NZX-listed travel management software company Serko increased its revenues in 2019 to $23.4 million, near the top of guidance.
Growth in its core Australasian business and the acquisition of US expense management provider Interplx underpinned Serko's 2019 financial results, the company said today.
Serko has also been investing in new software called Zeno and new content integration.
Revenue increased by 28 per cent during the year to 31 March and recurring product revenue rose 26 per cent to $20.7 million despite unfavourable exchange rate movements.
EBITDAF was $2.6 million, up 19 per cent, from $2.2 million in the prior year, while the company recorded an after tax profit of $1.6 million.
Serko chairman Simon Botherway said the company had benefited from growing transactions and increasing average revenue per booking through winning new customers and more customers transferring to the premium Zeno travel and expense management solution.
“In the new North American and United Kingdom markets, it is very pleasing to note the number, and market presence, of those travel management companies who have signed agreements to roll out Zeno to their customers, including Carlson Wagonlit Travel in the US, one of the world’s largest," he said.
Demand for Zeno in North America has exceeded in-house capacity to deliver so Serko had boosted resourcing and prioritised development as it configured Zeno to meet the needs of those customers.
“Our expanded team and the use of contractors will result in the progressive delivery of the commercial Zeno roll-out in the US commencing early in the second half of the 2020 financial year," he said.
"This investment will result in another year of cash burn, however this is an extraordinary level of investment, which is subsequently expected to normalise in the 2021 financial year."
Botherway said Serko expected to accommodate this investment within its existing balance sheet resources.
Operating expenses increased by 32 per cent to $23.3 million during 2019, reflecting investment into international expansion and extraordinary expenses.
Research and development costs increased by 87 per cent to $9.2 million on significant investment in platform development for expansion into new markets.
Of that $9.2 million of R&D costs, Serko capitalised $6.7 million as it moved into the build phase for Zeno to deliver functionality to new customers and geographies.
An oversubscribed capital raise of $15 million ($14.3 million net of costs) was completed in August 2018, providing funding for expansion into new markets and for strategic acquisitions.
Serko ended the year with a cash balance of $15.7 million.