WiseTech shares hit record highs as underlying earnings double

WiseTech shares hit record highs as underlying earnings double

Logistics software company WiseTech (ASX: WTC) saw its shares propelled 58 per cent higher this morning to an all-time record of $57.31, as underlying earnings more than doubled to $105.8 million.

The sudden jump in investor interest lifted founder-led WiseTech's market capitalisation by $6.86 billion, although since 11:30am AEST the frenzy has calmed down somewhat with shares up 38.8 per cent at $50.25 each by noon.

The group, founded by former music industry executive Richard White, highlighted six new global rollouts in FY21 and the signing up of FedEx in the current financial year.

WiseTech's core CargoWise product still accounts for the majority of sales at $331.6 million out of the group total of $507.5 million, and it is also responsible for the highest revenue growth rate at 31 per cent.

Meanwhile, acquisition revenue was up 6 per cent at $175.9 million.

Even though the operational sales result was encouraging, fair value adjustments from FY20 and acquisition-contingent considerations led to a 33 per cent decline in statutory net profit after tax (NPAT) at $108.1 million.

White says the strong CargoWise revenue growth in FY21 demonstrates industry recognition of WiseTech's customer value proposition, highlighting the global roll-outs by large global freight forwarders, the FedEx deal, and a strong pipeline of new customers.

"Our top line revenue growth, coupled with our ability to implement organisation-wide efficiencies and extract acquisition synergies, has enabled us to achieve a marked step change in operating leverage that is evident in our strong FY21 financial performance," he says.

"We have continued to see a ‘goods-led’ recovery in global trade resulting in tighter capacity, congestion and higher rates in global logistics channels.

"Whilst these higher rates do not translate into immediate revenue growth for WiseTech, we are benefitting from the acceleration of the longer-term structural changes that they are driving."

White points to consolidation within the sector and increased investment in replacing legacy systems with integrated global technology, such as CargoWise.

WiseTech expects supply chain disruption capacity constraints and the outbreak of new COVID-19 strains in key markets will likely continue to impact global trade until there is widespread rollout of vaccines.

Subject to assumptions, the group has issued guidance of 18-25 per cent revenue growth in FY22, and EBITDA growth of 26-38 per cent.

"The strong growth in CargoWise revenue and margins we have seen in FY21 is testament to our product-led strategy, which is delivering increased usage by existing customers and new global rollout wins," White says.

"We are benefitting from the acceleration in structural shifts from legacy systems to integrated global software solutions and industry consolidation, as large customers acquire businesses and add them to their CargoWise rollouts. Looking ahead we remain focused on R&D that delivers breakthrough products that enable and empower those that own and operate the supply chains of the world."

 

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