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Shift4 Payments, Inc. (FOUR)·Q1 2025 Earnings Summary

Executive Summary

  • Mixed print with strong profitability: Adjusted EBITDA rose 38% YoY to $168.5M with 46% margin, modestly above plan, on record Q1 volumes of $45.0B and GRLNF of $368.5M; GAAP diluted EPS was $0.20 and adjusted EPS was $1.07 .
  • Against S&P Global consensus*, FOUR delivered a major adjusted EPS beat ($1.07 vs $0.70*) but a slight revenue miss ($848.3M vs $862.1M*); GAAP EBITDA came in below consensus ($112.7M vs $160.3M*), reflecting sizable non-GAAP add-backs in the quarter .
  • FY25 guidance raised: GRLNF to $1.66–$1.73B (from $1.65–$1.72B) and adjusted EBITDA to $840–$865M (from $830–$855M); Q2 GRLNF guided to $405–$415M with ~50% adjusted EBITDA margin .
  • Catalysts/positioning: Stable spreads (~60 bps) and a $35B+ contracted backlog underpin visibility; management highlighted >$20M Q1 EBITDA synergies from recent M&A and expects Global Blue to close in early Q3, expanding cross-sell funnel and international reach .

What Went Well and What Went Wrong

What Went Well

  • Operating leverage and margins: Adjusted EBITDA +38% YoY to $168.5M; margins 46% (50% ex recent M&A drag), modestly above the 45% plan . Quote: “Excluding the drag from these recent acquisitions, adjusted EBITDA margins would have been 50%” — CFO Nancy Disman .
  • Stable unit economics and spread: Blended net spread was 61 bps in Q1 and management reiterated ~60 bps for FY25, supporting net revenue growth ahead of volume . Quote: “Our Q1 blended net spreads were 61 basis points… we still expect full year 2025 spreads of approximately 60 basis points” — CFO .
  • Commercial momentum and synergies: >$20M in Q1 EBITDA synergies across Revel, Givex, Eigen; marquee wins across hospitality (e.g., Aspen Hospitality, The Setai) and sports (PGA Tour, F1 Miami), and accelerated international restaurant sign-ups (1,000+/month) . Quote: “Across just these 3… acquisitions, we have already achieved more than $20 million in EBITDA synergies in the first quarter” — President Lauber .

What Went Wrong

  • Top-line vs consensus: Revenue of $848.3M was modestly below S&P consensus* ($862.1M*), with subscription & other revenue sequentially moderating as the company “deletes parts” in acquired models .
  • GAAP EBITDA vs consensus: EBITDA of $112.7M trailed S&P consensus* ($160.3M*), as integration, equity comp and other non-GAAP adjustments were significant; adjusted EBITDA was strong at $168.5M .
  • Cash conversion optics in Q1: Adjusted FCF conversion was 42% in Q1 (would have been 64% excluding a $37M semiannual cash interest payment on 2024 debt), and operating cash flow declined sequentially due to timing and investment needs .

Financial Results

Headline metrics by quarter (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Gross Revenue ($M)909.2 887.0 848.3
Gross Revenue Less Network Fees (GRLNF) ($M)365.1 405.0 368.5
Adjusted EBITDA ($M)187.4 205.9 168.5
Adjusted EBITDA Margin (%)51% 51% 46%
Net Income ($M)72.2 139.3 19.5
GAAP Diluted EPS ($)0.74 1.44 0.20
Adjusted Net Income ($M)96.2 123.4 98.6
Adjusted EPS ($)1.04 1.35 1.07

Q1 2025 actuals vs S&P Global consensus*

MetricQ1 2025 ActualQ1 2025 Consensus*Delta
Revenue ($M)848.3 862.1*-13.8
GAAP EBITDA ($M)112.7 160.3*-47.6
Primary/Adjusted EPS ($)1.07 0.70*+0.37

Values marked with * are from S&P Global.

Revenue composition (oldest → newest)

Metric ($M)Q3 2024Q4 2024Q1 2025
Payments-based Revenue806.8 772.4 755.7
Subscription & Other Revenues102.4 114.6 92.6
Gross Revenue909.2 887.0 848.3
Network Fees544.1 482.0 479.8
GRLNF365.1 405.0 368.5

KPIs

KPIQ1 2025
Payment Volume ($B)45.0
Blended Net Spread (bps)61
Adjusted FCF ($M)70.5
Adjusted FCF Conversion (%)42%
Net Leverage (x)~2.4x
Cash & Cash Equivalents ($B)~1.2

Notes: Subscription & other revenue rose 77% YoY to $93M but moderated sequentially due to ongoing “deleting the parts” in acquired models and mix . Q1 YOY performance: Volume +35%, GRLNF +40%, adjusted EBITDA +38% .

Guidance Changes

MetricPeriodPrevious Guidance (2/18/25)Current Guidance (4/29/25)Change
GRLNF ($B)FY 20251.65–1.72 1.66–1.73 Raised
Adjusted EBITDA ($M)FY 2025830–855 840–865 Raised
End-to-End Volume ($B)FY 2025200–220 200–220 Maintained
Adjusted FCF Conversion (%)FY 202550%+ 50%+ Maintained
GRLNF ($M)Q2 2025—405–415 New
Adjusted EBITDA Margin (%)Q2 2025—~50% New

Management cited stable consumer trends, spread stability and synergy realization as drivers of the raise; guidance assumes no improvement in macro .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Spreads/Unit EconomicsAnticipated FY24 ~61 bps spread; strong GRLNF growth Q1 blended spread 61 bps; FY25 ~60 bps reiterated Stable
Consumer/MacroCautious but resilient across restaurants/hospitality Stable trends; leap year/Easter timing modest impact; guide doesn’t assume macro improvement Stable/Cautious
M&A SynergiesPlaybook focus, Global Blue announced; cross-sell funnel up >$20M Q1 EBITDA synergies; continued cross-sell into Revel/Eigen/Givex Improving
International ExpansionRamping in UK/Ireland/Germany; following strategic customers globally Operating in 6 continents; >1,000 international restaurant sign-ups/month; LATAM unlocked Accelerating
Backlog/VisibilityBacklog $33B exiting Q3 Backlog $35B+; majority implemented within a year; annualization supports 2025 Improving
Global Blue (pending)Announced deal; ~$80M revenue synergies by 2027 Early Q3 close expected; modest synergy assumptions; strong strategic fit On track

Management Commentary

  • “We delivered 46% adjusted EBITDA margins, which were modestly above our guidance of 45%… Excluding the drag from these recent acquisitions, adjusted EBITDA margins would have been 50%.” — CFO Nancy Disman .
  • “Our volumes increased 35% year-over-year to $45 billion… GRLNF increased 40% to $369 million… adjusted EBITDA increased 38% to $169 million.” — President Lauber .
  • “Across just these 3 most recent acquisitions, we have already achieved more than $20 million in EBITDA synergies in the first quarter.” — President Lauber .
  • “We… expect full year 2025 spreads of approximately 60 basis points.” — CFO Disman .
  • “We are on track for an early Q3 close [of Global Blue]… with high confidence in unlocking $80 million of revenue synergies by 2027.” — President Lauber .

Q&A Highlights

  • International competition/edge: Market resembles U.S. 15–20 years ago; bundling software + hardware + payments resonates; ~25% of new merchants now outside the U.S. .
  • Backlog timing: ~$35B backlog largely implemented within 12 months; 2025 sees in‑year contribution with full annualization next year .
  • Pricing dynamics: Enterprise priced for broader value; SMB emphasizes variable model; pricing not a major headwind currently .
  • Guidance confidence: Stable consumer data; expense discipline; clear line‑of‑sight to further M&A synergies .
  • Spreads by vertical: Restaurant spread inching up on mix and SkyTab momentum; overall spread stability maintained .

Estimates Context

  • Q1 2025 vs S&P Global consensus*:
    • Revenue: $848.3M actual vs $862.1M consensus (miss of ~$13.8M) .
    • GAAP EBITDA: $112.7M actual vs $160.3M consensus (miss of ~$47.6M) .
    • EPS (Primary/Adjusted): $1.07 actual vs $0.70 consensus (beat of ~$0.37) .
  • Implications: Consensus likely underestimated the magnitude of non-GAAP add-backs driving Adjusted EBITDA/EPS strength while assuming higher GAAP EBITDA; sequential moderation in Subscription & Other as the company “deletes parts” from acquired revenue models also weighed on reported revenue vs expectations .

Values marked with * are from S&P Global.

Key Takeaways for Investors

  • FOUR raised FY25 GRLNF and adjusted EBITDA guidance, underpinned by stable spreads (~60 bps), strong Q1 profitability and synergy realization; Q2 margin guided to ~50%, supporting sequential operating leverage .
  • The $35B+ contracted backlog and healthy international ramp (1,000+ monthly restaurant sign-ups) offer multi‑quarter revenue visibility and mix benefits as implementations annualize in 2025–2026 .
  • Expect continued mix shift: Subscription & Other revenue may remain lumpy near‑term as the company sunsets legacy models, but net revenue (GRLNF) and adjusted margins remain well supported by spread stability and cross‑sell .
  • Near‑term trading setup: EPS outperformance vs consensus and a guidance raise are positives; GAAP EBITDA miss vs consensus could cap upside for investors focused on unadjusted profitability .
  • Medium‑term thesis: Execution on Global Blue (early Q3 close expected) broadens the cross‑sell funnel, adds rare capabilities and deepens international footprint; management’s conservative synergy targets provide potential upside optionality .
  • Balance sheet/capital returns: ~$1.2B cash, semiannual interest cadence acknowledged; buybacks of ~$63M in Q1 and $85M in April demonstrate willingness to return capital amid equity dislocations .
  • Watch items: Integration progress (Vectron/Revel/Givex/Eigen), international sales enablement, cadence of backlog go‑lives, and any macro spillover into hospitality/retail volumes (management currently assumes no improvement) .

Sources: Q1 2025 8‑K and shareholder letter, earnings call transcript, and press releases as cited above.