3 compelling reasons why the Pushpay (ASX:PPH) share price could be a buy

Pushpay has released an investor presentation, outlining some compelling reasons why the business has potential.

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The Pushpay Holdings Ltd (ASX: PPH) share price could be one to consider after the tech company released an investor presentation, outlining its strategy.

For readers that haven’t heard of Pushpay before, it’s a donation processing and church management business. It currently has a number of tools for churches including live streaming, giving, bible study, HR software, bookkeeping software, music licensing and so on.

It can also work with non-church organisations like charities or corporates. Pushpay can assist with payments, donations, memberships, branded credit cards, video on demand, event management and more.

There are a few different things that Pushpay pointed to in its presentation as reasons why it has growth potential:

Diversification plans

At the moment, a very large amount of Pushpay’s earnings come from US churches. But Pushpay is looking to explore other avenues for new earnings streams.

It said that education can be another area of focus, such as K-12 and college campus alumni associations. The company shared a list of offerings it could be involved, including: tuition or dues, the parent and teacher curriculum review, student body voting, sports program funding, audio and textbook licensing, sororities and fraternities membership and dues, class attendance, study groups, home school co-ops or networks and tutoring.

Other payment services that Pushpay could offer include currency conversion and cryptocurrency transactions.

Pushpay also noted that it can geographically expand as well. The US is the main profit generator, but management are also thinking about growing in South East Asia, South America and Europe too.

Resi Media

The ASX tech share recently announced the acquisition of Resi Media. The Pushpay share price has risen by 17% since the date of the announcement. This business was bought for a cost of US$150 million.

Pushpay described Resi Media as a high-growth software as a service (SaaS) company specialising in high-quality transmission for web and multisite streaming offering end-to-end solutions to customers.

Resi Media’s products are being used by 70% of the Outreach 100 churches – many of the biggest churches in the US.

The video streaming business also reportedly has customers outside of the faith sector, including in the corporate, education, sports and live event streaming markets.

In FY21, Resi Media had $12.9 million of annual recurring revenue (ARR), with 3,374 customers and net revenue retention of more than 100%. FY21 saw 101% revenue growth compared to FY20.

Catholic sector growth

Pushpay has told investors that it wants to expand in the Catholic sector.

The company says that 23% of the US population considered itself to be Catholic in 2018.

In 2016, 27% of US faith giving was generated from Catholic services, totaling US$30 billion. Pushpay estimates there’s an estimated US$330 million annual revenue opportunity here.

The ASX tech share pointed out there are an estimated 17,000 parishes in the US, which skew more heavily to medium and large churches.

It said that current solutions for the Catholic sector are dated, lack features, are not mobile-friendly and are not cloud-based. The donation business’ research shows that parishes are generally dissatisfied with current tools and ready for a change. It also said that Catholic branded or customised solutions are “clearly preferred” by Catholic parishes.

All of that leads Pushpay to believe there is an opportunity to provide a modern technology solution.

So Pushpay is providing an offering called ParishStaq, alongside its older all-in-one offering called ChurchStaq.

Pushpay share price valuation

The pre-open price of $1.84, its shares are currently valued at 35x FY22’s estimated earnings.

Should you invest $1,000 in Pushpay right now?

Before you consider Pushpay, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Pushpay wasn't one of them.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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