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

All right. Good afternoon, everyone. I am Rayna Kumar. I lead U.S. payment processors and IT services equity research at UBS. And today, I'm fortunate to be joined by the entire Shift4 management team, including CEO, Jared Isaacman; President and Chief Strategy Officer, Taylor Lauber; and CFO, Nancy Disman. Thanks for joining me. So I'm going to start with probably the most obvious question because I've been getting a lot questions about this, this morning. What are your thoughts on taking the company private?

Sure. I think that -- I mean I would think the first question, had some news not broken, that would have been about the supposed cyberattacks we inflicted on MGM and Caesars yesterday. I mean here's the answer with it, and forgive me because like some of that trauma from yesterday is still weighing on me a little bit. Since we were here a year ago, and forgive my approximations, we've grown volume over 60%. I think we grew EBITDA over 60%. I think free capital in excess of 120% year-over-year. And our multiple has contracted 5 turns. It's not like last year. Things were booming from a valuation perspective. So we've been -- like we're at like, I think, 9x on a -- like a next 12 months basis from an EBITDA perspective. So the fact that there were inquiries probably coming in throughout the year is valid. If I take in consideration the trauma of yesterday, which forgive my channeling my inner pulp fiction, but what happened yesterday was a travesty and somebody's got to acknowledge it. I would say like the interest is so much more sincere to have one partner versus thousands because I don't know how to describe yesterday than like outright market manipulation. We spent the whole day fielding questions that we somehow were responsible for the cyberattacks on MGM and Caesars, when had absolutely nothing to do with it. Our market cap peak drop yesterday of like 7.5% was greater than the combined market cap drop in absolute dollars between Caesars and MGM, and they're the actual ones that had a cyberattack, let alone the fact we had nothing to do with it whatsoever and had like no impact on our business. So yes, I would say like there's some sincere interest in alternatives.

Understood. And so just to be clear, no financial impact from MGM and Caesars...

Beyond that, they're not even a customer.

We said we -- we had half the Las Vegas Strip, which was not MGM. BetMGM is a customer of ours, which like we get the scraps that Braintree leaves behind because they price it at zero. So like BetMGM is a customer of ours. That wasn't even impacted as far as we know about whatever has happened with BetMGM. Caesars probably represents like 25 basis points of our EBITDA on an annual basis. My understanding is they may have had an outage for a day or 2 that had actually nothing to do with payments. So as far as I know, that was business as usual.

Okay. Makes -- no, a fair point. All right. Moving on from the news of yesterday and this morning, we're now halfway through September. What have you seen in terms of growth in your core business so far in the third quarter? And can you comment on progress you're making in new verticals?

Yes. I mean everything is going very, very well. It's like if we're to break it down by vertical, we have a ton of momentum with our SkyTab product right now. So I think you should expect at Q3, we'll probably give you the 1-year comparison from when we came out of beta until now and I probably should be shocked. There's some good momentum around that product. Hotels continue to come on. I think we've won every new resort that's been built in this country over the last year, so that wasn't even a gateway conversion. That's net new, including the 2 new signature properties in Vegas, which go online in the fourth quarter. Stadiums have been awesome. Probably for the past year now, every stadium, we've put in the agreement that you have to give us ticketing. We just needed to get the final 3 integrations done, or the final integration of Ticketmaster done, which was a huge one. So that's been inked. And I think that's pretty close, if not finished with Ticketmaster. So that's awesome. Yes, we're like incredibly -- and then obviously Finaro, which is great because we finally will be able to sell our products in Europe, too. So yes, I'd say we're like pretty happy with how things are going.

Great. You just alluded to some of the pricing pressure that we're seeing from Braintree, and with the news of audience growth slowing in North America several weeks ago, what do you -- like what is your pricing strategy going forward? How should we think about your spreads?

Yes. I think this is -- I mean this is -- I think this is important for people, investors to understand right now. It's like you -- if you're growing volume, you are adding value more than an approval or decline. You are contributing to some better commerce experience and that's why people are selecting you. Like again, I've used the example before, like Shopify can't come and contribute to a better mobile payment experience inside the Baltimore Ravens any more than we can give like a seamless e-commerce experience for their customers. Like there are some very, very clear moats and you are getting kind of properly rewarded based on the size of the customer. That said, like the bigger the volume customer, the pricing can come down quite a bit. It's just like -- if it is, as Taylor -- it's like some laws of physics there, like if you sell a 1% interest in the Baltimore Ravens, it costs an awful lot. They're not giving up 50 basis points very easily. But what they do care about is making it an awesome experience for their fans to be able to order a beer and a burger in their seats. So we're a 24-year-old company, 17-plus of those years focusing on the restaurant on Main Street. That's like an 80 to 90 basis point customer. Those take rates have been unchanged throughout like my -- all of my memory over the last more than a decade, even as you add more value with services like software and such, but a customer like potentially the Dallas Cowboys, they're going to come in at a meaningfully lower take rate than that. Now what happened with Adyen, like you have to -- I think there's some very unique circumstances there. Adyen is hands down the best global e-commerce payments company in the world. They add value Europe and emerging markets like nobody else does. They are the easy button for every [ awesome customer like an Amazon, Facebook or whatnot in the world. But the U.S. is going to be the lowest take rates for sure. And when those merchants woke up earlier this year and started doing layoffs and people cared about more than just the top line, it made sense that they went back and revisited the easy button in the U.S. market where there's no FX, no fraud screen, no 3D secure. It's like this isn't it, a market that can be priced very low that, that happened. But that doesn't change the rest of the world. And frankly, if everyone were paying attention, we said this in Q3 last year when we surprised a lot of people with a lot of volume and said, "Hey, look, we matched Adyen rates," but there's one customer and you should know that's like low teens kind of take rates, but it's better everywhere else in the world, which is why we're following that customer into new markets. And when we get there, we're not trying to do it to win the next Uber. We're just going to sign up a lot of restaurants and hotels when we get there.

I think it's safe to say that you are frustrated with how investors are viewing your business and your stock right now. What do you think investors servicing about your story? And I'd also love to hear from Taylor, since he's been with you for a long time.

I think there's a handful of pieces. We are a complex business because we serve a lot of verticals. And the idea that each vertical has its own different dynamics that help us win can sometimes be consolidated down to a simplistic story. We've had exponential volume growth because we keep adding bigger and bigger customers and bigger and bigger verticals. 17 years of our history, we boarded the bar and grill on the corner and suddenly we're boarding, as Jared mentioned, the Baltimore Ravens, the Washington Commanders. These customers are fundamentally different. The reasons we're winning them are fundamentally different. And so I think that can get lost and kind of co-mingled into a story that it's grow at all costs, which has been, to investors' credit, has been a dangerous story in the FinTech landscape. I think where we get sort of a little bit frustrated is, I think we've delivered kind of best-in-class growth but also an incredibly disciplined profit machine and free cash flow generation expansion, et cetera. And in the investment community, there's not always a perfect home for both high growth and cash flow generation. People seem to want one or the other and oddly, delivering both, which is something that is just intuitive to us as a founder-led business, is sometimes takes a little bit of time to find a home for.

Yes. Look, I mean if I'm like chill out, just zoom out, which I try and do and have an objective view, I think that for the last like 3 years has been an incredibly turbulent time to be a FinTech investor from a period of like can do no wrong, like throw the dart at the board and I'm sure it's a great company, to like now where it's super hard to figure it out, right? I think people woke up a lot of days and found out that some of the investments like behind it, like these companies were ludicrous and like completely mismanaged investor capital. So I understand some degree of skepticism as you go through it. I'd like to think we actually have delivered really well and tried to point out along the way like when things came up, like great payments companies don't do M&A. It was like, okay, there's only one scale payments company that's never done M&A and they just lost 60% of the value in a matter of a week. Like actually, when there's a convergence between software and payments going on all over the world, there's exciting opportunities to be a good capital allocator and unlock value in it, right? Or it's like, oh, you have a -- your tech is old. It's like, well, the sexy tech company just kind of a 24-hour outage. So I don't know if that's necessarily like the right way to be evaluating like the good and bad. So generally speaking, I think like we've tried to deliver really well over time. Like we have a playbook that works over -- that's worked for a very long time. We recognize the convergence that's happening with integrated payments and where there's awesome opportunities for the continued convergence of software and payments all over the world. You're just trying to do it without having your entire day ruined over things that had nothing, nothing to do with us.

Okay. That's really helpful. And let's bring Nancy into the conversation. One thing I hear about Shift4 is investors want more transparency in the financial accounting. Some people question customer acquisition costs and amortization. Maybe if you could just like help clear that up because I get the question a lot on your accounting, and you're obviously fairly new and you signed off on those accounting practices. So could you just explain why Shift4 does some of those that are different from your competitors, and any transparency you can add?

Sure. So first, I'd say I'm new to Shift4 as CFO. I think probably many people know I was the Audit Committee Chair before joining the company. So not new to the accounting practices, not new to kind of the company's story. And I would argue that we are incredibly -- I would definitely argue that we are incredibly transparent. I actually think some of the criticism that we get is unfairly because we overcommunicate, and I think whether that's in our 10-Q or our footnote disclosures or in these types of settings. I step back from it and say where we spend our money, whether it's CAC or equipment, the way we handle the free equipment and our strategies there are very strategic, and it is very important, I think, for investors to pull out and compare those investments. And the idea that every single one of them is tied to our a dollar spent for a customer we already have won versus, let's say, our competitors that are spending multimillions of dollars on digital advertising and hoping they will come. So I think the idea of taking [indiscernible] them over the life of the relationships that we have is actually very sound and incredibly transparent. So I'm very comfortable in the CPA, wouldn't have taken a job coming off the Board if I wasn't incredibly confident in the company's accounting practices. And look, we're building like a stellar team. We are -- obviously take this incredibly seriously. And I think the scrutiny is just part of maybe this story that's just out there. I think kind of -- I would almost put it in the same pile of stuff that Jared kind of went on about. Like I just think it's unfair criticism at this point to a company that I think is pretty buttoned up and pretty transparent.

Yes. It's almost like there's like a more honorable way to win a customer. I mean look, I think everybody knows who ever tried to like start a business, it's really hard to win new business, right? Like generally speaking, merchants have like anything they'd rather to do than have like payments related conversations. They want to bring more people in the front door and sell burgers and beers and all that kind of stuff. Like there isn't like a more honorable way to have like customer acquisition costs, like, oh, I'd rather you just spend $100 million in Google Adwords and bring people in the door that way. That seems so much better than like buying an older POS company that has 10,000 highly sticky customers and migrate them over to your product and platform that way. Like that's just called like having good unit economic model, like being very good capital allocators, recognizing the life span of the customer and how to deploy capital for the greatest return possible. So like giving away free hardware and charging less for software to get 20 basis points more take rate on a customer that's volume's going to grow in an inflationary climate is just being intelligent.

Yes, I'll pile on because this is something we're clearly really passionate about. I think it's ironic because we get more criticism on the quality of our free cash flow than our competitors that have none, which is where you see a sense for the frustration coming in. The entirety of what Shift4 thinks is our unit economic model, what it costs to acquire a customer, and we are incredibly strategic and also pragmatic about our desire to acquire customers at the most attractive rate possible. Jared gave the example of doing it through M&A, buying a captive base of customers who've been sending payment volume all over the place and delivering them a better bundled solution. Or going out and winning in the market, our gateway conversion strategy, another great example of being highly disciplined in it. The fact that we think and know that bundling the hardware, providing a sales bonus to the partner who gets the installation done in a complex environment is a great way to get the customer over the goal line is, I think, just one of the ways that we're very different from competitors who don't have these models, don't have the right incentives. And quite frankly, don't have the free cash flow despite charging for a lot of these services.

Understood. Just staying on the competitive landscape for a little bit. Toast recently announced Toast for hotel and restaurants. So they maybe entered some of your space? Any thoughts on if you're seeing them more as you compete for hotels?

Well, they don't do hotel payments. So they don't have -- they're not even -- they don't even have a payments platform to integrate into. They do a merchant of record model and use other people's infrastructure. So like they can't actually even do hotel payments because they don't have any hotel property management system integrations. We have 550 of them, so to be very clear, they don't even compete with us for hotels, nor have they said they did. What they did is they cut a deal with Marriott for some subset of their properties to be able to sell their software and hardware into those locations and not even get payments revenue at all. It's actually -- it's like it's -- what they've illustrated is exactly our value prop and why we win so much within the hotel vertical is they said that we get to sell our software and hardware into hotels, we have to integrate into FreedomPay, the gateway, to use JPMorgan to actually power the payments of that restaurant in that hotel. It's like super misleading, considering what portion of their revenue actually comes from payments. It would be like us putting out press releases of some of our software-only customers, of which we have many and they're really awesome names, but we don't have any payments revenue. We don't actually disclose them as like a win until we get our #1 KPI associated with it. So like in the end of the time, like to look at it objectively, a lot of restaurants inside of hotels have old stuff. I mean you're talking a lot of MICROS and Agilysys type software in there that is on-prem, and it is inevitable that they are going to want to move to a more modern solution. I have no doubt like Toast will sell some of them. And maybe even in some of those cases, they'll actually get payments. It certainly won't be in the Marriott example, that's why they had to clarify that release. From our perspective, we will win a very large share of the restaurants that are in hotels, just as we've done for x number of years. We'll also win the hotel itself and the salon and spa and the golf course. So like, I guess, saying here differently, like when both Toast and Shift4, I expect next year will be a big year for both of us in Europe. They will sign up a lot of European restaurants. We'll sign up a lot of European restaurants. We'll also sign up a lot of hotels they won't.

Do you see any impact from the $0.99 consumer facing fee which they withdrew several days later?

Yes. I mean that was just what -- like that was a tactical mistake, right? I mean because in the end, the actual dollars and cents of it was not that big of a deal. They just should have charged the merchant and giving them the option for the merchant to put some sort of a surcharge on the consumer rather than them go direct to the consumer. And I think that was a -- that was like a Silicon Valley misstep of like I can be like an Uber here when you can't, like your customer is the restaurant. They will bounce back from that. They actually put in the letter, which I think is helping the sales force of Shift4 and a lot of others, like we got -- we apologize, we got the $0.99 wrong, but we'll be back with like a terminator holding a gun. So like we'll get a different rate increase on you. And the answer -- like it made a lot of headlines. It's not going to change anything in the fact that like they're going to sign up a lot of restaurants. So will we. What I'd say is like I interpreted the last quarter so as like we challenge you to put up location count growth. So I'm sure you've seen we put some fair amount of like we've used some of that free cash flow no one gives us credit for anyway to actually market a little bit more and put some greater referral fees in. I would expect that we'll give you an update on location count growth that will be positively received.

Perfect. The gateway conversion remains one of your drivers of end-to-end growth. Can you talk a little bit about how that's progressed and what your expectations are over the next year?

There's still about $150 billion or so. The pace of conversions has not slowed. It's been -- it's remained consistent. What I think is cool is you get like pockets of enterprise customers, several hundred locations, ones that just they kind of come alive at different points in time. There were a lot of reasons over the last couple of years, whether -- it all comes down to like what's my bigger priority or problems to solve, and they had labor issues or other things that made this less of a conversation. Those come up from time to time, which is nice because that's like those are big lifts when you move like a multi-hundred location type operator. So we have a couple of those that come online in Q4, which we're kind of pumped about. But I think like the -- we took a position with you guys starting a year ago, basically like, hey, we have to take -- our philosophy is to execute or take out the parts, get rid of the old, invest in the future. We have to get rid of some of these gateway connections. And the way we're going to do it is people are going to move over to end to end or they're going at least, if you're on a handful of connections, pay us an equivalency. I'd say we had a very soft touch the first 2 years on that. I think next year we'll be a little bit more to kind of keep that migration ongoing. So I expect next year, we would have even better results than this year, but it's still going really awesome.

I know this year you decided to implement basis point fees based on volume peers, and that's different from your fixed monthly fees initially. Are you starting to see any reaction from merchants for that?

And like I said, the cadence of conversions has remained consistent, and it really is like -- it was a handful. So like if you see the evolution of the gateway customer, it was always just crazy because it was the technology that actually enabled the integrated [ PIMS ] transaction, like they were paying like $0.03. So like our repricing evolution, if you will, to get more in line with the majority of the payment economics, which we think we're entitled to for the service we're providing, it was like $0.03, then like $0.03 plus like $30 a month, which would have been like, I call it, last year's kind of story to like $0.03, $30 a month and like 3 or 4 basis points type thing, depending on the size of the customer, right? And the answer is like when you doubled your room rate from $400 to $800 or $400 to $1,200 a night, that didn't make the phone ring very much. So it's good. It has like -- I'd say like it certainly didn't have the effect that maybe like as we're trying to march on a journey to 40, 50 basis points would have like when you think about the year ahead.

Lodging has been one of your fastest growing verticals. And I'm always amazed to hear about how many wins you announce each quarter. In the near term, do you expect that lodging could become a bigger vertical than restaurants?

Yes. I would think we are on a pretty good pace to do that. It's certainly -- as a subset of our core, lodging the fastest-growing wave.

Yes. It doesn't take many hotels to eclipse a restaurant, and our hotels range in volume from, at the lowest end, a Best Western in Middle America doing $1 million in volume to, at the highest end, a large resort doing $200 million in volume. So from a volume perspective, it will absolutely be our largest vertical in the short term. Keep in mind, 40% of the hotels in the country use us as a gateway, and a small fraction of that are currently end-to-end customers. I think we won most of the hotels in Nantucket just last month as a result of our gateway conversion strategy. They've been on a gateway for a while, as just one example. So the spreads come in modestly lower, which you'd expect given the multitude of volume. So I don't want to comment too explicitly on the revenue contribution. But in terms of volume contribution, hotels will be really significant. They continue to grow. I mean what it used to be, kind of the majority of our business, 80-plus percent being coming from restaurants, now is much closer to an equivalency in hotels and restaurants today.

I always get tons of questions on stadiums, and obviously, that's another really strong area for Shift4. What do you think is driving those wins? And maybe just talk about the competitive environment. I know Global Payments competes in the stadium market, who else is there? And what do you think you do better than these players?

Okay. I feel like I'm on the bad guy track, so I'll just keep going. Look, if you have a stadium in your hometown and you want to put up your -- like you can write a big enough sponsorship check where they'll forgo a lot. Where is the easy one to concede? It's like the concession stand. There's only like 5 or so different like menu choices, pretzel, hotdog, beer. So like you can put in 500 Clovers. I mean like it's not like they needed 400, but they went for 500 anyway, I guess probably however many concession stands they had in the joint. What I would say is that actually driving the decision-making of stadiums, if you think about the mentality of these team owners and what they care about with their fan base, it's like a cool mobile experience. So every stadium we've won since our first, which was Raider Stadium, because that's kind of a separate story of how we got into that one, it's entirely driven off mobile. So patrons want to order a burger and a beer in their seats. That's what starts the conversation, and you leverage that to get the concession stands, the suites, the retail merchandise store, the parking. And then like the best case scenario out of that is ticketing, which for the last year, it's like we've embedded in our agreement, it's like you'll just do it. So like that has like a whole pipeline in itself of as contracts fall off, we'll just turn on ticketing, which is huge because it's like 3 to 5x the volume and probably 3x the take rates. All right, maybe that's a little much, but it's definitely a healthy step-up versus a concession stand. So like to be clear, like that's what's driving the stadiums to move very quickly to Shift4, and we have a total like demand problem there, like that is how many installs can you get done before the season starts. That's not going to change because we are the only one that under one roof has the payment platform, the suites, the restaurants, the mobile ordering, the concessions and the retail and parking integration. So I don't think that will slow down, but if you write a big enough check every now and then, one or two will maybe make a bad choice for some...

Yes. I just want to maybe address in a slightly more technical way. From a competitive landscape standpoint, in terms of who can provide a similar experience to our sports entertainment customers, there is nobody, period, full stop. But what Jared mentioned, whether it's mobile ordering, concessions, sit-down restaurants, integrations to anything else they might want in their environment, in Las Vegas, they have nightclubs as part of the stadium. It's just one bespoke example of a process we can serve for them. And adding on ticketing differentiates us even that much further. So while it's fair to argue that you can get a little bit confused looking at one provider of one service inside of a stadium like this, there is nobody that can do the breadth of services, which I think is why you're seeing the win rates that you are. We're kind of taking what we've done in hotels, which is really pioneer a much more sophisticated and bundled go-to-market for these big complex customers in a way that no one else can.

Do you still expect Finaro to close at the end of the third quarter?

Yes. I think that we have been on the -- to be like -- look, I'll -- look, to be fair, take responsibility for where it's applicable. We weren't super clear in Q2 earnings as to like what the exact timing contribution was for Finaro. We tried to give ourselves some wiggle room. And I don't think we help ourselves too much on that. So like let's -- like let me be very specific for like the sake of clearing nonpublic information. We have been on the shot clock. So the way the regulatory process works there, as they spend 18 months to get application complete, which is like the background checks and financials on every board member and executive in the company, then they declare an application complete, they have to decision it within 60 days. So we have been existing in that environment, which gives us very high confidence as to the timeline to close. I think October 1 would be a nice date for -- especially for the sake of Nancy and her team's finance accounting department, if you're going to own a bank, might be a good idea to start in on the first day in first quarter -- of the first quarter. Finaro is like -- is a -- and again, to say like let's clear up too, Finaro is a much better business today than we bought it. And I've said that before, but let me give you some specificity around it. When we announced the deal like 18 months ago, we said like we think this is a $30 million EBITDA business. But keep in mind, they've been historically taking some customers that we don't want, and we have, through our 18 months of oversight in this business, we have ushered a lot of those out. And now what you have, like when this closes, you're talking before any kind of cost synergies and other optimization we have to do, it's a $45 million run rate EBITDA business and 1/3 of which represents customers that were already Shift4's that we've been kind of working with them on over this prolonged regulatory process to get them going in Europe and receiving no financial benefit from. Now if we'd known it was an 18-month process, maybe you would work out rev shares or something so that you could have seen some of this performance blowing through. But like this is a business now that's ready to do lots -- that is doing lots of [ card ] present transactions and it's ready to start lighting up a lot of hotel and restaurants in Europe, which is why we did the deal. But more importantly than that, like some big customers we already had have been live in that environment and successful for a pretty prolonged period of time right now.

Got it. I'll add 2 questions for Nancy, and then I want to open up the floor for any questions. We will have a mic going around so feel free to raise your hand if you have anything. So Nancy, how should we think about the margin profile of Shift4 after 2023?

Yes. Obviously, our plan will certainly be to give a lot of clarity when we report year-end results on kind of confirming the midterm that we've put out that we feel great about, and we know we owe you some bridges there. But I think there is room for margin expansion beyond obviously this most recent raise and kind of where we're going to exit this year. And it really comes from a function as what I look at is incredibly positive diversification that's happened, which I know with the lower blended spread, people initially say like that feels negative until you understand that it's mix, right? And we've changed the profile of the business. And as we're moving upmarket, you will see that those are obviously flowing through at higher margin and then, in turn, greater cash flow conversion. And so that isn't going to change, like the mix of the business is going to continue to move upmarket. The second piece of that is we -- it kind of goes back to what Jared said. We kind of have the opposite of that, in effect, where we're in the U.S., right? So all of the kind of upsized blended spreads and the greater margin opportunities are really when we now cross-sell and build internationally. And so being that we're going to do that with hotels and restaurants where the richer spread are, plus we're going to get that international kind of [ bus-on ] from FX and other things that come with APMs, we expect to see similar margin expansion continuing.

Now that you've been in the seat for several months as CFO, any changes to your capital allocation priorities?

Look, I think we've been incredibly clear, and for the near term, we don't see -- international expansion is still our #1 priority. And I think we just want to continue to reiterate that we think we're really great capital allocators. And this idea of finding captive volume that we can convert to end-to-end, that's going to continue to be [indiscernible] priority going forward.

Okay. And we can open up the floor for questions. If anyone has anything, please raise your hand. Wow, I'm surprised, no questions after that. Okay. Well, I definitely have more. We'd love to hear just what you're most excited about, Jared, in the coming months. And what keeps you up at night?

What am I excited about? That's good. So all right, if we're like back -- kind of back to the business. Closing Finaro will be great. It was an 18-month journey and getting restaurants and hotels going in Europe. So the more time we spend in Europe over the last -- the last year and change, like it is amazing that it looks just like the payments landscape here in the U.S. in like 2014, like it is right at the Mercury payments / like Square early days, which is awesome because like we literally watched that unfold. And during that time, we had to kind of like sequence our strategy out to really lean into the integrated payments time. Like we had one -- we had a PE sponsor. We had a lot of leverage so we had to pick and choose our battles. Now we can look at the European landscape and be like, well, we know exactly what this looks like when you have hardware, software and payments on different sides of the street, all walking into like the restaurant and hotel separately. It is largely a nonintegrated environment. So even when you're in Europe and you go to a restaurant and they bring the mobile device over to the table, that's nothing like what Toast and Shift4 have in the U.S. That's not order at table or pay at table. It's truly like a bank terminal, like an EVO terminal not talking to the POS. And the same is applicable inside the hotels. When you check in, like they are pulling up your reservation on the computer for sure. And then they're punching in the number into like largely a nonintegrated terminal. So you're talking about like an environment that's super ripe, and now we'll have a European platform ready to go with our existing integrations here in the U.S., which means like OPERA or Agilysys, all our hotel property management systems like would power the hotel, not Toast, is actually ready to be turned on in Europe. And like SkyTab is ready to go into Europe. So those are all like pretty cool because we thought about what would be like to be a global player for more than a decade, and now we're really at the cusp of it. So I think it's hard not to say that like Finaro closing and being able to begin that next leg of the journey in Europe isn't pretty exciting. And we also have another like really awesome customer that I remind myself like they themselves could be like a $10 billion of our customer at some point. So like that, I find like pretty good satisfaction following them too around the world.

And what worries you the most?

What worries us the most right now? Whatever the next rumor is that gets floated that crushes productivity.

For much of your time running Shift4, you've actually ran it as a private company. So hypothetically, if you were to go private again, what would potentially change in Shift4's strategy versus being a public company?

Everything would be better. I mean look, when we -- especially when we talked about for the last year, our capital allocation priority is largely internationally focused, and that is following a customer we don't deserve to have but we do and it's going to take us in these markets profitably so we can do all the other stuff in those regions, like you do look towards M&A as a means to accelerate your entry into certain markets or accelerate your growth in particular verticals. And like, it's pretty smart to use -- like to have like equity alignment with those type of targets because they're on the other side of the ocean and you want them thinking the same way you think about it. As a private company right now, you look at our KPIs and CAGR, would anyone really like argue to say that we would be issuing equity in those type of deals at like a valuation double where we're at today? And would they be pushing back? Probably not. So like that's an incredibly costly aspect, I think, of being a public business right now. But like we are like -- I mean I would say like we're very well equipped to operate, I think, in either environment. We like our strategy, so.

Yes. So just to highlight, in the first 15 years of the company's history, there was no outside capital. Again, I think the FinTech label comes with a lot of connotations, like Series A, B, C never happened inside the company. So the idea that you need to self-fund your business is something we've always lived by. The capital markets have been nice to access from time to time. They're very painful today. They're certainly not needed to execute against our strategy, and it's just a constant balance of whether it's too much of a distraction in cost versus the opportunity it presents. And I think you're hearing Jared's sentiment on where that scale exists today. But from a strategy standpoint, and I think we've mentioned this for over a year now, the distraction factor is becoming an increasingly heavy element on that end of the scale.

Okay. We'll end it here since we're out of time. Thank you, Jared, Taylor and Nancy, very insightful and interesting meeting.

Thank you.