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Exciting small cap ASX tech share withdraws guidance due to COVID-19

The Serko Ltd (ASX: SKO) share price will be on watch on Monday after it provided an update on its guidance for FY 2020.

What did Serko announce?

This morning the market leading travel and expense technology solution provider announced that it would be the latest company in the travel sector to withdraw its guidance for FY 2020.

This follows decisions by Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Limited (ASX: WEB) to withdraw their guidance last week.

According to the release, management blamed this on the rapidly increasing uncertainty surrounding the duration and scale of the COVID-19 outbreak, and the impact it and the related border control restrictions are having on corporate travel.

Serko was previously aiming for total operating revenue growth at the low end of its guidance range of 20% and 40% for the 12 months ending March 31.

Serko’s CEO Darrin Grafton explained: “The spread of the virus and subsequent increase in border access restrictions is making it difficult to predict the impact the virus is likely to have on Serko’s year end position. On this basis, we think it is prudent to withdraw guidance at this time.”

What now?

The chief executive advised that Serko’s focus now was its balance sheet and its growth when trading conditions return to normal.

He advised: “Our priority during this period of uncertainty is to maintain Serko’s current balance sheet strength and position. Our focus is ensuring the company continues to grow following this challenging trading period.”

“Serko presently has a strong cash balance, following its successful capital raising undertaken late last year, and the Executive Team and Board are optimising the business for long-term growth by carefully managing the allocation of capital during this period,” Mr Grafton concluded.

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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 owns shares of and has recommended Flight Centre Travel Group Limited. The Motley Fool Australia has recommended Serko Ltd and Webjet 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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