Adyen lowers mid-term sales target, aims to slow hiring

FILE PHOTO: The Adyen logo is seen at the reception desk of the company's headquarters in Amsterdam

(Reuters) - Adyen on Wednesday cut its medium-term sales target, earning praise from analysts who said the new forecast was more realistic at a time when the digital payments sector is struggling.

The Netherlands-based company, whose clients include Netflix, Meta and Spotify, said it expects net sales to grow annually between a low to high twenties percentage, while it had previously forecast percentage growth between mid-twenties and low thirties.

"Despite guidance being lowered, we see this as a positive as it's more realistic," J.P.Morgan analysts wrote in a note, adding the release is a "major relief" that will reassure investors.

"Overall targets are lowered from previous targets and while likely more realistic, they still look ambitious," Jefferies analysts said in a note.

Adyen added it would aim to improve its core profit (EBITDA) margin to above 50% in 2026.

The group's third quarter net revenue rose 22% year-on-year to 413.6 million euros ($442.92 million).

Adyen's American Depository Receipts rose about 30% at 1803 GMT on the New York stock exchange, with Jefferies flagging the results as "more encouraging".

The digital payments sector faces an investor exodus as inflation-hit consumers spend less money, while tougher regulatory scrutiny is also lurking.

France's Worldline's shares tanked last month - sparking a sell-off in the sector - after it shocked investors with the size of its full-year guidance cut and comments that it had ditched some clients amid rising fraud.

This year so far, Adyen has lost about half its market value which currently stands at 21.58 billion euros.

The group is dealing with high wage costs and tough competition in the U.S. - a key market - as some rivals there are slashing prices.

It said it would slow down hiring, and that it hired 175 full-time employees over the quarter, which was "substantially below" Jefferies' expectations.

($1 = 0.9344 euros)

(Reporting by Olivier Sorgho and Piotr Lipinski; Editing by Elaine Hardcastle and Josie Kao)