To take a balanced approach to reviewing the H1 FY26 results I have called on a bear to challenge the bullish presentation by the company (I am not impartial enough to go full bear). I was struck by the negativity of Intelligent Investors (II) Nick Cummings commentary on the result “Another weak result raising more questions than answers” plus his changing WTC to “Avoid” citing their previously “silly” $30-35 price target as not worth buying at.

I have used AI to identify key issues in the results and compare II (Nick’s) and the companies view on these with what I found to be a challenging bull/bear analysis approach. I watched the presentation on the day and reviewed the results and have added my “comment” on each to provide my view. Plus there is a nice succinct bull and bear summary at the bottom along with the prompt I used.

I hope others find it useful (sorry for the length):

1. CargoWise organic growth (9% vs ~30% history)

• Company: Notes 9% organic CargoWise growth and 12% total, presents it as acceptable given transition to new model and product ramp.
• II: Calls it “just 9% organically,” labels the result “weak,” and says this is “concerning” versus ~30% historical CAGR, raising risk that CargoWise is maturing.
• Comment: I currently accept the company explanation, but only until the next reporting period which will test the II concerns.

2. Future CargoWise growth and new products (CTO etc.)

• Company: Argues growth will improve as CargoWise Value Packs ramp and CTO is implemented with ACFS, positioning CTO as a major long‑term opportunity.
• II: Says management has promised acceleration from new products before, but “new products have been delayed repeatedly” and timelines “consistently slipped,” so backing management now “leans more on hope than evidence.”
• Comment: the Value Packs are live, so criticism is not justified for what I view as a critical business model shift in the age of AI. The CTO opportunity is worthy of some criticism, however it presents a significant opportunity that II fails to put any value on.

3. Group headline growth (revenue + EBITDA)

• Company: Highlights 76% revenue growth to US$672m and 31% EBITDA growth to US$252m, “in line with expectations.”
• II: Says headline numbers are “flattered by the acquisition of E2,” points out underlying net profit up only 2%, and calls the result “another weak result.”
• Comment: I didn’t feel like the company shied away from low organic growth, the expectations where WTC+e2. I agree it was a weak result, but this misses the point, the company is in transition with a lot of moving parts, we don’t have a clean read and wont probably until FY27.

4. Organic vs reported earnings and “underlying” metrics

• Company: Focuses on underlying NPAT up 2%, stresses strong cash generation and Rule of 40 at 99%, and uses underlying metrics to support the “disciplined delivery” narrative.
• II: Explicitly challenges these adjustments, saying “taking the numbers at face value is a mistake,” and that management’s adjusted free cash flow and profit metrics differ materially from their own.
• Comment: The slide 16 “Rule of 40” achievement on a reported basis, 99% is an egregious misrepresentation because they factor in acquired EBITDA growth. This and FCF covered below I agree with the II take, brick bats are called for on these issues.

5. R&D capitalisation and accounting quality

• Company: Frames high R&D and capitalisation as long‑term product investment; does not describe it as aggressive, and notes capitalisation ratio moderating partly due to e2open.
• II: Labels it “accounting trickery again,” calls capitalising R&D Wisetech’s “favourite trick,” and says it “delays the hit to profits” though notes cap rate falling from 54% to 48% is “a step in the right direction.”
• Comment: Calling the capitalisation of development costs when you’re a software company “accounting trickery” is very odd. There is discretion for the accounting treatment but it’s clearly future benefit from the spend and matching principles apply. This spend none the less needs to be monitored via cash flow statements, which looks good with the cap rate falling.

6. Free cash flow and leverage

• Company: Reports US$154m free cash flow up 24% and emphasises a “highly cash‑generative operating model,” while outlining a deleveraging path from 3.2x net leverage to <2x by 2028.
• II: Recalculates FCF at US$40m (or US$98m ex one‑offs) after taxes, leases and interest, saying it actually fell ~50%, and notes net debt/EBITDA at “four times,” calling this stretched for a stock on “over 70 times free cash flow.”
• Comment: FCF should be shown as II state them, but it is a valuable insight to identify genuine one-off’s before making an assessment of the company as a multiple of FCF when assessing value.

7. e2open acquisition and integration risk

• Company: Describes e2open as transformative, expanding TAM and ecosystem, and highlights achieving US$50m cost synergy run‑rate 1.5 years early; expects earnings to improve as integration costs fade.
• II: Says headline growth is flattered by E2, warns E2 could be Wisetech’s “CSL Vifor moment,” and folds E2 into a list of concerns (debt, accounting, governance, maturing CW) that makes the risk set “too much.”
• Comment: Nick fails to assess the E2 addition as part of an integrated ecosystem play that combines with CargoWise. The strategic value of this is completely missed by comparatives to CSL Vifor. There are obviously integration risks plus the other concerns listed are worth consideration by investors, but there is no up side Vs down side value assessment done. With E2, it is a new company with expanded opportunities.

8. Net debt and balance sheet risk

• Company: Positions the US$3bn facility and 3.2x leverage as manageable with clear deleveraging targets; emphasises strong liquidity and bank support.
• II: States net debt/EBITDA has hit “four times” and explicitly calls it “stretched” post a large overseas acquisition, contributing to their “no confidence” stance.
• Comment: No sugar coating the current debt is high, but it comes with additional cash flows and a business plan to reduce it to reasonable levels by 2028. Managements delivery of this de-leveraging is an important success factor.

9. CargoWise customer concentration and DSV

• Company: Talks up LGFF wins and penetration but does not mention DSV’s intention to move volumes to Tango in this script.
• II: Highlights DSV as “one of WiseTech’s largest customers” planning to transition more volumes off CargoWise, notes a broker suggesting DSV could be 15% of EBITDA in a few years, and flags the impact as a key unknown risk.
• Comment: The script didn’t include questions, which this was talked to at the presentation. The transition by DSV looks to be a special case and may even result in CargoWise being retained to some extent. It also relates to the AI Vibe coding threat, which I see as an edge case risk, we will see some instances, but not a material impact.

10. AI moat and disruption risk

• Company: Argues AI strengthens WiseTech’s moat, emphasises embedded system‑of‑record role, regulated workflows, network scale and data, and presents AI as a major competitive accelerant.
• II: Largely agrees on this point; calls management’s defence against AI “convincing,” quotes Zubin’s “execution layer” line, and concludes “replacing Wisetech is hard,” placing it in their bucket of software least likely to be disrupted.
• Comment: The sell down of WTC due to AI is misplaced and it’s specifically due to the use of and response to AI that I have invested into WTC because I see them as owning the space and able to capture much of the value AI will generate in the space.

11. New commercial model and pricing resilience

• Company: Presents CargoWise Value Packs (95% of customers transitioned) as the “right” AI‑era model, aligning pricing to volume and protecting revenue when customers cut headcount via AI.
• II: Supports the move conceptually, saying transition to volume‑based pricing is “the right move” given AI‑driven labour savings; argues if management is right on labour savings, “faltering revenue growth could quickly reaccelerate.”
• Comment: I agree with both and reiterate the points made in 10.

12. AI‑driven layoffs and internal efficiency

• Company: Frames ~2,000 role cuts as part of a deliberate AI‑led efficiency program, designed to create a leaner, more scalable organisation with structurally lower costs.
• II: Acknowledges genuine AI efficiency potential but is “a tad sceptical” about the framing; says layoffs were “inevitable” after E2 nearly doubled headcount to 7,000, with or without AI.
• Comment: I agree II have a point and suspect that a portion of the layoffs will be non-AI, but note that they have already achieved targeted synergies for e2, which includes some headcount reduction (~500). What ever the reason, if the cuts happen and operations are unaffected, this will close to double NPAT which II fail to put any value on.

13. Valuation and overall recommendation

• Company: Does not comment on valuation; reiterates long‑term growth, strong moat and reaffirmed FY26 guidance.
• II: Says their prior “silly price” of A$30–35 “might still be silly” but “too high,” cites weak growth, stretched debt, aggressive accounting, governance issues and possible CW maturity, and ends with a clear “AVOID.”
• Comment: If profits double in FY27 due to job cuts and we see the new business model well established and organic growth kicks back up to 15-20%, the PE of ~28 would be a screaming bargain and probably says double the current value is reasonable ~$100+.  The II value is a died in the wool value investor view of a growth company – completely ignores future growth and new business opportunities a clear bear view Vs my bull view.

Bull case: a deeply embedded, high‑moat logistics OS with proven pricing power, accelerating AI‑driven efficiency and a much larger ecosystem/TAM post‑e2open, which together could re‑ignite double‑digit CargoWise growth and rapid deleveraging.

Bear case: slowing organic CargoWise growth, aggressive accounting and FCF presentation, elevated leverage on a difficult offshore deal, governance and customer‑concentration risks (DSV), leaving too much downside skew for a stock still priced for perfection.

Prompt Used:

I am an investor in Wisetech a listed ASX company and I am reviewing the investment following the release of the 1HFY26 results. I would like to analyse the companies results and expectations for the future by identifying 10 to 15 key factors that are important. To do so I would like you to review the two attachments to identify these factors. Noting that the “wisetech-1h26-results-breifing-combined-scripts” is provided by the company and may have favourable bias while the “Wisetech Interim Results 2026 – Intelligent Investor” commentary is by an analysist with an unfavourable bias. Identify the different points of view from each of these documents for each key factor or note where they do not comment on or talk down the key point so I can see the difference in points of view. Do not interpret a response if missing.

Disc: I own RL+SM

I have just bought some more WTC at $42 having topped up yesterday at $47.50 but will be buying no more reaching the limit to the capital I will deploy for it. The position is now 7.5% so over weight and the third highest amount of capital I have committed to a single company (XRG and RCE being the two higher).

The drop today on no news only sector sentiment tells me that momentum rather than fundamentals are driving the price. PME, REA, XRO, TNE, etc are all getting pummeled – it’s indiscriminate for the most part and while the first 50% of the drop in most of these companies was a fair adjustment on valuation grounds, things are going beyond – but may well keep going.

So I am set in what I consider a long term dominant business that will weather or ride the AI disruption well, continue to innovate and adapt to change and who’s current strategy is appropriate and will be seen as insightful in time.

There are plenty of hairs on the business, but I see the DNA of what got the company to it’s current dominant position as sound despite these issues. The rotation of pricing policy I think is bold but ultimately the only rational way forward, the expansion across the supply chain will ultimately lower risk despite the debt increasing risk near term and I also see WTC as very well placed to deliver customer needs such as CTO and AI workflow productivity improvements better than anyone else and from an incumbent position of power.

I am amazed at where the price has fallen to, having bought from $74.60 down I expect to hold at a loss for some time (situation normal for me). I was tempted by the other names I mentioned above but I see a lot more value in WTC and am a lot closer to it in understanding.

Lucky Friday to all.

Disc: I own RL+SM

Business Context

Wisetech is a leader in freight logistical solutions via it’s CargoWise product which is expanding it’s services and value to customers with additional features (modules) and across the supply chain via the E2 acquisition. In doing so it faces technical and market changes for the new products and services offered, integration challenges with the addition of E2 and a disruptive threat with AI that may provide bespoke and lower cost solutions for customers. In addition, it faces an increased polarization of global trade which threatens to reduce trade levels.

Investment Thesis

Wisetech will remain at the cutting edge or ahead of solutions for freight solutions due to it’s founder drive and focus on software engineering and customer value. The adaption in pricing model will enhance margins and align it to it’s customer value proposition to keep it focused on finding solutions to customer problems rather than customers for it’s solutions.

Deglobalisation of trade is yet another challenge for Wisetech’s customers, with increased complexity over trade rules and supply chain shifts. While trade levels may be in threat, the demand for supply chain solutions capable of handling such complexity will grow and Wisetech is well places to lead in providing customer solutions.

The current price at around and EV/M Cap of ~40 and PE ~34 on FY26 earnings requires the bottom line to grow at 15%+ for at least the next 5 years, which is reasonable given history but still challenging. In addition to customer growth it requires the revenue per customer to grow through the role out of CTO, new modules and the “sharing of the savings” approach to pricing with AI automation and workflows which offer revenue growth that can scale with value rather than diminish with efficiencies like the seat based model.

Like most long-term high growth compounders, it requires the company to adapt and change hence it’s the DNA of the company and management to meet and excel through periods of change that matter. This can not be modelled, only monitored to ensure the company continues to innovate and is prepared to make hard decisions that impact the short term for long term benefit.

Hence the thesis rests on the continued drive and innovation shown by Wisetech to date. This has been most attributed by Richard White directly, but is also part of the company DNA, I see CEO Zubin as a sign of this. If this is shown to not be the case then the thesis breaks down more than any other AI or competitive factor that may pose a threat.

Position

I have been building a position since late October and reached a full position allocation last week and am down 27% to this point. Which is small given the drop and not an issue given the long-term intention to hold and I am considering increasing it to an overweight position at current price levels. I last held WTC in 2019 and have been watching ever since (not finding value at much higher multiples), seeing this as an opportune value to get back in as well as having a favourable view of the companies direction grow and adapt.  I see issues with Richards personal life, governance and control as part of the territory for such an innovative and leading company, but would obviously prefer them to not be the issues they are.  I have no solid view or idea on near term price moves and will continue to monitor in context to it’s long term value.

Disc: I own RL+SM