WiseTech profit surges 80pc as global logistics giants sign up to its services

Global logistics software provider WiseTech (ASX: WTC) boosted its bottom-line profit by 80 per cent to $194.6 million in FY22, driven by new contracts with major players such as UPS and Fedex amid another challenging year for the logistics sector.

The result was delivered on a 25 per cent increase in group revenue to $632.2 million, which was at the top end of expectations, as Wistech capitalised on the ongoing supply chain issues facing the global economy.

Revenue from WiseTech’s core CargoWise product surged 35 per cent to $447.9 million, thanks to five new global rollouts with UPS, Fedex and Craft Multimodal in the second half, which built on rollouts with Brink’s and Access World in the first half.

CEO and founder Richard White says a further five customers grew into the ‘large global’ category in FY22 from smaller initial CargoWise deals.

CargoWise added 10 new global customers during the year, bringing the total to 43 large global freight forwarder rollouts, of which 10 are in the world’s top 25.

“This standout performance demonstrates the increasing resilience of our business model,” White says.

“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.”

White says WiseTech has substantial growth opportunities available to it through increased penetration of its existing customer base.

“We also have a strong pipeline of potential new global customers which we are actively pursuing while continuing to expand through tuck-in acquisitions and potential strategically significant acquisition opportunities, supported by strong cash generation, a range of funding options and our proven M&A capability,” he says.

“We remain firmly focused on achieving our vision of being the operating system for global logistics, and we have the product, strategy and resources to achieve it.”

WiseTech is anticipating that capacity constraints, port congestion and labour shortages hitting global supply chains could take some time to unwind, but this is likely to benefit the company in the near term.

“Demand for goods continues to outpace pre-COVID-19 levels, 4.9 per cent above pre-COVID trendlines,” says White.

“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.”

WiseTech is taking advantage of the current environment by increasing the pace of investment in research and development and in the recruitment of talent to drive future revenue growth.

“We have a proven track record since our IPO of accelerated growth while generating strong returns,” says White.

“When combined with the benefits of our increasing scale and significant operating leverage, this provides a strong platform for long-term sustainable revenue and earnings growth.”

WiseTech’s bottom line has benefitted from price increases during the year to offset the impacts of inflation and generate returns on product investments. Price increases helped EBITDA grow 54 per cent to $319 million in FY22. The EBITDA margin of 50 per cent was up by 9 percentage points on the previous year.

WiesTech has completed 41 acquisitions since listing on the ASX in 2016, and the company says it is currently focused on integrating its most recent acquisitions completed during FY22, Inobiz and Hazmatica.

The company acquired Bolero early in FY23, which WiseTech says will ‘considerably enhance our capability in digital documentation’ as it is integrated into the CargoWise platform.

“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,” says White.

WiseTech continues to target the top 25 global freight forwarders and the top 200 global logistics providers to grow its business.

The company is forecasting FY23 revenue to grow by 20 to 23 per cent to between $755 million and $780 million and EBITDA to increase by 21 to 30 per cent to between $385 million and $415 million.

WiseTech is paying a final dividend of 6.4c per share for a full-year payout of 11.15c, up 71 per cent on FY21.

The company’s shares were up 10.9 per cent at $58.78 at 1.03pm AEST.