Is the bear narrative done?

WiseTech (ASX: WTC) crushed expectations on Wednesday, reporting a strong set FY21 results, beating the company’s own EBITDA guidance in the process, while also providing an optimistic outlook for fiscal 2022.

The market reacted with a staggering amount of optimism: the stock skyrocketed 53% to $55.50 per share by 11:30 AM. At those price levels, WiseTech has a market capitalisation of over $18 billion.

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FY21 results

On the top-line, WiseTech reported total revenues of $507 million, representing an 18% year-on-year increase and coming in at the top-end of guidance. Most of that was driven by CargoWise revenue, which came in at $331.6 million, while acquisition revenue came in at $175.9 million. That bump in revenue from CargoWise was driven primarily by increased demand from current customers.

Commenting on that revenue performance overall, WiseTech CEO, Richard White, said:

'Our top line revenue growth, coupled with our ability to implement organisation-wide efficiencies and extract acquisition synergies, has enabled us to achieve a marked step change in operating leverage that is evident in our strong FY21 financial performance.'

Yet it was a beat on earnings (EBITDA) expectations that look to have truly captured the attention of the market. WiseTech, at its interim results, had guided for full-year EBITDA of between $165 million to $190 million. WiseTech beat firmly on those forecasts today, revealing FY21 EBITDA of $206.7 million, implying a year-on-year growth rate of 63% and an earnings margin of 41%.

This all resulted in statutory NPAT of $108.1 million, underlying NPAT of $105.8 million and earnings per share of 32.6 cents per share.

Off the back of this, WiseTech declared a final dividend of 3.85 cents per share – taking total FY21 dividends to 6.55 cents per share.

Analysts from Citi, who have a price target of $30.50 per share on WiseTech, described the result as solid, while noting that ‘guidance [was] stronger than expected.’

The investment bank went on to say that ‘With the company talking to a strong pipeline and guidance implying consensus upgrades, we are not surprised that the stock is up strongly today however do see the 27% increase as a bit excessive.’

FY22 outlook

Looking forward, WiseTech’s management said they expected full-year FY22 revenue of between $600 million to $635 million, implying a growth rate of between 18% to 25%, respectively.

On the bottom-line, earnings are expected to continue to accelerate, with full-year FY22 EBITDA guided to come in at between $260 million to $285 million, implying a growth rate of between 26% to 38%, respectively.

 

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Shane Walton | Financial Writer, Australia
25 August 2021