Serko Ltd

Please stand by. We're about to begin. Good day, everyone, and welcome to the CIRCO 2025 Full Year Results Announcement. Today's conference is being recorded. At this time, I would like to turn the conference over to Darren Grafton, Chief Executive Officer and Co-Founder. Please go ahead, sir.

Good morning. I'm Darren Grafton, CEO of CIRCO. 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 $85.7 million, consistent with our guidance. The inclusion of Get There for just a quarter brings our total income growth to 27% and $90.5 million. Our focus in FY25 was on the robust expansion of our business. Second, our pre-acquisition business generated $7.4 million in free cash flow, a significant $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. And third, we're 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, details 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'd 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 12% increase in average revenue per booking. We continue to invest and innovate our Xeno 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 Geary to our executive team as COO, overseeing product and strategy. Most recently, he was a director of strategy and analytics and 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 is 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 cost. 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, Darren, and good morning, everyone. Darren 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've also included comparatives for the pre-acquisition business. For this purpose, the pre-acquisition business reflects the Serco business, excluding the impacts of acquiring GetBear, 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 $19.3 million, or 27%, to $90.5 million, reflecting growth in booking for business volumes, online booking volume, and average revenue per booking growth in ANZ, and to get their acquisition. Operating expenses increased by 20% to $107.6 million, an increase of $17.9 million, primarily reflecting lower capitalization by $6.2 million, The addition of operating costs from Getfair is $7.1 million, and transaction and implementation expenses of $3.4 million. Our preferred measure, total spend, which excludes the impact of accounting decisions around capitalisation and amortisation, increased by $8.8 million, or 10% to $92.7 million, primarily reflecting the addition of Getfair operation costs and transaction and implementation related costs. The higher growth in income relative to spend resulted in EBITDAF improvement of $4.3 million to positive $2.8 billion, up from a loss in the prior year. You will note the addition of the I to EBITDAF for this reporting period. Serco reported a non-cash $5.1 million accounting impairment. As communicated in the 28 October 2024 acquisition announcement, Get There 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 $5.2 million to negative $1.9 million as a result of revenue growth outpacing growth and spend in the pre-acquisition business, partially offset by cash flows related to the GetBear business. I note that there were higher cash outflows associated with onboarding GetBear, 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 EBITDAFE for the pre-acquisition business, of $7.7 million despite the lower capitalization. Turning to slide 12. Slide 12 shows the pre-acquisition businesses 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 $14.5 million to positive free cash flow of $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 remains strong with cash and short-term deposits of $61.4 million and no debt. Cash was down by $19.2 million, primarily reflecting the $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 an 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 each incentivize and benefit both parties, unquote. The bar on the left shows in FY25, we achieved 29% growth in completed room nights or CRNs to 3.3 million, with Serco receiving a 50% share of the commissions generated by booking for business. As noted on slides 11 and 12, that translated into pre-acquisition Serco achieving positive free cash flows for FY25s. 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 Serco 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 CRMs, 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 will therefore expect of 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 Night. 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 volume tiers. 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 Darren.

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 forecast to reach US $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 travellers now expect customer-grade experiences and businesses need more efficient, interconnected systems. Data and AI will define the next wave of change. Serco is set up well to leverage this change through its platform and user experience learnings with Booking.com for Business. This is why Serco 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 and booking.com for business, reinforcing our market leadership in Australasia, expanding in North America, and evolving the Serco 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 has not only enhanced 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 and 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 user experience use of experience, and 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 Serco platform. Turning to slide 17, our third strategic focus is the North American market, a transformative growth opportunity for Serco. The acquisition of GetThere, together with our strategic partnership with Sabre, has redefined Serco'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 US 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 GetLair 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. Serco 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 Serco's history. And our conviction and that opportunity grows stronger with every customer conversation. Turning to slide 18, our fourth strategic focus area, the next phase of the Serco 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 Serco platform is powering Booking.com for businesses' growth. With upcoming enhancements, including a new checkout experience and the launch of the loyalty incentive program, it's 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. Serco 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 Serco's year-to-date performance is in line with our expectations. For FY26, total income is expected to be between $115 million and $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, Serco expects total spend in the range of $127 to $133 million. I note that while the outlook is focused on FY26, We retain our aspiration of $250 million of total income in FY30.

The opportunity ahead of us is rare.

A global business travel market undergoing structural change with Serco 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're 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 1. We'll take your first caller. Please go ahead. Your line is open.

Morning, Tim. Thanks.

Maybe just could I ask a little bit about the reasonable acceleration in the booking.com for business activity levels? Can 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 continual experimentation and marketing messages. Also, the platform appeal with the functionality that we continue to add in. So, yeah, and that's kind of, we are seeing strong top of the funnel feed into there. So there's been a substantial improvement in that process as well.

And so just the source of those customers, you know, a specific type of customer, specific markets? So the mix remains relatively constant with what we've seen previously. So still significant proportion coming out of Europe. And yeah, so things that are driving the growth, we're seeing Chen and the existing base come down and we're continuing to see new customer ads being strong. And as Darren said, we're There's a variety of different initiatives that are being taken to try and increase that rate of acquisition.

Thanks, Lars. Morning, guys. John O'Shea from Wards.

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, Darren, in FY26 regarding the reduced capital cost required to integrate the program with SABR and get there. Can you perhaps give us a split of that? That would be very helpful.

Yes, I think so. I'll hand it to Shane to talk about that, the work that's been done on that area.

Thank you, mate. Hi, John. Just checking, you mainly just interested in how much of that we think will be capitalized or were you looking for another? Well, obviously the 127 to 133, how much of that will be capex and how much will be opex? Yeah, so I think probably our pick is probably in the order of 10 million of CapEx, but as you know, we're kind of definitely on the conservative side for CapEx, so it bounces around a little bit depending where their sort of accounting rules sit. But yeah, I'd probably take something in the order of 10 million. That's particularly in the last year. We pretty much didn't capitalise stuff on our managed travel side on the basis that we're looking to build this new platform booking for business has been built on the new platform so there was a bit more capitalization there um but we still for example don't capitalize any of the work that we've done around the experimentation that has helped drive that growth um so we would expect most of that capitalization to be coming out of the new platform development which we're probably estimating for this year it being more than a sort of seven to eight million range yeah the title capex in terms of you know Yes, so total capex is probably around the 10 to 12 mark. Thank you, which is obviously, I can take it then that that's well down on our previous expectations or your previous expectations. Yes, in terms of where we were sitting, I think in the So one of the things Mark concedes is about $143 million. I think there are kind of five main places where we've got improvements there. One is effectively, you know, we tend to be a little bit conservative in our projections on the cost side. So there are a number of places where we've simply been able to get things done as part of the exhibition of get there cheaper than we expected. So, for example, we 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 get there. There's a little bit of lower volume that we're assuming in the US that drives some lower direct costs. And then 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, but the additional amount kind of gives us a little bit of leeway for other initiatives that come up and effectively, particularly given the uncertainty that's there, we've just given ourselves a bit more flexibility around how much that we spend. And then 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, so they'll be effectively deferred onto the balance sheet as they're paid out. and then effectively amortised over the life of those customer contracts. So kind of those five buckets, so probably a chunk of that is effectively just a lot of costs that we have to run the same thing. The top end of the range gives us some room around some initiatives that we're not committing to until we're 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, but thanks for the colour. Yeah, correct.

And as a reminder, ladies and gentlemen, that is the start key followed by the digit one. We'll move to the next caller. As a reminder, please state your name and your company before posing your question.

Hi, morning. It's Suraj from Citi. Morning, Darren and Shane. Maybe just, I guess, the first question, just one question would be, would love to unpack the income guidance for next year between different businesses, especially get their, Darren and Shane, given you did almost five million revenue and you're saying modest revenue for next year, a bit confused in terms of that. And on the income guidance as well, in terms of the volume tiers, Shane, looking at your current momentum, this just confirming that booking for business should hit that volume tier, the first half itself. You did mention FY26, but it does seem like you hit it in FY26. Thanks.

I might take the second one first, Suraj. In terms of volume tiers, if you like on that slide, we've kept it simple. The actual underlying model is a monthly model and it's a it's incremental completed bookings above a certain level that get the incremental tiers. So 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. So we would expect to see some transactions drop into that tier in those months. Except the other extreme, when you're in kind of December and January, we're like, we may be under. So yeah, we will... you 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 state that we expect the results in the US to be modest. I think there's a few factors in there. One is that the... In terms of the $4.8 million, not extrapolating that forward, the FX rate was a little bit in our favor for that quarter. It was sort of running in the sort of 0.57-ish range versus we're sitting about 0.6 now in terms of the U.S. dollar to New Zealand dollar. We have seen some volume impact on one particular large customer coming out of U.S. government policy. And we are, given the general events in the U.S., there's, I think, a GBTA survey suggesting that around about 27% of the respondents were expecting a 20% reduction in volume. So we've definitely seen risk around that. And I think within our, obviously we bought the business, we were aware that there's risk around potential customer loss. We had 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. So I think those combined factors mean that you can't just take the $4.8 million and multiply it forward by four to get the FY26 result. I think the other key call-out I'd just make on the U.S. that I alluded to in my comments was if you take the cash flow for Get There, it looks a little heroizing for the one quarter. There's a big chunk of that that relates to one-off benefits typically transactions relating to the acquisition. So, for example, a large multi-year software license of the order of $4 million, which I think probably ties to, I think, in your flash note, you noted our cash conversion was down a little bit. Some of those sort of things as we onboard and get there will be impacting that.

We wouldn't expect those to recur.

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 18 million. I think it was tracking pre-acquisition in the first year. But 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 GetPay, is it still double-digit in New Zealand dollars? Because I think at the time of that question, you said 18 million in the first year, right?

Yeah, so I think we're Yeah, so we're indicating that we expect it to be below that 18 level. But yeah, definitely in New Zealand dollars, it will be double-digit millions.

Thank you. I'll jump back in.

And at this time, we'll move to the next caller in the queue. Your line is open. Please go ahead.

Hi, this is Wei-Wang Chen from RBC Capital Markets. So 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's why we covered it in the script. Oh, sorry. Yeah, so no, definitely, that's why I added it onto the outlook statement, just to confirm that that is still our aspiration. And I don't know if Shane, you've got anything else?

Yeah, I mean, I think the main thing there is that Outlook slides focused on FY26. As we indicated to investors, that won't be a sort of linear track to the 250. So we 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 get there if you just assumed you could compound up that same percentage through to FY30, and I think that just reflects the point we've made in this today. There are multiple ways for us to get to that $250 million, so absolutely the aspiration is still in place, but our outlook slide was focused on FY26.

Yeah, okay, cool. And 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, you know, 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, but you're seeing it bounce around because it's kind of like every... day or week it's got a different impact that's occurring so it's pretty hard to predict but I guess the underlying of that is that through uncertain times it creates a focus on a category and so 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 26 and 27 year and that there is a heightened focus on that. So 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. And as Shane indicated, you know, you do see some softening through those areas. And government, of course, is one of those focus areas as well. So, yeah, it creates an ability to have really meaningful conversations with those customers as well.

Yeah. Okay. 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 Craig's. Just your commentary about booking for business and the team expanding at booking.com. You know, it's good to see they're investing. Can you outline to what extent they have expanded their team size?

Yeah, roughly doubled their team.

On what base, sorry?

So on the base that they had, I don't know the exact numbers off the top of my head, but the team that they had before, they've doubled that through this new expansion. And 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. and so it's recognising that we're really trying to accelerate both how we build technology, the platform and everything and so Josh and his team can actually support that with us and 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. And Do you expect that team's lowest to continue to grow materially from here? Yep. Or do you think they're about right?

I mean, from their side, they'll support what's needed from their side based on how we're executing. So 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.

Thanks, guys. 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, you know, it was only April when we announced the signing of the booking.com new partnership agreement. So there's a lot of progress in a year and that.

And at this time, we'll move to the next caller in the queue. Caller, your line is open. Please go ahead.

Hi, morning. Shannon Darrens, McNish here from UBS. Just a couple of questions on the ANZ business overall as well. Just to begin with, is the target for ARPB still $6 per booking into FY26? It seems that you're growing that number considerably this year. Is $6 still the target?

I'll take that one. We're probably expecting more of a flattening into this upcoming year, and the context behind that is we've had a commercial opportunity that allows us to take about $2 million off our cost line, but also takes about $1 million off our revenue line, so that will effectively dilute the other initiatives that we're doing in ARPB. So we'll be a little bit south of the $6 for FY26.

But it does increase our profitability by a million.

Right, so is that factored into the guidance? So I suppose just trying to get a steer on what you're thinking about for the ANZ business. Yeah, correct. What do you think about the volume component, though? So you've sort of got flat pricing and you've sort of seen a deterioration, I suppose, in business travel here. Is that kind of all backed into the 115 to 123?

Yeah, so we're still, I think for ANZ, we're expecting it to be relatively flattish on both volume and revenue. I think it's interesting in that clearly, as I noted, we had one US 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. So at this point, we're assuming that we're sort of reasonably similar in terms of volumes year over year.

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 of Mulligan from Macquarie. Just a quick question on the expectations to get there. Okay. I know you said it's not fair to annualise this quarter of revenue that you just did, but maybe instead of thinking of it in month's 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.

Just asking if you could talk through the volume and price expectations for the next year for the North American business.

Yes, 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. So it'll be south of $4 million. 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. And so just quickly, last one on your expectations for the performance payments. You're touching it slightly in your comments, but if you just expand, you know, how you're expecting those to flow through

Yeah, so in terms of performance payments, so 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 commissions basically defer over the life of the contract, so 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, and FYI, So you won't see much in our P&L for that in FY26. And then I think the actual payments from memory don't occur until the beginning of FY27. So effectively, you won't see a lot of that in either our cash flows or our reported total spend for this year. On the cash flow side, I'd also note that we have got the option to make those payments payments and potentially an equity rather than cash if we choose to. Our cash is looking pretty strong at the moment. So those are choices we'll make closer to the time.

Great. Thank you so much.

Next caller, your line is open.

Thank you. It's Siraj again. Just a couple of questions. First one, on the conversion ratio coming down for looking 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. slightly stronger growth in the December quarter. And one of the reasons why we came off growth slightly in the fourth quarter was we had some operational issues that impacted conversions. We saw really strong demand to the site, but we didn't convert all of that in January and February. Our teams got onto that and got it fixed and resolved. So coming out of March at the with the conversion rate we expected. So we kind of settled that conversion rate back in about where we expected it to be, and that's continued through into April and May. We certainly still aspire to grow that conversion rate a little bit further, but the rate we have is already pretty healthy.

So just clarifying on that, you're not seeing any macro impact in looking for business in April and May so far?

No, and I think you would have also seen the Booking.com releases, but they talk to the fact that their business is heavily weighted outside the US, and obviously both us and them would like to grow our businesses more in the US, but at the moment having a lower weighting is quite helpful. Ours is probably mid-single-digit percentage of booking for business transactions in the US, so it's quite a minor part of our business there. So there's certainly the risk that something could happen, but 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. So at the moment we're still seeing our kind of booking 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. And second thing, in terms of the integration and the platform, you know, the new platform, right, for managed travel. So I think in the university, and as a question, you said what total spend would be $40 million, right? And given that the spend is actually lower, like, what are you expecting with total spend in the two to three years? And then secondly, when do you reckon the unified experience will come through? Thanks.

So that's where, Suraj, we kind of indicated that most of the cost savings were in the synergies and implementation into the operational side of Serco. We still intend to spend the platform spend, and we've given, as Shane indicated, a wider spend range to enable us to boost that up a little bit more if we need to into that platform side. So on the platform side, we do still intend to spend and we are looking if we can actually do that faster with the teams that we're setting up in there. So 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.

So we're still expending $40 million this year. We'll be a little bit lower than what we projected last year. The numbers that we had yesterday, it's probably more 7, 8 million versus 9 million. And that's partly around, I think, Darren talked about the fact that we're taking quite a deliberate approach to getting the setup. So 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.

But allowing ourselves the flexibility. Yeah. Yeah.

And when do you expect it 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? I just missed that.

Just a new Zeno, or just a new managed travel experience, right? UX and everything.

Yeah, so it's... Yeah, it's quite...

We're not going to talk about everything we're doing in the new platform at the moment, but it's quite interesting how we're bringing that to life as well.

Thanks.

And at this time, there are no additional callers in the queue.

I would like to turn the conference back over to your host, Darren 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 Serco. Thank you very much.

That does conclude today's teleconference. We thank you all for your participation. You may now disconnect.