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The Adyen logo at the company's headquarters in Amsterdam, the Netherlands, August 24 2019. Picture: REUTERS
The Adyen logo at the company's headquarters in Amsterdam, the Netherlands, August 24 2019. Picture: REUTERS

Amsterdam — The share price of Dutch payments processor Adyen dropped more than a quarter on Thursday after its first-half earnings fell short of analysts’ estimates and the company’s medium-term targets.

The sharp sell-off in Adyen’s stock highlights analysts’ concern about stretched valuations in the digital payments sector and worries about a slowdown in what has been viewed as a high-growth business.

Adyen — which provides services to the companies such as Netflix, Meta, Microsoft and Spotify — said revenue growth was slower in North America, and its margins were affected by hiring costs.

Its share price fell sharply after a delayed start on Euronext due to high volatility, and was down 27% at €1,080 in morning trade. At that price its stock is down about 16% year to date.

“These are disappointing results, particularly the sales miss, and the key question will be whether the company can quickly revert to midterm trend growth,” JPMorgan analysts said.

Earnings before interest, tax, depreciation and amortisation (ebitda) were €320m, down 10% from a year earlier and below analyst forecasts of €386m, Refinitiv data shows.

Revenue rose 21% to €739m, against Adyen’s midterm forecasts of more than 25% growth.

In some areas, the business grew slower than expected, the company said in a letter to shareholders,

The company also cited competition in the US, where its rivals include Stripe, Braintree, Fiserv and PayPal.

Jefferies analyst Hannes Leitner said some concern is focused on Adyen, which is more profitable and more highly valued than its peers, and some on the sector and economy.

He said the economy overall is slowing and online payments growth may not be quite as fast as it was in the pre-Covid era. “This is impacting Adyen a little more than others.”

Adyen’s ebitda margin fell to 43% from 59%, which the company said was mostly because of higher wage costs as it takes on more staff. The company hired 550 full time employees as part of an accelerated hiring push, a 17% increase.

A similar margin decline led to a sell-off in Adyen shares when the company reported full-year earnings in February.

Adyen said it would hire only as needed in 2024.

Adyen maintained its medium-term targets for revenue growth above 25% and an improving ebitda margin that it expects to reach 65% in the long term. 

Reuters

The Adyen logo at the company's headquarters in Amsterdam, the Netherlands, August 24 2019. Picture: REUTERS
The Adyen logo at the company's headquarters in Amsterdam, the Netherlands, August 24 2019. Picture: REUTERS
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