GuruFocus - Release Date: October 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Serko Ltd (ASX:SKO) announced a significant expansion into the North American market, supported by a partnership with Sabre and the acquisition of Sabre's GetThere.
- The company achieved strong market success in Australasia with a 5-year partnership renewal with Booking (NASDAQ:BKNG).com, a key growth driver.
- Serko Ltd (ASX:SKO) reported an 18% increase in total income for the first half of 2024, demonstrating strong revenue growth.
- The company achieved positive EBITDA and positive free cash flow in the first half of 2024, reflecting improved financial discipline.
- Serko Ltd (ASX:SKO) has a strong balance sheet with $82 million in cash and no debt, providing financial stability for future investments.
- The acquisition of GetThere is expected to be earnings dilutive in the first year, with total annual spend anticipated to be approximately $36 million.
- Serko Ltd (ASX:SKO) expects to incur transaction and integration costs related to the Sabre partnership and GetThere acquisition, totaling approximately NZD6 million.
- The company no longer expects to be cash flow positive for FY25 when including the acquisition and accelerated investments.
- There are risks to achieving FY25 goals, including timing of initiative delivery, currency movements, and geopolitical factors.
- The New Zealand revenue segment saw a reduction due to lower volumes, reflecting a weaker New Zealand economy.
A: Darrin Grafton, CEO, explained that the partnership with Sabre and the acquisition of GetThere are pivotal for expanding Serko's presence in the North American market. This move positions Serko as the #2 online booking tool provider in North America by volume. The collaboration with Sabre, a market leader in the US corporate travel segment, enhances Serko's market reach and technological capabilities, particularly in AI and data-driven insights.
Q: What are the expected financial impacts of the GetThere acquisition on Serko's earnings?
A: Shane Sampson, CFO, noted that the acquisition is expected to be earnings dilutive in the first year due to additional investments in sales and marketing resources. The total annual spend for GetThere within Serko is anticipated to be approximately $36 million, with gross annual revenue estimated at NZD18 million from the existing revenue base.
Q: How does Serko plan to leverage its partnership with Booking.com to drive growth?
A: Darrin Grafton highlighted that the partnership with Booking.com is crucial for scaling Serko's solutions from small and medium-sized businesses to global enterprises. The collaboration allows Serko to integrate Booking.com's vast inventory into its platform, enhancing choice and flexibility for managed travel programs and driving higher volumes through increased customer acquisition.
Q: What are the key growth metrics for Booking.com for Business, and how have they performed recently?
A: Shane Sampson reported that completed room nights on Booking.com were up 17% in the first half of 2024, with active customers increasing to 187,000. The average revenue per completed night was EUR 10, showing a positive trajectory in customer acquisition and volume growth, which is expected to continue accelerating.
Q: What are the anticipated costs related to the Sabre partnership and GetThere acquisition?
A: Shane Sampson stated that transaction costs related to the Sabre partnership and GetThere acquisition are expected to be approximately NZD3 million. Additional one-off integration costs, including IT equipment and staff integration, are also anticipated to be around NZD3 million, spread across FY25 and FY26.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.