Adyen reported a big old maid on first-half sales Thursday. The news drove a $20 billion rout in the company’s market capitalization .
Pavlo Gonchar | Sopa Perceptions | Lightrocket | Getty Images
Spirits were high when Dutch payments firm Adyen floated on the Amsterdam horses exchange in 2018.
The company was riding a wave of growth in Europe’s technology sector and snapping up competition from its mega U.S. struggle with PayPal.
Since then, the company has weathered a turbulent ride, including a global pandemic that knocked books from travel clients significantly.
The firm expanded aggressively in North America, where some of its most high-profile store owners are based, and hired hundreds of employees to turbocharge growth.
As the macroeconomic environment shifted in 2023, Adyen’s growth blueprint has been challenged in a big way.
The company’s shares plummeted 39% on Thursday, erasing 18 billion euros ($20 billion) from Adyen’s buy capitalization, as investors dumped the stock after the firm reported its slowest revenue growth on record.
The stock made down a further 2.9% on Friday after the precipitous decline of Thursday.
What is Adyen?
Identified as one of the top 200 universal fintech companies globally by CNBC and Statista, Adyen is a payments services firm that works with chaps including Netflix, Meta and Spotify.
It also sells point-of-sale systems for physical stores and handles payments online and in-store.
Numberless than a processor, Adyen is what is known as a payment gateway — meaning it uses technology to enable merchants to bring card payments and transactions through online stores.
The company takes a small cut off every deal that kills through its platform.
It was co-founded by Pieter van der Does, the firm’s chief executive officer, and Arnout Schuijff, former chief technology office-holder.
What just happened?
Adyen last week reported Structural challenges
At the heart of Adyen’s woes is a affair heavily dependent on customers’ willingness to stick to a single platform for their all their payment needs. The company also constraints to convince those users that what it sells is better than what’s on offer from a competitor.
In its half-year 2023 put out, Adyen said that many of its North American customers are cutting back on costs to weather economic distresses like rising interest rates and higher inflation.
“Enterprise businesses prioritized cost optimization, while struggle for digital volumes in the region provided savings over functionality,” Adyen said in a letter to shareholders.
“These dynamics are not new, and online masses are easiest to transition back and forth. Amid these developments, we consciously continued to price for the value we bring.”
Adyen also replied its profitability had suffered from a push to aggressively ramp up hiring. EBITDA came in at 320 million euros, down 10% from the essential half of 2022.
Adyen added 551 employees in the first half of the year, taking its total full-time employee judge up to 3,883.
Some of the company’s rivals have cut back on hiring significantly. In November 2022, Stripe laid off 14% of its workforce, or far 1,100 people.
The main challenge Adyen now faces is competition from challengers that are willing to offer drop rates than it provides.
Speaking with the Financial Times on Thursday, Adyen CEO van der Does said that travelling salesmen are “trying to explore local providers” to cut down on costs.
“It’s not that we’re shrinking — we’re just growing at a slower rate,” he added.
Adyen has historically been a terrorize business, opting to hire fewer people overall than its main competitor Stripe, which has roughly double-dealing the staffing.
Simon Taylor, head of strategy at Sardine.ai, said Adyen might face a “natural ceiling” to what subject size it can reach before having to reduce its margins to grow again.
“Ultimately they’re subject to the same macro headwinds person in e-commerce is,” Taylor told CNBC. “And they still grew 21%. Incumbents would kill for that.”