Pushpay (ASX:PPH) Share Price Rises On US Acquisition

The Pushpay (ASX: PPH) share price is up over 4% after announcing an acquisition in the US.

Pushpay is a New Zealand based donation systems and software business for religious, not-for-profits and education providers in the US, Canada, Australia and New Zealand. Pushpay is used by over 7000 churches worldwide. The average gift is $192. Pushpay makes money by charging a subscription fee for its app but also from clipping the ticket on processing donations.

Pushpay’s US Acquisition

This morning Pushpay went into a trading halt to announce an acquisition.

Pushpay has announced that it is acquiring Church Community Building LLC for a total cash consideration of US$87.5 million. It will be funded by a combination of cash on hand and proceeds from an amortising senior secured debt facility of US$62.5 million.

What Is Church Community Building?

Church Community Building is a US based provider of church management systems to over 4,000 churches in the US faith sector.

Why Is Pushpay Acquiring Church Community Building?

The plan is that the combination of the two businesses will be to deliver a best-in-class, fully integrated church management system, custom community app and giving solution for customers in the US faith sector. The two platforms already deliver a two-way integration.

Chris Fowler, founder of Church Community Building and a prominent figure in the US faith sector according to Pushpay, will continue his involvement in the business ‘Visionary’ and will join the Pushpay Board as an Executive Director, while Don Harms will continue as Church Community Builder’s CEO.

Chris Fowler will acquire US$15 million of Pushpay shares with restrictions on selling.

The two platforms will maintain their respective existing integrations with other software providers for the convenience of customers.

Pushpay CEO Bruce Gordon said: “We are excited to announce the business combination of Pushpay and Church Community Builder. This strategic partnership enables us to better serve our customers as we strive to be the number one partner to the US faith sector by providing a fully integrated church management system, custom community app and giving solution. 

With a shared passion to serve the faith sector, we look forward to bringing continued investment and support to our customers with a truly differentiated, innovative product offering.”

Pushpay Guidance

FY20 guidance remains unchanged of operating revenue of between US$121 million to US$124 million, a gross margin of over 63% and EBITDAF (click here to learn what EBITDA means – the F stands for foreign exchange) will between US$23 million and US$25 million. Total processing volume is expected to be between US$4.8 billion to US$5 billion.

However, the acquisition is expected to add to earnings in FY21 and then from FY22 onwards Pushpay expects sizeable benefits to Pushpay’s revenue and EBITDAF.