Payment processor Adyen NV beat expectations with its latest numbers as it continued its global expansion, but shares fell after the company’s earnings report.
Adyen ADYEN, -2.02% which processes payments for big tech companies like Spotify Technology SA SPOT, -1.21% and Uber Technologies Inc., posted net revenue of €192.5 million ($218.9 million) for the second half of 2018, whereas analysts surveyed by FactSet had been expecting €181.9 million. The Netherlands-based company processed €89.0 billion in volume during the half.
Adyen went public last June, and shares are up roughly 175% since then as investors continue to bet on the company’s ties to fast-growing tech giants. Management sees big growth opportunities as the company gains more business outside of Europe, though Adyen faces high-tech competition as it moves deeper into the U.S., including from Stripe Inc., another rising star in payment processing.
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Chief Executive Pieter van der Does told MarketWatch that the company “doesn’t specifically focus on our competitors” and is working to grow volume with existing customers, though he acknowledged that in some cases merchants may use multiple providers. Adyen is known for being able to reduce the portion of times in which card payments are wrongly declined, and van der Does said that the company’s track record of higher authorization rates, combined with the responsiveness of Adyen’s system, is resonating with businesses.
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The company’s net revenue in North America rose by 93% in the last half, while net revenue from Asia-Pacific climbed 121%. “If you look at Asian growth, that’s related to the maturity of our product,” said van der Does, referring to the company’s ability to offer acquiring and processing in a “full stack.”
Adyen shares fell 2% in Wednesday trading in Europe. Evercore ISI analyst David Togut called the company’s medium-term forecast of mid-20% to low-30% revenue growth “almost certainly too conservative,” though he noted that the company didn’t provide a formal outlook for the full year.
“The company’s clientele of rapid growth, digital giants including Facebook FB, -1.15% Netflix NFLX, -0.85% Uber, the recent eBay EBAY, +1.42% contract win plus the ongoing shift of cash to electronic payments should support 46% net revenue growth in 2019, in our view,” he wrote in a note to clients.
Togut rates the stock at outperform with a €764.00 target price.
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