ANZAC Day......Lest we for get!My respect to fallen and serving...

ANZAC Day......Lest we for get!
My respect to fallen and serving soldiers.

Another solid 4c

• Positive operating cash flow trending towards breakeven (confirming Trent's observation the business will become cash flow positive by 2025).
• Cash collection is outstanding. Without this, Wrkr would not have been able to spend the sums on platform development they have without having to raise working capital.
• I would have liked larger receipts, only because I was previously estimating an annual revenue of $11M which now looks more likely to be $10M.
• SMSF Hub service continues to grow (low cost high margin business).
• Investment spend (read platform development); Q1 $912K Q2 $508k Q3 $512k (spend correlates with cash at bank).
• Cash at bank; Q1 $1.352M, Q2 $1.055M, Q3 $1.488M (other than the big spend in Q1, cash collection has seen a controlled draw down on cash reserves). Actual cash used this quarter $123k.
• Staff costs; Q1 $3.160M Q2 $2.083M Q3 $1.960 (staff costs have been well managed. For a growing business this is impressive) I expect this to change when we move into the onboarding phase of superannuation funds.
• I keep saying this, but for a business building (spending) for growth, to be able to control their costs they have done is impressive.
• The statement:- "Increased investment on delivering contemporary and elegant User Interface experiences for our customers" sounds to me to be strongly customer led. This is very encouraging.
• Recent communication from the company indicates a burgeoning relationship with KPMG and the implementation of the Workday HRM platform with KPMG target clients. Looking forward to this bearing fruit and the corporate customers it will bring.
• Platform integration with HSBC HK has been on-going for months now. May be next quarter we will begin to see recurring revenue from this market.
• Seems we are still at the build/integration phase of the REST pilot that is not schedule to start until Q4. Lets assume come June the pilot is in full swing, come September REST agrees to come on board. We start onboarding members from September and should start to see recurring income streams show in FY Q2 2024-2025.

My read on where the business is at

• Wrkr is still at the start line, fantastic preparation with big expectations but those expectations are yet to play out as they have not yet started the race.
• The core build-out of the platform must be close to being completed. Say another 4-6 months tops.
• I would be nervous if the scenario was "build it and they will come" but Wrkr has contracted agreements and an influential channel partner in Link Group to steer business their way.
• Corporate sales is protracted (as we have experienced) but once they are contracted and on-boarded, we can expect long term relationships, matched with recurring revenues.
• Wrkr has been lucky to have been paid up-front (principally by Link) for development of services required for Link's clients.
• I keep highlighting to investors to expect a change in revenue from services income to recurring revenues (SaaS). After this much effort and relationship building, I expect recurring revenues to start in the last 2-4 months of this calendar year. If it doesn't, then we have a problem, as you can't expend this much energy (and costs) and win customers / market share.
• My perfect world would be a staggered customer on-boarding 2nd half of this year. a) REST contracts and starts onboarding (recurring revenue slowly builds); b) another super company engages (say HostPlus), upfront service fees are paid by Link to build their iteration of the platform in the way HostPlus would like the WrkrOne platform to work for them; c) Recurring revenue and new uptake of the platform in the HK market to start; d) Sales funnel of channel partner KPMG bears fruit with Workday integrations with associated recurring revenues; e) Couple of corporate employers move to use Wrkr for pay and super contributions; f) one or two large Payroll groups come on board, white labelling the Wrkr platform for their use for Super and Pay.

Yet to playout

• The integration of Transmit Security into the platform with the associated influence on client uptake because of this Cyber posture feature.
• Replication of the platform into other O/S jurisdictions.
• Payroll companies adopting the platform for all their client needs (White Label)
• The integration of SCH Online into the platform and the revenue streams that comes with that.
• A better funded and larger international player in Mitsubishi UFJ Group taking over of the Link Group. Shareholder approval granted yesterday, it's now just a process of formality.

In my view, Wrkr is a well manged business on the cusp of benefiting from the past 2 years of platform development and channel partner relationships.

Ian