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WiseTech Global is a provider of software solutions (SaaS) to the logistics industry globally.
The Company develop, sell and implement software solutions that enable logistics service
providers to facilitate the movement and storage of goods and data, domestically and internationally.
WiseTech Global provides solutions to 12,000+ organisations 54+ billion data transactions in
CargoWise one annually across 130 countries supported through 39 offices across the globe.
25 of the top 25 global freight forwarders use its solutions. 7 of the top 25 global freight forwarders
use CargoWise One in global forwarding rollout exclusively – including the world’s largest.
---Sky High retention rates, incredible margins, rapid growth
---Strong recurring revenue with long runway for growth
---Lots of opportunity to consolidate a fragmented industry
---Ambitious growth-oriented founder, with plenty of skin in the game.
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WiseTech Global
...............FY17........FY18.................1H19* vs 1H18
Revenue AUD/M..153.8.......221.6................156.7
% Growth.......49%.........45%..................68%
EBITDA.........53.9........78...................48.5
% Growth 71% 45% 52%
Net Profit 31.9 40.8 23.1
% Growth 125% 28% 48%
Gross Margin 85% 85% n/a
OrganicRevGrow 78% 72% 81%
Operating CF 118% 107% n/a
conversion ratio
*1H19 data is from recent "WTC Investor conference and briefing materials" released 6 June 2019.
**Highlights**
---WiseTech Global (ASX: WTC) market capitalisation: AUD8.54B (USD$5.98B)
---Accelerated high quality revenue growth while building out its platform and expanding globally.
---Sticky, recurring, and global revenue is valuable
---Cash flow positive and profitable business with almost no debt
---HIGH quality recurring revenue ? >99% recurring
---LOW customer attrition (Last 5 years) ? <1% attrition rate
---HIGH innovation product development investment ? 33-34% of revenue
---LOW sales and marketing expense ? 10-11% of revenue
---Approx. 75% of revenue in Non-AUD.
---Its 10 largest customers by revenue had been with the company for more than 10 years.
**Risks**
---There have been lots of acquisitions in last few years. Overpaying for acquisitions and failure
to transition users to the company’s flagship platforms would sting.
---The shares aren’t screaming today. Even though I think the shares are a category crusher at
these prices we do not have a big margin of safety when it comes to valuation.
---We have not yet seen any real competitors at this stage, any disruptors coming on board may take some of the business from WiseTech Global.
I used to work in the import and export industry and fully experienced how bad the data issues
caused the headache. It seems clearly WiseTech’s product helps solve a significant industry
headache. The traditional dependency on multiple legacy software products creates terrible data
quality. Customs software systems are totally different to shipping forwarders’ systems. These
systems are incompatible and don’t talk to each other, creating a huge amount of manual re-work,
such as reentering and fixing data.
WiseTech Global is standardising multiple logistics software activities on a single platform.
And over time, to benefit from a network effect as more and more companies utilise WiseTech’s
products (CargoWise One and CargoWise Nexus).
*Disclosure: I own ASX:WTC.*
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Wisetech Global Limited (WTCHF) has practically no volume on US markets (Avg. Volume - 78)
WiseTech Global (ASX:WTC) trades in Australia
https://www.google.com/search?client=safari&rls=en&q…
Denny Schlesinger
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