Consensus community valuation
$8.85
Average Intrinsic Value
29.9%
Undervalued by
Active Member Straws
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Added 3 months ago

Is there a way to sort these straws newest to oldest? pretty annoying to scrol up and down to make sense of things

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#HY21 Results
Last edited 3 weeks ago

Pushpay has reported results for the HY ending Sep 30, 2020 -- and once again has delivered exceptional numbers.

  • Total revenue up 51% to US$86.6m
  • Gross margin increased from 65% to 68%
  • NPAT up -- wait for it -- 107% to US$13.4m
  • Operating cash flow up 203%
  • Cash and equivalanets on hand up 221% to US$23.1m
  • total customers up 38%
  • Processing volume up 48%
  • Average revenue per user down 1% (cant win 'em all! THis is due to the CCB acquisition)

The business is gaining material traction, has a market leading offering and continues to have a long runway for growth.

FY guidance has been increased (again) -- company expecting EBITDAF of US$54-58m, up from US$50-54m. A lift of roughly 7.5%.

You can read the results presentation here for more detail.

For me, the business is of an extremely high quality. I'll revisit my valuation in the coming days.

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#Sell down
Added 4 months ago

PushPay's major shareholder the Huljich family have sold 14.4 million shares -- around 5.4% of the company -- for $NZ8.40 a share (A$7.92). That's around $120m in total.

In total, the family still retain 43.2m shares, or about 16% of PushPay.

Peter Huljich, a non-exec director, said the family had no intention to sell further shares, although committed only until the groups FY21 results (May next year).

The Huljich family became cornerstone investors in PushPay way back in 2013, with an initial $2 million investment and a further $17m-odd up to the company's 2016 listing. I havent gone through all transactions, but it's safe to say they have scored an insane return on that early seed round!

I know a lot of people get upset when directors sell, and I agree it's not what shareholders would prefer to see. There's certainly many examples of such sell downs being a red flag.

But we also tend to forget a lot of 'silent evidence' where the sell down wasnt a portent of something negative. I'm sure someone, somewhere has done research on this, but my bet would be that more often and than not, in isolation, it's a poor signal.

As they saying goes, insiders sell for many reasons, but they buy only for one.

Frankly, if i had close to half a billion in one company, i'd probably look to sell down a little too. In fact, i recently sold a few PPH in my Strawman portfolio due to weighting considerations (but it is still my largest holding).

ASX announcement here

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#HY 2021 Presentation
Added 3 weeks ago

Key takeaways:

  • COVID-19 accelerates transition to digital payemtns, with TPV increasing 48% on PCP.  The CEO advised share of donation spend increased from 40% to 60% over the half year.  
  • ARPC (excl. CCB), increased approx. 16% on PCP.   
  • Customer count was relatively flat, with a bit of churn in CCB customers.  CCB tended to have smaller customers, which tend to be higher churn. 
  • 16 new product launched over the half, with ChurchStaq launched - its all in one church amangeent solution.  
  • Management report cross selling is exceeding expectations, which they say validates the CCB acquisition, and they are seeking to build their platform with further acquisitions.
  • Great operating leverage, allowing debt rasied to acquire CCB to be paid off over the next 12-18 months, with payments running at $2.4M per month. 
  • Maanagement report sales pieline is lengthening due to COVID-19 with potential customers reluctant to switch platforms at such a critical / uncertain time.
  • Analyst raised the question of shareholdings of the founders, and their plans.  A vague answer was given.  Thsi may weigh on the share price short term. 

 

 

 

 

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#Management
Added 4 months ago

Hot off the heels of the Huljich family sell down, Independent Director, Justine Smyth, has resigned from her role with PPH.

We'll have to keep our ear to the ground to learn more about this over time. I recall Chairman Shaw making note of Justine's experience in M&A when she was first appointed in Aug 2019. Perhaps it was always the plan to bring her in specifically for the Church Community Builder acquisition. If so, transparency could be better. If not, there could be something bigger at play.

It's always fraught with danger when trying to guess the underlying reasons behind a resignation or share sell down. Justine, for example, has an athletically gifted daughter who is pushing for a Winter Olympics spot. Alternatively, she is a passionate advocate of women's rights. Without further commentary, we could use this resignation to make intelligent arguments to paint PPH both in a positive or negative light. 

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#ChurchStaq
Added 3 months ago

PushPay announced a number of product developments this week, the most notable being a new, fully-integrated platform called ‘ChurchStaq’, which seems to combine all their tech into one seamless product. 

https://pushpay.com/churchstaq/

Difficult to say what effect, if any, this will have on the current financial year, but it looks to me like a decent long-term strategy to streamline further acquisitions and integrations into the one solution moving forward, whilst making the value proposition easier for customers to understand. Without a doubt, the dev teams have been busy over the last 8 months!

I see that they are also advertising some data migration positions for CCB, which makes me think there are a number of existing CCB customers who want to ‘upgrade’ to the new platform and access giving and engagement tools. Looks encouraging for upsell numbers, and could be evidence of the acquisition going well, though admittedly I’m drawing a long bow here.

Finally, a friendly reminder that PushPay upgraded their EBITDAF guidance by $5m on the 20th September last year…  Just sayn'! ;)

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#COVID-19 Update
Added 5 months ago

Attended the webinar conducted by Exponential this morning (2.30 pm US ET) aimed at providing an update on the impact of Covid-19. Their Survey Report (soon to be issued) captures findings from a sample size of 767 respondents (Churches) with the survey conducted between the 1st and 12th June. The analysis provides first hand feedback on challenges, impacts and evolving progress for the months of April & May.

So a reasonable sample size spanning small, medium and large churches in the USA and importantly, a ‘current’ snapshot. With PushPay’s AGM due to be held tomorrow, thought some may find it useful to get an overview which can either confirm or add context to whatever we hear tomorrow.

Herewith my interpretation of that shared in the Webinar.

* The gradual re-opening of churches in the USA is presenting a wide array of approaches, strategy, experimentation, rate of progress and resultant outcomes. The points of difference are to an extent governed by different things that can or cannot happen in different places. This situation is amplified with split opinion from congregants as to whether Churches should or should not open

The Survey has revealed that 80 % of the congregation at large churches are not attending. Attendance at smaller churches is much higher. Most churches who have the potential to gather at a determined level of capacity are yet to reinstate gatherings.

* The respondents surveyed fall into one of two categories, these being ‘early adopters’ and ‘late adopters’. 

Early adopters are being challenged by continuous testing of traffic patterns (vs restriction guidelines’, staffing availability and the need to run with a dual system covering ‘in building’ and ‘on-line’ services. After several weeks, the nett result is that more than 50% of pre Covid-19 congregants are not returning. Some early adopters are advising others not to start in-building services until the standard is equal to or better than the on-line standards. Examples include in- building attendance of 11%, congregation and Church choirs singing in masks, the divided political opinion on wearing masks (a level of boycotting), the necessary cleaning cycles, fogging and the list of challenges goes on.

The late adopters are very much in experimentation mode. 50 % of the churches surveyed plan to re-open in June, many with the understanding that, given the continued spread of Covid-19, they may need to re-close.

* So uncertainty abounds at a time when congregation care is a priority. Said that 20% of New Yorkers know someone who has died of Covid-19. You can add to this the woes of the unemployed, the fall-out for families, the pressure on food banks and the new impact of the ‘black lives matter’ protests. So the need has never been greater. 

All said, the responses indicated optimism currently outweighs uncertainty.

* What of funding ? Whilst the survey material does not dimension any drop in the extent of giving, some comparisons of Mar/ Apr 2020 versus Mar / Apr 2019 show that the funding inflow probability matrix reveals little change. They break the funding inflow into CERTAIN, UNCERTAIN and UNKNOWN. 

* Churches have found a new rhythm on remote staffing (on-line). With the Faith sector being considered as ESSENTIAL SERVICES, giving the change in exposure risk, Churches have lost some of the older volunteers and now replacing with younger volunteers. Some are leveraging this for extending the on-line engagement with congregants, expanding over the historic in building congregation size. 

Most Churches plan to remain on-line, creating multiple Zoom rooms all aimed at accelerating the drive into communities. 

********

We know that PushPay has seen higher adoption through this period. The above points to the move to Digital Services / Engagement Tools sustaining. Maybe this new found ability to leverage the power of on-line will see the mission of the Church rebound from the declines witnessed over the last 10 to 15 years.

Hopefully this will provide some context when we hear from PPH in the morning.

Rokewa
 

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#PushPay FY2021
Added 6 months ago

At the time of the release, most holders would have been ecstatic with the result and may still be pondering over the mouth-watering guidance provided for FY2021. Simply wow, particularly as this comes in the midst of a historical pandemic, with economic uncertainty prevailing across the macro, at a sector level and of course, for individual companies. I suggested prior to the release of the FY results @31 March, that due to timing, the impact of Covid-19 would likely be minimal. Nice to lock in solid results when others are withdrawing guidance and priming investors for a period of under performance.

More importantly, I think we can now confidently say that PushPay appear not only to be weathering the storm better than most, they are one of the few Companies which have seen increased adoption of their Digital products and services, a gain which is likely to sustain.

Having completed a full review of the results, can share some interesting observations. The investment case for PushPay is IMO now stronger than it was a year ago. This investment was always about operational leverage, where scaling and cost containment would drive enhanced profitability. To assess this, I chose to exclude the financial impact of the CCB acquisition from the results so as to assess the Run Rate entering FY2021 ( on the original PushPay business).

Note : Run Rate calculated using the financial results for the second half of FY2020

Key metrics as follows :

Operating Revenue ......................USD 134 m
less Third Party Direct Costs ....... USD 48 m
equates Gross Profit .....................USD 86 m

Gross Margin ................ 64 %

less Operating Expenses ...............USD 54 m

yielding EBITDAf............................. USD 31.5 m

Interesting the Company provided FY2021 guidance for EBITDAf only at USD 48m to USD 50m. Illogical when you consider TPV and Revenue feed into this result. Can understand that TPV will be subject to the economic stresses felt within congregations, yielding uncertainties in terms of the impact on the extent of giving. 

So where do PPH get the confidence to guide on EBITDAf ?

The Run Rate provided says they are already well on their way to achieving this result, particularly when you consider :

1) The FY2020 shows unearned Revenue of USD 14.3 m ( historically a USD 7 m carry)
2) The metric above excludes USD 16 m of historic CCB Revenue and the impact of CCB’s higher Gross Margin plus any further post acquisition cost savings. Company has really impressed via financial disciplines, so step change in costs anticipated.
3) Excludes any cross selling opportunities and the financial benefits associated with the launch of new fully integrated software including Church Management.

Gut says the FY2021 guidance on EBITDAf is already in ‘Beat’ territory. Look forward to the AGM on the 18th June. Sure they will provide more detail or at least further context at that time.

RobW
 

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#Runway
Added 3 months ago

In response to Foolednomore (not sure how to respond to your straw) they reference in the report they are targeting 50% of the med-large church market which represents  $1bil revenue. 

I thought I'd seen previously they had only been around 5-10% of target market. As such, with gross margins/operating leverage there still seems a runway for growth before having to fish in the smaller lower margin small church pond.

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#FY21 Guidance Increase
Last edited 5 months ago

PushPay upped its guidance for FY21 for EBITDAF (operating earnings) between US$50-54m (up 4% from US$48-52m).

That's double what they did in FY20 (year end March 31).

AGM presentation here

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#Sell down
Added 4 months ago

I see the selldown as a great buying opportunity, having seen Pushpay grow their Free Cashflow exponentially. They can start to expand across USA without hurting bottom-line. I missed out on getting in this during the March sell-off. Now, I am bolstering my portfolio by adding it. 

Plenty of research done by Andrew, Matt and others on this company. It was in my watchlist, along with Appen, Zip and Xero. The other 3 are priced for long-term future growth. Awaiting a pull back on them to add it to my portfolio. 

Much easier doing a DCF on Pushpay with a proven track record. Watch this space :)  

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#Profit Upgrade
Added 5 months ago

In the AGM today, PPH have upgraded FY2021 forecast profit by 4%, and is experiencing increasing demand of their mobile platform.

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#Analyst View
Last edited 2 months ago

Analyst update around 18:30 mark 

https://www.youtube.com/watch?v=uWjiMeFF3xs&t=2197s

 

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#New Product Launch
Added 2 months ago

New Product Launch Video 

https://grow.pushpay.com/lp-ty-replay-webinar-summer-launch-2020.html?utm_medium=email&utm_source=pushpay&utm_content=product-webinar&utm_campaign=summer-launch-2020&utm_term=faith--all--all

 

 

https://www.stuff.co.nz/business/industries/122757547/kiwi-company-pushpay-set-to-double-profit-thanks-to-digital-giving-us-churchgoers-analyst-says

 

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#Pundits
Added 3 months ago

Froxy. Thanks for the reply. Perfect response. That was why I was confused by the call. This seems to happen a fair bit. Where by pundit/s seem to  display an over confidence in their knowledge of a business. 

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#FY19 Results
Last edited one year ago

8th May, 2019

PushPay Results Presentation is here

  • Revenue up 40% to US$70.2m
  • A maiden FY net profit of US$18.8m, compared to a loss of US$23.3m
    • PBT was -US$1.5m. Positive NPAT due to US$20m tax benefit 
    • Now that they are likely to be profitable going forward, they needed to recognise these tax assets. They wont be paying any tax for a few years it seems.
  • Average Revenue Per Customer (ARPC) up 33%
    • Month to recover acquisition cost is is still "<18", which suggests that CAC is increasing
  • Customer count up by 5%, with 373 customers added over the year
  • Cash down to US$13.9m, from US$17.9m
  • But positive operating cash flows for the second half -- in fact, they seem very close to accounting profitability ion a statutory basis
  • Revenue retention is still >100%
  • Staff count up by 11%
    • mainly development and "customer success" (onboarding)
    • Sales costs flat, but headcount up 7%
    • G&A costs down 10%, headcount down 3%
  • Gross operating margin improved to 60%
  • CEO Chris Heaslip is leaving and being replaced by Bruce Gordon
    • Chris is remaining on the board
    • Comes almost a year after his co-founder Eliot Crowther stepped down
    • Bruce is long known to Chris and PushPay, having served as Chairman and acting as Mentor to Chris and Eliot in the early days of the company
  • Acquisitions seem likely, and expect the company to use a bit of debt here

At current price ($3.60), shares on a P/S of 10x, and a PE of 37x (including tax benefit)

Overall, these results were solid, and in line with expectations.

With the top line growing at ~40%, a large addressable market, high retention, rising ARPC and operating costs well contained, we should expect some very solid profit growth in the coming years. 

Happy with my existing valuation for now, but lean towards increasing this..

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#Risks
Added 3 months ago

Scott from motley fool and Tim from teaminvest are very cautious on PPH. They seem to think they have saturated the mega church market and are having to refocus on small and medium churches. Is this correct as it could seriously affect profit margins going forward? More risk to the downside?

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#Fund Managers' Views
Added 7 months ago

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 ---

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