The payments business rallied 10% on Monday after peer Smartpay (SMP) released its FY results for the 12 months to March. We met with Smartpay’s management team yesterday to get a better understanding of what is going on in the industry.
- SMP continue to see attrition from banks with SMEs looking for better technology in their payment options.
- They’ve seen a solid bounce back out of COVID lockdowns & floods.
- Margins were a huge win for SMP, gross margins expanding to 65.8% largely driven by a shift to their SmartCharge product. This trend is expected to continue.
While in direct competition with Tyro, we would expect a number of smaller players to continue to carve out market share away from the incumbents. Tyro’s margins have been under pressure but this Smartpay update does show operating leverage should be expected from these businesses, it’s all about executing properly. Tyro’s weekly updates continue to paint an improving picture for the business with transaction volumes up 35% for the year to last Friday.
In saying that, we are looking to move more defensive into any rally and reducing our payments exposure will be one of the first moves.
MM sees TYR as a sell into ongoing strength
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