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 have a material impact when revised or refined. | |||
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 During 2023, Adyen amended its terms and conditions applicable to merchant agreements in order to specify the responsibilities of the services provided by financial institutions and network scheme providers involved in the payment processing and acquiring services. As a result, Adyen reassessed its key accounting judgment in relation to pass-through settlement fees (namely; interchange and payment network fees), and concluded it acts as agent in this arrangement. This change in terms and conditions resulted in a prospective accounting change, effective from January 1, 2023 whereby pass-through settlement fees are recognized on a net (agent) basis (i.e. no longer recognized gross in revenue and costs incurred from financial institutions).\u00a0 This change impacts the 'Revenue' and 'Costs incurred from financial institutions' lines in the statements of comprehensive income, with no change to net revenue. This change does not impact the 2022 comparative results, the non-IFRS financial measures or objectives. 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 a 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 a 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 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 (\"pass- through settlement fees\"). Adyen adopts a transparent pricing model and charges fees to merchants based on its own incurred costs (including interchange and payment network fees charged to merchants in a pass-through arrangement), plus a mark-up which is disclosed as \"Settlement fees\". Adyen applies its judgment in determining whether it has control of the full payment service inputs before the service is transferred to its merchants, and, in consequence, whether it is acting as agent or principal in relation to the settlement fees charged to merchants. Where Adyen is principal, it will present its acquiring mark-up and interchange and payment network fees passed on to merchants on a gross (principal) basis within revenue. Where Adyen is agent, it will present its acquiring mark-up on a gross (principal) basis, while the pass-through settlement fees will be presented within revenue on a net basis (i.e. not recognized gross in revenue and costs incurred from financial institutions). | ||
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 6.2 Derivative liabilities 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 2021 year-end.\u00a0 There were no further tranche milestones met during 2023. As per December 31, 2023, 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 at EUR 1,400 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. The unamortized portion of these considerations are recognized as contract assets in the balance sheet.\u00a0 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 services and sales of goods. The Management Board monitors net revenue 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 provide 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 established a cash-settled share-based payment plan (phantom shares) for newly hired directors and employees as well as for certain current employees until May 2023. 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, 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: \u2022 Assets, equity and liabilities \u2013 at the closing rate at the date of the statement of financial position; \u2022 Income 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 relating to options exercised in the United States at a Federal and State level (December 31, 2023: EUR 85,910; December 31, 2022: EUR 115,121) and windfall benefits relating to options granted and vested, however not yet exercised (December 31, 2023: EUR 2,519; December 31, 2022: 5,325). The balance as at December\u00a031, 2022 included tax losses carried forward in the United Kingdom which was fully utilized in the current year. An amount of EUR 11,196 of the tax losses carried forward was utilised during the period and recognised in the share premium reserve (2022: EUR 6,180). During 2023, Adyen has reassessed the recoverability of deferred tax assets on windfall benefits linked to the share-based compensation plan in the United States. Adyen continues to recognize deferred tax assets that will be realized against future profits, on a going concern basis. The United States Federal Tax windfall benefit continues to be recognized, as these carry forward losses on a Federal level have no expiration date. The State net operating losses continues to be recognized as these carry forward losses are expected to be utilized against future taxable income before its expiration date. 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: \u2022 subsequently at fair value through profit or loss (\u2018FVPL\u2019), and \u2022 at 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: \u2022 Amortized 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 \u2022 Assets 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: \u2022 Category 1: Expected credit losses (12 months) \u2022 Category 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: \u2022 Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. \u2022 Level 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. \u2022 Level 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 include internally generated software with finite useful lives, which are stated at cost less accumulated amortization and impairment.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 and impairment. 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 months; 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, 2023, 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 in the case of Adyen relates to share options and RSUs granted to employees (refer to Note 4.3). | ||
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 services and sales of goods. The Management Board monitors net revenue 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 provide 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 established a cash-settled share-based payment plan (phantom shares) for newly hired directors and employees as well as for certain current employees until May 2023. 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, 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 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 relating to options exercised in the United States at a Federal and State level (December 31, 2023: EUR 85,910; December 31, 2022: EUR 115,121) and windfall benefits relating to options granted and vested, however not yet exercised (December 31, 2023: EUR 2,519; December 31, 2022: 5,325). The balance as at December\u00a031, 2022 included tax losses carried forward in the United Kingdom which was fully utilized in the current year. An amount of EUR 11,196 of the tax losses carried forward was utilised during the period and recognised in the share premium reserve (2022: EUR 6,180). During 2023, Adyen has reassessed the recoverability of deferred tax assets on windfall benefits linked to the share-based compensation plan in the United States. Adyen continues to recognize deferred tax assets that will be realized against future profits, on a going concern basis. The United States Federal Tax windfall benefit continues to be recognized, as these carry forward losses on a Federal level have no expiration date. The State net operating losses continues to be recognized as these carry forward losses are expected to be utilized against future taxable income before its expiration date. 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 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, 2023, 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 in the case of Adyen relates to share options and RSUs 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 have a material impact when revised or refined. | |||
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 During 2023, Adyen amended its terms and conditions applicable to merchant agreements in order to specify the responsibilities of the services provided by financial institutions and network scheme providers involved in the payment processing and acquiring services. As a result, Adyen reassessed its key accounting judgment in relation to pass-through settlement fees (namely; interchange and payment network fees), and concluded it acts as agent in this arrangement. This change in terms and conditions resulted in a prospective accounting change, effective from January 1, 2023 whereby pass-through settlement fees are recognized on a net (agent) basis (i.e. no longer recognized gross in revenue and costs incurred from financial institutions).\u00a0 This change impacts the 'Revenue' and 'Costs incurred from financial institutions' lines in the statements of comprehensive income, with no change to net revenue. This change does not impact the 2022 comparative results, the non-IFRS financial measures or objectives. 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 a 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 a 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 | 2023 | 2022 |
Settlement fees | 1,081,791 | 8,270,626 |
Processing fees | 460,853 | 387,541 |
Sales of goods | 84,133 | 55,710 |
Other services | 236,629 | 221,734 |
Total revenue from contracts with customers | 1,863,406 | 8,935,611 |
Costs incurred from financial institutions | (147,811) | (7,550,960) |
Costs of goods sold | (89,534) | (54,485) |
Net revenue | 1,626,061 | 1,330,166 |
Key Judgement \u2013 Principal versus agent for revenue out of settlement fees 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 (\"pass- through settlement fees\"). Adyen adopts a transparent pricing model and charges fees to merchants based on its own incurred costs (including interchange and payment network fees charged to merchants in a pass-through arrangement), plus a mark-up which is disclosed as \"Settlement fees\". Adyen applies its judgment in determining whether it has control of the full payment service inputs before the service is transferred to its merchants, and, in consequence, whether it is acting as agent or principal in relation to the settlement fees charged to merchants. Where Adyen is principal, it will present its acquiring mark-up and interchange and payment network fees passed on to merchants on a gross (principal) basis within revenue. Where Adyen is agent, it will present its acquiring mark-up on a gross (principal) basis, while the pass-through settlement fees will be presented within revenue on a net basis (i.e. not recognized gross in revenue and costs incurred from financial institutions). | ||
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. | ||
Timing of revenue recognition | 2023 | 2022 |
Goods and services transferred at a point in time | 1,848,323 | 8,923,199 |
Services transferred over time | 15,083 | 12,412 |
Total revenue from contracts with customers | 1,863,406 | 8,935,611 |
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 a 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 a 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 | 2023 | 2022 |
Settlement fees | 1,081,791 | 8,270,626 |
Processing fees | 460,853 | 387,541 |
Sales of goods | 84,133 | 55,710 |
Other services | 236,629 | 221,734 |
Total revenue from contracts with customers | 1,863,406 | 8,935,611 |
Costs incurred from financial institutions | (147,811) | (7,550,960) |
Costs of goods sold | (89,534) | (54,485) |
Net revenue | 1,626,061 | 1,330,166 |
Key Judgement \u2013 Principal versus agent for revenue out of settlement fees 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 (\"pass- through settlement fees\"). Adyen adopts a transparent pricing model and charges fees to merchants based on its own incurred costs (including interchange and payment network fees charged to merchants in a pass-through arrangement), plus a mark-up which is disclosed as \"Settlement fees\". Adyen applies its judgment in determining whether it has control of the full payment service inputs before the service is transferred to its merchants, and, in consequence, whether it is acting as agent or principal in relation to the settlement fees charged to merchants. Where Adyen is principal, it will present its acquiring mark-up and interchange and payment network fees passed on to merchants on a gross (principal) basis within revenue. Where Adyen is agent, it will present its acquiring mark-up on a gross (principal) basis, while the pass-through settlement fees will be presented within revenue on a net basis (i.e. not recognized gross in revenue and costs incurred from financial institutions). | ||
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. | ||
Timing of revenue recognition | 2023 | 2022 |
Goods and services transferred at a point in time | 1,848,323 | 8,923,199 |
Services transferred over time | 15,083 | 12,412 |
Total revenue from contracts with customers | 1,863,406 | 8,935,611 |
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 a 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 a 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 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 (\"pass- through settlement fees\"). Adyen adopts a transparent pricing model and charges fees to merchants based on its own incurred costs (including interchange and payment network fees charged to merchants in a pass-through arrangement), plus a mark-up which is disclosed as \"Settlement fees\". Adyen applies its judgment in determining whether it has control of the full payment service inputs before the service is transferred to its merchants, and, in consequence, whether it is acting as agent or principal in relation to the settlement fees charged to merchants. Where Adyen is principal, it will present its acquiring mark-up and interchange and payment network fees passed on to merchants on a gross (principal) basis within revenue. Where Adyen is agent, it will present its acquiring mark-up on a gross (principal) basis, while the pass-through settlement fees will be presented within revenue on a net basis (i.e. not recognized gross in revenue and costs incurred from financial institutions). | ||
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 6.2 Derivative liabilities 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 2021 year-end.\u00a0 There were no further tranche milestones met during 2023. As per December 31, 2023, 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 at EUR 1,400 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. The unamortized portion of these considerations are recognized as contract assets in the balance sheet.\u00a0 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 Plant and equipment Plant and equipment are stated at cost less accumulated depreciation and impairment. 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 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. The unamortized portion of these considerations are recognized as contract assets in the balance sheet.\u00a0 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, 2022 | 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 | 123 | (89) | 34 | |
Balance - December 31, 2022 | \u2014 | 41,664 | 6,948 | 48,612 |
Movements: | ||||
Additions | ||||
Amortization for the year | \u2014 | (21,935) | (2,414) | (24,349) |
Exchange differences (Note 6) | \u2014 | \u2014 | (68) | (68) |
Balance - December 31, 2023 | \u2014 | 19,729 | 4,466 | 24,195 |
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 services and sales of goods. The Management Board monitors net revenue 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 | 2023 | 2022 |
Europe, the Middle East, and Africa (EMEA) | 1,041,039 | 3,430,434 |
North America | 492,460 | 4,289,241 |
Asia-Pacific | 208,820 | 784,189 |
Latin America | 121,087 | 431,747 |
Total revenue from contracts with customers | 1,863,406 | 8,935,611 |
Non-current assets - Geographical breakdown | 2023 | 2022 |
Netherlands* | 311,002 | 311,849 |
Rest of the World | 214,249 | 227,304 |
Non-current assets | 525,251 | 539,153 |
Net revenue - Geographical breakdown and year-on-year growth | 2023 | YoY% | 2022 | YoY% |
Europe, the Middle East, and Africa (EMEA) | 908,233 | 22% | 746,823 | 25% |
North America | 429,497 | 25% | 343,158 | 48% |
Asia-Pacific | 182,285 | 28% | 142,346 | 48% |
Latin America | 106,046 | 8% | 97,839 | 31% |
Total net revenue from contracts with customers | 1,626,061 | 22% | 1,330,166 | 33% |
Selected non-IFRS financial measures | 2023 | 2022 |
Income before net finance income and income taxes | 657,582 | 664,675 |
Amortization and depreciation | 85,453 | 63,613 |
EBITDA | 743,035 | 728,288 |
Net revenue | 1,626,061 | 1,330,166 |
EBITDA margin (%) | 46% | 55% |
Purchases of plant and equipment | 65,605 | 95,575 |
Capitalization of intangible assets | 4,138 | 3,523 |
CapEx | 69,743 | 99,098 |
EBITDA | 743,035 | 728,288 |
CapEx | (69,743) | (99,098) |
Lease payments | (33,811) | (22,144) |
Free cash flow | 639,481 | 607,046 |
Free cash flow | 639,481 | 607,046 |
EBITDA | 743,035 | 728,288 |
Free cash flow conversion ratio (%) | 86% | 83% |
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 services and sales of goods. The Management Board monitors net revenue 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 | 2023 | 2022 |
Balance - January 1 | 87,891 | 22,138 |
Purchases during the year (products for resale) | 138,479 | 120,893 |
Costs of goods sold | (89,534) | (54,485) |
Transfer to plant and equipment (Note 14) | (6,269) | \u2014 |
Expense recognized in other expenses | (26,065) | (655) |
Balance - December 31 | 104,502 | 87,891 |
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 | 2023 | 2022 |
Amsterdam | 2,326 | 1,941 |
San Francisco | 299 | 270 |
New York | 186 | 139 |
S\u00e3o Paulo | 170 | 146 |
Singapore | 165 | 127 |
Chicago | 155 | 53 |
Madrid | 133 | 64 |
London | 133 | 123 |
Paris | 96 | 75 |
Berlin | 91 | 67 |
Other | 442 | 327 |
Total | 4,196 | 3,332 |
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 | 2023 | 2022 |
Salaries and wages | 475,721 | 317,817 |
Share-based compensation (Note 4.3) | 38,609 | 10,499 |
Total wages and salaries | 514,330 | 328,316 |
Social securities | 66,090 | 43,811 |
Pension costs - defined contribution plans | 13,614 | 8,460 |
Total social securities and pension costs | 79,704 | 52,271 |
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 | 2023 | 2022 |
Equity-settled | 24,650 | 9 |
Cash-settled | 13,959 | 10,490 |
Total share-based compensation | 38,609 | 10,499 |
Accounting policy \u2013 Equity-settled options Adyen has an option plan for directors and employees. Exercisable options provide 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. | ||
2023 | 2022 | |||
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 | 47.51 | 107 | 53.63 | 147 |
Forfeited | 66.71 | (17) | 72.46 | (24) |
Exercised | 65.53 | (28) | 66.71 | (16) |
Balance - December 31 | 34.55 | 62 | 47.51 | 107 |
Accounting policy \u2013 Cash-settled share-based payment plan Adyen established a cash-settled share-based payment plan (phantom shares) for newly hired directors and employees as well as for certain current employees until May 2023. 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, 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 Restricted Stock Unit (\u201cRSU\u201d) Awards Plan Adyen has established a Restricted Stock Unit (\u201cRSU\u201d) equity-settled share-based payment plan for newly hired directors and employees as well as for certain current employees. The RSUs are granted at the market price of Adyen shares at grant date. Subject to the employees\u2019 continued employment with Adyen N.V., the RSUs will vest over a period of four years from the grant date. 25% of the RSUs will vest on each anniversary of the grant date.\u00a0 Adyen recognizes an expense over the vesting period and a corresponding increase in equity. The measurement of the RSUs is based on the market price of Adyen\u2019s shares at grant date, and subsequent adjustments to the number of RSUs expected to vest are made at each reporting date. The expense reflecting the grant date fair value, recognition of service and adjustments to the expected number of instruments to vest, is presented as \u2018share-based compensation expense\u2019 under wages and salaries in the statement of comprehensive income. | ||
2023 | 2022 | |||
RSUs outstanding | Number of RSUs (thousands) | Weighted-average grant-date fair value (in EUR) | Number of RSUs | Weighted-average grant-date fair value (in EUR) |
Balance - January 1 | \u2014 | \u2014 | \u2014 | \u2014 |
Reclassified from cash- settled share-based payment plan | 53 | 1,452 | \u2014 | \u2014 |
Granted | 39 | 1,082 | \u2014 | \u2014 |
Vested | (9) | 1,459 | \u2014 | \u2014 |
Forfeited | (2) | 1,335 | \u2014 | \u2014 |
Balance - December 31 | 81 | 1,277 | \u2014 | \u2014 |
Accounting policy \u2013 Operating expenses Operating expenses are recognized in the period when they occur. | ||
Other operating expenses | 2023 | 2022 |
Travel and other staff expenses | 57,263 | 44,086 |
Sales and marketing costs | 52,990 | 55,630 |
IT costs | 41,847 | 33,086 |
Advisory costs | 24,398 | 27,722 |
Housing costs | 16,631 | 10,914 |
1% for the UN SDGs | 16,261 | 13,302 |
Contractor costs | 15,298 | 13,489 |
Office costs | 10,220 | 8,186 |
Miscellaneous operating expenses | 29,829 | 14,822 |
Total other operating expenses | 264,737 | 221,237 |
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 | 2023 | 2022 |
Income before income taxes | 942,609 | 719,939 |
Statutory tax rate in the Netherlands (%) | 25.8% | 25.8% |
Income taxes based on statutory tax rate in the Netherlands | 243,193 | 185,744 |
Tax effects of: | ||
Innovation box | (25,312) | (37,306) |
Tax rate differences on foreign operations | (2,327) | 5,688 |
Other adjustments (such as prior period and non-deductible amounts) | 28,733 | 1,674 |
Effective tax amount | 244,287 | 155,800 |
Income taxes | 2023 | 2022 |
Current income tax expense | 244,141 | 153,656 |
Deferred income tax expense | 146 | 2,144 |
Total income taxes | 244,287 | 155,800 |
Current income tax receivables/(payables) | 2023 | 2022 |
Current income tax receivables | 7,310 | 12,445 |
Current income tax payables | (63,063) | (4,441) |
FTE per office | 2023 | 2022 |
Amsterdam | 2,326 | 1,941 |
San Francisco | 299 | 270 |
New York | 186 | 139 |
S\u00e3o Paulo | 170 | 146 |
Singapore | 165 | 127 |
Chicago | 155 | 53 |
Madrid | 133 | 64 |
London | 133 | 123 |
Paris | 96 | 75 |
Berlin | 91 | 67 |
Other | 442 | 327 |
Total | 4,196 | 3,332 |
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 | 2023 | 2022 |
Salaries and wages | 475,721 | 317,817 |
Share-based compensation (Note 4.3) | 38,609 | 10,499 |
Total wages and salaries | 514,330 | 328,316 |
Social securities | 66,090 | 43,811 |
Pension costs - defined contribution plans | 13,614 | 8,460 |
Total social securities and pension costs | 79,704 | 52,271 |
2023 | 2022 | |
Salaries and short-term employee benefits | 4,407 | 3,590 |
Share-based payments | 955 | 439 |
Post-employment benefits | 318 | 209 |
Total | 5,680 | 4,238 |
2023 | 2022 | |
Salaries and short-term employee benefits | 379 | 386 |
Total | 379 | 386 |
FTE per office | 2023 | 2022 |
Amsterdam | 2,326 | 1,941 |
San Francisco | 299 | 270 |
New York | 186 | 139 |
S\u00e3o Paulo | 170 | 146 |
Singapore | 165 | 127 |
Chicago | 155 | 53 |
Madrid | 133 | 64 |
London | 133 | 123 |
Paris | 96 | 75 |
Berlin | 91 | 67 |
Other | 442 | 327 |
Total | 4,196 | 3,332 |
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 | 2023 | 2022 |
Equity-settled | 24,650 | 9 |
Cash-settled | 13,959 | 10,490 |
Total share-based compensation | 38,609 | 10,499 |
Accounting policy \u2013 Equity-settled options Adyen has an option plan for directors and employees. Exercisable options provide 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. | ||
2023 | 2022 | |||
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 | 47.51 | 107 | 53.63 | 147 |
Forfeited | 66.71 | (17) | 72.46 | (24) |
Exercised | 65.53 | (28) | 66.71 | (16) |
Balance - December 31 | 34.55 | 62 | 47.51 | 107 |
Accounting policy \u2013 Cash-settled share-based payment plan Adyen established a cash-settled share-based payment plan (phantom shares) for newly hired directors and employees as well as for certain current employees until May 2023. 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, 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 Restricted Stock Unit (\u201cRSU\u201d) Awards Plan Adyen has established a Restricted Stock Unit (\u201cRSU\u201d) equity-settled share-based payment plan for newly hired directors and employees as well as for certain current employees. The RSUs are granted at the market price of Adyen shares at grant date. Subject to the employees\u2019 continued employment with Adyen N.V., the RSUs will vest over a period of four years from the grant date. 25% of the RSUs will vest on each anniversary of the grant date.\u00a0 Adyen recognizes an expense over the vesting period and a corresponding increase in equity. The measurement of the RSUs is based on the market price of Adyen\u2019s shares at grant date, and subsequent adjustments to the number of RSUs expected to vest are made at each reporting date. The expense reflecting the grant date fair value, recognition of service and adjustments to the expected number of instruments to vest, is presented as \u2018share-based compensation expense\u2019 under 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 provide 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 established a cash-settled share-based payment plan (phantom shares) for newly hired directors and employees as well as for certain current employees until May 2023. 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, 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 | 2023 | 2022 |
Travel and other staff expenses | 57,263 | 44,086 |
Sales and marketing costs | 52,990 | 55,630 |
IT costs | 41,847 | 33,086 |
Advisory costs | 24,398 | 27,722 |
Housing costs | 16,631 | 10,914 |
1% for the UN SDGs | 16,261 | 13,302 |
Contractor costs | 15,298 | 13,489 |
Office costs | 10,220 | 8,186 |
Miscellaneous operating expenses | 29,829 | 14,822 |
Total other operating expenses | 264,737 | 221,237 |
Accounting policy \u2013 Operating expenses Operating expenses are recognized in the period when they occur. | ||
Other financial results | 2023 | 2022 |
Exchange gains/(losses) (Note 6.1) | 6,599 | (8,643) |
Fair value re-measurement of financial instruments: | ||
Derivative liabilities (Note 6.2) | 33,600 | 46,700 |
Other financial assets at FVPL (Note 6.3) | 3,210 | (153) |
Total other financial results | 43,409 | 37,904 |
Financial instruments | Note | Measurement policy | 2023 | 2022 |
Financial assets: | ||||
Other financial assets at FVPL | FVPL \u2013 level 2 | 14,821 | 12,264 | |
Receivables from merchants and financial institutions | 15 | Amortized cost | 490,052 | 369,104 |
Trade and other receivables | 15 | Amortized cost | 134,274 | 89,350 |
Cash and cash equivalents | 10 | Amortized cost | 8,306,982 | 6,522,345 |
Total | 8,946,129 | 6,993,063 | ||
Financial liabilities: | ||||
Derivative liabilities | FVPL \u2013 level 2 | 1,400 | 35,000 | |
Lease liability | 17 | Amortized cost | 223,063 | 203,073 |
Payable to merchants and financial institutions | 16 | Amortized cost | 5,953,563 | 4,795,804 |
Trade and other payables | 16 | Amortized cost | 168,397 | 147,827 |
Total | 6,346,423 | 5,181,704 |
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 | 2023 | 2022 |
Income before income taxes | 942,609 | 719,939 |
Statutory tax rate in the Netherlands (%) | 25.8% | 25.8% |
Income taxes based on statutory tax rate in the Netherlands | 243,193 | 185,744 |
Tax effects of: | ||
Innovation box | (25,312) | (37,306) |
Tax rate differences on foreign operations | (2,327) | 5,688 |
Other adjustments (such as prior period and non-deductible amounts) | 28,733 | 1,674 |
Effective tax amount | 244,287 | 155,800 |
Income taxes | 2023 | 2022 |
Current income tax expense | 244,141 | 153,656 |
Deferred income tax expense | 146 | 2,144 |
Total income taxes | 244,287 | 155,800 |
Current income tax receivables/(payables) | 2023 | 2022 |
Current income tax receivables | 7,310 | 12,445 |
Current income tax payables | (63,063) | (4,441) |
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, 2022 | Recognized in Profit or Loss | Recognized in equity | Effects of foreign exchange | Balance December 31, 2022 | |
Deferred tax assets: | |||||
Derivative liabilities | 21,079 | (12,049) | 9,030 | ||
Windfall tax benefit | 12,808 | (4,990) | (2,493) | 5,325 | |
Tax losses carried forward | 86,472 | 1,737 | 34,149 | (3,521) | 118,837 |
Temporary differences* | 11,361 | 3,112 | 14,473 | ||
Total deferred tax assets | 131,720 | (7,200) | 29,159 | (6,014) | 147,665 |
Deferred tax liabilities: | |||||
Contract assets | (16,010) | 5,261 | (10,749) | ||
Temporary differences | (391) | (205) | (596) | ||
Total deferred tax liabilities | (16,401) | 5,056 | \u2014 | \u2014 | (11,345) |
Net deferred tax assets | 115,319 | (2,144) | 29,159 | (6,014) | 136,320 |
Balance January 1, 2023 | Recognized in Profit or Loss | Recognized in equity | Effects of foreign exchange | Balance December 31, 2023 | |
Deferred tax assets: | |||||
Derivative liabilities | 9,030 | (8,669) | 361 | ||
Windfall tax benefit | 5,325 | (2,855) | 49 | 2,519 | |
Tax losses carried forward | 118,837 | (3,227) | (28,543) | 1,399 | 88,466 |
Temporary differences | 14,473 | 6,860 | 21,333 | ||
Total deferred tax assets | 147,665 | (5,036) | (31,398) | 1,448 | 112,679 |
Deferred tax liabilities: | |||||
Contract assets | (10,749) | 5,659 | (5,090) | ||
Temporary differences | (596) | (769) | (1,365) | ||
Total deferred tax liabilities | (11,345) | 4,890 | \u2014 | \u2014 | (6,455) |
Net deferred tax assets | 136,320 | (146) | (31,398) | 1,448 | 106,224 |
Significant accounting estimate: Deferred tax assets linked to windfall benefits Deferred tax assets include tax losses carried forward relating to options exercised in the United States at a Federal and State level (December 31, 2023: EUR 85,910; December 31, 2022: EUR 115,121) and windfall benefits relating to options granted and vested, however not yet exercised (December 31, 2023: EUR 2,519; December 31, 2022: 5,325). The balance as at December\u00a031, 2022 included tax losses carried forward in the United Kingdom which was fully utilized in the current year. An amount of EUR 11,196 of the tax losses carried forward was utilised during the period and recognised in the share premium reserve (2022: EUR 6,180). During 2023, Adyen has reassessed the recoverability of deferred tax assets on windfall benefits linked to the share-based compensation plan in the United States. Adyen continues to recognize deferred tax assets that will be realized against future profits, on a going concern basis. The United States Federal Tax windfall benefit continues to be recognized, as these carry forward losses on a Federal level have no expiration date. The State net operating losses continues to be recognized as these carry forward losses are expected to be utilized against future taxable income before its expiration date. 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). | ||
Amounts accrued on IFRS Consolidated basis | Taxes received/ (paid) on cash basis | ||||||||||
Country | Main activity | Ending FTE | Total Operating (Expense)/ Income | Income Before Tax | Income Tax Expense | ETR% | Income Tax | Indirect Tax | Payroll Tax | Grants / Incentives | Total tax contribution |
The Netherlands | Head office - Payment service provider | 2,326 | (511,797) | 748,803 | (211,606) | 28% | (140,679) | (121,622) | (116,060) | 496 | (377,865) |
United Kingdom | Sales office\u00a0 | 147 | (32,788) | 11,276 | (1,978) | 18% | \u2014 | (1,540) | (12,308) | \u2014 | (13,848) |
France | Sales office | 96 | (21,757) | 3,063 | (633) | 21% | (898) | (47,139) | (6,673) | \u2014 | (54,710) |
Germany | Sales and support office | 112 | (18,475) | 6,001 | (1,836) | 31% | (2,236) | \u2014 | (8,745) | \u2014 | (10,981) |
Sweden | Sales office | 76 | (12,304) | 2,976 | (759) | 26% | (418) | \u2014 | (4,994) | \u2014 | (5,412) |
Spain | Sales and support office | 133 | (14,111) | 3,853 | (891) | 23% | (1,117) | (3,090) | (4,182) | \u2014 | (8,389) |
Belgium | Sales office | 15 | (3,007) | 436 | (133) | 31% | \u2014 | \u2014 | (1,801) | \u2014 | (1,801) |
Italy | Sales office | 32 | (5,319) | 947 | (77) | 8% | (353) | (9) | (1,442) | \u2014 | (1,804) |
United Arab Emirates | Support office | 27 | (5,920) | 1 | \u2014 | \u2014 | \u2014 | (1,555) | \u2014 | \u2014 | (1,555) |
Poland | Sales office | 18 | (2,706) | 532 | (170) | 32% | (118) | \u2014 | (829) | \u2014 | (947) |
Norway | No office | \u2014 | \u2014 | \u2014 | \u2014 | \u2014% | (316) | (316) | |||
United States | Sales and support office | 640 | (203,534) | 122,907 | (13,553) | 11% | (2,994) | (2,540) | (46,377) | \u2014 | (51,911) |
Brazil | Sales and support office | 209 | (36,598) | 10,015 | (4,215) | 42% | (1,447) | (4,871) | (8,887) | \u2014 | (15,205) |
Mexico | Sales office | 27 | (5,274) | 793 | (540) | 68% | (862) | (3,972) | (1,140) | \u2014 | (5,974) |
Canada | Sales office | 26 | (5,856) | 4,026 | (944) | 23% | (778) | (25,783) | (1,366) | \u2014 | (27,927) |
Singapore | Sales and support office | 165 | (29,167) | 11,478 | (2,495) | 22% | (659) | (21,600) | (2,019) | \u2014 | (24,278) |
Australia | Sales and support office | 54 | (10,611) | 5,738 | (1,781) | 31% | (607) | (15,927) | (2,212) | \u2014 | (18,746) |
China | Sales office | 36 | (8,148) | 5,801 | (1,423) | 25% | (1,095) | (687) | (2,641) | \u2014 | (4,423) |
Japan | Sales and support office | 33 | (6,728) | 1,409 | (379) | 27% | (682) | (12,779) | (1,233) | \u2014 | (14,694) |
Hong Kong | Sales office | 9 | (1,968) | 1,655 | (185) | 11% | (181) | \u2014 | \u2014 | \u2014 | (181) |
India | Sales office | 12 | (7,169) | 202 | (515) | 255% | \u2014 | (404) | (497) | \u2014 | (901) |
New Zealand | Sales office | \u2014 | (425) | 389 | (105) | 27% | \u2014 | (3,132) | (120) | \u2014 | (3,252) |
Malaysia | Sales office | 3 | (604) | 256 | (69) | 27% | (42) | \u2014 | (35) | \u2014 | (77) |
Korea | Liquidated during the year | \u2014 | 42 | 52 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | |
Switzerland | No office | \u2014 | \u2014 | (652) | \u2014 | \u2014 | (652) | ||||
Total | 4,196 | (944,224) | 942,609 | (244,287) | 26% | (155,166) | (267,618) | (223,561) | 496 | (645,849) |
TTC Item | General findings | Exceptions |
Income before tax | NL owns the majority of income before tax given the key entrepreneurial functions performed, risks managed and intangible assets owned. | |
Income tax expense | Income tax expense should be close to the statutory tax rate multiplied by the income before tax. Typically the income tax expense is a bit higher than the statutory rate, due to many countries limiting deductibility of certain costs - such as meals, entertainment and stock based compensation. | Adyen NV incurs non-deductible amounts in the Netherlands, has prior year adjustments and is taxed on income booked for accounting purposes in the United States. |
Most outliers can be explained as reversal of (too high) accruals of previous years or because of an accounting difference (IFRS vs. statutory). | ||
The United States ETR is lower than the statutory rate in the United States due to stock based compensation and because income is booked in the United States branch its books for accounting purposes which is taxable only in the Netherlands. The latter does not impact the consolidated ETR as that income is taxed against the Dutch statutory tax rate. | ||
Income tax paid | Income tax paid should be close to the income tax expense | Differences in the income tax expense and the income tax paid are caused by impact of deferred taxes and deviations between profits assessed in preliminary assessments and profits realized. |
Incentives | We are reluctant to apply grants and incentives. | The only incentive applied is WBSO, a Dutch R&D tax credit scheme. |
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) | 2023 | 2022 |
Current income tax receivables | 7,310 | 12,445 |
Current income tax payables | (63,063) | (4,441) |
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, 2022 | Recognized in Profit or Loss | Recognized in equity | Effects of foreign exchange | Balance December 31, 2022 | |
Deferred tax assets: | |||||
Derivative liabilities | 21,079 | (12,049) | 9,030 | ||
Windfall tax benefit | 12,808 | (4,990) | (2,493) | 5,325 | |
Tax losses carried forward | 86,472 | 1,737 | 34,149 | (3,521) | 118,837 |
Temporary differences* | 11,361 | 3,112 | 14,473 | ||
Total deferred tax assets | 131,720 | (7,200) | 29,159 | (6,014) | 147,665 |
Deferred tax liabilities: | |||||
Contract assets | (16,010) | 5,261 | (10,749) | ||
Temporary differences | (391) | (205) | (596) | ||
Total deferred tax liabilities | (16,401) | 5,056 | \u2014 | \u2014 | (11,345) |
Net deferred tax assets | 115,319 | (2,144) | 29,159 | (6,014) | 136,320 |
Balance January 1, 2023 | Recognized in Profit or Loss | Recognized in equity | Effects of foreign exchange | Balance December 31, 2023 | |
Deferred tax assets: | |||||
Derivative liabilities | 9,030 | (8,669) | 361 | ||
Windfall tax benefit | 5,325 | (2,855) | 49 | 2,519 | |
Tax losses carried forward | 118,837 | (3,227) | (28,543) | 1,399 | 88,466 |
Temporary differences | 14,473 | 6,860 | 21,333 | ||
Total deferred tax assets | 147,665 | (5,036) | (31,398) | 1,448 | 112,679 |
Deferred tax liabilities: | |||||
Contract assets | (10,749) | 5,659 | (5,090) | ||
Temporary differences | (596) | (769) | (1,365) | ||
Total deferred tax liabilities | (11,345) | 4,890 | \u2014 | \u2014 | (6,455) |
Net deferred tax assets | 136,320 | (146) | (31,398) | 1,448 | 106,224 |
Significant accounting estimate: Deferred tax assets linked to windfall benefits Deferred tax assets include tax losses carried forward relating to options exercised in the United States at a Federal and State level (December 31, 2023: EUR 85,910; December 31, 2022: EUR 115,121) and windfall benefits relating to options granted and vested, however not yet exercised (December 31, 2023: EUR 2,519; December 31, 2022: 5,325). The balance as at December\u00a031, 2022 included tax losses carried forward in the United Kingdom which was fully utilized in the current year. An amount of EUR 11,196 of the tax losses carried forward was utilised during the period and recognised in the share premium reserve (2022: EUR 6,180). During 2023, Adyen has reassessed the recoverability of deferred tax assets on windfall benefits linked to the share-based compensation plan in the United States. Adyen continues to recognize deferred tax assets that will be realized against future profits, on a going concern basis. The United States Federal Tax windfall benefit continues to be recognized, as these carry forward losses on a Federal level have no expiration date. The State net operating losses continues to be recognized as these carry forward losses are expected to be utilized against future taxable income before its expiration date. 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 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. | ||
Amounts accrued on IFRS Consolidated basis | Taxes received/ (paid) on cash basis | ||||||||||
Country | Main activity | Ending FTE | Total Operating (Expense)/ Income | Income Before Tax | Income Tax Expense | ETR% | Income Tax | Indirect Tax | Payroll Tax | Grants / Incentives | Total tax contribution |
The Netherlands | Head office - Payment service provider | 2,326 | (511,797) | 748,803 | (211,606) | 28% | (140,679) | (121,622) | (116,060) | 496 | (377,865) |
United Kingdom | Sales office\u00a0 | 147 | (32,788) | 11,276 | (1,978) | 18% | \u2014 | (1,540) | (12,308) | \u2014 | (13,848) |
France | Sales office | 96 | (21,757) | 3,063 | (633) | 21% | (898) | (47,139) | (6,673) | \u2014 | (54,710) |
Germany | Sales and support office | 112 | (18,475) | 6,001 | (1,836) | 31% | (2,236) | \u2014 | (8,745) | \u2014 | (10,981) |
Sweden | Sales office | 76 | (12,304) | 2,976 | (759) | 26% | (418) | \u2014 | (4,994) | \u2014 | (5,412) |
Spain | Sales and support office | 133 | (14,111) | 3,853 | (891) | 23% | (1,117) | (3,090) | (4,182) | \u2014 | (8,389) |
Belgium | Sales office | 15 | (3,007) | 436 | (133) | 31% | \u2014 | \u2014 | (1,801) | \u2014 | (1,801) |
Italy | Sales office | 32 | (5,319) | 947 | (77) | 8% | (353) | (9) | (1,442) | \u2014 | (1,804) |
United Arab Emirates | Support office | 27 | (5,920) | 1 | \u2014 | \u2014 | \u2014 | (1,555) | \u2014 | \u2014 | (1,555) |
Poland | Sales office | 18 | (2,706) | 532 | (170) | 32% | (118) | \u2014 | (829) | \u2014 | (947) |
Norway | No office | \u2014 | \u2014 | \u2014 | \u2014 | \u2014% | (316) | (316) | |||
United States | Sales and support office | 640 | (203,534) | 122,907 | (13,553) | 11% | (2,994) | (2,540) | (46,377) | \u2014 | (51,911) |
Brazil | Sales and support office | 209 | (36,598) | 10,015 | (4,215) | 42% | (1,447) | (4,871) | (8,887) | \u2014 | (15,205) |
Mexico | Sales office | 27 | (5,274) | 793 | (540) | 68% | (862) | (3,972) | (1,140) | \u2014 | (5,974) |
Canada | Sales office | 26 | (5,856) | 4,026 | (944) | 23% | (778) | (25,783) | (1,366) | \u2014 | (27,927) |
Singapore | Sales and support office | 165 | (29,167) | 11,478 | (2,495) | 22% | (659) | (21,600) | (2,019) | \u2014 | (24,278) |
Australia | Sales and support office | 54 | (10,611) | 5,738 | (1,781) | 31% | (607) | (15,927) | (2,212) | \u2014 | (18,746) |
China | Sales office | 36 | (8,148) | 5,801 | (1,423) | 25% | (1,095) | (687) | (2,641) | \u2014 | (4,423) |
Japan | Sales and support office | 33 | (6,728) | 1,409 | (379) | 27% | (682) | (12,779) | (1,233) | \u2014 | (14,694) |
Hong Kong | Sales office | 9 | (1,968) | 1,655 | (185) | 11% | (181) | \u2014 | \u2014 | \u2014 | (181) |
India | Sales office | 12 | (7,169) | 202 | (515) | 255% | \u2014 | (404) | (497) | \u2014 | (901) |
New Zealand | Sales office | \u2014 | (425) | 389 | (105) | 27% | \u2014 | (3,132) | (120) | \u2014 | (3,252) |
Malaysia | Sales office | 3 | (604) | 256 | (69) | 27% | (42) | \u2014 | (35) | \u2014 | (77) |
Korea | Liquidated during the year | \u2014 | 42 | 52 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | |
Switzerland | No office | \u2014 | \u2014 | (652) | \u2014 | \u2014 | (652) | ||||
Total | 4,196 | (944,224) | 942,609 | (244,287) | 26% | (155,166) | (267,618) | (223,561) | 496 | (645,849) |
TTC Item | General findings | Exceptions |
Income before tax | NL owns the majority of income before tax given the key entrepreneurial functions performed, risks managed and intangible assets owned. | |
Income tax expense | Income tax expense should be close to the statutory tax rate multiplied by the income before tax. Typically the income tax expense is a bit higher than the statutory rate, due to many countries limiting deductibility of certain costs - such as meals, entertainment and stock based compensation. | Adyen NV incurs non-deductible amounts in the Netherlands, has prior year adjustments and is taxed on income booked for accounting purposes in the United States. |
Most outliers can be explained as reversal of (too high) accruals of previous years or because of an accounting difference (IFRS vs. statutory). | ||
The United States ETR is lower than the statutory rate in the United States due to stock based compensation and because income is booked in the United States branch its books for accounting purposes which is taxable only in the Netherlands. The latter does not impact the consolidated ETR as that income is taxed against the Dutch statutory tax rate. | ||
Income tax paid | Income tax paid should be close to the income tax expense | Differences in the income tax expense and the income tax paid are caused by impact of deferred taxes and deviations between profits assessed in preliminary assessments and profits realized. |
Incentives | We are reluctant to apply grants and incentives. | The only incentive applied is WBSO, a Dutch R&D tax credit scheme. |
Financial instruments | Note | Measurement policy | 2023 | 2022 |
Financial assets: | ||||
Other financial assets at FVPL | FVPL \u2013 level 2 | 14,821 | 12,264 | |
Receivables from merchants and financial institutions | 15 | Amortized cost | 490,052 | 369,104 |
Trade and other receivables | 15 | Amortized cost | 134,274 | 89,350 |
Cash and cash equivalents | 10 | Amortized cost | 8,306,982 | 6,522,345 |
Total | 8,946,129 | 6,993,063 | ||
Financial liabilities: | ||||
Derivative liabilities | FVPL \u2013 level 2 | 1,400 | 35,000 | |
Lease liability | 17 | Amortized cost | 223,063 | 203,073 |
Payable to merchants and financial institutions | 16 | Amortized cost | 5,953,563 | 4,795,804 |
Trade and other payables | 16 | Amortized cost | 168,397 | 147,827 |
Total | 6,346,423 | 5,181,704 |
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. | ||
Own funds | 2023 | 2022 |
EU-IFRS equity as reported in consolidated balance sheet* | 3,150,867 | 2,416,056 |
Net profit not included in CET1 capital (H2 2023 not yet eligible) | (416,149) | (282,002) |
Regulatory adjustments: | ||
\u00a0 Warrant reserve | (25,575) | (25,575) |
\u00a0 Intangible assets | (8,757) | (8,140) |
\u00a0 Deferred tax assets that rely on future profitability | (90,985) | (124,162) |
\u00a0 Prudent valuation | (16) | (47) |
Total own funds | 2,609,385 | 1,976,130 |
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 | 2023 | 2022 |
Cash held at central banks | 5,863,231 | 4,407,540 |
Cash held at banks, other than central banks | 2,443,751 | 2,114,805 |
Total | 8,306,982 | 6,522,345 |
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: \u2022 subsequently at fair value through profit or loss (\u2018FVPL\u2019), and \u2022 at 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: \u2022 Amortized 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 \u2022 Assets 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: \u2022 Category 1: Expected credit losses (12 months) \u2022 Category 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: \u2022 Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. \u2022 Level 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. \u2022 Level 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 | 2023 | 2022 |
Financial assets: | ||||
Other financial assets at FVPL | FVPL \u2013 level 2 | 14,821 | 12,264 | |
Receivables from merchants and financial institutions | 15 | Amortized cost | 490,052 | 369,104 |
Trade and other receivables | 15 | Amortized cost | 134,274 | 89,350 |
Cash and cash equivalents | 10 | Amortized cost | 8,306,982 | 6,522,345 |
Total | 8,946,129 | 6,993,063 | ||
Financial liabilities: | ||||
Derivative liabilities | FVPL \u2013 level 2 | 1,400 | 35,000 | |
Lease liability | 17 | Amortized cost | 223,063 | 203,073 |
Payable to merchants and financial institutions | 16 | Amortized cost | 5,953,563 | 4,795,804 |
Trade and other payables | 16 | Amortized cost | 168,397 | 147,827 |
Total | 6,346,423 | 5,181,704 |
Accounting policy \u2013 Financial instruments Classification Adyen classifies its financial assets in the following measurement categories, those to be measured: \u2022 subsequently at fair value through profit or loss (\u2018FVPL\u2019), and \u2022 at 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: \u2022 Amortized 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 \u2022 Assets 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: \u2022 Category 1: Expected credit losses (12 months) \u2022 Category 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: \u2022 Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. \u2022 Level 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. \u2022 Level 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: \u2022 subsequently at fair value through profit or loss (\u2018FVPL\u2019), and \u2022 at 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: \u2022 Amortized 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 \u2022 Assets 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: \u2022 Category 1: Expected credit losses (12 months) \u2022 Category 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: \u2022 Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. \u2022 Level 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. \u2022 Level 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: \u2022 subsequently at fair value through profit or loss (\u2018FVPL\u2019), and \u2022 at 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: \u2022 Amortized 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 \u2022 Assets 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: \u2022 Category 1: Expected credit losses (12 months) \u2022 Category 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: \u2022 Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. \u2022 Level 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. \u2022 Level 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 | 2023 | 2022 |
Financial assets: | ||||
Other financial assets at FVPL | FVPL \u2013 level 2 | 14,821 | 12,264 | |
Receivables from merchants and financial institutions | 15 | Amortized cost | 490,052 | 369,104 |
Trade and other receivables | 15 | Amortized cost | 134,274 | 89,350 |
Cash and cash equivalents | 10 | Amortized cost | 8,306,982 | 6,522,345 |
Total | 8,946,129 | 6,993,063 | ||
Financial liabilities: | ||||
Derivative liabilities | FVPL \u2013 level 2 | 1,400 | 35,000 | |
Lease liability | 17 | Amortized cost | 223,063 | 203,073 |
Payable to merchants and financial institutions | 16 | Amortized cost | 5,953,563 | 4,795,804 |
Trade and other payables | 16 | Amortized cost | 168,397 | 147,827 |
Total | 6,346,423 | 5,181,704 |
Source of risk and risk description | Risk mitigation | Remaining risk | ||||||
Liquidity risk | Minimal | |||||||
Liquidity risk is the risk that Adyen is not able to meet its short- to medium-term payment and collateral obligations. | At Adyen the majority of the balance sheet has a maturity of less than three months, both on the asset and on the liability side. Merchant- related balance sheet positions have an even shorter maturity. Longer- dated positions are typically immaterial, such as lease liabilities (refer to Note 17). The balance sheet positions related to merchant fund flows are considered to be neutral from a liquidity perspective as these cash balances and related payables are interrelated from a liquidity perspective. This is due to the fact that Adyen only settles merchant payables after the cash is collected from the card schemes. Accelerated pay-out schedules for individual merchants are more than balanced by liquidity buffers that primarily consist of existing cash and cash equivalents as well as incoming cash flows. Adyen monitors and manages both its Liquidity Coverage Ratio (LCR) and a survival period metric to mitigate the residual risk. Starting from 2022, De Nederlandsche Bank and Adyen agreed on a new calculation method for the Liquidity Coverage Ratio on the basis of the application of Article 26 LCR DA. Adyen reports its LCR on the basis of this revised calculation from July 2022 onwards. The survival period is determined by dividing the sum of cash and cash equivalents, receivables from and payables to merchants and financial institutions, by the total operating expenses for the period. The survival period is set at a minimum of six months. Adyen's survival period as of December 31, 2023 is 35 months (2022: 38 months). For short term liquidity needs Adyen holds additional buffers in a variety of currencies. Given the maturity of the assets and liabilities on-balance, the magnitude and quality of the liquidity buffer and the longitude of the survival period, Adyen considers the remaining liquidity risk low. | Adyen\u2019s balance sheet is by nature short-term and in general, cash is received prior to payout to merchants. The remaining liquidity risk continues to be low and well within risk appetite limits as evidenced by a high LCR. | ||||||
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 through its\u00a0 merchant payment services in different currencies as well as balance sheet positions denominated in currencies other than the functional currency. | Adyen actively manages the foreign exchange risk position resulting in limited remaining risk. As in previous years, USD remains the most significant non-functional currency exposure as of December 31, 2023. The following table highlights the net exposure to this currency stemming from the Visa Inc. shares on profit or loss resulting from a 10% shock (positive or negative) of the respective significant currency against EUR. Please note that all merchant-related short-term financial instruments have been excluded in this impact assessment given the short period to settle, and hence, limited foreign exchange risk on these instruments. The slight increase in net exposure is due to the increase of Visa Inc.\u2019s share price over the period which resulted in a revaluation of the asset (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 | ||||||
31/12/2022 | ||||||||
USD | EUR 12 million | EUR 1.2 million | ||||||
31/12/2023 | ||||||||
USD | EUR 15 million | EUR 1.5 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 is defined as the risk that changes in interest rates lead to an adverse impact on Adyen\u2019s income or value. | Adyen\u2019s business model is primarily fee-based and interest income does not constitute a key revenue component of the client-facing product offering. Despite the fee-based business model, Adyen\u2019s balance sheet has various characteristics that are relevant from an interest rate risk perspective. 1) Adyen\u2019s assets mainly consist of interest-bearing cash, 2) Adyen is fully equity financed; 3) Adyen\u2019s balance sheet has a distinct short-term nature. As a result of this profile:\u00a0 \u2022 There is net interest income sensitivity to interest rate movements: changes in interest rates translate into the price of assets but not into the price of liabilities. The aggregated net interest income sensitivity for material currencies in the most penalizing ramped shock scenario\u00a0 (-200bps) amounts to EUR -73 million. Adyen calculates this sensitivity on a constant balance sheet assumption and a 1Y projection horizon.\u00a0 \u2022 There is only limited value sensitivity to interest rate movements due to the fact that both assets and liabilities are on average short-dated. The aggregated economic value sensitivity for material currencies to the most penalizing instantaneous interest rate shock scenario (-200bps) amounts EUR -9 million. The economic value sensitivity is calculated on a run-off balance sheet assumption.\u00a0 For the volatility analysis\u00a0 performed on the interest rate risk exposure on cash and cash equivalent balances as per year-end refer to note 10. During 2022, negative interest rates applied for the period up to 31 October 2022 on the DNB Target 2 account, after which positive interest was earned. Throughout 2023, the interest earned on the cash position was positive. | Adyen accepts the interest rate risk stemming from its cash position as part of doing business. The cash position is innate to Adyen\u2019s business model as it is held in relation to merchant payables and as a liquidity buffer. |
Source of risk and risk description | was | Remaining risk | ||||||
Equity price risk | ||||||||
The risk of financial losses due to changes in the market price of financial instruments (stock prices) that are recognized at fair value. | Adyen\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 | ||||||
31/12/2022 | ||||||||
Visa Inc. preferred shares | EUR 12 million | EUR 1 million | ||||||
Derivative liabilities | EUR 35 million | EUR 2 million (5%) | ||||||
31/12/2023 | ||||||||
Visa Inc. preferred shares | EUR 15 million | EUR 1 million | ||||||
Derivative liabilities | EUR 1 million | EUR 0 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 the risk that a counterparty of Adyen will fail to meet its financial obligations when these are due, later or in accordance with agreed terms - causing a loss to Adyen. | Financial assets subject to credit risk: Adyen is exposed to credit risk primarily through receivables from financial institutions regarding settled payment transactions, cash held at partner banks as well as pre-financing services to merchants. Cash and cash equivalents: As per December 31, 2023, EUR 5,863,231 (2022: EUR 4,407,540) represents cash held at central banks, representing 71% (2022: 68%) of the cash and cash equivalents balance. Excluding the cash held at central banks, Adyen\u2019s top 10 cash exposures, which also include balances held at credit institutions with credit rating\u00a0 of\u00a0 A or higher, represent 88% of the balance of cash and cash equivalents excluding cash at central banks. Receivables from financial institutions: Receivables from financial institutions include balances due from schemes and other financial institutions regarding transactions processed which will be settled within a short-term, as well as bank accounts which are controlled by Adyen but do not meet the definition of cash and cash equivalents and are therefore classified as receivables from financial institutions. As at December 31, 2023, EUR 292,091 (2022: EUR 279,106) represents receivable from financial institutions.\u00a0 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, 2023 the total collateral was EUR 14,955 (BRL 80,101) (2022: EUR 31,086 (BRL 175,828). Adyen has no other collateral accounts to meet its other regulatory requirements. Adyen carefully chooses its financial counterparties and continuously monitors their credit quality and changes thereof in the form of rating downgrades. Receivables from merchants: As part of the accelerated Sales Day Payout product, Adyen settles a full sales day of transactions to merchants before the funds from financial institutions are fully received. The receivable is effectively secured through the authorization and capture of a transaction, leading to a commitment to pay by the card schemes. When Adyen receives the funds from card schemes, the receivable from the merchant is settled and there is no outstanding exposure anymore. As a result of the nature of the payment transactions the duration of the Sales Day Payout balances is relatively short (average duration between 2-3 days). Adyen assesses, on a forward-looking basis, the expected credit losses and concluded the impact of expected credit losses on receivables from merchants is not significant. During 2023, Adyen did not incur material losses related to non- performance of its counterparties. Other financial 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. The credit risk exposure per financial institution is capped at 25% of Adyen\u2019s eligible capital, provided that the financial institution has a credit rating in the A categories of Moody\u2019s/S&P\u2019s or, if not available, its equivalent from other rating agencies. Adyen has conservatively translated this amount into an internal limit of EUR 550 million. For financial institutions with lower credit ratings, the credit risk per financial institution is capped at EUR 200 million under business-as-usual conditions. Neither limit was breached during the year ended December 31, 2023. Furthermore, Adyen has reduced its concentration risk in exposures held at financial institutions evident by the lower 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. | Adyen\u2019s risk appetite for concentration risk is moderate. The residual risk after risk mitigation is considered low so that current credit concentration risk remains within risk appetite. |
Accounting policy \u2013 Intangible assets The intangible assets include internally generated software with finite useful lives, which are stated at cost less accumulated amortization and impairment.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 | 2023 | 2022 |
Internally generated software | ||
Cost | 23,029 | 22,776 |
Accumulated amortization | (14,889) | (12,935) |
Balance - January 1 | 8,140 | 9,841 |
Additions | 4,138 | 3,523 |
Amortization for the year | (3,521) | (5,224) |
Balance - December 31 | 8,757 | 8,140 |
Cost | 27,167 | 23,029 |
Accumulated amortization | (18,410) | (14,889) |
Balance - December 31 | 8,757 | 8,140 |
Accounting policy \u2013 Intangible assets The intangible assets include internally generated software with finite useful lives, which are stated at cost less accumulated amortization and impairment.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 Intangible assets The intangible assets include internally generated software with finite useful lives, which are stated at cost less accumulated amortization and impairment.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 and impairment. 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 Plant and equipment Plant and equipment are stated at cost less accumulated depreciation and impairment. 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. | ||
Plant and equipment | Computer Hardware and Software | Leasehold Improvements | Other | Total |
2022 | ||||
Cost | 98,379 | 18,738 | 4,002 | 121,119 |
Accumulated depreciation | (40,439) | (5,980) | (1,719) | (48,138) |
Balance - January 1 | 57,940 | 12,758 | 2,283 | 72,981 |
Additions | 81,848 | 12,555 | 1,172 | 95,575 |
Disposals | (100) | \u2014 | \u2014 | (100) |
Depreciation for the year | (23,176) | (4,464) | (714) | (28,354) |
Other changes (e.g. exchange differences) | 255 | 379 | 60 | 694 |
Balance - December 31 | 116,767 | 21,228 | 2,801 | 140,796 |
2023 | ||||
Cost | 178,707 | 31,774 | 5,244 | 215,725 |
Accumulated depreciation | (61,940) | (10,546) | (2,443) | (74,929) |
Balance - January 1 | 116,767 | 21,228 | 2,801 | 140,796 |
Additions | 59,708 | 4,568 | 1,329 | 65,605 |
Disposals | (1,093) | (32) | (28) | (1,153) |
Depreciation for the year | (39,083) | (5,957) | (915) | (45,955) |
Transfer from inventory | \u2014 | \u2014 | 6,269 | 6,269 |
Other changes (e.g. exchange differences) | (500) | 48 | 26 | (426) |
Balance - December 31 | 135,799 | 19,855 | 9,482 | 165,136 |
Cost | 216,513 | 36,064 | 12,745 | 265,322 |
Accumulated depreciation | (80,714) | (16,209) | (3,263) | (100,186) |
Balance - December 31 | 135,799 | 19,855 | 9,482 | 165,136 |
Accounting policy \u2013 Plant and equipment Plant and equipment are stated at cost less accumulated depreciation and impairment. 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 months; 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 | 2023 | 2022 |
Trade and other receivables | 143,864 | 93,399 |
Less: Allowance for expected credit losses | (9,590) | (4,049) |
Balance - Trade receivables - Net | 134,274 | 89,350 |
Receivables from merchants and financial institutions | 490,052 | 369,104 |
Total | 624,326 | 458,454 |
Receivables from merchants and financial institutions | 2023 | 2022 |
Receivables from financial institutions | 292,091 | 279,106 |
Receivables from merchants | 197,961 | 89,998 |
Balance - December 31 | 490,052 | 369,104 |
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 months; 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 | 2023 | 2022 |
Trade payables | 14,110 | 19,922 |
Taxes and social security | 70,319 | 55,593 |
Accrued employee benefits | 35,957 | 30,041 |
Accrued liabilities and other debts | 46,048 | 33,105 |
Cash-settled share-based payment plan - current portion | 1,963 | 9,166 |
Trade and other payables | 168,397 | 147,827 |
Payables to merchants and financial institutions | 5,953,563 | 4,795,804 |
Total | 6,121,960 | 4,943,631 |
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 | 2023 | 2022 |
Offices and data centers | ||
Cost | 249,760 | 168,630 |
Accumulated depreciation | (68,084) | (40,567) |
Balance - January 1 | 181,676 | 128,063 |
Additions | 55,173 | 81,060 |
Depreciation for the period | (35,977) | (30,035) |
Other movements (e.g. exchange differences) | (1,209) | 2,588 |
Balance - December 31 | 199,663 | 181,676 |
Recognized right-of-use asset | 299,080 | 249,760 |
Accumulated depreciation | (99,417) | (68,084) |
Balance - December 31 | 199,663 | 181,676 |
Lease liability | 2023 | 2022 |
Balance - January 1 | 203,073 | 142,964 |
Additions | 55,173 | 81,060 |
Lease installments | (38,343) | (25,516) |
Interest expense | 4,532 | 3,372 |
Other movements (e.g. exchange differences) | (1,372) | 1,193 |
Balance - December 31 | 223,063 | 203,073 |
Current portion | 50,666 | 33,200 |
Non-current portion | 172,397 | 169,873 |
Minimum future lease payments | 2023 | 2022 |
Within 1 year | 45,734 | 34,460 |
Between 1 and 2 years | 45,352 | 35,103 |
Between 2 and 3 years | 40,547 | 33,135 |
Between 3 and 4 years | 32,326 | 27,890 |
Between 4 and 5 years | 19,677 | 21,748 |
Later than 5 years | 56,433 | 49,870 |
Total | 240,069 | 202,206 |
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) | 2023 | 2022 |
Supervisory Board | (19) | (115) |
Employees (STAK) | 16,562 | 3,627 |
2023 | 2022 | |||||
PwC Accountants N.V. | Other PwC firms* | Total | PwC Accountants | Other PwC firms* | Total | |
Audit of financial statements | 1,206 | 746 | 1,952 | 842 | 713 | 1,555 |
Other audit services | 494 | \u2014 | 494 | 333 | \u2014 | 333 |
Other non-audit services | 218 | \u2014 | 218 | \u2014 | \u2014 | \u2014 |
Tax services | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 |
Total | 1,918 | 746 | 2,664 | 1,175 | 713 | 1,888 |
2023 | 2022 | |
Other audit services required by law or regulatory requirement | ||
Audit of financial statements | 1,952 | 1,555 |
Audit of the regulatory returns to be submitted to the Dutch Central Bank | 48 | 45 |
Assurance engagement DGS report | 62 | 56 |
Other audit services | ||
Assurance engagement ISAE 3402 report | 127 | 101 |
Assurance engagement SOC 2 report | 158 | 131 |
Assurance engagement ESG | 99 | \u2014 |
Other non-audit services | 218 | \u2014 |
Total for the year | 2,664 | 1,888 |
2023 | 2022 | |
Salaries and short-term employee benefits | 4,407 | 3,590 |
Share-based payments | 955 | 439 |
Post-employment benefits | 318 | 209 |
Total | 5,680 | 4,238 |
2023 | 2022 | |
Salaries and short-term employee benefits | 379 | 386 |
Total | 379 | 386 |
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, 2023, 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 in the case of Adyen relates to share options and RSUs granted to employees (refer to Note 4.3). | ||
Share information | 2023 | 2022 |
Net income attributable to owners of Adyen N.V. (in EUR '000) | 698,322 | 564,139 |
Weighted average number of ordinary shares for the period | 31,012,122 | 30,975,325 |
Dilutive effect of share plans | 144,868 | 70,704 |
Weighted average number of ordinary shares for diluted net profit for the period | 31,156,990 | 31,046,029 |
Net profit per share \u2013 basic | 22.52 | 18.21 |
Net profit per share - diluted | 22.41 | 18.17 |
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, 2023, 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 in the case of Adyen relates to share options and RSUs granted to employees (refer to Note 4.3). | ||
Amounts accrued on IFRS Consolidated basis | Taxes received/ (paid) on cash basis | ||||||||||
Country | Main activity | Ending FTE | Total Operating (Expense)/ Income | Income Before Tax | Income Tax Expense | ETR% | Income Tax | Indirect Tax | Payroll Tax | Grants / Incentives | Total tax contribution |
The Netherlands | Head office - Payment service provider | 2,326 | (511,797) | 748,803 | (211,606) | 28% | (140,679) | (121,622) | (116,060) | 496 | (377,865) |
United Kingdom | Sales office\u00a0 | 147 | (32,788) | 11,276 | (1,978) | 18% | \u2014 | (1,540) | (12,308) | \u2014 | (13,848) |
France | Sales office | 96 | (21,757) | 3,063 | (633) | 21% | (898) | (47,139) | (6,673) | \u2014 | (54,710) |
Germany | Sales and support office | 112 | (18,475) | 6,001 | (1,836) | 31% | (2,236) | \u2014 | (8,745) | \u2014 | (10,981) |
Sweden | Sales office | 76 | (12,304) | 2,976 | (759) | 26% | (418) | \u2014 | (4,994) | \u2014 | (5,412) |
Spain | Sales and support office | 133 | (14,111) | 3,853 | (891) | 23% | (1,117) | (3,090) | (4,182) | \u2014 | (8,389) |
Belgium | Sales office | 15 | (3,007) | 436 | (133) | 31% | \u2014 | \u2014 | (1,801) | \u2014 | (1,801) |
Italy | Sales office | 32 | (5,319) | 947 | (77) | 8% | (353) | (9) | (1,442) | \u2014 | (1,804) |
United Arab Emirates | Support office | 27 | (5,920) | 1 | \u2014 | \u2014 | \u2014 | (1,555) | \u2014 | \u2014 | (1,555) |
Poland | Sales office | 18 | (2,706) | 532 | (170) | 32% | (118) | \u2014 | (829) | \u2014 | (947) |
Norway | No office | \u2014 | \u2014 | \u2014 | \u2014 | \u2014% | (316) | (316) | |||
United States | Sales and support office | 640 | (203,534) | 122,907 | (13,553) | 11% | (2,994) | (2,540) | (46,377) | \u2014 | (51,911) |
Brazil | Sales and support office | 209 | (36,598) | 10,015 | (4,215) | 42% | (1,447) | (4,871) | (8,887) | \u2014 | (15,205) |
Mexico | Sales office | 27 | (5,274) | 793 | (540) | 68% | (862) | (3,972) | (1,140) | \u2014 | (5,974) |
Canada | Sales office | 26 | (5,856) | 4,026 | (944) | 23% | (778) | (25,783) | (1,366) | \u2014 | (27,927) |
Singapore | Sales and support office | 165 | (29,167) | 11,478 | (2,495) | 22% | (659) | (21,600) | (2,019) | \u2014 | (24,278) |
Australia | Sales and support office | 54 | (10,611) | 5,738 | (1,781) | 31% | (607) | (15,927) | (2,212) | \u2014 | (18,746) |
China | Sales office | 36 | (8,148) | 5,801 | (1,423) | 25% | (1,095) | (687) | (2,641) | \u2014 | (4,423) |
Japan | Sales and support office | 33 | (6,728) | 1,409 | (379) | 27% | (682) | (12,779) | (1,233) | \u2014 | (14,694) |
Hong Kong | Sales office | 9 | (1,968) | 1,655 | (185) | 11% | (181) | \u2014 | \u2014 | \u2014 | (181) |
India | Sales office | 12 | (7,169) | 202 | (515) | 255% | \u2014 | (404) | (497) | \u2014 | (901) |
New Zealand | Sales office | \u2014 | (425) | 389 | (105) | 27% | \u2014 | (3,132) | (120) | \u2014 | (3,252) |
Malaysia | Sales office | 3 | (604) | 256 | (69) | 27% | (42) | \u2014 | (35) | \u2014 | (77) |
Korea | Liquidated during the year | \u2014 | 42 | 52 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | |
Switzerland | No office | \u2014 | \u2014 | (652) | \u2014 | \u2014 | (652) | ||||
Total | 4,196 | (944,224) | 942,609 | (244,287) | 26% | (155,166) | (267,618) | (223,561) | 496 | (645,849) |
TTC Item | General findings | Exceptions |
Income before tax | NL owns the majority of income before tax given the key entrepreneurial functions performed, risks managed and intangible assets owned. | |
Income tax expense | Income tax expense should be close to the statutory tax rate multiplied by the income before tax. Typically the income tax expense is a bit higher than the statutory rate, due to many countries limiting deductibility of certain costs - such as meals, entertainment and stock based compensation. | Adyen NV incurs non-deductible amounts in the Netherlands, has prior year adjustments and is taxed on income booked for accounting purposes in the United States. |
Most outliers can be explained as reversal of (too high) accruals of previous years or because of an accounting difference (IFRS vs. statutory). | ||
The United States ETR is lower than the statutory rate in the United States due to stock based compensation and because income is booked in the United States branch its books for accounting purposes which is taxable only in the Netherlands. The latter does not impact the consolidated ETR as that income is taxed against the Dutch statutory tax rate. | ||
Income tax paid | Income tax paid should be close to the income tax expense | Differences in the income tax expense and the income tax paid are caused by impact of deferred taxes and deviations between profits assessed in preliminary assessments and profits realized. |
Incentives | We are reluctant to apply grants and incentives. | The only incentive applied is WBSO, a Dutch R&D tax credit scheme. |
Note | 2023 | 2022 | |
Revenue | 26 | 1,734,476 | 7,575,105 |
Costs incurred from financial institutions | 26 | (242,491) | (6,340,102) |
Costs of goods sold | 26 | (73,811) | (46,564) |
Net revenue | 1,418,174 | 1,188,439 | |
Wages and salaries | 27 | (432,160) | (269,641) |
Social securities and pension costs | 27 | (64,083) | (39,700) |
Amortization and depreciation | 13,30,31 | (64,614) | (46,720) |
Other operating expenses | 28 | (219,729) | (182,750) |
Other expenses | 3 | (23,237) | (54) |
Income before net finance income and income taxes | 614,351 | 649,574 | |
Finance income | 232,668 | 27,048 | |
Finance expense | (3,834) | (11,251) | |
Other financial results | 29 | 45,347 | 27,107 |
Net finance income | 274,181 | 42,904 | |
Note | 2023 | 2022 | |
Share of the profit of investments in subsidiaries | 32 | 39,234 | 21,351 |
Income before income taxes | 927,766 | 713,829 | |
Income taxes | (229,444) | (149,690) | |
Net income for the year | 698,322 | 564,139 | |
Net income attributable to owners of Adyen N.V. | 698,322 | 564,139 | |
Other comprehensive income/ (expense) | |||
Items that may be reclassified to profit or loss | |||
Currency translation adjustments foreign operations | 790 | (1,326) | |
Other comprehensive income/ (expense) for the year | 790 | (1,326) | |
Total comprehensive income for the year (attributable to owners of Adyen N.V.) | 699,112 | 562,813 |
Note | December 31, 2023 | December 31, 2022 | |
Intangible assets | 13 | 8,757 | 8,140 |
Plant and equipment | 30 | 127,045 | 113,596 |
Right-of-use assets | 31 | 167,847 | 153,329 |
Other financial assets at FVPL | 11 | 14,821 | 12,264 |
Contract assets | 2.2 | 24,020 | 47,916 |
Deferred tax assets* | 104,056 | 138,705 | |
Investments in consolidated subsidiaries on equity method | 32 | 159,493 | 115,030 |
Total non-current assets | 606,039 | 588,980 | |
Inventories | 93,019 | 78,788 | |
Receivables from merchants and financial institutions | 33 | 361,834 | 222,009 |
Trade and other receivables | 33 | 420,298 | 241,630 |
Current income tax receivables | 1,861 | 5,640 | |
Cash and cash equivalents | 7,454,251 | 5,964,798 | |
Total current assets | 8,331,263 | 6,512,865 | |
Total assets | 8,937,302 | 7,101,845 |
Note | December 31, 2023 | December 31, 2022 | |
Share capital | 8 | 310 | 310 |
Share premium | 8 | 390,043 | 352,399 |
Legal reserves | 22,582 | 18,518 | |
Other reserves | 151,471 | 150,298 | |
Retained earnings* | 1,888,139 | 1,330,392 | |
Net income for the year | 698,322 | 564,139 | |
Total equity attributable to owners of Adyen N.V. | 3,150,867 | 2,416,056 | |
Derivative liabilities | 11 | 1,400 | 35,000 |
Deferred tax liabilities | 5,090 | 10,749 | |
Lease liability | 31 | 150,472 | 150,278 |
Total non-current liabilities | 156,962 | 196,027 | |
Payables to merchants and financial institutions | 36 | 5,405,278 | 4,336,872 |
Trade and other payables | 36 | 127,357 | 126,274 |
Lease liability | 31 | 38,717 | 23,442 |
Current income tax payables | 58,121 | 3,174 | |
Total current liabilities | 5,629,473 | 4,489,762 | |
Total liabilities and equity | 8,937,302 | 7,101,845 |
\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 | |
Adjustment for change in accounting standard | 7.2 | 3,938 | 3,938 | |||||
Balance - January 1, 2022 (restated) | 310 | 335,725 | 32,244 | 102,142 | 25,575 | 1,318,356 | 1,814,352 | |
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 | 29,159 | ||||
Options exercised | 568 | (568) | \u2014 | |||||
Proceeds on issuing shares | 8 | 9,926 | 9,926 | |||||
Share-based payments | 4.3 | 9 | 9 | |||||
\u2014 | 16,674 | \u2014 | 22,420 | \u2014 | \u2014 | 39,094 | ||
Balance - December 31, 2022 | 310 | 352,399 | 18,518 | 124,723 | 25,575 | 1,894,531 | 2,416,056 |
\u00a0 | Other reserves | |||||||
Note | Share capital | Share premium | Legal reserves | Share-based payment reserve | Warrant reserve | Retained earnings* | Total equity | |
Balance - January 1, 2023 | 310 | 352,399 | 18,518 | 124,723 | 25,575 | 1,894,531 | 2,416,056 | |
Net income for the year | 698,322 | 698,322 | ||||||
Currency translation adjustments | 790 | 790 | ||||||
Total comprehensive income for the year | \u2014 | \u2014 | 790 | \u2014 | \u2014 | 698,322 | 699,112 | |
Adjustments: | ||||||||
Other financial assets at FVPL movement (net of deferred tax) | 2,557 | (2,557) | \u2014 | |||||
Intangible assets | 717 | (717) | \u2014 | |||||
Other adjustments | 744 | (3,118) | (2,374) | |||||
\u2014 | \u2014 | 3,274 | 744 | \u2014 | (6,392) | (2,374) | ||
Transactions with owners in their capacity as owners: | ||||||||
Deferred tax on share-based compensation | 7.2 | 11,196 | (31,398) | \u2014 | (20,202) | |||
Options exercised | 634 | (634) | \u2014 | |||||
Proceeds on issuing shares | 8 | \u2014 | 13,201 | 13,201 | ||||
Share-based payments | 4.3 | 12,613 | 12,037 | 24,650 | ||||
Reclassification of share-based payment plan | 4.3 | 20,424 | 20,424 | |||||
\u2014 | 37,644 | \u2014 | 429 | \u2014 | \u2014 | 38,073 | ||
Balance - December 31, 2023 | 310 | 390,043 | 22,582 | 125,896 | 25,575 | 2,586,461 | 3,150,867 |
Note | 2023 | 2022 | |
Income before income taxes | 927,766 | 713,829 | |
Adjustments for: | |||
\u2013 Finance income | (232,668) | (27,048) | |
\u2013 Finance expenses | 3,834 | 11,251 | |
\u2013 Other financial results | 29 | (45,347) | (27,107) |
\u2013 Other expenses | 1,035 | ||
\u2013 Depreciation of plant and equipment | 30 | 36,183 | 21,725 |
\u2013 Amortization of intangible fixed assets | 13 | 3,521 | 5,224 |
\u2013 Depreciation of right-of-use assets | 31 | 24,910 | 19,771 |
\u2013 Share of the profit of investments in subsidiaries | 32 | (39,234) | (21,351) |
\u2013 Share-based payments | 21,902 | 7 | |
Changes in working capital: | |||
\u2013 Inventories | (14,231) | (60,016) | |
\u2013 Trade and other receivables | 33 | (178,668) | (120,662) |
\u2013 Receivables from merchants and financial institutions | 33 | (139,825) | 281,638 |
\u2013 Payables to merchants and financial institutions | 36 | 1,067,067 | 1,150,418 |
\u2013 Trade and other payables | 10,549 | 51,490 | |
\u2013 Amortization and additions of contract assets | 2.2 | 23,896 | 30,210 |
Cash generated from operations | 1,470,690 | 2,029,379 | |
Note | 2023 | 2022 | |
Interest received | 232,668 | 27,048 | |
Interest paid | (3,834) | (11,251) | |
Income taxes paid | (148,776) | (140,910) | |
Net cash flows from operating activities | 1,550,748 | 1,904,266 | |
Redemption of other financial assets at FVPL | 11 | \u2014 | 11,407 |
Investments in consolidated subsidiaries on equity method | 32 | \u2014 | (106) |
Net cash from liquidation of Adyen Inc. | 32 | \u2014 | 6,643 |
Purchases of plant and equipment | 30 | (51,689) | (83,099) |
Capitalization of intangible assets | 13.0 | (4,138) | (3,523) |
Net cash used in investing activities | (55,827) | (68,678) | |
Proceeds from issues of shares | 8 | 13,201 | 9,926 |
Lease payments | 31 | (24,330) | (12,907) |
Net cash flows used in financing activities | (11,129) | (2,981) | |
Net increase in cash, cash equivalents and bank overdrafts | 1,483,792 | 1,832,607 | |
Cash, cash equivalents and bank overdrafts at beginning of the year | 5,964,798 | 4,150,440 | |
Exchange gains/(losses) on cash, cash equivalents and bank overdrafts | 5,661 | (18,249) | |
Cash, cash equivalents and bank overdrafts at end of the period | 7,454,251 | 5,964,798 |
Types of goods or service | 2023 | 2022 |
Settlement fees | 833,798 | 7,042,045 |
Processing fees | 360,802 | 302,052 |
Sales of goods | 74,158 | 50,958 |
Other services | 465,718 | 180,050 |
Total revenue from contracts with customers | 1,734,476 | 7,575,105 |
Costs incurred from financial institutions | (242,491) | (6,340,102) |
Costs of goods sold | (73,811) | (46,564) |
Net revenue | 1,418,174 | 1,188,439 |
Employee benefits | 2023 | 2022 |
Salaries and wages | 397,992 | 260,246 |
Share-based compensation | 34,168 | 9,395 |
Total wages and salaries | 432,160 | 269,641 |
Social securities | 52,551 | 32,743 |
Pension costs - defined contribution plans | 11,532 | 6,957 |
Total social securities and pension costs | 64,083 | 39,700 |
Other operating expenses | 2023 | 2022 |
Travel and other staff expenses | 44,585 | 35,458 |
Sales and marketing costs | 43,448 | 43,263 |
IT costs | 34,218 | 27,163 |
Advisory costs | 21,314 | 24,271 |
1% for the UN SDGs | 16,229 | 13,302 |
Contractor costs | 14,865 | 12,828 |
Housing costs | 11,596 | 8,483 |
Office costs | 7,937 | 6,974 |
Miscellaneous operating expenses | 25,537 | 11,008 |
Total other operating expenses | 219,729 | 182,750 |
Other financial results | 2023 | 2022 |
Exchange gains/(losses) (Note 6.1) | 8,537 | (19,440) |
Fair value re-measurement of financial instruments: | ||
Derivative liabilities (Note 6.2) | 33,600 | 46,700 |
Other financial assets at FVPL (Note 6.3) | 3,210 | (153) |
Total other financial results | 45,347 | 27,107 |
Plant and equipment | Computer Hardware and Software | Leasehold Improvements | Other | Total |
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 |
2023 | ||||
Cost | 142,791 | 25,030 | 4,314 | 172,135 |
Accumulated depreciation | (48,780) | (7,676) | (2,083) | (58,539) |
Balance - January 1 | 94,011 | 17,354 | 2,231 | 113,596 |
Additions | 46,008 | 4,100 | 1,581 | 51,689 |
Disposals | (1,094) | \u2014 | \u2014 | (1,094) |
Depreciation for the year | (30,924) | (4,534) | (725) | (36,183) |
Other changes (e.g. exchange differences) | (116) | (648) | (199) | (963) |
Balance - December 31 | 107,885 | 16,272 | 2,888 | 127,045 |
Cost | 167,828 | 29,017 | 5,850 | 202,695 |
Accumulated depreciation | (59,943) | (12,745) | (2,962) | (75,650) |
Balance - December 31 | 107,885 | 16,272 | 2,888 | 127,045 |
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 | 2023 | 2022 |
Offices and data centers | ||
Cost | 203,727 | 133,908 |
Accumulated depreciation | (50,398) | (23,304) |
Balance - January 1 | 153,329 | 110,604 |
Additions | 40,601 | 62,745 |
Depreciation for the period | (24,910) | (19,771) |
Other movements | (1,173) | (249) |
Balance - December 31 | 167,847 | 153,329 |
Recognized right-of-use asset | 240,831 | 203,727 |
Accumulated depreciation | (72,984) | (50,398) |
Balance - December 31 | 167,847 | 153,329 |
Lease liability | 2023 | 2022 |
Balance - January 1 | 173,720 | 123,882 |
Additions | 40,601 | 62,745 |
Lease instalments | (28,063) | (15,672) |
Interest expense | 3,733 | 2,765 |
Other movements (e.g. exchange differences) | (802) | \u2014 |
Balance - December 31 | 189,189 | 173,720 |
Current portion | 38,717 | 23,442 |
Non-current portion | 150,472 | 150,278 |
Minimum future lease payments | 2023 | 2022 |
Within 1 year | 34,572 | 24,107 |
Between 1 and 2 years | 35,486 | 25,981 |
Between 2 and 3 years | 32,631 | 26,122 |
Between 3 and 4 years | 27,178 | 22,987 |
Between 4 and 5 years | 18,265 | 20,247 |
Later than 5 years | 56,433 | 45,750 |
Total | 204,565 | 165,194 |
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 | 2023 | 2022 |
Balance - January 1 | 115,030 | 212,318 |
Investments in consolidated subsidiaries | 4,794 | 27,174 |
Liquidation of Adyen Inc. | \u2014 | (141,658) |
Share of the profit of investments in subsidiaries | 39,234 | 21,351 |
Currency translation adjustments foreign operations | 790 | (1,326) |
Share of changes in equity of investments in subsidiaries | (355) | (2,829) |
Balance - December 31 | 159,493 | 115,030 |
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 |
Adyen, London branch | London, United Kingdom |
Name | Branch location |
Adyen N.V., Belgian Rep Office | Brussels, Belgium |
Adyen N.V., Italian Rep Office | Rome, Italy |
Adyen N.V., Spanish Rep Office | Madrid, Spain |
Adyen N.V., Polish Rep Office | Warsaw, Poland |
Adyen, Czech Representative Office | Prague, Czech Republic |
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 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 India Tech Hub Pvt. Ltd. | Mumbai, India | 100% |
Adyen Japan K.K. | Tokyo, Japan | 100% |
Adyen MEA FZ-LLC | Dubai, United Arab Emirates | 100% |
Adyen Middle East Limited | Dubai, United Arab Emirates | 100% |
Trade and other receivables | 2023 | 2022 |
Trade and other receivables | 428,628 | 245,025 |
Less: Allowance for expected credit losses | (8,330) | (3,395) |
Trade receivables - Net | 420,298 | 241,630 |
Receivables from Merchants and Financial Institutions | 361,834 | 222,009 |
Total | 782,132 | 463,639 |
Trade and other payables | 2023 | 2022 |
Trade payables | 10,190 | 17,080 |
Taxes and social security | 41,972 | 43,777 |
Accrued employee benefits | 32,650 | 22,565 |
Accrued liabilities and other debts | 39,772 | 29,660 |
Cash-settled share-based payment plan | 2,773 | 13,192 |
Trade and other payables | 127,357 | 126,274 |
Payables to merchants and financial institutions | 5,405,278 | 4,336,872 |
Total | 5,532,635 | 4,463,146 |