Adyen has become a leading example of the success of the Amsterdam start-up scene, having grown into one of Europe’s largest fintech companies valued at € 2.0 bn over the 10 years since founder Pieter van der Does started the company. As an omnichannel payments technology company, Adyen allows businesses to converge different payment flows onto a single platform. It processed € 80 bn worth of transactions in 2016, covering the whole spectrum of in-store, in-app and online payments. This value proposition has landed Adyen a number of high profile clients in both retail and e-commerce, including Burberry, Netflix, Airbnb, Spotify and Facebook. After recently obtaining a pan-European banking license from the Dutch Central bank, Adyen will be able to serve its customers even more efficiently without relying on traditional banking partners for settlement.
Adyen has consistently translated these successes into financial results as well. It has been profitable since 2011 and nearly doubled its revenues in 2016 to €659m while operating profit increased by 89%. Adyen’s revenue growth has strongly outpaced growth of its employee base, which constitutes Adyen’s main operating cost. This allows Adyen to enhance its profitability even further in the years to come as it continues to gain scale through its international expansion strategy without large investment in human capital.
For a company with such prospects, going public may seem like a logical next step. However, Adyen wishes to remain independent for the time being and focus on executing its growth strategy without the distraction of an IPO and pressure of public investors. Also, Adyen doesn’t need an IPO right now since it’s currently well funded and growing profitably.
A strategic investment could be more likely in light of recent deal activity in the payments space, with Visa’s equity investment in Adyen’s Swedish peer Klarna and Vantiv beating JP Morgan in bid to acquire Worldpay. These transactions illustrate that traditional financial services providers are looking to cater to digital and card payments as the use of cash keeps declining. This is something that disruptive companies like Adyen have done more effectively with a new class of innovative financial services.
While van der Does has indicated that a company with an autonomous spirit like Adyen wouldn’t make a particularly attractive takeover, a strategic partnership like the one between Klarna and Visa could make sense. It would allow Adyen to keep following its own course while strengthening its competitive position versus larger players such as PayPal or traditional banks looking to enter its territory.
In any case, Adyen is in no rush. With an estimated potential of €1,000 bn worth of transactions processed, Adyen has plenty of growth to realise.