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Shares in Adyen surged 18 per cent on Thursday after one of Europe’s largest payments processors reported better than expected revenues in a much-needed boost for a group that has been battling to restore investor confidence.
Amsterdam-listed Adyen, which counts Singapore’s Temasek among its investors and had been hailed as a European tech success, has been trying to move on from a major profit warning last August that sent its shares down by a third.
A hiring binge and increased competition from the likes of Stripe and PayPal helped trigger the warning, prompting Ingo Uytdehaage, Adyen’s co-chief executive, to admit that the group’s management had “lost part of [investors’] trust”.
Chief financial officer Ethan Tandowsky told the Financial Times on Thursday that since the August setback, the company had sought feedback from investors and, as a result, would start to report numbers every quarter rather than every six months.
“Over the past six months, we engaged a lot more than a typical six-month period with our investor base; we’ve listened very carefully . . . what they were looking for was insights into how the business was developing,” he said.
Investors were cheered after the group reported earnings before interest, taxes, depreciation and amortisation of €423mn for the second half of last year, up 14 per cent from a year ago and above analysts’ forecasts of €399mn.
Shares in the company were up 21 per cent in early afternoon trading, driving its market capitalisation to €44bn.
Adyen said it processed a total of €544.1bn in payments in the six months to December, up from €421.7bn in the same period last year, as a deeper partnership with US mobile payments group Cash App helped boost online volumes by 33 per cent. More than 80 per cent of Adyen’s payment growth comes from existing customers.
This helped offset a “broader industry slowdown” in retail sales that led to weaker payment volume growth at its “unified commerce” division, which offers a blend of in-store and online services.
The group also went some way to allaying fears that pricing pressures in the US market would intensify. Adyen reported its highest revenue growth in North America in the first half, where it generated about a quarter of its total revenue.
“People got a little bit more comfortable with the pricing environment we’re in [in the US],” said Hannes Leitner, an analyst at Jefferies. “Some of the competitors, especially PayPal, switched from being overly aggressive on price to focus on profitability.”
While many tech and payment companies, including Stripe and Klarna, have slashed their workforce to weather a downturn in recent years, Adyen has remained committed to its “accelerated” hiring strategy.
Operating expenses rose 27 per cent year on year to €491mn in the second half, as the payments group executed the final phase of its hiring plan. Adyen added 313 new employees in the half, down from about 800 in the same period last year, bringing its total workforce to roughly 4,200.
The group said it would temper hiring this year and only add “a couple of hundred net-new joiners” in 2024, predominantly outside of its Amsterdam office and in tech and sales roles. Tandowsky said the benefits of Adyen’s staff ramp-up would not be visible in the company’s earnings until 2025.
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