Serko Ltd (ASX: SKO) has reported its FY19 result, is it a buy?
Serko provides software that is used by over 6,000 organisations and travel management companies to manage their travel and expenses. The software is called Zeno and it offers predictive workflows and a global travel marketplace. The company employs over 170 people worldwide with offices in New Zealand, Australia, China, India and the US.
What The Company Reported
Serko said that ongoing growth in the core Australasian business and the acquisition of US expense management provider InterplX underpinned the FY19 result. It also focused on investment into Zeno and new content to lay the groundwork for growth in new markets.
Serko revealed that total operating revenue increased by 28% to $23.4 million, its target was to grow revenue by 20% to 30% this year. The company said its recurring product revenue increased by 26% to $20.7 million.
EBITDAF went up by 19% to $2.6 million (click here to learn what EBITDA means, the F stands for fair value remeasurement of contingent consideration).
However, net profit after tax (NPAT) fell by 11% to $1.63 million because of the InterplX acquisition which was funded through Serko shares.
Serko Management Comments
Serko Chairman Simon Botherway said: “Serko has delivered another successful year. In the Australasian business we have benefited from growing transactions and increasing average revenue per booking as we both gain new customers and more customers transfer.”
“In the new North American and UK markets, it is very pleasing to note the number, and market presence, of those travel management companies (TMC) who have signed agreements to roll out Zeno to their customers, including Carlson Wagonlit Travel in the US, one of the world’s largest TMC’s.”
Serko Outlook
The company expects total operating revenue growth of 20% to 40% for FY20.
The EBITDAF is based on a small margin, so it will depend on how much revenue growth is achieved during the year. Further guidance will be provided in three months at the AGM.
Is Serko A Buy?
Serko certainly ticks a few boxes that can make for an attractive investment. It’s a software business, with global ambitions, in a growing industry with quality clients.
However, I’m unsure at what price Serko would be a good investment at, I don’t know enough about the company or the industry. I think I’m better off watching it from the sidelines and focusing my attention on the growth shares in the free report below.
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