Paya Holdings Inc. (PAYA) DCF Valuation & Fundamental Primer
Paya Holdings Inc. (PAYA) currently trades at $9.74 with an enterprise value of $1.62B. Our proprietary institutional model rates Paya Holdings Inc. at 88/100 (Grade: A+ · Elite SaaS Compounder). The current market price prices in an implied 5-year revenue CAGR of 11.0% vs. historical growth of 18.8% (Substantial Margin of Safety).
Institutional fundamental teardown of Paya Holdings Inc. (PAYA) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Paya Holdings Inc. (PAYA) 3-Scenario DCF Valuation Range
Stress-test PAYA's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $9.74).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $14.36 +47% | $15.23 +56% | $16.24 +67% | $17.44 +79% | $18.88 +94% |
| 9.3% | $12.95 +33% | $13.63 +40% | $14.42 +48% | $15.33 +57% | $16.40 +68% |
| 10.0% | $11.79 +21% | $12.34 +27% | $12.96 +33% | $13.67 +40% | $14.50 +49% |
| 10.8% | $10.82 +11% | $11.27 +16% | $11.77 +21% | $12.34 +27% | $12.99 +33% |
| 11.5% | $9.99 +3% | $10.37 +6% | $10.78 +11% | $11.25 +15% | $11.77 +21% |
Institutional Software Quality Scorecard (88/100 · Grade A+)
Exceptional unit economics, disciplined equity dilution, and fortress balance sheet.
Elite deferred revenue float; FCF exceeds operating income by >20%
Standard software SBC dilution; modest equity transfer to employees
Elite Tier-1 SaaS compounder with high gross margin and superior Rule of 40
Positive net cash cushion; self-funding operations with zero insolvency risk
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 169% of EBIT driven by upfront annual collections
- Top-quartile software unit economics: 82.1% gross margin and 47.8% Rule of 40 score
- Net cash positive: $96.6M balance sheet buffer
Key Operational & Dilution Risks
Reverse-DCF Solver: What Growth is Priced Into PAYA?
The current share price only requires 11.0% 5-year CAGR (19.5% dilution-adjusted), well below historical growth of 18.8%. If the company maintains baseline execution, there is asymmetric upside.
Headline Reverse-DCF ignores Stock-Based Compensation (12.2% of revenue) and annual share dilution (1.8%/yr). Accounting for both requires 19.5% 5-year revenue CAGR to justify $9.74/sh on a true per-share economic cash flow basis.
Paya Holdings Inc. (PAYA) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $211.4M | $211.4M | $251.2M | $298.4M | $354.5M | $421.2M | $500.4M |
| Gross Profit | $173.6M | $173.6M | $206.2M | $245.0M | $291.1M | $345.8M | $410.8M |
| Operating Income (EBIT) | $36.4M | $36.4M | $43.2M | $51.3M | $61.0M | $72.4M | $86.1M |
| Stock-Based Compensation (SBC) | $25.8M | $25.8M | $30.6M | $36.4M | $43.3M | $51.4M | $61.0M |
| Unlevered Free Cash Flow (FCF) | $61.3M | $61.3M | $72.8M | $86.5M | $102.8M | $122.1M | $145.1M |
| SBC-Adjusted True Cash Flow | $35.5M | $35.5M | $42.2M | $50.1M | $59.6M | $70.8M | $84.1M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -32.9 + 0.86 × (Rule of 40) · R² = 79%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Paya Holdings Inc. | PAYA | $1.29B | $211.4M | 82.1% | 29.0% | 47.8% | 12.2% | 5.6× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 5.6× | $1.19B | $1.29B | $9.74 | 0.0% |
| -20% Multiple Compression | 4.5× | $954.6M | $1.05B | $7.94 | -20.0% |
| -35% Multiple Compression | 3.7× | $775.6M | $872.2M | $6.59 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $1.06B | $1.15B | $8.71 | -11.4% |
Frequently Asked Questions: Paya Holdings Inc. (PAYA) Valuation
What is Paya Holdings Inc. (PAYA)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Paya Holdings Inc. (PAYA) has a Base Case implied value of $12.96 per share (with a Bear Case of $6.13 and a Bull Case of $22.29), compared to its current price of $9.74. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Paya Holdings Inc. (PAYA)'s Rule of 40 score and Free Cash Flow margin?
Paya Holdings Inc. achieves a Rule of 40 score of 47.8%, combining a 18.8% revenue growth run-rate with a 29.0% TTM free cash flow margin on $211.4M in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into PAYA stock according to Reverse-DCF analysis?
At $9.74 per share (Enterprise Value of $1.19B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 11.0%, compared to Paya Holdings Inc.'s historical CAGR of 18.8%. Overall market expectations are rated as "Substantial Margin of Safety".
How does Paya Holdings Inc. compare to Software & Cloud Services software peers?
Paya Holdings Inc. (PAYA) earns an institutional Software Quality Score of 88/100 (Grade A+ — Elite SaaS Compounder). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Paya Holdings Inc. (PAYA)'s valuation?
Paya Holdings Inc. recorded $25.8M in TTM stock-based compensation (12.2% of revenue). When treating SBC as a cash-equivalent compensation expense, Paya Holdings Inc.'s SBC-adjusted free cash flow yield is 2.8%, scoring 16/25 on our Shareholder Dilution Friction pillar.