Serko Limited (SKO) Earnings Call Transcript & Summary

[Foreign Language] Good morning. My name is Claudia Batten, and I'm the Chair of Serko. I'm pleased to see so many shareholders joining us today and also welcome those shareholders who have joined online. I'll start with some important points. For those shareholders and proxy holders who are attending the meeting in person and who are entitled to vote, you should have received a voting card when you registered upon arrival at the meeting. If you've not received a voting card, please go to the registration desk for assistance. Please turn your mobile phones to silent. I've already done that. If there's an emergency and we need to leave the venue, please do so through the marked exits and follow the instructions of the venue staff. Those online will be able to ask -- to vote and ask questions during the meeting. You can send through your questions at any time through the online portal by using the Ask a Question button, and I would encourage you to do so as early as possible. This will allow us to answer these questions at the appropriate time of the meeting. I'll provide you with further instructions as we progress. If you encounter any issues, please refer to the online portal guide or you can phone the help line on 0800-200-220. We will be using some slides during the meeting. For those of you online, you'll be able to see these and follow along. They're also available on Serko's website. It's my pleasure to introduce my fellow directors here today: Jan Dawson, Independent Director and Chair of the Audit, Risk and Sustainability Committee; Sean Gourley, who will be here any minute now. He's just flown over from the U.S., so he's coming in from the airport. He's an Independent Director and Chair of the People, Remuneration and Culture Committee; Darrin Grafton, Executive Director, CEO and Co-Founder; and Bob Shaw, Executive Director, Chief Strategy Officer and Co-Founder. I'm the only director who's standing for reelection today. And as a result, we'll hand over to Jan Dawson to run the voting process for that reelection resolution. I'd also like to welcome the members of Serko's management and staff here in attendance. And finally, I'd like to welcome our external auditors, Deloitte; our lawyers, Russell McVeagh, and also the team from our share registrar, MUFG Pension and Market Services. They will help conduct the voting on the formal business later in the meeting and also act as scrutineer. The company's Secretary has confirmed to me that the Notice of Meeting has been sent to shareholders and other persons entitled to receive it on the 29th of May 2026. I confirm that the requirement for a quorum for this meeting of 3 shareholders has been met, and I declare the meeting open. The items of business for this meeting and the resolutions to be considered by the shareholders are contained in the Notice of Meeting. Darrin and I will provide an overview of Serko's performance for the year ended 31 March 2026 and the progress and priorities for the current financial year. There will then be an opportunity to ask questions. We will then attend to the formal business of the meeting. Voting on all resolutions will be conducted by way of poll as required by the New Zealand -- by the NZX listing rules. Shareholders attending virtually will be able to cast their vote using the electronic voting card received when online registration is validated. Please refer to the online portal guide or use the help line specified. The world Serko is operating in is moving at an unprecedented pace. Geopolitical uncertainty is reshaping travel patterns. Artificial intelligence is fundamentally disrupting industries, including ours, and financial markets have reflected this broad uncertainty. These challenges and the opportunities they present have energized the Board and the management team. The foundations that we've built over recent years are now genuine competitive advantages. What many businesses are experiencing as challenges and uncertainty are acting as potential tailwinds for us. What's important for any company operating in this environment is the quality of its governance and culture, the strength of its foundations, the clarity of its strategy and the excellence and speed of its execution. All of these at Serko are in excellent shape. The decisions we have made and the disciplines we have embedded are positioning us to lead in the next era of business travel. Today, I will cover the strength of our FY '26 performance and our business, how we are governing in this period of change and opportunity and why we are confident in Serko's future. Good governance starts with the right people around the Board table. I want to take a minute to speak to the strength of the Serko Board because in an environment defined by AI disruption, geopolitical complexity and rapid technological change, the capabilities of your directors matter enormously. Jan Dawson brings deep financial acumen, executive leadership experience and rigorous governance skills as our Chair of Audit, Risk and Sustainability Committee. Jan's oversight of our financial reporting, risk management frameworks and sustainability practices has been an important contributor to the discipline that you see reflected in our results. Sean Gourley brings something rare and valuable, deep expertise in AI and technology, cybersecurity and data governance, combined with a strategic insight into building and scaling businesses in the U.S. market. This allows him to test our ambition and strategy against world-leading technology companies. Sean has been instrumental in shaping the Board's thinking on AI governance. This capability is no longer optional for a company like Serko, it's essential. Darrin Grafton and Bob Shaw as co-founders and executive directors bring the deep domain expertise and long-term industry knowledge and relationships that continues to be extremely valuable as we navigate a fast-moving competitive landscape. Together, this is a Board with the right blend of financial rigor, technology and AI expertise, U.S. market experience and governance depth for this period in Serko's development. In recent years, the Board has been refreshed, and I remain committed to ongoing renewal, as I'll cover later today. We also recently provided an executive leadership update to accelerate the execution of our strategy. Matthew Gerrie's role as COO has expanded to cover day-to-day operational performance across the business as we execute our strategy at scale. This frees Darrin to focus on where the industry is heading, where Serko needs to be positioned in the external relationships that will get us there. We've also promoted David Holyoke to Chief Product Officer. David has led the development of Serko AI and has driven growth in Booking.com for Business. He's a highly experienced executive, having worked for some of the largest -- world's largest travel brands, including most recently at Airbnb. FY '26 was a strong year. Total income grew 34% to $120.9 million at the top end of our narrowed guidance range. EBITDAF increased 137% to $6.5 million, which was a significant improvement in our underlying operating earnings. Our net loss after tax narrowed by $4.2 million to $17.7 million. Total spend reached near parity with total income at 102%, demonstrating our operating leverage. And we remain well capitalized with $54.1 million in cash and no debt, providing us with flexibility as we pursue our strategy. Our FY '26 performance is proof that our business model is working, that we can achieve high revenue growth while managing costs with discipline. The Board is satisfied that FY '26 provides further evidence of Serko's execution capability and provides a solid foundation for the investments and growth initiatives we are pursuing in FY '27 and beyond. Darrin will provide further details on the results. At last year's meeting, I outlined 5 Board priorities for FY '26, and I'm pleased to report meaningful progress across all of them. On capital management, the Board oversaw a disciplined allocation of capital towards our 3 strategic initiatives: Serko AI, Booking.com for Business and the defined U.S. corporate segment opportunity. This was done while maintaining our strong balance sheet and near parity of spend to income. Platform investment has been scaled and weighted to the areas of highest strategic priority, and Darrin will cover this in more detail. I'll speak to Board succession as part of our FY '27 focus. On strategy and execution, the Board has remained closely engaged with the development of our 2030 strategy, which we shared with investors in March. A big shift for Serko in FY '26 was the pace at which the team was able to move because Serko had invested early in AI capability, data infrastructure and platform development, we entered the FY '26 year strongly. This translated directly into delivery, including the launch of Serko AI and the closed beta in May of this year. The Board is encouraged by what this says about Serko's ability to execute at pace. On AI governance and oversight, we've strengthened our frameworks for the responsible use of AI across the business, including appropriate data governance and ethical AI practices. AI now touches nearly every aspect of how we operate, and our focus has broadened beyond simply governing AI itself. It's about governance in an AI world, from ensuring safe use to managing the implications of that use to ensuring that our strategy remains aligned with an AI-led future. This is an area of ongoing focus as we become an AI-led business and one I'll return to in more detail in the FY '27 priorities section. In our global workforce, we've continued to build our international capability. We've expanded our India engineering hub. We've strengthened our U.S. team, both through get their talent and new additions in sales, product and technology. And we've deliberately uplifted our senior leadership with global AI and technology experience. All of this advanced materially in FY '26. In addition to these priorities, in FY '26, we made a number of improvements to executive remuneration in direct response to feedback from investors. We redesigned executive incentives to further strengthen the connection between executive performance and long-term shareholder value. As part of that, we converted nonperformance-based long-term incentives into deferred performance-based structures with a 3-year absolute total shareholder return metric. We also significantly increased the transparency of our remuneration reporting, including disclosing detailed performance metrics. We will continue to evolve our approach in response to shareholder feedback. I want to directly address the reduction in Serko's share price in recent months. Like many software businesses, Serko's share price has been significantly affected by a broad market re-rating of the technology sector, which has also impacted a number of prominent listed software companies in Australia, New Zealand and the United States. We don't believe it's a reflection of anything structural to the business travel industry. It's an industry that continues to grow. While we are not alone, we are using this as a catalyst to sharpen our execution and stay firmly focused on achieving our ambitions. We recognize Serko is at a stage where it needs to demonstrate the success of its newer growth initiatives. Investors are rightly looking for proof points as these initiatives advance. Translating strategy into measurable progress is a key priority for us as we move through this financial year. We're confident in our ability to do so. Serko's data foundations, domain expertise, established partnerships and early investment in AI mean that disruption others fear is for Serko an opportunity. The share price decline does, however, create a practical challenge. Under NZX listing rules, the number of securities that we can issue for employee incentives is capped at 3% of the shares on issue. The reduction in our share price means that meeting our incentive commitments would require issuing more securities than this cap allows. To address this, we will be convening a separate special virtual meeting of shareholders in August. The Notice of Meeting will be distributed to shareholders in July. The resolution will seek approval to issue securities above the 3% threshold to allow us to grant equity incentive awards to members of the executive team in critical hires. The alternative would be to grant cash incentives that provide the same economic award. We believe this request is the right way to maintain strong alignment between executive and shareholder interests and honor our existing commitments. For the year ahead, the Board's priorities are centered on 4 areas. First, the Board is ensuring that execution against our strategic milestones remains the top priority. Solid progress is already being made on each of these as we will update you today. Second, Board succession, completing the search for and appointment of 2 new nonexecutive directors. One of these appointments is intended to be a potential chair successor. The skills we are targeting are technology, innovation and U.S. operating experience, complementing and extending the existing capabilities of the Board. We're taking a disciplined approach, prioritizing quality over speed. There's a smaller pool of directors with the right skill set for a technology company with a big international growth objective. So we're taking our time to ensure that we get the right directors. We will keep shareholders updated as the process progresses. The Board has determined that it is in the best interest of the company that I continue as Chair through this transition to support the appointment and onboarding of the potential chair successor. Once that process is complete, I intend to step down. In the meantime, I am standing for reelection today. Third, driving growth with financial discipline. We are focused on capturing outsized growth opportunities funded by the cash flows of our existing business, all while maintaining a strong balance sheet. We've demonstrated that we can deliver operational leverage at scale. And fourth, artificial intelligence. Last year, we broadened our focus from simply governing AI to governance in an AI world. This year, that means going further, embedding AI thinking in how we build product, how we set strategy and how we run the business. On behalf of the Board, I want to thank our partners, our customers and all of you, our shareholders, for your ongoing support. I particularly want to thank the Serko team and those who are joining online from Serko. Hi, everyone. The pace and quality of execution that we have achieved this year is a direct reflection of the talent and commitment and belief of the people who build and run this business every day. I look forward to sharing our ongoing progress with you, and I will now hand over to Darrin.

Good morning, everyone. I want to take this opportunity, first of all, to say thank you to Claudia, but also give her my complete support for reelection today. Claudia has been a phenomenal challenger of our thinking and strategy, and I've loved the opportunity over the last year to work with her. And so I just wanted to acknowledge that support, Claudia. Thank you. To the rest of the Board, thank you again for your continued guidance and challenging as well. Thank you. It's greatly appreciated. Today, I want to cover 3 things: a brief overview of our FY '26 performance, our strategic position and what makes Serko competitively differentiated and the pathway to our $250 million FY '30 aspiration. I'm then going to hand over to my Chief Operating Officer, Matthew Gerrie, who will take you through our progress on the 3 growth initiatives. With me this morning, and I'm going to ask them all to either stand or wave up, Matthew Gerrie, our Chief Operating Officer; Liz Fraser, our Chief Revenue Officer; Shane Sampson, our Chief Financial Officer; Rachael Satherley, our Chief People Officer; and Bob Shaw, our Chief Strategy Officer; and Simon Young, our Chief Technology Officer. Our Chief Product Officer, David Holyoke, he sends his apologies. He's based in the U.S. Claudia has spoken to the recent leadership update, and I'm delighted to welcome both Matt in his expanded role and David as our new Chief Product Officer. But what I'm really most proud of is the quality of the team we have. The talent across the executive and the wider leadership group is really exceptional. And we're seeing that in the quality and the pace of our delivery. Claudia has covered the headline numbers. So let's give you a little bit more detail of what's actually behind them. The 34% growth in total income reflects strong momentum in Booking.com for Business, and it's the first full year of the GetThere revenue. Online bookings increased 41%, up from $6.4 million to $9 million. On Booking.com for Business specifically, completed room nights also grew 31% to $4.3 million, and that's driven by active customer growth of 36%, 301,000. That's approximately 79,000 new active customers over the year. And that's reflecting our acquisition strategy with Booking.com and of course, the strength of the product in this SME market. In Australasia, we continue to see growth across both customers and bookings and travel revenue was up around 6%. I note that this growth was largely driven from specific service order work from specific partners. We don't expect that rate to repeat. However, we do remain the market leader in the region and the new distribution capability or NDC continues to gain real traction with full integration across Sabre and Amadeus, and it's a genuine point of difference. In the U.S., GetThere has provided us with a strategic foundation, and it would otherwise have taken us years to build organically these direct customer relationships, transaction data at scale and real visibility into one of the world's largest business travel markets. That foundation is now supporting the 2 initiatives that Matt is going to share with you shortly. The first of that is Serko AI and the second is a targeted push into the specific U.S. corporate travel segments, and that's through Booking.com for business. The signals from both reinforce our confidence on the opportunity. It has been a big year for AI. We've been positioning Serko at the front end of this shift for some time. But the disruption it's capable of was truly felt across multiple sectors this year. And I want to address directly the question that I know is on many investors' minds, what does AI disruption mean for Serko? As we outlined at our Investor Day, we see AI disruption as an advantage, not a threat. Every year, our technology processes millions of bookings. We understand how people travel for work. What actually make the decisions, what policies the organizations need to enforce and where these friction points are. We're not just building another AI travel tool. We're leveraging years of travel data, supplier connections, policy intelligence to operate at the center of how an AI-enabled travel gets orchestrated. And this is really very difficult to replicate. The large language models are actually commodities. Anyone can access them. What is not a commodity is the data, the domain understanding and the customer relationships that determine whether AI can actually deliver value in a specific context. And Serko has all 3. We started our journey early. We made the foundational investments before they were commonplace, and we are now in delivery mode with a product in advanced testing with users and improving continuously. Platform investment will continue to scale in FY '27, and this is funding largely by reallocating existing spend rather than adding a new cost. And this reflects a deliberate strategy to simplify our operations and sharpen our focus on growth initiatives that will drive Serko's next phase of growth. Cost discipline and operating leverage remain a focus, supporting the scale-up of our investment in FY '27. The investments are focused across key areas of the business as we evolve our strategy to execute on our FY '30 strategy. This includes our dedicated booking for business teams, expanding our India engineering hub and Serko AI. The most important point on this slide is not just how much we have grown, but it's the how. We've consistently and substantially increased the top line while improving efficiency. Over the last 5 years, income has increased more than 5x, while spend has grown less than double. Few companies are able to demonstrate that level of operating leverage at scale. That track record gives us the confidence that as we deliver on our plans and revenue continues to grow, profitability and cash flow can expand materially faster. We're often asked, when will Serko become sustainably cash flow positive? The answer is that we know how to achieve that outcome. The question today is not the capability, but the optimization. Where we see opportunities to create significantly greater long-term value, we will continue to invest ahead of the curve. We believe the combination of our market position, strategic partnerships, the AI opportunity and proven operating leverage gives us a unique opportunity to create substantial shareholder value over the coming years. And our aspiration of $250 million total income by FY '30 is grounded in the growth initiatives we already have underway. Booking.com for Business is the core engine. It's already at 4.3 million completed room nights and growing. It's expected to be the highest contributor to our FY '30 aspiration and the partnership provides a strong structural foundation. Serko AI represents the highest upside potential as it moves from our closed beta through to open beta and into commercial scale. We expect it to create new revenue models and capture value that legacy tools simply cannot reach. We are currently validating our potential commercial models through user research and focus groups. We look forward to sharing more as we take the product to the broader market. The U.S. corporate segment is meaningful, additional growth lever that's targeting the multibillion accommodation market, and that's really underserved by modern policy compliant tools at scale. And our Australasian business is also stable and reliable performer in the market and which remains the clear leader. As these initiatives gain further traction, we'll share more detail on the pathway ahead. I'm now going to hand over to Matt, who will take you through the execution update on each of those 3 initiatives.

Thanks, Darrin, and good morning, everyone. I'll take you through where we're at on our 3 strategic initiatives and what's next. We've made rapid progress against all 3 with meaningful developments since the FY '26 results last month. Before I get into detail, Claudia noted David Holyoke's promotion to Chief Product Officer. David is based in the United States and has deep U.S. and global product experience. It's a well-deserved appointment and a great example of the leadership that we have in place to deliver upon everything that I'm about to cover today. Starting with Serko AI. Six months ago, this was a proof of concept. Today, it's live in beta with United States users. That pace reflects several years of investment in our AI and data foundations and the strength of our team. For users, the experience is simple, a conversational interface that removes friction from booking work travel. But simple to use does not mean simple to build. Behind every interaction, Serko AI is coordinating multiple AI agents, working in parallel, managing connections between third-party suppliers and navigating a huge range of possible options and outcomes. This is all taking place in real time and all invisible to the person booking the trip. Delivering that level of simplicity is, in fact, vastly complex. We launched a closed beta in May to a deliberately small group of users to test and iterate. Alongside this, more than 100 Serko employees have rigorously tested the product. This is a real advantage for us as their deep expertise in business travel means they catch issues that an average user might miss. During June and July, we're expanding the beta to several hundred more users. Feedback has been very positive. Users say it saves time, it's easy to navigate and it removes pain points in business travel. We're rolling out improvements on a frequent basis based on data and user insights. Building on this momentum, we continue to strengthen and innovate core parts of the product experience. This includes developing new functionality for organizations wanting to deploy Serko AI across their workforce and testing pricing and packaging approaches. Demand to join the beta has been strong, and we're pleased with the quality and the volume of the users coming through. Last week, we held an innovation forum with 20 corporate customers and potential customers in the United States to showcase our progress on Serko AI, demonstrate some of the prototypes of future corporate-facing features and gather their feedback on our approach and future directions. We received very positive feedback. It was a strong signal for the appetite for Serko AI and the feedback and engagement were a strong validation for the direction that we're headed in. Looking ahead, we'll keep growing our beta users through targeted acquisition over the coming weeks and maintain our cadence of continuous improvement. We're really proud of the progress our teams have made on Serko AI, and we remain on track for beta launch in Q3 FY '27. Our second strategic initiative is scaling Booking.com for Business. This remains the core growth engine of our business and the highest contributor to our FY '30 aspiration. The 31% growth in completed room nights and 36% growth in active customers in FY '26 reflects both the strength of the product and the quality of our partnership and execution. In FY '26, we delivered meaningful product improvements that are translating into commercial results, including a new checkout experience that significantly outperformed the legacy experience driving incremental bookings, an enhanced mobile experience that is driving higher booking conversion rates and AI-powered customer support that is autonomously resolving support queries. In FY '27, our focus is on 3 things: first, identifying and converting new customers and incentivizing and rewarding customer behavior. As an example, there is an opportunity to bring on more customers from Booking.com to Booking.com for Business. Second, we're ensuring a seamless booking experience on any device and personalized travel suggestions at scale. And finally, we're giving organizations the visibility and policy control they need to keep their teams booking through the platform. Our third strategic initiative is the defined U.S. corporate segments opportunity, targeting U.S. organizations that regularly move people at scale using Booking.com for Business. This accommodation market is large, recurring, high frequency and high volume, yet underserved by modern, simple, scalable tools. We believe Serko's corporate travel expertise and Booking.com for Business' simplicity is uniquely suited for what these customers need. One example is insurance displacement housing. When a policyholder's home is damaged, insurers need to place their policyholder into temporary accommodation often same day or next day. These placements are frequently in suburban or rural areas where major hotel chains have limited reach for stays that can reach anywhere from 2 weeks to several months. Demand can also spike rapidly during catastrophic events where thousands of people need housing all at once. This is where Booking.com for Business is strong. Its inventory in suburban and regional markets is strong and its centralized booking model suits this far better than the individual self-serve booking. It's a use case insurers have struggled to solve well and one that we believe we're well placed to address. We've signed 2 organizations in our target market, and onboarding is underway. We're currently training the travel arranges within these organizations, which is a key step at embedding the product into their daily operations. Our focus right now is on testing, learning and refining our approach with the initial customer group before we scale at large. What's exciting is the pace. It's only been a short time since we set out the opportunity at our Investor Day, and we already have a market-ready product and customers being onboarded. We have a strong U.S. team on the ground in the United States, and we're leveraging our GetThere talent base who have a deep U.S. market knowledge and established customer relationships, plus new hires, including dedicated sales capability just for this segment. The pipeline is growing, and we expect to bring on additional customers through FY '27. Well, thank you for listening, and I look forward to keeping you updated in the future. I now hand back to Darrin.

Thanks, Matt. Before I cover guidance, I want to flag something for shareholders. We are operating in an environment of unusual uncertainty. The conflict in the Middle East, the macroeconomic volatility and the broader, of course, geopolitical context create a level of unpredictability that we know shareholders are watching very closely. While our business has proven resilient, we want to keep you appropriately updated. We've, therefore, decided to provide a one-off nonfinancial business update in August, covering the key operational metrics and the progress on our strategic initiatives. We'll provide a notice to shareholders of the date and format of that update. Now Serko has made a strong start to FY '27. Booking volumes are slightly ahead of our growth expectations, and we have not seen material impacts from the geopolitical environment on our core markets. So we are affirming the guidance that we provided in FY '26 results in May. And in closing, I want to say we're entering FY '27 with real momentum, and we are delivering on our milestones. Serko AI is live in closed beta and on track for open beta in quarter 3. We are onboarding new U.S. customers and Booking.com for Business is growing strongly. Our Australasian business is resilient, and we are executing with discipline and pace. I want to thank you for your continued support, and I'm now going to hand back to Claudia.

Thanks, Darrin. I'd now like to give shareholders and proxy holders, both here in person and online today the opportunity to ask questions of the Board, management or the auditors. Shareholders online can continue to provide questions through the portal, and we'll also address questions from the room. When I call for questions, can shareholders present in the room, please wait until a microphone is provided to you and clearly state your name before asking a question. I'll take questions from those present first before moving on to any questions from shareholders online. I ask that in the interest of fairness to all shareholders attending this meeting that anyone wishing to speak should be as concise as possible, and please be considerate to other shareholders wishing to ask questions. There will also be an opportunity to ask questions on each of the proposed resolutions during the formal business session. So I'll begin with questions from shareholders in the room.

[ Alex Ball ], New Zealand Shareholders' Association. Just a couple of questions. So I'm going to hog the microphone. We talked last year about AI, and I'm delighted to see the initiatives that you've gone with in the strategic value proposition that you've outlined this morning. My only question around that is, have you had any feedback about what others are doing and whether you are quick enough to the market? Are you extensive beta testing, that's great. But speed to market is critical as well. That's my first question. Roll on to the second one, which I know will resonate with people here. SaaS again is happening. There's a lot of pressure on share prices around the world in terms of tech stocks. But the re-rate that we need as an organization for the share price to go up. Have you had any conversations about what might drive a re-rate in your share price within [ Stowes ], for example, and other market participants. The share price is single-digit multiples rather than the 20x, 30x that you'll see in other stocks around the world. And I'm just wondering whether they've got any observations around that.

Magic answers. Great questions. Thank you. Look, the AI one is really interesting. I don't think you could ever tell yourself that you are at pace. I think that's a really dangerous thing to do. I think the most important thing to do is be paranoid that you're running behind. I think we're doing a really good job of being paranoid. So I think that's the first point. The second point would be you want to make sure you've got a great team. And I think that there's a balance there. You don't want to rush to hiring a lot of people with so-called AI capability because there's just not a lot of those people in the market, and they're very, very expensive. We'll take some of that talent. But the really important imperative is for us to get our whole team up to speed on AI and make everyone AI-power users. So I think that's the second really important piece is balancing some real capability and skill with just an uplift of the whole organization because that way, we can actually be the ones discovering what the new frontier looks like rather than trying to catch up and play a catch-up game. And look, I think the third thing is just making sure you're surrounding yourself with that challenge outside of the business. So [ Shawn ] is a great gateway for us to the U.S. and what's happening there, and there's never a Board meeting where [ Sean ] is not pushing us saying, well, that's fine, but what about this? Have you thought about these folks and what they're doing over here? So we get really great access and provocation through his lens. And then just generally, we'll have other people come in and share what they're doing. So I think we're going as robustly as we can in that area. It's very exciting to us, but you should just presume that you're behind because I think we all are. So the question around the re-rate of the share price, look, there aren't any magic answers here. And really where we get to, and we have had a number of conversations with [indiscernible], I'm talking to a lot of my fellow directors, both in the tech space and more broadly, [indiscernible] seen this over her time and her career. At the end of the day, we sum this down to execution. The bottom line for us is that we have to put our noses down, execute against the plan. We've got a great strategy for the business. We've got to execute to that. We've got to be really smart about that because plans are great on paper, but they execute differently in the market. So being really vigilant about what's working and what's not and adapting as we go. And then communicating that to the market. And I think we've done a really, really strong execution game. There's a lot more work that we need to do. We've built up the capability for that, and we're absolutely radically focused on that for the year. The communication to the market, I think we can do a better job of. And I think that's needed in a moment like this where there is uncertainty, people are questioning it. No one really knows what's going to happen. And so that for us is our key focus. We'll continue to have these conversations. If anyone's got any magic answers, I would love to know them. But we think at the end of the day, we've got a great strategy, and we've just got to execute it. Thank you. Other questions in the room? We've got one here, [ Catherine ].

[indiscernible] shareholders. I read the annual report, I see the sales have gone up and the costs have gone up and you're making a loss, which I find a bit disappointing. But then the next thing I do, I always go straight to the cash flow from operations, and that showed a positive of $7 million. And I think all that's very good but then later on, I've learned, and I don't think it was mentioned in your annual report about the free cash flow. So that seems to be and Darrin talked about the cash flow, I'm not too sure if he means the free cash flow or the cash flow from operations, but the free cash flow is negative $4 million. And that wasn't mentioned in the annual report, and maybe I should look at that as a better indicator of how the company is doing.

I think free cash flow is a really important metric to us, and it's...

What makes it go from operation cash flow of $7 million to a negative $4 million for free cash flow.

Yes. I'll get Shane up, our CFO, to speak to the specifics of that. And I think just more broadly, what I'd point to is we have continued to invest into what we believe is growth. So we believe and we're seeing that revenue number continue to increase. Our costs continue to increase alongside that, but at a slower pace. So we think that we're building the right proportions there, and we have to continue to push for the revenue growth while keeping our costs contained. That will be the thing we'd love you to keep a close eye on because we'd like to think that, that will really improve over the year, and that's the plan. But Shane, do you want to come and speak specifically to that point?

Yes. So if you were sort of in an old school business, then the key difference is in the operating cash flow and your free cash flow is effectively what are you investing? And then what are you paying in financing? The good thing for us, we've got no debt, so we don't have any financing costs. What does sit between those 2 is the investment and then we were pretty conservative in terms of how much of our software investment we capitalize, but there's still a little bit there. So that's the main difference. As Claudia said, we focused mainly on that free cash flow (sic) [ cash on hand ] number that we've got $54 million in the bank at 31 March, we want to make sure we continue to have that -- the strength of that balance sheet gives us optionality around what choices we make. So we have effectively been making the choice to as we generate strong cash flows out of our existing businesses. So if you look at our [ GetThere ] business and our [ Booking.com for Business ], they both generate quite strong cash flows. We're effectively reinvesting those. And you saw the slide from Darrin that was showing where we were investing them. So it's into that Serko AI and continuing to improve that Booking.com for Business products. So the difference between the operating cash flow and the free cash flow is particularly the level of investment we have and because we're quite conservative in our choices around what we capitalize from a software point of view, probably if anything tends to understate that operating cash flow probably understates how much cash our existing businesses are generating and how much we're investing into the future of the business.

[indiscernible].

Do you want to come back here. We definitely expect to see it in the earnings.

Yes. Certainly, thus far could be have a clear memory of the annual report, So I have a quick check and chat during the break. Certainly, in our investor presentation, that is one of our key focus numbers. So we actually talk about that rather than the operating cash flow. And one of the reasons we do that because we certainly could pump up the operating cash flow. But from our point of view, you have got a lot of judgment around what you capitalize or don't capitalize. We've taken the choice to focus on the free cash flow because at the end of the day, cash in and out of the bank is an absolute black and white number. So we focus on that. And as you saw, as our revenue has grown, we've increased our investment. But underlying that, we have definitely got a business where as the businesses grow, we're generating more and more cash. We're just choosing to invest that at the moment.

I think it's a great question. Thank you. It's something we're very, very focused on. And maybe we can do a little more detail on that at the next ASM for you just to show you how we are tracking, seeing as you've asked that question. we may need a whiteboard for Shane next time. We'll figure that out. Are there any more questions in the room? Okay. So we'll go online Nick for questions.

Thank you, Claudia. Yes, we do have some questions from online. The first at last year's AGM, the Chair said she would look at a request to offer an Australian-style nonbinding remuneration report vote at today's AGM. What happened with that? Did the company consult with major shareholders and have a Board discussion on the issue? How comprehensive was the process as this is a law in Australia and being dual listed on the ASX, why are we not adopting Australian market practice by offering a remuneration report vote today?

It's a great question, and thanks for the follow-up from last year. We've actually -- we actually took it very seriously. We gave this a lot of consideration at a Board level. I spent a number of hours internally with our Company Secretary and Head of Legal on this just to look at what it would mean for us to do this. And we did consult with all of our major shareholders on it and a number of other influential folks in New Zealand just to see what the general sense is on this voting. And where we landed is that specifically with direct feedback from our investors is that our rem reporting is very, very solid, very, very strong. We've leaned into that in a big way and had a major uplift in our rem reporting. So we're really proud of that work that we've done, and we think it genuinely provides a lot of transparency to our shareholders. So there were there were low concerns, if not no concerns in terms of our reporting. And the obligation, frankly, for a company of our size to add more burden to ourselves, regulatory burden to ourselves, it's not insignificant. We aren't a big company. The cost of annual reporting and ASMs and all the rest of it, which we love, and it provides great transparency and visibility through to our shareholders. It's a big burden for a small company that's running as fast as we are. So we think that we're doing a great job, frankly, right now of being transparent and visible with our rem reports. If anyone's got concerns with any part of our reporting, we'd love to hear about it. We'll continue to evolve that. But at this stage, we have decided that that's not the right thing for us to do for the company.

Thank you. We have a further question from online, which is we had an aspirational revenue goal for FY '30. Are we still on track to reach this revenue goal?

Yes. So on track is a big statement. And I think it's too early right now in 2026 for us to declare that we're on track. But I'm very confident in the strategy, I'm very confident in the work that we're doing. And we would obviously talk to our shareholders about it if we felt that there were any major issues with that ambition as we have stated it.

Thank you. A further question is, why didn't we put the proposed changes to our 3% cap on shares issued to employees to a vote at today's AGM as opposed to calling an EGM for August. And if calling a special meeting on a single remuneration element, why not also provide a nonbinding rem report, I think we've covered that question. And if a new director is found by then, will you also put their proposed election to the vote at that meeting.

Yes, great question. I think that -- and there are a number of pieces in there. Look, the reason that we're not putting the 3% to a vote now is a timing issue just in terms of how we calculate VWAP and how we work through the incentives. The share price has moved around a lot that we've been chasing this a little bit. So largely a timing issue while we're not addressing it here. The second reason, frankly, is it is something that I would actually like us to singularly focus on. I think that it's a good order for us to focus on this one issue. It will be a hopefully simple special shareholders' meeting. We'll all have time to get up to speed on what we're talking about and carefully consider that resolution, which I think is the right thing to do. So for that reason as well, I wouldn't think that we will compound that with additional things, particularly when you think about the timing for preparing a notice of meeting. I know this clearly because we just discussed this at our Board meeting yesterday, but there are some timing elements to getting a notice of meeting drafted, approved through the NZX review and then out to shareholders in the appropriate amount of time before we have that special meeting. So I think that will actually just technically mean that there's not time for anything additional.

One final question under general business. It's been years since Serko has made a profit being the most important factor in business is profit far away.

I'm not going to declare a timing around profit, but I am going to declare that this is getting a huge amount of focus from us. We talked about free cash flow just before. This is a huge priority. It's one of our 4 priorities as a Board this year, not specifically that we will be generating a profit in the next year. I'm not prepared to state that, but we are working very, very hard to make sure the growth that we are delivering is profitable growth. As to the time frame on that, we will definitely come back and share that with shareholders once we feel like we've got real line of sight to that. Are there any further questions?

There are no further questions online.

Thank you. They were -- actually they were outstanding questions from everyone, so I really appreciate that. All right. So if there are no further questions, we'll now move to the formal business to be addressed at this meeting. You may ask questions on each matter being put to shareholders today, the voting that -- the resolutions that we will be voting on will be displayed on the screen and to give you an overview of the voting procedures before we commence voting. Shareholders joining us in person today, you will have been given your shareholder voting card. Shareholders joining online will be able to cast their vote using the electronic voting card received when online registration was validated. To vote, you'll need to click Get Voting Card within the online meeting platform. You'll be asked to enter your shareholder or proxy number to validate. Please then mark your voting card in the way you wish to vote by clicking for, against or abstain on the voting card. Once you've made your selection, please click submit vote at the bottom of the card to lodge your vote, you don't need to do that in person. Please refer to the virtual meeting guide or use the help line specified if you require assistance. Voting will remain open until 5 minutes after the conclusion of the meeting, and the results of the vote will be announced via the exchanges. Each of the resolutions set out in the Notice of Meeting are to be considered as an ordinary resolution, and as such, must be approved by a simple majority of the votes cast by shareholders entitled to vote and voting on the resolution. Proxies have been appointed for the purposes of this meeting in respect of approximately 92 million shares representing approximately 73% of the total of shares on issue. The results of the proxies will be displayed following voting. I will now hand over to Jan Dawson to run the voting on the first resolution as it relates to my reelection as a Nonexecutive Director. Thank you, Jan.

Thank you, Claudia. Resolution 1 relates to the reelection of Claudia Batten as a Non-Executive Director. The Board recommends Claudia to you as a Nonexecutive Director and unanimously supports her election. Claudia has served as the Director of Serko since April 2014 and has been Chair of the Serko Board since 2020. Claudia is an experienced company director and a technology leader. She has spent 20 years in the U.S. at the intersection of technology, digital and consumer behavior, where she built and scaled 2 high-profile digital businesses. Under her leadership, Serko has made significant progress on its global growth agenda despite near-constant macroeconomic and geopolitical and instability. And with the Board and management, she has shaped Serko's 2030 strategy, which is now an execution. Her continuity as here is particularly important at the stage of Serko's growth initiatives. I'll now invite Claudia to briefly address the meeting on her proposed election.

Thank you, Jan. I've been on the Board since 2014 and share since 2020. And my time with Serko has reinforced for me that you don't measure a company by how it performs in any single year, you measure it by its trajectory and whether the people running it know what to do next and can deliver it. On these counts, I'm confident about where Serko stands today. In my time on the Board and as Chair, we've navigated significant challenges and seized opportunities. There was the pandemic when business travel stopped, and the Board and the company had to adapt and quickly. Booking.com for Business now looks like it was always going to be a success, but it was never guaranteed. It carried real risk and required bold thinking and precise execution. Our expansion into the U.S. has had challenges, but we're seeing positive momentum with a growing team on the ground and a strong one at that. We've got increased market presence and traction on our strategic initiatives. And then there's AI. Every software company is being asked the same question, is AI a threat or a multiplier? For Serko, we believe it's a multiplier because of our deep data and business travel experience, both take years to accumulate. How we overcome challenges and deliver on opportunities is a key driver of shareholder value. What we're focused on is 2 things within our control, our ability to execute and deliver and our ability to communicate that to the market. Both have our full attention. As you heard from Matt, we've made a solid start to our new growth initiatives, and we're moving with speed and precision. Over the past 5 years, Serko's total income has grown more than fivefold with strong growth in the last financial year. Our job is to see that strength translated into value for you. There's much more work to be done as we pursue our 2030 ambition. Delivering on that ambition takes the right people with proven track records. I have grown and scaled technology businesses in my career in the U.S. as has Sean. Jan brings governance experience that few in New Zealand can match. We have leadership that knows international best practice and a team with global capability that is customer-focused, future-focused and built to deliver excellence. Serko has the products, the talent and the market position to become a truly global business, which brings me to why I'm seeking reelection today. As I noted in my address, I'm standing for what I intend to be a final term. Continuity is the key reason. Our 2030 strategy is moving from plan into execution. The Board's view is that this is the wrong time for a change in Chair. We're also running an orderly Board renewal. We're currently searching for 2 new Nonexecutive Directors, including a potential successor to me as chair. Once that process is complete and the handover is done, I will step down. Until then, I'm fully committed 110%. My key focus is on ensuring that this business delivers on its potential for you, our shareholders. It's a privilege to support this company on behalf of shareholders, and I'm excited for the chapter ahead. Thank you.

Thank you, Claudia. On behalf of the Board and management, we thank you for your leadership and guidance over the previous years. I now propose that Claudia Batten be elected as a Non-Executive Director of the company. Are there any questions concerning the motion from shareholders in the room. Are there any questions online? Nick?

Yes. There are 2 questions in relation to this resolution. The first 2 parts to it, I think, just confirming that Claudia said she would not be seeking reelection in 2029 as part 1. Part 2 is in terms of looking for an external -- a new chair, why did we not look to have a new Chair ready to go from amongst the existing directors as opposed to only looking outside for a new Chair?

Yes, Claudia is not seeking reelection. So that's the first part of the question. On the second part of the question, the Board renewal has been thought about quite carefully by the Board. And we feel that we need another 2 directors and one of those should be Chair. There has been discussion where the Chair should be located, whether that's New Zealand, Australia or the U.S. So we're giving that a lot of consideration. And I think that as far as internal appointments go myself, I've got commitments with other boards that I Chair. So I'm not in a position to take on the chair. And I think similarly, with Sean that the Chair responsibility is quite an extensive role, and I think Sean is not in a position to take the Chair role either. So we canvass the internal candidates. We think it's important for Serko. As Claudia says, it's quite a small pool of people who can add value to Serko as a Director and as Chair. And we're taking our time to really be thoughtful about who we bring on to the Board.

The second and final question. Best practice is to disclose the proxies early to the ASX to allow for a more fully informed AGM debate?

I have seen New Zealand Shareholders Association shaking their head at that?

The question is, that was a statement, I think not a question. Moving on to the question. Will you do this before next year's AGM? And also, were there any protest votes on Claudia's reelection today? And did any related -- did any of the proxy advisers issue a report ahead of today's AGM and approximately how many of our circa 2,200 shareholders voted to proxy on the 2 resolutions. Finally, what proportion of our shares and shareholders do we believe are held by Australian-based shareholders? And is that enough to justify the ASX listing? We'll probably break that into a couple of different questions.

The first part of the question is I don't think it is a practice to disclose the proxy votes. But I look at my legal and investor advisers over here. It's not been done in any other companies that I've been involved in. So and I'm getting head shakes on that. So the answer to that would be no. In terms of the numbers, the proxy votes are about to be displayed. So I don't have those numbers as top of mind, so I can't give you the numbers and in any event. But I think will follow what is normal practice for New Zealand companies and that proxy votes are generally disclosed at the end of the voting for each motion.

Just to remind the final part of the question was what proportion of shares do we believe are held by Australian-based shareholders? And does that justify the ASX listing?

Yes. And I can't answer that question, but we're happy to take it on notice and can probably disclose it at some point in a written question.

Yes. There are no further questions.

Thank you. Please now select either for, against or abstain for Resolution 1 on the voting card. Thank you. I'll now hand back to Claudia in respect to Resolution 2.

Yes. And to that last question, we'll have a look at whether there's further disclosure that we can make in terms of voting. I'm not aware of that being a common practice at all, but we'll definitely take that away and look into that. So Resolution 2 relates to the fees and expenses of Serko's auditors. The proposed resolution is to authorize the directors to fix the auditor's fees and expenses for the current year. In accordance with the Companies Act, Deloitte has been automatically reappointed as the company's auditor. Details of the statutory audit fees paid to Deloitte for the financial year ended 31 March 2026 are set out in the 2026 annual report. I now propose that the directors are authorized to fix the fees and expenses of Deloitte as auditor for the 2027 financial year. Are there any questions concerning the motion from shareholders in the room? And are there any questions online Nick?

There are no questions online.

Great. Thank you. So now please select either for, against or abstain for Resolution 2 on the voting card. Shareholders joining online, you can now submit your vote. Voting will be open until 5 minutes after the conclusion of this meeting. For shareholders present with us in the room, MUFG will now move through the room to collect your voting cards. Okay. That completes voting on the resolutions. At this time, I'd like to advise the outcomes of proxy votes that were lodged in respect of each of the resolutions. I will not read the proxy results for each resolution, but they're shown on the screen now. I would now like to give shareholders a final opportunity to ask questions, whether related to the presentations, the financial statements or the management of the company. You can continue to provide questions online, and we'll also address questions already submitted online. Are there any questions from shareholders in the room? And are there any questions from anyone online?

There are no questions online.

Great. So thank you for your attendance at Serko's Annual Meeting both here in person and online. I now declare the meeting closed. The results of the meeting will be released on the NZX and ASX as soon as possible. Thank you.