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WiseTech’s numbers

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Question asked 06/12/2025

WiseTech’s numbers

I wanted to get your view on WiseTech's numbers. I listened to a podcast that criticised its accounting, arguing that its artificially boosting EBITDA by treating wages for its software developers as a depreciable asset (ie capitalising R&D) - and then because of that the free cash flow is inflated and margin improvements are really down to a bit of accounting magic. Do you have a view on this and whether its something to worry about? A bit technical I know, but would love your view on this issue as I don't think you've discussed this in your analysis. Thanks, Josh

Answer

Hi Josh,

Definitely a question on the granular level and very topical when we consider the financial engineering that has arisen in a few companies over the years – Corporate Travel (CTD) comes to mind! Interesting timing on your question, with Macquarie having just raised it to an Outperform with a PT of $108.50.

We feel the Podcast may be trying to grow subscriber numbers by kicking a “dog when its down” – not that we believe WTC is a dog. Capitalising software-development wages (treating them as an asset rather than an immediate expense) is common practice in the tech industry. It improves reported EBITDA and smooths earnings — which is why analysts always look at percentage of wages capitalised to assess quality of earnings – other well know tech names including Xero, Technology One and Atlassian also follow the practice.

We listened to WTC’s investor day closely this week and garnered more confidence that the company has a firm handle on its new commercial model including the important e2open integration and that they will deliver on their FY26 guidance.

MM remains long and bullish towards WiseTech Global (WTC).

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WiseTech Global Ltd (WTC)

LAST UPDATED 05/12/2025 10:29

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