The WiseTech Global Ltd (ASX: WTC) share price is up more than 10% after the logistics software business announced a lot of growth in FY22.
WiseTech provides software to the logistics execution industry globally. It has over 18,000 logistics company clients across 170 countries, including 41 of the top 50 global third-party logistics providers and 24 of the 25 largest global freight forwarders.
WiseTech FY22 result
Here are some of the main highlights from the result:
- Total revenue of $632.2 million, up 25% compared to FY21, which was at the top end of guidance
- CargoWise revenue rose 35% to $447.9 million, thanks to large global freight forwarder rollouts, new customer wins and increased usage from existing customers
- Increased market share, including the win of UPS
- EBITDA (EBITDA explained) increased 54% to $319 million
- Underlying net profit after tax (NPAT) jumped 72% to $181.8 million
- Statutory net profit up 80% to $194.6 million
- Free cash flow up 71% to $237.3 million
- Final dividend up 66% to 6.4 cents
- Total dividend up 71% to 11.15 cents
The company managed to deliver a strong performance at a time of supply chain constraints, inflation and COVID-related business disruption. It is executing on its goal of being the operating system for global logistics, following on from a strong half-year result.
WiseTech said it’s increasing the pace of its investment in research and development, as well as hiring talented people to drive future revenue growth. When combined with “increasing scale and operating leverage” this will give it a platform to drive sustainable revenue and earnings growth.
Demand for goods continues to be stronger than pre-COVID levels, it’s 4.9% above the pre-COVID trendline.
WiseTech said that while global trade flows remain strong, prevailing uncertainties relating to industrial production, international goods flow and sovereign and geopolitical risk continue. Global freight forwarders and logistics organisations “continue to accelerate their adoption of technology in the pursuit of improved productivity”. It pointed to the UPS and FedEx wins as demonstrations as how CargoWise is becoming the ‘industry standard’.
FY23 guidance
WiseTech provided two areas of guidance for how much growth it’s expecting in FY23.
FY23 revenue is expected to grow by between 20% to 23% to a range of $755 million to $780 million.
EBITDA is expected to grow by between 21% to 30%, representing EBITDA of between $385 million to $415 million.
Management comments
WiseTech founder and CEO Richard White said:
We are well placed to benefit from the continuing merger & acquisition consolidation activity amongst global logistics operators, and their increasing investment in replacing legacy systems with digital solutions, as well as pursuing our own merger and acquisition opportunities.
Looking ahead, we also remain focused on R&D and accelerating our investments to deliver breakthrough products that enable and empower those that own and operate the supply chains of the world.
Final thoughts on the WiseTech share price
WiseTech has done very well and the share price reflects that. Is it good value today? The price/earnings ratio (p/e ratio) is enormous. But it nearly always has been. I don’t know what a good price to buy this business is – in hindsight the COVID-19 crash seemed like an opportune time. But there’s now a lot growth expectations built into the valuation, despite rising interest rates.
I’d be happy as a shareholder, but I’m looking at other ASX growth shares as better value opportunities.
