PayGroup share price: Where next following FY21 Sales Update?

PayGroup share price surges on Trading Update

Despite trading lower over the last six months, payroll and human capital management PayGroup (PYG) has seen its share price surge in the last month.

Much of those gains have been built off the back of investor enthusiasm around the company’s latest FY21 sales update – with the stock finishing out Thursday’s session up 11.11% at $0.75 per share.

At those levels the stock trades close to its 52-week high of $0.90 per share, suggesting that optimism may again be returning to the name as equity markets in general move higher.

Below we examine some of the highlights from the recent market update, including commentary around PayGroup’s upcoming financial year.

The Sales Update Unpacked

Overall, PayGroup reported strong total contract (TCV) growth between the first and third quarters of fiscal 2021 – notching up $8.2 million TCV in that period – representing a 200% increase on the prior corresponding period.

Some 34% or $2.8 million of the value of those contracts come during the third quarter, which itself represents a TCV increase of 115% on a year-over-year basis. This strong sales growth was underscored by robust client satisfaction, with the company reporting an impressive 95% client retention rate.

'This significant sales achievement represents an overall success across all business divisions of the Group and will continue to support future revenue growth across FY21 and FY22.'

That sales growth was complimented by impressive client acquisition numbers, with PayGroup acquiring 115 new customers during the nine months ending December 30.

The impact of acquisitions

Elsewhere, the company noted that its two prior acquisitions of TalentOz and Payroll HQ had already begun to contribute revenue growth to the group, with it being further noted that as they 'continue to be integrated into the Company have the ability to capitalise on the sustained growth in their respective regions – and provide the market with a further justification of these acquisitions.'

The company added that it would continue to explore growth opportunities for these acquisitions in the year ahead.

A confident outlook

Looking forward, PayGroup’s MD Mark Samlal said:

'PayGroup is committed to expanding our global sales channels to sustain the momentum generated in FY21, and our strong sales is a direct indication of our top line growth ambitions -- with recent contract signings impacting not just FY21, but our forward planning for FY22 and beyond.'

Mr Samlal added that:

'As the Group moves into Q4, we are well positioned to finish Fy21 strongly, and we look forward to updating the market further in the coming period.'

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