WiseTech Global (WTC.AX), a leading provider of software solutions for the logistics industry, has reported strong financial results for the fiscal year 2024. The company achieved a 50% EBITDA margin run rate in the fourth quarter, ahead of schedule, and announced the addition of new clients for their flagship product CargoWise. Total revenue increased by 28% to $1.04 billion, with EBITDA up 28% to $495.6 million.
WiseTech introduced three new products aimed at optimizing logistics and compliance, and declared a final dividend of $0.092 per share, up by 10% from the previous fiscal year. The company also provided guidance for FY '25, projecting revenue between $1.3 billion and $1.35 billion and EBITDA between $660 million and $700 million.
Key Takeaways
- WiseTech Global's total revenue reached $1.04 billion, a 28% increase from the previous year.
- EBITDA rose 28% to $495.6 million, with an underlying NPAT of $283.5 million.
- The company announced a final dividend of $0.092 per share, a 10% increase from FY '23.
- WiseTech introduced three new products: CargoWise Next, Container Transport Optimization, and ComplianceWise.
- For FY '25, revenue is expected to be between $1.3 billion and $1.35 billion, with EBITDA projected at $660 million to $700 million.
Company Outlook
- WiseTech Global plans to switch to reporting in U.S. dollars from FY '25.
- The company anticipates a revenue skew towards the second half of FY '25, driven by new product launches.
- WiseTech aims to drive shareholder returns through its high-growth SaaS model, focusing on efficiency and cost reduction.
Bearish Highlights
- The company acknowledges that growth rates achieved in the past may not be sustainable in the future, although confidence in long-term prospects remains strong.
Bullish Highlights
- Large Global Freight Forwarder rollouts, new product enhancements, and ongoing R&D investments are key growth drivers for WiseTech.
- The company has a strong pipeline of sales opportunities, especially in Asia.
- Positive customer feedback for the early access program of the product Neo, which enhances the platform's attractiveness.
Misses
- There are no specific misses mentioned in the provided context.
Q&A highlights
- CEO Richard White emphasized WiseTech's strategy to grow through product innovation and efficient systems rather than price increases.
- The company's M&A strategy will focus on small, targeted acquisitions to enhance the CargoWise platform.
- New product rollouts will be progressive, starting with specific regions like the East Coast of Australia.
WiseTech's strategic vision to become the operating system for global logistics is underscored by the release of breakthrough products designed to enhance cost efficiency and compliance. The company's solid financial performance and strong balance sheet, with over $0.5 billion in liquidity, provide a stable foundation for future growth. As WiseTech continues to invest in product development and streamline its operations, it remains committed to delivering value to its clients and shareholders. With translations of the earnings call to be made available in multiple languages, WiseTech Global demonstrates its dedication to its international customer base.
Full transcript - None (WTCHF) Q4 2024:
Richard White: Good morning, everyone, and thank you for joining us for our FY '24 results briefing. Before we look at the financials, I'd like to call out the highlights we are sharing today. Firstly, we delivered a strong result, especially at the EBITDA level due to a solid lift in margin as we can execute on our 3P strategy. Our EBITDA margin run rate in the fourth quarter was 50%, which we achieved a full year ahead of schedule. Secondly, penetration of our world-leading CargoWise solution has continued with the addition of TIBA Tech, Grupo TLA Logistics, as well as post year-end signing Nippon Express, a top 10 global freight forwarder and the largest Japanese freight forwarder, taking us to 52 large global rollouts and more than 50% of the top 25 with Nippon. Thirdly, we are announcing three breakthrough products that present a substantial advance in product capability. CargoWise Next, our fourth-generation web-enabled feature-rich platform; Container Transport Optimization, which dramatically extends our landside logistics capability; and ComplianceWise, which builds on our customs and compliance functionality and will include capabilities in trade compliance and Gen AI-driven customs classification assistance. These and the many other actions we continue to take create a strong foundation for FY '25 and beyond. I would like to acknowledge the team of almost 3,500 people around the world for their passion, dedication and focus. Together, we are revolutionizing the global logistics industry and creating extraordinary value for our customers. Turn to our financial performance on Slide 6. In FY '24, we delivered total revenue of $1.04 billion, an increase of 28% on last year. Organically, total revenue grew by 15%. CargoWise revenue grew by 33% to $880.3 million, an outstanding result, which included the full and part year benefits of the acquisitions we made in FY '23 and FY '24. EBITDA was up 28% to $495.6 million, with our EBITDA margin up slightly on last year at 48%, ahead of expectations. Underlying NPAT of $283.5 million was up 15% on FY '23 and free cash flow of $333 million was up 14%. This shows we continue to deliver high-quality earnings that give us plenty of financial headroom to execute on our growth plans. The Board declared a final dividend of $0.092 per share, up 10% on FY '23, representing a payout ratio of 20% of underlying NPAT. These results clearly show the strength of our 3P strategy and execution capability as well as our ability to deliver strong, profitable growth and attractive returns to shareholders while balancing long-term investment for the future. Andrew will now take you through our FY '24 financial performance in detail.
Andrew Cartledge: Thanks, Richard, and good morning, everyone. Starting with an overview of our financial performance on Slide 8. As Richard noted, the business delivered strong revenue growth in FY '24, with total revenue up 28% to $1.04 billion, driven by strong CargoWise growth, which was up 33% to $880.3 million or 19% organically. Gross profit was up 26% with gross profit margin of 85%, down one percentage point, diluted as expected by M&A in FY '23 and FY '24. Reported EBITDA was up 28% to $495.6 million with EBITDA margin of 48%, up slightly on FY '23 and ahead of where we expected it to be. Importantly, the EBITDA margin in the fourth quarter returned to 50%, a full year ahead of our expectations, as Richard mentioned, with six percentage points of dilution from acquisitions in FY '23 and FY '24, more than offset by operating leverage and cost efficiencies. EBIT grew by 27%, reflecting an increase in depreciation and amortization, driven by continued R&D investment and an additional $8.5 million of acquired amortization from M&A. Underlying net profit after tax of $283.5 million was up 15% on FY '23, with net finance costs of $14.3 million, mostly reflecting interest on our drawn debt facility over the year to fund M&A. On Slide 9, you can see the split between recurring and nonrecurring revenues as well as between CargoWise and non-CargoWise revenues. In FY '24, recurring revenue grew by 26% or $204.3 million excluding the impact of FX. This was driven by price increases to offset the impact of inflation and to generate returns on product investment, further large global freight forwarder rollouts and FY '23, FY '24 M&A. On the right-hand side of the slide, you can see the contribution from the strong organic growth in CargoWise revenue, which was up $119.2 million or 19% organically. Of this, $100.2 million was from existing CargoWise customers and $19 million was from new customers. This growth reflects price increases and LGFF rollouts. Importantly, CargoWise customer attrition remains extremely low at less than 1% every year for the last 12 years, demonstrating the stickiness of the CargoWise platform for customers and emphasizing the significant long-term value generated from CargoWise customers under our SaaS model. Turning to our revenue growth drivers on Slide 10, as you can see on the left-hand side, over the last eight years, our CargoWise recurring revenue has grown by over $777.3 million at a 33% compounded annual growth rate on a constant currency basis from FY '16 to FY '24. On the right, you can see the contribution of each of our major CargoWise recurring revenue drivers to that growth with Large Global Freight Forwarder rollouts, by far, the most significant driver of growth having contributed 11 percentage points of the 33% CAGR. New product enhancements reflected in our pricing and inorganic growth with the next largest contributors, with new and existing customer growth, major new product releases and finally, growth from the underlying market, making up the balance of our growth. Importantly, this shows that the overwhelming majority of our growth is driven by factors that we can influence, making it much less sensitive to market volatility, giving us far better visibility and confidence in future revenues. Looking ahead, we expect future CargoWise recurring revenue growth to be driven by Large Global Freight Forwarder rollouts, new products and features derived from acquisitions as well as from ongoing R&D investments, including our three breakthrough product releases, CargoWise Next, Container Transport Optimization and ComplianceWise, which Richard will talk about shortly. As demonstrated throughout these FY '24 results, we can accelerate our growth by deploying our sizable balance sheet, strong liquidity and operational cash generation while utilizing our proven M&A experience to grow and scale our product development capability. Turning to Slide 11, you can see the revenue growth trajectory from our large global freight forwarder rollouts. Of the 51 global rollouts in place at the end of FY '24, 38 are in production, including nine of the top 25 LGFFs. The remaining 13 are contracted and in progress, meaning they are at an earlier stage of their global rollout. From a revenue perspective, you can see that these 38 global rollouts in production have delivered a compounded annual growth rate of 37% since FY '16, with top 25 global freight forwarders having grown at an even higher CAGR of 41% over the same period, showing the attractiveness of these large global rollouts. Looking ahead, we expect growth from a range of sources. The 13 global rollouts that were contracted and in progress in FY '24, which included four of the top 25 have grown at a compounded rate of 260% since FY '20 and still collectively have less than 45% of their expected users currently live on CargoWise. This demonstrates the significant potential revenue upside from customers progressing through their initial rollouts. The size of the expected user base not currently live on CargoWise has increased by 14%, with new contract wins more than offsetting continued rollouts from existing customers. Our existing 38 customers with global rollouts and production will also continue to drive revenue growth as their global rollouts and product penetration continue to expand, and they add new products and features, including customs, warehouse and over time, our three breakthrough product releases. We also anticipate future revenue growth will be driven by continued logistics industry consolidation and additional large global freight forwarder contract wins. On Slide 12, you can see our operating expenses and how we continue to drive ongoing operating leverage. Overall, operating expenses, as a percentage of revenue were down 1 percentage point from FY '23 with the cost efficiency program and lower M&A costs offsetting the impacts of FY '23, FY '24 M&A. At our first half '24 results, we said we expected EBITDA margins to return to 50% plus in FY '26. And in 4Q FY '24, we achieved an EBITDA margin run rate of 50%, a full year ahead of expectations. Product design and development expenses increased by $44.6 million in FY '23 or 1 percentage point of revenue due to M&A and investments in CargoWise innovation and development. From FY '22, product design and development expenses increased by $75.4 million, with over half from organic growth. Expenses supporting maintenance of non-CargoWise platforms represented 21% of total PD&D expenses, down 6 percentage points on FY '23. We expect to see further reductions in the future. Sales and marketing expenses of $79 million increased by 1 percentage point of revenue on FY '23 to 8 percentage points, largely reflecting acquired businesses' previous commercial models. General and administration expenses, as a percentage of revenue reduced by 2 percentage points on FY '23 or were flat year-on-year at 13% of revenue, excluding M&A costs. Turning now to Slide 13, where you can see our R&D investment, which as previously communicated, has, over the last two years, deliberately accelerated as we focus on innovation and product development is a strategic priority. Our overall R&D investment increased by $106.3 million or 41% versus FY '23, reflecting hiring activity, investment in the CargoWise platform and the full and part year effects of FY '23, FY '24 M&A. Overall, this represents a reinvestment of 35% of our revenue in R&D, which is up three percentage points year-on-year. 53% of our FY '24 R&D investment was capitalized, up two percentage points on last year. This reflects increased development process efficiency and continued investment in future products, which can be seen in development costs for work-in-progress R&D increasing by 55% to $84 million at June '24 versus June '23. We delivered 1,135 new product enhancements on the CargoWise application suite in FY '24, bringing total enhancements delivered to more than 5,600 over the last five years from a total investment of over $1.1 billion. Increased hiring drove CargoWise product development resources up by 26% versus FY '23 with 62% of our global workforce now focused on product development. Moving forward, capitalized development is expected to be 50% to 55% of R&D, which is our updated target range. It reflects the growing efficiency of our product development process, which is we reduced defects and rework, allows us to spend more time efficiently developing new value-creating products and less time maintaining existing products. Moving to Slide 14, you'll see how our strong balance sheet and liquidity provide a solid platform for future growth. At 30 June 2024, we had total liquidity of over $0.5 billion, providing significant financial flexibility and headroom to fund strategic growth opportunities. The $218.5 million increase in intangible assets was driven largely by investments in capitalized development and M&A, partially offset by amortization. In October 2023, we refinanced our debt with a new five-year $0.5 billion unsecured debt facility maturing in FY '29, which was well supported by a diversified panel of nine banks. We repaid $145 million of our debt from our strong operating cash flow generation, ending FY '24 with a modest $80 million drawn from our facility. The $107.8 million increase in share capital reflects M&A consideration and new shares issued to the employee share trust to fund our employee equity programs, which represent less than 1% of our issued share capital. These are a key component of our plan to support staff retention, attract high-quality talent and encourage long-term value creation across our workforce, with almost 90% of our employees holding shares or share rights. You'll note the comparative information for the year ended 30th of June 2023 has been restated. This reflects the finalization of FY '23 acquisition accounting. Details can be found in Note 18 of the FY '24 financial report. Turning to our FY '24 cash flow performance on Slide 15. Operating cash flows were up 23% to $531.1 million, demonstrating the strength of our highly cash-generative operating model. During the year, we increased the reinvestment of our operating cash flows to support long-term growth initiatives, primarily in product development. Our operating cash flow conversion rate of 107% was down 5 percentage points on FY '23, reflecting higher working capital driven by growth. Free cash flow was up 14% to $333 million, with higher operating cash flows, partially offset by increased product investment. Free cash flow conversion reduced by 8 percentage points on FY '23 to 67%, reflecting increased R&D investment. Taking the sum of our total revenue growth and free cash flow margins, our Rule of 40 was 60% in FY '24, remaining highly attractive when compared to SaaS businesses globally. We're very pleased with WiseTech's financial performance in FY '24. The business is continuing to grow strongly with EBITDA margins returning to 50% ahead of our expectations and underlying earnings and cash flow remaining strong. A highly cash-generative business model and strong liquidity continue to provide a solid platform to fund long-term sustainable growth. Before handing back to Richard, I want to take a moment to let you know that from FY '25 we will switch our reporting currency to U.S. dollars. With recent M&A and overall business growth, U.S. dollars has become the most significant component of our currency mix. Switching reporting currency to U.S. dollars allows us to manage our FX exposure more efficiently and aligns us to the predominant currency used in international logistics. After our Investor Day at the beginning of December, we'll provide a set of retranslated financial results and FY '25 guidance in U.S. dollars so that you have ample time to absorb them prior to our first half results in February 2025, which will be reported in U.S. dollars.
Richard White: Thanks, Andrew. WiseTech's strategic vision is to be the operating system for global logistics and the momentum we are building towards achieving this vision is accelerating. We have the capability and capacity that no one else in the industry has. We are achieving outcomes that have real impact for our customers and the industry we serve. Through the consistent execution of our product-led 3P strategy, we are revolutionizing major parts of the global logistics ecosystem as we expand our capabilities across our six-key development priorities. Our international freight forwarding capabilities have brought many of the industry's largest players onto CargoWise, a single global platform with a revolutionary business model, something that was considered impossible. CargoWise is making it easier for large global players to operate efficiently and effectively and has driven vast improvements across the industry. In our quest to be the operating system for global logistics, we remain focused on our core market and our move into the close adjacencies of customs and compliance, landside logistics and warehouse. This deep focus on our strengths and careful expansion of our product capabilities has led to important product breakthroughs in many areas of CargoWise. For the next 8 slides, I'm going to take you on a deep dive into the how and the why of WiseTech and CargoWise's core competitive strengths, differentiators and efficiencies. Firstly, our product's competitive strength has three distinct axes. As a product-led innovator, we have a long-term strategy of building breakthrough products to revolutionize, not to simply replace. We look to find fundamental flaws, operating problems, inefficient models and incomplete or ineffective processes and to embed and automate improvements so that we revolutionize the industry's established model. We have done this very effectively with CargoWise's international freight forwarding capabilities and the competitive result is clearly visible on Slide 26. Similarly, with global customs, the warehouse suite and soon, with the planned release of Container Transport Optimization and compliance wise, we are not simply offering a me-too product or a simple upgrade from an aging legacy system. We are providing a dramatically better business model embedded in the CargoWise application suite. In the appendix, we outlined some of the key business model and product differentiators provided to customers by CargoWise. Secondly, because of the many cost and management efficiencies achieved through CargoWise, we are driving value for our customers across their entire cost base, which I will talk to more in detail on the next slide. Finally, the operating model delivered by CargoWise creates substantial cost efficiencies and global management simplicity. This enables industry consolidation through M&A and the rapid successful and profitable integration of acquired businesses, whilst also driving competitive advantage and profitable organic growth. CargoWise delivers cost efficiencies in four distinct layers. About 30% of our customers' total costs sit within operating expenses from legacy IT systems costs and operational labor costs. The remaining 70% of our customers' cost base is from the direct costs of air, sea, rail and road transport and from surcharges, fines and penalties related to the management of these transport services. Starting with IT cost efficiency, many freight forwarders still have outdated in-house legacy IT systems built 20 to 30 years ago. They are inflexible, complex and expensive to maintain and are supplemented at great cost with hundreds of smaller satellite systems, many of which are also legacy systems with their own costs and risks, including cybersecurity. CargoWise customers replace these myriad legacy systems with a single, global, modern, efficient and fully integrated platform that dramatically reduces IT costs and risks. The second cost efficiency involves tackling the labor costs required to deliver the planning, execution and management of the movement of goods from point of origin to final destination. International freight forwarders are asset-light service providers. They have large global workforces in each locale, often with a full management hierarchy, managing the local businesses and processing the local requirements. Many of these procedures are manually executed, often requiring the rekeying of critical data multiple times into many separate satellite systems. CargoWise provides a single comprehensive global system that streamlines and automates many of these procedures, removing much of the original data entry and avoiding rekeying data multiple times. With CargoWise, it is also simple to visualize plan, manage and control globally from a single location and to move low-value work to lower-cost locations. Export offices or shared services centers can perform most of the critical tasks, including data entry, leaving the often higher-cost import location a much smaller set of tasks. All this allows our customers to extract much greater value by substantially improving operational yield. The third cost efficiency addresses fines, penalties and unwanted surcharges on the movement of cargo. Aging legacy systems have many costs, complexities and risks and can't keep up with the rapidly changing compliance obligations that govern global trade. Because they're unable to comply or optimize effectively, many logistics providers build in margins or substantial budgets to cover fines and penalties or attempt to pass incidental surcharges on to their customers. The fourth cost efficiency is freight cost efficiency. Given the global scale of CargoWise and its integration with electronic schedules, rates, booking, tracking, job costing and account settlement, CargoWise customers are able to acquire and optimize transport services much more efficiently than ever before, improving freight utilization, negotiating better rates with carriers, optimizing packing and movement and allowing economies of scale to become more price competitive and improve unit economics and the value delivered to their customers. By creating substantial cost benefits over time through these four layers of cost improvements, customers also consume more CargoWise services, which drives ongoing long-term revenue growth for WiseTech. WiseTech's approach to its business operations is sophisticated and unique. We delivered both revenue growth and cost efficiency. We run our global business on a specialized version of CargoWise with extensive automations and staff R&D and admin activities driven by the PAVE workflow engine. Customer billing, reporting, software support incident reporting, sales processes, product development, software release, software licensing, defect management, patch and upgrade deployment, database upgrade and system health checks are all automated processes. And we actively look for additional repetitive processes to automate. In product and development, our strong focus on automation and quality work practices creates high-value product and we detect, analyze and prevent causes of defects and rework early in the development life cycle. The result is evident in the improving rate of capitalized development versus maintenance expense. In FY '24, we added Gen AI development tools and an upgraded developer education program, further assisting software development productivity, ensuring that every dollar we invest in R&D returns more and higher quality product. Our substantial product development budget is larger than any of our peers. And as we improve our product development yield, we become even more competitive, giving our customers and shareholders substantial and digital benefits. Now I'll explain in more detail our three breakthrough product releases and note how each links directly to the four layers of cost efficiency discussed earlier. CargoWise Next is our new next-generation platform. It will provide access to a comprehensive set of major new features, modules and capabilities. It is a deep reengineering of the CargoWise architecture while retaining the user experience for the entire community of CargoWise users, including more than 38,000 CargoWise certified users. CargoWise Next also includes an identical web-based model, creating significant additional IT cost savings and further reducing labor costs through additional automations and new applications of Gen AI. Container Transport Optimization brings together our landside logistics investments and innovations and will dramatically improve and optimize the cost and management of containers moving through the export and import landside community, reducing freight costs, delays and unnecessary surcharges. ComplianceWise, expands and deepens our customs border and trade compliance capabilities. With extended functionality in international trade compliance and export and import classification assistance to help protect customers from compliance breaches and audit failures resulting in customer loss, reputational damage and substantial fines, penalties and sanctions. With the release of CargoWise Next, our fourth generation web-enabled platform, allowing a simple, smooth and automatic upgrade from CargoWise One, customers will be able to access a range of major new features as outlined on the slide. The pricing for CargoWise Next will be the same as our current pricing for CargoWise One features. CargoWise Next gives our customers additional IT and labor cost improvements through a large set of powerful new capabilities and productivity improvements. New optional features and capabilities available only in CargoWise Next will enable further revenue growth for WiseTech, make CargoWise even more attractive and allow CargoWise Next customers to further reduce costs, increase competitive capability and provide additional value-added services to their customers. CargoWise One will be put into maintenance mode and all new development will be targeted at CargoWise Next. CargoWise Next is planned for release to the majority of CargoWise customers starting in early Q2 FY '25. Our acquisitions in landside logistics have plotted a deliberate path to our Container Transport Optimization plans. Container transport at the point of export and the point of import demands a complex mix of transport requirements for each container move. The cacophony of poorly optimized movements, empty or dead transport legs, truck wait times, wharf storage, container detention, futile trips, delays and other unnecessary surcharges, fines and penalties are a major cost in any international movement of containerized goods. The acquisition of MatchBox Exchange, a successful and unique online container reuse and exchange marketplace, along with our other acquisitions, including Envase, Blume, Trinium, Containerchain and other investments are increasingly rich data sets and recent product developments are all key components of container transport optimization. Export and import landside logistics are substantial cost components of any international containerized movement and Container Transport Optimization will revolutionize the industry. Container Transport Optimization will be progressively rolled out across our key markets, starting with the East Coast of Australia, then later the U.S. West Coast and then other markets based on value. Container Transport Optimizations' initial rollout is planned for late Q2 FY '25. International Trade Compliance requires traders and their logistics partners to accurately know the what, the where and the who of each trade. These facts deal with denied parties, sanctions, strategic goods, dual-use goods and many other obligations such as Wassenaar, U.S. EAAR and many other conventions, laws and regulations, navigating the complex due diligence required to maintain compliance with the law and regulations related to international trade and the movement of goods is fraught with complex risks, penalties and sanctions. ComplianceWise, with deep functionality in trade compliance and Gen AI-driven classification assistance, builds on our existing customs and compliance capability. It provides our customers with a sophisticated approach to diligently identifying the what, where and who of each international trade prior to export loading and well in advance of import processes that may also require licenses or permits. ComplianceWise is planned for Phase 1 release late in Q1 FY '25. While these three new products are distinct in their capabilities, they will all be critical and value creating for our customers to manage international trade and transport. More details on our product initiatives will be discussed at our Investor Day on the 3rd of December. With all these facts considered, you can see how our top 25 customers in production on CargoWise significantly outperform their peers. This is clearly demonstrated by the data from Armstrong & Associates, which tracks the top 25 global freight forwarders marine container volumes. Our in-production top 25 large global freight forwarder clients have grown container volumes by 82% between FY '11 and FY '23 compared to 12% for the remaining top 25, a staggering difference. This compelling customer result is driven by the way we revolutionize international logistics through breakthrough innovation. From all the factors you've seen in this and previous slides, our high-efficiency product development, the significant stream of breakthrough capabilities flowing into CargoWise, the progress we continue to make winning new major global logistics customers and our large customers' ability to grow faster than their peers all drives further adoption of CargoWise. What does all this mean for our customers' organic and inorganic growth? CargoWise customers can generate significant additional value over time and gain competitive advantage from a lower cost base across the four layers of cost efficiency I detailed earlier, with better visibility, planning, management and control on a global basis, our customers can offer better services while maintaining a lower cost to serve. Additionally, customers can execute value-accretive M&A consolidations, followed by rapid low-risk integrations that increased the scale, global reach, buying power and economies of scale CargoWise customers can achieve. CargoWise creates organic and inorganic pathways, which can accelerate competitive advantage compared with those with aging in-house legacy and hybridized systems. The strong momentum I referred to at the beginning of the presentation is evidenced by winning a further two global rollouts of top 25 and large global freight forwarders, Sinotrans and Nippon Express and adding TIBA Tech, Yamato Transport, Grupo TLA and APL Logistics, bringing us to a total of six new large global freight forwarder rollouts signed since the start of FY '24. The opportunity pipeline across the world's major economies is also strengthening and is especially strong across the Asian region. In addition, many customers are continuing to build on their global rollouts by adding customers and warehouse implementations organically as they are needed or become available in CargoWise. ComplianceWise and Container Transport Optimization will also drive these additive growth capabilities. We are focused on driving shareholder returns through our high-growth scalable SaaS model. We are both growth and cost focused, and we continue to enhance our operating leverage. Our company-wide efficiency program has achieved its FY'24 goal and delivered $40 million annual run rate savings with $14 million net cost out in FY '24. The program has now been expanded for FY '25 with an updated target of $50 million in annual run rate savings. This leads me to our guidance for FY '25 and our continued strong growth outlook. Our guidance is based on the assumptions we have set out here and in the appendix of our investor presentation. Assuming there are no material changes to these assumptions and no unforeseen events that arise prior to the 30th of June 2025, we expect to deliver FY '25 revenue in the range of $1.3 billion to $1.35 billion, representing revenue growth of 25% to 30%, with CargoWise revenue expected to grow by approximately 31% to 37%. In terms of FY '25 EBITDA, we expect to deliver $660 million to $700 million, representing EBITDA growth of between 33% and 41% with the EBITDA margin exit rate at the end of FY '25 expected to be around 53%. We expect FY '25 revenue to have a significant second half bias due to the timing of new product launches and uptake. We have delivered a strong track record of revenue, EBITDA and cash flow growth since our listing on April 11, 2016, delivering 33% revenue CAGR, 41% EBITDA CAGR and 49% free cash flow CAGR really demonstrates the focus on our strategy and the strength and resilience of our business model. To wrap up, I want to reiterate the highlights of this presentation. We have delivered a strong result, especially at the EBITDA level due to a strong margin performance as we continue to execute on our 3P strategy. Penetration has continued across our key development areas, while the momentum in our opportunity pipeline is building everywhere, especially within Asia. Our three breakthrough product releases CargoWise Next, Container Transport Optimization, and ComplianceWise will present a step change in our product capabilities, growth and value to customers. FY '25 will be a strong year, and it is a truly exciting time for our business, our global team and our customers. For 30 years, we've been challenging the status quo, thinking of breakthrough ideas that revolutionize global logistics and continuing to build capabilities that are delightfully better for our customers and their customers. We cannibalize that which needs to be superseded, improve that, which is imperfect, and add that which is missing. And we are having fun doing it. There is huge potential ahead of us as we continue to do what no one else in the industry can do. The team and I look forward to updating you on our progress in the months and years ahead, including at our Investor Day on December 3. Before opening for questions, I would like to mention the useful links we have included on the Q&A slide, including the links to Andrew's and my avatars in which we deliver this result presentation translated by AI into multiple languages. So, let's open for questions.
Operator: [Operator Instructions] The first question today comes from Lucy Huang from UBS.
Lucy Huang: So, with my one question, just around the guidance for FY '25. I mean talk about there being a really strong second half you predicated on the product launches. So, I just wonder if you can give us some color as to what type of contribution you're expecting to see in FY '25 from these throughput product releases? And any kind of feedback you can give us from, say, customers around the prospects of early adoption? Just wanted to get a sense as to how confident are we on the revenues actually flowing through for the new product launches?
Richard White: I'll let Andrew talk to the revenue, and I'll talk to the products and how they will push into the market very, very quickly. Andrew?
Andrew Cartledge: Yes. Lucy, thanks. It's a good question. So, I think, overall, we're very pleased with the performance of the business and the outlook going into FY '25, particularly from these three breakthrough products that we've announced today. Revenue is forecast to be between $1.3 billion and $1.35 billion for the year, with CargoWise revenue component of that up between 31% and 37%. What we've said in the guidance today is that we really are reflecting a second half timing bias for these products coming through into the revenue stream. And that's just predicated on the launch dates, which we've indicated on each specific products.
Richard White: So speaking to the products and their adoption. A number of products in adjacencies, such as customs and warehouse are pushing into areas where there are existing products, albeit legacy products and nonintegrated product, and so that requires quite a bit of effort and time for those products to be adopted. The two products we're talking about here sit in a vacant space, which is desperately in need of improvement. And in both these bases, there's no competitive product. And what we're offering is a solution to a serious problem that has very substantial costs and risks around it. So the differential here is that the product that we -- that these two breakthroughs and CargoWise Next as well are going to be much more quickly adopted than you would have it when you're trying to do an upgrade of an existing product by replacing it. So, I hope that makes sense, but that's the timing issue.
Lucy Huang: That makes sense. And were these trials through, like, the early access program? Is that giving you confidence that the customer take-up would be strong?
Richard White: The early access program really, it was adopted because of Neo and a number of major features that are in CargoWise Next. We're very sophisticated in how we build product, and we do work with customers privately and through this -- the [EIA], the early access program publicly. But in these two products, we've been very careful to build them out in a competitive sense in a relatively quiet and very specific way. But as I said, the real key here is that they're replacing -- not replacing a product. You don't have to squeeze something out to get something in. You don't have to do an implementation of a new product against an old product. You're simply solving a really painful problem that doesn't require the replacement of an existing product, and that means that the rollouts can be much, much faster.
Operator: The next question comes from Kane Hannan from Goldman Sachs (NYSE:GS).
Kane Hannan: Apologies for a volume question. If I just look at your historical growth rates, I think you've called market growth being a 1% CAGR since '16, down from a 3% driver last year. Is that implying that the market growth with a 15% drag on revenues this year, which would have meant organic growth would have been north of 30% this year outside of that volume impact, is that the right thinking?
Andrew Cartledge: Yes. Kane, I mean it is down to 1 percentage point of growth in that overall 33% compounded growth rate. I think that indicates obviously what we talked about through the year, where we've seen, actually, slower volumes coming through the market, and that's come through in the numbers as we expected it to. That's obviously been offset by growth in other areas. And I think we've always indicated that those numbers are going to move around year-to-year. I think the thing to focus here is the 33% compounded growth rate throughout the eight-year period.
Kane Hannan: Just not really implying like a 30%, 30%-plus growth rate you're guiding to would be consistent with what - on this -- which makes it outcome ex-volume.
Andrew Cartledge: Yes. That's right, Kane. So, on the guidance page, we've kind of got the CargoWise revenue growth in between that range of 31% to 37% for the year. And we are indicating that, that 33% compounded growth rate is going to be sort of continuing into the future here through FY '25.
Operator: The next question comes from Garry Sherriff from RBC.
Garry Sherriff: Richard and Andrew, just following up from Lucy on that second half revenue skew. I guess the last five years, it's averaged about 55%. It sounds as though, given those three big products that are coming through, it's going to be larger than that. Just wanted to confirm that, that is the way we should be thinking. And then secondly, just around your acquisition contribution, it seems you've missed at the lower end of guide. Have there been any steps made to address those issues. I think it was about $114 million you've delivered versus $125 million to $150 million that you've guided to. Just wanted to see if there are any issues there or anything that you're addressing on that end?
Andrew Cartledge: Yes. I'll answer the first part of that, and then I'll just throw it to Richard here. So, look, the revenue skew in the second half, we delivered 52% of CargoWise revenue in the second half in FY '24. We've indicated that the skew is going to be significantly more than that. And I think you can kind of see that from the launch dates on the three new breakthrough products. They're going to launch in the first half of the year. They'll get out there in the market, then we'll have customer take up and the volumes will grow through the second half. And that's why it's much more skewed into second half this year than it has been over, really, the last couple of years.
Richard White: Two things I'll add to that, again, the same real response that I gave to Lucy. Because these products are not displacing another product, but they're solving a fundamental problem that hasn't been solved properly before, we don't have this -- the very slow build of a replacement product. These are filling a gap, and that gap is a very significant gap, which will save a lot of money when implemented. So, that's why the product skew is faster in the second half. But equally, it's also not particularly interesting to think about the stand-alone businesses of Blume and Envase, we don't really think about those businesses as a stand-alone anymore. They have become part of this much greater solution, which is the Container Transport Optimization. And that market is a truly huge market, and it will take time to roll out across the world. But we bought Envase we bought Blume, we bought MatchBox and we've done a lot of internal development and have still got some more to do in order to create this new solution, which dramatically changes the way that container transport operates worldwide. That's the real driver here, not the revenues coming from Blume and Envase, which actually are being cannibalized in order to build this much bigger revenue.
Operator: The next question comes from Bob Chen from JPMorgan (NYSE:JPM).
Bob Chen: Just a quick follow-up on that revenue skew again. Just sort of [indiscernible] here, I mean, it looks like you're more likely to hit maybe 43%, 57% skew for FY '25? Would that be a reasonable assumption to go on?
Andrew Cartledge: What was the number there, Bob, you say?
Bob Chen: 43%, 57%.
Andrew Cartledge: Yes. Look, I think that's sort of within the type of range that we're looking at here in terms of how we see the second half of the year playing out. It's a significant step-up from the 52% in the second half of FY '24. It'll all really depends on the rollout timing of -- and the uptake of products in the first half of the year here and how quickly that happens and the run rate going into the second half.
Operator: The next question comes from Siraj Amit from Citi Group.
Siraj Ahmed: Richard and Andrew, just -- can you just clarify on these three new products. Is it really that we should be thinking Next is the main new products driving revenue growth? Is that the case? And also, can you just talk to how you think you're rolling this out to existing customers and whether that needs a big step-up in cost? Because you guide -- if it's 43%, 57%, Andrew, your margin guidance seems a bit conservative, or there's going to be a big step up in costs in the second half.
Andrew Cartledge: Yes. Look, Siraj, obviously, there's going to be some costs that we're going to need to add into the business to commercialize these products, bring them to market, roll them out and get them sort of up and running. We factor those into the guidance that we've given you today. What we're seeing though is that from a healthy run rate where we've achieved 50% EBITDA margins on the fourth quarter of FY '24, and that's also sort of our exit rate here. We're anticipating sort of 51% to 52% on the EBITDA margin with an exit rate going into FY '26 of somewhere around about 53%. So, the businesses continue to drive leverage here. These products will help to do that as well as the rest of the core business.
Richard White: I wouldn't think the cost of rolling out CargoWise Next, will upgrade a very substantial portion of the Community in the second quarter of FY '25. That, we've done before, we're not new to this particular model. This will be our fourth generation product. So, we've done these upgrades multiple times. We know that they -- how they work and what they should be doing. And the other products, as we talked about before, are entering a white space area. So, it's much easier to get the products to work, give people access to them and have them -- have them prove -- proving them out to be highly essential for their businesses and cost saving.
Andrew Cartledge: Yes. And sorry, just to clarify, I think were you asking if CargoWise Next is the major part of the growth driver? Is that what you asked?
Siraj Ahmed: Yes.
Andrew Cartledge: Yes. Just to confirm, no. It's across all three products. Actually, CargoWise Next, as Richard indicated, doesn't have a step up in price. It's sold at effectively the same price.
Richard White: That's in number of new major modules and capabilities, and they are optionally available for customers to use. But we are very keen to make sure that customers know that CargoWise Next will be the same cost envelope as CargoWise One, but it will contain much more value for the customer.
Siraj Ahmed: Just -- so just clarifying Richard, what you're saying is same price, existing process, but there's more modules, so you still expect if they take it up, there's more revenue from that one?
Richard White: So you've got to think of it as -- it's not a static marketplace. So, yes, there would be more revenue from CargoWise One, additional modules, including Container Transport Optimization and the ComplianceWise. But what we're really achieving here is growth through new customers. As you saw with Sinotrans and Nippon Express. And I can tell you that our opportunity pipeline is very strong, particularly in Asia, and we're expecting sales to -- that sales momentum to continue, and if anything, probably increase. So it's an all-factors thing. And we did do this. There is a slide which shows all the contributors to growth. It is not one lever, it has many levers that we pull, and they were all operating quite effectively. I think to try to carve out one piece of the growth and say that's it, it just doesn't work that way. We grow on all the metrics.
Operator: The next question comes from Paul Mason from E&P.
Paul Mason: I was just wondering if we could get a bit of an update on how the rollout of Neo is going? Like, how far through your customer base you've offered access to the product to, at this point, and sort of what the trajectory of that looks like in the next year or so?
Richard White: Yes. Thank you. That's a good question. So, Neo has been offered through the early access program. And we've got some hundreds of customers running Neo and it's had very, very strong reviews. We are continuing to develop Neo. Neo is not a static product, just as CargoWise Next is not a static product. all of our future investments go into those products. And I think from the perspective of customer feedback, we're getting great results from Neo. We have said many times, though, that Neo is not the revenue generator that people perhaps think it is. CargoWise Next will be because of its ability to grow and bring new customers on and to add new facilities. And these other products that we talked about, including Container Transport Optimization and ComplianceWise, they have key breakthrough things that really improve the industry's cost base. But again, Neo is not driving revenue. It's a part of the whole the whole platform, which is driving revenue. Neo just makes our product much more attractive, much easier to use and to access for our customers' customers. It also lowers the cost of serving those customers because the user experience and the model inside Neo actually has a lot to do with how you get labor out of the logistics company and give power and capability and visibility to their customers.
Operator: The next question comes from Roger Samuel from Jefferies Australia.
Roger Samuel: Well done on a great result. My question is on your cost efficiency program. Which areas of the business are you targeting? And I'm just wondering if there's more cost coming out of Blume and Envase, given that, yes, those two businesses will be cannibalized.
Richard White: Andrew and I will both share this question, because we both have a bit to do in this. I think it's always important. I think we've said in the presentation that we're very effective cost managers. And we're also very effective growth creators. And one of the things you have to do in any business at scale when you buy a business, you have to look at duplication. You have to look at efficiency. You have to look at job performance. A majority of the work that we do in this cost area is to look at what is needed in the business versus what is present. And I think you probably heard, through my talk, how much we focus on automation and how much we focus on ensuring that the systems that we run are highly effective and efficient. And so when you do that, sometimes you're inheriting a business that's got a lot of manual processes and a lot of old style processes. WiseTech is not like that. And so therefore, over time, we're looking at getting rid of some of those costs. Now, when we're talking about the software engineers and the very high-value product people that drive the industry and drive WiseTech, these are not part of cost efficiency. We'll always deploy high-value talent into the right places. But if you've got highly duplicative things or you've got wasteful things, that's where automation, that's where deduplication of resources, that's where that happens. And that's where the cost efficiency is coming from.
Operator: The next question comes from Tom Beadle from Jordan.
Tom Beadle: Sorry, another one on revenue guidance. I guess if I look at your first half, second half split in FY '24, it was 48%, 52% on revenue. and there was a $40 million sequential step-up in second half '24 versus the first half. So, with that 43%, 57% split to Bob's logic, that could infer a roughly $30 million step-up in the second half of '24 to first half '25. So, a little bit of a deceleration there sequentially, but then a $180 million plus sequential uplift in the second half. So, I just firstly wanted to confirm that those quantums are in the ballpark. And then just help me bridge that up with -- a bit more granularly? Just to Kane's point, obviously, volumes were a drag on organic growth in FY '24. So, -- are you assuming some sequential improvement in volume growth in the second half of '25 which might explain some of that growth in addition to the new product launches? It'd just be helpful if you could split out that growth by volume versus product launches versus all of your other growth drivers, if that's possible.
Andrew Cartledge: Yes. Okay, Tom. We'll try and get through that. The -- I mean, at the end of the day, we're looking at 31% to 37% growth rating in CargoWise revenue here. We've really got sort of recent industry volumes running through that. So, we're not really expecting some massive change in industry volumes to come through and drive an enormous amount of revenue growth here, either in the first half or the second half of the year. This is about the things that we have done previously to drive growth. It's new customer wins. It's existing customers growing on the platform. It's some of the new large global forwarders starting to produce revenue and to continue to grow their revenue as they roll out on the platform. And then gladly, in the first half and then into the second half of the year, it's these three new breakthrough products that we've talked about today, really starting to pick up and drive growth into the second half of the year. So, it's nothing that we haven't spoken to you about before. It's all around the key growth drivers for the business, and it's amplified by these new products that we'll launch in the end of first half and start to produce a lot of revenue in the second half.
Richard White: And comparatively, on FY '24, there were no new products released. We held these products back to make them complete and mature. And so we're just dealing with -- effectively with the new products coming in on the timings we gave you in the script. I think that's pretty clear what we're saying in terms of the timing of those things.
Tom Beadle: Right. And I guess just -- sorry to, I guess, harp on the point, but is that sort of -- I know you're not going to guide to precise numbers first half to second half, but is that quantum of acceleration, that estimate sort of, call it, $180 million sequentially in the second half there just because I guess it has implications for how we think about FY '26 as well?
Richard White: I think you should look at the growth rates that we've been achieving over the long term and use those going forward, don't get ahead of yourself here because these products fill a white space, so they'll go in quickly, but they won't continue to grow at that rate in following years.
Andrew Cartledge: Yes. Tom, I'll just add to what Richard said there. I think we're not going to give you guidance here for FY '26 at this point. What you've got to think about is the long-term growth rate that we've had in the business. We've indicated that revenue is growing between 20% and 30%. We expect to see that continue moving forward. These new products will be a part of that, as well the new customer wins and all the other factors that drive growth in the business. So, I don't start forecasting FY '26 to be any significantly different from what we've historically done here. These things will be contributors to that growth rate.
Richard White: And we're off a much larger base, of course, as well. So, you've got to consider the base effect here.
Operator: The next question comes from Nick Basile from CLSA.
Nick Basile: Richard and Andrew, just a question, I think, for Richard on Next. You talked a lot about the specific examples -- sorry, could you talk about specific examples of direct freight costs your customers incur and the link between the new product features within Next that help optimize those direct freight costs? I think you've mentioned quite a few times that you're addressing white space. So, it'd just be helpful to understand a specific example of where the Next feature set is assisting your customers .
Richard White: Yes. Thank you. That's a great question. We're talking specifically about Container Transport Optimization. And I actually mentioned, in the talk, the details of those specific costs. We're talking about dead legs, which means where the truck is moving without a load on board, where there's no revenue associated with that leg. We're talking about wharf storage, delays at the gate causing the truck to wait. We're talking about container detention charges, which, of course, because the containers [were] not returned on time. We're talking about futile trips and various other surcharges that occur in that chain. The container transport is an extremely expensive piece of capability that is -- has been very, very difficult to disrupt until now. And that is a direct freight cost. It is a very substantial part of any international move has a container transport movement at the origin, at the export point and another container transport move at the destination and those containers have to be retrieved from a depot as an empty in the case of export and they have to be returned as an empty on the import side. So there's a number of facets of that. We're not going to get into the details of how we do this until we release this product in the late second quarter. But there are substantial cost outs that are going to be able to be done for the industry by making the entire part of that transport component much more efficient. Now generally, we're talking about freight transport. Freight costs are really the direct costs of the businesses and better buying is one of those things, better optimization, which is what we're talking about with container transport and also economies of scale, better packing and so forth. So there are a lot of different pieces that can optimize freight costs. The specific one we had talked about for this product and in this discussion were all the things that make container transport at origin and destination, that export and import much more expensive than it should otherwise be because of the inability to optimize those things.
Nick Basile: And I guess it's important for us to realize that you're calling out the direct freight costs are a much bigger part of the overall expense base for your customers, so these products that address that...
Richard White: Yes, correct.
Nick Basile: Will be quite impactful, yes.
Operator: We are now nearing the end of the briefing, but since there are still several questions waiting to be asked, we'll extend the briefing for another 15 minutes for those that wish to stay, and thank you all for your attendance today. The next question comes from Roy Van Keulen from Morningstar.
Roy Van Keulen: I'd like to ask a long-term question. So, I think over the past couple of results, become clear that this is a winner-take-all or winner-take-most industry, especially given that your customers outperform and take market share. So, I'd like to ask a question about market size. Could you comment specifically on how much upside you see in your top 10 customers, taking into account just existing products, no price increases or customers taking market share?
Richard White: I'm not sure I -- that was my fault [to make]. Can you just ask that last part of the question again, please?
Roy Van Keulen: Also specifically the upside for the top line customers without -- just focus in specific existing products, no price increases or your customers taking market share?
Richard White: First of all, I think I just wanted to make a relevant comment here. I think what we've shown here is the size of our moat. We have a very, very substantial capability in this industry and competitively, we stand way above anybody else in this space. Our customers are really not freight forwarders in the traditional sense of the word. We use that word all the time because that's the way the industry talks. But they're really integrated global logistics providers. And the integrated part means that they have all these ancillary functions right from the point of order through the point of manufacture, delivery, export-transport move, export-transport across sea, air, rail and road. And then on the import side, customs exports, customs import, warehousing, all these components are valuable and valid parts of their service delivery. And our key focus has been and is very successfully, that, international freight forwarding piece. But we stand shoulder to shoulder with all the other components, and we now have products in the landside logistics space, the global customer space and the warehouse space, and these products are breakthrough products that are changing the way the industry works. So, there's a lot of upside for existing customers. I did say that when you're trying to displace an existing legacy product like a warehouse or a custom system, it takes time and it's more painful. The uniqueness of the two new products we've announced is there's no replacement product. There's a white space areas that need fixing. So, some of this will be substantial growth more rapidly. Some of it will be slower growth but very consistent growth. But in all cases, we stand with very strong ability to win business against a market that doesn't have an equivalent product because of its integrations and all of the features and functions that we have. And there's a slide in the appendix, which details all the differentials that we have, why we revolutionize the industry and how we do that through these deep product differentiations.
Operator: The next question comes from Andrew Gillies from Macquarie.
Andrew Gillies: Gillies is my last name. And just on the price rises, guys, if I may. So, I was just wondering if sort of next year, we can think about sort of a similar cadence for price rises. Obviously, you called out offsetting inflation. But in the past, there has been deeper monetization of product as well. I was just wondering how we can think about that for FY '25.
Richard White: I don't want to -- I want to be very clear that the move to CargoWise Next does not require any price rises. In fact, we're giving that as a strong assurance to everybody, obviously, our customers. The best way we can grow the business is to monetize our investments by adding a lot more additional value. We do put price rises in because we're in a technology industry and the inflation rate is a little bit higher than the normal rate of most economies. But that said, our goal is to not use price rises to grow the revenue. Our goal is to use products that change the way the world operates, change the way the logistics operates to grow the business. That's our key investment strategy. It's our key product strategy and that's our key marketing strategy.
Andrew Gillies: Perfect. And then just one more quick one, if I may. Just on kind of the head count growth in product design and development. Is it safe to say these new white space areas, there's a fair bit of sort of additional white space that you can look to address given you [found] extra head count?
Richard White: The industry -- I did actually talk about this in the script and the deck in some detail. We spend a lot of time trying to think about what the industry should do differently and why it should be operating on a different model. The original forwarding system really broke that ground and revolutionized the business model for international freight forwarding, and we continue to do that in all the spaces. Customs, for instance, is definitely doing that. This container transport piece is definitely doing that. But we're taking these steps in a very considered way. You don't run out and try to do 10 things at once. You've got to build, deliver, implement, churn, and then look around and see what the next best space to go in. There is a lot of white space, but we're talking about the big pieces that we're attacking here. I think international compliance generally. Classification and all the pieces around trade risks, that's a very big and important piece. And some of the fines that have been levered against logistic companies in that space in the tens of millions of dollars, so there's a lot of money that's going towards those things, and there's a lot of problems to fix. And even jail sentences are being levied for bad behavior in that space. So, that's a significant thing. And in the -- and as I said, in container transport, it is a very complex business with a lot of moving parts, and nobody has been able to solve that. Our scale gives us data and capabilities and visibilities that no one else has. And we're using that to create a substantially better solution to a very -- for a perennial problem that everybody is trying to fix, but they're only trying to do it in tiny pieces. We're trying to do it in at a macro level and getting all of the pieces working correctly.
Operator: The next question is a follow-up from Lucy Wang from UBS.
Lucy Huang: I just wanted to ask if you -- Richard, if you could give us some more color on the Nippon Express contract win. So, just how long roughly is the rollout period looking like for this particular customer? And is it mainly to do with the traditional air and sea freight modules? Or are we seeing them looking to take on some of the kind of new custom capabilities and maybe landside if they've kind of looked at it, it's early days?
Richard White: Yes. So, the Nippon Express deal is quite recent. I was in Japan last Tuesday, in fact. I went in on the red eye and came out in the red eye, so I managed to sleep in aircraft four days in a row. But I think the way to look at this is that for most customers now, they're taking up warehousing components, particularly the transit and the product warehouse, and they're taking up customs where possible. There is always this squeeze out of existing products when that happens. But in the forwarding space, when we do that, it goes in pretty quickly, and it's certainly going in much faster than it used to. I'm not actually sure of the entire rollout time for Nippon Express. I think it's about three years. Three years, okay. And that's relatively fast. Nippon is something like the number six, the number eight in the world, certainly a top 10. And I think -- number six, someone just said to me. So, typically, they would take a long time, and this is a relatively short time line. And the customers are increasingly moving more quickly because the value creation of pushing out quickly is much higher than the pain and cost of going quickly. But the fundamental issue here is that we are getting better traction on the ancillary products, adjacencies, such as customs, landside and warehouse. And we now have, in that marketing and sales space, very specific actors, very specific capabilities that we're working with customers to help them move out their legacy components. Because the industry is beset with this sort of hybridized system, where you've got core legacy system that we're replacing. But then there are hundreds of small systems sit around that. And if you have 100 small vendors in your platform stack, you have an impossible-to-control cybersecurity risk. It's just no longer reasonable or even it's incredibly dangerous and probably very hard to insure when you have 100 small vendors. Most of the big attacks in cybersecurity come by attacking a small vendor and then penetrating through that small vendor, a large company who can afford to pay the ransoms. Those activities are becoming increasingly dangerous, and our system doesn't have that problem. It is a single system with a single attack surface. We have deep cybersecurity capabilities. But again, these things all roll out as the customer needs them and as we push them into those additional areas. Thank you, Lucy.
Operator: The next question is a follow-up from Kane Hannan from Goldman Sachs.
Kane Hannan: Just -- you're talking about margins being back at 53% when you end '25. Your net cash deceleration, major product releases looks to be finalized. I mean just sitting up for another round of a pretty significant M&A into '26, and then maybe that's contributed to your decision to retire, Andrew? Or are we comfortable letting margins grow in sort of into the mid- to high 50s over time?
Richard White: So I can tell you that we have a continuous M&A program that is acquiring small tuck-ins and footholds. That program, if anything, is accelerating slightly. And the effect on margins for that program is very small. Meanwhile, we're also working on the efficiency of the business, which tends to take up any downward pressure on margins because of those M&As. I think doing big M&A, it's a lot harder to control the margin cost in those sort of situations. But our preference is small, targeted deals, tuck-ins that add a lot of value to CargoWise and footholds that extend our customs and compliance capabilities across the world and make us a complete system for international logistics.
Operator: The next question is a follow-up from Siraj Ahmed from Citigroup.
Siraj Ahmed: Rich and Andrew, just getting a few questions on revenue visibility, right? Just because FY '24 came at the low end. Just in terms of these new products, Richard, I appreciate that you're seeing this is in the white space. But how do you sort of assume the rollout take up, right? Are you assuming most customers take it up in the sort of guidance? Just keen to understand how you thought about it? And secondly, just on Paul's question on Neo, Richard. I appreciate that you're not looking to monetize it near term. I've heard some industry feedback with why is it potentially could directly provide BCOs with a freight forwarding management product EMS. Do you reckon that will eventuate if it does?
Richard White: Okay. So, I'm going to answer the BCO question first. We are very dedicated to our customers who are international -- global logistics providers, integrated global logistics providers. And anything we do with BCOs will be offered through our customers to those BCOs. Obviously, we'll have some relationship with beneficial cargo owners and supply chain executives as part of our mantra. But our total focus is to help our customers do better business. And of course, we're dealing not just with freight-forwarders is now. We're dealing with shipping lines as well, and we have relationships with a number of the big shipping lines, MSC, CMA, CGM, Maersk, et cetera, and we have good partnerships with shipping lines as well. But our fundamental is to use our customers and give them a benefit to offer to their customers, crossing the river, come as it were and starting to sell aggressively and directly to their customers would -- in my very strong view, be not effective, and it would actually cause problems. We really want to support our existing customers. And any BCO relationship we would want to have, we want to have that so that our customers are being front and center in that BCA relationship.
Andrew Cartledge: Yes. And Siraj, just to sort of answer the visibility question. I mean each of these products is rolling out slightly differently. CargoWise Next, for example, will roll out to the majority of our customers quite quickly over a period of time here at the end of first half in FY '25. But for Container Transport Optimization, as we indicated, as we went through the slides today, that's a progressive rollout. We're going to start on the East Coast of Australia with that and bring it to that market. And then we'll move it to the U.S. West Coast, and it'll roll out globally from there. So, this is a staged rollout. It's not a big bang where we're going global with the product first. But we expect that it'll take up pretty quickly as we roll out given the benefits that it provides to our customers.
Richard White: And even ComplianceWise will have two phases. It'll have an initial phase which will be global but it'll address one set of problems. And then there's another piece that's coming after that, which we didn't really talk about in detail, that addresses another piece of the puzzle. So, Phase 1 is the sort of late this quarter. Phase 2 will be well after that. I think we're coming to the end of our thread here, aren't we?
Operator: Yes, that's right. That is towards the end of the briefing. I'll hand back to Richard White to close the session.
Richard White: So well, so thank you for all of you for being with us on this earnings call and hearing about these important milestones and our progress. I'd like to thank the finance team, the Investor Relations and the comms team and all the many people who assisted us in bringing this information to marketplace. And I'd like to thank the WiseTech team for making WiseTech what it is today. Before I go, the avatars will -- avatar -- the English avatar will be up, but the translations for Japanese, in difference to our new Japanese customer Nippon, French, German and some other languages will be up later today. They just take a bit more translation time because of the way that this translation tool works. And so thank you again. We look forward to seeing you and hearing from you soon -- again soon. Bye, everyone.
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