Adyen N.V. (ADYEN) Earnings Call Transcript & Summary

Good morning. Before I welcome you all to our fully virtual General Meeting of Shareholders of Adyen N.V., I would like to thank you for your attendance today during these unprecedented times. These are extraordinary circumstances. And above all, I hope you and your loved ones are safe at this time. As you have seen on our website, we have converted our initially convened Annual General Meeting into a fully virtual general meeting, following the COVID-19 developments and the implementation of the emergency legislation on fully virtual general meetings. We are pleased to host this virtual general meeting for you together with the Management Board and the Supervisory Board. Welcome. I would like to briefly introduce the Management Board and the Supervisory Board to you. Our Management Board currently consists of 7 persons: Pieter van der Does, CEO, Chief Executive Officer and Co-Founder of Adyen; Arnout Schuijff, the CTO, the Chief Technology Officer and Co-Founder of Adyen; Ingo Uytdehaage, our CFO, Chief Financial Officer; Roelant Prins, our CCO, Chief Commercial Officer; Mariëtte Swart, our CLCO, the Chief Legal and Compliance Officer; Kamran Zaki, our COO, the Chief Operating Officer; and finally, Joop Wijn, our CSRO, Chief Strategy and Risk Officer. Pieter, Ingo and Mariëtte are pleased to join me today. You will probably have seen our press releases that both Sam Halse and Joop Wijn have resigned as Management Board members recently. Sam Halse has resigned per the 29th of February 2020. And Joop Wijn's resignation will become effective as per the 31st of May 2020. Our Supervisory Board currently consists of 4 persons: my name is Piero Overmars, I'm the Chairman of the Supervisory Board; Delfin Rueda is the Chairman of the Audit Committee; Joep van Beurden is the Chairman of the Nomination and the Remuneration Committee; and Pamela Ann Joseph. Delfin, Joep and Pamela are pleased to join me here today. Before we start with this Annual General Meeting, I have a number of announcements and requests to make. The meeting will be held in English. We are an international company with English spoken as our corporate language. This meeting will be streamed live through a live webcast and will be audio recorded. Records shall be published on the company's website. There was a possibility to submit questions up to 72 hours prior to this general meeting. These questions will be answered during this meeting. In addition, there is a possibility to submit questions during the meeting via the online platform. The questions will be categorized and clustered per theme. Not all the individual questions that are submitted during this meeting may, therefore, be addressed individually, but I will try to address as many questions as we can. I hereby state that this shareholders' meeting has been convened in accordance with the company's Articles of Association. The agenda, the explanatory notes to the agenda and corresponding documentation were all made available on our website within the prescribed time. Therefore, I conclude that the convening of this shareholders' meeting has taken place in a legally valid manner. I am pleased to appoint Brigitte van den Bosch as Secretary of this meeting. The minutes of the meeting will be drawn up as an official report by Mark-Jan Arends, our Civil Law Notary at Clifford Chance. Apart from during the meeting, it was also possible to cast votes electronically from the registration date up to and including the 19th of May 2020, by 17:00 Central Eastern Time. I refer you to the convening notice documentation for the exact details. The votes for all items will remain open during the virtual meeting and will be closed after the last voting item on the agenda has been discussed. I will, therefore, inform you about the voting results at the end of the meeting. To exact -- the exact percentage of shares represented here as well as the number of votes that are validly represented will now be announced by the Civil Law Notary, Mark-Jan.

Thank you, Chairman. I can confirm that currently, 23,905,459 votes are validly represented at this meeting. And for your information, this represents 79.15% of the total issued share capital of the company. These totals include the votes that were cast electronically, and that means that we can take valid resolutions for all the items on the agenda being put to a vote today. I will give the floor back to the Chairman.

Okay. Thank you, Mark-Jan. This brings the opening of this meeting to a close. And we will now proceed with agenda item #2: the annual report, the remuneration report, the adoption of the annual accounts, the dividend policy, remuneration policy and remuneration Supervisory Board. We now come to agenda item #2a, where the Management Board, the Supervisory Board and the external auditor will present their report for the past year. After the presentation of the Management Board, I will elaborate on the report of the Supervisory Board. Thereafter, our external auditor, Rogier van Adrichem of PwC, will give an account of the 2019 audit in which PwC performed the audit of the company. After these presentations, you will have the opportunity to submit questions to the Management Board, the Supervisory Board and the external auditor. I will start by giving the floor to Pieter van der Does, the CEO of the company; and Ingo Uytdehaage, CFO of the company, for the report of the Management Board for 2019.

Hi. Thank you, Piero. The world is currently in challenging times due to COVID. And because of that, Adyen did a Q1 update, which we did on the 21st of April. And the next time that we'll report on 2020 to the market will be the H1 numbers, which will be the 20th of August. But today, we are talking about 2019, which now feels a while ago, but that's what today is about. Let me start with how we got to the position which we have, and that is we built Adyen with a single platform. And that platform is a platform that takes together things in this industry which have been historically been separated. So where in the past, it was quite common as a merchant to connect to a technical gateway, maybe use an external risk company, then it will go -- your transaction will go into a processing platform but sometimes built by a bank. But sometimes, that's just a software which they buy, so they could be a first data platform. Then there's the license holder, which then often is bank. And then there's -- and that's how the transaction gets to the credit card platform. What we said is it would be beneficial from a functionality point of view to put everything in one platform. So if that's all together, what you see is that outperforms those platforms which are more stitched together and built by different components. On top of that, we have said, we believe that the best way to develop in the payments industry is to run just one platform. So where we see that we compete with many companies that -- with many companies that run multiple platforms, so where they have merchants which are connected to different platforms and where the physical points of sale, so the store business is on another platform. That means that they are way more intense to maintain. That means that if you have an engineer implementing, say, payment method and you run 14 platforms, that engineer would have to do that 14 times and you have to maintain it 14 times. Whereas we say the benefits of just having a single integration, and that means that as a merchant, if you're connected to that platform and say we implement Alipay, then Alipay is available online, is available in-store and it's available for all merchants. So that's very efficient. That means that we have a higher return on our engineer. So what have we done with this position in 2019? We have continued to innovate on the single platform. And let me talk about an industry that we particularly look at. On the back of the eBay deal, we got a lot of interest from platform companies. And to further support them, in 2019, we launched card issuing. And why is that so interesting? If you were on the platform, you can use Adyen to, for example, to have your -- well, an example could be, as you know, which is software or a SaaS. You can have your consumers pay in. Actually, that's -- let me use a different example. If you have a company like [ Global ] that picks up in-store stuff for you, so you can have Global to pick up anything, but let's take an example of food. If you want to, you pay Global to have that food picked up, but then somebody has to pick it up in the store and pay. What Adyen can do is issue a card where that the person working for Global can pay in the restaurant. Why is it then interesting to work with Adyen for that? What helps is that you then can connect to a single platform with a seller set of APIs where you run one administration, where you can instantly fund that card at the moment the person picking up the grocery needs to pay. And it works in multiple regions. So that's how we have further expanded to help our platform merchants. We have also started with new avenues of growth, and I think quick-service restaurants here is a good example. We talked in the past about quick-service restaurants that we found it an interesting market segment. What we saw in 2019 is that we indeed onboarded those quick-service restaurants. And what you've seen over time is that the consumer needs for quick-service restaurants changed. They use multichannel so that you can order on a screen history. You can order from your mobile. There's the traditional point of sale. They want to standardize across regions. And that means that suddenly, that payment functionality fits very well what Adyen can do for them. So we were very happy to see that the industry which we found attractive now also is supported by being able to talk about [ Mykonos ], talk about [ Subway ] tuning for us. If you look at the growth pillars, our corporate merchant segment is the strongest growth part of Adyen and in terms of volume. But if you look at what are growing, outpacing the rest, then point-of-sale has been increasing its share of our total volume. So those are very positive trends. If you look at how we further build the business, we've been opening in new regions. We've opened in an office in Mumbai. We've opened an office in Tokyo. And what's also noticeable is that we -- regarding corporate social responsibility, we have launched a program where we compensate our full carbon emissions actually from the beginning of Adyen. And we are also focused on developing functionality for the giving industry, helping our merchants to make it easy to raise money for good causes. Further to finish 2019, sustainable profitable growth. What we see is that it's -- we're seeing growth over the width of our merchant base. So that's a very positive trend, I would say. And we don't make loss-making contracts. So all merchants are contributing to our growth. And then I'd like to hand over to Ingo.

Thank you, Pieter. What I'd like to do is take you through our financial performance and tell a bit more about what we have seen over the past year. If you look at net revenues, net revenues grew by 42% in 2019. And I think we're absolutely very happy to see that this is in all geographies of Adyen. Although Europe has been always our home market, we see the relative share of Europe declining. And like Pieter said, most of our growth comes from existing merchants. So what is very strong, I think, in our base is that what you -- that merchants that are already live with us, the enterprise merchants contribute mostly to the growth in 2019. Our focus has always been on building a global company. This means also that we don't track profitability or revenues per geography, but we really focus on the profitability per customer and that this makes the management of our customers way easier. Then on cost. If you look at the cost side of the business, most of our cost is related to building the team, the team of engineers, the team of commercial people that help to build Adyen. And for that reason, the cost is basically unrelated to revenues, and this makes our business model very scalable on the long term. Although we keep on investing in the business, we keep on growing the team, we strongly feel that from a scalability perspective, we're on the right track. So the more volume we bring to the platform, that doesn't mean that our cost will increase in similar ways. Another very important part of our business model is that we've built everything in-house, and that means -- or that results in a situation where most of our cost is very manageable. We don't depend on third-party providers, and therefore, our IT cost is at a very low level. Then if you think about profitability, last year, we grew the profit before taxes to EUR 279 million, which is over 50% growth. So you already see the impact of economies of scale into our business. So we're very pleased with this development over 2019. It was slightly helped by the changes in IFRS 16, so the new leasing standard. But I think in general, it shows the scalability of our business. Then if you think about investment in the company, like what do we need to invest in our IT systems, we have guided this below 5% of our net revenues. And if you look at this year, we invested around EUR 20 million into our platform. And we think going forward that we can keep this level as low as it currently is. And this is also, of course, a very important factor that we have this high operating margins. Then equity has increased to EUR 868 million, close to 50% compared to 2018. We proposed to add the profits to the reserves of Adyen, which was approved by the Supervisory Board. And this is in line with our dividend policy to have no dividends given the high growth of the company. This was my presentation. Back to the Chairman. Thank you.

Okay. Thank you, Pieter and Ingo, for your presentations. As a Supervisory Board, we would like to give a brief explanation of our reports. We have a clear duty from the point of view of regulations and Articles of Association in which supervision of the Management Board is paramount. In addition, we also pay particular attention to strategy, compliance, reporting, risk, remuneration and culture. For that purpose, we have set up the Audit Committee and Nomination and Remuneration Committee. The Audit Committee discusses the financial results of the company, the reporting procedures, the risk and control systems, regulations and compliance. It also keeps in close contact with the external auditor and internal audit functions. The external auditor focuses, among other things, on the inspection and audit of the annual accounts. The internal audit focuses on identifying possible areas for improvement in the organization from a reporting and control perspective. The Nomination and Remuneration Committee looks at topics such as culture, remuneration policy, recruiting initiatives and succession of members of the Management Board and Supervisory Board. I would like to inform you about the activities of the Supervisory Board in 2019. It has been discussed at length in the Supervisory Board's report in the annual report. I will not discuss this in its entirety, but I would like to explain a number of elements here. As a Supervisory Board, we are tasked with supervising the conduct and policies of the Management Board. We are guided by the interest of Adyen and its operations, taking into consideration the interest of Adyen's stakeholders and its focus on long-term value creation as is implemented in Adyen's strategy and culture. The profile of the Supervisory Board is such that it's capable of assessing the broad outline of the overall policy of Adyen and of the most important risks incurred. The composition of the Supervisory Board is such that the members are able to act critically and independently of one another, the Management Board and/or any other interest. It further allows for the carrying out of all Supervisory Board tasks, including staffing of committees. In 2019, the Supervisory Board convened for 5 regular meetings at the offices of Adyen. The 4 members attended all of these meetings. During the meetings, the Supervisory Board engaged in deep-dive sessions on specific topics relevant to Adyen's business and discussed Adyen's strategy, including its work streams. The Supervisory Board members regularly visit the Adyen offices also outside of the meeting rounds. This includes the non-headquarter offices, too, such as San Francisco, New York, Singapore, London, Paris, Madrid and others. During these meetings, the individual members of the Supervisory Board interact with internal stakeholders on AML, products, technical, HR and commercial issues. In short, these were some elements of the Supervisory Board's report in 2019. This brings us to the conclusion of the Supervisory Board report. I now invite you to submit any questions about what has just been discussed here. And we will also address some questions that have been sent previously.

And I will start with a question from [ Marishta Voss ] on behalf of PGGM and APG, who sent in the following comments. We appreciate the publication of the comprehensive annual report. As long-term investors, we support the choice to publish half yearly results instead of quarterly results. We also appreciate that Adyen has provided its shareholders with a trading update on Q1 2020 and the impact of COVID on the business. Financially, Adyen is in a great position, so we support its effort to continue to support its customers where necessary. Your comment is well noted, and thank you very much for that. From the VEB, a number of questions have come in on the -- on this agenda item, which will be grouped and answered by Ingo. There's one question about materiality in the annual accounts, which will be taken by Rogier van Adrichem. So Ingo, please take us through the questions from the VEB.

Yes. Thank you, Piero. We have indeed got around 10 questions from the VEB. Let me start with the first one, which is related to our first quarter trading update. VEB asked us where we see that we see contrasting effects from COVID-19, which are travel and in-store sales are down, but the online volumes are up. So they ask us what the impact of these shifts are for our margin developments and profitability of the company. Well, as we build Adyen for the long term, we have not given any guidance for 2020. Of course, COVID-19 has impact on our volumes and revenues, but we have not changed our guidance because this is related to the medium to long term. And we strongly believe that we can continue to grow on the medium to long term, in line with our guidance. The next question is around working from home. Our whole company works from home, and the VEB asked us whether there are additional security risk from such a work-from-home setup. Of course, we continuously assess our security risk. And any change in the situation brings potential new risks, so we continue to evaluate this. And there's also what we have done in this current situation, but given the specific situation, of course, we can't say too much around it. The next question is around stress testing. Many banks have to do additional stress testing as a result of COVID. And the question is whether we have performed stress tests and what the outcomes are. Well, we haven't performed any specific COVID tests. However, stress tests are part of our yearly cycle and discussions with regulators. And I think we are in a very stable position as a company. This is also what our yearly cycle demonstrates. Then the next question is around the value chain, the value chain that Pieter explained. Part of that value chain is sometimes settlement through third-party banks, so they are in the settlement flow. And the question is around the counterparty risk of partners which have a lower rating than A1. What will be the effect of if there will be substantial downgrades from those partners? What would -- what kind of impact would it have on our risk profile and on our transaction volumes? Well, we monitor this closely. And so far, we haven't gotten any signals that this is the case. If needed, we, of course, will try to find alternatives. There are many alternatives specifically for currencies where we have a lot of traffic, and we always make sure that we have an alternative available if needed. Then the next question is on the daily settlement of merchants. There is a product that we have, which is called Sales Day Payout, where we pay out before we receive the funds. And the question is with contracts in mind, whether we can wait with payment until Adyen itself had received the funds. While merchants pay for Sales Day Payout, we can't wait with the settlement. And therefore, we have a lot of liquidity management procedures in place to make sure that we can always work with this product and that we have sufficient liquidity available to our customers. The next question is around the globalization and that some economists basically expect a decline in globalization as a result of COVID-19. And the question is how we look at this. Well, I think that's where we really benefit of having a single platform with localization where needed. We, I think, have benefited strongly from globalization, like global companies that want to go local. But as a result of this strategy, we have a lot of local implementations. And in the markets where we're active, we also see a lot of local customers working with our platform. So we feel we're -- in either outcome, we are really well positioned to play a role in the changing trends in this economy. The next question is about the growth which is mostly due from existing merchants. Could this also work in a different way as a result of -- or in an opposite way as a result of COVID-19? So what if the turnover of merchants would decrease due to COVID-19? Is this really a threat to Adyen? Well, of course, if revenues from merchants would disappear, that's a threat to us. However, we have a really well-defined portfolio. And I think as you can see in our Q1 trading update, the travel industry and the online retail -- or the offline retail traffic disappeared. At the same time, there were compensating trends. So we believe that this really well-diversified portfolio helps us to mitigate this risk. Then the next question is around the long-term guidance. We haven't changed our guidance since our IPO in 2018. The question is when we will update our guidance. Well, I think the answer is short. We have no plans to update our guidance given the fact that it's medium to long term. Then the next question is around our revenues, which is mostly from European and North American markets. The question is what we're going to do on the domestic Chinese market. How does, for instance, the agreement with Alibaba factor into this? Well, we have no plans to go local in China. It has always been our strategy to help Chinese merchants like Alibaba to go international and help them in other parts of the world. The Chinese market is very competitive, and we think it will be hard to find or to play a role there. So we focus on helping Chinese merchants with their international rollout. And then the last question is around the materiality of our profit before tax, and this will be answered by Rogier, our auditor, in a minute.

Yes. Thank you, Ingo. Then a question came in from Mrs. [ Buxbaum ], a question for Pieter. How does Adyen view its market within the coming 3 years, in particular, in the year of the current developments done by Visa and Mastercard as well as Google Pay, Amazon, et cetera? Pieter?

Yes. What you see is that there's constant change in this market. I think Adyen is very well positioned for this change. And it's also good to note that we embrace that. So if Visa and Mastercard come out with new products, we are often the first ones to have them, meaning that if you're an Adyen merchant, you have the feeling that you have a subscription to an ongoing innovation. So you don't become an Adyen merchant for what we can do today, but also with the reassurance that we are constantly adapting to new wallets. But this goes further than that. Also, if you look at in-store payments, there's still a lot of innovation going on with those terminals and that we will look very, very different in a number of years from today. And I think we -- Adyen is very strongly set up for that change.

Okay. Thank you, Pieter. Then a number of questions came in from Mr. [ Stevens ] from the Stichting Rechtsbescherming Beleggers, on behalf of Stichting SRB, and we have received the following questions. And Ingo, I think you will also take care of those as a group like you just did.

Yes. Thank you, Piero. The first question is related to COVID-19 and the impact on our profit margins post COVID. Well, I think the answer can be relatively short. The guidance is unchanged. We continue to invest in the business, and that's also why we have given this medium- to long-term guidance. So I can't say anything more specific on profit levels. And the second question is around those investments in growth. They have pushed down profit margins. What would happen if there is more pressure on the margins due to the effects of COVID-19 and further investment is required? Well, I think also the answer here is quite straightforward. We continue to invest in the team also during these COVID times. We believe that we are really well positioned, and we built this company for the long term. And that's why we continue to invest, albeit maybe with some shorter-term margins -- or lower margins on the short term, but absolutely in line for the guidance that we have given for the medium to long term. Then there's a question around stress testing. I think I already addressed this in the VEB question. And the next question is around the travel industry, if there's any impact in -- as a result of resurgence in the travel industry on the Q2 growth. Well, we will give our update on the first half year in August, and then we can say also a bit more of what we see in the travel industry right now. The next question is around the latest trends around COVID and to what extent shoppers are active online. Also here, I need to refer to our next update in August. I can't say anything around that at the moment. Next question is around Worldline and Ingenico and their acquisition plans. The question is what our M&A strategy is and if there's any play -- any role to play for us in the payment space for further consolidation. Well, I think what we have already said in the past is we pursue an organic growth strategy. So we focus on building our single platform and making sure that our merchants can grow on our platform. So we have no plans to acquire any companies for now. Then the next question is around credit offering. The question -- the statement is that we do not offer credit and whether we were going to do this in the next 5 years. Well, we already offer credit at the moment through our Sales Day Payout product, and we will continue to do so in the future. And then the last question is around a scenario in which new fintech companies potentially could undermine our business model and what our response will be. Of course, we keep tracking what's happening around us. But I think it's fair to say that a lot of the innovation takes place in the consumer space, so in consumer payments. And we are there to help the merchant. And so far, we haven't seen a lot of new players entering this market, but of course, we follow this closely. Thank you.

Okay. Thank you, Ingo. As there are no further questions, we will move on to the next agenda item, which is item #2a is PwC's explanation of the audit and the statements issued for the financial year 2019. For this, I would like to give the floor to Rogier van Adrichem, Partner at PwC. Rogier?

Thank you, Chairman. Dear shareholders, I'm pleased to provide you with some insights into our audit of the financial statements of Adyen for 2019. And in this presentation, I will incorporate the 2 questions of the VEB raised a day before. So we have issued our unqualified auditor's opinion on these financial statements on March 24, 2020. The materiality we have used for our audit has been determined on the -- and is in determining the scope and the depth of our audit work. We have set the materiality at EUR 10 million, which is an increase compared to 2018 of EUR 4 million. We determined materiality primarily on profit before tax, and that's something we do for all profit-oriented companies and especially buy companies or public interest entities like Adyen. In the case of Adyen, we had a cap of EUR 10 million because of the significant growth the company is making. And therefore, through the year, you have to adjust each and every time the materiality and therefore, also your audit approach. And we do want to cap that at EUR 10 million to keep our audit efficient and don't have to change it over and over time. For 2020, we, of course, will use also the rule of thumb of 5% of profit before tax. And possibly, we will use a similar cap, a little bit higher, probably depending on, of course, the profits, but in a similar way. Then if we look at the scope of our work, so we established our scope based on the way Adyen is organized. We performed audit work on all material components, which includes the Netherlands, United States of America and Brazil. The operations in the Netherlands are the most significant ones. Well, by this scope, we have a coverage of 100% of revenue, 99% of total assets and 98% of profit before tax. As all revenues flow through the system here in the Netherlands, that's why we have that 100% coverage. Now we ensure that our audit team for the group as well as for the components, including the appropriate skills and competence for the audit, we included specialists and experts especially on areas like IT, tax, remuneration and valuation services. We address the risk of management override of internal controls, including evaluating whether there was evidence of bias by management that may represent a risk of material misstatement due to fraud. In our analysis of fraud risk factors, we were supported by our forensic specialists. Then the impact of COVID-19. The impact of COVID-19 on the financial statements of 2019 is what we call a non-adjusting, post-balance-sheet event. And that means that the 2019 financial statements should not be adjusted for any possible impact of this virus. Adyen has described in Note 39 of its financial statement the possible impact and consequences of COVID-19 for the company. And in Adyen's Q1 trading update of April 21 this year, management provided additional transparency on processed volumes, net revenue and EBITDA. Then our key audit matters. Now key audit matters are the most important matters we have identified in our audit plan and in our audit work through the year. We identified 4 key audit matters. I will just walk them through one by one. First of all, IT general controls. Now given the importance of information technology for the group and hence, for our audit of the financial statements, we have paid specific attention to the IT dependencies and IT general controls, which comprise the policies and procedures to ensure reliable, automated processing of information used for the financial reporting purposes and relevant application controls. Now we concluded that we could rely on the IT general controls of the group for the purpose of our audit. The second key audit matter was around the risk of overstatement in revenue recognition. Adyen recognized substantial growth in revenue, and revenue is a key financial indicator for management, the investors as well as stakeholders. The generated revenues relates to processing fees, settlement fees and fees for other services in connection with the processed payments. Now our audit focused on the operational effectiveness of the key controls around this revenue process. And additionally, we tested on a sample basis the accuracy and completeness of contractual rates captured in the systems, and we did not identify any material exceptions. And of course, the sample is a statistical sample, which means that every contract has the same chance to be selected. The question of VEB around the eBay contract, we, of course, looked into the eBay contract carefully because it's a significant contract refuted in all kind of details. Then the third key audit matter is around the valuation of deferred tax assets. Well, Adyen recorded a deferred tax asset at its U.S. operations based on U.S. tax law. This deferred tax asset on windfall benefits is linked to its share-based compensation plan. Now we have, amongst others, examined the deferred tax asset from a tax and an accounting perspective as well as assessed the recoverability through agreeing to forecasted future taxable income. By performing these procedures, we determined that the valuation of the deferred tax assets were reasonable. And then our last key audit matter was around the valuation and classification of derivative liabilities. This key audit matter relates to the valuation of a merchant contract, that's the eBay contract. So we performed an independent assessment of the key assumptions contributing to the fair value of the derivative liability. And based on our assessment, we concur with management valuation and classification of the derivative liabilities. Now this last item, which I discussed, the last item I would like to discuss is the audit information as is included in the annual report. We have concluded that the information in the Director's report is consistent with the financial statements and does not contain material misstatements based on our audit work on the financial statement and our knowledge of Adyen. With this, I would like to thank you very much for your attention, and I now give the floor back to the Chairman.

Okay. Thank you, Rogier, for this explanation. I now invite the shareholders to submit any further questions about what Rogier just explained. So anything pertaining the audit process and PwC's statement. You have already answered 2 questions that were sent in before the meeting. So if there are no further questions, then we will move on to agenda item 2b, which is the remuneration report over the year 2019, where we will provide an explanation of the remuneration report over the year 2019, including the Management Board and Supervisory Board's remuneration for the past financial year. This explanation will be given by Joep van Beurden, who is the Chairman of the Nomination and Remuneration Committee. Joep, please?

Yes. Thank you, Chairman. The information and explanation on the remuneration of the Management Board and Supervisory Board in 2019 takes the form of a so-called remuneration report, in Dutch [Foreign Language], in accordance with the legislation implementing the revised Shareholder Rights Directive II, effective as per December 1, 2019. This remuneration report replaces the information on the Board's remuneration provided in the Director's report, in Dutch [Foreign Language], to the annual accounts. Against this background, we have listed the remuneration report 2019 for a separate advisory vote on the agenda. In accordance with relevant requirements, our external auditors have confirmed that the required information has been included in the remuneration report. This is on top of the information provided in the remuneration report in accordance with the best practice provision of the Dutch Corporate Governance Code. In the past financial year, the Management Board and the Supervisory Board members have been remunerated in accordance with the 2019 remuneration policy without any deviations. The remuneration report over 2019 will, after this shareholders' meeting, be published on Adyen's website as part of the annual report and will remain accessible for a period of 10 years. Piero?

Okay. Thank you, Joep, for this explanation. I now invite you to submit any questions about what Joep has explained. So anything pertaining to remuneration report for the year 2019.

We have 2 questions come in from the VEB prior to the meeting. We've translated these into English. They will be taken care of. The first is despite 8% increase in 2019, executive compensation is well below the AEX benchmark. Adyen accepts this differential for current Management Board members, but is open to making exceptions for new hires. Wouldn't these exceptions lead to internal disgruntlement? Maybe, Pieter, you can take that one, and then I'll read out the second question as well. Keeping in mind the principle that much of Adyen's expertise is in human capital, how important is compensation employees well? Can Adyen speak to how employees are recruited and how Adyen can remain an attractive employer? Pieter, maybe you can take the second question as well.

All right. Thank you. The first one regarding future compensation for Board members, I think there's a strong feeling that we build this together, and the current team largely build it themselves. And that means that we have stock positions, and therefore, our daily income is less important than if you now join the Board. So I think that would be -- then that will be understood, and people know it's lower than usual. And I don't think it's a sustainable policy for the future. And I think people are well aware of it. The second question is regarding -- well, I find it was very difficult. The second question, how do we make sure that we keep people motivated to work for the company? I think it was this -- if you have highly talented people like we do, the reason to be loyal to the company is if it's a pleasant place to work. Hence, we are very much focused on culture and making sure that this is an environment which is well suited for the highly talented people. That's the best way to retain them. So if you look at all the programs we run to make sure that we maintain this culture, but also if you look back, we said to the company getting banking license, getting work together with our culture, and we have proven we did. And if we said going public, it's a change of shareholders, but we can keep the culture as is, and we did. So I think we have a good track record of being a safe place for talented people.

Okay. Thank you for that, Pieter. And maybe one aspect that you didn't touch upon, the recruitment. Can you say something about how that is done?

Yes. I think first thing which we didn't mention about recruitment yet is that we see this challenging period for the world. From an Adyen point of view, there are very talented people which are currently, unfortunate for them, becoming available. And we try to get -- to use this time to get them as Adyen employees. So we think this could be a moment where you can attract even more talented people, that there is less of a competition for quality people. Our recruitment, it's -- we have a good experience with the reference program. So of course, Adyen runs a reference program as well. We have a large quantity of people approaching us. But despite that, we are also going out ourselves directly approaching people because we know that there are very talented people which are not actively looking for a job, but when invited will come to us. So it's not that because we have such a high number of resumes going in that we use that as our main source to others actively hunting, and reference programs are well used.

Okay. Thanks for that. And as there are no other questions that have come in, we would like to proceed. The general meeting has an advisory vote on this agenda item 2B, following the implementation of the Shareholder Rights Directive II in Dutch Law. And we will now proceed with this advisory vote on the remuneration report over the year 2019. The proposal is to grant a positive advice to the remuneration report over the year 2019, and we will now proceed to the vote. The vote is open. You can vote now. And as mentioned at the beginning of the meeting, the vote will remain open until the last voting item on the agenda has been discussed. [Voting]

So we will continue now with agenda item 2c, which is the adoption of the annual account for the financial year ending the 31st of December 2019. The Management Board, Supervisory Board and PwC have each presented their report for 2019. The proposal is to adopt the annual accounts for the financial year ending the 31st of December 2019. We will now proceed to the vote. The vote is open. You can vote now, and the vote will remain open until the last voting item on the agenda is discussed. [Voting]

I now invite you to submit any questions about what has just been discussed here.

Prior to the meeting, we received a following question from [ Markit Stafas ] on behalf of APG and PGGM, which we've translated and I'll read it. The accountant noted IT controls and risk of overstatement in revenue recognition as key points for the accountant's control for '19. Unfortunately, the Audit Committee did not address these key points in this report. Could you address it now? And could you consider addressing it in your 2020 report? Delfin, can you take this question, please?

Thanks, Piero. I'd be happy to address this point. As you know, key audit matters are those that external auditor consider most relevant for their audit. As Rogier has already explained, for their audit of the 2019 financial statements, PwC identified 4 key matters. Given the relevance, all 4 matters were discussed in numerous occasions in the Audit Committee and the Supervisory Board. This was known in the context of the preparation and publication of both the interim and the full year financial statements and public disclosures. Most of them were also the subject of separate bilateral discussions with management. Both the Audit Committee and the Supervisory Board put a special attention to monitor the proper functioning of IT controls from both an operational and financial point of view. For that purpose, we had several discussions covering IT security and performance incidents. We also discussed the reports prepared by Adyen's operational risk management and internal audit, covering IT risk and effectiveness and reliability of IT systems. This, together with PwC's testing and audit work, allowed management and the Audit Committee to assess the effectiveness of internal control over the financial reporting during 2019. In conclusion, I'm happy to say that there were no issues or concerns related to the IT general controls, which came to our attention and requires a specific disclosure. The second key audit matter, the risk of overstatement in revenue recognition, needs to be understood in the context of the continuous substantial growth of Adyen and the importance for the external auditor to make sure that the automated invoicing process had adequate controls and functioned effectively during the year. Also on this topic, there was no significant incident or matter requiring a specific attention from the Audit Committee or external disclosure. Finally, I agree with the suggestion of APG and PGGM to consider addressing these topics more explicitly in future annual reports.

Okay. Thank you, Delfin. If there are no further questions, then we will proceed to the next item on the agenda, which is 2d, the dividend policy and reservation of profits. This is not a voting item. In accordance with the Corporate Governance Code, we will discuss the company's dividend policy here. Ingo, in his explanation, has already said a couple of things about it. So in short, it's the company's policy not to pay a dividend. As announced in our press release, the Management Board proposes reserving the full profit realized in the financial year 2019. I invite you to submit any questions about what has been discussed here. We received 2 questions from the VEB on this subject prior to the meeting. Ingo, can you take both questions, please?

Yes, of course. Thank you, Piero. The first question is related to our policy to keep the profits to finance our growth. The question is how much we will need for this goal in 2020. Well, I think what we said, like we have a dividend policy where we do not pay out any dividends, and we continue to have this policy given the high growth of the company. And then the second question is like at what stage this dividend policy will be reevaluated. We will continuously look at this. As long as we are in this high-growth trajectory, we will keep this dividend policy. So I can't give a precise timing on it right now. But as we're still in high-growth mode, it's not expected to change on the short term. Thank you.

Okay. Thank you, Ingo. If there are no further questions, then we will move to agenda item 2e, the remuneration policy, where we will provide an explanation of the proposed new remuneration policy for the year 2020, as shared prior to this meeting via Adyen's website under Adyen AGM. This explanation will be given by Joep van Beurden, Chairman of our Nomination and Remuneration Committee. Joep?

Yes. Thank you, Piero. Following the Dutch law implementation of Shareholders' Rights Directive II, as just discussed, the proposed 2020 remuneration policy provides for the remuneration principles and related explanation to the Management Board and Supervisory Board members in accordance with these rules. The remuneration policy is rooted in the Adyen Formula and aligned with Adyen's strategy to create long-term value for our merchants. In line with Adyen's general remuneration policy, the Management Board and Supervisory Board remuneration policy assumes that the size of remuneration package is based on the scope of responsibilities, the member's experience and performance and local market circumstances, which may differ from country to country. The Management Board's remuneration is compared to AEX, AMX and AScX companies. At the date of this 2020 remuneration policy, the Management Board remuneration is below the median of the benchmark with remuneration packages providing for a base salary and share-related remuneration. The Nomination and Remuneration Committee believes that the remuneration policy is consistent with and promotes sound and effective risk management. The remuneration policy will, in any event, need to be adopted every 4 years by the shareholders' meeting. Annually, the remuneration for the Management Board members is determined by the Supervisory Board in accordance with the remuneration policy. Remuneration policy for the year 2020 will, after the shareholders' meeting, be published on Adyen's website. Piero?

Yes. Thank you, Joep, for this explanation. I now invite you to submit any questions about what has just been explained, so anything pertaining to the proposed 2020 remuneration policy. We have received the following comment from [ Markit Stafas ] on behalf of APG and PGGM prior to the meeting, which we've translated here. We thank Adyen for the dialogue we had on the remuneration policy. The new policy fits the company's culture. We understand Adyen's need for flexibility in its remuneration policy as it looks to hiring directors in the future. We would advise Adyen to retain its strong culture related to remuneration. While Adyen is an international player, its roots are Dutch, and that means that societal approval of executive compensation is important. We would advise the Supervisory Board to act in a reserved manner as it relates to approving sign-on or welcome bonuses, variable pay and stock compensation such as option packages. The new policy provides room and flexibility. We trust that the Supervisory Board will act in a prudent matter, for example, by consulting other stakeholders when changes occur. Thank you very much for your comments. Well noted. And we will now proceed to the vote on this item on the agenda. The vote is open. You can vote now. And as said, it will remain open until the last voting item has been discussed. [Voting]

Then we move to 2f, the remuneration of the Supervisory Board, which we will provide an explanation of the proposed new remuneration for the members of the Supervisory Board. This will again be done by Joep van Beurden, Chairman of our Nomination and Remuneration Committee. Joep?

Yes. Thank you, Piero. With due observance of the proposed new remuneration policy for the Supervisory Board, it is proposed to increase the remuneration for the Supervisory Board by introducing separate committee fees for both the Audit Committee and the Nomination and Remuneration Committee. The proposal is to introduce a fee of EUR 10,000 for the Audit Committee members and EUR 15,000 for the Chairman of the Audit Committee. For the Nomination and Remuneration Committee, the proposal is to introduce a fee of EUR 7,000 for members and EUR 10,000 for the Chairman. This results in below total direct annual compensation proposals for each of the individual Supervisory Board members: Piero Overmars, EUR 97,000; Delfin Rueda, EUR 75,000; Pamela Joseph, EUR 77,000; and Joep van Beurden, EUR 70,000. Piero?

Okay. Thank you, Joep, for this explanation. I now invite you to submit any questions about what just has been explained. No questions have come in prior to this meeting, and also no questions seem to be coming in at the moment. So we will then proceed to the vote for this item on the agenda. The vote is open. You can vote. [Voting]

Okay. Thank you for that. Then agenda item #3, the discharge of Management Board members. Of the Management Board for the management activities in the financial year 2019, it is proposed to discharge the members of the Management Board in 2019, being Pieter van der Does, CEO; Arnout Schuijff, CTO; Ingo Uytdehaage, CFO; Joop Wijn, CSRO; Roelant Prins, CCO; and Sam Halse, COO, from liability in respect of the performance of their management duties to the extent that such performance is apparent from the annual accounts of the financial year 2019 or has been otherwise disclosed to the general meeting before the resolution is adopted. For the avoidance of doubt, discharge of liability for management duties performed in the year 2020 by members of the Management Board who resigned in 2020, being Joop Wijn, CSRO; and Sam Halse, COO, will be up for discharge in the Annual General Meeting of 2021. We will now proceed to the vote. The vote is open. You can vote. [Voting]

Okay. Thank you. Then agenda item #4, the discharge of Supervisory Board members for their supervisory activities in the financial year 2019. It is proposed to discharge the members of the Supervisory Board in 2019, being Piero Overmars, Delfin Rueda, Joep van Beurden, Pamela Joseph, from liability in respect of the performance of their supervisory duties to the extent that such performance is apparent from the annual accounts for the financial year 2019 or has been otherwise disclosed to the general meeting before the resolution is adopted. We will now proceed to the vote. The vote is open, will remain open until the last voting item on the agenda has been discussed and closed. [Voting]

Okay. For the next agenda, item #5, I would like to give the floor to Joep van Beurden, Chairman of Remuneration and Nomination Committee. Joep?

Yes. Thank you, Piero. Agenda item 5 relates to the proposal to reappoint Piero Overmars as member and Chairman of the Supervisory Board. The period for which Piero Overmars has been appointed as member and Chairman of the Supervisory Board ends on the 20th of January 2021. In accordance with the Articles of Association of the company, the Supervisory Board proposes to reappoint Piero Overmars as member and Chairman of the Supervisory Board with effect as from the moment his current appointment period ends, being on the 20th of January '21. The reappointment will be for a period of 4 years. Piero Overmars, born in 1964, is a Dutch citizen. Piero serves as a member of the Supervisory Boards of Amsterdam UMC and Dura Vermeer Groep N.V. Previously, he served as a member of the Management Board of Randstad Beheer B.V. and was Chairman of the Supervisory Board of Nutreco and SNS Reaal. He also served as President of the Nyenrode Foundation, following an extensive career at ABN AMRO that culminated in a Board member position. Piero Overmars holds an MBA from Nyenrode Business University. Piero has assisted Adyen in its establishment of its Supervisory Board in 2017 and has subsequently served on the Supervisory Board of Adyen as Chairman. Piero will continue to chair Adyen's Supervisory Board if reappointed. The Supervisory Board proposes to reappoint Piero as a Supervisory Board member and Chairman of the company in view of his extensive experience managing financial institutions. Piero's knowledge and experience are of great value to Adyen. The proposed reappointment takes the Supervisory Board Profile and Equal Opportunity Policy into account. Piero is independent, as defined in the Dutch Corporate Governance Code. The reappointment does not require approval of the Dutch Central Bank, De Nederlandsche Bank, in this respect. Furthermore, as mentioned during our last meeting, we have used this year to further expand our Supervisory Board, and we are happy to inform you that we have finalized the search for a fifth member. We have selected a very capable candidate who will be proposed to the shareholders in the second half of this year, pending the Dutch Central Bank approval. She has extensive experience in managing tech companies throughout several stages of their growth. We are excited about the addition. Piero, maybe you want to say a few words about the proposal for your reappointment.

Yes. Thank you, Joep. Well, Joep has already taken you through my CV, so I will not bore you with any of those details. But I wanted to take the opportunity to say that the past 3.5 years, my first in a fast-growing technology company have been thrilling, from obtaining the bank license, going through the process of IPO and above all, seeing the team grow over the past few years. It's been a privilege and an honor to be part of all this. And the broader team is fantastic and a result of a unique culture. This is a company operating at the forefront of a broad societal change, and I'm looking forward to continuing my Adyen journey over the next 4 years. Joep?

Yes. Thank you, Piero. I'll now invite you to submit any questions about Piero's proposed reappointment. And while we wait for that, prior to the meeting, we received the following comments from [ Markit Stafas ] on behalf of APG and PGGM, which is translated. Adyen is growing and in a position to hire even now. Adyen is betting big on youth and on diversity. In keeping with these themes, we would advise Adyen to focus on diversity on board and senior management level, too. This would suit its innovative culture. This includes gender diversity, and we would advise Adyen to strengthen both its boards to meet the 30% threshold. Thank you, Markit, very much for that comment. It's well noted.

We also received follow-on question from Mr. [ Stevenson ] on behalf of Stichting SRB. We would like a detailed motivation of why Piero Overmars deemed Adyen such an interesting company, motivating him to become a candidate for reappointment? Well, Piero just gave that motivation, so I don't think anything further is required here. Are there any more questions from the screen?

No further questions have come in.

Okay. Thank you. Then if there's no further questions, we will proceed to the vote. The vote is open. You can vote. And as with all the other votes, it will remain open until the last voting item has been discussed. [Voting]

Piero?

Okay. Thank you, Joep. Then we go to agenda item #6, the authority to issue shares. The general meeting is asked to renew the existing mandate to the Management Board, whereby the company may issue up to a maximum of 10% of the share capital, subject to approval by the Supervisory Board. If the mandate is granted, it will be valid for a period of 18 months from the date of this meeting. This is a mandate in line with market conditions and is intended to enable the company to issue shares if, for example, this is necessary for the acquisition of additional capital. Without this mandate from the AGM, a separate AGM has to be convened for this purpose. If the company wants to act quickly, this would be difficult as the notice period for convening an AGM is 42 days. I now invite you to submit any questions about this subject. Prior to the meeting, no questions came in. Then we will proceed to the vote. The vote is now open. You can vote and will remain open until the last voting item on the agenda has been discussed. [Voting]

Okay. Thank you. Then we go on to agenda #7, the authority to restrict or exclude preemptive rights, which is agenda item #7. The general meeting is asked to renew the existing mandate to limit or exclude preemptive rights to the Management Board, subject to approval by the Supervisory Board. This links up with the previous agenda item. The preemptive rights attached to the shares that are issued under the previous mandate may be limited or excluded. This too is a common provision for many listed Dutch companies. I invite you now to submit any questions. There have not been any prior to the meeting and also nothing coming in, then we will proceed to the vote. The vote is open. You can vote, will remain open until the last voting item. [Voting]

Then we will move on to agenda item #8, which -- in which the general meeting is asked to renew the existing mandates to the Management Board to buy back shares. If the mandate is granted, it will be valid for a period of 18 months from the date of this meeting. In accordance with what is standard market practice, only a maximum of 10% of the number of shares currently issued may be repurchased. The condition is, however, that the company does not hold more than 10% of its own shares and that the price is not less than the nominal value of the shares and not higher than the opening price on Euronext on the day of purchase plus 10%. I now invite you to submit any questions. Not -- none came in before the meeting, and there are no further questions. We will proceed to the vote. Vote is open. You can vote. [Voting]

Okay. Then we will go to the last voting item of this meeting. This means that the vote agenda item #9, this means that the vote for all the previous agenda items will close after discussion of this agenda item. This agenda item concerns the proposal from the Supervisory Board regarding the recommended reappointment of PwC as external auditor for the current financial year. There are no questions about this subject. We will proceed to the vote. The vote is open. You can vote. And you now have 30 seconds left to vote for any of the other items as well if you still haven't done that. So after, we will close the vote shortly. [Voting]

Okay. It looks like -- so let's now look at the results of the votes when they come in. I'm looking at the screen. Exciting moment. Okay, the votes are now in. Agenda item 2b, the remuneration report for the year 2019, which was an advisory vote, there is a majority of votes in favor of 99.86%. And therefore, there's a positive advice from the general meeting for the remuneration report over the year 2019. Agenda item 2c, adoption of the annual accounts, there is a majority, 99.99%. So the proposal is accordingly adopted. Then 2e, on remuneration policy, there is a 3/4 majority required. We have a 99.86% support, so the remuneration policy is accordingly adopted. Then the remuneration for the Supervisory Board, there is a 98.85% support for this agenda item, so the remuneration for the Supervisory Board is accordingly adopted. Then we go to 3, the discharge of the Management Board members, there is a 99.86% majority of votes in favor of the proposal and accordingly adopted. Then item #4, there's 99.83% of the votes voted for this proposal, therefore, there is a majority, and the proposal is accordingly adopted. #5, 98 -- sorry, sorry, you go ahead.

Yes. I can't see how much -- whether it's 98-point-something percent, but it is -- there's a clear majority in favor of the proposal. It's therefore accordingly adopted. And on behalf of the Supervisory Board, I would like to congratulate Piero with his reappointment.

Okay. Thank you very much for that, Joep. For the minutes, it's 98.04% of the votes. Then on #6, authority to issue shares, 99.91% support, so the proposal is accordingly adopted. Then #7, the restriction and exclusion of the preemptive rights, 98.45% support, so majority of votes in favor, and the proposal is accordingly adopted. Then agenda item #8, 99.72% of votes in favor of the proposal, so majority of votes, and the proposal is accordingly adopted. And then finally, the reappointment of the external auditor, 99.92%. I think that's the highest vote on all of them, Rogier, so that's probably a good news for PwC. Majority of votes in favor of the proposal and accordingly adopted. And so thank you very much for your support. Then we come to agenda item #10, any other business. And please send your questions if you have any further.

There is a question from Mrs. [ Buxbaum ] coming in. Adyen benchmarks as a global company. Should it not be benchmarked also to the Nasdaq? And maybe, Ingo, you can take this question.

Yes, of course. Thank you, Piero. I assume that the question is related to why we're listed on the AEX and not to Nasdaq. But when we considered our listing venue, we clearly looked at all the benefits of having a listing in Amsterdam. And so far, that has proven us to be the right decision. There's a lot of liquidity in the stock. We have a very international portfolio of investors. So the Euronext serves us well and we have no plans to change this in the future. Thank you, Piero.

Okay. Let's see if any other questions come in. If there are no further questions, I would like to thank you all very much for your participation and contribution to this virtual general meeting and now proceed to the closure of the meeting. We hope to see you again next year under better circumstances, and we wish you good health and safety. And now I declare the meeting closed at 11 hours and 22 minutes. Thank you very much.