I’m an ex-employee of Tyro and consequently a shareholder. I’ve been watching this thread for a few weeks. Thought I’d respond to a few things with the perspective of someone who’s watched Tyro for a long time. I’ve been out of the business for over 6 months and don’t have any inside info.
> EFTPOS isnt a new model
True, but there is a lot of change happening in the payments space, and Tyro is arguably better placed to ride/lead the wave than the bigger players.
> can you tell me what Tyro's secret sauce is ? The moat.
The powerful and hard-to-replicate POS integration partnerships have already been mentioned. As a smaller, business-only, more customer-focussed bank, Tyro have the opportunity to integrate their payments, banking and lending products more seamlessly than other banks could. Take a look at the lending product for an example. Loan offfers can be viewed, configured and accepted in the banking app in minutes, funds land in the transaction account immediately, then EFTPOS takings are automatically debited each day. First version took 6 months to deliver, probably an unthinkable timeline for a big bank to deliver such an integrated offering. Also, in an industry where average NPS is negative, Tyro is way ahead of competitors w.r.t. customer satisfaction. This is probably partly due to the fact that Tyro dedicates all its efforts to understanding and serving SMEs, whereas inside many larger banks the SME market is categorised as a small subsegment of the retail portfolio.
> Yes it's a recurring revenue terminal ticket clipping payments business, blah, blah, blah, but its dog eat dog out there and after 15 years they have 3% of the market ??
Getting merchants to switch their EFTPOS is hard. Payment acceptance is often perceived as a commoditised product (it’s not) and the Big 4 have big marketing budgets. But a CAGR of 27% in a 15 year old business shows strong, consistent growth that should see that 3% continue to grow exponentially. 3% of a massive market shows potential to me, not a failure.
> even with massive revenue growth TYR wont be profitable with such a commodity like gross margin.
Lots of chatter above about Tyro not being able to become profitable. Which is funny, because the company deliberately chased and proved profitability, with FYs 13, 14, and 15 all being EBIT profitable. (See 2015 annual report on Tyro’s website.) Since then there’s been a conscious decision to invest into more product and market growth. (All publicly disclosed at shareholder meetings over the years.) IMO, the recent annual losses has been very disciplined considering there was over $100m cash available.
> [MCB] bought at almost nil consideration / It looks as though he has funded it from really low entry prices
Total rubbish. I believe Mike’s first major investment was as part of the $100m capital raise in 2015, which from memory was at about $1.03 per share. The prices of trades since then aren’t public, but you can use your imagination re. what buyers had to pay to convince people to hand over their shares after that raise and with IPO rumours flying around.
> They come to market like most struggling companies who need funding
Doesn’t look to me like they're struggling or that they needed a whole lot of funding. They raised $100m in 2015, still have $23m of that after 4 years, and cash on hand only dipped by $4.7m in FY19. I think the IPO only raised another $125m for Tyro (the rest went to shareholder liquidity), so it’s not the pattern of ever-ballooning rounds seen in many high-growth-but-capital-hungry stories.
My precis: Tyro has lots of growth potential left across existing markets, new markets, and new products. With a company that has proved they have a profitable business model, maintained a revenue CAGR north of 25% for many years, and kept costs under control while growing rapidly despite having a war chest, any demands that the company switch to a profit-taking model in the short term are basically asking for the (well-managed) growth to slow down, which isn’t what most people are looking for in an investment.
Having said all that, I haven’t looked deep into the fundamentals so can’t comment on the value at the current price. DYOR, of course. But as others have said, MCB is no fool, so you could probably do a lot worse than following his investments.
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