Gentrack (ASX:GTK) share price leaps 8% on EBITDA surprise

The software solutions company has released its full-year results. We have the details

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The Gentrack Group Ltd (ASX: GTK) share price is out of the blocks and is now trading 7.6% higher at $1.84. Gentrack is catching bids today after the provider of software solutions for utilities and airports released its FY21 results.

Here are the key takeouts from Gentrack’s results for the full-year to 30 September 2021.

Gentrack share price gains as EBITDA beats guidance

The highlights from Gentrack’s financial performance include:

  • Revenue of $105.7 million, up 5.2% on FY20 and in line with guidance;
  • Earnings before interest, taxes, depreciation, and amortisation (EBITDA) came in ahead of guidance at $12.7 million, also a 5.0% gain on FY20;
  • Statutory net profit after tax (NPAT) of $3.2m; and
  • Net cash in a stronger position of $26.0 million, up 54.8% year on year.

What happened in FY21 for Gentrack?

The Gentrack share price is climbing today amid positive results. Revenue growth last year was driven by an 8.8% increase in Gentrack’s utilities business to $89 million. New customer wins and growth from existing customers offset previous years’ losses, according to the release.

However, utilities annual recurring revenue (ARR) was down 0.3%, after absorbing approximately $4 million in customer revenue losses from prior periods.

The company wasn’t immune to the effects of COVID-19. Its Veovo airport brand saw revenue slip from $18.7 million to $16.7 million in FY21 due to the impact of COVID on the aviation industry.

Yet, despite the down-step, it still remained profitable and ARR was up 7.7% for the division.

Underlying group EBITDA of $12.7m came in ahead of guidance management issued earlier in 2021, whereas costs were up 5.2% on FY20.

The release notes Gentrack continues to “experience a drag on revenue growth, from prior period losses and supplier failures in the UK”.

The number of business to consumer (B2C) supplier failures in the UK has accelerated in the last 3 months due to the global energy crisis, the company said. However, this does not seem to have had a negative impact on the Gentrack share price.

According to the company, the government has now enforced a price cap for the B2C segment. It correlates this cap with a total of “9 customer insolvencies occurring since the beginning of FY21, compared to 6 in total from FY17 through FY20”.

Gentrack anticipates there “may be some further supplier failures in the coming winter months after which [its] expectation is that the market will stabilise”. It notes there are allowances for these potential failures in its forecasts.

What’s the outlook for Gentrack?

The company today reconfirmed that FY22 group revenues are expected to be ahead of FY21 revenue of $105.7 million announced today.

Still, Gentrack is not providing earnings guidance for FY22. It also confirmed no changes to its FY24 targets provided on 16 June 2021.

In addition, the company notes in its “Strategic Growth Pillars 2 and 3” strategy that new engagements have been secured, and that these engagements and pipeline “will enable FY22 growth”.

In the past 12 months, the Gentrack share price has climbed more than 30%, rallying 27% this year to date. Its shares have gained around 4% in the past month and are also up 4% for the week (since last Thursday’s close).

The author has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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