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

[Audio Gap] the last couple of days. We're going to kick it off in a minute with Shift4's management team, a name that we've obviously spent quite a bit of time and focus our attention on. And then we're going to be following that with Frank, CEO of Fiserv, followed by Western Union CEO and CFO. And then we have many more throughout the day, both companies and panels, covering topics including regulatory -- regulation in payments, obviously, crypto, another one on e-comm and many more. You can check the agenda, and the links should be on the agenda. We're going to be kicking it off. And then just as a reminder, at the end of this session, there'll be time for a few minutes if you want to enter questions on the bottom of your screen, and we'll try to get to a few of them and read them off to the team here. With that, again, thanks, everyone, for joining us. And most of all, thank you guys for joining us today. Jared, Taylor, Tom, nice to see you guys. Really, really appreciate you being with us and not only also in person, it's good to get out and see people again in flesh. That's been on and off over the last couple of years.

But I guess, Jared, maybe we just start off with you and just -- I mean the magnitude of opportunities you see in front of you and the different things you're looking at investing in, as CEO, where are you spending most of your time right now? How are you prioritizing not only your time but your investment dollars, if you look from here on for the next 12 to 18 months?

Yes, I think you teed us up really, really well for the 2 big announcements we had just a couple of weeks ago when we released our earnings. A lot of my time, a lot of Taylor's time really on the whole organization has been spent working on 2 acquisitions that we think are going to be highly impactful to the business and all build off of the momentum we've had coming out of our Investor Day just 5 or so months ago. So Finaro, it's an acquisition -- we announced the acquisition, it's got a 6- to 9-month regulatory process, is delivering on a promise I made to the workforce, I don't know, about 15 years ago that we were going to go global. We have a lot more rationale to do it today than we did back then when I originally made the statement. But Finaro is a cross-border e-commerce platform in Europe, very, very, very modern architecture, basically solves for several gaps that we have as an organization. One, we are predominantly card-present. I mean we are -- we focus on in-venue commerce. Our customers are 1/3 of restaurants, 40% of hotels, stadiums and theme parks. And we've spent 22 years growing very fast. We grew revenue year-over-year every single year for 22 consecutive years. We grew Payment volume in the fourth quarter by nearly 100%, and we've been entirely contained in the U.S. And then you look at Finaro, which has European acquiring licenses. Actually, it's a financial institution in Europe. It has licenses for the United Kingdom, licenses for Japan, Hong Kong, and they're almost entirely card-not-present. So they have integrations into WooCommerce and Magento and other e-commerce platforms, not to mention about 175 ATMs. This was a substantial gap closure for us in terms of capabilities. So how strategic is it? I mean, I think if we were growing as fast as we have been, limited to the U.S. market, imagine what happens when you take all of our products and all of our 425 integrations that have been winning here in the U.S. and extend their reach into new markets. Like you think a lot of our hotels in the U.S. have locations overseas, absolutely. A lot of our restaurant brands, a lot of our e-commerce customers. One in particular, SpaceX, Starlink, very strategic agreement, they're going to process payments literally all over the world. We follow them as the yellow brick road takes us into new markets, and we bring all of our other integrations and products with it. So they've taken us into Europe, and they'll certainly take us into other markets as well. So stadiums and theme parks. If you believe that you're going to order a beer and a burger in every stadium instead of waiting online, we have the category-leading product for that here in the U.S. Stadiums overseas want that as well. We can absolutely link that into the Finaro platform. And then thanks to Taylor's team doing a great job structuring, throughout this regulatory approval period, we're basically able to get our integration done because the earn-out is entirely structured around connecting the plumbing between our U.S. platform and European one. And now we're positioned really well to continue to close geographic gaps, which I'd say, going back to where time is spent, is one of the highest priorities, especially when you think of Starlink demand all over the world, and we want to satisfy it. So then I would say the second acquisition, which is The Giving Block, this builds off the momentum we announced at St. Jude Children's Research Hospital who was a customer of Shift4. We've never been in the nonprofit vertical. I mean, 2 years ago when we -- less than 2 years ago when we IPO-ed, we were essentially in almost all restaurants during a pandemic with a little bit of hotels and a big opportunity in lodging. We've since grown lodging a lot, but we've expanded into 7 new verticals. And one of those verticals was nonprofits via the St. Jude partnership. But we had the technical means to address the vertical. We had a signature customer, but that's where it ended. And now you look at The Giving Block, which is a crypto donation platform, it enables crypto donors to donate to nonprofits who want the donation but really have no clue about the mysteries of crypto and how to receive it, growing wicked fast, profitable model and now it gives us kind of a natural foot in the door to continue to build up that St. Jude momentum. $50 billion payment -- traditional payment volume cross-sell within the existing Giving Block customer base, and then it helps you pursue a $500 billion addressable market. So -- and we've had momentum across all the others. Allegiant integration underway, initial St. Jude volume underway. BetMGM volume started to flow through as we moved into wagering in our first state. We have licenses in 10 other states. So mostly just building again off of all the momentum we've had in all the big announcements we had at our Investor Day.

I was going to -- we were going to acquisitions and a couple of questions, but I'll -- since we're on the topic, I'll just go into it now. I mean when we think about the opportunities for both these deals for a minute -- I mean, let's start with The Giving Block. I think you had mentioned there were 1,300 different charities that theoretically, you could bring volume over, which has been your playbook, really, when we look at a lot of other areas you've operated in and succeeded in. Can you talk about that a little bit in terms of what you foresee in terms of an ability to take what was $40-plus billion, if I remember correctly, in that piece of business...

$45 billion.

$45 billion, and bring that over?

Yes, you nailed it. That is our playbook. We -- in almost every acquisition we've ever done, you're usually buying an opportunity to bring payments into a new vertical. So -- or where you're expanding your capability within a vertical and then you're going to pivot a revenue model around payments. The Giving Block is no different. A lot of people are very familiar with the gateway conversion strategy that we've been doing. We talk about that all the time. Gateway, you're doing all the heavy lifting and you're not getting paid for it. And that became our strategy, well, we should be rewarded for it. Let's move these from a gateway customer to an end-to-end customer, it's very little lift, but -- it's very little effort but a big lift from a gross profit contribution. Let's apply that to software. We've done that in the case of like VenueNext. Great software, every stadium wants it, was ignoring the payments opportunity. Well, The Giving Block, very, very focused on crypto donations, but you can use those same type of rails to facilitate traditional card donations, which is like 1,000x. If you're getting $1 in crypto donation, you're probably getting $1,000 in traditional card dollars. That's a huge opportunity. So it's something we know like really well.

And getting in there and actually making it happen, is that part of -- like is that going to be something you can do where you have to rely on The Giving Block with that?

No, we're like -- we're going to do exactly what we've done with VenueNext and others. We're going to supplement their team with subject matter experts on payments. We call them our channel sales managers. They're the same ones that help all of our 425 ISPs. I mean all of our integrated partners make software really well or they distribute software well or they install software well. They're not all super payment experts. So it's been our strategy since we've been doing integrated payments to always embed subject matter experts within those teams. We're actually just treating Giving Block giveback no different. We're putting 2 of our subject matter experts in there. We've come over the rules of engagement and a handful of character incentives to entice a nonprofit that, look, you really -- you love the service you have today, we'll do another additional crypto matching campaign. We're about to launch a $20 million crypto fundraising effort. It's going to be the largest one ever. I'm going to personally match half of it. These nonprofits, they will want to participate in that. These give you opportunities to have conversations because you're -- I mean you're helping them help their causes that matters. So...

And then shifting to Finaro. I mean when you think about the internationalization of the business potential, we've been talking about bringing some of your hotel customers and leveraging those relationships for a while now. I mean, now obviously, Starlink, on top of that, there's been more, right? So what kind of time frame do you think we can see in that progress? I mean, first, you have to close the deal. I don't know if there's any risk on that, first, you can mention? And then secondly, execution in terms of bringing more business internationally.

So I'll address the risk piece first, very low. I've learned to never say never, but it's a 6-, 9-month regulatory approval. They've done -- they've gone through these steps in the past to understand what it's required. It's effectively the -- it's because they're a bank that you have to check your extra boxes. In terms of -- and Jared mentioned this briefly, but in terms of how we structured the transaction, we positioned the earn-out to achieving technical integration milestones that can actually be achieved before we own the business. So there is a referral agreement that exists between both parties today because if you think about all the customers we can bring, they have lots of customers who do U.S. volume today that they've had no right to participate in, Roblox being an example. So those are going to get achieved. The integration calls have already started. Quite frankly, a really critical moment in our diligence before signing was that we had comfort that this was technically achievable to the standard that we wanted for a global customer like Starlink. So the integration discussions have already started. We can be referral partners for that 6- to 9-month period. And then hopefully, at the time the transaction actually closes, we've got a handful of wins to announce the launch side of it.

It sounds like this process is already starting even before effectively with [indiscernible].

Yes, absolutely.

Yes. And it's kind of -- it's very important because, again, we -- this is now where the journey ends for us with international expansion. If you look at Starlink, for example, Central and South America will be a huge market for satellite broadband connectivity. Africa will be big markets. APAC will be big markets. So the way Taylor's team structured this deal puts a lot of the integration burden and incentives on Finaro, which frees up a lot of our bandwidth to continue to close gaps and pump them into Finaro at the same time. So...

It's exciting. Again, it's nice to see you [pulling ] on some of these international [ seize ] opportunity. If we can shift gears now and go into some of the recent trends. When we look at the fourth quarter results, we obviously saw a very strong trend, and then Omicron hit at the end in January. But maybe just catch us up -- I know you just recently reported, so just catch us up on things that have progressed from, let's call it, December through January to as much as you can comment on more recently.

Yes, sure. So I described the overall pattern is not radically different than what you saw with the second wave last year, although a little bit more acute around specific weeks. So if you recall, the sort of Omicron variant first became news around Thanksgiving. We didn't see an impact significantly in transaction volume until about the second week of December. That's when holiday parties -- I think many of you on the line probably recognize the holiday party or 2 getting canceled. We were actually setting weeks -- sorry, record weeks and days just leading up to that. So you saw in December that we felt like it was going to look pretty normal up until about the middle of December. Reasonably pronounced downturn in the second half of December. I would say, notably larger downturn in the first half of January. So you did see some people trying to kind of make good on some commitments to travel in the last half of December despite what was going on. And then in January, pretty abrupt end to spending. Although fast forward to Valentine's Day weekend, which was a notable record week for us last year, it was again a record week and really pronounced uptick. So you had the Valentine's Day at the Super Bowl, you had a bunch of people excited to get out, travel a little more, eat in restaurants a little more, order takeout a little more. That week, just to put it in perspective, was nearly double what it was the week before -- I'm sorry, the year before. So both record weeks in the middle of February. And then it continues to rise from there. So as you recall, last year, that February 14 was bit of an inflection point from kind of anemic spending on the consumer to really robust. And then it grows as the weather gets warmer and warmer. So we're really encouraged by that. We had our first $200 million a day in -- just before our earnings call, we've had several cents. So back to setting records. And then again, as spring break travel picks up, we would expect elevated volume spend for the majority of the summer and then I think seasonally declines back again in the fall.

Worth pointing out to that, I mean, this is so similar and can emphasize Taylor's point of what we saw in the year prior, a big slowdown from the second wave started, setting records again after Valentine's Day. Also both did not have any real semblance of business or international travel yet. So in terms of like are we ramping back towards like, is this going to be the first year we're going to see normal, normal shift for us since IPO during a pandemic? It's like we're going to -- you're going to continue to see like lots of strengths out of the verticals that we're growing really quickly in. I don't think we're still seeing like the normal consumer, right? We're not -- there's no travel that we saw in the fourth quarter that you'd typically have in areas like New York City, that didn't exist. It's great that we're meeting face-to-face, but we're not like at 100% back to the conference rhythm that we were at before. So hopefully, we start to see that in the second half of the year, but it's been some time.

And just very briefly, I know you don't have a lot of exposure on the [indiscernible]. You don't have any exposure to [indiscernible]. But gas prices obviously kind of have an impact. You haven't seen demand disruption yet?

I think it's too soon. But I mean, just -- we do an employee town hall after our earnings every quarter. And there were a fair number of questions like, hey, $7 a gallon at the pump is not a good thing. Like what's the company doing about it? It was like, we'll keep working from home, we'll get through this. But it's -- yes, I mean, at some point or another, if that was prolonged and, frankly, prices came down a little bit yesterday, you have to imagine that's eating into people's like beer and a burger fund, which is a big part of what we do. But from day to day, we're setting records. Would those records have been 5% more? We have no idea.

Right, right. So far, it seems like a concerning [indiscernible]. As it relates to guidance, can you just talk about some of the assumptions embedded in there? And then as it relates to volume growth, specifically on new verticals and the recovery of purchase network is interesting, there's a lot of questions as to where we really are versus where we could get to, let's call it, 3 [indiscernible].

Yes, and it's fair. So as you recall, we set some medium-term guidance at our Investor Day. What we wanted to do in constructing our guidance for this year was basically show investors what it takes to kind of get 1/3 of the way there. So you'll see a bridge in our most recent earnings materials that talk about sort of the baseline building block components to get you 1/3 of the way to that 3 years of 50% volume growth, 30% revenue growth. The biggest component and, quite frankly, it's the most reliable component, is simply the annualization of merchants who joined in the year before. So we've got a real clear line of sight. When do they board? How many months of volume do they have? Those merchants will contribute about $8 billion to -- of incremental volume on top of where we ended the year. We do expect within our high-growth core the pace of merchant production to continue. We've got a few sort of back pocket reasons that could accelerate. But you could expect $8 billion of incremental volume from merchants joining you in '22, again, contributing a partial year in that year. But that sort of says merchant trends continue in the high-growth for the way they have. It doesn't assume a lot of leverage that could accelerate that. And then the last 2 components, one of which is kind of merchant recovery and same-store sales. We don't like to bet on this one. We don't like to guess. I think to Jared's point, given when we went public in the pandemic, we've had lots of conversations about this, Darrin, we just don't like to bet on it. So we put a $3 billion number on that, which is below inflation estimates, let alone any travel recovery. The last piece, which is the 6 new verticals that we're in, we assigned $3 billion out of $70-odd billion to those new verticals. I would argue it's an immensely conservative forecast. But they're new verticals, and they will fire on different cylinders, so we're watching it through. To your point, the nonprofit vertical alone, we've got a Rolodex of $45 billion we can go cross-sell into, so $3 billion does seem conservative, especially when you consider all the other verticals. But again, sort of rooting investors in the kind of fundamentals of how the business grows, we wanted to give the basic building blocks. And when we're surprised to the upside, those new verticals can be a major component of that. But you don't have to believe it necessarily to get to that medium-term guidance.

It's probably a combination of recovery, right, the magnitude of the recovery?

Yes. That's right. And so if we get back to that Valentine's Day week and I harp on it a lot, but bear with me, that Valentine's Day week last year, despite being a record, only ended up being 1.4% of our annualized volume for the year. When you use that same math and you look at the Valentine's Day week, we just had it double, you can get pretty lofty expectations. And I do think there's certainly some recovery left within our merchant base. But you don't really have to believe it. The high growth for us produced so well with net new wins and gateway conversions that you get most of the way there for [ balance ].

Look, on that topic, and I already see a ton of questions coming in, so I want to make sure I leave some time at the end, but the -- when we look at the 50%, the long-term or the medium-term targets you guys gave at the investor session in [indiscernible] recently, I think a lot of investors are trying to figure out the conviction you have in the building blocks. A big number, right? So that's organic. I know there may be some element of tuck-ins to there, but the reality is that's really just the performance of your business. So can you just reiterate or just remind us the building blocks of that?

Yes. I mean, in my mind, it's not that hard to get there. We actually try to set it up -- I mean you can choose your own adventure on how you arrive at this point. I can tell you, from 2017, right up until February of 2020, we were growing volume at 50% to 55% year-over-year for 3-plus years prior to the pandemic, then get normalized recognizing like where all our customers were impacted through the pandemic and that we grew through it, you probably would have been consistent at that growth level for 5 years. But let's just say you even discounted a bunch, numbers are getting bigger, harder to do, right? Okay. You have $180 billion of gateway volume, and it hasn't gone anywhere. Didn't go there -- I mean those are hotels and restaurants, they didn't go anywhere during the pandemic. They haven't gone anywhere as we constantly solicit them to our end-to-end platform despite what you would think would be every one of the legacy acquirers that's on the receiving end of that volume trying to move it somewhere, right? To give you an idea of just how sticky those customers are, we said, look, we've been at card-first approach for 5 years. We're going to probably start pulling some of that volume through a little bit faster as we look to reprioritize, repurpose our resources towards new initiatives and not maintaining some of these gateway connections. So you're going to pull some more of that through, right? You announced a customer that analysts would debate is going to be like $20 billion to $100 billion in potential subscription volume. It's a 5-year strategic agreement, but probably if anyone really looks at it closely know that, that's like a relationship agreement that I would be shocked if it ever goes anywhere, right? So you pick what percentage of that contributes. You've announced entering all these new verticals, right, all supported by some signature win. Like you're not just building and hoping they're going to come, you're building something and then you're backed by somebody who says, look, these are -- this is a good company to work within the space. And then you're layering on to it through acquisitions like The Giving Block to give yourself even more of a right to win. That vertical alone, nonprofits, $500 billion addressable market, $50 billion embedded opportunity just in The Giving Block alone. And we've done all this for 22 years, entirely contained in the U.S. And now we've just extended our reach for the next 2 years of our midterm outlook into new markets, Europe. So to me, it's like you know where high-growth core is going to get you. It's going to get you either all the way there or most of the way there. You pick up any of the other categories that we've gone into, 7 new verticals since the IPO. Is stadiums and theme parks going to contribute several billion of that? I would think so based on the -- I mean we're announcing a lot of new stadiums all the time. I think we own like the soccer vertical now for sure -- or subvertical and then stadiums and theme parks. Wagering just started to come online with -- and that's supported by BetMGM. We got a lot of licenses there. So I mean really the idea is to put it all out there and you can decide which one of these is [indiscernible].

Look, on that note, I mean, the way you've grown has also been somewhere around 50-50 new wins versus, I think, the gateway conversions, at least historically, although now as you're saying, maybe yes, I mean you have a lot more new verticals, that probably means a lot more new business, new MIDs, am I right, in terms of the mix?

It does. It means new MIDs, I mean, bigger MIDs on average. So even the charities that The Giving Block supports are substantially larger than the average hotel. The stadiums are larger -- much larger than the average hotel and customers larger as well. That's really the point of this algorithm. That's a good way to describe it. 4 years ago, we were predominantly restaurants. At the time of our IPO, we had 1/3 of the hotels in the country working with us with a really strong technological point of difference. Now we've got these 6 new verticals. So as you think about, yes, a lot of large numbers is something that can be intimidating. Our TAM is radically bigger than it's ever been at any point in our history, and our points of difference in those verticals are just getting defined. And hopefully, they're becoming clear to investors for something like what we're doing with BetMGM, with The Giving Block, with Finaro. So I think when you start to zoom out and look at TAM, the numbers certainly get lofty as you're talking now about the globe, and you're talking about these incremental verticals. But it's not -- that volume growth doesn't necessarily intimidate us when you look at the characteristics that these merchants [indiscernible].

When we think of the new verticals -- and I want to just jump in there for a minute because one of the questions we get is the ability for you to execute on these new ones the way you did with hotels and restaurants. With those restaurants, you have a lot of long legacy integrations to systems that give you a real edge. With these systems, there's other ways in, but you really feel confident about getting that kind of traction in. I mean stadiums, you're already, I think, showing traction, right?

Oh, yes. I mean -- so we -- it's interesting, we got that question just yesterday. It's like, are you guys biting off more than you can chew? You're moving into a lot of verticals where you have less history, less familiarity. It's like same playbook. We get our foot in the door, we size up the landscape, all right, what's the competitive landscape look like? How are we going to differentiate? Does our technology add any strategic value to this vertical? And if we think it does and we've got some momentum, we just layer on to it. I mean we've been doing that the whole time. We -- our entry into restaurants going back 17 years ago was entirely organic. Tons of momentum there. We bought 3 other restaurant point-of-sale software companies in it. We -- that was what drove us to buy the actual Shift4 gateway, which then exposed us to the opportunity in hospitality. And then we went and took out Merchant Link, recognizing all the value that could bring into the space. We had one stadium at the time of our IPO, which was Raider Stadium. Sized up the landscape, 4 software companies in it, 2 are dinosaurs, one's mismanaged, the other is growing really fast, has no payment strategy, let's build on it. We acquired that. We have like, I don't know, 125 stadiums now that are using our payments and software in the case. You get a St. Jude Children's Research Hospital, relationship driven, has a lot of characteristics we like. And then you do a Giving Block to build on top of that. BetMGM. I mean it's the same story in every one of these verticals that you're not just going in with one customer hoping that's going to solve everything throughout the rest of the vertical. You're building on it, either organic technical capabilities, which is -- our entire mobile wagering strategy is leveraging the card-present capabilities we have in venue and casinos, and tying those same tokens and analytics into a mobile wagering strategy helping us -- helped us win BetMGM, right? So it's like you're just building on your success and not just hoping it's going to fall in your lap. But this has been our playbook for, yes, I mean, 17 years now. So...

Before we go away from the incremental verticals, just to be clear, I mean, so one -- I mean a combination of St. Jude's, Starlink, obviously, [indiscernible], since some of those are already on [indiscernible], are they [indiscernible] where they are in the plan?

Yes. St. Jude cut over the first wave of volume, call it, in February. So they have 20 different donor management systems. So it's kind of why we like the vertical. You have to do integrations to each. We started with the big one, but we are layering in more volume. So we expect that to ramp throughout, I'd say, the first half of the year before you get to like your kind of full rate run rate, yes. Starlink, we did our test transactions prior to earnings, so in February. This is a month we're cutting it over. We have people in Hawthorne right now. So I expect this month, we're going to cut over their domestic volume. And then like Taylor mentioned before, we can use this regulatory approval period to have a no rev share, referral partnership back and forth between us and Finaro to start having those Starlink integration discussions now while we're going through the regulatory approval [ path ].

That's great. And in the gaming side, I know we have Resort's World and MGM as examples, right? I mean in terms of the traction there, above and beyond just the hotels in Vegas, but thinking about gaming and online and offline, can you just touch on that for one more minute?

Yes, sure. So we've had live transactions for BetMGM, and that's growing on a state-by-state basis. So that's just ramping as well. These are all Q1.

New licensing statements and all?

Yes. We have roughly 11 licenses like approved, and now we're working through a bunch of others. Good traction within gaming. That's sort of a sleeper benefit of the Finaro transaction is they've got a lot of gaming customers as well. So there's some benefit there. Significant traction, I think, not an insignificant integration library. So when you look at the vertical and the fact that it's just becoming legal in the U.S. in the past few years, these platforms are really trying to build out their points of difference. There's lots and lots of integrations funding in, funding out. I think you've got [ Dylan ] from [ Intertex ] here is a good example of that. There will only be a handful of platforms that go through this heartburn building out all these integrations. We've seen the benefits of it in the hospitality space 20 years after it's done. So we're excited to get that work done. And not dissimilar from hospitality, every time you do an integration, it unlocks the TAM of all the merchants using that. So good progress, early days.

We only have 5 minutes left, so I'm going to want to leave a couple for -- but last one I do want to just hit on is free cash flow and margins. Again, I know there's a balancing act, obviously, given the growth rate of the company, but still in the smart environment, it's still a big focus. So can you just touch on when you think about free cash conversion, remind us the pathway towards some greater conversion and then also just your conviction around margins being where they are?

We're kind of trapped in this unique spot right now. Obviously, we've been getting a question like crazy, right? It's like, well, we think you have a choice of some legacy acquirers that can give you very high free cash flow conversions, very high EBITDA margins and high single-digit, low double-digit growth. And largely, that's coming from -- volume is shrinking, they're raising rates and cutting expenses constant. That's not the kind of organization. We're also not on the other end of the spectrum where 15 years in business, still losing cash and have no idea how we're going to work our way out of it. But just trust that margin will come, but we're growing really fast. And we balance between that, right? Like our high-growth core has a continuously expanding margin profile. It does generate cash. I mean you go and look at last year, you have 2 $25 million events, the Super Bowl ad and a once-in-a 25-year outage that we saw from one of our key providers. You adjust those out, you have good cash flow. The fourth quarter is giving you a sense of that. I mean we kind of had to. We were -- before our IPO, we were like 6x levered with our PE partner, and we're able to cover a full capital stack there. So -- what I'd say is we're going to do both. Like our high-growth core will continue to expand margins. We will reinvest some of that in these new verticals where we think we have a good right to win. We will generate cash. And this is what you want us to do. You're going to -- you want 98% year-over-year volume growth, and you want EBITDA margins, and you want a good path to expanding margins, free cash flow. Shift4 is that story. But we're not going to just look at the profile of [indiscernible].

All right. Let me take a couple from the audience before we wrap up. There's a couple on Finaro, so maybe I'll consolidate them. Why did Finaro go with you versus another buyer? Was it a competitive bidding process [indiscernible] structure of the deal? Did e-comm's slowdown impact their decision to sell? And on the [indiscernible] topic, can you talk about the market structure between Europe and U.S. and how that impacts your international growth opportunity and leverage with Finaro?

Yes. A lot in there, so we'll try to get it all in. It's a complex business. It's a European bank. That's -- and it was investment fund backed. So I joked that when you're PE backed, you're always for sale, which is not really -- not a joke, it's the truth. The business was complex given that banking relationship. I do think that the tailwinds of e-commerce, especially cross-border e-commerce, was something the business benefited from. We looked at the business extensively and walked away this time a year ago. And it was the complexity of the banking operations and the sustainability of their revenue growth were the 2 biggest question marks in our minds. And we got both wrong. So we spent 6 months understanding the regulatory environment of a financial institution, got very comfortable with that, both at the ECB level and the multis regulators that oversee the bank directly. And then they outperformed their forecast significantly, and their forecast was ambitious. And they did it with a different mix of merchants than you would have anticipated. There's good balance inside the business. There's significant travel merchant, for example, that went away during the e-commerce trend, while a bunch of other merchants picked up pace. That has since reversed for us. So the balance in the business gave us comfortable that on a stand-alone basis, it's a good growth business with high profitability. And so like -- the way I like to approach these things is do no harm. You can buy the business, feel good about it on those terms alone, and that's even before you get all the integration synergies. So -- but it did take us a second look, and I think that probably gave us a competitive edge in the process because we are well educated, and we paid a lot more the second time around.

Just to reinforce that point, right? We probably spent $1 million in diligence a year ago, the first time we looked at it. So -- and again, it just came down to an intimidation factor of having a bank. Since that time, they got PCAOB audits, they were getting ready to go public. That additional work they did, they invested in some talent, got us comfortable on the bank side. And the fact that right about when they were probably looking at going publicly either a SPAC or an IPO, that market fell out, we were able to say, look, we already invested a lot in the business. We have a Starlink. We have some signature wins you'd never get on your own, so let's structure this with a fair amount of equity so that you can get back to the valuation you think you probably would have achieved had you been able to IPO at that time frame and you were able to get the deal done. But like we were very lucky, I would say, to be able to pull that off.

All right. Let's take one more, just in the interest of time. Regarding travel, do you expect pressure on the consumer sentiment for long-haul travel reopening given recent geopolitical risks in Europe and Russia? Are U.S. consumers being more conservative on travel to Europe or at least holding back on any bookings? If you can touch on it.

Yes. I mean we wouldn't -- I mean just to be clear, like our business -- like where we would have insights is the 40% of hotels that we have transaction going on. So like our business is not really that sensitive to people booking and it has no exposure to anyone in the U.S. booking to go overseas, like we couldn't really comment there. Even the one airline that we do have, which hasn't begun processing yet, which would be Allegiant, is a domestic carrier. So like we have no exposure to that. Of course, you'd love people to come in overseas and spend in the U.S. because then they are staying in your hotels, they are staying in -- they are spending in restaurants. We just haven't seen it for 2 years, so we kind of haven't been counting on it and really wouldn't have much visibility. What I would say is, based on our discussions with our hotel customers and resorts, everyone is expecting a record summer. Let's just hope like gas prices as such don't cancel people's plans in that regard. But I think in terms of authorizations or advanced bookings, like sentiment is pretty positive there.

Guys, thank you so much for joining us, honestly. Just like I said before, it's pretty good [indiscernible] covering and spending a lot of time on it [indiscernible].

Thank you very much.

Nice. Next up is at 9:05. We have Frank Bisignano from Fiserv.