Serko Ltd (ASX:SKO) Full Year 2025 Earnings Call Highlights: Strong Income Growth and Strategic ...
Total Income: Increased by 27% to $90.5 million.
Pre-Acquisition Business Income: Grew by 20% to $85.7 million.
Free Cash Flow (Pre-Acquisition Business): Improved by $14.5 million to $7.4 million.
Operating Expenses: Increased by 20% to $107.6 million.
Total Spend: Increased by 10% to $92.7 million.
EBITDAFI: Improved by $4.3 million to positive $2.8 million.
Non-Cash Accounting Impairment: Reported at $5.1 million.
Cash and Short-Term Deposits: $61.4 million with no debt.
Completed Room Nights (CRNs): Grew by 29% to 3.3 million.
Australasian Travel Revenue: Increased by 18%.
FY26 Income Expectation: Between $115 million and $123 million.
FY26 Total Spend Expectation: Between $127 million and $133 million.
Warning! GuruFocus has detected 3 Warning Signs with ASX:SKO.
Release Date: May 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Serko Ltd (ASX:SKO) achieved a 27% increase in total income to $90.5 million, driven by the integration of GetThere and growth in Booking.com for business.
The company generated $7.4 million in free cash flow from its pre-acquisition business, marking a significant improvement of $14.5 million year over year.
Booking.com for business saw a 29% year-over-year increase in active customers and completed room nights, indicating strong platform adoption.
Serko Ltd (ASX:SKO) has a strong balance sheet with $61.4 million in cash and no debt, providing a solid foundation for future investments.
The company is well-positioned to capture growth opportunities in the North American market, leveraging its strategic partnership with Sabre and the acquisition of GetThere.
Operating expenses increased by 20% to $107.6 million, primarily due to lower capitalization and costs associated with the GetThere acquisition.
Serko Ltd (ASX:SKO) reported a non-cash $5.1 million accounting impairment related to the GetThere acquisition, impacting financial results.
The company experienced a temporary dip in conversion rates for Booking.com for business in early Q4, although this was later addressed.
Revenue contribution from the North American market is expected to remain modest in FY26, with some volume impact from US government policies.
The integration of GetThere resulted in higher cash outflows for onboarding expenses, which are not expected to recur in FY26.
Q: Could you talk about the growth in Booking.com for business, particularly around customer acquisition and the source of customer growth? A: Darrin Grafton, CEO: The growth is driven by continuous experimentation in marketing messages and platform functionality. We are seeing strong top-of-the-funnel activity, with substantial improvements in customer acquisition processes. Shane Sampson, CFO: The customer mix remains consistent, with a significant proportion from Europe. We are seeing reduced churn and stronger new customer additions.
Q: Can you provide a breakdown of the total spend between OpEx and CapEx for FY26? A: Shane Sampson, CFO: We estimate around $10 million for CapEx, with a conservative approach to capitalization. Most of the CapEx will be related to new platform development, estimated at $7 to $8 million. Total CapEx is expected to be around $10 to $12 million.
Q: Could you clarify the income guidance for next year, especially regarding GetThere and the volume tier for Booking.com for business? A: Shane Sampson, CFO: We expect to hit the volume tier in the first half of FY26, with modest impact on average revenue per completed room night. For GetThere, revenue is expected to be below $18 million but still in double-digit millions in New Zealand dollars.
Q: What are your expectations for the ANZ business in terms of average revenue per booking (ARPB) and volume? A: Shane Sampson, CFO: We expect ARPB to be slightly below $6 due to a commercial opportunity that reduces costs and revenue. We anticipate relatively flat volume and revenue for ANZ, with no significant reductions observed despite industry commentary.
Q: Can you discuss the integration and platform development for managed travel, and when do you expect the unified experience to be live? A: Darrin Grafton, CEO: We are focusing on platform spend and operational synergies. We aim to accelerate platform development with the right teams in place. Shane Sampson, CFO: We expect to spend $14 million on the platform, with flexibility to adjust as needed. The new managed travel experience is in development, but specific details and timelines are not disclosed at this time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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