Ready for ascension: Why we like digital donations platform Pushpay

Pendal investment analyst Elise McKay explains why she likes ASX-listed digital donations platform PushPay

 

Pendal’s Horizon Fund invests in companies that are enabling and leading the transition to a more sustainable economy — while avoiding those that cause significant harm.

ASX-listed donations management platform Pushpay is one of those innovators leading the trend to digitalisation in the not-for-profit sector.

Pendal equities analyst Elise McKay explains why it’s part of Pendal Horizon Fund.

 

 
ASX-listed Pushpay provides software for the not-for-profit sector, focusing particularly on the vast US church market.

The platform enables everything from mobile phone donations to attendance-taking and even checking in children to Sunday school.

“What I like about Pushpay is that it’s a market-leading business with already strong tail winds accelerated by COVID,” says Elise McKay, an investment analyst in Pendal’s Australian equities team. “It has solid financials with very good unit economics and an expanding addressable market.

“It’s a software and payments company trading at a significant discount to global software-as-a-service peers and the fintech sector. It is comparable to the WAAAX [Wisetech, Afterpay, Altium, Appen, Xero] sector, but trades at fraction of the multiple.”

Pendal invests in PushPay via the Pendal Horizon Fund, a concentrated portfolio aligned with the transition to a more sustainable, future economy.

Not-for-profit communities such as churches have long sought solutions for managing donations that are better than simply placing coins in a plate.

Pushpay’s software allows donations to be targeted, tracked and regular.
 
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“It was started because the founders were in church and wanted to give but did not have cash on them. They had best intentions when they went home, but just forgot.”

Pushpay is much more than just a payments fintech, however.

It also acts as a customer relationship management (CRM) tool for churches, allowing them to manage relationship with their congregation, manage community events and understand visitation patterns.

Pushpay — which is compelling in terms of valuation and opportunity. It is also aligned with the values of the Pendal Horizon Fund.

“There are so many good things a church does in terms of fulfilling a community function,” says McKay. “Giving is 90 per cent of church revenue and churches are not-for-profit so the vast majority of that gets recycled into the community.”

Pushpay’s purpose is to bring people together by strengthening community, connection and belonging, says McKay.

“This is an important tool that’s contributing towards the UN sustainable development goal 16, which is to promote just, peaceful and inclusive societies.

“Pushpay is supporting institutions in the community and helping them reach people in new and innovative ways to create better outcomes.”

From a financial perspective, McKay says Pushpay truly offers growth at a reasonable price, trading on fewer than eight times revenue for mid-teens organic growth.
 
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“And think about what you’re buying. You’re buying the current business at a reasonable price, but that business is only 10 per cent penetrated in US churches.

“You’ve got additional upside from churchgoers continuing to change their behaviour away from in-person to digital giving, you have the opportunity to expand the product base and then optionality expanding into new categories and geographies.”

Meanwhile, Pushpay benefited from COVID’s closure of churches, lifting the penetration of digital donations and encouraging church leaders to adopt digital to keep in touch with their community.
 

About Elise McKay

Elise is an investment analyst with Pendal’s Australian equities team. Elise previously worked as an investment analyst for US fund manager Cartica where she covered a variety of emerging market companies.

She has also worked in investment banking and corporate finance at JP Morgan and Ernst & Young.
 

About Pendal Horizon Fund

Pendal Horizon Fund (formerly Pendal Ethical Share Fund) is a concentrated, high-conviction portfolio aligned with the transition to a more sustainable, future economy.

The fund is led by one of Australia’s most experienced portfolio managers, Crispin Murray. Crispin is backed by one of the largest, most experienced Australian equity teams.

Pendal is an independent, global investment management business focused on delivering superior investment returns for our clients through active management.

Find out more about Pendal Horizon Fund here.

Contact a Pendal account manager here.

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