I’ve been meaning to open a separate thread for Adyen for a while, even though there’s very little discussion about this Dutch company on the forum.
In short: Adyen is a payment platform that offers online payment services, card agreements, and risk management services all in one system.
This image from the 2020 CMD is an excellent summary of Adyen.
Adyen has countless fascinating nuances. For example, all their earnings videos are self-designed and produced!
Adyen was founded in 2006 by Pieter van der Does and Arnout Schuijff. Pieter is currently Adyen’s CEO, and Arnout served as CTO until January 2021. The core team of the company had a strong background in the industry, particularly with Bibit (now part of WordPay Group), which was sold to WordlPay in 2004. WordlPay was owned by the Royal Bank of Scotland. The name Adyen originates from Sranan Tongo, meaning “start over again.” The company has been profitable since 2011, which was also when its first funding round took place. However, they weren’t even seeking additional capital but rather marketing/presentation for their partners. Many VC firms were unwilling to invest in Adyen under the terms at the time.
Adyen was discussed for an episode on Join Colossus on March 9, 2022, with Michael Willar, a portfolio manager at Stenham Asset Management, as a guest. I highly recommend listening to that episode if you’re interested in Adyen: https://www.joincolossus.com/episodes/30866661/willar-adyen-a-first-principles-payment-platform?tab=blocks
The company reports only semi-annually, H1 and H2.
https://www.adyen.com/investor-relations/h2-2021 full report here
Here are a few highlights from H2/2021.
Financial targets
Cash flows
Adyen’s CMDs are absolutely excellent. This year’s CMD was held on March 31, 2022, and the link is here: https://www.adyen.com/investor-relations/events/capital-markets-day-2022
News related to the CMD regarding strategy: Payments company Adyen announces expansion into banking services | Fortune
Tweet about competitors
https://twitter.com/FlagshipAP/status/1513797305455022083
Stripe’s latest updates: https://stripe.com/files/stripe-2021-update.pdf
Another excellent Twitter thread from last year: https://twitter.com/Invesquotes/status/1463641852763070467
IPO prospectus here: https://www.adyen.com/dam/jcr:ab990e2d-7911-44b7-8932-beeec4809eba/Adyen%2520Prospectus.pdf
From there, I’ll highlight this section, which has been reviewed again in earnings reports.
"Adyen’s net revenue is impacted by the volume of payment transactions with a specific merchant. In
general, as volumes grow, merchants are able to negotiate relatively lower fees per transaction. As a
result, this means that the company’s take-rate (net revenue as a percentage of processed volumes) for a merchant generally declines as transaction volume grows, with a take rate of 0.21% for the year ending 31 December 2017, as compared to 0.24% and 0.30% in the years ending 31 December 2016 and 2015, respectively. However, Adyen does not track take-rate as a measure of its business. Instead, Adyen aims to ensure that each additional euro of processed volumes increases its net revenue in the aggregate. This means that the positive impact from an increase in processed volumes is higher than the negative impact of fee decreases related to volume discounts. This consequently has a positive impact on EBITD"A.
No dividends are paid during periods of strong growth, and no share buybacks are planned in the near future. Additionally, approximately $6 million was spent on SBC (Share-Based Compensation) in 2021.
In 2021, Adyen spent just ~$6 Mn in Share Based Compensation (SBC) which is only ~60 bps as % of their net revenue.
Finally, the “Adyen Formula”
Disclaimer:
I own Adyen shares; this thread and its messages are not investment recommendations.
