Why the PayGroup (ASX:PYG) share price has climbed today

The PayGroup share price has risen more than 5% in early trading after the company announced it had acquired a rapidly growing competitor
The post Why the PayGroup (ASX:PYG) share price has climbed today appeared first on Motley Fool Australia. –


PayGroup Ltd (ASX: PYG) announced today it has completed its acquisition of Payroll HQ Pty Limited. Payroll HQ is an Australian-based outsourced payroll provider with high quality corporate client base, delivering approximately 120,000 payslips annually. The PayGroup share price was up 5.45% in early trading but has since retreated to a price of 56 cents, up 2.73% .

Headquartered in Melbourne, PayGroup provides payroll and human capital management solutions. The company has operations in 11 countries, with more than 995 clients, and processes more than 5 million payslips per annum.

For the first quarter of FY21, PayGroup announced record contract growth of $5.4 million in contract wins. This was up 93% on the prior corresponding period, and 98% of its entire FY20 total contract value.

What’s moving the PayGroup share price?

Payroll HQ offers Software-with-a-Service (SwaS) payroll outsourcing services based in Sydney. At the time of sale, it has 100 corporate clients in Australia and New Zealand. All contracts have 3 year recurring revenue terms with automated renewals in place and a client retention of >95%.

The acquisition is worth the equivalent of $2.535 million, payable through the issue of 4,122,694 PayGroup shares at $0.615. A further earnout of circa $1.28M is expected to be achieved based on the FY21 forecast revenue.

The acquisition immediately adds 100 clients with significant cross-sell opportunities. Moreover, PayGroup plans to appoint the experienced Australian-based sales team to help drive PayGroup’s growth strategy. The company expects the acquisition will add $2.25 million in revenues. 

What did management say?

PayGroup managing director Mark Samlal said the Payroll acquisition would “significantly transform” PayGroup’s SwaS payroll presence and increase sales capabilities in Australia.

Payroll HQ has an excellent client base and sales pipeline, and is led by a group of experienced and high-performing industry experts. In this current environment, when payroll is so critical to the livelihood of workers, and cost efficiency and agility is a crucial element for all businesses in a post-lockdown economy, we see significant opportunity to grow this business and we welcome the Payroll HQ team on-board.

Payroll HQ Chief Executive Officer Ross Heron also welcomed the move, saying:

We see real benefits of integrating our business with PayGroup and have already identified many of their product lines – such as Treasury Services and HCM SaaS modules – as being highly attractive to our client base…We believe that working together with PayGroup will put us in the best position to capitalise on post-pandemic business opportunities.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

The post Why the PayGroup (ASX:PYG) share price has climbed today appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!