Wisetech tanks 17% on earnings miss but margins shine

Wisetech (ASX: WTC) reported a rare FY25 earnings and FY26 guidance miss, driving the stock down as much as 17.7% ($95.21) in early trade.

Though the soft result did contain some bright spots, including strong underlying margins and breakthrough products progressing towards revenue generation.

Another key highlight was the completion of the e2open acquisition on 4 August 2025, expanding the company's foothold in the $11 trillion global logistics market. 

Though the $3 billion debt facility used to fund the acquisition and ongoing integration leaves room for execution risk as the company works to deliver on its ambitious growth targets while managing increased financial leverage.

To unpack the moving parts behind this volatile result, I spoke to Datt Capital's Emanuel Datt, for his take on the numbers and what lies ahead

FY25 at a glance

• Revenue up 14% to $778.7m vs. $796.8m est (2.3% miss)
  
• EBITDA up 17% $381.6m vs. $406.0m est (6.0% miss)
• Underlying EBITDA margin up 500 bps to 53%, statutory EBITDA margin up 100 bps to 49%  
• Underlying NPAT up 30% to $241.8m vs. $225.9m est (+7.0% beat)
• Final dividend up 24% to 7.7 cps

The company also provided FY26 guidance, including:

• FY26 revenue guidance of $1.39-1.44 billion vs. Citi ests of $1.51bn (6.3% miss)
• EBITDA of $550-585 million vs. Citi ests of $687m (17% miss)

What was the key takeaway from this result in one sentence?

One liner: Margin expansion on revenue growth.

Top-line revenue growth was slightly under expectations. The market was expecting around 17% top-line revenue growth, but it came in at 14%, which is obviously a couple of percentage points underperformance. However, pleasingly, underlying EBITDA margins (ex e2open) up 500 basis points to 53%.

The other point is that with these sort of high beta exposures that trade on rich valuations, they can be extremely sensitive to investor expectations. That probably explains why there's been a bit of volatility in the stock today.

Were there any surprises in this result that you think investors need to be aware of?

The company appears to be in fine form. I wasn't expecting that level of margin expansion.

Looking forward, they've obviously got this big e2open acquisition that they have to digest. 

The company's forward guidance is balanced with the inorganic impact of e2open providing a significant uplift in top line revenue albeit at slimmer margins. We anticipate that Wisetech will be able to improve top line revenues and margins over time from simplifying its pricing model and enhancing productivity via automation; both initiatives have been well flagged by the company.

Would you buy, hold or sell Wisetech off the back of this result?

Rating: Hold

There are very few doubts about the quality of the business itself. There are question marks, of course, about the leadership and acquisition, as we all know. But ultimately, just looking at the hard numbers in black and white, it's clear that this business trades at a premium for very obvious reasons - that it's a high-quality business with a very sticky sort of customer base, and it's mission-critical software ultimately.

Are there any risks investors need to be aware of?

The e2Open acquisition takes a competitor out of the competitive landscape. When you think about who the global competitors are, the universe itself is very small. If you're in a position to achieve a quasi-monopoly, or come to that sort of industry structure, why wouldn't you do it?

 If e2open can be integrated successfully, I'm sure it'll be a really value-creative acquisition for the whole business itself.

In terms of governance, and Richard White, he's someone who is probably at the tail end of his career. I'm not expecting his influence to diminish in the short term in any way, given what's transpired over the past year or so. However, I do think that as time goes on, it's inevitable that a new generation of leadership will transition into the company.

In a nutshell, I'm not expecting any sort of short-term changes, but over time, governance should improve.

From 1 to 5, where 1 is cheap and 5 is expensive, how much value are you seeing on the ASX today?

Markets are at a very interesting juncture in time. I am moderately bullish on the market, and I think that we're continuing to see continuing elevated M&A sort of action, especially in the small-cap space. 

To me, that sort of highlights the value differential between Australian markets and the US markets and other key Western stock markets.

Investors often think in silos here in Australia. For example, the Index is at 9,000 points, which is "too high". But we still haven't reached inflation-adjusted peaks. The sort of absolute peak prior to this was back in 2007-08 at around 7,000 points, and in inflation-adjusted terms, that's actually 10,200 points today. So, even though the popular opinion is that things are too high, things can probably get a bit crazier because we've seen it in the past. But ultimately, you've got to be prepared both ways.