Spirits were high when Dutch payments firm Adyen floated on the Amsterdam stock exchange in 2018.
The company was riding a wave of growth in Europe’s technology sector and snapping up competition from its mega U.S. rival PayPal.
Since then, the company has weathered a turbulent ride, including a global pandemic that knocked volumes from travel clients significantly.
The firm expanded aggressively in North America, where some of its most high-profile merchants are based, and hired hundreds of employees to turbocharge growth.
As the macroeconomic environment shifted in 2023, Adyen’s growth strategy has been challenged in a big way.
The company’s shares plummeted 39% on Thursday, erasing 18 billion euros ($20 billion) from Adyen’s market capitalization, as investors dumped the stock after the firm reported its slowest revenue growth on record.
The stock closed down a further 2.9% on Friday after the precipitous decline of Thursday.
It also sells point-of-sale systems for physical stores and handles payments online and in-store.
More than a processor, Adyen is what is known as a payment gateway — meaning it uses technology to enable merchants to take card payments and transactions through online stores.
The company takes a small cut off every deal that runs through its platform.
It was co-founded by Pieter van der Does, the firm’s chief executive officer, and Arnout Schuijff, former chief technology officer.
Analyst had expected 853.6 million euros of revenue and 40% of year-on-year growth, according to Refinitiv Eikon forecasts.
Adyen has typically been viewed as a growth stock, after consistently reporting revenue growth of 26% each half-year period since its 2018 stock market debut.
“With higher inflation, leading to higher interest rates, there has been a bit of a shift of focus — less focus on growth, more focus on bottom line,” Adyen’s chief financial officer, Ethan Tandowsky, told CNBC’s “Squawk Box Europe” on Thursday.
Tandowsky insisted that the company had “limited churn” and that none of its large customers had left the platform.
But concerns that competitors in local markets, particularly in North America, are muscling in with cheaper offerings have heavily weighed on company prospects.
Adyen said in a letter to shareholders last week that its EBITDA (earnings before interest, taxes, depreciation and amortization) margin fell to 43% in the first half of 2023 from 59% in the same period a year ago.
The company said this was down to softer growth in North America and to higher employment costs such as wages, as it ramped up hiring during the period.
Tandowsky insisted the company had more of a focus on “functionality” than its peers, even though those peers may offer cheaper services.
“The efficiency of which we can develop new functionality, functionality that outperforms our peers will lead us to gaining the market share that we expect.”
Structural challenges
At the heart of Adyen’s woes is a business heavily dependent on customers’ willingness to stick to a single platform for their all their payment needs. The company also needs to convince those users that what it sells is better than what’s on offer from a competitor.
In its half-year 2023 report, Adyen said that many of its North American customers are cutting back on costs to weather economic pressures like rising interest rates and higher inflation.
“Enterprise businesses prioritized cost optimization, while competition for digital volumes in the region provided savings over functionality,” Adyen said in a letter to shareholders.
“These dynamics are not new, and online volumes are easiest to transition back and forth. Amid these developments, we consciously continued to price for the value we bring.”
Adyen also said its profitability had suffered from a push to aggressively ramp up hiring. EBITDA came in at 320 million euros, down 10% from the first half of 2022.
Adyen added 551 employees in the first half of the year, taking its total full-time employee count up to 3,883.
Some of the company’s rivals have cut back on hiring significantly. In November 2022, Stripe laid off 14% of its workforce, or about 1,100 people.
The main challenge Adyen now faces is competition from challengers that are willing to offer lower rates than it provides.
Speaking with the Financial Times on Thursday, Adyen CEO van der Does said that merchants are “trying to explore local providers” to cut down on costs.
“It’s not that we’re shrinking — we’re just growing at a slower rate,” he added.
Adyen has historically been a lean business, opting to hire fewer people overall than its main competitor Stripe, which has roughly double the staffing.
Simon Taylor, head of strategy at Sardine.ai, said Adyen might face a “natural ceiling” to what business size it can reach before having to reduce its margins to grow again.
“Ultimately they’re subject to the same macro headwinds everyone in e-commerce is,” Taylor told CNBC. “And they still grew 21%. Incumbents would kill for that.”
A file photo of Hiroki Totoki, Sony Group Corporation executive, delivering a keynote address at CES 2025 in Las Vegas, on January 6, 2025.
Artur Widak | Nurphoto | Getty Images
Sony Group shares rose about 2% Wednesday in volatile trading after the Japanese conglomerate announced a 250 billion yen ($1.7 billion) share buyback and operating income beat estimates.
Operating income for the last three months of the financial year came in at 203.6 billion yen, beating mean analyst estimates of 192.2 billion yen, though it was down 11% from the same period last year.
In the earnings report, the Japanese-based electronics, entertainment and finance company announced a stock buyback of shares worth 250 billion yen.
Sony also provided details on a partial spinoff of its financial unit. The company plans to distribute slightly more than 80% of the shares of common stock of the spinoff to shareholders of Sony Group through dividends.
The financial unit will list its financial operation this year and will be classified as a discontinued operation in Sony’s accounting from the current quarter, the company added.
However, Sony’s outlook for the current financial year ending in March was lackluster.
The company forecasted its operating profit to rise a slight 0.3% to 1.28 trillion yen, after flagging a 100 billion yen hit from U.S. President Donald Trump’s trade war.
Yet, Sony clarified that the estimated tariff impact did not reflect the trade deal made between the U.S. and China on May 12 and that the actual impact could vary significantly.
A Samsung Group flag flutters in front of the company’s Seocho building in Seoul.
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Samsung Electronics on Wednesday announced that it would acquire all shares of German-based FläktGroup, a leading heating and cooling solutions provider, for 1.5 billion euros ($1.68 billion) from European investment firm Triton.
Samsung said the acquisition would help it expand in the heating, ventilation and air conditioning business as the market experiences rapid growth.
“Our commitment is to continue investing in and developing the high-growth HVAC business as a key future growth engine,” said TM Roh, Acting Head of the Device eXperience (DX) Division at Samsung Electronics.
The acquisition of FläktGroup stands to bolster Samsung’s position in the HVAC market against rivals such as LG Electronics.
FläktGroup supplies heating, HVAC solutions to a wide range of buildings and facilities, notably data centers which require a high degree of stable cooling. Samsung said it anticipates sustained growth in data center demand due to the proliferation of generative AI, robotics, autonomous driving and other technologies.
FläktGroup has more 60 major customers, including leading pharmaceutical companies, biotech and food and beverage firms, and gigafactories, according to Samsung’s statement.
Samsung said in March that its HVAC solutions had achieved double-digit annual revenue growth over the past five years, and that the company aimed to boost revenue by more than 30% in 2025.
