Pushpay Holdings Ltd (ASX: PPH) provides a donor management system, including donor tools, finance tools and a custom community app to the faith sector, non-profit organisations and education providers in the US, Canada, Australia and New Zealand.
The company just announced that it has doubled total revenue to US$70 million in the year to 31 March 2018. It is now processing over US$3 billion in payments.
Management said that its profit margins are improving, Pushpay expects the gross margin to increase from 54% for the six months ending 31 March 2018 to over 60% for the six months ended 31 March 2019.
The ASX release included other impressive statistics. At the end of the March 2018 quarter it had annualised committed monthly revenue of US$86.4 million compared to US$58.8 million a year ago, which is an increase of 46.8%. More of this is now from medium and large customers, this percentage has increased to 86.6% compared to 82.4% a year earlier.
Average revenue per customer increased by 36% from US$727 per month to US$989 per month. Total customers increased by 8% from 6,737 to 7,276.
The company’s balance sheet is becoming more flexible with the growth of the business. Pushpay reported that it had US$17.9 million of cash and available funding lines at 31 March 2018, compared to US$13.4 million at 31 March 2017.
Management said that the company now has 13 of the top 20 and 54 of the top 100 largest churches in the US. Pushpay expects to continue to increase the number of top 100 largest church customers in the US as the business scales. Around 97% of Pushpay’s customers are now located in the US or Canada. The rest are in Australia or New Zealand.
The company also said it has released two strategies to ensure more money goes through Pushpay. Payment Assurance makes sure a payment goes through (eventually) even if processors, banks or their partners are having issues. The payment intention is recorded and processed once the payment network issue is resolved. Last quarter, this resulted in Pushpay customers receiving over US$4 million in payments.
The other strategy is called Offline Conversion. It encourages users to change to digital giving from online cash & cheque. Around 85% of giving in churches is still made through traditional methods of cash and cheque. In the long-term this will hopefully see more people give through Pushpay’s service.
Pushpay re-iterated its plan to list in the US market by the end of 2018.
Chris Heaslip, Pushpay’s CEO, said “Pushpay is providing total revenue guidance of between US$20.5 million and US$22 million for the quarter ending 30 June 2018. Pushpay remains in a position to reach its target of breakeven on a monthly cash flow basis prior to the end of calendar 2018.
“In the long term, Pushpay is targeting over 50% of the medium and large church segments, an opportunity representing over US$1 billion in annual revenue.”
This is clearly another top update from Pushpay and it shows how well the business is going. The business is very scalable as the improving gross margin shows, if it gets to even US$250 million the margins should be a fair bit higher.
Tech shares can be hard to value, but if Pushpay can continue with this growth rate for a few years today’s price could appear cheap – even after the share price run.