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Post: Adyen’s shares sink 31% after weak H1 2023 report; sparks worries over sector’s high valuations



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Amsterdam-based Adyen, a fintech unicorn, encountered a setback as its shares experienced a sharp decline after publishing its H1 2023 report that fell short of analysts’ projections and the company’s medium-term targets.

Adyen Shares slumps
Image credits: Google

Adyen’s shares plummeted by 31 per cent at the time of writing this article. On Thursday, trading of Adyen shares was temporarily suspended on the Amsterdam stock exchange due to a 25 percent drop in share value, reports NLtimes.

The significant drop in Adyen’s stock value underscores concerns among analysts regarding stretched valuations within the digital payments industry and worries about a slowdown in what has been viewed as a high-growth business, reports Reuters.

“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,” says JPMorgan.

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Adyen cites US competition, hiring costs

In the H1, 2023 report, the Amsterdam company revealed that revenue growth exhibited a slower pace in North America, while its margins were adversely affected by elevated recruitment expenses.

According to the report, EBITDA (Earnings before interest, tax, depreciation, and amortization) for Adyen is €320M in H1 2023, down 10 per cent from €356.3M in H1 2022.

This result fell below the consensus forecasts of €386M, as indicated by Refinitiv data.

The Dutch company also reported a decline in its EBITDA margin from 59 per cent to 43 per cent.

It was primarily due to higher wage costs associated with the company’s decision to hire an additional 550 full-time employees as part of an accelerated hiring push, representing a 17 per cent increase in its workforce.

In light of these developments, the fintech unicorn conveyed its intention to adopt a more measured approach to recruitment stating it will “hire as needed” in 2024.

Adyen registered net revenue of €739.1M in H21 2022, growing 21 per cent YOY. However, this figure failed to align with Adyen’s midterm predictions of exceeding 25 per cent growth.

The Dutch fintech unicorn attributed the competitive landscape in the United States, where key rivals include Stripe, Braintree, Fiserv, and PayPal, as a contributing factor.

Moving forwards, Adyen aims to grow net revenue and achieve a CAGR between the mid-twenties and low-thirties, to improve EBITDA margin (65 per cent and above) in the long term and maintain a sustainable capital expenditure level.

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Lora Helmin

Lora Helmin

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