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The Adyen co-head acknowledged that the European payments processor must rebuild investor trust, but said the group would not overreact after a record plunge in its shares this week.
Adyen shares plunged 39 percent on Thursday, wiping 18 billion euros off its market value, after the company posted a disappointing first-half profit and disclosed a slowdown in its U.S. business.
“It’s clear that we’ve lost some (investor) trust – we need to regain that trust in the next period,” co-chief executive Ingo Uytdehaage told the FT. “First, we want to talk to investors, understand their thinking, and act (before we do).”
Rising costs and lower profit margins caused Adyen’s first-half profit to fall well short of analysts’ expectations. The group is known as a rare successful enterprise in the European technology field, and Singapore’s Temasek Holdings, BlackRock and Vanguard Group are its largest shareholders.
The stock failed to rebound on Friday, falling 3%.
Despite the historic share price drop, Utterdhatch said buybacks were not on the table “at this time” and that management would meet with investors in a series of scheduled meetings.
“We’ve seen the market go to extremes and it’s very important not to overreact right away,” he said, adding that Adyen still wants to succeed in the US.
Hannes Leitner, an analyst at Jefferies, said the results “were below expectations on all fronts”, with signs of a slowdown in the U.S. economy particularly worrisome.
The US is one of the markets Adyen is tapping into as it looks to take advantage of lax regulations on fees charged to processors. Ayden, which generates about a quarter of its revenue in the US, competes with Stripe and PayPal’s Braintree.
Alyssa Cox, an analyst at research firm Carraighill, said Adyen’s efforts to sell premium products to retailers had become more difficult as retailers demanded lower fees.
“Peers like Braintree and Stripe have cut costs recently – Adyen said they don’t want to fight on price, they don’t want to treat payments as just a commodity,” she said. “But when you see big retailers looking for lower prices on services, they may need to match that price.
“You would think 2024 to 2025 (sales) would start to struggle,” she added. “There are early signs in 2023 that are really worrying.”
Utterdhag told the Financial Times last year that the group was not worried about competition, saying there was “a lot of market share to be captured”. That assessment remains accurate, but pressures in the U.S. economy mean some customers have switched to cheaper rivals, he said on Friday.
“The competition hasn’t changed, it’s just that we’re in a different economic situation with many of the major players being more cost-conscious,” he said.
The company’s ongoing hiring spree dented first-half profit. Chief Financial Officer Ethan Tandowsky said the group would continue with its hiring plan for this year, which would mean adding about 500 more staff, but said hiring would slow in 2024.
Adyen’s determination to continue laying off workers has set it apart from those of its larger rivals that are cutting jobs as pricing pressures intensify in the U.S. market.
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