Pushpay Holdings Ltd (ASX: PPH)

PPH Details

Accelerated progress for ACMR target: Pushpay Holdings Ltd, a mobile app developing New Zealand company, witnessed a stock price surge of 10.7% on October 11, 2107, as the group announced about bringing forward its US$100 million Annualised Committed Monthly Revenue (ACMR) target to 31 December 2017 from 31 March 2018. The key aspect to note here is that the group will be achieving this milestone within 27 months after reaching US$10 million ACMR. The group ACMR has been reported to increase to US$67.5 million, which is 96.8% growth over the year to 30 September 2017; and this has helped in bringing forward the ACMR target.

With the capability to serve 12 of the top 20 and 50 of the top 100 largest churches in the US, the group is now processing over US$2.2 billion in Annualised Monthly Payment Transaction Volume. The group’s customer base has been increased to 7,121, reflecting a jump of 34.7% over the year to 30 September 2017. The focus on medium and large customers by reducing headcount dedicated to small customer sales with an associated reduction in the number of small customers acquired has helped the group. 

Quarterly Result (Source: Company Reports)
 
The group now seems to move an inch towards a market leading position in a growing sector. PPH also aims to reach the milestone of US$10 billion in Annualised Monthly Payment Transaction Volume, representing less than 10% of annual giving to religious organisations in the US. To attain this, the group is making changes to its sales strategy in order to attract a higher number of medium and large customers, and expects to find support from the consistent growth in Average Revenue Per Customer (ARPC).

PPH’s consolidated echurch app on the Apple app store and strategic relationship with Stripe that supports PPH’s core payments platform, are all adding to gain traction. The group is yet to begin with providing quarterly revenue targets, and the same is expected in April 2018.

PPH stock has already run up 84% this year to date (as at October 10, 2017) and is peaking towards its 52-week high price. Given the run-up, we give an “Expensive” recommendation at the current price of $2.75

IPH Ltd (ASX: IPH)

IPH Details

Acquisition of AJ Park: On October 11, 2017, IPH’s stock surged up 4% on the news that it has reached an agreement to acquire the NZ intellectual property firm AJ Park by an acquisition of its patent attorney business, the benefit of its trade mark and legal businesses, and its associated Australian operations. AJ Park is a full-service IP firm and services clients ranging from large multinational corporations and universities to start-up companies and entrepreneurs. The total purchase consideration for the acquisition is AU$60.9m adjusted for net debt and working capital adjustments, which represents 7.5x FY2017 normalised EBITDA. The acquisition, though subject to many conditions, is expected to be completed by end of October 2017, and is a part of the group’s strategy to expand in secondary IP market. The group is focussed on operations optimisation and other growth opportunities. Growth in Asia is one of the key priorities. IPH stock has fallen about 3% this year to date, as at October 10, 2017 based on the group’s performance. Meanwhile, the group’s management is positive on the return to normalised revenue underlying growth in FY18; however, delays in break-even in the Data Analytics business post FY20 have been stated. Further, IPH’s exposure makes it sensitive to currency headwinds. Given the challenges, we maintain an “Expensive” recommendation at the current price of $5.16

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