Welcome to today's Shift4 Payments second quarter 2021 earnings call. My name is Jordan, and I'll be coordinating your call today. If you'd like to ask a question, you may do so by pressing star followed by one on your telephone keypad. I'm now going to hand over to Sloan Bohlen to begin. Sloan, please go ahead. Thank you. I'd like to welcome everyone to Shift4's earnings conference call for the three months ended June 30th, 2021. Before we begin, I'd like to remind everyone that this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding management's plans, strategies, goals, and objectives, the expected impact of COVID-19 on our business and industry, including with respect to the economic recovery, increases in vaccination rates, the reopening of the country, and any volume recovery by us, gateway penetration and spend seen by our gateway merchants, expectations regarding new customers, acquisitions, and other transactions, and anticipated financial performance, including our financial outlook for the year ended December 31st, 2021. These statements are neither promises nor guarantees but involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results. Performance or achievements expressed or implied by the forward-looking statements factors discussed in the Risk Factors section of our annual report on Form 10-K for the year ended December 31st, 2020, as updated by our quarterly report on Form 10-Q for the six months ended June 30th, 2021, and our other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made on this call. Any such forward-looking statements represent management's estimates as of the date of this call. While we might elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. In addition, we may also reference certain non-GAAP measures on this call, which are reconciled to the nearest GAAP measure in the company's earnings release, which can be found on our investor relations website at investors.shift4.com. With that, let me turn the call to our Chief Executive Officer, Jared Isaacman. Thank you, Sloan, and good morning, and thank you all for joining us. As you saw in our pre-announcement a few weeks back, we achieved reasonably strong results for the quarter, setting new records for end-to-end processing volume, gross revenue less network fees, and Adjusted EBITDA. Specifically, we reported end-to-end volume of $11.8 billion. To put it into perspective, that is nearly 3 x the same period last year and is more than double the same period in 2019. Similarly, we grew gross revenue less network fees to $136 million, or 81% compared to the same period in 2019. Gross revenue less network fee growth in the second quarter was up 40% compared to just a quarter ago. As was the case last quarter, the majority of our growth was the result of new and larger merchants joining our platform over the last 12 months. Volume growth also improved as expected as the country continues to reopen. Consistent with our volume growth, we are driving a higher mix of our revenues from net processing fees as more and more of our gateway customers migrate to our end-to-end solution, which, as you know, represents significant increase into our profitability. Overall, when we look at our top-line growth, the second quarter is a great example of the multiple ways Shift4 can grow. Our model has inherent operating leverage, evidenced this quarter by the improvement in our Adjusted EBITDA margins. Second quarter Adjusted EBITDA margins came in at 33%. We are driving margin improvement while simultaneously making investments supporting our expansion into new verticals, including the introduction of many new digital capabilities. It's also worth reiterating that several of our acquisitions were EBITDA neutral to negative but are expected to contribute meaningfully as we execute on our integrated payment strategy and unlock revenue synergies. To put it more plainly, we believe there is embedded margin uplift as our new vertical strategies ramp and scale. With that, let me update you on a few strategic initiatives we are pursuing at Shift4 and a few exciting new merchant wins from the second quarter, as well as a little color as to where we are going. Tao Group, which owns many of the most recognizable restaurant and entertainment venues around the world, selected Shift4 as its end-to-end payment solution provider for all of its U.S.-based venues. TAO selected Shift4 not only for our holistic solutions package but also for our contactless and mobile payments technology, which was critical for their nightlife venues in this current environment. This win should really not be that surprising. As an integrated payments company that focuses on the most demanding environments in commerce, including hospitality and F&B, Shift4 is in an advantaged position for opportunities like TAO Group. What should be surprising is our notable wins in online, in-venue, and the overall regulated gaming market. We, of course, have stated our intentions to pursue this exciting vertical for some time, mostly leveraging our incumbency in many casinos around the country, as well as our mobile capabilities in sports stadiums. That stated, Shift4 should have been viewed as the underdog relative to other payment companies that had existing customer relationships and payment capabilities from the more mature European market. That stated, we announced a preferred partnership with BetMGM to power their online gaming and sports betting transactions. Similarly, through our partnership with Sightline, Shift4 has a growing capability to facilitate regulated gaming transactions both online and in venue, such as our cashless casino payment experience that we expect to roll out at Resorts World Casino in Las Vegas. While we have not been putting out press releases each time a state approves Shift4 for a gaming license, know that we've been accumulating licenses at an accelerated pace. In addition to significant accomplishments in gaming, stadiums, and hospitality, you will find other wins in our materials, including reference to some e-commerce merchants that were the result of our acquisition and ongoing enhancement of the Shift4Shop platform. We continue to see growing adoption of the product, and since the acquisition, we've added over 36,000 new web stores. Now, with over 50,000 businesses on the platform as of June 30th, Shift4Shop has grown its merchant base over 230%. It's worth pointing out that it's a long road from a web store creation to a merchant processing transaction. As such, we are evolving our Shift4Shop strategy to include, A, aggressively prioritizing new user experience, restaurant and hospitality-specific themes with tight integrations to our POS platform, and I'm going to talk about that in just a minute, as well as our online ordering capabilities and other marketplace initiatives like capital offerings. B, simultaneously pursuing partnerships that will accelerate Shift4Shop's entry into new geographic markets, risk management tools, and capabilities like crypto acceptance that we have recently released. This two-prong approach of organic development initiatives supported by strong strategic partnerships will meaningfully accelerate our roadmap objectives and the overall momentum of Shift4Shop. I spent a good amount of time talking about recent performance and accomplishments. Before turning things over to Taylor, I would like to take a bit of your time to talk about where we're going. Our organizational priorities are as follows. Number one, leveraging our 350 unique software integrations to pursue $150 billion of gateway volume, as well as the rest of the market that relies on these same integrations. This is without question playing to our immense strengths in verticals where it's very hard to replicate Shift4's capabilities. As many of you know, the gateway conversion opportunity that is embedded in our business is probably the single biggest point of difference between Shift4 and virtually every other fintech player in the market. In order to achieve our objectives, we're going to continue to make investments in our products and capabilities to solve pain points for these customers as further incentive to move to our end-to-end platform. Some of these investments take the form of internal systems, customer self-help capabilities, automation, and other solutions to deliver a better experience for our merchants and the thousands of software partners that support them. Two, we are about two quarters away from releasing our next-generation restaurant platform. I say platform because this is more than just a new point-of-sale application. It's an entire experience-based platform for restaurants and their patrons. We are leveraging our immense expertise in the restaurant industry, along with feedback from roughly 1/3 share of the F&B market that our technology is presently touching today, to deliver a platform that will have a major emphasis on QR and other contactless means to pay, a tighter online ordering experience with our products, as well as third-party delivery providers, a modern, low-cost, and reliable architecture, business intelligence, analytics, and a marketing engine to drive loyalty and frequency from patrons, all wrapped up in a sexy mobile-optimized hardware. We're building an ecosystem around this platform to include payroll, capital offerings, and other solutions we think restaurant owners will find helpful. We expect to go to market with this solution in late Q1 2022 through our vast network of sophisticated and aligned distribution partners capable of selling and supporting merchants at a local level. This will enable us to pursue an upgrade opportunity with our existing customers, driving incremental SaaS revenues, and winning further share of what is an enormous and exciting market. Three, w e're a company that has created a lot of value over the years through a disciplined but aggressive approach to M&A when the right inorganic opportunities present themselves. Our momentum adding new merchants in adjacent verticals such as stadiums and e-com is proof we can successfully identify the right strategic assets to complement our business. We recently completed another convertible bond offering that significantly increased our cash position. We would not have gone down this road if we were not gaining some measure of confidence in our pipeline of opportunities. As we progress, our roadmap of opportunities is immense. The three priorities I referenced above really just scratch the surface. We're adding capabilities to our existing payment platform that enable further scale and a right to win in new verticals, and even taking us organically into new geographies. With that, let me turn this call over to Taylor Lauber to give you some additional color on our volumes through the summer, as well as some of our recent announcements in sports and entertainment. Taylor? Thanks, Jared. Good morning, everyone. We exited the very strong quarter with solid momentum and remain optimistic that we are returning to a more normal seasonal cadence by the end of this calendar year. For example, July end-to-end payment volume was approximately $4.7 billion, as we continue to benefit from a larger base of merchants, and those merchants benefit from increased spending. This continued merchant growth is important to spend a moment on because I think oftentimes our dominance in hospitality and restaurants can give the misperception that we are an economic recovery play from an investment standpoint. Note that we exited Q2 with roughly 7% more active merchants than in Q1. This merchant growth of between 0.5% and 1% per week has continued through July. We would note that forecasting, specifically with regard to seasonality, is quite difficult when you consider the impact of merchant growth, new industry verticals, and increased spending as a result of economic recovery. Regardless, it's safe to say that although volume levels are improving, some pockets of our merchant base continue to be impacted by COVID. Barring any material new COVID-imposed restrictions, we expect our third-quarter volumes to continue benefiting from seasonality and the momentum we have in our business, followed by a more typical seasonal moderation heading into the fourth quarter. As Jared noted, we continue to sign new stadiums within the sports and entertainment market, and we are excited to see a return to live sporting and entertainment events. Some of our stadium clients have already hosted live events. For instance, last month, Allegiant Stadium in Las Vegas opened to a full-capacity crowd attending an entirely cashless Garth Brooks concert. Also, as we mentioned in our release, Shift4 was selected by Chicago's United Center to power all payments throughout their venues, including integration with the Bulls, Blackhawks, and United Center mobile apps. In addition to our previous wins, these new merchants represent proof points that our value proposition to provide stadium clients with a best-in-class in-venue mobile shopping experience for their fans, including everything from pre-game ticketing to in-seat ordering and scan-on-the-go merchandise. We remain active in the market evaluating M&A opportunities and continue to view acquisitions as part of our growth strategy. The success we had with VenueNext and Shift4Shop, including our recent partnership with Sightline, has helped build upon our already strong reputation in the marketplace as a visionary partner. With that, let me turn the call over to our CFO, Brad Herring, to review our financials. Thanks, Taylor. Similar to last quarter, the numbers I'll be referencing are included in the release we distributed this morning. I'll start with a few quick comments. First, we are very proud to mention that Q2 represents a record quarter for Shift4 across all of our key measures, including process volumes, merchant counts, revenue production, and profitability. Second, because of the impact of COVID on Q2 2020 results, I'm going to focus more on relevant comparables such as sequential growth over Q1 and variances against Q2 of 2019, which represents our performance prior to COVID. As highlighted in our release, we generated $136 million of gross revenue less network fees in the quarter. This record figure represents a 40% increase compared to last quarter and an 81% increase over Q2 of 2019 pre-COVID levels. The continued growth in revenues over the first quarter was mostly due to a 54% increase in net processing revenues driven by new merchant boardings and further recovery in consumer spending. Net processing revenue now makes up 68% of gross revenues less fees, up from 61% from the previous quarter as we continue to monetize our services through adoption of our end-to-end solution. Gateway and SaaS other revenue streams both grew double digits from Q1 due to the recovery of the hospitality merchants on the Gateway and continued growth in the merchant base. Q2 spreads landed at 78 basis points, increasing three basis points from what we reported in the first quarter. The increase over last quarter is a net of the normal seasonal lift of 3 to 5 basis points we would expect, combined with a 1- to 2-basis point sequential quarter decline we have signaled due to our continued shift toward larger end-to-end merchants. With regards to profitability, we reported a record $45 million in Adjusted EBITDA for the second quarter. This represents a 65% increase over Q1 reported results when adjusted for the impact of the credit loss that we absorbed in the first quarter. It also represents a 67% increase over Q2 of 2019 pre-COVID levels when we normalize for consistent accounting treatment of equipment leases. As Jared mentioned, our second quarter results represent an Adjusted EBITDA margin of 33% against gross revenues less network fees. This represents 10 percentage points of margin expansion over Q1's Adjusted EBITDA margin, or 5 percentage points when adjusted for the impact of the $5.2 million credit loss from Q1. Our margin trends continue to benefit from improved revenue generation and associated scale benefits within the cost structure. It should be noted that the recent acquisitions of 3dcart and VenueNext negatively impacted Q2 margins by 240 basis points as we continue to shift their pre-acquisition revenue streams to our spread-based monetization model and integrate these businesses into our operating structure. We reported our first quarter of positive GAAP net income since our IPO. As a result, you will notice we've included an additional section in the table on page 11 of our press release reflecting the dilutive effect of unvested restricted stock and the outstanding convertible notes. For purposes of calculating adjusted net income per share, we continue to use a more conservative non-GAAP diluted share count that includes Class B shares. As a result, for the second quarter, our adjusted net income per share of $0.22 is based on non-GAAP weighted average diluted share count of 85.1 million shares. We did not execute on any significant capital transactions during the quarter. However, we issued just over $630 million of convertible debt in late July. With regard to liquidity, we ended the quarter with approximately $700 million in cash and approximately $100 million of available capacity on our revolving credit facility. Notable for the quarter is a cash outlay of approximately $120 million for employee tax withholdings and payroll taxes on 3.1 million shares of stock that vested on the one-year anniversary of our IPO. 80% of these shares were issued at the time of the IPO with a one-year vesting period, so this is not representative of typical cash outlays related to our equity-based compensation plan. On to updates for our annual guidance. To start, we are increasing our full-year volume guide by $2 billion to a range of $46 billion-$48 billion and increasing our full-year gross revenue guide by $100 million to a range of $1.3 billion-$1.4 billion. We are increasing our full-year gross revenue less network fee guidance by $20 million to a range of $500 million-$510 million. This increase is coming from the incremental processing revenue generated by the raise in volume. EBITDA, we are increasing our annual guidance to land between $175 million and $180 million. The increase of $10 million over prior guidance is from an assumed 50% pass-through rate on the incremental processing revenue mentioned earlier. We use 50% versus a gross margin of 57% due to continued investments in OpEx related to technology scaling efforts and additional staffing to support new verticals. Lastly, we would note that our new outlook ranges do not contemplate any potential economic slowdown or further lockdowns due to the COVID-19 Delta variant. As of now, we do not anticipate any significant negative impact, but we'll update you all if needed. With that, let me turn the call over to the operator for your questions. As a reminder if you'd like to register a question, please press star, followed by one on your telephone keypad now. If you change your mind please press star followed by two, and when preparing to ask your question, please ensure your phone is unmuted locally. Our first question comes from Darrin Peller of Wolfe Research. Darrin, the line is yours. Hey, thanks guys. Congrats on these results. When we look at the results, what is the driving force of what we saw was a very, I think you said, 7% new merchant growth sequentially? What does that translate to when you think about it on a YoY basis? When we just try to break out the strong volume, even further acceleration in July, I think you said it was $4.7 billion, hitting more than the $1 billion per week. How much of that is reopening versus the new merchant growth you're seeing? Hey, Darrin. Thanks for the question. This is Taylor. I think what's great to see about the 7% sequential growth was that if you recall, we had 4% month-over-month growth in April over March, right? That's a really important number to ground on because you still had reopening going on, especially within the hotel space as spring break started to occur. Seeing seven on a consistent basis over the quarter really goes to show you that merchants are joining, right? That's not a hotel that had closed and reopened for spring break for the first time. This 0.5%-1% a week, it sort of bumps around a little bit in between those two ranges, is a consistent number that we've seen joining the platform, quite frankly, going back to even before the pandemic. Right. To see it continue is, I think, really a testament to the quality of the product offering. The mix has augmented slightly, but I think what's really important to understand is that the real new markets are not yet active contributors. You'd have, for example, a small handful of stadiums doing one event or so in July, not in that count at all. When they show up in our July reported numbers, next quarter, what you're going to see is a lot more volume per site out of them. I think the July numbers shouldn't be a surprise, right? When you're adding merchants at this pace from the larger merchants, you should continue to grow. I think the one thing we just want to be mindful of is that in the fourth quarter, we typically see a seasonal slowdown, right, across all of our merchant base. We want to be cautious that $4.7 billion is a number we're exceptionally proud of. We do want to be mindful in the fourth quarter that you see typically a slowdown within your existing base, but we're not seeing a slowdown in merchant adds. All right. That's really helpful. Obviously it's a mix. When you think about that kind of growth on a YoY basis, it's obviously a lot more than just the reopening when we think about the number of merchants. If I remember correctly, it was over 20% or 25% YoY trending last quarter. It almost seems like it's accelerated a bit to some degree on a YoY basis. Quickly, just on the yield, when we think about what the kind of volume that's coming on is and the yield, and generally, are we still confident in the 50 basis points or greater for the larger merchant category and maybe 70 to 80 basis points averages going forward? Thanks again, guys. Hey, Darrin, this is Brad. I'll take that. You're exactly right. The 50 number we talked about last time is certainly a floor. What we're seeing is certainly a mix across the board, across the spectrum of merchants. While we are adding some of these large merchants in those 50 ranges, we are certainly adding, we continue to add restaurants. We continue to add specialty retail merchants in the 80 to 100 basis point range. It'll blend back down to a book rate. Great. All right. Thanks again, guys. Our next question comes from David Togut of Evercore ISI. David, please go ahead. Thank you. Good morning. You've clearly underscored the strength of your liquidity and a number of opportunities in the acquisition pipeline. Could you talk through your focus in terms of acquisition? Would this be in terms of adding new horizontal capability, like a 3dcart or going more deeper into existing or new verticals like a VenueNext? Yeah. Thanks, David. Good morning. Jared Isaacman here. Good question. I'd say the story is really unchanged. We've continued to say that we have a pretty healthy pipeline that Taylor's team has been developing. It really can go in a number of directions, right? Like on one end of the spectrum, you have the big transformational type acquisitions we're looking for a la 2017, when we acquired Shift4 and began our gateway strategy. In which case, we could be talking about moving into new geographic markets, extending our reach there. We could be talking about an exciting new vertical that kind of shares some of the characteristics that we found very helpful within our current core markets, like multiple different types of software to deliver a commerce experience. That's where we typically would want to focus. You kind of flip to the other end of the spectrum where you're talking about smaller transactions consistent with some of our last deals like VenueNext, like 3dcart, which is now Shift4Shop. You could be talking about entering into new verticals. You could be talking about accelerants within our existing verticals. For example, we did an acquisition almost a year ago, maybe a little less than that, which was MICROS Retail Systems. It was a ProServe company, and it helped pull forward a lot of our growth within our current markets, as well as accelerate some of our gateway conversions as well. I'd say those are really all on the table, and nothing really has changed as much, other than you may have noticed in some of my remarks that even things like moving into new geographic markets, which probably we would've said on other earnings calls, would've been favored more in terms of an inorganic initiative. We wound up just allocating some of our dollars towards that, and we're already right now doing some things in the Caribbean. We're already looking to develop that further to add the additional acquiring-type capabilities. That was an entirely organic initiative. Even though we have some wish list items, and we certainly have a lot of firepower to deploy against them, we're not slowing down on the organic side either. Great. I appreciate that. Just as a follow-up question, Brad, I just want to confirm just the guidance methodology. Historically, you've excluded the impact of acquisitions from future guidance, and in the first quarter, you also excluded the impact of any stadium-related volume. As we think about the implied second half guide, does that still exclude acquisition impact and stadium volume, or are those now baked in? No, hey, good question. No, when you look at the back half, we still do not have any assumed additional acquisitions targeted for Q3 and Q4 embedded in that guide, nor do we have significant stadium volume. Taylor mentioned what's coming through now is measured in hundreds of thousands of dollars. No, we do not have a significant ramp at all coming in from the stadium vertical. Just to clarify, David, we do obviously have the expense base, right? This has been a theme we want to make sure is crystal clear. We have the full annualized impact of the expense base of VenueNext and Shift4Shop, and the MICROS business that Jared mentioned. The OpEx does reflect sort of the incremental employees. Understood. I appreciate the clarification. Thanks so much. Our next question comes from Ashwin Shirvaikar of Citi. Ashwin, please go ahead. Thank you. Hi, Jared. Hi, Taylor. Brad. Good morning, and congratulations on the quarter. Thanks. Sure. I wanted to ask with regards to the outlook, what's embedded, sort of what gets you to the high end versus the low end? You mentioned cadence, I think, in one of the responses here for Q growth being a little lighter. Obviously, when we look at the past, both 2019 and 2020, it's a little difficult to figure out what true seasonality is. If you could comment on how you're thinking of that with respect to your outlook. Yeah, sure. I'll start. I think it's important to note that we continue to be conservative in our volume guide. This is always evidenced, hopefully, by the fact that when we're guiding, annualizing recent trends gets you beyond those guides. There's not a lot of science in the range, except that we think it's prudent to give a range. There's the cautionary statement, which is we see much more normal seasonal patterns this year. We talked about depressed payment volume leading up to the middle of February, and then a strong increase in March, and then a strong increase again in June, sustained through the summer. We would expect, to the extent that the first half of the year, first seven months of the year, have expressed normal seasonal patterns, that the fourth quarter looks seasonally normal as well, meaning that payment volume per site declines during that quarter. I think the ballast to that, right, is our strong merchant growth. The ballast to that are things like fall sports events and stadiums that we don't include in our guide because it's a bit unknown. I think the methodology on our guide hasn't really changed much from what we've done in the past, which is point to the most recent evidence and add some conservatism for the months ahead, given what we've seen in the merchant base. To the extent that our offering continues to outperform and merchants join at the strong pace, then we hope we'll do better than what the guide suggests. Understood. In the past, you've often talked about if volumes came back for existing clients and merchants to, say, 2019 levels, it would result in 20% higher, 25% higher outcomes. Where do we stand now, given we have seen quite a bit of a recovery already, if you can comment about that? Yeah. I'll take this one, only because I'm probably responsible for the very unclear statement in our prepared remarks on it because it's hard math to do. I think you have to look at pockets of the merchant base and analyze them on a case-by-case basis. I would say restaurants in general, from a payment volume perspective, are looking reasonably good. You can see this in things like the Visa, Mastercard, or the American Express category spend data. However, the way it manifests itself is higher prices as opposed to fuller occupancy in most parts of the country. There is higher prices per merchant. Average ticket volumes have gone up in a bunch of different places across our book. It's hard to pin down precisely a recovery of occupancy versus a recovery of ticket prices or ticket prices, quite frankly, going beyond where they would've been pre-pandemic. I would say the hotel space still at a macro level is depressed, although at a more regionalized level, hotels are seeing really good tourism behavior ex-international. We're seeing pockets where volume in certain cases is above where it would've been pre-pandemic. In other cases, it's still substantially below when you think about international-heavy markets and tourism-heavy markets. It's why we sort of keep pointing people towards the merchant count growth because, if anything, in a world where you've seen a pandemic impact our end markets really, really significantly, the idea that we can point to between 0.5%, 1% active merchant count growth every week throughout that timeframe, that's what we like to rely on in terms of predictability. Whether sustained higher average ticket values continue, whether occupancy grows, these are all things that, quite frankly, it's just too hard to predict. Got it. Thank you for that. Appreciate it. Our next question comes from Timothy Chiodo of Credit Suisse. Tim, please go ahead. Great, thanks a lot. Thanks for taking my question. I want to dig into the NextGen restaurant platform that is coming in a few quarters and just talk about that opportunity there. It seems like a great new tool to give to the bars that would be attractive to them in terms of how they allocate their time in selling and just in recognizing that they have options. Also when we think about it as a way to attract new SMB restaurants, but also is there an opportunity for an upgrade within your existing base that might either be take rate supportive or take rate accretive in some manner? Hey, Tim. Good morning. Jared Isaacman here. Great question. The answer is really yes all around. It's certainly an opportunity to empower our immense distribution network to simply just go out, differentiate, and win in what is a huge market. We touch a third of the restaurant market today. We don't have the end-to-end processing on a third of the restaurant or F&B market today. They're using some form of payment technology, which is a foot in the door and an opportunity to have a conversation, opportunity to convert gateway volume to end-to-end. There's still the other two-thirds of the market out there, which is pretty exciting. It's an opportunity for us to go out and win share in the market. It's an opportunity to upgrade existing merchants that are within our immense base of customers today. In doing so, that's certainly going to create incremental opportunities from a SaaS revenue perspective. It's an opportunity to drive gateway to end-to-end volume conversions. Then it's an opportunity as well to just tap into a lot of revenue opportunities in the broader payment application ecosystem. We've talked about in the past that if you look at the size of our customers and certainly the direction we're going, does Shift4 have an opportunity to really get involved in payroll and potentially monetize the relationship to a customer that way through other HR services or capital offerings? As we look to this new restaurant platform that we intend to roll out pretty soon, and it's already in betas right now. It's actually beyond betas, I would say. It's hitting a pretty substantial number of customers. It is an opportunity for us to dive into that broader ecosystem. Other things I'd say too is if you look at some of the applications that will be, I don't know, spearheading what we're describing as this customer patron-first approach, like QR code-based payments and what we've been doing with SkyTab. You're accumulating a lot of information on consumers. When I say that, meaning email addresses for various marketing and loyalty-based applications. It puts Shift4 in an interesting spot where we can start looking at things that otherwise wouldn't have been available to us. Not totally going like playing two sides like maybe some of the other organizations, but certainly an opportunity to get a little bit closer to it than we have been in the past, if that makes sense. It absolutely does. Thank you so much for all that context. I appreciate it, Jared. Our next question comes from Mike Colonnese of Bank of America. Mike, the line is yours. Hi. Good morning, guys. Nice quarter all around, and congrats again on the one-year anniversary here since the IPO. My question is on the revised outlook for 2021. If I take a look at the midpoints you provided for net revenue and end-to-end volumes relative to the prior outlook, I'm coming up with incremental spreads of 1% by taking the $20 million in incremental revs divided by the $2 billion of incremental volumes for the year. I guess what factors are driving your spread assumptions higher compared to the prior outlook? Yeah. Hey, Mike, this is Brad. I'll start off with saying one of the things we learned was the conservative spread outlook last quarter, we probably undershot when we talked about the 50 basis point add. When we approached it this quarter When we raised guidance, we wanted to make sure we were more reflective on the spread side. When you think about how that $2 billion is going to convert to $200 million, the majority of that is certainly coming through processing revenue. We called in that 80-basis-point range, right? It's going to blend down, like I mentioned with Darrin a little while ago. You've got new stuff coming on at a floor of call it 50 basis points. You've got numbers of merchants still coming on in the 100-80 basis point range. It's going to blend down to more of an 80-basis-point range. You also do have some lift in the guide related to some of the non-processing revenues. You've got some slight lift in the gateways that recovered a little bit quicker than we thought, and some slight lift in the SaaS revenue. If you think of the $20 million, the vast majority of it's processing, but there are some other components that are non-spread related. That's very helpful. Thank you. Yep. The next question comes from James Faucette of Morgan Stanley. James, please go ahead. Thank you very much. Good morning, everybody. I wanted to touch on a couple of little bit of details, is that first, obviously, the rate at which you're adding new customers is really impressive. I'm wondering if you can give us a little bit of color of where those are coming from. Are these new businesses? Are they coming from other providers? Just kind of wondering where you're taking those new customers from. Hey, James, thanks very much. Good question. Jared Isaacman here on this one. This comes back to really just a foundational component to the Shift4 story, which is on the more complex end of the commerce spectrum where we play, there's really only two other platforms that have the software integrations that are capable of really competing with us. It's so important to understand that, right? The payments landscape is huge. Probably everybody thinks that everybody has some right to win, especially as you move up into that more upmarket end of the spectrum. It's really just not the case, right? In a world of integrated payments where you're connecting software to a payment platform, especially multiple different types of software, we're talking about specialty retailers or ski resorts or big hospitality resorts or complex restaurants like Tao Group, for example, that we referenced in our prepared remarks. There's only three platforms that have those software integrations that would be able to compete for that business. That's really the case on the whole upper end and more complex end of that commerce spectrum, and Shift4 is one of them. Now, we've said for a while we own more links in the value chain than any other payment provider. What does that mean? We just have more tools available to us to differentiate when we're already afforded a seat at the table. Things like QR code-based payments and contactless payments and mobile payments and online ordering, we own all of these capabilities already. We just have so many different levers to pull, so many incentives and carrots as inducements to make available to these customers to move over to our end-to-end platform. It's a very powerful value proposition because it really comes down to taking out a lot of complexity, which means taking out a lot of costs, which was important to our customers in the best of economic times before the pandemic. It was obviously very relevant to them through the pandemic because we were adding a lot of customers and actually growing volume during such a challenging time period. That's what we just continue to do as part of our ongoing strategy, recognizing we're in such an advantaged position. We look for capabilities to further differentiate. We look to take the strengths that we have in this complex end of the market and bring it into other comparable verticals like sports entertainment and theme parks, and do exactly the same thing right now. Really, we're in a competitive landscape with few, and we're able to differentiate in a very effective way, and that's why we're growing customer count, which is contributing volume. The one thing, James, that I just want to be very specific on because there was a comment by Jared during the prepared remarks. When we say active merchant count growth, that is merchants producing volume on our rails, and that's really important, right? When a stadium signs up and they don't have an event yet, that's not included in that count. When a web store is built, unless that web store is actively selling product every week, it's not in that count as well. All Jared's comments ring true. There's not a lot of the sort of emerging markets in that count yet because these are things that we're still growing. Even though we're adding customers, until the volume comes through, it doesn't show up in that incremental totals. Got it. I guess kind of a somewhat related question to your comments, Jared, in terms of the capability and the speed at which you're adding capabilities. Clearly, we've looked at and you have been very successful in finding acquisitions to add in to the capability stack of Shift4 over the years. If you're unable to or you're not finding the things, solutions that you want in the market that you can acquire or that kind of thing, should we think that it might make sense to increase R&D or spend elsewhere to try to continue to improve the advantages of Shift4 more aggressively? Or do you think that you can still continue on the strategy and capital allocation path that you have in the past? I think the answer is we're doing both. We certainly like M&A. I think we've been pretty successful at it over the years. We've done a number of transactions that have unlocked a substantial amount of value, and we continue to look. The other thing too is we're not going to be pressured to do a deal that we're going to regret. I know a lot of us here, myself included, we consider this like a life sentence. We don't want to do a transaction two years down the road where we're kicking ourselves for it. We're trying to remain pretty disciplined in that regard. What happens is we identify an opportunity, and if we can't solve for it in a way that an M&A transaction could, we just prioritize an organic initiative. A good example of that is what we did with Pay at Table, Order at Table, which is our SkyTab product that was a solution we released in 2019 that really took off during the pandemic and continues to be one of the strongest technology initiatives that we've gone to market with. The reality was is every solution that was out there that we would look at from an inorganic perspective was just no good. That was why Pay at Table, Order at Table just never took off in the U.S. market for 20 years, even though it was predicted. In international, I think pretty much every earnings call since we've been public, somebody asks the question about what are you doing to enter into new markets. We point out that we have a lot of customers that have international presence, and that this is not. We're very aware of the opportunity in front of us. We just don't want to be pressured into a bad deal. What did we do? We prioritized some internal resources to start expanding our reach slowly. We didn't organically make a leap across the Atlantic into Europe. We're starting to do more things in, say, the Caribbean markets. We're learning from it, and it's an organic initiative, and we'll see if we want to continue to fund that to potentially take us in even farther geographic areas. The answer is we're just balancing both. If something gets us really excited and we think we can create a lot of value with it, we're certainly happy to allocate dollars in that direction. If not, we're able to achieve an awful lot of really powerful things in terms of our organic investments. Appreciate that. Thank you. Our next question comes from John Davis of Raymond James. John, please go ahead. Hey, good morning, guys. Jared, I just wanted to touch on a comment I think you made that I wanted to clarify in the prepared remarks. The gateway volume was now about $150 billion. I think if we go back a year at the IPO, it was $185 billion. Just curious how much of that has been converted? If you don't have an explicit number, just maybe an update on gateway conversions. Yeah, let me just clarify, and then Jared can talk about the conversion pace. We just referenced the stat that we gave on our last earnings call. That was a March annualized number of $150 billion of gateway volume. We haven't refreshed that for the second quarter any. Yeah. My apologies if I didn't add an approximately in there. I don't think we're significantly off. I think that approximately $150 billion of gateway volume to go is probably pretty accurate. Because even though, as Taylor mentioned, that was the number we cited in the end of Q1, and we of course, had a fair amount of conversions, like the actual pace of conversions from gateway customers to end-to-end has been unchanged for several years now. You also would have had somewhat of a recovery from within the gateway base anyway. Just as markets open too, you're probably in that same ballpark. In terms of pace of conversion, it's very consistent that we win approximately 50% of our new customers via just winning share of the market that's connected to any number of our integrations. The other 50% is customers that are on our gateway that migrate over. Yeah. There's certainly a lot of opportunity that remains within the existing base of gateway customers. I don't think our position has changed at all in terms of what we think is addressable, which is all of it. It's just a healthy pace that we're pursuing with our thousands of really aligned software partners. Yeah, this shouldn't surprise people, right? When we quote that 0.5% to 1% end-to-end customer growth, and everyone sort of recognizes how great that is, keep in mind, we've got three to four times the volume in our gateway that we have on our end-to-end platform. It should be an awesome feeder system for us for many years to come. There are certain things that accelerate portions of those, and we spend a lot of time with our business development leads each week identifying pockets that are more ripe at that point in time for conversion than others. Think hotels coming back to life and bringing their technology staff back in, for example. It's a constant effort and it's a really big population. It's largely unchanged, as Jared mentioned, and still a ton to go, and we see it as great. Yeah. Maybe just to build on that more, Jared again here. If you went into my prepared remarks, I said our number one priority is still pursuing the opportunity our 350 unique software integrations affords us, of which the gateway volume is really top of the list, right? $150 billion in volume. We've always said that we develop various capabilities and then give them away at little to no cost as an incentive to help those customers migrate from gateway to end-to-end because it's such a significant lift in annualized gross profit. What did I already share in the remarks? We're developing a next generation restaurant payment platform or a POS platform. A lot of that $150 billion in gateway volume are restaurants, right? Maybe the incentive that they were waiting for over the last two years is a next generation platform that does things for them that their current solution is unable to do. Maybe it's free loyalty because we've been developing and enhancing our current loyalty capabilities. They would otherwise be paying a third party in order to deliver a loyalty experience for their customers, right? These are things that are quarters ahead, that are additional incentives and capabilities to incentivize those customers to migrate to our end platform. This is no different than what we've done with QR codes or QR ordering or online ordering or Pay at Table, Order at Table, delivery, and takeout. It's just another example of it. Number one priority, focusing on that $150 billion in volume that we're just in such an advantaged position to pursue, as well as all of the other volume that's connected into those same integrations that are pretty uniquely situated on the Shift4 platform. Okay, great. Just as a follow-up, Jared, we've been talking about M&A for a while. You guys have done a couple of nice tuck-ins. How much of a struggle is valuation? Is that something that's holding you up? Obviously, assets are relatively expensive. Does that mean probably more likely, tuck-ins in the near term? Just curious on how much of a hang-up valuations have been in your hunt for maybe something larger. Just to be clear, it's not just valuation, right? It's also the quality of the asset itself. When I think back to 2017, when we acquired our first gateway, which was Shift4 Gateway, that was like a record multiple for us. It was probably 24, 25 x forward EBITDA. On a fully, even I think a year one synergized basis, it averaged down pretty quickly. We were prepared to pay up for what would probably have been considered toxic valuations at that time period. I don't actually think that anything's changed in terms of 2021 or 2020 in terms of the valuation we're willing to pay for a quality asset. I just don't think a lot of the deals, of course, you probably would've seen some of them would've been announced from others who end up pursuing them, were that high quality, where we felt like we could leverage a playbook that's worked incredibly well for us to just unlock an integrated payments opportunity. So, yeah, valuation is certainly part of it, but we want good quality assets. I don't think there's been too many out there that got us super excited. I don't know, Taylor, if you want to play around that. Yeah, it's something we talk about a lot, especially with investors, given the current climate. I think the public markets and the spend sub-sector of the public markets have done very good and very bad things for those of us focused on M&A. In the good camp, they have shaken more trees than a single strategy department could ever shake. The attitude towards selling your business is much more positive. Therefore, we see a ton more than we would in a normalized environment. It's very easy to sort of get your phone call taken. On the other side of the coin, they've set valuation expectations that are flat out unreasonable. In many cases, we find ourselves sort of waiting for a normalization or waiting for a reckoning, which we saw a little bit, right, in Q2 within the spend market of valuation expectations tampering. Again, none of this impedes the excellent, highly strategic transactions, because we still have managed to find plenty of them to spend time on. I do think it's worth noting that, right? It is a myriad of opportunities and a lot to sift through, to Jared's point on quality, because the difference between a nice product that might get traction later and a really strong embedded base of customers to cross-sell is radically different in our minds. I think the latter is tremendously undervalued right now. I think the idea of finding a pocket of merchants that you can deliver a much wider platform to, the way we have with our point-of-sale acquisition, and our gateway acquisition, this goes to our benefit, but I think that the market's sort of missing that at the moment, and that's what makes us excited. Yeah, Jared again here. I would like to think over the long run that just continuing to be disciplined in our strategy is going to pay off very well for our shareholders and Shift4 as an organization. To be honest, it's not hard to win an auction. You just take the last comp and add like 20% or something to it. I don't think you're very good as a management team just to win every auction and set new revenue multiples on every transaction. No, very helpful. Appreciate all the color, guys. Our next question comes from Christopher Donat of Piper Sandler. Chris, please go ahead. Good morning. Thanks for taking my question. Wanted to ask about the new restaurant platform, and partly about the timing of it now, of why working on it now, is it sort of pandemic related, or is it just a need to refresh a bunch of technologies? Then thinking about it from the restaurant perspective, what is a typical life cycle for a platform from a restaurant? Like how often do they typically revisit what they do, or I imagine there's a lot of variation there, but I'm wondering if there's a general rule of thumb of when you might get an opportunity to revisit with restaurants. Thanks, Chris. Jared here. This new platform, which is internally code-named Edgewater, existed prior to the pandemic. We did think it was pretty prudent during the pandemic, especially considering how impacted our end markets were to reprioritize dev resources to adding capabilities to existing solutions. It just wasn't like an environment conducive to people coming on site and ripping out hardware and software and reinstalling new ones. Nobody even wanted to visit face-to-face. As it became clear that we were emerging from the storm, if you will, we just put the resources back on the project that we've been excited about for several years, which is Edgewater. What is Edgewater designed to do? It's designed to take all the different capabilities that we think are essential for an SMB-type restaurant environment and deeply integrate it into a single application. Instead of paying third parties for gift and loyalty and online ordering, of which there's like 100 companies out there doing that, plus point of sale, plus analytics, plus marketing and combining it all into a single ground-up application, Android-based, hybrid cloud, everything customers would want. We've been excited about that idea for a long time. We do have, I would say, measured in the hundreds out there in beta, which has been deployed slowly through our existing distribution channels. As we continue to gain confidence, add more capabilities, we think it'll be pretty big hit for our existing customers and new ones. In terms of timing for customers, I'd say if we look at the upmarket towards more enterprise customers, regional chains, not uncommon for them to be seeking bids in a three to five -year type interval, whether it's a formal RFP or just soliciting interest. I'd say SMBs, until they have a problem, they're going to continue to roll with what they got. That's pretty much the general trend. We've certainly seen restaurants in the smaller end of spectrum throw out a solution inside of months or a year if it wasn't solving the pain point that they felt was most relevant for the business. We've also seen plenty of stuff out there that's been around for quite some time. What I would say with high confidence is the overwhelming vast majority of the restaurant industry is using Windows-based point-of-sale application. Windows comes with a lot of headaches. It's just a lot of upkeep, and it's pretty draining on hardware, and every time there's a Windows update or something, things start breaking. The market that's going to be ripe for a very sexy new platform following along with our existing strategy of don't charge for 100 different annoying things and just monetize the relationship through payments we think is pretty large and ripe for well-timed for our solution. Okay. Just related to that one, do you expect the platform will bring you into more competition on sort of the smaller size SMB payments world? This is a different class of restaurant than, say, like a Square goes after. Oh, yeah, definitely different class than where Square would go after. You're really talking about within the restaurant market as of today, if you were to size it up, there's Shift4 and all the various applications we touch, then there's Toast. We think Shift4 is in a pretty advantaged position because we already touch or power about a third of the restaurants in the U.S. already. That's beyond a foot in the door. That's a conversation anytime you want. It's a blast email away. We already touch a third out there that we think are going to be interested in migrating towards that more modern architecture, that more modern platform that I just described. Then we also have literally thousands of sophisticated distribution partners that are out there able to have a conversation at a local level, which further differentiates us from really the only other player out there. We think it's a pretty big opportunity, and we think the competitive landscape within the space is still quite narrow, and we have our natural advantages. Got it. Thanks very much, Jared. Our next question comes from Andrew Jeffrey of Truist Securities. Andrew, the line is yours. Hey, good morning. I appreciate you squeezing me in. Lots of good stuff discussed already. Jared, I wonder, could you update us on your thinking around the gateway strategy broadly? I guess what I'm asking is there any thought that you could move directly to offering end-to-end processing solutions in addition to the conversions within the existing gateway as a means of accelerating growth? I guess what would be required, and are you investing against that kind of opportunity today? I want to make sure I understand the question because we've been pretty consistent that about 50% of our production in any given month comes from just winning share of the addressable market. They're going right to the end-to-end platform, leveraging the software integrations we already have. I guess I'm thinking about- So only about- more of an enterprise level. I was thinking about more enterprise-type customers that might traditionally have been on the Shift4 Gateway. Oh, for sure. I can think of just a number off the top of my head that we announced over the last year that were just enterprise-grade customers that boarded directly to our end-to-end platform. Virgin Hotels, the Vegas property, half of the Sonesta relationships, there's some M&A activity going on there from the customer, not us, that were all net new. Wind Creek Casino and Resorts, that's a handful of resort casino restaurant hotel properties, I think mostly on the East Coast. That was all a net new win. CAL Group, which is pretty huge, was a net new win as well. Yeah, we're winning enterprise customers independent of the gateway business. It's kind of one of the reasons why everybody always asks us to give specific merchant counts on gateway conversions, and it gets hard because The UPS Store, at the time the contract was inked, was a net new win. We had no gateway affiliation with them whatsoever. We were displacing Chase. We were in competition with FreedomPay. We acquired MerchantLink, and that happened to be the gateway platform they were leaving, and it kind of muddied the waters, and you called it a conversion. Point being is a number of our just pure net new wins independent of the gateway are enterprise customers. Okay. Yeah, that helps a lot. Thank you. We have no further questions on the phone line, so I'll hand back to Jared for closing remarks. Thank you very much. I appreciate everyone's time today. We'll speak very soon. Wish you all well. Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.