Dutch payments processor Adyen logged a Q4 earnings report that came in above analyst expectations. Adyen processes payments for such household names as Spotify, Uber, and Gap and Netflix, among many others, and has been popular with investors since its public debut last June. The firm’s stock price debuted at €240 ($272 USD), more than doubled by the end of its first day and hit €758.90 by mid-September.
As of its earnings report yesterday (Feb. 27), Adyen’s stock was up 175 percent since its 2018 IPO. That brings Adyen’s total valuation to $22 billion — roughly on par with its Silicon Valley counterpart and latter-day rival, Stripe, which was valued at $20 billion as of its last fundraising — as the business expands into the United States.
By the numbers, the firm posted net revenue of €192.5 million during the back half of the year, ahead of analyst predictions of €181.9 million. That figure represents a 60 percent rise in net revenue for the full year, beating Adyen’s own guidance of a 40 percent increase. The Netherlands-based company processed €89 billion in volume during that half — a 50 percent increase from the same period last year. For the full year, net revenue came in at €348.9 million, with total transactions processed at €159 billion.
“Though a total processed volume of €159 billion will be disappointing to the market, the high take-rate and strong cost control positively surprises us,” analysts at KBC Securities said in a research note.
Management pushed future growth opportunities as it expanded outside Europe, and moved into the more competitive waters in the United States. The company reported that net revenue in North America rose by 93 percent in the last half, while net revenue from Asia-Pacific climbed 121 percent.
“We saw strong, profitable growth in the second half of 2018, largely due to the continued growth of enterprise merchants on our platform. If you look at Asian growth, that’s related to the maturity of our product,” said Adyen CEO Pieter van der Does, referring to the company’s ability to offer acquiring and processing in a “full stack.”
Furthermore, van der Does said that, while it does not “specifically focus on our competitors” (i.e., Stripe), it does focus on growing volume with existing customers, even in cases where merchants are using multiple providers. He noted the firm’s better-than-average track record in lowering false-positives for fraud, and boosting authorization rates that are increasingly resonating with businesses worldwide.
Despite the strong showing, Adyen’s stock price ultimately fell 2 percent, after initially increasing by more than 4 percent when the results hit the wires. The firm did not offer a full-year forecast, but offered a medium-term forecast of 20 percent to 30 percent revenue growth that David Togut, an analyst at Evercore ISI, called “almost certainly too conservative.”
During the call, analysts asked if there were concerns within Adyen about living up to the extraordinarily high expectations it had set in 2018 stock price-wise, and van der Does noted that daily stock prices were not its overriding concern.
“We are focused on the longer term,” he said.
When asked about the long term, specifically about its competitive prospects in tougher markets, and the risks of potentially losing its own clients as it tries to recruit new enterprises to the platform, van der Does was much more confident. He acknowledged the more difficult landscape in which the company is operating, particularly in the United States, but he pointed out that, when it comes to keeping the clients it recruits, the firm remains mostly unconcerned.
“We don’t lose customers to anyone,” he noted on the call. “The loyalty to our platform is very high.”