Good day, everyone, and welcome to the Serko 2025 Full-Year Results Announcement. Today's conference is being recorded. At this time, I would like to turn the conference over to Darrin Grafton, Chief Executive Officer and Co-founder. Please go ahead, sir.
Good morning. I'm Darrin Grafton, CEO of Serko. I'm joined by our CFO, Shane Sampson. Today, we'll cover how FY25 has set us up to achieve our ambitions. I'll start with a summary of the 2025 financial year and then hand over to Shane to cover the financials in more detail. I'll then take you through our strategic priorities and outlook, and we'll close with your questions. Turning to slide five, the key points I want to make today are: first, we've achieved 20% growth in our pre-acquisition business, with total income increasing to NZD 85.7 million, consistent with our guidance. The inclusion of GetThere for just a quarter brings our total income growth to 27% and NZD 90.5 million. Our focus in FY25 was on the robust expansion of our business.
Second, our pre-acquisition business generated NZD 7.4 million in free cash flow, a significant NZD 14.5 million improvement year-over-year. This increasing cash generation from our established operations provides a strong foundation for our strategic investments, which we'll cover shortly. Third, we are making deliberate progress in capitalizing on key opportunities, including the integration of GetThere and the expansion of our Booking.com for business partnership. This has been supported by disciplined cost management and targeted investments in our data and AI capabilities, driving early positive momentum into FY26. I'm now on slide six. Booking.com for business is driving significant traction. 2025 marked a pivotal year for Booking.com for business, with a focused execution on activation, engagement, and conversion, leading to substantial growth.
We achieved a 29% year-over-year increase in both active customers and completed room nights, demonstrating the accelerating adoption of the platform, driven by marketing, experimentation, and onboarding enhancements detailed in the appendix. Growth in completed room nights accelerated to 43% over the second half of 2024, indicating increasing transaction and user stickiness. Despite strong traffic to the site in early quarter four, we experienced a temporary dip in the conversion rate. Swift action by the teams led to a rebound in March of the conversion rate and a strong trajectory out of the quarter. The current financial year has commenced strongly. We're in line with our booking trajectory, and as Shane will cover in more detail, we expect to exceed the first milestone of the commission tier of 4.2 million completed room nights during the FY26 year. I'm on slide seven.
In Australasia, we had a solid year with 18% growth in the Australasian travel revenue, made up of a 6% increase in online bookings, including new wins within the markets and a 12% increase in average revenue per booking. We continue to invest and innovate our Zeno product for all partners and customers, including those in Australasia. This year, we applied learnings we had gained from our work with Booking.com to boost satisfaction and user experience. More detail on these is also included in the appendix. Turning to slide eight, organizational performance is front and center. We have seen the benefits of decisions made in previous periods to the uplift capability and refocus resources. We've been attracting several senior leaders with data, AI, and e-commerce expertise from leading global consumer tech businesses. We've welcomed Matt Gerrie to our executive team as COO, overseeing product and strategy.
Most recently, he was a Director of Strategy and Analytics in Booking Holdings, Global Strategy and Business Development Division. We continue to build our expertise in data and AI, taking a whole-of-organization approach and supported by expert teams. Experimental AI features were launched to market in the second half of FY25. Our culture and organizational performance are in a strong position, with pleasing improvements in our employee engagement scores. Looking at slide nine, our focus on scaling revenue while maintaining cost discipline is delivering meaningful gains in operational leverage, with a key reduction in long-term hosting costs. In FY25, total spend declined from 118% to 102% of income, highlighting the increasing scalability of our model and our ability to grow without corresponding rise in costs. This improved leverage is helping drive our return to positive free cash flow.
Thank you, and I'll now hand over to Shane, who will cover the financial highlights.
Thanks, Darrin, and good morning, everyone. Darrin has already called out some of the key highlights for the year. I will go into a little more detail. I'm going to focus on the key outtakes from the annual result, but we have put the financial detail slides in the appendix for your convenience. Unless otherwise stated, all references are to the financial year ended 31 March 2025, and comparisons are against the year to 31 March 2024. Turning to slide 11, I will initially cover the group results for FY25, but based on feedback from investors, we have also included comparatives for the pre-acquisition business. For this purpose, the pre-acquisition business reflects the Serko business, excluding the impacts of acquiring GetThere, including the related transaction and implementation costs.
The breakout is intended to assist investors to compare performance against the expectations we set at the start of the year around total income and achieving positive cash flows in FY25. Our total income increased by NZD 19.3 million, or 27%, to NZD 90.5 million, reflecting growth in Booking.com for business volumes, online booking volume, and average revenue per booking growth in ANZ and the GetThere acquisition. Operating expenses increased by 20% to NZD 107.6 million, an increase of NZD 17.9 million, primarily reflecting lower capitalization by NZD 6.2 million. The addition of operating costs from GetThere is NZD 7.1 million, and transaction and implementation expenses of NZD 3.4 million. Our preferred measure, total spend, which excludes the impact of accounting decisions around capitalization and amortization, increased by NZD 8.8 million, or 10%, to NZD 92.7 million, primarily reflecting the addition of GetThere operation costs and transaction and implementation-related costs.
The higher growth in income relative to spend resulted in an EBITDAFI improvement of NZD 4.3 million to positive NZD 2.8 million, up from a loss in the prior year. You will note the addition of the I to EBITDA for this reporting period. Serko reported a non-cash NZD 5.1 million accounting impairment, as communicated in the 28 October 2024 acquisition announcement. GetThere currently has negative cash flows, and the relevant accounting standard does not allow any planned improvements to be taken into account when estimating the value and use of a unit. I note this accounting impairment does not impact expected future cash flows. Free cash flow improved by NZD 5.2 million to -NZD 1.9 million as a result of revenue growth outpacing growth in spend in the pre-acquisition business, partially offset by cash flows related to the GetThere business.
I note that there were higher cash outflows associated with onboarding GetThere, such as purchase of laptops for staff and multi-year licenses for certain software required to operate the business, which are not expected to recur in FY26. Looking at the pre-acquisition business, we achieved total income growth of 20%, with stronger revenue growth in the second half. Total spend declined by 1% as efficiency initiatives reduced headcount required to run the pre-acquisition business, and we achieved improvements in hosting costs despite the increased transaction volumes. The result was a positive EBITDAFI for the pre-acquisition business of NZD 7.7 million, despite the lower capitalization. Turning to slide 12, slide 12 shows the pre-acquisition business's trajectory graphically, with the left chart showing income now exceeding spend and the right chart highlighting the strong trajectory in free cash flow generation.
Growth in total income has continued across the last three years, while total spend has been essentially flat, and total income now exceeds total spend. This demonstrates the strong operating leverage in the pre-acquisition business, where we have been able to reduce costs of sale as a percentage of revenue and hold other costs across the three-year period, despite 78% growth in total income. Cash generation was even stronger, as total spend includes non-cash share-based compensation for staff and management. Free cash flow for the pre-acquisition business improved by NZD 14.5 million to positive free cash flow of NZD 7.4 million. Looking at both graphs, the trend is clear. We expect our pre-acquisition business to generate strong results in FY26, with continued strong organic growth and healthy free cash flow.
The free cash flow generated by the pre-acquisition business will help fund our investment into the next stage of growth, with the accelerated platform investment and investment into U.S. expansion. We also consider that the operating leverage achieved can be replicated in the U.S. as we grow revenue. Turning to our balance sheet on slide 13, our balance sheet remained strong, with cash and short-term deposits of NZD 61.4 million and no debt. Cash was down by NZD 19.2 million, primarily reflecting the NZD 17.3 million payment for the acquisition of GetThere. The acquisition is also the primary driver for the increase in other current assets and current and non-current liabilities. The purchased intangibles partially offset the reduction in pre-acquisition business intangibles, as amortization significantly exceeded capitalization of software, reflecting our conservative approach to software capitalization.
Turning to slide 14, one final point I wanted to remind investors of is the commission tiering model agreed with Booking.com as part of the renewal and communicated in our announcement of 30 April 2024. In that announcement, we noted that the tiering model, quote, "allows for significant volume growth at the current commission levels, providing a solid base for profitability. This also allows future volume growth on commercial terms that mutually incentivize and benefit both parties." The bar on the left shows that in FY25, we achieved 29% growth in completed room nights with CRNs to 3.3 million, with Serko receiving a 50% share of the commissions generated by Booking.com for business. As noted on slides 11 and 12, that translated into pre-acquisition Serko achieving positive free cash flows for FY25 and total income exceeding total spend.
We have therefore achieved the first goal of the commercial model: a solid base for profitability. CRNs still need to grow by over 25% from the average FY25 level, which will drive further growth in cash flow before the next tier impacts. The second from left bar shows that Serko expects to continue to receive a 50% share of the commission up to 4.2 million CRNs. The two bars on the right show that as we exceed 4.2 million CRNs, the additional transactions are expected to be on the incremental tiers, and we will receive less than 50% of the commission on those transactions. While our commission percentage on the incremental transactions will be lower, our revenue will continue to grow as volume grows.
The second goal of the commission model was to mutually incent both parties to achieve further volume growth, and we're targeting to also deliver on that aspect of the model. On our current trajectory, we will exceed the 4.2 million CRNs during FY26, and we'll therefore expect to have some transactions where we get a lower share of the commission. This will result in a slight decrease in our reported ARPCRN, or average revenue per completed room nights. In FY26, we will therefore report a new metric, average commission per completed room night, or AComPCRN. This metric gives a view of the total commission pool generated on our platform, allowing investors to better assess the underlying commercial strength, even as our share of that pool varies with volumes.
As you will have seen from the strong operating leverage we've been able to achieve, our incremental margins are high, and therefore, even on the lowest tier, our incremental gross margin percentage is expected to be healthy. I will now hand back to Darrin.
Thanks, Shane. I'm now on slide 16. We're well positioned to capture the upside of the expanding, dynamic, and changing industry vertical of business travel. With business travel forecasts to reach $2 trillion globally by 2028, the opportunity remains substantial for a technology company operating in this sector. Technology is reshaping expectations, economics, and execution. Business travelers now expect customer-grade experiences, and businesses need more efficient, interconnected systems. Data and AI will define the next wave of change. Serko has set up well to leverage this change through its platform and user experience learnings with Booking.com for business. This is why Serko has set new growth ambitions in the past year and why we have chosen to accelerate investment to achieve them. We have four strategic focus areas: growth in Booking.com for business, reinforcing our market leadership in Australasia, expanding in North America, and evolving the Serko platform.
Starting with our first strategy area, Booking.com for business growth. In terms of our FY26 focus, we've noted in the appendix our plans, including the planned launch of a new checkout and loyalty incentive program in the near term. Testing is also underway for new AI search capability. A current experiment that you may have had a chance to use is the new AI SmartStay search, which lets users search as naturally as they speak, making business travel as intuitive as consumer travel. It's a great example of how we're using AI to deliver real-world value. Our AI focus is not only to enhance the user satisfaction but to drive material increases in conversion and repeat use over time.
We'll continue to leverage our data-driven and experimentation capabilities, with 500 new experiments undertaken during the year, which have led to double-digit improvements in onboarding conversion and set us up for continued fast-paced growth. With an increased investment and a newly expanded team from Booking.com to help accelerate these and future growth opportunities, this underscores their belief in this partnership as a global growth engine. We continue to work at pace on the exciting growth opportunity ahead together. Our second strategy area is reinforcing our Australasian leadership. We are committed to continued investment in our managed travel offerings through our Zeno product. We continue to win new customers within these markets. Zeno is highly regarded for its ease of use of experience, and in FY25, we continue to strengthen UX as well as using data to improve recommendations.
In the coming year, we will strengthen how we use data alongside continued simplification. On the next two slides, starting on slide 17, I'll provide further detail on our strategy for North America and the Serko platform. Turning to slide 17, our third strategic focus is the North American market, a transformative growth opportunity for Serko. The acquisition of GetThere, together with our strategic partnership with Sabre, has redefined Serko's position. We're no longer a challenger trying to enter. We're an in-market player with a credible platform, proven partners, and access to major customer channels. Since the acquisition, we've spent extensive time on the ground in the U.S. and India, working closely with the teams, partners, and customers. This hands-on integration has accelerated both market understanding and platform alignment. We've been deliberate in our approach, engaging closely with existing GetThere customers and actively pursuing new enterprise opportunities.
Importantly, customer feedback, both in direct conversations and formal forums, has been clear and consistent. The market is ready for change. Corporates are actively seeking modern, user-centric, scalable alternatives to legacy tools. Serko is uniquely positioned to meet that demand. We're running a structured commercial engagement program focused on building long-term relationships with large enterprises. These discussions are directly informing the next phase of our product development, ensuring our platform reflects the needs of this market. We expect the majority of new customer decisions to materialize across FY26 and FY27, in line with our stated timeline. The foundational work is in place, and the momentum is building. As we look ahead, we're confident our differentiated user experience, deep partner network, and scalable platform architecture position us to lead a new chapter in the evolution of managed travel in North America.
We believe this is one of the most significant long-term growth opportunities in Serko's history, and our conviction in that opportunity grows stronger with every customer conversation. Turning to slide 18, our fourth strategic focus area, the next phase of the Serko platform. We're building a unified global platform designed to scale across customer segments, from SME to mid-market to enterprise, with a modern commercial model that matches how customers want to buy today. This isn't just a roadmap. It's already in flight. The Serko platform is powering Booking.com for business's growth, with upcoming enhancements, including a new checkout experience and the launch of the loyalty incentive program, as just a few of the key features launching shortly. Our approach is deliberate. We are rolling out platform enhancements in ways that simultaneously serve existing users while laying the groundwork for broader expansion.
We will be showcasing prototypes of an exciting new approach to managed travel to a select group of U.S. managed travel customers, a key step in preparing for a shift and a commercialization in that market. We're also ensuring that our architecture can support the future with integrated AI capabilities, enhanced data infrastructure, vertical and horizontal platform connections, and modular design that scales across the markets and partners. We're not just adapting to an evolving market; we're shaping it with the right team, technical foundations, and product vision in place. Serko is building the platform that we believe will help define the future of managed travel. Now, turning to the outlook on slide 20, overall demand for business travel remains strong, and Serko's year-to-date performance is in line with our expectations.
For FY26, total income is expected to be between NZD 115 million and NZD 123 million, underpinned by the trajectory of the Booking.com for business. We are confident in the long-term opportunity in North America, with revenue contribution remaining modest in FY26. For FY26, Serko expects total spend in the range of NZD 127 million-NZD 133 million. I note that while the outlook is focused on FY26, we retain our aspiration of NZD 250 million of total income in FY30. The opportunity ahead of us is rare: a global business travel market undergoing structural change, with Serko positioned at the forefront. We have a strong foundation, world-class partners, and a disciplined execution. Booking.com for business is on a strong trajectory following a pivotal year. We're on track with our growth plans and are seeing volume proof points into FY26. Our pre-acquisition business remains cash-generative, supporting our investments and growth initiatives.
We're delivering strong, improving cash flow, and building long-term value. We have materially reduced the capital needed to execute our FY26 growth plans through smart integration and operational efficiencies. The evolution of our platform and expansion in North America presents strong long-term opportunities, and we're focused on laying the right foundations for FY26. With a profitable core, two world-class partners, a global runway, and a scalable platform, we enter the year with momentum, conviction in our strategy, and confidence in our team's ability to execute. Thank you. We're now happy to take questions. I just want to remind you that it's one question each, and then we'll move on through into there.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are joining us today using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. A voice prompt on your phone line will indicate when your line is open. We do ask that you please state your name and company before posing your question. Again, that is the star key followed by the digit one. We'll take your first caller. Please go ahead. Your line is open.
Good morning, team. Thanks. Maybe just could I ask a little bit about the reasonable acceleration in the Booking.com for business activity levels? Could you talk a little bit about, I guess, how that growth is being driven, particularly around customer acquisition and the source of the customer growth?
Yeah. I mean, it's a continued experimentation and marketing messages. Also, the platform appeal with the functionality that we continue to add in. Yeah, and that's kind of we are seeing strong top-of-the-funnel feed into there. There has been a substantial improvement in that process as well.
Just the source of those customers, a specific type of customer, specific markets?
The mix remains relatively constant with what we've seen previously. Still significant proportion coming out of Europe. Things that are driving the growth, we're seeing chain and the existing base come down, and we're continuing to see new customer ads being strong. As Darrin said, there's a variety of different initiatives that are being taken to try and increase that rate of acquisition.
Thanks, guys.
Morning, guys. John Osho from [AWDS]. Thanks for taking my question. Can you just give us some sense of that total spend split between OPEX and CAPEX? I note your comments at the end, Darrin, in FY26 regarding the reduced capital required to integrate the program with Sabre and GetThere. Can you perhaps give us a split of that? That would be very helpful.
Yes. I think I'll hand to Shane to talk about that, the work that's been done in that area.
Thank you, mate.
Hi, John. Just particularly, you mainly just hinted at how much of that we think will be capitalized, or were you looking for another?
Yeah. Obviously, the 127-133, how much of that will be CAPEX and how much will be OPEX?
Yeah. I think probably our pick is probably in the order of NZD 10 million of CAPEX. As you know, we're kind of definitely on the conservative side for CAPEX. It bounces around a little bit depending where their sort of accounting rules sit. Yeah, I'd probably take something in the order of NZD 10 million. That's particularly in the last year. We pretty much did not capitalize stuff on our managed travel side on the basis that we're looking to build this new platform. Booking.com for business is being built on the new platform. There was a bit more capitalization there. We still, for example, do not capitalize any of the work that was done around the experimentation that has helped drive that growth.
We would expect most of that capitalization to be coming out of the new platform development, which we're probably estimating for this year at being more in the sort of NZD 7 million-NZD 8 million range.
Yeah. But total CAPEX in terms of about NZD 10 million?
Yeah. Total CAPEX probably around the sort of NZD 10-12 million mark.
Yep. Thank you. Which is obviously, I can take it then that that's well down on our previous expectations or your previous expectations?
Yeah. In terms of where we were sitting, I think one of the things, my consensus is about NZD 143 million. I think there are kind of five main places where we've got improvements there. One is, effectively, we tend to be a little bit conservative in our projections on the cost side. A number of places where we've simply been able to get things done as part of the acquisition of GetThere cheaper than we expected. For example, we've managed to bring in some of the software licensing at a lower cost. A number of places where we've found that we can effectively leverage our existing resources rather than adding new resources to GetThere. There's a little bit of lower volume that we're assuming in the U.S. that drives some lower direct costs.
In terms of the range, if you sort of think of the range there, the bottom end is kind of what we're kind of on track to spend now. The additional amount kind of gives us a little bit of leeway for other initiatives that come up. Effectively, particularly given the uncertainty that's there, we've just given ourselves a bit more flexibility around how much of that we spend. I think the final element would just be the performance payments for the Sabre customer acquisition. The accounting treatment we're landing on there is that we will effectively treat those as commissions. They'll be effectively deferred onto the balance sheet as they're paid out and then effectively amortized over the likes of those customer contracts.
Kind of those five buckets, so probably a chunk of that is effectively just lower costs that we have to run the same thing. The top end of the range gives us some room to, it gives us some room around some initiatives that we're not committing to until we are further into the year and then that performance payment piece.
Thank you. It looks like it's about half, less than half of what we thought it was going to be. Thanks for the color.
Yeah.
Correct.
As a reminder, ladies and gentlemen, that is the star key followed by the digit one. We will move to the next caller. As a reminder, please state your name and your company before posing your question.
Hi, morning. It's Siraj from Citi. Morning, Darrin and Shane. Maybe just, I guess, the first question, just one question would be, we'd love to unpack the income guidance for next year between different businesses, especially GetThere. Darrin and Shane, given you did almost $5 million in revenue, and you're saying modest revenue for next year, a bit confused in terms of that. On the income guidance as well, in terms of the volume tiers, Shane, looking at your current momentum, this is just confirming that Booking.com for business should hit that volume tier in the first half itself. You did mention FY2026, but it does seem like you hit it in the first half of 2026. Thanks.
I might take the second one first, Siraj. In terms of volume tiers, yeah, if you like on that slide, we've kept it simple. The actual underlying model is a monthly model. It is incremental completed bookings above a certain level that get the incremental tiers. Effectively, we would expect to hit it in the, if you like, in the first half. Both June and September tend to be quite strong months. We would expect to see some transactions drop into that tier in those months. Obviously, at the other extreme, when you're in kind of December and January, we may be under. Yeah, we will start seeing some of that in the first half, albeit it'll be pretty modest in terms of the impact on the average revenue per completed room night in the first half.
In terms of the second one around guidance, I think you would have seen we have called out in the guidance statement that we expect the results in the U.S. to be modest. I think there's a few factors in there. One is that in terms of the $4.8 million, not extrapolating that forward, the FX rate was a little bit in our favor. That quarter was sort of running in the sort of 0.57-ish range versus we're sitting about 0.6 now in terms of U.S. dollars and New Zealand dollar. We have seen some volume impact on particularly one particular large customer coming out of U.S. government policies. And we are, given the general events in the U.S., there's, I think, a GBTA survey out that's suggesting that around about 27% of the respondents were expecting a 20% reduction in volume. So we've definitely seen risk around that.
I think within our obviously, we bought the business. We're aware that there's risk around potential customer loss. We have seen sort of one unexpected customer loss quite shortly after we acquired the business that related to decisions that were made well in advance of us acquiring it. I think those combined factors mean that you can't just take the 4.8 million and multiply it by four to get the FY26 result. I think the other key callout I'd just make on the U.S. is that I alluded to in my comments was if you take the cash flow for GetThere, it looks a little heroizing for the one quarter. There is a big chunk of that that relates to one-off, typically, transactions relating to the acquisition.
For example, a large multi-year software license of the order of NZD 4 million, which I think probably also ties to, I think, in your flashnote, you noted our cash conversion was down a little bit. Some of those sort of things as we onboarded GetThere will be impacting that. We would not expect those to recur.
Yeah. Can I confirm then, Shane, if you can be a so you're saying modest, but it doesn't seem like so it's going to be below the NZD 18 million, I think it was tracking pre-acquisition in the first year. But sort of what it's still double-digit with some churn and lower volumes. Is that the way we should think through for next year?
I didn't quite catch the back end of that question, Siraj.
In terms of revenue for next year from GetThere, still double-digit in NZD? Because I think at the time of that question, you said 18 million in the first year, right? Is what the.
Yeah. I think we're, yeah, we're indicating that we expect it to be below that 18 level. Yeah, definitely in NZD, it will be double-digit millions.
Perfect. Thank you. I'll jump back in the queue.
At this time, we'll move to the next caller in the queue. Your line is open. Please go ahead.
Hi. This is Wei-Weng Chen from RBC Capital Markets. Just a couple of questions for me. There wasn't a mention of your $250 million target in your results. Any reason for that?
No. That is why we covered it in the script.
Oh, sorry.
Yeah, no. Yeah. No, definitely, that's why I added it onto the outlook statement just to confirm that that is still our aspiration. I don't know if Shane, you've got anything else.
Yeah. I mean, I think the main thing there is that outlook slide's focused on FY26. I think as we indicated, invested out won't be a sort of linear track to the 250. You definitely won't be giving kind of steps along the way beyond the upcoming year. Having said that, I think if you look at what the growth rate that's occurring in our business at the moment, you would actually GetThere if you just assumed you could compound up that same percentage through the [FYPB]. I think that just reflects the point we've made investor data multiple ways for us to get to that 250 million. Absolutely, the aspiration's still in place, but our outlook slide was focused on FY26.
Yeah. Yeah. Okay. Cool. You guys have a bit more of a focus on North America right now. Can you maybe speak to some of the trends that you saw during that sort of March, April, sort of May period, and with Liberation Day kind of in that middle there in April?
Yeah. I mean, the survey that Shane talked about, which said that it's created a level of, I guess, uncertainty of spend. You are seeing it bounce around because it's kind of like every day or week, it's got a different impact that's occurring. It's pretty hard to predict. I guess the underlying of that is that through uncertain times, it creates a focus on a category. You get to have a look at conversations with customers looking at how they could bring in new technology and commercial models that may have been not front and center. We are hearing from the market that people are wanting to make decisions in that 2026 and 2027 year and that there is a heightened focus on that.
Kind of through that traffic jam of tariffs and information in there, you can pick the things that you can actually focus on through there. As Shane indicated, you do see some softening through those areas. Government, of course, is one of those focus areas as well. It creates an ability to have really meaningful conversations with those customers as well.
Yeah. Okay. No, thanks so much. That's all for me.
Next caller in the queue. Your line is open. Please go ahead.
Morning, guys. It's Josh here from Craigs. Just your commentary about Booking.com for business and the team expanding at Booking.com. It's good to see they're investing. Can you outline to what extent they have expanded their team size?
Yeah. They roughly doubled their team.
On what base, sorry?
Oh, so on the base that they had. I don't know the exact numbers off the top of my head. But yeah, the team that they had before, they've doubled that through this new expansion. Really, what that's about is there's a lot of work that both of us do together as a partnership across marketing and software engineering to bring these features out. It's recognizing that we're really trying to accelerate both how we build technology, the platform, and everything. Josh and his team can actually support that with us. We can put things out into market a lot quicker and just really start to hit that growth curve. Everyone's focused on the same thing. It's really exciting to see that support.
Got it. Do you expect that team size to continue to grow materially from here?
Yep.
Do you think they're about the right size?
I mean, from their side, they'll support what's needed from their side based on how we're executing. If we're needing more capacity to drive through because we're executing to the growth levels, then they'll support what's needed to support that growth.
Got it. Good to hear.
[crosstalk] Yep. No, no. It is really good. I mean, it shows the position that we've come through and remembering that in the last year that it was only April when we announced the signing of the Booking.com new partnership agreement. There is a lot of progress in a year in that.
At this time, we'll move to the next caller in the queue. Caller, your line is open. Please go ahead.
Hi. Morning, Shane and Darrin. Vignesh here from UBS. Just a couple of questions on the ANZ business overall as well. Sort of just to begin with, is the target for ARPB still $6 per booking into FY26? It seems as though you're growing that number sort of considerably this year. Is $6 still the target?
Hi, Vignesh. I'll take that one. We're probably expecting more of a flattening into this upcoming year. The context behind that is we effectively have had a commercial opportunity that effectively allows us to take about NZD 2 million off our cost line, but also takes about NZD 1 million off our revenue line. That will effectively dilute the other initiatives that we're doing in ARPB. We'll be, yeah, a little bit south of the $6 for FY26.
It does increase our profitability by $1 million.
Right. Is that factored into the guidance? I suppose just trying to get a steer on what you're thinking about for the ANZ business.
Yeah. Correct.
The volumes, what do you think about the volume component, though? You have sort of got flat pricing, and you have sort of seen a deterioration, I suppose, in business travel here. Is that kind of all baked into the 115-123?
Yeah. So we're still, I think, for ANZ, we're expecting it to be relatively flat-ish on both volume and revenue. I think it's interesting in that clearly, as I noted, we had one U.S. customer that's been particularly impacted by the government policies there that we've seen dramatic reduction. We've seen a bit of more broad-spread reduction. In ANZ, we really haven't seen that yet despite lots of commentary in the industry. At this point, we're assuming that we're sort of reasonably similar in terms of volumes year-over-year. It's sort of if you're targeting the midpoint of guidance.
Okay. That's very clear. Thanks, guys.
Ladies and gentlemen, as a final reminder, it is star one if you have a question or a comment. We'll move to the next caller in the queue. Caller, your line is open. Please go ahead.
Hi, guys. It's Sophia Mulligan from Macquarie. Just a quick question on the expectations for GetThere. I know you said it's not fair to annualize this quarter of revenue that you just did, but maybe instead of thinking of it in months' contribution, could you talk through your volume and price expectations for the North American business?
I couldn't quite catch the back part of that question, Sophia.
Volume price.
Just asking you, yeah, just asking you if you could talk through the volume and price expectations for the next year for the North American business.
Yeah. I think sort of consistent with the revenue comment, we'd expect the volume to be kind of less than four times what we had in that first quarter. It'll be south of 4 million. I don't know. I haven't got the exact number off the top of my head, but I can come back to you on that.
Great. Thank you. Sorry, just quickly, last one on the U.S. Your expectations for the performance payments? I know you touched on it slightly in your comments, but could you just expand how you're expecting those to flow through?
Yeah. In terms of the performance payments, those will be paid out based on contracted revenue that we sign up through the year. Effectively, from an accounting point of view, the treatment that we've landed on for that is that it'll be treated as a commission. And commission, basically, you defer over the life of the contract. You won't see, given we're not expecting a lot of there's long sales cycles, we're not expecting a lot of that revenue to come in FY26. You won't see much in our P&L for that in FY26. I think the actual payments, from memory, do not occur until the beginning of FY27. Effectively, you won't see a lot of that in either our cash flows or our sort of reported total spend for this year.
On the cash flow side, also note that we have got the option to make those payments potentially in equity rather than cash if we choose to. Obviously, our cash is looking pretty strong at the moment. Those are choices we will make closer to the time.
Great. Thank you so much.
Thank you.
Next caller, your line is open.
Thank you. It's Siraj again. Just a couple of questions. Just first one, on the conversion ratio comment, Darrin from Booking.com for business, can you just touch on that? And anything that you're seeing in terms of trends in April, May so far, right? Are you seeing an acceleration in the conversion issue in the fourth quarter?
Yeah. So effectively, across the second half, we obviously had very strong growth. We had slightly stronger growth in the December quarter. One of the reasons why we came off growth slightly in the fourth quarter was we definitely had some operational issues that impacted conversion. We saw really strong demand to the site, but we did not convert all of that in January and February. Our teams got onto that and got it fixed and resolved. We kept coming out of March with the conversion rate we expected. We have kind of settled that conversion rate back in about where we expected it to be. That has continued through into April and May. There is still, yeah, we certainly still aspire to grow that conversion rate a little bit further, but the rate we have is already pretty healthy.
Just clarifying on that, you're not seeing a bit of any macro impact in Booking.com for business in April, May so far?
No. I think you would have also said that if you see the Booking.com releases, but they talk to the fact that their business is obviously heavily weighted outside the U.S. Obviously, both us and them would like to grow our businesses more in the U.S. At the moment, having a lower weighting is quite helpful. Ours is probably mid-single-digit percentage of Booking.com for business transactions in the U.S. It is quite a minor part of our business there. There is certainly the risk that something could happen. At the moment, the general indication is travel to and from America is being impacted, but people are tending to reroute trips to other places rather than not travel at all.
At the moment, we're still seeing our kind of Booking.com for business market holding up strongly with no signs of any volume impacts from all the noise that we see in the papers every day at this point in time.
Got it. Second thing, in terms of the integration and the platform, the new platform, right, for GetThere for managed travel. I think in the investor, another question, you said what total spend would be NZD 40 million, right? Given that the spend is actually lower, what are you expecting in terms of total spend in the two to three years? Secondly, when do you reckon that unified experience will come through? Thanks.
That's where, Siraj, we kind of indicated that most of the cost savings were in the synergies and implementation into the operational side of Serko. We still intend to spend the platform spend. As Shane indicated, we've given a wider spend range to enable us to boost that up a little bit more if we need to into that platform side. On the platform side, we do still intend to spend that side. We are looking if we can actually do that faster with the teams that we're setting up in there. It's not from the reduction in the platform spend. It's actually the synergy, the operational way that we've actually been able to embed the business.
Sorry. Yeah. So yeah, we're still expending NZD 40 million this year. We'll be a little bit lower than what we've projected. The numbers that we had at this date, it's probably more NZD 7 million-8 million versus NZD 9 million. That's partly around, I think, Darrin talked about the fact that we're taking quite a deliberate approach to getting the setup. We're making sure we have the right people and processes in place as we build that team out in India to drive that acceleration.
Allowing ourselves the flexibility.
Yeah.
Yeah.
When do you expect to be live? I mean, you're saying a new prototype this year. Just when do you think it will go live?
What was that, Siraj? We just missed that.
Just the new Zeno or just the new managed travel experience, right? UX and everything. When do you expect that to live?
Yeah. It is quite—we're not going to talk about everything we're doing on the new platform at the moment, but it is something that's quite interesting how we're bringing that to life as well.
Thanks.
At this time, there are no additional callers in the queue. I would like to turn the conference back over to your host, Darrin Grafton, for any additional or closing comments.
I just want to say thank you, everybody, for your time today and, of course, your support of Serko. Thank you very much.
That does conclude today's teleconference. We thank you all for your participation. You may now disconnect.