WiseTech (WTC) shares fall on uncertain outlook

WiseTech Global Ltd (ASX:WTC) shares were trading 22% lower today after releasing its half-year financial report and softening its full-year outlook.

WiseTech’s Result Headlines

This period Last period Change
Revenue 205.9 156.7 31.4%
Profit 59.9 23.1 159.31%
Cash flow 62.4 43.7 42.79%
Dividends (cents) 1.7 1.5 13.33%

Source: WiseTech Global Ltd announcements; author calculations, AUD millions unless stated otherwise. 

Analysts surveyed by Bloomberg had been expecting an underlying profit (NPATA) result of $35.9 million, which seems to be slightly ahead of WiseTech’s NPATA result of $33.5 million.

On the cash flow statement, which is an important financial statement since it represents the underlying health of a business, operating cash flow was $62.4 million, up $18.7 million. Finally, dividends declared by the company stood at 1.7 cents, up 13.33%.

Management said revenue was pushed higher by a 24% increase in spending from new and existing CargoWise platform customers. These customers paid more for WiseTech’s software due to increased uptake of add-on features by existing customers and the ongoing transition from a customer licence model to a transaction-based or ‘per use’ fee.

“We continued to deliver high quality growth in 1H20 with revenues up 31% to $205.9m and EBITDA up 29% to $62.5m, a reflection of the strength of our CargoWise business and strategic actions, along with increased adoption by the world’s largest logistics organisations while we continued to expand our technology platform and grow our global footprint,” WiseTech CEO Richard White said.

“In the last 5 years alone, we have invested over $360m in product innovation, adding 3,500 product enhancements to our global platform.”

WiseTech said its CargoWise platform achieves a recurring revenue rate of 99%, and with less than 1% of customers leaving the product during the period.

What Happens Next?

It seems investors and analysts were spooked by WiseTech’s full-year outlook.

“The predicted early 2020 recovery from the end of 2019 trade volume softness within the logistics industry (as a result of US-China trade war), was in effect in early January,” Mr White added.

“However, the unexpected outbreak of coronavirus (COVID-19) and the effective shutdown of China, a critical driver of the global manufacturing supply chain and a ~16% contributor to global GDP, is creating negative flow-on effects to manufacturing, slowing supply chains and economic trade across the world.”

WiseTech Global shares were last seen trading around $23, giving the company a market capitalisation more than $7 billion.

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