We leave our fair value estimate for narrow moat WiseTech WTC unchanged at AUD 105 per share following the announcement that four independent non-executive directors are stepping down from the WiseTech board, including the independent chair. The board members are stepping down following intractable differences over the ongoing role of CEO Richard White, who founded the business 30 years ago but has recently become caught up in allegations of inappropriate behavior, as reported in the media.

We don’t see the board resignations as a material loss, but it could signal a shift in power toward the founder. Following the changes to the board, the average tenure on WiseTech’s board has more than doubled to over 20 years, from under 10 years previously.

The directors who are stepping down have all joined the board relatively recently, with two of them having joined the WiseTech board just a year ago and the other two having joined the board three years ago. The remaining two directors have the longest history with WiseTech, and include co-founder Maree Isaacs, who has a 30-year history with the company, and Charles Gibbon, who has been with the company for nearly 20 years. Michael Gregg will rejoin the board following the release of half-year results, having previously served on the WiseTech board from 2006 until 2022.

Due to the ongoing disruption to the business, WiseTech says it expects revenue for fiscal 2025 to come in around the bottom of its prior guidance range, while EBITDA margins are expected to be toward the top. We update our near-term forecasts accordingly and have pushed out expected growth from new product releases to future years. WiseTech will present half-year results on Wednesday Feb. 26, 2025, where it will provide additional commentary.

Business strategy and outlook

WiseTech’s long-term strategy centers on becoming the operating system for the logistics industry as the industry digitizes.

We expect the logistics industry to digitize rapidly over the next decade. The logistics industry currently operates with a relatively low level of digitization, primarily due to a cultural aversion within the industry toward technology. However, the market for logistics services naturally selects for the lowest-cost providers and we see digitization as a key driver of cost-savings. We therefore see the process of digitization as inevitable, either through companies adopting digitization to remain competitive or through digital leaders taking market share from the digital laggards.

WiseTech provides logistics companies the technology to digitize. WiseTech’s core product suite, CargoWise, provides the best-in-class software solution for international freight-forwarding by air and ocean. We see logistics companies that use the CargoWise international freight-forwarding solution significantly outperforming their peers due to the efficiency and productivity improvements the platform provides. We therefore expect this solution to become the industry default, either through increased customer adoption or through WiseTech’s customers taking market share.

We expect WiseTech to leverage its already dominant position in international freight-forwarding to move into downstream adjacencies, which consist of, in order of functional proximity, customs and compliance, road and rail and warehousing. Recent acquisitions Envase, Blume and Matchbox all point to WiseTech currently pushing from customs and compliance into container-based road and rail. We view the expansion of its offering into these adjacencies as highly likely to succeed due to CargoWise’s increased adoption by the world’s largest global freight-forwarders, which we believe set the standard in the logistics industry. Given that these freight-forwarders experience significant cost-savings when their downstream partners are also on the CargoWise platform, we expect them to continue to push their downstream partners to adopt CargoWise.

WiseTech bulls say

  • CargoWise’s international freight-forwarding solution is best-in-class and we expect this solution to become the industry-default.
  • WiseTech is well placed to leverage CargoWise’s market position in international freight-forwarding into adjacent services such as customs and compliance, rail and road, and warehousing.
  • The logistics industry currently operates with a relatively low level of digitization, but we see the process of digitization as largely inevitable.

WiseTech bears say

  • The logistics industry is still in the early stages of digitizing, meaning there is high uncertainty as to how large the market opportunity will be for WiseTech’s current and future products.
  • Following the resignation of founder White from the CEO role, it is unclear whether the company will have sufficiently strong executive leadership.
  • WiseTech’s hasn’t yet incorporated all of its acquisitions into the CargoWise product suite, and the return on those investments could be dilutive if they lack strategic attention.

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Terms used in this article

Star Rating: Our one- to five-star ratings are guideposts to a broad audience and individuals must consider their own specific investment goals, risk tolerance, and several other factors. A five-star rating means our analysts think the current market price likely represents an excessively pessimistic outlook and that beyond fair risk-adjusted returns are likely over a long timeframe. A one-star rating means our analysts think the market is pricing in an excessively optimistic outlook, limiting upside potential and leaving the investor exposed to capital loss.

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Moat Rating: An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Companies with a narrow moat are those we believe are more likely than not to sustain excess returns for at least a decade. For wide-moat companies, we have high confidence that excess returns will persist for 10 years and are likely to persist at least 20 years. To learn more about how to identify companies with an economic moat, read this article by Mark LaMonica.