I screen software companies and double-check their ARR and...

I screen software companies and double-check their ARR and growth, then dig deeper if they interest me. PayGroup stood out as remarkably cheap on an EV/ ARR multiple especially considering their growth, even after stripping out acquisitive growth. I dug deeper and found they have a valuable position in their competitive environment where they add value that others dont. I liked management's commentary and focus on winning any customer they can and adding value and steadily growing user numbers with each customer.

As stated above, they've achieved growth recently and have more growth expected this year, profitable growth what's more, and based on that I think they deserve a higher multiple. I also think there are more valuable acquisitions that can be made to provide further cross-sell opportunities and a high quality product portfolio to attract more customers. I think multiple avenues for growth (acquisitve, organic, cross-sell, growth in users per customer), improving margins, low multiple of EV to ARR and sales and very low market cap all make a recipe for a multibagger when sentiment shifts and more attention is given so I am here for the long term with a small position.

They seemed eager to advertise that Appen is a customer which gave me reason to pause as they havent been having the best time lately, so hope they dont make up a large proportion of revenue. This is still good market validation and probably a good indication of the type of business that finds paygroup valuable. I'm going out on a limb here as this is not a stock I've read any analyst coverage on, but I find comfort in the dirt cheap price, solid balance sheet and guidance for growth..