Adyen N.V. ($ADYEN)

Hello, everyone, and thank you for joining us. My name is Isaac Lima, and I'm on the Investor Relations team here at Adyen. Today, we will be discussing Adyen's acquisition of Talon.One. As this is an M&A-focused call, we will not be commenting on current trading or our quarterly results beyond the brief update that Ethan will provide later. With me on the call today are Ingo Uytdehaage, our Co-CEO; and Ethan Tandowsky, our CFO. Before we begin, let me remind you that some statements we make today will be forward-looking. These statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Furthermore, the transaction we are discussing is subject to customary closing conditions and regulatory approvals, and there is no guarantee as to if or when it will be completed. With that, I will now turn the call over to Ingo.

Thanks, Isaac. Hello, everyone, and thank you for joining us. Today, we are announcing the acquisition of Talon.One, a move that represents a natural evolution of our platform and a direct response to our merchant needs and priorities in a rapidly changing commerce landscape. Talon.One is a leading customer engagement platform and incentives engine headquartered in Berlin. Since its founding in 2015, Talon.One has quickly become a critical partner for over 300 global merchants, including names like Nordstrom and H&M. Their API-first platform powers enterprise loyalty management, personalized promotions and incentive optimization. This acquisition builds on our Unified Commerce strategy, a core part of our focus for years. For many merchants, turning data into action in real time remains a significant challenge, and this move is designed to solve it. I want to outline the 3 reasons why it's relevant to us. First, we combine our identity capabilities with the SKU data and promotion capabilities of Talon.One. Retailers can now implement real-time price decisioning in each channel, online, in-store, but also in an agentic world. This does not yet exist, and it's hard to replicate if you don't own a full stack like we will together with Talon.One. We can offer this both to our existing and Talon.One's customers. Second, we move from providing insights to real-time actions and from focusing on payments to revenue management or customer lifetime value optimization. And lastly, with this combination, we are ready for new verticals where this differentiation is crucial like everyday retail and for domestic retailers in large domestic markets like the U.S. and the U.K. This also leads to a new added value that we can provide. Talon.One's growth has been remarkable with ARR growing at around 30% to 40% annually over the past years. The team has a high-growth mindset, is entrepreneurial and shares a very strong cultural fit with Adyen. Importantly, Talon.One's merchant base overlaps meaningfully with Adyen's supporting seamless integration and scale. We are investing to address emerging models like Agentic Commerce, where decisions are made much earlier in the shopping journey. The combination of Adyen and Talon.One positions us to address a long-standing and pivotal customer need. With a combined offering, we empower our merchants to influence what is shown and sold to each of their customers, ensuring they remain in control of the relationship across every channel. Now I will pass over to Ethan to go through some financial details on the transaction.

Thanks, Ingo. As Ingo highlighted, the acquisition of Talon.One is a significant step to advance our long-term strategy to help merchants succeed across sales channels by delivering a truly unified experience. Turning to the transaction itself. We've entered into a definitive agreement to acquire 100% of Talon.One shares for a total consideration of EUR 750 million, financed with our available cash. As part of the agreement, Talon.One's co-founders will reinvest a meaningful portion of their proceeds into newly issued Adyen ordinary shares, ensuring deep long-term alignment with limited dilutive impact. We expect the transaction to take up to 5 months to close as it is subject to regulatory approvals from the Dutch Central Bank. Talon.One has achieved remarkable success and is on track to generate approximately EUR 60 million in ARR by the end of this year. Now regarding the impact on our financials. Given the anticipated timing of the transaction close and the relative scale of our business, we do not expect a material impact on our 2026 net revenue or EBITDA. We will share more details on the full year impact as we approach the close of the transaction. Looking ahead, we do expect this acquisition to be supportive of our net revenue growth over time. In 2027, we anticipate 1 to 2 percentage points of incremental growth from Talon.One. In terms of margins, we anticipate a modest margin dilution of approximately 1 percentage point versus our stand-alone expectation in 2027 as we integrate and invest in scaling our new customer engagement and loyalty offering. Despite this near-term increase in costs, our 2028 target for EBITDA margin above 55% remains unchanged. I also want to provide a brief update on our current business momentum separate from this transaction. We are off to a strong start to the year. In the first quarter, we saw net revenue growth of 20% year-over-year on a constant currency basis, which was well in line with our expectations. We are reiterating our full year 2026 guidance of 20% to 22% net revenue growth on a constant currency basis and our expectation for the 2026 EBITDA margin to remain broadly in line with 2025. To be explicit, we are not adjusting our expectations for the year due to this transaction for the reasons mentioned earlier. Our underlying business remains strong, driven by continued expansion within our existing merchant base and steady new wins. We will provide the full breakdown of our Q1 results, including net revenue and processed volume by pillar during our scheduled update on May 6. We will not be providing further commentary on Q1 performance today and look forward to addressing those questions then. Finally, a word on capital allocation. This acquisition is directly aligned with our capital allocation approach. While organic growth remains our primary engine, this deal demonstrates our readiness to act decisively with M&A when we find a technology and team that significantly broadens our offering and creates clear long-term value. We are incredibly excited about the value this will unlock for our merchants and our long-term growth trajectory. Separately, even with this transaction, we maintain the flexibility for a range of capital allocation decisions. We are focused on leveraging our strong balance sheet to drive shareholder value. Now I'm going to turn it back to Ingo to quickly summarize the key strategic takeaways and why we are so excited about this opportunity.

Yes. So to recap the reasons that we're so excited about joining forces with Talon.One. First, we combine our identity capabilities with the data and promotion capabilities of Talon.One, enabling retailers to implement real-time price decisioning across channels, including Agentic Commerce. Second, we move beyond just optimizing payments and can actively manage our merchants revenue and customer lifetime value. Third, we unlock critical new verticals and regions. It positions us to win on everyday retail and with major domestic brands, accelerating our ability to gain market share. With that, Ethan and I are happy to take your questions.

[Operator Instructions] Our first question comes from Andrew Schmidt from KeyBanc.

Congrats on this acquisition that helps you move up the stack. So just maybe some clarification on build versus buy. This does seem like a little bit of a different capability set. But if you could talk about that a little bit. And then maybe just the Adyen platform, a hallmark of the Adyen platform has always been sort of the single organic nature of the tech stack. And obviously, this is a bolt-on. But maybe if you could talk about how you maintain that tech stack advantage while doing this acquisition and potentially more, that would be great.

Thanks, Andrew. So indeed, if we look into new areas, we always ask ourselves the question, are we going to build or are we going to buy? And this is the first time that we did an acquisition. And the reason why we've done that is because it's not just about the technology. It's also about the inroads into different teams. Talon.One has great relationships with marketing teams of enterprise merchants, and that's really in line with the area that we want to play. Next to that, they're enterprise focused. And I think that is also very helpful in our proposition to merchants. So it's that combination of knowledge on loyalty, the inroads to customers, the different revenue pool that they unlock through the marketing revenue pool that they typically address that makes us to do this acquisition, and that's why we buy instead of build here. Then if you think about our tech stack, of course, we did technical diligence on the architecture of Talon.One. And we think that it's very good in line with what we have built so far. Of course, we look if we're going to integrate the product also into our platform to see how we can further improve this. But of course, it's not an additional payments platform. I think we have always been very keen to making sure that we keep a single payment stack. That's still the case. We now expand our capabilities, and we will make sure that the technical architecture will be aligned over the future.

The next question comes from Justin Forsythe from UBS.

Congrats on the quarter and an interesting foray into M&A here. So a couple of questions from my end, if you don't mind. Just can you help me understand a little bit how you plan to monetize the solution going forward. So does it have tie-ins to the way that you monetize loyalty today? How does Talon.One monetize their solution today. And you can walk maybe a little bit through the synergy expectation going forward on the revenue side. I would imagine, yes, of course, you get the uplift of the 1 to 2 points next year in '27, as you mentioned, Ethan, but how do you think about the longer-term synergy opportunity there? And then just a follow-on here. I think one question might be, you have this Unified tech stack. One of your advantages is supposed to be data. I fully appreciate and understand that SKU level data is not something that merchant acquirers typically have access to. And so that will make you unique on the merchant acquiring proposition. But could you maybe talk then about the tie-ins to agentic and what that means for your proposition in the future. Meaning I imagine merchants, and you said this before, are quite nervous about loyalty going forward with agentic commerce and the shifts in distribution channels. So maybe you could just walk us through both of those.

Yes. So I think to your first question, Justin, on monetization. I think at the moment, nothing changes. So we'll continue to follow the joint strategies that both of our businesses have for our existing customers. Today, how Talon.One monetizes is typically a platform fee. So essentially a subscription that they charge to their customer as well as some components of usage-based. As we think that this will drive significant value, both for our existing customers and as we expand into newer markets, like we mentioned domestic retail, we talked about everyday retail. We'll follow the same approach we always have, which is creating differentiation, creating value for our customers and monetizing accordingly. In terms of your question on how we think about synergy expectations going forward, certainly, we see this acquisition as very strategic. We think that this will be very supportive to driving growth in our Unified Commerce segment over time. The way we plan to integrate this acquisition is ultimately to fully integrate it. And because of that, we'll look at a joint proposition like I just mentioned. I share the more near-term expectations because that's also how we plan to guide the market going forward as we started with in February. We'll give an annual view each year as we develop. And over time, we don't expect to report on this separately. We expect that we'll drive that integration together as a team and work to drive value for our customers.

And let me answer the question on how this also works with agentic commerce space. How we look at it is that, of course, what we have built over time is the dynamic identification layer, which enables us to basically detect who is transacting. If you combine that with the SKU level data of Talon.One, we are in a position that we are also really well prepared for agentic commerce because what is relevant in agentic commerce, that's also what we've heard based on the interviews with all our merchants is that we get a way to publish the product catalog of our merchants. And this is exactly the SKU level data that Talon.One owns. So making that available together with our capability of identifying consumers through this dynamic identification layer brings us in a perfect position to provide agentic commerce to our merchants. And this is what we are already building right now on the Adyen side and with the SKU level data on the Talon.One side, it will be even better, and that's why we're so excited about this.

Next question comes from Craig Maurer from FT Partners.

I was curious if you could discuss how much overlap there might be in terms of brands and merchants between the 2 businesses? And how much of this represented a lead gen opportunity for Adyen versus just an opportunity to extend the identity layer and connect both sides with existing customers.

Yes. So there's about 60 customers that we have an overlap in out of the 300 in total. So of course, the first thing we will do is work with customers that we both have to see how we can quickly make the improvements that we think is possible right now with this combined stack. And then, of course, the Talon.One team has then access to the customers we have and vice versa. So that's a huge opportunity for both of us, so for the new company.

Next question comes from Klaus Gala from MCH.

So the differentiation seems to be owning the prepayment decisioning. So the thesis here, what it sounds like is consolidate the marketing, tech and promotion stack into your infrastructure. I'm just trying to understand, there's a range of loyalty vendors already, Salesforce, Adobe that have deep merchant relationships. Can you help us think about the wedge that helps you bypass those relationships where there are long-term marketing contracts.

I think what we believe is not out there is the capability to do this in the Unified Commerce space. So specifically in-store, a lot of retailers still struggle to connect the consumer with the right promotion. And what you also can see that Talon.One has a lot of technical integrations with all kind of commerce players. This is the real question that retailers have. So how do I recognize the customer in-store and then how can I actionize it? And we believe that there are no other players that can do this in the way that we can do this combined. So that's why we're so excited about it.

Next question comes from Sanjay Sakhrani from KBW.

I'm curious if we should look at this deal as a strategy pivot and that Adyen might now do more bolt-on deals here? And if so, sort of what areas are you looking at to expand your capabilities. And then Ingo, that last example that you gave in terms of Talon.One and sort of what they're able to do with the assets you have, could you just bring that to life a little bit for us. Like we go to Nike and I go to the Nike store and basically, I get a customized offer there. Maybe you could just explain that a little bit more for me.

Yes, sure. So this is not a strategy pivot. So what we see that this is basically the next step in Unified Commerce. And we see that a lot of retailers have difficulties bringing loyalty into action. And then we ask ourselves, okay, what is the best way to get here. And that's how we landed on Talon.One. We still have an organic growth strategy, and we have no imminent plans right now to do that differently. Then on your question for examples to bring it to life. Indeed, if you're in a store and you, for instance, tap your card, we know exactly who you are if you have registered with that merchant. We can then, for instance, give a promotion that we immediately load into the cash register, for instance, give you a discount or with that data, we can later on send you a more detailed promotion offer. So for instance, I'm wearing a light blue shirt right now that I bought for full price in October. There is a dark blue shirt available end of sale in Overstock. And you know exactly who has bought that shirt also in store and can send them a targeted e-mail with an offer to this customer. These are the kind of use cases that retailers are looking for and that we together can offer to our customers.

Next question comes from Harshita Rawat from Bernstein.

So Ethan, maybe can you refresh us on kind of the capital allocation framework. I know you commented on that earlier. It looks like there's a little bit more openness to doing tuck-ins, but you also have a lot of cash on your balance sheet. So maybe talk about also shareholder returns via buybacks or dividends, especially also considering how much cash you generate in a year.

Yes, sure. Happy to. So as we've shared previously, our primary focus is on driving growth. And primarily, that's through organic means as it always has been. That remains still the case today. So we're very much focused on driving organic growth through continuing to invest in the business as we've done. As growth is also the clearest way that we can drive shareholder value, we've also had an openness to looking at also inorganic means of doing so. Of course, we haven't done that to date until today, where, of course, we're very excited to see this acquisition get to signing and to bring in Talon.One. We saw this as a great opportunity to add capabilities, to add a talented team, to add deep expertise, all the things that Ingo mentioned earlier. And that will help us continue to drive growth over time. So we're still very much focused on driving growth in general. That focus, though, it doesn't preclude us from having further financial flexibility for a range of different capital allocation decisions because even with this transaction, we feel that we are in a strong financial position. Of course, there's a number of considerations. We shared the regulatory approval process that we will now follow with the Dutch Central Bank. That also applies to a number of different capital allocation options that we also have, but we'll continue to focus on delivering what's best for our business and delivering shareholder value over time. I think we remain flexible even following this transaction.

The next question comes from Adam Frisch from Evercore.

Congrats on the acquisition. I think it makes a lot of sense. But you've been -- some people, not everyone, have kind of talked about your agentic strategy. I think this one kind of lands really, really well to kind of refute some of the concerns that some people may have had. It sounds like what you're doing is using your processing engine that you already have with merchants that love and trust you and you're almost forming like a consumer aspect to that network without having to own a consumer business through Talon.One so you can match up consumers and preferences and loyalty with your processing platform that obviously has lower fraud and chargebacks and higher approval rates and all that. Is that the right way to think about this as a very slick way to form a dual-sided network for merchants and consumers where merchants are trusting you with their catalog data to do agentic the right way where they're not disintermediated from their customers. Is that the right way to think about this?

Well, of course, agentic is one of the applications that we see, but it's not the only reason why we're doing it. So I think, first and foremost, retailers today still struggle to combine actions on in-store and online transactions. And I think that's what, first and foremost, we want to achieve here. Then, of course, on the agentic play side, you're right. It's very important for retailers to continue to have a relationship with the consumer behind the agent. And of course, by recognizing consumers and by recognizing agents, we are capable of capturing this and making sure that retailers continue to have this connection and build indeed on the trust that we have with our customers. So in that sense, it's certainly going to help us in the agentic play. But it's not the main reason why we're doing this acquisition. It further helps us to position us there, but also the problems that retailers still have in store need to be solved first.

Got it. And just a clarification on Harshita's question. Ethan, does this mean that share buybacks are still something that's on the table for you to consider in the future at a future date?

Yes. We still think that we have a strong balance sheet and flexibility given our financial position and our cash generation. So it's certainly among the options that we are considering.

Next question comes from Darrin Peller from Wolfe Research.

This is Paul Obrecht on for Darrin. Ingo, in addition to loyalty and incentives, what are other areas in the Unified Commerce landscape that Adyen perhaps doesn't necessarily address today, but could in the future to expand its value proposition?

That's a fair question. I think for now, we focus on this loyalty. And I think you need to see it slightly broader. It's not just loyalty, it's the way how we help retailers to optimize their revenues. That's what we're going to build together with Talon.One. And because we can do this together really well, I don't expect that we need to do any additional acquisitions now.

Next question comes from Hannes Leitner from Jefferies.

Congrats to the first acquisition. Can you maybe help us understand how this should basically feed back into a higher share of wallet. And should we expect now Unified Commerce to kind of break out of the roughly 30% year-over-year growth you have been doing. Or is this rather more to be seen as a revenue driver to supercharge Talon who seems to have been still in funding mode. And then maybe just a clarification for Ethan on the guidance part for this year, given you have said that this is separate and so we should expect this coming then on top and you report both separately clearly because of IFRS rules.

Yes. So let me start with the first part on essentially how you should think about this in terms of the building blocks. I think that's the first question that you outlined. There's a couple of ways. One is that these are offerings that we believe we will be able to monetize both with our existing customers, whether those are joint existing customers today, existing customers of Adyen or existing customers of Talon.One. And so there will be an additional monetization component on the current volumes that we have. There is, of course, also the opportunity when you provide more value to gain more share of wallet with our existing customers. So there's some part of that. But the biggest opportunity we see is one that will play out over a few years, which is we also think that this expands our offering into newer verticals and parts of the market that we're underrepresented in today. Think about everyday retail as a vertical. Think about domestic markets, right, in large domestic markets, there's often pretty sizable significant enterprise-level domestic retailers. So we think we can win a bigger part of that market as well by combining our offerings. That I would look at as new wins that will play out over time. If I just come back once more to the pricing part, I think if you think about where we are today, we are often selling into payments teams, to finance teams. What this really opens up is another revenue pool that's often managed by marketing teams. And so if you put that together with the current monetization strategy we have, we think that given the value we can create as a joint company, we'll be able to access that as well. As to your point around if we will expect UC to break out, I think in the end, it still will take us some time to close the deal. Then we'll work together on building a solution. We'll first focus on our joint customers. We'll move more broadly into the existing customers that either one of us have. And then, of course, expand into newer markets. This will take some time to play out. So I wouldn't expect it to change overnight, but I think we're really, really excited by the potential here to drive value, to expand our offering, to expand into markets we're not yet in and to truly drive value that way. In terms of guidance for the year, so indeed, the guidance number that we've reiterated for this year is not including this transaction. We expect that this transaction will close in the second half, so closer to the end of the year. And given the relative size compared to our business, we haven't incorporated it in, but you should read our existing guidance as a continuation of the guidance that we shared a few months back.

Next question comes from Mohammed Moawalla from Goldman Sachs.

Congrats on a milestone moment for the company. My question was just from what you sort of described in the payments industry, the sort of value-added services to use a kind of broader phrase, has always been very difficult to sort of monetize. And often, when you think of the kind of core payment offering, you've talked about the sort of take rate or the tiered pricing model. How should we then think about sort of this acquisition in the context of sort of that take rate evolution? I know you're focusing more and more on net revenue growth. I know embedded financial services is one of those services that you're looking to kind of monetize. And in the end, is this really going to be able to be monetized? Or is the bigger play here that just sort of really accelerates kind of the pace of the share gains as you further enhance kind of the moat of your offering, particularly around Unified Commerce.

Yes, sure. So I think if I go back to the previous question, I think what you see here is that we're moving into a different revenue pool, again, one that's managed by marketing. If you can create value for customers across their broader revenues and not just optimizations within their payments flow, that is a significant opportunity to create value for our customers. And again, because it is a separate revenue pool, we think we will monetize it separately. Now as we bring this product offering together, we'll ensure that our monetization strategy follows the value we create, and that value may look different in different segments of the market. That's a strategy that we've employed historically, and we've employed it well historically. So we'll continue to focus on how we deliver that value and then how we monetize it accordingly. We think that we're in a good position to monetize both products.

Next question comes from Frederic Boulan from Bank of America.

Two quick ones. First of all, in terms of go-to-market, can you clarify to what degree decision-making on payments and on the solution like Talon.One overlap? And second, on the financial side, can you clarify how many shares Adyen is issuing to Talon.One founders in the process.

Yes. So the good thing here is that if you look at who the payment decision-makers are, they are different than decision-making makers for loyalty solutions. We typically talk to financial teams, payment teams, CFOs. For loyalty, you typically talk to the marketing teams. So that's a huge opportunity to get also broader attachment to companies. And I can't disclose now how many shares we're issuing. I will come back on that later.

Yes. I would just mention on that piece that what was really important through this is that we aligned incentives also with Talon.One and with their founders. So we set this up in a way where this is a meaningful contribution for them. But on the broader shareholdings for Adyen, this is an immaterial amount.

Next one comes from Pavan Daswani from Citibank.

I've got a couple as well. Firstly, just expanding on the rationale. Do you see this deal as providing a competitive position advantage as well? Or is it mainly about the cross-sell opportunity in new verticals over time? And then secondly, I appreciate the color on the increment to 2027. But could you talk through the integration process after the deal is completed at the end of the year? What are the next steps? And how quickly can it be fully integrated into Adyen's platform?

So it is absolutely a competitive advantage. We think that if you want to be successful in retail, you need to crack this. And we've tried to build this with retailers over the years, but I think it's very -- we noticed that it's very difficult for retailers to do it themselves. That's also why Talon.One is so successful in why they've grown so fast given the number of years that they are active. And that's why we believe that if we combine the businesses, we really get to a competitive advantage, which is hard to follow for others if you don't combine these data. Then the integration process will start once we get the approval from the Central Bank. We don't want to rush the integration because there's a lot of speed also in the Talon.One business. So they certainly will be -- or operate stand-alone, and we will make sure that we align on the go-to-market teams first. Then, of course, also on the tech and product side, make sure that we make the changes that are needed and then integrate it slowly over time. We're not going to rush it. We want to keep the momentum that they have in the business. We want to keep the momentum that we have in our business.

Next question comes from us Nooshin Nejati from Deutsche Bank.

I also have 2. So I appreciate the commentary on the build versus buy. I was also wondering like what can Adyen do on their ownership that it couldn't possibly do via partnership. And then can you also comment on how international is Talon.One really. So of course, Adyen is global, and I'm wondering basically these promotions and loyalty, if they are often market specific or not and how portable is these products across geographies and how much of the growth case depends on international rollout through Adyen's footprint?

Yes, it's a good question around why we can't do this via partnership. We believe that the best product is built if you fully integrate it. And that's what we have seen also with other partnerships in the past, also with other parts of the ecosystem. And if you do integrations, they typically deteriorate over time and you don't get to also the latest product innovations that we bring. And that's why we've chosen here to go for an acquisition instead of a commercial partnership. Also, and that ties really nicely to your second question, Talon.One is a very global company. They have a presence in the same markets as we have, have a lot of traction in the U.S. market, which is our fastest-growing market. So that is one of the reasons why I'm so excited.

We're now going to take one last question. This question comes from Sven Merkt from Barclays.

Can you be a bit more specific about the time line before you will be in a position to fully realize the vision for the combined businesses? And once you fully integrate it, Talon, will it be available only to Adyen merchant? Or will you continue to also work with non-Adyen customers?

So we expect approvals from the Dutch Central Bank within the next 5 months. Of course, we try to accelerate this, but that's sort of the time line you need to think of. And then we will start with the commercial go-to-market strategy together. I think if you look at how we completely integrate the business, that's more a multiple year project for the reasons that I mentioned earlier that we want to make sure that we keep the speed as independent businesses and only make the connections where it basically improves the go-to-market motion or the integration on the product side. I think it's very important to say that Talon.One works with other partners, and we want to respect those partnership relationships. So for now, there will be no changes to non-Adyen customers. I think that's very clear.

Thank you very much, Ingo and Ethan. This concludes today's call. Thanks also to everyone who joined us today.