# WiseTech Global (WTC) — Valuation Update, May 2026

**Fair Value: $58.00 (range $42 – $72)**

**Share Price: $37.88**

**Margin of Safety: 35%**

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## The Setup

WTC is down 73% from its November 2024 ATH of $141.61. That’s not a typo. One of the best businesses on the ASX has been more than cut in thirds. The question, as always, is whether the market has overcorrected or whether it’s finally seeing clearly.

After spending a significant amount of time going through the 1H26 results, the FY25 investor presentation, the DSV Capital Markets Day transcript, and various analyst reports, I’ve landed on a fair value of $58 with a range of $42-$72. Here’s how I got there and what I think matters.

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## What Actually Happened in 1H26

Let’s separate the signal from the noise.

**Revenue:** $672M, up 76% YoY. Sounds amazing until you realise the organic CargoWise growth was 9%. The rest is e2open consolidation. So the core engine is growing at ~9% organically — decent but nowhere near the 17-20% organic rates of FY24/FY25. Management would argue this understates things because they held back new features pending the Value Pack rollout, and that’s partially fair. But 9% organic is 9% organic.

**EBITDA:** $252M, margin 38% reported. But strip out the e2open M&A costs and the organic EBITDA margin was 51%. That’s the number that matters. The business, ex-acquisition noise, is still a margin machine.

**EPS:** This is the problem. TTM EPS is ~$0.49 AUD, down from $0.69 at FY24. At the current price, you’re paying 62x trailing earnings for a business with *declining* earnings. That’s uncomfortable no matter how you cut it.

**The good news they don’t mention enough:** Free cash flow was up 24% to $153.6M. Cash conversion remains excellent. And e2open cost synergies hit $50M annualised a full year ahead of the original target. That’s genuine execution.

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## The Five Things That Actually Matter

I’ve tried to boil this down to the factors that will drive the next 3-5 years of value.

### 1. Value Pack Transition (Near-term revenue driver)

95% of CargoWise customers are now on transaction-based Value Packs. The remaining 5% represent ~30% of CargoWise revenue — these are the largest customers on legacy contracts. Management is proactively approaching them “even if expiries are many years into the future.”

This is simultaneously the biggest near-term revenue opportunity and the biggest customer-relations risk. Value Packs effectively bundle 200+ features (including AI tools) into one transaction-priced package. For many customers, this means paying more for things they weren’t previously buying. Hence the pricing backlash.

My read: the transition is structurally right for an AI world (seat-based pricing dies when AI eliminates seats). But the execution has been heavy-handed, and it’s contributed to the customer anger that made DSV’s exit feel like a “finally someone stood up” moment.

**Impact on valuation:** I’m modelling 12-15% CargoWise revenue CAGR over FY27-FY30, down from the 17-20% of recent years but above the 9% organic in 1H26. The Value Pack transition should lift this as remaining large customers convert.

### 2. DSV Departure (Overstated risk, understated signal)

DSV confirmed at their Capital Markets Day (May 12, 2026) that they’re migrating to Schenker’s in-house Tango system. 25% of Air & Sea already on Tango, full rollout from 2027.

Revenue impact: Analysts estimate $40-50M over 5-6 years. On ~$1.4B in FY26 revenue, that’s 3-4% of total, phased over half a decade. Manageable.

But — and this is the part many bulls are glossing over — the signal matters more than the dollars. One Strawman contributor put it well: “every forwarder has been waiting to see what DSV does.” The pricing trust has been damaged.

Here’s why I think the contagion risk is limited though:

- DSV inherited Tango through the Schenker acquisition. They didn’t build it from scratch. No other top-25 forwarder has an equivalent system sitting in a drawer.

- DSV won’t share Tango. It’s their competitive weapon against K+N and DHL. Sharing it would erase their advantage.

- Replicating CargoWise from scratch? Industry experts estimate $100M+ and 3-5 years minimum. US customs alone takes ~3 years.

- K+N has built RoadLOG for road freight (96 branches, 43 countries) but explicitly has NOT announced any air/ocean replacement.

**Impact on valuation:** I’m haircut-ing revenue by $10M/year from FY28 for DSV runoff, and adding a 5% “contagion probability” discount to my base case for the chance that 1-2 other mega-forwarders partially follow. If a second top-5 forwarder announces an exit, I would downgrade significantly.

### 3. AI Transformation (The margin story)

This is being under-appreciated. WiseTech announced up to 50% headcount reduction in product, development, and customer service through FY27. That’s savage. CEO Appoo said “the era of manually writing code as the core act of engineering is over.”

Currently ~3,600 employees. If they genuinely get to ~3,000-3,500 while maintaining or increasing output, the margin expansion is significant. EBITDA margin could move from 53% ex-M&A to 60%+ over the next 2-3 years.

But equally important: AI makes CargoWise *more* valuable to customers. Automated customs declarations, intelligent document processing, predictive analytics. Under transaction-based pricing, if AI helps a customer process 2x the shipments with half the staff, WiseTech earns more, not less.

The risk (flagged well by Intelligent Investor): management has promised acceleration from new products before, and timelines have “consistently slipped.” So I’m giving this only partial credit.

**Impact on valuation:** I’m modelling EBITDA margin expansion to 57% by FY28 and 60% by FY30. More conservative than Morningstar’s 51% EBIT margin by FY34 (which would imply ~58-60% EBITDA), but on a shorter timeline.

### 4. CTO — Container Transport Optimisation (The optionality)

WiseTech signed ACFS Port Logistics (Australia’s largest container logistics operator — Kmart, Bunnings, Coles, Woolworths, Aldi) to pilot CTO on the Australian east coast. Management claims a $4-20B TAM.

Here’s the honest truth: CTO is still essentially a zero-revenue product. Management admitted it will be a “smaller contributor to FY26” and acknowledged the rollout requires “significant change management in an industry with entrenched processes.” There is no concrete timeline for scaling beyond the ACFS pilot.

One contributor on Strawman noted there “cannot be any concrete, confident assumptions for the scale and medium-term revenue contribution of CTO” — and I agree. It’s optionality, not a base case assumption.

**Impact on valuation:** I’m assigning $0 in my base case and $3-5 per share in my bull case (essentially treating it as a free option that might pay off in FY28+).

### 5. e2open Integration (Show me)

The $2.1B acquisition added ~$600M in annual revenue but at a much lower margin (28% EBITDA vs WiseTech’s 53%). The bull thesis: WiseTech lifts e2open margins toward its own, converts BluJay customers to CargoWise, and unlocks the BCO (beneficial cargo owner) market.

The bear thesis: e2open was a declining-revenue business that WiseTech paid a full price for, and integration of large acquisitions is where most companies destroy value.

Early signs are mixed. Cost synergies ahead of schedule (good). Revenue contribution of A$249.4M in 1H26 (in line). But statutory NPAT dropped 36% partly due to e2open-related charges.

**Impact on valuation:** I’m modelling e2open reaching 35% EBITDA margin by FY28 (from 28% today) and stabilising revenue. If BluJay conversions materialise, there’s upside. If e2open stagnates or needs a write-down, there’s ~$5-8/share downside risk.

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## The Numbers

Here’s my base case DCF assumptions:

|Metric    |FY26E|FY27E|FY28E|FY29E|FY30E|

|--------------|-----|-----|-----|-----|-----|

|Revenue (US$M)|1,415|1,580|1,770|1,965|2,160|

|Revenue Growth|82%* |12% |12% |11% |10% |

|EBITDA Margin |40% |50% |57% |59% |60% |

|EBITDA (US$M) |566 |790 |1,009|1,159|1,296|

|EPS (AUD)  |0.55 |0.80 |1.10 |1.30 |1.50 |

*FY26 includes e2open consolidation; organic growth ~12%.

I’m using a 10% discount rate and 3% terminal growth rate, reflecting the high quality of the business offset by elevated uncertainty.

**DCF Fair Value: $58 AUD**

**Scenario-weighted:**

- Bull ($72): DSV contained, CTO traction by FY28, e2open margins hit 40%, EPS $1.50+ by FY29. 25% probability.

- Base ($58): DSV exits over 5 years, 1-2 others partially explore alternatives, Value Packs fully adopted by FY28, margins expand to 60%. 50% probability.

- Bear ($42): Additional top-25 forwarder announces exit, e2open integration stalls, pricing backlash forces concessions, EPS flat at $0.60-0.70. 25% probability.

**Scenario-weighted fair value: $57.50**

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## The Moat Question

Morningstar says Wide. I say Narrow-to-Wide, and here’s the distinction:

For 95% of the customer base (mid-market and smaller forwarders), the moat is genuinely Wide. Switching costs are enormous (7+ year customs history, multi-year implementation, eight-to-nine-figure migration costs). These customers have no viable alternative.

For the top 5 mega-forwarders (DSV, K+N, DHL, CMA CGM/CEVA, DB Schenker — now part of DSV), the moat is Narrow. These companies have the scale and resources to build or acquire alternatives, as DSV has proven.

Since the top 5 represent a disproportionate share of revenue, this distinction matters. I’m treating the moat as Narrow for valuation purposes but acknowledging it functions as Wide for the vast majority of customers. Net result: I’m comfortable with modest multiple compression from historical averages but not a collapse.

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## What I’m Watching

**Positive re-rating triggers (in order of impact):**

1. FY26 full-year EPS ≥ A$0.60 (proves trough is in) — Aug 2026

1. Retention rate reported at 99%+ (kills the contagion narrative)

1. e2open synergies exceeding $70M

1. CTO first revenue reported

1. New top-25 forwarder enterprise win on Value Packs

1. Insider buying from Richard White at current prices

**Exit triggers (would cause me to downgrade):**

1. Another top-5 forwarder announces CargoWise exit — CRITICAL

1. Retention drops below 95% — CRITICAL

1. Amazon acquires a customs/compliance platform — CRITICAL

1. WiseTech forced to roll back Value Pack pricing — HIGH

1. e2open write-down — HIGH

1. EPS still declining at FY27 results — HIGH

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## Where This Fits in a Portfolio

This is a steady compounder at a cyclical discount, not a multibagger.

From $38 to my base case of $58, that’s ~53% upside, or roughly 15-18% annualised over 3 years if the thesis plays out. Add the dividend (small, ~0.5%) and you’re looking at a mid-teens total return. Not bad for a dominant market position in mission-critical infrastructure software.

But it’s not going to 10x from here. The land-grab phase is over (24 of top 25 already won). Growth is transitioning from “add new whales” to “extract more value from existing customers + expand into adjacencies.” That’s a different, harder, messier kind of growth.

I’d position this as a 4-6% portfolio weighting in the “quality compounder” bucket. Not a high-conviction overweight, but a solid anchor position if you believe the moat holds.

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## Bottom Line

WiseTech at $38 is not the screaming buy that Morningstar’s $138 would suggest (that target requires everything to go right for a decade). But it’s also not the value trap the market seems to fear.

The business fundamentals — 99% recurring revenue, 53% EBITDA margins, 84% gross margins, dominant market position — are genuinely exceptional. What’s changed is the growth trajectory and the pricing trust, not the moat itself.

My fair value of $58 implies ~53% upside, with a reasonable margin of safety at current prices. I’m watching for the FY26 full-year results in August as the key catalyst. If EPS shows signs of troughing and retention holds, I’ll likely initiate a position.

WiseTech doesn’t need new good news to re-rate. It just needs the bad news to stop.

**Fair Value: $58.00 (range $42 – $72)**

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A big thank you to @JohnnyM for his excellent instruction of claude

@jcmleng @Strawman @mikebrisy would love your thoughts