The WiseTech bull case after a difficult result

WiseTech Global has spent the past year giving shareholders plenty to worry about. The stock rallied 25 per cent through the first three weeks of August to $45.47, then fell as much as 11 per cent on the FY26 result in late August and has drifted lower since, against a 52-week high of $115.75.

Emanuel Datt, chief investment officer at Datt Capital, owns it and reads the same set of numbers the other way.

“We currently hold WiseTech in our portfolios and view the outlook for the company as positive,” he says.

The headline growth numbers need reading carefully before they land as good news. Revenue of $1.4 billion, up 79 per cent, owes most of that jump to the $2.1 billion e2open acquisition rather than to the existing business. Underlying EBITDA of $644.5 million rose 56 per cent, though the margin fell seven percentage points to 46 per cent.

Statutory net profit dropped to $178.7 million from $200.7 million as interest and amortisation from the deal came through. Underlying net profit, which excludes both, rose 29 per cent to $313.5 million.

Pricing and the SME shift

CargoWise, still the core franchise, lifted revenue 11 per cent to $756.9 million. More than 95 per cent of its customers have moved onto CargoWise Value Packs, which bills on transaction volume instead of user seats. New customer signings rose about 30 per cent over the year. SME signings rose 55 per cent.

Datt reads the pricing structure as the mechanism behind that second number.

“Smaller forwarders that were previously priced out can suddenly afford it, because pricing is volume based on the number of containers you are shipping,” he says.

He sees the customer mix shifting rather than simply lengthening.

“The company alluded to a significant uptick in SME customers, which dilutes revenue concentration among the largest accounts and expands the total addressable market,” he says. “There has been a lot of talk about the pricing change, but our view is that it works in favour of smaller businesses.”

The freight trade press describes a rougher transition. Forwarders quoted by The Loadstar this year reported confusion over their first invoices under the model, a transitional pricing line item that held their charges flat when they had expected a fall, and per-transaction fees of between $2 and $19 they cannot easily pass to shippers. Thin-margin operators wear that cost themselves.

Chief executive Zubin Appoo has said the company knew the change would be disruptive. A model can broaden the market and irritate the installed base at the same time, and FY27 guidance leans on the second half partly because those conversions are still working through.

The R&D question

Research and development spending fell to 24 per cent of revenue from 33 per cent, with 45 per cent of it capitalised. WiseTech cut about 1,200 roles globally under its AI transformation programme, mostly across product, development and customer service, and says more than three-quarters of its staff now use AI every day.

Datt treats the fall as a claim to be tested rather than a saving to be banked.

“They have historically put a significant proportion of revenue into R&D and that’s come down to about 24 per cent,” he says. “Management put it down to AI adoption, on the basis that it’s cheaper to use AI than hire heads, and whether that plays out will only be known in time.”

He declines to call it a red flag on its own.

“It’s an edge risk, because companies across every sector are claiming big productivity gains from AI. What WiseTech is saying isn’t unusual.”

The risks

“The biggest single risk for the company is a drop off in global trade,” Datt says. “They are also relying heavily on AI transformation and automation, so a broad increase in the cost of compute or AI models would hurt, though that’s an unlikely edge case now the industry has matured.”

The regulatory overhang belongs on the same list. The ACCC executed a search warrant at WiseTech offices on 19 August over alleged contraventions of the Competition and Consumer Act relating to the supply of logistics software, an investigation that points squarely at the commercial model Datt likes.

Founder Richard White stepped down as chair in July, staying on as executive director and chief innovation officer, and faces separate investigations he has denied in strong terms. Advisers holding the stock will field questions on both.

Datt answers the founder question by shrinking it. “There has been a lot of focus on the founder, but this is an organisation of five or six thousand people,” he says. “It’s not one person running the shop.”

The valuation

Datt puts the stock at “the low 20x forward earnings” and calls it “about the cheapest WiseTech has ever traded”, with “good scope for upside as confidence returns to the story”.

Management has guided FY27 revenue to between $1.48 billion and $1.54 billion, underlying EBITDA to between $725 million and $780 million, and the margin back to 49 to 51 per cent.

Against FY26 underlying earnings per share of 94 cents, the shares trade well above a low-20s multiple, so the number Datt cites rests on a forward earnings base advisers should build for themselves before they accept the conclusion.

WiseTech has told the market it can grow earnings faster than revenue while spending a smaller share of that revenue on building the product. FY27 is the year the market gets to check the working.