Adyen: A First Principles Payment Platform - [Business Breakdowns, EP. 50]

03.09.2022 - By Business Breakdowns

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This is Zack Fuss and today we’re breaking down European-based payment business, Adyen. Adyen was founded in Amsterdam in 2006 by a group of payments entrepreneurs who had already built and sold a business in this space. Adyen was their chance to start afresh and build a modern solution to displace the patchwork legacy system that merchants were being forced to use.   To break down the business, I’m joined by Michael Willar, a portfolio manager at Stenham Asset Management. Our discussion covers Adyen’s single platform solution in detail, the driving force behind their track record of profitable growth, and why payments isn’t a winner take all market.  Please enjoy this breakdown of Adyen.   For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.   -----   This episode is brought to you by Visible Alpha. The team at Visible Alpha built a platform to analyze consensus data and financial metrics on over 6,000 public traded companies. Rather than having to dig through models one by one, Visible Alpha extracts data from every line item across sell-side models so you can better understand expectations on metrics beyond just revenue and earnings. Try Visible Alpha for free by visiting visiblealpha.com/breakdowns   -----   This episode is brought to you by Scribe. Scribe is the trusted transcription provider for the business and investing community. Scribe is designed to accurately transcribe messy, real-world audio and is unique in that it’s optimized for the complexities of enterprise audio, such as company and product names, currencies, accents and numbers. Visit kensho.com/breakdowns to learn more and unlock your free trial.   ----- Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss Show Notes [00:02:55] - [First question] What Adyen is and what they do  [00:05:54] - General overview of how payment processing works [00:07:29] - Flow of a transaction and how they manifest [00:09:52] - How the business generates revenue and their revenue model [00:11:25] - Where Adyen sits in the industry and the size of it today [00:13:37] - The reality of processing 50-60% of their addressable market  [00:16:19] - What about their culture and founding story makes them so nimble  [00:21:18] - The competitive strengths of the business and their innovative solutions  [00:24:07] - Key revenue drivers for Adyen  [00:26:01] - What is it about Adyen’s business structure that enables them to grow so rapidly while still being profitable [00:29:34] - Key growth drivers  [00:32:44] - What gives Adyen its competitive advantage over other payment providers [00:35:56] - Having one platform is beneficial but why isn’t it a more popular approach?  [00:37:42] - The secret sauce behind their successful growth trajectory [00:39:25] - The essence of Adyen’s culture and how it manifests in their day-to-day work [00:42:04] - What Adyen plans to do with all of the cash they produce [00:43:35] - What keeps him up at night and potential threats to the business [00:47:54] - Is there a chance anyone could build a platform comparable to Adyen? [00:50:06] - Key differences between Stripe and Adyen [00:56:23] - Lessons learned from studying Adyen and what payment service builders can learn from them

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