• Volume Growth: Increased 35% year-over-year to $45 billion.
• Gross Revenue Less Network Fees: Grew 40% to $369 million.
• Adjusted EBITDA: Increased 38% to $169 million.
• Adjusted EBITDA Margins: Achieved 46%, slightly above the guidance of 45%.
• Adjusted EPS: Delivered $1.07 per share.
• Subscription and Other Revenue: Reached $93 million, up 77% year-over-year.
• Adjusted Free Cash Flow: $71 million, representing 42% adjusted free cash flow conversion.
• GAAP Net Income: $20 million.
• GAAP Diluted EPS: $0.20 per share.
• Net Leverage: Approximately 2.4 times.
• Cash and Cash Equivalents: $1.2 billion as of March 31.
• Full Year 2025 Guidance: Gross revenue less network fees between $1.66 billion and $1.73 billion; Adjusted EBITDA between $840 million and $865 million.
• Q2 2025 Guidance: Gross revenue less network fees between $405 million and $415 million with adjusted EBITDA margins of approximately 50%.

• Warning! GuruFocus has detected 4 Warning Signs with FOUR.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Shift4 Payments Inc (NYSE:FOUR) reported a 35% year-over-year increase in volumes to $45 billion for Q1 2025.
• Gross revenue less network fees grew by 40% to $369 million, indicating strong financial performance.
• Adjusted EBITDA increased by 38% to $169 million, with margins slightly above guidance at 46%.
• The company raised its full-year 2025 guidance, reflecting confidence in its ability to execute and deliver growth.
• Shift4 Payments Inc (NYSE:FOUR) is expanding internationally, now operating in over 50 countries, which is expected to drive future growth.

Negative Points

• The timing of leap year and Easter holiday modestly impacted year-over-year growth in Q1 volumes.
• There is ongoing depreciation of legacy revenue from recent acquisitions, affecting subscription and other revenue.
• The company faces challenges in integrating and unlocking synergies from recent acquisitions, which can take longer than expected.
• Economic uncertainty and potential macroeconomic challenges could impact consumer spending and business performance.
• The international expansion requires significant market education and adaptation to local payment methods, which can be complex and time-consuming.

Q & A Highlights

Q: How would you describe the competitive environment in international markets that you're targeting? What gives Shift4 an edge here? A: Taylor Lauber, President and Chief Strategy Officer, explained that the international market resembles the US market from 15-20 years ago, with software, hardware, and payment solutions evolving separately. Shift4's strategy of bundling these solutions gives them an edge, as merchants are looking for integrated solutions. Currently, about one in four new merchants are from outside the US.

Q: Can you elaborate on the assumptions for guidance given the current market conditions? A: Taylor Lauber noted that the market trends have been consistent over the past 12-18 months, with stable same-store sales across segments. Nancy Disman, CFO & COO, added that the forecast is not heavily reliant on new market grabs, as much of the growth is expected from existing volume and annualization of past sign-ups.

Q: What is the progress on cross-sell opportunities from recent acquisitions like Revel and Eigen? A: Taylor Lauber highlighted that Revel has seen significant cross-sell success, with many merchants migrating to SkyTab. Eigen is contributing to international growth, and the integration of these acquisitions is progressing well, enhancing Shift4's competitive position.

Q: Can you provide insights into the backlog and its contribution to 2025 volumes? A: Taylor Lauber stated that the $35 billion backlog is expected to be implemented largely within the year, contributing significantly to 2025 volumes. Most of these customers will annualize in the following year, providing a stable growth trajectory.

Q: How is the Global Blue acquisition expected to impact Shift4, and what are the anticipated synergies? A: Taylor Lauber emphasized that Global Blue's capabilities are rare and valuable, particularly in luxury retail. The $80 million in revenue synergies by 2027 is based on modest conversion expectations, with significant potential for growth beyond that. The acquisition is expected to close in early Q3, subject to regulatory approvals.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.