In an interview, Chief Executive Richard White of logistics software provider WiseTech Global addressed the recent market response to the company’s fiscal guidance. WiseTech shares dropped approximately 20% after announcing that it projected earnings before interest, tax, depreciation, and amortization (EBITDA) for fiscal 2024 to be in the range of AUD 455 million to AUD 490 million (USD 292.2 million to USD 314.7 million). This figure fell short of the average analyst forecast of AUD 550 million for the same period.
While revenue expectations aligned with market predictions, WiseTech anticipates a decline in EBITDA margin, projecting it to range between 44% and 45%. This is compared to 47% in fiscal 2023 and 50% in fiscal 2022. White explained that WiseTech had previously cautioned investors about the lower-margin nature of its recent acquisitions during the first half of the year.
WiseTech acquired intermodal rail-solutions provider Blume Global and transport-management software provider Envase Technologies for a total of USD 644 million in the current year. In February, the company stated that Envase’s margin for calendar 2023 was expected to be in the low-to-mid 20% range, while Blume’s margin for fiscal 2024 was projected to be around 10%.
Chief Financial Officer Andrew Cartledge emphasized that the focus is on generating high revenue growth in order to achieve the desired profitability despite the margin contraction resulting from the integration of these lower-margin businesses.
WiseTech forecasts an EBITDA margin of 47%-48% for the second half of fiscal 2024, with an eventual return to 50% by fiscal 2026. Analyst Paul Mason from E&P Financial even suggests that margins may reach 50% earlier than anticipated.
It is important to note that WiseTech aims to deliver sustainable profitability by leveraging its high revenue growth potential, allowing for the successful integration of its recent acquisitions.