WiseTech waves $1bn revenue flag, disappoints investors

Shares in the tech logistics firm slumped 18 per cent despite a higher dividend and expectations for growth in the year ahead.

WiseTech shares have slumped as its earnings guidance disappointed the market, despite the group forecasting revenue in the current year to breach the $1bn mark.

The listed Australian tech company on Wednesday upped its dividend to shareholders after reporting profit growth of 9 per cent to $212.2m, on the back of higher logistics revenue.

But its share price tumbled by 19.2 per cent to close at $69.60, cutting the value of chief executive Richard White’s stake by around $1.8bn.

Asked about the share price, Mr White said while some people focused on the performance of a single day in the market, he’d continue to look at the long-term growth of WiseTech.

Most of the company’s “significant investors” and Mr White were in it for the long term and would recognise the company performed “better than expected”, he said. “I think that the share price will continue to be what other people focus on. I focus on the growth of the company and the long-term capabilities of WiseTech.”

The group’s financial reports showed revenue jumped 29 per cent over the last financial year, bringing in $819m.

A majority of that revenue came from the company’s CargoWise offering, used by logistics transport and companies DHL, FedEx, and UPS, which has reached an annual recurring revenue of $650.1m – up 39.1 per cent on the prior year. The company recently landed Large Global Freight Forwarder as a customer.

However, non Cargo-Wise revenue was down 5 per cent, with WiseTech reporting $157.2m in FY23 compared to $164.9m in FY22.

Asked about AI and how it might affect WiseTech, Mr White said the company had been using it for years in various forms and that he’d tried his best to not use the word “AI” amid all the hype.

“Well, for many years, we’ve been using machine learning and automation as a fundamental tool to enhance the productivity of our staff,” he said. “All that’s happened now is that everybody else has woken up and called it AI.”

WiseTech’s plans to make ground in the US were now coming to fruition, Mr White said.

“Our deep move into Landside Logistics as a result of our strategically significant acquisitions of Envase Technologies and Blume Global is delivering breakthrough capabilities, at scale, creating significant growth opportunities,” he said.

Earnings before interest, taxes, depreciation and amortisation grew 21 per cent to $385.7m. Cashflow reached $433.3m – representing 28 per cent growth – with free cash flow of $291.4m.

The company anticipated revenue in the 2024 financial year to reach between $1.04bn and $109bn. Earnings before interest, taxes, depreciation and amortisation expectations was tipped at between $455m and $490m.

E&P analyst Paul Mason gave WiseTech a positive recommendation at $84.49 but aired some concern regarding the company’s FY24 EBITDA guidance which, he said, fell short of expectation and would likely affect the company’s share price on Wednesday.

“Guidance is somewhat in line at the revenue line versus Visible Alpha (prediction), but a major miss versus expectations at the EBITDA line,” he said.

“We would expect this to negatively impact the share price (potentially significantly given the multiple) unless there are details that can explain the gap to expectations better.”

WiseTech has come close to doubling its global development team headcount in FY23, growing from over 1000 staff to 1800, with a large number coming from recent acquisitions. Its total headcount is over 3000.

Mr White had previously flagged the company would capitalise on lay-offs at competitors and the tech sector more broadly.

WiseTech has also ramped up its investment in research and development investing $261.8m in FY23 – representing about 32 per cent of revenue – which was up about 45 per cent from FY22.

Meanwhile, the group also tweaked its dividend policy, to target a future payout ratio of up to 20 per cent of underlying net profit after tax. It had previously aimed to distribute up to 20 per cent of NPAT.

WiseTech will pay a final, fully-franked dividend of 8.4c per share, up 31 per cent from last year.