Software solutions company Gentrack Group Ltd (ASX: GTK) shares will be on watch this morning after reporting a weaker FY19 result.
What did Gentrack announce?
Gentrack shares will be worth watching after reporting growth in a number of key financial areas, despite some challenges.
Gentrack revenue climbed 7% higher on the prior corresponding period (pcp) to NZ$111.7 million. Recurring revenue jumped 22% on pcp to NZ$78.2 million but otherwise earnings softened. Positively, recurring revenues now account for 70% of total revenue as at 30 September 2019.
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 20% on pcp to NZ$24.8 million during the year.
Gentrack reported 36% revenue growth on FY18 in the United Kingdom despite "challenging market conditions". The utilities and airports software company added 4 new energy customers, 1 water utility customer and 3 new Evolve projects.
Gentrack's Evolve Analytics acquisition in June 2018 expanded the company's capabilities and footprint in the UK and sent Gentrack shares climbing higher.
In terms of operational highlights, Gentrack did add a number of new customers during the year. These include Mexico City, Luton and Buenos Aires airports all being added to its Veovo airport business.
Total research and development spend jumped 21% on pcp to NZ$13.5 million as Gentrack continues to invest in further Gentrack Cloud solutions.
How will Gentrack shares react?
While the headline numbers were mixed for the software group, Genworth shares could be heading lower this morning.
Gentrack said continuing uncertainty in its core UK market are likely to impact its FY20 results. The Kiwi software company isn't forecasting much growth and is expecting results to be broadly flat in FY20.
Gentrack shares have fallen 16.35% lower throughout 2019 but are still up a tidy 87.62% in the last 5 years.
The company's share price closed at $3.94 per share yesterday and I'd be watching to see if it falls below its current 52-week low of $3.81 in early trade.
