The Tyro Payments Ltd (ASX: TYR) share price is surging higher this morning as the company released its latest transaction data which shows a distinct decline in values. Tyro shares are currently sitting at $2.31 in early trade, up 11.06%.
Tyro provides payment and banking services to some 32,000 small and medium enterprises, many of which are struggling with the impacts of COVID-19.
The company generates revenue by enabling merchants to process debit and credit card payments. With spending likely to slip in the near future, however, Tyro's earnings may well come under pressure.
Transaction volumes fall
Transactions between 1 April and 3 April (inclusive) fell 23% compared to the previous year, with $102 million in payments processed compared to $133 million in FY19. This is a sharp turnaround for Tyro, which was previously reporting impressive increases in transactions.
In January, transactions were up 27% compared to the previous year, with $1.83 billion in payments processed. In February, a 30% increase was reported with $1.785 billion in transactions. In March, however, volumes were only up 3% to $1.6 billion as the impacts of coronavirus began to bite.
The company reports that it has implemented measures to provide what assistance it can to those of its merchants that are undergoing hardship. It has reported that many of its merchants are finding the current environment extremely challenging, and some, particularly in the hospitality vertical, are severely impacted.
For the year to date, Tyro's transaction volumes are up 26% to $16.381 billion, compared to $13.047 billion in FY19. This increase has been driven by strong growth prior to the coronavirus crisis taking hold, but growth being eroded in the current climate.
Business of payments
Tyro is Australia's fifth largest merchant acquiring bank by number of terminals in the market, behind the four major banks. Traditionally focused on in-store payments, Tyro has recently expanded into eCommerce.
Tyro listed in December in the biggest public float of 2019. Shares were issued at $2.75 and debuted at $3.30, giving the company a market capitalisation of $1.37 billion. Tyro shares traded as high as $4.49 in February before crashing to earth in the coronavirus maelstrom, hitting a low of 97 cents on 19 March. Shares have recovered somewhat in the interim and closed last week at $2.08.
At the time of its IPO, there were high hopes for Tyro, which bucked the 2019 market trend of failed listings led by Latitude Financial Group and Retail Zoo. Tyro planned to use funds from the float to accelerate expansion into business lending and the buy now, pay later sector. Those plans may now be on hold with the economy screeching to a halt as coronavirus shutdowns put thousands out of work.
