Company Interview / SiteMinder narrows FY loss

Sankar Narayan, CEO of SiteMinder (ASX:SDR) details the progress made by his company in terms of financial performance. Despite recording a yearly statutory net loss, Sankar displays contentment as this loss has seen a significant decrease from 49.3 million in the previous year to 25.1 million. SiteMinder's total annual recurring revenue has seen a substantial rise of close to 21%, reaching $209 million whilst total revenue has also seen an increase of 26% to a staggering $190.7 million. Sankar highlights the company's sizeable growth in newly added properties as something he is particularly pleased with, as these form the foundation for the company's long-term growth.

As Sankar envisions SiteMinder's future, he states an ambitious target of achieving 30% organic annual revenue growth over the mid-term. He sees the Smart Platform, alongside new product launches, as a driver of this growth. He shares information on past launches such as Channels Plus and dynamic revenue plus that simplify the process of hotel distribution and improve revenue performance, but more so emphasises the potential of Smart Distribution in partnership with major global distribution companies. Sankar speaks of SiteMinder’s potential to leverage the data gathered from the $75 billion worth of yearly reservations it handles to create new services and drive further revenue growth.

Sankar further delves into SiteMinder's geographical expansion plan. He affirms strong existing market positions in the US, Mexico, UK, Spain, Germany as well as in Thailand and Indonesia in Asia. Despite this, the CEO reveals plans for minor expansion into Italy and no immediate need to enter new geographies whilst emphasising the importance of adding value to their existing customers. In light of recent times, he mentions the resilience of SiteMinder during Covid. He then discussed keeping costs under control and driving more value from their current reservations as crucial parts of the company's strategy moving forward.

Full unedited transcript:

0:11

Well. Hotel booking software company Site Minder has narrowed its full year statutory loss from 49.3 million in the previous financial year to 25.1 million. In FY 24, total annual recurring revenue rising almost 21% to $209 million. Total revenue up 26% to $190.7 million. It is targeting 30% organic annual revenue growth in the medium term, aided by contributions from its smart platform. It expects to be underlying cash free positive in FY 25. Let's get the story behind those numbers. Site minus chief executive Shankar Narayan joining us now. Welcome to Ospi. Congratulations on the result. So still recording there a net loss. But clearly you're pleased that you're heading in the right direction.

1:01

Thank you. Thank you for having me here. As I said, um, um, it's really good to be here today. Um, talking about the results, if you look at the financial results for the last year.

1:12

Um, sure. The financial metrics improved quite substantively. Um, as you said, the net, the net loss reduced. Um, second half, we went into free cash flow positive underlying free cash flow positive. And for the year we were underlying EBITDA positive. So that's a big turnaround from the year prior. But we also had unit economics improved quite significantly. Rule of 40 improved quite um quite significantly as well as you had in your chart.

1:40

But I think more than the financial results itself, what is really pleasing is the headline growth in terms of properties added, because that's the foundation for long term growth. Yeah, we accelerated our growth in new properties added year. Um, we had a record additions during the year. Um so while those metrics improved, importantly, we laid out the smart platform with its new, um, pillars driving stronger medium to long term growth as well. So you talk about, uh, you're targeting 30% organic annual revenue growth there in the medium term. Um, given that contribution from Smart Platform, just talk us through then how are you going to generate that growth?

2:24

Yeah, we have new products and new programs that are launching in during during this year. So um, we have um, introduced during the course of last year, um, two programs when we added at the third leg. Uh, one is um, uh, Channels Plus where you actually really take the friction out of distribution for hotels, make it really easy for them to distribute to all corners of the world.

2:48

Uh, the second product is, uh, dynamic revenue plus. Um, and that actually, that leverages and improves the revenue, revenue performance for the hotels. And we launched a third program, um, known as Smart Distribution in partnership with major global distribution companies. But the key here is if you look at our business, we carry $75 billion worth of reservations every year. There's so much data on transactions that are going through our platform. We concluded 120 million reservations in all parts of the world. We have hotels in over 150 countries, and we are the largest player on a global basis. So the opportunity for us through the smart platform is leverage that intelligence, leverage the platform into providing new services that actually drives revenue growth for our hotels, makes it easier for them to take the friction away. And for us to be, you know, participating in the

3:48

value uplift. So are you looking to double down in those countries, that regional footprint you already have, or are you looking to expand beyond where you are regionally?

3:57

We are in most parts of the world today. We actually have strong positions in the US, in Mexico and uh, in the UK, Spain, Germany, uh, we are we are actually expanding a little bit in Italy. Um, but if you come down to Asia, we have very strong leadership positions in Thailand, in Indonesia and other parts of Southeast Asia. So we have enough geographies for us to, um, develop a greater share, but also, um, really add value to the customers we have as well, even as we actually look to acquire new customers. So, um, we don't have to enter near GEOs, doesn't mean we won't in the longer term, but we actually do have the footprint today.

4:38

Yeah. Because you point to obviously, uh, those reservations, what, 120 million, you say, generating $75 billion in revenue. So I'm just wondering, post-Covid, have those effects completely washed out now, given what we're seeing in the hotel industry, are we talking about full recovery? That's now behind you. Um, is it now all about that growth?

5:02

It is. There was recovery. And if you look at how our company did during Covid, we were, I would say, one of the most resilient global travel companies during Covid, if not the most resilient on a global basis because of how resilient our platform had been. But coming out of Covid, we, um, we have various regions recover at various speeds. Um, we all know China still not fully recovered in its outbound travel. That is still yet to fully play out. Um, and some international travel is still, um, still opportunities for growth as the airfares come down. We would see international, um, travel increase over the course of the next 2 or 3 years, but our growth has been more about growing the platform, the products we have, adding more value to our customers. But most importantly, um, you know, driving more value out of that 120 million reservations that are actually going through the platform already in all parts of the world.

6:01

What are you carrying at the moment and how you controlling those costs?

6:07

Cos um, we do manage a cos one of the big um ways we, we said we would actually get to profitability. Um, and the second half is keep a cost relatively tightly controlled. Um, we drive greater efficiencies. Um, we do have AI for our internal purposes in terms of delivering support service, um, and supplemented. So, you know, you don't go all in on one, one or the other, but make sure that we have a high levels of service that we actually continue to provide. Uh, so drive operating efficiencies. At the same time, you actually drive the top line growth. So you actually can do and if you look at our results over the course of the last 12 months, that is exactly what you would see. Tightly controlled costs, revenue growing drives big improvement in profitability and unit economics year over year.