Pushpay (ASX: PPH) Upgrades Guidance

Given that I fairly publicly announced I was going to sell all my Pushpay (ASX: PPH) shares once the pandemic became fait accompli, I have had a lot of people essentially ask me if I think I was wrong, now that Pushpay announced it is ahead of guidance.

Back on February 25 I said: “I sold some Pushpay (ASX: PPH) shares since I think people will stop going to church in a pandemic. I plan to sell the rest of my holding today.” Since I sold at about 20% higher than the current price, I have no regrets. But the question on my mind is whether I should buy back in or not.

While the pandemic provided the impetus for me to sell, it must be remembered that I had already expressed doubts around my confidence in management, late last year.

Today’s announcement by Pushpay has three key points.

  • Pushpay is seeing churches cancel congregations, but there is “a clear shift to digital whereby customers are utilising its mobile first technology solutions to communicate with their congregations.”
  • Pushpay’s processing volume over the last week was higher than the company expected prior to COVID-19
  • Pushpay upgraded legacy business EBITDAF guidance from $23m – $25m to $25m – $27m.

On top of this, Pushpay earns US dollars, so in Australian dollar terms, its EBITDAF is higher as a result of the weak Australian dollar.

At current prices that puts it on an EV/ EBITDAF multiple of around 15-17, with further upside to come as Church Community Builder.

It also said operating revenue will be $121m to $124m. Last half, operating revenue was $57m, so that implies $67m for the second half, more than 20% above the second half last year. That’s a positive.

Overall, I think Pushpay looks interesting right now and I have put it on my watchlist. However, given that I think the coronavirus will provide a surplus of opportunities, and because I suspect people will give less if they don’t go to church physically I am hesitant to buy.

On top of that, it’s well established people give less to charity in a recession, and I think we will see a near global recession. Therefore, I’d prefer try to buy Pushpay (ASX: PPH) during that recession when revenue is (possibly) in decline (or at least rather flat). Of course, this may not eventuate in which case I will miss out, comforting myself with the old saying: “You can’t pat all the fluffy dogs.”

This post is not financial advice, and you should click here to read our detailed disclaimer.

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