Adyen (ISIN: NL0012969182) is one of the world's leading providers of payment infrastructure. In recent years, the European company has evolved from a fast-growing fintech to a highly profitable platform with global reach. It benefits structurally from the global trend toward digital payments, e-commerce, and omnichannel retailing. At the same time, Adyen is also one of the few payment companies that combines strong growth with very high profitability and a solid balance sheet. For investors, the stock has always been an exception, but also interesting because it combined several key investment themes. These included structural market growth, platform economies of scale, high margins, and strong customer loyalty. However, the equity story has begun to show cracks. After multiplying in value and reaching an all-time high of around €2,745 toward the end of 2021, the stock has fallen sharply.
Source: Stock price
Currently, the share price is only around one-third of its 2021 value. However, the long-term outlook remains positive. There are reasons for the sell-off. For example, investors are increasingly realizing that Adyen is no longer a classic early-stage growth stock. Growth has normalized in recent years, while the valuation continues to reflect a quality premium. This creates a typical quality growth story with increased valuation risks. However, risks are also emerging from new competitors such as Apple and Alphabet. Although they do not yet offer the same as Adyen, there is great concern that these well-capitalized corporations could challenge Adyen and Co. for business. Today's Adyen stock analysis therefore assesses four key questions: How strong is the business model structurally? How sustainable is growth in the current competitive environment? How justified is the current valuation? And what opportunities and risks arise from competition, market structure, and big tech influence in the payments market?
Adyen's business model is based on providing companies worldwide with a uniform payment infrastructure. Adyen enables merchants to process payments online, in stores, and in apps, for example. Essentially, Adyen earns money by technically operating and controlling the entire payment process for merchants. Its own platform connects merchants directly to card networks, banks, and local payment methods. Adyen also handles functions such as payouts, reporting, and data analysis. This allows merchants to manage their payments and financial processes from a single source, while Adyen indirectly earns money from every payment processed. What makes the core business unique, however, is that Adyen operates the entire payment “stack” itself, rather than simply integrating many third-party providers. This reduces costs and complexity and allows Adyen to serve large merchants globally via a single platform. At the same time, the business model grows strongly with the payment volume of customers, as more sales automatically mean more transactions processed via Adyen. The focus was early on on fast-growing start-ups. This allowed the company to benefit dynamically from their growth.
Source: StocksGuide AI
The revenue model clearly focuses on the transaction. Adyen primarily earns money from fees per payment. These typically consist of a fixed amount plus a percentage of the transaction value. This means that revenue is directly linked to the success of the merchants: if merchants sell more, Adyen's revenue also increases. In addition, fees are charged for the payout and settlement of funds to merchants – known as settlement fees. In addition to these basic fees, Adyen systematically taps into other revenue sources along the payment chain. These include platform and service fees, for example for fraud prevention, data analysis, POS solutions, or additional financial functions. In some cases, there are also subscription-like fees for premium features or platform access. The additional services increase customer loyalty and ensure recurring revenue beyond the pure transaction. Another important aspect is the so-called “interchange-plus” model. Adyen passes on many external costs – such as card network fees – directly and earns primarily from a surcharge for its own payment and acquiring services. This keeps the pricing structure transparent, while Adyen achieves stable margins on large volumes. Almost 99 percent of net sales can be attributed to this area. Around one percent of sales are attributable to interest income.
The market for digital payment processing has a number of special features that distinguish it significantly from traditional software or financial markets. One key feature, for example, is its very strong structural growth. Digital payments are continuously increasing worldwide. More and more consumers are paying online, via mobile devices, or contactlessly. In the long term, the global market for payment processing is growing by around 15 to 16 percent per year. This growth is primarily driven by e-commerce, mobile wallets, and automation in companies. At the same time, over 70 percent of consumers now prefer digital transactions, which is strengthening the structural tailwind for providers such as Adyen. Another important point in this context is the platform and network characteristics of the market. Payment providers are strongly embedded in the existing financial infrastructure, which includes card networks, banks, and regulatory systems. This in turn leads to high barriers to entry, as new providers must first establish global licenses, compliance systems, banking partnerships, and the trust of merchants. At the same time, however, this also creates a strong scaling logic: once you are processing large volumes, you can reduce costs per transaction and improve margins. These market characteristics present several opportunities for companies such as Adyen.
Source: StocksGuide AI
The most important opportunity is probably long-term growth through the digitization of payment transactions. The trend toward omnichannel commerce, real-time payments, international e-commerce, and embedded finance means that more and more payment volumes are being processed via platform providers. At the same time, merchants are increasingly investing in integrated payment systems and multichannel gateways, which is driving up demand for complete platforms such as those offered by Adyen. However, another opportunity lies in technological differentiation. Providers that offer an integrated platform instead of many individual solutions can make better use of data, detect fraud more effectively, and integrate new payment methods more quickly. In addition, new sources of revenue can be created through value-added services such as fraud prevention, data analysis, or financial products along the payment chain.
Let us now consider the risks. A key risk comes from competitors in the fintech and big tech sectors. New technologies, aggressive pricing strategies, or high investments in research and development can quickly lead to shifts in market share. For example, competitors are gaining market share through strong API integration, global expansion, or new technologies such as blockchain-based payment methods. However, a key risk lies in regulation and dependence on infrastructure partners. Payment providers must comply with complex financial regulations worldwide. Changes in regulation, data protection, or authentication requirements can quickly increase costs or change business models. In fact, these regulations and compliance requirements are a moat in practice. In addition, payment providers are indirectly dependent on card networks and banks, which can change their prices or rules. There is also a structural risk in the area of cybersecurity and fraud. Unfortunately, increasing digitalization also increases the vulnerability to phishing, malware, or data leaks. Security incidents can quickly cause high financial losses and a loss of trust, which in turn can lead to increased investment in security and compliance.
Source: StocksGuide AI
Adyen's competitive landscape is broad and multifaceted, as the payments market encompasses several segments: traditional payment processors, modern fintech platforms, wallet ecosystems, and integrated payment providers that utilize software. At its core, however, Adyen primarily competes with global payment platforms such as Stripe, PayPal (via Braintree), FIS, Global Payments, and Fiserv, as well as rapidly growing fintechs like Checkout.com. Simultaneously, competition is emerging from software-based providers like Block and Toast, which integrate payments directly into business software. A particularly important competitor is Stripe. The company is considered a classic "API-first" counterpart to Adyen. While Adyen has historically been strongly represented in the enterprise segment, Stripe originated in the developer and startup world and is increasingly expanding towards large enterprise customers. Stripe competes with its developer-friendliness, a broad ecosystem of additional financial products, and very fast integration. For many digital business models, Stripe appears more like a complete financial infrastructure, whereas Adyen is more strongly positioned as a core payment platform. PayPal is also a key competitor, albeit with a slightly different focus. PayPal primarily leverages its vast reach in the consumer wallet market and its brand trust. Through Braintree, PayPal competes directly with Adyen and Stripe in the unbranded payment processing sector. This allows PayPal to exert pressure through both end-customer relationships and merchant services. Another important competitive segment consists of large, traditional payment infrastructure companies such as Fiserv, FIS, Worldpay, and Global Payments. These companies compete primarily based on their enormous economies of scale, their banking relationships, and their existing merchant networks. Worldpay, due to its size and historical transaction data, can offer high authorization rates and global coverage. Consolidations, such as the merger of Global Payments and Worldpay, demonstrate that these established companies are joining forces to remain competitive against fintech platforms. Additionally, there is a new generation of competitors from the software sector, namely companies like Block, Toast, and Lightspeed. They integrate payments directly into merchant software, thereby creating strong customer loyalty. This shifts the focus of competition from the price per transaction to the total value of the software platform.
Source: Market Cap
Recent developments also show, however, that platform ecosystems like those of Apple or Alphabet can pose the greatest threat to fintechs without deep integration. Accordingly, the shares of the largest players have performed poorly. Nevertheless, an investment over 20 years would have been worthwhile – except for PayPal. Over the last three years, however, all players have been in the red. Is something worse looming? I think we need to differentiate. If it's just about pure payment processing, some providers are likely to run into problems. However, the situation is different with Adyen. Apple Pay and Google Wallet are not direct competitors, but rather gatekeepers. They are currently only establishing additional layers in the payment ecosystem and are not replacing existing infrastructure or entire ecosystems. Every payment made through these providers still goes through Visa or Mastercard, or through providers like Adyen or Stripe.
Fintech stock valuations are extremely attractive. Even in terms of growth, they still have a lot to offer, although not the explosive growth of a few years ago. Only Adyen can still boast revenue growth in the high double digits. However, even here, a steady slowdown in growth is evident.
In the second half of the year, Adyen demonstrated that its business model remains very stable, although growth declined again to 17 percent. This was partly due to currency weakness. Adjusted for this effect, revenue still increased by 21 percent. The company continues to grow solidly, primarily through the expansion of existing major client relationships and international growth. At the same time, Adyen's operational discipline is evident. This is reflected in further increasing profitability and very strong cash generation.
Source: Adyen earnings
From an operational perspective, it was particularly important to recognize that transaction volume continued to grow – even when excluding the revenues of large individual customers. This growth was demonstrated by a 19 percent increase in processed volume to €745 trillion. Simultaneously, the point-of-sale (POS) payments sector is performing exceptionally well, with growth of 26 percent year-over-year reaching €173 trillion. This further demonstrates Adyen's strong position within the omnichannel trend and its reliance on online retail is not the only factor. The operational quality of the business is also very positive. Profitability has continued to rise and remains at an exceptionally high level for platform and payment companies. EBITDA increased by 23 percent, resulting in a margin of 55 percent. At the same time, a significant portion of profits is converted into free cash flow, with a continued high free cash flow conversion rate of 86 percent. This confirms once again that the business model is not only profitable on paper but also generates real cash flow. The investment required remains moderate, which is typical for highly scalable platform models.
Strategically, Adyen has made several important advances. The company is increasingly expanding its platform beyond pure payment processing. This includes, for example, data-driven conversion optimization tools, embedded finance products, and solutions for managing cash flows within companies. The area of embedded finance products is currently experiencing particularly strong growth. Technologically, Adyen is also clearly positioning itself as a next-generation platform provider. Initiatives surrounding AI-powered commerce, real-time data processing, and partnerships with major technology and cloud companies demonstrate that Adyen is striving to establish itself as a long-term infrastructure layer in digital commerce and not just be perceived as a payment provider. Its current strength is particularly evident in the enterprise segment. Adyen continues to acquire very large, global customers and is rapidly scaling existing partnerships across numerous countries and sales channels.
The forecast shows that Adyen is strategically focusing on a combination of solid growth and very high profitability. While the company does not expect extreme hyper-growth in the coming years, it anticipates more stable and predictable growth at a consistently high level. Specifically, Adyen expects low double-digit growth of 20 to 22 percent for 2026. Regarding profitability, the focus is clearly on efficiency and scaling. In the short term, the operating margin is expected to remain stable at its current high level of 53% for the full year 2025. In the medium to long term, however, Adyen plans to further increase profitability. Specifically, this could mean that the EBITDA margin will exceed 55 percent by 2028.
Source: StocksGuide Charts
For investors, the investment strategy is also particularly important. In this context, Adyen plans to maintain a comparatively low capital requirement relative to revenue. This means that growth doesn't have to be bought with high investments in infrastructure or hardware. Instead, a large portion of the cash flow can remain in the company or be used for expansion, product development, or capital returns. Nevertheless, this results in a somewhat weaker return on capital employed (ROCE). On the positive side, however, this low investment level allows for the generation of steadily increasing earnings (EBITDA). Adyen traditionally does not pay dividends or engage in share buybacks.
Looking at the investor reaction, the figures for the second half of the year and the full year 2025 were not well received on the stock market. The share price fell by more than 20 percent after the publication.
A key trigger for this was the combination of solid, but uninspiring, operating figures and a cautious forecast. While revenue growth remains structurally strong, it is more in the realm of steady growth than the classic high-growth pace. For a highly valued stock, "good" is often insufficient, as investors expect acceleration or at least figures that significantly exceed expectations. If these fail to materialize, revaluations quickly follow. Adyen's transaction volume, which fell short of market expectations, was also received particularly negatively. Since the business model depends directly on payment volume, transaction volume is considered a leading indicator of future revenue growth. The guidance for the following year is also a factor.
The High-Growth Investing (HGI) strategy is a systematic method for evaluating technology or platform companies with very strong growth. It is long-term oriented and aims to identify companies early on that have the potential to become true cash flow generators. This approach doesn't use traditional value metrics like the price-to-earnings ratio (P/E ratio), but primarily focuses on growth, scalability, and efficiency indicators. A key element of the strategy is a points system. Six metrics are evaluated, with each metric scoring between 0 and 3 points. This results in a maximum score of 18 points. Companies scoring around 12 points or higher are considered very attractive within the HGI framework – as is currently the case with Adyen stock.
Source: HGI analysis
An HGI score of 15 points clearly places the company in the upper range and signals that the business model is very attractive, even if not all growth metrics are optimal. The maximum score was achieved in all categories except growth. The gross margin of over 88 percent is particularly noteworthy. For HGI investors, it is a key indicator of the platform's quality. High margins demonstrate that the business model is highly scalable and that additional revenue can later be converted into substantial operating profits. Especially in the payment platform sector, this is an indicator of technological control over the payment stack and low variable costs per additional transaction. With a Rule of 40 score of over 170 percent, the company is also exceptionally well-positioned. However, this score is somewhat misleading. Free cash flow of €3.8 billion grew by almost 58 percent over the last twelve months – primarily due to a massive increase in Payables to Merchants. These are funds that Adyen has already received for its merchants but has not yet paid out to them as of the reporting date. This effect needs to be put into perspective. Last year, for example, the figure was around €54 million. By 2025, approximately €1 billion in free cash flow is expected to have been generated, corresponding to a free cash flow margin of around 40 percent. Specifically regarding the Rule of 40 score, this means that the true value for Adyen is only 60 percent. However, it is still high enough to achieve the maximum score. A high free cash flow margin is a typical characteristic of companies entering a cash flow dominance phase. The extremely low debt ratio of 0.05 is also very positive. It shows that growth is financed almost entirely from operating cash flow. For HGI investors, this is a quality indicator, as debt financing increases risk and makes growth less ethical. Adyen also achieved three out of three possible points for both valuation metrics: EV/Sales and PEG ratio. With an EV/Sales ratio of approximately 6.6, Adyen is once again highly attractively valued after the recent market sell-off. The PEG ratio of around 0.9 also indicates a relatively favorable valuation in relation to its growth. For high-growth investors, a PEG ratio of around one is considered fairly valued. A value significantly below one indicates strong undervaluation, and a value significantly above two indicates overvaluation. However, the dynamic growth is the key factor.
From HGI's perspective, the current weak point is clearly revenue growth. While around 20 percent growth is good in absolute terms, 30 to 40 percent is considered top-level in the classic high-growth framework. Therefore, no points are awarded for this. Adyen is thus no longer in the early hyper-scaling stage, but rather in the transition to more stable and predictable growth. The historical growth trajectory is also interesting. With almost 50 percent growth in 2022, the previous hyper-growth phase is clearly evident.
Source: Revenue estimates
With growth of around 21 percent in 2024 and 18 percent for 2025, the new normal is evident: solid, if no longer explosive, growth. Double-digit growth for several years is realistic, eventually settling into single digits.
From a fundamental perspective, the valuation of Adyen stock is not considered favorable. While the stock, with an EV/Sales ratio of 6.6, might just be acceptable for a growth company, the overall valuation is not favorable.
Source: Key metrics
However, a look at revenue growth shows that this isn't necessarily the case. While revenue is currently growing by around 20 percent, less than 10 percent is expected in the future. That's anything but high-growth investing. Although the expected P/E ratio of almost 26 is likely to fall further, it's still high. As the following chart shows, Adyen could nevertheless grow into its valuation over the long term.
Source: EPS
Looking at market sentiment, however, revenue growth is steadily declining. This is primarily due to market saturation and increased competition. First, though, it's important to understand why Adyen was valued so highly in the first place. The answer is simple: the Dutch company has been among the most profitable payment platforms worldwide for years. It achieved high margins very early on and simultaneously grew exponentially. The problem arises, however, when growth slows while the valuation remains high. This is precisely what has happened to Adyen recently. While the company continued to report revenue growth of around 20 percent, it had to lower its forecasts because payment volume growth was weaker than expected. At the same time, revenue and EBITDA partially missed analyst estimates. An important factor, however, is that the payments market itself has become more cyclical. When merchants generate less revenue or global trade flows shift, payment volume automatically decreases. Adyen, for example, had to lower its forecast because tariffs and weaker trade flows reduced payment activity from some customers. Additionally, segment data shows that certain areas are growing more slowly, such as online retailers from Asia or the digital e-commerce sector. All of this suggests that Adyen is more dependent on macroeconomic trends than previously assumed.This effect is amplified by competition. Adyen competes directly with global payment giants like PayPal, Stripe, and Fiserv, as well as with regional players like Worldline and Nexi. They are aggressively vying for market share – sometimes through pricing or bundled offerings with banking services. This is particularly relevant for Adyen, as the company deliberately pursues a premium positioning. It focuses heavily on large enterprise customers and offers a highly integrated platform. This model enables high customer retention and margins, but also limits growth, as the market for very large merchants is limited. If these customers grow more slowly or shift their volume, it immediately impacts Adyen. There is also a structural effect: as size increases, growth automatically becomes more difficult. Adyen already processes enormous payment volumes and is growing from a large base. While analysts expect further growth in the long term, they anticipate it to be in the low double-digit range rather than hypergrowth.
From a fundamental perspective, Adyen remains one of the strongest platform companies in the global payments market. Its business model is highly scalable, margins are exceptionally high, and its balance sheet is extremely solid. Key figures such as the very high gross margin, the exceptionally strong Rule of 40 score, and the virtually non-existent debt demonstrate Adyen's high efficiency. At the same time, the stock is demanding from a valuation perspective. Multiples such as the relatively high EV/Sales ratio indicate that the market continues to price in premium quality. This valuation is based on the expectation that Adyen will experience long-term structural growth, maintain market share, and remain highly profitable. As long as these assumptions hold true, a higher valuation can certainly be justified. However, the central risk for the stock is a slowdown in growth. With revenue growth of around 20 percent, Adyen is still growing solidly, but no longer at the classic high-growth pace. Since growth stocks are valued significantly above future expectations, investors understandably react sensitively to any slowdown in growth. And there have been some recent geopolitical indications of this. Furthermore, Adyen is now growing from a very large base, which structurally makes further acceleration more difficult. Competition also remains an important valuation factor. In the long term, Stripe, PayPal, traditional payment infrastructure players, and to some extent also Big Tech wallets, will increase price pressure and potentially limit margin expansion. Not only is direct competition in processing relevant, but also the control of the customer interface by wallet ecosystems like Apple Pay or Google Pay. In the long term, Adyen could therefore be more of a quality compounder than a classic hyper-growth stock. This means more stable, but slower growth with simultaneously high profitability. For investors, the stock is therefore better suited to a portfolio of high-quality, long-term platform companies.
Source: Target price
Despite its ambitious valuation, most analysts recommend buying the stock. Specifically, 76 percent of the 38 analysts recommend it. Only two percent advise selling. The average price target is €1,836. Based on the current price, this represents a potential upside of more than 100 percent within a year. In the medium term, the stock is trading sideways, while in the short term, it is down by more than 50 percent over the past year. A breakout can only be achieved with convincing fundamentals. The company must, above all, achieve a turnaround towards greater growth. Furthermore, the company must convince investors that it will not be a loser in the digital payment processing market. Those who find the stock generally interesting but do not want to buy it at this price given the risks mentioned can set an alert here on aktien.guide. In my opinion, a P/E ratio of 25 would be an interesting benchmark to revisit the stock.
The author and/or persons or companies associated with StocksGuide own or may own shares of Adyen. This article represents an expression of opinion and does not constitute investment advice. Please note the legal information.