Serko Ltd. ((SERKF)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Serko Ltd. Reports Strong Performance Despite Challenges
The recent earnings call for Serko Ltd. painted a picture of robust performance, marked by record revenue and EBITDAFI figures. The company’s success was largely attributed to its strategic integration efforts and expansion in key markets. However, the positive sentiment was somewhat tempered by challenges in U.S. sales, foreign exchange losses, and an increased net loss.
Strongest Half Year Performance
Serko delivered its strongest half-year performance, achieving a 45% increase in total income to $61.8 million. This impressive growth was driven by the scalability of its business model and significant contributions from Booking.com for Business and the addition of GetThere.
Record EBITDAFI
The company reported its highest ever EBITDAFI result of $6.1 million, reflecting disciplined execution and a strong focus on profitable growth. This milestone underscores Serko’s commitment to maintaining financial health while expanding its market presence.
Significant Growth in Booking.com for Business
Serko experienced a 32% growth in room nights, reaching 2.1 million, alongside a 40% increase in active customers. This indicates robust performance in the Booking.com for Business segment, highlighting the effectiveness of their strategic initiatives.
Free Cash Flow Generation
The company generated $3 million in free cash flow, demonstrating the cash-generating capabilities of its existing business. This achievement further solidifies Serko’s financial stability and operational efficiency.
Successful Integration and Market Presence of GetThere
The acquisition of GetThere has been successfully integrated, stabilizing the customer base and contributing positively to revenue. This strategic move has strengthened Serko’s market presence and revenue streams.
Partnership with Booking.com
Serko’s partnership with Booking.com continues to drive significant revenue and contribution. The company expects completed room nights to exceed 4.2 million this financial year, showcasing the partnership’s ongoing success.
U.S. Sales Challenges
Despite overall success, Serko faced challenges in the U.S. market. The company did not achieve its targeted U.S. sales, with direct corporate sales falling short due to changes in partner focus and customer preferences for new capabilities.
Impact of U.S. Government Shutdown
The U.S. government shutdown negatively impacted volumes, although this was anticipated and incorporated within guidance. The company remains vigilant in navigating such external challenges.
Foreign Exchange Losses
Serko reported a $3.7 million loss due to foreign exchange contracts not designated as hedges, which impacted net profit despite revenue growth. This highlights the volatility and risks associated with foreign exchange markets.
Increased Net Loss
The net loss after tax increased to $9.5 million, driven by lower interest income, foreign exchange losses, and a noncash accounting loss on the sale of InterplX. This underscores the financial challenges the company faces despite its operational successes.
Slight Decline in Average Revenue per Booking
While online bookings in Australasia grew by 2%, there was a slight decline of 2% in average revenue per booking due to reduced third-party costs. This indicates a need for strategic adjustments to maintain revenue growth.
Forward-Looking Guidance
Looking ahead, Serko reaffirmed its FY ’26 total income target of $115 million to $123 million, while revising total spend to $124 million to $128 million. The company highlighted a 32% increase in completed room nights to 2.1 million and maintains a strong balance sheet with $65 million in cash and no debt. Serko continues to invest in AI capabilities and platform transformation to support future growth.
In conclusion, Serko Ltd.’s earnings call reflected a strong performance with record-breaking figures, driven by strategic integrations and market expansions. However, challenges in the U.S. market and foreign exchange losses present hurdles that the company must navigate. The forward-looking guidance remains optimistic, with continued investments in technology and platform enhancements to drive future growth.