Tyro’s first-half results disappoints the market

  • By Zilla Efrat

Payments group Tyro’s share price fell by 26 per cent yesterday after its first-half results disappointed the market.

Tyro’s payments business lifted its transaction value by 31 per cent to a record $15.8 billion in the first half of its 2022 financial year even though many of its merchants, particularly those in hospitality and retail, were affected by lockdowns.

“We worked alongside our merchants as they continued to navigate the impact of lockdowns and provided all the assistance we could including terminal rental relief, loan repayment relief and we did not pass on scheme and interchange fee increases we incurred in the half,” says Robbie Cooke, Tyro’s CEO and managing director.

But the group reported a 67 per cent fall in its EBITDA to $2.8 million – down from $8.5 million in the first half of its 2021 financial year.

According to Cooke, this reflects its continuing investment in growth initiatives including the recently announced exclusive partnership with Telstra, the absence of any JobKeeper benefits, wage inflation and first-time costs associated with newly acquired health-related fintech Medipass.

Tyro also experienced a 23 per cent increase in employee costs and a 26 per cent rise in other operating costs. Plus, Medipass generated an expected EBITDA loss of $1.8 million.

Medipass contributed for a full half-year for the first time. It joined the group in May 2021, adding more than 7,000 new health providers.

“The addition of Medipass positions us to provide a leading unified health claiming and payments offering,” says Cooke.

“Our exclusive partnership with Telstra to provide merchant acquiring services to Telstra’s business customers through over 350 Telstra retail stores and Telstra Business Technology Centres, as well as online, is an exciting new acquisition pipeline for us.”

As a part of its alliance with Bendigo Bank, all Bendigo merchants were novated across to Tyro on 1 June 2021.

“The strategic importance of our alliance with Bendigo Bank is clear in our result,” says Cooke. “The alliance performed exactly as we forecast when announcing the partnership back in October 2020. This saw the alliance add $2.5 billion in transactions to our performance in the half and a gross profit contribution, after allowing for Bendigo Bank’s gross profit share, of $10 million.”

A record 61,554 merchants used Tyro as their payments solution in the six months – up 68 per cent on the 36,720 in the first half of the previous financial year.

Tyro’s terminal count grew up 52.1 per cent to 103,935 terminals over the same period.

Tyro’s transaction value growth drove a 25 per cent lift in statutory gross profit to $68.1 million for the group’s payments business. After allowing for the gross profit share payable under the Bendigo Bank alliance, the normalised gross profit lift for the payments business was up 20 per cent to $65 million.

“Our start to the second half has seen our strong momentum continue,” says Cooke.

“Lockdowns abating, along with government and businesses encouraging a return of workers to the nation’s CBDs, provide a positive outlook for our predominantly card-present payments operation.

“We are looking to roll out our new EFTPOS card reader in the half, initially to our Bendigo alliance merchants. We are also continuing our work on a new android-based terminal which will supplement our fleet and presents some exciting opportunities for the future.”