Adyen N.V.

Hello and welcome to Atien's first ever Virtual Capital Markets Day. We're happy that you could join us today. Before I introduce Peter, my name is Hemmo. I'll be your moderator today. I'd just like to talk you through the logistics of the Q&A. There will be two blocks of 30 minutes each for Q&A. And you would really help out the team if you could list your name and the firm or fund you're representing in your question. We will try to get through all of them. During the Q&A session, you'll have an opportunity to unmute yourself to ask your question directly so we have the most interaction we can get in this COVID environment. And with that, I'm really looking forward to today. It's my great honor to hand off now to our co-founder and CEO, Pieter van der Does.

welcome all at our first virtual capital markets day we were looking forward to meet you all face to face but given circumstances we are very happy that we can have a capital markets day in this way Atien is focused on building the company for the long term and today we want to use to explain more about what that means so how we how that translates to the different geographies and how that translates to the different solutions that we're building but before I do that I want to address the COVID situation because it has of course enormous impact on people all around the world on businesses, the economy, but also not yet our employees. So what I hope is that the impact on you and your loved ones is limited and that you stay safe. Also something that's top of mind for us is Arnoud has announced that he will resign. Arnoud is my co-founder and CTO. Originally Arnoud said we are going to do this for maybe one or two years together and then you run the company. That turned out to be true, but it took 14 years before we were at that point. Although I'm sad that Arnoud is leaving, I think the engineering team that we built is very, very strong and I'm very optimistic for the future. So I'm just happy that he stayed so much longer than his original plan. Then I'd like to move over to the agenda for today. Ingo and I will talk about Jan-Willem Wasmann, And now let's, let's go one step back there. There are three angles, how we look at Altium Jan-Willem Wasmann, And that is we look through the people in the culture, how we build this company for the long term. We look at the products that we're building and then how that interacts. So how comes that Jan-Willem Wasmann, How does that come together in scaling the company and you see that back in the presentations because Ingo and I We'll be talking about how we're building, retaining and developing our people. Then we hand over to Kamran, our Chief Operations Officer. Kamran will talk about the geographical expansion, our technology stack and how we're scaling this company. Um, something about Cameron, uh, he has been with us for, uh, uh, proof for almost seven years. And, uh, he joined the boards, uh, the beginning of this year. So I'm very happy that we have such, uh, uh, uh, people on the boards that, which I find very much audience style that built the company themselves. When he started in North America, uh, there was very little there. He's grown it himself and he moved on. to now take operational responsibility. So that's a little bit on the background of Cameroon. Then we hand over to Mariette. Mariette is our chief legal and compliance officer and she will talk about how we do our product development which is merchant driven product development so you need an organizational structure to support that and she will talk about how we have set that up in work streams and solutions a little bit of background on Mariette she almost has been five years with the company and Mariette has also proven to have a lot of traction just as general developing the company, but also more specifically in the regulatory framework, getting banking licenses through the whole process of IPO. And also she joined the board for January this year. So that's a little bit of background on Mariette. And then we're going to move to the solutions. So then we're going to move to the merchant facing solutions that we build. And we do that with Sunil, Derek, Blake, and Martina. And they will explain how we use the single platform to solve complexity in those specific areas that the presentation is about. All the people presenting are people that have been contributors themselves and as they developed they moved on to lead a stream or maybe later a solution. Then we close today with a tour around the world and we do that with Jean from Latam, with Brian from North America and with Warren. What I think is interesting, if you see what we learned over the years in building a company, is it's really important that the people who manage regions have a good understanding how you build a global company. We don't have a single dominant culture. You might think headquarters in the Netherlands, but the Dutch are not the majority in this company. This is such a mix. So people who are really good in developing a region usually also have a more... Jochen Breuer- An exposure to different culture. So if you look at John, he's a Brazilian, but he lived. He studied for a while in Europe and then moved back to Brazil. Jochen Breuer- So has been exposed more to European culture Brian work for years for us at headquarters in the Netherlands, whereas it's an American who lives in San Francisco. And Warren spent half his professional career in the US and half of it in Singapore and lived in various Asian countries and a bit in the US. So these are people who are well aware how you make a company work internationally. So here you got the pictures. And then let me start with people and culture before I hand it over to Ingo. Something that we talk a lot about is the Adyen formula. And the Adyen formula is actually lessons learned in building this company, but also some lessons which we learned in the past. How do you build such a global company and are able to retain speed and build something for the long term? And we wrote it down in eight points and I'll talk through a few of them. Let me start with the first one. We build to benefit all merchants. Why is it so important for us and why did we agree that that's the way we build? It is the vision of long-term. Short-term, you could develop something to onboard a merchant and then you would have to benefit from the revenue of that merchant. But that's only short-term if that makes your technology stack more complex and difficult to maintain. And that if that moves you to a point where at a certain point you lose speed. So because we're there for the long-term, we say we build stuff that benefits all merchants and all merchants means it doesn't necessarily need to be used immediately by all merchants but if we add acquiring malaysia that means that all merchants needing acquiring in that region can use it and we already have some form of demand Also, the second point, good choices to build an ethical and sustainable business. We don't need to work with that company that you're not really proud of just to bump up your numbers because we know we are building for the way longer horizon. So we want partnerships that work for us. And if you see how that works, merchants have always been given us more volume over years because they see we outperform. So we steer away from those short-term gains. How do we build? We say we launch fast and iterate. We have a direct communication with our merchants. Mariette is also going to talk about the merchant-led innovation. If we feel we can help a merchant in a certain way, we quickly test something and then we further build out such a product. And we feel that's a strategy that fits us much better than going for huge releases. Winning is more important than ego. What does that matter? We feel that if you run such an international environment with such a complex product, everybody needs to chip in. So somebody that fits well with the company is somebody who is humble enough to get the satisfaction out of the success in what we're building, maybe commercial success or maybe technical success. And if somebody wants to be really seen, this is not the environment because there are way too many people who help. And that's made it therefore to the formula. Don't hide behind email. Life is complex enough if people work through time zones, through video. So we try to pick up the phone also in these COVID times to just debug our ideas, to understand like, hey, if we would do that, what would be the impact? If we run this product, what would be the impact on the support? Is it easy to maintain or am I overlooking something? So there's a lot of communication going on and we ask people just pick up the phone and discuss. Don't go to formal communication. We go through cultures and quickly that's very slow because people misunderstand. The last one which I want to point out is, this is very similar to Seven by the way, we use different people, we ask people. There's a lot of autonomy, but you do have to work according to the formula. That means that you ask different people for input, different people from different cultural background. Obviously a marketing campaign which works in one region could really not be suitable for another region. but also from different departments so that you get a good feel for what would be the effect of your choices but if you do that there's a lot of autonomy and the last one which i wanted to point out is we talk straight without being rude at the end is founded in the netherlands we are originally a dutch company not so much anymore because we're very very mixed but we stay true to the Frans de Ruiterlnagel, Ph.D.: : Talk straight. That means something else in Singapore, then it means in New York, then it means in San Francisco, and that's okay. But within the cultural bandwidth. We asked people to talk very straight internally and externally because we feel it's a lot quicker. Let's get to the core of what's going on. Let's try to solve stuff. Frans de Ruiterlnagel, Ph.D.: : Um, Then before I hand over to Ingo, I want to talk about a few things that we always said that Adyen is about, the three things, which is why are we here? That's of course, we want to change the payment industry. We don't accept how it is, but we think things can be done better. We want to have fun whilst we do it. If we don't have fun, we wouldn't be having so much attraction, so much traction. We wouldn't be attracting the right people. And thirdly, we help our merchant grow. If we help our merchants grow, that means that they'll give us more volume and that together we can build out this business. Now over to Ingo. And Ingo will share more about how we hire people, how we grow people, and how we retain people. So, Ingo, over to you.

Thanks, Pieter. And it's a great pleasure to talk today about our culture because I'm very proud how we've built the company so far and how we've built a team. And in building the team, hiring is of crucial success or crucial dependent on finding the right people. And Pieter already talked about the formula. So we're looking for people that fit the formula. And what does that exactly mean? Well, we're looking for people that are smart and want to work together to build a company. So we're not looking for people that just find a role and try to be successful just in that role. We want to see people that basically broaden their horizon and really want to see how you can build this fantastic company. We do that by having board interviews. So still in all rounds that we have with candidates, typically six, seven rounds, the final round is with one of us. So one of the six board members, they see each candidate and that's a very good start of the relationship for people that join. Because at the one hand, we can make a good judgment whether this person fits the company. At the other hand, you immediately get to know the people that join the company. And that's, of course, if you want to build a flat organization, very important that you know who is working for you. And this also means that it's a measured growth approach because financially we could hire way quicker than we currently do. But by making sure that we hire in the right pace, that people can actually be onboarded in a good way, we make sure that people feel welcome to the team. So if they join, that there is room to properly onboard them to help them to get up to speed, which is very important. Then the key question, of course, is why do talent stay with us? A very important factor here is that all the talent gets the opportunity to grow with us. Typically, if you look at the team leads that we find in our company, they are promoted from the inside. We almost never hire team leads from the outside. That's a great way. Also, it works the other way around, that if we look for people, and they have team lead experience that we sometimes ask them to join as an individual contributor to make sure that they are really hands-on and make the company successful. Because that's what we have seen, that if you have hands-on people that can also lead a team, that that's the best way to grow. Also, a very important aspect is that we ask people to create their own path. There are so many opportunities in the company that there are no standard patterns. This is not a company where you know within two or three years, I get to the next function. We ask people to look around and come up with ideas that best work for them. By doing that, we create a culture where people really try to understand how they can excel and how they can help to build the culture. So the company culture is a very important reason why people want to stay. The company culture is, I think if I also look to myself, I've been now with the company for over 10 years, the culture is the key reason to work here. It's great to have so many talented people around you that you can learn from each day, and it's very inspiring. How do people grow? Of course, ownership is crucial. Making sure that people really get the opportunity to work on an idea, build it out, and put it into production. We have a young team. If you look at average age, it's around 32 years. As a result, people get a lot of responsibilities at a young age. Of course, that's super cool if you join, work on a product, and see that it goes live. Another reason why people grow with us is that they often or almost always work in cross-functional teams. We're going to talk today about the solutions and the work streams. All those solutions and work streams are cross-functional teams. It's engineering, product, commercial people, By doing that, you learn from the different disciplines and products become better. That's also how individual people grow in the teams. Then the last point is the Adyen way of leading teams. With the growth of the company, we've been looking for a lot of new team leads over the recent years. We ask ourselves the question like, how can we bring them up to speed as soon as they can? Often, they are first-time new team leads, so they have never had the experience to lead a team, and we want to do it in a specific Adyen way. As management team, we spend a lot of time in helping them out, trying to basically tell the key principles how we like to lead the company. And the Adyen way of leading teams is basically the Adyen formula for team leads. And we have seen that that really helps to accelerate the growth of the company. In these COVID times, of course, it's all a bit more difficult. We used to work all together in the office, and now we have to do everything remotely. Working from home is the standard, and of course, where possible, we get in limited groups to the office. But it basically meant that in a few months' time, we completely had to convert all the training and onboarding to online training and onboarding. And we have done that very successfully. The feedback of new joiners over the recent months has been very positive. And of course, as this is going to last a bit longer, we need to continue to prepare ourselves for this situation. Another very important element is the normal course of life principle that we have had within the company for a long time. This basically means that there's a lot of freedom to do what is best for an individual person. If you encounter problems in your personal life, we ask team leads to support their team members and do what is best. So there are no rule books there. And I think also in these COVID times, this made it possible that we had a lot of different solutions for the difficult situations where people were sometimes in. And another very important aspect is the events. We've always organized events as a very important way to interact with our merchants. And we completely migrated all the events to online events. And I think the Capital Markets Day, of course, today is a good example of it. Then a very important part of the formula. Pieter already touched upon it. We include other people to sharpen our ideas. I think it's the key part of our success. If you want to change the industry, you need to have different perspectives. With a group of 90 different nationalities, we have all those perspectives, and it leads to better outcomes. On the ratio male-female, we need to do still better. We are currently at one-third female, two-thirds male, and we continue to invest to make sure that this ratio gets even better in the future. I talked about how important it is to have the right culture and why people like to work here. Of course, if you further want to scale the company, the scalability of the platform is very important. I'm very pleased to hand over to Kamran, who's going to talk about that in the next section.

Thanks Ingo, pleasure to be here today and speak with everyone about how we're scaling Adyen. Maybe starting off where Peter and Ingo left off, one of the most important pillars for scaling Adyen both today and in the future we feel is people. As an example, when I started approximately seven years ago, I think we were approximately 150 people globally and maybe a dozen of us in the US. Fast forward today where I think we're 1400 plus people at the end of H1 globally and over 200 in the US. And I think that's a testament to how global our customer base is. And as Peter said, our main goal is how do we help solve complex problems for them? And I think what that's led to is on the people side, we've expanded to well over 20 offices across the different parts of the world because payments are often quite local. And we need that expertise to be able to help our customers solve problems in these different parts of the world and bring the local expertise to bear so that we're offering them proactive consultative advice. So if you're an American company and you expand to Asia, we can partner with Warren's team and say, hey, here's how people like to pay in Singapore or Australia or China. or Malaysia, and really bring that expertise to bear for people, rather than they have to figure it out for themselves. And this is a great illustration of all the different offices we have and how the team has scaled and continues to grow. To Ingo's point, despite COVID and some of the challenges, the team reacted extremely quickly, and we hired over 250 people in H1 of this year. Obviously, the other huge pillar for us outside of the people is our technology. So I think two things that really stand out. One, we have a common code base. And that sounds like that should be the norm. But what you really see is a lot of companies are local or regional only, not global. And two, a lot of companies have grown through mergers and acquisitions. And what that means is that introduces a lot of complexities. You have multiple different platforms built over time by different people stitched together. And at Adyen, we have one common code base, one single instance of the platform running everywhere. And that means that it's a lot simpler for our customers to integrate with us. And that's also a lot simpler for us to maintain. And that basically means you get benefits like time to market in new regions if you're already using Adyen, as well as benefits in uptime stability. And as you can see from this chart, in terms of number of transactions, it also allows us to scale exponentially, building off that common code base and our stateless architecture. But at the end, if we have the people, we have the technology, how are we really solving the complicated problems for our customers? As Ingo and Peter said, we'll dive into the different regions and the different solution areas. But just to give an overarching picture, here's one illustration. So if you look at how acquiring was traditionally done, it's the top part of this slide. So typically a customer or merchant in this illustration would have connected into a gateway, had somebody to help them with risk management, a different person often for processing, and a different person for acquiring. So they would have sometimes been partnering with four different providers in order to be able to accept payments. And sometimes that would have been per country. So we've had customers who, even in Europe, often had a portfolio of 20 different partners that they needed to support all the different countries they were operating in, let alone as you expand globally, that number grew. And what Adyen really did is combine all of those into one. So a customer just partners with Adyen. We provide all of these different capabilities and help them offer all kinds of different payment methods in different parts of the world through a common interface, common reporting, reconciliation, et cetera. So again, it helps them with time to market. It helps them with simplicity in terms of ongoing operational complexity and cost. And most importantly, because we offer all of these different capabilities in one platform, we're seeing all of the data across the board rather than handoffs between different parties. And this really helps us help our customers grow their business. we can focus on what's the ideal customer experience, how do we look at the data and ensure that their approval rates are high. So eking out an extra approval for every 100 transactions is pretty material. If you're a multi-billion dollar business and we can help you grow your revenue and top line by basis points, let alone percentage points, that's a huge value add, obviously. And the solution teams will get into more detail of how we bring some of that to bear across different opportunities. If we expand from there, as we talked about recently in the last year, we started doing the same thing on the issuing side of the house. So if you look on the other side, it's as complex or often even more. So again, you would typically have to partner with somebody for processing. You would have to have a bank partner who's the issuer, somebody to help you with risk mitigation capabilities, Know your customer and anti-money laundering as you give accounts to these people or issue them a card. If you're issuing a card, you often have the physical plastic. How do you manufacture the card? How do you ship it? All those logistics. And we've combined all of that into one. So you can partner with Adyen and we can basically help you end to end with all of this. And again, the benefits of time to market simplicity, as well as data being aggregated and helping ensure better approval rates, lower risk, et cetera. We'll talk about a few use cases that that's enabling on the issuing side. So the first one is what we're calling commercial payments, using physical virtual cards to pay suppliers. So if you look at this example, the platform or our partner in this example may be offering a delivery service. Basically, we're giving them either virtual and or physical cards, which they're able to give to their delivery people. That delivery person is then going to the restaurant, paying for that order, picking it up and delivering it to you, the consumer. But what Adyen also brings to bear is we can offer more sophisticated controls. So for example, that card cannot be used in the red flow below to buy electronics. So they can't take this card and say, hey, I'm going to go and buy, I don't know, a watch or an iPhone. or AirPods. And we can even enable GPS location sophistication. So, hey, is that delivery person really at the restaurant that they were dispatched to to pick up that specific order? And then the platform would only approve that transaction. Another example is using physical or virtual cards to pay for company expenses. So again, we would help issue the virtual and or plastic card to our customer. They would give their employees these cards. They could be used on all approved transactions. So whether travel, online purchases, office supplies. But again, as you can see in the red flow, what we could help enable is more sophisticated controls. So if they weren't supposed to be using these for drinks or dinners or certain other types of transactions, we could help control that at a category level, location level, et cetera. And then the other thing that we can do is help them with all of the reporting, reconciliation, tracking, et cetera. And if you look at the two sides, the acquiring and issuing, we're bringing them together and that offers even additional benefits. So if you're somebody who's using adding and acquiring and issuing, One, we can help you with reporting reconciliation. You can see the transaction on the issuing side as well as acquiring side, and we can really help you stitch that together. So a good example would be in the travel space. If you're an online travel agency, think of the global companies like a Booking.com or an Expedia. Often Peter is making a booking with them, they have Peter's card details, they're charging those. But on the other side, this hotel that Peter is going to stay in at Berlin has to be paid. And often they can use a virtual card to keep Peter's details confidential, but pay the hotel on the other side. And they can make some of the interchange economics off of that. As well as if they're getting the card acquiring and the issuing done through Adyen, could we help them with cash flow and speed up when they have to pay for those transactions in the issuing side versus when they receive the funds on the acquiring side and help them with their liquidity management? So these are some of the ideas and examples of how we're helping solve complexity for our customers globally with a great combination of the people we have, the Adyen formula and our technology. And with that, I'd like to hand it back to the studio for my colleagues on the solution side and Mariette to give you overview and a few more details of how we're enabling all of this.

Thank you very much for that, Kamran, Ingo and Pieter. I've heard many synopses of the central philosophies behind Adyen, and that was one of the best ones. We're going into a very short break now before we return with Mariette to talk us through the solutions. We will reconvene in about four minutes, so just enough time to get a coffee or a cup of tea at 3.35 Amsterdam time. See you soon. Welcome back. Before I introduce Mariette, I'd like to remind everyone you can use the Q&A function in Zoom to submit your questions for the Q&A session after this block of presentations. And now I'd like to hand you over to Mariette Zwart, our Chief Legal and Compliance Officer, who will tell you more about the solution planning process we use here at Adyen.

Thank you, Hammo, and welcome, everyone. My name is Mariette Zwart, and I'm indeed responsible for all legal and compliance matters within Adyen. But that's not what I'm going to talk with you about today. Today, I'm going to talk with you about strategic planning. And Pieter already mentioned it, as a company, we've always had a long-term view. And that long-term perspective is needed for us to help our merchants in the best possible way. It also allows us to stay ahead of our competition. And as such, we believe that it's been an important driver to our success. And when we keep that long-term planning into mind, how do we plan ahead? Well, let me start by saying that our innovations are merchant driven. We build to benefit our merchants. On a continuous basis, we are having conversations with our merchants to really understand their needs. What are the problems we need to solve for? And on the basis of these conversations, we decide what we're going to build in the next year and the years after. To each of these innovations, we tie a group of people and we call them a work stream. It's really a cross-functional team comprising of people from the commercial side, from the engineering side and the product side. And together, they are responsible for making it fly. And all the streams are headed by a technical lead and a commercial lead. And they help us to translate that long-term perspective in really concrete operational goals. In execution of these plans, their workstreams work really closely together with our merchants. It really is a co-creative process whereby we allow the merchants to really have an impact on the products and the services that we build. We currently have 35 workstreams. That number can change if needed, but we won't change this approach because it's really been beneficial to us. It allows us to stay focused and flexible in our planning. What we've learned over the recent years is that the problems that our merchants face are really similar in certain verticals. And that made us decide to group the workstreams into six solutions. There are two more fundamental solutions in which we work on the foundation. Everything that is needed to make sure that we can continue to offer these premium services whilst we grow the company going forward. The first more core fundamental solution is core platform. On this, we work on everything that is needed to scale the platform. Think of the expansion of our global acquiring capabilities, adding new payment methods or building out on our core data infrastructure, everything that is needed to scale. The other one is core finance. And in that one, we work on everything that is needed to scale our finance products, making sure that we can, for instance, do payouts on a large scale in different currencies, but also making sure that we stay transparent in our reporting and our pricing and our invoicing. The other four more commercial solution that we have follow our go-to-market strategy. They are tailored around the different type of customers that we service, making sure that for each of them, we have the right approach. The first is enterprise and digital. That's our bread and butter. It's what we've always been good at from the start. Large enterprises like Facebook and Uber and Spotify are typically interested in a global reach. And at the same time, they're also interested in KPIs like conversion rates and authorization rates. We continue to innovate also to make sure that we stay ahead of the pack. The second one is enterprise and retail. And here we service the customers that typically operate over different sales channels. For these merchants, payments is much more of a revenue game rather than a commodity. And with our omnichannel solution, Unified Commerce, we give them really valuable insights in shopper behavior and shopper expectations, making sure that they can adapt. I think the recent COVID months have shown that it's really important to have a good omnichannel solution. And we try to offer that. This is a focus area to us because we believe that here we can really make a difference. The third one is enterprise and platforms. With Agenda for Platforms, we offer our merchants a tailored platform solutions, having things like split payouts, speedy onboarding, but at the same time, we also allow their sellers and submerchants to benefit from the features that we have on our platform. This solution has seen a lot of growth in the last couple of years, and we're really proud to have some flagship customers like Alibaba and eBay. But we also see that this solution is also beneficial to less traditional third-party models like Zenoti or Fiverr. And then finally, we have mid-market. Mid-market we define as the next adjacent segment to enterprise. And as such, we see it as a longer term investment in getting sustainable growth by investing down market. We think that by simplifying our proposition, we can help these customers in a similar way as we do with enterprises. And as such, we very much invest in simplifying our proposition, our customer area, reporting and onboarding. These are the solutions we are currently working on. We've invited the commercial leads of each of these four solutions to talk a little bit about the innovations that we've been working on over the last year. And we'll start with Sunil, who's going to talk about enterprise and digital.

Thank you, Mariette. Hi, I'm Sunil Dixit. I'm a VP of Product at Adyen, and I work with the enterprise digital and online solution. We're a collection of data scientists, engineers, product designers, and product managers that are helping to create really magical payment experiences alongside our global enterprise e-commerce merchants. So what kind of merchants are we talking about? There are merchants in the mobility and food delivery space that are transforming it and making it more frictionless, like Uber. There are large global enterprise e-commerce merchants like Alibaba.com that are changing the way we buy as shoppers. Of course, there are subscription businesses that are supporting SaaS services as well as streaming media like Spotify. And then there are the global enterprise merchants that defy categorization, multi-channel merchants like Microsoft that are serving gaming as much as subscription services as much as online retail. So why do all of these merchants work with us? Going back to something that Kamran had said earlier, it really is about the way we're built. We're one platform, one code base, one integration. We're not a bunch of platforms that are stitched together, requiring multiple integrations or multiple adaptations every time new innovation comes out. It really is one integration to grow and scale globally. This becomes really important when disruption comes out like PSD2, requiring new methods and new strong methods for customer authentication. And this didn't just happen in Europe. It was a requirement in Australia. It was a requirement in Brazil. And after just two years of effort, we were able to launch a 3DS2 market-leading solution for strong authentication in all of these markets and ensure that it worked beautifully for our merchants' customers. The same is true for any new technology we bring to market, whether it's a new standard for tokenization using EMV co-based cloud tokens called network tokens, or whether it's new payment methods and new wallets that span the globe or are specific to local markets. Merchants get all of these with one integration into our platform and get them at scale. What kinds of problems are we looking to solve with our platform and the integration of these technologies? At our heart, we're trying to reach the highest level of conversion with a manageable level of risk. What does this mean? In the end, if a customer wants to buy, so the merchant has made the investment to bring a shopper into their site, and they finally click the buy button. After that, if the customer has a valid method of payment, They have the money and the funds to pay. And they're, of course, not a fraudster. That payment should convert. That is our goal. The problem is the payments landscape is extremely complex, especially in e-commerce. At the point of sale, conversion rates are largely pretty good, with 95 plus percent approval rates and relatively low fraud, because most of the technology over the last 10 years has been invested to solve problems there. But the e-commerce space is very different. As Kamran's chart showed before, there are many players involved in the value chain of converting a customer payment. The customer comes in and connects to the merchant site, which sends it to a gateway, which sends it to a payment processor. Sometimes a risk provider is involved, and then to a card scheme, then to a bank. And all of these checks have to be in alignment. One way we solve this problem is simply by reducing complexity in this stream, by having one platform that combines the payment gateway with the payment processor, and then ultimately having our own connection to card schemes and local payment methods and to banks. We're also extending that, of course, into issuing. But the other way we resolve this is by understanding the technical issues that come with bringing in new conversion methods, with connecting to external providers and new payment methods. We bring this to the importance of this problem is because globally, across most processors, we see about a 20% decline rate for e-commerce transactions. So how do we solve this problem? We start with the checkout, which is where the customer begins to buy. That checkout experience is critical in showing the customer what kinds of payment methods they expect to see for their region or for their preference. And then we make sure that those methods of payment work really, really well with the least number of redirects, with the fewest number of fields to fill out, with the least amount of entry with their thumbs on mobile devices. With the introduction of new requirements for strong authentication, 3DS2 and other means of authentication also become important to optimize in the checkout. What does that mean? It means making sure that the customers are presented with means of authenticating themselves that are in alignment with the banks that they use. and making sure that those authentication methods do not fail. The merchants can depend on us to automate this for them through our dynamic authentication services. Also happening in the checkout is our ability to protect a transaction against risk. This is where our revenue protect product is using machine learning to determine at the moment of payment, the level of risk of a transaction and ensuring risk doesn't get passed through to the merchant. Once we've accepted all the transaction information, we then decide where to route it. So across the globe, we have integrations to all the major card schemes, but also to local schemes. Sometimes it makes more sense to route to a local scheme than to a major scheme, and it's our job to know which is best for conversion and sometimes which is best for cost savings. Once we've determined where to send it and what information has come in for authentication, we also decide what goes into the message. So what is the content of the payment request that goes to the bank and to the card scheme? This message needs to contain enough information to be sure we know who this customer is and that they aren't involved in fraud and that they really have a valid method of payment, but not more than that. Knowing what each bank prefers and adjusting to it dynamically is critical to the process of having high conversion rates. This has become such a sophisticated exercise, we have over four million combinations of things that we could adjust in a transaction flow in real time. And for that reason, we've introduced machine learning this year to optimize this process, to ensure that in real time we can find the best content of a payment request possible to get the best outcome. Now should all of these techniques fail, we still have the ability to try again. So immediately after a decline, we can instantaneously, within milliseconds, retry with a different set of parameters to ensure a good outcome for that transaction. And even if that declines for subscription payments, perhaps for insufficient funds, we can continue to retry with our auto rescue product over the following weeks to recover transactions and make sure subscriptions are uninterrupted. So what is the origin of some of these technical issues? Why are payments so complicated to solve? In the end, it's because when we started to do e-commerce several decades ago, we just pulled the account numbers off the card and started entering them into websites to transact. security was relatively low and this information that was in the public eye needed to be taken out this is how audience platform helps to future proof our merchants as payments go increasingly digital with new local payment methods with new global local payment methods with new standards coming out from emvco supported by the major card schemes for click-to-pay for tokenization and for strong authentication of a customer, 3DS2. We are there for our merchants to combine these technologies and launch them globally at scale through their existing integration so that they're always growing with the pace of innovation in the market. With that, I'll pass it on to Derek, who's also talking about solutions we're providing to our merchants in the food, beverage, hospitality, and retail solution. Thanks.

Thank you very much, Sunil. My name is Dirk Busser. I'm a product manager in the retail food and beverage and hospitality solution. And together with that solution and all the team members, we're working on a product that solves the unified commerce problems for these well-known brands. So I'll tell a little bit about why these brands choose Adyen to help them with this. and to tell you about why our Unified Commerce offering makes us stand out. The Unified Commerce offering is mainly about reducing complexity and making the merchant experience easier, providing them with the tools to give an amazing customer experience in their stores, and finally also to give them the data that they need to really understand how their shoppers are shopping across their different channels and regions. So, we have four pillars there. We try to simplify operations and their integrations of our customers. We give them full control over configuration and software that they run. We provide a unified commerce offering globally. And finally, we give them all the data and some insights to help them better understand their customers. So, if you look at why payments are complicated, Cameron also went into this. Typically, a customer that, for example, a retailer that grows from being a large domestic player and grows across different regions or across different channels, builds up a legacy of different payment providers, PSPs, and acquirers. and making him do a lot of different integrations, use different types of hardware, and also getting different types of reports back on the financial transactions, and also getting different ways of settlement. What we at Adyen try to do is solve that by giving them a single platform where they have a single contract, a single integration for all these different regions and channels. Because all the payments flow into the same system, they get a single overview of all their payments and all their shoppers. And finally, it's a single set of devices that we offer them. So if they integrate into a mobile device or a countertop device, it will work in all the countries that they're operating. So if you look at our reach, we have an online solution that has global reach. And for our in-store solution, we follow our acquiring roadmap. So currently, we're available in North America, Europe, Brazil, Australia, New Zealand, Singapore, and Hong Kong. And in these regions, we both offer in-store payments and online payments. And by doing this, we can offer our customers the ability to grow together with their shoppers in giving them all the unified commerce experiences that these shoppers are expecting now. So especially with the last couple of months and all the events happening, we've seen a big shift from shoppers going from full carts using all their carts in stores to asking for more touchless payment types and new types of ways that they want to interact with the store. So these examples are, for example, click and collect, self-service ordering, drive-through solutions, but also because we collect all the data on these different shoppers across different channels and regions, we're able to amend and help our merchants to provide for great loyalty programs. The setup of the platform and having online and in-store payments also makes it a lot easier to address payments in all these new journeys that are coming up in the future. So with our solution, we really want to reduce the complexity for our merchants and we enable them by increasing the transaction speed. So the handling time in store has to be way faster and quicker. But we also allow them to use the terminal not only for payments, but for example, also for collecting more shopper data. So if a shopper wants to type in their telephone number or their email address on the payment terminal, we can facilitate that without our customers coming into all these security or certification requirements. But it does allow them to use a terminal that's already on their desk to do way more than payments alone. By having all this information in a single platform, we can also provide our customers with the possibility to tailor-made the experiences for their shoppers. So if you talk about full control, traditionally the point of sale or payment terminals have always been very technical and very difficult to operate. We try to take away all the complexity in the full process. So that starts with our customers being able to order a terminal and to send it back like it was a pair of jeans and allowing them also to configure their complete estate remotely. Then when the terminal enters a store to be installed and configured, a sales associate doesn't need a PhD to install it. The terminal will automatically start configuring itself. Also, pairing it with a cash register or multiple cash register is very easy. And finally, maybe a very unique thing that we do at Adyen is we have a dedicated team that works on a set of robots that go through a couple hundred integration and certification tests automatically every night whenever our developers commit new code. to verify that there's no regressions or bugs introduced. And when we go through this whole cycle, at the end of the day, we try to automate the complete fleet of our merchants automatically to keep them up to date with the latest functionality and the latest products without them having to think about going through this whole testing cycle. So we have the majority of our customers on the latest firmware, always with the latest security patches and the latest features enabled. The integration itself, so if you want to initiate a payment either on a terminal or on a screen, so for example, in your app or online or by a link, we have two very simple integration methods. We have a terminal API for everything that has to do with payment terminals and checkout for everything that has to do with card not present or payments on a consumer device. As said, we offer these different channels based on the context of a shopper. So where's the shopper at that moment? What's the shopper origin? And what's the channel that the shopper is interacting with? We offer the right payment method at the right time. And finally, all this data. So as soon as the payments hit our platform, they enter the same database and we can link all those different transactions together and give this data back to our customers so that they can create a full picture of how their shoppers shop across their different stores across different regions. And one of the insights that we can then provide to our customers as well is, for example, an omnichannel report that gives a lot of information about the recency of customers, the frequency of customers, but also what value do different types of customers bring to us. Of course, all this data is also available as raw data that we can feed back to our customers so that they can then add that to their own data to create even more insightful insights. Thank you very much. I'm now going to hand it over to Blake, who's going to tell us something about platforms and marketplaces.

Hey everyone, thanks Dirk. My name is Blake Breathitt and together with a few of my colleagues, I lead up our solution. Now, before I get started into our solution today, I would like to share some brief history about how we got here. Over the years, Adding has worked with some of the world's largest marketplaces. With the introduction of PSD2 in Europe, money transmission laws in the States, a lot of these marketplaces look to us to help them navigate these payment complexities. While a few existing solutions were in the market at the time, we also felt that none were truly representative of the needs of enterprise marketplaces. So extending our solution for enterprise merchants to enterprise marketplaces was fairly obvious for us. We launched our solution with the launching partner in GoFundMe, and we actually found really quick, great success in providing the solution to other marketplaces like eBay and Reverb and SeatGeek. However, we also at the time started to witness the rise of the on-demand economy. Think about Uber Eats and Postmates, as well as these SaaS platforms who started integrating financial services into their software stack. This is when we decided to broaden our reach beyond just marketplaces to platforms. And we introduced features tailored to platforms as well, such as integrating our full point of sale suite and also calling our solution now Add-In for Platforms. So going to this slide, you can see we never lost focus of serving these key marketplaces. However, you're also seeing us having great success with platforms like Wix, who recently integrated payments to their software stack. Now, if I went to Wix today and created Blake's website, I have instantly the ability to accept payments through Wix payments, which are powered and enabled by adding the backend. Also platforms like Zanotti, a global solution for salons and spas and wellness centers. Zanotti is extremely focused and provided a unified commerce approach to their sub merchants. And through adding from platforms, someone like Zanotti cannot only onboard a single location barbershop to a multi-location franchise, but also use add-ins terminal fleet manager to ship and maintain PO point of sale devices all across the globe to their customers. So as we were building our solution for marketplaces and platforms, we were extremely focused on two main ideas. First, we wanted to create a tailored and configurable experience for these enterprise platforms. For instance, we believe that the experience of onboarding a courier on Postmates should look and feel completely different than onboarding a surgical center on modernizing medicine, a healthcare platform. The second is we refuse to sacrifice Anything we've come to be known for here at Adyen meaning this is why Adyen for platforms was built into that that core Adyen engine So Everything we built on from our risk services of Revenue Protect to all the payment methods we offer across the globe, all the points of conversion and optimization that Sunil mentioned, like endless debit and network tokenization, to all the innovations that we're introducing now. Cameron touched on issuing and all the terminal suites that Dirk spoke about. All these features and functionalities are fully available to our platforms. And beyond that, As we maintain and scale one single platform, all the future innovations that we will be introducing to will be our platform's fingertips as well. And we find this very key, a big key differentiator for Adyen. While offering a platform solution, we're still able to offer them all the payment innovations that they come to value. So as I mentioned, one of our focuses was on configurability and flexibility. A lot of that sits in the onboarding flows. We offer both an onboarding API as well as a hosted onboarding page. Both can take a risk or tier-based approach. An example here. So for instance, in this screenshot, you're seeing in the first screen, a seller can sign up on a marketplace in a matter of seconds with just a name and email and start listing a pair of shoes, for instance. And as goods and services are sold and more information is provided and verified in real time This ensures a really frictionless experience for their seller which is a key key component for a marketplace because any any marketplace will tell you that sellers are their inventory and Be able to create a frictionless path for them to transact on their platform is what will make them successful So But what's also key is not only enabling this frictionless path but also being able to verify these sellers are who they say they are. and they can protect the ultimate integrity of their platform as a marketplace. And lastly, as we find consistent with these large enterprise marketplaces and platforms is a heavily So you can see in these flows and others, adding is completely behind the scenes. Moving on from onboarding, the next key pillar of the platform structure would be fund movement. With our solution, whether the payment request is initiated from a point of sale device, an app, or online, the platform maintains full control of that fund movement while also staying out of the flow of funds, which is a critical component of removing yourself from any sort of money transmission scope or needing a PI license in Europe. As you can see in this example, you have a shopper buying, let's just say, a $100 shirt at a retail location. And then that payment request, the platform will instruct Adyen how to split the funds. In this very simplistic example, this platform is telling Adyen to move the funds 90 and 10. $90 is going into a sub merchant virtual account, and the $10 is then being split back to the platform's operating account. now these funds are all being held in an add-in owned bank account until they are paid out directly to that sub merchant's external bank account while the example here is is rather simple as i mentioned our solution does go beyond just this for instance we mentioned on-demand platforms like a Postmates, where for all these on-demand platforms, they have in common there are at least three-sided marketplaces, meaning funds need to be split at least three times to the courier, to the restaurant, and back to the platform. Not only can our platforms split three times, we can actually split as many times as physically possible to accommodate all these nuances that we're seeing these platforms introduce. Lastly, we've also built a funds transfer call. A funds transfer call gives platforms a little more flexibility within this environment to move funds instantly and securely from one virtual account to another. And lastly, the last critical component of a platform solution structure would be payouts, the last component of the platform payment lifecycle. As a platform with adding, you have a few configurations of payouts. One would be scheduled payouts, and the other would be API-initiated. Under scheduled, as the name implies, you can set a unique cadence per sub merchants, whether it's a day, a week, every 14 days. And then upon expiration of that cadence, whatever funds were allocated in the account, adding would automatically pay on their behalf, removing a little more of that logic from the platform's workload. Furthermore, on API initiated, this gives platform full control. meaning Add-in will hold the funds until an API call is sent to tell Add-in when and where to pay those funds out. As we've continued our reach into platforms and not as a big result of COVID, we're seeing more and more platforms stressing on payout speed. Business and individuals are needing their funds and capital sooner. Thus, we're seeing a higher usage of same-day ACH payouts in the States, faster payments in UK, and also instant payouts, which rides the Visa, MasterCard, Rails, of paying out to an eligible card where funds are available in 30 minutes or less. And all of these features are fully available with no extra integration needed with Addium for Platforms. So that finishes up the payouts and also concludes our presentation on Addium for Platforms. Thanks for your time. I'll pass it on to Martine.

Hi all, I would like to tell you about today what excites us about the mid-market and how we help our mid-market grow their business. A mid-market merchant can be a local player, a local hero who's looking for an additional sales channel, or it can be an international company who wants to scale abroad. I'm Martina de Visser, VP of Mid-Market Products, and today I would like you to talk through how we give our mid-market merchants full access to the iGEM platform and how we help them grow. So over the past years, we learned that mid-market merchants encounter the same payment complexity as enterprise merchants. Logically following, mid-market merchants are a great fit for our IGEM platform. There is a difference between mid-market merchants and enterprise merchants. Mid-market merchants tend to don't have the internal knowledge or the internal resources to make payment decisions. So we're here to help to solve their payment complexity and to make the right choices for them regarding the payment setup. So we're currently supporting mid-market merchants in Europe and Brazil. Some striking examples of mid-market merchants are VanMoof, a Dutch bike company who is scaling internationally, Chili's, a bottle company from the UK, Beats & Roots, a company from Germany who is leveraging our unified commerce in all their stores, and Cloudeli, a beauty brand from France. So to best cater the needs for our mid-market merchants, we are tailor-made our product offering. We are offering our mid-market merchants an out-of-the-box solution, so they don't need to worry about their payment setup. You can compare it to the auto-set function of a photo camera. You can make beautiful settings and beautiful photos with that camera with the auto settings. If you compare it to enterprise, it's like a professional photographer. They want to adjust all their settings according to their needs. But what we are trying to do for our mid-market merchants is really create an auto setting and that the product works out of the box for them. And when speaking to create a product out of the box for the mid-market merchants, I'm implying that we simplify our solution, but we don't give on in the strength of our platform. We provide a very easy and scalable way to integrate into our platform. And our plugins and partnership approach is helping us. So according to our agenda formula, We benefit for all merchants. This translates us in providing access to the iGEM platform for mid-market merchants as well. So they're using all the same features and products as our excellent enterprise merchants are using. This scales very well. It's still one platform, one integration, and our mid-market merchants are using the same products and innovations as we're building throughout the year. Mid-market merchants are also growing. They start sometimes as a smaller company and they grow and they scale. So at the beginning, sometimes they don't need all the products or features we have. So we give them an out-of-the-box solution and while they're growing, they have access to all the products and features they need. That doesn't mean they need to integrate again. It's still the same integration. We're here to solve their problems and we can facilitate there while they're growing. And it's very nice to see that mid-market merchants are growing into our enterprise volume in an organic way. So as I briefly explained, we give a simplified version to our mid-market merchants compared to enterprise. In order to build the right integration for mid-market merchants, we need to properly understand their needs. As Mariette explained, we're in daily talks with all our mid-market merchants to understand their needs and to develop the right features for them. So from both a commercial and product point of view, we help them making the right choices, like a customer success team who can give them advice. If merchants want to scale into a new country, what kind of payment settings do they need? Another important growth pillar for mid-market is partnerships. Through partnerships, we have access to a lot of mid-market merchants. A nice example is BigCommerce, a new partnership which gives us access to thousands of new merchants in Europe. Also, our plugging solution and approach is key for MidMarket to grow. A plugin is a downloadable software package you can compare to an agent out of the box. It skills very nicely, and our partners are using our software plugins to go live very quickly with our merchants, but they also use it because we build our plugins in-house. We build our plugins in-house because we want to guarantee the high quality we're always providing to our merchants. Oh, sorry. So simplifying the product for mid-market merchants. Here are two examples I want to give to you what we've been working on. So during COVID situation, which we unluckily are still in, Pay by Link gained a lot of traction. Pay by Link is a solution whereby merchants can go live within a couple of hours. They will get an hosted payment page for their shoppers and the shoppers can see their preferred payment methods. A second example we're working on is our customer area. That's the interface we have with our merchants. Adjusted reporting, but also going live quicker, which is very important for our mid-market merchants. So we're coming to an end already. It was a pleasure to talk you through our mid-market solution. I hope that you take away the following three things. So mid-market merchants needs are product-wise are not different than from enterprise, but it's the way how we present it to them. We are helping mid-market merchants to make the right choices so they can focus on building their business. Also important is that we simplify our products for our mid-market merchants, but that they still have the access to the same platform, they don't need to integrate another time, and they can add functionalities and products along their growing journey. It's still one integration, one platform. And lastly, we hold a great set of cards in this segment. We are very well positioned for the mid-market and to grow into the mid-market. We have a single platform which serves their needs and we're here to support their emergence in their growth journey. Thank you very much.

Thank you, everyone. I learned a lot. And on VanMoof, this is actually serendipitously a VanMoof bike behind me. This is an accident, I promise you. My heart stopped a few times when Blake's Zoom froze up, but luckily we got through that relatively unscathed. We'll be going into a break now. You will have the opportunity for a 30-minute Q&A session with the presenters you just saw and our full board. Now, a reminder to please also list the firm or the fund you are representing. It really helps us to order the questions. And see you soon. We will reconvene at 4.25 Amsterdam time, which is in eight minutes. Welcome back everyone to the Q&A section, the first one we have today. Just a reminder on how it works. You put in your question, I will give you the chance to unmute yourself and to ask your question in person. Our first one is from Mohamed Moala at Goldman Sachs. Moak, I would just ask you for the sake of time, there's four questions here to pick two and ask those and we can circle back to you when everyone else has had a chance. So Mohamed, go ahead.

Great. Thank you very much. So my first question is really revolving around the technology lead you have in unified commerce. You talk a lot about that. Which of your competitors in the field are you mindful of? What is your key differentiator? And when do you expect to see sort of this big take up of unified commerce to really accelerate among larger merchants? Thank you.

So, a few on unified commerce. Peter, would you like to take that one?

Yeah, sure. On the question, let me pick one, which is when do we expect unified commerce to really take off? For us, it has taken off. Sometimes you don't really see it in our numbers yet, but if you see why merchants choose for us, that can be that they choose for us with terminals because they know they're going to do online with us later. You do see it the other way around as well, that they choose for us with online because they can do terminals later. And actually, if we look at our current merchant base, we indeed see merchants which have been for quite a long time, I think one to two years live with us, only now coming up with the next channel. Also on top of that, COVID has shown the need to be multi-channel. We've seen it with our retailers that when the store volume fell away, online compensated for that. So I think the trend is actually is going quicker and is already happening so the question was when will when will we see that mouse i think there's currently already a lot of traction there two questions so if you want to ask a follow-up um i i'm asking the team here to unmute your line again so you have another opportunity Did I answer everything? Because I had the feeling that Mohammed had another question.

Should I say a few words on the competition? Because I think that was the other question. So on competition, I think what we really see happening right now is that we have a single global platform. where the omnichannel approach is really helping us to win the largest deals. There are not that many players that we are aware of that has the same proposition, so really a single code base in all those geographies. That's what you need if you really want to truly get to a unified commerce proposition. Maybe you have some local players But for the ones that want to go to a real international implementation, you need to basically work with us at the moment. And so far, we haven't gotten any signals that someone is competing with us on a global scale here.

Right, that's very clear. Our next question is from Josh Levin at Autonomous. Josh, you can go ahead and unmute yourself.

Hi, so large merchants we've spoken with say reporting and reconciliation is still a challenge and that while audience offering is better than others, it's still not perfect. What makes reporting and reconciliation so challenging to do right? Thank you.

Ingo, perhaps this is one you can take on.

Sure. Thanks, Josh, for the question. Yeah, reporting reconciliation has always been a topic in our company, how to improve it and how to work with our merchants to get it better. I think if you look at where we currently are, we have a lot of detailed reporting for our merchants. At the same time, you see that sometimes they want to have new types of reporting. One of the examples is, for instance, sales day payout, where for retailers, we developed a product where Monday's sales get paid out one day or two days later, just the full amount, which leads to a different type of reconciliation, and it gives more easiness to our merchants, and that's what we're looking for. So it's always an area where we can further improve. It will also be important to mid-market customers to make it even more simple and to make sure that they actually understand what they get paid.

Right. Thank you, Ingo. The next question that's come in is from Julian Serafini at Jefferies. Julian, you can go ahead and unmute yourself.

Thank you for taking the question. So I want to ask on marketplaces specifically, can you discuss or share your view on marketplaces longer term? Why do you think they do or do not actually internalize a greater portion of the payment value chain? So why do they keep relying on acquirers such as Adyen for part of their payments infrastructure and not choose to in-house more and more of that?

Thanks, Julian. Blake, perhaps you could take the first part of this question.

Yeah, I think marketplaces and platforms both are actually choosing to take payments in-house. Now, what does in-house mean to us? In-house means a unified branding experience for the marketplace or the platform. Our vision is we want to make sure that every marketplace and platform of ours does have the tools, the features, the functionalities to be able to manage payments in-house and have a payments channel within their own company and us being behind the scenes empowering them to do so.

Hey, Hemo, maybe I can chime in here.

Absolutely, go ahead.

Yeah, sorry, I think Blake broke up a little bit. I think to Blake's point, they're taking it in-house in that they're offering to their end customers, who are often small merchants, payments in addition to the core marketplace offering, right? Whether that's a retail offering, if you're an eBay or an Etsy, or if you're a SaaS platform like the ones Blake mentioned, Zenody or Modernizing Medicine, et cetera. But I think there's a lot of complexity. One, how How many regions are you going to offer it in? How many payment methods? How many channels? And it's not just payments. You have to do onboarding. So how are you doing the KYC and AML for your customers? Then all the payment processing. Then the payouts, the reporting, and the reconciliation. So I think to Blake's point, it's a question of what in-house means, but there's so much complexity that I think there's a huge value that we can offer in simplifying what they offer to their end customers. But we think this is a huge growth area and opportunity for us as a result of that.

Thank you Kamran, that's very clear. Our next questions come in from Sanjay Sakrani at KBW. Sanjay, you can go on unmute.

Thank you. So the post-COVID-19 environment has seen some positives and negatives for the payment industry. I'm curious if there's any specific strategy-related changes or any considerations we should think about when thinking about the Agyen story. For example, has the push on unified commerce accelerated on the part of merchants? And my second question is, you know, it's been about a year since we saw the wave of consolidation among U.S. payment providers, processors as well. Could you just talk about any impacts that Agya has seen?

Thanks. Thanks, Sanjay. Perhaps, Peter, you can tackle that first question on the strategic impact that COVID-19 has had, and then I'll ask Kamran to answer on consolidation in the U.S. market.

Right. Yeah, that is a really good question. It's a question that we asked ourselves, is what is the impact of COVID on Adyen? And we come to the conclusion that strategically, long term, It doesn't change that much. What it does, though, is that it influences certain developments. And which developments are influenced? There is more a move from cash to cards. So... which were about to happen, happen quicker, or innovation changes. Think about businesses which were considering to move online, which now currently do it very rapidly. So it could be a catalyst for change. On the other hand, Adyen also sees, of course, that there are industries which are severely hit and therefore travel, of course, is negatively impacted. So that's how we look at it. So the answer to your question, should I strategically look differently at Adyen? No, I don't think so. I think the trends which have always helped us, which is international, single platform, multi-channel, that still is all valid and will remain valid for the future. Thank you. Kamran, do you want to say something about consolidation? Sorry, I'm out. No worries.

Kamran on consolidation. We're going live to him.

Absolutely. Thanks, Peter. I think what we're seeing as a result of the consolidation is honestly neutral to positive for us. It goes back to, I know maybe we sound like a broken record here, but the common code base on which we can offer global capabilities, omni-channel capabilities, and all the different feature and functionality. So we're seeing as players are consolidating, that means that sometimes platforms are being migrated or sunsetted, which means customers then start looking around and saying, hey, what do I want to do in terms of my future strategy? Where's the world going? And especially with COVID, the acceleration of a lot of trends. And I think that's resulting in a lot more conversations for us, given the unique nature of our offering. So I think for us, it's been neutral to positive, to be honest.

So consolidation is opportunity. Thank you, Kamran. Our next question is from Hannes Leitner at UBS. Hannes, go ahead, please.

Yes, thank you for letting me on. So I have two questions. The first one is on your license roadmap. You latest added Malaysia to acquiring license. Maybe you can talk here also on the issuing side, which are your future markets. There you have seemingly more white spots. And then also, can you talk about economics on the owning their own license and the bin sponsor? Is there a certain volume threshold when it makes sense to have your own? And then lastly, on issuing, you showed that integrated acquiring to issuing platform. Would you also consider to collaborate or cooperate with banks on that issuing platform?

Thanks, Hannes. So a question on the roadmap for licensing and then also on the potential cooperation with banks in the issuing space. Ingo, if you could tackle at least the first part of that question, please.

Yeah, so I think for the licenses, we've always followed our merchants and always try to get the best license possible. So that means for certain markets, you need to work with BIN sponsors that basically help you with the regulatory setup in a country. But if possible, we always try to go direct. And from an economics perspective, given the volume that we bring, there is not much of a difference between acquiring and rent-a-bin. And in the current situation, the number of rent-a-bins is very limited at the moment. only in the US and Brazil. So we continue to build our own licenses and we continue to follow basically our merchants to see what's next. Malaysia was the most recent announcement and we will continue to work on new licenses in the future where possible.

Got it, thanks. And banks as potential partners in the issuing space?

Yeah, so that's an interesting question. I think, of course, we're building a complete new infrastructure, but we built the infrastructure for our merchants, and we've always seen that that is the most important target group for us. We see a lot of use cases where we can help our merchants, and we don't see banks currently on the top of our list to help them out. Of course, if we would run out of ideas with merchants, you could always think about it, but it's not on the agenda right now. Got it.

Thank you very much. Our next question is from Stefan Hoery, who is at Oddo BHF. Stefan, you can go ahead, please.

Yes, hello. Thank you for taking my questions. So my first question would be on the European Payment Initiative, if you can explain what is the impact for you, if you see one. Second question is, how much can you improve the acceptance rate? You've been talking about 80%. And maybe tell us about your difference versus competition. And the third question is, do you have, let's say, the means to develop into the mid-market? Because it seems that it's an already pretty crowded space with local competitors, you know.

Thank you. Thank you very much, Stefan. So we've got the European Payments Initiative, how much we can improve the auth rates and the means of development into mid-market. I think we'll go European Payments Initiative to Ingo, then we'll head to Sunil for the auth rate question and Martina on the mid-market space. So, Ingo, kick us off, please.

Yeah, thanks. So European Payment Initiative is an initiative to create a new payment method. That's how we see it. So banks working together to see how they can build a new product, which I think very similar to some online banking products that we already see in Europe. So it leads to more complexity for our merchants. If there is a merchant ask for it, we will of course have a look at it. So we see it more as a way to help our merchants than like a threat. It's just another product to our platform.

Thank you. And Sunil, how much can we improve the acceptance rate versus the 80% we talked about?

Thank you for that question. It's an important one to ask. I think to put it in context, auth rates is a way of keeping score. It isn't the most important objective. In the end, the important objective is solve technical problems, reduce complexity, and improve customer satisfaction and conversion. um but within the boundaries of that we find that depending on the merchant's model what they are selling where they are selling it you can improve auth rates at different rates but i'll give you one example that we've talked about in the past just the introduction of a network token which is a new means of accepting a digital payment token in um in as opposed to the account number on the card um that can increase auth rates by two to six percent so By integrating these technologies globally at scale, we can make a significant difference in merchant revenue.

That's really good. Thank you. And then Martina, lastly, on evolving into an already crowded space when it comes to the mid-market, especially locally. Can you say a few words about that?

Thank you for this question. Great question. What we see is that we gain a lot of traction for the mid-market and that we're growing at the same pace in the mid-market as the enterprise. It's also a long-term game, as we mentioned. We're building partnerships. One great example is BigCommerce, which will give us access to thousands of new merchants in Europe. So it's a long-term game, but we gain a lot of traction there.

All right, thank you very much. Our next question is from Sandeep Deshpande. Sandeep, you can go off mute, please. Go ahead.

Yeah, hi. I have two questions, if I may. Firstly, on your new issuing offering. Is this issuing offering dependent on having a banking license in the market where you will be doing this issuing and how quickly this business opportunity can scale up? And my second question is, clearly, when you look at the revenue of Adyen today, it is very European-centric. Maybe it is not actually generated in Europe, but in the way you report it is very European centric. You have been expanding very aggressively in the US. Maybe you can talk about how successful you've been in terms of, given that many of your customers are originally US companies, how successful you've been in becoming a payment services provider to them back home.

Thank you, Sandeep. So the first question was only licensing setup required for issuing. Kamran, if you could take that, please. And then on our net revenue distribution globally, I think Ingo is the best to answer that. So Kamran, go ahead, please.

Thanks, Hemo. Thanks for the question. Yeah, I think the answer is similar to what Ingo described on the acquiring side. So wherever possible, our strategy is to leverage our own licenses. Europe is a great example where we have a full bank license and therefore everything end-to-end, the license, all the processing, risk, et cetera, et cetera, is us. In other markets, beginning with the US, we would partner with a bank. So rent-to-bin, as Ingo described. as a quick way to launch. So I think similar to acquiring wherever possible Go Direct, but a combination in the short term.

Thank you, Kamran. And then Ingo, on the net revenue distribution, we do have a lot of US logos. Explain that to us. How does that work?

Yeah, so with the net revenues, we always take a global approach. So if we onboard merchants, we want to make sure that we help them globally. That's also how we've structured the company. And the way we report revenues is where we send the invoice. So, for instance, for U.S. merchants, we started to work with them with European acquiring. So that's recognized as European traffic and European revenues. But it wouldn't be possible without U.S. team to help those merchants and to service them. I think the good thing is what you've seen over the recent years is that we convert a lot of U.S. merchants also to the local domestic market in U.S. And that's the game going forward to make sure that we have the right proposition there, that we, if you look at recent wins, I think we have a lot of proof points that we can be very competitive in U.S. And specifically if you think about unified commerce propositions, we're actually in a very good spot to solve complexity in a domestic market. So our longer-term expectation, of course, is that the share of European revenues will go down.

That's quite clear. Thank you. Our next question is from Adam Wood at Morgan Stanley. Adam, I see about five questions here. If you could kindly pick the two you'd most like to ask.

and we'll thank you very much and thanks for letting me on maybe just first of all it was about the whole kind of concept of automation of onboarding and you've done that around employees but I guess that's also important from a mid-market point of view could you maybe just talk a little bit about how that's worked with employees have you found that the success rates have been different as you've started to automate that process and then for mid-market merchants How do you scale that up in terms of managing both the onboarding and support of those merchants? So that kind of question there. And then just secondly around being able to monetize offerings, you talked about accelerating payments and data analytics. Is that something that differentiates the offering or is that something that you can charge for as you go forward? Thank you.

Thank you, Adam. And an extremely elegant way of asking three questions in the form of two.

You've caught me out. I apologize. Thank you. Well done.

Hat is off to you. So perhaps we can go to Pieter for remote onboarding on people and then Martina on the onboarding experience for mid-market merchants. And the last one was on, let me just pull it back up one second. Data insights. We'll let Ingo tackle that one. Go ahead, Pieter.

All right. So regarding remote onboarding on people, let me start with saying that we'd rather have everybody in the office. So we have done a lot and that has been very effective, but it's not 100% ideal. So what have we done from the beginning of the COVID crisis? We have said, let's assume this takes a long time. And then we'd rather be surprised that it turns out to be shorter than anticipated than the other way around. So all training programs have immediately been converted to online programs. On top of that, we have also increased our training to team leads. So to help them what is expected from me during this crisis, how can I better help onboarding new people? And the third thing which we have done is offices which are open or were open or are open with some limited capacity, new joiners are the first one to go to the office with the people who train them so that we make it easier for them to get absorbed by the company. Something about, I said, you cannot, it doesn't work perfectly. So what does that mean? That means that the team leads are asked to also meet with them in something. And because we're so worldwide from Shanghai where things are perfect, where are relatively normal to some offices which are fully closed. But within what can be done by country, people are meeting on terraces to do the last part. Sometimes people are meeting in a subset in the office, but that's how we make a tailor-made program so that everybody gets the onboarding, which is very close to what it would have been in a world without COVID.

Thank you, Pieter. And then Martina on how onboarding is different for mid-market companies compared to enterprise companies.

Yeah, thank you very much. So I think what's very important for us is that we keep on learning for the onboarding step by step on a daily basis. We're looking in how we can improve our onboarding and how we can onboard our merchants faster. This is through automation, but of course, always our customer success team is always very happy to help. I think automation is very important and we're also working together with partners, very open for feedback on how we can improve our onboarding.

All right, so we're working in the right direction there. Ingo, lastly on data and analytics, how does it differentiate us and can we charge for it?

Yeah, so data analytics is key in our strategy. So helping our merchants to give back the right data, to give back the right insights, is the way to build a long-term relationship with our merchants. That's what our strategy is. And currently we do not charge for it, at least not for all products. We do for some products, like Revenue Protect, where we use data and give the right insights. But if you really think about unified commerce data analytics, this is something maybe for the long run. But at the moment, we want to make sure that we work with customers, help them build this long-term relationship, and the revenue is then more reflected in this long-term relationship than in additional charging for it.

So a value game for now.

Value game for now, yes.

Got it. Next question is from Josh Beck at KeyBank. Josh, go ahead, please.

Hi, this is Alex Markoff on for Josh. Thanks for taking the question. I was hoping, and if you guys could provide some thoughts just around how much of the recent activity and surge in e-commerce volume that we've seen, you expect to be more permanent in nature. And then any sense of how much of that is more of a pull forward and TAM penetration versus expanded TAM bringing new consumers into the TAM. Thank you.

Thank you very much. So on the macro impact of COVID, perhaps Ingo, would you like to say a few words?

Yeah, so I think we have seen a couple of accelerations on our platform. But of course, the question is, how long does it stick? And it's very difficult to exactly answer because also without COVID, we've grown the company quite quickly. So to completely separate those trends is relatively difficult. I think it comes back to the question that was discussed earlier by Peter. Do we see fundamental changes to the market and to the addressable market? I would say the answer is no. Maybe the total addressable market has grown because we have more conversion from cash to cashless, but there was a trend that was going anyways. So I don't think that there is a fundamental change. That's also not how we look at it. Got it. Thank you very much.

Our next question is from Patrick Lemmens at Robeco. Patrick, you can go ahead, please. Stay tuned as we get in touch with Patrick. If we can't get in touch with him, if the team could just... Yes, can you hear me now? Yes, here's Patrick. Go ahead, please.

I was muted. Okay. Well, basically, it is clear that you want to build solutions for all merchants and not customize stuff for just one or a couple of merchants. With the recently announced change at board level, there was perhaps some expectation that there will be changes coming to the IT strategy. And, well, not huge changes, but you have shown in the past that IT core, if you need to change it, you do it. So perhaps if you can give us a bit of idea of what might be sort of attention points going forward.

Thank you, Patrick. Pieter, will there be a change in IT strategy now that Arnout has announced he's leaving?

Go ahead. Our choice to not go into custom development, that is lessons learned from the past. Even within the beginning of hot yen, we have an example where we still did it, where we went into a customized, into a specific protocol for a single merchant. It sounds attractive if you're looking for revenues. Long-term, it does slow you down. So this is so ingrained in our mentality. We want to build something very scalable. something which uh which has way more runway than a short-term strategy uh bolting all sorts of things to your platform and losing speed so that is that that is not just anchored in iron out but it's so strongly anchored in the altian formula and in the food company that that won't change clear so arnold's legacy will outlive his tenure um our next question is from michael willer michael go ahead please

Hi, guys. Can you hear me? Yes, Michael. Go ahead.

It was just a question regarding your comparative advantage. How do you guys think about the defensibility of your tech advantage as well as your culture?

Thank you. Thanks, Michael. Pieter, perhaps you could take that. So the defensibility of our tech and culture advantages.

I think that those are good questions to ask and that is something on which we spent a huge amount of time. If you see how much time we spent on educating people on the culture, on training team leads, on spotting what we call So what we do is the unseen talents. So people who are high contributors, we make sure that they make a career and not the ones who are politically active. So if you see, we run all sorts of programs to keep the culture this way. But the question is fair. I would say if you just let it go, things won't be as powerful as they are today. So those things are constant investment. And similar for technology, we are constantly making improvements, changing things that, because we also have been running for 14 years, if we wouldn't have, things would need to be revised. So you try to minimize the technological depth in your platform and constantly investing. So it's hard work. But I think we're really good at it. But it is constant work.

And perhaps a few words on people then and the importance of culture.

Yeah, the reason why we have been able to move so quickly and attract talented people, I think that has been in the presentation today. We are attractive to people who specifically like to contribute, usually the high performers. And I would give a similar answer, that is constant maintenance. That means that we are very careful in selecting, that we are ourselves, that the board does final interviews, that we invest in people with a lot of runway. And you've seen it today. Everybody here today are people who made their career within the company. Nobody has been parachuted into it. And there's also, of course, the part that if there's not a cultural fit, which is the main reason for people to leave Atyen, we act. And that's the only way how you keep the organization as agile as it is.

It's very clear. Thank you, Peter. Our next question is from Sean Horgan. Sean, go ahead, please.

Hi, can you guys hear me?

Yes, sir.

Go ahead. Great, thank you. So my first question was just on the platform marketplaces front. The divide payment seems like a large opportunity. You gave the Postmates example. Have you ever considered expanding into any consumer offerings?

Blake, if you could tackle that one. So the importance of split payments when it comes to platforms like Postmates.

Yeah, yeah. So as we said, the split payment features is a critical component, right? Because the genesis of the solution came from the need for platforms and marketplaces to be out of the funds flow while also still maintaining full control of the funds. So the split payment feature allows us to put the payment on their behalf. We can split the funds in the Postmates example as many times as possible. Maybe I'm getting to what your question was in terms of the consumer reach. When we split the funds, we not only had the ability to pay out to bank accounts, but also eligible cards. And also, as Cameron was alluding to, on the issuing side, where the issuing stream was built into the solution such that we can pay out to an issued card as well to a courier or whoever it may be.

Thanks, Blake. And the second part of your question, please, Sean.

Yeah, thank you. So next question was just online tailwinds are quickly offsetting store retail headwinds. And last period weekly volumes increased sharply after the late March bottom. How are you seeing the pace of transaction volumes recover since the last update?

Ingo, a word on the pace of transaction volume since the last update, knowing we won't be able to share much detail.

Yeah, I think the latest that we have given is our H1 results, where you see a good rebound of offline after, of course, the store closures in the spring, whilst maintaining e-commerce volumes. And we will update, of course, for the second half early next year. I'm afraid I can't say much on the recent weeks, unfortunately.

Thank you very much. And with that, I think we've come to the end of our first Q&A block. We will be back at five minutes past the hour, which is in about seven minutes. Another opportunity for teas and coffees. When we return, we'll have the regional heads presenting, Brian Demeer, Jean Mies and Warren Hayashi. And we'll have another block of Q&A following that. So see you soon. Welcome back, everyone, and my apologies for the slight delay in reopening. For our next section, where we will introduce you to the regional leads, I'd like to hand off to Kamran Zaki, our COO. Kamran, go ahead, please.

Thanks, Hemmo. Pleasure to speak to everyone again. As we discussed earlier today, how we've been scaling Adyen as a global company and focused on solving for the complexities of our merchants across different channels, but also different geographies. I think Peter also mentioned our founders are Dutch. We started in Europe and that's still the largest contributor to our net revenue globally. But as our merchant portfolio is continuing to diversify, we see the revenue contributions from the other regions becoming more diversified as well. And so we thought it would be helpful to give you an overview on the key trends going on across Latin America, North America, and Asia Pacific. So with that, it's my pleasure to introduce you to Jean, who will kick us off with Latin America.

Thank you, Cameron, for the introduction. Hi, everybody. My name is Jean Mies. I'm audience president for Latin America. Today, I would like to talk to you about our presence in Latin America, give you a brief introduction to the Latin American payments landscape, and we'll then elaborate a little bit on how we are positioned to help our global merchant base to adapt to key industry trends and challenges in the region. Let me start by giving you a brief introduction on some key metrics on audience presence in Latin America. With offices in Mexico City, Sao Paulo, and San Jose, the Latin team currently consists of 76 full-time employees and is growing. In the first half of 2020, our net revenue contribution was of 9%, which represents a 15% year-on-year net revenue growth. Would like also to provide you with some depth on what the payments landscape in Latin America looks like. Latam is expected to reach a retail e-commerce volume of around 100 billion US dollars in the next two years. Prior to the pandemic, the region was amongst the fastest growing markets in the world at a rate of roughly 20% compared to a global average of 16.5%. Over the past years, what we have seen is a transition towards online and electronic payments in the Latin American payment space. Electronic payments became more popular over the years. To add some color here, credit card and debit card usage grew by 19% in Brazil in 2019. This continuously increased adoption rate is due to several key socioeconomic factors that are tailwinds for us in the region, such as increased smartphone usage across the region, but also continent-wide promotion of financial inclusion, resulting in increased access to financial assistance for all. With this in our minds, we expect these regional tailwinds to develop further in the years to come. At the same time, of course, it's good to keep in mind that The Latin American economy has been largely cash-based, and according to the IMF, 55% of the population does not have a bank account. This, of course, resonates with the cash heaviness of the market, but at the same time, it also illustrates that there's a lot of room left for growth when it comes to online and card payments. Now, from a payment infrastructure perspective, the whole region is still largely dominated by banks. So high banking concentration has led to a scenario of little to no innovation over the years. And only recently, we have seen the local central banks starting to open the markets to encourage competition. So over the years, markets like Brazil, Mexico, but also Chile and Colombia have started removing or reducing barriers that affected the entrance of international payment companies, thus also allowing Adyen to launch its first Latin American operation in 2011. Since then, Adyen gradually expanded its scope from offering a gateway-only solution to what now is a full-stack proposition in Brazil. For us, it's clear that our technology-driven approach puts us in a strong position to challenge the dominance of the legacy players across the region. Now, in the Latin American market, the continuous shift towards e-commerce, which obviously has been accelerated due to COVID-19 pandemic, has forced companies to invest in their payments technology and to integrate their offline and online sales channels. A good example to mention in our region is a company called Magazine Luiza, a merchant of ours, or Magalu, which is a 60-year-old traditional retailer that has pretty much reinvented itself over the last five years and is now Brazil's prime example of a successful transformation and fiercest competitor to global powerhouses. We, Adyen, have helped Magalu over time with our full-stack solution. and of course our capacity to significantly improve the efficiency of their e-commerce operation by increasing their approval rates, offering more data for them to make business decisions. And although local PSPs are making efforts to offer integrated multi-channel solutions, their biggest challenges are still their technological legacy and segregated platforms. So unified commerce is really a big differential for ADIEN in this region. And it's quite unique in a sense that it solves for fundamental technological challenges like channel integration, dependence on outdated platforms and services, but also processing performance and stability. With our single platform, our strong technology is our main differentiator. We are a technology company redefining payments. This ensures that we hold a unique position in the Latin American markets and today service some of the largest domestic digital players, companies like Rappi, iFood and Hotmart. In addition, of course, to the local operations of global audience merchants like Uber, Microsoft and many others. As said before, we are here to serve both global merchants expanding into Latin America, which we can easily offer via our single platform. Additionally, we are here to help Latin American merchants transition towards online. So as digital transformation advances in the region, more and more retailers focus on strengthening their digital channels to better serve their customers. In markets like Brazil, where Ardian offers the full stack solution, Merchants are increasingly interested in breaking ties with traditional payment providers that really cannot fulfill their need for innovation in the payment space, both online or offline. And because of the evolution of the entire region, large enterprise players from North America, Asia Pacific and Europe are increasingly interested in the Latin American market. As a result, competition in the e-commerce and retail verticals has increased significantly, and local companies are positioning themselves to face international competition and are being hugely successful. Companies like MercadoLibre, Rappi, and Magazine Luiza that I mentioned before are really seen as references in the market. But as we are recognized as a truly global payments technology company that has existing ties with many of the global players that are entering the region, most of the times we're seen as a natural choice for local companies and their efforts to defend their turf. As mentioned before, our focus on innovation through technology puts us really in a unique position to solve fundamental challenges for our merchant base. Thanks to the speed of our merchant-driven innovation, which Mariette touched upon earlier, we're very well positioned to deploy innovative payment solutions swiftly in the region. Like we did it, for instance, with the digital wallets, Apple Pay, Samsung Pay, and others that we pioneered in the region. The same goes for how we were the first ones to market 3DS2. a very innovative authentication tool for debit and credit card transactions that enhances security and convenience in those transactions. The speed of how fast we could deliver the solution has been very beneficial in getting access to local champions like Via Varejo, a multi-billion dollar retail conglomerate in Brazil. Now, coming to my closing remarks, We continue to assess our opportunities for increasing audience footprint in the region. As always, and as Ingo mentioned before, this will be closely tied to our merchants' demands. In addition to that, after successfully launching unified commerce in Brazil as the first ones in the market in 2019, And also as stores begin to gradually open up, as lockdown restrictions are beginning to lift, our objective in this area will be to further scale our unified commerce solution in Brazil. So while helping Latin American merchants inside the region to expand outside the region, or non-LATAM-based merchants to expand into LATAM, we continue focusing on solving real complexities for our global merchants and local merchants in here to the Latin American region. With this, I want to thank you all. It was a pleasure to provide you with some more insights on audience presence in Latin America and how we help our merchants over here. And now I would like to hand over to San Francisco to Brian to talk about North America.

Thank you, Sean. My name is Brian Demir. I'm president of North America. And today I'm going to talk about the amazing work that 214 ADIANers do in North America every day. North America represents a strategic region for ADIAN. It represents 18% of ADIAN's net revenue contribution. And in H1 of 2020, we saw 58% year-over-year net revenue growth. We're bi-coastal in North America with an office in San Francisco, as well as New York, and a growing presence in Toronto for our Canadian business. Similar to LATAM, we have a multifaceted mission in North America. We primarily have a two-part mission. The first is to serve North American merchants going abroad. With our one platform, we present a global solution to our merchants. Second to that, we serve North American merchants in an increasingly evolving domestic market. I'm going to dive into each of these themes and talk about what we're doing with our merchants here in North America. First, I'd like to talk about the North American domestic market itself. It's easy at a 10,000 foot perspective to look at North America and see it as a simple market, to see it as card centric, to be dominated by a consolidated list of players and a straightforward place to do payments. We would actually disagree with that. North America is evolving much like other markets are around the world. And at the end of the day, payments is a highly cultural experience. We'd like to call out three themes that are driving merchants in North America to work with us in their own domestic market. The first would be around payment method proliferation. While North America is predominantly card-centric market, it is worth noting that there's an explosion of additional payment method offerings that consumers are adapting. The first I would call out would be buy now, pay later methods, of which there are many to choose from, The second would be card-centric wallets like Apple Pay, Google Pay, Samsung Pay. And then finally, alternative wallets like PayPal, Venmo, and Square Cash. As consumers have additional options, merchants need to consider and weigh the pros and cons of offering those additional payment method options to their consumers in North America. With Adyen's one platform philosophy, the single integration, single contract, and single relationship they have with us lets us adapt to that evolving dynamic in the North American market. And that's why we find that merchants are working with us here. The second theme that I would call out would be unified commerce in general, but also the merging of channels in unified commerce. COVID-19, while an unfortunate incident globally that's had a lot of effects, has also fundamentally changed the dynamic for retailers and multi-channel merchants in general. What we've found under COVID-19 is that having these digital channels and having a unified commerce omni-channel approach is no longer a nice to have. In North America, we're assisting merchants growing these digital channels, but then importantly, unifying their own platforms and their own systems around our single platform so that they can present one single holistic offering to their end consumer. And in that, they have one holistic view of their consumer, their shopper, and they can understand their shopper's behavior more as it adapts during COVID and as it changes over time. And then finally, we would call out evolutions from the card networks themselves. While there are evolutions in alternative payment methods, local payment methods, and non-card-centric payment methods, it is worth noting that the card world itself is evolving as well. Sunil called out a lot of very interesting technologies that merchants need to be on top of, whether that's NFC contactless, EMV code network tokens, or the 3D Secure 2 protocol for next-generation authentication. When you take these three themes together, we actually see a market that's rapidly evolving and requires merchants and payments teams on the merchant side to be dynamic and quick. And with our one platform philosophy, they're able to tackle this evolving market. We of course have our second theme, which is to help North American merchants expand cross-border and see the world. North American merchants have a hugely global presence, in many cases being in dozens of countries around the world. And as I said previously, payments is a highly cultural experience. So whether you're considering offering boletos and installments in Brazil, konbini payments in Japan, buy now, pay later in Australia, bank-based payment methods in Europe, or even card-centric payments in North America, merchants need to consider a wide swath of approaches, payment methods, and localization opportunities across their global business. And with Agin's one platform philosophy, we're able to offer them a single integration, commercial contract, and relationship to manage all of that complexity. Importantly, we focus on two really important things as well. One would be authorization rates. Around the world, there's different levels of maturity in these markets around both payment methods as well as just card-based payments in general. And with our one platform and with the machine learning and our revenue accelerate system, we're able to maintain consistent, high-quality authorization rates regardless of the market that we're operating with our merchants in. And then second to that, I would say that we offer local expertise. While we maintain one global unified platform, we offer our merchants the ability to open up a market with the intelligence that we have about how payments works in that market. That's exactly why merchants like Microsoft, Uber, Tiffany's, and Dollar Shave Club choose to work with Agin to expand around the world. I wanted to take a few moments and focus in on three of our solutions that we've talked about earlier today and specifically talk about what each of these solutions means for our North American merchants and what sorts of problems we're solving for those merchants around the world. The first that I would call out would be technology and online merchants in many ways are bread and butter e-commerce centric merchant merchants operating around the world. Main theme that I would call out for these merchants would be scale. Like I said previously, in terms of one of our two core missions of expanding around the world, these merchants benefit from our one platform philosophy. So whether it's focusing on maintaining excellent authorization rates, as well as recurrent billing, domestic acquiring connections with a growing swath of offerings there, as well as local payment methods, merchants like Fiverr, Box, and Pinterest choose us to operate their digital platforms. One thing that I would really call out, and it's been talked about earlier today, would be the fact that we build our products with these merchants. And I think a significant success story of the last year or so is 3DS2. There's a rapidly evolving authentication dynamic around the world, whether it's PSD2 in Europe, as well as authentication requirements in countries like Brazil, Australia, and more to come. We worked with these types of merchants to build a merchant-centric solution together. that not only met their need to follow these regulations around consumer facing authentication, but also maintained their business at the same time. Second, I would call out unified commerce and point of sale. And the most important theme here would be adaptation. There's a huge amount of change going on for unified commerce merchants right now. Many of those changes were happening before COVID-19. Many of them have been sped up because of it. These merchants are introducing touch-free and digital payments, as well as additional payment channels onto their platforms. And because of that, they're rethinking their approach to facing their consumers, and they're needing to rethink their technology approach to how they maintain those different channels. We offer one platform that offers all of those channels and all of those regions to those merchants. And that's why a merchant like Subway, for example, works with us. At the same time, they're evolving on their side, adapting their systems to unify their approach to unified commerce. In the end, what this means is that consumer behavior is changing. Consumers used to stick around in a single channel, but now they might float between a kiosk flow, an in-app flow, an online order ahead, a traditional counter payment, or maybe even a drive-through. And with Agen's unified system, one platform and singular token vault, we're able to give a holistic single view of the shopper back to these merchants. This is exactly why merchants like Subway, Gap and Restoration work with us so that they can evolve their approach in a quickly adapting unified commerce environment. And then lastly, I would like to talk about our newest and most exciting, I would say, new area, which would be platforms and marketplaces. There is a new economy going on right now around offering payments as a service. You know, we have foundational merchants in this area from GoFundMe to eBay. And what we're finding is that there's multiple challenges that these merchants face when wanting to present payments as part of their overall platform. And the first would be how to simplify. How to simplify a highly complex set of requirements from processing payments, splitting them, paying them out, onboarding sub-merchants, KYC regulatory compliance. And with Aging for Platforms, we're able to offer an API-first solution that lets these platforms maintain their brand and relationship with their end customers and end merchants, but also simplify the overall approach with their API design. Over time, we're working with these merchants like we do with all of our merchants to build with them. And that's why it was very exciting over the last year to announce our issuing offering, which in many ways is an adaptation of the overall adjunct for platforms flow as merchants are looking for unique ways to split funds, as well as to pay out funds to sub merchants or to third parties. And then finally, I would call out our recent announcement of integrating Adjunct's point of sale and terminal offering into Adjunct for platforms with Zenoti and modernizing medicine as our exciting launch merchants for that offering. Now with the same API driven approach, these merchants can offer payments to their end customers, multi-channel and adapt that same unified commerce dynamic that I've talked about before. I hope you enjoyed this overview of what we're working on here in North America. I'm happy to hand you off to Warren, who's going to talk about Asia Pacific. Thank you.

Thank you, Brian. Headquarters in Singapore. A little bit about our business. So as of June 30th, we have 132 employees in the region with offices in Singapore, Australia, China, Hong Kong, India, and Japan. Contribution of APAC to our total net revenue was 10% in the first half of 2020 with year-on-year net revenue growth of 28%. Now, Asia Pacific is a very exciting region with two of the largest e-commerce markets globally in China and Japan, and two of the fastest growing ones in India and Southeast Asia. And it's continued to be seen from a payments perspective as a very fragmented region. Many countries, currencies, regulations, cultures, payment habits, and because of that, payment methods. The macro trends that we've been seeing over the last few years are now accelerating, leading to further digitization in both the online and offline settings. And this bodes well for IDN's unified commerce offering in the region. Well, these trends are really exciting. Ironically, merchants now face even more choices and complexities with this digitization, and it's amplified if they're looking at covering even more countries. And this places Adyen in a strong position to help our merchants simplify payments through our single platform, whether you're a global merchant reaching consumers in Asia, or if you're a merchant in the region that has aspirations to grow beyond the borders. We're solving at the very core for this fragmentation. Now consumers are leading the digitization of commerce. In particular, four trends are happening all across the region. The first trend we're seeing is the acceleration of cashless payments, shift from cash to cashless. Now this trend started before the pandemic, but with the COVID, first of all, it's accelerating because shoppers and store employees are now minimizing the use of cash. And second, shoppers have really shifted their purchases to e-commerce, necessitating and accelerating the use of adoption. of cards and other digital payment methods. And the first thought that comes to mind when we speak about cashless are the mobile wallets like Alipay and WeChat Pay, which played a large part of driving the cashless agenda in China. But cashless is a lot more than this. For example, in Australia, tap and go or contactless card payments now represents over 90% of retail transactions, including the use of mobile payments like Apple Pay and Google Pay. And across Southeast Asia, QR code wallets are growing with multiple players in each country, not only offered by innovative tech companies, but also by local debit card schemes, all playing in the same arena. In fact, our research shows that 48% of merchants in Singapore are seeing increased use of mobile wallets in store, and 54% are seeing an increase in QR code payments in store as well. And even in Japan, which has historically been one of the most cash-heavy markets in the world, Consumers are adopting QR code based and mobile based wallets as well. And in most countries, there's a big tailwind because governments are also actively pushing the cashless agenda. Now, when you go shop online or in store across Asia, one of the first things you notice are the breadth of cashless payment methods available to shoppers, which creates dilemmas for our merchants. Now, which ones do I need to offer? How many do I need to offer? Are there differences in online and offline? And how do I then scale this across countries? And we expect this cashless trend to continue and for more and more consumers to adopt cashless payments. And that's a big tailwind for Adia. The second trend is the rise of the super apps. And earlier I talked about Alipay and WeChat Pay. Both have evolved into super apps that offer consumers a wide range of services, including ride hailing, commerce, financial services, and of course, mobile payments that can be used both online and in store. And for years, super apps were unique to China, but now we're seeing them across Southeast Asia with both Grab and Gojek, creating super apps that allow shoppers to pay online and offline. And we see this as a big accelerator to digitization. First, consumers now have an additional cashless payment that they can use for their shopping. Now, just a decade ago, four in five people in Southeast Asia had no internet connectivity and limited access to the information superhighway. But today, Southeast Asians are one of the most engaged mobile internet users in the world, with internet penetration over 80% in places like Singapore, Malaysia, and Thailand. And this means that consumers are primed for digital and mobile shopping experiences. And furthermore, in countries with low credit card penetration, the super apps means that tens of millions of consumers are now able to pay for e-commerce, not just from domestic merchants, but also from international merchants from Europe, from North America, and other places that are increasingly targeting these shoppers. And second, this has accelerated offline merchants to adopt digital commerce and move into unified commerce and contributing to a growing ecosystem of technology-savvy merchants who, as they grow over time, face the same challenges of accepting payments beyond their borders and across multiple channels. The third trend is buy now, pay later, which we first started seeing in Asia, in Australia, several years back. But this is no longer an Australia-specific trend, but a global one with the likes of Afterpay and Zip moving international. And it's not just about these two companies, with approximately 20 players alone in Australia and many tech startups trying to emulate the success, particularly across Southeast Asia. Here, merchants are really looking for an alternative solution to installment payments, which are tied to complex legacy implementations and require merchants to contract with each issuing bank in each country. And finally, unified commerce is also happening in Asia Pacific. Like other regions, the pandemic really shifted spent to e-commerce. In particular, stores, whether you're a retailer or QSR, forced to shut down during the lockdown periods. Asia Pacific was no exception either. We saw rapid growth of essential online services, such as food deliveries and groceries. And in many cities across Asia where shopping is synonymous with going to foot traffic and going to malls, Retailers accelerated their digitization initiatives even when the stores opened up. And Hong Kong and Singapore are great examples. Given the shopping densities in the two cities and the digitally savvy populations, unified commerce strategies helps retailers not only to quickly adapt for the situation now, but also prepare for opportunities in the future. And with that, we're seeing more and more cross-channel experiences that are more frequently seen in the United States and Europe and La Salle. buy online pickup in store, buy online return in store, or audience pay by link solution, which was also adopted by many retailers during this time. Now, these trends are really exciting, but it also means that merchants now face even more fragmentation and therefore complexities, especially when looking at more countries. It's daunting. international and local card schemes, wallets, super apps, online banking, convenience store payments, vouchers, and it's true smorgasbord of payments. And that's why we have our unified commerce offering because we can then simplify payments for our merchants, whether they're growing within Asia or going abroad or in across multiple channels. We now have our unified commerce offering in Australia, Singapore, Hong Kong, Malaysia, and New Zealand that offer payment methods. and super apps like GrabPay, Alipay, and Apple Pay, as well as buy-now-pay-later methods like Afterpay and Zip, amongst many others. Which brings me to the final point around globalization of commerce. Now, audience grows with our merchants, and we're really proud to work with our global customers to simplify their payments, whether it's digital e-commerce, luxury retail, or QSR that have established a presence here across Asia. However, Asia-based merchants are now going global as well and growing beyond their home countries. If you're an entrepreneur based in Singapore, you're thinking of growing across Southeast Asia. And if you're already a regional retailer, the aspiration is to go global. And consumers worldwide are now shopping from recognizable Asia-based brands, whether it's shopping on Singles Day on AliExpress or going to a Lorna Jane or ESOP store in the United States or Europe. And as more and more brands are expanding regionally and globally, they face the same challenges of global merchants that have come to Asia. They face an incredible number of choices of unfamiliar cashless payment methods, super apps, buy now pay later, which is then amplified when expanding into multiple countries and then multiple regions. And that's where Audion comes in. So digitization accelerating across Asia and Audion's single global platform is helping our merchants deal with this fragmentation and work with some of the most relevant payment methods across three channels, And we're now helping many of the top brands in Asia, both here locally and beyond the region. Thank you so much. And with that, I'd like to turn it back to Hemo. Thank you.

Thank you, Warren, and thanks to everyone presenting. That was really insightful, really cool to see the pace of evolution of all these trends across the world and how we're dealing with them. Quick break. We will be back at 10 to 6 local time, which is in about six minutes, and then we'll begin our last round of Q&A with all the regional lead presenters you just saw and the full ATM board. See you soon. Thank you. Welcome back, everyone, to our second block of Q&A. We're just going to start it off. I would say there are still some questions left open in the queue from the first session. It is my personal aim to get through all of this before we end today. So with that said, the next question is from Antonin Baudry. Antonin, you can go ahead and ask your question, please.

Yes, thank you very much. In fact, my question is about the mid-market and its developments. You answered part of my question. But I would want to know, it's a different go-to market. So I want to know if the mid-market development would necessitate more investment in sales and marketing or probably some partnerships with banks. And do you aim to develop the small merchant markets with mobile point of sales terminal, for example? Thank you.

Ingo, would you like to take that question on the development of the mid-market strategy and the investment required?

Yeah, sure, absolutely. Thank you, Hemmo. Yeah, so of course, if you want to invest in mid-market and reach the right target group, you need to invest in marketing. So that's what we've been doing. It's also very crucial to work with the right partners because they typically build a relationship already with those merchants. So we will continue to invest in this segment like we have done over the past year. So it won't be a big change compared to what you've seen so far, but we will continue on that path for sure. And then related to smaller merchants, I think we've always said we're focusing on mid-market, and mid-market is the next adjacent segment to enterprise. That's something that we will continue with. So we're not targeting the smaller merchants directly. That's one of the reasons why We work with the platform strategy, and we hope to target those smaller merchants through platforms.

All right. That makes a lot of sense. Thank you. Our next question is from Thiago Almeida at Milestones Capital in Brazil. Thiago, go ahead, please. Thank you.

Hello. Hi. I'd like to ask, if you think about a long to mid-term strategy of the company, what challenges and opportunities that you're seeing that you're facing most within the products? And also in terms of geographies, which ones that you believe it's the most promising in terms of growth

and and to keep the the high growth of the company within the next five to ten years i say let's put this way please thank you right thank you so uh opportunities with products and the most interesting geographies for growth this sounds very much like a ceo question to me perhaps one of the regional leads can uh can jump in after peter but peter if you could kick us off please Peter, I think you have to unmute yourself on your end.

Yeah, my fault. The reason for us to be in a geography is twofold. It is to have a good coverage for our merchants that they can work with us. And it can be because domestically we think it's interesting. So if we invest in a certain region, it's usually that we invest there because our merchants are interested in that region. So if you look at our Malaysia acquiring license, That is because merchants that internationally are working with us want to also have us cover that market. So the relationship between the most exciting market is that also the market where you invest. That relationship is not one on one. We invest in markets because it are great places for our merchants to grow with us. or we invest in markets because it are great places for our merchants to land us. And if you've seen what Jean has done in Brazil, Brazil has been a very complex market for many merchants. They started working with us because we're good at Brazil, but then they also came with all other markets. So the relationship that is assumed behind the question in reality is slightly different.

It's kind of like picking children, right? You can't play favorites. I think we all understand. Our next up is Mohamed Moualla at Goldman Sachs for his second attempt. I think he has two more questions. Mo, go ahead, please. Are we getting in touch with Mo? If not, all right. Mo, we'll get back to you should it be possible to reach you again. Our next question is from Louis Benoliel. Louis, you can go ahead and unmute yourself and ask your question.

Yes, thank you. Just two questions. One is, I'd like to hear from some of the regional heads whether they can get the employee growth to address all these opportunities that they have ahead. And then secondly, I'm just curious in Latin America whether Mercado Pago is a competitor or an enabler for Radeon.

Thanks very much, Louise. Perhaps, Jean, if you can tackle that question first. Is Mercado Pago a competitor for us?

Mercado Pago is not a competitor of ours. As I said in the previous conversation and along also this whole presentation, we really focus on large enterprise merchants and the mid-market. And this is our sole focus also in this region. So Mercado Pago, as far as I understand, and of course, I don't like to comment on other companies, but has not this target group.

Thank you kindly, Jean. And then perhaps Brian and then followed by Warren, are we able to hire quick enough to be able to capitalize on all the local opportunities we have in the markets? Brian, go ahead, please.

Yeah, it's a great question. I think as you've seen in our earnings results, every six months we continue to focus on hiring in the regions. And I think there's been a strong emphasis under COVID in particular of moving to a digital-based onboarding approach, which I think in the long run will just make us simply more scalable in general in terms of onboarding. That being said, at the same time, our focus is on quality. We could always hire quicker, but at the end of the day, we want to make sure that we're bringing in the right people, that we're having the right discussions, and that we're focusing on the right opportunity. So I think the focus is on balancing these two things, but continuing our growth in terms of people so we can capture those opportunities.

Thanks, Brian. Very clear. And Warren, your take, please, for APAC?

And to add to Brian's point, we're also benefiting from the overall digitization and the agendas that are going on across the region. And because of that, we're seeing a deeper talent pool that we can pick from. There are many more people, talented employees that have international backgrounds, multi-regional, multi-country backgrounds, as well as technology backgrounds. I think that really helps in hiring the great people that we have.

It's very clear. Thank you, Warren. I don't think we've been able to get back in touch with Mo. There's a new one that popped up in my queue. Our next question is from Ken Hill at Loop Capital. Ken, you can go ahead, please.

Yeah, great. I had a question. So for Latin America, you mentioned unifying commerce in the region and a focus scaling the effort there. So I'm wondering if there's still any structural impediments that might be suppressing growth in the region. And if you expect any of those to kind of ease here going forward. And I guess the second question for the region is if you could kind of maybe break down the growth between who might be, maybe you guys growing with customers entering the region for the first time, or is it more established companies there kind of coming to your platform for the first time? Just kind of wondering if you could break it down between like new and existing customers there and how that might vary across the regions.

Thank you very much, Ken. So, Jean, the first part of the question was, are there any regulatory or technological hurdles for the scaling of our unified commerce solution in LATAM? If you could please take that first.

Well, also, as I mentioned before, we're really solving for very strong complexities that exist in the markets. But since we are really benefiting strongly from the one platform, single platform approach, we're circumventing many of the challenges that exist in the market. What we have been able to set up over the last few years also for our unified commerce solution is completely different from what other players offer in the market. Because as I said before, there are many times dependent on many different platforms and services that we don't. And this creates a certain dependency that we don't have.

That's very clear. Thank you. And some breakdown, perhaps even if just anecdotal on the split between international companies coming into Brazil with us or Brazilian companies that we're helping grow outside of Brazil.

Yeah, so we see a continuous trend of international companies from the regions, as I mentioned, North America, Asia Pacific and Europe. Coming into Brazil because the market is simply becoming more and more interesting because of the evolutions that we have seen there in terms of penetration of digital payments, electronic payments. So at the same time, we feel that we are tackling exactly the challenges that Brazilian companies have been faced with. um over decades if you will so um in my opinion it's quite balanced uh in terms of uh in terms of traction we see a lot of traction coming from local merchants but also a lot of traction coming from from international merchants that's very clear sean thank you um now we're going back to adam wood and morgan stanley adam go ahead please

Hi, thanks very much for taking the question. So I was very interested to hear, you talked about the complexity in the domestic US market, which I think is probably underestimated by a lot of people. Could you maybe just talk a little bit about how far the opportunity in the US goes? So we've heard a lot in recent years around the price competition in that market, and particularly for the big box retailers in the US that the rates they're paying you know, very, very low. Is that a market that can open up to you as omnichannel becomes more important? Or do you think you stay much more kind of in the more mid market and more complex part of that U.S. space, please? Thank you.

Yes. So that first part of your question, I see another one listed here, but that should be answered by Brian Demir. Brian, could you perhaps talk through the opportunity in North America, especially as it relates to pricing?

Yeah, absolutely. And glad to hear you affirm our opinion that it's an increasingly complex market. And I think the thing that I would simply note there is where adjunct strength is, is where complexity lies. And that's not necessarily geographic complexity or even always channel complexity. um what we're finding is that these merchants though are generally if you're solely a domestic merchant still have a lot of challenges in their single retail channel whether that's on bringing additional payment methods terminal offerings adapting to things like curbside pickup contactless but then of course taking on a multi-channel approach you know as digital continues to be a more and more substantial channel for these retailers they're realizing that they need to unify their overall technology stack so that they have sort of one view of their consumer as they float between those channels. So specifically as it pertains to pricing and price pressure in that market, I won't necessarily speak directly to that. What I will say is that, you know, we tend to do very well with these merchants who have these complex channels and complex challenges. And the more complex challenges they have, generally, the more they're willing to pay for those services. So we definitely see benefits in that and the overall pricing dynamic.

very clear brian thank you and adam i wouldn't want to be called evasive so would you still like to ask the second part of your question if we've lost touch with adam we can pivot to the new question it seems that adam is out our next question comes from sanjay sakrani at kbw sanjay go ahead please thank you um

So I was curious if the buy now pay later product is something that Adyen would consider offering on its own off of its balance sheet or is the goal just to be a facilitator? And then the second question more strategic is the whole land and grab strategy. I'm just trying to think about if there's any definition around the progress that you guys have made over time on existing relationships, and maybe if there's any metrics that you could provide where you are in terms of your share today versus what the addressable share might be within their existing merchant base. Thank you.

Thank you, Sanjay. So the first part of the question on offering a buy now, pay later product offer balance sheet. When I hear balance sheet, Ingo, I think of you, so you can go ahead.

Indeed, it's a question that often comes up. We could develop our own payment methods, including buy now, pay later, but then we would go into direct competition with our merchants. So far, we've always said, let's not do that. Let's make sure that we help them out because the moment you start to offer this payment method yourself, you're trying to get a relationship with the same consumer. And we don't think that that's on the long-term beneficial. So we will be more facilitator if needed, than developing a product like this ourselves.

That's very clear. Thank you. And then on the land and expand strategy that we've operated for over a decade now. Pieter, would you like to say a few words on how that's evolving?

Yeah, that is... On the one hand side, we see more than 80% of our growth coming from existing merchants. So this is merchants that indeed we landed either a product line or a region and that give us more volume. On the other hand, we're also constantly onboarding new merchants. So that process is a continuous process. The efforts to quantify that, it's very difficult. It has been with the company sustained over time that the vast majority of our growth is from existing. What we do ourselves is we look at the pipeline to make sure that we are indeed onboarding enough more merchants that that process continues.

Thank you, Peter. That's very clear. Our next question comes from Girish Baku at Tencore Partners. Girish, you can go ahead, please.

Sorry, thank you. Can you hear me?

Yeah, we can hear you clear. Go ahead, please.

Great. I have two questions. One is on customer service. Mostly customers love audience. One thing we hear is that sometimes the responsiveness is a little bit slow given how critical the payments process is for them. And so they say maybe the people in Netherlands are sleeping. So I wonder how do you think about human relation responsiveness and how do you think about maybe becoming less time zones specific in terms of the technical responsiveness. And then second question is regarding the platform's strategic vision over the long term. Given we're used to thinking of merchant acquirers in a certain way, but your vision and your platform is so much broader. I wonder where are the limits of it in terms of how deeply you could help your customers long term when I think about the back end in terms of their financial and banking software stacks.

Thank you very much, Girish. I think the first question is definitely one for Kamran on the responsiveness of our tech support around the world and us relying on time zones. And perhaps, I'm not sure if we still have Blake, but the strategic vision behind our platforms. If no, Blake, then Kamran, feel free to take that one on as well. Go ahead, please.

Thanks, Hemal. Yeah, the first one, I think, as we highlighted throughout today, I think we're continuing to expand internationally. And I think the goal is definitely to not just be responsive to our customers, but as we discussed, be proactive in highlighting strategies that can help them grow their business. So obviously, always helpful feedback if we aren't living up to that promise. But that is definitely the goal and definitely work in progress. And I think Blake's there, so I'll let him tackle the platform one. But happy to chime in if he's dropped off.

Go ahead, Blake. Yeah. Yeah, no problem. Yeah, so for platforms, what we're seeing is more and more of these software companies implementing financial services, specifically payments. A lot of these same software companies and platforms are also encouraging innovation from us to do things like issuing and other forward-thinking platforms. traditional financial institution products and services. So I think that the platforms will bring a lot of innovation going forward to Adyen. And I also think, yeah, I think we're prepared to serve them in that same vision.

Thank you very much, Blake. Our next question is from Anthony Baudry at HSBC. Antonin, go ahead, please.

Yes, thank you. A question about competition. Again, you speak since the beginning about one platform, one contract for internet on marketplace clients, something that I understand. At the same time, we see, for example, that you address many European business of U.S. companies, implying that these companies have other providers for their payments in the U.S. How do you see the future on this type of cross-border clients? Do you expect certain time to grab the volumes of your U.S. clients in the U.S.? ? When do you see that?

Thanks, Anthony. Perhaps, Brian, you can kick us off on the opportunity for US volumes, for US logos, for which we mostly process European volumes at this time. And then, Ingo, if you want to jump in after, feel free. Go ahead.

Yeah, I mean, it's a great question. And usually we start a relationship with a merchant solving a particular problem. And actually, I would say it's oversimplified to say it's always a European opportunity that the business has. They might want to land in Brazil. They might have needs in APAC, Europe, whatever. I think that that's been the dynamic for a long time with Agin, and then we focus on growing that business over time. I think it goes without saying almost that their domestic US business in many cases is an opportunity. I would argue that we have hit a watershed moment over the last few years where in many cases, part of the initial discussion is their domestic US business. I would point to companies like Subway, for example, that are predominantly a US-centric business, but then also have a global presence where where that may be the case. So while we don't necessarily report specific numbers on that, I do think that there continues to be progress on working with our merchants with their domestic U.S. business.

Thanks, Brian. And we should always remember that payments is lumpy and sometimes it's slow and it takes a while for opportunities to realize themselves. Paul Jeffrey, you are next up. Paul, go ahead, please. Are we getting in touch with Paul Jeffery? Paul Jeffery is a no-go. Then I will wait for a new question to pop into the queue. We have one from Nushin. Nushin, go ahead, please.

the benefit of the single platform and the competitive advantage of it, but building every single solution from the scratch is very time and headcount consuming. You're seeing now with your issuing solution that have been in the pilot phase for a while. Can you tell us how you see this strategy going forward? How sustainable do you see this strategy versus M&A? And secondly, do you plan to better monetize your banking license by also offering issuing

Thank you very much, Nooshin. I almost thought we would get through this day without an M&A question, but here we are. Peter, perhaps talk us through our M&A approach and why we feel that building from scratch is better.

Yeah, so we have never bought something. And you said, isn't it time consuming to build stuff yourself?

I think if the people backstage could please mute Nooshin's line, there's some interference there. Sorry, Peter, for interrupting you. Please go ahead.

So what we feel is that whereas theoretically, if you acquire something, you immediately have the functionality, what it does, it makes your business a whole lot more complex. So we think that ultimately it's slower. Suddenly you start to run multiple platforms, multiple technologies, And then the question is, would you want to migrate that to a single platform to have those benefits again? Or are you from there exposing yourself to the complexity of running multiple platforms? And why is that complex? From a security point of view, you use different technologies. From an uptime point of view, where do you put your best engineers if one of the platforms suffers? Many of the people involved with ATIEN have at a certain point in their career worked for a payments company with multiple platforms. We all lived through it and we're not fans of it. So I think it's a lot quicker to build stuff yourself. But it depends on the window over which you measure success. If you measure success more over seven years, I think it's a lot quicker. If you measure success over one year. then it's a lot slower and that's why we always say we look for the long term if you really want to build something that consistently outperforms you're looking at single platform you're looking at end to end and you're looking at the same platform that works in multiple geographies um hence if you look at card issuing that we're now building you can say yeah how much did you get done since you started on it i think a lot um We are now live with it in Europe, and that will be the same rollout where we will add licenses to it. And actually, I think it's fairly quick.

Thank you, Pieter. And then on the second part of that question on using our banking license to offer issuing products to consumers, Ingo, would you like to say a few words?

Yeah, I think it's very much in line with the earlier question on the buy now, pay later question. Like, do we want to use our balance sheet to offer financial products? And we would go into direct competition with our customers. So I think it's highly unlikely that we will do this on the short or midterm.

It's very clear. Thank you. Our next question is from Fahed Kunwar. Fahed, you can go ahead, please.

Hi, just a question on the trends that we're seeing in terms of account-to-account retail payments versus card networks. It looks like the regulators are trying to increasingly incentivize account-to-account payments. Can I just ask, in the markets that you operate in, how have you seen this shift occurring? And also, how does the economics differ for Adyen when you go through a card network versus account-for-account payments, if it differs at all? Thank you.

Thank you very much, Fahed. Ingo, would you like to take that question on how account-to-account is different?

I think it's, of course, something that we have always been good at. If you look at the European market, for instance, there's a lot of online banking payment methods that have been there for a long, long time. Often, the payment fee structures are slightly different, so not ad valorem like with car payments. You need to think about, okay, what does it exactly mean? If you look at our economics, typically we can make similar type of margins on account to account payments compared to car payments. So it's not a threat to our business. I think it's even an opportunity because it leads to additional complexity, which we like to solve.

Right. More complexity. All right. Our next question is from Nick Barnes Advantage. Nick, you can go ahead.

do we have nick we do not have nick then we have josh levin for attempt number two uh josh you can go ahead please hi uh when there's an rfp by a merchant and in those occasions when audien does not win is there a typical reason why is it pricing is it technical some other reason

Okay, so why don't we win RFPs at times? I think this might be an interesting one to have all the regional heads answer and see if there's any difference there. So, Brian, if you'd like to kick us off. When we don't win, why is it usually?

I'll give a bit of a cop-out answer. It's across the board. It really varies. What it's generally not about is our technological capabilities. What it's generally not about is our reach. Now, sometimes they might be looking for a specific product, that we haven't yet found enough demand with our merchant base. And then there's an incompatibility of what we're looking to offer. That's usually the case where we're not winning an RFP, where they're effectively looking for something that we aren't yet selling, I would say.

That's very clear. Warren, does that sound familiar to you?

Very much so. I think it's really... a wide range of depending on the merchant and what they're looking for. It can go all the way to looking for some merchants looking for a long tail market in regions that we don't currently support yet.

All right, it's clear. And Jean, anything to add?

No, I think it's very much aligned. I think that when most of the times when wind businesses here, it's because of our technological solution, our proposition to the market that is different from our incumbents. that typically choose because of the challenges that they have, they choose to go for a price based strategy. So dropping prices, which is nothing that we do. We like to sell value and we offer value.

Right. That sounds very familiar. Thank you for those answers. Our next question is from Michael Del Grosso. Michael, go ahead, please.

Yes, thank you for taking my question. On the hospitality industry, you've announced several new partnerships recently. Is there an increased focus on this industry? Or more broadly, can you comment on your growth outlook for this vertical?

So our growth outlook for the hospitality vertical, I think perhaps Derek, you could talk through some new developments. And then our growth outlook. Let's pivot to Ingo for that part.

Indeed, hospitality for the last year, year and a half, has been a focus of us, next to expanding retail and also looking at food and beverage. Setting up partnerships there is key, as in all our different markets that we're operating. A couple of key partners have been introduced, and we're planning to now extend that as well in the other verticals that we're active in.

Thank you, that's very clear. Ingo, anything on the growth outlook for that?

Yeah, I think it's long-term investment in hospitality. Typically, if you'd like to work with partners, like Dirk just mentioned, you need to build the relationship. So you won't see here like big increase in volumes in the next year. This is more like the next three to five years. And we never give any specific guidance on verticals. But of course, we wouldn't invest in it if we would not have very high expectations for this vertical.

That sounds reasonable enough. Our next question is from James Goodman. James, go ahead, please. Do we have James?

Good afternoon. Can you hear me?

Yes, sir. Go ahead.

That's excellent. Thank you. My first question is around the unified commerce strategy. You talked in an earlier session about the importance of things like terminal automation and faster install merchant onboarding. The question is to what extent the current terminal hardware solutions that are out there from the major markets, manufacturers are really keeping pace with the payment experience that you want to provide in unified commerce and to what extent you're experimenting with alternative in-store hardware. The second question, just a bit more numerical, but thinking back to some disclosures I think in the prospectus around the number of customers you had that generated certain levels of TPV. I think you had just under 500 merchants which were generating over a million euros of monthly TPV and about three and a half thousand total customers. I wondered if you could at this opportunity give us an update on how the customer numbers have evolved. Thank you.

Thank you very much, James. So for the first question on our hardware strategy, perhaps, Derek, you can provide a bit more color there. Yeah.

Yeah, of course. So we're always looking at our existing range and looking at the range and evaluating it. We're also looking at the market, how the point of sale market is evolving, also going away from terminals in the future. And that's at this point what we're doing. We're not actively announcing any new terminals at this point.

But those announcements will come in time, I promise. Secondly, on the evolution of our customer number that we disclosed pre-IPO. Pieter, would you like to say a few words on the merit of disclosing the number of customers we serve?

Well, what I think is good to note is that the dependency on large merchants has decreased over time because we've been adding more and more to them. So our spread over merchants and over industries is much more sophisticated than when we went public. Regarding number of mergers, we don't guide on that.

That's very clear. Thank you. Our next question is from Robert Lam at Citi. Robert, you can go ahead, please.

Hello, can you hear me?

Yes, sir. Go ahead.

Super. Within the healthcare vertical, such as the modernizing medicine win, How should we think about your position in the payment flows here? Is this purely out of pocket and copay? Or perhaps there's also an opportunity to help with the ultimate flows that come back from insurance reimbursement in the US?

Blake, do you want to take that question on payment flows concerning modernizing medicine?

Yeah, I think in the healthcare space, we're seeing a lot of this verticalized software specific to the healthcare industry. I think we mentioned modernizing medicine, but they're not alone in that space. And I think while payments is key, a lot of the doctor's offices and surgical centers, they don't solely pick ModMed because of payments. They pick them for everything else they do. And I think it's going to be interesting what these health care software companies do next. A lot of them today are issuing virtual cards to these providers. Obviously, that's something that we can now support. So I think that's also interesting to see how we incorporate that to this offering. Beyond that, yeah, I think it's going to be interesting to see where everything plays out with that space, but it's one that we're very excited about. We see a lot of growth there, and there's been plenty of partners like a good modernizing medicine.

That's very helpful, Blake. Thank you. I think we're on to our last two questions from Sandeep at J.P. Morgan. Sandeep, go ahead, please.

Yeah, hi. Thanks for letting me on. My first question is... regarding through the COVID crisis, how you have onboarded customers. Do you think that your onboarding of customers through this whole last six-month period is in line better or worse than what you had expected at the beginning of the year? You clearly had a plan or a roadmap at the beginning of the year and how that has gone versus the roadmap. And then secondly, clearly, Adyen has continued to take share in the market over the past year. Could we try to understand where Adyen has taken share from? Clearly, you know, you expand, you know, you land and expand. But whenever you expand, after you've landed, whether you're taking share from the legacy banks or you're taking share from the more modern companies or you're sharing business with the very modern payment companies, we'd like to understand where your market shares are. Thank you.

Thanks Sandeep. So the first question is on the evolution of new deals we signed. Ingo, if you could answer that one. Has it been largely in line with pre-COVID times or not?

Yeah, I think it's been different. I think that's fair to say. Of course, we had a complete stop of implementations when COVID started. And I think the good news is that since then, a lot of implementations resumed. And of course, that's important to get new customers live. I think one of the reasons why we guide for the medium to long term is because we believe that the key question that we ask ourselves is, has something fundamentally changed to our company? I think that's a key question. Our answer to it is no, nothing has changed. We still believe in our medium to long-term outlook. And of course, this year is completely different than we expected. There's so many other trends, but it hasn't impacted how we look towards the future. All right.

Thank you. That's very clear. And then perhaps, Pieter, to close us off, we win share from a number of different buckets. I think we've talked about that a lot over the past few years. Has that evolved at all since our IPO, for example?

I think there are three buckets that we typically see that we gain from, which can be a domestic player that the company outgrows. It can be the banks. Sometimes we replace in a single country multiple banks to move to us. And the third one is the older existing payments company. There's not that much competition between the newest players. So it's more gaining share from the likely large players, the likely suspects.

So the pie is growing. That's very clear. Thank you. My Q&A prompt is empty and my heart is full. So I think, well, before I say goodbye, I want to give a really big shout out to the team that made this possible. Of all the virtual Capital Markets Days I've ever attended, this is by far my favorite. Really, really good job. I think this is quite the production. So thank you to everyone who's worked on this. And I don't know if we can do one of those cool panning shots where we see the whole room here or see all the people on the screen. But I'll just talk a bit while. Yeah, there we go. I think from all of us, thank you very much for joining. We hope that next time we can all be together again in the same room. But if not, I think this worked quite well. If you have any remaining questions, our IR team is always at your disposal at IR at adyen.com. And now for me and everyone here and everyone on the screen. Thank you and good night.