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

Okay, great. I'll start the next session off. It's a great pleasure to have Adyen with us here in Barcelona. Ethan Tandowsky, CFO. Thank you very much for coming and joining us.

Thanks for having me.

Its a pleasure. So look, I think we were just discussing, I mean, it's been a journey over the -- over this year to date. And the question I get from a lot of investors is kind of can we just get a little bit of a better understanding of what's happened and what's going on that you see in a bit more detail than we do. So I think if we look at second half of last year, the business ex-FX was growing 26%. It dropped down to 19% in the first half of this year. I think everyone was wanting to kind of extrapolate that deceleration was nervous, that was the right thing to do. And I think you alluded to the end rate of H1 being slower than the beginning, so people were thinking you were going into Q3 at 16%, 17%. And then we got an amazing acceleration back up to 26%. Could you just help us a little bit with under the hood, what was going on maybe quarter-to-quarter, what were you seeing there?

Yes. Yes. So to start, it was really the very start of the year that we saw similar trends to last year. So higher growth levels. January and February, those are the smallest months of our half, right? So even though that's 1/3 of the time of the half year, those are the smallest months, so they don't provide that same proportion in terms of growth. So from there, we saw that the growth slowed. It was relatively specific to our U.S. digital customers, and it's not that we lost customers or that we lost significant volumes. We still grew market share also in the U.S. in our digital customer base, but we grew it at a slower rate than we were growing previously. And that led to us growing indeed a bit slower. I think not as low as the numbers that you just mentioned, but growing at a slower rate, which led us to 21% on a nonconstant with FX included in the first half. Then in Q3, we saw that we grew 22% reported and as you alluded to 26% on a constant currency basis. That growth mostly comes from our existing customer base. Because in any given year, most of our growth comes from customers already on the platform. And in any year, our existing customers grow across their own growth. So as they organically grow, we also grow and it's from gaining more wallet share from our customer base. When we look at Q3, we did accelerate. We see that, that acceleration is broad-based across the portfolio. So it's not 1 or 2 customers that drove it, but a wider range, not specific to a vertical or to a region, but throughout the portfolio. And we don't have signals that that's because our customers grew faster in the third quarter. We don't have precise data to say that, but all the data that we have around how the market grew doesn't tell us that Q3 was an acceleration for our customer base. So we expect that that's from wallet share gains that accelerated in the third quarter.

Okay, that's really helpful. So because I guess the narrative became in the first half because there's lots of explanations why the growth could have slowed a little bit. I mean macro plays a role here, both in terms of your customers maybe seeing a bit slower growth, but also people in terms of the options they choose, they go for the premium option or the discount option, a macro environment can change how that works. The functionality differences between the products could play a role into that decision. And then how you're able to take wallet share. So could you help us on that impact, maybe in that slowdown in the first half? And I know it's very difficult to kind of pinpoint what the issues were, but how much was it the competitor pricing? How much was it macro? And then do you have any feel for why in H1, it was difficult to get that incremental wallet share and why in Q3 was happening because it doesn't feel like the competitors' behavior has particularly changed.

Yes. I would agree with your last point. I don't think competitive dynamics have really shifted. There's always been providers who provide payments at a lower price than we have. We're typically premium pricing what we offer. So that dynamic hasn't really changed. That's been there for years. I think what we saw most shift was the priorities of specific parts of our customer base. And there it was, again, U.S. digital customers. And they shifted from a focus on peer growth to a focus on profitable growth, which we feel well positioned to help them with, but which is different than how we were pitching and working with them in the past. So we had some work to do to adapt our commercial pitch, also make some incremental changes in what we focused on from a product perspective. And yes, we've been working on those over the last months. It's too early to say that, that has shifted something. I think the conversations go well. But in general, in enterprise payments, these things take a long time. And the fact that customers test with other providers, that's not new. That's been happening on the e-commerce side, especially for years and years, especially if you talk about large enterprises, they typically multisource. So they're already working with multiple providers. And then it's a question of, okay, with these priorities, let's reassess how the low-cost providers can do in comparison. And that's what we need to compete against, and that's what we need to show the value that Adyen can bring to the table for us.

So on that, I mean, that's a really good point that these big vendors have multiple acquirers. The idea in your value can take a little bit longer to come through than someone who's just going to give you a price discount tomorrow because it's a promise that we can improve your performance versus you're going to pay less tomorrow. Do those merchants that do not have experience of what the outcomes are from those lower cost providers that would make them more reluctant to give them more volume because they know the outcome is not going to be great? Or was there a need for you to, as you say, educate the sales force, and tweak the product to be able to deal with that more effectively?

Yes. I think both are true. It's true that we needed to do work on the commercial side to make sure that our pitch was crisp also to these priorities and not just growth priorities. So we had trainings that we needed to do. We needed to get our pitch right. We needed to have the right test conversations with the right people. All of that is true. At the same time, if you're doing a small part of your volume with somebody and you're doing, let's say, a medium size or a bigger, but still if you ramp up your volume, you get a different service level. You get a different experience with scale. That's why we often see that as customers grow into true enterprise customers. That's also a natural moment for them to reach -- to come to Adyen. The same is true if you're doing a small portion of your volumes with somebody to do a bigger portion of your volumes is a different experience. It's a different scaling challenge. It's a different operational challenge, and it's a different service level. So it's true that they have these integrations that they have these experiences, but it's very different to do 10% of your volume, then to do 30% of your volume with the customer. And to experience it, you need to test it live, you need to do real transactions. And that's always been in our favor. We start small, we say, "Give us your hardest challenge, we'll take it first," and then we'll show you the service levels, and we'll expand from there. And we have to keep proving ourselves every step we take. That's still the strategy. In this half year, that meant that growth went a little bit slower than it had in the past.

And in terms of the improvement in Q3, so have you seen any signs of merchants coming back to you and saying, do you know what that experiment with X, that didn't work very well. Your promises were correct about price point. We were paying that price for a reason. Is that -- have you seen signs of that?

Yes. I think we've consistently seen that because testing, again, is not new, right? Maybe the -- there was a more natural moment for people to test more expansively than they had in the past. But the fact of testing across providers in the e-comm space in enterprise, that's been around for years and years and years. So that's a trend that we've always seen that's going to a low-cost provider assessing the impact and then coming back. We have seen that over the years. We continue to have those conversations and see that now. So that is certainly a trend. But that explain the acceleration in Q3? That's not what we saw.

And could -- again, you weren't willing to call time on -- we've -- and you'll never call time on solving the problem and making sure the salespeople are as good as they can be, that's ongoing. But are you at a point where you feel we've addressed that issue of the market's changed, our pitch needs to change? And then from a coverage point of view, again, I think you felt you didn't have the coverage you needed of particularly the U.S. market. Do you think those 2 things are now in the right place?

Yes. So I think we have a very strong pitch to solve for bringing down costs, especially we keep talking now about U.S. e-comm customers. If you think about the position that Adyen has, we cover 5% to 10% of their payment fees, right? The rest is not paid to us but to the networks or to the issuing banks who their shoppers are banking with. And so there's a big opportunity to lower payments costs without necessarily lowering the processing costs that we are charging. And that's where we're spending a lot of time talking to our customer base, understanding in the U.S. There's way more payment methods today than there were 5 years ago if it's paid by bank. We announced a partnership with Plaid recently. If it's the Buy Now, Pay Later, if it's the prevalence of the debit networks, all of these things are adding complexity and contributing to our opportunity to reduce overall payments costs and support our customers.

So would it be fair to say that absent kind of massive change in the macro where things slow down, you feel comfortable now that you're able to cope with this environment in the U.S. and those challenges should be less of a threat to you over the next few quarters?

Yes. I think that we're well positioned, both from a product perspective and from a commercial perspective. In the end, these conversations do take time. So it's not that we should expect it to change overnight, but we feel we're really well positioned both commercially and product-wise to succeed in the U.S. on the digital side.

And if I can be more exact, you've obviously given a new guidance for the next few years, low 20s, high 20s, was -- when you thought about that range, were you thinking, well, we really don't want to be outside that range over the next few quarters, that kind of envisages what the range of outcome -- what a reasonable range of outcomes would be with a consistent macro? Would that be a fair way to think about it?

Yes and it was also capturing 3 years of growth. And we are doing a lot of things which we feel will help drive growth over the next coming years. For instance, growing the sales team, we hired a significant number of new sales team members in the last 12 to 18 months. And those people typically contribute to revenues after 2 years because the first year they are building pipeline and closing deals. The second year of those customers are just -- are new on the platform, they're not contributing a lot of revenues. In the second year, they start to ramp up. So those investments, they take time to play out. So part of it was also thinking what's the right range for the next 3 years. We've also said that we expect to be towards the lower end of the range in '24 and accelerating from there. That was a bit of the thinking, right? It's for 3 years. It's an annual number. So the range can be a bit wider. But also these things don't change overnight. So I wanted to give a bit of context what the next year looks like, too.

So maybe let's talk a little bit then about what you can do to improve the offering, the performance, the functionality of the product. And maybe let's focus on the U.S., first of all. I think the perception is that it's a commodity market. It can be very domestic, 2 payment methods, how complex can it be? Could you help us a little bit with, first of all, that's only a part of the U.S. market. I think people kind of were worried there was a much bigger part than we thought it was. So how much is complex and not? And then could you talk a little bit around are the things I'm missing in terms of where the complexity is in the U.S. that you're going to address to rebuild and create the performance advantage that you've always had?

Yes. Yes, it's a good question. So I think it's interesting to think about when Adyen went into the U.S., which is over a decade ago now. We went in to help, especially tech companies go abroad. So we came in with a commercial function, but the idea was not to solve the U.S. market. The idea was to help these customers go internationally. And that's how we started, right? And actually, I think back then, we thought that the U.S. market was commoditized that we never play a role in that market. I think the trend has been that it's become much more complex over the years, not less complex, which has allowed us to gain market share in the U.S., still a small player, but even when we went public just over 5 years ago, it was between -- it was in the low teens percentage of our revenues. It's now 1/4 of our revenues. So it's been fast growing within our base. And it's gotten, in our view, less commoditized because there's more payment methods. You mentioned 2 payment methods. You're right. It was like that. There's many more payment methods now. Regulation has driven that. Consumer behavior has driven that, and that's just on the pure e-comm side, but we also see as unified commerce as become much more complex even for domestic U.S. businesses, it's interesting to work with a partner like Adyen now because they have a decent sized e-comm channel as well. The customers asking for a better experience in store and across channels, they want to buy things online, return in-store. This is creating complexity giving us an opportunity. And SMBs were never in our scope. We were always very enterprise-focused. And now with our platform offering, and U.S. as far as along on the platformization of payments, we have the opportunity to also service these SMBs through these large enterprise relationships we build with these platforms. So I think in many ways, the complexity has increased. On the digital side, on the payment method piece, we've talked about auth rates coming closer together, and they have. I think network tokens has played a role in that to standardize the system. At the same time, conversion is much broader than just auth rates. It's what payment methods do you expose into who. And because we've built Adyen full stack from banking license to acquiring license to the gateway to the fraud tooling, we have the full data lineage on a transaction, and we can leverage that to help our customers make the right decision, right? So if you want to offer a certain payment method, you shouldn't offer it at the top to every customer because some customers will drop out of the checkout if you offer them the wrong payment methods. So you should dynamically decide which payment methods you should offer, for example. And that's one of the things we can help with because we have a lot of shopper history now with the volumes that we have to be able to help make those decisions for customers increased conversion and help them drive down overall payments cost. So I think even on the digital side, we see complexity increasing and the real opportunity to continue to grow with our merchant base.

I think you mentioned network tokens and that kind of level in the bank field. You were very early with that as you are with a lot of the technologies that come out, which gave you an advantage for a period. That's level down. Do you think with these other things, as you mentioned, dynamic offering methods dynamically to consumers, can you recreate the same scale of advantage? You won't be on all trades, but it will be on different methods of routing that you had when you're early with network tokens?

Yes, we think so. And I think the trend will always be like that. The things that we're talking about today as being market-leading, in 3 years' time, if we're sitting on this stage there, probably there's others that can offer them. So it's always about us being able to stay in front of the market. And to be able to have those opportunities, you need complexity to increase, not decrease. And I think that's the general trend that we've seen that through changing consumer behavior through this regulation that we've seen, I think PSD2 in Europe was a great example of authentication, creating a lot of complexity. You see more markets around the world that are exploring what stronger authentication requirements look like in Europe, there's PSD3 coming. So the trend is always that there is more innovation happening. And for us, that means we can stay on the front edge and we need to stay on the front edge to keep that value difference.

And if we think about -- I was kind of using this analogy that maybe 2 years ago, you had a -- let's say, it was a 20% performance advantage and you were, let's say, the 20% price premium. There obviously has been some discounting in the U.S. and competitors making up a number gone to 40% discount. Even if you can keep that performance advantage and you create it as we've just discussed to those methods, is there a risk that you're just too far away from where the market is on pricing, and you need to take a different stance on your pricing strategy?

You always need to be connected to the market and the value you provide is always compared to what the next could provide. Because if we got paid just simply for all the value we created, our business would look entirely differently. But it's, of course, compared to what others can provide. So we need to have one eye on competition, but we also feel that we have the full hand of cards to be able to execute and continue to drive value. And we feel very strongly about that. That's why we've made so many investments in the team over the last periods. It's mostly on the tech side that these people are hired. So this is building these products. It's iterating on our current base and building new ones. And we think we can continue to maintain that advantage. So nothing tells us, hey, you should slow down or you should not pursue this market. Absolutely not. We feel the opposite that we should go even more into the U.S. That's why we've built up the team more significantly in the last year. So we feel well positioned as long as we continue to keep executing, we feel we can drive outsized value to our customers.

And that level of value and differentiation would mean that your premium potentially could -- you could sustain where you are today?

Yes, that's what we feel.

That's very clear. I guess the other -- the question mark that came out of this -- out of that U.S. market discussion was what about the rest of the world? I mean in Europe, again, tons of local payment methods, I think a need to connect directly to them if you can have good authorization. Could you talk a little bit about -- maybe let's do your first maybe the level of complexity there, how hard it would be for someone to replicate what you've built in the European market?

Yes. So what we generally see is when there are many countries involved, that creates fragmentation. That creates fragmentation and consumer behavior. So you see different payment methods per market and you see fragmentation and regulation. And so one of the things that we focused on in Europe is standardizing that. Usually, when our customers go into Europe, they don't think about going into just one market. They go into multiple. So helping them on the operational side to reduce the overhead that comes with going into each of these markets, solving for the currency challenges that still exist in Europe. Making sure that we're deeply integrated again on the acquiring side, have the banking licenses like we do in the EU and in the U.K. There just is a lot more complexity when you cut up a region and so many more pieces than we have in, for instance, North America. And so it does look different. We don't see -- of course, people are more cost conscious in general. That's part of the trend we've seen over the last 1.5 years, but the fragmentation leads to more complexity here in Europe than in the U.S.

So that complexity issue is good, and that's there. You're obviously a lot bigger in Europe relative to the size of the market than in the other areas. Do you worry about that being a constraint to growth at all in terms of the penetration you have of Europe?

Yes. So if you take Europe and then also just pure digital, because that's where we started. So that's where we are biggest, we still feel that there's a lot of room for us to grow. So we're not a dominant -- we don't have a dominant market share in Europe by any means, even on the e-comm side. We have lots of room to grow in our existing base. We showed a share of wallet view during our Investor Day 2 weeks ago. And there on the digital side, we show that in our existing digital customers, the older cohorts have 40% wallet share and the newer cohorts have 20%. So also in that base, we have a lot of room to grow next to all the new customers that we still have to win. And that's only on digital. If you then look at Unified Commerce, we're just getting started. The fact that Unified Commerce is in the mid- to high teens -- point of sale is in the mid- to high teens of our total volume, and the rest of the market is exactly inversely correlated more like 80%, 85%. It means we have lots and lots of room to grow on the Unified Commerce side and the platformization, the platform side, that's just starting to come to Europe. And I think SMBs will certainly go this direction. So there's plenty of runway still for us also in Europe.

And is the competitive environment different because of that fragmentation that you don't -- it's far more difficult for anybody to compete across the entire landscape, whereas it's a lot easier in the U.S. for someone to play?

I would say it's mostly down to the size of the market because you have domestic players in every country. That's usually who we go against. And the bigger a domestic market is likely the bigger competitor is. So it more so comes down to the size of the market that leads to that domestic provider being more capable. So of course, if you look in a market like Germany or France or in the U.K., which are the biggest markets in Europe, then you have a bigger domestic presence than in some of the smaller markets. And for us, competing with domestic players, there's big differences in what we can provide. And that typically leads to us outperforming pretty significantly.

Could we have the same discussion to some extent about the Asian markets? Maybe, again, are we right to think about it as more similar to Europe and the levels of complexity? And then can you talk about the markets where you're placing bets and saying this is where we want to be? Or is it a very broad strategy in that region?

So Asia is very fragmented as well. We have offices in many of the countries there. There's a lot of complexity because in each country, you have different consumer behaviors again, you have different regulation. We see that, for instance, wallets are very far in Asia compared to other places. So there's a lot of innovation happening there. But if you go from one country to the next, you find that different wallets are interesting in one market versus the next. So there's a lot of complexity, if you want to expand to Asia as a customer of ours, then you have to not only be global, but you have to go very local to succeed, and that's where we can really help. In terms of countries we're making bets on, I think Japan is one of the big ones that we have bet on in the last couple of years, that we're still very early days. It's one of the biggest markets in the world. Also on the e-commerce side, it's in the top 5 markets in the world. So it's a really sizable opportunity, and there's a lot of room for technological advancement. There's processes which are still stuck in a few decades prior, and there's a lot of movement away from cash still. So there's still a lot of use of cash in Japan, too. So we think that's a great opportunity for us. And then India is another one that we're making a big bet on, too. We're just getting started. We have a small team there. But we've made investments in making sure that we have the infrastructure to succeed in India. And that's a more longer-term bet, but that's one that we're really excited about as well.

And maybe just focusing on Japan, you mentioned earlier, you referenced PSD2 and strong customer authentication. That was obviously a huge issue for e-commerce merchants in Europe. I think publicly, Zalando has come out and said, you weren't an acquirer for them. They had this problem, you came in, solved the problem for them and now you're the main acquirer. If you look at that more -- can we take that learning from Europe and apply that to Japan? And how big a game changer was that for you in Europe as a problem for e-commerce merchants? And so can we take that as Japan puts that into place, I think, in 2025?

Yes, yes. I think in general, stronger authentication as a trend is a global trend. So I think that more and more countries are also looking to Europe and seeing, okay, there were some challenges. We're glad you did it first, but there's also a lot of benefits to lowering fraud. And I think that's a trend that we'll see that stronger customer authentication will be something that's not just a European topic, but that does go around the world. Japan is an example. It is a real opportunity for us because the risk with stronger customer authentication is, for instance, 2 factor using your finger or your face, it has the risk of lowering conversion, has a risk of people dropping off in the process. And of course, anything that leads to drop off in the checkout process is a big challenge for e-commerce businesses. So our position of doing that as elegantly as possible of only requiring it when needed using exemptions were not about helping to lower fraud while not impacting conversion. That's something that we saw as a big advantage in Europe and that will likely go out to other parts of the world, too, where we can apply the same setup because we've built everything on that single platform. So it's not that we need to rebuild it in every market as it comes. Of course, we need to tweak settings depending on how the regulation comes, but the product itself is built, and that's a good advantage for us.

And maybe to round out my regional sort of the world, LatAm was -- we didn't really talk about that in H1. That wasn't a focus, but it was a bit weaker in terms of growth. Is that naturally lumpier because it's a smaller market and merchants coming on board can move things? Or is there other explanation for that?

It is a bit lumpier. It's more concentrated. It's a really strategic market for us because a lot of our biggest customers in the world find it challenging to go into Brazil. So if we can help them with that challenging market, that's usually a good entry point for us or even a way to help broaden our relationship. So it's a really important market. It is a bit more lumpy because it's smaller, but also because it only has large digital customers. We're new to point of sale. So Unified Commerce is just getting off the ground in Brazil and LatAm in general. And platforms isn't there yet. So it's just the digital pillar. So it's more concentrated. We have big expectations for Brazil in years down the road, but also for Mexico, where we've made pretty sizable investments as they've gone through quite a shift in their payment system with Visa, MasterCard starting to play a role where they didn't previously. A local network, we've built a full integration into the local network, so we can route transactions between networks. So we're excited also about the Mexican market. It is going to be lumpier just given the size and the fact that it's mostly digital at the moment, but over the coming years, we have expectations for LatAm to grow.

Perfect. That's helpful. Maybe we should move on to -- I'll move down to the P&L a little bit and maybe talk about the investments that you're making. So you -- it was kind of really more with the full year results back in February that you -- we have a much heavier rate of investment in the second half of last year. You confirmed that this is going to continue. Could you just talk us through what prompted that decision to really increase this investment in the business? Was there a feeling that you've maybe done a little bit less than you needed to in '21? Was it seeing opportunities in the market?

Yes. Part of it was -- I mean, it's always connected to the opportunities we see in the market. Part of it was a feeling that we hired a bit slower than we would have liked in '21. The biggest part of it is that we wanted to achieve a couple of things. We wanted to increase the proportion of tech in the company. We wanted to increase the global nature of the company. So we wanted to hire faster outside of Amsterdam, increase our global presence to make sure that in the local markets that we really want to make a difference that we have a sizable enough team to do so and to compete. And the last part, which is also very important is that we went basically from a single product organization to a multiproduct organization, right? We were very much a payments company, and I think platforms has taken us down the road of becoming a fintech company, also with our banking licenses that we've gotten over the years. So a much broader set of financial services that we plan to sell into our customer base and support them with. So I think those were the 3 main things that led us to the decision to ramp up hiring. And it also helped that the market was -- it was easier to hire in the past couple of years than it was in those years before, where the talent market was so competitive. That finding the absolute best people, we were able to find them well in the last couple of years and add them to the team. I think we saw a couple of them at the Investor Day [indiscernible] finding that balance of adding talent in from the outside and developing people internally that we focused on at the leadership level, too.

Perfect. Well, I'm kind of conscious of time and we -- you mentioned platforms several times. It sounds like a really interesting opportunity. Could you maybe just, first of all, help us understand the platform that you're going after? Because I think a lot of people -- my first idea is always the e-commerce platforms, it's eBay and Shopify and those guys, but it's a much broader vision. So maybe could you just help us understand?

So there's, of course, marketplaces, which are the classic e-commerce example that you just mentioned. eBay, GoFundMe, Etsy, those kind of businesses that they have a buyer and a seller. There's also now -- this is what we see as the trend is that a lot of SaaS businesses who were previously just selling software into typically an SMB, they're also looking to embed financial services and they want to start with payments. So if they're a vertically oriented SaaS platform that sells in software to [indiscernible] restaurant, then they've always sold software, but they want to add stickiness to their offering. They want to solve a pain point for their customers, which is typically around financial services. So they start with embedding payments. And what embedding payments looks like is they sell payments to their customers, they support it, but they don't build the technology themselves to build a full payments company. They buy that or they white label that from somebody. And that's what we can offer. So we're seeing that a lot of these vertically oriented platforms are interested in going down this path of embedding payments and that we can very well support them. And that use case exists across in-store and online, right? So if we take that restaurant's example, Olo is a customer that we've talked about. Of course, in restaurants, you need the in-store capabilities. But you also need online, for instance, you want to do takeaway through it or you want to do a deposit for reservation, for example. All of these things have a component of both e-commerce and online. And the beauty of what we're building for platforms is that it's built on top of our payments offering, right? So they benefit from all the things we're building for our enterprise customers. They benefit in the same way. And we did some research last year that about 1/3 of small- to medium-sized businesses today are getting their payments from a platform like this. But that 3/4 of them said that in the future, they plan to get their payments from a platform like this. So there will be a lot of expansion of this market. And we previously didn't have any exposure to SMBs directly. So now via these large enterprises, we get exposure to them, and we can really help.

I guess it brings you 2 layers of growth because you can sign platforms, but the other trend is that SMBs are digitizing and there's a huge transformation there and then going on to the platforms at the same time, so...

Exactly. Exactly. So you have the normal wallet share gains like we always have with a customer, but you also have the fact that they're selling into their customer base. And as they sell into their customer base, we grow with them. So there are indeed 2 impacts.

And can you give us a bit of help on the payments into platform side? Are there any figures you could give us around how you've grown? Number of platforms, merchants? Just to give us a feel for how that's moving along.

Yes. So we talked about a couple of things. So our platform's growth in the third quarter, excluding eBay, which is the biggest platform that we had, which is -- that we're growing 120% year-on-year. So really dramatic growth, lots from our existing customer base as we expand wallet share and as they sell into their own customers. So that's a really strong signal. We also see that we work with 17 platforms who do over EUR 1 billion in volume on the Adyen platform. So even when you think of these relatively niche kind of providers who are providing to a small vertical in one market that can bring really substantial payments volumes, and we have worked with 17 now, I think, up from 10 within the last year that are over EUR 1 billion in volumes on the platform. So we're seeing really strong traction there. And of course, our offering on the payment side goes beyond payments. It's winning us payments volume today that we have this embedded financial product suite, but it isn't material yet on a stand-alone basis, but it's really important to the pitch today because most of them have the ambition to go beyond payments down the road.

And that's -- could you go through a little bit around what's after payments in terms of what you add to that platform, the whole embedded finance offering?

Yes. So with the fact that we have all of our own licenses, including banking licenses, we can offer a lot. We can offer issuing. So debit cards, for example, or bank accounts, we could offer capital. So a short-term cash advance or short-term loan. We can do payouts. For instance, in the U.S., we have FedNow, which is a new real-time payment system, which we get access to because of that license and where we can support platform customers a lot. So it's these types of financial services that platforms want to provide to their customers because whenever they do NPS surveys or ask them questions, they always say that's one of their biggest pain points that getting financial services from the traditional banks is really, really complicated as a small business. And we have a lot of great data to make smart choices about how we provide those financial services given the fact that we're in the payments, so we see their payment history, so we see their sales history, we're in the money flow. So there's a lot of benefits we see down the road in offering those services to you.

That's very clear. [indiscernible] have to maybe open it up to the audience. Are there any questions we can take from the floor? Take a question over here, please. We'll get a microphone over to you right now.

I just wanted to test my understanding of something Adam asked you earlier, and with an additional add-on. So the low 20s to high 20s revenue growth rate, you -- just you said kind of '24 should be towards the low end of that range. So is it right to think of the low end of that range as a kind of floor for what you perceive your revenue growth outlook to be for the next few years? That's the first question. And the second question is really around operating leverage in '24. So obviously, versus maybe what the market expected a little while ago, it feels like the amount of hiring in H2 will be a little bit less than perhaps you had previously planned. And I think we met a few months ago, and I recall you suggesting that the pace of hiring would moderate further in '24, such that OpEx growth would be below revenue growth. So is it right to assume that whatever your revenue number lands at, EBITDA growth should outpace revenue growth in '24?

Yes. So first on the revenue guidance. Of course, it is a forward-looking number, right? So it's our assessment of where we think our growth will come from -- or what we think our growth will look like. You can never predict what -- fully what will come, but our expectation is that we should be in the guidance range for the next 3 years. That's why we've guided on that range. So it is fair to say -- you never know what comes. But yes, we don't expect to be below the range that we've given, especially in '24. In terms of EBITDA margins, and maybe one other point to make on the net revenue side. We did a breakdown of where our growth will come from. So mostly that our growth comes from existing customers in any given year. It comes across the fact that our customers are growing. We're in one of the fastest-growing markets in the world that, of course, supports us, and we gain wallet share with our customers. We also talked about pricing impacts. We offer tiered pricing. As our customers grow, the price they pay goes down. There can be different combinations of volume and revenues that we see over the coming years. Because some periods, we may grow faster with really large customers, some periods, we may grow faster with smaller customers. But in general, the revenue outcome is the thing that we manage on as a business. And that's also why we've guided specifically to revenues rather than on volumes. Your point on EBITDA margins, we do expect operating leverage in 2024. So there is some trailing impact from hiring that you do in the year before, right? All the people that we hired in 2023, they will have a full year of salaries next year when they had a partial year of salaries this year. So there will be some trailing impacts, but we do expect operating leverage in '24 already. And then to accelerate in the years after because we'll stack a few years of lower hiring than we had in 2023 on top of each other. And next year, we've talked about a couple of hundred net additions.

Another one from the floor, maybe we've got time for one last one.

Maybe if I finish it off then. Just on that slowing the pace of investments, can you reassure us that, that's done with -- we've got what we need from a tech perspective. We've built out the sales teams and not market reaction and a set of events, we need to show a certain change to the market and react to that?

Yes. So we didn't do layoffs, and we didn't rescind offers. So factually, it's not possible for us to have reacted that quickly. I wish we could, of course, but no, it's not a reaction to the market, right? That was in mid-August that we went out with H1, we'd already hired for 2 months, and we already had all the offers signed for September. So we had no way to react other than to pull offers or to do layoffs in neither of those we did. It was -- it happened organically. It was our teams coming to the end of 2 years of large-scale hiring and saying, okay, we've always been disciplined in it. We don't feel that we need these additional people. What's much more a forecast than the target. So I'm pretty proud of the team that they made those choices along the way out of business need rather than out of pressure from external.

Well, we could go on for a lot longer, we're bumping up against time, Ethan. I really want to thank you again for joining us.

Thanks for having me.

Thank you.

Thanks, Adam.