Adyen Makes New Hires, Earnings Buoyant in Surprise Results
(Bloomberg) -- Revenue at Adyen NV, which processes payments for companies including Uber Technologies Inc. and EBay Inc., grew by over a third in the first quarter, despite a hit in fees from the travel and accommodation sector.
The payments company typically only publishes earnings on a biannual basis but made an exception due to the coronavirus crisis. The company said it posted net revenue of 135.5 million euros ($147.3 million) for the first quarter of the year ending March 31, up 34% year-on-year.
The Amsterdam-based company said it processed 67 billion euros of payments for the period, an increase of 38%, but warned that the prospect of a deep economic recession brought on by a prolonged pandemic could hurt earnings. Despite the threat, it made 169 new hires in the quarter, boosting its workforce by about 14% since the end of last year.
Earnings before interest, taxes, depreciation and amortization margin declined to 47%, from 56% last year, due to the new hires and marketing campaigns, and a hit to net revenue in March from the crisis.
Adyen shares rose as much as 4.1% in Amsterdam on Tuesday.
KBC analyst Thomas Couvreur said the results were “unsurprising” and in line with expectations, adding he expects a similar impact for the company in the month of April, with some recovery toward the summer as restrictions are lifted.
“As a company we are very well positioned” to deal with the impact resulting from the virus, said Adyen Chief Financial Officer Ingo Uytdehaage in an interview, adding the biggest risk to his company is the uncertainty over how long the crisis will last. “If we as an economy go through a very deep recession, of course that’s also going to impact us.”
The company said it was hardest hit in the travel and accommodation sector, where processed volumes fell by around 90% by the end of March compared to the first week of January. In-store retail was also similarly impacted, but online sales have started to rise to compensate for that, it said.
Still, Adyen’s lack of debt and positive cash flow has given the company room to maneuver, including to continue hiring as it invests for the long-term, Uytdehaage said. Its main customers are also large global companies that so far have been able to respond reasonably well to the crisis, he said.
Adyen backed its outlook, with the finance chief saying “it’s too early to change that view.” The company still expects to grow net revenue at a rate between the mid-20s and low-30s in the medium term. It also plans to increase EBITDA margin to above 55% in the long term. The company doesn’t define what it perceives as medium or long-term.
Riding the boom in cashless payments, Adyen’s shares have increased three-fold since its initial public offering in June 2018. The Amsterdam-based company offers merchants payments processing both online and in stores and in a variety of local payments methods.
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