Why the Pushpay share price is charging higher on Monday

In morning trade the Pushpay Holdings Ltd (ASX: PPH) share price has had a strong start to the week and charged notably higher.

At the time of writing the payments and engagement provider’s shares are up over 5% to $3.04.

Why is the Pushpay share price charging higher today?

This morning Pushpay provided an update on its performance during the quarter ending December 31.

According to the release, the company has achieved its target of being breakeven on a monthly cash flow basis prior to the end of calendar year 2018.

In fact, Pushpay was both earnings before interest, tax, depreciation, amortisation and foreign currency gains/losses (EBITDAF) positive and cash flow positive for the quarter.

Pleasingly, management is confident the company will remain cash flow positive on an ongoing basis from now on.

The key to achieving this milestone was a significant increase in its annualised processing volume (APV). During the December quarter this grew 56% from US$3.2 billion to over US$5 billion, though some of this growth was due to seasonal factors.

Prior to the start of the seasonal period on December 10, APV had increased by 25% to over US$4 billion.

What’s next?

In light of this strong quarter, management is confident that the company will achieve its full year revenue guidance of between US$97.5 million to US$100.5 million, a gross margin above 60% for the second half, and positive full year EBITDAF.

Pushpay’s CEO and co-founder, Chris Heaslip, appeared to be very pleased with the company’s performance during the final quarter.

He said: “We are very pleased to announce that Pushpay has achieved its target, and was both EBITDAF and cash flow positive for the quarter ended 31 December 2018. “

Before adding: “Given the strength of the underlying business, Pushpay is well positioned to capitalise on opportunities to accelerate growth, including potential acquisitions that add significant value to the current business.”

Should you invest?

I’ve been very impressed with the way Pushpay has carved out a leading position in the niche church donations market over the last couple of years and believe it is well-positioned to continue growing its share over the coming years.

In light of this and a recent pullback in its share price, I think it could be well worth taking a closer look at Pushpay right now along with fellow payments companies Afterpay Touch Group Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P).

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 Scott Phillips.

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