Gentrack Group Ltd (ASX:GTK) Half Year 2025 Earnings Call Highlights: Revenue Surge and ...
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Gentrack Group Ltd (ASX:GTK) reported a 9.8% increase in revenue, reaching $112.5 million, with recurring revenue up by approximately 17%.
The company's airports division, Viovo, experienced significant growth of 24%, driven by modernization and digitization efforts.
Gentrack Group Ltd (ASX:GTK) has a strong cash position, with cash flow increasing by $4 million to $70.7 million, compared to $39 million the previous year.
The company is expanding into new markets, including Asia, the Middle East, and Europe, with a strengthening and maturing pipeline.
Gentrack Group Ltd (ASX:GTK) has secured new projects and renewals, including a significant win with Utility Warehouse in the UK, enhancing its customer base and recurring revenue potential.
The company's EBITDA margin decreased slightly from 18% to 17% due to increased investments in sales and product development.
Non-recurring revenues in the utilities segment were 12% lower, reflecting variability and a high level of project work in the previous period.
The company's investment in Amber resulted in a share of loss amounting to $1.1 million for the half-year.
There is a noted decrease in the utilities business margin due to increased spending on R&D and sales and marketing.
The company faces challenges in international expansion, requiring local resources and partnerships to effectively deploy projects in new markets.
Q: Can you discuss the dynamics of project work and whether resource limitations affected your ability to carry out additional projects? A: We have been upgrading our base to G2 over the next 5 to 8 years, which acts as a shock absorber for non-recurring revenues. We are not pushing G2 hard yet as we want to ensure successful deployments, with Genesis being our first. We are investing more resources to ensure successful landings, which is part of the process for any first hyperscale program. (Gary Miles, CEO)
Q: Can you provide more details on the scoping with G2 and whether it involves new or existing customers? A: We have scoping in both core and target growth markets, but we do not plan to discuss specifics until contracts are finalized. We prefer to ensure certainty before making public announcements. (Gary Miles, CEO)
Q: How do you approach resourcing in new markets like Bulgaria, and at what point in the sales cycle do you hire locally? A: Outside of core markets, we need local resources for project deployment, possibly a small team for scoping. The approach depends on language, partnering strategy, and customer needs. We have experience with various permutations, and typically, a small team is needed for scoping, followed by a surge in resources for project execution. (Gary Miles, CEO)
Q: Can you elaborate on the deal progression this year, particularly with Utility Warehouse and potential opportunities in Bulgaria? A: Utility Warehouse is a new billing system win, not a renewal, in a competitive UK market. We are confident in our midterm guidance due to our strong technology and customer results. Salesforce is increasingly partnering with us, which boosts our confidence. (Gary Miles, CEO)
Q: Regarding medium-term guidance, how confident are you in achieving a 15% revenue CAGR given the current growth rate? A: We have achieved approximately 26% growth over the past four years despite challenges. We are confident in our market due to macro dynamics and are focused on executing our strategy as we expand into new territories. (Gary Miles, CEO)
Q: When will recurring revenue from the Utility Warehouse contract begin, and how much implementation falls into FY25? A: Implementation revenues will be seen in the second half of FY25 and the following year. Recurring revenues will become more significant in FY26 and beyond, as the relationship grows. (John, CFO)
Q: Are there country-specific variations in price per meter point in non-core markets compared to core markets? A: There is significant variation depending on the market. For example, Asia and Eastern Europe have different price points compared to core markets. The variation is consistent with enterprise-grade software pricing. We aim to win at profitable levels and focus on recurring revenue. (Gary Miles, CEO)
Q: Can you provide insight into the scale of scoping opportunities compared to Utility Warehouse? A: We aim to win more tier-one customers like Utility Warehouse but are also successful with tier-two and tier-three customers. We focus on customers with generation assets for better profit pools. Our customer concentration is balanced, and we target a range of suppliers. (Gary Miles, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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