Shift4 Payments(FOUR) - 2024 Q2 - Quarterly Report

Revenue and Income Growth - Gross revenue for Q2 2024 increased to $827.0 million, up from$637.0 million in Q2 2023[13] - Net income for Q2 2024 rose to $54.5 million, compared to$36.8 million in Q2 2023[13] - Comprehensive income for Q2 2024 was $40.5 million, up from$36.7 million in Q2 2023[15] - Income from operations for Q2 2024 increased to $59.2 million, up from$33.9 million in Q2 2023[13] - Net income attributable to Shift4 Payments, Inc. for Q2 2024 was $39.2 million, compared to$25.1 million in Q2 2023[13] - Class A net income per share - basic for Q2 2024 was $0.59, up from$0.43 in Q2 2023[13] - Comprehensive income attributable to Shift4 Payments, Inc. for Q2 2024 was $28.6 million, compared to$25.0 million in Q2 2023[15] - Net income for the period ending June 30, 2024, was $54.5 million[17] - Net income for the six months ended June 30, 2024, was$83.0 million, compared to $57.2 million in the same period in 2023[21] - Payments-based revenue for Q2 2024 increased to$755.8 million, up 25.9% from $600.1 million in Q2 2023[47] - Total revenue for the six months ended June 30, 2024 reached$1,534.4 million, a 29.6% increase from $1,184.0 million in the same period of 2023[47] - Gross revenue increased by$190.0 million, or 30%, compared to the prior year period, driven by growth in payments-based and subscription revenues[100] - Payments-based revenue increased by $155.7 million, or 26$13.3 billion, or 50%, increase in end-to-end payment volume[100] - Subscription and other revenues increased by $34.3 million, or 93$350.4 million, or 30%, to $1,534.4 million for the six months ended June 30, 2024[110] - Payments-based revenue grew by$299.8 million, or 27%, to $1,410.9 million for the six months ended June 30, 2024[110] - End-to-end payment volume increased by$24.4 billion, or 50%, to $73,435.9 million for the six months ended June 30, 2024[110][118] - Subscription and other revenues rose by$50.6 million, or 69%, to $123.5 million for the six months ended June 30, 2024[110] - Gross revenue less network fees grew by$156.2 million, or 36%, to $584.3 million for the six months ended June 30, 2024[111] - Adjusted EBITDA increased by$84.8 million, or 43%, to $284.1 million for the six months ended June 30, 2024[118] - Net income attributable to Shift4 Payments, Inc. rose by$19.9 million, or 50%, to $59.8 million for the six months ended June 30, 2024[109] - Gross revenue for 2024 Q2 increased to$827.0 million, up 29.8% from $637.0 million in 2023 Q2[122] - Gross profit for 2024 Q2 rose to$218.8 million, a 37.9% increase from $158.7 million in 2023 Q2[122] - Adjusted EBITDA for 2024 Q2 reached$162.4 million, up 47.6% from $110.0 million in 2023 Q2[123] Expenses and Costs - Interest income for Q2 2024 was$5.0 million, down from $8.8 million in Q2 2023[13] - Depreciation and amortization expense for Q2 2024 was$46.7 million, up from $35.9 million in Q2 2023[13] - Network fees increased by$97.5 million, or 24%, primarily due to the 26% increase in payments-based revenue[101] - Other costs of sales increased by $27.6 million, driven by recent acquisitions and incremental residual commissions[101] - General and administrative expenses increased by$28.0 million, primarily due to growth and recent acquisitions[102] - Depreciation and amortization expense increased by $10.8 million, driven by equipment under lease and amortization of intangible assets from recent acquisitions[103][105] - Professional expenses increased by$6.2 million, primarily due to higher acquisition-related costs[104][105] - General and administrative expenses increased by $49.4 million, or 29$217.2 million for the six months ended June 30, 2024[112] - Depreciation and amortization expense grew by $20.3 million, or 29$91.5 million for the six months ended June 30, 2024[112] - Total depreciation and amortization for Q2 2024 was $69.7 million, compared to$50.0 million in Q2 2023[52] - Estimated amortization expense for the remaining six months of 2024 is $118.6 million[53] Acquisitions and Goodwill - The company acquired a 74$59.0 million, net of cash acquired, and plans to gain operational control[34][35] - The acquisition of Revel Systems, Inc. was completed for $245.3 million, net of cash acquired, to strengthen presence in the restaurant and retail markets[37][38] - Finaro was acquired for$330.8 million, net of cash acquired, to drive expansion into international markets[40][41] - The company acquired Appetize for $108.7 million, net of cash acquired, to enhance presence in the sports and entertainment market[43] - The fair value of contingent consideration for Vectron was$2.9 million as of June 30, 2024[35] - The fair value of contingent consideration for Finaro was $3.8 million as of June 30, 2024[40] - Goodwill from the Vectron acquisition was$79.9 million, not deductible for tax purposes[36] - Goodwill from the Revel acquisition was $117.6 million[38] - Goodwill from the Finaro acquisition was$280.6 million, not deductible for tax purposes[41] - The company issued $25.0 million in restricted stock units to Finaro employees, vesting over three years[42] - Net assets acquired from the Appetize acquisition totaled$108.7 million, including $75.0 million in goodwill and$38.3 million in other intangible assets[44] - Goodwill increased to $1,299.9 million as of June 30, 2024, up from$1,111.3 million at December 31, 2023, primarily due to acquisitions[51] - The company acquired Finaro in the fourth quarter of 2023, expanding its operations in Europe and the UK[26] - The total purchase consideration for Vectron was $66.1 million, including$63.2 million in cash and $2.9 million in contingent consideration[35] - The fair value of net assets acquired from Vectron was$84.9 million, with goodwill accounting for $79.9 million[36] - The fair value of net assets acquired from Revel was$245.3 million, with goodwill accounting for $117.6 million[38] - The total purchase consideration for Finaro was$518.0 million, including $211.9 million in cash and$302.0 million in shares of Class A common stock[40] - The fair value of net assets acquired from Finaro was $330.8 million, with goodwill accounting for$280.6 million[41] Cash Flow and Debt - Net cash provided by operating activities was $172.8 million for the six months ended June 30, 2024, slightly up from$171.3 million in 2023[21] - Net cash used in investing activities increased to $381.5 million in 2024, primarily due to acquisitions net of cash acquired at$301.4 million, compared to $108.0 million in 2023[21] - Cash and cash equivalents and restricted cash decreased to$403.3 million at the end of June 2024 from $721.8 million at the beginning of the period[21] - Total long-term debt stood at$1,754.3 million as of June 30, 2024, slightly up from $1,750.2 million as of December 31, 2023[59] - Future principal payments on long-term debt total$1,772.5 million, with $690.0 million due in 2025,$450.0 million in 2026, and $632.5 million in 2027[60] - The Revolving Credit Facility had no borrowings as of June 30, 2024, with a borrowing capacity of$100.0 million[61] - The fair value of contingent consideration related to acquisitions was $49.7 million as of June 30, 2024, with$30.6 million classified as current liabilities[64] - The fair value of Tranche 2 of the Online Payments Group earnout was estimated at $28.3 million as of June 30, 2024[65] - The fair value of the Restaurant Technology Partners earnout was$0.4 million as of June 30, 2024[66] - The company's contingent liabilities at the end of the period totaled $50.3 million, with$49.7 million related to acquisitions and $0.6 million for acquired liabilities[68] - The fair value of the company's outstanding debt as of June 30, 2024, was$1,813.9 million, compared to a carrying value of $1,754.8 million[70] - Net cash provided by operating activities for 2024 H1 was$172.8 million, slightly higher than $171.3 million in 2023 H1[125] - Net cash used in investing activities for 2024 H1 surged to$381.5 million, primarily due to a $265.1 million increase in acquisition spending[127] - Total debt outstanding as of June 30, 2024 was$1,772.5 million, including $690.0 million of 2025 Convertible Notes[129] - Cash and cash equivalents balance as of June 30, 2024 was$205.0 million, with $115.9 million held outside the U.S.[124] Equity and Shareholder Information - Total equity increased from$868.4 million at December 31, 2023, to $958.8 million at June 30, 2024[17] - Additional paid-in capital grew from$985.9 million at December 31, 2023, to $1,005.7 million at June 30, 2024[17] - Retained deficit improved from$(346.7) million at December 31, 2023, to $(297.8) million at June 30, 2024[17] - Noncontrolling interests increased from$215.1 million at December 31, 2023, to $258.0 million at June 30, 2024[17] - Equity-based compensation for the period ending June 30, 2024, was$14.3 million[17] - Other comprehensive loss for the period ending June 30, 2024, was $(14.0) million[17] - Total equity at December 31, 2022, was$480.6 million, increasing to $479.2 million by June 30, 2023[19] - Net income for the period ending June 30, 2023, was$36.8 million[19] - Additional paid-in capital at December 31, 2022, was $702.6 million, increasing to$733.8 million by June 30, 2023[19] - The company repurchased 230,400 shares of Class A common stock for $15.9 million at an average price of$68.79 per share during the three and six months ended June 30, 2024[81] - The Company's noncontrolling interests in Shift4 Payments, LLC amounted to $232.1 million and$215.1 million as of June 30, 2024, and December 31, 2023, respectively[82] - The Company acquired 74% of Vectron's common stock, with the noncontrolling interests balance representing the 26% economic interest amounting to $25.9 million as of June 30, 2024[82] - Equity-based compensation expense was$14.3 million and $37.1 million for the three and six months ended June 30, 2024, respectively[83] - The Company had$117.0 million of total unrecognized equity-based compensation expense related to outstanding RSUs and PRSUs as of June 30, 2024[86] - The Company's May 2024 Program authorizes the repurchase of up to $500.0 million of Class A common stock, with$484.2 million remaining as of June 30, 2024[81] - Basic net income per share for Class A common stock increased to $0.59 in Q2 2024 from$0.43 in Q2 2023[88] - Diluted net income per share for Class A common stock rose to $0.58 in Q2 2024 compared to$0.42 in Q2 2023[88] - Net income attributable to common stockholders grew to $39.2 million in Q2 2024 from$25.1 million in Q2 2023[88] - Weighted average shares of Class A common stock outstanding - diluted increased to 65,564,817 in Q2 2024 from 58,173,624 in Q2 2023[88] - Total anti-dilutive shares excluded from diluted EPS calculation were 24,055,011 in Q2 2024[89] - Net income allocated to Class C common stock - diluted remained stable at $1.1 million in Q2 2024[88] - RSUs contributed 1,126,649 shares to the diluted weighted average shares of Class A common stock in Q2 2024[88] - LLC Interests that convert into potential Class A common shares totaled 23,830,105 in Q2 2024[89] Other Financial Metrics - Unrealized loss on foreign currency translation adjustment for Q2 2024 was$14.0 million, compared to $0.1 million in Q2 2023[15] - The company's European and UK business, previously known as Finaro, operates under a direct member model, including settlement assets and liabilities on the consolidated balance sheets[30] - The company's cash equivalents consist of highly liquid investments in money market funds, with restricted cash primarily related to a deposit in its US sponsor bank merchant settlement account[26] - The company's TRA liability was$8.2 million as of June 30, 2024, up from $5.1 million at the end of 2023[23] - The company's European and UK business includes settlement processing assets and liabilities, primarily related to the acquisition of Finaro in Q4 2023[26] - The company's US operations operate under a sponsorship model, where settlement assets and obligations are the responsibility of the sponsoring member and not recorded on the company's balance sheets[28] - The company's cash and cash equivalents included in settlement assets were$123.5 million as of June 30, 2024, down from $182.4 million at the end of 2023[29] - Residual commission buyouts had a net carrying value of$187.4 million as of June 30, 2024, down from $229.6 million at December 31, 2023[54] - Other intangible assets, net increased to$674.0 million as of June 30, 2024, up from $548.8 million as of December 31, 2023[55] - Capitalized customer acquisition costs, net rose to$59.0 million as of June 30, 2024, compared to $51.7 million as of December 31, 2023[56] - Equipment for lease, net grew to$144.5 million as of June 30, 2024, up from $123.1 million as of December 31, 2023[57] - Total property, plant and equipment, net remained stable at$28.5 million as of June 30, 2024, compared to $28.6 million as of December 31, 2023[58] - The company's investments in non-marketable equity securities had an estimated fair value of$72.9 million as of June 30, 2024, up from $62.2 million in December 2023[71] - Crypto settlement assets and liabilities were valued at$7.5 million and $3.5 million, respectively, as of June 30, 2024[71] - The company's effective tax rate was (3)$5.2 million tax benefit from valuation allowance release[72] - The company recognized a Tax Receivable Agreement (TRA) liability of $8.2 million as of June 30, 2024, with$4.1 million classified as current and $4.1 million as noncurrent[75] - Lease income for the six months ended June 30, 2024, was$12.0 million, up from $10.5 million in the same period of 2023[77] - Future minimum lease payments for hardware under SaaS agreements are expected to be$16.0 million from July 1, 2024, through June 30, 2025[77] - Total expense for services with Jared Isaacman was $0.3 million and$0.5 million for the three and six months ended June 30, 2024, and 2023, respectively[78] - The Company made $2.0 million of distributions related to income taxes paid on behalf of Rook during the six months ended June 30, 2024[78] - The Founder is expected to contribute 592,219 shares