The Pushpay Holdings Ltd (ASX: PPH) share price could be one to watch this morning after it updated its FY20 guidance.
Pushpay is a New Zealand based donation systems and software business for religious, not-for-profits and education providers in the US, Canada, Australia and New Zealand. Pushpay is used by over 7000 churches worldwide. The average gift is $192.
Pushpay’s New FY20 Guidance
The company is updating both its EBITDAF (click here to learn what EBITDA means, the F stands for foreign currency gains or losses) and the operating revenue.
On the positive side, Pushpay now expects its EBITDAF to be between US$23 million to US$25 million, whereas before it was expecting EBITDAF to come in at US$18.5 million to US$20.5 million.
But, operating revenue is now expected to be between US$121 million and US$124 million, but before the company was thinking it woudl be US$122.5 million and US$125.5 million.
How Is Pushpay Making More Profit On Lower Revenue?
Management were previously expecting that costs would grow by a range in the mid-single digits, but cost efficiencies achieved in recent months are now expected to generate slightly lower costs in the second half of its financial year.
Combine that with accounting standard changes, the cost efficiencies are expected to result in lower expenses year on year, leading to higher expected EBITDAF.
Pushpay CEO Bruce Gordon explained the lower revenue, “As previously indicated at our 2019 annual meeting, new customer acquisition over the start of the financial year was lower than the previous year. We have subsequently adjusted our operating revenue guidance range to reflect this.”
The company is still expecting its gross margin to be over 63% and total processing volume to be between US$4.8 billion and US$5 billion.
Higher profit is probably preferred to higher revenue, but slower customer growth may be a negative sign for the longer term. But I think Pushpay is one of the best small cap growth shares to think about.
Other growth shares worth investigating are the ones revealed for free in the report below.
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