The payment service provider $ADYEN (-0,84%) held its H2 2024 earnings call last week. Ingo Uytdehaage, Co-CEO, looked back on a strong year in which Adyen continued to invest in its financial technology.
These investments included products such as Uplift and Intelligent Payment Routing, which aim to balance cost, conversion and fraud. The CEO was particularly proud of the launch of SFO1, a terminal that helps retail customers optimize their customer journeys. These product innovations help to increase market share with customers, which is an important part of Adyen's growth strategy.
Ethan Tandowsky, the CFO, added that the customer focus is also reflected in the figures. In the second half of the year, Adyen increased net sales to almost 1.1 billion euros, which corresponds to growth of 22%. This growth is mainly due to the expansion of business with existing customers. EBITDA margins increased to 53% in the second half and just under 50% for the full year, due to a lower level of hiring compared to previous years.
The CEO explained that product investments such as Intelligent Payment Routing or Uplift are based on a unified platform. This platform enables access to more data, as a volume of over 1 trillion euros was processed last year. One example of this is Payment Routing for U.S. Debit, which resulted in 26% lower costs and 22 basis points higher conversion for 20 pilot customers. The number of merchants using this product has doubled in recent months. The Net Promoter Score reached an all-time high of 66.
Ethan emphasized the importance of the combination of innovation and reliability, especially on Black Friday and Cyber Monday weekend. Adyen processes around 160,000 transactions per minute and supports its customers in these crucial moments.
Examples of customers that have grown with Adyen were also mentioned: Adobe in digital, Motel One in hospitality and Spendesk as a platform merchant. Ethan discussed the regional development and emphasized that EMEA was the fastest growing region. In North America, Adyen gained market share and invested in new office space. In APAC, long-term investments were made, while in Latin America there was an acceleration on a constant currency basis.
For 2025, Adyen plans to continue investing in relevant markets, especially in North America, both commercially and on the engineering side. Margins are expected to continue to increase, but not as strongly as in the period from 2023 to 2024. Management forecast slightly accelerated net revenue growth in the low to high 20 percent range for 2025.
The Q&A session covered the following topics:
Competition in the US: Adyen is focused on creating value for its customers and gaining market share, even against competitors that compete on a cost basis.
Embedded Finance: Adyen is focusing on growth with its platforms. Many SaaS platforms already use Adyen and there is great potential for the sale of financial products. The volume of the issuing business is around 1 billion euros per year, with expense management and virtual cards being important use cases.
Growth momentum: Growth is mainly driven by the expansion of business with existing customers. The areas of digital, unified commerce and platforms are making a positive contribution.
Growth in Europe: This is a combination of growth with existing customers (e.g. Zalando) and the acquisition of new customers. Europe is benefiting from the complexity and fragmentation of the market and from the platforms.
Regulatory environment: Adyen sees the regulatory environment as an opportunity to develop products that reduce friction for customers.
Importance of an in-house solution: The approach of having everything in-house helps Adyen get more data with a single platform. With more data, Adyen can gain better insights and make better risk assessments.
Capital allocation: Acquisitions are still not a central part of the strategy. A strong balance sheet is important to gain customer confidence and support the launch of financial products.
I hope this summary has helped you.
Stay tuned!
