James Telfser Payfare PAY-T SELL Jul 25, 2024

A Canadian Fintech company that allows Canadian gig workers to have instant access to their money. It has contracts with Uber, Lyft and DoorDash, the three biggest players in that space. Using their credit card system, Payfare takes a piece of the merchant fee, not Uber, etc., or the worker. They are planning to take their technology and apply it outside the gig space. There is super high growth in a very fast growing space. it has a decent valuation and very high ROE.     Buy 6  Hold 0  Sell 0

It is one of his favourites with a fantastic business model, a very good core business and ROC, and trading at 8 or 9 times earnings. It is good for Uber drivers and others in the gig market since they can access their money quickly. The gig market is growing at 30% per year. It is not well known but there are lots of catalysts coming. It may move outside the gig space. For example it may start to provide fast access to capital in the fast food industry meaning that workers can access their money right after a shift. It is a capital light business.

Large position, great future. Lets people such as Uber drivers get paid at the end of the night, instead of waiting 2 weeks for a paycheque. They skim a fee off the top. Biggest risk is customer concentration, working to expand.

We have quite a few comments posted on PAY; it was halted for a period to clear up an issue (discussed in the Q&A) and appears very much back on track now. It is very cheap at under 10X earnings and it has a very strong balance sheet. Very good earnings growth is expected in the next 18 months at least. Insiders own 11% and cash flow is growing. Overall, it has some good qualities for a small cap stock. 
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Canadian fin tech business that provides instant access to gig worker economy. Trading at low multiple, with high profit margins. Unsure on why valuation is so low. Believes market will soon recognize value and re rate the stock. Recent announcement with Lift very good for long term profits. 

PAY earns approximately 70-80% of total revenue from network interchange fees from payment networks and 20-30% from user banking fees such as ATM withdrawls, money transfers, and foreign exchange. So no, they do not take a percentage of the workers paycheck, rather they operate similar to a credit card or transaction processing company like Paypal, Mastercard, or Visa. We like it because it's funamamentals are strong, it has a cheap valuation, a large growing target market, and is integrated with the largest companies (Uber, Lyft, Doordash). Downside risks being a fintech is that another bigger player comes out with a similar platform and the space gets very fragemented. Fintech companies can be very economically attractive, but are typically quite replicable, so PAY will need to ensure that it is able to continue to grow and sustain its user base. This is in addition to the general small cap volatility it will face. Overall we think it is a strong small cap name and looks good at 11x forward earnings. 
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Targets the gig economy. Great adoption in Canada and US.

Has owned shares in the past, but has since sold. Company lost biggest customer, so is suffering. Stock has sold off ~75%. Trading at cash value right now - but the company needs cash for business (not much liquidation value). Good management team, but has sold. 

Probably his worst pick ever on the show :(  Big disappointment. Lost biggest customer, which made up ~60% of revenue, and he'd underestimated the likelihood of that happening. Company sold at a good price to FISV.