Pushpay stock split . I don't understand., page-9

If you are guided by the analyst call's that customer numbers have stalled and overlay the share price performance since 6 November, then you are part of a growing group where sentiment has shifted from very positive to neutral / negative. I see things very differently and genuinely believe PPH is a better buy now than it was 12 or 18 months ago.

Scrutiny of the customer count number in isolation yields a very shallow assessment of growth. In fact, a non-sensical view in my book. The pivot to targetting Medium / Large churches and not defending churn on Small churches demonstrates the point.

The USA Church Classification reveals :
Mega Church .....2000 + congregants per week
Large Church .....301 to 2000 congregants per week
Medium Church ..51 to 300 congregants per week
Small Church ......Less than 50 congregants per weekand

Interestingly, half the Churches in the USA have less than 75 congregants per week. You can run the numbers eg lose 100 Small and replace with one Mega, 5 Large and say 10 Medium. Whilst the Church is the contract party and therefore considered as the Customer, the Congregant is responsible for the entire Revenue associated with ''Processed' donations. Therefore the Congregant is as much a Customer of PPH as the Church.

With this in mind, for a 'catch all' assessment of growth, I monitor the avg Annual Processing Volume (APV) per Church (as Customer). Herewith the trajectory :
FY16 ....$ 159 320 [ $ 0.6 Bn APV vs 3766 customers]
FY17.....$ 267 181 [ $ 1.8 Bn APV vs 6737 customers]
FY18.....$ 412 314 [ $ 3.0 Bn APV vs 7267 customers]
FY19.....$ 549 091 [ $ 4.2 Bn APV vs 7649 customers]
FY20.....$ 611 247 [ $ 5.0 Bn APV vs 8180 custmers]
Half Year FY21 .....$ 293 685 [ $ 3.2 Bn APV vs 10896 customers]

Note : The FY20 number excludes the 'take-on' via the CCB where the acquisition only 3 months prior to FYE. Remember CCB did not offer Payment Processing as part of their Church Mgt System. Simply earned a commission from a 3rd party provider.

Then, looking at the Half Year FY21, now that PPH / CCB are fully intergrated, the customer count adjusts upwards by 2716 Customers or a whopping 33%. See the impact of this addition in the Maths? Reinforces how good the $ 293 685 number is.

Finally, worth considering that be it the traditional PPH platform or the new Churchstaq platform, onboarding a customer is not as simple as a 'Plug-in & Play' model. The Company have a defined capability via resourcing to manage this on-boarding process. Logically, it will vary from Church to Church, a range of legacy systems, the challenge of data migration, the level of commitment from Church personnel and a whole process of engaging with the congregant/s. Understand that it takes 60 to 90 days to on-board a Church with 1000 congregants per week, that is to the point where processing volumes start to materially increase.

Operating Costs do not reflect any material increase. Now think of 2716 new customers in a single year, the evolution of the 'one stop shop' and what lies ahead in terms of extended operational leverage, cash generation, future acquisitions, targetting of the Catholic Church sector and never forget, other geographies.

I remain very high conviction. The share price will IMO re-rate to reflect the progress in time.

Rokewa