Bango's Turnaround: From Losses to Profitability as Capital Efficiency Rises

London-listed fintech Bango (LON:BGO) is beginning to chart a course toward sustainable growth, with key financial metrics indicating a company learning to generate more from its invested capital. After years of operating at a loss, the payments technology specialist has crossed into profitability—a shift that often captures the attention of investors searching for potential 'multi-bagger' opportunities.

At the heart of this analysis is Return on Capital Employed (ROCE), a crucial gauge of how efficiently a company generates profits from its capital. For Bango, the calculation for the trailing twelve months to June 2025 shows a ROCE of 3.7%, derived from an EBIT of US$1.5 million against capital employed of US$41 million. While this figure remains substantially below the software industry's approximate 12% average, the direction of travel is positive. Five years ago, the company was not profitable at all.

More notably, Bango is deploying significantly more capital—up 39%—in pursuit of growth. This combination of rising profitability and expanding capital base is a classic, though early-stage, pattern observed in companies before periods of accelerated value creation. "The initial ROCE is modest, but the trend from zero is what matters," noted a sector analyst. "It signals that past investments in their digital payment and data platform are starting to bear fruit."

However, a note of caution emerges from the balance sheet. The company's current liabilities have risen to fund about 51% of its operations. While this can boost short-term ROCE figures, it introduces reliance on suppliers and short-term credit, a risk factor in uncertain economic climates.

Despite this, the overall narrative is one of a turnaround. The stock, down 59% over five years, may already price in past struggles, leaving room for revaluation if the new profitability trend holds. Bango's journey reflects the challenging path of many tech firms: investing heavily upfront for a future payoff that is now, just perhaps, coming into view.

Market Voices: A Split Verdict

Eleanor Vance, Portfolio Manager at Calderwood Capital: "This is the fragile, early innings of a turnaround story. The ROCE improvement, though from a low base, is the first green shoot. The increased capital deployment tells me management sees viable reinvestment opportunities—that's the seed for future compounding."

Marcus Thorne, Independent Retail Investor: "3.7% ROCE? That's pathetic. You can get that from a high-yield savings account with zero risk. This 'promising trend' is financial spin. The market has hammered the stock for good reason—the business model is still unproven, and that huge liability pile is a ticking time bomb."

Dr. Sarah Chen, Fintech Professor at King's College London: "Bango operates in the embedded payments and data monetization space, which is crowded but growing. Their metrics show the operational leverage inherent in their platform model. If they can scale further, the ROCE should improve materially. The next few quarters are critical to see if this is a blip or a breakout."

This analysis is based on historical data and analyst forecasts. It is not financial advice. Investors should consider their own objectives and conduct independent research. Simply Wall St has no position in any stocks mentioned.