WiseTech (WTC): An Underappreciated Software Asset

WISETECH GLOBAL (ASX: WTC) — INVESTMENT MEMORANDUM

Sector: Vertical Software

Recommendation: LONG   |   Current Price A$32   |   Target A$55 (+72%)   |   Bear A$30 (-7%)   |   Bull A$73 (+130%)

I. EXECUTIVE SUMMARY AND INVESTMENT RECOMMENDATION

• Business Model. WiseTech sells CargoWise (CW), the software that global freight forwarders run their business on. Highly sticky product with annual churn sub-1%. It handles quoting, customs paperwork, billing, and compliance across 170+ markets. It is the critical system of record.
• The Setup. The stock is down c.60% in the past year on four things: 1) founder governance, 2) one large customer (DSV) moving in-house, 3) CW growth slowing to 11% y/y, and 4) AI disruption fear.
• The Call. Long at c.12x FY27 EV/EBITDA, target 19x blended, A$55 per share (+72%, c.24% 3-yr IRR).
• Why it is mispriced. Fears around AI, founder misconduct, and one-off contract cancellations are overblown. The new contract structure, new product launches, and e2open should grow adjusted net income at a c.23% CAGR through FY29.
  • Deferred pricing is self-inflicted. WiseTech realized only c.6% price growth in FY26[1] against the c.14% available on our own repricing math (20% uplift on the c.70% of revenue already migrated), because transitional rebates hold customer invoices flat during migration. The last 5% of customers are the large forwarders, which account for c.30% of CargoWise revenue. We expect further repricing from FY27.
  • Margin expansion via cost cuts. $115m of annualized run-rate savings realized in FY26. WTC expects to cut headcount to reach a c.49–51% margin.
  • DSV churn is idiosyncratic. DSV inherited Tango with the DB Schenker acquisition. The contract runs to Sep-28, so no P&L impact before FY29. DHL’s own attempt failed at a cost of c.$350m.
• Catalysts — next 12 months.
  • Container Transport Optimization (CTO) — live since Jul-26, ramping through FY27. Carried at zero in our base case.
  • Large-forwarder repricing — the remaining c.30% of CargoWise revenue converting at a c.20–30% uplift. 70% of CargoWise revenue has already been onboarded, so repricing comes through gradually as rebates roll off.
  • AI upsells. Six AI agents are live, targeted to deliver up to c.50% labor cost savings for customers.
• Risk / reward. Bear A$30 (-7%), base A$55 (+72%), bull A$73 (+130%). Risks are if a second large forwarder in-houses, the large-forwarder contracts slip to FY28, the cost savings get reinvested, or another governance headline.

II. THE BUSINESS AND WHY IT IS HARD TO REPLACE

• Dominant position. WTC controls a c.70% share of global freight-forwarder software. 24 of the top 25 global forwarders are customers, and those top 25 move roughly a third of global freight volume.
• High customer stickiness. Annual churn has been under 1% for the last 14 years. A large forwarder takes 5–7 years to implement CargoWise, so signing is a decade-long decision.
• Strong moat. Cross-border logistics spans 170+ markets, each with its own compliance rules. CargoWise keeps the documentation and data consistent across every border. Legacy in-house systems are fragmented, have no single source of truth, and cannot keep up with changing compliance rules.
• TAM expansion. e2open (bought for c.$2.1bn, 9.7x EBITDA, all debt-funded) extends WiseTech from forwarders to shippers and carriers. The asset was a mismanaged, neglected PE roll-up; WiseTech delivered $64m of cost synergies 18 months early against a $50m target. Our base case assumes e2open reaches a c.50% adjusted EBITDA margin in FY27E, up from c.36% in FY26.

III. WHY THE STOCK IS DOWN 60%+ IN THE LAST YEAR

• Founder governance. Richard White faces insider-trading allegations and an ongoing ASIC investigation; no charges have been laid. Add to that an ASIC/AFP raid on the Sydney office, sexual-misconduct reporting, and the resignation of four independent directors over his role. He stepped down as Chair in Jul-26 but remains an Executive Director and Chief Innovation Officer, and controls c.30% of the shares.
• DSV going in-house. DSV is migrating to Tango, the TMS it inherited when it bought DB Schenker. We size DSV at c.3–4% of Adj. EBITDA (c.$20–30m), or a c.50–100bp annual headwind to EBITDA growth.
• Growth slowed. CargoWise grew 8% organically in FY26, held back by the customer contract transition. The market thinks the moat is breaking.
• AI fear. If AI agents remove seats, a seat-priced software business shrinks. WiseTech has been moving off seat-based pricing since 2025. We view this as front-loading the pain rather than dying by a thousand cuts.

IV. INVESTMENT THESIS — WHY THE MARKET IS WRONG

a. Revenue slowdown is self-inflicted, by design

• WiseTech is moving customers from seat-based pricing to a per-transaction model. Migrated customers see total CargoWise costs step up 20–30%.[2]
  • To avoid churn during the switch, WiseTech offers Transitional Pricing Protection (TPP), rebates that hold the customer’s invoice roughly flat. So the price rise is contracted but not yet recognized. The question is when TPP rolls off.
  • 95% of customers are already on the new model. The remaining 5% are the large forwarders, and they are ~30% of CargoWise revenue, repricing from FY27.
  • Transaction fees are US$2–19 per shipment and under 0.1% of the landed cost of a shipment. Forwarders should be able to pass the increase through to their clients.

b. DSV is a one-off

• DSV did not build Tango. It came with the DB Schenker acquisition. No other large forwarder has a scaled in-house TMS sitting there to migrate onto.
  • DHL tried to build its own with SAP and took a €350m write-down in 2015.
  • The contract runs to 30-Sep-2028, so there is no P&L impact before FY29.

c. AI is a revenue opportunity, not just a risk

• Six AI agents are live in CargoWise, targeting up to ~50% of a logistics provider’s labor cost.
  • 32 years of proprietary data and live shipping feeds are not something a customer vibe-codes around.

V. VALUATION[3]

• Entry. ~12x FY27 EV/EBITDA on an EV of $9.6bn.
• Target. Base case at 19x blended FY27. SOTP: 25x CargoWise ($477m) and 10x e2open ($296m) on $772m of FY27 Adj. EBITDA.
• Versus peers. Australian supply-chain peers trade at 17–26x on low-teens growth; vertical software spans 15–30x. WTC’s own history is c.40x.

VI. RISKS — WHAT CHANGES MY MIND

• A second large forwarder in-houses.
• The large-forwarder contracts do not convert onto the new pricing model.
• Pricing resistance. Forwarders say they cannot pass a software surcharge to shippers.
• Cost savings get reinvested. The 49–51% margin does not arrive.[4] Excess R&D headcount reduction leads to lower product quality.
• More governance headlines involving the founder or other top executives.
• e2open trough is later than assumed. The company guides to flat FY27 revenue with subscription attrition continuing, and our base case needs a c.14pp margin step-up in the same year.

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[1] Per UBS channel checks.

[2] Third Bridge, July 2026.

[3] Source: CapIQ as of 24 September 2026. All numbers based on consensus. WTC FY27E EV/EBITDA excludes debt reduction; pro forma for debt reduction, the FY27 multiple is 9x.

[4] WTC guided to a 50% FY27E EBITDA margin.