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Last time you booked a plane ticket or a hotel night, there is a very good chance that you interacted with RateGain without even realizing it. RateGain operates in the background offering services to airlines, hotel chains, cruise lines, car rental companies, online travel agents, tour operators and more.
RateGain started off by producing intelligent price comparison product for hotels in 2004. Over the years it developed revenue optimization, distribution and marketing solutions for the hotel industry.
As RateGain grew as a company, they extended their services to more travel industry participants. Airlines, car rentals, cruise and ferry lines are all served by RateGain in the current market.
Being connected to so many participants of the travel industry, and it has access to the relevant data. RateGain’s excellent software and analytics team can help it take advantage of this data access.
It packages this data and insights up into various kinds of products and services’ models like Data as a Service or Marketing Technology solutions.
RateGain has spent the last few years making several acquisitions and inducting them into its current business. These include DHISCO in 2019, BCV Social in 2020 and Myhotelshop in 2021. This has helped the company diversify into different markets and target high revenue share from its current customer base. Here are a few reasons why investors should invest in RateGain:
The company tends to over 1,500 customers across the globe. RateGain’s reach extends to around 110 countries targeting the travel and hospitality industries in those markets. The customers have stuck with the company through thick and thin. Some of RateGain’s customers have been around for over 10 years. This also shows the performance of RateGain’s technology. There is a deep focus on verticals, with access to data and skillsets across data science, machine learning, and artificial intelligence allowing it to generate deep insights valued by the customers.
Moreover, the company’s addressable market is expected to grow to around 20 billion dollars over the next few years at a CAGR of 18 to 19%.
So what is our view on company valuations?
The Company did its IPO in December 2021, listing at a 15% discount reflecting the weakness in the market at the time. It has traded mostly below its issue price, dipping 35% at its lowest price in its brief history. For a loss-making company, Company trades at ~15 time of FY21 revenue which can only be a called a reflection of “narrative investing” that seems to be driving tech company valuations currently.
As for the risks to this analysis, technology is constantly evolving, and should any competitor offer better solutions the possibility of customers moving to the competitor is high. Single vertical dependency is risky for the company as seen in the COVID Pandemic, which crippled the travel industry the most.
So, would you invest in RateGain? Share your views in the comments section and like the video if you liked our analysis.
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