Growth is only the start
However, as we highlighted in previous posts (SaaSy Stories I, SaaSy Stories II SaaSy Stories III), growth rates are only part of the future value creation that an EV/Sales multiple is trying to reflect. It captures a measure of potential growth, but not the return on investment to exploit that growth. It is here that the Pushpay story diverges from its more highly rated peers.
Pushpay revenue comprises two components:
- A traditional SaaS software subscription; and
- Processing fees on the volume of payments made through the platform.
These processing fees represent ~70% of the total revenue of the business and are growing faster (85% vs 60%) than the subscription revenue. In essence, Pushpay is a payments providers with a SaaS bolt on.