Serko, the corporate travel and expense management company founded in New Zealand and well-established in Australia, has reported continued strong growth in its maturing Australasian business and good progress laying the foundations for growth into new northern hemisphere markets.
Total Operating Revenue for the year to 31 March 2019 rose 28% to AUD 23.4 million from AUD 18.3 million in the same period a year ago, a result that is at the upper end of guidance.
Unfavourable exchange rate movements in the second half negatively impacted revenue by approximately 1%.
Serko Chairman Simon Botherway said Serko had delivered another successful year.
“In the Australasian business we have benefited from growing transactions and increasing Average Revenue per Booking as we both gain new customers and more customers transfer to our premium Zeno travel and expense management solution.
“In the new North American and United Kingdom (UK) markets, it is very pleasing to note the number, and market presence, of those TMCs who have signed agreements to roll out Zeno to their customers, including Carlson Wagonlit Travel in the US, one of the world’s largest TMC’s.
“Demand for Zeno in North America has exceeded our in-house capacity to deliver. In response, we have boosted our resourcing and prioritised development as we configure Zeno to meet the operational and marketing needs of these customers. This includes integrating complex travel content and associated services, as well as customised TMC integration work.
“Our expanded team and the use of contractors will result in the progressive delivery of the commercial Zeno roll out in the US commencing early in the second half of the 2020 financial year. This investment will result in another year of cash burn, however this is an extraordinary level of investment, which is subsequently expected to normalise in the 2021 financial year. We expect to accommodate this investment within our existing balance sheet resources. We anticipate that the customer agreements we have signed to date will generate strong revenue and EBITDAF growth in years to come.
“Meanwhile, we have improved our ability to service these customers with the acquisition of InterplX, which enhances our suite of expense management solutions and gives us a US-based software development capability close to our North American TMC partners.
Outlining Serko’s growth strategy, the company’s chief executive and co-founder Darrin Grafton said the strategic focus on growing average revenue per booking and increasing Serko’s customer base had underpinned the company’s financial performance.
“Meanwhile Serko has laid the foundations for sustained growth in new markets,” Grafton said.
“The first thing we had to do in Europe and North America was validate Zeno and we are delighted with the response we have received over the last year. Zeno resonates in these markets and the pipeline of customers continues to grow. The demand for Zeno demonstrates that Serko is leading technological innovation in the sector.
“Investment for these markets has seen our headcount increase to 173 from 106 at the same time a year ago. We have made new hires at all levels of the company to increase the speed of development and ensure readiness for global deployment, configuration and support.
“We are currently in the development phase of Zeno as a global platform for the future. We are evolving the product, recognising the differing systems and processes used within each new market and, of course, porting the relevant content to Zeno. Over the 2020 financial year the benefits of that ongoing investment will become apparent as we move from start-up to scale-up in those markets.”
“Thanks largely to the Australasian market, where Serko enjoys a sizable market share of all corporate travel bookings, we lifted recurring revenues in the 12 months to 31 March 2019. This included a 20% lift in travel platform revenues and a 19% increase in content revenues. Expense platform revenues rose by 76%, including the contribution from InterplX.
“In excess of 85% of our TMC’s in the Australasian region have agreed to make Zeno available to their customers and are actively promoting the benefits of Zeno. We have seen a steady migration of customers to Zeno from Serko Online.
“With Tandem (Air New Zealand’s TMC) signing last year and now Orbit (House of Travel’s corporate travel arm) signing this year and choosing Zeno as their preferred booking tool, we have gained blanket coverage of the Australasian corporate travel and expense management market for all the medium and large TMCs. “
Edited by Peter Needham
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