The WiseTech Global Ltd (ASX: WTC) share price has bolted higher in morning trade after the cloud-based supply chain management software provider reported its half-year results.
At the time of writing its share price is higher by 3% to $5.25.
Key highlights from the release include:
- Revenue from ordinary activities up 46% on the prior corresponding period to $71.1 million.
- EBITDA of $24 million, up 70% on the prior corresponding period.
- Net profit after tax increased 361% to $14.4 million.
- Earnings per share of 4.9 cents.
- FY 2017 interim dividend of 1 cent per share.
- Free cash flow of $14.7 million, up 17.6% from the end of FY 2016.
- Full-year revenue guidance of between $148 million and $155 million, with EBITDA of $50 million and $53 million.
According to management the stunning 361% increase in net profit was fuelled by significant growth in revenue from its existing customers across transactions, modules, and geographies. Furthermore, new sales worldwide accelerated through its targeted acquisitions.
Another driver of profit growth was a significant drop in sales and marketing expenses as a percentage of sales. During the half WiseTech's sales and marketing expenses equated to 9.7% of total sales, compared to 15.4% in the first-half of FY 2016.
This and other efficiencies led to the company's net profit after tax margin widening to 20.4% from 10.2% in the prior corresponding period.
What's next?
For the full-year management believes it is on course to meet its prior guidance of revenue between $148 million and $155 million and EBITDA of $50 million and $53 million.
It believes that the strong momentum from the first-half will be carried through into the second, with increasing tailwinds from industry dynamics supporting its growth.
Is it a buy?
As I have mentioned in the past, with over 6,000 of the world's logistics companies across more than 125 countries using its logistics software, I think the company has become an integral part of the industry.
Because of this and the strong growth of the industry, I believe WiseTech has enormous growth potential that could make it a great long-term buy and hold investment at the right price.
But like we saw with Aconex Ltd (ASX: ACX), if a fast-growing company fails to deliver on the market's high expectations its shares can come tumbling down. For this reason I would suggest investors keep an investment to just a small part of their portfolio.
