Is the Pushpay Holdings Ltd (ASX: PPH) share price a post-COVID opportunity?
Pushpay shares have actually dropped by 21% since the start of the year and 38% in the past six months.
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What is Pushpay?
It's an ASX tech share that provides a donor management system, including donor tools, finance tools and a custom community app, a church management system and video streaming solutions predominately to the faith sector in the US.
Not only is there the Pushpay business, but it also owns Church Community Builder as well as Resi Media. Church Community Builder provides a software as a service (SaaS) church management system that churches use to connect and communicate with their community members, record member service history, track online giving and perform a range of administrative functions.
Resi is a SaaS company that provides live video streaming solutions. It largely services the faith sector, but also services commercial, non-profit organisations as well as education providers.
What has happened to the Pushpay share price?
Pushpay was one of the beneficiaries of the changes from the COVID-19 pandemic. The ASX tech share provides donation capabilities for people to give money electronically. Social distancing and lockdowns resulted in more donations being sent electronically.
But now the business is reporting that its growth rate in FY22 is slowing compared to 2021 and the affected months during 2020.
Pushpay's FY21 revenue rose 39% to US$181.1 million and the net profit rose by 95% to US$31.2 million. In the FY22 half-year result, revenue grew by 9% to US$93.5 million and net profit after tax went up 43%.
Is life returning to normal hurting the company?
In the HY22 result, Pushpay said that despite pressures that have been felt globally from the COVID-19 environment, the ASX share has not seen any material change in digital giving reverting to non-digital means.
To management, this indicated that its customers in the US in the faith sector may have undergone a fundamental technological shift because of what's happening. Indeed, customers are accelerating the option of technology because of the COVID environment.
Is the Pushpay share price an opportunity?
The company is continuing to focus on sustainable growth, refining its strategies that would enable the company to "realise its considerable potential over the long-term".
The ASX share expects to see continued growth through further expansion of its existing suite of solutions, providing bundled product offerings to existing customers, the products utilised by customers, while also attracting new customers and expanding its reach into new segments. Resi Media provides an opportunity for material synergy opportunities through product bundling and integration.
It has plans to expand in the Catholic segment and also keep growing profit margins thanks to operating leverage. In HY22, the Pushpay gross profit margin increased from 68% to 69%.
Commsec numbers put the Pushpay share price at 17x FY24's estimated earnings.
