Serko Ltd (ASX: SKO) has reported its FY21 half year result to 30 September 2020. It’s suffering because of COVID-19.
What did Serko report?
The online travel booking and expense management business said that its six-month travel booking volumes were down 77%. However, the company pointed out that October volumes were ‘only’ down 35%.
Total operating revenue was $5.1 million, down 66% because of COVID-19. ‘Recurring’ product revenue was $4.6 million, down from $13.3 million. Half year total income was $8.5 million, down from $15.2 million.
The percentage of transactions occurring on its Zeno platform continued to increase, it represented 38% of online transactions in September, up from 25% at the end of March 2020.
Serko reported EBITDAF (EBITDA explained – the F stands for foreign currency) for the period was a loss of $6.7 million compared to a profit of $1.4 million in the prior corresponding period.
The travel business said it generated a loss after tax of $10.1 million, which was a steep decline from the net loss of $0.9 million last year. Lower revenue and investing for growth in anticipation of a travel recovery combined for the disappointing result.
In terms of its net cash burn, it averaged $1.8 million per month over the half year.
The company finished with a cash balance of $31.5 million. After the recent capital raising it has over $90 million of cash on hand.
Serko Chair Claudia Batten said: “Amid this disruption our travel management company (TMC) resellers and partners recognise the pivotal role Serko’s solutions and relationships can play in managing the disruption and preparing for the recovery. Many have requested accelerated timetables to onboard new customers, deliver new features and expand existing partnerships, while many others are considering or are planning to follow suit.”
Summary thoughts
The travel industry could be one of the last to see a share price recovery, but that could mean that it’s an opportunity during these times, though Serko has recovered back to its pre-COVID-19 price. If the vaccines from Moderna and BioNTech are as good as it initially seems, them Serko could be a higher-risk buying opportunity today.
However, there are other ASX growth shares that I’d prefer as a recovery idea like EML Payments Ltd (ASX: EML).
