Shift4 Payments, Inc. ($FOUR)

Thank you, everyone. I'm [ Scott Dorchak]. I co-head our Fintech investment banking practice at JPMorgan, and we're pleased to introduce Chris Cruz, who is the CFO of Shift4. Chris joined the executive team in August 2025 after serving on the Board of Directors for almost a decade and was most recently the Lead Independent Director. Chris, thank you for joining us today. We're very excited to have you.

Thanks, Scott. Thanks for having us.

Shift4 today feels meaningfully different than it was when you guys went public in 2020. How do you think investors should frame what Shift4 ultimately becomes over the next 3 to 5 years?

Yes, gosh, it's a trip down memory lane type of a question to think about the world back in 2020, and my how things have changed. But as a context point and a reminder, so at the time of the IPO, you can think about the contrast of scale and diversification as probably the easiest way to summarize it. You think back to 2020, we were a restaurant's software integrated payments company with lodging on the comp. And that was where we were at and the idea of how this proposition of converging payments in software for the restaurant vertical could translate into the world of hospitality and lodging was a bit of a question mark. You sort of fast forward to where we are today, and not only are we still a leader in Dine, AK restaurants and stay, which is our hotels vertical as we call it. But we are also a leader within the verticals of play, stadiums and entertainment, and then most recently, shop entering the luxury retail vertical, all of which with the core proposition of bringing payments and software solutions into a single value proposition that really resonating with each of these verticals, each of these end markets and it allows us to really build not just a good value proposition to kind of simplify the commerce for that merchant across shop, dine, stay and play but it also allows us to have a pretty dense unit economic model when we face these merchants and bundle together the concept of software payments, value-added services in the sort. And so I think when you step back and look at multiple verticals and market leadership, the most scaled we've ever been sort of setting kind of quarterly records on financial metrics, and the most diversified geographically we've ever been, sort of we were in 1 country, we weren't yet serving multiple countries across Europe and Asia Pacific. Now we're in business in more than 75 countries around the world. So it's been a pretty phenomenal kind of like 5.5, 6-year journey.

It's incredible how big you guys have gotten. Maybe we could talk a little bit about the broader landscape. And it's important for investors to understand where you fit into the broader landscape. There's a lot of misconceptions about merchant acquirers, integrated payments players, back-end processors where do you guys fit in the overall landscape? And what is the simple way for investors to grasp that?

Yes. It's a great question because we thrive within the overall concept that payments has complexity. Commerce has complexity. And unfortunately or fortunately, depending on how you view it, we actually run towards that complexity and try to build simplified commerce technology solutions for the hardest experience economy verticals. So what is experienced [indiscernible] it means the places where in-person commerce like thrives in lodging environments like the one we're sitting in right now or where the Super Bowl is played at major stadiums and entertainment or from some of the most demanding retailers around the world. We run to that kind of an environment because marrying up in-person commerce and all of the software solutions that are needed to deliver a good in-person commerce [indiscernible] that solution set is something we then try to simplify for the merchant from a financial and a payment standpoint. So this idea that you merchants can deliver the best solution of commerce for your customer, delivering all of the different suites of software or all of the different best-in-class technologies, some of which you may choose to build yourself. But in the end, you still want one accountable party to reconcile your money to settle it, to enable the money movement to happen in a totally compliant manner and in a reliable way from a scaled enterprise, and this marriage between complex commerce on one end, especially within the experience economy and the in-person world, and the simplicity of making all of that math, all of those payments and deliver into a single place, fully reconcilable, right, like we sort of thrive in that world. And so to make all of that happen, you can get lost within all of the interoperability you have to create because there are a lot of parties that sit within ecosystem to make money movement happen. You multiply that out by a lot more parties when you have to integrate multiple revenue centers, respective suites of software. And then you multiply it out further when you start to acknowledge that consumers' demands for how they want to pay, don't just change and grow, the old method never goes away, right? We only stopped minting the penny like a couple of months ago. And so the concept that these payment modalities from the consumer continue to grow. And yes, like in my home of like Miami, Florida, people pay with crypto at restaurants and enable that. But this concept, the modalities continue to grow, the complexity stays kind of pretty prevalent, but the merchant's experience when it comes to the money, they want single point of reconciliation, kind of wanted to shake, 1/3 to choke. They want accountability. And regardless of what the next phases of evolution in Commerce tech reveal, I think we are well positioned to continue to still be that player that already has that trust with the experienced economy makers.

That's fantastic. I think let's unpack the business a little bit, and maybe we could talk about you guys have expanded very methodically to 1, 2, 3, 4-plus verticals, and you guys crushed it, whether it's restaurants or hospitality or sports and entertainment. How do you think about when you're entering a new vertical, what you're looking for, any common strategic themes that underpin your expansion efforts into these new verticals?

Yes. It's, again, a good kind of memory jogger to think about pretty much since IPO. Every other year, we've been public. We've kind of announced ourselves as a leader within a new experienced economy vertical. So you sort of go back to the 2020 time frame of being restaurants only. You then have lodging on the come after that, then stadium's entertainment and now we're kind of in the luxury retail space, and we'll expand from there. This idea, though, of how do you pick those verticals is a very deliberate decision that I think stands all the way back to kind of a deep appreciation and understanding of like what is going to create a point of difference within the payment space. Like Step 1 was actually in the early 2010s, simply acknowledging that we were about to go through a mega shift of payments and software converging into integrated single offerings. And if you successfully identified that trend in the early 2010s and went all in on that trend, you're sitting here today growing at a rate that is at least 2x what the baseline of the payments market grows. We are a 100% software integrated payment. Every payment we touch is attached to a piece of software we own or a piece of software that a partner has that we're integrating our payment capabilities on to. But that was piece on is acknowledging that. Then our big piece of what is the criteria that differentiates it. I hate to say it, but it's like hard commerce. It's where it's not a simple commoditized proposition that enables the payment flow to happen through even an integrated partner. For us, the more that the commerce environment that, that merchant is operating in, the more that, that commerce environment is actually multi-revenue center in nature, therefore, multiple software suite in nature or where the software that we're providing in the case of restaurant or in luxury retail like where those solutions actually drive the entire kind of multipartners experiments it might be driving workflows of wait staff of host staff of kitchen people of kitchen workers or it's actually driving the data movement between the merchant, the consumer and something like an airport customs authority, right? Those kinds of environments are actually pretty complicated commerce environments and almost all of those environments have been largely in-person physical presence kind of component, which just makes it even harder, because now you're not just managing lines of code because lines of code could go anywhere, and it could be dominated by anyone, but you're actually managing an experience that requires a lot of digital meets physical in order for all of this value proposition to work.

Yes. Maybe we could kind of unpack the growth algorithm a little bit. You guys reported Q1 results a couple of weeks ago. There were some new metrics that you disclosed around organic growth. And how do you think about you have a lot of verticals you're international. How do you think about the growth algorithm with your customers and new logos and all of those things.

Yes, sure. So in the fourth quarter results and the introduction of the 2026 guidance, we introduced the concept of this growth algorithm just to help people appreciate a few different disclosures about the business. The first of which was to reinforce that there are 3 categories: disaggregated revenue categories that we want you to think about us as. One is our payments-based revenue our North Star. We think about payments based revenue as the way with which we -- the way with which we grow, it's the way we focus our revenue models towards. And that payments-based revenue is the largest except almost of our revenue pool. Inside of that revenue payments-based revenue, you can split the business up into its 2 main geographies. Our Americas business which is the business -- which is the market that we've served for multiple decades. It's where our products are all the most mature and this year is pretty much entirely unaffected by prior year M&A [indiscernible]. So it's a very clean organic kind of geographic view of our most important revenue category. Then you have the worldwide region. And that worldwide region represents our fastest-growing kind of international markets where we're a challenger, we're a disruptor. We're bringing our battle hardened and tested products and into a competitive backdrop where essentially we're looking to compete against unintegrated pin pads provided by banks. It's kind of like going back in time relative to what we see in the Americas in terms of the software integrated payments team. And that market is growing incredibly fast for us. And you take a look at those pieces of payments-based revenue and what we basically put to the growth algorithm is [indiscernible] will grow in the mid-teens and that the worldwide region will grow in sort of the high 20s. And in Q1, Americas grew 15% year-over-year and worldwide grew 51% year-over-year, and that's the largest part of our revenue. Then you talk about our tax-free shopping business, and we made a commitment within the disclosures to break that out as a disaggregated revenue category in order for folks to acclimate the movements in that business and acclimate to and understand that we were going to commit to that disclosure. And within tax-free shopping, what you see is a business that for this year, we sort of in the growth algorithm said, on a pro forma basis, call it, mid-single digits. And I'll probably come back to at some point the impact on headwinds that, that category has faced. And then, of course, we have our last bucket of sub and other within our revenue growth algorithm, which we guided or provided growth outlook of like low single digits around and it grew about 10% in the first quarter. So when you look at those categories, though, I think the important like net new disclosure that we added on top of that growth algorithm, was a view that in the first quarter, we also grew organically, putting aside kind of any effect of the last 4 quarters of M&A. And organically, we grew at a low double-digit rate as well. I think it's important to note that when you look at that growth algorithm, it's component parts, whether it's mid-teens in the Americas, a low double-digit kind of overall revenue growth or a low double-digit organic revenue growth, I should say, right? Our view is that, that is a 3x to the relative growth rate of the payments industry as a whole. And the payments industry as a whole is still a good industry from the perspective of it has growth durability, it has elements of value, especially if people have a value proposition, strong pricing power, -- and I think it has demonstrated its ability to navigate a lot of these technological changes through a long duration of time. But for us to grow at sort of a multiple like a 3x of that industry growth is something that I think we're proud of.

That's impressive. I mean, obviously, growth has come down for the market in Americas and the fact that you're growing 3x in the mid-teens is actually really impressive. And maybe we could touch more on the durability of the growth profile that you mentioned. Which verticals are you seeing are outperforming? Maybe you think of customer cohorts in certain ways. What do you see that's really driving outsized growth?

Yes, sure. So we can walk through things through this kind of geographic lens, and we're always going to talk about payments based as the North Star. But when you look in the Americas, we have our power lanes. We basically look at our dynamic of dine, stay and play. So restaurants is dine, hotels is stay, stadiums and entertainment is play. Within those power lanes, you have all 3 verticals that are at or above the kind of Americas growth rate that we talk about. And it makes sense that that's where our strongest growth comes from because those are very carefully crafted value propositions. We look at the restaurant environment. We've been in it for multiple decades. We've studied it deeply. We understand what the trials and tribulations are of restaurants of all sizes in table side dining, and we build propositions that fit those categories. We did the same in lodging, and we do the same in stadiums and entertainment. Just so happens, though, that in lodging stay and in stadium entertainment and play, we're the market leader by far. And so I do think that the growth there being grounded in differentiated value propositions is hopefully justifiable to all and understandable by all, but those are growing kind of in line with or greater than the Americas growth rate. The standout within that is probably stadiums and entertainment, where we're in 3/4 of kind of the pro sports environment and are in a very kind of like favorable position where we can attach ticketing to all of those environments on top of the food and beverage and the retail and all of that in-person physical presence volume that we touch and flows through our software and payments, we are attaching ticketing solutions to that. And sometimes that can be the equivalent volume for a stadium and a sports team as all the F&B combined. And so there's a really nice outsized growth rate there. Then when you step outside the Americas, the growth rate that we're incredibly excited about is this idea that worldwide kind of the growth algorithm we gave was the high 20s. And in the first quarter, it delivered a 51. And for us, the worldwide green shoots that we're seeing is really exciting because we've been at the international markets for only 3 years. right? We were not in an international country providing payments and doing business before 2023. And for us to be able to see these rates of growth for us to be able to see the green shoots across multiple of our products and offerings across multiple countries. This idea that international is working is very exciting for us because we know the competitive dynamics in that landscape look like we're looking back in time in the Americas. We know that our battle-tested products and propositions in stadium entertainment in Shift4 Dine and the sort are competitively differentiated in the Americas and are going to be even more differentiated in these markets. So we're really excited to continue to build out those regions. And then on top of all of that to then have this totally unique product of payments meets tax-free shopping meets currency conversion, what we call Shift4 One as a result of the tax-free shopping acquisition. When we look at that product in the market and know that we have kind of $100 billion of captive volume that we can go after within the countries that we already serve in focusing on SMBs and tax-free like that's an incredibly exciting opportunity for our business. So there's a lot of places where we see sort of accretive growth areas, and they happen to be the places that we've allocated our capital resources to be differentiated and to be a leader.

Yes, it's amazing when you take a look at any individual spend and you look at the bucket to spend, whether it's eating out or travel or staying at a hotel, you guys are going after the biggest buckets of spend, and it's -- and it's the most complex bucket. So you guys are definitely getting into the big categories. Maybe we could switch gears to capital allocation. Obviously, in this environment, A lot of companies are repurchasing shares, paying down debt. Some are looking at M&A opportunistically. How are you thinking about capital allocation, your framework in light of this market environment and how are you prioritizing different -- different...

Yes, sure. So our capital allocation framework has always been one that has been multifaceted and every dollar has to for the best allocation and earn its return. And our allocation strategy, historically, if you go way back in time to the beginnings of our restaurant days it was all about disrupting the concept that customer acquisition investment by essentially giving away the hardware, the software in exchange for the long-term reoccurring payments contract, that was the first allocation of capital we did. We know that playbook incredibly well. Then you fast forward from that era and you look at how acquisitions actually accelerated our customer acquisition, we were able to acquire installed bases of legacy revenue streams, nonrecurring revenue streams and successfully convert those into payments cross-sell. And so these acquisitions effectively were customer acquisition by another name, and we knew how to allocate that. So you put that arrow in the quiver. Then we find ourselves in an environment where we're a public company and given the owner's mentality that I think people can appreciate we have within the DNA across the management team, we look at trying to be as dilution-sensitive and dilution neutral as possible. So capital allocation towards repurchases and thoughtfulness around that has always been inside kind of the framework. And then, of course, you invest in the resources, the technologies and the capabilities enhancements that are just going to make all of that kind of better and faster. That framework doesn't change. the environment changes, but the framework doesn't change. The way with which you analyze ROI and the way with which you're driven by the return on that invested capital, like it all in the end is like very easy to measure, and it all in the end, needs to, at some point, convert into the growth of free cash flow per share. And if it doesn't have that, then it's not justifying its allocation and we'll definitely look to allocate away from it. The only other place that I would say is a bit different about the environment we're in now as it relates to capital allocation is that we're the most diversified we've ever been. So if we are looking at an environment like the fourth quarter or the second half of 2024, 2025, when same-store sales in the Americas were soft in a category like restaurant, or as folks look at varying degrees of competitive intensity or different kind of inflationary forces, the huge advantage we have is that we can be completely critical about where to allocate the dollar of capital, tech resources, people and money to the highest and most productive places, whether that's across verticals, across geographies and right now, it's really hard not to be super excited about the ability to allocate capital at the Shift4 One opportunity of cross-selling payments on top of tax-free shopping on top of currency conversion because the unit economic model of that is just going to be so sound. But that's probably the only new thing is that as we look at the kind of organic allocation of capital within our overall complex of Shift4 we do have these advantages to be able to react to whatever the geopolitical or the macro throws at us. And I think that, that's a really advantaged place to be.

Yes. And one thing that's really impressive, switching gears to your international expansion, it's a huge opportunity and it probably relates to capital allocation a little bit in investing dollars into expanding into Europe. What do you want investors to take away about your international expansion efforts and how you think about investing for growth in some of these really exciting markets where you're disrupting some legacy players there and having basically repeating the playbook that you did in the U.S. and just disrupting some of the old-school bank-led kind of payment providers.

Yes, I'd say this was not an overnight phenomenon. This is something that took years to really unpack the strategy around to study all of these markets to study the verticals inside the given geographies and that we've chosen to enter. And I think the thoughtfulness around that set of strategic decisions to want to lean into experience economy verticals, in-person payments within these international regions because you're going to be differentiated in terms of the fact that integrated payments is just a much, much earlier inning theme in these markets is something that we are really careful and thoughtful about I'd say the second thing that we were careful and thoughtful about was actually to not make the mistake that we've seen from other companies entering the European or international markets and be under invested. This idea of experimenting inside of a region or thinking that you can just air drop your personnel and your way of doing things without really appreciating how much infrastructure is needed to be not just single country Europe but pan regionally in Europe and have density in Asia Pacific. These are not markets where you can be sheepish around how to invest to go after and compete with these legacy incumbent banks and legacy incumbent providers of payments. And I think that, that is something that was well developed in the strategy based on us looking at the failures of others. You can't limp your way into these markets. And to do so with a disruptive proposition of ours, also meant that the best assets to enter these markets through we're going to be market-leading assets, where the propositions were so durable where the market share that they're positioning from is so far and away the leader that it can endure the disruption that we bring on to it, right? Those were some of the key critical variables. And in the case of something like Global Blue, it had the added advantage of having been, from our perspective, something that we had actually reviewed for multiple years, like we had known this company well before COVID and has seen its performance through it and had seen the grit and the durability, and I think that helped embolden us to overall view that as a really good kind of infrastructure asset from which to build this disruptive playbook on top of.

How is -- speaking of Global Blue, how is the integration going? Like it's a big acquisition, huge opportunity of untapped volume. How is it going so far?

Yes. So from an integration milestone standpoint, we're pleased with the pace of progress. For us, the operational milestones that I think are the most important and noteworthy begin with product. Everything begins with product. And in this case, this idea of a totally unique product that can deliver tax-free shopping, payment processing and currency solutions to even an SMB merchant with a very simple provision, almost self-service model is something that we're really proud of and had to get operationally live as step 1, and it was a key component of the integration road map. The second key component of that from there is to actually get live, get live in countries, have the product, beta testing with customers. But getting live, it's a simple statement that we talk about, but to be [indiscernible] with this product in 7 countries means our payment platform is in-person payments, omni person -- like omnichannel payments ready in these countries. And by the end of the year, our target is to be live in 15 countries, which means payment capable, tax-free capable, currency solution capable and live. And then the last piece to this integration is about scaling the go-to-market, which is the phase we're in now, in order to make sure that not just scaling operations, not just scaling product capability and not just scaling the payment platform, but you need the go-to-market to be completely ready to go. And the uniqueness about the European market and the Asia Pacific market is you can't assume go-to-market as ubiquitous. You have to appreciate those nuances and identify that, yes, there's a direct sales force, you can recruit and hire, but there's a lot of interesting partners whether they're value-added software resellers, whether they're the ISVs themselves, folks that don't even realize that the entire of the American market went through a huge software payment integration that are untapped and ready to become partners of ours. And so I do think that, that last piece is the big operational milestone in front of us.

Yes. Maybe we could switch to AI. It's been a big topic at this conference. Obviously, AI in the payment space and a regulated money movement space is a bit of a different conversation, right? Can you talk about the role that you're seeing AI play within Shift4?

Yes. So I'll start with kind of the operational sides within it, where we are seeing a lot of advancements, productivity, efficiency, whether that's within your -- certainly your product and technology dev organization. We work with all of the frontier model companies from an application and a usage standpoint. So Cloud code tends to be cloud code and [ codecs ] tend to be the applications there. And when you go from there into the world of operations, the ability to create efficiencies on onboarding, the ability to build efficiencies on service support with agents all of that is clearly defined efficiency gain. You then stem that all the way into, but what are the product set features, where are you actually seeing product enhancement, things like conversational ordering, things like the ability to actually help bring a time to revenue of a merchant down in 2 days from what used to be weeks because I can take a picture of a menu, and it can now be preprogrammed live into a POS system. Those kinds of gains are very like real-time dynamic and seem to be uncovered every day. And so I think it's a pretty incredible time to have the sandboxes that we have across multiple verticals, multiple geographies to be probably like aggressive in the way with which we experiment. At the same time, as has been talked endlessly at this conference and amongst others, you have to be, and it's the CFO and me having to say it, you have to be super disciplined about the ROI that's coming through on it. And we are aware within every token dashboard that I have that I analyzed, right? You're aware of when a model drops, you see it in the spike on consumption costs. And you're going to have a very kind of unbalanced usage set of characteristics that I think you also have to manage because just because a certain set of dev and engineering capability can now move 10x. If the rest of the throughput doesn't keep pace, then all you did was create a new bottleneck somewhere within your process flow. So actually, this process engineering and the rearchitecting -- rearchitecting of how you think about things is equally important from a change management standpoint as it is the adoption of technology. And so we're seeing all of those kinds of underlying dynamics. And then maybe the thing that the least talked about is the fact that we actually are a pretty scaled provider of payments meet software, we actually have integration marketplaces, where partners are proliferating. We are seeing new and emerging partners that are providing point solutions that a merchant can go into our marketplace and select and integrate into and we have data exchange between them, and that actually is proliferating again. So it does seem like one of the big trends that AI is probably going to unlock within this is this potential proliferation of technology, this refragmentation of technology does seem to be one of the early trends that we're seeing. And we haven't really seen this level of kind of proliferation or fragmentation technology since like the zero interest rate environment, right, when money was free. And so I think that, that dynamic is something to watch.

Yes. Let's talk about the valuation environment, and you probably throw this back at me, but what do you think is going on with the public equity markets as it relates to this sector? And payments in general, obviously, the bigger companies have tripped over themselves and underperformed expectations. But what do you think the equity markets are underappreciating about Shift4 particularly?

Yes. Well, definitely, the question of what's going on in the market is something that I ought to throw in your direction. But Look, I do think that what we have is a time within sort of the tailwinds of software payment integration as a theme and how that was impacting the kinds of investors that were moving into fintech that may have been more pure-play tech. They moved in within a certain phase, and they seem to be moving out within a certain phase. Now where they are hiding, it seems to be sort of unclear because it would seem like there is a lot of market cap concentration that's technically rising just to the top, right, just to the top of the S&P. But if I try to isolate down where do Shift4 sort of stand out within the noise of what's happening within the public backdrop? I do think it comes down to a lot of the fundamental dynamic of what is the durability of our growth algorithm and how does that compare to an industry that today is still a good industry but maybe requires a couple of quarters to kind of rebuild confidence within, right? And so I come back to this idea that I think the industry of payments has had to go through a bit of a reshuffle in terms of the kinds of investors that are moving in and out of it. But when I look at the fundamentals of payments industry, you're talking about a valuation paradigm that we haven't seen since like the GFC. But you're talking about a unit economic model that is totally different because it's not just providing commodity payments that was classified as BPO and IT services. This is a kind of payment that's integrated into software unit economic models that have high single-digit attrition rates. So the LTV, the free cash flow generation that comes through on it, they're far superior than where we were when the last time multiples were ever at this kind of pocket back in kind of the late 2000s. And so I do think that there is a little bit of a coming back to the intrinsics of why is this a good industry. And can it grow durably even if that growth rate is durably at like for the industry as a whole, sort of like a low single digit for us that have made the deliberate decision to be integrated payments and then to also have leadership propositions in an integrated payment world, that's how you grow 3x the underlying market dynamics. But it would help if the industry as a whole was able to kind of get through some of the rebuilding of trust that has -- that some of the -- that has transpired over the last couple of quarters.

Well, thank you, Chris. It's a pleasure hosting you and I appreciate the opportunity. And thank you, everybody, for attending.

Thanks very much.

All right.