The Siteminder Ltd (ASX: SDR) share price has dropped around 50% in the last six months, as the chart below shows. I view this as a great time to invest in the business because I think it is one of Australia's top shares.
I'm not just saying I think it's a great buy – I recently put some of my own investment money into buying a small slice of the ASX tech share.
It provides software for hotels around the world to manage their operations, connect with accommodation booking providers, view data on room pricing, and automate hotel processes.
The business recently reported its FY26 half-year results and demonstrated both strong growth and improving profitability. I think the market is underestimating the company's potential to be one of Australia's top shares, and AI won't have the negative impact the market seems to be pricing.
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Great revenue growth
The business delivered very good growth in the FY26 half-year result, with total revenue growth of 25.5% to $131.1 million. Within that, subscription revenue increased 17.7% to $78.1 million, and transactional revenue soared by 39.1% to $53 million.
Net property additions in HY26 were 2,900, bringing the total number of properties to 53,000. Siteminder said that it has continued its strategy of pursuing larger properties.
Siteminder's new initiatives are within what it's calling its 'smart platform' with three offerings.
Channels Plus has grown to around 7,000 hotels, with ongoing progress in inventory optimisation and expanding distribution use cases. Dynamic Revenue Plus has seen accelerating adoption, with over 20,000 rooms now under management. The Smart Distribution Program broadened its impact across distribution partners.
The improved adoption of the smart platform is significantly increasing the value of each subscriber for Siteminder. Overall average revenue per user (ARPU) rose 11.3% to $435, which saw a 4.5% increase in subscription ARPU to $257 and a 22.8% jump in transaction ARPU to $178.
With an annual revenue growth target of 30%, the business is worthy of the title of one of Australia's top shares, in my eyes.
Strong profitability
Siteminder is not just a business delivering fast revenue growth – it's now becoming profitable. Thanks to the operating leverage of a software business, I expect its profit margins to increase rapidly.
In HY26, its adjusted operating profit (EBITDA) more than doubled to $12.3 million, while adjusted free cash flow reached $2.7 million (an improvement of $3.3 million).
Profit margins are increasing across all levels of the business, as reflected in the gross profit margin, suggesting profit can continue to grow considerably faster than revenue for a long time to come.
Siteminder reported that its HY26 adjusted group gross profit margin increased by 98 basis points (0.98%) to 67.8%. The adjusted subscription margin increased 125 basis points (1.25%) to 86.7% through operating leverage and AI efficiencies, while the adjusted transaction margin rose 558 basis points (5.58%) to 40.1% thanks to the smart platform.
The broker UBS suggests that Siteminder could make a net profit of $21 million in FY27 and $77 million in FY30. That means it's trading at 13x FY30's estimated earnings, which looks exceptionally cheap to me and a great valuation to buy one of Australia's top shares.
