SiteMinder (SDR) $3.78

Travel stocks are feeling the pinch.  We’ve recently seen downgraded guidance from Flight Centre (FLT) and Corporate Travel (CTD) locally, while it’s been more of a mixed picture overseas with Booking.com and Airbnb highlighting stable leisure demand trends overall, but they called out some weakness in the US, particularly from travellers coming from Canada and Europe – an understandable trend given anti-America sentiment stemming from the absurd tariff situation being worked through. These trends seem to be industry-wide,  and SiteMinder is unlikely to be immune.  SDR is more geographically diversified than most, with 41% of revenue coming from Europe in the 1H25, 32% from Asia and 27% from the Americas, but softness in the latter geography is still likely to hurt.

That said, there is still a very good story here, and a strong runway of growth in the medium term. As a guide, Citi forecasts an 80% increase in sales from the $188m in FY24 to an expected $351m by FY27, driving a 250% increase in earnings during that period. Important to note, this is coming off a low base, and SDR remains unprofitable (tipped to lose another $12m in FY25), not helped by the recent trend across US markets of unceremoniously putting unprofitable small caps in the proverbial bin. However, they are scaling their platform well and just like Xero (XRO) has successfully done, we expect SDR can generate significant earnings at scale.  We covered the background of SDR in a note towards the end of last year (here), which gives an overview of the business, and despite some near-term challenges due to the current trade situation, we remain very optimistic about their prospects.

• Short-term weakness in travel demand may impact transaction volumes, particularly in their US operations, though the medium-term picture still stacks up.