WiseTech Global, Re-Building Its Reputation

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Post a tumultuous period, WiseTech Global is seeking to re-assert its credentials as a global growth company.

-Wisetech Global rebuilding market trust after governance turmoil
-CargoWise growth outlook remains strong despite tariff threats
-Analysts see upside for WiseTech amid digital logistics expansion

By Danielle Ecuyer

The ups and downs of the founder genius

Greatness comes in many forms. In the case of founder-led companies that have risen to great heights, a misplaced step in the eyes of shareholders can be quite punishing for the share price.

Look no further than Tesla, which has fallen -36% year-to-date on the back of very poor sales across Europe and in markets like Australia, in what some describe as retaliation against founder and CEO Elon Musk’s involvement in US politics, in addition to rising competition from Chinese EV companies like BYD.

Luckily for WiseTech Global ((WTC)) shareholders, or those looking for possibly a good entry point, the management tussle between Richard White and the Board has entered the rebuilding phase, post what some large funds considered multiple corporate governance failures.

The issues around White’s personal life and subsequent governance problems coincided with two consecutive earnings downgrades by the company, along with delays in product launches, which underwrote a sharp sell-off in the share price over the fourth quarter of 2024.

From over $140, the share price has retraced to around $80, or down by circa -43%. Arguably, the rally to $140 was overdone as the stock got caught up in the momentum trade around technology stocks at the time.

Post the resignation of several board members, White who resigned as CEO in October 2024 has been re-instated as Executive Chair in late February.

Moving forward on governance

Two new independent non-executive directors have been appointed: Chris Charlton, who was at UPS for twenty-six years, and Andrew Harrison, who was WiseTech’s Chair until March 2024.

RBC Capital, who has just hosted a Canadian investor roadshow, views the appointment of two non-executive directors as a “step in the right direction” while the Board considers internal and external candidates to be appointed as the next CEO. No timeline has been confirmed. The CFO role is likely to be filled by an internal candidate.

The twists and turns around governance and succession planning resulted in the divestment of the entire shareholding in the company, some $580m worth, by AustralianSuper. HESTA is also reported as having written to the Board to seek out the substantive release of both governance reviews into the company and White.

Since the appointment of Harrison, HESTA’s Chief Executive Debby Blakely stated:

“Due to the previous tenure of the new lead independent director alongside the long-term relationships to the company of other existing board members we are seeking clarity on how the company is prioritising strengthening board independence.”

“We are continuing to engage with WiseTech on these matters in the best financial interests of our members.”

Goldman Sachs highlighted, post the company’s first-half results, that WiseTech needs to re-establish and rebuild the market’s trust, and proposed several possible measures.

These include the release of the full report from the Board’s recent review; offering meaningful key performance indicators, revenue drivers, and addressable markets to provide a framework around potential market opportunities; as well as communicating with the market regularly and in a timely manner.

RBC Capital also points to the top 50 institutional shareholders who were surveyed with the following findings:

-Investors expect commitment to transparency and the release of the findings of the Board review as a step to rebuilding market confidence.

-Support around White’s ongoing involvement and commitment to WiseTech, but the need for development around concrete succession planning for a replacement candidate with a robust software and development background.

-Improved Board governance and independence, as well as communication between the Board and management.

Management also pointed to staff turnover remaining “stable”. Over 90% of the staff own shares in WiseTech. Nor has there been any change in customer usage among existing customers.

Rome wasn’t rebuilt in a day and nor will WiseTech’s reputation. However, drawing a simplistic line of comparison, Tesla shareholders seemingly face more hurdles including reputational brand damage, multiple compression on growth stock valuations, increased competition, and falling sales.

WiseTech has a governance and trust problem, with product launch delays self inflicted rather than structural growth issues of a more systemic nature. 

Cleaning the slate for a re-boot

With White back at the helm and on the earnings call, WiseTech Global sought to draw a line under the sad saga from the prior few months and, overall, the first-half results came in marginally above consensus estimates.

The FNArena Corporate Results Monitor summed up the financials as follows:

“With uncertain expectations around Wisetech Global’s 1H25 results due to multiple downgrades in the run-up and governance issues surrounding founder Richard White, there seems to have been a sigh of relief from analysts. Underlying net profit after tax rose 34% due to revenue growth of 21% from CargoWise. An EBITDA margin of 50% was higher than consensus expectations. Disappointingly, management lowered FY25 guidance due to new product launch delays, with FY25 revenue growth guidance at the lower end of the previous range. Macquarie is continuing to look for more quantifiable information, noting product quality is more important than new product delays. Morgan Stanley believes the results were ‘clean’ and commends the signing of another large customer, Logisteed.”

Citi has since engaged with several of WiseTech’s customers, partners, and competitors at a major logistics event, TPM25.

The analyst came away optimistic about the medium-term outlook due to growth in digitalisation and increased tech spending across the logistics industry, including CargoWise’s focus on new products to address logistics pressure points and inefficiencies.

WiseTech possesses a robust customer pipeline with substantial customer win opportunities.

Management offered a caveat around FY25 guidance, noting any changes in industrial production and/or global trade favourable and/or unfavourable could have a material impact on guidance.

Market Opportunities in Numbers

RBC Capital offers insight into the WiseTech moat, stressing the company has a 20-year-plus head start when it comes to product capabilities and investment.

The logistics function is often handled in-house, which WiseTech competes against. These systems typically allow for quoting, engaging carriers, sending and tracking freight, and billing.

In contrast, CargoWise offers superior functionality across customs clearance, warehousing, and international e-commerce.

Third-party logistics providers are increasingly seeking platforms that can deliver real-time tracking, automation, and advanced data analytics with e-commerce bringing higher demand for complex international supply chains and same-day/last-mile delivery.

WiseTech asserts it has 14 of the top 25 global freight forwarders as customers and is targeting to retain existing customers while increasing usage. RBC notes the company’s top 300 customers generated around 70% of CargoWise’s revenue in FY24.

With an estimated total addressable global logistics software market at US$26.4bn by 2026, RBC asserts the company’s growth runway remains robust through onboarding large global freight forwarders and expanding offerings into warehousing, landside logistics, customs, and compliance.

Citi is also expecting further global tailwinds in FY25, notably from Asian forwarders. Following conversations with industry contacts, Citi points to the possible acquisition of DB Schenker by DSV, a Danish logistics company and large customer, and the integration of Schenker onto CargoWise.

CargoWise represents around 96% of the company’s recurring revenue, with a churn rate of less than 1%. The product generates the majority of WiseTech’s revenue. Most sales are achieved through a ‘seat plus transaction’ agreement meaning charges are applied per user and per transaction.

Luckily, WiseTech management has the experience of President Trump’s first-term tariff precedent as a benchmark for any likely impacts from the latest tariff impositions.

Most importantly, from a historical perspective, global trade volumes have had a limited impact on the company’s revenue, with around 1%-3% swings in sales growth tied to freight volumes.

RBC estimates a sales effect of -3% decline in FY26 due to US tariff changes flowing through the global freight market.

What Do the Analysts Really Think?

RBC is the latest to assess the changes taking place at WiseTech, upgrading the shares to Outperform after considering the latest results. RBC has applied a governance discount of -10% to its valuation but continues to see strong growth prospects, and believes the stock is trading at a fair valuation post-selloff. Target price: $110.

Across the FNArena daily monitored brokers, a consensus target price of $131.90 stands, with seven Buy or equivalent ratings, including an upgrade at the half-year results from Ord Minnett.

Goldman Sachs is Buy-rated with a $128 target. The only Hold-equivalent rating comes from Jarden with a $100 target price post earnings.

Company Summary

WiseTech Global is an Australian technology company specialising in cloud-based software solutions for the logistics industry.

Its flagship product, CargoWise, enables logistics service providers to execute complex transactions and manage operations across supply chains. It was founded in 1994 by Richard White and Maree Isaacs and listed on the ASX in 2016.

The stock is part of the ASX50 since June last year.

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