AssessmentTwo comments. GLTA
19 Jan
There is definitely small cap risk here for PAY but we think that ii is fundamentally strong. The company has been generating consistent cash from operations for the last few quarters now, while having zero debt on the balance sheet and a strong cash balance. So despite being small, PAY mitigates the typical small cap pressures by having good access to cash and also displaying growth.
22 Jan
Payfare seems to have carved out a nice little niche for itself though revenue looks like it is concentrated in several major customers. How susceptible is their business model to competition?
As a fintech company, PAY is susceptible to competition and much depends on its ability to differentiate its offerings and continue to advance its technology. It is a small company ($326M market cap) and at this size, it could be easily outcompeted by larger peers. But with that said, analysts expect strong sales and earnings growth in the coming years, and its rapid increase in margins over the years has been encouraging. It has a good cash level for its size, and while it is susceptible to competition, it continues to sign agreements with several partners, including international big box retailers, to provide earnings payouts to the retailer's delivery gig workforce in Canada. Given enough time, we could see its competition finding it difficult to compete with PAY's strong momentum. (5iResearch)