Adyen: 2021 H2 Earnings – Processing on all Levels, Strong Results for 2021!
- Rupam Deb
- Mar 3, 2022
- 4 min read
Adyen: 2021 H2 Earnings
In H2 2021, Adyen continues to generate significant growth and operating leverage, with impressive results on all fronts, with its share price jumping 12% after the earnings on 9 February 2022. Processed volume and net revenue increased by 72% and 47% y/y, respectively, during the period, far outpacing the company’s long-term revenue growth targets of mid-twenties to low thirties growth, while profitability continues to improve (to 64% EBITDA margin) despite continuing to invest in future growth.
Here are our key points from the results and earnings call! And we will discuss Adyen’s updated valuation given its recent strong 2021 performance in our next Multibagger Research Series Meetup!
Processed volume increased 72% (to €300 billion) in the second half of 2021 and full year volumes exceeded €500 billion for the first time in 2021 (+70% y/y from 2020). Strong demand across all merchant channels continues to drive accelerated growth. It’s also noteworthy that Point-of-Sale (POS) transactions increased 97% y/y in the period.Management stated that “Results were bolstered by the unrelenting rise of online commerce globally, and an increasing need for merchants to implement unified commerce shopper journeys”.
Net revenue increased 47% y/y from €379 million to €557 million in H2 2021. Similar to the prior periods, more than 80% of the growth in the period came from existing merchants. Volume churn was also less than 1%. It is also worth noting that despite the growth from existing clients, revenue concentration continues to decrease
Enterprise: Enterprise transaction volume increased by 125%, to EUR 293 billion in H2, and is the largest driver of the revenue growth. Adyen’s focus on winning both new merchant relationships and greater wallet share with existing clients has been aided by the implementation of new sales channels, geographic expann, asiond new product offerings to merchants.
Unified Commerce: Point-of-Sale contributions continue to be relatively small, with EUR 41.8 billion processed volumes (14% of company total) in H2 2021. However, this represented 130% growth y/y. Management stated that the ability to remain a leader in this shifting consumer preference by adopting a multi-channel strategy is “business critical”, and Adyen is in a good position to help the merchants with this with its unified single platform.
Enterprise volume in EUR billions.Enterprise volume in EUR billions.POS volume evolution, including share of total processed volume in EUR billions.Mid-market volume in EUR billions
By geography, net revenue growth in the North America and Asia-Pacific regions far outpaced that of the company’s overall results, experiencing growth of 70% and 51%, respectively in H2 2021. The total contributions of net revenues outside the company’s EMEA market exceeded 40% for the first time during the period. This is a key highlight for the period from management’s perspective, as the management has been focused on global expansion and geographic diversification. In our opinion this would help increase the company’s ability to address a much greater TAM around the world.
EMEA (59% of H2 revenues, and 42% y/y growth): As the region continues to rebound from the lows of COVID, the lasting changes in merchants’ interactions with customers has accelerated digitalization. This has boosted Adyen’s ability to help merchants create more resilient platforms for their customers. Alex von Bismark added that the customers that Adyen were able to help in the early stages of the pandemic have structurally adapted and are now powering the commerce growth for the region. Such value adding by Adyen should allow it to continue to capture greater wallet share with its clients
North America (25% of revenues, and 70% y/y growth): This region saw the highest levels of growth in the period. The company continues to look at this as a large opportunity to gain market share. Adyen’s exposure to the market here represents a much smaller share than in the EMEA region. Investments in growth here could help this segment generate robust growth.
APAC (10% of revenues, and 51% y/y growth): Management noted that the Asia Pacific market remains the most fragmented region for digital payment methods. The rise of non-card payment methods continues to be a tailwind for growth and the company has seen a number of buy now, pay later options emerge. Adyen will continue to invest in the region with aspirations to hold a leadership position as the market matures.
LatAm (7% of revenues, and 23% y/y growth): Like APAC, LatAm continues to evolve rapidly, with the rate of contactless transactions increasing significantly over the past year. Management called out Brazil and Mexico as having the most dramatic shift toward online commerce recently and believes that Adyen is leading that shift.
The company does not try to manage the take rate actively, and has seen increasing average transaction value. In H2 2021, Adyen’s transaction take rate fell to 18.6 bps (or 19.4 bps for the full year). Meanwhile the average transaction value realised continues to climb, and reached EUR 35.1 in H2 (vs EUR 27.5 in the prior year period).The company’s strategy of focusing on the most profitable volume at scale, which is driven by success with enterprise merchants, should continue to result in this dynamic going forward.
For the remaining points of this earnings summary, check them out at our Multibagger Research Series (linked below). https://learn.moneywisesmart.com/courses/multibagger-research-series/lectures/38491468
For our free analysis of other high quality companies, check them out at our free Research Series (linked below).
For our summary analysis of Adyen, check out the video below.
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