Executive Summary

Q3 2024 delivered quarterly records across end-to-end volume ($43.5B), gross revenue less network fees ($365.1M), Adjusted EBITDA ($187.4M), and Adjusted Free Cash Flow ($110.6M), with Adjusted EBITDA margin ~51% (nearly 54% ex-M&A drag) .
Management raised the midpoint of Q4 GRLNF ($400–$415M) and Adjusted EBITDA ($205–$216M), and tightened FY 2024 guidance: GRLNF $1.35–$1.36B, Adjusted EBITDA $677–$688M, volume $164–$166B, and Adjusted FCF conversion ~58% .
Mix strength from hospitality, sports/entertainment and SkyTab offset modest consumer-spending softness; spreads remained stable at ~60 bps in Q3 with full-year ~61 bps expected .
Capital structure improved via $1.1B senior notes and a new $450M revolver; net leverage ~2.4x and weighted average cost of debt ~3.8%, supporting flexibility for buybacks and the 2025 convertible maturity .

What Went Well and What Went Wrong

What Went Well

Strong enterprise wins led by hospitality (KSL Resorts and a premier Las Vegas operator), plus over ten stadium/ticketing wins, reinforcing #1 positioning in end-to-end hospitality and sports/entertainment payments .
SkyTab momentum: over 55,000 installs since beta and on pace to exceed 35,000 installs in 2024, with ramping production in the UK and Ireland .
Backlog expansion: ~$5B rolled into actuals and ~$13B added, increasing contracted volume backlog to ~$33B; installation windows typically 3–6 months, supporting sustained growth .

Selected quotes:

“It was absolutely one of our strongest quarters for new logo wins, especially within hospitality.”
“We believe we are #1 in end-to-end hospitality payments in the world… Similarly, we believe we're #1 in end-to-end sports and entertainment.”

What Went Wrong

International card-present ramp behind internal goals; Q3 ended with ~1,000 unique merchants live, with delays tied to debit certifications and install timing (e.g., Germany/Canada) .
Consumer-spending softness: restaurants experienced persistent low single-digit same-store sales declines since mid-summer; hotels slightly softer in September before rebounding in October .
GAAP EBITDA was negative ($(122.4)M) due to large non-cash items (tax valuation allowance release and TRA liability change), highlighting the magnitude of non-GAAP adjustments in the quarter .

Financial Results

Quarterly Financials (Q1–Q3 2024)

Metric	Q1 2024	Q2 2024	Q3 2024
Gross Revenue ($M)	$707.4	$827.0	$909.2
Gross Revenue Less Network Fees ($M)	$263.7	$320.6	$365.1
Net Income ($M)	$28.5	$54.5	$72.2
GAAP Diluted EPS ($)	$0.31	$0.58	$0.74
Adjusted Net Income ($M)	$50.5	$89.1	$96.2
Adjusted EPS ($)	$0.54	$0.96	$1.04
Adjusted EBITDA ($M)	$121.7	$162.4	$187.4
Adjusted EBITDA Margin (%)	46%	51%	51%
Net Cash from Operations ($M)	$56.7	$116.1	$182.1
Adjusted Free Cash Flow ($M)	$78.2	$76.0	$110.6

KPI and Revenue Mix Trends (Q1–Q3 2024)

KPI / Mix	Q1 2024	Q2 2024	Q3 2024
End-to-End Volume ($B)	$33.4	$40.1	$43.5
Payments-based Revenue ($M)	$655.1	$755.8	$806.8
Subscription & Other Revenue ($M)	$52.3	$71.2	$102.4

YoY Comparison (Q3 2023 vs Q3 2024)

Metric	Q3 2023	Q3 2024
End-to-End Volume ($B)	$27.9	$43.5
Gross Revenue ($M)	$675.4	$909.2
Gross Profit ($M)	$171.0	$253.2
GRLNF ($M)	$243.0	$365.1
Net Income ($M)	$46.5	$72.2
GAAP Diluted EPS ($)	$0.55	$0.74
Adjusted EPS ($)	$0.82	$1.04
Adjusted EBITDA ($M)	$124.5	$187.4
Net Cash from Operations ($M)	$111.7	$182.1
Adjusted Free Cash Flow ($M)	$75.5	$110.6

Sequential Comparison (Q2 2024 vs Q3 2024)

Metric	Q2 2024	Q3 2024
End-to-End Volume ($B)	$40.1	$43.5
GRLNF ($M)	$320.6	$365.1
Adjusted EBITDA ($M)	$162.4	$187.4
Adjusted FCF ($M)	$76.0	$110.6

Notes:

Blended spread was ~60 bps in Q3; full-year average expected ~61 bps .
GAAP EBITDA was $(122.4)M due to non-cash items (tax valuation allowance release and TRA liability update); Adjusted EBITDA removes these non-recurring/non-cash impacts .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
End-to-End Volume ($B)	FY 2024	$167–$175	$164–$166	Lowered/range tightened
GRLNF ($B)	FY 2024	$1.35–$1.38	$1.35–$1.36	Tightened (lower high end)
Adjusted EBITDA ($M)	FY 2024	$662–$689	$677–$688	Midpoint raised
Adjusted FCF Conversion (%)	FY 2024	59%+	58%+	Lowered
GRLNF ($M)	Q4 2024	$395–$415	$400–$415	Midpoint raised
Adjusted EBITDA ($M)	Q4 2024	$197–$216	$205–$216	Midpoint raised

Management highlighted that annualizing the midpoint of updated Q4 Adjusted EBITDA implies reaching 2025 consensus EBITDA levels without growth or seasonality .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2024)	Current Period (Q3 2024)	Trend
AI/operational efficiency	Introduced investments in internal systems and AI; focus on deleting parts and staying flat	Emphasis on Project Phoenix, Mission Control, and AI to improve service quality, margins, and profitability	Increasing execution focus
Macro/consumer-spending	Seasonal moderation expected; diversification across verticals	Low single-digit declines in restaurant SSS since mid-summer; hotels softer in September then improved in October; S&E a bright spot	Mixed but manageable
SkyTab performance	Ahead of schedule for ~30k installs; rapid SaaS growth	55k installs since beta; on pace >35k in 2024; international ramp (UK/Ireland)	Accelerating installs
International expansion	Finaro-enabled global expansion; target 10k EU/Canada hotels/restaurants	Live in new African countries; early European card-present installs via Vectron; UK/Ireland ramp; transit solutions across EU	Broadening footprint
Crypto/stablecoin payments	Innovation center groundwork	Intends to make crypto/stablecoin payments available; cites pro-crypto administration; early committed customers (e.g., Tao Group)	New monetization vector
Gateway conversion funnel	Large ongoing opportunity	Still >$100B annualized volume on gateway; conversion now programmatic; funnel topped up via Givex/Revel	Sustained cross-sell
Capital structure	Buyback authorization; deleveraging profile	$1.1B notes; $450M revolver; net leverage ~2.4x; plan for 2025 converts	Strengthened balance sheet

Management Commentary

“We delivered quarterly records across all our major KPIs… Adjusted EBITDA margins were also a quarterly record of 51.3% or nearly 54% when excluding a 250 basis point drag from recent acquisitions.”
“We have a deep moat around our hospitality business… Our 550+ software integrations are nearly impossible to replicate.”
“We are… #1 in end-to-end hospitality payments… and #1 in end-to-end sports and entertainment payments.”
“We intend to make available crypto and stable coins as a form of payment… we are seeing significant interest from existing clients.”
“We added more firepower and topped off our gateway conversion funnel… with the acquisition of Givex… at least $300 billion in volume that we can convert.”

Q&A Highlights

Seasonality and 2025 building blocks: Q4 now more predictable with sports/entertainment; annualizing Q4 supports comfort heading into 2025 .
Revel/Vectron integration and EU ramp: playbook includes waiving legacy fees and pivoting to payments; timing impacted by debit certifications; momentum building with first installs .
Gateway conversion: programmatic conversion continues; still >$100B annualized volume on gateway; Givex expands funnel .
International differentiation: bundled software+payments and complex card-present capabilities are underpenetrated in Europe; expanding e-comm via geographic coverage .
Managing complexity: “Shift4way” culture emphasizes radical ownership, deleting parts, urgency, and staying flat; PMO drives cross-functional execution .

Estimates Context

S&P Global consensus data could not be retrieved at query time due to API limits; therefore explicit comparisons to consensus EPS, revenue, and EBITDA for Q3 are unavailable at this time. Values would typically be sourced from S&P Global; estimates unavailable.
Management indicated that annualizing the midpoint of updated Q4 Adjusted EBITDA implies reaching 2025 consensus EBITDA levels without growth or seasonality adjustments, suggesting potential estimate convergence post-Q4 .

Key Takeaways for Investors

Revenue quality improving: GRLNF and Adjusted EBITDA margins at ~51%, supported by enterprise wins and subscription growth; spreads stable at ~60 bps despite modest consumer softness .
Near-term catalysts: raised Q4 midpoints for GRLNF and Adjusted EBITDA, seasonal strength in stadiums/ticketing, and accelerating SkyTab installs (>35k target for 2024) .
Medium-term growth drivers: ~$33B contracted backlog (3–6 month install window), gateway/gift-loyalty cross-sell (Givex), and European expansion (Vectron, transit solutions) .
Capital flexibility: $1.1B senior notes and $450M revolver with net leverage ~2.4x and ~3.8% weighted cost of debt; positioned to address 2025 converts and opportunistic buybacks .
Watch non-GAAP adjustments: Q3 GAAP EBITDA hit by valuation allowance release and TRA changes; Adjusted metrics better reflect operating performance .
International card-present is ramping later than planned; debit certifications and install timing are gating factors but momentum is building with first EU installs and UK/Ireland production .
Upcoming investor day alongside Q4 results should clarify 2025–2027 trajectory across verticals/geographies and efficiency initiatives (Project Phoenix, Mission Control, AI) .

Additional Relevant Press Releases (Q3 2024)

New $450M revolving credit facility (undrawn at closing) improves liquidity profile and flexibility .
Closing of $1.1B 6.750% senior notes due 2032 to fund general corporate purposes including potential repayment of 2025 converts and/or 2026 notes .

Prior Quarters for Trend Analysis

Q2 2024: Volume $40.1B; GRLNF $320.6M; Adjusted EBITDA $162.4M; Adjusted EPS $0.96; Adjusted FCF $76.0M .
Q1 2024: Volume $33.4B; GRLNF $263.7M; Adjusted EBITDA $121.7M; Adjusted EPS $0.54; Adjusted FCF $78.2M .

Notes: All values above are based on company filings and earnings materials.

Shift4 Payments, Inc. (FOUR)·Q3 2024 Earnings Summary