PPH - PushPay (Church/donor software.)

[sb9]

Good robust and very constructive discussion from all y'day's posts. Its always good to have for and against views and that's what makes this forum so interesting to be part of.

For me personally I did my research on PPH and felt comfortable in the way they operate their business and are very careful with shareholders funds. I wouldn't put them in the same category as few other mentioned companies like WYN, PEB and RAK (apologies if you're a holder in any of those).

To begin, you just need to look at the way they disclose all relevant information be it financial or operational, very transparent and clear around detail. They provide quarterly updates which enables one to decide on their position with regards to investing which many companies do not provide.

They're moving most of their operational staff to US which is where the main action is and that's makes me comfortable about their business strategy. And you know what happens when they strike a cord with one of the big boys in silicon valley, they'll be snapped up just like that which is what is going to be with this one ultimately.

I'm comfortable with my investment choice on this one and will keep tight handle on things as they progress.

[BlackPeter]

Good discussion. And yes - looking at the other technology companies we had at the NZX, I agree that in terms of product offering DIL is the closest. They as well offer a technically quite simple product for a niche market - and hey, while theirs was an amazing roller coaster journey, they ended (as listed company) on a high.

Does this mean that every company with a similar product to DIL is to succeed - obviously not, and anybody who followed DIL knows, that they had more than one near fatal accident on their way.

Can't really compare them in terms of board competence, but agree that RAK as well as PEB as well as WYN suffered in part due to huge governance issues (be it plain incompetence, wrong skill sets, nepotism (RAK) or a combination thereof.

I haven't yet investigated the PPH board myself (an exercise I would recommend any potential investor to do), but had for this post a brief look into their latest report. Oh - surprise ... I note with interest that Chris Huljich is one of the directors. Any potential investor in PPH might want to research the history of Huljich Wealth Management (for some funny reason not mentioned in his PPH-CV).

And hey - here is another interesting name: Bruce Gordon; Now that's obviously a quite common name, but there was a Bruce Gordon at the board of Hanover who is on my "never again" list. Think as well he looked similar, but my memory is not photographic. Might be worthwhile to research whether this is the same person? Any of the investors know?

Both (if its the same Bruce) did sit on boards which had in the past problems to protect their investors funds. Up to each individual to decide, whether these are the best people to look now after their money in PPH. A very personal choice, but I think I know what my answer would be.

But apart from this - yes, there are obviously the fundamentals. Personally I do prefer to buy into companies which either demonstrated already that they are able to make money (I mean more money than they spend) or, alternatively (if they are startups like PPH) which have a potential large enough to pay for the risk that 80% of startups die off before they start to make money.

This means - to be comparable in earning potential with an established (money making) company, they would need to have at least 5 times the earning potential (to compensate for the 4 out of 5 companies biting the dust before they make money). Given their current market cap (nearly $500m) would they need to have a realistic NPV (edited, I first wrote here NPAT, which is obviously nonsense) of at least 2.5 billion to compensate for the 80% chance of a total capital loss). I'd love to see the growth assumptions turning this into a viable business case. Maybe I am a non believer, but I don't see this net worth in this particular startup with $15m revenue (FY2016) and a $20m loss. Given the amazing staff growth am I confident that for 2017 its not just their revenue, but as well their loss increasing.

Ah - and before I forget ... just watch their staff growth. If they kept growing as they did last FY, they must have passed (or at least approached) by now the 500+ staff barrier. This means they would need to put a lot of additional effort into (internal) communication and organisation. I have seen many companies failing to move over this hurdle and am wondering whether they have the management expertise to pass it. Any of the investors researched this? Do they have an experienced and empowered quality manager?

Will they manage to grow revenue ultimately faster than cash burn? Maybe, if all stars stay aligned and the low hanging fruit don't run out ... Would I want to bet my money on it? Certainly not.

Anyway - DYOR and GLTAH. Just remember - its a dangerous world out there and everybody wants just your best: your money

[kizame]

Excellent, thank you BlackPeter.

However I will continue to look at performance,and so far they can't be faulted. Without a certain amount of calculated risk in any endeavour,life would be a little boring for me.

[Cobber]

Good discussion. And yes - looking at the other technology companies we had at the NZX, I agree that in terms of product offering DIL is the closest. They as well offer a technically quite simple product for a niche market - and hey, while theirs was an amazing roller coaster journey, they ended (as listed company) on a high.

Does this mean that every company with a similar product to DIL is to succeed - obviously not, and anybody who followed DIL knows, that they had more than one near fatal accident on their way.

Can't really compare them in terms of board competence, but agree that RAK as well as PEB as well as WYN suffered in part due to huge governance issues (be it plain incompetence, wrong skill sets, nepotism (RAK) or a combination thereof.

I haven't yet investigated the PPH board myself (an exercise I would recommend any potential investor to do), but had for this post a brief look into their latest report. Oh - surprise ... I note with interest that Chris Huljich is one of the directors. Any potential investor in PPH might want to research the history of Huljich Wealth Management (for some funny reason not mentioned in his PPH-CV).

And hey - here is another interesting name: Bruce Gordon; Now that's obviously a quite common name, but there was a Bruce Gordon at the board of Hanover who is on my "never again" list. Think as well he looked similar, but my memory is not photographic. Might be worthwhile to research whether this is the same person? Any of the investors know?

Both (if its the same Bruce) did sit on boards which had in the past problems to protect their investors funds. Up to each individual to decide, whether these are the best people to look now after their money in PPH. A very personal choice, but I think I know what my answer would be.

But apart from this - yes, there are obviously the fundamentals. Personally I do prefer to buy into companies which either demonstrated already that they are able to make money (I mean more money than they spend) or, alternatively (if they are startups like PPH) which have a potential large enough to pay for the risk that 80% of startups die off before they start to make money.

This means - to be comparable in earning potential with an established (money making) company, they would need to have at least 5 times the earning potential (to compensate for the 4 out of 5 companies biting the dust before they make money). Given their current market cap (nearly $500m) would they need to have a realistic NPV (edited, I first wrote here NPAT, which is obviously nonsense) of at least 2.5 billion to compensate for the 80% chance of a total capital loss). I'd love to see the growth assumptions turning this into a viable business case. Maybe I am a non believer, but I don't see this net worth in this particular startup with $15m revenue (FY2016) and a $20m loss. Given the amazing staff growth am I confident that for 2017 its not just their revenue, but as well their loss increasing.

Ah - and before I forget ... just watch their staff growth. If they kept growing as they did last FY, they must have passed (or at least approached) by now the 500+ staff barrier. This means they would need to put a lot of additional effort into (internal) communication and organisation. I have seen many companies failing to move over this hurdle and am wondering whether they have the management expertise to pass it. Any of the investors researched this? Do they have an experienced and empowered quality manager?

Will they manage to grow revenue ultimately faster than cash burn? Maybe, if all stars stay aligned and the low hanging fruit don't run out ... Would I want to bet my money on it? Certainly not.

Anyway - DYOR and GLTAH. Just remember - its a dangerous world out there and everybody wants just your best: your money

Some interesting points Peter.

They state that by the end of calendar 2017 that ACMR will reach $72 million.

They also state they will break even at the end of calendar 2017.

So reaching these goals is the first litmus test. The 2nd is.... for every $1million of revenue growth thereafter, what % is profit.

The next 24 months for these guys will be nice to watch as it plays out.

[Jinx]

Pushpay has had a rough few months taking hit after hit, primarily due to the NZ dollar gaining strength (meaning PPH profits go down since they're in USD).

Some interesting food for thought is Trumps impact on Pushpay, although not obvious at first I'm willing to bet Trumps childish and harmful policies will be seriously increasing the amount given to charity and churches though Pushpay's app. I imagine both sides would see an increase, religious fundamentalists who think Trump is doing the US a massive favour will be ecstatic and opening their wallets. As well as everyone who disagrees with Trump feeling worried and unsure are also likely opening their wallets. Perhaps a cold way of looking at the situation but this on top of Christmas has me excited for the next update
Just some speculation

[BlackPeter]

Pushpay has had a rough few months taking hit after hit, primarily due to the NZ dollar gaining strength (meaning PPH profits go down since they're in USD).

Some interesting food for thought is Trumps impact on Pushpay, although not obvious at first I'm willing to bet Trumps childish and harmful policies will be seriously increasing the amount given to charity and churches though Pushpay's app. I imagine both sides would see an increase, religious fundamentalists who think Trump is doing the US a massive favour will be ecstatic and opening their wallets. As well as everyone who disagrees with Trump feeling worried and unsure are also likely opening their wallets. Perhaps a cold way of looking at the situation but this on top of Christmas has me excited for the next update
Just some speculation

Agree with all three statements: Yes, PPH had (and still has) a terrible time; Yes, Trump declaring war on everybody might well drive people back to church and yes, this is all speculation ;.

Just remember - people do have other ways than PPH App to buy their way into paradise ; Most churches are quite happy to take cash, cheques, bank transfers or valuables and real estate in any form & shape.

[kizame]

Agree with all three statements: Yes, PPH had (and still has) a terrible time; Yes, Trump declaring war on everybody might well drive people back to church and yes, this is all speculation ;.

Just remember - people do have other ways than PPH App to buy their way into paradise ; Most churches are quite happy to take cash, cheques, bank transfers or valuables and real estate in any form & shape.

Yep they have other ways to pay,but mostly people are going to pay with the most convenient option,and an app is an excellent way to pay,in fact that way,they are more likely to give more.
I for one love the convenience of paying anything via phone,a trip to the bank and cheques are nearly a thing of the past.
people are people and the less effort they have to do to get a job done,the better.

[Entrep]

If there's one thing I've learned from opening a US bank account (with Wells Fargo when I went on holiday last year) it's that transferring money to another person in the US is a freaking mission. Not like we have back here.

[sb9]

Yep they have other ways to pay,but mostly people are going to pay with the most convenient option,and an app is an excellent way to pay,in fact that way,they are more likely to give more.
I for one love the convenience of paying anything via phone,a trip to the bank and cheques are nearly a thing of the past.
people are people and the less effort they have to do to get a job done,the better.

Couldn't agree more, with whole world now virtually turning digital in the way things are done be it payments, shopping, learning etc. People love ease of doing things when they want, where they want and most importantly how they want.

[sb9]

Notice some big volumes on ASX today, 3M+ shares traded so far. Looks like some big fund is accumulating..