Tyro Payments share price lifts as EBITDA soars 600%

The ASX 300 payments provider posted a major earnings milestone.

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Key points

  • The Tyro share price is up 0.3% right now, trading at $1.64
  • It comes on the release of the company's earnings for the first half
  • The payments provider posted a record $19.5 million in EBITDA and its first profit since 2015 – coming in at $1.1 million

The Tyro Payments Ltd (ASX: TYR) share price is rising this morning after the company posted its earnings for the first half of financial year 2023.

Shares in the S&P/ASX 300 Index (ASX: XKO) payment solutions provider lifted 4.9% to peak at $1.715 shortly after open. Right now, the stock is up 0.31% at $1.64.

Tyro Payments share price slips on long-awaited profitability

  • $1.1 million of statutory net profit – a 106% improvement on the prior comparable period's (pcp) $18 million loss
  • $21.7 billion of transaction value, a 37.1% jump on that of the pcp
  • $216.6 million of normalised revenue – up 45.2%
  • $19.5 million of earnings before interest, tax, depreciation, and amortisation (EBITDA) – a 601% year-on-year improvement
  • $600,000 of free cash flow – marking its first positive cash flow as a listed company

Tyro Payments posted its first profit since 2015 this morning while revealing its EBITDA soared 601% last half as profits grew faster than costs.

Its payments business benefited from inflation as consumers were forced to fork out more. Its alliance with Bendigo and Adelaide Bank Ltd (ASX: BEN) generated $2.8 billion of transaction value.

Meanwhile, its merchant cash advance loan product generated a record $72.7 million of new loan originations – double that of the pcp. Lending losses came to just 1.2% of originations last half.

What else happened last half?

The number of merchants using Tyro's platform increased 8.7% over the 12 months ended 31 December to 66,884.

At the same time, its banking business saw 5.4% growth in activated deposit accounts – coming in at 6,400. A total of $95 million is held in deposit with Tyro.

Of course, last half also saw the company approached by two suitors, Westpac Banking Corp (ASX: WBC) and Potentia. It scrapped takeover talks with both in December before granting the latter due diligence in recent weeks.

What did management say?

Tyro Payments CEO Jon Davey commented on the results driving the company's share price today, saying:

An increased focus on growth, cost management and delivery excellence has led to very pleasing first half results, including a record EBITDA and achieving positive free cash flow for the first time as a publicly listed company.

Over the last six months we have delivered foundational initiatives which will deliver lasting benefits to our competitiveness and growth profile. These include the Tyro Go reader, the Tyro Pro next generation terminal, and automated onboarding. From these we will build new customer experiences and drive further operational efficiencies.

As we look forward, our focus will be on payment and banking product innovation, revenue growth and margin optimisation, operating efficiency, and cost reduction.

What's next?

The company provided an update on its second-half trading today.

It saw its transaction value lift 23% year-on-year in the first eight weeks of 2023 to $6.3 billion. Simultaneously, its banking business generated $22.5 million of loan originations – a 30% improvement.

Meanwhile, its normalised gross profit for January was $15.4 million – up 39% – while its EBITDA was $3.6 million at an operating leverage of 76.6%.

Tyro Payments also reaffirmed its full-year guidance. It expects its EBITDA to come in at between $37 million and $41 million at a target operating leverage of 79% in financial year 2023.

Tyro Payments share price snapshot

This year has been good for the Tyro Payments share price so far. The stock has gained 19% since the start of 2023. It's also 6% higher than it was this time last year.

For comparison, the ASX 300 has risen 4% year to date and 2% over the last 12 months.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Tyro Payments. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool Australia has recommended Tyro Payments and Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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