Adyen NV plunged as much as 15% after it reported second-half earnings that missed estimates, weighed down by a hiring push that contrasts with mounting job cuts across the tech industry.
(Bloomberg) — Adyen NV plunged as much as 15% after it reported second-half earnings that missed estimates, weighed down by a hiring push that contrasts with mounting job cuts across the tech industry.
The company’s margin on earnings before interest, taxes, depreciation and amortization — a measure of profitability — was 52% for the six months ended December 2022. That compares with an average estimate of 59.7% in a Bloomberg survey of analysts.
The Amsterdam-headquartered fintech firm, which processes transactions for companies such as Uber Technologies Inc. and H&M, said it’s in a high-growth stage, pushing ahead on investments even as rivals work to rein in costs. It reaffirmed its financial objectives on Wednesday, with the long-term outlook for Ebitda margins at levels above 65%.
The shares were down 14.9% at 1,299.8 euros apiece as of 9:13 a.m. local time, the biggest drop since 2018.
Read More: Adyen’s 65% Ebitda Margin Promise More Distant After Miss: React
Adyen’s net revenue rose 30% to €722 million in the second half of last year, compared with an estimate of €725 million in a Bloomberg survey. Processed volume for the period increased by 41%.
Adyen’s larger peer PayPal Holdings Inc said last week that it will cut 2,000 employees. By contrast, the Dutch fintech firm had ruled out headcount reductions in November, adding that its recruitment strategy was not led by short-term trends such as pandemic-related e-commerce or in-store volume fluctuations.
No Slowdown
In a letter referencing job cuts across the wider tech industry, Van der Does had said Adyen would expand staff by a similar number in the new year as it did in 2022.
Adyen’s management explained that they have been investing heavily for the long-term growth of the business, but refused to quantify the cost impact, Citi said in a research note. “The lack of absolute guidance has led to the market being correct on direction but wrong on magnitude of profit pressure,” analyst Andrew Gardiner said.
The company also reshuffled its top ranks naming Chief Financial Officer Ingo Jeroen Uytdehaage to a newly created position of co-CEO as co-founder Pieter van der Does seeks the flexibility to focus on his health. It said Ethan Tandowsky will transition into the CFO position while Kamran Zaki steps down as chief operating officer.
“What I learned is that, should it be needed in the future, it’s important to be able to spend time on my health,” Van der Does said in a statement on Wednesday. “With Ingo as co-CEO, I can do that while Adyen stays its course.”
–With assistance from Henry Ren.
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