SiteMinder Travelling Well

Small Caps | May 01 2024

SiteMinder’s March quarter update showed the company is on track to reach positive earnings and cash flow next quarter and new product launches offer growth.

-SiteMinder on track to be cash flow positive
-Revenues fall short due to Easter timing
-New product launches offer growth upside
-Plenty of room to move for market share

By Greg Peel

SiteMinder ((SDR)) develops, markets, and sells online guest acquisition platform and commerce solutions for accommodation providers in Australia and internationally.

The company listed on the ASX in November 2021 and proceeded to lose -55% of its value before bottoming out in mid-2023 and rallying 95% to now.

SiteMinder’s March quarter saw free cash flow generation in line with broker forecasts, and management reiterated its guidance of targeting 30% organic revenue growth over the medium term and for it to be underlying earnings and free cash flow positive in the second half.

Revenue, up 23.3% year on year, nonetheless fell short of forecasts, which management attributed to Easter not falling within the school holidays this year as it did last year, as well as moderating annual revenue per user growth in subscriptions because of lower price increases this year.

While the June quarter is seasonally stronger, given the weaker March quarter revenue, Citi sees potential for consensus revenue and earnings downgrades.

New Products

SiteMinder showed continued progress in its two new products in the quarter, with Demand Plus called out as seeing accelerated adoption and strong booking activity and signing up to join Channels Plus, giving hoteliers exposure to the recovering outbound Chinese tourism market, and providing SiteMinder with more scale as the fourteenth-ranked online travel agency than Jarden previously expected.

The company’s operating cash flow was slightly better than expected in the quarter due to lower administration and corporate costs, offset by higher capex related to higher product development spend.

Online travel agency partners for Channels Plus have increased to fourteen from six at the first half result, with signing up to the Channels Plus program. Further, Channels Plus pilot program is now live with 1,000 hotels, earlier than Citi had expected.

This broker continues to see upside to medium-term revenue forecasts from stronger adoption of Channels Plus, with forecasts assuming some $25m in revenue in FY28 from Channels Plus.

The Demand Plus mobile app, launched in the quarter, provides revenue managers a tool to make changes from anywhere, and Morgan Stanley notes very positive initial feedback. The launch of Demand Plus is expected mid-2024.

Wilsons continues to suspect much is baked into consensus for incremental growth from the new products, with SiteMinder now needing to execute.

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