The Siteminder Ltd (ASX: SDR) share price is up around 20% after the ASX tech share released a very promising update.
Siteminder says that it’s the world’s leading open hotel commerce platform, it’s helping every hotel access online commerce. It’s used by tens of thousands of hotels in 150 countries.
Siteminder’s strong finish to FY23
The company said that in FY23 it delivered revenue of $151.4 million, an increase of 30.5% year over year, with subscription revenue rising 18.7% to $103 million.
FY23 transaction revenue rose 65.6% to $48.4 million as normal travel resumed during the period.
The number of transaction products adopted by customers increased 53% to 19,900 at the end of FY23. The number of properties rose 12.7% to 39,100.
Annualised recurring revenue (ARR) rose 33.5% to $173.1 million. If FY24 revenue is $173 million that would be a rise of 13% with the revenue growth already already baked in.
The FY23 fourth quarter underlying free cashflow was an outflow of $5.3 million, reflecting a negative margin of 12.5% of revenue, more than halving from the negative margin of 28% in the first two quarters of FY23 which demonstrated “operating leverage and contributions from the cost reduction program”.
Underlying operating cashflow was positive $0.1 million, excluding non-recurring costs relating to the cost reduction program, and residual initial public offering (IPO) costs. Reaching positive cashflow is a great step and boost for the Siteminder share price.
Guidance for FY24
Siteminder says that it’s still targeting organic revenue growth of 30% in the medium term. It “expects” to be underlying EBITDA (EBITDA explained) and underlying free cashflow positive for the second half of FY24.
These profit expectations are due to the normalisation of hotel booking activity, growing its global customer base and its cost reduction program. Its new ‘smart platform’ could also be a positive for customers and the ASX tech share.
Final thoughts on the Siteminder share price
Siteminder seems to be a leader in the industry and a solid business. If it can keep growing its revenue then it has a very attractive feature based on its ability to deliver growing profit margins.
It’s certainly not as good value as it was earlier in the week, and it’s questionable how much further the strong travel demand can rise in the short-term, but it’s certainly one to watch for the long-term.
