You almost never see Wisetech this cheap. Datt Capital sees a buying opportunity

You never know what you're going to get with Wisetech (ASX: WTC). A good result here, a bad result there, a Richard White headline in between and more recently, an ACCC raid.

Today's FY26 result was much the same. The numbers and guidance read well at face value, but the stock tumbled as much as 10.2% to $40.80 in early trade.

"We grew revenue 79% within guidance, exceeded guidance EBITDA and EBITDA margin, reduced net leverage to 2.7x ahead of expectations, and delivered approximately $115 million in annualised run-rate savings through our focus on efficiency and earnings," said CEO Zubin Appoo.

The market was clearly positioned for downside, with short interest at a record 8.5%, up from just 0.98% at the start of the year.

Still, WiseTech continues to grow at a double-digit clip while its forward price-to-earnings ratio has dipped to the low 20s on an adjusted basis. To make sense of the gap between the numbers and the reaction, I spoke to Datt Capital's Emanuel Datt.

FY26 at a glance

• Revenue up 79% to US$1,395.9m vs US$1,407m ests (1% miss), within guidance and reflecting eleven months of e2open at US$541.2m
• CargoWise revenue up 11% to US$756.9m, driven by customer growth, LGFF rollouts, M&A and the CargoWise Value Packs launched in December
• Underlying EBITDA up 56% to US$644.5m at a 46% margin

• Statutory NPAT of US$178.7m vs US$195m ests (8% miss)

• Underlying NPAT rose 29% to US$313.5m
• Around US$115m of annualised run-rate cost savings delivered, split US$64m from e2open, US$34m from the AI Transformation program and US$17m from efficiency initiatives
• Operating cash flow up 29% to US$564.0m with underlying free cash flow up 67% to US$489.6m, cutting net leverage to 2.7x against a guided target of around 3x
• Final dividend up 14% to 8.8 US cps fully franked vs. Macquarie ests of 8.5 US cps (3.5% beat)

FY27 guidance

• FY27 revenue guidance of US$1.48bn to US$1.54bn, implies 6-10% growth, with the US$1,510m midpoint roughly 3% below the US$1,562m ests
• FY27 underlying EBITDA guidance of US$725m to US$780m, implies 12-21% growth, with the US$752.5m midpoint about 1% above ests
• FY27 underlying EBITDA margin of 49-51%
• Guidance range rests on adoption, with the low end assuming FY26-like growth and modest uptake of new initiatives, the high end assuming accelerated CVP, agentic AI and VerifyWise adoption

Do you currently hold the stock and what is your rating?

We do hold WiseTech and see it as a buy here.

What are the key metrics from the result?

This result was all about three key things.

• EBIT margins to maintain or improve. They delivered around 46%, which obviously means revenue is growing faster than the cost base.
• Cost synergies and headcount reductions. They delivered $115 million in total annualised run-rate cost savings in FY26 which is considerably ahead of previous guidance, so a year ahead, which is excellent.
• Question marks around customer attrition. Given the transition to the new business model, and that looks like it's been maintained below 1%, so in line with historical churn.

Wisetech shares traded sharply lower on the result. What's driving the negative reaction?

The market may have viewed the FY27 guidance as a little soft. Though this is fairly consistent with the company's track record of being conservative when guiding earnings, and more often than not they tend to beat it, as we've seen today.

WiseTech's valuation is well below historical levels and short interest is high, but the headline risk hasn't gone away. How do you navigate that?

Much of it comes down to the founder, Richard White. His influence has clearly diminished over the last six months. New board members have joined and that influence is considerably diluted compared with 12 months ago.

The ACCC investigation is more company related, and ultimately it demonstrates how powerful and influential WiseTech is in its market segment. It's also worth looking impartially at the track record of matters like this. Something like 70% of ACCC inquiries aren't pursued further. There are limits on the Australian exposure too, since Australia is only around 10% of the business and the ACCC's jurisdiction stops at the border.

Ultimately this is commercial software. It doesn't hold a monopoly, no-one in the customer base is mandated to use it, and there are plenty of alternatives. Those are the hard facts, and I don't expect much material to come out of the investigation if it progresses.

What's your outlook for Wisetech?

The outlook is positive. 

They've clearly demonstrated their value to customers, which is the single most important thing for any business, and the ability to transition those customers to the new pricing model is what drives it forward from here.

There's been a lot of talk about the pricing change, but our view is that it works in favour of smaller businesses. Smaller forwarders that were previously priced out can suddenly afford it, because pricing is volume-based on the number of containers you're shipping.

The company alluded to a significant uptick in SME customers, which i) dilutes revenue concentration among the largest accounts and ii) expands the total addressable market. There's also a range of products coming that will be attractive to customers and, over time, integral to their operations.

What could you be wrong about?

The biggest single risk is a drop-off in global trade. They're also relying heavily on AI transformation and automation, so a broad increase in the cost of compute or AI models would hurt, though that's an unlikely edge case now the industry has matured.

R&D spending is another one. They've historically put a significant proportion of revenue into R&D and that's come down to about 24%. Management put it down to AI adoption, on the basis that it's cheaper to use AI than hire heads, and whether that plays out will only be known in time. Even so, it's an edge risk, because companies across every sector are claiming big productivity gains from AI. What WiseTech is saying isn't unusual.

At the low 20x forward earnings, this is about the cheapest WiseTech has ever traded.

It's typically sat well above that, in the 30-40x range, so there's good scope for upside as confidence returns to the story. There's been a lot of focus on the founder, but this is an organisation of five or six thousand people. It's not one person running the shop.