Pleasantly suprised to see todays little SDR pop. Technically, it looks like it broke out upwards quite decisively from a nice textbook horizontal flag consolidation in the past week. Theory has it that it "should continue" in the direction of the breakout.

~$7.03 looks like the next resistance zone, this being the 2nd highest peak on 30 Dec 2021 since SDR listed on 8 Nov 2021. This also coincidentally happens to be in the zone of the uptrend line resistance from the low of 28 Jun 23. Might thus be a a bit of a struggle to go past $7.00. Suspect it will bounce between ~$6.50 and ~$7.00 for a bit, which for the longer term, is a healthy thing to have happen.

Price is also not too far from SDR's all-time high was $7.77 on 9 Nov 2021, after which we will be in completely price uncharted waters ...

The next business update will be likely Jan 2025 when 1H results are announced as SDR no longer reports quarterly. Time will tell whether what is poured on this price fire from those results is kero or water!

Discl: Held IRL and in SM

I know people are keen on SITEMINDER but with every hot tip share spike there are shorters around the corner. Short interest spiked with recent price increase.

Anyone aware of who bought so aggressively?

SUMMARY

A very good all round operational result - very hard to find fault with it as the business appears to have fired on all CURRENT cylinders.

Smart Platform new capabilities are being progressively rolled out in 1HFY25 - sets the foundation for a good step up in revenue in 2HFY2025.

Focus is now increasing on larger hotel properties vs SDR’s earlier focus on small hotel properties - this opens up the TAM, is a good sign of growing product/platform confidence and will support future revenue momentum given the higher Gross Booking Value of larger hotels

Am very bullish as things are falling into place very nicely.

Thesis of SDR being the dominant platform in small and medium-sized hotels is very much intact and in play with the existing capabilities, and with the promise of more from the imminent Smart Platform capability rollout.

Market does not seem to have recognised this and prices have fallen to my top up zone of ~$4.90

Topped up today at $4.92 IRL and in SM, with dry powder kept on standby to further top up around $4.60, if prices fall to those levels.

Disc: Held IRL and in SM, High Conviction holding

Financials (all amounts and %’s are YoY comparisons)

Total revenue up 26.0% to $190.7m - while this is shy of SDR’s “medium term” goal of ~30% annual organic growth, it has grown at a fast clip and is before new Smart Platform capabilities are released.

• Subscription revenue up 18.8% to $122.4m, driven by a 13.8% increase in properties of 5,400 to 44,500 properties
• Transaction revenues up 41.2% to $68.3m, driven by strong Transaction Product Uptake which increased 41.2% to 26,300 products
• ARR is up 20.7% to $209.0m
• Revenue mix is shifting slowly in favour of Transaction Revenue, from 68% Subscription:32% Transaction to 64%:36%
• Revenue was earned more or less evenly across all 3 regions of APAC, EMEA, North America

Margins have been sustained:

• Reported margin - 66.7%
• Underlying subscription GM improved from 83.2% to 85.1%
• Underlying transaction GM moderated from 34.8% to 32.0% due to product mix, temporary expansion into new segments and acquisition channels - no concerns on this

Underlying EBITDA turned positive from FY23 ($21.9m) to FY24 $0.9m, importantly, this occurred in 2HFY24, reflecting the benefits of operating leverage and cost discipline

LTV/CAC continues to improve on a steep trajectory - 31.7% improvement from 4.1x to 5.4x

• Customer Lifetime Value improved 8.3% from $22,312 to to $24,130
• Customer Acquisition Cost (CAC) improved by 18.2% from $5,469 to $4,472

Rule of 40 performance improved 230%, from 5 to 17, reaching 21 in 2H

Operating leverage is kicking in as revenue increases - this is very evident in falling product Development Cost despite the intense focus on developing and deploying the new Smart Platform capabilities in the back half of FY2023.

Balance Sheet

Underlying FCF improved from ($34.0m to ($6.4m)

• FCF as a % of revenue improved from (22.5%) to (3.4%)
• FCF positive was achieved in 2HFY24, generating $2.3m or 2.4% of revenue

$72.3m in available funds, which includes $30.0m of undrawn debt facilities

3-Pillar Smart Platform Strategy

Clear evidence that the SDR platforms are being actively used

The industry is coming onboard, including the big Global Distributors

New capabilities appear on track for rollout in 1HFY25 - expect revenue to get a good leg up in 2HFY25 as a result

My notes on SDR's Appendix 4C and Trading Update today. I really like how things are panning out not only for FY24, but also what is ahead for FY25 ...

Disc: Held IRL and in SM

TAKEAWAYS

• Operating leverage and cost management is evident from the 4C, which should translate into improved EBITDA
• 2H Revenue of $99.0m, has increased $7.3m or ~8% from 1H revenue of $91.7m
• 2H Operational Costs of $86.6m has fallen $7.3m, ~7.7% from 1H costs of $93.9m
• Good solid growth across all metrics, but suspect it will fall short of 30% annual organic revenue growth in FY2024 - this 30% growth was positioned as a “medium-term” objective, so not achieving this in FY2024 should not be an issue so long as SDR demonstrates tangible YoY growth, which the 4C and Trading Update suggest, it has
• FY2024 into 1HFY2025 is the period where significant capability is being piloted, built/improved, ready for rollout throughout FY25 - Dynamic Revenue Plus, Channels Plus, Payment Solutions, Metasearch Manager, and the newly announced Smart Distribution Program - the rollout of these capabilities broadens SDR’s monetisation opportunities and hence, underpins the medium-term 30% organic growth target guidance
• The FY24 growth is thus all the more impressive as it does not include any revenue from any of these new capabilities
• Assuming the new capabilities are rolled out in FY25 as planned (and indications thus far that they are on track), FY25 revenue growth could be very interesting ...

Summary of the Updates on Key Metrics

SMART PLATFORM STRATEGY

Dynamic Revenue Plus

• Equips hoteliers with the ability to assess and react to changes in demand quickly and accurately - commenced pilot in Australia and NZ. 
• Phased development is progressing as planned with the ANZ release on schedule for Q1FY25
• Entered into agreement with IDeaS to provide price recommendations for the product - 35-year track record in hospitality pricing, industry’s most trusted revenue management software - combines IDeaS pricing engine with SDR’s distribution execution capability and deep global and local intelligence to reset how hoteliers execute revenue management

Channels Plus

• Allows hoteliers to expand their distribution to multiple channels with ease and control
• General release remains on track for Q2FY25
• Pilot commenced in April, attracted interest from 25 distribution partners

Smart Distribution Program - Newly Announced

• 3rd pillar to accelerate and expand the revenue potential of SDR’s Smart Platform
• Designed to accelerate and expand the revenue potential of the Company’s Platform
• Secured support and commitment from key global distribution partners to jointly improve the distribution configurations of hoteliers through the Smart Platform to capitalise on significant opportunities to maximise revenue performance

TRANSACTION PRODUCT INITIATIVES

Payment Solution

• Extended into SIN and HKG, additional markets will go-live in FY25
• Work on introducing physical payment terminals, well progressed, pilot scheduled to commence in Q2FY25, followed by staged rollout from Q3FY25

Metaseach Manager

• SDR’s metasearch solution for the enterprise segment
• Entered pilot with strong interest from hotel groups looking to better manage their meta search campaigns

GUIDANCE

• Still targeting 30% organic annual revenue growth in the medium term, aided by contributions from the Smart Platform
• No change to financial guidance
• Underlying EBITDA profitable
• Underlying FCF positive for H2FY24

Morningstar imitating with a $10 price target.

Same points made:

• $40M of cash and move to CF positive in FY25.
• Expect metrics to adopt that of a platform as the channel manager industry consolidates - SDR being the leader at double other market shares at 5% - natural winner (some risk this does not happen). SDR then becomes natural choice lowering customer acquisition costs.
• Attraction to hotels to use SDR due to operating leverage from incremental guests despite dominance of Booking.com and Expedia.

Wrote an article about Siteminder for arichlife. Would love to have another strawman meeting with CEO.

https://arichlife.com.au/an-introduction-to-siteminder-asx-sdr/

Good to know Aust Super is accumulating SDR, adding another 1%.

The Good

• Increase in positive operating cash flow to $4.9m for the quarter. FCF is still not quite positive due to investing cash outflows of $5.3m. Siteminder is trending well to meet their FCF target by the end of FY24.

• Operating expenses remain flat, so going forward, most of the top line growth should be going to the bottom line.

• $39.5m in cash available as the business reaches FCF positive. Cash balance should improve going forward offering a solid operational buffer for future R&D spend.
• 14 agreements signed on for Channel Plus which indicates there is a demand for the new product. Currently this is running in pilot for Q4FY24 so unlikely there will be any significant contribution from Channels Plus until H2FY25.

The Not So Good

• ARR is up YoY and the previous quarter but still down on Q1. It’s a similar story with quarterly revenue, which has been largely flat for FY24 and still down on Q1. For the company to be close to the targeted growth rate of 30% much of this will need to come over the next 2 quarters.

What To Watch

• Channel Plus and Dynamic Revenue Plus release as per target in Q1FY25
• Siteminder Pay Terminals rollout in H1FY23
• Updates on Little Hotelier Autopay and contributions to increase in transaction revenue.

Watch Status

• Unchanged. Slower growth QoQ but business developing opportunities for FY25 and beyond.

Valuation Status

• No Change

Board

Inside Ownership                   Ordinary Shares    %SDR Issued          Net Value at $5.40

Pat O’Sullivan                          65,976                         0.02%              $356K

Sankar Narayan                      7,147,691                    2.58%              $38.598m

Jenny Macdonald                    54,525                         0.02%              $294K

Paul Wilson                             16,760,807                  6.05%              $90.508m

Les Szekely                              15,549,072                  5.61%              $83.965m

Kim Anderson                         24,500                         0.01%              $132K

Dean A. Stoecker                    20,000                         0.01%              $108K

Total                                        39,622,571                  14.3%              $213.962m 

Recent Board Buying

Kim Anderson

·      28 November 2023

5,000 shares at $4.58 ($22,949.81)

·      2 November 2023

4,500 shares at $4.265 ($19,192.50)

Board Bios

Pat O’Sullivan - Independent, Non-Executive Chairman

Pat was appointed independent non-executive Chairman of the Company in October 2021.

Pat has extensive experience as a Director of both listed and unlisted entities. Pat is currently the non-executive Chair of both carsales.com Limited (ASX:CAR) and TechnologyOne. He was previously a non-executive Director of APN Outdoor (ASX: APO), iSentia (ASX:ISD), Marley Spoon (ASX:MMM), iSelect (ASX:ISU) and iiNet (ASX: IIN). 

Pat has over 30 years’ commercial and business management experience, including holding various senior financial and operational roles in Ireland, the US, Australia and New Zealand across a number of industries including traditional and online media, telecommunications, fast moving consumer goods and professional accounting. He was the Chief Financial Officer of Optus from 2001 to 2006 and was the Chief Operating Officer and Finance Director of Nine Entertainment Co Pty Limited from 2006 until 2012.

Pat is a member of the Institute of Chartered Accountants in Ireland and Australia. He is a graduate of the Harvard Business School’s Advanced Management Program.

Sankar Narayan -Chief Executive Officer and Managing Director

For more than 20 years, Sankar Narayan has delivered change management, operational rigour and business growth across the travel, technology, media and telecommunications sectors, with particular expertise in company transformations and business strategy to achieve strong shareholder outcomes. Following several senior management roles at ​Virgin Australia, ​Fairfax Media and Foxtel, and having also worked at Vodafone Australia, Boston Consulting Group and Schlumberger prior, in 2015 Sankar joined Xero where he went on to serve in the dual capacity of Chief Operating and Financial Officer.

Today, Sankar leads SiteMinder’s internationalised software and multilingual teams across 20 locations globally, and which see more than 80% of revenue sourced from outside the company’s home market of Australasia.

Sankar holds a Masters in Business Administration with Honours from the Booth School of Business at the University of Chicago and a Masters in Electrical Engineering from the State University of New York. He is a Certified Practising Accountant and a Fellow of CPA (Australia), and has been a regular contributor to Forbes.com on the crucial topics of strategy, disruption and managing high growth businesses.

Jenny Macdonald - Non-Executive Director, Audit and Risk Committee Chair

Jenny was appointed as an independent non-executive Director of the Company in October 2021.

Jenny has a background in financial and general management roles across a range of industry sectors including fast moving consumer goods, resources, travel and digital media. She has a proven track record in developing and implementing strategy with a focus on risk management, growth and value creation. Jenny was previously Chief Financial Officer and Interim Chief Executive Officer at Helloworld Travel and Chief Financial Officer and General Manager International at REA Group.

Jenny is currently non-executive director of Redbubble (ASX:RBL) and Australian Pharmaceutical Industries (ASX:API), and is Chair of Healius Limited (ASX:HLS).

Jenny is a member of the Institute of Chartered Accountants ANZ, has a Masters of Entrepreneurship and Innovation from Swinburne University and is Graduate member of the Australian Institute of Company Directors.

Paul Wilson - Non-Executive Director

Paul was appointed a non-executive director of the Company in 2012. Paul held the role of SiteMinder Chair from 2012 to 2018, and was previously Chair of the People and Culture Committee. He is a member of the Audit and Risk Committee.

Paul is a co-founder and Managing Partner of ASX-listed Bailador Technology Investments (ASX:BTI) (which is a substantial shareholder of SiteMinder). Paul’s business background includes positions with leading Australian private equity house CHAMP Private Equity in Sydney and New York, with MetLife in London, media and technology focussed investment group, Illyria and with Ernst & Young.

Paul’s other non-executive director roles include ASX-listed Vita Group (ASX:VTG) and Straker Translations (ASX:STG), as well as private companies InstantScripts and the Rajasthan Royals IPL cricket franchise.

Paul has a Bachelor of Business, from Queensland University of Technology and is a Fellow of the Financial Services Institute of Australia, a Member of the Institute of Chartered Accountants of Australia and a Member of the Australian Institute of Company Directors.

Les Szekely - Non-Executive Director

Les was appointed a non-executive director of the Company in 2012. He was the first angel investor in SiteMinder.

Les was a tax consulting partner with Horwaths Chartered Accountants for 20 years, until the company merged with Deloitte, when he became a Director of Taxation in Deloitte Growth Solutions.

Since leaving Deloitte in 2008, Les has dedicated his time to angel and venture capital investing. He is the Chairman of Grand Prix Capital, Equity Venture Partners and Microequities Asset Management Group Limited (ASX: MAM). These businesses are engaged in venture investment at the angel, venture capital and early listed stages, respectively. Les is also is a director of several venture backed growth companies.

Les holds a Bachelor of Law and Arts from the University of New South Wales, a Master of Laws from the University of Sydney.

Kim Anderson -Non-executive Director, People & Culture Chair

Kim was appointed a non-executive director of the company in April 2022. She is the Chair of the People and Culture Committee. 

Kim brings more than 30 years’ board and executive expertise to SiteMinder from a range of media and e-commerce companies. Kim is the former CEO and founder of Reading Room Inc (bookstr.com), CEO of Southern Star Entertainment, and has held senior executive positions at PBL and Ninemsn. 

She is currently a non-executive director of Carsales (ASX:CAR), Marley Spoon AG (ASX:MMM), Invocare Ltd (ASX:IVC) and Infomedia (ASX:IFM). She serves as Chair of the Remuneration, People and Culture Committee on all her boards.

Dean A. Stoecker - Non-Executive Director

Dean Stoecker is an American entrepreneur and businessman, who co-founded software giant Alteryx (NYSE:AYX) in 1997, a company specialising in automating analytics, which today plays a key role in making data-driven tools accessible at all levels of the world’s leading organisations. 

Currently Alteryx’s Executive Chairman, Dean was previously the company’s Chief Executive Officer. Prior to this, Dean was Director-Enterprise Solutions at Integration Technologies, Principal at Donnelley Marketing Information Services and Vice President of Sales at Strategic Mapping. 

Dean holds a bachelor’s degree from the University of Colorado, and a Masters of Business Administration (MBA) from Pepperdine University. He lives in Colorado Springs, Colorado.

Following the post on SDR's 1HFY24 results earlier, here is the summary of the SDR 3QFY24 Appendix 4C. More of the same from 1HFY24 ...

Very excited with progress on the 2 new capabilities currently in pilot release ahead of 1QFY25 release as this will propel SDR's next phase of growth, in parallel to the ongoing growth in the current base products.

Discl: Held IRL and in SM

KEY POINTS FROM THE ANNOUNCEMENT

• Revenue increase driven by SDR’s metasearch offering, Demand Plus, driven by accelerated adoption and strong booking activity
• Net subscriber addition momentum continued from 1HFY24, focused on larger properties (vs the target market of small, independent hotels)
• Continued improvement in FCF - underlying FCF was ($0.2m), now only (0.4% of revenue) - accelerating throughout FY24 thus far - continuing benefits of sustained strong organic growth and operating leverage
• Liquidity remains strong at $72.2m
• No change to FY24 guidance - (1) organic revenue growth of 30% in medium term (2) underlying EBITDA profitable in 2HFY24 (3) underlying FCF positive in 2HFY2024.
• On track for mid-CY2024 release of 2 Smart Platform products
• Channels Plus:
• Signed up Trip.com Group to participate in the Channels Plus Program
• Channel Plus continues to gain traction - 14 distribution partners have signed up
• Channel Plus pilot commenced 29 April 2024, limited to 1,000 hotels, has drawn strong registered expression of interest from existing customers
• Dynamic Revenue Plus:
• Mobile App launched in March well received by users

Belatedly worked through SDR's 1HFY24 results and last week's 3QFY24 Appendix 4C after leaving it aside for about 6M.

The FY2024 slides is an easy read and tells the story very clearly SDR 1HFY24 Preso

Added notes taken during the 1HFY2024 call and a summary of the P&L and KPI's across the halfs, so that I can more clearly see the trend across half's rather than pcp.

SUMMARY

• This is a company that is firing on all cyclinders today, with new capabilities in pilot release now, which will drive the next wave of growth from FY2025
• Positive momentum and operational KPI’s all steadily trending in the right direction and improved on the pre-Covid 2019 trajectory - subscriber growth, across all regions
• Scale and leverage is clearly showing as revenue grows - unit economics continue to improve, LTV/CAC continues to grow, Sales and Product Development expense as a % of revenue continues to fall
• Underlying cash flow positive in 1HFY24 - on track to target of cashflow positive in 2HFY24
• Driving industry change via Smart Platform - the integration of Distribution, Intelligence and Revenue Optimisation, as the hotel industry is far behind airlines in yield management
• Smart Platform will provide the next step increase in SDR’s growth - good progress made in 1st 2 capabilities of Demand Plus and Channels Plus - due for release in 2HFY2024, will full impact to be felt in FY2025 - increases the moat
• Smart Platform will also see more transactional monetising opportunity for SDR by taking a clip of the gross booking value that goes through the SDR platform
• SDR is rapidly growing its base market with a huge TAM to go and in parallel, rapidly building new capabilities that will drive improvements in hotelier revenue via improvements in yield management

KEY POINTS FROM 1HFY24 INVESTOR CALL

• Comparison CY2023 against Pre-Covid CY2019 a better indication of performance as CY2022 was Covid-distorted - unable to sustain acceleration rates when compared to a distorted 2022, but underlying growth from CY2019 is ongoing
• APAC and Aust - higher growth pace, expect Asia to grow scale
• Subscription growth momentum - good pipeline and additions in 2M in CY2024, no slowdown
• Transactions held up better than most majors:
• GDS - big beneficiary of return of leisure travel post Covid
• Pay - on par with average growth rates
• Demand Plus - strong ability to drive activity and share of Gross Booking Value - strong in Jan/Feb
• LTV/CAC is 5.3x - higher than pre-Covid, LTV has expanded and CAC continues to moderate
• Channel Plus Partners - signed on Agoda and Hopper
• Agoda is either top 5th or 6th of global channels, strong in Asia and is very big
• Channels Plus takes away friction from inventory management
• Both sides have monetising opportunity - SDR, Hotels, Online Travel Agent
• SDR is one of the largest supplier of inventory to the majors
• Channels Plus creates new distribution channels, is not part of Demand Plus - complementary, not cannabilistic
• Channels Plus - hotel has 1 pipe which opens many distribution channels - removes inventory management friction
• Pilot in mid-CY24, impact will be seen in FY2025
• Revenue growth is driving leverage and scale
• Positive Underlying Cash Flow in Q1 and Q2
• Not looking at M&A

Discl: Held IRL and in SM

As @PeregrineCapital pointed out, BTI's February Update is all about SiteMinder, which is their largest holding in the portfolio. BTI are still quite bullish given the significant portion it makes up of their NTA and for me, any sell downs from the BTI team would be worth paying attention to. (Even though they probably should to move capital into other unlisted ventures).

The update breaks down Short, Medium and Long term prospects for the company, but implies there is value at current levels.

I'm yet to do my review of Q2/H1 but will revisit this when I do.

Q1FY24

The Good

• Q1 revenue of $46.8m which annualise to $187.2m. This would be a 23% increase on FY23 and keeps management’s 30% YoY growth targets in range. 
• ARR increased 10.7% QoQ to $191.6m which is just shy of my previous forecast target

The Not So Good

• Operational cash flow positive not quite achieved this quarter as per my previous target. “Underlying” cashflow has been reported positive when adjusting for “non-recurring” costs of ~ $800k. There have been cost adjustments in most of Site Minders announcements, which brings into question how “non-recurring” these are.

• Operational expenditure is largely levelled out, except for staff costs which continues to grow. Q1 did include an annual cash incentive of $2.4m, so this should come down slightly in Q2. Staff costs do remain as a watch point as they are the most significant expense for site minder.

• Cash down to $45m. There is still $31.3m of unused financing facilities, however it would be much more positive for the company if they can reach their FCF targets before having to draw on these.

What Status

What To Watch

• Introduction of Dynamic Revenue Plus and Channels plus mid 2024 as detailed by @jcmlengs post. Investor day announcement here 
• Business metrics not reported for the quarter. Look for improvements across these in H1, particularly net subscriber additions as these were reported to have accelerated in Q1.
• FCF should be just shy of breakeven in Q2.
• Levels of investing expenditure to implement the new smart platform developments. Currently is ~$6m per quarter. Increases to the investing spend could potentially hinder the FCF targets. However ongoing development of the platform is required to drive growth in spend for the existing user base.
• Decrease in staff costs for Q2.

Siteminder trading update. Business continues to progress

Went through the SDR Investor Day Presentation slide pack released yesterday 16 Oct 2023:

https://www.asx.com.au/markets/company/SDR

It was well worth spending the 25-30 mins working through the 78 slides to get a flavour of the 2 Smart Patform offerings targetted to be released in FY24 and the opportunity ahead to upsell within existing customers, over and above the signing up of new hotels.

Having had some past exposure to cruise ship revenue management and reservation systems, the offerings make complete sense to me. It solves some big problems, especially for smaller hotels that do not have extensive distribution and revenue management capabilities.

Very keen to see how the SDR customer base takes up these new offerings and the resultant financial impact in the coming Q's.

SUMMARY

• Strong uptake of SDR offerings across the 4 Global Hotel Industry segments
• Significant TAM remaining to chase
• Rolling out “Smart Platform” - sophisticated revenue management capability which converges distribution, intelligence and revenue optimisation to maximise hotel revenues
• 2 new offerings under Smart Platform:
• Dynamic Revenue Plus - real-time recommendation engine to help identify optimal commercial actions a hotelier can take in response to external events, intelligence etc. Address challenges in the lack of revenue management capability in small hotels
• 5 use cases showcased (slides 35-48)
• Channels Plus - capability to automatically connect distribution channels and hotel properties as they sign up to the program out of the box, eliminating today’s friction in many connections, agreements, connectivity configurations (slides 56-62)
• Commercial potential to deliver >10x ROI to hotels at 1% monetisation of FY23 GBV (Value of bookings processed by SDR)
• Previous guidance was reiterated - (1) target 30% organic revenue growth in the medium term (2) underlying EBITDA profitable and underlying free cash flow positive for H2FY24.

Discl: Held IRL and in SM.

SDR's FY23 results had no surprises as most of it was revealed during the earlier 4Q Appendix 4C Release. However, these charts in the pack stood out for me as it provided a bit more "colour" on the performance.

It was a strong result and it is executing/delivering on the trajectory Sankar said it would. Will be interesting to see how much this holds up in the next 2Q's as global economies decelerate further, eating into discretionary travel demand.

Discl: Held IRL and in SM.

• Growth was strong across all regions in terms of revenue and property additions

• Strong subscriber Net Additions, again across all regions, and strong uptake of transaction-based products

• LTV/CAC metric was missing in the 4C announcement - moved to 4.1x for FY23, but improved to 4.8x 2HFY23, HoH moves appear to be accelerating, as Sankar said it would
• LTV was up 9.7% to a record $23,212
• CAC improved 14% from $6,386 in FY22 to $5,469 in FY23, driven by operating leverage. CAC for H2FY23 was $4,890

• Both Sales & Marketing and Product Development cost as a % of revenue are trending down rather decisively

SDR Director buy from Dean Stoecker - around $50k worth

@Strawman any chance of getting Sankar Narayan back for another update?

• SVB collapse

The ASX companies exposed to the SVB crisis

Life360 and SiteMinder are among the locally listed companies to have banked with failed VC lender Silicon Valley Bank.

some local fall out

Siteminder Half Yearly Report

Consistent growth rate and has not missed a beat since IPO and subsequent tech sell off. Long growth runway and obvious large TAM. Continue to impress and I continue to add in RL PF.

Siteminder Quarterly report - impressive revenue growth numbers continuing (fastest in 5 years)

I’ve also been watching SiteMinder. This observation is a bit from left field, but it may have an impact on SDR in the short/med term.

Within 2 days, I heard 2 podcast references to hotels operating at low capacity, due to lack of staff availability and the subsequent flow on of price increases for accommodation to ensure operators are profitable.

My initial thought is that this is a headwind for SDR as there are less rooms to clip the ticket on.  Alternatively, it could be a positive as operators need to ensure they fill rooms to a predetermined capacity to make a profit/break even. I don’t have a strong view either way, just another data point to consider.

Sources below:

Ref 1: “Imagine that China moves away from zero COVID. I'm not saying they will, I'm saying imagine, then all of a sudden, the demand for all sorts of basic materials, the demand for luxury goods. I'll give you just an example. I just went around Europe visiting clients and the hotel rooms that used to cost me 200 euros now costs 400 euros, and you can't get room service at night because they don't have enough staff anymore. What happens when the Chinese tourists come back? That probably goes from 400 euros to 600 euros.”

Excerpt from podcast, (my emphasis in bold) Louis-Vincent Gave: The Xi Pivot vs. The Powell Pivot October 20th, 2022

https://macrovoices.podbean.com/e/macrovoices-346-louis-vincent-gave-the-xi-pivot-vs-the-powell-pivot/

Ref 2: On The Call yesterday, Adam and Jun Bei discuss business travel, with hotels running low occupancy due to staffing issues and increasing prices to compensate. They note that business travel is strong but expect it to taper going forward re the higher costs to travel.  

https://www.ausbiz.com.au/media/the-call-friday-21-october-?videoId=24901

Adam Dawes & Jun Bei Liu At 20.30

As a side note, the macrovoices podcast is interesting. It refers to a potential Xi pivot.  That is, when China loosens covid restrictions, there may be a “flood” of liquidity that will be released from pent up Chinese demand.

A solid result from Siteminder. @west has posted the key details, but the company has delivered exactly what they said at their IPO and in line with what CEO Sankar Narayan said we spoke to him in early June.

...and yet shares are down 33% since then!

Yes, they're burning through the cash, but they have +$100m in 'liquidity' ($25m in cash, $50m in term deposits, and a $30m loan facility). Moreover, it's more about what they are spending the cash on and what return they are getting on that -- and investors can't really pretend to have seen any nasty surprises.

Of course, the macro situation has changed a lot, as has general market sentiment. And they are directly related to travel.

Fair to point out too that shares are still on 5x ARR, so certainly some growth priced in.

Still, this is all about a huge market opportunity, high margins and a capacity (it is hoped) to scale effectively.

I don't own, but on my watchlist.

Hope you found the discussion with Sankar Narayan valuable.

He struck me as a straight shooter with a clear focus on what matters, and as someone who is thinking years into the future.

You can catch the recording on the Meetings page, but a few things that stood out for me:

• There's a very large market opportunity, with 1 million small to medium hotel chains globally (ex China)
• They are the largest player and 3x the size of their nearest competitor
• Sankar is wary of acquisitions and mainly focused on organic growth
• They have a LTV/CAC of 3-4, which allows for very attractive unit economics and helps explain the investment expenditure. This is exactly what happened at Xero when he was the CFO, and it builds a very attractive cash flow stream as the business scales.
• Macro conditions are uncertain, but he's not focused on predicting it. They have however done a lot of scenario analysis and have thought through a wide variety of possibilities. All that being said, if Covid couldnt knock them over, it's hard to see how an economic slowdown could be any worse. Moreover, the re-opening dynamics are more likely the dominant factor over any macro headwinds.
• They are cash flow negative by choice and well supported by a very strong balance sheet. That is, as with covid, they can easily pull back on Capex and remain viable if needed.
• New modules, recently released, provide significant upsell potential. 32% of customers use only one product.
• They have some serious investors aside from Bailador, including Blackrock.

All told, it looks to me like a well run business that has not only survived a near existential threat, but emerged far stronger on the other side. Management is capable, aligned and thinking long term. The business is very sticky, and should scale well as revenues grow, and is unlikely to need any outside capital for the foreseeable future.

All that being said, despite the drop in the share price, shares are still on something like 10x ARR. Yes, it's growing well with attractive economics, but it feels like a lot in the current market.

CEO Sankar Narayan – joined SiteMinder in January 2019. Previous roles before SiteMinder include CFO and COO at Xero (ASX: XRO), CFO at Virgin Australia, Fairfax media and Foxtel.

Podcast link below from last year interview with Sankar Narayan.

https://podcasts.apple.com/au/podcast/joining-the-dots-w-sankar-narayan-ceo-siteminder/id1486108522?i=1000496409280

Founders

SiteMinder was co-founded by Michael Ford and Michael Rogers in 2006.

Michael Ford is currently a Non- Executive Director with SiteMinder with approx 12,453,770 or 4.62% shares on issue.

https://podcasts.apple.com/nl/podcast/s03e05-mike-ford-siteminder/id1490231090?i=1000458624547

Michael Rogers is currently SiteMinders Chief Technology Officer with approx. 2,300,353 Share or 0.85% of shares on issue.