Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying stocks that can fulfill their growth potential is challenging due to associated risks and volatility [1] Group 1: Shift4 Payments Overview - Shift4 Payments (FOUR) is currently recommended as a growth stock by the Zacks Growth Style Score system, which evaluates a company's real growth prospects beyond traditional metrics [2] - The stock has a favorable Growth Score and a top Zacks Rank, indicating strong potential for performance [2] Group 2: Earnings Growth - Shift4 Payments has a historical EPS growth rate of 138.8%, with projected EPS growth of 43.5% this year, significantly surpassing the industry average of 10.4% [4] - Double-digit earnings growth is a key indicator of strong prospects for growth investors [3] Group 3: Cash Flow Growth - The year-over-year cash flow growth for Shift4 Payments is 38.8%, well above the industry average of 4.3% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 119.9%, compared to the industry average of 12.9% [6] Group 4: Earnings Estimate Revisions - The current-year earnings estimates for Shift4 Payments have been revised upward, with the Zacks Consensus Estimate increasing by 20.2% over the past month [8] - Positive trends in earnings estimate revisions correlate strongly with near-term stock price movements [7] Group 5: Conclusion - Shift4 Payments has achieved a Zacks Rank of 2 and a Growth Score of B, positioning it well for potential outperformance in the growth stock category [10]

Group 1 - Shift4 Payments (FOUR) shares have increased by 17.2% over the past four weeks, closing at $90.26, with a mean price target of $114.83 indicating a potential upside of 27.2% [1] - The average of 23 short-term price targets ranges from a low of $80 to a high of $150, with a standard deviation of $15.53, suggesting variability in analyst estimates [2] - Analysts show strong agreement in revising earnings estimates higher, with the Zacks Consensus Estimate for the current year increasing by 20.2% over the past month [11][12] Group 2 - FOUR holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] - The correlation between earnings estimate revisions and near-term stock price movements supports the expectation of an upside in FOUR [11] - While price targets are often viewed skeptically, the direction implied by the consensus price target may serve as a useful guide for potential price movement [10][13]

Summary of Shift4's Conference Call Company Overview - **Company**: Shift4 Payments - **Industry**: Payment processing and financial technology Key Points and Arguments Leadership and Company Strategy - Incoming CEO Taylor Wobber emphasizes the importance of maintaining the company's successful operational algorithm while adapting to international growth [4][5][6] - Shift4 has expanded significantly, now operating in 50 countries and serving 40% of hotels and a majority of stadiums in the U.S. [6][5] Recent Developments - The company is focused on growth and global expansion, with recent funding rounds and the acquisition of Global Blue being pivotal [10][11] - CFO Nancy Dissman highlights the importance of a limited set of priorities aimed at growth and filling embedded opportunities [11][12] Financial Health and Market Position - Shift4 has a strong balance sheet, with recent financing efforts resulting in a better financial position and flexibility [14][15] - The company experienced a 6x oversubscription for its recent debt offerings, indicating strong market confidence [14] Economic Outlook and Consumer Spending - Wobber addresses investor concerns about exposure to discretionary spending, arguing that consumer behavior during economic downturns shows resilience in dining and lodging sectors [17][18] - Historical data suggests that consumers are more likely to cut back on larger purchases before dining out, indicating stability in Shift4's core markets [19][20] Growth Projections - The company anticipates at least 20% organic growth by 2025, based on stable consumer spending and a diversified vertical mix [26][27][28] - Shift4's growth strategy relies on acquiring new customers and annualizing existing contracts rather than same-store sales [27][29] Global Blue Acquisition - The acquisition of Global Blue is expected to enhance Shift4's offerings in VAT refunds and dynamic currency conversion, providing a competitive edge in the retail sector [32][34] - Global Blue's strong market position in VAT refunds (85% market share) is seen as a significant opportunity for Shift4 [40][41] Competitive Landscape - Shift4 aims to compete effectively with established players like Adyen by leveraging its SMB focus and comprehensive service offerings [53][55] - The company is positioned to cross-sell its payment processing services to Global Blue's existing luxury retail clients [55] Financial Structure and Shareholder Considerations - The decision to use mandatory convertible preferred shares for financing was driven by a desire to maintain leverage ratios below four times net debt [47][50] - The company plans to present non-GAAP EPS on a fully diluted basis, accounting for the impact of the preferred shares [49] Revenue and Pricing Strategy - Shift4's pricing strategy is based on providing differentiated services rather than competing solely on price, with a focus on maintaining strong margins [70][72] - The company utilizes a variety of pricing mechanisms, including promotional offers to attract new customers [74][78] Future Guidance and Market Dynamics - The blended take rate post-acquisition of Global Blue will require careful modeling due to differences in financial reporting standards [81][82] - Shift4 is committed to educating investors on the implications of the acquisition and its impact on overall business performance [82] Additional Important Insights - Shift4's diversified verticals now include stadiums, entertainment, and unified commerce, enhancing its resilience against economic fluctuations [28][29] - The company has a robust cross-sell strategy that has historically proven effective during economic downturns, allowing for customer acquisition even in challenging times [22][25]

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with Shift4 Payments identified as a strong candidate due to its favorable growth metrics and Zacks Rank [1][2]. Group 1: Earnings Growth - Shift4 Payments has a historical EPS growth rate of 138.8%, with projected EPS growth of 40.3% for the current year, significantly outperforming the industry average of 11.1% [4]. Group 2: Cash Flow Growth - The company exhibits a year-over-year cash flow growth of 38.8%, which is substantially higher than the industry average of 4.3% [5]. - Over the past 3-5 years, Shift4 Payments has achieved an annualized cash flow growth rate of 119.9%, compared to the industry average of 12.8% [6]. Group 3: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Shift4 Payments, with the Zacks Consensus Estimate for the current year increasing by 17.3% over the past month [7]. Group 4: Overall Positioning - Shift4 Payments holds a Growth Score of B and a Zacks Rank of 2, indicating strong potential for outperformance in the growth stock category [9].

Core Viewpoint - Shift4 Payments (FOUR) is showing a significantly improving earnings outlook, making it an attractive option for investors as analysts continue to raise their earnings estimates for the company [1][2]. Earnings Estimate Revisions - Analysts' optimism regarding Shift4 Payments' earnings prospects is leading to higher estimates, which is expected to positively impact the stock price [2]. - The Zacks Rank system indicates a strong correlation between earnings estimate revisions and stock price movements, with Zacks 1 Ranked stocks averaging a +25% annual return since 2008 [3]. - For the current quarter, the earnings estimate is $1.33 per share, reflecting a +38.54% change from the previous year, with a 12.77% increase in the Zacks Consensus Estimate over the last 30 days [5]. - For the full year, the expected earnings are $5.46 per share, representing a +40.36% change from the prior year, with a 17.27% increase in the consensus estimate due to seven upward revisions against one downward revision [6][7]. Zacks Rank and Performance - Shift4 Payments has achieved a Zacks Rank 2 (Buy) due to favorable estimate revisions, indicating strong potential for stock performance [8]. - Stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) have been shown to significantly outperform the S&P 500 [8]. Stock Performance - The stock has gained 13.6% over the past four weeks, driven by solid estimate revisions, suggesting that its earnings growth prospects may lead to further increases in stock value [9].

Core Viewpoint - Shift4 Payments (FOUR) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, suggesting that revisions in earnings estimates can lead to significant price changes [4][6]. - Shift4 Payments is projected to earn $5.46 per share for the fiscal year ending December 2025, reflecting a year-over-year increase of 40.4% [8]. Analyst Sentiment and Market Position - Analysts have raised their earnings estimates for Shift4 Payments, with the Zacks Consensus Estimate increasing by 19.7% over the past three months [8]. - The upgrade to Zacks Rank 2 places Shift4 Payments in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10]. Zacks Rating System Overview - The Zacks Rank system classifies stocks based on earnings estimate revisions, with a proven track record of performance, where Zacks Rank 1 stocks have generated an average annual return of +25% since 1988 [7]. - The system maintains a balanced distribution of ratings, ensuring that only the top 5% of stocks receive a 'Strong Buy' rating, while the next 15% receive a 'Buy' rating [9].

Core Viewpoint - Shift4 Payments (FOUR) has seen a 13.6% increase in share price over the past four weeks, closing at $82.36, with a potential upside of 41.2% based on Wall Street analysts' mean price target of $116.29 [1] Price Targets - The average of 24 short-term price targets ranges from a low of $80 to a high of $150, with a standard deviation of $16.01, indicating variability among analysts [2] - The lowest estimate suggests a decline of 2.9% from the current price, while the highest estimate indicates an upside of 82.1% [2] Analyst Sentiment - Analysts show a consensus that FOUR will report better earnings than previously estimated, which supports the expectation of a stock price increase [4][11] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 17.3%, with seven estimates moving higher and one lower [12] Zacks Rank - FOUR holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, indicating strong potential for upside [13]

Financial Performance - Gross revenue for Q1 2025 was $848.3 million, a 19.8% increase from $707.4 million in Q1 2024[18] - Net income attributable to Shift4 Payments, Inc. for Q1 2025 was $16.7 million, down from $20.6 million in Q1 2024, representing a 19% decrease[18] - Comprehensive income attributable to Shift4 Payments, Inc. for Q1 2025 was $42.3 million, significantly up from $10.0 million in Q1 2024[20] - Net income for Q1 2025 was $19.5 million, a decrease of 31.6% from $28.5 million in Q1 2024[23] - Operating cash flow decreased to $96.6 million in Q1 2025 from $115.0 million in Q1 2024, reflecting a decline of 16.5%[23] - Payments-based revenue increased to $755.7 million in Q1 2025 from $655.1 million in Q1 2024, reflecting a growth of about 15.3%[66] - Subscription and other revenues rose significantly to $92.6 million in Q1 2025, compared to $52.3 million in Q1 2024, marking an increase of approximately 76.8%[66] Expenses and Liabilities - The company reported a cost of sales of $591.3 million in Q1 2025, compared to $519.6 million in Q1 2024, reflecting a 13.8% increase[18] - Depreciation and amortization increased to $85.2 million in Q1 2025, up from $66.1 million in Q1 2024, representing a rise of 28.5%[23] - Equity-based compensation expense increased to $26.0 million in Q1 2025 from $22.8 million in Q1 2024, an increase of 14.0%[23] - The TRA liability was $362.6 million as of March 31, 2025, slightly down from $365.5 million at the end of 2024[29] - Total liabilities as of March 31, 2025, included a Tax Receivable Agreement (TRA) liability of $362.6 million, slightly down from $365.5 million at the end of 2024[29] Cash and Investments - Cash and cash equivalents at the end of Q1 2025 were $1,384.3 million, down from $1,438.6 million at the end of Q4 2024, a decrease of 3.8%[36] - Net cash used in investing activities rose to $85.0 million in Q1 2025 compared to $39.7 million in Q1 2024, indicating a significant increase of 114.1%[23] - The company reported a gain on investments in securities of $(0.3) million in Q1 2025, compared to a loss of $(11.0) million in Q1 2024[23] Acquisitions - The company completed the acquisition of Eigen Payments for a total purchase consideration of $115.0 million, net of cash acquired[41] - The company completed the acquisition of Givex Corp. for a total purchase consideration of $127.8 million, net of cash acquired[47] - The acquisition of Vectron Systems AG involved a total purchase consideration of $62.7 million, net of cash acquired, with the company owning approximately 75% of Vectron's common stock as of March 31, 2025[52] - The acquisition of Revel Systems, Inc. was completed for $245.3 million, net of cash acquired, enhancing the company's presence in the restaurant and retail markets[60] Stockholder Equity - The total stockholders' equity as of March 31, 2025, was $1,016.0 million, slightly down from $1,017.7 million at the end of 2024[21] - The company repurchased and retired 686,177 shares of Class A common stock, resulting in a reduction of $63.4 million in equity[21] - The company recognized equity-based compensation expense of $26.0 million for the three months ended March 31, 2025, compared to $22.8 million for the same period in 2024, reflecting an increase of approximately 14.0%[119] Debt and Financing - Total debt as of March 31, 2025, was $2,843.5 million, with a current portion of $687.8 million and long-term debt of $2,155.7 million[78] - The company has a $450.0 million senior secured revolving credit facility, with no borrowings as of March 31, 2025[84] - Future principal payments on the company's debt total $2,872.5 million, with $690.0 million due in 2025[81] - The company entered into a commitment letter for a 364-day bridge loan facilities totaling $1.795 billion, consisting of a $1.0 billion senior secured bridge loan and a $795.0 million senior unsecured bridge loan[86] Tax and Compliance - The Company's effective tax rate for the three months ended March 31, 2025, was (71)%, significantly different from the federal statutory rate of 21% due to noncontrolling interest allocations[99] - The Company was in compliance with all financial covenants under its debt agreements as of March 31, 2025[89] Other Financial Metrics - The company experienced a change in TRA liability resulting in a gain of $3.0 million in Q1 2025, compared to a loss of $1.2 million in Q1 2024[18] - The effect of exchange rate changes on cash and cash equivalents resulted in a gain of $14.8 million in Q1 2025, compared to a loss of $(6.5) million in Q1 2024[23] - The company did not have any single customer accounting for more than 10% of its revenue during the reported periods, indicating a diversified customer base[130]

Financial Data and Key Metrics Changes - The company reported a 35% year-over-year increase in volumes to $45 billion, with gross revenue less network fees rising 40% to $369 million [6][24] - Adjusted EBITDA increased 38% to $169 million, with adjusted EBITDA margins at 46%, slightly above the guidance of 45% [7][24] - Adjusted EPS for the quarter was $1.07 per share, reflecting strong performance [8][28] Business Line Data and Key Metrics Changes - Subscription and other revenue grew 77% year-over-year to $93 million, driven by success in SMB, SkyTab, and further penetration in the sports and entertainment vertical [24] - The company is focused on adding new merchants and expanding share of wallet, particularly in the restaurant sector with the introduction of SkyTab Air [9][10] Market Data and Key Metrics Changes - The company is experiencing stable volume trends across all end markets, with a slight deceleration attributed to seasonal factors [6][30] - International expansion is underway, with significant growth in markets like the UK, Ireland, and Germany, signing over 1,000 restaurants monthly [19][75] Company Strategy and Development Direction - The company is raising its full-year 2025 guidance, reflecting confidence in execution and growth drivers [6][29] - The acquisition of Global Blue is expected to unlock $80 million in revenue synergies by 2027, primarily through bundling payment solutions [21][90] - The company aims to replicate its successful U.S. model internationally, focusing on software and payment convergence [18][75] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding consumer spending trends, noting stability despite macroeconomic uncertainties [30][100] - The company has a proven track record of growing payment volumes during economic downturns, indicating resilience [22][30] Other Important Information - The company repurchased approximately 686,000 shares for $63 million in Q1 and continued repurchases in April [27] - Total indebtedness has a weighted average cost of 3.4%, with net leverage at approximately 2.4 times [28] Q&A Session Summary Question: How would you describe the competitive environment in international markets? - Management noted that the international opportunity mirrors the U.S. market evolution, with a lack of convergence among software, hardware, and payment solutions [36][39] Question: Can you touch on what you're seeing in the market more broadly into April? - Management indicated stable trends in same-store sales across various segments, with modest compression in restaurants and hotels [42][46] Question: Where are you on the synergy update from recent acquisitions? - Management highlighted successful cross-sell opportunities from acquisitions like Revel, contributing significantly to the SkyTab development pipeline [50][51] Question: What was organic and inorganic growth in the 40% GR LNF growth in the quarter? - Management stated that organic revenue growth is expected to be north of 20% for the year, with acquisitions providing noise in quarter-to-quarter comparisons [56][57] Question: Can you provide any color on the current revenue split between U.S. and international? - Management indicated that international revenue is still developing, with significant contributions expected from enterprise customers and SMB products [72][73]

Core Insights - Shift4 Payments reported a revenue of $368.5 million for the quarter ended March 2025, reflecting a year-over-year increase of 39.7% and surpassing the Zacks Consensus Estimate by 6.90% [1] - The company's EPS for the quarter was $1.07, significantly higher than the $0.54 reported in the same quarter last year, resulting in an EPS surprise of 50.70% compared to the consensus estimate of $0.71 [1] Financial Performance Metrics - End-to-End Payment Volume reached $45 billion, exceeding the average estimate of $44.53 billion from five analysts [4] - Gross Revenue from Subscription and other revenues was reported at $92.60 million, slightly above the average estimate of $92.56 million, marking a year-over-year increase of 77.1% [4] - Gross Revenue from Payments-based revenue was $755.70 million, below the average estimate of $797.60 million, but still showing a year-over-year growth of 15.4% [4] Stock Performance - Over the past month, shares of Shift4 Payments have returned -2.5%, compared to a -0.8% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]