The Siteminder Ltd (ASX: SDR) share price is higher after the software company revealed a strong update.
Siteminder provides software for hotels around the world for managing reservations and it also offers Little Hotelier, an all-in-one hotel management offering.
Strong growth in HY24
Siteminder reported its FY24 first-half revenue increased 27.9% year on year to $91.7 million. The number of customer properties increased 13.7% to 41,600.
Subscription revenue grew 23.8% year on year to $60.3 million, showing its revenue growth has continued from the FY23 second half. Transaction revenue grew 36.5% to $31.4 million. Ongoing growth of this strength like this is helpful for the Siteminder share price.
Annualised recurring revenue (ARR) increased 27.2% to $182.5 million – this was lower than the FY24 first quarter because of the “seasonality” of the transaction business, according to Siteminder.
Underlying free cash flow was negative $8.7 million, though it was negative $3.1 million in the FY24 second quarter. The second quarter free cash flow saw an improvement from negative 28.4% of revenue in FY23 Q2 to negative 7% in FY24 Q2. Siteminder attributed this improvement to operating leverage and disciplined cost management.
FY24 guidance and outlook for the Siteminder share price
Siteminder said its growth guidance is unchanged and it’s still targeting organic revenue growth of 30% in the medium-term. It’s also expecting to be underlying EBITDA (EBITDA explained) profitable and achieve positive underlying free cash flow in the FY24 second half.
The company pointed out that at the HotelTechAwards, it won the most number one awards in its history, including best hotel e-commerce platform and the supposedly coveted ‘hotelier’s choice award.’
Siteminder thinks it’s in primed to lead the “long overdue transformation of the global hotel’s industry approach to revenue management by harnessing the power of the industry’s most comprehensive global data asset through machine learning and artificial intelligence”.
I think this business has a very promising future, particularly because of the increasingly digital nature of the world. Due to the scalable nature of software and its increasing profit margins, it seems Siteminder has a very promising future. It’s one of the ASX growth shares I’d want to own in my portfolio, though the Siteminder share price was much cheaper a year ago.
