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 (PPH) Capital markets day takeouts</h2>
PPH’s capital markets day had little material new information, with much of the presentation focused on product demonstration.
Items of relevance
<ul>
<li>PPH are looking to re-brand the business (moving away from aggressive outbound sales) towards inbound sales through improved advert and content strategies while looking to upskill the sales team</li>
<li>Wage inflation was highlighted with PPH looking to pay competitive salaries and rely upon 1) strong culture and 2) ability to do social good in order to retain and attract staff</li>
<li>The business looks to continue its efforts in the Catholic space with comments stating 1) current Catholic Parishes are only using ~15% of PPH’s current features 2) demand so far from Catholics has been more focused towards church management systems and unique features (such as digital cemetery mapping) rather than digital giving 3) there has been some reservation in the Catholic space that live streaming undermines the Catholic mass 4) PPH has re-named its Catholic software ‘Parish Staq’ and 5) Catholic attendance in some churches has dropped considerably post COVID re-opening</li>
<li>Current trading: PPH are in black out period and therefore gave no details of current trading, however comments stated that digital penetration has held up well. Interestingly it was mentioned that demand for streaming has fallen since churches have started to re-open</li>
<li>PPH sees some international opportunities in the medium term, focusing on the US in the short term</li>
<li>The focus for growing its market share: churches sized 500-1000&nbsp;&nbsp;</li>
</ul>
Our view
This was a disappointing 2.5 hours focused mainly around product features and branding. We view the comment around softened demand for streaming as unhelpful given the recent acquisition of Resi Media. We have had previous feedback from a number of churches that has suggested that a large proportion of PPH features go unused, yet the customer is charged increased subscription fees regardless. This concurs with the Catholic view stated above that only ~15% of features are used currently in parishes. Additionally we were unsurprised that the stated Catholic demand was more for church management systems and organisational software rather than processing software. This supports our view that the Catholic market is far less lucrative than the Evangelical sector. We felt that PPH was quick to dismiss competition at the mid church size (referencing that Breeze focused on churches sized below 250) when Breeze has stated that the majority of customers are sized 200-600, with Tithe.ly also looking to grow its share in the upper medium sized segment (demonstrated by the recent acquisition of Breeze). Finally when asked for 3 key reasons why a customer would choose PPH over competitors, the answer was given 1) an all in one solution, 2) reliability and 3) feature completeness. This was unconvincing given that a number of competitors offer all of these components and typically priced at a discount.

Pushpay (PPH) Capital markets day takeouts
PPH’s capital markets day had little material new information, with much of the presentation focused on product demonstration.
Items of relevance

PPH are looking to re-brand the business (moving away from aggressive outbound sales) towards inbound sales through improved advert and content strategies while looking to upskill the sales team
Wage inflation was highlighted with PPH looking to pay competitive salaries and rely upon 1) strong culture and 2) ability to do social good in order to retain and attract staff
The business looks to continue its efforts in the Catholic space with comments stating 1) current Catholic Parishes are only using ~15% of PPH’s current features 2) demand so far from Catholics has been more focused towards church management systems and unique features (such as digital cemetery mapping) rather than digital giving 3) there has been some reservation in the Catholic space that live streaming undermines the Catholic mass 4) PPH has re-named its Catholic software ‘Parish Staq’ and 5) Catholic attendance in some churches has dropped considerably post COVID re-opening
Current trading: PPH are in black out period and therefore gave no details of current trading, however comments stated that digital penetration has held up well. Interestingly it was mentioned that demand for streaming has fallen since churches have started to re-open
PPH sees some international opportunities in the medium term, focusing on the US in the short term
The focus for growing its market share: churches sized 500-1000&nbsp;&nbsp;

Our view
This was a disappointing 2.5 hours focused mainly around product features and branding. We view the comment around softened demand for streaming as unhelpful given the recent acquisition of Resi Media. We have had previous feedback from a number of churches that has suggested that a large proportion of PPH features go unused, yet the customer is charged increased subscription fees regardless. This concurs with the Catholic view stated above that only ~15% of features are used currently in parishes. Additionally we were unsurprised that the stated Catholic demand was more for church management systems and organisational software rather than processing software. This supports our view that the Catholic market is far less lucrative than the Evangelical sector. We felt that PPH was quick to dismiss competition at the mid church size (referencing that Breeze focused on churches sized below 250) when Breeze has stated that the majority of customers are sized 200-600, with Tithe.ly also looking to grow its share in the upper medium sized segment (demonstrated by the recent acquisition of Breeze). Finally when asked for 3 key reasons why a customer would choose PPH over competitors, the answer was given 1) an all in one solution, 2) reliability and 3) feature completeness. This was unconvincing given that a number of competitors offer all of these components and typically priced at a discount.

Pushpay (PPH): Capital Markets Day Takeouts

Pushpay Holdings

Pushpay (PPH): Capital Markets Day Takeouts