PayGroup flags post-COVID growth as first half sales climb

PayGroup (ASX:PYG) flagged strong growth in new sales at its half-year results this morning.

The SaaS-based payroll and human capital management platform said it booked sales of $5.4m for the six months ended September 30.

Shares in the company rose by around 7 per cent in morning trade to 58c.

That marks the same price at which PayGroup completed a $3.5m share placement in early September, to assist with the integration of competitor platform TalentOz which it acquired in July for $1.2m.

COVID-19 rollercoaster

As a software platform tied to workforce management, PayGroup shares have fluctuated over the past six months as investors assess the strength of any post-COVID tailwinds.

After hitting March lows of around 45c, the stock rose to 90c in late June before falling back towards 50c. At current prices, the stock is still below its May 2018 listing price of 65c.

PayGroup said it booked $5.4m worth of new sales contracts in the first half, a gain of 93 per cent from the prior corresponding period.

“During H1 FY21, 80 new contracts were executed and these included both existing client upsells as well as new customers,” the company said.

PayGroup said those gains were driven in part by post-pandemic changes, as companies moved to digitise their process around workforce management, payroll and treasury functions.

The workforce management division contributed 27 new clients, with $724k of contract revenue. Stockhead has contacted a company representative requesting a breakdown of new revenue across each division.

PayGroup’s treasury function, which it introduced in the FY20 financial year, also booked strong increases in HY21.

The company said it planned to add additional features over the next six months which would allow employees to access their accrued wages on demand before payday.

PayGroup said it also expanded its global partner program, which it said now gave it access to markets in 39 countries across the Asia-Pacific and the Middle East.

Managing Director Mark Samlal said he was pleased with the company’s operational performance, despite a “challenging environment” post-COVID.

“We are well positioned to weather the current business environment and are increasingly seeing clients seeking to outsource HR and payroll functions to drive greater business efficiencies,” Samlal said.