GTK – Gentrack Group | Aussie Stock Forums

Market Announcement
Gentrack Group Limited (NZX/ASX: GTK), a leading provider of software solutions
for utilities and airports, today released its results for the half-year to 31 March 2023.
Results Summary
• Revenue: $84.3m – up 47.7% on H1’22
• EBITDA $16.0m – up $14.8m over H1’22
• Statutory NPAT: $7.9m profit v $5.8m loss in H1’22
• Cash: $41.9m – up $14.5m over FY22
• No Dividend payable
• Results include substantial one-off revenues, but strong underlying growth
means that both FY23 and FY24 revenue guidance have been upgraded to
a range of $157m to $160m (from previous guidance of $147m to $150m for
FY23 and $150m for FY24)
Across the first half of the financial year, Gentrack has delivered impressive growth
in revenue, EBITDA and cash. We continue to win new customers as well as deliver
against recent wins and expand services with existing customers. We have strong
net people growth and employee engagement is high, with staff turnover at an alltime low. Finally, we are proud to be working with the leaders in the sectors we
serve to help them innovate and move to sustainable solutions.
Financial performance
Strong revenue results were driven by a 51.2% increase in the Utilities business to
$73.9m for this half. This included $19.7m of revenue from Bulb and other insolvent
UK customers. In December 2022, the UK Government agreed the sale of Bulb’s
business to another retailer who is now in the process of migrating Bulb’s customers
from our platform to its own. Whilst we continue to support the administrators of
Bulb, the level of services we provide has now peaked and we do not expect
material revenues from this customer beyond this financial year.
Notwithstanding, our underlying growth in the Utilities business, excluding
insolvencies, was also impressive, up by 38.7% over H1’22. The Veovo airports
Gentrack Group Ltd | ARBN 169 195 751
business also grew strongly, up 26.7% on H1 ‘22 to $10.4m with growth in recurring
and non-recurring revenues, up 15% and 57% over H1’22 respectively.
EBITDA performance was $16m, $14.8m higher than H1’22. This growth in EBITDA
has been achieved whilst continuing to invest in strategic R&D and increasing our
sales & marketing spend to support international expansion.
With strong cash conversion from EBITDA, net cash as of 31 March 2023 was
$41.9m, which is an increase of $14.5m from the end of the last financial year.
This half year marks a return to an NPAT profit of $7.9m against an NPAT loss made
last year. Gentrack’s Utilities and Veovo businesses both operate in markets with
strong growth potential. The Board continues to believe that the best use of the
company’s capital is to continue to invest in growth. We have therefore decided not
to pay an interim dividend.
Growing our energy customers
Our underlying growth in Utilities demonstrates we are doing more with both new
and existing energy customers in the markets we serve.
EnergyAustralia, a new customer for Gentrack this half year, went live in March with
its innovative, ground-breaking product ‘Solar Home Bundle’ on our cloud billing
solution. They have migrated their existing Solar Home Bundle customers to the
new platform, an integrated solution including digital consumer engagement, field
services management and automation, and a Virtual Power Plant (VPP) solution.
In New Zealand, we are working with Mercury, a customer win for Gentrack last
September, to migrate their customers from SAP across to our multi play platform
that will support Mercury to deliver premium offers, multi play bundles across B2C
and B2B energy and communications services and a high level of digital
engagement with its customers.
Growing our water customers
We are doing more with our water customers across the globe. We support,
through leading water retailers, more than 50% of the UK’s businesses with water
solutions. We recently completed the migration of Scottish Water Business Stream’s
200k+ business customers from three legacy systems to our cloud-based solution.
In Australia, we have won another water customer during this half year, and we are
working to migrate a new customer we secured last year across to our platform. In
Fiji, we have agreed with one of our existing customers, the Water Authority of Fiji,
to modernise their platform and transform their business.
Targeting international expansion for Utilities
In November, we announced our plan to expand our international footprint, beyond
our core markets in the UK, Australia, and New Zealand. This year, we have opened
an office in Singapore, and are growing the local team to both support the
Gentrack Group Ltd | ARBN 169 195 751
migration to our platform at one of Singapore’s large energy retailers (customer win
in 2022) and to target new business in the wider Asian region.
During the period, we built our EMEA business development team, based from our
London office, and are actively pursuing opportunities across Europe and the
Middle East.
We are pleased with our progress in building our capability and growing our
pipeline in these new regions. The Salesforce relationship, an essential part of g2.0,
our next generation platform, has greatly benefited our pipeline development.
Growing our airport customers
We are seeing a strong recovery across the aviation and airports industry.
Passenger numbers are trending close to pre-pandemic levels, driving airports to
look to technology to help them handle more passengers with fewer resources than
before. For Veovo, this has meant strong demand for upgrades to our latest “R8
Platform” for Aero-Billing and Airport Operations. This, together with some
significant expansions in deployments of our passenger flow solutions, is driving
growth within our current customer base. We have also gone live at our first Tier 1
airport for our managed service offering.
Veovo’s pipeline of new customer opportunities has also significantly strengthened
across the last year as airports globally look to undertake digital transformations.
Looking Forward
We are pleased with the progress made this half year on sales and building our
pipeline, delivering against recent customer wins, on-boarding new people into our
team, building our overall people capability, and continuing to innovate with great
technology.
We are excited about the transformation capabilities required by the industries that
we serve. For airports, we are seeing pent-up demand being unleashed in
modernisation programs. For utilities, no other market requires the level of
modernisation that the IT systems in both the energy and water markets require. It
is an exciting time to be in these dynamic markets.
In the second half of the financial year, we continue to expect growth across all our
customer base excluding revenues from insolvent UK customers. For insolvent UK
customers we expect lower revenues in H2 ‘23 than H1 ’23 and generally a wind
down of revenues from these insolvent customers by the end of the financial
year. As a result, our full year revenue for FY23 is expected to be in the range of
$157m to $160m with EBITDA for the year of approximately $22m.
The strong underlying growth in both Utilities and Veovo means we are able to
upgrade our revenue guidance for FY24 to be in line with the revenue expected in
FY23 despite the loss of ‘one off’ revenues of c.$25m from insolvent UK customers.
Gentrack Group Ltd | ARBN 169 195 751
Guidance
For FY23, the Group expects revenue to be between $157m and $160m. This is an
increase over our previous guidance of $147m to $150m. We still expect FY23
revenue will include c.$25m from insolvent UK customers, with the higher revenue
guidance a result of faster growth across the rest of our business. We expect EBITDA
for FY23 to be c.$22m.
The strong underlying growth in both Utilities and Veovo means we are also able to
upgrade our revenue guidance for FY24, from the prior guidance of $150m, to be
in line with FY23 revenue despite the loss of ‘one off’ revenues of c.$25m from
insolvent UK customers. Our targeted EBITDA margin for FY24 remains at 12% to
17%

DYOR

i hold GTK