Business Overview
What the company does. WiseTech Global builds and sells CargoWise, a single-platform, single-database software suite that runs the operations of freight forwarders and customs brokers — quoting, booking, customs filing, warehousing, accounting, compliance, tracking — across 181 countries. It was founded in Sydney by Richard White in 1994, listed on the ASX in 2016 and switched its reporting currency to US dollars from FY25. More than 17,000 customers use it, including all of the top 25 global freight forwarders; the largest (DSV, Kuehne+Nagel, DHL Global Forwarding, Nippon Express and others) run multi-year global rollouts that take years to complete and are commercially impractical to reverse. Pricing was historically per-user and per-module; a new all-inclusive, per-transaction "Value Pack" commercial model launched in December 2025 and 95% of customers have moved to it, so revenue now scales with transaction volumes rather than seats.
Segments. The company now reports two segments. WiseTech ex-e2open (US$854.8m, 61% of revenue, +10%) is CargoWise (US$756.9m, +11%; 99% recurring) plus a tail of non-CargoWise legacy products (US$97.9m, flat) that are being sunset or migrated. e2open (US$541.2m, 39%) is a Texas-headquartered supply-chain SaaS platform — channel, logistics and global-trade applications sold to manufacturers, retailers and brand owners rather than forwarders — acquired for US$2.1bn enterprise value and consolidated from 4 August 2025. Its 22% reported EBITDA margin (mid-30s ex-restructuring) is the drag on group margin from 49% to 40%; lifting it toward CargoWise economics is the core of the FY27–FY28 story. Strategically, e2open gives WiseTech the shipper end of every shipment CargoWise already touches at the forwarder end — the "multi-sided marketplace" ambition management calls Horizon 3.
CargoWise's economics — 99% recurring, ~50% EBITDA margin, multi-year rollouts at the world's largest forwarders — are those of a mission-critical vertical ERP with near-monopoly share at the top of its market. The company that owns it, however, now presents as a leveraged roll-up with three EBITDA definitions, statutory earnings 43% below underlying, its largest customer building an exit route and three regulators on the premises. The investment question is which of those two descriptions the next 24 months make true — and the memo's view is that the price already discounts the second while the first remains intact.
The asset investors want to own — CargoWise — grew 11% and held a 50% margin through the worst year in the company's public life. What the market is repricing is the wrapper around it: leverage, integration, accounting complexity and a governance file that keeps adding pages. That distinction is what separates a WATCH from an AVOID.
Market Dynamics
Global trade and logistics is an ~US$11 trillion industry running on fragmented, often decades-old software; the addressable spend on logistics execution and supply-chain software is in the tens of billions and growing high-single-digits. Two forces matter for WiseTech: consolidation among forwarders (each merger is a CargoWise standardisation event — DSV's acquisition of Schenker being the largest recent example) and the arrival of AI agents that can automate the document-heavy, exception-heavy work that forwarders currently staff with people. The first widens CargoWise's installed base; the second either widens its moat or lowers the barrier for competitors, and the answer is not yet known.
When a CargoWise customer acquires a non-customer, the acquired volumes migrate onto CargoWise. The DSV–Schenker integration alone adds a large-forwarder rollout to the pipeline. Transaction-based pricing means those volumes convert to revenue without a new commercial negotiation.
Management has been explicit that frontier coding models changed the economics of software development inside WiseTech: up to 50% of product-development and customer-service roles (~2,000) are being removed across FY26–FY27, with the guidance already embedding a 49–51% underlying margin. The company disclosed 1,060 CargoWise enhancements in 1H26 alone, suggesting throughput is not falling with headcount.
The December 2025 shift to all-inclusive per-transaction pricing removes the module-by-module sales friction that slowed adoption of new products (the 1H25 rollout delay that started the 2025 de-rating). 95% of customers have migrated; SME signings have improved; the cost is a 2H26 revenue "refinement" as pricing settled.
Three separate matters: an ACCC search warrant executed in August 2026 concerning the supply of global logistics services and software under the Competition and Consumer Act; an ASIC/AFP search of headquarters in October 2025 over alleged trading in WTC shares by the founder and three employees; and 2026 AFP inquiries into the founder personally. None has produced charges. Any one could produce a penalty, a remedy that constrains commercial terms, or a forced change in the founder's role — and the ACCC matter, if it concerns bundling or exclusivity within Value Packs, touches the revenue model directly. The ACCC has form here: in forcing the 2025 divestment of Expedient it stated that WiseTech holds "substantial market power" in logistics software.
DSV — the world's largest forwarder by revenue and, per Jefferies, ~9% of WiseTech's pre-e2open revenue and ~10% of EBITDA — has confirmed that Tango, the platform it inherited with DB Schenker, is intended to become its strategic operating system, and industry reporting suggests a minority of operations have already moved. The counter-evidence is real: WiseTech disclosed in July 2026 that DSV's CargoWise transaction volumes grew ~20% in six months as Schenker users were migrated onto it, the contract with a "substantial financial commitment" runs to September 2028, and the two CEOs met in Copenhagen in May to discuss an early move onto Value Packs. WiseTech's own guidance is that a full migration off CargoWise would take 5–7 years. But the largest customer of a company with <1% historical attrition has, for the first time, named an alternative.
The same models that let WiseTech halve its development headcount let a well-funded competitor or a large forwarder build more of its own stack. CargoWise's moat is data, breadth and regulatory content (customs rules across 180+ countries), not lines of code — but the market has not yet decided whether AI compresses vertical-software moats generally, and WTC's multiple has been caught in that repricing alongside its own issues.
Net leverage of 3.2x at December 2025 (~3.0x at June 2026) is unfamiliar territory for a company that was net cash three years ago. Net finance costs of ~US$135m a year absorb roughly a fifth of underlying EBITDA. Deleveraging to <2.0x by August 2028 depends on e2open margin recovery landing on schedule; a stumble there and the restructuring costs, integration costs and interest arrive together.
WiseTech has moved, in 24 months, from a company whose regulatory exposure was essentially customs-rule change management to one under active investigation by Australia's competition, securities and federal police authorities. The company's position is that no charges have been laid and that it is cooperating fully; the ASIC/AFP matter concerns individuals' trading rather than the company, and the ACCC matter has not been particularised publicly. What an investor can observe is the pattern: allegations about the founder's personal conduct (October 2024) led to his exit as CEO; a governance dispute led to four independent directors resigning (February 2025) and White returning as executive chair; the ASIC/AFP search (October 2025) was followed within days by White selling ~A$70m of stock; the AFP inquiry (mid-2026) preceded his exit as executive chair in July 2026, with Raelene Murphy appointed independent chair. He remains a director, "Founder and Chief Innovation Officer", and the largest shareholder at ~33%. The board renewal is real; whether it has authority over the founder's role is the open question. Product-level ESG exposure is low — WiseTech's software reduces paper, error and re-work in trade — and cybersecurity of customs and trade data is the material operational risk.
The sector tailwinds are unusually strong and specific to this company — consolidation, transaction pricing and AI cost-out all accrue to CargoWise first. But the regulatory stack is not a background risk; it is the live variable that determines whether the multiple recovers, and it cannot be diligenced from outside. That is precisely the condition under which a disciplined investor waits for the trigger rather than the price.
Management & Governance
Chronology: Oct 2024, media reports on founder-CEO Richard White's personal conduct; White steps down as CEO, CFO Andrew Cartledge becomes interim CEO. Feb 2025, four independent directors (including the chair) resign in a dispute over White's role; White becomes executive chairman. Zubin Appoo appointed CEO. Aug 2025, e2open completes. Oct 2025, ASIC and AFP execute a search warrant at head office over alleged share trading by White and three employees; within days White sells ~A$70m of shares on-market. Feb 2026, 50% headcount reduction announced. Jun 2026, reports of an AFP investigation into White; shares hit a five-year low of A$28.76. Jul 2026, White steps down as executive chair; Raelene Murphy appointed independent chair; White remains director, Chief Innovation Officer and ~33% holder. Aug 2026, ACCC executes a search warrant under the Competition and Consumer Act. Aug–Sep 2026, board renewal completes: Tim Ebbeck (ex-Oracle and SAP ANZ CEO) joins as independent director and Audit & Risk chair, and a permanent CFO is appointed on 1 September 2026, ending a 23-month interim period under Caroline Pham that spanned the e2open acquisition, the currency change and the debt raise.
| Dimension | Rating | Assessment |
|---|---|---|
| Communication | Amber | Guidance has been met since the FY25 reset and the AI restructure was disclosed with unusual candour. Against that: three EBITDA measures (reported, "guidance", underlying), underlying NPAT redefined and restated in FY26, and regulatory disclosures that are minimal. Investors are told what is required, rarely more. |
| Capital Allocation | Amber | e2open was a US$2.1bn, debt-funded bet on a 22%-margin business made while the board was in turmoil — bold, and early evidence (synergies 18 months ahead) is positive. But the balance sheet went from net cash to 3.2x, buybacks are off the table, and the dividend payout is held at 20%. Bolt-ons (FRDM.ai, US$10m plus earn-outs) continue. |
| Track Record | Green | Operationally, a decade of 15–20% organic growth, 50%+ margins and product-led share gains at the world's largest forwarders. FY26 revenue and EBITDA guidance were both delivered, EBITDA above the top of the range. The operating machine has not broken. |
| Insider Alignment | Amber | White's ~33% is the largest founder stake on the ASX 100 and aligns him with the equity in magnitude; his ~A$70m sale days after the ASIC/AFP search, and the subject matter of that search, undermine the alignment argument. Directors Isaacs and Charlton bought on-market in December 2025 at ~A$68, which is a genuine positive. |
| Strategic Clarity | Green | The three-horizon plan (CargoWise depth → e2open synergies → forwarder-shipper marketplace) is coherent and has been articulated consistently since the FY25 result. The AI operating-model thesis is specific — headcount, throughput, margin — rather than aspirational. |
Governance structure. Australian public company, single class of shares, June year-end, US$ functional currency from FY25, fully franked dividends. The board was substantially reconstituted through 2025–26 and now has an independent chair for the first time since February 2025. The unresolved structural issue is the founder: a 33% shareholder who is also a director and executive (Chief Innovation Officer) while under regulatory investigation cannot be managed by a board in the ordinary way, and the market is right to discount for that. The interim-CFO issue has now been resolved with a permanent appointment on 1 September 2026, and with Tim Ebbeck as Audit & Risk chair the board is five independents to two executives — the most legible governance signals available have been sent. Class-action exposure relating to 2024–25 disclosures should be assumed until evidence otherwise.
This is a strong operating team inside a governance structure that has visibly improved in the last 90 days — independent chair, permanent CFO, independent audit chair — but still cannot resolve the founder's position or the regulators' questions. Management delivered the numbers in FY26; what they cannot deliver is the outcome of three investigations, a change in the founder's role, or DSV's technology strategy. Until one of those resolves, the quality of the business is not investable at institutional standards, however cheap the price.
Financial Analysis
| Year | Revenue | Growth | EBITDA | Margin | EBIT | NPAT (u/l) | EPS (US$) | DPS (USc) |
|---|---|---|---|---|---|---|---|---|
| FY24A | 683 | +28% | ~326 | 48% | ~270 | ~186 | ~0.56 | ~12.4 |
| FY25A | 779 | +14% | 410 | 53% | ~340 | 242 | 0.72 | 14.4 |
| FY26A | 1,396 | +79% | 645 | 46% | ~520 | 314 | 0.94 | 15.6 |
| FY27E | 1,510 | +8% | 750 | 50% | 610 | 360 | 1.08 | 22 |
| FY28E | 1,650 | +9% | 870 | 53% | 720 | 435 | 1.30 | 26 |
| Underlying = company definition from FY26: excludes M&A costs, restructuring, divestment gains/losses and acquired-intangible amortisation. FY25 EBITDA shown ex-e2open M&A costs (reported US$381.6m). FY24 converted from A$ at the FY25 restatement rate; approximate. EBIT = underlying EBITDA less depreciation and amortisation of capitalised development. FY27E anchored to guidance (revenue US$1.48–1.54bn; underlying EBITDA +12–21%); FY28E is analyst extrapolation. Statutory NPAT: FY25 US$200.7m; FY26 US$178.7m. Share count ~336m throughout — no buyback capacity at current leverage. | ||||||||
| Risk | Rating | Type | Narrative |
|---|---|---|---|
| Regulatory & legal stack | High | Thesis-level | ACCC (competition/consumer law, August 2026), ASIC/AFP (share trading, October 2025) and AFP (founder, 2026) are three separate matters with three separate outcomes. The ACCC one is the thesis risk: if it concerns bundling or exclusivity in the Value Pack model, a remedy could reach into pricing and product packaging. Penalties and class actions are the secondary channel. |
| Governance & founder | High | Thesis-level | A 33% shareholder-director-executive under investigation is a structural fact the board cannot resolve on its own. A forced exit would remove the product architect; a prolonged status quo keeps the discount. Either path is disruptive; only the second is priced. |
| DSV concentration & Tango | High | Thesis-level | ~9–10% of pre-e2open revenue/EBITDA (~US$70–80m) with a contract to September 2028 and a customer that has named a replacement platform. Volumes are rising now as Schenker migrates onto CargoWise, and an early Value Pack deal is under discussion — but the FY29+ revenue line has a hole in it until DSV signs beyond 2028. A loss would also be a reference-customer event for every other LGFF. |
| Leverage into integration | Med | Valuation discount | ~US$1.75bn net debt, ~US$135m annual finance cost, 3.0x leverage. Deleveraging depends on e2open margin recovery and restructuring landing simultaneously. Covenant headroom is not disclosed in detail; a rate-swap program mitigates cost, not quantum. |
| AI moat erosion | Med | Structural | If AI lowers the cost of building forwarder software, in-house rebuilds at LGFFs and better-funded competitors become plausible over five years. CargoWise's defence is customs content, network effects and switching cost, not code — but the market is applying an AI discount to vertical SaaS broadly and WTC has no way to disprove it quickly. |
| Commercial-model transition | Med | Execution | Transaction-based pricing (US$2.63–19.95 per job, per the CEO) ties revenue to freight volumes and to "refinements" of the model (which already cost 2H26 growth). The CEO has said the majority of FY26's 11% CargoWise growth came from the pricing transition rather than volume — the FY27 guide of 12–20% CargoWise growth needs volume and AI monetisation to take over. A trade downturn now flows more directly to revenue than under seat licensing. The upside — usage growth without sales cycles — is real but unproven over a full cycle. |
| Earnings quality | Med | Valuation discount | Statutory NPAT is 57% of underlying; three EBITDA definitions coexist; capitalised development is ~US$130m+ a year; underlying NPAT was redefined and restated in FY26. Each is defensible individually. Together they mean the headline multiple flatters. |
| Freight cycle & concentration | Low | Cyclical | CargoWise grew through the 2023 freight recession. The top forwarders are a meaningful share of revenue but each is a multi-year rollout with no realistic alternative. Trade-policy volatility (tariffs, rerouting) increases customs complexity — historically a net positive for CargoWise usage. |
FY26 free cash flow of US$410.7m (+43%) is 131% of underlying NPAT but only 64% of underlying EBITDA — the gap is capitalised development (~US$130m+, which the company treats as investment rather than expense), net finance costs (~US$135m) and restructuring/M&A cash. Management's "underlying FCF" of US$489.6m adds the one-offs back. The honest read: CargoWise standalone converts cash exceptionally well; the group number is now carrying an integration and an interest bill. On a ~US$9.3bn EV that is a ~4.4% FCF yield rising toward 6–7% as restructuring cash rolls off and leverage falls — adequate, not compelling, until FY28.
The FY26 accounts show a 46%-margin, cash-generative software business that has been deliberately loaded with debt, integration cost and restructuring to buy a second platform and a cheaper cost base. Whether that was wise will be visible by the FY28 result; what is visible now is that the price assumes the answer is no, while the operating data so far says yes.
The Investor Opportunity
Mispricing thesis. WiseTech has fallen from A$121 to A$32 in eleven months — ~A$30bn of market value — during which CargoWise revenue grew 11%, group underlying EBITDA grew 56% and guidance was met. The de-rating is a governance and regulatory discount applied to a business the market previously valued at 100x earnings; at ~21x FY27E underlying earnings it now trades at a discount to Descartes, TechnologyOne and the ASX software cohort despite superior margins and market position. Consensus targets of A$55–61 say the sell-side sees the same thing. The memo's view is that the mispricing is real but that the discount is attached to risks that cannot be sized from outside — three investigations and a founder's role — and that the correct response is not to buy the average outcome but to wait for the distribution to narrow. The base case does not require the investigations to end well; it requires them to end without touching the revenue model.
Holding period and triggers. 3–5 years once entered. Entry is conditional on any one of: (i) the ACCC matter being publicly scoped as not concerning CargoWise's commercial terms, or resolved; (ii) DSV extended beyond September 2028 or moved onto Value Packs early, with a clear board statement on the founder's executive role; or (iii) 1H27 (February 2027) showing CargoWise organic growth ≥15% and leverage ≤2.7x. Absent a trigger, A$28–34 is the accumulation zone for a starter position only if the committee accepts governance as an explicit bet. Exit trigger post-entry: any regulatory remedy that constrains pricing or packaging, or CargoWise organic growth below 8% for two halves.
- Category-defining vertical ERP: top 25 global forwarders, 99% recurring, ~50% margin, multi-year rollouts that don't reverse.
- Cheapest in a decade: ~21x FY27E underlying EPS, ~12x EV/EBITDA, vs a 50–100x history and a Descartes premium.
- AI restructure is already in the guide: 49–51% margin FY27, with 2,000 roles out and product throughput up.
- e2open synergies 18 months early; margin path from 22% → mid-30s → CargoWise-like is the FY27–28 earnings engine.
- Value Packs convert a decade of product investment into transaction-linked revenue; 95% migrated, SME signings up.
- Governance reset largely done: independent chair, permanent CFO, independent audit chair, 5-of-7 independent board, directors buying stock.
- ACCC action reaches the commercial model — bundling, exclusivity or pricing remedies cut into Value Pack economics.
- Founder resolution is disruptive either way: forced exit removes the product architect; status quo entrenches the discount and invites class actions.
- e2open margin recovery stalls in the low 30s; deleveraging slips; finance costs and restructuring cash coincide.
- AI compresses vertical-software moats faster than it compresses WiseTech's cost base; large forwarders rebuild.
- Accounting opacity — three EBITDAs, restated underlying NPAT, ~US$130m capitalised development — becomes a market-wide discount rather than a footnote.
- Transaction pricing meets a freight recession for the first time; revenue sensitivity to volumes is higher than under seat licensing.
- DSV completes its migration to Tango after September 2028 — ~10% of core EBITDA and the industry's most-watched reference account.
Entry: A$32.18 · Base FY28E EBITDA: US$870m · Exit multiple: 26x underlying P/E ≈ 14.5x EV/EBITDA · Base target: A$48 + ~A$0.7 dividends over 24 months → ~24% IRR. Bull: 35x on US$1.45 = A$73 → ~51% IRR. Bear: 14x on US$1.00 = A$20 → −21% p.a. Probability-weighted at 35/45/20 (bear-heavy, reflecting unsizeable regulatory risk) the two-year expected return is still ~+35% — which is why this is WATCH and not AVOID. The trigger discipline exists because the 35% bear weight is a guess, and the correct response to an unsizeable risk is to wait until it can be sized, not to average over it.
WATCH: the best software asset on the ASX is on sale, and the committee should want to own it — but not until at least one of three things happens: the ACCC matter is scoped away from the revenue model, DSV signs beyond 2028, or the February 2027 half proves the AI cost base with CargoWise growth intact. Any one converts this to BUY; none of them is priced, and none can be diligenced from outside.
Scorecard — 20 Dimensions
| Dimension | RAG | Score | Rationale |
|---|---|---|---|
| A · Business Quality — 6 Dimensions | |||
01 Business Model Clarity & Scalability Single-platform vertical SaaS | Green | 4.0 | CargoWise alone would be a 5. e2open adds a second platform, a second customer type and a second margin structure; the "marketplace" synergy is a thesis, not yet a product. Clarity has been traded for scope. |
02 Customer Dependency & Pain Point Operating system of the forwarder | Green | 4.5 | A global forwarder on CargoWise runs its entire operation on it — customs, finance, tracking. Rollouts take years and touch every office. Dependency is close to total; 99% recurring revenue is the evidence. |
03 Competitive Moat & Barriers to Entry Content + network + switching cost | Green | 4.5 | Customs and compliance content across 180+ jurisdictions, a US$1bn+ product investment, and the top 25 forwarders as reference customers. The half-point deduction is the AI question: whether code-generation lowers the barrier over a five-year horizon. |
04 Pricing Power Transaction-based, annual uplifts | Green | 4.0 | Annual price increases have gone through for a decade and the Value Pack model captures product depth without negotiation. Deducted for the 2H26 "refinements" and for the possibility that the ACCC matter concerns exactly this. |
05 Vulnerability of Business Model AI, regulation, cycle | Amber | 3.5 | No single substitute threatens CargoWise, but three slower-moving vulnerabilities coexist: AI-enabled in-house rebuilds, a regulatory remedy on packaging, and transaction pricing's untested cyclicality. |
06 Nimbleness of Company Product cadence, restructure speed | Green | 4.0 | 1,060 product enhancements in a half; e2open synergies delivered 18 months early; a 50% headcount restructure decided and executed within a year. This is a company that moves — which is also why it makes large mistakes quickly. |
| B · Sector & Market Quality — 4 Dimensions | |||
07 Is the Sector Ahead of the Curve? Logistics digitisation, AI | Green | 4.0 | Global trade software is under-penetrated and consolidating, and AI agents suit document-heavy, exception-heavy logistics work unusually well. WiseTech is positioned at the front of both trends. |
08 Expected Regulatory Changes ACCC · ASIC · AFP | Red | 2.0 | Three active regulatory matters, one of which (ACCC) may concern the commercial model. No charges laid; no scope disclosed. The score reflects what is known — which is only that the exposure is live and unbounded. |
09 Sector Attractiveness to Stock Market Vertical SaaS under AI discount | Amber | 3.0 | ASX technology has de-rated and vertical software globally carries an AI-disruption discount. Sentiment will not lead a WTC recovery; delivered numbers and regulatory clarity will have to. |
10 Market Position — Local & Global #1 in global freight forwarding | Green | 5.0 | All of the top 25 global forwarders; no competitor of comparable depth at the top of the market. The strongest single dimension in the card. |
| C · Management Quality — 4 Dimensions | |||
11 Management Quality Operations strong, governance weak | Amber | 2.5 | Operating execution in FY26 was strong and guidance was met. But the company's leadership has produced, in two years, a CEO exit, a board exodus, a search warrant over insider trading, a founder share sale during that investigation and a second search warrant. Quality of management includes judgment, and judgment has been the problem. |
12 Executive Preparedness Bench, succession, CFO | Amber | 3.0 | A CEO in his first full year, a permanent CFO appointed in September 2026 after a 23-month interim period, a chair appointed in July, an audit chair appointed in September, and a founder whose role is undefined. Moved from Red to Amber on the CFO and audit-chair appointments; the team is now assembled, but untested together. |
13 Skin in the Game Founder 33%; directors buying | Amber | 3.5 | By magnitude, the most aligned founder on the ASX 100. By conduct, an ~A$70m sale days after a regulatory search. Directors buying on-market in December 2025 at twice today's price partially offsets. Net: alignment is real but conditional. |
14 Capital Allocation Discipline e2open, leverage, 20% payout | Amber | 2.5 | A US$2.1bn, debt-funded acquisition of a 22%-margin business, executed during a board crisis, is not disciplined even if it proves well-timed. Synergy delivery is ahead of plan, which earns the half-point. No buyback capacity exists at 3x leverage while the stock is at a decade-low multiple. |
| D · Financial Quality — 6 Dimensions | |||
15 Balance Sheet Strength ~3.0x net leverage | Amber | 2.5 | ~US$1.75bn net debt on ~US$645m underlying EBITDA; finance costs ~US$135m. Serviceable for a 99%-recurring business, and swaps fix part of the cost, but there is no cushion for a regulatory penalty or a margin miss. Target <2.0x by August 2028. |
16 Earnings Quality Statutory 57% of underlying | Amber | 2.5 | Three EBITDA measures, a redefined and restated underlying NPAT, ~US$130m of capitalised development, acquired amortisation and restructuring all sit between statutory and underlying. Each adjustment is defensible; the aggregate demands a discount the market is currently applying. |
17 FCF Generation US$411m · 64% of EBITDA | Amber | 3.5 | FCF grew 43% and exceeds underlying NPAT. Conversion from EBITDA is diluted by capitalised development and interest; it should improve as restructuring cash rolls off. Solid, not yet the CargoWise-standalone standard. |
18 ROIC vs. WACC ~11–12% vs ~9.5% | Amber | 3.0 | Pre-e2open, ROIC was well above 20%. Post-acquisition, US$2.1bn of goodwill and a 22%-margin asset pull group ROIC to low-teens against a ~9.5% WACC (beta 1.1, levered). The spread is positive and should widen as e2open margins recover; it is not yet the return profile of a quality compounder. |
19 Dividend Sustainability 20% payout, fully franked | Amber | 3.5 | A 20%-of-underlying-NPAT policy, fully franked, covered many times by FCF — sustainable by construction. Deducted because the yield (~0.7%, ~1.0% grossed up) is immaterial to the return and deleveraging will keep it that way. |
20 Valuation vs. Intrinsic Value ~21x FY27E u/l EPS · ~12x EV/EBITDA | Amber | 3.5 | The companion DCF (9.5% WACC / 3.5% TGR, base-case cash flows) lands at ~A$34 — only ~7% above the price — because a Gordon-growth terminal value implies just ~10.5x terminal EBITDA. The exit-multiple cross-check at 14.5x gives ~A$47. Cheap against history and peers on multiples; fairly priced on a conservative perpetuity DCF. The gap between the two methods is the market's argument in one number. |
| Composite Score (equal weighted) | 3.43 / 5.0 | Stance: WATCH — composite in the 3.2–3.7 band with one Red dimension (Regulatory 2.0). Executive Preparedness lifted to Amber on the September CFO and audit-chair appointments; Valuation trimmed to Amber on the perpetuity DCF. Business Quality averages 4.1 and Market Position is 5.0; the stance is held down by regulation, the founder, DSV and leverage — which is exactly where the upgrade triggers sit. | |
A 3.4 composite with a 4.1 business-quality group is the signature of a great asset inside a compromised structure. The scorecard did not produce WATCH by doubting CargoWise; it produced it by refusing to score three open investigations as anything other than Red, and by pricing the DSV question into Vulnerability and Pricing Power. Resolve the regulatory Red and the composite clears 3.6 with no Reds — a BUY on the framework's own rules.
| Assumption | Value | Source / Basis |
|---|---|---|
| FY27E revenue | US$1.51bn (+8%) | Guidance midpoint US$1.48–1.54bn; assumes 45/55 CargoWise half-year skew per company |
| FY28E revenue growth | +9% | Analyst extrapolation: CargoWise organic ~11%, e2open low-single-digit, legacy flat |
| Underlying EBITDA margin | 46% → 50% → 53% | FY27 guidance 49–51% (mid 50%); FY28E assumes restructuring fully annualised and e2open high-30s |
| Underlying NPAT / EPS | US$360m / US$1.08 FY27E · US$435m / US$1.30 FY28E | Finance costs ~US$135m falling to ~US$110m; tax ~25%; ~336m shares |
| Net leverage | ~3.0x → ~2.5x → ~2.0x | Company targets (Feb 2026 release): ~3.0x end-FY26, ~2.5x end-FY27, <2.0x by Aug 2028 |
| Capitalised development | ~US$130–150m p.a. | Company disclosures; expected to fall with headcount, partly offset by AI tooling |
| WACC / TGR | 9.5% / 3.5% | Beta ~1.1, AU 10-yr ~4.3%, ERP 5%, levered; TGR reflects trade-volume growth plus pricing |
| AUD/USD | 0.695 | Mid-September 2026 spot; all A$ price targets are translations of US$ earnings |
| Exit multiples | 14x / 26x / 35x underlying P/E | Bear = distressed vertical SaaS; Base = mid-way to quality-SaaS rating; Bull = still below 2021–24 range (50–100x) |
| DCF cross-reference | A$34 perpetuity · A$47 exit-multiple | wtc_dcf_model_v1.xlsx, Base scenario; see Sensitivity tab for WACC/TGR grid |
| Scenario probabilities | 35% / 45% / 20% | Bear-heavy by design: regulatory outcomes cannot be sized from outside |
| Metric | Definition as Used | Note |
|---|---|---|
| Underlying EBITDA / NPAT | Company definition (FY26 onward): excludes M&A costs, restructuring, divestment gains/losses, acquired-intangible amortisation and associated tax; FY25 restated on the same basis | FY26: EBITDA US$644.5m; NPAT US$313.5m vs statutory US$178.7m |
| Reported EBITDA | Statutory EBITDA including restructuring and M&A costs | FY26 US$558.4m (40% margin) |
| "Guidance" EBITDA | Reported EBITDA excluding the AI-transformation restructure and divestments — the basis on which FY26 guidance was set | FY26 US$585.8m (42%) vs guidance US$550–585m |
| Organic growth | Excludes acquisitions completed in the current and prior year and FX | CargoWise FY26: +11% reported; ~8–9% organic after US$14.2m M&A and US$9.3m FX |
| FCF | Operating cash flow less capitalised development and PP&E; "underlying FCF" adds back restructuring and M&A cash | FY26 FCF US$410.7m; underlying FCF US$489.6m |
| Net leverage | Net debt ÷ trailing EBITDA on the company's covenant basis | 3.2x at Dec-25; ~3.0x at Jun-26 (company target); net debt ~US$1.75bn (estimate) |
| ROIC | Underlying EBIT × (1 − 25%) ÷ (equity + net debt), goodwill included | ~US$390m ÷ ~US$3.4bn ≈ 11–12% |
| EV / EBITDA | (Market cap at 0.695 AUD/USD + net debt) ÷ underlying EBITDA | ~US$9.3bn ÷ US$644.5m = 14.4x FY26A |
| # | Source | As-at | Use in Memo |
|---|---|---|---|
| 1 | WiseTech FY26 results release, investor presentation and briefing transcript (ASX 2026/52 series) | 26 Aug 2026 | All FY26 financials, segment data, FY27 guidance, dividend |
| 2 | WiseTech 1H26 ASX release, presentation and briefing scripts | 25 Feb 2026 | Leverage path, AI restructure scope (~2,000 roles), e2open synergy timing, Value Pack transition |
| 3 | WiseTech FY25 results and investor presentation | 27 Aug 2025 | FY25/FY24 comparatives, e2open completion date, FY26 guidance assumptions |
| 4 | InvestSMART / Motley Fool AU / StockAnalysis (ASX: WTC) | 15 Sep 2026 | Share price, 52-week range, shares outstanding, director transactions |
| 5 | Motley Fool AU, Simply Wall St, MarketScreener analyst aggregations | Sep 2026 | Consensus targets (~A$55–61, 16 analysts) and rating distribution |
| 6 | Reuters (via StockAnalysis); Motley Fool AU; ad-hoc-news | Aug 2026 | ACCC search warrant, share price reaction, chair appointment, founder role change |
| 7 | Reuters; Investing.com; Fool AU director-transaction data | Oct 2024 – Jun 2026 | Governance chronology: CEO exit, board resignations, ASIC/AFP search, founder share sales, AFP inquiry reports |
| 8 | IG Markets FY26 earnings preview; Kalkine coverage | Aug 2026 | Pre-result consensus, leverage commentary, FRDM.ai acquisition |
| 9 | WiseTech ASX 2026/42 "Clarification regarding the WiseTech relationship with DSV"; ASX 2026/48 (Ebbeck appointment); CFO appointment release 1 Sep 2026 | Jul–Sep 2026 | DSV volumes +20%, contract to Sep 2028, 5–7 year rollout/exit horizon, <1% attrition, 23 of top 25 as customers; board and CFO appointments |
| 10 | The Loadstar — two-part CEO interview (3–4 Sep 2026); DSV/Tango reporting | Sep 2026 | DSV Tango strategy and Copenhagen talks; Jefferies estimate of DSV at ~9% revenue/10% EBITDA; CVP pricing per job; growth-from-pricing disclosure; 1,700 roles removed; ACCC "substantial market power" finding (Expedient) |
| 11 | IC Memo project — ASX IT Sector Thesis v1; WTC DCF Model v1 (companion workbook) | Mar–Sep 2026 | Sector calibration; prior Red rating on WTC founder/key-person risk; DCF and exit-multiple values cited in dimension 20 |
| Financial data, analyst estimates and market data have not been independently verified or audited. Net debt is estimated from the company's stated leverage target; FY24 figures are A$-to-US$ approximations. FY27E is guidance-anchored; FY28E is analyst extrapolation. Regulatory matters are described from public disclosures only — no scope, allegation or outcome has been confirmed by any authority as at the memo date. | |||