" But Stripe has not been immune to the global downturn: In November, it laid off 14% of its staff, or around 1,120 people. And the company has slashed its internal valuation more than once over the past year. Earlier this month, TechCrunch reported that Stripe had cut its internal valuation to $63 billion. That 11% cut came after a prior internal valuation cut that valued the company at $74 billion."
The market seems to have been disappointed by the earnings growth. However, the company hired 757 professionals during H2 (a 22% increase), which will surely translate into future growth.
In my opinion, revenue is also at a good level considering the difficult market situation. Acquiring new customers has certainly been challenging during these times.
My investment thesis hasn’t changed at first glance, but I’ll need to digest this a bit more.
Edit: No point writing more here, so I’ll remove it, as I think the most important highlights from the call are already in this thread 
https://twitter.com/Quartr_App/status/1624141073642622988
Business Breakdowns just published a timely piece on Adyen; I recommend reading it.
Here is also a good deep dive into Adyen: https://joincolossus.com/research/adyen_research.pdf
Additionally, I recommend listening to this episode, which was also mentioned in the opening post: https://www.joincolossus.com/episodes/30866661/willar-adyen-a-first-principles-payment-platform?tab=blocks
However, the industry is highly competitive and price-sensitive; the markets are large, but the maximum size is very difficult to estimate.
I believe Adyen will continue its growth investments and take the next step up through its current efforts. Management commented that the situation is similar to 2015-2017, when Adyen invested heavily in license acquisition and point of sale (I wonder what the correct Finnish term for this would be). These investments then began to bear fruit in 2018-2020.
" Data Connect for Marketing empowers omni-channel businesses to use payments data to drive personalization and increase loyalty
Adyen’s latest product is already helping global fashion group AWWG (Pepe Jeans London, Hackett and Façonnable) improve its customer loyalty programs & Salesforce has built an integration to offer payments-enriched profiles to its customer base"
" Adyen among the first financial technology platform certified by the Federal Reserve to utilize its instant payment infrastructure"
H1 2023
In my opinion, it was a fairly unsurprising report. Growth investments with a long-term focus continued, which ate into EBITDA. On the other hand, growth investments were fully funded by financial income, meaning cash reserves hardly changed at all.
The market reaction today will likely be negative, as the market often only looks at the numbers.
The market reaction was almost -40%, meaning a drop of about €20 billion in market cap in a single day. It’s rare for large-caps to plunge like that without a profit warning.
(For the record, in case someone reads the thread later) This chart is not from Amsterdam, but it reflects the situation there.
Apologies for a completely contentless post, but okay.. NOW the company has started to interest me as an investment.
I don’t think I’ve ever verbalized my investment strategy, but it’s damn important that a company actually has a product / products to sell. And Adyen has a product, not just speculative fluff. Competition in the industry is fierce and the required investments in operations are massive, but a large part of the players are rigid and legacy-bound.
Investments in talent and technology now guarantee products and a competitive position in the future as well.
Now, if I had done some kind of valuation for the company, I would know how much to pay for the stock, but maybe an opening position could be opened even without thinking…
I listened to the earnings call, and the gentlemen there commented on future growth prospects with quite a bit of confidence.
The Q&A session is very pleasant to listen to; the IR of many companies could take a leaf out of their book.
Today’s share price reaction, on the other hand, reminds me of Fundsmith’s 2023 AGM, where Robinson commented that the company they would absolutely like to own is Adyen, but they are waiting for a market “glitch” as the valuation is too pricey.
"It did €2.7 billion of turnover before covid-19 and is now doing €8.9 billion. It delivers 30% return of capital operating in online payments, which is an industry that is likely to have a lot of natural growth. The only real barrier to investing is that it is trading on 60 times earnings.”
Slightly off-topic, but a listening recommendation: https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://m.youtube.com/watch%3Fv%3DPW5bJ7_i05g&ved=2ahUKEwjRvsvCyOSAAxXVDRAIHcbXDCAQwqsBegQIEBAG&usg=AOvVaw3-l1-rwDhhilG0cxu-rclM
Edit: Let’s include one highlight from the Q&A where the investment levels of 2015-2017 were discussed, which Adyen’s management has referred to before,
Morgan Stanley, Adam Wood
"Hi, perfect. Thanks for taking the question.
Piet, good to see you back, and Ingo, congratulations on the added role. I’ve got 2, please.
The first one is just, could you help us understand the order of magnitude impact on the 2023 numbers on EBITDA? I mean the model that we were working on suggests that EBITDA margins fall back below 50% this year.
But obviously, that depends a lot on the wages per employee that we assume. Could we even be looking at a situation where margins return back to the 2015, 2017 level?
Well, again, I think it was a period you’re investing quite heavily when margins went as low as the low mid-40s EBITDA. That’s the first one."
Adyen, Ingo Uytdehaage
"Thanks, Adam. Yes.
So for – if you look at our investments, we want to continue our investments in 2023. So in 2022, we hired around 1,200 people.
That’s also the number of people that we want to add to the team this year. That’s sort of the maximum that we want to hire.
We, of course, keep the bar high. Also with the full impact of the people that we have hired in the second half of this year or in 2022, that could lead to some further margin pressure.
So 2023 is certainly not a year where margins will expand again. That’s more something that we will expect to see longer term in the course of '24 when we think we are at this next level, and we will hire less people.
Indeed, I think your reference to early years, I think it’s very similar and not so much maybe on the margin levels but the perspective that we take. So the perspective that we take right now is fairly similar to the 2015 and 2016, 2017 years when we invested heavily in acquiring licenses, point-of-sale development, and that really started to pay back in the years 2018, 2019, 2020."
I haven’t been following closely, but here are today’s updates to the targets.
edit. and some more from yesterday
I still haven’t done proper valuation calculations for Adyen myself, but the company itself is solid. Their business philosophy is sound, the technology is good, and the CEO is very much on top of things and a veteran in the industry.
All the older comments linked by Jaska underscore a forward-looking operational philosophy.
The CEO is absolutely right in the Q&A that North American online sales are the easiest to put out to tender and switch. That’s why the market is challenging. You need complementary products to keep customers engaged and to differentiate yourself. Stickiness.
I need to try to dig through the H1 report to see which products this massive recruitment is being focused on… After all, the products for online payments are already quite mature.
I would name Stripe, Worldpay, and as a surprise entry, Apple, as competitors to watch.
Apple from the perspective that they will use all their proprietary payment-related tech to disrupt the industry as much as they can imagine (though they’ll impact the territory of traditional card companies like Visa, Mastercard, and Amex even more).
One very essential competitor is definitely missing from this list, namely PayPal. PayPal’s Braintree plays in exactly the same ballpark as Adyen. Braintree continued its growth of approximately 30% in the second quarter, meaning it has likely taken market share from Adyen in North America. PayPal also has other verticals that overlap with Adyen, such as the new PayPal Complete Payments aimed at the SMB market and Zettle aimed at POS needs.
Another notable competitor missing from the list is Checkout.com.
Here’s some quite good analysis vs. the main competitors. https://twitter.com/FredaDuan/status/1693082581007311353?s=20
Q3 2023 Figures
Processed volume was €243.1 billion, up 21%YoY.
Net revenue was €413.6 million in Q3, up 22% YoY. On a constant currency basis, net revenue of €413.6 million would have been 4% higher than reported.
175 FTE were hired to the team as part of the final stages of Adyen’s accelerated investment phase.
The company evolved its financial objectives in order to specify timelines around growth expectations.