WiseTech (ASX:WTC) share price on watch after smashing FY 2021 earnings guidance

This tech share was on form in FY 2021…

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The WiseTech Global Ltd (ASX: WTC) share price could be on the move today.

This follows the release of the logistics solutions company’s full year results which revealed that the company outperformed its guidance in FY 2021.

WiseTech share price on watch after smashing guidance

  • Total revenue up 18% (or 24% in constant currency) to $507.5 million
  • CargoWise revenue increased 26% to $331.6 million
  • Acquisition revenue rose 6% to $175.9 million
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 63% to $206.7 million
  • Net profit after tax doubled to $105.8 million
  • Free cash flow up 149% to $139.2 million, underpinning a 141% increase in its final dividend to 3.85 cents per share
  • Outlook: More strong growth in FY 2022

What happened in FY 2021 for WiseTech?

For the 12 months ended 30 June, WiseTech was on form again and delivered strong top and bottom line growth. Revenue increased 18% to $507.5 million and EBITDA jumped 63% to $206.7 million. The former was at the high end of its guidance range of $470 million to $510 million, whereas the latter smashed its updated earnings guidance range of $165 million to $190 million. This could bode well for the WiseTech share price today.

This strong result was underpinned by growth in usage and increased market penetration. The latter includes six new global rollouts secured in FY 2021 and the signup of FedEx since the end of the financial year. Another positive was organisation-wide efficiencies that delivered $22 million of gross cost reductions in FY 2021. This was ahead of target.

Another positive from the result that could support the WiseTech share price today was that its revenue growth was predominantly from recurring sources. The company advised that of the $101.4 million additional revenue generated in FY 2021, $97.3 million was recurring.

What did management say?

WiseTech’s Founder and CEO, Richard White, said: “Our strong CargoWise revenue growth in FY21 demonstrates industry recognition of our customer value proposition. We have continued to gain momentum in our market penetration with six new CargoWise global rollouts by large global freight forwarders secured in FY21, and the signing of FedEx post 30 June 2021. Importantly, we have a strong pipeline of potential new global customers, which we are actively pursuing.”

“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.”

What’s next for WiseTech?

Also potentially giving the WiseTech share price a lift on Wednesday was its guidance for FY 2022.

On the basis that market conditions do not materially change, management anticipates FY 2022 revenue growth of 18% to 25% (representing revenue of $600 million – $635 million) and EBITDA growth of 26% to 38% (representing $260 million – $285 million).

Mr White concluded: “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. 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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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended WiseTech Global. The Motley Fool Australia owns shares of and has recommended 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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