The Smartpay Holdings Ltd (ASX: SMP) share price has jumped in afternoon trade after the payment technology company released its trading update for the fourth quarter.
At the time of writing, the Smartpay share price is trading at 92.5 cents a share, an increase of 4.5%.
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High growth story continues
It appears the payment solution providers' trading update has fallen roughly in line with shareholder expectations. Despite the continuation of growth metrics, the Smartpay share price has failed to gain momentum.
The company's fourth quarter, ending 31 March, experienced continued growth in Australian acquiring revenues. Smartpay delivered a 97% year-on-year revenue increase to $5.784 million – a further 15% increase on the previous quarter.
Additionally, Smartpay's transacting terminals reached record levels. At the end of March, the company's payment terminals in use reached 6,754 – up from 5,775 from the previous quarter.
Total quarterly revenue for the company came in at NZ$10.05 million on a consolidated basis for both Australia and New Zealand operations. This reflects an increase of 36% year-on-year for the business.
Potentially disappointing shareholders, the company did not indicate growth in its New Zealand operations. Instead, Smartpay stated, "Our New Zealand business provided stable and consistent revenue contribution through the quarter."
Context is important for Smartpay share price
Smartpay is a much smaller peer of ASX-listed Tyro Payments Ltd (ASX: TYR). Comparing the two competitors we can see how Smartpay is stacking up.
Based on current metrics, Tyro is generating roughly 7.1 times more revenue than its smaller contender. However, the company is utilising 10.1 times more transacting terminals than Smartpay to do so, at 68,338.
Adding to this, despite only accruing sevenfold the revenue, Tyro is valued at 9.7 times the market capitalisation of Smartpay. This might explain why the returns from the Smartpay share price have outpaced its bigger competitor over the last year (108% versus 38.6%).
The market might be imposing a discount on the smaller terminal provider, given the heightened risk profile. This risk was displayed during the COVID-19 crash, as the Smartpay share price fell dramatically 64% in one month.
