Shift4 Payments(FOUR) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (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][150][156] - 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] - 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][77][91] - 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][273] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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][236] 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] - 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][167] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] - 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] Item 4. Controls and Procedures 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] - 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] PART II. OTHER INFORMATION Item 1. Legal Proceedings 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][286] Item 1A. Risk Factors 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] - 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] - 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][329] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 5. Other Information 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] - 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]