Adyen CEO Pieter van der Does

Adyen’s shares fell Thursday after the global provider of commercial payment systems missed margin guidance as increased investment in the company’s in-store terminals business cut into its profitability.

The company’s Ebitda margin was 59% in the first half of 2022, 6% below its long-term guidance of 65%. The share price reacted, dropping 4% to the equivalent of $1,743 on Euronext after being down nearly 15% earlier in the day. The narrowed profitability was attributed largely to a hiring spree in the first half of the year, in addition to increased travel costs and a charity commitment. Ramping up its offerings to support payments both in-store and online was an investment priority for Adyen, CFO CFO Ingo Uytdehaage told Forbes. The current phase of that investment includes the launch of two new point-of-sale terminals, the company’s first step into payments hardware.

Sales rose to the equivalent of $4 billion in the first six months of the year, up from $2.6 billion a year earlier, while net income gained 38% to $282 million. Earnings per share on the adjusted basis used by analysts were $9.17, vs the $9.40 that had been expected. The first device is a mobile card reader designed to work with a retailer’s existing checkout system on a tablet. The second is an all-in-one payments terminal. The new products come after Adyen launched a new tap-to-pay product in partnership with Apple AAPL last month, which enables merchants to accept card payments directly from a tablet without any additional hardware. Adyen will be competing against payment terminal incumbents, including Clover (from Fiserv FISV ) and Square.

“In a lot of markets there are a lot of domestic players, but if you are an international retailer and active in many markets and want standardization of multiple channels, then we are a very logical company to work with,” Uytdehaage said. “We provide multiple geographies, multiple channels, single integration, lowest cost.”

A casualty of Adyen’s investment in both online and in-store payments processing, also called unified commerce, has been its margin outlook. “I find it very hard to give this year’s guidance or next year guidance on Ebitda percentage because we want to invest in the business,” Uytdehaage said during the earnings call.

Adyen is not looking to make a profit on the physical terminals, Uytdehaage said. However, the new products will help position Adyen as a one-stop shop for payments processing. “It fits really well with that strategy to have basically a terminal or payment device for each and every situation,” Uytdehaage said.

Adyen built its customer base through processing digital payments, but in recent years has shifted its focus to facilitating payments both online and in-store. The development of its in-person offerings, including point-of-sale terminals, comes with investment costs. In the first half of the year Adyen added 395 employees, mostly in software engineering and design teams. The company said it does not plan to slow down its hiring. “If we could hire 400 people in the second half of the same quality we would certainly do so, this will absolutely be the pace we try to keep if we find the right talent,” Uytdehaage said.