This Dutch payments firm is a proxy for retail’s shift to ‘omnichannel’ commerce
For investors looking to play the pandemic’s acceleration of “omnichannel” shopping, payments provider Adyen might be as close as it comes to a sure bet.
The Dutch company rose to prominence as the preferred online payments processor for many of the world’s biggest digital-first brands, from Facebook and Uber to Netflix and eBay. Since then, it has increasingly won over traditional retailers, becoming their payments solution not just for e-commerce but for in-store transactions too.
“We are gaining market share in what is probably a shrinking market, but it is a huge market,” Ingo Uytdehaage, Adyen’s chief financial officer, said of the company’s in-store payment terminals.
In fact, the company’s growth is a useful proxy for the progress retailers are making toward integrating online and brick-and-mortar commerce. And Adyen’s business is booming: Yesterday it reported payment volumes of $252 billion in the first half of 2021, a 67% increase on the same period during the depths of the pandemic in 2020. Of that, Adyen’s cut amounted to $519 million, on which it made $318 million in Ebitda profits—an eye-popping gross profit margin of 61%.
Already a darling of the European fintech scene, the company’s shares surged more than 8% since the earnings figures were announced yesterday. And they are up almost 40% so far this year.
Companies were already talking about integrating their online and in-store technology systems before the pandemic. But COVID-19 persuaded many businesses to radically accelerate this merger, Adyen’s Uytdehaage tells Fortune.
With physical stores shuttered due to lockdowns, sales simply had to shift online. To save costs, companies closed physical locations—permanently, in many cases. Now, while some high-traffic stores may be open again, brands are increasingly viewing their physical outlets as marketing channels: Carrying less stock, they are asking customers to browse in-person but buy online, even from right in the shop.
Companies need to be able to track and serve those customers as they move seamlessly from the shop floor to a mobile browser or a desktop at home. And, Uytdehaage says, Adyen is the only payments software backbone that can support this kind of “unified commercial” experience across hundreds of different geographies and payment methods. That offering has enabled Adyen to add LVMH and the Body Shop to its roster of customers in 2021.
Despite lockdowns in many regions and countries, the company saw its point-of-sale payment volumes for the first half of 2021 double year on year to $26.6 billion. They now make up 11% of the company’s total processed volume.
Adyen also offers a good way to keep tabs on several other trends as economies begin to recover from the depths of the pandemic. For instance, Uytdehaage says that Adyen can clearly see the growing popularity of buy-now, pay-later checkout options online, especially in key markets such as the U.S.
The Adyen CFO also says the rebound in the travel industry, which had been a key vertical for Adyen prior to the pandemic, is clearly evident.
“Domestic flights in the U.S. [have] returned not to normalcy but to higher levels than during the pandemic,” he said. “And we see OTA—online travel agency—volumes are starting to pick up again.”
He said that travel volumes during the last week in June were at the same level as they had been during the first week of the pandemic.
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