Domino's up, Wisetech down: Suddenly it's Upside-Down World in ASX earnings today

It’s earnings season again as the ASX market announcements page becomes increasingly flooded with earnings lodgements.

To save you the trouble of trudging through it all, we’ve wrapped up the highlights from some of the reports that caught our eye.

Domino’s Pizza (ASX:DMP)

Highlights:

Full year global sales of $4 billion, up 2.2% on pcp
Full Year EBIT of $201.7m, down -23.3% on pcp
Sales growth came through higher menu prices, but fewer meals sold

Domino’s says the company’s margins and earnings were affected by the decision to increase menu prices to protect the sustainability of more than 1,000 franchisee partners faced with ‘extraordinary inflation’.

As a result, total sales growth for the year came mainly through higher menu prices, not the sales of more meals.

CEO Don Meij said the speed at which the company needed to respond to inflation meant that it didn’t always get the ‘value equation’ right.

“For example, some of the changes we made including the introduction of a Delivery Service Fee did not resonate with some customers and over time, they ordered less frequently,” he said.

Meij says the company is still actively working to ‘rebalance’ the value equation – this means getting the right products, service and image for our customers, not simply reversing the price increases.

In FY24, the company expects that a sales rebound would have to rely on rebuilding customer frequency and order volumes, with new products a proven path to increasing orders from new and returning customers.

Management says they are focused on ‘rebalancing the value equation’ – namely product, service and image, at an affordable price.

The Domino’s share price rose by almost 5% this morning, suggesting the market’s confidence in the company’s plans was rising.

Wisetech Global (ASX:WTC)

Highlights:

Full year FY23 total revenue of $816.8 million, up 29% on the pcp
Underlying NPAT 3 of $247.6 million, up 30% on the pcp
Final dividend of 8.40 cps, up 31% on the pcp

The global logistics software company’s shares slumped by as high as 15% this morning despite reporting solid metrics for the full year.

Wisetech has delivered pretty much at the upper end of its forecasts.

Revenue came in at $816.8 million, versus guidance of $790 million-$822 million; EBITDA excluding M&A costs was 28% higher at of $412.1 million, versus guidance of $380 million-$412 million.

During the year, Wisetech signed its first global customs and compliance rollout with the world’s largest global freight forwarder, Kuehne+Nagel.

This momentum continued after year end, with FedEx confirming it intends to roll out global customs alongside their ongoing global forwarding rollout.

For FY24, Wistech has guided the market to revenue of $1,040 million–$1,095 million, a 27%–34% from FY23.

EBITDA is expected between $455 million–$490 million, representing growth of 18%–27% from this financial year.

The selloff in Wistech shares this morning could be due to profit taking, as the WTC shares have risen by almost 70% this year.

Pepper Money (ASX:PPM)

Highlights:

First half loan originations of $3.5bn, down from $5.6bn on the pcp
Statutory NPAT of $52m, down 28% on the pcp
Fully franked interim dividend of 3.5 cents per share declared

Pepper says that following 12 official cash rate increases by the RBA since May 2022, there has been a pronounced impact on credit demand in mortgages.

“The mortgage market has been challenging with intense competitive behaviour as the major banks sought to gain share through cash back offers and other incentives, driving higher levels of customer attrition,” said Pepper Money CEO, Mario Rehayem.

Within this environment, the company quickly capitalised on opportunities it identified in the auto and equipment market.

“This has seen the business accelerate growth in our Asset Finance business, to offset volume constraints in mortgages,” said Rehayem.

Looking ahead to FY24, Pepper says it is encouraged by recent Equifax data showing a 4% uplift in mortgage enquiry levels over the last six months.

This shows that whilst there may be further interest rate increases ahead, mortgage lending activity appears to be trending upwards.

Adore Beauty (ASX:ABY)

Highlights:

Revenue of $180.6 million, down 9.6% on the pcp
EBITDA of $0.6 million and EBITDA margin of 0.4%
Cash balance of $27.8 million available for investment, and no debt

Despite challenging trading conditions, Adore has returned to growth in the second half, up 0.5% vs the prior year’s H2.

Active customers however were down 8% on pcp to around 801,000.

Adore Beauty’s strategic growth initiatives continue to mature, with mobile app sales now accounting for a quarter of all revenue in Q4.

“We see further opportunities to increase revenue contribution from the app and are investing in AI, beauty technology and user experience enhancements,” says CEO, Tamalin Morton.

In FY24, Adore says it’s targeting an EBITDA margin of 2-4%, versus 0.4% in FY23.