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

Good morning. I would like to welcome you all to this virtual General Meeting of Shareholders of Adyen N.V. We're very pleased to host this virtual General Meeting for you, together with the Management Board and the Supervisory Board. I would like to briefly introduce the Management Board and Supervisory Board to you. Our Management Board currently consists of 6 members: Pieter van der Does, our CEO, Chief Executive Officer and Co-Founder of Adyen; Ingo Uytdehaage, our CFO, Chief Financial Officer; Roelant Prins, the CCO, Chief Commercial Officer; Mariëtte Swart, our CLCO, the Chief Legal and Compliance Officer; Kamran Zaki, our COO, Chief Operating Officer; and finally, Alexander Matthey, our CTO, Chief Technology Officer. Pieter, Ingo, and Mariëtte are pleased to join me here today. Our Supervisory Board currently consists of 5 members. My name is Piero Overmars. I am 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 Remuneration Committee, and Pamela Joseph and Caoimhe Keogan. Delfin and Joep are here with me 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 through live webcast and will be video recorded. Record shall be published on the company's website. There was a possibility to submit questions up to 72 hours prior to this general meeting, and these questions will be answered during this meeting. There will be various moments when you will be given the opportunity to send in questions via the chat. [Operator Instructions] In case you have additional questions, we will come back to you after we have allowed others to ask questions as well. 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 the shareholders' meeting has taken place in a legally valid manner. I'm pleased to appoint Brigitte van den Bosch as the 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 27th of May 2021 by 17:00 hours CEST. 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. 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. And I can confirm that at this meeting, 20,614,277 votes are validly represented. And for your information, this represents 67.73% of the total issued share capital of the company. This total includes the votes that were cast electronically, and this means that valid resolutions can be taken on all agenda items that are being put forward for a vote. And I will give the floor back to the Chairman. Thank you.

Okay. Thank you, Mark-Jan. This brings the opening of this meeting to a close, and we will now proceed with agenda item #2, which is the annual report, Management Board's remuneration, Supervisory Board's remuneration, adoption of the annual accounts dividend policy, reservation of profits. 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 2020 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, Supervisory Board and external auditor. And I will start by giving the floor to Pieter van der Does, the CEO of the company; and Ingo Uytdehaage, the CFO, for the report of the Management Board 2020. Pieter.

Good morning, all, and thank you for dialing in. This is now our second AGM, and we're still largely working from home. I'd like, together with Ingo, speak to a few focal points and give you an overview of 2020. So let's move to the slides. And if you look at the -- at both agendas, that is we set -- we are there to help our merchants grow. And why is it that we are there to help -- why is that our purpose? If our merchants grow, we grow. So through account management, through our developments, we help our merchants to grow. And you see that back that more than 80% of Adyen's growth comes from existing merchants that expand with us in new regions, new geographies, but also new product lines. We also set Adyen's purposes to change the payments industry. What do we mean by that? We're an engineering-first company. So we don't connect and build a patchwork of platforms. Now we build a platform ourselves end-to-end. We have done that in the -- for card acquiring. And you can also see that we do it for card issuing. So by building everything ourselves, you see it outperforms what has been there in the industry, and we built a new way of approaching it. Thirdly, having fun while doing it. What do we mean by that? We are a very strong culture-first company. That means that we think that you can change the market, that you can help our merchants and do it in a way that it's fun to go to work. And fun doesn't mean having a beer after work, but fun means that if you have traction, you can actually get something done. If you look at the slide of the power of one platform, what you see is that what we combined is gateway, risk systems and processing and acquiring into one platform and that outperforms. But if you look at where we are today, putting those things together, what we did in card acquiring, we will also start doing in card issuing. So the lessons learned over the last decade are now being implemented in how do we build new products with card issuing as an example. Let's look at the business overview. What has happened in 2020? We are profitable, both during a pandemic. And if you see how come, there is -- it has to do with our portfolio. As, of course, we were ahead in our portfolio in travel. You saw that online picked up because there were tailwinds in online in general, but also the move to cashless helped us growing our business, and that meant that the impact was softened. We have a well diverse portfolio, so we're not overly exposed to one industry. And what you see is that our retail merchants often have also an online presence. They were unified commerce merchants. So when stores slowed down, you saw the online commerce for these merchants increased. 2020 was, of course, also the year that we all worked from home. And we have invested enormously in being able to do that well. A few topics that were important for us will be [indiscernible], so that means investing in working together in such a way that's sustainable, that we can do for a long period of time without too much impacting the well-being of the people who work for Adyen. And not everything that 2020 brought was bad. If you look at it, we became a more global company, because it's much easier to connect people from all over the world into your discussions. So we have been able to scale Adyen significantly. Also, if you see what we do to stay connected is we have invested a lot in keeping the culture. And what does that mean? For example, the Board still does final interviews. So that means that everybody who has been hired has been interviewed by one of the 6 Board members, but also the Board is actively involved in training people. That means to team leads, there are sessions for new and existing team leads, where Adyen's Board member are involved and make sure that we teach them in the direction that we feel we want to grow the company. Merchant-driven innovation and Adyen platform. We get inspiration from what our merchants need in their next step of development. And an example of that of products that we launched is IdentityRisk, so that's helping platforms to onboard large amounts of sellers in screening them. We also work, of course, with Network Token Optimization. So that's a way to see how do we want to submit the card. Is it with a PAN or is it in an alternative way? And we have launched Android POS mobile devices. So that means that people who walk into physical stores can, on a device, to complete the transaction with a shopper. So a way that fits well with how you don't want to line up in stores, but want to work with the individual. Adyen Issuing, we have implemented. And if you see that, for example, with a single merchant, we can -- we have been issuing 30,000 cards. It does get, I think, scale into what we have built there. Of course, the regulatory landscape is one of the focus points. We've been scaling up the teams to make sure that we have the right teams available for all the regulators that we deal with around the world. And we are always investing in expanding our acquiring network. And if you look at that, the investment is not always at the same time as the -- as when we reap the fruit from that. So the investment of 2020 actually was an acquiring license that we just announced in '21, Malaysia, Puerto Rico, Japan or in the United Arab Emirates. So it is the work of 2020, but it doesn't always fall in that calendar year. And we keep continuing investing in that. I'd also like to say a few words about diversity, equity and inclusion. We have stepped up our efforts there because, yes, we are extremely diverse company. We have so many nationalities around the world. We have so many different offices. But we also feel we could step-up there and do even more. One of the things that we have done is we have done a DEI survey. And with that survey, we want to measure progress each year to see if the additional efforts that we take actually have an effect and we have envisioned it. We want to build a more inclusive Adyen, but we also want to measure it if we're really doing what we say we want to do. We have -- we are making an investment in training. A conscious effort to avoid unconscious biases, but we don't just do training to recruiters, to team leads, but everybody in the company goes through those unconscious bias training. So I want to point that one out. And the third one that I wanted to point out is when we hire, promote, reward, we work with fair criteria. And one of the things that we found out where we could improve is internal promotions. We were considering different people and that we made our choice, but we had it too much as a black box. So we invest now more in telling people who were considered that they were considered and why they weren't chosen if they are not the ones chosen. We have many young managers. So we found out that they are a little bit -- those discussions aren't always very easy, but it helps take a lot of noise away. Because sometimes people were considered, but they never realized it. They never got their learning points. So that's how we can step up. What I'd now like to do is to hand it over to Ingo, who wants to talk about social responsibility. Ingo, please go ahead.

Thanks, Pieter, and good morning, everyone. What I'd like to do is indeed talk about our social responsibility approach, but also, of course, give an update on our financial performance in 2020. But to start with social responsibility, we have been building this company from the start with a long-term perspective in mind. And that means that a lot of the sustainability efforts that we have worked on over the recent years has been there since the start. It's really part of our culture, how we like to build the company. At the same time, we invested heavily over the recent years. And if you look at our sustainability approach, we've basically built upon 3 pillars. And I'd like to tell a bit more about those 3 pillars. First and foremost, we want to help our merchants with our technology to see how we, with our technology, can help them to make new steps in sustainability efforts. And if you think about the products that we have launched, we have basically launched 2 new products over the recent years. One is Adyen Giving and the other is Planet. And the way of doing that is that we basically introduced new technology in a checkout where our merchants can do good. It is a way to help consumers, for instance, with a given product to contribute to charities after they completed the transaction with the merchant. And in that way, we can do what we're good at. We're taking out a friction of payments and use that in helping charities to raise funds for the good cause. This has gotten a lot of traction, both on the Giving side where we give to charities, but also with the Planet product that we recently launched, where shoppers have the ability to pay for the carbon emissions of this transaction and basically make an additional payment, which then contributes to projects that will compensate for those emissions. And by doing this, we do what we're good at. We're using technology to have an impact on society. And that's not everything that we do. We also have a second pillar. And that's, of course, what we do ourselves, what is our own footprint and how do we make sure that we continue to have a neutral status in our environmental footprint. We think it's very important that we take our responsibility here in society. We have this neutral status. We calculate our greenhouse gas emissions every year. And we'll make sure that we compensate by investing in projects that compensate for these emissions. But we think that, that's not enough. So what we're also doing is setting up a working group that is thinking about new initiatives that could further reduce the emissions and being even more efficient in this space as a company. And then the third pillar, and that's also -- that really comes to the heart of a lot of our employees, which is we want to help the communities that we work and live in. So making sure that we can contribute to local projects that help in one of the areas of the global sustainability development goals of the UN. And there are many grassroot initiatives around the globe. We have more than 20 offices. In all those offices, we work on local initiatives that contribute to one of those goals. And I personally really think this is a very cool initiative. And to take one example, one thing that we did is Hack Your Future where we provide coding lessons to refugees looking for tech jobs, which is, of course, also helping us as a company or other tech companies to get well-trained people in. And of course, as a result of the pandemic, we had to shift this training to online. And that made it even bigger, because at that moment, it was possible to transform it from a MSTeM-focused initiative into a global initiative. And I think that's also one of the strengths of being a global company, that you can use all the brain power globally to work on those initiatives. So these are the 3 pillars. We continue to invest here, and we see it as a very important part to give you further updates on in the future. Then talking about financials. Like Pieter said earlier, we're very proud of the fact that the business has proven to be very resilient despite the global pandemic in 2020. The continued investment in further diversifying the merchant base has paid out, and that's also reflected in the numbers. Our processed volume continued to increase to EUR 303.6 billion, which was 27% higher than the year before. Net revenue increased in line with that, and also EBITDA further grew over 2020. If you then look at the different regions, net revenue is still mostly coming from Europe. That's where we started off the company. It's our home base. And -- but you see that other regions are growing very quickly. If you look at North America specifically, we see that our product and then specifically unified commerce, is addressing the complexity that is in the local market there. We have a unique product in the U.S., and that's being recognized by domestic players. And that's why we have won a lot of local players in the U.S., and that's why you see this growth. I think it is a reason why we further want to invest in also the other markets. APAC grew significantly, the same for LatAm. And we're pleased with these developments to become a further global company, and we will continue to invest in those regions. Then on EBITDA, the EBITDA margin was -- or the total EBITDA was EUR 402.5 million, grew 27% and was around 59% of net revenues. We continue to invest in our company. So we continue to hire, and that's mostly the reason why you see that the ratio is stable. At the same time, a lot of people asked us like, is this the end of the operating leverage in the business, and it is not. And that's one of the reasons why we've updated our EBITDA margin guidance. We strongly believe that with the additional growth in the future and the operating leverage that we have, that we can further increase EBITDA margins on the long run. This is certainly not something that we think we can do on the short term. But in the long run, we think that we can grow to at least 65% EBITDA margin. That's also cool. We still believe very relatively at the early stage of building Adyen. And of course, one of the things that we continue to want to do is invest in the business because we see this long-term opportunity. And that's also what we're currently working on. Then if you look at OpEx, our operational expenses, most of the investment has been in the team. We continue to grow the team. If you look at employee benefits, they increased 47% to EUR 180 million, which is still the majority of our costs, and we will continue to invest in our business. The same for CapEx. CapEx is around 3% of net revenue. That's mostly the result of investing in our single platform. We have our own co-locations globally, and we continue to invest in adding more server capacity in those locations. Then shareholder equity. Shareholder equity increased to EUR 1.2 billion coming from EUR 918 million in 2019. And this is the result of adding the retained earnings to equity. And in accordance with the Articles of Association, we as Management Board, together with the approval of the Supervisory Board, decided to allocate the profits of 2022, the reserves of Adyen and it is in line also with our dividend policy. I'd like to give the floor back to Piero now.

Thank you, Pieter, Ingo, for your presentations. As the Supervisory Board, we would like to give a brief explanation of our report. 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. For that purpose, we have set up the Audit Committee and the Nomination and Remuneration Committees. 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 function. The external auditor focuses, among other things, on the inspection and audit of the annual accounts. 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 2020. This has been discussed at length in our Supervisory Board report in the annual report. So I will not discuss this in its entirety, but I would like to explain a number of elements here. As the Supervisory Board, we were tasked with supervising the conduct and policies of the Management Board. We're guided by the interest of Adyen and its operations, taking into consideration the interest of Adyen stakeholders and its focus on long-term value creation as is implemented in the strategy and the culture. The profile of the Supervisory Board is such that it is 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 interests. It further allows for the carrying out of all Supervisory Board tasks, including staffing of committees. In 2020, the Supervisory Board convened for 8 meetings, of which 2 were held at the offices of Adyen and 6 were held via videoconferencing due to the COVID-19 pandemic. The attendance rate of Joep van Beurden, Delfin Rueda and myself was 100% in 2020 and Pamela Joseph was absent at one meeting in 2020, therefore, resulting in an attendance of 83%. During the meetings, we engaged in discussions about, amongst others, risk management, business performance, strategic updates, development of financials, diversity, culture, social responsibility and sustainability, compliance with relevant legislations, relationships with regulators and remuneration were also discussed at length. Furthermore, deep dive sessions on specific topics were held, such as issuing, customer relations and operational excellence. In short, these were some elements of the Supervisory Board's activities in 2020. And 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. We will also address questions that have been sent in previously by the VEB, the VBDO and on behalf of PGGM as well as some Eumedion participants. First, we will address the questions coming in from VEB. First 4 questions will be answered by Ingo. Ingo, please go ahead.

Yes. Thanks, Piero. So the first question is related to our balance sheet item, payables to merchants and financial institutions, that showed a significant increase if you compare that to the percentage change of revenue, which was lower. And the question is what the background is of this change? What is the root cause of this difference? I think if you look at the payable to merchants, if you look at our balance sheet, our balance sheet is highly volatile. So it basically -- we're paying out every day. And depending on the day of the week, the -- we have different volumes of the previous days, and that also then impacts the level of this balance sheet item. So it's basically unrelated to revenues of the full year, it's more related to the day of the week, so where the balance sheet date is. And that's the reason why you see this increase. And then that's just a normal course of business for our company. Then the second question is whether we could give more background on the impact of the pandemic on our revenues. And whether we think that this effect is going to persist. I'd like to take a step back here. Like I think if you look at our business and you take the pandemic into account, it does not change the long-term view of our business. So if you look at our guidance, we continue to guide on net revenue growth of mid 20s to low 30s. I think what you've seen during the pandemic is that our merchant base is very resilient. So we've diversified significantly over the recent years. And although certain travel volumes were completely gone on our platform, we saw a significant uptick in online volumes. Also, the digital goods vertical was very -- was growing very quickly in 2020. And that's, of course, a very positive trend for us as a company. For -- going forward, we continue to want to help our merchants in the best way we can. So also if things change, I think we all see that markets are quite changing at the moment. We want to make sure that we continue to facilitate our merchants in the best way we can. So again, we don't believe that there is a fundamental change in the way we think we can grow the company. Then the third question is related to the agreement that we concluded with eBay. That agreement was closed in 2018, and eBay acquired warrants in exchange for us being their provider. And the question is, what is the percentage of total transaction volume on the eBay contract that is directed through the Adyen platform? And is it in line with expectations? Could we give an update on the milestone so far and whether that is in line with our own expectations? I think we're very pleased with the performance so far. I think that's also what eBay shared in their last earnings call. So we're very pleased to hear that, but we typically want to stay away from commenting on individual merchants. If you look at the pace of the rollout, that's up to eBay. So they are basically in a position to control the volumes. And as far as we, of course can, we will support them to make sure it is a successful contract. Per end of December 2020, none of the milestones have been met. So no warrants were triggered. And the question was whether there is a limit in place. Well, there is no limit in the value of those warrants. So in that sense, the more volume they would bring, the better it is for Adyen. Then the last question is related to the accounting error. We revised our financial statements due to an accounting error that was noticed since 2018. And the question is, if we could explain why the different lines of defense, including the external auditor overlooked these errors over for several years. Well, if you look at our internal control system, mostly it's focused on making sure that our cash balance is right and the payable to merchants is correct, so that we always pay out correctly to our merchants. And both were not impacted. Also, if you look at the development of cost over time, that was very much related in -- to the trends that we saw on our platform. So quite a bit of growth and, therefore, also an increase in cost. Because we were introducing new additional internal controls, we noticed the error. And again, no merchant ever missed a payout nor was any merchant paid out wrong account and all cash balances that we had were confirmed by bank confirmations. So only by introducing additional controls, we noticed that there was like a double journal entry basically coded, which was leading to additional reservation on our balance sheet. We -- when we found out that this happened, we, of course, applied extensive procedures to make sure that, yes, there are no similar errors on our balance sheet. And we believe that, that's the case. So we believe that we're in a good position right now. We discussed this also with auditors. Our external auditor, Rogier van Adrichem who is here today, will also spend a bit of time in his comments on the 2020 statements. And we believe that we will have no further errors in our numbers related to this type of errors. These were the first 4 questions. Thank you, Piero.

Yes. Thank you, Ingo. Pieter will now address a few further questions from the VEb. Please go ahead, Pieter.

Thank you, Piero. The first question is, how does the company envision its role in the market for small companies with possible low turnover, but higher take rates. You see that there's a lot of demand for Adyen. And we see a role for us for all sizes of companies. Currently, we have a 2-tiered approach for smaller companies. And in the mid-market, we have direct approach to the midsized merchant. And the long-tail merchants, we want to service via platforms. We have made an enormous investment to be very advanced in helping those platforms. So that's the approach that we currently have. There's another question, and that is, is Adyen experiencing difficulties to retain top-level personnel in the banking branch as at least part of the company must adhere to bonus caps and first in Europe and the Netherlands. We can deal very well with our remuneration. We can sort of in such a way that we can attract the right talent and that we can retain the right talent. So within the limitations of that operating framework, we don't feel the hindrance in attracting the right people and keeping the right people. Could Adyen explain how it deals with local competitors? Two things about that. Firstly, of course, there has to be a local competition. If there's no competition, there's no market. And competition forces all of us in this industry to be innovative because if you're not innovative, you don't have your unique selling point. So we embrace that. Secondly, you also have to realize that the majority of the volume is still with the incumbent, is still with the large legacy players and with the banks. So there is a lot of market still up for -- to transition to new players. How does Adyen look at blockchain developments? Our blockchain applications shows a smart payment contracts perceived as long-term threats to the business model of Adyen. Well, you have to realize that those type of payment methods are complex, and that's exactly what Adyen is good at, is helping merchants with sorting complexity. So should those payment methods emerge more will help merchants with it? We'll always do it based on merchant demand. And you see that our innovation is merchant led in some of those new initiatives -- in blockchain initiative. We are involved, but as always, when there is a merchant, when there's both on the supply side but also on the demand side. So if a merchant of us are interested, then we join them in 2 pilots. So we are currently active in that. That were the 3 questions that were for me. Now I will give it back to Piero.

Okay. Thank you, Pieter. Now Mariëtte will answer a few further questions that were sent in by the VEB. Please go ahead, Mariëtte.

Thank you, Piero. I received 3 questions from VEB. Let me address them one by one. The first question relates to risk management. Adyen has grown significantly over the past years. How does Adyen ensure that its internal control system remains at odds with the challenges presented by this expansion strategy? Well, risk management has always been an integral part of our strategy. We've implemented an internal control system to mitigate for key risks. And our second line functions help us in continuous monitoring to see whether that system works effectively, and they also support us in our annual and control statement. We review our in control -- our internal control system on an annual basis, but also in case of changes to our organizations or our procedures. And any of those reviews may eventually result in us changing some of the existing controls or adding new ones. The second question relates to our policies to combat financial frauds like money laundering. Adyen states that it follows a principle-based approach while relying on in-house developed data-driven tooling. VEB would like to know and would like us to discuss the possibilities as well as the limitations of such tooling and explain why a rule-based approach was not preferred instead. Well, we basically do both. Our principle-based policies lay the foundation to our integrity risk framework. They define the standard by which we want to conduct our business. And by doing so, we aim to create a risk-aware culture, where our employees remain critical in their day-to-day work rather than working off checklist and not understanding the underlying risks. At the same time, we do recognize that when working on very complex compliance matters, such as AML, our employees may require a little bit more guidance. And for that reason, we also have very detailed procedures and work instructions, whereby we explain the rules that Adyen say adhere to when it comes to the onboarding of customers to continue due diligence and to transaction monitoring. So it's basically a combination of both. The final question relates to our U.S. banking license. VEB would like to know where we are with the remaining steps that are needed to complete the overall approval process in the license applications, the time lines and to discuss the benefits that should arise from this. We're happy to confirm that the Federal Reserve approved our license application to establish a branch in the U.S. The approval from the second regulator, the OCC, is still pending. And until we receive that approval, we will not change our structure or our product offering. And we also don't know when the OCC will issue this approval. But the moment that it does, then we will have the ability to expand our service offering in the U.S. in the same way that we did in Europe and our European banking license. Thank you for these questions. Back to you, Piero.

Okay. Thank you, Mariëtte. And now on behalf of PGGM and -- as well as some Eumedion participants, we have received 6 further questions. Pieter will take the first one. Please go ahead, Pieter.

Thank you, Piero. The first question is Adyen is operating in a very competitive market. For investors, it's important to understand what wider context as an organization operates, how the organization compares to peers and what the overall market looks like? Investors would appreciate it if Adyen would report more elaborately about their market position, the market share and how the market develops. Can Adyen make this commitment to investors? Let's talk about the market. We don't feel that total addressable market is something that's limiting us. And to recap, there are certain tailwinds, which is the move to -- from cash to digital, where we have seen enormous growth of online, where there are new patents for shoppers, you've seen unified commerce being embraced by merchants. So the market is large. The market is still moving a lot. And that means that other things are limiting growth. And if you look at what's limiting growth, that is the power to absorb new employees to further build on the platform. If you compare us to our competitors, we have made a choice, and our choice is that we build things in a single platform. And that means that we, therefore, reduce the complexity because we don't spend our time in integration processes, but our engineers are actually productive in taking out new products. And if there's a lot of the dynamics still in this market. That means that we have an advantage over others who lose a lot of engineering power in integrating stuff. So I think our strategy there helps us to take -- as our strategy of building a single platform helps us to take maximum advantage of engineers and therefore helps us in the position in the market. And again, a lot of volume is still with the incumbent. A lot of volume is still moving to new parties. So culture and focus on single platform are the 2 main things that we focus on.

Okay. Thanks, Pieter. Ingo will take the next 3. Go ahead, Ingo.

Thanks, Piero. So the first question is related to our reporting segments or revenue segments. The question is whether investors would like Adyen to report more details on those segments. For instance, how these payment services differ per sector and reports on subsegments in terms of the value of transactions. Can Adyen report more elaborately on operating segments in the next year's annual report? The way we report externally is basically also how we report internally. So we look at the business in total. And then if you look at the distinction that we make, we've taken a view that we're managing the business through the strategic growth pillars, which is enterprise, unified commerce and mid-market. That's how we also split up the volumes in our shareholder letters, and we will continue to do so going forward. Sharing the same information is also how we look internally to the developments in those strategic pillars. Then the next question is why Adyen -- why does Adyen reinvest all of the capital instead of using a part of it to pay a dividend? And what criteria would need to be met for Adyen to pay a dividend? If you look at our current phase, where we're still in high-growth mode, there is no plan for us to change our dividend policy. And it has a real advantage to have a robust balance sheet. It helps us to grow with merchants. So there's -- it's never a question whether we're a financially stable company. It helps us to get acquiring licenses. We're a very solid financial partner, and it also helps us with talking to regulators globally that we -- that regulators can see that we have this strong balance sheet. And that's the reason why we have no intention to change our dividend policy on the short term. Then the third question is related to our environmental footprint. So can Adyen commit to assessing materiality with respect to our environmental footprint and reporting on that footprint in terms of both year-on-year development as well as underlying performance? Well, we launched [ Fastnet rate ] is an important part of the way we work. And over the recent year, we have gotten quite a bit of feedback from stakeholder groups, and this has been very valuable in iterating in our CSR efforts. So both on the things that we do, but also on the disclosures. We have engaged in different dialogues across stakeholder groups. So our merchants, but also with our staff, with local communities, with investor base and, of course, also the charities that we work with. And if you think, that's being used for rethinking about how we want to work on the different initiatives. I think what we spoke earlier about initiatives like Giving and Planet. I think these are great examples that were built together with merchants and charities. And that brings us in a stronger position. If you then think about how we report about it, we, of course, can think about how we can explain more what we do. And we're certainly committed to provide more context on this, so how do we make good choices, building an ethical business. And we will do this in the coming months to see -- to tell more what we do and give this or share this with you through the Investor Relations website. And of course, we hope to do that relatively shortly, so over the next upcoming months. Thank you. Piero?

Okay. Thanks, Ingo. Now Mariëtte will take a few further questions on AML and compliance. Mariëtte, please?

Thank you, Piero. Indeed, 2 more questions from PGGM, the first one relating to our company's culture and how our company culture ensures that no AML violations will occur. Well, indeed, we believe that our very strong company culture helps us to identify and mitigate integrity risks. The drivers to the culture, like the Adyen Formula, set a really clear direction to our employees, namely that we don't accept integrity risks, and we try to align our governance and our control systems to that. When it comes to AML, that means that on a continuous basis, we analyze the risks that are associated with our business, with our services and the countries in which we operate. And the risk that we then identify are being translated into policies and procedures. As explained before, the policy and procedures that we have are very much focused on automation and on monitoring because we believe that when compliance procedures become too manual and too complex, they are not scalable in the long term. That means that in practice, our compliance teams work really closely together with our developers and data scientists to maintain and improve our fully in-house and automated AML system to detect any unusual behavior. The second question, can we report on compliance incidents such as whistleblower reports and complaints? And what steps are taken to remediate these incidents? Well, of course, we maintain and register for the reporting of any integrity and whistleblower incidents in line with our whistleblowing reporting policy. That's on our website. You can find it there. And I can confirm that since last AGM, there were no reportable incidents. Thank you.

Okay. Thank you, Mariëtte. The Management Board will now answer the final questions that have been sent in prior to this AGM. These were questions sent in by the VBDO, and Ingo will take the first one.

Thanks, Piero. VBDO requests Adyen to publish a target regarding the reduction of carbon emissions. Can we expect a long-term climate strategy in the year 2021? Well, we are happy with the progress that we have made so far on our sustainability strategy over the past years. We've been able to offset our historic emissions, renew our climate neutral status annually since 2018 and also help our merchants and our shoppers to offset their emissions by building Planet, which we recently announced. We're also now setting up a sustainability working group, which will be instrumental in building out our future sustainability efforts. The work group will comprise of a diverse set of team members to make sure that the demographics of the global team will be represented. And this working group will look further into how we can reduce CO2, reduction efforts, and in a way that would fit us well. So with being a growing company and making sure that we do the right things and continue to grow as a company.

Okay. Then the next question for Mariëtte on human rights risks. Please, Mariëtte?

Thank you, Piero. Yes, indeed, an important topic. How do we identify and manage human right risk in our supplier procedures, particularly when it comes to the selection of our data center providers? Well, we have adopted a third-party policy that set certain criteria when it comes to the engagement of new suppliers and new partners. And as part of that policy, we've set certain criteria that need to be taken into account when we engage a new supplier. Amongst other, we look, indeed, whether that provider adheres to the international standards of human rights and whether it holds appropriate working conditions. In particular, we look and investigate whether there's any suspicion of that supplier having any signs of slavery or child labor, and we ask proof for that. We do these checks when we board a new supplier or a new partner, but also during the life term, during the relationship that we hold with a partner on a recurring basis.

Okay. Then another question for Ingo on the Planet, new feature that we've built. Ingo?

Thanks, Piero. VBDO is curious to hear how Adyen is working with merchants to promote its new feature Planet and incentivize consumers buying on its client platforms. Also, what share of total transactions in corporate, such as service? And what is Adyen's objective in the coming years? Well, this is related to our Planet product, which we recently launched. When it comes to implementing new features for this product, we will closely work with our merchants to see what their needs are and how we can build those needs for them. We're pleased with the recent launch. We will look forward to work with our merchants to further roll out the product. And yes, we will continue to explain the results that we will get with this product. So that's how we look at it right now. Thank you.

Okay. Pieter, then a question for you on DEI from VBDO. Please?

Yes. The question is, can Adyen commit to concrete targets to improve the path defined by the DEI working group and report the progress towards achieving these targets? Well, if you look at what we're doing, we are proactively working on diversity, equity and inclusion, and we have already built a full company where that's part of our DNA. And we feel in 2020, we made significant progress. Inclusion, diversity, equity is something that you actively should design for, and that's what we're doing. We have a working group with this -- an international group, which is advising us, and that team is making recommendations. But also we have defined a lot of actions, which we have been taking in 2020. How do we know if that works? We do an annual DE&I survey and we measure if we are working -- if the recommendations and actions we took are actually working and if we're getting towards an even more diverse and inclusive Adyen. And well, I'm very proud of how the team is working, and we intend to make that measurement every year so that we can see if we indeed make the progress that we think we are making. If that works, then we're measuring and feel comfortable. If we see this insufficient, we'll have to think about further measures. Now I want to give it back to Piero.

Okay. Thanks, Pieter. That concludes the questions that were sent into the Management Board before the meeting. Let's now see if there are any further questions that have been sent in through the chat function. I'm now looking at the screen. I don't see any questions. Can that be confirmed? There is another question from VBDO. Offsetting is good. So we're now carbon neutral. But can you commit to a GHG target in 2021? Ingo?

Yes. So like we said, we're working with a working group to see what we can do as a team to further reduce greenhouse gases going forward. It's too early for us to commit to any reduction targets. But of course, we want to take our responsibility, that's also why we have this working group, to come up with ideas how we could further reduce because we absolutely see that as part of our social responsibility.