Tyro Payments Ltd. · ASX:TYR
Tyro Payments — FY2024 Earnings Presentation
40 slides from Tyro Payments's earnings presentation, Aug 26, 2024
Slide 1: Investor Briefing FY24 Results
INVESTOR BRIEFING FY24 Results 26 August 2024 Tyro Payments Limited ABN 49 103 575 042 1
Slide 2: Disclaimer
DISCLAIMER This presentation is provided by Tyro Payments Limited (ABN 49 103 575 042) and its controlled entities (variously, “Tyro”, “us”, “we”, “our” and “Group”) and is current at 26 August 2024. It is information given in summary form only and does not purport to be complete. It does not consti
Slide 3: Introduction and summary; Strategic delivery; Financial performance; Outlook and Q&A
01 Introduction and summary 02 Strategic delivery 03 Financial performance 04 Outlook and Q&A 3
Slide 4: Introduction and Summary
INTRODUCTION AND SUMMARY Jon Davey CEO and Managing Director
Slide 5: FY24 Results: Key Themes
FY24 RESULTS: KEY THEMES GOOD PROGRESS AGAINST OUR STRATEGIC INITIATIVES with focus on enhancing our proposition to merchants STRONG FY24 FINANCIAL PERFORMANCE transitioned to a significantly more profitable business UNIQUELY POSITIONED FOR GROWTH OPPORTUNITIES while delivering profitable and sustai
Slide 6: Good Progress Against Our Strategic Initiatives
GOOD PROGRESS AGAINST OUR STRATEGIC INITIATIVES with focus on enhancing our proposition to merchants PRODUCT PRICING IMPROVED GROWTH AND INNOVATION TRANSFORMATION OPERATING NEW VERTICALS EFFICIENCY 6
Slide 7: Strong FY24 Financial Performance
STRONG FY24 FINANCIAL PERFORMANCE transitioned to a significantly more profitable business GROSS PROFIT EBITDA $210.8m $55.7m Net Profit After Tax1 Free Cash Flow +9.1% (vs. FY23) +31.6% (vs. FY23) Margin 26.4% (+4.5ppt) $25.7m >4x higher (vs. FY23) $30.4m >5x higher (vs. FY23) FY24 guidance: FY24 g
Slide 8: Uniquely Positioned for Growth Opportunities
UNIQUELY POSITIONED FOR GROWTH OPPORTUNITIES while delivering profitable and sustainable growth WE WILL LEVERAGE: TO DELIVER: • Strong balance sheet • Growth in addressable market • Tech stack: 100% owned end-to-end • More diverse customer base • Targeted distribution channels • Better customer econ
Slide 9: Strategic Delivery
STRATEGIC DELIVERY Jon Davey CEO and Managing Director
Slide 10: Product Innovation: Unified Payments
PRODUCT INNOVATION UNIFIED PAYMENTS Innovating for the future with Tyro Unified Payments BUNDLED PAYMENTS + POS Promising response with bundled payments, with initial efforts focused on managing high churn-risk merchants • 36 POS partnerships • Almost 1,000 merchants using bundled pricing DEVICE AND
Slide 11: Product Innovation – Payment Ecosystem
PRODUCT INNOVATION – PAYMENT ECOSYSTEM Our infrastructure is powering popular end-customer solutions We enabled payments for StoreConnect, the world’s first Salesforce integrated POS for small businesses helloclever partnered with Tyro to build its revolutionary real-time cashback rewards scheme 11
Slide 12: Continued Growth in Active Bank Account Users
CONTINUED GROWTH IN ACTIVE BANK ACCOUNT USERS Our integrated payments and banking offering resonates with our merchants Banking Gross Profit Active Tyro Bank Accounts +29% (YoY) +27% (YoY) $12.6m 7,643 Tightened lending policy led to lower loan originations Loan originations - 9% (YoY) STRATEGIC GOA
Slide 13: Success in Further Embedding Financial Discipline
SUCCESS IN FURTHER EMBEDDING FINANCIAL DISCIPLINE Pricing transformation Improved operating efficiency • Reprioritisation to focus on smaller number of high impact projects Moved c.14,000 • Process digitisation and automation Price review for Bendigo c.2,700 Tyro merchants to core • Right-sizing of
Slide 14: Continued Growth in Our Non-Discretionary Verticals
CONTINUED GROWTH IN OUR NON-DISCRETIONARY VERTICALS Increasingly diversified into highly attractive non -discretionary verticals PAYMENTS TTV ($B) PAYMENTS GROSS PROFIT ($M) +5.2% +0.8% 186.7 42.6 42.9 177.4 34.2 8.5 +14.6% 9.8 141.5 44.1 +13.5% 50.1 27% +43.1% 6.5 30.8 34.1 33.2 133.3 136.6 73% 27.
Slide 15: Tyro Health Continues to Deliver Strong Growth
TYRO HEALTH CONTINUES TO DELIVER STRONG GROWTH Tyro Health is a fast growth business that will generate durable cashflows into the future HEALTH TTV ($B) FAST >20% growth in TTV in FY24; strong growth expected to continue over medium-term, supported by growing health GROWTH related spend in Australi
Slide 16: Set to Launch 2 New Verticals in FY25
SET TO LAUNCH 2 NEW VERTICALS IN FY25 New verticals leverage our existing capabilities and will support medium -term growth ADJACENT TYRO UNATTENDED HEALTH VERTICAL DEVICES • We have made good progress with work on our • Large and growing market opportunity with multiple avenues go-to-market in a ma
Slide 17: Continuing to Invest for Growth: FY25 and Beyond
CONTINUING TO INVEST FOR GROWTH: FY25 AND BEYOND Explore inorganic opportunities Grow new Increase verticals multi-product Further enhance adoption our go-to-market Develop payment ecosystem 17
Slide 18: Financial Performance
FINANCIAL PERFORMANCE Prav Pala CFO
Slide 19: Strong Financial Performance
STRONG FINANCIAL PERFORMANCE Performance reflects our transition to a significantly more profitable business GROSS PROFIT1 GROWTH IMPROVING EBITDA MARGIN MORE CASH GENERATIVE Gross Profit ($m) EBITDA ($m) and EBITDA margin (%)2 Free Cash Flow ($m) 45 26.4% 35 +9% 21.9% 80 20.00% 25 70 7.2% +31.6% 30
Slide 20: Increasingly Diverse Top Line
INCREASINGLY DIVERSE TOP LINE Higher quality gross profit driven by increasing contribution from Health and Banking 9.1% INCREASE IN GROSS PROFIT GROSS PROFIT CONTRIBUTION 4% 5% $m FY24 FY23 Change 6% 21% 23% 24% Payments Discretionary & Bendigo 136.6 133.3 2.5% Non-discretionary 50.1 44.1 13.5% 75%
Slide 21: Continued Growth in Tyro Core Payment Volumes
CONTINUED GROWTH IN TYRO CORE PAYMENT VOLUMES TTV: TYRO CORE 1 ($B) GROSS PROFIT Tyro core non-discretionary verticals ($m) +2.4% +13.5% 38.1 37.2 +5% 3.3 50.1 3.2 44.1 5.4 +21% 6.5 10.4 (0)% 10.3 FY23 FY24 GROSS PROFIT 18.3 (2)% 18.0 Tyro core discretionary verticals ($m) 5.5% FY23 FY24 Hospitality
Slide 22: Higher Payments Margin in FY24
HIGHER PAYMENTS MARGIN IN FY24 Payments gross margin benefitted from successful pricing transformation in FY24 ILLUSTRATIVE VOLUME AND MARGIN PROFILE BY SEGMENT PAYMENTS MARGIN1 (BASIS POINTS) MARGIN 46.4 MICRO 43.7 43.1 41.3 SMB 38.2 LARGE 34.7 35.1 33.4 TRANSACTION VALUE Providing simple SMB remai
Slide 23: Banking Returns Improved in FY24
BANKING RETURNS IMPROVED IN FY24 Banking gross profit increased by 29.4% to $12.6 million DEPOSITS AND LOAN ORIGINATIONS ($M) BANKING RETURNS Deposits Loan originations (8.7)% 16.2% (4.1)% 92.7 12.4% 88.9 14.2 10.1 7.8 4.6 8.2% 7.9% 149.7 136.7 2.9% 74.2 2.3% 70.7 FY23 FY24 Net return on loans Net r
Slide 24: Improved Operating Efficiency
IMPROVED OPERATING EFFICIENCY Continued emphasis on disciplined cost management to ensure ongoing efficiency improvements IMPROVED OPERATING JAWS1 210.8 193.2 60.7 41.7 148.5 11.8 151.5 150.1 136.7 FY22 FY23 FY24 Gross profit ($m) Operating expenses (excl. lending and non-lending losses) ($m) Operat
Slide 25: More Profitable and Cash Generative
MORE PROFITABLE AND CASH GENERATIVE CONTINUED IMPROVEMENT IN …SUPPORTING STRONG FREE CASH …AND A SIGNIFICANT INCREASE IN EBITDA MARGIN.. FLOW GENERATION… STATUTORY EARNINGS… EBITDA and EBITDA margin1 Free Cash Flow ($m) Net Profit after Tax (statutory, $m) 45 Includes $7.7m of one-offs2 Includes $6.
Slide 26: Robust Balance Sheet
ROBUST BALANCE SHEET Strong capital position enables us to pursue growth whilst retaining capacity for strategic opportunities TOTAL CAPITAL ($M) & TOTAL CAPITAL RATIO (%) LIQUID ASSETS ($M) AND MINIMUM LIQUIDITY HOLDING RATIO (%) 17 5 65% 17 5 56% 60.00% 52% 60.00% 43% 44% 155 39% 155 40.00% 40.00%
Slide 27: Summary
SUMMARY Strong financial performance reflects our transition to a significantly more profitable business 01 02 03 Gross Improving More profit EBITDA cash growth margin generative 27
Slide 28: Outlook and Q&A
OUTLOOK AND Q&A Jon Davey CEO and Managing Director
Slide 29: Uniquely Positioned for Growth Opportunities
UNIQUELY POSITIONED FOR GROWTH OPPORTUNITIES WHY TYRO IS PAYMENT PROVIDER OF WHAT THESE STRENGTHS POSITION US TO CHOICE TO >70,000 MERCHANTS ACHIEVE IN FY25 AND BEYOND 100% owned end-to-end tech stack Growth in addressable market • New POS and partner • Launch of new verticals Complete control and f
Slide 30: Improving Profitability Over the Medium-Term
IMPROVING PROFITABILITY OVER THE MEDIUM-TERM Continued focus on balancing growth and profitability Rule of 40* or better from FY26 RULE OF 40 MINIMUM 11%+ =Gross profit growth + EBITDA margin 9%+ c.31% c.29% c.28% 26.4% 21.9% 7.2% FY22 FY23 FY24 FY25 FY26 FY27 EBITDA MARGIN FY24 Gross profit growth:
Slide 31: FY25 Outlook and Guidance
FY25 OUTLOOK AND GUIDANCE Continued gross profit growth coupled with an improvement in our EBITDA margin Continued gross profit growth and improved profitability, despite ongoing challenging market conditions facing our merchants. GROSS PROFIT: $218m – 226m EBITDA MARGIN: Growth of 3% to 7% c.28% 31
Slide 32: Question & Answer
QUESTION & ANSWER Jon Davey Prav Pala CEO and Managing Director CFO
Slide 33: Appendix
APPENDIX
Slide 34: Summary of Financial Performance
SUMMARY OF FINANCIAL PERFORMANCE FY24 FY23 Growth $’000 $’000 % Transaction value 42,932,748 42,601,263 0.8% Payments revenue and income 445,216 419,215 6.2% Banking revenue 14,725 10,550 39.6% Other revenue and income 11,483 6,037 90.2% Revenue (normalised)1 471,424 435,802 8.2% Payments direct exp
Slide 35: Reconciliation of Statutory to Normalised Results
RECONCILIATION OF STATUTORY TO NORMALISED RESULTS Normalisation adjustments Bendigo Alliance FY24 Bendigo Alliance Investment in Compensation and FY24 $’000 unless stated otherwise impairment and Statutory gross profit share associate remediation Normalised revaluation Total revenue 497,715 (17,324)
Slide 36: Financial Position
FINANCIAL POSITION $’000 unless stated otherwise 30 June 2024 30 June 2023 Assets Cash and financial investments 169,000 132,906 Loans to merchants 39,325 50,526 Property, plant and equipment 51,334 42,785 Intangible assets and goodwill 97,772 126,502 Right-of-use assets 23,630 26,344 Other current
Slide 37: Free Cash Flow
1 FREE CASH FLOW $’000 unless stated otherwise FY24 FY23 Change Operational cash flows EBITDA 55,680 42,299 13,381 Capital expenditure (29,592) (32,090) 2,498 Rent (4,434) (1,897) (2,537) Bendigo top-up payment2 (3,265) (1,861) (1,404) Items in EBITDA moved to one-offs 3,018 - 3,018 Working capital
Slide 38: Supplementary Information: Payments
SUPPLEMENTARY INFORMATION: PAYMENTS Transaction Value (TV) Merchant Count FY24 FY23 Growth Proportion of FY24 FY23 Growth Performance by vertical $’million $’million % FY24 TV # # % Hospitality 18,049 18,347 (1.6)% 42.0% 16,114 17,425 (7.5)% Retail 10,301 10,360 (0.6)% 24.0% 10,639 10,874 (2.2)% Hea
Slide 39: Summary of Tyro Pricing Structures
SUMMARY OF TYRO PRICING STRUCTURES Cost-plus pricing Card Based pricing Simple pricing Variable Variable Fixed (bps) Merchant Service Fee (MSF) Based on cost incurred by Tyro Based on merchant size and card type For all transactions Tyro charges MSF based on card type for: Tyro charges merchant: • e
Slide 40: Thank You
THANK YOU