MENU

Pushpay Holdings Ltd hands investors mixed quarter

Electronic charity chugger Pushpay Holdings Ltd (ASX: PPH) delivered a mixed update for the quarter ending June 30 2018 today in meeting revenue guidance, but only lifting client numbers 3% higher on the prior corresponding quarter.

Annualised committed monthly revenue (ACMR) clocked in at US$87.7 million, compared to $86.4 million as at March 31 2018 and ACMR’s moderate growth has seen investors send the stock 7% lower to $3.51 this afternoon.

As a reminder ACMR equals monthly average revenue per customer multiplied by number of customers and annualised, as such it’s a key forward-looking metric sported by software-as-a-service businesses looking to impress investors.

The flattish growth quarter-on-quarter is in part due to the seasonality of the business, with periods like Easter and Christmas being the traditional time for faith-based giving.

Luckily the clients it has are paying it substantially more than during the prior correspoding quarter, which reflects the group’s stated stragegy of chasing larger clients that generate incresed subscription and volume fees.

Pushpay is guiding for revenue in the region of US$21.8 million to US$23.3 million for the second quarter and is sticking to its goal of being cashflow breakeven by the end of calendar year 2018.

Unusually for a growth company it also reported that it had seen a 9% decrease in headcount compared to the prior corresponding period, with one of those leaving the business being a founder, Eliot Crowther, who also recently took the opportunity to sell down his NZ$100 million shareholding.

As far as I’m aware Pushpay did not provide much of an explanation over the mini-staff exodus and as a kind of online tithes business mainly chasing churches as customers, I’m not entirely comfortable with the watertightness of PushPay’s business model.

As such it’s a stock I’m inclined to watch from the side lines.

There’s no doubt the growth so far has been impressive, but in the software-as-a-service space I’d prefer to look to businesses with blue-chip client bases such as Elmo Sotware Ltd (ASX: ELO) or its powerful US rival Workday  Inc.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Atlassian.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of and has recommended ELMOSFTWRE FPO. The Motley Fool Australia owns shares of 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 Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.