Why the Pushpay (ASX:PPH) share price underperformed in May

What went wrong in May for Pushpay?

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The Pushpay Holdings Ltd (ASX: PPH) share price was out of form in May.

During the month, the donation and engagement platform provider's shares lost 7% of their value.

falling asx share price represented by woman making sad face

Image source: Getty Images

What happened to the Pushpay share price in May?

The Pushpay share price came under pressure last month after weakness in the tech sector offset the release of a strong full year result.

For example, while Pushpay's decline was disappointing compared to the 1.9% gain by the S&P/ASX 200 Index (ASX: XJO), it was in line with the 7% decline by the S&P/ASX All Technology Index (ASX: XTX) in May.

The weakness in the tech sector appears to have been driven by a rotation to value shares and concerns over rising bond yields and their impact on valuations.

The Pushpay FY 2021 result

Pushpay was on form again in FY 2021, delivering operating revenue of US$179.1 million. This was a 40% or US$51.6 million increase on the prior corresponding period.

And thanks to operating leverage, things were even better for its operating earnings (EBITDAF), which increased 133% to US$58.9 million. This was in line with its guidance for FY 2021, which was upgraded three times during the financial year.

FY 2022 onwards

Looking ahead, while management is expecting the company's growth to moderate in FY 2022, it is still forecasting a growth rate many companies would be envious of.

Excluding costs relating to its expansion into the Catholic church market, Pushpay expects to achieve operating earnings of between US$66 million and US$71 million. This represents year on year growth of 12% to 20.5%.

Speaking about its expansion, management commented: "In the long-term, Pushpay is targeting to increase the appeal of our products to new customers and increase the revenue per Customer through continued innovation, and merger and acquisitions. The Catholic initiative is our first step in investing to grow our Customer base outside of our existing core Customer base, and we have set the goal of acquiring more than 25% of the Catholic church management system and donor management system market over the next five years."

It also revealed that it will consider mergers and acquisitions to support its growth.

"The Catholic church is closely associated with many education providers and non-profit organisations, which presents further opportunities within the US and other international jurisdictions. Mergers and acquisitions provide opportunities to expand our Customer base and to deliver new products that can be sold into our existing Customer base more rapidly than could be achieved organically," it concluded.

Shareholders will no doubt be hoping that it is onwards and upwards for the Pushpay share price in June.

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