Hello everyone, Thanks for your recent posts Jocko. This...

Hello everyone,

Thanks for your recent posts Jocko.

This announcement took way too long to come to fruition, but it could beargued that if it took Link this long to go to contract, it will take themequally as long to leave, if they ever felt the desire to do so.

Cons

· Alteredterm of contract from 10 yrs to 5 (3 +1+1). Not bad but not what was first proffered.

· Timelost in the contract coming to fruition coupled with Link platform integration andsuper fund onboarding will most likely delay some of the revenue I wasexpecting this FY.

· Itwill mean Wrkr will need to dig into their cash funds.

Pros

· Thecontract signed with the largest superannuation fund administrator inAustralia. Let that sink in

· The contract locks out other potential competitors that may have been snoopingaround.

Couple of observations about the announcement.

1. The contract has a 3-year term, with options for Link Group to renew for one plus one years.

Comment - This was meant to be 5 years + 5 year renewal being a 10 year term contract when first reported.

2. An initial estimated value of AUD $3,000,000 covering: licences; integration to Link Group’s administration platform; fund onboarding support and services.

Comment – 12 months ago the estimated initial contract spend was $2M. So, I guess recent contract negotiations have included requests for more services of Wrkr. Don’t forget, Link has already spent at least $700k in design fees, so the Link spend will in fact be closer to $4M.

The following funds will need to be onboarded as per SCH Online’s website.

I assume Link will be closing their onboarding service SCH Online and moving over to the Wrkr platform.

3. In addition to the estimated contract value in this announcement, Wrkr will earn usage fees for contributions management and messaging. These usage fees will be charged on a transaction basis as employers use the service.

Comment – As previously stated by Trent, usage fees for Wrkr’s SaaS services; Pay, Onboarding & Benefits are uncapped, which will lead to a greater cumulative income stream overtime from the Link relationship (and their customers) then the $3M contract value stated in this announcement.

4. Link Group will have the right to offer implementation of the Wrkr Platform to all new and current superannuation fund clients.

Comment – this aligns with the stated outcomes Link spoke of in their investor day presentation 2021. Image is from my initial investment thesis from early this year.

5. The Wrkr Platform provided under the terms of the contract will include the full stack of Wrkr products, including Wrkr PAY (employee wage, disbursements processing and Single Touch Payroll reporting); Wrkr READY (employee onboarding, and continuous compliance); and Wrkr BENEFITS (employee pre and post-tax benefit processing). These additional services will be accessible through direct contracts between employers and Wrkr at the sole discretion of the superannuation fund.

Comment – This will lead to a step-change in revenues overtime.

I particularly like the wording that the superannuation fund has the sole discretion in allowing Wrkr to offer their services; Wrkr Pay, Wrkr Ready & Wrkr Benefits. In this way, Wrkr will be given a personal introduction/referral by the super fund to their individual employers. That would be a very strong way for Wrkr to build relationships with these employers to upsell their services.

I am disappointed with the current SP action this week as this is a fantastic contract win and underwrites the business strategy of Wrkr going forward.

Management need to get out into the investment community and sell this business now the deal with Link has been locked in.

I expect some tasty announcements over the next few months as Wrkr onboards individual Super Funds, Workday CRM integrations, QSuper integration via ART (Beam), Payroll company integrations and most likely the HSBC’s Hong Kong superannuation service as Wrkr’s first international undertaking with Link.

Revisiting my initial investment thesis, I now conclude the following:

· The SP is too cheap to raise capital at back end of this year as I postulated.

· I think management are moving away from M&A and more to we will build the services we need.

· With the amount of work that will go on next calendar year re onboarding super funds, Link platform build etc, I think they will end up kicking the can down the road with paying out the Convertible Notes.


Ian