PYS - PaySauce

[etrader]

ACC has only had its shareholding disclosed as a SHH has moved their shareholding by 1% or more in addition to been directors.

From what I read into it nzx only require companies disclose 5% of a listed company but as the two founders did an offmarket transaction this meant it showed who the buyer was.

Currently ACC hold 2.5% of the company and won’t need to disclose until they buy another 3.5 mill if they choose to adjust their holding.

I only see this as positive to have them on the register as the 6th largest shareholder.

Many small investors like myself will buy in the early stages but institutional investors tend to wait for the market to be proven or their pipeline of expansion will mean they see uplift which is where the ACC style investors come onto the top 20.

• Proof of concept is currently underway where they develop gen 2.0 that will go live in Oz while proving the concept can embed within an existing employment software that already exists.
• PYS will receive an upfront annual fee on a minimum number of employees that sit within the existing employment software this will be on a multi year contract.
• PYS will benefit additionally by processing those wages within the software allowing for the uplift in interest.
• PYS won’t incur additional headcount to support these employees as they will still stay under the employment software support.
• PYS will gain potentially a substantial growth in employees processed with little cost to bring them onboard as this software will already have them processing.
• PYS will benefit with upfront revenue which will boost their cash reserves as they roll out the oz expansion.
• Summary as a small existing shareholder: I see all these steps as positive progress as they scale up and allow processing of multiple jurisdictions further afield.
• timing of this POC is the unknown but one would think by the time the annual results are due late may progress should be fairly positive for an update.
DISC: DYOR this is just purely reading all their releases and digesting some potential.


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.

[winner69]

Caught up with Director Mike the other day. He was gettingnpretty excitedvat how Paysauce was going. …can’t say how well but watch this space lol.

Made me buyba few

And the good news continues …cool charts eh
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PYS/428915/416015.pdf

[silverblizzard888]

Caught up with Director Mike the other day. He was gettingnpretty excitedvat how Paysauce was going. …can’t say how well but watch this space lol.

Made me buyba few

And the good news continues …cool charts eh
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PYS/428915/416015.pdf

They've built stable foundations and set everything for its next growth phase which should be exciting, but its just a matter of when they will hit their stride; end of the year or next year? That really matters when an investors capital and time is of the essence. Still watching and waiting for that moment to come, but it indeed seems like it will be a great one once they get moving. Its impressive they're funding all their growth by themselves and not having to raise capital. They have proven they are good with executing their plans and efficient with how they handle resources.

ARR did reduce to $8m from $8.2m from last quarter, likely due to interest rate dropping a little.
Customer numbers up to 7368 from 7320 from last quarter, but not by a large amount, enough to soften the blow of lowering interest rates.

[Rawz]

Basically the bet here is if the wholesale platform works or not. As growth is too small (only 7% customer growth off a small base).

High interest rates have helped them massively

[silverblizzard888]

Basically the bet here is if the wholesale platform works or not. As growth is too small (only 7% customer growth off a small base).

High interest rates have helped them massively

Theres 3 irons in this fire: Australia expansion, Building industry as next focus area and wholesale platform. A betting man would say if one of these were to work it should be lucrative enough to make a decent profit. For now their valuation is similar to BPG who are on the cusp of surpassing them on the ARR front and that would be the choice for an investor which horse you would prefer to be riding to the finishing line at the moment.

[Rawz]

Theres 3 irons in this fire: Australia expansion, Building industry as next focus area and wholesale platform. A betting man would say if one of these were to work it should be lucrative enough to make a decent profit. For now their valuation is similar to BPG who are on the cusp of surpassing them on the ARR front and that would be the choice for an investor which horse you would prefer to be riding to the finishing line at the moment.

It doesn’t matter what industry is next the fact is they are only growing their customers 7% like a $1billion mature company. Not a microcap break even company. So a lot of growth is factored into the SP.

I’m looking at a micro cap on the ASX which has just gone profitable and has revenue of $50m vs market cap of $25m. So for me PYS still has a lot to prove. The wholesale thing is very interesting for me. Good luck in Aussie I think that is a very competitive market and a big big mountain to climb, especially considering how hard they have found it growing in NZ.

[silverblizzard888]

It doesn’t matter what industry is next the fact is they are only growing their customers 7% like a $1billion mature company. Not a microcap break even company. So a lot of growth is factored into the SP.

I’m looking at a micro cap on the ASX which has just gone profitable and has revenue of $50m vs market cap of $25m. So for me PYS still has a lot to prove. The wholesale thing is very interesting for me. Good luck in Aussie I think that is a very competitive market and a big big mountain to climb, especially considering how hard they have found it growing in NZ.

Eventually the growth will be much higher, its just that the company has chosen to build its products using limited funding from their own cashflow rather than accelerating development and growth with extra capital from shareholders. Some will appreciate that approach and some won't due to the complete halt of their growth. Given they are expected to post a profit with an ARR of $8m, any future revenue will have a big impact on their profits, hence why the market values them at the current value because they have clear opportunities ahead of them and they don't need a lot of growth to make a decent profit due to their high margins.

The ASX company you mention that has $50m revenue and has just gotten to profitability means their margins are much smaller than PYS hence why it takes so much more revenue to make a profit. Markets always value high margin businesses a bit higher given their ability to generate profits much quicker.

[Rawz]

Eventually the growth will be much higher, its just that the company has chosen to build its products using limited funding from their own cashflow rather than accelerating development and growth with extra capital from shareholders. Some will appreciate that approach and some won't due to the complete halt of their growth. Given they are expected to post a profit with an ARR of $8m, any future revenue will have a big impact on their profits, hence why the market values them at the current value because they have clear opportunities ahead of them and they don't need a lot of growth to make a decent profit due to their high margins.

The ASX company you mention that has $50m revenue and has just gotten to profitability means their margins are much smaller than PYS hence why it takes so much more revenue to make a profit. Markets always value high margin businesses a bit higher given their ability to generate profits much quicker.

Yes good points Silver. Something to ponder

[Almost-confused]

Agree. They've done the hard part of building a profitable business. Now it's all about leveraging it. There are many options for future growth and being self sufficient puts them in the drivers seat of some rather "good" options, rather than being forced into some less desirable ones

[etrader]

Pys looks set to make its first profit and cashflow positive when results come out late may which is refreshing in the SAAS space as they scale up.

^ pys covering their way with a reinvestment in expansion on a multi pronged approach.
^ confirmed their proof of concept is complete with co tract with multi national software firm around the corner with update expected during annual report.
^ proof of concept was the same as version 2.0 for Ozzie meaning the rollout for multiple countries.
^ headcount growing as they expand, no sign of capital raise and on the edge of an injection from upfront annual min employee threshold.

Where do from here ???? My novice view is they will bring a new level of annual cashflow with embedded software, carefully roll out oz, new markets open and still I’m expecting a slow growth in new customers separate to the embedded software,

Takeover target in the coming 2 - 3 years…… again my novice view is the basics are now sorted ie breakeven and now profitable, expanding offshore, no need for capital and signs this is scaling and I would guess a firm such as “deel” would see this as an easy mop up for $50 - $100 mill before they grow further.

The share register in the top 20 only has ACC, the founders and a few larger private investors making way for an attractive takeover downstream of .50c - .75c to grab a SHH of 19.9% before proceeding further.

This is simply my novice view as a tiny shareholder so let’s see where this goes.


Agree. They've done the hard part of building a profitable business. Now it's all about leveraging it. There are many options for future growth and being self sufficient puts them in the drivers seat of some rather "good" options, rather than being forced into some less desirable ones

[etrader]

15 trading days until the annual results are out and one would guess this potentially will sync with the update on embedded payrole with a “multi jurisdiction employment software firm” jury is out on who, how big and what the downstream benefits will be if this gets rolled out globally.

My novice view reading between the lines are.
* PYS processes the payroll on behalf of an existing employment software firm clipping a min employee annual fee upfront on a multi year contract.
* PYS hold the funds to gain interest
* the payroll labour needs won’t increase as this software firm is still responsible to those employees meaning little difference in headcount once 2.0 is developed
* immediate boost to annual ARR, cashflow to expand Oz
* This version 2.0 was been developed already to roll out Oz so it’s pushed it along for more positive results.
* Non of this will require capital raising and in fact I would say the upfront fee will give free flow of cash to roll out Oz and beyond.

Who could it be is anyone’s guess but globally there’s a lot of consolidation in payroll and firms are seeing multi jurisdictions software where digital nomads can work anywhere and get paid in that currency 💵

I’m picking post result a new range of .25, - 32c while this news and the upside flow through each quarter.

[etrader]

Tomorrow pre market the results are out !!!

We know q1 / q4 sales already and know the “proof of concept” has been accepted with the final contract and terms to be released.

The key metrics I’m looking at before scaling up my holding is….
• who is the contract with that the embedded software has been trialed on / how many employees will come under the new contract and what min revenue and terms of contract are in place.

• will this be exclusive to one employment software firm for a period of one year ? Or does it allow them to push further around jurisdictions?

• they’ve already announced their first “profit and cashflow positive” expectations albeit how much ? Given the growth % is small I’m picking 50k - 150k max pre tax profit.

Let’s digest the metrics and see if this pops .30c in the come 30 days.

[Sideshow Bob]

https://www.nzx.com/announcements/431425

Software as a Service Fintech PaySauce (NZX: PYS) today reports a maiden full year net profit after tax of $1.2m for the year to 31 March 2024 as the company benefited from growth in customers and increased interest income.

It also reports significant progress in preparing for its next phase of growth. PaySauce is nearing completion of the proof of concept which will demonstrate the ability to execute wholesale payroll with the new Gen 2.0 payroll engine. PaySauce also extended the reach of its microbusiness app from its core dairy farmer market into new verticals of plumbers, builders and hospitality.

HIGHLIGHTS
- Operating revenue: $7.7m up 33% lifted by a 7% increase in customers to 7,368 and a 11% increase in average monthly revenue per user (ARPU) to $91.
- Processing fee income: $5.4m up 17% lifted by customer growth and fee increases as we passed on rising costs.
- Interest income: $2.2m up 96% lifted by customer growth and continued high interest rates.- Annualised recurring revenue (ARR): $8m up 19% from $6.7m.
- EBTDA: $1.06m, reverses EBTDA loss of $0.08m with revenue growth more than offsetting investments for growth and general inflationary pressures.
- Net profit after tax (NPAT): $1.2m maiden net profit, reversing a $0.6m loss.