WiseTech’s results and share price are a giant F You! to the short-sellers who predicted the software giant’s death in 2020

- February 23, 2024 3 MIN READ
Richard White
WiseTech Global founder and CEO Richard White
About this time four years ago, China-based analyst and short-seller J Capital took its third stab at ASX-listed WiseTech Global with a report headlined “WiseTech may be the first corporate death from Covid19”.

This week the logistics software company (ASX:WTC) was very much alive and kicking with its share price hitting an all-time high, above $90, after beating expectations in half-yearly results (1H24) for the six months to December 31 that added $3 billion to its market cap to nearly $30 billion.

Revenue grew by 32% (up 15% organically) to $500.4 million. Statutory profit after tax increased 8% to $118.2 million, and the interim dividend rose 17% to 7.7¢. Organic EBITDA was up 16% to $230.6 million, with increased product investment contributing to flat organic EBITDA margins of 53%.

The company says it’s ploughed more than $1 billion into product development over the last five years, delivering more than 5,500 new product enhancements.

R&D spending was up 54% to $177.5 million for the 1H, but says it’s also on a $40 million cost-cutting push.

The result is a vindication for founder and CEO, Richard White, who spent late 2019 and and early 2020 fending off a trio of attacks from the short-sellers that drove the share price down from just under $40, 4.5 years ago to below $12 in March 2020 as the pandemic shut down borders and economies.

The business, which sells software to global shipping companies – the W in the top 5 WAAAX  when the ASX All Tech Index launched – has also had an aggressive mergers and acquisitions policy alongside its software investments. When J Capital began stalking the business releasing its first critical report in late October 2019, and then another a month later in November they claimed the deals were opaque and hiding  They succeeded in spooking some investors – the goal – when Covid became an unpredicted accomplice

For comparison, back then revenue in 1H FY20 sat at $205.9 million and net profit at $59.9 million – so the company has increased revenue by 150% and doubled profit. Earnings per share rose from 18.8 cents in FY20 to 38.8 cents now.

While it’s now well in the past, and wars in the Middle East and Europe continue to play havoc with supply chains, the latest results are nonetheless a raised middle finger to J Capital from White.

“I am pleased to announce a strong first half financial performance, driven by the focused execution of our 3P strategy by WiseTech’s passionate and dedicated team of more than 3,300 people,” the CEO said.

“Our highly cash generative business model and strong liquidity continues to provide a solid platform to fund long-term sustainable growth.

“We continue to focus on enhancing our core CargoWise platform in pursuit of our vision to be the operating system for global logistics. Innovation remains a critical driver of our growth.”

After kicking off 2023 with acquiring US rail logistics firm Blume Global for $602 million, WiseTech gobbled up Melbourne shipping container marketplace MatchBox Exchange for an undisclosed some last October.

“Our acquisition of MatchBox Exchange added another key component to CargoWise’s Landside Logistics capability and will deliver significant efficiency and productivity benefits for our customers. The integration of our recent acquisitions is also progressing well,” White said.

While the spending cut into EBITDA margin, down 4% to 46%, it’s expect to grow by 1-2% this half.

The CEO also says the problems in the Red Sea, as shipping companies reroute adds to expenses and time and the cost of goods, it has “a very tiny positive impact on us”.

WiseTech’s prediction of $1.04bn to $1.095bnin revenue and $455m to $490m in EBITDA for FY2024 remains unchanged.