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The company’s operating revenue grew nearly 30 percent to $14.7 million over the past six months, as more and more customers switch over from Serko to the more-expensive Zeno platform, the company reported in an earnings release Wednesday. The product’s popularity is helping the company move beyond its home market into the United States and continental Europe.
Serko is still in the early stages of its international expansion, having initially entered the United States in 2018. Over the past year, the company nearly doubled its staff, going from 106 to 173 employees. It is making strategic partnerships with major travel companies such as Booking Holdings and CWT to help it further penetrate new markets.
All of these changes mean that operating expenses are up, increasing nearly 50 percent to $15.7 million in the six-month period. This was balanced out by the rising number of booking platform transactions, however, which increased 4.5 percent to 2.2 million.
“During the half year, we continue to increase our investment into our travel and expense platform as demand for our products grew both within our home market and new territories,” said Serko CEO Darrin Grafton on an earnings call Wednesday. “We continue to grow market share in our home markets of Australia and New Zealand, and we’ve made good progress in our Northern Hemisphere expansion.”
In particular, the company expects that its revamped partnership with Booking Holdings will help it grow revenue in both Europe and the United States.
“The additional content that Booking.com can bring to Zeno is expected to further increase our average revenue per booking,” Grafton said. “I believe that Serko is in a strong place to execute on its strategy and its strategic target revenue.”
Through the agreement, Booking Holdings is investing $11.2 million (NZ$17.5 million) in Serko. It comes as part of a $29 million (NZ$45 million) capital raising Serko launched recently in order to accelerate the global rollout of Zeno.
On the earnings call, many of the analysts’ questions revolved around the mechanics of the new Bookings Holdings partnership, which the company first announced in October.
The purpose of the agreement is to accelerate the growth of Zeno in North America and Europe, and to rapidly increase the content available on the Zeno platform.
“The capital will also be used to deliver and support the expected growth in Serko’s customer base and to support projected expansion arising from the Booking.com agreement,” the company announced in October.
The agreement is a revenue share model, but some of the finer details are still being worked out with Booking Holdings, Grafton added. The official launch of the new plan will take place in early 2020. Serko sees the investment as validation of Zerko’s viability as a global product.
Like many of the travel management platforms that have gained traction in recent years, Zeno targets small and medium- sized businesses, and aims to differentiate itself from legacy providers through a focus on technology and personalization. The platform prides itself on its smooth user interface, and the Zeno Marketplace includes features to manage food, drink, and entertainment, going beyond just the typical travel expenses.
However, Serko’s strategy of partnering with big players shows it is on a somewhat different path than competitors like TripActions or Travelperk. So far, the broader offerings of the Zeno Marketplace are only available in Serko’s home market, but the company plans to expand the feature internationally in the near future.