Pushpay (ASX:PPH) share price on watch after dazzling first half profit growth

The Pushpay Holdings Ltd (ASX: PPH) share price will be one to watch this morning after the donor management and community engagement platform provider released its half year results.

How did Pushpay perform in the first half?

For the six months ended 30 September, Pushpay delivered a 48% increase in total processing volume to US$3.2 billion and a 53% increase in operating revenue to US$85.6 million.

Things were even better for its earnings thanks to further margin expansion through its expanding operating leverage. Pushpay’s total operating expenses increased by 16% over the prior corresponding period. As a result, as a percentage of operating revenue, total operating expenses improved by 12 percentage points from 50% to 38%.

This led to the company posting earnings before interest, tax, depreciation, amortisation and fair value adjustment (EBITDAF) of US$26.7 million, which was up 177% on the prior corresponding period.

Bruce Gordon, CEO and Executive Director, commented, “We are pleased to deliver a strong result for the six months ended 30 September 2020. Pushpay has delivered solid revenue growth, expanding operating margins, EBITDAF growth and operating cash flow improvements over the period.”

“Over the six months to 30 September 2020, the Company has made significant progress integrating the Pushpay and Church Community Builder solutions as we continue to execute against our shared vision and strategic goal of becoming the preferred provider of mission-critical software to the US faith sector. Our results are a reflection of our innovative products, the dedication of our teams in the US and New Zealand, and our culture of continuous improvement,” he added.

Outlook.

Pushpay expects further strong revenue growth as it continues to execute on its strategy to gain further market share in the medium-term. It believes this is the best way to maximise shareholder value.

And in light of its strong start, management has upgraded its guidance for FY 2021 for the second time.

It has increased its EBITDAF guidance for the year ending 31 March 2021 to between US$54 million and US$58 million. This compares to previous guidance of US$50 million to US$54 million and will be more than 115% higher than FY 2020’s EBITDAF of US$25.1 million.

Though, it has warned that uncertainties and impacts surrounding COVID-19 and the broader US economic environment remain.

Stock split.

The Pushpay board has approved a four-for-one split of Pushpay’s shares.

This will result in shareholders holding, after the share split, four fully paid ordinary shares for each fully paid ordinary share held by them at 5:00 pm on the record date of 27 November 2020. Following the share split, Pushpay will have a total issued share capital of 1,102,610,236 fully paid ordinary shares.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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