Shift4 Payments, Inc. ((FOUR)) has held its Q1 earnings call. Read on for the main highlights of the call.
The latest earnings call from Shift4 Payments, Inc. painted a picture of robust growth and strategic expansion, despite some challenges. The sentiment was largely positive, with significant increases in volumes, revenue, and EBITDA, driven by effective cross-selling and international expansion efforts. However, the company acknowledged the presence of macroeconomic uncertainties and the impact of legacy revenue deprecation.
Strong Year-over-Year Volume Growth
The company reported a remarkable 35% increase in volumes year-over-year, reaching $45 billion. This growth reflects stable trends across all end markets, showcasing the company’s ability to maintain momentum in a competitive landscape.
Gross Revenue Growth
Shift4 Payments saw a 40% increase in gross revenue less network fees, amounting to $369 million. Notably, net revenue grew at a faster pace than volumes, indicating efficient operations and effective revenue management strategies.
Adjusted EBITDA Performance
Adjusted EBITDA rose by 38% to $169 million, surpassing the guidance of 45% with a 46% margin. This performance underscores the company’s operational efficiency and ability to exceed financial expectations.
Successful Cross-Selling and Acquisitions
The company achieved over $20 million in EBITDA synergies from recent acquisitions, including Revel, Givex, and Eigen. This success highlights Shift4’s strategic focus on enhancing its portfolio and maximizing value from acquired entities.
Global Expansion
Operating across six continents, Shift4 Payments is experiencing strong international growth, with over 1,000 restaurant sign-ups per month. This expansion underscores the company’s commitment to broadening its global footprint and tapping into new markets.
Macroeconomic Uncertainty
Despite stable consumer spending trends, the company expressed concerns about macroeconomic factors such as new tariffs and political rhetoric. These uncertainties could potentially impact future performance, necessitating careful navigation.
Interest Payments Impacting Free Cash Flow
The first cash interest payment of $37 million on debt issued last August affected the adjusted free cash flow conversion rate. This highlights the financial implications of the company’s debt management strategies.
Legacy Revenue Deprecation
There was a sequential moderation in subscription and other revenue from Q4 due to ongoing deprecation of legacy revenue from recent acquisitions. This indicates a transitional phase as the company integrates new acquisitions into its operations.
Forward-Looking Guidance
Looking ahead, Shift4 Payments has raised its full-year 2025 guidance, forecasting gross revenue less network fees between $1.66 billion and $1.73 billion, representing 23% to 28% growth. Adjusted EBITDA is expected to range between $840 million and $865 million, reflecting 24% to 28% growth. The company anticipates improved margins as synergies from recent acquisitions are realized and expects full-year spreads of approximately 60 basis points. Additionally, the acquisition of Global Blue is projected to bring $80 million in revenue synergies by 2027.
In summary, Shift4 Payments, Inc. delivered a strong earnings call, marked by impressive growth and strategic initiatives. The company is well-positioned for continued success, with robust volume and revenue growth, successful acquisitions, and a clear focus on international expansion. While macroeconomic uncertainties and legacy revenue challenges persist, the company’s forward-looking guidance remains optimistic, promising sustained growth and profitability.