… tech play Pushpay (PPH) is an app-based intermediary for churches to manage donations and to communicate with their congregation. The product is most widely used in the US, where Hillsong-style churches attract thousands of attendees. Depending on its size, the client church pays a monthly subscription fee anywhere between hundreds and thousands of dollars, while Pushpay also clips the ticket on the transactions.
The US ban on gatherings of more than ten people has put the kybosh on physical worshipping. In reality, the traditional felt-lined collection bowl has long been superseded by electronic payments and if anything the enforced move to virtual gatherings will work in Pushpay’s favour.
The Kiwi based Pushpay has upped its earnings guidance for the year to March 31, from $US23-25 million ($38-42m), to $US25-27m.
Faith giving sounds fluffy but it’s big business: the company expects current year revenue of $US121-124m, on volume of $US4.8-5 billion. The revenue is derived roughly one third from the subscriptions and two-thirds from the processing fees.
Given the US restrictions only came into effect in mid-March, the real story lies in how the company fares post balance date. But management is sanguine about the move to live streaming of services and the concomitant rise in “digital giving”.
“Pushpay is seeing a clear shift to digital whereby customers are utilising its mobile-first technology to communicate with their congregations,” the company says. “The company is experiencing an overall increase in demand for its services and remains well equipped to support customers to leverage digital technology and drive continued congregation participation through the use of its mobile app.”
We’ll know more about the post-corona trends when Pushpay issues its full year results on May 6.
Pushpay late last year entrenched its position in the US faith sector by acquiring “giving solutions” outfit Church Community Builder. The $US87.5m cash purchase was funded by cash on hand and a $US62.5m debt facility. CCB services more than 4000 churches, taking the combined companies’ tally to around 10,000. Along the way, parties associated with CCB founder Chris Fowler spent $US15m to acquire a 2.4% Pushpay stake.
In hindsight, the CCB purchase could have been better timed, with the company now carrying around $US60m of net debt. Broker UBS forecasts that, engorged by the CCB business, Pushpay will manage $US39m of earnings before interest and tax in the 2020-21 year, 77% higher, on revenue of $US165m (34% higher).
Much depends on the worshippers’ ability to keep their jobs.
https://www.sharecafe.com.au/2020/04/01/the-business-models-holding-up-in-the-rout/
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