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the Pushpay Holdings Ltd (ASX: PPH) the share price might be worth considering right now.
Pushpay is a leading digital donation company. Specifically, Pushpay provides church management tools and donation tools.
But there are several reasons why ASX stock might be a good thing to watch out for:
Growing profit margins
A business with increasing profit margins has the potential to generate faster profit growth over time.
Pushpay sees operational leverage across the company.
Fiscal 21 saw the gross profit margin improve from 65% to 68%.
Earnings before interest, taxes, depreciation, amortization and foreign exchange (EBITDAF) improved from 22% to 34% thanks to revenue growth and limited growth in expenses.
Pushpay deliberately chose scalable software and chose the best tools to provide its customers with the best service. Management says that when combined with strong financial discipline, these investments will provide significant operating leverage as revenues increase.
Strong offer for churches
Pushpay offers a number of good tools for its large and medium-sized American churches.
It offers a live streaming service so that churches can stay in touch with their congregations. This has been helpful over the past year and a half during the pandemic.
Pushpay’s tools also allow churches to track donations from different donors. It offers many other administrative tools.
The best offer from Pushpay is called ChurchStaq, which is the combined offer of Pushpay and Church Community Builder (which she acquired not so long ago). It combines Pushpay’s donation and pledge solution with the functionality of Church Community Builder’s church management system.
ChurchStaq proves popular after significant customer adoption. ChurchStaq’s sales as a percentage of total sales increased after its launch in September 2020 across all customer segments. Pushpay has also seen an increase in cross-selling of its Donor Management System and Church Management System products to existing customers.
ASX Stock continues to seek acquisitions that can improve its offering to customers and potentially capture more market share.
Pushpay has allocated an initial investment of resources to develop and improve the client proposition for the Catholic segment of the US faith sector.
The Catholic segment of the US denominational sector comprises 196 dioceses and archdioceses representing approximately 17,000 individual parishes. This will be part of Pushpay’s plan to become the preferred provider of mission-critical software for the US faith sector.
In fiscal year 21, Pushpay began a pilot project with the Archdiocese of Chicago in Illinois, United States, and hosted a number of new Catholic parishes and dioceses on the Pushpay platform.
In fiscal year 22, Pushpay will invest between US $ 6 million and US $ 8 million to expand into the Catholic segment. Of this total, two-thirds will be spent on product design and development expenses. The rest is in sales and marketing.
The company expects the benefits of this Catholic segment to be realized gradually over the following years. It has set itself the goal of acquiring more than 25% of the Catholic Church Management Systems and Donor Management Systems market over the next five years.
The Catholic Church is closely associated with many educational providers and nonprofit organizations, which presents further opportunities in the United States and other international jurisdictions.
Pushpay share price assessment
According to Commsec, the Pushpay share price is valued at 27 times the estimated earnings for fiscal year 23.