The WiseTech Global Ltd (ASX: WTC) share price is down more than 17% after the ASX tech share revealed an impressive FY23 result that wasn’t enough for investors.
WiseTech provides CargoWise software, which is a provider of global logistics software. Its customers include 44 of the top 50 global third-party logistics providers. FedEx is one of its biggest customers.
WiseTech Global share price
FY23 result
Here are some of the highlights for the 12 months to June 2023:
- Total revenue increased by 29% to $816.8 million
- Underlying EBITDA (EBITDA explained) grew by 28% to $412.1 million
- Underlying net profit after tax (NPAT) grew by 30% to $247.6 million
- Statutory net profit after tax rose 9% to $212.2 million
- Free cash flow increased 23% to $291.4 million
- Final dividend up by 31% to $0.084
WiseTech said that this result showed the expansion of its product offering, enhanced operating leverage and further penetration in certain markets.
Organic revenue growth was 21%, with recurring revenue growing by 30% and CargoWise recurring revenue rising by 48%. Some of the growth experienced came about from price increases. These are good factors that help keep the WiseTech share price relatively high.
WiseTech said that it has launched a $40 million cost efficiency program, which is expected to deliver $15 million net savings in FY24. The business is expecting recent acquisitions to dilute its EBITDA margin, but it expects to return to an EBITDA margin of at least 50% in FY26.
The company said that it’s now targeting a dividend payout ratio of up to 20% of underlying net profit, which is a change from 20% of net profit previously.
Outlook for the WiseTech share price
As mentioned, the company is expecting EBITDA margin dilution from the acquisitions of Shipamax, Envase and Blume.
FY24 revenue is expected to be between $1.04 billion and $1.1 billion, which would be growth of between 27% to 34%. EBITDA is expected to grow to between $455 million and $490 million – this would be growth of 18% to 27%.
WiseTech noted that FedEx will be utilising the global customs offering from the ASX tech share. It’s continuing its push into ‘landside’ logistics, starting with North America.
It’s a great business, but the share price seemed to have gotten ahead of itself. It’s impossible to say what future profit and the WiseTech share price will do, so it’s tricky to say when is a good point to invest because it trades on such a high price/earnings ratio (p/e ratio). I’d want to wait on the sidelines for a better price.
