WiseTech guides to higher FY22 earnings: Ord Minnett upgrades to Buy

While the tech sector has been largely out of favour, due to the impact of higher interest rates on valuations, WiseTech (ASX: WTC) receive a welcomed kicker at the open, up 6.23%, after announcing stronger than expected guidance.

Due to strong top line growth and cost efficiencies ahead of expectations, the software business is now guiding to FY22 earnings (EBITDA) of between $310m and $320m versus previous guidance between $275m and $295m.

Revenue is also expected to reach the top end of a range between $600m and $635m.

What does WiseTech do?

To the uninitiated, WiseTech has 18,000 customers across 165 countries and include 42 of the top 50 global third-party logistics providers and 24 of the 25 largest global freight forwarders.

The company’s flagship platform, CargoWise, provides customers with an end-to-end global logistics solution, executing more than 72bn data transactions each year.

Business model resilience

WiseTech founder Richard White attributes today’s FY22 guidance upgrade to resilience within the company’s business model and strategy through the cycle.

“We are upgrading our FY22 guidance, with our performance reflecting the Our product led approach and focus on our 3P strategy has enabled us to continue to deliver strong top line growth and drive significant operating leverage,” White noted.

What happened at the half year?

During the six months to 31 December 2021, WiseTech’s revenue increased 18% to $281.0m, and underlying net profit after tax (NPAT) increased 77% to $77.3m.

Much of the result can be attributed to increased market penetration, customer usage and adoption of technology, plus a price change to CargoWise.

The company ended the first half with $380m in cash and no debt and paid a fully franked dividend of 4.75 cents per share (CPS).

The Company will release its full year audited statutory results on 24 August 2022.

WiseTech share price over 12 months.