Adyen – Strong Resilient Growth With Accelerated Hiring In Tough Times When Others Were Cutting Down
- Rupam Deb
- Aug 23, 2022
- 3 min read
Updated: Nov 28, 2024
Adyen released its 2022 H1 earnings in August 2022. Here are the key points that you don't want to miss for Adyen from this earnings!
Despite the tough and uncertain economic conditions, Adyen continued to perform well in 2022 H1, showing the resiliency of its business by growing y/y its volume by 60%, net revenue by 37%, and EBITDA by 31%.
When many other technology or industry players were cutting expenses and slowing down hiring (like Wix) or retrenching employees (like Shopify and Fiverr), Adyen, on the contrary, was accelerating their hiring, growing its employee count by 32% (or 621 employees) y/y, to 2,575 employees. This accelerated hiring had caused its EBITDA margin to go down to 59%, (vs 61%-64% last year).
In this article, let’s first look at Adyen’s key financial performances during the first half of the year, followed by some comments on the business’ long term strength and prospects.
Processed volume grew 60% y/y (to EUR 346b), with the Unified Commerce segment growing fastest (+83% to EUR 80b), followed by Digital (+55% to EUR 218b) and Platforms (+53% to EUR 48b).
Net revenue grew 37% y/y (to EUR 609m), a slowdown from the 46% in 2021 H1 or 47% in 2021 H2, but still impressive relative to many other technology or Internet industry players which experienced more significant slowdowns. Net revenue growth was fastest in Asia Pacific (53%) and North America (52%), followed by EMEA (30%) and Latin America (25%).
Operating expenses grew faster than net revenue, by 47% (or EUR 89m) y/y to EUR 278m. This was driven mainly by:
higher employee benefits (+37% or EUR 37m) as Adyen accelerated its hiring mainly in technology team (after Adyen expanded its senior leadership team group involved in the final decision making of hiring);
increased travel & event spend (+509% or EUR 13m) as Covid-19 restrictions eased; and
new spending for the United Nations SDG (Sustainable Development Goals) commitment (EUR 6m, or 1% of net revenue).
EBITDA grew by 31% y/y (to EUR 356m), and EBIT grew by 29% y/y (to EUR 331m). These translate to an EBITDA margin and EBIT margin of 59% (compared to the >65% long term targeted margin) and 54% respectively.
On cash flows, it generated operating cash flows (OCF) of EUR 1.0b (+66% y/y). It spent ~5% of it on capex (including leases), and retained all the remaining free cash flows (i.e. ~95% of OCF) in the business as cash. This led to it having ~EUR 1.6b of net cash (that is not part of the merchant fund flows), which was a lot, at about 3 times its annual FCF (ignoring the merchant fund flows).
Now, let’s talk about some of the business’ long term strength and prospects, as highlighted by its recent developments and financial performance.
For the remaining points of this article about Adyen Resilient Growth, check them out at our Multibagger Research Series (linked below).
For our free analysis of other high quality companies, check them out at our free Research Series (linked below).
For our summary analysis of the company, check out the video below.
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