Good afternoon, welcome to Adyen's 2022 H2 earnings call. We're delighted to be joined by Pieter van der Does, our co-founder and CEO, and Ingo Uytdehaage, our CFO today to talk you through the financial results for the second half of the year. We're gonna structure the call as follows. We'll start with a short fireside chat hosted by myself with Pieter and Ingo, after which we'll open it up for Q&A hosted by Sanne. If you have any questions, please feel free to submit them already using the Q&A functionality of Zoom, and when submitting the questions, please make sure to use your full name and the firm you represent. Please do not use the Raise Hand function since we won't be using this today. I hope that household memo got in loud and clear, but before we dive into the fireside chat and Q&A, we once more, and as you're used to from us, would like to share a short video that the team prepared highlighting the key developments of the second half of the year for you. Enjoy. Welcome to Adyen's H2 2022 earnings call. We look forward to discussing our commercial, product, and team updates from the last period. There's no doubt that the past six months presented a range of global challenges for society and commerce alike. Despite the economy's volatility, Adyen's disciplined history placed us at a fortunate position at the start of H2 and enabled this half to serve as a key investment period. As planned, we were able to continue laying the groundwork for our next growth phase. Following this approach, we closed 2022 with a strong set of results. Looking at it by the numbers, in H2 we processed EUR 421.7 billion on our single platform, which is an increase of 41% year-on-year. In line with previous cycles, more than 80% of these volumes came from customers who were already on our platform when the period began, and we again achieved less than 1% of volume churn. Net revenue amounted to EUR 721.7 million, up 30% year-on-year. Adyen is moving with momentum. Each period we report even broader global reach, and H2 proved to be no exception. Our point of sale volumes were EUR 67.6 billion, up 62% year-on-year, and comprising 16% of total processed volume. This figure underlines the continued appetite for advanced multi-channel experiences and the unique ability of our single platform to meet this need. In order to remain at the cutting edge of consumer journeys, in H2 we relentlessly sought new avenues for innovation. This resulted in the launch of several product iterations with an online checkout, the rolling out of our new terminals, and piloting our embedded financial services suite. While we're proud of these achievements, our sights remain on our long-term horizon. From this vantage, we see our significant runway ahead and a journey we are only at the outset of. The key to reaching our technical and commercial ambitions is maintaining our speed. To keep moving at this pace, H2 required accelerated headcount growth. By the end of 2022, our motivated team totaled 3,332 FTE, with 58% of our new hires sitting in tech roles spanning both established and young initiatives. Being diligent about both the quantity and quality of these hires further situated us to capitalize on the sizable opportunity at hand. Investments in the team were the primary driver of half year EBITDA margin evolution, which landed at 52%. We remain confident in the long-term return on this investment period. Together, we are laying the bricks needed to reach Adyen's next level. Well, I think that video does a great job in capturing the highlights for the past six months. Pieter, Ingo, it's great to have you both here. Pieter, perhaps to start with you. I think the video highlighted the growth that we saw on the platform, but even more so, we've been investing in the team. Would you care to elaborate a bit on why it's so important for us to use this period as an investment period? Yeah. I think for Adyen to reach its full potential, we need to grow a little bit larger in number of people. During COVID, we were hiring, but we always kept the bar high. It's a very competitive market, so we knew something was gonna give, and that was the number of people that we attracted, because we would have liked to hire a little bit more. Now we move into a market where things are still competitive, but a little bit easier, and we now see the opportunity to get those very talented people on board. We're benefiting from that to grow towards the plan of working at a larger scale and to onboard those people. What's, I think interesting is it's often assumed that we use them just for one initiative, maybe embedded financial services or just for platform, but actually, we use them to invest in all our products. Both, online, where we started, Unified Commerce, having a store and online working seamlessly together in platforms, helping the industry which is platforming, and then over and above that, the embedded financial services. Also we have new development hubs in Madrid, in Chicago. We're adding to the commercial organization, account management, and sales. You see that globally, we invest in the company, so it's not very skewed towards one element. That's how we bring the company to the next stage. That's all very clear. At this accelerated pace, how do we ensure that we successfully onboard all of these new joiners? We benefit from being back in the office. Adyen is back in the office. Globally, we have a policy where we ask people to come in, and it's really working. The offices are a very vibrant place, and that makes it easier to train people. That's a very simple part. We have always been very good in training, I think. Even there we stepped up. We have specific what we call academies, and we now broaden those academies for the different for the different specialisms within the company, so that it's easier to train people. We are hiring people with a little bit more experience. And sometimes even we have leaders which we call in flying leaders, so people who have been leading in an other organization. Why is now the time good to do that? In the past, we felt it could be dilutive to our culture. We have now such a size that we feel that actually those leaders can add something and can be good for the company. We targeted to have more senior people. We also developed a special training for them called the Flying Leader Training, so to land them successfully. Also, of course, it takes less work to train those advanced people. That's why we feel comfortable that we can absorb this. That's all very clear. Ingo, on to you. If you look back at the past six months, perhaps through the financial lens, what are the highlights that you'd like to emphasize? Yeah, we look back on a strong half year of results. If you look at our process volumes, they grew over 40%. Net revenues were up 30%. Also, what was already highlighted in the video, we became more and more global, so further diversified both in geography as verticals. That's a development that we're very happy with. EBITDA margin came in at 52%, lower than previous periods. But that's the outcome of our willful decision to invest in the business, like Pieter just said, hiring more people, starting to travel again, bringing people back. This is the outcome of our decision. If we had to, we could get back to higher EBITDA levels very quickly. But this is our moment of investment. Yeah, I think investment for me really is the key word. It's, it's fair to say that investment goes beyond only investing in the team. Can you highlight any other investment areas that we've seen? Yeah, absolutely. Of course, we continue to invest in our product, but also in the underlying infrastructure. That's also why you see why CapEx is higher than usual. The second half of this year, we ended up at 8% of our net revenues, and the total year 7%. We made these additional investments to make sure that we would have all the capacity available. Also, with the stricter situation in many supply chains, we want to make sure that we have this capacity available. Longer term, we believe that we will come back to the 5% guidance on CapEx. 2023 onwards, we will below that level again. All clear. Pieter, back to you. What makes you confident in this investment approach? Our customer base is very stable. You see churn in large merchants less than 1%. Our growth comes from more than 80% out of existing merchants, so merchants that give us more business, but also merchants which we onboarded last year or the years before, which are still rolling out with us. The underlying economics are strong. If you look historically, we invested, for example, Unified Commerce in the U.S. It takes years for that to really scale. Currently, we're making the investment in other markets. Think Japan, think Mexico, where we have both online and store working together. We know those are powerful products, but we also know the results of that will come quite a bit later. It's the fact that we are very long term and you see that there's appreciation by our merchant base that we feel it would be risky not to use the opportunity that we currently have in the market. Yeah. At the same time, I mean, we're not blind to what's happening around us macroeconomically. Yet, if I hear the both of you, for Adyen, it really seems like it's business as usual. We've got our eyes on the long term. Ingo, back to you. What do you attribute that to? Indeed, what you say, we take this long-term view, make the investments that are necessary to get to the next levels of growth. That's very important to us, make sure that we do the right things for our customers in the different commercial pillars. Of course, that comes at a cost. That's why you see why EBITDA levels are lower right now. These are real investments. You could also argue that if we would stop doing this, we would get back at 65% margins very quickly. These are not additional cost because we need to run our business today. These are investments in the future. If we would stop investing in the future, we would quickly get to these higher profitability levels. That's why we're very convinced that this is a good and valid strategy for us. It's indeed a bit opposite to what's happening in the market around us. We've always built the company in a very disciplined way, and that's what we will continue to do so. We're not hiring as fast as we can. We hire in a way that we get the right quality in, with the bar high and keep the discipline. That's clear. Pieter, I already see you nodding. Are there any closing remarks that you'd like to add to what Ingo just mentioned? The investments which we make today are deliberate, and they're built and they're for the long term so that we can on a for a prolonged period keep to our growth guidance. That's what we're doing. Perfect. Well, thank you both for your for your insights. We're now gonna open it up for for Q&A. If you haven't done so already, please use the Q&A functionality in Zoom to submit any questions that you that you have. Please, again, mention your full name and the firm you represent. Hi, all, and welcome back after a quick break. With the already great fireside chat behind us, we're now moving into Q&A, and we've had our first questions come in. The first one that we'll be answering live is from Mohammed Moawalla from Goldman Sachs. Mo, please go ahead unmute yourself to ask your questions. Great. Thank you, Sanne. Hi, Pieter. Hi, Ingo. My question was really on the investments you're making. You're obviously in a quite a unique position, as you said, despite what's going on around you, to be able to really step up the pace of investments. Can you help us understand how you think of the sort of payback and how this sort of impacts the existing business, as well as perhaps the realization of the benefits from the new product areas? Should we think of this as simply sustaining Adyen's kind of already high growth rates or potentially, you know, being additive and accelerating that? Thank you. Thanks for your questions, Mo. Pieter, if we look at why we're investing and the timelines of when we're expecting payback on these on our investments, how do we think it will impact our business and our products? If you could take that one, and then, Ingo, if you can take the second one on sustaining our growth rates or whether we'll be accelerating them. If you see how we're investing, we are investing in things which will have a return fairly quickly. For example, in digital, we are constantly investing and making checkouts easier, are able to retract stored payment details, so that has an immediate benefit. If you invest in a sales organization, if you sign up more merchants, you need more account managers. Those things lead to a high quality of service but also executing it well. There are other parts which I mentioned, for example, Unified Commerce. If you launch that in Japan, that's not gonna make a material different on the very short term. We know those are the type of products that take more years to come to maturity. If you look at our investments in embedded financial services, it's great that it's live, because now we get direct merchant feedback and you can improve, but that's how you build something. That's not how you get the benefits yet. That's an example of something which will ramp up slower. Great. Thank you. Ingo, anything to add on how this will sustain or accelerate our growth rates? Yeah, absolutely. I think if you look at how we see these investments, it will extend our runway. Of course, we have this guidance on how we want to grow our revenues longer term. That's what we want to continue, and these investments make this possible. Of course, longer term, we also want to go beyond payments, so we're still heavily investing in payments but also developing the first products that go beyond this. This is because merchants ask for it. We wanna make sure that we do this to make sure that we are in line with our merchant demand. And, yeah, with a single platform, that's relatively easy to do. Not in itself as an acceleration. It is a sustaining growth path that we're on. Great. Thank you. Mo, I think that should answer your question. We're gonna open the line for the next questions, which are from Adam Wood at Morgan Stanley. Adam, please go ahead and unmute yourself to ask your questions. Hi. Perfect. Thanks for taking the question. Pieter, good to see you back, and Ingo, congratulations, on the added role. I've got two, please. The first one is just could you help us understand the order of magnitude impact on the 2023 numbers on EBITDA? I mean, the model that we were working on suggests that EBITDA margins fall back below 50%, this year. Obviously, that depends a lot on the wages per employee that we assume. Could we even be looking at a situation where margins return back to the 2015, 2017 level, when, again, I think was a period you were investing quite heavily when margins went as low as the low mid-40s EBITDA? That's the first one. Secondly, a lot of people have been asking about the interest on the cash on the balance sheet. There's obviously a pretty big cash balance in the business now. Could you talk a little bit about your ability to earn interest on that balance? Is that different between the cash that is your cash and the cash that is part of the merchant float, please? Thank you. Thanks for your questions, Adam. Ingo, I hear EBITDA margins, I hear balance sheet. I think this one's for you. Thanks. Thanks, Adam. If you look at our investments, we want to continue our investments in 2023. In 2022, we hired around 1,200 people. That's also the number of people that we want to add to the team this year. That's sort of the maximum that we want to hire. We, of course, keep the bar high. Also, with the full impact of the people that we have hired in the second half of this year or in 2022, that could lead to some further margin pressure. 2023 is certainly not a year where margins will expand again. That's more something that we will expect to see longer term in the course of 2024, when we think we are at this next level, and we will hire less people. Indeed, I think your reference to early years, I think is very similar. Not so much maybe on the margin levels, but the perspective that we take. The perspective that we take right now is very similar to the 15 and 16, 17 years, when we invested heavily in acquiring licenses, point of sale developments, and that really started to pay back in the years 18, 19, 20. We wanna take that same approach. Indeed, have lower margins on the short term to be in a way better position on the long run. On our balance sheet and interest rates, yes, we are, I think in a lucky situation that we're now in a positive interest environment, with no debt that leads to income instead of the fact that we need to pay for the balances that we hold. We don't want to make this like a separate business model. Like, our business model is really focused on the fees that we earn with our merchants, so not so much on the interest rates that we make with the central banks. Of course, it's a good side effect, and it will certainly partly pay back our investments that we're currently making. Great. Thank you. Adam, as you hear, we remain in investment mode. We're building for the long term. We're building what our customers need. I think we've answered your questions. That means that we're ready for the next in line, which is James Goodman from Barclays. James, please go ahead and unmute yourself to ask your questions. Great. Much appreciated. Thank you for taking mine. Just firstly, coming back to the commentary around the, the macro backdrop and the growth outlook, I think you've been pretty clear that these investments are helping to sustain your medium-term growth. If we look at the second half this year, which was already a challenging e-commerce environment, I think on a constant FX basis, your net revenue was within, but at the lower end of your medium-term guidance. I just wonder if you could comment in terms of what you're seeing right now and the outlook for 2023, whether that's a sort of prudent level of growth to think about given some of the discretionary spend pressures and higher energy bills and things that we're seeing in the market. That's the first question. The second is just actually to directly follow up on the interest income element. Just really to gauge a little bit the materiality of this. I mean, it was EUR 25 million, I think, already in the second half. Presumably, that was mainly Q4. I think you're earning it both with central banks and commercial banks in both Europe and the U.S. Is there any reason this couldn't be EUR 200 million-plus of interest income on an annualized basis and really a full offset to some of the incremental investments that you've been discussing in the opening remarks? Thank you. Thanks, thanks for those, James. Ingo, if you could take the first question on how the overall macro backdrop impacts our growth outlook. I think James specifically asked for what we also see happening in the e-commerce environment versus on our platform. The second question I think is another good one for you to take on, is how material we think interest income can become for us. Sure. I think if you look at our expectations for 2023, our main focus will be land and expand. The fact that there is a macroeconomic backdrop is not necessarily an issue for us because we are so much focused on the land and expand. Working with our existing merchants and getting a bigger share of wallet. Of course, if the organic growth of merchant is lower, that also has always a bit of impact on us. We're not completely immune for these type of developments. We strongly believe also in the guidance that we have given. If we would have different growth expectations also for 2023, we would have signaled this. We are firm believers in our growth strategy. But in the end, it's very difficult to exactly measure which part is linked to the macroeconomic circumstances. Then on interest rates, like indeed, of course, the interest that we earn is really dependent on how the interest rates will develop this year. There's of course still a bit of uncertainty around, but with rising interest rates, that income will certainly further increase. I think it is of course relatively easy to model how much we potentially could make. We've decided to not disclose or guide separately on interest income. But I think it's good to assume that for most of the balances that we hold, we will get interest on it. And it will indeed, one of our sources for funding the investments that we currently make. Great. Thank you. That's another complete set of answers. Next up is Justin at Credit Suisse. Justin, please go ahead and unmute yourself to ask your question. Awesome. Thank you so much. Congrats, Ingo, and good to speak to you guys. Just a couple from me here. One, I noted an Oracle partnership in the platform side. I think you may have had a relationship there in the past. Obviously, this is a massive provider of POS, point of sale software, across North America and Europe. Maybe you could talk a little bit more about that relationship and that win, if it was incremental. The other question is kind of ancillary relating to embedded financial services. Now that that's live, have you seen a change in the way conversations are going with platforms? Meaning, you know, are you seeing kind of more productive conversations? Are there a lot of platforms that are saying, "Hey, now that you guys have this more complete suite of offerings, we're more likely to work with you." Any examples of that that you can provide, outside of the Moneybird one you gave in the shareholder letter. Thank you very much. Thanks for your questions, Justin. Indeed, a lot happening in the platform space. Justin's question, the first one on our Oracle partnership, whether that's a win or an expansion of the relationship. The second one on how our conversations around EFP are evolving. I think two great questions. Thank you for those. Ingo, if you can take them. Sure. I think if you look at our Oracle partnership, that's a partnership that we're very pleased with. Indeed, they have a huge reach, and they also bring us to customers that would be more difficult for us to sign up directly. I think it is also a way to further grow our embedded payment solution and of course, longer term, that's also very much important for building out EFPs or embedded financial products. The embedded payments is a entry point for longer-term the other financial products. Oracle is an important partnership. Of course, we look at other partnerships. It's a very clear trend in this industry that software service providers look for different ways to embed payments into their offering, that's why the platform vertical for us is so important. Switching to embedded financial products, now it's live, what we're gonna do. The initial feedback is very positive, but it's also still in pilot phase. Yes, there are more platforms coming to us that already were considering us for embedded payments to say like, "Okay, if you can do more, you're even more interesting or logical choice for us." It absolutely fits very well with also our strategy to be their long-term partner. But like we also indicated earlier, like, this gonna take a bit of time to really roll out embedded financial products and get revenues from it. First focus is getting the embedded payments, right. That's like the majority of the conversations that we have now with platforms. Great. Thank you. Justin, as you hear, there is much more in store in the years to come. I hope we've answered your questions cause it's time for the next questions already from Frederic Boulan at Bank of America. Fred, please go ahead and unmute yourself to ask your questions. Hi. Thank you, Sanne. Thank you, everybody. If I can follow up on the previous question from James on your revenue growth outlook. If you look at 2022, second half, and we had FX supporting, we had eBay still contributing. If you can discuss the building blocks that give you comfort about delivering within the guidance range for 2023, in the macro that gets a bit tougher, in particular any development on POS or other areas where, you know, we could get a bit more comfort on growth picking up. Secondly, on the management side, if you can maybe spend a moment on the changes happening, in particular the departure of Kamran Zaki and the outlook for the rest of the management team. Thank you. Thanks for your questions, Fred. Ingo, if you can take Fred's first question on our growth outlook for the upcoming year against the macro backdrop, and also what gives us confidence for the year to come. Then Pieter, if you can take Fred's second question. Yeah. Yeah, sure. I think if you look at the building blocks for our growth this year, it's at one hand regional. If you look at our traction in North America right now, that's very significant, and we want to further grow this. The same for what we see in Unified Commerce space. A lot of retailers also after pandemic are reconsidering their payment strategy. They see that payments is very strategic to them. Also with our data perspective, we can help them to get better insights in their consumers. That's an area where we expect a lot of growth from. Of course, these are deals that we potentially already have signed in 2022. In line with our land and expand strategy, we expect to see more revenues from this in 2023. That's also why we are so convinced that we will make this outlook. It's also based on the account management plans that we have in place. For each account that we manage, we have detailed visibility on the growth that we wanna make, and that also supports our growth for this year. Great. Thank you. Pieter, could you address Fred's second question? There're some changes in the management board. I'm very positive about it. I of course don't like to see Cameron go, our COO. I think from a West Coast U.S. perspective, to spend almost a decade with the company, shows strong commitment. When we asked him for the board, my assumption was that it would probably be for a term, so there's not a big surprise in there. It gave us the opportunity for Ethan to become CFO. Often you see that people already have the role which they are being granted and so we were happy to give Ethan that opportunity. Ingo takes over a large part of Cameron's role, which is product and. Operations? Yes, sorry. Product and operations. What we do with account management, that goes to Roelant Prins, who has been with us very much from the beginning, and bring that commercial together is an elegant way to solve it. Because now we make those changes, there's also an opportunity to adjust the board to how Ingo and I have been working together. We have been very much operating together. To now formalize that, I think that that's the right thing to do to ensure that we're all working in a way which we can work together going forward. Of course, with coming back to the office a little bit more difficult than I expected. It would've been nice to have had it in place already. I've no There's nothing which I know is coming up that I would be out of the office. Great. Thanks, thanks for that update. I think, Fred, we've also answered your questions here. That means we're going to move on to the next question, which is from Sandeep Deshpande at JP Morgan. Sandeep, if you could please unmute yourself and ask your question. Hi. Thank you for letting me on, and congratulations on a good report. Two questions from me, if I may. Just back again to the question on margin. Would you then say, Ingo, that 2023 would be the bottom of your margin, and then in 2024 your margin will improve from here as your hiring slows into 2024? The second question I have is for Pieter, which is to do with the growth trajectory of the business. I mean, clearly, I mean, you've seen very strong growth in POS and in the United States. What is the next leg of this growth? I mean, clearly, for instance, in the U.S., getting your license and et cetera, helped you grow very fast in the U.S. over the last few years. Is it about continuing to expand within the existing, acquired customer base, or is it now your, you know, the push to get with these new employees to get new customers is going to increase? Thank you. Thanks for your question, Sandeep. I think they were already directed by Sandeep in the right direction. I guess I'll say thank you for that. Ingo, if you can take the first question on how our margins will develop in an upcoming year and the years after. Pieter, the second question for you on how we're expecting to further grow in the U.S. and beyond. Yeah. If you look at our margin expectations for 2023, we expect that margins will indeed be impacted by the people that we hire this year. We have as an internal goal 1,200 people that we want to add to the team. In 2024, number of people that we hire will slow down. In absolute terms, lower than the 1,200. That's our current expectation. That should lead, if you think about the number of people that we hire in 2023, that also of course has some impact on the cost in 2024. In the course of 2024, we expect that margins will start to expand again. We think that we are at a level where our ultimate scalable business model will be visible again, where we grow on the longer term to the 65% EBITDA margin. I think that's a very important point to highlight. We strongly believe that our revenue can grow way faster than our cost. Most of our cost is cost of the team. The people that we hire currently are additional investments to have a longer growth path. If we wouldn't hire them right now, we would get to higher margins instantly. I think that's the investment that we're making, that's why we expect from 2024 onwards, or in the course of 2024 onwards, margins will expand again. Great. Thank you. I think from a current investment to over to North America, a place or a region where we continue to invest but also have been investing for a very long time already. Pieter, what's our growth trajectory and aimed growth trajectory there moving forward? First, how does that commercial engine for us work? That is, we have growth from existing merchants, which is like the majority, more than 80%. We're constantly adding new merchants to that so that that doesn't stall, but that keeps going. That's what we're doing. If you look at addressable market, we are not limited by addressable market. Yes, that's what we'll keep on doing in the U.S. with more people, with more track records, being recognized as an important domestic player as well. So, at a certain point it becomes easier than your first sale, where you're a little bit as a, being seen as a, oh, that's an unusual choice. It's now much more an accepted choice. In the meantime, we're doing, we're planting the same seeds in other markets. I mentioned Japan, I mentioned Mexico. There also that engine starts to work. If you say what's the more important, it's important to keep it flowing. We constantly grow with existing, and we constantly add, and that's what we have been doing now for more than a decade, and that's what we continue to do. It's about outperformance of the products, investing in engineers, and almost 60% of what we hired are engineers that build the product constantly improving, and that's why merchants choose first. It's not from a decision in the past that they tied their hands. No, it's like, "This is the product I like and I put more volume to." That's what we'll do for the years to come. Ingo, a very clear strategy that's brought us where we are today and will continue to drive our growth in the future. Thank you, Sandeep, for your questions. Next up is Michael Briest from UBS. Michael, please go ahead and unmute yourself to ask your questions. Yes, thank you. I think most of them have been asked, but I guess just coming back on the interest income, could you give any sensitivity perhaps around a one percentage point move on U.S. or Eurozone rates, how that would affect that income stream? In terms of the hiring, in the second half, it looked like the average employee cost went up quite a lot sequentially and year-over-year. I guess is there anything odd about seasonality, or does that speak to something around the sort of salary inflation you saw or the caliber and seniority of talent that you brought on board? Perhaps has attrition come down notably, if you could address that? Thank you. Thanks for your questions. I think it's becoming a theme of the call, but Ingo, could you address the Michael's first question on interest income and then also pick up employee costs and maybe together you can speak to attrition and seniority of our team. Yeah, if you, if you think about the, uh, sensitivity to interest, um, the, uh, balances that we hold on a daily basis, of course, the velocity of those balances is super high. So what we receive from all the different payment methods around the world is, uh, paying out basically the next day. Uh, that velocity is high. But for most of the balances that we hold, we are in a position to, uh, get interest, uh, on it. So I think that gives a sense for if you want to model it, like if you look at, uh, at our balance sheet, uh, how much, uh, is, uh, eligible for getting, uh, interest. I think, thinking about how volumes will grow over time and also how balances then will grow over time, I think it's the best way to model the sensitivity to interest rates. We're not going to specifically guide on it also because we're not actively gonna steer on it. We're focused on making sure that we continue to build our fee business with our merchants, and this is a very nice side effect of it, that helps us to fund our growth. Great. Thank you. There is a question that I think you can best address together, which I think we'll kick off with the cost of employee expense, and then also some parts on how the team has developed also from a seniority perspective and what attrition looked like. This year is the year that we deliberately chose to bring in leaders because we felt that we are now of such a size that we benefit from it. On the balance of do you risk culture, we feel we are now, that's so well embedded, that's actually an opportunity to get other leaders in so that indeed, changes the package. What we also see is that we're hiring outside of Europe. If you hire outside of Europe, then usually the packages are different, so that raises salaries. We are hiring engineers, and they are usually also on the different package. Those are I think the underlying trends. Yeah. I have nothing to add from the trends on the cost. That's the perfect summary. Yeah. Great. Thank you. I think, we've already answered the full question. It's time to move on to the next. Hannes Leitner, from Jefferies, please go ahead and unmute yourself to ask your question. Yes, thanks for letting me on. I have also a couple of questions. They're rather more driven around license landscape. Could you remind us a little bit around your current license landscape? Where do you see the key focus areas? Also talk about the acquiring license in the U.S. I think after the branch license, you are potentially eligible to apply for one. Also, what would be the incremental benefits from that? Maybe on the second question around Unified Commerce, one key discussion here is around profitability between the channels. Could you remind us there, especially always around the implementation, is there extra costs incurred by you to, for example, implement the terminals in store or do you have third parties you work with or is it the merchants directly? Thank you. Thanks for your questions, Hannes. Ingo, if you could take the first, Hannes first question on our license, licensing landscape, what our key focus areas are, how we're progressing when it comes to our U.S. acquiring license, what it means for our business, and then also the second one on profitability between our Unified Commerce channels. Sure. If you look at our license landscape, let's first take it from a regulatory perspective. We always try to optimize our regulatory approach in each region. That's why we have a banking license in Europe, why we have a branch license in the U.S. In each market, we always ask ourselves, like, what's the best next step to provide our services on the long term? If there are any updates to be given, we of course will, but it's of course also the question like what is right timing for it. A second way to look at licenses, of course, are acquiring licenses globally. We used to have a couple of rent-a-BIN licenses in the past. For U.S., that's mostly now transitioned out. Given the fact that we have significant acquiring volume, this is not necessarily a real cost benefit because having those licenses ourselves also incur certain cost. Of course, in combination with the regulatory license, it improves the quality of service because we have direct control over all the flows. We're no longer dependent upon third parties. That's, I think, a very important improvement in how we can help our biggest merchants globally. If you're live in the U.S., we are a real domestic player now, and that's of course, if you're a big merchant, the quality that you're looking for. Great. Thank you. Hannes also asked a second question on Unified Commerce. If I recall correctly, he was asking whether there's a difference between online and offline channel when it comes to profitability, and whether there are any extra additional costs that incur when we implement terminals for our customers. Yeah. I think typically, the way how we price for Unified Commerce type of deals is more volume-based. Because longer term, we strongly have the vision that the difference between online and in-store will disappear. You don't want to have strange situations that based on the choice of a consumer, you get two different costs for the retailer. We try to make it as easy as it is to price that. If you think about rolling out, the cost of terminals, of course, is an additional component. We're not subsidizing these terminals for our retailers, we charge for it. For the whole supply chain or logistics behind it, we work with third parties to make sure that those terminals are shipped to the stores. The in-installation of those terminals is relatively straightforward. Some companies do it themselves, some have the help of third parties to do this. But our aim, of course, is to make it as easy as possible. For instance, one of the things that we have changed compared to the traditional industry where if you had updates on terminals, you had to send a service engineer, we have all made that completely remotely. We can remotely update terminals, and it's basically internet plug and play. Great. Thank you. I think that makes it we've answered both of Hanne's questions. Next up on the line is Josh Levin. Josh, please go ahead and mute yourself to ask your questions. Hi, good afternoon. two questions. It seems like the increase in head count is more than what you had discussed earlier in 2022. Are you hiring more people than you had originally planned, or are you hiring faster than you had originally planned to hire, and if yes, why? Just, again, on the interest income, it looks to us the implied rate you earned on the cash in H2 2022 is a lot lower than the prevailing short rates in Europe and the U.S., and we're trying to understand why. Can you park your deposits at central banks and earn the rates paid by central banks, or do you largely park the deposits at commercial banks and earn the rates paid by commercial banks, or is it some other mechanism altogether? Thank you. Thanks for your questions, Josh. Pieter, if you could, take the first question on, our pace of hiring and why we're maintaining that pace. Ingo, I think, once more the interest rate question will come your way. Yeah. I think we run the risk of... Actually, we run the risk of underinvesting. Now that we can find those talented people, those are the people that we need. We're not managing the company towards let's hire those people, which in these discussions almost sounds like, "Oh, it would be great to have 1,200 people." No. We have work for 1,200 fantastic people. Can we find them? Then we will. That's, that's, about the number where we think we should get to. It's not, we're hiring to build products and not the other way around. I think adding a fantastic to it is a great nuance. I think it's a good one for everyone to take into account that that's in the end for the 1,200 people from this year were. I think for the second question on the interest income, Ingo, I'm going to defer to you again. Yeah, sure. If you look at the interest rates, they only start to move in the period, so it's only part of the period that we have seen those increases. Most of our balances is at the ECB. I think the ECB has been slightly slower, for instance, in raising their rates than the U.S. Part of our funds are held by commercial banks, and they typically have a bit of a lag between if the central bank raises interest before they have implemented it. These are effects where there's a bit of a lagging situation in those in those interest income. Thank you. Josh, thanks for sending in your questions. We're going to move on to the next on the line, which is Jeff Cantwell. Jeff, please go ahead and mute yourself to ask your questions. Hey, thanks. Can you hear me? Yes, we can. Thank you. Okay, great. Thanks for taking my question. Thanks for squeezing me in. I just wanted to follow up a little bit on, you know, what you're talking about with your new hires. When you say that your new hires have a longer growth path, can you explain what you mean by that? Why is that the case? Just trying to think about, you know, whether this is product development, for example, land and expand, maybe movement into new geographies and so forth. When we think about how to model that, you know, what does that mean for the volumes and take rate, for example? Given the magnitude of the hires, you know, the size you're talking about on these expense lines, it would seem that, you know, you're thinking implies this would add more than 2 PPT to your revenue growth. I was hoping you could help us understand more about this. Yeah. Thanks. Thanks, Jeff. Pieter, could you speak to how our new hires will extend their growth path and what it will mean for the business moving forward? Yeah, feel free to chip in where you think necessary. As Ingo mentioned, it's very easy to limit on investments, and it will bring the operational leverage very high in this company. The question which we try to solve here is, what investment level is right to have those products which we know will later on deliver? We are building things which we know already for a few years are needed by merchants. Those, how that works is not always so straightforward. When we were just launching with terminals, in-store payments, we thought, "Oh, wow, this is really gonna help for companies which have in-store payments." It turns out that you sign up merchants for pure online who say, "We might wanna do it in the future, so we'd rather work with you," then we can know we can extend it. Why do I mention this as an example? If you now look at platforms and you don't use embedded services, if you can choose between providers, which provider would you take? The one where if you want in the future, do card issuing embedded services or the one who doesn't do that. If you also look in our case, all in one platform, so no new contracts, it's just flipping of switches to get things up and running. That's very attractive. The hard relationship that you're asking for is sometimes a little bit less strict. On the other hand, we have been in this market for a long time. We've been speaking to merchants for a long time, this is not just a gaslight guess as in let's make up a feature. No, we're building to what we know is needed and will be used. If you then ask me, "Why do you say that then lengthens your growth, your runway?" We know these are the products. You never know 100% for sure, but we think these are the products that will be used, quite confident in that. Yeah, I think the comparison to be made is, for instance, like if you look at the U.S., it has taken years to get real traction in domestic U.S. market. Of course, we already were quite successful early days with U.S. merchants going international, but now to have domestic traction, that took years to get there. If you translate that to other markets that are very significant, Japan, it will really take time to get or to be in that similar situation. You need to build a team. We built a team from the ground up. We don't do any type of acquisitions. Time is the thing that we need to overcome. It just is having that patience, building it right. It's also on the product side, of course, building everything ourselves, it just takes more time. That's why we strongly believe that the investments now will put us on a longer growth path, and why we think this is the right thing to do. Great. Thank you. Think, Jeff, we have answered your questions there, so we're going to move on to the next on the line, which is Alexandre Faure. Alexandre, please go ahead and unmute yourself to ask your questions. Good afternoon. Thank you very much for squeezing me in. Got a couple of questions, if I may. The first one is again on this big investment phase of yours, in 2022 and 2023. Could you please give us a broad sense of how much of this effort goes into embedded financial products as opposed to all your other initiatives? My second question relates very much to inventories that I think went up quite dramatically in H2. I think it relates mostly to point of sale terminals, and also I'm curious if that's in anticipation of growth in Unified Commerce, if it's trying to get ahead of potential supply chain disruptions. Just wondering what's going on there. Thank you very much. Thanks for your questions. Pieter, could you speak to Alexandre's first question on where all of our new colleagues are, what initiatives they're working across? I'm not sure whether it was me, but I've had some difficulty understanding or hearing your second question. I'm looking at Ingo whether he heard, and else we might ask you to unmute again if he didn't hear. I thought it was either Unified Commerce or CapEx. That's a broad range, so let's start with Pieter. The question, is it embedded financial services where you feel the need to hire people? The answer is no. It's we're investing in all initiatives. That means that we build the teams out globally. We invest in all the different initiatives that we have, which means making sure that our online merchants get new functionality. We retrieve payment data. We make it more smooth. We look at risk and make sure that we have less false positives. There's constant investment. We invest indeed in Unified Commerce. We invest in platforms and off platforms. Embedded financial services is a part. We are also discussing now taking Unified Commerce live in other regions. We have, we set up development hubs and to develop that muscle that we can also have engineers in other regions is important. It's not so biased, and especially if you look at 2013 when we had a lot of engineers on getting point of sale live, this is different. This is scaling the company to bring it to its potential. Great. Thank you, Pieter. Ingo? Yeah. Let me start with the second question, if I'm not completely answering it, we'll give you a second try. I think the way we look at Unified Commerce and the way how we've built our terminal business, of course, we had some limitations in the supply chain earlier. We were also dependent upon a single provider or a single vendor. That's why we already some years ago decided, okay, we need to go for a multi-vendor strategy and preferably also develop or design terminals ourselves to make sure that we cater for the needs of our merchants. We've built terminals that are in line with those needs. We have them available, that's not a restriction any longer to grow Unified Commerce. From that perspective, the situation where there were some limitations, that's over. It is really about making sure that we have the right rollout plans with our customers and making sure that terminals then get to stores. So far we feel in a very good position to further roll out with our customers. Great. Thank you. I think we can move on to the next questions. Next up on the line is Antonin Baudry from HSBC. Antonin, please go ahead and unmute yourself to ask your questions. Yes, thank you very much, Sanne. Hi, Pieter. Hi, Ingo. My question is about evolutions of the competitive landscape. We saw that Stripe, one of your competitor, signed partnership with Amazon in Europe and the U.S. This is a contract that you could have typically won, especially as you already partner with Amazon in some geographies. Do you see a change in the competitive landscape? Do you see more pressure from some of your competitors to penetrate this enterprise segment, especially with some pressure on prices? Thank you. Thanks for that question. Ingo, if you could speak to the overall competitive landscape, Antonin also asked about our relationship with Amazon. I think in general, the competitive landscape is not really changing. Of course, there is, if you look at in general large players, they typically work with multiple providers. There's always deals that we would like to have. At the same time, we focus on the deals that we have won and deliver the best quality on it. In that sense, there is not a lot has changed. Going forward, I think if you look at new players, like most of the industry is still with the traditional banks. If you look at the opportunity that we have in Unified Commerce, most of that is to win from traditional banks. If you look at online players, a lot is to win from, the incumbent players, that still have significant volumes, that's what we, what we focus on. Clear. Thank you. Think we have answered your questions there. Next up on the line is Sébastien Sztabowicz from Kepler Cheuvreux. Sébastien, please go ahead and unmute yourself to ask your questions. Yeah. Hey, everyone, and thank you for taking the question. On Unified Commerce again, the volumes are ramping up quite rapidly, and you are now moving to new markets, Japan and Mexico. Could you please help understand what is the competitive landscape in this new geography? Do you see new competitor in Mexico and Japan? On the capital allocation strategy, you have now a bit more than EUR 2 billion in terms of net cash position at the end of 2022. Could you remind us a little bit the capital allocation strategy? What do you plan to do with your cash going forward? Thank you. Thanks for your questions. Pieter, if you could take the first one on the competitive landscape at global scale on Unified Commerce. Ingo, the second question on the capital allocation will come your way. Yeah. If you see how much experience we build up in Unified Commerce over the last years, if we bring it to new markets, we're very far ahead. The challenge in a new market is that you don't are established as a brand yet. banks and merchants have relationships which you don't switch overnight. We know that, so that takes time. but it's not that we are, that there are other companies providing that. It is, it also works as they do it. It's just way more operationally efficient to work with us, and there are sales that's lost by not doing it. At a certain point, there's a tipping point that merchants say, "Yeah, I'm gonna switch now," that doesn't happen the day it becomes available at the market, at least for some, but not as quickly as you would dream. It's a long-term effort, for sure. Ingo, a second question on our capital allocation strategy. Would you take that one? Sure. We indeed have a significant cash position that helps us to grow the business. We're still in investment mode. It helps to have a significant cash balance in discussions with regulators. It helps us with discussions with merchants. We have a A- rating with S&P, so it also says a lot about our financial stability. In the end, that's ultimately what we're selling. We're selling trust to our customers. Having this financial stability helps us a lot. That's why we continue with this strategy for now, and we will revisit at a later stage. Great. Thank you. I think it's time for us to move on to the next question, which is Lisa Ellis from MoffettNathanson. Lisa, please go ahead and unmute yourself to ask your questions. Good morning. thanks for having me on. I'm delighted to be joining. I had one related to the deceleration in processed volume growth that we see from 1H to 2H, excluding the impact of eBay in there. Was most of this deceleration driven by a slowdown or moderation in e-com spending, or are you seeing some other dynamics out there in the market, such as a slowdown in customer decision-making or the slowdown in customer rollouts of your implementations or an increase in competitive environment? just can you unpack a little bit that deceleration in volume? Thank you. Thank you, Lisa. This is our final question. On the final question of the day, I think I'm gonna send it over to Ingo, and then afterwards we're going to wrap it up. Yeah. If you think about the volume growth on our platform, for an important part of, is the volume growth dependent on rollouts of new merchants. For instance, for point of sale, there's not a lot of rollouts in the second half of the year, specifically not in Q4. That's a trend that we see. I think other trends are not really visible, so we are still very much convinced that we can continue the growth on our platform. That's also why we keep reiterating our guidance on revenues. There are no, yeah, big underlying trends that I can highlight. Thank you. With that, it was our final question. It was a pleasure having you. It was a pleasure being here with Pieter and Ingo today. Also on behalf of Steven, the rest of the team, we'd like to thank you for dialing in today, sending in your questions. Thank you.