Payday Super Regulation And Compliance Services Will Shape A Long Term Opportunity

Catalysts

About Wrkr

Wrkr provides a platform that moves money, messages and credentials to make employer compliance, especially around superannuation and payroll, more effortless.

What are the underlying business or industry changes driving this perspective?

• Regulatory change around PayDay Super is expected to shift superannuation from roughly 160 million to about 500 million events a year. This pushes more frequent, data rich transactions into Wrkr's core workflow and can influence transaction driven revenue and float income.
• Concentration of members in the largest Australian super funds, with the top 5 funds holding about 50% of members and Wrkr already involved with AustralianSuper, REST and Australian Retirement Trust, gives the company a path to meaningful share of employer flows. This can influence long term revenue visibility and scale driven net margins.
• Partnerships with MUFG Retirement Solutions, Zalaris and SAP app store integration are expected to widen Wrkr's reach into payroll and mid market employers. This can increase Platform as a Service fees and support more predictable earnings as implementations move into steady state.
• Ongoing investment in anti fraud capabilities, including facial liveness testing and stronger verification processes, aligns with rising fraud risk in superannuation and may support higher value compliance services and potential premium pricing. This can influence net margins over time.
• The focus on additional compliance moments beyond super payments, such as onboarding, identity and license checks for hundreds of thousands of employers using fund branded portals, creates scope for new subscription and transaction products that can diversify revenue and support earnings resilience.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Wrkr's revenue will grow by 79.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from -32.9% today to 24.1% in 3 years time.
• Analysts expect earnings to reach A$11.1 million (and earnings per share of A$0.01) by about January 2029, up from A$-2.6 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting A$20.2 million in earnings, and the most bearish expecting A$9.8 million.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 27.7x on those 2029 earnings, up from -108.6x today. This future PE is lower than the current PE for the AU IT industry at 43.4x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.49%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• If Wrkr successfully onboards large super funds like AustralianSuper, REST and additional MUFG administered funds on the time frames they are targeting, transaction volumes across pay and super events could rise meaningfully. This may support higher revenue and float income and put upward pressure on the share price instead of it remaining flat, directly affecting revenue and earnings.
• The PayDay Super regulation is expected to lift super transactions from 160 million to about 500 million events a year. If Wrkr captures a material share of this uplift through its employer and payroll integrations, the structural increase in volume and data rich flows could translate into stronger Platform as a Service fees and transaction revenue. This could support a higher valuation multiple and share price, impacting revenue and net margins.
• Wrkr is investing heavily in anti fraud capabilities, security and compliance services. If funds and employers increasingly shift liability and higher value checks to Wrkr, this could open up new, higher margin products around identity, credentials and additional compliance moments. This could support margin expansion and higher profitability, affecting net margins and earnings.
• The partnership work with MUFG, Zalaris and SAP app store integration, along with the Hong Kong pension rollout, gives Wrkr a way into more payrolls and international pension systems. If these channels start to contribute meaningfully to employer onboarding and transaction volumes, it could broaden the revenue base beyond the current Australian clearing house business. This may support revenue growth and higher earnings over time.
• Management is considering additional funding options so they can pursue more super fund and payroll opportunities before PayDay Super deadlines. If they secure capital and deploy it effectively into client wins and platform features, Wrkr could win a larger long term share of employer compliance workflows than the current pipeline alone implies, potentially supporting a higher P/E multiple and share price and directly affecting revenue and earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of A$0.14 for Wrkr based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$0.16, and the most bearish reporting a price target of just A$0.11.
  
• In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be A$46.0 million, earnings will come to A$11.1 million, and it would be trading on a PE ratio of 27.7x, assuming you use a discount rate of 8.5%.
  
• Given the current share price of A$0.15, the analyst price target of A$0.14 is 7.1% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.