The PayGroup Ltd (ASX: PYG) share price has stormed higher today following the release of its H1 FY21 trading update.
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The PayGroup Ltd (ASX: PYG) share price is higher today following the release of its H1 FY21 trading update.
The update sent the PayGroup share price storming up to a 60 cent high in opening trade, before dropping to settle at 56 cents, up 3.7% at the time of writing. In comparison, the All Ordinaries Index (ASX: XAO) is up 0.9% to 6,294 points.
Let’s take a look at PayGroup and its performance for the first-half of the financial year.
What does PayGroup do?
Headquartered in Melbourne, PayGroup provides payroll and human capital management solutions. The company operates in 11 countries, servicing more than 995 client entities and processing more than 5 million payslips per annum.
For the period ending September 30, PayGroup announced that it had achieved record contract growth for H1 FY21. The result was $5.4 million in contract wins, up 93% on the prior corresponding period, and 98% of its entire FY20 total contract value.
The company advised that COVID-19 has provided structural tailwinds, drawing new businesses to help digitise their payroll systems. PayGroup added 80 new contracts which included existing client upsells and new customers.
PayGroup’s treasury services segment continued its strong growth trajectory since product launch in Q2 FY20. For the period, total treasury services rose by 279% for the first-half of the year.
In H2 FY21, the company plans to launch its ‘Accessing Wages Earned’ module. The new platform will allow employees to access their accrued wages before payday, and will join PayGroup’s financial wellness program. The addition is anticipated to further drive revenue momentum, particularly in the current climate.
The company’s global partner program expanded during H1 FY21, servicing more than 39 countries. PayGroup’s increased presence seeks to capitalise on the addressable market to cross-sell its human capital management and payroll services.
PayGroup managing director Mark Samlal welcomed the result, saying:
We’re very pleased with the performance that we have achieved in the last six months, despite the challenging environment. We are continuing to follow the government protocols in each of our regions with respect to operating and re-opening safely, with employee welfare and client service satisfaction as our key priority. Our service standards have not been compromised during this period.
Mr Samlal said the new contract wins achieved this half year were a significant increase on the previous half. They reflected “strong underlying demand” for the company’s mission-critical SaaS and SwaS products across Asia Pacific and the Middle East.
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. Our successful capital raise in September 2020 will allow us to more rapidly capture these growing business opportunities.
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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.