Thanks for taking the time to explain this, really appreciated!
What isn't clear to me is why there isn't a similarly sized receivable on the asset side of the balance sheet to offset the very large payables?
Also, I take your point on the company's reference to free cash, however this seems to be derived from EBITDA rather than the cashflow statement so isn't "pure" in my mind!
Thanks for the great write up. I'm getting up to speed on the company and their financials. Do you know why operating cashflow has trended down in the last few years and was negative in H22025, even as operating profits have trended up?
The disconnect to which you refer is a classic structural artifact of how global payments infrastructure companies are required to format their cash flow statements.
For a merchant acquirer holding a banking license like Adyen, standard statutory operating cash flow is highly distorted by working capital timing mismatches (particularly receivables and payables on money that flows through the Adyen eco-system at different speeds). Said differently, this distortion is merely unwelcome noise.
If Adyen experiences a temporary timing mismatch where it pays merchants before fully clearing funds from the global card networks, or if billions are caught mid-transit on the exact day the reporting period closes, statutory operating cash flow can violently swing negative, even if the underlying business is incredibly profitable.
You asked about the negative operating cash flow in H2 2025. It is heavily tied to calendar cutoffs and seasonality. The second half of any financial year for Adyen includes peak global shopping events like Black Friday, Cyber Monday, and the entire Christmas holiday rush. Transaction volumes spike exponentially during the final weeks of December. If December 31st falls right after a high-volume shopping window or on a weekend, a multi-billion-euro lag occurs. This happens because as the transactions successfully clear, operating profit is immediately recognized, but in respect of the operating cash flow, it takes a massive hit because billions of dollars are sitting as an open "receivable" from the banking systems over the holiday bank closures. The cash hasn't hit Adyen's operational bank accounts yet, causing working capital to absorb a temporary cash deficit on paper.
To see how the business is actually performing, you have to strip away the merchant settlement float and look at underlying corporate cash generation. For the full year 2025, Adyen’s Free Cash Flow conversion sat at an impressive 87%, with capital expenditures well-controlled at roughly 5% of net revenue. This confirms that the cash generation engine of the core business remains completely intact and scales alongside its 53% EBITDA margin.
Great article. I dont think you can attribute the drop in stock price in 2023 to the change in the way they report revenue though ;). It was mostly downward revised guidance, increased hiring and the EBITDA margin compressing from the highs of 64% in 2021 to as low as 43% in 2023 . Either way, I agree, Adyen is a wonderful business selling at a wonderful price!
Yes, they accelerated spending with a particular focus on scaling up the work force. That compressed margins but was entirely voluntary on the part of the company. It is difficult to construe the need to significantly upscale the number of peope working in the business as bearish. Unfortunately, Mr Market is myopic and trades on quarterly numbers (or algorithmically) and misses the broader long term picture. I agree that this would have negatively impacted the valuation. It was a combination of a few factors. But none of that explains the share price today. There is a clear disconnect between price and value. It will be interesting to see the August earnings numbers.
From Adyen press news : AMSTERDAM, June 11, 2026 — Adyen N.V. (AMS: ADYEN) today announces it has entered into a definitive agreement to acquire enterprise billing platform Orb through a reverse triangular merger. Upon closing, Orb will become an indirect, wholly owned subsidiary managed under an incubator model.
May be decent bet - 335M$ - for future AI usage Billing !
That was with the head of IR, so there could be a disconnect with the CEOs visions. I was trying to figure out what they were doing with the cash balance which I had modelled coming up to ~12 bn or so.
The rationale was that they wouldn’t do an acquisition which would interfere with having a unified code stack for payments and money transfer. Instead the focus would be on tech bolt ons which could quickly utilise the data thrown off by their identity and transfer data.
dLocal is very complimentary. It offers payments infrastructure where Adyen doesn't.
Since Adyen has tier 1 multinationals as clients, many of which want access to emerging markets, I can't think of a better way to cement those relationships.
If Stripe acquires dLocal, that would be a disaster for Adyen. So defensively it also makes sense.
The cash balance is closer to $3.8bn rather than $12bn. I believe much of the cash showing on the balance sheet is money collected on behalf of third parties.
Head of IR may not know full strategy. Also wouldn't be able to say anything as it would be MNPI if it was the plan. So a denial means little or nothing.
Also, the CFO is changing, so priorities may change.
Thanks for taking the time to explain this, really appreciated!
What isn't clear to me is why there isn't a similarly sized receivable on the asset side of the balance sheet to offset the very large payables?
Also, I take your point on the company's reference to free cash, however this seems to be derived from EBITDA rather than the cashflow statement so isn't "pure" in my mind!
Thanks for the great write up. I'm getting up to speed on the company and their financials. Do you know why operating cashflow has trended down in the last few years and was negative in H22025, even as operating profits have trended up?
The disconnect to which you refer is a classic structural artifact of how global payments infrastructure companies are required to format their cash flow statements.
For a merchant acquirer holding a banking license like Adyen, standard statutory operating cash flow is highly distorted by working capital timing mismatches (particularly receivables and payables on money that flows through the Adyen eco-system at different speeds). Said differently, this distortion is merely unwelcome noise.
If Adyen experiences a temporary timing mismatch where it pays merchants before fully clearing funds from the global card networks, or if billions are caught mid-transit on the exact day the reporting period closes, statutory operating cash flow can violently swing negative, even if the underlying business is incredibly profitable.
You asked about the negative operating cash flow in H2 2025. It is heavily tied to calendar cutoffs and seasonality. The second half of any financial year for Adyen includes peak global shopping events like Black Friday, Cyber Monday, and the entire Christmas holiday rush. Transaction volumes spike exponentially during the final weeks of December. If December 31st falls right after a high-volume shopping window or on a weekend, a multi-billion-euro lag occurs. This happens because as the transactions successfully clear, operating profit is immediately recognized, but in respect of the operating cash flow, it takes a massive hit because billions of dollars are sitting as an open "receivable" from the banking systems over the holiday bank closures. The cash hasn't hit Adyen's operational bank accounts yet, causing working capital to absorb a temporary cash deficit on paper.
To see how the business is actually performing, you have to strip away the merchant settlement float and look at underlying corporate cash generation. For the full year 2025, Adyen’s Free Cash Flow conversion sat at an impressive 87%, with capital expenditures well-controlled at roughly 5% of net revenue. This confirms that the cash generation engine of the core business remains completely intact and scales alongside its 53% EBITDA margin.
Great article. I dont think you can attribute the drop in stock price in 2023 to the change in the way they report revenue though ;). It was mostly downward revised guidance, increased hiring and the EBITDA margin compressing from the highs of 64% in 2021 to as low as 43% in 2023 . Either way, I agree, Adyen is a wonderful business selling at a wonderful price!
Yes, they accelerated spending with a particular focus on scaling up the work force. That compressed margins but was entirely voluntary on the part of the company. It is difficult to construe the need to significantly upscale the number of peope working in the business as bearish. Unfortunately, Mr Market is myopic and trades on quarterly numbers (or algorithmically) and misses the broader long term picture. I agree that this would have negatively impacted the valuation. It was a combination of a few factors. But none of that explains the share price today. There is a clear disconnect between price and value. It will be interesting to see the August earnings numbers.
From Adyen press news : AMSTERDAM, June 11, 2026 — Adyen N.V. (AMS: ADYEN) today announces it has entered into a definitive agreement to acquire enterprise billing platform Orb through a reverse triangular merger. Upon closing, Orb will become an indirect, wholly owned subsidiary managed under an incubator model.
May be decent bet - 335M$ - for future AI usage Billing !
I spoke with Adyen management about 6 months ago and they explicitly ruled out a DLO acquisition - I didn’t ask about Wise though
Who did you speak to?
Never say never.
A year ago they would have said that they would never do any M&A. Now they have just completed their first $750m acquisition.
That was with the head of IR, so there could be a disconnect with the CEOs visions. I was trying to figure out what they were doing with the cash balance which I had modelled coming up to ~12 bn or so.
The rationale was that they wouldn’t do an acquisition which would interfere with having a unified code stack for payments and money transfer. Instead the focus would be on tech bolt ons which could quickly utilise the data thrown off by their identity and transfer data.
dLocal is very complimentary. It offers payments infrastructure where Adyen doesn't.
Since Adyen has tier 1 multinationals as clients, many of which want access to emerging markets, I can't think of a better way to cement those relationships.
If Stripe acquires dLocal, that would be a disaster for Adyen. So defensively it also makes sense.
The cash balance is closer to $3.8bn rather than $12bn. I believe much of the cash showing on the balance sheet is money collected on behalf of third parties.
Head of IR may not know full strategy. Also wouldn't be able to say anything as it would be MNPI if it was the plan. So a denial means little or nothing.
Also, the CFO is changing, so priorities may change.
Just me speculating, but it makes sense.
Yes that was exactly my point when I raised it. I wouldn’t be anti the acquisition, I just got quite direct pushback from them when we spoke about it.
And the €12 cash balance was a forecast, not current figures.
But yes you’re right, never say never! But I think we’re more likely to see acquisitions resemble the value added services of V/MA
thank you