Giving & Engagement Solutions Provider, Pushpay Pushes One Notch Up on ASX Charts

PPH Stock Up By Over 9% Post Results Announcement

Market participants welcomed Pushpay Holdings Limited’s (ASX: PPH) results handsomely on 6 November 2019. The stock price went up by over 9% in the last two days’ trade, as on 7 November 2019, the PPH stock settled at $ 5.263 with a daily volume of 335,789 and a market capitalisation of $ 836.8 million.

Since its listing, the PPH stock has delivered a 48.29% return. The stock has a 52-week high price of $ 3.850 and a 52-week low price of $ 2.640 with an average volume of 138,827.

Over the period of six months ended 30 September 2019, Pushpay registered solid revenue growth, in addition to growing operating margins and improving EBITDAF and operating cash flow. Pushpay makes continuous efforts on the futureproofing of its business by refining its strategies and maintaining prudent financial discipline.

Let’s dig deeper into Pushpay’s financial performance during the six months to 30 September 2019.

Revenue Growth by USD 13.4 million

The total revenue for Pushpay during the reported period increased by USD 13.4 million (an increase of 30%) to an amount of USD 57.4 million, which was USD 44.0 million in the prior comparable period.

Pushpay believes that the growth in revenue was witnessed as a result of the targeted employment of the company’s strategy, along with growing team competences and expertise, and investment into product design and development.

Moreover, the company has several initiatives in place to attract fresh customers throughout the remaining financial year.

EBITDAF Up 413%

During the first half of FY2020, Pushpay witnessed a 413% increase in its EBITDAF. The EBITDAF jumped from a loss of USD 3.1 million in the first half of the prior year to a gain of USD 9.6 million.

NPAT Increased by USD 10.9 million

Net profit after tax of the company grew by 247% (or USD 10.9 million) from a net loss of USD 4.4 million in the six months ended September 2018 to a net profit of USD 6.5 million in the first half of FY2020. Pushpay is optimistic about the continued growth and success for its business being driven by its persistent emphasis on innovation, strategy and execution.

Operating Cash Flow Improved by USD 14.0 Million

During the reported half year period, the company’s operating cash flow increased by USD 14.0 million or 274% as compared to the prior comparable period. The company reported positive operating cash flow of USD 8.9 million in H1 FY2020, compared with negative operating cash flow of USD 5.1 million in the same period a year ago.

Pushpay’s increasing positive cash flow provides flexibility to the company while the evaluation of potential strategic acquisitions is in pipeline. The company believes that these strategic acquisitions would boost the expansion of its current proposition and complement significant value to its current business.

Operating Expenses Declined by 2%

Along with the increase in operating revenue by 31%, Pushpay’s total operating expenses declined by 2% for the six months period. In terms of percentage of operating revenue, total operating expenses for Pushpay improved from 72% to 54%, representing an improvement of 18% points.

Pushpay is hopeful of noteworthy operating leverage to accumulate as a result of the continuous increase in operating revenue, with growth in operating expenses remaining low.

The implementation of best-in-class software tools and scalable processes, in addition to strong financial discipline, will enable the company to attain significant operating leverage as revenue grows.

During the half year period ended 30 September 2019, the total processing volume for Pushpay increased by USD 676.3 million from USD 1.5 billion in the prior comparable period to USD 2.2 billion, representing an increase of 45%.

Pushpay expects further growth in Total Processing Volume being steered by

• A larger proportion of new medium and large customers;
• Further development of its product set resulting in higher adoption and usage;
• Increased adoption of digital giving in the US faith sector;
• Increased giving to religion in the US.

Changes in Leadership Team

During the half year, Pushpay made significant changes to its leadership team.

• Chris Heaslip resigned from his position as Chief Executive Officer, effective 31 May 2019. Chris remains a Non-Executive Director of the company;
• Following Chris Heaslip’s resignation, Pushpay’s Board appointed Bruce Gordon (previously Chairman of the Board) as CEO and Executive Director, effective 1 June 2019;
• Christopher Huljich was replaced by Peter Huljich (previously an Alternate Director to Christopher Huljich), as a Non-Executive Director, effective 8 May 2019;
• Subsequently, Christopher Huljich was appointed as an Alternate Director to Peter Huljich;
• Daniel (Dan) Steinman resigned as a Director of Pushpay, effective 26 August 2019.

Pushpay welcomed Justine Smyth to the Board of Directors as an Independent Director, effective from 26 August 2019.

In addition to this, Justine will share additional responsibilities as the

• Chair of Pushpay’s ‘Audit and Risk Management Committee’
• Member of the ‘Nominations and Remuneration Committee’

As per the company’s reports, the Management Board of Pushpay is currently in search of additional Directors with diverse backgrounds and experience.

Outlook for FY2020

Standing on a strong financial base, Pushpay looks forward to maintaining steadiness in increasing operating margin and simultaneously seeking opportunities to boost revenue progress.

Pushpay looks forward to laying a special emphasis on ensuring that the efficiency continues to be high while maintaining cost discipline throughout the business.

With the evidently strong half year results, the company restated its guidance for the year ending 31 March 2020 as follows:

• Operating revenue of between USD 121.0 million and USD 124.0 million
• Gross margin of over 63%
• EBITDAF of between USD 23.0 million and USD 25.0 million
• Total Processing Volume of between USD 4.8 billion and USD 5.0 billion

In the long term, Pushpay is targeting more than 50% of the medium and large church segments, an opportunity representing over USD 1 billion in annual revenue.

With a striking performance in the half year period, Pushpay anticipates solid revenue growth for the future. The company believes to gain further market share in the medium-term and maximise shareholder value through the execution of its strategy.

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