Thu 29 Nov 2018

Gentrack EBITDA up 30% to $31.0m

Gentrack Group Limited (NZX/ASX: GTK), a market leader in software solutions for utilities and airports, announces its financial results for the year to 30 September 2018.
Highlights (NZ$)

  • Revenue $104.5m: up 39% on FY17
  • EBITDA $31.0m: up 30% on FY17
  • NPAT $13.9: up 17% on FY17
  • Final Dividend: 8.7cps, bringing full year dividend to 13.7cps

Gentrack has continued to deliver strong growth in the year to 30 September 2018 with revenue up 39% on prior year to $104.5m and EBITDA up 30% to $31.0m which is consistent with market guidance. Excluding the $1.4m revenue and $0.9m EBITDA contribution from Evolve Analytics, which was acquired in June 2018, revenue growth was 37% with EBITDA up 26%.

Net profit after tax (NPAT) of $13.9m is up 17% on prior year. Included in NPAT are the following non‐recurring acquisition related items:

  • Transaction costs related to the acquisition of Evolve Analytics in June 2018 of $1.3m
  • Impairment of CA+ goodwill to reflect the fact that no further consideration is likely to be payable

A final dividend of 8.7cps has been declared taking the full year dividend to 13.7cps, up 7.9% on FY17. This represents a total pay‐out of $12.8m and 70% of NPATA.

Ian Black, CEO said, “Gentrack has delivered a year of revenue and profit growth across the utilities and airport segments. Our new utility customers are adopting our productised solutions in the cloud, driving the Group’s Annualised Committed Recurring Revenue (ACRR) up by 103% year‐on‐year from $25.5m to $51.8m. Full Year Recurring revenue for the Group, which includes non‐contractually recurring services to our customer base, is $64.0m, and accounts for 61% of total revenue.

We added 25 utilities and 3 airport customers during the year lifting FY18 subscription and software licence revenues by 78% on last year to $48.9m. We have maintained our leading market share of the UK’s independent energy suppliers and our software has now been selected by a number of the largest utilities in the UK including Npower, E.ON and SSE. We have also secured business with key airports in the USA including Orlando International Airport, and we have expanded our footprint at the Port Authority of New York and New Jersey which operates JFK, LaGuardia and Newark International airports.

In June 2018 we acquired Evolve Analytics which offers a highly complementary SaaS based solution in portfolio data analytics and revenue/cost assurance to our existing utility billing and customer information solutions. This is performing well, and we are seeing the expected cross‐sell opportunities in our UK customer base.

Continued expansion in the UK means that over 50% of the group revenues now come from the UK and Europe and half of our staff are based in the region. During the year we opened our new office in Singapore, winning our third customer in that newly competitive electricity market, and we continue to see growth opportunities in South East Asia.

We have continued to invest in our software with total development expenditure of $11.2m of which $3.7m was capitalised through the development of highly productised solutions which enable rapid delivery and conversion to our SaaS model. We launched Gentrack Cloud for utilities customers which will position us as a key supplier of full meter‐to‐cash solutions with integrated data assurance and analytics in the cloud.

The launch of the Veovo brand as the new name for our revenue, operations and customer experience solutions for airports has been well received. Veovo revenues are up 66% to $19.4m and EBITDA up 56% to $5.0m. Building on wins in the USA, we have opened our first sales and support office, and see a growing pipeline of US opportunities.

In July we undertook a successful Accelerated Renounceable Equity Offer to raise NZ$90m to de‐gear the balance sheet, leaving us with NZ$50m of undrawn debt facilities to pursue acquisition opportunities that may arise.”

Looking forward, in our key markets in the UK and Australia there is currently significant investment uncertainty amongst our utility customers following Government reviews and intervention in the energy retail markets. In the UK the introduction of electricity price caps on default tariffs in January 2019 will significantly impact utility margins and business models, and compounds Brexit uncertainty. Gentrack continues to target 15%+ p.a. organic EBITDA growth in the long‐term but we remain exposed to contract and project timing risk and we are seeing customers adopt a cautious approach to new projects. Our transition to productised solutions and increased focus on growing committed recurring revenues and expanding our addressable market, builds resilience during uncertain market conditions.

All figures are presented in NZ$.

Additional information regarding Gentrack’s full year results is below:

Gentrack Financial Statements 2018

Investor presentation

Appendix 1: Results

Appendix 7: Dividend details

The Annual Report will be released on 14 December 2018.