PYS - PaySauce

[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