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Shift4 Payments, Inc. (FOUR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered record KPIs: end-to-end payment volume $47.9B (+49% YoY), gross revenue less network fees $405.0M (+50% YoY), adjusted EBITDA $205.9M (+51% YoY), and adjusted free cash flow $134.4M (+78% YoY) .
  • GAAP diluted EPS was $1.44; non-GAAP adjusted EPS was $1.35; adjusted EBITDA margin held at 51% .
  • Management introduced FY2025 guidance (ex-Global Blue): volume $200–$220B, GRLNF $1.65–$1.72B, adjusted EBITDA $830–$855M, and adjusted FCF conversion ≥50%; Q1 2025 EBITDA margin expected ~45% due to seasonality and 2024 M&A mix .
  • Strategic catalysts: announced acquisition of Global Blue (~$2.5B EV) to strengthen unified commerce globally, CEO transition to Taylor Lauber, and Investor Day; Ant International and Tencent intend to remain shareholders and pursue product partnerships .

What Went Well and What Went Wrong

  • What Went Well

    • Record Q4 KPIs and strong back-half ramp; adjusted FCF conversion reached 65%, with full-year conversion 59% .
    • Enterprise wins across hospitality (Alterra resorts, Great Wolf renewal, Meritage Collection) and sports/entertainment (House of Blues, NY Yankees ticketing, Dallas Mavericks) underscored category leadership; “we are #1 in hospitality and #1 in sports & entertainment” (Jared) .
    • Unified commerce platform maturation (pay-ins/payouts, MOR, PayFac, APMs, intelligent fraud) enables global e-comm expansion and underpins Global Blue strategy; built with “the world’s most technologically advanced company” as anchor customer (Jared) .

  • What Went Wrong

    • Consumer softness in some verticals; spreads stable but Q1 2025 margin guide (~45%) reflects seasonal margin trough and lower-margin 2024 M&A drag to be mitigated through synergy by year-end .
    • International card-present rollout gating items (e.g., local debit certifications) slowed installs earlier; momentum improving but timing remains a dependency (Q3 discussion) .
    • Subscription and other revenue growth is not linear due to deliberate “blow up legacy revenue models” and pivot to bundled payments, causing temporary revenue dips in acquired businesses during integration .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Gross Revenue ($USD Millions)$705.4 $909.2 $887.0
Gross Revenue Less Network Fees (GRLNF) ($USD Millions)$269.3 $365.1 $405.0
Gross Profit ($USD Millions)$184.6 $253.2 $270.8
End-to-End Payment Volume ($USD Billions)$32.1 $43.5 $47.9
Net Income ($USD Millions)$19.2 $72.2 $139.3
Adjusted EBITDA ($USD Millions)$136.1 $187.4 $205.9
Adjusted EBITDA Margin (%)51% 51% 51%
GAAP Diluted EPS ($USD)$0.21 $0.74 $1.44
Adjusted EPS ($USD)$0.76 $1.04 $1.35
Net Cash Provided by Operating Activities ($USD Millions)$63.0 $142.5 $131.0
Adjusted Free Cash Flow ($USD Millions)$75.3 $110.6 $134.4

Segment/Revenue Mix

Revenue MixQ4 2023Q3 2024Q4 2024
Payments-Based Revenue ($USD Millions)$648.0 $806.8 $772.4
Subscription & Other Revenues ($USD Millions)$57.4 $102.4 $114.6

KPIs and Operating Metrics

KPIQ4 2023Q3 2024Q4 2024
Blended Net Spreads (bps)N/A60 60
Adjusted FCF Conversion (%)N/A59% 65%
Contracted Volume Backlog ($USD Billions)N/A$33 $30
SkyTab System Installs (cumulative)N/A55,000+ since beta ~38,000 in 2024, > original 30,000 goal

Notes:

  • Subscription & Other revenue in Q4 2024 was $115M (+100% YoY), driven by SMB/SkyTab, sports & entertainment penetration, and acquisitions .
  • Net leverage approx. 2.5x; weighted average cost of total indebtedness ~3.4% at quarter end .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
End-to-End Payment Volume ($USD Billions)FY 2025N/A$200–$220Introduced
GRLNF ($USD Billions)FY 2025N/A$1.65–$1.72Introduced
Adjusted EBITDA ($USD Millions)FY 2025N/A$830–$855Introduced
Adjusted FCF Conversion (%)FY 2025N/A≥50%Introduced
Q1 Adjusted EBITDA Margin (%)Q1 2025N/A~45%Seasonal low point; reiterates cadence

Additional context:

  • 2025 guidance excludes Global Blue impact and any 2025 acquisitions .
  • Management reiterated synergy plans to offset 2024 lower-margin M&A drag by year-end .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Unified commerce & global e-commBuilt “one platform, one integration”; backlog ~$25–33B; converging software+payments; expanding into many countries; large strategic customer driving global coverage Platform capabilities detailed (MOR, PayFac, APMs, cross-border, fraud); asserted TAM growth; anchor customer validated; Global Blue acquisition to accelerate reach Accelerating
Hospitality leadershipMega wins (KSL, Vail, Whistler, Leonardo Hotels) and multi-geo expansion; #1 claim reiterated Added Alterra resorts and Ikon Pass; Great Wolf renewal; multiple luxury properties; #1 in the world reiterated Strengthening
Stadiums & ticketingRapid VenueNext installs; cross-sell ticketing; high wallet-share ambition; strong Q3 list (Heat, Colts, Bears, Pacers, Grizzlies) House of Blues expansion; ticketing for Yankees and Mavericks; USC, Diamondbacks, Trail Blazers; #1 in S&E reiterated Strengthening
SkyTab restaurant POSQ2: ~10.5k installs; Q3: momentum, 55k since beta; SaaS up 55% Finished 2024 with ~38k installs, exceeding 30k goal; international ramp; roadmap continues Strengthening
Spreads/marginsBlended spreads ~60–62 bps stable; adj. EBITDA margins ~51% (ex-M&A higher) Q4 spreads ~60 bps; Q4 adj. EBITDA margin 51%; full-year margin 50%; Q1 margin seasonally ~45% Stable near-term; seasonal dip in Q1
Consumer/macrosRestaurant SSS softness; hotels mixed; S&E strong (Q3) Acknowledged softness; maintaining discipline and synergy execution Mixed
M&A integration & playbookRevel/Vectron deals: deliberately pivot legacy models; initial dips then recurring and payments lift; Focus POS/VenueNext case studies Announced Global Blue acquisition; financing and deleveraging plan; 2025 guidance ex-deal; partnerships with Ant/Tencent Expanding strategically
Crypto acceptance & nonprofitsCrypto payments rollout; nonprofits volume +400% in 2024 trajectory; major platform integrations (Give Lively) Crypto acceptance natively at POS; unified commerce nonprofits volume up 660% YoY in Q4; more growth expected Accelerating

Management Commentary

  • “We once again delivered reasonably strong results…records across all of our major KPIs…end-to-end volumes…GRLNF…adjusted EBITDA…adjusted free cash flow” (Jared) .
  • “We are #1 in hospitality…#1 in sports & entertainment…#2 in restaurants, but we hate being second” (Jared) .
  • “We consolidated all of our card-not-present efforts into…unified commerce…pay-ins, payouts, cross-border…MOR…PayFac…APMs…intelligent fraud…unique geographic coverage” (Jared) .
  • FY2025 guidance (ex-Global Blue): volume $200–$220B; GRLNF $1.65–$1.72B; EBITDA $830–$855M; FCF conversion ≥50%; Q1 margins ~45% on seasonality (Nancy) .
  • CEO transition: Jared to hand over responsibilities to Taylor; “I intend to remain Shift4’s largest shareholder” (Jared) .
  • Global Blue acquisition rationale: scarce capabilities (tax-free refunds, DCC), two-sided network (75k luxury retailers; 15M affluent shoppers), ~$80M run-rate revenue synergies by 2027, >$500B embedded cross-sell, partnerships with Ant International and Tencent .

Q&A Highlights

  • No Q&A held on the Q4 2024 call due to the Investor Day schedule; prepared remarks only (call simulcast via webcast and X Spaces) .

Estimates Context

  • S&P Global consensus estimates were unavailable at the time of writing due to a data access error; therefore, comparisons vs consensus are not provided. Values retrieved from S&P Global would normally be used here if accessible (SPGI daily request limit exceeded during retrieval attempt).
  • Given the record Q4 KPIs and FY2025 guidance above, analysts may revisit out-year GRLNF/EBITDA trajectories and margin cadence assumptions .

Key Takeaways for Investors

  • Q4 capped a strong back-half ramp with records across volume, GRLNF, EBITDA, and FCF; spreads and margins remained resilient despite mix and seasonality .
  • FY2025 guide implies continued double-digit growth with disciplined cash conversion; near-term margin seasonality (~45% in Q1) is consistent with historical cadence and recent M&A mix .
  • Global Blue acquisition is a strategic step-change in unified commerce reach and embedded cross-sell; Ant/Tencent partnerships add distribution/product synergies; pro forma leverage manageable with deleveraging plan .
  • Hospitality and S&E leadership plus accelerating SkyTab installs and unified commerce adoption support durable multi-vertical growth .
  • Execution focus: integrate 2024 acquisitions, delete legacy parts, realize synergies to lift margins and FCF; international card-present rollout continues as certifications/localization complete .
  • Watch for Investor Day materials and subsequent quarterly updates for progress on Global Blue timing, international expansion, and unified commerce wins .
  • Near-term trading: headlines around Global Blue, CEO transition, and 2025 guide are key narrative drivers; medium-term thesis centers on cross-sell funnel monetization (> $1.4T with Global Blue) and margin scalability via platform efficiencies .