The ASX tech share Siteminder Ltd (ASX: SDR) has hit a 52-week low today of $4.24. I think this is a great time to invest in the business.
I believe investing is all about finding good assets and investing at a price that makes sense. The 52-week low actually means this is the lowest share price on offer since October 2023. That's despite the business being the largest it has ever been, revenue-wise.
I thought the business was such good value that I invested recently, and now it's even cheaper.
I'll outline below what I think makes the business so attractive for a long-term investment.
Operating leverage
One of the main advantages of an ASX tech share is that the nature of software means it's capable of achieving high profit margins. Software can be replicated for almost no cost, whereas it takes a lot more resources and distribution centres/stores to sell a fridge, couch, TV, car, or other physical product.
Siteminder provides what it calls the world's leading hotel distribution and revenue platform, under the Siteminder name. It also offers an all-in-one hotel management software that helps small accommodation providers, called Little Hotelier. It's involved with more than 125 million reservations worth over A$80 billion of revenue for those hotel customers each year.
In the FY25 first-half result, the ASX tech share's underlying gross profit margin increased by 118 basis points (1.18%) from the second half of FY24 to 66.9%, reflecting higher subscription and transaction margin. The underlying subscription gross margin increased 31 basis points to 85.5% and the underlying transaction gross margin increased 384 basis points to 34.5%.
Those higher margins bode well for future profit growth if revenue can continue climbing.
Ongoing revenue growth
While wider economic conditions have been difficult, including high interest rates and a high cost of living, the ASX tech share's FY25 half-year result still included a number of positive growth numbers.
The business reported net customer additions increased to 2,700. As part of the company's strategy to pursue larger hotel properties, the number of net rooms increased by more than 50% year over year.
Annualised recurring revenue (ARR) grew 184% to $216.2 million, with an acceleration in the second quarter of FY25, with contributions from its new initiatives with the new smart platform. The company's HY25 subscription revenue increased 9.9% to $66.3 million and transactional revenue improved 21.4% to $38.1 million.
Pleasingly, the ASX tech share reported that underlying operating profit (EBITDA) was positive at $5.3 million, up from a loss of $1.2 million in the HY24 result.
More appealing valuation
The Siteminder share price has fallen 34% since 17 February 2025, so it's a lot cheaper and I think the valuation is now very attractive.
According to the forecast on Commsec, the business is projected to generate earnings per share (EPS) of 10.3 cents in FY27.
That means the Siteminder share price is now trading at more than 41x FY27's estimated earnings.
The business is just entering profitability, so I'm expecting its net profit after tax (NPAT) to significantly increase in percentage terms in the next few years because of the small starting base. Overall, I think this is a good time to invest in the ASX tech share.
