Adyen published its slowest growth for a half-year since 2018 and lost $20 billion of its market valuation as shares also fell 39%.
Shares of Dutch payment company Adyen crashed 39% on Thursday causing the company’s market capitalization to plunge by 18 billion euros ($20 billion). Adyen had just published figures for the first half of 2023, which fell considerably below expectations.
Although Adyen reported a 21% year-over-year (YoY) growth in revenue of 739.1 million euros, about $804.3 million, it was the company’s slowest sales growth. Projections from Eikon Refinitiv analysts had put the expected revenue at 853.6 million euros, a 40% growth YoY.
The company’s growth was not enough to allay investor fears as they rushed to dump the stock. Adyen’s consistent revenue growth every half-year since it began trading in 2018 was also not enough to save the shares from plunging. Speaking to CNBC, Adyen chief financial officer Ethan Tandowsky said:
“With higher inflation, leading to higher interest rates, there has been a bit of a shift of focus – less focus on growth, more focus on bottom line.”
Tandowsky says that Adyen is paying more attention to “functionality” than most of its competitors. This was in response to the competition offering cheaper services, especially in other markets like North America. The company’s competitors seem to give Adyen a run for its money as they can pull in more customers with cheaper services.
In a letter sent to shareholders, Adyen revealed that its earnings before interest, tax, depreciation, and amortization (EBITDA) margin fell from 59% in H1 last year, to 43% in H1 2023. Nevertheless, Tandowsky believes the company’s focus on functionality will help Adyen remain successful:
“The efficiency of which we can develop new functionality, functionality that out performs our peers will lead us to gaining the market share that we expect.”
Adyen Shares Plunge to Reflect Market Conditions
The company’s H1 2023 report shows that Adyen’s conditions may have dampened since the beginning of the year. The report states that many customers in North America are already reducing costs to tackle general economic problems like inflation and the rise in interest rates.
In addition, profitability may have suffered because Adyen spent more on wages as it increased its staff count. After onboarding 551 new employees in H1, Adyen now has a total of 3,883 workers. Interestingly, rivals are taking the opposite route and have considerably reduced hiring. Stripe, for instance, cut 1,100 staff, or about 14% of its employee strength.
Adyen offers payment services to several major companies, including Meta, Spotify, and Netflix. It also helps process payments for brick-and-mortar stores using point-of-sale services and enables online payments. Adyen is one of the world’s top 200 fintech companies worldwide, according to CNBC and independent data and statistics company Statista.
Although the company has recorded growth since 2018, Adyen might be facing continued growth reduction. According to CEO Pieter van der Does, several merchants are already considering local alternatives with cost-effective options.