Digital Modernization And Energy Transition Will Drive Sustained Market Opportunity

Key Takeaways

• Strong demand for digital billing and customer management in utilities and telecom positions Hansen as a key provider with growing recurring, high-margin SaaS revenues.
  
• Investments in AI, automation, and regulatory-driven energy transitions support operational efficiency, scalability, and long-term market opportunities.
  
• Rising competition, volatile license revenues, M&A risks, underinvestment in cloud and AI, and tighter regulations threaten growth, margins, and long-term market share.

Catalysts

Engages in the development, integration, and support of billing systems software for the energy, utilities, communications, and media sectors.

• Ongoing global digital modernization in utilities and telecom continues to drive strong demand for advanced billing and customer management solutions; this is evidenced by Hansen's pipeline of large new contracts (e.g., Virgin Media O2, major US renewables deal) and sets up for sustained revenue growth as smart grid, smart meter, and IoT rollouts accelerate through the decade.
  
• Rapid expansion of data usage, connectivity, and IoT devices is increasing platform complexity for utility and telco clients, securing Hansen's positioning as a key mission-critical provider, and resulting in recurring, high-margin software and support revenues, particularly in EMEA and communications verticals.
  
• The shift to cloud-based and recurring SaaS revenue streams is enhancing Hansen's earnings visibility and supporting higher group margins; company guidance and recent margins (28.5% EBITDA) suggest ongoing operating leverage as new SaaS agreements ramp up and legacy license revenues gradually shrink in share.
  
• Investment in AI-enabled automation and product innovation (nearly 9% of revenue allocated to R&D) is already driving internal operational efficiency and faster product cycles, expected to improve net margins and enable more scalable, profitable growth across existing and new markets.
  
• Regulatory-driven energy transition, especially in regions like Germany-where all retailers must adopt smart meters and smart grids by 2030-creates visible, long-term market tailwinds for Hansen; recent acquisitions and turnaround successes (powercloud, CONUTI) position the company to capture significant incremental revenue and boost free cash flow as adoption deadlines approach.

Hansen Technologies Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Hansen Technologies's revenue will grow by 3.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from 10.7% today to 13.8% in 3 years time.
• Analysts expect earnings to reach A$61.3 million (and earnings per share of A$0.3) by about August 2028, up from A$43.3 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting A$75.2 million in earnings, and the most bearish expecting A$54.1 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 21.9x on those 2028 earnings, down from 26.3x today. This future PE is lower than the current PE for the AU Software industry at 76.8x.
• Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.12%, as per the Simply Wall St company report.

Hansen Technologies Future Earnings Per Share Growth

Risks

• Intensifying competition from global software giants and nimble SaaS startups, particularly in the German and European energy markets, could commoditize Hansen's offerings and put pressure on pricing, potentially reducing both revenue growth and net margins in the long term.
  
• The company's continued reliance on periodic, sizable license revenues introduces revenue volatility; with management guiding for lower license revenue in FY26, this may soften total revenue growth and weaken earnings visibility as the business transitions toward a recurring revenue model.
  
• Heavy investment in M&A carries execution and integration risks-if acquired businesses underperform or prove difficult to integrate (e.g., powercloud turnaround expenses and restructuring costs), Hansen could face impaired margins, unexpected costs, or even balance sheet strain, negatively affecting future earnings.
  
• While management is optimistic about AI-led productivity improvements, the rapidly accelerating shift to cloud-native, SaaS-first, and AI-powered platforms industry-wide may require even higher R&D investment and faster product innovation than Hansen is committing to, risking erosion of market share and future top-line growth if peers outpace their efforts.
  
• Compliance costs and restrictions stemming from increasingly stringent data privacy, cybersecurity, and data residency regulations (especially in Europe and North America) could add ongoing legal and operational expenses, complicating international growth and reducing net margins over time.

Valuation

• The analysts have a consensus price target of A$6.512 for Hansen Technologies based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$7.3, and the most bearish reporting a price target of just A$4.6.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be A$444.8 million, earnings will come to A$61.3 million, and it would be trading on a PE ratio of 21.9x, assuming you use a discount rate of 8.1%.
  
• Given the current share price of A$5.6, the analyst price target of A$6.51 is 14.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.