Pushpay share price jumps nearly 10% on updated guidance

The Pushpay share price is up almost 10% today after the payment system provider released upgraded guidance at its annual meeting.

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The Pushpay Holdings Ltd (ASX: PPH) share price is up 9.90% today after the payment system provider released upgraded guidance at its annual meeting. Pushpay reported solid revenue growth and expanded operating margins, with the company meeting or exceeding all guidance provided to the market over the year. 

What does Pushpay do? 

Pushpay sells a cloud-based online payment solution that centralises donation data and manages payment operations. The company has some 10,896 customers, most of which are US-based churches. 

In December, Pushpay acquired Community Church Builder (CCB), a church management system that provides a platform to connect and communicate with community members. The acquisition strengthens Pushpay‘s value proposition, with a joint product offering launched in April.

How did Pushpay perform in FY20?

Pushpay reported a 32% increase in revenue for FY20, which grew to US$129.8 million in the year to 31 March 2020. This increase pushed Pushpay into profitability, with the company reporting a US$21.7 million profit before tax, up from a loss of US$1.4 million. Operating expenses increased by only 5% thanks to disciplined cost management. 

Customer numbers grew 42% to 10,896, up from 7,649. This drove a 39% increase in total processing volume which reached US$5 billion. Gross profit margin also climbed 5 percentage points to 65%. Over the year, Pushpay processed 25.9 million transactions with an average transaction value of US$195. 

What is the outlook for Pushpay?

Pushpay stands to benefit from the shift to digital as a result of the coronavirus pandemic. This has resulted in increased demand for Pushpay’s services. While digital donations to churches were once uncommon, they are now becoming increasingly prevalent in the US. 

Pushpay has a strategic goal of becoming the preferred provider of mission-critical software in the US faith sector. Its solutions allow churches to create their own apps, manage service schedules, and facilitate digital giving. Despite Pushpay’s strong growth to date, it has still only captured a very small percentage of the market, meaning there is scope for further growth. 

Today, Pushpay updated its guidance for the year ending 31 March 2021. The company now expects earnings before interest, tax, depreciation, amortisation, and foreign currency (gains)/losses (EBITDAF) to be between US$50 million and US$54 million, up from between US$48 million to US$52 million. 

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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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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