Shareholder letter

With each shareholder letter we write, we are a more global business. Of the regions, North America continued to stand out. The region’s contributions rose to 22% of net revenue, growing 80% year-on-year. This acceleration comes on the back of almost a decade of investments. Starting out, we mainly helped US merchants expand outside the region. Today, we are consistently able to win US domestic volume as we are well-positioned to help merchants solve for the evolving complexity in the North American payments landscape (e.g. shopper preferences evolving towards multi-channel shopping journeys and payment method proliferation). There is significant opportunity with both new and existing merchants — our merchant base now includes household names such as Airbnb, American Eagle, and Slice. The trend in our North American footprint mirrors our historical track record — we see increased opportunity when the environment grows more complex.

Consistent with previous periods, the cadence of lockdown restrictions impacted our volumes. In travel, this was reflected in processed volume rebounding to pre-pandemic levels towards the end of the period due to Europe and North America gradually reopening for domestic travel in late spring. In Europe, volume of online travel agencies rebounded quicker than airline volume, due to many people opting for closer-to-home vacationing. For North America, the easing of interstate air travel resulted in an uptick in airline volume. Our full-stack [1] volume share, which was 83% for the period, was impacted by relatively low airline volume, as we tend not to act as an acquirer in this space. For reference, this was 77% in H1 2020, and 71% in H1 2019. 

The pandemic marks an inflection point in the significance of the industry as multi-channel shopping journeys were ingrained in shopper preferences globally. As a result, unified commerce strategies shifted from a nice-to-have to a need-to-have for businesses around the world. Due to this reality, and despite the impact of global lockdown restrictions, we continued to see significant growth in retail, with in-store [2] and online volumes growing in tandem. Point-of-sale (POS) volume doubled year-on-year, as it reached €22.8 billion in H1 2021, comprising 11% of total processed volume. The growth of these volumes further emphasizes the increased relevance of our unified commerce proposition. The addition of leading names such as LVMH and The Body Shop underscores this success. 

We have made it no secret that we are building Adyen for the long term, and see our team and tech stack as key success factors. As such, we continue to invest in both. During the period, we grew the team — which totaled 1,954 FTE at the end of the period — and further built out our data center infrastructure. 

We keep our merchants’ needs central to our strategy development to allow for swift iterations on our product. To efficiently do so, we maintain a flat organizational structure comprised of dynamic workstreams that work directly with our merchants — integrating product, commercial, and technical expertise into every team. Our licensing approach mirrors this philosophy, as expansion is always driven by merchant demand.

To best support our merchants, we continually build out our full-stack capabilities. Following longer-term investments, we obtained multiple licenses in the first half. Notably, we were granted our US branch license. Our European banking license has helped many of our merchants grow, and we see similar opportunities for our merchants in the US. Other improvements include the expansion of our acquiring capabilities in Japan and the UAE. Both are illustrative to how we build driven by merchant demand — our launching merchants in Japan were Microsoft and Breitling, and we moved into the UAE with HMS Host International and Fabergé. 

The sophisticated controls (e.g. time-, location-, and category-based) of Adyen Issuing support a plethora of use cases. We saw additional applications go live in the first half of 2021 in the realm of expense management. Our Issuing offering allows these merchants to achieve operational efficiency by instantly streamlining these processes. Illustrative is how accounting software provider Visma implemented the product to enhance its software for a broad range of expenses, and how Just Eat Takeaway.com is leveraging the product to build out a new revenue stream, allowing its corporate clients’ employees to order food and beverages without having to submit an expense report. 

The widespread industry trend towards strong customer authentication (SCA) continued during the period, and was further supported by the PSD2 regulation coming into effect across Europe. As the topic is top of mind for regulators and networks, we focused on best helping our merchants navigate this complex regulatory space with our machine learning-driven 3DS2 feature. First results show a significant drop in fraud rates across SCA transactions — partially making up for the decline in conversion rates that are a direct consequence of the legislation. We know that there are opportunities for whomever solves most elegantly for the structural impact SCA will have on conversion rates and the industry more widely, and therefore continue to see this as a positive.

The principles of the Adyen Formula have guided the way we work as a team since we founded the company. One of our Formula points is about making good choices to build an ethical business. Since IPO, we have kept you informed about the company’s progress via these bi-annual shareholder letters and annual reports. Following constructive conversations with a broad range of stakeholders, and conscious of its importance, we have drawn up the Adyen way of building an ethical business. The document explains what making good choices means, and we will make a point to keep you well-informed as the business grows. You can read the document here. 

Another development in the realm of ESG is the expansion of our Impact product suite with Restore. Just like our donation feature Giving, Restore is a natural extension of the payment chain — now enabling our merchants’ shoppers to offset the carbon footprint of their purchases at the end of the checkout process by funding environmental sustainability projects.