Adyen’s Net Revenue Beats Estimates as Customer Spending Rises

Sarah Jacob, Bloomberg News

An employee passes a logo on a wall inside the Adyen NV headquarters in Amsterdam, Netherlands, on Monday, Oct. 29, 2018. Investors have flocked to fintech company Adyen, whose shares have risen from 240 euros at the time of the IPO, to as much as 609 euros a month later. Photographer: Jasper Juinen/Bloomberg , Bloomberg

(Bloomberg) -- Adyen NV’s shares surged after the payment-processing company’s net revenue beat estimates in the second half on higher consumer spending, a sign that the company is winning back investor confidence.

Adyen staged a comeback after facing a record slowdown in revenue last year, which resulted in a stock meltdown. Since then, the payments giant has sought to regain investor confidence with more transparency, by unveiling new growth targets in November and committing to providing quarterly trading updates.

The Amsterdam-based company’s net revenue rose 23% to €887 million ($956 million) for the six months through December. That compares with an average estimate of €876 million in a Bloomberg survey of analysts.

Adyen’s shares jumped as much as 24% to €1,472.20 apiece in Amsterdam, the highest level since Aug. 16.

Adyen said its digital volume increased 33% in the second half of the year, compared to a 23% rise in the first six months. Processed volume rose 29% to €544.1 million in the period, it said on Thursday.

“This acceleration was predominantly driven by the further ramp-up of an existing customer” in the fourth quarter, the company said in its earnings statement. North America, its second-largest market, grew the fastest in the second half of the year.

“It sometimes takes time before you build trust,” Co-Chief Executive Officer Ingo Uytdehaage said in an interview. “Then if a customer sees the benefits of working with us, they give us more volume over time. I think that’s what you see in digital,” he said.

In November, Adyen reported a better-than-expected trading update. Since then, investors were concerned with “whether the growth numbers can sustain or if 3Q growth was a blip,” Harshita Rawat, an analyst at Bernstein Research said in a note.

“The even stronger 4Q results, potential for acceleration in 2024 and easing competitive pressures makes the setup compelling for the year,” she said.

As a payment processor which sits between a merchant and networks such as Visa Inc. and Mastercard Inc., Adyen competes with the likes of PayPal Holdings Inc. and Stripe Inc..

Unlike competitor PayPal, which last week announced around 2,500 job cuts to cope with rising competition and profit pressures, Adyen added 313 employees in the second half of the year. The company has been gradually slowing hiring.

What Bloomberg Intelligence Says:

“Adyen’s 2H Ebitda margin of 48% — a 4 percentage-point beat vs. consensus — was supported by a slower hiring pace and breeds optimism the company can deliver on a level of higher than 50% before 2026. Material wallet-share gains helped beat volume estimates by about 6% and bode well for revenue prospects, with the North America region (sales up 27% in 2H) a major growth driver.”

— Tomasz Noetzel, BI Senior Industry Analyst

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Adyen still sees its margin on earnings before interest, taxes, depreciation and amortization increasing to levels above 50% in 2026. That key measure of profitability stood at 48% for the second half of the year, beating estimates.

(Updates with shares, chart and analyst quote)