Should I Buy Tyro

Tyro provides digital payment and banking services to merchants across Australia, the company trades on a market cap of $1.9billion, we take a look and see Should I Buy Tyro Shares 2021? The company provides services similar to Square Payments.

About Tyro Payments

Tyro is Australia’s largest EFTPOS provider of all ADIs outside the big four. The company provide tailored EFTPOS, business loans and banking solutions that support over 36,000 Australian businesses. 

The group is separated into 5 main segments which are listed below:

Should I Buy Tyro Shares 2021?
Should I Buy Tyro Shares Key Business Segments

Should I Buy Tyro Shares – Share Price

The share price for Tyro Payments is up 15.16% this year to trade at $3.95 per share and a market cap of $1.9billion. The group has a 52-week range of $2.31 – $4.40 and is trading towards the top end of this range.

During the pandemic, Tyro fell to as low as $1.5 per share, investors who spotted the opportunity would now be sitting on over 150% gains. This goes to show the time tested motto of ‘buying quality companies at good discounts’ seems to be a good strategy.

How To Buy Tyro Shares? In order to buy shares in Tyro, you will need to open a brokerage account, Prophet Recommends a low-cost brokerage platform such as Pearler. Pearler offers some of the most competitive online brokerages on the market.

Prophets Trusted Affiliate Partner

Should I Buy Tyro Shares – Fundamentals

Current Share Price$3.95/share
Market Capitalisation$2,024,439,053
Shares Issued512,516,216
ASX Rank206 of 2,290
Dividend Yieldn/a
NTA per share$0.08
TYR ASX Fundamentals
Should I Buy TYR Shares – FY21 Income Report

Tyro Payments stock announced in their FY21 Annual report a set of Record numbers, this is during a global pandemic where the government response has been hard lockdowns as a primary measure of controlling the virus.

We also commend Tyro for their transparency in providing weekly updates to the market, this to us seems to indicate an honest management team. The summary of the weekly updates has also been provided in the Tyro FY21 Annual Report.

The below graph of Monthly Transaction Value Growth of FY21 vs FY20 shows that transaction value seems to have recovered however, the group still seems to be very much affected by snap lockdowns.

From the below the items inside bubble 1 are from the first National Lockdowns and bubble two is from the second major lockdown in Victoria. So it seems to show that the impact of the lockdowns on the business is less than the first lockdown, however still seems to have an impact on the business.

TYR Shares - Monthly Transaction Value Growth
TYR Shares – Monthly Transaction Value Growth

FY21 Annual Report Headline Figures

  • Record $25.5 billion in transactions processed by Tyro merchants – up 26% (FY20: $20.1 billion).
  • Record 58,186 merchants choosing Tyro as their payments solution – up 81% (FY20: 32,176).
  • Transaction growth driving record gross profit of $119.4 million – up 28% (FY20: $93.5 million).
  • EBITDA of $14.2 million – up 424% (FY20: $4.4 million loss).
Tyro Share Price - FY21 Annual Report Growth Figures
Tyro Share Price – FY21 Annual Report Growth Figures
Tyro Payments – FY21 Balance Sheet

Tyro has $103million of cash on their balance sheet and total assets of $396million. Total liabilities sit at $215million, leaving total shareholder equity at $180million.

This leaves an NTA per share of $0.08 cents compared to a share price of $3.95.

Tyro FY21 Balance Sheet
Tyro FY21 Balance Sheet

The group has no debt on their balance sheet.

Should I Buy Tyro Shares – Dividend

Does Tyro Pay a Dividend? Tyro Payments does not currently pay a dividend yield, the group has not yet paid out a distribution to shareholders since listing on the ASX.

Should I Buy Tyro Shares – Ownership and Insider Transactions

Tyro ASX Shares Ownership Breakdown

Tyro shares are majority-owned by individual company insiders at 46.8%, this is quite high for an ASX listed company trading around the $2billion in market cap range. This is followed by institutional ownership and private company ownership at 32.9% and 12.8% respectively.

Tyro Shares Company Ownership Breakdown
Tyro Shares Company Ownership Breakdown
TYR ASX Insider Transactions

A number of company insiders have been selling down their shares lately with David Fite selling over $9million worth of shares since May 2021 alone at an average price of approximately ~$3.75 per share.

DateValueNameEntitySharesMax Price
28 Jun 21-$2,832,167David FiteIndividual787,086AU$3.60
17 Jun 21-$5,326,505David FiteIndividual1,387,084AU$3.84
27 May 21-$3,857,300Fidelity International LtdCompany1,000,000AU$3.86
14 May 21-$1,492,831David FiteIndividual396,766AU$3.76
19 Jan 21-$0Fidelity International LtdCompany5,487,726AU$4.11
Recent Insider Transactions TYR.ASX
TYR ASX Top 5 Shareholders

Interesting enough co-founder and co-CEO of Atlassian Michael Cannon-Brookes owns over 25% of Tyro shares. Atlassian has had a stellar run-up this year with shares up over 125%, so potentially one could argue that Mike knows what he is doing.

XERO executive Andrew Winkler also owns a significant portion of the companies shares. David Fite, who from the above was selling down shares between May 21 and July 21 owns approximately 3.11% of the company and still maintains about $63million worth of shares.

Entrepreneurs Paul Wood, Peter Haig and Andrew Rothwell founded Tyro in response to the RBA’s call for greater competition. However, the founders don’t seem to have retained any significant portion on the share register.

OwnershipNameSharesCurrent Value
26.05%Michael Cannon-Brookes133,614,056 $527.8m
14.68%Morgan Stanley75,293,008A$297.4m
4.9%Fidelity International Ltd25,127,395A$99.3m
4.65%TDM Growth Partners23,853,855A$94.2m
4.29%Andrew Winkler21,981,132A$86.8m
TYR Shares Top 5 Shareholders

Should I Buy Tyro Shares – Payments Issue

In January 2021, Tyro experienced widespread terminal connectivity issues across a number of their EFTPOS payment solutions. A number of merchants have made claims relating to lost revenue during the outage.

In August 2021 tyro provided an update on the rectification of the claims situation, mentioning that strong progress has been made in rectifying the claims.

Impact of Terminal Connectivity Issue on TYRO
Impact of Terminal Connectivity Issue on TYRO
  • All financially impacted merchants invited to register with Tyro to enable remediation claims to be assessed.
  • A total of 3,656 merchants have registered to date with claims of financial loss with more than 888 already settled.
  • The remediation process remains available for claims of financially impacted merchants – providing a fast and straightforward assessment aimed at resolution without the cost, delays and uncertainty inherent in legal proceedings.

We commend tyro for the actions in the above, and the group would actually have the data to be able to make fair and reasonable offers to each of the merchants who are claiming.

Should I Buy Tyro Shares – Prophets Take

Tyro payments seem to have a good business, although affected by COVID and a terminal error issue back in Jan 2021, the business seems to have recovered well and management can be commended for providing such transparent weekly updates during COVID. A management team that you can trust is typically a good one!

The group has no debt on their balance sheet.

We like the high proportion of individual insider ownership and the fact that Mike Cannon-Brookes holds a high proportion of shares at ~25% of the float.

Tyro also has a smaller upstart competitor listed on the ASX SmartPay Group, which we have been following for some time (seems to have better fundamentals), however have not yet made any investments in either of these companies.

We will be keeping an eye on both Tyro Shares and Smartpay shares going forwards, we will be looking to see traction in the business loans segment and additional TTV coming in from the deal with Bendigo Bank.

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