Gentrack Group Limited Analysis

Overview

Gentrack has an extensive history of developing, implementing and supporting its specialist software for energy utilities, water companies and airports. Established in 1989, Gentrack now has over 150 utilities and airports using its software, including some of the most innovative utilities companies in Australasia and the UK, and Tier 1 airports around the world.

Active involvement in deregulating energy markets, reforming water markets and rapidly evolving airport businesses has created unprecedented demand for Gentrack's software solutions and professional services. As a result our global presence is growing rapidly, now with offices worldwide including Melbourne, Brisbane, London, and Auckland.

Gentrack is a dynamic company thriving on a diverse and energised company culture. With proven solutions and a low risk approach to implementation we continue to demonstrate our commitment to on-time and on-budget projects. Backed by a team with local industry expertise, and the right AGILITY, ABILITY and ATTITUDE, we continue to deliver where our competitors can't.

Performance

The following information was extracted from Gentrack Group Limited's full year results, released on 26 November 2024:

Results Summary

• Revenue: $213.2m: up 25.5% v FY23 and up 50% when excluding $27.6m of one-off revenues in FY23 from insolvent customers.
• EBITDA: $23.6m v $23.2m in FY23 (FY24 impacted by a $7.1m charge against payroll costs on the Group’s LTI schemes due to the significant growth in our share price and the accelerated amortisation of these costs).
• Statutory NPAT: $9.5m v $10.0m in FY23
• Cash: $66.7m: $17.5m increase in the year after $12.9m Amber investment in H1’24.
• No Dividend payable

Financial performance

For the Group, revenues increased 25.5% over the prior year period to $213.2m. In our Utilities business, total revenue grew by 23% to $181.3m. Underlying Utilities revenue, excluding $27.6m of revenue in FY23 from insolvent customers, grew by 51%. Upgrades and other customer transformations, new customer wins and strong demand for innovation and change from across our customer base helped drive our non-recurring revenues 104% higher to $60m. Whilst wins and upsells from prior periods increased our recurring revenues by 33% to $121.3m.

New customer wins in the UK and the Middle East have powered Veovo to a 45.5% increase in revenue over the prior period to $31.9m. The project work to implement these wins alongside upgrades from existing customers have driven non-recurring revenues 101% higher v prior year to $15.7m. This includes $6.8m ($2.0m in FY23) of revenue from sales of hardware sourced from our supplier network. Customer wins and upgrades from prior periods have also pushed recurring revenues 15% higher to $16.3m.

EBITDA at $23.6m ($23.2m in FY23) includes $7.1m booked against expected payroll tax on the Group’s LTI schemes (compared to $0.3m in FY23). This follows the strong rise in our share price across the year. The tax is based on the share price at vesting. Furthermore, for LTI awards to management made at the start of FY24 more shares vest and vest earlier when the share price is higher and so we are now amortising most of this expected cost over two rather than three years.

We have continued to increase investment in strategic R&D, all of which has been expensed, as well as increase our sales & marketing spend to support our international expansion.

Our NPAT of $9.5m ($10m in FY23) includes a $1.3m loss being our share of the losses of Amber in which we acquired a 10% stake during the year. Alongside our equity we hold a seat on Amber’s Board and so account for this investment as an associate company within our financial statements.

Gentrack continues to deliver strong cash generation. Our cash as of 30 September 2024 was $66.7m, a $17.5m increase over the start of the year, after investing $12.9m in Amber. Gentrack’s Utilities and Veovo businesses both operate in high growth and consolidating markets. Today the Board believes that the best use of the company’s capital is to continue to invest in growth. We have therefore decided not to pay a dividend. We will keep the use of capital under regular review.