Gentrack Rockets 22% on Record Results: Buy This Airport Software Stock or Sell Into the Rally?

Gentrack (ASX: GTK) jumped 22% to $8.10 today after reporting strong full-year results that beat market expectations. The New Zealand software company grew revenue by 8% to NZ$230.2 million, but the real story was profit growth; EBITDA surged 18% to NZ$27.8 million, showing the company is squeezing more profit from every dollar of sales. For investors in enterprise software, this margin expansion is exactly what you want to see. The question now is whether the 22% rally leaves room for more upside, or if the good news is already priced in.

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Gentrack’s Recurring Revenue Model Delivers Expanding Margins

Gentrack provides mission-critical billing software for two niche sectors: utility companies (energy and water) and airports. The business model’s strength lies in switching costs; once a utility or airport implements Gentrack’s billing platform, ripping it out becomes prohibitively expensive and disruptive. This creates predictable, sticky revenue streams that now represent 67% of total sales at NZ$155.4 million, up 13% year-over-year.
The real story in these results is operational leverage. While revenue grew just 8%, EBITDA expanded 18%, meaning the company is extracting more profit from each dollar of sales as it scales. This margin expansion stems from Gentrack’s shift towards cloud-based SaaS solutions, which carry lower delivery costs than legacy on-premise software. If this trend continues, and management expects it will, EBITDA margins could reach the high end of the 15-20% target range within two years.
Net profit tells an even stronger story, surging 119% to NZ$20.9 million. This dramatic jump reflects both margin gains and lower one-time costs, demonstrating that Gentrack is transitioning from a high-investment growth mode towards sustainable profitability.

Airport Division Powers Growth With International Expansion

Gentrack’s airport software division, Veovo, posted 15% revenue growth to NZ$36.8 million, outpacing the utilities business. Veovo now operates in over 150 airports across 25+ countries, providing software that manages everything from passenger flow forecasting to aeronautical billing.
The standout win this year was securing NAV CANADA, the world’s second-largest air navigation service provider, for aeronautical billing. This contract validates Veovo’s technology at scale and opens a new market segment with global potential. For investors, airport software represents the higher-growth side of Gentrack’s portfolio, with digital transformation spending accelerating post-pandemic as airports modernise ageing infrastructure.
The utilities division, while growing more slowly, delivered important wins, including Utility Warehouse in the UK (serving nearly two million metre points) and Genesis Energy’s first full deployment of Gentrack’s new g2.0 platform in New Zealand. These enterprise-scale deployments typically lead to long-term expansion revenue as customers add modules and users over time.

The Investor’s Takeaway

At $8.10 after today’s 22% surge, Gentrack now trades at a premium valuation by any standard. Typical SaaS companies with low-double-digit growth trade between 5-7x revenue in 2025, while high-growth names (30%+ growth) command 8-10x. Gentrack’s 8% revenue growth and 15% target sit in the middle, suggesting a fair multiple around 6-7x revenue, which today’s price likely exceeds.

We believe the stock is expensive at current levels for three specific reasons:

• Recurring revenue growth of 13% is solid but not exceptional in a software market where investors pay premiums for 20%+ organic growth. Gentrack’s growth is respectable but doesn’t justify a top-tier multiple.

• The 15%+ revenue CAGR target is an aspiration, not a guarantee. Achieving it requires successful international expansion in competitive markets where Gentrack faces entrenched players. Execution risk is real, particularly in the UK utilities market, where customer insolvencies have previously hurt results.

• Today’s 22% jump means much of the near-term good news is now priced in. The margin expansion story is well understood, and unless Gentrack materially beats its 15% growth target, the stock may struggle to justify further multiple expansion from here.

That said, the bull case has merit if you believe in management’s execution ability. The recurring revenue model provides predictable cash flows, the balance sheet is debt-free with healthy cash reserves, and the total addressable market in utilities and airports remains large. If Gentrack can sustain 15%+ growth while pushing EBITDA margins towards 20%, today’s valuation could prove reasonable over a 2-3 year horizon.

For growth investors: The risk-reward looks unfavourable at $8.10 unless you have high conviction in management’s ability to accelerate growth beyond the 15% target. Wait for a pullback closer to $7.00 for better entry valuation.

For existing holders: Today’s rally doesn’t create an obvious sell signal, but trimming 25-30% into strength makes sense to lock in gains. Keep core exposure if you believe in the long-term story.