According to an IBISWorld report published last year, the online payment processing software market in the US has grown 7% annually over the period 2012 through 2017 to $20 billion. Amsterdam-based Adyen is a Billion Dollar Unicorn club member in this space, one of the few European Unicorns that have crossed the threshold.

Adyen’s Financials

Adyen was founded in 2006 by Pieter van der Does and Arnout Schuijff to deliver a solution that would offer more flexibility and transparency to e-commerce transactions. Adyen offers an online payment service that enables businesses to use either hosted payment pages, encrypted solutions on their website, or direct APIs to process payments from their customers. There are as many as 250 payment methods supported through Adyen hosted on a business’ site, mobile pages, and physical stores. Besides payment solutions, Adyen also provides analytics and risk management capabilities. Today, Adyen has more than 4,500 customers globally with names like Etsy, Facebook, Netflix, L’Oreal SA, and Burberry Group, to name a few.

Adyen earns revenues by charging a processing fee and a payment method fee per transaction. Its impressive product has helped drive strong revenues. While Adyen does not disclose financials often, last year, it had published its fiscal 2016 results. Revenues for the year grew 99% to $727 million. In 2015, Adyen had earned $365 million in revenues. Adyen processed $90 billion in transactions, recording an 80% growth over the year. Revenues net of transaction costs grew 65% to $178 million. Adyen is estimating similar growth for fiscal 2017. EBITDA came in at $87 million for 2016 compared with $46 million recorded a year ago. Adyen has been profitable since 2011.

Adyen has been venture funded so far and has raised $266 million from investors including Temasek Holdings, Felicis Ventures, and General Atlantic. Its last funding round was held in October 2015, when it raised an undisclosed at a valuation of $2.3 billion. Earlier rounds had valued the company at $1.5 billion. Analysts would like Adyen to list, but the company has no plans of listing this year.

Adyen’s Product Expansion

Adyen has expanded its services through MarketPay, a flexible end-to-end payments solution that allows online marketplaces to control the full payment stack, own the customer experience, easily sign up and pay out sellers, and expand into new markets. MarketPay is focused on marketplaces and offers a scalable solution that can operate both domestically and internationally. Adyen performs automated screening to verify individual sellers so that they can immediately start selling in the marketplace. It is also able to split funds between one or more sellers and deduct different costs for the marketplace, including commission, platform usage, or payment fees to enable the seamless distribution of funds. Additionally, it enables scheduled and on-demand payouts directly to sellers’ local bank accounts and adheres to the EU payments directive, PSD2, to ensure regulatory compliance.

Adyen is also growing its international footprint. Last year, it acquired licenses for Visa and Mastercard transactions in Singapore. Singapore is part of Adyen’s strategy to focus on the rapidly growing Asia Pacific market.

There is a lot of consolidation happening in the European online payment space. Last year, Vantiv Inc. agreed to buy e-commerce payments company Worldpay Group Plc for an estimated $11 billion. Another transaction was that of the US private equity firm Hellman & Friedman LLC buying out Nets A/S for about $5.3 billion. There was also speculation of PayPal wanting to buy Adyen, but Adyen has maintained that its desire is to remain an independent company.

Questions for the Adyen Board

The company is profitable and delivering substantial revenues and good growth. In this era of late-stage hyper funding, I would say that Ayden has avoided corrupting its cap table by taking in exorbitant amounts of capital at ridiculous valuations. Thus, the option of a healthy IPO or a healthy exit through acquisition are both viable.

Shall we then read the reluctance to go public as an indicator that the Board is leaning towards the acquisition path?