Shareholder letter
H2 2018

Robust expansion of Adyen’s global footprint and sustained profitable growth


Processed volume


€89.0 BN

50% growth year-on-year

Full year

€159.0 BN

47% growth year-on-year


Net revenue


€192.5 MN

54% growth year-on-year

Full year

€348.9 MN

60% growth year-on-year




€111.7 MN

83% growth year-on-year
EBITDA margin 58%

Full year

€181.9 MN

83% growth year-on-year
EBITDA margin 52%


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

February 27, 2019

Robust expansion of Adyen’s global footprint and sustained profitable growth

Dear shareholders,

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.

Strengthened unified commerce offering

The paradigm shift in the retail landscape, driven among other factors by the digitalization of the industry, coupled with the seasonal trends in the second half and the increasing strength and geographic reach of our unified commerce offering, has resulted in the continuing growth of our POS business.

Growth is coming from our more established verticals, like retail, but also increasingly from new verticals, such as quick-service restaurants and hospitality. Across these verticals, the common denominator is the increasing need for a channel-agnostic approach to payments amid shifting shopper behavior and expectations. This is the approach that our single platform was built for.

We further expanded our local payment method offering on our POS terminals in the second half of the year, to now include high-volume domestic card schemes (e.g. Carte Bancaire in France). On the technical end, we built out product features in order to better support our merchants in specific verticals — hospitality and quick-service restaurants — such as seamless tipping and pay-at-table flows.

Following the success in the unified commerce space, we invested significantly in our POS operations in the second half of the year, to ensure the scalability of this growth pillar going forward. This includes partnerships, warehousing and logistics optimizations. Additionally, we engaged in new partnerships (e.g. Oracle) to help support our growth in specific verticals.

We launched a number of improvements to our product suite, including Sales Day Payout, to help merchants — especially in the retail segment. This product facilitates an easier reconciliation and faster payout (made possible by our banking license in Europe), irrespective of settlement times from different payment methods.

POS volume growth in the second half of the year came from both new POS-only and unified commerce (POS and ecommerce) merchants, as well as previously ecommerce-only merchants on our platform extending into unified commerce. Platform share of POS volume (% of total volume) was up to €10.0 billion in the second half of the 2018, up 86% year-onyear and accounting for 11% of total volume on the platform.


Accelerating innovation on the single platform

As a technology company aiming to redefine the payments industry, we continually build new products to help our merchants grow.

Speed is key to our ability to keep improving our platform. Consequently, we’ve been driving towards an acceleration of our release cycle and have now been able to bring it down to weekly. This means that there is a continuous flow of new functionality on the platform — reflecting the rapid pace of innovation we are able to provide to our merchants.

We were also first to market in launching our 3D Secure 2.0 (3DS 2.0) solution in the second half of the year. This in-house built solution allows for the authentication of transactions without intervention from the shopper, an industry-first. The solution is based on EMVCo’s 3DS 2.0 protocols and enables shoppers to use biometrics such as fingerprint recognition, voice recognition or facial scans, as well as SMS-delivered two-factor authentication. Compared to EMVCo’s 1.0 iteration of 3DS, this removes a significant amount of friction for the shopper (leading to higher conversion) — especially on mobile. We view this as another step toward delivering an increasingly seamless payment experience. This proposition has allowed us to position ourselves as a leading player to help merchants prepare for PSD2 mandates going live in Europe in September 2019, with other regions to follow.

Due to continued investment in machine learning algorithms, we saw the strength of our RevenueProtect toolkit grow such that we decided to build a standalone API for it. This allows merchants that are not on the Adyen platform to use our leading risk tool — optimizing authorization rates while combating fraud.

Investing in the Adyen team

We view keeping our culture as business critical while we continue to invest in growth. We added 105 FTE in the second half of 2018.

Of the those hired in the second half of the year, 50% were in tech roles, 40% in commercial roles, and 10% supporting functions. As of end of year 2018, the Adyen team comprised 41% tech, 40% commercial and 19% supporting functions. The total FTE count is 873, up 31% year-on-year.

Senior management has continued to invest significant time and energy into our rigorous hiring process, ensuring that every new Adyen employee meets at least one board member prior to joining.

Graph Adyen’s full year 2018 FTE growth (873 FTE in 2018 and 668 FTE in 2017)

Visualization Adyen’s net revenue in key regions (by billing address in EUR millions) in H2 2017 and H2 2018

North America

Latin America



Graphs Adyen’s net revenue in key regions (by billing address in EUR millions) from H1 2017 to H2 2018

Discussion of financial results

Acceleration of volume growth

We processed €89.0 billion on our platform in the second half of 2018, demonstrating continued growth at scale. This is up 50% year-on-year. Full year 2018 volume was €159.0 billion, up 47% year-on-year. Settled volume (i.e. full-stack including acquiring) increased from 61% for full year 2017 to 70% for full year 2018. This was due to us adding acquiring capabilities in Asia-Pacific and Canada this year as well as POS volume (where we are always the acquirer).

Second half POS volume accounted for €10.0 billion, equivalent to 11% of total volume, up 86% year-on-year.

Net revenue growth across regions

Net revenue was €192.5 million in the second half of 2018, up 54% year-on-year.

Year-on-year growth of net revenue was well diversified across regions, with Asia-Pacific (121%), North America (93%), Europe (46%) and Latin America (25%) all contributing. Europe remains the largest net revenue driver with 65% of total net revenues, down from 69% in H2 2017. Full year 2018 net revenue was €348.9 million, up 60% year-on-year.*

* On a constant currency basis, FY 2018 revenue of €1,652.9m would have been approximately 3% higher than reported. Please refer to Note 1 of Interim Condensed Consolidated Financial statements for further detail on revenue breakdown

Investments in growth

Total operating expenses were €85.5 million in the second half of 2018, up 28% year-on-year, and representing 44% of H2 2018 net revenue. Total operating expenses for full year 2018 were €175.8 million, up 41% year-on-year from 2017.

Employee benefits were €43.5 million in the second half of the year, in line with €43.6 million in the first half, as the cost of increased headcount was offset by the impact of phasing of variable pay.

Other operating expenses amounted to €37.3 million in the second half of 2018, down from €42.7 million in the first half. This delta was partly due to lower housing costs, which were negatively impacted by additional spend on our Amsterdam office. Sales and marketing expenses were €9.9 million in the second half of 2018, up 32% year-on-year, and down from €11.4 million in the first half — as the majority of investments in increased brand awareness were made in the first half of the year. Further, there were some IPO-related costs in H1 2018.


EBITDA growth aided by operating expenses phasing

In the second half of 2018, we generated an EBITDA of €111.7 million, up 83% year-on-year. Full year 2018 EBITDA totaled €181.9 million, up 83% year-on-year.

EBITDA margin increased from 45% in the first half of 2018 to 58% in the second half, due to continued strong net revenue growth and operating expenses impacted by phasing of some spend categories. Full year 2018 EBITDA margin was 52%.

Strong net income growth

Net income for the second half of 2018 was €83.0 million, up from €48.2 million in the first half of the year, and up 90% year-on-year.

Full year 2018 net income was up 84% from 2017, and totaled €131.1 million.

High free cash flow conversion

Free cash flow was €105.4 million in the second half of 2018, up from €62.7 million in the first half. Full year 2018 free cash flow was €168.1 million, up 90% year-on-year.

Free cash flow conversion ratio ((EBITDA-CapEx)/EBITDA) was 94% for the second half of the year, and 92% for full year 2018.


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: 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.

Earnings call and webcast

We will host our earnings call at 15.00 CET (09.00 ET) today (February 27) to discuss these results.

To listen to a live audio webcast, please visit our Investor Relations page at, 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 our H2 2018 financial results and three one-page updates on our growth pillars (Enterprise, Unified Commerce, Mid-market).


Pieter van der Does

Ingo Uytdehaage

*Adyen has not defined, and does not intend to define, “medium-term” or “longterm”. Adyen’s medium-term and long-term financial objectives should not be read as forecasts, projections or expected results and should not be read as indicating that Adyen is targeting such metrics for any particular year, but are merely objectives that result from Adyen’s pursuit of its strategy. Adyen’s ability to meet its medium-term and long-term objectives is based upon the assumption that Adyen will be successful in executing its strategy and, furthermore, depends on the accuracy of a number of assumptions involving factors that are significantly or entirely beyond Adyen ‘s control and are subject to known and unknown risks, uncertainties and other factors that may result in Adyen being unable to achieve these objectives. page 12

Growth pillars


This segment has historically been our key growth driver, and we saw a continuation of this in the second half of 2018

Enterprise volume evolution, including share of total processed volume on the platform (%) in EUR billions. Note that 2017 numbers represent total processed volume

We continue to win new merchants, and volume from existing merchants, as a result of the high service levels facilitated by our single global platform — built with the complex needs of multinational enterprise merchants in mind

Sustained diversification in merchant base and in geographic spread of net revenue growth (notably North America and Asia- Pacific)

Continued investment in the growth of the Adyen team. Of those hired in the second half, over 50% were outside of our Amsterdam HQ. Ensuring that our merchants are optimally supported locally around the world

Ongoing improvements of platform functionality and product suite, now powered by a weekly release cycle

Growth pillars

Unified commerce

We continue to see strong growth in this space due to the strength of our offering, and are now expanding into new verticals

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

Strength of offering resulting in increased traction and share of total volume on platform, further supported by seasonal trends in second half of the year

Increasing momentum in new verticals, such as quick-service restaurants and hospitality verticals, adding to existing verticals such as retail

Significant investment in POS operations, vertical-specific partnerships and POS logistics to further support our merchants’ growth

We launched Sales Day Payout as an extension of our core product offering, aiming to allow for an easier reconciliation process — especially helpful in the retail segment

Growth pillars


We are seeing some good early signs in the mid-market, which we view as the next-adjacent segment to enterprise

Mid-market volume evolution, including share of total processed volume on the platform (%) in EUR billions. Please note that in 2017 we did not differentiate mid-market volume

We invested significantly in our mid-market operations in the second half of the year, notably in the establishment of a customer success team, which is focused on scaling up merchants, and the development of midmarket- specific marketing plans

All accounts (platform-wide, not just midmarket) were moved to our new customer area, which features intuitive UX, and contains a range of actionable data insights. We also simplified and sped up onboarding to the Adyen platform

Launched ‘Plugins & Partnerships’ workstream, extending our existing partnerships strategy with major ecommerce platforms (e.g. Magento, SAP, Salesforce)

Continued investment in mid-market-specific sales teams, albeit at relatively small scale, primarily in continental Europe and in the UK

Interim Condensed Consolidated Financial Statements H2 2018 Adyen N.V.

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