Adyen reported an enormous miss on first-half sales Thursday. The news drove a $20 billion rout in the corporate’s market capitalization .
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Shares of European online payments giant Adyen jumped on Thursday, after the corporate reported strong sales growth and better-than-expected profit for 2023.
Adyen, which competes with Stripe, PayPal, and Block, told shareholders in its 2023 annual letter that it had slowed the pace of its hiring to counter concerns that it was spending too aggressively on expanding its team, while its margins were being compressed.
Shares of the corporate were up greater than 22% as of 6:40 a.m. ET. Adyen is as a result of hold an earnings call at 9 a.m. ET.
Here’s how the corporate did in its full-year results:
Net revenue: 1.626 billion euros ($1.75 billion), up 22% year-on-year. That is broadly consistent with expectations of 1.636 billion euros, in line with LSEG, formerly Refinitiv
EBITDA (earnings before interest, tax, depreciation, and amortization): 743.0 million euros, up 2% year-on-year. Analysts had forecast EBITDA of 254.3 million euros, per LSEG
Adyen said its net revenue growth was driven by “continued growth across our existing customer base consistent with our underlying land-and-expand fundamentals.”
The corporate also said it “significantly expanded” its partnership with a single, unnamed existing digital customer, which contributed to raised sales growth overall.
Adyen announced latest global partnership deals with fintech firm Klarna and music streaming platform Spotify last yr.
The corporate said that it progressively slowed down the pace of hiring significantly within the second half of the yr, and that it was focusing on hiring outside of Amsterdam across tech and industrial teams.
The move intended to deal with investor concerns that the corporate was spending too aggressively on hiring while peers were cutting back on their capital expenditure.
“Without being specific on 2024, but confident commentary on mid-term execution, we consider shares will see a relief this morning given constant currency growth being well ahead of the soft-guided low20s 2024 growth, while ramps at Klarna and Shopify should further derisk,” analysts at Jefferies said in a note Thursday morning.
Adyen is considered one of several payment corporations that faced an onslaught of challenges in 2023, including higher inflation, rising rates of interest, and slowing consumer spending. These same aspects put pressure on valuations of once-attractive payment darlings corresponding to Stripe, considered one of Adyen’s closest competitors within the U.S., in addition to PayPal, Block, and Worldline.
Stripe’s valuation was cut to $95 billion in early 2023, down from $95 billion at the height of the Covid-driven boom in financial technology corporations in 2021.
In August 2023, Adyen reported first-half results that showed it grew revenues 21% year-over-year — its slowest rate on record.
Investors have questioned the corporate’s punchy pricing for its payment solutions, which include digital and in-store transactions.
Adyen has been stubborn to cut back its payment fees, whereas competitors in local markets, particularly North America, have been muscling in with cheaper fees.
Investors were watching the corporate’s progress on margin closely to get a way of whether it was focusing enough on keeping costs reasonable.
Adyen’s EBITDA margin got here in at 48% within the second half of the yr — “reflecting our deliberately slowed hiring,” the corporate said, adding it still brought in 313 latest staffers for the period.
Adyen had a complete of 4,196 full-time employees of the tip of 2023.