On track for a turnaround
Money Magazine Australia|July 2022
After a tough few years, this software maker can see better times ahead
GRAHAM WITCOMB
On track for a turnaround

SHARES INTELLIGENT INVESTOR

Gentrack (ASX: GTK) entered 2020 with a faltering UK division, declining margins and three profit downgrades in the previous quarter. It all went downhill from there.

The UK utility market is the billing software maker’s biggest segment, and also its best opportunity for growth. Representing a bit over half of total revenue, the division has had three years of stagnant sales due to 2019’s introduction of new laws that limit how much electricity retailers can charge customers. This triggered a domino of declining revenues, falling margins and a slowdown in new project spending.

There are signs a turning point might be in sight. The company has announced a strong result for the six months to March, with revenue rising 12% to $NZ57 million ($52 million).

Despite the significant disruption to its UK operations, the utilities division increased revenue by 15% – and it would have been 25% without the 12 UK customers that became insolvent during the period.

The company continued to win new contracts, with five new utility customers installing Gentrack’s billing software. It may not sound like much, but that’s champagne-worthy in this industry.

Once installed, Gentrack’s software becomes the utility’s core – its cashflow engine – and the high cost and time required to switch providers make customers “sticky”, both to Gentrack and its competitors. Gentrack had only seven new customers in all of 2021.

The UK regulator, Ofgem, also appears to have realised that the price cap system isn’t working – 29 energy companies have closed shop or been put into special administration since its introduction, nine of which were Gentrack customers.

Bu hikaye Money Magazine Australia dergisinin July 2022 sayısından alınmıştır.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

Bu hikaye Money Magazine Australia dergisinin July 2022 sayısından alınmıştır.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MONEY MAGAZINE AUSTRALIA DERGISINDEN DAHA FAZLA HIKAYETümünü görüntüle
An outrageous, beautiful monopoly
Money Magazine Australia

An outrageous, beautiful monopoly

Telstra's mobile business is a cash machine with few competitors, giving it the highest returns in the world.

time-read
4 dak  |
July 2024
Drop the anchor to judge value
Money Magazine Australia

Drop the anchor to judge value

Buying and selling decisions should be based on where a stock price is going, not where it has been.

time-read
3 dak  |
July 2024
Powering the AI boom
Money Magazine Australia

Powering the AI boom

Beyond the software and chipmakers, where will the energy come from?

time-read
3 dak  |
July 2024
Get into life
Money Magazine Australia

Get into life

Tucked inside super are products that can protect you from life's inevitable uncertainties.

time-read
5 dak  |
July 2024
Paths to home ownership
Money Magazine Australia

Paths to home ownership

Taking the road less travelled can sometimes deliver unexpected benefits.

time-read
5 dak  |
July 2024
Sold! Quick ways to add value
Money Magazine Australia

Sold! Quick ways to add value

Small, strategic changes can have a big impact on the look and feel of your home. And get you a better price on auction day.

time-read
5 dak  |
July 2024
Money lessons the kids need to know
Money Magazine Australia

Money lessons the kids need to know

Your children can learn a lot from your past money mishaps. Here are eight financial conversations I have had with mine.

time-read
4 dak  |
July 2024
Property-investing rules: are they likely to change?
Money Magazine Australia

Property-investing rules: are they likely to change?

The pressure for the government to curb the tax benefits of tax concessions, such as negative gearing and the capital gains tax discount, is unrelenting. Most recently, independent senators David Pocock and Jacqui Lambie proposed five options for paring back investment property tax concessions, with savings to the Federal budget of up to $60 billion over the next decade.

time-read
3 dak  |
July 2024
What's love got to do with it?
Money Magazine Australia

What's love got to do with it?

A rollercoaster of emotions could be driving poor crypto behaviour.

time-read
3 dak  |
July 2024
Are we ready to be cash-free?
Money Magazine Australia

Are we ready to be cash-free?

Saying goodbye to our piggy banks too soon could leave small businesses in the dark when problems arise.

time-read
2 dak  |
July 2024