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  • Payroll provider PayGroup (PYG) has reported a 100 per cent year-on-year revenue increase from H1 FY20 to H1 FY21
  • The company also saw a material earnings improvement, with $1.6 million in earnings compared to a $1 million loss in H1 FY20
  • The group also reported a net profit after tax of $444,000, compared a loss of $1.4 million at the same time last year
  • Strong revenue growth, ongoing cost efficiencies, and government wage subsidy programs such as JobKeeper lead to the financial success
  • Additionally, total contract value increased from $2.8 million to $5.4 million with the help of two payroll provider acquisitions
  • At the end of the period, PayGroup had a healthy $5.3 million in the bank after a $3.5 million capital raise conducted in September
  • PayGroup shares are trading flat at 58 cents

PayGroup (PYG) has reported a 100 per cent increase in revenue from the first half of the 2020 financial year to the first half of the 2021 financial year.

PayGroup's financial year calendar is from April to April — meaning the first-half results cover the six months from April through September 30.

The human capital management and payroll provider's $6.8 million in revenue was largely driven by organic growth, as well as the impact of the Astute One and TalentOz acquisitions.

Astute One was acquired in November last year, and TalentOz was acquired in July this year. Both companies are payroll providers that have enabled PayGroup to expand its human capital management (HCM) module solution.

The acquisitions have already led to new customer opportunities and new contract sales. In fact, total contract value increased significantly from $2.8 million in 1H FY20 to $5.4 million in 1H FY21.

While it wasn't signed within the half-one period, PayGroup secured a significant $120,000 contract with Volvo Group Singapore last month.

The three-year contract will see PayGroup offer its software-with-a-service (SwaS) payroll offering to Volvo, along with multiple software-as-a-service (SaaS) HCM modules.

PayGroup also reported an earnings before interest, taxes, depreciation and amortisation (EBITDA) of $1.6 million compared to a $1 million loss in H1 FY20.

Net profit after tax came in at $444,000 compared to a loss of $1.4 million in 1H FY20. The company attributes the turnaround to strong revenue growth, ongoing cost efficiencies, and government wage subsidy programs such as JobKeeper.

Operating cash increased from an outflow of $600,000 in H1 FY20 to an inflow of $2.1 million in the six months ending September 30.

"I am very pleased with the financial performance of PayGroup this half as we have reported a profitable period, supported by a strong and growing base of contract revenues," Managing Director Mark Samlal said.

At the end of 1H FY21, PayGroup had a healthy $5.3 million in the bank after a $3.5 million capital raise conducted in September. The payroll provider raised the money to enhance the roll-out of its full-service HCM and payroll offering to a larger customer base.

In terms of segment performance, its SwaS segment processed 44,175 payslips, which is a 13.5 per cent increase on the prior corresponding period (PCP). This segment accounted for around half of PayGroup's 1H FY21 revenue.

Its SaaS segment accounted for 45 per cent of 1H FY21 revenue. By the end of the period, there were 400,000 total SaaS active users compared to 330,000 at the end of 2H FY20.

Further, its Treasury Services segment saw excellent momentum with 11,204 transactions processed in H1 FY21 compared to just 155 transactions in the PCP. This segment accounted for the remaining 5 per cent of PayGroup's revenue.

Looking ahead, the company is well-positioned to continue expanding its offering which will be complemented by the recently announced $2.5 million acquisition of another payroll specialist, Payroll HQ.

"We expect continued growth in contracted sales and earnings as we see the full contribution from our acquisitions and the benefits from our enlarged customer base and addressable markets," Mark concluded.

PayGroup shares are trading flat at 58 cents at 2:52 pm AEDT.


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