Shift4 Payments, Inc. (FOUR) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Shift4's Inaugural Investor Field Day. I'm Tom McCrohan, Head of Investor Relations, and welcome. On behalf of the management team of Shift4, we welcome you here. For those here in person, thanks a lot for making the trip and being here today. For those of you dialing in virtually to the live stream webcast, welcome as well. And for those on the webcast, there is a presentation available on the Investor Relations website, investors.shift4.com. I'm just going to read through the perfunctory safe harbor language. Before turning the presentation over to our Founder and CEO, Jared Isaacman, I'd like to remind everyone that this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding management's plans, strategies, goals and objectives; the expected impact of COVID-19 on our business and industry, including with respect to economic recovery, increases of vaccination rates, the reopening of the country in any volume recovery by us, gateway penetration and spend seen by our gateway merchants, expectations regarding new customers, acquisitions and other transactions and anticipated financial performance, including our financial outlook for the year ended December 31, 2021, and any other comments regarding future operating performance. These statements are neither promises nor guarantees but involve known and unknown risks, uncertainties and other important factors that may cause our actual results and performance or achievements to be materially different from any future results. Performance or achievements expressed or implied by the forward-looking statements, factors discussed in the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2020, as updated by our quarterly report on Form 10-Q for the 9 months ended September 30, 2021, and other filings could cause actual results to differ materially from those indicated by the forward-looking statements made today on this call. So today's formal presentation will be about an hour, we'll have about a half hour for Q&A, after which we'll break -- we'll break the group into 2 groups. You should see a group A or group B on your name badge. And with that, allow me to welcome our Founder and CEO, Jared Isaacman.

Good, good. There we go. Okay. Is there a slide clicker? All right. While that's coming up here, Welcome to Allegiant Stadium, home of the Las Vegas Raiders. If -- I know it's early, but for whatever reason, there's any news that we're sharing today that you don't enjoy, you're welcome to go to the bar right here. They accept credit cards. It's powered by Shift4 and its Vegas. So the bar is always open. Okay. Well, this gives everybody an opportunity to read through our safe harbor statements again. Okay. We're going to start. First of all, if anyone who doesn't know me, I'm Jared Isaacman, CEO, Founder of Shift4. I've asked to pretty much give the entirety of the presentation today. I've been accused of spending too much time off this planet. And I wanted to show you that we are very much involved with a lot of exciting things going on with the organization. I'm sure many of you dialed in for our Q3 update, but we're going to start the presentation today just reviewing a couple of the points from Q3 and skip the letter here. So the third quarter was pretty good. Volume growth for the quarter was 90% year-over-year. Revenue growth was up 86% from Q3 2020 on $400 million. You'll notice there's a little bit of noise there for the contra revenue that we had to take on the TSYS credit, but it was, in fact, $400 million for the quarter and again up 86%. Gross revenue less network fees were up nearly 70% year-over-year. Adjusted EBITDA up 94% year-over-year for the quarter at $55.8 million. And as we communicated, July was hot. We actually shared July's volume growth during our Q2 update. Everything was looking good. Delta variant came back and gave us a little bit of a hard time starting in August. It was very apparent in September. But as you can see from this slide, October end-to-end payment volume is up 86% year-over-year. I know we put out an update earlier in the month that 80% year-over-year, turned out we did a little bit better than expected. And as also communicated during the update earlier today, we we're coming off of November and -- first, October of last year was a relatively hard comp. That was a record volume for us. It was up, I think, about approximately 25% year-over-year from 2019. But also November and December is when we were faced with considerable COVID-related restrictions and lockdowns last year. If you recall, cities like New York, L.A. aside from just climate challenges and eating outdoors or impacts on travel, there were also restrictions in California and others. So we expect November and December performance throughout the rest of this year to be pretty favorable, which is why we reiterated our 2021 guidance and actually lifted our gross revenue less network fee guidance for 2021. So in quarter 3, we signed a number of notable wins. Many in our core markets. So you'll see hospitality locations here, ski resorts, restaurants. You also see T-Mobile Arena here in Las Vegas, one of many signature stadium wins that are -- that have adopted both our software and our payments. One thing I wanted to comment here is, it should be apparent to everyone, in this climate right now, businesses are generally not making horrible decisions. They're not choosing to leave one payment provider for another that is delivering an equal or worse service. If you're growing payment volume and you're picking up wins like this, it's generally because you're adding a lot more value for that customer. In the case of stadiums, via our VenueNext acquisition, we have some pretty cool fan-first technology. In fact, you'll be able to get a demo of it today later on as we break up into smaller groups. But the idea that you can order your beer and a burger in your seats, you can manage your tickets through it, you can buy merchandise. You can walk into a store, retrieve your merchandise without ever maybe going into the checkout lane. Those are what we refer to as like fan-first experiences. Stadiums are gravitating towards that. And in doing so, we're capturing SaaS revenue, which is one of the reasons we're going to outperform our original guidance on 2021 SaaS -- on 2021 gross revenue less network fees. And that same story reflects across the restaurant and hospitality base that we have today. You'll see some of these wins on this page are gateway conversions, which means we were already powering all of the hard part of the transaction experience for them. So it was simply a matter of just turning off the faucet to whichever legacy acquirer was on the other end of that pipe. But there's a lot of net new wins here, too, which means those hotels and restaurants are surveying the competitive landscape and saying the solution they can get from Shift4 is better than another. So coming back to what I communicated before, despite the realities of COVID that I think virtually everyone communicated across August and September, we are reiterating our end-to-end payment volume guide for 2021 between $46 billion and $48 billion, total revenues between $1.3 billion and $1.4 billion. Adjusted EBITDA, we're still maintaining the same guidance of between $175 million and $180 million. I do want to point out, again, if you recall in Q1, due to the COVID effect of Q4 in 2020, we did have a single merchant failure that resulted in approximately a $5 million loss. It's still management's position. That is onetime and extraordinary as ever. It was most -- what single highest loss in our 23-year history. And the last one anywhere in that vicinity was in 2003. So if you take that adjustment into account, we're actually communicating that 2021 should end between $180 million and $185 million with that adjustment in mind. And last, we are raising our gross revenue less network fee guidance for the year between $520 million and $525 million. And really, that is the result of the SaaS and other software-related revenue that we've generated in our new verticals that we're going to talk about a little bit later on in this presentation. Verticals that are already yielding quite well from a revenue perspective, but we are super early days in terms of monetizing the payments opportunity. So we've been spending a fair amount of time over the last 6, 9 months thinking about what our identity is at Shift4, what is our new vision and mission since we've gone public, since we've expanded our reach into a number of new verticals. And I would be lying if I said at my nearly a year of being exposed to, again, what I think is a pretty extraordinary organization like SpaceX hasn't influenced a lot of what you're going to see in terms of our new vision, our new mission, our values. And what we don't have in this presentation, which is the philosophies that guide us towards execution, a lot of it for sure has some SpaceX influence. So I got a little bit of a video for you here, if you haven't seen it yet. [Presentation]

All right. So there's a lot of gems hidden in that video. So if you want to go back and check it out, you might find some of them. But Boldly Forward, that's our identity, and we have a history of being quite bold as an organization. First, if anyone fact-checked this, we've had 22 years of consecutive year-over-year revenue growth. This is a new development. We're not a COVID beneficiary. When we cater price predominantly, at least at that time to restaurants and hotels. We're not afraid to go in and challenge the norms and break glass in order to achieve our objectives on behalf of our employees, our merchants, our partners and our shareholders. You want to go all the way back to 2008, we created Harbortouch. What was Harbortouch? We pulled together multiple industries together from restaurant point-of-sale software, hardware, and we bundled it together with an integrated payment solution, and then we put a SaaS bow on it and armed our distribution partners with it to go out and win. That's still an element of our business that's growing very fast. If that sounds like a Toast or a Revel or Clover or Square it is. And we were doing that in 2008, really before people were even considering those strategies. In 2017, we acquired a number of software companies that had no semblance of SaaS, hadn't made that pivot yet, hadn't embraced integrated payments. We went in -- we annihilated their revenue model. People talk about, let's say, organic revenue growth. We went in and we shut down the legacy revenue streams, converted them to SaaS with an integrated payment solution and grew them considerably. That was before it was hot-buying ISVs. I can tell you that because we bought most of them for like a 10x EBITDA multiple, and that just doesn't exist anymore. And then we purchased 2 payment gateways, recognizing these technology platforms were the key to an integrated payment strategy. They possess all of those vital software integrations that make commerce possible. But we're up to that point, merchant-acquirer agnostic, outputting to all the legacy acquirers who never developed that technology themselves. In doing so and providing all that value for a $0.01 or $0.02 transaction, I don't think so. We acquired both those several years ago, completely pivoted their revenue model, certainly created a lot of anxiety amongst some of the legacy providers as to what this represents. And now represents to us, geez, $170 billion of merchant acquiring opportunity that's living captive and easily quantifiable within our base of customers, created a ton of value for our shareholders along the way. That's bold. That's what we've been doing for a very long time as part of our history, and we're not going to shy away from it. We're going to embrace it. So Boldly Forward. Our North Star is to power commerce, and don't deny it. And then these values here will inform a lot of our decision-making and how we approach opportunities on the road ahead. So boldness, excellence, ownership and trust. So our vision is Shift4 will illuminate the world through connected commerce. So there's a couple of things in there, illuminate. That's not necessarily shining a light on something. It can also be bringing clarity to something. And for those of you that aren't familiar, global commerce is anything but clear. It's very complicated. Even some of the organizations that we all respect the most, like Adyen or Stripe and numerous financial institutions across the world in order to bring everything together, creating a platform on top of platforms to at least have some semblance of a unified experience for their customers. Global commerce is hard. We endeavor to bring clarity to it. And then, obviously, world in that. One thing you should be taking away from today's information is we are absolutely going global, not just for some of the signature wins that we're going to talk about later but across the entirety of our core business: restaurants, hotels, stadiums. I'm quite sure the stadiums in Europe and other parts of the world would like to benefit from the same capabilities that make Allegiant Stadium so special and all the other customers we have. Mission: to power commerce through our bold and determined spirit, and deliver the most trusted and comprehensive payment experience. Comprehensive in that, we will absolutely deliver an experience that others would take multiple vendors in order to replicate. And then doing so it will add cost, it will be anything but expedient and it will challenge the customer experience. And then the values of bold, excellence, ownership and trust to inform our process. And what you don't see here is the philosophies that we embrace and that's what's going to enable us to be able to execute with urgency on all the various growth vectors that we -- that we're sharing with you today and more to come. So a little bit more on Shift4 for not familiar, obviously, with $200 billion in payment volume running across our rails, 200,000-plus customers, 7,000 sales partners, which give us a lot of reach and operating leverage. We're not a small organization, pretty scaled player across a number of verticals. And we serve some of the most recognizable brands, not just across restaurants or hospitality or specialty retail, but a number of other exciting verticals. And many of these customers that are highly dependent on our payment technology are only using 1 or 2 components of our solution. Maybe they're just using our gateway and they will embrace end-to-end or maybe they're going to embrace our gateway, our end-to-end processing solution and our software in the case of like United Center. So there's a massive amount of opportunity that just exists within the commerce that we're touching today, not to mention what is a huge global addressable market that all of our software integration is connected to. Over the last couple of weeks with various investor engagement, I truly appreciate all the feedback everyone who reached out, trying to explain to us what the heck was going on over the last month. It felt like maybe people forgot that we're actually an integrated payments company, at least as of this morning before the opening, it certainly didn't seem like we were trading that way. We power commerce by connecting our integrated payment platform into software. It's not one product. You can't have one product that can serve restaurants, hotels, golf courses, retail stores, salons, spas, mobile sports wagering, satellite Internet connectivity, right? You have to connect into a lot of software. And most of our customers being on the more complex end of the payment spectrum require multiple different types of software to deliver payment experience. Even here at Allegiant Stadium. You've got restaurant point-of-sale software. You have retail software. You have mobile software for consumers to order from the seats. You have the in-suite software because that's a different experience altogether. That's the type of customers we serve. And 99% of the transactions we touch are connected to software. That's an integrated payments company. That's why we're growing very fast. And we do it through 3 strategies. And the reason we're able to do it through 3 strategies is because we've been doing it for a really long time. We didn't just wake up in the integrated payment space. We knew that there's going to be opportunities within certain verticals where you should build your own product. Examples of that would be SkyTab. And now what we've built on top of 3dcart, which we refer to as Shift4Shop. We're in our past, which was the example I gave before, 2008 Harbortouch, maybe like the industry's first fully bundled hardware-software payment offering for the restaurant space. And again, that goes back 13 years ago. We also buy software companies. If we like a vertical a lot, and we think we're willing to pull the trigger and bet on one horse in order to have substantial share within that space and move quicker, we'll do that. Great example is VenueNext acquisition. We sized up the landscape. There's 4 companies that have software solutions for the bulk of the stadium market. Two of them are legacy. They're share losers and not winning. There was another one that's winning share. It was really grossly mismanaged. And there's VenueNext that was winning like crazy. And that was out without an integrated payments field value proposition. So we're willing to pull the trigger on acquisitions we can go in and dominate within the vertical. VenueNext has performed far bit than we could have expected not just within stadiums like this, but across numerous entertainment venues like theme parks, for example, that are also our customers. And then there's partner. We partner with a lot of software. The same reasons I said before. We're an integrated payments company. We're not going to be able to, as is no one, going to build a single software application product that will work in all the verticals we want to be in. It just doesn't work that way. There's a lot of software companies out there. So our job is to integrate with a lot of them. Now we've been accused of integrating with a lot of old software, okay. We had 350 unique software integrations at the time of the IPO. We have 425 now. Those 75 additional software integrations are almost all cloud-based solutions. You know why that's the case? Because the 350 software integrations we have aren't just putting up the white flag and capitulating the market. They're building new software. They're going to build a next-generation hotel software, salon software, golf course software. And you know who they're going to integrate it to first? They're going to integrate it with the payments company they already have because those are the ones that already have the existing base of customers and the distribution partner is familiar with the product. So when an integrated payments company connects into software and we didn't slow down in our core markets, we've only continued to add software integrations through a build, buy and partner strategy, that's why volume is going up because we're winning share through software integrations. So we want to put this slide in here. So the slide you see on the left is what we circulated at the testing the water process prior to the pandemic. Very important, it was in February of 2020. So 25% end-to-end volume growth CAGR was forecasted, 10% net revenue CAGR, and 21% adjusted EBITDA CAGR. So what do we actually do over the last 18 months in the face of the pandemic, that we didn't have at the time this slide was created that some people thought was even a little bit aggressive, 46% end-to-end volume CAGR, 31% gross revenue less network fee CAGR and 41% adjusted EBITDA CAGR. Now we're not a COVID beneficiary, guys. We don't do e-commerce in any significant numbers. I mean in prior to the 3dcart acquisition, we had virtually no e-commerce other than our hotel room reservations. Restaurants and hotels got wiped out during the pandemic. We processed payments predominantly at that time for restaurants and hotel. We grew payment volume double digits through the pandemic, and there were somehow an impression that we were actually losing share in restaurants. The way that happened is because we signed up a lot of restaurants and hotels during the pandemic, and they made that choice not because they were trying to gravitate to a weaker technology solution. They made that choice because they were gravitating to a superior technology solution. That's how we achieved this growth performance. Now personally I think, if the story stopped there, that would be pretty good over the last 18 months. Story doesn't stop there. So we want to put together in our scorecard since the IPO of how we performed. These were all direct references from the S-1 at the time. So continue to win new customers. We grew payment volume of 46%. Now if we're losing share, that's not possible. So we're winning customers, and we're winning customers not just across the core verticals at the time of the IPO, but across several new ones. So unlock substantial opportunity within the existing base. As we've said, 50% of our production in any given month comes from gateway customers moving to our end-to-end platform. And 50% comes from just net new wins in what is a really nice addressable market. That opportunity still remains. There's $170 billion gateway volumes still on the platform. I know that was $150 billion last quarter. That was before it cost $500 a night at Motel 8. So the big thing there is that easily quantifiable opportunity, it's not going anywhere else. We all know where that gateway volume is connected into, right? It's Global, FIS, JPMorgan, First Data. I'm very sure they are aware of our strategy because that's how we've moved a lot of volume over to our platform right now. If you were them and you knew that we were executing on this end-to-end conversion strategy, once you try and take that volume over the last 4 years and park it anywhere else but us, I think that's how valuable those 425 software integrations are in the 20 years of version history behind it, there's nowhere else for it to go. And we've largely pursued that opportunity by showering those customers with incentives. Lots of carrots, free handheld SkyTab devices, free online ordering, anything really to move them over, and it's working really well. I mean, end-to-end volume growth CAGR is what it is. But we don't have to be in the gateway business forever. Toast isn't in a gateway, Clover isn't a gateway, Square is in a gateway. At some point or another, we can sunset that strategy or we can implement tolls or other opportunities to monetize the gateway for those that continue to want to work with the legacy acquired that's probably not adding a lot of value. Leverage domain expertise in hospitality to expand into adjacent verticals. We've added 7 new verticals, and we'll talk about this a little bit later on. But you have to be highly confident in your high-growth core business in order to branch out in other verticals that, that business will take care of itself. And that's exactly what it's been doing, which is why the responsible thing you do was to go into new verticals that we saw a lot of opportunity in, bring our integrated payment expertise and start to get real results. The real results are we've generated $45 million of additional software revenue for this year in those new verticals. Now it's still early days in monetizing the payments associated with those verticals. We've only been at it 6, 9 months, there is a football season that starts. Once that happens, it gets a lot harder to move stadiums over. It gets a lot harder to move gaming customers over once football season starts. But we think we're doing pretty well. And again, that expansion was largely the confidence we had in our core high-growth business that it's going to keep doing its thing. Continue enhanced product portfolio with differentiated solutions. We've added 75 new software integrations within our high-growth core business and pursue strategic acquisitions, I feel like we got a little punished that we were disciplined here. We deployed about $200 million of capital since the IPO between a split of organic and inorganic initiatives. That's what took us into gaming. That's what took us into sports and entertainment. It's what took us into e-commerce. It also included some investments and some accelerants within our core markets, which is obviously playing out well. But we have $1.3 billion of cash, and we haven't deployed that on a large scale because we're waiting for the right opportunity. And I think we've got a lot of reasons now why we should be a little bit more aggressive, and we'll talk later. But we don't give ourselves a good checkmark there because we have been patient. Monetize the robust data we capture through the Shift4 model. We're still capturing all that great data that we have. We're still learning, but we haven't begun to even monetize it yet. And then leverage our relationships with global customers to expand internationally. This one is, in our minds, there's only a couple of paths to really having global card-present processing capability. It's hard. That's why it's our vision to bring clarity and illuminate commerce on a global level. It's one of the most obvious things we could do strategically, right? Look at who our customers are, Hilton, Hyatt, Marriott. I mean, you have a lot of multinational customers already. You want to follow them. You just want to do it on the right terms. But the more synergies you can unlock from one of these deals, like bringing on a number of signature global wins, provides that much more justification to go and pull the trigger on something we've always wanted to do. We just want to do it at the right time. So I'd say we're delivering on our IPO promises based on this slide. And really, we're just getting started. So we're going to take this presentation into a couple of parts. We're going to talk right now about Shift4 at essentially at the time of the IPO and what we're calling our high-growth core. So based on some feedback from our investors, we wanted to provide a lot more specifics on just how healthy and how quickly our core business is growing. Just like most of our competitors, when they refer to their core, they're referring to something that is shrinking, their legacy business and then pivoting over to -- but be excited about this shiny new object. Our core business is awesome. I mean look at how it's performing here. This is not because like of any factor other than simply we're taking share in the market right now. And you can see some comparisons against Visa, Mastercard and some other players. I would call your attention to a couple of things. Take a look at 2020's slight dip. I mean that's what the pandemic did to us. I'd say that looks like we shrugged it off pretty well despite those circumstances affecting our customers. Restaurants are growing. Again, I can't emphasize enough, like you've got to assume these restaurant operators are not -- they're not making bad decisions, right? Like, they're actually gravitating towards a product because it's adding value. Well, we think you guys are probably losing share to some of the new emerging players. I don't see that in the restaurant chart right there. We've had some critiques on -- when our spread moves 1 basis point or 2 in a quarter, and we'll talk about that in the next slide. It's because 4 years ago, we had no hotels, we have a lot of hotels now. Hotels do more volume than restaurants. Average revenue per merchant is going up, average volume per merchant is going up. But sure, you do a lot more volume, it's going to be priced differently. Setting expectations right now, I can guarantee you Starlink is not priced at the same spread as an Irish pub on the corner. I think that would make a lot of sense if you do $100 billion a year in payment volume. And yes, I -- the other thing I'd emphasize too here, this is all organic. We've done small acquisitions, sure, over the years. We haven't purchased a company in recent history in the last 8 years that actually possess our #1 KPI, which is end-to-end payment volume, which is what you're looking at here. We bought companies and transform the revenue model for sure. We've acquired companies and added an integrated payment solution to it. Every bit of that volume is growth from our partners, software partners going out and winning payment volume. And nothing to do with anything we acquired that already possessed it. Okay. We've had a lot of inbounds of last month about Toast eating us alive. So I wanted to point out a couple of things here. For starters, we've been around for a long time. And I can even tell you in 2015, when we had our process to find our equity sponsor, all the questions throughout that time period with Square is going to put you out of business. And Square is a fantastic company. But I think it's very clear where their lane is right now, and they're doing great things to it. But it never -- it didn't stop there. It was NCR Silver is going to put out of business. Revel. Remember Revel, they were raising $500 million valuations like 6 years ago before any of these like super-astronomical revenue multiples were. We really hear about them a whole lot anymore. Upserve or TouchBistro or Toast. Look guys, it's not a winner-take-all environment. I mean I can't emphasize that enough. These are good companies. We're a good company, too. And I think that's probably demonstrated by that 52% CAGR within the restaurant space. So let's talk spreads a little bit. 74 basis point blended spread. I think you can see restaurant spreads are going up. So obviously, we're not under immense pressure that we got to burn it all down and price at nothing in order to maintain relevancy in the restaurant spot. It looks like restaurants are continuing to sign up despite the fact that spreads are pretty healthy. These spreads, by the way, are healthier than the other company has been talking about in terms of what they're able to capture. The only spread here that's actually trending down, if you'll notice, is in all other. So that's the result of UPS stores. So I believe we started this year, approximately 3,000 of UPS stores were on our end-to-end platform. We're ending this year somewhere around 4,200. It's also worth pointing out that Toast software does not power retail shipping companies. And then you'll see lodging at the bottom. Obviously, significant lift in lodging volume over the last couple of years. And again, you're just talking substantially higher volume per merchant. So we believe they should be looking at it for sure on an average revenue per merchant, which is really what this next slide is meant to represent. Higher-volume merchants, lower spread, it's still trending up, as you saw on the previous slide, but it's obviously not the Irish pub on the corner. It's a completely different environment. But this is what you want to see, by the way. We've said, of all the competitors out there, the ones that we liken ourselves most to is an Adyen. We're an integrated payments company just like them, and we happen to focus on the more complex end of the payment spectrum. Well, how do you know it's working on the more complex end of the payment spectrum? Average volume per merchant goes up. Average revenue per merchant goes up. That means you're moving farther and farther away from the world that a PayPal or a Square would find success in and into the world of multiple different software applications, where no one particular software product can dominate the payments conversation. We talked about this during the Analyst Day at Pebble Beach, but when questions came up about PayFac and it's like, well, you got to see here, you've got 15 retail stores, 3 golf courses using golf software, 3 salon and spas using salon software. You got 3 hotels using different software. There is no one product in here that gets to say, "I get to be different." All of this can be integrated with one common experience for security and tokenization and business intelligence and settlement. But me, I'm the golf software player, I'm going to do a PayFac thing and completely isolate myself from that environment. It doesn't work that way. Doesn't work that way in the more complex end of the spectrum. And obviously, the results, again, are speaking for itself if your average revenue per merchant -- average volume per merchant is trending upward. So if we talk a lot about margin. So on an adjusted EBITDA margin basis, we've increased since Q3 2020, nearly 500 basis points to 38%. We're doing this while we're investing in high-growth verticals. Like, this is an anomaly right now, guys. Like, there's legacy merchant acquirers who are optimizing around expense and raising rates like crazy on their existing customers because volume is going down, and that's why they're not reporting it and you need to hide that fact that, that's the legacy acquirer. Then you have the high-growth players who are saying, "We'll worry about margin later. Just value on a revenue multiple, and we're going to grow like crazy." We're trying to do both. We're growing very quickly in our core markets where we are scaled. Margin is expanding. Margin will continue to expand, but we're also making investments organically into new verticals because that's the right thing to do. And we're getting results as -- and we have real results to show for it, which is the $45 million in revenue and why we're raising that component of guidance this year. So we've been trying to figure out where the heck we live over the last month. So we put this slide together as much for ourselves as for you. I don't think any of this is too shocking. Volume growth from legacy acquirers. I think for the most part, they don't report it. I think it's probably pretty clear why. And then you look at the revenue growth associated with it and you have the high-growth disruptors. And I think we size up reasonably well on the volume growth side, not as much maybe on the revenue growth side. I would point out that a lot of these players in this middle column did, in fact, benefit from COVID. I don't think anyone could deny that when you weren't allowed to physically go into a store, restaurant or a hotel, that meant you would have to procure things online. So if you are an Adyen or PayPal, you're probably going to benefit in that environment and a company like ours where you usually do go in a restaurant or a hotel, if you want to stay there, should not benefit. And the volume again speaks for itself there. So I don't know how anyone could think we're a COVID beneficiary, but I believe we performed reasonably well in this comparison. Now I feel like we could end the whole thing right here and this would have been time well spent on further explaining the business. We are not stopping there. We actually have a lot to talk to you guys about today. So high-growth core. What are you doing about it? We're going to keep growing it. And how are you going to do that? So we still have $170 billion of gateway volume that remains. Again, that's really hard to do, right? That's actual commerce-enabling software that's integrating to our platform. It's not easy to get software integrations. We're providing point-to-point encryption. We're providing tokenization. Everybody kind of generally understand what's going on with tokenization. Tokenization is where you're replacing what would otherwise be a cardholder information of a credit card number and you're replacing it with something that stands into that process. Now when you tokenize, that becomes a very sticky connection back to that customer. So once you have a lot of tokenized cardholder information, you can't pick up that tokenized data out of our token vault and bring it somewhere else. So you've got $170 billion of very sticky volume using our encryption and our tokens that we are then outputting to a Global, Fiserv, Worldpay and every other legacy acquirer because they don't actually possess those integrations directly. It's very clear, there's no gateway connections into Adyen or Stripe. Like, they're an integrated payments company, they have those integrations directly. This is all going to legacy acquirers that don't have integrations to our 425 software applications. We don't have to be a gateway long term. Like I said, we don't have to have a pure carrot-only approach. At some point, we can choose to sunset those connections. They're costly for us, by the way, that's in our OpEx. We have teams of people who have to maintain connections into all those processors. Every time there's a new EMV or security mandate, we have to invest in doing that. When we certify a new hardware device, we have to certify it on every one of the processors. That's a lot of accommodation for the competition, doesn't need to stay that way. It is purely an eventuality. There is no sized customer that lives within our gateway base that can't -- we can't do a process or change on, make their life easier having a single-vendor solution, save them cost and have a meaningful lift in our gross profit. And if you look at the gateway conversion economics, we talked about this before, we've always said every time a gateway customer moves over, they're happier, they're paying less. They got some sort of technology from us to save pain points, and it's a huge uplift in gross profit. That's based on a 50 basis point net spread. It's not how we're signing customers, like, don't punish us over the time . We're just saying we took a very conservative assumption here saying even at 50 basis points, we should be doing this all day long, and we are. And then you have your organic wins. These are customers that require those software integrations in order to deliver commerce experience for their patrons. They're not on our gateway, but they're still gravitating to our solution. Hakkasan, Tao Group, these are pretty sophisticated operators. They're not moving to us for an equal or worse technology experience. They're making a good choice to come our way because they're getting a lot of value. What else are we doing in our core vertical? We do a lot of restaurants, right? So we're not going to sit on our hands in that space. There's too much opportunity there. We've known this since 2017 since we acquired 3 different software -- restaurant software ISVs that we were going to deliver a next-gen point-of-sale system platform. We told you about it before. We called it project Edgewater. It has a name. It will be fully released in the end of Q1 of 2022 to all of our distribution partners. You can have a preview of it here today. I believe it's in suite maybe 2018. But we'll give you a demo of our new prototype hardware, customer-facing display, our new tablet and our new next-gen handheld SkyTab. So I imagine at some point, you've seen some of our SkyTab devices in the field, you'll get to see what the new generation looks like and this pretty cool user experience that we've built out into the software. This isn't something we started working on a month or 2 months ago because we were in the face of this immense competition. We started building this 3 years ago, and we have a lot of merchants using it now. So what does this represent to us? There are 125,000 restaurants that already use some form of Shift4 payment technology today, 15% of which we generate SaaS revenue on. Why? Because we moved very quickly after our acquisitions in 2017 when we acquired those software companies to pivot their revenue model entirely towards payments. And it worked really well. We grew a ton of payment volume. And we gave away things. We gave away SkyTab handhelds. We gave away free online ordering. And this still worked really well. Volume growth has been fantastic. Margins have expanded. But this is a world today where if you're delivering as much value as SkyTab can, you can have those spreads on payments and you can have SaaS revenue and you can monetize the marketplace. So I don't know if you guys are -- we have 50 integrations out there at least 2 year Uber Eats, DoorDash, Postmates, all the players you can think of, they're in our marketplace today. All of our merchants can connect -- a large portion of our merchants can connect into it. We don't charge any tolls on that. We don't punish the app developers 30% or 40% or anything like that. It doesn't mean we shouldn't do that going forward. And certainly, with SkyTab, we will have an intention to monetize marketplace. We never pushed out a payroll or capital offering product partially because we're moving upmarket, and I have to assume that a Tao or a Hakkasan may not want to take high APR capital off of us or use a payroll solution. It doesn't mean we shouldn't do it, especially for going -- if we want to take some share within the sweeter SMB part of the space. So a lot of opportunity within the 125,000 customers we have. But any time we talk about whether it's a gateway conversion or a cross-sell, that's always about 50% of production. There's still a very large addressable market that 7,000 of our partners are waiting for a product that they can go out and make some noise with. And that's where you'll find SkyTab POS. So immense opportunity within our existing base, huge cross-sell opportunity out there, new revenue opportunities from payroll capital marketplace. And then there's also -- it's going to unlock a ton of efficiencies inside the organization. We have 1,700 or so employees right now. It takes a lot of people to upkeep Windows-based point-of-sale system, especially when you connect into an awful lot of them out there. You gain so much as you consolidate customers around a single product type. Android-based systems are less maintenance intense. There's no question about it. So we'll gain a number of internal benefits alone with just the SkyTab POS program. Some of the capabilities -- and we'll give you a demo in the back so I don't need to read through all of this. There are a couple big sizzle ones. So how do you get here so quickly? Because we've built a lot of these components and essentially modules. So the same type of SkyTab pay a table, order table application that connects to numerous software integrations we already have, that's easy to bolt right into SkyTab POS. Our QR code payment and QR-based ordering capability, you already built it out, it works. You just integrate that module into it. There are other examples, like our free online ordering platform, same thing, you integrate into it. So really, we just had to prioritize this new user experience, take some of the fan-first capabilities that we've learned from our friends at VenueNext and also building some other sizzle things that we like, like it has free loyalty modules right now that we think is pretty differentiated. You might have seen a couple of pure loyalty-based companies traded this past year at some pretty extraordinary revenue multiples. Well, it's easy. It's -- I mean, think about it for the longest time, it was just a punch thing on a card. You get -- you went to a barber 10 times, you get a free haircut. You can either make it like frequency based or you can make a dollar spend based, it's easy to do. You don't have to charge for it. It's embedded in SkyTab POS. It will be one of the differentiators when our partners go to market as free loyalty-based solutions. We built our own kitchen video display system. I know Square is very proud of theirs. We're very proud of ours as well. A new handheld manager app, we call InCharge, new business intelligence platform. But again, we'll give you a demo on it. And then last -- this isn't PowerPoint. So we're not telling you about something we want you to get excited about a couple of years in the future. There's 2,000 merchants using SkyTab POS. We've already brought in a lot of our sophisticated distribution partners for this beta, really, for over a year now. So you can see an idea of the number of customer growth over the last year. We have some pretty notable customers already using it. So Church's Chicken, United Center. The United Center is about as end to end as it gets in our world. It's our restaurant point-of-sale software. It's our mobile software with VenueNext, and it's our end-to-end processing. So again, expect in end of Q1 2020, we'll unleash this to our partners. So what have we done since the IPO? We moved into 3 exciting verticals through organic and inorganic means. So sports and entertainment, we've been announcing wins in stadiums and theme parks, I would say, pretty consistently since the acquisition, which was only about 6 to 9 months ago. Gaming, this is entirely organic. We had to build out all the integrations to software platforms like Everi, NRT, PXP, alternative payment methods. In the mobile gaming world, people have a variety of solutions. Sightline would be another great example of that. And then e-commerce through 3dcart and our Shift4Shop acquisition. So what we did is recognize at the time of the IPO. I mean, we were very fortunate to launch a successful IPO during a pandemic. We knew great confidence in our core markets and our unique software integrations that you can't replicate that. So the responsible thing to do is take this newfound position and enter into new high-growth verticals and do it quickly, and we did do that. And in doing so, we've expanded our TAM by about $630 billion just between these 3 verticals alone. So let me give you a little bit of a sense of the time line here. You can see Shift4 IPO. We acquired MICROS Retail Systems. That was an accelerant within our core markets. We acquired 3dcart, renamed Shift4Shop. I talked earlier on our earnings call about some of the things we're doing in Shift4Shop right now, which is great. Acquired VenueNext. We launched Shift4 Ventures. We made 2 investments in earlier this year. One of them is Sightline and the other was SpaceX. They've both since done subsequent transactions and have appreciated considerably. We began processing payment volume in our first stadium. We had our first notable gaming win, which was BetMGM. We've since followed that up. And then recently this past quarter and a very small transaction. We acquired Postec, which is another accelerant within our core markets again. Again, deploying about $200 million, so not a lot relative to the amount of firepower we have available to us, not a lot relative to many of our peers who were on a shopping spree over the last year. And it was both organic and organic strategies to be in these 3 new verticals. We've got $45 million of software-based revenue to show for it. We've added $630 billion of TAM and living within these verticals today, just the software integrations we're talking about. So VenueNext, Shift4Shop, we have a $6 billion cross-sell opportunity of customers already using our software, and that we're in the process of moving over to monetize payments on. I say all this because this is also a drag on margin. And I know I mentioned it before, we could have not done this, maybe it wouldn't be a 38% margin, maybe at 40%. And then we'd be just talking about a restaurant hotel specialty retail story. Instead, we're able to talk about all of this while still expanding margins and deploying capital wisely. So a couple of specific updates within these 3 new verticals. Gaming, we have 8 gaming licenses now. I think we got another 8 or so. Well, how many states want to do gaming. You shouldn't expect we have an application in on. 20 integrations with top gaming providers and alternative payment methods. Key partnerships with Sightline and Everi. You can see other ones on this page like NRT, you're also very relevant players in the space. E-commerce. I think we said earlier, we're at about 70,000 sites that are on the Shift4Shop platform. There were approximately 15,000 at the time of the acquisition, which is a year ago. This is not a huge needle mover at all for us from a volume or a revenue perspective but it's a presence in web store e-commerce. Restaurants have web stores. Bed and breakfast have web stores. A lot of businesses like having that capability, and it is a way for us to differentiate along the way. We have integrated with Facebook ads, and we also are announcing -- or we will announce shortly a donation to check out with a pretty notable nonprofit, you probably guess who. And then we have enabled crypto acceptance through BitPay on that platform. And that's good exposure because one of the big customers we announced today certainly has an affinity for crypto. And if they tell us they want us to bring that into other verticals, at least we kind of have some sense of what we are doing it now. And then sports and entertainment, tons of wins that are going on there as well as theme parks. Look, there's real SaaS revenue in there from the most well-known theme park in the world and that's growing. And that's a revenue stream right now that would like almost weigh against us that would be penalized on that. You'd almost want to be -- you think would be rewarded. In any case, it's still very early days on payment monetization across these 3 verticals. These are all efforts in the last 6 or 9 months, but there's real results to show from it. Okay. Shift4 for tomorrow, our new expansion, really the transformation. I love this slide. The moon. Okay. So big thing here is we're going global. Every one of these customers has a need outside the United States. We'll talk a little bit more on that right now over the next couple of slides. But I think the big takeaway here is if we're going to invest the energy to meet the demand, and the energy and resources to meet the demand, of these 3 signature wins and to capture additional share within their verticals, we are not doing it just to the limitation of those verticals, right? If you're building out this capability, you're going to build it out across the platform so that our stadium business can go international. Our gaming business can go international. Our e-commerce business can go international. If you added 55,000 or so, 60,000 sites Shift4Shop in the last year and an entirely domestic strategy of no hosting fees, we purely monetize about payments, what does that do when you make it available to most of the world? I would think it goes up. You can do the same with your restaurants, your hotel business, your specialty retail business. So when we're going global to meet the needs of these awesome customers and the industries they represent, that global TAM expansion applies to all of our integrations, core, the 3 new verticals and the 4 that these 3 signature wins represent. St. Jude Children's Research Hospital. So I mentioned it earlier on the call right now. I think one of the analysts had a good question, it was like, "Why is your platform that does restaurants and hotels, why does that add any value to nonprofits or airlines?" It's like our platform is an integrated payments platform. We connect into software. We happen to have a lot of software in restaurants, hotels and specialty retailers, but really what makes our platform special and why they're so few like it is because we cater to the complex end of commerce, not just one piece of software, multiple pieces of software need to exist in order to deliver a commerce experience for that particular customer. I can tell you nonprofits haven't been really exposed to this for the last really year. They have so much software there. It's incredible. I mean, there's like 10 different roll-up strategies going on right now just for nonprofits and they all have a collection of like 50 software in them, and they're all even more fragmented in that. You want to take donations during a live stream of a video game, there's software for that. It's not the same software that's doing the in-venue or in-person galas and donation events. It's not the same software that's on their website and such. So it's incredibly logical that we would go in the space. And what's like a more signature win to usher us into nonprofits and health care than say St. Jude's Children's Research Hospital. So you're talking about over $2 billion in annual payment donations. We're the preferred partner there. I think that the commitment by the way, is that, that volume will begin in January. So as soon as we get through the busy season, you can expect those integrations come in. And keep in mind, again, when they're integrating all these different software applications into our platform, those same software integrations take us into who knows how many other nonprofits and health care verticals. So pretty substantial win in its own right, and obviously, a huge TAM expansion when you think about a land and expand across the vertical. Allegiant Air. So this -- we're in the Allegiant Stadium. That's cool. This is really an extension within travel and leisure. I can tell you one of the ways we were able to differentiate and win here is Allegiant does own some hotels. I think they're expanding into additional ones. They do own some restaurants. They're trying to have more of, I think, an end-to-end solution there. The fact that we would be able to integrate into all their existing hotel and restaurant point-of-sale systems as well as integrate into the travel side of the business, allows them to know their customer better and follow them through tokens, which drive usually the business intelligence solutions they're using. Allegiant is a public company. You can see what their revenue is. It's pretty much all credit cards. I don't think you can buy an airline ticket in cash, and you should expect that to migrate over to Shift4. I think that's -- I think maybe like we'll -- I would accept that, that would be like a second quarter thing, but I'm certainly hopeful that we can expedite some of the integrations. It's their travel management system. It's new integration for us, obviously, but opens up opportunities into additional airlines, which is a pretty substantial TAM in its own right. And I don't know if you know this, most of the airline volume lives on 1 acquirer right now. That's the same acquirer that we've been just beating up like crazy in the hotel space for the last couple of years, as demonstrated by the hotel volume growth CAGR. They pretty much all came from one player. So that's Allegiant. And then my personal favorite, I don't like to say that this is opening us up to the new vertical of space-based broadband technology. This is sexy tech. Like, this is a $100 billion company, anyone didn't know. That's what they raised their last round at. And I think there was a Morgan Stanley analyst that predicted their revenue opportunity is going to be over $100 billion a year. That's also going to be credit card and crypto based. I mean this relationship alone, which is a 5-year strategic partnership with a commitment to move all the domestic payment volume within 120 days of when the contract was signed. So we're well on our way in that integration path. This one relationship could more than double the size of the company. Not to mention, it's a stamp and validation from probably our generation's greatest entrepreneur that we can do sexy tech. And I wouldn't expect it to be the last. I don't know if anyone like, again, that $100 billion round was raised on very little disclosures out there based on the belief that the world is going to want to be connected through access to information. It's a lot harder to run cable lines and DSL lines into the desert. There's a whole new world of cord cutting that's going to go on with Starlink satellite connections. They have 1,740 up right now. They consider that they're beta. They'll have 30,000 up, and they're a vertically integrated provider and that they can put their own satellites up. I don't know if you saw, there's a lot of other satellite companies applying for permits. They haven't built anything yet pursuing the same landscape. They're going to probably have to pay SpaceX to put their satellites on orbit. You can imagine what those costs will be for the competition. Also worth pointing out, they have a restaurant in Starbase Texas. Now if you've never been there, it's like a religious experience. It's amazing. This is like the gateway to Mars and beyond. It's pretty cool. Very Manhattan project like vibes and building a city on a pretty scarcely populated area. They have a great restaurant there now. They're adding a couple of bars on top of these big high bays where they're building 100 of these cool Starship spacecraft. And it's also part of the agreement that those have to -- those will wind up using SkyTab POS. In fact, I think we have a demo coming up this week. So lot of extraordinary opportunity there too. This is, for sure, the signature win that is going to take us all across the world for the benefit of all of our other software integrations. And yes. These pretty much, in the 3 wins we just talked about, I can tell you that in terms of who we displaced because it's usually one of the questions that come up, Adyen and Stripe both lost at least 2 of the names that we just talked about here. And I think those are amazing organizations, by the way, a total perspective. So wrapping up here, and apologies if I'm running a little long. We wanted to set some expectations. I think that we -- personally, I think we were really bad about this in the past. We do acquisitions like VenueNext or 3dcart, and we'd get excited about it internally. I don't think we gave our investors a lot of reasons to be excited all the time. So I think we have to set some expectations here. So we anticipate by the end of 2024, that year, we'll have $160 billion end-to-end volume; $3.5 billion of gross revenue; $1.15 billion gross revenue less network fees, which represents at least a 50% end-to-end volume growth CAGR over that time period. Of 30% gross revenue less network fee CAGR. And let me also get out in front of 2, just a question of what does this mean for margin? First of all, all 3 of those wins I just announced have margin in it. Those were not throwaway deals from a pricing perspective at all. I think the idea is our core business that we talked about, our high-growth core is going to continue to expand with margin. We will continue to balance investments in our organic -- and we will continue to balance investments organically and inorganically to support our 3 new verticals from this past year, the 4 new verticals that we're announcing today as we go global, while also letting our core business expand. And of course, long term, we expect, as you're talking $160 billion end-to-end volume, you get to like 1/4 of -- long-term margins are going to be the same. I mean, we consider ourselves very Adyen-like and that at some point in time, these transaction volumes, they're all incremental and fall to the bottom line. But at least for the next couple of years in these new verticals, we are going to have to make investments if we're going to go global. We have a ton of demand, and we're going to deploy capital, of course, to support it. So again, I can't emphasize enough, core markets are going to continue to do their thing in terms of margin expansion while we balance our investments that we think are necessary. The other thing I'd say here, too, is just what is the whole -- what do you have to believe on this whole thing? And if you look at just the CAGR on our core business, that's not very far off from that 50% end-to-end volume growth number. And we've been doing that for 4 years. Even if you were to discount off of its current number, you're just saying that of the 3 new verticals that we entered 6 to 9 months ago in gaming, e-commerce and sports and entertainment -- sports and entertainment venues, plus these 4 new verticals that we now have an immense right to win, which is nonprofit, health care, travel and leisure as well as sexy tech, that just needs to contribute 15% or so of incremental end-to-end volume growth, and you start blowing through these numbers. So I don't think it's a tough ask on what you need to believe. So that brings me back to this slide, of which I think we continue to size up very well. Again, I think if there was an organization I like in us most to here, it's really Adyen. Adyen is a very impressive global commerce player that integrates software across all verticals. This is not like are you a jack of all trades, master of none, why don't you just get really good at restaurants and why are you doing also hotels, now you're doing satellite broadband communication payments. We integrate to software. A lot of the software is made by great companies. And no doubt the software that powers the Allegiant airlines is awesome. I'm sure -- I definitely know for sure the software that's driving the commerce experience for Starlink is pretty incredible. We want to connect into it. And just like Adyen, we want to differentiate and win those software integrations and go out and conquer across a number of verticals, which is why this is exactly what our strategy has been. It's why we've increased our TAM so significantly. I feel very compelled to talk through this over the last month. So look, I mean, I think in terms of SkyTab POS and Toast, there's a lot of similarities there. We're not a stranger to restaurant point-of-sale technology. We've been doing it for a really long time. We've been growing restaurant payment volume, even in the face of these death star competitors for a long time right now. And we have our new platform. We have very sophisticated distribution that provide local sales, service and support, which we think is important as you want to move upmarket. We have some advantages. We have an in-house payment platform. And we do have local distribution and support, and we think that matters quite a bit. But unlike Toast, we haven't pulled all the levers yet. And Toast is a very smart from the beginning. I mean, integrated payment strategy, SaaS, monetize the marketplace, capital, payroll offerings, those are all great levers that they've already implemented. We have not monetized SaaS anywhere close to the level. It was not even a requirement for our solution. I mean, again, only 15% of our restaurant customers are paying it. We've never put out a payroll solution. We haven't put out a capital offering. And we haven't monetized our marketplace, but we're going to. So that seems some upside for this product. And then it's also worth noting, and we pointed this out before, Toast doesn't power UPS stores. Toast doesn't power hotels, they don't power golf courses, they don't power salons and spas. They don't have a gaming application. They don't have an e-commerce web store builder. They don't do stadiums. They don't do theme parks. They don't do hospitals. They don't do nonprofits. They don't do airlines and they don't do Starlink. And even the restaurants that are part of SpaceX, they don't do those either. Wrapping up here, and then we can go to questions. But pretty deliberate in how we told the story today. We thought it was very appropriate because we hadn't done an Investor Day for a while and the last month was pretty chaotic out there. So we felt like we owe you this deep dive here. But we broke it up in liberally into 3 parts, Shift4 at the time of the IPO. The core markets are doing fine. They're going to continue to be fine because it's so hard to replicate those integrations. And we're not just relying on the integrations we had. We're expanding on them. We have 425 of them right now. Margins are good. Spreads are fine. Margins are expanding, spreads are fine. You can see right there across the restaurant track and anything that actually -- the only one category that trended down is retail. We had a monster of a customer in UPS stores that boarded over to our platform, which is great. It's very hard to win volume right now. It's why some people don't even report on it. And those margins will -- those spreads will expand over time just like you're seeing with lodging as we continue to add more value for those customers. So we felt really good that our core business is going to do fine for a long time, which again embolden us to go out and take advantage of this great opportunity at the time of the IPO to invest in new markets, in gaming, in sports and entertainment, in e-commerce, which are all early days, but we've got something to show for that $200 million. We've got good revenue there, and we have a real right to win in those verticals. We expanded TAM considerably. And then we had some monster wins. And that tees us up for tomorrow as we go boldly forward after health care, nonprofits, travel and leisure and sexy tech. What this has done is create enormous demand. If we could process payments in South America tomorrow, we would have volume waiting for us there. In Europe, the same. So recognizing this enormous TAM and this immense amount of demand that's already from our committed customers, we've positioned us well. Thanks to you and a lot of our investors who entrusted us with a lot of cash that we are now more motivated and have more rationale to deploy than ever to accelerate our growth in these verticals and fortify the ones we're already in today. And with that, we'll take questions.

James Faucette from Morgan Stanley. Appreciate you taking time today. And just you know, I didn't come up with that $100 billion revenue number for Starlink. That's another Morgan Stanley analyst. But anyway, I want to ask a couple of things. First question is, tied to your medium-term outlook, just clarifying, are you looking at that, particularly the revenue growth is organic versus inorganic? And I guess I would tie that back to one of the things on your scorecard about acquisitions and doing strategic acquisitions. Like, how do we tie those things together? And it is hard to do deals out there, at least at valuations that people find attractive. So how are you approaching that?

Yes. So good question. And by the way, whoever was the Morgan Stanley analyst, the assumption was $29 a month subscription fee for broadband. They charge $100 a month right now. So could actually be 3x that $100 billion. People seem to like to pay a premium for Elon's products. So look, the way we look at it right now is we just have an awful lot of demand right now, and we have to meet it and that can -- that will unquestionably include deploying capital organically towards some of these initiatives like we're doing in gaming and for sure, inorganic as well. Now that -- the result of organic could be that we considerably exceed. Let me clarify considerably. I don't want to get too -- like it could exceed a lot of what we communicated already. And to your point on valuations being challenging, for sure, that's a large part of the reason why we haven't pulled the trigger before. But things have changed. We have more rationale than ever right now. There could be hypothetically an international opportunity that we looked at and said, we can't maybe justify this price because they're in verticals that aren't like very compatible with what we try and do. And then today, you can say, well, wait a second, you can just supplement that with the instantaneous demand that Starlink would have in that region, which could help rationalize that transaction even at that multiple. So these 3 really important wins. St. Jude for nonprofits in health care, Starlink for this sexy tech and really global demand associated with it. And Allegiant definitely changed the game a little bit for us in terms of our willingness to maybe pay up for some of these opportunities that we think we can immediately benefit from. Yes, in terms of getting the specifics of how much is baked within that, I think that we're never 100% counting on, well, this acquisition is needed in order to achieve this right now. I think we looked at it as we're very comfortable with the demand that we have, that we can quantify from our gateway opportunity. The integration is represented and the signature multiyear strategic partnerships to have confidence that we're going to get there or even surpass it and use the resources available that we have available to do it.

And then one question that we get a lot from investors that are especially kind of kicking the tires and then develop Shift4 about is, while you show very good margins on the P&L, the cash conversion or cash flow relative to others isn't as good. And I think the assumption is that ties a lot to -- that you are doing your own hardware in a lot of cases, you are building that into the pricing. So how should we think about that evolving? Or is that -- are you always going to be kind of a lower cash conversion? And it seems like some of the past improvement there would be extending the life of terminals or doing some other things. So can you just talk through how we should think about the evolution of cash conversion?

Yes. No, I got that feedback from some others. It was like, wow, it's like the clock rewound 6 years that we're talking about a valuation on a free cash flow basis. There's really horrible businesses that we can even buy on a revenue multiple basis. Look, I think a lot of it does drop to the bottom line, but we're intelligently reinvesting in the business to continue to win share. I mean you look at what that volume growth look like. We put that slide in there for a reason. It's telling you that we're not losing customers, we're gaining customers. I mean we haven't refreshed this in some time. The average -- the lifetime -- the average -- the average customer lifetime on our gateway platforms at the time of the acquisitions was close to 13 years. That doesn't go down when you move them to our end-to-end platform. You're now actually derisking the relationship with the customer and adding more value. So the last time we really picked apart our unit economic model, we were sub 12-month payback periods. I mean, frankly, giving a $110 -- I mean like these devices over here, your Shift4 device over here, they're like $125 and every one of these came with probably a $10 device management fee or something. So I think people would be getting too wound up on that right now if they're not seeing you're getting growth, you're getting real EBITDA, you've got real free cash flow in the business. This is only going to improve. And to your point on like when you start moving to a more Android-based systems, that's not Windows-based. You got solid-state hard drives there. It's less loaded, they don't fail as much. The replacement cost on some of these devices is considerably less. And as you move more upmarket, you're gaining IT resources. They generally have their own hardware and infrastructure. So a lot of times, your acquisition costs even less as you move upmarket and have a higher revenue per merchant. But I would love to ask that same question to some of our other competitors that just have pure negative cash flow.

Chris Donat with Piper Sandler. In terms of your 50% growth rate for end-to-end volume through 2024, how should we think about the big swing factors for that? Is it organic growth? Is it these 3 new relationships really delivering? Is that what's going to make the difference? Or just what should we -- if we worry about something, what should we worry about?

Well, I mean, certainly, like some real lumpiness in there could absolutely come from those wins and when they come on board. I mean, geez, Starlink is monster, right? I mean if they're doing what I think they're going to do, because those assumptions on $100 billion a year were -- I mean they were pretty conservative. They were $29 a month subscription plans. It's $100 a month now. There's a $400 device kit cost. So like Starlink doesn't have to come on at full throttle and you're still going to start throwing off like substantial volume contribution just from that relationship alone. But I mean right now, if you just look at what our core businesses' CAGR has been at and you're not that far from that 50%. So if everything else that we've talked about in these new verticals, even ramps up at like an anemic pace, it's -- to me, it would seem like we're comfortably past it. But yes, for sure, I mean those 3 signature wins alone just on their current volume rate would be like a 12% to 14% lift in our exit volume of 2021. So those 3 accounts aren't insignificant in terms of immediately boosting us on there. But the core business is still growing very fast and the markets that they open up are pretty enormous. And we're obviously signaling that we're willing to be very bold and aggressive to go out and capture that demand.

Okay. And then just one follow-up, separate topic. But as you talk about going global and we think about being in a stadium environment here, do you have a different set of competitors internationally? Like you mentioned Europe, stadiums there. Is like Adyen already in stadiums in Europe? Or do you have other competitors who are there? Is it a greenfield opportunity?

I mean Adyen and Stripe are awesome and they're all over the place right now. But I mean they don't have -- they integrate into someone else's software. We felt comfortable buying software that we think is going to be a winner in stadiums in the case of VenueNext. So the idea that we could come into those markets and say -- which, by the way, there's already demand for it now. To be able to come in and say, "Look, we'll replace all the software you have with our VenueNext solution and we'll do the payments. But if you really want the software, you kind of have to give us the payment which is part of the deal." We think we'll find a lot of success in it. So we are advantaged in some cases when you do own the product and the payment rails in order to displace a competitor. And there's a lot -- I mean, the idea of mobile ordering and kind of checkout free shopping and retail, those trends aren't going to go away. There's going to continue to be demand for it, which is still ramping really.

We've got a couple of questions, Jared, from the webcast. And they pretty much all focused around international and margins. So on the international side, people are wondering, can you go international without an acquisition? And are there any certain international markets that a priority? And the margin question is about what the margins trends are.

Yes. So good questions. It's interesting. I don't know how familiar everybody is. We've obviously done a lot of work in the international markets over the last year. We've more than kicked the tires on a handful of opportunities. It's not totally like-for-like on how we do things here, or at least how Shift4 does things, which is predominantly spread based. A lot of the players we admire over there, they have -- a portion of the -- you can see in all these charts over there, but got a portion of kind of acquiring and then volume. They charge separately for gateway. They charge separately typically for risk-based services. And then usually a very healthy portion of it comes from a currency conversion, like a shockingly healthy. So what I'd say is, perhaps the actual acquiring portion -- first, everything should be again relative to the size of the customer, right? Like -- but just as we've seen in difference between hotels and restaurants. But the acquiring portion might be hypothetically 20 basis points, but when you average in gateway, fraud services and DCC, you start to get to places that look very similar. And in terms of where I'd say there's urgency, the core business would say, getting to Europe would be maybe the bigger priority. I think when you look at where Starlink is trajectory likely, you'd actually probably even sway more towards South America, Latin American area, Africa and other places because they are prioritizing parts of the world that having broadband connectivity has been a lot harder to reach. So -- and if we do it organically versus inorganically, we're certainly going to do both. But I'd say there is more urgency now just based on if you have a lot of demand -- and you got to go buy a factory in another country in order to satisfy that demand, that makes a lot of sense to do that. So I think we would have a lot more rationale to do an acquisition than we did previously. But we've already have gateway transactions across the Caribbean. We have gateway transactions in Canada. So it's not like we're at a starting place from 0 if we do want to continue to build out and invest on organic level.

Cole Hyland here from Credit Suisse here for Tim Chiodo. So just doing some quick back of the envelope math here. The medium-term guide seems to imply about a 220 basis point take rate on the gross revenue. On the gross revenue less network fees, it's about 72 basis points. So down from where it is today, which makes sense given the move upmarket, but that very healthy take rate on the gross base -- or gross revenue less network fees seems to imply some material contribution from it sounds like software revenue coming more into the mix? Or are there other factors that are helping to support that net take rate, I guess, we would call it?

Yes. So I think probably Brad should weigh in on it. But what I'd first say is like when we built this midterm outlook, a lot of it was based on the idea that our core business can get you there. And you can see a lot of similarities already like that in our core business in terms of volume growth and what the spread contribution is from that. But the idea that you should gain even greater comfort based on all these new verticals -- of course, I think some of those will come in at a lower spread. I think some of them will have a much higher SaaS contribution to it as well. But Brad, if you want to.

That's the piece I was going to add on. So if you think about go back into the history of primarily monetizing through spreads, we've done that historically through the hotels and restaurants. But now as we move into these other verticals, you are going to see a mix. So to the point Jared just made, you may see a stadium come on certainly lower spreads in a restaurant or a hotel but that SaaS component is going to prop up the total revenue stream. And I think that's one of the shifts we want to make sure people leave this room is understanding that we've talked historically, even going back to the IPO of taking SaaS revenue streams and almost completely blowing them up and converting it completely into payment space. What we found is there are certain verticals where we actually do have a really good opportunity to capture that SaaS revenue in addition to the spreads, e-com and VenueNext have really taught us that. So when you look at those net spreads, they still look healthy, but it's componentized a little differently than necessarily pure being on the payment side. Now we're actually going to keep some of that SaaS revenue with it as well.

Another question from the webcast, Jared. People are asking about next-generation PayFacs and how Shift4 is positioned to win against next-generation PayFacs?

Yes. So I mean, PayFac is essentially where the software company itself becomes a payments company, monetize through payments. We know how to do that. There are portions of our business today that are -- where we have customers that are essentially PayFacs. Generally, as overarching statement, right, we want to be very far from the simplistic end of the payment spectrum. We don't want to compete with Square. We don't want to compete with PayPal. We don't like anything where one application that you can download on an iPad, which is where a lot of those PayFacs live, can run the entire business. That's an environment even legacy acquirers can compete in. All it is, is opening essentially 1 merchant account at really, really low pricing and then pushing all the obligations of managing the sub merchant's fund to that customer. So it's generally not where we want to be. I don't want to fight with like FIS for a $0.01 a transaction on the next great PayFac or something that's out there. We want to focus on the complex end of the commerce spectrum. We want customers that need lots of different types of software in order to deliver a commerce experience for their customer and ideally across a lot of different geographies. And that's how you're going to be able to protect spread and so you're going to be able to command this SaaS revenue. That's how you're going to be able to differentiate from those that are having a harder time differentiating. So the next -- I don't know -- so many examples of it. But yes, generally, that's probably not where you want to be if you're looking to move the bottom line.

You talked a lot about restaurants and adding restaurants. I'm wondering if you look at over the last 6 months or 12 months, whatever time frame is appropriate for you, how -- what are the types of new restaurants or customers you've gained, existing restaurants that you've taken away from people or brand-new locations that have opened up?

That's a pretty good question. I'd like to think that most are already established restaurants because that would support the idea that your average volume per merchant, average revenue per merchant is going up. Generally, new restaurants have a one, they have a very high failure rate. Last I checked, about 1 in 3. And also, it takes them a long time to ramp and build the following. So I guess just looking at our average volume per merchant going up, I would tend to believe that they're usually pretty established ones that require multiple different types of software in order to win.

And are there any couple providers that you're winning from? Or is it...

Yes. Again, last couple of weeks, and clearly, I probably put a little bit too much Toast in the presentation, but man, we were feeling so many damn questions about it and think all we did was restaurants. And I think people lose track of it. It's -- there are winners out there, but it's really more who are the losers in the whole thing. Heartland probably had the most restaurant payment volume in the country 5 or 6 years ago. They were all essentially nonintegrated terminals. They bought a couple of ISVs. They shut a couple of ISVs down, they bought another ISV, like they're donating share. Heartland is part of Global. FIS had a lot of restaurants as part of Mercury, which became part of Ana . The bottom line is like the legacy merchant acquirers are enormous and have a lot of restaurants using cash registers and not integrated terminals. That's why they're shrinking. And they don't all just follow the -- road to Toast. Like they go to a Revel, they go to an Upserve, they go to -- maybe some go to Clover or some go to Square in the small end of the market. A lot of them go to Toast. A lot of them go to Shift4, too. But yes, it's not a winner-take-all environment in restaurants. It's probably a little bit more of a winner take all in lodging, I'd say, of late. But it's -- we're certainly at the end of the spectrum where we're able to differentiate value through technology and grow volume.

Can you give us an update on Shift4Shop? I think that's one of the most interesting things you've launched recently. And I know you mentioned some merchant count, but maybe some more color on how it's being received in the marketplace and how you stack up against Shopify?

Yes. It's definitely like kind of our -- I think one of our investors really said it well. It's like a self-funding R&D shop for us. That's a pretty fair way to say it right for at least for its purposes right now. I mean it's hard, right? I mean you take a giant like Shopify and huge customer acquisition costs for a long time, lost a lot of -- invested a lot of capital to get their positioning. And ultimately, you're not winning Amazons all the time. You're winning a lot of new entrepreneurs that have an idea with an immensely high failure rate. I mean it takes a long time to get payment volume from it. So we bought that business in September of 2020-ish, October 2020. I mean it was during a pandemic, I felt like the right thing to do if you could buy an e-commerce platform at a 14x EBITDA multiple. And we've been growing site count like crazy. And if I look at the volume -- end-to-end volume growth from platform, it's doing a hockey stick. It's just relative to the rest of the business. It's just -- it needs to keep doing this for a really long time to start moving the needle. But what it is allowing us to do is be that self-funding vehicle. We have had BitPay integrating the Shift4Shop for, I don't know, I think at least 4 months or so. So that's giving us some crypto payment exposure. I think that might matter with Starlink at some point in time. It's -- what was the other big initiative we did there? Well, anyway, there's a lot of interesting things that we're experimenting with there that we'll have -- that we'll be able to carry over to the rest of the business. For sure, capital offering is going to start there. And there's something else that's alluding to me that...

I just I mean as a side, just talk about crypto payments. I just don't understand why most people want to use crypto over payments because it requires tax information and it's much easier to use your PayPal or your credit card. What's the opportunity in crypto payments?

Yes. I mean.

At least in the U.S.

I mean I kind of -- I don't want to say anything that's like to offend any customers. I'm not like a huge crypto bull, right? Like I said, I just -- we're a payments company, and we're going to provide connectivity to meet the demands of our customers who are responding to the demands of their consumers. And if there was ever an environment to experiment with it in, it was Shift4Shop. Because it's card not present, it's kind of easy to do that. That -- I don't know why it's alluding to me right now, but we had another recent experiment -- sorry, the donation widgets that we're going to do for St. Jude, we incorporated into Shift4Shop. So it was a business that gives us exposure to card not present as a payments company that focused almost entirely on card-present volume for forever. And it is profitable, and it does allow us again to experiment some of these new things that I am very confident will be applicable across the business. I guarantee you long before we do like the SkyTab POS-facing capital offering, we're going to have it out and test it in Shift4Shop first. So it's a good platform for us at all. It's going to keep going up in the right. The model makes sense. If the platform capabilities meet your needs as an e-commerce entrepreneur, why wouldn't you take the no subscription fee model with all the capabilities, you don't have to unlock any modules and you just have to pay payments. Or go somewhere else, pay all the hosting fees, pay for all the modules and pay the same cost for payments. Like, we're materially lower cost for the entrepreneur to build their e-commerce business. It's just we're a big business and a lot of the other things we do, too. And it's going to take a while for that to make an impact on -- given just the size of the company right now.

This is Collin McBirney from Topline Capital. I was -- can you talk about like the new customers that you win, kind of how much of those are direct versus come through the partner channels, and you talk about the 7,000 partners and then maybe within the partners. Could you talk about like who those partners are and then like are they selling other solutions? Are they just selling Shift4 and then kind of how you get the attention of them versus them selling someone else's solution?

Yes. So all of our new verticals, so the 3 that we've really invested in this year, which would be gaming, e-commerce and sports and entertainment venues, largely direct strategy. Gaming, there's a lot of partnerships involved, but largely direct. The 4 new verticals we've entered into are all direct relationships. That said, it might make sense as we continue to pursue things like health care, nonprofits to leverage our distribution network to go out because there's a lot of them and they're very attuned to integrated payments. So -- but basically, it's the core markets that are mostly supported by our 7,000 distribution partners. And yes, they're largely going to market with our integrations. I mean some might do restaurants and say, grocery stores, in which case we've won grocery relationship, and we're looking to expand upon that. So that might be with somebody else. But most of them are with us. I mean, look, if you're going after restaurants to talk about that vertical directly, you're really either -- it's either really Toast which is pure direct or you're with us. So -- it's not like we're competing for a lot of their time. They like to win. They like to survive, so you need to put products in front of them that allow them to really differentiate, sizzle and win payments volume. We've been doing that for a long time, and SkyTab POS will be very helpful for the years ahead.

Another webcast question, Jared, on bank joint ventures. So as you think about growing internationally, how you think about bank JV is getting a lot of markets. Like Europe, very bank JV heavy?

Yes. Yes, I don't know about that, right? I mean the -- I mean a lot of the -- at least a lot of the bank opportunities that we've seen in Europe of late are more kind of, call it, Evo ] appropriate, where you're buying the existing book of business that they have there and then a referral relationship going forward, and it's kind of all constrained -- like the whole beginning and end of it is constrained within what that document is. I don't know if that's necessarily the right way to go to market for really tech-heavy enabled solutions. What I will say for sure is there's no question we're going to have bank relationships across the world. You're going to have to have anything close like a unified commerce experience globally. It's not all done with the U.S. bank sponsor. Adyen doesn't do it that way, Stripe doesn't do it. You need, in relationships and PSP relationships pretty much everywhere in order to do that. But I would say like we don't -- we're not going to intend to go to market through banks, at least that doesn't seem like immediately obvious to us with our integrations in other markets right now. Yes, sir.

Yes, Jared. Just curious how much you guys spend on R&D now? And if you could compare that versus what Toast spends on R&D. And I'm not saying it's all good spend, but just a sense of who your Chief Product Officer is, Chief Technology Officer is and the idea of doing a few small experiments that are $1 million to $5 million in costs, let's say, versus a Super Bowl campaign or something like that and just M&A, like just trading off those different capital allocation activities.

Yes. So I'll defer to Brad to give you the exact dollar amounts. We're certainly not spending at Toast levels at all. We'd be punished for doing so, like immensely, right? Like, we just had a question on free cash flow conversion. So we're in this weird spot, which is why we spend as much time as we did on this investor presentation. We're growing really, really fast. There's a lot of attributes to the business that are expected to grow really fast. But also want margin expansion, like, we don't get the luxury of just hiring and firing like 2,000 developers at one time. The idea is we have a lot of expertise within the domains that we're in today, and we can build good products kind of responsibly and win. And it's not -- these aren't hypotheticals, right? It's why we also put the volume and spread data. We are winning in restaurants. We have been winning in restaurants. We're going to continue to win in restaurants. We're going to maintain our spreads in that. We're also developing in e-commerce. We've added a number of people to Shift4Shop. I mean we've added a lot of talent over the last year. We said we were going to do that. That's how you build out an organic initiative like gaming. We just know that we're looked at differently than everybody else, and we've got to kind of balance it all. And I think in terms of capital allocation, like the Super Bowl ad, we just bought 3dcart, which was -- we renamed Shift4Shop. We got a heck of a price on it. I think it was a 14x EBITDA multiple. If we paid 16x, nobody would have faulted us for it. So the idea was, hey, this is an opportunity to shine a light on Shift4 because a lot of people aren't familiar with us. More specifically, shine a light on the Shift4Shop platform. Let it know, hey, it's an alternative out there. If we get even -- if we whittle away like 200 bps from Shopify, it was money well spent, and that was effectively what the cost was for a Super Bowl ad. And the result is 70,000 sites on it versus 15,000 sites on it now. That was probably the boldest trigger we ever pulled, I think, relative to a marketing campaign. I won't rule it out as we start seeing some momentum on SkyTab POS to get the word out a little bit more that we do restaurants even better than anyone else and create some sizzle. But yes, I think we're, for the most part, from a capital allocation perspective, we're super disciplined. We have a great track record on that. I mean, again, you try and unscramble the egg from any of our acquisitions, like they all average down and effective multiple, probably like 2 or 3 times right now.

Just a quick follow-up there, specifically as it relates to Toast is, would your all-in pricing on a software plus spread relative to TPD be higher because you have an indirect partner that's taking some amount of -- are they basically adding some fat to the pricing relative to Toast because they're going direct?

Yes. I mean our -- well, first of all, I think our spreads are -- I mean, I've looked at their materials, their spreads are certainly higher. I'd like to think that because we're adding a lot of value to that customer. We don't charge for a lot of other things that they're monetizing separately. But what I would say is whatever expense that we have by working with third-party distribution pays for itself several times over. I mean look, we don't need anywhere near as many -- and look at how many different verticals we're growing in right now, and we have less employees than Toast. We don't just do restaurants because we have thousands of partners out there that when a printer breaks at a Hakkasan or a Tao, like we have somebody who's economically aligned to get out there and go fix the printer because it costs them just as much as it costs us, right? That's worth it. I mean there's tons of operating leverage that come with it. We introduced a new product. We entered the hypothetically, the health care vertical tomorrow with some, I don't know, really interesting integration. We can do a health care 101 to 7,000 partners, let them go after that market, take share really, really quickly. Whatever expense from a rev share component is well worth it because it's resources. We didn't have to burden our OpEx with. So I think having like third-party distribution is really worth it. I don't think it comes at the expense of the customer at all. I think we're delivering a lot of value. We just might be bucketing that revenue in different places.

And also just to add on to that, think about when we do share with our partners, we're sharing that on the payments piece. We're not sharing that SaaS components with our partners. So that's just another element to think through as you model these kinds of revenue streams out is you will see share to the partners go for those indirect components where we are going to market through partners, but only on the payment piece, not on the SaaS piece. We'll keep all that. And just coming to your question on R&D, just wanted to get ahead of that. We spend right now about $10 million to $12 million a year on R&D. And historically, it's been kind of piecemeal on a lot of smaller different projects. What we have seen happen in the last, call it, 24 months, is that shift is made more towards kind of transformative projects, right? So you think about Edgewater that we just went through today and how the SkyTab POS is going to be deployed. That's a byproduct of a lot of R&D over the last 24 months. The other one is the Everest platform where we're building internal capabilities. So what we're seeing is as opposed to R&D being deployed to necessarily maintain some of the other software packages we use, which we have several in the market right now, it's concentrating down much heavily in, a more, call it, more transformative type initiatives. And that's what we could see going forward.

Jared, great presentation. And a quick question on the gaming business in vertical. Can you talk, a, bit about what you guys are offering versus what a Sightline is offering differently? And b, can you also talk about where your nascent offering is going up head-to-head with some of the competitors because there's companies out there that have been talking about doing iGaming and whatever, and they haven't disclosed a company like that MGM. And so why did you guys win that versus a competitor in a bake off? And where does Sightline play into all of this?

Yes. Really good questions. So first, I've often thought like Sightline is kind of like in what an early day PayPal was, but just for the gaming industry. It's a good intermediary wallet. It's -- look -- for right now, like a lot of the credit card issuers do not want direct gaming transactions. They block it. I mean any of the FanDuel, DraftKings or something. You just trying to do like your normal Capital One card, it's probably going to get declined. That's like kind of how industry early days in e-comm looked at buying things on essentially like eBay, give birth to a PayPal Wallet is a better way to manage that experience. I'd like to think that's what Sightline is doing right now. And the idea is that we -- when those transactions flow through Sightline, somebody has to process them. And that's what our preferred relationship with them is all about. And obviously, they have a ton of traction. I mean -- and they're not just -- they're not just like that intermediary wallet, if you will, for mobile wagering. I mean the whole cashless concept that will inevitably come to The Strip. I mean, the same way we kind of woke up one day and all the quarters were gone from slot machines and ticket started coming out. That's going to happen across all of table gaming and you can pretty much count on I think, and that probably is why Sightline's valuation went where it did. The Sightline will be at the front row seat for all of that. Now in terms of the market, right? Nobody was considerably advantage of the 3. So we're talking about essentially Nuvei, Paysafe and Shift4. And all 3 of us had good arguments of why we should win some of the gaming business. But nobody was like crushing in the U.S. already because it was illegal up until recently. I mean you talked about -- remember the poker days where like you woke up 1 day, you have online poker and there's just FBI logos on all the websites. This was an industry that got super punished in the U.S. market, right? So really, if you have 3 players that want a piece of this market, and we all have a story to tell. So Nuvei would say we own SafeCharge and SafeCharge has a lot of relationships in Europe, and therefore, those relationships will -- that the -- our experience and expertise over in Europe is why we're going to be one of the players that will do well in the U.S. market. And then you have Paysafe. It is like virtually no domestic payment capabilities at all. They bought iPayment and Merchants' Choice card services. So those are like legacy ISO acquirers, you remember who iPayment and Merchants' Choice was. But what they do have is a ton of alternative payment methods in Europe, like Skrill and paysafecard, right? So they would say, well, we're relevant because those APMs are going to matter here in the U.S. market, maybe they will. The U.S. has not been a very hot APM market, by the way, like as close as you can get to a hot APM in U.S. market is PayPal. Those are usually connected to normal credit cards or ACH. And then what would Shift4 would say? Shift4 would say, "Well, half of the Las Vegas Strip for actual in-venue payments is connected into our payment platform. That's a fact. And we tokenize all those transactions and those tokenized transactions can feed into business intelligence systems. And you may want to know how your players are doing in venue and in a mobile environment. And you may want somebody to be able to like, win a bunch of money in their mobile app and then come into a store and buy like a watch with it or go to the nightclub or restaurant. So we think that's -- we think that matters." And then the other thing I'd say is like you don't overlook at the stadium side of it with VenueNext. I can say that I truly believe that largest reason why we want BetMGM had more to do with stadiums than our presence on The Strip because people are going to want to go to a stadium, bet on a game, bet on the first half, make a real-time prop better something, win and then use that money to buy a burger and a beer, all within the same app. And that I think is ultimately why we won BetMGM there. But I will say, like, back to the theme of, there isn't winner take all. It's super rare. Same in restaurants, right? Like Toast isn't going to be end game, everybody in the restaurant space. We're not going to own all mobile wagering in this whole digital conversion gaming in venue either. Like this industry has been so traumatized, they're going to put pipes into us in Nuvei and Paysafe, and we're probably all going to benefit pretty substantially from that. Maybe if one adds more value than the other, we'll get a preferred status. I think we had preferred with BetMGM.

Jared, I was looking at Slide 25 and the $1.9 billion of addressable revenue here on the SaaS revenue potential for restaurants. If I divide that by the IBISWorld sort of estimate of 860,000 restaurants, it implies like, I don't know, $2,200 per restaurant or something like that, give or take. And when I look at what Toast is making, they're making like $4,400 and the bulls think that's going to like $9,000. So my question is, well, maybe the Toast estimates are just too aggressive. But my question is, it doesn't seem like your feature set is any less or you're not offering potentially a worse solution. So I'm trying to understand like why is the assumption -- the $2,200 assumptions so different?

I mean, off the top of my head, there's 2 answers. One of it is, we could just be taking the same conservative view that we have with the 50 basis points on the gateway conversions. The other is, I thought we actually just robbed that right from the Toast deck or something. But I mean, I think the idea is that you are going to monetize that relationship with the customer through a number of areas, and you can make trades and maybe SaaS is a little less, and it's more on the payment spread. That's pretty much what we've been doing for the last 4 years, and we're saying it doesn't have to be that way. Maybe they expect to take more in on capital or payroll offerings or push payments than they do on the SaaS side or maybe they're not discounting any of those, and they're just going to get full freight on every one of those buckets and maybe that's what's in the Toast assumptions.

And every dollar that you gain here would be a SaaS gross margin, is that right? Like, something 70%, 80% pretty high, right?

I would think.

I have another question. On the 2024 guidance, are you using the same philosophy of relative conservatism, I guess, that you gave during your pre-IPO deck? Or are you seeing for example, like Starlink, we can't -- that seems like a tremendous opportunity, but it's unclear if you're assuming gazillions dollars of Starlink in that or not. So any color you can share?

Yes. No, we're not assuming that Starlink is just going to save the day and that's everything. I think actually, the story we want to tell today was core business is doing fine. Core business has been growing at nearly 50% and in volume for 4 years. Spreads are stable, expect us to continue to do well there, win new integrations, take new products to market like SkyTab POS. And then you don't have to believe a whole lot is going to come from the other 7 verticals, and we'll get there. That said, the choppiness disclaimer is like some of these organizations work on a time line that we've never seen before. And for all I know, you could have $25 billion in volume dropped on 2023 or something. It's unthinkable, right? How many people love their Comcast Internet? Probably not a lot. So things can happen very quickly in that, but that's not baked in like that there's some massive shift in a short period of time. That's coming from it. That would be like a nice surprise, and we would tell you the story as it's happening. I think that, by the way, that's another kind of just general commitment, as I think, as I said before, we were rather quiet over the last 5 months or so. I mean people should be interested in what we're doing across the world and what we're doing with Starlink or Allegiant and others and nonprofit. So we're going to try and provide healthier updates. So you know if they entered like a bunch of new countries, you can take -- probably make some assumptions that, that probably has an impact, but that's probably driven by Starlink volume.

Okay. That concludes the Q&A. We'll have Jared give some concluding remarks and we'll finish up.

Yes. Really, I don't know if anything further to be said than I appreciate you taking the time to travel out here and spend the morning with us. I think we still have some agenda items today. You're welcome to participate in including a nice tour of the facilities, some demos of hardware. We're happy to do some smaller -- small group or one-on-one discussions, if you like. And I believe at Bellagio tonight this evening, we're going to have dinner, drinks, cocktails for anyone who wants to stay. But that was somewhat dependent on share price reaction, are we up down? If it's up, we're happy to have dinner, drinks, and cocktails with you guys. If not, you can find me in the Bellagio pool. So with that, again, thank you guys very much for your time. And I'll turn it back over to Tom for the next phases of our agenda.

Thank you. That concludes the webcast. I just want to make sure we're done with the webcast.