Pushpay sells Run The Red unit for $4.5M

Pushpay Holdings [NZX: PAY], the mobile payments app developer, sold its Run The Red business, a personalised text messaging service for businesses, for $4.5 million, which it will use to expand its core business.

The sale of the unit to Modica Group was completed yesterday with an immediate payment of $4 million and the balance to be paid in March 2017, the Auckland-domiciled, Redmond, US-headquartered company said in a statement. Run The Red staff will move to Modica, it said.

Pushpay bought Run The Red in June 2014, enabling it to offer targeted text messages for clients including Westpac Banking Corp, Vodafone, Sky Network Television, Z Energy, Facebook and the Department of Internal Affairs. It says the sale of the business will allow it to focus resources on its rapidly growing core business providing payment solutions to merchants.

"The sale of Run The Red will maximise value to Pushpay's shareholders by freeing up capital for investment," said chief executive Chris Heaslip. "In particular, the sale allows us to redeploy capital received to support our growth strategy in the US and our target of reaching $100 million of annualised committed monthly revenue by August 2018."

Pushpay provides mobile commerce tools that help make payments easy between consumers and merchants and is geared to mobile charitable giving. It's targeting the US faith sector for growth, where there are more than 314,000 churches with an average 500 attendees each, along with non-profit organisations and enterprises. It's foregoing short-term profits to invest in future growth in the US.

The announcement of the deal follows a 39% jump in the company's share price, which prompted a 'please explain' notice from the NZX on March 22, to which the company replied it had no material information to declare to the market.

The stock market operator queried the movement in Pushpay's shares when they rose to $2.25 from $1.62 between March 14 and March 22. The company responded to the notice by confirming it complied with all continuous disclosure obligations.

Its shares last traded at $2.28 and have increased 30% so far this year, having started the year at $1.74.

(BusinessDesk)

BusinessDesk receives funding to help cover the commercialisation of innovation from Callaghan Innovation.