Gentrack widens loss: UK division may be on road to recovery

Gentrack Group’s (ASX: GTK) share price remained virtually unchanged going into lunch after the dual-listed NZ provider of software to airports and energy retailers reported that its half-year net loss widened to $NZ5.8m on revenue up 12% to $NZ57.1m for the six months to March 31.

Gentrack guided to revenues for FY22 of around $115m, versus FY21 revenues of $105.7m, with earnings expected to be in low single-digits.

Highlights within today’s result were:

• Earnings fell to $NZ1.2m, versus $NZ5.8m in the previous corresponding period

• Net cash of $NZ16.5m versus $NZ26m as at September last year

• Cash position of $16.5m versus $26.0m at September 2021

• No interim dividend to be paid

UK Turmoil

Despite the turmoil in the UK Energy market – where 12 customers have moved into insolvency over the last 18 months - revenue was driven higher by a 15.2% increase in the utilities business to $48.9m for the half year from new customer wins and growth from existing customers.

Revenue was also slightly down in Veovo’s Airports business by $0.3m to $8.2m due to the industry downturn.

UK turmoil aside, management attributes significantly lower earnings to an increased investment in strategic R&D and in sales & marketing.

Management also noted that the programs for product investment and business development are positioning the company well for the accelerating industry transformation.

A&NZ in good shape

While around half of Gentrack’s revenue is from retailers selling electricity directly to the public - where price issues exist - the rest of Gentrack’s utilities division is in good shape.

The Australia and NZ business, which comprises around 39% of the utilities revenue continues to grow. Overall revenue per project delivery rose 7% in the year to September, while the cost of providing that service fell 3%.

Gentrack share price movement over three months.