seems to have few regrets about choosing Adyen over
Both digital payments companies boomed during the pandemic, but unlike its American rival, the European giant is thriving in the reopening as well.
Adyen stock rose 13% in morning trading Wednesday after the company released excellent 2021 results, increasing net revenue by nearly half to €1 billion and growing earnings before interest, taxes, depreciation and amortization by 57%. Management reassured shareholders that “the indicators of sustainable profitable growth remain intact.”
That outlook contrasted sharply with PayPal’s decision last week to lower its profit outlook and ditch its growth strategy, which sent its shares tumbling. PayPal blamed, among other things, supply-chain bottlenecks and a faster than expected shift of eBay’s business to a new payments system, which is provided by Adyen.
The Dutch company is thriving even as economies reopen because its system supports the gamut of payments: in store at traditional checkouts or self-serve checkouts, and online for delivery or curbside pickup. It started building that in-store capability as a strategic initiative in 2013. Adyen has developed its system in house rather than through acquisitions, and improves it by solving existing customers’ problems as well as pursuing a few broader goals. That often means a solution built for one can be offered to all, contributing to a 63% Ebitda margin last year.
Customers seem happy: Last year, over 80% of growth came from existing merchants and those quitting the service represented less than 1% of transaction volumes. The system road map includes links for new buying methods like buy-now-pay-later, as well as big plans to give merchants more insight into their in-store customers, including linking up with online shopping information. The company reiterated its medium-term financial targets of an Ebitda margin exceeding 65% and a compound annual growth rate for net revenues of between 25% and something in the low 30s.
Adyen stock has a lot of growth priced in at around 85 times earnings, even after a nearly 30% fall from its high last summer. What its latest results and ambitions make clear is that the decline has more to do with the wider tech selloff amid rising valuation discount rates than any fundamental business concerns.
Write to Rochelle Toplensky at rochelle.toplensky@wsj.com
Corrections & Amplifications
Adyen’s 2021 net revenue increased by nearly half over the prior year. An earlier version of this article incorrectly said it nearly doubled. (Corrected on Feb. 9)
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