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Shift4 Payments(FOUR) - 2024 Q1 - Earnings Call Transcript
FOURShift4 Payments(FOUR)2024-05-09 19:45
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Financial Data and Key Metrics Changes - Total Q1 volume reached 33billion,reflectinga5033 billion, reflecting a 50% year-over-year growth [15] - Gross revenue less network fees increased by 32% to 264 million [15] - Adjusted EBITDA for the quarter was 122million,up36122 million, up 36%, with adjusted EBITDA margins at 46% [15][21] - Adjusted free cash flow was 78 million, representing a conversion rate of 64% [22] Business Line Data and Key Metrics Changes - Subscription and other revenue in Q1 rose by 45% year-over-year, driven by growth in sports and entertainment [19] - Restaurant SaaS revenue increased by 55%, with a total of approximately 9,400 SkyTab system installs in Q1, a 38% increase quarter-over-quarter [19][86] - Gateway revenue decreased sequentially, reflecting the success of the Gateway Sunset initiative [18] Market Data and Key Metrics Changes - The blended spread for Q1 was 62 basis points, consistent with full-year guidance [17] - The company anticipates a stronger second half of 2024 due to various growth initiatives and market conditions [28][56] Company Strategy and Development Direction - The company is focused on expanding its international presence, particularly in Europe and Canada, with a goal of signing 10,000 new restaurant and hotel customers in international markets by year-end [36][70] - The recent acquisition of Revel for 250millionisaimedatenhancingdistributionandacceleratinggrowthintherestaurantvertical[8][37]−Thecompanyiscommittedtomaintainingadisciplinedapproachtocostmanagementwhileinvestinginstrategicgrowthopportunities[20]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementnotedthatthecurrentoperatingenvironmentisfavorable,withmerchantsseekingtechnologysolutionstostreamlinecommerceexperiences[43]−Thereisconfidenceinachievingannualyear−over−yearexpansioninconversionratesdespitepotentialfluctuationsduetoseasonality[22][32]−Thecompanyexpectsorganicgrowthofgrossrevenuelessnetworkfeestoexceed25250 million is aimed at enhancing distribution and accelerating growth in the restaurant vertical [8][37] - The company is committed to maintaining a disciplined approach to cost management while investing in strategic growth opportunities [20] Management's Comments on Operating Environment and Future Outlook - Management noted that the current operating environment is favorable, with merchants seeking technology solutions to streamline commerce experiences [43] - There is confidence in achieving annual year-over-year expansion in conversion rates despite potential fluctuations due to seasonality [22][32] - The company expects organic growth of gross revenue less network fees to exceed 25% [28] Other Important Information - The company has a strong balance sheet with approximately 700 million in available liquidity and a net leverage of about 2.4 times [24][25] - The company is tightening its guidance for end-to-end volume to a range of 167billionto167 billion to 175 billion for the full year 2024, representing 53% to 61% year-over-year growth [26] Q&A Session Summary Question: Why did a deal not close to be acquired? - Management indicated that strategic interest and rising price expectations prevented the deal from closing, emphasizing a focus on executing their plan [50] Question: How has the expansion outside of North America been progressing? - Management reported successful execution of their playbook in international markets, with notable wins in Europe and Canada [51][109] Question: Can you elaborate on the strategic rationale behind the Revel acquisition? - The acquisition is expected to enhance distribution and accelerate growth in the restaurant vertical, leveraging Revel's strong sales team [127]