The Serko Ltd (ASX: SKO) share price has jumped almost 30% after reporting its FY23 result.
Serko describes itself as a leader in online travel booking and expense management for the business travel market. Zeno is its travel management application.
FY23 result
Here are some of the highlights for the year to 31 March 2023:
- Total income jumped 154% to $48 million
- Average revenue per booking grew 65% to $9.56
- Average revenue per completed room night of €9.34, up 36%
- Online bookings were up 93% to 4.1 million
- Completed room nights on Booking.com for business up 381% to 1.5 million
- Net loss after tax of $30.5 million, up 15%
The total income of $48 million was above the FY23 guidance range of $42 million to $47 million.
Serko said that the growth was “underpinned by a significant increase” in the Booking.com for business. This could be very promising for the Serko share price in the coming years.
It’s well positioned to reach cash flow breakeven in my opinion. The average monthly cash burn reduced from $3.3 million to $2.7 million, while the underlying average monthly cash burn in the FY23 second half was $1.8 million. It finished the period with cash of $87.7 million.
Outlook for the Serko share price
Serko said that it has made significant progress towards is goals, with business travel demand tracking “strongly” and Serko is “well positioned to deliver increased scale and operational efficiency.”
It’s aiming for $100 million of total income in FY25, while FY24 total income is anticipated to be between $63 million and $70 million based on current trends.
That projection is based on continued business travel recovery, growth in active customers in Booking.com for business, a useful exchange rate and current average revenue per completed room night.
Serko also said that it’s working on a number of initiatives which “have the potential to drive further revenue growth.”
But, Serko is expecting total spending of between $86 million to $90 million, based on current investment plans and anticipated efficiency gains partially offset by higher volume related costs.
I think the Serko share price can rise a lot more from here as it recovers from COVID. Being a software business should mean it’s able to demonstrate operating profit margin growth from here, which could impress the market.
