Paygroup - PYGSo far, Nice based chart ... double bottom, increase in volume recently and under SMA200. MACD crossed through zero.
(Under 100m shares ... good.) TA's looking fine. Created a small triangle it just appears to have broken out of so let's watch the chart from here.
COMPARISON
Paygroup Ltd is a better company than Elmo, it not only provides saas based product also the option of outsourcing it. PAYGROUP has a better footprint than Elmo. I have worked in Payroll companies keeping up with compliance and features is key for success. A lot of enterprise companies prefer to outsource the payroll function for cost-cutting and compliance purposes. Most of the cloud-based payroll software is finding success due to faster adaptability. The global paygroup partners will bring more outsourcing payroll work to PAYGROUP as these companies don't have a footprint in Asia and Australia. The profit margin will increase over a period of time as the gross margin will increase. Unlike Elmo, they are using their capital wisely and reducing costs. Long term, I can see PAYGROUP as a favorite to rise higher.
DEEP ANALYSIS
SWAS is PYG's trendy term for Saas but with service.
Think of SaaS as the cloud-based solution you pay for on subscription. SwaS comes with on-going support. In the payroll/HR world, having the tool is half the battle. Governing the tool to make it work according to legislation is the real value adder. Under PYG you've got a selection of payroll and HCM tools ... all add up to formulate a hand in delivering a solution to sell to businesses. You want digital tools that work in all industries. What works in a mine doesn't work in a white-collar environment. The goal is to get the royal flush of tech tools and service options.
Astute is their labor hire and recruitment tech, Talent One is the hire to fire HCM tech for HR managers, Pay Asia and Payroll HQ are their Asia Pacific payroll solutions - the tech and the service delivery ... training, implementation, configuration, auditing, and outsourced expertise.
Jurisdictional difference and pay complexity mean this is a challenging market. A tool and team in Asia will struggle with NZ or AU payroll compliance. You only need to look at Woolies, Commbank, ABC, etc, for all the underpayments where outsourcing or internal lack of skills cost them underpayments. Australia's payroll rules change every month from payroll tax changes, super obligations, changes to the modern awards by Fair Work, the court issued interpretations of legislation, withholding rates ..... the tech does the job but you need to continually configure it.
So how do they compare to your stated listed competitors?
ELMO has a pretty suit with tight marketing. They spend big on marketing but their real value within the product is HR tools. They bought Sky Payroll which was a heap of shit. Now they are screwing around with Payroll Metrics. I think every payroll tool on the market that says it can work Australia has pitched at ELMO but the ones that work and are good have not or chose not to know ELMO struggles with their core piece of the puzzle. I'll grade their hand like a flush.
PYG. You've got a service delivery team in Asia to reduce costs and the acquisition of Payroll HQ to provide onshore service both outsourced governance and call center support. Neither owns their tech, they license 3rd party vendors which means no developer costs and the ability to jump to the latest providers in the market, remaining agile. Astute owns its tech but has really smashed the market and will struggle for sales, really only playing to new and emerging smaller businesses. Astute's strategy will be to create a line extension into managed services based on the back of the service delivery models of PHQ and Pay Asia, then it will have a whole new revenue model to capitalize on. Talent One owns its tech and has a full development team, offshore too so it's a lot cheaper. This brings tech staff to the Astute table and the ability to do fast integrations with the 3rd party solutions creating more bespoke services. Let's call this a royal flush hand. You've got Asia Pacific covered, the HCM, and all industries sorted from a technology and service basis .... hence SWAS.
Will this make the share price go up ...probably not, well at least not for a while or at least until capital goes towards creating awareness of the hand they are holding. Others who watch the continued revenue growth of the tech + subject matter expertise service model will get the play PYG is making.
There are plenty of players with big marketing war chests... Ceridian acquired Riteq and have rebadged their product to call themselves Australia ready, they picked up Harris Farm (retail workers awards are bread and butter in the industry and everyone wants the easy work with big headcounts). RAMCO leverage their international presence and a war chest to market hard but have not yet been able to pick up significant clients. You also mentioned WorkDay, a $$$ offering, not so much for the underserviced middle market who are price-sensitive and cluey to looking around.
Ultimately the share price rises on market sentiment. Expect continuous revenue growth from PYG with their royal flush. The hype train we see in other tech companies at the moment isn't likely to come for PYG due to the detailed nature of their strategy .... though no one really ever knows these things.
PAYGROUP (PYG: ASX) will be more successful than ELMO in the long term.
