Shift4 Payments, Inc.

thank you for your patience today's shift for payment second quarter 2021 earnings call will begin shortly so Welcome to today's shift. for Payments Second Quarter 2021 Earnings Call. My name is Jordan, and I'll be coordinating your call today. If you'd like to ask a question, you may do so by pressing star followed by one on your telephone keypad. I'm now going to hand over to Sloan Boland to begin. Sloan, please go ahead.

Thank you. I'd like to welcome everyone to Shift4's earnings conference call for the three-month end of June 30, 2021. Before we begin, I'd like to remind everyone that this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding management's plans, strategies, goals, and objectives. The expected impact of COVID-19 on our business and industry, including with respect to the economic recovery, increases in vaccination rates, the reopening of the country, and any volume recovery by us. Gateway penetration and spend seen by our gateway merchants. Expectations regarding new customers, acquisitions, and other transactions, and anticipated financial performance, including our financial outlook for the year ended December 31, 2021. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results. Performance or achievements expressed or implied by the forward-looking statements, factors discussed in the risk factors section of our annual report on Form 10-K for the year ended December 31, 2020, as updated by our quarterly report on Form 10-Q for the six months ended June 30, 2021. And our other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made on this call. Any such forward-looking statements represent management's estimates as of the date of this call. While we might elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events caused our views to change. In addition, we may also reference certain non-GAAP measures on this call, which are reconciled to the nearest GAAP measure in the company's earnings release, which can be found on our investor relations website at investors.ship4.com. And with that, let me turn the call to our Chief Executive Officer, Jared Isaacman.

Thank you, Sloan. Good morning and thank you all for joining us. As you saw in our pre-announcement a few weeks back, we achieved reasonably strong results for the quarter, setting new records for end-to-end processing volume, gross revenue less network fees, and adjusted EBITDA. Specifically, we reported end-to-end volume of $11.8 billion. To put it into perspective, that is nearly three times the same period last year and is more than double the same period in 2019. Similarly, we grew gross revenue less network fees to $136 million or 81% compared to the same period in 2019. Gross revenue less network fee growth in the second quarter was up 40% compared to just a quarter ago. As was the case last quarter, the majority of our growth was the result of new and larger merchants joining our platform over the last 12 months. Volume growth also improved as expected as the country continues to reopen. Consistent with our volume growth, we are driving a higher mix of our revenues from net processing fees as more and more of our gateway customers migrate to our end-to-end solution, which, as you know, represents significant accretion to our profitability. Overall, when we look at our top-line growth, the second quarter is a great example of the multiple ways shift forward can grow. And our model has inherent operating leverage. Evidenced this quarter by the improvement in our adjusted EBITDA margins, second quarter adjusted EBITDA margins came in at 33%. We are driving margin improvement while simultaneously making investments supporting our expansion into new verticals, including the introduction of many new digital capabilities. It's also worth reiterating that several of our acquisitions were even in neutral than negative, but are expected to contribute meaningfully as we execute on our integrated payment strategy and unlock revenue synergies. To put it more plainly, we believe there is embedded margin uplift as our new vertical strategies ramp and scale. With that, let me update you on a few strategic initiatives we are pursuing at Shift4 and a few exciting new merchant wins from the second quarter, as well as a little color as to where we are going. Cal Group, which owns many of the most recognizable restaurant and entertainment venues around the world, selected Shift4 as its end-to-end payment solution provider for all of its U.S.-based venues. Cal selected Shift4 not only for our holistic solutions package, but also for our contactless and mobile payments technology, which was critical for their nightlife venues in this current environment. This win should really not be that surprising. As an integrated payments company that focuses on the most demanding environments in commerce, including hospitality and F&B, Shift4 is in an advantage position for opportunities like Cal Group. What should be surprising is our notable wins in online, in-venue, and the overall regulated gaming markets. We, of course, have stated our intentions to pursue this exciting vertical for some time, mostly leveraging our incumbency in many casinos around the country, as well as our mobile capabilities in sports stadiums. That stated, Ship 4 should have been viewed as the underdog relative to other payment companies that had existing customer relationships and payment capabilities from the more mature European markets. That stated, we announced a preferred partnership with BetMGM to power their online gaming and sports betting transactions. Similarly, through our partnership with Sightline, Shift4 has a growing capability to facilitate regulated gaming transactions, both online and in venue, such as our cashless casino payment experience that we expect to roll out at Resorts World Casino in Las Vegas. While we have not been putting out press releases each time a state improves Shift4 for a gaming license, know that we've been accumulating licenses at an accelerated pace. In addition to the significant accomplishments in gaming, stadiums, and hospitality, you will find other wins in our materials, including reference to some e-commerce merchants that were the result of our acquisition and ongoing enhancement of the Shift4 shop platform. We continue to see growing adoption of the product, and since the acquisition, we've added over 36,000 new web stores. Now, with over 50,000 businesses on the platform as of June 30th, Ship4Shop has grown its merchant base over 230%. It's worth pointing out that it's a long road from a web store creation to a merchant processing transaction. As such, we are evolving our Ship4Shop strategy to include, A, aggressively prioritizing new user experience, restaurant and hospitality-specific themes, with tight integrations to our POS platform, and I'm going to talk about that in just a minute. as well as our online ordering capabilities and other marketplace initiatives like capital offerings. And B, simultaneously pursuing partnerships that will accelerate Shift4Shop's entry into new geographic markets, risk management tools, and capabilities like crypto acceptance that we have recently released. This two-pronged approach of organic development initiatives supported by strong strategic partnerships will meaningfully accelerate our roadmap objectives and the overall momentum of Shift4Shop. I spent a good amount of time talking about recent performance and accomplishments before turning things over to Taylor. I would like to take a bit of your time to talk about where we're going. Our organizational priorities are as follows. Number one, leveraging our 350 unique software integrations to pursue 150 billion of gateway volume, as well as the rest of the market that relies on these same integration. This is without question playing to our immense strengths and verticals where it's very hard to replicate shift force capabilities. As many of you know, the gateway conversion opportunity that is embedded in our business is probably the single biggest point of difference between Shift4 and virtually every other fintech player in the market. In order to achieve our objectives, we're going to continue to make investments in our products and capabilities to solve pain points for these customers as further incentives to move to our end-to-end platform. Some of these investments take the form of internal systems, customer self-help capabilities, automation, and other solutions to deliver a better experience for our merchants and the thousands of software partners that support them. Two, we are about two quarters away from releasing our next generation restaurant platform. I say platform because this is more than just a new point of sale application. It's an entire experience-based platform for restaurants and their patrons. We are leveraging our immense expertise in the restaurant industry and along with feedback from roughly one-third share of the F&B market that our technology is presently touching today to deliver a platform that will have a major emphasis on QR and other contactless means to pay, a tighter online ordering experience with our products, as well as third-party delivery providers, a modern, low-cost, and reliable architecture, business intelligence, analytics, and a marketing engine to drive loyalty and frequency from patrons, all wrapped up in a sexy, mobile-optimized hardware. We're building an ecosystem around this platform to include payroll, capital offerings, and other solutions we think restaurant owners will find helpful. We expect to go to market with this solution in late Q1 2022 through our vast network of sophisticated and aligned distribution partners capable of selling and supporting merchants at a local level. This will enable us to pursue an upgrade opportunity with our existing customers, driving incremental SaaS revenues, and winning further share of what is an enormous and exciting market. We are a company that has created a lot of value over the years through a disciplined but aggressive approach to M&A when the right inorganic opportunities present themselves. Our momentum adding new merchants in adjacent verticals such as stadiums and e-com is proof we can successfully identify the right strategic assets to complement our business. We recently completed another convertible bond offering that significantly increased our cash position. We would not have gone down this road if we were not gaining some measure of confidence in our pipeline of opportunities. As we progress our roadmap of opportunities is immense. The three priorities I referenced above really just scratched the surface. We're adding capability to our existing payment platform that enable further scale and a right to win a new vertical and even taking us organically into new geographies. So with that, let me turn this call over to Taylor Lauber, give you some additional color on our volumes through the summer, as well as some of our recent announcements in sports and entertainment. Taylor. Thanks, Jared. And good morning, everyone. We exited the very strong quarter. with solid momentum and remain optimistic that we are returning to a more normal seasonal cadence by the end of this calendar year. For example, July end-to-end payment volume was approximately $4.7 billion, as we continue to benefit from a larger base of merchants, and those merchants benefit from increased spending. This continued merchant growth is important to spend a moment on because I think oftentimes our dominance in hospitality and restaurants can give the misperception that we are an economic recovery play from an investment standpoint. Note that we exited Q2 with roughly 7% more active merchants than in Q1, and this merchant growth of between 0.5% and 1% per week has continued through July. We would note that forecasting, specifically with regard to seasonality, is quite difficult when you consider the impact of merchant growth, new industry verticals, and increased spending as a result of economic recovery. Regardless, it's safe to say that although volume levels are improving, some pockets of our merchant base continue to be impacted by COVID. Barring any material new COVID-imposed restrictions, we expect our third quarter volumes to continue benefiting from seasonality and the momentum we have in our business, followed by a more typical seasonal moderation heading into the fourth quarter. As Jared noted, we continue to sign new stadiums within the sports and entertainment market, and we are excited to see a return to live sporting and entertainment events. Some of our stadium clients have already hosted live events. For instance, last month, Allegiant Stadium in Las Vegas opened to a full-capacity crowd attending an entirely cashless Garth Brooks concert. Also, as we mentioned in our release, Shipboard was selected by Chicago's United Center to power all payments throughout their venue, including integration with the Bulls, Blackhawks, and United Center mobile apps. In addition to our previous wins, These new merchants represent proof points that are value propositioned to provide stadium clients with a best-in-class, in-venue mobile shopping experience for their fans, including everything from pre-game ticketing to in-seat ordering and scan-on-the-go merchandise. We remain active in the market evaluating M&A opportunities and continue to view acquisitions as part of our growth strategy. The success we had with Venue Next and Shipboard Shop, including our recent partnership with Sightline, has helped build upon our already strong reputation in the marketplace as a visionary partner. With that, let me turn the call over to our CFO, Brad Herring, to review our financials.