AFR: Aussie tech unicorns keep on growing through COVID-19
By Michael Bailey
Hotel technology provider Siteminder became Australia's latest unicorn just before the pandemic pummelled the tourism industry, but it's hoping early cost-cuts and a pivot to customers outside major cities will help it preserve its nine-figure valuation.
Remarkably, Siteminder still managed to join fellow unicorns SafetyCulture and Envato in increasing its 2019-20 revenue, according to financial statements for all three lodged with the corporate regulator this month.
Siteminder brought in $112 million compared to $97 million the prior year, despite what chief executive Sankar Narayan described as "four months of pullback" baked into the top line.
The pandemic did help sink Siteminder's bottom line, however: combined with increased marketing and R&D spending, the scale-up lost $22 million after recording a $2 million net profit in 2018-19.
The gap between revenue and profitability continues to close at SafetyCulture, whose compliance and education software has more than 700,000 active users worldwide, a number which grew 57 per cent between April and August as employers sought help enforcing COVID-safe protocols.
Revenue rose to $52 million in 2019-20 from $28 million the prior year, while its net loss of $14 million had shrunk from $23 million in 2018-19.
SafetyCulture founder and chief executive Luke Anear said the scale-up was on track to hit $100 million in annual recurring revenue next year, running on an 82 per cent gross profit margin.
Meanwhile Envato, the digital assets subscription service whose global customer based leads it to report in US dollars, reported $US135 million revenue in 2019-20, up from $US113 million as more people turned to online means of making a living.
However increased marketing costs, associated with Envato's gradual shift from a marketplace to a subscriber model, saw a downward trend in profitability continue for a second year, with its $US6 million profit in 2019-20 down from $US7 million in 2018-19.
However Siteminder's story has been far more dramatic.
In January, it raised $50 million from investors including BlackRock and AustralianSuper, putting a $1.1 billion valuation on its platform which connects hotels to online distribution channels.
Then Australia's February 1 ban on Chinese arrivals presaged border closures, which rocked the 35,000 hotels subscribing to its product.
By April, hotel bookings for most major cities in Siteminder's ecosystem were down 90 per cent year-on-year. Even by October 18, Sydney hotel bookings in Siteminder's ecosystem had recovered to only 35 per cent of levels a year before, while London bookings were at 30 per cent and Melbourne just 5 per cent.
With thousands of hotels suddenly unable to justify Siteminder's $200-per-month subscription fee, and transaction revenue drying up from its payments product for small hotels, the scale-up was forced to cut its headcount from over 900 to around 700.
"We had to make some difficult decisions, but we've discovered a strength and a resilience in this which is going to make us a better business into the future," said Mr Narayan, adding that Siteminder had received wage subsidies for its Australian, UK and Ireland offices, but that revenue recovery meant it would no longer be eligible for Jobkeeper after this quarter.
Management had held its breath and seen through the crisis, the chief executive said, doubling down on investments like a 'partner program' aimed at increasing interconnectivity among its ecosystem.
Siteminder also refocused its sales efforts on hotels outside major cities that benefit from domestic tourism. Hotel bookings in Newcastle, north of Sydney, were now at 110 per cent of levels a year ago, while in the UK regional centres like Bournemouth and Brighton were around 70 per cent versus London's 30 per cent.
The number of hotel subscribers, from whom Siteminder earned 80 per cent of its revenue pre-COVID, had now recovered to 34,000, just 1000 below its January level, Mr Sarayan said.