The ASX tech share Siteminder Ltd (ASX: SDR) has soared around 30% this year, as the chart below shows. The company has outperformed the S&P/ASX 200 Index (ASX: XJO) capital growth return by around 20%.
Siteminder is known for its global hotel distribution and revenue platform called Siteminder. Little Hotelier is an all-in-one hotel management software designed to help small accommodation providers. It helps its subscribers generate more than 130 million reservations worth more than A$85 billion in revenue.
There are a number of brokers that really like the ASX tech share. According to Commsec's consensus of analyst opinions, there are currently 15 buy ratings on the business. That's a very bullish view on the business, despite its higher valuation.
Let's take a look at why investors are so excited by the company.
Strong outlook for the ASX tech share
Broker UBS was particularly impressed by the company's recent FY25 results. UBS said the result ticked a lot of important factors.
First, it achieved the positive free cash flow milestone.
Second, it accelerated the annual recurring revenue (ARR) to 27% (up from 22% in the first half of FY25), with a reacceleration of the core business, while the smart products were added on top.
Third, it made good headway in terms of Siteminder's channels+ (C+) and the smart distribution platform (SDP) deployment.
Fourth, the "solid" topline result was not at the expense of cash burn, meaning profitable growth.
Fifth and finally, the company continues to make progress towards the rule of 40, which is a combination of its revenue and profit margin. It hit 21% in FY25, up from 17% in FY24.
UBS said the business is now being treated more as a tech company rather than a travel business. However, its performance was impressive despite challenging conditions for the travel sector because analysts feared the transaction component of the business may be adversely impacted by a global slowing in travel.
The broker then said:
Still early days for the Smart portfolio of products and we need to see ongoing momentum, as ARR uplift from SDP is replaced by C+ and Dynamic Rev+ (DR+), but positive to see good initial traction. We continue to like SDR's market leadership positioning in a tech market with plenty of greenfield opportunities.
UBS revised its forecasts following the FY25 result, suggesting that Siteminder's future financials could experience stronger revenue growth, provided that incremental revenue is reinvested back into the business.
Buy rating on Siteminder shares
UBS is one of the experts that has a buy rating on the ASX tech share, with a price target of $8.30.
At the current valuation, that suggests the Siteminder share price could rise by another 7.5% over the next year, despite the fact that it has risen 13% in the last month and 30% this year.
The broker forecasts Siteminder could achieve a positive net profit after tax (NPAT) of $2 million in FY26 and $23 million in FY27 as it reinvests for more growth.
