Gentrack's 38.6% Plunge Was About Timing, Not Lost Business

A guidance downgrade tied to two delayed utility contracts wiped out years of gains in a single session, even as recurring revenue kept growing.

15 Oct 2026 · 3 min read

Gentrack fell 38.6 percent in a single day in May after downgrading FY26 revenue and EBITDA guidance a week before its half-year result, a delayed-contract-driven shock that took the utilities and airport software company from above $9 to around $3, even as recurring revenue kept growing strongly and long-time believers began buying back in.

A downgrade caused by delayed deals, not lost business

Tamim Funds Management detailed a half-year revenue decline of 1.7 percent to NZ$110.1 million, with EBITDA falling to NZ$7.9 million from NZ$13.0 million and statutory net profit down 29 percent to NZ$5.1 million, even as recurring revenue accelerated strongly, up 12 percent to NZ$85.3 million and now 77 percent of total revenue. Lakehouse Capital said the downgrade followed two new utility customer deals slipping out of the current financial period, both originally expected to close by December 2025, with one customer entering an M&A process and the other affected by a regulatory timing shift, while management insisted neither deal had actually been lost. Yarra Capital Management said the downgrade reflected delayed new customer additions to the utilities division combined with a decision to retain the existing cost base to support future growth, and retained a small position on the view it offers significant valuation upside. Perennial Partners confirmed the stock fell 38.6 percent as management lowered FY26 revenue and EBITDA guidance while still reaffirming a medium-term revenue growth target of more than 15 percent compound annually.

Both deals were expected to close by December 2025 but have been delayed; one customer entered an M&A process, while regulatory timing shifts altered upgrade timing for the other. Although management insist neither deal has been lost.

— Lakehouse Capital, Monthly Report, May 2026

The market punished the whole business for one segment's timing

Tamim Funds Management argued the sell-off illustrated a familiar small and mid-cap pattern, where the market does not always punish only the part of a result that deserves it, sometimes marking down the higher-quality part of a company at exactly the moment that part is actually improving. Pengana Capital Group said it had sold most of its position the previous year on valuation grounds, leaving the impact of the downgrade minimal, while Ryder Capital counted Gentrack among its detractors, still viewing it as trading significantly below its assessed intrinsic value.

The market does not always punish the part of a result that deserves to be punished. Sometimes it punishes the whole business for the misbehaviour of a small piece of it. And sometimes, in its hurry to be decisive, it marks down the higher quality part of a company at exactly the moment that part is getting better.

— Tamim Funds Management, Article, May 2026

Long-time believers buy back in

Forager Funds said it had added Gentrack back to its portfolio over recent months, having first invested in the business in early 2020 when the share price was around $2, watching the thesis play out over the following five years as shares rose above $9 before it sold out, with ongoing delays in new contract wins and higher costs since then creating the opportunity to re-enter at a much lower price. Lakehouse Capital's annual report said the guidance downgrade sent shares down more than a third in a single session and roughly two-thirds over twelve months, with the half-year result confirming the shape of the miss, though group recurring revenue growth remained a more encouraging feature of the same result.

What fund managers say they are watching next is whether the two delayed utility customer contracts eventually close as management maintains they will, continued growth in recurring revenue now making up 77 percent of the total, delivery toward the reaffirmed medium-term target of more than 15 percent revenue growth, and whether the stock recovers as it has for repeat buyers like Forager in the past.