Stock down 39% after record low sales growth

Shares of Adyen, the European payments giant taking on U.S. titan Stripe, fell nearly 39% on Thursday after the company reported worse-than-expected sales and a profit drop in the first half of the year.

Here’s how the company performed:

• Revenue of 739.1 million euros ($804.3 million) over January to June 2023, up 21% from a year ago. This came in below analyst estimates of 853.6 million euros of revenue and 40% of year-on-year growth, according to Eikon data.
• EBITDA (earnings before interest, tax, depreciation and amortization) of 320 million euros, down 10% from 356.3 million euros in the first half of 2022. The first-half 2023 result matches an analyst prediction of 320 million euros profit.

Adyen attributed the tepid print to increased hiring, firmer wages and to a shift in its North American customers’ business prioritization from growth to cost savings in the first half of the year.

The company reported much slower sales growth than a year earlier — in the first half of 2022, the company said revenues grew 37% year-over-year.

“We’ve been quite open that since the beginning of 2022 we really want to invest in the business and to do that we needed to grow the team,” Ethan Tandowsky, Adyen’s CFO, told CNBC’s “Squawk Box Europe” Thursday.

“We see a real opportunity in payments and in the financial services space.”

Adyen is one of the biggest fintech firms in Europe, with a market capitalization of 35.4 billion euros. The company provides payment services to the likes of Netflix, Meta, Microsoft and Spotify.

The firm also said that inventory write-offs led to a 6.3 million euro hit to EBITDA.

It competes directly with online payment staples, such as PayPal, Stripe, Block — formerly known as Square — and Fiserv.

Adyen — and other payment companies — benefited heavily in previous years from the rise in demand for e-commerce and digital payment options resulting from the Covid-19 pandemic and ensuing lockdowns.

More recently, these companies have been hit by a tidal wave of negative economic events, including the Russia-Ukraine war, higher interest rates, rising inflation and a slump in global equity markets.  

Investors have soured on fintech, as a high-interest rate environment decreases the appeal of growth-oriented companies that typically depend on raising cash.

The company primarily makes money off a small slice of the overall transactions charged to merchants’ bank accounts. Payments is an overall massive but incredibly competitive market, which hosts plenty of different players.

Adyen, identified among the top 200 global fintech companies globally by CNBC and Statista, is betting on the fact that a unified single payments platform gives merchants access to a variety of services, from debit cards and buy now, pay later options to mobile wallets like Google Pay and Apple Pay.