NZX-listed Pushpay nudged up its earnings guidance at its annual meeting today, following a positive start to the year.

The digital church collection payment operator now expects earnings before interest, tax, amortisation and fair value adjustments (ebitdaf) to be between US$18.5 million and US$20.5m in the year ending March 31, 2020, versus a prior forecast of US$17.5m and US$19.5m.

It also expected total processing volume to be between US$4.8b and US$5.0b from US$4.6b and US$4.8b (see more financial metrics in the table below).

Shares bounced 2.63 per cent to $3.90 on the news.


Chairman Graham Shaw also told investors that Pushpay is currently searching for a female director but having no luck.

Last year, the Auckland and Seattle-based company was called out by AUT Public Policy Director Judy McGregor and fellow authors survey of listed companies as one of 19 companies on the NZX - many of them techs - that had no women on their board.

Under sharp questioning from NZ Shareholders Association rep Jenny Miller, who criticised Pushpay's lack of progress on diversity (it continues to have an all-male board), Shaw said the company was actively seeking a female director to fill one of two open positions.

He said two candidates with the requisite skills had been identified, but Pushpay had been "deserted at the altar" on both occasions.

Shaw said there was only a limited pool of candidates with the requisite experience.

Miller said she saw that excuse as a "cop-out." There was a huge pool of talented candidates in NZ and the US, she said.

The chairman also said that remuneration had also been a sticking point. Shareholders (including proxies controlled by the NZSA) voted to increase the director fee pool for non-executive directors' fees from US$450,000 to US$650,000 - which those on both sides of the debate said would help.

Miller injected further controversy by reiterating that the NZSA would vote against Peter Huljich's election to the board in protest against Pushpay's failure to include details of Huljich's KiwiSaver conviction (more on which below) in the biography distributed to investors.


Shaw reiterated his support for Huljich, but did also concede that in hindsight it had been a mistake to exclude mention of the criminal conviction.

The result of the vote was not immediately announced, but beyond Miller the mood of the room was strongly in favour of Huljich.

Herald Graphic. Source / Pushpay NZX filings
Herald Graphic. Source / Pushpay NZX filings

Overnight, Facebook announced its "Libra" project, which will see it develop a digital called "Calibra," which it says will be an easy way for people to pay each other or transfer funds online.

That development drew no questions from the floor, but speaking to the Herald afterward, incoming CEO Bruce Gordon said he did not see Libra as a threat to Pushpay's mobile app, which is used by churches to collect donations.

He said Pushpay supported payments through many different currencies - including virtual ones - and that Libra could become just another payment option. The same question came up Apple first introduced Apple Pay, he said. Earlier, Paypal had been mooted as a competitor. Pushpay positions itself as offering a full suite of software to "nurture" a church's relationship with a giver.

Earlier, the NZSA recommended its members vote against Huljich, citing that the biography presented to shareholders failed to mention a 2011 guilty plea to misleading investors about his KiwiSaver scheme.


But early investor Aaron Bhatnagar told the Herald the ginger group is failing to take into account how Huljich saved the startup when it couldn't make payroll in its early days, then helped lay the groundwork for its success today.

Peter Huljich - who has previously served as an alternate to his father Christopher - was named to the board during a May reshuffle. Today's AGM was the first time he has faced a shareholder vote to affirm his appointment.

The Huljich family interests hold 22 per cent of Pushpay shares, "so in that sense are aligned with outside investors", the NZSA said in a notice issued to its members.

But the group also noted the "controversial activities" of Peter Huljich's KiwiSaver scheme. The 2011 misleading public statements case saw Huljich himself fined almost $113,000 while the company, Huljich Wealth Management, was fined $239,000 plus $95,265 in legal and court costs.

"With this background, even allowing for the passage of time, we have concerns around the appropriateness of this appointment. We also consider that this adverse information
should have been disclosed in the notes accompanying the Notice of Meeting, consistent with relevant commentary in the NZX Corporate Governance Code, the NZSA said.

NZSA chief executive Michael Midgley told the Herald his organisation was not targeting Huljich or Pushpay, but rather standing up for a good governance principal.


'Saved Pushpay'

Early Pushpay backer Aaron Bhatnagar spoke out strongly in Peter Huljich's defence.

"I'm very disappointed in the Shareholder Association's position, and I say that advisedly as I used to be a committee member for the Auckland branch of the NZSA for about five years, ceasing two years ago," he told the Herald.

"It's a matter of public record that Peter Huljich saved Pushpay."

In late 2013, Pushpay had run out of money and couldn't pay their staff, and had, in fact, told staff they would understand if they no longer turned up to work, Bhatnagar said.

"It was Peter Huljich who then arrived on the scene, providing bridging finance to enable Pushpay to keep going in late 2013.

"It was Peter who then brought together a consortium of investors in early 2014 which included myself and our family interests. As an executive and major investor, he helped drive the capital raise round which led to be compliance list in August 2014, plus helped drive subsequent capital raises and the ASX listing as well."


It reflects poorly on the Shareholders Association to not take this into account, Bhatnagar said.

Strong results

While the NZSA spoke against Peter Huljich today, momentum was with the director, thanks in part to strong results.

Pushpay recently reported a maiden full-year profit of US$18.8m against a year-ago loss of US$23.3m as revenue jumped 40 per cent to $98.4m.

Pushpay 24-month share price performance. Source / NZX.
Pushpay 24-month share price performance. Source / NZX.

Its shares, however, have recently flattened after a steep run-up (see chart above).

Backing Heaslip

Although taking a stand against Huljich, the NZSA made something of a departure from its philosophy by backing recently-departed Pushpay CEO Chris Heaslip to keep his board seat. Heaslip was also appointed in May and faces his first shareholder vote today.

Last year, the NZSA spoke out against outgoing Sky TV CEO John Fellet's plan to sit on the pay TV broadcaster's board, saying it would crimp the style of new-broom chief executive Martin Stewart.


Then NZSA chairman John Hawkins said, "The difficulty with an immediate appointment or continuation is that the ex-CEO will carry too much influence and may inhibit necessary change being made – particularly if it casts his or her tenure in a poor light and seeks to change or reverse earlier strategies and policies."

But in Pushpay's case, having Heaslip as a director would be good for continuity, Midgley told the Herald.

Heaslip and co-founder Eliot Crowther left the virtual collection plate software company within months of each other - Crowther to concentrate on his family after a split with his wife, and Heaslip because he thought it was time to pass the baton from an entrepreneurial leader with startup skills to a more process-focused CEO, Bruce Gordon. (read: "'It's hard to be vulnerable as a CEO,' Pushpay co-founder Chris Heaslip on his surprise decision to quit).

Okay with fee increase

Pushpay shareholders will also vote on whether to increase the directors' fee pool from US$450,000 to US$650,000.

The NZSA backed the bump. Midgely said while substantial, it was necessary to attract top board talent in the US.

Most of Pushpay's revenue is generated from US churches and 283 of its 389 staff are based in the US (with most of the balance in Auckland).