Kiwi tech star Pushpay has reported a maiden full-year profit of US$18.8m against a year-ago loss of US$23.3m.

The company also said chief executive and co-founder Chris Heaslip has resigned as CEO effective May 31. He will remain as a non-executive director.

Heaslip said on a conference call that new skills were needed to lift the company from around US$100m revenue to US$300m and beyond as it heads toward its US$1 billion medium-term goal.

Bruce Gordon - previously chairman - is taking over as the new chief executive. Gordon of a former chairman of Paymark, and has held senior roles at ASB (where he developed FastPhone), The Warehouse Group and Bendon Group, among other companies. He was most recently CEO and an investor in HRV, sold to Vector in 2017.

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Heaslip's Pushpay co-founder, Eliot Crowther, sold his stake and exited the company last year amid a marriage split.

Pushpay broke into the black on the back of a US$20.24m income tax benefit as it realised a deferred tax asset (recorded when income taxes payable are higher than the income taxes paid to the government). Before the tax benefit, it made a US$1.42m loss.

The NZX-listed, US-based maker of a mobile app for managing church, non-profit and school donations, fulfilled its promise to be profitable on an earnings before interest, tax, depreciation and foreign currency gain/loss basis, reporting ebitdaf of US$1.6 million versus its year-ago ebitdaf loss of US$18.6m.

Source: Pushpay NZX filings.
Source: Pushpay NZX filings.

The company confirmed it had achieved breakeven on a monthly cashflow basis, too.

And it also met its revenue guidance as full-year revenue increased 40 per cent to US$98.37m (it had forecast US$97.5m to US$100.5m) as total customers increased 5 per cent to 7649.

The company described the 373 increase in total customers as "modest" but added that most were in the medium to large bracket, fueling the significant revenue increase.

"It was a strong FY19 result from Pushpay and in line with our expectations and guidance," Craigs Investment Partners senior research analyst Stephen Ridgewell told the Herald.

"Earnings guidance for FY20 was well above prior market expectations.

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"Investors are however digesting the change of CEO, which came as a surprise."

2020 forecast

The company is now on the hunt for possible acquisitions, which could be the vehicle to break into new markets.

It is forecasting revenue growth to slow to around 25 per cent next year, or between US$122.5m and US$125m.

It says ebidaf will land between US$17.5m and US$19.5m for 2020.

Gross margin, which increased from 55 per cent to 60 per cent in 2019, is forecast to widen again to 63 per cent next year.

The US continued to dominate, accounting for 98 per cent of Pushpay's 2019 revenue.

Headcount increased 11 per cent over the year to 389, with 106 staff based in Auckland and 283 in Redmond, Washington.

Source / Pushpay Annual Report.
Source / Pushpay Annual Report.

The company is aiming to drive further growth by expanding beyond Pushpay's base of large US churches into non-profits and the education sector.

Today, Heaslip said those initiatives were still in an embryonic stage. His company's near-term focus is on "other faith verticals" outside its Protestant base. He says Pushpay has only made limited progress with Catholic churches, where an incumbent called Blackboard is strong. Heaslip says as a small, nimble company, Pushpay has more to offer.

In a statement to the NZX this morning Pushpay's new chairman, Graham Shaw - formerly an independent director - said, "Pushpay has recently achieved a number of key milestones: we have delivered our first positive ebitdaf result and achieved positive operating cash flows. Succession planning for growth companies is important and now that the business is of significant size and scale, the time is right to welcome Bruce Gordon to the position of CEO.

"Bruce has the operational experience and competencies required to build on the success that Chris has helped create."

Heaslip said, "The past eight years building Pushpay have been hugely rewarding. From humble beginnings with three staff operating above a gym in Glenfield to over 350 staff and more than 7000 customers across the US, Canada, Australia and New Zealand.

"I am excited that Bruce has decided to accept the role of CEO. He mentored both Eliot and I before we had written one line of code and has demonstrated the skills and experience required to execute on our next phase of growth, while I continue to contribute to strategy, as a non-executive director."

There has also been a reshuffle on the board for early backers the Huljich family.

Christopher Huljich has been replaced by Peter Huljich on the board, and will serve as his alternate, reversing their previous roles.

And Dan Steinman has signaled his intention to stand down as a director once a replacement has been appointed.

Shaw said Pushpay - which was recently one of several tech companies dinged for having an all-male board - would assess "a diverse range of candidates" to replace Steinman.