BTI\u2019s largest holding SiteMinder to join S&P\/ASX 200 after quarterly rebalance
\nSiteMinder forecasts profitability for H2 FY24 with sustained growth
\nNew SiteMinder products leverage AI along with its industry-leading data assets<\/p>\n
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Special Report:<\/em><\/strong> Tech-focused capital fund Bailador Technology Investments has seen its largest holding <\/strong>SiteMinder (ASX:SDR)<\/strong><\/a> elevated to the ranks of the benchmark S&P\/ASX 200 in the latest rebalance of some key indices. <\/strong><\/p>\n Bailador Technology Investments (ASX:BTI)<\/strong><\/a> says the hotel booking platform\u2019s inclusion in the S&P\/ASX 200 is a significant milestone and reflects the ongoing strong performance of the company.<\/p>\n Paul Wilson, BTI\u2019s co-founder and managing director, says SDR\u2019s H1 FY24 results released in late February confirmed to the market it was delivering on strong medium-term growth and continued progress towards profitability forecast for H2 FY24.<\/p>\n Highlights include:<\/p>\n Total revenue increased 27.9% to $91.7m \u201cSiteMinder\u2019s growth guidance is unchanged and continues to target organic revenue growth of 30% per annum in the medium term,\u201d Wilson says.<\/p>\n \u201cThe company maintains its expectation to be underlying EBITDA profitable and \u201cWith SiteMinder providing guidance of moving into underlying profitability this half, we believe there is prospect of valuation re-rating.\u201d<\/p>\n Wilson believes SDR\u2019s move into profitability will open additional investment pools with the mandate of some institutional investors only allowing them to invest in profitable businesses.<\/p>\n \u201cWe believe that the move by SiteMinder into profitability could mean an increased pool of\u00a0 available investors,\u201d he says.<\/p>\n \u00a0<\/p>\n Wilson also noted there is typically significant trading of stocks which are confirmed to be joining the S&P\/ASX 200.<\/p>\n \u201cGiven some funds are restricted to investing only in S&P\/ASX200 stocks, SDR\u2019s impending inclusion will further boost its potential pool of investors,\u201d he says.<\/p>\n There are many funds whose key benchmark is the ASX200 index, which will form a view on whether an investment in SDR is consider overweight or underweight compared to index composition.<\/p>\n \u201cWhile it is helpful to have these favourable market factors, the performance of the share price over the medium and longer term will, of course, be driven by the performance of the business,\u201d Wilson says.<\/p>\n SDR has two transformational new products, including Channels Plus and Dynamic Revenue Plus, which aim to redefine how hoteliers approach revenue management.<\/p>\n Wilson says the products leverage AI, along with SDR\u2019s industry-leading data assets, and its Smart Platform to automate and optimise commercial decisions around pricing, distribution channel activation and inventory allocation.<\/p>\n \u201cOf particular note is that these products will generate volume-based revenue,\u201d he says.<\/p>\n \u201cSiteMinder has historically generated predominantly subscription-based revenue.<\/p>\n \u201cThis type of revenue has proven to be great defensively and can produce solid \u201cWe believe there is potential upside from SiteMinder generating material revenue from value added products based on volume through its platform.\u201d<\/p>\n Wilson says the SDR platform has throughput of more than 115 million reservations worth more than $70 billion in revenue for its hotel customers annual.<\/p>\n \u201cCapturing even a tiny fraction of that revenue \u2013 for example, 1% is $700 million \u2013 could produce a step change financial result for SiteMinder,\u201d he says.<\/p>\n SDR expects revenue proof-points from the new products to begin in the H2 CY24 calendar year, with financial impact to grow over time. Wilson says SDR has characteristics that BTI looks for in an \u201coutstanding\u201d business, including:<\/p>\n Worldwide market leader \u201cIt is Bailador\u2019s assessment that SiteMinder is positioned for sustained growth and improved profitability over a long period of time,\u201d he says.<\/p>\n Wilson says some BTI shareholders may ask why it continues to hold a material position in a business that has gone past the traditional \u2018expansion\u2019 stage.<\/p>\n He says a return of close to 100% so far this financial year is one of the main reasons.<\/p>\n \u201cAnother contributing factor is confidence and having been closely involved over a number of years, we feel that we have a deep understanding of the business and its prospects,\u201d he says.<\/p>\n \u201cIt can take time to achieve a level of understanding that provides confidence to allocate a large amount of capital to an investment.<\/p>\n \u201cSiteminder is at a point where we believe the downside risk is significantly lower than many expansion stage opportunities, while the growth is strong and predictable, with genuine breakout upside potential.\u201d<\/p>\n \u00a0<\/p>\n This article was developed in collaboration with Bailador Technology Investments, a Stockhead advertiser at the time of publishing. <\/em>\u00a0<\/em><\/p>\n This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.<\/em><\/p>\n <\/span><\/p>\n The post Bailador bullish on largest holding SiteMinder as it charges into S&P\/ASX 200<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"
\nARR increased 27.2% to $182.5m
\nUnderlying EBITDA improved $13.4m to a loss of $1.2m<\/p>\n
\nunderlying free cash flow positive for H2FY24.<\/p>\nInclusion in S&P\/ASX 200 <\/strong><\/h2>\n
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Positive medium-term outlook driven by two transformational new products<\/strong><\/h2>\n
\ngrowth.<\/p>\n
\n\u00a0<\/strong><\/p>\nCharacteristics for long-term growth<\/strong><\/h2>\n
\nHigh quality management team
\nMarket leading products with established product market fit
\n\u00a0Massive addressable market
\nDefensible market position
\n\u00a0High gross margins
\nOperating leverage
\nReliable strong unit economics
\nPredictable growth
\nBlue sky breakout opportunity<\/p>\n