Good afternoon, everyone. Why don't we get started? My name's Dave Koning. I'm a Senior Research Analyst at Baird. I cover payments and BPO companies, and very pleased to have Shift4 with us today. You know, a leading payments company, very similar in a lot of ways to Fiserv or Global Payments or others, in what's a pretty high growth area, and these guys are one of the fastest growing firms in that area. We have Nancy Disman, CFO, and then we have Taylor Lauber, President and Chief Strategy Officer, with us today. Maybe just to kinda kick it off, Taylor, maybe because not everybody's completely familiar with the company, maybe you could give a little overview of what you guys do, how you play in the markets, et cetera. Yeah, of course. So, we've been in the industry for, I guess, going on 25 years. Today is the four year anniversary of our IPO, so a fun internal milestone to celebrate. We sit at the intersection of software and payments and how to drive an excellent commerce experience for both the merchant and the consumer through the convergence of software and payments. We specialize in a handful of verticals that we're best known for, which is we're in roughly a third of the table service restaurants in the United States, where it's, you know, our own software connected to a great payments experience, a great consumer experience. Basically, the entirety of the ecosystem is something we provide. We are also in hotels in a really strong way. Now, take that restaurant, put it inside of a hotel like this, and put it alongside of dozens of other revenue centers: your front desk, your parking garage, you know, your room service, your golf course, if you will. We'll connect all of that software together, and we'll deliver a common commerce experience again for the consumer and the merchant in that environment. Imagine, you know, Pebble Beach, if you will, dozens of revenue centers, lots of different software, and a single deposit at the end of the night, and awesome tools to reconcile the experience for the merchant. You'll. And that's kind of where we've been increasingly growing. So where you can download a piece of software on an iPad and run your business, that is not where you'll find us. You'll find us where you need dozens and dozens of different pieces of software. Stadiums is an environment we're particularly proud of. We're in roughly 75% of the sports and entertainment, and theme parks across every league in the United States, and again, lots of different software that needs to come together to deliver a fan experience, in that regard. So we specialize in these verticals, and what's so exciting is that the convergence of payments and software that we know really well here in the United States, where, you know, your online reservation, becomes a card-present transaction, checking into a hotel, where you can charge it to the room, for example, and you all get a nice, clean, single line item on your credit card and a single invoice. That largely hasn't happened in the rest of the world. So in the rest of the world, it looks much like the United States 10 or 15 years ago. There is a software industry, there is a payments industry, and there is a hardware industry, and merchants are kind of forced to, you know, purchase these things individually. So what we're most excited about across the business today is taking what we've done in the United States, what's given us all this market dominance, and going around the rest of the world. Yeah. Thanks for that. And yeah, I mean, I, as mentioned before, I use it at Hyatt every time, and Shift4 pops up, and it's seamless every time. Yeah. Thank you. Any other, like, you know, few name brands that, you know, we'd all know of that we would see you at? Yeah. So you'd find us in, in most major hotel brands in the United States. We have about a 40% market share. I don't want you to confuse that with wallet share, 'cause there's lots of, of revenue growth opportunity with inside of them. Again, I mentioned kind of 75% of every league, but, you know, you should expect to see us in a bar and grill in Boise, Idaho, and the Yankee Stadium- Mm-hmm ... and everything in between. So hotel is a really, really strong presence, and what we're most proud of is that, when on the rare occasion a brand-new mega-resort gets built in a place like Las Vegas, we're increasingly, you know, the only choice in terms of what they're installing, you know, in the new build. Yeah. Well, thanks for that. And you know what's been remarkable? Your volume growth has been pretty massive. You know, I think a CAGR around 50% or so the last four years or so. Maybe describe why you've taken so much share. Is that all organic? Like, kinda talk through that. Yeah, of course. So, I wanna say that our volume growth is impressive when compared with the likes of other great companies we admire, Adyen, Stripe, you know, awesome high growth payments companies. But when you think about the verticals we predominantly serve, restaurants aren't popping up all over the place where they didn't used to be before. Hotels aren't growing massively. Stadiums kind of, you know, have been there a while. So when you think about the volume growth, I want you to layer it against the verticals that have traditionally grown a couple points a year, and that tells you that all of that growth comes from adding lots and lots and lots of new customers. Mm-hmm. You know, we have found an exceptional right to win in environments of complexity. We move towards complexity. When we first kind of by happenstance, you know, I think we were solicited to buy a box at the Raiders' stadium in Las Vegas, 'cause we had an office there, and, you know, we're talking through the environment with them. We said: "This is our wheelhouse. This is tons of revenue centers, lots of different software. You need it all stitched together. Let us do that," and fast-forward, you know, about four years later, and we went from being in no stadiums to 75% of the stadiums in the country. So our volume growth is a function of two things. Yes, it's adding lots of customers, but it's also, the average customer looks a lot bigger than it did, you know, just four years ago at our IPO. Mm-hmm. Yeah, and, you know, maybe you can talk a little about your, your acquisition, you know, strategy. You've been a pretty active acquirer. Maybe a little like, unlike other firms, just the way you acquire businesses and how... And maybe just talk through a little bit of that, your strategy. Yeah, of course. I think it's important to understand that. Our experience in combining software and payments has led us to a really good set of conclusions around how you can do that. And yet there are still tons and tons of software assets around the world that have struggled to make that happen. There's lots of great software companies that merchants use every single day, and the payments go totally around that experience. It's inefficient for the merchant themselves. They're paying multiple vendors where they shouldn't have to, and it's a massive revenue opportunity miss for that software company. And there's, like, kind of a handful of different reasons why it may have happened over the years. It could have simply been, "I was so focused on making my software great that I ignored this problem." And our opinion has been, if you can purchase that software company at a reasonable valuation and embolden it with a payments value proposition, number one, you can collect a lot of revenue that that software company was overlooking. Number two, you can dramatically transform the value proposition of that software. So by example, I've mentioned our stadium presence. VenueNext was an awesome fan first mobile ordering solution that really hadn't monetized payments thoughtfully, and they were, you know, getting into environments that had lots and lots of payments flowing through it, and they were predominantly monetizing SaaS. We said, "You know, don't focus on the SaaS. Focus on all the payments that, you know, that stadium needs processed anyway, and you'll get access to, you know, a very lucrative revenue stream. You'll get access to a much wider TAM than just the mobile ordering experience that you're enabling. And you'll win a lot more. You don't have to charge for your product. You can bundle it with these things." So we've done this numerous times. We've done it a bunch in the restaurant vertical, and I would say, the way investors should think about this is it's customer acquisition cost for us. It is, you know, can the price we pay for a business, and the opportunity it creates for us blend down to a customer acquisition cost that we think is highly attractive? So, you know, we announced our intent to acquire a business in Germany, for example, that will give us access to 65,000 customers using that software to the tune of $95 million. It's very simple division to say you can get access to awesome restaurants in Germany that are loyal to a piece of software that has really never monetized payments for $1,500 a piece. Like, that's, that is in our view. And then we get to shepherd that transition. So it's a, it's a very prudent use of capital, but it's also we get to shepherd that merchant through this convergence of payments and software in a way that probably otherwise would have meant they're ripping out their solution and putting in something else. And how different... You know, we, we cover, like, Square, who does on average about a $50,000 volume merchant, so very small, and gets high yields on that. Not a ton of software with it. We cover Toast, that $1.4 million average merchant, right? So a little bigger merchant, about a third of revenue software, two-thirds is just processing 50 basis points. Yep ...on transactions. How is your model like... I mean, you have big, big clients with some stadiums and, and stuff. Is your model like a- also a third software, two-thirds processing, or how, like, how should we think of the model? I would, I would compare it on, on that paradigm more closely to Toast. I mean, certainly we, we view ourselves as the other competitor in kind of that mid-market space. But I think the best comparison that you didn't touch on when, when talking about Toast is, is really their cost, their customer acquisition cost and how do they go to market. Mm-hmm. You know, lots of, lots of feet on the street, lots of marketing, SEO optimization, and, you know, something that we view as just economically not sound. You know, I think what makes Shift4 unique, as we kind of drill into customer acquisition costs, is we're, we're profitable. We've been profitable every year in the company's history. We're expanding EBITDA margins, expanding free cash flow conversion, and that kind of brings us back to our model of, like, what is the most economical way to acquire a customer? And if you look at the three recent deals that we've done, that's what they really-- that's the thread that kind of makes that common. In terms of where we are in the market, to go back to really your question, is in the restaurant space specifically, which we are not just restaurants. I know we get compared to Toast a lot. Mm. It is probably the largest driver, probably global hospitality coming right behind it in terms of revenue. But it is certainly not, as we just talked about, the be-all and end-all of all that we do. In the restaurant space, we're in that sweet spot of table service restaurants, right? So we're not looking for the restaurants that are new to market, certainly not at the convenience store, fast service type. We're really at table service, which is really us and Toast kind of in that market. So from a size perspective, that's where we sit kind of in the paradigm. And I just— Yeah ... wanna help dimensionalize this because it is a very unique aspect to the Shift4 business, is we're not in one vertical. We're in multiple verticals, and we're increasingly finding that the competitive air is quite thin, the higher up the complexity chain that we go. So, you know, again, if you can download a piece of software on an iPad and run your business, you will not find us there. If you took, you know, someone like a Square or Clover's kinda highest volume cohort, we would be above that in our lowest volume cohort. You know, I think the volume metrics around something like a Toast are a good comparison for our restaurant vertical, but believe it or not, we have restaurants that do $50 million in volume in a single location. And then we have hotels that on average do, you know, significantly larger than a restaurant, up to $many hundreds of millions. Mm. And then stadiums, you know, that can be, you know, $50 million to several hundred million as well in volume. So, you know, the average site is growing meaningfully in volume, because they're much more complex than the average SMB restaurant in our business. Yeah, gotcha. And so I think restaurants were kind of the core of Harbortouch, I think, for years, the kind of- Yeah the core business years ago. And then what's the growth strategy going forward in terms of, it seems like you're growing everything well, but are certain verticals like the real, like, the parts that are really growing way faster, or is everything just growing fast? So our progress in restaurants has been quite steady. We have, and I'm glad you mentioned Harbortouch. It's a 20-year history inside of that franchise, and it won very steadily throughout its history. We've also acquired restaurant software brands for the reasons I've mentioned, and emboldened those businesses with software plus payments, just like what Harbortouch was. And now we're increasingly going to market with our single modern cloud-based solution, which is SkyTab, and that's winning a lot of share in the market. So, you know, while I think there's a lot of investor focus on who's winning in this vertical, to us, it's very clear. We've been consistently winning for 20 years. We have one good competitor, and we love that about any industry dynamic. And then in hotels, the dynamic is quite different. It is no one piece of software competes with us individually. What software companies do is they come to Shift4, and they say, "I want access to hotels. I want to be able to sell my software into hotels, and I need to be part of your ecosystem because you connect to all of the other things that my hotel customer needs." Again, parking, salon, spa, all the other stuff. So it's created this nice, you know, virtuous circle. We like, you know, where many e-commerce companies sign up for Stripe, everyone in the hospitality or stadium industries call Shift4. They say, "I need to be in your ecosystem because I want to get my software into a stadium, or I want to get my software into a hotel." So our volume growth in hotels is probably the largest in dollar quantum contributor because a hotel joining us just brings a heck of a lot of volume. When the Fontainebleau in Las Vegas opens up, that's a really big single volume customer, by way of example. And then stadiums was a fascinating one, because stadiums, we were winning basically every opportunity that came up to solicit the services we were winning, and then our number one competitor called us and sold us, you know, the business. So now we've got an awesome opportunity where we've got, again, that 75%+ market share. We still announce a lot of great wins, like the Kansas City Chiefs, by way of example, but we've got this massive book to go cross-sell payments in, like we've done so well in the restaurant vertical. Mm-hmm. No, that's great. And then in late 2022, you insourced your restaurant distribution in the US. I guess why, and kind of what, what's been the, you know, how that's performed? Yeah, it's performed exceptionally well. There were really good kind of offensive and defensive reasons for doing this. So traditionally, we had largely used outsourced distribution. These were restaurant resellers. They would install the technology, they'd configure the menus, they'd be there on the Friday night when the printer breaks. And in exchange for that, they got a good rev share on the payment economics. We paid them roughly 40% of the payment economics. And it became clear to us as we were coming to market with SkyTab, that we wanted to own our distribution. And we didn't want channel conflict, we didn't want brand conflict. We wanted our best distribution partners selling SkyTab, and wherever that would create conflict, we quite frankly couldn't have as many distribution partners as we might have had in the past. We acquired these businesses. In In our view, the trade was we no longer pay that revenue share. However, we've just hired a bunch of employees, and now they work for us on a direct basis. As I think any, you know, investor can appreciate, when you can trade variable costs for fixed costs in markets that you have a lot of scale, it makes a ton of sense. Mm-hmm. So we were able to do that. We still go to market with some third-party distribution, where it simply just doesn't make sense, where, you know, that reseller might not just sell restaurant software, they might sell alarm systems and a bunch of other things to make ends meet. But in big markets, we own the teams that would historically be there on a Friday night when there was a problem, and they own the direct relationships with the merchants, which is what's so valuable to us. Yeah. Okay. All right, it's late in the day, it's time for a fun question. So Shift4, probably almost everybody realizes that's the dollar sign on the keyboard. If keyboards go obsolete in the next 30-50 years, do you consider changing the name? The name is changed, and I actually, it's better than a fun question because it speaks to the heart of the culture of the business. We are founder-operated. We're a founder-operated business who didn't take outside capital for the first 15 years he ran the business, and has really strong views about how we should be attacking the market, and yet we've changed our brand name 6 times. I think throughout our history, we do not care what software a merchant uses, if it's tightly integrated to us, and we have a strong, differentiated right to win. So yeah, I hope we've got a really compelling reason to change our name because, you know, I don't know that the Shift4 brand is gonna resonate in some new vertical that we're trying to dominate like we are, you know, stadiums and hotels. It added a phenomenal brand reputation in hotels. Mm-hmm. We acquired an asset that was called Shift4, and we said, "This is a better name for what we're trying to do." In verticals where, you know, SkyTab makes more sense, we'll use that, we'll use that product offering. But yeah, I absolutely hope that there's a name that's more indicative of, you know, the market dominance we're conquering at that point in time. And I, by the way, I don't think it'll be any one of these verticals. I think it'll be something else. Mm-hmm. By the way, the more fun answer would have been to first see how many people actually knew that Shift4 was the dollar sign- Oh, yeah, that's true. - on the keyboard. I don't know how you make a pound- Yeah. or a euro. A euro. A euro, yeah. It actually, the logo actually looks a little like Starlink, and I just got it at the cabin. It works better than my Spectrum in Milwaukee, in the middle of nowhere. Starlink is awesome, but you own part of that. Is that right? Or own, had some sort of relate... Am I ... Let me be careful here. Yeah. Shift4 has invested in the SpaceX business. Okay. We were presented with the opportunity to, and we, you know, as did our founder at the time, we kind of split the offering, because we believed incredibly in what they were building, specifically with regard to that, that product. Mm-hmm. It's an organization we've got to know reasonably well through some personal relationships, and yeah, we agree. We admire the heck out of- Yeah. what they do. That's great. Yeah, and the payment actually is really easy to do too. It's way easier than AT&T, Spectrum, all that stuff, so- Thank you. Yeah. Um- I mean, I think, I think what's important there, first of all, is that we didn't say the name, you did. But, Okay. You know, and I think that, you know, reminding kind of everyone, we haven't talked about it. It hasn't. It didn't come up at all today, but, you know, certainly it has given us the opportunity in terms of following them into a lot of countries that we've recently, you know, started processing for, you know, across the globe. It's been a great way for us to get up and running in countries, and then kind of take our U.S. playbook along the way with the countries. But it's certainly a great... I know it used to be called the Yellow Brick Road, and I think internally, we still feel that way, so. Yeah, great. And then, okay, in stadiums, you recently bought a company called Appetize. Yep. What is that? How does that, you know... Yeah. Yep. So at the time that I referred to earlier, so several years ago when we were first getting an introduction to the stadium space, it was a plethora of different software suites in this environment. You know, specifically with regard to the bulk of the sales, the bulk of the concession sales, it was some legacy players in the form of kind of NCR and the Micros of the world, and then there were two companies winning share. One was called Appetize, and the other was called VenueNext. And Appetize was by far and away the more dominant player at the time. It was a business we couldn't get our heads around. It was for sale because while they had a much higher top line, they also burned significantly more cash. And philosophically, again, founder-led, no outside capital for 15 years, we very vividly remember the days of looking at the checking account every single day before you made an investment decision. So we chose VenueNext, which was a really cool little technology business seeded by the San Francisco 49ers, focused on this fan-first mobile experience. And quite frankly, they had just won an incredible stadium opportunity and bundled Shift4 Payments into it 'cause they saw how much better it made their value prop without us even telling them. And we said, "This is a match made in heaven." We quickly came to terms to acquire that business, which was break even. It was much smaller, but also break even at the time. So philosophically, they felt the same way about kind of pursuing business opportunity as we did. Fast-forward three years, and we had won so many stadiums that Appetize, our number one competitor, the owner of that business, called and asked if we would buy it from them. And we paid, you know, roughly $0.20 on the dollar for what they had paid for it. Why'd we do it? We did it because we knew those customers would in some stage come to us anyway. But could we shepherd it in a much more controlled way as a result of owning the business? And by the way, we need the talent. Interestingly, you know, we closed on that transaction in late September of this past year. We are installing VenueNext at more stadiums per month now than we did at the busiest quarter we've ever had before that. So we needed the help, quite frankly, and, you know, this business, while it was a competitor, you know, the team that we took over quickly jumped in and have been helping us get, you know, VenueNext installed in all these great places. In a Yankee Stadium, probably the best visual example here in New York City of an Appetize customer that very quickly adopted the VenueNext technology and has loved it. Yep, great. And then internationally, you recently made an acquisition to enter international markets as well. Those are tough. Like, I know some of the, you know, some of the... Your competitors too are like, "Man, it's hard to get into different markets unless you have a bank partner." But maybe talk a little bit about international expansion. Sure. We've been asked by our hotel customers for many years to deliver them a solution like we do in the United States, in the rest of the world. More often than not, you can make a reservation at the global hotel brand of your choice. We will take that reservation, we'll tokenize your credit card information, and we'll put it in the property management system at a hotel in Madrid, maybe for this global hotel chain that you'd wanted to travel at. Then you show up, and they swipe your card at a local bank terminal that's not at all integrated to the system. They key in what you owe, and then they staple that little receipt to your folio. That's a horrible experience, but it's a, it's one that was technically necessary 'cause the operator of that hotel needs local currency deposited into their local bank account through local rails. So hotels have been challenging us for years to say: You do all this in the United States. What we didn't have was we didn't have all those local banking capabilities. So we made an acquisition with the idea that we bring all the software that's already integrated and installed in all these different places all over the world. We have customer relationships that operate these brands all over the world, and with the local capabilities, with the local rails, they're all excuses are gone in terms of how we can deliver an experience. And by the way, when it's integrated tightly, it's far better than that bank terminal that sits off to the side. So the Finaro acquisition closed in November. The excuses are gone, and we're thrilled. We're announcing, you know, we've announced a transaction in the restaurant vertical that we're excited about, but we've also won, you know, multi-hundred-location hotel chains within 6 months of closing this capability gap. So again, software plus payments, this convergence that Jared saw 20 years ago still has a really long way to go- Yeah in the rest of the world. We think we've done a decent job of spotting and exploiting the opportunities here in the United States. We can't wait to do it in big economies that just haven't gotten there yet, with regard to their technology, for one reason or another. Europe is kind of the obvious in front of our face example, but the customer you alluded to earlier in the conversation is challenging us to be in a hell of a lot more places than just Europe. Mm-hmm. Well, great. And can you kinda walk through the growth formula and how, how you build it? Is it like... You You know, I, I think of if you have software growth, but then you've got volume growth kind of on top of that, or how, like, how do you, and, and maybe what is the revenue growth target, you know? I think for us, well, probably what is unique to Shift4 is we lead with volume and payments before software. Okay. So just to kinda go back to that. Now, that's not to say we don't see the software opportunity, but with SkyTab, for sure, we're leading more processing, and that's future TAM and future revenue opportunity down the road, you know, on, on the SaaS side. So that, that's kind of like the... I think what turns the model on the head for what makes Shift4 unique. We've always said, if we're reporting volume, you know, the businesses that are reporting volume growth are the ones that are really growing. And those are the- you know, the- that's just new business with it, with- within the, the TAM of Shift4. I think in terms of revenue targets, you know, we've got a midterm target out that, you know, was put out at the IPO, that, you know, we're on target for, you know, with our guides that we have set. You know, we will set probably a new near-term guide. We're talking about kicking around an Investor Day, you know, in Q4. Well, we're- but certainly, you know, this is a business that you should expect we'll be looking to hit target and revenue goals that are beyond where the mean of the business is. You know, I think just where the diversification of our verticals outside of relying on a macro or a same-store sales growth really gives us the opportunity to propel, you know, double-digit growth, you know, for the long term. And I wanna emphasize something, because I think, you know, there can be a balance of kind of the growth investor, the value investor, and Shift4 offers a very unique blend to each one of those. The volume growth that you've talked about is exceptionally real. The revenue growth is exceptionally real, and the use of capital to get there is what we believe is the single best differentiator for our business, kind of regardless of what the products are, which is, compare us to anyone in our space, our best competitors don't make money. And they spend 10x what we do, or 4x what we do to acquire customers. In our case, we've got, you know, industry-leading EBITDA margins, we've got really strong free cash flow through, coupled with really awesome growth. That can be something that people struggle to get their heads around, and it's because we will be agnostic in terms of the best way to deploy a dollar, build, buy, partner, acquire, you know, a POS business with lots of great customers and shepherd them on this product journey, as opposed to just, you know, to Nancy's point, a bunch of Google Ads and hope the customer signs up for it later. So as you're thinking about Shift4, you know, yes, we're exceptionally proud of the volume growth. We're exceptionally proud of the vertical penetration. We're exceptionally proud of the revenue growth. But the single fact, the... Like, we hold ourselves to an exceptionally high standard with the use of capital, and I think when you look at the total dollars deployed to get to those levels, it is far and away, you know, distinguishes us from our peers. Yeah, it's been super efficient. And why do you think so yeah, with the revenue growth, with the profitability and cash flow, like you kinda are hitting all three, why does the stock trade where it is? And maybe also talk a little bit about the strategic review and kinda what, what was around that, kind of both of those. Yeah, sure. I think there's two things that can't be ignored. When we went public four years ago, there had been six payments companies, and then there were three. And then we came along, and then the SPACs came along, and then there were, like, 70. And so in fairness to the investors, there were lots of features that shouldn't have been companies. And then there were lots of companies that had a really specific niche in an ecosystem that I don't think investors fully appreciated how complex this environment was. What I've tried to tell folks is: don't think about it as payments, think about it as commerce, and the scale and complexity of these environments and the nuances to them become a little bit more clear, at least in my mind, when I think about commerce. In terms of the strategic review, it was a very simple and rational decision back in the fall when our stock was $40, and we were seven times more profitable than we were at our IPO four years, three and a half years ago. Mm-hmm. It didn't seem to make sense to us to operate the business in an environment like that. And we didn't need, you know, robust access to capital markets. We We really liked our balance sheet and everything else. So we explored a multitude of options, in terms of, like, better ways to run the company with fewer distractions. Without saying, you know, more than Jared has said in his own letters, we got, you know, nicely complimented in everything from a take private to strategics making offers for the business, and we made the conclusion that the path we're on is does not require a lot of extra help. And how can you ignore opportunities that we knew we had in front of us, like a Revel, like this European expansion, like the, you know, the German POS business that was recently announced? It just became pretty undeniable that, you know, our growth path would be our growth path, and we didn't need a lot of help to achieve it. And we're gonna continue on it. Yeah. Well, it seems like a great situation. That's actually all the time that we have. So please- Thank you. Yeah Thank you. Join me in thanking Shift4?