Latest / The Dutch Investors / #55 | Inside Adyen's HQ | About its moat, culture and competition | An interview w/ Tarik Manfrinato and Maggie O'Donnell

Transcript

#55 | Inside Adyen's HQ | About its moat, culture and competition | An interview w/ Tarik Manfrinato and Maggie O'Donnell · The Dutch Investors

0:01
SPEAKER_03: Hi guys.
0:02
SPEAKER_03: Welcome to another episode of The Dutch Infestive.
0:05
SPEAKER_03: My name is Bauke and I'm co-founder and analyst at TDI.
0:09
SPEAKER_03: Today we have two very special guests.
0:12
SPEAKER_03: I'm delighted to be joined by Tarek Manfinato and Maggie O'Donnell.
0:17
SPEAKER_03: Agen is a global fintech powerhouse, enabling seamless payments for the world's biggest companies.
0:22
SPEAKER_03: From online to in-store, it offers a unified platform trusted by companies like Meta, Spotify, and Nike.
0:29
SPEAKER_03: Agen removes payment friction and boosts conversion rates.
0:32
SPEAKER_03: With its gained banking licenses and in-house-built infrastructure, Agen is processing payments in over 100 countries all over the globe.
0:40
SPEAKER_03: In this interview, we will discuss Agen's competitive position, the process of scaling, culture, and a little bit behavioral finance.
0:49
SPEAKER_03: Without further ado, let's begin with the interview.
1:07
SPEAKER_03: So welcome to our podcast, Derek and Maggie.
1:10
SPEAKER_03: It's an honor to have you here.
1:12
SPEAKER_03: Maggie, could you please briefly introduce yourself and what your role is at ADI?
1:16
SPEAKER_00: Sure, yeah.
1:16
SPEAKER_00: Thanks for having both of us.
1:17
SPEAKER_00: We're super excited to be part of this podcast.
1:20
SPEAKER_00: Um, my name is Maggie O'Donnell.
1:22
SPEAKER_00: I'm on the investor relations team here at Audion.
1:25
SPEAKER_00: Um, I'm part of a team of two, but it's kind of expanded.
1:28
SPEAKER_00: There's investor relations and corporate comms.
1:30
SPEAKER_00: We work super closely together to help tell the story of the company.
1:33
SPEAKER_00: My day-to-day is mostly talking to investors one-on-one, answering questions that they have about strategy, financials, uh, products, uh the competitive landscape, whatever might be on their minds, whether it's trying to update a model that they have or just get comfort around the position that they have in our stock.
1:54
SPEAKER_00: The other group of people that we talk to are our analysts.
1:57
SPEAKER_00: So these are the equity research analysts, the ones who um have research on the company, on the entire industry.
2:04
SPEAKER_00: Um, and we just help make sure that they understand us uh as well as they can.
2:09
SPEAKER_00: That's really the day-to-day.
2:10
SPEAKER_00: We also work on earnings um every quarter, every half year, uh, everything that goes into the script, shareholder letter, um, and any other types of materials that we would share with the investors.
2:24
SPEAKER_00: So that's really the the gamut of of what we do.
2:28
SPEAKER_00: The way I kind of think about it is it's this is a cheesy way to explain it, but it's almost like the the window to Wall Street, which is that like we are we give the company the view of what the financial community thinks, and we also give the financial community the view of what the management team thinks.
2:43
SPEAKER_00: So we're trying to kind of bridge that gap.
2:45
SPEAKER_03: Okay.
2:45
SPEAKER_03: Excellent.
2:46
SPEAKER_03: Thank you for uh for sharing that.
2:48
SPEAKER_03: Tarek, we have already met at the uh annual meeting last year.
2:51
SPEAKER_03: Yes.
2:52
SPEAKER_03: Could you please briefly introduce yourself as well?
2:55
SPEAKER_02: Yeah, very happy to.
2:56
SPEAKER_02: Uh thank you so much for having us in your podcast.
3:00
SPEAKER_02: Um uh my name is Tarek, as you said, or Tarek, I have no preference.
3:04
SPEAKER_02: Okay.
3:04
SPEAKER_02: Um uh and I am a part of the corporate communications team.
3:09
SPEAKER_02: Uh, the corporate communications team, as very well introduced uh by Maggie, uh, works very closely with IR indeed.
3:18
SPEAKER_02: And uh we are thinking about the strategy around communications, how we position a certain topic, or um how we can work together with IR to build a shareholder letter, to build the earnings call.
3:30
SPEAKER_02: Uh these are some of our key, let's say, deliverables as a team.
3:34
SPEAKER_02: We're mostly looking out for the broader reputation of AGIN as a company, right?
3:39
SPEAKER_02: Uh we can look at AGIN from many perspectives, like as a product, as a as a market leader in many ways, but also just as like this company corporation listed in the stock exchange.
3:50
SPEAKER_02: So, like, how do you position this entity externally?
3:54
SPEAKER_02: That's mostly what the corp comms team is looking at.
3:58
SPEAKER_02: Uh yeah.
3:58
SPEAKER_03: Okay, great.
4:00
SPEAKER_03: Uh if I'm not mistaken, you were born in Brazil.
4:02
SPEAKER_03: Yeah, at the other side of the Atlantic Ocean.
4:05
SPEAKER_03: How did you end up working for AGEN in Amsterdam?
4:07
SPEAKER_02: Yeah, good question.
4:09
SPEAKER_02: Uh indeed, I was born in Brazil.
4:11
SPEAKER_02: I am Brazilian.
4:12
SPEAKER_02: And uh I moved to the Netherlands six years ago to study uh first psychology and then went into neurobiology, neuroeconomics.
4:22
SPEAKER_02: And uh at some point through this process, I thought to myself, I don't want to be a therapist.
4:28
SPEAKER_02: I also don't think I want to be a researcher.
4:30
SPEAKER_02: So I want, and I used to tell people that I wanted an office job.
4:34
SPEAKER_02: I didn't did not know what that meant.
4:37
SPEAKER_02: Uh, and so I started to try to find a place where I could have the experience of working at a big company and just seeing if from there I could understand what I was passionate about.
4:48
SPEAKER_02: And ADN at the time had a very big uh working student program.
4:52
SPEAKER_02: Uh, and that's when I got into ADIN with uh a role in KYC, screening our merchants, making sure that um our customers were people very good to work with, and eventually migrated into corporate communications.
5:08
SPEAKER_03: Excellent.
5:09
SPEAKER_03: Maggie, back to you.
5:10
SPEAKER_03: You have been working for Agen for about a year now.
5:12
SPEAKER_03: Uh, what are your thoughts about the company culture?
5:15
SPEAKER_00: Yeah, it's a it's an incredibly unique culture.
5:18
SPEAKER_00: Um, it's similar to other tech companies I've worked for in that it's uh we are very fast-paced.
5:26
SPEAKER_00: We like to um think of a problem and try to solve it very quickly.
5:30
SPEAKER_00: We don't like to throw a lot of people at a problem.
5:31
SPEAKER_00: It's a very lean organization.
5:33
SPEAKER_00: Um, and it keeps us super nimble.
5:35
SPEAKER_00: Um, one thing that's interesting is that so we have this formula, we call it the Audien formula, and it's something that is a big part of the interview process.
5:43
SPEAKER_00: And other companies I've worked for, they have something like this on the website, and then it's never referred to again after your interview process.
5:50
SPEAKER_00: But this is actually something that recurs and comes up all the time.
5:53
SPEAKER_00: I have it in front of me because I think some of these are really cool.
5:56
SPEAKER_00: But there's there's eight main points.
5:58
SPEAKER_00: So it's we build to benefit all of our customers, not just one.
6:01
SPEAKER_00: We make good decisions and consider the long-term benefits for our customers, Adian, and the world at large.
6:06
SPEAKER_00: We launch fast and iterate, which is what I mentioned.
6:09
SPEAKER_00: Super, super clear.
6:11
SPEAKER_00: Um, winning is more important than ego.
6:13
SPEAKER_00: We work as a team across cultures and time zones.
6:16
SPEAKER_00: We don't hide behind email.
6:17
SPEAKER_00: Instead, we pick up the phone.
6:18
SPEAKER_00: Super true.
6:19
SPEAKER_00: Helps us move fast as well.
6:21
SPEAKER_00: We talk straight without being rude, which is part of just being a Dutch company.
6:25
SPEAKER_00: So it's very uh Dutch to do that.
6:27
SPEAKER_00: We seek out different perspectives to sharpen our ideas and we create our own path to grow towards our full potential.
6:33
SPEAKER_00: So those things like really actually exist in the work, the working day every day.
6:38
SPEAKER_00: Um, collaboration is a key thing.
6:40
SPEAKER_00: Like we're talking about IR and court comms working together.
6:43
SPEAKER_00: We'll try and solve similar problems and like it requires just a lot of collaboration, picking up the phone, working as a global team too is a challenge, but we can do it because of the way that this company is structured.
6:54
SPEAKER_03: I hear you.
6:55
SPEAKER_03: Do you believe this gives Agen an advantage in attracting top-tier talent?
7:00
SPEAKER_00: Yeah, I think so.
7:02
SPEAKER_00: Um, I think when you're trying to hire the best people and the most creative people, they want to be able to solve real problems.
7:10
SPEAKER_00: Like the the people who come to work here don't want to like sit at their computer and just you know do their job and sit in a spreadsheet all day.
7:19
SPEAKER_00: Like they want to like solve something.
7:20
SPEAKER_00: They want to talk to people, like they want to understand their customers, like they want to understand our product.
7:24
SPEAKER_00: And like that is just that kind of person is all over the place here.
7:28
SPEAKER_00: I think those are the kind of people that really make an impact.
7:31
SPEAKER_00: It definitely helps here in the Netherlands.
7:33
SPEAKER_00: We have this is the majority of our employees, but I think everyone here, like this is a place people want to work.
7:39
SPEAKER_00: Um, and I'm I'm based in the US, and it's a bit different there, but we are our reputation is is such that engineers and people who like really they know the tech world, they want to work for a great company like this that is solving problems that exist today.
7:56
SPEAKER_00: So yeah.
7:57
SPEAKER_03: Talking about making an impact, the Agen has some kind of rule that they uh donate 1% of their net revenues to charities.
8:06
SPEAKER_03: And that's that's an excellent example, I believe, where you put your money where your mouth is, you are actually making a good impact on the world, I believe.
8:15
SPEAKER_03: So yeah.
8:16
SPEAKER_02: I think the philosophy uh around the 1% is really that as our business continues to grow, right, we would like to leverage our growth as a multiplier effect to impact more and more people.
8:28
SPEAKER_02: And that's why our 1% fund is directly tied to the performance of our business, which is somewhat unique when you look at how other companies approach uh social responsibility, corporate social responsibility.
8:42
SPEAKER_03: Okay, let's dive a bit deeper into the product and the industry Agen is operating in.
8:47
SPEAKER_03: How would you compare Agen's product to those legacy providers?
8:52
SPEAKER_02: Yeah, um, so I think uh I have a funny anecdote on that one because uh when I first joined uh corporate communications, I uh I went to the sales team and I asked that exact question to them because I was trying to understand how our sales pitch worked.
9:06
SPEAKER_02: And he uh made the comparison of uh pitching uh an electric car, state of the art from the best electric vehicle brand that you can think of versus a um a car that's that's a little bit older, patched up uh by many years of maintenance.
9:24
SPEAKER_02: And I found that to be like uh, oh wow, uh an Aegean uh sales guy is uh positioning himself as a sale, a car salesman, right?
9:33
SPEAKER_02: Um But um uh I think to that, uh what he meant by that is really related to how we have built our technology in-house.
9:43
SPEAKER_02: We have established a single tech stack for our single platform.
9:47
SPEAKER_02: We're able to build with the knowledge of a team in-house.
9:53
SPEAKER_02: We really grow through research and development, and we're not just trying to solve for a very we we solve for an environment just made out of patched up uh many, many stakeholders, many different companies trying to create a single stream, and we're able to bring this funnel fully in-house and really be the end-to-end provider of uh payments and uh other financial services more and more.
10:17
SPEAKER_03: I believe that will result in eventually better authentication rates and uh higher approval rates.
10:24
SPEAKER_03: Is that true?
10:25
SPEAKER_02: Yeah, I mean, uh our numbers speak for themselves, uh, Maggie.
10:30
SPEAKER_00: Yeah, yeah, for sure.
10:31
SPEAKER_00: So I think one's one thing that's fascinating about us versus like the legacy players are like the banks mostly.
10:37
SPEAKER_01: Yeah.
10:38
SPEAKER_00: They don't have this tech focus and they don't have the amount of data we have.
10:41
SPEAKER_00: And the fact that we have this one single tech stack that just continues to teach itself.
10:45
SPEAKER_00: It's a machine learning model that like can continuously get smarter.
10:49
SPEAKER_00: Chase Payments doesn't have that.
10:51
SPEAKER_00: Like they don't have that kind of a thing.
10:53
SPEAKER_00: So we are we're able to use that data to increase conversion, increase authorization rates, lower fraud, and lower costs.
11:03
SPEAKER_00: So the amount of data that we have, the way that we're able to interpret it, is something that the legacy players just won't be able to recreate.
11:11
SPEAKER_03: Okay, that's clear.
11:13
SPEAKER_03: Then how would you compare your product to those of uh so-called non-legacy providers?
11:19
SPEAKER_03: I mean dozens of players in this market, uh, let's say Stripe, BrainTree, Molly, they are all non-legacy providers.
11:27
SPEAKER_03: What makes your product exceptional?
11:29
SPEAKER_02: Well, uh there are many different ways.
11:32
SPEAKER_02: And looking specifically at the ADN strategy, how we grow and how we develop, I really like the fact that we grow through research and development and not through mergers and acquisitions.
11:43
SPEAKER_02: Uh, this has historically been the way we've always approached it.
11:46
SPEAKER_02: And it just creates a much more reliable and unified form of uh tech stack.
11:53
SPEAKER_02: And uh that leads us to be able to solve for complexities and build for complexities of huge enterprise merchants, which historically has always been our focus.
12:03
SPEAKER_02: And then now that we would like to expand and look at different tail ends of the spectrum of uh uh customer sizes, we are we have all of this in-house already.
12:13
SPEAKER_02: We have this all ready to be deployed and to be fit under different uh circumstances.
12:19
SPEAKER_02: So I that's one thing I would call out.
12:22
SPEAKER_02: Maybe Maggie also has different uh views.
12:24
SPEAKER_00: Yeah, I mean that's definitely uh it's there are a couple of few, a couple of big points in there.
12:29
SPEAKER_00: Like not doing MA makes us it you have one single tech stack again.
12:34
SPEAKER_00: One of the best things about it.
12:35
SPEAKER_00: Um we work in enterprise level so we can support the biggest companies in the world.
12:40
SPEAKER_00: It also gives us the most shopper data because we're working with the you know, the Ubers of the world.
12:46
SPEAKER_00: We we have that information that we can then use to make our system smarter.
12:52
SPEAKER_00: One other thing I would say about what differentiates us is just like the culture in general here.
12:58
SPEAKER_00: We are not a showy, we're not a Silicon Valley company.
13:02
SPEAKER_00: We like to build for what our merchants want.
13:04
SPEAKER_00: We're focused on our merchants, like that is the core of what we do.
13:08
SPEAKER_00: Once we build something great, we'll talk about it, but we're not like gonna come out and talk about things before they're ready.
13:14
SPEAKER_00: And I think that's a really interesting part of the culture here and something that's super unique.
13:18
SPEAKER_03: Okay.
13:19
SPEAKER_03: Okay.
13:20
SPEAKER_03: Another question.
13:21
SPEAKER_03: How should investors interpret the declining take rate?
13:24
SPEAKER_03: Uh, should we consider this as a strength uh or as a weakness, or perhaps something that's just common within the payment service providers market?
13:32
SPEAKER_03: Please explain that to us.
13:33
SPEAKER_00: Yeah.
13:34
SPEAKER_00: Well, so first what I'll say is that we don't manage to take rate.
13:38
SPEAKER_00: So what we focus on as a business, like the KPI we're most trying to drive, is net revenue.
13:43
SPEAKER_00: So incremental net revenue dollars.
13:46
SPEAKER_00: Volume is something that we have less control over.
13:49
SPEAKER_00: Um, we we like to have investors kind of focus on on net revenue.
13:54
SPEAKER_00: Take rate will decline over time as we get bigger and bigger and more and more wallet share with our customers.
14:02
SPEAKER_00: So we have a tiered pricing model, which essentially says that as they hit a certain threshold, they have more volume with us, their price comes down.
14:09
SPEAKER_00: So a declining take rate is really just an example of how our our customers are continuing to grow.
14:17
SPEAKER_00: So I think by itself, it actually is okay.
14:20
SPEAKER_00: There are other factors as well.
14:21
SPEAKER_00: Like sometimes there's a big customer that leaves.
14:24
SPEAKER_00: Um, you know, there's also the offsetting factor of like, well, we have new merchants come on the platform, they often have a higher take rate, so that can offset it a little bit, but declining take rate overall is proof that we are helping our customers grow faster.
14:36
SPEAKER_03: Okay.
14:37
SPEAKER_03: On the other side, do you believe Agen has pricing power, or is raising prices something Agen isn't prepared to do?
14:43
SPEAKER_02: Um, I think pricing is directly tied to our value proposition.
14:48
SPEAKER_02: And I think uh we we've seen uh the market react to this, right?
14:53
SPEAKER_02: What we're mostly focused on is total cost of ownership.
14:56
SPEAKER_02: Perhaps there is a price difference between us and uh other players in the market, but when we're able to deliver value and we're able to show them that end-to-end in the payment funnel, they are saving money.
15:10
SPEAKER_02: Specifically, what they are spending on is not necessarily the biggest issue if at the end of the day, we are the most cost-effective alternative.
15:19
SPEAKER_02: And I think we are more and more convincing the customers and the market of this reality.
15:26
SPEAKER_02: I'd love to also hear Maggie's thoughts.
15:29
SPEAKER_00: Yeah, definitely.
15:30
SPEAKER_00: It it's it's super true.
15:31
SPEAKER_00: I think, and this might answer your next question, but a couple of years ago, we we saw some pricing pressure from one of our biggest competitors.
15:39
SPEAKER_00: Um, they really underput us on price.
15:41
SPEAKER_00: And we stood true to always pricing for value.
15:44
SPEAKER_00: We didn't lower prices to try to match it.
15:46
SPEAKER_00: Um, we want to work with customers who understand that payments are an enabler to growth.
15:51
SPEAKER_00: And if you're working with the right company who's like giving you more innovations over and over, that it's gonna give you more value overall.
15:59
SPEAKER_00: And what we actually saw, so this is like summer of 2023, we really saw a lot of our big customers move share to another provider.
16:06
SPEAKER_00: And since then, we have gotten better at our sales pitch.
16:09
SPEAKER_00: So we're really trying to talk about total cost of ownership.
16:12
SPEAKER_00: We hired a lot more salespeople.
16:14
SPEAKER_00: We've also improved the product to help showcase what we're talking about.
16:17
SPEAKER_00: And what we've actually saw is that when that competitor started raising prices again, those customers all came back.
16:24
SPEAKER_00: So it I think that is just a testament to the strength of what we're trying to do here and the fact that us sticking to this pricing for for value only is really what's going to continue to help us win.
16:38
SPEAKER_03: So if I understand it correctly, Agen isn't willing to uh decrease the price if competitors will do that.
16:45
SPEAKER_01: Correct.
16:46
SPEAKER_03: Okay.
16:46
unknown: Okay.
16:48
SPEAKER_03: So what makes Agen actually with customer deals?
16:51
SPEAKER_03: Uh, what are the unique selling points compared to other PSPs or fintechs, as you may call it?
16:57
SPEAKER_02: I mean, total cost of ownership.
16:59
SPEAKER_02: I think we've touched upon a few of these, right?
17:01
SPEAKER_02: Uh the customers look at us and our ability to be fully licensed, a fully licensed bank in so many geographies, the regulatory uh investments that we have made to be able to expand our offering into so many different types of products, especially because we are a bank, but also because we are a tech-first uh company.
17:22
SPEAKER_02: This is a great differentiator and it's what uh many, many players are looking for.
17:28
SPEAKER_02: Uh, the way we can grow with our customer in different geographies and help them expand, you know, especially when let's say a new retailer is looking at a new market that they have no experience in.
17:39
SPEAKER_02: The last thing they want to be thinking about is like how how are how are we going to deal with our financial transactions there and like uh deal with payments there?
17:49
SPEAKER_02: So uh they already are looking at too many other complexities.
17:52
SPEAKER_02: So there's a really great way in which we win new new geographies with merchants or new merchants in general.
17:59
SPEAKER_03: Okay, excellent.
18:01
SPEAKER_03: So, how would you describe a gen's competitive advantage?
18:04
SPEAKER_03: Uh, would you say it's academic of scale, network effects, maybe uh intellectual property, patents, uh maybe switching costs.
18:11
SPEAKER_03: Could you elaborate?
18:12
SPEAKER_00: Sure.
18:13
SPEAKER_00: Yeah.
18:13
SPEAKER_00: It's a little bit of all of those things.
18:15
SPEAKER_00: So I think maybe the best way to think about it when we talk about our competitive moat, we think about the three different pillars that we operate in.
18:21
SPEAKER_00: So there's digital, which is gonna be like tech companies, um, content and subscriptions, online retail, delivery mobility, those all fall into digital.
18:31
SPEAKER_00: Unified commerce is the the omnichannel solution.
18:35
SPEAKER_00: So, you know, small format retail, food and beverage, hospitality, something where there's an in-person component and an online component.
18:42
SPEAKER_00: And then platforms is where we um we work through like a SaaS platform and try to deliver to sub-merchants without having to actually go to them directly.
18:50
SPEAKER_00: So the platform addresses it for them.
18:54
SPEAKER_00: The thing, so on digital, the moat, the competitive moat really is that we have the best technology.
19:01
SPEAKER_00: So digital customers are more likely to have more than one provider.
19:05
SPEAKER_00: The reason that they would use us for the majority of their volume is because we're able to help them with conversion, fraud, and cost.
19:12
SPEAKER_00: And we can do that because of the technology.
19:15
SPEAKER_00: Um, the system we built is is incredibly strong.
19:18
SPEAKER_00: It's really hard to replicate.
19:19
SPEAKER_00: Um, we've been doing this for a long time and the system gets smarter over time.
19:23
SPEAKER_00: So on that side, it really is just it's it's a bit, I guess, economies of scale, but it's also just the technology itself.
19:30
SPEAKER_03: Perhaps a superior product.
19:31
SPEAKER_00: Superior product, exactly.
19:33
SPEAKER_00: Exactly.
19:34
SPEAKER_00: Unified commerce, this is a bit more interesting because we have a higher share of wallet with those customers and they are stickier over time.
19:42
SPEAKER_00: Like we could get to a hundred percent share of wallet with most customers because once they start having the in-person component, once they have the terminals in store, they're more likely to use us for both online and offline.
19:55
SPEAKER_00: It just makes it for a better um uh experience for their customers.
20:00
SPEAKER_00: Um, and once they once they make the investment in the terminals, they are probably not going to switch to another provider.
20:05
SPEAKER_00: So on that front, it's switching costs.
20:07
SPEAKER_00: On the platform side, it's again about technology, but this is where the banking licenses really come into play because we can help those customers um with embedded financial products, which is like the next leg of what we're helping them do, which is like drive more revenue.
20:22
SPEAKER_00: We're helping, we're helping our customers build more revenue streams.
20:26
SPEAKER_00: And so by adding to the product and having a better product for them, they become stickier over time as well.
20:32
SPEAKER_00: So we continue to win in that area too.
20:34
SPEAKER_03: Banking licenses are for the platform customers a very uh key benefit.
20:40
SPEAKER_03: Yes, absolutely.
20:41
SPEAKER_02: Okay, we can help them become fintechs through that, right?
20:44
SPEAKER_02: Uh it's an extremely costly investment to get a banking license.
20:49
SPEAKER_02: We've always prioritized this.
20:50
SPEAKER_02: Uh, and so for uh a small startup, a small platform that's just trying to have a really innovative piece to embed itself in the platform and benefit from that, it's really revolutionary for them.
21:03
SPEAKER_03: Okay, clear.
21:04
SPEAKER_03: Let's say it's the year 2040, so 15 years into the future.
21:09
SPEAKER_03: Uh, where do you believe AGEN stands at that time from a product size and cultural standpoint?
21:14
SPEAKER_02: Well, uh it's it's it's difficult to gaze into the future that much, but I think our vision is clear, right?
21:22
SPEAKER_02: We've only just begun.
21:23
SPEAKER_02: Uh, in many markets where we prioritize and that our strategic markets for us, our market share is still in the single digits.
21:32
SPEAKER_02: Uh, we have only just begun uh rolling out some very interesting products, which Maggie can talk uh best to.
21:41
SPEAKER_02: Um so it's about uh helping our customers, it's about continuing to expand with our customers and continuing to execute on our vision.
21:52
SPEAKER_02: I think Maggie touched upon how uh remaining true to our original Dutch core were quite low key.
22:00
SPEAKER_02: And we're trying to not overpromise and underdeliver with flashy new things, but actually sticking to what we're very good at and continue to grow in that direction, right?
22:11
SPEAKER_02: But that is not to say that we don't have really exciting stuff.
22:14
SPEAKER_02: I mean, staying close to Adian, being an ADN customer really is that subscription to innovation.
22:19
SPEAKER_02: So every year that goes by, every expansion, every iteration of our platform is more innovation and growth for us and for our customers.
22:30
SPEAKER_01: Okay.
22:31
SPEAKER_00: Only thing I'll add to that is um in terms of like company size and like what our culture will become.
22:36
SPEAKER_00: I mean, I think we're going to continue to become more and more global over time.
22:40
SPEAKER_00: Um, but we're also going to try to stay true to our roots.
22:43
SPEAKER_00: And one of those things is not throwing people at problems and trying to make the product smarter so that we don't have to hire tons and tons of salespeople, tons of customer support, and tons of engineers to continue to grow.
22:56
SPEAKER_00: So the platform strategy is a big part of that.
22:58
SPEAKER_00: So instead of us going to every cafe in Amsterdam and trying to sell our product, we can go through a platform customer and we just support that platform customer.
23:08
SPEAKER_00: And then the platform customer talks to the cafes.
23:10
SPEAKER_00: And so we don't then have to hire all those people.
23:12
SPEAKER_00: We just have to have the best product.
23:14
SPEAKER_01: Yeah.
23:14
SPEAKER_00: One example.
23:15
SPEAKER_00: That's one example.
23:15
SPEAKER_00: The other is like uplift, which is one of our newer products.
23:19
SPEAKER_00: That is a way for us to funnel new products and innovations to our merchants.
23:25
SPEAKER_00: So we're using some of it is a bit of AI where we're making recommendations, but some of it is just showcasing our product suite so that we don't have to make sales calls and try to say, hey, have you heard of the next new thing?
23:37
SPEAKER_00: Like it's a system that's already built.
23:39
SPEAKER_00: So it just makes it more efficient for us over time.
23:42
SPEAKER_00: So we don't have to double, triple, quadruple the size of this business or of the employee base to do the same for revenue.
23:49
SPEAKER_00: Revenue will grow with leverage over time.
23:51
SPEAKER_03: Yeah.
23:52
SPEAKER_03: What you just said about the uh platform customers, if I believe correctly, if I understand correctly, agenda is the infrastructure, the platform is the middleman, and the cafe or the coffee shop at the corner is the end customer.
24:06
SPEAKER_00: Yeah, that's the right way to think about it.
24:08
SPEAKER_00: Yeah.
24:08
SPEAKER_03: Yeah.
24:08
SPEAKER_03: Okay.
24:09
SPEAKER_03: Okay.
24:09
SPEAKER_03: All clear.
24:11
SPEAKER_03: So let's infer it now.
24:12
SPEAKER_03: What do you believe are the biggest challenges you envision for the next 10, 20 years?
24:18
SPEAKER_00: Yeah, I think our biggest challenge is our own execution.
24:21
SPEAKER_00: That's what we worry the most about.
24:23
SPEAKER_00: Obviously, there's there's market growth overall.
24:27
SPEAKER_00: Like our customers need to grow.
24:29
SPEAKER_00: The economy needs to grow for us to grow.
24:31
SPEAKER_00: That's a part of our growth.
24:33
SPEAKER_00: But the other biggest buckets, the biggest contributors of our growth are expansion of share of wallet, um, getting new logos and new wins, and ramping last year's group of customers.
24:46
SPEAKER_00: Those things are going to continue to be driven by us executing and not getting distracted by the new trendy thing.
24:54
SPEAKER_00: Um, so we just need to continue to function at the at the speed that we are right now.
24:59
SPEAKER_00: The other thing that I think is key is that so the next leg of our growth is um embedded financial products.
25:06
SPEAKER_00: That is the new, it's the next thing, it's the next um growth driver that hasn't really taken off yet.
25:14
SPEAKER_00: That is critical for us.
25:15
SPEAKER_00: And so that's a big challenge.
25:16
SPEAKER_00: Just making sure that goes that goes to plan and that we continue to roll that out and that it becomes a big part of our story over time.
25:22
SPEAKER_00: I think that's a big challenge for us.
25:24
SPEAKER_03: In how many years do you believe embedded finance will really contribute to the revenue of agile?
25:30
SPEAKER_00: So it's contributing today.
25:32
SPEAKER_00: We are seeing some progress.
25:34
SPEAKER_00: Um, issuing is one where we've had some pretty significant milestones in the last half, H1 2025, we hit 2 billion euros in volume for the half, which is a milestone for us on issuing.
25:47
SPEAKER_00: But still, in terms of contribution, it's small.
25:50
SPEAKER_00: Um, I would say this is like five to 10 years out in terms of major contribution.
25:55
SPEAKER_03: Okay.
25:55
SPEAKER_03: Uh at the 2023 Investor Day agenda shared the expected growth in platforms is highest of all three pillars.
26:02
SPEAKER_03: So when we extrapolate this, we can expect platforms to be at least as big as Unified Commerce or digital.
26:08
SPEAKER_03: But what comes after platforms?
26:12
SPEAKER_02: I wouldn't necessarily look at it from that specific perspective.
26:16
SPEAKER_02: Uh, it's not when we look at our offering, right?
26:19
SPEAKER_02: We can we can touch upon the entirety of what our customers and the global uh players that are moving money around need, right?
26:27
SPEAKER_02: We have the platforms that help us reach the small cafes.
26:30
SPEAKER_02: We have digital for online retail, for subscriptions, we have unified commerce for the connection between in-store and online purchases.
26:39
SPEAKER_02: I would say ADIAN continues to innovate in ways of optimization, uplift, embedded financial products.
26:48
SPEAKER_02: So I do think to answer your question, embedded financial products is definitely the direction for additional growth, more innovation, but we're also refining our capabilities.
26:59
SPEAKER_02: We're making our platform more intelligent, we're leveraging the data that we have in our platforms to be better at what we do and uh have more creative product offerings.
27:09
SPEAKER_02: But we, in terms of what we offer and who we can touch with our offering, we're quite uh complete with our product suite.
27:18
SPEAKER_03: Okay.
27:18
SPEAKER_03: Okay.
27:19
SPEAKER_03: If I understand correctly, you uh mainly believe it's uh your core product.
27:24
SPEAKER_03: So let's say payment processing and value-added services like embedded finance uh solutions, uh agent uplift.
27:32
SPEAKER_03: Is that correct?
27:33
SPEAKER_02: Well, the uh agent uplift is an optimization, so it's uh taking this core offering and making it better, more intelligent, more efficient, increasing approval rates, auth rates, et cetera.
27:44
SPEAKER_02: Um, there is innovation through new ways of leveraging this platform, our banking license through embedded financial products.
27:52
SPEAKER_02: What I tried to convey uh with my previous uh uh uh speech is that I uh I see that in terms of like core product offering, like we're not going to create an innovative new way to reach a customer that doesn't exist yet.
28:08
SPEAKER_02: Let's let's put it that way.
28:09
SPEAKER_02: So uh that's what I meant.
28:11
unknown: Okay.
28:11
SPEAKER_03: Okay.
28:12
SPEAKER_03: One thing that's extremely hard to assess from an investor's point of view is the quality of Agen's code and product.
28:19
SPEAKER_03: How can investors evaluate this?
28:21
SPEAKER_03: Uh, how difficult do you believe it is to replicate Agen's code or product?
28:26
SPEAKER_00: Yeah.
28:27
SPEAKER_00: So the way that we think about it, I think I kind of alluded to this before, but it's the fact that our infrastructure has been built on this one single platform.
28:36
SPEAKER_00: It is a machine learning platform.
28:38
SPEAKER_00: It is teaching itself how to be smarter, it is adding data to itself over time.
28:43
SPEAKER_00: And if someone were to kind of come out and try to recreate that tomorrow, it's going to take them the same amount of time to get to where we are today.
28:51
SPEAKER_00: So this is years and years worth of shopper data and understanding of what our customers are doing.
28:57
SPEAKER_00: Um the thing I would, I mean, that's just that's the structure of it.
29:03
SPEAKER_00: And like I think that's just hard to replicate.
29:05
SPEAKER_00: What I would recommend, there is a blog that we actually have.
29:08
SPEAKER_00: It is like a it's an AI focused blog.
29:11
SPEAKER_00: It's an engineering blog.
29:12
SPEAKER_00: Um, I think we don't point investors to it enough, but it's on the Audien website.
29:17
SPEAKER_00: There is a a post that's about how how we use AI in general.
29:21
SPEAKER_00: And like those kinds of posts, I think would would really clarify a lot of this for investors.
29:26
SPEAKER_00: It's beyond my pay grade to explain all of the structure of how AI works, but this uh those blog posts are really, really helpful.
29:34
SPEAKER_03: Yeah.
29:35
SPEAKER_03: Okay.
29:36
SPEAKER_03: Okay, that's a good uh good advice.
29:38
SPEAKER_03: Thank you.
29:38
SPEAKER_03: Yeah, Terek, yeah, back to you.
29:40
SPEAKER_03: If I did my research right, you studied psychology and neuroeconomics in Amsterdam.
29:46
SPEAKER_03: Uh, your thesis was about group decision making.
29:49
SPEAKER_03: Uh, are there any insights from your study that might be interesting for investors?
29:54
SPEAKER_02: Oh, yeah.
29:55
SPEAKER_02: Um, well, my my thesis was on uh political decision making, which is a little bit different, but uh ultimately it's about directing resources in one way or the other.
30:04
SPEAKER_02: So that's the that's interesting.
30:06
SPEAKER_02: Um, I would say to that that uh indeed I know that there is a segment of people that try to look at the markets from a perspective of greed and fear.
30:17
SPEAKER_02: And uh a lot of people touch upon prospect theory to try to anticipate how people are going to react to potential losses, to potential gains.
30:28
SPEAKER_02: Um and yeah, I can imagine that there is a world in which this information is helpful.
30:33
SPEAKER_02: But now stepping completely away from my role at Agin and just uh talking about how I see this stuff very personally is that uh I take a very um uh when I think about investing, and I don't do this to any large degree or anything like that.
30:50
SPEAKER_02: And it's uh I just think it's cooler to look at a company's story, look at a company's strategy, and uh try to see if that's something that you believe in and resonate instead of trying to think about a greedy market or like uh timing the market, et cetera.
31:07
SPEAKER_02: Just my my conclusion from my uh psychology degree is that don't necessarily try to uh psychoanalyze investors.
31:18
SPEAKER_02: I guess that would be my what I would say to that.
31:21
SPEAKER_02: Maggie, would you would you like to say anything?
31:24
SPEAKER_00: That's great.
31:24
SPEAKER_00: I think what's funny, investors try to psychoanalyze us.
31:27
SPEAKER_01: Yeah, yeah, yeah.
31:28
SPEAKER_01: That's definitely good.
31:29
SPEAKER_00: There's a lot of psychology going around.
31:31
SPEAKER_00: Uh I I was mentioning that I think some hedge funds, it seems like they type like CIA training.
31:38
SPEAKER_00: He was just saying something.
31:40
SPEAKER_03: Okay.
31:40
SPEAKER_03: Yeah.
31:41
SPEAKER_03: Uh any last uh words from you, any things we haven't yet yet touched upon you want to share?
31:48
SPEAKER_02: I have a question for you.
31:49
SPEAKER_02: Okay.
31:49
SPEAKER_03: Are you familiar with the agent formula?
31:51
SPEAKER_02: Do you have a favorite formula point?
31:53
SPEAKER_03: Oh, that's a great question.
31:55
SPEAKER_03: Uh, I am actually familiar with it.
31:57
SPEAKER_03: Uh my favorite point is the principle we pick up the phone, uh, we don't hide behind email.
32:04
SPEAKER_03: So uh that is way more efficient.
32:07
SPEAKER_03: The message comes across way more effectively, and that's something a lot of companies don't get leverage, don't yet use, uh, but I gen does, and that's uh that's my favorite.
32:18
SPEAKER_03: That's an awesome one.
32:19
SPEAKER_02: Just showing up to people's desk.
32:22
SPEAKER_02: As you did as you did, yeah, just showing up.
32:25
SPEAKER_00: Yeah, cool.
32:26
SPEAKER_02: Maggie?
32:27
SPEAKER_00: Oh, what's my favorite?
32:29
SPEAKER_00: Or what's my favorite?
32:30
SPEAKER_00: I'm gonna answer the formula point question.
32:32
SPEAKER_00: My favorite is uh winning is more important than ego.
32:36
SPEAKER_00: It's the hardest one, honestly, for me.
32:38
SPEAKER_00: Um, but it's the best, like because it's all about the team, the people here are what makes this place really unique.
32:45
SPEAKER_00: And so just like working together with a group of people to like collaborate on and win is is much more exciting than like one person getting to take credit for it.
32:53
SPEAKER_02: So through so true.
32:56
SPEAKER_02: My favorite, yeah.
32:57
SPEAKER_02: Uh I think picking up the phone is a pretty good one.
33:00
SPEAKER_02: I recently uh switched the formality of my role in a way, and then uh I my manager told people like, what is the formula point that Tarek resonates with?
33:10
SPEAKER_02: Like in her view, it's picking up the phone because like I just like show up at people's desks.
33:15
SPEAKER_02: I'm like, can you help me with this, please?
33:20
SPEAKER_02: That's my approach.
33:21
SPEAKER_02: Uh, but my my personal favorite is uh launching fast and iterating because I think it's just so powerful.
33:27
SPEAKER_02: It's like just get it done.
33:29
SPEAKER_02: Just do it, just do it, don't be afraid, don't try to make it perfect.
33:34
SPEAKER_02: And then if it needs some degree of fixing after the fact, we'll do it, you know.
33:39
SPEAKER_03: Yeah, I hear you.
33:41
SPEAKER_03: Excellent.
33:42
SPEAKER_03: Okay, thank you both so much for joining this podcast.
33:44
SPEAKER_03: And uh yeah, it was really insightful.
33:47
SPEAKER_03: Thank you.
33:47
SPEAKER_03: Thank you so much.
33:48
SPEAKER_00: Thanks, I'm gonna do it.