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Pushpay eyes acquisitions as cash flow fills collection plate

Wednesday 6th November 2019

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Pushpay Holdings has its eyes on buying other companies to aid its long-term goal of attracting more than half of America's medium and large churches as positive cash flow fills its coffers.

The digital church collection payment app maker started generating a positive operating cash flow over the past 12 months, and that stepped up to US$8.9 million in the six months ended Sept. 30 from about US$2 million in the March period. That turned around an outflow of US$5.1 million a year earlier. 

Pushpay was sitting on US$9.9 million in cash at Sept. 30 and another US$13 million in a term deposit, putting it in a position to accelerate its growth through acquisition. 

"As we continue to execute on our strategy, we are also actively evaluating potential strategic acquisitions that broaden Pushpay’s current proposition and add significant value to the current business," the company said. 

Earlier this year, Pushpay had said it was evaluating potential acquisitions. 

The company reported a profit of US$6.5 million in the September half, turning around a loss of US$4.4 million a year earlier. Revenue climbed 30 percent to US$57.4 million as it processed US$2.2 billion of transactions, up from US$1.5 billion a year earlier. 

"We expect continued growth in total processing volume driven by a larger proportion of new medium and large customers, further development of our product set resulting in higher adoption and usage, increased adoption of digital giving in the US faith sector, and increased giving to religion in the US," Pushpay said. 

Church customer numbers rose to 7,905 from 7,420 a year earlier, while monthly average revenue per customer was up 20 percent at US$1,272. 

Pushpay has been focused on improving margin by stripping out costs. It also got a tailwind from a weaker New Zealand dollar, meaning the cost of product design and development is cheaper when converted into US dollars. 

Product design and development costs were down 7 percent at US$7.8 million in the half. 

The company's gross margin widened to 65 percent from 57 percent a year earlier, which it put down to more revenue and keeping a lid on costs. Pushpay still managed to expand the size of its workforce, with 360 staff compared to 354 a year earlier. 

Earnings before interest, tax, depreciation, amortisation and foreign exchange movements were US$9.6 million, turning around an ebitdaf-loss of US$3.1 million a year earlier. 

Pushpay affirmed annual guidance for ebitaf of $23-25 million in the March year on revenue of US$121-124 million. Total processing volume is estimated to be US$4.8-5 billion for the year. 

The shares last traded at $3.17, and are up 0.6 percent so far this year, lagging behind a 23 percent gain for the S&P/NZX 50 Index. 


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