New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Pushpay Holdings Ltd<br>Are We There Yet?</h2>
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<p><strong>NEUTRAL</strong></p>
<p>In an unscheduled trading announcement, Pushpay (PPH) has 1) announced the appointment of internal candidate Molly Matthews (Chief Customer Officer) as its new CEO, and 2) updated its FY21 guidance in light of stronger than expected processing volumes in December 2020. Speaking to several megachurches in recent months, we are unsurprised by the strong processing volumes as our feedback suggests US church donations have been buoyant during 2020 due to 1) continued support of congregation members in times of hardship, 2) the recent re-opening of churches albeit with strict social distancing, plus high online church participation, and 3) digital penetration remaining at elevated levels post lockdown. Whilst PPH's new customer church growth has disappointed in FY21 to date, total processing volumes and earnings have been driven by the jump in digital penetration, accelerated by COVID-19 related restructuring. With a soft front book expected for FY22 and the threat of further shareholder sell downs weighing heavily on the stock, we retain our NEUTRAL rating.&nbsp;&nbsp;</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/182/181/original/image_4092508821610497908404.png?1610497910" class="editor-image img-responsive" data-smartkarma-image-id="182181"></figure>
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<h3>What's changed?&nbsp;</h3>
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<li><strong>Target price:</strong>&nbsp;We decrease our target price from NZ$2.31 to NZ$2.00. This is driven by updates to peer multiples, and a decrease to&nbsp;PPH's&nbsp;terminal EBITDA margin assumption from 37.5% to 35% given the recent slowdown in new church customer sales.&nbsp;</li>
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<h3>Update to guidance unsurprising&nbsp;</h3>
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<p>PPH has updated its FY21 EBITDA guidance from US$54m–58m to US$56–60m (+4% at the mid-point) against our current EBITDA forecast of US$60.6m. We remain comfortable with our above range estimate in light of strong processing volume growth momentum.&nbsp;</p>
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<h3>Molly Matthews&nbsp;— new CEO appointment</h3>
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<p>In a surprising move, PPH has appointed Chief Customer Officer Molly Matthews as&nbsp;CEO, assuming&nbsp;duties from 1 March 2021​​​​​​​. She has been with PPH since January 2017 and is currently based in Seattle, US. Previous experience includes Director of K-12 Education (seven&nbsp;years), Management Consulting (four&nbsp;years) and she has held positions at PPH as: Senior Implementation Manager (eight&nbsp;months), Senior manager of Enterprise &amp; Strategic Accounts (two&nbsp;years), Director of Customer Success (two&nbsp;years)&nbsp;and most recently Chief Customer Officer (ten&nbsp;months).&nbsp;​​​​​​​​​​​​​​</p>
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<h3>A new focus on the Catholic church?</h3>
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<p>PPH has reiterated its strategic intent on allocating resource and investment on the Catholic church — in our view a far smaller opportunity than nondenominational and evangelical churches. We expect to hear more details at the full year result on 12 May 2021. ​​​​​​​</p>
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<div><strong>Jamie Foulkes</strong></div>
<div><a href="mailto:jamie.foulkes@forsythbarr.co.nz" target="_blank" rel="noopener">jamie.foulkes@forsythbarr.co.<wbr>nz</a></div>
<div>+64 4 914 2217</div>
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Pushpay Holdings Ltd Are We There Yet?

NEUTRAL
In an unscheduled trading announcement, Pushpay (PPH) has 1) announced the appointment of internal candidate Molly Matthews (Chief Customer Officer) as its new CEO, and 2) updated its FY21 guidance in light of stronger than expected processing volumes in December 2020. Speaking to several megachurches in recent months, we are unsurprised by the strong processing volumes as our feedback suggests US church donations have been buoyant during 2020 due to 1) continued support of congregation members in times of hardship, 2) the recent re-opening of churches albeit with strict social distancing, plus high online church participation, and 3) digital penetration remaining at elevated levels post lockdown. Whilst PPH's new customer church growth has disappointed in FY21 to date, total processing volumes and earnings have been driven by the jump in digital penetration, accelerated by COVID-19 related restructuring. With a soft front book expected for FY22 and the threat of further shareholder sell downs weighing heavily on the stock, we retain our NEUTRAL rating.&nbsp;&nbsp;


What's changed?&nbsp;



Target price:&nbsp;We decrease our target price from NZ$2.31 to NZ$2.00. This is driven by updates to peer multiples, and a decrease to&nbsp;PPH's&nbsp;terminal EBITDA margin assumption from 37.5% to 35% given the recent slowdown in new church customer sales.&nbsp;



Update to guidance unsurprising&nbsp;


PPH has updated its FY21 EBITDA guidance from US$54m–58m to US$56–60m (+4% at the mid-point) against our current EBITDA forecast of US$60.6m. We remain comfortable with our above range estimate in light of strong processing volume growth momentum.&nbsp;


Molly Matthews&nbsp;— new CEO appointment


In a surprising move, PPH has appointed Chief Customer Officer Molly Matthews as&nbsp;CEO, assuming&nbsp;duties from 1 March 2021​​​​​​​. She has been with PPH since January 2017 and is currently based in Seattle, US. Previous experience includes Director of K-12 Education (seven&nbsp;years), Management Consulting (four&nbsp;years) and she has held positions at PPH as: Senior Implementation Manager (eight&nbsp;months), Senior manager of Enterprise &amp; Strategic Accounts (two&nbsp;years), Director of Customer Success (two&nbsp;years)&nbsp;and most recently Chief Customer Officer (ten&nbsp;months).&nbsp;​​​​​​​​​​​​​​


A new focus on the Catholic church?


PPH has reiterated its strategic intent on allocating resource and investment on the Catholic church — in our view a far smaller opportunity than nondenominational and evangelical churches. We expect to hear more details at the full year result on 12 May 2021. ​​​​​​​




Jamie Foulkes
jamie.foulkes@forsythbarr.co.nz
+64 4 914 2217




Pushpay Holdings

Pushpay Holdings Ltd: Are We There Yet?