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Tyro (ASX:TYR) stock price drops 25% as COVID takes its toll

the Tyro Payments Ltd (ASX:TYR) The stock price plummets after the company reports results for the first half of fiscal 2022.

At the time of writing, Tyro’s stock price is $1.64, 24.77% lower than its previous close.

Tyro share price plunges as EBITDA falls67%

  • Processed $15.8 billion in transactions, an increase of 31% over the first half of fiscal 2021
  • Earnings before interest, taxes, depreciation and amortization (EBITDA) of $2.8 million – down 67%
  • Payments statutory gross profit hit a record $68.1 million, up 25%
  • Banking gross profit was $2.4 million, up 35%
  • Normalized gross margin – position Bendigo and Adelaide Bank Ltd‘s (ASX:BEN) – rose 11% to $68.1 million
  • A record 61,554 merchants using Tyro – up 68%

Tyro has seen an increase in profits, transactions and merchants despite many of its users suffering from outbreaks of the Omicron variant of COVID-19.

During the six months, the company provided terminal rental relief to affected merchants and deferred its annual price adjustments.

However, this, along with investments in growth initiatives, wage inflation, the removal of JobKeeper and the costs associated with its acquisition of Medipass, caused the company’s EBITDA to plummet.

Tyro ended the period with $157 million in cash and financial investments, compared to $173 million at the end of the prior six months.

The company is now Australia’s fifth largest acquiring bank by number of devices, with 103,935 devices distributed, an increase of 52.1%.

Additionally, merchant deposits reached $100.8 million during the six-month period and merchant churn and transaction value fell to 10.1% and 9% respectively.

Finally, merchant loan originations rebounded to $36.2 million, an increase of 1,279%.

What else happened in halftime?

The latest halving marked the first time the company has reported full half earnings, including its deal with Bendigo Bank.

The alliance between the financial institutions was completed on June 1, 2021 and saw all Bendigo Bank merchants migrate to Tyro. Bendigo Bank merchants brought Tyro $2.5 billion in transactions last semester, which is in line with expectations.

Additionally, Tyro generated $22.4 million in payments from Medipass healthcare providers during the period and $77 million in claims. It acquired Medipass in May 2021.

The company’s merchants in New South Wales and the Australian Capital Territory saw their transaction values ​​drop 9.4% in the first half.

However, excluding these regions, Tyro’s payments business saw transaction value growth of 23.2%.

Additionally, Tyro’s banking business saw lending revenue from its Merchant Cash Advance product increase 25.4% to $2.6 million.

Tyro’s bank account has also seen greater uptake. It had 4,964 active accounts as of December 31, representing an increase of 19.6% over the prior comparable period.

Finally, during the semester in which the company achieved a deal with Telstra Company Ltd. (ASX: TLS) which saw the telecom operator’s business customers offer Tyro’s merchant acquiring solutions.

What did management say?

Tyro CEO and Managing Director Robbie Cooke commented on the company’s first half results saying:

Booking a 31% increase in transactions processed to set a new record of $15.8 billion is something we are truly proud of as a team. We worked alongside our 61,500 merchants as they continued to manage the impact of the closures and provided all possible assistance, including terminal rental relief, loan repayment relief and we did not pass on the program and interchange fee increases we experienced during the six-month period.

Although lower than the first half of last year, our positive EBITDA result of $2.8 million reflects our continued investment in growth initiatives, the absence of any JobKeeper benefits, wage inflation and cost initial fees associated with our newly acquired Medipass operation.

And after?

The company did not provide any guidance for the 2022 fiscal year.

However, he said he expects a return of workers to Australian CBDs, which will likely help boost card transitions in retail and hospitality in the second half.

In addition, the company plans to deploy its new card reader soon and is working on its Android-based terminal.

Tyro also provided a trade update for the start of the second half.

The company’s January deal values ​​rose 35% from a year earlier to $2.7 billion.

In the first 3 weeks of February, its transaction values ​​increased by 50%, reaching $1.8 billion.

Its e-commerce transactions hit a new high of $36.5 million in January, up 836% from the same month in 2021.

Its payments business — after Bendigo Bank’s profit share and on a normalized basis — posted a profit of $11.1 million in January, an increase of 24%.

Finally, in the first 7 weeks of the calendar year, Tyro’s banking business recorded loans totaling $5.8 million, an increase of 1,099%.

The bank deposit balance also remained relatively stable at $96.1 million at the end of January.

Tyro Share Price Overview

It’s been a tough start to the year for the payments provider’s shares.

Right now, Tyro’s stock price is 43% lower than it was at the start of 2022.

It is also 45% less than at the same time last year.