Adyen Shows Impressive Business Growth Post-IPO

Adyen continues to grow at a steady clip across all fronts. The company has expanded headcount by 100 since the start of the year to 768 employees, roughly two-thirds of which are based in its European offices in Amsterdam (headquarters) and London. Headcount in the APAC region (Singapore) is up nearly 50% YoY, and almost 25% in North America (San Francisco). The new additions across all regions have predominately filled product and sales roles.

Adyen's total revenue through the first half of the year reached €697.1m, with net revenue up 67% YoY to €156.4m. Europe continues to account for the lion's share of net revenue, with roughly two-thirds derived from the continent. North America and APAC, where Adyen has a significantly smaller foothold comparatively, posted strong YoY net revenue gains of 143% and 147%, respectively. Importantly, Adyen is profitable with strong margins. It saw EBITDA of €70.3m through the first half of the year, and an EBITDA margin of 44.9%. Net income reached €48.2m in H1, up 75% YoY.

Strategy

Adyen is focused on driving growth across three core areas of its business. These include:

In-store: Adyen's in-store acceptance capabilities are a critical part of its unified commerce value proposition, which enables retailers to accept multichannel payments via a single processing platform. The company's in-store presence now extends to 37 countries, with support for Singapore added earlier this year. The volume of transactions it handled at the PoS has grown to €6.6bn through the first half up 2018, representing a 120% YoY increase. In-store payments now represent nearly one out every 10 dollars that Adyen handles (9.4% of total payment volume). This growth has been fueled in part by the addition of a steady stream of new customers. Added to the list of existing customers such as Bonobos and Tory Burch are the likes of Asics, Dunkin' Donuts and Lush.

In March, Adyen launched its Terminal API, which runs on various portable, handheld and countertop Verifone PoS devices and is compatible with PoS software packages such as RetailPro and Oracle Retail. The Terminal API is intended to enhance the functionality of the PoS device, such as enabling personalization (e.g., local payment method support) and inventory integration to provide the basis for delivering an endless aisle shopping experience.

Midmarket: While Adyen has traditionally been known as an enterprise-focused payments provider, the company is making investments to build out a position in the midmarket. Sales and marketing expenses rose 63% in H1 to €11.4m, in large part due to additional marketing resources that Adyen is dedicating to broadening its exposure to this market. The company has also increased hiring for midmarket-focused sales and product roles, in addition to implementing dedicated development teams focused on SMB commerce platforms such as Magento and NetSuite. New customers include Brompton, Tony's Chocolonely and Ubeeqo.

Also of note are enhancements Adyen has made to its web and native app SDK, Adyen Checkout, which provides midmarket businesses with a customizable and streamlined way to integrate Adyen. The company has also made updates to its Customer Area, where users can search for payments and manage disputes.

Enterprise: Enterprise customers such as Netflix, Spotify, Uber and LinkedIn continue to serve as the feedstock for Adyen's processing volume growth. Many of Adyen's enterprise clients are high-growth entities themselves, meaning as their revenue grows, so does the transaction volume Adyen processes for them. Adyen has also demonstrated an ability to win new business within existing accounts, in part through product enhancements such as the integration of Visa's and Mastercard's account updater services and automated transaction routing. Enterprise growth has also been supported by new customer wins, which include eBay, Cabify, Valve and Dollar Shave Club.

Moving forward, it is worth monitoring Adyen's progression into new enterprise retail segments. While the company has done particularly well with digital-native brands and marketplaces, it is making inroads into more traditional segments, such as supermarkets, restaurant chains and hospitality.