Shares of Dutch payment-technology provider Adyen NV pared back losses in Thursday trading after the company fell short of expectations with its latest results but expressed confidence in its medium-term targets.
During the first half of the year, Adyen
saw a decline in its “take rate,” or its cut of transactions. Adyen’s take rate was 17.6% in the first half of 2022, compared with 18.6% in the second half of 2021 and 20.6% in the first half of 2021.
Executives attributed the drop to “successful execution of our strategy, as we continue to onboard profitable volume at scale.” They also acknowledged in their shareholder letter that the rebound in travel spending also weighed on Adyen’s take rate, since the company doesn’t usually offer acquiring services to airlines. Accordingly, the boost in travel spending brought up Adyen’s average transaction value, though its portion of full-stack volume fell.
Shares fell 3.7% in Thursday trading, though they were down as much as 14.5% earlier in the session.
The company generated €609 million in first-half revenue, up from €557 million a year before, while analysts tracked by FactSet were modeling €615 million.
Adyen posted €282 million in net income, or €9.09 a share, up from €205 million, or €6.69 a share, in the year-prior quarter. Analysts were modeling €9.11 a share in earnings.
The company also reported €356.3 million in earnings before interest, taxes, depreciation and amortization (Ebitda), up 31% from a year earlier but below the €384 million FactSet consensus.
The results reflected “significant traction” for the company’s “unified commerce” offerings, according to a shareholder letter, as more industries look to integrate all sales channels into one place.
Other payment-technology companies aim to offer tools for “omnichannel” commerce, or shopping that bridges in-store and online channels, but Adyen Chief Financial Officer Ingo Uytdehaage said that his company’s services are different because Adyen combines all channels on a single platform. That’s helpful when a customer buys something online but tries to return it in store, for example.
“The blur between offline and online is not really visible anymore in our system,” he told MarketWatch. The “unified” system helps provide insights and data that “incumbents and traditional banks typically don’t have.”
Adyen’s management team also discussed the addition of new terminals that were built in-house, a move that Uytdehaage said helps Adyen build specifically to the certifications that retailers are looking for. The in-house design also helps control the costs of hardware, in his view.
The company is working with high-end fashion brands that want to better control the checkout experience in their stores so as to make the payment process reflective of the brand, according to Uytdehaage.
Executives noted in the company’s letter that they are “building for the next phase of Adyen,” which meant “growing [the company’s] tech teams at an increased pace” during the first half of the year, as well as pushing for more in-person interactions.
“We believe these investments are key to realizing our long-term growth and profitability potential,” they said in the letter. “With that in mind, we will not deviate from our long-term perspective by optimizing for short-term gains.”
Adyen executives maintained their medium-term revenue outlook, which calls for a compound annual growth rate in the mid-20s to low-30s. They also continue to expect improvement in the company’s Ebitda margin and a “sustainable capital expenditure level” that represents up to 5% of net revenue.
“We’ve not seen any developments in the business over the first half of 2022 that would lead us to updating our guidance,” they said in the letter.