Gentrack loss widens on increased R&D, marketing spend

Gentrack says it's well placed to capture the opportunities created by changes to the utilities and airport sectors

Gentrack's first-half loss widened as it ramped up spending in preparation for the UK energy market to come out of a major shake-up that has stretched the utilities software provider's business for the past couple of years.

The company reported a net loss of $5.8 million in the six months ended March 31, widening from a loss of $1.1m a year earlier. Earnings before interest, tax, depreciation and amortisation (Ebitda) sank 79% to $1.2m, as the company's spending grew at a faster pace than the 12% increase in revenue to $57.1m.

The software firm has been dealing with regulation changes in its key UK and Australian energy markets in recent years. The British regime's changes forced firms to pass on subsidies to customers and triggered the collapse of a number of companies.

For Gentrack, that saw 12 of its UK customers declared insolvent over the past 18 months, putting more than half its income stream at risk.

The company today said it hasn't seen any insolvencies since December and it believes "the worst of the UK market shake-up is over".

It's been preparing to come out the other side of the downturn, lifting spending on research and development and on sales and marketing, which it views as leaving it "well-positioned to capture the sizeable market opportunity created by the transformation of the utilities and airport sectors across the world".

The company reaffirmed its February forecast for annual revenue of roughly $115m in the September year, and earnings before interest, taxes, depreciation and amortisation (Ebitda) to be in the low single digits.

It's also retained targets for the September 2024 year for revenue growth of 30% from 2021, implying revenue of about $130m that year, and for cash Ebitda to be 15% to 20% of revenue, or $19.5m to $26m.

Gentrack's board decided not to declare a dividend for the period, due to the net loss.

The shares fell 2.7% to $1.47 in late trading on the NZX, underperforming the benchmark S&PNZX 50 Index, which was down 0.6%.