Dutch fintech company Adyen stock falls despite strong earnings
The company processes €104.6bn worth of payments, up 49%
Amsterdam — Shares in Adyen, a Dutch fintech company that processes payments for online merchants including Facebook and Netflix, fell on Thursday even though the company reported a better-than-expected 79% jump in core profit.
First-half core earnings at Adyen, which became one of Europe’s better-known fintech firms after a spectacular stock market flotation in June 2018, reached €125.8m, up from €70.3m a year before.
After doubling in value on their debut and hitting a peak of €758.9 in September from an issue price of €240, good news and strong growth have been largely priced in to the shares however, and so expectations are high, one analyst said.
Adyen CEO Pieter van der Does said growth was driven by a higher volume of transactions handled for existing customers.
The company grew strongly on all key metrics, with net revenue up 41% to €222.1m and net profit up 92%. It processed €104.6bn worth of payments, up 49% from €70bn in the first half of 2018.
Analyst Johann Scholtz at Morningstar, who recently initiated coverage of Adyen with a “fair value” estimate of €425 a share, said there was no question the company’s growth is impressive and noted it had also reduced costs in the quarter.
But “even with robust estimates we can’t get to current market valuations — there’s a lot of good news priced into the share”, Scholtz said.
Adyen shares fell 5.1% to €643.2 by midday.
Thursday’s share price dip on the back of 40%-plus revenue growth “illustrates expectations are quite high”, Scholtz said.
Adyen’s pitch to its merchant customers is that it is able to juggle nearly any kind of payment, routing shoppers through its single platform with fewer errors than competitors.
The company said it had added new customers including North Face and Timberlane. It also added new payments methods to its platform, including local deals with Apple Pay and Google Pay, as well as Open Banking in Britain and M-Pesa in Kenya.
Van der Does said “all segments grew nicely”, with existing customers accounting for the lion’s share of growth although customers rose in Europe, the US and Asia.
“What we do see is a healthy flow of new merchants from the pipeline converting into customers,” he said. “If you look at the size of the pipeline, we’re confident this process will continue.”
Adyen said separately it will sell 35,000 shares on the open market which it had earlier purchased from employees.