Recurring revenue or recurring losses? This ASX share just sunk on mixed earnings

Investors are punishing ASX shares that aren't meeting the mark in 2022.

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Key points

  • SiteMinder posted a mixed set of results today, leading investors to drive its share price south 
  • The company grew revenues but incurred a net loss for the period in its first earnings release since listing last year 
  • The SiteMinder share price is down 13% this year to date and has fallen nearly 1% into the red over the past month of trading

Shares in open hotel commerce platform SiteMinder Ltd (ASX: SDR) are sliding into the red today. It comes as the company releases its results for the half year ended 31 December 2021.

At the time of writing, the SiteMinder share price is trading more than 3% down at $5.82 as investors respond poorly to the company's mixed results.

SiteMinder shares slip on revenue gains with underlying net loss

Key investment takeouts from the company's earnings result include:

  • Total revenue was up 9% on H1FY21 (10.4% in constant currency (cc)) to $55 million
  • Global customer base increased 6% during the half, with annualised property growth in the Americas up 15%
  • Annualised recurring revenue (ARR) grew 13.5% (cc) from H1FY21 to $111 million
  • Monthly average revenue per user (ARPU) grew 7.7% (cc) on H1FY21 to $280
  • Underlying free cash outflow of $16.6 million (30% of revenue) with available cash and term deposits of $113 million
  • Underlying net loss was $18.6 million reflecting investments to reaccelerate
  • Reported net loss was $87 million

What else happened this period for SiteMinder?

This is the first half-yearly report for the company as an ASX share since its initial public offering (IPO) in November last year.

Annualised recurring revenue (ARR) at the end of H1FY22 was $111 million, growing 13.5% in constant currency terms from the same time last year. This result outpaced revenue growth and reflected "the acceleration of SiteMinder's business".

The company's customer property count also increased from 32,800 to 33,400 over the quarter. This led annualised property growth to accelerate from 5% in Q1FY22 to 8% in Q2FY22.

It also saw some relief from the recovery in global travel to its transaction revenues. Revenue saw a rebound from the prior year.

"Around a third or 32% of customers have adopted an average of one transactional product – up 9 percentage points from the prior year," the company said.

Despite growth at the top, SiteMinder reported a net loss for the period of $87 million. This was underpinned by a one-off cost of $61.8 million "relating to the higher revaluation of preference shares while a private company."

Management commentary

SiteMinder CEO and managing director Sankar Narayan responded to the announcement:

In line with the continued reopening of travel markets and the rebuilding of our go-to-market capacity, SiteMinder's growth is accelerating once again and our performance over the past six months stands as a testament to our ability to withstand the ongoing challenges presented by travel globally. We continue to exhibit our resilience through growth in total revenue and our subscription base, as well as ARR, ARPU and improved unit economics. Our performance also reflects the scale and breadth of our global business, with both the Americas and EMEA driving Company growth, and we are hopeful that the Asia Pacific will continue to reopen during 2022, to provide additional strength to our growth recovery.

What's next for SiteMinder?

The release notes that SiteMinder is targeting pre-COVID revenue growth rates of 31% (achieved from FY17 to FY19).

This would place the company on the same trajectory it was on before the pandemic hit, ceteris paribus.

Although, "realisation of this target will depend on many factors outside of the Company's control, including the substantial abatement of COVID-19 related influences on the accommodation and travel industry."

SiteMinder share price snapshot

The SiteMinder share price is down 13% this year to date and has fallen nearly 1% into the red over the past month of trading.

Time will tell in which direction this relatively new ASX share will head as we roll through 2022.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended SiteMinder Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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