Is the Pushpay Holdings Ltd (ASX: PPH) share price a buy after rising another 12% this morning?
The electronic donation business reported very impressively yesterday after releasing its FY20 result. The Pushpay share price was a strong performer yesterday too. The coronavirus seems have brought forward growth for the company which is able to livestream church services.
Pushpay's FY20 report
Pushpay reported that total revenue rose by 32% to US$129.8 million. Operating revenue rose 33% over the year to US$127.5 million. Excluding the Church Community Builder acquisition, operating revenue rose 28% to US$123.1 million.
The gross margin improved to 65%, up from 60% a year ago. The operating expenses only rose by 5%, causing total operating expenses to improve as a percentage of operating income from 65% to 52%. Excluding Church Community Builder, the operating leverage improved from 65% to 47%.
The interesting thing is that management still expect "significant" operating leverage to accrue as revenue continues to increase while growth in total operating expenses remains low. This will really help the long-term profit growth and ultimately the Pushpay share price.
Pushpay's total earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) jumped 1,506% to US$25.1 million. Excluding the acquisition, EBITDAF rose 1,677% to US$27.8 million. This beat the latest guidance the company had given of US$25 million to US$27 million.
Net profit came in at US$16 million. Operating cash flow improved by US$26.3 million to US$23.5 million.
In terms of actual volumes, total processing volume rose by 39% to US$5 billion.
Is the Pushpay share price a buy?
The exciting thing is the long-term future for Pushpay. It's targeting over 50% of the medium and large church segments. That's an opportunity of over US$1 billion in annual revenue, with much higher profit margins.
In FY21 the company is guiding EBITDAF of between US$48 million to US$52 million. That means growth of around 100% if achieved.
There's a long growth runway for Pushpay, if its margins can keep growing whilst the revenue jumps then it could still be an excellent long-term buy. I'd happily buy shares today.
