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Invest in KarbonPay

Automating global payroll in the cloud

Pitch Video
Investor Panel

Highlights

1
We are currently completing our second acquisition
2
Profitable SaaS with $2.5mm ARR and 30% EBIDTA margins
3
Running payroll for more than 275,000 employees every month
4
80% gross profit margins
5
More than 23,000 companies running payroll each month
6
Offering automated payroll in 7 countries

Our Team

We have worked in global payroll for the last 5 years so we have deep knowledge of the problems, and how to solve them. We have a customer base all over the world coming from our payroll services work.

KarbonPay

Multinational companies face incredible payroll compliance complexity: the process breaks down when it comes to international gross-to-net calculations.

So, what's the problem?

Ok…. but tell me how that effects customers in the real world?

(This video demonstrates a case study which is normative of the experience shared by companies running cross-border payroll)

Ok, that is a mess. What do customers SAY about this?

Wow, you’re not kidding. So, how can KarbonPay help?

KarbonPay brings cloud-based automation to consolidate multi-country payroll into a single system, eliminating reliance on in-country partners, manual calculations, removing redundancies, and reducing errors. Leveraging technology (instant calculations) for complex international compliance gives customers access to real time data, enabling business leaders to make data-driven decisions.

KarbonPay offers a single login across borders

Our single login for all our customers’ payroll needs allows us to provide analytics that are either not available with other providers or have to be manually consolidated. Typically, decision-makers are left with incomplete or inaccurate data. KarbonPay’s single-source-of-truth means that report generation is immediately accessible, allowing for customization on the fly. We open up all our payroll data to report-writing.

Our single-source-of-truth also provides a much more streamlined operational process. This allows anyone to step into the shoes of the payroll personnel in the event of any disruption in normal business operations. Being cloud-based means our customers can access and run payroll in almost all emergency situations.

With KarbonPay, there are no more in-country partners.

In fact, our customers are often able to eliminate or vastly reduce even the number of vendors they have involved in their payroll process. All changes and reports can be made right from our system so there is no more time and expense waiting on third party vendors.

We are in the process of completing an acquisition, after which our company will look as follows:

Projected end of 2022 Snapshot:

All of our existing revenue is charged on a per headcount per month basis.

For KarbonPay payroll, we have two high level pricing schemes; single-country users and multi-country users. Single-country users are charged amounts based on the local markets. Multi-country users (cross-border) are changed based on “international” payroll pricing.

XmartClock, like KarbonPay, charges per headcount per month. Direct Deposits are charged per transaction.

Pricing Differentiator:

Most other payroll providers (Sage, ADP and the like) charge on a per payslip basis vs. our monthly charge. This is no longer in touch with current SaaS pricing structures. Our competitors also up-charge for standard services (reports, analytics, corrections, off-cycle payruns, etc.) that customers expect to be included. KarbonPay allows customers immediate, customized access for no additional charge.

Over and above our payroll product itself, the primary driver of short-term value appreciation post-acquisition is KarbonPay’s ability to add two additional revenue streams that do not exist at Target but are in high demand amongst the customer base.

Direct Deposits:

Our Direct Deposit service allows customers to conveniently pay their employees from our platform. Once payroll is complete, customers have the option to initiate a single cash transfer after which the system distributes payment to each employee based on their payroll calculations.

Our assumptions for Direct Deposits adoption in our pro forma cash flow model are as follows:

  • 60% Target and affiliates customers (headcount) use Direct Deposits on a monthly basis.
  • Pricing of $0.50 per transaction, once a month - in reality those who are paid every two weeks would generate two $0.50 transactions per month.

Note:

KarbonPay uses 3rd party integrations to facilitate payments. As such, KarbonPay never takes possession of the cash. Furthermore, while KarbonPay discloses Terms and Conditions to customers regarding 3rd party services, KarbonPay is not responsible for ensuring regulatory compliance.

XmartClock:

  • Founded in 2018
  • Purchased by KarbonPay in June 2021
  • At time of purchase XmartClock was producing approximately $84,000k in top line revenue
  • We have since grown this revenue to an annualized $144,000 (70%+ increase in 9 months of operations)
  • Purchase price was $250,000 (2.97X multiple on revenues)

Additional Countries:

KarbonPay expands its territory footprint in three ways.

  • Internally developed country rules engines (South Africa, Mexico and Philippines (soon) on platform, development roadmap for 2022 has KarbonPay developing Canada, Columbia and Brazil)
  • Purchasing completed rules engines (use of funds to purchase rules engines for US and UK during 2022)
  • Purchasing functionality and rules engines from existing companies (i.e. XmartClock purchase in Q2 2021 and the subject purchase of Target).

Internally Developed:

Using our inhouse development team we developed and launched fully compliant, automated payroll for South Africa (12th most complex payroll in the world per Alight) in September of 2020. 2021 was used to solidify our multi-country infrastructure and develop rules for Mexico (23rd most complex payroll) and Philippines (22nd most complex). For reference, US payroll is ranked as only the 26th most complex.

A quick review of how we develop our payroll rules engines:

  • KarbonPay interviews local accounting and tax advisories
  • The best 3 are selected and formally engaged
  • We require 3 things from these firms:
    • Teach us all the rules and variables
    • Provide us with 12 months of historical payroll data, pre- and post-processing
    • Inform us of changes to regulations as soon as they are announced

The proforma below represents the consolidation of the annual revenue and their sources derived by laying all operations on top of each other. The sources of revenue considered in the model are: KarbonPay and the continuation of the existing business with minimal funding; XmartClock and Direct Deposit income from KarbonPay’s organic portfolio, the revenues from the two Target entities (SA and SG), and the income from selling XmartClock and Direct Deposit to existing customers.

Our software is poised to disrupt an industry expected to reach $38.4 Billion by 2027.

Between 2016 - 2019 there was a 25% increase in companies using cloud-based technologies. With COVID-19 now acting as a catalyst in this migration process, world-class SaaS options are more important than ever.



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