In the most recent Wrkr call I found a piece of info regarding competition in the superannuation payments space. There's only three major players including Wrkr. But I'm probably more interested in pricing elasticity, profitability and reasons for expansion to Hong Kong which I was planning to ask if we get a meeting here.

Obviously from an average of 3c it's been good and that opens up the questions on valuation, moat and whether i should lighten up here.

- Held

Transcript follows...

 Karen Gilmour

I think the one other thing to mention there as well is the limit that the banks are currently putting on the amount of the same time payments, which is currently $25,000. And a lot of people's superannuation payments are -- a lot of employers are higher than that. So we are really working closely with our bank and working through kind of the limitations that, that poses for employers at the moment. Yes.

Trent Lund

And Ian, working backwards, so who should bear the responsibility of the onboarding?

The reality is it's a tripartite, which is what makes it lengthy. But Wrkr take a very much hands-on approach because we're the recipient of the data, we're the recipient of the processes and that talks to our longer-term cost to serve and quality. So we are -- if you like, we take a more active role in implementation than what is perhaps necessary or what we're funded for, but it's -- we just know it's necessary for our long-term growth.

Nick. Could you give a competitive landscape description?

Yes, Nick. So competitors now, Westpac is still present across a bunch of funds. But obviously, REST has come from -- sorry, AustralianSuper has come from there. So that really does do some damage to their total numbers. Obviously, it would be interesting to see what their strategy is in light of a host and Cbus if they were to move.

Superchoice is definitely the other larger competitor. So it goes Westpac, Superchoice and then us for now. That's starting to shift. A bit of a difference in model and a difference in Westpac lowest price and least amount of features. Superchoice, comprehensive service, no onboarding, but highest price. We sit in the middle with increased features for the same dollar value and close to Westpac on transaction and price. So we're in a fairly unique position. I try to describe this as ALDI, where best value for money in the slot. Hopefully, that helps. Outside of that, it's a pretty small network of players.

Without much fanfare, Wrkr published their report today which showed a loss in latest financial report

But this hides the fact that last year the underlying loss was bigger if one off gain from the convertible note was not added in.

So in actual fact Wrkr could be reaching an inflection point but there are some key implementation risks with clients such as REST and AustralianSuper that needs to play out before we know whether or not Wrkr will be a success.

@Strawman Wrkr might be a good one to cover for a talk as I have a few questions.

[held]

Wrkr touching 52 week highs on the back of a successful $15m placement with institutions and professionals

At 9c a share this raise looks reasonable but Wrkr is still yet to turn a profit

Point 2 in the slide sounds interesting with the mention of adding customers from ATO small business clearing house (the free service by the government for processing super payments) but point 3 about a potential acquisition not so much.

I admit I have been a bit fortunate and lucky on getting into Wrkr last year

[held]

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.

[held]

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.

Bit of pushback?

https://www.dspanz.org/connect/news/payday-super-implementation-concerns/

The most recent capital raising was to provide capital for the implementation of Payday Super integration for MUFG and Link Advisors and also remove the con note overhang.

Some reading for anyone looking at the recent raising.

[held]

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.

[held]