Adyen Shares Drop as First-Half Results Disappoint

by Warren Seah

Adyen, the fast-growing Dutch payment company, experienced a significant decline in its shares, dropping as much as 22% on Thursday. This dip in share price was prompted by the company’s first-half results falling short of estimates.

Revenue and Profit Figures

Adyen’s first-half profit remained relatively unchanged at €282.2 million ($307 million), while net revenue increased by 21% to €739.1 million. However, these figures fell below the consensus of €777 million, highlighting the company’s underperformance.

Earnings and Ambitions

The company’s earnings before interest, tax, depreciation, and amortization saw a notable decline of 10%, landing at €320 million. This decrease was not in line with the consensus of €379 million.

Adyen expressed disappointment regarding the size of its sales team in North America, stating that it has impacted their operations. In their shareholder letter, they acknowledged, “We now see the impact of a sales team size that did not match our ambitions, particularly in North America.” During the first half of this year, they hired 551 full-time employees, with three-quarters filling tech roles. The company attributed the decline in adjusted profit to increased wages and salaries.

Economic Climate and Customer Impact

Not only did Adyen face internal challenges, but its customers also encountered obstacles. The shifting economic climate, driven by higher inflation and interest rates, caused many North American digital businesses to prioritize cost optimization over growth in the first half. The company noted, “Enterprise businesses prioritized cost optimization, while competition for digital volumes in the region provided savings over functionality.”

Future Goals

Despite the disappointing results, Adyen remains committed to its long-term revenue and margin objectives. The company aims for revenue growth between the mid-twenties and low-thirties and emphasized that growth is not always linear. Adyen stated, “We know that growth is not always linear and reiterate our financial objectives.”

In conclusion, Adyen’s underwhelming first-half results have led to a drop in its share price. The company faces challenges in North America due to the size of its sales team. Additionally, the economic climate and increased inflation impacted the profitability of its customers. Nevertheless, Adyen remains focused on achieving its revenue and margin goals.

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