NZX-listed software player Serko unfazed by weak travel to US

Tuesday, 20 May 2025

A recent decline in interest in travel to the United States has not dented Serko’s confidence in the long term opportunities the North American market offers.

The NZX-listed travel software company has reported an after-tax loss of $22 million for the year to the end of March, an increase of $6.1m on the same period last year.

But the company said the figure reflected one-off costs and a non-cash accounting impairment relating to the acquisition of US online booking platform GetThere in January.

Despite the loss, Serko grew its total income by 27% to $90.5m over the financial year, and improved its operational profitability with pre-tax earnings of $2.8m, up $4.3m on the previous year.

The result was driven by continued growth in its partnership with Booking.com, called Booking.com for Business, with completed room nights and active customers both up 29%, and a solid performance from its Australasian business, the company said.

Serko chief executive Darrin Grafton said the company was pursuing new growth, supported by targeted investment in its platform and North American expansion.

“We are in a strong position to do this, with continued income growth, cost discipline and an increase in our capability, including in data and AI.

“We expect the cash-generative strength of our pre-acquisition business to continue building, providing a solid foundation as we scale.”

Grafton said Serko remained well capitalised with $61.4m in cash and no debt, and its year-to-date performance was in line with its expectations.

Overall demand for business travel remained strong, and he was confident in the long term opportunity in North America, despite the noise around tariff uncertainties.

He said a recent industry survey showed about 27% of respondents expected a reduction in US travel volume, and that did make for uncertainty around spending.

Both Booking.com for Business and Serko had lower weighting or exposure in the US market, and that was quite helpful at this point, he said.

“The uncertainty has also created the ability to have meaningful conversations with customers, and we are hearing that travel to and from the US is being impacted, but that people are tending to re-route their plans rather than not travel at all.”

Serko planned to grow its volumes in the North American market further over the coming years, he said.

“There are rare opportunities in a global business travel market undergoing structural changes, and Serko is poised at the forefront of that and on track with our growth plans.”

The company expected its total income to be from $115m to $123m in 2026, driven by the Booking.com for Business. Total spending was expected to be between $127m and $133m.

It also expected to meet its planned target of $250m in income by the 2030 year, Grafton added.

But in a report earlier this month, Forsyth Barr analysts said travel demand was deteriorating in the face of heightened economic uncertainty, with the US market looking particularly weak.

Three of the largest corporate travel management companies had downgraded their earnings guidance recently due to reduced client activity in March and April, they said.

“We view these developments as modestly negative for Serko. While its revenue exposure to the US remains relatively small, we expect US weakness to interfere with its growth ambitions for GetThere.”

But the company’s largest geographic exposure was Europe, and commentary suggested European travel demand had so far been insulated from broader weakness, the analysts said.

Another NZX-listed tourism focused company, Tourism Holdings, has been struggling with the impact of the drop in demand for travel to the US.

In a recent trading update on the NZX, the campervan company said recent global geopolitical and tariff developments had significantly weakened the operating environment.

It warned that its underlying net profit after tax would be “significantly below” the current analyst consensus of $45.2m.