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On Tuesday, 10 June 2025, Shift4 Payments Inc (NYSE:FOUR) participated in the 2025 RBC Financial Technology Conference, where CEO Taylor Lauber outlined the company’s strategic initiatives. The discussion highlighted Shift4’s focus on international growth, the integration of Global Blue, and a disciplined approach to acquisitions. While the company’s financial outlook remains positive, challenges in localization and economic uncertainties were acknowledged.
Key Takeaways
- Shift4 is transitioning towards direct sales in dense U.S. markets, while maintaining partnerships internationally.
- The Global Blue acquisition is expected to bolster international expansion and provide access to top global retailers.
- The financial outlook for 2025 is optimistic, not yet factoring in the Global Blue acquisition.
- R&D investments are focused on the SkyTab product and adapting to local market needs.
- M&A opportunities are evaluated with a disciplined approach, with net leverage expected to be around 3.3x post-acquisition.
Financial Results
- Shift4’s 2025 guidance is deemed achievable, reflecting confidence in the company’s strategic direction.
- The company has raised 3.3 billion dollars for the Global Blue transaction.
- The financial outlook does not yet include potential benefits from the Global Blue acquisition.
Operational Updates
- Shift4 is prioritizing direct sales for larger merchants in major U.S. cities and enterprise clients.
- The acquisition of Vectron has facilitated rapid expansion in Germany, with over 1,000 new restaurants in the UK and several hundred monthly in Germany.
- Global Blue will largely operate independently, with synergies expected from dynamic currency conversion (DCC).
Future Outlook
- International revenue currently represents less than 20% of total revenue, but is expected to grow significantly.
- The SkyTab product is being rolled out in the UK and Ireland with minimal customization, while Germany requires a multi-year localization effort.
- The Global Blue acquisition is pending regulatory approval from the Bank of Italy, with closure anticipated in early Q3.
Q&A Highlights
- CEO Taylor Lauber emphasized the company’s strategic trajectory and the tools available to maintain competitive advantage.
- The focus remains on achieving a unique market position with minimal competition.
- Consumer trends have remained consistent over the past eighteen months, supporting the company’s growth strategy.
For more detailed insights, please refer to the full conference call transcript.
Full transcript - 2025 RBC Financial Technology Conference:
Unidentified speaker, Analyst, RBC: RBC, and I am delighted to have Taylor Lauber, CEO. Right? This is real, man. This is real. So thank you so much for being here with Shift4.
Super excited for you. I know the past week or so has been probably somewhat tumultuous, and we won’t make you recant that. But what I wanted to do now that you have taken the reins as the CEO, understanding that you’ve been a big part of the organization in a strategic role for a very long time, I want to get a sense of maybe some of the nuance changes maybe you’ve been starting to make along the way in anticipation of this transition, and then things maybe you want to change a little bit as you go forward.
Taylor Lauber, CEO, Shift4: Yeah, sure. So, of all, thanks for having me. This is a business that’s evolved dramatically kind of every year of its twenty six year history. So there really hasn’t been a change in our priorities nor should they be. We’ve been on an awesome strategic trajectory.
We’ve got all the tools we need to continue to win. But what has changed, and this has very little to do with the CEO transition, what has changed is we’re going end this year with 6,000 employees all over the world. 65% of those employees are non U. S. We’re going to have a product capability, several capabilities as a result of Global Blue that we’ve never had before.
We’re going have a massive base of customers and some of the best global retailers in the world that we’ve never had before. And so you have to adapt in the face of all of that. Again, this is very little to do with the CEO transition and much more to do with just a growing international business. What that means on the surface is a heck of a lot more time on airplanes, paying attention to all these constituents and making sure that our philosophies aren’t getting muddled with cultural realities in countries we’re trying to expand to.
Unidentified speaker, Analyst, RBC: Yeah.
Taylor Lauber, CEO, Shift4: It’s always an interesting balancing act for us. We are implementing go to market philosophies that have been proven to be highly successful in The United States and other parts of the world. And so, you are in some ways disrupting the way they’ve traditionally done things, for good reason. And in other ways, you have to be mindful of the ways people like to pay, the way consumers like to interact with merchants, the way merchants like to buy things. So all this means a heck of a lot more time on airplanes, talking to all these constituents, analyzing the local markets, which is all really fun activities.
Fortunately, it’s not a hard thing to do to convince my wife and kids to go to France for the summer. And then just making sure we’re structurally organized, so all 6,000 people know what’s going on every day.
Unidentified speaker, Analyst, RBC: Got it. That’s great. One, just point of clarification we want to get out of the way. So the multi class shares and the TRA that Jared, I guess, was officially going to be part of, that’s all off the table now because that was all predicated right off of his confirmation?
Taylor Lauber, CEO, Shift4: Just to make Yeah. Correct. So had indicated that if he were to separate from the company, he would be converting his voting interests. What I don’t think was is well known is there’s a very significant tax consequence to doing that, which does not make any sense to do to the extent he’s staying with the business. So he’ll retain control, which is great.
There’s no ambiguity around who’s in charge, which I love. And the share structure will sit as it has since we’ve been public.
Unidentified speaker, Analyst, RBC: Okay. Good. We just want to get that out of way. Keep getting questions on the clarification there. So one of the veins that we’re running through on all companies here is just trying to get a sense of what’s happening in May or what happened in May rather.
So maybe any kind of compare and contrast to what’s transpiring in May for your businesses, how that looked maybe relative to April, any early looks, and June is great as well.
Taylor Lauber, CEO, Shift4: Yeah. This is where we’re decidedly boring. I think it’s one of the few categories we’re boring in, which is that the consumer trends we’ve been seeing over the last eighteen months are very consistent. We’ve seen modest year over year increases in hotels offsetting modest declines in restaurants. Everything moves around by no more than 1% month to month.
Things look generally quite healthy.
Unidentified speaker, Analyst, RBC: Okay. Good. So no change. When we talk about the evolution of the business, you kind of touched on this a little bit. But when we think back to the time of the IPO to kind of where we are today, one of the major changes in particular is really the go to market strategy.
So much more direct distribution versus indirect distribution, in particular in The United States, but also even more specifically around restaurants. So how do you think about direct versus indirect as you want to continue to invest in the business? And again, we’re just going to keep this in The United States for now, because I know there’s a whole another strategy outside that.
Taylor Lauber, CEO, Shift4: Yes. It’s a great question. We’ve been indirect virtually the entirety of our existence. And as we evolved into larger and larger merchants, that just made less and less sense. We don’t need parties to tell us where Yankee Stadium is.
Don’t need parties to help us cross sell customers that we’ve inherited via M and A. And so there was this natural growth of a direct sales force inside of the business over the last five years. And then with our restaurant products specifically, we decided that there were specific markets we wanted to own distribution. The fixed costs are worth it because the markets are large enough to support that direct distribution and really just control of our own destiny inside of those markets. We still do party distribution in markets where they are not dense enough to warrant the fixed cost.
We love our sales partners in that capacity. They can help fill out gaps across the country for us in a tremendous way. And then it wasn’t necessarily part of the question, but internationally, it is very much a partner led strategy. This is where I think people can get too religious about one path or the other, when in reality through something like Vectron we inherited 300 partners that speak German, that know how German merchants like to talk about their products and implement their products. It would be silly for us to try to build that sales force on a direct basis in a new and growing market like that.
Unidentified speaker, Analyst, RBC: Yes. So when we think about The States, obviously, and we were talking about restaurants. But direct distribution as we think about stadiums and venues? Really anything enterprise. Anything enterprise.
So the distinction now as we think about it is support enterprise with direct distribution at a high level. On the SMB side, we’ll still go through partnership channels.
Taylor Lauber, CEO, Shift4: Yes. Except in dense markets. So whether it’s Florida, whether it’s New York, whether it’s Boston, Chicago, we have direct sales force, for restaurants because the markets are big and we can sustain it, and the fixed costs are far less than the variable cost of partnership. Yep. And then we use partners to fill out the rest of the country.
Unidentified speaker, Analyst, RBC: Do you have to have a sizable professional services organization in order to support those enterprise clients? Or do you feel like and okay, so you’re shaking your head yes. So do you feel like you’ve built that up to the point where you’re able to continue to grow with that trajectory? Or are you going to have to continue to put dollars there?
Taylor Lauber, CEO, Shift4: So we feel like we’ve got the right sized sales force. We try to, on the service side, make sure everyone’s capable of handling the most likely use case in a geography. We also do some kind of fun and innovative things, like anyone in the company can go sign up and get trained on how to install a stadium because that’s where you have surges. Right? You need to go, install Yankee Stadium in a month, and, you’re relying on a lot of people.
But that opportunity or that need might not be there. So we’ve got, dozens of employees across the company that raised their hand. They work in finance or they work in technology, and they said, I wanna be able to go to opening day at the Yankees, and they go and install it. And then they go back to their day jobs. So it’s a pretty fun, especially in these really high visible fun places to be, installing things to create a variable model like that, where you can leverage them temporarily, and then they can go back to their day jobs.
And then, obviously, you’ve got this extensive force that’s installing restaurants every day around the country.
Unidentified speaker, Analyst, RBC: Okay, so that’s interesting, because that’s one of the concerns that comes up fairly frequently. You’ve got these massive installs. I mean, these are large like, to your point, these are enterprise clients now, huge. And the capacity with which to actually implement those, part of that is coming from what it sounds like is your existing workforce that you’re just retraining periodically for them to do it, and that’s enough? Totally.
Yeah. That’s amazing.
Taylor Lauber, CEO, Shift4: So keep in mind, this is one of the few segments when we bought a business like Appetizer. We took everyone, that was involved in installation. We brought them on because we knew there would be this lift. But in general, if it’s a really fun place to be and it’s a cool experience, why not take someone from any corner of the company and say, we’re going to train you to do this. It’s going to be a fun travel experience.
It’s going be a fun entertainment experience. And by the way, you’re going to teach us a heck of a lot about what’s wrong with the product because you’re not interfacing with it every day. Yeah. You’re going to teach us the things that a novice adopting it would find challenging that, you know, people doing it every day wouldn’t necessarily see.
Unidentified speaker, Analyst, RBC: Interesting. Okay. Yeah. I mean, often worry that there’s not enough capacity for all that stuff, but it sounds like that’s not the case.
Taylor Lauber, CEO, Shift4: You know, it’s I understand the sentiment, but this is one thing that M and A does bring us, right? So M and A brought us nearly 1,000 employees over the course of the last year. Will bring us another 2,000. Rather than focus obsessively on expense synergies, are by nature pretty negative to implement across an acquired business, focus on training these people to where the future’s going to be, and they find that much more rewarding, and we solve a hiring need.
Unidentified speaker, Analyst, RBC: Yep. So one of the other major structural shifts of the organization, and you touched on this again in kind of your opening remarks there, is going from a domestic only kind of company to a much broader international company. So maybe speak to the mix of the business today. And then how do you think about putting an incremental dollar to work on investment, U. S.
Versus international now?
Taylor Lauber, CEO, Shift4: Yes. Sure. So mix of the business, and Global Blue is going augment this significantly. But still less than kind of 20 odd percent is international revenue. And yet on a customer ad basis, we’ve got a lot of customers joining us from different markets.
We’ve mentioned over 1,000 restaurants joining us in The U. K. Alone. We’ve got several 100 joining us each month in Germany. And so the operational focus of the business is skewed towards these growing markets.
I think we’re kind of constantly challenging people to say, these are high growth markets. They should not look like The U. S. We should be devoting a disproportionate amount of time. We should be obsessing over the local experience and the delivery model.
So it’s certainly a disproportionate amount of our focus. And what’s really nice about when Global Blue enters the fold is they are a very international business by nature. And that’s not just that they have like products all over the world. Their product inherently is helping one consumer from one country shop in another country and the fulfillment experience of that. So they’re very well adept at how to be organized internationally, to take advantage of local skill sets where it matters, and yet to implement structure where running 50 different countries is otherwise challenging to do.
Unidentified speaker, Analyst, RBC: Yeah. We’re going to get to global blue in a I want to talk about SkyTab, something that’s more tangible maybe right at the moment, and rolling that out in Europe. So you’ve got it in UK and Ireland. But it does feel like Germany has been a little bit of a different beast in terms of bringing that to market. So can you draw a distinction between what you’re doing in markets where it’s been, the inertia has has kind of held in and maybe some friction points that you’re figuring out, and maybe Germany is the right one.
Taylor Lauber, CEO, Shift4: Yeah. Sure. So the challenge is that depending on the market, you’ve got localization. That could be tax fiscalization. It could be language localization.
It could be customization of the product to suit just how merchants and consumers interact with it. Very little of that in The U. K. And Ireland. So we saw instant opportunity to distribute SkyTab and have near 100% adoption with little customization of the product.
Unidentified speaker, Analyst, RBC: Got it.
Taylor Lauber, CEO, Shift4: So it was obvious for us. Germany would be kind of a multi year step to have SkyTab ready for the market. And what presented itself as a really cool alternative was acquiring a business like Vectron that already had 65,000 restaurants using their product. Day one of that war is to get all of those customers onto our payments and make sure SkyTab is ready for those customers when they choose to evolve in the future. So it’s by no means a lesson learned.
It’s actually a deliberate part of the strategy. And I would say, had we been religious about SkyTab we would have been waiting several years and not adding several 100, you know, restaurants a month in Germany the way we are today.
Unidentified speaker, Analyst, RBC: So the question we get often is, why does it take so long to go and do all that customized work in a country? So the fiscalization, the tax codes, language and stuff like, I understand that. But like, it does sound like when you talk to people who have had to do this, it takes, like, twelve, eighteen months or longer. Like, and so that seems like an obscene amount of time Yeah. To have to cover that.
But so what’s the level of complexity that requires that?
Taylor Lauber, CEO, Shift4: So it varies very much by country. Yes. So, I’ll start with that. The payment methods inside of a country might be easy to get, might be hard to get. That creates time as well.
Fiscalization could be easy or hard. Statement requirements, what it looks like to the consumer, all these things. They do take time when you add it up. And that’s why a strategy like ours, where we’re very happy to sign up hotel customers that already have installed and localized software attaching our payments, and there’s none of that work required, it’s already been done for you, is a faster way to get to market. And I would say the players that are the most challenged that we’ve experienced are the really low end to SMB, really wide of capability.
You now have to adopt payroll solutions and capital solutions and all these other things that are part of your ecosystem. Makes the time off that much longer. So we start with software products that are already installed locally because you can attach payments very quickly. And where the friction is not as high in product like SkyTab in The U. K, it works exceptionally well.
And behind the scenes, we’re being informed on all the ways to We are much faster at localizing something like SkyTab for Germany owning Vectron than we would be without it.
Unidentified speaker, Analyst, RBC: 100%. 100%. And that’s a massive distribution asset for
Taylor Lauber, CEO, Shift4: you as Oh, yeah. 300 dealers.
Unidentified speaker, Analyst, RBC: 300 dealers. Yeah. Yeah, yeah, yeah. And so the playbook again on that is you’ve got these 300 dealers. They were selling other products, right?
Maybe just talk about how that Yeah.
Taylor Lauber, CEO, Shift4: Absolutely. So, international expansion, without this would have meant you’re hiring local sales teams. I don’t speak German. It would have been an awkward interview, to to try to assess the right, sales talent. And yet through acquiring Vectron, get 300 dealers that speak the local language, have installed the systems, know where the customers are.
And now you’re asking them to attach payments. And by the way, they’ll save money because they won’t have to buy as many Vectron products as they had before. They’ll cost less. And they’ll get a rev share for having done it. So it’s a real accelerant into a market that you’d otherwise be, you know, hoping you get hiring right, and no one gets hiring right kind of half the time.
These are established sales channels with established customer bases. You’re going to win. It’s a question of how fast you can do it. And it’s certainly worth the compromise of not having every single customer on SkyTab when you have an opportunity like 65,000 restaurants.
Unidentified speaker, Analyst, RBC: Yeah. And one of the other things that seems to be a bit of a pushback is a lot of European well, just countries in general, they’ve historically relied on their bank to handle payments, not a technology company. And so how do you get them over the hump to say to those merchants, like, I know there’s a value proposition that you’re offering, but there is also, like, this cultural thing sometimes that seems to stick with them.
Taylor Lauber, CEO, Shift4: Yeah. This is an awkward thing to say with this logo behind me at a at a conference monopolized by financial professionals. No one likes their bank for payments. And if you look at the evolution of payment processing in The United States over the last twenty years, it has increasingly been leaving these entrenched financial institutions for technology that helps the merchant conduct more commerce. And when that friction occurs, what the bank inevitably says is, Please just give me the deposit.
Meaning the banks don’t even hold on to this business. It’s not super high margin for them. So we go after it by delivering a heck of a lot of technology that’s tightly integrated. It’s displacing a bank terminal that a merchant was certainly not ascribing a lot of value to. The bank is doesn’t love that trade.
But to the extent they get to keep the deposits in their core business anyway, they don’t feel it’s terribly threatening. And I think the lesson we should sort of plan on seeing in Europe is that much like we’ve seen in The United States, the companies that are going to grow are going to be adding a heck of a lot of technology value to merchants. It’s not going to be approvals and declines at a fraction of a penny.
Unidentified speaker, Analyst, RBC: Yep. Yep. Nope. That transition definitely took place started taking place twenty years ago in the So that’s pretty that’s good to hear. So let’s talk about Global Blue for a So a couple of things.
One is, obviously, let’s let’s review the key attributes of this asset, the largest deal you’ve done in the company’s history. And so what are those attributes? And then the playbook that you’re going to run to integrate this into the company, it feels different to me than other acquisitions you’ve done. And so maybe draw a distinction between that.
Taylor Lauber, CEO, Shift4: Yes, sure. Starts with an incredible business. They just posted their earnings growing 20% year over year. They operate in what’s largely a duopoly in their tax free business, where they help consumers get tax free funds on goods that they’re purchasing abroad. So they have really high applicability in some of the best merchants in the world.
These are the LVMHs of the world that are selling luxury goods internationally throughout the world. And really strong brand appeal from consumers who can stand to get meaningful savings. It could be $1,000 or more back going through this Global Blue process. They have a significant market share in the markets that they serve, for the customers that they serve, really high attach rates, really high loyalty and demonstrably better refund rates than their competitor, which means the product just works better. Consumers more often than not go through the process and are happy to get this money back.
So it’s deeply entrenched within merchants, and it gives us a really, really powerful tool within which to sit at the table of the largest global retailers in the world. This is something that they demand. Like the Louis Vuitton in Paris demands that this service be available, and they’re very happy with Global Blue. So as we looked at the world, we we we kind of often ask ourselves, what’s our point of difference? Mhmm.
If we’re gonna go after a particular market or a particular geography, what’s gonna make us undoubtedly special and put us ideally in the camp of having one or fewer good competitors? And we looked at retail for the last six years and said, This thing is a point of difference. It’s a huge point of difference. And the ability to sit down with a retailer and talk about this product, and by the way, also be able to fulfill five or six other things that go into the commerce experience, is going be differentiated. And so that’s playing out, and we don’t even own the business yet.
So we’re able to have kind of these interesting conversations with customers about how we can fulfill more of that commerce value chain and reduce friction. And they love the Global Blue product. They’re not going to kick it out. They also are one of the largest currency conversion businesses in the world for merchants, and that’s something we’ve never offered.
Unidentified speaker, Analyst, RBC: This is GCC?
Taylor Lauber, CEO, Shift4: Exactly. So the idea that as a consumer, it presents you your local currency and the currency of the country you’re in right at the payment terminal and you get to choose. It’s very commonplace as you travel internationally. It’s less commonplace in The U. S.
And yet we support 40% of the hotels in the country that have never offered this product. It was such a logical thing to as we looked at our product pipeline, we had to solve for it, and Global Blue gave us that. And not just like a little bit, they’re like one of the three largest players in that industry. So we’ve got a best in class product on the currency conversion side, highly applicable for hotels. Stadiums are asking for it as well.
And so it’s kind of a perfect marriage in that we get world class retail product and access to a vertical with a highly differentiated right to win. We get a currency conversion product that we can apply to our own customers in a way that we would have had to solve for anyway. And now, we have beachheads in 50 plus countries around the world where we get to ask ourselves, is this a market for restaurants? Is this a market for hotels? Is this a market for stadiums?
All the ways we’ve traditionally grown. What I think kind of makes it maybe a different business than other businesses we’ve acquired is it’s a 20% grower in its own right. So there is an element of don’t screw this good thing up that comes into this. We like to come into businesses and really shake things up and change their go to markets really dramatically for the sake of winning. In this business, you’re just a little bit more cautious because them doing what they’re doing would, quite frankly, meet all the expectations we set for the Street anyway.
Unidentified speaker, Analyst, RBC: Right. Right. So prior acquisitions historically, you kind of tear it down and build it back up under your kind of distribution plan, your payment, and the strategy. This one stands on its own. You’re going to plug it in.
You obviously get synergies coming into with DCC, and you’ve got but the other thing I’ve often wondered is, they actually have a fair number of relationships with SMBs in all of these different countries. Yeah. And so how much of an opportunity will that prove potentially for SkyTab to go into those markets?
Taylor Lauber, CEO, Shift4: That’s the largest and most immediate opportunity. Yeah. Is the SMB that is using one vendor for payments, they may have currency conversion, they may not. The VAT process is disjointed because it’s not integrated to those other two. And we see the ability to deliver an all in one solution to them.
And it’s quite literally going to take three or four things off of their countertop. And those merchants historically have not had the conversion rate on that that the large enterprises have because they’re guessing at whether or not you’re eligible, and they’ve got to take another step. We envision being able to deliver them a product where at the point you tap your card, you’re on the Global Blue journey Automatically, it assesses that you’re a foreigner and that you’re eligible for this. It’s going to shove a lot more people into their app. Right now, there’s about 15,000,000 consumers that use the Global Blue app throughout history.
And the product is going to be quite differentiated from what these SMB merchants have historically been used to dealing with. So that’s kind of the early plan, is this SMB. And obviously, the really nice logos to win are all there for us as well, which is kind of the big global enterprise.
Unidentified speaker, Analyst, RBC: Yes. That’s going be awesome. It’s going to be awesome. So let’s talk about just the timing of the deal closing and then any other kind of regulatory approvals or hurdles that we need to be mindful of.
Taylor Lauber, CEO, Shift4: Yes, sure. So there’s one regulatory approval that we’re waiting on, which is the Bank of Italy. It’s their money transfer license. It’s a pretty perfunctory thing, but you do have to wait for the approval process. Just to remind everyone of kind of the expectations we set, I think originally at the time of the deal, it was second half.
We refined that to Q3. We refined that to early Q3. We were on track for that.
Unidentified speaker, Analyst, RBC: Okay. So no change there? No change. No change in terms of whatever’s happened at the organization right now with you It’s all steady state. That’s great.
So I wanna talk about, kind of visibility, but, you know, we get we get a lot of conversations going, with clients around, 25 guidance feeling a little conservative, I guess, is what people would tell me. And so since we’ve got you here, how do you think about the cadence and the trajectory and visibility that you have as you’re sitting here today, having set the 25 tone?
Taylor Lauber, CEO, Shift4: Yeah. We think it’s highly achievable, and that’s, I think, appropriate given everything that’s going on in the world is to set the level of expectations. So Jared mentioned this in his letter. We’re certainly on track for everything we’ve laid out. It does not include Global Blue, so we’ll have to adjust when the Global Blue transaction closes.
But that should, you know, be positive, which is great.
Unidentified speaker, Analyst, RBC: Yep. So nothing nothing to say otherwise. No. It’s positive.
Taylor Lauber, CEO, Shift4: So you’re boring. Unfortunately, boring You’re at high margins. That’s fine. That’s fine.
Unidentified speaker, Analyst, RBC: I wish I had invested in boring for a longer period of time. So the r and d dollars. So you guys talked a little bit about about this in terms of the Investor Day that you had. And then and you talked about, I think it was six times the amount of investments that you’ve done over the past, maybe three or four years. Yeah.
So where are all these dollars landing? I mean, I know when you’re doing, you’re putting money into these M and A activities after the fact, but like where are these M and A dollars going? And kind of what is that expected trajectory as we think about R
Taylor Lauber, CEO, Shift4: and Yes. So it’s more finite than it sounds, right? It’s the SkyTap product is a significant portion of our R and D investment. International expansion is another, and that comes in a few different flavors. It’s generally bolting on payment methods that are used all over the world, settlement methods as well, making sure merchants get their money in the ways that they’re accustomed to getting it as frequently as possible.
And then international expansion on the back of a handful of big global e commerce customers that are putting us in countries we otherwise wouldn’t be in before. I think I mentioned this recently. We were in one country twenty months ago. We’re in over 50 with payment processing capabilities now. Believe it or not, that’s like a much smaller team that’s focused on that, but they’re delivering on behalf of a handful of clients.
And again, these are just more markets that we get to assess the opportunity for our core verticals once we’ve lit them up.
Unidentified speaker, Analyst, RBC: Yes. Okay. So like recession fears have appeared to have abated for now. But it still begs the question of like the cyclical nature of your business. How do you think about that?
A lot of people think about more or less the idiosyncratic growth opportunities that just get stacked on you guys. And so maybe just talk to that point a little bit here.
Taylor Lauber, CEO, Shift4: Yes, sure. I’ll start with the investment community tends to get this wrong, meaning that they tend to lump consumer discretionary as this like giant bucket that when things get dicey, everyone pulls back. That’s not how consumers behave. It’s not how anyone in this room behaves when they’re uncertain about their own future. What tends to happen is the longer you take to think about a purchase, the less likely you are to make that in a time of uncertainty.
Houses, then cars, then furniture, then consumer electronics, then fashion. A restaurant is like a day of, maybe a week before decision. You still make that decision. You tend to pull back a little bit on price, but the restaurant vertical is highly adaptive to that. When the 100 stake doesn’t sell, they present you another option.
And so it’s just far less dramatic than I think investors typically assume. And yet, you can go back and look at consumer spending data throughout multiple times throughout history. Visa makes all this very available and you find that there’s modest pullbacks in these verticals despite being consumer discretionary. So we can take confidence in knowing that real strong economic hits will not manifest themselves one for one in our merchant base. The trade off, by the way, is when things are euphoric, you don’t get mega same store sales growth.
These are just kind of established businesses with good models. It’s fine because we’ve always experienced this, and we know the only way we’re going grow is add customers. Yeah. Period. Full stop.
And so we make sure that whether it’s our M and A strategy or our direct go to market, we’ve always got a really, really large base of customers to go access in times of economic uncertainty because one thing does happen when the world gets less certain is you don’t make decisions as a business as fast as you would when things are going great. So economic uncertainty is something we kind of embrace and make sure the business is well positioned to offer things like consolidate products, cross sell merchants, save them money, reduce complexity because they care a lot about it when their own business is down a few digits of
Unidentified speaker, Analyst, RBC: 100%. All right. So post Global Blue, I think your leverage, and I think what you said, net leverage at the end of ’twenty five, again, Global, like 3.3 turns, somewhere thereabouts. So it just begs the question, is M and A still in the cards? You have to digest this thing for a little while.
Are you just going to lean in some buybacks? Like, how should we be thinking about those opportunities still?
Taylor Lauber, CEO, Shift4: Yes. It’s the right question, although I would say we rarely get to choose when we do M and A. And no matter how many times I tell investors this, they don’t believe it. Every single transaction we’ve done over the last two years is something we worked on as far back as five years before that. So if you’re really disciplined about your acquisition model, it’s not always up to you when the criteria are met.
Yeah. But when the criteria are met, you have to challenge yourself as to why you should be doing this, and you should probably be doing it. So we maintain the team. We maintain the list of opportunities. We pursue them all with the same vigor that we would have before.
We raised about $3,000,000,000 $3,300,000,000 of capital for the Global Blue transaction, plus to extend some maturities. Yes, we had $20,000,000,000 of interest. So we’re not going to kind of lose that M and A muscle for the sake of our short term leverage ratio, but we’ll be very disciplined about how the next dollar gets deployed.
Unidentified speaker, Analyst, RBC: Yeah. So we got just thirty seconds. So just on that debt raise, it was pretty unique, right? Yeah. You had euro, convert, you had variable, you had fixed.
So, like, just two seconds on the structure of that thing because it it speaks to the growth of this company’s plans, I think, longer term Yeah. Is what I read into it.
Taylor Lauber, CEO, Shift4: Well, we we just had a bunch of priorities going into it. One was leverage ratio. It was preserve optionality into an uncertain future. And so we weren’t going to take on more traditional debt than we thought the leverage ratio was appropriate. So we said we’re going to be at 3.6 times on a traditional leverage ratio metric, meant some preferred into the stack to raise capital around it.
I think it’s a healthy discipline for the company that we’ve managed equity dilution incredibly responsibly. I think since we’ve been public, shareholders have been diluted about 15%, and yet we’ve delivered 10x the EBITDA inside of that. So we manage dilution prudently, and we’re not afraid to use a little bit of dilution when it matters. And if it turns out we didn’t need that capital, we will absolutely buy back stock and manage dilution that much further. So we did term loan, which gave us access to floating rate prepayable debt, which we thought prudent.
We did Euro, which kind of helps balance out the proportion of the revenues that are becoming are going to be coming from Europe. And then for the rest, we did this preferred instrument that gives us just a lot of flexibility in terms of future dollars deployed.
Unidentified speaker, Analyst, RBC: Awesome. We’re out of time. But, Taylor, thanks so much for being Congratulations on the new appointment. And there’s a lot of great things that are happening at this company. So I’m super excited to see where this goes.
Thank you. Thank you. Good to see us.
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