There's been a seemingly endless stream of deals that see ownership of Kiwi software startups going offshore.

But ASX/NZX-listed travel software company Serko is bucking the trend with its purchase of American outfit InterplX in a US$2.5 million ($3.7m) all-scrip deal.

"It's always good to be the acquirer, not the acquiree," Serko chief executive Darrin Grafton says.

"It's time to reverse the trend and build global companies from NZ."


The Minneapolis, Minnesota-based InterpIX makes cloud-based expense-management software.

Serko already offers various expense management features in its own software, but Grafton says InterpIX will add fraud-detection smarts, plus the ability for US companies to pay expenses outside their usual payroll processes.

It will also boost his company's presence in the key US market. The time-zone is advantageous, too, Grafton says and will help Serko offer 24/7 global support.

InterpIX, founded in 1994, has 21 staff.

Serko has around 170 today, spread been offices in New Zealand (home to around 90), Australia, China, India and the US.

Serko says the acquisition will add $2.5m to $3.5m to annual revenue. It won't comment on earnings impact until May.

The exact terms of the agreement are confidential, but Serko says the US$2.5 million will be fully paid ordinary shares, with 50% of the stock issued at completion (573,922 shares issued at $3.30 - a premium to Serko's Wednesday close of $2.68).

The remainder will be issued subject to revenue targets being achieved through to December 2019. The first tranche of shares to be issued are subject to an escrow period restricting the shares from being sold before 30 June 2019.

Serko NZX performance since IPO.
Serko NZX performance since IPO.

Serko shares closed at $2.68 yesterday. The stock is up 34 per cent for the year.

Net profit fell to $920,000 in the six months ended September 30 from $1.2 million a year earlier. Serko achieved profitability in the March 2018 year and stayed in the black as first-half revenue climbed 23 per cent to $11.8m.

The software developer affirmed annual guidance for operating revenue to grow 20-to-30 per cent, implying sales of $21.9m to $23.8m in the year ending March 31.

Serko has been establishing a presence in the Northern Hemisphere with a successful trial of its Zeno platform by travel management company ATPI in the UK. That's being extended to other corporate clients and will likely get rolled out to Europe and North America before the end of March.

Those reseller arrangements remove ongoing cost for Serko, which just needs to invest upfront to get its partner firm comfortable with the product.

In August, the company raised $15m in an over-subscribed placement to 12 institutional investors at $2.75 a share, and as of September 30, it had $19m in the banks.

Grafton says more acquisitions are possible.