Jabra, I was just combing through the FY21 annual report and...

Jabra, I was just combing through the FY21 annual report and that is what I discovered. They grew revenue 53% YoY but the share count grew 30% YoY. On those figures they still increased revenue per share by 18% in FY21, and losses were down 75% and will continue to move faster than revenue growth so I think that indicates that the acquisitions pre-IWS are proving worth while. 18% is still decent growth, but not as impressive as it looks on the surface.

Then IWS.. payouts due for IWS acquisition look to now be completed. The most recent "Application for quotation of securities" on 1/7/2021 says they now have 114,623,509 shares on issue which is 52.3% up since 31/3/2021. Will require some big revenue growth this year and next to justify that 52% share count growth. Given the acquisition was completed this FY a big chunk of this year's ARR and revenue growth will be acquisitive.

Agree with Toby, execution from here will depend on them moving from a focus on acquisitions to a focus on improving cashflows and continued organic growth. Which they seem to be aware of and executing on so far - from Q1 presentation: "With the platform now set following a number of strategic acquisitions in FY21, PayGroup is focused on continuing to extract the significant embedded value across the Group underpinned by its
enhanced scale, cross-selling opportunities and increasing operational leverage. A core focus of PayGroup will be on sales execution to capitalise on the significant pipeline of opportunities underpinned by structural tailwinds and significant demand for PayGroup’s payroll solutions and high margin HCM software suite." With the amount of acquisitions they have made it's hard to determine how much growth is actually organic on a trailing basis, so each quarter they continue to grow with no further acquisitions being made will strengthen the thesis.

Record $5m in new contracts signed in Q2 (and $4.6m in Q1) so that's a promising metric signaling organic growth. Annualise that and you get $20m in new contracts a year, 3 year contracts so that's $6.7m organic ARR growth per year based on Q2 contract wins or 24.5%pa. They are forecasting ~$10m increase in ARR (36%), so I guess they got about 12% from IWS and the rest is organic.. some growth I'd guess also comes from existing contracts (for example the "significant expansion of the Laser Clinics International franchise network"), my understanding of the contracts is that as headcount of customers grow, additional revenue is earned. ARR growth of 36% to end FY22 still trails share count growth.. but that's only considering the 1 year return on the IWS investment, I'd bet a lot of the organic growth is coming from IWS, which they also got on a cheaper revenue multiple than their own. If they can reign in dilution from here and continue growing thanks to their improved product portfolio and geographic coverage then I'd suggest it's been worth it. Granted it doesn't look as good to someone who bought at IPO or at the 12 month high (sorry if that's you..) considering the price at which they've raised capital, however I've gotten in below current price so I'm not so concerned.. Definitely a lot of potential for such investors to be happy in a year or 2 though.

TLDR: They are diluting shareholders, however revenue growth so far is justifying the dilution, dilusion should be over from now onwards pending how quickly they approach cashflow breakeven over the next 12 months and considering everything I still like it a lot at 1.6X price to forecast FY22 ARR growing revenues at ~25% organically. For whatever that's worth. DYOR, make your own decisions