Electronic charity chugger Pushpay Holdings Ltd (ASX: PPH) delivered a mixed update for the quarter ending June 30 2018 today in meeting revenue guidance, but only lifting client numbers 3% higher on the prior corresponding quarter.
Annualised committed monthly revenue (ACMR) clocked in at US$87.7 million, compared to $86.4 million as at March 31 2018 and ACMR's moderate growth has seen investors send the stock 7% lower to $3.51 this afternoon.
As a reminder ACMR equals monthly average revenue per customer multiplied by number of customers and annualised, as such it's a key forward-looking metric sported by software-as-a-service businesses looking to impress investors.
The flattish growth quarter-on-quarter is in part due to the seasonality of the business, with periods like Easter and Christmas being the traditional time for faith-based giving.
Luckily the clients it has are paying it substantially more than during the prior correspoding quarter, which reflects the group's stated stragegy of chasing larger clients that generate incresed subscription and volume fees.
Pushpay is guiding for revenue in the region of US$21.8 million to US$23.3 million for the second quarter and is sticking to its goal of being cashflow breakeven by the end of calendar year 2018.
Unusually for a growth company it also reported that it had seen a 9% decrease in headcount compared to the prior corresponding period, with one of those leaving the business being a founder, Eliot Crowther, who also recently took the opportunity to sell down his NZ$100 million shareholding.
As far as I'm aware Pushpay did not provide much of an explanation over the mini-staff exodus and as a kind of online tithes business mainly chasing churches as customers, I'm not entirely comfortable with the watertightness of PushPay's business model.
As such it's a stock I'm inclined to watch from the side lines.
There's no doubt the growth so far has been impressive, but in the software-as-a-service space I'd prefer to look to businesses with blue-chip client bases such as Elmo Sotware Ltd (ASX: ELO) or its powerful US rival Workday Inc.
