Shift4 Payments(FOUR) - 2025 Q3 - Quarterly Report

Financial Performance - Gross revenue for Q3 2025 reached $1,176.9 million, a 29.5% increase from $909.2 million in Q3 2024[21] - Net income attributable to Shift4 Payments, Inc. for Q3 2025 was $28.1 million, down 47.8% from $53.8 million in Q3 2024[21] - Comprehensive income attributable to Shift4 Payments, Inc. for the nine months ended September 30, 2025, was $154.1 million, compared to $120.1 million in the same period of 2024, reflecting a 28.3% increase[23] - Income from operations for Q3 2025 was $114.6 million, a 42.4% increase from $80.4 million in Q3 2024[21] - The company reported a loss on extinguishment of debt of $9.2 million in Q3 2025, compared to no loss in Q3 2024[21] - Interest income for Q3 2025 was $17.5 million, up 80.4% from $9.7 million in Q3 2024[21] - Basic net income per share for Class A in Q3 2025 was $0.19, down from $0.78 in Q3 2024[21] - For the nine months ended September 30, 2025, net income was $94.0 million, compared to $155.2 million for the same period in 2024, reflecting a decrease of 39.4%[27] Cash Flow and Liquidity - Operating cash flow for the nine months ended September 30, 2025, was $410.3 million, an increase from $369.3 million in 2024[27] - Total cash and cash equivalents at the end of the period were $1,709.7 million, compared to $1,595.4 million at the end of September 2024[27] - As of September 30, 2025, Shift4 Payments, Inc. held $126.9 million in cash, compared to $52.0 million as of December 31, 2024, indicating a significant increase in liquidity[32] - Cash and cash equivalents increased to $1,511.5 million as of September 30, 2025, up from $1,211.9 million as of December 31, 2024, reflecting a growth of approximately 24.8%[53] Acquisitions and Strategic Initiatives - Shift4 Payments completed the acquisition of Global Blue Group for $2.7 billion, enhancing its payment processing capabilities[28] - The total purchase consideration for the acquisition of Global Blue was $2,718.7 million, with a net total of $2,611.9 million after accounting for cash acquired[59] - The acquisition of Global Blue is expected to diversify the company's revenue streams significantly, leveraging its payments and technology platform[58] - The company completed the acquisition of Smartpay Holdings Limited for approximately $168 million USD, enhancing its strategic presence in Australia and New Zealand[163] - The company entered exclusive negotiations to acquire Worldline's North American subsidiaries, with the transaction expected to close in Q1 2026[162] Expenses and Costs - The cost of sales for Q3 2025 was $747.9 million, an increase of 16.5% from $641.9 million in Q3 2024[21] - General and administrative expenses increased to $188.4 million in Q3 2025, compared to $118.2 million in Q3 2024, marking a 59.3% increase[21] - The company reported depreciation and amortization expenses of $298.7 million for the nine months ended September 30, 2025, up from $213.1 million in 2024[27] - Total depreciation and amortization expense for the three months ended September 30, 2025, was $125.1 million, compared to $77.3 million for the same period in 2024, representing a 62% increase[74] Equity and Stockholder Information - As of September 30, 2025, total stockholders' equity stands at $2,204.0 million, with a retained deficit of $283.4 million[24] - The company repurchased and retired Class A common stock totaling $84.8 million during the reporting period[24] - The issuance of Series A Mandatory Convertible Preferred Stock generated $973.6 million, net of issuance costs[24] - The Company has authorized a new stock repurchase program to repurchase up to $1.0 billion of shares of its Class A common stock through December 31, 2026[129] Revenue Recognition - Shift4 Payments primarily earns revenue through volume-based payment and transaction fees, as well as subscription revenue for its software and technology solutions[44] - The company recognizes payments-based revenue upon authorization of a transaction, which includes interchange and payment network costs[46] - Subscription-based revenue is recognized over the period the fee covers, typically one year or less, reflecting the ongoing service provided to merchants[50] - The Company’s revenue recognition follows ASC 606, which requires recognizing revenue as performance obligations are satisfied[43] Debt and Financing - As of September 30, 2025, the total debt amounted to $4.719 billion, an increase from $2.841 billion as of December 31, 2024[11] - The Company issued an additional $550 million of 6.750% Senior Notes due 2032 in May 2025, bringing the total to $1.65 billion[90] - Future principal payments for the Company's debt are scheduled as follows: $692.5 million in 2025, $10 million in 2026, $642.5 million in 2027, and $3.426 billion thereafter[88] - The Company entered into a Settlement Line Credit Agreement in September 2024, which was amended in September 2025 to increase the available amount from $100 million to $125 million[102] Tax and Regulatory Matters - The Company's effective tax rate for the three months ended September 30, 2025, was 45%, compared to (135)% for the same period in 2024[115] - The Tax Receivable Agreement (TRA) liability was reported at $362.1 million as of September 30, 2025, slightly down from $365.5 million at the end of 2024[32] - The company plans to adopt ASU 2023-09 for income tax disclosures starting January 1, 2025, enhancing transparency in financial reporting[54] Other Comprehensive Income - The company experienced a comprehensive income of $84.7 million, driven by various factors including foreign currency adjustments[24] - Other comprehensive income for the period was recorded at $84.7 million[24]