(Reuters) - Shares of Dutch payments company Adyen jumped by nearly a quarter on Thursday after it beat 2023 earnings expectations, helped by its digital business and stricter cost control.
The shares had sunk to a four-year low in October after a cut in earnings guidance from rival Worldline fuelled a sector-wide sell-off, adding to losses incurred after Adyen disappointed with weak first-half earnings in August.
It then released what analysts described as "more realistic" medium-term guidance in November, along with a plan to slow hiring.
Net revenue for 2023 rose 22% from the previous year to 1.63 billion euros ($1.75 billion), Adyen said on Thursday, as it confirmed its financial targets for the current year.
Having risen as much as 24%, its shares were up 18.6% on the day by 1446 GMT at 1,404.6 euros, recovering to levels seen before August's earnings announcement.
"Expanding existing customer relationships delivered a period of profitable growth," Adyen said in a statement.
It highlighted its relationship with U.S. payments firm Cash App, saying that it had ramped up processing of its domestic volumes.
UBS analyst Justin Forsythe said in a note that even without Cash App, Adyen's digital volume trends would still have been stable.
Core profit rose 2% to 743 million euros, above the 720.6 million expected by analysts in an LSEG poll.
The company said its core profit margin rose to 48% in the second half of 2023, from 43% a year earlier, helped by the slower hiring.
Adyen has grown into one of Europe's most valuable financial firms with a market capitalisation that hit more than $46 billion following Thursday's results.
That compares to $43 billion Dutch lender ING and $39 billion for France's Credit Agricole (EPA:CAGR), according to LSEG Eikon data. If it were a bank, Adyen would be Europe's eighth largest by market value behind Italy's UniCredit (LON:0RLS).
The payments industry flourished during the COVID-19 pandemic but is now dealing with a drop in consumer spending and tougher regulatory scrutiny aimed at combatting online fraud risks.
JPMorgan (NYSE:JPM) said Adyen's volume growth and improved profitability will please investors, with the only concern being that the better than expected results were driven by a single customer.
($1 = 0.9304 euros)