Thank you for standing by, and welcome to the WiseTech Global FY 2024 results briefing. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Richard White, CEO and Founder. Please go ahead.
Good morning, everyone, and thank you for joining us for our FY 2024 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 continue to execute on our 3 P 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 Topocean, Grupo TLA Logistics, as well as post-year-end, signing Nippon Express, a top ten 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 2025 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. Turning to our financial performance on slide six, in FY 2024, we delivered total revenue of AUD 1.04 billion, an increase of 28% on last year. Organically, total revenue grew by 15%.
CargoWise revenue grew by 33% to AUD 880.3 million, an outstanding result, which included the full and part year benefits of the acquisitions we made in FY 2023 and FY 2024. EBITDA was up 28% to AUD 495.6 million, with our EBITDA margin up slightly on last year at 48% ahead of expectations. Underlying NPAT of AUD 283.5 million was up 15% on FY 2023, and free cash flow of AUD 333 million was up 14%. This shows we continued 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 AUD 0.092 per share, up 10% on FY 2023, representing a payout ratio of 20% of underlying NPAT.
These results clearly show the strength of our 3 P 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 2024 financial performance in detail.
Thanks, Richard, and good morning, everyone. Starting with an overview of our financial performance on slide eight. As Richard noted, the business delivered strong revenue growth in FY 2024, with total revenue up 28% to AUD 1.04 billion, driven by strong CargoWise growth, which was up 33% to AUD 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 2023 and FY 2024. Reported EBITDA was up 28% to AUD 495.6 million, with EBITDA margin of 48%, up slightly on FY 2023 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 2023 and FY 2024, 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 AUD 8.5 million of acquired amortization from M&A. Underlying net profit after tax of AUD 283.5 million was up 15% on FY 2023, with net finance costs of AUD 14.3 million, mostly reflecting interest on our drawn debt facility over the year to fund M&A. On slide nine, you can see the split between recurring and non-recurring revenues, as well as between CargoWise and non-CargoWise revenues.
In FY 2024, recurring revenue grew by 26%, or AUD 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 2023/FY 2024 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 AUD 119.2 million, or 19% organically. Of this, AUD 100.2 million was from existing CargoWise customers and AUD 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 AUD 777.3 million at a 33% compounded annual growth rate on a constant currency basis from FY 2016 to FY 2024. 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 were 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 2024 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 2024, 38 are in production, including nine of the top 25 LGFFs. The remaining 13 are contracted and in progress, meaning they're at an earlier stage of their global rollouts.
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 2016, 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 2024, which included 4 of the top 25, have grown at a compounded rate of 260% since FY 2020, 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 in 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 one percentage point from FY 2023, with the cost efficiency program and lower M&A costs offsetting the impacts of FY 2023, FY 2024 M&A.
At our first half 2024 results, we said we expected EBITDA margins to return to 50% plus in FY 2026, and in Q4 FY 2024, we achieved an EBITDA margin run rate of 50%, a full year ahead of expectations. Product design and development expenses increased by AUD 44.6 million in FY 2023, or one percentage point of revenue, due to M&A and investments in CargoWise innovation and development. From FY 2022, product design and development expenses increased by AUD 75.4 million, with over half from organic growth. Expenses supporting maintenance of non-CargoWise platforms represented 21% of total PD&D expenses, down six percentage points on FY 2023. We expect to see further reductions in the future.
Sales and marketing expenses of AUD 79 million increased by one percentage point of revenue on FY 2023 to eight percentage points, largely reflecting acquired businesses' previous commercial models. General and administration expenses as a percentage of revenue reduced by two percentage points on FY 2023, 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 as a strategic priority. Our overall R&D investment increased by AUD 106.3 million, or 41% versus FY 2023, reflecting hiring activity, investment in the CargoWise platform, and the full and part year effects of FY 2023, FY 2024 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 2024 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 AUD 84 million at June 2024 versus June 2023. We delivered 1,135 new product enhancements on the CargoWise application suite in FY 2024, bringing total enhancements delivered to more than 5,600 over the last five years from a total investment of over AUD 1.1 billion. Increased hiring drove CargoWise product development resources up by 26% versus FY 2023, with 62% of our global workforce now focused on product development.
Moving forward, capitalized development is expected to be 50%-55% of R&D, which is our updated target range. It reflects the growing efficiency of our product development process, which, as we reduce 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 June 30, 2024, we had total liquidity of over AUD 500 million, providing significant financial flexibility and headroom to fund strategic growth opportunities. The AUD 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, AUD 500 million unsecured debt facility maturing in FY 2029, which was well supported by a diversified panel of nine banks. We repaid AUD 145 million of our debt from our strong operating cash flow generation, ending FY 2024 with a modest AUD 80 million drawn from our facility. The AUD 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 thirtieth of June, twenty twenty-three has been restated. This reflects the finalization of FY 2023 acquisition accounting. Details can be found in Note 18 of the FY 2024 financial report. Turning to our FY 2024 cash flow performance on Slide 15, operating cash flows were up 23% to AUD 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 2023, reflecting higher working capital driven by growth. Free cash flow was up 14% to AUD 333 million, with higher operating cash flows partially offset by increased product investment.
Free cash flow conversion reduced by eight percentage points on FY 2023 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 2024, remaining highly attractive when compared to SaaS businesses globally. We're very pleased with WiseTech's financial performance in FY 2024. 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. Our 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 2025, we will switch our reporting currency to US dollars.
With recent M&A and overall business growth, US 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 2025 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.
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 3 P 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 eight slides, I'm gonna 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 ComplianceWise, 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 outline 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, while 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 deliver 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 2024, 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 additional 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 thirty-eight thousand 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 2025. 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, Containerc hain, and other investments, our 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 Optimization's initial rollout is planned for late Q2 FY 2025. International trade compliance requires traders and their logistic 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. EAR, 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 perits.
ComplianceWise is planned for phase I release late in Q1 FY25. 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 third 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 2011 and FY 2023, 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 increase 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 twenty-five large global freight forwarders, Sinotrans and Nippon Express, and adding Topocean, 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 2024. 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 customs 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 2024 goal and delivered 40 million annual run rate savings, with AUD 14 million net cost out in FY 2024. The program has now been expanded for FY 2025, with an updated target of AUD 50 million in annual run rate savings. This leads me to our guidance for FY 2025 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 June 30, 2025, we expect to deliver FY 2025 revenue in the range of AUD 1.3 billion-AUD 1.35 billion, representing revenue growth of 25%-30%, with CargoWise revenue expected to grow by approximately 31%-37%. In terms of FY25 EBITDA, we expect to deliver AUD 660-AUD 700 million, representing EBITDA growth of between 33% and 41%, with the EBITDA margin exit rate at the end of FY 2025 expected to be around 53%. We expect FY 2025 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 marginal performance as we continue to execute on our three P 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 2025 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.
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We ask that questions be limited to one per person. Please rejoin the question queue for further questions. The first question today comes from Lucy Huang from UBS. Please go ahead.
Good morning, Richard and Andrew. So with my one question, just around the guidance for FY 2025, and you talk about it, there being a really strong second half view, predicated on the product launches. So just wonder if you can give us some color as to what type of contribution you're expecting to see in FY 2025 from these three big product releases, and any kind of feedback you can give us from, say, customers around of the prospects of early adoption. Just wanted to get a sense as to, you know, how confident are we on the revenues actually flowing through for the new product launches? Thanks.
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?
Yeah, 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 2025, particularly from these three breakthrough products that we've announced today. You know, revenue is forecast to be between AUD 1.3 billion and AUD 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 you know just predicated on the launch dates, which we've indicated on each of the three products.
Speaking to the products and their adoption, a number of products in the adjacencies, such as customs and warehouse, are pushing into areas where there are existing products, albeit legacy products and non-integrated products. 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. In both these spaces, 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 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.
Yeah, that makes sense. And were these trials through, like, the Early Access Program? Is that what's giving you confidence that, you know, the customer take-up would be strong?
The early access program really 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 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.
Yep. Wonderful. Thank you.
Thank you. The next question comes from Kane Hannan from Goldman Sachs. Please go ahead.
Morning, guys. Apologies for a volume question, but I just looked at your historical growth rates. I think you've called market growth being a 1% CAGR since 2016, down from a 3% driver last year. I mean, is that implying that the market growth was a 15% drag on revenues this year, which would've meant organic growth, you know, would have been north of 30% this year outside of that volume impact? Is that the right thinking?
Yeah, Kane, I mean, it is down to one percentage point of growth in that overall 33% compounded growth rate. You know, I think that indicates obviously what we talked about through the year, where we'd seen actually, you know, slower volumes, you know, coming through the market, and, that's come through in the numbers, you know, as we expected it to. That's obviously been offset by growth in other areas, and I think, you know, we've always indicated that those numbers are gonna move around, year to year. I think the thing to focus here is the 33% compounded growth rate throughout the eight-year period.
Thanks, Andrew. Yeah, it's just, it's not really implying a, you know, like, the thirty-three plus growth rate you're guiding to would be consistent with what you've done this year, which makes it, you know, strong outcome, yeah, ex- volume.
Yeah, that's right, Kane. So, on the guidance page, we've kind of got the CargoWise revenue growth in between that range of 31%-37% for the year. And you know, we are indicating that the 33% compounded growth rate is gonna be sort of continuing into the future here through FY 2025.
Awesome. Thanks, guys.
Yeah.
Thank you. The next question comes from Garry Sheriff from RBC. Please go ahead.
Hi, 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%. Sounds as though, given those three big products are coming through, it's gonna 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 AUD 114 million you've delivered versus AUD 125 million-AUD 150 million that you'd guided to. Just wanted to see if there are any issues there or anything that you're addressing on that end?
...just part of that, and then, I'll just throw it to Richard here. So look, the, the revenue skew in the second half, we delivered 52% of CargoWise revenue in the second half in FY 2024. We've indicated that the skew is gonna 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 gonna launch in the first half of the year. They'll get out there in the market, and 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, you know, really the last couple of years.
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 that, 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 standalone businesses of Blume and Envase. We don't really think about those businesses as standalone anymore. They have become part of this much greater solution, which is the Container Transport Optimization.
That market is, you know, truly huge market and 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.
Thank you. The next question comes from Bob Chen from JPMorgan. Please go ahead.
Morning, guys. Just a quick follow-up on that, revenue skew again. Just sort of doing the math here. I mean, it looks like you're more likely to hit maybe a 43%-57% skew for FY 2025. Would that be a reasonable assumption to go on?
What was the number there, Bob, you were saying?
43%-57%
Yeah, 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. You know, it's a significant step up from the 52% in the second half of FY 2024. It'll all really depend on- the rollout timing and the uptake of the products in the first half of the year here, and how quickly that happens, and the run rate going into the second half.
Great. Thank you.
Thank you. The next question comes from Siraj Ahmed from Citi. Please go ahead.
Morning, 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 product driving revenue growth? And if that's the case, and also, can you just talk to how you're thinking of rolling this out to existing customers and whether that needs a big step-up in cost? Because your guide, if it's 43%-57%, Andrew, your margin guidance seems a bit conservative, or there seems to be a big step-up in cost in the second half. Thanks.
Do you want? Yeah, look, Siraj, obviously, there's gonna be some cost that we're gonna need to add into the business to, you know, commercialize these products, bring them to market, roll them out, and get them sort of up and running. We've factored those into the guidance that we've given you today. You know, what we're seeing, though, is that, you know, from a healthy run rate where we've achieved 50% EBITDA margins on the fourth quarter of FY 2024, and that's sort of our exit rate here. We're anticipating sort of 51%-52% on the EBITDA margin, with an exit rate going into FY 2026 of somewhere, you know, around about 53%. So the business is continuing to drive leverage here.
These products will help to do that, as well as the rest of the core business.
I wouldn't think the cost of rolling out CargoWise Next. We'll upgrade a very substantial portion of the community in the second quarter of FY 2025. 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 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 proving them out to be highly essential for their businesses and cost saving.
Yeah, and Siraj, just to clarify, I think you were you asking if CargoWise Next is the major part of the growth driver? Is that what you asked?
Yeah, yeah, with-
No, it's, it-
With-
Yeah, just to confirm, no, it's across all three products.
Yeah.
Actually, CargoWise Next, as Richard indicated, doesn't have a step up in price. It's sold at effectively the same price as-
It does have a 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.
Just for clarifying, Richard, what you're saying is same price for existing processes, but there's more modules, so you still expect if they take it up, there's more revenue from that, right?
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. I can tell you that our opportunity pipeline is very strong, particularly in Asia, and we're expecting that sales momentum to continue and if anything, probably increase. It's an all factors thing, and we do this. There is a slide which shows all the contributors to growth. It is not one lever, it is many levers that we pull, and they're all operating quite effectively.
I think to try to, yeah, 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.
Thanks.
Thank you. The next question comes from Paul Mason from E&P . Please go ahead.
Hey, thanks. I was just wondering if we could get a bit of an update on how the rollout of Neo is going. Like, you know, how far through your customer base you've offered access to the product to at this point, and sort of what the trajectory for that looks like in the next year or so?
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 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.
Thank you. The next question comes from Roger Samuel, from Jefferies Australia. Please go ahead.
Well, hi, morning all, and 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, yeah, those two businesses will be cannibalized. Thanks.
Well, Andrew and I both share this question because we both have a bit to do with 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, you know, the very high-value product people that drive the industry and drive WiseTech, these are not part of cost efficiency. We will 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 de-duplication of resources, that's where that happens, and that's where the cost efficiency is coming from.
Thank you. The next question comes from Tom Beadle, from Jarden. Please go ahead.
Hi, guys. Thanks for the opportunity. Sorry, another one on revenue guidance. I guess if I look at your first half, second half split in FY 2024, it was 48%, 52% on revenue, and there was a AUD 40 million sequential step up in second half 2024 versus the first half. So with that 43%- 57% split to Bob's logic, you know, that could infer a roughly AUD 30 million step up in the second half of 2024 to first half 2025. So a little bit of a deceleration there sequentially, but then a AUD 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 uplift a bit more granularly.
Just to Kane's point, obviously, volumes were a drag on organic growth in FY 2024. So are you assuming some sequential improvement in volume growth in the second half of 2025, 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. Thanks.
Yeah. Okay, Tom, we'll try and get through that. I mean, at the end of the day, we're looking at 31%-37% growth rate in CargoWise revenue here. You know, we've really got sort of recent industry volumes running through that, so we're not really expecting, you know, 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. You know, 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 laterally 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, you know, we haven't spoken to you about before. It's all around the key growth drivers for the business. And you know, 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 second half.
Comparatively, on FY 2024, there were no new products released. We held these product backs 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.
Great. And I guess just, sorry to, I guess, harp on the point, but is that sort of, y ou know, I know you're not going to go into precise numbers first half to second half, but is that quantum of acceleration, that estimate, sort of up, call it AUD 180 million sequentially in the second half there? Just 'cause I guess it has implications for, for how we think about FY 2026 as well.
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 the following years.
Yeah, Tom, I'll just add to what Richard said there. I think, you know, we're not going to give you guidance here for FY 2026 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 will the new customer wins and all the other factors that drive growth in the business. So, you know, don't start forecasting FY 2026, you know, to be any significantly different from what we've historically done here. These things will be contributors to that growth rate.
We're off to a much, much larger-
Great, thank you.
We're off a much larger base, of course, as well, so you've got to consider the base effect here.
Yeah. Gotcha. Okay, great. Thank you.
Thank you. The next question comes from Nick Basile from CLSA. Please go ahead.
Morning, Richard and Andrew. Just a question, I think for Richard, on Next. You talked a lot about the specific examples. Or 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, you know, quite a few times that you're addressing white space, so just be helpful to understand a specific example of where the Next feature set is assisting your customers.
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 are caused because the container's 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 an 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 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's 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, at export and import, much more expensive than it should otherwise be because of the inability to optimize those things.
Thanks, 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?
Yes, correct.
will be quite impactful. Yeah. Thanks.
Thank you. 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 fifteen 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. Please go ahead.
Thanks for taking my question. I'd like to ask a long-term question. So I think over the past couple of results, it's become clear that this is a winner-take-all or winner-take-most industry. Especially given that your customers are performing at 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 ten customers, take into account just existing products, no price increases, or customers taking market share? Thank you.
I'm not sure I. That was a bit muffled to me. Can you just ask that last part of the question again, please?
So specifically, the upside for the top 10 customers without just focusing on specific existing products, no price increases or your customers taking market share. Thanks.
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. 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 out 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 customs 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 customs system, it takes time, and it's more painful. The uniqueness of the two new products we've announced is there, there's no replacement product. These are 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 have a 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 of the differentials that we have, why we revolutionized the industry, and how we do that through these deep product differentiations.
Thank you.
Thank you. The next question comes from Andrew Wial, from Macquarie. Please go ahead.
Giles is my last name. Thanks. And just on the price rises, guys, if I may, 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, you know, offsetting inflation, but you know, in the past it has been, you know, deeper monetization of product as well. I was just wondering how we can think about that for FY 2025, thanks.
I don't wanna. I wanna 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 and 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 it's our key marketing strategy.
Perfect. And then just one more quick one, if I may. Just on kind of the headcount growth in product design and development, is it safe to say, you know, these new white space areas, there's a fair bit of sort of additional white space that you can look to address, given you've hired extra headcount?
The industry. I do 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're continuing 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, tune, and then look around and see what the next best space to go in is.
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 levied against logistics companies in that space are 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. Even jail sentences are being levied for bad behavior in that space. That's a significant thing. As I said, in container transport, it is a very complex business with a lot of moving parts, and nobody's been able to solve for 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 perennial problem that everybody's trying to fix, but they're only trying to do it in tiny pieces. We're trying to do it in a macro level and getting all of the pieces working correctly.
Thank you.
Thank you. The next question is a follow-up from Lucy Huang from UBS. Please go ahead.
Thank you. I just wanted to ask you, Richard, if you could give us some more color around the Nippon Express contract win. So just, you know, 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 customs capabilities and maybe landside if they've kind of looked at it in its early days? Thanks.
Yeah, 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 on the red-eye, so I managed to sleep in aircraft four days in a row. But I think the way that 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 to number eight in the world, certainly a top ten, and I think number six, someone just said to me. So typically they would take a long time, and this is a relatively short timeline. 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, the 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 a core legacy system that we're replacing, but then there are hundreds of small systems that sit around that. And if you have a hundred 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 a hundred 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.
All right. Thank you. Thanks.
Thank you. The next question is a follow-up from Kane Hannan from Goldman Sachs. Please go ahead.
Hey, guys. Thanks for the follow-up. Just you're talking about margins being back at 53% when you end 2025, your net cash, this iteration of major procure leases, you know, looks to be finalized. I mean, is this setting you up for another round of a pretty significant M&A into 2026, and then maybe that's contributed to your decision to retire, Andrew? Or are we comfortable letting margins grind sort of into the mid- to high-50s% over time?
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 you're doing big, 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.
Thank you. The next question is a follow-up from Siraj Ahmed from Citigroup. Please go ahead.
Thanks, Richard and Andrew. Just getting a few questions on revenue visibility, right? Just in terms of these new products, Richard, I appreciate that you're saying these are the white space, but how will 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've 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 that WiseTech potentially could directly provide BCOs with a freight forwarding management or a TMS. Do you reckon that will ever eventuate if it does? Thanks.
Okay, so I'm gonna 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, 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 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 offer to their customers.
Crossing the Rubicon, 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 BCO relationship.
Yeah, 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, you know, a period of time here at the end of first half in FY 2025. But, you know, for container transport optimization, as we indicated, as we went through the slides today, that's a progressive rollout. We're gonna start on the East Coast of Australia with that and bring it to that market, and then we'll move it to the US West Coast, and then it'll roll out globally from there. So, you know, this is a staged rollout. It's not, you know, a big bang where we're going global with the product first.
But we expect, you know, that it'll take up pretty quickly as we roll out, given the benefits that it provides to our customers.
And even ComplianceWise, we'll have two phases. It'll have a, 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 one is the sort of late this quarter. Phase two will be, you know, well after that.
Thank you.
I think we're coming to the end of our thread here, aren't we?
Yes, that's right. That is, towards the end of the briefing. I'll hand back to Richard White to close the session.
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 avatar, the English avatar will be up, but the translations for Japanese, in deference 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. Thank you again.
We look forward to seeing you and hearing from you soon, again soon. Bye, everyone.