Here’s why the Tyro (ASX:TYR) share price tumbled 15% today

Tyro shares have fallen today after its AGM update.

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a woman looks at her phone while making a transaction at the counter of a store where racks of clothing can be seen in the background.

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The Tyro Payments Ltd (ASX: TYR) share price dropped 15% today after the payments business gave a presentation at its annual general meeting (AGM).

While investors may already have seen how it performed in FY21, the company’s latest thoughts may be new information.

Looking ahead

The payments business outlined a number of things that it’s doing to expand its operations.

Tyro said that it has an appetite to continue investing to capture segment share growth opportunities. This will require a step-up in operational and capital expenditure investment in key project areas including the Tyro Go dongle, its e-commerce platform and a next generation terminal.

But that’s not the only thing that Tyro is working on. It’s extending its merchant cash advance product.

Tyro also said that there is an opportunity with Medipass in combination with its existing health solutions to create the leading unified claiming and payments platform for Australian healthcare practitioners.

The payments company is looks to deploy its IP in the alliance model into other market opportunities. It has gone into an alliance with the regional bank Bendigo and Adelaide Bank Ltd (ASX: BEN). Tyro also said that it has a pilot in operation with Telstra Corporation Ltd (ASX: TLS) that includes 29 of its retail locations where business customers can view and sign up to Tyro terminals.

Management also said that the business has continuing appetite for bolt on acquisitions to gain scale, leverage its platform or add capabilities.

The company declined to give any guidance.

Trading update

Tyro gave a trading update as part of its AGM for FY22 in the year to date to 29 October 2021. How the business is performing can have an impact on the Tyro share price.

In the payments business, it says that it averaged 1,259 new merchant applications per month for the first four months of FY22.

The transaction value to 29 October 2021 was up 25% year on year to $8.97 billion. The transaction value in the two weeks since NSW came out of lockdown was up 46%. The e-commerce value to 31 October 2021 was up 1,848% to $178.6 million.

Turning to the banking business, loan originations to 31 October 2021 was $20.6 million, up 1,447%. Deposit balances were $97.7 million at 31 October 2021, an increase of 7%.

Finally, Tyro said that its gross profit to 31 October 2021 was $38.5 million, an increase of 14%.

That gross profit increased was lower than what was achieved in FY21, where gross profit grew by 28% to $119.4 million.

Tyro’s payment terminals problems

During the last financial year, Tyro suffered from a terminal connectivity issue in January 2021. The business established a remediation program to provide financially-impacted merchants a channel to seek to claim financial loss caused by the incident. As of yesterday, 93% of all remediation claims relating to the terminal incident have been resolved.

Tyro said it is developing a dongle ‘failover’ solution for every merchant, which is an industry first. However, it is facing legal proceedings in the Federal Court on behalf of certain merchants. Tyro said it’s going to defend these proceedings.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Tyro Payments. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended Tyro Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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