Adyen Sales Miss Estimates as Payments Firm Targets Investment

April Roach and Aisha S Gani, Bloomberg News

The Adyen NV logo sits on a vintage computer arcade game cabinet inside the the Dutch fintech company's 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. , Bloomberg

(Bloomberg) -- Adyen NV’s shares fell the most in almost four years after reporting first-half results, as higher costs saw profit margins miss analyst estimates.

The payments firm’s EBITDA margin was 59% in the first half, Adyen said in a statement Thursday. That was 3 percentage points below consensus, impacted by hiring, the return of travel and event costs after the pandemic as well as a previously announced charity commitment.

EBITDA, a measure of earnings, rose 31% to 356.3 million euros ($362 million) while operating expenses were up 47% to 277.7 million euros, the firm said. Headcount rose by 395 to total 2,575 at the end of June.

Shares dropped as much as 14.5%, the most since September 2018, and were trading down 11% as of 9:48 a.m. in Amsterdam. Adyen’s stock had risen by about 50% since mid-June before the results.

The firm said -- despite the cost -- it would continue to prioritize in-person meetings and events.

“The speed and excitement that meeting each other in person brings has always been a crucial part of our success and our view on how to build the Adyen culture for the long term,” the firm said in a letter to shareholder. “Where possible, we will continue this approach.”

Heavy Investment

The company said net revenue was up 37% to 608.5 million euros in the period. Analysts expected about 615 million euros, according to the average of estimates compiled by Bloomberg.

The Amsterdam-headquartered fintech announced it is investing “heavily” in unified commerce and platforms, which will see Adyen launch its own terminal range for global retailers including a product that enables businesses to run both a cash register and accept payments via smartphone.

“That’s where also our growth opportunity is because what we can do is go beyond just payments,” Chief Financial Officer Ingo Uytdehaage said in an interview. “We can offer banking as a service to the platforms.”

He added there was also demand for buy-now, pay-later payment options from retailers, with Adyen worked with some of the biggest firms in the industry.

What Bloomberg Intelligence Says:

Adyen’s 1H Ebitda margin of 59% -- a 3 percentage-point miss vs. consensus -- is a key concern as the company cites the return of travel and event costs, as well as its 1% UN charity commitment. This suggests skepticism could increase over the 65% long-term goal, despite reiterated financial targets. Processed volume 60% growth, a 5% beat, is a small positive offset.

Jonathan Tyce, BI banking analyst

Adyen, which handles transactions for companies such as Uber Technologies Inc, and McDonald’s Corp., continues to grow its presence in the US with the recent expansion of its mobile app partnership with McDonald’s to the region and plans to work with Apple Inc.

The firm continues to target margins on earnings before interest, taxes, depreciation and amortization above 65%. It also expects to grow net revenue at a rate between the mid-20s and low-30s in the medium term.

(Updates with details throughout)