The Tyro Payments Ltd (ASX: TYR) share price is racing higher on Tuesday.
At the time of writing, shares in the payment solutions company are up 13.6% to $1.28 apiece. For context, the S&P/ASX 200 Index (ASX: XJO) is up 0.3% in early morning trading.
The remarkable move in Tyro shares follows the release of the company's FY23 full-year results.
Tyro share price takes off on record numbers
- Merchant numbers up 14% year on year to 68,665
- Transaction value processed up 24.6% to a record $42,601.3 million
- Group revenue up 33.6% to $435.8 million
- Gross profit up 32.1% to a record $204.3 million
- EBITDA up 296.5% to a record $42.3 million
- Statutory net profit after tax (NPAT) of $6 million versus $29.6 million loss in FY22
What else happened in FY23?
The 2023 financial year was a tumultuous time for Tyro Payments, marking a period of change and uncertainty.
Not only did the company gain a new CEO in Jonathan Davey — succeeding the now Star Entertainment Group Ltd (ASX: SGR) CEO, Robbie Cooke — it also contended with the possibility of a takeover by Potentia.
Despite the conditions, Tyro Payments marched onwards and upwards in the 12 months ended 30 June 2023. Releasing several new products (Tyro Go, Tyro Pro, Tyro BYO, and digital onboarding), the company reached more merchants and handled more transactions in FY23, all while reducing costs.
The cost-controlled growth resulted in the company achieving its first full year of positive free cash flow during its listed life.
Notably, merchant numbers in the health and services industries, increasing 24% and 21%, were the main growth contributors in FY23. Whereas, retail and hospitality merchant numbers grew at more subdued rates of 5% and 9%, respectively.
Nevertheless, it wasn't all rainbows and lollipops for the Tyro share price during the reporting period. Between 19 May and 16 June, shares in the fintech company tumbled 38% (shown above) after Potentia decided to walk away from acquiring Tyro.
What did Tyro's management say?
The importance and focus on profitability was emphasised by Tyro CEO Jon Davey, stating:
With refreshed leadership and a new operating model, we have prioritised initiatives that deliver measurable results, as well as improved operating leverage and profitability.
Davey added:
This year we have demonstrated an ability to innovate and deliver our strategic priorities. The launch of Tyro Pro, Tyro Go, and Tyro BYO has strengthened our product offering for businesses who seek flexible, cost-effective payment acceptance solutions.
What's next for Tyro Payments?
Based on the trading update in today's release, it appears Tyro has hit the ground running in FY24. For the period 1 July to 25 August, the company achieved $6.5 billion in transaction value, representing a 6.3% gain on the prior corresponding period.
Furthermore, the attention on increased profitability remains front and centre. For example, the July EBITDA margin was said to be 24% compared to 14% a year ago.
As a result, Tyro has provided the following guidance for FY24:
- Transaction value between $45 billion to $47.5 billion
- Gross profit between $206 million to $215 million
- EBITDA between $52 million to $58 million
- Targeted EBITDA margin of approximately 26%
Tyro share price snapshot
Prior to today, shares in Tyro had underperformed the benchmark index over the past 12 months. That has now changed, with the Tyro share price gaining 9.4% more than the ASX 200 during the past year.
Based on the company's reported FY23 profits, the company now trades on a price-to-earnings (P/E) ratio of around 98 times earnings.
