Tyro CEO Jon Davey
Tyro Payments chief executive Jon Davey is determined to maintain the focus on efficiency that helped deliver strong results in the year to June, and that includes reviewing the role of banking in the business.
Banking plays a small part in Tyro’s overall business, with A$149.7 million of loan originations, $11.1 million of interest income and a contribution of $8.5 million of gross profit to group gross profit of $204.3 million in the year to June.
The company will give investors a strategy update on October 18 and may reveal the future of the bank then.
Tyro reported its first profit as a listed company yesterday, on the back of tighter expense management and strong growth in merchant numbers and transaction volumes.
Transaction value rose 25 per cent to $42.6 billion and revenue rose 35 per cent to $439.8 million.
Operating expenses rose 11.6 per cent to $201.7 million but as a proportion of gross profit fell from 93 per cent in 2021/22 to 78 per cent in the year to June. Expenses came down in the June half.
The company reported a net profit of $6 million – a big turnaround from a loss of $29.6 million in the previous year.
Merchant numbers grew 14 per cent to 68,665, including 15,676 that have migrated to Tyro as part of its payments partnership with Bendigo Bank.
The net merchant acceptance fee as a proportion of transaction value rose from 32.8 basis points to 34 bps.
Davey was appointed CEO in October last year and set about making changes. He changed the company’s organisational structure and cut his direct reports from 13 to seven, as well as making a number of senior appointments.
Davey reduced headcount by 10 per cent, introduced new products and “optimised” the company’s pricing plans.
Pricing optimisation centred around promoting Tyro’s least cost routing solution, Tap & Save. At the start of the financial year 31 per cent of its merchants were using Tap & Save. This increased to 54 per cent by the end of the year.
Davey said the routing of transactions through the cheapest scheme was not only good for merchants and their customers, it also produced margin benefits for Tyro.
New products included Tyro BYO, which allows merchants to use their mobile phones to accept payments, and Tyro Pro, a large-screen terminal that provides opportunities for software-based product features tailored to different industry segments.
Another new product was Tyro Go, a portable card reader.
Davey said: “We know that if we are to maintain our market leading growth rates, there are important product, distribution and resources questions to answer.
“We are currently updating our strategy and considering key issues, including the role of banking and how we source products, the efficiency and utility of our proprietary payments switch, go-to-market approach and our relationship with partners.”
Davey said a challenge for the business in the current year would be weaker spending on discretionary items. The company has pushed hard into healthcare and services to offset weaker spending on hospitality – its biggest market segment.
Tyro is forecasting growth in transaction value from $42.6 billion in 2022/23 to between $45 billion and $47.5 billion in the current year.