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The All Points West podcast meets leaders from some of the most innovative and influential small and mid-cap UK-listed companies to learn more about them and their businesses. Hosted by former Sunday Times business journalist, Karl West.
Want to get in touch? Send an email to allpointswestpod@gmail.com.
Nothing in this podcast is intended as investment advice and the people in this podcast may hold positions in the stocks they talk about. Do not buy anything based solely on a tip or recommendation. Please do your own research.
Welcome Stuart Neal to the All Points West podcast. Stuart is Chief Executive of Boku, the aim-listed mobile payments business that has a roster of blue chip clients, such as Amazon, Google, Meta, Netflix, Spotify, and Microsoft, which all use its payment system. BOKU utilizes a global network of localized payment partners, which gives people the freedom to pay for their favorite goods and services using their preferred payment method, no matter where they are in the world.
BOKU was incorporated in 2008, is headquartered and floated in London on AIM in 2017, but it has offices kind of dotted around all over the place, really. The US, India, Brazil, China, Estonia. France, Germany, Indonesia. Japan, Singapore, Spain, Taiwan, and Vietnam. Stuart has more than 20 years experience in the payments industry and took over as CEO of Boku in January from Jon Prideaux, who remains on the board as a Non-Executive director.
If you wouldn't mind, perhaps we could start with you giving us an overview of how your model of using local payment methods, so-called LPMs, how does that work? Both for individuals who want to pay for goods and services and for the huge corporations that use your system.
Yeah, sure and hi, thanks, Karl, great to be here. it's probably not as obvious to us sitting here in the UK or sort of the Western world, but on a global level, more than two thirds of online transactions are now happening using payment methods that are not related to Visa or MasterCard or other such historical plastic oriented card networks.
And so the challenge is if you're a big global company and you're looking to grow your business cross border, what is surprising is a lot of our big global customers have actually quite a light footprint. They don't want to be doing business and setting up entities all around the world and getting licenses all around the world and directly connecting to hundreds and hundreds of disparate payment methods. And so Boku performs that role for them. So what we are effectively doing is helping big global customers to continue to grow in a cross border fashion by connecting them to effectively paying customers who are using payment methods that are not the traditional card scheme based payment methods.
So how does that work? Do you strike a deal with one local payment provider in every market that you're in?
Historically, we go where our customers have needed us to go and, there is a real scale benefit you get from connecting to one global customer who wants to commercialize in 50 countries. So what Boku does is effectively get ahead of that kind of demand from our customers by connecting up to as many of the dominant local payment methods in a given market.
So, in places like Indonesia, for example, that might be three or four different digital wallets in Japan that might be connecting up through our carrier billing network to the three mobile operators and the two biggest wallets. So it's not quite the same in every market. , but ultimately our goal is to be connecting up to all of the major non card scheme related payment mechanisms in each country.
So this is an area that is growing rapidly, isn't it? Local payment methods or LPMs now represent two thirds of all global online payments, which is a significant rise from 2010 when they accounted for one quarter of all online payments during the first half of 2023 Boku continued to expand the network to more than 300 LPMs across 60 countries. And saw quite rapid customer adoption with more than 32 million new consumers making their first purchase with Boku. Globally, the company's network reaches more than seven and a half billion consumer payment accounts in more than 90 countries.
That's a pretty impressive stat list and it started to show in the financials Boku recently released a trading update that was pretty bullish saying that you expect to report annual revenues for the year ending December 2023 up 30 percent at 82. 7 million dollars with underlying earnings at 33 percent at 27.3 million dollars at least. I mean, it looks like you've inherited a pretty good situation, Stuart. But how daunting is that in terms of how much pressure you feel to keep that positive momentum going?
You know, the business is in fantastic shape and credit to Jon, the previous CEO for getting us to this point. As you can see in the numbers, we are starting to reach an inflection point here where the expansion of the network across all of our existing customers is starting to enable us to scale up on our financials, you know, the business is in fantastic shape and credit to Jon, the previous CEO for getting us to this point. As you can see in the numbers, we are starting to reach an inflection point here where the expansion of the network across all of our existing customers is starting to enable us to scale up on our financials and so, you know, the way we grow is by enabling more customers for our merchants. You know, the merchants want to commercialize and one way of doing that is to offer more payment choice. More payment choices enabling local payment methods and so that's the business we're in and we're and it's a global business you know, we're live in many countries across Asia Pacific We're live across Europe.
We're in the Middle Eastern Africa and we're now starting to make inroads into LATAM So this isn't a kind of regional play. It's a global play and I think we're just at the beginning of the journey. So I wouldn't say it's a daunting prospect, I'd say it's an exciting prospect because really, most CEOs come into a job and they either have to fix something or turn something around or they have to worry about where their next dollar of revenue is going to come from.
I don't have any of that and it's a privileged position to be in. My concern really is how do we scale the business to be able to take advantage of the incredible market opportunity that we've created for ourselves. So it's one of execution because I think the opportunity is vast.
What do you intend to do differently in order to take Boku onto the next level? What's the plan for you? You mentioned a bunch of markets there. Are there any big markets that you're not currently in that you're working very hard on at the moment?
The two markets that we are focused on to add to the network are India and Brazil. So we are present in those markets. In fact, we have over a hundred staff in India already. But what we are now doing to increase the reach of the network is tapping into this, the new breed of payments, which we're calling eight away account to account.
Which basically means plugging directly into the banking network to be able to offer real time payments as a way of buying goods and services, so, we are at the latter stages of having our license in india which means all of our merchants will be able to offer their services cross border to consumers in india who can pay using the dominant payment method in India called UPI.
And we'll be doing the same in Brazil. We're a little bit further back, but we are in the process there too. And they're just two big markets. And what is interesting about those markets is they've not fully embraced or adopted the card scheme, Visa MasterCard networks in a way that you might imagine, is evident in the UK and the US, they don't have that legacy. And so to be able to bring more and more consumers into the online ecosystem, they've moved straight to this methodology which is use your phone to make a purchase online and that purchase will be charged directly to your underlying bank account and the money moves very quickly.
So it's another macro trend in payments which we're taking advantage of. And it's two very exciting markets where we're making quite a lot of progress.
So I would imagine that presents more fertile ground for a business like Boku, doesn't it? The fact that the rump of the consumer market isn't already wedded to the likes of a Visa or a Master Card.
It does make a difference because you end up with the kind of first time adoption online move straight to the new payment method. And so for, for some countries, you know, Indonesia is a good example, you know, the drive online has been facilitated by a number of big digital wallets.
And what those wallets do is enable people to make in-app purchases. If you think about ordering an Uber or a fast food takeaway through a just Eat within Indonesia, all of that is done within one or two mega apps. And that includes the way that people pay for those services so that the rise of the digital wallets, That's been driven by consumer preference, how the users want to interact and how the users want to pay for their goods and services online. So we don't have to convince anybody that they should change what they're doing that they're already there.
What we're doing is connecting to those payment methods and then serving that network up to our large global merchants. If you come further west, it doesn't mean that there aren't any wallets in Europe. And actually on the contrary, what we're seeing in Europe, which is sort of driven by maybe demographics, is young people wanting to transact on mobile, also wanting to pay on mobile.
And there's a new emergence of digital wallets in Europe. I'll give you some examples. Twint in Switzerland. Satispay in Italy, Blizzum in Spain, Swish in Sweden, Blick in Poland. You know, these are very card centric, historical Visa MasterCard territories and yet you're still seeing an emergence of digital wallets.
So it's actually a, it's a real global trend that we're playing in.
It's all been transformed. I mean, the one thing that the card was always doing was enabling you to authenticate yourself through a chip and pin type transaction. Hey, it's me because I know my PIN code. therefore, in possession of the card. What has opened this all up is the ability to seamlessly authenticate using a face ID or a finger ID that says, hey, you know it's me, and you know it's me in possession of my device so now I can make the payment through my phone without having to have a secondary piece of plastic, and it has revolutionized how payments can be made online.
Great stuff. All right, Stuart. So just so our listeners get a better picture of who you are. I've got some CV highlights, but correct me if I'm wrong about any of this. Now going back to 2002, you were financial director of Virgin Media for nearly three years, then you were at Barclaycard for six years.
Then came your first stint at Boku as chief financial officer for three years from 2011. You then worked at several places, including Pay by Bank App, Feature Space, Royal Mint, Mobile Ecosystem Forum. Then you were back at Boku in 2017 as CFO again, where you've now done several roles and eventually you took over as CEO from Jon Prideaux in January this year after doing a spell as CEO designate.
It feels like you were always meant to take over the top job at BOKU. But which of these other roles had the biggest influence on your career, would you say?
That's a great question. think everything is additive, isn't it, when it comes to career. A lot of my earlier career was training to be a qualified finance professional and I trained in companies like GSK. I ended up, in what was actually NTL, which rolled up into Virgin Media.
NTL was pretty chaotic and surviving and being part of a turnaround journey there was definitely an education. I first turned up at Barclays in payments to do finance job and I find myself actually getting more and more sucked into the commercial side of things.
And so I've always flip-flopped in and out between finance senior jobs and commercial senior jobs. with a view that I always wanted to be a CEO at some point. And, I did my time at BOKU on the finance side. So it's a fabulous organization. You know, the first time I joined, I left Barclays, and went to a Silicon Valley startup with a hundred people and a bunch of Premier League venture capital investors, and it was just so much fun, you know, chaotic, all the things you would expect from a Silicon Valley startup but all the things that ultimately led to us getting to list the business and at the point where we started scaling it in the early days, being public was super helpful and now the challenge is, I guess, A little bit the opposite, which is being a U.S Company in a very fast growing market listed in London, which is, you know, aim has its issues right now in terms of capital flight, how do we optimize the growth potential for this business while still doing all the things that our investors would like us to do? that kind of challenge poses, I guess, most growth companies who find themselves Listed on in London right now, particularly in the Aim market.
So what was the attraction initially in 2017 at IPO? Why London and not nASDAQ or, somewhere like that?
It wasn't my call but I don't think it was the wrong call. I definitely think we were very small for Nasdaq and Nasdaq is an interesting one because if you peel back the really big players who drive the growth in Nasdaq there's a lot of companies under there who are maybe not getting the same degree of traction. So there was a feeling of NASDAQ would come with a more onerous regulatory requirement, quarterly reporting, Sarbanes Oxley, all of those things, which would have meant, you spend a lot of money just for the privilege of being public and the danger is that you're just not big enough to get any attention you get lost in the noise. So AIM felt like it was a bit smaller, more contained. we just felt it would be a good story, and we would over-index in terms of our profile, rather than under-indexing on Nasdaq.
And how are you feeling about AIM now? what are the challenges for a business like Boku?
You've only got to look at the stats to see that AIM's got some challenges. You know, in a post-Brexit world, what is the incentive for money to come into the UK, particularly at the sort of small and riskier end of the market? And that's something that we're not in control of.
You know, we upgraded our numbers three times last year we, haven't really seen three upgrades in the share price, but, relative to other companies on AIM, we are outperforming by standing still, which is a strange concept. My challenge is how do I get more money coming into the stock, get fresh people, bigger funds to kind of buy into the story, to see the potential of this business and to come with us on what will be a kind of the next five year phase of the business growth.
That is quite challenging with a lot of the funds are facing redemptions and money outflows and people if anything will revert to being more short-term rather than long-term when the market's like this. So we're battling against it a little bit as a company you can only do what you do which is to continue to make the right decisions for the business and continue to grow your numbers and then you hope that the market will come back.
Is there an ambition at some point to maybe think about a dual listing with the States?
Not something that I'm actively pursuing. There's so much work involved with doing these things, and at the moment it's weighing that against the the potential of just focusing on growing the business and to be honest, we've got this great opportunity, but those windows close quite quickly if you don't execute, so I'm not sure at this point, I want to distract the business with a dual listing or a read domiciling or any of that structural stuff when actually we should all be engaged in growing the company.
Stuart, can I take you back to the beginning now? Where did you grow up and what was that like?
I grew up actually in Cambridgeshire, which is where I now live again and have done for a while. It was fairly chilled and easygoing. I think I found my career drive sometime in my mid-twenties which actually didn't hold me back in the long run, but it's, a nice part of the world, and easy access to London, but far enough out of London, if that makes sense.
What did Mom and Dad do when you were a kid? And have you got any siblings?
Yeah, no I have a brother who's also in tech. His company is in the sort of remote access and identity. It's a tech company based in LA, so he and I exchanged notes quite a bit on the West Coast goings on of this world. Dad was in in computing in the early days as a 16 year old school leaver got into computers early You know when they were filling up rooms just for one computer. So that was an interesting background. mum was mostly stay at home for the large part, which was helpful for us as a family. So yeah, it was, interesting without being, dramatic for any particular reason.
Do you think Dad's background in IT and computing guided you in that direction?
Not really, but he was always very, keen on investing and following the markets and business generally, and so I kind of picked up on quite a lot of that. And maybe my brother more so, my brother was more in computing in his earlier career and still is, I think he's a kind of field CTO in his day job, so he's more on the technical side. I'm more on the business side, so I guess we both took some influence from that.
Sure. Where did you go to school and what were you like? Were you academic? Were you sporty?
I went to school at a, comp in Cambridgeshire . I think I cruised through school without really pushing myself hard enough. So came out with average grades on most things without really trying preferred to be playing rugby, or any kind of sport, frankly, but rugby was always my go to and so, you know, I don't think I was pushed particularly, but it took me until university to figure out you have to push yourself in life, so, you know, there was, like I say, a bit of growing up that happened In my twenties by the time I really kind of got it.
So what about university then? Where did you go? What did you study?
Both my parents left school at 16 at a time when they thought university was for posh kids. So I went to work at 18 and by the time I got to 21, hang on a minute, I'm missing out on something here, all my friends have gone.
So I put myself through uni. I went to the closest uni where my girlfriend at the time was living, which was in Hertfordshire. They had a business school. I registered for an economics degree And I really loved my time there. And I had a couple of jobs, but the last job was for a foreign exchange broking house. So people that would put banks together so that they could trade on, forward dollar marks or some other kind of currency exchange. And it was high pressure, high stress. aggressive male dominated environment where there were probably 60 guys, large part from the east end of London, who were putting these trades together and it would blow up, there would be a lot of shouting across the room.
Things thrown against against the wall, you know, all the things not quite Wolf of Wall Street But but not far off and you know, what felt quite invigorating and exciting for the first five minutes soon wears off and the prospect of you doing that for the next 30 years dawns on you and you realize that that's actually not a lot of fun And so, you know, I, decided pretty quickly that I was capable of more. And then the first thing is you survive it and you learn to deal with the environment whilst you're figuring your route out. And so for me, I lasted a year doing that job sort of the 7am starts, quarter to five out of bed in the morning to have this crazy, aggressive business. And I think I got to the point where I was ready for them to push me up to the next level and I said, No, thanks. I'm out of here, I'm going to university. It was something I look back on and like you say it was formative
very
Yeah.
formative.
Yeah. Absolutely. And in the meantime, you were probably getting all these messages or seeing friends in holidays who were coming back from university who were probably having a whale of a time and you were thinking, what the hell am I doing?
Exactly right I realized it was an option that was in front of me and I just had to make it happen and I did and I never looked back from there, you know, I went straight from uni to Smith Klein Beecham, I came out with an economics degree, walked into a finance training scheme with a big global drugs company and I was off, you know, and it was the best thing I ever did.
What do you like to do away from work, Stuart? You mentioned sport and rugby earlier on. Are you still involved in sport or is it just from a watching standpoint these days?
I co-coached my son's rugby team until he was 16 lots of cold Sunday mornings, like a lot of parents will, relate to. For me now it's, more leisurely, so it's, more about keeping on top of my health, going to, gym classes and then, from a mental health point of view, it's playing my guitar, which I now have an office at the bottom of the garden so that my family don't have to hear the noise that I make. So, so it's kind of playing the guitar and, I learned to do oil painting last year and that's, quite a relaxing thing to do. and then it's just spending time with the family and, watching too much rugby on the TV, I suppose.
So the guitar playing, is that a solo endeavor or do you do it with friends? Are you part of a band or anything like that?
I used to be, and I guess, you know career family commitments and everything else got in the way of rock and roll stardom. So I think when I was in my 20s, we had a band and we had a go at making it. It's it sounds, you know a lot easier than it than it really is, and so, we gigged around a bit, you know made some demos. Back then doing a demo, you had to book a studio for two days to get one song done. Whereas now people doing it in their bedrooms with much better quality, you know, so the guys that I was in a band with, they're still recording actually a couple of them and they're putting out music on iTunes and it's, amazing how distribution of music has changed largely for the better, but also you only really make money from gigging now. So that dynamics changed, but I loved it and it's a treasured part of my, past and I still love to play. And if there's ever an invitation from friends to get together to play someone's wedding or party or something like that, then I'm there in a shot.
Great stuff. So finally what's next for Stuart Neal? Would you like to one day run for instance, a FTSE 100 company or are you content with where you're at at the moment?
I'm not content because actually I think Boku should be a FTSE 100 company. And I actually think the size of the opportunity here, that we have could definitely lead us down that path to being a materially bigger business. You know, and maybe that's a five year plus journey, but I'm setting my sights on that, and I think that's the level of ambition we have as an organization. When there are precedents for payments companies coming out of nowhere and suddenly becoming global, you know, monsters. I mean, Adyen's a great example from scratch in 2007 to multiple billions of market cap now, and there are others out there I could point to, and so I don't think it's unthinkable for me to get that experience of a bigger company by staying where I am. You know, we just have to execute.
Yeah, absolutely. Stuart Neal of Boku, thank you ever so much for joining me on the All Points West podcast. I wish you all the best with it.
My pleasure. Thanks, Karl.