The Serko Ltd (ASX: SKO) share price is higher today after the company released results for the 2019 financial year (FY19) yesterday. SKO shares opened 1.24% higher this morning and are sitting at $4.09 at the time of writing.
Founded in 2007, Serko provides "innovative cloud based corporate travel and expense technology solutions". The company is headquartered in New Zealand and currently has offices in Australia, the USA, China and India.
What did Serko tell the market yesterday?
Here is a summary of what Serko had to say in its release yesterday (dollar amounts in New Zealand Dollars).
- Operating revenue of $23.4 million – a 28% increase over FY18
- Recurring revenue of $20.7 million – a 26% increase over FY18
- Total income of $24.6 million – a 28% increase over FY18
- Earnings (EBITDAF) of $2.6 million – a 19% increase over FY18
- Operating expenses of $23.3 million – an increase of 32% over FY18
- Net profit after tax of $1.63 million – an 11% decrease over FY18
- Earnings per share of 2 cents.
In FY19, Australian revenue made up 78% of total revenue, with New Zealand at 14.7% and North America and others making up the remainder. As a proportion of total revenue, travel platform booking revenue (corporate bookings via Serko Online/Zeno) made up 68%, while expense platform revenue was at 11.6%, services at 11.5% and supplier commissions revenue at 6.6%. 'Other' revenue (primarily mobile subscriptions) was 2% of total revenue.
Outlook for Serko
Serko management has given initial guidance of total operating revenue growth of 20–40% for FY20. The company expects to commence in the North American and European markets in the second half of FY20 through the Zeno platform.
On its expansion plans, management stated that:
Demand for Zeno in North America has exceeded our in-house capacity to deliver. In response, we have boosted our resourcing and prioritised development as we configure Zeno to meet the operational and marketing needs of these customers… this investment will result in another year of cash burn, however this is an extraordinary level of investment, which is subsequently expected to normalise in the 2021 financial year. We expect to accommodate this investment within our existing balance sheet resources.
