Research Update:

Payments Platform Provider Adyen N.V. Assigned'A-' Rating; Outlook Stable
November 23, 2021

Rating Action Overview- Amsterdam, Netherlands-based Adyen N.V. is a global payments platform provider integrating
payment gateway, risk management, processing, issuing, acquiring, and settlement. It benefits
from a unique single platform. This has helped to increase its market share and given it
superior organic growth prospects and higher profit margins than peers. It takes a conservativerisk approach within its merchant-acquiring operations.
- The rating is supported by Adyen's conservative financial policy; it has no financial debt on its
balance sheet and pursues an organic growth strategy that precludes mergers and acquisitions(M&A). It focuses on reinvesting cash generated into the business, rather than distributing toshareholders.
- We are assigning our 'A-' long-term issuer credit rating to Adyen N.V.

PRIMARY CREDIT ANALYST
Shruti KundaliaFrankfurt+49-69-33999211
shruti.kundalia@spglobal.com
SECONDARY CONTACT
Osnat Jaeger
London+ 44 20 7176 7066
osnat.jaeger@spglobal.com- The stable outlook indicates that we expect Adyen to report net organic revenue growth ofabout 35%-45% and generate free operating cash flow (FOCF) excluding working capital
inflows related to merchant settlement of more than €300 million a year over the next two
years, while maintaining a conservative financial policy and a net cash position.

Rating Action Rationale
Adyen benefits from unique payment solutions globally run on a single platform. Adyen is oneof the leading challengers in the payments processing industry and benefits from a differentiatedunified payment processing platform that allows merchants to gain insights into the behavior ofits consumers, across all sales channels and geographies, via a single integration, regardless of
their location or whether they used the online or offline payment channel. Its in-house platform
also controls the processing chain from the merchant to the card scheme, helping to improvetransaction authorization rates and response times. In our view, this supports Adyen's very low
merchant churn (less than 1%). The unique product has helped Adyen gain market share fromdifferent regions and sales channels, though more than 80% of growth is generated from its
existing merchants. Historically, most of Adyen's total processed volumes (TPV) were from large
online enterprises. However, in recent years, its omnichannel solution has gained more tractionwww.spglobal.com/ratingsdirect

November 23, 2021

1

Research Update: Payments Platform Provider Adyen N.V. Assigned 'A-' Rating; Outlook Stablewithin its target merchant base and point-of-sale (POS) volumes have grown to contribute over
10% of TPV.
We expect Adyen to continue delivering above-average organic growth in 2021 and 2022. Adyen
competes with various payment solutions providers, such as Fidelity National Information
Services (FIS) and Fiserv Inc. in the U.S. and with FIS and Worldline in Europe. In addition, it also
competes with traditional banks and online payment systems like Paypal. The company's strong
omnichannel proposition has allowed it to win over new large global customers. Some of its
omnichannel wins include the Body Shop, LVMH, and Dick's Sporting Goods. Further, it also hasleading internet-based platforms such as eBay, Spotify, Booking.com, Uber, and Groupon, as its
clients.
The company reported resilient operating performance, with net revenue growth of about 28%
in 2020, despite the lockdowns. Although the pandemic adversely affected in-store volumes,
Adyen outperformed most of its competitors thanks to its exposure to large internet-based
service-providing merchants that boomed during lockdown, relatively limited exposure to POS
transactions and benefit from the transition to digital platforms. The company also benefitted
from the surge in online retail volumes during 2020. Most of its peers reported an organic decline
in revenue. We expect Adyen's net revenue to grow by about 45% in 2021 and 36% in 2022, basedon existing and merchant additions, underpinned by Adyen's unified platform. Its global
omnichannel integration and data enablement supported merchant's operations, particularly
when the pandemic started in 2020.
Focus on organic growth and ecommerce helps to further improve profitability above themarket average. Unlike most of its competitors, Adyen focuses on pursuing only organic growth,
so that it continues to benefit from a single platform. In our opinion, although inorganic growth
could add scale and breadth to the service portfolio, it would also erode the margin profile byadding integration costs and the cost of running and developing multiple platforms. In addition,
85% of Adyen's revenue is from e-commerce transactions, which have a lower cost compared with
POS (in-store) transactions. As a result, Adyen benefits from superior EBITDA margin comparedwith its peer group. For Adyen, any incremental features or improvement/innovation is done on theplatform and thus can be scaled globally to the entire customer base efficiently at minimal cost.
As a result, S&P Global Ratings-adjusted EBITDA-to-revenue (net of pass-through costs) andreturn on capital, at 56.4% and 35.7%, respectively, in 2020, were above the peer average for its
rated peers. We expect margins to improve further to 59% in 2021 and 61% in 2022.
Adyen benefits from large low risk merchants and limits exposure to risky customers Adyen's
customer base includes a substantial amount of large, high-volume merchants. Such clientstypically have better credit than smaller retail merchants, which further contributes to Adyen's
low churn rate. In addition, Adyen's conservative policies mean that it limits its exposure to risky
industries that have a long lead time to delivery, such as airlines. As such, despite its e-commerce
focus, it is exposed to relatively low chargeback risk. At the same time, Adyen is also expanding
into higher-margin mid-market and platform segments. We expect the economies of scale tooutweigh the declining take rate, which contracts as the process volume from merchant goes up.
Adyen has a well-diversified geographic presence. Adyen continues to expand its geographic
presence and is among the most balanced in terms of geographic presence among peers. It
generated about 62% of its net revenue in 2020 from Europe, 19% from North America, 9% from
Asia-Pacific, and about 9% from Latin America. Now that it has a U.S. branch banking license, we

www.spglobal.com/ratingsdirect

November 23, 2021

2

Research Update: Payments Platform Provider Adyen N.V. Assigned 'A-' Rating; Outlook Stable

expect the company to be able to offer full-service merchant accounts, as it does in Europe. This
will simplify the settlement process and reduce reliance on external banks.
Adyen remains a challenger and has a smaller product portfolio than larger peers. Given thescale of operations of incumbent players, we still see Adyen as a challenger that is slowly gaining
market share (as indicated by its strong organic growth). It still lags the incumbent payment
processors in terms of the scale and breadth of its product portfolio. We view Adyen's businessrisk as weaker than that of larger and diversified fintech companies such as Fiserv, FIS, and Global
Payments. These companies have increased the scale of their operations and the breadth of theirproduct portfolio through acquisitions.
Adyen's customer concentration exceeds that of incumbent platforms, but has been reducing.
Adyen predominantly has large customers and is also expanding its presence in the mid-market
segment. Historically, Adyen's customer concentration was higher than peers but it has
significantly improved over the past few years.
Adyen does not have any meaningful financial risk and we expect it to maintain a conservative
financial policy. Adyen built up a net cash position of about €1.0 billion in 2020 (net of €1.7 billionof cash separately held for merchant settlement) thanks to its focus on organic growth and good
free operating cash flow (FOCF) generation. Excluding settlement-related working capital
movements, Adyen maintained a strong FOCF conversion rate of 76% of EBITDA in 2020. Thishighlights its modest own working capital needs, low tax payments, modest capital expenditure(capex), and minimal interest payments. The company's lack of external financial debt, as a resultof its very conservative financial policy, reduces interest payments and also precludes
distributions to shareholders and business acquisitions. We have assumed no shareholder
returns to be distributed over the next two-to-three years as retained earnings continue tosupport and finance the organic growth strategy. Historically, the company has invested about
3.5% of revenue as capex, including software development. We expect the company to step-up its
investment in capex, including software development costs, to about 4%-5% a year going forward
as it expands its geographic footprint.

OutlookThe stable outlook indicates that we expect Adyen to report net organic revenue growth of about
35%-45% and FOCF generation of more than €300 million a year over the next two years, while
maintaining a conservative financial policy and a net cash position.

Upside scenario
We do not expect an upgrade over the next 12-24 months as we do not expect a material change in
Adyen's product portfolio, absent inorganic measures.
We could raise the rating if Adyen gains meaningful scale comparable with some of the larger
peers while continuing to improve its margins and market share.

Downside scenario
We could consider a downgrade if Adyen deviates from the current financial policy; for example, if
it were to undertake a debt-financed acquisition, dividend recapitalization, or repurchases.

www.spglobal.com/ratingsdirect

November 23, 2021

3

Research Update: Payments Platform Provider Adyen N.V. Assigned 'A-' Rating; Outlook Stable

Company Description
Headquartered in Amsterdam, Netherlands, Adyen is a global payments platform that combines
gateway, risk management, processing, issuing, acquiring, and settlement into a single
integration. In line with its organic growth philosophy, the company builds everything in-house. Its
global licensing footprint includes a banking license in Europe, a branch license in the U.S., andacquiring licenses in several other countries, which further supports this approach.
For 2020, the company generated €684 million as net revenue from North America (19%), Europe(62%), Asia-Pacific (9%), and Latin America (9%). Adyen is publicly listed in Euronext Amsterdam
and has a market capitalization of about €78 billion.

Our Base-Case Scenario
Assumptions- Global macroeconomic conditions to improve, with U.S. GDP growth of 5.7% and 4.1% in 2021
and 2022, respectively; and European GDP growth of 5.0% and 4.1% in 2021 and 2022,
respectively. We also expect the industrywide shift toward card and digital payments tocontinue over next two years.
- Growth in processed transaction volume growth in 2021 forecast at 60%-62%, as lockdown
restrictions that affected in-store volume in 2020 were lifted. Growth largely stems fromexisting clients, through the capture of a greater share of clients' transaction volumes, newmerchant wins, and further penetration into integration with platforms and the mid-market
segment. We expect processed transaction volume growth of 39%-40% in 2022.
- Net revenue growth of nearly 44%-46% in 2021 and about 35%-37% in 2022, driven byprocessed transaction volume growth, partially offset by declining net take rates.
- Adjusted EBITDA margins of 9.5%-10.0% in 2021, declining to about 9.0%-9.5% in 2022. Basedon revenue, less pass-through costs, this is equivalent to margins of 58%-60% in 2021, rising
to 60%-62% in 2022. This reflects continued gains from operating leverage.
- Annual capex including development costs to represent 4%-5% of revenue in both 2021 and2022. This includes capitalized software development costs of about €4 million-€7 million thatare expensed under our standard adjustments.
Based on these assumptions, we arrive at the following credit measures:- Adjusted cash funds from operations of €475 million-€500 million in 2021, improving to €675
million-€700 million in 2022.
- Adjusted FOCF of just above €300 million in 2021 and €325 million-€350 million in 2022,
excluding annual net working capital inflows from merchant settlement activities.

Liquidity
Adyen's exceptional liquidity is based on its significant cash balance and free cash flow
generation, coupled with limited liquidity needs due to a very conservative financial policy--that is,a lack of external debt, dividend payments, or sizable business acquisitions. As a result, we

www.spglobal.com/ratingsdirect

November 23, 2021

4

Research Update: Payments Platform Provider Adyen N.V. Assigned 'A-' Rating; Outlook Stable

forecast sources of liquidity to exceed uses by over 25x in the 24 months from June 30, 2021.
We expect the following principal sources of liquidity over the 12 months from June 30, 2021:- Cash and liquid investments of about €1.25 billion, excluding cash held for settling merchantpayables and thus unavailable for general corporate purposes; and- Cash FFO of about €550 million-€570 million.
Principal uses of liquidity over the same period:- Capex of about €55 million-€65 million; and- Intrayear working capital requirements of around €10 million.

Ratings Score Snapshot
Issuer Credit Rating: A-/Stable/-Business risk: Satisfactory- Country risk: Low- Industry risk: Intermediate- Competitive position: Satisfactory
Financial risk: Minimal- Cash flow/Leverage: Minimal
Anchor: aModifiers- Diversification/Portfolio effect: Neutral (no impact)- Capital structure: Neutral (no impact)- Financial policy: Neutral (no impact)- Liquidity: Exceptional (no impact)- Management and governance: Strong (no impact)- Comparable rating analysis: Neutral (no impact)
Stand-alone credit profile: a-

Related Criteria- General Criteria: Environmental, Social, And Governance Principles In Credit Ratings, Oct. 10,
2021- General Criteria: Group Rating Methodology, July 1, 2019
- Criteria | Corporates | General: Corporate Methodology: Ratios And Adjustments, April 1, 2019
- Criteria | Corporates | General: Methodology And Assumptions: Liquidity Descriptors For Global
Corporate Issuers, Dec. 16, 2014www.spglobal.com/ratingsdirect

November 23, 2021

5

Research Update: Payments Platform Provider Adyen N.V. Assigned 'A-' Rating; Outlook Stable- General Criteria: Methodology: Industry Risk, Nov. 19, 2013
- General Criteria: Country Risk Assessment Methodology And Assumptions, Nov. 19, 2013
- Criteria | Corporates | General: Corporate Methodology, Nov. 19, 2013
- General Criteria: Methodology: Management And Governance Credit Factors For Corporate
Entities, Nov. 13, 2012
- General Criteria: Principles Of Credit Ratings, Feb. 16, 2011

Ratings List
New Rating
Adyen N.V.
Issuer Credit Rating A-/Stable/--Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors,
have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such
criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. A description of each of
S&P Global Ratings' rating categories is contained in "S&P Global Ratings Definitions" at
https://www.standardandpoors.com/en_US/web/guest/article/-/view/sourceId/504352 Complete ratings
information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating
action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search
box located in the left column. Alternatively, call one of the following S&P Global Ratings numbers: Client Support
Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49)69-33-999-225; Stockholm (46) 8-440-5914; or Moscow 7 (495) 783-4009.

www.spglobal.com/ratingsdirect

November 23, 2021

6

Research Update: Payments Platform Provider Adyen N.V. Assigned 'A-' Rating; Outlook Stable

Copyright © 2021 by Standard & Poor’s Financial Services LLC. All rights reserved.
No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any
part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or
retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The
Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers,
shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of theContent. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results
obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is”
basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT
THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE
CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive,
special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits andopportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of suchdamages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are
expressed and not statements of fact. S&P’s opinions, analyses and rating acknowledgment decisions (described below) are notrecommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any
security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on
and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making
investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While
S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due
diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasonsthat are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on acredit rating and related analyses.

To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction forcertain regulatory purposes, S&P reserves the right to assign, withdraw or suspend such acknowledgment at any time and in its sole
discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment aswell as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of theirrespective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P
has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with eachanalytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors.
S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites,www.standardandpoors.com (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means,including via S&P publications and third-party redistributors. Additional information about our ratings fees is available atwww.standardandpoors.com/usratingsfees.
STANDARD & POOR’S, S&P and RATINGSDIRECT are registered trademarks of Standard & Poor’s Financial Services LLC.

www.spglobal.com/ratingsdirect

November 23, 2021

7