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Serko announces half year result, capital raising, & Booking.com deal

The Serko Ltd (ASX: SKO) share price will be one to watch when it returns from its trading halt.

Why is Serko in a trading halt?

This morning the online travel booking and expense management company announced its half year results and a major capital raising.

During the six months Serko achieved total operating revenue of NZ$14.7 million. This was an increase of 29% on the prior corresponding period. It means the company is on track to hit its full year revenue growth guidance of 20% to 40%.

Pleasingly, the majority of this revenue is classed as recurring. Serko’s recurring revenue grew 38% over the prior corresponding period to NZ$13.3 million. This means it now accounts for 91% of operating revenue.

One slight disappointment was that its net profit before tax came in at a loss of NZ$0.8 million. This compares to a profit of NZ$1 million a year earlier. This was due partly to non-cash adjustments and a jump in operating expenses. The latter came in 46% higher year on year at NZ$15.6 million.

As a result, cash on hand at the end of the quarter fell to NZ$10.3 million, from NZ$15.7 million at the end of March.

Management said: “Serko’s revenues continued to grow in its home markets of Australia and New Zealand and good progress was made in establishing its presence in the Northern Hemisphere, while remaining EBITDAF profitable. The net loss after tax of NZ$0.9 million includes NZ$0.6 million related to the non-cash adjustment for fair value remeasurement of contingent consideration from the acquisition of InterplX and depreciation and amortisation of NZ$1.3 million.”

Capital raising.

Serko is undertaking an underwritten NZ$56 million placement. This comprises a primary placement of NZ$40 million and a secondary sale of existing shares by a limited number of Serko employees of NZ$16 million. These funds will be used to accelerate the global rollout of Serko Zeno and expand marketplace content.

Global travel giant Booking Holdings will cornerstone the capital raising, resulting in an approximate 4.7% shareholding.

As part of the agreement, the two parties have signed commitments to expand their existing agreement so that Booking.com can offer and promote Serko Zeno to its business traveller customers. It will also enable the integration of new Booking.com content onto Serko Zeno.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Serko Ltd. The Motley Fool Australia has recommended Serko Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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