Tyro Payments sinks even after a record first quarter and improved FY23 guidance

Tyro Payments' (ASX: TYR) first quarter update marked fresh records across the board as households continue to spend in the face of rapidly rising interest rates and inflation.

Transaction values for the September quarter rose 59% to $10.37bn compared to a year ago. There were 4,281 new customer applications for Tyro's services, up 17% and merchant loan originations more than doubled in the quarter to $32.7m.

"All our operating metrics are either in line with, or exceeding, expectations which, together with our new cost reduction program, gives us the confidence to lift guidance for FY23," commented CEO Jon Davey.

Tyro shares briefly rallied 3.7% as the market opened but currently down -4.0%.

$11m cost reduction program

Tyro has kicked off a cost reduction program aimed at reducing its previously guided operating cost base by $11m on an annualised basis.

The company expects to achieve approximately half those costs in FY23.

“This program is targeted at reducing costs in non-revenue generating parts of the business without impacting our customer experience or product delivery timeline. These are difficult but necessary decisions," said Davey.

Guidance on the rise

Tyro updated its earnings guidance for FY23, although key operating metrics including transaction value and gross profit were unchanged.

Source: Company data | Table: Market Index

Next gen products

Tyro confirmed the delivery dates of new products including a new digital onboarding platform for November 2022 and Tyro Pro next generation terminal for December 2022.

"Tyro Pro will offer a best-in-class experience for our merchants and, with a growing feature set, will help unlock the potential of in-store digital commerce," Davey said.

Tyro share price chart