At the time of writing, the logistics solutions company’s shares are up 9% to $32.40.
How did WiseTech perform in the first half?
For the six months ended 31 December, WiseTech reported a 16% increase in revenue to $238.7 million.
This was driven by a 12% increase in acquisition revenue to $88.7 million and a 19% lift in CargoWise revenue to $150 million. Management notes that the latter reflects increasing customer usage of the CargoWise platform.
Another positive is that organisation-wide efficiency initiatives, including synergies from acquisitions, delivered $6.1 million in cost reductions during the half.
This and operating leverage supported a 43% increase in half year earnings before interest, tax, depreciation and amortisation (EBITDA) to $89.2 million. And on the bottom line, this ultimately led to WiseTech reporting a 61% jump in underlying net profit after tax to $43.6 million.
Also potential giving the WiseTech share price a lift today was its strong free cash flow. It came in 74% higher than the prior corresponding period at $48.7 million.
In light of this and its strong balance sheet (cash of $251.4 million), the WiseTech Board declared a fully franked interim dividend of 2.7 cents per share.
What is driving WiseTech’s growth?
Management advised that its strategic investment (via in-house research and development and acquisitions) is driving CargoWise’s revenue growth and market penetration.
It notes that this is delivering geographic expansion, the addition of new functionalities and products, and increasing momentum in the number of global customer roll-outs of CargoWise.
Since 1 January 2020, there have been eight new sign ups. These include Aramex, Hellmann, Deugro, CEVA Logistics, A. Hartrodt, Cargo-partner, Seafrigo Group, and Hankyu Hanshin Express.
WiseTech’s Founder and CEO, Richard White, commented: “Notwithstanding the subsequent waves of COVID-19 in major markets, our business has continued to deliver solid revenue and EBITDA growth in 1H21.”
“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% growth in Underlying NPAT, demonstrating the step change in operating leverage that we are achieving by extracting acquisition synergies and implementing organisation-wide efficiencies.”
Also giving the WiseTech share price a lift today was news that management is upgrading its earnings guidance for the full year.
It advised that this upgrade reflects the benefits expected to be generated from operational leverage as the company continues to implement its organisation-wide efficiency initiatives and extracts acquisition synergies.
It has reaffirmed its revenue guidance of $470 million to $510 million, which represents annual growth of 9% to 19%.
Whereas its EBITDA is now expected to be in the range of $165 million to $190 million. This represents year on year growth of 30% to 50%. Previous guidance was for growth of 22% to 42%.
Mr White commented: “The pandemic has provided the impetus for an acceleration in the longer-term structural shift towards consolidation, integration and digitisation of global logistics and supply chains. The recently announced proposed takeover of Kerry Logistics by SF Holdings and DSV’s public comments about its increased appetite for M&A following its successful UTi and Panalpina acquisitions are evidence of this trend.”
“We are seeing increasing demand amongst large global logistics service providers for our CargoWise offering with the momentum in sign-ups for CargoWise global roll-outs accelerating.”
“Looking ahead, we will continue to innovate through our ongoing product development program with the aim of delivering a seamless, global logistics technology solution that improves productivity, functional depth, data integration and cross-border regulatory compliance for customers, with a specific focus on targeting the Top 25 Global Freight Forwarders and the Top 200 Global Logistics Providers,” he concluded.
The WiseTech share price is now up a massive 72% over the last 12 months.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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