Adyen: 2021 H1 Earnings – Key Points to Know!
- Rupam Deb
- Aug 24, 2021
- 3 min read
Adyen – 2021 H1 Earnings Results
On 19 August 2021, Adyen released its financial results for 2021 H1. Adyen continued to make good progress on all fronts across the world, on its enterprise and mid-market merchants, on its unified commerce offerings and POS businesses, and also on its new issuing business. Processed volume grew 67% y/y and net revenue grew 46% due to strong demand, with >80% of the growth driven by existing customers. EBITDA grew even faster at 65% due to operating leverage, with its EBITDA margin hitting 61%, a significant improvement from the 54% a year ago.
Here are our key points from the earnings results and earnings call!
Processed volume grew 67% y/y, from EUR 129 billion to EUR 216 billion, driven by strong demand globally across all merchants.
Net revenue grew 46% y/y, from EUR 305 million to EUR 445 million. This high growth came largely from increased volume of existing enterprise merchants already on the platform, with platform businesses being a major growth driver. This growth from existing customers drove >80% of the net revenue growth, consistent with the past few years. Adyen invested significantly in building out its offering for these merchants over the past years, and is now seeing solid results of that work. Volume churn also remained consistently low, at <1%.
One example of growth from existing enterprise merchants through close partnership is Adyen’s partnership with McDonald over time. In 2019, Adyen launched mobile transactions in the UK with them and have since expanded to do the same in Canada, the UAE, and additional European markets.
On revenue by geography, Adyen is increasingly becoming more global, with net revenue contribution continuing to diversify across regions in 2021 H1. Europe accounted for 60% of net revenues, followed by North America (22%), APAC (9%) and LATAM (8%).
In line with previous periods, year-on-year net revenue growth accelerated in all regions. Most noteworthy, North American net revenue growth was 80%, and outpaced APAC (44%), Europe (40%), and LATAM (26%).
On the high net revenue growth of 80% for North America, the acceleration comes on the back of almost a decade of investments. Starting out, Adyen mainly helped US merchants expand outside the region. Today, it is consistently able to win US domestic volume, as it is well-positioned to help merchants solve for the evolving complexity in the North American payments landscape (e.g. shopper preferences evolving towards multichannel shopping journeys and payment method proliferation).
On unified commerce, the COVID-19 pandemic accelerated the longer-term shift towards unified commerce shopper journeys, which are now ingrained in shopper preferences. For retailers, this means that presenting a single brand across channels became essential. Ordering ahead, curbside pick-up, and in-store purchases with self-service checkouts will continue to be part of everyday reality. Adyen’s single platform is unique in its capability of helping merchants implement such multi-channel journeys.
Against this backdrop, Adyen’s point-of-sale (POS) volume doubled year-on-year, reaching EUR 23 billion in H1 2021, comprising 11% of total processed volume. The growth of these volumes emphasizes the increased relevance of Adyen’s unified commerce proposition, with it adding leading customers such as LVMH, The Body Shop, and Nando’s.
Total operating expenses grew 24% y/y, to EUR 189 million. This represented 42% of net revenue as compared to 50% in 2020 H1. The cost improvement is mainly due to its strong net revenue growth combined with lower travel and marketing costs, i.e. fewer in-person events and outdoor advertising, as a natural result of the COVID-19 pandemic.
The major operating expense, employee benefits, grew 36% to EUR 119 million, as it increased its employee count by 207 (~%) to 1,954, with new hires predominantly in tech (47%) and commercial (40%) roles. Senior management continued to dedicate significant time to the hiring process and, now virtually, meet every new hire before joining the team, as they believe scaling their culture is key to successful execution for the long term.
Sales and marketing expenses (included in other operating expenses) decreased by 20%, to EUR 17 million, due to lower travel and marketing costs.
For the remaining points of this earnings summary, check them out at our Multibagger Research Series (linked below).
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