Shift4 Payments, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights: - Growth drivers: Strong product offerings across large markets, number one or strong number two in verticals, world-class customers. M&A strategy for cross-selling. - M&A synergies: Achieved over $20M in EBITDA synergies from recent acquisitions (Revel, Givex, Eigen). - International expansion: Operating in six continents, focusing on enterprise customer enablement and SMB product plus software plus payments bundling in select markets like UK, Ireland, Germany. - Global Blue acquisition: High confidence in unlocking $80M revenue synergies by 2027, estimated embedded payment cross opportunity over $500B, on track for early Q3 close subject to regulatory approval.

Segment Performance: Volumes 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 with 46% margins. Subscription and other revenue was $93 million in Q1, up 77% year-over-year. Revenue contribution: Volumes at $45B, gross revenue less network fees at $369M, adjusted EBITDA at $169M, subscription and other revenue at $93M.

Guidance: - Raised full-year 2025 gross revenue less network fees to between $1.66 billion and $1.73 billion (23%-28% growth). - Raised adjusted EBITDA between $840 million and $865 million (24%-28% growth). - Second quarter expects gross revenue less network fees between $405 million and $415 million with adjusted EBITDA margins of approximately 50%. - Confidence in margins marching higher as year unfolds with synergies from acquisitions and operating leverage.

Risks: - Macro-economic uncertainties impacting consumer spending trends. - Tariffs and their potential impact on merchant segments. - Volatility in international travel affecting Global Blue business (though diversified).

Q: How would you describe the competitive environment in international markets that you're targeting? What gives Shift4 Payments an edge?

A: Taylor Lauber mentioned international opportunity was identified long ago, with software, hardware, and banks evolving separately. Shift4's edge is localized solutions, local settlements, accepting local payment methods paired with good software.

Q: Can we just touch a little further on you're seeing in the market more broadly into April, what you're seeing and what you're including in the assumption for guidance?

A: Taylor Lauber said what's seen is more of the same with stable consumer spending trends across merchant segments like restaurants, hotels, retail. Nancy Disman added volume bridge and focus on expense management.

Q: On the 40% GR L and F, growth in the quarter, what was organic and inorganic?

A: Taylor Lauber said organic revenue growth for the year is on track north of 20% but didn't break down quarter-to-quarter inorganic/organic.

Q: On the backlog disclosure of $35 billion, what's implied in the guidance?

A: Taylor Lauber said most backlog likely to be implemented in year, with most customers likely to be installed over next 12 months.

Q: Can you provide any color on the current revenue split between US and international and where you see that mix evolving?

A: Taylor Lauber said international revenue contribution from enterprise customer enablement and SMB bundling, with focus on select markets like UK, Ireland, Germany and expansion to others.

Q: How is growth balanced between net new and cross-sell? How to press cross-sell in challenged macro?

A: Taylor Lauber said M&A gives access to customers who wouldn't otherwise engage, cross-sell becomes invaluable in tough times as customers listen to existing vendors.

Q: Double click on the software and other revenue line downtick. Where does it trend?

A: Nancy Disman said it's from legacy models, will see growth but decelerating as legacy models slow.

Q: View on EBITDA guidance tick up amid macro?

A: Taylor Lauber said quarter played out within expectations, little impact from macro on consumer spending.

Q: Any callouts about Canada?

A: Taylor Lauber said Canada has been a solid contributor, accelerating due to recent acquisitions.

Q: Thoughts on Global Blue related revenue outlook and macro uncertainty?

A: Taylor Lauber said Global Blue has cultural alignment, focuses on controllable aspects, and has ballasted through shocks.

Q: Thoughts on pricing environment and enterprise side belt tightening?

A: Taylor Lauber said priced competitively for value delivered, enterprise demands value, SMB has variable cost model.

Q: Tweaks to capital allocation strategy?

A: Taylor Lauber said buybacks increased, focus on R&D, M&A, and closing Global Blue deal.