Wisetech Global

Income statement

Notes:

• FY25 underlying NPAT is the restated figure under the new definition.

Margins (%, derived from the table above)

Revenue CAGR (derived):

• FY22–FY26 (4-year): about 31.9%, inflated by e2open.

• FY22–FY25 (3-year, pre-e2open): about 19.1%.

FY26 operating cost structure

Additional context:

• Product design & development includes US$131.6 million of D&A in FY26 (FY25: US$66.5 million).

• FY26 G&A includes restructuring costs from the AI Transformation and higher legal and advisory costs.

• Restructuring costs were US$67.1 million pre-tax (US$51.2 million post-tax).

• M&A costs fell to US$11.9 million (FY25: US$30.6 million).

• Excluding e2open, restructuring and M&A, operating expenses were 45% of revenue, flat on FY25.

Balance sheet

Debt and liquidity notes:

• The e2open acquisition was funded by a new US$3.0 billion senior unsecured syndicated facility. US$2.4 billion was drawn on 30 July 2025.

• Net leverage was 3.2x at 31 December 2025 and 2.7x at 30 June 2026, against guidance of about 3x. The FY27 target is about 2.2x, and the FY28 target is below 2.0x.

• Total liquidity exceeded US$1.1 billion at 30 June 2026.

• The deeply negative NTA reflects goodwill and acquired intangibles from e2open.

Derived estimate: Net debt at 30 June 2026 is about US$1.7–1.9 billion, implied from 2.7x leverage on FY26 underlying EBITDA. Treat this as indicative only, as the leverage definition may use covenant or pro forma EBITDA.

Cash flow

Notes:

• FY26 FCF conversion was 74% (FY25: 75%, as reported).

• There was no buyback program. In FY26, 62,228 shares were bought on-market for employee plans at an average of A$59.64.

• An additional US$1.1 million of FY26 dividends was reinvested via the DRP.

• FY25 FCF is derived as OCF less capitalised development less other capex.

Ratios

ROE, ROA, ROIC, current ratio, debt/equity, asset turnover and cash conversion cycle cannot be computed without verified FY26 equity, total assets and working capital. Directionally, ROE and ROA fell sharply in FY26 as statutory NPAT dropped 11% while the balance sheet more than doubled.

Commentary on trends and inflections

FY22–FY25: an organic compounder: Revenue grew at about 19% CAGR, with reported EBITDA margins held at 47–50% despite heavy R&D (about 34% of revenue in FY25) and high capitalisation rates (55% of R&D in FY25). The model rested on LGFF rollouts plus annual price increases. CargoWise attrition stayed below 1%.

FY26: a structural break: e2open nearly doubled revenue but diluted every margin line:

• Gross margin fell from 86% to 77%.

• Underlying EBITDA margin fell from 53% to 46%.

• The group took on about US$2.2–2.4 billion of debt.

• Net finance costs went from US$3.5 million to US$131.7 million.

• Statutory EPS fell 11%.

• The economic quality of the core held: CargoWise grew 11%, and WTG ex. e2open delivered a 53% underlying margin.

Second-half inflection: 2H26 reported EBITDA (about US$306 million) was materially above 1H26 (US$252 million). This reflects synergy capture and AI-driven exits: US$115 million of total annualised run-rate savings, comprising US$64 million of e2open synergies, US$34 million from the AI Transformation and US$17 million from earlier efficiency programs.

Revenue quality watch-items: 1. Organic CargoWise growth slowed to the bottom end of guidance assumptions because of 2H26 CVP "refinements".

2. e2open subscription attrition is ongoing, and FY27 e2open revenue is guided flat.

3. Recurring revenue dipped to 95%.

Capitalisation of development: The share of R&D capitalised fell to 45% at group level (52% ex-e2open). Management says it will "monitor the future benefits of AI to capitalised development". This could pressure the capitalisation rate as AI writes more than 90% of code, which would hit reported EBITDA but not cash.

Management guidance (FY27)

• Revenue US$1.48–1.54 billion (+6–10%).

• Underlying EBITDA US$725–780 million (+12–21%), at a 49–51% margin.

• CargoWise revenue +12–20%, with a 45/55 half split.

• e2open revenue flat.

• Net leverage about 2.2x by FY27 and below 2.0x by FY28.

• Initial VerifyWise revenue in FY27.

The guidance midpoint is about 3% below pre-result revenue consensus and about 1% above EBITDA consensus. The second-half weighting implies mid-single-digit CargoWise growth in 1H27 and strong double-digit growth in 2H27. This back-ending is the main reason the market reacted negatively.

Bull case

1. CVP plus AI re-accelerates the core. Guidance calls for CargoWise growth of 12–20%. Combined with 61 LGFF rollouts that are largely not yet live, this supports a return to high-teens core growth at a 53%+ margin.

2. Operating leverage and deleveraging compound. US$115 million of run-rate savings already exists, more AI exits are coming in FY27, and underlying FCF of about US$490 million means leverage could fall below 2x within two years. That would make room for buybacks or M&A.

3. Governance de-risking. There is now an Independent Chair, a permanent CEO and CFO, and five independent NEDs, and the ASIC probe closed with no action. At about 12–13x forward EV/EBITDA for a franchise with under 1% attrition, the stock is priced at a historical trough.

Bear case

1. Regulatory and pricing-power ceiling. The ACCC has formally found substantial market power and is actively investigating. If the probe concerns pricing, contract terms or partner restrictions, CVP economics could be constrained just as growth depends on them.

2. e2open is a value trap. Ongoing subscription attrition and flat FY27 revenue sit against US$2.1 billion of debt. Synergies are a one-off benefit, and e2open's 36% margin structurally dilutes group returns.

3. Customer and competitive erosion. The CVP backlash, AI-native flat-fee rivals and DSV's long-term Tango migration could erode the "industry standard" status that justified the historical premium.

Catalysts and monitorables (next 12 months)

• 2026 AGM (27 November 2026): director elections and the FY26 Remuneration Report vote. A second strike would trigger a spill resolution.

• Progress and disclosures in the ACCC investigation.

• 1H27 results (around late February 2027): CargoWise organic growth against the 45% first-half assumption, e2open attrition, leverage path, and AI Transformation phase-two savings and costs.

• Outcome of the DSV contract and CVP migration talks.

• Remaining STL customers migrating to CVP; any pricing concessions.

• First VerifyWise revenue and CTO adoption metrics.

• Any further developments in matters concerning Richard White, including the reported AFP inquiry.

• Changes in the capitalised development rate as AI reshapes engineering.

Analyst verdict

WiseTech enters FY27 as two businesses in one share price. CargoWise remains one of the highest-quality vertical software franchises globally. It has under 1% attrition, 99% recurring revenue, a 53% underlying EBITDA margin, penetration of almost every top forwarder, and a product cadence that accelerated in FY26 despite heavy restructuring. e2open is a debt-funded diversification. It widens the addressable market and has already delivered synergies, but its revenue is shrinking and its margins sit structurally below the core.

FY26 showed that management can execute on cost. Run-rate savings of US$115 million, synergies 18 months early and a net leverage of 2.7x against guidance of about 3x are tangible achievements. Governance has also improved markedly. The Board has an independent chair and five independent directors, and both CEO and CFO roles are filled permanently.

The de-rating from roughly A$130 to roughly A$34 reflects three unresolved uncertainties, not one:

• whether CVP's transaction-linked pricing is a durable monetisation step or an overreach that invites customer flight and regulatory intervention;

• whether e2open can return to growth;

• whether AI enhances or erodes the CargoWise moat.

The ACCC investigation is the most consequential near-term unknown, because it bears directly on the pricing lever that FY27 guidance relies on.

On about 12–13x forward EV/EBITDA, about 24x underlying earnings and an underlying FCF yield in the mid-single digits, much of the bear case appears priced. However, the 2H-weighted FY27 guidance leaves little room for error in 1H27.

Our assessment is that the risk/reward is constructive but contingent. Conviction should rise with evidence of CargoWise organic growth in the low-to-mid teens in 1H27, stabilising e2open revenue and a benign path for the ACCC matter. Conviction should fall on any regulatory finding that constrains CVP pricing, or a second remuneration strike.