The share price of ASX fintech Pushpay Holdings Ltd (ASX: PPH) has followed a pretty familiar trajectory so far this year. After surging to a new all-time high of $4.74 on 17 February, it was savaged during the mass selloff prompted by the coronavirus pandemic. In the space of exactly 1 month, the Pushpay share price plummeted to a new 52-week low price of just $2.40.
But it is its performance since coming off that 52-week low which is of most interest to shareholders. The Pushpay share price has rallied strongly recently, up almost 70% to $4.02 as at the time of writing.
This pattern of crash and recovery isn’t unique amongst its peers – fellow fintech platform Afterpay Ltd (ASX: APT) has skyrocketed a whopping 260% higher since hitting its mid-March lows, while EML Payments Ltd (ASX: EML) has surged over 120% over a similar timeframe. But despite these recent gains, shares in both these other companies are still well down year-to-date. Pushpay shares have actually edged up 3%.
This essentially means that Pushpay has managed to get through 2020 unscathed. Not many companies can say that.
What has made this under-the-radar fintech so resilient?
Pushpay develops digital solutions for the church sector, with a particular focus towards the US faith market. Its online platforms provide ways for churches to reach their members remotely via a smartphone app. Churches can set up online ‘engagement centres’ which are almost like social media platforms tailored to individual congregations.
The platform also allows members of a church to set up one-off or recurring online donations. And on the backend, it allows churches to analyse trends in donor behaviour in order to target their fundraising campaigns. Pushpay generates revenues from these activities through both transaction and subscription fees.
In a COVID-19 update issued to the market in March, Pushpay actually upgraded its guidance in the face of the coronavirus pandemic. It reiterated its earlier operating revenue targets for FY20 of between US$121 million and US$124 million, but increased its guidance range for earnings before interest, tax, depreciation, amortisation and foreign currency gains or losses (EBITDAF) from between US$23 million and US$25 million to between US$25 million and US$27 million.
The company stated that social restrictions put in place to fight the coronavirus pandemic were forcing more churches to shift towards online and digital channels in order to communicate with their congregations. Pushpay also advised that it had seen an uptick in payment processing volumes over the weekend prior to this COVID-19 announcement, potentially as people sought to support their local communities during the crisis.
Should you invest?
Pushpay is targeting a fairly niche market, but one with potentially enormous revenue potential. By the company’s own estimates, if it can achieve 50% market penetration in the US this could represent as much as US$1 billion in annual revenues. That means Pushpay has a significant growth runway ahead of it.
And it is well suited to the unique demands of the coronavirus pandemic. Now more than ever, people are relying on a strong sense of online community to see them through this current crisis. This provides Pushpay with an opportunity to expand its brand awareness much faster than it otherwise may have been able to.
Pushpay structures its annual reporting around a financial year ending 31 March, and is due to release its full-year FY20 results on Wednesday, 6 May. Given its success so far in navigating the pandemic, this will definitely be one to watch closely over the coming days.
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Rhys Brock owns shares of AFTERPAY T FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Emerchants Limited 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.