PayGroup Ltd (ASX: PYG) shares are surging higher today after the business software developer upgraded its earnings guidance. As of writing, the PayGroup share price has jumped 7.38% to 65.5 cents.
By comparison, the All Ordinaries Index (ASX: XAO) is up by only 0.11% for the day so far.
Let's take a closer at what PayGroup announced regarding its earnings guidance.
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What did PayGroup announce?
The PayGroup share price received a boost today after the company declared it expects annualised recurring revenue (ARR) for FY21 to be 15% greater than in FY20. The group estimates ARR for FY21 to total $20.5 million. This is despite the effects COVID-19 has had on the business.
In further news pumping up the PayGroup share price, the company revealed it expects to complete approximately $10 million worth of new contracts during the period. That's an 81.8% increase on FY20. The number of payslips and transactions processed is expected to grow from 4.7 million in FY20 to 5.5 million in FY21.
Full results for FY21 (12 months ending 31 March) will be published in May 2021.
Words from the managing director
Mark Samlal, PayGroup managing director, said the following with today's update:
FY21 continues to be a landmark year for PayGroup as the business continues to achieve significant growth since our IPO in 2018. The FY21 guidance we have released today highlights the accelerating traction of our multi-country payroll solutions, underpinned by our local regulatory and compliance expertise across [the Asia-Pacific region].
The large customer base of multinational enterprises provides significant organic growth potential as we introduce more customers to the broader HCM product suite. Growth remains the key focus, as we continue to leverage our leading sales capabilities to scale the business in order to maximise shareholder value.
PayGroup share price snapshot
Near the end of March last year, the PayGroup share price reached its 52-week low of 43.5 cents. Since then, the company's value has increased by more than 50%. Yet, only three months after bottoming out, the company's shares peaked at 90.5 cents – around 108% higher than their current value.
Based on the current PayGroup share price, the company has a market capitalisation of $50 million.
