What does WiseTech have planned for the year ahead?
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At one point, shares in the cloud-based logistics software company were up ~58% to a new all-time high. This was driven by an impressive performance in FY21. For starters, net profit doubled to $105.8 million on revenue of $507.5 million.
However, the party was temporarily brought to a standstill around lunchtime after WiseTech entered a trading halt. Since then, the WAAAX constituent has responded to an ASX price query and resumed trading.
This leaves us to discuss what WiseTech has in store for FY22.
What’s next on the WiseTech share price?
While WiseTech clearly has been busy over the past year, it is important to remain forward-looking as investors. For that reason, let’s recap some of the details that concern the road ahead for Wisetech.
According to its results, the logistics software company remains focused on its long-term strategy. This is grounded in the “3P’s” which are product, penetration, and profitability.
WiseTech has been known for its “growth through acquisition” approach in the past — with 39 acquisitions since its initial public offering (IPO) in 2016. However, the company noted that it intends to slow its near-term acquisition activity down and be more intentional with expanding its CargoWise ecosystem.
This could be a positive for the WiseTech share price, depending on which way you look at it. The company might be able to redirect those funds to either further product development, marketing, or simply increasing profitability.
Furthermore, the pipeline of new global customers is said to be strong. These potential customers are being actively pursued. Additional customer wins are key to WiseTech achieving its target of being among the top 25 global freight forwarders and top 200 global logistics providers.
In regards to profitability, an organisation-wide efficiency and acquisition synergy extraction program will continue into FY22. The program has already delivered a $13.8 million net benefit, exceeding its $10 million target
In fact, Wisetech expects it is on track to achieve a cost reduction run-rate of ~$40 million for FY22. This would eclipse its previous $20 to $30 million.
Guidance for FY22
Despite ongoing supply chain disruptions, WiseTech anticipates another solid year of growth in FY22. According to its provided guidance, revenue is expected to increase 18% to 25% in FY22. Meanwhile, things look even more appealing for earnings before interest, tax, depreciation, and amortisation (EBITDA), expected to rise 26% to 38%.
Commenting on the drivers for further growth ahead, WiseTech Founder and CEO Richard White said:
We are benefitting from the acceleration of the longer-term structural changes that they are driving. In particular, we are seeing consolidation within the sector and increased investment in replacing legacy systems with integrated global technology, such as CargoWise, that drives productivity and facilitates planning, visualisation and control of global operations.
Based on the WiseTech share price, the company now commands a market capitalisation of $14.86 billion.
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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended WiseTech Global. The Motley Fool Australia owns shares of and has recommended WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.