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Gentrack (ASX:GTK) share price slips following mixed full-year results

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The Gentrack Group Limited (ASX: GTK) share price has slipped slightly in opening trade this morning after the software company released mixed full-year results for the 2020 financial year.

Gentrack builds software for energy utilities, water companies and airports, mainly in Australia and New Zealand. The company’s platform aims to develop, integrate and support billing and customer management solutions. At the time of writing, the Gentrack share price is trading 1.42 lower at $1.39.

What did Gentrack announce?

Gentrack reported growth in a number of metrics, but fell short other areas. For the period ending 30 September, revenue declined 10% to $100.5 million over the prior corresponding period (pcp). The company attributed the revenue slump to the impact of COVID-19 which saw delays in projects, particularly its airport programs.

Annual recurring revenue (ARR) saw an 4.9% uplift, which Gentrack registered $81.3 million over the comparable period. Its utilities business did the heavy lifting, representing $70.9 million of the group portfolio, with its airport division coming in at $10.4 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) plummeted 51% to $12.1 million.

Statutory net profit after tax came at a loss of $31.7 million. This included a partial write-down of $34.5 million mostly related to its blip and utilities segment due to COVID-19 uncertainly.

Gentrack recorded a cash balance of $16.8 million at the end of September, reflecting an increase of 263% from the year before.

The board advised that due to the net profit after tax loss, it will not pay a final dividend to shareholders.

Management commentary

Commenting on the results, Gentrack CEO Gary Miles said:

The results reflect a tough year for our utilities and airports customers. Pleasingly, the revenue mix and shift in annual recurring revenues is positive.

We see opportunities in our markets and our strong net cash position sets us up to accelerate our technology investment and lead the industry as it transforms to the cloud and clean technologies. This year, we’ve also played a key role in enabling our customers to adapt to COVID, keeping their mission critical systems operational and ready to support customer hardship at this time.

FY21 outlook

Looking ahead to the new FY22 year, Gentrack opted not to provide investors with a guidance. However, it did reveal that it expected EBITDA run rate for FY21 to be well below H2 FY20. This in turn could hit the company’s bottom line with a possible break-even depending on its ongoing product investment strategy.

Management said that it continued to see opportunities in cloud technology and would seek to compete in this space.

Furthermore, the company will deliver an update on progress at its annual general meeting in February.

About the Gentrack share price

The Gentrack share price has been trading lower this year, sitting around 65% below its high of $4.02 last November. However, the Gentrack share price is up 25% since the start of the month.

The company has a market capitalisation of $139 million and a price-to-earnings (P/E) ratio of 12.8.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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