H1 2023

Shareholder letter

Shareholder Letter H1 2023

Meeting customer needs amid changing landscape

  • As a result of higher inflation and interest rates, North American digital customers shifted focus from growth to cost savings in H1

  • Strong Platforms and Unified Commerce growth demonstrated our persisting ability to solve complexity

  • Our single tech stack helped us meet customer needs, whether they be globally expanding, streamlining operations, or optimizing cost

Continued investments in scaling the global Adyen team

  • In order to reach our full potential at our next phase of scale, we added 551 FTE to the team in H1

  • The majority of new hires (75%) were in tech roles, building our global engineering muscle dedicated to both young and mature initiatives

  • With Adyen becoming a larger and more global company every cycle, we prioritized scaling our culture of speed and autonomy

The global digitization of business fueled our growth and product launches

  • We continued innovating at speed, with high-impact product launches including Data Connect, Payouts, and Data-Only

  • Unified Commerce and point-of-sale volume growth highlighted the ever- growing relevance of advanced, cross- channel payment journeys

  • Adyen for Platforms continued to appeal to leading platform businesses, resulting in new partnerships with Olo, AffiniPay, and Buildertrend

Continued investments in scaling Adyen during a cycle of shifting customer priorities

August 17, 2023

Dear shareholders,

We closed H1 2023 with €739.1 million in net revenue, up 21% year-on- year. EBITDA margin landed at 43%. We continued building Adyen for the long term and made solid progress in attracting top talent, scaling our Platforms offering, and driving growth in Unified Commerce. In some areas, the business grew at a lower rate than anticipated. This was the case for our North American net revenue (up 23% YOY, compared to up 52% YOY in H1 2022), and Digital volumes (up 23% YOY, compared to up 55% in H1 2022). North America has been an increasingly important contributor in recent years, making these developments more significant to overall net revenue. In addition, the region has a high concentration of Digital customers, explaining the overlap in impacted metrics. While we remain focused on realizing Adyen's long-term opportunity, we want to start this letter by addressing the recent factors that impacted our North American and Digital growth.

First, as a natural consequence of the shifting economic climate – driven by higher inflation and interest rates – profit outweighed growth for many North American digital businesses in H1. Enterprise businesses prioritized cost optimization, while competition for digital volumes in the region provided savings over functionality. These dynamics are not new, and online volumes are easiest to transition back and forth. Amid these developments, we consciously continued to price for the value we bring.

Beyond the current industry dynamics in North America, another factor that impacted our growth was one we wrote about at the end of 2021 too: the fact that we would have liked to grow our team at a higher pace but were unable to hire enough top-quality talent. We now see the impact of a sales team size that did not match our ambitions, particularly in North America. Since then, we have ramped up our investments.That being said, investments in the team and revenue never move simultaneously. Rather, the former drives the latter over time.

While we see the changing industry tides reflected in this period's results, we remain focused on building Adyen for the long term. Global digital brands continue to emphasize that – today and in the future – online payments are a vital part of their commerce strategies, which further underpins our conviction in our sizable, untapped opportunity. Our historical investments in our single platform leave us well equipped to maintain our leading position in digital payments in North America, and beyond. We therefore continue to build teams and products that best address the needs of Digital customers and help them operate at the forefront of their industries. In H1, this was demonstrated by multiple product launches within our Digital product suite, including Trusted Beneficiaries, Data-Only, and our certification to utilize the FedNow(R) Service, the Federal Reserve’s instant payment infrastructure.

Shareholder Letter H1 2023 - Adyen

Our focus on meeting our customers' needs also applied in the current climate. To address their evolving priorities, we leveraged our established products and ongoing innovations to drive cost optimization in H1. Powered by machine learning, we helped our customers save costs via alternative payment methods and network token optimization. In addition, our single integration drove their operational efficiency. Coupled with our ability to build long-term relationships with our customers, over 80% of our growth came from existing customers with less than 1% of volume churn in H1.

To continue in this stead but at even larger scale, H1 was a key investment period to grow the team to its next level of maturity. We added 551 colleagues during the first half of the year, bringing the Adyen team to a total of 3,883 FTE. Of our new joiners, a majority (75%) sat in tech roles developing both young and more mature initiatives that power our global customer base. Our team and culture have always been central to realizing our success and remain the primary means of investing in our future. We foresee our team reaching its next level of maturity at the start of 2024 with a mix of both commercial and tech roles. After this point, we will phase out of our accelerated investment mode and hire as needed.

Primarily driven by our investments in the team, EBITDA margin was 43% in H1. We could have actively optimized this metric, but prefer building the team that can realize the long-term potential of our single platform. With increasingly positive interest rates as a tailwind to our interest income, we were able to invest in the business while keeping our bottom line solid. We have always maintained a strong balance sheet to enable rapid and flexible execution. An essential part of our competitive advantage is the efficiency of our single code base. To allow for this efficiency at even larger scale, we front-loaded this year’s priority infrastructure investments. This resulted in CapEx of 7.6% for H1, which is expected to be at 5% for the full year.

Alongside scaling our team, we successfully expanded our commercial pillars. As the digitization of SMBs and platform business model continued gaining prominence, Adyen for Platforms became even more appealing. Mirroring this trend, we were able to significantly grow our Platforms volumes (without eBay volumes, these were up 82% YOY) and sign partnerships with Buildertrend, Revel, and AffiniPay. Another trend within global commerce, the blurring of lines between channels, further drove Unified Commerce growth (up 36% YOY) and total point-of-sale volumes (up 49% YOY, now comprising 16% of total processed volume). With our cohesive backend consolidating all payment activity, our industry-leading Unified Commerce solution helps our customers navigate the complexity of this space. We are excited about what Unified Commerce and Platforms still have in store, and continue to invest in expanding their depth and reach.

Shareholder Letter H1 2023 - Adyen

We are building Adyen knowing that our product offering will constantly evolve. As consumer preferences become even more technology-driven, additional revenue opportunities will emerge and we will engineer our product to capitalize on them. Our investments and growth in both Unified Commerce and Adyen for Platforms exemplify our ability to turn upcoming opportunities into revenue streams.The low-cost nature of our single platform positions us to build highly scalable solutions while generating incremental net revenue at minimal additional cost.

Alongside the two above mentioned initiatives, many of our high-potential products are still in their early days. Even in more mature areas, such as digital payments, we are just scratching the surface. Similarly, from a regional perspective, we have only recently taken our first steps into high- potential regions such as Mexico, Japan, and India. In both nascent and mature markets, we are preparing to become the domestic partner of choice for leading brands.

As a recap of the above: the time that we can say “we did it” is still far out. We know that growth will not always be linear, and while we saw net revenue growth decelerate in H1, we did not see any substantial developments that structurally change our medium to long-term opportunity. In addition, we anticipate our business model's high operating leverage to kick in as we move out of this accelerated investment phase in 2024. With an ever- growing opportunity ahead, we are making the necessary investments to capitalize on it and reiterate our financial objectives.

To read the full H1 2023 financial results and accompanying shareholder letter, please download the following document below.


P.W. van der Does

Co-founder and Co-CEO

I.J. Uytdehaage


E.L. Tandowsky


Shareholder letter H1 2023 - Adyen

Interim Condensed Consolidated Financial Statements
H1 2023 Adyen N.V

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