*Historical figures have been adjusted since prior publications of results.
Business resilience amid global pandemic
Substantial net revenue growth (70%) in North America
Strong growth in online retail due to accelerated digitization of global commerce
Surging ecommerce volumes alongside store reopenings
Strong performance across growth pillars
Well-diversified merchant base compensated for declining travel volumes in enterprise
Momentum in unified commerce due to acceleration of longer-term tailwinds
Growing the mid-market merchant portfolio
Merchant-driven innovation on the single platform
Building IdentityRisk — sub-seller fraud checks on Adyen for Platforms
Scaling Adyen Issuing — rolling out over 30,000 cards with a single merchant
Launched mobile Android POS devices
Scaling the Adyen team and culture
Growing the team to 1,747FTE — focus is on scaling the culture
The team’s wellbeing as a focal point during COVID-19
Global expansion - opening an office in the Middle East
The business has proven resilient in the second half of the year. Despite the continued impact of COVID-19 on the world economy, we experienced substantial growth as online retail and digital goods volumes surged while the decrease in travel volumes persisted. Amid the constantly shifting environment of the pandemic, we focused on best helping our merchants. We were able to help move volumes online swiftly when stores closed and facilitated safe operations in reopening scenarios, as all our point-of-sale (POS) devices enable contactless payments.
The business’ resilience over the period was fueled by the continued diversification of our merchant base across verticals and regions. Most notable is the pace at which North American net revenue contributions grew. With a 70% year-on-year increase, net revenue contributions from the region rose to 20% of total net revenue in H2 2020, compared to 15% in H2 2019.
Historically, we have mainly helped North American merchants process payments outside of their home markets, mainly due to the North American payments market's relatively static nature. In recent years, we saw complexity increase, especially in the domain of unified commerce. This allowed us to board domestic volumes that previously might have been out of reach. Illustrative is how we partnered with DICK’S Sporting Goods to process their in-store, in-app, and online volumes. These are volumes that would not have been a logical fit in prior years — we are now seeing that shift.
At the start of the period, total processed volume recovered to pre-pandemic levels and trended upward since. The uptick in online retail volume that followed physical store closures in the first half of the year was a trend that persisted in the second half — now alongside recovering in-store  volumes. In the travel vertical, volumes remained below pre-pandemic levels as macroeconomic conditions directly impacted this space. During the shopping holiday season, spanning across days such as Singles’ Day, Black Friday, and Cyber Monday, we recorded peak volumes on the platform. Platform reliability is highly important during the online retail season, as we build to help our merchants capitalize on the increased traffic this period brings.
POS volume for the second half was €21.3 billion, comprising 12% of total processed volume, compared to €18.2 billion and 13% in H2 2019. For the full year, POS volume was €32.2 billion and 11% of total processed volume, compared to €29.2 billion and 12% in 2019, respectively. We consider these growing POS volumes amid world-wide store closures as a testament to the strength of our offering in this space. In line with that growth, we saw the roll-out of POS projects return to usual speed during the second half of 2020, following earlier delays after initial lockdown restrictions in H1.
 In-store retail volume is not a proxy for total point-of-sale volume
Enterprise merchants in online verticals continued to be our main growth driver. We work hand-in-hand with these merchants across regions and product lines to ensure their growth is never held back by their payments set-up. We continued to see increasing diversification across our enterprise merchant base, which helped us during a year where COVID-19 impacted everyone. We see this as a proof point of the business’ resilience going forward.
We also continued to roll out Adyen for Platforms during the second half of the year. Adyen for Platforms allows us to provide the long tail of the market with access to the full power of the Adyen platform through enterprise-level partnerships. By partnering with merchants like Modernizing Medicine, a business technology provider to over 150,000 medical practitioners, we deliver SMEs the payment technology required to successfully operate their businesses. To further enhance our offering for platform merchants, we continue to build for its scalability — most notably with automated information and verification checks and extensive sub-seller fraud controls implemented over the full year.
In the unified commerce space, the convergence of the offline and online channels continued to be a major theme — shoppers expect a single brand experience, regardless whether they are buying online or offline. During the period, we saw the historical trend of merchants adding a second channel on our platform speed up. Illustrative to this development, and the land-and-expand approach with existing merchants that we have employed since foundation, is how we have grown our partnership with H&M. In 2018, we started a global partnership across key markets in Europe and North America, focusing on online volumes. Today, we are proud to announce that we are rolling out our full unified commerce offering across Europe, the US, Canada and Puerto Rico with them.
Within the retail vertical, we started at the high end of the market where there was more complexity to solve for — e.g. creating personalized shopper journeys. In recent years, we have successfully moved into retail more broadly, as shoppers across the spectrum are increasingly expecting seamless experiences across channels. We continued to add household names to the platform from all ends of the retail segment — including Boulanger, Ralph Lauren, and Gianvito Rossi.
H2 2020 Consolidated statement of comprehensive income. All amounts in EUR thousands unless otherwise stated
We have set the following financial objectives, wherein EBITDA margin guidance has been updated since prior publications. Other objectives remain unchanged since IPO.
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: We aim to improve EBITDA margin, and expect this margin to benefit from our operational leverage going forward and increase to levels above 65% in the long term.
Capital expenditure: We aim to maintain a sustainable capital expenditure level of up to 5% of our net revenue.
On EBITDA margin — given the substantial growth and operating leverage we have seen since IPO, combined with our continued focus on the scalability of our single platform, we expect this upward trend to continue to levels of over 65% in the long term. We are still at an early stage of building Adyen, and view the short-term flexibility to invest in longer-term opportunities key to reaching this objective.
We will host our earnings call at 3pm CET (9am ET) today (February 10) to discuss these results.
To watch a live video webcast, please visit our Investor Relations page. A recording will be available on the website following the call.
As an appendix to this letter, please find attached three one-page updates on our growth pillars (Enterprise, Unified Commerce and Mid-Market) and our H2 2020 financial statements.
The enterprise space continued to drive the majority of our growth. Our continued success in this space stems from our ability to solve for our merchants’ payment complexities and how we build trusted partnerships with them. We consistently grow with them as they expand to new regions, sales channels, and product lines.
The pandemic further accelerated the trend of merchants opting for a unified commerce approach. We saw that unified commerce merchants were more resilient when dealing with the challenges of the pandemic due to the flexibility of quickly shifting volumes between sales channels.
We remain focused on building out our mid-market offering, and supporting these merchants in growing their business while solving for their payment complexities that arise along the way. In line with previous periods, we saw numerous mid-market merchants organically graduate into the enterprise segment.
Interim Condensed Consolidated Financial Statements H2 2020 Adyen N.V.
H2 2020 Adyen N.V
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