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Gentrack's Profit Doubled Last Year — So Why Has the Stock Fallen 45%?

A Tale of Two Stories

Gentrack Group is one of the most puzzling stocks on the NZX right now. On one hand, the company just delivered a stellar FY2025: profit up 119%, recurring revenue up 13%, major new customer wins across three continents, and a cloud platform that's gaining real traction. On the other hand, the share price has been absolutely hammered — falling roughly 45% from its 52-week high of around $13 to trade near $6.35 NZD.

What gives? The answer lies in the gap between expectations and reality — and it might just be creating an opportunity.

FY2025 Results: The Numbers Were Good

Let's be clear about this: Gentrack's FY2025 numbers were genuinely strong.

  • •Revenue: $230.2 million, up 8% on FY2024
  • •Recurring revenue: $155.4 million, up 13% — now two-thirds of total revenue
  • •EBITDA: $27.8 million, up 18%
  • •Net profit (NPAT): $20.9 million, up 119%
  • •Analyst consensus EPS (forward): $0.21 NZD
  • •P/E ratio: ~30x trailing

The profit doubling is the headline, but the recurring revenue growth is arguably more important. SaaS (software-as-a-service) businesses are valued on the quality and predictability of their revenue, and Gentrack is steadily shifting its revenue base toward higher-quality, stickier income streams.

So Why the Sell-Off?

The problem wasn't the results — it was the comparison to expectations. In FY2024, Gentrack grew revenue by 26%. In FY2025, that slowed to 8%. For a stock that had been priced like a high-growth tech darling, that deceleration was enough to trigger a de-rating.

The market had essentially priced in continued 20%+ growth, and when it didn't materialise, the P/E multiple compressed sharply. This is a classic pattern in tech stocks: great results that fail to meet sky-high expectations get punished as if they were bad results.

At around $6.35 and a P/E of ~30x, the market is still pricing in decent growth — but it's no longer pricing in the explosive growth story that drove the stock above $13.

The Business: Utilities and Airports

Gentrack operates in two niche but growing markets:

Utilities (83% of revenue): Gentrack's billing and customer management software is used by energy and water utilities worldwide. Revenue grew 7% to $193.4 million. The big story here is the g2.0 cloud platform, which represents the future of the business. Key milestones include deployments with Genesis Energy in NZ and ACEN in the Philippines — the first Asian customer to go live on g2.0. UK water company Pennon is also onboarding.

Airports — Veovo (17% of revenue): This division operates at over 150 airports in more than 25 countries and grew revenue 15% to $36.8 million. The standout win was a contract with NAV CANADA, the world's second-largest air navigation service provider, to handle all its billing. New customer wins in the UK and Middle East added to the momentum.

What the Analysts Think

The analyst consensus target price sits at around $11.16 NZD — roughly 50% above the current share price. That's an unusually wide gap, suggesting analysts believe the sell-off has been overdone.

The consensus recommendation leans toward Buy, reflecting confidence that the g2.0 platform transition and growing recurring revenue will drive a re-acceleration in growth over the coming years.

What to Watch

  • •g2.0 customer pipeline: The cloud platform is the growth engine. Every new deployment validates the product and builds recurring revenue. Watch for announcements of new utility customers, especially in the UK and Asia.
  • •Revenue growth re-acceleration: If Gentrack can get back above 15% growth, the stock will likely re-rate significantly. The shift to SaaS should support this over time as more customers migrate.
  • •Veovo's trajectory: The airports division is smaller but growing faster. NAV CANADA is a marquee win — more large ANSP contracts could make this division a much bigger part of the story.
  • •Margin expansion: With R&D investment in g2.0 being fully expensed, any reduction in development spend as the platform matures could boost margins significantly.

The Bottom Line

Gentrack is a quality software business that got caught in the classic expectations trap — strong results punished because they weren't strong enough relative to a hyped-up share price. At $6.35, with analysts targeting $11+, the risk-reward looks attractive for patient investors who believe in the long-term shift to cloud-based utility software. The risk is that revenue growth stays in the single digits longer than expected, keeping the stock in the penalty box. But with profit doubling, recurring revenue growing, and major new customers onboarding, the fundamentals tell a much better story than the share price suggests.

*Disclaimer: This article is for educational and informational purposes only. It does not constitute financial advice. Stock data may not be real-time. Always conduct your own research and consult with a qualified financial advisor before making investment decisions.*