After Wisetech’s founder and chief executive Richard White added more than $1bn to his fortune following a share price surge, he received a call from China, congratulating him on his fluency in Mandarin.
The only problem is, Mr White – who is worth an estimated $11bn – can’t speak Chinese, or French, German or Spanish.
But when Wisetech – the $29.59bn logistics software empire he founded in 1994 – presented its “strong” half year results on Wednesday, Mr White harnessed the power of artificial intelligence to ensure his message was heard loud and clear across the globe.
“We did it just for amusement. We published Andrew (Cartledge, Wistech’s chief financial officer) as avatars,” Mr White told The Australian.
“You can see our avatars speaking the script in English, but we didn’t record that – that’s not a video – that’s literally an avatar doing that, and we did it in French, Spanish, German and Mandarin.”
While Mr White said the idea of using an AI avatar to speak another language was “cute” is more serious when he talks about the potential of the technology, and how other global businesses can use it to their advantage.
“The point here is that that our careful and considered use of AI is going to amplify what we can do as a company.
“It’s going to project us into many more national languages and make us much closer to our end users and to the customers that they service. that couldn’t have been done without the use of these tools.”
Mr White has added about $1.2bn to his fortune, with Wisetech’s shares soaring after its half-year earnings beat analysts estimates, and it hiked its dividend.
The Sydney-headquartered company’s profit rose 8 per cent to $118.2m, while revenue surged 32 per cent to $500.4m. This compared with analysts consensus estimates of $490.5m and $105.7m for revenue and net profit, respectively.
The earnings beat, coupled with strong guidance, sent the company’s shares surging 11.1 per cent to $88.75 on Wednesday.
‘AI is not going to eat you’
Mr White said the outlook for WiseTech said innovation was a “critical” growth driver, and he was clearly not shy of using AI.
“I’m just trying to convince people it’s not going to eat them. The problem is that ubiquity sort of doomerism around AI and it stops you from thinking about what you can actually do. The right thing to think about as this is all additive, to productivity, additive to value additive to our customer experience.
“We have increased our investment in research and development over the last five years, investing over $1bn to deliver more than 5,500 product enhancements which creates substantial value for our customers and underpins revenue growth.
“We continue to focus on enhancing our core CargoWise platform in pursuit of our vision to be the operating system for global logistics.”
Mr White said the company’s profitability benefited from price increases, which offset the impacts of inflation. He said it was also set to deliver $15m in cost savings this financial year, which is part of a broader target to save $40m annually.
But the company’s EBITDA margin eased from 50 per cent to 46 per cent, which Mr White said was ahead of expectations.
“Recent strategic acquisitions will continue to dilute the overall EBITDA margin while being integrated, however, WiseTech is on track to return to 50 per cent+ EBITDA margins in FY26 as previously guided.”
Last October, the company acquired online marketplace MatchBox Exchange for an undisclosed sum, but the deal was partly funded by issue of $27.6m new WiseTech shares. Matchbox Exchanges matches logistics providers with empty shipping containers to those who need them.
“Our acquisition of MatchBox Exchange in October 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.”
Full year guidance
Mr White maintained WiseTech’s full year guidance range for revenue, which is expected to climb 27-34 per cent to $1.04bn-$1.1bn. Annual earnings before interest, tax, depreciation and amortisation is expected to be $455m –$490m, representing growth of 18–27 per cent.
“This is an exciting time for our business, our global team, and our customers. The WiseTech team are truly, deeply, passionate about what we do, and we use all our empathy, energy, focus and talent to drive innovation and deliver substantial value to our customers.
“We remain steadfast in our long-term vision, continuing to relentlessly invest in enhancing CargoWise, making it the platform of choice for large logistics service providers.”
RBC Capital Markets analysts said WiseTech delivered “large beats”, which he expected investors to lap up.
“(It) starts at sales line (2 per cent beat) and gets stronger as go down the P&L with EBITDA +14 per cent beat, NPAT +22 per cent beat and DPS (dividend per share) +17 per cent beat to market.
“(Wisetech has a) strong secular growth story that does not appear to be impacted by freight volume disturbances on a macro level (e.g. Red Sea), in our view.”
Paul Mason, managing director of technology and gaming research at EP, said: “Capitalisation rates have had some impact on EBITDA overall, but still looks good quality,” he wrote in a note to investors.
While WiseTech reiterated earnings guidance, Cargowise revenue growth is expected to be at the lower end of the range, which Citi analyst Siraj Ahmed said could weigh on the share price.
“We see potential for the share price to under-perform given Cargowise revenue growth guidance has been lowered and acquisitions continue to under-perform. Guidance implies organic Cargowise revenue growth in the high-teens versus previous expectation of an acceleration in the second half,” Mr Ahmed said.
But Mr White said the revenue forecast adjustment came from delaying the launch of some new product innovation by a few months.
“When you’ve got a team of more than 1800 software developers, engineers, product managers, and you’ve got a very complex industry that you’re satisfying, your goal always is to provide a product which is complete at the top of its capability to astound customers and to win your business.
“And this means that time becomes a slight variable. I’m only talking about a few months difference here. And we’re not talking about that much revenue difference.”
The company will pay an interim dividend of 7.7c a share, fully franked, on April 5. This is an increase from 6.6c in the previous corresponding period.
This story was originally published by The Australian.
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