Tyro Payments upgrades its FY23 guidance, so why the muted response from shareholders?

Nick Sundich, May 16, 2023

Tyro Payments (ASX:TYR) delivered some good news for shareholders this morning, in the form of upgraded FY23 guidance. But the shareholder response was muted with a measly 1.3% share price increase after 30 minutes of trading.

Tyro Payments (ASX:TYR) share price chart, log scale (Source: TradingView)

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Tyro delivers an upgrade, albeit a small one

Tyro told shareholders it was expecting $42.3bn-$42.8bn in transaction value, $192-$194m in gross profit and $41-$43m in EBITDA.

However, its EBITDA and gross profit were only modestly upgraded considering there were $187-$191m and $37-$41m previously. The company’s EBITDA margin only rose by one percentage point. And Tyro actually downgraded its transaction value having previously anticipated $42.5bn-$43.5bn.

Warnings over what is to come

The company told its shareholders that transaction volume remained strong albeit with some softening due to a slowdown in consumer discretionary spending. It is currently in talks with Potentia Capital about a potential takeover. Discussions have been going since March 27 but the company has nothing further to update shareholders on.

Shareholders arguably think there’s too much risk with this company relative to any potential upside. With Tyro having rejected deals twice before, a deal will have to be at a hefty premium to be accepted. But of course there’s the risk it could be rejected and Potentia could walk away this time. Shareholders would be left with a company facing an uncertain outlook and still clouded by reputational issues over terminal outages during the pandemic.