PayGroup (ASX:PYG) share price leaps 6% on guidance upgrade

The company's quarterly business update seems to have been well received…

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The PayGroup Ltd (ASX: PYG) share price is soaring following the company's latest quarterly business update and guidance upgrade.

At the time of writing, PayGroup shares are nearing their 3-month high. They are trading for 53 cents apiece, up 6% for the day.

How did PayGroup perform for the September quarter?

In its release, PayGroup reported a robust 3 months of trading for the period ending 30 September 2021.

The company signed a record $5 million in new contracts, which represents a 7% improvement on the previous quarter's record. This brings the total sales value for the first half of FY22 to $9.6 million, up 78% compared against H1 FY21.

The 3-year contracts included a number of well-known companies such as Hudson RPODexus, and Canaccord Genuity.

In a further possible boost to the PayGroup share price, the company continues to see significant momentum in the number of payslips processed. The expansion of the Laser Clinics International franchise network has led to PayGroup now providing payroll solutions for the company.

Laser Clinics International operates in North America, Australia, New Zealand, Asia, and Europe.

At an annualised rate, payslips processed stands at 7.5 million, reflecting 25% organic growth over FY21.

The Global Partner Program (GPP) sales channel has delivered PayGroup a significant stream of referrals and new contracts.

During Q2 FY22, PayGroup expanded its geographic reach and sales opportunities with new GPP agreements covering Canada and Africa. This brought the total number of countries PayGroup can service from 41 to 75 countries.

At the end of the quarter, the company held a cash balance of $7.6 million, and maintained its debt-free position.

Guidance upgrade

As a result of the robust trading conditions, PayGroup announced it has upgraded its outlook for FY22.

For the financial year, annualised recurring revenue is projected to be at least $37 million, up 36% on FY21. This is being underpinned by increasing demand for the company's core payroll solutions.

Commenting on the news possibly fuelling the PayGroup share price, founder and managing director Mark Samlal said:

We are delighted to report the strong growth of the core payroll business across 1H FY22, and provide upgraded guidance underpinned by the significant sales momentum we are experiencing.

PayGroup continues to benefit from the investment in our sales team, with our pipeline of opportunities now 5x bigger than this time last year. We remain focused on scaling our core payroll business, which provides a large and growing number of end users to drive ongoing monetisation opportunities.

PayGroup share price summary

Despite today's jump, the PayGroup share price is down roughly 5% for the year, and 10% in 2021.

The company has a market capitalisation of around $60.95 million and has approximately 115 million shares on its books.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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