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Adyen unveiled its future strategy plans and objectives in the CMD. The newly proposed targets are both ambitious and time-bound, fulfilling the expectations of both investors and AV. The Q3 update was a relief and better than had been feared by investors. Adyen plans to hire more slowly than initially planned, which will improve the profitability expectations. We maintain our BUY recommendation based on the increased confidence in Adyen’s strong single platform.
Companies: Adyen NV
AlphaValue
Adyen’s Q3 trading update revealed that the market’s response has been overly severe. The Q3 numbers exceeded our initial expectations, surpassing our industry peers. In terms of hiring, the company has revised its plans, shifting from the originally projected 550 new hires to a more realistic estimate of around 350. Moreover, the company has established new, attainable targets. We embrace this change in objectives and appreciate having a set deadline to achieve them.
Adyen’s H1 23 results were unexpectedly weak. The EBITDA fell well short of expectations, primarily due to extensive hiring. While the decline in the margin was somewhat anticipated, the situation took a more concerning turn as the revenue growth fell by more than the consensus. Our confidence in Adyen’s platform remains strong. However, our previous optimism about any setbacks being a temporary hurdle has slightly diminished. We now consider the possibility that these setbacks could signify th
Adyen released H2 22 figures that surprised everyone with EBITDA margins shrinking on the back of intense recruiting. However, the firm’s path to growth remains intact and the share price drop (-16% at closing) offers a unique entry point.
As we highlighted a couple of days ago (see our comment on Nov 4), Adyen’s CEO has confirmed that the firm will not be making lay-offs. The CEO’s comment indicated the firm’s disciplined approach to recruitment so far and the fact that growth needs to be fed by talent as Adyen is sourcing new products. Adyen’s CEO mentioned that it plans to slow recruitment only by 2024 and then fully exploit the leverage of the firm’s platform. This confirms our investment case on Adyen.
This is first set of disappointing results since we have covered Adyen. Tensions on the top-line can be sensed and foreseen, while profitability missed materially on the back of more intense hiring. However, we believe this to be temporary while the new generation of embedded finance products is launched and reiterate our belief that the medium-term targets will be met.
Adyen’s capital markets day was much anticipated. In fact, while the broader industry accumulates news of potential disruption stemming from BigTech, the CMD was a timely reminder of what Adyen is about and the future roadmap. Developing in embedded finance is hardly ground-breaking in our view and much will depend on execution where we expect Adyen to deliver.
Results come and go and all look similar. Adyen is once again beating consensus expectations as management shows a sassy control over its business. Despite our recommendation, we believe that, with the visibility over cash flows and the maintained super-efficient business model, the firm is well on its way to recover its previous valuation levels, unless there is a new Central Banks’ coup.
As we previously anticipated, Adyen is now more exposed to North America than any other continent, in terms of gross revenues, highlighting the high tension in the market when comparing net revenues. This implies a lot however, as according to its H1 release, nothing seems to be a drag on its outstanding growth while the world seems very much bonded with its online-shopping habits.
Adyen has announced on Tuesday that the US Federal Reserve had approved its banking license application. While the obtaining the Office of the Comptroller of the Currency’s approval (OCC) remains outstanding, a “formality” as per our industry discussions, the announcement reveals a wrong assumption on our part. We had overstated the BIN-sponsor cost effect, which turns out to reassert -more than ever- our opinion regarding the company’s valuation.
Adyen is piling up money in its balance sheet with no plans to spend it. This is questionable behaviour for which we believe the answer may be that the company is building up some capital to reach the requirement for a US banking licence. However, time is ticking and Adyen needs to keep up with the pace of its American peers. Raising further equity would be the key.
Adyen is releasing FY top-line growth (+28%) which is consistent with the market’s expectations (+1%), sustained by high growth in the US now almost equally weighing with Europe’s gross revenues. The company also disclosed a much higher than expected FY EBITDA margin (61.5% vs 55.5%) and has set its long-term target to more than 65%... 1,000bp higher than the previous 55% target.
Adyen has developed a best-in-class payment software for merchants with unique growth prospects. It’s out of this world valuation has benefitted from the Covid-19 wave(s), Central Banks’ liquidity plans and a self-feeding buy loop (ETF, indices). Even heroic growth assumptions cannot match the recent valuations.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Adyen NV. We currently have 0 research reports from 5 professional analysts.
Alphawave Semi has reduced guidance for FY23 and prospectively citing lower revenues from China, changes in expected revenue recognition from long-term contracts, and continuing investment in R&D. The share price has reacted negatively, giving up most of the gains since the trading statement at the end of January. Current consensus, which is a good match for pre-existing guidance, should be reduced, most likely following release of the FY23 results and full 1Q24 trading update due on 23 April. H
Companies: Alphawave IP Group PLC
Capital Access Group
Audioboom’s FY23 results and Q1 trading update show Q1 24 revenue growth of +11% yoy, $6.7m of March 2024 revenue marking the platform’s highest revenue month since May 2022, and a confident outlook that leads us to reiterate our FY24E forecasts. Following the focus on new initiatives through FY23, the platform is now in its strongest ever operational position, with a record 1.1bn monthly ad impressions created in March 2024, record global audience reach of 38.6m unique global listeners in Janua
Companies: Audioboom Group PLC
Cavendish
Crimson Tide has reported FY23 results to December in line with expectations, with additional operating leverage benefitting updated FY24 and maiden FY25 and FY26 forecasts. FY23 delivered +15% revenue growth to £6.2m at 86% GM, of which over 90% is recurring, and maintained £5.8m ARR even after unexpected customer churn in the year as we previously noted. Crucially, the Group achieved milestone adj EBITDA profitability of £0.4m at 7% EBITDA margin, and edges closer to adj PBT profitability expe
Companies: Crimson Tide Plc
Companies: BILN ELCO NXQ CUSN ATG
Devolver Digital encouragingly delivered 2023 results slightly ahead of expectations and provided a steady medium-term outlook that leads us to reiterate our 2024 Adjusted EBITDA estimates. Longer term, the company is now planning to further develop its two major planned titles, Human Fall Flat 2 and System Era's next major new release. We now expect those major titles to be released in 2026 rather than 2025, meaning we lower our 2025 Adjusted EBITDA forecast to $10.6m from $17.6m but introduce
Companies: Devolver Digital, Inc.
Zeus Capital
Companies: 88E RNO TRIN KRM EXR BOOM
GE Healthcare has announced the launch of the Voluson Signature 20 and 18 ultrasound systems, with the related press release noting these systems ‘comprehensively integrate artificial intelligence’ to improve the ultrasound procedure for clinicians and the women being scanned. These ultrasound systems include SonoLyst, the AI which incorporates Intelligent Ultrasound’s ScanNav Assist and ScanNav AutoCapture AI software. The launch of additional Voluson systems including the SonoLyst suite of AI
Companies: Intelligent Ultrasound Group Plc
Checkit has won contracts with two customers worth at least £417k over the three-year lives of the contracts, confirming its ability to upsell to its existing customer base and supporting our forecasts. Having trialled the new technology with multiple customers, Checkit has launched its Asset Intelligence module, which uses advanced analytics and machine learning to enhance customer sustainability, reduce costs and increase revenue.
Companies: Checkit plc
Edison
Companies: Kainos Group PLC
Canaccord Genuity
ATG’s H1/24 trading statement indicates revenue for the six-month period to 31 March 2024 was $86m, a 6% increase on H1/23 (1% organic growth), helped by the addition of the EstateSales.Net (ESN) marketplace last year, which performed well in the period. Total marketplace revenue increased 2% (organic), driven by growth in value-added services (VAS) and event fees, offsetting a decline in commission revenue (mainly through lower asset prices).
Companies: Auction Technology Group PLC
Companies: Crimson Tide Plc (TIDE:LON)Plant Health Care PLC (PHC:LON)
Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. This morning's full year results reflect the outcome of a multi-year strategy coming to fruition for the group, with recurring revenue growth of 8.7% delivering overall revenue growth of 7.1% and in turn a 60% increase in PBT to £0.7m. Over the past few years, Touchstar has focused on enhancing the returns from their product offering through a shift towards recurring software licen
Companies: Touchstar plc
WHIreland
This report is intended to help UK small- and mid-cap investors gain a better understanding of software companies’ routes to market, and to highlight how one of the most important facets of the way in which they grow and deliver value is routinely ignored. We examine sales processes for six UK-listed companies and one that has recently been taken over, and consider why they have followed their respective paths.
Companies: Idox plc
Progressive Equity Research
Companies: Cirata Plc
Liberum
ENGAGE XR’s FY23 results show revenue and net cash in line with the February trading update, EBITDA ahead at -€4.0m vs -€4.5m due to the split of cash outflow between opex and working capital, and a confident outlook that leads us to reiterate our FY24E forecasts. FY23 revenue for the core ENGAGE platform was unchanged vs FY22 at €3.3m, as H2 23 revenue was impacted by the record seven-figure contract announced in February shifting to 2024, and several enterprise customers scaling back renewals
Companies: Engage XR Holdings PLC
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