New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Pushpay Holdings Ltd<br>International: Searching for the Promised Land</h2>
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<p><strong>NEUTRAL</strong></p>
<p>We believe it is inevitable that Pushpay (PPH) will turn its attention to international markets in time, aiming to replicate success achieved in North America. In 2017 PPH made the decision to focus on megachurches due to 1) high visibility, 2) influence over smaller churches and 3) greater processing donations, and so we believe it logical to apply the same strategy if PPH were to expand internationally. Our analysis shows that the greatest international opportunities for PPH lies in countries demonstrating a high rate of Evangelical Christian growth, accommodating a large number of megachurches and experiencing stable levels of economic well-being combined with above-average smartphone penetration. We rule out countries which do not exhibit a high degree of religious freedom. Additionally, we have also spoken to a large number of Christian contacts around the world, including pastors, missionaries, academics (church planters) and congregation members. We conclude there are a number of niche opportunities in countries which include South Korea, Nigeria, Singapore, and Brazil.&nbsp;&nbsp;</p>
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<h3>Why has PPH had so much success in North America?</h3>
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<p>The US Evangelical church market has exhibited particular characteristics that have aligned well with PPH's product, culture and ambition. US megachurches are well structured corporate-run entities, growing at a consistent rate and focussed on raising money through donations for expansion, community projects and church running costs. Additionally, many US citizens have historically avoided donating via online banking due to 1) poor US banking infrastructure, 2) concerns over security, and 3) a culture embedded around credit cards. Accordingly, US churches relied heavily on cash donations until PPH proposed an alternative solution and attained market share at a great pace due to its aggressive sales technique.&nbsp;</p>
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<h3>PPH's&nbsp;current international presence remains limited</h3>
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<p>Outside the US, PPH currently provides services to churches in New Zealand, Australia and Canada, which are relatively small markets all with structural decline in church attendance. They&nbsp;lack the 'mega' style churches of the US, with the exception of a small number of international churches such as&nbsp;Hillsong, C3,&nbsp;CityImpact, Arise and&nbsp;Planetshakers, all of which operate multiple campuses regionally and/or internationally, and are growing in size and popularity. With a small addressable market, we do not see PPH&nbsp;focussing&nbsp;on these countries in isolation.&nbsp;</p>
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<h3>International competitive pressures already growing</h3>
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<p>Competitor Tithe.ly now provides its giving and donor management services to 45 countries globally, significantly growing its reputation and status. Entering a new market, PPH would be competing with current donation solutions which include church website donations, Paypal and the cultural norms associated with cash giving.&nbsp;</p>
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<div><strong>Jamie Foulkes</strong></div>
<div><a href="mailto:jamie.foulkes@forsythbarr.co.nz" target="_blank" rel="noopener">jamie.foulkes@forsythbarr.co.<wbr>nz</a></div>
<div>+64 4 914 2217</div>
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Pushpay Holdings Ltd International: Searching for the Promised Land

NEUTRAL
We believe it is inevitable that Pushpay (PPH) will turn its attention to international markets in time, aiming to replicate success achieved in North America. In 2017 PPH made the decision to focus on megachurches due to 1) high visibility, 2) influence over smaller churches and 3) greater processing donations, and so we believe it logical to apply the same strategy if PPH were to expand internationally. Our analysis shows that the greatest international opportunities for PPH lies in countries demonstrating a high rate of Evangelical Christian growth, accommodating a large number of megachurches and experiencing stable levels of economic well-being combined with above-average smartphone penetration. We rule out countries which do not exhibit a high degree of religious freedom. Additionally, we have also spoken to a large number of Christian contacts around the world, including pastors, missionaries, academics (church planters) and congregation members. We conclude there are a number of niche opportunities in countries which include South Korea, Nigeria, Singapore, and Brazil.&nbsp;&nbsp;


Why has PPH had so much success in North America?


The US Evangelical church market has exhibited particular characteristics that have aligned well with PPH's product, culture and ambition. US megachurches are well structured corporate-run entities, growing at a consistent rate and focussed on raising money through donations for expansion, community projects and church running costs. Additionally, many US citizens have historically avoided donating via online banking due to 1) poor US banking infrastructure, 2) concerns over security, and 3) a culture embedded around credit cards. Accordingly, US churches relied heavily on cash donations until PPH proposed an alternative solution and attained market share at a great pace due to its aggressive sales technique.&nbsp;


PPH's&nbsp;current international presence remains limited


Outside the US, PPH currently provides services to churches in New Zealand, Australia and Canada, which are relatively small markets all with structural decline in church attendance. They&nbsp;lack the 'mega' style churches of the US, with the exception of a small number of international churches such as&nbsp;Hillsong, C3,&nbsp;CityImpact, Arise and&nbsp;Planetshakers, all of which operate multiple campuses regionally and/or internationally, and are growing in size and popularity. With a small addressable market, we do not see PPH&nbsp;focussing&nbsp;on these countries in isolation.&nbsp;


International competitive pressures already growing


Competitor Tithe.ly now provides its giving and donor management services to 45 countries globally, significantly growing its reputation and status. Entering a new market, PPH would be competing with current donation solutions which include church website donations, Paypal and the cultural norms associated with cash giving.&nbsp;




Jamie Foulkes
jamie.foulkes@forsythbarr.co.nz
+64 4 914 2217




Pushpay Holdings Ltd: International: Searching for the Promised Land