Q3 2024 Adyen NV Earnings Call & Business Update

Josh Massa head of Investor Relations and I'm happy to be joined today by our CFO Ethan 10 dusky.

In today's call, we'll discuss audience financial and business updates from the quarter, followed by a Q&A segments. As this session will be slightly shorter than our half yearly earnings presentation. We ask you to keep your questions to a maximum of two per person. So that we can respond to as many of you as possible.

When submitting your questions. Please use the zoom Q&A functionality, rather than the raise hand option and as always we ask that you include your full name and the firm you represent when submitting your questions.

Keith: So with that lets get started Keith.

Keith: Can you speak to the progress made throughout the business over the last few months yeah. Thanks, Josh it's great to see that over the past few months, we continued to drive value for our customers through ongoing product innovation on our single global platform.

Keith: <unk> ability to meet customer needs was ultimately reflected in our net revenue, which was up 20% year on year or 21% on a constant currency basis. We're proud of this growth and the progress we've made towards our expectations for the full year, which was achieved despite stronger comparables and demonstrates the strength of our.

Keith: Core offering.

Keith: Key drivers included gaining wallet share with existing customers further diversifying our merchant mix and winning new business across all of the three pillars.

Keith: This net revenue growth is a great representation of the value we are able to create for our customers.

Speaker Change: Thanks for that summary, Ethan it's clear that Q3 was a period of strong but business as usual delivery as we continue to focus on the long term outlook and now that we have the high level picture can you also touch upon how growth looked within the pillars sure. We continued to see solid growth across the pillars, which led to process volume being up 32.

Keith: 2% year on year when.

Keith: When we exclude a single large volume customer and the digital pillar our process volume growth was up 27% slightly higher than in H one.

Keith: This is not only a testament to our global appeal and our ability to continually innovate, but it's also very promising when you look at the runway ahead for our newer areas of the business.

Keith: Starting with our most established pillar digital it was a key contributor with volumes up 29% year on year.

Keith: We saw consistent underlying trends compared to the first half of the year and excluding this single large volume customer here too we saw a slight acceleration versus H one.

Keith: We again saw strength in digital content and subscription as well as in our delivery and mobility vertical.

Keith: We also further advanced our U S debit offering with the launch of intelligent payment routing and partnered with some of the world's leading companies to bring this to market.

Keith: Delivering on our promise to provide our customers with a subscription to innovation.

Keith: We also continued to win wallet share and had strong performance in our other pillars.

Keith: Unified Commerce was up 33% with strong contributions from verticals outside of our historic core with our more recent strategic verticals of large format retail and hospitality remaining among our fastest growing.

Keith: We expanded our terminal range with the launch of S. F O one which creates a more tailored experience for shoppers, while also lowering costs for our customers.

Keith: And finally platforms remained our fastest growing pillar with volumes up 44% year on year.

Keith: As of Q3, we now have 25 platforms processing over 1 billion euros over the last 12 months compared to just 17 at this time last year.

Keith: This is a clear signifier both of our origin for platform's value proposition and the strategic importance for our customers of embedding payments within their broader offering.

Keith: All in all we're very pleased with the progress made so far this year, we are progressing as expected and our guidance remains unchanged.

Keith: We continue to expect to be towards the low end of our net revenue growth range for the full year and do not expect to fall below the low end of the range in the second half.

Keith: Looking ahead, we remain confident in the vast opportunity and in our ability to continue executing on our long term vision.

Speaker Change: Great. Thank you very much for that recap will now transition to the Q&A segments, we'll get through as many questions as we can and otherwise the IR team will be available for follow ups after the call.

Speaker Change: Thank you.

Speaker Change: Sure.

Speaker Change: No.

Speaker Change: Yes.

Keith: Yeah.

Keith: Okay.

Keith: Okay.

Keith: Yes.

Speaker Change: Thank you very much. The first question comes from her sheets of Rawat from Bernstein Hotshots are placed on mute yourself to ask your question. Thank you.

Speaker Change: Hi, good afternoon, and thank you for taking my question.

Speaker Change: I wanted to follow up time that you know you mentioned that if I can.

Speaker Change: Volume well.

Speaker Change: The large customer accelerated.

Speaker Change: That guidance suggests that your large customer.

Speaker Change: They have down a little bit.

Speaker Change: Any color there would be helpful. And then just as a follow up can.

Keith: Can you just remind us of the building blocks of loving acceleration into next year.

Keith: No.

Speaker Change: <unk> underlying product momentum.

Keith: Thank you.

Speaker Change: Yeah sure. So first I'd like to speak to the large digital customer you referenced. So here there is a limit to what I can share, but I would like to cover the most important points.

Keith: And I think Theres a couple that are relevant one is that we've been talking about this customer for the last few quarters because it is visible in our processed volume growth.

Keith: We saw a couple of things in the third quarter of this year.

Keith: That made it again visible in our overall platform processed volume growth. One is that we started to annualize some of the volumes from last year. So there were some volumes from this customer in the third quarter. They fully ramped in the fourth quarter. So it wasn't their full volumes, but we are starting to annualize some of their volumes and the second is that in the <unk>.

Keith: Third quarter of this year, we saw lower volumes from this customer.

Keith: And then in the first half of this year.

Keith: It's important here to remember a couple of things one is that while it is very visible in our volume our volume growth number it's not very visible in our net revenue growth number which is where we manage it talks back in August that this customer had around 1% of our net revenues.

Speaker Change: They fully ramped in the fourth quarter, so it wasn't their full volumes, but we are starting to annualize some of their volumes. And the second is that in the third quarter of this year, we saw lower volumes from this customer than in the first half of this year.

Keith: And therefore any movements with this customer and to be honest with any other customer given where our concentration is that has a limited impact on our net revenue growth.

It's important here to remember a couple of things. One is that while it's very visible in our volume, our volume growth number, it's not very visible in our net revenue growth number, which is where we manage. We talked back in August that this customer had around 1%

Keith: So if this customer has a relatively limited.

Keith: Impact on our net revenue growth and I think the obvious and logical question. I would also ask is does this also relates potentially to other customers on the platform.

our net revenues and therefore any movements with this customer and to be honest with any other customer given where our concentration is at has a limited impact on our net revenue growth.

Keith: And here I would like to be clear each at each customer on the platform has different characteristics and circumstances related to them.

Keith: So, if this customer has a relatively limited impact on our net revenue growth, then I think the obvious and logical question I would also ask is,

Keith: In this case in these circumstances there is no correlation to other customers on the platform and so while I can't share everything I think those are the most important points I would like to share and with that I can't share more specifically on this individual case.

Speaker Change: Does this also relate potentially to other customers on the platform?

Keith: And here I would like to be clear each each customer on the platform has

Speaker Change: Now the second question is what is what about the building blocks of revenue acceleration for next year there's.

different characteristics and circumstances related to them.

Keith: In this case, in these circumstances, there is no correlation to other customers on the platform. And so while I can't share everything, I think those are the most important points I would like to share, and with that I can't share more specifically on this individual case.

Speaker Change: Theres a couple right the biggest area of growth in any period for US is how do we expand our share of wallet with our existing customers.

Speaker Change: I think there we see nice traction.

Speaker Change: It is diversified it's across each of the pillars and the regions, but especially prominent in a few verticals that we highlighted in H one both in digital and.

Keith: The second question is what about the building blocks of revenue acceleration for next year? There's a couple, right? The biggest area of growth in any period for us is how do we expand our share of wallet with our existing customers.

Speaker Change: And especially in our larger markets being Europe and in U S North America rather.

Speaker Change: So we see real strong potential and our ability to continue capturing wallet share at.

Speaker Change: think there we see nice traction. It is diversified, it's across each of the pillars and the regions, but it's especially prominent in a few verticals that we highlighted in H1 both in digital and especially in our larger markets being Europe and US, North America rather.

Speaker Change: At an accelerated rate in twenty-five compared to where we were this year.

Speaker Change: And the second piece, which we've also talked about for the last year is how do new sales ultimately come in to impact our growth trajectory of course, we've done a lot of hiring throughout a 2022 and 2023 especially.

Keith: So, we see real strong potential in our ability to continue capturing wallet share at an accelerated rate in 2025 compared to where we were this year.

Speaker Change: And given our sales cycles, and our land and expand strategy, bringing in new customer wins takes time to play out in our net revenues were seeing strong signs there in the pipeline that this investment will also start to help us drive that acceleration into next year.

And the second piece...

Keith: which we've also talked about for the last year is how do new sales ultimately come in to impact our growth trajectory. Of course, we've done a lot of hiring throughout.

Speaker Change: So those are the two key things that I would highlight.

Keith: 2022 and 2023 especially and given our sales cycles and our land and expand strategy bringing in new customer wins.

Speaker Change: Thanks Harsha.

Speaker Change: The next question comes from Adam Wood from Morgan Stanley. So Adam. Please go ahead of me yourself to ask a question.

Keith: takes time to play out in our net revenues, we're seeing strong signs there in the pipeline that this investment will also start to help us drive that acceleration into next year. So those are the two key things that I would highlight.

Adam Wood: Hi, Josh Thanks for taking the question.

Speaker Change: The first one is.

Speaker Change: Is there any kind of asked about the big mentioned, you're talking about but wanted to ask about big merchants in general.

Speaker Change: People could come in and undercut you and that could be a reason to people shifting volumes.

Speaker Change: Thanks, Harshita. The next question comes from Adam Wood from Morgan Stanley. So Adam, please go ahead and unmute yourself to ask a question.

Speaker Change: With ebay last year that and move some specific scheme volume direct to those acquirers as opposed to reaching it through you would then be the main reasons that you would see volume shift away from you as opposed to for example, poor performance on the platform that would lead to merchants.

Speaker Change: Hi, Ethan and Josh, thanks for taking the question. The first one is, I don't know ask about the big merchant you're talking about, but wanted to ask about big merchants in general. I guess.

Speaker Change: Just helping us with reasons why that will happen, but that I guess could be seen as good or bad.

Keith: people could come in and undercut you and that could be a reason for people shifting volumes.

Speaker Change: And we saw with eBay last year that they moved some specific scheme volume direct to those acquirers as opposed to routing it through you. Would they be the main reasons that you would see volume shift away from you, as opposed to, for example, poor performance on the platform that would lead a merchant to move? So just helping us.

Speaker Change: And then secondly, just on the kind of swollen Ram I appreciate the volume and the volume growth is very strong but it has.

Speaker Change: Got a little bit over the last couple of quarters.

Speaker Change: But we've seen good growth in the merchant numbers could you just talk a little bit about the timing of ramps there.

Speaker Change: We probably should expect it to be lumpy.

Speaker Change: with reasons why that would happen, but that I guess could be seen as good or bad.

Speaker Change: Should we expect that customer number growth to start translating into volumes over the next few quarters space. Thank you.

Speaker Change: And then, secondly, just on the platform ramp, I appreciate the volume, the volume growth is very strong, but it has slowed a little bit over the last couple of quarters.

Speaker Change: Yeah sure.

Speaker Change: So I want to be sure that I address this directly rather than trying to.

Speaker Change: but we've seen good growth in the merchant numbers. Could you just talk a little bit about the timing of ramps there? I appreciate we probably should expect it to be lumpy, but should we expect that customer number growth to start translating into volumes over the next few quarters, please? Thank you.

Speaker Change: Or rather than trying and creating a bit of confusion. So you asked about the single customer like I just mentioned I think each each customer has its own unique circumstances and situations and in this circumstance. There is no correlation to others right. So to answer it in a generic way I think wouldn't be connected to.

Speaker Change: Yeah, sure. So I want to be sure that I address this directly rather than trying to, rather than trying and creating a bit of confusion. So you ask about the single customer, like I just mentioned, I think each...

Speaker Change: I think the direct question you're asking if you. If you are in and if I can answer the more generic question I would say, what we talked about last year, especially in the digital space is that it is ultimately on performance and cost to win share of wallet, we still have lots of share of wallet gain especially on the digital side.

Each customer has its own unique circumstances.

Keith: situations. And in this circumstance, there is no correlation to others, right? So to answer it in a generic way, I think, wouldn't be connected to, I think, the direct question you're asking.

Speaker Change: So ultimately it's through our ability to optimize for our customers, which drives that share of wallet, we talked about our intelligent payment routing. This this quarter, that's a improvement on our U S. Debit offering. This is certainly an area, where we can add value both by driving authorization rates up.

Keith: If I can't answer the more generic question, I would say what we talked about last year, especially in the digital space, is that it is ultimately on performance and cost.

Speaker Change: to win share of wallet. We still have lots of share of wallet to gain, especially on the digital side.

Speaker Change: And by reducing cost for our customers. So it is in the end the performance game like it's always been but I don't want to get this confused with the earlier question that you just asked where I would say this is specific circumstance and doesn't correlate to other customers on the platform.

Speaker Change: So ultimately it's through our ability to optimize for our customers, which drives that share of wallet. We talked about our intelligent payment routing this quarter. That's an improvement on our U.S. debit offering. This is certainly an area where we can add value, both by driving authorization rates up.

Speaker Change: Then the question on platform ramp.

Speaker Change: So in terms of our in terms of volumes and how to look at that so I would say generically that platforms is very much a area of growth for us it's both.

Speaker Change: and by reducing costs for our customers. So it is in the end a performance game like it's always been, but I don't want to get this confused with the earlier question that you just asked, where I would say this is specific circumstance and doesn't correlate to other customers on the platform.

Speaker Change: Both because of our ability to provide strong value in that space, but also because this is a direction that the payments world is going platforms are embedding payments and they're being very successful in that and we can be a really important player to help them do that so for multiple reasons. This will be a key grew.

Speaker Change: Then the question on platform ramp. So in terms of volumes and how to look at that. So I would say generically that platforms is very much an area of growth for us. It's both because of our ability to provide strong value in that space, but also because this is a direction that the payments world is going. Platforms are embedding payments.

Speaker Change: Area for us in.

Speaker Change: In terms of translation.

Speaker Change: Again, we're showing volumes here right. So there will be some lumpiness in it also given it's our smallest pillar to date.

Speaker Change: But we absolutely think over the medium to long term that this is.

Speaker Change: and they're being very successful in that, and we can be a really important player to help them do that. So for multiple reasons, this will be a key growth area for us. In terms of translation...

Speaker Change: This is probably our fastest growing pillar given the tailwind we have in this space.

Speaker Change: Thanks, Adam The next question comes from Justin Forsyth at UBS, Justin plays on mute yourself to ask your question.

Speaker Change: Again, we're showing volumes here, right, so there will be some lumpiness in it, also given it's our smallest pillar to date. But we absolutely think over the medium to long term that this is probably our fastest growing pillar, given the tailwinds we have in this space.

Justin Forsyth: Thank you very much Ethan Josh can you hear me well yes.

Speaker Change: Great. Thank you so much for having me on so a couple from me first one is it seems like there will be in four key we're already has been in <unk>, a meaningful amount of potential volume in digital coming to market relating to brain trees positive pricing actions given the client overlap is there an opportunity for you to take some of that and how are you pitching to your merchant clients.

Keith: Thanks, Adam. The next question comes from Justin Forsyth at UBS. Justin, please unmute yourself to ask your question.

Speaker Change: Thank you very much. Ethan, Josh, can you hear me well? Yes.

Speaker Change: To win that volume back to the extent any was lost in the first place.

Speaker Change: Great. Thank you so much for having me on. So, a couple from me.

Speaker Change: First one is, it seems like there will be in 4Q or already has been in 3Q a meaningful amount of potential volume in digital coming to market relating to brain trees, positive pricing actions. Given the client overlap, is there an opportunity for you to take some of that? And how are you pitching to your merchant clients to win that volume back to the extent any was lost?

Speaker Change: The second question is would you consider reevaluating your medium term EBITDA margin guide given you are running at 72 full time hires for the year to date and revenue is growing at 20% plus it seems like you were quite easily exit 2024 above that range with more leverage coming in 2025, why is 50% the guide for 2002.

in the first place.

The second question is...

Speaker Change: Six are there some large expenses are slower revenue growth we are not appreciating. Thank you.

Would you consider re-evaluating your medium-term EBITDA margin guide?

given you are running at 72 full-time hires.

Speaker Change: Yeah. So first on your question around how we're winning and how we're winning volume.

Speaker Change: for the year to date and revenue is growing at 20% plus. It seems like you will quite easily exit 2024 above that range with more leverage coming in 2025. Why is 50% the guide for 2026? Are there some large expenses or slower revenue growth we are not appreciating? Thank you.

Speaker Change: To be honest nothing really has changed here, we keep focusing on how do we drive value for our customers right in the digital space. That's often been how do we provide a global platform to solve their needs both to drive authorization levels to drive costs down to offer local payment methods that pitch.

Speaker Change: Yeah, so first on your question around how we're winning, how we're winning volume.

Speaker Change: Is the same as it's always been in some parts theres different emphasis depending on which customers, we're talking about and where their focus is at that moment, but I would say overall the pitches exactly the same and is there meaningful volume still to win absolutely. We still are the minority player across our customer base on average.

Keith: To be honest, nothing really has changed here. We keep focusing on how do we drive value for our customers, right? In the digital space, that's often been how do we provide a global platform to solve their needs, both to drive authorization levels.

Keith: to drive costs down, to offer local payment methods, that pitch...

Speaker Change: Right. So there's a lot of volume for us to win still in our existing base also in digital even though it's our biggest.

is the same as it's always been.

Speaker Change: some parts there's different emphasis depending on which customers we're talking about and where their focus is at that moment. But I would say overall the pitch is exactly the same and is there meaningful volume still to win? Absolutely. We still are the minority player across our customer base on average right? So there's a lot of volume for us to win still in our existing base also in digital even though it's our biggest

Speaker Change: Our biggest pillar of the three.

Speaker Change: And then in terms of our medium term EBIT margin guide.

Speaker Change: Yeah, there's a couple of things I'd say here first we are still very much building. This business. This business will be much bigger in the years ahead than it is today and in doing that we want to be sure that we have the right flexibility to invest where we can accelerate that growth and therefore, we've been very much focused on how to drive net.

Speaker Change: our biggest pillar of the three. And then in terms of medium-term EBITDA margin guide,

Speaker Change: Of new growth at the same time, showing the operating leverage that is inherent to our business model.

Speaker Change: Yeah, there's a couple of things I'd say here. First, we are still very much...

building this business.

Speaker Change: This business will be much bigger in the years ahead than it is today. And in doing that, we want to be sure that we have the right flexibility to invest where we can accelerate that growth.

Speaker Change: So theres nothing that I'd like to change at this moment I think we are making good progress we still plan to hire the people that we've planned to hire we've made no changes there.

Speaker Change: And we're very much focused on how do we build a bigger our gen supporting our customers and providing the ultimate value we can provide.

Speaker Change: Therefore, we've been very much focused on how to drive net revenue growth, at the same time showing the operating leverage that is inherent to our business model. So there's nothing that I'd like to change at this moment. I think we are making good progress. We still plan to hire the people that we've planned to hire. We've made no changes there, and we're very much focused on how do we build

Speaker Change: Thanks, Justin.

Speaker Change: The next question comes from Mohammed <unk> from Goldman Sachs. Please go ahead and limit yourself to ask your question.

Speaker Change: Hey, Josh Thanks for taking my question.

Speaker Change: The first one is just you call you alluded to kind of the productivity of the sales hires but when you sort of weight the different kind of contribute to us around the acceleration you expect is it still primarily the land and expand and then essentially the productivity of the sales force is kind of a more variable factor as you look at that sort of medium term period.

Speaker Change: a bigger Augen supporting our customers and providing the ultimate value we can provide.

Speaker Change: Thanks, Justin. The next question comes from Mohamed Moala from Goldman Sachs. Mo, please go ahead and unmute yourself to ask your question.

Speaker Change: Hi, Ethan. Hey, Josh. Thanks for taking my question. The first one is just you call you alluded to kind of the productivity of the sales hours. But when you sort of wait to different kind of contributors around the acceleration you expect.

Speaker Change: And secondly, with regards to that large customer is the bulk of the sort of the ramp down so to speak completed or are you expecting any kind of residual impact that could impact your kind of exit into this year.

Is it still primarily the land and expand and then?

Speaker Change: Yeah first how do we compare the sales hires to the existing piece.

Speaker Change: Essentially the productivity of the sales force is kind of a more variable factor as you look at that sort of medium term period.

Speaker Change: The wallet share gains with our existing customers is again, the biggest part and.

Speaker Change: And secondly, with regards to that large customer, is the bulk of the sort of the ramp down, so to speak, completed, or are you expecting any kind of residual impact that could impact your kind of exit into this year?

Speaker Change: Therefore, it has also the biggest impact on our acceleration.

Speaker Change: I think we see really strong signs that over the next year, we have the opportunity to continue to expand within that existing base to drive.

Speaker Change: Yeah. First, how do we compare the sales hires to the existing piece? The WalletShare gains with our existing customers is again the biggest part and

Speaker Change: Acceleration in our net revenue growth into 2025.

Speaker Change: And at the same time, we have good insight into what the sales pipeline is doing we track that from.

Speaker Change: Therefore, it has also the biggest impact on our acceleration. I think we see really strong signs that over the next year we have the opportunity to continue to expand within that existing base.

Speaker Change: From the start of talking to a to a prospect through to them onboarding onto the <unk> platform and then of course, ultimately seeing them ramp up over the coming years and given our investments.

to drive.

Speaker Change: Our now.

Speaker Change: acceleration in our net revenue growth into 2025 and at the same time we have good insight into what the sales pipeline is doing. We track that from the start of talking to a to a prospect through to them onboarding onto the Audgen platform and then of course ultimately seeing them ramp up over the coming years and given our investments

Speaker Change: A year or two years.

Speaker Change: Now with US we will start to see some of the signs. The early signs of that are of that net revenue coming in but the biggest piece certainly is still going to be from existing.

Speaker Change: As we're still ramp up that that new that new sales piece the.

Speaker Change: Second question is.

Speaker Change: Is there still some ramp down two to come it is our expectation still that.

Speaker Change: are now a year or two years now with us, we will start to see some of the signs, the early signs of that net revenue coming in. But the biggest piece certainly is still gonna be from existing as we still ramp up that new sales piece.

Speaker Change: There is a there will be lower volumes coming in the next couple of quarters from this customer.

Speaker Change: Thanks <unk> next question comes from how does lighten up from Jefferies. Please go ahead and ask your question.

The second question is...

Speaker Change: Is there still some ramp down to come? It is our expectation still that there will be lower volumes coming in the next couple of quarters from this customer.

Speaker Change: Hum.

Speaker Change: Can you hear me, yes, sure can hear you.

Speaker Change: So the first question is on Q4, and so how do you plan to achieve that I believe it's a similar quarter over quarter growth rate expected for around 14%.

Speaker Change: Thanks Mo. Next question comes from Hannes Leitner from Jeffries. Hannes, please go ahead and ask your question.

Speaker Change: But it's a higher base now when you are thinking the large volume customer is ramping for the Don and then also your largest platform customer potentially also continue its the ramp down you've I think you called out a partnership with a large buy and operate the customer.

Can you hear me? Yes, we can hear you.

Speaker Change: So maybe you can talk a little bit about the different moving parts hold to achieve Q.

Speaker Change: So the first question is on Q4 and how do you plan to achieve that uplift where it's a similar quarter over quarter growth rate expected for like around 14%?

Speaker Change: Q4, and then the second one is maybe then on.

Speaker Change: On the geographic drivers you didn't mention the U S. Maybe because of the floods performance the volume customer that it's not the fastest growing region.

but it's a higher base.

Speaker Change: Now, when you are thinking that the large volume customer is ramping further down and then also your largest platform customer potentially also continues to ramp down, I think you called out a partnership with a large buy now pay later customer.

Speaker Change: Maybe any trends there in terms of pricing and growth.

Speaker Change: Yeah sure.

Speaker Change: So first on how we plan to have to grow in Q4, I think you raise a very important question because on one hand, we're talking about an individual customer because of its impact on volume growth, whereas the way we guide the business. The way we manage the business is all down to net revenues and there is no single customer.

Speaker Change: So maybe you can talk a little bit about the different moving parts, how to achieve

Thank you.

Speaker Change: And then the second one is, maybe then on the geographic drivers, you didn't mention the US, is that maybe because of the platform and the volume customer that it's not the fastest growing region. Maybe any trends there in terms of pricing and growth?

Speaker Change: On the platform that ultimately determines our outcomes from a net revenue perspective, so ultimately we see strength across the board in the portfolio with ease.

Yeah.

Sure.

Speaker Change: So, first, on how we plan to grow in Q4, I think you raised a very important question because

Speaker Change: Even if we look from a volumes perspective, we even see slight acceleration if we exclude one individual customer which is large on the volume side and as I mentioned very limited on the revenue side. So it's.

Speaker Change: on one hand we're talking about an individual customer because of its impact on volume growth whereas the way we guide the business, the way we manage the business is all down to net revenues.

Speaker Change: It's not about one customer, making or breaking any individual period I think we're far beyond that given where our concentration is come through over the last years. It is really about us executing and delivering with our customers across regions across the pillars to drive that growth and they are I feel very confident that we will deliver growth which doesn't.

Speaker Change: and there is no single customer on the platform that ultimately determines our outcomes from a net revenue perspective.

Speaker Change: So ultimately, we see strength across the board in the portfolio, even if we look from a volumes perspective, we even see slight acceleration if we exclude one individual customer, which is large on the volume side, and as I mentioned, very limited on a revenue side. So, it's not about one customer making or breaking any individual period. I think we're far beyond that, given where our concentration has come to over the last years. It is really about us executing and delivering with our customers across regions, across the pillars to drive that growth, and there I feel very confident that we will deliver growth which doesn't fall below the low end of the range for the second half.

Speaker Change: Fall below the low end of the range for the second half.

Speaker Change: In terms of regional growth we.

Speaker Change: We see that our two largest regions being North America and EMEA our.

Speaker Change: Our fastest growing so far EMEA was our fastest growing and are in the third quarter.

Speaker Change: But it's difficult to assess a region on any specific three months period.

Speaker Change: It's really important for us to look at this more holistically over time, we see really strong growth still in North America, and we expect that to continue its absolutely our key target market and we've been really pleased with what we've seen in the third quarter as well.

Speaker Change: In terms of regional growth, we see that our two largest regions, being North America and EMEA, are our fastest-growing so far. EMEA was our fastest-growing in the third quarter, but it's difficult to assess a region on any specific three-month period. It's really important for us to look at this more holistically over time. We see really strong growth still in North America, and we expect that to continue. It's absolutely our key target market, and we've been really pleased with what we've seen in the third quarter as well.

Speaker Change: Thanks Dennis.

Speaker Change: The next question comes from Sandeep Deshpande from JP Morgan Sandeep, Please limit yourself to ask your question.

Sandeep Deshpande: Yeah, Hi.

Speaker Change: The question is.

Speaker Change: Given the volatility you're seeing at some customers do you have different contracts with different customers that allow them to gain volumes for one eight months that was related to another easily.

Speaker Change:

Speaker Change: Contracts that he wasn't alone, which which are which means that you know that most of that was bought acting differently and then my second question to you is your.

Thanks, Hanes.

Speaker Change: The next question comes from Sandeep Deshpande from J.P. Morgan. Sandeep, please unmute yourself to ask your question.

Speaker Change: You're a great into 25, again, I'm, sorry to get back there.

Speaker Change: Yeah, hi. Thanks for letting me on. I have two questions. I mean, clearly, I mean, you've got some volatility from some customers. So I'm trying to understand it in another way. Do you have different contracts with different customers that allow them to play value?

Speaker Change: Got it.

Speaker Change: I think the key witness in the last couple of quarters in terms of new customer announcements.

Speaker Change: Youre going to see those ramp up into any significant volume next year or is it as you just said mainly driven by your existing customer base that is going to drive volume.

Speaker Change: or not, you know, prevent water to be on there, because we don't want any of the people to stay. That's the best that we can do. Sandeep, your line is quite bad. Do you mind just repeating that question?

Speaker Change: Yeah, So first on the volatility and some customers.

Speaker Change: I'm just going to say it one more time just to try to make sure that I have to point clear I think if you look at the volatility it's really only visible in the in the volumes right. If you look at it from a net revenue perspective there.

Sorry, can you hear me better?

Hello?

Speaker Change: Wish we're struggling to hear you Sunday. Maybe we can come back to you

Speaker Change: There is not a lot of movement. There I think we're actually underlying accelerating if you compare it to the comparable periods that we had last year in terms of the way that we operate with our different customers. It's always our ambition to wind volumes through performance right. So it's not about tying customers in two long term contracts.

Hello.

Speaker Change: Yeah, we can yep. Try again Sunday. We can hear you now

Speaker Change: My question is, given the volatility you're seeing at some customers, do you have different contracts with different customers that allow them to change volumes for one payment service provider to another easily in the digital space, or are your contracts very similar, which means that customers are the ones who are acting differently?

Speaker Change: Where they get stuck with US no its about providing the best service that we can provide and the best product around the world that they bring us that additional volume and that's been super successful for US right. We've talked about where most of our growth comes from in any given period being from existing we've talked about our low churn levels. I think those are all a testament.

Speaker Change: And then my second question to you is, about your growth into 25 again, I'm sorry to get back there. You've had some pretty tricky wins in the last couple of quarters in terms of

Speaker Change: To that model and how we can drive success for our customers and I think from a net revenue perspective that is that is very clear. It's worked really really well for us over the last years and it continues to work really well for us in.

Speaker Change: new customer announcements, are you going to see those ramp up into any significant volume next year or is it, as you just said, mainly driven by your existing customer base that is going to drive volume?

Speaker Change: In terms of 2025.

Speaker Change: Are there critical wins of course, they are a critical wins are always important wins for us whether it's because of <unk>.

Yeah, so first on the volatility in some customers

Speaker Change: A market that we're in a new vertical we're getting in or the size of a customer, but still no individual customer given where we're at from a concentration perspective.

Speaker Change: I'm just going to say it one more time just to try to make sure that I have the point clear. I think if you look at the volatility, it's really only visible in the volumes, right? If you look at it from a net revenue perspective, there...

Speaker Change: Ultimately decides whether we're going to accelerate next year not this is much more broad based than that this is growth across many different customers across each of the pillars in the regions right. This is about us being diligent and worked closely with our customers to make sure that we're providing them the best value and when we look out to 2020 five now that we're getting towards the end of the two.

Speaker Change: there is not a lot of movement there. I think we're actually underlying accelerating if you compare it to the comparable periods that we had last year. In terms of the way that we operate with our different customers, it's always our ambition to win volumes through performance, right? So it's not about.

Speaker Change: 'twenty 'twenty four we see great opportunity to further expand with our existing customers and that's not going to be down to one or two customers that is going to be much more broad based.

Speaker Change: tying customers in to long-term contracts where they get stuck with us. No, it's about providing the best service that we can provide and the best product around the world that they bring us that additional volume. And that's been super successful for us, right? We've talked about where most of our growth comes from in any given period being from existing. We've talked about our low churn levels. I think those are all a testament to that model and how we can drive success for our customers. And I think from a net revenue perspective, that is very clear. It's worked really, really well for us over the last years and it continues to work really well for us.

Speaker Change: Thanks, Andy The next question comes from Josh Levin from Autonomous Josh. Please go ahead on mute yourself.

Josh Levin: Hi, good afternoon, two questions from me.

Josh Levin: Think about revenue growth accelerating from low twenty's to mid twenties, how much of that will be driven by higher NII from lending and other capital and the second question. It looks like just looking at Linkedin data some of the salespeople hired in the last 18 months I've gone back to their former legacy payment company employer.

In terms of 2025.

Speaker Change: Are there critical wins? Of course there are critical wins. There are always important wins for us, whether it's because of a market that we're in, a new vertical we're getting in, or the size of a customer. But still, no individual customer, given where we're at from a concentration perspective.

Josh Levin: Is this normal when you ramp up you just have some churn or did you perhaps over higher thank you.

Speaker Change: Yeah. So first how much of the acceleration is connected to NII.

Speaker Change: I think it's still going to be minimal we shared it for the first time in H, one we see absolutely a lot of opportunity in embedded financial products.

Speaker Change: ultimately decides whether we're going to accelerate next year or not. This is much more broad-based than that. This is growth across many different customers, across each of the pillars.

Speaker Change: But that is really driving the acceleration in the coming years, we still think that's too early so this is.

Speaker Change: in the regions, right? This is about us being diligent and working closely with our customers to make sure that we're providing them the best value. And when we look out to 2025, now that we're getting towards the end of 2024, we see great opportunity to further expand with our existing customers. And that's not gonna be down to one or two customers. That is gonna be much more broad-based.

Speaker Change: Still going to be an important piece for us, especially as we sell into platforms, but in terms of really driving that net revenue growth I think it's still going to be too early in 2025, and then in terms of our the salespeople that you mentioned I would say, there's no real trend there when you're hiring and growing a team you're always looking at do you are you are you able to bring in the <unk>.

Speaker Change: Thanks, Sandeep. The next question comes from Josh Levin from Autonomous. Josh, please go ahead and unmute yourself.

Speaker Change: Right people and then are they able to succeed in this in this business.

Hi, good afternoon. Two questions for me.

Speaker Change: And for the most part we're really really happy with the people that we've been able to bring in and of course from time to time.

Speaker Change: As you think about revenue growth accelerating from low 20s to mid 20s,

Speaker Change: How much of that will be driven by higher NII from lending and auditing capital? And the second question, it looks like, just looking at LinkedIn data, some of the salespeople hired in the last 18 months

Speaker Change: You need to do some performance management and you need to make some adjustments, but its nothing abnormal we haven't seen any strange levels related to this and it's not that we've over hired we're still hiring in these areas. We still believe theres further investments to make.

Speaker Change: I've gone back to their former legacy payment company employers. Is this normal when you ramp up, you just have some churn, or did you perhaps overhire? Thank you.

Speaker Change: Thanks, Josh.

Speaker Change: Our next question comes from Alex for a from Exxon Alex. Please go ahead and ask your question.

Yeah, so first

Speaker Change: Good afternoon. Thanks, Thanks for letting me on.

Speaker Change: how much of the acceleration is connected to NII. I think it's still going to be minimal. We shared it for the first time in H1. We see absolutely a lot of opportunity in embedded financial products.

Speaker Change: Wanted to come back on an earlier question around the range fee retrenching quite fast in the U S. Since.

Speaker Change: In Q2, and I was a bit surprised that you're talking about.

Speaker Change: Slight acceleration ex the.

Speaker Change: But that is really driving the acceleration in the coming years. We still think that's too early. So this is still going to be an important piece for us especially as we sell into platforms. But in terms of really driving that net revenue growth I think it's still going to be too early in 2025.

Speaker Change: This large customer that's not the more material ones. So should we understand that maybe some U S. Digital volumes that you are not interested in and maybe more focusing on the.

Speaker Change: For more sophisticated.

Speaker Change: Complex transactions.

Speaker Change: How should we think of that.

Speaker Change: And then in terms of the salespeople that you mentioned, I would say there's no real trend there. When you're hiring and growing a team, you're always looking at, are you able to bring in the right people? And then are they able to succeed in this business? And for the most part, we're really, really happy with the people that we've been able to bring in. And of course, from time to time, you need to do some performance management and you need to make some adjustments, but it's nothing abnormal. We haven't seen any strange levels related to this. And it's not that we've overhired. We're still hiring in these areas. We still believe there's further investments to make.

Speaker Change: Yeah, well I think I would I would look at that a bit differently and that of course, we're building a bigger scale each year, and where we've been able to accelerate our underlying digital growth in Q3, if you would exclude that customer. So I think it's a strong sign for us that we are able to grow much faster.

Speaker Change: Other than the market is growing and therefore can be gained market share with these customers of course things take time right. It's not like an overnight switch that that things go from one day to the next differently. So it's about staying close to our customers, helping them where their main pain points are and I think to see a bit of acceleration is a strong proof point that we are doing the right.

Thanks, Josh.

Speaker Change: The next question comes from Alex Fauré from Exxon. Alex, please go ahead and ask your question.

Speaker Change: And that even at the scale, we are able to gain significant market share as we move forward.

Speaker Change: Good afternoon. Thanks for letting me on. I wanted to come back on an earlier question around the brain theory trenching quite fast in the U.S. since Q2. I was a bit surprised that, you know, you're talking about slight acceleration X.

Alex: Thanks, Alex.

Speaker Change: The next question comes from Darrin Peller from Wolfe Research. Please.

Speaker Change: Please go ahead and ask your question.

Speaker Change: Guys. Thanks, I just want to hit again on the examples youre seeing were hearing in the market. Some success stories of new proving out T CEO.

Speaker Change: this large customer, but not a more material one. So should we understand that maybe there are some U.S. digital volumes that you're not interested in and maybe more focusing on the most sophisticated and complex transactions? How should we think of that? Thank you.

Speaker Change: And just a more material way more tangible way with some customers of yours and so maybe just hit again for a few example, if you don't mind on what Youre seeing where it's resonating in which parts of the business.

Speaker Change: What kind of savings you are providing anything you can provide more light on would be great. Just because it seems like it's it's something thats incremental even now versus where maybe it was a year ago.

Yeah, well...

Speaker Change: I think I would look at that a bit differently in that, of course, we're building a bigger scale each year and we've been able to accelerate our underlying digital growth.

Speaker Change: Yeah a good.

Speaker Change: Good question Theres, one that we touched on in the update which I think is may be relevant if not the only one but it's our intelligent payment routing, which is essentially <unk> also helped us to improve our U S. Debit offering we did a pilot with some of the world's leading companies and we saw that there was a 26% a.

Speaker Change: in Q3 if you would exclude that customer. So I think it's a strong sign for us that we are able to grow much faster than the market is growing and therefore gain market share with these customers.

Speaker Change: Of course things take time, right? It's not like an overnight switch that things go from one day to the next differently. So it's about staying close to our customers, helping them where their main pain points are. And I think to see a bit of acceleration is a strong proof point that we are doing the right things and that even at this scale we are able to gain significant market share as we move forward.

Speaker Change: Duction in cost, but not just by itself also with an increase in authorizations of 22 basis points and that might 22 basis points might seem small compared to the 26% cost savings, but again remember the 22 basis points is on the total value of those transactions, where the cost is just on the payments cost right. So these are really impactful numbers that we're seeing.

Thanks, Alex.

Speaker Change: The next question comes from Darren Pella from Wolfe Research. Darren, please go ahead and ask your question.

Speaker Change: Our customers and if we can drive traction in these areas with the biggest customers with the leading customers in the world and of course, there's many other customers that can benefit from it.

Speaker Change: Guys, thanks. I just want to hit again on the examples you're seeing. We're hearing in the market some success stories of you proving out TCO in just a more material way, a more tangible way with some customers of yours. And so maybe just hit again for a few examples, if you don't mind, on what you're seeing, where it's resonating, in which parts of the business.

Speaker Change: That's one example, I can make concrete there's many others, whether it's implementing new payment methods, whether it's a global offering there's a range of different ways that we help our customers.

Speaker Change: To manage their total cost of ownership.

Speaker Change: You know what kind of savings you're providing anything you can provide more light on would be great just because it seems like it's it's something That's that's incremental even now versus what maybe was a year ago

Speaker Change: I think one other maybe that I'd highlight is we talked about a new terminal our S. F O one within unified Commerce.

Speaker Change: Again, the same concept right how do we help improve the customer experience.

Speaker Change: Yeah, good question. There's one that we touched on in the update, which I think is maybe relevant, it's not the only one, but it's our intelligent payment routing, which is essentially also helped us to improve our US debit offering. We did a pilot with some of the world's leading companies and we saw that there was a 26% reduction in cost.

Speaker Change: That they can make more sales over time and at the same time help them reduce their costs. I think this is another. Good example, where we can help streamline the in store the in person payments flow to improve the customer experience and help them drive down their cost.

Speaker Change: Of those terminals at the same time and so I think it's not it's not just about driving costs down it's about driving costs and increasing top line at the same time and driving that overall total cost of ownership, which I think is where we are seeing traction.

Speaker Change: but not just by itself, also with an increase in authorizations of 22 base points.

Speaker Change: and that might 22 base points might seem small compared to the 26 cost savings but again remember the 22 base points is on the total value of those transactions where the cost is just on the payments cost right so these are really impactful numbers that we're seeing with our customers and if we can drive traction in these areas

Speaker Change: Thanks Darren.

Speaker Change: Our next question comes from Pavan. This one eight from city Pavan. Please go ahead and ask your question.

Speaker Change: Great. Thanks, Thanks for taking my questions I've got a couple if I may firstly.

Speaker Change: with the biggest customers, the leading customers in the world, then of course there's many other customers that can benefit from it.

Speaker Change: So very useful color on digital volumes, excluding the large customer could you maybe share any color on take rate trends excluding this customer.

Speaker Change: One example I can make concrete. There's many others whether it's implementing new payment methods

Speaker Change: And then secondly, you talked about wallet share being the most important driver for growth acceleration can you maybe touch on the visibility you have in terms of confidence on that ramp timing in 2025.

Speaker Change: Whether it's global offering, there's a range of different ways that we help our customers to manage their total cost of ownership. I think one other maybe that I'd highlight is we talked about a new terminal, our SFO-1 within Unified Commerce.

Speaker Change: Sure So first.

Speaker Change: First on take rate trends I would say this is even broader than digital but across the board. We see that there's been no structural change in the way that we price deals deals are mostly driven off of the size of the volumes that we can win.

Josh Levin: It's again the same concept, right? How do we help improve the customer experience?

Speaker Change: So that they can make more sales over time and at the same time help them reduce their costs. I think this is another good example where we can help streamline the in-store, the in-person payments flow to improve the customer experience and help them drive down their cost of those terminals at the same time. And so I think it's not just about...

Speaker Change: Given that we have little incremental cost to those additional volumes and we see that on a like for like basis. Those have stayed very much similar to where they've been in previous years, we shared.

Speaker Change: Back at our Investor day, the building blocks if you.

Josh Levin: driving costs down. It's about driving costs and increasing top line at the same time and driving that overall total cost of ownership which I think is where we are seeing traction.

Speaker Change: Exclude this large customer.

Speaker Change: The trend we saw low single digits to mid single digits impact from tiered pricing, so really from growing wallet share with our existing customers continues to be the trend. There's no real shift here. So we are seeing similar pricing for similar sized volumes as that's the biggest differentiator and then I'm talking about.

Thank you.

Speaker Change: Thanks Darren. The next question comes from Pavan Daswani from Citi. Pavan, please go ahead and ask your question.

Speaker Change: Great, thanks. Thanks for taking my questions. I've got a couple if I may. Firstly, you gave us some very useful color on digital volumes, excluding the large customer. Could you maybe share any color on take rate trends, excluding this customer?

Speaker Change: Our visibility.

Speaker Change: I would say in general we have pretty good idea of the way, we're able to gain wallet share over time.

Speaker Change: And then secondly, you talked about WalletShare being the most important driver for growth acceleration. Can you maybe touch on the visibility you have in terms of confidence on that ramp timing in 2025?

Speaker Change: On a more short term basis, we'd probably get good visibility six to 12 months out with our each of our individual customers. Because that's also how they're building out their priorities and their own product roadmaps and so as we get towards the end of 'twenty 'twenty four it then becomes quite visible what we should expect throughout 'twenty.

Yeah.

Speaker Change: Sure. So first on Take Great Trends, I would say this is even broader than digital, but across the board, we see that there's been no structural change in the way that we price deals, right? Deals are mostly driven off of the size of the volumes that we can win.

Speaker Change: 25, and that's what our.

Speaker Change: Our account management teams are spending a lot of time on understanding where the priorities are of our customers and how we can best execute and meet them to deliver on those priorities.

Speaker Change: given that we have little incremental cost to those additional volumes and we see that on a like-for-like basis those have stayed very much similar to where they've been in previous years. We shared back at our investor day the building blocks.

Pavan: Thanks Pavan.

Speaker Change: The next question comes from Sven Merkt from Barclays. Please go ahead and ask your question.

Speaker Change: And if you exclude this large customer, the trend we saw of low single digits to mid-single digits...

Speaker Change: Hi can you hear me, yes, that's fine.

Speaker Change: impact from tiered pricing so really from growing wallet share with our existing customers continues to be the trend there's no real shift here so we are seeing similar pricing for similar sized volumes as that's the biggest differentiator

Speaker Change: Okay.

Pavan: Thanks for taking the question.

Speaker Change: So first I wanted to quickly ask on APAC and Latam the rabbit tucked in H, one and has continued in Q3 and if so what's driving that.

Speaker Change: And then talking about visibility, I would say in general, we have a pretty good idea of the way we're able to gain wallet share over time.

Speaker Change: And then secondly, just wanted to ask on issuing as well the last time, you disclosed the volume anyway.

Speaker Change: Yes.

Speaker Change: I think there was an <unk> and then you had a number of interesting win.

Speaker Change: On a more short-term basis, we probably get good visibility 6 to 12 months out.

Speaker Change: Can you just give us an update on the card issuing volume run rate.

Speaker Change: Made significant progress.

Speaker Change: With our each of our individual customers because that's also how they're building out their priorities and their own product roadmaps And so as we get towards the end of 2024 it then becomes quite visible what we should expect throughout 2025 and that's what our

Speaker Change: Yeah sure. So I think from a regional perspective, again, I mentioned earlier, but North America and EMEA.

Speaker Change: EMEA were the fastest growing of our regions. This period, one thing I would highlight is that in Latam.

Speaker Change: We are seeing some nice underlying acceleration, having said that the currency has had a really big impact so far in this quarter.

Speaker Change: account management teams are spending a lot of time on understanding where the priorities are of our customers and how we can best execute and meet them to deliver on those priorities.

Speaker Change: So I wouldn't expect that that's materially changing the growth trajectory in the second half and then for issuing them Youre right in that we did last disclosed the hundreds of millions, we're making nice progress here and we'll plan to update the market soon about about that progress that were delivering on but.

Thanks. Pavan.

Speaker Change: The next question comes from Sven Merck from Barclays. Sven, please go ahead and ask your question.

Hi, can you hear me? Yes, hi Sven.

Speaker Change: Perfect. Thanks for taking the questions. So, first, I wanted to quickly ask on APAC and LATAM, they were a bit softer in H1, and has this continued in Q3, and if so, what is driving that?

Speaker Change: We very much are excited by the traction we're seeing here.

Speaker Change: Thanks Van.

Speaker Change: The next question comes from Andrew Baum from Wells Fargo. Andrew. Please go ahead and ask your question.

Speaker Change: And then secondly, I just wanted to ask on issuing as well. The last time you disclosed the volumes there, they were at 100 million.

Andrew Baum: Hey, Thanks for taking my question I wanted to ask about the regulatory environment in the U S. There's been considerable discussion around how this is impacting certain providers, particularly in the banking as a service segment and some struggling to meet these complex requirements.

Speaker Change: I think there was an H2 last year. Since we only had a number of interesting wins, such as bill.com, can you just give us an update on the current issue in volume one rate and if you have made significant sort of progress there?

Speaker Change: The licenses you have in place in the U S. How are you seeing your prospects really developed in the U S, particularly around embedded finance.

Speaker Change: So I think from a regional perspective, again, I mentioned earlier about North America and

Speaker Change: I think this is exactly why we've gone the path of trying to get for trying to be fully licensed like we've done in the U S in Europe and in the U K.

Speaker Change: We're the fastest growing of our regions this period. One thing I would highlight is that in LATAM,

Speaker Change: We are seeing some nice underlying acceleration. Having said that, the currency has had a really big impact so far in this quarter. So I wouldn't expect that that's materially changing the growth trajectory in the second half.

Speaker Change: Because we have that end to end responsibility and can rely on ourselves and our processes to to ultimately deliver the products that we wanted to deliver it puts us in a really really strong position to be able to help our customers and it's something that our customers also appreciate not only as at the end to end technology that we can provide but it's also.

Speaker Change: And then for issuing, you're right in that we did last disclose the hundreds of millions. We're making nice progress here and we'll plan to update the market soon about that progress that we're delivering on. But we very much are excited by the traction we're seeing here.

Speaker Change: So that regulatory experienced those licenses that means we can be fully in control of the process and I think that is going to be continue to be a really important.

Speaker Change: Differentiator for us in the way that we're approaching.

Thanks, Sven.

Speaker Change: This part of the market so I.

Speaker Change: The next question comes from Andrew Bow from Wells Fargo. Andrew, please go ahead and ask your question.

Speaker Change: I think as regulations and as regulatory environments change we are in the position to be able to move most quickly with that and to be able to deliver for our customers is it's all within our own hands all within our own court.

Speaker Change: Hey, thanks for taking my question. Um, I wanted to ask about.

Speaker Change: the regulatory environment in the U.S. You know, there's been considerable discussion around how this is impacting certain providers, particularly in the banking as a service segment, and some struggling to meet these complex requirements.

Speaker Change: Thanks, Andrew.

Speaker Change: Next question comes from Sanjay So chronic from K B W. Sanjay. Please go ahead and ask your question.

Speaker Change: You know, with the licenses you have in place in the U.S., you know, how are you seeing your prospects really develop in the U.S., particularly around embedded finance?

Speaker Change: Thank you.

Speaker Change: Just following up on that take rate question. It seems Ethan like Youre, saying the pricing is pretty stable across your merchants. So as we think about that large merchants stepping down as volume should we expect some stabilization in the take rate going forward from here. Maybe you can just help us think through that and then secondly, just.

Speaker Change: I think this is exactly why we've gone the path of trying to be fully licensed like we've done in the US, in Europe, and in the UK.

Speaker Change: because we have that end-to-end responsibility and can rely on ourselves in our processes.

Speaker Change: I'll ask my two questions upfront on Apple and sort of the NFC opening up do you see that providing an opportunity for you guys in terms of.

Speaker Change: to ultimately deliver the products that we want to deliver, it puts us in a really, really strong position to be able to help our customers. And it's something that our customers also appreciate. Not only is it the end-to-end technology that we can provide, but it's also that regulatory experience, those licenses, that means we can be fully in control of the process. And I think that is going to continue to be a really important

Speaker Change: Doing other strategies as you spoke to end to end just curious thank you.

Speaker Change: Yeah.

Speaker Change: So first take rate right. We show in aggregated take rate that's entirely driven to merchant mix again bigger customers, having lower take rates and smaller relatively smaller customers, having higher take rates if.

Speaker Change: differentiator for us in the way that we're approaching this part of the market. So I think as regulations and as regulatory environments change, we are in the position to be able to move most quickly with that and to be able to deliver for our customers.

Speaker Change: If you isolate just that individual customer that helps the take rate, but ultimately it's just one customer amongst the mix it will come down to the overall merchant mix, which will drive the take rate outcome and ultimately why we.

Speaker Change: It's all within our own hands, all within our own court.

Speaker Change: Prefer and think it's much more useful to focus on how our net revenue growth is developing.

Speaker Change: Thanks, Andrew. Next question comes from Sanjay Sakrani from KBW. Sanjay, please go ahead and ask your question.

Speaker Change: In terms of the second question.

Speaker Change: Yeah, I would say I would say a couple of things one is that I think you do see that there is a lot of change in how people look at what our payments terminal is theres, a lot more optionality and opportunity to create different experiences.

Speaker Change: Thank you. Just following up on that take right question, it seems, Ethan, like you're saying, the pricing is pretty stable across.

Speaker Change: your merchant. So as we think about that large merchant stepping down its volume, should we expect some stabilization in the take rate going forward from here? Maybe you can just help us think through that.

Speaker Change: We have been very.

Speaker Change: A very quick to market to offer a tap to pay on iPhone. We also expanded in certain markets on Android in the third quarter and I think as that ecosystem continues to develop and shopping behaviors change there will be more opportunity to further disrupt how in person payments operate and that's something that we're.

Speaker Change: And then secondly, just, I'll ask my two questions up front, on Apple and sort of the NFC opening up, do you see that providing an opportunity for you guys in terms of doing other strategies as you spoke to end-to-end? Just curious. Thank you.

Speaker Change: <unk> are playing a role in.

Speaker Change: Yeah, so first take rate, right? We show an aggregated take rate that's entirely driven to merchant mix again.

Speaker Change: Thanks Sanjay.

Speaker Change: Next question comes from Bryan Bergin from TD Cowen Brian. Please go ahead and ask your question.

Speaker Change: Bigger customers having lower take rates and smaller relatively smaller customers having higher take rates

Speaker Change: Okay.

Speaker Change: Hi, Josh. Thank you first question on unified Commerce suite of nice acceleration in volume growth just given US one is more macro sensitive though can you just talk about the key drivers that allowed that outperformance there.

Speaker Change: If you isolate just that individual customer that helps the take rate, but ultimately it's just one customer amongst the mix it will come down to the overall merchant mix which will drive the take rate outcome and ultimately why we

Speaker Change: And then the second question on platforms understanding solid growth there too, but can you just comment on the level of expansion in <unk> versus that first half level ex ebay shall we expect biopharma to be relatively lumpy in the earlier stages here of your scale in the business.

Speaker Change: prefer and think it's much more useful to focus on how our net revenue growth is developing. In terms of the second question,

Speaker Change: Yeah. So first on unified Commerce, I think the trend we've seen in unified commerce, which has been helping us and supporting our growth over the over this year is that.

Speaker Change: Yeah, I would say a couple of things. One is that I think you do see that there is a lot of change in how people look at what a payments terminal is. There's a lot more optionality and opportunity to create different experiences.

Speaker Change: <unk>.

Speaker Change: We've expanded outside of our historic core verticals over the last few years, so into things like large format retail into hospitality and I think the benefit of expanding into a more diversified set of verticals is that.

We have been.

Speaker Change: very quick to market to offer tap to pay on iPhone. We also expanded in certain markets on Android in the third quarter. And I think as that ecosystem continues to develop and shopping behaviors change, there will be more opportunity to further disrupt how in-person payments operate. And that's something that we're absolutely playing a role in.

Speaker Change: We are less macro driven by any one vertical given that diversification. So I think we're really seeing the benefits of that expansion to other verticals throughout the past years, helping to support and drive this growth.

Speaker Change: From a platform side I would say, yes, both because.

Speaker Change: Thanks Sanjay. Next question comes from Brian Bergen from C.D. Cowan. Brian, please go ahead and ask your question.

Speaker Change: It's the smallest pillar. It's so it's more concentrated but also because platforms can be very large in scale and size right.

Thank you.

Josh Levin: Hi, I'm Josh. Thank you. First question on Unified Commerce, nice acceleration and volume growth. Just given this one is more macro sensitive though, can you just talk about the key drivers that allow that outperformance there?

Speaker Change: They're ultimately embedding payments to their broad customer base and depending on where they are in their journey of ultimately attaching payments to their customer base. They can get to some pretty large scale customers and so I would say that combination of it's still being earliest days of the three pillars and the fact that there.

Speaker Change: And then the second question on platforms, understanding solid growth there too, but can you just comment on the level of expansion in 3Q versus that first half level X eBay, should we expect platforms to be relatively lumpy in the earlier stages here if you scale in the business?

Speaker Change: Or are just very large volume platforms in our in the in this space than you do you should expect a bit more lumpiness here in this pillar.

Speaker Change: Yeah, so first on Unified Commerce, I think the trend we've seen in Unified Commerce which has been helping us in supporting our growth over the over this year is that

Speaker Change: The last thing I'd say is that that's much more visible from a volumes perspective than what we see from our net revenues perspective again, given how we price these deals.

Speaker Change: We've expanded outside of our historic core verticals over the last few years. So into things like large format retail, into hospitality, and I think the benefit of expanding into a more diversified set of verticals.

Speaker Change: Thanks, Brian.

Speaker Change: Next question comes from James Friedman from S. O J J, it's ready to go ahead and ask your question.

James Friedman: Hi, first of all thank you for doing this call. It's it's very helpful cadence.

Speaker Change: that we are less macro driven by any one vertical given that diversification. So I think we're really seeing the benefits of that expansion to other verticals throughout the past years helping to support and drive this growth.

Speaker Change: Ethan I wanted to ask.

Speaker Change: With regard to your prior answer about take rate expansion I think the punchline was that its mix related I was just wondering if you could unpack that a little is that merchant size or cross border or something more and I'll. Just ask my second one upfront in your answer to <unk> question earlier.

From a platform side, I would say yes, both because...

It's the smallest pillar, so it's more concentrated, but also because platforms can be very large in scale and size, right? They're ultimately embedding payments to their broad customer base, and depending on where they are in their journey of ultimately attaching payments to their customer base, they can get to some pretty large-scale customers. And so I would say that combination of it still being earliest days of the three pillars and the fact that there are just very large-volume platforms.

Speaker Change: When you were saying you know that I'm doing this from every 22 basis point improvement Northridge nation.

Speaker Change: Do you think of that as an issuing solution or is that something on the merchant side. Thank you very much.

Speaker Change: Sure. So first on the on the mix related to take rate, we see the characteristic that most determines our take rate is merchant size. So when I speak to mix there I'm speaking, mostly to where the growth comes from whether that growth is mostly from large volume customers or.

Andrew Baum: in this space, then you should expect a bit more lumpiness here in this pillar. The last thing I'd say is that that's much more visible from a volumes perspective than what we see from a net revenues perspective, again, given how we price these deals.

Speaker Change: From relatively smaller volume customers maybe.

Speaker Change: Maybe just one example for instance in the second half of last year, we talked about growing faster with our relatively smaller enterprise customers, which had a size mix impact on our overall take rate.

Speaker Change: Thanks, Brian. Next question comes from James Freeman from SIG. James, please go ahead and ask your question.

Thank you.

Speaker Change: Hi, uh, 1st of all, thank you for doing this call. It's it's very helpful cadence. Even I wanted to ask, um.

Speaker Change: So when I when I say mix it is usually down to a two size.

Speaker Change: And then in terms of the 22 basis points uplift that I Ah Ah that I mentioned.

Speaker Change: With regard to your prior answer about take great expansion. I think the punchline was that it's mixed related. I was just wondering if you could unpack that a little. Is that merchant size or cross border or something more? I'll just ask my 2nd 1 up front in your answer to Darren's question earlier.

Speaker Change: Of course everything is working in tandem with your customer. So we've built out what we think is a a world class leading a debit proposition in the U S that drives this outsized performance of both increasing authorization and reducing cost we tried to pull as much of the complexity.

Speaker Change: When you were saying, you know, I'm doing this from every 22 basis point improvement authorization, do you think of that as an issuing solution? Or is that something on the merchant side? Thank you very much.

Speaker Change: <unk> of this underlying setup onto our own so that we can pull it away from the merchant side, but in the end you need to work together with your customer to make sure that you're optimized and setup right based on their individual needs and so it also requires working together with them to drive that value.

Sure, so first on the on the mix related to take rate. We see the the characteristic that most determines take rate is merchant size.

Speaker Change: Thanks, James The final question comes from notion of Duarte from Deutsche Bank. Please go ahead and ask your question.

So, when I speak to mix...

Speaker Change: there I'm speaking mostly to where the growth comes from. Whether that growth is mostly from large volume customers or from relatively smaller volume customers. Maybe just one example, for instance, in the second half of last year we talked about growing faster with our relatively smaller enterprise customers which had a...

Speaker Change: Right.

Speaker Change: Taking my question.

Speaker Change: For me I'm, sorry to push on that take rate.

Speaker Change: I'm just trying to understand.

Speaker Change: I mean I appreciate managing the company on the next 70 basis and he then that the move we have seen it take rate and I know that you were talking about the size of that and then the mix that you mentioned and the size of that is it now makes sense that we think that the mi.

Speaker Change: Size mix impact on our overall take rate So when I when I say mix it is usually down to two size and then in terms of the 22 base point uplift that I that I mentioned

Speaker Change: Financing a large U H, one last year and for as long as long as that was ramping up now that they are ramping down.

Speaker Change: Of course everything is working in tandem with your customer, so we've built out what we think is a world-class leading debit proposition in the U.S.

Speaker Change: So I'm trying to see if they are going to just say that outside of it here and there.

Speaker Change: And then comes to hiring should be interesting.

Speaker Change: that drives this outsized performance of both increasing authorization and reducing cost.

Speaker Change: Similar trends.

Speaker Change: Nine Q3, Q4, and maybe two out the next yeah. Thank you.

We tried to pull as much of the complexity of this underlying setup onto our own so that we can pull it away from the merchant side. But in the end, you need to work together with your customer to make sure that you're optimized and set up right based on their individual needs.

Speaker Change: Yeah. So first on take rate I think.

Speaker Change: If we would exclude a large customer well what we see is <unk>.

Speaker Change: Very much a trend in line with the building blocks that we laid out right. So there is of course, a tiered pricing impact because we're growing our business with our existing customers that means that over time, they're getting to higher tiers with lower prices per transaction and we've quantified that to be an expectation of low single digits.

and so it also requires working together with them to drive that value.

Moderator: MODERATOR Thanks, James. The final question comes from Nushin Najati from Deutsche Bank. Nushin, please go ahead and ask your question.

Speaker Change: Mid single digits. That's that's the trend that we see we don't see changes in the structural prices either that we offer to our existing customers or that we offered to our new business as they come on the pricing is mostly down to size of that merchant more than any other factor.

Speaker Change: Hi, thanks for taking my question from me. I'm sorry. I'm going to push on the take rates.

Speaker Change: I'm just trying to understand as we, I mean, I appreciate managing the company on the net revenue basis and given that the move we have seen in the take rate, and I know that we talked about the size of that.

Speaker Change: So I would say that it's been pretty consistent.

Speaker Change: The mix of your merchants and the size of them, is it?

Speaker Change: In terms of pricing over the last year.

Now, make sense that we think that the mix is kind of similar to H1 last year before this large volume customers was ramping up now that they are.

Speaker Change: Then in terms of hiring so we ours, we are ramping up hiring a bit we should expect a higher number in Q4 than we've seen in the in the earlier quarters, but I think getting through the couple of hundred is still probably unlikely. It was never a goal by itself to get to that couple of hundred those are the areas. We identified is really important.

Wrapping down.

Speaker Change: And so I'm trying to see if we're going to see fed upside over here. And then when it comes to hiring, should we expect similar trends as we saw in Q3 or Q4 and maybe throughout the next year? Thank you.

Speaker Change: <unk> mint areas for us Theres still the areas that we identify as really important investment areas for us and our hiring process isn't.

Speaker Change: Yeah, so first on take rate, I think if we would exclude a large customer, what we see is...

Speaker Change: The constrained by the annual calendar period that we typically report on rates. So we'll we'll make sure that we continue to hire those people make sure we get quality people in and if that rolls a bit over into the next year.

Thank you very much.

Speaker Change: A trend in line with the building blocks that we laid out right so there is of course a tiered pricing impact because we're growing our business with our existing customers that means that over time they're getting to higher tiers with lower prices for transaction and we've

Speaker Change: Thats probably likely.

Speaker Change: Thanks notion.

Speaker Change: So that concludes our business update call. So thank you very much everyone for joining today. We appreciate your taking the time and of course, the IR team is available for any further questions have a great day. Thanks.

quantified that to be an expectation of low single digits to mid single digits. That's the trend that we see. We don't see changes in the structural prices.

Speaker Change: Yes.

Speaker Change: [music].

either that we offer to our existing customers or that we offer to our new business as they come on. The pricing is mostly down to size of that merchant more than any other factor. So I would say that it's been pretty consistent in terms of pricing over the last year.

Then in terms of hiring, so we are we are ramping up hiring a bit. We should expect.

higher number in Q4 than we've seen in the in the earlier quarters, but I think getting to the couple hundred is still probably unlikely. It was never a goal by itself to get to that couple of hundred. Those are the areas we identified as really important investment areas for us. They're still the areas that we identify as really important investment areas for us.

our hiring process isn't constrained by the annual calendar period that we typically report on, right? So we'll make sure that we continue to hire those people, make sure we get quality people in, and if that rolls a bit over into the next year, that's probably likely.

Speaker Change: Thanks, Nushin. So that concludes our business update call. So thank you very much everyone for joining today. We appreciate you taking the time and of course the IR team is available for any further questions. Have a great day. Thanks.