SKO
22/05/2015 09:14
FLLYR
PRICE SENSITIVE
REL: 0914 HRS Serko Limited
FLLYR: SKO: Serko reports FY15 Result, delivers 55% YoY Rev Growth
22 May 2015
Serko reports FY15 full year result, delivers 55% Year on Year Revenue Growth
o Total revenue of $10.4m representing 55% year on year growth
o Online Booking revenues of $7.3m representing 62% year on year growth
o Net loss before tax $6.4m in line with PFI2
o New product pipeline from R&D investment of $5.7m, up 70%
Financial overview
Serko Limited (NZX:SKO) today announced its first set of full year unaudited
financial results as a publicly listed business for the year ended 31 March
2015. The company delivered top-line revenue growth of 55% compared to the
previous period. Revenue and losses after tax for the period were $10.4
million and ($6.4 million) respectively. The bottom line result was in line
with the prospective financial information (PFI) contained in the IPO
Prospectus, despite revenue being 5.6% lower than PFI.
Cash and working capital balances were strong. Cash held at 31 March 2015 was
$4.5 million, $0.5 million below PFI forecasts but offset by higher net
receivables.
Serko's core product Serko Online experienced growth in transaction volume in
line with forecasts. In the second half of the year, transactions increased
by 57% compared to the second half of FY14 and the 32% growth reported in the
first half. Serko Online revenues increased by 62% in total for the year.
Serko's online expense management platform, Incharge, contributed revenues in
its first full year since acquisition of $0.9 million, an increase of 15% on
a like for like basis.
Billable Service Revenues from client funded software development totaled
$2.1 million, an increase of 9% year on year.
Serko Incharge and Billable Services revenues were in line with the adjusted
guidance issued in early March and respectively were $0.2 million and $0.3
million below the PFI forecast.
Expenses from ordinary activities (excluding finance expenses) totaled $18.0
million for the year, which was $0.4 million lower than PFI.
Research and Development costs that were expensed through the profit and loss
account amounted to $5.1 million, with an additional $0.6 million that was
capitalized in the year. The total R&D investment of $5.7 million increased
70% from the previous year and was 10% higher than PFI.
Other income from R&D and Business Development Grants totaled $1.4 million,
which was an increase of 58% from the prior year and 30% higher than PFI.
Operational overview
Following Serko's IPO in June last year the company has been focused on
building the product and operational platform required to support the growth
ambitions in the Australasian market, Asia Pacific and beyond. We raised
sufficient capital to invest in growing internal capabilities, developing a
range of innovative new products and establishing a scalable operating model
that will deliver long-term value to shareholders.
The business added 46 new employees ending the year with 133 employees spread
between Auckland, Sydney, Brisbane, Melbourne, Perth, X'ian (China), Gurgaon
and Mumbai in India.
During the course of last year a number of key milestones were announced
which are important to the long term strategy. These included the award of
the travel expense automation patent by the US Patent Office in July,
strategic partnerships with third parties including Intelligent Travel and
Routehappy, the integration of Expedia Hotel Inventory into Serko's Online
Booking Tool, the launch of Serko Mobile and the first licensing agreement
for the Mobile App.
Although the effect of delayed implementations and contract confirmations had
an impact on our run rate in the final quarter and caused us to fall 5% short
of the PFI revenue target, the business has delivered solid growth and
progress.
Strategy
The strategy for FY16 is consistent with our 2015 activity and can be broken
into 3 discrete strategy streams:
1. Growing our user base aggressively, which means driving organic growth
through partnerships with TMCs across the region, while also looking at
inorganic opportunities to acquire a broader and more extensive user base
that we can monetize over time;
2. Continuing to evolve our business model, layering on the other revenue
lines such as subscriptions and supply side revenue streams;
3. Maintaining investment in our core products so that we retain our
competitive advantage in the market and develop a content proposition that
allows us to extendour business model to new markets.
Outlook
Darrin Grafton, Chief Executive of Serko, said that "The results clearly
demonstrate that demand for Serko products across the APAC region is strong
and our product vision is aligned with the needs of the market. The R&D
investments that we made during FY15 mean that we go into FY16 with a market
leading integrated travel and expense proposition and a set of reseller
relationships that should allow us to deliver on our growth ambitions.
"The acquisition of Arnold Travel Technology, an Australian Corporate Online
Booking Tool Competitor, on 1 May 2015 from Expedia/Wotif has significantly
increased Serko's share of the Australian corporate travel sector and will
further accelerate growth in on line transactions through FY16. As a result
of the acquisition of Arnold, we expect around 30% of Australia's corporate
travel expenditure to be flowing through Serko's systems by the end of FY16."
As previously signaled, the belated delivery of the Serko Mobile app and the
Incharge product refresh, coupled with the change in demand for software
customization and the acquisition of Arnold Travel Technology, resulted in an
adjustment to first half FY16 revenue forecasts. More recently, the demand
for software customization has remained below expectation and as a result the
company is forecasting a revenue range of between $7.5 million and $8.0
million for the first half of FY16, compared to PFI of $8.3 million. However
software customisation is non-recurring low margin business and those
resources have been re-allocated within the organisation offsetting our
hiring requirements. Revenue in the second half is expected to accelerate as
these new and refreshed products gain traction. For the full year, we expect
revenue to be between $16 million and $18 million. The company anticipates
moving into profitability in the first half of FY17 within existing cash
resources.
For more information:
Tim Bluett
Chief Financial Officer, Serko
+64 9 309 4754
About Serko
Serko is Australasia's leading online travel booking and expense management
company for businesses and is listed on the New Zealand Stock Exchange Main
Board (SKO.NZ). Headquartered in Auckland, New Zealand and with offices in
Sydney Australia, Xi'an City China and Gurgaon, India, Serko employs 140
people worldwide.
Serko Online is an integrated Online Booking Tool (OBT) used by
administrators and travellers to book flights, accommodation and car hire
from the broadest possible set of travel providers. The OBT ensures that
travel bookings comply with corporate travel management policy without
limiting the users choice of travel provider.
Visit www.serko.com for more information. Serko's results are available for
downloading from Serko's website at http://www.serko.com/investor-centre/.
End CA:00264678 For:SKO Type:FLLYR Time:2015-05-22 09:14:51
