Pushpay targets US investors to raise new capital

PushPay chief executive Chris Heaslip
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PAY Pushpay Holdings Limited
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Pushpay Holdings [NZX: PAY], whose mobile payment app allows churches to raise money from parishioners, posted a wider annual loss as it chased sales growth ahead of profit, reiterating its forecast to break even in 2017.

The loss widened to $19.4 million, or 8.6c per share, in the year ended March 31, from a loss of $7.5 million, or 4.05cps , a year earlier, the Auckland-domiciled, US-headquartered company said in a statement. Revenue from continuing operations rose to $15 million from $1.8 million. Excluding the company's Run the Red mobile messaging business which it sold in March, the loss from continuing operations was $20.2 million, from a loss of $7.6 million a year earlier.

Pushpay shares surged to a record high last month after the company said it would reach a target of $100 million of annualised committed monthly revenue by February 2018, six months earlier than previously forecast. The firm, which has been foregoing short-term profits to invest in future growth in the US, said today it's in talks with a number of US-based venture capital firms that have the potential to add significant value to Pushpay, and is exploring other capital raising opportunities with investment banks in Australia and the US, with more than $30 million likely to be raised within the next four months.

"The board is pleased with the financial result and while Pushpay believes that it is preferable to focus on and invest in growth as the best means to achieve overall value in its business, we are also conscious of the importance of reaching cash flow breakeven," said chairman Bruce Gordon said. "As we continue to invest in scaling the business our current business plan implies the business reaching breakeven on a monthly cash flow basis in 2017."

Pushpay had $16.2 million of cash and available funding lines at its March 31 balance date, up from $4.3 million a year earlier.

In the past year, the company's employee expenses rose to $19.8 million from $3.9 million, excluding discontinued operations. Its employee numbers jumped to 215 from 68, with about half of the new hires in sales and marketing roles.

Pushpay provides mobile commerce tools that help make payments between consumers and merchants easier and is geared to mobile charitable giving. The app has gained traction in the US faith sector, where its services are used by more than 1% of the estimated 314,000 churches with an average 500 attendees each. The company has turned its focus to larger merchants, who have the resources to implement the service more widely, and now counts four of the largest 10 churches in the US as customers.

The company's average revenue per merchant increased to $643 per month, from $491 per month, while its total merchants rose to 3766 from 996.

Annualised committed monthly revenue, the measure of total billings through merchants that Pushpay collects fees from, soared to $29.1 million from $5.3 million, exceeding its target of $28 million.

Pushpay has held talks with the ASX and intends to seek an ASX listing within the next six months.The company listed on the New Zealand Alternative Index in August 2014, with shares priced at $1, and moved to the main board in June 2015.

Its shares fell 3.1% to $2.20 today and have gained 30% so far this year.


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Another great result from PAY, with a good presentation to boot. It is good to see that the company has a clear-cut pathway to break-even and profit (glances eyes at Rod Drury...) and is looking to expand its shareholder base via its key market. The question now is, will PushPay raise capital at a premium to market price, like Xero did? Considering the growth curve and how tightly held the shares have been, I would consider this a possibility. I also hope that NZ shareholders keep a tight grip on their shares, as we have seen what an ASX listing can do to the investor register of listed companies for high-growth companies (see: A2 Milk).

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