Adyen N.V.

Ladies and gentlemen, thank you for holding, and welcome to the Adyen first half of 2020 results conference call. At this moment, all participants are in listen-only mode. After the introduction, there will be an opportunity to ask questions. I would now like to hand over to the conference to Mr. Peter van der Does, the CEO of Adyen. Please go ahead, please.

Thank you, and good afternoon, everyone. Before we talk about first-half results, I'd like to take a moment to talk about the COVID-19 pandemic. I cannot imagine having a discussion on the first six months of this year that does not begin with addressing the impact that the pandemic has had on the global economy, on businesses, and on people around the world, on the team here, and on all of our daily lives. I hope that you and your loved ones are safe and that the impact on your well-being has been limited. With that said, I would now like to give you a brief update on our first half, as that's why you're all tuned in. Ingo will take a deep dive into the numbers after my introduction. He will be happy to take any questions after that. We continue to see profitable growth in the first half of the year as the business has proven itself highly resilient despite the impact of the pandemic. this resilience is a result of continued diversification across our merchant base, verticals, and regions. Process volume for the period was 129 billion, with a net revenue at 280 million. Despite the impact of the pandemic, we did see several historical trends persisted on the platform, with volume churn remaining below 1%, net revenue contributions were further distributed amongst regions, and over 80% of volume growth came from existing merchants. Longer-term trends continued to benefit us as well, as the shift from cash to cashless, the blurring of lines between online and in-store sales channels, and the digitalization of commerce continued. Some of these trends were even accelerated by the pandemic. For our merchants, the pandemic meant that they had to adapt fast. We focused on helping them to ensure that they could keep their businesses running and sales flowing. Solving real problems for our merchants has always been a strength for us. I'm happy to see that this did not change. Once stores closed, we helped merchants to move online quickly, even if they didn't have an online sales channel before. In the recent reopening scenarios, we have been able to build several contactless setups so our merchants could reopen in safety. We were happy to see that large enterprise merchants' interest of partnering with us remained unchanged over the course of the pandemic. We continue to onboard new volume from existing merchants and add new merchants to the platform too, like iFruit and Bell has. While our merchants' priorities naturally shifted, it's exciting to see that our success in the unified commerce space continued. We saw an upward trend of merchants adding a second channel persist, a real proof of our success in the unified commerce space. On mid-market, we continue to invest in our long-term approach to moving into the next adjacent segment to enterprise. It excites me to see that volumes in this segment are growing at the same pace as our enterprise volumes. Remember, it's still early days here. On the product side, we expanded our global acquiring footprint to Malaysia and updated our 3DS 2.2 product with a whitelisting feature. It also excites me that we are now live with the first of the issuing transactions. We also continue to build the team in the first half. With our intent to capitalize on long-term opportunities and skill, we brought the team to Carnegie and welcomed 266 new colleagues. Onboarding them via video conferencing was quite a challenge, but we are happy to see that this all worked out well. The Adyen team now totals 1,448 FTE. Our focus is on measured growth while scaling, so we ensure that we maintain the Adyen culture. While the entire team adapted quickly to working from home, we did not encounter significant slowdowns in onboarding new merchants, building out the platform, or scaling the team. We continued doing what we have done since foundation in 2006, building Optium for the long term together, not held back by the backboard of a global pandemic. This is something I think the whole team is proud of. For more details, you can find our shareholder letter online. I will now hand over to Ingo to dive including numbers in more detail.

Thank you, Pieter, and good afternoon, everyone. Thanks for joining the call. Let's dive into processed volume first. We processed 129 billion in the first half, up 23% year on year. Of this 129 billion, 11 billion came from point of sale, accounting for 9% of total volume. Pieter just talked about store closures due to the COVID-19 pandemic. And as a natural consequence, growth in point of sale was limited in the first half of the year. Net revenue went up to 280 million, up 27% year on year, and continued to diversify across regions. Take rate was 21.7 base points, up from 21.1 base points in the first half of 2019. This delta is mainly due to the increase in full-stack volumes following the negative impact of global lockdown restrictions on airline volumes. OPEX were 153 million for the first half, representing 54% of net revenue and up 44% year-on-year as we continue to invest in Adyen for the long term in the team and marketing. Employee benefits are the main driver behind the increase in OPEX as we made significant investments in scaling the team to capitalize on long-term growth opportunities. EBITDA was 141 million in H1 2020, with EBITDA margin at 50%, down from 57% in the first half of 2019. This decrease is mainly a result of our increased hiring pace, as employee benefits exceeded net revenue growth in the first half of the year. GAPEX were 2% of net revenue in H1, down from 4% of net revenue in H1 2019. The low cost of operating the single platform allows for maintaining a low CAPEX level. On to our guidance. Our financial objectives remain unchanged since the IPO, as our view of the business has not substantially changed. We therefore maintain the same longer-term outlook as we did at IPO. With that being said, I would like to reiterate our financial objectives, which remain unchanged from our prospectus. We aim to continue to grow net revenue and achieve a compounded growth rate between the mid-20s and low-30s in the medium term. We aim to improve EBITDA margin to over 55% in the long term. And we aim to maintain a CAPEX level of up to 5% of net revenue. We have posted these results and our accompanying shareholder letter on our website. This can be found at agen.com. Thanks all for listening. Peter and I are happy to take any questions now.