Tyro share price slumps despite cost reductions delivering earnings guidance upgrade

A man sits nervously at his computer with his mouth resting against his hands clasped in front of him as he stares at the screen of his computer on a home desk.A man sits nervously at his computer with his mouth resting against his hands clasped in front of him as he stares at the screen of his computer on a home desk.

The Tyro Payments Ltd (ASX: TYR) share price has followed the All Ordinaries Index (ASX: XAO) lower today despite the payment solutions provider upgrading its full-year guidance.

The upgrade came on the back of a strong 10-month period and was driven by improved margins and cost reduction.

The Tyro share price roared to peak at $1.62 earlier today, marking a 4.8% gain.

However, it has since slumped into the red, falling 0.97%, trading at $1.53 at the time of writing

For comparison, the All Ordinaries is down 0.23% at the time of writing.

Let’s take a closer look at what investors might expect from the tech company’s upcoming financial year 2023 results.

Tyro tipped to bring in up to $194 million of profits

The Tyro share price is wobbling on Monday amid the news the company expects to continue its winning streak.

It reached profitability and posted its maiden positive free cash flow as a public entity in the first half of this fiscal year. And things appear to have just gotten better from there.

It now expects to bring in a gross profit of between $192 million and $194 million for financial year 2023. That’s up from its previous forecast of $187 million to $191 million.

Meanwhile, its earnings before interest, tax, depreciation, and amortisation (EBITDA) is forecast to come in between $41 million and $43 million. That was previously tipped to reach $37 million to $41 million.

It’s also targeting an EBITDA margin of around 22% and approximately 78% of operating leverage.

However, the company dropped its transaction value forecasts to between $42.25 billion and $42.75 billion. It previously estimated its transaction value would come in between $42.5 billion and $43.5 billion.

Tyro CEO Jon Davey commented on the news weighing the company’s share price today, saying:

Transaction value across our three core verticals remains strong albeit with some expected softening due to a slowdown in consumer discretionary spending. Despite this, we remain optimistic about the outlook for financial year 2024.

The All Ordinaries tech stock is still in takeover talks with suitor Potentia Capital. It reiterated that there’s no certainty the talks will result in a transaction.

Tyro share price snapshot

The Tyro share price has been on a roll lately.

The stock has gained 11% since the start of 2023. It’s also 42% higher than its previous close.

Meanwhile, the All Ordinaries has lifted 4% year to date and 1% over the last 12 months.

The post Tyro share price slumps despite cost reductions delivering earnings guidance upgrade appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tyro Payments. The Motley Fool Australia has recommended Tyro Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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