Pushpay expects to break-even by year-end

Pushpay CEO Chris Heaslip.

Digital church collection plate operator Pushpay says it expects to break-even for the first time in December this year and to post its first earnings before interest, tax, depreciation, amortisation and currency adjustments in the year to March 31, 2019.

The NZX-listed, US-headquartered software-as-a-service company is growing from a strategy targeting medium to large-sized US churches. It has 55 of the largest 100 US churches on its books, including the largest, which boasts 51,900 weekly church attendees, it told investors today.

Executives said one of its main competitors, Blackboard, was focusing more on "the Catholic sector" whereas Pushpay was making inroads with Protestant churches.

The company lost US$4.4 million ($6.5m) in the six months to September 30, compared with a US$12.5m loss in the same period last year.

Revenue of US$44m showed an increase of 48 per cent on the same period a year earlier, consistent with common SaaS strategy to invest in sales growth ahead of profitability.

Pushpay expects full-year revenue of between US$97.5m and US$100.5m.

Chief executive Chris Heaslip said any future positive operating earnings would come in part from a strategy to improve margins, as well as from increasing market share in "the US faith sector".

Gross margin is expected to increase to more than 60 per cent in the second half of the current financial year, from 54 per cent in the same period last year.

Once it breaks even, Pushpay will do away with quarterly reporting of key metrics, following investor and analyst feedback, said Heaslip.

The company has also concluded that one of its benchmarks, annualised committed monthly revenue, is no longer useful because of the seasonal nature of giving patterns, and will not be reported in future, he said.

The company, which listed in 2014, declined comment on reports that founder-shareholder Eliot Crowther's ex-wife, Dorette Banghart, is suing Crowther over the purchase of her share of the couple's stake in Pushpay.

The National Business Review reported last week that around mid-2017, while the couple were discussing divorce proceedings, Banghart alleges Crowther warned her that, based on inside knowledge, Pushpay shares were about to "go drastically down" and that she should accept $5m for her stake.

Crowther sold his 9.03 per cent stake in Pushpay for $100m on June 19.

A company spokeswoman told BusinessDesk the issue was private and declined to comment on whether Pushpay might be joined to Banghart's proceedings or whether the company anticipated taking steps to protect its brand, given its exposure to religious organisations.

Pushpay shares were trading at $3.64, down 1.9 per cent on last night's closing price, in early afternoon trading on the NZX today.