WiseTech Global’s new product releases to drive long-term earnings growth.

About WiseTech Global Limited

WiseTech Global Limited (WiseTech, the Group, ASX: WTC) is a leading developer and provider of software solutions to the global logistics industry.  Logistics software solutions help international businesses move goods around the world reliably and quickly by optimising supply chain efficiency and security. The Group was established in 1994 when it began writing software for Australian freight forwarders. Subsequently, the Group listed on the Australian Securities Exchange in 2016 and currently employs 3,500 people globally, serving 17,000 customers licensed to use its software in 183 countries.

Continued strong growth and high margins

The FY24 result has seen WiseTech strengthen its global software business across all key financial and operational performance metrics.

Underlying Net Profit After Tax was 15 percent higher to $283 million, on the back of a 28 percent increase in total revenue to $1,041 million. $1,009 million or ninety-six percent of total revenue is recurring revenue.  Half of this revenue uplift was organic growth sourced from increased usage by existing customers paying higher prices and the balance was from acquisitions.

The Customer attrition rate remains extremely low at about 1 percent, as it has been since WiseTech began measuring this performance indicator more than 12 years ago. Clients stay and grow their transaction volume with the platform because of its productivity and deep capabilities in logistics management.

The Group’s EBITDA was 28 percent higher at $496 million, representing a steady EBITDA margin of 48 percent of total revenue. This was a solid outcome given the inflationary pressures faced throughout 2024. The Group generated $531 million in operating cash flow, equivalent to an impressive 107 percent EBITDA operating cash flow conversion ratio.

Underlying earnings per share was 13 percent higher than FY23 at 85.7 cents, from which a 9.2 cents fully franked dividend will be paid to shareholders on 4 October. The Group’s dividend payout ratio policy is to pay approximately 20 percent of earnings to shareholders

New product releases to drive future earnings growth

The key to WiseTech’s success is its ongoing investment in Research and Development which in FY24 was $368 million. $172 million of this amount was expensed in FY24. Sixty-two percent of WiseTech total headcount is focused on product development and this ongoing investment underwrites WiseTech’s long-term value for its customers and long-term capital growth for shareholders.

Management expects the Group’s strong growth trajectory to be maintained through FY25 as it continues to make new product releases across its development priorities. The CEO considers there is “……………an enormous runway for growth, and we’re not even close to reaching our full capacity in the markets we’re already focused on………….”

Management have cited three breakthrough product releases planned for FY25 that should drive high-margin revenue over the long-term. The products are CargoWise Next, Container Transport Optimisation, and ComplianceWise.

CargoWise Next is the Group’s next generation platform, that replaces the original CargoWise One platform that will be placed into maintenance mode.

Container Transport Optimisation reduces container transport costs through enhanced prediction and visibility by removing dead legs, container detention, futile trips and unexpected surcharges as well as improving wait times, and wharf storage costs.

Compliance Wise is designed to protect clients from compliance breaches related to international trade and transport laws and regulations. This follows aggressive audits and inspections from regulators that often result in substantial fines and penalties. ComplianceWise will automate compliance procedures and demonstrate due diligence has occurred which reduces the risk of associated fines and penalties relating to breaches of international trade laws.

FY25 Outlook

WiseTech has issued buoyant FY25 earnings guidance that includes 25 to 30 percent revenue growth to $1,325 million, and 37 percent EBITDA growth to $680 million. The long-term outlook appears equally positive. WiseTech has a proven, well-incentivised management team, and is an established, quality business with strong and sustainable competitive advantages that drive organic growth opportunities, resulting in robust, recurrent free cash flows that should deliver superior risk-adjusted shareholder returns over the long term.