Serko making business travel personal Darrin Grafton, CEO
Important notice This presentation is not an offer of securities. It is a summary and does not purport to be complete, accurate or independently verified. Any forward looking statements are subject to known and unknown risks, uncertainties and assumptions, so may not be correct. This presentation does not constitute financial, product, investment or other advice and does not take into account the particular needs of individuals. When making an investment decision you should consider your financial circumstances and seek independent financial and other professional advice. Do not rely on any information contained this presentation. All information in this presentation is current at the date of this presentation, and all currency amounts are in NZ dollars, unless otherwise stated. This presentation should be read in conjunction with other market releases made by Serko. Page 2 Copyright 2014 Serko All rights reserved
Introducing Serko Online travel booking and expense management for corporates Pure play cloud software provider Founded in 2007, listed on NZX in 2014 115 employees in 5 countries Leader in Australasia, growing in Asia Annual forecasted revenue of $11m Page 3 Copyright 2014 Serko All rights reserved
The global market for business travel Globally worth US$4 trillion third of all travel is business- related Australian Corporate Travel worth ~US$23bn ~US$3bn currently transacting through Serko Asia Corporate Travel spend growing at ~10% CAGR India and China world growth engines Source: GBTA BTI Outlook Annual Global Report & Forecast: Prospects for Global Business Travel 2013-2017 Page 4 Copyright 2014 Serko All rights reserved
Historical Travel Value Channel Participants CorporaGons Business Travellers Travel Agents Page 5 Copyright 2014 Serko All rights reserved
Corporate issues requiring solutions Business travel essential to growth Travel is typically expensive for corporates- ~8-12% opex* Controlling costs is a big challenge Significant Duty of Care obligations Complex rules and preferred suppliers Use traditional travel agents to help High cost, low visibility & compliance *Global Insights MasterCard Worldwide, January 2012 Page 6 Copyright 2014 Serko All rights reserved
Business travellers Consumer travel booking behaviors cannot be controlled They want travel booking to be simple and quick Maverick, good intentioned, behavior Require integrated itinerary management and ability to simply make changes on the fly (Changes post- ticketing) Require alerts and relevant information in real time across multiple content providers (air, hotels, taxis) Page 7 Copyright 2014 Serko All rights reserved
Travel Agents (now Travel Management Companies) Internet booking has transformed travel industry and travel agents have had to significantly change their value proposition Previously labour intensive and difficult to scale Previously manual & high cost process Have deep corporate relationships Play key support role to the customer Page 8 Copyright 2014 Serko All rights reserved
Serko s travel booking solution Online Travel & Expense Booking Tool Accessed by travellers/travel admins Connects any travel content channel into the company policy Customers preferred suppliers promoted Travel rules applied at source (eg. Business class over 7hrs) Elegant booking workflow Flights, Hotels and Car Hire Pre or Post booking approval workflow Fully supported by travel agencies Makes the booking touchless for the travel agency Integrated Duty of Care/Health Safety Compliance Full End to End Travel and Expense solution Page 9 Copyright 2014 Serko All rights reserved
Important facts about Serko Serko is totally independent Not bound to any particular travel supplier Not bound to any particular Travel Agent Serko is easier to use than the next best alternative, so it gets used 90-95% adoption not unusual Serko delivers a measurable ROI fast Serko is designed to easily integrate into the TMC and corporations own systems. Page 10 Copyright 2014 Serko All rights reserved
Value creation CorporaGons Business Travellers Travel Agents Cost saving ~20% travel opex Duty of care compliance Spend visibility and control Time savings in booking process Compliance with policy Control over own desgny Improved Experience One place to make a change Re- invented and relevant Ability to scale and grow Ability to create value & charge Page 11 Copyright 2014 Serko All rights reserved
Where Serko fits in the value chain Low cost air Airlines Car hire Taxi Hotels GDS Aggregators Travel Agent (TMC) Corporates Page 12 Copyright 2014 Serko All rights reserved
Serko Functional Flow and Cash flow Corporate Customers pay TMCs: An account management fee Transaction fees on travel processed Travel Management Companies TMC s process payment for travel Corporate Users book travel on Serko Online via their web browsers Corporate Customers pay Serko for: Implementation Customisation Additional development fees Integrated itinerary TMCs pay Serko transaction fees for travel booked on Serko s platform + Mobile Subscriptions Content Fees Travel Content Providers Serko accesses end to end travel content consistent with corporate travel policy via Serko online TMCs pay travel content providers Page 13 Copyright 2014 Serko All rights reserved
Serko product portfolio Mass Booking module Integrated suite of products Flexible, scalable & feature rich Windows Azure /.net framework Key features exposed to third parties through Serko API Patents protecting key technology Global opportunity Serko API Page 14 Copyright 2014 Serko All rights reserved
Serko Mobile Serko Mobile is world s first truly integrated expense & travel app Travel itinerary, alerts, flight changes, expense and booking Empowering for business travellers, cost saving for corporations Already licensed to NuTravel in the USA Launching October 2014 NFC will be added to Mobile Expense Additional Corporation Benefits Taxi share, Free Parking Page 15 Copyright 2014 Serko All rights reserved
Serko Mass Booking Allows hundreds of airline seats to be booked simultaneously Huge cost savings for any organization that books a lot of flights Mining companies using Fly in Fly Out (FIFO) Conference organizers General group travel Ideal back- end to FIFO roster systems Further developments in the pipeline Interest from TMCs in USA & Europe Page 16 Copyright 2014 Serko All rights reserved
Serko Incharge A leading expense management platform Acquired in December 2013 Clients in 19 countries around the world Integrates with all major credit cards and financial systems Connections to SaaS accounting solutions Key relationships with Diners Card Sold on a per- active user month basis Will be integrated into the Mobile App Future paperless receipt with NFC. Page 17 Copyright 2014 Serko All rights reserved
NFC and the future of expenses Serko owns a valuable patent in the mobile expenses space Paperless transactions from NFC enabled point of sale terminal to the mobile device (e.g. iphone6) Apple s announcement that they will support NFC is an enabling step for the industry. NFC is about to go mainstream and paperless expenses will go with it Significant global opportunity Page 18 Copyright 2014 Serko All rights reserved
Financial forecast Revenue breakdown (NZ$) $11.0 $4.8 $6.7 53%* 34% FY13A FY14E FY15F Transaction fees (Serko Online and Mobile) Services Incharge Customer and revenue growth Revenue is expressed net of reseller market expansion rebates and Government grants Serko s revenue is forecast to reach $11.0 million in FY2015F. Of this total, 90% (or $9.9 million) is from transaction fees from travel booked across Serko Online (including Mobile) and from Services This represents a growth rate of 53% over FY2014E revenue of $6.7 million from Serko Online and Services. The growth rate excludes revenue from both Incharge (which was acquired in December 2013) Expenses All R&D is expensed Page 19 Copyright 2014 Serko All rights reserved
Regional expansion Visibility to 80% of AU corporate travel spend through current resellers Existing resellers pulling Serko into India Hong Kong Singapore Dubai Future expansion options into China Access to USA through NuTravel Page 20 Copyright 2014 Serko All rights reserved