Adyen Plunges After Earnings Miss

Shares in Dutch ecommerce giant briefly suspended on Thursday morning after extreme market reaction to earnings

Jocelyn Jovene 17 August, 2023 | 10:32AM
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Shares in dominant European digital payment firm Adyen (ADYEN) slumped more than 20% on Thursday as it announced half-year results below expectations due to a more marked slowdown in the United States.

On the Amsterdam stock exchange, Adyen shares were briefly suspended, and the shares in aternoon trading are down nearly €500 to €977, a fall of more than 30%.

The company announced a stable net profit of €282 million (£241 million) in the first six months of the year, reflecting diverging developments between the evolution of net sales (+21% to €739 million) and operating income (-16% to €279 million).

In a letter to shareholders, the managers indicated that "in certain areas, the activity grew less strongly than expected", specifying that net sales in North America increased by 23% on the year, after an increase of 52% during the first half of 2022, while digital activities also grew by 23% (after +55% during the first half of 2022).

The company also cited difficulties in recruiting. "We are measuring the impact of a sales force that does not match our ambitions, especially in North America," says Adyen.

Adyen had a market capitalization of nearly €46 billion before the publication of its results.

In a comment published Thursday morning, analysts at Jefferies point to results that fell short of market expectations.

They note in particular an EBITDA 13% lower than the consensus, despite fewer recruitments, which reflect an increase in the average cost of personnel.

“Uncertainty around the transaction volumes processed is likely to be a cause for concern,” they wrote.

Adyen's disappointments seem to be linked to the sharp slowdown in online commerce in many countries, particularly the United States, after a phase of strong growth fuelled by the coronavirus pandemic.

The latest results from Amazon, the leader on the American continent, and those from PayPal, however, seemed to indicate a recovery in e-commerce.

The drop in Adyen's share price seems to anticipate downward revisions to consensus revenue and earnings estimates, pending a possible reacceleration and recovery in the online payments specialist's profitability.

For UBS analysts, investors expected disappointments. "We expect questions about the competitive environment and pricing on the conference call," they wrote in a note dated August 17.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Adyen NV1,188.40 EUR-0.97Rating

About Author

Jocelyn Jovene

Jocelyn Jovene  is Senior Financial Analyst and Senior Editor for Morningstar France.

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