Contrasting Tales of Two Technology Companies – Gentrack Group and Buddy Technologies

  • Jan 22, 2020 AEDT
  • Team Kalkine
Contrasting Tales of Two Technology Companies – Gentrack Group and Buddy Technologies

The year 2020 is the start of a new decade, and there is a scope that it would bring about revolution in the technology sector. Australian government in its Report ‘Australia’s Tech Future’ highlighted that Australia’s technology sector would strongly be influenced by four emerging technologies which are Artificial Intelligence, IoT, Blockchain and Quantum Computing. These technologies are predicted to change as well as enhance many fundamental tasks & interactions in the upcoming years, which include the ways of working, travelling and communicating with each other.

However, the performance of any technology company also depends on the performance of the key market in which it operates. In case the key market is not doing well, then it might also impact the performance of the company.

In this article, we would look at two technology companies with different key markets. We would cover their recent updates and review the role of the demand conditions in the key market on the company’s future growth.

Gentrack Group Limited (NZX/ASX: GTK)

Gentrack Group Limited (NZX/ASX: GTK) is a growing, profitable, technology company that is listed on ASX as well as NZX. It is into the business of designing, building, deploying and supporting solutions of some of the most progressive utilities and airports in the world

Gentrack Group Limited, last week on 15 January 2020, had released an announcement and notified the market related to the difficulties which the company is experiencing in its key market areas which is impacting its sales pipeline.

It also highlighted that its significant UK utility client, E.ON anticipates suspending the implementation of its recently introduced Gentrack billing platform to align resources towards the stabilization of the newly acquired Npower business.

It also highlighted that the company was evaluating the financial implications of broader adverse market conditions and E.ON’s decision and assured to provide the market with a further announcement along with the updated FY20 Outlook.

On 20 January 2020, Gentrack Group provided further update to this announcement. It stated that in the UK and Australia regulatory price caps on electricity, along with competitive market conditions have resulted in reductions and delays in IT investment. As a result, the sales pipeline has got impacted to a greater extent than what was expected earlier.

Now, Gentrack is also transitioning from an upfront license model to a recurring SaaS model. The initial contract revenues are diminishing and are being substituted by more predictable contracted recurring payments.

GTK also completed the detailed FY20 reforecasting exercise, which reflected a significant fall in forecast revenue. The company now expects withs EBITDA for FY2020 to lie in between NZ$8 million and NZ$12 million.

Observing the market conditions, GTK is taking actions to lessen its cost base by ~NZ$8 million on a full-year basis.

Further to this, the company provided the following update related to its underlying business.

  • GTK remains a profitable and cash generative business. It has a strong balance sheet & does not have any debt.
  • Contractually Recurring Revenue is expected to grow by more than 5% in FY2020, with overall recurring revenue approx. Flat at NZ$78 million.
  • GTK continues to be a market leader in countries like the UK, New Zealand and Australia utility billing and customer management systems with high customer retention.
  • ON’s decision to suspend its Gentrack implementation is not because of any issues related to the product and services of GTK.
  • GTK’s airport business continues to be the market leader in Australia, New Zealand and the United Kingdom for airport billing as well as an operating system along with the passenger management systems.
  • GTK has more than 100 staff in product development to assist in its plan of SaaS productization.

Buddy Technologies Limited (ASX: BUD)

Buddy Technologies Limited (ASX: BUD) is a leader in IoT and cloud-based solutions to make spaces smarter. It has two core businesses, i.e. Commercial Business and Consumer Business. Under commercial business, Buddy Technologies’ commercial offerings are Buddy Ohm and Buddy Managed Services while Buddy’s Consumer Business trades under the LIFX brand.

Buddy Committed to Drive EBITDA positivity Since LIFX Acquisition:

On 24 December 2019, Buddy released an announcement where it highlighted its consumer division’s target. It remains focused on two large bulk purchase deals which remained incomplete and are subjected to negotiations as well as completion of the formal documentation.

Also, Consumer Division’s growth target of 70% to 100% is contingent on the completion of these two large bulk purchase deals which could not be achieved by CY2019 end.

On this front, the company is strategically aligned to meet its objectives. Recently on 8 January 2020, the team from Commercial and Consumer (LIFX) teams were in Las Vegas to attend the 2020 Consumer Electronics Show where it announced a slew of new and enhanced products.

Next step taken by the company was the appointment of Mr Donald Hicks, who would join LIFX as Global VP of Sales.

On 20 January 2020, Buddy Technologies Limited announced that Mr Donald Hicks would join LIFX as Global VP of Sales. Mr Donald Hicks has five years of experience at Ring. Ring is a fast-growing smart home security company that was acquired by Amazon for US$1 billion in the year 2018. At Ring, Mr Hicks was the VP of Global Retail Sales. He was the first salesperson to join Ring and led their global sales team to more than US$1 billion in annual sales.

He has more than 20 years of experience placing the products as well as the brands in international retail chains for distribution. He also has experience in growing the sales of an organisation by prospecting, discussing as well as handling distribution agreements with key U.S. and global retailers like Home Depot, Lowes, Wal-Mart, Amazon, Best Buy, Target, Costco, Sam’s Club, JB Hi-Fi, Media Saturn, Harvey Norman, Aldi, Dixons and so on.

It is expected that Mr Hicks would take up the role from 16 April 2020.


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