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Serko cuts revenue forecast for second time

20 Aug 15

Serko, the online travel booking firm, has downgraded its revenue outlook for a second time as a slowing Australian economy weighs and after a number of contracts were delayed.

The announcement, at the annual meeting, came hours after Serko posted an upbeat announcement about a new relationship with booking website Expedia and its share price rose from a record low.

The Auckland-based company expects revenue of between $6.3 million and $7 million in the six months ending Sept. 30, down from its forecast for $8 million in May, when Serko first downgraded the outlook from the $8.3 million flagged in its prospectus. The company anticipates annual revenue will come in at the bottom of the $16 million to $18 million range it had previously signalled, and says it's on track to achieve profitability in 2017.

"As a board, we are conscious that there is a slowdown in corporate Australia, which is resulting in longer timeframes around decision-making and a further reduction in expected billable software customisation," chairman Simon Botherway told shareholders in Auckland.

"In addition, there have been delays in signing and implementing key significant supplier agreements."

Earlier today, Serko announced a deal with global heavyweight Expedia, which will let Serko customers search and book Expedia and Wotif sites through its online booking tool. Serko's shares soared 20 percent to 90 cents after the Expedia announcement from a record low of 75 cents yesterday. The remained at 90 cents this afternoon after the revenue downgrade announcement.

In May, the company widened its annual loss to $6.4 million in the year ended March 31, while reporting revenue of $10.4 million, below its prospectus forecast of $11 million, blaming delays in the timing of some services.

Botherway told shareholders the company "has taken a conservative approach to our cost base" and expects cash reserves of $2.5 million at the Sept. 30 balance date, in line with the initial public offering forecast.

"We do not anticipate requiring additional capital to fund out current business plan," he said.

Last year Serko raised $17 million in new capital selling 15.5 million new shares at $1.10 a piece in an IPO to fund its growth ambitions and repay debt. Founders Darrin Grafton and Bob Shaw sold a further $5 million worth of shares into the offer, retaining about a 20 percent stake and have agreed not to sell any more shares until two days after Serko announces its 2016 annual result.

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