Shares of the European payments giant Adyen , which is competing with the U.S. titan Stripe, experienced an almost 39% decline on Thursday. This decrease came in response to the company’s announcement of sales that were below expectations and a drop in profits during the initial half of the year.
Details of the the company perfomance:
- For the period spanning from January to June 2023, the revenue amounted to 739.1 million euros ($804.3 million), showing a 21% increase compared to the previous year. However, this figure fell short of the analyst predictions, which anticipated revenue of 853.6 million euros and a year-on-year growth of 40%, as per data from Eikon.
- The EBITDA (earnings before interest, tax, depreciation, and amortization) amounted to 320 million euros, indicating a 10% decrease from the 356.3 million euros recorded in the first half of 2022. Interestingly, this first-half 2023 outcome aligns with the projection of a 320 million euros profit, as anticipated by analysts.
The company’s report indicates a considerably slower growth in sales compared to the previous year. In the first half of 2022, the company registered a 37% year-over-year revenue increase.
Ethan Tandowsky, Adyen’s CFO, conveyed to CNBC’s “Squawk Box Europe” that the company has been transparent about its intention to invest in business expansion since the start of 2022. This growth strategy was accompanied by team expansion. Tandowsky emphasized the potential in the payments and financial services sector.
Adyen the Europe’s Stripe rival stands as one of the prominent fintech firms in Europe, boasting a market capitalization of 35.4 billion euros. The company extends payment services to notable entities like Netflix, Meta, Microsoft, and Spotify.
The firm also noted that write-offs related to inventory resulted in a 6.3 million euro deduction from EBITDA.
Established online payment platforms like PayPal, Stripe, Block (formerly known as Square), and Fiserv directly compete in the same arena.
Demand for E-Commerce
Adyen, along with other payment companies, substantially benefited from the surge in demand for e-commerce and digital payment avenues due to the Covid-19 pandemic and the consequent lockdowns.
However, recent times have seen these companies confronting a series of adverse economic developments, including the Russia-Ukraine conflict, escalating interest rates, rising inflation, and a downturn in global equity markets.
The enthusiasm of investors toward fintech has waned in light of a high-interest rate environment, which diminishes the allure of growth-oriented enterprises that often rely on raising capital.
The company primarily generates revenue from a fraction of the total transactions processed through merchants’ bank accounts. The payments sector, on the whole, constitutes a vast and fiercely competitive market with participation from numerous players.
Positioned among CNBC and Statista’s top 200 global fintech companies, Adyen is placing its bets on a unified single payments platform. This approach aims to grant merchants access to an array of services encompassing debit cards, buy now pay later options, and mobile wallets like Google Pay and Apple Pay.