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Edited Transcript of WTC.AX earnings conference call or presentation 21-Aug-19 12:30am GMT

Full Year 2019 WiseTech Global Ltd Earnings Call

ALEXANDRIA Sep 7, 2019 (Thomson StreetEvents) -- Edited Transcript of Wisetech Global Ltd earnings conference call or presentation Wednesday, August 21, 2019 at 12:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Andrew Cartledge

Wisetech Global Limited - CFO

* Gail Williamson

Wisetech Global Limited - Chief Growth Officer

* Richard John White

Wisetech Global Limited - Founder, CEO & Executive Director

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Conference Call Participants

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* Jules Cooper

Ord Minnett Limited, Research Division - Senior Research Analyst

* Lucy Huang

BofA Merrill Lynch, Research Division - Analyst

* Paul Mason

Evans & Partners Pty. Ltd., Research Division - Research Analyst

* Stuart B. Turner

Blue Ocean Equities Pty Ltd, Research Division - Senior Equities Analyst

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Presentation

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Operator [1]

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Thank you for standing by, and welcome to the WiseTech Global Limited FY 2019 Results Conference Call. (Operator Instructions)

I would now like to hand the conference over to Gail Williamson, Chief Growth Officer. Please go ahead.

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Gail Williamson, Wisetech Global Limited - Chief Growth Officer [2]

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Good morning, everyone. Thank you for listening in to our FY '19 results briefing. We appreciate your interest particularly on this very busy reporting day.

Earlier, we lodged with the ASX our Appendix 4E statutory account, results release and investor presentation, which you can access at the investors center at wisetechglobal.com.

Joining me today is our Founder and CEO, Richard White; and CFO, Andrew Cartledge. We'll take about 25 minutes to talk through the results highlights, a quick dive into our technology and strategy and a recap of financials, and then of course the full year outlook. After which, we'll all be available to answer your questions and discuss the business further.

Over to you, Richard.

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Richard John White, Wisetech Global Limited - Founder, CEO & Executive Director [3]

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Thanks, Gail. Good morning, everyone, and thank you for joining us today.

In the interest of time, we'll start at Slide 8. In FY '19, our business delivered high-quality growth in revenues and earnings, while we continue to expand our technology platform and grew our global footprint. The strength of the core business and strategic actions are clear in the continued revenue growth, up 57% to $348.3 million for FY '19, a CAGR of 49% over the last 4 years.

EBITDA grew 39% to $108.1 million, with 49% CAGR over the last 4 years. Both revenue and EBITDA slightly exceeded the top end of our full year guidance.

Recurring revenue for CargoWise came in at 99%, with the 98% of that revenue usage-based and 88% recurring for the group overall. We continue to enjoy negligible customer attrition, running at less than 1% as it has for the 7 years since we started measurement. Our customers stay and grow transactions and users due to the power, depth and productivity of our global platform, which is why we continue to invest about half our global workforce and nearly 1/3 of our revenue in product development.

Investing deeply and innovating continuously over the very long-term makes our product easier to sell so revenues grow faster and make our sales and marketing effort highly efficient, consuming just 13% of revenue and 12% of our people. Keep in mind this includes the sales and marketing efforts of 37 strategic assets we have acquired.

EBITDA was $108.1 million with a healthy margin of 31% including our acquisitions. It is worth noting that our EBITDA margin excluding acquisitions was 48% as we continue seeing the benefits of our disciplined and highly efficient commercial model in our core business. And of course overall net profit for the year grew 33% to $54.1 million.

More important than our strong performance is the continued execution of our 5 levers of growth. Together, these levers work to build long-term revenue, drive customer growth and accelerate our global expansion. Looking at Level 1, we remain relentless about innovation, investing $113 million in further expanding our pipeline of commercializable innovations and delivering over 830 product enhancements seamlessly across the CargoWise platform. We continue to accelerate our development capability within our 36 development centers worldwide. Hundreds of upgrades include initiatives around global data sets, regulatory and trade requirements, building the ecosystems for the cargo and compliance chain and leveraging selected geographic and adjacent technologies to address new customer segments and expand our term.

We have continued to invest resources into machine learning, natural language processing, process automation and guided decision support, driven by vast volumes of transactional and border agency data sets to enable enhanced compliance, due diligence, risk assessment and risk mitigation.

Our second lever saw greater usage by our existing customers across transactions, modules and geographies with revenue growth from that channel of $46.8 million, providing 86% of our organic revenue growth in FY '19. This growth was generated by our large customer base adding more transactions, users and geographies and using more modules.

Revenue from our very large customers continues to grow. Our top 10 customers are still only 22% of revenue, and none are more than 5%. Now 43 of the top 50 global 3PLs and all of the top 25 global freight forwarders are using our solutions somewhere in the world.

We continue to bring new customers on the platform, with significant new regional customer deals including Bon Voyage, HAVI and a full global rollout for Bolloré, a global leader, ranked in the world's top 10 with an integrated network of 609 offices in 107 countries. The rollout will commence in FY '20.

We now have 270 external WisePartner organizations across the world actively referring, promoting or implementing our platform. We have 47 partner networks actively promoting to their member base of over 8,700 logistics professionals, and we added 4,000 CargoWise certified practitioners, a total of 15,000, to potentially form an effective, highly efficient additional sales force.

Turning to accelerated organic growth from our acquisitions, in FY '19, we have progressed product developments in China, Italy, Germany, Brazil, Ireland and Australasia and across our global adjacencies, including global rates management, border compliance and TMS.

In addition, since July 2018, we have completed a further 14 valuable geographic and adjacent acquisitions across Turkey, North America, Spain, Italy, Australia, the United Kingdom, Sweden, Norway and Singapore.

In the last 12 months, the pain points across the industry have deepened. In response, consolidation is accelerating. 10 of the top 20 major container carriers of 4 years ago do not exist today. Following many 3PL consolidations, the world's fifth largest logistics provider, DSV, our customer, having integrated global player UTi, this week acquired Panalpina, a global player of the same size.

As global trade and supply chains get more complex and challenging, trade barriers and tariffs are escalating. Brexit is looming for the U.K. and Europe. Worldwide, there is a constant regulatory change. Retailers are rewiring supply chains across Asia, while the proliferation of small but noisy digital forwarders along with the e-commerce giants compelled 3PLs to move faster at lower margins. The high fragmentation and disparate data continues to plague accuracy, create risk, destroy margins and compromise decision-making capability across the industry.

Meanwhile, these pain points we identified years ago continue to escalate and become more interdependent each year, a true Gordion knot for those logistics providers welded to proprietary legacy systems propped up with a plethora of micro point solutions and cheap labor.

Our global platform, CargoWise, is designed to turn these problems into tailwinds. Each one of these negatives that potentially would [persist] and derail even the largest of logistics companies are all opportunities for us to grow. With the addressable marketing technology for global logistics in the hundreds of billions and the spend on digital transformation billions more again, we are moving fast to leverage our lead. More and more logistics providers, from the largest to the micro, to the e-commerce giants and even governments, are moving from a cost-only focus to converge on the same needs. Real-time visibility, control over margins, reduced risk and cross-border execution, faster multi-modal movements, more efficient use of resources, error reduction.

We've already sold for the global platform. Now CargoWise is building out the cargo chain and compliance chain, creating new ecosystems. We are actively extending our reach across the supply chain, moving out from our heartland of international freight forwarding and third-party logistics, extending our reach into new customer segments, technology adjacencies and geographies across the increasingly blurred lines of 3PL, 2PL 1PL and the GTM space.

This is why we have invested more than 4 million development hours to create a solid foundation on which we can empower and enable the industry. Our CargoWise engines, services and systems are designed with a global schema utilizing workflows, automations, trigger events, exception-led transactions, robotics and productivity tools that deliver essential platforms and applications.

For FY '20, we are targeting a substantial increase in our R&D investment of 30% to 40% on last year to accelerate the build-out in our pipeline in key development areas: continuing to extend CargoWise' global functionality in the areas identified; further building globally integrated platforms for customs and border compliance, international fulfillment/e-commerce, land transport management systems and for the users of logistics services, NeXus, giving extended functionality for suppliers of logistics to connect their customers; additionally, optimizing landside logistics; and finally, extending the capabilities and integration of strategic acquisitions.

Every technology component is assessed on a build, buy, license or partner basis, and we will focus on the most efficient methods to expand our technology pipeline. In the same way, we provide full global freight forwarding rollout to the world's largest freight forwarders who will do the same globally for customers. Cross-border compliance is the most complex pain point for global logistics and involves the entire ecosystem, 3PLs, BCOs, carriers, shippers, e-commerce and governments. We are moving swiftly to build the world's only integrated global customs platform.

We have completed deep capability for all U.S., U.K., China, Australia, Canada, New Zealand, Singapore and South Africa, and we are simultaneously building out each acquired geography fully native, embedded in CargoWise.

We have secured 700 leading technologists and industry experts, 21 key assets and market positions, capturing centuries of hard-to-access capability and significant development capacity with local feet on the ground. We have done this with our own originators and internal M&A engine. As a result, we are well progressed with our global customs footprint already covering 30 countries and importantly, 80% of global GDP and 74% of imports. We will continue to acquire, focusing energy on footholds in Asia and Europe.

Our acquisitions are strategic, not revenue roll-ups. We are building highly efficient and scalable mini WiseTechs with significant market positions and key customer bases across the world. These positions are secure, but the businesses themselves will be in transition over a number of years. The integrations are progressing well, utilizing our engineered processes and universal architectures. The overview in the appendix provides more information.

It is important to understand that integration and product development are only one part. We are reshaping each strategic asset to evolve from a onetime license sales, consulting and servicing business to be a high-growth, scalable, automated business with high recurring revenue and high EBITDA, a true technology business. This requires a commercial foundation covering content architectures, channel development, sales, licensing and service and support systems.

Think about Pierbridge, a U.S.-based TMS provider that plays in the $560 billion global parcel market, provides white-label technology to large OEMs and direct solutions for enterprise shipping. Key foundation actions included providing sales channel partners with extensibility tools to build out the platform independent of Pierbridge engineers, rolling out community management tools to enable those partners to automate and control customer onboarding and administration and investing in video content, training and education architectures to accelerate adoption.

The foundation has already dramatically decreased client onboarding durations from weeks to minutes, reduced the demand for customer-specific development while increasing customer engagement and transaction volumes.

While adopting WiseTech transactional pricing in evolved license structures necessarily created the short-term reduction in revenue, it serves to build exponential expansion in long-term revenue streams. Sales resources have been freed up to target new channel opportunities recently signing ConnectShip, a UPS subsidiary, as an OEM reseller, while developers have been free to focus on building more strategic initiatives such as personal shipper, a solution that will drive more transaction volumes and royalties. System adjacencies such as SmartFreight and SaaS Trans dramatically broaden Pierbridge TMS capabilities. None of this shows up in revenue yet, but the foundations are in place to supercharge the growth and development capability of Pierbridge.

With international e-commerce already creating an explosion in customs declarations, exception handling and returns complexity, crossing borders remains the biggest pain point and driver of margin erosion for providers. Now governments are catching up, moving the goalposts on low-value imports, electronic lodgements and revising costs and the usage of national postal services.

We are well placed to address the seismic changes coming. Our solution is web-enabled with international fulfillment from origin. It integrates shipping, customs, international freight forwarding, parcel, final mile delivery plus full track and trace, delivering real-time visibility for shipper, consignee, retailer and consumer. We will launch in the U.S. end of this year in line with new government regulations on low-value imports and electronic lodgements, which will allow freight forwarders, our customers, to compete with global parcel carriers and automate clearances and inject into any parcel network.

Our solution is laid globally across CargoWise, leveraging its capabilities along the competencies across our acquired strategic assets from last mile to specialist warehouse to last inch. Similarly, we accelerate convergence of technologies by adding targeted acquisitions of key adjacencies to our innovation pipeline to build valuable ecosystems and global product sets. For around $305 million upfront plus earnouts, we have accessed 450 industry experts with significant development capability in specialist logistics spaces.

The foundation progress with Pierbridge is similarly playing out across our specialist TMS adjacencies, SmartFreight, Trinium and SaaS Trans, and we have commenced integration between these adjacencies to expand the retail omnichannel strategy and also direct integration with CargoWise and international e-commerce.

We're expanding CargoSphere's capability and integration with 3 of the world's largest global ocean carriers, including Maersk and Hapag-Lloyd, plus key regional players now live on the global rates platform, highly relevant when you consider 83% of global capacity is run by the top 10 carriers.

In April, we brought in Containerchain, an additional high-value component in our global container automation and domestic landside logistics developments. With Containerchain, we will be able to provide additional visibility, notification and decision-making capability domestically on both ends of the container chain.

A few days ago, we announced the acquisition of the leading U.S. container yard solution provider, Depot Systems, which combined with Containerchain, gives us extensive U.S. coverage via its existing 200 container yards and access into the sector to solve the broader landside logistics issues.

We are building out our global integrated platform for the consumers of logistics services. CargoWise NeXus is a powerful web-based portal, targeted at connecting the importers, exporters and freight users with their community of logistics service providers, information sets and functional capabilities. NeXus leverages a considerable set of functionality and services already within the CargoWise platform, along with our global data sets and network foundation. The development of NeXus is significant and will progress over a number of years. At this stage, early beta release to selected BCOs and 3PL customers will be at the end of calendar 2020. After which, it will be launched through our 3PL customers to make it available to their customers and wider markets. In our discussions to date, our larger global customers are very positive on this important development.

We again provide an update of our LEGO map, so you can understand where our strategic assets fit together and converge with our technologies. Here is but a sample of regulatory changes underfoot and recent completions. Global trade changes and updates in tariff and regulations are a positive driver for CargoWise adoption as we are swift to market with our solution upgrades. More importantly, changes to local requirements and regulations influence logistics providers to seek updated software.

With our 36 development centers, we are well placed to move swiftly on these, along with our Brexit custom solution and the evolving U.S.-China trade requirements. And while we drive hard on all our growth levers, our operation continues to be a revenue powerhouse. You can see the strength of the platform and commercial model we have built over the long-term in the revenue trajectory. As a result, for FY '19, in addition to executing on our key strategic actions, we have also delivered revenue of $348.3 million, up 57% year-on-year. In fact, we once again earned more in this half than we did for a full year only 18 months ago. I can honestly never get tired of saying that.

In FY '19, each cohort of CargoWise customers from the last dozen years grew revenue this period just as they did in the last, while CargoWise overall continued significant organic growth during extensive business transformation, license conversions, development partnerships and pilot programs.

One of the drivers of CargoWise's continued strength is global rollouts by the world's largest freight forwarders. We have 10 in global rollout, including 7 of the top 25 and the world's largest and the world's most profitable. Rollouts take time, often many years. However, a completed rollout is still early penetration with significant increases in transaction throughputs as customers utilize productivity tools, automations and access new products and additional modules.

CargoWise can also be used as a tool of consolidation such as DSV acquiring UTi and now Panalpina. In April, we signed Bolloré Logistics, a top 10 global forwarder, who will commence deployment in FY '20 and take some years to roll out.

Organic revenue growth rose to $54.5 million, delivering 43% of our total revenue growth, reflecting increased usage across our existing customer base and new customers, new products, new customers rolling on, adoption of new products, revenue from customers rolling off temporary pricing arrangements and positive foreign exchange impact. This strong growth is despite the static nature of a number of transitional revenue arrangements, such as DHL's rollout contract which did not tend to grow year-on-year during the transition period.

In any given period, while revenue drivers can also cause large, positive lumpy movements, generally over time, organic revenue tends to grow roughly 20% to 30% each year. You can read more about organic revenue drivers, the transition of acquired to organic and license types in the appendix.

Growth from acquired businesses included: $3.2 million from acquisitions in FY '17 and prior; $19.7 million from full year impact of acquisitions in FY '18; and the $49.3 million from FY '19 acquisitions. In addition to revenue growth up 57% reflecting the execution of our strategy and the CargoWise recurring revenue of 99%, EBITDA grew to $108.1 million. EBITDA margin, while lower at 31%, actually reflected strong profitable growth, partially offset by lower margins from 35 acquired businesses.

Overall, EBITDA has more than doubled since FY '17. And in FY '19, our EBITDA margin, excluding acquisitions but including M&A costs, was 48%. As I touched upon earlier, our EBITDA efficiency is a deliberate and highly engineered outcome. A 48% EBITDA would be difficult to replicate outside of WiseTech Global because it is the result of innovation in our business model and internal architectures and a laser-like focus on building globally scalable processes to systematically remove the constraints to growth. We customize through configuration. We offer a single global price list, and we service our customers through deep education and content platforms and encourage customers through behavioral discounts to open their own first level help desk. These are but a few of the many elements that scale out efficiently.

Importantly, we continue to improve the quality of our revenues with ongoing license transitions. Excluding acquisitions, CargoWise has achieved 99% recurring revenue, with 98% of revenue from on-demand licensing.

We introduced transactional licensing or STL in 2014 for all new customers, and we are transitioning long-term existing customers. Customer conversions within on-demand to full STL progressed well in FY '19, with STL now the largest revenue component at 81% of CargoWise revenue, up from 57% in FY '18.

Acquired business revenue from onetime licensing will transition over the coming years towards on-demand and STL where appropriate. We have a proven historical expertise in customer license transition with a less than 1% attrition throughout our transition changes.

We have invested $113 million in innovation this year, although at our revenue growth rates, the ratio has trimmed slightly to 32%. During the year, we capitalized $46.9 million or 42% of our total innovation and product development spend while we ensure we fully expense maintenance, bug fixes and research costs.

The 48% increase in FY '19 R&D spend reflects significant growth in the innovation pipeline of commercializable development, accelerated acquisitions and additional investment in industry experts and skilled software developers. We intend to continue increasing our R&D investment as we grow to widen and deepen our technology pipeline.

I will now hand to Andrew to talk through the financial summary, cash flow and balance sheets.

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Andrew Cartledge, Wisetech Global Limited - CFO [4]

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Thanks, Richard, and good morning, everyone.

For completeness, this table covers revenue down to EPS, and in the appendix, you'll find the performance summary with key operating metrics for the last 3 years and the key operating metrics excluding acquisitions along with other more detailed materials.

We continue to invest in our business to support current and future growth in line with our strategic growth levers. Product design and development expenses of $66.1 million reflected our investment in the expansion and updating of our core platform and expansion and retention of our skilled development workforce. Sales and marketing expenditure was $44 million, reflecting sales and marketing expenses from strategic assets, sales commissions on CargoWise One, expansions and business development resources and supporting marketing in new adjacencies.

G&A expenses were $68.3 million, representing 20% of revenue, as we continue to invest in this area to support the increased scale of the business and the expansion of our global footprint including additional investments in M&A and the inclusion of management teams of 29 strategic assets and additional headcount and corporate functions. However, we see long-term opportunity for future efficiencies as we scale. Year after year, our high-growth CargoWise One platform generates significant levels of cash, which we relentlessly reinvest back into innovation and important future expansion. Our operating cash flow performance delivered 55% growth to $126.4 million, and the operating cash flow conversion was 117%. Free cash flow increased to $76.7 million, and the conversion ratio was 71%. Noncash items in EBITDA mainly reflect share-based payments, while working capital reflected increases in customer deposits partially offset by increase in receivables. Continued investment on development and innovation of $43.7 million is reflected in capitalized development. Other net capital investment of $6 million reflected upgrades of our data centers and costs related to expansion of office facilities.

Net cash is up 117% year-over-year, reflecting our $336 million capital raising in second half '19 and strong operating cash flows partly offset by payments related to strategic acquisitions completed in FY '18 and FY '19. We had a strong balance sheet and healthy cash generation to support our growth and strategic initiatives.

During the year, we increased our debt facility to $190 million, with a further $200 million accordion facility in place.

Increase in trade and other receivables mainly reflects the impact of acquisitions and increased organic revenue growth, while the increase in intangible assets reflects significant acquisition goodwill and continuing product investments. The increase in other current and noncurrent liabilities reflects contingent earnouts for multiple acquisitions and prepaid customer deposits.

And finally, in line with our policy to pay dividends up to 20% of net profit after tax, we declared a $0.0195 cents per share fully franked final dividend which will be paid in October 2019.

I'll now hand it back to Richard.

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Richard John White, Wisetech Global Limited - Founder, CEO & Executive Director [5]

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We are moving swiftly and with determination to grow our moat. We think long term, which has enabled us to make the investments over many years to develop 4 formidable components on which we build the operating system for global logistics.

Firstly, we sold for the global integrated platform to which we apply our relentless technology development in the pursuit of digital straight-through processing. Second, we build vast, cleansed and verified data sets to which we can apply machine learning, automations and event-driven exception management. Third, we've built a hyperscale efficient commercial model, speeds onboarding and disciplined resource usage. And lastly, we have a powerful network of CargoWise connections drawing in thousands of nodes that bring millions of further connections. Every new customer, every customers' customer, every party to a transaction, every module, every geography, every technology and every strategic asset creates further nodes and with them, exponential connections.

We have continued to deliver on our 5-lever strategy in FY '19. All of these levers are connected, and when one lever accelerates, it generates high-quality growth or acceleration in the other levers, too. This growth across the levers is apparent in our financial performance, our innovation and product pipelines and our penetration into existing and new market sectors and ecosystems.

We achieved what we set out to do with focus and discipline. Through FY '20, we will continue to execute on our 5-lever strategy. We are moving rapidly with engineered precision and at speed to execute these strategic actions as we know they will deliver exponential results in the coming years.

Given our rigorous focus, the strong momentum of the group during FY '19, the power of the CargoWise platform, annual customer attrition rate of less than 1% and continued relentless investment in innovation, expansion across our global business give us confidence to expect, subject to currency movements: FY '20 revenue of $440 million to $460 million, a revenue growth of 26% to 32%; and EBITDA of $145 million to $153 million, an EBITDA growth of 34% to 42%.

I will now open up for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question comes from Lucy Huang with Merrill Lynch.

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Lucy Huang, BofA Merrill Lynch, Research Division - Analyst [2]

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I just got 3. So firstly, on R&D. R&D spend at 32% was a slight decrease from last year. I'm just wondering moving forward whether we expect this number to trend downward over time. And also, just in relation to R&D, are you able to guide to -- or provide some color as to how much has been spent on integrating new acquisitions versus what's been spent in developing the core product? And then just secondly, sales and marketing was also slightly higher. Just wondering which regions you spent a bit more marketing on over the course of the year. Was it in Asia or the U.S. or Europe? And whether you've increased your sales staff or whether it's other type of promotional activity. And then just lastly, I know you've done a lot of acquisitions in the customs clearance space, and a lot of work has been done to integrate and to build out that module. Just wondering when this product will be launched in the market and ready for use by your customers.

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Richard John White, Wisetech Global Limited - Founder, CEO & Executive Director [3]

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Thank you for that. Let me answer the first question. I'll try to get through that impressive list of questions. So whilst R&D was down a very small amount this year, remember that we're in this war for talent. And the structure that we're really working on is how to grow that faster in the future. And in fact, in my presentation, I indicate that we're going to be increasing our R&D spend by between 30% and 40% this year. And that means that we've been working for some time on creating a better pathway into the company, being more attractive to very high-quality candidates and building systems where we can actually grow our R&D by lifting it without compromising quality. So it's really -- it's to grow at speed without compromising quality is one of the fundamentals. The second question was on sales and marketing. Okay. So we have a -- Gail, do you want to comment on that?

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Gail Williamson, Wisetech Global Limited - Chief Growth Officer [4]

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Yes, so -- thanks, Lucy. In terms of the sales and marketing, we have increased that. I think we had flagged last year that we felt it needed to go up as we're acquiring more and more business, geography -- geographically. So essentially, what it reflects is the sales and marketing expenses of those assets. There are many assets that we acquired coming into the sales and marketing line. There has been a little bit of an uptick in terms of sales because we've been bringing on some of those multiregional and global rollout customers. And we're also doing some preliminary infrastructure build in relation to marketing as we're going to be entering each of those geographic regions more fulsomely, and of course, that will play out over the next couple of years.

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Richard John White, Wisetech Global Limited - Founder, CEO & Executive Director [5]

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On the customs one, we've actually delivered a number of custom systems in what we call native mode, that means integrated fully into our CargoWise, the rocket ship that is CargoWise. And so they're now live, and they've got customers on them, and we're getting increased business from those cases. But it is not a small thing to build a custom system, and it is one of those things that happens across multiple regions. In many cases, each country has a different process. For instance, it's quite hard to do in Brazil. It's fairly easy to do in Europe. And so there are reasons why things go faster and slower. We've given a bit of guidance on that in the sort of range of those things.

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Gail Williamson, Wisetech Global Limited - Chief Growth Officer [6]

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And Lucy, I think the last part of your question was related to how much is spent on the integration in relation to the customs assets. That's all expensed in the normal course of business as we're bringing them onboard. I think we've spoken previously about how we provide our universal customs engine architecture for simultaneous builds to happen at the same time. In addition, we're just expensing all of the normal costs associated with those businesses and development teams.

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Operator [7]

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The next question comes from Jules Cooper with Ord Minnett.

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Jules Cooper, Ord Minnett Limited, Research Division - Senior Research Analyst [8]

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Look, I've got just a few. Richard, if you could -- just to elaborate a little bit on the FY '20 guidance, it's clearly the organic growth within that is strong. And I guess if you could just maybe unpack that a little bit for us so that we can maybe better appreciate what you're expecting to have happened in FY '20 in contrast to '19. Just it looks like we're sort of reaching to a higher level in the business next year. And just where you're seeing those differences relative to the current would be the first question. And then the other one is when we look a little bit further down the track, you talked to some of your largest customers being static in the rollout phase. If we were to look at DHL specifically, are you able to give us some sort of order of magnitude of what that customer might look like once they've come through that process? And then thirdly, just on the past due receivables, it looks like that's stepped up a little bit this year from very low levels historically. And I just wonder if there's anything specific that's driving that. Those are 3.

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Richard John White, Wisetech Global Limited - Founder, CEO & Executive Director [9]

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Okay. Well, I think I might give my growth officer the question about growth.

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Gail Williamson, Wisetech Global Limited - Chief Growth Officer [10]

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Sure. In terms of looking at the growth, we do continue to see the durability of CargoWise. It really is a powerhouse in terms of its ability to generate transaction revenue across the globe. So we continue to see that perform very strongly. As we mentioned, we've undertaken a lot of acquisitions, and those acquisitions are in transformation stage, which Richard walked through during the presentation. It swings around about for some of those. We're turning off some of their revenue streams, and they'll be in that stage where they're going to be growing up transaction revenue over time, but we're also restructuring a lot of the foundation for their commercial model. And so while that happens, they tend not to grow revenue significantly. We're expecting for FY '20 to be just flat or minimal growth for the adjacencies apart from adjustments for full year impact. And so the organic growth, we'll see underlying CargoWise engine will continue to perform strongly in FY '20.

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Richard John White, Wisetech Global Limited - Founder, CEO & Executive Director [11]

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And as to the second question, I will not give you specific about any one customer. That would be improper. But what I can tell you is that we do get these large, lumpy lifts from time to time. They're very hard to predict with precision. For instance, DSV has, I think, 36 hours ago, completed the acquisition of Panalpina. DSV is an excellent customer and a fantastic manager. And we know that they will work very hard and very fast to integrate that business, and we expect there to be a very positive impact. But we can't predict its extent, and it's one of those things that where many of these transitions from a stable, a flat piece to a large jump, it's very difficult to predict as a precision thing. So we don't tend to include much in our predictions because of those things.

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Gail Williamson, Wisetech Global Limited - Chief Growth Officer [12]

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And just one thing I'd like to add there. I think, Chris, you're referring to DHL being static component, and you're absolutely right. We do have some static components. So obviously that speaks to the strength of the organic growth overall because you can't grow organically on static pieces. When DHL rolls off its rollout contract, obviously, we do expect there to be -- oh, sorry, Jules, we do expect there to be a change in terms of the transaction revenue, but we haven't included that in FY '20. And it's something that we'll have better visibility of closer to the end of the rollout contracts.

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Richard John White, Wisetech Global Limited - Founder, CEO & Executive Director [13]

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Right. I think I'll hand over to Andrew for receivables.

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Andrew Cartledge, Wisetech Global Limited - CFO [14]

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Yes. I mean, obviously, on CargoWise One, we have a very efficient collection model with the way that the commercial structure is set up. We have customer deposits offsetting receivables for a lot of the cases. We offer incentives for customers to pay on time with the CargoWise One model set. That creates a very efficient structure. Any acquisitions, I'd say it's a more normal collection model. So we have some receivables that fall over into the past due buckets. They take a little bit of time to follow up and collect. Obviously, that's an opportunity for us moving forward as we transition the commercial models in those businesses into more efficient structures.

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Richard John White, Wisetech Global Limited - Founder, CEO & Executive Director [15]

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And just to add, I think we are in -- with some of those businesses, starting to work on the psychologies of those collection systems because we do have a model that underpins that. It is somewhat independent than the other parts of the WiseTech way. However, the best time to transition those things is when you move them to the new platform and then the transition is very smooth. But that will get better. It's just one of those things that you have to work on when you're growing very fast in multiple directions.

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Operator [16]

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The next question comes from Paul Mason with Evans & Partners.

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Paul Mason, Evans & Partners Pty. Ltd., Research Division - Research Analyst [17]

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The -- in terms of the acquisitions you guys have made over full year '19, although the notes to your accounts had some pro forma information in there, but I was just wondering, historically, some of the acquisitions have actually -- you've seen revenue declines because of drop in consulting fees. And I just wanted to check whether any of the acquisitions over 2019 are expected to do the same or whether you're basically expecting all those revenues that were bought to be retained this time around.

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Richard John White, Wisetech Global Limited - Founder, CEO & Executive Director [18]

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Sure. Thank you. So it's not just consulting fees. There's a series of revenue streams in these businesses that we want to turn off. And we actively look at modifying quite quickly the onetime license streams that come in because they're very had to transition to the new model if you don't -- if you sell within our brand, you sell a onetime license. Also, there is just -- not just consulting, but there's also software development as a service, and there's also training services for implementing the new versions of the legacy platform which, of course, we also want to turn off. So this depends on the business, and it depends on a number of other factors. But there is in -- some of those businesses are stepped down. On the other hand, some of those businesses are growing quite reasonably. And net-net, there's a smaller growth in those things. It's quite tiny at this stage but will grow very rapidly in the future as we transition on to the core CargoWise platform, which is a huge growth engine.

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Paul Mason, Evans & Partners Pty. Ltd., Research Division - Research Analyst [19]

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And just maybe if you'd make a quick comment around your results, $348 million versus the top end of your guidance of $339 million that you guys kind of restated in early June. Was there anything that happened in June that got you that extra $9 million to push you above the top end of the range or like -- yes, can you give us some color on how that manages obviously a great result?

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Richard John White, Wisetech Global Limited - Founder, CEO & Executive Director [20]

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There's lots of moving parts in that business. And really, the fundamental issue here is we do a lot to try to target accurately. And as the business grows, we deliver on a number of projects. One of those pieces was a large new piece of product. But it's very hard to quantify those things. Even 3 months out, it's very hard to quantify them. And so I look at this as a piece of art. You do as much sites as you can, but ultimately, you can never quite figure out the impact. And I think we just got a couple of pieces that move to the upside very late in the piece -- May and June were cracker months.

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Paul Mason, Evans & Partners Pty. Ltd., Research Division - Research Analyst [21]

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Okay. Cool. Just maybe on U.S.-China trade tensions. Historically, you guys actually have enough data to be able to track like the impacts on specific trade flows. Like have you seen much negative impact from like the ongoing trade dispute between the U.S. and China? Obviously, your revenue is -- it's not comment about the result, but more just like is there like some latent upside in your numbers if that gets resolved? Or has there been not much impact on your business?

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Richard John White, Wisetech Global Limited - Founder, CEO & Executive Director [22]

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Okay. I think that what you have to understand here is it's a world system, not a China-U. S. system. And we look at container volumes, which for us look pretty similar. We haven't seen any sort of depression of that model. I think you can see there's a strong movement of trade that seems to be moving to Taiwan and Vietnam, that seems to be an exchange. Other countries aren't affected by that. And in fact, there would probably be some positive lift in some of those countries. I haven't look at enough detail because I don't do my work economically modeling the world. I do my work economically modeling WiseTech. Now Korea, for instance, is positively reinforced by China's trade tensions. But for me, I just don't study that at a high and grand level like perhaps an economist would.

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Operator [23]

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(Operator Instructions) The next question comes from Stuart Turner with Blue Ocean Equities.

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Stuart B. Turner, Blue Ocean Equities Pty Ltd, Research Division - Senior Equities Analyst [24]

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Congratulations on a fantastic result. I was going to ask you a question about the -- on the data sets. Because I haven't really given that much thought in the past, but with 50 billion transactions per year and you're set to leverage this down into depots, container depots and presumably lots of truck drivers and people with devices that need to know where goods are as well, that could potentially be 200 billion data transactions per year very quickly.

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Richard John White, Wisetech Global Limited - Founder, CEO & Executive Director [25]

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Well, look, we've often been asked about statistical analysis for trade and other flows. And that is something that we've put in an area and thought about a number of times, but I'm a stick to the knitting kind of guy, and I think this company is driving very hard to a very important goal. Net-net, we'll be able to do something with that data because it does show trade flows and economics. But our mission is to actually simplify the supply chain and create the operating system for global logistics. And I want nothing to stand in that way, in the way of that goal, that vision. And importantly, we have -- a lot of those data transactions are very tiny transactions that have value to us and to our customers, like an event that's -- a container passing through a gate. It's not something that we, at this stage, want to monetize independently of the business, but we do recognize that it does have a value. However, the very clear message that I'm giving is short, and I think you want we to do this, is I'm going to stick to the knitting, and I'm going to focus on the goal that we've set out, and there's nothing that's going to stop me moving forward and making that happen.

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Operator [26]

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Thank you. There are no further questions at this time. I'll now hand back to Gail for closing remarks.

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Gail Williamson, Wisetech Global Limited - Chief Growth Officer [27]

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Thank you, everyone, for your time today. We really, really appreciate it. It's wonderful to get your questions and your support for the stock, and we look forward to meeting many of you in the coming days.

Thank you.

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Richard John White, Wisetech Global Limited - Founder, CEO & Executive Director [28]

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Thank you, everybody. Bye.