Why this ASX tech share could be better than BNPL stocks 

Could the Pushpay Ltd (ASX: PPH) be a better ASX tech share to buy than leading BNPL stocks such as Afterpay Ltd (ASX:APT)?

| More on:
man holding mobile phone that says make donation

Image source: Getty Images

The BNPL sector is becoming an increasingly crowded space as banks, online payment behemoths and competitors scramble for market share. One could argue that the likes of Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) may have already priced in recent geographic expansions, and additional capital raisings might be needed to fund further growth initiatives. While BNPL shares could continue to grow, here is one ASX tech share in the payments space that often goes by unnoticed. 

Pushpay Holdings Ltd (ASX: PPH) 

Pushpay has been a quiet overachieving ASX tech share in light of BNPL stocks that tend to take the limelight. The company provides a donor management system including donor tools, finance tools and a custom community app to the faith sector, non-profit organisations and education providers in the US, Canada, Australia and New Zealand. 

FY20 performance 

Pushpay delivered solid revenue growth with expanding operating margins and operating cash flow improvements in FY20. The company completed the strategic acquisition of Church Community Builder, a US-based, leading provider of church management systems for a total cash consideration of US$87.5 million. It achieved or exceeded all guidance provided to the market over the year, including operation revenue, gross margin and total processing volumes. 

The company is making a significant step towards profitability with operating cash flow increasing 953% to US$23.5 million up from negative US$2.8 million. Likewise, its net profit after tax significantly increased to US$16 million from a loss of US$1.4 million in FY19. Its previous financial year included a one-time benefit arising from previously unrecognised tax losses and deferred research expenditure of US$20.9 million which contributed to the net profit of US$18.8 million in FY19. Excluding the benefit would result in the loss of US$1.4 million in FY19. 

COVID-19 has served as a tailwind for the digital business as client services move online. The company provided an earnings before interest, tax, depreciation, amortisation and fair value adjustments (EBITDAF) of between US$50.0 million and US$54.0 million. This would represent an increase of more than 100% on the prior corresponding period. 

Why Pushpay could be a leading ASX tech share

The shift to digital apps within the faith sector, non-profit organisation and education space has seen an uplift in demand for Pushpay services. The company has already provided an outlook that EBITDAF would more than double against the prior corresponding period and has already transitioned into a profitable business. This is arguably a step ahead of many ASX tech shares, especially the likes of BNPL shares that could be years away from being cash flow positive businesses. 

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

*Returns as of 15/2/2021

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia 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.

More on ⏸️ Best ASX Shares

Three travellers laughing and smiling outside airport
⏸️ Best ASX Shares

If you’d invested $2,000 in Webjet (ASX:WEB) shares 10 years ago, here’s what it would be worth now

The travel expert has proved a winner for long-haul investors...

Read more »

illustration of three houses with one under a magnifying glass signifying mcgrath share price on watch
⏸️ Best ASX Shares

The 5 best ASX real estate shares of the 2021 financial year unmasked

Office space, industrial storage, retail malls and residential. These companies cover them all.

Read more »

asx share price increase represented by golden dollar sign rocketing out from white domes of lithium
Energy Shares

5 best ASX energy shares of the 2021 financial year revealed

As the world emerged from initial COVID lockdowns, the demand for energy soared.

Read more »

best asx 200 shares of financial year 2021 represented by 2021 formed with gold piggy bank
⏸️ Best ASX Shares

Meet the best performing ASX 200 shares of FY21. Are yours on the list?

These companies have been crowned the best of the best in FY21...

Read more »

retail asx share price represented by shopping trolley full of cash
⏸️ Best ASX Shares

How I’d build a ‘best stocks to buy now’ list

Focusing on the quality and prices of companies from a diverse range of sectors could make it easier to build…

Read more »

asx share price on watch represented by investor looking through magnifying glass
⏸️ Best ASX Shares

How I’d aim to find top shares to buy in March 2021

Comparing companies with their peers and considering how they might change in future could allow an investor to find the…

Read more »

Brest ASX shares represented by piggy bank surrounded by autumn leaves
⏸️ Best ASX Shares

Top ASX shares to buy in March 2021

Our Foolish contributors have compiled a list of some of the ASX shares experts are saying to Buy in March.…

Read more »

rising asx share price represented by man with arms raised against blackboard featuring images of dollar notes
⏸️ Best ASX Shares

Why the Wesfarmers (ASX:WES) share price has soared 24% in a year

The Wesfarmers Ltd (ASX:WES) share price has been a solid performer over the past year. Here's why this ASX blue…

Read more »