#1serko FY21 Results Presentation 19 May 2021 +#2DISCLAIMER • This presentation has been prepared by Serko Limited. All information is current at the date of this presentation, unless stated otherwise. All currency amounts are in NZ dollars unless stated otherwise. Information in this presentation 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 Limited 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); includes forward-looking statements about Serko and the environment in which Serko operates, which are subject to uncertainties and contingencies outside Serko's control - Serko's actual results or performance may differ materially from these statements, particularly as a result of the impacts of Covid-19; includes 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; 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. 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 access business performance. serko#3CEO Welcome ARAA 8888 serko 3#4AGENDA CEO Financial Welcome Summary Strategic Updates Outlook Statement Wwwmoms 4 serko#5NON PINANQ FY21 Financial Summary WANTED HETOUR SUSHE ROAD CONSTRUC AHEAD serko 5 ST Lotter#6PERFORMANCE DASHBOARD - FY21 FY21 VS FY20 PROFIT (LOSS) REVENUE ($29.4m) NET LOSS AFTER TAX -52% ↓DECREASE OPERATING REVENUE -53% ↓DECREASE RECURRING REVENUE 2 -37% ↓DECREASE -37% ACTIVITY -63% ↓DECREASE -22% ↓DECREASE R&D COSTS 4 ↓DECREASE TOTAL INCOME PEAK ATMR 3 TRAVEL BOOKINGS COSTS 21% ↑ INCREASE OPERATING EXPENSES $(22.3m) EBITDAF 1 loss $12.4m Operating revenue from core products plus services revenue $11.3m Recurring revenue (core product revenue only) 91% of total operating revenue $16.9m Total income from all sources including grants $17.2m Indicator of future growth potential based on current trading 1.57m Travel platform bookings for the period $10.6m 86% of Revenue Opex $3.4m Capex $7.2m $44.9m Net FTE 5 increase in the period of 54 to 287 employees Notes 1 - 5: Refer to Appendix for definitions. serko 6#7NET PROFIT SUMMARY/ EBITDAF RECONCILATION • Revenue of $12.4m down 52% (Slide 8) Net Profit Summary EBITDAF Reconciliation Total income (including grants) down 37% to $16.9m Operating expenses of $44.9m up 21% (Slide 9) EBITDAF loss of ($22.3m) versus ($6.1m) in prior year Net loss for the period of ($29.4m) includes: • . Depreciation and amortisation of $5.6m, up $2.5m Foreign exchange losses of ($1.3m) versus prior year gain of $0.7m No fair value measurement adjustments in the current year FY21 FY20 change change $000 $000 $000 % Revenue 12,420 25,869 (13,449) -52% Other income (including grants) 4,476 922 3,554 385% Total income 16,896 26,791 (9,895) -37% Operating expenses (excluding FX) Percentage of operating revenue Net foreign exchange gains/(losses) Net finance income (44,854) (37,092) (7,762) -21% -361% -143% (1,337) 718 (2,055) -286% 247 257 (10) -4% Net profit before tax Percentage of operating revenue (29,048) -234% (9,326) -36% (19,722) -211% Income tax (expense)/benefit (341) (38) (303) -797% Net (loss)/profit after tax (29,389) (9,364) (20,025) -214% Add back (deduct): income tax expense (benefit) 341 38 303 797% Add back (deduct): FX/finance income 1,090 (975) 2,065 212% Add back: depreciation and amortisation¹ 5,633 3,156 2,477 78% Add back: fair value measurement² EBITDAF EBITDAF margin 1,056 (1,056) -100% (22,325) (6,089) (16,236) -267% -180% -24% 1 Depreciation includes right-of-use assets (leased premises) under IFRS-16 (Leases) adoption of $1.1 million (FY20 $1 million) 2 Fair value remeasurement of contingent consideration on deferred consideration for InterplX acquisition added to EBITDAF as non-cash expense 7 serko#8Revenue and Other Income FY21 FY20 change change by Type $000 $000 $000 % Travel platform booking revenue 6,354 16,307 (9,953) -52% Expense platform revenue 3,997 5,831 (1,834) -31% Supplier commissions revenue Other revenue 538 1,427 (889) -62% 386 485 (-99) -20% Recurring revenue 11,275 24,050 (12,775) -53% Recurring revenue % operating revenue 91% 93% Services revenue 1,145 1,819 (674) -37% 12,420 25,869 (13,449) -52% 4,382 922 3,460 375% 94 94 100% Total other income Total income 4,476 922 3,554 385% 16,896 26,791 (9,895) -37% REVENUE ANALYSIS • • • Recurring revenue (excluding Services revenue) at $11.3m down 53% and representing 91% of total operating revenue Travel platform booking revenue down 52% was Covid-19 impacted Total travel platform bookings at 1.6m versus 4.2m in the prior year, down 63% Online bookings down at 1.3m versus 3.7m in the prior year, down 65% Expense platform revenue at $4.0m down 31%, benefitting from fixed components to pricing Supplier commissions revenue at $0.5m down 62% Total revenue Government grants Sundry income • Services revenue at $1.1m down 37% as development resources focused on NORAM activation and Booking.com for Business platform • Government Grants included $3.4m related to Covid-19 subsidies received in New Zealand, Australia and the US New Zealand sourced income only down 13% as benefitted from the onboarding of customers completed over the year Average Revenue per Booking (ARPB) (based on total recurring revenue/online bookings) for the year was $8.76 up 36% from $6.46 in prior year, benefitting from Expense revenue which was not as affected as travel platform revenue; travel related ARPB was up 12% to $5.36 Operating Revenue by Geography 8 Australia New Zealand North America Other 7,520 18,218 (10,698) -59% 2,154 2,465 (311) -13% 2,369 4,80. (2,454) -51% 377 363 14 4% Total operating revenue 12,420 25,869 (13,449) -52% Total travel bookings (000) Online bookings (000) 1,566 4,215 (2.649) -63% 1,287 3.724 (2,437) -65% ARPB (Recurring revenue/online bookings) 8.76 6.46 2.30 36% ARPB (travel related revenue only) 5.36 4.76 0.60 12% serko#9OPERATING EXPENSES/HEAD COUNT • Operating Costs increased by 21% to $44.9m • Remuneration and benefits at 66% of total operating costs increased 52% to $29.5m • includes share-based payments of $3.2m which increased by $2.2m over prior year however, this was partially offset by reduced cash costs through reduced salaries due to temporary salary adjustments and no prior year short term incentive Net increase of 54 FTE* (FY20 increase 60). Capitalised costs less than prior year (refer to Slide 10) Selling and marketing of $2.1m decreased $0.9m (31%) • Hosting expense of $2.7m decreased 19% • Operating Expenses FY21 FY20 change change $000 $000 $000 % Selling and marketing 2,056 2,989 (933) -31% Hosting expense 2,710 3,362 (652) -19% Remuneration and benefits 29,527 19,419 10,108 52% Administration expenses 4,928 7.110 (2,182) -31% Amortisation and Depreciation 5,633 3,158 2,477 78% Fair value remeasurement 1,056 (1,056) -100% Total Operating Expense 44,854 37,092 7,762 21% Percentage of Operating Revenue 361% 143% FY21 FY20 Head count FTE FTE change FTE change % Product development and maintenance 193 146 47 32% 16 18 -2 -11% Customer support Administration 48 52 -4 -8% 30 17 13 76% Total employee numbers at end of year (FTE*) 287 233 54 23% Administration costs at $4.9m decreased 31% mainly due to: • • Professional fees of $0.9m decreased $0.7m Other admin expenses (primarily includes recruitment, listing, travel, training and insurance) of $2.2m decreased $1.6m While Computer licenses of $1.1m increased $0.2m Amortisation and depreciation of $5.6m increased $2.5m Sales and marketing *FTE (Full time equivalent) 6 serko#10RESEARCH & DEVELOPMENT (R&D) • Total R&D costs decreased by $3m (-22%) over prior year to $10.6m R&D Costs FY21 FY20 change change $000 $000 $000 % • • Capitalised development costs included development Northern Hemisphere markets as well as the Booking.com platform Resources were reprioritised with the onset of Covid-19 and the acceleration of the global release of the Booking.com platform powered by Zeno Development resources were also focused on the management of the platform costs due to the reduced bookings and then the subsequent scale up with the return of bookings in the Australasian region and in preparation for the Booking.com migration Total R&D costs (including amounts capitalised) Percentage of operating revenue 10,633 13,606 (2,973) -22% 86% 53% (7,231) (11,013) 3,782 -34% 68% 81% Less: capitalised product development costs Percentage of R&D costs Research costs (excluding amortisation of amounts previously capitalised) Percentage of operating revenue 3,402 2,593 809 31% 27% 14% Less: Government grants relating to research Add: Amortisation of capitalised development costs (930) (683) (247) -36% 3,909 1,705 2,204 129% Net product development costs expensed 6,381 3,615 2,766 77% Percentage of operating revenue 51% 14% Research & Development (R&D) cost is a Non-GAAP measure representing the internal and external costs related to R&D that have been included in operating costs and capitalised as computer software development during the period. Research expenditure includes all reasonable expenditure associated with R&D activities that does not give rise to an intangible asset. R&D expenses include employee and contractor remuneration related to these activities. It also covers research expenditure defined by NZ IAS 38. 10 serko#11Strategic Updates serko 11#12AUSTRALASIA MARKET UPDATE • The majority of Serko's revenues previously came from Australia and New Zealand domestic bookings. • Total Australasian travel corporate customers using the platform in the financial year were 6,492. New Zealand trading customers have increased and we are transacting up 158% on 2019 Australian recovery is still progressing behind New Zealand's with a combined 6,492 customers of our 7,759 recommencing business transactions which is in line with our expectations and is great to see this level of recovery. Zeno is now being used by 58% of all transacting corporate customers with transaction volume at 45% of total bookings for the month of March 2021, up from 25% for the month of March 2020. Expense revenue for the region, while initially impacted by Covid-19 has continued to underpin monthly revenues, benefitting from return to travel and growth in the Australasian region. Booking volumes are steadily recovering each month from former peaks in February 2020, prior to the impacts of Covid- 19 and the lows experienced in April 2020. Our new peak day was 13,000 recently in May 2021 down from a peak of 24,000 daily bookings in February 2020. 12 serko#13. TRANSACTION ANALYSIS - AUSTRALASIA Travel volumes have recovered from a low in April 2020 of 11% to 73% as of March 2021. This has further improved in April 2021 to 84%. New Zealand total bookings for March 2021 was 149% and 158% for April 2021 Australian total bookings for March 2021 was 62% and 72% for April 2021 150% 100% 50% 0% Apr 2020 Australasia Transactions as % of Prior Year* Mar 2021 New Zealand TMCs Total Australasian Transactions Australian TMCS *As of March 2021, Serko has begun benchmarking current transaction volumes to 2019 volumes (in addition to 2020 volumes) as we believe this provides a more meaningful indication of the resumption of travel by business travellers. This is as a result of Covid-19-related travel restrictions beginning to materially impact Serko's transaction volumes from mid-March 2020. For completeness, total Australasian transaction volumes exceeded 131% of March 2020 volumes (NZ: 211%, AUS: 116%), when Covid-19-related border closures started materially impacting Serko's transaction bookings. serko#14NORTH AMERICA MARKET UPDATE • • • • . We have continued to invest in the Serko Zeno platform for expansion into the North American markets during the current year. Serko launched a targeted North American Covid programme and TMC community. programme to assist Covid affected TMCS and their corporate customers. Five new TMC reseller agreements were signed during FY21, with Frosch Travel Group, a large buying group, signed in April 2021. Transactions are starting to flow from TMCS who have completed implementation and onboarded their first customers but have been affected by various travel restrictions. We expect this to increase with the rollout of a vaccination programme and the return to travel post summer holiday period. Targeted sales and marketing activity has grown our pipeline of direct enterprise opportunities. Serko launched the new Zeno Expense platform in October 2020, signed Zeno Expense reseller partnership with buying group Omnia Partners and joined the Oracle NetSuite SuiteApp partner program. 14 serko#15BOOKING.COM UPDATE . • • • • • In October 2019, Booking Holdings' made a cornerstone investment in Serko and Booking.com expanded its existing agreement with Serko enabling Booking.com to offer and promote Zeno to its business traveller customers. Booking Holdings has continued to support Serko and participated in the October 2020 capital raise. As announced in March 2021, following successful pilots undertaken during the financial year, Serko has commenced the migration of existing customers to the upgraded Booking.com for Business platform, powered by Zeno. Serko is currently seeing over 1,300* of SME business customers per day activate** on the new platform, during this phase of migration. Serko expects this rate of activation** to significantly increase as we move to the further phases of migration due to complete by end of July 2021. Although in the early stages, we are seeing companies use the new "Connected Trip" across multiple markets. We know SME business booking behaviors will be different from our enterprise customers and activations will not necessarily translate into bookings immediately, particularly during Covid affected periods. The migration is anticipated to have a material impact on Serko's revenue for the FY22 year. As we are only part way through the migration and there remains uncertainty around the rate of travel recovery, we are unable to forecast the revenue uplift with any certainty at this time.. * Weekday average for current phase of eligible customers ** Activations will not necessarily translate immediately into bookings, particularly during Covid affected periods. 15 serko#16IL FE Outlook Statement EL serko 16#17FY22 OUTLOOK The business is well positioned for growth when trading conditions improve as the travel industry recovers. The Booking.com for Business customer migration is anticipated to have a materially positive impact on our revenue for FY22 financial year. As at 30 April 2021, Serko had cash reserves and short-term deposits of $77.7 million. We believe these cash resources, at the current rate of cash burn, will be sufficient to see the company through to cash flow breakeven should our anticipated recovery scenario be achieved. We will continue our rigorous focus on cash flow throughout the remainder of FY22, targeting an average monthly cash burn of between $2 million and $4 million. We continue to consider inorganic growth opportunities, aligned to strategy as and when they arise. Subject to Covid-19 recovery, Serko considers it can achieve its $100m in Revenue target within the medium term but it has been delayed during this Covid-affected year. As industry recovery remains uncertain and the Booking migration is not yet complete, we are unable to forecast our likely operating revenue for the 2022 financial year with any certainty but will continue to provide regular updates to the market. 17 serko#18Q&A serko 18#19Appendices: Company Snapshot Definitions 6 serko#20ABOUT SERKO FOUNDED IN 2007 A SKO 20 20 Innovative Solutions Serko is a technology company focused on innovative solutions that address the challenges of corporate travel and expense management. The majority of Serko's revenue comes from Travel Management Companies (TMCs) ("Resellers"), who provide our online travel booking (OBT) solution to their corporate customers. Serko also sells Expense management solutions to corporate customers directly. Market Leader Serko is a leading supplier of travel technology solutions for TMCs in Australasia and is now expanding into Northern Hemisphere markets with multiple signed reseller agreements in North America and a global agreement with ATPI and Booking.com. NZX/ASX Listed Serko listed on the New Zealand stock exchange in June 2014. In June 2018, Serko listed as a foreign exempt listing on the Australian Securities Exchange. Serko trades under the ticker 'SKO' on both exchanges. Serko employs people worldwide with its HQ in New Zealand, and offices across Australia, the U.S. and China For further information refer to Serko's website www.serko.com and its 2021 Annual Report which can be found under Investor Centre. serko#21SERKO PRODUCTS zeno BY serko Zeno Travel Zeno Travel is an Online Booking Tool (OBT) that corporate travellers use to book flights, trains, hotels, rental cars and airport transfers in line with their corporate travel policies. Book my trip next week Ask ZENO Recommended way yey to San Diego tum) Sydney to San Diego Deping Tuesday 18 Sep 2018 2700 Does that le Quest San Diego Standard Room San Diege to Sydney Departing Fray 21 Sep 2018 1820 zeno Cat & Ofe Farme MATHO OHE SO CAFE 0 641 20180002-CORPIO.3230 27 FEB 2018 HOTEL INCIDENTALS Londonde NOT SUBMITTED 3831 ANZ VISANZ) 122.25 GBP 20180202-CORP100300893230- JOSPECTIONALY 29.0 Zeno Expense Zeno Expense automates the process of corporate card and out-of-pocket expense submission, reconciliation and reimbursement 21 serko#22SERKO STRATEGY Grow average revenue per booking (ARPB) by offering increased content and moving customers to Zeno Grow ARPB Technology Innovation Grow Customer Base Offer premium, integrated global solutions Expand into new territories through strategic alliances and reach the unserved SME market 22 22 serko#23COMMERCIAL MODEL Year Ended 31 March 2021 $000 Travel platform booking revenue 6,354 Expense platform revenue 3,997 Supplier commissions revenue 538 Other revenue 386 Recurring Product Revenue 11,275 Percentage of total revenue 91% Services revenue Total Revenue 1,145 16,896 Corporate traveller makes a booking via Serko Online/Zeno LA Booking and other fees Serko charges the TMCs a fee per booking (which varies based on volume). Traveller submits receipts using Serko Expense/Zeno Traveller books hotel or taxi via Serko Online/Zeno Traveller downloads and uses Serko Mobile Monthly user fee Serko Expense customers pay a fee based on the number of active users each month directly to Serko. Supplier commission $ Serko also generates revenue through commissions on hotels, rental cars, airport transfers and other travel providers that are booked through its platform. Mobile subscription $ Serko earns other miscellaneous revenue such as mobile licenses Additional Services $ Services Revenue Paid customisation, marketplace integration or implementation assistance serko 23#24HISTORIC MEASURES for financial years (31 March) Selected Operational Metrics FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 Total revenue growth (%) 27% 39% 55% 27% 9%# 28% 28% 11%* -52%* Revenue growth - Travel Platforms (%) 41% 12% 62% 49% 8% 23% 20% 2% -61% Total travel booking transactions (000s) 987 1,107 1,588 2,407 2,913 3,526 4,138 4,215 1,566 Online booking transactions¹ (000s) 821 1,011 1,468 2,262 2,673 3,207 3,743 3,724 1,287 Online transaction growth (%) 35% 23% 45% 54% 18% 20% 17% -1% -65% Recurring product revenue as % total revenue 84% 71% 80% 93% 91% 90% 89% 93% 91% Operating costs² (% change) 35% 62% 105% 13% (10%) (5%) 29% 50% 19% Employees (number at end of year - FTE) 47 87 133 127 108 106 173 233 287 Average revenue per FTE (NZD$000) 119 100 94 101 122 170 167 121 67 Research & development costs - expense and capex (NZD$000) 2,340 3,387 5,762 6,268 5,836 4,906 9,165 13.606 10,633 Peak annualised transactional monthly revenue (ATMR) (NZD$m) n/a n/a n/a 11.2 15.3 18.4 26.0 27.5 17.2 1- Online bookings exclude Offline and Custom bookings (system generated bookings) which are included in Online booking pricing or at a reduced rate 2- Operating costs are Operating Expenses excluding depreciation and amortisation and fair value remeasurements of contingent consideration n/a - indicates not previous measured or reported # - FY17 revenue was affected by adverse foreign exchange rates; *- FY20/FY21 revenue was affected by Covid-19 pandemic 24 serko#25DEFINITIONS 25 25 Peak ATMR (Annualised Transactional Monthly Revenue) is a non-GAAP measure. Serko uses this as a useful indicator of recurring revenues from Serko products. It is calculated by annualising the combination travel and expense platform monthly revenues for the most recent non- seasonal month. The travel platform revenue is annualised by taking the monthly online booking transactions divided by the number of weekdays for that month multiplied by the average ARPB and multiplied by 260 days. The expense platform revenue is based on the monthly revenue from active users multiplied by 12 months. ARPB (Average Revenue Per Booking) is a non-GAAP measure. Serko uses this as a useful indicator of the combined value from transactional booking fees and the supplier commissions earned from the travel platform. It is calculated by taking total travel platform booking revenue and supplier commission revenue divided by the total number of bookings. Recurring product revenue is a non-GAAP measure and is the recurring revenue derived from transactions and usage of Serko products by contracted customers. It excludes revenues from customised software development (services revenue). Operating revenue is a non-GAAP measure excluding income from grants and finance income, while total income includes grants. R&D (Research & Development) costs is a non-GAAP measure representing the internal and external costs related to R&D both expensed and capitalised. Operating Costs is a non-GAAP measure which excludes costs relating to taxation, interest, depreciation, and amortisation charges. EBITDAF is a non-GAAP measure representing Earnings Before the deduction of costs relating to Interest, Taxation, Depreciation and Amortisation and Fair value remeasurement of contingent consideration. FTE Full time equivalent employee. = Serko Limited, Saatchi Building, Unit 14D 125 The Strand, Parnell, Auckland, New Zealand PO Box 47-638, Ponsonby, T: +64 9 309 4754, F: +64 9 377 0545, [email protected] Incorporated in New Zealand ARBN 611 613 980 serko#26Thank you serko 26