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Forsyth Barr

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New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Pushpay (PPH) Acquisition of Resi Media LLC for US$150m</h2>
Pushpay (PPH) has announced this morning the acquisition of Resi Media LLC for a total consideration of US$150m which is made up of US$110m of cash and US$40m of new shares issued with the expected transaction to be completed at the end of August 2021.
Transaction details
<ul>
<li>Resi Media has been acquired on a FY21 revenue multiple of 8.8x, implying FY21 revenue to be ~US$17m (PPH FY21 revenue US$181m)</li>
<li>The business has reportedly grown its revenue from US$2.4m in FY18 to US$8.4m at FY20 before reaching US$17m at FY21</li>
<li>Of the US$17m revenue generated at FY21, the company estimates that US$12.9m is recurring revenue</li>
<li>Slightly concerning is the fact that Resi Media is not expected to contribute materially to PPH’s FY22 EBITDA, with the announcement highlighting that Resi’s headcount has recently increased. This suggests to us that Resi could be generating a negative EBITDA and is more than likely loss making at an NPAT level</li>
<li>Resi currently has 3,900 customers, implying average revenue per customer to be US$4,371 per annum (this compares to PPH’s subscription revenue of US$3,741 per customer and CCB’s US$3,395)</li>
<li>Transaction costs are estimated to be US$2.2m for FY22</li>
<li>Resi is currently defending an action filed on June 16, 2021 for the alleged infringement of two patents asserted by BoxCast</li>
<li>Resi’s management team will continue to lead the business post acquisition with Paul Martel remaining as the CEO of Resi</li>
</ul>
What is Resi Media
<ul>
<li>Resi is a streaming platform offering its services to churches and non-churches</li>
<li>It includes services to web, social media, mobile apps and multisite streaming</li>
<li>The product allows customers to automate, monitor or review streams across any platform, social media of within the organisations own brand</li>
<li>PPH estimates it provides services to 70% of the Outreach 100 largest church estimation in the US</li>
</ul>
Our view
<ul>
<li>For a while now we have seen PPH’s media offering falling behind that of competitors, with others investing heavily in the streaming and media space post COVID-19. With many churches retaining the ability to live stream and encourage ‘home church’ in addition to physical church, media and streaming has become a core part of a large church’s operations.</li>
<li>As Resi services both churches and non-churches, it open’s PPH’s TAM up to a new segment, removing the limitation of servicing a maturing and saturated US megachurch segment</li>
<li>As a result we believe that this is a relatively sensible acquisition for PPH given we believe demand to be stable for media services in the years ahead</li>
<li>It does signal a focus away from the Catholic church venture, as we expected an acquisition of a current Catholic provider before a move to a new vertical</li>
<li>There well maybe additional cross-selling opportunities for PPH although at a church level we are unsure whether this will increase PPH’s share of the largest churches as they will have been approached numerous times previously by PPH in regards to its donor management platform. There is a risk that some churches will churn off of Resi if they have previously opted away from PPH’s services prior.</li>
</ul>
Management call
PPH is holding an investor briefing this morning at 11am NZT link:&nbsp;<a href="https://meet.google.com/qmk-hwem-gwg" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://meet.google.com/qmk-hwem-gwg&amp;source=gmail&amp;ust=1629763930798000&amp;usg=AFQjCNHwTyq6H2pE466xIkxEdsSMMVGK3A" rel="noopener">https://meet.google.com/qmk-hwem-gwg</a>

Pushpay (PPH) Acquisition of Resi Media LLC for US$150m
Pushpay (PPH) has announced this morning the acquisition of Resi Media LLC for a total consideration of US$150m which is made up of US$110m of cash and US$40m of new shares issued with the expected transaction to be completed at the end of August 2021.
Transaction details

Resi Media has been acquired on a FY21 revenue multiple of 8.8x, implying FY21 revenue to be ~US$17m (PPH FY21 revenue US$181m)
The business has reportedly grown its revenue from US$2.4m in FY18 to US$8.4m at FY20 before reaching US$17m at FY21
Of the US$17m revenue generated at FY21, the company estimates that US$12.9m is recurring revenue
Slightly concerning is the fact that Resi Media is not expected to contribute materially to PPH’s FY22 EBITDA, with the announcement highlighting that Resi’s headcount has recently increased. This suggests to us that Resi could be generating a negative EBITDA and is more than likely loss making at an NPAT level
Resi currently has 3,900 customers, implying average revenue per customer to be US$4,371 per annum (this compares to PPH’s subscription revenue of US$3,741 per customer and CCB’s US$3,395)
Transaction costs are estimated to be US$2.2m for FY22
Resi is currently defending an action filed on June 16, 2021 for the alleged infringement of two patents asserted by BoxCast
Resi’s management team will continue to lead the business post acquisition with Paul Martel remaining as the CEO of Resi

What is Resi Media

Resi is a streaming platform offering its services to churches and non-churches
It includes services to web, social media, mobile apps and multisite streaming
The product allows customers to automate, monitor or review streams across any platform, social media of within the organisations own brand
PPH estimates it provides services to 70% of the Outreach 100 largest church estimation in the US

Our view

For a while now we have seen PPH’s media offering falling behind that of competitors, with others investing heavily in the streaming and media space post COVID-19. With many churches retaining the ability to live stream and encourage ‘home church’ in addition to physical church, media and streaming has become a core part of a large church’s operations.
As Resi services both churches and non-churches, it open’s PPH’s TAM up to a new segment, removing the limitation of servicing a maturing and saturated US megachurch segment
As a result we believe that this is a relatively sensible acquisition for PPH given we believe demand to be stable for media services in the years ahead
It does signal a focus away from the Catholic church venture, as we expected an acquisition of a current Catholic provider before a move to a new vertical
There well maybe additional cross-selling opportunities for PPH although at a church level we are unsure whether this will increase PPH’s share of the largest churches as they will have been approached numerous times previously by PPH in regards to its donor management platform. There is a risk that some churches will churn off of Resi if they have previously opted away from PPH’s services prior.

Management call
PPH is holding an investor briefing this morning at 11am NZT link:&nbsp;https://meet.google.com/qmk-hwem-gwg

プッシュペイ（PPH）：Resi Media LLCを1億5000万米ドルで買収

Pushpay Holdings

プッシュペイ（PPH）：Resi Media LLCを1億5000万米ドルで買収