Today, his firm highlighted local wins including Mercury’s switch to Gentrack from the multinational SAP, plus a November contract win to upgrade Genesis Energy systems in a project that will run through to 2025.
No new water utility contracts were announced this morning but Miles saw a fresh chance to crack the local market with the post-Three Waters rejig.
With Three Waters, his firm didn’t even get the chance to pitch.
“We are particularly excited to engage with New Zealand water authorities to bring modern systems to the ageing water infrastructure,” he said.
“It’s so new. This whole engagement will take time. But at least we’re starting to have conversations, which we feel good about.”
He also cautions: “It’s early days. And it’ll be tricky because some of the water players are smaller. We might have to find a way to bundle them together in some kind of multiplayer offering.”
Selling back to the grid
The firm (which remains debt-free) finished the half with net cash down 6.2 per cent to $39.3m after paying $12.9m for a 10 per cent stake in Aussie start-up Amber Electric in February. It was part of a wider $29m Series C raise for Amber, which numbers Tesla among its partners.
Aimed at home battery owners, Amber sells Australians electricity at a wholesale rate. It makes money from a flat A$19 ($21) per month subscription fee.
Amber’s app lets customers buy power from the grid at times when rates are low (and across the Tasman, solar is so pervasive that rates can drop to zero or even negative - where retailers pay you to take power out of the grid - when the sun is shining) then run their home (or power their EV) from the home battery in the evenings.
“They’re really a tech platform, but they operate as a retailer,” Miles said. “And if prices are spiking, you can actually sell your battery power into the grid. In New South Wales, 50 per cent of [Amber’s] customers actually have negative bills.
“They had a situation in recently Melbourne where one of the generators went out [Victoria’s largest coal-fired power station was taken offline by a storm in February] and Amber had some customers who made A$500 in a day. The grid needed to balance itself so it pulled on everybody it could.”
Miles’ meat-and-drink remains trying to convince big utilities to shift from the likes of SAP or Oracle to Gentrack’s software. But he sees the new partnership as a potential beachhead for new business with utilities who want new products to cater to solar, home battery and EV owners. “We could sell Amber to them as a managed service. Then as they get to know us, when can talk to them about upgrading their whole stack.”
Embracing AI, up to a point
As networks, sensors and meters get smarter, “We’ll use AI to create forecasting algorithms, so in the future you’ll have a real-time data network, you’ll have real-time analysis of each consumption point whether it’s a heat pump or a huge battery storage facility, each device will have a forecasting curve on how much energy it will probably use based on historical usage,” Miles said.
“Mark Rees, our new chief technology officer [ex-Xero], is super switched-on about data and AI. We’re already using it for predictive coding and documentation for our own international efficiencies to move faster as an organisation.
“But it’s pretty early days for AI and you have to be a little careful handing over the steering wheel for everything at this point in time. I don’t think we’re there yet.”
Airports take off
Gentrack’s airports business, Veovo, continued its post-pandemic revival in the first half. Revenue grew 49.4 per cent over the first half of 2023 to $15.5 million, its best half-year result to date.
And utilities revenue was up 17 per cent to $86.5m - despite a nearly $20m revenue hole left by former customers who went insolvent during the UK’s water utility crisis who contributed one-off revenue in the first half of 2023.
Overall revenue was up 21 per cent to $102.0m.
“Underlying revenue growth delivered for 1H24 [excluding the involvement customer impact] was an impressive 58 per cent,” Craigs analyst Joshua Dale said. Overall it was a “very strong result,” Dale said.
Net profit fell by a third to $5.3m, ebitda was down 23 per cent to $12.3m - with the firm again highlighting that its first-half 2023 result included one-offs from involved UK water customers.
No dividend was paid, in keeping with Gentrack’s historic approach.
Guidance raised
The Auckland-based NZX- and ASX-listed firm has raised its full-year operating earnings guidance to $23.5m-26.5m from the previous $20.5m-25.5m.
And full-year revenue guidance - already bumped from $157m-160m to $170m - has been increased again, this time to $200m.
Gentrack’s software for managing baggage systems, check-ins and other systems is now installed at 160 airports worldwide, with new AI features being piloted at Auckland Airport and several European airports. In the first half, it signed three new airports in the UK: Stansted, Manchester and East Midlands, with upgrade projects under way at Gatwick and Sydney Airport, among others. The firm also expanded its nascent Saudi business during the period, with its first Middle East office opening in Riyadh.
A focus on major airports was paying off, Miles said.
In utilities, the Genesis upgrade project is one of several based on Gentrack’s AWS cloud-based “g2.0″ product, which sees the firm combining forces with Salesforce’s Energy and Utility Cloud.
Shares closed Friday at $7.96. The stock is up 133 per cent over the past 12 months, making it a top performer.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
