Serko talks up boost from Booking.com
Travel software company Serko’s revenue and staff numbers are both set to more than triple following a hookup with US giant Booking.com, chief executive Darrin Grafton says.
Grafton sees annual revenue — forecast at $28 million to $33m this year — hitting $100m in the medium term (that is, two or three years) by pulling $100m from each of Serko’s three main regions (North America, Europe and Australasia), with $300m as his long-term goal.
And he says fulltime equivalent staff numbers, which have already climbed from 107 to 208, will hit between 300 and 350 by the end of next year, with around 200 in NZ .
In October, the Auckland-based, NZX-listed Serko raised $45m as it issued new shares and Grafton, chairman Simon Botherway and other founders sold $16m worth of script.
The equity issue saw Nasdaq-listed Booking.com (market cap: US$177 billion) take a cornerstone investment in Serko, paying $17.5m for a 5 per cent stake. Beyond the capital injection, Grafton says the deal will be a two-way street in terms of technology exchange.
The New Year will see Booking. com start selling a white-label version of Serko’s Xeno platform ( used for booking flights and expenses) in Europe, Booking for Business.
Serko will expand its own service to include the likes of hotels, experiences like sports games and concerts, rental cars and meals as it feeds off Booking.com’s capabilities through its stable of sites such as RentalCars.com and OpenDining.com.
Some software development is required on Serko’s side first, plus a softly, softly approach with reseller partners like CWT, Flight Centre, ATPI and Luxe Travel.
Grafton is banking on the new features attracting more corporate travel clients to Serko’s platform but, more crucially, allowing it a bigger clip of the ticket on each transaction as it bundles more services.
And he bills the change as making it more profitable for the likes of Flight Centre to plug into Serko, too.
He sees Serko’s clip of the ticket on each transaction that goes through its system rising from $6 to $7 in the medium term (to get to that aforementioned $100m revenue goal), then ultimately $20 (to get to $300m).
The Booking.com partnership, and Serko’s attendant ability to offer every type of travel, dining or entertainment option, will also allow Serko to finally fill out the expenses side of its service, Grafton says.
As Serko’s first-half results were reported for the six months to September 30, shares slipped 1.75 per cent to $4.50 for a $409m market cap.
Investors could have been cashing in some of their gains. But for all its 29 per cent first half-revenue growth, Serko slipped back into the red, recording a $866,000 loss for the six months from a $920,000 profit for the year-ago period.
This included a 46 per cent surge in operating expenses.