The Siteminder Ltd (ASX: SDR) share price has jumped 5% after the ASX tech share announced a strong FY24 trading update.
Siteminder is behind the software of the same name, which is a platform that aims to unlock the full revenue potential of hotels. It also offers Little Hotelier, an all-in-one hotel management software product that “makes the lives of small accommodation providers easier.”
It processes more than 120 million reservations worth over A$75 billion in revenue for hotel customers each year.
FY24 trading update
The company said its customer properties increased by 2,900 in the second half of FY24, compared to 2,500 in the first half. It ended the 2024 financial year with 44,500 customer properties.
During the second half, Siteminder added 70% more rooms in the Americas and EMEA (Europe, Middle East, Africa) compared to the corresponding period last year.
FY24 revenue increased 26% year on year to $190.7 million, with subscription revenue up 18.8% year on year to $122.4 million. As part of its pursuit of larger-sized hotels, Siteminder has “invested in short-dated incentives” – the impact is expected to normalise over the next 12 months.
Transaction revenue rose 41.2% to $68.3 million. The company said its metasearch offering, Demand Plus, performed “best, benefiting from strong adoption and improving booking conversion.”
Further growth in FY25 already looks promising for Siteminder. The company reported annualised recurring revenue (ARR) of $209 million, up 20.8% year on year. $209 million is 9.6% higher than FY24’s revenue total.
Profitability
The travel software company reported FY24 underlying free cashflow (FCF) of negative $6.4 million. Pleasingly, in the second half of FY24, underlying FCF was positive, at $2.3 million.
Management said the improving margin demonstrated “operating leverage and disciplined cost management”.
Final thoughts on the Siteminder share price
The business is still targeting 30% annual organic revenue growth.
Management said the business has improved its long-term growth trajectory with its smart platform strategy, expanding its monetisation opportunities. It’s working towards “industry-leading” software as a service (SaaS) economics.
I think the business has a very promising future. The question is – what valuation is a good price to buy at? It’s up 36% in the past year, so it’s not cheap. But, if margins keep rising then it could be a solid long-term opportunity to buy today, despite the higher valuation.
