Pushpay Holdings Ltd is a cloud-based online payment solution that provides a donor management system, including donor tools, finance tools and a custom community app to religious organisations, non-profit organisations and education providers in the US, Canada, Australia and New Zealand.
Founded in 2011, Pushpay operates under a SaaS (Software as a Service) model with a heavy emphasis on churches. As of 31 March 2020, it has a customer base of 10,896 churches and an annual revenue retention rate of 100%.
While Pushpay is listed on both the Australian Securities Exchange (ASX) and New Zealand Stock Exchange (NSX), 98% of its customers are in North America (US and Canada).
“Pushpay’s acquisition of Church Community Builder, a US-based leading provider of church management system (Chms), in December 2019 proved to be God’s gift,” said Michael.
“The acquisition of complemented Pushpay’s custom community app and donation solution, such that online churches could manage administrative affairs and ensure church announcements, sermon streaming, and mobile giving were maintained throughout the quarantine period,” he added.
So where is Pushpay’s point of difference?
“We argue Pushpay’s integrated system for churches poses as a powerful competitive advantage that differentiates them from other payment process services like PayPal and Stripe,” Michael said.
What sparks further interest in PPH?
“We’re also very encouraged by Pushpay’s total processing volume growth rate, as a key component of their revenue is the processing fee of 1.8%. In FY20, total processing volume increased by 39%, amounting to US$5b, which is expected to grow more as Pushpay states most churches see a 76% growth in recurring givers in their first six months without losing current givers,” he said.
And what about social distancing?
“With social distancing restrictions expected to continue, Medallion is encouraged by Pushpay’s prospects as revenues and gross operating margin jump all while total operating expenses improve,” he said.
And what do you think of its management?
“We like the strong emphasis on the founder and management team’s involvement, as we believe it increases the likelihood of management’s interests aligning with shareholder interests. Hence, we find co-founder Chris Heaslip and Directors’ equity stake amounting to 49.7% encouraging as it suggests there is a vested interest for management to grow the company,” Michael said.
So you see this stock as a buy?
“Going forward we view it as a great opportunity to take a position in a business that is rapidly growing its customer base, revenue, and margins, both organically and through targeted acquisitions. While Pushpay’s customers are predominantly North American, it is important to consider the prospects of global expansion given the world’s Christian population is 2.3 billion,” he concluded.
Source: Google
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