Guess which little ASX tech share is surging 20% on a huge income rise

A change a contract could hint at future profitability.

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One ASX tech share is bucking the sector trend today as investors react to an update.

The Aussie technology sector is waiting on the sidelines while the S&P/ASX 200 Index (ASX: XJO) rises 0.2%. Big names in ASX tech land are barely budging today as weak retail trade data dominates the headlines.

Companies like Xero Ltd (ASX: XRO), WiseTech Global Ltd (ASX: WTC), and NextDC Ltd (ASX: NXT) are wandering aimlessly into the closing bell. Despite the mooted performance among the popular names, a little-known tech player is shooting out the lights.

The numbers before the results

Today's star of the tech sector is none other than Serko Ltd (ASX: SKO).

Parading a humble market capitalisation of A$362 million, the travel and expense management software provider is one of the lesser-heard-about companies in the limited Australian technology space. However, that's not preventing it from reaching for the stars after a well-received ASX release.

The announcement is a two-part ensemble — hitting investors with a twofer to indulge in.

Beginning at the end — the latter half sheds light on ASX tech share's upcoming FY24 full-year results. With its official results only 28 days, the company entered its confession season. Fortunately for shareholders, Serko has only good doings to confess.

The New Zealand-based business shared its unaudited full-year figures for FY24. You better grab a seat to prepare for this. For the 12 months ending 31 March 2024, Serko's total income is estimated to be up 48% to $71 million.

Investors would also be chuffed to see 'completed room nights' on for Business were 2.5 million — rising 65% from the prior year. Not only were more nights recorded, the average revenue per night rose 4% to €9.74.

For context, Serko's 'Zeno' platform is used in partnership with accommodation booking behemoth — a company owned by Booking Holdings Inc (NASDAQ: BKNG). The product allows business clients to make arrangements easily.

ASX tech share lands another five years

Speaking of, it's the first part of today's announcement.

Serko and have signed a five-year contract, extending their existing partnership. The deal ties the two together until March 2029.

Management believes the contract sets the stage for further growth, with Serko CEO and co-founder Darrin Grafton stating:

This renewal is a significant milestone for Serko–providing a strong foundation for future global growth and scale. It reflects the successful execution of the partnership to date and the strength of the opportunities ahead. The progress made has directly driven material revenue growth for Serko under the partnership's revenue-sharing model.

Notably, the revenue share arrangement unlocks a new upside for Serko. While current volumes will maintain the existing split, higher volumes will be associated with a tiered system, with management touting the profitability potential of this change.

The ASX tech share has been unprofitable since the pandemic first hit in 2020.

Today's revenue share change might be the light at the end of the tunnel shareholders sought.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Booking Holdings, Serko, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool Australia has recommended Booking Holdings. 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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