Can the new boss at Tyro Payments turn the ship around in 2023?

Nick Sundich, September 16, 2022

The past three years been difficult times for EFTPOS provider Tyro Payments (ASX:TYR) between volatile payments volumes, technology issues, attacks from a short-seller and the recent notice of CEO Robbie Cook to depart the company.

Long-suffering shareholders are inevitably wondering whether to stay or go.

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Tyro is Australia’s biggest EFTPOS provider

Tyro Payments (ASX: TYR) is Australia’s biggest EFTPOS provider outside the big four banks. It was founded in 2003 and listed on the ASX in 2019 at $2.75 per share. Shares have had some good times, rising as high as $4 prior to the Corona Crash, as well as in the winters of 2020 and 2021.

In between these times various dramas have engulfed the company. Most notably was volatile consumer spending, but also short-seller attacks, a terminal outage and consequential class action against the company and the recent notice of CEO Robbie Cook to quit. When will these dramas end?

Tyro Payments (ASX:TYR) share price chart (Graph: TradingView)

What’s going on this week at Tyro?

This week, Tyro Payments announced it had has promoted internal candidate Jonathan Davey to succeed Robbie Cooke as CEO, effective on 3 October. This puts an end to the speculation as to who will succeed Cooke, who is moving on to Star Entertainment (ASX: SGR). But shareholders still appear to be disappointed that a change is occurring.

Also in the last week, the company has rejected a takeover bid from private equity firm Potentia, arguing the $1.27 per share offer undervalued the company. And it has been barely three weeks since its FY22 results. It’s EBITDA fell from $14.2m to $10.7m and it recorded a pre-tax loss of $16.1m – 64% higher than the year before.

Does a better future await?

Tyro Payments has told shareholders better times are ahead. It has revealed that transaction values for July were up 46% from the same period. Consensus estimates expect EBITDA to more than double – to $24.3m – and revenue to jump 22% – from $326.1m to $398.3m.

But in the current market environment, we think the stock will take some time to re-rate. We think new CEO Jonathan Davey needs to prove his worth in the role and that the company needs to show progress towards profitability. Both of these moves will take several quarters at the very least.