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Founder-led logistics technology group WiseTech (ASX: WTC) signed up a string of major global customers to its CargoWise software platform last year, lifting revenue and operating profits in the December half amidst a "goods-led" recovery in global trade.
WiseTech has reported a 16 per cent jump in revenue to $238.7 million; a rate that was outpaced by CargoWise revenue growth which was up 19 per cent at $126.5 million.
Since the start of 2020 the company has signed up eight new customers for the software: Aramex, Hellmann, deugro, CEVA Logistics, a. hartrodt, cargo-partner, Seafrigo Group and Hankyu Hanshin Express.
The remainder of its revenue - some $88.7 million - came from acquisitions for WiseTech, which in the past has been under fire from short sellers alleging its acquisitions were merely revenue roll-ups.
In the December half, the revenue growth rate from acquisitions was below the group average by four percentage points.
The Sydney-headquartered company reports a sharp contrast between normalised and statutory profits; the former is up 61 per cent at $43.6 million, but at the end of the day its official profit after tax was down 26 per cent at $44.4 million.
Like so many nuances in the WiseTech business model, this differential can be explained by acquisitions. In the corresponding period in FY20 the company reported a $32.7 million fair value gain due to earn-out contingent considerations, but in the recent half the figure was just around $800,000.
"Notwithstanding the subsequent waves of COVID-19 in major markets, our business has continued to deliver solid revenue and EBITDA growth in 1H21," says founder and CEO Richard White, a former music industry executive whose life changed tempo in 1994 with the founding of WiseTech with Maree Isaacs, writing code for Australian freight forwarders.
"Our strategic focus on 'Product, Penetration and Profitability' has enabled us to continue to expand the CargoWise ecosystem, increase our market penetration, with eight new global customer roll-outs signed since 1 January 2020 and deliver 61 per cent growth in Underlying NPAT, demonstrating the step change in operating leverage that we are achieving by extracting acquisition synergies and implementing organisation-wide efficiencies."
While global logistics markets were volatile in the early stages of the COVID-19 pandemic, characterised by a marked slowdown in the movement of goods across all modes of transport, WiseTech noticed the beginnings of a recovery in mid-2020.
By the end of December, the company's transaction numbers were up 19 per cent year-on-year.
"We are continuing to see evidence of a 'goods-led' recovery in global trade, with consumer spending switching from services to physical goods, in response to COVID-19 mobility restrictions.
"This has had the effect of boosting demand for manufactured goods and global trade, driving an acceleration in logistics providers looking to replace legacy systems with integrated global technology such as CargoWise.
"This enables them to better plan, visualise and control their global operations, mitigate risk and more efficiently manage cross-border regulatory compliance."
The group notes it did not receive any material benefit from any COVID-19 government support program globally.
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