Been looking closely at a few software and tech companies that have underperformed recently and in particular the management incentives.

Serko appears to have the most interesting incentives for the CEO as it is revenue based.

Not right in my opinion especially when you are burning cash and still get awarded on the slightest hint of revenue growth.

Should really be EPS based or weighted on the share price performance I think such as Gentrak

Could explain the insider selling recently.

Not sure if I like this one due to this incentive - unless there is an additional condition on the performance that I've missed and someone can point me out on it.

However I know this could go cashflow positive if corporate travel continues to recover.

[held GTK but not this one]

The key Booking.com agreement is up for renewal in May 2024 - the key driver of growth in recent years.

Seems a bit binary (but more likely it will get renewed) but if so and the current economics play out it will tip into profitability (inflection point) in FY25 (absent a world travel disaster - war/recession).

One to watch as could be interesting - especially if Booking.com eventually makes a takeover offer too.

The obvious one is COVID. It has had a massive impact on the travel sector, including business travel, with border closures, lockdowns and travel restrictions from both government and private organisations causing business travel to virtually evaporate.

Speaking from personal experience as someone who usually travels a lot for business, I averaged over 50 flights a year pre-COVID but have been reduced to less than 10 per year the past 2 years.

The longer the pandemic goes on the longer Serko’s revenues are suppressed and, as a loss making business, the more cash it burns through. This has already lead to several capital raises and the share count increasing by 30% since the start of the pandemic as Serko raised capital to fund itself. If it goes on for too long Serko may eventually find no one wants to give it any more money. Even if that does not happen, the dilution risk to shareholders is real.

More structurally, the risk is that the North American expansion does not take off. Given the Bull case is based almost entirely on overseas expansion (particularly North America) and it trades on extremely high revenue multiplies with massive growth expectations baked in, if that happens Serko will suffer a brutal re-rate as the market adjusts expectations.

To my mind this is the greater risk than COVID.