Adyen shares surge 10% after Dutch payments giant smashes earnings expectations

Adyen shares surge 10% after Dutch payments giant smashes earnings expectations

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Pieter van der Does, chief executive officer of Adyen.
Simon Dawson | Bloomberg | Getty Images

Dutch payments processor Adyen reported a 51% jump in core earnings in the first half of 2021, topping expectations and sending its stock price sharply higher.

The company said Wednesday that net revenue in the period came in at 556.5 million euros ($635.9 million), up 47% year-on-year. Earnings before interest, tax, depreciation and amortization (EBITDA) rose 51%, to 357.3 million euros.

That was higher than the 552 million euros of net revenue and 346 million euros of EBITDA expected by analysts, according to Reuters.

Adyen’s profit margin climbed to 64% in the second half, up from 61% in the first half. Its total processed transaction volume climbed 72% to 300 billion euros.

The firm said its guidance remained unchanged from the last time it published results.

Shares of Adyen around 10% Wednesday — though they’re still down more than 20% year-to-date amid a slump in tech stocks due to fears over higher interest rates. The Amsterdam-based firm has a market value of almost $60 billion.

Speaking about Adyen’s share price decline, CEO Pieter van der Does told CNBC: “That doesn’t impact our thinking. We are building for the long term.”

Divergence with PayPal

Adyen’s earnings report was in stark contrast to that of its U.S. peer PayPal, which reported a mixed set of results in the fourth quarter and weak guidance. PayPal at the time blamed “exogenous factors” like inflation weighing on consumer spending.

PayPal CEO Dan Schulman also said the transition of eBay — its former owner — away to a new payments system was also “hiding some of the underlying strength of the business.” EBay has partnered with Adyen for the new system.

Adyen said its results were “bolstered by the unrelenting rise of online commerce globally.” The digital payments space has benefited from changing consumer habits in the coronavirus era, with e-commerce adoption accelerating significantly.

The firm said it saw in-store shopping roar back to life in the second half of 2021, with point-of-sale volumes on its platform nearly doubling year-on-year to 41.8 billion euros, outpacing the growth of online volumes.

Van der Does said his company isn’t worried about rising inflation impacting consumer spending.

“We are expanding so much with our current merchant base, that dampens effects that people might be buying less because we’re expanding as a company,” he said.

“In terms of inflation in pricing, our pricing is for a large part ad valorem. So we are automatically compensated for inflation there.”

No M&A plans

Founded in 2006, Adyen acts as a middleman between other payment offerings and big merchants such as Uber, Netflix and Spotify. The company listed on the Euronext Amsterdam stock exchange in 2018 with a valuation of over $15 billion at the time.

It’s facing increased competition from a slew of rivals both big and small. Stripe, the U.S. payments software business, was last privately valued at $95 billion, while U.K. rival recently secured a $40 billion valuation.

The payments sector has undergone significant consolidation over the years, with legacy processors such as FIS and Worldpay combining to fend off the threat of competition from upstart players.

Adyen said its take rate — the fees it charges merchants for processing transactions — continues to decline as a “natural consequence” of its business model and growth strategy.

Nevertheless, van der Does ruled out the idea of acquiring another firm.

“We are not a fan of doing acquisitions,” he told CNBC. “We want to organically build a global company. And now with more than 40% of net revenues coming from outside the EMEA region, you see that we are delivering on that.”

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