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Billion Dollar Unicorns: Adyen is on a Roll

Posted on Wednesday, Oct 7th 2015

According to a BCG report on the global payment processing market, payments businesses generated $425 billion in transaction revenues in 2013. The market is expected to grow to $807 trillion by the year 2023, translating to a 8% annualized growth rate. Here is a quick recap of what payment processing services provider and Billion Dollar Unicorn club member Adyen has been up to over the past few months.

Adyen’s Offerings

Amsterdam-based Adyen’s online payment platform facilitates e-commerce-related payments by allowing businesses to use either hosted payment pages, encrypted solution on their website, or direct APIs to process payments from their customers. They also offer point of sales (POS) systems for physical stores which include countertop terminals, in-store kiosks, unattended terminals, and mobile POS systems that allow for multiple payment methods, cross-currency transactions, and even the processing of loyalty and gift cards. Adyen makes their offering more attractive by providing value add services such as analytics and risk management. In return, Adyen charges their clients a fixed fee on every transaction along with a markup on top of the fee charged by the card issuer. That markup starts at 60 basis points and scales down to 40 basis points depending on the volume of transactions.

It is their impressive product line-up that makes them very unlike other ready to implode Unicorns. Instead, Adyen is continuing to deliver very strong financial performance. They ended 2014 with revenues of $185 million and is on target to double that number this year. Above all, they have been profitable since 2010 and expects to earn $45 million in profits this year. Adyen is currently processing an annualized value of $45 billion in transactions – a number that has grown 80% since December 2014.

The impressive financials are also translating into increasing valuations. They have raised $266 million so far with investments from Temasek Holdings, Felicis Ventures, and General Atlantic. Last week, they raised an undisclosed sum in a round led by Iconiq Capital. The funding has valued them at $2.3 billion, a significant increase over the December 2014 round of $250 million when they were valued at $1.5 billion.

Adyen’s Expansion

Adyen plans to use the latest inflow of funds to expand their presence in the US, which already accounts for nearly 40% of their revenues. Currently, Adyen works with seven of the ten largest Internet firms in the US. It hopes to add to that list with the help of their new relationship with Iconiq. It is also looking to expand its presence in the US through acquisitions and is hopeful of adding to their marketspace companies who offer a complementary client listing.

Meanwhile, Adyen continues to grow its service offerings to drive higher market presence. For instance, in the UK, Adyen is enabling businesses to support Apple Pay. Going forward, Adyen’s customers will be able to leverage the Adyen platform for both in-app and in-store purchases made through Apple Pay. Adyen already had the feature enabled for the US markets and is the only payments technology provider that supports it both in the US and the UK through in-app and in-store with a single solution.

Adyen is also witnessing international growth because of the growth of its customers. Recently, Uber announced plans to use Adyen to power its Moroccan expansion. Adyen will help Uber process locally issued credit and debit cards for Uber users in Morocco. Last month, Adyen tied up with Brazil’s iconic Macaranã Stadium to process payments for online ticket purchases for football games and stadium tours. Brazil is already a fast growth market for Adyen. Since they began operations in the country three years ago, revenues have grown nearly 300%, making them one of the market leaders in the region.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

This segment is a part in the series : Billion Dollar Unicorns


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