Is Pushpay Holdings Ltd (ASX: PPH) a millionaire maker share? It has already been a solid grower since it listed on the ASX a few years ago.

Indeed, since the market crash caused by the coronavirus pandemic, the Pushpay share price has rocketed 163% from that low.

Pushpay is a software business that facilitates electronic donations. It provides tools and a community app for its clients. It’s particularly focused on the large and medium US church sector – there is large amount of money donated each year in this area.

What was driving Pushpay before COVID-19?

The company was steadily winning over churches before the pandemic. It’s always a good idea for organisations to make it as easy as possible for people to donate (or pay). Electronic donations are rising in popularity, just like electric payments in general are.

You can see this growth from the increase of total processing volume by 39% to US$5 billion in FY20.

The company also recently acquired Church Community Builder for US$87.5 million that helps churches connect with their community members, record member service history, track online giving and perform a range of administrative functions. In April 2020 Pushpay and Church Community Builder launched a joint product. They can sell to each of the client bases, plus the combined offering will be more compelling for potential new clients.

Pushpay’s business model is attractive because of the growing operating leverage of the business. In FY20, the company’s revenue (excluding Church Community Builder) rose by 28% to US$123.1 million. The gross margin improved by five percentage points from 60% to 65%, excluding the acquisition it improved to 64%.

One of the main pleasing things is that the combined business is expecting further gross margin improvement. 

Total operating expenses only increased by 5%. Excluding the acquisition, operating expenses actually decreased by 8%.

It was the above factors that caused earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to rise by US$23.5 million to US$25.1 million. It also helps that it’s now generating solid operating cashflow. 

Why it could be a millionaire maker share

I think Pushpay could be a great share to own because the current pandemic is causing many more people to donate electronically than they otherwise would have, bringing forward the shift to electronic giving.

Management expect the company to achieve EBITDAF of between US$48 million to US$52 million, which would be approximately doubling the operating profit. That would be a very strong result. 

Over the long-term, the business is targeting market share of over 50% of the medium and large church segments, which would be an opportunity of over US$1 billion of revenue. Obviously this would come with higher profit margins.

The US church segment is only one opportunity. There are plenty of other not-for-profit areas for Pushpay to grow over the long-term. I’d very happily buy shares for the long-term today.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and 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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Australian growth investors are a lucky bunch. Right now, there are a large number of companies on the ASX that are growing their earnings at a rapid rate.

Three which I believe can continue this trend for some time to come are listed below. Here’s why I think they are top options for growth investors:

a2 Milk Company Ltd (ASX: A2M)

The first ASX growth share to buy is a2 Milk Company. As I covered here last week, a2 Milk Company has been an exceptionally strong performer since its listing on the ASX in 2015. Over this time the company has gone from running loss-making operations to having an extremely profitable business. The catalyst for this has been the insatiable demand for its infant formula in China. The good news is that it still only has a modest market share in the lucrative market. In light of this, I believe it has a long runway for growth and further strong returns await investors over the coming years.

Kogan.com Ltd (ASX: KGN)

Another company which I believe has the potential to grow materially in the future is Kogan. It is benefiting greatly from the structural change that is happening in the retail industry and has been accelerated by the pandemic. I expect more and more retail spending to be made online over the next few decades, which bodes well for its increasingly popular website. In addition to this, the launch of Kogan Marketplace appears to have been a huge success and looks likely to underpin strong growth in the coming years.

Xero Limited (ASX: XRO)

A final ASX growth share to consider buying is Xero. It is a leading cloud-based business and accounting software provider. It has been growing its recurring revenues at a very strong rate over the last few years thanks to the increasing popularity of its platform with small businesses across the world. Xero now has ~2.3 million subscribers globally, which may seem like a large number, but is actually only a small portion of a massive global market opportunity. 

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• Why a2 Milk, Freedom Foods, Scentre, & TPG Telecom are dropping lower
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of A2 Milk and Xero. 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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