Josh Masser: Good afternoon, everyone, and thank you for joining Adyen's H2 2024 Earnings Call. My name is Josh Masser, and I'm Head of Investor Relations here at Adyen. I'm pleased to be joined today by our Co-CEO, Ingo; and CFO, Ethan. For today's call, we'll start with a short discussion on our business progress and financial highlights from the period, before opening the floor for Q&A. [Operator Instructions] Okay.

So, let's get started. Ingo, how do you look back on the last year?

Ingo Uytdehaage: Yes. I look back at a very strong year. We continue to invest in our financial technology, that is a strategic enabler for our customers and that is very important to us as a company. We invested in products, like uplift and Intelligent Payment Routing, and those products balance cost conversion and fraud.

And these are the topics that we discuss on a daily basis with our customers. What I'm very proud of is that we continue to deliver on our promise to be a subscription to innovation. Because it's not these two products that we delivered in the past half year, it's also how we launched SFO1, which is a terminal that helps retail customers to optimize their customer journeys. These investments help us to increase the share of wallet with our customers. It's an important part of our growth strategy, and I think that's also clearly reflected in the numbers that we posted this half-year.

Josh Masser: Thanks for that summary, Ingo. It's really great to see that we've proven that payments can be a strategic enabler. Ethan, maybe you can shed some more light into how that played out in our numbers?

Ethan Tandowsky: Sure. I think, ultimately, delivering for our customers is also visible in our numbers, as in the second-half, we were able to grow net revenues to close to €1.1 billion, or 22% growth for the period, that's ultimately mostly driven by growing with our existing customer base. And the biggest part of that is gaining share of wallet within them.

If you look at EBITDA margins, if you combine that strong net revenue growth with a year where we did less hiring than the years before, you see that EBITDA margins expanded to 53% in the second-half of the year and just under 50% for the full year. Looking back on this period of growing with our customers and growing our business, I'm really proud of both being able to deliver for them today, but also making investments for the long term.

Josh Masser: Thanks for that summary, Ethan. Ingo, coming back to you, you talked a bit about unlocking value for our customers, which is certainly a key draw for Adyen globally. Can you go into a bit more detail on some of our product investments and how they're helping our customers?

Ingo Uytdehaage: Yes, absolutely.

So, if you look at our product investments, like the Intelligent Payment Routing or Uplift, I think that's all based on a foundation of being a single platform. And being a single platform helps us to have more data. If you just realize that over the past year, we processed over €1 trillion of volume, that all gives new data-points to make better decisions. And that's also how we, for instance, developed Payment Routing for use debits. 20 customers piloted with this product.

It resulted in 26% less cost and 22 base points of increased conversion. And that combination makes it very special. Over the past couple of months, we have seen that the number of merchants using this has doubled, and this is, I think, a very strong proof-point that it helps us to increase our share of wallet. So, ultimately, it all comes back to the single platform and the investment in the single platform that help us to basically have a compounding effect of all the investments. And I think it's reflected in a way how customers appreciate us.

If you look at, for instance, net promoter score over the past half-year, it's at a all-time high, 66. And, of course, that's the result of hard work of our team, and I'm very proud of this.

Josh Masser: Yes. Thanks, Ingo. It's really exciting to see that our platform intelligence is really compounding at this scale and it's also being recognized by our customers.

Ethan, one of the things that sets us apart is what Ingo earlier referred to as our subscription to innovation. In other words, our commitment to delivering the best technology for our customers' continued advancement. What is also important is to ensure that we deliver today reliably and at scale. Can you maybe give us an example of how we delivered on that this half?

Ethan Tandowsky: Yes, sure. So, indeed, combining that subscription to innovation with our ability to provide reliability at scale is something that is really important to many of our customers, and is personified, I think, especially in the second-half around the Black Friday and Cyber Monday weekend, where, for many of our customers, this is a make or break sales period for them.

Of course, we've been focused on large enterprise businesses as long as Adyen has been around, and we're built for scale in that way. That's also the power of our single global platform. But ultimately, it's tested in this weekend, because to give a proof-point, you -- we processed around 160,000 transactions per minute, right? And so, when our customers think about what partners are there and available to help them through such an important moment, we are the ones they look to, to support them in doing that. And we do that not only with reliability at its core, but also combining that with all of the value propositions that we've talked about previously around conversion and cost savings, et cetera. So, I think it's a really nice proof-point about how we can deliver for our customers, especially when they need us most.

Josh Masser: Yes. It's very impressive and clearly a great case-study of what the platform is capable of. Moving to the pillars. Ingo, can you maybe give some examples of our pillar strategy and how we furthered that this half?

Ingo Uytdehaage: Yes, sure, absolutely. So, I'd like to take three examples of our customers that have grown with us over the past half year.

And to start with digital, where we have Adobe, who is a long-time customer of ours, and that continue to expand their share of wallet with us. So, they -- their geographical expansion helped us to get more volumes. And the key reason why digital customers select us is because we are innovating. The examples that I just mentioned, like Uplift and Intelligent Payments Routing, these are reasons why they are sending us more volume in this pillar. The second example is a unified commerce.

Motel One is a customer of ours, that is beyond retail. So, we're not just focusing on the retail vertical, but this is hospitality. And they selected us to help them to improve their insights, but also their customer loyalty. And I think it is very key that with this unified commerce strategy that we have, that we are in the best position to help customers also in the hospitality space. The third example is Spendesk.

And Spendesk is a platform merchant of ours. And together, we basically unlock payments and financial products for SMBs. And, of course, it's their customers, but we provide the white-label technology to them to make sure that they are successful. These three customers in the different pillars are great examples why we continue to increase our revenues in the last half-year and why we're doing that with both existing customers, but also with new ones where we bring the innovation.

Josh Masser: Yes, that is really great to see, really broad range of examples there.

And as well as our pillar strategy, of course, we also have our regions. So, Ethan, could you please talk to the regional developments that we saw this half?

Ethan Tandowsky: Yes, happy to talk to how the regions did in the second-half. And I think it's a nice combination of, again, delivering today, but also making sure that we are investing for the long-term across many of them. So, if we start with EMEA, our largest market, where we've been for the longest time, it was our fastest growing region this half. I think it's a really strong proof-point that even in our most core market, we are still able to deliver significant growth, and this opportunity is nowhere near the end of its cycle.

If you look at North America, we, again, were able to gain market share in a strong way, and we combined that also with further investing in our team. Not only growing the team, but also investing in new office space, whether that be in San Francisco, which we moved into in the second-half, or committing to new space in Chicago. In APAC, two things are relevant, both we're making some long-term investments in some of those key markets, like Japan and India, and we're seeing encouraging signs with that. But secondly, we're also able to help our APAC customers succeed both in APAC, but also to help them expand internationally, which is a core focus of many of our customers there. And lastly on LATAM, we're seeing some acceleration not on a reported basis, but on a constant currency basis.

We're seeing that a lot of the product investments that we made over the last years in Latin America are paying-off and we're able to help grow with our customers there.

Josh Masser: Yes, nice, really great to see the continued growth and promise in our regions. We talked a bit about the team, and maybe going a bit further along that line, Ingo, when you think about the current team that we have, how do you think we can position ourselves for further success?

Ingo Uytdehaage: Yes. So, if you take a longer term view, like in 2022, 2023, we significantly expanded our team, so we almost doubled the Company in size from a team perspective. And in '24, we willfully choose to hire less people and focus a lot on making sure that the people that we onboarded years before were very effective.

So, we also made sure that the team leads had time to actually do this. Going forward for '25, we will continue to invest in the markets that are relevant to us. So, North America will be a core of our growth strategy, both commercially and on the engineering side, where we will make additional investments. And we think that for '25, we will hire more people than we have done in '24. But at the same time, if you look at margins, that our margin will continue to expand.

It will not expand at the level that you have seen from '23 to '24, but still we expect that we will continue the path that we're on.

Josh Masser: Great. Thanks. It's clear we're going to continue to invest in the team, but still delivering some margin expansion as well. On the topic of the outlook, Ethan, how do you see 2025?

Ethan Tandowsky: Yes, sure.

So, if we start with net revenue, which is, of course, as a management team, where we spend most of our attention, then if you think about how we've been talking about it over the last year, it's been that we expect low-20s to high-20s growth annually between 2024 and 2026. We also expect it to start at the lower end of the range in '24, with some acceleration in the years after. Well, so far, that is what we've seen, even with some acceleration already in '24 compared to '23, growing from 22% growth annually to 23% this past year. We expect that acceleration to continue. So, we expect slight acceleration in 2025 on an annual basis.

Ingo mentioned how we expect EBITDA to develop, which is indeed that we expect some expansion of our EBITDA margins in '25, but not at the same rate as we expanded them in 2024. And in terms of how we plan to also share updates on how we're making progress during 2025, we committed to doing quarterly updates over the last year and we'll commit again to doing that throughout 2025. If I think about our position now and I look ahead, I'm really, really excited for the opportunity, not only to help continue to grow with our customers, but also to make the investments that will help us grow significantly over the long-term.

Josh Masser: That's clear. Thanks, Ethan, and thanks both for the time so far.

A -

Josh Masser: [Operator Instructions] The first question comes from the line of Adam Wood from Morgan Stanley. Adam, please go ahead and unmute yourself to ask your question.

Adam Wood: Hi, Ingo, Ethan, Josh. Thanks very much for taking the question. I appreciate it, and congrats on a strong end to the year.

Maybe if I just focus in on the U.S. market for a second. We've obviously seen a big competitor in the U.S. focus more on value rather than price. Could you maybe just give us a little bit of an idea of the impact that's had and how you see the pricing more broadly in the U.S.? And then, just as a follow-up on the debit routing, you flagged how important that is.

It's hard to break-out the underlying performance in the fourth quarter. But maybe ex-that, one big customer, could you say whether that's helping to drive an acceleration in U.S. digital volumes and how do you see the competition versus you on being able to deliver on those alternative debit routes? Thank you.

Josh Masser: Thanks, Adam. Ethan, do you want to take the first one, and then we'll come to you, Ingo, for the second one?

Ethan Tandowsky: Sure.

I think our strategy, in general, has been quite consistent in that we focused on delivering value to our customers. That is one approach. There is also another approach, which is, to try to compete on cost. I think competing on cost will exist in this market. It has existed in this market and will continue to be that way.

But we've very, very much focused on how do we deliver value. And we are gaining market share, right? You referenced the U.S., we're gaining market share there. We're winning from a number of different competitors, a lot of competitors that are focused on cost as well. So, it has some impact, but it's also a trend that we've been seeing over a longer period of time, as we've gained market share in that market.

Josh Masser: Thanks, Ethan.

Ingo, on U.S. debit and the differentiation?

Ingo Uytdehaage: Yes, it is very important to have differentiation in our products. U.S. debit is an example. The other example, of course, is what we do around Uplift.

In the digital pillar, these products are essential to increase our share of wallet, so that's why we're heavily investing in it. I think it's a clear example why payments is not a commodity, why the added value that we bring is appreciated, and why we continue to increase our share of wallet, so -- in the fourth quarter of this year.

Josh Masser: Thanks, Adam. The next question comes from Justin Forsythe from UBS. Justin, please go ahead and unmute yourself to ask your question.

Justin Forsythe: Awesome. Thank you very, very much, Ingo, Ethan and Josh. Sorry, I'm just hearing myself background echo a little bit. But I have two questions on embedded finance. So, question number one.

As you win more and more platforms and think about the adoption of EFS solutions, it seems like in reality there's two components, right? There's whether the software platforms you're partnering with are making offers to their end merchants, or actually those platforms gaining -- requiring themselves to gain more share, say, across Europe or the U.S. The BCG survey that you guys put out seem to suggest that there is demand from the merchant side for embedded solutions. So, what does it take to meet that demand as we move forward? And then, second question is I want to hit a number that you put out in the release which was issuing growth of volumes, I believe of 258%. Does that put you close to €1 billion annualized in volume? And would you say the main use case is expense management, or is there something else there? Thank you very much.

Josh Masser: Thanks, Justin.

Ingo, do you want to take the one on in general -- on our general embedded finance strategy, and then we'll come to you, Ethan, for issuing.

Ingo Uytdehaage: Yes. So, thank you for the question. On embedded financial products, I think our strategy is to grow with our platforms. Indeed, a lot of SaaS platforms have joined us on our platform.

Current number of platforms, doing already more than €1 billion of payments volume, is already 28 and that's the starting point. Then, on top of that, of course, we need to onboard a lot of sub-sellers also. There, you see significant growth in 2024. We're over 150k of sub-sellers. And they -- that combination of more platforms and more sub-sellers will create a situation where we can also upsell the financial products.

So, that's the strategy here. This is also why we publish those numbers, to give you better visibility on how we're executing on this plan, and we are very pleased what we have seen so far.

Josh Masser: Thanks. Ethan, on issuing?

Ethan Tandowsky: Yes. I think, the issuing question was both about scale of issuing today and about the use cases.

First, on scale, I think, you generally get it in the right type of ballpark, right? You mentioned €1 billion. Something like that is more the scale on the issuing side. If you compare that to what we're doing on the acquiring side, where we did well over €1 trillion in payments volume during 2024, then you see the difference in scale. What's important for us is that while it's still small, we see really strong traction. And to your other point around use cases, we see that traction in expense management.

That's one of the big areas that we're going after within issuing and where we see good traction as well as also in the OTA space where virtual cards are more relevant. Those are a few of the early use cases that we're currently working together on with our customers.

Josh Masser: Thanks, Justin. Next question comes from Mohammed Moawalla from Goldman Sachs. Mo, please go ahead and mute yourself to ask your question.

Mohammed Moawalla: Great. Thank you, Josh. Hi, Ingo. Hi, Ethan. And congrats on the performance in Q4 as well.

I had two, if I may. Number one, as we think of the kind of cadence of the growth and this acceleration to your mid-term plan, can you sort of perhaps again tell us kind of some of these key levers? Obviously, land and expand has always been the biggest piece, but as you've obviously expanded the team, sales productivity kind of kicks in, but also wins from prior years start to contribute. So, how should you think of that sort of cadence of the growth and the importance of the different levers? And then, secondly, you, obviously, clearly, gaining market share in all regions. The Europe number is obviously particularly impressive. I know that in North America, there was a big focus on selling on value, so perhaps you could update us on that.

But also, Ingo, you called-out the innovation a lot. Obviously, Uplift and debit routing are important products, but how should we think about kind of customers now upgrading kind of the quality of their technology offerings? And how does that change your position in the kind of the sales cycle or the competitive landscape? Thank you.

Josh Masser: Thanks, Mo. So, first one, Ethan, on the building blocks for 2025.

Ethan Tandowsky: Yes, sure.

So, similar to what we saw during 2024, share of wallet growth with our existing customers is also what we expect to be the biggest part of our growth in 2025. And that's also where we expect to see some acceleration. I think the areas that I would highlight are across each of the pillars, I think, which is the positive sign. Within digital, that's more around content and subscription delivery and mobility, as we've called out previously. Within unified commerce, we see that while retail remains really core to us within unified commerce, we've also been expanding to areas like hospitality, food and beverage.

And so, areas outside of retail will also continue to be a driver of our growth in unified commerce. And then, the platform pillar is our fastest growing pillar. And each period, it gets to be a bigger part of our overall business. So, it will continue to contribute more and more over time. In terms of the cadence of that growth, our growth isn't linear, especially not on a quarter-by-quarter basis.

I think 2024 was a good example of that, where we did 21% in Q1, 26%, 20% and then 23%, if you follow each of the quarters. And it's much more about the underlying trends that we see, and that's why we very much look at it on an annual basis where we expect slight acceleration. Maybe to touch on your last point, which was around how new sales was developing, we see strong signs. Indeed, we've invested a lot over 2022 and 2023. We're still making investments, especially in the commercial teams and we'll continue to do that, but the traction we see there is strong.

They are -- new team members are able to deliver how previous team members had done at the same time in their tenure. And I think that is a strong signal that not only can we absorb them into the teams, but also our ability to go after more and more verticals as payments becomes more strategic to them, is also very visibly there. And so, that will also play-out over the coming years, although at a smaller rate than growing with our existing customers.

Josh Masser: Thank you, Ethan. Ingo, on gaining market share, North America with the value proposition, selling on value and the innovation.

Can you maybe give us some updates on how that's all progressing?

Ingo Uytdehaage: Yes, sure. So, I think if you look at our North American proposition, of course, there have been discussions around, like, is North America payments markets completely commoditized? Is there really a right to play for you there? These products show or demonstrate that there is a right to play, like, we clearly see that the value proposition that we bring to our customers is bringing us in a position where we gain market share. And that's been our consistent story over time. That's also why North America is the second largest market in our portfolio. We're committed to further invest going forward, and I think it's a very clear point that we are in an excellent position to further drive market share there.

Josh Masser: Clear. Thanks, Mo. The next question comes from Harshita Rawat from Bernstein. Harshita, please go ahead and ask your question.

Harshita Rawat: Hi.

Thank you. Ingo, I want to follow-up on Adyen Uplift. Very exciting new product launch and impressive conversion Uplift that you kind of shared. Can you expand upon this? Are there kind of specific regions? You talked about North America verticals where this can resonate more. What are you hearing from your customers? And then, Ethan, just a follow-up on the large customer in digital.

Looks like the volumes have rolled-off completely. Is there still kind of some sequential headwind we should expect for our modeling purposes? Thank you.

Josh Masser: Thanks, Harshita. Ingo, should we start with your question?

Ingo Uytdehaage: Yes, sure, absolutely. So, indeed, for Uplift, the customers that adopt this are the enterprise merchants specifically in digital, that's where you have high volumes and where the data really help us to get to this higher conversion in combination with lower fraud.

So, that's where we see this traction. It's relatively new product. Of course, we had risk products before, but this is a new AI-powered effort to get traction on this side.

Josh Masser: Great. Thanks.

And Ethan, on the large customer in digital?

Ethan Tandowsky: Yes, sure. Indeed, on the large digital customer, we saw that volumes slowed down throughout the course of H2. So, both in Q3 and Q4, there were volumes. By the end of 2024, there are no volumes still. So, you shouldn't expect to see volumes throughout 2025.

So, of course, that will take a few quarters to play-out in terms of growth rates, but that's ultimately what you should expect there, and, of course, much less impact on net revenue basis.

Josh Masser: Thanks, Harshita. The next question comes from Hannes Leitner from Jefferies. Hannes, please go ahead and ask your question.

Hannes Leitner: Yes, thanks for letting me on.

Couple of questions in -- you mentioned already on the net revenue growth on the different growth drivers you have, but maybe you can drill a little bit into the different pillars and the regional split. I think the North America slowed a little bit, but that could be -- that this was related by your exposure to eBay and Cash App. Then, the second question is in-store TPV maintained quite a strong momentum. Maybe you can talk there about it. How much of this is from existing customer pre-pandemic, expanding the business and how much of that is the ramp post-pandemic given the pandemic had been quite decisive in driver for unified commerce?

Josh Masser: Thanks, Hannes.

Ethan, maybe both of you, starting with the net revenue growth split.

Ethan Tandowsky: Yes. You highlighted a couple of angles. One is, the pillars. If you think about that from a regional perspective, the only one that I'd really highlight separately is that platforms is very relevant in EMEA and in North America, less so beneficial in LATAM and in APAC to our net revenue numbers.

In terms of North America and its growth, I think the important part here is that the underlying trend is that we're gaining market share in a significant way. It's a really important focus market for us. We're continuing to invest there. And yes, if you take North America, it's about 25%, 30% of the business. So, any time you cut our overall net revenues into smaller parts, you get to more concentration.

But the general trend is that we are gaining market share there and we believe it will continue to be a growth market for us in the coming years. So, we're continuing to invest there.

Josh Masser: Nice. Thanks. And then, the second one on in-store TPV, so the momentum that we're seeing there, how much is from the existing customers and ramp of new customers?

Ethan Tandowsky: Yes.

I think the general trend in unified commerce is that more and more verticals are looking at unified commerce or as -- payments as a strategic enabler, right? So, they're seeing the benefits of bringing their online and their in-store transactions together in one system. And we see that, because I would say, pre-pandemic, we were mostly focused on retail within unified commerce. And, of course, we're very much still focused on retail, there's a lot of markets still to win in that space. But we've also been growing outside of retail, in hospitality, in food and beverage, as I mentioned earlier. And that's been a big driver of our growth over the last year as well.

So, it's a combination. It's adding new logos, of course, but it's also continuing to grow with our existing base. And maybe one last data point that I can give on it. If you combine basically the in-person payments in unified commerce with the in-person payments in platforms, which is also important value driver for us in platforms, we see that we did over 20% in-person in the second-half, which is quite an acceleration from where we were last year. So, this is really something that is resonating with our customers, bringing these online and in-person transactions together.

Josh Masser: Thanks. Thanks, Hannes. The next question comes from Fred Boulan from Bank of America. Fred, please go ahead to unmute yourself and ask your question.

Fred Boulan: Yes.

Hi. Thank you, Josh. And hi, Ingo, Ethan. Quick question for me in terms of opportunities on the five year view in terms of regions. So, EMEA, an impressive growth considering how mature that business is or that region is for you guys.

But if you look at some other regions beyond the EMEA and the U.S., any specific areas you want to call out? I mean, I think, you talked about Japan and India in the past. Any progress here of note? And then, as a short follow-up, you can update us on your use of cash policy or any commentary you can share around that? Thank you.

Josh Masser: Thanks, Fred. Ingo, do you want to take the first one on the longer-term opportunity, and then Ethan will come to you on the cash use policy?

Ingo Uytdehaage: Sure. Longer-term opportunity, indeed, like EMEA and North America are really well-positioned for basically our growth in the next couple of years.

I think the fact that we have strong traction in all three pillars, so digital, unified commerce and platforms, is the reason why you see the strong growth in both EMEA and North America. But longer-term and specifically for Japan and India, that's more like a five year plan or at least a five year plan. That's also what we've seen in the past with markets like North America. It takes a couple of years to really build it out to make sure that we have the traction in the local market. The initial response in both markets is very positive.

So, this is the five-year gameplay. And we do everything we can to accelerate this, of course, and apply the lessons that we have learn from other implementations. But it's going to take time to see massive volumes in these regions.

Josh Masser: Thanks. Ethan, on capital allocation?

Ethan Tandowsky: Sure.

Yes. On capital allocation, nothing has really changed here over the last six months. I think we continue not to have M&A. It's a core part of our strategy. We're very much focused on growing this business, growing that with the team that we have and the products that we're rolling out.

At the same time, we see a lot of advantage to having a very strong balance sheet, as we're trying to roll-out our financial product suite. The confidence that our customers have in us as a partner to help them roll-out these types of products is really key in ultimately being able to get these -- yes, growing it and becoming a much more significant part of our overall business. So, we still see that as the best use of cash today.

Josh Masser: It's clear. Thanks, Fred.

The next question comes from Darrin Peller from Wolfe Research. Darrin, please go ahead, unmute yourself and then ask your question.

Darrin Peller: Thanks, guys. Good results. I just want to touch on, unified commerce again continues to accelerate.

We're seeing an increasing mix of POS process volumes. Maybe just touch on what's resonating, how much of the TCO, the total cost of ownership, efforts are really resonating there as well as online? Maybe just compare and contrast, because it obviously seems like there's something that's helping you win share there? And then, maybe quickly as a follow-up on the hiring side. Look, the plan was helpful, the commentary was helpful in terms of what you talked about being a little more this year, but maybe just a bit more granularity on where in the business the hiring is occurring and maybe how it compares to, I think, it was around 150 FTEs added in '24? Thanks, guys.

Josh Masser: Thanks, Darrin. Ingo, do you want to take the one on the value prop in UC, and then, Ethan can come to you on the hiring.

Ingo Uytdehaage: Sure. So, indeed, for unified commerce, the key reason why customers work with us is indeed how we can help them to improve customer journeys. And if you improve those customer journeys, that, of course, helps with conversion, but also with total cost of ownership. We try to be -- to explain this also in the KPIs that we show. So, what are the UC customers that are active in multiple geographies, because I think that's a strong indicator how you can lower your total cost of ownership by working with a single supplier over multiple geographies, but it's indeed also over the channels.

Like, if you have multiple channels and you can drive payments cost, because you -- down, because you have more volume, that's another reason why we're winning here. So, those KPIs are important to track. That's also what we do internally.

Josh Masser: Thanks. Ethan, on the hiring?

Ethan Tandowsky: Yes, sure.

So, I think, generally, you can think about our hiring in two main areas, in the more commercial area, where account management, for instance, is our biggest part of our commercial team. So, that's where we would expect the most of the hiring from a commercial perspective to happen. At the same time,, we're also adding to our sales teams, and building those out as well. So, that's one part. And then, of course, we also hire within our tech and operations areas, and I think that's, in general, there to make sure that we're delivering continued innovation, of course, for our customers.

And we see the opportunity to do that across multiple product areas, but also across geographies, across pillars. What I find really important is that we make the investments now, that will allow for us to grow net revenue over a longer period of time. And we're quite confident that doing that throughout this year will help us be positioned to deliver.

Josh Masser: Thanks, Darrin. The next question comes from Sandeep Deshpande from JPMorgan.

Sandeep, please go ahead and ask your question.

Sandeep Deshpande: Yes, hi. Thanks for letting me on. Quick question for me. On your growth in Europe versus the U.S., I mean, is the growth in Europe coming from some new businesses that are ramping up with Adyen at this point, or is it just ongoing footprint gains in Europe that you've seen over the last few years, or is there some new verticals that are ramping up in Europe, given that you are essentially, the market -- one of the market leaders in Europe in this market? And then, my second question is regarding new verticals itself again.

I mean, you entered quick service restaurants a few years ago, before that marketplaces, et cetera. So, are there any new verticals that Adyen is targeting at this point? You had, in an earlier conference call, talked about grocery and your expansion into a Finnish grocery chain. So, have you seen any further traction there and are there any other such verticals you're looking at? Thank you.

Josh Masser: Thanks, Sandeep. Ethan, maybe you can take both of these.

So, on the growth in Europe, where is it coming from?

Ethan Tandowsky: Yes, it is -- it's a combination. Of course, the bulk in any year is going to come from existing customers. I think the Zalando example is a great example of a customer that we've worked with for a long time, but have expanded the relationship throughout the course of this year. At the same time, it's also adding new customers. And I mentioned earlier that in EMEA, we benefit not only from working with digital customers, but also unified commerce has a lot of complexity throughout Europe given the fragmentation as well as platforms is very much in scope of our offering within Europe.

And so, that combination means that we have still a major opportunity ahead of us to not only grow in 2024 in EMEA, but also to grow significantly in the years ahead. So, it's a combination of, I think, all of the things that we've been talking about over the last periods.

Josh Masser: Yes. And then, more generally, on the verticals and anything new that we're targeting?

Ethan Tandowsky: Yes. So, I think we highlighted a couple in unified commerce.

I think I would also highlight insurance is a vertical that we've also been working together with, and healthcare within platforms, for instance. So, those are a couple that we highlighted also in the shareholder letter, where we're winning new customers, but also we've had customers for a number of years that we're also expanding with, but we're seeing real traction in a few of these verticals as well.

Josh Masser: Clear. Thanks, Sandeep. The next question is from Josh Levin from Autonomous.

Josh, please go ahead and ask your question.

Josh Levin: Hi, good afternoon. Two questions for me. First, can you talk about other services revenue, that grew quite a bit, what's driving that growth? And do you think that kind of growth will continue? And then, just to follow-up on the cash question, you have an A- rating from S&P. As you think about having a strong balance sheet to signal to clients and potential clients that you have the strength, do you view A- as the lowest rating you can have, or would you be willing to possibly go lower? Is that -- should we think of A- as a constraint? Thank you.

Josh Masser: Thanks, Josh. Ethan, both of you.

Ethan Tandowsky: Yes. Sure. So, I think, the way to think about the way we break-out our revenues is that, our business is enterprise focused, which means that for the most part, our pricing is bespoke.

We agree individual pricing with individual customers, depending on what products they'd like to leverage, what volumes they can work with us on, what types of markets they're in, and ultimately, based on that assessment, we come up with a pricing proposal that fits both of our needs. And it's much less driven by how we separate fees between processing and acquiring or other services, we look at it more on a customer basis. And so, I would read less into which lines are moving in which direction, we focus much more on overall net revenue growth. Now within other services, just to add, there is -- the biggest part is FX, but it has a number of other areas, like, some terminal fees. It has issuing, for instance, in there, although that's a much smaller piece.

Those are the biggest components of it. And so, if you think especially about FX services, that is something that typically grows in line with our volumes as we expand with our customers. Then, on the question around the balance sheet and the A- rating, I think, if you think about most treasury policies, they typically want to work with banks who they see as providing financial services, who have at least an A- rating. And so, yes, I think the strength of that rating is supportive to us expanding in financial products. And that is what we would really like to maintain and can maintain with this policy to make sure that we accelerate like we know we can.

Josh Masser: Thanks, Josh. The next question comes from Pavan Daswani from Citi. Pavan, please go ahead and ask your question.

Pavan Daswani: Yes. Thanks, Josh, Ingo, Ethan.

I've got a couple of questions. Firstly, the EBITDA margins are already pretty close to your 2026 targets and you've obviously said that it'll accelerate in 2025. Should we expect any big step-up of hiring or investments over the next couple of years? And then, secondly, following up from an earlier question on the competitive dynamics, you talked about the value that you bring versus competitors that are trying to compete on price. But could you maybe touch on the advantages to having everything in-house versus a more unbundled approach?

Josh Masser: Thanks, Pavan. Ethan, first one for you on EBITDA.

Ethan Tandowsky: Yes, sure. So, I think if we look to '25 compared to '24, we do expect a step-up in hiring, but again we don't expect the team to grow faster than the business. That's why we do expect operating leverage still to be visible in '25. Just less expensive than we saw between '23 and '24.

Josh Masser: Clear.

And then, on the competitive dynamics and our approach to having everything in-house, Ingo?

Ingo Uytdehaage: Yes. So, indeed, for the approach to have everything in-house, that helps us with the single platform to get more data. With more data, we can create better insights, make better risk decisions. And that's why we strongly believe in this approach. It's the value that we bring to our customers, having this data, building products around it, and by doing that, ultimately, getting to the best conversion at the lowest cost.

Josh Masser: It's clear. Thanks, Pavan. The next question is from Sven Merkt from Barclays. Sven, please go ahead and ask your question.

Sven Merkt: Great.

Thank you. Just a follow-up question on issuing. Can you provide us a bit more color, what drove the strength there? Was this primarily from a single or few customers, or was it a bit more broad based? And then, secondly, can you comment a bit on your pipeline of large enterprise unified commerce deals? You won a number of high profile customers during 2024. And I'm curious whether you expect to see a further acceleration wins in 2025 on the back of your investments? Thank you.

Josh Masser: Thanks, Sven.

Ethan, maybe we'll come to you first, and then, Ingo, we can come to you on the pipeline. So, Ethan, on issuing?

Ethan Tandowsky: Yes. So, the question is, is it broad based or is it more concentrated? I think at this scale, it's certainly more concentrated. It doesn't mean it's down to one customer or two customers, but it's certainly much more concentrated than, for instance, our growth on the acquiring side. I think we see a range of opportunities to deliver a strong solution within issuing.

But still, at this point, given the volumes we have today, it is more concentrated, absolutely.

Josh Masser: Thanks. And then, Ingo, on the pipeline of big unified commerce deals?

Ingo Uytdehaage: Yes. So, if you look at, in general, the pipeline, we feel very comfortable how the pipeline is progressing. Of course, if you think about acceleration, that's not just coming from new sales deals, but also from growth from existing customers.

That's still where the majority of our growth comes from. But indeed, for unified Commerce, we are very pleased with the development of our pipeline and the opportunities that we see going forward.

Josh Masser: Clear. Thanks, Sven. The next question comes from the line of Andrew Bauch from Wells Fargo.

Andrew, please go ahead and ask your question.

Andrew Bauch: Hi, thanks for taking the question. I just want to, Ingo, maybe if you could start with how would you characterize the competitive environment and platforms relative to, say, digital? Are you taking share from the same players that you are in digital? And is the pricing environment similar to what -- or as intense as you see in digital? And then, I guess for Ethan, you talked about in the past the other services being kind of the tip of the spear for success in platforms. But in your conversations today, relative to where we were last year, what are they saying, what are they kind of telling you that they'd like to adopt and use over time?

Josh Masser: Thanks. So, maybe the first question on the competitive environment in platforms and how that differs versus digital, Ingo?

Ingo Uytdehaage: Yes.

So, I think the difference between platforms and digital is quite significant. I think specifically for all the implementations around SaaS, there's also a lot of new business that we're doing. So, SaaS platforms, realizing that there is additional margin to be made with embedded payments and maybe later on also embedded financial products, so that's really a new market opportunity. And I think that's different than digital. So, also, the competition is different.

So, there's only a few competitors out there that are actually really competing on the platform side, whilst if you look at digital, there's a wide range of companies competing in this space. So, yes, it's a different competitive dynamic than digital.

Josh Masser: Clear. And then, Ethan, on the conversations that we're having with customers around the services they would like?

Ethan Tandowsky: Yes. We talked about issuing in capital being the biggest opportunities we see, and I think that remains to be the case in talking to customers.

Bank accounts is a really nice way to connect the products to make sure that acquiring and issuing or acquiring capital are well connected as products. But I think the biggest opportunities that our customers see and therefore that we also see are in issuing in capital.

Josh Masser: Clear. Thanks, Andrew. The next question comes in the line of Sanjay Sakhrani from KBW.

Sanjay, please go ahead and ask your question.

Sanjay Sakhrani: Thank you. I want to go back to the issuing growth. I'm just curious and you guys kind of touched on it a little bit. But if we're hitting a tipping point from a distribution and momentum standpoint where we can actually see this type of growth sustain itself and -- or maybe even accelerate because you have these different channels available to you to sell that profit.

And then, second question, Ethan, just some modeling stuff. When we look at sort of the net revenue growth outlook for 2025, is there any difference in the cadence, first-half versus second-half, because I do think you have tougher comps in the first-half? Just curious on that. And then, just on employee growth, like, is there any difference in sort of the cost per employee complexion in 2025 versus 2024? Thank you.

Josh Masser: Thanks, Sanjay. So, maybe starting with the first one, Ethan, on issuing growth, and if we're hitting an inflection point?

Ethan Tandowsky: Yes, I think, we have strong momentum there.

In the end, still, we are at a small base. So, even significant growth from here will not have a material impact, for instance, in 2025. But we absolutely have strong traction, and I think that's the -- what we've always felt confident about getting to. But I think we are in a good moment where we not only have customers across use cases, but we also have them scaling their offering with us. And so, yes, I think we're absolutely excited about the traction that we've seen so far, the momentum we have.

But it's still going to take time until it's really financially meaningful in the numbers.

Josh Masser: Yes, thanks. And second one on the cadence of growth through the year?

Ethan Tandowsky: Yes. I think, I'd just again highlight a bit how we've -- our growth developed through 2024, if you look across quarters. There will be -- it won't be a linear growth path again in '25, but I think absolutely the underlying trends that we're seeing where we are gaining share of wallet at a faster rate with our existing customers.

We have been adding new logos. We'll continue to do so. I think that underlying trend of acceleration that we saw already in '24 compared to 2023, we expect to continue into 2025. I wouldn't highlight anything specifically that I'd already call-out from a half to a half perspective. And then, in terms of employee cost.

Yes, again, also wouldn't highlight anything major here. We're also not doubling the team or doing anything of that type of extent where that would become very visible in our numbers. We are going to have a step-up from our hiring this year, but it's not going to be growth faster than the team did, so -- or faster than the revenues will grow. So, it ultimately won't have a major impact on our cost structure or our margins.

Josh Masser: Clear.

Thanks, Sanjay. The next question comes from the line of Antonin Baudry from HSBC. Antonin, please go ahead and ask your question.

Antonin Baudry: Yes, thank you very much and thank you to taking my question. Just a question on the regions you cover, the reason of revenue growth appears different from a region to another between Europe, the U.S., Asia and LATAM.

Will it possible to know what make regions different, especially between Europe and the U.S., that continue to grow at a strong pace and Asia, LATAM at a lower pace? What makes the difference of performance between regions, is it competitive landscape, is it offers that you bring into this region?

Josh Masser: Thanks. Ethan?

Ethan Tandowsky: Yes. I think maybe I would focus it on -- there's a couple of angles which I think are relevant. One is the fragmentation in a market. I think EMEA and APAC are much more fragmented than, for instance, North America or Latin America.

I think that's one difference that we see. But it's also how international are the customers we work with, right? I called out, for instance, in APAC, that we work with a lot of international customers in APAC who also wanted to grow with us outside of APAC. And so, maybe, they grew in Europe, or they grew in LATAM, or they grew in North America. And so, that part of that growth is also represented in other regions. And so, I think those are maybe the two things I'd highlight, the difference in how fragmented the various markets are, but also how international the business is coming from those markets are focused.

Ingo Uytdehaage: And if I may add, like, one other element, of course, is also that in EMEA, North America, we have our full offering. So, all the three pillars, unified commerce, digital and platforms, whilst in APAC and LATAM, that's less the case, we're still developing this.

Josh Masser: Yes. That's clear. Thanks, Antonin.

The next question comes from Harrison Vivas from TD Cowen. Harrison, please go ahead and ask your question.

Harrison Vivas: Great. Thanks so much for taking the questions. First one, just on the regulatory environment, Uplift, Intelligent Routing, U.S.

debit, they were all called out as benefiting from the regulatory environment. So, just curious on your outlook on the current regulatory environment, how that might be shaping the product pipeline as we see it today and any potential opportunity? And then, your second question on embedded finance, interest income, just, obviously, really strong sequential growth there. So, how should we think about the scaling of interest income within embedded finance? And are there any particular verticals that are adopting or embedded finance products? Thanks very much.

Josh Masser: Thanks. Ingo, maybe we'll start with you on the regulatory environment.

Ingo Uytdehaage: Yes, sure. Yes, so the regulatory environment is always -- we see it as an opportunity. Like, ultimately, this Company is about building great technology, selling it with the best commercial team, but also having the best regulatory knowledge and making sure that if regulatory environment changes, that we adjust to it and build products that take friction out of the equation for a lot of our customers. So, indeed, if we see that there is a change, and I could assure you that the regulatory environment globally is pretty complex. If there is any change in that environment, that we try to adjust our product to it and make sure that's relevant to our customers.

So, we see it as an opportunity and not as a threat.

Josh Masser: Clear. And then, Ethan on the scaling of net interest income?

Ethan Tandowsky: Yes. I think important to mention on net interest income is that it includes interest on bank accounts that we provide to our customers, but it also includes interest on our capital product. It doesn't include, for instance, issuing fees which we earn, between those two so bank accounts and capital.

Currently, we see that the bulk of our net interest income is coming from our bank accounts offering, which is big in the digital type of marketplace space, especially. And, yes, I think the opportunity, as I mentioned, in embedded financial products we feel is much more in capital and in issuing over the long term. But certainly, attaching bank accounts to that is what we're seeing in traction now, and helps us connect all of these products. So, it will continue to scale, but again it won't be a material driver of our growth in the next year.

Josh Masser: Clear.

Thank you. The next question comes from the line of Nicolas Herms from Deutsche Bank. Nicolas, please go ahead and ask your question. Nicolas, are you there?

Nicolas Herms: Hi. Can you hear me?

Josh Masser: Yes, hey.

Nicolas Herms: Perfect. Thank you. Thank you for letting me on. Apologies. Two questions from my side on behalf of Nooshin Nejati, for me.

First, can you please help us understand your volume mix and your expectations here with the visibility that you have today? We're trying to understand if you expect any major changes in the mix that possibly impact take rate in a similar magnitude that we saw in the past two quarters. And then, second question, following up on your hiring plans, which geos has higher priority, is it rather North America or Japan and India? Thank you.

Josh Masser: Thanks, Nicolas. Ethan, on the volume mix expectations?

Ethan Tandowsky: Yes, I think most of the volumes change -- volume changes and take rate changes thereon have been mostly driven by a large digital customer. Most of those volumes have been declining through the course of the second-half, and ultimately, we exit with no more of those volumes.

So, you should expect that, that's still visible on a year-over-year basis for the next few quarters. Other than that, there's nothing else specifically that I'd highlight in volumes. It's again not what we manage on. We manage on net revenues and we're very focused on how to continue the acceleration we've seen in 2024 in our net revenues.

Josh Masser: Thanks.

And then, Ingo, maybe on the hiring plans, which are the focus regions for you?

Ingo Uytdehaage: Yes. So, the focus regions are multiple. So, it is North America, but it's absolutely also markets like Japan and India. But of course, the base where we operate from in Japan and India is different than -- compared to the U.S. So, in North America, we expect to hire more people in absolute terms than in Japan and India, also because we strongly believe in balanced growth, not adding as much as we can in a year just to get as a team as big as possible, but also to make sure that we keep the culture that is always super important to us and that we keep the bar high when we hire new people.

So, it's finding that right balance, but both regions are important for our investments.

Josh Masser: That's clear. Thanks. And the final question for today comes from Jamie Friedman from SIG. Jamie, please go ahead and ask your question.

Jamie Friedman: Thank you. I had two questions. First for Ethan and then for Ingo. With regard to the sequential half-on-half increase in the net revenue yield, so I'm looking at the net revenue divided by the volume, you call out in the shareholder letter that, that's related to mix. I was hoping you could elaborate on that.

And if that also is a reflection of debit routing, maybe. And then, for Ingo, in terms of the -- I mean, obviously, these results speak for themselves. LATAM did decline sequentially a bit. And maybe it's apropos of your previous answer, which was that you don't have the full suite rolled-out there, but I'm just wondering about the competitive dynamic and how you're seeing LATAM? Thank you.

Josh Masser: Thanks.

Ethan, maybe on take rate?

Ethan Tandowsky: Yes. When we talk about mix, in general, related to take rate, that's mostly driven to the size of the customers that we have on the platform and how they grow over any given period. Throughout 2024, we've called out a large digital customer that has mostly been a driver, first, of more significant volume growth and now lower volume growth, if you exclude that, ultimately, the impact on net revenue is much, much smaller. We talked in H1 about that customer having approximately 1% of our net revenues in that period. So, it's not really related to product mix.

It's related to the size of the merchants on the platform at any given moment. That's the type of mix we're referencing there.

Josh Masser: Thanks. You also want to take the one on LATAM and constant currency?

Ethan Tandowsky: Yes. Sure.

Yes, so, indeed, on a reported basis, you're right. What we also shared is that on a constant currency basis, LATAM grew 12% in the second half. And we called that out because it has quite a big impact, obviously. We've been making quite a few investments, especially with our product in Brazil. And I think we feel really well positioned, which is also why we've started to see that acceleration in LATAM during the second-half on a constant currency basis.

I'd also highlight Mexico, where we had a win with Starbucks in Mexico. Of course, a great name, but also a great win for that market. We're also excited about what we can achieve in Mexico, too. So, I think we're excited about the ambitions we have in Latin America.

Josh Masser: Clear.

Thanks, Jamie. And we're out of time. So, thank you very much, everyone, for joining us this afternoon. And for any follow-up questions, please don't hesitate to reach out to the IR team here at Adyen. Thank you, and have a great day.