ADYEN Adyen NV

   By Mauro Orru 
 

Shares of companies operating in the European fintech industry slumped on Wednesday after France's Worldline warned of a slowdown in the German market, long regarded as the economic powerhouse of the continent.

Worldline shares lost more than half of their value after the payments company reported third-quarter revenue below analysts' expectations and slashed its guidance for the year.

"After a solid start of the year, we now enter into a second semester where the macro environment deteriorates, in particular in Germany," said Worldline Chief Executive Gilles Grapinet.

Consumers have diverted more of their spending to so-called nondiscretionary expenses that are deemed essential such as housing and food, rather than discretionary expenses like entertainment or luxury goods, a development that harmed its profitability, Worldline said.

European consumers are grappling with inflation and high interest rates that are testing their spending habits, forcing many to prioritize essentials such as food over the occasional indulgence. Germany's gross domestic product is set to contract by 0.4% as a whole in 2023, according to European Commission forecasts from September.

At 1010 GMT, Worldline shares traded 57% lower at EUR9.90. Shares of Italy's Nexi are down 20%, while shares in Dutch payments company Adyen trade 11% lower. Shares of London-listed fintech group CAB Payments Holdings are down 9.5%.

Worldline on Wednesday posted revenue of 1.18 billion euros ($1.25 billion) for the third quarter, up 4.8% on year organically, led by growth at its core merchant services business. However, Citi analysts had forecast EUR1.22 billion in revenue, they wrote in a research note.

Jefferies analysts said Worldline's performance showed its merchant services business had reckoned with the macroeconomic slowdown in Germany, which is Worldline's largest end-market. Revenue at the unit rose 7.6% organically to EUR868 million, missing Jefferies's EUR887 million forecast.

Worldline now expects organic revenue growth of 6% to 7% for the year, down from a previous range of 8% to 10%. The group's operating margin before depreciation and amortization should be stable in absolute value, or decline by about 150 basis points compared with 2022. Worldline had previously guided for an improvement of more than 100 basis points.

Ed Frankl contributed to this article.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

October 25, 2023 06:45 ET (10:45 GMT)

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