FOUR
Shift4 Payments, INC
NYSE
8-K: Shift4 Payments Reports Strong Q2 Results, Raises Full-Year Guidance
Sentiment:
Quarterly Report
8 August 2024 7:02 AM
Shift4 Payments announced robust second-quarter results, highlighted by a 50% year-over-year increase in end-to-end payment volume and an upward revision of its full-year financial outlook.
Better than expected
The company's Q2 results exceeded expectations, leading to an increase in full-year guidance.
The company's end-to-end payment volume, gross revenue, and adjusted EBITDA all showed significant year-over-year growth, surpassing previous estimates.
The company's organic revenue growth was strong at 24%, with an expected acceleration in the back half of the year.
Summary
- Shift4 Payments reported a strong second quarter of 2024, with end-to-end payment volume reaching $40.1 billion, a 50% increase compared to the same period last year.
- Gross revenue for the quarter was $827.0 million, up 30% year-over-year, while gross profit increased by 38% to $218.8 million.
- Gross revenue less network fees grew by 41% to $320.6 million.
- The company's net income for the quarter was $54.5 million, and adjusted EBITDA reached $162.4 million, a 48% increase year-over-year.
- Shift4 has raised its full-year guidance, now expecting end-to-end payment volume between $167 billion and $175 billion, gross revenue less network fees between $1.35 billion and $1.38 billion, and adjusted EBITDA between $662 million and $689 million.
- The company also anticipates an adjusted free cash flow conversion rate of 59% or higher for the full year.
- Organic revenue growth for Q2 was 24%, and the company expects a healthy acceleration in the back half of the year.
- Shift4 completed the acquisition of Revel and announced the acquisition and majority closing of Vectron, which is expected to contribute ~$15 million of EBITDA in the back half of 2024.
- The company has a significant backlog of merchants whose volume opportunity is not yet fully actualized.
- Shift4 is seeing strong growth in the hospitality sector, which now represents approximately 33% of the volume they process.
Sentiment
Score: 9
Explanation: The document conveys a very positive sentiment due to strong financial results, raised guidance, successful acquisitions, and strategic expansion. The CEO's confident tone and emphasis on the company's winning strategy further contribute to the high sentiment score.
Positives
- Shift4 achieved a 50% year-over-year increase in end-to-end payment volume, demonstrating strong growth in transaction processing.
- The company's gross profit increased by 38% year-over-year, indicating improved profitability.
- Adjusted EBITDA grew by 48% year-over-year, showcasing the company's ability to manage costs effectively.
- Shift4 has successfully diversified its business, with hotels and resorts now representing a significant portion of their volume.
- The company's M&A strategy is proving effective, with acquisitions like Revel and Vectron expected to contribute to future growth.
- Shift4 is expanding its international presence, with new partnerships and agreements in Europe and other regions.
- The company has a strong backlog of contracted volume, indicating future revenue potential.
- Shift4 is seeing success with its SkyTab POS system, with thousands of locations being added every quarter.
- The company is actively investing in internal systems, AI, and its Shift4way principles to improve efficiency and performance.
- Shift4 is demonstrating strong free cash flow conversion, indicating efficient use of capital.
Negatives
- The document mentions that the company is unable to provide a reconciliation of certain non-GAAP measures to GAAP measures for 2024 without unreasonable effort.
- The company has incurred significant acquisition costs, which may impact short-term profitability.
- The company's net income was $54.5 million, which is lower than the adjusted EBITDA of $162.4 million, indicating significant adjustments.
- The company has a retained deficit of $297.8 million, which is a cumulative loss.
Risks
- The company faces substantial and increasingly intense competition in the financial services, payments, and payment technology industries.
- Changes in the competitive landscape, including disintermediation from other participants in the payments chain, could negatively impact Shift4.
- Global economic, political, and other conditions can affect consumer, business, and government spending, impacting the company's revenue.
- The company's reliance on third-party vendors for products and services poses a risk.
- Cybersecurity risks, security breaches, and other technological risks could disrupt operations and compromise confidential information.
- Compliance with governmental regulations, particularly related to privacy and data protection, is a significant challenge.
- The company's ability to expand into new markets and integrate its services with various systems is crucial for growth.
- The significant influence of the CEO and founder, Jared Isaacman, over the company could pose a risk.
- The company's international expansion exposes it to foreign exchange rate fluctuations and changes in foreign governmental policies.
Future Outlook
Shift4 has raised its full-year 2024 guidance, expecting end-to-end payment volume between $167 billion and $175 billion, gross revenue less network fees between $1.35 billion and $1.38 billion, and adjusted EBITDA between $662 million and $689 million. The company also anticipates an adjusted free cash flow conversion rate of 59% or higher for the full year. They plan to follow their strategic customers into new regions globally through partnerships and commercial integrations.
Management Comments
- Jared Isaacman, CEO, stated that he is reasonably pleased with the results, which were largely in line with expectations.
- The CEO highlighted the diversification of the business since the pandemic, with hotels and resorts now representing approximately 33% of the volume processed.
- Management emphasized the company's strategy of building, buying, or partnering to expand into different verticals.
- The CEO noted that Shift4's M&A strategy focuses on finding overlooked assets with high-conviction revenue synergies.
- Management believes that Shift4's corporate DNA is about winning and deploying capital on high probability outcomes.
- The CEO stated that the company loves complexity and its strategy to conquer integrated payments all over the world.
Industry Context
Shift4's strong Q2 results and raised guidance reflect a positive trend in the payment processing industry, where companies that integrate software and payments are gaining a competitive edge. The company's focus on diversification and strategic acquisitions aligns with broader industry trends of consolidation and expansion into new verticals and geographies. The emphasis on card-present transactions and integrated solutions positions Shift4 well in a market where value-added services are increasingly important.
Comparison to Industry Standards
- Shift4's 50% year-over-year growth in end-to-end payment volume significantly outpaces the average growth rate of many established payment processors, such as Fiserv and Global Payments, which typically see growth in the low to mid-teens.
- The company's adjusted EBITDA margin of 51% is competitive with industry leaders like Adyen, which also focuses on integrated payments solutions, but is higher than many traditional payment processors.
- Shift4's focus on M&A to acquire technology and distribution is similar to strategies employed by companies like Fiserv, which has grown through numerous acquisitions, but Shift4 emphasizes a more targeted approach to overlooked assets.
- The company's expansion into international markets, particularly Europe, is a common strategy among payment processors seeking to diversify their revenue streams, with companies like Worldline also focusing on European expansion.
- Shift4's emphasis on integrated payments and software solutions is a key differentiator compared to traditional payment processors that primarily focus on transaction processing, similar to the strategy of companies like Toast in the restaurant space.
Stakeholder Impact
- Shareholders will likely react positively to the strong financial results and raised guidance.
- Employees may benefit from the company's growth and expansion.
- Customers will have access to more advanced payment solutions and services.
- Suppliers and partners may see increased business opportunities.
- Creditors will likely view the company's financial health favorably.
Next Steps
- Shift4 plans to continue integrating recent acquisitions, such as Revel and Vectron.
- The company will focus on expanding its international presence, particularly in Europe and Canada.
- Shift4 aims to install over 30,000 SkyTab POS systems domestically in 2024.
- The company will continue to follow its strategic customers into new regions globally.
- Shift4 will continue to optimize its organizational structure and invest in internal systems and AI.
Key Dates
- August 8, 2024: Date of the report and announcement of Q2 2024 financial results.
- June 30, 2024: End of the second quarter of 2024, the period for which financial results are reported.
- December 31, 2023: Date of the previous annual report referenced in the document.
Keywords
payments, fintech, acquisitions, EBITDA, payment processing, software, hospitality, restaurants, sports, entertainment, international expansion, SkyTab, M&A, free cash flow, POS
FOUR
Shift4 Payments, INC
NYSE
Sector: TBD
Filings with Classifications
Worse than expected
4 June 2025 9:29 PM
Proxy Statement Supplement
- The previously announced restructuring transactions, which aimed to simplify the company's organizational and capital structure (Up-C Collapse and TRA waiver), have been terminated.
- The termination occurred because a key condition for the restructuring was not met, indicating a failure to achieve a significant strategic objective previously communicated.
Capital raise
16 May 2025 5:03 PM
Debt Offering Announcement
- Shift4 Payments, LLC and Shift4 Payments Finance Sub, Inc. completed the issuance and sale of 680 million aggregate principal amount of 5.500% Senior Notes due 2033 (the Euro Notes) and $550 million aggregate principal amount of 6.750% Senior Notes due 2032 (the New 2032 Notes and, together with the Euro Notes, the Notes).
Capital raise
15 May 2025 4:20 PM
Pro Forma Financial Information
- Shift4 issued 10,000,000 shares of 6.00% Series A Mandatory Convertible Preferred Stock, raising $1,000,000,000.
- Shift4 LLC expects to incur a new seven-year $1,000 million senior secured term loan B facility.
- Shift4 LLC and Shift4 Payments Finance Sub, Inc. are offering 680 million aggregate principal amount of 5.500% senior notes due 2033 (the Euro Notes) and $550 million in aggregate principal amount of their 6.750% senior notes due 2032.
Capital raise
8 May 2025 5:25 PM
Debt Offering Announcement
- Shift4 Payments is issuing €680 million in 5.500% senior notes due 2033.
- Shift4 Payments is issuing $550 million in additional 6.750% senior notes due 2032.
- The company intends to use the proceeds, along with other financing sources, to fund the acquisition of Global Blue and repay existing debt.
Capital raise
5 May 2025 4:35 PM
8-K Filing
- Shift4 Payments issued 10,000,000 shares of 6.00% Series A Mandatory Convertible Preferred Stock.
- The offering generated $1 billion in aggregate liquidation preference.
- The company intends to use the net proceeds from the offering, along with additional debt financing of up to $1,735.0 million, to fund the acquisition of Global Blue Group Holding AG and for general corporate purposes.
Capital raise
30 April 2025 9:24 AM
Capital Raise Announcement
- Shift4 Payments is launching an underwritten public offering of 7,500,000 shares of Series A Mandatory Convertible Preferred Stock.
- The company expects to grant underwriters a 30-day option to purchase up to 1,125,000 additional shares to cover over-allotments.
- Shift4 intends to raise up to $1,735.0 million in additional permanent debt financing.
Capital raise
30 April 2025 7:13 AM
8-K Filing
- Shift4 is proposing to issue $750.0 million Series A Mandatory Convertible Preferred Stock via an underwritten public offering.
- Shift4 expects to grant to the underwriters a 30-day option to purchase up to an additional 15% of shares of Mandatory Convertible Preferred Stock at the public offering price, less underwriting discounts and commissions, solely to cover over-allotments.
- Shift4 and/or Shift4 LLC intend to obtain certain permanent debt financing, both secured and unsecured, of up to $1,735.0 million in order to finance a part of the cash consideration payable by Shift4 to consummate the Merger with Global Blue in lieu of leveraging the Bridge Facilities.
Delay expected
29 April 2025 4:05 PM
Quarterly Report
- Merger Sub announced an extension of the Expiration Time of the Offer until one minute after 11:59 p.m., New York City time, on May 6, 2025.
Capital raise
29 April 2025 4:05 PM
Quarterly Report
- Shift4 Payments, LLC (directly or through Shift4 and/or one or more of its subsidiaries) also intends to pursue a permanent financing arrangement with the Commitment Parties, as contemplated by the Debt Commitment Letter, which may include a combination of senior unsecured and/or unsecured notes, mandatory convertible or perpetual preferred equity and/or a senior secured term loan B facility (the Permanent Financing), in each case, on terms and conditions to be set forth in the definitive documentation for such Permanent Financing.
Better than expected
29 April 2025 7:14 AM
Earnings Release
- The company is raising its full-year guidance for gross revenue less network fees and adjusted EBITDA by $10 million on both the low and high end.
- Shift4 Payments experienced record payment volumes, gross revenue less network fees, and adjusted EBITDA in Q1 2025.
Better than expected
19 February 2025 4:06 PM
Annual Report
- The company's end-to-end payment volume increased by 51% to $164.8 billion for the year ended December 31, 2024.
- Gross revenue less network fees increased by 44% to $1.35 billion.
- Adjusted EBITDA increased to $677.4 million, compared to $459.9 million in the previous year.
- The company released a valuation allowance against certain deferred tax assets, resulting in an income tax benefit of $296.1 million.
Capital raise
19 February 2025 4:06 PM
Annual Report
- Shift4 Payments, LLC, entered into a commitment letter with Goldman Sachs Bank USA (GS), pursuant to which GS has committed to (i) provide Shift4 Payments, LLC with 364-day bridge loan facilities in an aggregate principal amount of $1.795 billion (the Bridge Facilities), consisting of (x) a senior secured 364-day bridge loan facility in an aggregate principal amount of $1.0 billion (the Senior Secured Bridge Facility) and (y) a senior unsecured 364-day bridge loan facility in an aggregate principal amount of $795.0 million (the Senior Unsecured Bridge Facility), in each case, subject to customary conditions, and (ii) to backstop an amendment to, or replacement of, Shift4 Payments, LLCs existing $450.0 million senior secured revolving credit facility (the Backstop Revolving Facility and, together with the Bridge Facilities, collectively, the Facilities) in order to, among other things, permit the consummation of the transactions contemplated by the Transaction Agreement, the incurrence of the Bridge Facilities and any other permanent financing issued in lieu thereof or to refinance the loans thereunder, in each case, subject to customary conditions.
Capital raise
18 February 2025 4:22 PM
Merger Announcement
- Shift4 expects to finance the acquisition with cash on hand and a 364-day $1.795 million bridge loan facility entered in connection with the transaction.
Better than expected
12 November 2024 4:29 PM
Quarterly Report
- The company's revenue and payment volume growth exceeded expectations.
- The company released a valuation allowance against deferred tax assets, resulting in a significant tax benefit.
- The company's net income attributable to Shift4 Payments, Inc. increased to $53.8 million.
Better than expected
12 November 2024 7:04 AM
Quarterly Report
- The company exceeded expectations with record payment volume, strong revenue growth, and increased profitability.
- Shift4 raised its full-year guidance, indicating confidence in continued performance.
- The company's adjusted EBITDA and free cash flow were better than anticipated.
Capital raise
15 August 2024 5:27 PM
Debt Offering Announcement
- The document details the completion of a $1.1 billion senior notes offering.
- The company received net proceeds of approximately $1,087.9 million.
- The proceeds will be used for general corporate purposes, including debt retirement, acquisitions, and stock repurchases.
Capital raise
12 August 2024 8:40 PM
Debt Offering Announcement
- Shift4 Payments is raising $1.1 billion through a private offering of senior notes.
- The notes are being offered to qualified institutional buyers and certain persons outside the United States.
- The proceeds will be used for general corporate purposes, including potential debt repayment.
Capital raise
12 August 2024 8:25 AM
Debt Offering Announcement
- Shift4 Payments is proposing to offer $1.1 billion aggregate principal amount of senior notes.
- The offering is a private placement to qualified institutional buyers and certain persons outside the United States.
Better than expected
8 August 2024 6:29 PM
Quarterly Report
- The company's revenue, payment volume, and subscription growth all exceeded expectations.
- The company's net income and adjusted EBITDA also showed significant improvement compared to the prior year.
Better than expected
8 August 2024 7:02 AM
Quarterly Report
- The company's Q2 results exceeded expectations, leading to an increase in full-year guidance.
- The company's end-to-end payment volume, gross revenue, and adjusted EBITDA all showed significant year-over-year growth, surpassing previous estimates.
- The company's organic revenue growth was strong at 24%, with an expected acceleration in the back half of the year.
Better than expected
9 May 2024 5:51 PM
Quarterly Report
- The company's revenue, payment volume, and adjusted EBITDA all exceeded expectations, indicating strong financial performance.
- The company's growth in subscription revenue and international expansion are positive indicators for future performance.
Better than expected
9 May 2024 7:13 AM
Quarterly Report
- The company's Q1 results exceeded expectations with a 50% increase in end-to-end payment volume and a 36% increase in adjusted EBITDA, indicating better than expected performance.
Better than expected
29 February 2024 4:06 PM
Annual Results
- The company's gross revenue increased by 29%, and end-to-end payment volume increased by 52%, both exceeding expectations.
Delay expected
27 February 2024 7:05 AM
Quarterly Report
- The company experienced delays in closing enterprise deals and the timing of certain multi-billion-dollar gateway migrations, which slightly impacted gross revenue less network fees.
Better than expected
27 February 2024 7:05 AM
Quarterly Report
- The company's key financial metrics, including end-to-end payment volume, gross profit, and adjusted EBITDA, all exceeded expectations, demonstrating strong growth and profitability.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.