Consensus community valuation
Could explain the share price action this week. FNZ is checking out Wrkr competitor Superchoice.
This must have been the first time I've one-bagged on a capital raising for a company that is not quite profitable in such a short space of time but is approaching an inflection point (shre price of SPP was 0.0256)
No wait, I think there's that "other" company too which I still hold (free carried)
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Maybe I can understand why no one really follows Wrkr and so maybe this is another "has been" and move on.
The chart doesn't look good with early investors burnt in the beginning and is another risk that I took into account in the subscribing for the recent capital raise. Plus the ability to control costs early in the company journey.
Anyway, while everyone talks about AI, I'll just pen some thoughts here on what I see coming up.
Looking forward - Payday super:
Although this list is only for SMSF holders and not significant, still this offers clues on who may benefit from the Payday super changes
https://www.ato.gov.au/businesses-and-organisations/super-for-employers/paying-electronically-through-superstream/self-managed-super-funds/electronic-service-address/register-of-smsf-messaging-providers
I see Class (the spurned HUB24???), Macquarie and Netwealth there. But Netwealth and Mac doesn't offer rollovers so I wonder if they will work on upgrading their messaging platform? Not sure about Westpac and Colonial either
Anyway I'm creating a sounding board here while I figure out who could benefit big from the Payday super change that needs to be done by July 2026. I feel there could be many ways to play this and not just in Wrkr. Ironically I think Wrkr is not the best way to play this narrative so am thinking carefully about this before I post any more on this.
In meantime, feel free to post some thoughts.
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Quick update as I don't have time, the retail SPP for Wrkr was heavily oversubscribed by 6 times and had to be scaled back
In addition, there was a investment report by RAAS that thinks Wrkr will be in profit next year.
Note the above for 2024 the NPAT was negative. I guess there was some A that got deducted out somewhere.
By my calculations, I don't think that will happen as I expect spending to accelerate to push the company to either a slight loss or breakeven before the revenue from work starts accelerating.
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After nearly a decade Wrkr is unexpectedly EBITDA positive
Was expecting to be breakeven. So this was an unexpected surprise even though 500K is not much.
This result puts a new perspective on the upcoming SPP for retail for 500K with 6.6m placed already. Suddenly the raise looks "interesting" and appears to be reasonable in size to get resources for potential new business.
Not many shares for retail as well. Was planning to sit this one out but now have to pull out the booklet again.
With the above in mind, there are a number of things to consider
- Strength of the moat. Wrkr platform is one of 9 gateway providers for the STN (Superannuation Transaction Network) under the name Suprestream that communicate with the ATO. In addition, their software is licensed to Precision administration under the name Beam https://www.gngb.com.au/list-of-gateway-operators-and-contacts/
- Need to see if Xero, MYOB etc provides the same functionality below which is being done with KPMG and Workday
- Growth of the Wrkr Pay business which is the clearinghouse for super transactions and compliance. Will ignore Wrkr ready and Benefits as they appear to have gone backward.
- Further reduction in cost to income ratio which has been declining for the last 2 years.
- The large amount of work that may come from the MUFG and Link Group contract to get their customers onboarded (currently still in trial phase I believe)
- Other trails going on such as MUFG HK pension
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Hurdle rate is planning to switch off his substack soon
Here is his June 2024 writeup which got me interested in the last month.
I'll write about the last financials update later while I consider the latest SPP. Also withdrew the sell order here since that release.
In my last straw I mentioned there were 1.27bn SOI
However it seems the top 20 hold over 70% of the shares on issue (tikr)
This explains the low trading volume that I have observed since holding, but the share price can move by a large margin if someone in the top 20 decides to make an exit..
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Had a brief look at Wrkr in the last week and overall it looks appealing but with one caveat.
Wrkr has signed a $3m contract with Link Group who manage member super funds.
Wrkr provides the layer for automating the integration functions and charge about $8 per user. With the Link Group it seems there could be a big opportunity to capture more users.
Already there is a trial underway with Link's Rest Super that has about 2m members.
Wrkr earned about $4m last year and was cashflow from operations was positive last quarter.
But earlier I mentioned there was a caveat. That concern is a $3.3m convertible note due in October 2024 which will result in an additional 110m shares. With a market cap of $38m, there are already 1.27bn shares on the register!
Other minor concern is the salary of CEO Trent Lund of $460K although he used to be with PWC and was a non exec director before becoming CEO.
The economics of the business model look appealing but not sure about this convertible note and the amount of shares. Hopefully there could be an inflection point from work with the Link Group. I've got a small holding as of now in case the thesis backfires if the financials implied by work with Link Group don't turn out as expected.
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