Published on the 21/11/2014 | Written by Newsdesk
Serko, which listed on the NZX in June, has announced its interim results for FY15 showing a total revenue growth of 50% and significant interest from the US, but also a large increase in losses…
The Kiwi online travel booking and expense management software specialist posted and increase in revenue of $1.6 million to $4.7 million for the six months to 30 September 2014, but losses have bloated to $3.6 million, up from $347,146 for the same period last year. According to the company both the increased revenue and losses are in line with expectations. It has increased its expenses by 127 percent to $8.9 million, mainly due to a 129 percent increase in remuneration and benefits to $5.3 million as it has continued to hire staff to drive sales growth. At the end of the period Serko employed 118 worldwide, with another 13 new starters contracted to join.
Despite the widening gap in losses for its first half results Serko CEO Darrin Grafton said that it is “currently on-track to achieve the financial forecast for the 12 months to March 2015” as set out in the company’s pre-listing prospectus released in May, which predicted organic revenue growth of 53% in year to 31 March 2015. Grafton, this week, seemed confident that the company is continuing to build a strong pipeline of new business through existing and new Travel Agent resellers. He also noted that the acquisition of Serko’s main competitor, Concur, by SAP in October this year, clearly demonstrates the value inherent in the market.
In this week’s announcement Grafton highlighted mobile as the future for Serko. “We remain convinced that mobile is right at the core of our industry transformation strategy and plan to continue substantial investment in this space,” he said.
Serko Mobile, which Grafton refers to as the flagship new product, has commenced commercial trial, with a full commercial launch planned for February 2015. He said the product had already garnered significant interest from overseas markets, with nuTravel, a leading US travel technology provider, signing a three year reseller deal for the technology.
Significant discussions with major global companies in the mining, energy and resources sector in Australia and the US regarding its mass movement “groups” technology combined with the interest in its online and mobile technology from travel agents in the US, means Serko is now looking more closely at North America.
“These two developments indicate that there is an opportunity to grow the business in the US. This may result in deployment of resources to North America in addition to Asia and we are currently considering how best to undertake such an expansion of the company’s footprint,” said Grafton adding that the company has decided to “accelerate elements” of it headcount plans to support these operations.
The company acknowledged that Ebola was a risk factor to the travel industry, however, it said it had not noted any adverse results at this point. It will continue to monitor the situation.
Serko raised $22 million its initial public offering in June, the proceeds of which were to be used to employ staff, fund the firm’s growth ambitions and repay debt. In October it was also awarded an R&D grant through Callaghan Innovation worth up to $4.2 million over three years.
