ASX:WRK
WRKR Ltd
Investment Summary
The fund managers believe that WRKR Ltd is positioned for considerable growth, supported by its robust regulatory technology platform that simplifies workforce compliance for various clients. In their opinion, the recent $6.6m placement at $0.025/share signifies strong institutional interest, with a market cap exceeding $100m. WRK’s reported revenue growth of 45% to $9.6 million in FY24 and a positive EBITDA of $0.5m reflect effective cost management and strategic expansion. The recently extended partnership with MUFG Retirement Solutions enhances WRK's potential reach to 7m users, tapping into the Australian superannuation market’s regulatory reforms, especially with upcoming changes from 1 July 2026. The potential increase in transaction volumes will likely lead to higher average revenue per user (ARPU). Looking forward, the fund managers highlight WRK's strategy of leveraging new capital for organic growth, aiming for sustainable positive cash flows by FY26. This growth trajectory, favorable market dynamics, and a well-aligned management team suggest significant share price upside in the near future.
Commentary From The Managers
Saville Capital
30 Sept 2024
$0.05
- Saville Capital added WRK to the Fund via a $6.6m placement at $0.025/share, with a notable increase to $0.049/share by end of September.
- WRK operates as a regulatory technology business, aiding employers in simplifying workforce compliance throughout the employment lifecycle.
- Its platform manages compliance aspects including onboarding, payroll processing, and superannuation contributions.
- Clients include Super Funds, payroll providers, and businesses across various industries.
- WRK generates revenue through SaaS and transactions from long-term contracts, supported by significant regulatory licenses.
- In FY24, WRK achieved a revenue growth of +45%, reaching $9.6 million, enhanced by SaaS licensing and large superannuation contracts.
- For the first time, WRK reported a positive EBITDA of $0.5m, reflecting improved cost management and revenue growth.
- WRK's focus will be on reinvesting gross profits to maintain accelerating growth, rather than operating leverage.
- A key feature is its extended partnership with MUFG Retirement Solutions, enhancing integration with major super funds.
- This collaboration could expand WRK’s user base significantly, from 500k to a potential 7m users.
- The Australian payroll and superannuation landscape is facing increased regulatory scrutiny, which WRK aims to leverage.
- Funding from the recent capital raising will assist in contract delivery, support working capital, and enable organic growth initiatives.
- WRK plans to achieve sustainable positive cash flows by FY26, with an expanding customer base and new product offerings.
- The capital raising has introduced new institutional investors to WRK, indicating its potential for greater institutional attention.
- With a market cap exceeding $100m, there is expected upside from growth factors underpinning the valuation.
- WRK is positioned favorably for sustained success, supported by a strong board and management team, a favorable competitive environment, and long-term industry trends.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.