March 12, 2024

Stockhead: Bailador bullish on largest holding SiteMinder as it charges into S&P/ASX 200


  • BTI’s largest holding SiteMinder to join S&P/ASX 200 after quarterly rebalance
  • SiteMinder forecasts profitability for H2 FY24 with sustained growth
  • New SiteMinder products leverage AI along with its industry-leading data assets


Special Report: Tech-focused capital fund Bailador Technology Investments has seen its largest holding SiteMinder (ASX:SDR) elevated to the ranks of the benchmark S&P/ASX 200 in the latest rebalance of some key indices.

Bailador Technology Investments (ASX:BTI) says the hotel booking platform’s inclusion in the S&P/ASX 200 is a significant milestone and reflects the ongoing strong performance of the company.

Paul Wilson, BTI’s co-founder and managing director, says SDR’s H1 FY24 results released in late February confirmed to the market it was delivering on strong medium-term growth and continued progress towards profitability forecast for H2 FY24.

Highlights include:

  • Total revenue increased 27.9% to $91.7m
  • ARR increased 27.2% to $182.5m
  • Underlying EBITDA improved $13.4m to a loss of $1.2m

“SiteMinder’s growth guidance is unchanged and continues to target organic revenue growth of 30% per annum in the medium term,” Wilson says.

“The company maintains its expectation to be underlying EBITDA profitable and
underlying free cash flow positive for H2FY24.

“With SiteMinder providing guidance of moving into underlying profitability this half, we believe there is prospect of valuation re-rating.”

Wilson believes SDR’s move into profitability will open additional investment pools with the mandate of some institutional investors only allowing them to invest in profitable businesses.

“We believe that the move by SiteMinder into profitability could mean an increased pool of  available investors,” he says.


Inclusion in S&P/ASX 200

Wilson also noted there is typically significant trading of stocks which are confirmed to be joining the S&P/ASX 200.

“Given some funds are restricted to investing only in S&P/ASX200 stocks, SDR’s impending inclusion will further boost its potential pool of investors,” he says.

There are many funds whose key benchmark is the ASX200 index, which will form a view on whether an investment in SDR is consider overweight or underweight compared to index composition.

“While it is helpful to have these favourable market factors, the performance of the share price over the medium and longer term will, of course, be driven by the performance of the business,” Wilson says.


Positive medium-term outlook driven by two transformational new products

SDR has two transformational new products, including Channels Plus and Dynamic Revenue Plus, which aim to redefine how hoteliers approach revenue management.

Wilson says the products leverage AI, along with SDR’s industry-leading data assets, and its Smart Platform to automate and optimise commercial decisions around pricing, distribution channel activation and inventory allocation.

“Of particular note is that these products will generate volume-based revenue,” he says.

“SiteMinder has historically generated predominantly subscription-based revenue.

“This type of revenue has proven to be great defensively and can produce solid

“We believe there is potential upside from SiteMinder generating material revenue from value added products based on volume through its platform.”

Wilson says the SDR platform has throughput of more than 115 million reservations worth more than $70 billion in revenue for its hotel customers annual.

“Capturing even a tiny fraction of that revenue – for example, 1% is $700 million – could produce a step change financial result for SiteMinder,” he says.

SDR expects revenue proof-points from the new products to begin in the H2 CY24 calendar year, with financial impact to grow over time.

Characteristics for long-term growth

Wilson says SDR has characteristics that BTI looks for in an “outstanding” business, including:

  • Worldwide market leader
  • High quality management team
  • Market leading products with established product market fit
  •  Massive addressable market
  • Defensible market position
  •  High gross margins
  • Operating leverage
  • Reliable strong unit economics
  • Predictable growth
  • Blue sky breakout opportunity

“It is Bailador’s assessment that SiteMinder is positioned for sustained growth and improved profitability over a long period of time,” he says.

Wilson says some BTI shareholders may ask why it continues to hold a material position in a business that has gone past the traditional ‘expansion’ stage.

He says a return of close to 100% so far this financial year is one of the main reasons.

“Another contributing factor is confidence and having been closely involved over a number of years, we feel that we have a deep understanding of the business and its prospects,” he says.

“It can take time to achieve a level of understanding that provides confidence to allocate a large amount of capital to an investment.

“Siteminder is at a point where we believe the downside risk is significantly lower than many expansion stage opportunities, while the growth is strong and predictable, with genuine breakout upside potential.”