Why is the Pushpay (ASX:PPH) share price struggling lately?

What’s happening with Pushpay shares right now?

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Since 17 September 2021, the Pushpay Holdings Ltd (ASX: PPH) share price has fallen by around 6%.

The electronic donation ASX share has been going through a lot of change since the onset of COVID-19.

Investors may not know what to make of the business in the current environment.

Pushpay itself said it’s continuing to expect strong revenue growth in FY22 (and beyond) as continues to execute on its strategy to increase its market share, innovate its products, carry out acquisitions and expanding into the Catholic market.

What is Pushpay expecting in FY22?

In FY22, Pushpay said it was expecting to achieve earnings before interest, tax, depreciation, amortisation, foreign exchange and impairments (EBITDAFI) of between US$64 million to US$69 million. However, it said that uncertainties and impacts surrounding COVID-19 and the broader US economic environment remain.

But the above numbers include the impact of its plans to invest in the Catholic segment.

In the long-term, Pushpay is targeting to increase the appeal of its products to new customers and increase the revenue per customer through continued innovation, and acquisitions.

Pushpay’s Catholic initiative is its first step in investing to grow its customer base outside of its existing core base.

Management have set a goal of acquiring more than 25% of the Catholic church management system and donor management system market over the next five years.

The ASX share pointed out that the Catholic church is closely associated with many education providers and non-profit organisations, which can present further opportunities within the US and other international jurisdictions. Acquisitions also provide opportunities to expand the customer base and to deliver new products that can be sold into the existing customer base more rapidly than could be achieved organically.

Excluding the impact of the investment into the Catholic initiative, Pushpay said it was expecting to achieve EBITDAFI for FY22 from its business of between US$66 million to US$71 million.

What else has made headlines?

The Pushpay share price may also be impacted by the acquisition of Resi Media.

Resi Media is a US-based market-leading streaming solutions provider, servicing more than 70% of the Outreach 100 largest churches in the US.

Pushpay said this was a strategically compelling acquisition of a market-leading, faith-focused streaming platform to broaden its core product offering.

Management also said that this adds a further stream of high growth and high margin software as a service (SaaS) revenue. It also brings a large total addressable market across all church segments, non-profit organisations and other verticals.

Pushpay thinks this has material synergy opportunities through product cross-selling and integration with Pushpay’s sales and marketing engine.

In FY21, Resi Media had $12.9 million of annual recurring revenue (ARR), with 101% revenue growth. It had a total of 3,374 customers, with 314% customer growth compared to FY20. The net revenue retention rate was more than 100%.

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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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