PPH - PushPay (Church/donor software.)

[iceman]

I must say that reading this thread does give a fascinating insight into fear and greed.

Despite reading this thread, I don't follow the company itself closely because I am one of those 'old school' investors that BAA refers too who demands that a company 'makes a profit' before my investment hound's nose goes into action. I do appreciate that software companies can grow quickly and that new customers and incremental sales can turn a loss making venture quickly into a profitable one. (this is in contrast to something like ATM which needs physical product to sell, so I know for sure that A2 milk production cannot be ramped up to meet ATM investor expectations., which is how I know for sure that ATM is currently overvalued). But I also know that what seems to be the 'best' software in a market segment can still be usurped, and PPH shareholders could be left with nothing. So what we have here is a classic 'high risk' 'high return' investment scenario.

As Winner has noted the 'EV/Gross Margin multiple' of about 18 (a new statistic that has been invented for companies that make no money and so can't be analysed using traditional metrics) is above the industry average. This has become proof enough, to the PPH disciples, that nothing will go wrong and that as long as the share price keeps going up, then no fundamental analysis is required.



To reinterpret the comment that Ggcc made, the idea that you can have growth without profit is a relatively new investor concept. 'Growth' used to be synonymous with 'growth in profit' and I find it somewhat disconcerting that this old rule no longer applies. As with all investment bubbles, what tends to happen is that new investors find that the old rules do still apply, but only after all after the inevitable crash. I am not saying PPH will crash because amongst all the losers there will also be winners. But sorting out who the winners and losers will be in advance is a problem to this FA investor.

If I was to invest in PPH, I would be looking not for a path to breakeven cashflow but a path to actual profit. Then when investors find how small the profit really is, what sort of 'multiple deflation' investors can expect as a consequence. Of course as with all 'speculative investments' no serious study as to what the profit might be is ever carried out. And then 'investors' are 'surprised' when the share price collapses.

I will save my next post on this thread for when PPH makes a profit. I guess that means, very likely, this is my last post on this thread?

SNOOPY

We had many posts and conclusions like this on the ATM thread in the early days. I do however agree PPH is high risk high return investment, like HBL, ATM, XRO, DIL and many others have been.

[winner69]

Any particular reason to select 9 Jan 2018 ?

I think that was the date of his post saying he wasn’t in Push anymore .....suppose telling us it’s been downhill since then

[hardt]

I must say that reading this thread does give a fascinating insight into fear and greed.

Despite reading this thread, I don't follow the company itself closely because I am one of those 'old school' investors that BAA refers too who demands that a company 'makes a profit' before my investment hound's nose goes into action. I do appreciate that software companies can grow quickly and that new customers and incremental sales can turn a loss making venture quickly into a profitable one. (this is in contrast to something like ATM which needs physical product to sell, so I know for sure that A2 milk production cannot be ramped up to meet ATM investor expectations., which is how I know for sure that ATM is currently overvalued). But I also know that what seems to be the 'best' software in a market segment can still be usurped, and PPH shareholders could be left with nothing. So what we have here is a classic 'high risk' 'high return' investment scenario.

As Winner has noted the 'EV/Gross Margin multiple' of about 18 (a new statistic that has been invented for companies that make no money and so can't be analysed using traditional metrics) is above the industry average. This has become proof enough, to the PPH disciples, that nothing will go wrong and that as long as the share price keeps going up, then no fundamental analysis is required.



To reinterpret the comment that Ggcc made, the idea that you can have growth without profit is a relatively new investor concept. 'Growth' used to be synonymous with 'growth in profit' and I find it somewhat disconcerting that this old rule no longer applies. As with all investment bubbles, what tends to happen is that new investors find that the old rules do still apply, but only after all after the inevitable crash. I am not saying PPH will crash because amongst all the losers there will also be winners. But sorting out who the winners and losers will be in advance is a problem to this FA investor.

If I was to invest in PPH, I would be looking not for a path to breakeven cashflow but a path to actual profit. Then when investors find how small the profit really is, what sort of 'multiple deflation' investors can expect as a consequence. Of course as with all 'speculative investments' no serious study as to what the profit might be is ever carried out. And then 'investors' are 'surprised' when the share price collapses.

I will save my next post on this thread for when PPH makes a profit. I guess that means, very likely, this is my last post on this thread?

SNOOPY

How long will A2 have to continue thriving for you to concede that you are wrong on that milk theory?

Would hate to see a market where everyone shares your understanding or lack thereof of high growth loss makers ( there wouldn't be any around because no one would fund them )

As you said, you do not follow PPH... but somehow you know for certain so many things about their future... I do find that odd.



Growth on EARTH in 2018 is quite simple - sales growth, customer size and volume growth, increasing market share, brand awareness and geographical reach.

all in all, old school investors will have fewer and fewer options on offer as time goes on and some are happy to adapt to the market as it is instead of reaching for one that used to be.

[JeremyALD]

I think this thread is getting a bit ridiculous. This was one of the most picked shares for the competition, they just delivered fantastic result and nothings really changed. This remains a sound business listing in the US within the next year. The SP is still close to all time highs and has more than doubled over the past 12 months.

Snoopy your comment about them most likely "never making a profit" is ridiculous and based on no merit whatsoever.

[peat]

I think that was the date of his post saying he wasn’t in Push anymore .....suppose telling us it’s been downhill since then

but also commenting on the price as being way overcooked in that nothing really changed much since it was under $2

[blobbles]

One tip for those who understand how to value these companies - if snoopy says he isn't in it, jump in quick!

A number of times I tried to convince snoopy ATM was a great future investment (when the SP was at 50c) with him insisting it should have a value of 10c (which would have been fantastic too I suppose). And only about 3-4 short years ago!

That should be your investment time frame if you want to maximise your returns. Look for high growth companies who keep delivering and have a huge market opportunity in front of them. Two come to mind PPH (modernised giving) and SKO (disruption in the travel/expense management space, used in our office, almost perfect software) .

[gbogo]

ACMR is the most recent month / quarter’s revenue x 12 or x4. When growth is rapid, it is a helpful way to extrapolate. Eg if 3 Quarters are $1m, $3m, $4m, then ACMR would be $4m, $12m, $16m. If the next quarter is $3.25m, ACMR drops to $13m (these are example $s only. Nothing to do with actual PPH numbers). As long as the next quarter is >$3.5m, all looks good still. Not necessarily a big concern then with regard to PPH. In addition, ACMR is only their contractually committed revenue. They also derive transactional revenue which I believe is in addition to the ACMR and will see bigger fluctuations, I would expect. (although I haven’t gone back to check their reporting on these - am at the beach on mobile only). I’m long PPH because i see a large market that they can dominate and because they appear to have excellent management that delivers on promises. I also anticipate continued and additional institutional buying.

[peat]

I’m long PPH because i see a large market that they can dominate and because they appear to have excellent management that delivers on promises. I also anticipate continued and additional institutional buying.

I'm guessing you're not long from $4 though. And this is the point. Its much easier to be a long term holder from say less than $2 compared to being long from $4, even though technically you would both suffer the same reduction in asset value when it goes to say $3. Despite the fact that it will possibly be $6 in a year or two the later investor 'feels' the volatility a lot more. Apart from the fact that they stand to lose more should the unthinkable happen and it go to zero.

[winner69]

ACMR is the most recent month / quarter’s revenue x 12 or x4. When growth is rapid, it is a helpful way to extrapolate. Eg if 3 Quarters are $1m, $3m, $4m, then ACMR would be $4m, $12m, $16m. If the next quarter is $3.25m, ACMR drops to $13m (these are example $s only. Nothing to do with actual PPH numbers). As long as the next quarter is >$3.5m, all looks good still. Not necessarily a big concern then with regard to PPH. In addition, ACMR is only their contractually committed revenue. They also derive transactional revenue which I believe is in addition to the ACMR and will see bigger fluctuations, I would expect. (although I haven’t gone back to check their reporting on these - am at the beach on mobile only). I’m long PPH because i see a large market that they can dominate and because they appear to have excellent management that delivers on promises. I also anticipate continued and additional institutional buying.

I think you will find that Push's ACMR includes both the committed subscription fees and processing fees (their gross cut of the gifting)

Subscription fees make up ~30% of their revenues so you would expect that if ACMR was calculated only using the committed subscrition fee sit would be about $30m/$35m

That's how I see it anyway

Enjoy the beach ...but take care

[hardt]

I think you will find that Push's ACMR includes both the committed subscription fees and processing fees (their gross cut of the gifting)

Subscription fees make up ~30% of their revenues so you would expect that if ACMR was calculated only using the committed subscrition fee sit would be about $30m/$35m

That's how I see it anyway

Enjoy the beach ...but take care

Yep - ACMR takes into account transactional and subscription fees.

Due to the influx of transactions leading into Thanksgiving and Christmas in Q3, ARPC cools off leading into Q4.
As has been case since PPH began.


ARPC.png


They have done this in the past where their revenues and customer base were half the size of what they are now.
Not sure why the notion of ACMR being slightly lower than peak period is something that could spook anyone.


ACMR.png


Put it this way, A2M sales during Q3 out over 3 quarters would have an ACMR of $1bn +/-.
Most are not daft enough to be even slightly worried by a lower number in the following quarter as we know what a peak period looks like.