# Pento Financial Model

Cloud-native payroll automation platform replacing outsourced/spreadsheet-driven payroll for businesses [DECK]

- Canonical: https://finamodel.com/startups/pento
- Excel download: https://finamodel.com/startup-models/pento.xlsx
- Category: Enterprise/Security
- Model type: SaaS ARR / Valuation
- Funding round: Series A
- Funding: $15.6M
- Founded: 2021
- Geography: UK primary (GBP pricing shown); Spain and France mentioned as expansion targets [DECK, slide 5]
- Customer: B2B2C

## About the company

Pento is a cloud-native payroll automation platform intended to replace outsourced and spreadsheet-driven payroll processes. It gives businesses a software-led way to run an important recurring finance and people operation.

The company sells B2B payroll subscriptions, with employees processed on the platform providing the natural unit of scale. More headcount and additional customers increase recurring value without turning the business into a transaction-only processor.

The model uses employees on platform times a per-employee-per-month fee, alongside new logos, expansion, and churn. It links payroll delivery, onboarding, support, gross margin, sales efficiency, product investment, and headcount to ARR and cash flow.

## What's included

- 5-year monthly revenue build with stage-appropriate growth assumptions
- Full P&L, headcount plan, and operating-expense schedule
- Cash-flow statement, runway, and burn-rate tracking
- Valuation via exit multiple with a DCF cross-check
- Returns analysis with MOIC and IRR
- Unit economics including CAC, LTV, payback, and cohort retention

## Product & value proposition

Pento is a real-time payroll platform that replaces the legacy outsourcing model (spreadsheets → PDF reports → email amendments → bank upload) with an integrated, cloud-based workflow. Core capabilities shown in product UI:
- Real-time gross/net pay calculations
- Built-in approval flows (Reject / Approve / Review payroll)
- Employee-level payslip detail with pay items, NICs, PAYE, pension
- Employer contributions tracking (Employer NIC, Employer pension)

Solution features:
- Full integration to HMRC and pension providers; automatic regulatory updates
- Statutory report generation
- HR, accounting, and scheduling integrations
- Open API (stated as "coming soon")

Vision: Three-layer architecture - payroll infrastructure (country-specific calculation engine), SaaS platform, and an applications/API layer enabling third-party and customer-built products (HR integrations, employee financial products).

## Revenue model

Not explicitly stated in deck. Inferred from product and SaaS framing:
- Per-employee-per-month (PEPM) subscription - standard payroll SaaS pricing model; consistent with B2B platform positioning
- Possible API/usage-based tier for third-party integrators and global payroll providers (slide 6 describes these as distinct customer segments)
- Currency: GBP (UK-primary)

## Competition / moat

Not explicitly shown. Implied competitive framing:
- Displaces legacy outsourced payroll providers (slow, error-prone, rigid)
- Moat signals: country-specific payroll calculation infrastructure (complex regulatory compliance); open API ecosystem play; multi-country expansion roadmap (UK, Spain, France)
- API strategy aims to make Pento the infrastructure layer for global payroll providers and employment platforms

## Recommended financial model

- **Archetype + why:** B2B SaaS - PEPM (per-employee-per-month) ARR model. Pento sells to businesses who pay based on headcount processed; the natural unit is employees-on-platform × monthly fee. Standard SaaS ARR build is appropriate.

- **Forecast horizon & granularity:** 3 years monthly (Year 1–2 monthly detail, Year 3 quarterly roll-up). Series A stage warrants monthly granularity for the first 12–24 months to show cash burn and runway.

- **Key drivers & assumptions:**

| Driver | Value |
| -- | -- |
| PEPM pricing (GBP) | £5–£10 per employee/month |
| Average employees per customer (SMB) | 50–200 |
| New customers added per month (Yr 1) | To be confirmed |
| Monthly churn rate | 1.0–1.5% |
| Gross margin | 65–75% |
| S&M as % of revenue | 30–40% |
| R&D as % of revenue | 20–30% |
| G&A as % of revenue | 10–15% |
| Geographic expansion lag (Spain, France) | Month 18–24 |
| API / partner revenue contribution | 0% Yr 1, 5–10% Yr 3 |

- **Scenarios (Base / Bull / Bear - which variables flex):**
  - **Base:** Mid-range PEPM, steady new logo acquisition, 1.0% monthly churn, UK-only Yr 1–2, Spain/France light in Yr 3
  - **Bull:** Higher PEPM (enterprise deals), lower churn (0.5%), faster international ramp, API revenue materialises in Yr 2
  - **Bear:** Slower sales cycles, higher churn (2%), delayed international, margin compression from compliance ops

- **Required sheets / outputs:**
  1. Assumptions - all PEPM, cohort, and cost inputs
  2. ARR Build - new MRR, expansion, churn, net new ARR waterfall by month
  3. Cohort Table - employee count per cohort × PEPM × retention curve
  4. P&L - Revenue, COGS (infrastructure, compliance), Gross Profit, S&M, R&D, G&A, EBITDA
  5. Headcount - sales, engineering, ops ramp
  6. Cash Flow & Runway - monthly burn, ending cash, months of runway
  7. KPI Summary - ARR, MRR, customers, employees-on-platform, LTV/CAC (when data available)

## Frequently asked questions

### Is the Pento financial model free?

Yes. The Pento model is a free Excel download with live formulas.

### Can I change the assumptions?

Yes. The workbook is editable and its live formulas recalculate when assumptions change.