PYS - PaySauce

[Chanchay]

G'day folks,

Has anyone been following the reverse takeover of PaySauce?

I would love to know any information on the company, I have had a look at their software and concept and it seems solid for SME's, would love anyone elses input before i dip my toes in

[minimoke]

The red flag for me was when Asantha Wijeyeratne described current providers as "dinosaurs" with an inability to innovate. And then went on to describe how they solved farmers problem of paying Minimum Wage to workers. really how hard is 60 hours times $16.50 to derive a gross pay figure.

If they think Payday filing is the biggest issue facing payroll software / business then he is either out of touch or being deliberately mischievous.

I wouldn't touch this with a barge pole

[Chanchay]

Further to the above, here is a link to the limited documentation available:

https://www.paysauce.com/investor/#/documents

[Marilyn Munroe]

The feature that allows staff to submit time sheets by an app on their smart phone is a useful feature.

They are entering a crowded field so would need to be good to even keep their head above water.

My, admittibly limited, experience is good support is essential. There is always some wrinkle in holiday pay working for families or tax codes which requires personalized support. I am not sure if PYS's business model includes this.

Boop boop de do
Marilyn

[minimoke]

My, admittibly limited, experience is good support is essential. There is always some wrinkle in holiday pay working for families or tax codes which requires personalized support. I am not sure if PYS's business model includes this.
nWith $530,000 in total paid to salaries I think its fair to say you should expect zero support. They don't have the staff. Perhaps 3 - 4 people in total.

[whatsup]

Hard company to understand, too many shares on issue, imho definitely not worth the M C of $80+ million when the backdoorers tipped a $10 million business into that listing.
What is the business plan, the financials, the future and with 5.8 BILLION shares on issue that will take some getting my head around , if the current S P was .0014 and not .014 then I could fatham its numbers out.

Im glad I sold out when it was MAD !

[Oliver Mander]

With $530,000 in total paid to salaries I think its fair to say you should expect zero support. They don't have the staff. Perhaps 3 - 4 people in total.

Coincidence...was just looking at this.
I struggle to see how a company with $210k revenue for y/e 31/3/2018 is worth a market cap of $81m.
That's before you get to the salaries.

Their business model seems based around being simple, which seems fair enough to me, and their IT interfaces (including website) look good. But FAR too overvalued right now for me to be interested...

[whatsup]

How long will it be before they do a C R and with 98% of the company owned by the fish heads just who is going to strump up with the hard earned ?

[hardt]

Who is buying this business at 80x annualised revenue...

I wouldn't look past getting in there at ~20x but damn...

[silverblizzard888]

Who is buying this business at 80x annualised revenue...

I wouldn't look past getting in there at ~20x but damn...

Just someone taking a punt, only $811 went through today, but it did push the price up 27%. Crazy valuation, growth rate is high but on tiny revenues.

[hardt]

I need to short this stock ASAP.

[Schrodinger]

I need to short this stock ASAP.

Take a look at their 2018 accounts they cant even name the Directors for the signatures (in fact this is the first time I have seen this). Very amateur gaffe.

Avoid.

[SilverBack]

I actually think this company has a valuable product and has a smart CEO with a strong background in payroll systems. However, I think it is hopelessly over-valued at present.
I recently attended an investor presentation at which Asantha Wijeyeratne spoke. A few weeks earlier, I had talked with a chartered accountant who confirmed that the new payroll requirements for employers to submit PAYE within two business days of paying staff (Payday Filing) from 1 April, is indeed an issue with small businesses. At the seminar, Paysauce claimed that it was the only Payroll solution that met this requirement from 1 April and I have no reason to discredit that claim.
Using my valuation method of using estimated forward revenue for 12 months and calculating price to revenue as a proxy for PE (since PYS is a high growth company that can be expected to declare negative NPAT for the next year and more) I find that with a SP of 1.1 cents today, it has a value of 32.1 compared to 33.4 from XRO and 6.5 from Pushpay. This is based on PYS company guidance of 109% increase in gross revenue for 2019. The SP would need to be 0.22 cents to match PPH and 0.15 cents to match PLX which is on 3.5.
Normally I prefer to apply the operating margin to the gross revenue estimate to obtain a Price to Revenue at Margin ratio but PYS has not revealed its operating margin and so I have had to fall back to gross revenue. XRO has a very high margin of 83% and it is unlikely that PYS will exceed that. Whatever their margin is, it will almost certainly decrease as the company increases in size.
The other matter affecting PYS is the very large number of shares following its reverse takeover of MAD. Sooner or later PYS will consolidate its shares and following that, I fully expect the SP to move back towards a more typical valuation, which no doubt is a reason why the company will not want to consolidate in a hurry.
I have PYS on my watch list because I think it should do well but until the valuation reaches that for similar companies, I will stand aside. Although I used PPH as a comparison, I do not yet put it in the same class as PPH but would compare it more to PLX, which I have on a comparative ratio of 3.5.

[winner69]

SilverBack commented — Paysauce claimed that it was the only Payroll solution that met this (Payday filing) requirement from 1 April and I have no reason to discredit that claim.

I’m sure MYOB, Xero and all the others would discredit that claim

Mate uses MYOB and he’s been doing payday filing from early March (opted in) for his 20 person payroll

In saying i’ve heard some users say Paysauce is OK

[minimoke]

At the seminar, Paysauce claimed that it was the only Payroll solution that met this requirement from 1 April and I have no reason to discredit that claim..Bwahahaha. Another red flag

[SilverBack]

SilverBack commented — Paysauce claimed that it was the only Payroll solution that met this (Payday filing) requirement from 1 April and I have no reason to discredit that claim.

I’m sure MYOB, Xero and all the others would discredit that claim

Mate uses MYOB and he’s been doing payday filing from early March (opted in) for his 20 person payroll

In saying i’ve heard some users say Paysauce is OK

I do not use Paysauce or deal with anyone who does. Perhaps the claim related to automated filing using a B2B interface with IRD?
Anyway, the substance of my post was that PYS is extremely overvalued at present, even based on its own revenue projections.

[SilverBack]

I do not use Paysauce or deal with anyone who does. Perhaps the claim related to automated filing using a B2B interface with IRD?
Anyway, the substance of my post was that PYS is extermely over valued.

[minimoke]

I do not use Paysauce or deal with anyone who does. Perhaps the claim related to automated filing using a B2B interface with IRD?
Anyway, the substance of my post was that PYS is extremely overvalued at present, even based on its own revenue projections.Heres a company claiming to be first to pay day file, rather than "only"
https://www.flexitime.co.nz/payday-filing?gclid=Cj0KCQjw4qvlBRDiARIsAHme6otOUURlXqUYA sYjDl3V1OZuaXGY_S8U6qFLcj8jYEzkg-btrwF0Cr0aAll8EALw_wcB

[minimoke]

Its timely that they give a market updater today - which doesnt make pretty reading.

1384 customers covering 7237 employees. So that is 5.2 employees per customer

$72m in payroll processed. So thats $52,000 per customer or $9,950 per employee

Quite clearly their market is the very small employer with employees likely to be seasonal workers. From that we can conclude their sales / marketing costs are going to be huge relative to the number of sales made. Which is a major worry given they only have $240k in recurring revenue in a quarter.

Number of payslips issued = 46,812. Which is a dumb metric as payslips dont have to be issued. The number = 6.4 payslips per employee which doesnt make sense if they are paid weekly, fortnightly or monthly.

(They are certainly over-cooking the payday filing thing. Which is simply just sending a table file to IRD electronically each pay. No mention of Holiday Act compliance which is the real and pressing concern attendees at their Dairy Women Group meetings should have. Given the new minimum wage I would have thought that would have been more pressing - especially given the average rate of pay going through payroll. )

[winner69]

Minimoke said - They are certainly over-cooking the payday filing thing. Which is simply just sending a table file to IRD electronically each pay.

Dress it up and make it look and feel magical it probably is magic.

[silverblizzard888]

$75 Million company, $240k revenue Q1, a bit underwhelming. Heading in the right direction, though doesn't justify the valuation.

[minimoke]

Minimoke said - They are certainly over-cooking the payday filing thing. Which is simply just sending a table file to IRD electronically each pay.

Dress it up and make it look and feel magical it probably is magic.Its sending up a smoke screen over their lack of understanding of paying holidays.

[SilverBack]

Its timely that they give a market updater today - which doesnt make pretty reading.

1384 customers covering 7237 employees. So that is 5.2 employees per customer

$72m in payroll processed. So thats $52,000 per customer or $9,950 per employee

Quite clearly their market is the very small employer with employees likely to be seasonal workers. From that we can conclude their sales / marketing costs are going to be huge relative to the number of sales made. Which is a major worry given they only have $240k in recurring revenue in a quarter.

Number of payslips issued = 46,812. Which is a dumb metric as payslips dont have to be issued. The number = 6.4 payslips per employee which doesnt make sense if they are paid weekly, fortnightly or monthly.

(They are certainly over-cooking the payday filing thing. Which is simply just sending a table file to IRD electronically each pay. No mention of Holiday Act compliance which is the real and pressing concern attendees at their Dairy Women Group meetings should have. Given the new minimum wage I would have thought that would have been more pressing - especially given the average rate of pay going through payroll. )

Absolutely they have picked up small employers. They have been quite explicit about targetting the dairy industry and other farmers in the first instance. Their strategy is to have a system for small and medium businesses and SAAS is a good mechanism for achieving this. Now that the Rural Broadband Initiative has brought broadband to most of the farming community, this is viable. Paysauce is still a very small company even if it is highly overvalued. It will need to keep doubling its revenue each year for a while longer yet in order to reach a more reasonable valuation, or else the SP needs to drop dramatically. I still think they are worth tracking and keeping an eye on their growth but without buying until the valuation improves.
If anyone has the energy to calculate their operating margin, then I am interested to learn this. I just know that at present the 12 month ratio of SP to margin revenue still greatly exceeds XRO even if they are given a high operating margin of 85%.

[kiwidollabill]

How scalable is this outside of NZ? i.e. do the tax laws in Oz/US/EU make their solution a helpful fix? If no, this puppy will run out of steam real quick....

[pg0220]

There are a bunch of companies who provide nice and sexy payroll solutions. They may become successful widely but need to be keep in mind that the competition for this area is so high. Also, the current price doesn't justify anything from my point of view...

[minimoke]

There are a bunch of companies who provide nice and sexy payroll solutions. .But do they calculate pay correctly? A quick look at Paysausce indicates it doesnt.

[winner69]

Paysauce getting bigger ...people wise anyway

Jeez some big names this guy has been associated with

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PYS/335886/301483.pdf

[minimoke]

I see they are moving in to broader "employment solutions to small and medium sized businesses". A warning flag is when the use the term "employment contracts" when the current recognized term is "employment agreement" (which is of course a contract - but their are tow types of contract at play. The distinction becomes important). Go wandering off to parliament and mention "Employment Contracts" and Labour would have conniptions. And in their prior announcement where thy say " and ensures they they are always compliant" is total bull and misleading.

[winner69]

Bit of a weird announcement

This thread not the same since mini left us

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PYS/343342/310670.pdf

[youngatheart]

SP doubles in a week. What is going on with this stock?

[silverblizzard888]

irrational exuberance ...

[Cadalac123]

Saw this jump right infront of my eyes. Overeaction to the XERO deal or actual substance ? I want to say it's an over-reaction but there seems to be some liquidity to support the rise..

[Beagle]

For what its worth, I have one client who uses them and he tells me he is very impressed with how good and efficient they are.

[winner69]

For what its worth, I have one client who uses them and he tells me he is very impressed with how good and efficient they are.

Beagle been buying and that’s why the price is sky rocketing :t_up:

[Beagle]

LOL no thanks. Reading their financials is sobering stuff. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PYS/345084/312883.pdf

[Cadalac123]

their financial reports are beyond horrendous. This is probably a great example of how you can't always make logical deductions for why or when a stock will rise lol

[Dlownz]

Lol. You saw what I saw a few months ago. There growth looked amazing. But checked it out realised I'd brought a mistake. Sold out thinking the share would drop. Oops I was wrong. Maybe xero will buy them out

[Beagle]

For what its worth, I have one client who uses them and he tells me he is very impressed with how good and efficient they are.


their financial reports are beyond horrendous. This is probably a great example of how you can't always make logical deductions for why or when a stock will rise lol

I looked at what they do for 'Johnny" and what they charge him for it and I have serious questions as to whether their business model will ever be profitable taking into account the total overheads of running the business.

[Cadalac123]

The idea of them being bought out by someone would make some sense otherwise this is incredibly strange 40% rise in one day with no real news.

NZX slow to react as usual.

[silverblizzard888]

Reminds me of a company that use to be listed called GeoOp that did invoicing software, listed $1, went to a high of $4.49 then traded less than a tenth of that then delisted.
Went up along the tech wave because Xero had been doing really well, but its own numbers were never convincing.

I think the Paysauce business is a good one given the recent changes in PAYE and requirements for employers to report more regularly with the IRD, but I'm not sure it can be a big one and theres a good difference there. When you consider a business like Xero, everyone needed it and there weren't many competitors at the time thinking about cloud accounting.

Payroll software of course everyone needs it too, but it is a bit different, theres many competitors and theres nothing these guys are doing thats a technological advantage.
In reality if we normalise their expenses, they have actually have tripled while there revenue has only doubled. Until revenue growth outpaces expenses I'd be fearful of the financials. They have got a decent amount of cash in the bank to last 2-3 years so thats not too bad, but I still question the valuation, I only saw it been worth 30 odd million, not the $156 million for a business with about $1.6 million revenue and $2 million in losses.

[winner69]

Reminds me of a company that use to be listed called GeoOp that did invoicing software, listed $1, went to a high of $4.49 then traded less than a tenth of that then delisted.
Went up along the tech wave because Xero had been doing really well, but its own numbers were never convincing.

I think the Paysauce business is a good one given the recent changes in PAYE and requirements for employers to report more regularly with the IRD, but I'm not sure it can be a big one and theres a good difference there. When you consider a business like Xero, everyone needed it and there weren't many competitors at the time thinking about cloud accounting.

Payroll software of course everyone needs it too, but it is a bit different, theres many competitors and theres nothing these guys are doing thats a technological advantage.
In reality if we normalise their expenses, they have actually have tripled while there revenue has only doubled. Until revenue growth outpaces expenses I'd be fearful of the financials. They have got a decent amount of cash in the bank to last 2-3 years so thats not too bad, but I still question the valuation, I only saw it been worth 30 odd million, not the $156 million for a business with about $1.6 million revenue and $2 million in losses.

I didn’t believe your $156 million so I looked it up....jeez it is to, wow

Next we know it will be half a billion

[silverblizzard888]

I didn’t believe your $156 million so I looked it up....jeez it is to, wow

Next we know it will be half a billion

Pumped then dumped today, 20% drop so far. The real question is who is still buying. Theres big gap downwards. To bad I'm missing a box of popcorn, but then again I'm not too enthused watching people burn money away like that.

[whatsup]

Pumped then dumped today, 20% drop so far. The real question is who is still buying. Theres big gap downwards. To bad I'm missing a box of popcorn, but then again I'm not too enthused watching people burn money away like that.

Looks like its all over, the "pump " didn't have legs, back to .50 shortly !!

[couta1]

Looks like its all over, the "pump " didn't have legs, back to .50 shortly !! The pump has been Trumped. Lol

[Cadalac123]

Damn almost wish I was part of the pump bit lol surely someone made a solid profit on here from it haha

[Preston]

The only real exit I can see here is a Xero takeover. Adding an arm to their accounting machine and creating an all in one solution for sme’s.
It seems like they are currently picking up crumbs of customers who can’t afford/want to install a tried and tested solution.
The market can stay irrational longer than it can stay solvent, but can they stay solvent long enough to get bought out?
Could be worth a punt.

[whatsup]

The only real exit I can see here is a Xero takeover. Adding an arm to their accounting machine and creating an all in one solution for sme’s.
It seems like they are currently picking up crumbs of customers who can’t afford/want to install a tried and tested solution.
The market can stay irrational longer than it can stay solvent, but can they stay solvent long enough to get bought out?
Could be worth a punt.

Why would Xero do that when they are killing the accounting market, death knell to take on Xero in the accounting field imho.

[winner69]

Why would Xero do that when they are killing the accounting market, death knell to take on Xero in the accounting field imho.

I think Preston might have been hoping that Xero would take over Paysauce

But Xero already do payroll

Might have got it wrong

[Preston]

I think Preston might have been hoping that Xero would take over Paysauce

But Xero already do payroll

Might have got it wrong

Yeah, that's the angle I'm looking at, that it may add an arm to the Xero product that they might not have? But if as you say the have a good payroll system already then it'll be a tough gig challenging that for sure. I Wonder why then Xero did a joint initiative with them? Friends close and enemies closer?

I haven't got a position here and can't at the moment seem to justify it. Some crazy price swings in there lately.

[winner69]

Nearly everything doubled last year

No wonder share price is on fire

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PYS/347079/315216.pdf

[stealthmaster]

wow what is happening with this share? pump and dump?

[silverblizzard888]

wow what is happening with this share? pump and dump?

Well when even the company doesn't think their share price is worth the current amount its pretty grim. They are raising $5.8 million at 34 cents (currently share is 67 cent), thats a 14% dilution on the share register, expect people to sell their current shares and take up the cheaper shares, then dump them on the market after.

[clown]

Anyone invested in this company?

[Traderx]

Does anyone have any interest in PYS?

Market cap down to $48m

40-120% pa growth in different metrics (choose your favourite metric!)

50-60% GM

Interest rates dropping will hurt their earn on "float" (a nice little feature however)

SaaS (!)

[nztx]

Does anyone have any interest in PYS?

Market cap down to $48m

40-120% pa growth in different metrics (choose your favourite metric!)

50-60% GM

Interest rates dropping will hurt their earn on "float" (a nice little feature however)

SaaS (!)

Didn't Winner69 saying he was seeing some doubling somewhere ? ;)

Wonder if he doubled his exposure at the same time ?

or perhaps doubled right out before covid-19 hit ..

[Dlownz]

Yes I have a small holding in PaySauce. I'm still not 100% convinced but I'm in at 38 cents I'm interested in there next results. They are showing strong growth numbers repeatedly which is encouraging and the next results will show how covid has affected them.

[Cadalac123]

The idea of the company is great, the actual valuation questionable and the share price behavior extremely dodgy. Ran up a couple of times to ridiculous prices and heavily dumped.

Stayed away since, but who knows how they've done capturing the rural sector. I only invest on ASX now so wouldn't touch this because of that and my experience above.

[jorge_telosa]

Does anyone have any interest in PYS?

Market cap down to $48m

40-120% pa growth in different metrics (choose your favourite metric!)

50-60% GM

Interest rates dropping will hurt their earn on "float" (a nice little feature however)

SaaS (!)

I have bought shares from 35.5 to 36 cents. We should know the impact of Covid to their business soon. Their quarterly updates seems they are coping well. Their Q3 update should be due very soon. Last year's came out around 7th of October since their financial quarter ended 30th Sept. So hopefully tomorrow they will have announcement.

[youngatheart]

Half Year results out on Thursday? Will it be good news???

[Paradox]

Half Year results out on Thursday? Will it be good news???
Depends on what good news is . Recurring revenue went from $449k to $519k in Q2; with ease in covid situation and two months elapsed, fair to expect $565k minimum and $575k average and anything close to $600k is incredible.

[nztx]

Depends on what good news is . Recurring revenue went from $449k to $519k in Q2; with ease in covid situation and two months elapsed, fair to expect $565k minimum and $575k average and anything close to $600k is incredible.


and now the inevitable & unavoidable:


Will the bottomline be equally exciting .. even heading towards a maiden dividend ?

even remotely ?

Or instead a Big Disappointment (ie the things on fire in Jan 2020 got stubbed out somewhere between) ? ;)

[youngatheart]

It's tracking upwards a touch in anticipation of a good result tomorrow. We'll soon see :)

[youngatheart]

Now at it's lowest price this year. Hopefully next year will be it's time to shine :)

[youngatheart]

Quarterly update next week. It needs to be good otherwise the SP will continue to slide. And I'm losing patience...

[Dlownz]

PaySauce Quarterly Market Update - Dec 2020
Still growing which is good.
Let's see if this turns around the share price

[nztx]

PaySauce Quarterly Market Update - Dec 2020
Still growing which is good.
Let's see if this turns around the share price

No quarterly Div payable yet ? ;)

[Rawz]

Growth looks good enough for me. Dipped my toes in. 2.5% portfolio share

[Rawz]

PYS announced their qrtly update on the 13th.
https://www.nzx.com/announcements/370533

For the first time ever qrt on qrt recurring revenue growth was negative. Decreased 8%

Not sure if my spreadsheet will copy over but will try:

Period | Recurring Revenue | Gain from Previous Qrt
2018
Q1 $125,000
Q2 $150,000 20%
Q3 $190,000 27%
Q4 $195,000 3%
2019
Q1 $295,000 51%
Q2 $340,000 15%
Q3 $395,000 16%
Q4 $425,000 8%
2020
Q1 $450,000 6%
Q2 $520,000 16%
Q3 $569,000 9%
Q4 $526,000 -8%

[Rawz]

Period
Recurring Revenue
Gain from Previous Qrt
Gain from PCP


FY19
Q1
$ 125,000




FY19
Q2
$ 150,000
20%



FY19
Q3
$ 190,000
27%



FY19
Q4
$ 195,000
3%



FY20
Q1
$ 295,000
51%
136%


FY20
Q2
$ 340,000
15%
127%


FY20
Q3
$ 395,000
16%
108%


FY20
Q4
$ 429,000
9%
120%


FY21
Q1
$ 450,000
5%
53%


FY21
Q2
$ 520,000
16%
53%


FY21
Q3
$ 569,000
9%
44%


FY21
Q4
$ 558,000
-2%
30%


FY22
Q1
$ 612,000
10%
36%


FY22
Q2
$ 747,000
22%
44%

[etrader]

With PaySauce working out of the same building at Xero in Parnell, history from the founder with SmartPay that he exited several years before founding PYS would there be a closer working relationship over time ?

With organic growth and some additional gain from the recent purchases who sees some good growth mid Jan when the quarterly comes out.

This stock looks to have a very small database of investors but I still see an upside to $1 over the next few years

[etrader]

Results due in a couple of weeks and given the integration of smoothpay making a small impact it will be interesting to see if there’s any updates around trading expectations.

With a small group holding this interest is low but it’s worth popping a few bucks if they keep growing subscriptions

[etrader]

Looking back to last years timing of 3rd quarter you’d expect this out sometime this week

Not expecting a lot of new but single digit grown in subscription and traction of their pillars would be good.

Continuous disclosure would mean if there was any significant purchases of capital raises that info would already be release

Volume at very low levels with the odd lift

[Rawz]

Results due in a couple of weeks and given the integration of smoothpay making a small impact it will be interesting to see if there’s any updates around trading expectations.

With a small group holding this interest is low but it’s worth popping a few bucks if they keep growing subscriptions

Looks like its trading about 17.5x trailing four quarters revenue. Not too bad and you could be right about having a few bucks in pys.

Last 14 qrts have a CAGR of 13.6%

$20m in the bank to fund more acquisitions

Dont know much about their competitors or what makes PYS special.

Disc. Not holding

[Sideshow Bob]

PaySauce Quarterly Market Update - Dec 2021 - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/386029)

Employment fintech PaySauce (NZX:PYS) is pleased to report continued strong growth for the quarter with recurring revenue up 67% year on year and 22% quarter on quarter.
Total recurring revenue includes both PaySauce processing fees and interest income as well as SmoothPay subscription revenue for the quarter from October to December 2021. The key driver of the growth was PaySauce processing fees, up 57% YoY, the third consecutive quarter of accelerated growth, following the 44% YoY and 45% YoY increases for the quarters to June and September respectively. The growth comes from consistent growth in PaySauce customer numbers (38% YoY) and increased average processing fees (17% YoY) following a price increase in the quarter.
CEO Asantha Wijeyeratne said that the careful strategic decisions made earlier in the year to adjust PaySauce’s packages and increase pricing are playing out:
“Our existing customers continue to recognise the value that PaySauce adds to their business and have supported the changes across the board.
I’m also extremely pleased to see new customer growth for PaySauce at 38% YoY, testament to the solid reputation we have in the market, built on our sustained focus on product innovation and awesome customer service.
These key factors mean we’ve exceeded 20% quarterly growth for two consecutive quarters.”
Additional tables, graphs and important footnotes are included in the attached PDF.
KEY YEAR-ON-YEAR PERFORMANCE HIGHLIGHTS FOR THE QUARTER
- PaySauce processing fee revenue up 57% YoY to $827K
- Total recurring revenue up 67% YoY to $949K
- Customers using the PaySauce platform up 38% YoY to 4,511
- Total customers (inc SmoothPay) up 80% YoY to 5,893
For more information about the quarter results to 31 December 2021, please contact investor@paysauce.com​.

[winner69]

Pretty impressive numbers

Share price should be 20 times revenues …what’s that?

[Sideshow Bob]

Pretty impressive numbers

Share price should be 20 times revenues …what’s that?

Sounds good W69. Revenue is where its at, not earnings.....

20x revenue (based on the last quarter would mean trading at 2.4c, based on recurring revenue 2.7c. ;)

Take your pick. :confused:

[etrader]

Sounds good W69. Revenue is where its at, not earnings.....

20x revenue (based on the last quarter would mean trading at 2.4c, based on recurring revenue 2.7c. ;)

Take your pick. :confused:

Pleasing results for a small cap company, % growth in each quarter above last years, total customers climbing so looks to be on track as an emerging grow SAAS with some good roots already in their key areas they work.

Share price just steady with very light volume, moved above the MA30 and has just pushed over the MA100 albeit it light volumes

[winner69]

Sounds good W69. Revenue is where its at, not earnings.....

20x revenue (based on the last quarter would mean trading at 2.4c, based on recurring revenue 2.7c. ;)

Take your pick. :confused:

ARR about $4m now ….20 times that share price about 60 cents

Will be recognised one day

Cool eh

[Sideshow Bob]

ARR about $4m now ….20 times that share price about 60 cents

Will be recognised one day

Cool eh

My bad Winner.....I forgot to multiply revenue by 20!! :eek2:

Might as well make it 25x. Even cooler!! :cool:

[Almost-confused]

Just starting to look into this stock as my next investment. I'm liking what I see.

Although it seems thinly traded. Has anyone estimated how much of the stock is closely held and therefore not traded?

[etrader]

82% of the shares was held by the top 20 shareholders but the highest % of shareholders are small holdings, looks fairly tightly held and tiny weekly volume

[Almost-confused]

I'm in. Glad to be apart of this. Looking back across the announcements and the current proposition, I can see alot of good things within this business.

[Rawz]

I'm in. Glad to be apart of this. Looking back across the announcements and the current proposition, I can see alot of good things within this business.

I also put a few dollars in yesterday at $0.295, thought it a satisfactory entry price.

The smoothpay acquisition and integration seems to be going well. Last two qrt on qrt growth 22% and 27% respectively. The best thing about that acquisition is it was done at 1.5x revenue!!! PYS trading 14.3x revenue. Growth by acquisition might be the way to go (as well as organic) and this environment could present some opportunities for PYS.

[Almost-confused]

Absolutely! I also thought the acquisition price was crazy low. But then it seemed like it was a small founder run company. So it probably needed cash to keep growing that the founder didn't have. He got the opportunity to cash out a nice sum and then is now on a pretty nice salary with some more job security than before.

I've got a few more I want to add to my holding today. Hoping the weak hands have a few more to give to complete my initial entry 😁

[Rawz]

Q4 of FY22 will see PYS do over $1m revenue for a quarter for the first time. Great milestone. FY22 revenue will come in around $3.4m I reckon which will be up 63% from FY21. Great stuff

[etrader]

I remember a few years back seeing PSY AND XERO jointly working together on some rural software alongside they both share the local action in Parnell but have never spotted Xero having any shareholding for now.
$4.5 million position for a 10% blocking share could be a smart move as they start to grow

[Almost-confused]

What's the thoughts on where this baby could go? Being thinly traded, when it moves, it'll move fast

[nztx]

2 yr High point 10 Feb 2020 ~ 0.76
2 yr Low point May 2021 ` 0.25 / 0.26

Last close - 0.29 Fri

Mid Dec 2020 - Current trading range 0.25 - 0.31

current SP may be indication of lowish volumes currently, with an element of holders
perhaps still deep underwater waiting

Gut feeling - something fairly company changing needed to reach former levels IMO

market appears to fair valuing the enterprise around 0.30 levels based on
recent rough plateau reached, illiquidity and perception current trading
and prospects continuing to dish up periods of net bottom line red ink on rising revenue.

Not much margin (in fact none - negative) currently being seen between revenue & staffing expense
from a brief look in at most recent reports 2020 / 2021.

Sooner or later on current trajectory, assuming continuing net red ink, a Cap Raise
or more possible to sure things up, fund any possible future growth and carry
increasing activity ? ;)

56-57% held by top hand full of holders of small Cap listed Coy may be restraining
things somewhat

Discl: not a holder, nor have been. Not my cup of tea - better prospects elsewhere

[Rawz]

Nztx post above sums up current state really well.

For me, PYS need to cont with acquisitions. Thats the key to rapid growth. Mop up any small payroll companies in NZ or even Aus. Raising capital to buy them is okay if the revenue multiple is much lower that PYS.

The smoothpay acquisition was completed at 1.5x revenue. Smoothpay were generating ~$180pa per customer.
PYS trading at 11x my estimated FY22 revenue and generate ~$650pa revenue per customer

Lots of room for PYS to increase the revenue out of the smoothpay customers they acquired with the additional features PYS have (BNZ paynow, Rosters etc).

Holders need to understand this company wont be making a profit for a very long time. But you know, neither did Xero. Sometimes its doesnt matter. Net loss last year was $1.6m off $2.1m in revenue. FY22 revenue will come in about $3.35m. Keep plowing funds back into the business. Hire more people. Just focus on revenue.

Disc. Hold a small slice.

[etrader]

Well put but the couple of post and appreciate the views of this micro cap.

Looking back to the founders past he has a record of growing organically to a point that they could exit and one would think the same “could” happen here in time.

This stock will take several more years to hit the $5 mill mark without any other companies acquire

I’ve picked up a very small holding but it’s a few grand to tuck in a bottom draw.

This stock has a very thin trading range between late 20’s touches around 32c then drifts albeit it tiny volume.

As with a previous post a few holders control a large majority of the shares

[Rawz]

https://www.nzx.com/announcements/387019

Nice announcement. Add to the momentum. Growth.

"PaySauce Limited (NZX:PYS) announces a partnership with accounting software provider Reckon Limited (ASX: RKN) to replace Reckon’s existing payroll product in New Zealand. Reckon payroll, currently used by a portion of Reckon’s New Zealand customers, will no longer be supported by the company in March. Those customers can now use PaySauce via a new integration with Reckon Accounts to continue running their payroll. PaySauce CEO and Co-founder Asantha Wijeyeratne said, “We’re committed to ensuring employers in New Zealand can rest easy when it comes to compliance with payroll standards, so saying yes to a seamless transition for Reckon’s existing payroll users was obvious. ” As the PaySauce integration is available to all Reckon Accounts customers from today, this partnership is also expected to deliver more customers to the PaySauce platform on top of continued growth."

[beetills]

while surfing the web i am sure i read where insider trading charges against 2 people were to be laid by the FMA regarding Pay Sauce,but now i can't find it.

[winner69]

while surfing the web i am sure i read where insider trading charges against 2 people were to be laid by the FMA regarding Pay Sauce,but now i can't find it.

Yesterday the news was that was Pushpay

[jimdog31]

From a potential users point of view. Severely slack sales process. Nobody manning their sales phone, booked a call back, no direct line to call back. Back to hold.

Hmmm.

[beetills]

Thanks for putting me straight.:)

[etrader]

A small upside bolting PaySauce into Reckon nz payroll options, who are Reckon I wondered, checked them out on ASX turns out they’re capped at around $115 million with another firm recently confirming they’ve acquired a 19.9% position in them also.
Details below.
http://research.iress.com.au/IDS/old/20210713/02394657.pdf?uid=62A2EA27B720EA8AD434E5ED374F350B3 13E000059DC096273C7E540093D250091850000&ppv=

[jimdog31]

From a potential users point of view. Severely slack sales process. Nobody manning their sales phone, booked a call back, no direct line to call back. Back to hold.

Hmmm.

Got a call back 6 hours later. There's 1 guy manning sales. And he doesn't have a direct line.

[Rawz]

Got a call back 6 hours later. There's 1 guy manning sales. And he doesn't have a direct line.

Not sure how to interpret that..
on one side they have done very well growing with what seems like no sales team?
on the other.. um how much more growth is ahead of them if they higher a couple of lackeys to hit the phones all day.

Perhaps they run a policy like the Heartland bank mortgages. If you cannot sign up yourself online then you dont get the product?

[etrader]

The latest release of taking a portion of nz based clients payroll on to process who would put a number on the value ? 5 digits of additional revenue or simply another strike on the board in terms of collaboration.

Disc; I have a very small position in PYS but I’m mindful of looking for an emerging SAAS during the next 2 - 5 years so happy to sit out and collect as timing works

[Rawz]

The latest release of taking a portion of nz based clients payroll on to process who would put a number on the value ? 5 digits of additional revenue or simply another strike on the board in terms of collaboration.

Disc; I have a very small position in PYS but I’m mindful of looking for an emerging SAAS during the next 2 - 5 years so happy to sit out and collect as timing works

Yes it cant be much revenue. No numbers mentioned.

I thought it was just PYS getting better at telling their story. SP increased 10% so it worked?

[etrader]

PaySauce tacks between .28c - .32c and has light volumes going through daily.

Who sees a way forward to grow this both organically or through purchasing competitors.

What sort of growth PA would it take for this to hit $1 ? Maybe $12 mill PA .

I’ve been collecting a tiny bundle at the lower cycles.

[etrader]

Just floating a random thought around avoiding having two tiny SAAS firms listed.

GEO / PYS (logical merger) now this is not even speculation just throwing it out there for some feedback.

Having a flick over the balance sheet, annual sales, cash on hand $6 mill and recurring revenue at a similar level to Paysauce would it make logical sense to merge.

That would take revenue to around $7 mill cash on hand and a similar mindset on SAAS outcomes.

There’s only 1300 investors and a few control nearly the entire firm so a decision to avoid multiple listings, compliance costs, director fees etc

[Rawz]

Just floating a random thought around avoiding having two tiny SAAS firms listed.

GEO / PYS (logical merger) now this is not even speculation just throwing it out there for some feedback.

Having a flick over the balance sheet, annual sales, cash on hand $6 mill and recurring revenue at a similar level to Paysauce would it make logical sense to merge.

That would take revenue to around $7 mill cash on hand and a similar mindset on SAAS outcomes.

There’s only 1300 investors and a few control nearly the entire firm so a decision to avoid multiple listings, compliance costs, director fees etc

Not a bad idea etrader.

However Geo is trading at 7x sales multiple. PYS was able to buy a bunch of customers in their last acquisition at 1.5x sales and then triple the sales per customer buy upselling. thus buying them for 0.5x sales....

PYS trading 7x est FY22 sales...

[etrader]

Appreciate the update on GEO trading multiple so I guess if there was ever a friendly merger it would be something to consider around reduced compliance costs, multiple directors and some synergy ip cross selling between databases.

Organically as PSY stand if they don’t takeover any other companies it will take some years to crack $10 mill and other players will have emerged.

This stock will never the the Xero but as a micro SAAS can continue to carve out their space.

I’m not a chartist but there is definitely resistance over .32c and eases back to .28c and seems to maintain that range.

Results for year end come out normally in May and given all the updates during Q1 - Q3 already I can’t see any growth that’s unexpected.

My quick view would be around 45% growth is revenue, double digit customer growth and a small loss on the books.

[etrader]

31st March is FY22 with reporting historically around mid May.

Looking back to last years annual report there were around 1300 shareholders with 105 holders over 50k parcels so it will be interesting to see how this has moved.

The top 20 control most of the shares and the largest % of holders with parcels of up to 10k shares.

There could be some historic holdings from when this was Mad Energy making lightbulbs prior to the reverse takeover.

Personally I’m not expecting anything big but a steady growth in stats around customers and recurring revenue.

Who would agree if we see total growth of 50% or more this could touch late 30’s per share.

Apart from organic growth how can this stock go to that next level.

[etrader]

255% increase in employees from Q2020 to Q2021 has seen a huge uplift due to the very strategic purchase of smoothpay and already this is paying off in a lift in revenue from the update tiered pricing.

I’ve been acquiring shares around the 28.5c level each time they dip and I’m transparent around my posts as I have entered the top 100 shareholders it’s only right to disclose my position.

I will take advantage off any dips and have funds set aside pre FY2022 to Aquire a lot more as a 3 - 5 year hold.

I’m personally not seeing any massive correction in SP over the coming season but a steady as she goes approach of 45% growth would be very healthy.

I realise there’s an incredibly small shareholder base of 1300 plus from last report but from the couple of holders on this page where do you see the next portion of growth coming.

My outside views:

1: Smoothpay was purchased for 1.5 x revenue being a share swop and folding the founder into PYS as as key to this asset.

YOY growth of 45% might slow down as a % as they mature but still creating additional revenue value each quarter of equal or more.

Cash reserves on hand to accelerate growth and currently no noise around seeking additional funds.

More employers looking to divest internal costs out of the business so PYS will benefit from this restructuring as employers find recruitment harder in a tight employment landscape.

These are just my novice views from reading the reports accessible to us all but I’m excited with scaling up my portfolio around a SAAS that still has scale and possibly some nice upside once the revenue base keeps growing.

DYOR and wish the couple of holders on this page the best also.

[nztx]

It might take a miracle or PYS being taken over to see Apr 2020 0.59 SP peaks again IMO
that's if anyone stumps up to that level or the majors want to sell out ;)

[etrader]

Absolutely agree, I was going back through the charts and couldn’t see any reason for the spike back then, there wasn’t any major news and it was well after they merged with energymad

I’m going long on this but only expecting very small growth in the next year.

[Rawz]

How much cash do they hold?

I thought it was heaps but then double checked and realized it was all cash to be paid to IRD (paye tax).

Have sold my shares a few weeks back because I set in place some new rules to invest by.. PYS didn’t meet the rules but I am following

[etrader]

Rawz yes it’s ironic when you first spot around $20 plus cash on hand which as you say is on behalf of IRD from employers.

From memory payroll companies got paid $2 per employee from the govt and the company paying the wages either paid a subscription or some firms do a charitable donation, but from one of the last reports I’m sure the govt no longer pay that and they’ve adjusted revenue to not inc that to pro rata sales growth.

It’s all about recurring revenue now from employers but you might see a short increase in interest from money held as rates turn

Anyway I will await mid May

[Rawz]

https://www.nzx.com/announcements/390499

PYS goes cash flow positive. Excellent achievement.

Customers grew 3% qrt on qrt. Not much but Q4 is always a slow quarter for them. Maybe companies dont want to rock the boat coming into end of financial year so stay with their current payroll system.

Recurring revenue up 87% yoy

Trading 11-12x revenue

FY22 results announced next month

[nztx]

https://www.nzx.com/announcements/390499

PYS goes cash flow positive. Excellent achievement.

Customers grew 3% qrt on qrt. Not much but Q4 is always a slow quarter for them. Maybe companies dont want to rock the boat coming into end of financial year so stay with their current payroll system.

Recurring revenue up 87% yoy

Trading 11-12x revenue

FY22 results announced next month



Very easy to wonder if it isn't their clients cash sitting in the account on it's way out for disbursement
with this outfit ;)

Cashflow Positive in some cases can be easily achieved - for example tap the clients for higher
advances levels or deferred payments of disbursements :)

When the bottom line starts showing "Positive" then I may start getting interested in how it happened
but that might be a fairly long time ahead ;)

[winner69]

Nice looking charts in the announcement

[Rawz]

The thing to also watch with this company is no. of shares on issue. Will probably grow heaps via staff options and cap raises for acquisitions. Bit like ikeGPS.. number of shares on issue has increase heaps over the years with those guys.

[winner69]

https://www.nzx.com/announcements/390499

PYS goes cash flow positive. Excellent achievement.

Customers grew 3% qrt on qrt. Not much but Q4 is always a slow quarter for them. Maybe companies dont want to rock the boat coming into end of financial year so stay with their current payroll system.

Recurring revenue up 87% yoy

Trading 11-12x revenue

FY22 results announced next month

Jeez - 11-12 x revenue is very expensive

Median multiple for ANZ listed SaaS companies is 3.8 times --- upper quartile is 6.0 and bottome quartile is 2.3 times

The US listed median is 8.7 times

[percy]

Jeez - 11-12 x revenue is very expensive

Median multiple for ANZ listed SaaS companies is 3.8 times --- upper quartile is 6 and bottome quartile is 2.3 times

The US listed median is 8.7 times

Thanks for your post W69.
I have never known how to value SaaS.

[winner69]

Thanks for your post W69.
I have never known how to value SaaS.

Sometimes a mystery to me as well but the market experts have come up with these sort of valuation metrics (in the absence of any profit in most cases)

[etrader]

Will be interesting to see how the year end results come together.

I’ve been collecting more recently prior to the FY2022 annual results hoping for 5 - 10% uplift in SP.

I’ve bought into this stock from a growth upside and the fact they sit in a unique space of the rural sector.

Taking opportunities to scoop up more around 27c - 28.5 has been the focus.

[etrader]

Rawz from the stats I’m reading it looks like customers grew 38% exc smoothpay or 79% when you take that company into account.

One of the upsides is they paid a super low PE multiple but they’ve tapped that large client base and shifted into a different tiered price structure which has accelerated revenue.

Looks the volume and SP has found its limit short term as investors digest the growth.

I’ve enquired to hear the presentation post results and will be interested to hear their growth plan as this stock needs to make a few more takeovers as a low price and fold this client base in.

[etrader]

One final comment from today’s announcement was today’s volume was the highest since August last year when the shares were on a MA30 uplift.

This stock is incredibly light on average daily volume so at least a positive sign of mid sized investors grabbing parcels

[Rawz]

Rawz from the stats I’m reading it looks like customers grew 38% exc smoothpay or 79% when you take that company into account.

One of the upsides is they paid a super low PE multiple but they’ve tapped that large client base and shifted into a different tiered price structure which has accelerated revenue.

Looks the volume and SP has found its limit short term as investors digest the growth.

I’ve enquired to hear the presentation post results and will be interested to hear their growth plan as this stock needs to make a few more takeovers as a low price and fold this client base in.

Yes thats right- 79% yoy customer growth.

This is how the customer growth went qrt on qrt

Q1 15%
Q2 42%
Q3 6%
Q4 3%

PYS have a good track record of upselling to existing customers as they roll out new products. This is evident as revenue per customer went from about $555 Q1 FY19 to $700 Q4 FY20.

After the smoothpay acquisition it dropped back down to $550 as those customer were generating less revenue. It's now back up to $700 per customer so well done PYS for up-selling to them.

Maybe not as much growth to come from up-selling (unless they can find another bunch of smoothpay type customers) so keen to see customer growth..... and 3% qrt on qrt growth is too slow for how its priced. Hope Q1 FY23 is back into double digits.

[etrader]

Volume is normally incredibly thin on this stock but interesting side note post Q4 and annual ARR figures, who noticed the spike in volume making Thursday the highest since August last year.

100k in one parcel although it’s only $28k worth of stock it’s a significant lift from the 1 - 4k parcels that are more common.

I’ve been acquiring more during the dips heading towards a top 50 holder so I’m completely transparent around my position vs just ramping a stock for a quick flick.

DYOR but given the YOY % growth of 79%, increasing customer spend since the tiered price structure as they leverage up the smoothpay business & the annual spend is back to $700pa per user I personally have invested in a small SAAS that still has some good growth ahead.

I’m not a business analyst but the next challenge will be how to get this company to work towards $10 million revenue, at the current growth and presuming they don’t make any other substantial takeovers you’d think it will take around 2 more years to hit that figure, currently $4 mill I’m guessing 50% in the 2023 to $6 mill then lets assume another 50% in 2024 to around $9 - $10

In 2020 they raised $5 mill in new capital and Q4 was a small profit but given the cash burn during the last 7 quarters you wonder what their nest egg of cash is, setting aside Clients money from IRD payments.

These are just my novice views reading over the last reports and trying to take a positive view on seeing 10 - 20% upside potential in the next year.

This stock seems to have a resistance range of .28c - .32c so will take either a partial takeover offer, substantial investment position by a Xero style multinational or the purchase of a large competitor to get this anywhere near .40c

Look forward to your thoughts and any other breakdowns on the small cap stock.

[winner69]

Just had a look at Interim Report

Cash $23.5 but $22.8m isn't theirs (customers and IRD)

No wonder there was a lot of discussion in the notes whether Paysauce is a 'going concern' or not ..... technically not but Directors are confident things will be all hunky dory

Suppose they know best so all OK

Charts look pretty good though

Be interesting what the Auditors say in full year report

[etrader]

Winner so by the sound of your info it appears the cash burn has wiped out the $5 mill already but t guess with the business now having a small profit they can churn that back into operating costs.

Small side note with interest rates moving there’s a little more flowing through to offset the IRD subsidy that has ceased

[winner69]

Hope the touted cash flow positive is "Net cash (used in) operating activities before increase in funds due to customers and IRD" ....ie real cash flow

[winner69]

Was going to do a sales analysis --- on a rolling 4 quarter basis to see if there is a any growth rate decay .... before and after the recent acquisition

The numbers in Rawz's post spooked me a bit

But I'll wait until final report comes out

[Rawz]

Period
Qrt Recurring Revenue
Gain from Previous Qrt
Gain from PCP
Total Revenue trailing 4 qrts


FY19
Q1
$ 125,000


n/a


FY19
Q2
$ 150,000
20%

n/a


FY19
Q3
$ 190,000
27%

n/a


FY19
Q4
$ 195,000
3%

$ 660,000.00


FY20
Q1
$ 295,000
51%
136%
$ 830,000.00


FY20
Q2
$ 340,000
15%
127%
$1,020,000.00


FY20
Q3
$ 395,000
16%
108%
$1,225,000.00


FY20
Q4
$ 429,000
9%
120%
$1,459,000.00


FY21
Q1
$ 450,000
5%
53%
$1,614,000.00


FY21
Q2
$ 520,000
16%
53%
$1,794,000.00


FY21
Q3
$ 569,000
9%
44%
$1,968,000.00


FY21
Q4
$ 558,000
-2%
30%
$2,097,000.00


FY22
Q1
$ 612,000
10%
36%
$2,259,000.00


FY22
Q2
$ 779,000
27%
50%
$2,518,000.00


FY22
Q3
$ 949,000
22%
67%
$2,898,000.00


FY22
Q4
$ 1,045,000.00
10%
87%
$3,385,000.00



Smoothpay was acquired 31 May 2021, i.e. halfway through Q2 FY22

[Rawz]

Period
Payroll Customers
Customer Qrt to Qrt growth
Customer PCP Growth
Rev per Customer p.a


FY19
Q1
900


$ 555.56


FY19
Q2
1075
19%

$ 558.14


FY19
Q3
1150
7%

$ 660.87


FY19
Q4
1400
22%

$ 557.14


FY20
Q1
2000
43%
122%
$ 590.00


FY20
Q2
2250
13%
109%
$ 604.44


FY20
Q3
2400
7%
109%
$ 658.33


FY20
Q4
2450
2%
75%
$ 700.41


FY21
Q1
2750
12%
38%
$ 654.55


FY21
Q2
3050
11%
36%
$ 681.97


FY21
Q3
3274
7%
36%
$ 695.17


FY21
Q4
3400
4%
39%
$ 656.47


FY22
Q1
3900
15%
42%
$ 627.69


FY22
Q2
5550
42%
82%
$ 561.44


FY22
Q3
5893
6%
80%
$ 644.15


FY22
Q4
6052
3%
78%
$ 690.68

[etrader]

Thanks for posting Rawz and you can definitely see the trend emerging each Q3 and Q4 with the growth slowdown which could be attributed to companies impeding a system change in the Q1 and others waiting to rollover to a new year.

From a volume point of view around shares it will be interesting to see if the trend of investors grabbing bundles of 50k plus continues which given its a thin stock will this have a few cents of pressure put on the SP

[winner69]

Good stuff Rawz

Inove the growth rate decay from 137% in Q20 to the about 30% prior to the acquisition.

Question now is when and where the current 87% will peak …before decaying away again.

Good exercise

[etrader]

Winner as you mention when will the decay in growth % happen, as you know it’s easier to get huge % lifts off a low base but as PYS matures the % will slow but I’m hoping even if the $ value increases.
$3.6 mill in ARR if this became $5.6 would still be good just the % starts to tail.

Big questions for me are:
1: What’s their cash burn with current growth and will this mean a heavily discounted 1:7 option plan like 2020.

2: Is there another smoothpay style firm that they can acquire for a low PE to absorb another 3000 customers and transition them across to our platform.

3: collaborations with key accountant firms were Xeros best advertising when the likes of MYOB using a CD rom were one of the few choices.

4: A small side note in their latest report was they will continue to monitor govt regulations if there’s any significant changes to find other opportunities which could be a positive sign after loosing the employee subsidy.

Disc: Current holder and only to happy to acquire around 27.5c as and when investors want to move out

[Rawz]

I think the number to watch is customer growth.. which looks to be a high 30% annual growth rate. Not bad.

Maybe a cash raise on the horizon? If it was priced mid 20cents and the funds were for a similar smoothpay type acquisition it could be worth a punt since PYS is now cashflow positive.

One to watch

[Rawz]

Twitter sold for 30x revenue. PYS cheap as based on 7x

Both companies sort of techy aye

[etrader]

Exert from the paper today after Twitter and locally PushPay, this as mentioned could have a flow on effect as investors digest multiples on offer.

Currently the founder owns over 20% and the top 20 makes up most of the issued shares so any takeover of these minors would come at a decent increase to get those guys selling out.

The news of a potential takeover buoyed other tech stocks, with cinema software company Vista Group up 1.7% to $1.80, and travel software company Serko up 0.8% to $4.84.

“What we are seeing with Pushpay today does push up that whole sector, on the back of suspecting that if there is interest in Pushpay, potentially there could be interest in other stocks as well,” McIntyre said.

[etrader]

Shareholders:

Looking back at the FY 2021 there were 1389 shareholder with the 76% of those holding under 10,000 shares, 222 between 10,001 - 50,000 making up a further 15% of the register making up 91% of total shareholders.

On the reverse those invested over 50k shares make up only 104 investors that control 94% of the shares.

It will be interesting to see if there’s been an increase in individual shareholders but I await the movement of the top 20 to see what shift that’s had during the SP staying fairly flat.

I’ve been acquiring on dips with a .28c average and have a cheeky buy in with a low ball price if anyone feels the need to exit cheap

[etrader]

PaySauces results are released in 15 trading days on the 25th and although I’m not expecting anything to new as their continuous disclosure meant the gross sales and growth have already been disclosed.

I’ve used the soft trading to keep knocking off bundles sub 27.5c meaning the funds set aside has allowed me to build a larger position so creeping into the top 50 was always the goal when price determined a fair entry price.

I’m now sitting tight on the holding but will await results to see if the balance of funds will help enthusiasm to increasing the holding again.

Things I’ll be keeping in mind as front and centre:
* trend continues with growth of new customers and total employees
* increasing margins as the smoothpay is absorbed into their model
* forecasts from their online presentation showing how their growth will continue and the possible steps to work towards ongoing cash surplace.
* forecast around any potential capital raise
* net cash on hand setting aside clients monies for IRD payments
* any direction if they’re going to grow organically or expand through buyouts.

Last I will be interested to see the top 20 holders and if their positions have changed a lot, a couple of institutions put into the mix would change the top 20.

These are just my novice views as a minor shareholder but trust that value is created.
*

[etrader]

Tomorrow is the annual results and although they’ve previously given gross sales and % of growth it will be interesting to see the audited results and as previously mentioned the cashflow positive Q4.

I will be interested to see if there’s a Capital fundraising mention or at lease what their net cash is exc the clients IRD funds which are not an asset.

Will watch with interest in the top 20 movements is there any new heavy hitters along with how many new shareholders have come onboard.

[Rawz]

https://www.nzx.com/announcements/392979

HIGHLIGHTS
- Cashflow positive for the quarter ended 31 March 2022.
- ARR of $4.5M as at 31 March 2022 (83% YoY increase).
- Acquired and fully integrated the SmoothPay business.
- Over 6,000 customers as at 31 March 2022 (79% YoY increase).
- $2M of earned wages accessed through the BNZ PayNow feature in FY2022.
- Total customer LTV of $30M as at 31 March 2022 (96% YoY increase).
- LTV : CAC ratio of 14 : 1 as at 31 March 2022 (67% YoY increase).

Cap raise coming this year. What they should do is find another smoothpay type acquisition and raise funds for it + $5m for growth.

Still on the watchlist

[winner69]

Muted market reaction

Waiting for etrader to start collecting again ....share price will take off then

[Rawz]

Best wait for the cap raise.... it's coming

Nothing wrong with raising funds either. Its early stage. They say they have just left the start-up phase.
But one would expect a discount so thats why i am thinking wait and see

[etrader]

Agree with you guys on the wait and see approach, I have a few bucks set aside but given their comment…
“while we have achieved the milestone of moving earnings positive, I would note that we MAY go back to the market for capital if we believe the opportunity could significantly lift our growth rate.

This would tell me currently they don’t need the funds but if there’s a low multiple company that they can do a capital fundraiser for that will bring a good % in growth then it’s a good option.

I wasn’t a shareholder at the time but I noted when the SP was 60’s or 70’s they did a deep discount and the SP dropped so I hope they take the stance of raising capital once they have a conditional contract in place.

Sorry Winner won’t be buying at this stage but definitely if a capital raise I will take up a position so I don’t dilute.

Only other not was the shareholding split, seems possibly like an oversight or total coincidence but the exact shareholding split from 10,001 and over remains the same but note 80 shareholder have fallen away from the sub 10k positions which might be a hangover from the MAD energy days as people dump their tiny holdings.

Disc: position held

[winner69]

Interesting Comment after NBR story on result

He said that gives the company the opportunity to grow outside of New Zealand." Hardly. These are predominantly Pacific Island countries so not much happening there from a growth trajectory. SmoothPay tried for years to gain returns from this market without success. Economies of scale are very difficult compared to effort to support compliance.

[etrader]

Minor side note on Thursday was the highest volume during the last two years which could be a few new investors buying 100k parcels, sorry winner it wasn’t me mate 🤪 but funds are sitting aside for a capital raise if they secure a low multiple company to absorb.

I figure given 138 mill shares another 1:7 at 20c would give them $4 mill of tin.

$4.5 of ARR now on an annual and turned the corner with their Q4 profit, revenue per FTE OF $110k up from 60k so if they can hold costs flat and scale revenue them it’s looking good

[winner69]

I didn't realise Mike O'Donnell was a Director until the other day

Good guy Mike

[etrader]

He increased his holding post result also which is always encouraging.

Anyway will tuck these in the bottom draw for 3 - 5 years and grab any potential capital raise if and when they find an appropriate company to merge in.

[etrader]

Q1 would be expected within the next business week and looking over past results there tends to be an uplift in companies moving to PYS in Q1

There’s very few investors in this stock on the page so I don’t expect a lot of enthusiasm but for the couple that are who thinks 40% growth off Q1 2022 ?

My key takeaways will be:
• growth % YOY
• growth in customer numbers
• any sign that interest rates doubling has dropped another 30k upside per quarter.
• growth from Q4 2022 to Q1 2023
• continuous disclosure updates if there’s anything pending around capital raise
• have they again become cash positive back on back from Q4
• ARR on a timeline does it show growth
• upsides of the integration of smoothpay to the PYS platform.

These will be my key figures as I assess my position on cash set aside to either push over into a top 50 holder or remain as per.

Again a completely novice view but if they do a capital raise for an appropriate investment that is at a low multiple with headroom post integration I believe they could easily raise $4 mill on a 1/7 rights issue and given a large portion is owned by few key stakeholders this raise for the RIGHT FIT will be easy.

DYOR but as a minority holder these would be my ones to watch

[Rawz]

I like PYS. It's chugging along nicely. Still doing shy of $4m revenue with a market cap of $37m. In today's world it might be too much? But revenue growing 80-90% p.a. so maybe only another year and then its looking good?

See what happens with the potential cap raise.. on the watchlist

[etrader]

Just spotted on their Facebook 7/7/2022 👁 so I’d guess that’s the Q1 date.

Given how hard hit the market has been PYS is holding a very firm 26c which I’m surprised about given the state of play out there.

Looks it potentially will still take 18 months to two years to hit $10 ARR exc any cap raise and ideal bolt on companies

[etrader]

Today’s Q1 stats are in and again exceeded my personal expectations YOY.

89% growth YOY from Q12022
24% growth in customer numbers
No word on capital raise so it’s business as usual.
ARR just shy of $5 mill

I’ve invested again today to nudge towards a top 50 position as these are the numbers I’m happy to see

DYOR

[Rawz]

When I add in the recurring revenue and customer numbers into my spreadsheet i get different yoy numbers? weird.

Anyways, customer numbers up 8% from last qrt (67% up yoy as per me..? not 24%.. not sure what i am missing).

So more runs on the board. Revenue per customer is $718 up from $690 per customer. Put that down to the interest income, every 1% increase in rates = $250k extra interest income pa (as per annual report 2022). As more and more deposits expire and roll onto new higher rates its gold for PYS. They add this into recurring revenue but rates will drop if/when we head into a recession so im just going to focus on the customer numbers vs the revenue number as a true measure of the business performance.

Still waiting for this capital raise...

[etrader]

Just a side note around daily volume and today’s standout trade.

This tends to be a very low volume tightly held stock with 150k a big day, largest in the last few years was 350k so today’s one off trade of 500k parcel certainly is a sign that word has got out there for someone to commit $150k.

I’ve analysed the Q1 and happy to commit another 5 figure sum for a bottom draw investment.

[winner69]

Sponsoring the Wellington rugby teams

A bit of exposure on national TV - hope punters don't get confused and think its a tasty sauce to go on the pie and chips.

Pity they are backing a losing team in the Lions ..... but the Pride are pretty good.

https://wellington.scoop.co.nz/?p=146318

[silverblizzard888]

This is slowly looking like a company worth investing into, but still a cash burning furnace for the time being. I'm looking for them to reach $7m ARR for my entry.

[etrader]

Should be hitting ARR of $7 mill by Q4 and the following 3 quarters if the growth holds.

Looks like 28c baseline is now forming and seems to have moved up from 26c levels.

Now above MA100 and holding, not expecting anything big news in near future but the 6 months annual report due mid to late October should indicate where it’s heading as their best growth generally happens in Q1.

I’ve sat out my time waiting on the sideline snapping up the dips and confidently increased substantially during the last week.

I have funds still set aside for a capital raise if required, they’re now cashflow positive and reinvesting funds in growth but a 1/7 around 22c will allow a $5 mill purchase if and when the ideal bolt on happens

[silverblizzard888]

Should be hitting ARR of $7 by Q4 and the following quarters if the growth holds.

Looks like 28c baseline is now forming and seems to have moved up from 26c levels.

Now above MA100 and holding, not expecting anything big in near future but the 6 months annual report due mid to late October should indicate where it’s heading as their best growth generally happens in Q1.

I’ve sat out my time waiting on the sideline snapping up the dips and confidently increased substantially during the last week.

I have funds still set aside for a capital raise if required, they’re now cashflow positive and reinvesting funds in growth but a 1/7 around 22c will allow a $5 mill purchase if and when the ideal bolt on happens

I'll make sure to keep tabs on this for Q4, this could become quite the company if they can prove they can consistently grow and expand. Their purchase of Smooth pay definitely sets them up to expand to Aus. Reason I need $7m ARR is because at that level they can begin to prove that they can scale and also look towards profitability if they wanted.

[etrader]

$4.4 mill was their revenue in FY2022 and putting the first 1/4 into context I’ve taken a conservative 50% growth this year giving a base of $6.6 mill.

Interest rates have great upside with each 100 basis point movement having a $250k gain PA, today’s OCR will only accelerate the 330% surge in Q1 interest received as term deposits roll over.

ASM is hosted in AKL next month and although they can only still report up to Q1 unless there’s any major news a lot of the meeting will simply be a formality around FY2022.

With q4 becoming cashflow positive if this is maintained the flow on to the growth will mean a deeper investment into culture, key staff and increased markets.

There’s only one or two on the forum who show an interest in this stock and I value input if I’m missing any key metrics.

6 months to end of Sep should be a telling sign of organic growth including OCT flow through

[etrader]

PYS hit 32.5c which looks to almost be at breakout if the trickle of volume continues.

6 Month period has passed with Q2 generally out early next week and off the back of Q1 vs Q4 2021 a 12% rise which is modest I’d be hoping for another 15% up from Q1.

My estimate of $6+ mill IRR from Q4 and the following 3 quarters should be on track assuming no new companies are purchased.

Ceo has clearly noted in the delivery of results given q4 was in surplus that no capital raise is needed unless “an appropriate target” is found that will add scale and fair multiples.

I’ve taken a collect and hold ethos during the last year when dips happen and remain passionate that patients in the next 3 - 5 years could pay off

[Rawz]

PYS hit a low of 24.5c 24TH Aug and now 32.5c? On no news and during a wider market sell off??? hmmm 33% up.

Whats going on here?

Always hung around 27 cents.

I am still thinking there will be a cap raise and this nice jump in SP of late will allow for a nice discount so that it is fully subscribed

[etrader]

Rawz nice grab on that dip but from memory it was an instraday low on small volume, still seemed to track closer to the .26.6c to .27c most of the time but recently there’s been very small increases half to 1c at a time.

Like you point out no news and a declining market but are a few investors collection for a positive 6 month earnings ? Or is it a fair price for a SAAS that’s moved from a startup to a scale up.

I’m also picking by bundles of 12 plus trades that get pumped into one buy is that from a Sharesies style platform where the volume came yesterday right on close.

If they hit a IRR of $6 mill plus and grow at say 33% the following would you think a share like this would price in the late 30’s assuming no big capital raise.

I still figure a 1:7 at 20% discount to now would bring in $5mill new capital and based of their last phrase of 1.5 multiple of turnover over that could find a 2.5 - 3.25 mill revenue business if my math is right.

[Rawz]

I reckon FY23 revenue will be $5.5m so today they are trading 8x FY23 revenue. This will represent 61% revenue growth.
By Q4 ARR should be $6.1m if they do $5.5m.

How do you value this? I have no idea tbh.

They should raise capital and buy more payroll companies like they did last year. that worked very well.

[winner69]

I reckon FY23 revenue will be $5.5m so today they are trading 8x FY23 revenue. This will represent 61% revenue growth.
By Q4 ARR should be $6.1m if they do $5.5m.

How do you value this? I have no idea tbh.

They should raise capital and buy more payroll companies like they did last year. that worked very well.

Rawz ….my mates at Clare Capital sent me this the other day …..SaaS revenue multiples of ANZ companies (NTM is Next 12 Months)

PaySauce at 8 times one of best of the bunch?

[Rawz]

Rawz ….my mates at Clare Capital sent me this the other day …..SaaS revenue multiples of ANZ companies (NTM is Next 12 Months)

PaySauce at 8 times one of best of the bunch?

That graph shows PYS is overvalued. They should then raise capital now at say 6x revenue and buy businesses at 1.5x revenue like they did last year (or whatever the multiple was).

Every extra customers splits that head office cost. Need to get the economies of scale going

[etrader]

Only challenge is MYOB went around and picked up the fragmented businesses so very few private companies left, offshore expansion is the next scale with capital raise both Oz, islands and Ireland which got put on hold due to Covid

[winner69]

That graph shows PYS is overvalued. They should then raise capital now at say 6x revenue and buy businesses at 1.5x revenue like they did last year (or whatever the multiple was).

Every extra customers splits that head office cost. Need to get the economies of scale going

Jeez rawz you spooked the market today ..... down nearly 10%

[etrader]

PaySauce announced a collaboration with FundTap tonight which I presume won’t be needing an nzx announcement pre opening but never the less another positive way of supporting SME.

Announcement below:
Delighted that PaySauce is able to announce this collaboration with FundTap so that our clients have another option to access working capital

Essentially small businesses send their invoices and they pay instantly helping support cashflow and take a 4% fee

PYS have around 6300 businesses that have 60k staff on the books so for SME to help cashflow can only bring upside

[winner69]

Have to be impressed with this cool chart in todays update

[Rawz]

Have to be impressed with this cool chart in todays update

Very cool chart. The interest revenue is the cream on the cake!

Bit of a concern that the number of paying customers only increased 2% from the previous quarter. That's the lowest qrt on qrt growth since Q4 FY20. We can let them off i reckon, put it down to a timing issue. Last qrt was a bumper qrt with customer growth at 8%

The good news is they have managed to charge the most ever per customer resulting in nice revenue growth 16% ahead of last qrt.

[etrader]

Rawz interesting I was thinking the same around growth from Q1 to Q2, only things I can pop it down to is Q1 is their historic growth period where farmers move across, second is the churn which from the ASM I think it’s .04% per month so over the Q2 this could relate to a drop off of 750 clients potentially.

I am impressed by the interest rate increase which is around $1 mill PA and I’m sure they are prudent in terms of Maximising term deposit uplift.

Happy overall with result just need to keep an eye out on customer growth in q3 to see if it was a timing issue.

As they grow you’d naturally expect the % increase to drop a little but the actual revenue is still up albeit lower %

We switched our business over in august and can speak volumes to its transition.

Lastly growth: CEO has transparently stated that if they find the appropriate company that likely when a capital raise might happen.

[etrader]

Employment fintech PaySauce (NZX:PYS) announces the addition of Jessica
McLean into the new role of Chief People Officer. McLean will strengthen the
existing leadership team and take command of the people side of the business
from 31 October 2022.

Coming from the People and Capability Manager role at Catalyst IT, McLean
brings extensive people experience and skills with her. CEO, Asantha
Wijeyeratne, said that the need to reinvest for long term growth starts with
people:

[etrader]

6th month report should be out middle of November given past results but the fact they’ve already release Q1 & Q2 just adding those two and looking at YOY growth of 84% and 72% growth I’ve taken a conservative based off last Q3 revenue and it should put their IRR at north of $6 mill in q3 for the first time and one quarter ahead of my estimate.

Interest rates are having a great bottom line kick on their IRR and from last look potentially is nearly $1 mill PA Or 15% of revenue.

SP is holding a very tight range now but the market will want to see better growth in new clients in the second half to revalue it up.

Founders and key staff still control 65% of the shares making $15 mill worth of freely tradable stock making any significant new playing wanting to get north of 5% a hard task without paying substantially higher.

The company has stated before that they will only look to a capital raise if there’s a target that will substantially give their market share a lift so comfortable there’s no dilution in store unless it’s going to give us more scale.

DYOR / Disc: holding stock

[etrader]

OCR expected to jump possibly .75 basis points which plays straight into the hands of PYS with interest flowing through as a very healthy contribution to ARR.

Expecting the 6 month results on Thursday based on previous timing and my key focus will be…..

^ customer growth (inc churn) this has already been disclosed via Q1 and Q2 but a clear picture to the market will help.
^ did they continue making a small profit in each quarter
^ adjustments to the ARR based on the jump in Interest rates
^ any update on potential targets they’re considering, we need to lift the customer numbers to scale up

[Rawz]

i reckon 6857 customers. 3% up on last qrt.
$1.525m qrt rev. 12% up on last qrt.

[etrader]

Thanks Rawz are you referring to q3 which we are still in ? My concern was Q2 low customer growth but hopefully q3 shows a better pattern of net growth.

Realistically the 70% annual growth will slow down but as long as the dollar growth is maintained in an uptrend

Personally I think they need to acquire a competitor again 2500 - 5000 new customers and really scale up sales north of $10 mill within 2 years as you risk an offshore company either buying out PYS fairly cheap or they compete with deep pockets

[Rawz]

Thanks Rawz are you referring to q3 which we are still in ? My concern was Q2 low customer growth but hopefully q3 shows a better pattern of net growth.

Realistically the 70% annual growth will slow down but as long as the dollar growth is maintained in an uptrend

Personally I think they need to acquire a competitor again 2500 - 5000 new customers and really scale up sales north of $10 mill within 2 years as you risk an offshore company either buying out PYS fairly cheap or they compete with deep pockets

Sorry eTrader i have edited my post above. I buggered up my spreadsheet and it was telling me lies for a moment there.

Yes agree the low customer growth is a bit of a concern given how small this company is. Should be growing double digit qrt on qrt one would have thought.. but hey, that interest income is great aye. Really helps.

Also agree they need a cap raise + acquisition. PYS trading 7.7x revenue. Raise heaps of money while its SP is sky high.

[etrader]

Rawz so a month on since we threw a few ideas on the table around the slow down in new customer numbers etc.

Q3 closes end of month with results generally out mid Jan depending on how stats fall.

Q3 growth will be a telling sign for year end as we saw a slow down in q2, if net customers post churn are only in the 100’s they will need to look to growth via another takeover.

My next thoughts are keeping an eye on the IRR with cashflow from interest which is making up around 15% of revenue.

Last thing is hearing about breakeven or slightly profitable trading high takes pressure off cash burn.

[winner69]

Can’t do much better than this

Share price should get back into the mid 30s on this news

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PYS/405222/386886.pdf

Director MOD seemed pretty happy with progress when I saw him last month ….without putting him on the spot and pushing for details I just casually ask ‘how’s PaySauce going these days?’ and you can get a pretty good feel for how progress is going from the response

[etrader]

Can’t do much better than this

Share price should get back into the mid 30s on this news

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PYS/405222/386886.pdf

Director MOD seemed pretty happy with progress when I saw him last month ….without putting him on the spot and pushing for details I just casually ask ‘how’s PaySauce going these days?’ and you can get a pretty good feel from the response

All seems to be tracking well given the macroeconomics as Asantha mentioned, my prediction in Q1 is our ARR would hit $6 mill by q3 so happy to see it nudge 10% over that.

With the new pricing plan kicking off 1 Nov, integration of 1300 companies from smoothpay folding into the new price plans and SME’s needing to comply all these factors are flowing through.

What was once just minor detail has now made up almost 25% of ARR where the movement in base interest rates essentially means PYS have become a generator of revenue just of interest rates alone, this will be flowing through into covering a good level of overheads as they expand their FTE.

Q4 will give a fairly good indication to their year end results before the auditors summarise it, revenue up, interest rates up my only side note and again q3 seems to show this is a very slow new customer growth rate of 14%.

The ceo stated upon floating that he won’t chase growth simply for growths sake to judge them quarter by quarter but staying front of mind I’d like to see a bit higher growth in new customers, from last account their annual churn is around 9% PA one of the lower ones in the industry so adding new in q3 still naturally would have still lost 175 potential business given the average.

Next step in my thinking is to try and acquire a smart competitor at a fair multiple possibly adding 3500 to 5000 new customers, this could be done by a mix of debt, share issue without diluting existing to heavy and a capital raise of $3 mill.

Let’s see where the market sees value now as we close in on q4 in the coming months.

Disc: current holder for last 18 months

[etrader]

Rawz been interesting watching the interest rate movement flow through to ARR with $6.6 mill meaning $7.2 ARR by end of q4 should be achievable.

Still would like to see them absorb one more competitor to get customer base to 10k which was about the size of SmartPayroll before Asantha sold his holding to Datacom, they’ve since rebranded and have around 20k, ThankYou Payroll have 10k and MYOB went around buying lots of payroll companies so not sure who’s left.

[Rawz]

If you want to know the true performance of PYS you are best to look at the customer growth numbers because the additional interest income is making the numbers look better than they are.
We are coming off record low interest rates so come this time next year the business wont be getting the growing interest income tailwinds it has enjoyed of late.. so revenue growth will be more in line with customer growth.

Q3 FY22 revenue per customer was $644
Q3 FY23 revenue per customer is $916.

A lot of this is down to the interest income growth with the balance coming from PYS price rises.
The interest income is an important and real part of the business but all i am saying is if you want to look at the actual growth of the business customer numbers should be the number one metric.

Last two quarters has seen customer growth rate shrink from Q2 up 20% pcp to Q3 up 16% pcp.
So for me the business is growing high teens. Not the 65% yoy growth they say in the recent update.

FY23 revenue going to land around $5.85m i guess. so with a market cap of $40.9m its trading 7x revenue and if you recall that saas revenue multiple chart Winner69 has shared before PYS is valued at the upper end of the scale.

You compare this to an actual performer with tonnes of cash on the balance sheet- my current love affair IKE.NZX, who is trading on a FY23 rev multiple of 4x. IKE is growing its revenue over 100% per annum so tell me who should be trading 7x rev at the upper end of Winners chart?

[etrader]

If you want to know the true performance of PYS you are best to look at the customer growth numbers because the additional interest income is making the numbers look better than they are.
We are coming off record low interest rates so come this time next year the business wont be getting the growing interest income tailwinds it has enjoyed of late.. so revenue growth will be more in line with customer growth.

Q3 FY22 revenue per customer was $644
Q3 FY22 revenue per customer is $916.

A lot of this is down to the interest income growth with the balance coming from PYS price rises.
The interest income is an important and real part of the business but all i am saying is if you want to look at the actual growth of the business customer numbers should be the number one metric.

Last two quarters has seen customer growth rate shrink from Q2 up 20% pcp to Q3 up 16% pcp.
So for me the business is growing high teens. Not the 65% yoy growth they say in the recent update.

FY23 revenue going to land around $5.85m i guess. so with a market cap of $40.9m its trading 7x revenue and if you recall that saas revenue multiple chart Winner69 has shared before PYS is valued at the upper end of the scale.

You compare this to an actual performer with tonnes of cash on the balance sheet- my current love affair IKE.NZX, who is trading on a FY23 rev multiple of 4x. IKE is growing its revenue over 100% per annum so tell me who should be trading 7x rev at the upper end of Winners chart?

Great analysis Rawz and much appreciate the insight and so agree on growth slowing and the effects of interest rates flattening, still a handy area to bank some profit but can’t reply on that alone for growth

Q4 and full report should show a slowing of % growth but similar dollar growth as it matures

Key for me is to purchase a distressed model and fold those customers in

[Rawz]

https://www.nzx.com/announcements/406050


PaySauce Limited (NZX:PYS) announces that Mark Samlal has been appointed as an independent Director of the board with effect from 1 February 2023.
With over 20 years of experience in the payroll and HR space throughout the Asia-Pacific region. Samlal is Founder and CEO of PayGroup Limited. In this role, he oversaw large scale successful merger and acquisition activity, including the recent sale of PayGroup Limited to Deel, resulting in PayGroup Limited delisting from the Australian Stock Exchange in November 2022.

Looks like Paygroup was acquired for a for 3x revenue late last year.
PYS trading 7x revenue last time i checked.

I think this announcement is a clear confirmation (already suspected on this forum) that PYS will raise capital and acquire other payroll companies. With clear intention to get to a reasonable since and then exit to some big US based company.

I dont hold. Always seemed too expensive

[etrader]

Thanks Rawz

Appreciate the analysis and always great the stats you pop up.

Interesting tie up taking on the founder of paygroup as an independent director (cost $26,700 worth of shares)

Like you say alighting him to the board should bring a wealth of experience around scaling up and exit

The company that took over Paygroup was turning over $4 mill in ARR now around $295mill from takeovers, their valuation is $12 bill based on latest fundraising to bring this valuation

Here’s an extract Having a good equity valuation helps us get more and more acquisitions done.” Deel has already used its new price to make multiple acquisitions, headlined by an $83 million purchase of Australian payroll company PayGroup. Nevertheless, Bouaziz said he likely would not have struck a deal if not for the establishing ties with Emerson because he did not need any additional cash. Deel has more than $500 million remaining in the bank from previous funding by investors like Andreessen Horowitz and Spark Capital, he said. It declined to comment on how much Emerson had invested in the new fundraise.




https://www.nzx.com/announcements/406050


PaySauce Limited (NZX:PYS) announces that Mark Samlal has been appointed as an independent Director of the board with effect from 1 February 2023.
With over 20 years of experience in the payroll and HR space throughout the Asia-Pacific region. Samlal is Founder and CEO of PayGroup Limited. In this role, he oversaw large scale successful merger and acquisition activity, including the recent sale of PayGroup Limited to Deel, resulting in PayGroup Limited delisting from the Australian Stock Exchange in November 2022.

Looks like Paygroup was acquired for a for 3x revenue late last year.
PYS trading 7x revenue last time i checked.

I think this announcement is a clear confirmation (already suspected on this forum) that PYS will raise capital and acquire other payroll companies. With clear intention to get to a reasonable since and then exit to some big US based company.

I dont hold. Always seemed too expensive

[etrader]

Takeover target or a blocking shareholding which one would be smart.

This week the founder of PayGroup that’s now been delisted on the ASX was invited to join the board as a non executive director in exchange for $27k worth of shares.

Paygroup was taken over by DEEL a privately owned USA based payroll company and online HR software company with a valuation of $12 bill based on recent capital raise.

I’m looking at the scenario two fold, currently PYS tracks between 27c - 29.5 range Giving market cap of $40 mill, if DEEL for example took a blocking share of 10.1% they can’t be taken over by anyone else, is it smarter to get in bed with Paysauce while they’re deemed cheap or would you use under 1% of their war chest to take them out tomorrow for a 50% premium (they paid 179% premium when paygroup was 36c a share)

The founders and key staff control around 65% of this listed stock so grabbing a 10.1% position could be done easily up to 5% before a SSH pops up then surge a premium to grab that position and try and get a seat on the board.

These are just some of many scenarios that could exist and in no way I’m trying to hype a possibility in the market.

Disc: current shareholder

DYOR

[etrader]

Two more weeks inc this one for year end 31 March trading and generally q4 would be out within 5 - 7 working days of YE.

There’s been no further acquisitions this year, no capital raise and it seems steady sailing of the ship with a few key staff hired, director appointed and not a lot of other news.

Joining the dots from Q1 to Q4 you could easily see the gross revenue, ARR and possibly those good at numbers could easily spot if there’s a small cash surplace.

Q4 of 2022 was there first time of been cash positive so given ARR growth, overall cashflow growth it will be interesting to see how everything washes out year end.

Share price has eased back from the 28.5 to 29.5 range, volume low as there’s been nothing big either way to adjust the share price.

I’ve invested for a 3 - 5 year exit and mid last year hit the top 50 holders but at this stage I’ve chosen to not acquire more until I get a clear picture of solid growth, I noticed a slowing in net clients which might have been a seasonal adjustment between decisions.

Looking at the firms like DEEL based in USA you can see with a war chest of cash and aggressive acquisitions just how fast you can accelerate given timing.

In no way do I try and ramp this stock hit I’m transparent about disclosure and my upside and downside around decisions to hold this stock.

DYOR

[etrader]

The numbers are in for Q4 !!!! and albeit it very small volumes a few have bought shares and pushed the SP up a cent or 2.

My outside view as a holder is net customer growth has shown a definite maturing as they absorb into the farming sector but are growing in several other industry’s which will take time.

BEST TAKEAWAY is their intentions to roll out in Oz, they’re absolutely transparent of this intention and used q4 to build their networks by heading to key industry shows/forums/meetings which has been widely published.

Again only my novice view but it will take time to set the path to roll out in Oz but with a proven track record here and cloud based business a SAAS can be based her but grow there.
Recurring revenue of $1.63M (Up 56% YOY)
-Processing fee revenue of $1.23M (Up 27% YOY)
-ARR of $6.7M (Up 50% YOY)
-Active customers at end of period 6,875 (Up 14% YOY)

[Rawz]

Weak Q4. Weak year imo, higher interest rate earn on the float saved the day.

The business only added 823 customers this year. 14% growth. Thats a F for fail from me.

Sorry etrader hope im not being too harsh :mellow: No worries though revenue up 56% yoy so the company can highlight that until the cows come home.

[etrader]

Weak Q4. Weak year imo, higher interest rate earn on the float saved the day.

The business only added 823 customers this year. 14% growth. Thats a F for fail from me.

Sorry etrader hope im not being too harsh :mellow: No worries though revenue up 56% yoy so the company can highlight that until the cows come home.

I absolutely agree re growth which is net churn of around 8.5% plus what they added, yip they’re almost becoming a cash cow on interest along which. Must be going some way to covering a lot of their staff, PA around 1.6 mill in interest.

I’m sitting tight and always took a 3 - 5 year hold on this as a bottle draw investment while keeping in check where they are

[Rawz]

Google tells me there are 546,000 small businesses in nz.
PYS have 6875 customers. so 1.3% of the market.

Since the business is small and has a tiny drop of market share i would have thought it would grow its customers much much quicker. instead it grew customer numbers by 14% last year. this is matured market position type growth imo.

the last quarter they added 65 customers.... out of a potential 540k odd customers that dont use them. For whatever reason they cant seem to grab decent numbers of new customers. Just a trickle.

PYS will report revenue of $5.7m and has a market cap of $39m. Trading 6.8x revenue.

Its quite expensive this one...

[etrader]

Looks that reporting for FY will be mid next week and basically no surprises due after reporting the Q1 - Q4 ARR already it’s just how do the financials stack up in terms of break even or a tiny profit.

14% growth for a SAAS with small market share isn’t enough to push the SP north so i won’t expect any change until they start 30% customer growth again.

Looking to Oz is the next leap in terms of scale but again this will take a couple of years to slow through

Where to from here as a minor shareholder is something I keep front and centre, I would say they need to acquire another SME that processes several thousand customers a month but who and how much on a PE will be critical to bring synergies.

I’m still throwing my holdings into a bottom draw for the next two years and let’s see what happens.

[Almost-confused]

The share price is going through a bit of a sell off. Maybe into end of FY for those on June balance date...

Good fundamentals, keep the faith. I'm topping up at these prices

[kiora]

Running out of new farms to introduce it to?
https://www.paysauce.com/customers/

[Co0p_New]

I've noticed this has come back significantly.

Is this due to banks now processing payments 365 days a year? Potentially will reduce PYS's interest income.

[Rawz]

SP has been dropping since financials were published...

[Almost-confused]

I've noticed this has come back significantly.

Is this due to banks now processing payments 365 days a year? Potentially will reduce PYS's interest income.

I assume that might help the interest income. I thought they collect PAYE payments and only pay on due date. So if payments to PYS are more timely they have longer held on trust?

[Almost-confused]

Looks like some of the weakness was because the COO had to cash in his share bonus with an on market sale... Selling for an average of 22.5. ouch

[etrader]

I’ve been invested in PYS since Oct 2021 when Kiwis were bored at home dumping $ in stocks, my investment was about going long and prepared for up to 5 years to see where it heads.

Yes as you say PYS just keeps drifting back cent by cent and personally I’m not sure where the floor is, their latest results are solid in terms of a challenging economy but investors, competitors and potential suitors or any future takeover will be observing how they are “currently” maturing around the farming sector for growth where they now process over 50% of all farms.

ARR is the key metric for me alongside net churn of 8% PA which means they need to grow new customers at 8% to be neutral but from memory their net growth was 14% in the last year.

Options are; capital raise to make an acquisition where the capital deployed will bring new customers to the table and overlay their model for absorbing.

When the share price was 28c it would have been ideal to get $5 mill of capital as a war chest but they have clearly stated that they will only raise capital if there’s a company worth buying where returns are good.

My last metric and this is a cyclic return but the OCR has massively played in their corner where interest returns that were .25 are suddenly 3.25 to 3.5% and the net cashflow on short term deposit has massively contributed to their ARR which they group interest as a split of revenue.

How long this cycle lasts for with higher returns is hard to grip but during a low season of customer growth the $1 bill of wages process PA is bringing a positive level of upside.

Currently 65% of the shares are held by founders, key management and staff so it’s an illiquid stock volume wise and for a competitor to takeover would mean paying a significant upside to try and even get 19.9% before a takeover offer is needed.

I researched into “paygroup” which was taken over by DEEL from USA and they paid a 79% premium to secure that as they were rolling out in Oz, not saying PYS has the same premium attached or even could be a target but it was observed that the founder of paygroup post takeover got invited onto the PYS board in exchange fee for a small group of shares issued, from memory 27k worth.

Currently I’m sitting on a chunk of shares neither buying or selling but happy to hold and see how growth rolls out over the coming two years.

DYOR as this is purely my views as a small shareholder and just digesting the reports they post.

[winner69]

Etrader … saw Mike O’Donell a month or so ago …..MOD still happy way Paysauce tracking

But then he’d have to say that eh

[silverblizzard888]

Its just more the current market conditions, that growth is a little out of favour with most investors. They are so close to being Ebitda positive and when they announce their suite is ready for AUS use and they sign up a few customers there it should get the market quite interested particularly given the fact they are funding their own growth. I'm still waiting on their ARR to get to $7m and positive Ebitda before I'll look at taking an initial position, which they should achieve this quarter and means they are a sustainable operation. The real incentive is when they start making ground on their AUS expansion.

[etrader]

Its just more the current market conditions, that growth is a little out of favour with most investors. They are so close to being Ebitda positive and when they announce their suite is ready for AUS use and they sign up a few customers there it should get the market quite interested particularly given the fact they are funding their own growth. I'm still waiting on their ARR to get to $7m and positive Ebitda before I'll look at taking an initial position, which they should achieve this quarter and means they are a sustainable operation. The real incentive is when they start making ground on their AUS expansion.

Good comments there Silverblizzard 🙌

So ARR could be $7 mill possibly in q1 or 2 possibly and looking over the accounts they had mad an 80k loss for year end so I’m thinking if revenue holds the churn remains under 1% each month and surely there’s been some new customers break even is getting closer.

Very small volume I realise but happy to see it lift off the 22.5c SP back to 25c but of course it needs volume.

The key next is how are they going to get back to 30-45% growth PA again ? My only view is to purchase a competitor at a fair price, drop the synergies into their model and crank new growth.

[etrader]

KEY YEAR-ON-YEAR PERFORMANCE HIGHLIGHTS FOR THE QUARTER

- Recurring revenue of $1.73M for the quarter (Up 48% YOY)
- Processing fee revenue of $1.24M for the quarter (Up 21% YOY)
- ARR of $7M (Up 41% YOY)
- Active customers at end of period 7,087 (Up 9% YOY)

212 net new customer in q1 after taking out the natural churn, growth of new customer has definitely slowed.
Cracking ARR of $7 mill is positive and 490k in revenue alone from interest bringing it to around $2 mill or nearly 30% of ARR which they fold it in with.
If interest rates hadn’t cranked this would be an average result.
Still a red flag remains around growth in new customers


Good comments there Silverblizzard 🙌

So ARR could be $7 mill possibly in q1 or 2 possibly and looking over the accounts they had mad an 80k loss for year end so I’m thinking if revenue holds the churn remains under 1% each month and surely there’s been some new customers break even is getting closer.

Very small volume I realise but happy to see it lift off the 22.5c SP back to 25c but of course it needs volume.

The key next is how are they going to get back to 30-45% growth PA again ? My only view is to purchase a competitor at a fair price, drop the synergies into their model and crank new growth.

[silverblizzard888]

KEY YEAR-ON-YEAR PERFORMANCE HIGHLIGHTS FOR THE QUARTER

- Recurring revenue of $1.73M for the quarter (Up 48% YOY)
- Processing fee revenue of $1.24M for the quarter (Up 21% YOY)
- ARR of $7M (Up 41% YOY)
- Active customers at end of period 7,087 (Up 9% YOY)

212 net new customer in q1 after taking out the natural churn, growth of new customer has definitely slowed.
Cracking ARR of $7 mill is positive and 490k in revenue alone from interest bringing it to around $2 mill or nearly 30% of ARR which they fold it in with.
If interest rates hadn’t cranked this would be an average result.
Still a red flag remains around growth in new customers

Decent result, main key to this business growing is getting into the Australian market. NZ revenue forms a base that covers cost and Australian revenues build on that to make it a profitable company.

“This quarter we’ve invested in the sales and development teams, adding experienced people to accelerate delivery of our strategic priorities. We’ve further enhanced our operational processes as we build for scale in preparation for our launch into Australia.”

[etrader]

Silver cheers for feedback on q1

Looking at their existing knowledge around rolling our payrole nz side how long would you expect once they have boots on the ground in Oz that they generate reasonable cash ?

Given paygroup is already Oz based and now owned by DEEL plus the paygroup founder is a director of PYS they will need to carve out a space in the Oz market that is centric around their target market.

If they can scale things on the growth acehiced locally to date you’d think they could hit $1 mill plus in the first couple of years unless they start to purchase smaller payrole companies that are already generating cash.

I’ve been a passionate shareholder coming up two years now and invested for a 3 - 5 year hold so it’s definitely a bottom draw one but I stay mindful each quarter on possibly acquiring or reducing as needed.


Decent result, main key to this business growing is getting into the Australian market. NZ revenue forms a base that covers cost and Australian revenues build on that to make it a profitable company.

“This quarter we’ve invested in the sales and development teams, adding experienced people to accelerate delivery of our strategic priorities. We’ve further enhanced our operational processes as we build for scale in preparation for our launch into Australia.”

[silverblizzard888]

Silver cheers for feedback on q1

Looking at their existing knowledge around rolling our payrole nz side how long would you expect once they have boots on the ground in Oz that they generate reasonable cash ?

Given paygroup is already Oz based and now owned by DEEL plus the paygroup founder is a director of PYS they will need to carve out a space in the Oz market that is centric around their target market.

If they can scale things on the growth acehiced locally to date you’d think they could hit $1 mill plus in the first couple of years unless they start to purchase smaller payrole companies that are already generating cash.

I’ve been a passionate shareholder coming up two years now and invested for a 3 - 5 year hold so it’s definitely a bottom draw one but I stay mindful each quarter on possibly acquiring or reducing as needed.

Aus is a big lucrative market with a greater opportunity than NZ, but it also comes with much more competition. They've proven they have a decent product and they know certain customers find their product useful, so theres a good chance they can replicate some of NZ's success in Aus, especially given they already have an existing platform, they just have to sell it. It doesn't take too much additional revenue for the expansion to cover their additional cost base, so either way its worth it.

They will definitely be utilizing Smooth Pay's Aus presence to start off strongly, but they will be cautious about ramping too quickly because they will have flaws in their system that have to be worked out or adjustments for the Aus market. First 3-6 months will be about market testing and then the 6 months after that will be scaling their team to go full out in signing customers. $1m should be achievable within 2 years if they start off well and the market likes their offering.

Reason I never invested into PYS is because of two main reasons, first one was because I had some doubts around how fast they could cover their cost base doing payroll software since its not entirely a large market, their recent earnings alleviates my worries around that since they can cover their main cost on NZ revenue alone. My second concern was the valuation, at the time their revenues were low and their valuation was in my books considered high, which I don't think I was far off in theory given todays share price. However with the rise in revenue in that time the valuation starts to look worth it.

[Rawz]

Hey Silver just remember with the recent nice rise in revenue and looking how it covers the cost base… a big chunk of it is thanks to todays high interest rate environment.

If you believe we are at peak rates then over the next 24 months revenue could stand still or fall… it will depend on if they can sign up new customers quicker than the drop in interest income from falling rates.

[etrader]

Cheers for feedback Silver and Rawz much appreciate all views on PYS.

Currently with payrole levels which are still growing slowly they’re making 490k in Q1 which if rates hold steady say for the coming year this could generate just north of $2 mill in ARR, if they get boots on the ground as you mention smoothpay base in Oz and run their beta testing with success before scaling the downstream should be good.

I personally think they need to raise a war chest of $5 mill through existing shareholders as well if they can bring on a cornerstone investor around 5 - 10% that helps leverage knowledge and cash to expand.

I do like how they align with key industries and get alongside them to support certain industries now to replicate that.

I’m not a finance buy but conservative growth should mean end of q4 I believe $8 mill ARR will be around where we sit, the days of 70% growth are behind us without significant takeovers but a steady handle on the scaling and getting the company into slight profit will pay off.


Hey Silver just remember with the recent nice rise in revenue and looking how it covers the cost base… a big chunk of it is thanks to todays high interest rate environment.

If you believe we are at peak rates then over the next 24 months revenue could stand still or fall… it will depend on if they can sign up new customers quicker than the drop in interest income from falling rates.

[winner69]

Had another quick chat with director Mike the other day ….he seemed quite happy how Paysauce going

Seems to remain unloved though …even when it topped the leaderboard on Friday share price did get to 21 cents

[etrader]

Had another quick chat with director Mike the other day ….he seemed quite happy how Paysauce going

Seems to remain unloved though …even when it topped the leaderboard on Friday share price did get to 21 cents

Each quarter the SP seems to slip by a cent despite them holding incremental growth from their ARR, small net growth and around holding near break even but definitely not a “market darling” in this current market.

I’ve been taking opportunity during this weakness to keep acquiring parcels as they arrive at a fair price.

For the FY ahead will they acquire a competitor ? Get an institutional investor with a SPP or will there be significant movement in the top 10 ?

Look forward to the coming 2 years as Ozzie rolls out

[etrader]

Grabbed a quick view of the online shareholders meeting and listened to through the classic formalities but my one small takeaway was listening around intentions having Mark on the non executive board in lieu of shares, the question was asked will that potentially mean PYS works in partnership with PayGroup in Oz and the answer was a firm no, this would tell the market the PYS is carving out in a space that’s non competitive to paygroup.

Results for Q2 out early October and I’m expecting very little net growth in customer numbers as they’re almost flatlining in this market, ARR still showing small signs of growth and the biggest win for ARR has been interest rates holding up for longer than expected which is dropping 7 figures to the ARR PA.

Where to from here ? Well I’ve been a passionate shareholder since mid 2021 and went in for a 5 year hold so let’s see what the coming year brings albeit expecting maybe 15% growth max without any new takeovers

Disc: current shareholder


Each quarter the SP seems to slip by a cent despite them holding incremental growth from their ARR, small net growth and around holding near break even but definitely not a “market darling” in this current market.

I’ve been taking opportunity during this weakness to keep acquiring parcels as they arrive at a fair price.

For the FY ahead will they acquire a competitor ? Get an institutional investor with a SPP or will there be significant movement in the top 10 ?

Look forward to the coming 2 years as Ozzie rolls out

[etrader]

Little media for PYS

https://www.thepost.co.nz/a/business/350073890/payroll-app-paysauce-planning-expansion-australia


Grabbed a quick view of the online shareholders meeting and listened to through the classic formalities but my one small takeaway was listening around intentions having Mark on the non executive board in lieu of shares, the question was asked will that potentially mean PYS works in partnership with PayGroup in Oz and the answer was a firm no, this would tell the market the PYS is carving out in a space that’s non competitive to paygroup.

Results for Q2 out early October and I’m expecting very little net growth in customer numbers as they’re almost flatlining in this market, ARR still showing small signs of growth and the biggest win for ARR has been interest rates holding up for longer than expected which is dropping 7 figures to the ARR PA.

Where to from here ? Well I’ve been a passionate shareholder since mid 2021 and went in for a 5 year hold so let’s see what the coming year brings albeit expecting maybe 15% growth max without any new takeovers

Disc: current shareholder

[winner69]

Good article etrader

Jeez, a million customers …one day …big increase on current 7,087 eh

[etrader]

Yeah it was a great article for one of those under the radar business that gets little oxygen, given how they’ve grown might take 3 - 5 more years to hit 20,000 but if they can scale up ARR, not need any new capital and hold their labour costs fairly flat we will see small profits.



Good article etrader

Jeez, a million customers …one day …big increase on current 7,087 eh

[silverblizzard888]

Little media for PYS

https://www.thepost.co.nz/a/business/350073890/payroll-app-paysauce-planning-expansion-australia

Great article filled with great snippets of useful information. They've really dominated the payroll scene in the dairy industry and hence why they've slowed down in growth because they've probably signed up all the farmers willing to give it a try, only thing helping them lately was the rising interesting rates which looks to be riding high at least till end of next year, so they still have a good buffer for the time being.

Great to hear they're now targeting the construction industry, if they can make headway there they will really be doing well in NZ alone, with enough revenue to be in a health profit. A wait and see approach taken in Australia, with testing near the end of the year and the official launch coming near June 2024. If either the NZ construction scene or Australia dairy farmers show some traction then all things are go for the company. Yet to buy stock in the company, but I'm close to pressing the trigger on confirmation of traction on the new growth areas.

[winner69]

Director Mike still seems excited on their prospects

[Rawz]

It’s all about the customer growth and 7% yoy is a bit poor. What were the sales teams doing all year?? I’m obviously not commission based

[Almost-confused]

Great article filled with great snippets of useful information. They've really dominated the payroll scene in the dairy industry and hence why they've slowed down in growth because they've probably signed up all the farmers willing to give it a try, only thing helping them lately was the rising interesting rates which looks to be riding high at least till end of next year, so they still have a good buffer for the time being.

Great to hear they're now targeting the construction industry, if they can make headway there they will really be doing well in NZ alone, with enough revenue to be in a health profit. A wait and see approach taken in Australia, with testing near the end of the year and the official launch coming near June 2024. If either the NZ construction scene or Australia dairy farmers show some traction then all things are go for the company. Yet to buy stock in the company, but I'm close to pressing the trigger on confirmation of traction on the new growth areas.

I thought it was a really good article. Providing me more confidence to grab some more shares in these fresh lows

[winner69]

7087 outfits using Paysauce seems a very low number

Can’t see them getting rich on that

[Rawz]

Google says there are 540,000 small businesses in NZ. PYS gained 500 odd last year. Something not adding up

[Baa_Baa]

Paysauce are still a very small company, you'd wonder why they listed unless it was to get some growth investment capital. This is not a near term ticket to future prosperity or, retirement. It's a long game and this is at the beginning of that. There are a lot of hurdles in the way, that said having a few in the portfolio might come right one day, although that day might be a long way from here. Impatience will surely confound anyone who is looking for a quick capital upside.

[winner69]

New Director for Paysauce

[Rawz]

New Director for Paysauce
im has over 25 years of experience in financial leadership positions including CFO roles for DB Group, NZ Dairy Foods, Fliway Group, and Hawkesby Management. During this time, Jim has been involved in audit, compliance and corporate finance activities across a range of industries and sizes from start-up to scale-up.
Jim is currently a Director for Provident Insurance Corporation Limited, Auto Drive Holdings and First Glass. He is also CFO of Hawkesby Management, a family office investment role managing multiple investments in early stage tech companies and listed equity portfolios.
Commenting on the appointment, Jim said, “I’m incredibly excited to join PaySauce at such an important time of its growth journey, and I look forward to bringing my skills and experience to the table to help the team deliver success”.
Board Chair Shelley Ruha said, “We’re thrilled to have Jim step in as Chair of our Audit and Risk Committee. His expertise will serve us incredibly well as we execute on our growth strategy”.

[etrader]

No mention of cost PA or shares issues so you would expect this as an additional cost to bulk up the brains trust as they expand into Oz.

Looks he works with Duncan Hawkesbys business that owned FliWays till recent, let’s see how q2 stacks up as they say June is busy farming season around decisions for payroll etc, personally I’m expecting very flat numbers as farming as hit saturation point BUT they’re tapping into the construction networks and plumbing so that should build slowly


im has over 25 years of experience in financial leadership positions including CFO roles for DB Group, NZ Dairy Foods, Fliway Group, and Hawkesby Management. During this time, Jim has been involved in audit, compliance and corporate finance activities across a range of industries and sizes from start-up to scale-up.
Jim is currently a Director for Provident Insurance Corporation Limited, Auto Drive Holdings and First Glass. He is also CFO of Hawkesby Management, a family office investment role managing multiple investments in early stage tech companies and listed equity portfolios.
Commenting on the appointment, Jim said, “I’m incredibly excited to join PaySauce at such an important time of its growth journey, and I look forward to bringing my skills and experience to the table to help the team deliver success”.
Board Chair Shelley Ruha said, “We’re thrilled to have Jim step in as Chair of our Audit and Risk Committee. His expertise will serve us incredibly well as we execute on our growth strategy”.

[etrader]

With Q2 ended and the results pending end of next week based on usual timing I jumped back to last years highlights for q2.

(2022 q2) KEY YEAR-ON-YEAR PERFORMANCE HIGHLIGHTS FOR THE QUARTER

- Recurring revenue of $1.36M (Up 74% YOY)
- Processing fee revenue of $1.12M (Up 50% YOY)
- ARR of $5.58M (Up 71% YOY)
- Active customers at end of period 6,658 (Up 19% YOY)

I’d expect around 40% increase on ARR from last year which will be made up of healthy interest rates holding and almost slowly increasing, small growth in customers and holding a steady headcount.

[winner69]

CEO says they going to ‘smash $10m ARR’ soon

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PYS/419749/404842.pdf

[Rawz]

The only metric that matters is customer growth which is up 1.6% from previous quarter.

[winner69]

The only metric that matters is customer growth which is up 1.6% from previous quarter.

That is 113 new customers though ……..’relentless’ growth

[JSwan]

That is 113 new customers though ……..’relentless’ growth

Oh my, the next XRO haha

[etrader]

ARR of $10 mill might hit in q2 of next year if they continue of 40% growth Mainly made up of the interest rates holding or slightly increasing and possibly 10 - 15% growth in revenue.
As you will have seen in the graph it’s basically stalled in terms of growth and the only positive is interest earned.

I’ve divested a significant portion of my holding as there’s just not the growth happening but will sit on the remainder and review downstream




CEO says they going to ‘smash $10m ARR’ soon

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PYS/419749/404842.pdf

[winner69]

Share price down to 18.1 cents

Market not liking recent update

When I see Mike next I’ll tell him they need to better raves to get punters more excited

[silverblizzard888]

Share price down to 18.1 cents

Market not liking recent update

When I see Mike next I’ll tell him they need to better raves to get punters more excited

Public markets is no place for a pitstop, you have to keep going and going or else your share price gets punished. Should come good again when they get back into their growth phase. For now the share price will be under a bit of pressure.

[etrader]

First half of 2024 will be out end of the month but it’s easy to match q1 and q2 to see revenue and small customer growth but will be interesting to see the full 6 month report regardless.

They need to make a smart takeover as organic growth has slowed right down and I’m guess Ozzie will take several years to gain traction.

On a small side note it’s interesting the share price which bottomed at 17c on light volume has hit 23.5 albeit still very small volumes.

I’ve substantially reduced my portfolio but hold a parcel so let’s see what the next 6 months brings

[winner69]

Paysauce in big time now?

Love POCs

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PYS/421483/406951.pdf

[Dlownz]

Paysauce in big time now?


Love POCs

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PYS/421483/406951.pdf

Probably just means a great time to do a capital raise

[etrader]

This I see as a positive non price sensitive announcement that could potentially bring in good ARR if the POC comes off.

Their 2.0 which is been built for Oz can pivot into a third party payrole provider in any jurisdiction, these words tell me they can scale up at little capitals cost where a third party squires customers and scale while paying an annual upfront fee per payroll pay check with an min order PA.

I guess this rattled my head on “who” this company could be, it’s ruled out accounting software companies as they say a third party payrole provider.

My first thought is a company called DEEL is a payroll and HR firm in multi jurisdictions but is also a $12 bill listed firm so hmmmmm yeah nahÂ…. Anyway thereÂ’s plenty of water to pass under the bridge but still a positive direction.

Nice small lift in share price during the last month albeit it still very low volumes.


Paysauce in big time now?

Love POCs

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PYS/421483/406951.pdf

[etrader]

I’ve wondered the same thing since I bought in several years back when SP tipped 32c during lockdowns, then it kept tracking down, they’ve stated for a while that they will only seek a capital raise if the opportunity comes up for an appropriate purchase at low PE ratios but this is still not something needed to continue day to day operation.

They hit their first break even last last year which was their target to be cashflow breakeven and still awaiting 6 month financials to see where this sits.

Drilling down today’s announcement although it’s just in the proving concept phase they’ve already shown the upside of scale, they receive the customers water interest upside which is now around $2 mill in profit with a increase as total wages are processed, the third party also run the customer service side and growth in customers so I only see upside and still not capital intensive as they scale up processing.

I’m about to purchase more in the coming days as this is the more positive of growth updates I’ve been waiting for.


Probably just means a great time to do a capital raise

[etrader]

6 Month report out Wednesday with an online presentation at 10am, results plus their pipeline and progress report to date.

Will be interested to hear the POC detail around MIQ, potential impact on ARR and what the timing of this be in 6 - 12 months before POC becomes cashflow, also keen to hear will this 3rd party bold on then allow multiple payroll companies to also take it on.

Currently the ARR sits at $7 mill business is near break even, $2 mill is profit from interest and this cash is building with interest rates and gross payroll.

To get to $10 mill given the slowdown in growth they’re obviously looking at scaling up from this flat period.

^ beta testing is already happening for Oz rollout
^ Paysauce 2.0 underway which will essentially be the multi jurisdiction platform to bold into a 3rd party.
^ interest rates still bring growth in ARR
^key hiring for people culture and non exc directors done.
^setting out a roadmap of how now to substantially scale in their chosen SME and centric industries has been updated and will continue.

Disc: current shareholder of two years (recently sold down a portion to diversify but about to jump back post 6 months )

[Rawz]

hope this new cool tech helps them sign up a lot more customers. All about the customer growth which has been avg of late

[nztx]

6 Month report out Wednesday with an online presentation at 10am, results plus their pipeline and progress report to date.

Will be interested to hear the POC detail around MIQ, potential impact on ARR and what the timing of this be in 6 - 12 months before POC becomes cashflow, also keen to hear will this 3rd party bold on then allow multiple payroll companies to also take it on.

Currently the ARR sits at $7 mill business is near break even, $2 mill is profit from interest and this cash is building with interest rates and gross payroll.

To get to $10 mill given the slowdown in growth they’re obviously looking at scaling up from this flat period.

^ beta testing is already happening for Oz rollout
^ Paysauce 2.0 underway which will essentially be the multi jurisdiction platform to bold into a 3rd party.
^ interest rates still bring growth in ARR
^key hiring for people culture and non exc directors done.
^setting out a roadmap of how now to substantially scale in their chosen SME and centric industries has been updated and will continue.

Disc: current shareholder of two years (recently sold down a portion to diversify but about to jump back post 6 months )


Very interesting model - I dont think any downturn will be anything this outfit couldn't counter or better, by grabbing further customers as many will be looking for better software / processing solutions.

Nice concept at time of hiked interest rates to have your customers give you an interest free loan as part of the deal
to pull the interesr in on, until passover time to the Revenue Coffers arrives :)

[winner69]

Guys, did you see this article by my mate MOD …a Paysauce shareholder and Director

Even mentions General Electric and Caterpillar ….that’s cool

https://www.thepost.co.nz/business/350117987/mike-odonnell-paysauce-provides-lesson-diversification-challenging-times

[etrader]

Thanks for posting Winner hadn’t spotted that so good to get another view on their pipeline.

The market essentially hasn’t really paid any notice to this firm but if you read between the line you can definitely see a gradual rollout and expansion of their chosen space been SME Payroll and if the POC comes off this should expand their throughout of payroll, increase cash holdings and bring more ARR from their current 7.6.

Q3 results would be out mid to late Jan and again I’m seeing fairly flat growth pre new announcements that potentially come off, you will see another lift in arr as interest rates continue to flow through and bring a bonus growth.




Guys, did you see this article by my mate MOD …a Paysauce shareholder and Director

Even mentions General Electric and Caterpillar ….that’s cool

https://www.thepost.co.nz/business/350117987/mike-odonnell-paysauce-provides-lesson-diversification-challenging-times

[etrader]

1: POC is underway with a company “currently non disclosed” due to commercial sensitivity but here’s my takeaway……. PYS has clearly forged a working understanding that they can deliver a bolt on for better payroll delivery for a multi jurisdiction existing payroll provider where PYS can bring value and deliver a product to their employees that will work.

Let’s not underrate the value here where PYS get paid a minimum commitment of employees PA upfront on a multi year agreement.

This will boost employee throughput, bring cashflow and fresh upfront capital as they roll out Ozzie, the embedded platform is the same as they will use in Oz where existing beta software is already underway so this bolt on will bring scale

PYS is now producing profit on funds held on behalf of employees and with no sign interest rates will drop this cashflow will continue to cover a lot of their annual headcount and provide positive cashflow to roll out their expansion.

PYS have YES had a flat year of customer growth but reading between the lines they’ve made their first ebit profit of 255k for 6 months which isn’t common in scale up ARR companies so shows the leadership are focused not to take external capital and build on the existing platform.

Disc: I’m a shareholder of just over 2 years and these are just my novice views so DYOR but could be a nice bottom draw in the coming 3 years if they continue the expansion.

[winner69]

All looking with Paysauce …positive update

Will try to catch up with Mike to get latest gossip

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PYS/424319/410470.pdf

[etrader]

Key takeaways:

● ARR of $8.2m (Up 23% YOY)
● Recurring revenue of $2m for the quarter (Up 26% YOY)
● Processing fee revenue of $1.4m for the quarter (Up 15% YOY)
● Active customers at end of period 7,320 (Up 7% YOY)

*Personal thoughts are 30% of their ARR is now interest which reflects the slow and steady growth in processing fees which is a blend of total existing growth plus the 7% lift in new customers post churn.

* ARR “should” hit $10 mill by Dec 31 this year if the current modest rate of growth continues assuming total wages processed continues at a fair rate, interest rates hold around current levels and growth in new clients increases around 8 - 10%.

* now for the exciting part heading into 24 and beyond is the PoC for embedded processing, they’re already developing beta gen 2.0 for Ozzie which allows multi jurisdictions to be processed, they were developing gen 2.0 anyway to prepare for Oz launch so as a result they’re able to imbed that new tech into the proof of concept if it goes ahead.

* reading the POC announcement you’ll spot that if it goes ahead they will receive an upfront payment to process a minimum number of employees which will be paid at the beginning and each year on a multi year contract, Paysauce will process these wages and also benefit from the upside of all interest held bringing multi benefits to the contract.

* the cashflow from this contract if it goes ahead will bring a significant increase in revenue they state from an undisclosed multi jurisdiction payroll provider “not an accounting company” which to me would rule out the Xero style companies.

* disc: current shareholder so DYOR as these are just my personal non professional views


All looking with Paysauce …positive update

Will try to catch up with Mike to get latest gossip

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PYS/424319/410470.pdf

[silverblizzard888]

Looks like everything is nearly in place for their next growth phase, just a matter of when they test the waters on new markets and hit their next stage of growth. In the meantime its a waiting game and they continue to run at breakeven. Haven't gotten myself to pull the trigger on buying yet, but should do once theres a positive sign on their next growth market.

[Ggcc]

Looks like everything is nearly in place for their next growth phase, just a matter of when they test the waters on new markets and hit their next stage of growth. In the meantime its a waiting game and they continue to run at breakeven. Haven't gotten myself to pull the trigger on buying yet, but should do once theres a positive sign on their next growth market.
I am in the same boat as you I feel.

[etrader]

Apologies tried to edit a mistake but wouldn’t allow.

Should hit 10 mill ARR IN DECEMBER 31 this year at current fair growth, this is not taking in the embedded payroll licence if that gets confirmed downstream


I am in the same boat as you I feel.

[Rawz]

“Embedding our payroll technology into employment software that’s already in the market has been a long-standing goal for PaySauce. We’ve always known employment software providers have wanted a solution they could deploy in multiple jurisdictions. These providers are rapidly consolidating and with that move, demand is growing for payroll solutions that can be quickly deployed in multiple territories.“

Can someone give me an idea of what or who the ‘employment software’ is that PYS is talking about here

[etrader]

Rawz would love to help on that one but we’re all in the dark on this due to the confidentiality of the POC agreement.

Did a quick google around employment software and you will not companies acquiring each other as the industry consolidates between fewer bigger players.

I’m not really aware of this side of employment as I’ve always used a small payroll firm but it appears there’s companies that are looking to embed this into their existing customer base so I can only see it as positive if it goes ahead.


“Embedding our payroll technology into employment software that’s already in the market has been a long-standing goal for PaySauce. We’ve always known employment software providers have wanted a solution they could deploy in multiple jurisdictions. These providers are rapidly consolidating and with that move, demand is growing for payroll solutions that can be quickly deployed in multiple territories.“

Can someone give me an idea of what or who the ‘employment software’ is that PYS is talking about here

[Almost-confused]

Feeling really positive about PYS for 2024. The potential to integrate with other employment software providers could provide massive growth quickly. And a good diversification away from the Direct business model.

I'm back buying

[Almost-confused]

Interesting disclosure. CEO selling 2.7m shares to ACC off market

[etrader]

ACC becomes 6th largest shareholder in one swoop making it the first institution from what I can see, this is based on last years annual list.

ACC is not only a provider of health care but an investment vehicle that invests into listed companies to get uplift which boosts ACC fund.

Prior to this off market transaction pys had around 65% of their shares held by founders, key staff and their leadership, I see this move as positive and not a sell down of the founders but a gradual easing to allow more liquidity to the shareholders.

POC is currently in its gen 2.0 beta build phase which coincides with the Oz launch meaning multi jurisdictions can be processed for various offshore tax systems, this 2.0 is the same that will get imbedded into a potentially new employment software business.

Asantha has separately transferred smaller holdings to various key staff and even family members which has given others the opportunity to get some skin in the game.

Could it take 6 months for the POC update ? Or could it sync with their annual report due late may who knows but I’m at least staying positive that they have a way of scaling up new customers as the 7% growth is way to low.


Interesting disclosure. CEO selling 2.7m shares to ACC off market