DataWorks Group (ASX:DWG) Secures C$12.5M Contract Boost: Time to Buy This Micro-Cap?

DataWorks Group surges after Ontario contract expansion

DataWorks Group (ASX: DWG) surged 26.7 per cent to A$0.19 on Wednesday after announcing a major contract expansion with iGaming Ontario worth more than C$12.5 million (approximately A$14 million). This expansion comes on top of the original A$10 million deal signed in August 2024, bringing the total Ontario contract value to greater than A$24 million over the term and extension options. For a company with a market cap of around A$20 million, this single customer relationship is now worth more than the entire business. That kind of ratio is extraordinary and suggests either significant undervaluation or risks that justify the discount. We believe it is the former.

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Why This Contract Matters for Investors

The expanded deal covers end-to-end managed services for Ontario’s Centralised Self-Exclusion (CSE) program. In simple terms, DataWorks Group will run the systems that allow people to voluntarily ban themselves from gambling platforms with a single online registration. This is an important service as governments worldwide tackle problem gambling.

Revenue from this expansion starts immediately. The contract runs for three years, with iGaming Ontario holding options to extend for two additional years. If exercised, this could stretch the relationship to five years.

What makes this deal significant is the competitive position it creates. DataWorks Group now operates two national-scale CSE systems: BetStop in Australia and the Ontario iGaming CSE in Canada. It is the only company in the world running two such platforms. When regulators in other countries look for proven operators, DataWorks Group can point to two working systems rather than just one. We believe this creates a meaningful barrier to entry for competitors and strengthens the company’s credibility for future contract wins.

DataWorks Reaches Financial Turning Point

The December 2025 quarter marked a major shift for DataWorks. For the first time, the company reported positive operating cash flow of approximately A$1.1 million. Customer receipts reached around A$3 million for the quarter, up 74 per cent from the previous period. This jump came from milestone payments on government contracts, showing that big clients are paying on schedule.

Management expects net operating cash flows to remain around breakeven through the March 2026 quarter, maintaining the positive momentum achieved in December. Looking further ahead, the company targets US$9.5 million in revenue for FY26. The pipeline is also building, with more than US$90 million in qualified global leads for the CSE platform. If even a small portion converts, the growth story could accelerate meaningfully.

The Investor’s Takeaway for DataWorks Group

The bull case is compelling: total contract value exceeding market cap, positive cash flow already achieved, and a unique global position in a growing market. As a software business, DataWorks Group benefits from high margins once platforms are running. Additional jurisdictions could drive earnings growth without proportional cost increases.

However, investors should note the risks. This is a micro-cap stock with limited trading liquidity. The customer base is concentrated around two major government contracts. If either relationship ran into trouble, the impact would be significant.

For speculative investors comfortable with micro-cap volatility, the risk-reward looks attractive at current levels. Conservative investors may prefer to wait for additional contract wins before taking a position.