Introduction: Investing in the Utilities of Tomorrow

In the final instalment of our Small Cap Energy Transition Playbook, we explore a vital but often overlooked enabler of the global shift to clean energy: software for utilities. Following our reviews of Southern Cross Electrical (infrastructure) and Energy One (trading platforms), we now turn to Gentrack (ASX/NZX: GTK), a small cap leader in billing and customer engagement software, positioned at the heart of energy sector digitisation.

As the global push toward decarbonisation accelerates, the transformation of utility IT systems has become critical. “Smart grid software,” “utility billing platforms”, and “digital transformation in energy” are more than just buzzwords, they reflect a generational shift in how power is delivered, priced, and managed. Gentrack offers investors exposure to the software spine of that transition.

 

Thematic Fit: From Ageing Systems to Agile Software

Gentrack is one of a handful of global software firms providing cloud-based billing and engagement solutions tailored to energy and water utilities. Why now? Because the industry is experiencing a once in a generation churn event: legacy platforms, often built over 30 years ago, are no longer equipped to handle the complexity of distributed energy, dynamic pricing, or customer centric services.

A key catalyst: SAP, the market incumbent, is retiring its on-premise billing stack by 2027. Utilities globally must transition to SAP HANA or choose alternative providers. This has created a spike in RFPs and tenders, with many utilities re-evaluating their vendor mix. Gentrack’s next-gen product, g2.0, has emerged as a modern, scalable alternative.

         Source: Company

GTK’s g2.0 is built for modularity, fast deployment, and integration with renewable systems, smart meters, and digital apps. It enables utilities to future-proof their billing, improve customer experience, and embrace regulatory changes with speed.

Financial Profile: Profitable Growth with Recurring Revenue

Consensus forecast for Gentrack is forecasting NZ$240 million in revenue and NZ$42 million in EBIT for FY25 (September year-end), underscoring its earnings momentum. Ahead of 1H25 results (due 19 May 2025), analysts expect:

• Revenue of NZ$110–$118 million (+8–15% YoY)
• Recurring revenue rising to NZ$76 million (from NZ$65 million)
• Cash EBITDA of NZ$20 million (before SBC)

Importantly, Gentrack’s revenue is largely subscription-based, giving it high earnings visibility and strong operating leverage. Even as it invests in R&D and international expansion, margins remain healthy.

Growth Signals: Pipeline Maturing, Team Expanding

Gentrack’s hiring spree tells its own story. With 46 open roles and a 5% headcount increase over six months, GTK is clearly preparing for delivery. Recent job ads in Bulgaria suggest work has begun on a significant project with the country’s largest retailer with over 4 million meter points. GTK recently won UK contracts with Utility Warehouse and Ecotricity (UK), and already counts AC Energy (Philippines), and Neom (Saudi Arabia) as recent customers.

Management has also reported a surge in RFPs, spurred by its strengthened reputation and the SAP transition tailwind. Trusted consulting firms like EY and Deloitte are increasingly recommending GTK, creating new inbound opportunities.

The company has guided to >15% revenue CAGR and 15–20% EBITDA margins over the medium term—despite fully expensing all R&D costs.

Balance Sheet and Strategic Optionality

With NZ$70 million net cash, Gentrack has dry powder for opportunistic acquisitions that could complement its product suite or geographic footprint. Management has hinted at bolt-ons, but the focus remains on disciplined growth.

GTK’s clean balance sheet, proven management, and expanding pipeline give it the optionality to grow both organically and via acquisition.

Catalyst Watch: May Results Key to Re-Rating

GTK has a track record of outperforming post-earnings:

• Last four reporting periods saw rallies of 10–29%
• Market responds favourably to contract wins and pipeline updates

May’s 1H25 results will be pivotal. Investors should watch for:

• New contracts (Bulgaria confirmation, other EU wins)
• FY25 guidance upgrades
• Strength in recurring revenue
• Margin expansion as scale increases

Given GTK’s high operating leverage and expanding addressable market, we believe the stock is worth $25.00 on a 2-year view.

Tamim Takeaway: Betting on the Backbone of Energy Digitisation

Gentrack is not just a billing software provider, it is a mission-critical enabler of the modern utility. As energy providers shift from centralised generation to distributed, digitised, and customer centric models, platforms like g2.0 are indispensable.

For Tamim, GTK fits squarely within our investment framework: a founder-aligned, profitable small-cap with structural tailwinds, high recurring revenue, and global growth prospects. As with Southern Cross and Energy One, GTK provides exposure to the picks and shovels of the net-zero transition, without betting on binary outcomes.

Actionable insights for investors:

• GTK is a prime candidate for investors seeking digital infrastructure exposure in the utilities sector.
• Monitor May’s 1H25 results for evidence of revenue acceleration and contract conversion.
• Long-term structural tailwinds (SAP sunset, regulatory reform, decentralised energy) make this a multi-year compounder.
• With strong cash flow and no debt, GTK offers growth with downside protection.

Gentrack isn’t flashy, but it’s foundational. And in energy, that’s where the real value lies.

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Disclaimer: Gentrack (ASX/NZX: GTK) is held in TAMIM Portfolios as at date of article publication. Holdings can change substantially at any given time.