The Serko Ltd (ASX: SKO) share price is rising after the travel business released a trading update.
Serko’s trading update
The online travel booking and expense management company said that trading conditions remain volatile due to COVID-19 restrictions, particularly in Australia.
In New Zealand, domestic travel bookings have remained strong at 166% of 2019 volumes for June and 137% of 2019 volumes for July. New Zealanders are seemingly doing a lot of domestic travel.
However, Australian domestic travel bookings dropped from 56% of 2019 volumes in June to 35% of 2019 volumes in July due to the tightening of inter-state travel restrictions.
Management comments
Serko CEO Darrin Grafton said: “We planned for further lock-downs to occur in our core markets during the current financial year as vaccination programmes progressively roll out and we have factored these disruptions into our capital management plans. As such, we continue to target an average monthly cash burn of between $2 million to $4 million despite the persistent Australian lock-downs. We remain optimistic that Australasian travel bookings will revert to the levels seen at their peak in April 2021 once the travel restrictions for Australia lift, based on previous recovery trends.”
Booking.com business migration
Serko also revealed that the migration of companies to the new Zeno powered, ‘Booking.com for Business’ platform is progressing well. It has over 150,000 activated existing businesses on the new platform.
Booking.com and Serko have agreed the migration phase will be extended two months, beyond the original expected end date of 31 July 2021, to transfer the remaining business customers onto the new platform.
Serko said that migrating a customer base during this difficult period for travel is challenging. However, it is pleased with the volume of businesses that have activated their account.
The company said that the majority of revenue to be generated in FY22 from the new Zeno powered Booking.com for Business platform will be in the second half of the financial year.
Final thoughts on the Serko share price
The Serko share price is still up 123% over the last year and it’s higher than the pre-COVID price. So I don’t think the current price reflects the continued disruption it’s facing – meaning I don’t think it’s a great value opportunity at the moment as it continues to burn cash.
There are other ASX growth shares I’d rather be looking at which aren’t being so heavily affected (or taking advantage of the difficult situation).
