Adding some ‘Hyper-Growth’ to our portfolio

Any experienced value investor will know the frustration of finding an undervalued gem, only to find it remains undervalued, or even gets cheaper. We certainly do, so we try to ensure we have exposure to high growth companies in our portfolios.

On that note, we recently took a position in Pushpay Holdings, a company listed in New Zealand and one of the fastest-growing Software as a Service businesses in the world. Venture capitalist and SaaS expert Jason Lemkin defines “Hyper-Growth” in the SaaS -sector as a business growing annual recurring revenues from $1m to $10m in five quarters or less. Pushpay managed to accomplish this earlier in 2015, taking just over three quarters.

So what does Pushpay actually do? It’s a payments solutions provider targeting the niche-yet-sizeable Faith sector in the United States. The product aims to remove friction from the giving process, simplifying the process for donors while generating higher donations for churches. The company, having reported annualised committed monthly revenue (ACMR) of just NZD $5.33m for its merchant (church) product in the 12 months to March 2015, has forecast more than NZD $28m for the year to March 2016. In the same period, Pushpay is likely to quadruple the number of merchants using its product. 

We think this is just the tip of the iceberg, with impressive growth likely to continue for a number of years.