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Adyen Executives Cite Digital Disruption Strengths as Volume Growth Slows

Dutch payments firm Adyen saw its shares slide Thursday (Nov. 7) after the business reported a slowdown in the growth of its transaction volumes in the third quarter.

While the company achieved revenue gains of 498.3 million euros (about $538.7 million) in Q3 2024, up 21% year over year, per a Thursday press release, investors reacted to a slowdown in transaction volume growth — a key driver of the payments processor’s business.

Transaction volumes themselves continued to grow — just not at a breakneck pace. Overall transaction volume of 320.6 billion euros, which grew 32% year over year, was less vigorous than in previous quarters.

Digital processed volumes grew 29% year over year, the release said, lower than in the second quarter of 2024 due to impacts from a single large-volume customer, Block’s Cash App. Adyen has benefited from partnership growth with its North American clients, such as Cash App in the United States and Shopify in Canada.

“As we continue to build Adyen for the long term, the third quarter of 2024 marked a period of strong growth and continued innovation,” Adyen Chief Financial Officer Ethan Tandowsky said in the release. “Our net revenue growth of 21% at constant currency was driven by our ability to consistently execute on our land-and-expand strategy with our existing customers, in line with the building blocks that we outlined in 2023.”

Growth continues to be driven by longstanding underlying trends including wallet share expansion, further diversification in merchant mix and winning new business, according to an Adyen business update released Thursday. Existing customers continue to drive the majority of the firm’s growth.

“It’s always our ambition to win volumes through performance, providing the best service and product so they bring us additional volume, not by sticking them with long-term contracts they can’t get out of,” said Adyen leadership to investors during an earnings call, adding that existing customers continue to drive most of the growth.

Growth in Unified Commerce Customers

Adyen’s technology, which supports online and in-store payments, continued to gain traction across major markets.

Adyen’s platform offers a closed-loop payment system with worldwide processing, acquiring, local payment methods and like-for-like settlement capabilities. This reduces the amount of contracts and integrations for IT operations, for more simplified financial reporting and customer data management.

The firm observed stronger traction from in-store payments in the third quarter, with its Unified Commerce point-of-sale terminals seeing 33% year-over-year growth. Its installed base of physical payment devices increased by 46,000 to 299,000. Large-format retail and hospitality remain among Adyen’s fastest-growing verticals, the update said.

The business now has 559 customers processing across multiple regions with its omnichannel offering, up 91 year over year, per the update.

“There’s a lot of change in what people think a payment terminal is,” Adyen executives said during the call. “…As that ecosystem continues to develop and shopping behaviors change, there will be further opportunity to disrupt how in-person payments play out.”

Software point-of-sale (SoftPOS) solutions like Tap to Pay are likely to become game changers for merchants of all sizes, according to the PYMNTS Intelligence report “How SoftPOS Is Poised to Revolutionize Payments.”

The report said three-quarters of merchants expect SoftPOS to replace traditional POS systems in the future.

“We see a lot of opportunity in embedded products, but it’s still too early … in terms of driving net revenue growth,” Tandowsky said during the call.

The PYMNTS Intelligence report “Divided, Not Conquered: Acquirer and Merchant Confusion Clouds Split-Payments Landscape” found merchants often struggle to provide buy now, pay later (BNPL) options to their customers.

Thirty-five percent of merchants offer BNPL online during checkout, while just about half of that share do so during checkout in brick-and-mortar stores. By the same token, shoppers are twice as likely to be notified about BNPL options before checking out online as they are to be informed via signage in physical stores, the report said.

Adyen expanded hiring slightly, adding 35 new people in the quarter, per the business update. The firm has been taking on fewer workers due to concerns over increased hiring costs during a spree last year.

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