Pushpay Holdings Limited

PPH Details

Pushpay Holdings Limited (ASX: PPH) provides a donor management system, including donor tools, finance tools, and a custom community app, to the faith sector, non-profit organisations, and education providers in the US, Canada, Australia and New Zealand. The company recently updated that the investor briefing for interim results for the six months ended 30 September 2019, will be held on 6 November 2019.

Financial Highlights for the year ended 31 March 2019:Total revenue for the year amounted to US$98.4 million, representing an increase of 40% in comparison to prior corresponding period revenue of US$70.2 million. Continuous delivery on the company’s growth strategy and product enhancement aided revenue growth. Operating revenue was reported at US$95.9 million, rising 42% in comparison to FY18 operating revenue of US$67.7 million. Earnings before interest, tax, depreciation, amortisation and foreign currency gains/losses (EBITDAF) stood at US$1.6 million, rising 108% in comparison to prior corresponding period loss of US$18.6 million.


Income Statement (Source: Company Reports)

FY20 Guidance: Operating revenue for the year ended 31 March 2020 is expected to be in the range of US$121.0 million – US$124.0 million. Earlier, the company had provided a guidance range of US$122.5 million – US$125.5 million, to incorporate the impact of lesser new customer acquisitions over the start of the financial year as compared to the previous year. Guidance for EBITDAF was revised from US$18.5 million – US$20.5 million earlier, to US$23.0 million – US$25.0 million, due to lower cost generation expected in the second half of FY20. Moreover, the cost efficiencies in conjunction with accounting impacts of IFRS 16 are expected to result in lower expenses on yoy.
Stock Recommendation:The stock of the company generated negative returns of 5.68% and 8.28% over a period of 1 month and 3 months, respectively. During the year ended 31 March 2019, gross margin of the company stood at 60.5%, which is higher than the previous year’s gross margin of 55.3%. Current ratio for the company also improved from 2.06x in FY18 to 2.10x in FY19, implying improved short-term liquidity. The company is looking forward to refining its business strategy to promote growth over the long-term. The company will now focus on increasing its market share over the medium-term and is also eyeing potential strategic acquisitions to add value to the business. Hence, considering the decent performance in FY19, revised EBITDAF guidance due to expected improvement in cost efficiencies and current trading levels, we give a “Buy” recommendation on the stock at the current market price of $2.960, down 1.003% on 25 October 2019.
 
PPH Daily Technical Chart (Source: Thomson Reuters)
 

ELMO Software Limited

 

ELO Details

Strong Growth in Annualised Recurring Revenue:ELMO Software Limited (ASX: ELO) is a leading provider of software-as-a-service, cloud-based human resources and payroll solutions. The company recently announced that the 2019 Annual General Meeting will be held on 26 November 2019. In another recent release, the company notified about the successful completion of the Share Purchase Plan offer. The company received applications for a total amount of around A$18 million. Shares under the SPP were issued at a price of A$6.00 each and commenced trading on 21 October 2019.

FY19 Financial Highlights: During the year ended 30 June 2019, the company reported annualised recurring revenue of $46.0 million, up 47.8% on prior corresponding year. Pro forma revenue for the year stood at $42.6 million.The company has a large and growing addressable market in Australia & New Zealand and has witnessed market opportunity growth to 23,813 organisations. Total addressable market of ANZ is worth ~2.4 billion. In addition, the company’s customer base has depicted an impressive trajectory over the 5-year period starting FY15 to FY19, with CAGR of 51.6%.


Customer Base Growth (Source: Company Reports)
 
FY20 Guidance: Annualised recurring revenue for FY20 is expected to be in the range of $61 million - $63 million. Revenue for the year is expected to be between $53 million - $55 million. The company has entered FY20 with strong momentum, backed by remarkable growth in ARR and high degree of subscription revenue. A larger market opportunity awaits the business with a broader product set, increased traction in new market segment, and investments in sales, marketing and R&D.

Stock Recommendation: The stock of the company generated returns of 1.79% and -8.36% over a period of 1 month and 3 months, respectively. The recent capital raising from the Share Purchase Plan and the Institutional Placement, has provided an approximate funding of A$70 million to next stage of growth. Subscription revenue in FY19 reported a strong growth and stood above the pro forma guidance. Acquisitions during the year also performed in-line with expectations. However, the company reported a pro forma EBITDA loss of $0.9 million and expects to incur an EBITDA loss in the range of $1 million - $3 million in FY20. Given the backdrop of the above factors, we have a wait and watch stance on the stock at the current market price of $6.640, up 6.24% on 25 October 2019 on the release of notice related to 2019 Annual General Meeting.

 
 ELO Daily Technical Chart (Source: Thomson Reuters)

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