Organic Growth, ACH Volume, And M&A Fuel a Big Year for Paya As a Public Company

Marking its first full year as a public company, Paya Holdings Inc. cited organic growth, increasing ACH volume, partnerships, and mergers and acquisitions as key growth drivers.

Atlanta-based Paya reported payment volume of $11.7 billion for the fourth quarter, up from $9.2 billion from the same period in 2020, a 27.2% increase. For the full year 2021, the company reported payment volume of $42.9 billion, up 29% from 2020. Paya went public in August 2020.

“Internal investment in growth, partnerships, and acquisitions powered our financials during the fourth quarter and in 2021,” Paya chief executive Jeff Hack told analysts during an earnings call early Tuesday. “Going forwards we plan to continue developing new tools, features, and functionality, [deepening] relationships with existing clients and pursuing new ones.”

One example of organic growth cited by Hack was the recent signing of a provider of water infrastructure that serves 4 million customers in 19 states. Government and utilities accounts make up 10% of Paya’s revenues.

The company plans to continue fueling its organic growth by focusing on companies in high-growth, underpenetrated. and non-cyclical markets, Hack says. 

Paya’s automated clearing house volume totaled $5.1 billion in the fourth quarter, up from $3.5 billion from the same period a year earlier. For calendar year 2021, ACH volume totaled $43 billion, up 46% from 2020. 

On the mergers and acquisition front, Hack says the company’s strategy is to acquire companies that complement Paya’s organic growth strategy. To illustrate his point, he pointed to the acquisition earlier this year of VelocIT Business Solutions, a provider of omnichannel payment solutions to accounting and ERP partners. The deal accelerates Paya’s growth within the ERP channel and brings a strong roster of ERP partners, technology, and talent, while providing for continued growth within B2B and other vertical markets the company serves, according to Hack. 

While the purchase price of the acquisition was not disclosed, Hack described the deal as a modest acquisition that can help drive significant growth in the future. 

“This is a great example of where a small acquisition can be a big winner,” Hack says. “VelocIT has features and solutions that complement our offerings and that we probably would have built had we not acquired them. We are also very excited about the talent that comes with the deal. This is a great example of a buy-versus-build strategy.”

Looking ahead on the M&A front, Hack says potential acquisition targets are companies with proprietary technology that can open new markets for Paya or that can serve as an extension of the company’s current solutions. Companies in adjacent verticals also represent possible acquisition opportunities he adds. 

“We are proud of how we closed our first year as a public company,” says Hack. “What lies ahead is a plan to execute against a clear set of strategic priorities.”

For the quarter, Paya recorded $67.1 million in revenue, up 24.2% year-over-year.