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Adyen shares hit report highs because the cost firm beats earnings estimates for 2020

Pieter van der Does, managing director of Adyen.

Simon Dawson | Bloomberg | Getty Images

LONDON – Dutch online payments company Adyen saw its shares surge over 10% on Wednesday, hitting a record high after posting an annual profit that exceeded expectations.

Adyen announced that full-year 2020 earnings were € 402.5 million ($ 488.2 million), 27% more than last year and, according to Reuters, surpassed the € 386 million analysts expected in a refinitive poll .

The company posted net sales of € 684.2 million last year, up 28% from 2019 as it benefited from an increase in e-commerce volume during the coronavirus pandemic.

Adyen's shares hit an all-time high of € 2,123 on Wednesday after the 2020 figures were released.

According to the company, the processed payment volume amounted to 303.6 billion euros in 2020, an increase of 27% compared to the previous year. The profit margin for the full year was 59%, an improvement from 56% in 2019.

In the second half of the year, according to Adyen, sales rose by 28% year-on-year to EUR 379.4 million, while profits rose by 36% to EUR 236.8 million.

Pieter van der Does, CEO of Adyen, said the company proved "resilient" in the second half of 2020, adding that North American activity increased sharply in 2020.

"The company's resilience over the period was enhanced by the continued diversification of our dealer base across industries and regions," said van der Does in a letter to shareholders. "Most notable is the rate at which net sales in North America have grown."

"With a year-over-year increase of 70%, the region's net sales contributions rose to 20% of total net sales in the second half of 2020, compared to 15% in the second half of 2019."

Despite the tailwind from the increased demand for online payments, Adyen saw slow growth in 2020 as travel volumes fell sharply. Nevertheless, profitable growth is seldom observed in the fintech sector. Start-ups such as Revolut and N26, for example, are still very loss-making.

Not like a consumer fintech platform, Adyen focuses on making payments to businesses. The company offers payment services for companies like Uber, Spotify and Netflix.

Adyen, which competes with the US company Stripe and the British start-up Checkout.com, went public on the Amsterdam Stock Exchange in 2018. Alongside Spotify, Adyen's IPO has been one of the most famous tech listings in Europe in recent years.

Since its debut, Adyen's shares have risen more than 700%. With a market value of
At € 63 billion, the company is now worth more than some of Europe's largest banks, including BNP Paribas and Santander.

Despite securing a strong position in the payment technology market, increasing competition from privately held competitors should keep Adyen on its toes. Stripe raised $ 600 million on a valuation of $ 36 billion last year and is reportedly on track for additional funding with a market value of up to $ 100 billion. Stripe declined to comment on reports of the fundraising.

Meanwhile, Checkout.com completed a $ 450 million investment round last month valued at $ 15 billion, making it the most valuable fintech unicorn in Europe.

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