9 ms·

Adyen Plummets as Sales Miss Erases $20B of Market Value

65 points by the-dude 3y ago

the-dude 3y ago
Adyen gets little attention here, but it is a big Payment Service Provider ( services Uber, Booking.com, Etsy, Ebay? ) Think Stripe only targetting big customers.
- jmacd 3y ago
  I doubt they are processing 100% of the revenue from those companies. It's very normal for companies to spread their Payment Gateway calls across a number of providers depending on volume, approval rates, geography, currency, etc. Adyen has those logos, but so do the others.
  - the-dude 3y ago
    It still is a big PSP targetting big customers.
js4ever 3y ago
Adyen ... I have only bad stories about them. I guess they totally deserve this.
- zffr 3y ago
  can you share any more? I haven't heard much, but its all been positive so far
  - buggeryorkshire 3y ago
    Large food delivery I used to work for used them. They were fine and cheap until they didn't work at which we had a fallback
    - ramesh31 3y ago
      >They were fine and cheap until they didn't work at which we had a fallback Thus the lifecycle of a digital payments service provider is completed.
      - buggeryorkshire 3y ago
        Yeah. I'm not arguing with you at all, but when they work they are fine. After then...
      - Johnie 3y ago
        It's complete when you get to sufficient scale and end up directly integrating with Chase PaymenTech. Then you realize how much overhead it is to do a direct integration and your CFO wonders why it's payment cost is rising with all your support engineers on staff and then revert back to third party processor.
        CodesInChaos 3y ago
        > Then you realize how much overhead it is to do a direct integration Can you elaborate on that?
  - js4ever 3y ago
    Arrogant staff. Subpar api and experience compared to Stripe, only advantage was a better rate but Stripe made a better offer and my 3 customers using them was more than happy to be able to move away. Unfortunately I'm not allowed to disclose any details...
    - karim79 3y ago
      I tried to apply for Adyen's service in early 2021, we already had an existing (and working) payment system set up, and had heard good things about them. 1. They asked for a detailed walkthrough with screenshots of our payment process, which detailed the whole conversion process from the time of signup until the checkout/payment. Fair enough - they could have checked themselves, but I can still understand why they would insist on this. 2. It took six weeks to get a call back from them. During the call they said that they needed 80k EUR in reserve funds from us, but if we did not have the cash, then "no worries, we'll just capture the first 80k sales before making any payouts". Felt to me like they were only in search of much bigger fish with that much cash lying around. So we went with Stripe instead. The whole process took 20 or so minutes, from signing up, entering company information and uploading company and shareholder documentation to the "you are ready to accept payments" screen. I couldn't believe that was all it took, but it worked, and we have been using them ever since. Edit: Disambiguate which service I applied for that did not work out.
      - berkes 3y ago
        It's been always pretty obvious to me that Adyen is all about those big fishes. They are rather clear in their communication about that too.
- CodesInChaos 3y ago
  Are there any PSPs for which this is not the case?
deleted 3y ago
[deleted]
Deukhoofd 3y ago
Honestly this feels like a massive overreaction by the market for a company that just had a revenue increase of 21%. Most of their profit margin miss was due to them investing heavily in personnel, which sounds more like a company securing a strong future than a company in any trouble.
- djbusby 3y ago
  Or burning money to scale up people. Which is easy to trim after the growth.
  - berkes 3y ago
    Adyen is Dutch. In the EU, and the Netherlands in particular 'trimming personel' is anything but easy.
    - ergocoder 3y ago
      They mostly hire people in US these days.
- dfsasadfklj 3y ago
  I don't know man, their forward p/e is like > 60 at current market price. Buying part of a business at that valuation with a revenue increase of 21% and decelerating doesn't seem like that great a deal to me.
s17n 3y ago
The real question is, how do any of these companies (payment service providers) get to be worth more than a few billion? It's obviously an extremely low margin commodity business in the long run; this miss is only the beginning.
- ralph84 3y ago
  Low margin is fine if you process $trillions like Visa. Investors are betting on who will be the next Visa.
  - lotsofpulp 3y ago
    Payment gateways / payment service providers are not in the same business as Visa. https://www.macrotrends.net/stocks/charts/V/visa/profit-margins https://www.macrotrends.net/stocks/charts/V/visa/profit-marg... Visa is a network, with network effects that cannot be substituted, hence their enormous profit margins. Visa's competitors would be other networks like Mastercard, AmEx, Discover, JCB, China UnionPay, etc.
    - toomuchtodo 3y ago
      > Visa's competitors would be other networks like Mastercard, AmEx, Discover, JCB, China UnionPay, etc. Or FedNow in the US. I've heard lots of payments folks shrug this off, but the evidence from PIX in Brazil and UPI in India is that it decimates credit card rail revenue. If you can process a payment up to $100k, $500k, etc for ~5 cents a transaction, I'm definitely not going to eat 3-5% as a merchant. Margins will compress as system participants coalesce around a utility at utility pricing. https://bfsi.economictimes.indiatimes.com/news/fintech/brazils-pix-payment-system-surpasses-credit-and-debit-card-transactions-in-q1/102221920 https://bfsi.economictimes.indiatimes.com/news/fintech/brazi...
      - lotsofpulp 3y ago
        Ideally, but investors in the market do not seem worried based on share price movements for the aforementioned businesses.
hcmacro 3y ago
So Stripe going to get marked down again? Tough to IPO this far below your valuation high water mark, at least judging from its closest comp.
kerkeslager 3y ago
I'm not saying they're a good company, but nothing I'm seeing here justifies a 40% drop. I'd need to do more analysis to have a better hypothesis, but this might be temporarily undervalued.
- the-dude 3y ago
  Maybe it is not just them, but broader market expectations?
- ye-olde-sysrq 3y ago
  It could be that this is showing drying up of future (or near-term future) possibilities that this is a high-growth company. If investors were predicting they'd be growing at a certain rate (and a higher rate commands an exponentially higher P/E multiple) and now that rate is lower or even flat (or even shrinking), then that's going to be a big drop as a "small" movement on the X axis (of growth rate) produces a much larger movement down the Y-axis since it's an exponential relationship. TLDR if investors see this as a "party's over" signal and most of the big/easy growth is behind, they're going to flee.
- eigenvalue 3y ago
  More likely is that it was very overvalued before this, and now it's closer to a reasonable valuation given the deteriorating trends. It's still trading at something like 18+ times revenue. For Paypal, this stat is more like 2.3x, (although Paypal's EBITDA margin is a bit less than half of Adyen's, and clearly Paypal is more mature at this point). Still, even adjusting for that, Adyen remains very dramatically more expensive.

65 points by the-dude 3y ago

Adyen gets little attention here, but it is a big Payment Service Provider ( services Uber, Booking.com, Etsy, Ebay? ) Think Stripe only targetting big customers.

jmacd 3y ago
I doubt they are processing 100% of the revenue from those companies. It's very normal for companies to spread their Payment Gateway calls across a number of providers depending on volume, approval rates, geography, currency, etc. Adyen has those logos, but so do the others.
- the-dude 3y ago
  It still is a big PSP targetting big customers.

js4ever 3y ago

Adyen ... I have only bad stories about them. I guess they totally deserve this.

zffr 3y ago
can you share any more? I haven't heard much, but its all been positive so far
- buggeryorkshire 3y ago
  Large food delivery I used to work for used them. They were fine and cheap until they didn't work at which we had a fallback
  - ramesh31 3y ago
    >They were fine and cheap until they didn't work at which we had a fallback Thus the lifecycle of a digital payments service provider is completed.
    - buggeryorkshire 3y ago
      Yeah. I'm not arguing with you at all, but when they work they are fine. After then...
    - Johnie 3y ago
      It's complete when you get to sufficient scale and end up directly integrating with Chase PaymenTech. Then you realize how much overhead it is to do a direct integration and your CFO wonders why it's payment cost is rising with all your support engineers on staff and then revert back to third party processor.
      - CodesInChaos 3y ago
        > Then you realize how much overhead it is to do a direct integration Can you elaborate on that?
- js4ever 3y ago
  Arrogant staff. Subpar api and experience compared to Stripe, only advantage was a better rate but Stripe made a better offer and my 3 customers using them was more than happy to be able to move away. Unfortunately I'm not allowed to disclose any details...
  - karim79 3y ago
    I tried to apply for Adyen's service in early 2021, we already had an existing (and working) payment system set up, and had heard good things about them. 1. They asked for a detailed walkthrough with screenshots of our payment process, which detailed the whole conversion process from the time of signup until the checkout/payment. Fair enough - they could have checked themselves, but I can still understand why they would insist on this. 2. It took six weeks to get a call back from them. During the call they said that they needed 80k EUR in reserve funds from us, but if we did not have the cash, then "no worries, we'll just capture the first 80k sales before making any payouts". Felt to me like they were only in search of much bigger fish with that much cash lying around. So we went with Stripe instead. The whole process took 20 or so minutes, from signing up, entering company information and uploading company and shareholder documentation to the "you are ready to accept payments" screen. I couldn't believe that was all it took, but it worked, and we have been using them ever since. Edit: Disambiguate which service I applied for that did not work out.
    - berkes 3y ago
      It's been always pretty obvious to me that Adyen is all about those big fishes. They are rather clear in their communication about that too.
CodesInChaos 3y ago
Are there any PSPs for which this is not the case?

deleted 3y ago

[deleted]

Deukhoofd 3y ago

Honestly this feels like a massive overreaction by the market for a company that just had a revenue increase of 21%. Most of their profit margin miss was due to them investing heavily in personnel, which sounds more like a company securing a strong future than a company in any trouble.

djbusby 3y ago
Or burning money to scale up people. Which is easy to trim after the growth.
- berkes 3y ago
  Adyen is Dutch. In the EU, and the Netherlands in particular 'trimming personel' is anything but easy.
  - ergocoder 3y ago
    They mostly hire people in US these days.
dfsasadfklj 3y ago
I don't know man, their forward p/e is like > 60 at current market price. Buying part of a business at that valuation with a revenue increase of 21% and decelerating doesn't seem like that great a deal to me.

s17n 3y ago

The real question is, how do any of these companies (payment service providers) get to be worth more than a few billion? It's obviously an extremely low margin commodity business in the long run; this miss is only the beginning.

ralph84 3y ago
Low margin is fine if you process $trillions like Visa. Investors are betting on who will be the next Visa.
- lotsofpulp 3y ago
  Payment gateways / payment service providers are not in the same business as Visa. https://www.macrotrends.net/stocks/charts/V/visa/profit-margins https://www.macrotrends.net/stocks/charts/V/visa/profit-marg... Visa is a network, with network effects that cannot be substituted, hence their enormous profit margins. Visa's competitors would be other networks like Mastercard, AmEx, Discover, JCB, China UnionPay, etc.
  - toomuchtodo 3y ago
    > Visa's competitors would be other networks like Mastercard, AmEx, Discover, JCB, China UnionPay, etc. Or FedNow in the US. I've heard lots of payments folks shrug this off, but the evidence from PIX in Brazil and UPI in India is that it decimates credit card rail revenue. If you can process a payment up to $100k, $500k, etc for ~5 cents a transaction, I'm definitely not going to eat 3-5% as a merchant. Margins will compress as system participants coalesce around a utility at utility pricing. https://bfsi.economictimes.indiatimes.com/news/fintech/brazils-pix-payment-system-surpasses-credit-and-debit-card-transactions-in-q1/102221920 https://bfsi.economictimes.indiatimes.com/news/fintech/brazi...
    - lotsofpulp 3y ago
      Ideally, but investors in the market do not seem worried based on share price movements for the aforementioned businesses.

hcmacro 3y ago

So Stripe going to get marked down again? Tough to IPO this far below your valuation high water mark, at least judging from its closest comp.

kerkeslager 3y ago

I'm not saying they're a good company, but nothing I'm seeing here justifies a 40% drop. I'd need to do more analysis to have a better hypothesis, but this might be temporarily undervalued.

the-dude 3y ago
Maybe it is not just them, but broader market expectations?
ye-olde-sysrq 3y ago
It could be that this is showing drying up of future (or near-term future) possibilities that this is a high-growth company. If investors were predicting they'd be growing at a certain rate (and a higher rate commands an exponentially higher P/E multiple) and now that rate is lower or even flat (or even shrinking), then that's going to be a big drop as a "small" movement on the X axis (of growth rate) produces a much larger movement down the Y-axis since it's an exponential relationship. TLDR if investors see this as a "party's over" signal and most of the big/easy growth is behind, they're going to flee.
eigenvalue 3y ago
More likely is that it was very overvalued before this, and now it's closer to a reasonable valuation given the deteriorating trends. It's still trading at something like 18+ times revenue. For Paypal, this stat is more like 2.3x, (although Paypal's EBITDA margin is a bit less than half of Adyen's, and clearly Paypal is more mature at this point). Still, even adjusting for that, Adyen remains very dramatically more expensive.