Accounting policy \u2013 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 the activities 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 group companies are eliminated. | ||
Accounting Policies | Significant Accounting Estimates or Judgments | ||||
What it is | Accounting policies considered relevant for understanding the financial statements, or required to be disclosed by law or IFRS | These accounting policies involve a higher degree of judgement or complexity. The estimates applied are more likely to be materially adjusted due to inaccurate estimates and/or assumptions applied | |||
Where | Provided per note to the financial statements. The notes are organized into the following sections: | ||||
Key disclosures: provide a breakdown of 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 for revenue out of settlement fees 7. Income taxes \u2013 Recognition of deferred taxes related to share- based compensation | |||
Capital, investment and financial risk management: key information relating to Adyen\u2019s capital management, 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 | ||||
Other: information on items required to be disclosed to be compliant with EU- IFRS and other legal requirements. | Notes 13 \u2013 41 |
Accounting policy \u2013 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 a transparent pricing model and charges fees to merchants based on its own incurred costs plus a mark-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\u2019s platform and recognized 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. Adyen considers this performance obligation to be distinct from its payment services. As a result, the revenues 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 issuing services which are deemed other services - recognized at point in time. Services transferred over time relate to the amortization of deferred revenue for services provided as part of the merchant contract (note 2.1) and terminal services fees as part of the unified commerce offering. | ||
Types of goods or service | 2022 | 2021 |
Settlement fees | 8,270,626 | 5,525,079 |
Processing fees | 387,541 | 289,824 |
Sales of goods | 55,710 | 33,042 |
Other services | 221,734 | 147,474 |
Total revenue from contracts with customers | 8,935,611 | 5,995,419 |
Costs incurred from financial institutions | (7,550,960) | (4,960,951) |
Costs of goods sold | (54,485) | (32,951) |
Net revenue | 1,330,166 | 1,001,517 |
Element | Accounting treatment | Note reference | ||
Contract assets | Contract assets are initially recognized at cost on the balance sheet, and subsequently amortized against revenue (settlement fees) in profit or loss on a pro rata basis in line with the fulfilment of the expected payment services performance obligation. The contract assets are separated into a monetary and non-monetary component and are assessed for impairment annually with reference to the remaining (net) benefits from the 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 expected credit loss model. Exchange movements on the \"monetary item\" is recognized in profit or loss (other financial results). The monetary component has been fully repaid and amortized in 2022. | ||||
Settled by: | ||||
1. Cash advance | Cash 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 fair value and are subsequently stated on the balance sheet at fair value, with movements 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 moment that the processed merchant volume exceeds the milestone amount in a single 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). | 2.2. Contract assets 8. Capital management 11. Financial instruments 23. Share information | ||
After the IPO (on June 13, 2018), the derivative liabilities relating to tranches 1 and 2 were reclassified as a warrant reserve in equity in the amount of EUR 68.2 million. During 2021, the first tranche milestone was met, vested, and the related warrant was subsequently exercised by eBay. A total of 403,724 shares were issued to eBay at \u20ac240 per share. The gross equity balance relating to tranche 1 and related deferred tax were transferred from \u2018warrant reserve\u2019 to \u2018share premium\u2019 and \u2018retained earnings\u2019, respectively. The dilutive effect of the exercised warrant in 2021 (tranche 1) was reflected in the shares outstanding at year-end - refer to note 23 \u2018Share information\u2019. There were no further tranche milestones met during 2022. As per December 31, 2022, the \u2018warrant reserve\u2019 was carried at historic cost (EUR 34.1 million\u00a0 (net of deferred tax)) while the derivative liabilities relating to tranches 3 and 4 were carried at fair value on Adyen's balance sheet. | ||||
Accounting policy \u2013 Contract assets Recognition and measurement If an incurred fee or commission is not paid in connection with any distinct goods or services, it should be considered as a reduction of the total transaction price of a contract with a customer. As a result, this incurred fee or commission should be deducted from revenue when revenue is recognized for providing the services to the customer. These considerations are recognized as contract assets in the 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 merchant contract, 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 line with the fulfilment of the expected payment services performance obligation. For the monetary component of the contract asset, Adyen applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables, other financial assets measured at amortized cost and the contract asset. | ||
Contract assets | Monetary component | Non-monetary component | Other contract assets | Total contract assets |
Balance - 1 January, 2021 | 47,657 | 76,456 | \u2014 | 124,113 |
Movements: | ||||
Additions | 8,946 | 8,946 | ||
Amortization for the year | (42,112) | (14,395) | (637) | (57,144) |
Exchange differences | 3,426 | 3,426 | ||
Balance - December 31, 2021 | 8,971 | 62,061 | 8,309 | 79,341 |
Movements: | ||||
Additions | 1,791 | 1,791 | ||
Amortization for the year | (9,094) | (20,397) | (3,063) | (32,554) |
Exchange differences (note 6) | 123 | (89) | 34 | |
Balance - December 31, 2022 | \u2014 | 41,664 | 6,948 | 48,612 |
Accounting policy \u2013 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\u2019s Chief Operating Decision Maker (\u201cCODM\u201d) 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 assessment of the allocation of resources and performance of the operating segments identified. Based on Adyen\u2019s business and operating model, Adyen has identified a single operating and reporting segment: \u2018Payment services\u2019. Payment services The total revenue earned from Adyen\u2019s 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\u00a0 \u2013\u00a0 refer to note 2.4 for further explanation on the non-IFRS measures reported by Adyen. | ||
Revenue - Geographical breakdown | 2022 | 2021 |
Europe, the Middle East, and Africa (EMEA) | 3,430,434 | 2,351,662 |
North America | 4,289,241 | 2,899,788 |
Asia-Pacific | 784,189 | 436,185 |
Latin America | 431,747 | 307,784 |
Total revenue from contracts with customers | 8,935,611 | 5,995,419 |
Non-current assets - Geographical breakdown | 2022 | 2021 |
Netherlands | 307,911 | 288,788 |
Rest of the World | 227,304 | 151,724 |
Non-current assets | 535,215 | 440,512 |
Net revenue - Geographical breakdown and year-on-year growth | 2022 | YoY% | 2021 | YoY% |
Europe, the Middle East, and Africa (EMEA) | 746,823 | 25% | 599,332 | 41% |
North America | 343,158 | 48% | 231,406 | 74% |
Asia-Pacific | 142,346 | 48% | 96,086 | 48% |
Latin America | 97,839 | 31% | 74,693 | 24% |
Total net revenue from contracts with customers | 1,330,166 | 33% | 1,001,517 | 46% |
Selected non-IFRS financial measures | 2022 | 2021 |
Income before net finance income/(expense) and income taxes | 664,675 | 594,981 |
Amortization and depreciation | 63,613 | 35,011 |
EBITDA | 728,288 | 629,992 |
Net revenue | 1,330,166 | 1,001,517 |
EBITDA margin (%) | 55% | 63% |
Purchases of plant and equipment | 95,575 | 51,387 |
Capitalization of intangible assets | 3,523 | 2,959 |
CapEx | 99,098 | 54,346 |
EBITDA | 728,288 | 629,992 |
CapEx | (99,098) | (54,346) |
Lease payments | (22,144) | (9,045) |
Free cash flow | 607,046 | 566,601 |
Free cash flow | 607,046 | 566,601 |
EBITDA | 728,288 | 629,992 |
Free cash flow conversion ratio (%) | 83% | 90% |
Accounting policy \u2013 Inventories Inventories are measured at the lower of cost or net realizable value. The cost of inventories is based on the first-in, first-out method (FIFO) and includes expenditure incurred in acquiring the inventories 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 | 2022 | 2021 |
Balance - January 1 | 22,138 | 19,548 |
Purchases during the year (products for resale) | 120,893 | 39,814 |
Costs of goods sold | (54,485) | (32,951) |
Transfer to contract assets (note 2.2) | \u2014 | (3,093) |
Expense recognized in other operating expenses | (655) | (1,180) |
Balance - December 31 | 87,891 | 22,138 |
FTE per office | 2022 | 2021 |
Amsterdam | 1,941 | 1,262 |
San Francisco | 270 | 199 |
S\u00e3o Paulo | 146 | 88 |
New York | 139 | 72 |
Singapore | 127 | 101 |
London | 123 | 98 |
Paris | 75 | 51 |
Berlin | 67 | 48 |
Madrid | 64 | 32 |
Stockholm | 55 | 33 |
Other | 325 | 196 |
Total | 3,332 | 2,180 |
Accounting policy \u2013 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 share-based payments (refer to note 4.3). | ||
Employee benefits | 2022 | 2021 |
Salaries and wages | 317,817 | 187,133 |
Share-based compensation (note 4.3) | 10,499 | 12,008 |
Total wages and salaries | 328,316 | 199,141 |
Social securities | 43,811 | 35,413 |
Pension costs - defined contribution plans | 8,460 | 5,985 |
Total social securities and pension costs | 52,271 | 41,398 |
Accounting policy \u2013 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\u2019s pension plans are all classified as defined contribution plans. For defined contribution plans, the Group pays contributions to publicly or privately administered pension 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. | ||
Share-based compensation | 2022 | 2021 |
Equity-settled | 9 | 292 |
Cash-settled | 10,490 | 11,716 |
Total share-based compensation | 10,499 | 12,008 |
Accounting policy \u2013 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\u2019 and directors\u2019 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\u2019 and directors\u2019 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 each month, over the following 36 months.\u00a0 Options can be exercised at any time from the vesting date until the 8th anniversary of the grant date. Adyen has no legal or constructive obligation to repurchase or settle the options in cash. | ||
2022 | 2021 | |||
Share options outstanding | Weighted average exercise price (in EUR) per share option | Number of options (thousands) | Weighted average exercise price (in EUR) per share option | Number of options (thousands) |
Balance - January 1 | 53.63 | 147 | 39.20 | 344 |
Forfeited | 72.46 | (24) | 105.74 | (1) |
Exercised | 66.71 | (16) | 28.05 | (196) |
Balance - December 31 | 47.51 | 107 | 53.63 | 147 |
Accounting policy \u2013 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\u2019 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 each anniversary of the grant date,\u00a0 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\u2019s shares. The liability is measured at fair value through profit or loss using the market price of Adyen\u2019s shares at balance sheet date with remeasurements on each reporting date. Changes in the fair value are recognized as \u201cshare-based compensation expense\u201d. The expense reflecting the recognition of the grant date fair value and changes in fair value of the phantom share plan is presented in wages and salaries in the statement of comprehensive income. | ||
Accounting policy \u2013 Operating expenses Operating expenses are recognized in the period when they occur. | ||
Other operating expenses | 2022 | 2021 |
Sales and marketing costs | 55,630 | 36,384 |
Travel and other staff expenses | 44,086 | 10,102 |
IT costs | 33,086 | 23,190 |
Advisory costs | 27,722 | 15,711 |
Contractor costs | 13,489 | 10,384 |
Housing costs | 10,914 | 6,427 |
Office costs | 8,186 | 4,308 |
Miscellaneous operating expenses | 14,822 | 24,730 |
1% for the UN SDGs | 13,302 | \u2014 |
Total other operating expenses | 221,237 | 131,236 |
Other financial results | 2022 | 2021 |
Exchange gains/(losses) (note 6.1) | (8,643) | 11,375 |
Fair value re-measurement of financial instruments: | ||
Derivative liabilities (note 6.2) | 46,700 | (13,300) |
Other financial assets at FVPL (note 6.3) | (153) | (322) |
Loss on redemption of other financial assets at amortized cost | \u2014 | (138) |
Total other financial results | 37,904 | (2,385) |
Accounting policy \u2013 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 Adyen N.V. (\u201cforeign operations\u201d) are translated into Euros as follows: \u2022Assets, equity and liabilities \u2013 at the closing rate at the date of the statement of financial position; \u2022Income and expenses \u2013 at the average rate of the period (as this is considered a reasonable approximation 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. 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\u2019s functional currency at the rates prevailing on the balance sheet date. Exchange rate differences resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of comprehensive income within \u201cother financial results\u201d. Non-monetary items Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities that are measured at fair value through profit or loss are retranslated at the date that the fair value is determined. | ||
Accounting policy \u2013 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 to tax payable in respect of previous years. | ||
Effective tax calculation | 2022 | 2021 |
Income before income taxes | 719,939 | 580,847 |
Statutory tax rate in the Netherlands (%) | 25.8% | 25% |
Income taxes based on statutory tax rate in the Netherlands | 185,744 | 145,212 |
Tax effects of: | ||
Innovation box | (37,306) | (31,163) |
Change in tax rate | 209 | |
Other adjustments (such as prior year and non-deductible amounts) | 7,362 | (3,128) |
Effective tax amount | 155,800 | 111,130 |
Income taxes | 2022 | 2021 |
Current income tax expense | 153,656 | 126,898 |
Deferred income tax expense/(income) | 2,144 | (15,768) |
Total income taxes | 155,800 | 111,130 |
Current income tax receivables/(payables) | 2022 | 2021 |
Current income tax receivables | 12,445 | 6,761 |
Current income tax payables | (4,441) | (9,879) |
Accounting policy \u2013 Deferred income taxes Deferred income taxes arise, in general, as a result of temporary differences between tax and commercial 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 in determining taxable profit) that relates to remuneration settled by options over Adyen\u2019s shares. The amount of that tax deduction may differ from the related cumulative remuneration expense, and may 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 contracts (refer to note 2.1 \u2018Long-term merchant contract\u2019), 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 gross basis in the balance sheet. | ||
Balance January 1, 2021 | Recognized in Profit or Loss | Recognized in equity | Effects of foreign exchange | Balance December 31, 2021 | |
Deferred tax assets: | |||||
Derivative liabilities | 17,100 | 3,979 | 21,079 | ||
Windfall tax benefit | 43,934 | (33,384) | 2,258 | 12,808 | |
Tax losses carried forward | 43,085 | (939) | 38,932 | 5,394 | 86,472 |
Temporary differences | 2,218 | 5,205 | 7,423 | ||
Total deferred tax assets | 106,337 | 8,245 | 5,548 | 7,652 | 127,782 |
Deferred tax liabilities: | |||||
Other financial assets at FVPL | (4,527) | 4,527 | \u2014 | ||
Contract assets | (19,114) | 3,104 | (16,010) | ||
Temporary differences | (283) | (108) | (391) | ||
Total deferred tax liabilities | (23,924) | 7,523 | \u2014 | \u2014 | (16,401) |
Net deferred tax assets / (liabilities) | 82,413 | 15,768 | 5,548 | 7,652 | 111,381 |
Accounting policy \u2013 Cash and cash equivalents Adyen\u2019s 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 maturities of 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 (less than 3 months), the fair value approximates the carrying\u00a0value. | ||
Cash and cash equivalents | 2022 | 2021 |
Cash held at central banks | 4,407,540 | 2,565,875 |
Cash held at banks, other than central banks | 2,114,805 | 2,050,219 |
Total | 6,522,345 | 4,616,094 |
Accounting policy \u2013 Financial instruments Classification Adyen classifies its financial assets in the following measurement categories, those to be measured: \u2022subsequently at fair value through profit or loss (\u2018FVPL\u2019), and \u2022at amortized cost. The classification depends on Adyen\u2019s business model for managing the financial assets and the contractual 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 terms of the contractual arrangement, and subsequently reassesses the accounting treatment on changes in circumstances. The derivative liabilities are classified as financial liabilities measured at fair 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. 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\u2019s business model for managing the asset and the cash flow characteristics of the asset. Adyen measures its debt instruments as follows: \u2022Amortized cost: Held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, where those cash flows represent solely payments of principal and interest. Interest income from these financial assets is included in finance income using the effective interest rate method. Financial assets and liabilities at fair value through profit or loss \u2022Assets that do not meet the criteria for amortized cost or fair value through other comprehensive income (\u2018FVOCI\u2019) 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, the group applies the simplified approach, which requires expected lifetime losses to be recognized from initial recognition of the assets. Instruments in scope on the balance sheet of Adyen include: cash and cash equivalents, receivables from 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: \u2022Category 1: Expected credit losses (12 months) \u2022Category 2: Lifetime expected credit losses 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 allowance for trade receivables are measured at initial recognition, and throughout the total duration, equal to lifetime expected credit losses. As the average duration of the instruments in scope for impairment calculation is below 10 days, no forward-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 the outstanding 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: \u2022Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. \u2022Level 2: The fair value of financial instruments that are not traded in an active market is determined 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 fair value an instrument are observable, the instrument is included in level 2. \u2022Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. | ||
Financial instruments | Note | Measurement policy | 2022 | 2021 |
Financial assets: | ||||
Other financial assets at FVPL | FVPL \u2013 level 2 | 12,264 | 22,504 | |
Contract assets \u2013 monetary component | 2.2 | Amortized cost | \u2014 | 8,971 |
Receivables from merchants and financial institutions | 15 | Amortized cost | 369,104 | 633,249 |
Trade and other receivables | 15 | Amortized cost | 89,350 | 56,852 |
Cash and cash equivalents | 10 | Amortized cost | 6,522,345 | 4,616,094 |
Total | 6,993,063 | 5,337,670 | ||
Financial liabilities: | ||||
Derivative liabilities | FVPL \u2013 level 2 | 35,000 | 81,700 | |
Lease liability | 17 | Amortized cost | 203,073 | 142,964 |
Payable to merchants and financial institutions | 16 | Amortized cost | 4,795,804 | 3,608,531 |
Trade and other payables | 16 | Amortized cost | 147,827 | 100,116 |
Total | 5,181,704 | 3,933,311 |
Source of risk and risk description | Risk mitigation | Remaining risk | ||||||
Market risks | Minimal | |||||||
Foreign exchange risk | ||||||||
Adyen operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises on recognized assets and liabilities (principally trade and merchant flow related receivables and payables) and investments in foreign operations. | Adyen actively manages the foreign exchange risk resulting in limited exposure to foreign exchange risks. USD is the most significant non- functional currency exposure as at December 31, 2022 and 2021. The following table highlights the net exposure to this monetary item currency 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 short period to settle, and hence, limited foreign exchange risk on these instruments. The decrease in net exposure is due to the eBay monetary item being fully amortized during 2022 (refer to note 2.1 for further details) and sale of\u00a0 Visa Inc. common stock (refer to note 11 for further details). | Adyen has limits on its open FX position per individual currency and for Adyen as a whole. The open positions including the impact of an immediate 10% shock remain within Adyen\u2019s risk appetite. | ||||||
Currency | Net exposure | 10% shock | ||||||
31/12/2021 | ||||||||
USD | EUR 32 million | EUR 3.2 million | ||||||
31/12/2022 | ||||||||
USD | EUR 12 million | EUR 1.2 million | ||||||
The merchant funds have a natural match in currencies between receivables and payables or a very short duration. 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. |
Source of risk and risk description | Risk mitigation | Remaining risk | ||||||
Interest rate risk | ||||||||
Interest rate risk on financial instruments is the risk of adverse impact of movements of the interest rates of underlying financial assets. | Interest rate risk arising from maturity and tenor mismatches in assets and liabilities 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\u2019s lease liabilities is considered immaterial due to a fixed discount rate (determined with reference to Adyen\u2019s incremental borrowing rate) and nominal 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, majority of cash balances of Adyen are not significantly exposed to interest rate risk because that cash is used to settle the current liabilities towards the merchants at short notice. The nominal values of the money-market funds are minimal as compared to the overall financial instruments balance. In addition, they are short-term in nature given the nature of underlying assets, and are held for short-term use (overnight clearing of funds to avoid excess concentration risk). Overall, this leads to minimal interest rate risk for Adyen. For the volatility analysis we performed on the interest rate risk exposure we have on our cash and cash equivalent balances as per year-end refer to note 10. For the limited amount of interest-bearing balances that Adyen holds, negative interest rates applied for the period up to 31 October 2022 on the DNB Target 2 account, after which positive interest was earned. | Due to the nature of Adyen\u2019s assets and liabilities, Adyen experiences low interest rate risk and maintains within its risk appetite. |
Source of risk and risk description | Risk mitigation | Remaining risk | ||||||
Equity price risk | ||||||||
The risk that the fair value of equities changes as a result of changes in the\u00a0 value of individual stocks. | The Group\u2019s 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 the balance sheet as derivative liabilities. The exposure is affected by share price movements of Adyen shares. Adyen carried out a sensitivity analysis on the Visa Inc. preferred shares and derivative 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 other circumstances considered equal: | The remaining equity price risk is considered limited as Adyen has no other equity instruments on its balance sheet. The risk appetite on equity price risk is low and therefore the residual risk is within risk appetite. | ||||||
Balance sheet item | Carrying amount | 5% underlying share price movement | ||||||
31/12/2021 | ||||||||
Visa Inc. preferred shares | EUR 23 million | EUR 1 million | ||||||
Derivative liabilities | EUR 82 million | EUR 4 million (5%) | ||||||
31/12/2022 | ||||||||
Visa Inc. preferred shares | EUR 12 million | EUR 1 million | ||||||
Derivative liabilities | EUR 35 million | EUR 2 million (5%) | ||||||
In addition, Adyen\u2019s Treasury policy does not allow purchasing additional equity positions (excluding treasury shares). | ||||||||
Credit risks | Minimal | |||||||
Counterparty default risk | ||||||||
The counterparty default (credit) risk relates to receivables from financial institutions regarding settled payment transactions. A default of financial institution counterparties could have a negative impact on Adyen\u2019s financial results. | Financial assets subject to credit risk: Cash and cash equivalents, and receivables from merchants and financial institutions: Adyen\u2019s 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\u2019s eligible capital, provided that the financial institution has a credit rating in the A categories of Moody\u2019s/S&P or, if not available, its equivalent from other rating agencies Adyen has conservatively translated this amount into an internal limit of EUR 491 million. For financial institutions with lower credit ratings, the credit risk per financial institution is maximized to EUR 200 million under business-as- usual conditions. Neither limit was breached during the year ended December 31, 2022. As per December 31, 2022, EUR 4,407,540 (2021: EUR 2,565,875) represents cash held at central banks, representing 68% (2021: 56%) of the cash and cash equivalents balance. Excluding the cash held at central banks, Adyen\u2019s top 10 exposures include balances held at institutions with credit rating A or higher, representing 91% of the balance of cash and cash equivalents, and 2% of receivables from merchants and financial institutions - combined top 10 exposures: 28% (2021: 63%). 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, 2022 the total collateral was EUR 31,086 (BRL 175,828) (2021: EUR 39,125 (BRL 250,157). Adyen has no other collateral accounts to meet its other regulatory requirements. No defaults of institutions where Adyen had an exposure to 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 monetary component of the contract assets The remaining financial asset credit risk exposure (such as trade and other receivables) is considered to be limited. | The remaining counterparty credit risk is low as is Adyen\u2019s risk appetite. Therefore, Adyen residual risk on counterparty default risk remains within risk appetite. | ||||||
Concentration risk | ||||||||
Risk of losses stemming from on- and off-balance sheet positions arising from concentrations in exposures to a counterparty or a group of connected counterparties. | Concentration risk at Adyen originates primarily at banking partners in locations where there are no own direct acquiring licenses. In 2021 and 2022, Adyen has reduced its concentration risk in exposures held at financial institutions evident by the low proportion of top 10 exposures within Adyen\u2019s total financial assets. The residual credit risk is mitigated by the short-term maturity of these balances of less than 7 days. 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 ensure compliance with the large exposure limit. | The remaining credit risk remains is low where Adyen\u2019s risk appetite for concentration risk is moderate. Therefore, the residual risk is within risk appetite. |
Accounting policy \u2013 Intangible assets The intangible assets are stated at cost less accumulated amortization and include internally generated software with finite useful lives. These assets are capitalized and subsequently amortized on a straight-line basis in the statement of comprehensive income over the period with an estimated useful life of 5 years. Intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The useful life is assessed on an annual basis. | ||
Intangible assets | 2022 | 2021 |
Internally generated software | ||
Cost | 22,776 | 19,817 |
Accumulated amortization | (12,935) | (9,847) |
Balance - January 1 | 9,841 | 9,970 |
Additions | 3,523 | 2,959 |
Amortization for the year | (5,224) | (3,088) |
Total as at December 31 | 8,140 | 9,841 |
Cost | 23,029 | 22,776 |
Accumulated amortization | (14,889) | (12,935) |
Total as at December 31 | 8,140 | 9,841 |
Accounting policy \u2013 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 are classified at amortized cost, initially recognized at fair value and subsequently measured at amortized 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 from financial institutions: 1-2 days; receivables from merchants: 30 days).\u00a0 Due to the short duration of all the receivables (overall average of less than 3 months) the fair value approximates the carrying value. | ||
Trade and other receivables | 2022 | 2021 |
Trade and other receivables | 93,399 | 61,294 |
Less: Allowance for expected credit losses | (4,049) | (4,442) |
Balance - Trade receivables - Net | 89,350 | 56,852 |
Receivables from merchants and financial institutions | 369,104 | 633,249 |
Total | 458,454 | 690,101 |
Receivables from merchants and financial institutions | 2022 | 2021 |
Receivables from financial institutions | 279,106 | 561,578 |
Receivables from merchants | 89,998 | 71,671 |
Balance - December 31 | 369,104 | 633,249 |
Accounting policy \u2013 Trade and other payables Payables are obligations initially recognized at fair value and subsequently measured at amortized cost to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Payables are classified as current liabilities if payment is due within one year or less. Due to the very short duration of the payables (average less than 3 months) the fair value approximates the carrying value. | ||
Trade and other payables | 2022 | 2021 |
Trade payables | 19,922 | 8,989 |
Taxes and social security | 55,593 | 51,418 |
Accrued employee benefits | 30,041 | 26,269 |
Accrued liabilities and other debts | 33,105 | 5,996 |
Cash-settled share-based payment plan - current portion | 9,166 | 7,444 |
Trade and other payables | 147,827 | 100,116 |
Payables to merchants and financial institutions | 4,795,804 | 3,608,531 |
Total | 4,943,631 | 3,708,647 |
Accounting policy \u2013 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 lease commencement 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 of comprehensive income on a straight-line basis over the lease term. | ||
Right-of-use assets | 2022 | 2021 |
Offices and data centers | ||
Cost | 168,630 | 149,732 |
Accumulated depreciation | (40,567) | (25,404) |
Balance - January 1 | 128,063 | 124,328 |
Additions | 81,060 | 19,114 |
Depreciation for the period | (30,035) | (16,608) |
Other movements (e.g. exchange differences) | 2,588 | 1,229 |
Balance - December 31 | 181,676 | 128,063 |
Recognized right-of-use asset | 249,760 | 168,630 |
Accumulated depreciation | (68,084) | (40,567) |
Balance - December 31 | 181,676 | 128,063 |
Lease liability | 2022 | 2021 |
Balance - January 1 | 142,964 | 131,485 |
Additions | 81,060 | 19,114 |
Lease instalments | (25,516) | (11,541) |
Interest expense | 3,372 | 2,496 |
Other movements (e.g. exchange differences) | 1,193 | 1,410 |
Balance - December 31 | 203,073 | 142,964 |
Current portion | 33,200 | 22,996 |
Non-current portion | 169,873 | 119,968 |
Minimum future lease payments | 2022 | 2021 |
Within 1 year | 34,460 | 20,327 |
Between 1 and 2 years | 35,103 | 21,326 |
Between 2 and 3 years | 33,135 | 21,331 |
Between 3 and 4 years | 27,890 | 20,979 |
Between 4 and 5 years | 21,748 | 14,780 |
Later than 5 years | 49,870 | 71,564 |
Total | 202,206 | 170,307 |
Related party assets/ (liabilities) | 2022 | 2021 |
Supervisory Board | 115 | \u2014 |
Employees (STAK) | 3,627 | 66 |
2022 | 2021 | |||||
PwC Accountants | Other PwC firms* | Total | PwC Accountants | Other PwC firms* | Total | |
Audit of financial statements | 842 | 713 | 1,555 | 655 | 541 | 1,196 |
Other audit services | 333 | \u2014 | 333 | 292 | \u2014 | 292 |
Total | 1,175 | 713 | 1,888 | 947 | 541 | 1,488 |
2022 | 2021 | |
Salaries and short-term employee benefits | 3,590 | 3,137 |
Share-based payments | 439 | 241 |
Post-employment benefits | 209 | 97 |
Total | 4,238 | 3,475 |
Accounting policy \u2013 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)\u00a0 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 at December 31, 2022, only the warrant related to tranche 1 vested (and exercised), while no warrants\u00a0 vested in the current year. Therefore, the issued shares relating to tranche 1 is reflected in the calculation of ordinary shares. 2)\u00a0 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 | 2022 | 2021 |
Net income attributable to owners of Adyen N.V. (in EUR '000) | 564,139 | 469,717 |
Weighted average number of ordinary shares for the period | 30,975,325 | 30,499,194 |
Dilutive effect of share options | 70,704 | 176,621 |
Weighted average number of ordinary shares for diluted net profit for the period | 31,046,029 | 30,675,815 |
Net profit per share \u2013 basic | 18.21 | 15.40 |
Net profit per share - diluted | 18.17 | 15.31 |
Accounting policy \u2013 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 the activities 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 group companies are eliminated. | ||
Accounting policy \u2013 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 the activities 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 group companies are eliminated. | ||
Accounting Policies | Significant Accounting Estimates or Judgments | ||||
What it is | Accounting policies considered relevant for understanding the financial statements, or required to be disclosed by law or IFRS | These accounting policies involve a higher degree of judgement or complexity. The estimates applied are more likely to be materially adjusted due to inaccurate estimates and/or assumptions applied | |||
Where | Provided per note to the financial statements. The notes are organized into the following sections: | ||||
Key disclosures: provide a breakdown of 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 for revenue out of settlement fees 7. Income taxes \u2013 Recognition of deferred taxes related to share- based compensation | |||
Capital, investment and financial risk management: key information relating to Adyen\u2019s capital management, 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 | ||||
Other: information on items required to be disclosed to be compliant with EU- IFRS and other legal requirements. | Notes 13 \u2013 41 |
Accounting policy \u2013 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 a transparent pricing model and charges fees to merchants based on its own incurred costs plus a mark-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\u2019s platform and recognized 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. Adyen considers this performance obligation to be distinct from its payment services. As a result, the revenues 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 issuing services which are deemed other services - recognized at point in time. Services transferred over time relate to the amortization of deferred revenue for services provided as part of the merchant contract (note 2.1) and terminal services fees as part of the unified commerce offering. | ||
Key Judgement \u2013 Principal versus agent for revenue out of settlement fees Adyen applied its judgment in determining whether it has control of the full payment service before the service is transferred to its merchants, and, in consequence, whether the Company is acting as agent or principal in relation to the settlement fees charged to merchants. This judgement is supported by existing facts and circumstances during the year up to 31 December 2022, not limited to Adyen\u2019s 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\u2019s payment processing and acquiring services to merchants, for which interchange 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. Based on existing terms and conditions, Adyen is considered 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 is responsible for its contractual terms with merchants. Adyen is thus considered to control the full payment service before the service is transferred to merchants. Settlement fees \u2013 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 recognized based on this conclusion. | ||
Accounting policy \u2013 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 (\u2018goods and services transferred at a point in time\u2019). In addition to the aforementioned revenue streams, Adyen provides terminal replacement services included in \u2018other services\u2019, for which revenue is recognized over a period of time. Adyen recognizes revenue for these services on a straight-line basis over the contract term. | ||
Element | Accounting treatment | Note reference | ||
Contract assets | Contract assets are initially recognized at cost on the balance sheet, and subsequently amortized against revenue (settlement fees) in profit or loss on a pro rata basis in line with the fulfilment of the expected payment services performance obligation. The contract assets are separated into a monetary and non-monetary component and are assessed for impairment annually with reference to the remaining (net) benefits from the 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 expected credit loss model. Exchange movements on the \"monetary item\" is recognized in profit or loss (other financial results). The monetary component has been fully repaid and amortized in 2022. | ||||
Settled by: | ||||
1. Cash advance | Cash 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 fair value and are subsequently stated on the balance sheet at fair value, with movements 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 moment that the processed merchant volume exceeds the milestone amount in a single 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). | 2.2. Contract assets 8. Capital management 11. Financial instruments 23. Share information | ||
After the IPO (on June 13, 2018), the derivative liabilities relating to tranches 1 and 2 were reclassified as a warrant reserve in equity in the amount of EUR 68.2 million. During 2021, the first tranche milestone was met, vested, and the related warrant was subsequently exercised by eBay. A total of 403,724 shares were issued to eBay at \u20ac240 per share. The gross equity balance relating to tranche 1 and related deferred tax were transferred from \u2018warrant reserve\u2019 to \u2018share premium\u2019 and \u2018retained earnings\u2019, respectively. The dilutive effect of the exercised warrant in 2021 (tranche 1) was reflected in the shares outstanding at year-end - refer to note 23 \u2018Share information\u2019. There were no further tranche milestones met during 2022. As per December 31, 2022, the \u2018warrant reserve\u2019 was carried at historic cost (EUR 34.1 million\u00a0 (net of deferred tax)) while the derivative liabilities relating to tranches 3 and 4 were carried at fair value on Adyen's balance sheet. | ||||
Accounting policy \u2013 Contract assets Recognition and measurement If an incurred fee or commission is not paid in connection with any distinct goods or services, it should be considered as a reduction of the total transaction price of a contract with a customer. As a result, this incurred fee or commission should be deducted from revenue when revenue is recognized for providing the services to the customer. These considerations are recognized as contract assets in the 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 merchant contract, 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 line with the fulfilment of the expected payment services performance obligation. For the monetary component of the contract asset, Adyen applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables, other financial assets measured at amortized cost and the contract asset. | ||
Accounting policy \u2013 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\u2019s Chief Operating Decision Maker (\u201cCODM\u201d) 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 assessment of the allocation of resources and performance of the operating segments identified. Based on Adyen\u2019s business and operating model, Adyen has identified a single operating and reporting segment: \u2018Payment services\u2019. Payment services The total revenue earned from Adyen\u2019s 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\u00a0 \u2013\u00a0 refer to note 2.4 for further explanation on the non-IFRS measures reported by Adyen. | ||
Accounting policy \u2013 Inventories Inventories are measured at the lower of cost or net realizable value. The cost of inventories is based on the first-in, first-out method (FIFO) and includes expenditure incurred in acquiring the inventories 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. | ||
Accounting policy \u2013 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 share-based payments (refer to note 4.3). | ||
Accounting policy \u2013 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\u2019 and directors\u2019 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\u2019 and directors\u2019 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 each month, over the following 36 months.\u00a0 Options can be exercised at any time from the vesting date until the 8th anniversary of the grant date. Adyen has no legal or constructive obligation to repurchase or settle the options in cash. | ||
Accounting policy \u2013 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\u2019 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 each anniversary of the grant date,\u00a0 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\u2019s shares. The liability is measured at fair value through profit or loss using the market price of Adyen\u2019s shares at balance sheet date with remeasurements on each reporting date. Changes in the fair value are recognized as \u201cshare-based compensation expense\u201d. The expense reflecting the recognition of the grant date fair value and changes in fair value of the phantom share plan is presented in wages and salaries in the statement of comprehensive income. | ||
Accounting policy \u2013 Operating expenses Operating expenses are recognized in the period when they occur. | ||
Accounting policy \u2013 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 Adyen N.V. (\u201cforeign operations\u201d) are translated into Euros as follows: \u2022Assets, equity and liabilities \u2013 at the closing rate at the date of the statement of financial position; \u2022Income and expenses \u2013 at the average rate of the period (as this is considered a reasonable approximation 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. 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\u2019s functional currency at the rates prevailing on the balance sheet date. Exchange rate differences resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of comprehensive income within \u201cother financial results\u201d. Non-monetary items Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities that are measured at fair value through profit or loss are retranslated at the date that the fair value is determined. | ||
Accounting policy \u2013 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 to tax payable in respect of previous years. | ||
Accounting policy \u2013 Deferred income taxes Deferred income taxes arise, in general, as a result of temporary differences between tax and commercial 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 in determining taxable profit) that relates to remuneration settled by options over Adyen\u2019s shares. The amount of that tax deduction may differ from the related cumulative remuneration expense, and may 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 contracts (refer to note 2.1 \u2018Long-term merchant contract\u2019), 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 gross basis in the balance sheet. | ||
Significant accounting estimate: Deferred tax assets linked to windfall benefits Deferred tax assets include tax losses carried forward at a Federal and State level relating to options exercised in the United States and United Kingdom (December 31, 2022: EUR 115,121; December 31, 2021: EUR 86,277) and windfall benefits relating to options granted and vested, however not yet exercised (December 31, 2022: EUR 5,325; December 31, 2021: 12,808). EUR 6,180 of the tax losses carried forward was utilised during the period and recognised in the share premium reserve (2021: nil). During 2022, 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. \u2022The United Kingdom windfall benefit continues to be recognized as these carry forward losses have no expiration date. \u2022The United States Federal Tax windfall benefit continues to be recognized, as these carry forward losses on a Federal level have no expiration date. In addition, during 2022, Adyen reassessed its position relating to the recoverability of deferred tax assets relating to the State net operating losses in the United States, which resulted in recognizing EUR 27,834 of previously unrecognized tax losses. This was the result of obtaining Federal Foreign Branch and acquiring licenses, leading to increased transactions recorded on a local level and an expectation that tax losses will be utilized against future taxable income. The recoverability of the deferred tax asset in the US is not impacted by the liquidation of Adyen Inc, finalised during 2022, as the deferred tax asset has been transferred to the newly set-up branch of Adyen N.V. in San Francisco effective January 1, 2022, and is recoverable against the future taxable profits of the 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). | ||
Accounting policy \u2013 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. | ||
Accounting policy \u2013 Cash and cash equivalents Adyen\u2019s 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 maturities of 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 (less than 3 months), the fair value approximates the carrying\u00a0value. | ||
Accounting policy \u2013 Financial instruments Classification Adyen classifies its financial assets in the following measurement categories, those to be measured: \u2022subsequently at fair value through profit or loss (\u2018FVPL\u2019), and \u2022at amortized cost. The classification depends on Adyen\u2019s business model for managing the financial assets and the contractual 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 terms of the contractual arrangement, and subsequently reassesses the accounting treatment on changes in circumstances. The derivative liabilities are classified as financial liabilities measured at fair 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. 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\u2019s business model for managing the asset and the cash flow characteristics of the asset. Adyen measures its debt instruments as follows: \u2022Amortized cost: Held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, where those cash flows represent solely payments of principal and interest. Interest income from these financial assets is included in finance income using the effective interest rate method. Financial assets and liabilities at fair value through profit or loss \u2022Assets that do not meet the criteria for amortized cost or fair value through other comprehensive income (\u2018FVOCI\u2019) 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, the group applies the simplified approach, which requires expected lifetime losses to be recognized from initial recognition of the assets. Instruments in scope on the balance sheet of Adyen include: cash and cash equivalents, receivables from 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: \u2022Category 1: Expected credit losses (12 months) \u2022Category 2: Lifetime expected credit losses 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 allowance for trade receivables are measured at initial recognition, and throughout the total duration, equal to lifetime expected credit losses. As the average duration of the instruments in scope for impairment calculation is below 10 days, no forward-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 the outstanding 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: \u2022Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. \u2022Level 2: The fair value of financial instruments that are not traded in an active market is determined 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 fair value an instrument are observable, the instrument is included in level 2. \u2022Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. | ||
Accounting policy \u2013 Intangible assets The intangible assets are stated at cost less accumulated amortization and include internally generated software with finite useful lives. These assets are capitalized and subsequently amortized on a straight-line basis in the statement of comprehensive income over the period with an estimated useful life of 5 years. Intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The useful life is assessed on an annual basis. | ||
Accounting policy \u2013 Plant and equipment Plant and equipment are stated at cost less accumulated depreciation. Repairs and maintenance costs 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 on a straight-line basis and are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The useful life is assessed on an annual basis. | ||
Accounting policy \u2013 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 are classified at amortized cost, initially recognized at fair value and subsequently measured at amortized 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 from financial institutions: 1-2 days; receivables from merchants: 30 days).\u00a0 Due to the short duration of all the receivables (overall average of less than 3 months) the fair value approximates the carrying value. | ||
Accounting policy \u2013 Trade and other payables Payables are obligations initially recognized at fair value and subsequently measured at amortized cost to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Payables are classified as current liabilities if payment is due within one year or less. Due to the very short duration of the payables (average less than 3 months) the fair value approximates the carrying value. | ||
Accounting policy \u2013 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 lease commencement 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 of comprehensive income on a straight-line basis over the lease term. | ||
Accounting policy \u2013 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)\u00a0 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 at December 31, 2022, only the warrant related to tranche 1 vested (and exercised), while no warrants\u00a0 vested in the current year. Therefore, the issued shares relating to tranche 1 is reflected in the calculation of ordinary shares. 2)\u00a0 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). | ||
Accounting Policies | Significant Accounting Estimates or Judgments | ||||
What it is | Accounting policies considered relevant for understanding the financial statements, or required to be disclosed by law or IFRS | These accounting policies involve a higher degree of judgement or complexity. The estimates applied are more likely to be materially adjusted due to inaccurate estimates and/or assumptions applied | |||
Where | Provided per note to the financial statements. The notes are organized into the following sections: | ||||
Key disclosures: provide a breakdown of 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 for revenue out of settlement fees 7. Income taxes \u2013 Recognition of deferred taxes related to share- based compensation | |||
Capital, investment and financial risk management: key information relating to Adyen\u2019s capital management, 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 | ||||
Other: information on items required to be disclosed to be compliant with EU- IFRS and other legal requirements. | Notes 13 \u2013 41 |
Accounting policy \u2013 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 a transparent pricing model and charges fees to merchants based on its own incurred costs plus a mark-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\u2019s platform and recognized 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. Adyen considers this performance obligation to be distinct from its payment services. As a result, the revenues 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 issuing services which are deemed other services - recognized at point in time. Services transferred over time relate to the amortization of deferred revenue for services provided as part of the merchant contract (note 2.1) and terminal services fees as part of the unified commerce offering. | ||
Types of goods or service | 2022 | 2021 |
Settlement fees | 8,270,626 | 5,525,079 |
Processing fees | 387,541 | 289,824 |
Sales of goods | 55,710 | 33,042 |
Other services | 221,734 | 147,474 |
Total revenue from contracts with customers | 8,935,611 | 5,995,419 |
Costs incurred from financial institutions | (7,550,960) | (4,960,951) |
Costs of goods sold | (54,485) | (32,951) |
Net revenue | 1,330,166 | 1,001,517 |
Accounting policy \u2013 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 a transparent pricing model and charges fees to merchants based on its own incurred costs plus a mark-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\u2019s platform and recognized 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. Adyen considers this performance obligation to be distinct from its payment services. As a result, the revenues 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 issuing services which are deemed other services - recognized at point in time. Services transferred over time relate to the amortization of deferred revenue for services provided as part of the merchant contract (note 2.1) and terminal services fees as part of the unified commerce offering. | ||
Types of goods or service | 2022 | 2021 |
Settlement fees | 8,270,626 | 5,525,079 |
Processing fees | 387,541 | 289,824 |
Sales of goods | 55,710 | 33,042 |
Other services | 221,734 | 147,474 |
Total revenue from contracts with customers | 8,935,611 | 5,995,419 |
Costs incurred from financial institutions | (7,550,960) | (4,960,951) |
Costs of goods sold | (54,485) | (32,951) |
Net revenue | 1,330,166 | 1,001,517 |
Accounting policy \u2013 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 a transparent pricing model and charges fees to merchants based on its own incurred costs plus a mark-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\u2019s platform and recognized 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. Adyen considers this performance obligation to be distinct from its payment services. As a result, the revenues 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 issuing services which are deemed other services - recognized at point in time. Services transferred over time relate to the amortization of deferred revenue for services provided as part of the merchant contract (note 2.1) and terminal services fees as part of the unified commerce offering. | ||
Key Judgement \u2013 Principal versus agent for revenue out of settlement fees Adyen applied its judgment in determining whether it has control of the full payment service before the service is transferred to its merchants, and, in consequence, whether the Company is acting as agent or principal in relation to the settlement fees charged to merchants. This judgement is supported by existing facts and circumstances during the year up to 31 December 2022, not limited to Adyen\u2019s 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\u2019s payment processing and acquiring services to merchants, for which interchange 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. Based on existing terms and conditions, Adyen is considered 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 is responsible for its contractual terms with merchants. Adyen is thus considered to control the full payment service before the service is transferred to merchants. Settlement fees \u2013 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 recognized based on this conclusion. | ||
Accounting policy \u2013 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 (\u2018goods and services transferred at a point in time\u2019). In addition to the aforementioned revenue streams, Adyen provides terminal replacement services included in \u2018other services\u2019, for which revenue is recognized over a period of time. Adyen recognizes revenue for these services on a straight-line basis over the contract term. | ||
Element | Accounting treatment | Note reference | ||
Contract assets | Contract assets are initially recognized at cost on the balance sheet, and subsequently amortized against revenue (settlement fees) in profit or loss on a pro rata basis in line with the fulfilment of the expected payment services performance obligation. The contract assets are separated into a monetary and non-monetary component and are assessed for impairment annually with reference to the remaining (net) benefits from the 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 expected credit loss model. Exchange movements on the \"monetary item\" is recognized in profit or loss (other financial results). The monetary component has been fully repaid and amortized in 2022. | ||||
Settled by: | ||||
1. Cash advance | Cash 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 fair value and are subsequently stated on the balance sheet at fair value, with movements 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 moment that the processed merchant volume exceeds the milestone amount in a single 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). | 2.2. Contract assets 8. Capital management 11. Financial instruments 23. Share information | ||
After the IPO (on June 13, 2018), the derivative liabilities relating to tranches 1 and 2 were reclassified as a warrant reserve in equity in the amount of EUR 68.2 million. During 2021, the first tranche milestone was met, vested, and the related warrant was subsequently exercised by eBay. A total of 403,724 shares were issued to eBay at \u20ac240 per share. The gross equity balance relating to tranche 1 and related deferred tax were transferred from \u2018warrant reserve\u2019 to \u2018share premium\u2019 and \u2018retained earnings\u2019, respectively. The dilutive effect of the exercised warrant in 2021 (tranche 1) was reflected in the shares outstanding at year-end - refer to note 23 \u2018Share information\u2019. There were no further tranche milestones met during 2022. As per December 31, 2022, the \u2018warrant reserve\u2019 was carried at historic cost (EUR 34.1 million\u00a0 (net of deferred tax)) while the derivative liabilities relating to tranches 3 and 4 were carried at fair value on Adyen's balance sheet. | ||||
Accounting policy \u2013 Contract assets Recognition and measurement If an incurred fee or commission is not paid in connection with any distinct goods or services, it should be considered as a reduction of the total transaction price of a contract with a customer. As a result, this incurred fee or commission should be deducted from revenue when revenue is recognized for providing the services to the customer. These considerations are recognized as contract assets in the 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 merchant contract, 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 line with the fulfilment of the expected payment services performance obligation. For the monetary component of the contract asset, Adyen applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables, other financial assets measured at amortized cost and the contract asset. | ||
Accounting policy \u2013 Contract assets Recognition and measurement If an incurred fee or commission is not paid in connection with any distinct goods or services, it should be considered as a reduction of the total transaction price of a contract with a customer. As a result, this incurred fee or commission should be deducted from revenue when revenue is recognized for providing the services to the customer. These considerations are recognized as contract assets in the 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 merchant contract, 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 line with the fulfilment of the expected payment services performance obligation. For the monetary component of the contract asset, Adyen applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables, other financial assets measured at amortized cost and the contract asset. | ||
Accounting policy \u2013 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\u2019s Chief Operating Decision Maker (\u201cCODM\u201d) 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 assessment of the allocation of resources and performance of the operating segments identified. Based on Adyen\u2019s business and operating model, Adyen has identified a single operating and reporting segment: \u2018Payment services\u2019. Payment services The total revenue earned from Adyen\u2019s 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\u00a0 \u2013\u00a0 refer to note 2.4 for further explanation on the non-IFRS measures reported by Adyen. | ||
Revenue - Geographical breakdown | 2022 | 2021 |
Europe, the Middle East, and Africa (EMEA) | 3,430,434 | 2,351,662 |
North America | 4,289,241 | 2,899,788 |
Asia-Pacific | 784,189 | 436,185 |
Latin America | 431,747 | 307,784 |
Total revenue from contracts with customers | 8,935,611 | 5,995,419 |
Non-current assets - Geographical breakdown | 2022 | 2021 |
Netherlands | 307,911 | 288,788 |
Rest of the World | 227,304 | 151,724 |
Non-current assets | 535,215 | 440,512 |
Net revenue - Geographical breakdown and year-on-year growth | 2022 | YoY% | 2021 | YoY% |
Europe, the Middle East, and Africa (EMEA) | 746,823 | 25% | 599,332 | 41% |
North America | 343,158 | 48% | 231,406 | 74% |
Asia-Pacific | 142,346 | 48% | 96,086 | 48% |
Latin America | 97,839 | 31% | 74,693 | 24% |
Total net revenue from contracts with customers | 1,330,166 | 33% | 1,001,517 | 46% |
Selected non-IFRS financial measures | 2022 | 2021 |
Income before net finance income/(expense) and income taxes | 664,675 | 594,981 |
Amortization and depreciation | 63,613 | 35,011 |
EBITDA | 728,288 | 629,992 |
Net revenue | 1,330,166 | 1,001,517 |
EBITDA margin (%) | 55% | 63% |
Purchases of plant and equipment | 95,575 | 51,387 |
Capitalization of intangible assets | 3,523 | 2,959 |
CapEx | 99,098 | 54,346 |
EBITDA | 728,288 | 629,992 |
CapEx | (99,098) | (54,346) |
Lease payments | (22,144) | (9,045) |
Free cash flow | 607,046 | 566,601 |
Free cash flow | 607,046 | 566,601 |
EBITDA | 728,288 | 629,992 |
Free cash flow conversion ratio (%) | 83% | 90% |
Accounting policy \u2013 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\u2019s Chief Operating Decision Maker (\u201cCODM\u201d) 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 assessment of the allocation of resources and performance of the operating segments identified. Based on Adyen\u2019s business and operating model, Adyen has identified a single operating and reporting segment: \u2018Payment services\u2019. Payment services The total revenue earned from Adyen\u2019s 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\u00a0 \u2013\u00a0 refer to note 2.4 for further explanation on the non-IFRS measures reported by Adyen. | ||
Accounting policy \u2013 Inventories Inventories are measured at the lower of cost or net realizable value. The cost of inventories is based on the first-in, first-out method (FIFO) and includes expenditure incurred in acquiring the inventories 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 | 2022 | 2021 |
Balance - January 1 | 22,138 | 19,548 |
Purchases during the year (products for resale) | 120,893 | 39,814 |
Costs of goods sold | (54,485) | (32,951) |
Transfer to contract assets (note 2.2) | \u2014 | (3,093) |
Expense recognized in other operating expenses | (655) | (1,180) |
Balance - December 31 | 87,891 | 22,138 |
Accounting policy \u2013 Inventories Inventories are measured at the lower of cost or net realizable value. The cost of inventories is based on the first-in, first-out method (FIFO) and includes expenditure incurred in acquiring the inventories 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. | ||
FTE per office | 2022 | 2021 |
Amsterdam | 1,941 | 1,262 |
San Francisco | 270 | 199 |
S\u00e3o Paulo | 146 | 88 |
New York | 139 | 72 |
Singapore | 127 | 101 |
London | 123 | 98 |
Paris | 75 | 51 |
Berlin | 67 | 48 |
Madrid | 64 | 32 |
Stockholm | 55 | 33 |
Other | 325 | 196 |
Total | 3,332 | 2,180 |
Accounting policy \u2013 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 share-based payments (refer to note 4.3). | ||
Employee benefits | 2022 | 2021 |
Salaries and wages | 317,817 | 187,133 |
Share-based compensation (note 4.3) | 10,499 | 12,008 |
Total wages and salaries | 328,316 | 199,141 |
Social securities | 43,811 | 35,413 |
Pension costs - defined contribution plans | 8,460 | 5,985 |
Total social securities and pension costs | 52,271 | 41,398 |
2022 | 2021 | |
Salaries and short-term employee benefits | 3,590 | 3,137 |
Share-based payments | 439 | 241 |
Post-employment benefits | 209 | 97 |
Total | 4,238 | 3,475 |
FTE per office | 2022 | 2021 |
Amsterdam | 1,941 | 1,262 |
San Francisco | 270 | 199 |
S\u00e3o Paulo | 146 | 88 |
New York | 139 | 72 |
Singapore | 127 | 101 |
London | 123 | 98 |
Paris | 75 | 51 |
Berlin | 67 | 48 |
Madrid | 64 | 32 |
Stockholm | 55 | 33 |
Other | 325 | 196 |
Total | 3,332 | 2,180 |
Accounting policy \u2013 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 share-based payments (refer to note 4.3). | ||
Accounting policy \u2013 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\u2019s pension plans are all classified as defined contribution plans. For defined contribution plans, the Group pays contributions to publicly or privately administered pension 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. | ||
Share-based compensation | 2022 | 2021 |
Equity-settled | 9 | 292 |
Cash-settled | 10,490 | 11,716 |
Total share-based compensation | 10,499 | 12,008 |
Accounting policy \u2013 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\u2019 and directors\u2019 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\u2019 and directors\u2019 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 each month, over the following 36 months.\u00a0 Options can be exercised at any time from the vesting date until the 8th anniversary of the grant date. Adyen has no legal or constructive obligation to repurchase or settle the options in cash. | ||
2022 | 2021 | |||
Share options outstanding | Weighted average exercise price (in EUR) per share option | Number of options (thousands) | Weighted average exercise price (in EUR) per share option | Number of options (thousands) |
Balance - January 1 | 53.63 | 147 | 39.20 | 344 |
Forfeited | 72.46 | (24) | 105.74 | (1) |
Exercised | 66.71 | (16) | 28.05 | (196) |
Balance - December 31 | 47.51 | 107 | 53.63 | 147 |
Accounting policy \u2013 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\u2019 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 each anniversary of the grant date,\u00a0 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\u2019s shares. The liability is measured at fair value through profit or loss using the market price of Adyen\u2019s shares at balance sheet date with remeasurements on each reporting date. Changes in the fair value are recognized as \u201cshare-based compensation expense\u201d. The expense reflecting the recognition of the grant date fair value and changes in fair value of the phantom share plan is presented in wages and salaries in the statement of comprehensive income. | ||
Accounting policy \u2013 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\u2019 and directors\u2019 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\u2019 and directors\u2019 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 each month, over the following 36 months.\u00a0 Options can be exercised at any time from the vesting date until the 8th anniversary of the grant date. Adyen has no legal or constructive obligation to repurchase or settle the options in cash. | ||
Accounting policy \u2013 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\u2019 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 each anniversary of the grant date,\u00a0 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\u2019s shares. The liability is measured at fair value through profit or loss using the market price of Adyen\u2019s shares at balance sheet date with remeasurements on each reporting date. Changes in the fair value are recognized as \u201cshare-based compensation expense\u201d. The expense reflecting the recognition of the grant date fair value and changes in fair value of the phantom share plan is presented in wages and salaries in the statement of comprehensive income. | ||
Accounting policy \u2013 Operating expenses Operating expenses are recognized in the period when they occur. | ||
Other operating expenses | 2022 | 2021 |
Sales and marketing costs | 55,630 | 36,384 |
Travel and other staff expenses | 44,086 | 10,102 |
IT costs | 33,086 | 23,190 |
Advisory costs | 27,722 | 15,711 |
Contractor costs | 13,489 | 10,384 |
Housing costs | 10,914 | 6,427 |
Office costs | 8,186 | 4,308 |
Miscellaneous operating expenses | 14,822 | 24,730 |
1% for the UN SDGs | 13,302 | \u2014 |
Total other operating expenses | 221,237 | 131,236 |
Accounting policy \u2013 Operating expenses Operating expenses are recognized in the period when they occur. | ||
Other financial results | 2022 | 2021 |
Exchange gains/(losses) (note 6.1) | (8,643) | 11,375 |
Fair value re-measurement of financial instruments: | ||
Derivative liabilities (note 6.2) | 46,700 | (13,300) |
Other financial assets at FVPL (note 6.3) | (153) | (322) |
Loss on redemption of other financial assets at amortized cost | \u2014 | (138) |
Total other financial results | 37,904 | (2,385) |
Financial instruments | Note | Measurement policy | 2022 | 2021 |
Financial assets: | ||||
Other financial assets at FVPL | FVPL \u2013 level 2 | 12,264 | 22,504 | |
Contract assets \u2013 monetary component | 2.2 | Amortized cost | \u2014 | 8,971 |
Receivables from merchants and financial institutions | 15 | Amortized cost | 369,104 | 633,249 |
Trade and other receivables | 15 | Amortized cost | 89,350 | 56,852 |
Cash and cash equivalents | 10 | Amortized cost | 6,522,345 | 4,616,094 |
Total | 6,993,063 | 5,337,670 | ||
Financial liabilities: | ||||
Derivative liabilities | FVPL \u2013 level 2 | 35,000 | 81,700 | |
Lease liability | 17 | Amortized cost | 203,073 | 142,964 |
Payable to merchants and financial institutions | 16 | Amortized cost | 4,795,804 | 3,608,531 |
Trade and other payables | 16 | Amortized cost | 147,827 | 100,116 |
Total | 5,181,704 | 3,933,311 |
Income taxes | 2022 | 2021 |
Current income tax expense | 153,656 | 126,898 |
Deferred income tax expense/(income) | 2,144 | (15,768) |
Total income taxes | 155,800 | 111,130 |
Current income tax receivables/(payables) | 2022 | 2021 |
Current income tax receivables | 12,445 | 6,761 |
Current income tax payables | (4,441) | (9,879) |
Accounting policy \u2013 Deferred income taxes Deferred income taxes arise, in general, as a result of temporary differences between tax and commercial 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 in determining taxable profit) that relates to remuneration settled by options over Adyen\u2019s shares. The amount of that tax deduction may differ from the related cumulative remuneration expense, and may 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 contracts (refer to note 2.1 \u2018Long-term merchant contract\u2019), 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 gross basis in the balance sheet. | ||
Balance January 1, 2021 | Recognized in Profit or Loss | Recognized in equity | Effects of foreign exchange | Balance December 31, 2021 | |
Deferred tax assets: | |||||
Derivative liabilities | 17,100 | 3,979 | 21,079 | ||
Windfall tax benefit | 43,934 | (33,384) | 2,258 | 12,808 | |
Tax losses carried forward | 43,085 | (939) | 38,932 | 5,394 | 86,472 |
Temporary differences | 2,218 | 5,205 | 7,423 | ||
Total deferred tax assets | 106,337 | 8,245 | 5,548 | 7,652 | 127,782 |
Deferred tax liabilities: | |||||
Other financial assets at FVPL | (4,527) | 4,527 | \u2014 | ||
Contract assets | (19,114) | 3,104 | (16,010) | ||
Temporary differences | (283) | (108) | (391) | ||
Total deferred tax liabilities | (23,924) | 7,523 | \u2014 | \u2014 | (16,401) |
Net deferred tax assets / (liabilities) | 82,413 | 15,768 | 5,548 | 7,652 | 111,381 |
Accounting policy \u2013 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 to tax payable in respect of previous years. | ||
Effective tax calculation | 2022 | 2021 |
Income before income taxes | 719,939 | 580,847 |
Statutory tax rate in the Netherlands (%) | 25.8% | 25% |
Income taxes based on statutory tax rate in the Netherlands | 185,744 | 145,212 |
Tax effects of: | ||
Innovation box | (37,306) | (31,163) |
Change in tax rate | 209 | |
Other adjustments (such as prior year and non-deductible amounts) | 7,362 | (3,128) |
Effective tax amount | 155,800 | 111,130 |
Income taxes | 2022 | 2021 |
Current income tax expense | 153,656 | 126,898 |
Deferred income tax expense/(income) | 2,144 | (15,768) |
Total income taxes | 155,800 | 111,130 |
Current income tax receivables/(payables) | 2022 | 2021 |
Current income tax receivables | 12,445 | 6,761 |
Current income tax payables | (4,441) | (9,879) |
Accounting policy \u2013 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 to tax payable in respect of previous years. | ||
Current income tax receivables/(payables) | 2022 | 2021 |
Current income tax receivables | 12,445 | 6,761 |
Current income tax payables | (4,441) | (9,879) |
Accounting policy \u2013 Deferred income taxes Deferred income taxes arise, in general, as a result of temporary differences between tax and commercial 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 in determining taxable profit) that relates to remuneration settled by options over Adyen\u2019s shares. The amount of that tax deduction may differ from the related cumulative remuneration expense, and may 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 contracts (refer to note 2.1 \u2018Long-term merchant contract\u2019), 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 gross basis in the balance sheet. | ||
Balance January 1, 2021 | Recognized in Profit or Loss | Recognized in equity | Effects of foreign exchange | Balance December 31, 2021 | |
Deferred tax assets: | |||||
Derivative liabilities | 17,100 | 3,979 | 21,079 | ||
Windfall tax benefit | 43,934 | (33,384) | 2,258 | 12,808 | |
Tax losses carried forward | 43,085 | (939) | 38,932 | 5,394 | 86,472 |
Temporary differences | 2,218 | 5,205 | 7,423 | ||
Total deferred tax assets | 106,337 | 8,245 | 5,548 | 7,652 | 127,782 |
Deferred tax liabilities: | |||||
Other financial assets at FVPL | (4,527) | 4,527 | \u2014 | ||
Contract assets | (19,114) | 3,104 | (16,010) | ||
Temporary differences | (283) | (108) | (391) | ||
Total deferred tax liabilities | (23,924) | 7,523 | \u2014 | \u2014 | (16,401) |
Net deferred tax assets / (liabilities) | 82,413 | 15,768 | 5,548 | 7,652 | 111,381 |
Accounting policy \u2013 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. | ||
Accounting policy \u2013 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. | ||
Accounting policy \u2013 Cash and cash equivalents Adyen\u2019s 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 maturities of 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 (less than 3 months), the fair value approximates the carrying\u00a0value. | ||
Cash and cash equivalents | 2022 | 2021 |
Cash held at central banks | 4,407,540 | 2,565,875 |
Cash held at banks, other than central banks | 2,114,805 | 2,050,219 |
Total | 6,522,345 | 4,616,094 |
Accounting policy \u2013 Cash and cash equivalents Adyen\u2019s 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 maturities of 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 (less than 3 months), the fair value approximates the carrying\u00a0value. | ||
Accounting policy \u2013 Financial instruments Classification Adyen classifies its financial assets in the following measurement categories, those to be measured: \u2022subsequently at fair value through profit or loss (\u2018FVPL\u2019), and \u2022at amortized cost. The classification depends on Adyen\u2019s business model for managing the financial assets and the contractual 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 terms of the contractual arrangement, and subsequently reassesses the accounting treatment on changes in circumstances. The derivative liabilities are classified as financial liabilities measured at fair 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. 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\u2019s business model for managing the asset and the cash flow characteristics of the asset. Adyen measures its debt instruments as follows: \u2022Amortized cost: Held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, where those cash flows represent solely payments of principal and interest. Interest income from these financial assets is included in finance income using the effective interest rate method. Financial assets and liabilities at fair value through profit or loss \u2022Assets that do not meet the criteria for amortized cost or fair value through other comprehensive income (\u2018FVOCI\u2019) 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, the group applies the simplified approach, which requires expected lifetime losses to be recognized from initial recognition of the assets. Instruments in scope on the balance sheet of Adyen include: cash and cash equivalents, receivables from 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: \u2022Category 1: Expected credit losses (12 months) \u2022Category 2: Lifetime expected credit losses 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 allowance for trade receivables are measured at initial recognition, and throughout the total duration, equal to lifetime expected credit losses. As the average duration of the instruments in scope for impairment calculation is below 10 days, no forward-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 the outstanding 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: \u2022Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. \u2022Level 2: The fair value of financial instruments that are not traded in an active market is determined 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 fair value an instrument are observable, the instrument is included in level 2. \u2022Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. | ||
Financial instruments | Note | Measurement policy | 2022 | 2021 |
Financial assets: | ||||
Other financial assets at FVPL | FVPL \u2013 level 2 | 12,264 | 22,504 | |
Contract assets \u2013 monetary component | 2.2 | Amortized cost | \u2014 | 8,971 |
Receivables from merchants and financial institutions | 15 | Amortized cost | 369,104 | 633,249 |
Trade and other receivables | 15 | Amortized cost | 89,350 | 56,852 |
Cash and cash equivalents | 10 | Amortized cost | 6,522,345 | 4,616,094 |
Total | 6,993,063 | 5,337,670 | ||
Financial liabilities: | ||||
Derivative liabilities | FVPL \u2013 level 2 | 35,000 | 81,700 | |
Lease liability | 17 | Amortized cost | 203,073 | 142,964 |
Payable to merchants and financial institutions | 16 | Amortized cost | 4,795,804 | 3,608,531 |
Trade and other payables | 16 | Amortized cost | 147,827 | 100,116 |
Total | 5,181,704 | 3,933,311 |
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, the group applies the simplified approach, which requires expected lifetime losses to be recognized from initial recognition of the assets. Instruments in scope on the balance sheet of Adyen include: cash and cash equivalents, receivables from 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: \u2022Category 1: Expected credit losses (12 months) \u2022Category 2: Lifetime expected credit losses 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 allowance for trade receivables are measured at initial recognition, and throughout the total duration, equal to lifetime expected credit losses. As the average duration of the instruments in scope for impairment calculation is below 10 days, no forward-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 the outstanding 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: \u2022Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. \u2022Level 2: The fair value of financial instruments that are not traded in an active market is determined 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 fair value an instrument are observable, the instrument is included in level 2. \u2022Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. | ||
Accounting policy \u2013 Financial instruments Classification Adyen classifies its financial assets in the following measurement categories, those to be measured: \u2022subsequently at fair value through profit or loss (\u2018FVPL\u2019), and \u2022at amortized cost. The classification depends on Adyen\u2019s business model for managing the financial assets and the contractual 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 terms of the contractual arrangement, and subsequently reassesses the accounting treatment on changes in circumstances. The derivative liabilities are classified as financial liabilities measured at fair 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. 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\u2019s business model for managing the asset and the cash flow characteristics of the asset. Adyen measures its debt instruments as follows: \u2022Amortized cost: Held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, where those cash flows represent solely payments of principal and interest. Interest income from these financial assets is included in finance income using the effective interest rate method. Financial assets and liabilities at fair value through profit or loss \u2022Assets that do not meet the criteria for amortized cost or fair value through other comprehensive income (\u2018FVOCI\u2019) 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, the group applies the simplified approach, which requires expected lifetime losses to be recognized from initial recognition of the assets. Instruments in scope on the balance sheet of Adyen include: cash and cash equivalents, receivables from 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: \u2022Category 1: Expected credit losses (12 months) \u2022Category 2: Lifetime expected credit losses 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 allowance for trade receivables are measured at initial recognition, and throughout the total duration, equal to lifetime expected credit losses. As the average duration of the instruments in scope for impairment calculation is below 10 days, no forward-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 the outstanding 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: \u2022Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. \u2022Level 2: The fair value of financial instruments that are not traded in an active market is determined 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 fair value an instrument are observable, the instrument is included in level 2. \u2022Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. | ||
Accounting policy \u2013 Financial instruments Classification Adyen classifies its financial assets in the following measurement categories, those to be measured: \u2022subsequently at fair value through profit or loss (\u2018FVPL\u2019), and \u2022at amortized cost. The classification depends on Adyen\u2019s business model for managing the financial assets and the contractual 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 terms of the contractual arrangement, and subsequently reassesses the accounting treatment on changes in circumstances. The derivative liabilities are classified as financial liabilities measured at fair 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. 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\u2019s business model for managing the asset and the cash flow characteristics of the asset. Adyen measures its debt instruments as follows: \u2022Amortized cost: Held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, where those cash flows represent solely payments of principal and interest. Interest income from these financial assets is included in finance income using the effective interest rate method. Financial assets and liabilities at fair value through profit or loss \u2022Assets that do not meet the criteria for amortized cost or fair value through other comprehensive income (\u2018FVOCI\u2019) 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, the group applies the simplified approach, which requires expected lifetime losses to be recognized from initial recognition of the assets. Instruments in scope on the balance sheet of Adyen include: cash and cash equivalents, receivables from 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: \u2022Category 1: Expected credit losses (12 months) \u2022Category 2: Lifetime expected credit losses 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 allowance for trade receivables are measured at initial recognition, and throughout the total duration, equal to lifetime expected credit losses. As the average duration of the instruments in scope for impairment calculation is below 10 days, no forward-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 the outstanding 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: \u2022Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. \u2022Level 2: The fair value of financial instruments that are not traded in an active market is determined 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 fair value an instrument are observable, the instrument is included in level 2. \u2022Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. | ||
Accounting policy \u2013 Financial instruments Classification Adyen classifies its financial assets in the following measurement categories, those to be measured: \u2022subsequently at fair value through profit or loss (\u2018FVPL\u2019), and \u2022at amortized cost. The classification depends on Adyen\u2019s business model for managing the financial assets and the contractual 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 terms of the contractual arrangement, and subsequently reassesses the accounting treatment on changes in circumstances. The derivative liabilities are classified as financial liabilities measured at fair 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. 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\u2019s business model for managing the asset and the cash flow characteristics of the asset. Adyen measures its debt instruments as follows: \u2022Amortized cost: Held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, where those cash flows represent solely payments of principal and interest. Interest income from these financial assets is included in finance income using the effective interest rate method. Financial assets and liabilities at fair value through profit or loss \u2022Assets that do not meet the criteria for amortized cost or fair value through other comprehensive income (\u2018FVOCI\u2019) 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, the group applies the simplified approach, which requires expected lifetime losses to be recognized from initial recognition of the assets. Instruments in scope on the balance sheet of Adyen include: cash and cash equivalents, receivables from 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: \u2022Category 1: Expected credit losses (12 months) \u2022Category 2: Lifetime expected credit losses 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 allowance for trade receivables are measured at initial recognition, and throughout the total duration, equal to lifetime expected credit losses. As the average duration of the instruments in scope for impairment calculation is below 10 days, no forward-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 the outstanding 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: \u2022Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. \u2022Level 2: The fair value of financial instruments that are not traded in an active market is determined 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 fair value an instrument are observable, the instrument is included in level 2. \u2022Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. | ||
Financial instruments | Note | Measurement policy | 2022 | 2021 |
Financial assets: | ||||
Other financial assets at FVPL | FVPL \u2013 level 2 | 12,264 | 22,504 | |
Contract assets \u2013 monetary component | 2.2 | Amortized cost | \u2014 | 8,971 |
Receivables from merchants and financial institutions | 15 | Amortized cost | 369,104 | 633,249 |
Trade and other receivables | 15 | Amortized cost | 89,350 | 56,852 |
Cash and cash equivalents | 10 | Amortized cost | 6,522,345 | 4,616,094 |
Total | 6,993,063 | 5,337,670 | ||
Financial liabilities: | ||||
Derivative liabilities | FVPL \u2013 level 2 | 35,000 | 81,700 | |
Lease liability | 17 | Amortized cost | 203,073 | 142,964 |
Payable to merchants and financial institutions | 16 | Amortized cost | 4,795,804 | 3,608,531 |
Trade and other payables | 16 | Amortized cost | 147,827 | 100,116 |
Total | 5,181,704 | 3,933,311 |
Source of risk and risk description | Risk mitigation | Remaining risk | ||||||
Market risks | Minimal | |||||||
Foreign exchange risk | ||||||||
Adyen operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises on recognized assets and liabilities (principally trade and merchant flow related receivables and payables) and investments in foreign operations. | Adyen actively manages the foreign exchange risk resulting in limited exposure to foreign exchange risks. USD is the most significant non- functional currency exposure as at December 31, 2022 and 2021. The following table highlights the net exposure to this monetary item currency 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 short period to settle, and hence, limited foreign exchange risk on these instruments. The decrease in net exposure is due to the eBay monetary item being fully amortized during 2022 (refer to note 2.1 for further details) and sale of\u00a0 Visa Inc. common stock (refer to note 11 for further details). | Adyen has limits on its open FX position per individual currency and for Adyen as a whole. The open positions including the impact of an immediate 10% shock remain within Adyen\u2019s risk appetite. | ||||||
Currency | Net exposure | 10% shock | ||||||
31/12/2021 | ||||||||
USD | EUR 32 million | EUR 3.2 million | ||||||
31/12/2022 | ||||||||
USD | EUR 12 million | EUR 1.2 million | ||||||
The merchant funds have a natural match in currencies between receivables and payables or a very short duration. 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. |
Source of risk and risk description | Risk mitigation | Remaining risk | ||||||
Interest rate risk | ||||||||
Interest rate risk on financial instruments is the risk of adverse impact of movements of the interest rates of underlying financial assets. | Interest rate risk arising from maturity and tenor mismatches in assets and liabilities 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\u2019s lease liabilities is considered immaterial due to a fixed discount rate (determined with reference to Adyen\u2019s incremental borrowing rate) and nominal 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, majority of cash balances of Adyen are not significantly exposed to interest rate risk because that cash is used to settle the current liabilities towards the merchants at short notice. The nominal values of the money-market funds are minimal as compared to the overall financial instruments balance. In addition, they are short-term in nature given the nature of underlying assets, and are held for short-term use (overnight clearing of funds to avoid excess concentration risk). Overall, this leads to minimal interest rate risk for Adyen. For the volatility analysis we performed on the interest rate risk exposure we have on our cash and cash equivalent balances as per year-end refer to note 10. For the limited amount of interest-bearing balances that Adyen holds, negative interest rates applied for the period up to 31 October 2022 on the DNB Target 2 account, after which positive interest was earned. | Due to the nature of Adyen\u2019s assets and liabilities, Adyen experiences low interest rate risk and maintains within its risk appetite. |
Source of risk and risk description | Risk mitigation | Remaining risk | ||||||
Equity price risk | ||||||||
The risk that the fair value of equities changes as a result of changes in the\u00a0 value of individual stocks. | The Group\u2019s 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 the balance sheet as derivative liabilities. The exposure is affected by share price movements of Adyen shares. Adyen carried out a sensitivity analysis on the Visa Inc. preferred shares and derivative 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 other circumstances considered equal: | The remaining equity price risk is considered limited as Adyen has no other equity instruments on its balance sheet. The risk appetite on equity price risk is low and therefore the residual risk is within risk appetite. | ||||||
Balance sheet item | Carrying amount | 5% underlying share price movement | ||||||
31/12/2021 | ||||||||
Visa Inc. preferred shares | EUR 23 million | EUR 1 million | ||||||
Derivative liabilities | EUR 82 million | EUR 4 million (5%) | ||||||
31/12/2022 | ||||||||
Visa Inc. preferred shares | EUR 12 million | EUR 1 million | ||||||
Derivative liabilities | EUR 35 million | EUR 2 million (5%) | ||||||
In addition, Adyen\u2019s Treasury policy does not allow purchasing additional equity positions (excluding treasury shares). | ||||||||
Credit risks | Minimal | |||||||
Counterparty default risk | ||||||||
The counterparty default (credit) risk relates to receivables from financial institutions regarding settled payment transactions. A default of financial institution counterparties could have a negative impact on Adyen\u2019s financial results. | Financial assets subject to credit risk: Cash and cash equivalents, and receivables from merchants and financial institutions: Adyen\u2019s 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\u2019s eligible capital, provided that the financial institution has a credit rating in the A categories of Moody\u2019s/S&P or, if not available, its equivalent from other rating agencies Adyen has conservatively translated this amount into an internal limit of EUR 491 million. For financial institutions with lower credit ratings, the credit risk per financial institution is maximized to EUR 200 million under business-as- usual conditions. Neither limit was breached during the year ended December 31, 2022. As per December 31, 2022, EUR 4,407,540 (2021: EUR 2,565,875) represents cash held at central banks, representing 68% (2021: 56%) of the cash and cash equivalents balance. Excluding the cash held at central banks, Adyen\u2019s top 10 exposures include balances held at institutions with credit rating A or higher, representing 91% of the balance of cash and cash equivalents, and 2% of receivables from merchants and financial institutions - combined top 10 exposures: 28% (2021: 63%). 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, 2022 the total collateral was EUR 31,086 (BRL 175,828) (2021: EUR 39,125 (BRL 250,157). Adyen has no other collateral accounts to meet its other regulatory requirements. No defaults of institutions where Adyen had an exposure to 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 monetary component of the contract assets The remaining financial asset credit risk exposure (such as trade and other receivables) is considered to be limited. | The remaining counterparty credit risk is low as is Adyen\u2019s risk appetite. Therefore, Adyen residual risk on counterparty default risk remains within risk appetite. | ||||||
Concentration risk | ||||||||
Risk of losses stemming from on- and off-balance sheet positions arising from concentrations in exposures to a counterparty or a group of connected counterparties. | Concentration risk at Adyen originates primarily at banking partners in locations where there are no own direct acquiring licenses. In 2021 and 2022, Adyen has reduced its concentration risk in exposures held at financial institutions evident by the low proportion of top 10 exposures within Adyen\u2019s total financial assets. The residual credit risk is mitigated by the short-term maturity of these balances of less than 7 days. 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 ensure compliance with the large exposure limit. | The remaining credit risk remains is low where Adyen\u2019s risk appetite for concentration risk is moderate. Therefore, the residual risk is within risk appetite. |
Accounting policy \u2013 Intangible assets The intangible assets are stated at cost less accumulated amortization and include internally generated software with finite useful lives. These assets are capitalized and subsequently amortized on a straight-line basis in the statement of comprehensive income over the period with an estimated useful life of 5 years. Intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The useful life is assessed on an annual basis. | ||
Intangible assets | 2022 | 2021 |
Internally generated software | ||
Cost | 22,776 | 19,817 |
Accumulated amortization | (12,935) | (9,847) |
Balance - January 1 | 9,841 | 9,970 |
Additions | 3,523 | 2,959 |
Amortization for the year | (5,224) | (3,088) |
Total as at December 31 | 8,140 | 9,841 |
Cost | 23,029 | 22,776 |
Accumulated amortization | (14,889) | (12,935) |
Total as at December 31 | 8,140 | 9,841 |
Accounting policy \u2013 Plant and equipment Plant and equipment are stated at cost less accumulated depreciation. Repairs and maintenance costs 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 on a straight-line basis and are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The useful life is assessed on an annual basis. | ||
Accounting policy \u2013 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 are classified at amortized cost, initially recognized at fair value and subsequently measured at amortized 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 from financial institutions: 1-2 days; receivables from merchants: 30 days).\u00a0 Due to the short duration of all the receivables (overall average of less than 3 months) the fair value approximates the carrying value. | ||
Trade and other receivables | 2022 | 2021 |
Trade and other receivables | 93,399 | 61,294 |
Less: Allowance for expected credit losses | (4,049) | (4,442) |
Balance - Trade receivables - Net | 89,350 | 56,852 |
Receivables from merchants and financial institutions | 369,104 | 633,249 |
Total | 458,454 | 690,101 |
Receivables from merchants and financial institutions | 2022 | 2021 |
Receivables from financial institutions | 279,106 | 561,578 |
Receivables from merchants | 89,998 | 71,671 |
Balance - December 31 | 369,104 | 633,249 |
Accounting policy \u2013 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 are classified at amortized cost, initially recognized at fair value and subsequently measured at amortized 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 from financial institutions: 1-2 days; receivables from merchants: 30 days).\u00a0 Due to the short duration of all the receivables (overall average of less than 3 months) the fair value approximates the carrying value. | ||
Accounting policy \u2013 Trade and other payables Payables are obligations initially recognized at fair value and subsequently measured at amortized cost to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Payables are classified as current liabilities if payment is due within one year or less. Due to the very short duration of the payables (average less than 3 months) the fair value approximates the carrying value. | ||
Trade and other payables | 2022 | 2021 |
Trade payables | 19,922 | 8,989 |
Taxes and social security | 55,593 | 51,418 |
Accrued employee benefits | 30,041 | 26,269 |
Accrued liabilities and other debts | 33,105 | 5,996 |
Cash-settled share-based payment plan - current portion | 9,166 | 7,444 |
Trade and other payables | 147,827 | 100,116 |
Payables to merchants and financial institutions | 4,795,804 | 3,608,531 |
Total | 4,943,631 | 3,708,647 |
Accounting policy \u2013 Trade and other payables Payables are obligations initially recognized at fair value and subsequently measured at amortized cost to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Payables are classified as current liabilities if payment is due within one year or less. Due to the very short duration of the payables (average less than 3 months) the fair value approximates the carrying value. | ||
Accounting policy \u2013 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 lease commencement 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 of comprehensive income on a straight-line basis over the lease term. | ||
Right-of-use assets | 2022 | 2021 |
Offices and data centers | ||
Cost | 168,630 | 149,732 |
Accumulated depreciation | (40,567) | (25,404) |
Balance - January 1 | 128,063 | 124,328 |
Additions | 81,060 | 19,114 |
Depreciation for the period | (30,035) | (16,608) |
Other movements (e.g. exchange differences) | 2,588 | 1,229 |
Balance - December 31 | 181,676 | 128,063 |
Recognized right-of-use asset | 249,760 | 168,630 |
Accumulated depreciation | (68,084) | (40,567) |
Balance - December 31 | 181,676 | 128,063 |
Lease liability | 2022 | 2021 |
Balance - January 1 | 142,964 | 131,485 |
Additions | 81,060 | 19,114 |
Lease instalments | (25,516) | (11,541) |
Interest expense | 3,372 | 2,496 |
Other movements (e.g. exchange differences) | 1,193 | 1,410 |
Balance - December 31 | 203,073 | 142,964 |
Current portion | 33,200 | 22,996 |
Non-current portion | 169,873 | 119,968 |
Minimum future lease payments | 2022 | 2021 |
Within 1 year | 34,460 | 20,327 |
Between 1 and 2 years | 35,103 | 21,326 |
Between 2 and 3 years | 33,135 | 21,331 |
Between 3 and 4 years | 27,890 | 20,979 |
Between 4 and 5 years | 21,748 | 14,780 |
Later than 5 years | 49,870 | 71,564 |
Total | 202,206 | 170,307 |
Accounting policy \u2013 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 lease commencement 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 of comprehensive income on a straight-line basis over the lease term. | ||
Related party assets/ (liabilities) | 2022 | 2021 |
Supervisory Board | 115 | \u2014 |
Employees (STAK) | 3,627 | 66 |
2022 | 2021 | |||||
PwC Accountants | Other PwC firms* | Total | PwC Accountants | Other PwC firms* | Total | |
Audit of financial statements | 842 | 713 | 1,555 | 655 | 541 | 1,196 |
Other audit services | 333 | \u2014 | 333 | 292 | \u2014 | 292 |
Total | 1,175 | 713 | 1,888 | 947 | 541 | 1,488 |
2022 | 2021 | |
Salaries and short-term employee benefits | 3,590 | 3,137 |
Share-based payments | 439 | 241 |
Post-employment benefits | 209 | 97 |
Total | 4,238 | 3,475 |
Accounting policy \u2013 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)\u00a0 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 at December 31, 2022, only the warrant related to tranche 1 vested (and exercised), while no warrants\u00a0 vested in the current year. Therefore, the issued shares relating to tranche 1 is reflected in the calculation of ordinary shares. 2)\u00a0 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 | 2022 | 2021 |
Net income attributable to owners of Adyen N.V. (in EUR '000) | 564,139 | 469,717 |
Weighted average number of ordinary shares for the period | 30,975,325 | 30,499,194 |
Dilutive effect of share options | 70,704 | 176,621 |
Weighted average number of ordinary shares for diluted net profit for the period | 31,046,029 | 30,675,815 |
Net profit per share \u2013 basic | 18.21 | 15.40 |
Net profit per share - diluted | 18.17 | 15.31 |
Note | 2022 | 2021 | |
Revenue | 26 | 7,575,105 | 5,233,538 |
Costs incurred from financial institutions | 26 | (6,340,102) | (4,387,767) |
Costs of goods sold | 26 | (46,564) | (29,177) |
Net revenue | 1,188,439 | 816,594 | |
Wages and salaries | 27 | (269,641) | (112,618) |
Social securities and pension costs | 27 | (39,700) | (22,560) |
Amortization and depreciation | 13,30,31 | (46,720) | (25,752) |
Other operating expenses | 28 | (182,750) | (99,529) |
Other income | (54) | 250 | |
Income before net finance expense and income taxes | 649,574 | 556,385 | |
Finance income | 27,048 | 62 | |
Finance expense | (11,251) | (12,379) | |
Other financial results | 29 | 27,107 | (3,436) |
Net finance expense | 42,904 | (15,753) | |
Note | 2022 | 2021 | |
Share of the profit of investments in subsidiaries | 32 | 21,351 | 38,002 |
Income before income taxes | 713,829 | 578,634 | |
Income taxes | (149,690) | (108,917) | |
Net income for the year | 564,139 | 469,717 | |
Net income attributable to owners of Adyen N.V. | 564,139 | 469,717 | |
Other comprehensive income/ (expense) | |||
Items that may be reclassified to profit or loss | |||
Currency translation adjustments subsidiaries | (1,326) | 11,373 | |
Other comprehensive income/ (expense) for the year | (1,326) | 11,373 | |
Total comprehensive income for the year (attributable to owners of Adyen N.V.) | 562,813 | 481,090 |
Note | December 31, 2022 | December 31, 2021 | |
Share capital | 8 | 310 | 310 |
Share premium | 8 | 352,399 | 335,725 |
Legal reserves | 18,518 | 32,244 | |
Other reserves | 150,298 | 127,717 | |
Retained earnings | 1,326,454 | 844,701 | |
Net income for the year | 564,139 | 469,717 | |
Total equity attributable to owners of Adyen N.V. | 2,412,118 | 1,810,414 | |
Derivative liabilities | 11 | 35,000 | 81,700 |
Deferred tax liabilities | 10,749 | 16,010 | |
Lease liability | 31 | 150,278 | 106,622 |
Total non-current liabilities | 196,027 | 204,332 | |
Payables to merchants and financial institutions | 36 | 4,336,872 | 3,352,592 |
Trade and other payables | 36 | 126,274 | 74,772 |
Lease liability | 31 | 23,442 | 17,260 |
Current income tax payables | 3,174 | 8,846 | |
Total current liabilities | 4,489,762 | 3,453,470 | |
Total liabilities and equity | 7,097,907 | 5,468,216 |
\u00a0 | Other reserves | |||||||
Note | Share capital | Share premium | Legal reserves | Share-based payment reserve | Warrant reserve | Retained earnings | Total equity | |
Balance - January 1, 2021 | 304 | 194,608 | 14,853 | 98,034 | 53,401 | 856,934 | 1,218,134 | |
Net income for the year | 469,717 | 469,717 | ||||||
Currency translation adjustments | 11,373 | 11,373 | ||||||
Total comprehensive income for the year | \u2014 | \u2014 | 11,373 | \u2014 | \u2014 | 469,717 | 481,090 | |
Adjustments: | ||||||||
Other financial assets at FVPL movement (net of deferred tax) | 6,148 | (6,148) | \u2014 | |||||
Intangible assets | (130) | 130 | \u2014 | |||||
Other adjustments | 59 | 59 | ||||||
\u2014 | \u2014 | 6,018 | \u2014 | \u2014 | (5,959) | 59 | ||
Transactions with owners in their capacity as owners: | ||||||||
Equity transfer on exercise of warrant | 2.1 | 34,100 | \u2014 | (26,700) | (7,400) | \u2014 | ||
Deferred tax on share-based compensation | 7 | \u2014 | 5,548 | 5,548 | ||||
Options exercised | 1,732 | (1,732) | \u2014 | |||||
Proceeds on issuing shares | 8 | 6 | 105,285 | 105,291 | ||||
Share-based payments | 4.3 | 292 | 292 | |||||
Other adjustments | (1,126) | 1,126 | \u2014 | |||||
6 | 141,117 | \u2014 | 4,108 | (27,826) | (6,274) | 111,131 | ||
Balance - December 31, 2021 | 310 | 335,725 | 32,244 | 102,142 | 25,575 | 1,314,418 | 1,810,414 |
\u00a0 | Other reserves | |||||||
Note | Share capital | Share premium | Legal reserves | Share-based payment reserve | Warrant reserve | Retained earnings | Total equity | |
Balance - January 1, 2022 | 310 | 335,725 | 32,244 | 102,142 | 25,575 | 1,314,418 | 1,810,414 | |
Net income for the year | 564,139 | 564,139 | ||||||
Currency translation adjustments | (1,326) | (1,326) | ||||||
Total comprehensive income for the year | \u2014 | \u2014 | (1,326) | \u2014 | \u2014 | 564,139 | 562,813 | |
Adjustments: | ||||||||
Other financial assets at FVPL movement (net of deferred tax) | (10,240) | 10,240 | \u2014 | |||||
Intangible assets | (2,160) | 2,160 | \u2014 | |||||
Other adjustments | 161 | (364) | (203) | |||||
\u2014 | \u2014 | (12,400) | 161 | \u2014 | 12,036 | (203) | ||
Transactions with owners in their capacity as owners: | ||||||||
Deferred tax on share-based compensation | 7 | 6,180 | 22,979 | \u2014 | 29,159 | |||
Options exercised | 568 | (568) | \u2014 | |||||
Proceeds on issuing shares | 8 | \u2014 | 9,926 | 9,926 | ||||
Share-based payments | 4.3 | 9 | 9 | |||||
Other adjustments | \u2014 | |||||||
\u2014 | 16,674 | \u2014 | 22,420 | \u2014 | \u2014 | 39,094 | ||
Balance - December 31, 2022 | 310 | 352,399 | 18,518 | 124,723 | 25,575 | 1,890,593 | 2,412,118 |
Note | 2022 | 2021 | |
Income before income taxes | 713,829 | 578,634 | |
Adjustments for: | |||
\u2013Finance income | (27,048) | (62) | |
\u2013Finance expenses | 11,251 | 12,379 | |
\u2013Other financial results | 29 | (27,107) | 3,436 |
\u2013Depreciation of plant and equipment | 30 | 21,725 | 11,733 |
\u2013Amortization of intangible fixed assets | 13 | 5,224 | 3,088 |
\u2013Depreciation of right-of-use assets | 31 | 19,771 | 10,931 |
\u2013Share of the profit of investments in subsidiaries | 32 | (21,351) | (38,002) |
\u2013Share-based payments | 7 | 114 | |
Changes in working capital: | |||
\u2013Inventories | (60,016) | (4,262) | |
\u2013Trade and other receivables | 33 | (120,662) | (86,573) |
\u2013Receivables from merchants and financial institutions | 33 | 281,638 | 286,624 |
\u2013Payables to merchants and financial institutions | 36 | 1,150,418 | 945,941 |
\u2013Trade and other payables | 51,490 | (1,918) | |
\u2013Amortization and additions of contract assets | 2.2 | 30,210 | 49,448 |
Cash generated from operations | 2,029,379 | 1,771,511 |
Types of goods or service | 2022 | 2021 |
Settlement fees | 7,042,045 | 4,838,701 |
Processing fees | 302,052 | 238,621 |
Sales of goods | 50,958 | 29,186 |
Other services | 180,050 | 127,030 |
Total revenue from contracts with customers | 7,575,105 | 5,233,538 |
Costs incurred from financial institutions | (6,340,102) | (4,387,767) |
Costs of goods sold | (46,564) | (29,177) |
Net revenue | 1,188,439 | 816,594 |
Employee benefits | 2022 | 2021 |
Salaries and wages | 260,246 | 107,353 |
Share-based compensation | 9,395 | 5,265 |
Total wages and salaries | 269,641 | 112,618 |
Social securities | 32,743 | 18,076 |
Pension costs - defined contribution plans | 6,957 | 4,484 |
Total social securities and pension costs | 39,700 | 22,560 |
Other operating expenses | 2022 | 2021 |
Sales and marketing costs | 43,263 | 23,363 |
Travel and other staff expenses | 35,458 | 7,133 |
IT costs | 27,163 | 18,659 |
Advisory costs | 24,271 | 12,213 |
Contractor costs | 12,828 | 10,264 |
Housing costs | 8,483 | 3,403 |
Office costs | 6,974 | 2,453 |
Miscellaneous operating expenses | 11,008 | 22,041 |
1% for the UN SDGs | 13,302 | |
Total other operating expenses | 182,750 | 99,529 |
Other financial results | 2022 | 2021 |
Exchange gains/(losses) (note 6.1) | (19,440) | 10,324 |
Fair value re-measurement of financial instruments: | ||
Derivative liabilities (note 6.2) | 46,700 | (13,300) |
Other financial assets at FVPL (note 6.3) | (153) | (322) |
Loss on redemption of other financial assets at amortized cost | \u2014 | (138) |
Total other financial results | 27,107 | (3,436) |
Plant and equipment | Computer Hardware and Software | Leasehold Improvements | Other | Total |
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) | \u2014 | \u2014 | (19) |
Depreciation for the year | (10,879) | (713) | (141) | (11,733) |
Other changes (e.g. exchange differences) | \u2014 | (2) | \u2014 | (2) |
Balance - December 31 | 42,703 | 7,828 | 1,539 | 52,070 |
2022 | ||||
Cost | 75,138 | 10,916 | 2,633 | 88,687 |
Accumulated depreciation | (32,435) | (3,088) | (1,094) | (36,617) |
Balance - January 1 | 42,703 | 7,828 | 1,539 | 52,070 |
Additions | 68,994 | 12,901 | 1,204 | 83,099 |
Disposals | (100) | \u2014 | \u2014 | (100) |
Depreciation for the year | (17,666) | (3,464) | (595) | (21,725) |
Other changes (e.g. exchange differences) | 80 | 89 | 83 | 252 |
Balance - December 31 | 94,011 | 17,354 | 2,231 | 113,596 |
Cost | 142,791 | 25,030 | 4,314 | 172,135 |
Accumulated depreciation | (48,780) | (7,676) | (2,083) | (58,539) |
Balance - December 31 | 94,011 | 17,354 | 2,231 | 113,596 |
Accounting policy \u2013 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 lease commencement 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 of comprehensive income on a straight-line basis over the lease term. | ||
Right-of-use assets | 2022 | 2021 |
Offices and data centers | ||
Cost | 133,908 | 119,070 |
Accumulated depreciation | (23,304) | (14,819) |
Balance - January 1 | 110,604 | 104,251 |
Additions | 62,745 | 17,232 |
Depreciation for the period | (19,771) | (10,931) |
Other movements | (249) | 52 |
Balance - December 31 | 153,329 | 110,604 |
Recognized right-of-use asset | 203,727 | 133,908 |
Accumulated depreciation | (50,398) | (23,304) |
Balance - December 31 | 153,329 | 110,604 |
Minimum future lease payments | 2022 | 2021 |
Within 1 year | 24,107 | 15,070 |
Between 1 and 2 years | 25,981 | 16,168 |
Between 2 and 3 years | 26,122 | 15,734 |
Between 3 and 4 years | 22,987 | 15,663 |
Between 4 and 5 years | 20,247 | 12,531 |
Later than 5 years | 45,750 | 64,381 |
Total | 165,194 | 139,547 |
Accounting policy \u2013 Investments in consolidated subsidiaries Adyen\u2019s 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\u2019s share of the results of the investees is reported in the company statement of comprehensive income and its share of movements in other comprehensive income is recognized in other comprehensive income. Investments are reviewed for impairment at least annually or whenever events or circumstances indicate that the carrying amount may not be recoverable. | ||
Investments in consolidated subsidiaries on equity method | 2022 | 2021 |
Balance - January 1 | 212,318 | 139,510 |
Investments in consolidated subsidiaries | 27,174 | 17,918 |
Liquidation of Adyen Inc. | (141,658) | \u2014 |
Share of the profit of investments in subsidiaries | 21,351 | 38,002 |
Currency translation adjustments subsidiaries | (1,326) | 11,373 |
Share of changes in equity of investments in subsidiaries | (2,829) | 5,875 |
Balance - December 31 | 115,030 | 212,318 |
Name | Legal Seat | Ownership percentage |
Adyen International B.V. | Amsterdam, The Netherlands | 100% |
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 |
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 |
Name | Legal Seat | Direct and indirect ownership percentage |
Adyen Services Inc. | Dover, DE, USA | 100% |
Adyen do Brazil Ltda | S\u00e3o 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 India Technology Services Private Limited | Mumbai, India | 100% |
Adyen Japan K.K. | Tokyo, Japan | 100% |
Adyen Middle East Limited | Dubai, United Arab Emirates | 100% |
Adyen MEA FZ-LLC | Dubai, United Arab Emirates | 100% |
Trade and other receivables | 2022 | 2021 |
Trade and other receivables | 245,025 | 290,970 |
Less: Allowance for expected credit losses | (3,395) | (3,862) |
Trade receivables - Net | 241,630 | 287,108 |
Receivables from Merchants and Financial Institutions | 222,009 | 503,647 |
Total | 463,639 | 790,755 |
Trade and other payables | 2022 | 2021 |
Trade payables | 17,080 | 7,014 |
Taxes and social security | 43,777 | 41,988 |
Accrued employee benefits | 22,565 | 17,579 |
Accrued liabilities and other debts | 29,660 | 2,571 |
Cash-settled share-based payment plan | 13,192 | 5,620 |
Trade and other payables | 126,274 | 74,772 |
Payables to merchants and financial institutions | 4,336,872 | 3,352,592 |
Total | 4,463,146 | 3,427,364 |