Robust expansion of Adyen’s global footprint
Built-out acquiring and unified commerce capabilities
Substantial expansion of suite of local payment methods, including high-volume domestic card schemes
Merchant-led geographic growth of the Adyen team
Strengthened unified commerce offering
Expanded functionality on point-of-sale (POS) terminals
Invested in POS operations and partnerships to enhance scalability on the back of increased merchant traction
Extended core offering to include easy reconciliation feature (Sales Day Payout)
Accelerating innovation on the single platform
Moved to weekly release cycles — revving up the pace of deployment of new updates on the platform
First to market with in-house built 3DS 2.0 solution
Risk product now available as standalone API
Sustained profitable growth
Increased share of full-stack vs. gateway-only volume on platform as a reflection of our growing acquiring footprint
Net revenue growth across all regions with > 100% year-on-year net revenue growth for North America and Asia-Pacific
Slower operating expenses growth in H2 relative to H1 due to the phasing of some operating expenses spend categories
We saw strong profitable growth in the second half of 2018, largely due to the continued growth of enterprise merchants on our platform. The continued build-out of the Adyen acquiring footprint has enabled us to offer our end-to-end payment solution (full-stack) in more geographies around the world. Adding Canada to the countries in which we are able to offer full-stack and unified commerce is one example of this, having already added Singapore, Hong Kong, Australia and New Zealand in the first half of the year. We believe the end-to-end solution unlocks the full strength of the Adyen platform, and consequently delivers the most value to our merchants. So we’re happy to see that the share of full-stack volume increased to 70% of total volume for the full year 2018, compared to 61% for the full year 2017. This reflects the merchant mix that powered our growth in 2018, and our growing acquiring footprint.
The fundamentals behind our historic growth also held true for full year 2018. Volume churn remained at <1% and the vast majority of growth came from our existing enterprise merchants. Additionally, we are seeing increased traction in the unified commerce segment, as well as positive first signs in mid-market, the next adjacent segment to enterprise. For both of these relatively new segments, this comes on the back of increased focus and investment in sales and marketing, partnerships and product optimization. The success of our unified commerce offering and its subsequent increased volume share has resulted in some seasonal tailwinds for the business — especially in the retail vertical —during the end-ofyear shopping cycle. We saw increased traction from our existing POS merchants, and are proud to now be working with several new merchants as of the second half of the year, including Farfetch, Gap, H&M and Mulberry. When it comes to offering the highest service levels to merchants globally, supporting high-volume local payment methods and card schemes is critical to optimizing authorization rates and improving shopper engagement. As we have continued our global expansion, we have added Interac debit in Canada and Vipps in Norway to our platform, among a wide range of other local payment methods. Total processed volume increased to €89.0 billion in H2 2018, up 50% year-on-year. Net revenue totaled €192.5 million, up 54% year-on-year, driven by the above-mentioned increased share of full-stack volume, which comes at better net revenue economics. We have continued to successfully grow our team. Of those hired in the second half of 2018, over 50% were in locations outside of our Amsterdam HQ. These hires were made to reinforce our geographic expansion and local merchant support, predominantly in North America and Asia-Pacific. We added 105 FTE in the second half of 2018. While we continued to invest in headcount, overall operating expenses were down 5% vs. H1 2018. The decrease was primarily due to the phasing of some spend categories, including pay out of employee benefits and marketing campaigns. H1 2018 operating expenses also included additional spend in housing costs due to the expansion of our Amsterdam office, as well as IPO-related costs. In the second half of 2018, EBITDA totaled €111.7 million, up 83% yearon-year, with an EBITDA margin of 58% in H2 2018 vs. 49% in H2 2017. Free cash flow (EBITDA-CapEx) was €105.4 million for the second half of 2018, up 104% year-on year. This resulted in free cash flow conversion of 94% for the period, vs. 85% in H2 2017. Net income was €83.0 million, up 90% from H2 2017.
This segment has historically been our key growth driver, and we saw a continuation of this in the second half of 2018.
We continue to see strong growth in this space due to the strength of our offering, and are now expanding into new verticals.
We are seeing some good early signs in the mid-market, which we view as the next-adjacent segment to enterprise.
Interim Condensed Consolidated Financial Statements
H2 2018 Adyen N.V
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