Shift4 Payments, Inc.

And in fact, as we've folded in tools like GiveX and currency conversion, our value proposition has only grown. You can go to purchase gift cards at the largest hotel chain in the world and scroll down to the bottom of the page, and you'll see Ship4 powering that whole experience for them. So that's just another example of how these acquisitions can at times feel like cookie cutter, but in reality, we spend a lot of time thinking about how it rounds out the offering, and we spend a ton of time thinking about what our customers are buying away from us, and can we deliver that under one roof? And obviously, something like gift cards is so inherent to the payment experience that when we own it as part of the offering, It's a better customer experience to work with one vendor than two, and we're in rarefied air being able to do that. Loyalty was an incredibly significant set of features inside of that same acquisition, and we haven't even begun to talk about that. But as competitors and companies we admire invest significantly in loyalty, you can get a sense that we were on that curve as well. I could go on and on, but our sports entertainment wins, I think, have sort of become happenstance. But we alluded to a really nice ticketing win with regard to LA in 2028. That's an example of an extension I don't think people would have assumed. is supernatural in the sports and entertainment space. Everything's going quite well in the United States. I will say the significant amount of executive attention is focused on how do we replicate all of this, and not over a 25-year timeline, but over like a two- or three-year timeline throughout the rest of the world. Chris, anything you want to comment on with regard to the same-store sales environment?

Yeah, sure. So, yeah, Darren, and thanks for the question. You're right to provide the context that when you think about the Americas region within our payments-based revenue, less network fees, kind of disaggregated categories, that America's region comes into this year largely unaffected by prior year M&A annualization. So you end up with a very clean view on our most mature region, a region where we've been doing business for multiple decades and where all of our products are also mature, live, battle-tested. So you take that region, and for us to be able to deliver mid-teens the mid-teens growth there, you're right to point out that that wasn't really needed or supported by much in the way of Triple S. We saw like a modest positive on Triple S, which is a better trend than what we saw exiting Q4, and certainly is better than what was embedded within Guide, but it wasn't a meaningfully positive contributor to that growth rate And it's important that we also think about what is the context beyond the absolute of that growth rate. To us, we think we're quite proud of the fact that that means the region is probably punching at a greater than 3X relative growth to the baseline market, which is something that I think is probably even more important because then the SSS kind of neutralizes across all of the relative players and peers. But that's a bit of the context.

You guys, and just a quick follow-up, and that's great to hear, by the way, guys. Thanks. Just on the coming up World Cup, do you feel good about getting GCC and all your products ready here for that?

Yeah, we do. I mean, you know, we've got a big estate, and there's hundreds of software suites you could be connecting to us through. But the World Cup actually helps sort of minimize distraction factor because we want it in stadiums and we want it in the hotels around those stadiums. So we feel great about it. Okay. All right. Thanks again, guys. Nice job.

We'll now move to Andrew Jeffrey with William Blair. Please go ahead. Your line is now open.

Thank you. Good morning. Taylor, I wonder if we could just sort of zoom out and think about sort of how Shift4 slots into the broader global payment processing landscape. You know, you're a $200-plus billion sort of run rate processor in a 20-plus trillion-dollar market. Where do you think Shift4's one or two kind of really meaningful competitive advantages are as you think about becoming maybe the next trillion-dollar processors? Because we look around at a lot of much, much larger companies that are even growing faster than Shift4. And I'm just trying to get a sense of where is this company five to 10 years from now? How do we get there in a very sort of succinct way and and from whom do you take share to achieve uh your bigger ambitions

It's a great question. I'm glad you asked it because I think a lot of our sort of strategic moves in isolation can seem strange because I don't think people have a decent enough appreciation for what our core skill sets are. We made a decision as far back as 20 years ago that we were going to double down on the in-person economy. That was actually, at the time, a very defensive play as the likes of Amazon were coming up and Apple and Google were suddenly getting into the payment flow. So, there was a deliberate decision made that we're going to focus on in-person experiences. Restaurants was the first vertical. And we learned a ton about what it means to Get hardware, software, and payments working together in the most demanding environments, which is like there is a customer at your bar waiting to pay, and you need to deliver all of those things together. At the time, these technologies didn't work nearly as seamlessly. as they do today. We've expanded that into basically any place you would physically pay for something where those advantages are quite material. I think some of the larger players that are growing really nicely that you've mentioned are almost exclusively riding a wave of e-commerce. That's not to belittle what they do. I think they do an excellent job at powering this transition from purchasing something in a store to purchasing something online. But we continue to find a lot of opportunity where humans will physically want to pay for something as the natural entry point for us. Now, it doesn't end there. You think about some of our largest relationships, we're facilitating massive amounts of e-commerce transactions, but they ultimately want to tie that back to a physical experience. So we see an edge there. We see our most innovative customers, groups like Altera, creating this really seamless experience behind buying a ski pass online and then using that throughout a bunch of physical experiences. We integrate to those experiences quite nicely and we help drive that. Now, what's nice about that is these verticals are not nearly as advanced throughout the rest of the world as they are here. So our playbook is gonna sound kind of uninteresting with regard to taking everything that's made us successful, empowering the experience economy in the U.S., and bringing it to the rest of the world. But that's awesome. We don't have to learn a ton of new things. We have to learn about local payment methods. We have to learn about certain tax rules. you know, coding in local geographies, but we know how to make all these technologies work together, and they don't work together in the rest of the world. So, we think we can continue to ride this wave. We think we're helping our merchants get from physical to digital. But at the end of the day, you know, they want and their consumers want an in-person experience, and we are naturally well-positioned to provide that. Now, where is Share coming from? It's generally coming from a fragmented network. It could be coming from software providers. It could be coming from legacy banks providing bank terminals. We're actually delivering a solution that takes five or six vendors off the table in exchange for one shift four. That's what we're seeing high demand for throughout Europe today. The tax-free shopping experience prior to our acquisition of GlobalBlue was, when it worked its best, was a handshake of five different highly competent vendors. Now it's one. So, hopefully, you can sense the enthusiasm, but I think the root of your question is the right one, which is, you know, how do you get confidence going into luxury retail? Well, that in-person experience is as demanding as setting up, you know, a local restaurant, meaning we need people in that location, on-site, to help work the merchant through their challenges and deliver the whole commerce experience, and we're uniquely positioned to do it.

Yeah, I'll just add that the question almost takes me down like memory lane because when you think about the market environment in some of the worldwide region, the international markets, It's reminiscent of all of the things, all of the commerce challenges that we were solving in kind of the early and mid-2010s in the U.S. or the Americas market. And bringing that kind of simplification of the many parties that you have to work with to deliver an in-person software-integrated payment experience That is literally straight out of the vault, straight out of the playbook of the Americas, literally probably in all of our strategy write-ups and memos and materials from the mid-2010s. And so the idea of where that share is coming from, Taylor is exactly right. It's going to come from the point solution providers of each of those parts. whether that is a local bank that's providing standalone, unintegrated pinpads and devices, whether that's a partner only, whether that's a point solution software vendor. It's the combination of all that we disrupted in the Americas that we're bringing into the worldwide markets. And it's why we're so excited about the growth there. And the growth there is actually, as we said, exceeding our expectations. And that's how we know international is working.

I appreciate that. Thank you.

We'll now move to Dominic Ball with Rothschild & Co. Please go ahead. Your line is open.

Hey, Taylor, Chris, and Tom. Great numbers on the quarter, particularly the international growth. Just a question a bit beyond the quarter, and Chris, I know we've discussed this previously. A lot of the, or the majority of ShiftWall's growth going forward is international, but U.S. restaurants still remain an important part of the current merchant base. Following commentary from DoorDash yesterday, alongside seeing DoorDash POS across San Francisco, Phoenix, New York, a formal launch of DoorDash POS is becoming more imminent. and more of a kind of when rather than if. So when delivery platforms evolve from more of a partner, from a partner to a peer, how do you think about the competitive responses available to shift for? Thank you.

I'm going to let Chris hit it, but I actually want to emphasize that I don't think that's well appreciated, what this online delivery trend has looked like throughout the U.S., especially, you know, over the last, kind of six years, like COVID did accelerate a lot of it for restaurants where like a meaningful portion of sales have gone to, you know, network affected players. We do enable that through most of our software providers. So Chris can talk about kind of how we think about competition in the space. But I think our restaurant growth is really, quite strong, and I don't think people realize these numbers also have a headwind of a lot of business going out of the physical location and going onto platforms like that. So, it should speak even higher for our ability to get into restaurants and deliver them solutions. But, Chris, do you want to address the DoorDash questions?

Yeah, sure. It's an astute observation, and it really speaks to the dynamism of restaurant technology as a sector, as an environment. It's not too far into the past that you have to look to find some pretty innovative ideas from players within the ecosystem of restaurant, such as right down to the food service providers that essentially are kind of a short handful of players that are providing and supplying the food to pretty much all of America's restaurants. At points in time in history, even they have had POS strategies, because it's highly logical to get as close to the merchant environment and seeing the data of the flow-through and trajectory as possible. We value that data. Many others within restaurants value that data. And I think that's why our strategies have various points in time involved partnering with a lot of these players within deep integrations, and DoorDash is no different. These integrations are actually quite valuable to us, valuable to them, and I think our strategy has never been as myopic to sort of look at all of these players and say, okay, this is a pie, a winner-take-all, or this is like a way that we can actually work together, grow that pie, and actually have an opportunity to see whether there are greater ways to value that data, greater ways to work together. So I do think that these kinds of, we'll say, competitive shifts in dynamics, they're not new within the restaurant space. It's partially why within the various categories of the experience economy we serve, we actually like a lot of our other categories as well because the competitive dynamics are quite different. But within our most competitive area, the vertical that is restaurants, This dynamism isn't new, but at the same time, I think our model affords a very partner-centric approach where we're able to actually take advantage of some of these innovations through a partner lens.

Yeah, I'm going to just re-attack it because I think it's such a fun question because you mentioned one company. You could have just as easily said AI. What can AI do to single vertical software? This is where the scars and triumphs of a 28-year-old business the independence industry really inform our thinking. We have run vertical software for over 20 years, and as a single vertical software provider in restaurants, you should always be paranoid about who's going to come up around you. We can define the barriers to entry as slightly harder or slightly easier, but there have been micros, there have been toast, there have been touch bistros, there have been There have been many companies that we've since bought because I think our paranoia about the value you deliver as a single service software provider and the cost you pay to acquire customers is incredibly important to pay attention to. So we respect the heck out of most of our competitors. But again, are we worried about someone eating our lunch in a vertical that we've specialized in in 20 years and grown despite some of the trends that you mentioned? Not particularly today.

Yeah, great points, understood, and well done again. Thanks, guys.

Thanks, Tom. We'll now move to Craig Marr with FT Partners. Please go ahead. Your line is open.

Hi, thanks for taking the questions. Just two modeling questions for me. For rest of world payments-based revenue growth, what was the growth on an FX-neutral basis And just secondly, knowing that the subscription line is volatile and moves based on what legacy revenue streams are shut off, et cetera, how should we think about the quarterly cadence underpinning the mid-single-digit growth guide for the year? Thanks.

Yeah, sure. So on the first one, so the FX neutral impact, it would have been basically relative to the 51% of growth that you would have seen in that payments-based kind of worldwide region. It would have had an almost 10-point kind of impact within the quarter. Now, that is, I think, isolated as a as a year-over-year factor in this quarter that I think will dissipate in forward-looking quarters, future quarters, because if you remember, if you kind of look back to the Euro-USD kind of cross, the widest it was or the widest it is in this quarter relative to looking at the forward curve would have been isolated into Q1. But that said, I think from the perspective of the commentary, the worldwide region from a payments-based revenue, less network fee standpoint, it still exceeded kind of our expectations in not isolating that variable. And then can you reiterate the second and third part of the question? It was on the volatility of subscription and the other quarter. Oh, yeah. Yeah, subscription and other volatility, I think we tried to – flagged that upfront. So we provided, as a reminder, the growth algorithm that we provided in Q4. It flagged that subscription and other would probably be in the low single-digit category in terms of disaggregated revenue category growth. and that it would be volatile quarter to quarter. So from that perspective, I think you have to continue to anticipate that things remain in line and that that volatility will express itself through some of the coming quarters.

The only thing I think worth calling out on international, just to layer into what Chris mentioned, is that our customer base internationally is a lot more homogeneous today in these early days than what you'd see in the United States. So adding, you know, multibillion-dollar, non-U.S.-based enterprise customers is not yet a thing. We believe it can be a thing. We are on this same evolution we went through in the United States, which is kind of SMB-based, the small to medium-sized hotels, the larger enterprise opportunities, which are groups of these merchants. So, you know, the majority of that volume growth that you're seeing there is expressed as like almost a location count growth rather than a volume per merchant shift, if that makes sense.

Yes, thank you very much.

We'll now move to Sanjay Sakrani with KBW. Please go ahead. Your line is open.

Thank you. Good morning. Chris, I was just wondering if you could just unpack the travel stuff a little bit more for me. Just want to make sure I understand sort of the trend line that you saw earlier. in the quarter and then going into April, and maybe even early May, and sort of what's baked in? Because I know you have that headwind in the second quarter, but like, where would be the risks from here on out in terms of travel?

Right, so... To reiterate the point, what we're isolating within travel disruption as a result of Middle East conflict is trying to isolate down into the corridors within the tax-free shopping category of the business. And when we looked at those corridors, obviously March would have been directly impacted, passenger seat capacity effectively, you know, minimized to almost nil. And what we attempted to do was look at the forward capacity and the change in those flights across those corridors. So from the perspective the how we analyzed it. I don't need to reiterate what I'd mentioned to Raina, but that's what's baked in. And I think it's important to understand that that is not any attempt to kind of forecast conflict. I think it really is just trying to look at, well, what is the kind of combination of all of these airlines that have really put forward not just an outlook, but also have put forward an outlook that's now underpinned by how they would have deviated passenger flights or passenger seat capacity by having deviated flights. They've sold tickets now against where those new flights are going to be. And so for the most part, this travel disruption dynamic, as we know it right now, it's fairly baked in, and it's not that easy to change because it's driven by passenger seat capacity outlooks. And in general, when we've looked at these travel disruptions in the past, regardless of what the origin is, the tax-free shopping business has generally been able to rebound within a four- to eight-week period, and that's also something that's reflected into our Q2. But by no means are we trying to forecast kind of an underlying continuation of travel disruption, let alone trying to forecast a duration around conflict.

Thanks. I guess I'm just trying to make sure I understand, like, have there been any additional sort of impacts as we think about people canceling their travel plans? And obviously, FIFA is coming up. There's been some mixed numbers around that, too. I'm just curious if that sort of plays into some of the forecasts that you've made and embedded in the guidance.

So, again, I'll let Chris comment, but I think it's, I want to clarify this statement. A lot of the All of the commentary Chris made is very specific to Global Blue tax-free shopping, and there's a reason for that. That is not a consumer cohort that is very sensitive to economic activity. They tend to travel and spend a lot almost regardless of the economic conditions. Where you have disruptions in that business, you have disruptions because these people cannot travel. or are reluctant to travel for one reason or another. So it's actually much easier to kind of – well, I shouldn't say it's easy, but it's easier than trying to predict how many people are going to choose to attend the World Cup and what are they going to spend on tickets. It is these people would have otherwise traveled, but they can't. And what we're careful to do is to give line of sight into how long we know they are unlikely to be traveling for, but also not try to predict a war because that's a bit of a fool's errand. So we've got good visibility through Q2. Chris, I don't know if you want to characterize it, but I think that's kind of the extent of our great visibility into the conflict.

Yeah. The only other thing I may add is just a little bit of color on some of the other Some of the other interesting things that we saw, and again, these aren't meant to be sort of extrapolation points, but when you do have some of this travel disruption, part of the resilience of the tax-free shopping business is sort of the second derivative effects that maybe are a little less intuitive unless you're deeply studied and understood the dynamics of the business. But you have a disruption as a result of a conflict geopolitically. And what that actually created, at least within this quarter, was actually relative to forward outlooks, like the U.S. dollar strengthened against the euro. And what that actually ended up, what we saw as a result of that was our most important corridor within tax-free shopping is actually the U.S. consumer coming to Europe and spending, and that actually outperformed. in the quarter. So, it created a bit of a counterpoint to the travel disruption and the conflict for the corridor that was GCC to Europe or Southeast Asia to Europe. It was a bit offset by actually strength and outperformance in U.S. to Europe, largely underpinned by purchasing power. And so, there are some of these elements in the business that are maybe second derivative effects. I don't know if that's getting at the heart of the question, Sanjay, but they I think are worth noting because it helps at least provide a little bit of color as to why the volatility of outcomes on both sides remain higher as a result of what we're seeing in the current environment.

Thank you. I appreciate that. That was helpful. Strong underlying trends. Thanks.

Thank you. At this time, we've reached our allotted time for questions. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.