These 2 ASX payment shares look like compelling ideas at the moment, including donation company Pushpay Holdings Ltd (ASX:PPH).
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There are a few really high-performing ASX payment shares that are delivering good levels of profit growth right now.
Cash is steadily being replaced by electronic payments as the preferred month of sending money from one person or business to another.
These two ideas in-particular could be interesting to look at:
EML Payments Ltd (ASX: EML)
EML is one of the most diversified payment businesses on the ASX. It provides technology and systems for a wide array of clients. EML has prepaid offerings like gift cards, as well as gaming payouts, healthcare and government reimbursements and commission payments.
It has a number of global clients like the Queensland Government, Ladbrokes, Star Entertainment Group Ltd (ASX: SGR) and Sportsbet.
Over the last 12 months the company has partially suffered from a lack of economic activity in shopping centres in the northern hemisphere. But it’s seeing a recovery and the other parts of the business are more than making up for that decline.
The general purpose reloadable section, which includes things like salary packaging and gaming is performing particularly strongly. The non-PFS businesses of the ASX payments share saw like for like growth of 25% in the half-year FY21 result.
In that result, gross debit volume was up 54% to $10.2 billion, revenue grew 61% to $95.3 million and underlying net profit after tax (NPATA) rose 30% to $13.2 million.
According to Commsec, the EML share price is trading at 28x FY23’s estimated earnings.
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is another ASX payments share that is delivering high levels of growth at the moment.
It’s seeing its process volumes boom during the COVID-19 pandemic as US churches and their communities stay connected. In the six months to 30 September 2020, the company saw a 48% increase in total processing volume to US$3.2 billion. Pushpay technology has a useful ability to livestream services to the congregation, as well as many other church management and donation tools.
Over time, Pushpay is targeting a market share of 50%, which could translate into US$1 billion of annual revenue for the business.
The company is proving its profitability and leverage with each result. Whilst processing volume rose 48% and operating revenue grew 53% to US$85.6 million, the business saw net profit after tax (NPAT) increase by 107% to US$13.4 million and the operating cash flow grew by 203% to US$27 million.
Management are particularly optimistic about the future of Churchstaq, which is an all-in-one engagement solution. It combines Pushpay’s giving and engagement solution with Church Community Builder’s church management systems functionality. Sales of the combined product outperformed internal expectations in the first half of FY21.
Pushpay continues to see limited expense growth – expenses only went up 16% in the half-year – and it’s expecting further margin improvements as it gets bigger. The gross profit margin increased from 65% to 68% in that most recent result.
According to Commsec, the Pushpay share price is valued at 24x FY23’s estimated earnings.
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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 recommends EML Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended EML Payments and PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.