Payments group Adyen defends hiring spree as shares tumble 20%

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European payments company Adyen has defended a hiring spree that left its first-half profits far below expectations and sent shares in the group down more than 20 per cent in early trading on Thursday.

The Dutch company, which listed in 2018, added 551 more employees in the first half of the year, taking its total workforce to 3,883.

The sustained recruitment by Adyen has defied the broader trend of fintechs retrenching as interest rates rise and major economies slow. US rival Stripe announced it was cutting 14 per cent of its workforce, about 1,000 staff, last November.

The hiring knocked Adyen’s profits in the first half of the year, as it reported earnings before interest, taxes, depreciation and amortisation of €320mn on Thursday, below expectations of €365mn.

Chief financial officer Ethan Tandowsky said: “Going into 2023, we said we expected to hire a similar amount of people as we did in 2022. We continue to plan to execute against those hiring plans.”

Last year, the company added more than 1,000 staff, but Tandowsky said that Adyen expected its hiring trend would slow in 2024.

Adyen serves a range of clients including Spotify, Uber, Booking.com and Microsoft.

Its net revenue for the first half of 2023 — which includes settlement fees, processing fees and other services, minus costs such as interchange fees paid to banks — rose 21 per cent to €739.1mn, missing analyst estimates of €754mn.

Chief executive Pieter van der Does told the Financial Times on Wednesday that the fintech was facing growing competition for US online retailers, as rising interest rates force businesses to cut costs.

“We’ve seen that merchants are very cost focused before, but now they’re trying to explore local providers,” he said, speaking ahead of Thursday’s update. “It’s not that we’re shrinking — we’re just growing at a slower rate.”

Hannes Leitner, an analyst at Jefferies, said the company’s weaker performance in the US reflected aggressive pricing from competitors such as Braintree, owned by PayPal. Adyen’s US net revenue grew by 23 per cent year on year to €187.5mn, less than half the rate of growth in 2022.

“The big question looking forward is what will the next half look like,” he said. “Seeing substantial slowing in a key growth area like the US will be something of major concern.”

Shares in Adyen are down 36 per cent over the past year, a reflection of wider struggles in the sector, as consumer spending comes under pressure from persistent high inflation.

The price tags of private competitors have also fallen sharply. Stripe was valued at $50bn in its latest funding round in March, around half the valuation it carried two years ago. London-based Checkout.com, which became Europe’s most valuable private tech group when it was valued at $40bn last January, slashed its internal valuation to about $11bn late last year.