While many financial institutions are feeling the negative effects of lockdown measures across the globe, Netherlands-based fintech company, Adyen, has reported record profits. This, according to their CFO, is due to increased online purchasing heightened by the outbreak.
Adyen Reports Nearly $146 Million in Q1 2020
The ongoing COVID-19 situation and subsequent lockdown measures around the globe have spelled great changes in the financial world. This includes institutions being forced to close their offices and layoff staff as it is estimated the virus will cost firms in the United States billions of dollars in 2020 and beyond.
Despite the impending losses and impact on the employment market, some companies, particularly those that offer online payment services, have seen a boost in profits. One of these companies is Adyen, a Dutch financial technology firm, which has seen a sharp increase in revenue and profits following the outbreak. This information comes courtesy of their results which was made public on April 21, 2020.
According to the report, the company saw revenue of $146.9 million, which indicates an increase of 34 percent from 2019. There was also a 16 percent increase in their earnings before taxes and interest to 63.6 million euros. The company elected to release this information on a quarterly basis this year, which is in contrast to their usual system of releasing semi-annual and annual earnings reports.
Despite this, the company saw a 9% decrease in their profit margin from 56% to 47%, though this can be attributed to their investment in new hires and the coronavirus’s impact on the market. According to their Chief Financial Officer, Ingo Uytdehaage, there was a decline in transaction volume in the last month and this is due to the closure of stores and the ceasing of airline activities. The same day that the firm’s earnings report was released, their stock rose by 9%, making them one of the biggest earners on the pan-European Stoxx 600 Index.
COVID-19 Results in Drastic Spike in Online Retail
Besides the company’s profitable first quarter, their Chief Financial Officer has also spoken on the shift in consumer culture, stating that there has been an uptick in online retail volume. He believes that this is indicative of a change in how consumers make their purchases. Other companies whose services are delivered over the internet such as Netflix (which Adyen processes payments for) have seen growth in their customer base in the last month.
Adyen’s employee culture has also helped them thrive despite the virus as the company continued to hire new staff in the first quarter and had a rather smooth transition to remote working. Uytdehaage has said that the company has always treated their offices like an internet cafe and this has allowed employees to effectively work from home for the last month.
The COVID-19 outbreak will likely have far-reaching implications for the larger world because it proves how essential online businesses. In the modern world, many businesses need to adapt to the internet — or they risk being left behind. Uytdehaage’s statements show that e-commerce is here to stay and a shift in consumer culture is inevitable.
Do you think online purchasing will eventually become the consumer marketplace of the world? Comment below and let us know.
Image courtesy of CNBC.