Pushpay Holdings Ltd shares rise on quarterly update

The Pushpay Holdings Ltd (ASX:PPH) share price is closing in on a record high after releasing a positive quarterly update…

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In early trade the Pushpay Holdings Ltd (ASX: PPH) share price has pushed 1.5% higher to $4.05 and is just a fraction away from making another record high.

This brings the fintech company’s 12-month return to an impressive 136%.

What happened?

Last week Pushpay advised that it achieved its target of US$100 million in annualised committed monthly revenue (ACMR) ahead of its March 2018 target.

This morning the company has followed up that announcement with an end of quarter update which revealed ACMR of US$106.4 million as of December 31.

This represents growth of 83.8% on the prior corresponding period and was driven largely by a solid increase in customer numbers and average revenue per customer (ARPC).

According to the release, ARPC has grown 57.1% on the prior corresponding period to US$1,233 per month.

Another positive in my opinion is the scalability of its business. Although customer numbers have increased 17% on the prior corresponding period, the company only added an additional four staff members. This means that ACMR per staff member increased from $170,000 to $308,000. Very efficient.

Looking ahead, management does expect both ACMR and ARPC to decrease over the next quarter due to the seasonality of its business. But the following quarters these metrics are expected to accelerate again.

The company has once again reaffirmed its belief that it will achieve its full-year revenue guidance of US$70 million and be breakeven on a monthly cash flow basis prior to the end of calendar 2018.

Should you invest?

I think Pushpay is a great long-term buy and hold investment option due to the massive opportunity the company has in the US church market. The company’s long-term target is winning over 50% of the medium and large church segments, an opportunity representing over US$1 billion in annual revenue.

I believe the company is capable of delivering on this, putting it up there with Afterpay Touch Group Ltd (ASX: APT) and Praemium Ltd (ASX: PPS) as a fintech share not to be missed.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and PUSHPAY FPO NZX. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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