Servcorp (ASX:SRV) used its earnings call to outline a major product launch and reiterate its strategy of differentiating its serviced office and coworking offering through technology, infrastructure investment, and staffing levels. Management also provided earnings per share guidance for the year and discussed expansion priorities across several regions.
Servcorp app rollout and “Wombat” operating system
The company introduced the new Servcorp app, describing it as a tool for “seamless and secure check-in” via QR code at global locations, and a way for customers to book offices and meeting rooms without calls or delays. Servcorp also said the app includes an “intelligent Servcorp assistant, powered by AI,” and is designed around a “clean, intuitive dashboard.”
Technology and service differentiation
Management repeatedly argued that Servcorp’s proposition differs from competitors that focus primarily on “price per square foot.” Servcorp said it has spent “over AUD 100 million” over time migrating systems to the cloud, which it believes gives it an advantage in deploying AI and delivering enterprise-grade services consistently across its network.
Among the examples cited:
- Servcorp said it has “200,000 extensions” in the cloud and one standard telephone system globally.
- The company said its IT team is “about 100 strong,” with management indicating it is “heading for 140” centers.
- Management presented a Wi-Fi speed comparison, claiming Servcorp’s Wi-Fi was “12 times the speed” of competitors and said this was consistent “in every single country” and location.
- Servcorp said it has 50,000–60,000 clients globally and referenced “AUD 1.3 million a month’s worth of coffee” sales, suggesting the app will eventually enable ordering coffee and other services, printing, and booking space across locations.
Management said the company avoids aggregators because they are primarily focused on price, while Servcorp aims to offer a “major corporation” level of service for clients, including mobile access to phone services across geographies.
Investment in centers and staffing levels
Servcorp said it invests more per location than key competitors, citing an estimate of “about AUD 4 million” to build a center versus around “AUD 1 million” for Regus. Management attributed the higher spend mainly to infrastructure and argued it enables better operations and client experience.
The company also emphasized staffing as a key differentiator, stating it runs “10 people per 100 offices,” compared with an industry average “below 2 per hundred.” Management provided an anecdote about visiting a competitor in Japan that had “one person on three floors” covering 120 offices, contrasting that with Servcorp’s typical staffing of “between 12 and 14” for a similar footprint, and said that in Australia it runs “over 12 people per hundred offices.”
Regional performance and expansion plans
Management offered commentary on several markets:
- London: Management said London “made a profit last month, just,” and described it as a “critical city,” adding it intended to open more centers if suitable space can be found.
- Paris/France and Brussels: Management said Paris “washes its face” and Brussels “makes money,” while noting bureaucracy challenges.
- United States: Management described the U.S. as “probable” and noted accumulated losses mean the company “pay[s] no tax there.” In Q&A, management said it intends to expand in the U.S. and that prior issues were due to management execution, which it said has been fixed.
- Japan: Management said Japan is highly competitive with “2,000 competitors” between Tokyo and Osaka. Servcorp said it has 32 centers there and does not believe any lose money. It said it opened a new center in Osaka, “opened 3, closed 3,” and expects to open six in the second half of the financial year without closing any.
- China: Management said China still loses money, though “not as much as last year,” and added it does not see “too much light at the end of the tunnel.”
- Middle East: Management said it is profitable in every location across the Middle East and expects to open “probably 4” new ones, possibly “7.” It later specified plans over the next six months to open “3 in Saudi,” and also pointed to long operating histories in the UAE (25 years) and Saudi (15 years).
- Australia: Management said it expects to open “1 in Australia” in the next six months.
On Saudi Arabia specifically, management attributed regional strength to long-term investment and operational execution, as well as economic and social changes it said are supporting demand. Management also said competition exists in the region, including from building owners and major operators, but argued Servcorp’s cloud-based infrastructure and systems would be difficult for competitors to replicate quickly.
Guidance, margins, and AI development
Servcorp guided that earnings per share for the year would be “between AUD 0.80 and AUD 0.85.” Management also said that over the last five years EPS appears to have increased about “25% per annum compounding,” and that cash increased by “AUD 40 million” over that period.
In response to a question about EBIT margin expansion, management attributed it to having “closed centers,” without detailing other drivers in the discussion captured in the transcript.
On AI, management said the future will be “AI-assisted” and emphasized that Servcorp’s centralized cloud platform allows the company to deploy AI across its footprint more effectively than operators that must implement changes “one location at a time.” It discussed work on an AI concierge to be developed within its Cisco-based telephone system, including integration into voicemail over time to handle questions and bookings via large language models.
Management also addressed a previous “avatar” concierge project named “Susie,” saying the vendor went bankrupt and that Servcorp wrote off “about AUD 300,000–AUD 400,000.” Management said Servcorp seeks to own source code for projects through its development approach, and noted it is expensing most development work as it goes rather than capitalizing it.
In closing comments, management acknowledged currency as “a little bit of concern,” but said its focus remains on building a sustainable business and potentially adding real estate “under it” over time, while indicating it does not intend to cut the dividend.
About Servcorp (ASX:SRV)
Servcorp Limited provides executive serviced and virtual offices, coworking and IT, communications, and secretarial services. It offers office space solutions; and virtual office services, including office business address, secretary and receptionist, mail forwarding, and telephone answering services. The company also provides co-working and meeting room services. It operates in Australia, New Zealand, Southeast Asia, the United States, Europe, the Middle East, North Asia, and internationally. The company was founded in 1978 and is headquartered in Sydney, Australia.
