Pinned valuation:
What next for embattled WiseTech?
Simonelle Mody
SaaS giant WiseTech Global (ASX:WTC), saw a steep draw down amidst ongoing investor concern about allegations against co-founder.
The market responded to ongoing board composition uncertainty and allegations of inappropriate behaviour, with a mass sell-off despite coinciding with a relatively positive earnings update.
Figure 1: WiseTech share price chart 06/02/25 – 06/03/25. Source: Morningstar.
The February update provided a mixed outlook, highlighting delayed growth plans. Recent business disruptions were evident in the results with primary product CargoWise’s revenue growing 21% which is below WiseTech’s usual growth rates but still impressive in comparison to other software companies. Despite this, Morningstar does not anticipate this trajectory to continue as the delayed release of several new products caused a temporary hinderance to results.
Impressive margin expansion
Increased leverage on sales and marketing dropping to just 6% (formerly 8%) of revenue led to an expansion of EBITDA margins and suggests the software continues to become easier as the product sells itself. Currently, Morningstar is unaware of any other publicly listed software company that spends a smaller share of revenue in this category, whilst achieving similar growth rates.
Figure 2: WTC results overview. Source: WiseTech Investor Presentation. 2025.
Expanding customer base
The business also successfully won two new customers or ‘Large Global Freight Forwarders’ (“LGFFs”) which the company defines as a CargoWise customer contracted for 10 or more countries and 400 or more registered users.
These new customers are two of the top 25 largest global freight forwarders and solidifies the defensive nature of WiseTech’s revenues given its expanding blue-chip client base. Notably, WiseTech currently has 14 out of the top 25 LGFFs in its contracted customer base.
Figure 3: 51 LGFF rollouts are driving long-term revenue growth. Source: WiseTech Investor Presentation. 2025.
Figure 4: Revenue by customers. Source: WiseTech Investor Presentation. 2025.
Morningstar analyst, Roy van Keulen considers WiseTech as an exceptionally well-managed, high-quality company with a large and highly winnable market opportunity. The company’s core product suite, CargoWise provides the best-in-class software solutions for international freight-forwarding, customers who use these solutions outperforming their competition. We expect CargoWise to become the industry-default either through increased customer adoption or existing customers expanding market share.
Furthermore, the company is likely to leverage its position to move into downstream adjacencies in order of functional proximity, customers and compliance, road and rail and warehousing. We view this expansion as highly likely to succeed given WiseTech’s omnipresence amongst the world’s LGFFs.
The narrow-moated Saas player flexes its competitive advantages through switching costs and network effects. This is evidenced by its industry-leading customer retention rates of over 99% per year over the last decade, despite material price increases. High upfront capital expenditure and multi-year rollouts are required for the software implementation; therefore, customers are understandably reluctant to switch providers. Freight forwarders, who are the gatekeepers in the supply chain give selection preference to asset operators with the CargoWise platform due to increased visibility and labour cost savings.
We assign WiseTech a High Morningstar Uncertainty Rating, primarily for industry risk and key person risk.
There is still high uncertainty in the logistics industry’s ultimate market opportunity given it is in the early stages of digitising. Although we believe the market opportunity is large and highly winnable.
The company has been exceptionally managed by its founder and former CEO Richard White, however he has been transitioned to executive chairman following allegations of inappropriate behaviour. Whilst ASIC announcing preliminary inquiries into WiseTech, it is still unclear what the specifics of the probe entail. White was instrumental in developing and executing the vision behind the operating system. Given this, we see risks to expansion beyond the company’s core freight forwarding software in the case he was to leave the company.
The appointment of founder Richard White as executive chairman reduces lingering uncertainty around chain of command, compared with the previously discussed consultant role. Richard White has been instrumental to the company’s success and will continue driving the company’s product growth and strategies.
Morningstar expects revenue grows at a compound annual growth rate of 20% over the next decade. Furthermore, EBIT margins are forecast to increase at 51% by fiscal 2034 from 27% in fiscal 2024.
Van Keulen raises his fair value estimate for the narrow-moat player by 10% to $115 per share. This reflects a 20% discount to the current price of ~$91 per share.
@Chagsy , I have a couple of points, and we have discussed this many times on this site: What is a relevant weight? People talk about different measures. % of total wealth is perhaps the most useful, but few use it. They use a "fund," which could be anything. The relevant exposure is very different. 4% look high to me, but that si because my equity investments are, by far, my largest asset. Sometimes that disclosure is disingenuous, and other times it is not.
Putting that to one side, looking at WTC, i disagree with Mike i think RW is still a major factor because the task for WTC and TAM are still large, very large, that is the main difference i can see between WTC and PME for instance. WTC still needs a quarterback, imo, maybe a really strong technical board (good luck there-- you mainly get DEI boards nowadays) could fill the position. The bench is very good, but the task they are after is vast. That is what makes WTC interesting, but execution, market assessment and product flexibility are still more of a factor where i think RW is still key. PME looks more of a copy right.
if RW suddenly left, it would threaten my longevity and certainly my conviction in the holding.
@Chagsy I’m of a similar view. The lingering governance concerns have me maxed out at 5% RL even though I have a very high conviction that $WTC is worth more today and will continue to grow strongly. (I’d prefer to be back at 10% at these prices).
I expect that over the next year, the Board renewal will be fleshed out (hardly rocket science), eventually RW will appoint a CEO-successor. This is harder, and he will rightly take his time to find the right person, unless there is an internal candidate, which would of course be great.
I believe the concern about the criticality of RW leading the build out into adjacent functionality is completely overblown. The vision is clear, One Platform to Rule Them All (Global Logistics-OS). There is already a crowded, fragmented universe of software solutions across the entire domain. $WTC just has to carefully build out, making the correct make or buy decisions, and selecting the best “tuck in” acquisitions to accelerate building the capability. They’ve already been at this for a while, so a lot of the leaders on the team know what good looks like, and they have proven their ability to absorb acquisitions. I just don’t believe sustained success is dependent on RW.
Of course, as long as he is there, he is a totemic figure and the organisation will follow his leadership and defer to him for the strategic decisions. And, who knows, with good health he might be able to run for another decade. And a positive from this shambles of the last 6 months is that it will have caused him to think deeply about what an orderly succession roadmap looks like. Despite his manifest weaknesses, RW is an avid learner. Of that I have little doubt. Legacy will become his obsession, if it isn’t already.
Disc: Held in RL only