"In the early days, it's about sheer persistence. An entrepreneur has wor work in every part of the business. But from $100m to $300m, it's about people, processes and systems," Chris Heaslip says.
"In the early days, it's about sheer persistence. An entrepreneur has wor work in every part of the business. But from $100m to $300m, it's about people, processes and systems," Chris Heaslip says.
"Hard to be vulnerable as a CEO. We're seen as hard-charging people," Pushpay co-founder Chris Heaslip told the Herald today.
Moments earlier, Heaslip has been hosting a conference call for analysts, which beyond discussing his company's maiden profit included the surprise news that he would be stepping down on May31, replaced by veteran Kiwi business executive Bruce Gordon.
"The skills required to take a business from 0 to $100 million are radically different from those to get it to $300 million," Heaslip said.
He and co-founder Eliot Crowther created Pushpay - a mobile app for managing the church, non-profit and school donations - as a two-man startup in a Glenfield garage.
Now it has close to 400 staff and more than 7000 customers.
Hitting profit makes a nice moment for a transition but Heaslip also gave the impression it was time for a breather after the pyramid-building hours required to build a successful startup.
"It's a tiring process to run a company, especially with a young family," he said.
"It's like a relay race where you're passing the baton to the next runner," he added of his decision to hand over to Gordon.
Both founders have now stepped away from management. Crowther left the company last year, and sold down his stake amid a marriage split.
That episode was accompanied by a report that Crowther's wife had filed in court documents that "while we were taking steps to determine whether we would remain married, Eliot told me that the Pushpay stock would soon be crashing. He told me that the price would soon go drastically down and that our shares were going to be worth very little. Eliot told me he knew this would happen based on information he knew about the company from his position at the company".
Yesterday, the Financial Markets Authority told the Herald that its inquiries into that allegation were ongoing.
"In matrimonial disputes, there's obviously there's a lot of emotion," Heaslip said today. He understood the couple had now settled.
Whereas Heaslip and Crowther both relocated to Seattle, Gordon says his family will stay in Auckland and, for the next few months at least, he will divide his time between NZ and the United States.
Gordon is no stranger to Pushpay. Beyond serving as chairman, "He mentored both Eliot and I before we had written one line of code," Heaslip said.
Asked if he might now mentor or invest in startups himself, Heaslip said it was possible, but he was still assessing things. "It's still all very fresh," he said.
Gordon's appointment mirrors Steve Vamos taking over the reins from founder Rod Drury at Xero, and Gordon happily accepts the description of being the designated adult who comes in after the startup kids have done their work.
But although he has a solid corporate CV, including Paymark chairman and senior roles at The Warehouse Group, Bendon Group and other companies, he tells the Herald he also has experience with launching new products and companies.
Source / Pushpay Annual Report.
He was part of the team who developed FastPhone for ASB - at the time, a world-leading product. And he led and part-bankrolled HRV before selling it to Vector in 2017. It was the Vector sale that freed him up to start thinking about succeeding Heaslip as Pushpay chief executive, he said.
Maiden profit
Before the market opened today, Pushpay reported a maiden full-year profit of US$18.8m against a year-ago loss of US$23.3m.
The NZX-listed, US-based company broke into the black on the back of a US$20.24m income tax benefit as it realised a deferred tax asset (recorded when income taxes payable are higher than the income taxes paid to the Government). Before the tax benefit, it made a US$1.42m loss.
It also fulfilled its promise to be profitable on an interest, tax, depreciation and foreign currency gain/loss basis, reporting ebitdaf of US$1.6m versus its year-ago ebitdaf loss of US$18.6m.
The company confirmed it had achieved breakeven on a monthly cashflow basis, too.
And it also met its revenue guidance as full-year revenue increased 40 per cent to US$98.37m (it had forecast US$97.5m to US$100.5m) as total customers increased 5 per cent to 7649.
The company described the 373 increase in total customers as "modest" but added that most were in the medium to large bracket, fueling the significant revenue increase.
"It was a strong FY19 result from Pushpay and in line with our expectations and guidance," Craigs Investment Partners senior research analyst Stephen Ridgewell told the Herald.
"Earnings guidance for FY20 was well above prior market expectations.
"Investors are however digesting the change of CEO, which came as a surprise."
While it may have caught some on the hop, Heaslip said there had been an orderly succession process. Behind the scenes, he had been discussing his situation with the board, and the possibility of Gordon taking over, for some time.
2020 forecast
PushPay is forecasting revenue growth to slow to around 25 per cent next year, or between US$122.5m and US$125m.
It says ebidaf will land between US$17.5m and US$19.5m for 2020.
Gross margin, which increased from 55 per cent to 60 per cent in 2019, is forecast to widen again to 63 per cent next year.
The US continued to dominate, accounting for 98 per cent of Pushpay's 2019 revenue.
Headcount increased 11 per cent over the year to 389, with 106 staff based in Auckland and 283 in Redmond, Washington.
The company is aiming to drive further growth by expanding beyond Pushpay's base of large US churches into non-profits and the education sector.
Today, Heaslip said those initiatives were still in an embryonic stage. His company's near-term focus is on "other faith verticals" outside its Protestant base. He says Pushpay has only made limited progress with Catholic churches, where an incumbent called Blackboard is strong. Heaslip says as a small, nimble company, Pushpay has more to offer.
Acquisitions could form part of its growth strategy in 2020, Heaslip said, as it looks for the best way to gain customers in new markets.
US listing still on hold
As Crowther exited, selling his 9.03 per cent stake for $99m last June, Pushpay's board shelved its plans for a Nasdaq listing.
Today, Heaslip said, "US listing plans still on hold. We've been really excited to partner with the NZX and have seen some great results".
Where it once thought it needed a US listing for increased liquidity and shareholder buy-in, "We've been able to achieve that through our NZX listing," Heaslip said.
"We're now on the ASX as well, but a lot of the inflow has been through the NZX."
Boardroom reshuffle
Board member Graeme Shaw is taking over from Gordon as chairman.
There has also been a reshuffle on the board for early backers the Huljich family.
Christopher Huljich has been replaced by Peter Huljich on the board, and will serve as his alternate, reversing their previous roles.
And Dan Steinman has signalled his intention to stand down as a director once a replacement has been appointed.
Shaw said Pushpay - which was recently one of several tech companies dinged for having an all-male board - would assess "a diverse range of candidates" to replace Steinman.
