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Pushpay share price down 5% on full-year results and weak guidance

Pushpay shares are falling on Wednesday…
The post Pushpay share price down 5% on full-year results and weak guidance appeared first on The Motley Fool Australia. –

The Pushpay Holdings Ltd (ASX: PPH) share price is on the slide on Wednesday morning.

At the time of writing, the donation technology company’s shares are down 5% to $1.12.

Pushpay share price lower on FY 2022 results

Total Processing Volume increased by 10% to US$7.6 billion
Operating revenue increasing by 13% to US$202.8 million including Resi Media acquisition
Annual Revenue Retention Rate remained above 100% over the last five comparable periods ended 31 March.
Gross margin remained consistent with the previous year at 68%.
Operating expenses up 28% to US$83.4 million
Underlying EBITDAF increased 8% to US$62.4 million
Net profit after tax up 7% to US$33.4 million

What happened during FY 2022?

For the 12 months ended 31 March, Pushpay reported a 10% increase in total processing volume to US$7.6 billion. This was underpinned by a 31% increase in customer numbers to 14,508 and the acquisition of video streaming provider Resi Media.

Operating revenue increased 13% to US$202.8 million including Resi Media and 6% to US$190.6 million excluding the acquisition.

And while its gross margin remained consistent at 68%, operating expenses grew quicker than revenue at 28% to US$83.4 million over the period due to the inclusion of Resi Media and increasing investment in people.

This meant that Pushpay’s earnings before interest, tax, depreciation, amortisation, and forex (EBITDAF) and net profit grew at a more modest 8% to US$62.4 million and 7% to US$33.4 million, respectively.

Management commentary

Pushpay’s CEO, Molly Matthews, was pleased with the company’s performance in FY 2022 and the progress it is making with its long-term strategy. She commented:

Pushpay’s long-term growth strategy is focused on four areas – growing Customer numbers, increasing the number of Products utilised, expanding and enhancing Pushpay’s suite of products, and increasing share of wallet. Significant progress has been made executing against strategic priorities in each of these areas, setting the foundation for escalating growth in future years.

A number of initiatives were implemented during the year to respond to market headwinds, including to refresh and strengthen Pushpay’s go-to-market strategy and investment in talent and capability. A key highlight during the 2022 financial year was the acquisition of a leading video streaming provider, Resi Media in August 2021, which provides significant value and growth opportunities.

“Pleasingly, we are now seeing benefits from these actions, with the full benefits to be seen from FY24 onwards following a further year of investment, particularly in people and capability, in FY23.

Outlook

The weakness in the Pushpay share price today is likely to be down to its guidance for FY 2023.

Although management is expecting more of the same for its operating revenue, guiding to growth of 10% to 15%, it is forecasting a decline in its EBITDAF.

Pushpay is expecting underlying EBITDAF to be between US$56 million and US$61 million in FY 2023, which will be a decline of 2.2% to 10% year on year. This reflects the company’s investment in growth opportunities.

Looking further ahead, the company is targeting over US$10 billion of Total Processing Volume and more than 20,000 customers by the end of FY 2024.

Pushpay chair, Graham Shaw, commented:

After many years of building our business and with the recent expansion of Pushpay through two significant acquisitions, we are now focused on developing our business for the future and are investing in targeted strategic growth initiatives, in particular entry into the Catholic segment, Resi Media and other growth initiatives. This investment will continue through FY23, with escalating returns expected from FY24.

The unique opportunity ahead for Pushpay remains significant and we see substantial room for growth. We are focused on growing Underlying EBITDAF faster than revenue, and we will continue to invest to build our share of existing and new market opportunities and take advantage of the significant pipeline ahead of us. We are confident we have a clear strategy and strong leadership in place to continue delivering value for our Customers and our shareholders.

The post Pushpay share price down 5% on full-year results and weak guidance appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended PUSHPAY FPO NZX. The Motley Fool Australia has positions in and has recommended PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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