"Wrkr" Platform Uptake, page-33

Hi Jocko,

I apologise for the length of this post. Your post deserved a better response than a just a reference to a Podcast (as helpful as I hoped that was for you or anyone else who carded to listen to it) at the time it was the best option to respond around my commitments.

The following is my personal view from reading the publicly available information provided by management in their last few market updates. The rest is my deductions that form my own on-going investment thesis and subsequent continued investment in WRK. I have not questioned management as to the validity of my assumptions and to that end I would welcome anyone else's critique and or value add to my ramblings.

Imagine if you will, a Superannuation Fund, Payroll Company and or Employer using their own in-house proprietary software or that of a 3rd party provider to meet some or all of their required compliance moments. Maybe it's a bit clunky or expensive relative to what it does. Maybe the Board/Senior management are considering improving/broadening their service to differentiate themselves from their competitors in the market. Maybe they are thinking of building their own proprietary product/service but the time, expertise and cost is daunting or financially prohibitive.

Along comes WRK with a treasure trove of services and optionalities that allow you to do what you are currently doing better, most likely cheaper and provides an environment (sandbox) in which to test and build out your current or proposed service offerings to your client base.
https://en.wikipedia.org/wiki/Sandbox_(software_development)



It was advised in the last 4c that ClickVu (the final service of the merged entities) will, by December 2021, be integrated into the One Wrkr PLATFORM (referred to as the single cloud platform above) - which I interpret as WRK's PaaS (Platform As A Service). That's the deeper more complex service offering that I see. It's a pick and mix or collaborate and develop smorgasbord of services offered on one platform.
Emma said in the last 4c "We have moved to a single Dev Ops and Service Reliability Engineering framework and have invested in standardising our security and reliability across the business."

Look to PaaS and SaaS to be the dominate income streams into the future Jocko. If we don't achieve this, we will not be the dominate force in RegTech I believe we can become. The likelihood of the relationships and or becoming the go to Platform that you have eluded to in previous posts will not come to pass.



I am enthused by the expected revenue to be earned from the Wrkr Platform that prior to FY20 did not exist but are forecast to be WRK's biggest earner. I don't believe all this revenue will just come providing a product/service that addresses regulatory pain points such as: Stapling, SMSF Rollovers, Single Touch Payroll Phase 2 etc under the marketed products of Wrkr Ready & Wrkr Pay.

The bigger dollars and longer term sticky relationships will come from deeper collaboration and development of products and services with clients utilizing the Platform more like a PaaS. Its obvious to me this is already occurring for which I have highlighted the following comments made in the last 4c & AGM presentation as confirmation;

1. The priority of the business is to continue to secure partnerships and strategic supplier agreements to reach more workers while we invest in our platform and products to serve more compliance moments.
2. We have hired an additional 2 developers to keep up with growth demands (delivering proof of concepts and delivering on Platform licence growth)
3. Strong partnerships and alliances (shared revenue and product co-creation)
4. Additional investment in resources may be required where the Group secures material contracts that are currently in the pipeline.
5. The implementation of secure blockchain-based digital wallet and consent management to enable secure real-time payments notifications. This next advancement is planned for late in the calendar year of 2022. Subject to demand from APRA Funds and Payroll early adopters we may prioritise this and implement sooner.

These products are not off the shelf solutions but complex collaborative software development with clients. The end product could well be white labelled versions of our product/services integrated within a client's software and or app and marketed under the client's brand.
We would become the "backbone" of a client's service offering. A very powerful and trusted position.

I suspect that some services will be provided as a SaaS offering while others will be on a PaaS basis. I think it will be horses for courses Jocko and we will never know the reasoning for a client to choose one or the other.

As excited, as I am about the revenue potential of the Platform, I also realize that any company making such a decision would not do so lightly and therefore you would expect a significant courting period before a deal is consummated. Sticky revenues yes but a long road to get there and this should be appreciated by those invested in WRK.
Emma confirmed as much in the last 4c "Converting our pipeline of APRA Funds and Payrolls can take up to 12 months, due to the complexity, size and implementation planning required by our target segments but; after 9 moths of sales activity, we are now seeing that pipeline mature."



Love the fact that 90% of revenues are annuity style. Nothing better than selling a product once and receiving an annual income in perpetuity (or until the contract comes to an end).

Did you note the reference of the pipeline being weighted to PaaS and SaaS? I believe this further supports my comments above re deeper relationships through more collaborative development with clients.

I don't think anyone has discussed the comment "the gap to forecast at full year is less than 10% of pipeline value". If the projected gap is $800k and that is 10% of the pipeline value, then I would assume the pipeline value to be $8M hence management being comfortable with working capital and achieving projected targets.

Emma commented in the last 4c "While the above graph may suggest an $800,000 shortfall on our full year revenue forecast of $5M, the growth team has a well progressed pipeline that far exceeds this gap. With 3 operating quarters remaining, we are confident that our current sales activity with APRA Funds and leading Cloud Payrolls, above forecast growth in Wrkr READY and SMFS Hub, and the expected conclusion of two commercial deals in the next quarter will easily close this gap. In addition, we expect this pipeline of activity to bring longer term revenues forward and top position the company for further growth in FY23 and beyond."

Hence the forecast cash position change below that you liked so much Jocko.



Well, time will tell if my investment thesis is right or wrong but at this point in time, I don't see a reason to sell and my original thesis to invest has actually strengthened under Trent Lund's leadership.

I also believe, as you do Jocko, that WRK is significantly undervalued at this point in time, relative to WRK's forward looking potential.

I am comfortable, given time, our investment in WRK will play out.

As @norvest likes to point out, own your posts and don't hide behind a pseudonym, so I sign off using my first name...

Ian

Have a good week everyone.