PaySauce Limited Analysis

Overview

PaySauce is a multiple award-winning cloud-based FinTech business, delivering Software as a Service payroll solutions to small and medium sized enterprises ("SMEs").

PaySauce has a particular focus on agricultural SMEs. PaySauce enables SME owners to pay staff accurately and efficiently using web, iOS, and Android applications. The PaySauce platform includes mobile timesheets, payroll calculations, banking integration, PAYE filing, labour costing, automated general ledger entries and digital employment contracts

PaySauce was founded in 2015 by Asantha Wijeyeratne, a New Zealand FinTech entrepreneur with a record of success in building SME service businesses, and Troy Tarrant, a software architect and developer with a background in creating payroll and human resource solutions. Their vision is to take the Kiwi-grown PaySauce software platform to businesses around the globe, helping SME owners spend less time paying staff and more time doing what they love.

Performance

The following information was extracted from PaySauce Limited's half year results, released 10 November 2025:

1H 26 FINANCIAL HIGHLIGHTS:

• Recurring revenue rises 5% to 4.5 million, supported by a strong 15% rise in processing fee income to $3.5 million; period end ARR of $9.2 million
• Interest income falls to $967k (down 21% on 1H 25) following Reserve Bank cuts to wholesale interest rates and despite an 18% increase in funds held for customers to $43 million
• Total customer lifetime value rises 20% to $60.5 million following a reduction in customer churn and reduced costs to serve 1
• EBTDA rose 42% to $779k lifted by revenue growth and efficiency gains
• Net profit before tax more than doubles to $302k

FINANCIAL PERFORMANCE

Recurring revenue for the six months to 30 September 2025 (1H 2026) rose 5% to $4.5 million. A strong 15% rise in processing fee income to $3.5 million was diluted by a 21% decline in interest income to $967k from $1.2 million in 1H 2025. The reduction in interest income follows the Reserve Bank’s reduction in the Official Cash Rate (OCR) and the market’s perception of further future cuts, incorporated into wholesale interest rates. The float of funds held on behalf of customers rose 18% to $43 million from $36 million at the same time a year ago.

Annualised Recurring Revenue (ARR) at the end of the period was $9.2 million, up 6% on the $8.5 million achieved at the end of 1H 2025. The result was lifted by a 9% increase in total customers to 8,506 from 7,821 in 1H 2025 as our strong base of loyal customers and partners drives new referrals. Average Monthly Revenue Per User (ARPU) fell 3% - a fall that again reflects the reduction in interest income.

These metrics coupled with reduced churn and reduced costs to serve per customer have lifted the value of our customer base by 20% to $60.5 million over the same period a year ago - a clear demonstration of the value we are continuing to create for shareholders.

Earnings Before Tax Depreciation and Amortisation (EBTDA) rose 42% to $779k from $548k as we benefitted from revenue and efficiency gains and tight management costs. Notably, gross margins were stable at a robust 78%, while general and administration costs fell 21% to $1.6 million from $1.9 million in 1H 2026.

Capitalised research and development costs increased from $0.79 million to $0.96 million as we focused our development effort into building our Australian product. Net profit before tax more than doubled to $302k from $148k in the same period a year ago.

CASHFLOW AND FUNDING

The New Zealand business continues to generate positive free cash flow, funding both the two-year development of the Global Payroll Platform and its commercialisation via the Australian pilot.

Operating cashflow before movements in funds due to customers and the IRD was flat year on year at $1.1 million for 1H26, with free cash flow of $33k, down $166k from $199k in 1H25. We ended the period with cash reserves (excluding funds held on behalf of customers) of $272k and undrawn banking facilities of $350k, providing the company with flexibility to support its next phase of growth.