Bear case
After much reflection, I think there’s a strong argument to be made that Pushpay’s foray into the Catholic sector will be difficult, expensive, and less profitable than the Pentecostal sector, if it even succeeds at all.
Having some insight into the way Catholic-based schools, churches and charities operate, I cannot stress strongly enough just how different the cultures are between Pentecostal and Catholic mindsets. Catholic institutions find it uncomfortable to talk about finances and growth in the same way, and have little interest in procedural efficiencies or larger donations if there’s even the slightest slight risk of alienating their older congregants with tech. That is an insurmountable challenge for Pushpay with their current offering as it stands.
Without a differentiated product and brand – even the name ‘Push’Pay was enough to put off a high ranking Australian Vicar General I spoke to about this – I just can’t see any rapid adoption or customer love for their product, despite the obvious benefits it would bring. Granted, investments are being made here this year, but anything other than a totally different product and brand seems destined to fail based on the enquiries I’ve made so far.
Putting all that aside though, It’s becoming increasingly harder to ignore recent Glassdoor reviews by former employees who make claims about Pushpay’s toxic culture and discrimination practises.
A picture is emerging that the succession of leadership changes in recent months together with the acquisition of CCB have resulted in a messy and fractured culture, whereby employees are losing confidence in the direction of the business. Talk of employee churn being high is particularly discouraging.
Beyond that, there are some serious allegations made about discrimination against pro LGBT+ congregations, which if true reveal not just terrible ethical practices, but that the larger, more conservative churches potentially hold too much power in the customer/supplier relationship. A power imbalance like this doesn’t bode well for future pricing power to my mind.
I doubt that PushPay will go backwards in the next 5 years, given how strong their FCF is, but it strikes me that we’re in the plateau phase at the top of their ’S curve’ of growth. The Catholic sector is being touted as the next vertical, but given my points above I don’t have the confidence that they can execute this vision by building a solution internally.
An external acquisition would potentially change my mind, so long as there’s a clear intention to silo that team and add additional resources, but this seems wildly risky too, since it would be difficult to find any synergies or efficiencies doing it this way. If they switched strategies and looked at acquiring another ticketing or event management business that complemented the ChMS, that would also get me interested again, but unfortunately I just see too much execution risk in the Catholic space.