Ann: Pushpay and Church Community Builder announce business..., page-5

In the absence of the Company providing the likely impact of the Acquisition on Operating Revenue & Processing Volumes, other than to say “ from FY2022 onwards, deliver material accretion and benefits to PushPay’s Revenue and EBITDAF”, thought it may be useful to reflect on what having access to approx. 2100 new customers may mean for the business.

Clearly, CCB have credibility and a relationship with these customers. A blog review on CCB across some 380 reviews carried a rating of 4.3 out of 5, reflecting a high ‘value add’ ethic and a generally high ‘customer satisfaction’ level. Service response time appears the only negative, where website logging (and 1 to 2 day delayed response) opposed to call centre access ( immediate response) frustrates some.

Should in theory present PushPay with an improved strike rate in winning new business. Door is essentially already half open. Of course, we do not know what percent of CCB’s customer base is considered ‘medium to large’ (traditional PushPay target market’. We also cannot speculate on whether this acquisition has a strategic slant which reconsiders the prospect of servicing smaller churches as well....an enhanced Church Management system which extends a value proposition to smaller churches, easy on-boarding and affordable.

Let’s get back on point. What does having easier access to say a percentage of 2100 new customers potentially mean. Looking back over past financial years...

In FY18 , the addition of 539 new customers saw Operating Revenue up USD 33.8 M. Processing volume increased by USD 1.2 BN.

In FY19, the addition of 373 new customers (Nett of small church churn) saw Operating Revenue up USD 28.2 M. Processing Volume increased by USD 1.2 BN.

Based on the H1 FY 20 and Guidance as provided, the addition of say 300 + new customers should see Operating Revenue up USD 26.6 M. Processing Volume set to increase by USD 0.7 BN.

In summary, if this acquisition resulted in the signing up of just 40 % of the estimated 2100 new customers, the impact would be more than material. Near equivalent to two years of historic PPH performance.

Increased scale will surely accelerate the Operational Leverage Dynamic (already present). Let’s hope that when the dust settles, PushPay will issue an investor presentation which better informs the market of the PPH / CCB strategic fit, any change in strategic direction, any benefits in terms of the geographical footprint of the new entity, the near term priorities and some numbers in support of the SPEND to acquire. My gut is telling me there are some hidden benefits with this acquisition. Also suspect their competitive environment is changing (although they essentially denied this on the recent investor call) and their motivation is being tuned accordingly.

IMO, share price at $3.93 is now hugely under-valued. I said previously (and stated) that I expected EBITDAF to reach AUD 100 m by the end of FY2022. You can change that to a AUD 100 m PLUS PLUS

Other’s thoughts ?

Rokewa