H2 2019

Shareholder Letter


Profitable growth at scale

  • Well-diversified volume growth across regions and merchant base

  • Strong EBITDA margin of 56% amid investments in growth

  • Spotting exciting new opportunities for future expansion

Gaining momentum in unified commerce

  • Tangible success in QSR space with McDonald's and Subway wins

  • Ongoing market-wide shift of shopper expectations

  • POS volume comprised 13% of total volume

Innovation on the single platform

  • Our focus remains on incremental product innovation to solve merchants' pain points

  • Adyen Issuing powers a range of use cases for merchants

  • Speed of innovation allows us to be at the forefront of industry trends

Growing the team

  • Higher absorption rate due to improved onboarding process allowed us to ramp up hiring

  • Global expansion including new offices in Tokyo and Mumbai

  • Maintaining the Adyen culture at scale

Scaling Adyen during another year of sustained profitable growth

February 27, 2020

Dear shareholders,

We processed €135 billion in the second half of 2019, up 52% year-on- year. This growth came largely on the back of increased volume from enterprise merchants onboarded in previous periods. With McDonald’s and Subway now on the single platform, we reached a stage with quick- service restaurants (QSRs) where we can report tangible success. Another noteworthy development relevant to the second half of the year is the increasing pervasiveness of merchants adopting a platform business model. We are uniquely equipped to cater to this segment, and view this as a positive for the business. Processed volume for full year 2019 was €240 billion, up 51% year-on-year with 2019 net revenue and EBITDA coming in at €497 million and €279 million, respectively. As in previous periods, volume churn was less than 1%.

Three themes of recent years persisted throughout the second half of 2019: increasing diversification across our merchant portfolio, most of the growth (over 80%) coming from existing merchants and steadily low volume churn. These leave us confident that we are delivering a best- in-class solution to merchants that are looking to future-proof their approach to payments.

Point-of-sale (POS) volume for the second half was €18 billion, comprising 13% of total processed volume compared to 11% in H2 2018. It’s exciting that something we started relatively recently is growing at such a pace. We believe this is due to the convergence of shopping channels and the increasing need for merchants to adopt a unified commerce approach, essential in this age of experiential shopping. We now have a proven track record in helping our merchants in this space.

Full-stack volume share for H2 2019 was 73%. For FY 2019, this was 72%, up from 70% for FY 2018 and 61% for FY 2017. This trend reflects our changing merchant mix, the global roll-out of our acquiring capabilities and an increased share of POS volume[1] as a percentage of total processed volume

The payments space continues to be buoyed by numerous tailwinds — including an increase in cross-border commerce, a continually increasing share of online traffic in global commerce and the continuous shift from cash to cashless payment methods around the world. These are a few of the wider macroeconomic trends that affect the space, and from which we also benefit.

Beyond these tailwinds, we continue to invest in order to maximize long- term value for all of our stakeholders. Retaining the flexibility to invest has always been critical to us, and in line with this philosophy we grew the team at a faster rate in the second half of 2019 — without this new hiring rate being dilutive to culture. This is something we expect to be able to maintain for the foreseeable future.

[1] POS volume is volume for which we are always the acquirer


In the second half of 2019, we also began the process of investing more robustly in our global reach, most notably in the APAC region. This investment has been primarily in hiring and the opening of new offices — as offering local expertise in payments and on market developments is a critical part of our promise to merchants. They can now find us in Tokyo and Mumbai — and expect the same level of support as they receive in São Paulo or New York.

Our investments in expansion into Japan and India come on the back of merchant demand. The APAC region houses over half of the world’s population and is expected to contribute more to global GDP than the rest of the world combined in 2020[2]. Moreover, the ubiquity of mobile technology in APAC is striking — as entire generations are skipping the desktop stage of internet usage. Naturally then, the region has our merchants’ attention.

A development tangentially related to the APAC region is the unwavering advance of shopping holidays like Black Friday and Singles' Day. These days are critical to our merchants’ success and serve as a solid test for our platform and its capacity to handle peak volumes. Exposure to peak traffic on these days has given us the opportunity to validate the robustness of our platform as we continue to scale our technology.

[2] 12/19/2019, World Economic Forum

Contributions from across the growth pillars

As in previous years, enterprise volume continues to drive the bulk of our growth. We are consistently able to win incremental merchant volume in this segment through adding channels, geographies and product lines with existing merchants. As a consequence of our land-and-expand strategy, most of the growth is still driven by cohorts that boarded onto the platform several years ago.

Within the enterprise pillar, we would like to highlight the increasing importance of platforms. In order to best help platforms and their users (e.g. sub-sellers in marketplaces, or SMEs in the realm of business toolkit providers like Wix), we needed a product that would work well at scale for both. This is why we developed Adyen for Platforms, formerly MarketPay. Through enterprise-level partnerships with platforms, the long tail of the market is able to gain access to the full strength of the Adyen single platform, worldwide. This includes unparalleled ease-of- use and full unified commerce without compromising on risk mitigation. Automated KYC[3] allows platforms to board their users quickly, providing them with a best-in-class payment offering — and ensuring that scale never hinders growth. Early results are positive, with a diverse set of merchants opting for the same solution as eBay. These merchants range from more traditional online marketplaces to companies like Zenoti — a business that provides technology to over 10,000 salons, spas and barber shops.

In the unified commerce space, helping merchants cater to rapidly evolving shopper behavior continues to be a driver for us. Delivering seamless shopper journeys across channels is increasingly becoming a necessity for businesses to thrive. In the second half of 2019, we saw hundreds of merchants adding a second channel, either ecommerce or POS, facilitating true unified commerce. New merchants, too, were more likely to begin processing via both channels than we have previously seen.

Initially, our focus in unified commerce was on helping high-end retail businesses. We felt that our technology would add most value to these merchants — whose main focus was already on delivering a best-in-class shopper experience. Following early success there, we moved into retail more broadly, and gained significant share in that space over the past few years, with customers including H&M and Gap Inc. Recent additions to the merchant portfolio in retail include HUGO BOSS, Dubarry and Acne Studios. In line with this growth, we continue to invest in our global POS operations and logistics to ensure scalability going forward.


Following success in retail, we have begun targeting QSRs, as the recently evolved needs of merchants in this space are largely similar to those in retail. We are proud to have boarded McDonald’s and Subway onto the single platform — helping them capitalize on the blurring of lines between online and offline traffic. Mobile orders, kiosks and home delivery are increasingly prevalent in the landscape of QSRs. We embrace that this is an ever-evolving space, and we are excited to be at the forefront of it.

On mid-market, we continue to invest in partnerships, a mid-market focused salesforce, and our growing customer success team. These are investments that we feel will pay off down the line. The product is now at a stage where mid-market merchants can take full advantage of the single platform — ensuring that no matter their growth stage, they'll never have to rethink payments. As we continued investing in this segment, we noticed that merchants previously defined by us as the lower end of enterprise have largely similar needs to those that we defined as mid-market. In parallel, our mid-market commercial teams have also been focusing on these businesses, based on the same observations. Therefore, to align with our commercial focus, we have decided to redefine mid-market to include all merchants processing up to €25 million per year (up from €12 million per year previously) on our platform.

[3] Know-your-customer


Innovating at scale

We announced Adyen Issuing in November 2019. Adyen Issuing enables us to further power our merchants’ growth by allowing merchants — especially those in the travel, food delivery and hospitality verticals — to issue debit cards. These cards can be used for a range of use cases, from payouts to sub-sellers to B2B disbursement. These card-powered experiences provide exciting new opportunities. Examples include the ability to provide drivers in the delivery space with pre-loaded debit cards for payment on order pick-up, or virtual cards in the hotel industry for payment to booking partners. These cards come with extensive funding controls, allowing merchants to ensure funds are used for the desired purpose (e.g. with time window, location or sales channel controls). The product is still in an initial stage, but we are excited about new applications that could help our merchants in the future.

Another example of our ongoing product innovation is the build-out of Pay by Link, one of the ways of integrating our Checkout product. Pay by Link is an Adyen-hosted checkout that provides access to the full strength of the Adyen platform through a merchant-branded link. This link can be sent automatically or manually through any channel and is perfect for contextual commerce use cases, e.g. for VIP concierge services or chatbots. Further, Pay by Link offers merchants with limited development resources an option to go live quickly with Adyen, no matter their size.

We also continue to work closely with industry partners and card networks — investing in the payment rails of the future. One example is network tokens, a new standard being developed by EMVCo. These tokens present a more secure way of seeking payment approval — without having to send in sensitive data (i.e. PANs). Our speed of innovation allows us to bring these new standards to market at an industry-leading pace, helping both merchants and industry partners.

We are able to include these network tokens in our smart issuer logic too — helping to uplift authorization rates for merchants, which in turn earns them additional revenue. The functionality we developed to do this, Network Token Optimization, essentially applies our RevenueAccelerate logic to network tokens — testing issuer preference for these tokens or PANs. Another example of how the single platform fosters innovation.

In the wider industry, there are two trends worth highlighting for the second half of 2019. The first is an unwavering shift toward stronger authentication, beyond just PSD2 in Europe — currently top of mind for most networks and regulators. We pride ourselves on ensuring that our merchants can thrive no matter what regulatory shifts occur in the landscape, and we have seen positive traction from our 3DS 2 solution. Additionally, on innovation on the consumer end of payment methods, we are seeing that mobile user flows are increasingly the focal point of development. This is a logical evolution as we see mobile payment traffic growing globally.


Investing in the scalability of the team

We ramped up hiring in the second half of 2019 in order to continue supporting our merchants’ growth, adding 195 FTE. This enhanced hiring rate is primarily a result of us growing off a larger base, but also due to several improvements that we have made in the structure of our team onboarding process. These include the introduction of tech-specific onboarding, the Adyen Sales Academy and an increased frequency and reformulation of the company introduction sessions. These improvements have resulted in a higher rate of absorption for new hires, allowing us to grow the team more quickly without it being dilutive to the culture. We expect to be able to continue this approach for the foreseeable future.As in previous periods, senior management continued to invest significant time and energy into the hiring and onboarding processes in the second half of 2019, ensuring that every new Adyen team member sees at least one board member prior to joining. We have ramped up hiring, but we will not compromise on culture.New hires in H2 2019 were primarily in commercial (43%) and tech roles (37%).The Adyen team totaled 1182 FTE as of December 31, 2019.

Discussion of financial results

Sustained volume growth at scale

We processed €135.0 billion on our platform in the second half of the year, an increase of 52% year-on-year, mainly as a result of the growth of merchants already on our platform.

Full year 2019 processed volume was €239.6 billion. Year-on-year growth for the full year was 51%, mirroring the year-on-year growth of previous years — now at increased scale. POS processed volume totaled €29.2 billion in 2019 and now comprises 12% of total processed volume.

Steady net revenue growth driven by diversification in merchant base and regional footprint

Net revenue was €275.6 million in the second half of 2019[4], up 43% compared to the second half of 2018. Full year 2019 net revenue was €496.7 million, up 42% compared to full year 2018.

All regions posted double-digit growth, and the trend of increasing regional diversification continued in the second half of 2019. Europe (42% year-on-year growth) and Asia-Pacific (28%) were outpaced by growth in Latin America (55%) and North America (54%).

Despite ongoing global diversification, Europe still contributed over half (65%) of total net revenue for the second half of 2019. North America contributed 15%, Latin America 10%, and Asia-Pacific 9%.

Take rate was 20.4 bps in the second half of 2019, compared to 21.6 bps in the second half of 2018. This delta is also reflected in the full year numbers: 20.7 bps for 2019, versus 21.9 bps in 2018. The difference was primarily due to a changing merchant mix and volume tiers kicking in with enterprise merchants. Take rate continues to not be a driver for us, as the lower cost of operating our technology allows us to keep our focus on incremental net revenue.

Investing in global expansion

Total operating expenses were €134.1 million in the second half of 2019, up 57% year-on-year. These represented 49% of H2 2019 net revenue. For the full year, total operating expenses were €239.7 million, up 36% year-on-year, and representing 48% of FY 2019 net revenue. This increase is mainly due to employee benefits.Employee benefits were €67.6 million in the second half of 2019, up 55% from €43.5 million in the second half of 2018. For the full year, employee benefits were €122.4, up 41% from €87.1 million in full year 2018.The larger growth of employee benefits in the second half of the year versus the full year number is due to the ramp up of hiring in H2 2019.Other operating expenses totaled €54.7 million in the second half of 2019, up 47% from €37.3 million in the second half of 2018. Of these, sales and marketing costs made up the largest slice, totaling €18.7 million in the second half of 2019, up 89% from €9.9 million in the second half of 2018.For full year 2019, other operating expenses were €95.1 million, up 19% from €80.0 million for FY 2018. Sales and marketing expenses were €32.3 million for the full year, up 52% from €21.3 million in full year 2018. As we continue to expand into new geographies and extend to new verticals, we feel it is imperative that our efforts in marketing support these initiatives.

EBITDA displaying solid profitability amid investments in growth

H2 2019 EBITDA was €153.5 million, up 37% year-on-year from €111.7 million in H2 2018. Full year EBITDA was €279.3 million in 2019, up €181.9 million from 2018.

EBITDA margin came in at 56% for the full year, as it continued to benefit from the positive impact of the IFRS16 accounting change. Without this impact, the EBITDA margin would have been approximately 2% lower.

Net income mirroring EBITDA

Net income for the second half of 2019 was €111.5 million, up 34% from €83.0 million in the second half of last year.

Full year 2019 net income was €204.0 million, up 56% from €131.1 million in 2018.

Strong free cash flow to close out the decade

Free cash flow was €141.7 million in the second half of 2019, up 34% from €105.4 million in the second half of 2018. Free cash flow was €259.4 million in full year 2019, up 54% from €168.1 million in full year 2018.

Free cash flow conversion ratio[5] was 92% in the second half of 2019, down from 94% in the second half of 2018. Free cash flow conversion ratio was 93% in full year 2019, up from 92% in full year 2018.

CapEx up due to investments in scalability

Investments in the scalability of our data centers drove CapEx slightly up to 4% of net revenue for 2019, up 45% year-on-year from 2018. H2 2019 CapEx were also at 4% of net revenue.

[4] On a constant currency basis, H2 2019 gross revenue of € 1,512.6 million would have been approximately 2% lower than reported. Please refer to Note 1 of the Interim Condensed Consolidated Financial statements for further detail on revenue breakdown.


H2 2019 Income statement. All amounts in EUR thousands unless otherwise stated

Financial objectives

We have set the following financial objectives, which remain unchanged from our IPO prospectus.

Net revenue growth: We aim to continue to grow net revenue and achieve a CAGR between the mid-twenties and low-thirties in the medium term by executing our sales strategy.

EBITDA margin[6]: We aim to improve EBITDA margin, and expect this margin to benefit from our operational leverage going forward and increase to levels above 55% in the long-term.

Capital expenditure: We aim to maintain a sustainable capital expenditure level of up to 5% of our net revenue.

We will host our earnings call at 3pm CET (9am ET) today (February 27) to discuss these results.

To listen to a live audio webcast, please visit our Investor Relations page at adyen.com/ir, where you can find a link. A recording will be available on the website following the call.

As an addendum to this letter, please find attached three one-page updates on our growth pillars (Enterprise, Unified Commerce and Mid-Market) and our H2 2019 financial statements.


Pieter van der Does


Ingo Uytdehaage


[6] This objective was set prior to the IFRS16 accounting change


Enterprise volume continues to be our largest growth driver. Solving problems for these merchants is what we do best. Within the enterprise segment, the growing share of platform business models is especially noteworthy.

Enterprise volume in EUR billions. Under the previous definition of mid-market (processing up to €12 million annually on our platform), H2 2019 enterprise volume would have been €132.3 billion.

Rappi logoBorden logoFresha logoZenoti logoLidl logoRoku logoStena Line logoKinepolis logo

Unified commerce

We are gaining momentum in this space on the back of shifting shopper behavior. Merchants are increasingly adopting a unified commerce approach to adapt to this new environment.

POS volume evolution, including share of total processed volume on the platform (%) in EUR billions

Happy Socks logoAcne Studios logoDubarry of Ireland logoDaniel Wellington logoGanni logoBeets & Roots logo


We continue to invest in the mid-market segment for the long term. We have redefined mid-market merchants as those processing up to €25 million annually on our platform. In H2 2019, 3,867 merchants met this definition.

Mid-market volume in EUR billions. Under the previous definition of mid-market (processing up to €12 million annually on our platform), H2 2019 mid-market volume would have been €2.7 billion.

Casteñer logoLunettes Pour Tous logoKusmi Tea logo Brabantia logoLaderach logoChistopher Ward logo

Interim Condensed Consolidated Financial Statements

Unsponsored ADRs: As of October 10, 2008, the US Securities and Exchange Commission (SEC) published revisions to Exchange Act Rule 12g3-2(b) which permits depository institutions to establish unsponsored ADR programs without the participation of a non-US issuer. Adyen NV does not consent to the establishment of any unsponsored ADR program, and further does not authorize, endorse, support or encourage the creation of any such unsponsored ADR program in respect of its securities. Adyen NV will not actively, directly or indirectly participate in the creation of any unsponsored ADR program. Adyen NV specifically disclaims any liability whatsoever arising out of or in connection with any unsponsored ADR program. Adyen NV does not represent to any depository institution or any other person, nor should any depository institution or any person rely on a belief that the website of Adyen NV includes all published information in English or that Adyen NV otherwise satisfies the exemption criteria set forth in Exchange Act Rule 12g3-2(b).