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Global logistics software company WiseTech reports huge rise in revenues and profits

Pictured: Richard White, CEO and founder of WiseTech Global. Photo: Wisetech

WiseTech (ASX:WTC), a global provider of advanced logistics software, has reported a whopping 57 percent growth in revenues and a massive 37 percent net profit after tax for its full 2018-2019 financial year. Revenues generated in the last financial year stood at A$348.3 million and net profits were $54.1 million.

Sydney, Australia-headquartered WiseTech’s CargoWise software is used in 150 countries and counts 12,000 logistics companies as customers. Its software is provided on demand and as a service through the internet and customers pay for monthly usage.

The group reported A$348.3 million (US$348.3 million) of revenues, 57 percent up on the A$221.6 million (US$150.39) reported in previous 2017-2018 financial year. Australia’s financial year runs from July to June. One Australian dollar is equivalent to US$0.68 at the time of writing. The majority of the group’s revenues, 71.7 percent, are recurring on-demand revenues with the rest being split between one-time licence revenues and revenues from support services.

The group revealed a 72 percent jump in the cost of revenues from A$38.7 million to A$66.7 million. The other main costs incurred by the group include product design and development, A$84.2 million, up 58 percent; sales and marketing A$47.7 million, up 94 percent; and general and administration expenses of up $69.4 million, up 49 percent.

Commenting on expenses incurred, the group said in a statement that it has a “relentless product innovation to further develop our software platform and build our innovation pipeline, with our research and development investment at $113.0m in FY19, reflecting 32 percent of total revenue.”

Expansion and upgrades of the group’s software included real-time container and vessel visibility; additional China-interface; completion of the Border Compliance solution, BorderWise, for the U.S. market; consolidation of the planning board module to enable export forwarders, transshipment agents and gateways to optimise space and cost allocation over multiple shipments; regulatory upgrades for “a myriad of government changes”.

The group generated A$80.2 million of operating profit, a rise of 37 percent on the previous financial year while net profit rose 33 percent from A$40.8 million to A$54.1 million.

In a statement the group said that the increase in profit was driven both by organic revenue growth and contributions from acquired businesses. It added that the acquired businesses dilute the gross profit margin owing to higher product and service support costs and they have lower cost leverage because of their smaller size. But that is likely to change over time, the group expects.

“We expect the dilutive impact of their existing gross profit margin to reduce over time as they evolve to our more efficient commercial model and as they integrate with, or convert onto, the CargoWise global platform. The transition of acquired businesses occurs over multiple years,” the group said.

Founder and CEO Richard White said that the results are a “reflection of our strategy to accelerate WiseTech’s global growth and industry penetration, driven by geographic expansion, relentless innovation and deepening product capability, all of which saw usage by the world’s largest logistics providers increase.”

He added that the company is expanding out of international logistics and cross-border compliance and is “deepening” its reach across the supply chain.WiseTech is a very acquisitive company having acquired at least 15 freight software companies around the world including ContainerChain, Fenix Data Systems and PierBridge between July last year and May 1 this year. In the last few days WiseTech bought Ohio-based Depot Systems.

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Jim Wilson, Australia Correspondent

Sydney-based journalist and photojournalist, Jim Wilson, is the Australia Correspondent for FreightWaves. Since beginning his journalism career in 2000, Jim has primarily worked as a business reporter, editor, and manager for maritime publications in Europe, the Middle East, Asia, and Australia. He has won several awards for logistics-related journalism and has had photography published in the global maritime press. Jim has also run publications focused on human resources management, workplace health and safety, venture capital, and law. He holds a degree in law and legal practice.

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