Payments company Adyen’s shares plummet after earnings miss

By Toby Sterling and Elizabeth Howcroft

AMSTERDAM (Reuters) -Shares in Dutch payments processor Adyen NV fell by more than a quarter on Thursday after its first-half earnings missed analysts’ estimates and the company’s own medium-term targets.

The sharp selloff in Adyen’s stock highlights analysts’ concerns about stretched valuations in the digital payments sector and worries about a slowdown in what has been viewed as a high-growth business.

Adyen, which provides services to the likes of Netflix (NASDAQ:), Meta, Microsoft (NASDAQ:) and Spotify (NYSE:), said revenue growth was slower in North America and that its margins were impacted by hiring costs.

Its shares fell sharply after a delayed start on Euronext due to high volatility and were down 27% at 1,080 euros at 1005 GMT. At current prices shares are now down about 16% in the year to date, surrendering gains up to Wednesday’s close.

“These are disappointing results, particularly the sales miss, and the key question will be whether the company can quickly revert to mid-term trend growth,” JPMorgan (NYSE:) analysts said.

Earnings before interest, tax, depreciation and amortisation (EBITDA) were 320 million euros ($348 million), down 10% from a year earlier and below analyst forecasts of 386 million euros, Refinitiv data showed.

Revenue rose 21% to 739 million euros, against Adyen’s mid-term forecasts of more than 25% growth.

“In some areas the business grew at a lower rate than anticipated,” the company said in a letter to shareholders,

The company also cited competition in the US, where its rivals include Stripe, Braintree, Fiserv (NYSE:) and PayPal (NASDAQ:).

Jefferies analyst Hannes Leitner said some concerns are focused on Adyen, which is more profitable and more highly valued than its peers, and some on the sector and economy.

He said the economy overall is slowing and online payments growth may not be quite as fast as it was in the pre-COVID era. “This is impacting Adyen a little more than others.”

Adyen’s EBITDA margin fell to 43% from 59%, which the company said was mostly because of higher wage costs as it takes on more staff. The company hired 550 full time employees as part of an accelerated hiring push, a 17% increase.

A similar margin decline led to a sell-off in Adyen shares when the company reported full-year earnings in February.

Adyen noted that it would only “hire as needed” in 2024.

Adyen maintained its medium-term targets for revenue growth above 25% and an improving EBITDA margin that it expects to reach 65% in the long term.

($1 = 0.9205 euros)