Tyro Payments Earnings: Positive Operating Leverage Is Evident

We maintain our AUD 2.60 per share fair value estimate for no-moat Tyro. Adjusted EBITDA, Tyro’s preferred profitability metric, of AUD 42 million for fiscal 2023 was broadly as expected. The lower-than-expected payments gross profit margin, given higher processing costs, is slightly disappointing, but resilient Tyro bank margins offset this downside. Strong volume growth and effective cost control helped Tyro realize its first full-year net profit after tax of AUD 6 million. The improved operating leverage trend continued into fiscal 2024.