Last week Pushpay Holdings (ASX:PPH) announced that it would buy Church Community Builder (CCB).
Arguably the main benefit here is to increase the stickiness of customer relationships by providing more of the technology stack used by each church. This would come with cross-selling opportunities, but also development expenses.
UBS has estimated CCB has a gross profit of about $15 million USD, while FN Arena has reported that CCB has revenue of around $10 million USD Unfortunately, Pushpay didn’t feel the need to enlighten shareholders.
Notably, the founder of Community Church Builder, Chris Fowler, has bought $15m USD worth of Pushpay shares from the former CEO and founder of Pushpay, Chris Heaslip, at about AUD $3.40 per share.
While it’s hard to get particularly excited about an acquisition when we don’t have any information about how much the acquired company earns, shareholders have enjoyed strong share price appreciation since it was announced. They will be hoping that this will fuel a bit of momentum and the stock will get added to passive fund indices, such as the S&P/ASX 200. With a market capitalisation of over $1 billion, it may be getting close.
Having said all that, there are some reasons to be skeptical about Pushpay:
Founder Eliot Crowther quit not long ago, and sold many of his shares. During divorce proceedings, his ex-wife said:
“While we were taking steps to determine whether we would remain married, Eliot told me that the Pushpay stock would soon go drastically down… Eliot told me he knew this would happen based on information he knew about the company based on his position at the company.”
Founder Chris Heaslip sold shares not long ago, when he quit as CEO but remained on the board. He agreed to escrow his shares. He has now sold more shares (the ones that he agreed to escrow) and is standing down from the board.Director Peter Huljich was fined for misleading investors and sued (unsuccessfully) by his grandmother
Finally, I note that the co-founders of Pushpay are investing in an anti-money-laundering company that arguably could have made an interesting investment for Pushpay itself.
Disclosure: This is not intended as advice and is certainly not a recommendation. The author currently owns Pushpay shares, and will not buy or sell Pushpay shares for 2 business days after the publication of this article. However, he may buy or sell shares without notice after that.
If you’d like to receive an occasional Free email with more content like this, then sign up today!