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Shares of Adyen fell by more than a fifth on Thursday after a wave of hiring and competition in the United States from rivals such as Stripe hurt earnings at one of Europe’s largest payments companies.
The decline has eroded more than 10 billion euros from the market value of Adyen, which has been seen as one of Europe’s leading technology companies since its listing on the Amsterdam Stock Exchange in 2018.
However, investors punished the Dutch group after it revealed the cost of a hiring spree that has continued even as economic growth slows and competitors decline.
Adyen reported EBITDA of €320m in the first half, below forecasts of €365m. Its revenue rose 21 percent to 739.1 million euros, but fell short of the 754 million euros expected by analysts.
Founded in 2006 by CEO Peter van der Doos and Arnott Schwejf, Adyen’s largest market is still in Europe but the group has been expanding aggressively, including in the United States.
Its workforce expanded nearly 15% in the first six months of the year, to 3,883 employees. Compensation costs increased by 80 per cent in the period to €247m, which the company has driven by both a recruitment drive and salary increases for existing staff.
CFO Ethan Tandowski defended the hiring, which came after the group added more than 1,000 employees last year.
“Going into 2023, we said we expect to hire the same number of people as we did in 2022,” said Tandowski. “We continue to plan for execution against these hiring plans,” he said, adding that he expects hiring to slow next year.
Stripe, founded in 2010 by Irish brothers Patrick and John Collison, announced plans to cut 14 percent of its staff last November.
Adyen competes with the likes of Stripe and Checkout.com in London for processing online payments. Its clients include Spotify, Uber and Booking.com.
A bruising first half for the company was compounded by increased competition in the United States. Its revenue there rose 23 percent to 187.5 million euros, less than half the growth rate in the same period last year.
“We’ve seen merchants focus too heavily on cost before, but now they’re trying to scout local suppliers,” said Van der Duos. “It’s not that we’re shrinking — we’re just growing at a slower rate.”
Its weaker performance in the US reflected aggressive pricing from competitors such as Braintree, which is owned by PayPal, and San Francisco-based Stripe, said Hannes Leitner, an analyst at Jefferies.
“The big question we’re looking forward to is what the next halving will look like,” he added. “Seeing a major slowdown in a major growth region like the US would be a huge concern.”
Hannes Leitner, an analyst at Jefferies, said the company’s weaker performance in the US reflected aggressive pricing from competitors such as Braintree, which is owned by PayPal. Adyen’s net revenue in the US grew 23 percent year-on-year to 187.5 million euros, less than half the growth rate in 2022.
Shares in Adyen are down 36 percent over the past year, reflecting broader struggles in the sector, as consumer spending is under pressure from persistently high inflation.
Prices for private competitors have also fallen sharply. Stripe was valued at $50 billion in its last funding round in March, about half of the valuation it made two years ago. London-based Checkout.com, which became Europe’s most valuable private tech group when it was valued at $40 billion in January, lowered its internal valuation to around $11 billion late last year.
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