Perhaps the strong 2021-22 revenue and profit growth experienced by global logistic group WiseTech will finally quieten all the naysayers the company seems to have collected who have long been sceptical about the company’s products and its growth strategy.
Despite increasing evidence that the company’s trade flow and logistics software was doing what it claimed to do, some of the negativity has persisted.
But on Wednesday the company revealed a bumper year, despite all those reports of global supply chain disruptions, with profits up 80% to $194.6 million and revenue up 25% to $632.2 million in the year to June.
EBITDA jumped 54% to $319 million and the company said its EBITDA margin of 50% was up 9 percentage points on 2020-21, “reflecting enhanced operating leverage, the benefits of exceeding cost reduction program targets and pricing offsetting inflation.”
The result was one of the strongest for this reporting season and saw the shares jump more than 12% to $59.77, adding more than $2 billion to WiseTech’s market value.
The company said its key CargoWise software “generated revenue of $447.9 million, up 35% (37% ex FX) on FY21, driven by Large Global Freight Forwarder (LGFF) rollouts, new customer wins and increased usage from existing customers.
“Market penetration momentum continues with the notable win of UPS and four additional new LGFF rollouts in FY22,” the company said. UPS was in fact one of 10 large companies that signed on in the June 30 year.
That saw directors up the final dividend 66% to 6.4 cents a share. That made a total for the year of 11.15 cents a share, up 71% from the previous year.
WiseTech founder and CEO Richard White said in Wednesday’s statement
“This standout performance demonstrates the increasing resilience of our business model. In an environment of persistent supply chain constraints, inflationary pressures and COVID-related business disruption, to have delivered these outcomes is a real testament to the strength of our business, the dedication of our people, and the effectiveness of our 3P strategy.
“COVID-related capacity constraints, port congestion and labour shortages experienced during the year resulted in an overloaded supply chain which could take some time to unwind. Demand for goods continues to outpace pre-COVID-19 levels, 4.9% above pre-COVID trendlines.”
“While global trade flows remain strong, prevailing uncertainties relating to industrial production, international goods flow, and sovereign and geopolitical risk continue.
“Global freight forwarders and logistics organisations continue to accelerate their adoption of technology in the pursuit of improved productivity, and our new Large Global Freight Forwarder wins with leaders like UPS and FedEx demonstrate how CargoWise is rapidly becoming the industry standard,” Mr White said.
Part of the reason for investor and analyst scepticism about WiseTech was its rapid growth via acquisition which some claimed was cloaking a weak underlying operation.
WiseTech has acquired 41 companies since listing on the ASX in 2016 including two in the last financial year — Inobiz and Hazmatica – with perhaps more to come.
“We are actively looking at further tuck-in acquisition opportunities which are typically smaller in size but can quickly bring their team, technology and knowledge, without major rewrites, and rapidly add value to the CargoWise ecosystem,” according to Mr White.
“We also continue to look at larger, strategically significant, acquisition opportunities supported by our strong balance sheet, cash flow and funding options.”
And looking to the coming year, Wisetech and its CEO are looking for another strong performance.
Assuming market conditions stay reasonably similar, WiseTech is predicting revenue growth of 20% to 23% for the 2023 financial year and EBITDA growth of 21% to 30%
“We are well placed to benefit from the continuing M&A consolidation activity amongst global logistics operators, and their increasing investment in replacing legacy systems with digital solutions, as well as pursuing our own M&A opportunities,” Mr White told the ASX on Wednesday.
“Looking ahead, we also remain focused on R&D and accelerating our investments to deliver breakthrough products that enable and empower those that own and operate the supply chains of the world.”
