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The co-head of Adyen had admitted that the European payments processor must rebuild investors’ trust but said the group would not overreact following a record slump in its shares this week.
Shares in Adyen plunged 39 per cent on Thursday, wiping €18bn from its market capitalisation, after the company’s first-half profits disappointed and it disclosed a slowdown in the US.
“It’s very clear that we lost part of [investors’] trust — we need to regain that in the next period,” Ingo Uytdehaage, co-chief executive, told the Financial Times. “First we want to talk to investors and see what’s on their mind, [before we] jump into action.”
Rising costs and a squeeze on margins left Adyen’s first-half profits well below analysts’ expectations. The group, which has been hailed as a rare European tech success, counts Singapore’s Temasek, BlackRock and Vanguard among its biggest shareholders.
The shares failed to stage a recovery on Friday, falling 3 per cent.
Despite the historic drop in the shares, Uytdehaage said buybacks were not on the agenda “right now” and management would meet investors in a set of meetings that had already been scheduled.
“We’ve seen that the market is behaving in an extreme way — it’s very important not to immediately overreact,” he said, adding that Adyen still expects to be successful in the US.
Hannes Leitner, analyst at Jefferies, said the results were “below expectations on all fronts” and that signs of slowing growth in the US were a particular concern.
The US is among the markets Adyen has pushed into as it hopes to capitalise on the lighter regulation of the fees that processors can charge. Ayden makes about a quarter of its revenues in the US, where competitors include Stripe and Braintree, which is owned by PayPal.
Alyssa Cox, analyst at research provider Carraighill, said Adyen’s effort to pitch itself as a premium offering to retailers was becoming tougher as retailers pushed for lower fees.
“Peers [such as Braintree and Stripe] have cut their costs recently — Adyen has said they don’t want to engage in a price war, they don’t want to treat payments as just a commodity,” she said. “But when you’re seeing large retailers looking for lower price for services, they might need to match that price.
“You’d have thought that 2024 to 2025 is when [sales] would start to struggle,” she added. “It’s really concerning it has had early signs in 2023.”
Uytdehaage told the FT last year that the group was not concerned by competition, saying there was “still a lot of market share to grab”. He said on Friday that that assessment remained accurate, but pressures in the US economy meant some customers had moved to cheaper rivals.
“Competition has not changed, it’s just the fact we’re in a different economic situation where a lot of major players are more cost conscious,” he said.
A sustained hiring spree by the company dented profits in the first half. Chief financial officer Ethan Tandowsky said the group would continue with its hiring plans for this year, which would mean adding roughly another 500 staff, but said the recruitment drive would slow in 2024.
Adyen’s resolve to keep hiring marks it out from big competitors that have cut staff as pricing pressure in the US market intensifies.
