WiseTech Global Limited (WTC) Earnings Call Transcript

Hi. Good morning, everybody, and welcome to WiseTech Global's 2024 Investor Day. I'm told we have over 100 fund managers and analysts in the room, excluding the WiseTech team, and many more joining us online via the webcast. For those of you who I haven't met, my name is Richard Dammery, and I'm the Chair of the WiseTech Board. I acknowledge the traditional custodians of the land on which each of us meets today here in Sydney, the Gadigal people of the Eora Nation, and I pay my respects to their elders, past, present and extend that respect to all First Nations people today in the places that we meet. When I took over as Chair earlier this year and traveled around to meet shareholders, I received strong feedback about how much you wanted to see the depth and quality of the WiseTech team and hear more about the company. Our last Investor Day was during COVID, and I promised you that we would have this Investor Day today in person, and here we are, and thank you very much for coming. Today is designed to allow you to deepen your understanding of the company, see our key people in action and experience some of the unique ways that we think about growth. We're a global team of 3,500 people and growing, a team that has deep knowledge of the intricacies and complexities of the global logistics industry. I want to acknowledge Richard White. He had the vision, the tenacity and the huge intellectual horsepower to imagine and build this great company. And Richard's commitment to WiseTech remains as strong today as it has ever been. His new role changes nothing in that regard. I also want to acknowledge my Board colleagues who are here today: Maree, Charles, Fiona, Lisa and Michael. We're a very collaborative Board and we recognize the unique context that we are governing here at WiseTech. We look to set high governance standards without being slavish followers of fashion, if I can put it that way. What makes this business successful and its place in the Australian capital market is unique. And as a Board, we look to understand deeply and nurture what has made the company successful as well as keeping 1 eye on how we evolve WiseTech for a bigger and better future. Governance and culture are 2 sides of the same coin. I've never seen a company with a great culture and poor governance, and I've never seen a company with great governance and a poor culture. There's at least a correlation, if not a causation happening here. WiseTech's credo begins up on the screen here begins, our culture is not by accident, our creativity is by design. Easy to say but not easy to build. I hope by the end of today, you will have a better feel for this. Strategy undoubtedly brings focus and direction, but its culture, supported by ways of working, process is designed to deliver consistent excellence that fuel passion and dedication and which lead to consistent execution. At its essence, WiseTech through the application of our technology is transforming the logistics industry globally and delivering efficiencies, productivity and profitability across the global supply chain. We do this by replacing manual paper-based processes with more secure automated and highly efficient digital solutions. Today, you'll be hearing from a range of the WiseTech team members and learning about the WiseTech way of doing things. We're intending to provide 3 opportunities through the course of the day to ask questions. We'll be taking questions from the floor with roaming mics available and for the attendees joining us via the webcast, you can submit your questions via the portal and the WiseTech team will make sure these are picked up too. Can I now introduce our 2 moderators today. Caroline Pham, where are you, Caroline? Caroline's over there. Caroline Pham is WiseTech's Interim CFO. She's been a key part of the WiseTech team for more than 8 years and has played an integral role in building out the finance function over this time. Mark Hall, down here, is Head of Acquisitions and Integration and joined WiseTech 9 years ago. Mark leads deal execution and overseas the integration process to fully embed acquired businesses within the WiseTech model. I hope you enjoy today. Thank you again for coming, and a special thank you to those of you who have traveled from overseas. I'll now hand over to Andrew.

Thanks, Richard. I'm extremely pleased to welcome you all to today's Investor Day. Firstly, in my new role as Interim CEO, I've been enjoying working together with the wider WiseTech team. The senior management team and I have been working closely together over this period of transition, and exploring opportunities and ways to continue to drive growing progress throughout the business. I'm impressed by everybody's passion, constructive attitude and desire to work together across functions. You'll get to meet and learn today from the team and hear from many of them joining the sessions. As Richard said, our last Investor Day was during COVID, that was actually 4 years ago. As an organization, our vision remains unchanged, to be the operating system for global logistics. But over those 4 years, we've grown and progressed significantly, not only in the size of our team, our global footprint, but also in the breadth and capability of our technology and the penetration we've achieved amongst the top 25 global forwarders and the top 200 logistics service providers. We now have more than 50% of the top 25 global freight forwarders rolled out or in the process of rolling out our leading logistics execution platform CargoWise. Over the course of today's sessions, you'll hear about how we're revolutionizing an industry. We've been doing this in steady, thoughtful and strategic ways, slower today, faster forever. One of our mantras lies at the heart of how we approach all the industry challenges and pain points we tackle and solve. For 30 years, WiseTech Global has been learning, refining and scaling this approach. Our strong culture built on innovation and collaboration has been and will continue to be pivotal to our success. This culture is embodied by our talented and knowledgeable people whose dedication and expertise drive our ongoing growth and continuous improvement. We have the capability and the capacity that no one else in this industry has. Our commitment to adding value for our customers and the industries we serve is unwavering, and we achieved this through consistent execution of our product-led 3P strategy: product, penetration and profitability. The momentum we have for the future is substantial. Our strategic investments in technology, our relentless focus on adding value for our customers and our ability to adapt the ever-changing logistics landscape positions us well for continued success. We're not just keeping pace with the industry changes. We're leading the way setting new standards and driving the evolution of global logistics. As we look ahead, we're excited about the opportunities that lie before us and are confident that the best is yet to come. Thanks for joining us today.

Thanks, Andrew. Welcome, everyone. As Richard said earlier, my name is Mark Hall, I'm Head of Acquisitions and Integration at WiseTech. Just before we start the fireside chat, there's a few housekeeping points that I want to take you through. The day will conclude at 5:30 here in Sydney. After that, there will be a short networking session for those of you actually here and present. Lunch will be a 40-minute break and we'll have a 20-minute break later on in the afternoon. During these breaks, the webcast will be paused. The agenda is on the back of your lanyards, if you've not seen that already. There'll be 3 sessions for Q&A, a short session after the fireside chat. And then after lunch, there will be a session that covers the WiseTech way. And then towards the end of the day, there'll be another Q&A session for the -- in relation to the product sessions. [Operator Instructions] When you submit your questions, for those of you in the room, if you could please try and make those relevant to the particular session. That will be really helpful. We'll get through as many questions as we can. And if we don't cover them all off, we'll try and cover those later. Please keep your phones on silent. There's complementary WiFi for the hotel. I think it's under a Bumble Marriott or something like that doesn't say a W Hotel. W Sydney has a 2-tone alert system for evacuation. In case of emergency, a beep alerts will be sounded throughout the affected area while they investigate the cause of the alarm. In this event, guests are requested to remain where they are while waiting for further instructions. If we are required to evacuate, the alert tone alarm will change to a whopping noise with a please evacuate instruction. That's actually meant to be a whooping noise probably not whopping noise. But anyway, let's say that. In that event, whether it's whopping or whooping, the team at W Sydney will take control of the proceedings with staff directing us to the closest evacuation route and escort us to appropriately assembly area located by the circular fountain near ICC Sydney. A reminder that W Sydney is a no smoking hotel. The allocated smoking area for guests is located outside the hotel premises. Nothing more specific than that. I think it's just outside. And lastly, if you do have any questions or need to speak to someone, please don't hesitate to ask one of the WiseTech team. They're the ones wearing the white lanyards as we go then. Now time for our fireside chat. So please welcome to stage: Richard White, Richard Dammery, Andrew Cartledge.

Thanks. So Richard Dammery, start with you, if I can, please. WiseTech is 30 years young this year. We've had great growth. We passed AUD 1 billion of revenue this year. We're highly profitable. We finished with EBITDA margins of around 50%. We've got an enviable customer base, and that's all been built on a huge amount of product investment. At the same time, Richard White has stepped down from his role this year. How do you and the Board see that? Is this an inevitable sort of outcome of a sort of a mature and growing founder-led business? Or is it -- is there an unwanted distraction for the business?

This hasn't been rehearsed by the way, just so you know. It's not like I've been practicing my answers to these questions a week. I think it's a natural part of the evolution of the company as we've talked about. Richard and I have been -- since I took over as Chair, fact before I did, we've been talking about how do we think about making sure that WiseTech can fulfill its full potential. And it's one of, I think, Richard's signature strength and distinguishing characteristics is that I think you're probably one of the longest term thinkers that I've met actually in business. And so thinking about how we set the company up in 5 years is not a particularly challenging time horizon for us. I think it's fair to say we're here. And so we've been having that conversation and we're now enacting something. And I think here we are. I was saying to somebody beforehand, we were having a few issues back in October, you might agree. We've had an AGM since then and now here we are for the Investor Day. The company is stable. Andrew's in role and doing what the Board wants him to do. Caroline is in her role, and we're getting on with it. And we're very much looking forward in the sense of looking at what we need to do now through to the end of this year and beyond that into the coming years, and we've got a very good plan.

What was the rationale for the reporting structure when you were discussing this with Richard?

Quite simply, Richard coming into this role, which is going to be a significant role. Richard is not going anywhere. Richard's going to be focusing, as we've said repeatedly, on the things that he enjoys, and he can talk about that in his own words shortly. But on the things that we think are going to add maximum value to the company. And people said, "Oh, well, isn't having -- is not going to make the CEO's role impossible? Isn't having dual reporting structure going to be too complicated?" Well, no. I mean, we're a pretty collaborative place. Ultimately, the Board's got a role here to make sure that this evolution of the system works. And to that extent, therefore, we've set both Richard, in terms of his role and Andrew as CEO, will report to the Board. So far, so good, but it's early days, right?

And how -- I will ask Richard later. But from your perspective, Richard Dammery. How do you think Richard will benefit from not having to focus on some of the things that he was doing as CEO and just being focused on product and growth initiatives?

Hopefully, you're going to enjoy it a lot more. That's the plan. And I think from the company's perspective, without embarrassing you with flattery, you are a pretty valuable resource, let's agree. And there are only so many hours in the day. And therefore, directing Richard's time to the areas that we've talked about, the future of product, its development and the execution of the things that we want to achieve into M&A, which feeds into product, which we'll talk about a lot during the day and supporting sales, they feel like highest and best uses to me. So it can only be good.

It's obviously been a busy time over the last few weeks. But how long do you think we should be thinking about sort of this settling in? Because I'm sure there's a little bit of time to bed the roll down.

Like most things in business, you just get on with it, don't you? I mean, we're getting on with it. We're an adaptive organization as a kind of -- as things arise, we'll deal with them. But we're getting into this new rhythm at the moment. It's not like we're working out what to do. Andrew has been in the CEO role now for what a couple of months -- coming up a couple of months, RW had a break. And then, by the way, he's RW and RD because it gets confusing when you got 2 Richards. So RW had a bit of a break. He's back, very focused on the things we need to do and want to do around product. So it's happening.

And Andrew, look, from your perspective, I mean we've been through challenging times in the past like is kind of a short seller attacks and everyone had to go through COVID and that sort of stuff. How -- for this, how have the team reacted when you've been talking to the senior team and other people around the business, what do you think like morale is like?

Yes. No, honestly, Mark, it's great. I think everybody is clear on what their roles are and the responsibilities. And there's just been a desire to work through what's obviously been going off in the media. And has had a little bit of a disruption, and we talked about that a couple of weeks ago at the AGM, but the teams just really managed through it very well. And I think as a team of people, we've worked together for a long period of time. I mean you and I joined the business roughly around the same time about 9 years ago. We've worked with Richard for that period of time and many of the senior leaders within the business. So this is not like a new group of people coming together for the first time. It's an existing team that works well together and is continuing to work well together.

Yes. And in practice, are you seeing -- I mean it kind of feels like things are pretty much just normal. Are you seeing any sort of major changes?

No. I mean obviously, with RW's role here, that is a change, but it's one that the business is taking again its stride. What it is today and what it is in a month's time and what it is in 6 months' time and what it is in a year's time will continue to evolve. As the organization that's growing 20% to 30% a year continues to evolve. So it's not an unusual situation to be in. We are an evolving business, and we're growing rapidly and change happens all the time.

You mentioned the senior management sort of tenure and a number of people have been around for quite some time. What do you think the key strengths of the senior management team are in terms of being able to deal with this change?

Yes, I think we have 3,500 people around the world. It's keeping everybody focused on the things that they need to execute, right? And the leadership team is very, very good at that. And we've demonstrated that the way that we've grown the business the way, that we acquire businesses and that we integrate them, it's a key part of our strategy as well as keeping the focus on the commercial side of the business. I mean, this year, we signed Nippon Express, which was the top 25 customer that got us over to 50%. And we focus on all aspects of our 3P strategy, whether that's product, penetration or profitability.

And do you see any changes in that -- those focus areas on the 3Ps in the sort of short term or?

No, I think that is the core of our strategy. And that is helping us to become the operating system for global logistics. As I mentioned in my opening address there. We'll continue to prosecute that vision. And I think it's been very successful, and we'll continue to be very successful as we continue to grow the business.

And this year is a bit different because we've announced the 3 breakthrough products, which we have sort of talked about so much in the past. How do you see that playing out? And how important is that for us for our development?

Yes. I mean they are 3 breakthrough products that are all coming through within the same time period as we talked about last week or the week before at the AGM. Compliance-wise is launched into the market. We've now launched CargoWise Next. That's available with the first group of pilot customers. So that's good to see. And we've delayed as we communicated at the AGM, the launch of CTO for some very obvious reasons. And that will launch now in the second half of the year. It's a transformational product though. It's something that is so important in the marketplace that really addresses what we call the fourth layer of cost efficiency for our customers, which is where we're addressing their direct cost of transportation. And it's the first time that we've really done that. So landing this product and getting it right in the market is absolutely important and very paramount.

Yes. There was a question in the AGM last week just about why I think the perception was a relatively small period of disruption had led to this delay. Do you want to add a little bit of color on to that?

Yes. When you bring in a new product to market, you've got a piece of product development, you've got a commercial exercise, you've got to bring all those things together. And the disruption that we saw over the past few weeks really just coincided with a very important period in that product life cycle. We also get into sort of the end of the-year period, we're launching a brand-new product into a marketplace as our customers are very busy isn't the best time to bring something revolutionary to market like that. So hence, why we've said we'll launch that now in the second half of the year.

Okay. And there is a lot of focus at the moment on our sort of breakthrough products, but those obviously aren't the only product initiatives that are on the way, we're a product-led company. Do you want to talk about some of the other things or at least the volume of things that the team are working on?

Yes, absolutely. I mean most people in the room here and probably listening in sort of know this story, but we reinvest 1/3 of our revenue every year in new product development in R&D. Over the past 5 years, that's delivered 5,600 new products. So it shouldn't be alien to everybody to recognize that there's always a lot of stuff going off in the business. And some things we tell you about is we're bringing those things to market. Other things we tell you about after we bring them to market. So clearly, you would anticipate there's an awful lot going off in the business that we haven't shared yet.

And RW, you are and always will be our founder and our founding CEO. How does it feel to be in a slightly different position now and really focused on solely on products and growth?

Well, firstly, my natural resting state is actually focusing on products and the growth of the company through that product and the things that flow from that. This was a decision that I made by myself and I brought it to the Board. It was a circuit breaker because some of the noise in the media was hurting the company, and I wanted to make sure that the company was protected. But equally, I'd spent the previous day in a series of product meetings. And I cannot ended at thinking how wonderful that felt and how much more meaning it gave to me, much more leverage it gave to me. So that decision itself was driven by my desire to focus on my highest and best years. When you think about a company like WiseTech, we are a high-growth product innovator. And as such, the things that we have to do in the immediate short term. The things we have to do in the medium term, in the long term have to be highly integrated, they have to be very product focused. And there has to be breakthroughs that are continuing to occur all the time. I mean we're not stopping with the 3 breakthrough products we're talking about here. We're talking about internally, we're talking about things that will occur next year and the year after, the year after that. We're talking about how we can extend into adjacent marketplaces like Landside Logistics with other marketplaces in ways that others probably haven't seen, but we've been planning for, for some time. And the ultimate industry that we serve is the entirety of the supply chain and logistics. I mean it's probably easy now to think about it as a series of a pieces trade, which is the movement of the goods themselves, the goods. Transport, the asset-heavy things that are moving goods around the world; and logistics, which is the planning and management of asset light, but incredibly necessary things. That's what we started out in logistics. And the combination of those things together, it's an incredibly complex problem, and it's hyper inefficient in many places. It's actually quite broken because it's always dealt with in a local optimized way. We are solving those local optimists and building global capabilities that make it much stronger and better, more efficient and effective. And that, by the way, at our scale is probably -- we're probably the only people with the reach and capability that can actually build something of that type and implement it in a way that is meaningful from a world view point of view.

Yes. What do you think it is that has got us to that point when we've got the scale that no one else has been able to achieve. Because there are other companies out there that are large logistics they've been buying companies. What is it about?

And I've looked at some of those companies, in fact, Mark and thought about whether we want to buy them. The answer was no. That's not something that we want to do. That's a breaking effect rather than a positive. Our M&A, by the way, is usually quite targeted and focused on specific things rather than just buying up the businesses. WiseTech is a very strong culture. A culture of innovation, a culture of people that with great strength, great ability to execute and abiding vision to be the operating system for global logistics. And those things remain true. And during this last, let's call it, 10 years, a bit more than 10 years, just pre-IPO and forward. We've been operating on a global scale in larger and larger pieces and the success of the company, it's ability to grow, and it's more particularly its ability to be profitable and generate cash so that it can continue to grow itself. That's the secret sauce here. Most of our competitors, if you will, are not like that. They're actually stuck in a legacy product. They're stuck in a low-margin business. So they're stuck in an area of the business that doesn't give them scope. We've got the ability to take very careful but very deliberate steps into adjacent areas. And those adjacent areas continuously improve and grow our addressable marketplace, which is an enormous market.

You mentioned the mantras. And for those of you around the room, you'll see there the mantra is up on the wall there and the credo. I would really encourage you to spend some time looking at those and especially reading the credo during the course of the day. But Richard, those are really important to us as a business. Can you take yourself back a number of years to what made you realize that we needed credo and mantras like that, and we wanted to be -- have our culture really sort of designed to support our growth.

Well, the credo, as you said, culture strategy for lunch. If you have a strong strategy, but you don't have aligned teams that have a common purpose and mission, you're not going to get the strategy to work. You need to have people connected together by something meaningful and deep that is actually a goal that is more than just the next year's reporting or the next 5 years. That's what the credo has done. I mean it's kind of a black versus sort of almost poetic. And by the way, that took probably 3 months to construct. I took advice from many staff and had many conversations, some of them quite tough conversations about I wanted it to be in a deep and thoughtful and meaningful that other people wanted to be sort of a high surface message. I think we've arrived at a set of mantras and the credo that people actually when they read it, they want to join the company. People when they read it, they feel proud to be in the company. And customers when they realize that we are different to other companies because most of the time, when you look at people's vision and mission and there are other documents, they don't look like that. They're trying to be like that. When you look at ours, we actually enact them every single day, care about them and want them to be the fundamentals of how we operate.

As Andrew mentioned, I've been here about 9 years. And it took me a number of years to realize that the culture and the mantra was actually real and true rather than just something that we have on the website and in something out there. But for you, when you sort of started to put this into place, what was the point? How long did it take to see those behaviors really coming through and making a difference? When did you realize it was going to work?

When you're a smaller company, your culture is visible within arm's length of you. You can look across a small floor and see 50, 100 people, and you can realize you can talk to them and you can express culture as a set of conversations. The credo came about because I needed to explain to a much bigger company, and we're talking about very small by today's standards, but still global. What is we really are and how do we think about it. And so the credo and the mantras by the way, weren't called mantras until when you say it was 2018 or '19, we started calling the mantra. I think we just called them slogans before that. And that was sort of part of my management study about what it means to communicate an ideal in a company. So the whole idea here was to take the true culture of the company, which was quite meaningful and very passionate, but to turn it into something that people could read and understand as they expressed rather than just implied culture.

Yes. But from an integration perspective, like cultural change is obviously really hard. But at WiseTech, I think it's a bit easier because people see the mantras being enacted in their sort of daily interactions with people from -- people that have in the business long enough.

People quite them all the time, of course. I think there's a couple of things to think about here. First of all, we are by nature a software company, a development company, an innovator. And for that reason, we have quite similar culture to the companies that we buy. Typically, you'll find that there are differences, but there are more similarities than there are differences. And then we're working in logistics. And so logistics operates a certain way and it has a certain attitude. And that, again, makes it very similar for the businesses that we acquire. When they come in to this business, they get a superset of what they've already experienced or think they should experience it. So the credos are helpful for that, too, because it gives you the kind of the core recipe for what we do and how we think and what we want to project ourselves into.

What role do the tools and processes that we use play in reinforcing the culture? I'm thinking of sort of PAVE and the things that underlie PAVE the way we work and...

PAVE is an implementation of, I think, called Drum-Buffer-Rope, which is, if you've ever read the book called The Goal by Eliyahu Goldratt, it's implementation of that model. It was actually done I think we started building PAVE in a deeper way in about 2011. When I read the book The Goal in 2005, I started building some of the data sets that we needed for PAVE. So it's a long-term thing that we've built. Equally, we have a lot of pieces of this that come from management theory that come from other constructs but one of the very powerful one is thinking processes. We called that course, a black belt in thinking. It's on the Academy. It's all digital these days. Thanks to the help of [ Viago ]. And it actually typifies this sort of problem solving, conflict resolving, core conflict discovery process and how to actually continue the company's growth. And so a lot of the things that we do here are effectively constraint breakers or conflict breakers that we do. And you see this conversation happening around the company. You see people building prerequisite trees, NCNs, necessary condition networks, IR maps, disappearing clouds, core conflict studies. So current and future reality trees. These are all tools that we use. And they must be across the company, probably or at least 400 or 500 people who have done either one of the physical boot camps or the black belt thinking itself. So there's a common language across the company. People that haven't done those things, pick up the language in the model pretty quickly.

Yes. Now we had our IPO 8.5 years ago. At the time you predicted a long and healthy future. 8.5 years on, what's your sort of outlook for the longer term for WiseTech and...

Well, I want to give you an anecdote because I had a spreadsheet, and I predicted when we make the 300 index, when we make the 200 index, when we make the 100, we make the 50 index, we make the 25, right? And I showed it to a number of people, many of them very sophisticated. And I got laughs everywhere, "It's never going to happen, Richard. That's just complete lunacy." And I can tell you that, that spreadsheet was way more conservative than reality. We have made much more of that than I could ever have predicted. And to be fair, it's the perspectives mean anything really. I was just -- it was a little sort of fun sort of mental experiment. This is what I think will happen. So one of the problems in this business, and this is a problem with technology businesses generally, and this is a very complex technology business, so it's even more of an issue. It's very hard to properly predict the long-term future. I can get you 3 months and maybe 12 months and maybe at some level of detail 3 years, but it starts getting very, very fuzzy when you go out 5 to 10 years. So what you have to be is you have to be a learning organization, a very adaptive organization and you have to be able to constantly renew the ideas and reframe them in different ways. I actually started talking about or thinking about container transport optimization in 2019. It didn't really happen until 2024, that I had all the pieces together and the things assembled in a way that could actually construct an idea that was going to become that product. So some of these things are very short term. We've been working with teams on various things compliance-wise. That's relatively quick. I mean it's probably a year or 2. There are some other things we've been working on. I won't tell them what they are until the big surprise, the big reveal, but probably been about 6 months maybe less than that, in fact. And some things like CargoWise Next, it's probably a 3-year development where we're basically cleaning out architecture and refreshing and renewing and so forth. So not sure that was the question you asked. But the point is across this continuum of being a public company, we've actually done a very fundamental thing that is kept to our core product-driven growth strategy. We've added commercial models to that. So the product strategy and the product tactics sit in the core of the business, then there is the commercial model, the marketing and sales model that comes from that. And then there is the M&A, which is -- I think of M&A largely as sort of feedstock for the engine that is the growth of CargoWise. Now for those of you that have come from acquisitions, I don't want to make up a consulting thing. I don't what you think of you personally as feedstock. But the point is that this is an engine that you feed with ideas, with people, with customers, with knowledge and with markets. And ultimately, and I see many of you from the acquisitions, including Gene, who we acquired the Gene's business, Chris Aaron's business in fact in 2006, right? So we've been doing this acquisition stuff for quite a long time, and it is a critical part of growth. Now we got hammered in 2019 by a short attack, claiming that acquisitions are all face and they didn't exist and of course, nothing would be further from the truth, but the point is, what we do here with acquisitions is one of the amplifications of a product growth company. And it's actually very common for high-quality software companies to have a growth engine that is partly funded and fueled by M&A.

Yes. And so much of those -- that is the people as well as that. I mean the audience will get a chance to hear from many of them later on today. But when you look around all of the experience we have across all of those acquisitions we've done, in addition to what we have from the corporate, it's -- I mean there's not many people that would have that kind of bench I don't think.

So if you think about across that product business, we have benefited from a very substantial number of senior leaders that have come from those businesses. They may have been in business from themselves for 10 or 20 or even 30 years, and they've come in a senior product leaders. So I think probably in the drinks afterwards, we'll meet some of those people. But the fact is that, that is an amazing way of being able to build the depth, and it's the ability to have leadership that have come in, understand the industry, understand software, understand the nature of the customers and the nature of the industry itself because there's a characteristic in this industry that's quite different to other industries. And to have that without having to go to the market and hire generically to hire senior people. That is an incredibly powerful driver of highly sophisticated, high-level management talent.

Right. Thank you. We do have some time now for Q&A. So I'm happy to open that to the room. Question over there. It would be great, sorry, if you could just say your name and where you're from before when you're asking a question.

Bob Chen from JPMorgan. Just a question around culture. Obviously, we focused a lot about speaking about the mantras and the credo as well. There's obviously a fair bit of management turnover happening at the moment. So can you talk to how you're planning to manage that with the transition in the CEO and CFO position as well as maybe give us a little bit of color on what criteria you're looking for in a new CEO coming into the business.

We'll try to agree with the predicate of the question about a high level of turnover very low. Andrew is retiring one day. But apart from that, our turnover is exceptionally low. I can't remember what the number was, Andrew. Can you remind me?

I think it's 6% across the company.

Yes, it's incredibly low, right? So obviously, the Board as we think about the company's talent pool, we are obviously conscious that some of the people who have worked with Richard for a long time are actually getting close to retirement. But this is where this sort of feeding talent back into the organization become super important as we were just talking about. And that's a cycle that we do continuously. And we will continue to evolve our talent management and succession processes to a high level of sophistication. It's not to say they're not sophisticated today, but we expect the company to be very much bigger. And significantly more global in 5 years' time, and therefore, we're planning for that. In terms of the CEO search process, we've said publicly, we've appointed Russell Reynolds to help us with that. We don't need to rush. Thanks to Andrew's commitment to stay as it was in the CFO role now and the CEO role to the end of next year. We've got time on our side. Now let's agree a year can go quite quickly, but we're going to make sure that we hire from inside the organization or outside it, whichever way it rolls, the person best suited to allow the company to execute on its growth potential.

Thank you. Yes, on front, please? Big one, sorry, at the back.

Paul Mason from E&P here. Just there's a few Eliyahu Goldratt references there. One of the ones I wanted to explore a bit was about like customers and their local optimal versus global optimal which is like that's -- it's not like. Maybe if you could talk about like it's one thing to have a product that sort of comes up with the idea of solving or something like that. But in practice, that's going to involve your customers off and restructuring people out in order to achieve like the global optimal, right, they have to change to map to your product. There's a lot of what I think that gets at. So could you talk a little bit about like how you actually go about culturally selling into customers that they need to change to you in order to get these better outcomes because it seems to be a quarter like we being successful, but it's also quite a lot high friction than a lot of other software companies as well.

Well, first of all, Paul, welcome, and thank you for that question. And I'm impressed that you actually know the title of the book and its core thesis, which is this -- actually, the local versus global belongs to The Goal. It's not like it's more about the core conflict. But it's great that you've actually had enough in that space. I would tell you that customers do not take on those ideas or changes at all willingly or even see them as a necessity. Where we have a big advantage is that the system itself trends to a global optima because it is an integrated global and complete system. And so they're not -- customers are not going into the thing and saying, "Oh, look, I've read The Goal and I read that's a lot like and I now have this set of tools that I can use in the software helps us do that, and that's not what's happening. We do have customers that are moving to that, but typically, it's coming from the low levels of management that are learning about the product and about the education system that we have in WiseTech Academy, and it's not the senior managers. Senior manager to be doing the same thing for 30 years, and they truly believe that if I do it more and harder than we'll be successful. Of course, that's not right. But the software does create a global optima because it allows the entire chain of processes to be seen as one whole thing. And if anybody is sort of holding on to a local piece, it flares up pretty badly. And you see that they become a constraint or a bottleneck that shouldn't be there. Now in the process of selling, you have to be in a position that you don't criticize the customer for the inability to understand things. It's not a great way of going about it. But the way that our customers are -- the new companies coming on board, they see the improvements in the P&L of their competitors. They see the managers and sometimes they hire those managers, and they talk to the massive improvements internally about visibility and control and capability and profitability and management control. And those are the things that sell the software. The software kind of implies a global optimal. Now what we do want customers to do is to think more deeply about constraints, which is kind of like this drug buffer road PAVE implementation. We do have some customers operating PAVE, but I would say that's still an early journey for them. And then we do want customers to think about what is the core conflict and how do you actually make a business materially better than others. Typically, the industry's culture and its long-term history says that this is the way you do things. And people they hire have come from 5 other companies maybe in their history. They've all done things exactly the same way, and it is hard to change that culture, but the software does most of the heavy lifting.

I think there's a question down the front.

It's Kane from Goldman Sachs. Maybe just coming back on the management structure going forward. I mean, Andrew, it's probably a question for you around if there is a disagreement around product M&A going forward between Richard and the incoming CEO or today, like how -- what steps does the Board take to resolve this? How do you think about actually reaching a decision between the 2 core conflict issue?

Yes. Yes. Nice to see you. I think good question. The mature organization conflict should be able to be resolved between if there is conflict. Disagreement, distance, whatever you want to call it, should be able to be resolved applying the thinking principles of the organization. And so as the Board, we think about this as things are having to come to us to act as a point of resolution, that's actually not a good thing. We're willing to play that role. We accept that's inevitable in terms of setting up the double reporting line. But we've been talking about this quite a lot over the last month. And I mean, we all agree. All 3 of us agree that working things through together, which, frankly, by the way, is how the company has been operating in the time I've been here, and I suspect probably the way it's been working forever. So it ain't a big shift because that's actually in the resolution framework of WiseTech. And so do we anticipate issues? Yes. Can you get do please, yes, yes.

Ultimately, this is a company full of highly educated engineering minded people. And we've always had one of the mantras about creative abrasion. And the way this works, if you have the good of the business at hand in your sites and you have a disagreement, what you've got is an opportunity for improvement. It's not a -- it's not the time to override the other person just because you can and say this is the way we're going to do it. That might have to happen in the end so you have consistency. But ultimately, what you're trying to do is to stop worrying about the mechanism that you're promoting. That is, "I want to do this. You want to do that." What you actually think about is what is the effect we're trying to create here? And how is the best way to create that effect. That might be revenue growth, it might be the release of a product. It might be the restructure of a team. It might be the build of a new product. But all of them have an effect or an outcome that you can define. And then what the argument becomes an argument in a positive way, the discourse about that is what do we have to do to make that happen to create that effect. There's very little -- there's very few times that, that creates an ultimate unresolvable disagreement. It may be that there are 2 people with very substantially differing experiences and views because one comes from a different view to the other. But ultimately, if you focus on the effect we're trying to create and not the mechanism that I believe is the right way to do it, you often come to much better answers. And that, by the way, is a very large chunk of the second Eliyahu Goldratt book called, It's Not Luck.

I want to make another comment on this topic. But before I do, I think we should let Andrew comment as well.

Yes. Kane, it's a really good question. And look, Rich and I have worked together for 9 years now, right? We've not agreed on everything all the time, right? Clearly, there's been things that we discussed and debate. I think a great example though was just something that we were discussing together actually last week, right? And going into discussion, we thought we were opposite ends of the scale, right? And we -- actually, we figured out we were trying to achieve the saying exactly the same thing. And then we were just discussing how we were going to get there, right? And one of us through an injection into the conversation that got both of us basically to the same place of how we were going to move from where we were today to where we were ultimately going and that was it, and we were done. And I think it's that maturity that we've got as an organization where we can talk through different views and different opinions and come to common ground to be able to move forward. And that was a 15-minute conversation, right? Something we thought going in, we were 180 degrees, and we actually figured out we were very, very close, and we've resolved it very, very quickly. And that's just the way the organization operates.

And I think it comes back to what RW said earlier. If you're guided by doing the right thing for the organization, you tend to find the answer. And that's been my experience of how we approach problem-solving in WiseTech in the 3 years I've been involved including at the Board. I mean this notion that it's been said almost perhaps not quite as directly as this but isn't the Board just a slave to Richard? No, I don't think that way. You don't see it that way. We don't see it that way. It's never really been that way.

I'll just go to 1 last question because we're running out of time.

It's Andrew Gillies from Macquarie. Obviously, this is a product-led business. Richard, how much incremental time do you feel, RW, don't worry, I'm getting the lingo. How much incremental time do you have to spend on product now? And is this actually the best outcome for the business, notwithstanding what happened back in October?

I think I probably had 20% of my time that I could spend on product. And then if I work weekends and nights I could get a bit more out of it than that, but it was always -- what you actually need is some reflective time as well. I probably have 95% of my time on something to do with the product, what we're going to call this product counsel and then the related issues to do with commercialization and sales and the also related to relate M&A. I think that's my scope of influence is those things and my scope of direct significant influences the products -- effectively, the ideation and the creation of the product. Now if you look at this, I would be, in many senses, average and a whole bunch of stuff. But in these areas, I think I've got a very strong track record. And I know that what my passion is and where I can actually get the most value for the company is in those spaces. So it is the past and best use of my time. It's always going to be that I'll be pulled into other things. The Board may want me to do something, enter would do something. I might have to fly and meet a customer somewhere. But I'm hoping that 95% of my time is the ideation and creation and delivery of product, commercial model and the M&A structure that enables the growth of the company.

Thanks very much, everybody. We've sort of run out of time for this session. If you do have further questions, please submit them online and we'll try and cover them later in the day, either in the sessions or in one of the other Q&A panels. But we'll move on next to the next session, which is on the commercial model. But in the meantime, please thank our panelists for this session.

Thank you. And welcome, Caroline.

Thank you. So this session is about our commercial model. We'll talk to you about how the commercial model has evolved over time, how our model supports our sales growth and does that whilst maintaining very low sales and marketing costs compared to other industry benchmarks. To do that, I'm joined by our 2 guests here, Gene Gander, who's Global Head of Sales; and Caroline Pham, our Interim CFO. Gene, you've been with the business for 22 years. And as Richard pointed out, joined as part of an acquisition. Would you mind giving us a couple of minutes on your background?

So as Richard pointed out, we were a North American logistics software company. We threw in, in 2006 to be part of what is today's WiseTech Global. It's been a fun ride. In 2018, I moved from North American Head of Sales to global sales. And at that point, we had a couple of large wins with DHL and DSV. We had a strong sales team. And at that point, we started to focus on the upper end of the market. So we posted wins with Ballarat and Helman and Maersk, and CEVA, followed up with FedEx and UPS, and then most recently, Sinotrans last year, which was the largest China forwarder and then Nippon Express starting out the year strong this year, the largest Japanese forwarder. And that project is going very well. They're going to be visiting us in February to keep the pressure on that. So where we are today, global implementations in play or completed for 50 of the large global forwarders. And now with Nippon. As Andrew said, we've tipped over the top 25 more than half.

Great. Thanks, Gene. Caroline, introduce yourself please? .

Sure. Thanks, Mark. Hi, everyone. I'm Caroline. I'm the interim CFO at WiseTech Global I joined this business 8 years ago, just a few months after we IPO-ed in 2016, and I've got a background in big 4 audit and M&A. So prior to joining WiseTech, I walked in commercial finance for an FMCG. And it's there that I really, I guess, discovered what I liked about that area, which was that you've got to combine that technical accounting knowledge that you had with analytical skills and use those to translate data into actionable insights. And the ultimate goal, of course, was to drive revenue growth. And so that was something that was really personally rewarding for me to be a part of. And so it was with that experience that I joined WiseTech, and I'm really proud to say that I helped establish and build out the commercial finance function at WiseTech over the first 4 or 5 years I was here. As part of that, I worked closely with Richard, with Marie, with Andrew, with yourself as well, Mark, and the team that we were building out in that area. And we worked on things such as revenue growth initiatives, price and discount strategy, a fee per user per month per module. So this was the first iteration of on-demand, which is where you pay for what you use. With this model, it did away with the long-term contracts, and we moved to a rolling month-to-month contract, which gave customers the flexibility, as they wish, to kind of leave or not. And as we've seen with the customer attrition, it's been very low. I guess that came at a time around GFC, where a lot of businesses were starting to reduce their headcount as a result of margin pressure. And so that kind of led us to further evolve the on-demand model to what we have today, which is STL, so seat and transaction license. And what that comprises is fee for each user, but we also charge fees per transactions that are conducted on CargoWise. And what that helps do is 2 things. One, it allowed us to, I guess, grow when our customers grew even if it meant that they weren't growing their headcount. So say customers became more efficient and the amount of transactions that each user could do increase. On the previous version, we didn't really capitalize from that because it was a fee that was per user; whereas here, if they're conducting more transactions per user, we're clipping the ticket each time as well. And so we found that the STL model is a much higher growth model than, say, MUL or STL. And it's also -- it's highly consistent. It means that the revenues are predictable. And it's also the model that we encourage our acquisitions to eventually move onto as well.

And Gene. So that's a good example of like a win-win by the more the customers use, the more productive they become, more revenue we get. How has that helped you in the sort of sales cycle? And how do you also deal with the complexity of the price list?

So I like to use the word comprehensive instead of complex. So we have a very granular price list. So whatever your exact needs are, the same price list applies to everyone. So if it's just customs in a specific country, you can take advantage of that. Some of the behaviors we have on the win-win is we say all customers are equal, but they're not the same. So depending on how much of the system that you're using is a volume discount that you can achieve. So obviously, the 100-user forwarder is having less of a volume discount than the 10,000-user forwarder. But we're very transparent with the scale. So it's not -- let's make a deal. It's here's the discounts that are available to you for you to earn. Let's work towards that. Probably the biggest win-win example is the CCLP, so the certified CargoWise logistics provider. So a company can be certified. Their individuals are certified as operators or professionals, specialists. And depending on the size of the organization, there's so much certification that they have to have. And then when they achieve that certification, they get a discount. Now we're -- with the win-win aspect, we're as impressed when they get the discount is when we give it to them because we get a few things out of that. We get very proficient users, so a certified individual, a proficient user is easier to support. They use more of the system. They see a greater value in the system. So when we get some of the commercial implications and price increases, they see a higher value product than other people. The other aspect of the network effect of this is that people move in the industry. A CargoWise service professional that's working for a CargoWise company moves to a new company that's not working CargoWise and they can be a little of a pain in the ass. Why aren't we using CargoWise? This problem we have, we can solve those CargoWise. What you're doing here, we can do better with CargoWise. So they're basically selling CargoWise within the walls of the organization. And from a very senior level executives that move from one company to another, who have a strong brand and track record for digital transformation with CargoWise, one of the first things they do with the new assignment is let's start taking a look at what it's going to take to put in CargoWise there. So this win-win, I want a discount. I'll give you a discount. If you get certified, there's a win for CargoWise in that we have 28,000 certified professionals out there selling CargoWise is basically a flywheel of growth as far as the network effect.

Yes. And Gene, what do you think have been the main changes that you've seen for the sales model about how are you and the team have gone about sales and the time you've been here. .

Since 2018, it's probably the relentless focus on penetrating the top end of the market. So CargoWise is a very scalable system, and the price list is very scalable that I mentioned that it's granular. But the strength of CargoWise's value, that competitive moat gets bigger the larger and more complex the organization is. So I think the biggest thing is concentrating on the top end of the market where we've got complex organizations that need customs. They need forwarding. They need compliance. And the more they operate across geographical borders, then the stronger CargoWise resonates with them. So we have our greatest return there, one, as far as the competitive moat, but also it pays out bigger and longer just based on scale.

In terms of the process itself, we lead with a lot of content, don't we, in the sales process. Can you talk to us about that a little bit? .

Certainly. So we're a product company, and we've argued about whether sales jumps product, but people buy product at the end of the day. We've got very quality salespeople. They've got good relationships with the customers. But at some point, this customer is buying product and they have a relationship with CargoWise going forward. We took a look at what made good salespeople good and great, and we industrialize that process. And what we did is we built 1,000-plus sales demo videos that this is the problem, this is the solution, which is CargoWise, and this is the benefit to you so that we can be consistent now leading with content from marketing to sales. On global campaigns, we can have stakeholders at both ends of the globe. So the same message we're delivering in Asia, we're delivering in the U.S. It allows us to onboard salespeople quicker because we've got a very structured process, and it allows us to make our good salespeople great because we're leading with sales demo content. Now when COVID hit, we were digital before it was a necessity. So we were way ahead of the game. We still get in an aluminum tube now when we have to, but it's very late in the sales stage where it's more of a closed than early stage sales process.

Yes. And those demos are really important as well because we can only create demos on things that we actually have, which differs from other organizations that we come across sometimes, including some of those that we acquire.

So selling what you have is important. When I started working with Richard a long time ago, he said I've got enough people who can sell what we don't have. I need people who can sell what we have. And that's huge because we don't sell the contract. We sell the go live. We sell to commissionable revenue. So anytime we have somebody where there's friction for them going live, we defeated the purpose. The idea is let's get them live as frictionless as possible. So this sales demo content that I mentioned that we value as far as salespeople, the customers value too because think about buying something as broad and comprehensive and deep as CargoWise. If you're sitting in the purchase chair, how can I be confident of knowing exactly what was presented is what I need it and what I bought. With sales demo content, there's no question because there's been cases where we've worked with the customer, and it's, Gene, 6 months ago, we had this problem. You showed us, sold us on how you could solve it. 6 months later, I forget, and we have a sales demo content. We can go back to it. So it adds buyers confidence as much as sales effectiveness.

And we also have sort of customer testimonials [indiscernible].

Yes.

Caroline, how do we think -- we talked a little bit about the price list and the price list -- prices we set for each of those transactions really based on value. How do we think about the sort of 4 layers of value that we offer to customers?

Sure. So one thing that we know is that our customers want value. So one of the ways that we thought to, I guess, neatly describe the value that CargoWise delivers is these 4 layers of cost efficiency. So if we take the first layer, which is legacy IT costs, these are the costs that companies and logistics are today incurring as a result of many systems that they're using. These can range from the tens to the hundreds of systems that they may need to use to operate their business as well as an in-house proprietary system that may be thrown in there as well. And so what you get is really, I guess, a network that's been a network of systems that have been patched together, and with those comes very high IT maintenance costs. That's the first bucket that would be targeted when you use CargoWise because you're replacing those myriad of systems with one single integrated platform. The next cost is labor costs. So in logistics, as we know, and we'll hear a lot more about later, it's a pretty manual and inefficient industry for the most part. A lot of our largest customers in the industry. They have teams of hundreds, sometimes even thousands where their roles are largely manual. So they're doing manual processes. They're doing e-mails, faxing. They're doing phone calls to operate their business. I think you'd be quite surprised about how manual the industry is. And so it's that labor workforce costs that can be reduced as a result of moving to CargoWise because of the high levels of automation, the integrated workflow and the fact that, I guess, they can now digitize what they're currently doing manually. So those 2 costs there make up about 30% of our customers' total cost base, which is actually not that much. The bigger part, the remaining 70% is these other 2 layers. So if we talk about fines and penalties, so here, customers typically have a part of their budget that they allocate to fines and penalties that they just expect to incur as part of doing business. Why is that the case? The first that they use today, because they're often manual, it means that they have to be quite selective about what they can actually do and be compliant in. They just simply can't be compliant over every area. And so it's inevitable that fines and penalties will be incurred as part of their business. So with a system like CargoWise, where, for example, in customs or you'll hear about ComplianceWise later, we've worked very hard to build tools where it's seamless for a customer to be compliant in whatever jurisdiction they're operating CargoWise in. And that means that they can significantly reduce and in some cases, avoid altogether the fines and penalties that they may incur. And the last bucket that we have is freight costs. So these are the costs that our customers and logistics providers are incurring in physically moving the goods from A, B to C. So as you can imagine, this is a huge part of their cost pool. And it's actually that bucket where if you use tools that we have in CargoWise like route optimization, we've got air and sea schedules that are constantly being updated due to the connections that we have to all of the industry players there and also container transport optimization, which you'll hear about a bit later on, these features allow customers to, I guess, better optimize the movement of their goods and result in reduced direct freight costs. So the direct freight costs and the fines and penalties, they make up actually 70% of our customers' total cost base. And it's actually those areas that we wanted to specifically highlight as areas that can be reduced if you use CargoWise, not just sort of their go-to IT costs and labor workforce.

Gene, CargoWise is obviously very deep in terms of functionality, but we do hear feedback that it's expensive. So talk to us about like how you deal with that with customers because I'm sure they don't -- surely, they must highlight that to you.

We're dealing with forwarders who buy low and sell high every day. So everything is expensive in their eyes. But they ultimately want what we had to offer, and that's the productivity and throughput. They've seen what their peers have done with it, and Richard had mentioned that within the industry. They know other digital transformation that's been happening. But if we take -- and they're aware of what we've done in the industry. The top 25 forwarders over the past 12 years, the ones that run CargoWise have 85% growth and the companies that aren't running CargoWise have 12% growth. They have not, as I call it. So that's a 7x multiplier. So they know what CargoWise can do if it's utilized effectively. And as we've said, there's a network effect where people are moving around within the industry. They also are aware that we're generating thousands of enhancements and updates to CargoWise every year even before we get into the large mega features. And customers are seeing that every day. Now they don't want to admit that thank you for the price increase, Gene, it's worth every dime. But they do know that for every dollar they're contributing, they're getting $0.35 going into enhancing their product to make their business better. And they also know that all their competitors that are giving us $1, $0.35 of that is going in to enhance that product. So there's this co-op effect of moving it forward. So they know the value they're getting out of CargoWise. It's -- and we're -- let me expand on that a little bit. We put together a tool to help them quantify this. So we have a CargoWise value calculator. So the first thing is CargoWise cost X versus our current IT or the competition. But what we can do is we sit down with them and say, let's go through your current business. We have these 9 phases of productivity. You can operate manually. You can operate computerize. You can operate it in the enterprise environment, workflow, workflow automation, the buffer management that Richard had talked about. Now let's take a look at your current business. In this part of the business, you're running that manually. This one is computerized, but it's a separate computerized system with this one. Workflow is nonexistent. Accounting is separate. And what we can do is we can take a look at it. And we had talked about this year of the cost of labor. We talk about operational cost. Instead of beating ourselves up about the cost of IT to buy CargoWise, we take a look at the operations cost and we can basically show them that they can operate cheaper by spending money with CargoWise. And we changed that paradigm from buying CargoWise and spending money to operations costs.

And Caroline, I suppose we don't get too many thank you cards for the price increases, but at the end of the day, we have pretty low attrition, don't we? So...

Yes, that's exactly right. So I think with the noise that often a company's price increase, I guess, the ultimate litmus test for us is to look at our customer attrition, which has been less than 1% for the last 12 years. And I guess one other aspect to think about with price increases and the approach that we take is it's how we look at the business. So with the business, we've taken a product-led approach -- and when we think about pricing, we take that product-led approach. That means that when we're thinking of price changes, we -- our primary goal is to ensure that revenue growth is driven by the monetization of very valuable features that we're providing to our customers through new features, new enhancements rather than a pure price increase.

Yes. One of the other things that we talked about earlier on and that I mentioned was the low sales and marketing costs. How do we achieve this? We're not underpaying the sales team, are we?

Yes.

No.

[indiscernible], Caroline.

Yes, that's right. So our sales and marketing as a percentage of revenue in FY '24 was 8%. And so if you look at that compared to our direct peers but also other technology providers of similar size and scale, they're usually in the mid- to high teens. And so we've got pretty low sales and marketing. And so that's really, I guess, due to a couple of things. So one, Gene spoke about the fact that we take a digital content-led approach. And so we see that coming through with our sales force. As Gene said, we don't fly them to every single sales meeting that we need to have to establish or maintain a relationship. We rely heavily on the thousands of demo videos that we have in product demonstrations that we can do virtually. The other aspect of this as well is in terms of the network effect that we have in terms of our partner network and also the 38,000-plus certified professionals that Gene spoke about. So the partner network and the certified professionals, they're not on our payroll, right? But they're -- in terms of partners, they're very well respected logistics providers in the industry, and they're very influential. And so the more business they can refer to WiseTech, that obviously helps us. It's like an extension of our marketing tool. And that will in turn help them because they'll get more business in terms of implementation in services work. And then for certified professionals, as Gene said, as they move from place to place in the industry, they take that knowledge about CargoWise with them to influence whichever business next.

Yes. And Gene, we talked a little bit about external sales. What about internal? Because we know that our customers are growing, lots of existing customers are also growing and expanding. What do we do to encourage more growth within those customer base?

In the past, it was sales job was to hunt new logo, fuel the growth machine, move on to the next sale. But then at some point, we have a large stable of top 200 customers with an opportunity to get a greater share of their wallet. So we've done a number of different things. One, from a direct sales standpoint, we said your job is to sell new and existing products to current customers as well as logo hunting. And initially, that was a task across the wholesale team. And then we realized some people are good at hunting. Some are better at building relationships. We segmented the team, continue to hunt and do very well, and your job is to grow customers. That's a big part of it. What we also have done with that is the certified professionals that we talk about, for the hunters -- let me take a step back. For the builders, we put together a tool to assist them. So we've got a large data set out there of forwarders that are using CargoWise. So we built a customer insight portal. So we go to the sales team and quickly say, with a heat map, this is an area of CargoWise that, that customer is underutilizing CargoWise. Let's focus on that part of the sale. We've also put together a productivity index. So when we're engaged with these customers and we're doing a CargoWise business review and we take a look at their customs operations, we can track their throughput per resource of what they're doing for customs entries, and we can benchmark them against the competition if you're in the 10 percentile or 50 percentile. And that gets to be a very engaging customer story. Service professionals are the partner team that Fergus built, and his team is huge. So the partners do more than take our customers live. They do a constant process improvement after the fact. And part of that process improvement is showing where they can use and benefit from more and more of Cargowise. So our CargoWise partners are out there pushing CargoWise. But the probably biggest scalable item is what we do again with the lead with content. So we're constantly releasing product, update notes e-learning videos, major products get a blog for marketing, the customer insight story you had said earlier. All of that is contributing to get the customers to use more and more of CargoWise.

[indiscernible] in front of the 38,000 CCLP.

These professionals when they see the content we're kicking out and on the CargoWise community profile that all the users have -- and these CargoWise professionals are like CargoWise fan club members. When they see these releases, it's like Christmas morning to these people. So yes.

Yes. Very good. Caroline, talk to us a bit about industry consolidation because that's another sort of tailwind that we benefit from somewhat.

Yes, sure. So I think in recent years, we've seen increasing activity around industry consolidation. So we've obviously got some businesses that have had a long history of that, such as DSV with their acquisitions of UTi, Agility, Panalpina and more recently, DB Schenker. But we've also seen other businesses such as Jazz and Tigers. We've got CGM with CEVA as well. And I think that industry consolidation is something that WiseTech has generally benefited from because whether it's the acquiring business that uses cargo wise and then brings the acquired business onto CargoWise or whether it's the reverse again, it's, I guess, increasing the pool of users that we have on CargoWise. There are other industry factors as well. One of them is that, I guess, as we spoke before, the industry is generally quite a manual process, so even relatively simple automation can drive above-average growth. And then the other aspect as well is cybersecurity. So I think that's another area where, in recent years, we've seen customers who have used many systems sort of patched together and have had a breach in one of those systems. And so turning to a system like CargoWise, where it's got that single integrated platform and very heavy cybersecurity around it, that's really, I guess, encouraged them to come to WiseTech.

And Gene, another question I get asked a lot is who our competitors are. I don't know of anyone that's really got our sort of reach and scale, but you must come across some competitors when you're discussing with targets.

We do. When you think about the level of market that we're targeting, I had mentioned this earlier, that's where we focused on that, they appreciate what we have to offer. If it's forwarding in a single country, there's a wide competitor field there. We throw in customs. It gets a little bit tighter. We throw in accounting and warehouse. It constricts. And then if they have operations off of many -- across many different borders, that competition field just dissipates. I mean nobody can really do what we're doing across the globe. They'll pick at us at different places. So then your question is if not CargoWise, who. Stringing multiple systems together, we've proven it doesn't work, and that's why people are coming to us for a single platform strategy. In-house development is a strategy that really hasn't been touched in the past decade plus because of what we have out there for options with CargoWise. So I think our biggest competition is having people that are continuing to throw good money at bad and whatever we can do to drive them to market because we drive them to market, as I said, if not CargoWise, who. We can win that sale.

So really, we've got industry consolidation, GDP growth. Those are all tailwinds for us. We've got an existing and expanding customer base that's rolling out to new countries. And that's all supported by our sort of scalable sales model, our CCLP process, our standard price list, standard contracts so that customers don't need to roll out to more people. And we have a partner network and growing user base that's really driving our growth. Any other sort of main points?

It's pretty much covered it. I think maybe the one point to sort of emphasize here is that all of those factors that you listed that drive our recurring revenue growth, pretty much all of them are actually within our control. So things such as rolling out new features, the rollout of large global freight forwarders, that fact that we have major new product releases, essentially all of those are within our control, except for market growth, which actually is only 1 percentage point of our total 33 percentage points growth in revenue.

Yes. And I guess all of that is also very hard to replicate [indiscernible] competitors. Okay. Gene, we're almost out of time, but before I let you go, what can you tell us about sales pipeline without getting us into too much trouble today?

Very general terms. Our claim to fame is we have global forwarders and you would think I'd be losing sleep about that at night of where growth is coming from. But only half of them are in the process or have rolled out globally. And even in that, yesterday, FedEx, we celebrated that win a year ago, just went live with North American forwarding yesterday on December 1. So there's a big lump of revenue comes in. The remaining of the top 25 are utilizing us in a specific region or a specific module. And when you look at CEVA and Maersk, they started with customs. And once we're inside the walls with CargoWise, it sells itself, and then it evolved to global. So we have a lot that we can do there. If we take a look at the DHL and DSV and we got a foothold into the European region, that got to be a tipping point in all the European installed. Entering North America, UPS and FedEx fell in quick succession. We're coming off of Sinotrans in China and Nippon Express in Japan. I feel confident that we've got a tipping point happening in the greater Asia region. So I sleep well at night.

Good. All right. Well, thanks very much, both of you. Appreciate your time. We're going to move on now to a session on acquisitions and integration. So we'll thank Gene for his company and invite Vlad Bilanovsky to the stage. Thank you.

All right. So after a bit of musical chairs from Mark and I., we're going to talk about acquisitions and integration in this session. Thank you. So acquisitions, as we heard from Richard is a proven strategy to accelerate our product development. What we're going to hear about in this session is why we acquire businesses, what we look for and a bit more about our integration process. Introductions first. So Vlad, you are our Chief Execution Officer, and you joined the business over 20 years ago, actually through an acquisition as well. Would you mind telling us a bit about your journey, how you started? What -- how your role has evolved over time and what your role is today?

Thank you, Caroline. Hi, everyone. Yes, I joined the business around 20 years ago together with Gene. Hope he's still here as a result of acquisition in the U.S. of a company called [ Fountain head ]. But prior to that, I was actually working in the industry. I was managing global logistics operations for freight forwarder focusing on oil and gas industry. These customers, mostly in North America, in Europe and the Middle East. And we also did U.S. domestic logistics, particularly video games distribution. Back then, video games were sold on the DVD disks. So we are bringing them from factories in Japan and U.S. in containers to our warehouse and then on the day of a major game release sending hundreds of thousands of shipments directly to U.S. stores. And in order to enable that, we have to build a very sophisticated automated integrations with major U.S. retailers such as Walmart, Target, Sears, Department of Defense. And as a result of this, some of the [ Fountain Head ] customers started reaching out, asking to help them with automations and integrations as well. And that's how I first met, Chris and Gene and eventually become a consultant for the company. And in 2006 -- early in 2006, when WiseTech acquired [ Fountain Head ], that's where I met Richard first, Richard White. And this crazy Australian trying to conquer the world. But very quickly, I realized that we share the same passion for changing the world of logistics, the magnitude of the challenges, huge and exciting and sooner after that, I joined the business. We were a small back then, growing quickly, and there, I had to perform various jobs, very different hats depending on the business need. So I was in development management, in product management, in sales. For a couple of years I was managing company marketing. In 2011, I established first partner program and very pleased now to see hundreds of partners across multiple countries and multiple partner programs worldwide. With my experience, industry relationships and credibility growing, I was involved in a more leadership opportunities within WiseTech and that allows me to transition to M&A. And these years lead corporate development and origination. In my current role as a Chief Execution Officer, I'm working closely with the CEO and the Board on strategic initiatives, with our senior management team as well as these key product managers, with Mark on acquisitions. And this product management is mostly about how acquisitions and strategic partnerships can accelerate our product road map. In addition to corporate management, I'm also looking at managing global customer support, carriers, team and channel management.

Okay. Great. Thanks, Vlad. Mark, you've got an extensive history in M&A having worked in big 4 and then obviously joined WiseTesh at a really critical time pre-IPO. Could you tell us about your journey how you started at WiseTech and how that role has evolved over time and what you do now?

Yes, sure. So it's been close to 17 years professional services, mainly focusing on M&A. And as Caroline mentioned, I joined to assist with the IPO. After that, I joined the team permanently. The IPO was a great opportunity for me to understand how much organic growth the business really had start to understand what the culture was like at WiseTech. So I stayed on and quickly got involved in a number of the acquisitions that we started to make over that period of time. In due course, I also took on responsibility for integration. But what that's really given me is the opportunity to interact with -- during the acquisition process and also the integration process with almost sort of 50 businesses that we've acquired over that period of time. And that's given me some great insights into the logistics industry. I mean prior WiseTech, I didn't really have any particular industry specialism having worked across a number of industries. And it really has sort of dawned on me how complex the industry is. You've got the carrier -- sorry, the shippers like moving goods around the world, BCOs and freight forwarders, our customers moving goods on behalf of others. You've got the carriers, the ocean carriers, the airlines as well as the motor carriers. You've also got facilities. Every time a shipment is shipped somewhere it needs to be loaded and unloaded, if that's a parcel, well, that's relatively easy; but when that's a container, that's not so easy. And so there are a lot of facilities and interchange points. And then I've also been struck as well by the amount of compliance that's required. Often a lot of those interchange points, but of course, broader compliance as well. So that all adds up to a significant amount of complexity within the industry. And at the same time, I've also been struck by the lack of standardization. There are relatively few standards across the industry, which is really surprising, was really were surprising to me. And as I think you mentioned earlier, Caroline, like the amount of manual processes, you think we're in the modern world. But the amount of paper that's moved around by the logistics industry that's even carried around, we've got processes that have been the same for hundreds of years that fundamentally haven't really changed, and we're still operating the same way. And all of that sort of adds up to a very sort of fragmented industry, and there are lots of software providers out across the industry, but they're all relatively small. They're solving problems, challenging problems, but they're solving them at a local scale. And I think what we have with WiseTech is the ability to actually solve that on a global scale. And as a result of that, WiseTech's one of the few, if not the only company I've ever been involved with, whether I can actually say that I think the vision is to be the operating system for global logistics is actually something we can and should actually achieve.

Thanks, Mark. So I guess let's start with the fundamentals. Why do we acquire businesses at WiseTech?

Firstly, I mean, it's important to know we're a product-led company. It has been mentioned a couple of different times. We've got great organic growth because of the investments we've made in product, because of the commercial model that we've got supporting that growth. So we don't have any actual need to buy businesses in order to grow. Because we're product-led though, we do have the opportunity to acquire businesses to accelerate our growth. And it will come as no surprise that the main attributes we look for is businesses that can add something to our product, which we can offer to our customers. So fundamentally, that's why we do it. It's to enhance our products further and offer more. We've got different types of acquisitions we refer to the footholds we've done. About sort of roughly half of our acquisitions is a foothold acquisitions, mainly customs compliance. And that's been really valuable to us because building custom systems is hard, doing it in different geographies with different languages, different customers' processes. But being able to buy a business, acquire the domain expertise, intellectual capital and then embed that back into CargoWise through rewriting the system back into the functionality, back into CargoWise is really valuable to us. And then we have adjacency acquisitions, which we refer to as other or tuck-ins or sometimes strategic significant.

Great. Thank you, Mark. And Vlad, in terms of finding these businesses, what are the ideal acquisition targets that we look for? What are the attributes there?

So I will repeat again that we are a product-led company. We focus on product. So product strategy determine what companies we're looking for. Strong product and product capabilities would be a key attribute I would be looking for. Specific licenses to accreditations particularly in a compliance space like customs would be a very good education of a maturity of the product and strength of the product team. If I have a magic wand, I'd like to acquire small- and medium-sized businesses, businesses which we share customer base with, businesses with -- which are profitable. And profitability or breaking even is a good indication that team can focus on the value and create value, not just go after shiny object of delivering some functionality. I also really like our founder-led businesses, not always, but typically, those businesses have more leadership drive, more cohesive team and higher-quality products. And I think you will be speaking to some of the founders. I see Karl there later today. Also -- just one more thing, cultural fit is very important, as we need to make sure that businesses will be successfully integrated and then can join our product teams and other key teams and help us to grow moving forward.

Thank you. That's a good point about culture. In terms of how these opportunities get on our radar, could you just talk to us a little bit about that origination process?

Sure, sure. So we have a strong internal research team, right, and we conduct our research ourselves. But this is a huge industry, right? So we work closely with Gene's team, with our sales team, with our local offices, with our existing customers, with our partners, with industry associations as well as we're working proactively with private equities with investment banks, with advisers. And that enables us to identify all targets in the specific areas we're focusing on. Once we identify these targets, we approach and talk to every and each one of them, so we can form our own opinion about market niche or market vertical. Then we shortlist targets, and we approach those of them that we believe are most valuable to us. Now that's where the challenges most valuable businesses are usually profitable, successful and they're not for sale, right? So we are patient. I think the longest it took me is 4 years from initial engagement until I was able to have a meaningful discussion with owners of the business to progress. And now we have a successful deal, and it's one of the core business for us moving forward with the product expansion in Europe. At the same time, as a name and recognition of the company in the industry was growing, we started getting more and more inbound inquiries, right? And again, if I have a magic wand, I'd like every company who's ever considering to be sold reaching out to us. So every day, we have several inquiries coming in at this time. We also have companies which are in a start-up mode or trying to raise a little bit of a capital and get a minor investment to move forward reaching out. And sometimes this turns out into a full acquisition. Irrespective of how we get our leads or how we get our shortlisted targets, we follow exactly the same process on deciding should we acquire the business or not. We have opportunity to partner with the businesses. Sometimes it's a better opportunity to accelerate our product road map. An example was, after reviewing more than 30 business in greenhouse gas emission calculations, we partnered with one of them to speed up our development of corresponding functionality. I think Angela later today will be talking about. This is one of the major products. Alternatively, we have more than 60% of our staff in R&D. They can develop things organically, right? We believe we can develop anything ourselves. So in some cases, acquiring and partnering is not the best approach. It's developing things ourselves. In India and Israel, instead of acquiring local customs compliance businesses, we decided to hire people. And they work together with our global customer teams. And we develop local compliance in those markets ourselves. So it's always a full case in terms of buy or build or partner. We review all 3 opportunities and then make a decision.

Thanks, Vlad. So I guess that means that we're really thinking about the build versus buy when we're looking at acquisitions. So after the origination process, we move to acquisitions. Mark, can you tell us about the acquisition process? And I guess more specifically, what do we do differently at WiseTech if anything?

Yes. A lot of the acquisition process that we follow will be kind of familiar to most of the processes. We have a team of people with big 4 backgrounds that are kind of used to those processes. I think the things that different really are our focus on product, we involve our product teams, as Vlad mentioned, from pre-diligence for origination, but also during the diligence phase. We have a close focus on IS as well for security in particular. ESG, we involve our people team a lot. So there's a lot of people from functional teams that get involved in the DD process too. And that really is to help speed up the integration. I mean one of -- the main focus areas that I have is trying to make sure there's not a gap between buying a business and then integrating it. So we try and bring as much of that integration process forward into the diligence process. I mean we also have in terms of how we structure the deal, we use earnouts a lot. We focus -- we prefer to focus certainly on action-orientated earn-outs rather than maybe more traditional earn-outs like revenue growth or EBITDA achievements or something like that. We find that a lot of the businesses sort of almost by definition that we're acquiring have not scaled and scaling is hard. They don't know how to scale. We've got 30 years experience of scaling successfully, so we'd rather help them take the actions they need to scale rather than take a bit of a bet on whether they are able to get it right themselves.

Yes. And you mentioned the fact that we sort of bring in other parts of business earlier that will actually help us with the integration. So obviously, integration is a key process that we have to extract value from the acquisitions. Could you tell us more about our integration process?

Yes, sure. I mean that's really what adds the value at the end of the day rather than actually just buying the business. So we have a sort of a 5-stage process. The first thing that we sort of focus on is the typical sort of business integration, finance, legal, people, those sorts of core functions that we need to align from the beginning. Then we obviously need to make sure we've consolidated our products. So in many cases, that's not really -- not actually integrating the product. We may integrate it in sort of the short term, but you will have heard us talk about natively rewriting software, and it obviously takes a longer period of time. So there'll be some sort of integration or native rewrite. We also adapt the commercial model, as you were mentioning earlier, bringing a lot of the things that we've learned and some of the benefits from our commercial model to bear with the acquired business. And then we have productivity injections as well, using tools like Pave, standard customer support requests and other things like that. In some cases, we might also build new partner networks to support a lot of these businesses because you can imagine a lot of businesses come in with high level of professional services and other type of revenue, which is not what we want to focus on. We really have that sort of core recurring revenue focus. And then finally, but arguably most importantly, as we touched on before, is really integrating the culture. And that's really about making the business aware of what the culture is at WiseTech, how it fits in introducing them to people throughout the process where they can understand that the culture is real, and it's not just a nice slide show. And as we mentioned earlier when I was talking to Richard about some of the processes and tools we have in place to reinforce that. And over time, we see that culture being identified in the acquired business and they habituate it, and then they start to act in the same way that we do.

Thanks, Mark. And so I guess following on from integration, Vlad, can you tell us about this concept? So one of the mantras that we have is win-win or no deal. Can you tell us from, I guess, an acquisition perspective, how does that mantra play out for our sellers, for their team and for WiseTech in the industry?

Sure. Win-win applies not only actually to sellers and WiseTech, it should apply to all stakeholders in the business if you want to have a sustainable deal, right? So we're talking about key managers, actually talking about all stuff in the acquired businesses. We're talking about customers of the acquired businesses, customers of WiseTech, partners and industry should benefit as well. So many businesses, which we approach, what I called lifestyle businesses, right? Owner, founders started business 20, 30 years ago, achieved success, now enjoying life. Many family members are involved. Key managers are friends. Customers are friends. Business play significant role in local social environment. Throwing money at this business will not get you far because it will represent a significant change for decision makers. So we have to be creative and actually, constructing a win-win for all involved is the most challenging part of the deal making. So for the sake of time, I will not go into all the tweaks maybe a couple. One is why stack equity. If you're talking to your founder to keep managers to shareholders of the business, we usually find common language on how together we can build more great products, how together we can make more impactful changes to the industry. And that becomes very appealing to decision-makers, to owners of the business, to founders. So they would like to be part of this. And I really like when they take shares, WiseTech scrip is a part of consideration. Almost all our deals have scrip as a part of the deal. And I think at least once one owner of the business did not take any cash, 100% in WiseTech shares is how excited he was about the product road map. Another one is a good example is the earnout. So when we're discussing an opportunity with the business, usually, again, it's about product and what we can do together. And there is opportunity to take the product and expand into more geographies or have product functionality to be available to larger customers. A lot of WiseTech customers can use this product or functions globally. And all these require usually very deep integration, but more often a native rebuild of the product. And discussions about how this could be done turns out into earn-out discussions. So you pretty much agree what needs to be done in order to achieve much more value with the product. And then we have a financial component to this, and we have a deal. And during due diligence process, we clarify information about the product, about the team and fine tune it, so it's realistic and it could be delivered straight away. And as a result, the win for sellers is they get a higher consideration. And for WiseTech, the value is tremendous as we not only get the business. We actually get the business with the product, which is much more valuable to us is a team which is much more aligned. Also, once again, I will be talking about founders and key employees of the business. They join us and during earn-out period, they learn more about WiseTech. They know more how we operate. They know key managers and development teams. And this time, they transition into more leadership roles. They take more responsibility in the company. And they take us into geographical expansion or become leaders of the products in the business. And you will be speaking today with Steve Tracy. Where is Steve Tracy? I met Steve in Brussels many years ago, and I was impressed how Steve was talking about the industry. That would be good to have someone like this. Steve joined us as a result of acquisition in Ireland and now managing our customers product in Europe. [ Karl Marchis ] will be speaking later today. Karl is now taking his product and expanding into more geographies as a result of the deals that we have. Another good example is [ May Mora ] who joined in Brazil. She was a managing company called Bysoft and now managing our operations in South America. The experience that these people bring the knowledge of the industry, you cannot get it. You cannot hire these people. It's not possible. So this is extremely valuable for us. Now I know I'm out of time, but win for customers of acquired businesses, access to more products, features, new product road map, value to employees is that they have more opportunities, obviously, within the business. They expand into new domain areas, into new geographies. They also have a remuneration equity opportunity, which means they become shareholders of WiseTech and they benefit from the success of our business. There is also a huge value to WiseTech customers as every dollar that we spend on the acquisition effectively becomes an investment into new product features that customers will benefit from.

Thanks, Vlad. So what we heard in this session is that we take a product-led approach not only in the origination phase but during the acquisition phase in terms of the way that we structure the earnouts around action-oriented goals. And then we have had a chance to talk through our integration process, where we have emphasized, again, the product fit, but then also the equally important elements such as culture. I want to you to thank Vlad and Mark, very much for your time on the session today. And we will now actually break for lunch and be returning at 1:35 p.m. We will have a short video on our culture and then heading into our WiseTech way technology development session with Cody and Ian. Thank you all. [Break]

Hi. I'm Cody Love, Head of Productivity and Quality. I joined WiseTech 12 years ago, where I first started in product development, working closely with our CTO, Brett Shearer and Richard White. For the last 8 years, I've been focused on the productivity of our business. That's defining, refining and implementing the WiseTech way.

And my name is Ian Larsen. I joined WiseTech in 2018, initially looking after all the CargoWise product and development teams. And now I am Head of Operations. I graduated as a computer programmer quite some time ago. And for the last 40 years, I've been building, selling, implementing and managing enterprise software. And it's honestly an absolute pleasure and a privilege to have learned a new way to do that, what we call the WiseTech way.

The WiseTech Way is our chosen way of working, it's our systems, our processes, our strategies, our culture. The WiseTech Way is woven into every part of the organization. It's deeply embedded in our DNA.

And we have systemized the WiseTech Way such that we can deliver it and implement it in new teams and new businesses in the decades to come as we continue this amazing growth journey. The tension between speed and quality is something that is in every business. This pressure to deliver something now more quickly versus the pressure to deliver a quality outcome is always in play. And we would say that it is endemic to almost all human endeavor. One of the ways that plays out for us is constantly, for years and years and years, we get customers asking us, please deliver this small piece of functionality. I've got this problem in my business, and I need you to deliver a little piece of functionality so I can solve it. We actually gather those all up, and we look through them and we look for the ones that are repeated time and time again, the ones that are the deep pain points of our customers, and we take the time instead to build a deeper, much more comprehensive solution that works for all of our customers over the long term. This tension between speed and quality is always going to be with us, and deeply embedded into the WiseTech Way is the understanding of the tension and how to manage it.

At the heart of the WiseTech Way is a deep commitment to invest in the future to find the best solutions. To get that right, we need to manage the tension between speed and quality. Our strategy is to focus on the long-term vision. It's something that we commit to every day, month and year. The WiseTech Way is embedded in every part of our organization. It's in our culture. And one way that we have simplified that is through the mantras that you see over here. The mantras are simple and easy to remember. They are understood by all of our staff members, and they're able to be used to challenge thinking to bring that thinking towards the organization's cultural True North. And these mantras I use every -- in every team, everywhere across the organization, across all functions.

Slower today, faster forever is actually a really simple concept, and I'm sure that you guys will get this in a heartbeat, if you haven't already today. We invest the time now in order to not have to spend the time again and again and again. One of the ways in which this is evident within WiseTech is the way that we build our software and in particular, the testing system that we have. For over 20 years, we've been building CargoWise in a particular way, where we write the code and we write tests to ensure that our code works correctly. And we've built the sophisticated system for testing all of that. And we started building that 20 years ago. Every time we write new code, we ship it into testing system along with all the tests, and it tests not just the new code that we've developed, but every single piece of code we've ever developed since we started. And that's more than 30 million lines of code now. That's more than 1.5 million tests. This is something you cannot do manually anymore. We are long past the point at which we could test our software manually. And we have saved ourselves millions and millions and millions of hours of effort over the last 20 years that we've been doing this. This is truly an example of slower today, faster forever.

Creative abrasion fuels collaboration. Collaboration between experts for deep knowledge and differing experience is critical to be able to find the best solutions. You see this in integrations, when we bring in the intellectual capital from the acquired businesses into our core business and enrich CargoWise. We encourage open and frank communication, collaboration between different people and different function and scenarios. We want to see people challenging assumptions and working together to find the best solution. This is agreement over control, and it enables creativity to flourish. In product development, engineering leaders and product leaders don't report to each other. They have a clear purpose and a shared vision, and they use agreement over to control in order to execute on it.

Lead with content is one of the most powerful ways that we implement slower today, faster forever in our business. And Gene talked about this to a degree in his talk. When we create a new piece of product, a new piece of functionality, we invest the time then to build all of the material we need. We need marketing material. We need support material. We need implementation materials so our partners can implement the product for our customers. We need sales material, and this is what Gene was talking about. All of our demonstrations are prepackaged videos that we keep in a library. And our salespeople don't need to think too hard about how they're going to demonstrate software to our customers. They simply reach into the library and pull out those prerecorded videos, package them up and say, here's the functionality that we have in CargoWise, this is how it will solve your problems. And what we can do, what that lead with content does for us, it gives us an incredibly reliable, high-quality delivery of a sales experience time and time and time again.

Anyone can talk to anyone at any time for any reason. We have opened and unrestricted lines of communication and the free throwing exchange of ideas. When information is transmitted up and down a hierarchy, not only does this add delay and add overhead, but the information is easily filtered or distorted. We want every team member to be able to have the maximum impact on the organization in this direction and strategy. That means that leaders need to be able to engage directly with the staff who are closest to the ground troop and the functional experts who understand the detail need being able to impact that vision and direction and how we're going to be able to move forward. From Earn & Learn through to the CEO and the board, anyone can talk to anyone about anything at any time. Joining an organization the size of WiseTech, especially if you come from a company of 50 or so people, can be intimidating for people. But time and again, I hear people tell me how liberating is to join an organization where you can just speak to anyone about anything. If you have a concern, if you have an idea, if you have a suggestion, if you want help on something, you can just speak to the person and there isn't a worry of if that's appropriate or not because anyone can talk to anyone about anything at any time.

Lead others and manage yourself. For us, this is all about people being the example that they want others to follow. We don't want managers managing managers, managing managers, right? That's incredible bureaucratic. It slows everything down, and it's hugely expensive. We want people to be able to invest in their own capabilities, build their expertise, right? We want people to be able to step up and lead where there's an opportunity to do so. And time and time again, we see people doing it. They step up, they have a crack, and they get well rewarded for doing so. Lead others and manage yourself is the way in which we want the people in our business interacting with each other.

Win-win solutions can be unrefusable, implementable offers that scale rapidly with little friction. Our STL model is a win-win between us and our customers. When we build product functionality that enables them to grow, we grow with them. Our approach to acquisitions and integrations is a win-win-win. We win, the acquisition wins and the staff at both companies win as we can achieve far more together. And our sales strategy is a genuine win-win between us and our customers. We're focused on creating value for them and their organizations. Productivity at the center of everything. We are deeply committed to the systemization and continuous improvement of productivity. When you come and work at WiseTech, you will see our culture all around you. It is not just something that is on the website and in the onboarding. It's not just something that we're speaking about to you here today. This is something that the vast majority of us live every day. We are always looking for opportunities to improve our processes and practices. And we're talking about step change improvements. We're talking about dramatic changes and trends. We take a challenger mindset, always looking to do better than yesterday. We are not complacent. When you join WiseTech, you'll see processes all around you from the way they are onboarded to the way that we approach sales and marketing, our software development life cycle, the way that we handle e-requests. Everything that we do is systemized and has processes that we can continuously upgrade and improve to make the company better. In the long run, productivity at the center of everything has set WiseTech up for success at scale. With the gap between us and our closest competitors getting bigger, our moat is getting deeper.

Find the root cause. That rolls incredibly easily off the tongue, but it's actually quite difficult to do. Most people are not interested in spending the time to understand the root cause of a particular issue that's presented to them. They'd much rather stick a Band-Aid on that, solve the problem that's presented to them and then move quickly on to the next issue. We chose a different path. We take the issues that are presented to us, and we dive in to find the root cause of whatever that issue is. And this presents us with a tremendous opportunity. When you dive in, you find the root cause, you peel back all the assumptions, you apply a lot of logic, what you find is you develop a deeper, more comprehensive solution and not just to the initial problem that you were presented with, you end up solving a multitude of related problems in that particular area of the industry. And that enables us to create a solution that other people just don't take the time to build, don't take the time to think about. And this delivers tremendous value to our customers. I don't have to give you any examples of that here today because we have a bunch of incredibly talented people who are going to be on the stage soon, talking about our breakthrough products. Every single one of those is borne of this process where we dive in, find the root cause and develop a better solution. The whole credo and all our mantras have been built using that exact same process that Richard White talked about earlier today. He looked deep into what is it that makes a software development company work, what are the fundamental issues, that tension between speed and quality that we talked about earlier, and he's come up with a recipe, the credo and the mantras that solve a multitude of problems that are endemic to the software development industry. Oops. Wrong way. Sorry. There you go.

Culture eats strategy for lunch. Culture will always win out over strategy. Let me give you an example from quality management. We can have a very thorough and comprehensive 13 containment barrier process in our software development life cycle. We can encourage reviews frequently. And when we do that, we focus on 3 things: We focus on identifying the issue early because a defect that is identified earlier in the process is going to cost exponentially less to fix. We focus on getting formative input from people into the product early when we can still change direction. And we focus on the collaboration and upskilling our people around this. So we don't just have a single person who understand the domain, but we're bringing the team up and building them with us. When we do these things and we have this strategy that is going to live and die on the strength of the culture, we have a very strong culture. So we click our fingers and we delete that entire quality management strategy and remove all of the documents and all the processes around reviews. The culture will still be there. People will be thinking, I've been working on this for a while. I need some feedback. I need some input because I don't want to get the big iteration at the end. People will be thinking, "I've got this idea, but I think that this person over here might be able to help me make it even better, how am I going to get them into the process?" And people are going to think, oh, someone's asked me for help, a rotator, someone from Earn & Learn, someone just graduated at high school, I should help that person. I should help upskill them. I should make sure I'm not the only person that understands this. I don't need to hoard my knowledge. I need to make sure that the team grows together. This is because culture will always win out over strategy. We have an incredibly strong culture and people love it. This is one of the many reasons why we've managed to have a single-digit staff attrition rate for many years. People love the culture, so they stay around. So they understand it deeper and deeper. They understand the fundamental principles of it, which we're talking to you about today. Because of that, they stay around longer, and that means that they're then there to help the next people understand that culture. And that's what gives us the depth, which is not just Richard and Andrew and the Board. It's not just the senior management team. It's not just the people that work for them, but it is thousands of people at WiseTech that understand and live this culture every day.

And here today is an example of a functional expert in our business, the kind of people that we have and want to be part of WiseTech. These mentors that we've been talking about just give you a glimpse into the WiseTech Way. There are many other principles and practices that are implemented within the business and used by all of our people every single day. The culture is pervasive throughout the entire company. We have evidence that the WiseTech Way works, and we know we can implement it time and time again in the new teams and the new businesses that join our growth journey in the years and decades to come. Thank you very much.

Okay. Thanks for that. Now it's time for our Q&A session. Happy to take your questions now that relate to the last few sessions on the WiseTech Way. And we'll go -- we'll start at the front. It was a very quick hand.

It's going to be quick. It's Roger Samuel here from Jefferies. I've got a question about the commercial model from the earlier session before lunch. So back in 2014, you changed the revenue model to STL. So 10 years on, are you thinking about a new revenue model, especially with the new products? Perhaps you can stick with the transaction model, but instead of charging per shipment, you can go 1 level down, whether it's per container move, so it's by container or perhaps even more detail like a line item or an SKU, for example?

Roger, I think you've nicely summarized some of the options available to us. Thank you very much. I think it would be fair to say that based on what we've done, that we'll take a sort of a value-based approach to that. But Caroline, you're well placed to comment.

Yes, sure. I can expand on that. So I think we -- you mentioned shipments. So shipments is one of the main transactions that our customers conduct on CargoWise. That is true. But actually, some of the other suggestions that you made around line items. Actually, that's another transaction charge basis that we already have. So just to give people some color on the STL price list, you've got the seat part, which I think is well understood, and you've got transactions. Transactions isn't just one type. We don't just charge for seats and shipments. We actually have about 100 transaction line items on our current STL price list. One of them is shipments. Another one will be receipt headers in the warehousing space. And we actually also charge per container move depending on which feature you use. So there is already, I guess, that variability in terms of the charge basis across the STL model. But to address your question around it's 10 years on now, are we thinking about a new model for the new product? What I will say is that the way that we think about the commercial model is not static. Every day, even though we're not coming out with a new model that's called something different, we are thinking about the different ways that we create value for our customer and what's the best way for us to monetize that. And so that's the thought process that's still going on today, whether that evolves into a new model that's called something else or whether that's just a further iteration of STL, I think just sort of watch this space.

Thank you. Yes, in the middle, please, Claire.

It's Lucy Huang from UBS. I just have a question in relation to kind of your conversations with customers. And I think you had a really good slide on 30% of your customers' costs are indirect and then OpEx related and then 70% are direct cost. So just wanted to understand like how the conversations evolved, and are customers more now willing to look at kind of your spend with CargoWise as a bigger part of that kind of 70% direct cost picture? Or are they still containing the conversations to kind of the OpEx budgets. And just some color on that would be great.

Yes. Thanks, Lacey. Gene, you touched on that a little bit earlier, but you want to expand?

Yes. The #1 thing is customers are looking at is productivity at the center of everything that we talk about, how can they do more throughput with what they're doing? And I hope I'm answering this correctly for you. They're looking at in the correlation to the IT spend. What is our operations throughput that we can benefit by spending money on CargoWise. Having said that, I mean there's been examples of where we can minimize the number of applications that companies are running with a single platform of CargoWise and take that out of it. I think probably the thing that's come to the surface most recently is trying to manage their risk. So Caroline had talked earlier about they actually budget for compliance and fractions for fines and penalties. That's an area now that they're giving more consideration on not just operational cost throughput versus IT, but the compliance aspect of conducting business.

Okay. Next, yes, down here, please. And then another one down here, Steph for next.

It's Nick Basile from CLSA. Just to ask a question on these mantras. Can we talk a little bit about the slower today faster tomorrow and how that's influenced past M&A integration and transactions, how you thought about extracting value and growing the business?

Is there any particular aspect that you're thinking about?

I'm thinking about -- I mean, the custom strategy, I'm thinking about the U.S. land side. I imagine there's moments in times as you've learned more about the business that there's been a decision to be made around how you integrate. Can you give us some sort of raw examples? Because I think it's quite topical given the announcement around container transport, how you've worked through these problems in the past.

Yes, sure. I might take that in the first instance and open up to the others. I mean the way that we've got about integrations over the years hasn't changed hugely. But the fundamental, I think I talked earlier, what we're trying to do with integrations is really replicate what we've learned over the sort of 25 to 30 years that we've been developing our model. So we take the same approach with the acquired businesses. We obviously want integrations to happen as quick as they possibly can, but we're not going to sacrifice quality for speed. So we don't set unrealistic targets. We wait and we make sure that we do things properly. I don't know whether anyone else on the panel. Andrew?

Yes. Nick, thanks for the question. I mean, related to the custom strategy, a great example is when we have an external change with our custom strategy. So governments in certain countries are changing their custom systems all the time. And I think a really good example is we bought a business in Germany 6 years ago, right? And then the German Customs Authority decided, look, we'll change the system. We could have rewritten the German custom system on to CargoWise a whole lot quicker, but it didn't make sense to do that when the customs authority was changing their system. So we pivoted slower today, faster forever and said, okay, we'll write it and do the upgrade to CargoWise in concert with the availability for the new custom system in Germany. Now you lose a bit of time, but the long-term value of being able to do that is much, much better.

And actually, it's even more complicated than that because the customs authorities don't change a whole system in one go. They tend to change it message by message. So actually, you get lots of different overlap. So actually being able to build all the right things to be available all the right time is really complicated. Thank you.

It's Siraj from Citi. Just 2 questions on the commercial model. The first one, in terms of -- when you think about the commercial model, where do you think WiseTech's take rate or revenue share of those value savings should be? Like how do you think about the take rate? Should it be 25% of the value, 50% of the value? Just keen to understand how you set that value exchange. And secondly, one of your largest customers seems to be publicly pushing back on price increases. Just wondering whether you're hitting the limit on that one of those cost buckets, the productivity cost bucket is hitting a limit and you just need new products to expand your the value that you're offering because that's been quite public and topical.

Caroline, do you want to talk about how we set prices in the first instance and then maybe Gene can cover the...

Yes. Sure. Thanks, Siraj, for the question. So I think the first question you asked was around the take-up rate and is there like a certain percentage that we set. So I guess when we think about the pricing for either a new feature or an enhancement that we've done, you're right, we think of it from a value-based perspective. And so we look at how much value is our customer getting from using this feature in dollars. In terms of a specific take-up rate that we use, there isn't one, right? It really depends on a few factors. It depends on sort of what they're doing now, is it displacing an already manual process? And then how do you actually put a dollar figure on that? Or are there other competitors in the space and is it highly competitive. So there's a number of factors there that we think about as well as how does our product stack up against what exists today. What I will say is that in terms of the take-up rate, we want to make sure that we're charging a price where it makes sense for the customer and where there is still a strong value proposition. So if they're saving -- I don't know, if they're saving something like $10,000 as an example, on something that we're doing, then it probably makes sense for us to have a value proposition that's comparatively low compared to $10,000. So it makes it a no-brainer. And that's how we think about pricing for all of our features. We want to make sure that it's at a price point where it's not a barrier to adoption.

Gene, do you want to cover a little bit, sorry, just on the pushback.

Yes. No, I don't think so. When we take a look at CargoWise and how people are using it, maybe the key is allowing them to bring more and more value out of how somebody is using CargoWise. And we also talk about as we're extending CargoWise and enhancing it, it's a very holistic approach. So when we look across the customer base as a whole, I don't think that's a point. No one likes to pay any price increase. But the throughput that we're getting for CargoWise hasn't been the question. And possibly, as we continue to extend CargoWise, the elements of what we're extending will allow them to bring a lot more value out of what they're doing.

Thank you. We have a question down here.

Mark, can I just interrupt? We have a question from online.

I'll come back to you.

Lindy Sherman from [ Simlan ] asks, based on the earnings update at the AGM, it is clear that you are expecting faster uptake and monetization of container optimization. Can you please talk through the drivers of the fast growth, which has a material impact on company earnings in the first year of release?

Yes, sure. Andrew, are you happy to cover that in this session or should we wait?

Yes. Look, let's talk about it here. I think, obviously, container transport optimization will have a rollout schedule. I think when we updated market with FY '24 results, and we provided our guidance for FY '25, we talked through the rollout schedule was going to be the East Coast of Australia first and then the West Coast of the U.S. and then on from there. And obviously, we've adjusted the timing of that with the announcement and the updated guidance that we provided at the AGM week last Friday. So the rollout schedule is still there. Whether we see all that coming through in the second half of this year or it continues to allow us to provide future growth into future years at the same rates that we've seen. I think it's a very, very important product for us sort of moving forward.

I've got one down here.

Roy Van Keulen from Morningstar. Following on the earlier questions on take rate and value capture, I think, Caroline, you mentioned where you pointed out that attrition is very low for the sector. But maybe looking on the other side, win rates, Gene, like maybe you could comment on how -- what kind of win rates you have when it comes to other SaaS businesses rather than in-house solutions, the win rates and maybe how those have changed over the last, say, 5 years or just general commentary around how win rates are looking and how they've been trending?

As far as the win rate versus heads up competition of another SaaS solution. I'm more -- I'm less concerned about that than I have been in the past. I mean, the gap between CargoWise and the competition continues to widen. I can't think of too many incidents where we've lost to a competitive offering. It's more likely we lose to do nothing. We're not willing to spend the money and go through a digital transformation at this point. We're not perfect when we have lost in the past. It's just a matter of time before that customer comes back and we start having another engagement on CargoWise. So I think the biggest challenge, as I said earlier, is driving people to market and getting them to invest in any digital transformation. Thanks.

A question over here.

Yes. Sorry, Garry Sherriff coming through from RBC. Just a question on pricing. Funny, we sat with a quite a decent-sized customer, and we were fortunate enough to look at the CargoWise software. One thing that comes up from a pricing perspective is that they showed us like monthly invoicing, and they very much see value, obviously, in the broader platform but there are certain things that I guess, rub them the wrong way. And it's just like little things around being charged monthly for printer access or data movements into or out of the system or actual individual printing of pages. I just wonder, how do you factor in and sense check some of those price changes? I mean there's a lot of value in the platform. But little things like that, it can really get to get to a point where you have some level of view of being egregious price gouging from some of your customers. How do you sense check some of those features in terms of price increases?

Are you thinking in terms of how we sort of set some of those prices? Or is it more about the pushback we get from customers during the year?

Yes. I mean, I don't know, just sitting there and thinking about being charged for individual printing from the platform or being charged a monthly price just to have the ability to print. It just -- I guess, from my perspective, and a lot of customers are probably sitting there going, it feels a little egregious.

Caroline or Gene?

Maybe I'll start and then I'll throw it to you, Gene. So I think with transactional charging, I guess one of the slight downsides of that is that when customers receive their invoice, it's very clear to them what they're being charged for, right? So on one hand, it's really good to have that transparency. On the other hand, it kind of gives them the ability to look at each charge and really scrutinize what are the value I'm getting from here. With some of the features such as in land side or in forwarding or in customs, I think the value is clear. So there's probably no issues there. With one such as printing charges, I guess they would ask, well, why am I being charged for this? And I think for us, one of the things that we do is we -- I guess we have I guess, a long process behind each value that we provide. So whether it's something that is arguably more valuable such as a shipment or a booking versus a printing transaction, that still actually requires smart in compute and engineering to actually make that happen. In saying that, we do actually think about it when we're thinking about the price list. There are features that we don't charge transactionally for. You just get unlimited access for it as part of paying your seat fee. And so that will be access to like HR modules, which are actually critical to the running of our customers' businesses, and we don't charge for all aspects of that on a transactional basis. It's actually just included in the seat fee. So I guess the answer to that is, yes, I think there are some transactions that may on surface appear more valuable than others, but everyone requires effort and development effort from us to deliver. And we are still balancing that discussion internally around what needs to go in the seat fee and what needs to be charged a discrete transactional fee.

Gene, do you get any sort of specific pushback on these small charges?

Some of it is not necessarily value as much as behavior shaping. What if we don't charge for print drivers, you wake up one day and they've uploaded thousands of print drivers that they don't use anymore. When they do see that invoice every month and they take a look at their print drivers, they rationalize what the value is to them. And from an infrastructure standpoint, then we're maintaining fewer print drivers. That's just one example there. Part of it is value creation, part of it is behavior shaping.

Thanks, Gene. Anything else from the room? Yes, another one down here.

Yes. Just a follow-up to that point. I thought that was quite interesting. What is the value behind creating a pricing model that is designed to do that behavior shaping to the broader business? Can you expand on that point?

Sure. I mean, I guess this is probably around standardization, isn't it, and goes back to the whole way that we build standard product that everyone uses.

Well, can you give the question again? So what...

It was about what's the value of using price drivers. And I suppose the same would apply to behavioral discounts because it's another side of pricing to change the way that people behave and use the system.

Okay. I need to think of another example. But everything that we're doing is basically -- and I'm sorry if I'm talking in circles here, but looking for the win-win. The easiest example is the discounts, we talked about that earlier. Everybody wants a discount. I want another 5%. What do we want out of that, that can help shape that behavior. Part of it is collections and prepayments. So everyone wants a discount. We want preferred terms. We put together a mechanism of you're going to accept our terms, but here's a discount in order to work towards that.

Probably another example, Ian, might be how we go about services fees or paying for product developments. Do you want to speak a little bit about that?

Sure. I mean one thing, of course, is that no matter what pricing model you put up in front of customers, some people are going to disagree. There's always going to be that situation no matter what you do. One of the things we get is, like I said in my talk, many, many requests to enhance the product. And what we do is we offer customers the opportunity to advance that development on our road map and pay a fee to have us build that solution sooner than we otherwise would have. But still, we're always looking to ensure that what we build is a comprehensive solution that will work for every single customer. We do not build any software that is exclusive in just for one customer at all. And sometimes that takes us a bit longer to do it. But if we get a payment, we will advance it on the road map and put it ahead of other things that we would otherwise build.

Yes. And in terms of the way we charge them as well, I mean, that discourages some customers from even asking...

It does. It does. And at times, we've looked at how much demand we have for that work, and we've increased the price in order to slow down the demand. That's exactly what I've done.

Add in here, Nick, we've chatted about this before, but there's much more layers of productivity in our system that our customers don't all use, right? So we're giving them tools and pieces of development work that drive efficiency and productivity into their processes that they can continue to enable within their businesses. They do that through the CargoWise certified professionals that are in the business, the 38,000 people that are trained that we talked about earlier to adopt some of those productivity to be able to take more labor out and maybe take out costs that's related to printing documents turn to digital documents, which is another one of our 6 key development priorities.

Anything else from the room? No. Okay. Well, thank you very much. Thanks, panelists. Appreciate your time. We'll now move to the next product session. I think Caroline, you're hosting this one.

Great. Okay. CargoWise Next. So CargoWise Next is our fourth-generation, web-enabled platform that will deliver to customers a whole suite of major new features and functions. Today, we'll hear from 2 long-standing members of WiseTech who, with their teams, have been key to allowing us to deliver CargoWise Next.

Brett, you're our CTO and Chief Architect. You're one of the original employees that started with Maree and Richard many, many years ago. Could you please tell us about how your journey at WiseTech started and how that's evolved to the role you have today?

Sure. I started with the organization in 1994. It's quite a long time ago now. More than half of my life has been spent with WiseTech and certainly almost all of my professional career. We started by bringing a product from New Zealand called Datahawk, which we rewrote for the Australian market and then took the CMR message reengineering for Australian customs to then launch our new Odyssey product back in 2001. I've been involved in writing the Australian, New Zealand, U.S. and British custom systems. And I've had a real passion for making software that's fast, reliable and scalable. And so that's what I've been doing for the last 20 years or so, really focusing on growing the software that we build and making sure that the capability meets the market.

Great. Thank you, Brett. And Angela, you have an amazing story at WiseTech. And actually, someone gave me a very interesting data point about you. I think you were actually the first product manager that we had at WiseTech. So...

That's correct. That's correct. So I'm Angela Gadaev, and I joined WiseTech nearly 20 years ago. In my past life, I was Head of Information Services in a shipping company. And I decided -- I saw the opportunities at WiseTech, and I decided to switch my career from being tech expert in the logistics company to become logistics expert in a tech company. And that's absolutely right. I was the first product manager at WiseTech when the company was just 40 people strong. And it's really amazing to see that most of us are still here. Today, my title, my role is Head of International Logistics Product portfolio. This portfolio now has about 300 people in 13 countries. The team looks after our flagship product, freight forwarding as well as order management, shipping, visibility, automation and tracking of containers, shipments, vessels, flights as well as rates, quotations, tariffs, contracts and integrations to ocean carriers, airlines and port authorities. So practically all aspects of international logistics.

Thanks, Ange. So Brett, maybe let's start off with explaining the differences between CargoWise One and CargoWise Next, I guess more from like a technical and infrastructure perspective. Could you give us a couple of the key points there?

Certainly. CargoWise One is delivered and CargoWise Next also in an optional mode, using a technology called RDP, Remote Desktop Protocol. I'm sure during COVID almost all of us were working from home at some point, and we're RDPing or connecting into the office. So that technology is well used and well understood, but it does present some security issues. And so it's better to not use RDP unless you absolutely need to. We are taking that out of the platform. So we have a layer of business layer, then we have the presentation layer. And that presentation layer, we've been able to completely reuse but change how it actually gets delivered to the customer. So that increases our security profile within our CargoWise cloud. It has also increased the performance of the product. So it's got a snappier user interface. But because we've reused that layer, the interface is the same. So it's completely refreshed, but the customer doesn't actually notice anything different apart from it being faster and the more secure that they can't see.