Shift4 Payments, Inc. Price & Performance (FOUR)

Our strategy gives us the confidence to provide impressive 2025 guidance alongside a new midterm outlook that takes into account a number of cases from simply sitting on our hands, in which case the results are excellent to the pro form a case alongside our recently announced acquisition, And last, the most likely case that further accelerates growth in line with what you seen us achieve over the last three years. In any of these cases, we are growing faster and more profitably than any of our peers. It is with this confidence that I can comfortably step aside and pursue this next chapter in my life knowing Shift four is on the correct course. And with that, I'm going to turn the call over to Taylor to talk about the recent acquisition. Thanks, Jared. As Jared mentioned in his remarks, it's been our strategy for some time now to build a one integration, one platform to power payments all over the world. Today, we're announcing the acquisition of Global Blue for approximately $22,500,000,000.0 in an all cash transaction, which further builds upon our capabilities in this area. GlobalBlue is a market leading payment platforms supporting tens of thousands of luxury brands worldwide, including Louis Vuitton, Hermes, Valentino, Fendi, Prada, Burberry, Cartier and many many more.

They operate a two sided network offering over 15,000,000 consumers, quick and efficient VAT tax refunds when shopping abroad through one of their and advanced dynamic currency conversion capabilities. To be clear, we've spent many years admiring this business. The combination of their latest capabilities, our growing geographic coverage, Global Blue's existing scale and two sided network were all factors in helping us underwrite this transaction with a high level of confidence. Simply put, the business standalone is exceptional before revenue synergies, and yet we estimate over $80,000,000 of revenue synergies [indiscernible] That are current Global Blue customers.

We estimate the aggregate embedded payment opportunity to be over $500,000,000,000 As a reminder, our cumulative cross sell funnel is over $800,000,000,000 today and with this transaction, it increases our unique advantage across this customer base to over 1,400,000,000,000.0 The opportunity Global Blue affords us within unified commerce has also attracted two of the world's largest FinTech companies, Ant International and Tencent, International and Tencent have historically collaborated with Global Blue to enable a seamless shopping and refund experience via their mobile applications and wallets. Both these valuable partners have committed to further collaborate with us on e commerce opportunities all over the world and have also agreed to remain shareholders of the combined business. This is an all cash deal to be financed with existing cash on hand and pro proceeds from a $1,800,000,000 short term bridge financing that will be replaced with long term debt and convertible financing following the launch of an offering shortly. We expect to close the acquisition in the second half of twenty twenty five subject to regulatory approvals.

And our pro form a net leverage is expected to be approximately 3.6 times upon closing of the transaction and we expect to deleverage approximately 3.3x by the end of the year.

This transaction is the largest in our history which speaks to the conviction we were able to gain as we learned about the business. Despite its scale and unique product offering, it leverages a playbook that we've continued to refine over the last decade at Shift four, whether it be Revel, Givex, Eigen Shift4 now Global Blue, we are passionate about identifying critical but often overlooked businesses that have an incredible merchants who benefit immensely from a single comprehensive payment platform.

We aim to deliver these merchants what they would have otherwise sourced from five or six different companies and in turn deliver more value and convenience. With that, I'll turn the call over to Nancy who will outline our 2025 financial guidance and other key stats for the fourth quarter. Thank you, Taylor.

Jerry provided a summary review of the quarterly financial results. So I will just expand on a few additional items. Organic gross revenue less network fee growth for the full quarter 2024 was 26%. This reflects the ongoing strength and momentum across all of our verticals and the monetization and conversion of gateway and software only customers.

Our Q4 blended net spreads were 60 basis points or 61 on the average blended spreads for the full year. In line with our guidance. Spreads across our core business remained stable. Our Q4 adjusted EBITDA margins were 5150% for the full year. Excluding a nearly two seventy basis point drag from recent acquisitions, full year adjusted EBITDA margins were 53%. We expect to synergize these acquisitions over the next twelve to eighteen months. Subscription and other revenue was $115,000,000 in Q4, up 100% compared to the same period last year. The growth was once again driven by our success across SMB, Sky Tab and further penetration of the sports and entertainment vertical. As well as the contribution from acquisitions completed during the quarter. Our adjusted free cash flow in the quarter was $134,000,000 bringing full year adjusted free cash flow to $399,000,000 up 46% compared to a year ago. Q4 adjusted free cash flow conversion was 65%, bringing full year to 59%. We are very pleased with our free cash flow generation as we are one of the few companies that are extremely expense disciplined and laser focused on efficiency gains, which allows us to generate exceptional cash flow without sacrificing growth.

During the fourth quarter, we repurchased over 1,000,000 shares for 110,000,000 leaving approximately $350,000,000 of capacity available as of December 31 under our current program. You can find a complete reconciliation of our shares in the back of our earnings materials. GAAP net income for the fourth quarter was $139,000,000 and GAAP diluted EPS was $1.44 Non GAAP adjusted net income for the quarter was $123,000,000 or $1.35 per share on a fully diluted basis. As a reminder, we have not historically added back acquired intangible amortization to non GAAP net income and EPS, but plan to do so starting next quarter in line with our industry peers. Our total indebtedness now has a weighted average cost of 3.4% and our net leverage at quarter end was approximately 2.5 times.

As we had previously indicated, the $690,000,000 of convertible debt due in December 2025 was classified as current debt on our current 12/31/2024 balance sheet.

However, after the recent financing activity last quarter, and the strong cash flow profile of our operations, we are well positioned to pay it down at maturity.

Now turning to twenty twenty twenty five guidance. We are introducing this guidance excluding the Global Blue impact and as follows. Volume between $200,000,000,000 and $220,000,000,000 representing 21% to 33% year over year growth. Gross revenue less network fees between $1,650,000,000 and 1,720,000,000.00 representing 22% to 27% growth. Adjusted EBITDA between $830,000,000 and $855,000,000 representing 23% to 26% growth.

And adjusted free cash flow conversion greater than 50%. While we are not providing quarterly guidance today, Q1 is shaping up in line with our expectations for both volume and revenue. We anticipate adjusted EBITDA margins of approximately 45% which is also in line with historical trends as Q1 is a seasonal low point for margins.

We are also absorbing some drag from lower margin M and A but again anticipate this to be mitigated by year end. With that, let me now turn the call back to Jared.

Thank you. Thank you, Nancy.

We will be saving questions until after our Investor Day. But since this was likely my last earnings call, please know I leave Shift4 in the very capable hands of Taylor Lobbber alongside a great leadership team, those who I have the utmost confidence in and who have been key architects in the firm's growth strategy and overall success over the years.

While I can't predict how the process will go, hope to be able to offer input to Taylor whenever it is requested. And to the extent it's permissible, I intend to remain Shiftfor's largest shareholder. As the founder of Shiftfor, from my parents basement to the multibillion dollar public company it is today, incredibly proud of the team and what we've accomplished over the last twenty six years. I'm really thankful to my family, friends, the incredible team our advisors and investors who believed in us really in this incredible nation that makes stories like this possible. I will always be grateful. And thank you. This does conclude today's teleconference. We thank you for your participation.