How Is Gentrack Driving 9.8% Revenue Growth Amid Global Expansion?
Gentrack Group Limited reported a solid 9.8% revenue increase to NZ$112 million in the first half of FY25, powered by strong recurring revenue growth in utilities and a surge in its airports division, Veovo. Net profit after tax jumped 34.7%, supported by currency gains and a lower tax rate.
- Revenue up 9.8% to NZ$112 million, driven by Utilities and Airports segments
- Recurring revenues grew 16.7%, reflecting strong contract wins and upgrades
- EBITDA increased 5.1% to NZ$13 million despite higher investment in product and sales
- Net profit after tax surged 34.7% to NZ$7.2 million, aided by foreign exchange gains
- Cash reserves strengthened to NZ$70.7 million; no interim dividend declared to fund growth
Solid Growth Across Core Markets
Gentrack Group Limited has delivered a robust performance in the first half of fiscal 2025, with revenues rising nearly 10% to NZ$112 million. This growth was underpinned by strong momentum in its Utilities business, which saw recurring revenues climb 17%, and a remarkable 24% revenue increase in its Airports division, Veovo. The company’s focus on essential services in energy, water, and airport sectors continues to pay dividends as it expands its footprint globally.
Recurring Revenue Strength and Strategic Investments
The Utilities segment, serving markets in Australia, New Zealand, and the UK, remains the backbone of Gentrack’s business. The increase in recurring revenues reflects successful contract renewals and upgrades, including notable partnerships with Utility Warehouse in the UK and several long-term renewals across its core markets. Meanwhile, Veovo’s growth was driven by new customer wins and upgrades, including significant projects in the UK and Middle East, as well as hardware sales contributing to non-recurring revenue.
Despite the revenue growth, EBITDA rose a more modest 5.1% to NZ$13 million, as Gentrack increased investment in product development, highlighted by the rollout of its g2.0 platform at Genesis Energy, and bolstered its sales capabilities to support a strong pipeline. This strategic reinvestment signals the company’s commitment to innovation and market leadership.
Profitability Boosted by Currency and Tax Benefits
Net profit after tax surged 34.7% to NZ$7.2 million, a performance enhanced by NZ$2.1 million in foreign exchange gains, primarily from the appreciation of the British pound, and a significantly lower effective tax rate of 21.3%, down from 35.5% the previous year. These factors helped offset a share of losses from its 10% stake in Amber Energy, a technology-driven energy retailer.
Strong Balance Sheet and Capital Allocation
Gentrack’s cash position strengthened to NZ$70.7 million, up from NZ$39.3 million a year earlier, providing ample liquidity to fund ongoing growth initiatives. Reflecting its focus on reinvestment, the Board has decided against paying an interim dividend, opting instead to deploy capital towards expanding its global reach and product capabilities.
Global Expansion and Market Leadership
The company is actively pursuing growth beyond its established markets, with recent contract wins in the Philippines and Saudi Arabia and a strategic push into Asia, Europe, and the Middle East. Veovo’s recent contract to deliver London Gatwick’s Integrated Airport Control project marks a significant milestone, positioning Gentrack at the forefront of airport digital transformation. The company’s leadership in utility billing and airport management software, combined with its investments in AI and cloud technologies, positions it well to capitalize on accelerating industry trends.
Outlook Amid Macro Trends
While global economic uncertainties and some resistance to net-zero targets exist, Gentrack remains confident that the pace of utility transformation will continue. The weakening of the Australian and New Zealand dollars has also provided a currency tailwind given its international customer base. The company’s dual focus on essential services and innovation suggests it is well placed to navigate evolving market dynamics.
Bottom Line?
Gentrack’s strong H1 momentum and strategic investments set the stage for accelerated growth, but investors will watch closely how global expansion and technology rollouts translate into sustained profitability.
Questions in the middle?
- How will Gentrack’s increased investment in product development impact margins in the second half of FY25?
- What is the outlook for non-recurring revenues given their variability and past project intensity?
- How might shifts in net-zero policies or economic conditions in key markets affect Gentrack’s growth trajectory?
