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Adyen shares plunged by more than a third on Thursday after a hiring spree and competition in the US from rivals such as Stripe hit profits at one of Europe’s largest payments companies.
The drop knocked more than €10bn from the market capitalisation of Adyen, which has been seen as one of Europe’s trailblazing tech companies since listing on the Amsterdam stock exchange in 2018.
However, investors punished the Dutch group after it revealed the cost of a hiring spree it has persisted with even as economic growth slows and competitors retrench.
Adyen reported earnings before interest, taxes, depreciation and amortisation of €320mn in the first half, below expectations of €365mn. Its revenues rose 21 per cent to €739.1mn, but fell short of the €754mn analysts had forecast.
The company’s ebitda margin was 43 per cent in the half, down from 59 per cent in the same period in 2022 and below the 48.6 per cent investors had anticipated.
Founded in 2006 by chief executive Pieter van der Does and Arnout Schuijff, Adyen’s biggest market remains Europe but the group has been expanding aggressively, including in the US.
Its workforce expanded almost 15 per cent in the first six months of the year to 3,883. Compensation costs surged 80 per cent in the period to €247mn, which the company put down to both its recruitment drive and salary increases for existing staff.
Chief financial officer Ethan Tandowsky defended the hiring, which came after the group added more than 1,000 employees last year.
“Going into 2023, we said we expected to hire a similar amount of people as we did in 2022,” said Tandowsky. “We continue to plan to execute against those hiring plans,” adding that he expected hiring would slow next year.
Stripe, founded in 2010 by Irish brothers Patrick and John Collison, last November announced plans to cut 14 per cent of its staff.
Adyen competes with the likes of Stripe and London-based Checkout.com to process online payments. Its clients include Spotify, Uber and Booking.com.
Shares in the group were down 37 per cent in late afternoon trading.
A bruising first half for the company was compounded by increasing competition in the US. Its revenues there climbed 23 per cent to €187.5mn, less than half the rate of growth in the same period last year.
“We’ve seen that merchants are very cost-focused before, but now they’re trying to explore local providers,” said van der Does. “It’s not that we’re shrinking — we’re just growing at a slower rate.”
Hannes Leitner, an analyst at Jefferies, said Adyen’s weaker performance in the US reflected aggressive pricing from competitors such as Braintree, owned by PayPal, and San Francisco-based Stripe.
“The big question looking forward is what will the next half look like,” he added. “Seeing substantial slowing in a key growth area like the US will be something of major concern.”
Hannes Leitner, an analyst at Jefferies, said the company’s weaker performance in the US reflected aggressive pricing from competitors such as Braintree, owned by PayPal. Adyen’s US net revenue grew by 23 per cent year on year to €187.5mn, less than half the rate of growth in 2022.
Shares in Adyen are down 36 per cent over the past year, a reflection of wider struggles in the sector, as consumer spending comes under pressure from persistent high inflation.
The price tags of private competitors have also fallen sharply. Stripe was valued at $50bn in its latest funding round in March, around half the valuation it carried two years ago. London-based Checkout.com, which became Europe’s most valuable private tech group when it was valued at $40bn last January, slashed its internal valuation to about $11bn late last year.