Wrkr Ltd's (ASX:WRK) Path To Profitability

We feel now is a pretty good time to analyse Wrkr Ltd's (ASX:WRK) business as it appears the company may be on the cusp of a considerable accomplishment. Wrkr Ltd, together with its subsidiaries, provides software as a service to solve compliance needs for companies to process pay, superannuation and SMSF contributions, onboard new staff and contractors, and check credentials of new employees and contractors in Australia. The AU$117m market-cap company announced a latest loss of AU$3.8m on 30 June 2024 for its most recent financial year result. Many investors are wondering about the rate at which Wrkr will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Wrkr

According to the 2 industry analysts covering Wrkr, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of AU$3.9m in 2026. So, the company is predicted to breakeven approximately 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 100% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Wrkr's growth isn’t the focus of this broad overview, however, bear in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 3.0% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Wrkr, so if you are interested in understanding the company at a deeper level, take a look at Wrkr's company page on Simply Wall St. We've also compiled a list of key aspects you should further examine:

1. Valuation: What is Wrkr worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Wrkr is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Wrkr’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.