No wonder charismatic Serko boss Darrin Grafton is talking up a listing of his company on the Australian Stock Exchange. Business in its home market of New Zealand, where it trades on the local bourse, is minimal and heading south.
Serko’s half-year results show the corporate travel software company’s NZ sales slumped 18% in the six months to September 30 to just NZ$352,578.
Meanwhile, sales at the Aussie operation, boosted by the acquisition of Arnold Travel Technology, grew 40% to NZ$5.9m.
Breaking it down, 92% of Serko’s sales come from Australia while
just 5% originates in New Zealand – a triumph for NZ ingenuity and the Australian economy.
Serko’s business has been struggling of late, missing a number of targets outlined in its 2014 prospectus.
The big one is profitability which the company now says will happen in FY17.
At present its losing more than NZ$6m a year with total revenue roughly twice that.
Sales will have to double to turn that around.
The question is – where are those extra sales going to come from?
Sure, Australia’s strong but you’d think future growth will be steady rather than spectacular.
In the past Serko’s talked up international but its forays into the US and Asia have yielded very little so far.
For example, India, its biggest market outside Australia and NZ, generated NZ$76k in sales for the first half while the US contributed NZ$47k.
Aside from sales, there’s also been issues with the development pipeline with significant delays on key products.
However, NZ investors are still buying the Serko story, despite the share currently trading 23% below its listing price of $1.10.
In late December Serko, with a market cap of NZ$70m, easily raised NZ$8m at 84 cents a share to top up its dwindling cash pile.
This should sustain the business for another couple of years when Serko says it will be profitable.
That is , assuming everything goes according to plan.