GICS Sector : Technology
Adyen N.V. operates a payments platform in Europe, the Middle East, Africa, North America, the Asia Pacific, Latin America.The company's platform integrates payments stack that include gateway, risk management, processing, issuing, acquiring, and settlement services.It offers a back-end infrastructure for authorizing payments across merchants' sales channels, as well as online, mobile, in-store, and APIs; and data insights.
Adyen reported a strong set of earnings, with net revenues growing 21% on a constant currency basis to EUR 1.1 billion, driven by expanding share of wallet with existing customers and adding new customers to the platform. EBITDA grew 28%, bringing EBITDA margins up to 50%. The company saw strong growth in EMEA and North America, with Digital growing 10%, Unified Commerce growing 31%, and Platforms growing 55%. CFO Ethan reported that Adyen expects the second half of the year to play out similarly to the first half, with growth driven by expanding share of wallet with existing customers and adding new customers.
Publication Date: Aug -15
The strong euro and weak dollar, as well as tariffs, impacted Adyen's results, particularly for APAC merchants trading into the US. However, the company sees opportunities to help these merchants enter new markets. Ethan clarified that the impact of tariffs was limited to a handful of customers, and if they were excluded, Adyen's growth would have been approximately 2% higher in Q2.
Co-CEO Ingo discussed Adyen's approach to innovation, including investments in infrastructure and licenses, which enable them to build products that are relevant to their customers. He highlighted the success of Intelligent Payment Routing and Adyen Uplift, which optimize authorization rates with cost and fraud. The company has started charging for Uplift, and Ingo reported that 2/3 of customers who started with Adyen in the first half have implemented Protect, a subproduct of Uplift.
The company reiterated its expectation of accelerating growth, driven by share of wallet gains and new customer additions. The company is focused on expanding its share of wallet with existing customers and investing in new customer acquisitions. Ethan emphasized that the growth of their own customers will continue to play an important role in their growth, but share of wallet expansion will be the biggest piece.
Adyen's stock is trading at a P/E Ratio of 47.03, P/B Ratio of 10.28, and P/S Ratio of 21.01, indicating that the market is pricing in strong growth expectations. With a ROIC of 18.43% and ROE of 23.7%, Adyen's financial performance is strong, and the company's balance sheet strength brings flexibility to drive growth.
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Adyen's online payment solutions enable merchants to accept and manage payments, driving growth through increasing e-commerce adoption, digital transformation, and demand for seamless payment experiences.
Adyen's payment gateway enables businesses to accept and process payments online, in-store, and through mobile channels.
Adyen's POS terminals provide businesses with a secure and reliable way to accept in-store payments.
Adyen's mobile payment solutions enable businesses to accept payments through mobile devices, such as Apple Pay and Google Pay.
Adyen's online payment platform provides businesses with a scalable and secure way to accept and process online payments.
Adyen's marketplace payment solutions enable marketplaces to manage payments between buyers and sellers.
Adyen's recurring payment solutions enable businesses to manage recurring payments, such as subscriptions and memberships.
Adyen's risk management and fraud detection solutions help businesses to identify and prevent fraudulent transactions.
Adyen's substitutes are limited, as the company operates in a niche market. However, there is a growing trend towards digital wallets and cryptocurrencies, which could potentially substitute traditional payment systems.
Adyen's customers are mainly large enterprises and merchants, which have limited bargaining power due to their reliance on Adyen's services.
Adyen's suppliers are mainly banks and financial institutions, which have some level of bargaining power due to their importance in the payment processing ecosystem.
The payment processing industry is highly competitive, and new entrants could potentially disrupt Adyen's market share.
The payment processing industry is highly competitive, with several established players, Stripe, PayPal, and new entrants, which leads to a high intensity of rivalry among companies.
| Value | |
|---|---|
| Debt Weight | 5.12% |
| Debt Cost | 14.42% |
| Equity Weight | 94.88% |
| Equity Cost | 13.27% |
| WACC | 13.33% |
| Leverage | 5.39% |
Value: 3.5
Growth: 7.8
Quality: 6.6
Yield: 0.0
Momentum: 9.5
Volatility: 2.0
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