Yahoo Finance Payments company Adyen's shares soar after results beat forecasts
(Reuters) - Shares of Dutch payments company Adyen jumped by nearly a quarter on Thursday after it beat 2023 earnings expectations, helped by its digital business and stricter cost control.
The shares had sunk to a four-year low in October after a cut in earnings guidance from rival Worldline fuelled a sector-wide sell-off, adding to losses incurred after Adyen disappointed with weak first-half earnings in August.
It then released what analysts described as "more realistic" medium-term guidance in November, along with a plan to slow hiring.
Net revenue for 2023 rose 22% from the previous year to 1.63 billion euros ($1.75 billion), Adyen said on Thursday, as it confirmed its financial targets for the current year.
Having risen as much as 24%, its shares were up 18.6% on the day by 1446 GMT at 1,404.6 euros, recovering to levels seen before August's earnings announcement.
"Expanding existing customer relationships delivered a period of profitable growth," Adyen said in a statement.
It highlighted its relationship with U.S. payments firm Cash App, saying that it had ramped up processing of its domestic volumes.
UBS analyst Justin Forsythe said in a note that even without Cash App, Adyen's digital volume trends would still have been stable.
Core profit rose 2% to 743 million euros, above the 720.6 million expected by analysts in an LSEG poll.
The company said its core profit margin rose to 48% in the second half of 2023, from 43% a year earlier, helped by the slower hiring.
Adyen has grown into one of Europe's most valuable financial firms with a market capitalisation that hit more than $46 billion following Thursday's results.
That compares to $43 billion Dutch lender ING and $39 billion for France's Credit Agricole, according to LSEG Eikon data. If it were a bank, Adyen would be Europe's eighth largest by market value behind Italy's UniCredit.
The payments industry flourished during the COVID-19 pandemic but is now dealing with a drop in consumer spending and tougher regulatory scrutiny aimed at combatting online fraud risks.
JPMorgan said Adyen's volume growth and improved profitability will please investors, with the only concern being that the better than expected results were driven by a single customer.
($1 = 0.9304 euros)
(Reporting by Olivier Sorgho, additional reporting by Elizabeth Howcroft and Amanda Cooper; Additional reporting by Samuel Indyk; Editing by David Goodman, Tommy Reggiori Wilkes and Kirsten Donovan)
