As PYG's FY ends on 31 March, I thought I would share the results of my latest analysis which concentrates entirely on organic growth:
Organic Growth Rates (annual unless otherwise noted):
- +36% on ARR to end of FY22 - based on FY22 guidance;
- +46% on Payslips & Transactions processed - 3rd Qtr to PCP;
- +62.5% on Statutory Revenue to end of FY22 - based on FY22 guidance;
- +100% on New Contracts - 3rd Qtr to PCP;
- +181% on Monetisation - 3rd Qtr to PCP;
- +300% on GPP - year to FY21 (no FY22 guidance - see below for my estimate);
- Gross Margin expansion from 50% to 56% over only 6 months to end H1 FY22.
My estimate for GPP growth in FY22 is around 60%. I derive this from PYG's disclosure that GPP now comprises 31% of sales in the 3rd Qtr of FY22. We know that New Contracts are running at an annualised rate of around $20M. As these are 3 year contracts, this amounts to an ARR increase of around $6.7M. 31% of this is approx $2.1M. Hence the $3.5M of GPP in FY21 increases to around $5.6M in FY22 for an annual growth rate of around 60%.
The above analysis makes it very clear to me that PYG's investments in growth (at the expense of earlier and higher profits) are now generating organic growth rates of 36% and above, at increasingly high gross margins. IMO, that will lead to bigger and faster growing profits by FY23 (which starts in 7 weeks), than if they had not invested in this growth.
P.S. If readers do not appreciate the value in my analysis (and therefore do not award any GA's), then I will respect their opinion, but that will mean that I will keep my analysis to myself to inform my investment decisions on PYG, rather than sharing it with other investors.
