Adyen shares dip on slower volume growth

Investing.com -- Adyen 's (AS:ADYEN ) shares took a hit after the company's transaction volume growth came in slower than anticipated for Q3. 

At 5:32 am (1032 GMT), Adyen was trading 6.5% lower at €1,287.40.

The payment processor reported a 32% increase in volume for Q3, which missed analysts' expectations of 43% growth. 

The bulk of the miss can be attributed to a sharp deceleration in volumes from Square’s CashApp, which Adyen noted has a low impact on revenue despite its high transaction volume. 

“Volumes weaker but take rate better due to merchant impact in base – we’d prefer this mix given the choice,” said analysts at Morgan Stanley (NYSE:MS ) in a note.

Adyen said that the core growth patterns remained steady, implying the decrease in Digital volumes was not a recurring trend.

While the overall volume growth miss raised some doubts, revenue growth remained solid. 

The company reported a 21% year-on-year increase in revenue, in line with market expectations. 

The net revenue was in line with forecasts, and the net take rate slightly increased compared to the previous quarter, which could suggest resilience in its core business, despite the slowdown in some key areas. 

“While there are some moving parts, 21% rev growth is still encouraging considering the weak market backdrop,” said analysts at Barclays (LON:BARC ) in a note.

However, the overall growth deceleration in volumes, especially in the Digital vertical, has spooked some investors, leading to the drop in share price.

Other segments within Adyen showed mixed results. Unified Commerce, a key area for the company, continued its strong performance, with volume growth accelerating to 33% year-on-year. 

Within this, Point-of-Sale volumes stood out, growing 45% year-on-year, while eCommerce volumes grew at a slower pace of 29%, compared to 46% growth in Q2. 

Platforms also showed solid growth, with volumes up 54% year-on-year when excluding eBay (NASDAQ:EBAY ), although this was a deceleration compared to earlier quarters.

Despite the slowdown in growth, Adyen's performance in platforms and Unified Commerce suggests it still has strong customer acquisition potential. 

The company saw an increase in the number of business customers, with 22,000 new customers added in Q3 alone. Adyen also noted growth in the number of platforms processing over €1 billion, showing the continued scaling of its key verticals.

Another factor that stood out in the quarter was Adyen's relatively slow hiring pace. The company added just 72 new employees year-to-date, with only 35 hires in Q3.

This slow hiring rate has been viewed positively by some analysts, as it suggests Adyen could maintain strong margins moving forward, particularly in the second half of 2024 and into the first half of 2025.

Source: Investing.com