Gentrack Boosts Recurring Revenue Amid Strategic Acquisitions and AI Focus

Revenue Stability Masks Margin Pressure and Investment

Gentrack Group Limited (ASX:GTK) posted a largely flat half-year revenue of NZ$110.1 million for the six months ended 31 March 2026, a slight 1.7% dip from the prior corresponding period. However, the headline masks a meaningful 12% lift in recurring revenue to NZ$85.3 million, driven by strong growth in both its Utilities and Veovo airport businesses. This recurring revenue growth underpins Gentrack’s confidence in its medium-term target of more than 15% compound annual growth rate (CAGR).

Despite this, EBITDA (excluding acquisition costs) plunged 39% to NZ$7.9 million, primarily due to delays in new Utilities projects and continued investment in product development and international expansion. The Utilities segment saw recurring revenue grow 9% to NZ$73.3 million but was offset by a 33% fall in non-recurring revenue to NZ$17 million, reflecting the completion of several projects and slower new customer wins. Veovo’s total revenue rose 3% to NZ$19.8 million, but excluding hardware sales, recurring revenue surged 33% to NZ$12 million, benefiting from prior period upgrades and new contracts including NavCanada.

Strategic Acquisitions to Accelerate AI and Energy Pricing

In May 2026, Gentrack announced two acquisitions aimed at enhancing its technology stack and market presence. Dubai Technology Partners (DTP), pending completion, brings AI-centric airport technology and deep Middle East expertise to Veovo, positioning the company to capitalize on the region’s anticipated airport infrastructure expansion. The acquisition is expected to add approximately NZ$3.5 million in revenue to Veovo during the remaining months of FY26 and be marginally EBITDA accretive before integration costs.

Simultaneously, Gentrack completed the acquisition of Factor, a New Zealand-based SaaS company specializing in advanced forecasting and pricing solutions for energy retailers. Factor’s platform complements Gentrack’s g2 energy retail system, addressing the growing complexity of energy markets marked by dynamic tariffs and real-time grid demands. The NZ$24 million deal, funded from cash reserves with an additional earn-out of up to NZ$10 million contingent on revenue targets, is expected to be EPS accretive by FY28. Factor’s standalone sales capability offers Gentrack a faster route into new markets, with no upfront implementation projects required.

Strong Balance Sheet Supports Growth Initiatives

Gentrack maintains a robust balance sheet with NZ$73.2 million in cash and no debt, despite a typical first-half working capital outflow driven by bonus and tax payments. The company expects underlying cash generation for FY26 before acquisitions and share buybacks. The Board has opted against an interim dividend, instead announcing a conditional on-market share buyback program of up to NZ$20 million over 12 months, reflecting confidence in the company’s capital allocation strategy and growth prospects.

Operationally, Gentrack continues to execute on its strategy with key milestones including the first B2B deployment of g2 in Asia with ACEN Energy in the Philippines and the first UK g2 water customer, Pennon Water Services. Veovo’s footprint expands with deployments across 15 Saudi Arabian airports and new contracts at Tier-1 Asian airports and Seattle-Tacoma International Airport, highlighting its growing global reach.

AI Adoption and Market Transformation Remain Central Themes

The company highlights the rapid adoption of AI as a transformative force reshaping energy and water sectors. Gentrack’s decades of operational data and domain expertise position it well to embed AI into retail operations, automating customer service and enabling dynamic pricing. This aligns with broader market trends where utilities face mounting pressure to adopt effective AI strategies amid increasing price volatility and service complexity driven by the energy transition.

Gentrack’s recent acquisitions reinforce its platform capabilities and market leadership, particularly in the B2B energy retail segment. The company’s focus on AI-enabled solutions and expanding presence in high-growth regions like the Middle East and Asia underpins its medium-term growth ambitions.

Given the delays in Utilities project wins and the ongoing investment in growth, the company’s FY26 EBITDA guidance of NZ$13.5 million to NZ$20 million (excluding acquisition costs) reflects cautious optimism. Meanwhile, revenue guidance stands at NZ$229 million to NZ$238 million, with recurring revenues expected to exceed NZ$174 million, underpinning the strategic shift towards more predictable income streams.

Gentrack’s approach contrasts with its FY25 performance where it delivered 8% revenue growth and a doubling of net profit, powered by strong recurring revenue and successful technology deployments including the g2.0 platform Gentrack Doubles NPAT, Eyes Faster Growth. The current half-year results and strategic moves suggest a transitional phase as the company invests for scale and AI-driven differentiation.