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- Human capital management and payroll provider PayGroup (PYG) has delivered another strong quarter of growth despite pandemic headwinds
- The company enjoyed a 10 per cent growth in operating cash flow surplus, up to $1.1 million from $1 million
- The company has also delivered $5.4 million in contract wins over the last two quarters, almost eclipsing the $5.5 million delivered through the entire prior year
- Quarterly cash receipts of $4.2 million were almost double the figure delivered in the same period last year
- After a $3.5 million capital raise, the company has $5.3 million in the bank to fund the next phase of growth initiatives and capitalise on the economic rebound
- PayGroup is down 2.59 per cent to 56.5 cents
PayGroup (PYG) has delivered another strong quarter of growth despite pandemic headwinds.
Strong growth
The September quarter saw a 10 per cent growth in operating cash flow surplus, up to $1.1 million from $1 million.
The company has also delivered $5.4 million in contract wins over the last two quarters, almost eclipsing the $5.5 million delivered through the entire prior year.
Around 70 per cent of PayGroup’s new contract sales were to Asian-based customers as a result of the strong business confidence rebound throughout the region.
The new contract sales are expected to add to the company’s recurring revenue base as employees are onboarded to PayGroup’s platform over the coming months.
Customer churn also remained below 5 per cent, which is in line with the company’s target.
Quarterly cash receipts of $4.2 million were almost double the figure delivered in the same period last year.
While this is a slight dip from $4.5 million delivered in the June quarter, this was broadly anticipated due to the customary “13th month” payroll processing that occurs throughout Asia, typically in February, and its associated cash flow.
The company also realised significant operational savings over the past months, introduced due to the pandemic downturn.
PayGroup is on track to realise $1.5 in annualised savings across the current financial year, with efficiencies made to hosting technology and corporate costs which have tightened the proverbial belt.
The company is also gathering momentum going forward, with a particular boost being provided by the acquisition of leading SaaS HCM, analytics and payroll provider, TalentOz.
PayGroup has made rapid progress in integrating TalentOz’s portfolio of SaaS
modules with its core payroll offering, which has enhanced the company’s overall service to customers.
Subsequent to the end of the quarter, PayGroup executed a 3-year, $120,000 contract with Volvo Group Singapore, which is the first to combine a number of HCM SaaS modules with PayGroup’s payroll offering.
The comprehensive payroll solutions package will likely find more clients in time, particularly with the group’s sales and marketing team’s Asian focus during the pandemic rebound.
Outlook
With continued growth and a strong balance sheet, PayGroup seems on track to capitalise on the Asian pandemic rebound.
In particular, the creation of a full “hire-to-retire” HCM module suite to complement PayGroup’s comprehensive payroll solution could open a significant number of new customer opportunities across the Asia-Pacific region.
PayGroup Managing Director Mark Samlal says he expects to see the recent growth trends continue.
“Our recent contract wins, with high quality customers such as Volvo Group Singapore, are testament to our expansion strategy and goal of offering our customers a full service solution,” Mark said.
“Not only does this increase our addressable market but gives us significant scope to increase revenue opportunities from existing clients,” he added.
“We are also seeing Asian and Middle Eastern economies rebound strongly and expect continued growth momentum in H2 FY21.”
After a $3.5 million capital raise, the company has $5.3 million in the bank to fund the next phase of growth initiatives and capitalise on the economic rebound.
PayGroup is down 2.59 per cent to 56.5 cents at 12:48pm AEDT.
