Earnings call transcript: Serko’s H2 FY 2026 results show strong growth and strategic investments

Serko posted strong H2 FY2026 results, with total income up 34% to NZD 120.9 million, EBITDAFI up 137% to NZD 6.5 million, and the net loss narrowing to NZD 17.7 million. Management guided FY2027 total income to NZD 128 million-NZD 134 million and highlighted early progress in Serko AI plus continued Booking.com for Business growth, though FX volatility and U.S. segment timing remain risks. Shares rose 4.35% on the update despite trading near a 52-week low.

Analysis

The market is still treating Serko like a classic “good quarter, bad stock” story, but the mix shift matters more than headline growth. The core Booking.com for Business engine is compounding, while GetThere is doing a different job now: seeding U.S. distribution and transaction data that should lower the marginal cost of launching adjacent products. That makes the real option value of the balance sheet higher than the current revenue multiple implies, especially because the next leg of growth is increasingly software-like rather than travel-ops-like.

The key second-order effect is margin compression before margin expansion. Near-term, platform buildout, AI experimentation, and U.S. sales hiring will keep reported cash flow noisy; however, the long-duration economics improve if Serko can convert existing customers into AI-assisted workflows and capture more of the booking funnel without materially increasing support cost. The fastest path to upside is not just more bookings, but higher attachment, better retention, and lower servicing cost per transaction — that is where operating leverage can surprise to the upside over the next 12-24 months.

Consensus may be underestimating how important the FX hedge change is. By reducing translation noise, Serko should get cleaner reported revenue and earnings, which can materially improve multiple perception in a stock sitting near lows; in small-cap software, de-volatility alone can catalyze rerating. The counterpoint is execution risk: if the U.S. enterprise-lite channel ramps one quarter later than expected, the revenue gets pushed out but the cost base arrives on time, which is exactly how a “cheap” name stays cheap.

Competitively, Sabre is the most direct structural loser in the U.S. distribution wedge, while ABNB is an indirect beneficiary if Serko succeeds in converting more business travel into a more consumer-like, AI-mediated interface. The contrarian setup is that the market may be over-discounting the AI story as vaporware; if Serko AI merely improves conversion and self-service by a few points, the uplift to LTV/CAC could be meaningful even before a full monetization model is obvious.

Key Decisions for Investors

• Long SKO for a 6-12 month re-rating: buy weakness near recent lows, target a move toward consensus fair value plus AI optionality; thesis breaks only if U.S. segment ramp slips into FY28 and operating losses re-accelerate.
• Pair trade: long SKO / short SABR over 3-6 months — SKO has cleaner product-led expansion and AI leverage, while SABR faces more legacy system drag and weaker option value from new demand capture.
• Option strategy on SKO: buy 6-9 month call spreads to express the upside from U.S. segment conversion while capping downside if timing slips; best entry after a broad-market risk-off day when small-cap software de-rates.
• Selective long ABNB as an indirect beneficiary over 12 months if business travel booking becomes more app-like and ecosystem-driven; use as a thematic hedge against Serko execution risk rather than a pure pair leg.
• Avoid chasing immediately after the earnings pop; wait for one to two weeks of post-print consolidation, because the stock still needs proof that guidance is beatable rather than just achievable.