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Adyen NV Earnings - Analysis & Highlights for Q4 2024
Overview
PositivesNegativesOutlook
- Net revenues grew to €1.1 billion in H2, up by 22%.
- The company is committed to further invest in the market and is in an excellent position to drive market share.
- The company is well positioned for growth in EMEA and North America in the next couple of years.
- The company is gaining market share in its largest market, EMEA.
- Volumes have been declining through H2 and the company exited with no more of those volumes.
- The company saw a slowdown in volumes on the large Digital customer throughout H2.
- Margins are expected to expand.
- The company expects slight acceleration on an annual basis.
- The company is expected to continue to invest in the team and deliver margin expansion.
- The company expects to gain market share and continue to be a growth market in the coming years.
- The company expects to see declining volumes through the course of H2 and exit with no more of those volumes.
Q&A Highlights from Adyen NV Earnings Call Q4 2024
- Analyst asked about the impact of a big customer on accelerating US digital volumes and how the company is competing with other providers on alternative debit routes.
- Ethan Tandowsky stated that the company's strategy has been focused on delivering value to customers, rather than competing on cost. They have gained market share in the US and are winning from a number of different competitors.
- Ethan Tandowsky stated that the company's strategy has been focused on delivering value to customers, rather than competing on cost. They have gained market share in the US and are winning from a number of different competitors.
- Analyst asked about the differentiation of Adyen's products, specifically US debit and Uplift, and how they contribute to increasing the company's share of wallet.
- Ingo Jeroen Uytdehaage explained that the company's products, such as US debit and Uplift, are essential to increase their share of wallet. They are heavily investing in these products, and they continue to increase their share of wallet in the fourth quarter of 2024.
- Ingo Jeroen Uytdehaage explained that the company's products, such as US debit and Uplift, are essential to increase their share of wallet. They are heavily investing in these products, and they continue to increase their share of wallet in the fourth quarter of 2024.
- Analyst asked about the volume growth of issuing, specifically 258%, and if it puts the company close to €1 billion annualized in volume.
- Joshua S. Masser stated that the company's strategy is to grow their Platforms, with a current number of platforms already doing more than €1 billion of payments volume. They are also focused on onboarding sub-sellers, which has resulted in significant growth in 2024, with over 150,000 sub-sellers.
- Joshua S. Masser stated that the company's strategy is to grow their Platforms, with a current number of platforms already doing more than €1 billion of payments volume. They are also focused on onboarding sub-sellers, which has resulted in significant growth in 2024, with over 150,000 sub-sellers.
- Analyst asked about the use cases for Issuing, specifically expense management and OTA space.
- Ethan Tandowsky explained that the company sees strong traction in expense management and the OTA space, where virtual cards are more relevant. They are working together with their customers on early use cases in these areas.
- Ethan Tandowsky explained that the company sees strong traction in expense management and the OTA space, where virtual cards are more relevant. They are working together with their customers on early use cases in these areas.
- Analyst asked about the company's strategy for upgrading the quality of its technology offerings and how it affects the sales cycle and competitive landscape.
- Ethan Tandowsky explained that the company's growth will be driven by existing customers, with a focus on the Digital, Unified Commerce, and Platform pillars. He highlighted the areas of content and subscription, delivery and mobility, and hospitality, food, and beverage as drivers of growth. He also mentioned that the Platform pillar is the fastest growing and will continue to contribute more over time.
- Ethan Tandowsky explained that the company's growth will be driven by existing customers, with a focus on the Digital, Unified Commerce, and Platform pillars. He highlighted the areas of content and subscription, delivery and mobility, and hospitality, food, and beverage as drivers of growth. He also mentioned that the Platform pillar is the fastest growing and will continue to contribute more over time.
- Analyst asked about the progress of the company's value proposition in North America and its ability to gain market share.
- Ingo Jeroen Uytdehaage explained that the company's value proposition is bringing it in a position to gain market share in North America, and that it is committed to investing further in the region. He also mentioned that the company is in an excellent position to drive market share in North America.
- Ingo Jeroen Uytdehaage explained that the company's value proposition is bringing it in a position to gain market share in North America, and that it is committed to investing further in the region. He also mentioned that the company is in an excellent position to drive market share in North America.
- Analyst asked about the impact of the large customer in Digital on the company's growth rates and net revenue.
- Ethan Tandowsky explained that the large customer in Digital has seen a slowdown in volumes throughout H2, and that there are no volumes expected for 2025. He mentioned that this will have less impact on net revenue, but will take a few quarters to play out in terms of growth rates.
- Ethan Tandowsky explained that the large customer in Digital has seen a slowdown in volumes throughout H2, and that there are no volumes expected for 2025. He mentioned that this will have less impact on net revenue, but will take a few quarters to play out in terms of growth rates.
- Analyst asked about new verticals that Adyen is targeting.
- Adyen is targeting new verticals such as grocery and Unified Commerce. They are also expanding their relationships with existing customers, such as Zalando.
- Adyen is targeting new verticals such as grocery and Unified Commerce. They are also expanding their relationships with existing customers, such as Zalando.
- Analyst asked about Adyen's A- rating from S&P and whether they view it as the lowest rating they can have or if they would be willing to go lower.
- Adyen views their A- rating as a strong signal to clients and potential clients that they have the financial strength to support their business. They focus on net revenue growth rather than the specific lines of revenue, and their pricing is bespoke and based on individual customer needs. They also emphasize the importance of maintaining their A- rating to support their expansion in financial products.
- Adyen views their A- rating as a strong signal to clients and potential clients that they have the financial strength to support their business. They focus on net revenue growth rather than the specific lines of revenue, and their pricing is bespoke and based on individual customer needs. They also emphasize the importance of maintaining their A- rating to support their expansion in financial products.
- Analyst asked about the advantages of having everything in-house versus a more unbundled approach.
- Joshua S. Masser explained that having everything in-house allows Adyen to have a single platform to get more data, which helps in creating better insights and making better risk decisions. This approach also enables Adyen to build products around the data, resulting in better conversion at a lower cost.
- Joshua S. Masser explained that having everything in-house allows Adyen to have a single platform to get more data, which helps in creating better insights and making better risk decisions. This approach also enables Adyen to build products around the data, resulting in better conversion at a lower cost.
- Analyst asked about the strength of the Issuing business and whether it is broad-based or concentrated.
- Ethan Tandowsky explained that the Issuing business is more concentrated, with a range of opportunities to deliver a strong solution. He also noted that the growth on the acquiring side is more broad-based.
- Ethan Tandowsky explained that the Issuing business is more concentrated, with a range of opportunities to deliver a strong solution. He also noted that the growth on the acquiring side is more broad-based.
- Analyst asked about the pipeline of big Unified Commerce deals.
- Ingo Jeroen Uytdehaage stated that the pipeline is progressing well, and the company is pleased with the development of the opportunities in Unified Commerce.
- Ingo Jeroen Uytdehaage stated that the pipeline is progressing well, and the company is pleased with the development of the opportunities in Unified Commerce.
- Analyst asked about the competitive environment in Platforms compared to Digital, and whether the company is taking share from the same players.
- The company explained that the competitive environment in Platforms is different from Digital, with fewer competitors and a focus on new business opportunities.
- The company explained that the competitive environment in Platforms is different from Digital, with fewer competitors and a focus on new business opportunities.
- Analyst asked about the scaling of interest income within embedded finance and whether there are any particular verticals adopting embedded finance products.
- The company explained that the regulatory environment is an opportunity for the company, and that they are seeing traction in the digital marketplace space with bank accounts. They also mentioned that the bulk of their net interest income is coming from their bank accounts offering, but that they see the opportunity for growth in capital and issuing over the long term.
- The company explained that the regulatory environment is an opportunity for the company, and that they are seeing traction in the digital marketplace space with bank accounts. They also mentioned that the bulk of their net interest income is coming from their bank accounts offering, but that they see the opportunity for growth in capital and issuing over the long term.
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