Wotso Property

Income statement

Sources and caveats:

• FY22 revenue (A$40.2M) and PBT (A$36.7M): WOTSO FY22 release via The Property Tribune. TipRanks shows A$39.82M revenue.

• FY23 revenue (A$49.0M) and net profit (A$0.72M): aggregator data (Kalkine/TradingView, labelled 2023-12-31 but consistent with FY23).

• FY24: statutory revenue A$49.7M and loss before tax A$65k (FY24 summary). Net loss attributable A$23k (FY25 Appendix 4E comparative). FY24 underlying EBITDA (~A$8.6M) is derived from FY25's reported +14% growth on A$9.8M.

• FY25: total revenue A$47.05M and underlying EBITDA. FilingReader/FY25 release show A$9.8M; the FY26 presentation comparative shows A$10.06M. This discrepancy is probably a restatement or definitional change. The FY25 Appendix 4E states "revenue from continuing operations" of A$48.4M (−11%), a different (statutory) measure from the A$47.05M headline. Net loss attributable A$4.673M and loss before tax about A$4.4M (FY26 presentation comparative).

• FY25 cost of sales (~A$29.2M) is derived from FY26 cost of sales of A$31.5M, reported as +8%.

• FY26: revenue A$48.75M, EBITDA A$10.12M, loss before tax A$865k (FY26 presentation). FY26 net result attributable was not available in the sources reviewed.

• Distributions: FY22 3.0c interim plus 3.0c final. FY24 1.0c plus 1.0c. FY25 1.0c plus 1.25c. FY26 1.35c plus 1.45c.

• Gross profit, operating income (EBIT) and EPS series are not disclosed in a consistent form. H1 FY25 basic and diluted EPS was 0.2 cents (H1 FY24: 2.3 cents).

Margins and growth (derived from 6.1)

Revenue CAGR FY2022–FY2026: (48.75 / 40.2)^(1/4) − 1 ≈ 4.9% per year (headline). Flexspace annualised revenue 5-year CAGR: 14.3% (company, Q3 FY26 update). June-quarter annualised revenue rose 85% over five years (Q4 FY26 update).

Commentary. Headline revenue has been almost flat since FY23 (A$47–50M). That masks a sharp change in mix. Flexspace has grown at a double-digit rate while property income shrank through the Pyrmont deconsolidation (FY24) and the Yandina sale (FY26). FY22 profit was almost entirely revaluation-driven: management said the A$36.7M was "dominated by revaluation income". The FY23–FY25 statutory results turned negative as rising interest rates hit borrowing costs and cap rates, and as depreciation and lease-liability accounting from new sites weighed. FY26 narrowed the pre-tax loss to A$0.87M despite A$1.0M of one-off legal costs from the North Strathfield landlord dispute and a A$4.4M share of the Pyrmont revaluation loss. That was offset by A$4.7M of revaluation gains on directly owned property. The key inflection is operating leverage: overheads stayed flat at A$8M through 29% network growth. Thirteen start-up sites had negative contribution (−A$641k), so underlying EBITDA rose only 1%.

Balance sheet

Notes:

• FY22: total assets A$485M and property valuation A$385.2M (FY22 report; June 2021 comparative A$335.1M).

• FY24: portfolio A$295M including A$261M investment property and A$34M Pyrmont investment. The NAV row shows NTA of A$1.26 for FY24 (FY25 Appendix 4E comparative).

• FY25: NTA A$1.22 (Appendix 4E); net assets per security A$1.41 (H1 FY26 comparative). Equity, goodwill and management rights are as at 30 June 2025 (interim report comparatives).

• FY26: at 31 Dec 2025, equity attributable was A$221.6M, total equity A$225.7M and management rights A$2.56M. Full 30 June 2026 balance-sheet line items were not available.

• Adjusted NAV values the Flexspace operating business at A$92M (not recognised in statutory accounts); FY24 used an A$80M valuation.

• Aggregator net-debt series (Kalkine, labelled by calendar year): 162.2 (2021), 145.7 (2022), 133.9 (2023). These are probably fiscal-year figures that include lease liabilities.

• Aggregators report a current ratio of 0.08–0.62, indicating facilities classified as current around refinancing dates.

Cash flow and capital allocation

Other disclosed items:

• H1 FY25 operating cash flow of A$10.7M (Quartr summary of the H1 FY25 report). This looks high relative to EBITDA and may be a mislabel.

• H1 FY25 distributions paid A$1.6M.

• H1 FY26 fitout capex A$1.97M.

• Net capex per sqm fell from A$991 to A$447 (H1 FY26) through landlord-funded fitouts.

Ratios (analyst-computed where inputs exist)

Notes:

• The H1 coverage ratios use H1 FY25 (A$5.08M / A$3.05M) and H1 FY26 (A$5.38M / A$2.97M) figures.

• The FY26 payout ratio uses A$4.2M distributions paid divided by A$10.12M EBITDA.

• ROA, ROIC, asset turnover and cash conversion cycle cannot be computed reliably from the verified data. A cash conversion cycle is not meaningful for a business with membership receipts in advance.

Commentary. Leverage is moderate on an asset basis (LVR 38%, net gearing 27.8%) but high on an earnings basis (about 9x net borrowings to EBITDA). This is typical of property-heavy structures with low initial yields; the group average yield is 5.4%. The Flexspace business itself is described as debt-free (2024 AGM); the debt sits against property. Refinancing A$67.3M in FY26 at a lower margin, and repaying the Yandina facility, reduced refinancing risk. Interest cover below 2x on underlying EBITDA is the main financial vulnerability if rates stay high.

Management guidance (FY27)

• Seven confirmed new locations (six leased, one owned), down from nine in FY26.

• Focus on extracting value from existing assets: e-commerce across all products, demand-based pricing, ancillary revenue, CookSpace refinement.

• Overheads expected to stay broadly flat. Margins expected to improve as 13 start-up sites mature.

• Gearing headroom available. Buy-backs to be weighed against property and Flexspace investment.

• No numerical guidance; no consensus forecasts available.

Bull case

1. Operating leverage is real and pending. Overheads have been flat at A$8M across 31 to 40 sites. If start-up sites follow the developing cohort (+A$0.78M contribution improvement in FY26), the A$641k drag can turn positive within 12–24 months and lift EBITDA disproportionately.

2. Deep asset backing. At about 0.4x NAV and about 0.31x adjusted NAV, the security trades well below independently valued property plus an operating business that management values at A$92M. Accretive buy-backs and continued asset recycling (Yandina) can crystallise value.

3. Revenue engines beyond desks. E-commerce, dynamic pricing and CookSpace show measurable early returns (day passes roughly tripled in April 2026; meeting rooms +A$50k a month), with little extra capital required.

Bear case

1. Earnings quality and coverage. Underlying EBITDA of A$10.1M covers interest less than twice, net borrowings sit at about 9x EBITDA, and statutory results have been negative for three years.

2. Persistent NAV erosion. NAV per security fell from A$1.56 (FY22) to A$1.37 (FY26) through revaluation losses, lease liabilities and FX. Each new leased site adds AASB 16 liabilities before profit arrives.

3. Governance and liquidity discount may be structural. Founder concentration, related-party history, minimal institutional ownership and very low trading volume may keep the NAV discount wide whatever the operating performance.

Catalysts and monitorables (next 12 months)

Analyst verdict

WOTSO is an unusual listed vehicle: a founder-controlled suburban coworking network built on top of a mid-sized property portfolio. FY2026 shows where the business stands in its cycle. The operating platform has scaled quickly, from about 25 sites in December 2023 to 40 in June 2026. Overheads have been held flat, and same-location pricing improved 6%. Record quarterly Flexspace revenue of A$9.41M in Q4 FY26 confirms that demand for work-near-home space remains healthy. The group earnings line has not yet followed. Underlying EBITDA grew only 1% to A$10.1M, the statutory result remained a small loss, and NAV per security slipped to A$1.37.

The investment case rests on maturation, not expansion. Twenty mature sites generate almost all Flexspace contribution today, so the 20 developing and start-up sites are the main source of upside. Management's deliberate slowdown to seven openings in FY27, combined with low-capital revenue initiatives (e-commerce, dynamic pricing, CookSpace), is the right sequencing. It should let start-up losses roll off while the overhead base stays fixed. The Yandina sale showed management will recycle mature, non-core assets to fund growth and reduce debt. That lowered LVR to 38% and margins to 1.86%.

Against that, the balance sheet is earnings-thin: interest cover is below 2x and net borrowings are about 9x EBITDA. Governance remains concentrated, and liquidity is poor enough to leave the NAV discount entrenched.

On balance, WOTSO looks like an asset-backed, deep-value special situation with a credible but unproven operating-leverage story, rather than a quality compounder. The key evidence to watch is H1 FY27: positive contribution from the FY25–FY26 start-up cohort and EBITDA growth well above revenue growth would validate the thesis. Another flat result would suggest the discount is deserved.