Blended Australian Equities Portfolio
WiseTech Global (WTC) is a provider of cloud-based software solutions to the global logistics industry. Its core product, CargoWise is a fully integrated platform that allows global logistics companies to manage, track and trace freight forwarding, customs clearance, compliance and warehousing with significant efficiency and productivity benefits compared to traditional, disaggregated software solutions.
Founded in 1994, WTC has built a global network of 17,000 customers including 44 of the Top 50 global third-party logistics providers and 24 of the 25 largest global freight forwarders. The largest of these clients are progressing through multi-year global roll outs, with many yet to utilise the full suite of applications. Revenue is earned on a “transaction” basis according to volume of throughput, rather than one-off licence fees. The customer attrition rate for CargoWise has remained consistently below 1% for more than a decade.
WTC has a proven track record since its 2016 IPO of revenue (5-year CAGR 24%) and earnings growth (5-year CAGR 38%). Organic growth has been supplemented by an acquisition strategy focused on new geographies and additional functionality for the core system, while capitalizing on the benefits of increasing scale and operating leverage.
For FY23, WTC delivered 21% increase in organic revenue and 28% increase in EBITDA with organic EBITDA margin expanding 2 percentage points to 53%. Free cash flow of $291.4m, was up 23% on FY22.
WTC has made a strategic move into North American landside logistics with acquisitions of Envase Technologies and Blume Global which gives WTC access to talent, domain expertise, and a high-quality customer base.
WTC has significant financial headroom with total liquidity of ~$400m and a Net Debt to EBITDA ratio of 1.2X. The company is trading on a 12m forward 12m forward EV/EBITDA of 54.4X vs its 2-year average of 60.3X.