Serko Targets Further Growth, Will Acquire Sabre's Getthere

TOTAL INCOME ASPIRATION New total income aspiration of $250m for FY30, reflecting Serko’s current growth trajectory and the assessment of the size of the opportunities ahead. NORTH AMERICAN EXPANSION Partnership with travel technology leader Sabre1, and acquisition of Sabre’s GetThere, rapidly increases Serko’s North American presence to become the #2 online booking tool provider2 Serko to acquire Sabre’s business travel management solution GetThere for $US12m Sabre and Serko to co-develop and co-invest to bring new capabilities to the industry Partnership incentivises Sabre co-selling Serko solutions with revenue share and up to $US12.75m in performance bonuses for the first two years. PRODUCT & TECHNOLOGY INVESTMENT Targeted investment to deliver innovation and global scale and maximise the opportunities presented by a changing travel market – with development of an open platform that seamlessly integrates diverse content and services with built-in data and AI capabilities. Serko Limited (NZX&ASX: SKO) (“Serko”) today announced plans to expand its existing business in North America, including through a long-term partnership with global travel software and technology provider Sabre Corporation (NASDAQ: SABR) (“Sabre”). As part of the partnership, Serko will acquire Sabre’s business travel management solution, GetThere, becoming the #2 online booking tool provider in North America. The ownership of the GetThere business will be transferred to Serko upon close, including the GetThere solution and intellectual property, the substantial expertise and deep domain knowledge of the GetThere team members joining Serko in the United States, Australia, United Kingdom and India, as well as a valuable customer base. Serko will continue to operate and sell under the GetThere and Zeno brands. Serko co-founder and CEO, Darrin Grafton, said: “The size of the opportunity in North America is significant and today’s announcement sets out the most compelling path to deliver long-term value for shareholders, partners and customers. “We enter into this next phase of our growth in a strong position, with sound financials, a track record of successful growth through partnerships, and increased efficiency and capability. “For some time, we have been closely considering how we scale in North America, expanding our existing operations in a $NZ400 billion3 business travel market. This partnership and acquisition is a logical step for Serko, with targeted growth in the US managed travel market strengthening our position as a leader in business travel technology. “We are delighted to enter this long-term partnership with Sabre to support both companies’ success. The GetThere team, with their extensive travel technology expertise and market knowledge, will be highly complementary to our existing North American operations. The announcement follows extensive engagement with Sabre and the GetThere business, including detailed due diligence. “In addition, today we are announcing an acceleration of investments in Serko’s products and technology, which will benefit all channels, partners and customers.” Serko-Sabre partnership to support both companies’ success Five-year initial term commencing upon the closing of the GetThere acquisition Co-development and co-investment plans Co-selling and co-marketing of Serko’s solutions utilising Sabre’s North American sales team Revenue share for new customer acquisitions achieved as a result of co-selling Up to $US12.75m in performance bonuses payable in cash or shares. The long-term partnership between Serko and Sabre is designed to accelerate innovation in managed travel by bringing together both companies’ unique and complementary expertise and resources. The partnership also defines a joint approach to commercial, sales and marketing initiatives to help facilitate growth in North America and beyond. Additionally, through its partnership with Sabre, Serko will utilise the Sabre and Google co-innovation framework to further explore and develop new advancements and solutions for the corporate travel space. The performance bonus payments strongly align Sabre incentives for selling and marketing Serko products to outcomes which drive long-term value for Serko and its shareholders. The performance payments of up to $US12.75m will be made on Sabre achieving contracted annual revenue on a ~1:1 ratio from co-selling in the first two calendar years. Mr Grafton said: “As part of the agreement, Serko and Sabre have announced plans to co-develop and co-invest to bring new capabilities to the industry – all with the goal of empowering and delivering greater value to travel management companies, business travel buyers, and, ultimately, business travellers.” Sabre Travel Solutions Chief Product and Technology Officer, Garry Wiseman, said: “This collaboration supports Sabre’s strategy to be the most valued platform technology provider for the travel industry while building upon our continued focus in the corporate travel space.” Acquisition of GetThere rapidly increases Serko’s market presence Acquisition of the GetThere business for $US12m is expected to occur on or about 6 January 2025 (Eastern Daylight Time) $US10m cash payable at close with a further $US2 million payable in cash or shares in late 2025 Multi-year transitional hosting services agreement Twelve-month transitional services agreement. The acquisition of GetThere provides Serko with a broadened, blue-chip customer base with incentivised selling by Sabre’s North American sales team under the partnership. Mr Grafton said: “We warmly welcome the GetThere team to Serko. GetThere has a highly regarded team with substantial knowledge and expertise on both global travel and the North American market. We look forward to working with the team to enhance the value we provide to partners and customers.” The transaction will include a multi-year transitional hosting services agreement and 12-month transitional services agreement to help ensure the smooth transition of the GetThere business operations to Serko. Product and technology acceleration to support growth plans Serko will accelerate investment in its product and technology to support Serko’s growth plans and remain at the forefront of business travel. Development of an open platform that seamlessly integrates diverse content and services with built-in data and AI capabilities. This will allow Serko to support growth plans globally, benefitting partners and customers. Mr Grafton said: “Accelerating the evolution of our product and technology will allow us to maximise the opportunities available to us in our chosen markets, while also positioning us to respond to increasing demands for automation, data and AI tools and an increasing blurring between traditional travel segments such as managed and unmanaged.” Accelerated product and technology investments are anticipated to be approximately $NZ40 million over the next four years. Investing to maximise the North American opportunity Serko's aspiration of $250 million in total income by FY30 reflects Serko’s current growth trajectory and our assessment of the size of the opportunities ahead. Funding for North American expansion together with the increased product and technology investments will be sourced from existing cash balances and operating income. Serko has structured investment levels to maximise the opportunity, as well as retaining flexibility and appropriate cash reserves. The acquisition of GetThere, in combination with the Sabre partnership and product and technology investment, is expected to be one of the key drivers of Serko’s long-term revenue growth. However, the acquisition is currently earnings dilutive with additional information available in the investor presentation. Serko expects to incur transaction costs relating to the Sabre partnership and the acquisition of GetThere of approximately $NZ3 million. One-off integration costs associated with the acquisition are also anticipated to be $NZ3 million, spread across FY25 and FY26. Interim results FY25 Serko has today separately released its unaudited results for the six months to 30 September 2024. Authorised for release by the Board of Serko FURTHER INFORMATION Investors Shane Sampson Chief Financial Officer +64 9 884 5916 investor.relations@serko.com Media Coran Lill CSL Advisory +61 (0)468 963 068 coran.lill@csladvisory.com Important Notes Information in this release: - is for general information purposes only, and does not constitute, or contain, an offer or invitation for subscription, purchase, or recommendation of securities in Serko for the purposes of the Financial Markets Conduct Act 2013 or otherwise, or constitute legal, financial, tax, financial product, or investment advice; - should be read in conjunction with, and is subject to Serko’s Financial Statements and Annual Reports, market releases and information published on Serko’s website (www.serko.com); - may include forward-looking statements about Serko and the environment in which Serko operates, which are based on assumptions and subject to uncertainties and contingencies outside Serko’s control – Serko’s actual results; or performance may differ materially from these statements; - may include statements relating to past performance information for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance; and - may contain information from third-parties believed to be reliable, however, no representations or warranties are made as to the accuracy or completeness of such information. The information in this release has been prepared with all reasonable care, however neither Serko (including its related entities), nor any of their directors, employees, agents or advisers give any representations or warranties (either express or implied) as to the accuracy or completeness of the information.  To the maximum extent permitted by law, no such person/s shall have any liability whatsoever to any other person for any loss (including, without limitation, arising from any fault or negligence) arising from this presentation or any information supplied or omitted in connection with it.   Non-GAAP financial information does not have a standardised meaning prescribed by GAAP and therefore may not be comparable to similar financial information presented by other entities. The non-GAAP financial information included in this release has not been subject to review by auditors. Non-GAAP measures are used by management to monitor the business and are useful to provide investors to assess business performance. All conversions of US dollars to New Zealand dollars in this release have been made using a rate of one New Zealand dollar = $USD 0.6077.