Pinned straw:
Adding to the bear case (as everyone here always likes a bear case on an overpriced stock), here are a few slides from the SAP July 2024 update
RISE is the cloud offering of SAP S4/HANA for existing customers wanting to migrate. GROW is the offering of SAP S4/Hana for new customers
It is hard to get any numbers out of how many SAP IS-U on premise customers are out there holding off on migrating to SAP S4/Hana but it looks like numbers are around 1000-2000 when I search through various sites.
There's also the question of how easily the pipeline of SAP migration will move to the cloud.
The SAP slides only give sales numbers, not the number of customers wanting to move
SAP sales would always be large due to the price of the product compared to Gentrack.
It would be good to get the amount of contracts in the slide but each contract would be different since each purchase of modules will vary from customer to customer
Therefore we can only guess.
From Gartner, the number of customers on SAP ECC (on premise) and still to commit to the 2027 date is about 23000 as of Dec 2023.
So if SAP cloud intake is about 30% p.a. then 6900 customers are planning to roll to SAP Rise this year
Although this is big and dramatically cuts the addressable market for companies like Gentrack, I don't think it's a cause for panic. There will always be a percentage that will wait it out, likely from SAP ISU customers.
On SAP ISU, there could at least 800 customers (as of 2017) but that is probably bigger now according to other unverified sources (up to 1500 as the highest case).
I also have not included Oracle customers so number of customers still not on cloud could be 2000+.
Finally I haven't accounted for the economics of Gentrack deployments which are charged on #billable meter points per year on top of one off contract revenue.
Surprisingly no one has gone through the Gentrack pricing in previous straws. Then again, there's not much info on it except what is in the MS research note, so no need for concern. This will need to be discussed in another post.
Having mentioned all the above, I believe Regal and WAM did not sell because of valuation.
They may have sold to get cash for other opportunities
I agree it is not worth buying here, but I feel it is not worth selling either after doing my own research with the help of the MS research notes.
Need to get a big win that owns lots of connections to push higher probably in SE Asia which Gentrack are trying to do. And also get Genesis through the g2.0 upgrade by FY25 which will be the main catalyst for others to move.
Also the difficulty is finding the revenue breakdown which I tried last night but didn't find anything.
Gentrack does not break out the meter points (recurring) and deployments and services (non recurring)
Most of their big customers are still UK like nPower followed by Australia eg: Energy Australia, NZ with Mercury and Genesis and ROW (mostly Asia pacific nations such as Fiji).
Mercury recently migrated from SAP with the Trustpower acquisition so that is a plus.
I'll have to start guessing the connections from their customer list of 60 if I can't find the numbers!
(Note I have been buying virtually here to bring the holding in line with the real one, but not added in real life)