WiseTech Global: 1H21 revenue up 16%, EBITDA up 43% Underlying NPAT up 61%.
1H21 Revenue up 16%, EBITDA up 43%
Efficiency initiatives on track to deliver $10 million of cost reductions in FY21
First half 2021 (1H21) overview
- Total Revenue of $238.7 million, up 16% on 1H20
- CargoWise revenue up 19% (1H21: $150.0 million; 1H20: $126.5 million), a testament to increasing customer usage of the CargoWise platform
- Acquisition revenue1 of $88.7 million, up 12% on 1H202
- Strategic investment (via in-house R&D and acquisitions) is driving CargoWise's revenue growth and market penetration delivering:
o geographic expansion;
o the addition of new functionalities and products; and
o increasing momentum in the number of global customer roll-outs of CargoWise (eight new sign-ups since 1 January 20203: Aramex, Hellmann, deugro, CEVA Logistics, a. hartrodt, cargo-partner, Seafrigo Group and Hankyu Hanshin Express)
- Organisation-wide efficiency initiatives including synergies from acquisitions delivered $6.1 million in cost reductions in 1H21 (net benefit $1.0 million post $5.1 million restructuring costs)
- EBITDA of $89.2 million up 43% and EBITDA Margin up 7pp - reflecting continued revenue growth and cost reduction initiatives
- Underlying NPAT4 of $43.6 million up 61%
- Cash at 31 December 2020 of $251.4 million - 1H21 free cash flow of $48.7 million up 74% on 1H20
- Fully franked interim dividend of 2.70 cents per share declared, payable on 9 April 2021
WiseTech Founder and CEO, Richard White said, "Notwithstanding the subsequent waves of COVID-19 in major markets, our business has continued to deliver solid revenue and EBITDA growth in 1H21.
"Our strategic focus on 'Product, Penetration and Profitability' has enabled us to continue to expand the CargoWise ecosystem, increase our market penetration, with eight new global customer roll-outs signed since 1 January 2020 and deliver 61% growth in Underlying NPAT, demonstrating the step change in operating leverage that we are achieving by extracting acquisition synergies and implementing organisation-wide efficiencies."
COVID-19 impact in 1H21
As noted at the time of the Company's 2020 full year results (FY20), WiseTech saw volatility in global logistics markets during the early stages of the pandemic, with a marked slowdown in the movement of goods across all modes of transport. By mid-2020 however, the Company started to see a recovery, with momentum improving and resulting in 1H21 CargoWise shipment transaction numbers up 19% on 1H20. Mr White said, "We are continuing to see evidence of a 'goods-led' recovery in global trade, with consumer spending switching from services to physical goods, in response to COVID-19 mobility restrictions. This has had the effect of boosting demand for manufactured goods and global trade, driving an acceleration in logistics providers looking to replace legacy systems with integrated global technology such as CargoWise. This enables them to better plan, visualise and control their global operations, mitigate risk and more efficiently manage cross-border regulatory compliance." Throughout 1H21, and consistent with FY20, the Company did not receive any material benefit from any COVID-19 government support programs globally.
Strong financial and operational performance
The Company reported Total Revenue growth of 16% in 1H21 (1H21: $238.7 million; 1H20: $205.9 million) reflecting both growth from its CargoWise platform and acquisitions. Total Revenue in 1H21 was impacted by a $3.6 million unfavourable foreign exchange (FX) movement compared to a $4.6 million favourable FX benefit in 1H20. Excluding the FX impact, Total Revenue grew by 18% in 1H21 on the pcp.
Revenue from the CargoWise platform grew 19% in 1H21 and was comprised of:
o existing customer growth of $17.5 million (1H20: $17.0 million); and
o new customer growth of $6.0 million (1H20: $7.3 million).
Existing and new customer revenue growth in the half reflects:
o increased usage through the addition of transactions, seats and new sites, the utilisation of additional products and modules and growth from industry consolidation; and
o a price increase ($5.7 million in 1H21) to offset increased product investment in research and development (R&D), data centre hardware and cyber security.
Excluding FX headwind of $1.4 million CargoWise revenue grew 20% in 1H21.
Acquisition revenue9 grew 12% on the pcp, driven predominantly by the full-year impact of the five acquisitions completed in FY20. This growth was partially offset by a small delay in non-recurring services revenue due to COVID-19. It is noted that acquired businesses typically have higher levels of one-time licence (OTL) and/or support services revenue, as a result their revenues may be flat or reduce as they transition to the WiseTech commercial model. Excluding FX headwind of $2.3 million acquisition revenue grew 15% in 1H21.
Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 43% on the pcp to $89.2 million reflecting continued revenue growth and the benefit from cost reduction initiatives.
WiseTech's investment in R&D increased 13% from $73.3 million in 1H20 to $83.0 million in 1H21.
The Company achieved an EBITDA Margin of 37% for the half year, up seven percentage points (pp) on 1H20. This improvement reflected:
o the impact of WiseTech's revenue growth; and
o the benefits of cost reductions (partially off-set by restructuring costs).
CargoWise's 1H21 EBITDA margin of 54% represents an increase of 5pp on 1H20. This improvement was driven by revenue growth from existing customers and the impact of reduced sales and marketing expenditure. In terms of the acquired businesses, significant progress has been made in implementing cost reduction initiatives to extract acquisition synergies and remove duplication.
Due to significant fair value adjustments made to earn-out contingent consideration in 1H20, Statutory Net Profit after Tax (NPAT) decreased to $44.4 million in 1H21, down 26% on pcp. Underlying NPAT increased by 61% to $43.6 million in 1H21 and Underlying EPS of 13.4 cents per share was up 58% on 1H20.
Strong balance sheet, cash flow generation and liquidity
WiseTech's financial position is robust. Cash as at 31 December 2020 was $251.4 million (with no outstanding debt excluding lease liabilities). Coupled with an undrawn debt facility of $190.0 million and a further $200.0 million accordion facility, the Company has significant financial headroom.
1H21 operating cash flows of $92.1 million were up 32% on 1H20 and the operating cash flow conversion rate was 103%. 1H21 free cash flow of $48.7 million was up 74% on 1H20, demonstrating the strength of the Company's highly cash generative operating model.
Strategic update WiseTech's vision is to create the operating system for global logistics to drive efficiency and digital transformation. To achieve this, the Company's strategy is centred around Product, Penetration and Profitability (the 3Ps) with investment focused on:
o in-house R&D and Product Development;
o building in-house expertise through recruitment of technology and industry experts; and
o strategic (foothold and adjacency) acquisitions delivering technology, geographic reach and skill sets to expand the CargoWise platform.
Mr White said, "Our strategic investments are designed to build in-house capabilities and where appropriate to fast track the development of technology and know-how through acquisitions. These investments are inter-related and complementary and as such should be looked at holistically rather than on a piecemeal basis.
"Having completed 39 acquisitions since IPO in 2016, we have now assembled significant resources and development capability to fuel our CargoWise technology pipeline and therefore intend to slow our acquisition activity in the near term. Our focus going forward is on expanding the CargoWise ecosystem and extracting efficiencies across our business to maximise our operational leverage."
Since listing on the ASX in 2016, WiseTech's strategic investments have delivered10
o over 4,000 CargoWise product enhancements since FY16;
o 207% growth in CargoWise revenue (FY16: $85.8 million; FY20: $263.0 million);
o expansion of CargoWise EBITDA margins from 30% in FY16 to 54% in 1H21;
o 54% growth in CargoWise Registered Users from 1H17 to 1H21;
o growth in large global freight forwarders11 (20 at FY16 growing to 34 at February 2021);
o a strong team of technology and industry experts (1,024 people at 1H21 up from 225 people at FY16); and
o expansion of CargoWise's geographic footprint (from 136 countries at FY16 to 167 countries at 1H21).
To read the complete release, including tables and figures, please visit:
Please refer to the WiseTech Global 1H21 Results Investor briefing materials released today for detailed financial data and analysis.
To view the investor presentation, please visit:
Analyst Briefing The results presentation webcast to discuss WiseTech Global's 1H21 financial results will be held at 10.30am (Sydney time) today. The webcast and briefing audio will be available at:
About WiseTech Global Ltd
WiseTech Global Ltd (ASX:WTC) is a leading developer and provider of software solutions to the logistics execution industry globally. Our customers include over 17,000 of the world's logistics companies across 160 countries, including 41 of the top 50 global thirdparty logistics providers and all of the 25 largest global freight forwarders worldwide2. Our flagship platform, CargoWise, forms an integral link in the global supply chain and executes over 50 billion data transactions annually.
At WiseTech, we are relentless about innovation, adding over 4,000 product enhancements to our global platform in the past five years while bringing meaningful continual improvement to the world's supply chains. Our breakthrough software solutions are renowned for their powerful productivity, extensive functionality, comprehensive integration, deep compliance capabilities, and truly global reach.
For more information about WiseTech Global or CargoWise, please visit wisetechglobal.com and cargowise.com
WiseTech Global Ltd