Listed@ASX Winter 2020 edition

Pushpay Holdings Limited ASX:PPH

Pushpay processes $US5 billion annually or four per cent of all donations collected by US churches.

Online payments platform Pushpay (ASX:PPH) has been at ground zero of the COVID-19 outbreak. Its headquarters are in Seattle, where the virus initially hit in the US. That meant it had to move quickly.

Personal messages can be sent to members of the congregation and churches can respond to enquiries. Calls can also be made for funding through the app.

“Most of our larger churches are not experiencing a reduction in giving,” Gordon says. “They have the digital platform established and our brand awareness puts us in a strong position to attract new customers. That comes back to investing very early in our development in scalable technology and the use of software-as-a-service platforms. We have been focused in the last couple of years on investing in processing systems that sit behind those tools, allowing us to scale.” An example is Salesforce’s customer relations management systems, which have been part of Pushpay’s back office for some time. More recently, Amazon Web Services has hosted its systems. “That has been outstandingly helpful. We can add more nodes as demand comes on. It takes us 20 minutes to put more grunt on the system.”

Gordon cites Pushpay’s ASX listing as another strength. It sprung from New Zealand’s junior NZAX board.  Within 12 months of its Kiwi listing, it shifted to the main NZX and achieved a compliance listing in Australia. “That allowed us to broaden our investor base,” Gordon explains. “Being on ASX opened up opportunities with US institutional investors. We now have very strong representation from US and Australian institutional investors on the share register. They tend to take a longer-term view.

“We give equal time to each of our three markets. We hold investor calls, and then we schedule follow-up with analysts and larger investors. The balance is based on who’s on the register. But we don’t favour, in any way, any particular territory. It’s a matter of who is showing interest in the company.”

Pushpay doesn’t use shareholder targeting, in the main because regular research reports are issued by leading investment banks including UBS, Macquarie, Goldman Sachs, more recently, Credit Suisse. That’s impressive support for a group capitalised at $1.1 billion. The company says that it has established investor trust, in no small part because it has met every market guidance issued since listing in August 2014.

“We have been very mindful of setting transparent goals and outlining our growth potential. We have hit every number and you hope that builds reputation over time,” Gordon says.

A new part of Pushpay’s offering is Church Community Builder (CCB), a US company whose online management systems control many day-to-day church business functions. Gordon says systems such as these are central to how churches operate. One popular function allows parents to check their children into Sunday School or Bible class meetings and have them met at the door by church staff. The system checks kids in and gives them name badges, allowing parents to pursue their own church activities.

“We see a great opportunity in tying the mobile app capabilities we have through Pushpay with CCB,” he says. “It was our number one preferred strategic acquisition. It has been built up over 20 years, and it is rock solid as the go-to, end-to-end provider for church systems. It has very strong brand recognition. It has a good number of customers and a profitable business and had been investing in its own tech renewal. We have combined the two structures in recent months” A bundled product is expected to be rolled out imminently.

“The key is knowing who your people are, what their interests are and, behaviourally, what they are experiencing. Then we can engage with them to take the next step. That can be in relation to the community, the ministry or down the donor journey. We are leading in a really fascinating area. Churches want to know how they can help people to engage, whether with their wider community, the community within the church or their connection with God. We can attract churches with our management solution and then introduce them to Pushpay for giving. Equally, Pushpay members who aren’t a CCB customer can offer bundled pricing. At the moment, churches are dealing with different vendors.”

Looking into the future, Gordon says Pushpay could be used in other sectors such as schools. “They need to raise money for capital programs or for school fees. A lot of churches, particularly Catholic churches, have affiliated schools and that is a natural segue to extend our offer into education.”

Gordon’s background is in payment systems, specialising in the rollout of EFTPOS and the development of telephone banking. He has connections to private equity. Prior to Pushpay, he was working on turning around a New Zealand company at which the top salesperson was Pushpay’s future co-founder, Elliott Crowther. Along with a friend, Crowther was working on an app allowing café customers to order a second cup of coffee. That friend became Pushpay’s co-founder and recently retired CEO, Chris Heaslip.

“I told them they were trying to solve a problem that doesn’t exist. We cracked this with EFTPOS,” Gordon recalls. Crowther and Heaslip continued their search for applications, and had a eureka moment in a church in Orange County, California. They spotted people queuing at an ATM, wanting cash to donate but not having enough in their pockets. “Elliott burst into my office and said he had it. He wanted to do mobile payments for churches. It was brilliant.” Crowther and Heaslip have in recent times stepped down from their executive roles. But Pushpay’s path to glory continues.