Serko warns on annual sales as first-half comes in at bottom of range, may raise capital

Serko [NZX: SKO], the online travel booking company, cut its forecast for annual revenue by 15%, after reporting first-half sales near the bottom of an already reduced guidance due to late product rollouts and a slowing Australian economy.

The Auckland-based company expects annual revenue to be 15% below the bottom end of its $16-18 million range provided at its annual meeting in August, blaming reduced demand for non-recurring customised software development, and longer lead-in times to commercialise new products. Serko today reported a 35% increase in revenue of $6.4 million in the six months ended Sept. 30, near the bottom end of the $6.3-7 million range given at the AGM when it downgraded guidance for a second time.

Serko reported a first-half loss of $3.4 million, or 5c per share, compared to $3.6 million, or 6c a year earlier, with expenses rising 19% to $10.6 million. The company pushed out its goal to breakeven to the end of the 2017 financial year, having previously targeted early 2017.

Last year Serko raised $17 million in new capital selling 15.5 million new shares at $1.10 a piece in an IPO to fund its growth ambitions and repay debt. The shares last traded at 95c, and have dropped 20% this year.

When the company listed, chairman Simon Botherway said the company didn't anticipate coming back to market for more funding, and, as recently as the August AGM, said there were no plans to do so but Serko today said it was "considering options to raise some additional capital to support the company's growth aspirations and the roll-out of additional product initiatives."

Serko posted an operational cash outflow of $1.7 million in the half, smaller than the $3.7 million used a year earlier, with a further $460,000 spent on investing activities. That left Serko with cash and equivalents of almost $2.5 million as at September 30.

In August, Serko entered into a partnership with US-based hotel-finding website Expedia, where its customers can search the Expedia and Wotif sites through Serko's online booking tool, and earlier this year it bought Expedia's Arnold Travel Technology, which it said would expand Australasian transaction volumes by a fifth.

(BusinessDesk)

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