DataWorks’ Cash Burn Halved—Can It Sustain Momentum Amid Contract Risks?

Strong Financial Turnaround

DataWorks Group Limited (ASX, DWG), a leader in regulated gaming technology, has delivered a robust financial performance in the fourth quarter of FY25. The company reported a more than 50% reduction in operating cash outflows compared to the previous quarter, alongside a 69% increase in cash receipts, reaching $2.2 million. This improvement reflects disciplined cost management and growing revenues, particularly from the Ontario iGaming (iGO) contract in Canada.

With operating cash outflows falling to $0.7 million and cash and equivalents standing at $0.64 million, DataWorks is on track to achieve positive operating cash flow by the December quarter of 2025. The company’s management reaffirmed this outlook, emphasizing that all contract delivery milestones remain on schedule.

Strategic Focus on RegTech and Contract Execution

DataWorks has sharpened its strategic focus by winding down its underperforming datapowa division, which had failed to meet expectations and required further capital investment. This move allows the company to concentrate resources on its RegTech division, which offers scalable, recurring revenue opportunities backed by proprietary technology. The RegTech business includes the BetStop National Self Exclusion Register in Australia and the iGO project in Ontario, both critical reference sites that bolster DataWorks’ competitive positioning globally.

The iGO contract is progressing steadily, with key milestones successfully delivered and beta trials underway. Cash receipts from this contract are expected to increase significantly over the coming quarters, underpinning the company’s positive cash flow forecast. Additionally, DataWorks is actively pursuing multiple advanced sales opportunities internationally, including a major domestic land-based self-exclusion contract and potential expansions in Alberta, Canada.

Leadership and Industry Recognition

In a notable development, CEO Al Watson was appointed to the Board of the Responsible Gambling Council, an influential non-profit organization dedicated to promoting safe gambling practices. This appointment not only recognizes Watson’s expertise but also strengthens DataWorks’ industry standing and influence in shaping responsible gambling policies worldwide.

Meanwhile, the Secure Data Engine division remains in the pilot phase with positive progress, supported by strategic partners such as Microsoft and the Western Australian Government. However, the timing and scope of any expansion beyond the pilot remain uncertain due to external policy and funding factors.

Financial Discipline and Outlook

DataWorks’ cost base has been optimized relative to revenue, with staff costs reduced by nearly 40% quarter-on-quarter after adjusting for one-off payments. Administration and corporate expenses remained stable, reflecting ongoing expense discipline. The company’s cash position is deemed sufficient to fund operations through to positive cash flow later in 2025, assuming contract milestones continue to be met on time.

Looking ahead, DataWorks is also evaluating merger and acquisition opportunities within the RegTech sector to further strengthen its market position, although no deals have reached an advanced stage yet. The company’s ability to convert pipeline opportunities into contracts will be a key driver of its financial trajectory in the near term.