Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________________________ FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Securities registered pursuant to Section 12(b) of the Act: | | | Name of eac ...

*Illustrative quotes assuming 5-year total cost of ownership. Shift4 will process payments for the many notable locations operated by Clyde's in the Washington DC area, including the historic Old Ebbitt Grill. Gaining momentum in new verticals TOTAL 5-YEAR COST ^ We are now integrated to the top three ticketing providers: 1 5 15 Second Quarter of 2023 S H I F T @. Forward-Looking Statements ability to continue to expand our market share or expand into new markets; our reliance on third-party vendors to prov ...

Shift4 Payments, Inc. (NYSE:FOUR) Q2 2023 Earnings Conference Call August 3, 2023 8:30 AM ET Company Participants Tom McCrohan - EVP, Strategy and IR Jared Isaacman - CEO Taylor Lauber - President and CSO Nancy Disman - CFO Conference Call Participants Darrin Peller - Wolfe Research Will Nance - Goldman Sachs Tim Chiodo - Credit Suisse Dan Perlin - RBC Rayna Kumar - UBS Jason Kupferberg - Bank of America Ashwin Shirvaikar - Citi Andrew Jeffrey - Truist Securities Operator Ladies and gentlemen, thank you for ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________________________ FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 001-39313 __________________________________ SHIFT4 PAYMENT ...

[FORM 10-Q General Information](index=1&type=section&id=FORM%2010-Q%20General%20Information) [Filing Details and Registrant Information](index=1&type=section&id=Filing%20Details%20and%20Registrant%20Information) This section provides the basic filing information for Shift4 Payments, Inc.'s Form 10-Q for the quarterly period ended March 31, 2023, including its legal name, state of incorporation, principal executive offices, and confirmation of compliance with SEC filing requirements - Shift4 Payments, Inc. filed its Quarterly Report on Form 10-Q for the period ended March 31, 2023[3](index=3&type=chunk) - The registrant has filed all required reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and has been subject to such filing requirements for the past 90 days[5](index=5&type=chunk) - The company's Class A Common Stock is traded on The New York Stock Exchange under the symbol FOUR[5](index=5&type=chunk) [Filer Status and Stock Information](index=2&type=section&id=Filer%20Status%20and%20Stock%20Information) Shift4 Payments, Inc. is classified as a large accelerated filer. As of May 4, 2023, the company had 57.3 million Class A, 23.8 million Class B, and 2.1 million Class C common shares outstanding - Shift4 Payments, Inc. is designated as a 'Large accelerated filer'[8](index=8&type=chunk) Outstanding Common Stock as of May 4, 2023 | Class of Stock | Shares Outstanding | | :--------------- | :----------------- | | Class A Common Stock | 57,271,931 | | Class B Common Stock | 23,831,883 | | Class C Common Stock | 2,090,706 | [Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) [Forward-Looking Statements Disclosure](index=4&type=section&id=Forward-Looking%20Statements%20Disclosure) This section outlines the company's forward-looking statements, emphasizing that actual results may differ materially due to known and unknown risks, uncertainties, and other important factors. It also lists key risk factors that could impact the business, such as intense competition, global economic conditions, inflation, reliance on third-party vendors, and acquisition-related risks - The report contains forward-looking statements covered by safe harbor provisions, which are subject to known and unknown risks and uncertainties that may cause actual results to differ materially[13](index=13&type=chunk) - Key risk factors include intense competition, potential changes in the competitive landscape, global economic conditions, inflation, reliance on third-party vendors, and risks associated with acquisitions[15](index=15&type=chunk) - The company does not plan to publicly update or revise any forward-looking statements unless required by applicable law[17](index=17&type=chunk) [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 for Shift4 Payments, Inc., including the balance sheets, statements of operations, comprehensive income (loss), changes in stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, acquisitions, revenue recognition, debt, and other financial components [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in millions) | Asset/Liability Category | March 31, 2023 | December 31, 2022 | | :----------------------- | :------------- | :---------------- | | **Assets** | | | | Total current assets | $1,049.0 | $991.7 | | Total noncurrent assets | $1,565.9 | $1,562.3 | | **Total assets** | **$2,614.9** | **$2,554.0** | | **Liabilities** | | | | Total current liabilities| $283.1 | $268.3 | | Total noncurrent liabilities| $1,805.4 | $1,805.1 | | **Total liabilities** | **$2,088.5** | **$2,073.4** | | **Stockholders' Equity** | | | | Total stockholders' equity| $526.4 | $480.6 | - Total assets increased by **$60.9 million** from December 31, 2022, to March 31, 2023, primarily driven by an increase in cash and cash equivalents[19](index=19&type=chunk) - Total stockholders' equity increased by **$45.8 million**, reflecting net income and additional paid-in capital[19](index=19&type=chunk) [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (in millions, except per share) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Gross revenue | $547.0 | $401.9 | | Cost of sales | $(401.6) | $(317.3) | | Income (loss) from operations | $8.8 | $(11.7) | | Net income (loss) | $20.4 | $(13.2) | | Net income (loss) attributable to Shift4 Payments, Inc. | $14.8 | $(7.5) | | Class A net income (loss) per share - basic | $0.26 | $(0.13) | | Class A net income (loss) per share - diluted | $0.24 | $(0.13) | - Gross revenue increased by **36.1%** year-over-year, from **$401.9 million** in Q1 2022 to **$547.0 million** in Q1 2023[20](index=20&type=chunk) - The company reported a net income of **$20.4 million** in Q1 2023, a significant improvement from a net loss of **$13.2 million** in Q1 2022[20](index=20&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Condensed Consolidated Statements of Comprehensive Income (Loss) (in millions) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) | $20.4 | $(13.2) | | Unrealized gain on foreign currency translation adjustment, net of tax | $3.0 | $— | | Total other comprehensive income | $3.0 | $— | | Comprehensive income (loss) | $23.4 | $(13.2) | | Comprehensive income (loss) attributable to Shift4 Payments, Inc. | $16.9 | $(7.5) | - Comprehensive income for Shift4 Payments, Inc. improved from a loss of **$7.5 million** in Q1 2022 to an income of **$16.9 million** in Q1 2023, partly due to an unrealized gain on foreign currency translation[23](index=23&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Condensed Consolidated Statements of Changes in Stockholders' Equity (in millions) | Metric | Balance at Dec 31, 2022 | Net Income | Issuance of Class A Stock | Exchange of Shares | Equity-based Compensation | Other Comprehensive Income | Balance at Mar 31, 2023 | | :----------------------- | :---------------------- | :--------- | :------------------------ | :----------------- | :------------------------ | :------------------------- | :---------------------- | | Additional Paid-In Capital | $702.6 | — | $5.5 | $4.9 | $21.9 | — | $730.2 | | Retained Deficit | $(363.6) | $14.8 | — | — | — | — | $(348.8) | | Total Stockholders' Equity attributable to Shift4 Payments, Inc. | $347.3 | $14.8 | $5.5 | $4.9 | $21.9 | $2.1 | $391.8 | - Total stockholders' equity increased from **$480.6 million** at December 31, 2022, to **$526.4 million** at March 31, 2023, driven by net income, equity-based compensation, and share issuances[25](index=25&type=chunk) - Additional paid-in capital increased by **$27.6 million**, primarily due to equity-based compensation and share exchanges[25](index=25&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in millions) | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $79.4 | $30.8 | | Net cash used in investing activities | $(31.4) | $(37.6) | | Net cash used in financing activities | $(7.0) | $(35.7) | | Effect of exchange rate changes on cash and cash equivalents and restricted cash | $0.4 | $— | | Change in cash and cash equivalents and restricted cash | $41.4 | $(42.5) | | Cash and cash equivalents and restricted cash, end of period | $817.9 | $1,189.0 | - Net cash provided by operating activities significantly increased to **$79.4 million** in Q1 2023 from **$30.8 million** in Q1 2022[27](index=27&type=chunk) - Net cash used in financing activities decreased substantially from **$35.7 million** in Q1 2022 to **$7.0 million** in Q1 2023, mainly due to no stock repurchases in 2023[27](index=27&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Organization, Basis of Presentation and Significant Accounting Policies](index=12&type=section&id=Note%201.%20Organization,%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This note describes Shift4 Payments, Inc.'s organization as a leading independent provider of software and payment processing solutions, its basis of presentation for unaudited interim financial statements, and significant accounting policies, including changes in presentation for restricted cash and transaction-related expenses. It also highlights the company's liquidity position and compliance with debt covenants - Shift4 Payments, Inc. is a leading independent provider of software and payment processing solutions in the U.S., serving a wide range of merchants from small businesses to multinational enterprises[29](index=29&type=chunk) - The company's unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and SEC regulations for interim financial information, with all necessary normal recurring adjustments[30](index=30&type=chunk)[31](index=31&type=chunk) - As of March 31, 2023, the company had **$1,772.5 million** in total debt outstanding and was in compliance with all financial covenants, expecting to remain compliant for at least the next 12 months[37](index=37&type=chunk) Cash and Restricted Cash (in millions) | Category | March 31, 2023 | December 31, 2022 | | :--------------- | :------------- | :---------------- | | Cash and cash equivalents | $743.9 | $702.5 | | Restricted cash | $74.0 | $74.0 | [Note 2. Acquisitions](index=14&type=section&id=Note%202.%20Acquisitions) This note details the company's acquisitions, including Online Payments Group, several restaurant technology partners, and The Giving Block. It outlines the purchase consideration, allocation of fair values to acquired assets and liabilities, and the nature of contingent consideration (earnous) for each acquisition, emphasizing their strategic rationale for global expansion and market penetration - The company acquired Online Payments Group AG in September 2022 for an estimated **$125.9 million**, aiming to accelerate global eCommerce growth[46](index=46&type=chunk) - Multiple restaurant technology partners were acquired in 2022 and early 2023 for a total of **$81.8 million**, net of cash acquired, to onboard their customers onto the company's end-to-end acquiring solution[54](index=54&type=chunk) - The Giving Block, a cryptocurrency donation marketplace, was acquired in February 2022 for **$106.9 million**, net of cash acquired, to accelerate growth in the non-profit sector[61](index=61&type=chunk) - Contingent consideration (earnous) for these acquisitions is revalued quarterly, with fair value adjustments recognized in the Condensed Consolidated Statements of Operations[47](index=47&type=chunk)[55](index=55&type=chunk)[63](index=63&type=chunk) [Note 3. Revenue](index=19&type=section&id=Note%203.%20Revenue) This note disaggregates the company's revenue into payments-based revenue and subscription and other revenues, showing significant growth in both categories. It also details contract liabilities (deferred revenue) and the allowance for doubtful accounts Disaggregated Revenue (in millions) | Revenue Type | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------- | :-------------------------------- | :-------------------------------- | | Payments-based revenue | $511.0 | $371.5 | | Subscription and other revenues | $36.0 | $30.4 | | **Total Gross Revenue** | **$547.0** | **$401.9** | - Payments-based revenue increased by **37.6%** year-over-year, while subscription and other revenues grew by **18.4%**[69](index=69&type=chunk) Allowance for Doubtful Accounts (in millions) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------- | :-------------------------------- | :-------------------------------- | | Beginning balance | $18.1 | $8.0 | | Additions to expense | $3.2 | $3.0 | | Write-offs, net of recoveries and other adjustments | $(1.1) | $(1.5) | | Ending balance | $20.2 | $9.5 | [Note 4. Goodwill](index=20&type=section&id=Note%204.%20Goodwill) This note details the changes in the carrying amount of goodwill, which increased slightly due to a restaurant technology partner acquisition and foreign currency translation effects, partially offset by purchase price adjustments Changes in Goodwill Carrying Amount (in millions) | Metric | Amount | | :----------------------------------- | :----- | | Balance at December 31, 2022 | $735.0 | | Restaurant technology partner acquisition | $1.1 | | Purchase price adjustments related to prior period acquisitions | $(0.2) | | Effect of foreign currency translation | $1.1 | | Balance at March 31, 2023 | $737.0 | - Goodwill increased by **$2.0 million** from December 31, 2022, to March 31, 2023, primarily due to a restaurant technology partner acquisition and foreign currency translation[73](index=73&type=chunk) [Note 5. Depreciation and Amortization](index=20&type=section&id=Note%205.%20Depreciation%20and%20Amortization) This note provides a breakdown of depreciation and amortization expenses, showing a significant increase in total expenses year-over-year, primarily driven by higher amortization of residual commission buyouts and acquired intangibles Total Depreciation and Amortization (in millions) | Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Depreciation and amortization expense | $35.3 | $17.3 | | Cost of sales | $12.3 | $11.8 | | **Total Depreciation and Amortization** | **$47.6** | **$29.1** | - Total depreciation and amortization increased by **$18.5 million (63.6%)** from Q1 2022 to Q1 2023, largely due to residual commission buyouts and acquired intangibles[74](index=74&type=chunk) Estimated Amortization Expense for Future Years (in millions) | Year | Residual Commission Buyouts | Other Intangible Assets | Capitalized Customer Acquisition Costs | Total Amortization | | :--- | :-------------------------- | :---------------------- | :------------------------------------- | :----------------- | | 2023 (remaining) | $63.0 | $47.0 | $11.5 | $121.5 | | 2024 | $83.8 | $59.5 | $14.0 | $157.3 | | 2025 | $81.9 | $51.1 | $10.0 | $143.0 | | 2026 | $48.3 | $30.3 | $3.9 | $82.5 | | 2027 | $1.6 | $22.6 | $0.2 | $24.4 | | Thereafter | $4.4 | $95.5 | $— | $99.9 | | **Total** | **$283.0** | **$306.0** | **$39.6** | **$628.6** | [Note 6. Residual Commission Buyouts](index=21&type=section&id=Note%206.%20Residual%20Commission%20Buyouts) This note details the company's residual commission buyouts, which represent the acquisition of ongoing merchant relationships from third-party distribution partners. The net carrying value decreased slightly, and contingent consideration for these buyouts was $14.2 million as of March 31, 2023 Residual Commission Buyouts, Net (in millions) | Category | March 31, 2023 Net Carrying Value | December 31, 2022 Net Carrying Value | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Residual commission buyouts from asset acquisitions | $271.3 | $291.9 | | Residual commission buyouts from business combinations | $11.7 | $12.0 | | **Total residual commission buyouts** | **$283.0** | **$303.9** | - The net carrying value of residual commission buyouts decreased by **$20.9 million** from December 31, 2022, to March 31, 2023[77](index=77&type=chunk) - Contingent consideration for residual commission buyouts was **$14.2 million** as of March 31, 2023, with a maximum potential payout of **$23.0 million** under the strategic buyout program[78](index=78&type=chunk) [Note 7. Other Intangible Assets, Net](index=21&type=section&id=Note%207.%20Other%20Intangible%20Assets,%20Net) This note provides a breakdown of other intangible assets, net, including merchant relationships, acquired technology, trademarks, and capitalized software development costs. The net carrying value remained relatively stable, with ongoing amortization and new capitalized software development Other Intangible Assets, Net (in millions) | Category | March 31, 2023 Net Carrying Value | December 31, 2022 Net Carrying Value | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Merchant relationships | $157.4 | $159.9 | | Acquired technology | $55.9 | $59.0 | | Trademarks and trade names | $22.8 | $23.4 | | Capitalized software development costs | $69.9 | $64.5 | | **Total other intangible assets, net** | **$306.0** | **$306.8** | - Capitalized software development costs, net, increased by **$5.4 million** from December 31, 2022, to March 31, 2023[79](index=79&type=chunk) [Note 8. Capitalized Customer Acquisition Costs, Net](index=22&type=section&id=Note%208.%20Capitalized%20Customer%20Acquisition%20Costs,%20Net) This note details capitalized customer acquisition costs, net, which increased from $36.1 million to $39.6 million, with a weighted average amortization period of four years Capitalized Customer Acquisition Costs, Net (in millions) | Metric | March 31, 2023 | December 31, 2022 | | :----------------------------------- | :------------- | :---------------- | | Gross carrying value | $78.6 | $72.3 | | Accumulated amortization | $(39.0) | $(36.2) | | **Net carrying value** | **$39.6** | **$36.1** | - Net capitalized customer acquisition costs increased by **$3.5 million** from December 31, 2022, to March 31, 2023[80](index=80&type=chunk) - The weighted average amortization period for these costs remained at **four years**[81](index=81&type=chunk) [Note 9. Equipment for Lease, Net](index=22&type=section&id=Note%209.%20Equipment%20for%20Lease,%20Net) This note outlines the company's equipment for lease, net, which includes equipment under lease and equipment held for lease. The net carrying value increased, reflecting new acquisitions of equipment to be leased Equipment for Lease, Net (in millions) | Category | March 31, 2023 Net Carrying Value | December 31, 2022 Net Carrying Value | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Equipment under lease | $76.9 | $67.4 | | Equipment held for lease | $12.7 | $13.3 | | **Total equipment for lease, net** | **$89.6** | **$80.7** | - Net equipment for lease increased by **$8.9 million** from December 31, 2022, to March 31, 2023[82](index=82&type=chunk) [Note 10. Property, Plant and Equipment, Net](index=22&type=section&id=Note%2010.%20Property,%20Plant%20and%20Equipment,%20Net) This note details the company's property, plant, and equipment, net, showing an increase in total gross value and accumulated depreciation Property, Plant and Equipment, Net (in millions) | Category | March 31, 2023 | December 31, 2022 | | :----------------------------------- | :------------- | :---------------- | | Total property, plant and equipment, gross | $35.7 | $33.0 | | Less: Accumulated depreciation | $(12.0) | $(10.7) | | **Total property, plant and equipment, net** | **$23.7** | **$22.3** | - Net property, plant and equipment increased by **$1.4 million** from December 31, 2022, to March 31, 2023[83](index=83&type=chunk) [Note 11. Debt](index=23&type=section&id=Note%2011.%20Debt) This note provides a comprehensive overview of the company's outstanding debt, including Convertible Notes due 2025 and 2027, and Senior Notes due 2026. It details the principal amounts, effective interest rates, net carrying values, and future principal payments, confirming compliance with all financial covenants Outstanding Debt (in millions) | Debt Instrument | Maturity Date | Effective Interest Rate | March 31, 2023 Principal | December 31, 2022 Principal | | :----------------------------------- | :------------ | :---------------------- | :----------------------- | :-------------------------- | | Convertible Notes due 2025 | Dec 15, 2025 | 0.49% | $690.0 | $690.0 | | Convertible Notes due 2027 | Aug 1, 2027 | 0.90% | $632.5 | $632.5 | | Senior Notes due 2026 | Nov 1, 2026 | 5.13% | $450.0 | $450.0 | | **Total borrowings** | | | **$1,772.5** | **$1,772.5** | - The company had **$1,772.5 million** in total principal debt outstanding as of March 31, 2023, with no change from December 31, 2022[85](index=85&type=chunk) - The company was in compliance with all financial covenants under its debt agreements as of March 31, 2023[92](index=92&type=chunk) Future Principal Payments (in millions) | Year | Amount | | :--- | :----- | | 2025 | $690.0 | | 2026 | $450.0 | | 2027 | $632.5 | | **Total** | **$1,772.5** | [Note 12. Other Consolidated Balance Sheet Components](index=25&type=section&id=Note%2012.%20Other%20Consolidated%20Balance%20Sheet%20Components) This note provides detailed breakdowns of prepaid expenses and other current assets, accrued expenses and other current liabilities, other noncurrent assets, and other noncurrent liabilities. It highlights changes in contingent liabilities for acquisitions and residual commission buyouts, as well as increases in accrued interest and payroll Prepaid Expenses and Other Current Assets (in millions) | Category | March 31, 2023 | December 31, 2022 | | :----------------------------------- | :------------- | :---------------- | | Total prepaid expenses and other current assets | $17.5 | $15.4 | Accrued Expenses and Other Current Liabilities (in millions) | Category | March 31, 2023 | December 31, 2022 | | :----------------------------------- | :------------- | :---------------- | | Contingent liability earnouts for acquisitions | $28.5 | $34.9 | | Contingent liability earnouts for residual commission buyouts | $9.8 | $10.0 | | Accrued interest | $9.3 | $4.9 | | Accrued payroll | $13.0 | $10.0 | | **Total accrued expenses and other current liabilities** | **$82.5** | **$80.0** | Other Noncurrent Liabilities (in millions) | Category | March 31, 2023 | December 31, 2022 | | :----------------------------------- | :------------- | :---------------- | | Contingent liability earnouts for acquisitions | $13.8 | $10.3 | | TRA liability | $2.2 | $1.7 | | **Total other noncurrent liabilities** | **$29.5** | **$26.5** | [Note 13. Fair Value Measurement](index=27&type=section&id=Note%2013.%20Fair%20Value%20Measurement) This note details the fair value measurements for the company's assets and liabilities, particularly contingent liabilities from acquisitions and residual commission buyouts, using Level 3 unobservable inputs. It also covers the fair value of outstanding debt (Level 2) and investments in securities, noting a significant unrealized gain on investments - The company makes recurring fair value measurements of contingent liabilities for acquisitions and residual commission buyouts using Level 3 unobservable inputs, such as projected revenues and attrition rates[100](index=100&type=chunk) - Fair value adjustments to contingent liabilities for Online Payments Group resulted in a **$7.0 million** expense in Q1 2023 due to increased projected revenues[101](index=101&type=chunk) - An unrealized gain of **$8.9 million** on investments in non-marketable securities was recognized in Q1 2023, based on secondary offerings of identical securities[107](index=107&type=chunk) Estimated Fair Value of Outstanding Debt (in millions) | Debt Instrument | March 31, 2023 Fair Value | December 31, 2022 Fair Value | | :----------------------------------- | :-------------------------- | :--------------------------- | | 2025 Convertible Notes | $790.7 | $686.9 | | 2027 Convertible Notes | $601.1 | $533.7 | | 2026 Senior Notes | $427.2 | $423.0 | | **Total** | **$1,819.0** | **$1,643.6** | [Note 14. Income Taxes](index=30&type=section&id=Note%2014.%20Income%20Taxes) This note explains the company's income tax structure, effective tax rates, and uncertain tax positions. It highlights the impact of noncontrolling interests and valuation allowances on the effective tax rate, and details the Tax Receivable Agreement (TRA) liability - The company's effective tax rate was **(21.4)%** for Q1 2023, compared to **(32.0)%** for Q1 2022, primarily influenced by income allocated to noncontrolling interests and valuation allowances[112](index=112&type=chunk) - A **$4.8 million** tax benefit related to a valuation allowance release due to a legal entity restructuring impacted the Q1 2023 effective tax rate[112](index=112&type=chunk) - The TRA liability was **$2.2 million** as of March 31, 2023, with an additional **$291.6 million** liability not recognized due to uncertainty of realizing future tax benefits[116](index=116&type=chunk) Uncertain Tax Positions (in millions) | Metric | March 31, 2023 | December 31, 2022 | | :----------------------------------- | :------------- | :---------------- | | Uncertain tax positions recognized within Other noncurrent liabilities | $8.1 | $8.0 | [Note 15. Lease Agreements](index=31&type=section&id=Note%2015.%20Lease%20Agreements) This note describes the company's role as a lessor, providing hardware to merchants under operating leases. Lease income for Q1 2023 was $5.3 million, with expected future minimum lease payments of $11.8 million for the next twelve months - The company provides hardware (terminals and POS equipment) to merchants under operating leases, with lease payments recognized as gross revenue[118](index=118&type=chunk)[119](index=119&type=chunk) Lease Income (in millions) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Total lease income | $5.3 | $4.3 | - Expected future minimum lease payments for hardware from April 1, 2023, through March 31, 2024, are **$11.8 million**[120](index=120&type=chunk) [Note 16. Related Party Transactions](index=32&type=section&id=Note%2016.%20Related%20Party%20Transactions) This note details transactions with related parties, including a service agreement with the CEO and founder, distributions to noncontrolling interests, and equity award programs funded by the founder. It also describes variable prepaid forward contracts entered into by the founder's SPV, involving pledges of Class B common stock and LLC units - The company has a service agreement with its CEO and founder, Jared Isaacman, incurring **$0.2 million** in expenses for Q1 2023[121](index=121&type=chunk) - During Q1 2023, **$1.4 million** in distributions were made to noncontrolling interests related to income taxes paid on behalf of Rook Holdings Inc[121](index=121&type=chunk) - The founder's SPV entered into variable prepaid forward contracts covering approximately **4.44 million** shares of Class A common stock, secured by pledged Class B common stock and LLC units[125](index=125&type=chunk) [Note 17. Commitments and Contingencies](index=33&type=section&id=Note%2017.%20Commitments%20and%20Contingencies) This note addresses the company's involvement in various lawsuits and legal proceedings in the ordinary course of business. It states that the company is not currently aware of any legal proceedings or claims that would have a material adverse effect on its business, financial condition, or operating results - The company is involved in various lawsuits and legal proceedings arising in the ordinary course of business[127](index=127&type=chunk) - Management believes no existing claims or proceedings will have a material adverse effect on the company's business, financial condition, or operating results[128](index=128&type=chunk) [Note 18. Stockholders' Equity](index=33&type=section&id=Note%2018.%20Stockholders'%20Equity) This note discusses the company's stock repurchase programs, noting that the last program expired on December 31, 2022, and no shares were repurchased in Q1 2023. It also confirms no treasury stock was outstanding - The company's stock repurchase programs, authorizing up to **$250.0 million** in Class A common stock repurchases, expired on December 31, 2022[129](index=129&type=chunk) - No Class A common stock was repurchased during the three months ended March 31, 2023[130](index=130&type=chunk) - There were no shares of treasury stock outstanding as of March 31, 2023, or December 31, 2022[131](index=131&type=chunk) [Note 19. Noncontrolling Interests](index=33&type=section&id=Note%2019.%20Noncontrolling%20Interests) This note clarifies that Shift4 Payments, Inc. consolidates Shift4 Payments, LLC, and the noncontrolling interest represents Rook Holdings Inc.'s economic interest in Shift4 Payments, LLC. It provides the ownership percentages of LLC Interests - Shift4 Payments, Inc. is the sole managing member of Shift4 Payments, LLC, and consolidates its financial results[132](index=132&type=chunk) Ownership of LLC Interests in Shift4 Payments, LLC | Entity | March 31, 2023 LLC Interests | March 31, 2023 Ownership % | December 31, 2022 LLC Interests | December 31, 2022 Ownership % | | :----------------------- | :--------------------------- | :------------------------- | :------------------------------ | :---------------------------- | | Shift4 Payments, Inc. | 59,024,237 | 71.0% | 57,121,314 | 68.9% | | Rook | 24,162,351 | 29.0% | 25,829,016 | 31.1% | | **Total** | **83,186,588** | **100.0%** | **82,950,330** | **100.0%** | [Note 20. Equity-based Compensation](index=33&type=section&id=Note%2020.%20Equity-based%20Compensation) This note details the company's 2020 Incentive Award Plan, including the types of awards granted (RSUs, PRSUs) and the shares available for issuance. It also reports the equity-based compensation expense and unrecognized expense - The 2020 Incentive Award Plan allows for various equity awards, with **721,911** Class A common shares available for issuance as of March 31, 2023[133](index=133&type=chunk)[134](index=134&type=chunk) RSU Activity for Three Months Ended March 31, 2023 | Metric | Number of RSUs | Weighted Average Grant Date Fair Value | | :----------------------------------- | :------------- | :------------------------------------- | | Unvested balance at December 31, 2022 | 2,465,355 | $47.57 | | Granted | 1,245,155 | $64.30 | | Vested | (194,613) | $60.59 | | Forfeited or cancelled | (129,176) | $53.40 | | Unvested balance at March 31, 2023 | 3,386,721 | $52.75 | - Equity-based compensation expense was **$20.9 million** for Q1 2023, an increase from **$16.9 million** in Q1 2022[136](index=136&type=chunk) - As of March 31, 2023, **$139.7 million** of total unrecognized equity-based compensation expense is expected to be recognized over a weighted-average period of **3.27 years**[136](index=136&type=chunk) [Note 21. Basic and Diluted Net Income (Loss) per Share](index=36&type=section&id=Note%2021.%20Basic%20and%20Diluted%20Net%20Income%20(Loss)%20per%20Share) This note presents the calculation of basic and diluted net income (loss) per share using the two-class method. It shows the allocation of net income to Class A and Class C common stock and the impact of dilutive securities Basic and Diluted Net Income (Loss) per Share | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) attributable to Shift4 Payments, Inc. | $14.8 | $(7.5) | | Class A net income (loss) per share - basic | $0.26 | $(0.13) | | Class A net income (loss) per share - diluted | $0.24 | $(0.13) | | Class C net income (loss) per share - basic | $0.26 | $(0.13) | | Class C net income (loss) per share - diluted | $0.24 | $(0.13) | Weighted Average Shares Outstanding (Diluted) | Class | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Class A weighted average common stock outstanding - diluted | 82,238,704 | 52,119,378 | | Class C weighted average common stock outstanding - diluted | 2,241,648 | 4,573,372 | - Dilutive securities for Q1 2023 included **25,533,462** LLC Interests and **1,469,038** RSUs for Class A common stock[138](index=138&type=chunk) [Note 22. Supplemental Cash Flows Information](index=38&type=section&id=Note%2022.%20Supplemental%20Cash%20Flows%20Information) This note provides supplemental cash flow disclosures, including cash paid for interest and income taxes, and noncash investing and financing activities such as shares issued for acquisitions and contingent consideration Supplemental Cash Flows Information (in millions) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Cash paid for interest | $1.6 | $1.6 | | Cash paid for income taxes, net of refunds | $1.3 | $— | | Noncash investing activities: Shares and equity-based compensation awards issued in connection with acquisitions | $— | $36.5 | | Noncash investing activities: Contingent consideration for acquisitions | $0.3 | $57.8 | | Noncash financing activities: Shares and equity-based compensation awards measured but not yet issued in connection with settlement of contingent consideration for acquisitions | $7.6 | $— | - Cash paid for income taxes increased to **$1.3 million** in Q1 2023 from zero in Q1 2022[140](index=140&type=chunk) - Noncash investing activities related to acquisitions significantly decreased in Q1 2023 compared to Q1 2022[140](index=140&type=chunk) [Note 23. Segments](index=38&type=section&id=Note%2023.%20Segments) This note states that the company operates as a single reportable segment, as the Chief Operating Decision Maker (CODM) reviews financial information on a consolidated level. It also summarizes gross revenue by type - The company's operations constitute one operating segment and one reportable segment, as the CEO reviews financial information on a consolidated level[141](index=141&type=chunk) Gross Revenue by Revenue Type (in millions) | Revenue Type | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------- | :-------------------------------- | :-------------------------------- | | Payments-based revenue | $511.0 | $371.5 | | Subscription and other revenues | $36.0 | $30.4 | | **Gross revenue** | **$547.0** | **$401.9** | [Note 24. Subsequent Events](index=40&type=section&id=Note%2024.%20Subsequent%20Events) This note discloses significant events occurring after March 31, 2023, including the acquisition of Focus POS Systems, a new long-term agreement with its sponsor bank, and the authorization of a new $250.0 million stock repurchase program - Subsequent to March 31, 2023, the company acquired Focus POS Systems for **$45.0 million** (**$35.0 million** cash, **$10.0 million** Class A common stock)[143](index=143&type=chunk) - In April 2023, a new long-term agreement with its sponsor bank was finalized, augmenting services and expanding tiered pricing to lower costs as transaction volume increases[145](index=145&type=chunk) - On May 3, 2023, the Board authorized a new stock repurchase program for up to **$250.0 million** of Class A common stock through December 31, 2023[146](index=146&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2023, compared to the same period in 2022. It covers an overview of the business, factors impacting performance, key financial definitions, a detailed comparison of financial results, key performance indicators, liquidity, capital resources, and critical accounting estimates [Overview](index=41&type=section&id=Overview) Shift4 Payments, Inc. is a leading independent provider of software and payment processing solutions in the U.S., offering an end-to-end payments platform and technology solutions across various industry verticals. The company's end-to-end payment volume significantly increased year-over-year, and it has a pending acquisition of Finaro to accelerate international growth - Shift4 Payments is a leading independent provider of software and payment processing solutions in the U.S., serving merchants across diverse verticals[151](index=151&type=chunk) - The company's end-to-end payment volume grew by **65.8%** to **$22.3 billion** for the three months ended March 31, 2023, compared to **$13.4 billion** in the prior year period[156](index=156&type=chunk) - A definitive agreement to acquire Finaro for **$200.0 million** in cash and **6,439,316** shares of Class A common stock is pending regulatory approvals, expected in 2023, to accelerate international market growth[158](index=158&type=chunk) [Factors Impacting Our Business and Results of Operations](index=42&type=section&id=Factors%20Impactin%20Our%20Business%20and%20Results%20of%20Operations) This section identifies key factors influencing the company's business and financial performance, including the adoption of software-integrated payments, conversion of gateway-only customers to end-to-end solutions, changes in merchant base mix, ability to attract and retain sales teams and software partners, investment in product development, strategic acquisitions, international operations, and macro-economic conditions - Growth is driven by increased adoption of software-integrated payments and converting gateway-only customers to higher-revenue end-to-end payment offerings[160](index=160&type=chunk)[161](index=161&type=chunk) - The mix of the merchant base is shifting towards higher average revenue and volume per merchant, impacting overall portfolio pricing[162](index=162&type=chunk) - Continued investment in product development, distribution, and operations, alongside strategic acquisitions, is crucial for long-term growth and profitability[164](index=164&type=chunk)[165](index=165&type=chunk) - Macro-level economic trends, such as inflation and consumer spending habits, and foreign exchange risks from international operations, can affect revenue and profitability[166](index=166&type=chunk)[167](index=167&type=chunk) [Key Financial Definitions](index=44&type=section&id=Key%20Financial%20Definitions) This section defines the components of the company's revenue and expenses as presented in the Condensed Consolidated Statements of Operations. It clarifies payments-based revenue, subscription and other revenues, cost of sales (interchange, residuals, equipment, other costs), general and administrative expenses, revaluation of contingent liabilities, depreciation and amortization, professional fees, advertising and marketing, interest income/expense, unrealized gain on investments, change in TRA liability, income tax, and net income attributable to noncontrolling interests - Gross revenue comprises payments-based revenue (fees for processing and gateway services) and subscription and other revenues (SaaS fees, hardware sales, support)[168](index=168&type=chunk)[169](index=169&type=chunk) - Cost of sales includes interchange and processing fees, residual commissions, equipment costs, and amortization of capitalized software development, acquired technology, and customer acquisition costs[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) - Operating expenses include general and administrative, revaluation of contingent liabilities, depreciation and amortization, professional fees, and advertising and marketing[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) [Comparison of Results for the Three Months Ended March 31, 2023 and 2022](index=45&type=section&id=Comparison%20of%20Results%20for%20the%20Three%20Months%20Ended%20March%2031,%202023%20and%202022) This section provides a detailed comparison of the company's financial performance for Q1 2023 versus Q1 2022, highlighting significant increases in gross revenue, payments-based revenue, and a shift from operating loss to income. Key drivers include increased end-to-end payment volume, recent acquisitions, and changes in amortization and contingent liability revaluations Key Financial Performance Comparison (in millions) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | $ Change | % Change | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :------- | :------- | | Gross revenue | $547.0 | $401.9 | $145.1 | 36.1% | | Payments-based revenue | $511.0 | $371.5 | $139.5 | 37.6% | | Subscription and other revenues | $36.0 | $30.4 | $5.6 | 18.4% | | Income (loss) from operations | $8.8 | $(11.7) | $20.5 | NM | | Net income (loss) attributable to Shift4 Payments, Inc. | $14.8 | $(7.5) | $22.3 | NM | - The **37.6%** increase in payments-based revenue was primarily driven by an **$8.8 billion (65.8%)** increase in end-to-end payment volume[182](index=182&type=chunk) - Depreciation and amortization expense increased by **$18.0 million (104.0%)**, mainly due to higher residual commission buyout amortization[188](index=188&type=chunk) - The company recognized **$7.6 million** in interest income and an **$8.9 million** unrealized gain on investments in securities in Q1 2023, with no corresponding income in Q1 2022[190](index=190&type=chunk)[191](index=191&type=chunk) [Key Performance Indicators and Non-GAAP Measures](index=49&type=section&id=Key%20Performance%20Indicators%20and%20Non-GAAP%20Measures) This section presents key performance indicators and non-GAAP financial measures, including end-to-end payment volume, gross revenue less network fees, EBITDA, and Adjusted EBITDA. It provides reconciliations to the most directly comparable GAAP measures and explains management's use of these metrics to evaluate business performance Key Performance Indicators and Non-GAAP Measures (in millions) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | End-to-end payment volume | $22,256.9 | $13,420.9 | | Gross revenue less network fees | $200.0 | $148.8 | | EBITDA | $64.9 | $17.6 | | Adjusted EBITDA | $89.3 | $44.3 | - End-to-end payment volume increased by **65.8%** year-over-year, reflecting growth in payments delivered for settlement[196](index=196&type=chunk)[197](index=197&type=chunk) - Adjusted EBITDA more than doubled, increasing by **$45.0 million (101.6%)** from **$44.3 million** in Q1 2022 to **$89.3 million** in Q1 2023[196](index=196&type=chunk) - Gross revenue less network fees increased by **$51.2 million (34.4%)** year-over-year, indicating improved value derived from the customer base[196](index=196&type=chunk)[199](index=199&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity sources and uses, primarily cash flow from operations and debt. It details cash flow activities, outstanding debt, and future cash requirements for debt, contingent liabilities, and leases. Management believes current liquidity and future cash flow will be sufficient for at least the next twelve months - The company's liquidity is primarily sourced from cash flow from operations and debt borrowings[209](index=209&type=chunk) Summary Cash Flow Information (in millions) | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $79.4 | $30.8 | | Net cash used in investing activities | $(31.4) | $(37.6) | | Net cash used in financing activities | $(7.0) | $(35.7) | | Change in cash and cash equivalents | $41.4 | $(42.5) | - As of March 31, 2023, the company had **$1,772.5 million** of fixed rate debt principal outstanding and a **$100.0 million** Revolving Credit Facility with no outstanding borrowings[216](index=216&type=chunk)[217](index=217&type=chunk) - Material cash requirements include **$1,772.5 million** in debt principal, **$31.7 million** in contingent liabilities (with **$31.4 million** payable within 12 months), and **$27.0 million** in future rent payments for operating leases[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk) [Critical Accounting Estimates](index=53&type=section&id=Critical%20Accounting%20Estimates) This section highlights the critical accounting estimates that require significant management judgment and assumptions, including the allowance for doubtful accounts, valuation of contingent liabilities, other intangible assets, and goodwill. These estimates are based on historical experience and various assumptions, and actual results may differ - The preparation of financial statements requires management to make significant estimates and assumptions[223](index=223&type=chunk) - Critical accounting estimates include the allowance for doubtful accounts, valuation of contingent liabilities, other intangible assets, and goodwill[223](index=223&type=chunk) - Actual results may differ from these estimates under different assumptions or conditions[223](index=223&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily interest rate risk. It notes that fixed-rate debt does not pose financial statement risk from interest rate changes, but its fair value fluctuates. The Revolving Credit Facility, if utilized, would expose the company to floating interest rates - The company's financial instruments are subject to risks related to interest rates[225](index=225&type=chunk) - As of March 31, 2023, the company had **$1,772.5 million** of fixed-rate debt, which does not create financial statement risk from interest rate changes, but its fair value fluctuates[226](index=226&type=chunk) - Borrowings under the **$100.0 million** Revolving Credit Facility, if any, would bear interest at floating rates, exposing the company to interest rate fluctuations[227](index=227&type=chunk) [Item 4. Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms that management, with the participation of the principal executive and financial officers, evaluated the effectiveness of the company's disclosure controls and procedures as of March 31, 2023, and concluded they were effective at a reasonable assurance level. No material changes in internal control over financial reporting occurred during the quarter - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2023[229](index=229&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2023[230](index=230&type=chunk) [PART II. OTHER INFORMATION](index=56&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the company is involved in various legal proceedings in the ordinary course of business but does not believe any existing claims will have a material effect on its business, financial condition, or results of operations - The company is party to various claims and legal proceedings arising in the ordinary course of business[232](index=232&type=chunk) - Management does not believe any existing claims or proceedings will have a material effect on the company's business, consolidated financial condition, or results of operations[232](index=232&type=chunk) [Item 1A. Risk Factors](index=56&type=page&id=Item%201A.%20Risk%20Factors) This section refers investors to the 'Risk Factors' section in the company's 2022 Form 10-K for a comprehensive understanding of investment risks. It also states that there have been no material changes to the previously disclosed risk factors - Investing in Class A common stock involves a high degree of risk, and investors should consider the risks described in the 2022 Form 10-K[233](index=233&type=chunk) - There have been no material changes to the company's risk factors previously disclosed in its 2022 Form 10-K[233](index=233&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section indicates that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities and use of proceeds to report[234](index=234&type=chunk) [Item 3. Defaults Upon Senior Securities](index=56&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities to report for the period - No defaults upon senior securities to report[235](index=235&type=chunk) [Item 4. Mine Safety Disclosures](index=56&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[236](index=236&type=chunk) [Item 5. Other Information](index=56&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report for the period - No other information to report[237](index=237&type=chunk) [Item 6. Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed as part of the Quarterly Report, including organizational documents, indentures for various notes, and certifications required by the Sarbanes-Oxley Act - The report includes an index of exhibits, such as the Amended and Restated Certificate of Incorporation and By-Laws, various Indentures for debt, and certifications (31.1, 31.2, 32.1, 32.2) required by the Sarbanes-Oxley Act[238](index=238&type=chunk)[240](index=240&type=chunk)[242](index=242&type=chunk) [Signatures](index=59&type=section&id=Signatures) This section contains the signatures of the Chief Executive Officer and Chief Financial Officer, certifying the report's submission on behalf of Shift4 Payments, Inc - The report is signed by Jared Isaacman, Chief Executive Officer, and Nancy Disman, Chief Financial Officer, on May 9, 2023[246](index=246&type=chunk)

Shift4 Payments, Inc. (NYSE:FOUR) Q1 2023 Earnings Conference Call May 4, 2023 8:30 AM ET Company Participants Tom McCrohan - EVP, Strategy & Investor Relations Jared Isaacman - Chief Executive Officer Taylor Lauber - President & Chief Strategy Officer Nancy Disman - Chief Financial Officer Conference Call Participants Rayna Kumar - UBS Timothy Chiodo - Credit Suisse Will Nance - Goldman Sachs Darrin Peller - Wolfe Research Ashwin Shirvaikar - Citi Andrew Jeffrey - Truist Securities Operator Thank you for ...

Financial Data and Key Metrics Changes - The company reported a total Q4 volume of $20.7 billion, representing a 55% year-over-year growth [102] - Q4 gross revenues were $537.7 million, up 35% from the same quarter last year, while gross revenue less network fees increased by 36% to $199.4 million [102] - Adjusted EBITDA for the quarter was $94.4 million, with adjusted EBITDA margins at 47%, and full-year adjusted EBITDA margins expanded by over 800 basis points to 39.8% [105][106] Business Line Data and Key Metrics Changes - The high-growth core remained the primary driver of growth, with significant contributions from new verticals such as sports and entertainment, gaming, travel, and non-profits [52][62] - The company added over 100 new software integrations during 2022, enhancing its service capabilities [56] - The SkyTab POS system saw over 10,000 deployments, indicating strong market acceptance and sales pipeline [56][57] Market Data and Key Metrics Changes - The blended spread for Q4 was 71 basis points, down from 74 basis points a year ago, reflecting a shift towards larger enterprise merchants [32] - The company experienced a sequential improvement in spreads during Q4, driven by volume mix and international growth [104] - The company anticipates total end-to-end volumes of $100 billion to $109 billion for 2023, representing 40% to 52% year-over-year growth [117] Company Strategy and Development Direction - The company is focusing on international expansion as its top capital allocation priority, with plans to integrate its payment platform with Finaro [83] - The management emphasized a disciplined approach to capital deployment, aiming for positive returns within 12 to 18 months [96] - The company aims to maintain flat expenses and headcount while upgrading talent, reflecting a cautious yet optimistic outlook for 2023 [88][89] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2023, noting that while consumer spending may face headwinds, they expect to deliver profitable growth exceeding peers [48][109] - The company highlighted its competitive advantage in navigating economic downturns, having grown through previous recessions and the pandemic [86] - Management noted that the current economic climate presents opportunities for growth and market share expansion [97] Other Important Information - The company reported a strong balance sheet with $776 million in cash and a net leverage of 3.5 times, which is expected to improve with ongoing initiatives [115] - The adjusted free cash flow for Q4 was $56.7 million, bringing the full-year total to $147.2 million, with a conversion rate of 60% for the quarter [114] Q&A Session Summary Question: What are the drivers of the strong EBITDA margin in the quarter? - Management attributed the strong EBITDA margin to in-sourced distribution and a more efficient service delivery model, with confidence in sustaining these margins into 2023 [14][15] Question: How are macro conditions impacting restaurant demand for SkyTab POS? - Management indicated that the restaurant vertical performed normally in Q4, with no significant impact on customer acquisition despite macroeconomic concerns [19][22] Question: Can you elaborate on the ticketing opportunity and integrations? - Management explained that integrations with various software platforms significantly expand their total addressable market, allowing for quicker customer onboarding [138][141] Question: What was included in Q4 regarding inorganic contributions? - Management noted that contributions from The Giving Block and the international PSP were minimal, but they expect improvements as market conditions stabilize [142][144]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________________________________________________ FORM 10-K _________________________________________________________________________ x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _______ ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________________________ FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 001-39313 __________________________________ SHIFT4 PA ...

Shift4 Payments, Inc. (NYSE:FOUR) Q3 2022 Earnings Conference Call November 7, 2022 8:30 AM ET Company Participants Tom McCrohan - Investor Relation Jared Isaacman - Chief Executive Officer Taylor Lauber - President and Chief Strategy Officer Nancy Disman - Chief Financial Officer Conference Call Participants Rayna Kumar - UBS Darrin Peller - Wolfe Research Timothy Chiodo - Credit Suisse Andrew Bauch - SMBC Ashwin Shirvaikar - Citi Group Roberto Suarez - Evercore ISI James Friedman - SIG Andrew Jeffrey - T ...