Market Sentiment Around Loss-Making Wrkr Ltd (ASX:WRK)

With the business potentially at an important milestone, we thought we'd take a closer look at Wrkr Ltd's (ASX:WRK) future prospects. wrkr Ltd 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$38m market-cap company announced a latest loss of AU$4.2m on 30 June 2023 for its most recent financial year result. The most pressing concern for investors is Wrkr's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Wrkr

Expectations from some of the Australian IT analysts is that Wrkr is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of AU$1.3m in 2025. The company is therefore projected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 91% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Wrkr given that this is a high-level summary, however, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 4.5% 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:

There are too many aspects of Wrkr to cover in one brief article, but the key fundamentals for the company can all be found in one place – Wrkr's company page on Simply Wall St. We've also put together 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.