Wednesday 11 January 2017 04:16 PM
Pushpay in talks with large US vendors over product offering
By Sophie Boot
Jan. 11 (BusinessDesk) - Pushpay Holdings says it's moving up the value chain and is in talks with large US vendors
about its expanded product offering, after confirming it's on track to reach US$72 million in annualised committed
monthly revenue (ACMR) by the end of the year.
This morning, the mobile app developer reported its ACMR grew US$8.4 million in the December quarter, including US$1.1
million it made from acquiring US church app business Bluebridge in November.
Chief executive and co-founder Chris Heaslip told investors on a conference call that the company expects to see the
majority of the benefits from the Bluebridge acquisition to be apparent in the September quarter, with technology
migration to be completed in the March quarter and new functionality added in the June period which he said will have a
non-material impact on metrics.
Pushpay needs to deliver about US$7.4 million in net ACMR growth each quarter to achieve its ACMR goal of US$72 million
by the end of the calendar year, Heaslip said.
"As we've noted the focus for this quarter is about adding these additional initiatives that we mentioned - fuel sales,
and a number of other things we are working on - that we believe will have positive impacts on our growth," Heaslip
said. "The sell cycle for the larger churches mean that any sales we made last quarter are going to help impact this
quarter's numbers. We're very optimistic about continuing to deliver good results in the long term."
The company lifted ACMR - a favoured revenue measure for software-as-a-service companies - to US$42.3 million as of Dec.
31, up 25 percent from the end of the September quarter, while average revenue per customer rose 7.3 percent from
September to US$573 per month.
Pushpay employed a mandatory price increase for its legacy customers in the December period, to bring them in line with
what is being paid by new clients. The company expects a few more customers to drop out over the next three to six
months, but those that remain are paying more, so it has been a net positive for ACMR.
Heaslip said the Bluebridge acquisition had moved Pushpay up the value chain.
"As we now come to sell new functionality and engagement solutions to our existing and new customers, we believe we're
going to start to see some really great efficiencies come from the fact we've already built the mailing lists, we have
over 150,000 church staff members who subscribe," Heaslip said. "Engagement is the overall banner for new products -
digital payments, mobile payments, events, those all together are a complete solution we're selling to churches, and
we're seeing churches are willing to pay more for additional functionality."
The company estimates the US faith sector revenue opportunity in 2020 at US$3.14 billion, compared to US$2.16 billion as
of 2015, with about half of that from volume fees and the remainder from subscription fees for app and payments
software.
James Maiocco, Pushpay's chief business development officer since September, said competition from large "horizontal"
players such as Google and Apple was not a concern, as they aren't focused on the faith sector and don't speak the
language necessary to acquire the customer base.
"If they were to go aggressively into payments, the very first market they would go after would be retail, which is
where you're beginning to see the core area of their focus, obviously PayPal and Visa are doing the same thing," Maiocco
said. "Most of those partners are engaged with that, I can't comment on those at this point but we are in conversation
with several of those vendors in terms of how we can help them in terms of executing together in this market. The
payment by itself, while that's interesting, it's really the engagement capabilities and the additional things we can
offer to the church. We feel very confident about the position we're in, and about the opportunity to drive partnerships
and alliances with those horizontal payment providers."
The shares rose 0.5 percent to $1.89 in early trading, but had fallen 3.7 percent to $1.81 at 4pm, and have gained 19
percent in the past year. The shares dropped sharply in December, triggering a price enquiry from stockmarket operator
NZX, but recovered in thin holiday trading, up 44 percent between Dec. 28 and yesterday.
(BusinessDesk)
ends