Growth has been particularly disappointing in North America

Adienne shares fell after disappointing half-year results. Payment processor revenue growth slows significantly while costs skyrocket.

Although expectations were not high after disappointing annual figures, the market was still surprised by Adeon’s sharp slowdown. In First half year The company paid 426 billion euros (+23%). The growth rate was still 41% in the second half of 2022. Turnover rose 21% to 739.1 million euros, up 30% on the previous six months. Analysts expect very strong sales and volume growth of 28% and 34%, respectively.

North America is particularly disappointing

Operations in North America were particularly disappointing, with revenue growth nearly halving to 23%. It was one of the fastest growing markets for Adeon, accounting for more than a quarter of turnover.

According to Adiene, its digital customers are growing at a slower pace and are more focused on cost savings. The company points to sharp price competition and a shortage of sales personnel in the market due to a tight labor market in recent years.

Increased workforce

Adian now captures the region and has hired 551 employees, bringing its workforce to 3,883 full-time employees. Operating expenses have increased by 66% over last year. As a result, EBITDA fell 10% to EUR 320 million, below the analyst consensus of EUR 375 million. Margin has decreased from 59% to 43%. Thanks to higher interest income, net profit was 282 million euros.

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As usual, Adiene did not release a profit forecast. However, the company has met its medium-term financial targets of revenue growth of 25% to 30% and EBITDA margin of more than 65%.

According to Adiene, although the growth rate has slowed, there are no significant developments that will structurally change the medium-term prospects. Next year the heavy investments in new employees will be over and profit margins will generally improve again.

In doing so, the team points to the operational efficiency of the business model: digital infrastructure can enable many more online payments without a directly proportional increase in cost.

Reiterating the medium-term outlook is reassuring. Accordingly, Adiene has to say that it is now investing in additional employees and sacrificing margins for this in the short term. Through this it can protect its strong market position.

At the same time, management is now for the first time hinting at increasing price competition in the important US market. This raises questions about long-term margin potential.

Watch Z-Beurs with Eric Joly from ABN Amro Belgium about Adyen: