Adyen proves the 'payments slump' is really a PayPal problem

The company has grown as a middleman, not aiming to compete with merchants or banks, while adding more and more services for retailers.

Pieter van der Does, chief executive of Adyen.

Adyen is a middleman and doesn’t offer a branded payments service itself or build relationships directly with end customers, which is key for large merchants that want to control that relationship.

Photo: Adyen

Payments company Adyen is growing amid the latest phase of the pandemic, avoiding some of the pandemic-related problems that have hit its competitors.

PayPal revealed it had missed earnings expectations this month and said it was pulling back its plan for growth in users and focusing on more active, higher-spending users and blamed inflation, supply chain issues and the pandemic for curbing shopping.

Adyen, meanwhile, has continued to grow, posting $342.7 billion in payment volume and $646 million in net revenue in the second half of 2021, which was up 72% and 47% year-over-year, respectively. Excluding interest, tax, depreciation and amortization, it earned $408 million for the period, up 51%. It lists customers such as eBay, Uber, Spotify and Etsy. Shares jumped 10% Wednesday on the news.

The company, which went public in 2018, has seen its shares fall this year in the tech downdraft, and is still smaller than rival PayPal, which has a market cap of around $143 billion. But Adyen’s market cap is now $69 billion, larger than Block at $64.5 billion. Stripe was last valued in private markets at close to $100 billion.

Because it handles a broad range of in-store, self-serve checkout, curbside and online payment options, Adyen could weather the pandemic and changes coming out of the pandemic, said Pieter van der Does, chief executive of Adyen.

“The strength that [merchants] know us for is that we are helping them to sell in all channels. Often they take us for point-of-sale and think it's only in years that they're going to do online — and now with COVID that’s quicker,” he said. “But the ultimate promise is that we will help them whatever comes their way.”

During the pandemic, many Adyen clients quickly moved to online or contactless curbside options — even luxury merchants who would have previously turned up their noses at such sales methods. Adyen sold new services for many existing customers while also adding new customers. (More than 80% of growth came from existing merchants and churn based on volume was less than 1%.) As a result, it wasn’t as affected by changes or drops in revenue volume of its merchants, van der Does said.

“We just get more share of the wallet,” he said. “If a merchant starts with us for one brand, and they like it, they roll it out over multiple brands or regions.” McDonald’s, for example, started in 2019 with Adyen for mobile payments in the U.K. and later expanded elsewhere.

Adyen’s take rate on transactions has declined as it has grown and added large clients, and its average transaction value has grown, the company acknowledged.

The company also has grown by expanding outside of Europe, with 40% of net revenue outside of EMEA for the first time. North America net revenues grew 74% in 2021, faster than the company overall.

Adyen also got a banking license in the U.S. last June, which has made it easier to operate and enables things like faster payouts, van der Does said.

While some of its rivals have grown through acquisitions — look at PayPal’s acquisitions of Braintree, iZettle and Paidy, or Block’s recent Afterpay deal — Adyen, founded in 2006, generally prefers not to acquire companies and believes building its own technology to meet the needs of clients provides the best products, while avoiding costly and distracting integration issues, he said.

Another key difference: Adyen is a middleman and doesn’t offer a branded payments service itself or build relationships directly with end customers, which is key for large merchants that want to control that relationship, van der Does said.

Adyen plugs into many “buy now, pay later” providers, but doesn’t provide that service itself. But it looks to offer new payment methods as soon as they’re available, he said, citing Brazil’s Pix, a new electronic payments system.

Update: This story was corrected on Feb. 10, 2022, to reflect the correct timing of PayPal’s earnings announcement.


Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

Keep ReadingShow less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Keep ReadingShow less
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

Keep ReadingShow less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

Keep ReadingShow less
Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.


Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

Keep ReadingShow less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories