Company Interview / Richard White's growth strategy

Key points:

WiseTech Global's (ASX: WTC) sustained 33% CAGR and long-term approachStrong demand and notable contracts with DHL, FedEx, DSV, and moreNew product releases and WiseTech's commitment to tech talent through Earn and Learn

Richard White, cEO of WiseTech Global (ASX: WTC) shares the company's impressive 30-year journey. WiseTech Global's (ASX: WTC) internal mantra, "slower today, faster forever," focuses on long-term growth. Over the past five years, WiseTech Global (ASX: WTC) achieves a 33% CAGR and expects FY 25 revenue between $1.3-$1.35 billion.

Richard mentions that demand for WiseTech Global's (ASX: WTC) logistics software, notably for clients like DHL and FedEx, fuels their growth, though they remain a small part of the vast logistics industry. New contracts with top freight forwarders like DSV, Sinar Trans, and Nippon Express signal increased demand, especially in Asia.

Additionally, Richard outlines WiseTech’s (ASX: WTC) acquisition strategy and highlights three new product releases that will enhance operational efficiency and compliance. WiseTech Global’s Earn and Learn program also cultivates homegrown tech talent. Richard diversifies his ownership while maintaining confidence in the company's future.

Full unedited transcript below:

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Well, let's get into stock specifics with the focus on Wisetech global after it continues its impressive trajectory, with shares surging by nearly 100% over the past 12 months. What are the key drivers for this growth? Well, Richard White, chief executive of Wisetech Global, joins us in the studio. Richard, great to have you here in Australia. Great to be here. So you're approaching your 30th anniversary in October, in fact, 1994 to now. So 30 years, you only need to look at your share price to see that that impressive growth. Uh, how would you describe it and particularly that journey over the past 30 years? Well, first of all, we have an internal mantra slower today, faster forever. And we spent a lot of time in the early years building our technology, building our customer base, building our capabilities. And of course, uh, before we went to market, we had a very high growth company that was very profitable. In fact, we've been profitable the entire time of our 30 years. Um, and we

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took a very long term approach to building, and once we hit the market, we were able to expand that capability with an appropriate M&A strategy and an appropriate organic strategy, which combined together to give us a fairly continuous growth curve in the last five years, 33% growth, CAGR. That's a thing that we think is quite continuous and and already working very hard to create long term value for shareholders. We'll get into that strategy in just a moment. I was going to ask you, is it sustainable? And you take a look at your FY 25 revenue projected between 1.3 and 1.35 billion and a growth rate there close to 24%. You say this a lot of this is fueled by strong demand for its logistics software solutions for clients such as DHL and Fedex. I wanted to get your reaction because Fedex last week came out, it missed quarterly estimates, lowered its full year guidance. Do you have some concerns about what's going on, particularly at a macro level, and what you're seeing in the US economy at the

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moment? You know, in general, the industry's growth itself is not a large driver of our growth. We're a we're a small part of a very, very large industry. And we're growing by winning new customers, building new products, and changing the way that the supply chain and logistics works. And we cover Fedex is a relatively important customer, but DHL, UPS, Fedex, the big three that people know are important brands, but they are by no means the the large part of our growth. And we have DSV, who just acquired Schenker. That will be a big growth driver for us in the future. We signed in this year. We signed Sinar Trans globally the largest Chinese forward and the fifth largest freight forwarder in the world. We signed Nippon Express just after the end of the financial year, the sixth largest forwarder in the world and the largest Japanese forwarder. And we're seeing very strong demand across our global business, but also an increased demand, much a very different type of demand curve in our Asian business. That's a

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very big breakthrough for us. And then we have products that are driving growth as well. And we have a number of other levers that we can pull to create growth. And so I think whilst industry growth and supply chain growth does have some small impact on us, the big impacts come from those things that I just mentioned. I do want to touch on your new products. Just before that though, you talk about your acquisitions, you have been fairly aggressive. How much of that is is about that growth? I mean, how much is organic? How much is acquisition or do you feel, oh, we're organic. Growth is very high. It's much, much more than the acquisitions create. Our acquisitions are generally fall into a pattern. We've done about 50 and most of them are quite small. Some between 5 and 1020 million cost, some a bit higher than that a couple a year and a half ago, in order to enter the US landside logistics market, we spent about 900 million on two acquisitions of inverse A and bloom. But that's an unusual thing. That was a one off

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and a strategic change, but that's sort of acquisition. Size doesn't occur much. We're typically buying small what we call footholds, which get us into new countries to allow us to do the customs processing in those countries. Or a tuck in to add a substantial capability to our platform and to give our customers much more

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value across that platform. They are very continuous. We might do a bit more, a bit less than six this year of those sites, and they are fundable out of profits. So we're really able to do those on a continuous basis without really stopping or breathing for stopping, for breath. Now you've got three new product releases, which you you mentioned there specifically what cargo was next, container transport optimization compliance wise. What are what are they adding? Well, first of all, we're a product led company and we continuously build products. And every year we release more than 1100 major features, upgrades and modules, only three of which are those three. They're significant in the sense that they're larger. We've spent more time on them, but to take you through them cargo wise, next is the next generation platform to replace and enhance Kyrgyz, one which is already a world leading product. It creates a modernized platform that allows us to grow faster and gives our customers cost advantages. It also

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gives us a platform for the future. So this issue with most software companies, they end up in a sort of technical debt situation. We modernize out of that and make sure that we can grow and invest in high quality products.

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Container transport optimization is resolving a problem in the transport industry, where the cost of container transport at, say, for instance, the port of La or Long Beach is substantial portion or even higher than the cost of moving the container from Shenzhen to Long Beach. And that's an extraordinary problem. It's there's choking around the ports, there's costs at the gates, there's delays, there's container storage, there's container detention or what Americans call podiums. And this model is a very inefficient model, uses a lot of carbon, a lot of fuel, a lot of trucks and a lot of it is trucks traveling without a load on board. To get to the next load. And we can optimize that in a way that at scale that other people can't do. Then the third product is a trade compliance product called compliance wise, which brings some of the regulatory burdens that the world is now saying with sanctions, with denied parties, with embargoes, with restricted goods and things that are very, very important to get right. And if

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you don't get them right, there are millions or tens of millions of dollars worth of fines for exporting something to a third party who is a pariah state or has an embargo. So that really makes our customers safe. And their trading customers, the logistics and the traders, the exporters and the importers makes them safe. So, Richard, in terms of 525 guidance, how much of a contribution is assumed from those three new products? Well, I think we've taken a very balanced view of this. When you think about our guidance over the last five years, our second half has been somewhere between 50 and 56% of growth. And we're talking about numbers at the high end of that. So it's not not that atypical to what our growth curve has been in the past. So there is contribution from those three products, but there's also contribution from sales of new product customers rolling out the platform and various other growth levers in the new product space. So it's a it's a very well measured, uh, way of looking at the future. So are you going to have these

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two platforms, if you like, running concurrently in terms of, uh, moving across one to the other? And is that going to mean perhaps, uh, more costs for you as a result?

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No, not not particularly. There'll be a few overlaps in costs in the first three months of this. Cargo wise, one is very widely used across the world and is continuing to grow. But the move between cargo phase one and cargo was next is almost seamless. The commercial model is identical. Uh, there's a compatibility interface that makes it very easy for our customers to use the new product without retraining. Uh, and it has some other advantages and some benefits in moving to it, and the contractual terms are very similar as well. So in all in all, the move between Kiger was one and car was next. Should be very fast and very seamless for most of our customers. Remember this is the fourth generation product. So we've done these conversions between old and the new three previous times. And we've learned each time how to do it better. Our first conversion in 1990, 2004. From there, our Australian product was extremely painful. I've got to tell you, I live that I lived it and read that it was very, very painful. The second generation changed between

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enterprise and cargo wise. One was much less painful, but still we learned a few things from that. And this one is the the pinnacle of the learning, if you will. We think we can do it quite quickly and quite painlessly. All right. Well, keep a watch obviously as well. Investors are just away from the business. Uh, you're clearly invested in Australian technology and the talent pool. Yes. Via your Earn and Learn program. Just tell us a little more about that and why you've got into that. Well, first of all, it's it's an unbelievably powerful program. Um, we think that the, um, the Australian, uh, population doesn't understand as well as we do when some other technology companies are the value of a tech education and the value of tech employment. And what we're doing is we're reaching into high school as far back as year nine and encouraging people to learn technology skills, particularly software development skills and software engineering skills. And then we are providing a sort of an onramp to a high school graduate. So

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instead of attending university full time and working for 3 or 4 years

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at McDonald's or somewhere else flipping burgers, what have we got to say? Um, they can join Wisetech. They can start on a very strong wage of about 65,000 gross.

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Uh, they get a share portfolio as part of that. So they get Wisetech shares, which, uh, vest on their graduation, and they also earn bonuses which pay for their fees. So at the end of their 3 or 4 years, or it depends on how long they take, but let's call it four years of study. They have a full time job for four years. They have four years of shares with vesting, and they have earned bonuses for their high marks. And all of our students are doing extremely well academically. We select carefully and we train them internally as well. And they don't have a hex payloads. So at the end of this, this is pretty amazing. Yeah. Well I wouldn't be complaining about to receiving someone's take shares either. Speaking of which, I can't let you go without asking you about your own ownership of the company has decreased from some 51% to 35% since 2016. A lot is made in the media about you selling down your shares. Just tell us your strategy. So I think between myself and my co-founder Marie, it's held in a single holding company and it's about 38%, a little bit less of the company. And

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yes, we have been selling down in when we're not blacked out and when the market has understood our earnings, we sell a little bit every day. It's pretty much the same amount of shares, but obviously the dollar value of the shares has become much higher. But we've done that for, I don't know, 2 or 3 years now. And it's a very calm and orderly process. And in fact, I think the media makes far more about it than the than the shareholders do. Um, I'm between myself and Marie and a couple of other very large shareholders. We're probably the biggest shareholder in terms of listed companies where something like number 13 on the on the ASX in terms of total market cap and to have a founded, it has 38% of the of the company's shares is quite remarkable and different. So and I think that there's a reasonable argument that I should diversify. But there's also a very reasonable argument that shareholders need liquidity in order to buy into Wisetech. And so I intend to continue that program on a very modest basis. I call it a trickle out. Other people call it

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dribble, but it sounds terrible. When you dribble, it's much more trickling better. So I think the model here is that if I keep doing what I'm doing now and sell a little bit of shares every day, every earnings period that we've had, I've had more in total valued dollar value than I had in the previous period. So it's a it's a very modest program.