Wisetech Global Ltd. · ASX:WTC
Wisetech Global — H1 2020 Earnings Presentation
79 slides from Wisetech Global's earnings presentation, February 2020
Slide 1: WiseTech Global 1H20 Results
Empowering and enabling the logistics industry globally WiseTech Global 1H20 Results Investor briefing materials February 2020
Slide 2: Important notice and disclaimer
Important notice and disclaimer Content of presentation for information purposes only Preparation of information Visit wisetechglobal.com/investors All financial information has been prepared and reviewed in accordance with Australian Accounting Standards. Certain financial data included in this pre
Slide 3: © 2020 WiseTech Global
Ill | wisetech "il" global Our innovations and global technolo enable, improve and empower the world’s supply chains. We are a force Ee for good, improving productivity, connectivity and resource usage across -— 150 countries worldwide.
Slide 4: Our technology is used by the world's logistics providers across 150+ countries
Our technology is used by the world’s logistics providers across 150+ countries 15,000+ logistics organisations globally are customers(1) 150+ countries(2) 2,000+ valued employees(4) across 60+ offices 50+ billion data transactions in CargoWise annually(3) 4+ million development hours over two decad
Slide 5: CargoWise… operating system for global logistics
CargoWise… operating system for global logistics Strong foundation for future technology, seamless rollout, scalable capacity, global solutions ✓ scalable to any size of business ✓ global reach ~150 countries ✓ deeply integrated with real-time visibility ✓ reduces risks, costs and data entry ✓ detai
Slide 6: 40 of the top 50 global third party logistics providers use our solutions
40 of the top 50 global third party logistics providers(1) use our solutions across 150+ countries worldwide, 34 use CargoWise. 6 © 2020 WiseTech Global 1. Armstrong & Associates: Top 50 Global Third Party Logistics Providers List ranked by 2018 logistics gross revenue/turnover. Armstrong & Associat
Slide 7: 25 of the top 25 global freight forwarders use our solutions
25 of the top 25 global freight forwarders use our solutions across 150+ countries worldwide, 23 use CargoWise. 8 of the top 25 global freight forwarders(1) use CargoWise in global forwarding rollout exclusively – or are rolling out - including the world’s largest. “We have chosen the CargoWise One
Slide 8: 1H20 performance, delivery on strategy and financial results
1H20 performance, delivery on strategy and financial results 8 © 2020 WiseTech Global
Slide 9: WiseTech Global financial highlights
WiseTech Global financial highlights Delivered significant, high quality growth while expanding technology lead and global footprint SIGNIFICANT HIGH recurring LOW HIGH innovation LOW sales and PROFITABLE high revenue HIGH quality customer product development marketing EBITDA margin + growth revenue
Slide 10: Delivered on strategy – significant progress in 1H20
Delivered on strategy – significant progress in 1H20 Focus on expanding market leadership and investing to grow + + + Innovation and expansion of Greater usage by Increase new customers Stimulate Strategic acquisitions: securing our global platform existing customers on the platform network effects
Slide 11: Strong growth in revenue continues
Strong growth in revenue continues Significant high quality revenue growth while focusing on innovation and global expansion Revenue $m 348.3 1H20 revenue +31% vs 1H19 191.6 221.6 205.9 +43% CAGR 1H16 – 1H20 153.8 128.2 102.8 82.7 Full year revenue (FY13 and FY14), 70.0 2H revenue (FY15 – FY19) 54.2
Slide 12: CargoWise organic revenue growth – all cohorts grew revenue in 1H20
CargoWise organic revenue growth – all cohorts grew revenue in 1H20 Expanding penetration… more users, modules and transactions • CargoWise continues significant growth during CargoWise revenue by customer cohort 240 extensive business $m, last 12 months transformation, licence 220 conversions, deve
Slide 13: Global rollouts increasing – larger players rolling out
Global rollouts increasing – larger players rolling out, grow more valuable over time Powerful network effect, exponential growth in transactions, revenue over long term Top 25 global freight Top 25 global freight forwarder 23 of the top 25 global freight forwarders The world’s top 25 global freight
Slide 14: CargoWise organic revenue strength and EBITDA efficiency continues
CargoWise organic revenue strength and EBITDA efficiency continues Drivers of CargoWise Organic Revenue Increased usage across our existing CargoWise Organic CargoWise revenue, EBITDA(1) and EBITDA margin customer base, ($m) as existing customers use more – i.e. • add transactions • open up in new s
Slide 15: Significant total 1H20 revenue growth of 31%
Significant total 1H20 revenue growth of 31% Strong CargoWise growth with impact of large volume of strategic acquisitions • Powerful revenue growth of 31% in challenging logistics industry Revenue environment $m • Organic revenues from our existing and new CargoWise customers 0.4 205.9 delivered 49
Slide 16: Strong growth in total revenue and EBITDA
Strong growth in total revenue and EBITDA Strong CargoWise revenue growth, high CargoWise EBITDA margin, while building out our platform • 31% revenue growth vs 1H19, reflecting both strong CargoWise growth and impact of acquisition of strategic assets that lay Revenue solid foundations for EBITDA(1
Slide 17: Licensing model – On-Demand removes constraints to growth
Licensing model – On-Demand removes constraints to growth Focus on pay for usage, revenue benefits from transition of customers to On-Demand licensing • Excluding acquisitions, CargoWise has achieved 99% recurring revenue, with 99% revenue from customers on On-Demand licensing Revenue by licence typ
Slide 18: Licensing model – transformation ongoing
Licensing model – transformation ongoing Transitioning pre-existing MUL to more sustainable STL progressed rapidly in 1H20 • We have well-proven expertise in customer licence transition Revenue by licence type with <1% attrition % of total revenue • We introduced STL in 2014 for all new customers an
Slide 19: Strong financial position and disciplined use of capital
Strong financial position and disciplined use of capital 19 © 2020 WiseTech Global
Slide 20: Financial summary
Financial summary Significant growth in revenue and earnings reflects strength of business and execution on strategy $m 1H18 1H19 1H20 Change (vs 1H19) Total revenue 93.4 156.7 205.9 +31% Gross profit 79.4 129.0 169.4 +31% Gross profit margin 85% 82% 82% - Total operating expenses (47.6) (80.4) (106
Slide 21: Operating expenses
Operating expenses Scaling to support relentless innovation, geographic expansion and business growth Operating expenses focused on strategic levers: Product design & development Gross profit margin • Innovation, product development % of total revenue and maintenance of our global platform and expan
Slide 22: Investment in innovation and product development
Investment in innovation and product development Continued high investment in R&D, every $ and every hour build out our technology • 1H20 $73.3m invested in R&D • 450+ product upgrades and Investment in innovation and product development enhancements in 1H20 across the CargoWise platform $m • 43% in
Slide 23: Intangibles: significant technology assets for commercialisation
Intangibles: significant technology assets for commercialisation Building commercialisable and monetisable assets for future growth Intangible assets and tangible assets at period end ($m) 844.6 783.7 650.8 360.3 346.9 361.2 241.2 176.9 106.6 111.9 1H18 2H18 1H19 2H19 1H20 Total intangible assets To
Slide 24: Cash flow profile
Cash flow profile Increasing operating and free cash flow • Strong operating performance delivered continuing increase Operating cash flow in operating cash flow $m 1H18 1H19 1H20 $m • Continued high conversion of 69.7 EBITDA into operating cash EBITDA 31.8 48.5 62.5 flow Non-cash items in EBITDA 2.
Slide 25: Cash flow movement
Cash flow movement • Healthy inflows of $218.6m from customers • Main cash outflows Operations Financing Invest to grow comprise: • $148.9m of payments to suppliers and employees • Investments in future $39.2m related to the acquisition of strategic assets and $33.0m cash cost of capitalised develop
Slide 26: Summary statement of financial position
Summary statement of financial position Solid capital position to drive further strategic growth • Strong balance sheet and healthy cash generation to support growth $m 30 June 2019 31 December 2019 and strategic initiatives Current assets • Further funding alternatives in Cash and cash equivalents
Slide 27: Investing to grow
Investing to grow 27 © 2020 WiseTech Global
Slide 28: Widening our reach, building the operating system for ecosystem
Widening our reach, building the operating system for ecosystem Expanding global CargoWise platform Expanding technology to new addressable markets Expanding platform to Operating System (neo) Expanding commercial foundation to new geo-markets Transforming content architectures, channel development,
Slide 29: Increasing investment in relentless innovation
Increasing investment in relentless innovation Significant pipeline of longer-term innovations across existing verticals and new adjacencies 450+ product upgrades and enhancements in 1H20 36% of revenue invested in innovation in 1H20 49% employees focus on CargoWise, CargoWise neo product developmen
Slide 30: Increasing investment in relentless innovation
Increasing investment in relentless innovation Significant pipeline of longer-term innovations across existing verticals and new adjacencies Extending CargoWise Cargo chain Trade and border International Landside logistics CargoWise neo One functionality ecosystem compliance ecosystem Ecommerce and
Slide 31: Acquire people, knowledge & market positions to fuel development
Acquire people, knowledge & market positions to fuel development Small targeted founder-led acquisitions provide safer, faster, stronger entry Geographic footholds fuel global customs platform, adjacencies expand into addressable markets/technologies 31 © 2020 WiseTech Global
Slide 32: Integration process ─ build out of foundation to support efficient growth
Integration process ─ build out of foundation to support efficient growth Evolution of strategic assets involves comprehensive reshaping of commercial model Foothold 12 ─ 36 mths 3 ─ 12 mths 0 ─ 36 mths Adjacencies 3+ years Integrate operations Develop product Grow revenue Platform migration, TECHNO
Slide 33: Progress on integration
Progress on integration Key highlights for 1H20 “To date we have secured over 1,200 industry experts • Acquired Depot Systems, Cypress, Ready and key logistics industry resources with hard to Korea and SISA since FY19 access knowledge and development capability across • We have now completed interfa
Slide 34: Strategy and outlook
2020 Strategy and outlook 34 © 2020 WiseTech Global
Slide 35: We are moving swiftly and determinedly to grow our market and moat
We are moving swiftly and determinedly to grow our market and moat Solved for global platform, high growth commercial model, expanding network foundation Global Hyper-scalable integrated efficient platform commercial model Digital straight-through Speeds onboarding processing Eliminates costs Discip
Slide 36: Powerful growth strategy
Powerful growth strategy Multiple levers to sustain growth and increase market penetration + + Transactions/users Modules Innovation + Increase new Strategic customers on Stimulate acquisitions- and expansion the platform network securing of our global Geographies Industry effects resources + platfo
Slide 37: Logistics execution industry dynamics
Logistics execution industry dynamics Industry pain points and trade changes cycle faster, drive an exponential shift to CargoWise 3PL industry dynamics vs Impact of Our leading global logistics software, CargoWise and low propensity to switch out of dynamic for open-access, usage-driven business mo
Slide 38: Industry environment early 2020
INDUSTRY environment early 2020 COVID-19 virus closing manufacturing, delaying trade Container departures per region - world Container departures per country - Asia Sources: https://www.joc.com/maritime-news/global-container-growth-forecast-rebound_20190425.html Source: CargoWise industry data: 3 da
Slide 39: Strong growth outlook – powerful organic revenue
Strong growth outlook – powerful organic revenue Execution on strategy continues to deliver strong long term growth 420 – 450 Strong delivery • Momentum from accelerating penetration of existing customers FY20 revenue(1) • 99% recurring revenue on CargoWise • Annual CargoWise customer attrition rate
Slide 40: Appendices
Financial information Appendices FY20 guidance and assumptions Global revenues received in a mix of key currencies Financial performance summary Income statement Company information Key operating metrics – WiseTech Global including and excluding acquisitions Opportunity for the solution to industry
Slide 41: FY20 guidance and assumptions
FY20 guidance and assumptions Growth in revenue and EBITDA What is included in the FY20 guidance: What is not included in the guidance: • Retention of existing customers with CargoWise usage growth • Revenue from new products in development but not planned to be consistent with historical levels com
Slide 42: Global revenues received in a mix of key currencies
Global revenues received in a mix of key currencies Revenues protected with effective natural hedge FY20 1H20 2H20 FX rates v AUD prior guidance actual forward guidance • 75% of 1H20 revenue in non-AUD currencies, 1pp GBP 0.55 0.55 0.52 lower than 1H19 (76%) RMB 4.80 4.81 4.81 • Natural hedges in so
Slide 43: Financial performance summary
Financial performance summary Robust delivery on strategy, business thriving, revenue growing Income statement $m 1H19 1H20 Change (vs 1H19) Revenue Recurring On-Demand 114.1 151.8 33% Recurring OTL maintenance 25.0 34.1 36% OTL & support services 17.7 19.9 12% Total revenue 156.7 205.9 31% Cost of
Slide 44: Income statement
Income statement $m 1H19 1H20 Revenue Recurring On-Demand 114.1 151.8 Recurring OTL maintenance 25.0 34.1 OTL & support services 17.7 19.9 Total revenue 156.7 205.9 Cost of revenues (27.7) (36.4) Gross profit 129.0 169.4 Operating expenses Product design and development (31.2) (38.3) Sales and marke
Slide 45: Key operating metrics – including and excluding acquisitions
Key operating metrics – WiseTech Global including and excluding acquisitions 1H20 1H19 1H20 CargoWise(1) Total revenue growth vs prior period 22% 7% Total revenue growth vs prior corresponding period 68% 31% Recurring revenue 89% 90% 99% On-Demand revenue 73% 74% 99% Gross profit margin 82% 82% 92%
Slide 46: Contingent consideration liability
Contingent consideration liability • Contingent consideration liability is related to earnouts agreed, at the time of acquisition for 29 acquired businesses, contingent on achieving select milestones over periods of 3 years or more such as for financial performance, product development or customer t
Slide 47: Explanatory notes
Explanatory notes $m 1H18 2H18 1H19 2H19 1H20 NPATA NPAT attributable to equity holders of the Parent 15.6 25.3 23.1 31.1 59.9 Acquired amortisation (net of tax) 0.8 1.8 2.7 3.6 3.8 Contingent consideration interest unwind (net of tax) 0.5 1.0 1.9 2.2 2.6 Fair value gain on contingent consideration
Slide 48: Reconciliation of statutory operating cash flow to statutory cash flow
Reconciliation of statutory operating cash flow to statutory cash flow • Payments for intangible $m 1H19 1H20 assets reflected internal EBITDA 48.5 62.5 capitalised development Non-cash items in EBITDA 3.2 6.8 Changes in working capital (0.4) 0.4 • Acquisition of businesses Operating cash flow 51.3
Slide 49: Revenue: CargoWise and acquired strategic assets
Revenue: CargoWise and acquired strategic assets Strong organic revenue from CargoWise is durable as it derives from many drivers What drives CargoWise organic revenue growth? When does acquired revenue become CargoWise? Organic revenue relates to revenue from existing CargoWise customers As with ev
Slide 50: Significant revenue growth
Significant revenue growth Strong underlying CargoWise growth demonstrates resilience during extensive business transformation • Organic CargoWise revenue Revenue growth 24% yoy $m • CargoWise revenue can contain large static 22.6 0.4 205.9 components on which organic growth does not occur. e.g. fix
Slide 51: Overview of revenue licensing models, drivers and platform
Overview of revenue licensing models, drivers and platform Customers in transition to On-Demand, ultimately move to transaction-based licensing Nature of revenue: Recurring revenue Other revenue (1) (1) 90% 10% Revenue categories: On-Demand OTL maintenance OTL & support services 74%(1) 16%(1) 10%(1)
Slide 52: Integration process ─ build out of foundation to support efficient growth
Integration process ─ build out of foundation to support efficient growth Evolution of strategic assets involves comprehensive reshaping of commercial model Foothold 12 ─ 36 mths 3 ─ 12 mths 0 ─ 36 mths Adjacencies 3+ years Integrate operations Develop product Grow revenue Platform migration, TECHNO
Slide 53: Acquisitions progress – integration and product
Acquisitions progress – integration and product GLOBAL CUSTOMS AND FOOTHOLD FY15 and FY16 FY17 FY18 Freight forwarding Customs Customs Customs Customs Customs China South Africa Germany Italy Brazil Taiwan Compu-Clearing & ACO Informatica Brand Zsoft znet Bysoft Prolink CoreFreight & Multi-consult H
Slide 54: Acquisitions progress – integration and product
Acquisitions progress – integration and product GLOBAL CUSTOMS AND FOOTHOLD FY18 Customs/ Customs Customs/ Customs Freight Forwarding Freight Forwarding Freight forwarding/ Freight WMS Accounting Accounting WMS forwarding/ WMS Pan-European Ireland Belgium Netherlands Argentina Uruguay Brand ABM Data
Slide 55: Acquisitions progress – integration and product
Acquisitions progress – integration and product GLOBAL CUSTOMS AND FOOTHOLD FY19 Customs Customs Customs Customs Customs/ Freight forwarding/ WMS France Turkey Canada Spain/Europe United Kingdom Brand Easylog Ulukom Fenix Taric DataFreight Headcount 14 37 9 87 11 • HR, Finance, BP/BO complete • HR,
Slide 56: Acquisitions progress – integration and product
Acquisitions progress – integration and product GLOBAL CUSTOMS AND FOOTHOLD FY19 FY19 FY20 Customs/ Customs Customs/ Customs/ Freight forwarding/ Bonded WMS/ Freight WMS/ Trade compliance forwarding TMS Norway/ Sweden Denmark South Korea Switzerland Brand CargoIT Systema Ready Korea SISA Headcount 1
Slide 57: Acquisitions progress – integration and product: adjacencies
Acquisitions progress – integration and product ADJACENCIES FY17 FY18 FY19 Ocean Carrier Land Transport Rates (air) Rates (ocean) Warehouse LTL TMS Parcel shipping management management TMS Asia Pac, M East Global Australasia Global Global North America United States United States Brand Softship CMS
Slide 58: Acquisitions progress – integration and product: adjacencies
Acquisitions progress – integration and product ADJACENCIES FY19 FY20 Intermodal trucking Parcel ship Container Messaging/ Machine Learning Container yard/ TMS/container LTL Transport optimisation Integration terminal mgt tracking United States United States North America Australia Sing/Aust/NZ Swed
Slide 59: CargoWise expanding to be the operating system for global logistics
CargoWise expanding to be the operating system for global logistics Every innovation & acquisition adds to flywheel of growth 59 © 2020 WiseTech Global
Slide 60: Opportunity for the solution to industry pain points is vast
Opportunity for the solution to industry pain points is vast Logistics market size: across 1PL, 2PL, 3PL = ~A$16 trillion(1) Hundreds of billions spent on technology + billions more wasted on sneakerware/people. Yet, industry drowning in paper and high error rates, decimating margins and visibility.
Slide 61: Powerful high growth engine – CargoWise integrated global platform
Powerful high growth engine – CargoWise integrated global platform 61 © 2020 WiseTech Global Relentless platform expansion with over 500 enhancements annually
Slide 62: Powerful high growth engine – CargoWise integrated global platform
Powerful high growth engine – CargoWise integrated global platform Deeply integrated… Benefits of integration Integration within + across modules ✓ Data is entered once only ✓ Lower error rates Integration across geographies ✓ Real-time visibility globally Integration with other customers ✓ Improved
Slide 63: Powerful high growth engine – CargoWise integrated global platform
Powerful high growth engine – CargoWise integrated global platform … features extend beyond integration configuration, not customisation scalable to any size of business – from single user to thousands global reach – licensed over 150 countries and expanding 30 languages, myriad of currencies, netti
Slide 64: CargoWise – value proposition for customers
CargoWise – value proposition for customers ✓ Reduction in costs – due to: replacement of multiple proprietary systems and/or third-party applications with a single, deeply integrated platform; reduction in IT infrastructure and maintenance costs; and potential elimination of labour intensive proces
Slide 65: CargoWise integrated global platform – productivity gains and cost savings
CargoWise integrated global platform – productivity gains and cost savings Customer with multiple software applications Complex network of applications replaced provided by multiple suppliers (1) with CargoWise(2) Extra 3rd party application Proprietary application Extra 3rd party application Extra
Slide 66: Product commercialisation and monetisation processes and timeline
Product commercialisation and monetisation processes and timeline Rich ideation Innovation cycle Rapid commercialisation Grow usage & revenue Industry expert teams solve Product leads + architects leverage global across sectors and countries: Global platform availability of released product/function
Slide 67: Capitalised development and amortisation
Capitalised development and amortisation High innovation to commercialisation ratio – product designed for CargoWise platform + customer base • Capitalised development comprises: • in development – labour and overhead costs relating to the development of new modules and products Net book value of In
Slide 68: Focus on innovation investment, efficient sales and marketing
Focus on innovation investment, efficient sales and marketing We build assets, not churn Relentless focus on innovation aligned with an efficient commercial model delivers minimal attrition by CargoWise customers – less than 1% every year for last 7½ years R&D Sales and marketing expense % of total
Slide 69: Employees
Employees Our diverse, talented workforce continued to grow both organically and through acquisitions in 1H20 Growth in number of employees Employees by function as at 31 Dec 2019 General and administration, 17% Product Technical and design and product development, support, 22% 49% Sales and marketi
Slide 70: WiseTech difference, transformation track record
WiseTech difference, transformation track record Product Expanding offshore requires Cannibalised AU business by building single source-code, global platform bottom up global solution Launched integrated regional platform: AU, NZ, UK, US, SG (2004) Ultimately created the integrated global logistics
Slide 71: WiseTech difference, transformation track record
WiseTech difference, transformation track record Revenue Create pure recurring revenue Early move to On-Demand licensing (2008) Transition existing OTL to On-Demand Launched transaction-based licensing – disciplined application (2014) Transition existing to pure Seat+ Transaction-based licensing Cre
Slide 72: WiseTech difference, transformation track record
WiseTech difference, transformation track record Revenue Revenue by licence type Revenue 348.3 % of total revenue $m 191.6 On-Demand 221.6 (recurring) 205.9 74% 73% 71% 74% 82% 153.8 128.2 99% 102.8 82.7 70.0 54.2 156.7 13% 16% 17% 56.7 OTL maintenance 16% 43.0 37.7 (recurring) 93.4 12% 71.1 13% 56.
Slide 73: WiseTech difference, transformation track record
WiseTech difference, transformation track record Cost efficiency Build assets, Inversion of product spend vs usual sales & marketing – prioritise asset development not churn Remove consulting: evolve to channel partner organisations Eliminate costly Continuous rollout and expansion with no further s
Slide 74: WiseTech difference, transformation track record
WiseTech difference, transformation track record Cost efficiency Operating expenses EBITDA(1) % of total revenue $m 49%(2) 49% 49% 100.0 48% 46% 21% 80.0 20% 20% 19% 19% 34% 36% 31% 31% 30% 20% 18% 19% 18% 19% 60.0 14% 14% 40.0 11% 11% 59.6 62.5 10% 46.2 48.5 20.0 31.8 - 1H18 2H18 1H19 2H19 1H20 1H1
Slide 75: WiseTech difference, transformation track record
WiseTech difference, transformation track record Technology Innovation lead Early deployment 2011 to full cloud – customers transition over 2 years + fast follower Establish data centres worldwide Built “High Volume Low Value” capability 2006, launched ecommerce 2013 Architectures and 2012, GLOW ‘bu
Slide 76: Regulatory and trade changes are tailwinds
Regulatory and trade changes are tailwinds We invest our regulatory experts and development teams in ensuring CargoWise fully compliant globally Global trade changes and updates in tariffs and regulations are a positive driver for CargoWise adoption as we are swift to market with our solution upgrad
Slide 77: Logistics industry – moving goods and data
Logistics industry – moving goods and data Movement of goods requires timely movement of accurate information across the supply chain A myriad of logistics suppliers is needed across the supply chain. Information moves ahead of, alongside and behind the physical goods as they move through the supply
Slide 78: Visit our investor centre for more information on WiseTech Global
Visit our investor centre for more information on WiseTech Global www.wisetechglobal.com/investors Videos Presentations Other materials 78 © 2020 WiseTech Global
Slide 79: www.wisetechglobal.com/investors
www.wisetechglobal.com/investors