Pushpay says it will still hit its FY2025 goals of 20,000 customers and US$10 billion in total processing volume - but it is now expected to take a further 12 to 18 months “on the basis that the current trends improve”.
The admission was made as the NZX-listed Kiwi-American firmposted its first-half numbers, which were in line with an October 31 guidance update.
It also came against the backdrop of a $1.54b takeover offer that will be voted on in the New Year, and divided analyst opinion over whether a rival bidder could enter the fray.
CFO Richard Keys said on a conference call with analysts that Sixth Street and BGH Capital’s $1.54b offer could not be lowered, and that in any case the pair had seen Pushpay’s final numbers - including its pushed-out FY2025 targets - under non-disclosure before entering the scheme of arrangement on October 31.
The church giving and management software provider said underlying ebitdaf fell 10 per cent to US$27m based on costs of its early push into the Catholic segment (so far, nearly all of the Kiwi American firm’s revenue has come from Protestant churches).
Pushpay also said underlying earnings would fall 10 per cent to US$27m based on the costs of its early push into the Catholic segment. So far, nearly all of the Kiwi-American firm’s revenue has come from Protestant churches.
Total processing volume increased to US$3.6 billion, up 2 per cent on the first half of last year as total customer numbers increased 4 per cent to 14,602.
The softer guidance given in the October 31 update was also confirmed.
Pushpay said it now expects underlying ebitdaf to be at the lower end of its original FY2023 guidance of US$56m - US$61m. It is now forecasting underlying between US$54 and $58m.
And its revenue growth guidance has been cut from 10 to 15 per cent to 4 to 8 per cent.
Matthews said that churches were under pressure from increasing inflation, labour costs and interest rates.
Keys said while congregations were looking to technology to help cut running costs, the economic pressures also meant that purchasing decisions were being pushed out.
UBS analyst Phil Campbell noted that churn had increased among mid-size churches.
Matthews said Pushpay’s own data, and third-party research, showed the economic downturn saw “lower number of brand new donors coming into the church ecosystem” over the year.
Earlier this year - before the takeover offer - Pushpay said it planned to transfer its intellectual property from a New Zealand Pushpay subsidiary to a US Pushpay subsidiary. It has requested a binding ruling from Inland Revenue.
Today, it said it obtained a binding ruling from IRD, plus banking approval.
Chief executive Molly Matthews earlier told the Herald the move was not a precursor to a Nasdaq listing (a move now superseded by the private equity buyout offer in any case). It would reduce Pushpay’s tax expenses, due to the different tax treatment of IP in the US.
In any event, although Pushpay has now gained approval to shift its IP to a US subsidiary, the move has been put on hold, pending the outcome of the takeover bid.
Shares closed at $1.27 on Tuesday. The stock is down 31.2 per cent for the year.
Sixth Street and BGH Capital, which collectively hold a 20.3 per cent stake, have bid $1.34 per share or $1.53 billion for the company, or a 30 per cent premium on the “undisturbed” price of $1.03 on April 22 before takeover talk first emerged, if only 13 per cent above the trading price immediately before the offer was formalised.
A vote is expected in the first quarter of next year.
Pushpay has also closed a couple of large deals recently, with the Archdiocese of Seattle and the US Army Chaplain Corps, a public service organisation that services over one million active, reserve and retired US soldiers - a deal that Hooper says is worth $4m and more importantly “marks a push into public service organisations and a potentially meaningful expansion of the total-addressable market”.
On a conference call this morning, Matthews said the Catholic segment, non-profits and the public sector would be future areas of growth.
Forsyth Barr analysts Andy Bowley and Mark Robertson warn that Pushpay faces cheaper competitors in new markets, however.
