2021

AnnualReportAdyen Annual Report 2021

1

Cover image

Keo — Operational Support Specialist, Amsterdam“ I never learned more in a year than I did in 2021. I work in the
Operational Support team and it’s just not possible to only learn one
thing – you have to know a million things at once, and come to work witha fresh mind every day ready to soak it all up. Starting out, it was a bit
stressful to take in so much information at once, but now I go over every
day with confidence in myself and my role, knowing I can handle a lot ofthings. 2021 taught me that. ”

Disclaimer: This document is only a "printed version" and is not the official annual financial report, including the audited financial statements thereto
pursuant to article 361 of Book 2 of the Dutch Civil Code. The official annual financial report, including the audited financial statements and theauditor's report thereto, are included in the single report package which can be found via www.adyen.com/investor-relations/documents.
In case of any discrepancies between the printed version and the annual financial reporting package, the aforementioned financial reporting package
prevails. Note that the auditor's opinion included in the printed version does not relate to the printed version but only to the official annual financial
reporting. No rights can be derived from using the printed version, including the unofficial copy of the auditor's report. Our auditors did not determine(nor do they need to) that the printed version is identical to the official version.

Adyen Annual Report 2021

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01Management
Report_ ______________________________ 4
Message from the CEO______________________ 5
Highlights_ _______________________________ 7
Description of business activities ______________ 9
Business strategy _________________________ 10
Discussion of financial results _ ______________ 13
Financial objectives _ ______________________ 15
Building Adyen for the long term _ ____________ 17
People & culture_ _________________________ 23
Social & environmental responsibility__________ 33
Risk management _ _______________________ 49
Compliance _ ____________________________ 69
Tax _ ___________________________________ 74
Data Privacy _____________________________ 76
Statement by the Management Board _________ 77

03
Financial
Statements________________________________ 109
Financial statement table of contents included
on page 110-111

02
Governance_________________________________ 80
Corporate governance _____________________ 81
Report of the Supervisory Board_ ____________ 89
Compliance with the Dutch Corporate
Governance Code _ _______________________ 95
Remuneration report _ _____________________ 97

04
Other
Information________________________________ 182
Other information ________________________ 183
Auditors Report__________________________ 184
GRI Index_______________________________ 202

Adyen Annual Report 2021

Tita — Performance Marketing Manager, Madrid“ It has been an unexpected but fun twist how working from homechanged the way we connect to people at work – I’m part of the Madrid
office but my closest friends in Adyen are actually located in Berlin and
Milan. I have never met them in person, but we talk every day! We jumpon a call often to share updates and milestones. We even have virtual
drinks sometimes with just the three of us. ”

3Adyen Annual Report 2021

01
Management
Report4

Adyen Annual Report 2021

5

Message from the CEO
I’m writing this on the 4th of March, a Friday
afternoon, in one of our Amsterdam offices withsunny skies behind me. However, a little over 2,000
kilometers away the world is on fire. It’s impossible
for me not to make a note of the invasion in Ukraine.
My heart goes out to everyone affected. Morefar-reaching than the evolving humanitarian crisis,
the state of the world order — the relative stability
we’ve enjoyed in the West since the Second World
War — is seriously at risk. This is a note of reflection
on the past year, as it is every year, and I hopesincerely that this invasion and its impact won’t be
the subject the next time I’m writing this.
Onto 2021. In the annual exercise of re-reading lastyear’s annual report cover letter before writing thisyear’s, I was struck by the consistency in themes —in those that were addressed in the note I was
reading, and those that I wanted to address here.
The theme of societies in lockdown and open
societies existing side-by-side, the theme offocusing on wellbeing during a crisis without a set
end date, the theme of Zoom and other video
services acting as a great equalizer for the team.
These were as relevant in 2021 as they were in 2020.

The pandemic and its impact turned out to be a real
marathon — and in many ways we’re still running it.
With the luxury of hindsight, I’m happy to have notattached any finish lines to the shifting realities wewere faced with during the year. This is something
we stressed at length internally — to focus on
making our days engaging and productive and on
working side-by-side with our merchants, notpotentially naively looking forward to a hopeful end
date. Quickly adjusting the company toward
predominantly working online helped us become
more resilient. We benefited throughout the year
from infrastructure we put in place immediately as
the pandemic hit.
It’s premature to say we’ve emerged from thepandemic, as its long-term impact is still to beproperly assessed. However, if it is the case that theworst of COVID-19 is now behind us, I can say withemphasis that we’ve emerged from the pandemic
stronger than we entered it. The team has grown toover 2,000, we processed over half a trillion of ourmerchants’ volume, and we continue to executedecisively. I’m incredibly proud of the teams acrossthe world that have worked to make this happen.

Adyen Annual Report 2021

To build a growing company, at scale, with a different reality on a weekly
basis — that’s an incredible feat from the team.
It’s equally true that the environment we now find ourselves in is markedly
different from when we entered the pandemic. The acceleration of longerterm trends due to the rapid digitalization during the pandemic haschanged the landscape, permanently. And with it, our position in it too.
We’ve talked at length in previous publications about the fact that unified
commerce has moved from what was previously a nice value-add to being
critical infrastructure for businesses to survive and thrive. We’ve been able
to be one of the drivers here as businesses were looking to adapt.
That’s not all that changed during the pandemic. Platforms had beensuccessfully democratizing access to global markets for SMEs and smaller
sellers for years. This too has accelerated greatly due to the pandemic, as
an increasingly digital reality provided another catalyst for platforms acrossverticals. With this trend now entrenched, they are looking to deepen therelationship with their customers — with turnkey or plug-and-play solutions
increasingly becoming the norm. To us, this is reason to look beyond thenatural fit of our unified commerce offering to other embedded products.
With our proven single platform and our licensing footprint, there is an
opportunity here for us to serve as the infrastructure for a significant shift
towards platform business models in the market.
We now operate at a different scale, amid a changing environment in which
we are well positioned. As we look to capitalize on this opportunity, we areseeing a great appetite for office attendance and in-person cooperation in
our growing team. Therefore, we’ve made a deliberate investment in offices
around the world. We realize that this goes against what is largely a fullremote trend within tech and feel that the key is to find the right balance.
What has changed from the pre-pandemic environment is that we now
approach the working environment with a more flexible mindset.
As we continue to evolve in our role of providing financial infrastructure to
growing businesses, our approach to social and environmental
responsibility topics has grown too. Throughout 2021, this became evident
in the build out of our Impact product suite, the growth of our internalsustainability and Diversity, Equity & Inclusion efforts, and the maturation of
our reporting frameworks. Our roots dictate that we do first, and tell stories
later — having said that, this is an area in which I expect to be able to reportsignificant progress going forward.
At over half a trillion processed in 2021, I want to end this note with anappreciation of the fact that what started as a moonshot goal in Adyen’s firstyears (one trillion in volume) is now well within reach. I remain firmly
convinced that we will be able to again deliver on what now seems like newmoonshot goals 5-10 years from now. We have the track record, we havethe product, and we have the team to get us there.

6Adyen Annual Report 2021

7

2019

2020

2021

2019

2020

2021

2019

2020

2021

239.6BN

303.6BN

516.0BN

496.7MN

684.2MN

1,001.5MN

279.3MN

402.5MN

630.0MN

Processed volume
70% YOY€516.0BN

Net revenue *EBITDA *46% YOY

57% YOY€1.0BNMARGIN 63%€630.0MN

Surpassing half a trillion inprocessed volume for the
first time

Monumental developments
in scaling our Impact
products portfolio, as total
processed donation volume
through Giving hit 10x
growthA strong year for platforms
as we roll out Adyen for
Platforms at scale, withfurther success in unified
commerce

Talent remains central to
our growth and strategy— expanding the team andopening tech hubs in Madrid
and Chicago* Comparative figures have been restated on account of our previously disclosed accounting adjustment.
Refer to our annual consolidated financial statements of 2020 for details on the correction.

Adyen Annual Report 2021

Leif — Product Manager, San Francisco“ Last year I transitioned from my former company to Adyen — it was aunique experience, leaving a job remotely, starting my new job remotely
again. But that’s where the Adyen culture came in handy, everybody was
genuinely excited to meet me, across all offices people jumped on Zoom,
no matter the time. Connecting as a team majorly happened online andwe had some crazy team events — including a fully digital magic show
from an authentic Peruvian magician! ”

8Adyen Annual Report 2021

Figure 1
The Adyen value chain

Description of businessactivities
Adyen operates a global payments platform, integrating the full payments
stack — gateway, risk management, processing, issuing, acquiring, andsettlement. Adyen issuing was launched in 2019, and enables merchants toprovide virtual and physical cards to their customers. Issuing meets various
merchant needs, as it gives them the ability to issue cards for a variety ofuse cases, either online, in-app and in-store. The Adyen offering includes acommon back-end infrastructure for authorizing payments acrossmerchants’ sales channels, as well as feature-rich APIs.
The platform services a range of global and local merchants across different
verticals, connecting them directly to Visa, Mastercard, and many otherpayment methods. Additionally, it provides a high level of reliability,
performance, and data insights.
For this service of payments processing, Adyen earns processing andsettlement fees — gateway and acquiring services, respectively — as well assome smaller fees related to products or functionalities aimed at reducing
complexity and friction for merchants. For a full breakdown of fees, refer toNote 2 ‘Revenue and segment reporting ’ of the attached Consolidated
Financial Statements for more information.

9Adyen Annual Report 2021

Business strategy
The majority of our yearly volume growth (consistently over 80% from eachhalf-year period since IPO in 2018) comes from the growth of merchants
already on our platform when the period began. This fact underscores the
success of our land-and-expand strategy, with which we are able to win
additional volume as the years of our merchant partnerships progress.
This requires a co-creative approach, working closely with merchants on
their plans and pain points.
In order to execute this strategy, the Adyen organization is divided into
solutions, composed of workstreams, which are in turn comprised ofproduct, technical, and commercial staff. These workstreams work closelywith our merchants and are thus able to efficiently prioritize their needs.
Our yearly product roadmaps are built with these needs in mind.
They are constantly subject to adaptation, ensuring our speed andagility are maintained as we grow.
The Enterprise segment (e.g. large international businesses) is what the Adyen
platform was built for from day one — tackling the most impactful challenges
faced by large multinational businesses. The fact that our growth comes largely
from existing Enterprise merchants, paired with very low volume churn, proves
our success in this space. More recently, this segment has seen the rise of
platform businesses — themselves servicing large numbers of SMEs —allowing us to efficiently reach the long tail of the market through our partneringwith these platforms. We see the following as key drivers of future growth in theEnterprise segment:
1.

2.

3.

4.

Existing merchants: Our merchants' organic growth combined with us
expanding our relationships with them (i.e. adding new channels and/or
expanding across geographies) continues to drive a majority of our
growth. This leads to a deepening of our product offering, as well as anincrease in our proportion of transaction volume with our current
merchants (i.e. growth of wallet share).
New merchants: Adding new merchants to our Enterprise portfolio is
another avenue for growth. We have a direct sales approach focused on
onboarding new merchants in all geographies where we are present andverticals we are targeting, both of which are constantly expanding.
Capitalizing on evolution in the industry: Our strength is in our speed
and ability to react to market developments that can help our merchants
due to the structure of our technology and our teams. The increasing
dominance of platform models is an opportunity for us to build
enterprise-level partnerships that allow us to service large groups ofSMEs without the need to alter our marketing and sales approach.
In platforms especially, the opportunity to deepen the relationship with
our merchant partners is significant. These businesses are often looking
for turnkey solutions that they in turn offer to the large number of SMEs
that comprise their customer base.

10Adyen Annual Report 2021

Alexander — Chief Technology Officer, Amsterdam“ The last year, with changing macroeconomic circumstances inevery region, definitely had an impact on how we are evolving as acompany. You think more carefully about how we can grow together ina sustainable way. This also contributed majorly in our decision to open
two new technology hubs in Chicago and Madrid — building out our
technology teams is a key priority for us. ”

11Adyen Annual Report 2021

Another segment worth highlighting is Unified Commerce.
Shifting consumer behavior is increasingly driving a need for merchants topresent a single brand across all sales channels (i.e. offline and online).
In industries such as retail, hospitality, and food & beverage, merchants canno longer afford to present either single, or diffuse channels to their
shoppers. We are confident on the opportunity in this space due to ourcapacity to offer the following:
1.

2.

3.

Holistic view of payments: A unified, single platform to process all
payments, irrespective of channel, is foundational to how we havebuilt our technology since the start of our company. This approachallows the collection of data that can deliver unique shopper insights
and simultaneously help to combat fraud. Our back-end
infrastructure for processing and settling payments is the sameacross all channels, providing merchants with a single view of all
shopper transactions.
Seamless shopper journeys across channels: The Adyen platform
enables merchants to offer a uniform experience to shoppers acrossall sales channels. This allows merchants to significantly improve thequality of service to their shoppers — for example, through one-click
payments online or on mobile for shoppers recognized from in-store
visits, through improved offer targeting, and through facilitation ofhome delivery.
Improvements in point-of-sale (POS) technology: Since the launch of
our POS offering in 2015, we have seen growth mainly due to theincreasingly obsolete infrastructure in the POS landscape still inplace all over the globe. This technology is simply not built for the
shoppers expectations described above. Due to this reality,
merchants see vast improvements in performance when
implementing our technology.

Historically, we built the Adyen platform focused on the needs of Enterprisemerchants. We have since seen that a broader range of merchants is finding
value in our offering. To meet this demand, we have invested in making oursingle platform more accessible to businesses in the next adjacent segment
to enterprise, mid-market. Every merchant on our platform has access tothe same performance and functionality as the world's largest businesses.
With 26 offices worldwide, our continuously expanding global footprintprovides a local presence, local payment methods and local expertise in our
key markets. This allows us to partner with ambitious businesses at a
relatively early stage of their growth. By partnering with us, thesebusinesses will be able to avoid being hampered by the complexity inbusiness operations that so often comes with growth — such as adding
additional payments channels, or expanding into new regions.

12Adyen Annual Report 2021

Discussion of financial
results
Processed volume for 2021 was €516.0 billion, up 70% year-on-year.
Of these volumes, POS accounted for 13% — totaling €64.6 billion. This is
up 100% year-on-year as we continue to scale our capabilities in this space.
Net revenues were €1.0 billion for the year, up 46% from 2020. Net revenue
contribution from non-EMEA regions came in at over 40% for the second
half — this was the first time that happened since we started reporting per
region. The regional diversification of our net revenues is evidence of thesuccess of our global approach, and something we view as a positive forthe business.
Full year take rate for 2021 was 19.4 bps, down 13.8% year-on-year as we
continue to win additional volume primarily from enterprise merchants
already on the platform.
Operating expenses for 2021 came in at €406.8 million, up 31% year-onyear and comprising 41% of net revenues. The largest contributor to thesewere employee benefits — which totaled €240.5 million, growing 34%
year-on-year. The team totalled 2,180 FTE at the end of the year, up from
1,747 FTE at the end of year 2020. It is our intention to ramp up hiring
during the following periods.

13Adyen Annual Report 2021

14

The operational leverage inherent to our business model and platform is
illustrated by the 63% EBITDA margin for 2021.
Full year EBITDA was €630.0 million for 2021, up 57% year-on-year.
Net income was €469.7 million in 2021, up 80% year-on-year.
CapEx were €54.3 million for the period, as we dealt with a significant
one-off in the investment in new offices in Amsterdam. Consequently,
CapEx was 5% of net revenues for the full year.
2021 free cash flow was €566.6 million, up 53% year-on-year. Free cash
flow conversion ratio was 90%.

Figure 2
Net revenue per region (in EUR millions). Comparative figures have been updated to reflect the
Net Revenue geographical breakdown as disclosed further in note 2.4 Non-IFRS financial
measures, in the 2021 consolidated financial statements.

+41%YOY

2020

2021

+74% YOY

2020

2021

+48% YOY

2020

2021

24% YOY

2020

2021

Adyen Annual Report 2021

Financial objectives
We have set the following financial objectives1.

Net revenue growth: We aim to continue to grow net revenue andachieve a CAGR between the mid-twenties and low-thirties in the medium
term by executing our sales strategy.

EBITDA margin: We aim to improve EBITDA margin, and expect thismargin to benefit from our operational leverage going forward and increase tolevels above 65% in the long-term.
Capital expenditure: We aim to maintain a sustainable capital
expenditure level of up to 5% of our net revenue.

1

Adyen has not defined, and does not intend to define, "medium-term" or "long-term”. Adyen's
medium-term and long-term financial objectives should not be read as forecasts, projections or
expected results and should not be read as indicating that Adyen is targeting such metrics forany particular year, but are merely objectives that result from Adyen's pursuit of its strategy.
Adyen's ability to meet its medium term and long-term objectives is based upon the assumptionthat Adyen will be successful in executing its strategy and, furthermore, depends on theaccuracy of a number of assumptions involving factors that are significantly or entirely beyond
Adyen 's control and are subject to known and unknown risks, uncertainties and other factorsthat may result in Adyen being unable to achieve these objectives.

15

Adyen Annual Report 2021

Caroline — Partner Marketing Manager, San Francisco“ The most exciting thing for me last year and this year is seeing myfunction grow - I’m part of our small but constantly expanding groupof partner marketeers. It’s amazing to see the interest in partner
marketing developing organically all around the globe, we now alreadyhave colleagues in Spain, the UK, Latin America, and Asia. Marketeers
identified the need for dedicated partner marketing, took the initiativeand made it happen – and we’re really seeing it take off everywhere. ”

16Adyen Annual Report 2021

Building Adyen for thelong term
Introduction
The principles of the Adyen Formula have guided the way we work as a teamsince we founded the company in 2006. One of these Formula points
describes making good choices to build an ethical business and drive
sustainable growth for our merchants. During the summer of 2021, we
published The Adyen Way of Building an Ethical Business, a document that
explains what making good choices means to us. In this document, wehighlight our approach and policies with regards to several environmental,social and governance (ESG) topics. As we continue to expand our ESG
efforts, we aim to share more and be transparent on the initiatives we have
implemented. These initiatives are part of our ongoing commitment to build
a sustainable, responsible and inclusive business.
This Annual Report reflects how we aim to have a positive impact on topics
related to social, environmental and governance, and how we create
long-term value for our merchants, our team and other stakeholders.
To us, making good choices is inherent to ethical behavior and trust— these have been constant themes in our decision-making over the courseof building Adyen. In our ESG strategy, we focus on three pillars: (i) People &culture, (ii) Social & environmental responsibility, and (iii) Responsible
governance, risk and compliance.

Adyen’s social and environmental pillars (Impact technology, local initiatives and environmental
sustainability) are aligned with the United Nations’ Sustainable Development Goals (SDGs) as we
acknowledge the importance of the SDGs as important metrics in the long-term prosperity of people
and planet.

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18

Stakeholder engagement & materiality
Throughout 2021, we engaged with stakeholders on environmental-, socialand governance-related (ESG) topics to better understand their views andpriorities in both formal and informal conversations and dialogues.
Our stakeholders include, but are not limited to, employees, merchants,
investors, governance bodies, suppliers, and peers. These initialconversations have provided us with a good understanding of what ismaterial and valuable to our stakeholders in the context of ESG topics, andhelp us define material topics in preparation for the Corporate Sustainability
Reporting Directive (CSRD). These topics, such as people and culture,training and education, diversity and equal opportunity, environmental
sustainability, tax, anti-corruption and compliance have been addressed
throughout this Annual Report, where our pillars describe in more detail
how we currently focus on and manage our responsibilities that arise from
ESG topics.
We see this informal assessment as a move forward with our ESG strategy.
We are committed to dive deeper into the views of our stakeholders and what
they deem important to better understand how we can implement, improveand report on these topics in the future, while simultaneously continuing tointegrate ESG further into our business strategy.
In 2022, we plan to carry out a comprehensive, in-depth materiality
assessment focused on identifying, prioritizing and benchmarking material
topics. Implementing KPIs on our material topics will be our focus in 2022, as
it will further develop our initiatives, activities, progress, metrics, performanceand disclosures. This materiality assessment will include, but not be limited
to, the set of stakeholders described above.

Oversight and responsibility of ESG matters
We consider building an ethical business and driving sustainable growth forour merchants the responsibility of the entire Adyen team. Activities related
to ESG matters are managed across several functions and levels (strategic,
functional and operational), and are all subject to Management Board andSupervisory Board oversight.
Recently, we have supported the creation of cross-functional working groups
focused on diversity and sustainability. These working groups cooperate with
our Communications and Reporting teams, and are, together with ourManagement Board and Supervisory Board, responsible for coordinating andreporting on our ESG strategy, initiatives and disclosures.
Solid governance practices are a critical success factor for driving long-term,
sustainable growth. Our two-tier board structure allows for sound oversight,
transparency and accountability. Governance of specific ESG topics isshared amongst various Management Board and Supervisory Board
committees, and is overseen by the Supervisory Board as the highest
governance body.

Supervisory
Board
committees
Nomination andRemuneration
Committee
•
•
•
•
•
•

CultureExecutive compensation
Remuneration
Diversity and inclusion
Succession planning
Talent management andretention• Learning & development

Audit and Risk
Committee• Risk Management• Ethics, integrity andcompliance• IT (information security
and data privacy)• Tax
Please refer to the Report of theSupervisory Board for a complete
overview of topics discussed by theSupervisory Board in 2021, and toadyen.com/investor-relations/
governance for the Terms ofReference of the Supervisory Board
committees.

Adyen Annual Report 2021

19

ESG reporting & regulations
Compliance with existing and future sustainability reporting standards
allows for increased transparency and comparability, as well as visibility into
our business activities for our stakeholders.
From January 1, 2022, we are required to report on our environmentally
sustainable economic activities in line with EU taxonomy regulation (“the EU
taxonomy”). The EU taxonomy was introduced to provide a common
classification system for sustainable economic activities in support of theaction plan on financial sustainable growth and EU’s climate and energy
targets for 2030.
Starting from January 1, 2023, the EU Taxonomy requires credit institution,such as Adyen, to report their Green Asset Ratio (GAR) which illustrates the
proportion of a credit institution’s assets financing and invested intaxonomy-aligned economic activities as a proportion of total covered
assets.
In accordance with the EU directive, we have performed an initialassessment to identify total assets covered by the taxonomy, in addition to
the numerator and denominator used in the calculation of the Green Asset
Ratio. Please refer to the details below:

Gross carrying amountExposures to EU Taxonomy-eligible economic activities

Gross Carrying
amountTotal assets(%)

Total GAR assets
(%)

—

—

—

Exposures to EU Taxonomy non-eligible economic activities

591,328

10%

18%

Total GAR numerator

591,328——

Derivatives

—

—

—

On-demand interbank loans

—

—

—

137,227

2%

4%

Exposures to undertakings that are not in scope of the NFRD
Other assets excluded from GAR numerator

2,481,307

43%

77%

Excluded from GAR numerator

2,618,534

45%

82%

Total Assets Covered

3,209,862

56%

100%

—

—

Trading portfolio
Exposures to central governments, central banks and supranational issuers

2,565,744

44%

Total assets

5,775,606

100%

Adyen Annual Report 2021

We initiated our assessment using Adyen’s Q4 2021 FINREP report toidentify total covered assets in addition to the components of the GAR
numerator and denominator. The EBA FINREP report provides theclassification of the gross carrying amount of Adyen’s assets.
As a first step, exposures to central banks, such as cash and cash
equivalents, were identified as being outside of the scope of the GAR.
Next, assets excluded from the numerator were identified. These included
cash and cash related assets, exposures to undertakings not obliged to
publish NFS under NFRD (SMEs and non-obliged NFC’s, non-EU
counterparties) and other assets (i.e. tangible assets, other assets, etc.).
Finally, an assessment was carried out to identify what exposures tof﻿﻿inancial and non-financial corporates are deemed eligible assets (assets
exposed to activities included in the EU Taxonomy Delegate Act).
This exercise was performed by referring to the NACE code of eachcounterparty. It was concluded that as at December 31, 2021, we do nothave any assets financing or investing in taxonomy-eligible activities and assuch have a negligible GAR. This is due to the nature of our business, which
is currently not involved in investing in or financing any type of activities.
We will continue to monitor the regulation and update our disclosures,
business strategy and product design accordingly.
In light of the CSRD proposal and its upcoming regulatory requirements, weare taking the necessary steps to prepare for compliance with the regulation
by full year 2023 (for publications after January 1, 2024).
In the meantime, we would like to disclose how we are taking steps topositively contribute and responsibly manage our impact on theenvironment and society through other available non-financial disclosure
frameworks, such as the Global Reporting Initiative (GRI). GRI provides a
standard to guide us in reporting and communicating our economic,
environmental and social impacts.
Providing transparency and comparability by reporting in reference to GRI(evidenced by the GRI Index content table in the ‘Other information’ sectionof this Annual Report) allows us to inform our stakeholders of the activities
that we perform to promote sustainable business practices in a broader
financial and non-financial context. Please refer to the GRI Index table forfurther details of the disclosures included and their location.

20

Adyen Annual Report 2021

21

Elisa — Enterprise Sales Manager, Mexico City

“ I now have the best mix of working fromhome and the office I’ve ever had. I enjoy thedays I spend at home and being able to visit
my mum more often, but I’m also looking
forward to the days I go to the office, with ateam of just 17 people, it feels like I'm with
my friends. And as a runner, I love that wehave showers at the office – sometimes I go
for a run in the morning, take a shower, andgo back to work. People think I'm crazy but
it’s perfect for me! ”

Adyen Annual Report 2021

Benjamin — Account Manager, Paris“ 2021 definitely became the year ofreconnection in my opinion. In 2020 welost so many shared moments, and in
2021 we could luckily go back and makeup for more socially isolated times. It’s allabout people to me, I also go to the officewhenever I can to work with colleagues. But
I also reconnected to myself in a way lastyear – I found more time to live slowly and toprioritize things that bring me joy. ”

22Adyen Annual Report 2021

People & culture
Building the Adyen team for the long term
We value people for their skills and what they bring to the company.
When building for long-term success, we need a team that comprises
different perspectives. Whether we’re attracting top talent in a new market,
developing our people via training and stretch them to make most out ofopportunities presented, or when supporting our leadership teams.
We provide our team at Adyen with autonomy. People are challenged
intellectually, given ownership, and held accountable. We prefer promoting
from our own ranks before considering external hires, and encourage
growth across the teams. How far our team members go, and what they
focus on, is largely up to them. Working here is an investment in yourprofessional development, as much as it is in Adyen.

23Adyen Annual Report 2021

24

The
Adyen Formula
We build to benefit all merchants (not just one)

We don’t hide behind email, instead wepick up the phone

We make good choices to build an ethical business anddrive sustainable growth for our merchants

We talk straight without being rude

We launch fast and iterate

We include different people to sharpen our ideas

Winning is more important than ego; we work as a team— across cultures and time zones

We create our own path and won’t be slowed
down by “stewards”

FormulaThe way we work with our merchants, and as a team, is guided by the Adyen
Formula. Consisting of eight guiding principles, the Formula describes ourculture and touches upon every aspect of the business. The Formula fosters
speed, which is the foundation of our company. We think fast. We work fast.
We launch fast. The eight principles that make up this Formula are notpermanent — but are constantly evolving to keep pace with our merchants,
our business, and the growth of the team.
The Adyen Formula leads how we recruit, grow, and retain colleagues
around the world. While building this business for the long term, we believethat maintaining our culture is critical to its continued success.
To ensure that the Formula is as familiar and top of mind for new joiners as it
is for early-day employees, we’ve introduced the Formula Journey.
The program comprises workshops, fireside chats and video materials that
help introduce and explain the concepts and principles on which Adyen isbuilt. The program expands on the Adyen Formula and other Adyen staples,
including the No Blush policy, Normal Course of Life and our Own Your
Career track.

Adyen Annual Report 2021

Alberto — Head of Business Development ES & PT, Madrid“ We really learned to master flexible schedules and routines last year
as a family. My wife and I managed to fit in work time, gym time, dinnertime, and play time with the kids. Especially with two babies, we got very
creative with inventing games — How-can-we help-Martina-to-startwalking-today for example. ”

25Adyen Annual Report 2021

Talent development
We don’t do pre-set career paths at Adyen. You join, learn, and grow inthe way that best fits you and the business. We look for the right learning
opportunities on an individual level. At Adyen, everyone creates theirown path.
Our rule of thumb is to promote internally. Our talent is key to our growth —and we want them to grow with us. The following initiatives help us to ensure
we scale the Adyen culture as our company grows, while also sustaining ourexisting team:
The Adyen Way of Leading Teams is a program that provides team leads
with board-led training sessions that teach the mechanics and philosophyof the Adyen leadership style.
• We provide a wide range of trainings for all employees, including careerdevelopment trainings, professional skills, and an international exchange
program that actively encourages people to work across Adyen offices inorder to gain experience and train across teams, geographies,
and cultures.
• We’ve built the Adyen Sales Academy, which aims to further train sales
staff across the regions wherein we are active.
• We run a number of trainings that relate to running Adyen in a safe andsecure way — including mandatory data privacy, security, andcompliance trainings for all staff members. These trainings keep theteam informed on the latest developments in these areas, and are
centered around awareness and the mitigation of risks.
• Leadership-led Dilemma Chats help involve everyone in the company instrategic problem-solving, talking through the tough decisions the teammakes every day.
• This year, we launched our Senior Leadership Training Program aiming tohelp grow leaders in Adyen in tandem with the growth of the company.
• Also new this year, we’ve built an internal Jobs Board to facilitate career
mobility — to create visibility on the opportunities the team has at theirhands at scale.
• The Adyen Academies are continually built out, this year saw the launchof the Tech Academy, Account Management Academy, and Operations
Academy. Much like the Sales Academy, these programs help shorten
onboarding timelines and improve individual and team performance.

26

Adyen Annual Report 2021

27

Total FTE
2,180

EMEA

Asia-PacificAmsterdam

LondonParis

Berlin33

Brussels

Munich

10

Milan

32

17

12

Manchester

Warsaw

Dubai

9

10

Stockholm

48

MadridSydney

101

28

51

98

1,262

SingaporeTokyo

Mumbai

19

8

Melbourne

Shanghai

25

Hong Kong

6

Kuala Lumpur

1

2

10

North America

Latin America

San Francisco

New York*

São Paulo

199

72

88

São José

Mexico City

15

14

Toronto10

Figure 32021 FTE growth* Boston FTE is categorized under New York as official office location.

2020

2021

2021 leavers

Adyen Annual Report 2021

Growing the Adyen team
Following the move to working-from-home setting in March 2020, we
continued to onboard and train new joiners virtually through introduction
sessions and onboarding programs. Again, the team proved highly flexible— something that will remain invaluable for us in the future. We were able tohost several social and team-building events during the year, ranging fromteam sessions to hikes and drinks.
Recently, we have launched two tech hubs in Chicago and Madrid.
These tech hubs should provide us with increased global coverage andscale as we build out a technical organization that has historically operated
primarily out of Amsterdam. We continue to pursue a hiring strategy ofsustainable growth at scale, keeping our rate of absorption in mind.
In 2021, we added 433 FTE to the team, totaling 2,180 FTE at the end of
December 2021.

Diversity, Equity, and Inclusion
Key to our long-term success is cultivating an inclusive environment — one
designed with equity in mind. This philosophy is also reflected in the Adyen
Formula, wherein we stress the importance of involving others to sharpen
our ideas. The broader the set of philosophies the team encompasses, thebetter we can foster innovation and avoid groupthink. In 2020 we founded
the Diversity, Equity, and Inclusion (DEI) working group — a team of global
Adyen colleagues that help identify key areas to improve on from a DEI
perspective.
We are aware that all aspects of diversity are vital to the business, enabling
the Boards and the company to look at issues and opportunities fromdifferent angles and to respond to challenges in new ways. Diversity is a key
driver for innovation and allows us to attract and retain our talented people.

Designing for inclusion: Building a fair and equitable Adyen
In line with the Adyen Formula to include different people to sharpen ourideas, we strive for diversity in all dimensions, including but not limited torace, ethnicity, gender, sexuality, age, culture, disabilities, religion, interestand upbringing. Our guiding principles are captured in our Diversity, Equity
and Inclusion policy below, and apply throughout the organization, including
for potential members of the Management Board and Supervisory Board.

28Adyen Annual Report 2021

29

Diversity, Equity,and Inclusion Policy
1.

2.

Improving diversity is a toppriority for us. We actively
include a diverse group ofpeople to sharpen our ideas,
strengthening our team byconsidering all perspectives
when making decisions.
We proactively look for ways to
add diversity to our teams.
During the hiring process, ourdiverse hiring team assesses
individuals based on the same
performance, skills andformula fit criteria.

3.

4.

When we hire, promote or
reward, we question who else
was considered, whether wewere fair, and why we madethis decision. We provide
credit where credit is due,and explain the reasoning to
all that were considered in theprocess.
We treat each other fairly
and adapt our approach toindividual needs. We support
each other in navigating thenormal course of life.

ERGs at Adyen
Employee resource groups (ERGs) are employee-led and employeefounded, and provide our diverse workforce with a space to come together,to promote representation and to use a resource for information. ERGs are
crucial to the representation of underrepresented communities, and play apart in the building and retention of diverse workplaces. We are proud tosee the number of Adyen’s ERGs grow, currently including the Adyen Pridecommunity, Parents at Adyen, Women at Adyen, Latinx at Adyen, Black at
Adyen, and Asians at Adyen.

5.

6.

With an annual DEI survey, wemeasure progress and aim to
improve upon our efforts withevery cycle, to build a more
inclusive Adyen.
We make a conscious effort
to avoid making decisions
based on unconscious bias.

Adyen Annual Report 2021

30

Initiatives
In support of our DEI Policy, we have launched a range of initiatives to help
track, measure, and improve our efforts. The first and most foundational ofthese is our annual DEI survey, which anonymously polls every Adyen
employee on a variety of DEI benchmarks, both qualitative and quantitative.
In order to bolster our efforts further, we continue to facilitate Unconscious
Bias trainings, Building Diverse Teams chats for Team Leads, and Building
and Leading Inclusive Teams sprints. We further invested in partnerships
with external organizations to help bring in perspectives fromunderrepresented groups, and we ensured the implementation of diverse
interview panels and gender-neutral job descriptions.

Figure 42021 Adyen FTE - gender and age

34%

66%

36%

63%

29%

71%

36%

64%

22%

44%

1%

76%

2%

54%

2%

Adyen Annual Report 2021

Commitments
We strongly believe in the benefits of a diverse workplace and strive fordiverse teams at all levels. In 2021, we have committed to hire, promote andenable underrepresented groups across all levels of the organization, as wellas include diverse candidates in our hiring process. As an organization,
we will ensure that those from underrepresented groups can be themselves,
are able to speak up and be heard, and excel at all levels. Furthermore,
we have committed to increase the gender balance of our Management
Board and senior management to consist of at least one-third female
members.
In 2021, we saw that our efforts and initiatives as mentioned above haveresulted in an increased percentage in gender diversity across new starters,
our overall workforce, and team leads. We will continue to report on our
progress in our Annual Reports.

Wellbeing
Due to the unrelenting impact of the COVID-19 pandemic and lockdown
restrictions and their resulting working-from-home reality, we invested
more deliberately in wellbeing initiatives in 2021. The aim of these initiatives
is to improve the physical and mental wellbeing of the team. In order toachieve this, we’ve designed a range of programs:
•

•
•
•

Recharge Week: A week where it's all about reconnecting and having
fun by learning some healthy skills and habits both from our own
colleagues and even from some of our merchants and external
experts in the field. It helps us pause to consider where we are, what
we’re doing and how we’re doing it. We launched Recharge Week toencourage a more holistic understanding of how work ties in andinfluences our physical and mental wellbeing.
Company-wide one-year membership to the Calm meditation app,and increased support for mental health services.
Built out our Normal Course of Life facilities, allowing employees totake time off more flexibly, and to work from different locations.
Wellbeing trainings and workshops for all members of the
Adyen team.

31

Adyen Annual Report 2021

Gbonjubola — Java Developer, Amsterdam“ It definitely has been a learning process to balance work and life lastyear. When working from home, I try to be very strict and close my laptop
at 5:00 to spend time with my family. For many activities I prefer the vibeof the office. I’m taking Dutch classes for example, and it’s much moreengaging and fun to practice with my colleagues in the office while
sharing a coffee. ”

32Adyen Annual Report 2021

Social & environmental
responsibility
Driving sustainable growth and making good decisions have been central
themes to building Adyen since foundation. In our social and environmental
responsibility initiatives these values come to life by both addressing
traditional criteria, such as offsetting our emissions and facilitating
employee volunteering and the build-out of our product suite withtechnology to do good. Our social and environmental responsibility efforts
are guided by the United Nations’ Sustainable Development Goals (SDGs).
We acknowledge the importance of the SDGs as key metrics in the longterm prosperity of people and planet.

33

Adyen Annual Report 2021

Impact Technology
Our technology allows us to extend our Impact strategy to our merchants
and beyond. We believe that we create the most positive impact whenstaying close to our core. For us, this means supporting our vast merchantnetwork through our single platform. Shoppers' expectations continue to
evolve beyond payment acceptance, now expecting to be facilitated in
making positive impact in the payment process.
Simultaneously, donor behavior is moving away from structured monthly
donations to one-off contributions. As always, we listen to our merchants
and their request for donation functionalities — so they can engage with
consumers by together positively contributing to social and environmental
causes.
Through our Impact products Giving and Restore, we built functionalities tohelp our merchants and their shoppers do good. In 2021, we further
invested in a strong infrastructure that helps businesses generate funds forcharities and climate action projects that are close to their brand andstrategy. We look forward to continue doing so in the future. We deliver on
this promise by building products that are straightforward to implement, do
not interfere with business operations and ensure processing costs do nottake away from generating funds for good causes — we are not seeking
additional margin when it comes to our Impact products.

34

Adyen Annual Report 2021

Rifad — Software Engineer, Amsterdam“ The job of a developer is far more collaborative than people expect, you
are not an island writing code all day – especially for bigger projects, youneed input from others. Working from home might be great for focus,
but at the office, aspects like discussing technical issues or asking
questions that pop up in the moment are much more seamless. ”

35Adyen Annual Report 2021

36

GivingGiving is our first and most mature Impact product for merchants.
Giving enables them to accept donations at checkout online, in-app andin-person. Today, over 35 of our merchants have adopted Giving,
predominantly in digital and retail industries in Europe, North America, theUnited Kingdom and Australia. After building a solid foundation over the
past years, the product is ready for scale.
At the core of the product, we ensure that there is no impact to ourmerchant’s business operations. We do so by creating a separate donationtransaction which has no impact on our merchant’s reconciliation, reportingor existing financial operations. For our merchants, this benefit, paired withthe ease of integration as the production is a natural extension of thepayment flow, sets the solution apart to traditional donation optionsin the market.
Our merchants are in the driver’s seat to choose their preferred charity,either from their own network or via Adyen’s pre-approved charity library(charities we have performed extensive due diligence on) that support the
UN Sustainable Development Goals. Giving is flexible and built to cater tomerchant’s local sustainability and social impact fundraising campaigns.
We absorb the full transaction costs of each donation to ensure that 100%of the donated amount goes to the good cause.

“ Adyen’s solution has enabled us to seamlessly
engage the Etsy community in supporting ourUplift Fund. It’s been amazing to see how a smallchange in checkout can have such a major impact
in addressing the gap in resources available tomany communities who are eager to use theirentrepreneurial talents. ”
Kruti Patel Goyal — Chief Product Officer, Etsy

Adyen Annual Report 2021

37

“ Giving helps us to make it easy and securefor our merchants to donate to charities in ourstores with just one tap. In addition, it ensures
the transparency we are looking for since our
shoppers can contact the NGO directly for any
information they need about their donation. For
us, Adyen is the perfect partner to continue
supporting social causes and facilitate
merchants to do good. ”
Nuria Ramirez — Chief Sustainability Officer, H&M Spain“ We’ve been blown away by the volume of donations. It’s
so hard to generate that scale of income any other way. ”
Catherine Hutchinson — Partnership and Fundraising, The Prince's Trust UK

Results in 2021
Illustrative to how Giving is scaling is how processed donation volume
developed year-on-year. In 2021, we processed €3,423,280 in donation
volume – ten times the amount processed in 2020. The funds processed
have created additional revenue streams for over 50 charities ranging fromglobal organizations like UNICEF, The Red Cross, UNHCR and Charity:
Water, to more localized charities such as Les Restos du Coeur in France,
Surfers Against Sewage in the UK and the Prinses Maxima Centrum in the
Netherlands.
While Giving supports merchant’s local charity campaign needs, we also
see the product helping to foster long-term partnerships between ourmerchants and charities, as inviting their shoppers to give back while they
shop creates additional exposure and funding to the charities. In somecases, we even see new partnerships emerge between our merchants andcharities in our pre-approved charity library. Considering this, we aresolidifying our position to facilitate partnerships for the SDGs, and are able
to create long-term value for our merchants, their shoppers, and society.

Adyen Annual Report 2021

Jeanne — Event Manager, Paris“ My biggest moment of pride last year was seeing how the partnershipI started with our local charity L’Un Est l’Autre, which cooks and serves
meals for homeless and immigrants, blossomed into something
beautiful when our entire team here at the Paris office joined! We stilluse our chat group to share pictures and people still go on the weekend
and help out on their own. It was amazing being able to do something
nice for the community, and as a lovely plus we connected as a team in acompletely new way. ”

38Adyen Annual Report 2021

39

“We choose to partner with businesses that maintain aforward-thinking approach to sustainability, as we area frontrunner in sustainable consumerism. Innovatingover shared beliefs, like we did when integrating Restore,
is illustrative of how we like to work"
Olivier Vangest — Head of Technology, Kazidomi

RestoreRestore, formally known as Offsets in Checkout, is our latest Impact
product. This product enables our merchants and their shoppers tocompensate the carbon emissions for either the delivery or the life-cycle ofgoods at checkout. This provides a simple way for shoppers and ourmerchants to support climate action projects. Our merchants haveexpressed a growing need for carbon compensation products in checkout
and therefore Restore helps solve this.
In order to ensure the data quality of emissions per purchase calculated, we
partnered with South Pole to build a greenhouse gas emissions2 calculator.
Currently, Restore is in pilot phase as we work with our merchants to iterate
and build the best product fit for them.

2

The product feature measures greenhouse gas emissions in tonnes of Carbon Dioxide
Equivalents (tCO2e) — covering the six greenhouse gases defined in the Kyoto Protocol by theUnited Nations Framework Convention on Climate Change. These six gases are carbon dioxide(CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perufluorocarbons(PFCs) and sulphur hexafluoride (SF6).

Adyen Annual Report 2021

40

Local initiatives

North America San Francisco

North America New YorkThrough our local initiatives
program we enable our teams toorganize grassroots initiatives forthe issues their communities face.
Our local teams know theircommunities best and that’s
why we foster employeelead, grassroots activities acrossthe globe.

Our San Francisco team partneredwith the Children’s Book Projectand collected over 60 books for
local Bay Area children in-need.
The team had over 40 donors fromour west-coast office and plans tocontinue to foster a relationshipwith the organization throughfuture book drives and in-person
volunteering. The San Francisco
office also actively partners withand supports Surf-Rider
Foundation and Hamilton Families.

The New York team hosted avirtual Career Day in the spring of2021 for 40 local college students
in partnership with America Needs
You (ANY). ANY helps
first-generation college students
find success through mentorship,career development curriculumand extensive networking. A new
initiative in the New York office inthe fall was launched with
Sharebite, a catering company
that prioritizes social impact.
Through Sharebite, our New Yorkteam was able to work with a local
food bank to give back to thecommunity. Furthermore, the New
York office supports the Hudson
River Park and Room to Grow.

The majority of our offices havecreated dedicated working groups
to assist and implement local
initiatives and have the autonomy
to set their own goals for theiractivities, as long as thesecontribute to at least one of the
SDGs. Key themes we see acrossall offices are fostering long-term
partnerships with largely hyperlocalized charities, making
sustainable choices when it comes
to office practices, providing
volunteering opportunities for
Adyen employees and ensuring
team building is incorporated.
Here are some highlights from thelocal initiatives we’ve seen acrossthe globe this year, selected per
region where we are active:

LATAM São PauloOur Sao Paulo office supports
three education-focused NGO’s
through ongoing partnerships andfunding — Generation
Brasil, Instituto Semear andRecode. Generation Brasil offers
minorities across 14 countries thepossibility to go through one of 26
training programmes focusedon developing skills for
employability. Instituto Semear
was established with the objectiveof providing quality education toyoung people from low-income
backgrounds through preparing
teenagers to attend university andcontinue throughout their studies
by providing financial assistanceas well as mentoring. Recodeprepares vulnerable youths for a
career in tech by providing training
in technical and soft skills throughits Recode Pro programme. Up
until now, more than 30 colleagues
volunteered in these initiatives,and more than 120 students were
funded.

Adyen Annual Report 2021

41

EMEA Amsterdam

EMEA Paris

Our Amsterdam team revamped
the cooperation with Hack Your
Future, a non-profit which trains
refugees in coding skills. We havecurrently more than 100
colleagues from the Amsterdam
team participating — and received
positive feedback with many of theparticipants landing jobs in thetech industry since. Anothereducation-focused initiative is how
colleagues from our Amsterdam
office volunteered at JINC, acharity which coaches and trains
primary and pre-vocational
secondary education students
from socio-economicallydisadvantaged neighborhoods.
Close to a hundred children were
included in our volunteering
contributions and Adyen donatedover 80 laptops. The Amsterdam
office also supports New Tech
Kids, Manara, and IMC
Weekendschool.

L’Un Est l’Autre is a charity whichcooks and serves around 1600
meals per week for homeless andimmigrants. In 2021, our French
team helped to distribute morethan 5500 meals over the year.
Adyen financially contributed to
the recent upgrade of L’Un Est
l’Autre’s kitchen equipment inorder to improve efficiency for theorganization. Furthermore, ourFrench office supports Café
Joyeux — a non-for-profit coffee
shop with the purpose of training
and employing people withcognitive disabilities, such as
Down syndrome or autism.

APAC Sydney
Colleagues from our Sydney officeparticipated in Fred’s Big Run
supporting the The Fred Hollows
Foundation, a non-for-profit whichaims to restore sight in third-world
countries.

Adyen Annual Report 2021

Alejandro — Office Manager, Mexico City“ Being an office manager during COVID has had its ups and downs, sowhen the office you’re supposed to manage is closed you need to getcreative. I made it my priority to build a great culture everywhere, sowhether people are at home or in the office, they feel comfortable andwelcome. I love that people are slowly coming back – not because they
feel pushed but because they really want to and miss it. ”

42Adyen Annual Report 2021

Environmental sustainability
At Adyen, we constantly strive to ingrain sustainability in the way we work as
a business. The decisions we make — from selecting service providers to
opening new office locations to business travel and beyond — need toconsider our commitment to the planet.
We believe that limiting our environmental impact is part of our license tooperate in today’s society and recognize that our impact on the planet is aconcern for us and our stakeholders. While Adyen’s exposure to physicaland transitional climate risk is limited (as detailed further under‘Environmental, Social and Governance risk’ in the Risk Management
section), we are committed to reducing our carbon emissions. For thoseemissions that cannot yet be reduced, we offset them in order to maintainour status as a carbon neutral company. We are currently assessing how
best to invest our resources to make a positive impact on our environment.
In 2021, we established a global Sustainability working group to further
implement sustainability across the company. The Sustainability working
group raises awareness, identifies strategic sustainable initiatives andfocuses its efforts on reducing Adyen’s carbon footprint. Furthermore, theteam seeks out ways to minimize Adyen’s environmental impact, both within
local communities and worldwide. Our Chief Financial Officer oversees theSustainability working group, and upholds the responsibility of its decisions
to the chairman of the Supervisory Board.
The below sections illustrate the outcomes of some of the initiatives we areworking on and details the progress we are making as we further embark on
our sustainability journey.

Reduction
Four significant emitters Adyen intends to target, include, but are not limited
to, the supply chain of terminals, the energy used by our data centers, theexpansion and building of new offices and business travel. The followingcase studies illustrate some of the work that we have undertaken in 2021 ineach of these areas:
Terminal recycling
In 2013, Adyen expanded its product offering to include POS. Starting from2016, we have been refurbishing and recycling our terminals, and we began
to record our recycling practices in 2019.
To date, we refurbished and reused 66% of the terminals returned to us.
The remaining 34% were recycled with our certified partners. While ourpreference would be to refurbish as many terminals as possible, recycling is
considered when terminals are reaching their end-of-life and must be
replaced by newer models.

43Adyen Annual Report 2021

Data centers
One of our key reduction efforts has been the optimization of our data
centers’ energy usage. In 2021, 88% of the energy we used in our data
centers was covered by renewable energy.
As we continue to expand globally — and sourcing renewable energy is not
yet equally accessible across countries — it will be a challenge to maintainand improve on the high level of renewable energy coverage we currently
maintain. Notwithstanding, we will strive for solutions to keep this coverageas high as possible, improving our efficiency on a global scale.
New office buildings
We continue to open new offices and up-sizing existing locations at scale
and particularly focus on sustainability and social impact while doing so.
For example, with expanding and leasing new offices in Amsterdam weutilized local, sustainable materials and worked with local companies during
the construction process to support the Amsterdam communities. In
London, we worked together with a local design team to use locally-sourced
products throughout the build. This commitment to local products
contributed to keeping unnecessary delivery emissions to a minimum. We
used a variety of different refurbished and recycled materials across thefitting of the office.
TravelAdyen was built on the foundation of working together as a team andcreating meaningful relationships with our merchants. As a result, we areaware that business travel is one of our largest emitters — one that we must
act upon. This is why we introduced the Adyen ‘Travel Formula’ this year.
The Travel Formula is aimed at making us travel smarter than we did prepandemic, with key points around the necessity of travel, sustainable
alternatives, and efficiently planning international meetings. With local
lockdowns lifting and travel restrictions relaxing, we look to the future and aslow return to travel where we will use this Formula as a guidance towards
making more sustainable choices and limiting our emissions.
In addition to our Travel Formula, we invested in carbon removal credits tomatch the volume of CO2 emitted from our business travel. For 2021, wepurchased 1,668tCO2 of the CarbonCure project in the US.

44

Adyen Annual Report 2021

CarbonCure - Enabling the concrete industry to improve operations while reducing its carbon
footprint, USA
The carbon emitted from the manufacturing of building materials and construction is estimated toaccount for nearly 50% of carbon emissions from new construction over the next three decades.
CarbonCure’s technology is retrofitted into concrete plants to allow concrete producers to inject a
precise amount of captured CO2 into fresh concrete during mixing. Once injected into the concretemix, the CO2 reacts with the calcium ions in the cement to form a nano-sized mineral, Calcium
Carbonate, which becomes embedded in the concrete. Best of all, the CO2 mineralization also
increases the concrete’s strength, resulting in economic and climate benefits—truly a win-win
solution.

Next steps
Now we have a clear view of what our material emission sources are, we arefocusing on how to design our reduction efforts. In 2022, we will beformalizing these reduction targets. We recognize the need to further
monitor and report on reducing our footprint. Targets are not a goal in andof itself, but help us hold ourselves accountable. This will be our priority,
alongside the continued expansion of our reduction efforts and the strategic
sustainability investments that we have begun.

Carbon neutrality
We annually calculate our carbon footprint through a greenhousegas (GHG) audit, which measures the amount of CO2e emissions for which
we are accountable. Through our partnership with South Pole, we are able
to offset these emissions by supporting environmental sustainability
projects. As outlined above, we recognize that carbon reduction tops
carbon compensation and remain committed to offsetting the remainder ofour emissions.
We follow the scopes of the Greenhouse Gas Protocol: Accounting andReporting Standard to measure Adyen’s GHG emissions. Scope 1 and 2
emissions are calculated using data from our offices across the world,reflecting how we heat and cool our offices along with the electricity we use.
Scope 3 emissions stem from mileage (air travel and groundtransportation), data center energy use, hotel stay duration, spend onpurchased goods, and outsourced activities.

45

Adyen Annual Report 2021

Meliza & Sabine — Facilities Managers, Amsterdam“ Whether it was from home or from the office – we have been working
hard on facilitating the opening of our new Amsterdam office spaces.
Our main priority for the buildings is that it has to feel like a great placefor our colleagues to come back to and experience all the little things
they missed while working from home. Having a chat at the coffee corner,
bumping into a colleague in the elevator, and bouncing off ideas during
lunch – we wanted the new office to be a home and a testament of how
we work together as a team. ”

46Adyen Annual Report 2021

47

Adyen’s 2021 operational GHG emissions, measured in tCO2e3
Scope
Scope 1: direct GHG emissions

Emissions (tC02e)% of total

tCO2e/ FTE

231

1%

0.11

2,212

12%

1.01

15,792

87%

7.24

18,235100%

8.36

These emissions are emissions from sources owned or controlled by
us — such as refrigerants used to heat or cool our offices.

Scope 2: indirect GHG emissions from purchased electricity, heating
and cooling
These emissions cover indirect emissions, such as purchased
electricity for our buildings and data centers.

Scope 3: other indirect GHG emissions
These emissions stem from activities that are not directly owned orcontrolled by Adyen — think of air travel, hotel stays and employees’
homes.
Total GHG emissions

For the second year running, we have decided to take our responsibility one step further
and include the energy usage of our products in our footprint calculations. That meansthat we calculate the emissions generated by each individual transaction on ourplatform — on POS terminals, online and through mobile payments — and include it in
the emissions that we offset.
The effect of working from home was considered in our calculations for the second year
in a row too. Normally, our emissions are mainly derived from the operations within our
offices and business travel. As a natural result of the COVID-19 pandemic, many of ouremployees continued to work from home across 2021, meaning lower office emissions,but higher personal emissions within each employee’s homes. For this reason, we
included an estimation of increased CO2e emissions from homes, so that we could still
consider all of our business activities in our annual offsetting calculations.
Overall, we saw an increase in Scope 3 emissions when compared to 2020. This is
primarily due to the expansion of the business both in terms of our team and offices.
The purchase of new servers for our data centers and the increase in the number oftransactions on the Adyen platform in 2021 led to significant increases in the overall
scope emissions. The new leases and office expansions that we took on worldwide also
played a significant role in the elevated numbers.
3

Environmental sustainability projects
This year, the environmental sustainability projects we supported were focused on the
SDGs of climate action and quality education. We have chosen to continue our support
for the projects in which we invested in in 2020 — TIST (Uganda) and Kariba(Zimbabwe), as we firmly believe in the long-term goals of these ongoing projects.
We also added a new project to our portfolio, focusing on metro travel improvements in
India, as we have expanded our business in the country. Each of the projects are helping
to bring lasting solutions to these Sustainable Development Goals.

The measure for our greenhouse gas
emissions is tonnes of Carbon Dioxide
Equivalents (tCO2e) — covering the six
greenhouse gases defined in the Kyoto
Protocol by the United Nations Framework
Convention on Climate Change. These six
gases are carbon dioxide (CO2), methane(CH4), nitrous oxide (N2O),
hydrofluorocarbons (HFCs),
perufluorocarbons (PFCs) and sulphur
hexafluoride (SF6).

Adyen Annual Report 2021

48

Delhi Metro Rail Corporation— Metro energy efficiency, India

TIST Program Empoweringsubsistence farmers in Uganda

This project reduces energy
consumption levels of the Delhi
Metro Rail Corporation (DMRC),
creating greener transport
infrastructure and supporting a
range of programs that contributeto the sustainable development,setting a standard for
implementation across India.
The project activity reduces
electricity consumption throughvarious energy efficiency systems
in lifts, escalators, lighting andair conditioning.

Farming for the survival of anindividual or family, also known as
subsistence farming, iscommonplace throughout the
majority of rural communities in
Uganda. Via education-focused
projects, the International Small
Group and Tree Planting Program(TIST) aims to break the cycle ofdeforestation, drought, famine,and poverty by empowering
populations reliant on subsistence
farming via education-focused
projects. These projects empower
and train local farmers in theirreforestation and agricultural
efforts — for example, byeducating on how to plant trees for
maximum protection from runoff
and erosion, and simultaneously
conserve water and stabilize soil toincrease crop yields. In terms ofbuilding sustainable livelihoods,
participants in the TIST Program
receive stipends from the sale ofcarbon credits based on the GHG
benefits created by their efforts.

Kariba Reforestation andwildlife protection on the shoresof Lake Kariba, Zimbabwe
In recent decades, more than athird of forests have been clearedin Zimbabwe to make space forsubsistence farming and fuelwood,as the rocky political andeconomic climate has left many
communities with no other option.
The Kariba project protects around
785,000 hectares on the shores of
Lake Kariba from deforestationand land degradation. This large
biodiversity corridor is home to
many vulnerable and endangered
species, and prevents 3.5 million
tonnes of CO2 from being
released into the atmosphereannually. The project also supports
regional sustainable development
and promotes the independenceof local communities by providing
healthcare, clean drinking waterand education on project-related
activities such as agricultural
practice, beekeeping and borehole
maintenance.

Adyen Annual Report 2021

Risk management
Adyen recognizes that risks are associated with achieving its strategy andbusiness objectives. Adyen aims to be risk aware without being unduly risk
averse. Adyen therefore actively manages its risks to protect and grow thecompany, it has adopted a uniform and systematic approach for managing
risks. Adyen's integral risk management framework is based on theEnterprise Risk Management (ERM) model as issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO) in 2017.

Risk governance
Adyen has established a risk governance that is consistent with the size andcomplexity of the organization and the risk profile of the company. Adyen's
governance identifies, establishes and reinforces the importance ofoversight responsibilities for risk management. The Supervisory Board
supervises and advises the Management Board. The Audit and Risk
Committee is charged with supervising, monitoring, and advising theManagement Board in relation to the functioning of the internal risk
management and control systems.
The Management Board is responsible for maintaining an adequate system
for risk management and internal control. The Management Board has
instituted a Risk Committee to support them with risk management
oversight. The CFO, CLCO, and CTO represent the Management Board in
the Risk Committee. The Corporate Risk and Internal Control team reports
its findings from monitoring Adyen’s risk profile to the Risk Committee. The
Risk Committee keeps the Management Board informed of theobservations, recommendations, and deliberations on findings regarding
risk management and internal control. The Risk Committee reports any
material risk limit breach that would place Adyen at risk of exceeding its risk
appetite promptly to the Management Board.

Three-lines-model
Adyen has adopted the three-lines-model, which reflects the segregation
between operations (first line management), the risk management, security
and compliance functions (second line), and the independent internal audit
function (third line). The first line owns and manages risks, the second line
sets control standards and monitors adherence to them, and the third
line—internal audit—provides assurance on the adequacy of the first two.
The Corporate Risk and Internal Control team supports the Management
Board and Risk Committee with its risk oversight, management of the risk
framework, setting of the relevant risk management policies, risk appetite,and independent monitoring of key risks, limits, and controls.

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Adyen Annual Report 2021

Soraia — Marketing Manager, Sao Paulo“ I had quite some me-time in 2021, and actually really enjoyed that. I got
to explore different clothing styles, I changed my hair, tried new work-out
classes, I pretty much had time to find a new me. In between lockdowns,
I even got to go on my first work trip, which was such an adventure! We
worked the full week on a big marketing project, it was an intense week
but so much fun, definitely a highlight of my year. ”

50Adyen Annual Report 2021

51

The Adyen
Way of Being In Control
We always ask why and are critical,
we don’t just tick the box
Your work impacts others, involve them
We evidence our work at the source, we don’t
replicate it
If you see a problem, act on it

We all make mistakes, we seek help
and share as soon as we find out

Always look for improvement, automate processes
continually & challenge the status quo

The formula guides our behavior,policies support it

Risk culture
Culture is a key aspect of risk management at Adyen. Our people establish
the mission, strategy, and business objectives, and put risk management
practices in place. Adyen believes that a strong culture serves as a safety
net to guide people in making good decisions. Therefore, Adyen promotes
and safeguards the key elements of culture through the Adyen Formula andthe Adyen Way of Being In Control.

Strategy, objective setting, and risk appetite
At Adyen, risk management, strategy, and objective-setting work together.
Operational objectives put strategy into practice while serving as a basis for
identifying, assessing, and responding to risk.
Risk appetite defines the amounts and types of risk Adyen is willing toaccept in pursuit of its objectives. A low risk appetite implies a low
acceptable residual risk and therefore requires a stronger risk response
and stricter internal controls. A higher risk appetite may allow for additional
activity and less strong internal controls. Adyen's risk appetite is alignedwith its strategy. Changes in strategy and willingness to assume risks or
external developments may result in an updated risk appetite, which isultimately bound by Adyen’s risk capacity.
Adyen has translated its view on risk appetite into risk appetite statements,
which set the overall tone for Adyen's approach to risk taking. In 2021, theManagement Board performed its annual review and updated Adyen’s risk
appetite statements and risk limits, which were discussed in the Audit andRisk Committee, and approved by the Supervisory Board.

Adyen Annual Report 2021

Event identification and risk assessment
Adyen performs a top-down, company-wide risk assessment at least
annually. The purpose is to assess principal and emerging risks in order tofocus attention on the most significant threats and opportunities.
The Management Board has updated its company-wide risk assessment in
2021. For a more detailed description of the principal risks, see the Risk
Factors section. The top-down, company-wide risk assessment iscomplemented by a multitude of bottom-up risk assessments. These canbe conducted at process level or can be aimed at specific risk categories.
A notable example of the latter category is the Systemic Integrity Risk
Analysis (‘SIRA’) which focusses on integrity risks.
Adyen has continued in 2021 with expanding the use of its GRC tooling tosupport the evaluation of the effectiveness of its control framework. One of
the additions allows us to map our risks and controls to various industry andregulatory compliance frameworks simultaneously. This creates significant
efficiency gains for both first and second line functions.

Control activities
Adyen uses COSO's Internal Control — Integrated Framework (2013) as areference for its design, implementation, and evaluation of control activities
as part of a system of internal control. Adyen has implemented internal risk
management and control systems to manage the risks effectively andefficiently and to provide reasonable assurance that objectives can be met.
Policies and procedures ensure that employees understand their role in
Adyen's risk and control systems. Fraud risk prevention, for example, starts
with the identification of potential internal and external fraud risk scenarios.
This identification is a process that continues throughout the year, with anotable detailed analysis during the yearly SIRA exercise. As a first step theidentification, analysis and determination of the internal and external fraudrisks relevant to Adyen takes place, followed by the nature and inherent sizeof these risk. Subsequently, the relevant controls that are in place aremapped to the risks. Finally, Adyen concludes on the overall residual risk
and an assessment is made to what extent the remaining residual risk is
within Adyen’s risk appetite. Adyen’s key internal fraud risk scenarios
include the manipulation of financial results, the misuse of confidential
information, and the misappropriation of assets. Relevant mitigating
controls mapped to these internal fraud risk scenarios vary in origin. There
are governance measures, such as oversight by the Management Board,Internal Audit, Compliance and the Audit Committee. Adyen also applies
measures aimed at people, conduct and culture, such as an anti-fraud
policy, employee background screening, a whistleblower policy and atargeted training program. Furthermore a broad range of detective controls
at process level are present, such as system monitoring, reconciliation andauditing. These are complemented by preventive measures that include
review and approval flows and segregation of duties. Whenever fraud is52

Adyen Annual Report 2021

suspected or reported, an internal investigation is conducted and corrective
actions are taken. Adyen’s key external fraud risk scenarios include merchants
providing Adyen with fraudulent documents, circumvention of Adyen’s fraud
prevention system through brute force or fraud rings, and merchants initiating
fraudulent transactions. Relevant mitigating controls mapped to these external
fraud risk scenarios include both preventative and detective controls, such as
customer due diligence, customer screening, security monitoring, vulnerability
management, access controls, and transaction monitoring. Adyen by ways of
it’s management assessed that the relevant controls and mitigating measuresin place sufficiently mitigate the identified internal and external fraud risk
scenarios. There were not any internal fraud cases or suspects thereof
identified. During the year, no significant external fraud cases were identified.
However, with regards to any minor cases identified, Adyen undertook timely
corrective actions.

Stress testing
Adyen uses stress testing to understand the potential impact of adverse eventson its business model, capital, and liquidity ratios. The stress scenarios are
based on exceptional but plausible events with an adequate degree of severity.
Adyen also performs stress testing to evaluate the reliability of capital andliquidity plans under stressed conditions using scenarios and risk factors
prescribed by the regulator. Adyen performs these tests in accordance with
EBA guidelines on stress testing. In 2021, Adyen’s Internal Capital and
Liquidity Adequacy Assessment Process (ICLAAP) confirmed its high financial
shock absorption capacity and high capital and liquidity ratios.
More information on Adyen’s capital and liquidity ratios can be found in the2021 Transparency and Disclosure Report (Pillar 3) at www.adyen.com/ir.

Effectiveness of risk management and internal
control systems
In compliance with principle 1.2 of the Dutch Corporate Governance Code,the Management Board is responsible for establishing and maintaining anadequate system for risk management and internal control.
Adyen has implemented internal control over financial reporting designed toprovide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes inaccordance with financial reporting standards. In compliance with principle 1.4of the Dutch Corporate Governance Code, the Management Board annually
evaluates the effectiveness of the design and operating of its risk management
and control systems. Per December 31, 2021, no major failings in theeffectiveness of the internal risk management and control systems wereobserved, nor were significant changes to these systems made or major
improvements planned. The Management Board has discussed the evaluationof its risk management and control systems with the Audit and Risk Committee
and Supervisory Board.

53Adyen Annual Report 2021

Risk factors
In compliance with principle 1.4 of the Dutch Corporate Governance Code,the Management Board has updated its company-wide risk assessment in
2021. This section describes the principal risks that could potentially affectAdyen, with further detail on financial risks provided in note 12 of thefinancial statements. While Adyen believes that the risks described below
are the material risks concerning Adyen's business, they are not the only
risks relevant to Adyen. Other risks, facts, or circumstances not presently
known to Adyen or that Adyen currently deems to be immaterial, could
individually or cumulatively prove to be significant and could have a material
adverse effect on Adyen's business, results of operations, financial
condition, and prospects.

Strategic and business risk
Adyen accepts strategic and business risk knowing that in order to achieve
its strategic objectives it will consume capital when investing in new assets,
people, and processes. In pursuance of its strategic objectives Adyen
values a solid financial and capital outlook.
Reputational risk
Adyen has low appetite for reputational risk and aims to avoid actions thattrigger negative international media attention and/or significant reputational
damage. Any negative publicity about Adyen, the quality and reliability of its
products and services, changes to its products and services, its ability toeffectively manage and resolve complaints, its privacy and security
practices, litigation, regulatory activity, and the experience of merchants
and shoppers with its products or services, could adversely affect its
reputation and the confidence in and use of its products and services.
Harm to Adyen's brand can arise from many sources, including failure by
Adyen or its partners to satisfy expectations of service and quality,
inadequate protection of sensitive information, compliance failures andclaims, litigation and other claims, employee misconduct, rumors or false
stories, and misconduct by its partners, service providers, or othercounterparties. Adyen wants to build an ethical and sustainable businessand therefore actively mitigates risks that could negatively affect the Adyen
reputation or brand. Failure to meet carbon-reducing policy goals, forexample, could cause reputational damage and result in low ratings insustainable investment indexes, affecting the share price. Adyen prides its
commitment to goals that improve the business, social and environmental
footprint. Refer to the ‘Social Responsibility’ section for an overview ofAdyen’s sustainability efforts.

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Adyen Annual Report 2021

Competition
Adyen competes against a wide range of businesses. These competitors
might have a dominant position, or offer other products and services to
shoppers and merchants that Adyen does not offer. Some competitors havegreater merchant bases, volume, scale, resources, and market sharecompared to Adyen, which may provide significant competitive advantages.
Furthermore, Adyen is facing competitive pressure from non-traditional
payments processors and other parties entering the digital payments
industry, which may compete in one or more of the functions performed inprocessing merchant transactions. Adyen has a moderate risk appetite forcompetition as it is accepted that it will experience competition as it seeks
to increase market share, thereby potentially reducing profit margins. But
not at all cost — if pricing is not sustainable, then Adyen will not pursue adeal. In general, Adyen is able to react quickly to market developments due
to how its technology and solutions are structured.
Disruptive innovation
Adyen expects that rapid and significant advancements in technology willcontinue. These changes may be more superior, cheaper, and impair or
render obsolete the products and services Adyen offers. If Adyen is unable
to provide enhancements and new features that achieve market acceptanceor keep pace with rapid technological developments and evolving industry
standards, its business could be materially and adversely affected. Adyen
accepts disruption and innovation as standard market practices. As such,
Adyen continues to build and actively invest in its single platform solution.
Adyen has established solutions and workstreams that continuously workon improving its service offering based on merchants’ needs. Through the
setup of the solutions and workstreams with product, technical, andcommercial staff, Adyen can work closely with its merchants and quickly
address their evolving needs.
Access to card networks
The majority of transactions processed on the Adyen platform go throughinternational credit and debit card networks. In order to access these card
scheme networks to provide acquiring, processing, and issuing services,
Adyen must have the relevant geographically based operating licenses ormemberships. In some markets where it is not feasible or possible for Adyen
to have a direct license with a card network, Adyen has a relationship with alocal financial institution to act as a local sponsor for the license. Adyen has
low appetite for failure to comply with card network rules or for any other
deterioration in its relationships with the card networks, which could resultin the restriction, suspension, or termination of Adyen's own licenses, or theuse of sponsoring banks’ licenses.

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Adyen Annual Report 2021

Concentration of merchantsSome of Adyen's largest merchants provide significant contributions to its
net revenue. Large merchants typically have arrangements with multiple
payment service providers (primarily in order to mitigate their single-pointof-failure risk). These merchants could terminate their contracts or shiftbusiness away, leading to lower processed volumes and net revenues.
Adyen has low risk appetite for commercial dependency and therefore
continues to execute its growth strategy to board new merchants fromdifferent verticals on its platform. Adyen believes that its merchant portfolio
is well diversified, as was evidenced during the pandemic.
Macroeconomic conditions
Adyen accepts that entering and operating in markets with somemacroeconomic volatility could lead to financial losses. Uncertainty about
global and regional economic events and conditions, may result in shoppers
and merchants postponing spending, which could have a material adverse
impact on the demand for Adyen's products and services. Adyen therefore
monitors relevant indicators and has for example observed inflation rates
going up in several key markets during 2021, to which it was able toformulate risk responses during the year.
In December 2020, Adyen formally applied for providing regulated services
through a UK Branch. Currently awaiting formal authorization, Adyen makes
use of the Temporary Permission Regime to continue servicing UK
merchants on a cross-border basis without disruption.
Intellectual property rights
As substantially all of Adyen's intellectual property is developed in-house,
the protection of such intellectual property, including Adyen's platforms,
trademarks, copyrights, domain names, trade dress, and trade secrets isimportant to the success of its business. Adyen seeks to protect its
intellectual property rights by relying on applicable laws and regulations, aswell as a variety of administrative procedures. Nevertheless, Adyen's
intellectual property rights may be contested, circumvented, or foundunenforceable or invalid, and Adyen may not be able to prevent third-parties
from infringing, diluting, or otherwise violating them. Any failure toadequately protect or enforce Adyen's intellectual property rights orsignificant costs incurred in doing so could diminish the value of its
intangible assets.
As the number of products in the technology and payments industries
increases and the functionality of these products further overlaps, Adyen
may become subject to intellectual property infringement and other claims.
Adyen’s international growth and development of intellectual property in
new jurisdiction can also influence it’s risk of claims. The ultimate outcomeof any allegation is often uncertain and, regardless of the outcome, any such

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claim, with or without merit, may be time-consuming, result in costly
litigation, divert management's time and attention, and require Adyen to,among others, stop providing transaction processing and other paymentrelated services or redesign, stop selling its products or services, pay
substantial amounts to satisfy judgments or settle claims or lawsuits, pay
substantial royalty or licensing fees, or satisfy indemnification obligations
that Adyen has with certain parties with whom Adyen has commercial
relationships.
Execution risk
Central to the success of Adyen has always been the ability to innovate andrespond quickly to opportunities that arise. The organizational
competences of speed and decisiveness will also be key in realizing future
strategic objectives. Adyen therefore actively mitigates its execution risk,
which it has defined as increased complexity leading to a loss oforganizational focus and loss of ability to act effectively. Most notably thiscan be seen via its organizational structure and governance. This structure
is relatively flat, aimed at direct co-creation and focuses on growing thebusiness through solutions and workstreams.
Environmental, Social and Governance risk
Climate and environment-related risks are commonly understood tocomprise two main risk drivers: Physical and transition risks. Physical riskrefers to the financial impact of a changing climate. Physical risk is
categorized as “acute” when it arises from extreme events, such as
droughts, floods, and storms, and “chronic” when it arises from progressive
shifts, such as increasing temperatures, sea-level rises, water stress,
biodiversity loss, land use change, habitat destruction, and resource
scarcity. This can directly result in, for example, damage to Adyen property
or reduced productivity, or indirectly lead to subsequent events, such as the
disruption of the Adyen supply chain. Transition risk on the other hand,refers to a financial loss that can result, directly or indirectly, from theprocess of adjustment towards a lower-carbon and more environmentally
sustainable economy. This could be triggered, for example, by a relatively
abrupt adoption of climate and environmental policies, technologicalprogress or changes in market sentiment and preferences.
Adyen is not a traditional bank and does not hold assets on its balance
sheet that have an inherently high exposure to physical climate risk. It is also
not straightforward to make the connection between transition risk andAdyen’s payments business model. As a result, there is not a broad array ofinherently high risk climate and environment-related risks.
As its main inherent climate risk, Adyen does recognize the potential
adverse impact on Adyen’s ability to provide services to its merchants.
Prolonged power outages due to natural disasters could have a devastating57

Adyen Annual Report 2021

impact on critical infrastructure used by Adyen and its service providers.
Adyen’s headquarters are located in Amsterdam, which is a city potentiallyvulnerable to flood due to the gradual rise of sea levels. Physical risk could
also occur in other locations where Adyen’s offices or vendors are located.
Adyen’s offices are typically close to its merchants in metropolitan areas,
which could make Adyen vulnerable to the adverse impact from pandemics.
There are structural measures Adyen has implemented that mitigate its
environmental risk exposure. The one single platform of Adyen is designed
to create redundancy in its critical infrastructure and operations, surpassing
traditional back-up setups, as is detailed in the section on availability.
Adyen furthermore continues to diversify its global customer portfolio tomitigate any reliance on sectors and markets, which could be more
vulnerable to climate-related and environmental risks, both physical as wellas transitional.
Adyen also considers the risks it may encounter due to social
developments. Specifically how its own workforce develops and therelationship to the society in which it operates, and the politicalenvironment. Society sees a role for private companies to support positivesocial change and Adyen is contributing. It would be limited to only point at
reputational risks in this context, diversity is seen as fundamental to Adyen’s
company culture. It is included in the Adyen Formula which states weinvolve others to sharpen our ideas. Adyen’s Diversity, Equity and Inclusion(DEI) initiatives and DEI policy are further testament to this. Adyen risk
management identifies and monitors social factors and their effects
throughout the year during risk assessments. Adyen also conducts a yearly
culture audit, and actively considers geopolitical developments in light of its
supply chain as well as interest and inflation expectations.
Governance risk relates to decision making, at Adyen in particular withrespect to the distribution of rights and responsibilities among different
participants in the company, including the board of directors, managers,
shareholders and stakeholders. Mitigating factors are sound management
structures, policies and procedures, healthy employee relations, wellthought remuneration and tax compliance.
Adyen sees governance risks as directly connected with the robustness
and resourcefulness of the procedures for compliance with the frameworkof relevant laws and regulations wherein Adyen operates. However, Adyen
does go beyond evaluating just the formal routines for compliance, as thecompany consciously connects to voluntary frameworks such as GRI andsees the company culture as a prime measure in mitigating
governance risks.
A considerable amount of new ESG regulation, with accompanying
disclosure frameworks, approach Adyen, as explained earlier in this Annual
Report. In preparation, Adyen has further integrated ESG during 2021 in its
overall risk management framework.

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Adyen Annual Report 2021

Operational risk
Adyen recognizes that operational risks are associated with achieving its
business objectives. Operational risk concerns the risk of losses resulting
from inadequate or failed internal processes, people, and systems or fromexternal events, including legal risk. Adyen has a moderate appetite for
operational losses. During 2021, Adyen remained well within its risk limits
that were set as a reflection of its risk appetite for operational risks.
Merchants’ potential liability for shopper chargebacks
When shoppers claim that a merchant has not delivered goods or services
as agreed, issuing banks can file chargebacks. Adyen seeks to offset suchchargebacks with the payouts to the merchant, but may not be able tosucceed in full. While Adyen has implemented risk mitigation, including
withholding funds from the payouts to its merchants based on assumptions
and estimates that Adyen believes are reasonable to cover such
eventualities, the measures, including the withheld funds, may not
be sufficient.
Adyen has a dedicated MPL team that closely follows the development of
this risk. The team frequently discussed its observations andrecommendations with the Merchant Risk Committee, Management andSupervisory Board throughout the year. Despite the prolonged pandemic
lockdown measures in 2021 Adyen has not incurred sizeable MPL losses
due to chargebacks during the year. The cumulative MPL losses were wellwithin the set risk appetite.
Availability, connectivity, and performance of products and services
Adyen has a low appetite for issues in the availability, connectivity andperformance of the platform. Adyen's systems and those of its third-party
service providers, including data center facilities and communication
networks, have experienced service interruptions in the past and may
experience significant service interruptions in the future. Frequent or
persistent availability, connectivity, or performance issues could cause
current or potential merchants to believe that its systems are unreliable,
leading them to switch to a competitor or to avoid Adyen's products andservices, potentially harming Adyen's reputation and brand permanently.
Moreover, to the extent that any platform failure or similar event results indamages to Adyen's merchants or their business partners, the merchantsor partners could seek significant compensation or contractual penalties
from Adyen for their losses, which, even if unsuccessful, could likely betime-consuming and costly for Adyen to address and divert management
attention. Furthermore, frequent or persistent interruptions could lead toregulatory scrutiny, significant fines and penalties, and/or mandatory andcostly changes to its business practices and could ultimately cause Adyen
to lose existing regulatory licenses or prevent or delay Adyen from obtaining
additional regulatory licenses that Adyen needs to expand its business.

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Adyen has built its platform and services to avoid the presence of single
points of failure, and to ensure that sufficient capability exists to continue
normal operations for critical processes despite the loss or unavailability ofcorporate resources, from information technology, physical locations oreven personnel and whole departmental structures. The highly available
platform is designed to withstand individual telecommunications, systems
and data center instance failures. During 2021, on one operational incident
Adyen underperformed the Wft norm. However, no claims were identified
and this incident was resolved and used as input for further improvements
to configuration. Adyen staff is fully equipped to work remotely, and havebeen doing so without impact to our payment processing ability.
Information security risk
Adyen and its merchants, partners, and others who use its services, obtainand process a large amount of sensitive data. Adyen's and its partners' IT
systems may be vulnerable to physical and electronic breaches, computerviruses and attacks by cyber-criminals, internet fraudsters, employees orothers. This could lead to, amongst other things, a leakage of merchants’data, damage related to incursions, destruction of documents, inability ordelays in processing transactions, and unauthorized transactions. Adyen
has a low appetite for information security risk which includes cybersecurity risk. Any real or perceived privacy breaches or improper use of,disclosure of, or access to such data could harm Adyen's reputation as atrusted brand in the handling and protection of this data. Although Adyen
carries cyber liability insurance that it believes to be reasonable to coversuch eventualities, such insurance may not be sufficient to cover all
potential losses or could come at a price where it is no longer economicallysensible to take out in the future.
Adyen’s Security Officer is responsible for managing the Information
Security Program. The goal of the Information Security Program is to ensure
the ongoing confidentiality, integrity, and availability of data, systems, andprocesses at Adyen, and to ensure that specific information security
compliance programs are maintained and externally assessed as
appropriate. Adyen undertakes background checks for new hires. Training
is undertaken on IT security on the first day at Adyen. A follow-up generalsecurity introduction, which addresses privacy and confidentiality policies,
must be completed within two months of start date. Annual refresher
training on topics as privacy and security is mandatory for all employees.
Adyen’s risk-based approach has resulted in an efficient and flexible IT
infrastructure, which enabled a very steady and stable transition to thework-from-home environment.
Information security will be a structural risk for Adyen, and strengthening
our capabilities to mitigate the evolving risk is therefore continuous.
Information security risk was not necessarily higher in 2021 compared toprevious years, but did have its specific events.

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Adyen saw for example increased DDoS threats in the beginning of the year
which Adyen was able to shield effectively, but logically also led to lessons
learned. Another example was the Log4j event in December 2021. Within
12 hours from first becoming aware of the Apache Log4j vulnerability, theAdyen platform was upgraded and the fix was verified by Adyen’s Security
team. A second and third iteration were done when Log4j versions 2.16.0
and 2.17.0 became available. Although the mitigating factors and existingmeasures confirmed no exploitation would be possible, Adyen patched all
platform and supporting services diligently and also here took on thelessons learned for future development.
Third party risk
Vendors and supply chain dependencies could negatively impact Adyen’s
operations and security of data, systems, and services. Adyen has a low
appetite for dependency on third-parties in its critical processes. Adyen
strives to minimize outsourcing of activities directly related to its core
processes or platform to avoid dependency on suppliers. Adyen believes
that not being limited by third-party software in its core operations is a key
factor in its ability to rapidly increase the number of transactions that theplatform can process. Adyen has established a Third Parties Policy, which
defines a framework, including clear ownership, for assessing third-party
risk. Adyen is monitoring third-party risk on a continuous basis with support
of a third party risk management tool. In 2021, Adyen carried out a periodic
review on its most important third parties to update their risk profile andmonitor compliance with the policy. The review was completed on all
in-scope vendors, resulting in reclassifications, updates of third-party risk
profiles or off-boarding advice due to inactivity.
Data privacy
Adyen is subject to several privacy and data protection laws and regulations,such as the GDPR, CCPA and LGPD (referred to as "privacy laws") relating
to the collection, use, retention, security, processing, and transfer of
personal data about its merchants, shoppers, third-parties and others, andtheir transactions in the countries wherein Adyen operates. Adyen’s
expanding global footprint and product offering requires Adyen to steadily
adapt, improve and strengthen its processes and procedures and closely
monitor any changes to new and existing privacy laws.
Any failure, or perceived failure, by Adyen to comply with its privacy policies
or with any applicable privacy laws in one or more jurisdictions could resultin proceedings or actions against Adyen by governmental entities or others,
including class action privacy litigation in certain jurisdictions, significant
fines, penalties, judgments, and reputational damage. Adyen has a low
appetite for data privacy risks and promotes a culture of diligence and highethical standards with regards to the collection of information. Please referto the ‘Data Privacy’ section in this Annual Report for more information on
the topic.

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Entrepreneurial culture
Adyen is committed to maintaining its entrepreneurial company culture,
which fosters innovation, diversity, and talent development, and therefore
has a low appetite for elements threatening this culture. Adyen's
entrepreneurial culture has been one of the primary drivers of its historical
growth. As Adyen continues to grow, it may not be able to maintain its
entrepreneurial culture. If Adyen does not successfully manage its growth,and is not able to differentiate its business from those of its competitors,
drive value for and retain merchants, or effectively align its resources with its
goals and objectives, Adyen may not be able to compete effectively against
its competitors, leading to declining growth and net revenues. Adyen
promotes and safeguards the key elements of its culture through the
Adyen Formula.
During 2021, Adyen saw the benefits of the changes that were made toaccommodate working-from-home. The onboarding process and thecompany introduction sessions are delivered online, with real-life interaction
possible and complementary if the regional situation permits. Senior
management spent significant time on the online company introductions by
hosting Adyen Formula chats and continued to meet every new hire before
they joined the team. When possible, company events were organized thatemphasized Adyen’s unique culture and the shared responsibility ofmaintaining it.
TalentAdyen's future performance substantially depends on the continued
services of key talent and its ability to attract, retain, and motivate suchtalent. The loss of services of any of Adyen's key talent or Adyen's inability to
attract highly qualified key talent may adversely affect its operations. Adyen
has low appetite for the loss of key talent and actively manages thecomposition and quality of its talent pool.
2021 continued to impact Adyen’s relatively young labor force in different
ways. Working from home often became the default for employees andsustainable and structural ways to develop, grow and bind talent were
implemented. Many of these measures placed team leads in a central role,
but personal lessons learned and guidance from the Management board
also took shape via the “The Adyen from Home Formula”. Adyen has beenable to grow the team considerably during 2021, but, despite Adyen being apreferred employer in the Netherlands, finding the right (technical) skills is
becoming an increasingly global challenge which is expected to remain achallenge in the upcoming years. Therefore, two Adyen tech hubs in
Chicago and Madrid were announced. These two locations are focused ontechnically growing the platform, provide an inspiring environment forengineers and tap into the locally available talent pool. Adyen furthermore
strives to hire, promote, and enable underrepresented groups, while62

Adyen Annual Report 2021

challenging the status quo in the communities in which it operates. In realizing
this aspiration, Adyen deployed a number of actions during 2021. The ‘People
and Culture’ section in this Annual Report provides more information.
Integrity risk
Integrity risk is the risk of inappropriate behavior of employees and board
members or third-parties (merchants, suppliers, advisers) posing a current or
future threat to Adyen and/or the proper functioning of the financial systemthat can be attributed to Adyen or in which Adyen acts imputable.
Inappropriate behavior generally refers to insufficient compliance with
relevant rules or regulations, internal policies, and/or the Adyen Formula. If
Adyen (or a third-party it does business with) fails to comply with laws andregulations, or expectations by the market or society of ethical businessconduct, supervisory authorities may initiate legal and regulatory proceedings
against Adyen. Fraud is a risk Adyen is exposed to both internal as well as
external. Merchants (and their shoppers) and Adyen employees may attempt
to act in such a way intended to obtain personal gain. Adyen has a low risk
appetite for non-ethical behavior of its management, employees, andthird-parties that could negatively affect Adyen’s reputation or brand, lead tocompliance breaches of laws or regulations or endanger its future existence.
Adyen has no risk appetite for facilitating money laundering or terrorist
financing and therefore sets limits on acceptance of prospective merchants
as well as the nature of services offered to accepted merchants. Although
Adyen has policies and procedures that it believes are sufficient to comply
with currently applicable anti-money laundering, anti- corruption, bribery andsanctions rules and regulations, it cannot guarantee that such policies andprocedures completely prevent situations of money laundering, terrorism
financing or corruption, including actions by Adyen's employees, merchants,
third-parties, or other related persons for which Adyen might be held
responsible. Such events may have severe consequences, including litigation,
sanctions, administrative measures, fines, criminal penalties, and reputational
consequences.
Tax
Adyen has a low appetite for risk forthcoming from its tax obligations. Adyen
wants to meet its obligation to pay the amount of tax legally due in any
territory, in accordance with rules set by governments. The determination ofAdyen's worldwide provision for income taxes, value-added taxes, and othertax liabilities requires estimation and significant judgment. Like many othermultinational corporations, Adyen is subject to tax in multiple tax jurisdictions.
Key tax risks, that could potentially affect the strategic and operational
objectives, are identified through the annual top-down and bottom-up
company-wide risk assessments. When a specific tax risk is encountered, we
may seek for professional advise and strive for open communication towards
tax authorities.

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Adyen's determination of its tax liability is always subject to audit and review
by applicable domestic and foreign tax authorities. Any adverse outcome ofany such audit or review could have a negative effect on Adyen's businessand the ultimate tax outcome may differ from the amounts recorded in its
financial statements. Adyen has not observed adverse impact from the
COVID-19 pandemic on its ability to report taxes in a timely and accurate
manner. For more information, please refer to the ‘Tax’ section in thisAnnual Report.
Financial reporting
Gaps in internal controls could negatively impact the accuracy of our
financial and management reporting. Adyen has a low appetite for errors infinancial reporting and does not accept material misstatements in thefinancial statements. Adyen has implemented internal control over financial
reporting designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements forexternal purposes in accordance with financial reporting standards. Due toits inherent limitations, internal control over financial reporting can’t provide
absolute assurance that a misstatement in Adyen’s financial statements
would be prevented or detected. Also, projections of any evaluation of theeffectiveness of internal control over financial reporting to future periods are
subject to the risk that the controls may become inadequate because ofchanges in conditions, or that the degree of compliance with the policies orprocedures may deteriorate.

Financial risks
Adyen has a limited appetite to incur losses from financial risks, please refer
to Note 12 ‘Financial Risk Management’ of the attached Consolidated
Financial Statements for additional disclosure.
Credit risk in respect of counterparties, including other financial
institutions
Credit risk at Adyen can originate from the risk that a counterparty will notsettle the full value of an obligation — neither when it becomes due, nor
thereafter (default risk), or the risk of losses stemming from on- andoff-balance sheet positions arising from concentrations in exposures to asingle counterparty or a group of connected counterparties (concentrationrisk). Within the regulatory limits set by the Large Exposure framework
Adyen has a moderate risk appetite. Adyen makes good choices in our
financial counterparties and actively monitor them, nevertheless engaging
with partner banks resulting in a credit exposure is unavoidable in certain
circumstances for providing payment services. Adyen did not see a material
increase in counterparty credit risk that can be directly related to the
COVID-19 pandemic. For markets or jurisdictions that are considered key to64Adyen Annual Report 2021

successful operations, Adyen seeks to work with at least two different
partner banks. During the year 2021, Adyen remained comfortable within
its internally set risk appetite limits for its credit risk related indicators, aswell as within the regulatory relevant limits.
Fluctuations in foreign currency exchange rates
The strengthening or weakening of the euro impacts the translation ofAdyen's net revenues generated from its international operations that are
denominated in foreign currencies into the euro. Additionally, in connection
with providing its services in multiple currencies, Adyen generally sets its
foreign exchange rates once per day. Adyen may face financial exposure if
Adyen incorrectly sets its foreign exchange rates or as a result offluctuations in foreign exchange rates between the times that Adyen setsthem. Given that Adyen also holds some merchants’ and own funds in
non-euro currencies, its financial results are affected by the translation ofthese non-euro currencies into euro. While Adyen has measures in placeintended to manage its foreign exchange risk, primarily natural hedges andspot trades for any net open positions forthcoming its acquiring activities
for merchants, no assurance can be given that fluctuations in foreignexchange rates will not have a significant impact on Adyen's results ofoperations. Adyen is also exposed to foreign exchange risk on its assets andliabilities denominated in currencies other than the functional currency,
including certain contract assets, its holding of Visa Inc. shares and theassets and liabilities of its subsidiaries. The majority of these assets towhich Adyen is exposed to are denominated in US dollars. Adyen pays
specific risk management attention to the FX position that originates
through the international payment services it provides for its merchants,
this FX position originates as a result of transactions done by merchants.
Contrary to its own longer term balance sheet positions, Adyen does notcontrol this FX origin directly and during 2021 Adyen performed spot tradeson a daily basis to maintain FX positions within its risk appetite set limits.
Note 12 of the financial statements supports this, as it shows the limited
effect that a 10% shock of the Euro FX rate has on the 31-12-2021 net
position of USD (EUR 3.2 million) and GBP (EUR 0.0 million).
Price risk of financial instruments
Adyen's exposure to price risk of financial instruments at fair value arises
from a holding of Visa Inc. shares and a derivative financial liability.
Any movements in the underlying share prices could have a significant
impact on Adyen's financial condition and results of operations. Adyen
obtained the Visa Inc. shares as the result of its previous holding in Visa
Europe, which subsequently was acquired by Visa Inc., which resulted inamongst others Adyen being issued shares of Visa Inc. as consideration for
the acquisition. Adyen has no appetite to take on additional equity positions
and resulting price risk.

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Interest rate risk of cash and cash equivalents
Adyen’s customer centric business model is fee-based and doesn’t dependon the transformation of assets or any interest spread. Therefore, thecurrently low interest rates do not impact Adyen’s revenues. However,
Adyen is exposed to interest rate risk in the banking book in relation to its
high-quality liquid assets in the form of cash held at central banks within EU
for which it is subject to negative interest rates. Second, a limited amount ofcash is invested in money-market funds that hold US-government T-bills.
Despite this low risk profile, in 2021 Adyen quantified the impact of interest
rate movements in its earnings as well as market value changes of its
financial instruments and their direct effect on capital for each significant
currency. The results of this exercise show minimal impact, as is also
supported by the overall limited impact of finance expense in our financial
statements of EUR 12.8 million, which can be primarily attributed tonegative interest paid on the DNB central bank account.
Liquidity and funding risk
Liquidity risk is the risk that Adyen could not meet its short- to mediumterm payment and collateral obligations without affecting daily operations.
Adyen has no appetite for not being able to meet its payment and collateralobligations without affecting daily operations. Funding risk is the risk that
Adyen will not have stable sources of funding in the medium and long term,
resulting in the current or prospective risk that it cannot meet its financial
obligations, such as payments and collateral needs, as they fall due in themedium to long term, either at all or without increasing funding costs
unacceptably. Adyen aims for a simple, stable, and solid funding position
and the central ratio it monitors in this context is its Net Stable Funding
ratio.
Secure financing on favorable terms
Adyen has funded its operations since inception through equity financing.
Adyen is currently able to generate sufficient cash through operational
results to fund its upcoming operations, but there is no guarantee that
Adyen will be able to continue doing so in the future. Going forward, Adyen
may require additional funding to respond to business opportunities or
unforeseen circumstances and may decide to engage in equity or debt
financings or enter into credit facilities for other reasons, and may not beable to secure any such debt or equity financing or refinancing on favorable
terms in a timely manner, or at all. If Adyen is unable to obtain adequate
financing or financing on terms satisfactory when it requires it, its ability tocontinue to grow or support its business and to respond to businesschallenges could be significantly limited.

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Emerging risks
Regulatory environment
Adyen does not only need to comply with laws and regulations in thejurisdictions in which it operates, but also with laws and regulations thathave worldwide application. The laws, regulations and standards are subject
to varying interpretations, in many cases due to their lack of specificity or
unclear application to the business of non-traditional market participants
such as Adyen. As a result, their application in practice may evolve over time
as new guidance is provided by supervisory authorities and theinterpretation of requirements by supervisory authorities and courts may befurther clarified over time. If Adyen's efforts to comply with laws,
regulations, and standards differ from the activities intended by regulatory
bodies or supervisory authorities, they may initiate legal and regulatory
proceedings against Adyen. To ensure that applicable laws and regulations
are identified and mapped to the activities and services Adyen offers in local
markets, Adyen performs ongoing regulatory scanning by regulatorycompliance specialists with validation from external legal counsel.
Adyen believes that the use of a single platform is best overlaid with a global
compliance and risk framework, whereby Adyen strives for global
application of best practices while being cognizant of the need to
implement local deviations where required or for better fit. Maintaining aproactive approach to regulation, Adyen is well placed to deal withregulatory complexity and differences in supervisory approaches in asustainable manner. However, accents and focus areas of supervisors
within regulatory frameworks differ across the globe. To manage the variety
of supervisory conversations, Adyen actively invests in the relationships
with regulators and payment schemes, maintaining transparent andconstructive interactions.
Protectionism
Adyen’s growth strategy is focused on its single platform approach.
Changes in foreign policies and trade laws in certain key markets, including
tariffs and sanctions, could lead to negative impact on the trade levels andflows of our merchants. The changes could also create boundaries to us.
For example, if the use of certain (foreign) payment methods would not beallowed in a market, or if (foreign) payment service providers would not beallowed to charge fees for their services under a policy that payments
should be free of charge.

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Thomas — VP Business Development, Dubai“ We opened the Dubai office in 2020, and built the team and ourpresence here from scratch. I was the second colleague here and moved
with my entire family during the pandemic. Interestingly, Dubai became
even more relevant as a fintech hotspot than before, since business wasable to continue here more than elsewhere and many entrepreneurs
moved their companies to the region. A nice side effect was that withcomparably low local infection rates, many colleagues from other offices
could come and visit us here, and connect in-person. ”

68Adyen Annual Report 2021

Compliance
The Compliance Opportunity
We are building for the long-term based on a strong culture of integrity. To
this end, we ensure that compliance forms an integral part of everyday
decision making by integrating a global compliance program into daily
business activities and strategic planning. In light of our growth, theeffectiveness of the compliance program depends on scalable compliancesolutions. Consistent with our core business, this scalability is achieved
primarily through the use of technology and data-driven solutions, in the
pursuit of lasting and sustainable growth.
In addition to the technology-driven approach to compliance, each andevery employee is encouraged to act as the “eyes and ears” of Adyen. This
principle of joint responsibility is reflected in the three-lines-model
employed as part of Adyen’s governance framework and promoted openly
by both tiers of the Board — tone starts at the top.
As a technology company operating within the financial services space,effectively managing compliance risk not only serves as Adyen’s license tooperate, it also maximizes Adyen’s opportunities in the market andenhances Adyen’s competitive position by building trust.

We make good choices tobuild an ethical business anddrive sustainable growth forour merchants
Adyen Formula

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Compliance and integrity
Central to Adyen’s compliance framework is the identification, mitigationand monitoring of integrity risks, being the risk of inappropriate behavior of
employees and board members or third parties (merchants, suppliers,
advisers) posing a current or future threat to Adyen and/or the proper
functioning of the financial system, that can be attributed to Adyen or inwhich Adyen acts imputable. Inappropriate behavior generally refers to
insufficient compliance with relevant rules or regulations, internal policies
and/or the Adyen Formula.4
To ensure Adyen proactively identifies and effectively mitigates integrity
risks that may affect its business, including to account for evolution withrespect to the product offering, the markets in which Adyen operates andthe general growth as a business, a systematic integrity risk analysis (SIRA)
is performed on an ongoing basis. The SIRA assists Adyen to identify,
mitigate, measure and monitor potential integrity risk scenarios as
described below.

Integrity Risk Identification
Adyen identifies a number of integrity-related topics as being core to
maintaining control from a compliance perspective5:
•
•
•
•
•

Money laundering
Terrorist financing
Circumvention of sanctions legislation
Corruption (bribery), fraud and conflicts of interest
Non-compliance with relevant laws and regulations — including
evasion or avoidance of tax regulation• Socially unacceptable behavior and market manipulation• Data privacy and cybercrime
Consideration of the how the identified integrity risks could manifest to
impact compliance at Adyen, applicable laws, regulations, industry
standards, and best practice related to payments or financial services arecontinually monitored to identify compliance obligations and standards.
Once identified, the obligations and standards are mapped and translated
into principle-based policies and procedures that act as the starting point
for Adyen’s compliance program.

4

Adyen’s definition of Integrity Risk also includes the related concept of conduct risk.

5

Other Integrity Risk topics such as cybercrime and fraud are referenced in the Risk Management
section of this Annual Report.

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Integrity Risk Mitigation
Adyen’s policies and procedures set minimum standards for all employees,
and give direction to business operations in accordance with businessobjectives and the Adyen Formula. Such policies and procedures set out
due diligence requirements with respect to both Adyen’s employees,
merchants and partners in relation to (amongst others) risks of bribery,fraud, human rights violations and other socially unacceptable behaviors.
In 2021, Adyen has continued to develop and refine principle-based
policies, supported by globally applicable scalable procedures, to combat
misuse of the financial system and build scalable compliance solutions tomeet Adyen’s regulatory obligations as a financial institution. For example,
Adyen has launched this year Adyen Speak Up, an online integrity reporting
tool allowing stakeholders to report suspected wrongdoing on an
anonymous basis.
Particular focus continues to be given to anti-money laundering, counterterrorist financing (AML, CFT) and sanctions regulations as further
described in the Risk section of this report.
The Compliance Handbook and its related policies and procedures
additionally promotes integrity and ethical conduct throughout Adyen. The
Handbook, and associated standards, are communicated initially throughintroductory sessions and subsequently promoted on an ongoing basis,including through annual refresher training sessions. The ComplianceHandbook is applicable to all Adyen employees worldwide.
With specific reference to Integrity Risks associated with Adyen’s merchantbase (and the industries in which such merchants operate), Adyen
maintains a Prohibited and Restricted List in relation to customer businessmodels. The Prohibited and Restricted List (supported by Adyen’s
Customer Risk Methodology and related Integrity Procedures) acts as anarticulation of Adyen’s risk appetite — specifying which merchants Adyen
will do business with based on relevant scheme rules, regulations, industry
standards and Adyen’s own long-term objectives. The Prohibited andRestricted List was continually updated throughout 2021 to align with
developments in scheme rules, regulations and emerging trends/industries.
To ensure new products, features or markets are appropriately accounted
for in Adyen’s compliance program, a Product Approval and Review Process(PARP) is undertaken as part of launch preparations. The purpose of the
PARP is to ensure relevant stakeholders can identify and assess potential
risks for both Adyen and its merchants, and ensures mitigating actions aretaken when necessary. In 2021, the PARP was updated to ensure scalability
and numerous PARPs were undertaken in connection with new products ormarkets and expansion in existing markets, including by way of example,
the launch of Adyen Bank. In addition, during the year, additional features toexiting products were reviewed as well as new products being approved. In
total six products were reviewed and/or approved in 2021.

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In line with the Formula, Adyen ensures, when engaging with partners,
suppliers and merchants, it takes into consideration integrity topics
including human rights, environmental protection standards andappropriate working conditions, including the prohibition of child labor.

Integrity Risk Monitoring
In accordance with the three-lines model, teams within the second line ofdefense are mandated with an independent position from which to monitor
and advise on the implementation of integrity risk controls within Adyen.
This independent position is warranted by (without limitation), the power toinvestigate, challenge and escalate any concerns without influence fromthe business.
As part of the ongoing maturity of Adyen’s compliance program, theindependent second line compliance monitoring team has been focusing
on the development and maintenance of data-driven monitoring tools toprovide oversight on the implementation of integrity risk controls in ascalable and technology-led manner.

Regulatory Environment, including AML, CFT
and Sanctions Regulation
The global regulatory landscape for payment and financial services is varied
and constantly changing. Still, Adyen continues to see alignment between
the underlying principles and objectives of financial regulation around theglobe and leverages this as the basis for its global compliance program.
As a result, Adyen continues to embrace regulation in building for the longterm. Regulation allows Adyen to continually improve the quality ofprocesses, sharpen thinking and explore and develop new productopportunities.
Throughout 2021, key focus areas for Adyen to maintain control andleverage regulation as an opportunity included:• Utilizing the growing commonality in the purpose and objective of AML,
CFT and Sanctions regulation to future proof the scalability of Adyen’s
core integrity policies and procedures, including to ensure such policies
and procedures can be applied irrespective of merchant type, merchantlocation, or the financial products and services provided to suchmerchants.
• Supporting Adyen’s expanding global footprint from a regulatory
perspective, including to identify new or changing obligations andimplement appropriate controls, in relation to (without limitation):• North America and the United Kingdom in relation to the applications
for bank branch authorizations;72Adyen Annual Report 2021

• Asia-Pacific — new payments/financial licenses or authorizations for
Adyen’s locally operating subsidiaries, owing to both regulatorychange and/or expansion in the activities of such subsidiaries;• Latin America — increasing regulatory requirements relating to
expansion in the activities of locally operating subsidiaries.
• Middle East — newly issued set of regulations applicable to payment
service providers.
• Investing in data-driven compliance technology to support scalable
compliance efforts, with particular focus on the use of post-event
transaction monitoring systems and machine learning to combat misuseof the financial system and meet Adyen’s regulatory obligations arisingout of AML, CFT and Sanctions regulation.
• Taking advantage of opportunities created by the Second Payment
Services Directive (PSD2) with particular focus on new Strong
Customer Authentication (SCA) requirements to reduce fraud within
the financial system.
Through the power of a unified platform, Adyen is well positioned to deal
with increasing regulatory complexity. Adyen continues to take a proactive
approach to building relationships with regulators and payment schemes,maintaining transparent and constructive interactions to build a sustainablebusiness. Adyen is committed to maintaining and strengthening its global
compliance program to support sustainable business and drive growth formerchants.
Given the regulated nature of Adyen’s activities in several jurisdictions,
Adyen is subject to the on-going supervision by competent authorities
ensuring proper oversight over Adyen’s operations. In 2021, as part of theauthorization and supervision cycles of these competent authorities, Adyen
was subject to integrity oversight and audits by Dutch Central Bank in the
Netherlands, the Federal Reserve and Office of the Comptroller of theCurrency in the United States and the Monetary Authority of Singapore.
Adyen has been working on addressing and implementing the feedback
received from these competent authorities as part of Adyen’s continued
commitment to improve its integrity framework on an ongoing basis.

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Tax
To help our merchants grow, we focus on long-term, scalable solutions. As
such, responsible tax behavior is an essential element of our business. We pay
taxes in the countries wherein we have a taxable nexus, dependent on thelaws of the respective countries. In line with this approach and our values, we
do not seek refuge in tax havens and, when making decisions, we respect
relevant laws and regulations. We support the principles that are thefundamentals of the OECD’s work on Base Erosion and Profit Shifting (BEPS),
including country-by-country reporting to tax authorities. We maintain an
open relationship with all relevant tax authorities, which includes that we may
conclude a tax agreement.
When it comes to tax, Adyen has a low risk appetite. We operate a global,
scalable tax framework which aims to support the business in its growth,
while simultaneously allowing us to be in control of our tax position. Our
global tax framework covers Adyen’s total tax contribution, both the corporate
income taxes paid and the taxes collected, such as: Value added tax,
withholding tax, and payroll tax. More details on the taxes paid and taxes
collected can be found in the Financial Statements.

Tax governance, control, and risk management
Adyen utilizes a tax control framework to manage and control Adyen’s global
tax risks, compliance requirements, and processes. Having a robust
governance, control, and risk management system for tax ensures Adyen’s tax
strategy and approach to tax are properly embedded within the organization.
The tax control framework6 defines the roles and responsibilities within Adyen
when it comes to managing tax risks and ensuring compliance requirements
are met. Adyen’s tax team is responsible for all Adyen’s tax affairs around theworld. Members of the tax team enrol in external tax trainings. Compliancewith the tax control framework is effectuated through a set of internal controls
for which evidence is documented and collected on a regular basis. Internal
Audit Control continuously monitors and tests compliance with the tax
control framework. As part of our internal control processes, we perform anannual tax in-control statement. We continuously seek for ways to embed
technology in all areas of our tax control framework, including tax processes
and tax data management.
The tax strategy is monitored by the tax team on a continuous basis and isformalized in the tax policy. The tax team updates the tax policy at least
annually or in case of significant changes. The Risk Committee reviews the6

Governed in accordance with the three-lines-model as defined in the‘Risk management’ section of this Annual Report.

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Adyen Annual Report 2021

policy before submitting it to the Management Board for their approval. The
tax strategy as included in this Annual Report and as included in the tax
policy is ultimately signed-off by the Management Board. We refer to ourWhistleblowing Policy for the mechanism for anyone within Adyen to report
its concerns about unethical or unlawful behavior in relation to tax.

Stakeholder engagement and management ofconcerns related to tax
Adyen maintains an open relationship with all relevant tax authorities. We
are open to participate in cooperative compliance agreements in order toseek an active real-time audit, whereby clearance is obtained for any
significant transactions or tax risks. This may result in Adyen concluding a
tax agreement with a tax authority to get upfront certainty on any tax
implications that may arise.
Adyen typically refrains from public policy advocacy on tax, nor engages inany lobbying activities related to tax. There is no active involvement in thedevelopment of tax systems, legislation, and administration. Within Adyen,
tax follows the business. Adyen’s tax team is well embedded in theorganization to engage with (external) stakeholders and address any views
and/or concerns. The description of our tax strategy, as presented in thisAnnual Report, is constantly evaluated and iterated following an active
dialogue with stakeholders.

75Adyen Annual Report 2021

Data Privacy
Data privacy compliance is one of the key commitments Adyen makes to allof its merchants. Building for the long run means building a platform thathas privacy ingrained in its design, from the outset. In 2021 Adyen
continued to improve and strengthen its privacy compliance framework bydesigning and incorporating specific internal data privacy controls. These
controls monitor the effectiveness of Adyen’s procedures and policies
focusing on the rights of individuals and the lawfulness of processing
activities. Furthermore, there are adequate processes in place to ensurethat Privacy by Design-principles are addressed during Adyen’s productapproval process and data privacy impact assessments.
Adyen continues to strive for a global privacy approach, thereby taking into
account applicable privacy legislation from different regions such as theGeneral Data Protection Regulation (the GDPR), the California Privacy
Rights Act (the CRPA) and the Lei Geral de Proteção de Dados (the LGPD) in
Brazil. To facilitate Adyen’s global footprint, Adyen transfers data to its
affiliated companies across the globe. During 2021 the new Standard
Contractual Clauses (SCCs), containing “Schrems II” obligations, were
published. Adyen has implemented the new SCCs into its contractual
framework and plans to replace the existing SCCs in 2022. Adyen has also
finalized several data transfer impact assessments in order to ensure its
transfers are compliant with both “Schrems II” and the new SCCs.
Data privacy is a responsibility for everyone at Adyen. The Privacy teamworks in close collaboration with the Information Security team, and isclosely involved in both strategy setting and day-to-day operations (e.g.
launching new products and expanding into new markets). Every Adyen
employee is comprehensively trained on data privacy, security andconfidentiality principles, including an annual mandatory refresher training
to remind all team members of the significance of keeping our data and ourmerchants’ data safe. Adyen is committed to further improve, develop andstrengthen its privacy compliance efforts and standards.
For Adyen’s internal data privacy compliance, in 2021, Adyen continued tofocus on its third-party process to make sure that Adyen’s vendors andsuppliers match Adyen’s privacy and security standards.
In 2021, Adyen has reported two notifiable data breaches to the Dutch
Supervisory Authority, ‘de Autoriteit Persoonsgegevens’. The affectedindividuals were informed about the incident and no indication of misuse of
the data has been reported. Furthermore, Adyen has not identified any
substantiated complaints related data privacy matters from relevant
regulators and/or third parties.

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Statement by theManagement Board
The Management Board of Adyen is responsible for establishing andmaintaining an adequate system for risk management and internal control.
This system is designed to manage risks effectively and efficiently, toprovide reasonable assurance that objectives can be met, that financial andnon-financial reporting is reliable and that laws and regulations arecomplied with.
Internal control over financial reporting is an integral part of the risk
management and control systems of Adyen. Internal control over financial
reporting is a process to provide reasonable assurance regarding thereliability of our financial reporting for external purposes in accordance withIFRS and IFRIC interpretations as endorsed by the European Union and inaccordance with sub article 8 of article 362, Book 2 of the Dutch Civil Code.
Internal control over financial reporting includes:• Maintaining records that, in reasonable detail, accurately, and fairly
reflect our transactions• Providing reasonable assurance that transactions are recorded asnecessary for preparation of our financial statements
Due to its inherent limitations, internal control over financial reporting is notintended to provide absolute assurance that a misstatement of our financial
statements would be prevented or detected. Also, projections of any
evaluation of the effectiveness of internal control over financial reporting tofuture periods are subject to the risk that the controls may become
inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate.
The Management Board has performed a company-wide risk assessment
and described the principal risks facing the Company in relation to its risk
appetite in the section ‘Risk factors’ of this Annual Report.
The Management Board has assessed the effectiveness of the design andoperation of the risk management and control systems as of December 31,
2021. The results were shared with the Audit Committee and theSupervisory Board and discussed with the independent external auditor(hereafter “external auditor”).

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78

Based on the assessment and with reference to best practice provision
1.4.3 of the Dutch Corporate Governance Code, the Management Board
confirms that to the best of its knowledge and belief:• This Annual Report provides sufficient insights into any failings in theeffectiveness of the internal risk management and control systems (seesection ‘Risk management’);• The aforementioned systems provide reasonable assurance that thefinancial reporting does not contain any material inaccuracies (seesection ‘Risk management’);• Based on the current state of affairs, it is justified that the financial
reporting is prepared on a going concern basis (see ‘Financial
statements’); and• This Annual Report states those material risks and uncertainties that are
relevant to the expectation of the Company’s continuity for the period of
twelve months after the preparation of this report (see section ‘Risk
Factors’ and ‘Financial statements’).
However, the risk management and internal control systems cannot provide
absolute assurance that missing of objectives, misstatements, fraud or
non-compliance with laws and regulations will not occur.
In accordance with Article 5:25c of the Financial Supervision Act, theManagement Board confirms that to the best of its knowledge and belief:• The financial statements of 2021 give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company; and• The Annual Report 2021 gives a true and fair view of the position as at
December 31, 2021, the development and performance during 2021 ofAdyen, together with a description of the principal risks that Adyen faces.
Amsterdam, the Netherlands, March 9, 2022
P.W. van der DoesCEOK. Zaki
COO

I.J. Uytdehaage
CFO

M.B. Swart
CLCO

R. Prins
CCO

A. Matthey
CTOAdyen Annual Report 2021

Rajan — Account Manager, Singapore" I became a father last year which helped me to connect with myself but
also with my merchants, many of which are parents as well, in a very
different way – you know each other's struggles and joys while working
from home with a newborn. ”

79Adyen Annual Report 2021

02
Governance80Adyen Annual Report 2021

81

Corporate Governance
A solid, transparent, and seamless corporate governance structure is key toAdyen. It is consistent with the Adyen Formula and allows us to focus on
growing our business. In setting up and maintaining our governancestructure Adyen is guided by Dutch statutory requirements, the Dutch
Corporate Governance Code (the Code), European Banking Association(EBA) Guidelines on Internal Governance and international best practices.
As Adyen is operating globally, international developments are closely
monitored.
Adyen’s corporate governance is reflected in its Articles of Association, theManagement Board By-Laws, the Supervisory Board By-Laws, the Terms ofReference of our Supervisory Board committees and certain other internal
policies and procedures. These documents are available on Adyen’s website(www.adyen.com/investor-relations/governance).

Management structure
Adyen maintains a two-tier board structure consisting of a Management
Board and a Supervisory Board, each of which have specific responsibilities.
The Management Board is collectively responsible for the overallmanagement, which includes, among others, developing and executing
Adyen’s strategy and risk management policy, and setting and achieving
Adyen’s objectives. The Supervisory Board oversees and advises theManagement Board, and can give guidance to its general development.
Each board is accountable to the General Meeting for the performance ofits duties.

Management Board
Composition, Powers, and Function
Per December 31, 2021, Adyen’s Management Board is composed of thefollowing members (the Managing Directors):
Year ofbirth

Nationality

GenderPieter Willem van der Does

1969

NL

Male

Roelant Prins

1975

NL

Male

Ingo Jeroen Uytdehaage

1973

NL

Male

CFO

June 1, 2011

June 2025

Kamran Zaki

1973

US

Male

COO

January 1, 2020

January 2024Mariëtte Bianca Swart

1980

NL

Female

CLCO

January 1, 2020

January 2024

Alexander Matthey

1981

DE

Male

CTO

February 12, 2021

February 2025

Name

Position

Member since

Term

CEO

July 6, 2007

June 2022

CCO

September 9, 2009

June 2022

Adyen Annual Report 2021

Each Managing Director has duties related to their specific area of
responsibilities and expertise. In performing their duties, the Managing
Directors are required to be guided by the best interests of the Company
and the business connected thereto, taking into consideration the interestsof the Company’s stakeholders. The Management Board By-Laws set out
rules regarding the composition, responsibilities and objectives of theManagement Board.
Per April 1, 2021 Mariëtte Swart also heads up both Security and Corporate
Risk in her position as Chief Legal and Compliance Officer (CLCO),
following Management Board approval. Until this date, Ingo Uytdehaage(CFO) had assumed the responsibilities for risk management, whileMariëtte Swart had assumed the responsibilities for security.
Arnout Schuijff stepped down as Chief Technology Officer (CTO) as per
January 1, 2021. Alexander Matthey has taken over the position of CTO
after approval of shareholders during the Extraordinary General Meeting
held on February 12, 2021.
More information on the Management Board can be foundat www.adyen.com/about.
Subject to certain statutory exceptions, the Management Board as a wholeis authorized to represent the Company. Two Managing Directors acting
jointly are also authorized to represent the Company. This reflects thefour-eyes principle that Adyen operates across the organization: (At least)
two Adyen Managing Directors must sign off on significant businessdecisions.

Appointment and dismissal
The Articles of Association provide that the Management Board shallconsist of two or more members and that the Supervisory Board
determines the exact number of Managing Directors after consultation with
the Management Board.
Managing Directors will be appointed for a maximum term of four years,
after which they may be reappointed for another four years. The General
Meeting appoints Managing Directors upon a nomination by theSupervisory Board in accordance with the Articles of Association. The
Supervisory Board shall make one or more nominations to the General
Meeting in case a Managing Director is to be appointed.
In the event that the Supervisory Board has made a nomination, theresolution of the General Meeting to appoint such nominee shall be
adopted by an absolute majority of the votes cast. However, the General
Meeting may at its discretion appoint a Managing Director other than upon
the nomination of the Supervisory Board, provided that a proposal toappoint such other person has been put on the agenda of the relevant
General Meeting. A resolution of the General Meeting to appoint a82

Adyen Annual Report 2021

83

Managing Director other than in accordance with a nomination of theSupervisory Board, but in accordance with the agenda for such General
Meeting, shall require a majority of two thirds of the votes cast representing
more than half of the Company's issued share capital.
Adyen is a licensed credit institution, which means that any appointment of
a Managing Director must be approved by the Dutch Central Bank (DNB). In
connection with its approval procedure, DNB will test the proposed newManaging Director on integrity and suitability.
The General Meeting may at any time, at the proposal of the Supervisory
Board, suspend or remove a Managing Director with a resolution adopted
by an absolute majority of votes cast. Should the General Meeting wish tosuspend or remove a Managing Director other than in accordance with aproposal of the Supervisory Board, such suspension or dismissal needs tobe adopted by a majority of two thirds of the votes cast representing morethan half of the Company's issued capital. The Supervisory Board may at
any time suspend but not dismiss a Managing Director. A General Meetingmust be held within three months after a suspension of a Managing Director
has taken effect, in which meeting a resolution must be adopted to either
terminate or extend the suspension, provided that in the case that suchsuspension is not terminated, the suspension does not last longer than
three months in aggregate. The suspended Managing Director must be
given the opportunity to account for his or her actions at that meeting. Ifneither such resolution is adopted nor the General Meeting has resolved todismiss the Managing Director, the suspension will cease after the period ofsuspension has expired.

Supervisory Board
Composition, powers, and function
Adyen’s Supervisory Board is composed of the following members (theSupervisory Directors) as of December 31, 2021:
Year ofbirth

Nationality

GenderPosition

Member since

TermPiero Overmars

1964

NL

Male

ChairmanJanuary 20, 2017

January 2025

Delfin Rueda Arroyo

1964

SP

Male

MemberJanuary 20, 2017

January 2026

Joep van Beurden

1960

NL

Male

MemberJanuary 20, 2017

January 2024

Pamela Joseph

1959

US

FemaleMemberMay 21, 2019

May 2023

Caoimhe Keogan

1978

IE

FemaleMemberFebruary 12, 2021

February 2025

Name

Adyen Annual Report 2021

The Supervisory Board oversees the conduct and policies of theManagement Board and the general course of affairs of the Company andits business. The Supervisory Board also provides advice to theManagement Board. In performing their duties, the Supervisory Directors
are required to be guided by the interests of Adyen which includes theinterests of the business connected with it, taking into consideration theinterests of the Company’s stakeholders. These interests are driven by
Adyen’s focus on long-term value creation and its implementation in
Adyen’s strategy and culture. The Supervisory Board also has due regard
for corporate social responsibility issues relevant to the Company. The
Supervisory Board By-Laws set out rules regarding the composition,
responsibilities and objectives of the Supervisory Board.
On February 12, 2021, Caoimhe Keogan was appointed as Supervisory
Director during the Extraordinary General Meeting of shareholders.
Following her appointment, she also became a member of the Nomination
and Remuneration Committee. More information on her background can befound in the ‘Report of the Supervisory Board’ below.

Appointment and dismissal
The Articles of Association provide that the Supervisory Board must consistof three or more individuals, with a maximum of five persons. The exact
number of Supervisory Directors is to be determined by the Supervisory
Board. Only natural persons may be appointed as Supervisory Director.
Supervisory Directors will be appointed for a maximum term of four years,
after which they may be reappointed for another four years. Reappointment
after eight years shall be motivated in the Supervisory Board Report. After
this term, a Supervisory Director may once again be reappointed for a termof two years, which can be extended for another two years. Supervisory
Directors are appointed by the General Meeting upon a nomination of theSupervisory Board in accordance with the Articles of Association. The
Supervisory Board shall make one or more nominations in case a
Supervisory Director is to be appointed.
In the event that the Supervisory Board has made a nomination, theresolution of the General Meeting to appoint such nominee shall be
adopted by an absolute majority of the votes cast. However, the General
Meeting may at its discretion appoint a Supervisory Director other thanupon the nomination of the Supervisory Board, provided that a proposal toappoint such other person has been put on the agenda of the relevant
General Meeting. A resolution of the General Meeting to appoint a
Supervisory Director other than in accordance with a nomination of theSupervisory Board, but in accordance with the agenda for such General
Meeting, shall require a majority of two thirds of the votes cast representing
more than half of the Company's issued share capital. The Supervisory
Board shall appoint one of its members as chairman and shall appoint oneof its members as vice-chairman.

84Adyen Annual Report 2021

Any appointment of a Supervisory Director must be approved by DNB. In
connection with its approval procedure, DNB will test the proposed new
Supervisory Director on integrity and suitability.
The General Meeting may at any time, at the proposal of the Supervisory
Board, suspend or remove a Supervisory Director with a resolution adopted
by an absolute majority of votes cast. Should the General Meeting wish tosuspend or remove a Supervisory Director other than in accordance with aproposal of the Supervisory Board, such suspension or dismissal needs tobe adopted by a majority of two thirds of the votes cast representing morethan half of the Company's issued capital.

Supervisory Board committees
The Supervisory Board has appointed from among its members two
permanent committees: A 'Nomination and Remuneration Committee' andan 'Audit and Risk Committee' (the Committees). Each of these Committees
has a preparatory and/or advisory role to the Supervisory Board. The
Committees report their findings to the Supervisory Board, which isultimately responsible for all decision making. Terms of Reference apply foreach Committee, which can be found at www.adyen.com/investorrelations/governance. All Supervisory Directors have a standing invitation toattend meetings of Committees of which they are not a member and haveaccepted these invitations on a frequent basis in 2021.

Nomination and Remuneration Committee
The Supervisory Board has assigned certain tasks to the Nomination andRemuneration Committee. This Committee drafts proposals for Adyen’s
remuneration policy, and it proposes the remuneration of the individual
Managing Directors and Supervisory Directors. It analyses developments of
the Code and other applicable laws and regulations, and prepares
proposals for the Supervisory Board on these topics. It further advises theSupervisory Board on its duties regarding the selection and appointment ofManaging Directors and Supervisory Directors. The Committee is also
responsible for carrying out annual assessments on the functioning of theindividual Managing Directors and Supervisory Directors and on thefunctioning of the Management Board and Supervisory Board as acollective.
Where necessary, the Nomination and Remuneration Committee prepares
proposals for (re)appointments and drafts the selection criteria for the (re)appointment of Managing Directors and Supervisory Directors.
The Nomination and Remuneration Committee meets as often as required
for a proper functioning of the Committee. The meetings are scheduledsemi-annually, and as of 2022, three times a year. The Committee consistsof at least three Supervisory Directors. The Committee members are Joepvan Beurden (Chairman), Piero Overmars, and Caoimhe Keogan, who

85Adyen Annual Report 2021

became a member of the Nomination and Remuneration Committee as ofher appointment as Supervisory Director on February 12, 2021.
The composition and number of members of the Committee provide forsufficient capacity to carry out the supervisory functions. The members of
the Committee have the specific skills and experience required to properly
carry out their duties.
Adyen’s CEO, CFO and CLCO have a standing invitation for eachCommittee meeting. The Company’s HR Director also attends the meetingsof the Committee.

Audit and Risk Committee
The Supervisory Board has assigned certain tasks to the Audit and Risk
Committee (formerly: Audit Committee). This Committee supervises theprovision of the Company’s financial information. The Committee issues
preliminary advice to the Supervisory Board regarding the approval of
Adyen’s interim and annual accounts.
It also advises the Supervisory Board on the nomination of the external
auditor, who is appointed by the General Meeting. It is in regular contact
with the internal audit function and the external auditor, and monitors theauditor’s independence. In addition to advising the Management Board on
tax and finance matters, it is also responsible for supervising compliancewith relevant legislation and regulations.
The Audit and Risk Committee meets as often as required for a proper
functioning of the Committee. The meetings are held at least four times ayear. The Committee consists of at least three Supervisory Directors.
The Committee members are Delfin Rueda Arroyo (Chairman), Piero
Overmars and Pamela Joseph. The composition and number of membersof the Committee provide for sufficient capacity to carry out the supervisory
functions. The members of the Audit and Risk Committee have the specificskills and experience required to properly carry out their duties.
Adyen’s CEO, CFO and CLCO have a standing invitation for eachCommittee meeting. The Company’s internal auditor and external auditor
also attend the meetings of the Committee.

General Meeting, shares and shareholders
Extraordinary General Meeting
On February 12, 2021, an Extraordinary General Meeting was held to
appoint Alexander Matthey as member of the Management Board as Chief
Technology Officer and Caoimhe Keogan as member of the Supervisory
Board. Both were appointed for a four-year term.

86

Adyen Annual Report 2021

General Meetings
Adyen holds a General Meeting of shareholders within six months of theend of the financial year. The agenda for this meeting includes (i) the
adoption of the annual accounts, (ii) the Annual Report, (iii) the
remuneration policy and remuneration of the Management Board and theSupervisory Board, (iv) the release from liability of the members of theManagement Board and the Supervisory Board for their performance
during the financial year, (v) the policy of the Company on additions toreserves and on distributions of profits, (vi) any proposal to distributeprofits, (vii) the auditor’s report, and (viii) any other proposals placed on theagenda by the Management Board.
General Meetings can be held as often as the Management Board or theSupervisory Board deem necessary. A General Meeting is also convened incase of a decision entailing a significant change in the identity or characterof the Company or its business. One or more shareholders representing atleast the statutory threshold of 3% of the voting rights may request that theManagement Board places items on the agenda of a General Meeting.
Such a request must be honoured by the Management Board provided thatthe request is received in writing at least 60 days before the date of such ameeting.
The Annual General Meeting of 2021 was held on June 3, 2021. Aside fromthe topics of this meeting as listed above, Ingo Uytdehaage was reappointed as CFO and member of the Management Board for a period offour years, and Delfin Rueda Arroyo was re-appointed as member of theSupervisory Board for a period of four years, effective June 3, 2021.
Our next Annual General Meeting will be held on June 1, 2022.

Voting rights
Each share reflects one vote in the General Meeting. Subject to certain
exceptions provided by Dutch law or the Articles of Association, resolutionsof the General Meeting are passed by an absolute majority of votes cast.
Votes can be cast at the General Meeting either in person or by proxy.

Amendment to the Articles of Association
The General Meeting may pass a resolution to amend the Articles of
Association with an absolute majority of the votes cast. A proposal toamend the Articles must be made by the Management Board and must be
approved by the Supervisory Board. When a proposal to amend the Articles
of Association is made to the General Meeting, the intention to propose
such resolution must be stated in the relevant notice convening theGeneral Meeting.

87Adyen Annual Report 2021

Issue of shares
Shares can only be issued pursuant to a resolution of the General Meeting,unless the General Meeting has designated this authority to the Management
Board. During the Annual General Meeting held on June 3, 2021, the General
Meeting granted the Management Board — subject to the Supervisory
Board’s approval — the authority to issue ordinary shares or to grant rights to
subscribe for ordinary shares for a term of 18 months as of June 3, 2021 forup to 10% of the total number of shares issued at the time of the General
Meeting for any purpose. Hence, within the aforementioned limit shares canbe issued by a decision of the Management Board, which allows theManagement Board to react promptly when for example a business
opportunity arises which requires such issuance. This decision must be
approved by the Supervisory Board. Any issuance exceeding the
aforementioned limit needs approval by the General Meeting.
In addition, the General Meeting granted the Management Board — subject
to the Supervisory Board’s approval — the authority to restrict or exclude
applicable pre-emptive rights when issuing ordinary shares or granting rights
to subscribe for ordinary shares for a term of 18 months as of June 3, 2021.

Repurchase of shares
Shares can only be repurchased by Adyen pursuant to a resolution of theGeneral Meeting and subject to any required regulatory approvals. The
General Meeting may designate the authority to repurchase shares to theManagement Board. During the General Meeting held on June 3, 2021, theshareholders granted the Management Board — subject to the Supervisory
Board’s approval — the authority to acquire shares in the capital of theCompany, either through purchase on a stock exchange or otherwise. The
authority applies for a term of 18 months as of June 3, 2021, under thefollowing conditions: The repurchase (i) may constitute up to 10% of the total
number of shares issued at the time of the General Meeting; (ii) provided that
the Company will not hold more shares in stock than 10% of the issued sharecapital; and (iii) at a price not less than the nominal value of the shares and nothigher than 110% of the opening price at Euronext Amsterdam at the date of
the acquisition. Any repurchases exceeding these limits need approval by theGeneral Meeting.

Issued capital and shareholdings
Adyen’s issued capital and voting rights are notified to the Dutch Authority for
the Financial Markets (AFM) from time to time. This reporting can be found in
the register issued capital on www.afm.nl. Shareholders owning 3% or moreof the issued capital and/or voting rights of a listed company must report thisto the AFM as soon as the threshold is reached or exceeded. This reportingby shareholders can be found in the ‘Register of substantial holdings andgross short positions' at www.afm.nl.

88Adyen Annual Report 2021

Report of theSupervisory Board
The Supervisory Board is pleased to present its report for 2021 — again achallenging year for society, our team and many businesses due to the
COVID-19 pandemic. In 2021, the Adyen platform processed €516.0 billion,
growing 70% year-on-year. Adyen has proven resilient due to the further
diversification of its merchant base across geographies and verticals,
despite the difficult macroeconomic environment continuing to be a
disrupting factor to many of its merchants. In 2021, Adyen was able to growthe team to a total of 2,180 FTE as of December 31, 2021.
This report includes a more specific description of the Supervisory Board’s
activities during the financial year 2021 and other relevant information on its
functioning.

Composition
Adyen has established a two-tier board structure consisting of theManagement Board and the Supervisory Board, as explained in the section‘Governance’ of this Annual Report. The Supervisory Board functions as aseparate corporate body and is fully independent from the Management
Board. The composition of the Supervisory Board is such that members areable to act independently of one another, the Management Board and any
particular interest and allows for properly carrying out all Supervisory Board
tasks, including staffing of committees. The Supervisory Board is capableof assessing the broad outline of the overall policy of the Company and of
the most important risks incurred. The background, knowledge andexpertise of each Supervisory Director adds to the Board’s effectiveness,enabling it to fulfil its duties in the Company’s best interest.
As of December 31, 2021, the Supervisory Board is composed of fivemembers — Piero Overmars (Chairman), Delfin Rueda Arroyo, Joep van
Beurden, Pamela Joseph and Caoimhe Keogan.
Piero Overmars serves as a member of the Management Board of Stichting
Continuiteit PostNL and as a member of the Supervisory Board of Dura
Vermeer Group N.V. and Dutch Organic International Trade B.V. Previously,
he served as a member of the Management Board of Randstad Beheer B.V.
and was Chairman of the Supervisory Boards of Nutreco and SNS Reaal,
and member of the Supervisory Board of Amsterdam UMC. He also served
as President of the Nyenrode Foundation, following an extensive career at
ABN Amro that culminated in a Board Member position. Piero Overmars
holds an MBA from Nyenrode Business University.

89Adyen Annual Report 2021

Delfin Rueda Arroyo serves as CFO and Vice-Chair of the Executive Board
and Management Board of NN Group, and is a member of the Supervisory
Board of Allfunds Bank S.A.U. and Allfunds Group plc. Previously, he was CFO
and member of the Management Board of ING Insurance, following an
extensive career at Andersen Consulting, UBS, JP Morgan and Atradius.
Delfin Rueda Arroyo holds a master degree in Economic Analysis andQuantitative Economics from the Complutense University of Madrid (Spain).
He also holds an MBA from the Wharton School, University of Pennsylvania(USA).
Joep van Beurden is CEO and member of the Executive Board of Kendrion
and member of the Supervisory Board of the Twente University of Technology(the Netherlands). In addition to these positions, Joep serves as a member ofthe Advisory Board of PlantLab. Previously, he served as CEO of CSR Plc. (UK)and NexWave Inc. (France), following a career at Royal Dutch Shell, McKinsey,
Philips and Canesta Inc. Joep van Beurden holds a degree in Applied Physics
from Twente University of Technology.
Pamela Joseph is CEO and member of the Management Board of Clearent,
holds a position as Chair of the Board of Directors of TransUnion and is a
non-executive member in the Board of Directors of Paychex. In addition tothese positions, Pamela serves as Operating Partner at Advent International.
Previously, she served U.S. Bank corp. Payment Services as a Vice-Chairman,
and prior to that Elavon as President and COO. She started her career at
Wells Fargo Bank and VISA International. She holds a degree in Business
Administration from the University of Illinois (USA).
Caoimhe Keogan serves as CPO (Chief People Officer) for Aveva Group plc.
Previously, she served as Chief People Officer for Moneysupermarket Groupplc, and as SVP People, Places & Community at SoundCloud. Prior to theseroles, she was Senior HR Business Partner at Google. Caoimhe Keogan holds
a degree in Occupational Psychology from Queen’s University Belfast (UK).

Supervisory Board meetings
The Supervisory Board convened for eight regular meetings, of which two
were held at the offices of Adyen, and six were held via videoconferencing due
to the COVID-19 pandemic. The meetings were held in the months February,
March, May, July, August, November and December. Members of theManagement Board were also present during these meetings.
In 2021, Pamela Joseph was absent at one Supervisory Board meeting. Her
attendance rate was therefore 87,5%. The attendance rate of the other
Supervisory Directors was 100%.
The Supervisory Board meets at a minimum each half year before thepublication of the half-yearly results, and discusses these results with theManagement Board, as well as the draft press release and auditor’s report on
the procedures performed. These documents are first discussed in the Audit
and Risk Committee meeting prior to the Supervisory Board meeting.

90Adyen Annual Report 2021

In addition to the regular agenda for the Supervisory Board meeting — which
includes topics such as risk management, business performance, strategic
updates and the development of the financials — the Supervisory Board
discussed topics related to culture, diversity, social responsibility andsustainability, compliance with relevant legislations, relations with regulators,
brand positioning and the preparation and evaluation of the Annual General
Meeting of Shareholders. Furthermore, deep dives and educational sessions
on topics relevant to Adyen’s business were held, such as security, privacy,
PSP and Bank, brand positioning, and compliance & regulatory complexity.
The Supervisory Board also discussed Adyen’s (long-term) strategy including
its Solutions, Streams, focus areas and associated risks, and reviewed
proposed annual and other financial reporting.
The Company Secretary attended all Supervisory Board meetings andCommittee meetings, and acted as the secretary of the Supervisory Boardand its committees. The Chairman of the Supervisory Board met regularly
during the year with the CEO and other Managing Directors to discuss theperformance of the Company and projects as part of executing the strategy.
The Supervisory Directors also interacted individually and collectively withManaging Directors outside the formal Supervisory Board meetings.
In 2021, there were no conflicts of interest between Adyen and Managing
Directors or Supervisory Directors.

Committee reporting
The Supervisory Board has established two Committees, as further
explained in the chapter ‘Governance’: The Nomination and Remuneration
Committee and the Audit and Risk Committee. The main considerations andconclusions of each Committee were shared with the full Supervisory Board.

Nomination and Remuneration Committee
The duties and composition of the Nomination and Remuneration Committee
are described in the section ‘Governance’ of this Annual Report.
The Nomination and Remuneration Committee convened twice in 2021. All
Committee members attended all meetings. The Committee has reviewed
the composition of the Supervisory Board and Management Board. The
Committee monitored and analyzed developments of the Code andapplicable laws and regulations in relation to remuneration policies, reviewed
Adyen’s Remuneration Policy and its execution for compliance with the Codeand the Dutch Act on Remuneration Policies Financial Undertakings (Wetbeloningsbeleid financiële ondernemingen) as implemented in the Dutch
Financial Supervision Act (Wet op het financieel toezicht). For more
information on the Remuneration Policy, please refer to the section‘Remuneration Report’ of this Annual Report.

91

Adyen Annual Report 2021

The Nomination and Remuneration Committee leads the evaluation of theperformance of the individual Managing Directors and Supervisory
Directors. During the evaluation the Committee took note of the Managing
Directors’ views on their own remuneration. The Committee drafted
proposals to the Supervisory Board for the remuneration of the individual
Managing Directors and Supervisory Directors. The remuneration of theSupervisory Directors remained unaltered in 2021. The Nomination andRemuneration Committee has drawn up a plan for the succession of theManaging Directors and the Supervisory Directors.

Audit and Risk Committee
The duties and composition of the Audit and Risk Committee are describedin the section ‘Governance’ of this Annual Report.
In 2021, the Audit and Risk Committee convened for four regular meetings.
The Committee discussed the quarterly results and the financial
statements. Furthermore, the Committee discussed the reports frominternal and external auditors, reviewed the Annual Report and the H1 andH2 Shareholder Letter including the relevant press releases, and discussed
the overall internal control environment. The Committee also discussed
other topics including compliance, governance, ICLAAP, SREP, tax,
information security, legal, risk, merchants’ potential liability, investor
relations and treasury. The members of the Committee met with the internaland external auditors outside the Committee meetings to ensure all relevant
information was discussed. The Committee evaluated the performance andremuneration of the external auditor. All Committee members, the internal
auditor and the external auditor attended all meetings held in 2021.

Diversity
The Supervisory Board values and promotes diversity, both within the
Supervisory Board and the Management Board, as within Adyen in general.
Differences in amongst others educational background, nationality, age,
race, gender, experiences and beliefs are vital to the business, enabling theBoards and the Company to look at issues and opportunities differently andto respond to challenges in new ways. Diversity is a key driver for innovation
and allows Adyen to attract and retain the most talented and smart people.
This standpoint has also been embedded in the Adyen Diversity, Equity andInclusion (DEI) Policy, which has been adopted in 2021 — please refer to the‘People and Culture’ section and ‘Compliance with the Dutch Corporate
Governance Code’ section of this Annual Report.
The Supervisory Board aims for a balance in its composition with respect togender, nationality, age, experience and affinity with the nature and cultureof the business of Adyen in all countries in which it is active. In line with theCompany’s DEI Policy and the adoption of the legislative proposal
introducing stricter gender diversity measures for Dutch listed (in line with92

Adyen Annual Report 2021

the SER’s guideline on Supervisory Board composition), Caoimhe Keogan
has been appointed as Supervisory Director in the Extraordinary General
Meeting which was held on February 12, 2021. The Supervisory Board now
consists of 40% women.

Independence
Throughout the year, four Supervisory Directors — Piero Overmars (Chair),Delfin Rueda, Pamela Joseph, and Caoimhe Keogan — were independent
from the Company within the meaning of Best Practice Provisions 2.1.7,
2.1.8 and 2.1.9 of the Code. One Supervisory Board Director, Joep van
Beurden, has acted as an advisor to the Company in the years preceding his
appointment in 2017, and is therefore considered not to be independent
within the meaning of Best Practice Provision 2.1.8 (iii) of the Code. The
Supervisory Board is, as a body, independent as defined in the Code.

Performance assessment
In 2021, the Supervisory Board has assessed its performance andcomposition and that of its Committees. The Supervisory Board has
conducted the annual self-assessment without the Managing Directors
being present. The main results of the self-assessment have subsequently
been shared with the Management Board. The performance of theSupervisory Board, the Nomination and Remuneration Committee and the
Audit and Risk Committee has been assessed as satisfactory.
The functioning of the Supervisory Board fully complies with the relevant
principles and best practices as set out in the Dutch Corporate
Governance Code.
The points for follow-up as proposed in last year’s external evaluation havebeen implemented successfully, such as the set-up of additional bilateralmeetings with fellow Supervisory Directors and the Supervisory Board as abody. For the upcoming year, the Supervisory Directors among others aim
to dedicate even more time to second-line functions within the Company.

Financial statements
The Financial Statements for the year ended December 31, 2021, wereprepared by the Management Board and approved by the Supervisory
Board. The Report of the Independent Auditor, PricewaterhouseCoopers
Accountants N.V. (PwC) is included in the Independent Auditor’s Report inthe ‘Other Information’ section of the Financial Statements.
The Supervisory Board recommends that the General Meeting adopts
these Financial Statements.

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Adyen Annual Report 2021

Appreciation
Looking back at 2021, the Supervisory Board would like to thank all Adyen
employees for their contribution during what has again been a challenging
year in many aspects. The Supervisory Board is proud to see the team wasable to continue to serve the interests of merchants, shareholders and otherstakeholders of the Company with the highest standards.

Relevant documents on our Governance website
•
•
•
•
•
•
•

Remuneration Policy — Management Board and Supervisory Board
General Remuneration Policy
Reporting and Whistleblower Policy
Terms of Reference Nomination and Remuneration Committee
Terms of Reference Audit and Risk Committee
Diversity, Equity and Inclusion Policy
Disclosure and Bilateral Dialogue Policy

These documents can be found on www.adyen.com/investor-relations/governance.

94Adyen Annual Report 2021

Compliance with theDutch Corporate
Governance CodeAdyen acknowledges the importance of good corporate governance. The
Company agrees with the general approach and with the provisions of theCode7. As such, it fully complies with the Code with the exception of Best
Practice provision 4.3.3 of the Code, which provides that the general
meeting of shareholders of a company not having statutory two-tier status
may pass a resolution to cancel the binding nature of a nomination for theappointment of a member of the Management Board or of the Supervisory
Board and/or a resolution to dismiss a member of the Management Boardor of the Supervisory Board by an absolute majority of the votes cast. It may
be provided that this majority should represent a given proportion of theissued capital, which proportion may not exceed one-third. However, Adyen
applies a higher proportion of one-half, which follows from a previous
arrangement with Adyen’s shareholders.
In line with the request from the Monitoring Commission Corporate
Governance Code to comply and explain over 2021 with regards to the
topics of long-term value creation, culture and diversity, the Company
provides insight into these topics below.
Long-term value creation, as set out in Principle 1.1 of the Code, is one of
the leading topics for the Adyen, and therefore for the Management Board.
When formulating the mid- to long-term strategy, the Supervisory Board is
kept informed and is asked to provide feedback on a continuous basis. Thisnot only with regards to the overarching organizational structure, but also
on a more granular implementation level. The Supervisory Directors have
one-on-one meetings with key people within the Company, and are involvedin the assessment of risks, not only via the regular Supervisory Board andCommittee meetings, but also in an informal way. Please refer to the‘Management Report’ for further information.

7

For the full version of the Dutch Corporate Governance Code 2016 please refer to www.mccg.nl.

95

Adyen Annual Report 2021

On diversity, as set out in Best Practice 2.1.5 and 2.1.6 of the Code, Adyen
has adopted a Diversity, Equity, and Inclusion Policy in 2021. The Policy sets
out the Company’s guiding principles while designing for diversity, as wellas the accompanying commitments. One of the commitments is tomaintain a Supervisory Board that is at least one-third female (currently twoout of five Supervisory Directors are female). Next to this, Adyen iscommitted to increase the gender balance of its Management Board andSenior Management together, to consist of at least one-third female
members. The Senior Management Group includes among others direct
reports to the Management Board, Critical Roles, as well as the Global
Leadership Group. As mentioned in the ‘People & culture’ section of thisAnnual Report, the Company is committed to hire, promote, and enable
underrepresented groups across all levels of the organization. The full DEI
Policy can be found at adyen.com/investor-relations/governance.
With regards to culture as set out in Best Practice 2.5.4, this is of the utmost
importance to Adyen, as it enables an open and inclusive environment
which is key to innovation. The Adyen Formula defines the key principles onculture within the Company, and is valued highly. Culture is furthermore
yearly audited by the Internal Auditor in the Culture Audit. Please refer to the‘People and Culture’ section in the Management Report for further
information.

96

Adyen Annual Report 2021

Remuneration report
This remuneration report explains how the remuneration policy for theManagement Board and Supervisory Board was put into practice in 2021. The
current remuneration policy was approved by the General Meeting in 2020 with a98.61% approval rate. The remuneration report has been prepared in accordancewith article 2:135b of the Dutch Civil Code and the Dutch Corporate GovernanceCode. It will be presented for an advisory vote to the shareholders at the 2022
General Meeting of Shareholders.

Reward Principles
Equal pay
We are committed to ensure equal pay between women and men. We value allperspectives, so we see no reason to reward one more than the other — same role,same pay. Our annual equal pay audit is designed to safeguard same pay anduphold this standard.

Remuneration
The size of an individual remuneration package is based on the scope of
responsibilities, the employee’s experience and performance, and the local market
circumstances, which varies depending on country.
The total remuneration of individual staff members, including the Managing andSupervisory Directors, is determined by considering the long-term strategy ofAdyen and aimed at ensuring a sustainable and durable company for stakeholders.
The remuneration of the Management Board is reviewed annually and any
adjustment of the remuneration will be in accordance with the remuneration policy.
Remuneration decisions such as pay increases will take account of the individual
Managing Directors delivering on specific areas of focus, including sustainability
and the Adyen Formula, as well as company performance.
Remuneration may consist of a base salary, share-related remuneration, pension
entitlements and other emoluments. For certain employees remuneration may also
include variable pay.
Adyen has the right pay mix in place to mitigate short-term orientation andcontribute to the long-term performance of the company. This is specificallyachieved by awarding staff members, including the Management Board, with(long-term) share-related remuneration. The purpose of the share-based
payments is to put staff members in a financial ownership-like position where
shares are concerned and for them to obtain an economic interest in the pursuit ofAdyen’s long-term objectives such as sustainable growth, development,
profitability, and financial success of Adyen.

97Adyen Annual Report 2021

Adyen remuneration policy
The objective of our remuneration policy is to recruit and retain the besttalent worldwide by offering competitive payment structures that takeaccount of our strategy to focus on our merchants’ growth, changing thepayment landscape and having fun while doing so.
Adyen observes the laws and regulations applicable to the company, which
includes the remuneration regulations as provided in the Act on
Remuneration policy Financial Undertakings (Wet beloningsbeleid
financiële ondernemingen) and the EBA Guidelines on Sound Remuneration
Policies (EBA Guidelines) (the Remuneration Regulations). Moreover, thisRemuneration Report has been inspired by the EC Guidelines on thestandardised presentation of the remuneration report. Adyen's
remuneration policy is in line with the Remuneration Regulations.
Our remuneration policies are consistent with, and promote, sound andeffective risk management and are always aligned with our strategy and the
Adyen Formula to create long-term value for our company and ourmerchants. As such, our remuneration policy does not contain incentives
that exclusively benefit staff members themselves or encourage improperrisk-taking.
The remuneration policy of Adyen is published on Adyen’s website.
There have been no deviations from the remuneration policy or theprocedure for its implementation in the financial year 2021.

Variable remuneration
In the financial year 2021, Adyen has not rewarded any variable
remuneration to the members of the Management Board. Adyen does notaward variable remuneration to members of the Supervisory Board.
The total global company-wide amount of variable remuneration awarded
over 2021 was EUR 19,861,792 (2020: EUR 17,092,364) compared to total
staff expenses of EUR 240,538,495 (2020: EUR 180,013,967).

Malus and Claw BackIn accordance with the Remuneration Regulations, variable remuneration
will be subject to hold back and claw back instruments. As no variable
remuneration has been awarded to the members of the Management Boardor the Supervisory Board in the financial year 2021, no variable
remuneration has been adjusted or clawed back over 2021 or previous
years in accordance with these instruments .

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Adyen Annual Report 2021

Identified staff
In 2021 there were 26 employees (2020: 21) identified as “Identified Staff”.

Total annual remuneration
In 2021 there were 3 employees to whom total annual remuneration(including employer pension contributions and any severance paymentsmade) of EUR 1,000,000 or more was awarded.

Management Board Remuneration
The remuneration policy that applies to the Managing Directors is in linewith the remuneration policy that applies to all staff. Adyen’s Management
Board remuneration is consistent with and promotes a sound and effective
risk management and has always been aligned with Adyen’s strategy tocreate long-term value for its merchants. It is thus set up with the aim tocontribute to Adyen's long-term goals. As such, the remuneration policy
provides an incentive for prudent and sustainable risk-taking.
The remuneration of the Managing Directors is determined by theSupervisory Board with due observance of the remuneration policy as
adopted by the General Meeting.

Base salary
The Managing Directors provide the Nomination and Remuneration
Committee with their individual views with regard to the amount andstructure of their own remuneration. In 2021 base salaries of the Managing
Directors were increased with 3%, in line with the average salary increase of
an Adyen employee in 2020.
The Management Board’s remuneration is compared to AEX companies.
The Management Board remuneration is below the median of thebenchmark.
In 2022, Adyen will apply the same principle of increasing Management
Board compensation in line with the organization. Two exceptions will bemade. Per January 1, 2022, the total remuneration of Adyen’s Chief Legal &Compliance Officer will be adjusted to EUR 750,000, based on full-time
employment to reflect the increased scope of role and responsibilities, andto bring it towards more market competitive level. An adjustment will also
be made for Adyen’s Chief Technology Officer. To recognize experience andensure the remuneration change is in line with the technology organizationand external technology sector, the total remuneration will be adjusted to
EUR 600,000.

99Adyen Annual Report 2021

Variable remuneration
No variable remuneration has been awarded to members of theManagement Board in 2021.

Pension & Benefits
Pension
As from January 2017, all Dutch Managing Directors participate in theCollective Defined Contribution (CDC) pension plan, with respect to theirsalary up to EUR 112,189 gross per year for 2021 ((2020: EUR 110,111). On
behalf of each Managing Director, Adyen pays a contribution of 4% of thepensionable salary — being 12 times the monthly fixed salary plus holiday
pay up to the fiscally allowed maximum minus a deductible — for theaccrual of old age pension benefits as well as the administration costs. If
and as far as fiscally allowed, each Managing Director has the possibility tomake additional contributions in order to accrue additional pension capital.
Kamran Zaki participates in a 401k retirement plan in the US, for which
Adyen provides an employer match of up to 2% of base salary.
Benefits
All Managing Directors are insured under an insurance policy taken out by
Adyen against damages resulting from their conduct when acting in theircapacities as directors.
All Dutch Managing Directors are insured for the risk of death and disability,
for which Adyen pays the insurance premiums.

Scenario Analysis
In line with the revised Dutch Corporate Governance Code, Adyen
performed a scenario analysis and back-test on Management Board
remuneration. All scenarios resulted in the same outcome as the
remuneration of the Managing Directors is not linked to variable
remuneration elements.

Pay Ratio
The internal ratio of the Managing Directors’ remuneration and all other
Adyen staff was determined. For this ratio, Adyen included all remuneration
components of the CEO compared to the average total remuneration of all
Adyen employees worldwide. For the CEO a ratio of 7:1 applies (2020: [7:1]).
For the other Managing Directors, a ratio of 6:1 applies (2020: [6:1]).

100

Adyen Annual Report 2021

101

Management Board Remuneration in 2021
The table below provides an overview the Management Board remunerationin 2021 and 2020. Compared to last years report, all allowances andbenefits have moved to a separate column to ensure better transparency onbase salary paid. Total remuneration numbers did not change.
The Managing Directors did not receive variable remuneration. Sharebased compensation refers to share-based fixed remuneration awarded indepository receipts.

Base salaryPension andbenefits

2021

612,710

15,975

628,6852020

594,864

17,900612,7642021

497,376

15,975513,3512020

482,890

17,900500,7902021

576,668

15,975592,6432020

559,872

17,900577,7722021

727,510

17,217744,7272020

656,000

15,617

2021

347,625

15,975

115,863

479,4632020

345,814

17,900104,166

467,8802021

375,000

15,975125,000

515,975

Managing Director

Reported Year

Pieter van der Does

Roelant Prins

Ingo Uytdehaage

Kamran ZakiMariëtte Swart*

Alexander Matthey

Share-based
compensation

Variable
incomeTotal
Remuneration

671,617

2020
Former Managing
Director
Arnout Schuijf**

2020

289,657

17,900307,557

Sam Halse

2020

65,234821

66,055

Joop Wijn

2020

248,777

6,653

87,112

342,542

Total

2021

3,136,889

97,092

240,8633,474,844

2020

3,243,108

112,591

191,278

3,546,977

All amounts are in EUR* 0.9 FTE**0.6 FTE

Adyen Annual Report 2021

102

Stock options awarded in previous years
The table below provides an overview of the stock options per December
31, 2021 that have been granted to Managing Directors as part of theirshare-based compensation. No new grants were given in 2021.
The stock options held by Ingo Uytdehaage and Roelant Prins expired on
December 1, 2021. Mr. Uytdehaage and Mr. Prins gradually sold their stock
options in the period running from July 1, 2019 (i.e. after expiry of the
Post-IPO Shareholders’ lock-up period) until December 1, 2021. The stock
options were sold on a monthly basis in portions equally divided over the 3(three) calendar years with due observation of a 15% daily trading-cap.
The stock options held by Kamran Zaki expired on January 1, 2022. Mr. Zaki
instructed ABN Amro to sell to cover in order to exercise and hold theremainder of his stock option portfolio. As per the instruction the stock
options shall be sold at any given market-price. Upon each sale appropriate
notifications were made via the AFM register.
The stock options held by Mariëtte Swart are due to expire
November 1, 2023.
The stock options held by Alexander Matthey are due to expire
December 1, 2023.

Grant date

Number of
Options Vested

Number of
Options
Non-Vested

Number of
Options
expected to Vest

Pieter van der Does

—

—

—

—

Roelant Prins

—

—

—

—

Ingo Uytdehaage

—

—

—

—

2021

Kamran Zaki

—

—

—

—

Mariëtte Swart

2015

3,400

—

—

Alexander Matthey

2015

1,250

—

—

Grant date

Number of
Options Vested

Number of
Options
Non-Vested

Number of
Options
expected to Vest

2020
Pieter van der Does

—

—

—

—

Roelant Prins

2014

24,133——

Ingo Uytdehaage

2014

40,633——Kamran Zaki

2014

80,391——Mariëtte Swart

2015

4,000

—

—

Arnout Schuijff*

—

—

—

—

Adyen Annual Report 2021

103

Grant date

Number of
Options Vested

Number of
Options
Non-Vested

Number of
Options
expected to Vest

Pieter van der Does

—

—

—

—

Arnout Schuijff*

—

—

—

—

Roelant Prins

2014

48,266——

Ingo Uytdehaage

2014

80,632——

Sam Halse*

2015

17,829——Joop Wijn*

2017

20,154

6,719

6,719

Grant date

Number of
Options Vested

Number of
Options
Non-Vested

Number of
Options
expected to Vest

—

—

—

—

2019

2018
Pieter van der Does
Arnout Schuijff*

—

—

—

—

Roelant Prins

2014

72,378——Ingo Uytdehaage

2014

120,632——

Sam Halse*

2014

24,072——

2015

24,727——2017

26,87537,62537,625

Joop Wijn**Former Managing Director

Pieter Van der Does (through Spreng BV) has irrevocably instructed a bankto gradually sell 100,000 shares from April 2022 until March 2023. The
shares shall be sold on a monthly basis, in substantially equal portions
divided over the calendar year. As per the instruction, the shares shall besold at any given market-price. Upon each sale, appropriate notifications
shall be made via the AFM register.

Adyen Annual Report 2021

104

Share and Depositary Receipt holdings
The table below reflects the equity position directly or indirectly held by theManaging Directors as per December 31, 2021, 2020 and 2019:
Shareholdings (aggregate number of Shares
and/or Depositary Receipts

Pieter van der Does

2021

2020

2019

2018
1,415,278

1,022,539

1,022,539

1,202,987

Roelant Prins

287,309287,309

338,011

338,011

Ingo Uytdehaage

195,182

195,182229,570229,570

Kamran Zaki

47,16821,440——Mariëtte Swart

79

52

—

—

Alexander Matthey

84

—

—

Arnout Schuijff*—

1,371,655

1,613,589

Sam Halse*

—

—

—

—

Joop Wijn*

—

8,061

2,156

2,156

*Former Managing Director

Service and Severance Agreements
All Managing Directors have entered into a service agreement(overeenkomst van opdracht) with Adyen N.V. effective as of the date of thelisting of Adyen, whereby Kamran Zaki is currently assigned to Adyen N.V.
San Francisco Branch. The terms and conditions of these service
agreements have been aligned with the Dutch Corporate GovernanceCode. The service agreements will be entered into for a term of 4 years.
The service agreements provide for a severance of one annual base salary if
the Managing Director is not re-appointed or otherwise terminated by
Adyen (for any reason other than urgent cause within the meaning of article
7:678 of the Dutch Civil Code (dringende reden)), in accordance with theDutch Corporate Governance Code. In the financial year 2021, no
severance payment has been paid to any Managing Director.

Loans
No loans, advance payments and guarantees have been granted to or on
behalf of the Managing Directors.

1,898,339

Adyen Annual Report 2021

105

Remuneration and Company Performance
Development
The below table shows the difference in Management Board remunerationcompared to the previous year and company performance over the last tworeported financial years:
Annual change

2021 vs 2020

2020 vs 2019

Pieter van der Does

15,921

42,987

Roelant Prins

12,561

34,693

Ingo Uytdehaage

14,87140,395

Kamran Zaki

73,110671,617Mariëtte Swart

11,583467,880

Alexander Matthey*

515,975—

Net revenues

317,317

149,900

EBITDA

227,51282,245

4,663

1,703

Director's remuneration (in EUR)

Company Performance (in EUR ‘000)

Average remuneration comparative on FTE basis (in EUR)
Wages and Salaries / FTE* Became Managing Director as per 2021

Supervisory Board Remuneration
The total remuneration received by the Supervisory Board in 2021
amounted to EUR 386,000 (2020: EUR 292,705). The current remuneration
structure of the Supervisory Board was approved in the Annual General
Meeting on May 21, 2020.
Role

Amount (in EUR)

Chair

80,000Member

60,000Chair Audit Committee

15,000Member Audit Committee

10,000Chair Nomination & Remuneration Committee

10,000Member Nomination & Remuneration Committee

7,000

No increases have been made to the Supervisory Board remuneration in thefinancial year 2021. No increases will be made for the financial year 2022.

Adyen Annual Report 2021

106

The table below provides an overview of the remuneration of eachSupervisory Director for the financial year 2019, 2020, 2021. In addition to
the remuneration, expenses incurred by the members of the Supervisory
Board in the performance of their duties are reimbursed in full. Supervisory
Directors do not receive variable remuneration or share-based
compensation.
2021

2020

2019

Remunerationin cashTotal
Remuneration

Remunerationin cashTotal
Remuneration

Remunerationin cashTotal
Remuneration

Piero Overmars

97,00097,00090,20090,20080,00080,000Delfin Rueda Arroyo

75,00075,00069,00069,00060,00060,000

Joep van Beurden

70,00070,00066,00066,00060,00060,000

Pamela Joseph

77,00077,00067,50567,50540,00040,000

Caoimhe Keogan

67,00067,000

—

—

—

—

Total

386,000

386,000

292,705

292,705

240,000

240,000(in EUR)

Share-based compensation
The table below provides an overview of the aggregate number of Shares
and/or Depositary Receipts per December 31, 2021 that have been granted
prior to the Company’s IPO in 2018 to Supervisory Directors as part of theirshare-based compensation.
Shareholdings (aggregate number of Shares and/or Depositary
Receipts)

Piero Overmars

2021

2020

2019

1,094

1,094

1,094

Delfin Rueda Arroyo

—

—

—

Joep van Beurden*

1,719

1,719

1,719

Pamela Joseph

—

—

—

Caoimhe Keogan

—

—

—

*Options were granted in his role as an advisor to Adyen prior to becoming a member of theSupervisory Board.

Adyen Annual Report 2021

As the Supervisory Directors are not allowed to be remunerated via
share-based compensation after the listing of Adyen in 2018, the annual
remuneration per Supervisory Directors with unvested Options that expired
as per June 1, 2018 was increased by €30,000 to €80,000 for
Piero Overmars and to €60,000 for Joep van Beurden per year startingat that date.
Additionally, Piero Overmars and Joep van Beurden committed not to sell,transfer or otherwise dispose of any Shares and/or Depositary Receipts,
during the term of their appointment.

Insurance
The Supervisory Directors of Adyen are insured under an insurance policy
taken out by Adyen against damages resulting from their conduct whenacting in their capacities as supervisory directors.

Loans
No loans, advance payments and guarantees have been granted to or on
behalf of the Supervisory Directors.

107

Adyen Annual Report 2021

Mahmoud — VP Acquiring Middle East

“ Here at Adyen, everyone leaves their ego at home, and we work
together whatever the task at hand requires. When we moved into abigger office last year, we all carried the furniture ourselves, taking careof the curtains, making sure it’s soundproof – it became our homebecause we built it. No matter what we’ll face in the future, I’m looking
back fondly on the times spent in that office already. ”

108Adyen Annual Report 2021

03
Financial
Statements
2021

109

Adyen Annual Report 2021

Consolidated Financial
Statements______________________________________________________________________ 112
Consolidated Statement of Comprehensive Income ___________________________________ 113
Consolidated Balance Sheet _______________________________________________________ 114
Consolidated Statement of Changes in Equity ________________________________________ 115
Consolidated Statement of Cash Flows _____________________________________________ 117
Notes to the Consolidated Financial Statements ______________________________________ 118
Key Disclosures _ ________________________________________________________________ 121
2. Revenue and segment reporting _ ________________________________________________ 121
3. Inventories _ _________________________________________________________________ 129
4. Employee benefit expense _ _____________________________________________________ 130
5. Other operating expenses _______________________________________________________ 134
6. Other financial results __________________________________________________________ 135
7. Income tax _ _________________________________________________________________ 137
8. Capital management _ _________________________________________________________ 141
9.CRR/CRD IV Regulatory Capital ___________________________________________________ 142
10. Cash and cash equivalents _____________________________________________________ 142
11. Financial instruments _ ________________________________________________________ 143
12. Financial risk management _ ____________________________________________________ 148

Other disclosures ________________________________________________________________ 151
13. Intangible assets _____________________________________________________________ 151
14. Plant and equipment __________________________________________________________ 152
15. Trade, other receivables, and receivables from merchants and financial institutions ____________ 153
16. Trade, other payables, and payables to merchants and financial institutions __________________ 155
17. Leases _____________________________________________________________________ 156
18. Other contingent assets, liabilities and commitments __________________________________ 157
19. Related party transactions _ ____________________________________________________ 158
20. New and amended standards adopted _____________________________________________ 158
21. Audit fees __________________________________________________________________ 159
22. Compensation of key management _ ______________________________________________ 160
23. Share information ____________________________________________________________ 162
24. Tax reporting ________________________________________________________________ 163

110

Adyen Annual Report 2021

Company Financial
Statements______________________________________________________________________ 166
Company Statement of Comprehensive Income_ ______________________________________ 167
Company Balance Sheet _ __________________________________________________________ 168
Company Statement of Changes in Equity ____________________________________________ 169
Company Statement of Cash Flows __________________________________________________ 171
Notes to the Company financial statements ___________________________________________ 172
25. Basis of preparation _______________________________________________________________________ 172
26. Company - Revenue _______________________________________________________________________ 172
27. Company - Employee benefits _ _____________________________________________________________ 172
28. Company - Other operating expenses ________________________________________________________ 173
29. Company - Other financial results _ __________________________________________________________ 173
30. Company - Plant and equipment _ ___________________________________________________________ 174
31. Company – Leases ________________________________________________________________________ 175
32. Company - Investments in consolidated subsidiaries on equity method ___________________________ 176
33. Company – Trade, other receivables, and receivables from merchants and financial institutions _ ____ 178
34. Shareholders’ equity _ _____________________________________________________________________ 179
35. Dividends paid ____________________________________________________________________________ 179
36. Company – Trade, other payables, and payables to merchants and financial institutions ____________ 179
37. Directors’ remuneration ____________________________________________________________________ 179
38. Audit fees ________________________________________________________________________________ 179
39. Contingencies and commitments ___________________________________________________________ 180
40. Proposed profit appropriation _______________________________________________________________ 180
41. Events after balance sheet date _____________________________________________________________ 180

111

Adyen Annual Report 2021

Consolidated Financial
Statements

112

Adyen Annual Report 2021

113

Consolidated Statement of Comprehensive Income
For the years ended December 31, 2021 and 2020(all amounts are in EUR thousands unless otherwise stated)
Note

2021

2020

Revenue25,995,419

3,641,389

Costs incurred from financial institutions

2(4,960,951)(2,935,182)

Costs of goods sold

2, 3

(32,951)(22,007)

1,001,517

684,200

4(199,141)(151,440)(28,574)

Net revenue

Wages and salaries
Social securities and pension costs
Amortization and depreciation
Other operating expenses

4(41,398)

13,14,17(35,011)(28,567)

5(131,236)(101,889)

250

183

594,981373,913

1,039

1,334

Other income
Income before net finance expense and income taxes

Finance income
Finance expense

17(12,788)(9,406)

Other financial results

6(2,385)(42,661)(14,134)(50,733)

Net finance expense

580,847

323,180(111,130)(62,161)

Net income for the year

469,717

261,019

Net income attributable to owners of Adyen N.V.

469,717

261,019

Currency translation adjustments subsidiaries

11,373(11,764)

Other comprehensive income/ (expense) for the year

11,373(11,764)

Total comprehensive income for the year
(attributable to owners of Adyen N.V.)

481,090249,255

Income before income taxes
Income taxes

7

Other comprehensive income/ (expense)
Items that may be reclassified to profit or loss:

Earnings per share (in EUR)–

Net profit per share - Basic

23

15.40

8.63

–

Net profit per share - Diluted

23

15.31

8.51

The accompanying notes are an integral part of these consolidated financial statements.

Adyen Annual Report 2021

114

Consolidated Balance Sheet
As at December 31, 2021, and 2020(all amounts are in EUR thousands unless otherwise stated)
Note

December 31,
2021

December 31,
2020

Intangible assets

13

9,841

9,970

Plant and equipment

14

72,98135,746

Right-of-use assets

17

128,063

124,328

Other financial assets at FVPL

1122,504

20,883Contract assets

2.2

79,341

124,113

Deferred tax assets

7

127,782

106,337

440,512421,377

Total non-current assets

Inventories

3

22,13819,548

Receivables from merchants and financial institutions

15633,249

883,939

Trade and other receivables

15

56,85275,079Current income tax receivables

7

6,761

8,794

Other financial assets at amortized cost

11—

12,238Cash and cash equivalents

10

4,616,094

2,737,486

Total current assets

5,335,094

3,737,084

Total assets

5,775,606

4,158,461

Share capital

8

310

304

Share premium

8335,725

194,608

137,457

149,931

Other reserves
Retained earnings

1,336,922

873,291

Total equity attributable to owners of Adyen N.V.

1,810,414

1,218,134

Derivative liabilities

11

81,70068,400

Deferred tax liabilities

7

16,401

23,924

Lease liability

17

119,968

118,051

Cash-settled share-based payment plan

4.3

5,601

—

223,670

210,375

Total non-current liabilities

Payables to merchants and financial institutions

16

3,608,531

2,588,863

Trade and other payables

16

100,116

111,547

Lease liability

17

22,996

13,434Current income tax payables

7

9,879

16,108

Total current liabilities

3,741,522

2,729,952

Total liabilities and equity

5,775,606

4,158,461

The accompanying notes are an integral part of these consolidated financial statements.

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115

Consolidated Statement of Changes in Equity
For the years ended December 31, 2021 and 2020(all amounts are in EUR thousands unless otherwise stated)
Other reserves
Note

Balance - January 1, 2020

SharecapitalSharepremium

301

179,296

Legal
reserves

Share-based
payment
reserve

Warrant
reserve

9,095

66,73453,401

Net income for the year
Currency translation adjustments

Retainedearnings

Total equity

609,507918,334

261,019

261,019

261,019249,255(11,764)

Total comprehensive income for the year——

(11,764)(11,764)——

Adjustments:
Intangible assets

2,330

Other adjustments(1,165)

1,165

1,165

1,165

—

—

—

(2,330)

—

5,095

5,095

2,765

5,095

Transactions with owners in their capacity as owners:
Deferred tax on share-based compensation

7

Options exercised
Proceeds on issuing shares

8

Share-based payments

4.3

Balance - December 31, 2020

3

(321)

32,1592,795(2,795)31,838—

12,838

12,841771

771

3

15,312—30,135——45,450304

194,608(1,504)

98,03453,401

873,291

1,218,134

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116

Other reserves
Note

Balance - January 1, 2021

SharecapitalSharepremium

304

194,608

Legal
reserves

Share-based
payment
reserve

Warrant
reserve(1,504)

98,03453,401

Net income for the year
Currency translation adjustments

Retainedearnings

Total equity

873,291

1,218,134

469,717469,717469,717

481,090

11,373

Total comprehensive income for the year——

11,373

11,373——Adjustments:
Intangible assets

(129)

129

—

59

59

—

188

59

(26,700)(7,400)

Other adjustments
—

—

(129)

—

Transactions with owners in their capacity as owners:
Equity transfer on exercise of warrant

2.1

34,100

Deferred tax on share-based compensation

7

—

5,548

5,548

1,732

(1,732)—

Options exercised
Proceeds on issuing shares

8

Share-based payments

4.3

6105,285

105,291292

Other adjustments

Balance - December 31, 2021—

292
(1,126)

1,126

—

6

141,117—

4,108(27,826)(6,274)111,131310

335,725

9,740

102,142

25,575

1,336,922

1,810,414

The accompanying notes are an integral part of these consolidated financial statements.

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Consolidated Statement of Cash Flows
For the years ended December 31, 2021 and 2020(all amounts are in EUR thousands unless otherwise stated)
Note

2021

2020

580,847

323,180

Finance income(1,039)(1,334)

Finance expenses

12,788

9,406

Income before income taxes
Adjustments for:

–
–
–
–
–
–
–
–

Other financial results

6

2,385

42,661

Depreciation of plant and equipment

14

15,315

11,230

Amortization of intangible fixed assets

13

3,088

2,465

Depreciation of right-of-use assets

17

16,60814,872Equity-settled share-based compensation *

4.3

292

922

5,601

—

Cash-settled share-based payment plan

Changes in working capital:

–
–
–
–
–
–

Inventories

3(3,851)(12,528)

Trade and other receivables

15

19,780(15,213)

Receivables from merchants and financial institutions

15

250,690(440,606)

Payables to merchants and financial institutions

16

1,019,668

1,129,637

Trade and other payables *16(11,048)

21,351

Amortization and additions of contract assets

2.2

48,198

10,641

1,959,322

1,096,684

Cash generated from operations

Interest received

1,039

1,334

Interest paid

(12,788)(9,406)

Income taxes paid

(127,427)(71,965)

Net cash flows from operating activities

1,820,146

1,016,647

Purchases of financial assets at FVPL

(211)

—

12,427

13,088

Redemption of financial assets at amortized cost

11

Purchases of financial assets at amortized cost

11—

(13,355)

Purchases of plant and equipment

14(51,387)(17,097)

Capitalization of intangible assets

13(2,959)(4,795)(42,130)(22,159)

Net cash used in investing activities
Proceeds from issues of shares

8

105,285

12,832

Lease payments

17(9,045)(9,439)96,2403,393

Net cash flows from financing activities
Net increase in cash, cash equivalents and bank overdrafts

1,874,256

997,881

Cash, cash equivalents and bank overdrafts at beginning of the year

2,737,486

1,745,388

4,352(5,783)4,616,094

2,737,486

Exchange gains/(losses) on cash, cash equivalents and bank overdrafts
Cash, cash equivalents and bank overdrafts at end of the year10

The accompanying notes are an integral part of these consolidated financial statements.
* The comparative information is updated to align with the current period presentation of trade and other payables and cash-settled share-based
payment plan.

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118

Notes to the Consolidated Financial
Statements
General Information
Adyen N.V. (hereinafter ‘Adyen’, ‘the Company’, or ‘the Group’) is a licensed Credit Institution by De Nederlandsche
Bank (the Dutch Central Bank) and registered in the Netherlands under the company number 34259528. The Credit
Institution license includes the ability to provide cross-border services in the European Economic Area. Adyen sharesare traded on Euronext Amsterdam, where the Company is part of the AEX Index and has a credit rating of A-.
During the year, Adyen was granted a license to operate as a US Federal Foreign Branch in San Francisco, California
by the Office of the Comptroller of the currency and the Federal Reserve. The US branch was incorporated andcommenced trading during the year 2021.

1. Basis of preparation
The consolidated financial statements have been prepared on a going concern basis in accordance with International
Financial Reporting Standards and IFRS IC interpretations as endorsed by the European Union (EU-IFRS) and inaccordance with sub articles 8 and 9 of article 362, Book 2 of the Dutch Civil Code. The financial statements comply
with IFRS as issued by the International Accounting Standards Board (IASB). All amounts in the notes to theconsolidated financial statements are stated in thousands of EUR, unless otherwise stated.
Impact of COVID-19:
Since January 2020, the COVID-19 outbreak has spread across many regions around the globe. The pandemic has
caused disruption to business and economic activity in many sectors. Despite these disruptions, the adverse
impacts on the Company’s profit and liquidity was limited during the year.
Adyen’s merchants operate across many sectors and geographies, and have been impacted in varying degrees by
the pandemic. Overall there has been an increasing pervasiveness of unified commerce shopper journeys, which isreflected in our growth in point-of-sale volumes on our platform, despite the lockdown restrictions. Due to Adyen’s
diverse merchant portfolio, net revenue growth continued in line with the prior year (refer to note 2.4). Moreover,
EBITDA margin and net cash position improved, showing the overall resilience of the Adyen business model.
In connection with the developments of the virus outbreak, Management has advised Adyen employees to work fromhome since March 2020. While the default has been to work from home, Adyen has favored a hybrid working
approach when allowed by local regulation. The Company has always been flexible in dealing with personal
circumstances and will maintain that approach going forward. This decision had limited impact on business
continuity as our infrastructure is developed in order to allow remote connection with no access impact to therelevant systems and platforms.
Management has assessed the impact of the COVID-19 pandemic on the realizability of assets that rely on future
profitability, such as deferred tax asset positions. The diversified nature of Adyen’s business model has allowed forcontinued net revenue and EBITDA growth throughout the year and contributed to consolidating a positive outlook
for future profitability of the Company. As a result, recoverability of the deferred tax asset and valuation of our otherassets remains unaffected. During 2021, Management reassessed the expected credit loss model for trade andother receivables, with no changes to the accounting policy disclosed in the financial statements for the year endedAdyen Annual Report 2021

119

December 31, 2021. In addition, Adyen did not see a material increase in counterparty credit risk, nor recognizedmaterial losses related to its merchant portfolio. Based on the above, management has concluded that there isreasonable certainty that Adyen is able to continue as a going concern over the foreseeable future. All topics
mentioned above continue to be monitored timely due to the fast-changing environment linked to the pandemic.

1.1 Consolidation

Accounting policy – Consolidation
The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power to direct theactivities of the entity. Subsidiaries are fully consolidated from the date on which Adyen acquires
control and they are deconsolidated from the date that control ceases.
Inter-company transactions, balances and unrealized gains on transactions between groupcompanies are eliminated.

Adyen N.V. directly or indirectly owns 100% of the shares of, and therefore controls all entities included in these
consolidated financial statements (refer to note 32 ‘Company - Investments in consolidated subsidiaries on equity
method’ for a full list of entities included in scope of consolidation of these financial statements).
Adyen has offices in the Netherlands, Brazil, Singapore, United Kingdom, Canada, Australia, Hong Kong, Mexico,
China, India, Japan, United Arab Emirates, and the United States, with branches in Germany, France, Sweden, andthe United States, and representative offices in Belgium, Italy, Poland and Spain. The address of Adyen’s N.V.
registered office is Simon Carmiggeltstraat 6-50, 1011 DJ Amsterdam, the Netherlands.

1.2. Significant accounting policies, estimates and judgements and new and amended
standards Adopted by the Group
The table below provides an overview of what the significant and new accounting policies are and where they areincluded in these financial statements. It further provides an overview of how accounting policies together withsignificant accounting estimates and judgements are connected throughout the notes to these financial statements.
In the 2021 financial statements, Adyen adopted amendments issued and made effective from January 1, 2021.
Adyen has assessed that the implementation had no impact on its current accounting policies. Details of the overall
impact assessment of the first-time application on January 1, 2021 of new amendments is disclosed in note 20.1
‘New standards adopted by Adyen’.
For the assessment whether a disclosure is relevant to users of these financial statements the following wasconsidered: the amount in question is significant in size and/or nature, importance for understanding the results ofAdyen or explaining the impact of significant changes in Adyen’s business and whether judgement is involved.

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120

Accounting Policies
What it is

Accounting policies considered relevant for understanding the financial
statements, or required to be disclosed by law or IFRS

Where

Provided per note to the financial statements. The notes are organized into thefollowing sections:

Significant Accounting Estimates or
Judgments
These accounting policies involve ahigher degree of judgement orcomplexity. The estimates applied are
more likely to be materially adjusted due
to inaccurate estimates and/or
assumptions applied

Key disclosures: provide a breakdownof individual line items in the financial
statements that users of the financial
statements consider most relevant;

2. Revenue and segment reporting
3. Inventories
4. Employee benefit expense(including share-based payments)
5. Other operating expenses
6. Other financial results
7. Income taxes

2. Revenue - Principal versus agent forrevenue out of settlement fees
7. Income taxes – Recognition ofdeferred taxes related to share-based
compensation

Capital, investment and financial
risk management: key information
relating to Adyen’s capitalmanagement, explanations regarding
financial instruments and financial risk
management;

8. Capital management
9. CRR/CRD IV Regulatory Capital
10. Cash and cash equivalents
11. Financial instruments
12. Financial risk management

11. Financial instruments – fair value
accounting of financial liabilities

Other: information on items required
to be disclosed to be compliant with
EU-IFRS and other legal
requirements.

Notes 13 – 41

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121

Key Disclosures
In relation to our strategy, as outlined in the Management report, Adyen’s management considers the following
disclosures as key in understanding its financial performance or position.

2.

Revenue and segment reporting

The Adyen platform integrates the full payments stack (gateway, risk management, processing, acquiring andsettlement) with a common back-end infrastructure for authorizing. The company derives revenue from settling andprocessing payments, sales of goods such as the sale of point of sale (POS) terminals, and other payment specificservices.

Accounting policy – Revenue from contracts with customers
Adyen has the following sources of revenue from contracts with customers:(I) Settlement fees: Fees paid by merchants, usually as percentage of the transaction value, where
Adyen offers acquiring services. These fees are recognized as revenue when a payment transaction
has been completed by means of settlement with a merchant. Settlement fees include interchange
and payment network fees and other costs incurred from financial institutions. Adyen adopts atransparent pricing model and charges fees to merchants based on its own incurred costs plus amark-up for its acquiring services, as contractually agreed between each merchant and Adyen.
(II) Processing fees: Fixed fee per transaction paid by merchants for the use of Adyen’s platform andrecognized as revenue when transaction is initiated via the Adyen payment platform.
(III) Sales of goods: Adyen satisfies the performance obligations to deliver the ownership of the POS
terminals and related accessories upon transfer of control of the terminal to the merchant. Adyenconsiders this performance obligation to be distinct from its payment services. As a result, therevenues for the sale of POS terminals and related accessories are recognized at that point in time.
(IV) Other services: Includes foreign exchange service fees, third party commission and issuingservices which are deemed other services - recognized at point in time. Services transferred overtime relate to the amortization of deferred revenue for services provided as part of the merchantcontract (note 2.1) and terminal services fees as part of the unified commerce offering.

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122

The breakdown of revenue from contracts with customers per type of goods or service is as follows:
Types of goods or service

2021

2020

Settlement fees

5,525,079

3,293,512

Processing fees

289,824

217,208

Sales of goods

33,042

19,353

Other services

147,474

111,316

Total revenue from contracts with customers

5,995,419

3,641,389

Costs incurred from financial institutions(4,960,951)(2,935,182)

Costs of goods soldNet revenue(32,951)(22,007)

1,001,517

684,200

Net revenue
Adyen’s total revenue contains scheme fees, interchange and mark-up for which Adyen acts as a principal. The
Management Board however, monitors net revenue (net of interchange and scheme fees (costs incurred fromfinancial institutions), and costs of goods sold) as a performance indicator. Adyen considers net revenue to provide
additional insight, together with total revenue, to its users to evaluate the nature and financial effects of the businessactivities in which it engages and the economic environments in which it operates. Net revenue is a non-IFRS
measure – refer to note 2.4 for further explanation on the non-IFRS measures reported by Adyen.

Adyen Annual Report 2021

Key Judgement – Principal versus Agent for revenue out of settlement fees
Based on existing facts and circumstances, Adyen applied its judgment in determining whether it
has control of the full payment service before the service is transferred to its merchants, and, inconsequence, whether the Company is acting as agent or principal in relation to the settlement fees
charged to merchants. This judgement is supported by facts and circumstances, not limited toAdyen’s financial risk exposure as acquirer in its relationship with third parties and merchants.
Adyen contracts with third parties (financial institutions and network scheme providers) that provide
services to enable Adyen’s payment processing and acquiring services to merchants, for whichinterchange and payment network fees are charged to Adyen. Adyen adopts a transparent pricing
model and charges fees to merchants based on its own incurred costs plus a mark-up.
Adyen is primarily responsible for fulfilling the promise to provide payment transaction services.
Although Adyen contracts with third parties to facilitate the interchange of funds between the issuer
and merchant, Adyen is ultimately responsible for ensuring that the services are performed and are
acceptable to the merchant. Adyen integrates the elements provided by third parties and its own
services, in order to execute payment transactions, and Adyen is responsible for its contractual
terms with merchants. Adyen is thus considered to control the full payment service before theservice is transferred to merchants.
Settlement fees – Adyen is the principal
For all payment processing services Adyen provides to the merchants as an acquirer, it retains the
exposure to financial institutions and payment networks for the interchange and payment network
fees, other costs incurred from financial institutions as well as a mark-up charged by Adyen. As
such Adyen concluded it acts as Principal for the aforementioned fees and as such are recognizedbased on this conclusion.

Accounting policy – Revenue recognized at a point in time and over time
All processing and settlement fees, together with the sales of goods are recognized as revenue
when the services are rendered or the ownership of the goods is transferred (‘goods and services
transferred at a point in time’). In addition to the aforementioned revenue streams, Adyen provides
terminal replacement services included in ‘other services’, for which revenue is recognized over a
period of time. Adyen recognizes revenue for these services on a straight-line basis over thecontract term.

123

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124

The breakdown of revenue from contracts with customers based on timing is as follows:
Timing of revenue recognition
Goods and services transferred at a point in time
Services transferred over time
Total revenue from contracts with customers

2.1.

2021

2020

5,985,474

3,634,151

9,945

7,238

5,995,419

3,641,389

Long-term merchant contract

In 2018 Adyen entered into a long-term contract with eBay for the provision of payment services that resulted in theinitial recognition of contract assets settled with a cash advance and issue of warrants over Adyen’s shares. The
following accounting elements were recognized as a result of the contractual agreements.
Element

Accounting treatment

Note reference

Contract assets

Contract assets are initially recognized at cost on the balance sheet, andsubsequently amortized against revenue (settlement fees) in profit orloss on a pro rata basis in line with the fulfilment of the expected payment
services performance obligation. The contract assets are separated intoa monetary and non-monetary component and are assessed for
impairment annually with reference to the remaining (net) benefits fromthe long-term merchant contract.

2.2.Contract assets

The USD "monetary item" is translated at each balance sheet date at the
EUR/USD spot rate and is assessed for impairment under the expectedcredit loss model. Exchange movements on the "monetary item" isrecognized in profit or loss (other financial results).
Settled by:
1. Cash advanceCash consideration is treated as part of incremental costs of obtaining
the merchant contract ('contract assets').

2.2. Contract assets

2. Warrants

Derivative liabilities relating to the warrants are recognized initially at fairvalue and are subsequently stated on the balance sheet at fair value, withmovements recognized in profit or loss (other financial results). The
warrants vest in four tranches, each linked to a milestone of processed
payments volume. Each milestone is deemed achieved at the momentthat the processed merchant volume exceeds the milestone amount in asingle calendar year following the Issue date (January 31, 2018). Only
two warrant tranches may vest in a single calendar year, and upon
vesting, each entitles the warrant holder to acquire 1.25% of Adyen's
issue-date diluted share volume at any time prior to the warrant
expiration date (January 31, 2025). Prior to 2021, none of the four
warrant tranches related to the derivative liabilities vested.

2.2. Contract assets
8. Capital management
11. Financial instruments
23. Share information

After the IPO (on June 13, 2018), the derivative liabilities relating totranches 1 and 2 were reclassified as a warrant reserve in equity in theamount of EUR 68.2 million. During 2021, the first tranche milestone wasmet, vested, and the related warrant was subsequently exercised by
eBay. A total of 403,724 shares were issued to eBay at €240 per shareand represented 1.25% of Adyen’s issue-date diluted share volume. The
gross equity balance relating to tranche 1 (EUR 34.1 million) and related
deferred tax (EUR 7.4 million) were transferred from ‘warrant reserve’ to‘share premium’ and ‘retained earnings’, respectively. The dilutive effectof the exercised warrant (tranche 1) was reflected in the shares
outstanding at year-end - refer to note 23 ‘Share information’. As per
December 31, 2021, the ‘warrant reserve’ was carried at historic cost
(EUR 34.1 million (net of deferred tax)) while the derivative liabilities
relating to tranches 3 and 4 were carried at fair value on Adyen's balance
sheet.

Adyen Annual Report 2021

2.2.

125

Contract assets

Accounting policy – Contract assets
Recognition and measurement
If a fee or commission (a consideration) is not paid in connection with any distinct goods orservices, it should be considered part of the total transaction price of a contract with a customer. As
a result, this fee or commission should be deducted from revenue when revenue is recognized forproviding the services to the customer. These considerations are recognized as contract assets inthe balance sheet.
Amortization and Impairment
The contract assets are assessed for impairment annually with reference to the remaining (net)benefits from the long-term merchant contract. An impairment loss is recognized if the carrying
amount of the contract assets are higher than the estimated remaining benefits in the merchantcontract, net of directly attributable costs to fulfil the remaining payment service obligations. The
contract assets are amortized and booked to revenue (settlement fees) on a pro rata basis in linewith the fulfilment of the expected payment services performance obligation.
For the monetary component of the contract asset, Adyen applies the IFRS 9 simplified approach tomeasuring expected credit losses which uses a lifetime expected loss allowance for all tradereceivables, other financial assets measured at amortized cost and the contract asset.

Management derived its best estimate of the future (net) revenue from expected payments volumes and fees
determined in the merchant contract, net of directly attributable costs to fulfil the remaining payment service
obligations. The contract assets were not impaired at December 31, 2021 and 2020 as the remaining estimated (net)benefits from the merchant contract exceeded the contract assets balance at year-end.
The monetary component of the contract assets is in scope of impairment under IFRS 9; however, due to low credit
risk, the expected credit loss on the contract asset is deemed not significant.
In addition to the long-term contract with eBay (note 2.1), during 2021, Adyen capitalized contract costs (othercontract assets) relating to multi-year service contracts with its merchants. These costs mainly relate to integrationand development fees that are directly incremental to obtain the multi-year contracts and do not represent separate
performance obligations. Consistent with the treatment of contract costs related to the long-term contract with eBay
(note 2.1), Adyen will amortize these costs against revenue (settlement fees) on a pro rata basis as the related
revenue is recognized.

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126

The following table summarizes the movement in the contract assets balance:

Contract assets
Balance - 1 January, 2020

Monetary
component

Non-monetarycomponent

Other contract
assetsTotal contract
assets61,087

78,913—140,000(8,184)(2,457)

Movements:
Amortization for the year
Exchange differences(5,246)

Balance - December 31, 2020

47,65776,456(42,112)(14,395)(10,641)(5,246)—

124,113

Movements:
Additions
Amortization for the year
Exchange differences (note 6)
Balance - December 31, 2021

2.3.

8,946

8,946

(637)

(57,144)

3,426
8,971

3,426
62,061

8,309

Segment reporting

Accounting policy – Segment Reporting
An operating segment is a component of an entity that engages in business activities from which it
earns revenues and incurs expenses. The operating results of each segment are regularly reviewed
by the entity’s Chief Operating Decision Maker (“CODM”) in order to make decisions about
resources to be allocated to the segment and assess its performance and for which discrete
financial information is available.
Adyen has identified the Management Board as the CODM who is responsible for the assessmentof the allocation of resources and performance of the operating segments identified. Based on
Adyen’s business and operating model, Adyen has identified a single operating and reporting
segment: ‘Payment services’.
Payment services
The total revenue earned from Adyen’s only operating and reporting segment contains settlement
fees, processing fees, other fees and sales of goods. The Management Board monitors net revenue(net of interchange, scheme fees and costs of goods sold) as a performance indicator. As a result,
Adyen considers net revenue to provide insight to its users to evaluate the nature and financial
effects of the business activities in which it engages and the economic environments in which it
operates. Net revenue is a non-IFRS measure – refer to note 2.4 for further explanation on the
non-IFRS measures reported by Adyen.

As a result of the entity wide disclosure requirements of IFRS 8, a geographical breakdown is provided.

79,341

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127

The following table summarizes Adyen’s geographical breakdown of its revenue based on the billing location asrequested by the merchant for the periods indicated. During 2021, Adyen updated the geographical breakdown(including comparatives) by reallocating the revenue from the Rest of the World to the other existing regions. Thisupdate resulted in the following changes to revenue per region in 2020: Europe, the Middle East, and Africa (formerly'Europe') (EUR 5,489), Latin America (EUR 38), and Rest of the World (EUR (5,527)).
Revenue - Geographical breakdown

2021

2020

Europe, the Middle East, and Africa (EMEA)

2,351,662

1,634,873

North America

2,899,788

1,511,470

Asia-Pacific436,185

263,678

Latin America
Total revenue from contracts with customers

307,784

231,368

5,995,419

3,641,389

Large customers
For the year ended December 31, 2021, as measured by revenue, Adyen's top 10 merchants represent 29% ofrevenue (2020: 38%). In 2021 and 2020 there were no single customers that on an individual level accounted formore than 10% of the total revenue.
For the year ended December 31, 2021, as measured by net revenue, Adyen's top 10 merchants represent 20% of
net revenue (2020: 20%). There were no customers with individually more than 10% of the total net revenue(2020: nil).
Non-current assets
At December 31, 2021 EUR 289 million of the non-current assets were carried by Adyen N.V. (2020: EUR 301
million). Based on the location of the Adyen offices the following geographical breakdown of non-current assets is
prepared.
Non-current assets - Geographical breakdown

2021

2020

Netherlands

288,788

300,939

Rest of the World

151,724

120,438

Non-current assets

440,512421,377

2.4.

Non-IFRS financial measures

Non-IFRS financial measures are disclosed in addition to the statement of comprehensive income, in order toprovide relevant information to better understand underlying business performance of the Company. Furthermore,
Adyen has provided guidance on several of these non-IFRS measures. Adyen reports on the following additional
financial measures that are directly derived from the consolidated statement of comprehensive income or statementof cash flows:– Net revenue: Revenue net of interchange, scheme fees (“costs incurred from financial institutions”), and costs ofgoods sold;
The following table summarizes Adyen’s geographical breakdown and the year-on-year growth of its net revenue,
based on the billing location as requested by the merchant for the periods indicated. During 2021, Adyen updated

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128

the geographical breakdown (including comparatives) by reallocating the net revenue from the Rest of the World tothe other existing regions. This update resulted in the following changes to net revenue per region in 2020: Europe,
the Middle East, and Africa (formerly 'Europe') (EUR 1,313), Latin America (EUR 18), and Rest of the World (EUR
(1,331)).
Net revenue - Geographical breakdown andyear-on-year growth

2021

YoY%

2020

YoY%

Europe, the Middle East, and Africa (EMEA)

599,33241%

426,191

22%

North America

231,406

74%

132,959

66%

Asia-Pacific

96,08648%

64,95029%

Latin America
Total net revenue from contracts with customers

74,69324%

60,10011%

1,001,517

46%684,200

28%– EBITDA: “Income before net finance expense and income taxes” less “amortization and depreciation” on the
consolidated statement of comprehensive income;– EBITDA margin: EBITDA as a percentage of net revenue;– CapEx: Capital expenditures consisting of the line items "purchases of plant and equipment" and "capitalizationof intangible assets" on the consolidated statement of cash flows;– Free cash flow: EBITDA less CapEx and “lease payments” on the consolidated statement of cash flows;– Free cash flow conversion ratio: free cash flow as a percentage of EBITDA.
Selected non-IFRS financial measures

2021

2020

Income before net finance expense and income taxes

594,981373,913

Amortization and depreciation

35,011

28,567

EBITDA

629,992

402,480

1,001,517

684,200

63%

59%

51,387

17,097

Net revenue
EBITDA margin (%)

Purchases of plant and equipment
Capitalization of intangible assets

2,959

4,795

CapEx

54,346

21,892

EBITDA

629,992

402,480CapEx(54,346)(21,892)

Lease payments(9,045)(9,439)

Free cash flow

566,601

371,149

Free cash flow

566,601

371,149

EBITDA

629,992

402,48090%

92%Free cash flow conversion ratio (%)

Adyen Annual Report 2021

3.

129

Inventories

Inventories relate to the point of sale (POS) terminals in connection with the roll out of the Unified Commerce
strategy.

Accounting policy – Inventories
Inventories are measured at the lower of cost or net realizable value. The cost of inventories is basedon the first-in, first-out method (FIFO) and includes expenditure incurred in acquiring theinventories and other costs incurred in bringing them to their existing location and condition. Net
realizable value is defined by Adyen as the estimated re-sell price in the ordinary course of business.
The carrying amount of inventories is recognized as an expense when the inventories are sold or
written off, unless they form part of the cost of another asset.

Inventories
Balance - January 1

2021

2020

19,5487,020

Purchases during the year (products for resale)

39,81435,086

Costs of goods sold

(32,951)(22,007)

Transfer to contract assets (note 2.2)

(3,093)—

Expense recognized in other operating expenses(1,180)(551)

Balance - December 31

22,13819,548During 2021, Adyen added EUR 3,093 in contract assets related to POS terminals given as consideration for enteringin to multi-year service contracts with its merchants. In addition, Adyen recognised inventory price variances of EUR
1,180 (other operating expenses) related to purchases of POS terminals from resellers at higher than standard price.

Adyen Annual Report 2021

4.

130

Employee benefit expense

The average number of full-time equivalents (FTE) during the year was approximately 1,964 FTE (2020: 1,465 FTE)
with main expansions of our operations in the EU and US. From those hired during 2021, 51% were in tech roles, 36%
in commercial roles and 13% in staff or supporting functions.
At the end of the reporting period the regional breakdown of FTE per office is as follows:
FTE per office

2021

2020

Amsterdam

1,262

1,011

San Francisco

199

179

Singapore

101

96

London98

84

São Paulo

88

72

New York

72

53

Paris

51

43

Berlin48

36

Stockholm

33

25

Madrid32

22

Other (16 offices)

196

126

2,180

1,747

Total

For representation of the FTE per subsidiary, refer to note 24.2.

4.1.

Employee benefits

Accounting policy – Employee benefits
Employee benefits are all forms of consideration given by an entity in exchange for services
rendered by employees or for the termination of employment, except when they are related to sharebased payments (refer to note 4.3).

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131

The employee benefit expense can be specified as follows:
Employee benefits

2021

2020

Salaries and wages

187,133

141,355

Share-based compensation (note 4.3)

12,00810,085

Total wages and salaries

199,141

151,440

Social securities

35,413

24,792

Pension costs - defined contribution plans

5,985

3,782

Total social securities and pension costs

41,39828,574

Reference is made to note 22 ‘Compensation of key management’ for the remuneration of the Management Board
and Supervisory Board.

4.2.

Post-employment benefit obligations

Accounting policy – Post-employment benefit obligations
Post-employment benefits are employee benefits (other than termination benefits and short-term
employee benefits) that are payable after the completion of employment.
The Adyen group companies operate various pension schemes. The entitlement of the employees
under the company’s pension plans are all classified as defined contribution plans.
For defined contribution plans, the Group pays contributions to publicly or privately administeredpension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further
payment obligations once the contributions have been paid. The contributions are recognized as
employee benefit expense when they are due.

The expected contributions to the pension benefit plans for 2022 are EUR 5,928 (2021: EUR 4,950).

Adyen Annual Report 2021

4.3.

132

Share-based payments

The share-based compensation consists of both equity- and cash-settled compensation expenses. A specificationof the expenses is presented in the following table:
Share-based compensation

2021

2020

Equity-settled

292

922

Cash-settled

11,716

9,163

Total share-based compensation

12,00810,085Adyen considers its employees and culture as core to its growth. As part of the total remuneration package, Adyen
has two types of share-based compensation:
I.
II.
III.

Equity-settled option plan (granted until 2018);
Cash-settled share-based payment plan (granted from 2018 onwards); andDepositary receipts award plan for directors and employees (granted from 2018).

These plans are described in more detail below:
I.

Equity-settled option plan

Accounting policy – Equity-settled options
Adyen has an option plan for directors and employees. Exercisable options provided participants
the opportunity to obtain Depositary Receipts at an exercise price. The exercise price of the granted
options is equal to the market price of the shares at grant date. Subject to the employees’ anddirectors’ continued employment with Adyen, options will vest over a period of four years. The
vesting period starts on the grant date. Subject to the employees’ and directors’ continued
employment with Adyen N.V., 25% of the options will vest on the first anniversary of the grant date.
The remaining 75% of the options will then vest monthly, in equal proportions at the end of eachmonth, over the following 36 months. Options can be exercised at any time from the vesting dateuntil the 8th anniversary of the grant date. Adyen has no legal or constructive obligation to
repurchase or settle the options in cash.

The maximum aggregate number of Depository Receipts in respect to which options shall be granted is 1,312,5008.
Of the outstanding options, 84,306 options (2020: 136,445) are exercisable as at year end. The exercise price ofshare options outstanding at year end ranges from EUR 11 to EUR 106 (2020: EUR 11 to EUR 106). No options were
granted during the year ended December 31, 2021 and 2020. The fair value of options granted was determinedusing the Black-Scholes valuation model as at each respective grant date. At December 31, 2021, the weighted
average grant date fair value is equal to EUR 65.42 (2020: EUR 65.42) and the weighted average remaining expected
option life is 1.22 years (2020: 2.22 years).

8

Amounts in this paragraph are not rounded to the nearest thousand.

Adyen Annual Report 2021

133

Movements in the number of share options outstanding and their related weighted average exercise prices are as
follows:
2021
Share options outstanding

Weighted average
exercise price (in EUR)
per share option

2020
Weighted average
exercise price (in EUR)
per share option

Number of options(thousands)

Number of options(thousands)

Balance - January 1

39.20

344

30.48

Forfeited

105.74

(1)

82.77

(17)

Exercised

28.05

(196)

38.62

(294)

Balance - December 31

53.63

147

39.20

344

II.

655

Cash-settled share-based payment plan

Accounting policy – Cash-settled share-based payment plan
Adyen has established a cash-settled share-based payment plan (phantom shares) for newly hired
directors and employees as well as for certain current employees. The phantom shares are granted
at the underlying market price of Adyen shares at grant date. Subject to the employees’ continued
employment with Adyen N.V., the phantom shares will vest over a period of four years from the grant
date. 25% of the phantom shares will vest on the first anniversary of the grant date. The remaining
75% of the phantom shares will then vest yearly (25%) until all are vested after four years.
Adyen recognizes a cost over the vesting period and a corresponding liability based on the market
price of Adyen’s shares. The liability is measured at fair value through profit or loss using the market
price of Adyen’s shares at balance sheet date with remeasurements on each reporting date.
Changes in the fair value are recognized as “share-based compensation expense”.
The expense reflecting the recognition of the grant date fair value and changes in fair value of thephantom share plan is presented as wages and salaries in the statement of comprehensive income.

In 2021 a total of 8,1669 phantom shares (2020: 7,707) were granted. The share price at December 31, 2021 is EUR
2,312 per phantom share (December 31, 2020: EUR 1,905). The fair value of the liability recognized resulting fromthe phantom shares is EUR 13,045 (2020: EUR 8,227).

9Amounts in this paragraph are not rounded to the nearest thousand.

Adyen Annual Report 2021

III.

134

Depositary receipts award plan

Adyen has granted the possibility to purchase Depositary Receipts at fair market value to directors and to employees
as part of their remuneration from 2018. The underlying shares of the Adyen are held by an administration foundationthat in turn issues the Depositary Receipts to the employees. Each Depositary Receipt issued represents the
economic interest of one underlying STAK (“Stichting Administratie Kantoor Adyen N.V.“) share. The related
employee benefits expense is presented in wages and salaries.
There is a lock-up period but no vesting condition attached to the Depositary Receipts award plan. Thus there was norevised estimate of the number of Depositary Receipts expected to vest or relating income statement impact in 2021.

5.

Other operating expenses

Accounting policy – Operating expenses
Operating expenses are recognized in the period when they occur.

The other operating expenses can be specified as follows:
Other operating expenses

2021

2020

Sales and marketing costs

36,38439,612

IT costs

23,19014,024Advisory costs

15,711

15,891

Travel and other staff expenses

10,102

7,644

Contractor costs

10,384

5,978

Office costs

4,308

2,988

Housing costs

6,427

3,170

Miscellaneous operating expenses

24,73012,582

Total other operating expenses

131,236

101,889

Miscellaneous operating expenses in 2021 includes a loss arising from a difference in currency rates in LebanesePound (LBP): merchant funds were settled to Adyen at a rate requested from the schemes to be used by the
Lebanese central bank, while funds were still being paid out to the merchants at the official exchange rate. This leadto a EUR 13,028 one-off operational loss. Adyen has not recognized an asset for potential recovery of the funds.

Adyen Annual Report 2021

6.

135

Other financial results

The other financial results can be broken down in the following categories:
Other financial results
Exchange gains/(losses) (note 6.1)

2021

2020

11,375(11,066)(13,300)(32,600)

(322)

1,005

Fair value re-measurement of financial instruments:
Derivative liabilities (note 6.2)
Other financial assets at FVPL (note 6.3)
Loss on redemption of other financial assets at amortized cost
Total other financial results

6.1.

(138)

—

(2,385)(42,661)

Exchange gains/(losses)

The exchange gains (losses) recognized during the year relate to realized and unrealized translation differences onmonetary assets and liabilities. The exchange gains during 2021 mainly relate to Adyen’s foreign-denominated cash
balances, contract assets (EUR 3,426 — refer to note 2.2 ‘Contract assets’), other financial assets at FVPL (EUR
1,722 – refer to note 6.3 ‘Other financial assets at fair value through profit or loss (‘FVPL’) (Visa Inc. preferredshares))’, proceeds receivable on disposal of Visa Inc. common stock (EUR 493), and other financial assets at
amortized cost (EUR 198 – refer to note 11 ‘Financial instruments’).

Accounting policy – Functional currency and foreign currency translation
The functional currency of Adyen N.V. is the Euro as the Euro area is the primary economic
environment in which Adyen operates. The financial statements of entities that have a functional
currency different from that of Adyen N.V. (“foreign operations”) are translated into Euros as follows:• Assets, equity and liabilities – at the closing rate at the date of the statement of financial position;• Income and expenses – at the average rate of the period (as this is considered a reasonableapproximation of the actual rates prevailing at the transaction dates).
Foreign currency differences are recognized in other comprehensive income and are presented
within equity in the legal reserves.

Adyen Annual Report 2021

136

Monetary items
Monetary items are units of currency held and assets and liabilities to be received or paid in a fixed
or determinable number of units of currency. Monetary assets and liabilities denominated in foreign
currencies are retranslated into Adyen’s functional currency at the rates prevailing on the balance
sheet date. Exchange rate differences resulting from the settlement of such transactions and fromthe translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognized in the statement of comprehensive income within “other financial
results”.
Non-monetary items
Non-monetary items that are measured in terms of historical cost in a foreign currency aretranslated using the exchange rate at the date of the transaction. Non-monetary assets andliabilities that are measured at fair value through profit or loss and are retranslated at the date thatthe fair value is determined.

6.2.

Derivative liabilities

As part of the merchant contract referred to in note 2.1, Adyen recognized derivative liabilities measured at fair value
through profit or loss. The nature of the derivative liabilities is described in more detail in note 11 ‘Financial
instruments’. For 2021, EUR 13,300 (2020: EUR 32,600) is recognized in “other financial results” due to the remeasurement of the fair value of the derivative liabilities. The change in fair value of the derivative liabilities is mainly
linked to the Adyen share price increase over the year as well as a revision of valuation inputs; namely, the estimate of
the probability of vesting and discount for lack of marketability.

6.3.

Other financial assets at fair value through profit or loss (‘FVPL’) (Visa Inc. preferredshares)Adyen has classified the convertible preferred Visa Inc. shares as a financial instrument at fair value through profit orloss. For 2021, the effect on other financial results is a net gain of EUR 1,400 (2020: net loss of EUR 59) relating to an
exchange gain of EUR 1,722 (2020: loss of EUR 1,064) and fair value loss of EUR 322 (2020: gain of EUR 1,005).
Refer to note 11 ‘Financial instruments’ for more detail on the other financial assets at FVPL.

Adyen Annual Report 2021

7.

Income taxes

7.1.

Income tax expense

137

Accounting policy – Current income tax expense
Current income tax expense is the expected tax payable on the taxable income for the year, using
tax rates enacted or substantively enacted, at the end of the reporting period, and any adjustment totax payable in respect of previous years.

The tax on Adyen’s income before income taxes differs from the amount that would arise using the statutory tax ratein the Netherlands. The effective tax rate (“ETR”) of Adyen for the year ended December 31, 2021 is 19.13% (2020:
19.23%) which differs from the statutory headline corporate tax rate in the Netherlands of 25% (2020: 25%) due to theapplication of the innovation box, tax rate differences on foreign operations and other adjustments (such as nondeductible expenses). The innovation box is a Dutch tax incentive whereby a portion of qualifying profits derived frominnovative activities are taxed at a lower rate than the headline corporate tax rate in the Netherlands. Further detail on
the innovation box, Adyen’s total tax contribution and country-by country reporting are included in note 24.
Effective tax calculation
Income before income taxes
Statutory tax rate in the Netherlands (%)
Income taxes based on statutory tax rate in the Netherlands

2021

2020

580,847

323,18025%

25%

145,21280,795(31,163)(18,381)

209

2,150

Tax effects of:Innovation box
Change in tax rate
Other adjustments (such as prior year and non-deductible amounts)(3,128)(2,403)

Effective tax amount

111,130

62,161

Adyen Annual Report 2021

138

The breakdown between current and deferred income taxes for the year ended December 31, 2021 and 2020 isdisclosed below:
Income taxes

2021

2020

Current income tax expense

126,898

69,915

Deferred income tax income(15,768)(7,754)

Total income taxes

111,130

62,161The breakdown between current income tax receivables and payables as at December 31, 2021 and 2020 isdisclosed below:
Current income tax receivables/(payables)

2021

2020

Current income tax receivables

6,761

8,794

Current income tax payables(9,879)(16,108)

7.2.

Deferred income taxes

Accounting policy – Deferred income taxes
Deferred income taxes arise, in general, as a result of temporary differences between tax andcommercial accounting treatment. Deferred income tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when the asset is realized or the liability is settled.
The applied rates are based on tax rates and tax laws that have been enacted or substantively
enacted at the balance sheet date.
In some tax jurisdictions, Adyen is granted a tax deduction (i.e. an amount that is deductible indetermining taxable profit) that relates to remuneration settled by options over Adyen’s shares. The
amount of that tax deduction may differ from the related cumulative remuneration expense, andmay arise in a later accounting period. In the event where tax deductions exceed the remuneration
expense, Adyen recognizes a deferred tax position with the impact presented directly in equity.
Deferred tax assets are recognized by Adyen to the extent that it is probable that future taxable
profits will be available against which they can be utilized.
In connection with the long-term contract with eBay (refer to note 2.1 ‘Long-term merchantcontract’), Adyen has recognized derivative liabilities and contract assets. The deferred tax positions
on these items are in-substance linked to the merchant contract, and are presented on a grossbasis in the balance sheet.

Adyen Annual Report 2021

139

During 2021, the Dutch Government substantively enacted a change in the statutory tax rate, increasing it from 25%
to 25.8%, applicable from the year 2022. As a result, Adyen has remeasured the relevant deferred tax balances as per
December 31, 2021, using the updated headline statutory tax rate (25.8%) and has made an adjustment to thedeferred tax position based on the updated information. The impact of the remeasurement is accounted for in the
consolidated statement of comprehensive income.
The below movement schedule includes the changes in deferred taxes with the respective impact in equity and profit
or loss:
BalanceJanuary 1,
2020

Recognized in
Profit or Loss

9,331

Recognized inequityEffects offoreignexchange

Balance
December 31,
2020

10,521

303

43,934

21,638(8,263)43,085(7,960)106,337

Deferred tax assets:
Derivative liabilities

7,769

Windfall tax benefit

33,110Tax losses carried forward

29,163547

17,100Temporary differences

1,591

627

Total deferred tax assets

71,633

10,50532,159

2,218

5,041

Deferred tax liabilities:
Other financial assets at FVPL

(9,567)(1)

Contract assets(16,319)(2,795)(19,114)

(328)

45

(283)

Total deferred tax liabilities(26,214)(2,751)

5,041—(23,924)

Net deferred tax assets / (liabilities)

45,4197,754

37,200(7,960)82,413

BalanceJanuary 1,
2021

Recognized in
Profit or Loss

Recognized inequityEffects offoreignexchange

Balance
December 31,
2021

3,979
(33,384)

2,258

12,80838,932

5,394

86,472

5,548

7,652

127,782

Temporary differences(4,527)

Deferred tax assets:
Derivative liabilities

17,100Windfall tax benefit

43,934

Tax losses carried forward

43,085

Temporary differences
Total deferred tax assets

(939)

2,218

5,205

106,337

8,245

21,079

7,423

Deferred tax liabilities:
Other financial assets at FVPL

(4,527)

4,527—

Contract assets(19,114)3,104(16,010)

(283)

(108)

Total deferred tax liabilities

Temporary differences(23,924)

7,523

—

—

(16,401)(391)

Net deferred tax assets

82,413

15,768

5,548

7,652

111,381Adyen Annual Report 2021

I.

140

Deferred tax assets

The deferred tax assets include an amount of EUR 86,472 (2020: EUR 43,085) relating to net operating losses carriedforward. The increase in this balance relates primarily to share-based compensation excess deduction fromexercised options taken in the United States, explained in more detail later in this section. Further, EUR 21,079 (2020:
EUR 17,100) of the deferred tax assets relates to the recognized derivative liabilities.

Significant accounting estimate: Deferred tax assets linked to windfall benefits
During 2021, Adyen has reassessed the recoverability of deferred tax assets on windfall benefits
linked to the share-based compensation plan in the United States and United Kingdom. Adyen
continues to recognize deferred tax assets that will be realized against future profits, on a going
concern basis, as carryforward losses have no expiration date. Deferred tax assets include tax
losses carried forward relating to options exercised in the United States and United Kingdom(December 31, 2021: EUR 86,277; December 31, 2020: EUR 42,244) and windfall benefits relating
to options granted and vested, however not yet exercised (December 31, 2021: EUR 12,808;
December 31, 2020: 44,081). The recoverability of the deferred tax asset linked to windfall benefits
in the United States is not impacted by the US branch license, as the asset will be transferred to andrecoverable against the future taxable profits of the newly incorporated US branch. This windfall
benefit has been recognized assuming all options granted to date will be exercised within the 8th
anniversary of the grant date (grant date + 7 years). The deferred tax asset in the United States only
relates to the Federal tax and not State tax, as the Federal tax offers an unlimited carryforward andState tax a finite carrying period. An amount of EUR 24,228 (December 31, 2020: EUR 12,659)
related to deferred State taxes was not recognised as of December 31, 2021, due to its finite
carrying period and uncertainty around the recoverability of the asset.

Management has assessed the impact of the COVID-19 pandemic on the realizability of the deferred tax assets as it
relies on future profitability. Based on the continued net revenue and EBITDA growth throughout the year, as well as
the positive outlook of future profitability of the Company, the deferred tax assets shown on the balance sheet wereconsidered to be fully recoverable.
II.

Deferred tax liabilities

The deferred tax liabilities consist mainly of the deferred tax on the non-monetary part of the (eBay) contract asset(December 31, 2021: EUR 16,010; December 31, 2020: EUR 19,114).
The deferred tax assets and liabilities are presented as non-current on the Adyen balance sheet.

Adyen Annual Report 2021

8.

141

Capital management

Adyen’s objective when managing capital is to safeguard its ability to continue as a going concern.
Furthermore, Adyen ensures that it meets regulatory capital requirements at all times.

Accounting policy – Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of equity
instruments are shown in equity as a deduction, net of tax, from the proceeds.

In 2021, 600,85010 (2020: 295,289) additional shares were issued. The additional issued shares were a result of
exercises of options granted to employees as well as the exercise of the warrant linked to tranche 1 of the long-term
merchant contract (note 2.1). The paid up and called share capital increased to EUR 309,571 (2020: EUR 303,562)
resulting in a total of 30,957,086 (2020: 30,356,236) ordinary shares (nominal value EUR 0.01 per share). In 2021,
the total number of authorized shares was 80,000,000 (2020: 80,000,000).
The following reserves are considered to be non-distributable: legal reserves (in accordance with Dutch Law),
share-based payment reserve, warrant reserve, and total comprehensive income for the current period (inaccordance with regulatory capital requirements). The total of distributable reserves amounts to EUR 1,203,240(2020: EUR 790,775). The legal reserves restricted for distribution in accordance with Dutch Law amounts to EUR
32,244 (2020: 14,853 – refer to company statement of changes in equity.
Net income is added to retained earnings reserve and the current dividend policy is not to pay dividends, as retained
earnings are used to support and finance the growth strategy of the Company.
Derivative liabilities and Warrant reserve
In relation to the warrants granted to eBay (refer to note 2.1 ‘Long-term merchant contract’), as per December 31,
2021, Adyen has classified the first two tranches as an equity instrument, with the gross equity balance relating totranche 1 (vested and exercised in 2021) presented within ‘share premium’, and tranche 2 (unvested) presented
within ‘warrant reserve’. In the previous year, the warrants related to tranches 1 and 2 (both unvested) were presented
within ‘warrant reserve’ for the amount of EUR 53,401, net of EUR 14,799 deferred tax assets. The derivative liabilities
relating to the first two tranches were measured at fair value through profit or loss before being de-recognized andreclassified to equity. Equity instruments are not subsequently remeasured to fair value.
The remaining derivative liabilities relating to tranches 3 and 4 are measured at fair value with a closing balance of
EUR 81,700 as per end of December 2021 (2020: 68,400). Fair value movements are presented within ‘other financial
results’ in profit or loss. Reference is made to note 11 ‘Financial Instruments’ for further details on the accounting
treatment of the derivative liabilities.

10

Amounts in this paragraph are not rounded to the nearest EUR thousand.

Adyen Annual Report 2021

9.

142

CRR/CRD IV Regulatory Capital

The following table displays the composition of regulatory capital as at December 31, 2021. The regulatory capital isbased on the CRR/CRD IV scope of consolidation, which is the same as the IFRS scope of consolidation.
Own funds

2021

2020

EU-IFRS equity as reported in consolidated balance sheet

1,810,414

1,218,134

Net profit not included in CET1 capital (H2 2021 not yet eligible)(264,884)(261,019)

Warrant reserve(25,575)(53,401)

Intangible assets(9,841)(9,970)

Deferred tax assets that rely on future profitability(99,084)(93,788)

Regulatory adjustments:

Prudent valuation
Total own funds

(104)

(89)

1,410,926

799,867

The increase in total own funds in 2021 mainly relates to the additions of consolidated net profit (full year 2020 andH1 2021) as well as share premium increase due to the exercise of the warrant linked to tranche 1 of the long-term
contract with eBay (note 2.1).

10.

Cash and cash equivalents

Accounting policy – Cash and cash equivalents
Adyen’s cash and cash equivalents are measured at amortized cost and are included in current
assets due to their short-term nature.
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand,deposits held at call with banks, other short-term highly liquid investments with original maturitiesof three months or less and bank overdrafts. Adyen presents interest paid/received and dividends
received as operating cash flows. Due to the short duration of the cash and cash equivalents (lessthan 3 months), the fair value approximates the carrying value.

Cash and cash equivalents

2021

2020

Cash held at central banks

2,565,875

1,479,313

Cash held at banks, other than central banks

2,050,219

1,258,173

Total

4,616,094

2,737,486

Adyen Annual Report 2021

143

During the year ended December 31, 2021, the cash held at central banks incurred negative interest in the amount of
EUR 10,536 (2020: EUR 4,863). Had the interest rate at central banks been 0.1% higher/(lower), the interest incurredon cash held at central banks would decrease/(increase) by EUR 2,566 (2020: EUR 1,479).
Of the cash held at banks, other than central banks, EUR 19,654 (December 31, 2020: EUR 4,523) are restricted andare therefore not available for general use by the Company. The restricted cash mainly relates to deposits required
under the US Federal Foreign Branch license as well as deposits held as guarantee for leased offices.
Adyen’s cash held at banks, other than central banks is exposed to credit risk with financial institution counterparties.
Adyen actively manages concentration risk and it is Adyen’s policy that all commercial banks where cash and cash
equivalents are held have a credit rating in the A categories of Moody’s/S&P. No defaults occurred during the year
and management does not expect any losses from non-performance by these counterparties.

11.

Financial instruments

Accounting policy – Financial instruments
Classification
Adyen classifies its financial assets in the following measurement categories, those to be measured:• subsequently at fair value through profit or loss (‘FVPL’), and• at amortized cost.
The classification depends on Adyen’s business model for managing the financial assets and thecontractual terms of the cash flows. For assets measured at FVPL, gains and losses are recorded in
profit or loss.
Financial liabilities
Adyen initially classifies financial instruments as a liability or equity instrument based on the termsof the contractual arrangement, and subsequently reassesses the accounting treatment onchanges in circumstances. The derivative liabilities are classified as financial liabilities measured atfair value through profit or loss (refer to note 2.1 'Long-term merchant contract'). The derivative
liabilities may be derecognized or classified as equity instruments contingent on uncertain future
events linked to milestones of processed payments volume with eBay.

Adyen Annual Report 2021

Measurement
At initial recognition, Adyen measures a financial asset at its fair value plus, in the case of a financial
asset not at FVPL, transaction costs that are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Financial
assets with embedded derivatives are considered in their entirety when determining whether their
cash flows are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on Adyen’s business model for managing
the asset and the cash flow characteristics of the asset. Adyen measures its debt instruments asfollows:• Amortized cost: Held within a business model whose objective is to hold financial assets inorder to collect contractual cash flows, where those cash flows represent solely payments ofprincipal and interest. Interest income from these financial assets is included in financeincome using the effective interest rate method.
Financial assets and liabilities at fair value through profit or loss
• Assets that do not meet the criteria for amortized cost or fair value through othercomprehensive income (‘FVOCI’) are measured at FVPL. A gain or loss is subsequently
measured at FVPL and gains or losses are recognized in profit or loss and presented net
within other financial results for the period in which it arises.
Impairment
Adyen assesses on a forward-looking basis the expected credit losses associated with its debt
instruments carried at amortized cost. The impairment methodology applied depends on whether
there has been a significant increase in credit risk. For trade receivables and contract assets, thegroup applies the simplified approach, which requires expected lifetime losses to be recognizedfrom initial recognition of the assets.
Instruments in scope on the balance sheet of Adyen include: cash and cash equivalents, receivablesfrom merchants and financial institutions, trade receivables, other receivables and contract asset
classified as monetary item. The expected credit loss model is designed to measure the pattern of
improvement or deterioration in the credit quality of the debt instruments. The measurement basis
consists of two categories• Category 1: Expected credit losses (12 months)• Category 2: Lifetime expected credit losses

144

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The Adyen Treasury policy only allows exposures to financial institutions with sound credit quality
rating and limits the exposure to a maximum amount. As a result, Adyen applies the low credit risk
simplification; hence all assets are considered to be in stage 1 and a 12-month expected credit loss
is applied.
Lifetime expected credit losses are applied for trade and other receivables. For these instruments
operational simplifications can be applied; hence it eliminates the need to calculate a 12-month
expected credit losses or to measure increases in credit risk for the instrument. The loss allowancefor trade receivables are measured at initial recognition, and throughout the total duration, equal tolifetime expected credit losses.
As the average duration of the instruments in scope for impairment calculation is below 10 days, noforward-looking elements are included in the expected credit loss assessment.
In the event of no reasonable expectation of recovering the financial asset, the Adyen Credit
Committee decides on whether a write-off should take place for the entirety or portion of theoutstanding amount.
Fair value measurement
For financial instruments measured at fair value, Adyen categorizes the fair value measurement in
its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to
the entire measurement. Adyen categorizes fair valuation inputs on the following basis:• Level 1: The fair value of financial instruments traded in active markets is based on quoted
market prices at the end of the reporting period.
• Level 2: The fair value of financial instruments that are not traded in an active market isdetermined using valuation techniques which maximise the use of observable market data
and rely as little as possible on entity-specific estimates. If all significant inputs required to fairvalue an instrument are observable, the instrument is included in level 2.
• Level 3: If one or more of the significant inputs is not based on observable market data, theinstrument is included in level 3.

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146

The financial instruments as at each balance sheet date are summarized in the table below. For those measured atfair value, to provide an indication about the reliability of the inputs used in determining fair value, Adyen hasclassified its financial instruments into the levels described in the accounting policies above. All other financial
instruments on the balance sheet meet the requirements of the contractual cash flow and characteristics test to bemeasured at amortized cost. Furthermore, the classification is based on the business model test. As a result, theclassification is consistent with how the business is managed and is in line with risk management strategies and how
this is reported to key management. Adyen’s exposure to various risks associated with the financial instruments is
discussed in note 12.

Financial instruments

Note

Measurement
policy2021

2020

Financial assets:
Other financial assets at FVPLFVPL – level 2

22,504

20,883Contract assets – monetary component

2.2

Amortized cost

8,971

47,657

Receivables from merchants and financial institutions

15

Amortized cost

633,249

883,939

Trade and other receivables

15

Amortized cost

56,85275,079Amortized cost—

12,238Other financial assets at amortized cost
Cash and cash equivalents

10

Amortized cost

Total

4,616,094

2,737,486

5,337,670

3,777,282

Financial liabilities:
Derivative liabilities

FVPL – level 2

81,70068,400

Lease liability

17

Amortized cost

142,964

131,485

Payable to merchants and financial institutions

16

Amortized cost

3,608,531

2,588,863

Trade and other payables

16

Amortized cost

100,116

111,547

3,933,311

2,900,295

Total

Other financial assets at FVPL (Visa Inc. preferred shares)
Adyen has recognized and classified the convertible (‘Series C’) preferred Visa Inc. shares within the FVPL category.
The fair value of the level 2 preferred shares in Visa Inc. is based on the quoted price of Visa Inc. common shares,
adjusted for lack of marketability, multiplied by an initial conversion rate of preferred shares into common shares. The
conversion rate may fluctuate in the future. The adjustment for lack of marketability is determined using an option
pricing model technique which relies on observable market data of the underlying Visa Inc. common shares, as well
as a presumed length of holding period restriction on the preferred shares.
During 2020, Visa Inc. effected a partial conversion of 50% of the Series C preferred stock into Series A preferredstock. The Series A preferred stock were converted into Visa Inc. common stock and sold prior to the end of 2020 atfair market value. The proceeds receivable was recognized within trade and other receivables (EUR 23,440) and an
amount of EUR 23,671 was ultimately received during the year ended December 31, 2021. No further conversion of
the Series C preferred stock took place in 2021.
The remaining Visa Inc. preferred shares carry the right to receive discretionary dividend payments presented as“other income” in the statement of comprehensive income (2021: EUR 130; 2020: EUR 310).

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147

Other financial assets at amortized cost (US and UK Government Bonds)
During the year ended December 31, 2021, Adyen redeemed the government bonds (other financial assets at
amortized cost) at maturity, and realized a loss on disposal of EUR 138 recognized in other financial results (refer tonote 6). During the year, Adyen recognized exchange gains of EUR 198 and no finance income relating to the bonds(2020: EUR 1,006 exchange losses and EUR 281 finance income, respectively).
Derivative liabilities
As part of the eBay contract previously mentioned (refer to note 2.1 ‘Long-term merchant contract’), Adyen
recognized derivative liabilities measured at fair value through profit or loss, classified as a level 2 fair value
instrument.
The derivative liabilities are valued using a Black-Scholes option pricing model (“OPM”) technique. The OPM takes
into consideration various observable market and contractual data as well as management estimates, including theprobability of vesting based on achievement of milestones in line with the fulfilment of the payment services to beprovided to eBay. A sensitivity analysis to Adyen’s share price is provided in note 12 ‘Financial risk management’.
The change in fair value of the derivative liabilities is mainly linked to the Adyen share price increase and revision ofvaluation inputs; namely, the estimate of the probability of vesting and discount for lack of marketability. Refer tonote 6 ‘Other financial results’ for the recognition of the movement of the derivative liabilities.

Adyen Annual Report 2021

12.

148

Financial risk management

Adyen’s activities bring exposure to a variety of financial risks. Risk management is the responsibility of Adyen’s
management. Adyen applies a risk-aware but not unduly risk-averse approach towards risk management. Adyen’s
Integral Risk Management Framework (IRMF), which is based on COSO’s Enterprise Risk Management (ERM)
model, defines a uniform and systematic approach for managing risks across Adyen. The main sources of financial
risk to Adyen are considered in the table below:
Source of risk and risk
description

Risk mitigation

Remaining risk

Liquidity risk
Liquidity risk is the risk that
Adyen is not able to meet its
short-term payment
obligations.

MinimalAdyen actively monitors its liquidity risk. However, the majority of the balance
sheet, for both assets and liabilities not related to merchant funds, has amaturity date of less than three months on an undiscounted contractual basis.
The remaining balances with a different maturity date (as mentioned
specifically in the notes of these financial statements) are not consideredmaterial, including lease liabilities (refer to note 17).
The balance sheet positions related to merchant fund flows are considered not
to impose liquidity risk as these cash balances and related payables areinterrelated from a liquidity perspective. For the majority of its merchants,
Adyen only settles merchant payables after the cash is collected from the card
schemes. Accelerated pay-out schedules for individual merchants are morethan balanced by liquidity from merchants with default pay-out schedules andliquidity via settlement by payment methods.
Adyen holds a liquidity buffer based on the Liquidity Coverage Ratio (LCR),
accompanied by a survival period metric, to mitigate the residual risk. The
survival period is determined by dividing the sum of cash and cash equivalents,
receivables from and payables to merchants and financial institutions, by total
operating expenses for the period. The survival period is set at a minimum ofsix months and Adyen's survival period as at December 31, 2021 is 48 months(2020: 40 months). For short term liquidity needs Adyen holds additional
buffers in a variety of currencies.Given the maturity of the assets and liabilities
on balance sheet, as well as Adyen's liquidity buffer and survival period metric,
the Company has sufficiently mitigated liquidity risk.

Market risks

Due to theshort-term characterof Adyen’s balance
sheet, the remaining
liquidity risk remains
within Adyen’s risk
appetite.

MinimalForeign exchange risk
Adyen operates internationallyand is exposed to foreignexchange risk arising fromvarious currency exposures.
Foreign exchange risk arises onrecognized assets andliabilities, principally trade andmerchant flow related
receivables and payables, andinvestments in foreign
operations.

Management actively manages the foreign exchange risk resulting in limited
exposure to foreign exchange risks. USD and GBP are the most significant
non-functional currency exposures as at December 31, 2021 and 2020. The
following table highlights the net exposure to these monetary item currencies
as well as the impact on profit or loss resulting from a 10% shock (positive or
negative) of the respective significant currency against the Euro. All short-term
financial instruments have been excluded in this exposure given the quick
settlement times, and hence, limited foreign exchange risk on these
instruments.

Currency

Net exposure

10% shock

USD

EUR 77 million

EUR 7.7 million

GBP

EUR 4 million

EUR 0.4 million

USD

EUR 32 million

EUR 3.2 million

GBP

EUR 0 million

EUR 0.0 million

31/12/2020

31/12/2021

The resulting overall
impact of animmediate 10%
shock on all
currencies excluding
USD and GBP
remains within
Adyen’s risk appetite.

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149

The balance sheet positions related to merchant fund flows are not considered
for the determination of foreign exchange risks. The merchant funds have anatural match in currencies between receivables and payables or a very shortduration. This significantly reduces the foreign exchange risk.
Adyen holds liquidity buffers in various currencies to ensure that it will be able
to meet payment obligations to merchants, thereby mitigating potential liquidity
risk arising from failed FX transactions.
Interest rate risk
Interest rate risk on financial
instruments could arise fromadverse movements inunderlying interest rates.

Interest rate risk arising from maturity and tenor mismatches in assets andliabilities is limited and therefore considered not to be material to Adyen. Some
assets are interest bearing, whereas all liabilities are non-interest-bearing.
Adyen is not financed with external debt, which excludes that origin of interest
rate risk.
Although significant liabilities towards merchants are present, these liabilities
are non-interest bearing and are settled at short notice. Moreover, the interest
risk on Adyen’s lease liabilities is considered immaterial due to a fixed discountrate (determined with reference to Adyen’s incremental borrowing rate) andnominal value of outstanding leases.
Adyen could be considered to be exposed to interest rate risk in the banking
book mainly in relation to its High-Quality Liquid Assets (HQLA): cash held at
central banks and money-market funds invested in US-government
instruments. However, cash balances of Adyen are not significantly exposed tointerest rate risk because that cash is used to settle the current liabilities
towards the merchants at short notice. The nominal values of the moneymarket funds are minimal as compared to the overall financial instruments
balance, are short-term in nature (given the nature of underlying assets), andare held for short-term use (overnight clearing of funds to avoid excessconcentration risk), overall leading to minimal interest rate risk.
For the limited amount of interest-bearing balances that Adyen holds, negativeinterest rates might apply, as is the case on the DNB Target 2 account.

As a result of thenature of the
products on the
Adyen balance sheet
the remaining
interest rate risk
remains within
Adyen’s risk appetite.

The Group’s exposure to equity securities price risk arises from investment in
Visa Inc. preferred shares, which are classified in the consolidated balance
sheet as other financial assets at FVPL. The exposure consists of potential
financial losses due to movements in the share price of Visa Inc.
Two tranches of the long-term merchant contract with eBay are classified in thebalance sheet as derivative liabilities. The exposure is affected by share pricemovements of Adyen shares.
Adyen carried out a sensitivity analysis on the Visa Inc. preferred shares andderivative liabilities, respectively. A 5% increase (decrease) in the underlying
Visa Inc. and Adyen share price would result in the following increase (decrease)in the balance sheet item and income before income taxes, all othercircumstances considered equal:

The remaining equity
price risk is
considered limited
as Adyen has noother equity
instruments on its
balance sheet.

Equity price risk
The risk that the fair value ofequities decreases as a result ofchanges in the levels of equity
indices and the value ofindividual stocks.

Balance sheet item

Carrying amount

5% underlying
share pricemovement

Visa Inc. preferredsharesEUR 21 million

EUR 1 million

Derivative liabilities

EUR 68 million

EUR 3 million (5%)

Visa Inc. preferredsharesEUR 23 million

EUR 1 million

Derivative liabilities

EUR 82 million

EUR 4 million (5%)

31/12/2020

31/12/2021

In addition, Adyen’s Treasury policy does not allow purchasing additional
equity positions (excluding treasury shares).

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150

Credit risks

MinimalCounterparty default risk
The counterparty default(credit) risk relates toreceivables from financial
institutions regarding settled
payment transactions.
A default of financial institution
counterparties could have anegative impact on Adyen’s
financial results.

Financial assets subject to credit risk:
Cash and cash equivalents, and receivables from merchants and financial
institutions:
Adyen’s cash held at banks, other than central banks, is exposed to credit risk
with financial institution counterparties.
The credit risk exposure per financial institution is maximized to 25% of Adyen’s
eligible capital, provided that the financial institution has a credit rating in the A
categories of Moody’s/S&P or, if not available, its equivalent from other rating
agencies. Adyen has conservatively translated this amount into an internal limitof EUR 316 million. For financial institutions with lower credit ratings, the credit
risk per financial institution is maximized to EUR 135 million under businessas-usual conditions. Neither limit was breached during the year ended
December 31, 2021.
As per December 31, 2021, EUR 2,565,875 (2020: EUR 1,479,313) represents
cash held at central banks, representing 56% (2020: 54%) of the cash and cash
equivalents balance.
Excluding the cash held at central banks, Adyen’s top 10 exposures include
balances held at institutions with credit rating A or higher, representing 83% of
the balance of cash and cash equivalents, and 54% of receivables frommerchants and financial institutions - combined top 10 exposures: 63% (2020:83%). During 2021, Adyen has reduced its single-name concentration
exposure, evident by the drop in proportion of top 10 exposures within Adyen’s
total financial assets. The residual credit risk is mitigated by the short-term
maturity of these balances of less than 7 days.
Adyen has exposure to various financial institutions globally. Due to regulatory
requirements, in order to mitigate the counterparty exposure to one of its
partners in Brazil, Adyen has setup a collateral account in which Brazilian
Government bonds were deposited by a partner financial institution. As per
December 31, 2021 the total collateral was EUR 39,125 (BRL 250,157) (2020:
EUR 37,533 (BRL 239,091). Adyen has no other collateral accounts to meet its
other regulatory requirements.
No defaults occurred during the year and management does not expect any
losses from non-performance by these counterparties.
Contract assets:
Refer to note 2.2 for detail on credit risk exposure resulting from the monetarycomponent of the contract assets
The remaining financial asset credit risk exposure (such as trade and otherreceivables) is considered to be limited and within Adyen’s risk appetite.

The remaining credit
risk remains within
Adyen’s risk appetite.

Concentration risk at Adyen originates primarily at banking partners inlocations where there are no own direct acquiring licenses. Adyen actively
manages this concentration risk by distributing its cash over bank accounts at
multiple banks. If needed, excess cash can be held at accounts with central
banks. Adyen continues to monitor its merchant funds flows at partner banks
that are not settled through accounts held at the central bank, to ensurecompliance with the large exposure limit.

The remaining credit
risk remains within
Adyen’s risk appetite.

Concentration risk
Risk of losses stemming fromon- and off-balance sheet
positions arising fromconcentrations in exposures toan issuer or a group ofconnected issuers.

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151

Other disclosures
13.

Intangible assets

Adyen’s intangible assets relate to expenses capitalized on the internal development of the Adyen payment platform.

Accounting policy – Intangible assets
The intangible assets are stated at cost less accumulated amortization and include internallygenerated software with finite useful lives. These assets are capitalized and subsequently amortizedon a straight-line basis in the statement of comprehensive income over the period with an estimateduseful life of 5 years. Intangible assets are tested for impairment whenever events or changes incircumstances indicate that the carrying amount may not be recoverable. The useful life is assessedon an annual basis.

Intangible assets

2021

2020

Cost

19,81715,022

Accumulated amortization(9,847)(7,382)

Balance - Balance - January 1

9,970

7,640

Internally generated software

Additions

2,959

4,795

Amortization for the year

(3,088)(2,465)

Total as at Balance - December 31

9,841

9,970

Cost

22,776

19,817

Accumulated amortization(12,935)(9,847)

Total as at December 31

9,841

9,970

Adyen Annual Report 2021

14.

152

Plant and equipment

Accounting policy – Plant and equipment
Plant and equipment are stated at cost less accumulated depreciation. Repairs and maintenancecosts are charged to the statement of comprehensive income during the period in which they are
incurred. The major categories of plant and equipment (namely hardware equipment and leasehold
improvements) are assessed to have a useful life of 5 years. Plant and equipment are depreciated ona straight-line basis and are tested for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. The useful life is assessed on an annual
basis.

ComputerHardware andSoftwareLeasehold
Improvements

Other

Total

Cost

46,860

6,855

1,872

55,587

Accumulated depreciation(21,386)(2,758)(1,224)(25,368)

Balance - January 1

25,474

4,097

648

30,219Plant and equipment
2020—
Additions

14,471

2,499

127

Disposals

(23)

(15)

—

(38)

(9,614)(1,390)(226)(11,230)

Depreciation for the year
Other changes (e.g. exchange differences)
Balance - December 31

17,097

(118)

(176)

(8)

(302)

30,1905,015

541

35,746

2021
Cost

59,016

9,060

1,964

70,040

Accumulated depreciation(28,826)(4,045)(1,423)(34,294)

Balance - January 1

30,1905,015

541

35,746———

Additions

39,964

9,391

2,032

51,387

Disposals

(19)

—

—

(19)
(15,315)

Depreciation for the year

(13,233)(1,797)(285)

Other changes (e.g. exchange differences)

1,038

149

(5)

1,182

Balance - December 31

57,94012,7582,283

72,981

Cost

98,37918,738

4,002

121,119

Accumulated depreciation(40,439)(5,980)(1,719)(48,138)

Balance - December 31

57,94012,7582,283

72,981

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153

Computer Hardware and Software additions during the year mainly relate to equipment such as laptops for
employees and servers for data centers. Leasehold improvements additions during the year relate to thecapitalization of improvements made to the new leased offices in Amsterdam. Adyen did not recognize an
impairment loss or reversal of impairment loss of plant and equipment during the year ended December 31, 2021
and 2020.

15.

Trade, other receivables, and receivables from merchants andfinancial institutions

Accounting policy – Trade and other receivables
Trade receivables are amounts due from merchants for payment services performed. If collection is
expected in less than one year they are classified as current assets. Trade and other receivables areclassified at amortized cost, initially recognized at fair value and subsequently measured atamortized cost less impairments for expected credit losses. The average duration of the receivables
varies depending of their nature (Trade and other receivables: less than 3 month; receivables fromfinancial institutions: 1-2 days; receivables from merchants: 30 days). Due to the short duration of all
the receivables (overall average of less than 3 months) the fair value approximates the carrying value.

15.1. Trade, other receivables, and receivables from merchants and financial institutions
Trade and other receivables

2021

2020

Trade and other receivables

61,294

79,918Less: Allowance for expected credit losses(4,442)(4,839)Balance - Trade receivables - Net

56,85275,079Receivables from merchants and financial institutions

633,249

883,939

Total

690,101

959,018

2021

2020

Balance - Receivables from financial institutions

561,578

833,657

Receivables from merchants

71,67150,282

Balance - December 31

633,249

883,939

Trade and other receivables
These receivables are held with merchants that have not been subtracted from settlement.
Receivables from merchants and financial institutions

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154

Receivables from financial institutions
Receivables from financial institutions include balances due from schemes and other financial institutions regardingtransactions processed which will be settled within a short-term, as well as bank accounts which are controlled by
Adyen but do not meet the definition of cash and cash equivalents and are therefore classified as receivables fromfinancial institutions.
Receivables from merchants
As part of the accelerated Sales Day Payout product, Adyen settles a full sales day of transactions to merchants
before the funds from financial institutions are fully received. Therefore, Adyen is entitled to a receivable from all
merchants which have opted to use this form of settlement. The receivable relates to balances of merchants to besettled by schemes, with an average duration of less than 10 days. As at December 31, 2021, the receivables fromaccelerated Sales Day Payout have a balance of EUR 71,671 (2020: 50,282).
Adyen assesses, on a forward-looking basis, the expected credit losses and concluded the impact of expected credit
losses on receivables from merchants is not significant.

15.2. Impairments of financial assets at amortized cost
Adyen uses a provision matrix when calculating the loss allowance on trade receivables. During the year Adyen
deducted EUR 397 (2020: added EUR 2,312) from (to) its trade receivable loss allowance based on the calculations
from its IFRS 9 expected credit loss model for trade receivables. The expected credit loss model was updated at
year-end, to reflect reasonable and supportable information available on credit risk of the trade receivables balance.
The impact of COVID-19 on the expected credit loss allowance was not significant and the decrease in the loss
allowance year-over-year is mainly driven by a decrease in the trade receivables balance. Adyen wrote off tradereceivables balances for an amount of EUR 548 (2020: 2,357). Adyen did not reverse any impairment losses in 2020
and 2021.
No financial assets are past due except for trade receivables. As at December 31, 2021, trade receivables of EUR
37,049 (2020: EUR 15,383) were not past due, EUR 24,245 were past due ( 2020: EUR 24,822) of which EUR 9,879 isless than 3 months (2020: EUR 9,409) and EUR 548 impaired (2020: 2,357). The average duration of the overdue
trade receivables is 3 months (2020: 3 months).

Adyen Annual Report 2021

16.

155

Trade, other payables, and payables to merchants and financial
institutions

Accounting policy – Trade and other payables
Payables are obligations initially recognized at fair value and subsequently measured at amortizedcost to pay for goods or services that have been acquired in the ordinary course of business fromsuppliers. Payables are classified as current liabilities if payment is due within one year or less. Dueto the very short duration of the payables (average less than 3 months) the fair value approximatesthe carrying value.

Trade and other payables

2021

2020

Trade payables

8,989

8,308

Taxes and social security

51,41842,482

Accrued employee benefits

26,26931,390Accrued liabilities and other debts

5,996

21,140Cash-settled share-based payment plan - current portion

7,444

8,227

100,116

111,547

Payables to merchants and financial institutions

3,608,531

2,588,863

Total

3,708,647

2,700,410

Trade and other payables

The payables to merchants and financial institutions relate to interchange and scheme fees payable and do notconstitute borrowings. The payables to merchants include the Merchant Potential Liability (‘MPL’) reserve as part ofAdyen’s MPL risk mitigation. When Adyen acts as an acquirer, it is liable to settle eligible chargebacks with card
networks. To cover for this inherent risk, Adyen withholds funds from the payouts to merchants, estimated as theamount of transaction volume for which issuers could potentially submit a chargeback and Adyen has to takefinancial responsibility. These MPL reserves amounted to EUR 471,247 as per December 31, 2021 (2020: EUR
377,598).
Taxes and social security mainly relate to VAT payables and wage taxes relate to Adyen employees.
Adyen has recognized liabilities measured at fair value through profit or loss that are related to the cash-settled
share-based payment plan (refer to note 4.3 ‘Share-based payments’).

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17.

156

LeasesAdyen’s leases relate to offices and data centers across locations where it operates.

Accounting policy – Leases
Adyen assesses if a lease exists or a contract contains a lease at the contract inception date,concluding whether an asset is identifiable and Adyen has control to direct its use and all related
economic benefits. A right-of-use asset and a lease liability are recognized at the leasecommencement date, which can differ from contract inception date.
The lease liability is initially measured by bringing to present value all future lease payments,
discounted by an incremental borrowing rate, in case no interest rate is available for the contract.
At initial recognition, the right-of-use-asset amounts to the initial lease liability. Right-of-use-assets
are depreciated on a straight-line basis over the lease term and tested for impairment whenever
events or changes in circumstances indicates that the carrying amount may not be recoverable.
Interest on lease liability is recognized as an expense in the statement of comprehensive income.
Short-term (less than 12 months) and small value lease contracts are expensed in the statement ofcomprehensive income on a straight-line basis over the lease term.

All leases entered are related offices and data centers, being these based on fixed payment and term.
Right-of-use assets

2021

2020

149,732

70,849

Accumulated depreciation(25,404)(11,154)

Balance - January 1

124,328

59,695

Offices and data centers
Cost

Additions19,11481,308Depreciation for the period(16,608)(14,872)

1,229(1,803)

Balance - December 31

128,063

124,328

Recognized right-of-use asset

168,630

149,732

Accumulated depreciation(40,567)(25,404)

Balance - December 31

128,063

124,328

Other movements (e.g. exchange differences)Adyen Annual Report 2021

157

Lease liability

2021

2020

Balance - January 1

131,485

61,694

Additions19,11481,308

Lease instalments(11,541)(11,493)

Interest expense

2,496

2,054

Other movements (e.g. exchange differences)

1,410(2,078)

Balance - December 31

142,964

131,485

Current portion

22,996

13,434Non-current portion

119,968

118,051

During the year, short-term and small value leases expensed in other operating expenses amounted to EUR 1,793(2020: EUR 1,080).
As of December 31, the future minimum lease payments are as follows:
Minimum future lease payments

2021

2020

Within 1 year

20,327

11,126

Between 1 and 2 years

21,326

16,294

Between 2 and 3 years

21,331

15,141

Between 3 and 4 years

20,97914,845

Between 4 and 5 years

14,78014,412Later than 5 years

71,564

74,841

Total

170,307

146,659

18.

Other contingent assets, liabilities and commitments

Adyen N.V. and Adyen International B.V. are a fiscal unity for income tax purposes. Under the Dutch Tax Collection
Act, the members of the fiscal unity are jointly and severally liable for any taxes payable by the fiscal unity.
Adyen has EUR 72,290 of outstanding bank guarantees and letters of credit as at December 31, 2021 (2020: EUR
32,344).
Adyen has setup a collateral account in which Brazilian Government bonds were deposited by a partner financial
institution, in order to decrease its exposure to this counterparty in Brazil. As at December 31, 2021 the totalcollateral was EUR 39,125 (BRL 250,157) (2020: EUR 37,533 (BRL 239,091).
During the year ended December 31, 2021, the Brazilian Tax Authorities initiated an audit of the Corporate Income
Tax and of the Social Contribution of Net Income for the year ended December 31, 2017. Based on the outcomes ofthis audit the Company was issued a tax infringement notice claiming approximately EUR 3,622 (BRL 23,162) inrelation to the financial year 2017. The Company has disputed the findings of the Brazilian Tax Authorities andconsiders it to be probable that the judgement will be in its favor. Adyen has therefore not recognized a provision in
relation to this claim.

Adyen Annual Report 2021

19.

158

Related party transactions

During 2021, Adyen identified related party transactions that took place with Stichting Administratiekantoor Adyen(STAK), employees and Supervisory Directors. The transactions with employees and STAK are related to options
exercised, and the transactions with Supervisory Board are related to remuneration for services rendered throughout
the year (refer to note 22.2 ‘Remuneration Supervisory Board’). The outstanding balances as per December 31, 2021
and 2020 are:
Related party assets/ (liabilities)

2021

2020

Supervisory Board

—

(52)

Employees (STAK)

66

20

The Management Board and Supervisory Board remuneration is disclosed in note 22 ‘Compensation of key
management’.
There were no other transactions with related parties in 2021 (2020: nil).

20.

New and amended standards adopted

20.1. New standards adopted by Adyen
The following accounting standards, interpretations and amendments applicable to Adyen (collectively,“amendments”) were issued and made effective for the annual reporting period beginning on January 1, 2021:• Amendments to IFRS 16, ‘Leases’ — Covid-19 related rent concessions; and• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16 — Interest rate benchmark reform (Phase 2).
Adyen has taken into consideration the changes of each one of the above-mentioned amendments, and concluded
that the amendments do not have a material impact on the financial statements.

20.2. Amendments to existing standards that are applicable to the Company but not yet
effective
Certain amendments have been published that are not mandatory for December 31, 2021 reporting period and havenot been early adopted by the Company. The Company has assessed the amendments to become effective in 2022,
and onwards, to have no material impact on its financial statements.

Adyen Annual Report 2021

21.

159

Audit fees

21.1. Fees to the auditor
The audit fees were expensed in the statement of comprehensive income during the reporting period.
The fees listed below relate to the procedures applied to Adyen and its consolidated group entities by accounting
firms and external independent auditors as referred to in section 1(1) of the Audit Firms Supervision Act (“Wettoezicht accountantsorganisaties-Wta”) as well as by the Dutch and foreign-based accounting firms, including theirtax services and advisory groups. These fees relate to the audit of the 2021 financial statements, regardless ofwhether the work was performed during the financial year.

21.2. Summary of services rendered by the auditor, in addition to the audit of the financial
statements
Our auditor, PwC Accountants, has rendered the following services to Adyen and its controlled entities during 2021
and 2020:
2021

2020

PwC
Accountants

Other PwC
firms*

Audit of financial statements

655

541

Other audit services

292

—

292

93

—

93

Total

947

541

1,488

799

293

1,092

Total

PwC
Accountants

Other PwC
firms*

Total

1,196

706

293

999

* Other PwC firms refer to PwC member firms outside of the Netherlands.

Other services than the Audit of the financial statements refer to services rendered outside of the European Union.
2021

2020

1,196

999

Audit of the regulatory returns to be submitted to the Dutch Central Bank

96—

Assurance engagement DGS report40—

Assurance engagement ISAE 3402 report

101

93

Assurance engagement SOC 2 report

55

—

1,488

1,092

Other audit services required by law or regulatory requirement
Audit of financial statements

Other audit services

Total for the year

Adyen Annual Report 2021

22.

Compensation of key management

22.1

Remuneration Management Board

160

Adyen identifies the Management Board as the only key management personnel. The total remuneration received by
the Management Board in 2021 amounted to EUR 3,475 (2020: EUR 3,547).

Salaries and short-term employee benefits
Share-based payments
Post-employment benefits
Total

2021

2020

3,137

3,243

241

191

97

113

3,475

3,547

Variable remuneration
As of 2018 and in line with (i) the Act on Remuneration Policies in Financial Enterprises (Wet beloningsbeleid
financiële ondernemingen), and (ii) the Guidelines on Remuneration Policies and Practices as formally adopted on
December 10, 2010 by the Committee of European Banking Supervisors, Adyen does not award variable
remuneration to the Managing Directors. As the application of such rules and principles may include an assessment
and interpretation of the remuneration restrictions, it cannot be excluded that a competent supervisory authority
takes a different view on the correct application thereof in specific cases (although there is currently no indicationthat a competent supervisory authority will take such position).

Pension11
As from January 2017, all Dutch members of the Management Board participate in the Collective DefinedContribution (CDC) pension plan, with respect to their salary up to EUR 112,189 gross per year for 2021 (2020: EUR
110,111). On behalf of each Managing Director, Adyen pays a contribution of 4% of the pensionable salary - being 12
times the monthly fixed salary plus holiday pay up to the fiscally allowed maximum minus a deductible - for theaccrual of old age pension benefits as well as the administration costs. If and as far as fiscally allowed, eachManaging Director has the possibility to make additional contributions in order to accrue additional pension capital.
Kamran Zaki participates in a 401k retirement plan in the United States, for which Adyen provides an employer
match of up to 2% of base salary.

Insurance
All Managing Directors are insured under an insurance policy taken out by Adyen against damages resulting fromtheir conduct when acting in their capacities as directors.
All Dutch Managing Directors are insured for the risk of death and disability, for which Adyen pays the insurance
premiums.

11

Amounts in this paragraph are not rounded to the nearest EUR thousand.

Adyen Annual Report 2021

161

Service and Severance Agreements
All Managing Directors have entered into a service agreement (Overeenkomst van Opdracht) with Adyen N.V.
effective as of the date of the listing of Adyen, while Kamran Zaki is currently assigned to Adyen Inc. The terms andconditions of these service agreements have been aligned with the Dutch Corporate Governance Code. The service
agreements will be entered into for a term of 4 years.
The service agreements provide for a severance of one annual base salary if the Managing Director is not reappointed or otherwise terminated by Adyen (for any reason other than urgent cause within the meaning of article
7:678 of the Dutch Civil Code (dringende reden)), in accordance with the Dutch Corporate Governance Code.

Loans
No loans, advance payments and guarantees have been granted to or on behalf of the Managing Directors.

22.2. Remuneration Supervisory Board
The total remuneration received by the Supervisory Board in 2021 amounted to EUR 386 (2020: EUR 293). The tablebelow provides an overview of the remuneration of Supervisory Directors for the financial year 2021. In addition to
the remuneration, expenses incurred by the Supervisory Directors in the performance of their duties are reimbursed
in full:
2021

2020

Salaries and short-term employee benefits

386

293

Total

386

293

Insurance
The Supervisory Directors of Adyen are insured under an insurance policy taken out by Adyen against damages
resulting from their conduct when acting in their capacities as directors.

Loans
No loans, advance payments and guarantees have been granted to or on behalf of the Supervisory Directors.

Adyen Annual Report 2021

23.

162

Share information

Accounting policy – Earnings per share
Adyen presents basic and diluted earnings per share (EPS) data for its ordinary shares. The
calculation of EPS is as follows:
1) Basic EPS: dividing the net income attributable to owners of Adyen N.V. by the weighted average
number of ordinary shares outstanding during the period. As per December 31, 2021, the warrant
related to tranche 1 vested (and exercised), while no warrants had vested in the previous year.
Therefore, the issued shares relating to tranche 1 is reflected in the calculation of ordinary shares
during 2021.
2) Diluted EPS: determined by adjusting the basic EPS for the effects of all dilutive potential
ordinary shares which passed on contractual conditions (e.g. vesting), only related to share options
granted to employees (refer to note 4.3).

Share information

2021

2020

Net income attributable to owners of Adyen N.V. (in EUR '000)

469,717

261,019Weighted average number of ordinary shares for the period

30,499,194

30,246,923

Dilutive effect of share options

176,621420,676

30,675,815

30,667,599

Net profit per share – basic

15.40

8.63

Net profit per share - diluted

15.31

8.51

Weighted average number of ordinary shares for diluted net profit for the period

Adyen Annual Report 2021

24.

Tax reporting

24.1. Total tax contribution
Adyen is liable to pay corporate income tax in the countries in which it has ataxable presence. Since Adyen’s first global expansion outside theNetherlands , Adyen has been characterized as a centralized organization
for corporate income tax purposes. Key business activities are performed in
the Netherlands and sales support activities are performed by local Adyen
offices. In response to this centralized organization, transfer pricing
agreements have been established based on the applicable OECD
principles.
Adyen is responsible for the collection and payment of taxes connected with
its services and products sold, on behalf of employees, or service providers.
Corporate income tax, indirect tax and payroll tax are main sources ofgovernment income. Considering the importance of these taxes for local
governments, Adyen bears a responsibility to maintain a compliant global
tax framework. Adyen’s tax team closely monitors local regulations andAdyen’s product offerings to remain compliant.

24.2. Country-by-country reporting
The following table provides a country-by-country overview to support thattaxes are paid in the country wherein Adyen has an economic nexus. To
serve this purpose, the table is split into two parts: the first part covers per
country where Adyen has a liability to pay tax; the main activity, number of
FTE’s per year-end, and consolidated IFRS data on an accrual basis ofoperating expenses, income before tax and income tax expense. The
second part of the table is prepared on a cash basis and covers the income
tax, indirect tax, payroll tax and grants or incentives. The table is preparedusing consolidated accounts or on a cash basis. As a result, local statutoryfinancials and actual tax contributions may deviate from the amountdisclosed. The full list of participating interests as referred to in Article 414,
Book 2 of the Dutch Civil Code can be found in note 32 ‘Investments inconsolidated subsidiaries on equity method’ of the company financial
statements.

163

Adyen Annual Report 2021

164

Amounts accrued on IFRS Consolidated basis
Country

Main activity

The Netherlands

Head office - Payment
service provider

Taxes received/ (paid) on cash basis

Ending
FTE

Total
OperatingExpenseIncomeBeforeTax

IncomeTax
ExpenseETR%

IncomeTax

Indirect
Tax

PayrollTax

Grants /Incentives

Total tax
contribution

1,262(222,469)

531,000(106,128)20%(124,368)(69,041)(123,885)

736(316,559)

United Kingdom

Sales office

107(20,525)

7,846

(1)*

—

—

(526)

(15,704)—(16,230)

FranceSales office

51(13,689)

1,916

(744)

39%

(559)

(16,783)(3,707)—(21,049)

Germany

Sales office

58(7,402)

3,630(1,343)

37%

(687)

—

(3,865)—(4,552)

SwedenSales office

33(7,298)

1,718

(357)

21%

(345)

—

(4,450)—(4,796)(3,979)Spain

Sales office

32(4,413)

1,086

(207)

19%

(246)

(2,236)(1,498)—Belgium

Sales office12(1,701)

353

(94)

27%

(33)

—

(762)

—

(795)

Italy

Sales office

17(2,325)

494

36

—

(240)

—

(647)

—

(886)

United Arab Emirates

Sales office10(1,958)

231

1

—

—

(13)

—

—

(13)

PolandSales office

10

(938)

402

(77)

19%

—

—

(288)

—

(288)

NorwayNo office

(28)

(28)

United States

Sales and support office286(71,201)

19,777

303

—%

1,392

(409)

(142,209)—

BrazilSales office

88(14,139)

2,513

(502)

20%

49

(5,225)(4,667)—(141,226)(9,843)MexicoSales office

14(1,617)

253

(42)

17%

(326)

(2,328)(292)—(2,947)(12,862)

CanadaSales office10(1,432)

426

(70)

16%

—

(12,422)(440)—

Singapore

Sales and support office101(15,185)

2,283

(472)

21%

(377)

(7,193)(1,205)461(8,315)Australia

Sales and support office30(7,295)

1,385

(443)

32%

(445)

(6,366)(1,486)—(8,297)

China

Sales office25(5,986)

2,950

(715)

24%

(968)

(479)

(1,795)—(3,243)
(543)

Japan

Sales and support office19(2,319)

270

(85)

31%

(123)

—

(420)

—

Hong Kong

Sales office

6

(969)

649

(87)

13%

(51)

—

—

—

(51)

India

Sales office

8(3,679)

1,449

(38)

3%

(47)

(764)

(525)

—

(1,336)

New Zealand

Sales office

—

(193)

90

(26)

29%

—

(2,542)(40)—(2,582)

Malaysia

Sales office

1

(42)

149

(42)

28%

(52)

(35)

—

—

(87)

Korea

Inactive

—

(11)

(22)

—

—

—

—

—

—

—

2,180

(406,786)

580,847(111,130)19%(127,427)(126,391)(307,885)

1,197(560,506)

Total

Adyen Annual Report 2021

24.3. Innovation box
Adyen set out to build a payment platform capable of meeting the rapidly
evolving needs of fast-growing global businesses. Continuous innovationand technology are critical to meet the changing payment industry
dynamics and the needs of our merchants. Governments worldwide
facilitate innovative research and development (R&D) activities throughgrants and tax incentives. One of the facilities offered by the Dutch
government is the Dutch innovation box. Following the application of theinnovation box, profits attributable to qualifying innovations are taxed at a
Dutch corporate income tax rate of 9%, opposed to the corporate income
tax rate of 25%. As Adyen strives to continuously innovate its payment
platform, Adyen applies the innovation box in order to reinvest thosebenefits in the further development of the platform and growth of thecompany.
Adyen concluded an agreement with the Dutch tax authorities to obtain
upfront certainty on the percentage of taxable profit that qualifies for the
innovation box. Based on this agreement the percentage of taxable profit ofAdyen N.V. qualifying for the innovation box is directly linked with thenumber of hours spent by developers on R&D projects.

165

Adyen Annual Report 2021

Company Financial
Statements

166

Adyen Annual Report 2021

167

Company Statement of Comprehensive Income
For the years ended December 31, 2021 and 2020(all amounts in EUR thousands unless otherwise stated)
Note

2021

2020

Revenue26

5,233,538

3,171,197

Costs incurred from financial institutions

26(4,387,767)(2,610,741)

Costs of goods sold26

(29,177)(20,071)816,594

540,385

Net revenue

Wages and salaries

27(112,618)(85,505)

Social securities and pension costs

27(22,560)(14,542)

13,30,31(25,752)(20,545)28(99,529)(66,356)

Amortization and depreciation
Other operating expenses
Other income
Income before net finance expense and income taxes

250

286

556,385353,723

Finance income

62

1,248

Finance expense(12,379)(8,987)

Other financial results

29

Net finance expense

Share of the profit of investments in subsidiaries

32(3,436)(42,203)(15,753)(49,942)

38,002

20,516

Income before income taxes

578,634

324,297

Income taxes(108,917)(63,278)

Net income for the year

469,717

261,019

Net income attributable to owners of Adyen N.V.

469,717

261,019

Currency translation adjustments subsidiaries

11,373(11,764)

Other comprehensive income/ (expense) for the year

11,373(11,764)

Total comprehensive income for the year
(attributable to owners of Adyen N.V.)

481,090249,255

Other comprehensive income/ (expense)
Items that may be reclassified to profit or loss

The accompanying notes are an integral part of these company financial statements.

Adyen Annual Report 2021

168

Company Balance Sheet
As at December 31, 2021 and 2020(all amounts in EUR thousands unless otherwise stated; and before profit appropriation)
Note

December 31,
2021

December 31,
2020

Intangible assets

13

9,841

9,970

Plant and equipment30

52,07027,686

Right-of-use assets

31

110,604

104,251

Other financial assets at FVPL

1122,504

20,883Contract assets

2

78,091

124,113

22,534

17,100

Deferred tax assets
Investments in consolidated subsidiaries on equity method

32

Total non-current assets

Inventories

212,318

139,150

507,962

443,153

19,05916,055

Receivables from merchants and financial institutions

33

503,647

790,271

Trade and other receivables

33

287,108

200,535

Other financial assets at amortized cost

11—

12,238Cash and cash equivalents

4,150,440

2,458,038

Total current assets

4,960,254

3,477,137

Total assets

5,468,216

3,920,290

Share capital

8

310

304

Share premium

8335,725

194,608

Legal reserves

32,244

14,853

Other reserves

127,717

151,435

Retained earnings

844,701

595,915

Net income for the year

469,717

261,019

1,810,414

1,218,134

81,70068,400Total equity attributable to owners of Adyen N.V.

Derivative liabilities

11

Deferred tax liabilities
Lease liability

31

Total non-current liabilities

16,01023,640106,622

102,647

204,332

194,687

Payables to merchants and financial institutions

36

3,352,592

2,406,651

Trade and other payables

36

74,772

77,988

Lease liability

31

17,260

7,349

8,846

15,481

Total current liabilities

3,453,470

2,507,469

Total liabilities and equity

5,468,216

3,920,290

Current income tax payables

The accompanying notes are an integral part of these company financial statements.

Adyen Annual Report 2021

169

Company Statement of Changes in Equity
For the years ended December 31, 2021 and 2020(all amounts are in EUR thousands unless otherwise stated)
Other reserves
Note
Balance - January 1, 2020

SharecapitalSharepremium

Legalreserves

Share-based
payment
reserve

Warrant
reserve

Retainedearnings

Total equity

301

179,296

43,616

66,73453,401

574,986

918,334

261,019

261,019

261,019249,255(17,404)

17,404—2,330(2,330)—Net income for the year
Currency translation adjustments(11,764)

Total comprehensive income for the year——

(11,764)(11,764)——

Adjustments:
Other financial assets at FVPL movement to Retained
earnings
Intangible assets
Other adjustments——(1,165)

1,165(16,239)

1,165

—

5,095

5,095

20,1695,095

Transactions with owners in their capacity as owners:
Statutory tax rate change
Deferred tax on share-based compensation

(760)
7

Options exercised
Proceeds on issuing shares
Share-based payments

Balance - December 31, 2020

3—

32,15931,8382,795(2,795)—

12,838

12,841

8

4.3

760

(321)

771

771

3

15,312(760)

30,135—760

45,450304

194,608

14,85398,03453,401

856,934

1,218,134

Adyen Annual Report 2021

170

Other reserves
Note
Balance - January 1, 2021

SharecapitalSharepremium

Legalreserves

Share-based
payment
reserve

Warrant
reserve

Retainedearnings

Total equity

304

194,608

14,85398,03453,401

856,934

1,218,134

469,717469,717469,717

481,090—

Net income for the year
Currency translation adjustments

11,373

Total comprehensive income for the year——

11,373

11,373——Adjustments:
Other financial assets at FVPL movement (net of deferred
tax)

6,148

(6,148)Intangible assets

(130)

130

—

59

59

—

(5,959)59(26,700)(7,400)—

Other adjustments
—

—

6,018

—

Transactions with owners in their capacity as owners:
Equity transfer on exercise of warrant

2.1

Deferred tax on share-based compensation

7

34,100

Options exercised
Proceeds on issuing shares

8

Share-based payments

4.3

6

—

5,548

1,732

(1,732)—

105,285

105,291292

Other adjustments

Balance - December 31, 2021

5,548

292
(1,126)1,126

6141,117—

4,108(27,826)(6,274)111,131310

335,725

32,244102,142

25,575

1,314,418

1,810,414

The accompanying notes are an integral part of these company financial statements.

Adyen Annual Report 2021

171

Company Statement of Cash Flows
For the years ended December 31, 2021 and 2020(all amounts in EUR thousands unless otherwise stated)
Note
Income before income taxes

2021

2020

578,634

324,297(62)(1,248)Adjustments for:

–
–
–
–
–
–
–
–

Finance income
Finance expenses

12,3798,987

Other financial results

29

3,436

42,203

Depreciation of plant and equipment

30

11,733

8,824

Amortization of intangible fixed assets

13

3,088

2,465

Depreciation of right-of-use assets

31

10,931

9,258

Share of the profit of investments in subsidiaries

32(38,002)(20,516)

114

241

Share-based payments

Changes in working capital:

–
–
–
–
–
–

Inventories(4,262)(10,441)

Trade and other receivables

33(86,573)(83,473)

Receivables from merchants and financial institutions

33

286,624(490,653)

Payables to merchants and financial institutions

36

945,941

1,139,843(1,918)(489)

Trade and other payables
Amortization and additions of contract assets

2.2

Cash generated from operations

Interest received

49,448

10,641

1,771,511

939,93962

1,248Interest paid

(12,379)(8,987)

Income taxes paid

(127,679)(70,648)

Net cash flows from operating activities

1,631,515

861,552

Purchases of financial assets at FVPL

(211)

—

12,427(13,355)
13,088

Redemption of financial assets at amortized cost

11

Purchases of financial assets at amortized cost

11—

Investments in consolidated subsidiaries on equity method

32(17,918)—

Purchases of plant and equipment

30(36,138)(13,563)

Capitalization of intangible assets

13.0(2,958)(4,795)(44,798)(18,625)

Proceeds from issues of shares

8

105,285

12,832

Lease payments

31(3,346)(4,257)

Net cash used in investing activities

Net cash flows from financing activities

101,939

8,575

Net increase in cash, cash equivalents and bank overdrafts

1,688,656

851,502

Cash, cash equivalents and bank overdrafts at beginning of the year

2,458,038

1,603,580

Exchange gains on cash, cash equivalents and bank overdrafts
Cash, cash equivalents and bank overdrafts at end of the period

3,746

2,956

4,150,440

2,458,038

The accompanying notes are an integral part of these company financial statements.
* The comparative information is updated to align with the current period presentation of equity-settled share-based compensation and trade and otherpayables.

Adyen Annual Report 2021

172

Notes to the Company financial
statements
25.

Basis of preparation

The company financial statements have been prepared on a going concern basis in accordance with International
Financial Reporting Standards and IFRS IC interpretations as endorsed by the European Union (EU-IFRS) and inaccordance with sub articles 8 and 9 of article 362, Book 2 of the Dutch Civil Code.
The principles in the company financial statements are the same as those stated for the consolidated financial
statements unless stated otherwise.

26.

Company - Revenue

Types of goods or service

2021

2020

Settlement fees

4,838,701

2,875,955

Processing fees

238,621

178,851

Sales of goods

29,186

17,929Other services

127,030

98,462

Total revenue from contracts with customers

5,233,538

3,171,197

Costs incurred from financial institutions(4,387,767)(2,610,741)

Costs of goods sold(29,177)(20,071)

Net revenue

816,594

540,385

Employee benefits

2021

2020

Salaries and wages

107,353

81,47827.

Company - Employee benefits

Share-based compensation

5,265

4,027

Total wages and salaries

112,618

85,505Social securities

18,076

11,852

Pension costs - defined contribution plans

4,484

2,690

Total social securities and pension costs

22,56014,542

Adyen Annual Report 2021

173

28. Company - Other operating expenses
Other operating expenses

2021

2020

Sales and marketing costs

23,363

17,583Advisory costs

12,213

12,779IT costs

18,65912,226

Travel and other staff expenses

7,133

4,803

Contractor costs

10,264

5,822

Office costs

2,453

1,923

Housing costs

3,403

2,400

Miscellaneous operating expenses

22,041

8,820

Total other operating expenses

99,52966,3562021

2020

10,324(10,608)(13,300)(32,600)

(322)

1,005

(138)

—

(3,436)(42,203)

29. Company - Other financial results
Other financial results
Exchange gains/(losses) (note 6.1)
Fair value re-measurement of financial instruments:
Derivative liabilities (note 6.2)
Other financial assets at FVPL (note 6.3)
Loss on redemption of other financial assets at amortized cost
Total other financial results

29.1. Exchange gains/(losses)
The exchange gains (losses) recognized during the year relates to realized and unrealized translation losses onmonetary assets and liabilities. The exchange gains during 2021 mainly relate to Adyen’s foreign-denominated cash
balances, contract assets (EUR 3,426 — refer to note 2.2 ‘Contract assets’), other financial assets at FVPL (EUR
1,722 – refer to note 6.3 ‘Other financial assets at fair value through profit or loss (‘FVPL’) (Visa Inc. preferred shares)’,
proceeds receivable on disposal of Visa Inc. common stock (EUR 493), and other financial assets at amortized cost
(EUR 198 – refer to note 11 ‘Financial instruments’).

Adyen Annual Report 2021

30.

174

Company - Plant and equipment
ComputerHardware andSoftwareLeasehold
Improvements

Other

Total

Cost

38,069

3,880

1,292

43,241

Plant and equipment
2020

Accumulated depreciation(17,278)(1,665)(816)(19,759)

Balance - January 1

20,791

2,215

476

23,482

Additions

13,230289

44

13,563

Disposals
Depreciation for the year
Other changes (e.g. exchange differences)
Balance - December 31

(23)

(15)

—

(38)

(7,978)

(709)

(137)

(8,824)

(516)

18

1

(497)

25,504

1,798

384

27,686

2021
Cost

49,037

4,175

1,337

54,549

Accumulated depreciation(23,533)(2,377)(953)(26,863)

Balance - January 1

25,504

1,798

384

27,686

Additions

28,097

6,745

1,296

36,138

Disposals

(19)

—

—

(19)

(10,879)

(713)

(141)

(11,733)

Depreciation for the year
Other changes (e.g. exchange differences)

—

(2)

—

(2)

42,703

7,828

1,539

52,070Cost

75,138

10,916

2,633

88,687

Accumulated depreciation(32,435)(3,088)(1,094)(36,617)

Balance - December 31

42,703

7,828

1,539

52,070

Balance - December 31

Adyen Annual Report 2021

31.

175

Company – Leases

Adyen’s leases relate to offices and data centers across locations where it operates.

Accounting policy – Leases
Adyen assesses if a lease exists or a contract contains a lease at the contract inception date,concluding whether an asset is identifiable, and Adyen has control to direct its use and all related
economic benefits. A right-of-use asset and a lease liability are recognized at the leasecommencement date, which can differ from contract inception date.
The lease liability is initially measured by bringing to present value all future lease payments,
discounted by an incremental borrowing rate, in case no interest rate is available for the contract.
At initial recognition, the right of use asset amounts to the initial lease liability. Right of use assets
are tested for impairment whenever events or changes in circumstances indicates that the carrying
amount may not be recoverable.
Short-term (less than 12 months) and small value lease contracts are expensed in statement ofcomprehensive income on a straight-line basis over the lease term.

All leases entered are related offices and data centers, being these based on fixed payment and term.
Right-of-use assets

2021

2020

Cost

119,070

41,180

Accumulated depreciation(14,819)(5,561)

Balance - January 1

104,251

35,619Additions

17,232

77,890Depreciation for the period(10,931)(9,258)

Offices and data centers

Other movements

52—

Balance - December 31

110,604

104,251

Recognized right-of-use asset

133,908

119,070

Accumulated depreciation(23,304)(14,819)

Balance - December 31

110,604

104,251

Adyen Annual Report 2021

Lease liability

176

2021

2020

Balance - January 1

109,996

36,363

Additions

17,232

77,890

Lease instalments(5,461)(5,918)Interest expense

2,115

1,661

123,882

109,996

Balance - December 31
Current portion

17,2607,349

Non-current portion

106,622

102,647

2021

2020

Within 1 year

15,0705,394

Between 1 and 2 years

16,168

11,358Between 2 and 3 years

15,734

11,014

Between 3 and 4 years

15,663

11,014

Between 4 and 5 years

12,531

10,849Later than 5 years

64,38173,927

Total

139,547

123,556

As of December 31, the future minimum lease payments are as follows:
Minimum future lease payments

32.

Company - Investments in consolidated subsidiaries on equity
methodAccounting policy – Investments in consolidated subsidiaries
Adyen’s investment in consolidated subsidiaries is initially recorded at cost and subsequently
accounted for using the equity method. Dividends received from the investees are recognized as a
reduction in the carrying amount of the investment. Goodwill is currently not applicable.
Adyen’s share of the results of the investees is reported in the company statement ofcomprehensive income and its share of movements in other comprehensive income is recognizedin other comprehensive income.
Investments are reviewed for impairment at least annually or whenever events or circumstancesindicate that the carrying amount may not be recoverable.

Adyen Annual Report 2021

177

Investments in consolidated subsidiaries on equity method

2021

2020

Balance - January 1

139,150

98,147

Investments in consolidated subsidiaries

17,918—

Share of the profit of investments in subsidiaries

38,002

20,516

Currency translation adjustments subsidiaries

11,373(11,764)

Share of changes in equity of investments in subsidiaries

5,875

32,251

212,318

139,150

Balance - December 31

During 2021, the main driver of the changes in investments balance related to increased investments in Adyen’s
wholly-owned subsidiary (Adyen International B.V.), as well as Adyen’s share of profit and changes in equity ofinvestments in subsidiaries. An amount of EUR 5,548 (2020: 32,159) was recognized directly in equity connectedwith future tax deductions and carry forward losses on subsidiaries in the United States and the United Kingdom.
Refer to note 7 ‘Income taxes’ in the consolidated financial statements for more detail.

Adyen N.V. – Subsidiaries
Name

Legal Seat

Adyen International B.V.

Amsterdam, The Netherlands

100%

Adyen Inc.

San Francisco, CA, USA

100%

Adyen N.V. – Branches
Name

Branch location

Adyen N.V., German branch

Berlin, Germany

Adyen France

Paris, France

Adyen Nordic Filial

Stockholm, Sweden

Adyen, San Francisco branch

San Francisco, CA, USA

Adyen N.V. – Representative offices
Name

Branch location

Adyen N.V., Belgian Rep Office

Brussels, Belgium

Adyen N.V., Italian Rep Office

Rome, Italy

Adyen N.V., Spain Rep Office

Madrid, Spain

Adyen N.V., Polish Rep Office

Warsaw, Poland

Ownership percentage

Adyen Annual Report 2021

178

Adyen International B.V. – Subsidiaries
Direct and indirectownership percentage

Name

Legal Seat

Adyen Services Inc.

Dover, DE, USA

100%

Adyen Nevada Inc.

Las Vegas, NV, USA

100%

Adyen do Brazil Ltda

São Paulo, Brazil

100%

Adyen Singapore PTE. LTD.

Singapore, Singapore

100%

Adyen UK Limited

London, United Kingdom

100%

Adyen Hong Kong Limited

Hong Kong, Hong Kong SAR

100%

Adyen Australia PTY Limited

Sydney, Australia

100%

Adyen Canada Ltd.

Saint John, Canada

100%

Adyen Korea Chusik Hoesa

Seoul, Republic of Korea

100%

Adyen Mexico, S.A. de C.V.

Mexico City, Mexico

100%

Adyen (China) Software Technology Co. Ltd.

Shanghai, China

100%

Adyen New Zealand Ltd.

Auckland, New Zealand

100%

Adyen Malaysia Sdn. Bhd

Kuala Lumpur, Malaysia

100%

Adyen GmbH

Berlin, Germany

100%

Adyen India Technology Services Private Limited

New Delhi, India

100%

Adyen Japan K.K.

Tokyo, Japan100%

Adyen Middle East Limited

Dubai, United Arab Emirates

100%

33.

Company – Trade, other receivables, and receivables frommerchants and financial institutions

Receivables fall due in less than one year except for deposits transferred to financial institutions.
Trade and other receivables

2021

2020

Trade and other receivables

290,970

205,073

Less: Allowance for expected credit losses(3,862)(4,538)Trade receivables - Net

287,108

200,535

Receivables from Merchants and Financial Institutions

503,647

790,271

Total

790,755

990,806

In 2021, EUR 155,798 (2020: EUR 89,420) related to receivables from group companies. Intercompany receivables
and payables fall within the scope of IFRS 9 ‘Financial Instruments’. The outstanding amounts as per December 31,
2021 and 2020 relate to transactions linked to the usage of Adyen platform which took place throughout the year at
arm’s length conditions. Considering the maturity of the intercompany balances and the financial position of the
Adyen group, the credit risk is considered not significant. As a result, the impact of expected credit losses onintercompany balances is not significant.

Adyen Annual Report 2021

34.

179

Shareholders’ equity

Refer to the company statement of changes in equity for the movements in shareholders’ equity.
The legal reserves include all exchange rate differences arising from the translation of the net investment in foreign
entities. The total of distributable reserves amounts to EUR 1,180,736 (2020: EUR 790,827). The other reserves are
restricted for distribution, being the legal reserves, in amount of EUR 32,244 (2020: 14,853), legally non-distributablein accordance with Dutch Law. Besides the aforementioned exchange rate differences these relate to revaluation ofbalance sheet positions that require revaluation reserves.

35.

Dividends paid

No dividend has been paid in the years presented.

36.

Company – Trade, other payables, and payables to merchants andfinancial institutions

Trade and other payables

2021

2020

Trade payables

7,014

6,798

Taxes and social security

41,98831,401

Accrued employee benefits

17,57918,072

Accrued liabilities and other debts

2,571

18,239Cash-settled share-based payment plan

5,620

3,478

Trade and other payables

74,772

77,988

Payables to merchants and financial institutions

3,352,592

2,406,651

Total

3,427,364

2,484,639

All current liabilities fall due in less than one year. The fair value of the current liabilities approximates the book value
due to its short-term character.
In 2021, EUR 57,023 (2020: EUR 14,010) related to payables to group companies.

37.

Directors’ remuneration

For an overview of the directors’ remuneration, reference is made to note 22 ‘Compensation of key management’ of
the consolidated financial statements.

38.

Audit fees

For an overview of the audit fees, reference is made to note 21 ‘Audit fees’ of the consolidated financial statements.

Adyen Annual Report 2021

39.

180

Contingencies and commitments

Adyen has no contingent liabilities in respect to legal claims.
Adyen has EUR 72,290 of outstanding bank guarantees and letters of credit as at December 31, 2021 (2020: EUR
20,092).
Adyen N.V. and Adyen International B.V. are a fiscal unity for income tax purposes. Under the Dutch Tax Collection
Act, the members of the fiscal unity are jointly and severally liable for any taxes payable by the fiscal unity. Pursuant to
the Collection of State Taxes Act, the company and its subsidiary are both severally and jointly liable for the tax
payable by the combination.

40.

Proposed profit appropriation

Awaiting the decision by the shareholders, management proposes the income for the year to be added to retained
earnings in shareholder’s equity.

41.

Events after balance sheet date

Starting from January 1, 2022, Adyen Inc. will transfer all assets and liabilities at book value with no profit to Adyen
N.V. (San Francisco) Branch, a branch of the company. No further events after the reporting period impacted the2021 consolidated and company financial statements.

Adyen Annual Report 2021

181

Amsterdam, March 9, 2022

P.S. Overmars
Chairman Supervisory Board

D. Rueda Arroyo
Supervisory Director

J.A.J. van Beurden
Supervisory Director

P.A. Joseph
Supervisory Director

P.W. van der DoesCEO

R. Prins
CCO

I.J. Uytdehaage
CFO

M.B. Swart
CLCO

K. ZakiCOO

A. Matthey
CTOAdyen Annual Report 2021

04
Other
Information

182

Adyen Annual Report 2021

183

Other information
Provisions in the Articles of Association relating to profit appropriation
The Articles of Association of Adyen provide that the appropriation of the net income for the year is decided upon at
the Annual General Meeting of Shareholders.
For the preferred dividends the Annual General Meeting of Shareholders can elect to pay out the annual dividend onthese shares or to add the dividend to the class reserve.
Independent auditor’s report
Please refer to the next page.
Contact
Please contact ir@adyen.com in case of any questions regarding this Annual Report.

Adyen Annual Report 2021

201

GRI Index
In the following table, we make reference to where in this report we disclose our environmental, social andgovernance (ESG) programs, policies and metrics. These disclosures are mapped in reference to the voluntary
reporting framework: The Global Reporting Initiative (GRI) standards. As per clause 3.3.1.1 of GRI 101 Foundation
2016, the Adyen 2021 Annual Report references the below disclosures either in part or in full. Reference to page
numbers and additional notes, where necessary, have also been included in the table below. As we prepare to
become compliant with CSRD, we will continue to evaluate opportunities for future reporting enhancement.
Organizational profile
Disclosure

Description

Location in report

Page Ref.

102-1

Name of the organization

General Information (Notes to the consolidated Financial Statements)

p. 118102-2

Activities, brands, products, and services

Description of business activities

p. 9

102-3

Location of headquarters

General Information (Notes to the consolidated Financial Statements)

p. 118102-4

Location of operations

General Information (Notes to the consolidated Financial Statements)

p. 118102-5

Ownership and legal form

Corporate Governance. General Information (Notes to theconsolidated Financial Statements)

p. 81 & p. 118

102-6

Markets served

Discussion of Financial Results, People & Culturep. 13 & p. 27

102-7

Scale of the organization

Discussion of Financial Results

p. 13

102-7-a-i

Scale of the organization (total number of
employees)

People and Culture

p. 27

102-10Significant changes to the organization and its
supply chain

Highlights

p. 7

102-11

Precautionary Principle or approach

Risk Management, Compliancep. 49 & p. 69

102-12External initiatives

Building Adyen for the long termp. 17Disclosure

Description

Location in report

Page Ref.

102-14

Statement from senior decision-maker

Letter of the CEO, Building Adyen for the long term

p. 5/6 & p. 17

102-15Key impacts, risks, and opportunities

Risk Management (Environmental, Social and Governance risk)

p. 57

Disclosure

Description

Location in report

Page Ref.

102-16

Values, principles, standards, and norms of behavior

People and Culturep. 24102-17

Mechanisms for advice and concerns about ethics

Integrity risk mitigation

p. 71

Disclosure

Description

Location in report

Page Ref.

102-18Governance structure

Corporate Governance (Management structure), Report of theSupervisory Board (Composition)p. 81 & 89

102-19Delegating authority

Building Adyen for the long term (Oversight of responsibility and ESG
matters)

p. 18

102-20Executive-level responsibility for economic,
environmental, and social topics

Building Adyen for the long term (Oversight of responsibility and ESG
matters)

p. 18

102-21

Consulting stakeholders on economic,
environmental, and social topics

Building Adyen for the long term (Stakeholder engagement &materiality)p. 18102-22Composition of the highest governance body andits committees

Corporate governance (Management structure)p. 81

102-23Chair of the highest governance body

Corporate governance (Management structure)p. 81

102-24

Nominating and selecting the highest governancebody

Corporate governance (Management structure, Appointment anddismissal)p. 81 & p. 82

Strategy

Ethics and integrity

GovernanceAdyen Annual Report 2021

202

102-25

Conflicts of interest

Integrity Risk Identification, Supervisory Board Meetingsp. 70 & p. 90

102-26

Role of highest governance body in setting purpose,values, and strategy

Report of the Supervisory Board (Supervisory Board meetings)

p. 90

102-27

Collective knowledge of highest governance body

Report of the Supervisory Board (Supervisory Board meetings)

p. 90

102-28

Evaluating the highest governance body’s
performanceSupervisory Board (Performance assessment)

p. 93

102-29Identifying and managing economic, environmental,
and social impacts

Building Adyen for the long term (Oversight of responsibility and ESG
matters)

p. 18

102-30Effectiveness of risk management processes

Risk management (Risk governance), Audit and Risk Committee

p. 49 & p. 86

102-31

Review of economic, environmental, and social
topicsBuilding Adyen for the long term (Oversight of responsibility and ESG
matters)

p. 18

102-32Highest governance body’s role in sustainability
reporting

Building Adyen for the long term (Oversight of responsibility and ESG
matters)

p. 18

102-33

Communicating critical concerns

Integrity Risk mitigation, Relevant documents on corporate website

p. 71 & p. 94

102-35

Remuneration policies

Remuneration Report (Adyen remuneration policy)

p. 98102-36

Process for determining remuneration

Reward Principles (Remuneration)

p. 97

102-37

Stakeholders’ involvement in remuneration

Reward Principles (Remuneration)

p. 97

102-38Annual total compensation ratio

Remuneration Report (Pay Ratio)

p. 100102-39Percentage increase in annual total compensation
ratio

Remuneration Reportp. 97

Stakeholder engagement
Disclosure

Description

Location in report

Page Ref.

102-40

List of stakeholder groups

Building Adyen for the long term (Stakeholder engagement &materiality)p. 18102-42

Identifying and selecting stakeholders

Building Adyen for the long term (Stakeholder engagement &materiality)p. 18102-43

Approach to stakeholder engagement

Building Adyen for the long term (Stakeholder engagement &materiality)

p. 18Disclosure

Description

Location in report

Page Ref.

102-45

Entities included in the consolidated financial
statements

32. Company - Investments in consolidated subsidiaries on equity
methodp. 176102-47

List of material topics

Building Adyen for the long term (Stakeholder engagement &materiality)p. 18

102-50

Reporting period

General Information (Notes to the consolidated Financial Statements)

p. 118102-51

Date of most recent report

General Information (Notes to the consolidated Financial Statements)

p. 118102-52

Reporting cycle

General Information (Notes to the consolidated Financial Statements)

p. 118102-53

Contact point for questions regarding the report

Other information (ir@adyen.com)

102-54Claims of reporting in accordance with the GRI
Standards

GRI Index Table

p. 202102-55

GRI content index

GRI Index Table

p. 202102-56External assurance

Independent auditor’s Reportp. 184Disclosure

Description

Location in report

Page Ref.

401-1

New employee hires and employee turnoverPeople & Culture (Growing the Adyen team)

p. 28

401-2

Benefits provided to full-time employees that are notprovided to temporary or part-time employees

Remuneration Report, Note 4 (Employment benefit expenses)

p. 97 & p. 130

Reporting practices

Employment

Learning and Development
Disclosure

Description

Location in report

Page Ref.

404-2

Programs for upgrading employee skills andtransition assistance programs

People & Culture (Talent development)p. 26

Adyen Annual Report 2021

203

Diversity and Equal Opportunity
Disclosure

Description

Location in report

Page Ref.

405-1

Diversity of governance bodies and employees

People & Culture

p. 30

405-2

Ratio of basic salary and remuneration of women
to menRemuneration Reportp. 97Disclosure

Description

Location in report

Page Ref.

302-1

Energy consumption within theorganization

Direct energy consumption by primary source: 13.37 GJ

302-2

Energy consumption outside of the organization

Indirect energy consumption by primary source: 49,955.83 GJ• renewable electricity: 21,781.76 GJ• grid electricity: 16,886.28 GJ• district heating: 5,254.31 GJ• district cooling: 33.48 GJ

Disclosure

Description

Location in report

Page Ref.

305-1

305-1 Direct (Scope 1) GHG emissions

Environmental sustainability (Carbon Neutrality)

p. 45

305-2

305-2 Energy indirect (Scope 2) GHG emissions

Environmental sustainability (Carbon Neutrality)

p. 45

305-3

305-3 Other indirect (Scope 3) GHG emissions

Environmental sustainability (Carbon Neutrality)

p. 45

305-4

305-4 GHG emissions intensity

Environmental sustainability (Carbon Neutrality)p. 45

Disclosure

Description

Location in report

Page Ref.

207-1

207-1 Approach to tax

Tax

p. 74

207-2

207-2 Tax governance, control, and risk
management

Tax (Tax governance, control and, risk management)

p. 74

207-3

207-3 Stakeholder engagement and managementof concerns related to tax

Tax (Stakeholder engagement and management of concerns related
to tax)

p. 75

207-4

207-4 Country-by-country reportingCountry-by-country reporting

p. 163

EnergyEmissionsTax