Gentrack expects better 2nd half after 1H loss

Gentrack said the Covid-19 crisis is starting to bite its airport and utility customers. Photo / Getty Images

Gentrack said the coronavirus crisis is starting to bite its airport and utility customers but it still expects a better second half.

The utility-software company today reported a 7 per cent revenue decline to $50.6 million for the six months ended March 31. Gentrack said this was due to losing some UK customers as several energy-utility companies collapsed or consolidated.

The company, which said Covid-19 had little impact on its first-half results, posted a net loss of $12.8m after impairing $10.7m of goodwill in Blip and $1.5m of previously capitalised utility software.

Blip, which was acquired in April 2017, has been significantly impacted by the global airport shut down, with the timing of a recovery remaining uncertain.

Adjusted for the impairments, the underlying net loss was $1m, while adjusted operating cashflow was $8.6m and earnings before interest, tax, depreciation and amortisation were $4.3m, down 78 per cent.

The share price fell 1.4 per cent to $1.40 in early trading and is now down more than 62 per cent year to date.

Gentrack had already forecast a weak result because the energy retail industry in the UK is under pressure as a result of price caps introduced by the British government in 2019.

The economic downturn is beginning to have an impact on airport and utility customers, causing some projects to be delayed or postponed in the second half.

The difficult conditions have already cost Gentrack a number of contracts and the company warns there is an increased risk of further failures and consolidation in the second half due to the Covid-19 downturn. The UK market accounts for more than half of all revenue.

Revenue from airport management software Veovo is also starting to see an impact from the travel shutdown, particularly from smaller customers.

Executive chair John Clifford said he expects improved earnings and continued positive cashflow in the second half of the year, despite the risks.

"Notwithstanding the impact of the economic downturn Gentrack expects to deliver a second-half ebitda result ahead of the first half, and to remain cash flow positive," he said.

"Gentrack is well positioned to emerge from the current difficult market conditions and return to consistent profit growth."