Gentrack has provided more detail on its FY20 outlook, following an initial statement on 15/1/29 (see here)
The company has reiterated that it is facing difficult trading conditions in its utlities segment in Australia and the UK. This is due to a competitive environment for customers, as well as regulatory price caps on electricity, which is leading to a deferal of IT investment.
Gentrack now expects FY20 EBITDA to be between $8-12m. That compares with $24.8m in FY19, and $31m in FY18. OUCH!!
In response, Gentrack is seeking to reduce its cost base by ~$8m, half of which will be realised in teh current year. The business also reiterated that it is a profitable business, with no debt and around $8.6m in cash. Recurring revenue is forecast to grow by 5% (the company is transitioning away from a license model to a subscription model), and the company remains a market leader in its chosen markets.
Following a further drop in the share price, this could potentially be a buying opportunity if you believe it has the ability to resume growth. Personally, i'd want to see some evidence of this before i was encouraged to buy.
You can see the latest ASX announcement here