Giri Tenneti: Hello. Thank you for joining ASX. Today, we have with us Richard White, founder and CEO of WiseTech Global, to talk about his own company and the future of the tech industry in Australia. Welcome, Richard.
Richard White: Thank you.
Giri Tenneti: So, you've just turned in a bumper profit result. Can you tell us a little bit about that and what's driving the future of WiseTech?
Richard White: Well, first of all, yes, it was a great result. But it's really from years and years of very careful planning and execution. No one creates a profit like that without putting a lot of thought into the business and a lot of planning into how you actually go to market.
We've been building a very powerful product, and we're a product-led company. And part of that strategy is what we call the three Ps – product, penetration and profitability. We've been working on all aspects of the business, making it more efficient and effective, building a better product, winning more market share and really focusing on the things that make the company profitable and powerful.
Giri Tenneti: Obviously, this is an issue for WiseTech, but what's your view on investor appetite for technology companies that aren't turning a profit?
Richard White: Well, I think, look, there are two types of companies. There are really high-cash-burn companies that have difficulty explaining what their path to profitability is, or that path is very far into the future and requires multiple capital raisings to keep them going. They've suffered really badly. Their valuations have dropped dramatically and investor appetite has fallen away. I think that's a rational result of higher interest rates and quantitative tightening from the central banks. And it's a very rational view from investors because investors want a company to be smart and organised and profitable in the long term because that's how you sustain a company. You don't keep going back to investors and asking for more money in the hope that one day you're going to make money.
On the other hand, there are a lot of very good software businesses that do need some time to get to profitability, but they typically have very high growth rates and a very clear path to that profit.
Giri Tenneti: What's your outlook for the long term?
Richard White: The company has had very strong growth over the last five years. And we've talked about the market and that the combined end-of-growth rate is quite high. I think that as the company has arrived at a very strong position in the marketplace, we can see a pathway to a lot more addressable markets and a lot more growth. So, I'm always very strongly of the view that we can continue to grow the company strongly while also making it a very profitable business.
Giri Tenneti: So, in light of that, what's your outlook on the Australian tech industry? And what do you think will encourage more listings to come to ASX?
Richard White: Well, first of all, I think the Australian tech industry is doing very well. And there's a good indicator of that. When we listed in 2016, the total tech part of the index was about 3%. Today, it's about 9% of the index. There's a lot of upside opportunity there because if you look at the NASDAQ, again, around that same timeframe, 27% of the index was technology companies. So, we've got a lot of upside opportunity. And it's a smart country. It's got a great education system, a great system of laws. It's very calm and orderly in this country. It's a great place to do business.
We can do business with the US in the morning, we can do business with Europe in the evening. And nobody thinks Australia is a big threat, so we can kind of creep up on people and do quite well in that sense. So, I think it's a great country to build these technology businesses in, and there's a lot of upside opportunity.
Giri Tenneti: Fantastic. Thanks for joining us today, Richard.
Richard White: No problem.