FOUR
Shift4 Payments, INC
NYSE
10-Q: Shift4 Payments Reports Strong Q3 Growth Driven by Increased Payment Volume and Strategic Acquisitions
Sentiment:
Quarterly Report
12 November 2024 4:29 PM
Shift4 Payments saw a significant increase in revenue and payment volume in the third quarter of 2024, boosted by strategic acquisitions and growth in its SkyTab solutions.
Better than expected
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.
Summary
- Shift4 Payments reported a 35% increase in gross revenue to $909.2 million for the third quarter of 2024, compared to $675.4 million in the same period last year.
- Payments-based revenue grew by 29% to $806.8 million, driven by a 56% increase in end-to-end payment volume, which reached $43.5 billion.
- Subscription and other revenues more than doubled, increasing by 111% to $102.4 million, primarily due to recent acquisitions and higher SaaS revenue from SkyTab solutions.
- The company's net income attributable to Shift4 Payments, Inc. was $53.8 million, compared to $32.6 million in the third quarter of 2023.
- The company released a valuation allowance against deferred tax assets, resulting in a discrete tax benefit of $283.8 million.
- The company acquired a majority stake in Vectron Systems AG and completed the acquisition of Revel Systems, Inc. during the quarter.
Sentiment
Score: 8
Explanation: The document shows strong financial performance with significant revenue growth and strategic acquisitions. The release of the valuation allowance is a positive development. However, increased expenses and a loss before income taxes temper the overall sentiment.
Positives
- The company experienced substantial growth in both payments-based and subscription revenues.
- The increase in end-to-end payment volume indicates strong merchant activity and adoption of Shift4's platform.
- The release of the valuation allowance resulted in a significant tax benefit.
- Strategic acquisitions of Vectron and Revel are expected to strengthen the company's market position.
- The company is no longer in a three-year cumulative loss position.
Negatives
- Growth in end-to-end payment volume outpaced payments-based revenue growth, primarily due to onboarding of larger merchants with lower unit pricing.
- General and administrative expenses increased due to continued growth and recent acquisitions.
- Interest expense increased due to the issuance of the 2032 Senior Notes.
- The company reported a loss before income taxes of $208.3 million.
Risks
- The company is subject to certain restrictions in its dealings with Vectron until a domination and profit and loss transfer agreement is established.
- The company may be obligated to compensate any annual net loss of Vectron under a domination and profit and loss transfer agreement.
- The company is subject to risks related to fluctuations in interest rates to the extent it impacts borrowings under the Revolving Credit Facility.
- The company is subject to risks related to the estimation of liability under the Tax Receivable Agreement.
Future Outlook
The company expects the TRA liability to increase as additional tax benefits are established through exchanges of LLC Interests with Rook. The company believes that its cash and cash equivalents and future cash flow from operations will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next twelve months and into the foreseeable future based on its current operating plan.
Management Comments
- Management believes the acquisition of Vectron will provide the company with local product expertise and a European distribution network of POS resellers.
- Management believes the acquisition of Revel will strengthen the company's presence within the restaurant and retail markets.
- Management believes the acquisition of Givex will significantly increase the company's overall customer base and geographic footprint.
Industry Context
The company's growth reflects the broader trend of increasing adoption of digital payment solutions and the consolidation of software and payment processing services. The acquisitions of Vectron, Revel, and Givex indicate a strategic move to expand into new markets and enhance the company's product offerings.
Comparison to Industry Standards
- Shift4's 56% growth in end-to-end payment volume significantly outpaces the industry average, indicating strong market share gains.
- The company's focus on strategic acquisitions is similar to other major players in the fintech space, such as Global Payments and Fiserv, who have also grown through mergers and acquisitions.
- The company's adjusted EBITDA of $187.4 million in Q3 2024 is a strong result compared to other payment processors, but the company's EBITDA was a loss of $122.4 million.
- The company's focus on SaaS revenue through its SkyTab solutions is in line with the industry trend of recurring revenue models.
Stakeholder Impact
- Shareholders will benefit from the company's strong financial performance and strategic acquisitions.
- Employees will benefit from the company's growth and expansion.
- Customers will benefit from the company's enhanced product offerings and services.
- Suppliers will benefit from the company's increased business activity.
- Creditors will benefit from the company's improved financial position.
Next Steps
- The company will continue to integrate the recently acquired businesses.
- The company will focus on growing its SkyTab solutions.
- The company will continue to monitor the impacts of Pillar Two on its operating footprint.
Legal Proceedings
- A securities class action lawsuit was filed against the company, but the company's motion to dismiss was granted with leave to amend. A second amended complaint was filed and the company filed a motion to dismiss on October 1, 2024.
Related Party Transactions
- The company has a service agreement with Jared Isaacman, the company's CEO, including access to aircrafts and a property.
- The company made distributions related to income taxes paid on behalf of Rook.
- The Founder agreed to fund 50% of a one-time discretionary equity award program for non-management employees through a contribution of shares of his Class C common stock.
- Rook has pledged LLC Interests and shares of the company's Class A and Class B common stock to secure a margin loan.
- The Founder, through a wholly-owned special purpose vehicle, entered into two variable prepaid forward contracts with an unaffiliated dealer.
Key Dates
- 2019-11-05: Shift4 Payments, Inc. was incorporated.
- 2020-06-09: Shift4 Payments initial public offering.
- 2021-01-29: Shift4 Payments, LLC entered into an Amended and Restated First Lien Credit Agreement.
- 2022-09-29: Shift4 Payments entered into an earnout agreement with the former shareholders of Online Payments Group.
- 2023-01-01: Legal entity restructuring and acquired deferred tax liabilities from Focus POS Systems.
- 2023-08-18: A shareholder filed a putative securities class action against the company.
- 2024-02-29: Shift4 Payments filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
- 2024-06-13: Shift4 Payments completed the acquisition of Revel Systems, Inc.
- 2024-06-14: Shift4 Payments acquired a majority stake in Vectron Systems AG.
- 2024-08-15: Shift4 Payments issued $1.1 billion of 6.750% Senior Notes due 2032.
- 2024-09-05: Shift4 Payments, LLC entered into a Second Amended and Restated First Lien Credit Agreement.
- 2024-09-28: The second tranche of the earnout agreement with the former shareholders of Online Payments Group was determined to be fully earned.
- 2024-09-30: Shift4 Payments entered into the Settlement Line Credit Agreement.
- 2024-11-05: As of this date, there were 68,664,969 shares of the registrants Class A common stock, 19,801,028 shares of the registrants Class B common stock, and 1,635,770 shares of the registrants Class C common stock outstanding.
- 2024-11-08: Shift4 Payments acquired Givex Corp.
Keywords
payment processing, SaaS, acquisitions, payment volume, financial results, fintech, revenue growth, SkyTab, Vectron, Revel
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.
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.
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.
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.
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.
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
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.
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