Glassdoor reviews have been rising steadily over the last year or so. This is likely due in large part to the improving feedback from employees post the small-segment purge. It's a good indicator that things are ticking along nicely behind the scenes.
As a reference point, the overall rating is better than Appen, Altium, Xero, EML Payments, Nearmap, Dicker Data, Hansen, iSignthis, Computershare and many others with a similar MCap on the ASX.
Interestingly, Wisetech is one of the few that are better. Make of that what you will!
Pushpay has updated shareholders on the impact of the coronavirus and actually INCREASED guidance.
The cessation of church gatherings has created an increase in demand for their offering.
EBITDAF now expected to be roughly 8% higher at between US$25-27m for the year ending March 31.
ASX announcement here
Chris Heaslip was one of the co-founders of Pushpay, along with Eliot Crowther.
Eliot left the business in quite a public way following a marriage breakup, selling his 9% stake at that time.
Chris announced his intentions during a conference call to step down in May 2019. Following the recent CCB acquisition, Heaslip sold off a further 6.5M shares to allow CCB founder, Chris Fowler to take a meaningful stake in PPH (Fowler now holds a 2.4% stake in PPH). What is left is a 3.984% stake between the two original founders of Pushpay. Whilst we cannot claim Pushpay is founder-led, it is still at least founder-mentor-led. Heaslip may have been preparing the battlefield, but during several interviews prior to his May departure, Heaslip referred to Gordon as a mentor of his and instrumental in getting Pushpay off the ground. An interview with Jeremy Medlin from 12 Dec 2018 includes comments such as:
Furthermore, in an article from the New Zealand Herald, found here, Heaslip said "there had been an orderly succession process. Behind the scenes he had been discussing his situation with the board, and the possibility of Gordon taking over, for some time."
A counter-argument to the harmonious succession plan I am painting is that Chris Heaslip was asked to step aside and that he ultimately 'agreed' to remain as a non-executive director. People much smarter than I have expressed this opinion which gives me reason for pause.
Regardless, insiders buy into their company for one reason and sell for many. I am not concerned by Chris Heaslip's continual departure from the business. The consistent narrative I observed over 12-months of interviews leading up to May 2019 was that Chris himself was tired and wanted to focus on his family. Who could blame him when his best friend, Eliot, had it go so very wrong right in front of him?
Here is a comparison of PPH adj. cashflow against other software businesses
Note: Figures exclude Capture capitalisation (NEA), Stock based compensation (US), and software capitalisation.
I am not 100% confident in the accuracy of my figures, but I think it is fairly accurate picture.............
Given Pushpay's market capitalisation is well above $1B, it ranks around 130 in terms of market capitalisation. Assuming liquidity hurdles are achieved, Pushpay should enter the ASX 200 index in the June quarterly rebalance, and become an investible business for a number of passive and active funds.
PushPay FY20 Results.
Wow. An amazing result in some very challenging times.
Headlines were all excellent, with EBITDAF hitting right at the top of their revised guidance in March, coming in at US$25.1m. Operating revenue was up to US$127.5m (total US$129.8m), gross margins improved to 65% (up from 60%), PBT was up to US$21.7m (from US-$1.4m), and operating cash flows were up to US$23.5m (from US-$2.8m).
The business is scaling beautifully, and is thriving on the back of a rapidly increased adoption curve from the impact of COVID-19.
Expenses increased a little more than I had forecast for the full year on the back of 4 months of additional expenditure from the CCB integration, although sales and marketing expenses declined by about US$1.5m.
NPAT was slightly down on last year, due wholly to tax losses being brought forward last year, so the more revealing figure is PBT, which saw a impressive % increase from last year. PushPay has well and truly tipped into profitability now, and will look to aggressively use excess cash flows to fuel further growth via M&A, incremental product improvements and increased engagement with their existing customers.
Looking ahead, one of the key highlights of the investor call was that the last 6 weeks have seen an outperformance in terms of revenue gain, fulled no doubt by the expedited new need to give digitally. Though management don't expect this to carry on, they were cautiously optimistic about FY21, and provided stunning guidance of between US$48-52m in EBITDAF (a near 100% increase!). However, if revenue outperformance were to continue unabated – even for an extra month or so – that guidance will be smashed. The half year report will be very interesting indeed.
CCB contributed about ~$4m in revenue from Dec 1, so a rough annualised guess is that we'll see an additional $16m contribution from the acquisition this year. Commentary so far was that they are happy with how the integration is progressing, and that FY22 is where they expect to see the full benefits of the partnership play out financially.
All in all, one of the more exceptional results on the ASX so far this year . Even with the spike in price today, there still looks to be value buying at the current levels if that guidance is met. Well done to all holders!
I didn't think an announcement relating to a new hiring was going to be the next event that got me more excited about PPH, yet here we are.
When everyone else is laying people off, PPH have secured the services of Lovina McMurchy. Lovina has significant experience with tech-orientated business over the last 20 years. Most recently, she worked on the Alexa team to build out voice-based shopping services. Prior to that, she pioneered Amazon's move into the subscription economy by building a technology platform to allow both Amazon teams and external teams to rapidly launch and sell subscription products on Amazon. She has also worked with Microsoft, Starbucks and Movac, a kiwi venture capital firm.
As PPH seek to flesh out their newly acquired ChMS this is a great hire.
In the same announcement, PPH completed the last step in founder Chris Heaslip's departure with him formally standing down from any formal PPH position. I am sure in the future we will discover if Chris left or was pushed. As for now, I am excited to see the fruit of their most recent hire.
Original announcement here.
PPH have announced this morning that performance for the year ending 31 Mar 2020 is not expected to be adversely impacted by Corona virus. (no comment on any period beyond that)
Gordon mentions that the Pushpay platform is helping churches communicate with their congregations despite many churches closing their doors (i.e. doing its job).
Despite many Americans already self-isolating, donations through the pushpay platform last weekend exceeded pre-COVID expectations. This may be an anomaly or part of my short-term thesis playing out. I expect tithing to decrease in the short term, however part, or all, of that processing volume to be offset by one-off offerings. For those unfamiliar with church givings there are two components; tithes and offerings. Tithes are the 10% that is biblically expected each week. An offering is what occurs above and beyond that and are a way of church attendees to assist in the face of catastrophe. I expect offerings to reduce the short-term processing volume impact of self-isolation.
In the same announcement, PPH reiterated or increased guidance as follows;
Original announcement here.
Attached is a comparison of PPH vs local and Us software businesses. PPH remains relatively inexpensive to other "stonks"
Outstanding results. Key takeaways:
1) COVID-19 is driving churches towards digital giving.
2) Revenue (ex. CCB) grew 28% on constant currency basis.
3) Gross margins (ex. CCB) grew from 60% to 64%.
4) Expenses (ex. CCB acquisition) decreased 8%.
5) Outlook -
a) EBITDA to double next FY.
b) "strong" revenue growth to continue.
c) Looking for further strategic acquisitions to broaden platform.
d) Long term - targeting 50% of medium / large church segment, which represents $1 billion in potential revenue.
6) ARPC ex. CCB, at $1614 per month, up from $1315. Thats 22% growth. Nice.
7) no. of customers grew 43%. partly due to CCB acquisition.
"Due to the restrictions around in-person gatherings, Customers have been emphasising....digital giving...through their apps for continued engagement with their communities.....Pushpay’s processing volume over the month of March was higher than...expected.." Although, it is antiicpated demand for digital payments may moderate as restrictions are eased.
Many improvements to the platform, improving engagemnt and value to customers.
Interesting trend in Pushpay app downloads over the past few months. It seems to tie in with management reporting churches are encouraging church goers to use electronic payments for tything......
FY2020 has seen PPH execute on their plan, delivering impressive operational leverage and prospects for accelerated growth with a first acquisition. When they report their FY2020 results on the 6th of May, expect EBITDA to be north of AUD 35 million. The Church Builder acquisition appears to have gone well and their efforts towards integration and expanding their platform to the 'one stop shop' concept should present significant growth opportunities during CY 2021. The Company did indicate that the Church Builder acquisition will be earnings accretive in FY2021.
The fall-out from Covid-19 should yield approx. a 20% decline in Total Processing Volumes, offset by the addition of many new Church Groups. Watching BlackBaud as their most significant competitor. This USA listed Company is a well established business who has undergone a major transformation over the past 24 months. Dominant in the Catholic Church space, which provides for some market divide. As the combined revenue of PPH and Blackbaud, generated from the faith sector yields a market share of less than 10%, plenty of scope for these two Companies to extend their footprint during the Covid-19 disruption. That said, suspect many of the smaller players will be capitalising on the opportunities during this period.
PushPay's achievements to date have been measured. Interesting to see how they have coped with a need-driven surge in demand over the past 8 weeks.
Revise my valuation to AUD 5.88 for FY2021
14-Apr-2020: FSI Shareholders' Quarterly Report - March 2020
"INVESTMENT ACTIVITY: During the quarter, we removed Pushpay Holdings (ASX: PPH) due to concerns regarding their competitive environment and an uncertain future regarding profitable growth."
--- click on link above for more ---
A SaaS business that provides a payments platform for the faith sector, PushPay has achieved extremely strong topline growth over the past few years. This year it's on track to grow revenue by a further ~25%.
Moreover, the business is now cash flow positive, EBITDAF positive and has ~US$14m of cash in the bank. There is zero debt.
Average revenue per client has been growing (strongly and consistently), they are the dominant player in their space, gross margins are improving, costs have been well contained, revenue retention is >100% and they have consistently met guidance.
PushPay still have a long runway for growth, ultimately targeting 50% of the medium and large church segments, which is a $1 billion annual revenue opportunity.
Importantly, the company has passed the breakeven inflection point, so we should expect to see profit grow at a much greater rate than sales.
And yet, while most other SaaS companies are trading on extremely high multiple, PushPay is on a trailing PE of ~32 and a forward P/S of 4.6 (at the current price of ~$3/share).
Great business model where the aims of PushPay (increase revenue) and the customer (increase donations) are aligned as PushPay “clips the ticket” i.e. more donations = more revenue for PPH
Sticky product – Greater than 100% retention
Founder led company with strong inside ownership
Consistent revenue growth
First mover advantage
About to hit an inflection point of achieving profitability
The latest reults are again quite strong.
For the 2019 half year,
Half Year presentation here
Has anyone had any direct experience with pushpay pph??
Website and apps easy to use?
Customer service as good as they say?
I have only just looked at this business and it’s the first time I have really got excited by the huge growth prospects of a business.
The premise behind the business, the target sector, the potential loyality of their customers, recession resistant. Peer promotion, millions of churches, development into other religions, contract based, branding. Only thing I’d like to see is a per capita league table.
Please temper my excitement!! Stock seems a bit expensive but not a gamble?