Company Overview - Shift4 Payments (NYSE: FOUR) is a fintech company that specializes in merchant services for restaurants, hotels, and other discretionary leisure sectors [1] Market Position - Despite evident consumer risks, Shift4 Payments does not trade as if growth is guaranteed, indicating a potential undervaluation in the market [1] Investment Perspective - The analysis is based on value investing principles, emphasizing an owner's mindset and a long-term investment horizon [1]

Core Insights - The company’s strategic priorities are expected to remain consistent despite the change in CEO, as the founder remains the largest shareholder [1] - The new CEO, David Lauber, emphasizes alignment with the founder on growth strategies and differentiation [1] Company Strategy - The company’s strategic direction is not anticipated to change significantly, indicating stability in its operational focus [1] - The CEO and founder have been in sync regarding the approach to business growth, suggesting a cohesive leadership vision [1]

Core Insights - The company’s strategic priorities are expected to remain consistent despite the change in CEO, as the founder remains the largest shareholder [1] Group 1 - The new CEO, David Lauber, emphasizes continuity in strategic direction, indicating alignment with the founder's vision for growth [1] - The company has a strong focus on differentiation in its business strategy, which is seen as a key driver for future growth [1]

Summary of Shift4 Payments Conference Call Company Overview - **Company**: Shift4 Payments - **CEO**: Taylor Lauber, who has been with the company for many years and previously served as President and Chief Strategy Officer [1][3] Key Points and Arguments Company Growth and Evolution - Shift4 Payments has significantly evolved, now being 12 times larger on an EBITDA basis and 25 times larger on a free cash flow basis compared to a year ago [4] - The workforce has expanded to 6,000 employees, with 65% located outside the United States, indicating a global growth strategy [4] Management Changes - Chris Cruz has been appointed as CFO following Nancy's retirement, who successfully achieved her objectives during her tenure [5][6] - The transition is expected to maintain continuity in strategic priorities, as the founder remains the largest shareholder [5][6] Guidance Philosophy - The company aims to adopt a conservative guidance philosophy, focusing on under-promising and over-delivering [8][9] - Medium-term guidance is based on a strong conviction of achieving set targets, with a focus on profitability and revenue visibility [9][10] Financial Performance - Recent revenue came in roughly in line with expectations, with a higher take rate but lower volumes than anticipated [16] - The company has a balanced customer book, with a robust SMB opportunity, particularly outside the U.S. [18][19] International Expansion and Acquisitions - The acquisition of Vectron, a restaurant point-of-sale business in Germany, is expected to enhance Shift4's international footprint [22][24] - The integration of Vectron is seen as a way to leverage an existing reseller network to accelerate market entry [23][24] Global Blue Acquisition - The acquisition of Global Blue is the largest in the company's history, with expectations of high single-digit growth and potential for 12% to 14% growth in the medium term [31][36] - The company plans to leverage synergies from the acquisition, particularly in currency conversion and tax-free shopping services [38][39] Market Opportunities - Shift4 Payments has a significant presence in the U.S. hospitality sector, with about 40% of hotels on its platform, indicating room for growth [51] - The company is also expanding its footprint in the stadium and entertainment sectors, with a large total addressable market (TAM) for in-venue commerce [45][46] Capital Allocation and Future M&A - The company plans to continue pursuing M&A opportunities, with a target of redeploying approximately $200 million annually into new acquisitions [58][59] - Shift4 Payments has a disciplined approach to acquisitions, focusing on strategic fit and synergy realization [59] Additional Important Insights - The company emphasizes the importance of customer satisfaction and retention, particularly in the context of its SkyTab product [27][28] - There is a focus on ensuring that existing customers are happy with their current solutions before pushing for upgrades [28][30] - The management is keen on maintaining a balance between growth and operational efficiency, especially in integrating new acquisitions [59] This summary encapsulates the key insights and strategic directions discussed during the Shift4 Payments conference call, highlighting the company's growth trajectory, management changes, and future opportunities.

Core Insights - Shift4 Payments (NYSE: FOUR) has achieved a premium valuation in the fintech sector, distinguishing itself as a strong performer following the recovery of tech stocks [1] - The company has demonstrated robust performance in both revenue and earnings, indicating strong operational health [1] Company Overview - Shift4 Payments is recognized for its ability to identify undervalued companies with long-term growth potential, focusing on those with solid balance sheets and effective management teams [1] - The company operates within a sector characterized by significant growth opportunities, which supports its valuation and investment appeal [1] Investment Strategy - The investment approach emphasizes combining growth-oriented principles with strict valuation criteria to enhance the margin of safety for investors [1] - The investment group led by Julian Lin provides exclusive access to high-conviction stock picks, comprehensive research reports, and real-time market analysis [1]

Core Insights - Shift4 Payments (NYSE: FOUR) has achieved a premium valuation in the fintech sector, benefiting from the recovery in tech stocks [1] - The company has demonstrated strong performance in both revenue and earnings [1] Company Overview - Shift4 Payments is recognized as a significant player in the fintech industry, with a history of delivering substantial returns [1] - The company focuses on maintaining a strong balance sheet and effective management, which are critical for long-term growth [1] Investment Strategy - The investment approach emphasizes identifying undervalued companies with sustainable growth potential [1] - The strategy combines growth-oriented principles with strict valuation criteria to enhance investment safety [1]

Summary of Shift4's Earnings Call Company Overview - **Company**: Shift4 Payments, Inc. - **Recent Acquisition**: Global Blue, closed in early July 2023 Key Themes and Insights 1. **Investor Focus**: Investors are particularly interested in payment volumes and the profile of Shift4's average customer compared to previous years. The success of various initiatives and the impact of the Global Blue acquisition on financials are also key discussion points [5][6] 2. **Business Segments**: Shift4 has a unique position in both enterprise and small-to-medium business (SMB) markets, which contributes to different growth rates in payment volumes and revenue [5][6] 3. **International Expansion**: The company has been focusing on international growth for several years, with significant execution progress noted. The contribution from different countries is a major theme in investor discussions [6] 4. **CFO Transition**: The transition from Nancy to Chris Cruz as CFO was discussed, emphasizing continuity and the importance of Chris's long-standing relationship with the company. Nancy will remain involved as a board member [11][12][15] 5. **Guidance Philosophy**: The company will maintain its guidance philosophy despite the CFO transition, with ongoing refinements as the business evolves [16][17] Financial Projections 1. **Growth Scenarios**: Shift4 outlined three growth scenarios: - **Sit on Hands**: High teens CAGR if no new initiatives are pursued. - **Global Blue Impact**: Mid-twenties CAGR by incorporating Global Blue's forecasts. - **Active Growth**: 30% CAGR by reinvesting capital and pursuing new opportunities [18][22][23] 2. **Capital Deployment**: The company plans to deploy approximately $200 million annually for M&A opportunities, with a disciplined approach to acquisitions [26][28] Global Blue Integration 1. **Performance**: Global Blue is performing well as an independent business, with strong client acquisition in its VAT refund and currency conversion services. The company anticipates meaningful synergies within a year [30][31] 2. **Leadership**: Jacques Stern, CEO of Global Blue, has been appointed head of Shift4 International, bringing valuable international experience to the organization [36] 3. **Digitization Opportunities**: Shift4 aims to enhance the digitization of Global Blue's processes, making refunds easier and more accessible for consumers [51][54] Currency Impact 1. **Currency Fluctuations**: The impact of currency strength on Global Blue's tax refund business is complex, with both positive and negative effects noted. The diversified nature of Global Blue's business helps mitigate risks associated with currency fluctuations [56][58] Strategic Priorities 1. **Market Leadership**: Shift4 aims to maintain its leadership in key verticals such as hotels, restaurants, and sports entertainment while expanding internationally [63][64] 2. **Differentiation**: The company emphasizes the importance of having a unique value proposition rather than expanding for the sake of growth [65] 3. **Capital Allocation**: Prudent capital allocation is crucial for sustaining growth and achieving returns for investors [66] Competitive Landscape 1. **Stadium and Ticketing Opportunities**: Shift4 is well-positioned in the stadium market, providing comprehensive solutions that enhance the fan experience. The integration of ticketing technology is also a focus area, expanding revenue opportunities [67][72] Leadership Involvement 1. **Jared's Role**: Jared's involvement has shifted to focus on high-level strategic priorities, including capital allocation and international expansion, while maintaining regular communication with the management team [75][78] This summary encapsulates the key points discussed during the earnings call, highlighting Shift4's strategic direction, financial outlook, and integration efforts following the Global Blue acquisition.

Core Insights - Shift4 Payments recently released its earnings for the second quarter of FY 2025, indicating ongoing interest in the company's financial performance [1]. Company Overview - Shift4 Payments is focused on capital appreciation opportunities, including high-quality undervalued companies and those growing at a high rate [1]. Investment Strategy - The company also invests in dividend-paying stocks, provided they are good companies and correctly priced [1].

Financial Performance - Revenue decreased by 1% to $659.4 million compared to H1 2024[6,9] - Operating profit increased by 1% to $70.7 million compared to H1 2024[6,9] - Basic EPS increased by 2% to 197.4 cents[6,9] - Cash and bank deposits were $102.3 million[6,10] - Interim dividend remained stable at 80.0 cents[6] Income Statement Analysis - Gross profit increased by 1% to $216.5 million[9] - Marketing costs decreased by 3% to $84.7 million[9,24] - Admin and central costs increased by 12%[9] - Operating profit margin increased to 10.7% from 10.5% in H1 2024[9] Market and Operational Review - Industry sales declined by 3.6% and 3.2% in Q1 and Q2, respectively[18] - Over one million orders were received in H1 2025, a 2.8% decrease compared to H1 2024[18] - Total marketing spend was $84.7 million, a 3% reduction from H1 2024[24] - Revenue per marketing dollar increased to $7.79 from $7.64 in H1 2024[9,24]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, along with notes detailing significant accounting policies, recent acquisitions, and financing activities Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to **$7.0 billion** from **$5.0 billion** at year-end 2024, primarily due to a rise in cash from financing activities, while liabilities increased to **$5.0 billion** and equity nearly doubled to **$2.0 billion** Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $3,029.3 | $1,211.9 | | Goodwill | $1,517.7 | $1,455.6 | | Total assets | $6,990.6 | $5,041.4 | | **Liabilities & Equity** | | | | Total current liabilities | $1,492.6 | $1,379.8 | | Long-term debt | $3,043.2 | $2,154.1 | | Total liabilities | $4,971.8 | $4,023.7 | | Series A Mandatory Convertible Preferred Stock | $973.6 | $— | | Total stockholders' equity | $1,990.6 | $1,017.7 | Condensed Consolidated Statements of Operations In Q2 2025, gross revenue increased 16.8% year-over-year to **$966.2 million**, but net income attributable to Shift4 Payments, Inc. declined to **$34.0 million** due to higher operating expenses, increased interest expense, and a **$9.5 million** preferred stock dividend Q2 2025 vs. Q2 2024 Performance (in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Gross revenue | $966.2 | $827.0 | | Income from operations | $83.1 | $59.2 | | Interest expense | $(39.4) | $(8.1) | | Net income attributable to Shift4 Payments, Inc. | $34.0 | $39.2 | | Preferred stock dividend | $(9.5) | $— | | Class A net income per share - diluted | $0.32 | $0.58 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash from operating activities slightly increased to **$238.5 million**, investing activities used **$132.2 million** (lower than prior year), and financing activities provided a substantial **$1.63 billion** from new debt and preferred stock Cash Flow Summary (in millions) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $238.5 | $226.8 | | Net cash used in investing activities | $(132.2) | $(381.5) | | Net cash provided by (used in) financing activities | $1,626.1 | $(154.8) | | **Change in cash and cash equivalents** | **$1,814.5** | **$(318.5)** | Notes to Condensed Consolidated Financial Statements The notes detail the **$2.7 billion** Global Blue acquisition, significant financing activities including **$1.0 billion** in preferred stock and over **$1.3 billion** in new senior notes, and **$148.2 million** in Class A common stock repurchases - Subsequent to the quarter end, on July 3, 2025, the company completed its acquisition of Global Blue Group Holding AG. The aggregate consideration was approximately **$2.7 billion**[54](index=54&type=chunk)[150](index=150&type=chunk)[156](index=156&type=chunk) - In May 2025, the company issued 10,000,000 shares of 6.00% Series A Mandatory Convertible Preferred Stock for gross proceeds of **$1.0 billion** to help fund the Global Blue acquisition[120](index=120&type=chunk) - During the second quarter of 2025, the company issued an additional **$550.0 million** of 6.750% Senior Notes due 2032 and **€680.0 million** of 5.500% Senior Notes due 2033. The company also repaid its outstanding **$450.0 million** of 4.625% Senior Notes due 2026[73](index=73&type=chunk)[77](index=77&type=chunk)[91](index=91&type=chunk) - During the six months ended June 30, 2025, the company repurchased 1,834,895 shares of its Class A common stock for **$148.2 million**. As of June 30, 2025, **$206.0 million** remained available under the repurchase program[119](index=119&type=chunk)[273](index=273&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 17% year-over-year increase in Q2 gross revenue to **$966.2 million**, driven by a 25% increase in payment volume, alongside the impact of acquisitions, higher expenses, and significant financing activities, with Q2 Adjusted EBITDA growing 26% to **$205.1 million** and a strong liquidity position of **$3.0 billion** in cash Q2 2025 vs. Q2 2024 Revenue Performance (in millions) | Revenue Type | Q2 2025 | Q2 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Payments-based revenue | $868.5 | $755.8 | $112.7 | 15% | | Subscription and other revenues | $97.7 | $71.2 | $26.5 | 37% | | **Gross revenue** | **$966.2** | **$827.0** | **$139.2** | **17%** | - The increase in payments-based revenue was primarily driven by a **25% increase in payment volume**, from **$40.1 billion** in Q2 2024 to **$50.1 billion** in Q2 2025[200](index=200&type=chunk)[236](index=236&type=chunk) Key Performance Indicators & Non-GAAP Measures (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Gross revenue less network fees | $413.4 | $320.6 | | Adjusted EBITDA | $205.1 | $162.4 | - As of June 30, 2025, the company held **$3.0 billion** in cash and cash equivalents, a significant portion of which was used in July 2025 for the approximately **$2.7 billion** acquisition of Global Blue[246](index=246&type=chunk) - Recent developments include Taylor Lauber succeeding Jared Isaacman as CEO and a definitive agreement to acquire Smartpay Holdings Limited for approximately **$180 million USD**, expected to close in Q4 2025[166](index=166&type=chunk)[167](index=167&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate changes, with **$3.8 billion** in fixed-rate debt mitigating existing risk, but floating-rate facilities expose it to future interest rate fluctuations - As of June 30, 2025, the company had **$3,771.0 million** of fixed-rate principal debt outstanding, which does not pose a financial statement risk from interest rate changes[280](index=280&type=chunk) - The company is exposed to floating interest rate risk through its Revolving Credit Facility and, as of July 3, 2025, its new Term Loan Facility[281](index=281&type=chunk) [Item 4. Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[283](index=283&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[284](index=284&type=chunk) [PART II. OTHER INFORMATION](index=63&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any legal proceedings or claims that could materially adversely affect its business, financial condition, or operating results - The company is not aware of any legal proceedings that could materially and adversely affect its business[116](index=116&type=chunk)[286](index=286&type=chunk) [Item 1A. Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) This section highlights new risks from the Series A Mandatory Convertible Preferred Stock, including its junior status to substantial debt and price volatility, and risks from the Global Blue acquisition, focusing on integration challenges and synergy realization - New risks have been introduced related to the Series A Mandatory Convertible Preferred Stock, which is junior to the company's approximately **$3.8 billion** in consolidated debt[287](index=287&type=chunk) - Holders of the Preferred Stock bear the risk of fluctuations in the trading price of the Class A common stock, as the conversion rate is variable and dependent on the stock's market price[290](index=290&type=chunk) - The company may be unable to successfully integrate the Global Blue business or realize the anticipated synergies and benefits of the merger, which could result in distraction of management and disruption of ongoing business[328](index=328&type=chunk)[329](index=329&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=74&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's Q2 2025 stock repurchase activity, including the repurchase of **1,148,718 shares** in April at an average price of **$74.17** per share, with **$206.0 million** remaining available under the program Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 1,148,718 | $74.17 | | May 2025 | — | — | | June 2025 | — | — | - As of June 30, 2025, **$206.0 million** remained available for repurchase under the company's stock repurchase program, which is authorized through December 31, 2025[332](index=332&type=chunk) [Item 5. Other Information](index=74&type=section&id=Item%205.%20Other%20Information) In June 2025, CFO Nancy Disman and General Counsel Jordan Frankel each entered into new Rule 10b5-1 trading plans for the future sale of company shares - On June 13, 2025, CFO Nancy Disman entered into a Rule 10b5-1 trading plan for the potential sale of up to **45,000 shares** of Class A common stock and **56,412 shares** from vested RSUs[336](index=336&type=chunk) - On June 13, 2025, General Counsel Jordan Frankel entered into a Rule 10b5-1 trading plan for the potential sale of up to **42,500 shares** of Class A common stock[337](index=337&type=chunk)