Tyro shares plunge 26 per cent despite record transactions from Bendigo Bank Alliance

Tyro shares plunge 26 per cent despite record transactions from Bendigo Bank Alliance

Tyro Payments (ASX: TYR) hit numerous positive milestones in the December half, but a sharp fall in earnings led to a sell-off today that has cut the Sydney-based company's value by more than a quarter, shedding around $292 million in one day.

At the close of trade today the group's shares were trading at $1.61 each, which is even 32 per cent lower than when Tyro had an EFTPOS terminal outage at the start of 2021; edging close to all-time lows experienced during the COVID crash March 2020.

This is despite record rates for merchant numbers, the value of transactions processed, payments revenue and gross profit, all boosted by an alliance with Bendigo Bank (ASX: BEN) completed on 1 June that novated more than 18,000 new merchants across to Tyro who generated $2.5 billion worth of transactions - around 16 per cent of the total.

"Booking a 31 per cent lift in transactions processed to set a new record of $15.8 billion is something as a team we are really proud of," Tyro CEO and managing director Robbie Cooke said in today's ASX announcement.

"We worked alongside our 61,500 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.

"The strategic importance of our Alliance with Bendigo Bank is clear in our result. The Alliance performed exactly as we forecast when announcing the partnership back in October 2020."

EBITDA however was down by two-thirds at $2.8 million due in part to the cost of assisting merchants through lockdowns, including terminal rent relief to its COVID-impacted customers and deferring pricing adjustments that are usually made annually to offset fee changes.

Transaction value increased by 9.7 per cent to $13.3 billion for Tyro's core payments business, but dropped by 9.4 per cent for its merchants impacted by COVID lockdowns in NSW and ACT during the first three months of the period.

"While lower than first half last year, our positive EBITDA result of $2.8 million reflected our continuing investment in growth initiatives, the absence of any JobKeeper benefits, wage inflation and first time costs associated with our newly acquired Medipass operation," Cooke said. 

Medipass was integrated into the group last May and added 7,000 new health providers.

"The addition of Medipass positions us to provide a leading unified health claiming and payments offering," Cooke noted.

"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," he added.

The executive highlighted strong momentum in 2022 thus far.

"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," he said.

"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."

In an update on more recent activity, Tyro noted transaction values in January were up 35 per cent year-on-year at $2.7 billion, and in the first 18 days of February values were up 50 per cent compared to the same period in 2021.

Gross profit was also up in January, rising 24 per cent year-on-year.

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