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Adyen reported a significant drop in first-half sales on Thursday, a news that has knocked $20 billion off the company’s market cap.
Pavlo Gonchar | Soba Images | Light Rocket | Getty Images
Dutch payments company Adyen beat first-half core earnings expectations on Thursday, driven by market share gains, slower hiring and lower one-time expenses, sending its shares up more than 5%.
While the digital payments sector faces pressure from a post-pandemic decline in consumer spending and regulatory scrutiny, Adyen is outperforming its peers with the help of international expansion and clients like Cash App in the U.S. and Shopify in Canada.
The biggest driver of growth for the company is improving demand from existing customers and its ability to expand services to them, Ethan Tandowski, Adyen's chief financial officer, told Reuters in an interview.
“There is still room for growth, even in our more mature markets,” said Tandoski. That applies to partnerships with payment platforms that serve small and medium-sized businesses, and the direct integration services that Adyen offers to large enterprises.
The company added that the company's market share in the Europe, Middle East, Africa and North America region is single digit, leaving it with ample room for growth there.
The company also pointed to winning a contract with IKEA in Mexico and obtaining a new permit to operate as an online payment aggregator in India as examples of its international expansion.
Its core profit in the first half of the year rose 32% to 423.1 million euros ($465.8 million), beating the average estimate of 413.39 million euros from 13 analysts polled by the London Stock Exchange.
Net revenues increased by 24% year-on-year to €913.4 million, while the EBITDA margin expanded to 46% from 43% in the same period.
Analysts at JPMorgan said the results were positive given investors' cautious attitude towards the stock.
In early August, French rival Worldline cut its 2024 outlook, citing a sharp drop in demand in Europe, while Adyen cut its 2026 outlook last November and said it would hire fewer people to cut costs.
Adyen said it hired 37 employees in the first half of 2024, down from 551 employees in the same period last year.
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