The travel and hotel software company reported revenue and EBITDA growth of 21% and 31.7% year-on-year respectively in the June quarter led by strong performance of DaaS (Data as a Service) and MarTech (Marketing Technology) segments. However, it missed analysts’ estimates due to softness in the distribution segment, slow deal closures and demand challenges in North America. Both revenue and EBITDA fell short of Reuters-Refinitiv estimates by 1.3% and 6.4% respectively.
While the distribution segment registered a muted growth of 3.1% year-on-year, DaaS and MarTech segments registered 17.7% and 33% growth on a year-on-year basis. New client additions aided the former, and paid digital marketing supported the latter.
The company processes electronic transactions and pricing data in the travel and hospitality sectors by leveraging artificial intelligence. It offers advanced tools that help companies in various sectors including hotels, airlines, car rentals, and online travel agents. It is a beneficiary of the growing travel sector, which is supported by rising incomes in Asia-Pacific economies, increased consumer spending, deeper penetration of online booking systems, technological advancements and remote work.
All three business verticals of the company have decent growth prospects. DaaS is driven by a strong traction across OTAs, airlines and car rentals and strong volume demand in the enterprise accounts. On the other hand, increased traction in PDM (paid digital marketing) offerings with hotel chains across Europe and APAC regions and healthy deal closure are driving the MarTech segment. Though the distribution segment growth is seeing volume pressure on some demand channels, the management is optimistic about a growth rebound led by integrated offerings.
Furthermore, the company enjoys multiple growth levers that include diversified revenues across offerings, a large enterprise customer base, investments in new geographies, product innovation and a focus on inorganic opportunities.The management has guided for a 20% organic growth for 2024-2025. Healthy traction in business segments and operating leverage is expected to support the guidance. It has also made multiple acquisitions and launched several products in the past few years that helped it strengthen its market position. The acquisition of Adara (travel data exchange platform) and the launch of multiple AI-based solutions and RevMax (integrated solutions) are some of the strategic steps undertaken by the company.A recent report from Batlivala & Karani endorses the company for its scalability, conservative cash management, and sustained investments, describing it as a multi-year compounding asset with several cash-generating products. Multiple verticals provides it insulation from short-term market fluctuations.
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