[Non-English content] My name is Shelley Ruha. I am the Chair of PaySauce, and it is a pleasure to Welcome all of you here in person and also online to our annual shareholders meeting for 2026. We will run through our presentation today, which we have released to the NZX and made available on the PaySauce website. Please read the full disclosure slide and note that nothing in this presentation constitutes legal, financial, tax, or other advice. You will be able to vote and ask questions online and in person, and I will provide you with instructions as we progress through the meeting. If you have any issues, please refer to the online annual meeting portal guide, or feel free to call MUFG on 09375-5998, ensuring you have your CSN holder number for verification purposes. Let me begin by introducing my fellow directors.
In the room, we have Asantha Wijeyeratne, Chief Executive Officer and co-founder of PaySauce. Gavin Thompson, Director. Jim Sybertsma, Independent Director and Chair of our Audit and Risk Committee. Joining us online, we have Mark Samlal, Independent Director. I would like to take the opportunity to acknowledge Mark Samlal, who is retiring as a Director of PaySauce at the conclusion of this annual meeting. Mark has brought deep payroll industry experience, sound commercial judgment, and an invested shareholder's perspective to our boardroom table over his years on the board. On behalf of the board, I want to thank Mark sincerely for his insights and contribution, and we wish him every success. Turning next to our executive team. In addition to Asantha as our CEO, our executive team includes Jaime Monaghan, Chief Financial Officer. Jess McLean, Chief Operating Officer. Jacques Labuschagne, Chief Technology Officer. Kelly Harvey, Chief Marketing Officer.
Aaron Dustin, Chief Design Officer. Chris Reagan, Chief People Experience Officer, and Chris Ridd, Executive Director of PaySauce Australia. I would also like to welcome to the meeting Brayden Smith, our Audit Partner from Grant Thornton, and Jack Douglas, our lawyer from Duncan Cotterill. Before we get officially underway, I would like to advise that proxies have been appointed for the purposes of this meeting in place of approximately 32 million shares, representing over 40% of the total number of shares. My fellow directors and I plan to vote all discretionary proxies we have received in favor of the resolution in the notice of meeting, and I can confirm the notice of meeting has been given to all shareholders, and that we have a quorum at this meeting. Finally, I want to thank you, our fellow shareholders, for attending this ASM today.
I am now pleased to declare PaySauce's 2026 annual shareholders' meeting open. Today's ASM will include comments from myself as your Chair, Asantha, our CEO, and Jaime, our CFO. We will then vote on the resolution under consideration and then address any general business matters or questions that shareholders want to raise. Upon completion, I will close the meeting. Moving to the Chair's address. Financial year 2026 was a defining year for PaySauce. After two years of focused investment, we deployed our global payroll platform into Australia. What we believe will be the world leading payroll product for small businesses. This significant milestone has been made possible by the strength of our New Zealand business, the commitment of our people, and the continued support of our customers, our partners, and especially you, our shareholders. Customer numbers grew to approximately 8,600, up 5% on FY 2025.
The strategic decision to cease offering our lowest-value product to direct customers delivered increased processing fee revenue, which is the key driver of value creation in the business. This grew 13% to NZD 7.2 million from NZD 6.3 million in FY 2025. Operating revenue for the year was approximately NZD 9.2 million, compared with NZD 9 million in FY 2025. in January 2026, we completed a NZD 5 million capital raise, which was 25% oversubscribed. That raise, together with strong operating cash flow of NZD 2 million generated by our New Zealand business, enabled the investment in sales, marketing, customer support, and product development required for our market entry into Australia. We ended the year with net cash, excluding funds held on behalf of customers, of NZD 4.5 million. I want to take a moment to recognize Asantha's leadership.
Asantha's vision for what PaySauce can become and his commitment to seeing that vision through have been evident in every stage of our Australian expansion, including his decision to relocate to Melbourne during this market entry phase to embed the PaySauce culture into our new team from the ground up. That is a significant personal commitment, and on behalf of the board and our shareholders, I want to thank Asantha for the leadership he continues to bring to this business. I also want to thank you, our shareholders, for your trust and continued support. I'll now hand over to Asantha to give his CEO's address.
Thank you, Shelley. Thank you for the kind words. At the start of financial year 2026, our priorities were clear. Continue to grow and strengthen the New Zealand business, complete the key milestones required to bring our next-generation cloud payroll, global payroll platform to Australia, and prepare the company for its next stage of growth. I'm proud to say that we've achieved those priorities. For Australia's 694,000 micro-businesses, we're building a payroll platform that is unmatched in the market, delivering an intuitive, easy-to-use mobile interface that also offers the peace of mind that comes with compliance. We are focused on turning the opportunity that we've given ourselves into accelerated customer acquisition. The pilot of our Australian product, launched in September 2025, validated the platform in a live environment.
In February, we began onboarding our first commercial customers, confident that our product could handle real payroll complexity and deliver peace-of-mind compliance. New payroll rules came into effect on the 1st of July, requiring Australian businesses to make superannuation payments at the same time as they run their pays. We expect this to act as a catalyst for growth over the next 12-18 months, as businesses reassess legacy solutions that do not deliver that functionality. For financial year 2027, the focus remains on disciplined execution, building momentum, learning quickly, and investing carefully as we scale. Two priorities will remain to shape the remainder of the 2027 financial year. First, sustaining the New Zealand business as we introduce a global payroll platform to our domestic market. Second, executing on the Australian opportunity. We remain realistic about the pace of customer acquisition growth.
Having tested marketing channels in Australia, management and the board's focus will remain on disciplined execution, careful allocation of capital, and maintaining the balance between growth and profitability. Though we acknowledge the impact of upfront costs required to enter a new market ahead of revenue in the short term. I want to recognize the commitment and collaboration shown by the Australian team this year. PaySauce continues to strengthen the team with experts in their field, and it is their dedication that has turned platform readiness into our initial cohort of paying customers, as we continue to build out the sales engine for future success. I also want to acknowledge the hard work put in by our New Zealand team in both supporting the Australian team in delivering outcomes for our new Australian customers, as well as continuing to grow and support our existing New Zealand businesses customer base.
My sincere thanks also goes to my fellow directors for their guidance and support, and to you, our shareholders, for your continued trust and investment in our vision. I look forward to sharing our progress over the coming months. I'll hand over to Jaime, our CFO, to provide more detail on the numbers.
Thank you, Asantha. Excuse me. The result for the financial year to 31st of March 2026 reflected the continued investment for long-term growth. Operating revenue increased NZD 0.2 million - NZD 9.2 million, and two factors contributed to that modest increase. The 13% year-on-year increase in processing fee revenue to NZD 7.2 million. This was partially offset by a NZD 0.5 million decline in interest income to NZD 1.8 million, as interest rates continued to decline over the financial year.
The strong underlying business enabled an increased investment for the Australian product launch following the successful trial, whilst maintaining a pre-tax profit of NZD 0.17 million for the year. From a cash perspective, the capital raise completed in January this year lifted the overall cash balance to NZD 4.5 million at the end of the financial year. This slide shows the breakdown of the recurring revenue over the last four financial years.
The growth in processing fee revenue in FY 2026 is consistent with prior years, but there's a marked decline in the interest income component, which softens the overall recovering revenue in FY 2026. Processing fees make up 80% of the recurring revenue in FY 2026, on par with FY 2023, and higher than the FY 2024 and FY 2025 years at 71% and 73% respectively. Overall, operating expenses increased 5% to NZD 8 million in FY 2026.
Incremental investment was channeled into customer acquisition costs and costs to serve our increased customer base. Investment into customer acquisition increased 31% to NZD 1.3 million, and this includes early investment into creating some brand awareness for the Australian market. Cost to serve rose 2% to NZD 2 million, lower than the 5% increase in customer numbers. Efficiencies were gained via the AI agent, delivering a resolution for nearly 80% of the queries that come through that chat channel.
Overall, R&D expenditure increased by NZD 0.5 million or 16% to NZD 3.3 million, of which NZD 2.1 million was capitalized onto the balance sheet as internally generated assets. The remaining R&D operating expense of NZD 1.2 million was in line with FY 2025, as were general and administration costs. Looking at the key SaaS measures, customer numbers increased 5% to 8,600 at the end of FY 2026. The monthly average revenue per user increased to NZD 87 from NZD 86 in FY 2025, with overall a NZD 6 increase in processing fee revenue per user offsetting the NZD 5 decline in interest income per user. With the cost to serve these customers holding flat at NZD 19, there was a small increase in the margin. Acquisition costs, including the early investment into brand awareness in Australia, as we brought on the experts to attend trade stands and industry events.
The lifetime value per customer declined very slightly as a result of a marginal increase in churn rates, but increased customer numbers offset that to increase the total customer lifetime value by 3%. The LTV to CAC ratio declined to a 7.1 multiplier, as the initial sales and marketing investment is required for the go to market in Australia. The underlying business generated NZD 2 million of operating cash in FY 2026, and this was predominantly reinvested into product development. The balance sheet was strengthened by the NZD 4.56 million net capital raised in January 2026. Having funded the development of the global payroll platform from operating cash flows over the previous two years, the increased capital positions PaySauce well to execute on the Australian market entry. NZD 4.5 million of that cash remained on the balance sheet at the end of the financial year.
As published in our first-quarter market update, momentum has continued into the new financial year. Quarterly processing fee revenue grew 11% year-on-year to NZD 1.9 million, off the back of a 4% increase in active customers to 8,756. ARR grew 8% year-on-year to NZD 9.5 million. Quarterly recurring revenue grew 5% year-on-year to NZD 2.3 million. Interest income declined 17% year-on-year to NZD 0.4 million, reflecting lower wholesale interest rates on the customer float. I'll now pass you back to Shelley, who will move on to the resolution to be voted on.
Thanks, Jaime Monaghan. That now brings us to the formal part of the meeting, the matter requiring resolution, which is outlined in the notice of meeting. Shareholders may ask questions on the matter being resolved. For the sake of good order, shareholders questions at this point should relate directly to the matter being considered. Shareholders joining online will be able to cast their vote using the electronic voting card received when online registration was validated. You are presented with a Get Voting Card icon within the online meeting platform. You will be asked to enter your shareholder or proxy number to validate. Please then mark your voting card in the way you wish to vote by clicking For, Against, or Abstain on the voting card. Once you have made your selection, please click Past Vote on the bottom of the card to lodge your vote.
Please refer to the virtual meeting online portal guide or use the helpline specified if you require assistance. The voting card remains editable until the voting is closed at the conclusion of the annual shareholders' meeting. Once voting has been closed, all voting cards submitted and unsubmitted will automatically be submitted and cannot be changed. Results of the vote will also be announced via NZX after the meeting. The resolution set out in the notice of meeting is to be considered as an ordinary resolution, and as such, must be approved by a simple majority of votes cast by shareholders entitled to vote and voting on the resolution. Resolution A is to authorize the directors to fix the auditor's remuneration for the current year. Under the Companies Act, Grant Thornton are automatically reappointed as auditors of PaySauce.
Details of the statutory audit fees paid to Grant Thornton for the financial year ended March 31, 2026 are set out in the 2026 annual report. I'll ask the shareholders in the room for any questions first, then move to questions from our shareholders online. Are there any questions for the board in the room? No. Todd, any questions online?
No questions online, Shelley.
Thank you. As there are no outstanding questions, please now mark either For, Against, or Abstain for Resolution A on your voting cards. That concludes the formal part of the meeting. For online shareholders, please remember to submit any general business questions you may have by clicking on the Ask a Question box, either at the top or bottom of the web page. When you are ready to submit your question, click the blue Submit Question button. This will send the question to the panel. Note that not all questions are guaranteed to be answered during the annual shareholders meeting, but we will do our best to address your concerns. Once you have asked a question, a View Questions box will appear. At any point, you can click on View Questions and see all the questions you have submitted. Only you can see the questions you have asked.
We will allow 15 minutes for questions. If we run short of time and are unable to answer your questions online today, we will endeavor to respond to you after the meeting. I would now like to give shareholders the opportunity to ask questions, whether related to the presentations, the financial statements, or the management of the company. I will open it up to our shareholders in the room first.
Thank you, Shelley. Look, I do appreciate this is a hybrid meeting, which is something we have been seeking for some time. Just thank you for the effort the company has put into that. Just in terms of your Australian expansion, and you talked about the investment in brand awareness that you made during the year. What are the other levers that you have, or do you think you have, in terms of actually trying to increase and sustain the rate of expansion that you have in Australia? How does that balance against the resources that you have got available in terms of people and cash?
One of the key things is as we take the product to our target market in Australia, there is a lot of learning that we gather from that, which is why we have decided to take this at a pace where we can convert that information back into what is it that the customers are looking for. That has been part of our DNA from day one. We are not depending on a big brand push or billboards or anything like that to build a brand. We are building a brand with the customers and the type of customers who our product appeals to. The effort we are putting into that is very deliberate, and that is what seeded us in New Zealand.
A lot of the learnings from New Zealand were around if you can find a customer group, satisfy their requirements, and delight them, they will become raving fans for us. That is the biggest push in terms of what we are doing. That is where the majority of our investment has gone into. It is building that kind of framework and the people around it, but also the infrastructure that supports it, from developing all of the customer relationship management, the website work. This is an evolving process, and there are things that we are learning that impact us, that we have got to change very quickly as to what is not working and stop doing what is not working, and then double down on what is. Does that answer your question? Yeah.
I'd assumed that the SmoothPay customers would be converted to PaySauce. That might be a thing, but I haven't heard anything about that. Are they just being maintained on the side, or are they going to be converted at some point?
The first group of customers that we brought on board were the SmoothPay customers. Essentially in Australia, we've migrated those SmoothPay customers that the PaySauce solution was appropriate to. Any new customer is not going onto the SmoothPay product, they're going onto the new Australian product in market for PaySauce.
Does that mean there are no more SmoothPay customers?
Correct, in Australia.
Okay.
Correct.
I didn't realize that. They've all been converted.
Correct.
They've all been converted.
Pardon?
They've all been converted.
Yeah, so in that conversion process, there were some customers where our solution was not the ideal solution, and those customers have found an alternate solution, which is a lesson we learned in New Zealand is if we try to be everything to everybody, we just can't deliver on that. So we had to make the brave call that this is not our ICP, we walk away from that.
Question. There was a comment I think you made, Asantha, a while ago about why PaySauce would thrive with AI rather than basically die by AI. Can somebody explain or give a reason why PaySauce is going to thrive and not going to get killed by AI?
Right. There's a range of things. At the front end, in terms of the customer support, the transformation that we've seen, that we are able to answer questions at any time, day or night. That takes away the requirement for us to man that, which is why we're already seeing that in the reduction in the customer support time. That's an easy win for us. In terms of the development, we find our development team embracing technology to iterate quickly, to write code faster, and all of those solutions. Lastly is at the other end, where traditionally, payroll has had this wealth of information about employees and how they behave and the outcomes of that. That knowledge has very seldom been tapped, particularly in the small business market.
What we're working on is how do we make that accessible, so that I can ask a question like, "Who's most likely to take leave in December?" and get an intelligent answer. Or ask a question like, "I'm paying Rob." It knows I'm paying Rob, right? "Am I paying Rob fairly, and is it a reasonable amount of money I'm paying him?" Takes the information from what am I paying Rob, what's Rob's classification, compares that to the universe out there, and gives me, as a small business owner running an ice cream shop, an intelligent answer. That's where the value is, and that's where AI allows us to then provide the same kind of information that a large enterprise with access to all of the data analytics can provide them.
That's where I think the proprietary moat that we have in terms of the customer information with the use of AI tools, allows us to give insights for business owners to take day-to-day business decisions effectively that they can't do today.
Okay, thanks.
Yes. You mentioned the Australian market. I know in the New Zealand market you targeted a number of things like the dairy sector. I was wondering if you can give us some insights what verticals you are looking at in the Australian market.
We started off in the dairy sector, because that is a sector that we know well and that we have got credibility in. That was our start off point. But we are signing up. Today, we have signed up a funeral parlor, we have signed up a nail technician, we have signed up a hairdresser. We are getting a much broader cross-section of businesses signing up for the solution in Australia than just narrow farmers. Again, that is a deliberate decision that we have taken to be wider in terms of the award coverage that we have got for not just in farming, but for the wider business population in Australia.
This might be for Jaime Monaghan. How many customers in Australia do we need before we break even? You have got quite a high-powered team, a great team. From LinkedIn, they are really energized. But it looks like an expensive team. So how long and how many?
We haven't published any forward guidance on our expenses, or on our revenues at this stage. We've not published that information, so I can't share that with you, Rob, sorry.
That's disappointing.
I think it's fair to say that as we get more clarity, we're very early days with Australia. It would be misleading at this point in time to provide that kind of information. As we get deeper into the Australian expansion and we get more clarity and more certainty, that's sort of information that we'll be more willing to share.
I guess the question is about discipline. Sorry. Is about discipline in terms of we've got a machine in New Zealand pumping out 1.2 or whatever the number is. We can use that in Australia for a long time. Some stick's in the sand, I guess. I understand what you are trying to do. Can you explain a bit more about, so there is currently sort of maintaining two platforms, is that right? There is a New Zealand version of PaySauce and an Australian version of PaySauce. Is that right? Can someone explain and you are going to roll out the Australian version to New Zealand?
Okay, so-
Can someone talk to that?
This is probably the best way to explain it. We built the platform that we call Phoenix. That is probably easier if I use that word because it works in my brain. That is the Australian one. The first deployment of Phoenix was in Australia. So that is where we stood our first customer up. We are expected to stand our first New Zealand customer on that platform in the next week or so. The work that we have been doing for the last three months is to enable us to use the Phoenix platform for our New Zealand customers. They are currently, today, they are all running on the old legacy solution. So we are running two platforms. We are actually running three platforms because we are running SmoothPay as well.
The push has been unification, and we are doing that in 14 jurisdictions with SmoothPay, is how do we bring all of those disparate solutions to a single platform? Phoenix is that platform.
Does that mean the SmoothPay customers and the rest of Oceania are going to be dropped?
No. We will migrate them to the same. We will do the conversion of those to the rules for those countries.
Within Vanuatu or wherever it is.
Correct. That's the power of the platform that we've built, that we can do any jurisdiction we choose to.
This is a fundamental difference between the way PaySauce has chosen to go offshore than almost every other company in the sector globally. Where, in every other case, companies have stood up independent, fully coded versions of their software in each jurisdiction. We have built a global platform that we can deploy globally.
The only distinction was we chose to deploy it for the first time in Australia as opposed to in our home market.
Mm-hmm. So what's going on at the moment is you're also standing up PaySauce in the rest of Oceania, not just Australia. Well, you're kind of-
At the end of the journey, we will have a single platform for all of the jurisdictions we are already in or any jurisdiction we choose to go beyond that.
Thanks.
Just to expand on that.
Yeah.
Thank you for the clarity around it. I guess the first thing is it becomes a case of configuration if you move into new markets rather than customization, which sounds cheaper to a simple brain like mine. But also does that actually then have the potential to accelerate the pace of any further expansions that you do and to make those expansions easier in future? Is that the idea behind that?
Correct. Again, we look at Australia and we say this to ourselves, "Everything we learn and do in Australia is the playbook for every subsequent market that we decide to enter." Each market has its own peculiarities. New Zealand has the Holidays Act that requires a degree of customization of that. But it is all running on the same platform. And that is a really important distinction.
How connected to Xero is PaySauce? Given that in the media, Xero seems to be having some troubles. Is PaySauce completely independent of Xero? It's very interactive with Xero, but can someone explain that, do you know what I'm asking?
Xero is the dominant accounting solution in Australia and New Zealand and a number of markets that they're in, and customers are using that for doing their business as usual. They're using our payroll solution, and we then export the payroll data into the accounting solution. That's the connection we have with them.
Thank you. That was great. Todd, are there any questions online?
Thank you, Shelley. Yes, we've got one question here from Craig Moffat. "What are the top three risks for PaySauce, and how might they be mitigated?
Like any new market entry, the number one risk is how quickly can we get adoption. It is a race against time, in terms of we know that there is a customer requirement. We know that we have got a solution that meets that customer requirement. It is being able to execute on that and convert the learnings as we make those. Every day we discover a new thing, right? It is how do we refine that model and do that within the capital envelope we have is, I would say, the single biggest challenge we share as a board. That would be a fair assessment of that.
He has asked for three.
Three. Sorry.
But-
That is what happens.
we've entered a new market, being Australia, and there's big risks associated with entering a new market. New Zealand companies entering Australia, it's an interesting story. To mitigate those inherent risks, we have hired really capable people who have proven track records. Chris Ridd, one of our first hires as an Executive Director in the Australian business, brings a wealth of experience from taking New Zealand tech platform-based products into the Australian market and globally. Xero being the key one, but not the only one. We have also hired within Australia some very, very capable people, and you can see the difference in our executive team lineup this year versus last year. Then finally, as I mentioned earlier, Asantha relocating himself and his family into Melbourne to enable him to live and feel the Australian expansion every day.
I think that's a level of commitment to a new market that's somewhat rare. I guess that would be what I would say, Craig Moffat, is the biggest mitigant to the biggest risk that the organization faces.
One of the things we looked at, why do some companies succeed in Australia and some companies don't? That's the reality of it. The companies that do succeed that we've identified are the companies that take the time to understand the market and then commit fully, as opposed to trying to run Australia as an outpost of New Zealand. I think that's a really, really important distinction in how to approach the Australian marketplace.
It's looking very glad that Craig Moffat asked that question because it was one of mine as well. At a much more process-driven level, is there any chance that you could put some of those key risks explicitly within your disclosure and reports and the mitigants associated with them? You talk about your risk process. You don't talk about those key risks and the color that that conversation has just provided.
Cool.
Is that something you will consider for next year's reporting?
Yes.
Thank you.
Todd, are there any further questions online?
No further questions online. Thanks, Shelley.
Okay. Given that there are no outstanding questions from our shareholders, I will now close the meeting. Thank you all for your attendance, which is very much appreciated. I now declare the meeting closed. Results of the meeting will be released on the NZX later today. Thanks.
Thank you.