Gentrack Group (GTK) H2 2024 earnings summary

Executive summary

• Revenue grew 25.5% year-over-year to $213.2m, driven by strong performance in both Utilities and Veovo segments, with underlying growth of 50% excluding one-off revenues from insolvent customers.

• Underlying EBITDA before LTI costs rose 42% year-over-year, but reported EBITDA of $23.6m was impacted by higher LTI-related costs, including a $7.1m payroll tax charge due to share price growth.

• Net cash increased by $17.5m to $66.7m after a $12.9m investment in Amber, reflecting robust cash generation.

• Four new utility customers were added, including entries into Saudi Arabia and the Philippines; Veovo expanded with major contracts in the Middle East and UK.

• Joined NZX50 and ASX300 indexes, highlighting market recognition.

Financial highlights

• Group revenue reached $213.2m (NZD 213 million), up from $169.9m in FY23, with Utilities revenue at $181.3m (+23%) and Veovo revenue at $31.9m (+45.5%).

• Recurring revenues rose 33% in Utilities and 15% in Veovo, while non-recurring revenues more than doubled, up 104% year-over-year.

• EBITDA margin before LTI costs improved to 19% in FY24, up from 17% in FY23.

• Operating cash flow was $34.4m, with closing cash at $66.7m.

• NPAT was $9.5m, including a $1.3m share of Amber's loss and $1.7m in R&D tax credits.

Outlook and guidance

• Midterm guidance targets revenue growth above 15% CAGR and EBITDA margins of 15%-20% after expensing all development costs.

• FY25 expected to see continued revenue and EBITDA growth in both segments, with timing dependent on deal closures; no formal FY25 revenue guidance issued pending greater clarity.

• LTI-related costs expected to decrease in FY25 and fall below 1% of revenue by FY26, supporting margin expansion.

• Continued investment in R&D and sales/marketing to support international expansion.

• No dividend planned as capital is prioritized for growth; capital allocation to be regularly reviewed.