Adyen is down 23% with record-low sales growth disappointing

Adyen is down 23% with record-low sales growth disappointing

(Bloomberg) — Shares of Adyen NV fell after increased competition in North America contributed to the slowest revenue growth since its initial public offering.

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Shares fell the most on record, dropping 23% to €1,140.80 at 10:29 am in Amsterdam.

The Amsterdam-based financial technology company said Thursday that revenue growth in the first half was affected by price competition, as well as higher inflation and interest rates. Net sales rose 21% to 739.1 million euros ($803 million) in the period, compared to an estimate of 776.5 million euros in a Bloomberg survey of analysts.

Revenue growth in North America, which accounted for a quarter of the company’s sales in the period, more than halved to 23% in the first half. CFO Ethan Tandowski said in a phone interview that Adyen’s digital clients are focused more on profitability than on growth in the US.

“That has had some impact on the growth that we’ve seen,” he said. “In a market like this, some customers choose to see if they can find a lower-cost provider that can offer similar functionality.”

“It will be difficult for Adyen to accelerate growth” in the second half as competition and currency headwinds will continue to be factors, Jefferies analyst Hannes Leitner said in a note.

What Bloomberg Intelligence Agency says:

Adyen’s disappointing first-half net profit — a 5% loss versus the MODL consensus — along with slowing North America segment (25% of total) and numerical volume, add to concerns that Ebitda’s margin may not hit estimates again (6%-point miss). ) with continued recruitment drive. This suggests that Ebitda’s confirmed long-term target of 65% margin will face greater uncertainty, making the analyst estimate of 49% this year and 28% net revenue growth look sharp.

Tomasz Noetzel, Analyst, BI Financials

Adyen’s profit margin missed expectations due to an industry-defying hiring push and inflationary pressures. The EBITDA margin — a measure of profitability — was 43% in the first six months of the year. That compares with a median estimate of 48.6% among analysts surveyed by Bloomberg.

Adyen added about 1,150 employees last year and said it will hire a similar number in 2023 as it prepares for its next phase of growth. The payments company’s hiring sets it apart from its larger peers, who have announced job cuts to cut costs amid rising interest rates and economic uncertainty.

The company said it expects to slow hiring early next year.

Adyen, who handles transactions for companies such as McDonald’s Corp. and Hennes & Mauritz AB, reaffirmed its guidance for Ebitda’s margin at 65% over the long term. It still expects net revenue to grow at a rate between the mid-20s and low-30s over the medium term.

– With the help of Henry Raine.

(Updates with analyst comment in sixth paragraph)

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