Shift4 Payments Stock

Next up, we have Shift4. Chris Cruz, I'm proud to say, had his first presentation as CFO over here at our conference a year ago. And so he's back for some gruesome questions from Sanjay Sakhrani. So Chris Cruz, CFO of Shift4. He became CFO in September of last year after serving on the company's Board since its formation. He previously served as partner at Searchlight Capital Partners and earlier worked on the investment team at Oaktree Capital Management. Chris, thank you so much for joining us.

Thank you for having me.

All right. So it's been a little over a year that you've been CFO. What's your biggest learnings? And how have they changed the way you're thinking about Shift4 and its priorities going forward?

Yes. Well, first off, thank you again for having us. As you said, fond memory has popped up on my social feed that it's been 1 year, and this was my first fireside chat. So I'm ready for your gloves to come off on this one. But nonetheless, really fun to be here. You guys do a great job. So reflecting on the year, one heck of a year to have as your first year in the CFO seat. hard not to reflect on the number of crosscurrents, number of curveballs we got thrown, macro, geopolitical and otherwise. But before starting -- before going into that, I would say my biggest observation in the seat is that our strategy is working. It resonates this idea of simplifying payment complexity, enabling the acceptance of the ever-growing number of payment modalities and bringing that all into a high fidelity, single reconciliation point, single integration point. That strategy resonates no matter where you are in the experience economy, shop, dine, stay, play, no matter what geography you're in, in the Americas or the worldwide regions that we serve or whether you're an SMB or an enterprise. The idea that our strategy is working is something I'm really enthused by, I'm really emboldened by -- at the same time, I have to pair that enthusiasm with what has been a pretty tough and challenging year from the perspective of getting thrown a lot of curveballs, a lot of crosscurrents that really end up making you reflect and kind of bias you towards more of a cautious and a cautionary tone. And so as I reflect on the year, I have that dichotomy of 2 forces, real excitement about the business, but a reflection that there are reasons to kind of exude a certain caution and a bias towards caution, especially as you talk about external expectation setting.

Good. So I will say positively, payments organic growth of 14% remained really strong in the third quarter. What gives you the confidence that, that growth is durable despite some of the challenges that you guys mentioned on the earnings call?

Yes. Payments-based organic growth delivering kind of mid-teens every quarter this year is a really good testament to not just payments-based as a category of revenue. When you look at the business as a whole, the business has demonstrated resilience across the board. The third quarter results were in line across the board. And we also had a record adjusted free cash flow quarter at $200 million of adjusted free cash flow. So the demonstration of resilience is yet another reinforcing point that the business is doing what we said it would do. the deliberate strategy to diversify across the experience economy is working, diversify across a mature Americas region and a really exciting growth region set in the worldwide markets that we serve, diversify across SMB and enterprise, which is something we started doing a few years ago. All of that deliberate and strategic choice to diversify is creating this resilience and it's translating into the numbers. And now we just want to see that accelerate.

Okay. Now just on to the softer fourth quarter outlook. Maybe you could just talk about at a high level, how much of that reflects timing issues versus the weaker demand environment versus a change in the underlying opportunity?

Sure. So on the fourth quarter, we've guided to some specific ways to bridge the variance from the pre-existing guide that had been out there. And that can be broken down into 3 parts. $20 million to $25 million associated with what was embedding or introducing into the guide, the travel disruption variable. So that had not been in the guide previously. It had been telegraphed and sensitized so that folks could figure out how to size that if they had wanted to in advance. But then it formally entered the guide at $20 million to $25 million of travel disruption in the fourth quarter. $6 million of that variance is associated with FX, simply put, the continued U.S. dollar strengthening has a translation impact on our non-U.S. dollar revenues. And the part that you're probably most focused on inside of this question, which really is a question about the timing versus permanent change in the $25 million to $30 million associated with the subscription and other types of revenues, right? That was really broken down into 2 parts. Two parts are: one, we are seeing a responsive merchant when it comes to providing interesting kinds of incentives and interesting kinds of trades in our mind between noncore, often legacy acquired revenue streams and exchanging that for what we view as the higher quality revenue, payments-based revenue, right? Payments-based revenue in our minds is the North Star, growing in that category that delivered the 14% organic growth. That's our North Star because that revenue stream is like the original usage-based billing model, right? That is the original model that as your merchant wins, you win, you're kind of fully aligned, right? So when we have the opportunity to trade away noncore revenue streams, think of things like gift card, plastic sales, think of hardware sales, perpetual license sales, anything where there would have been more of an upfront dynamic, trading that away so that we can get long-term contracts with payments-based reoccurring revenues. That's a trade that comes straight out of our playbook. We do that all day. That made up 1 of the 2 parts of that 25-30 bucket. And the other part is about really pure timing, right? So the first part will show up in our payments base over time. The second part is truly just timing. That's why we refer to it as the deferral of commercial initiatives in the European markets. And it was pretty clear to us that the idea of trying to take commercial initiatives on or implement commercial initiatives in Europe, especially net towards merchants that were being impacted by travel disruption, both geopolitically, but then net new travel disruption from what looked like some civil unrest that emerged in the fourth quarter in capital cities like Paris and Milan. If we had taken those commercial initiatives, it would have been, I think, the wrong decision strategically, wrong decision long term. It's the kind of thing that you have to -- as much as it sometimes is it challenges a plan in terms of what you expected to do in the fourth quarter, it was still like the right thing to do, would have been viewed, I think, often as -- it would have been viewed as a very tone-deaf approach to not acknowledging what was happening in the market around you. So we deferred those. But we'll continue to monitor in '27 on when an action could be taken, and that's why that's timing.

Got it. And if we zero in that part 1, which is the trade-off piece, like how much more of a headwind over the years is that? Like do we feel like we're closer to an end? Or is that a perpetual sort of a headwind that we face?

Yes, it's a good question. Embedded inside of that kind of timing versus permanence question is also a question of -- how do I then take that Q4 guide, which implies a growth rate in kind of the low single digits and map that to the newly introduced FY '27.

That was my next question. Go ahead. That's perfect.

Okay. Got it. How does that map to the FY '27 sort of GRLNF growth framework of mid- to high single digits. And I think simply put, we're not anticipating that change in, we'll say, dollar change in Q4 subscription and other persists. So I think you could kind of get yourself to a place where mid- to high single-digit growth in GRLNF achievable if simply put you didn't have the step down in subscription and other. More intuitively, I think from our perspective, it really is timing, right? It really was a deferral and a timing. It really is something that we think does not need to persist in terms of like forward outlook. Subscription and other, I think, on a go-forward basis, kind of a pretty steady dollar, has some volatility quarter-to-quarter, has always been one of the trickier parts of disaggregated revenue to model. But I think stability is the right assumption going forward.

Okay. And then when we think about the mid- to high single-digit organic growth framework, right, -- like what is inside that number? Because I think investors would want to know if that framework is conservative or aggressive or a realistic base case.

Yes. So obviously, we are going to provide the fulsome kind of unpack of the 27 guide at the upcoming quarter as would be the ordinary course. But if you wanted a little bit more insight into how to think about mid- to high single-digit GRLNF growth, you can kind of unpack it through the way we talk about the business in the growth algorithm that we introduced at the start of last year or at the start of this year, which is to say payments-based growth probably in the, call it, low double digits. Tax-free shopping disaggregated revenue category two, probably more of a mid-single-digit akin to this year. And subscription and other, for the most part, flat with some quarter-to-quarter volatility where it could go kind of low single-digit negative, but on balance, flattish. That's probably a reasonable unpack if you're trying to map it back to a framework of the growth algorithm that exists out there.

Got it. Okay. So you're now Shift4 is live across 15 countries. Maybe you could talk about the milestones we should look at to gauge your success and sort of maybe talk about where you're further along versus relatively in their infancy stages and where you can -- you might see some stair steps higher?

Yes. It is a real pride point that we were able to achieve the 15 countries live milestone before the end of the year and a real testament to the team that, that was all achieved. When you step back and think about this -- the level -- the number of achievements that the Global Blue business or the tax-free shopping business has been able to achieve this milestone of a completely new product in Shift4 One, live in 15 countries, which is now going to give us the base to bring all of our other products into those countries is a huge milestone for us. I'd say the other metric that -- and that would have been my answer. My answer would have been follow the countries live, but we're there. So then the other milestone that I think you want to look at is really about the delivery of synergies. We talked about how the Global Blue transaction back at the time it was announced had a target of $70 million in EBITDA synergies and progress and pace against those synergies is probably the next big milestone that you want to be focused on. And then, of course, just simply put, Shift4 One will contribute to payments-based revenue growth in the long run. So expect to kind of see the improvement in that category as a result of the continued momentum of Shift4 One. But if you're out in Europe and traveling and travel shopping, you'll see it. And I think that's an important milestone as well.

Got it. And so you think -- is there a specific country that you think is sort of the biggest opportunity more immediately for you versus other countries?

Yes. If you look at the markets, where travel shopping is the most dense where the TAM opportunity is the greatest. It wouldn't surprise anyone that you'd sort of look in the European countries, France, Italy, Spain as kind of a big 3. And increasingly so, though, you will look at the German market and the Nordic markets. And -- but I think if you started to just map out where is there luxury goods and luxury consumption propensity from a TAM standpoint, those will be a good proxy for where the market opportunity is the greatest. The only other thing I would say is that -- and this is maybe less appreciated from the outside in is that the Shift4 One product is often characterized as a way to kind of cross-sell or incentivize tax-free shopping customers to then take on payments and currency solutions. But the other way around is totally in play because when you have a product that is truly unique, right, there's no other way for a payment distribution partner or a professional that is in the payments distribution business, there is no other way for them to distribute a product that has tax-free shopping. So when they go door-to-door and they walk into a location and they see an opportunity to sell an integrated device to a point-of-sale system at retail that has currency solutions, tax-free shopping and payments, that's a one-of-one product. That is going to be not just a product that appeals to a merchant, but it has great appeal to a distribution partner. And so that's the only other thing I would say is a really important kind of component of that product.

Very interesting. So on the synergies that you mentioned for Global Blue, I think you said you've talked about $50 million of those synergies exiting 2027. The remainder pushed out to 2028. Maybe you could walk us through the major drivers of those synergies and where you have the highest conviction and whether or not like some of these macro factors weigh in against those synergies.

So actually, one clarifying point. So what we've talked about at the time of earnings is that we anticipate exiting the year at $50 million of annualized synergies, well on our way to the $70 million target. So there's no pushing out to '28. This is really about exiting the year on a path to being well on our way to the target and then having really the remainder of '27 to continue to deliver on that annual -- against that annualized target. So in my mind, I think the way that folks should interpret the synergy realization progress is that we're on great pace. And if not for some of the things that we had to do from a decisions -- deliberate decisions in the fourth quarter to defer commercial initiatives, we could have been even further along. So that's just piece one from a clarification standpoint, no pushing out to '28 and well on our way to deliver on that target. And I'd say that the parts that we talked about in terms of deconstructing it, breaking it down, majority of that is revenue-oriented in nature, but we have been able to deliver on cost synergies as well. I think the concept of Shift4 delivering -- continuing to kind of abide by the cultural values, get flat, stay flat, delete the parts, all very much alive and well in how we approach integration of acquisitions and having a real discipline around it.

Got it. So maybe shifting over to Shift4 Dine. With more than half of the restaurant software companies on Shift4 Dine, is the bigger opportunity now winning more merchants or increasing more wallet share within that existing base?

It's a great question. And the restaurant ecosystem in general is one that I think is a pretty dynamic one. For us, I think some of the most exciting places for not just Shift4 Dine, but let's call it, Shift4's restaurant value proposition is to identify where a merchant actually has a broader set, maybe not sort of not single -- they're not in a single state in their technology journey of how to deliver commerce in restaurant, but they actually have a multitude of restaurant technology sitting inside their walls because they're not a single location mom-and-pop restaurant. They're actually a multi-location, multi-banner, right, multiple brands, potentially multi-country and potentially, they have locations that aren't stand-alone. They are actually embedded inside of hotels. If you take that type of complexity, which is the kind of thing you see at an Alterra or the kind of thing that you see in our now like the recently announced largest restaurant win we've had in Kahala Brands. This -- this sort of nonuniformity in restaurant technology is the exact place where we have a super unique right to win because if some of your locations have the GMV density to go to modern POS, they can stomach the costs and they can handle the conversion downtime. -- modern POS, you can get that from us and Shift4 Dine. But if you have legacy POS technology that's also in the field, but you don't want to compromise on a single integration point for payments, for a payment experience, a single reconcilable set of financial information and settlement files to go to the back office, then you need to integrate to us and we can handle that. And if on top of that, you have locations that are in multiple countries or are nonstand-alone and they're in hotels, we can handle that, too, right? That ability to meet the merchant wherever they are on their technology journey is something that we view as the most exciting proposition, and it's something that we're seeing. If you start to go to -- for those that enter ski season and start to go to the Alterra properties, you'll start to see Dine there. But our payments platform is everywhere. And in the case of Kahala Brands, a similar dynamic is at play. But it's -- this is not a new part of the story. I just think it is one of the most exciting things that's bearing a lot of fruit that we're seeing this proposition of meet the merchant wherever they are in their multitude of technology in running restaurants.

Well, I guess like when we think about sort of what you guys anticipated Shift4 Dine to be and where it is today, are you guys satisfied with its progress? Or do you feel like you're behind? Because I mean, what you're describing seems like it's a longer sales cycle.

So it is -- I would say, enterprise in general is a longer sales cycle. Kahala Brands is thousands of locations. And it is owned by a group that owns thousands of locations more. And to kind of meet those needs, for sure, there is a different selling cycle than what we do when we are capable of serving and when we meet the needs of a single location tableside dining environment. The fact that we can serve up and down SMB to enterprise in multiple regions around the world in a variety of different environments, both stand-alone and embedded inside of stadium entertainment environments or embedded inside of future resort ecosystems like Alterra, those are just ordinary course for us. And if you bring it back to is the product able to deliver on meeting the needs of everyone from single location to enterprise, the answer is yes. Like we are very satisfied with the pace of progress on what we're seeing in Shift4 Dine. We're making quarterly record investment in product and platform, and we absolutely like what we see. And so I think it's a testament to the way we win that we're seeing these kinds of results, but the product absolutely has to be solid, has to be good enough in order to meet those needs.

Got it. And if you focus in on or zero in on the small to midsize, there's a ton of competition there with Toast and Square and many others, right, Clover, Global Payments. I'm just curious like do you feel that competitive pressure there like that it's increased? Or do you feel like the product is still resonating as you expected.

Believe it or not, this is not the most competitive time in restaurant technology, in restaurant POS. If you've been in the industry as long as our company has and has witnessed the ebbs and flows, you mentioned a lot of really great peers and competitors that we have a ton of respect for. Today, we're glad that they have to be profitable as part of the benchmark because competing with them when they didn't have to be, that was a tough time. And you named a handful of names. Once upon a time, there were multiple multibillion-dollar unicorn restaurant POS companies that are not part of that set anymore. And I think that the dynamics of understanding where you are on -- in terms of like a competitive framework, if you're looking at through the lens of I'm comparing it to the last year or the last 3 years versus I'm looking at it through the lens of how long we've been in this business, in this game, which is like a multi-decade journey, this is not the most competitive time. This is a very rational time to be a scaled incumbent participant in the restaurant technology and restaurant payment ecosystem, and we're happy to be one of those players. At the same time, I can easily make that statement of enthusiasm about that industry, about that end market because we absolutely do view it as a core of where we are a leader. But I can also look at it and say that if there's irrational activity happening in that sector, I'm glad that I have the diversification to look at other places of shop, stay, play and allocate capital towards where better unit economic returns can be had. We can do both at once. We can walk and chew gum. We know how to balance this, and we've been doing it for decades.

Okay. Great. Maybe shifting gears and talking about investments and margins. I think last couple of years, the margins have been pressured by acquisitions, international expansion, go-to-market investments. As we look ahead, where are you in the investment cycle? And when should we expect more operating leverage and margin expansion?

Yes, this is a real point that I would like to see us make a ton of progress on. No surprise to anyone that has looked at our journey this year and seen us sort of go backwards on incremental margin. EBITDA margin that has come together when you sort of take a large acquisition in the low 40s EBITDA margin, merging it with a business that has a low 50s EBITDA margin, going through the integration of that while also aggressively expanding into many new markets. You mentioned the 15 of Shift4 One. That's not all of them. We expanded into multiple country markets all at once without wanting to compromise on investments in product and platform that are at quarterly record levels. So how do you balance that with a path back to incremental margins? And I think from my perspective, right now, we've gone through the tough work of that financial profile integration mapping. And from here forward, I think we see a path in the medium term back to these kind of historical levels of EBITDA margin back to the low 50s, but it's not something anyone should expect as a step function tomorrow. I think we view the business as at a stable place, won't go backwards in EBITDA margin. But on a go forward, I think there is opportunity for getting incrementals back to the historical level, back to kind of that mid-60s incrementals, which means though on a moderate -- but on a moderate pace because -- when we look at the investments we're making, especially in market expansion, these are great long-term high-return yielding investments to keep building out globally, to keep expanding because we haven't yet brought our products that are going to build the gross profit density to drive high incrementals in these regions of expansion. So we're still in the expansion phase. We are still opening markets. And I think you should expect that in the year to come. So modest, like be modest within the market -- within the margin expansion expectation, but know that we have line of sight back to 50s. We have line of sight back to mid-60s incrementals.

So really bright light in the third quarter results was the free cash flow generation and obviously, the outlook remaining stable. So I'm just curious what's driving the improvement in conversion? How should we think about the path for free cash flow generation from here?

Yes. So I think it is a pride point for us to be so focused on adjusted free cash flow and in particular, kind of this idea that compounding adjusted free cash flow per share, like that's the metric that matters over a long-run time series, if you're a long-term oriented investor, that's the way we think about the business since we have an owner's mentality. And that idea of being focused on improvements in free cash flow, that is, I'd say, broken down into a couple of fronts. One, -- the synergy we don't talk about because the EBITDA targets and revenue targets were the ways we expressed the synergies at the time of the Global Blue acquisition. The synergies we don't talk about are trying to get benefit from this global scale that we have as an enterprise, global treasury, global working capital management and try to deliver kind of an excellence within that, that will ultimately yield improved NWC, improved free cash flow. There are also synergy opportunities within CapEx as you are one of the fastest growing in international markets, your procurement and purchasing leverage with OEMs, with other parts of our value chain, that improves. And then there is the dynamic that there are also synergies within areas of cap software. There are areas of synergies across the board on those kinds of procurements as well. So we don't talk about it as much, but some of the benefits to free cash flow is doing that blocking and tackling very well. And you started to see it. But we have a lot of global scale now. And that also appeals down to the way we may choose to finance things, the way we manage the working capital locally and the sort.

Okay. So you think there's still a lot of wood to chop in terms of improving and getting synergy out of CapEx?

I don't want to set expectations around it. I think...

Over time.

I think that it's my job and my team's job, many of whom are here, are the ones that have to hold ourselves to the standard that, that opportunity is getable. But at the same time, -- completely understand. cautious around expectations.

Let's keep expectations low and beat them. So maybe you could talk about the recent acquisition of Paramount and what it does for Shift4. Obviously, you talked about a lot of the trade-offs of capital, right? And especially when your stock is where it is today. So maybe you could just talk about what attracted you to Paramount, why you decided to go this direction versus buy back stock and we'll go from there.

Yes. The balancing act is always something we have to do from a capital allocation framework standpoint. We talk about it a lot, and it's not new. The balancing act of capital allocation across organic opportunities, inorganic opportunities and return of capital to shareholders, that's not new to us. But you're right to ask the question of what does Paramount give you that was so compelling from a capabilities enhancement and the sort. So let's start with this is a Rule of 40 business that we think we are acquiring at a very fair price. We think that, that's also a price that if certain objectives and goals are achieved that drive gross profit and earnings growth to levels that we think are well aligned, there are earn-out dynamics that will blend that multiple down. So that inside of 8 multiple could go down over time. And that just makes the business even more attractive from the upfront setup, okay? So put that aside, Rule of 40 business at a fair setup. Capabilities enhancements here is the theme that I want folks to take away because when you step back and look at our core knitting of the payment modality that is card acceptance, you ignore -- and that is our knitting because we grew up in the U.S. When you look around the world, the payment modality that dominates isn't necessarily card acceptance. When you look around the world and you look at especially high-value transactions, think about things like large ticket purchases, think about things like the corporate activity to put down a reservation in a private room or in a conference space. These things happen over the modality of bank rails, much more than they happen over the modality of cards. So when we looked at what was missing within our payment capabilities, when we looked at the very obvious next steps of cross-sell to drive value into the proposition, whether it's in shop, dine, stay or play, it was pretty clear to us that we had to really improve the bank rails proposition. So it's a nice follow-up to the ACH capabilities that we acquired in Bambora to be able to bring account-to-account to the table. The other capability enhancement that it really gives us is a capabilities enhancement that we don't talk that much about, which is payouts, right? We have been historically all about pay-ins, like enable our merchants to accept payments in a high fidelity, easily integrated way. But payouts is actually a really interesting value proposition when you think about some of the markets we serve. Certainly, within the world of gaming, that's a factor. But if you think about merchant environments where they're looking to pay out tips to underlying employees where you're looking to move money across markets because you're receiving a tax-free refund. This idea that we are now far more into the bimodal like pay-in and payouts game is something that very much came into mind when we looked at this capability enhancement. And so you step back, you think about a Rule of 40 business at a fair price, you set it up with a structure to even improve that setup. And then you look at the capabilities enhancements that create a really nice set of cross-sells and plug a hole within the platform around being able to deliver bank rail modality at a really great way. And you think about now the other side of the coin of payouts, there was a lot to like about this transaction, which is why we pursued it for many years. And in true Shift4 fashion, this is never something that happens overnight. It's a really patient approach to inorganic capital allocation that we have that most of the transactions culminate after many, many years of persistent pursuit and then things have to align.

And not to set expectations, but how quickly can Paramount like actually start contributing to the synergies that you're talking about?

We will probably talk about it a lot more when we get into '27 guide. Obviously, as a reminder, Paramount is not yet closed. So it's not in the Q4 guidance. And so this is really a forward-looking kind of a topic that I'm excited to talk more about in terms of like financial contribution and where that could go when we unpack the '27 guide.

So I wanted to open up to the audience, see if anyone's got questions. Otherwise, I can keep going. Any questions from the audience? No? I guess I'm doing something right, still.

It's a good thing you're prepared.

Yes. No, I'm prepared. So maybe we could talk about the free cash flow generation and deleveraging. You've had leverage come down and a new $1 billion buyback authorization in place. Can we just talk about the pace of buybacks and other activities from here on out?

Sure, sure. Like I've said many times, capital allocation framework as a balancing act is always top of mind. And in particular, when you acknowledge the constraints you might be facing as you think about a stated 3.75 pro forma net leverage threshold that we do not intend to be above on a sustained basis. If you think about that and look at where we are today at 3.7, it's clear that we acknowledge that constraint. We also acknowledge that the seasonality of our free cash flows is different than it was historically, very back second half weighted versus first half, totally acknowledge that constraint. So how do you think about the pacing of return of capital to shareholders in the face of understanding those constraints? And at the same time, acknowledge that you still want to invest organically in the platform into new markets, invest inorganically when those opportunities arise. It's a balancing act. I would say -- something that's very different about the recent $1 billion share repurchase authorization that the Board approved is that this authorization, unlike the current November 2025 authorization is a perpetual. So more akin to the market convention, perpetual in nature in contrast to the expiration date that we had of calendar this year. And so you can assume that, look, you can take a more measured approach. You can take a more prolonged approach in pacing repurchases than we've done this year. And I think that's a fair way to think about it. But I come back to it time and again because it's the thing that the executive team talks about nonstop. The Board talks about nonstop is how do you continue to balance this and this capital allocation. And look, we're governed by ROIC. And happily, I can also pair this balancing act with the idea that this is probably one of the best times we've seen for having a high bar on the competition of capital because it's going to generate long-term results. And I think that scarcity is a healthy thing and a good thing.

So maybe my final question is, it seems like M&A activity has picked up in the sector in general. You guys are obviously acquisitive. We're talking about uses of capital, just got this last deal, Paramount. Like are there others in the pipeline? Like what are you guys thinking? And what do you think is driving the pickup in M&A?

Yes. It's a great question, a real softball on the close. Gosh, I would say that if you reflect on the payment space or the fintech ecosystem aptly called at this conference broadly, it has actually surprised me how much of a hiatus we've seen in terms of M&A activity. I think especially within our sector where financial profiles of companies are high margin, high free cash flow conversion, effectively trading at double-digit free cash flow yields. That financial profile lines up very, very well for the way that buyers in my former life of what I used to do, look at attractive investments. And so it's not surprising today that we are finally hearing that there is, we'll say, private equity and interest and activity in the sector. The surprise to me has been how long we haven't heard about it. And maybe the other side to this is not just sort of a private equity kind of perspective on it, but how do corporate strategics look at kind of this ecosystem that we're in. I think we did have to get a little bit away from historical valuation volatility, figure out where things were going to settle in order to start to see folks get more acquisitive again. I think that uncertainty just created some challenges. So it's not surprising to me that we're now seeing the fintech ecosystem start to converge. I remember a day, and I'm sure you remember it well, where you can't commingle balance sheet businesses with EBITDA businesses. You can't commingle consumer fintech with B2B fintech. And those lines are very easily blurring. And why is that? It's because if you're the trusted party that can deliver financial solutions, whether that's moving money, storing money, borrowing money, if you can be the trusted intermediary for that, you can deliver all of those solutions. And people have shown that in the models that, that works. And I think that, that framework coming together is one of the reasons that we are seeing this catalyst in like fintech ecosystem. But again, my own take on it is it's not so much a surprise that we're here now, and we're starting to see that M&A activity, but rather, it's been a bit of a surprise that we've been on such a long hiatus.

Well, we're out of time. Thank you, Chris. Really appreciate it.

Awesome. Thank you for having me.

Thank you for standing by, and welcome to the Shift4 Third Quarter 2026 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Paloma Pate, Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Shift4's Third Quarter 2026 Earnings Conference Call. With me on the call today are Taylor Lauber, our CEO; and Christopher Cruz, our Chief Financial Officer.

This call is being webcast on the Investor Relations section of our website, which can be found at investors.shift4.com. Today's call is also being simulcast on X Spaces, which can be accessed through our corporate account at Shift4. Our quarterly shareholder letter, quarterly financial results and other materials related to our quarterly results have all been posted to our IR website.

Our call and earnings materials today include forward-looking statements. These statements are not guarantees of future performance, and our actual results could differ materially as a result of certain risks, uncertainties and many important factors. Additional information concerning those factors is available in our most recent reports on Forms 10-K and 10-Q, which you can find on the SEC's website and the Investor Relations section of our corporate website.

For any non-GAAP financial information discussed on this call, the related GAAP measures and reconciliations are available in today's quarterly shareholder letter.

With that, let me turn the call over to Taylor. Taylor?

Thanks, Paloma. We'd also like to thank Tom McCrohan for the years he spent as our Head of Investor Relations. We wish him well.

I'd like to start today's remarks by thanking the entire Shift4 team for delivering third quarter results in line with our guidance in the face of continued volatility. I'm proud of our results this quarter and with what our team has achieved despite a challenging environment. Years of methodical diversification across the experience economy and a disciplined capital allocation continue to pay dividends throughout each quarter.

All of that being said, 3 themes will guide how we talk through the quarter. First, we continue to deliver durable and balanced growth. Our deliberate diversification across the experience economy in shop, dine, stay and play is doing what it's supposed to do. Second, we continue to be efficient stewards of capital, applying a disciplined capital allocation approach to everything we do. We are finding many attractive areas to invest in. And third, our international expansion remains on track, as evidenced by achieving our ambitious country expansion target ahead of schedule, our Global Blue synergies and worldwide payments revenue growth ahead of our expectations.

Diving into Q3, we delivered results in line with our previously provided guidance across all major KPIs. We delivered 12% year-over-year growth in gross revenue, 10% year-over-year growth in gross revenue less network fees, 6% year-over-year growth in adjusted EBITDA and a record $200 million of adjusted free cash flow. We did and will continue to deliver durable growth. Our gross revenue less network fees grew 10%, or 9% on an organic constant currency basis, remaining steady over the past few quarters and in line with what we previewed. Chris will elaborate on this later. We also continue to find opportunities to trade noncore revenue for higher and stickier payments-based revenue. We are proud of the resilience in our numbers in the face of an incredibly volatile macro backdrop.

Travel disruption remained a headwind on our tax-free shopping business throughout the quarter. Chris will provide more detail when he reviews our guidance, but we continue to expect travel disruption through year-end. We also saw a modest softening in restaurant same-store sales relative to our other verticals, particularly towards the end of the quarter.

Despite these macro headwinds, we continue to deliver strong growth in our North Star, which is payments-based revenue. Year-to-date, both the Americas and worldwide are tracking in line or ahead of our growth algorithm. And our most mature market continues to grow double digits, with our growth markets growing faster still.

The bottom line regarding Q3, we delivered results in line with guidance, notably in our North Star of payments-based revenue despite ongoing travel disruptions impacting tax-free shopping. Most importantly, we continue to win across the experience economy broadly.

In restaurants, we signed Kahala Brands, now our single largest restaurant customer with thousands of locations and many moving to Shift4 Dine. As a reminder, more than half of our restaurant software customers now run on Shift4 Dine, which is our most modern and flagship product. We also added La Masseria Group, John Davey Restaurants and the Gastronomy Group, Sardi's and many more. Notably, Alterra, one of our marquee customers, has already begun migrating their full-service restaurants to Shift4 Dine. This is a further proof of our experience economy flywheel. Success in one vertical brings trust with our customers and often leads to wins in another.

We remain the #1 provider for hotel payments in the United States, but are increasingly global, having added significant European and U.K. hospitality volume through our software integrations, including MGM Muthu Hotels, Pearl Hospitality and [ The Venue Hotel ], just to name a few. Hotels are also increasingly adopting our gift and loyalty solutions as they see the benefits that a single vendor across every guest touch point can provide.

Our sports and entertainment capabilities remain unmatched. We signed MSG Sphere for food, beverage and retail, and we look forward to seeing their new locations as they open. You'll also continue to see us powering ticket sales for the L.A. 2028 Olympics. And the Buffalo Bills, a win we announced last quarter, is the first pro team to launch Shift4 Venue's new Apple and Google Wallet loyalty passes, which include geofence alerts and the ability for teams to implement tailored segmented marketing campaigns. We view this as a burgeoning opportunity, and we're happy to announce that we've also recently gone live with the same program for the Orlando Magic.

In luxury retail, we're incredibly excited to welcome the Kering Group, whose brands include Gucci and many, many others, to Global Blue tax-free shopping. Kering is one of the largest luxury brand groups in the world, and we're proud of the confidence they placed in us to deliver an accelerated rollout, which we completed in Q3. In unified commerce, we also added Designer Brands and wine.com and continue to grow our partnerships with nonprofits across the globe.

Our position across the experience economy truly compounds. It's a flywheel building brand loyalty, netting new wins and entrenching us further into the fabric of the experience economy. We are the connected tissue behind the consumer experience, and the gap between us and our single vertical focused peers continues to show itself.

Moving on to capital allocation. Our framework hasn't changed since our inception. We have a playbook of efficient and prudent capital allocation with a build, buy, partner strategy that puts each and every dollar where we believe it earns the highest return. On acquisitions, we expect to close on Paramount Commerce in the coming weeks, subject to a regulatory review.

Bank rails carry the lion's share of payment volumes in many markets and account-to-account fits transactions where cards run into limits. It builds on the payout capabilities we've acquired with Bambora and Global Blue. And in Canada, it lets us offer one provider for card acquiring, EFT, interact and account-to-account. This is the kind of normal course tuck-in that fits right into the Shift4 playbook. It's a good business at an upfront purchase price less than 8x EBITDA, with further earn-out incentives that, if achieved, will reduce our multiple further over time.

This was again a record quarter of product and platform investment. We continuously strive to improve our product suite. This quarter, we introduced enterprise loyalty for hospitality, a new unified analytics platform for Shift4 Dine and further TFS enhancements, including QR code invoice capture and a new control center for merchants.

We've also returned meaningful capital to shareholders through repurchases with our stock at levels too attractive to ignore while continuing to invest in the business, as I just described.

On the third objective of international expansion, worldwide payments-based revenue continues to grow well ahead of our algorithm, up 44% year-to-date. As we continue to scale outside of the Americas, we keep globalizing our products and the power of the experience economy across the world. Shift4 Dine continues to have strong receptivity with merchants throughout the world where software integrated payments are still very much in their infancy.

And Shift4 One continues to resonate with retailers in Europe, and we're now live in 15 countries, which is ahead of our operational schedule. If you recall, this is a key indicator we are looking for in relation to Global Blue synergy potential in 2027. As a reminder, Shift4 One combines payments, dynamic currency conversion and tax-free shopping into a single device and is a real differentiator in the market.

With regard to Global Blue, we will be exiting the year at nearly $50 million in annualized synergies, which is in line with our original expectations at announcement and well on our way to the 2027 target in synergies. To have this in the face of significant above-average travel disruption reinforces our enthusiasm. It's a great business with market-leading product that continues to win great global groups like Kering while also beginning to cross-sell a much larger platform of services to their already stellar customer roster.

What gives me confidence is the pattern we've seen before. In the U.S., integrated payments took years to teach the partner channel to sell payments. And in Europe, that channel is still a new concept. We're building direct first and adding partners second, and we think the first provider to mobilize that channel earns real loyalty in having done so.

Let me close by pulling these themes together. Our North Star of payments-based revenue remains strong despite a tough macro, softer restaurant same-store sales and an intentionally moderated subscription and other revenues. We put our capital to work wisely in the vein of capability-enhancing strategic tuck-ins, returning capital to shareholders where appropriate and record technology investment. And Shift4 One is in 15 countries live and growing, and we continue to add PFS wins and grow our brand internationally.

Our business has been tested in many different ways this year, forcing us to adapt the business and make challenging calls, especially in the fourth quarter, as Chris will elaborate on the guide discussion. But the diversification of our business, the durability of our growth and the caliber of the team we've built continue to give me genuine confidence on the road ahead.

I feel it important to acknowledge that the share price has clearly not reflected the durability, diversity and outright caliber of our business and the optimism we feel inside the company. I have a deep sympathy for shareholders who have endured far more pain than underlying performance warrants. As a reminder, between employees and our founder, we own over 40% of the total equity. In that regard, shareholder returns are another way we measure ourselves.

This piece is clearly not working as it should be. In the meantime, we remain relatively aggressive in our repurchases, having bought back roughly 16% of the shares outstanding over the last year and 24% since our IPO. Our long-term numbers are the clearest evidence of why our model works and why we're so confident. To remind you, gross revenue less network fees has compounded over 35% annually and adjusted EBITDA at over 43% annually since our IPO. All of this achieved with cumulative equity dilution of just 9%.

And with that, let me turn it over to Chris.

Thanks, Taylor. Our third quarter results reflect another set of consistent in-line results across the board, reinforcing the financial durability of our business despite what has continued to be a challenging operating environment in a major integration and market expansion year. We continue to deliver well above market growth with high single-digit constant currency organic growth, and our North Star payments-based organic revenue growth is in the mid-teens, all while continuing to execute on a disciplined and balanced capital allocation framework.

Our Q3 financial results consisted of gross revenues of $1.3 billion, growing 12% year-over-year, GRLNF of $648 million, growing 10% year-over-year or 9% on a constant currency organic basis, both in line with guidance. Adjusted EBITDA of $310 million grew 6% year-over-year, delivering a 48% margin and was also in line with guidance. Adjusted free cash flow of $200 million was an all-time record quarterly adjusted free cash flow and grew 42% year-over-year and resulted in a 65% conversion from adjusted EBITDA.

Now let's unpack this further. Volumes grew 11% year-over-year to $61 billion, while delivering blended spreads of 64 basis points, which remained above our full year expectation of roughly 60 basis points.

Turning to the disaggregated categories of revenue. Payments-based revenue less network fees was $402 million, growing 18% year-over-year or 14% on an organic basis. The Americas region grew 13% year-over-year, led by strength in most of our experience economy verticals, but offset by some softness in restaurant industry SSS. The worldwide region grew 31% year-over-year, demonstrating the continued growth of all of our products in the many new markets we serve.

Subscription and other revenue was $107 million, down 10% year-over-year. Here we are making a deliberate choice to lean into our total cost of ownership advantage by creating incentives and deprecating legacy acquired revenues that are ultimately in support of our payments-based cross-sell and extend overall lifetime value of our customers. It's noteworthy that year-to-date, this category is up 2% year-over-year and that we have consistently referred to this category as being volatile quarter-to-quarter.

Tax-free shopping revenue was $139 million, growing 7% year-over-year. Performance here remains consistent with prior quarters and in line with expectations, despite continuing to be impacted by travel disruptions. This performance demonstrates the resilience of the business, benefiting from having many global markets as a portfolio. Our flight capacity and booking forecasting methodology remains predictive from last quarter, with the forecasted $25 million of travel disruption headwinds coming in line with expectations.

Before moving from the revenue unpack, I want to highlight that we've added constant currency disclosures this quarter and intend to continue them going forward. The reconciliation tables in the shareholder letter now show constant currency organic growth comparables for Q1 through Q3, all in the high single-digit to low double-digit range.

Adjusted EBITDA grew 6% year-over-year, delivering a margin of 48%. We will discuss adjusted EBITDA margin more in the guidance. However, we are focused on getting margins back to delivering incrementals more akin to the historical levels as we completely move through this year of global integration and meaningful market expansion. Non-GAAP EPS was $1.49 for the quarter.

Adjusted free cash flow reflected a new quarterly record for our company at $200 million, up 42%, reflecting a 65% conversion of adjusted EBITDA. This translates into an adjusted free cash flow per share of $2.26. This quarter benefited from approximately $20 million of net working capital timing benefit from Q4 and thus should be viewed as having delivered in line with our expectations of Q3 guidance. We will comment on this dynamic further when discussing Q4 guidance.

Now on to capital allocation. Every allocable resource must compete for the best use and is subjected to a rigorous and consistent framework with an output guided by return on invested capital and adjusted free cash flow per share. We continue to view the current environment as having amongst the highest bars for return that we have experienced. Since Taylor discussed the organic investments in new markets, products, platform technology as well as our investment in Paramount Commerce, I will jump directly to the part of capital allocation framework related to return of shareholder capital.

In Q3, we repurchased approximately 4.2 million Class A shares at an average price of approximately $45.62, on invested capital of $190 million, and also repurchased 170,000 shares of our mandatory convertible preferred for about $10 million of invested capital, resulting in approximately $200 million of return of capital to shareholders in the quarter and continuing to actively manage dilution. Under the $1 billion share repurchase authorization announced in November 2025, we have now returned capital of $825 million, with $175 million remaining authorized. We are also announcing that our Board of Directors has authorized the company to enter into a new $1 billion share repurchase program beginning on January 1, 2027.

On our capital structure, pro forma net leverage was 3.7x at the end of the quarter with total debt of about $5.5 billion and cash of $1.2 billion, of which $633 million is earmarked for the August 2027 convertible notes, meaning that we have no notional debt maturities until 2032. We reiterate that we do not intend to exceed a pro forma net leverage of 3.75x on a sustained basis.

Given the strength of Q3 free cash flow generation, we were able to use excess free cash flow to fund share repurchases. And as a result of those repurchases, we now expect year-end pro forma net leverage of about 3.6x. This is inclusive of estimated capital needed to close on the acquisition of Paramount Commerce, but does not include additional share repurchases through year-end.

Now on to guidance. Of note, our guidance does not include any contribution from Paramount Commerce as it has not yet closed. For the fourth quarter, we are updating our guidance ranges as follows: GRLNF of $625 million to $640 million, adjusted EBITDA of $285 million to $300 million, and adjusted free cash flow of $155 million to $165 million, reflecting approximately 54% to 55% conversion from adjusted EBITDA.

We're approaching this quarter with more deliberate cautiousness than earlier in the year given the intensification of the aforementioned crosscurrents from geopolitical, macroeconomic and market risks. There are 3 main factors on the guidance variance. First, embedded within this guidance is the forecasting of the travel disruption impact on tax-free shopping, using the consistent forward flight capacity and booking framework that we've used in prior quarters. And this accounts for $20 million to $25 million of the midpoint variance, which, as a reminder, was not included in our previous guidance.

Second, updating for FX rates, namely the continued U.S. dollar strengthening, accounts for approximately $6 million of the midpoint variance. Third, the remainder or $25 million to $30 million of the GRLNF variance is associated with our strategy of trading noncore revenue for higher-quality payments-based revenue and deferring planned commercial initiatives in Europe due to the intensifying travel disruptions. This third factor will be most pronounced in the subscription and other disaggregated revenue category, underscoring why this variable tracking status for the year has been revised to below in the shareholder letter growth algorithm.

This translates into a full year guidance range of volume of $240 billion to $250 billion, tightening the upper end of the range, GRLNF of $2.45 billion to $2.46 billion, adjusted EBITDA of $1.11 billion to $1.13 billion, implying 45% to 46% adjusted EBITDA margins, and adjusted free cash flow of $465 million to $475 million, which remains reaffirmed and unchanged from prior guidance, non-GAAP EPS of $5.05 to $5.15.

The guidance updates flow through to adjusted EBITDA margins such that the FY '26 adjusted EBITDA margin range is expected to be 45% to 46% or a 100 -- approximately 100 basis point variance to the original guidance at the start of the year of 46% to 47%. As previously mentioned, the adjusted free cash flow guidance for the year is reaffirmed and unchanged, with the Q3 outperformance resulting from $20 million of net working capital timing between Q3 and Q4. The adjusted free cash flow conversion from adjusted EBITDA is now expected to be 42% for the year, an increase that realigns the original adjusted free cash flow conversion guidance from the beginning of the year.

Overall we have seen encouraging progress on working capital management in this year's integration of [ TFS ]. Although we always strive to achieve our ambitious targets, this year has seen one of the most dynamic sets of geopolitical, macroeconomic and market crosscurrents. As we enter 2027 planning, we are pairing our internal financial ambitions with a methodology that leaves appropriate room for volatility factors. We believe a framework of mid to high single-digit organic GRLNF growth, consistent with our full year 2026 expectations, is a reasonable way to think about 2027. That said, we will provide formal guidance when we provide our fourth quarter results in the new year.

Before I turn the call to Q&A, I want to thank Tom McCrohan for the foundational work he has provided in establishing our Investor Relations program over the years. We wish him well in his next endeavors.

With that, operator, we can open up the call to Q&A.

[Operator Instructions] Your first question comes from the line of Rayna Kumar with Oppenheimer.

So Chris, you gave us some idea of your 2026 to 2027 framework. Could you just provide us some more details as to what the drivers could be to the framework you just provided?

Sure, Rayna. So the 2027 GRLNF organic growth framework of mid to high single digits, I think is what you're referring to, which we just talked about towards the end of the call here. Let's kind of take that into 2 parts. Like first, let's start with, I think, the point that we were trying to make off the top, that there is a conservatism in the way we're looking at the variety of challenges this year from the geopolitical, the macro, the market crosscurrents. And right off the top, it's hard not to be influenced towards a more cautious approach to forward outlook.

But probably more important is really trying to get an understanding of the why we're introducing the framework at this point in the year. Obviously, formal guidance will come out next quarter with Q4 results. But if you looked at the full year '26 kind of implied guidance, the Q4 GRLNF range would result in, call it, a 3% to 5% reported growth, with an organic growth rate that's probably about 1 to 2 points inside of that. And we just wanted to be very clear that this growth rate is being depressed by events and actions in Q4 that will be isolated and not recur.

Namely what we're talking about there is that we have headwinds that have intensified in travel disruption. We've made some deliberate choices to deprecate noncore subscription and other revenue in exchange for our higher-quality payments-based revenue. That's always been part of our playbook. And then the deliberate choice to defer commercial initiatives on our European merchants experiencing the aforementioned challenges from travel disruption events.

And so taking all of that into account, we're looking at something that is, we acknowledge, an isolated Q4. But when you think about the broader framework of how we think of growth in GRLNF organic terms, mid to high single digits is the right way to think about. It's a good framework for the following year.

That's very helpful. And as a follow-up, do you anticipate same-store sales in 2027 to remain similar to 2026? Or does your GRLNF of mid to high single digits assume things could also worsen?

I think the approach as we entered this year is an approach where same-store sales as a backdrop should be viewed as a neutral variable, not a positive variable, not a negative variable, but a neutral variable. And I think absent some incremental data that might guide us towards a different direction, I think neutral is probably the right going-in assumption.

Your next question comes from the line of Dan Dolev with Mizuho.

Thanks for the detail on unpacking '27. Maybe just could you elaborate a little bit more on like Global Blue long-term trajectory. Given this is a difficult year, could we be seeing -- is there a chance that next year will be a better year? And then I have a quick follow-up.

Yes, Dan. So I think we're not necessarily going to provide like a long-term trajectory or a medium-term type of trajectory view on this call. But I think some of the observations that I'd make from the year that we've had in integrating -- successfully integrating the global tax-free shopping business is that, as a portfolio, despite the fact that this business can be impacted by travel disruption events that can be acute on certain markets, namely the Middle East to Europe market or Southeast Asia to Europe market, you can have a counterbalancing force in the portfolio across other corridors. We've talked that the U.S. consumer in the European markets continues to perform well, continues to show up. And intra-Asia, we're continuing to see good sales results.

That balancing act is what has translated into a performance in [ TFS ] that actually has been in line with the growth algorithm component that we had at the start of the year. Admittedly, within the growth algorithm, the TFS component was probably the area that, relatively speaking, we were trying to be the most conservative on, acknowledging that this is our first year of ownership and that as you go through any major global integration, you're naturally going to run into the unknowns. And so I think that the outlook for TFS is something we're very excited about despite the challenges this year. And it's because this business has actually demonstrated good durability in the face of a challenging geopolitical and macro.

Yes. I just want to sort of double-click on that. Everything Chris said is right, but I think it's important to take a step back and realize this is kind of the first 18 months we've owned this business. We had always anticipated '26 to be a year of a lot of integration work and quite frankly, a year that we were going to proceed with caution as we did that integration work. That was set up as early as our announcement of the transaction.

2026 was going to be an integration year. The fact that that integration year coincided with a lot of geopolitical conflict that caused above-average travel disruption and yet the business continues to grow, I think, is a testament to what we saw 2.5 years ago when we decided to buy the business.

I think the best proof point that people are sort of trying to understand what this piece is as part of a greater puzzle is Kering, right? The largest luxury brand group in the world, one of the few that wasn't already a customer of Global Blue chose to roll out our services throughout this year. And I think that was as a result of the differentiation we provide despite of everything I just talked about and despite of the fact that it's been an integration year for the business.

So we are incredibly happy to have this asset despite what we've seen. I think it's interesting that people sort of view these travel disruptions as an inconvenience. I actually view the growth through them, and the fact that one of the best luxury brand customers in the world chose to move to us in this year as a testament to the quality of the business.

Got it. And really quick follow-up, guys, really helpful on this. I mean just on the yields for '27, I think end-to-end step down, but the yields were up. So how can we think about that going into '27? And how does that change relative to sort of the way you thought about the business prior? And then how should we think about acquisitions fitting into that framework? Congrats on the strong 3Q.

Yes. So I think you're referring to net spreads. So as a reminder, the net spreads came in ahead of our -- at 64 basis points, ahead of our 60 basis points kind of full year sort of outlook around it. And that has been a trend that has continued throughout the year, such that even the -- on a year-to-date basis, we're ahead.

Look, I think the spread dynamic is something that is a result of the balance in our portfolio. I think in years past, the theme of enterprise growth has weighed down on spreads. I think the mix shift back towards a variety of a portfolio that's now actually very well diversified is giving us a much more stable view around spreads. And overall, I think we're content with what we're seeing in the portfolio, being able to balance it, being able to manage spread and provide a performance that exceeds our expectations.

Yes. And maybe -- we don't want to sort of set a guide here. I think it's just not appropriate at this time. But like those who've been with us since our IPO, remember this journey well, right? Spreads in the 80s sort of blending down towards the 60s as we added a lot of enterprise customers for the first time. In Europe, we're on the reverse trajectory of that, which is that we're adding SMB customers and enterprise will take time. Over the next year, 2, 3, enterprises start to adopt the value proposition and pay a lower spread, but give us a lot more volume.

So to Chris' point, we're like really happy with this mix. I think a few companies can thread this needle of enterprise solutions and SMB well. And so the result is a stable spread, but we are unabashed to the extent we see enterprise opportunities that give us outsized volume, we'll go after it.

But at the same time, like one other point I'd make is that when we think about spreads, that's not the only variable within our total cost of ownership equation. When we face merchants with the value proposition of the best total cost of ownership in the end markets that we serve, a full offering of software, meets payments, meets hardware, meets services and meets the value add around it, we look at it through the total cost of ownership perspective.

So having spreads that are variable in our payments-based revenue that we think is the highest quality of revenue, we think is the best because it's usage-based in nature, it doesn't -- you can't think of it completely separate from the fact that we will trade off the noncore revenues, the subscription revenues, the legacy acquired revenues in order to keep delivering a better total cost of ownership proposition to the merchant, which we think in the long run extends their lifetime value and makes us very competitive.

Your next question comes from the line of Timothy Chiodo with UBS.

I wanted to dig into the U.S. versus international growth within the 9% organic constant currency GRLNF for the Q3. And then also similarly, when we look at the mid to high single-digit number for next year in the preliminary 2027 outlook, what the assumption is for U.S. relative to international? And then as part of that, you can just kind of recap the mix plus growth and effectively do the sum product, if you will, that would be appreciated.

Yes, Tim. So just to reiterate it, the year-to-date payments-based revenue less network fees in the Americas, year-to-date, we're running at 16%, mid-teens, in line with our growth algorithm kind of tracker. In the worldwide, excluding Americas, year-to-date we're at 44%. But our growth algorithm variable there, high 20s. So that's ahead, that's exceeding.

And I think inside of your question though is how do you connect those 2 variables in the growth algorithm back to this GRLNF organic framework? I think, unfortunately, an unsatisfactory answer is that we will give the detail around the guidance in a more formal way for '27 at the upcoming quarter. I think the important part here though is to acknowledge the reasons that we gave that piece was I think it was pretty clear that it would have created a little bit of uncertainty and also lack of clarity if we hadn't been able to provide that given the Q4 implied in the full year '26 guidance. So that's the real reason for it. But we'll unpack it in all of the detail that we have been unpacking the business at the formal guidance in the coming quarter.

Okay. I really appreciate that. For that number though, just to confirm, that does include continued Middle East travel impact, meaning the mid to high single digits. So investors should expect that, should the conflict resolve, then we would see a slight bump above and potentially back to the -- more close to the 9% to 13% range that you previously discussed. Is that a reasonable assumption?

Yes. I think the way you can think about it is that as we look at the quarterly cadence that the conflict -- the Middle East geopolitical conflict has created, you're talking about an event that really in Q1 of this year impacted the last month of the quarter. And then Qs 2, 3 and 4 obviously have been impacted.

So as you think about the year-over-year dynamics, the first quarter will still have, it's not fully anniversaried in the first quarter, so you will still have some effect there. And that's something that we're anticipating. But for the most -- for the rest of the year, what you have is that it is anniversarying at a neutral level.

Now what you're describing though is a far more complicated answer in terms of how do you think about how different scenarios of this travel disruption resolving itself? What are the different scenarios of how that could flow through? What are the different sensitivities? This is something that we're going to really want to unpack with you all as we get into the formal guide, but that is something that we definitely will do.

Your next question comes from the line of Will Nance with Goldman Sachs.

I appreciate some of the initial look into 2027. Maybe if we can kind of zoom out and not talk about any individual year. Talking about a mid to high single digits, I think it's a little lower than what we're talking about a few months ago. I think it's lower than you guys have aspired to in the past. Over time, how do you think about the underlying growth potential of the business? And where are the opportunities that you're most focused on executing to kind of restore the performance of the business to the levels that you guys have historically aspired to?

Yes, it's a great question. We obviously believe the potential of the business to be far beyond that. We also need to look at the broader market and recognize what's getting rewarded and what's not getting rewarded in terms of expectation setting. and acknowledge some of the challenges that we, quite frankly, didn't anticipate a year ago when we set out our guidance for this year, namely the geopolitical conflict and macro more broadly.

So I think it's the right thing to do in terms of setting an expectation for the business that we think is highly achievable. It doesn't really impact how we think about execution in the business day-to-day. So what are we really focused on? We talked about being live in our materials in 15 countries. That's just being live. that isn't escape velocity of a sales force that's paying for itself yet, right? And when they do, you've seen the potential -- you've seen the results of that potential in the United States and what we've done there. So we're incredibly excited about

that. And there's entire new continents to unlock on top of a business that's already winning a lot of great customers. And as yet, I think for being self-critical to really deliver the full platform to every single one of them. So we're talking about things like account-to-account capabilities. We're talking about things like gift and loyalty. It's only been in the last quarter or 2 that our largest hospitality enterprises have really started to embrace the gift and loyalty offerings that we acquired 2 years ago.

So there's a ton of potential inside the business, but we also need to look around at the market and say what's getting rewarded and what's not. And this doesn't seem like a time to set ambitious expectations, I think, for a lot of obvious reasons when you look at multiples.

Yes. No, all makes sense. I appreciate that. And then just maybe one for Chris. As you guys think about the framework for free cash flow, it's nice to see the progress on working capital this quarter. I was wondering if you could just talk about some of the puts and takes on free cash flow on a go-forward basis and how you think about that, the puts and takes on conversion on EBITDA relative to EPS. And I know we talked a little bit about interest expense in the past. Just how are you thinking about some of the below-the-line items?

Yes, Will. So I think what this free cash flow performance has allowed us to gain -- this free cash flow performance has allowed us to gain confidence in the framework that we laid out at the beginning of the year, this idea that absent any capital structure changes, you should assume that the incremental free cash flow conversion will run at the 60% zone, so relative to EBITDA, right? So as you have $1 change in EBITDA, right, you should assume the $0.60 flows through to the adjusted free cash flow.

I think there's room to improve that. That is something that we actually were able to achieve with some of the net working capital focus in the year. It's a very global business. And in particular, within the TFS business model, it's something where I think there's optimization room, and we're focused on it. But at the same time, the business is just so much more scaled, so much more global than it ever has been, and more diversified. So as we look at all the different functions and all of the different ways with which we can be both cost conscious and cash conscious, inside of working capital and other, these are things that I think we still have as some low-hanging fruit.

But I think from a framework standpoint, this year's ability to simply reaffirm the same kind of free cash flow as the guidance here despite the guidance variance and the other variables, I think it affirms that our thinking is correct on the framework.

Your next question comes from the line of Sanjay Sakhrani with KBW.

I just wanted to go back to the slowdown in same-store sales and restaurant. I guess like could we just parse that apart a little bit more in terms of what you were seeing specifically towards the tail end of the quarter and what's built into 4Q?

Sure. So at the start of the year, when we had given our neutral same-store sales variable, that's what would have been embedded in the guide. That consisted of a first half same-store sales that would have been low single digits negative and the second half that was low single digits positive. And it's that second half that we just haven't seen the turn despite the fact that restaurant, in particular, is anniversarying sort of softer comps as we move into the fourth quarter.

So as we look at the data, you're actually seeing in the first month here of the quarter, you've actually seen negative same-store sales comps in some of the weeks. And so that is something that is weighing. And I think that it is something that, look, we're looking at, we're trying to see if there is a dynamic here, where the market is now more interested and seems to be responding well to, I think, the lower total cost of ownership proposition as they think about their own desires to be, I think, a bit more cost conscious within their operations in order to weather the storm here of what seems to be soft SSS.

Okay. And like in the fourth quarter, you're assuming it stays sort of the tail end of what we saw in the third quarter?

We are baking in the idea that there is risk to the SSS inside of our figures as part of our overall kind of shift towards more caution.

Got it. And so one follow-up for Taylor. I mean, obviously, the stock has struggled given the volatility in some things that you can't control. I'm just curious, like as you think about strategic options, what are they? I mean, like can you maybe lever up, buy more stock, consider other options? Maybe you can just talk about some of the things that you guys are thinking about.

Yes, sure. It's a great question. And I hear it expressed often from the shareholder base. I think what we're doing is sort of an obvious nod towards what we think of the stock price, which is that we've repurchased 16% of the company, and we've got cash remaining on that authorization and a new authorization just announced today immediately behind it. We intend to grow value per share in the company, we're 42% owners of the business when you consider our founder and the employees.

So we don't like the price. We don't think the price reflects the underlying performance of the business, but we also acknowledge the market sentiment in both our business and the broader sector is one that is not rewarding much and is punishing any misgiving. So I think our attitude is probably best reflected in that repurchase. But as you can see from the rumors across the industry, I think people are starting to recognize the free cash flow generation of these businesses is something that can't be ignored. So I'll kind of just leave it at that.

Yes. I think just to add that the adjusted free cash flow per share growth as one of the key variables that we simply put. Like we measure ourselves against, we measure the capital allocation framework against like that plus return on invested capital, right? Those are -- when you have those growing and going the right way and you just put your head down and you keep focusing on compounding that adjusted free cash flow per share metric, there's going to be a lot of options. There's going to be a lot of options.

And then the other thing I would say is that if you looked at our capital allocation balance in the quarter, I think that is a good indication that we are investing in the business heavily, both within that market expansion, record product and platform investment. We're investing in our playbook of accelerating our strategic initiatives, enhancing our capabilities through acquisitions like the Paramount Commerce announcement that we expect to close in the quarter. And then we're doing share repurchases. So this balance it's a bit of a high-class problem to be able to have a high bar of high-return initiatives that you can allocate capital to, but we're balancing all of them.

Your next question comes from the line of Darrin Peller with Wolfe Research.

I know it's hard to sometimes disaggregate this, but can you help a bit with how much you see coming out of the deals you've already done, whether it's Smart Bay or Bambora and how much that's still -- sort of what inning you're in, in terms of generating incremental revenue synergies out of those deals, combined now with -- my bigger question on Global Blue would just be, Taylor, when do you expect -- when for you is the -- what's the targets you're looking for to say, success, and we've really achieved what we wanted to in terms of cross-selling potential? I know you're in 15 markets, but how penetrated really are you there now? What do you want to see to consider that having succeeded so far?

Yes, it's a great question, and I think every transaction we look at individually for a different set of purposes. If you recall, SmartPay was -- we have awesome Australian acquiring capabilities. We have products like Shift4 Dine and Shift4 One that are going to be highly applicable in those markets, not to mention all of our integrations to support hospitality, sports and entertainment, retail, et cetera, we need a sales force and SmartPay was a great sales force.

And so that deal is achieving exactly what we wanted it to do, which is that it's a business that is adding hundreds of merchants a month in Australia across a product suite that's much stickier than their traditional payment terminal they might have given to a customer, and they're starting to have success at higher-quality customers. So that's awesome. That's exactly what we intend to do with it. And unlike some of our other acquisitions, the core business doesn't necessarily need to degrade. We can upgrade those customers from terminals to much stickier products.

Bambora is somewhat different, right? There's a volume opportunity inside of it, but also a capability in one of the largest ACH providers in the world and a customer base in great companies like Concur that we didn't have inside the company. So there's a much more technical aspect to that integration and making sure that those critical pieces become part of a platform.

One thing that I think may be lost on people who followed our story for a while is we are starting to become a really big payouts business in addition to a pay-in business. The entirety of what Global Blue does, for example, is payouts. And Bambora enhances that meaningfully. That brings a different set of customers or even just a different set of capabilities to the customers we have.

So those are achieving our objectives. I feel really excited about Paramount. I know I've raised a lot of skepticism in the last quarter. Hopefully, that's being demystified. We're not runaway crazy. We pay fair prices. We get good businesses, and we put the right framework around them growing inside of our franchise. So hopefully, that's understood, all within the capital allocation framework that Chris laid out.

Now with regard to Global Blue, I would sort of challenge everyone, it's not that hard these days to use AI to do it. Go back and look at all the statements we made since February of 2025 about what we expected this business to do. We expected that we would close in the middle of '25. We expected that '25 and '26 would be a year about setting the foundation for the business. And so operationally, we have hit the milestones we want to hit. We've got live teams selling live products in 15 countries.

Now to be fair, you need to have yield on that. And '27 is the year that we told people as far back as February of '25 to expect that. So just to reiterate some of the comments made in our prepared remarks, we're already seeing or we expect to exit this year is probably better said, with $50 million of annualized synergies. That's against the bogey of about $70 million that we told the Street to expect. So clearly, we feel good. And then if you unpack Chris' remarks, there was more we plan to do that we didn't get done.

So I think that's the right level of expectation. Operationally, we feel great. There could have been more, and we always sort of self-analyze that. But we're well on our way to what we described. And that, I think, is most important for shareholders in a payments environment that's super choppy. Just go look at the long track record of comments, and I think you'll find we're right on top of them.

All right. Actually, Chris, just one quick follow-up would just be you're still targeting low 3s leverage in the same time frame, right? And then just to be clear on free cash, your 60% conversion, does that incorporate incremental possible hardware costs for anything on the chip side? Or just to be clear with those 2 points.

Yes, sure. So what I talked about in the prepared remarks is that as a result of the opportunity to deploy excess free cash flow at share repurchases in the third quarter, we now have rather than an outlook to the year that ends in the low 3s in line with sort of our long-term historical average, we're expecting to delever from 3.7 to 3.6 would include within it the assumption that Paramount Commerce closes and that the proceeds needed to close on that acquisition, that's embedded within the figure, but incremental share repurchases in the fourth quarter would not be included in that figure.

On the second part of your question around free cash flow conversion, the free cash flow conversion kind of framework that we introduced at the beginning of the year, 60% incremental free cash flow, that's, I think, still the right way to think about it. If anything, our ability to have reaffirmed our free cash flow guidance this quarter for the full year, that, if anything, has just kind of continued to confirm that, that 60% incremental is the right -- that's the right framework of how to think about modeling going forward.

Your next question comes from the line of Madison Suhr with Raymond James.

I wanted to ask on the Japan tax-free shopping shift to refund based. I know it's a key region for Global Blue. It looks like you've already received some regulatory approvals there. But can you just help us understand how that change could impact Global Blue's business there? Are you expecting to have to make any changes around the business model? Do you see incremental revenue opportunities? Just any color there.

Yes, sure. Chris should keep you grounded in this. But it is a monumental change in a country that has, as you pointed out, a lot of tax-free shopping, quite frankly, one of the largest in the world. It is way too soon to predict the impact because what's going to happen here is that friction is going to be introduced to a process that largely didn't have a lot of it. And I think it's for the right reasons, right? It's a much more compliant process to make sure that anyone engaging in tax-free shopping leaves the country with the goods, is a foreigner, et cetera.

So there's friction being introduced, and therefore, predicting the near-term results of that is probably not very wise. We got to see it play out. Just for those keeping score, the change happened this week on overnight between Halloween and November 1. We've had to staff the country quite meaningfully to be able to accommodate this. We need bots in a lot of airports and a lot of department stores. But if you compare us to our peers in that country specifically, we're the only one that's done this throughout the world.

And so I envision over some period of time, our market share is going to grow dramatically and that customers who are not used to this process are going to find that Global Blue does this better than anyone else in the world as evidenced by kind of our 85-plus percent market share throughout Europe and other places. You've seen a bunch of brands join us in Japan. I think we referenced that in our last earnings call. So it's something we're excited about. It's a major priority for the business, but I also think you got to watch the consumer behavior play out, and that can be quite volatile before we kind of can comment on the longer-term trajectory.

Okay. Yes, I know it's still very early days there. Just a follow-up here. Again, I appreciate all the extra color on the 4Q guide. I wanted to ask just on the nonrecurring revenue transition to some of the higher quality, the commercial deferments, like should we really just think of that as more of a one-off 4Q event? Or as you think about the portfolio and the pipeline more broadly, do you feel like there's going to be other actions you may need to take over the next few quarters?

Yes, it's definitely the right question to focus here. Look, I think the best operational decisions that we can make in a challenged geopolitical backdrop, a challenged macro backdrop are decisions that put the customer first. They are decisions that put the merchant first. We hear what is happening in restaurant with TSS. We hear what is happening to our European retail customers given heightened levels of travel disruption and even unrest in the capital cities.

And we're choosing to take a decision to support them and to meet them where they are on needs around having a better total cost of ownership and deferring on commercial initiatives that would have otherwise been planned and would have been things that we would have otherwise actioned. Now those are things that I think are decisions that you make given the market backdrop, given the macro backdrop. But our ability to then defer those to a future point is very much still part of what we are capable of doing.

And it's -- we've got to look at the market backdrop behind us. We've got to look at what the merchants and the customers need in the moment in time. So I think that is a good call out from a question standpoint, and that is our plan.

Yes. The only other color I'd add on that is we are constantly putting in front of customers reasons they should stop paying us for one feature and embrace the entire platform, which, as you know, benefits the payments-based revenue line. So we're sometimes -- and I think Q4 is an example of that at the whim of the customer simply saying yes, and us flushing what we view as lower quality revenue, maybe they just paid for gift card services or something like that into a permanent payments-based customer where we're earning more on. So that trend is very different than what Chris just described. It's when the customer says, yes, we're thrilled to do it. And hopefully, like balanced in our tone here, but somewhat unapologetic about the results of that because it yields payment space growth in the quarters ahead.

Our final question comes from the line of Jason Kupferberg with Wells Fargo.

So just some of the newer headwinds you guys called out this quarter, the incentives deprecating the legacy revenue, obviously, the deferral of the EU initiatives we just hit on. Can you just take us back to like when those started to materialize? And as we try and quantify their impact on the top line for next year, should we just think about kind of annualizing the Q4 impacts that you outlined?

Jason, I can tackle that. So the way to think about it is in the fourth quarter, approximately 25% to 30% of, call it, the midpoint variance change in guidance is a result of those 2 points that you just mentioned. This idea that we made some decisions, some of them challenging, but the right decision given the -- what our merchants are facing in this market and travel disruptive backdrop. So we think of those as point in time, moment in time.

Some of them are, I would call them not so much a headwind, but actually some of them are opportunistic and positive because the merchant is asking if I take on more of your services, will you provide me an incentive to do so that then results in us translating noncore revenues to payments-based revenues. That's a good thing. That's straight out of the playbook that we've been -- that we've had over many years. But there are moments in time such as a soft macro backdrop or a tough operating environment for restaurants where there's an acceleration of that ask and there's a good opportunity to go after it.

In the case of Europe, I think it would be hard to ignore what we're seeing on some of the civil unrest in the capital cities disproportionately hitting some of the high-value retail as well as the continuation and intensification of some of the travel disruption from geopolitical. And so you have to make challenging calls that meet your merchant where they are, and that was what happened there.

I would not be anniversary -- I would not be annualizing that. Hence, the importance of hearing us that the framework for FY '27 GRLNF organic growth is a mid to high single digit. It isn't take the Q4 and run it out.

Okay. Okay. That's helpful. And just a quick follow-up. Can you just clarify the Global Blue synergy comments? I know you talked about the $50 million, is that just on the cost side so far? Or is there a little bit of revenue as part of that? Because I think we were going after like an $80 million revenue synergy number for 2027. So I just want to make sure we're thinking about it on an apples-to-apples basis for some of the synergy numbers you guys talked about today.

Yes, sure. That's a total synergy number. And you can think of it as approximately 2/3 top line, 1/3 cost.

That concludes our question-and-answer session. Ladies and gentlemen, this concludes today's call. We thank you all for joining. You may now disconnect.

All right. We're going to kick it off here. Kicking us off for the third day of the conference is Chris Cruz, CFO of Shift4. Chris, thanks for joining us.

Thanks for having us. Well, really happy to be here. Great conference. I wouldn't miss it.

So look, I wanted to kick us off kind of high level here. When you think about the story for Shift4, how are you thinking about the story of differentiation for the company? What do you think the major selling points to customers are?

Yes. No, it's a great way to kind of think about us as we're coming into this year and really embracing this idea of who we are as the company that wants to help empower the experience economy, whether that's shopping, dining, staying or playing. Across all of these different subverticals of the experience economy, we want to be the provider of payments integrated to commerce technology that helps power all of those experiences, restaurants, hotels, lodging, resorts, stadiums and entertainment like Levi's Stadium here, where the 49ers play or where they hosted the Super Bowl. This is all the in-person payment experience that's super complex. It's very hard. It requires not just lines of code and payment platforms, you need to integrate into vast libraries of software that run revenue centers, need to deliver on multiple payment modalities, cards, bank rails, APMs, et cetera. And you need to do it all with a real physical infrastructure in mind so that when the dinner rush comes 7:00 Saturday night, you can actually go and break fix. You can actually keep the uptime. And when something like the Super Bowl happens, you have the ability to provision all of that infrastructure, make it happen because those in-person memories and moments that matter are the things that we want to keep that uptime on. And then we do all of that with, I think, kind of the revenue model that aligns with reliability.

So the idea that it's almost like the original usage-based billing model, right? That's what payments brings to the table. If the uptime is there and the merchant is making money and collecting those payments, we are aligned with revenue. And if it's down, we're down. So I view that as kind of the core things of what we do, what differentiates us and how our value proposition resonates with these experience economy end markets.

And when you think about what that brings from a financial perspective, how does that inform how you communicate the growth algorithm to investors?

Yes. So coming into this year, it was really important to really help take this globally expanding growing business covering the experience economy as a whole and try to break it down into some of my own sort of understanding in financial formula in growth algorithm. So we introduced the concept of the growth algorithm at the beginning of the year, cutting across 2 very important axes. The first of which is how our revenues are generated. So our disaggregated revenue categories of payments-based revenue, our North Star, 3/5 of the business, tax-free shopping and subscription and other. But then we also look at the business through the lens of our geographies. The global expansion narrative of what we're after is a really important part of our growth algorithm. And that's where we look at the Americas region versus worldwide as a whole. And those are really 2 very important axes to look at the business.

And so when you look at that growth algorithm, essentially a composition that calls for payments-based revenue to grow sort of in the low 20s. That's like a mid-teens in the Americas and kind of a high 20s, but outperforming in the worldwide region, a tax-free shopping growth algorithm that's calling for mid-single digits and a subscription and other that's calling for low single digits. That was for the year. So when you look at that growth algorithm and you look at the first half of the year, I will admit that it is a difficult thing to then turn into a framework for ongoing growth because you have something, for example, like worldwide payments-based revenue year-to-date, it's grown 50-plus percent. How do I turn that into some sort of a framework for future growth?

So what I'd like to point people to is it's important to understand that the second half implied in our growth algorithm really does show you the building blocks of taking -- you take the year-to-date, you take the full year outlook and you can see that our second half kind of runs with a growth algorithm that would suggest 9% to 13%, so high single digit, low double digit. And I think that, that kind of a way of thinking about the building blocks of the business, that kind of growth algorithm is an important framework to appreciate and understand as you start to think about durable growth in the future.

Yes. No, that makes sense. Maybe just on the near term, so at the most recent quarter, you took the full year guide down at the midpoint. The bulk of that revision came from FX and some of the continued travel disruptions out of the Middle East. So 2 parts. How much of the remaining guide would you characterize as derisked at this point? And then separately, on the broader spending environment, is there anything to call out on same-store sales dynamics that you're seeing as we sit here sort of late in the quarter?

Yes. So let's unpack that. So we revised the full year guidance at the end of -- at the second quarter earnings, rightfully so, a little less than 200 basis points at the midpoint. On a constant currency basis, it actually is like about closer to 100 basis points in terms of the revision when you kind of play it through. Absolutely right. The 2 biggest drivers of that revision were, one, just trying to adjust for the fact that FX volatility has moved quite a bit. So when we set out the plan at the beginning of the year to where we are today, it's amazing to think that we were talking about a world where the U.S. dollar was supposed to depreciate against the euro pretty meaningfully. And I think Goldman and J.P. were sort of debating by how much because it all hinged on how many rate cuts were we going to have. And we are just in such a far cry from that. So a large portion of that revision was just simply updating those FX.

And then, of course, the topic that we've been talking about quite a bit over the last couple of quarters, the Middle East conflict creating travel disruption resulted in us finally revising guidance for second half with Q3 having now an impact embedded into the forecast. We were able to absorb the first half of the year in conflict. We did not revise. But finally, coming into what is now a bit more of a lasting duration of a conflict, we had to revise and include that into the Q3. But we did not include anything into the Q4. For those that are trying to sensitize what a Q4 impact might be using the same framework that we have been using, which is a framework that looks at the forward forecast of flight capacity, flight availability and bookings, you could size the fourth quarter roughly in line with what the second quarter impact was. And I think that's something that we've been trying to be really transparent on to help people with the modeling.

Got it. Most of that makes sense. So another thing on the quarter was on free cash flow. I think this is really the guiding light for a lot of the Shift4 investors. The acquisitions and capital structure have created some noise in free cash flow this year. Historically, you've talked about roughly a 60% flow-through of incremental EBITDA converting to free cash flow. Does that algorithm still hold going into next year? And are there any other puts and takes that we should be considering?

Yes. So I'll say at the kind of high level of how I think about that incremental free cash flow conversion algorithm without trying to sort of provide any specific guidance around the following year. But I think the answer is yes. The way to think about the algorithm of -- for a dollar change in EBITDA, the flow-through into free cash flow conversion, roughly speaking, 60%, I think that formula, that framework should hold. And it is important, though, to get the capital structure impact correct. So that is separate and away from the fact that interest expense will have changed as a result of the term loan transaction, which prefunded a 2027 convert maturity. So if you can normalize for that and factor that into your models, you then go into next year and you actually have to now capture that in August of '27, that convert, $633 million, that convert comes due. It matures. We will then take the excess cash on balance sheet that we've prefunded. We're going to redeem and pay down that convert. So the $633 million that was earning interest income comes off the balance sheet and the 50 basis point running cost on that convert also comes off. So if you can get that part right into the model, you then have the formula hold, 60% incremental free cash flow conversion.

Got it. Okay. All right. That's very clear. Another point on free cash flow that's been very topical across the industry has been on hardware. I think for Shift4, this runs through the P&L, mostly through D&A. It's more of a cash flow item. So I think it amounted to roughly $140 million over the last 12 months. As we think about what has been going on with memory costs, how should investors be thinking about the impact that this could have on free cash flow going forward?

Yes. So it's a really topical one that I think we have been able to navigate really well as a procurement team, as an organization that's probably one of the more scaled purchasers of OEM created payment-specific hardware. As one of the largest purchasers there, I think our purchasing scale has afforded us sort of a better weathering of this storm than others, it seems. And I say that because despite the fact that there are larger payments companies than ours, many of them don't actually procure equipment through the same OEMs, the same scaled OEMs that manufacture payment devices. Some larger players actually component manufacture and then assemble themselves, which then exposes them to probably more spot rate dynamics of a market versus us who really gets the leverage being one of the largest buyers from some of the largest equipment manufacturers.

Importantly, though, we've also been able to weather the storm, I think, a bit better than others because not every new merchant win has the same amount of hardware across our portfolio. So we, of course, have a restaurant vertical where within that vertical, you have POS systems, you have payment devices. We're in stadiums and entertainment environments that also have POS systems, payment devices. But on the other end of the spectrum, we do win our fair share of card-not-present where you wouldn't have hardware. We do have our fair share of luxury retail -- we have a market-leading position in luxury retail or in hotel lodging, where you have a lot less of a ratio hardware to revenue than, we'll say, some of our competitors that might be talking more about hardware. So I do think those are 2 key distinctions. But between our purchasing scale and our ability to keep negotiating well and the composition of our revenue, having more of a mix between revenue to hardware ratios. I think those are 2 key distinctions that investors need to appreciate about why we're able to weather the storm perhaps a bit better than others. And for the year, we have not -- we stay on top of this topic very closely, and we are not making any revisions associated with memory for the year.

Got it. Okay. That's very clear. Sticking with kind of balance sheet type topics, you're at 3.7x pro forma net leverage. You said the business should delever to low 3s by end of the year. You've also termed out a lot of your debt maturities to 2031 and prefunded to '27, as you just talked about. Where does leverage go from here? Is low 3s the right long-term operating zone? And then how do you think about the trade-off between deleveraging the remaining share repurchase authorization and I would also throw M&A in there as well?

Yes. So our capital allocation framework has remained totally consistent since the beginning of being public and well before that. My involvement with the company now is, I think I just crossed over my 10-year anniversary of being involved with the business. And as far back as I can remember, our capital allocation framework has stayed completely consistent, 3 parts. So the first of which is looking at capital allocation organically. And for us, right now, a lot of great opportunities. We're expanding international markets. That's organic opportunity to invest. We're investing in product and platform. I think our second quarter was a record quarter of investment within the product and platform from a technology standpoint. And that is competing for capital allocation. You have our inorganic opportunities where today, relative to the recent history, we are finally starting to see private company valuations start to converge with the public. So said another way, we're starting to see more attractive opportunities in the pipeline. And our pipeline is a patient, proactive, long-dated database of pipeline where we will be monitoring opportunities for multiple years.

And finally, when we start to see those valuations converge and attractive opportunities that could generate really high ROI start to show themselves, we get pretty excited. That's starting to compete for capital. And then as a public company, capital allocation towards minimizing the dilution and trying to keep share repurchases in the forefront, that remains an opportunity. So we've got to balance all 3 of those while acknowledging the constraint of where we are on leverage. It's not an easy feat. It's definitely something that manifested itself in the second quarter where we actually had to be more conservative around share repurchases, right? We only ended up investing a little more than $20 million within share repurchases because we acknowledge it. We get it. That was a cash outflow or a low cash generation quarter. And now that we're in the back half of the year, much more cash-generative quarters, we can look at this capital allocation framework. And even though it has to all compete for the highest and best kind of generated returns of capital, we've got to balance this formula out. So I would say that, yes, 3.75x -- not to exceed 3.75x on a sustained basis, that's the message people should take away. If the business kind of runs on its own, just through EBITDA growth and free cash flow generation, we could get to the low 3s this year. But we are going to be opportunistic when looking at our framework and trying to balance out where are we going to generate high ROI with dollars deployed.

Got it. So it sounds like you have some flexibility by the end of the year. If you're already on the trajectory to low 3s and you're kind of managing to kind of the mid- to high 3x range, it seems like there's flexibility to resume kind of more normal capital allocation going forward.

Yes, I think that's fair to say. But I would say that the nice part about the model right now is because all 3 of those are competing for capital, like that is a high-class problem. It is a balancing act that we have to acknowledge, but I think I would view it through the lens of it being a pretty high-class problem right now.

And then on the M&A side, how are you thinking about potential size on the spectrum between tuck-in acquisitions and Global Blue, where are you thinking is the right use of capital there?

Staying absolutely consistent on kind of the messaging over the last few quarters, this is about tuck-ins. This is about investments that are going to accelerate existing strategic alternatives, enhance capabilities on the platform, expand distribution in the markets that we think we have a really unique right to win. Those are going to be the areas, nothing of the material size and scale, certainly of an investment like a Global Blue. But that's, I think, the best way to think about it this year is a focus on tuck-ins.

Yes. Okay. All right. So let's talk about organic growth. I think the organic growth disclosure has been a really helpful disclosure. It has given investors a common language to talk about the growth in the business. You printed 11% for 2 quarters. Tax-free shopping rolls into organic starting in the third quarter. It sounds like the message is kind of 9% to 13% is sort of the pro forma organic growth rate in the back half of the year. How should investors think about durable organic growth rate? Is it that 9% to 13% range? And then how do you think about opportunities to accelerate that when they come?

Yes. So a few parts there. One, I appreciate you saying that people have appreciated the incremental disclosure around it. We're probably still one step to go, which is to -- given the global nature of the business, introducing a constant currency concept within that probably is one more net helpful piece to the equation. Because, for example, if you were to have looked at kind of a constant currency basis for Qs 1 and 2, you would have actually seen Q2 was about 145 basis point expansion in organic growth on a constant currency basis relative to Q1. So you would have seen sort of -- about 9-and-change percent in Q1 would have come to 10.5% or so in Q2. So I think that's something that folks should expect us to evolve into. When you think about your point about the implied second half reported growth of 9% to 13%, it is important to appreciate that, for example, in Q3, we've got a guide out there for 10% reported growth. Organic would therefore be high single digits. It will be just underneath the reported number. And that will end up kind of converging over time. Certainly, as Global Blue becomes organic in the third quarter, Smartpay becomes organic in the fourth quarter. As those all roll in, you sort of end up in a range where reported kind of high single digit to low double digit, organic should be just a little under that. But I do think that in general, this kind of consistency around high single-digit growth to low double-digit growth, that's what's been showing up within the numbers, both organically and even on sort of parts of the reported basis. It's kind of what we point to within the growth algorithm in the second half implied. And I think that's the right framing.

Got it. Okay. All right. Very helpful. One thing that came out of the quarter in the 10-Q, I think you disclosed a roughly $300 million acquisition for an account-to-account platform. $140 million upfront. The balance is contingent consideration. Presumably, that's not in guidance, maybe you can clarify that. But bigger picture, can you provide any more information on it and maybe how you think about how much that could add inorganically once it's closed?

Yes. So clarify that point for sure, not in the guidance. That's a transaction that after we signed it, we were expected to have, call it, 90-ish days between signing and closing for the close process. So the account-to-account opportunity is a really unique one. It's a very interesting one. It's something that we've been pursuing for multiple years. And I'll start with the first part. The topic that comes up or question comes up a lot is the kind of the decisions around the disclosure of it. And I'll start with wanting to clarify that when we were approaching the earnings and talking through the best way to disclose, we knew we had disclosure around subsequent events, but it was a decision between kind of all of the parties involved that a key commercial discussion and negotiation was happening for the business and that it would be in the best interest to not sort of shine a spotlight on it in such a large forum. We absolutely are committed to talking about why we're excited about the business, the thesis of it and the sort the minute we get to the close of it. And happily, the negotiation that really brought this into the forefront is going well. So we're happy about that, but it was an important decision that we had to make, hence, the disclosure choice that we had.

Account-to-account is interesting because when we talk about being a payments company within different payment modalities, it's very easy to think solely about cards. And I think that actually is a very -- we're a business that was born in the Americas. It tends to be America-centric that the cards culture here is really strong and prevalent. But there are many other payment modalities that, especially in other countries around the world, are the lion's share of volume. And bank rails tends to be an area. In our Bambora acquisition, we were able to obtain an ACH capability, an integrated ACH capability that we were already building, but we were able to acquire. And that gave a bank-to-bank kind of capability. But think of that as B2B, a corporate bank-to-bank capability. A2A is basically the consumer-to-business side of bank-to-bank as a rail. It tends to be for things like for categories where a payment card may not be as well suited. So think of a large ticket transaction where you might exceed a card limit, you might exceed an authorization limit, you're likely to see a high kind of rate of failed transaction. That is where an account-to-account, a bank transfer may actually make sense. Those can happen in high-ticket environments like high-ticket luxury, ticketing, where there's a onetime purchase that may be outside the norms of the spending patterns for that cardholder or even making a deposit on a special night out in a restaurant for like a private room. Those kinds of kind of spikes in cardholder behavior tend to trip kind of an auth rate, in which case a user or a consumer may want to start to go to an account to account or they might be topping up a wallet of some sort.

So having all of these different payment modalities in our platform just help us round out the total value proposition to a merchant and allow us to take off the table any one-off things that the platform may have otherwise been missing, and therefore, the merchant may have a reason to look elsewhere. Dynamic currency conversion was one. We took that off the table. ACH was one. We took that off the table. A2A was one of the last ones we needed.

Great. Makes a ton of sense. All right. I wanted to maybe zoom out a bit, a lot of financial-oriented questions. Let's talk a little bit about the business and maybe start with Shift4 Venue and the experience economy. I think there's been a big point of framing that the team has leaned into recently about Shift4's exposure across multiple dimensions for the experience economy. We just had the World Cup, great showcase for your leverage to that theme. How does the positioning around the experience economy impact the way that you think about the resilience of the business and sort of the long-term growth prospects of the company?

Yes. No, it's a great question. And we like to think of it as when you step back and look at some of the bigger trends, trying to zoom out to the trend level, it is clear that there is a growth and a demand for experiences over goods, and that trend continues. And experiences in our world is also nicely aligned to the fact that it tends to be very in-person, right? It tends to be in the real world. It tends to require all of the physicality of provisioning of payments and commerce solutions that help make that moment happen. We like to think of it, too, that our technology -- especially in a place like a sports and entertainment venue, our technology is actually the last technology that the consumer is probably interfacing with sitting in their seat, ordering ahead or they're a season ticket holder, so they might actually be using like a wallet that's provisioned by us. And that's the last interface between consumer to technology in the venue. But we're also the last piece of technology that a sales associate or an employee is likely interfacing with before they face the consumer, too.

So the technology that exists that we're providing, whether it's payments or POS tends to actually be that last piece of touch point where technology now meets a person, either an employee or an actual consumer. And we think that's really powerful because when you think about crafting kind of future experiences around commerce, around payments, unifying them together with things like loyalty, unifying them together with accessing the proprietary data assets we have on fans, on luxury shoppers, there's a lot that we are able to innovate with our merchants as a result of it. And we like knowing that we're in the conversation with some of the most innovative experience makers. It's the folks that are right at the forefront of the resort hotel ecosystem, right at the forefront of stadium entertainment, at the forefront of luxury retail, like categories that we think are unparalleled in their desire to deliver the best experiences within shop, dine, stay and play. And so that knowledge base and us being able to then cross-pollinate the ideas that we have with each of these categories, each of these experience makers, I think also gives us a pretty unique differentiation.

Okay. Let's talk about luxury retail a bit. I think this is one of the biggest swings at the Shift4 playbook that you guys have taken born out of the Global Blue acquisition. This is your way of integrating that platform with Shift4's payments platform. Can you walk through what that sales motion looks like and talk about how your visibility into the $80 million of revenue synergies from that deal has changed? And what are your latest views on timing?

Yes. So Shift4 One is a really exciting product for us because it brings together a few of the things that we've been strategically and tactically putting together to be differentiated in a massive category of retail, luxury retail in particular, and give us the entry pan-regionally into Europe, again, with a fundamental point of difference. Because when you take tax-free shopping, combined with payments and combined with currency solutions like DCC, it's really that tax-free shopping piece that is one of one, right? That is a 75%, 80% market share leading value proposition that is very difficult to displace because that's a system that is integrating merchants to fiscal authorities, to customs authorities at airport checkout and housing that data in order to deliver a pretty unique experience of money movement and payment. And when you take that piece of uniqueness and then you actually then say, well, by the way, this tax-free shopping experience works best when the payments are integrated because a card that gets swiped with a foreign BIN range, a foreign bank can automatically detect whether that person should be eligible for a tax-free shopping rebate.

So the integration makes sense to you as the merchant, makes sense to your consumer for a better experience. We're going to displace an unintegrated bank device that is probably provided by a local bank that's not investing nearly as much in commerce technology, and we're going to match a rate. And we can do all of that and have incremental revenues. You add currency solutions on top of that, which, again, is actually a unique product because the merchant can actually make money off of that solution, too. So when you combine it all together, the value proposition is very compelling to the merchant, not just for themselves economically, but because it's better for their consumer. And it's incredibly compelling to us because when you stack all of that ARPU together, tax-free shopping, currency solution, payments and pull that together, that actually gives us the ability to certainly have that ARPU built, create the best unit economics in the business, but it also gives us quite a lot to be able to maybe invest back into the customer. So where I said match the rate, well, we could actually consider having some amount of a strategy to go after the market share. So it's a pretty compelling overall offering.

Our go-to-market and selling motion with this solution today is about going country by country, building up go-to-market resources, a mix of direct and indirect partner. You're going to see the direct build first and build fastest. And that's been the experience that we've been seeing. And that's because the partner channel, unlike in the U.S., where integrated payments has been able to teach partners, partners being software companies themselves or the distributors that sell the software and integrate it, aka, value-added resellers. In the U.S., those partner channels have had more than a decade to mature in becoming payments salespeople. That didn't exist a decade ago. Those revenue streams and commissions to those types of partners, that was a foreign concept. In Europe, it's still a foreign concept. So what we're seeing is mobilizing these channels and mobilizing these partners is something that is going to take some time, but we think it's a very worthwhile investment because we can just take the pattern recognition of everything we saw in the U.S., accelerate that time frame to mobilizing these partners. But we know that if we're the first to be able to do it and really build the loyalty within that channel, it's an incredibly powerful channel. And so that's the investment we're making. So as we move country by country, we start with direct, we then add the indirect. We acknowledge the indirect. It will take a little more time, but it's a very worthwhile investment. because if you get it, it's a pretty fantastic asset.

And how do you think about the achievability of the $80 million through direct channels versus needing that kind of extra push from the indirect side?

So the plan was always to have the combined power of a dense go-to-market model where the revenue synergies are going to come from the combination of Shift4 One, DCC, the cross-selling motion of the variety of solutions that came out of Global Blue, moving through this now larger and scaled go-to-market asset spread out across the many countries that we'll be live in and bringing some of those solutions live into the U.S. So the combination of all of that is in motion. We haven't yet begun the reporting out against revenue synergies. That will be in '27. But what we can say is that we're hitting the progress milestones that we needed to hit on product, on go-to-market scaling, on countries live, which is a really important metric and on being ready with payment platform capability that can actually deliver these in-person payment capabilities that we need to be live. So we're hitting all of those milestones and feel good about it.

Got it. Great. All right. We've got just about a minute left. Chris, I wanted to maybe get your thoughts on the stock as both an investor and CFO. The stock seems to be pricing at a much lower level of earnings and growth than what it has historically. And that seems disconnected from a lot of the energy that's coming out of the team, from you, Taylor and everyone. What do you think the market is telling you about the business? And what do you think the market is missing?

Yes. Well, first, I can say we can be very patient people. I've been involved in the business for 10 years, and you can go back to the S-1 of the company, take a look at fiscal '18, fiscal '19 financial stats, and you're going to see 30%, 40% CAGRs through time. Like I mean, we know that our playbook works. We know that the combination of doing what we do well of cross-selling, of enabling payments and commerce technology to converge and then allocating capital to create outsized through inorganic investment and other outsized rates of growth. We know that, that formula works. And we're committed to it. We're excited about it. So even when you sort of have the backdrop that you have of macro and markets and volatility as a result of all of that, we know that we can put our heads down and just execute our way through. And we know on the other side of this, we will be able to continue to compound at high rates of growth. The valuation, though, is at times something that simply means that in your capital allocation framework, you have to take a serious look at, in some respects, the gift that the market is giving you, right? There's a whole host of reasons that these things can happen, industry-specific, macro specific. And at best, what we can do is play our playbook, execute that and allocate capital if we think it's attractive to something like share repurchases. And that's what we have been doing.

But as an investor, I do think that it does seem like we're at a point in time as someone that's kind of studied the payment space for like 20-plus years as an investor, you can look at the multiples to growth ratio, and we're at the low point, right? We haven't seen this since GFC, right? So the idea that I can take simple ratios like a PEG multiple. I can take simple ratios like EBITDA, adjusted EBITDA to growth rates over a multiple, like that's simple math. And I can look at it at a whole sector level and acknowledge that, wow, this is not a sector that's supposed to be running at a 0.5 PEG, right? That is for like speculative junior gold, right? Like this is not that. I think payments has always been recurring revenue, durable and certainly warrants a growth-adjusted multiple that reflects that kind of durability. So I think we do know that we're at kind of an interesting point in time right now.

Yes. Makes sense. Well, I think we'll have to leave it there. Thank you for joining. It's been a great conversation.

Yes, awesome. Thank you for having me.

Okay. Great. Thank you all for joining us today. I'm delighted to be hosting this fireside with Chris. I'm going to do a brief introduction, and then we'll get started. We have about 12 questions to go through. And I think we harmonized them, and we went through them fairly carefully, and I think they will address most of the questions that investors have sent me over the last week.

By background, Chris joined Shift4 as CFO after serving on the company's Board of Directors for nearly a decade. So Chris was a partner, as many of you know, at Searchlight Capital Partners. He led a majority investment in Shift4 in 2016 and subsequently, the public listing of the business on the New York Stock Exchange in 2020. Prior to that, he was at Oaktree Capital. I met Chris, we were just remembering about 10 years ago, and I went into his office was after 4:00 on a Friday. He was at Searchlight at the time. And after well over an hour, I was exhausted with his energy and copious knowledge of the industry, which I did not have and I left exhausted. So that was our first meeting, and we are grateful to have been reconnected over the years, especially in this capacity.

So Chris, welcome. Thank you for joining us today.

Thank you for having me.

So I wanted to start with a perspective type question. So in your CFO role, which is now 13 -- almost 14 months, what would you say are the major changes you've implemented over that time? And what have been the biggest lessons that you've learned? And importantly, how would you describe your current priorities?

Yes, sure. Great question. And thanks, again, Jamie, for having us and the team on here. So I'm coming up on a year for -- in the seat, and it's amazing what can happen in a year. I will start by saying that I was very fortunate to have come into a finance organization in a company that had a really solid foundation from which to support this global expansion and this fast growth at Shift4. And so when I came in, the biggest changes were really just about focusing on the integration work that was in front of us, namely with the acquisition of Global Blue really at the forefront of this year.

But importantly, that's an integration that whether it was across leadership, across people, across systems, across ways of working, there was a lot of already existing commonality and I think there is a lot to be appreciated about our respective organizations that actually have a lot of cultural similarity. But a really important example within some of that change in order to bring all of this together was actually benefiting from some of the really high-quality talent and leadership that came with these companies, some of which are now key leaders within the finance organization on a global basis.

And I couldn't be happier about the ability to bring all of that leadership together into a single kind of operating model, a single structure that, like I said, focuses on really helping Shift4 with the global expansion across all of its different experienced economy lines of business. And so I would say the integration piece is probably one of the biggest things from a change standpoint.

On the priorities front, I'll try to -- there's so many, but I will say I will try to keep it to the audience with the audience in mind. And I would say my #1 priority for this audience is helping investors understand the business and the financial profile. My background from where I come from, it's one where I'm very used to being able to get access to every nook and cranny of information, and that is simply not the reality of the public world, especially simply because the competition for time and bandwidth in something like an incredibly busy earnings calendar is nearly impossible.

And so we're a dynamic company. We have bold growth ambitions, a track record of expansion. And it's not lost on me that with that kind of a model comes and ask, a pretty high ask of information synthesis from investors who certainly have a lot of competition for their time. And so it's our job from a priority standpoint to really help folks acclimate to the model, to the financial profile, especially in a year like where we're integrating our TFS business, and it has its impacts on the financial profile change. It's our job to really help people try to synthesize that.

It's been great to get positive feedback that we are making good progress on that front with some net new disclosures, some approaches to how to like building block up the growth algorithm. But I totally appreciate there's still so much to do. And I really do welcome the investor engagement around it and appreciate the advice that we're getting through it. So those are probably the most appropriate of my priorities as it relates to this [ items ].

That's all well put. And it's interesting because the last comments about the adjusting disclosures is thematic throughout fintech. So this is going around. And I think the investor base will benefit from it even at the industry level. So revisiting the Q2 and the revised guidance, you reported a strong Q2, including the Middle East impact coming in. Now that was, I think, correct me if I'm wrong, a little bit better or less bad than you had thought on the -- at the same time, you did lower guidance. So can you help summarize the quarter for us and the guidance revision?

Sure. So Q2 was a record quarter. We delivered a record Q2. We delivered results ahead of guidance across the board, like a 51% year-over-year growth in our gross revenue less network fees or GRLNF, 39% year-over-year growth in adjusted EBITDA and delivered on $21 million of adjusted free cash flow against $10 million guide. So we view it as a really important kind of demonstration of resilience.

But when you kind of look at it through the lens of the building box, the growth algorithm that we introduced at the beginning of the year, we're also really proud of how that's tracking through to the year-to-date results. We have pretty much the 5 categories almost like the payments based revenue Americas, worldwide, TFS sub and other, effectively everything is either intact or ahead. And so payments-based revenue, for example, that's our north star of growth.

In the Americas region, we saw 19% year-to-date growth in the worldwide region, it's growing more than 50%. Now keep in mind that is against a growth algorithm variable that we believe high 20s. We're probably exceeding that in the total for the year. But I do think that, that's an important distinction that, that 50% isn't what we expect for the full year. The tax-free shopping business, to your point, is growing right in line with the growth algorithm despite the fact that it has been impacted by this Middle East travel disruption and the conflict.

And I do want to take a moment to remind people, though, in the growth algorithm for tax-free shopping, we started the year acknowledging that this was year 1. This is the first year you own a business. In my years of experience of owning companies, your year 1 has to be conservative. And I think we even used the words conservative when we described our growth outlook on tax-free shopping. And we thought it was an appropriately conservative variable to put MSD down there because first year running a business, they have a way of surprising you. And this definitely was one of those types of years.

But historically, this is a business when it was stand-alone public, we acknowledge that it had historically given kind of like a high single digit, low double-digit kind of growth outlook for it. And so when we look at mid-single-digit growth algorithm actually being hit, it is important to remind people that, that was a conservative variable at the outset of the year. And that we do think that there is the opportunity for that business to accelerate. For example, the underlying luxury goods market that it serves, that grows mid-single digits just as a market variable. And when you think about what we do as providing a digital payment ecosystem for tax-free shopping of these luxury goods, we are benefiting from the tailwind of existing TFS markets digitizing.

We are benefiting from new TFS markets opening globally. So we are going to outgrow that underlying MSD luxury growth -- luxury goods market. And I also think that given the disruptions that we saw there, we're definitely pleased to see that the resilience of the business across its other geographies is what has made this business perform the way it has. So strength from the U.S. consumer going to Europe, that's an outperforming corridor or strength within the inter-Asia corridor. Those are really absorbing the underperformance of the -- or the impacted corridors of Southeast Asia flying through the Middle East and trying to get to Europe or the GCC consumer trying to get to Europe.

And so we like this global diversified resilience that TFS has and this is not an anomaly. It has demonstrated this kind of diverse resilience throughout its history, and we've tracked this business for years. So in short, as we look at the business in total, the growth algorithm variables, we feel pretty validated that this is exactly the high-quality business we expected it to be. And people should not mistake our year 1 conservatism as sort of the long-term view on growth.

And then the last thing I'd say about the quarter, we delivered another consecutive quarter of low double-digit organic growth in the business. And on an FX-neutral basis, Q2 actually had organic growth expand by about 145 basis points over Q1. And so that's something we're proud of. And so look, it's a lot in the quarter to consume, but it's in our minds, a demonstration of a really positive outcome and a really strong quarter and when you take that into consideration against what we're operationally trying to achieve, expanding internationally, integrating our most material investment to date, navigating geopolitical and macro volatility, I mean, I can't imagine a better way to sum it up than to say that this is a demonstration of durability and resilience and the kind of performance that Q2 demonstrated.

And then your second question was about the guide, I think, if you wanted me to go there. Yes. So in terms of the full year guide in the quarter, we revised guidance to incorporate the Q3 estimated impact of the Middle East conflicts, travel disruption continuing and as well as the impact of of FX on the business from a translation standpoint. And then we also, for the purposes of helping people appreciate and understand adjusted free cash flow and EPS, we reminded people about the impact that the new $1 billion incremental term loan B would have on the business.

And so when you take all of those pieces together, they all impact the revision on the guide. I think for reasons that one, a, were telegraphed as it related to the Middle East variable. But in terms of the capital structure, I think, is a very positive one in the sense that we now have termed out any maturities all the way to 2031 to when our undrawn revolver would come due. But in terms of funded debt, our maturities are pushed all the way out to 2032.

And then on the revenue side, though, but to come back to it, right, the midpoint of the revised revenue guidance was only reduced by 100 basis points on an FX-neutral basis. And we'd like to believe that given that, that was well telegraphed should have been appreciated, it should have been well understood. But at the same time, I can appreciate where there might have been some differences of opinion on that.

So in terms of the organic trajectory, as you mentioned, the organic accelerated in the second quarter. You delivered low double-digit organic growth in the first half overall, correct me if I'm wrong. I see -- I find one of the debates among investors is the GRLNF guidance relative to the organic because it may appear to some to be back-end loaded. So long-winded question, but what does the guidance assume for organic GRLNF in the back half?

Yes. No, it's a great kind of clarifying question. I can appreciate why you're asking it. I'm sure a lot of investors have been inbounding to you about it. We've been getting our fair share of clarifiers around it as well. So organic for the first half has been low double digits, kind of a back-to-back 11%. I mentioned on an FX-neutral basis, Q2 actually accelerated over Q1 by about 145 basis points. In the back half, a couple of things are happening.

One, because of the anniversary of the close of Global Blue, tax-free shopping will come into the organic and Global Blue as a whole will come into the organic in the third quarter, and Smartpay comes into the organic in the fourth quarter. And you factor that into the equation if you acknowledge that tax-free shopping, the largest part of Global Blue is growing at kind of this mid-single-digit growth rate. We acknowledge that the Middle East conflict is continuing. It's reasonable to assume that a reported growth rate of the guide in Q3, 10%, that should come with an organic growth rate that's high single digit as all of that math comes together and that shouldn't be a surprise to anyone.

At the same time, we also acknowledge that if not for the $25 million impact that we're forecasting into Q3 for the Middle East conflict, this organic variable would be low double digits, and it would have been an expansion to Q2. So that's probably the first thing I'd look to say.

In total, the back half has these kind of pieces that you need to put together, and we generally have had some questions about that. I'd say the other thing that people have been asking about, and I think they're sort of mismodeling is that the contributions for Bambora and Smartpay in terms of what they're they are -- how they're impacting the business in the reported versus organic. I think they're being overestimated because folks are probably applying gross revenues associated with those businesses as opposed to net revenues or what we would call gross revenue less network fees.

And so we've had past disclosures around that to help people understand what those are, but I do think there's probably some overestimation on the impact of those businesses embedded within it. But the net takeaway that I think people should appreciate is that as this comes together, the Q3 reported kind of guide point of 10% plus, that converges with our organic. But as it all rolls together, the organic number is probably an HSD. But if not for this Middle East conflict variable, that would have been an LDD.

When reviewing the 10-Q, you disclosed a $300 million acquisition in here, and it's account-to-account related. So can you provide some additional color on that acquisition and why you found this to be a good use of capital allocation and how it fits in strategically?

Yes. Yes. Another popular question for sure. So first, I will say that as a reminder, like our capital allocation framework is consistent -- has been consistent for years, the three parts of it. We invest organically in this instance. We have a lot of organic opportunities in front of us as we open up new markets geographically, as we achieve kind of record levels of investment into the platform, into the technology of the business and we have really great unit economics to invest behind. So that's definitely an attractive area for us.

Inorganic opportunities are finally starting to show themselves. In quarters past, we've observed that there was a pretty wide discrepancy between public market valuations and private market valuations that's finally starting to compress and assets that we've deemed strategic and would accelerate kind of existing objectives that we have are finally starting to show themselves. And this account-to-account payments acquisition would be a good example of it.

But three, our bucket 3 of share repurchases and being able to deploy capital against our capital structure has been an area we've been active. We were intentionally conservative in the second quarter around it, but it is an area that continues to show itself as potentially an attractive area to deploy capital. I say all of that for context because it helps people appreciate that we do have to balance this at all times. It's not new for us to look at the framework this way. But right now, all 3 variables within the framework seem to have attractive areas to deploy capital around.

And so the bar is just higher. I think that ultimately should express itself in terms of like good outcomes, but it's not lost on us on decision-makers that are at the company that impact capital allocation decisions, it's not lost on them that the bar is simply higher and that when $1 of capital has to fight for its return, that is now just a higher bar across the board.

Now to be more specific, account-to-account payments is a capabilities enhancement. So for those that have followed us for a long time, we sort of have a few different buckets for our tuck-in acquisition categories. And this is a capabilities enhancement that we think is a really intriguing one. The ability to have sort of a bank-based kind of money movement capability within the payment platform, that's something that appeals to varying types of high-ticket type transactions. It is something that is utilized much more in international and global markets, and it's highly complementary to the places that we are expanding into and the parts of the experienced economy that we serve, especially parts where -- that are less carded, we'll say, and are areas that happen to have often like higher tickets associated with them.

It's also complementary to the capabilities enhancement that we recently were able to acquire in the form of ACH capabilities from the Bambora North America transaction. And so I would like to add that component of it, too. So we've been very thoughtful about capabilities enhancements onto the platform, tuck-ins that accelerate an existing strategic initiative. But we also want investors to take away from it that the bar is high, and we're aware of that. And so the attractiveness of this transaction was something that really stood out.

I would also say, just as a reminder to -- you started with the question of phrasing it is a $300 million acquisition. Importantly, it's $140 million of upfront purchase price, and then the balance is contingent consideration. And that's been pretty typical of our transactions that we would have these multiyear contingent considerations that are driven by -- that are meant to drive alignment towards achieving objectives, objectives that are, in our minds, high-value objectives that ultimately we and our shareholders would want to see achieved. And so this is a transaction that we've been advised will go through regulatory and close in an estimated 90 days.

And importantly, this is not in the guide. And that has been our standard practice to -- if we were including something in our guide that was a signed transaction, it's only ever happened historically because the closing was imminent, like within a day of the announcement that we are making. So very clearly, this transaction is not in the guide.

Okay. That's an important point. So I wanted to ask you about the experienced economy. You guys have a lot of mind share in a number of different areas in payments, sexy tech and obviously, stadiums. So can you speak a bit more about the experience economy and why this is an area that you view as strategic?

Yes. Look, I love this question because it is the way we think about ourselves. It is the way that I'd like to believe our brand ought to evolve. And it is an emphasis point that we have the right to win in because of sort of the power lanes of where our market-leading propositions are. But the experience economy is sort of like what is it at the highest level, it's really touching on this overarching concept that consumers are favoring experiences and that the allocation of especially affluent and aspirational consumers towards experiences is something that has an above-average discretionary growth rate tied to it.

And whether it's coming from us, whether it's coming from the airlines themselves, whether it's coming from hoteliers talking about opening much more 5-star versus economy, the airlines talking about generating their revenues from the front of the plane versus the plane overall. I think this concept of being a leader in the experienced economy is really just about aligning yourself to a growth trend that is likely to outpace an underlying growth trend of discretionary spend, but one that's far more durable.

And when we think about being able to work with merchants and be their commerce partner in serving luxury retail for the luxury travel shopper or the fan that is going to stadiums for pro sporting events or concerts, our ability to deliver in an environment like the World Cup across every stadium in the U.S. and Canada and then do so -- and then serve that merchant who's trying to serve the consumer in these resort ecosystems, in these tableside dining establishments. -- like overall, that is demonstrating itself to be a good macro trend to be aligned towards.

But another important part of it is that it's a trend that is very in person. It's very physical. It is actually happening in the real world. And when we think about the roots of our company, as being something that was very focused on operationally -- operational excellence, physical provisioning, being able to support a Super Bowl in terms of its level of spike demands, demanding commerce environment. We take a look at our DNA and we know what we're good at. And we want to take that capability, bring it globally and bring it all across the experience economy where demanding in-person payments are required. It doesn't mean that we don't do e-commerce and omni-commerce well. I think that's table stakes if you need to take a reservation in a hotel.

But in short, we like the underlying trends of this mega trend shift towards experiences as an underlying market growth, but we also acknowledge that our point of difference is high-demand in-person environments where we can be a commerce tech partner for some of the biggest tastemakers kind of in the world.

Then the last thing I would say is that we're also starting to see a real convergence across a lot of these industries where restaurants are in hotels, that's not necessarily new, but for sports teams to now have hotels, build out shopping and retail and restaurant districts around their stadiums and really want to own that in support of an ever-growing set of valuations in sports and entertainment, we're just starting to see our experience economy converge. And so the phone is ringing for us because of our ability to interoperate across all of these different verticals and see our ability to perform in places like World Cup and Super Bowl.

All right. That makes a lot of sense. I hear you loud and clear on the experience economy. I wanted to ask you about revisiting the Investor Day algorithm. So you guys had a great Investor Day in February 2025. There were a lot of incremental disclosures. There was a great amount of detail about the strategy of the company, the tactics of the company.

At that time, you had laid out mid-teens Americas, high 20s worldwide, mid-single-digit TFS. So now we're 18 months in, worldwide is running 52%. You alluded to this earlier, TFS is seeing corridor pressure. So how do you think about the algorithm now? Does it need rebasing? Or is it dispersed enough so it comes in as expected?

Yes. I would say that the growth algorithm that we introduced at the start of the year, is the way to think about the business, certainly through my lens. I came into this role with the priority of really wanting to help bridge as it relates to the investor community. Really help bridge the -- how do you model the business, how do you think about the building blocks of growth and how do you acclimate to the new financial profile of the business, especially with TFS coming into the equation and its seasonality dynamics and its margin profile.

You take all of that together, and I think it is important to then step back and kind of acknowledge that this growth algorithm and the way we talk about the business now is the -- is probably the best way to kind of not just model, not just track but to, let's say, continue to track the business in a way that will map the kind of the data points that we're providing.

And what we intend to report out on consistently is the pieces of the growth algorithm, the disclosures that we've laid out, whether that's the various disaggregated revenue categories, the organic disclosure. I do think we're going to be much more front-footed around FX components and the impact on that in disclosures. And so I think it is important to kind of just look at the current when thinking about how to best appreciate the financial profile of the business.

Okay. I'm going to come back to the free cash flow, but I did want to get a perspective on the Global Blue cross-sell. So I think Taylor had said on the Q2 call, Global Blue is somewhat different than past cross-sell playbooks. You're deliberately investing in the sales build-out across countries and anticipating a meaningful synergy benefit not just in -- not in 2026, but moreover in 2027. So what are the early conversations looking like on the cross-sell? I think you have a goal of a few thousand merchants per month exiting the year. How are you trending towards that indicator?

Sure. So I think it's important to sort of start with the context and level set that when we embarked upon the announcement of the Global Blue transaction, we highlighted sort of this $80 million synergy potential and that, that would be very much a 2027 event. And so when we think about reporting out against kind of hard and fast figures, KPIs that will do so as we move into that time period.

The most important milestones though, that I do think are tracking and what we're trying to report out to people are the operational milestones. That's why in the prior quarter, we were really focused on reporting out on the product milestones of something like Shift4 One and DCC and talk about where we are with that from a readiness standpoint, the integration milestones of the company as a whole. Making sure that go-to-market was aligned, making sure that the operational support systems, ways of working are aligned and that leadership was aligned.

And I think those things we reported out on as positive. And as we moved into the Q2, the critical one -- the critical milestone that I think we wanted to emphasize the most was how many countries we were live in and what is our goal that we had set out. We've set out the 15-country target, and we're tracking to -- in Q2, disclose that we were at 12 and I do think that is one of the most important operational milestones to have an appreciation for. But as it relates to Shift4 One, we're really pleased by the progress and really pleased by the way that the commercial resources are growing, the way that we're live in those countries.

The only thing I would add, though, that I think often gets lost is the appreciation that when Shift4 One is "live" in a country, it means that our -- all of our in-person payment capabilities, our tax-free shopping integrations to those payment capabilities, our DCC capabilities or dynamic currency conversion solutions are all live in these countries. And that means that the infrastructure has already been laid out for us to bring all of our other market-leading solutions potentially as fast follows into these live markets.

We talk about Shift4 One being live in 12 countries, but we also announced that in Q2, Shift4 Dine got live in two new countries. And that component of the narrative, I think, does get lost and is underappreciated about why we bought into or invested into all of the infrastructure that came with the pan-regional markets of Global Blue. So I just wanted to add that as a piece that I think often gets a bit lost.

So this reminds me of the Friday meeting 10 years ago where we covered a lot of territory and there was more to go, Chris. So I am delighted to have hosted you today and gotten your perspective. There's a lot more we could cover. Unfortunately, we are running out of time. So but we are grateful to you, Chris and Shift4 and Tom and Paloma for joining us today.

Folks, I think that you guys just stay here, Chris, you too. And then we have additional meetings coming up with Mastercard shortly and the rest of the day. So thank you, Chris. Thank you very much.

Thank you, Jamie, and thanks to Susquehanna team. Appreciate it.

Hello, and welcome, everyone, joining today's Shift4 Q2 2026 Earnings Call. [Operator Instructions] It is now my pleasure to turn the meeting over to Tom McCrohan, Head of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone, and welcome to Shift4 Second Quarter 2026 Earnings Conference Call. With me on the call today are David Lauber, our CEO; and Christopher Cruz, our Chief Financial Officer. This call is being webcast on the Investor Relations section of our website, which can be found at investors.shift4.com. Today's call is also being simulcast on expasis, which can be accessed through our corporate ex account at Shift4. Our quarterly shareholder letter, quarterly financial results and other materials related to our quarterly results have all been posted to our IR website.

Our call and earnings materials today include forward-looking statements. These statements are not guarantees of future performance, and our actual results could differ materially as a result of certain risks, uncertainties and many important factors. Additional information concerning those factors is available in our most recent reports on Forms 10-K and 10-Q, which you can find on the SEC's website and the Investor Relations section of our corporate website. For any non-GAAP financial information discussed on this call today, the related GAAP measures and reconciliations are available in today's quarterly shareholder letter. With that, let me turn the call over to. Taylor? .

Thanks, Tom. Good morning, everyone, and thank you for joining us today. I'd like to acknowledge the entire Shift4 for delivering strong quarterly results, including powering payments flawlessly at many of the World Cup matches, This tournament was a great unifying event and an unparalleled showcase for Shift4 ability to help merchants deliver the moments that matter on one of the sports world's greatest stages. Shift4 technology can be found at every match in both the U.S. and Canada and of course, across the broader experience economy of restaurants and hotels. .

It was especially rewarding to have the finals in our backyard and hosted by a great Shift4 customer, MetLife Stadium. Kudos to our team for demonstrating once again our ability to operate in demanding high stakes environments such as the World Cup final. Believe it or not, this was not even our busiest quarter for Sports and Entertainment despite the well-attended matches across so many of our customer locations. While there were clear signs of increased spending across restaurants, hotels and other locations in host cities, our stadium customers are quite accustomed to hosting large crowds, whether it be NFL, MLB, concerts or even events like Formula One. We are with them for all these events, and I think the World Cup was another healthy demonstration of that.

I'm proud of our results this quarter. They demonstrated resiliency despite ongoing travel disruptions and validated our deliberate diversification across the experience economy. With that said, 3 themes will guide how we talk through our second quarter results. First, the durability of our diversified business continued to show through, delivering resilient growth even as the operating environment stayed challenging. Second, our international expansion continues to scale and compound, and I'll share why we're increasingly confident in its trajectory shortly. And third, I want to spend some time on what I call the heart of our story. Our position across the experienced economy isn't by accident. Many have asked about our competitive positioning in one vertical or another, but miss the big picture. We are exceptionally well positioned to handle in-person payment experiences from SMB to the largest enterprises.

What we've learn from decades in restaurants is brought to hotels and then to sports and entertainment and most recently, luxury retail. We choose these growth paths, not because they're different, but to the contrary, they all demand a high-touch in-person experience that we are uniquely positioned to provide. And of course, we challenge ourselves to build new capabilities in areas like Unified Commerce, but with a capital discipline that demands results before risk. Diving into Q2 results, we delivered Q2 results above our previously provided guidance, including plus 34% year-over-year growth in gross revenue. plus 51% year-over-year growth in gross revenue less network fees, plus 39% growth in adjusted EBITDA and $21 million of adjusted free cash flow versus our $10 million guide.

Adjusted for acquisitions, our organic gross revenue less network fees grew 11%, which is consistent with last quarter. We believe there is further room for expansion as we continue delivering our market-leading products to new geographies around the world. The performance we delivered this quarter in our payments-based revenue streams is a testimony to our durable growth. Total payments based revenue less network fees grew 27% in Q2, with the Americas-based revenue less network fees growing 19% and worldwide payments base revenue less network fees growing at 53%. I'll repeat that our most mature Americas market grew in the high teens, and our growth markets grew over 50%. As can be the case, this quarter was not without some challenges. The Middle East conflict remained a headwind and weighed on inbound travel to Europe and across several Gulf Coast countries.

However, the overall impact on our Q2 results was slightly better than we had forecast. Said differently, we were able to absorb some of the travel disruption impact from strong U.S. to Europe travel strong performance in Asia and overall better-than-expected trends in same-store sales for both restaurants and lots. Chris will provide more details when he reviews our guidance, but we do anticipate continued travel disruption in the upcoming quarter, and our guidance now reflects that. Regardless, our Q2 results coming in above our guided KPIs speaks to the resilience of our diversified portfolio and our ability to operate through factors beyond our control. I also want to address same-store sales directly since that's been a recurring topic on these calls. As a reminder, we experienced softer trends in recent quarters among restaurants and SMBs in the Americas. This quarter, as Chris will highlight, same-store sales trends in restaurants and lodging were slightly better than our expectations consistent with what we saw in Q1 and a further sign that the trend is encouraging.

That said, our full year outlook continues to assume a neutral impact on same-store sales, and we are not forecasting any material recovery in the back half of the year. We think that, that's the right posture given what we deem to be arguably stable trends in consumer spending despite higher gas prices. The bottom line regarding Q2, we delivered better-than-expected results relative to our guidance in a quarter that provided some modest benefits from the halo effect of the World Cup, offset by ongoing travel disruptions in [indiscernible]. Chris will provide more details on our full year 2026 guidance in a bit, but the bottom line is that we are tracking to deliver 24% to 27% FX neutral year-over-year growth in gross revenue less network fees this year.

Moving on to international. We delivered another quarter of over 50% growth in worldwide payments based revenue less network fees as we continue to scale our business internationally. Some highlights in the quarter included -- we introduced our restaurant POS products, which is Shift4 Dine in Spain and Australia, and we are rapidly attracting restaurants to our platform. We continue to globalize all of our products for international markets and expect to introduce Shift4 Dine in many more international markets in the months and years ahead. Shift4 One continues to resonate with retailers in Europe, and we are now live in 12 countries, well on track to surpassing our annual goal of being live in 15 countries by the end of 2026.

As a reminder, our Shift4 One product combines payments, dynamic currency conversion and tax-free shopping into a single device. This quarter, we added numerous retail cosmetic and jewelry merchants across Spain, Italy and the Czech Republic. You can find them in our materials we provided this morning. Merchants understand the value immediately, and I expect that we'll be adding thousands of merchants per month in the near future. In hotels, we continue to win excellent resorts and hospitality customers. This quarter, we added Massa Newton Resort, the Nora Hotel West Palm Beach, Wafford Bridge in Hotel, Radisson Hotel Winnipeg, just to name a few. Again, there's more in our materials. And our sports and entertainment capabilities remain unmatched. This quarter, we signed the Buffalo Bills and Texas A&M, along with new venues, including Tom Benson Hall of Fame Stadium and Splash Way water park. You'll continue to see us processing ticket sales for LA 2028 as well.

Finally, in luxury retail, we signed several brands to our tax-free shopping solution, including Ralph Lauren, Burberry, Patagonia and Jiangxi in Japan. In an increasingly digital world, consumers are demanding more meaningful in-person experiences. As I mentioned earlier, we are uniquely positioned to address all aspects of the experience economy. We are beginning to see a meaningful amount of capital being invested in this concept of sporting events, driving commerce in the surrounding neighborhood with some interesting new concepts beginning to break ground, such as Miami Freedom Park and its surrounding retail and restaurant shops. We expect the same halo effect we benefited from this quarter at the World Cup to repeat itself with several other upcoming sporting events such as the 2028 LA Olympics.

The second way we benefit from our position in the experienced economy is the daisy chain of relationships that leads to net new business. For example, our existing relationship with major casino resorts contributed to us winning many restaurants across the country. the ownership groups of these hotels often own restaurants and other entertainment venues and as such, wants to deliver the same experience to their guests. We are increasingly aligning ourselves with the operators who share our vision of connecting consumers with experiences and having a shared vision goes a long way towards creating differentiated products and capabilities supporting the growth and vision of our customers.

Our competitive differentiation across hospitality and sports and entertainment is unique, and it continues to widen the gap between us and peers who either narrowly focused on a single vertical or only offer a point solution. We are the connective tissue behind the entire consumer experience, the same fan like grab dinner, catch a game, buy a jersey, check into a hotel in 1 night or the point of sale they're interacting. In the U.S., we still have meaningful market share to capture an incremental services to offer, and our DCC offering is live and has been well received by our first few customers. Before closing, I want to talk a little bit about the technical investments we've made recently.

Our story as a public company has often been about the proof points. The customer is one, the verticals conquered the geographies open, but none of this would have happened without meaningful investment and innovation. To that end, this was a record quarter for technology investment and product development. We released the next-generation payment terminal application, internal management software, which includes dynamic currency conversion, as well as multi-location enhancements and a totally new quick service feature set within Shift4 Dine. I mentioned Shift4 One being live in 12 countries, which, as you can imagine, requires meaningful language in local feature customization, and we have integrated AI-powered propensity models across our TFS platform, which will continue to enhance the customer journey and allow for more refunds processed.

Despite this, the disciplined approach we have towards managing expenses hasn't changed. We continue to maintain a relentless focus on driving incremental operational improvements and preserving our advantages in regards to minimizing customer acquisition costs relative to others in our industry. I'm of the view that there is always room for improvement. And while we already deliver margins that are commendable relative to peers, I do see a path to 50% margins as we scale our international operations and continue to better leverage the resources that we have across the global organization. Let me close on a theme I keep coming back to it this group because the data keeps backing it up. We can grow meaningfully without adding a single new customer, and we can drive real margin and free cash flow expansion just by continuing to do what we do well, integrating our business and deleting the parts we no longer deep.

This quarter was another proof point volume of $61 billion, up 22% year-over-year, gross revenue less network fees of $624 million, which was up 51%. 11% of that was organic. Adjusted EBITDA of $284 million, which is up 39% and at a 46% margin. And our updated full year '26 guidance calls for plus 25% to plus 28% gross revenue less network fee growth or plus 24% to 27% growth on an FX-neutral basis. The macro environment remains dynamic, and I'm not going to pretend otherwise. but the diversification of our business, durability of our growth and caliber of the team we've built continue to give me genuine confidence on the road ahead. Our long-term numbers are the clearest evidence of why this model works. To remind you, gross revenue less network fees have compounded over 35% annually and adjusted EBITDA of over 40% annually since 2019, all achieved with cumulative equity dilution of roughly 15% during that time frame. said much more simply, we x the business with only 15% dilution in 7 years. I'd encourage everyone to dig into the prepared materials for the additional detail. And with that, let me turn it over to Chris.

Thanks, Taylor. Q2 2026 delivered record Q2 financial results that exceeded all our guided metrics while our growth algorithm remains intact or ahead. All of this performance is underpinned by the continued execution of our durable model, rapid integration and disciplined capital allocation. while continuing our strategic priority of diversifying both geographically and serving more of the experience economy. This diversification has afforded us the resilience to offset some of the travel disruption we continue to experience due to conflict in the Middle East. Gross revenue of $1.29 billion came in well above our $1.17 billion guidance and was up 34% year-over-year. gross revenue less network fees, or GRLNS, of $624 million grew 51% year-over-year or 11% organically, excluding contribution from acquisitions. .

Adjusted EBITDA of $284 million grew 39% year-over-year, delivering a 46% margin and adjusted free cash flow of $21 million exceeded guidance as well. Now let's unpack this further. Volumes grew 22% year-over-year to $61 billion, while delivering blended spreads at 65 basis points. The Q2 volume mix was largely in line with our expectations, while same-store sales in the Americas trended slightly better than our expectations. Turning next to the disaggregated categories of revenue that make up the Q2 GRLNF. Beginning with our North Star on growth, payments based revenue less network fees that was $402 million, growing 27% year-over-year.

This category consists of an Americas region that grew 19% year-over-year and worldwide, excluding Americas region, that exceeded our expectations, growing 53% year-over-year. The next category of subscription and other grew 8% year-over-year. And although on a year-to-date basis, we are exceeding the original growth algorithm outlook we expect this category to moderate in the back half, resulting in a low single-digit growth for the year. Finally, the category of tax-free shopping or TFS, grew 8% on a pro forma year-over-year basis. an improvement from last quarter's 4% growth. TFS results continue to be impacted by travel disruptions in the Middle East, but the overall revenue impact came in modestly better than our prior expectation of a $20 million headwind.

Overall, we are encouraged by the resilience of the business that this growth performance expresses. Our growth algorithm remains intact or is ahead across all areas, and we delivered a consecutive quarter of low double-digit organic GROF growth. As a reminder, TFS was not part of our organic growth this quarter. but given we just celebrated the 1-year anniversary of the acquisition closing in July last year, TFS will roll into our organic growth calculation beginning next quarter. Adjusted EBITDA margins were 46%. And while an improvement from the first quarter, it is worth noting that we continue to scale our international operations and are continuously making investments in both product and internal initiatives. The encouraging outperformance we continue to see in the worldwide region validates all of these investments. Non-GAAP EPS came in at $1.32 per share.

Adjusted free cash flow in the quarter was $21 million, which exceeded our guidance of $10 million, and on a non-GAAP per share basis, this results and $0.23 of adjusted free cash flow per share or 17% conversion from non-GAAP EPS. And when combined with Q1, this translates on a combined basis to a 52% free cash flow per share conversion for the first half. And now on to quarterly guidance. For the third quarter of 2026, we are introducing guidance as follows: GROF of approximately $650 million which embeds an approximate $25 million impact for travel disruption due to the continued Middle East conflict. Adjusted EBITDA of $310 million. and $180 million of adjusted free cash flow. As a reminder, we raised an incremental $1 billion of Term Loan B on July 8 to prefund the August 2027 maturity of our convertible notes. As such, adjusted free cash flow revisions are largely the result of the net interest expense impact with the balance resulting from the flow-through of the aforementioned earnings revisions.

Additionally, gross revenue for the quarter is expected to be $1.3 billion. We are also introducing Q4 guidance ranges as follows: GRO&F range of $661 million to $711 million, adjusted EBITDA of $327 million to $352 million, and adjusted free cash flow of $176 million to $186 million, reflecting approximately 53% to 54% conversion. Similar to last quarter, we are only forecasting potential travel disruption from the Middle East conflict for the next 60 days. And thus, our fourth quarter guidance does not assume any impact from this.

This all translates into full year guidance ranges as follows: GRO&F of $2.48 billion to $2.53 billion, up 25% to 28% year-over-year adjusted EBITDA of $1.15 billion to $1.18 billion, up 19% to 22% year-over-year, adjusted free cash flow of $465 million to $475 million, representing approximately 40% conversion of adjusted EBITDA and non-GAAP EPS range of $5.15 and to $5.35 per share. Again, both the EPS and the adjusted free cash flow revision or majority of the result of the incremental net interest expense resulting from the increased term loan B to prefund the August 2027 convertible notes and the flow-through of earnings revisions. Just some color on guidance.

Although we now have an outlook that will favor the low end of our original guidance range, we are proud of the durability and resilience that the business is exhibited by absorbing the travel disruptions associated with the Middle East conflict in the first half of the year. However, given the duration of the conflict, incorporating an estimated $25 million impact to Q3 and updating the outlook for approximately $20 million of FX translation impact seems prudent to acknowledge and comprises the majority of the $40 million midpoint guidance revision.

On an FX-neutral basis, our GRO&F guidance now reflects 24% to 27% year-over-year growth compared to an FX-neutral growth of 24% to 29% in our prior guidance range. Said differently, the midpoint of our GRO&F growth range has only been reduced by 100 basis points on an FX-neutral basis. And now last, on capital allocation. Every allocable dollar must compete for the best use and is subjected to rigorous process, while the output that guides us is return on invested capital and adjusted free cash flow per share. In Q2, we repurchased approximately 650,000 shares at an average price of approximately $38. We were intentionally conservative this quarter given current leverage levels and the cash consumptive quarter we were in. Cumulatively, we have deployed $625 million against the $1 billion share repurchase authorization announced 3 quarters ago and this has resulted in an approximate 11% reduction in non-GAAP share count for the authorized period.

On debt capital structure, our Q2 2026 pro forma net leverage was 3.7x and and we maintain our view that we do not intend to exceed 3.75x pro forma net leverage on a sustained basis. Based on performance trajectory and guidance, the business is expected to delever by year-end to our long-term average net leverage level in the low 3s. As mentioned on July 8, we extended the maturity of our $550 million revolving credit facility, which remains undrawn and raised an additional $1 billion of Term Loan B at the same terms as our existing term loan B. with proceeds principally to address the August 2027 convertible note maturity. The net result is that we have successfully termed out our capital structure to 2031.

Before turning the call back to Taylor, I want to thank our colleagues for their flawless execution at 1 of the world's grandest events of the World Cup and every venue you tirelessly executed to ensure that our customers could deliver the moments that matter in the most demanding environment. With that, let me now turn the call back to Taylor.

Thanks, Chris. And operator, we're ready for questions. .

[Operator Instructions] We'll take our first question from Dan Dolev with Mizuho.

Lots of good things here. I hope people pay attention to that as well. Chris question for you. Has anything changed regarding your capital allocation priorities? So for example, how are you thinking about buybacks, acquisitions and leverage here?

Yes. Thanks for the question, Dan. Yes. So I would start with the overarching phrase that our capital allocation framework remains unchanged. I think we have the benefit of having a few different value creation drivers within that framework, and we have to be prudent about how to balance it at all times, given how focused we are on driving return on invested capital, and so when you think about where we are, though, in this past quarter, I think it's fair to acknowledge that we had to approach things with a little more conservatism and that was very deliberate. .

So the execution against the share repurchase in the quarter was certainly impacted by the fact that we acknowledge where we are on our pro forma net leverage level at 3.7x, and we acknowledge where we are -- where we were in a second quarter that is a seasonally cash-consumptive quarter. You take those 2 things together and the strategic decision was to be intentionally conservative at the time. Obviously, the cash flow generation seasonality changes in the back half of the year. And then in general, from a liquidity standpoint, we're in a much more improved position in light of the recent financing. Maybe 1 other thing I would say about it, though, is that as we think through the cash flow generation in these coming quarters, and the growth that we anticipate, I think it's fair to reiterate that within that capital allocation framework, it's not just about repurchases, it's also about making sure we continue to invest.

I think something that we like to highlighted the fact that this was a record quarter for us in terms of investment into product technology platform as well. We continue to believe that there are a number of interesting opportunities to strategically enhance or accelerate some of our strategic initiatives by looking at tuck-in M&A as well. So I would say, overall, no change in the way we think about the framework but very much intentional in how we look at it, given some of the seasonality dynamics. I don't know if there's anything else you wanted to add Taylor.

No. I think you said it well. We've invested meaningfully in technology. We continue to see lots of interesting M&A opportunities. I would sort of categorize them in the tuck-in category. But keep in mind, we're in many dozens of countries that we weren't in just a few years ago. And in most cases, with a single product. So the ability to deliver the rest of our product whether that's been buying a local sales team is something that we're incredibly focused on. So nothing's changed with I think Chris' caveat that Q2 warranted a little bit of caution, but Q3 less so.

We'll take our next question from Rayna Kumar with Oppenheimer.

Chris, so you raised to the Term Loan B during the quarter. Can you just talk about the uses of funds and how you're thinking about your balance sheet here? .

Yes, sure. Thanks for the question, Ren. So we -- on July 8, we successfully executed a combination of extending our revolving -- our revolver maturity into a new 5-year and take that out to 2031 and also raised $1 billion of Term Loan B on essentially fungible terms or the same terms as our existing term loan. The primary use of proceeds there was to prefund the August 2027 convertible note maturity so that we could successfully term out the entirety of the capital structure into the 2031 territory. And actually, 2032, if you think about where there's -- where there actually is funded debt because the revolver is undrawn. And that's the primary purpose of that capital.

I think the other dynamic within it is to acknowledge that -- within that, we also have some general corporate proceeds that went to the balance sheet improves liquidity. And all the while, I think it was fair to say that it was a well-received offering in general. ratings remained affirmed and unchanged as well the debt markets really do view us as a seasoned issuer and we're very supportive of the transaction given the fact that you could see the terms that came through are probably really amongst the market best for our BB rating -- our BB corporate rating. So overall, really satisfied with the transaction outcome and like where our balance sheet is right now.

That's really helpful. And just 1 quick follow-up. You were on some pretty big wins in retail. And I think your initial expectations were like signing smaller retailers. So just like are you surprised by the bigger wins? And should we continuing to expect that type of traction with large retailers.

So there's a lot of receptivity across kind of the larger retail base. This is a group that Global Blue has had a marquee product offering in for quite some time. Increasingly, as the tax-free shopping sort of product adds new geographies, those retailers were the default for those retailers in those geographies. I would say I wouldn't want to challenge the sales motion that we have now, which is a lot of the SMBs that we would reference in the materials, these are same-day decision makers. This is a walk in, get a meaningful enhancement from a product perspective and adopt the product quite quickly. Any of the enterprise retailers we work with require deep and sophisticated customizations and take longer to board, et cetera. I think as has kind of always been the case we Shift4, and it's kind of interesting to use in the context of the World Cup, like you win the MetLife so that it helps substantiate why all the local businesses around the MetLife should be doing business with you, and that continues to be the case in Europe. .

We'll take our next question from Timothy Chiodo with UBS.

So I think a lot of investors appreciate the Shift4 approach, which, as you mentioned earlier, results often in lower customer acquisition costs. One of the hallmarks of that over the years has been the gateway strategy. And of course, there's many other means of doing this in conversion. But specific to Gateway, there was originally the Shift4 Gateway, there was a merchant link gateway. More recently, that opportunity has been somewhat replenished with age and even more recently, Bambora. I was hoping you could give a little bit of an update on what remains in the -- specific to the gateway conversion opportunity. and maybe a little bit more specifically on the 2 more recent ones in terms of Egan and Benbora.

Yes, sure. Well, I'm glad you categorized as the way that you did, which is to say that the hallmark of the M&A approach that we've taken over the years is that in every case, it gives us an embedded base of customers to go cross-sell to. So institutionally, we don't think about the ability to migrate a give gift card customer over to our payments radically different than we think about an and gateway customer. I would say gateways have been -- it's a no place like home M&A move for us. That's really what we call them in our M&A tracker because the playbooks seasoned, it's understood across the entire company, practically speaking. iGen has been an awesome proof point for us. We've got 1 of the largest airport operators, concessionaires in the world has switched over. That was largely a result of the gateway conversion, many hundreds of merchant locations as a result of just that merchant moving. iGen's been great.

And they all kind of follow the same pattern, which is to say the newer the gateway, the less progress we've made through it, but again, a really seasoned motion. I will say though, we don't challenge our sales teams to prioritize 1 opportunity or the other. We basically bucket all these merchants into pain points we believe we can solve. So our restaurant team goes after all the restaurants. in our acquired book. Our hotel team does the same. Just now, our luxury retail team does the same with that. So we try not to sort of put a prescription on moving 1 versus the other. I would say highlights for us recently have been a beginning of conversion of Rebel merchants over to Shift4 Dine, which is quite exciting. [indiscernible] the kind of upper bound of that product is nonexistent, meaning we're attracting lots of awesome institutional customers to that product, and that product is compelling payments conversations. And again, no place like home. I would put Bambora in the same category.

We'll take our next question from Nate Svensson with Deutsche Bank.

I appreciate all the details on the Middle East, but I do want to follow up on that just given how dynamic the situation is. For 2Q, I know you said the headwind came in lower than expected, but maybe just wondering if you can give more specifics on where that number was relative to $20 million in kind of the strength you saw offsetting that? And then just as we think about the $25 million headwind that you're baking in for 3Q. So I get that there's seasonality that's a higher travel quarter relative to 2Q. But given the results you saw in 2Q and some flight data that does look like it's improving. Just wanted to hear the assumptions underlying that $25 million?

Sure. I'll take that, and thanks for the question. Yes, so look, well said, the right word is dynamic, right? It's been -- it's definitely been a dynamic on like the travel disruption that has resulted from it has made forecasting a challenge specific to the corridors that are impacted. And when I say the corridors, I mean the dynamic of the consumer's origin point is an origin point largely in the GCC or Southeast Asia coming into Europe, right? That's the corridor that we're focused on. And I'll answer the question around the commentary that relative to the $20 million Q2 sort of number that we had baked in as far as kind of like a headwind.

The $20 million, it did perform modestly ahead not a meaningful amount, but modestly ahead of what we had expected within our forecasting at the time. More than anything, though, the overall TFS category, I think, outperformed across other areas that demonstrates its kind of balance and resilience as a whole. So for example, 1 of the themes that we had mentioned outside of that affected corridor of sort of GCC, Southeast Asia consumer coming into Europe, outside of that corridor, there was like nice pockets of strength. The U.S. consumer into the European corridor continued to perform well. We continue to see nice strength there. and we saw nice strength coming from the inter-Asia area, so travel into Japan for tax-free shopping, so when you balance out TF as a whole, it actually was pretty resilient and demonstrates it's kind of the benefit that it has by being as kind of geographically diverse as it is. But in short, to come back to your question around specific to the $20 million, it was modestly ahead.

That's very helpful. And I hear you on the challenges, especially Asia to Europe [indiscernible] So I appreciate the color there. Just for the follow-up on free cash flow. So get the points on the guidance this year sounds like mostly from the term loan being made a little bit from these Middle East headwinds. But just as we think about free cash flow conversion into next year and beyond, beyond the higher interest expense that will be flowing through, is there anything going on across the business that changes your confidence or kind of visibility into what free cash flow conversion should look like in future years. just trying to get our models in the right place as we think about next year and beyond? .

Yes. No, it's the right question, and it's definitely something that I think -- the Street has done a good job of getting acclimated to through the balance of this year is sort of free cash flow modeling. So we appreciate that. I would say that as I think into next year, it's obviously 2 large caveats, right? The story of this year, a combination of capital structure, given that we had maturities in '26 and a convertible maturity in '27. That's now out of the way. I think there was some questions even in last quarter, as to how we might address the '27 convertible and how to think about that within models, hopefully, now that's fully off the table in terms of how to model it. And then the -- obviously, the travel disruptions that we experienced this year have been the other big factor on free cash flow, and corresponding or maybe connected or maybe disconnected like there has been FX volatility as well.

So when you take into those if those are not part of what we have to contend with in '27. The answer is no. We don't see anything fundamental. If anything, something that we would reiterate from earlier in the year is that the incremental free cash flow conversion that should come through into the business, it should expand over time, given overall operating leverage that exists. Even when we think about record levels of product investment that is all still well within the well within the normal and ordinary course of what the business can deliver. So I think the short answer is there should be anything incremental to the aforementioned things that we were facing this year and the capital structure point that you brought up.

Yes. One thing I want to layer into it because fully acknowledged Global does a little bit of a different opportunity than we've had in the past. Typically, whether it's any of the cross-sells I described in Tim's question, it's almost an immediate incremental revenue opportunity on an existing customer, and that revenue is like nearly 100% flow through to the bottom line. On a net to EBITDA basis. One thing that's different about Global Blue is we are deliberately investing in meaningful sales build-outs across all the countries that they operate in that we see opportunity. That's because they're not just going to go after Global Blue retail customers, Global Blue SMB customers, they're going to offer all of our other products in those countries.

So while this early cross-sell motion is great, we're seeing great momentum. some of the costs associated with that mask, what a typical cross-sell might look like. It's all for the right reasons, and that's kind of why when we even first signed and announced the Global Blue transaction, we talked about meaningful little synergy benefit in '27. It's because this is -- I think it's very balanced, but it's an investment year to make sure we have the -- all of the infrastructure we want in these countries. And as much of our full product suite available as possible.

We'll take our next question from Craig Maurer with FT Partners.

Two clarifiers for me. First, on the 3Q guide or the effectively the guide for the rest of the year. You basically said similar to last quarter, we are only forecasting potential travel disruption from Middle East conflict for the next 60 days. Now what does that mean exactly? Does that mean beyond 60 days, it's just an immediate return to normal when we should be considering your model? Or how should we think about that? And second, you called out the FX drag this quarter. But could you give us the last, call it, 3, 4 quarters of FX impact, so we can model properly?

Yes. Thanks for the question. On the second one, I think it's probably most conducive to do that in a follow-up. So we'll tackle that 1 as a follow-up. On on the first point around what does it really mean to continue to similar to last quarter, use a 60-day outlook forecast. So as a reminder when we look at the affected corridors in the TFS business, what we're really focused on is looking at how those corridors are tied to a forward forecast of flights. The flights, the seat capacity and a variety of the factors through data sets that we get our input into an outlook bottle that allow us to get a pretty good 60-day for case. I think indicative of the -- we'll say the predictability of that view is that relative to the $20 million sort of figure that we had forecasted as an impact figure in Q2, we were pretty close.

So I think that we wanted to continue that same methodology use the forward forecast and importantly, not try to predict the duration of a conflict, a geopolitical conflict. So you take those 2 things together, and we're consistently applying the exact same methodology that we applied the last quarter and that methodology would lend itself towards the $25 million number that we put out there. It's important to understand that the Q3 period in terms of seasonality is the strongest of the quarters in terms of total sales in store or volumes. And so the increase is only a reflection of the seasonally strong Q3 relative to Q2. And I know you didn't ask this as explicitly, but if you sort of think about Q4, the idea of what we're trying to say is that we're not -- we don't want to break the consistent approach we've used in the last 2 quarters and now try to forecast the fourth quarter on something like a geopolitical conflict -- but for context, it's fair to say it's probably a good data point to appreciate that Q4 and Q2 are about the same size in terms of their TFS contribution from a seasonality standpoint in terms of volumes. And so I'll put that out there as hopefully something helpful for your own modeling.

Yes. I just want to hit this again because I sense a little bit of confusion on it. I would say the impacted travel corridor that we anticipated and we forecast in Q2, they largely as expected. There were other corridors that outperformed, and therefore, you got a slightly better than forecast results -- we are approaching Q3 with the exact same mindset, which is that we know what the impact of the travel corridor would be in the highest seasonal quarter. And so we're giving investors insights into that. The 1 thing I would just sort of say with regard to Chris's remarks, now we haven't had a conflict that's kind of on and off and on and off and on and on. We haven't seen that change travel behaviors radically inside of that corridor. .

So this is why we're so reticent to want to try to predict beyond what we can see in flight planning capacity. But this is a shopper base that is largely quite resilient. When travel is safe in the eyes of the traveler, they get out and spend quite immediately. So I don't think it's unreasonable to say that when this conflict is decisively over that this impact would be muted.

We'll take our next question from Darrin Peller with Wolfe Research.

Look, when we look beyond the [indiscernible] impact, and to really follow up a bit on Tim's question earlier in terms of the cross-sell. It looks like you do have the underlying trends, obviously, in the payment side and the Americas side trending well. So just looking beyond the short-term minus conflict impacts and thinking about next year for a little longer, I can't help but wonder where you are on Shift4 and Global Blue in terms of where you expect to be contributing to numbers. So we know by the end of the year, you're holding 15-plus countries. It seems like you're progressing well. I think you had 12 now you said.

But help us understand a little bit more in terms of the progress and the time lines you'd expect to see that really start moving the needle where not only do you have entry into the countries, but real ability to process volumes and convert more and more merchants, the sales team set up probably a little more structural time lines.

Yes, it's an awesome question and it is literally the heart of our strategy here. So to give you a little bit of insight into how Global Blue historically operated, it was a very enterprise-oriented go-to-market motion with strong market share across the enterprises. And the SMBs were largely self-service operation, meaning an SMB merchant would find its way to Global Blue without a lot of service without a lot of dedicated customer management. Our approach is kind of the inverse of that, which is that the SMBs are the first to target. They're the fastest move there, quite frankly, some of the highest benefit of consolidating all of these technologies into a single payment device for ease of use. and increasing tax-free shopping at that hypothetical watch retailer or fumed boutique, et cetera.

So we deliberately approach this with the idea that we're going to build a sales team that can focus on that motion explicitly. The way this works in practice, dedicated ship for strategy personnel that have done this across multiple acquisitions in the past, going into these countries, sitting in global blue offices, hiring local salespeople training, building all the materials, et cetera. I can't kind of understate the amount of work that our Austin team has done in this. And then there's a threshold we have, which is after x 100 merchants are signed up, the motion is handed over to the local teams and they run with it from there because it is kind of a regular sales quota-based system.

We've been able to hand that off in a handful of countries now. So we're very excited about that. That's proving that the motion is working. But again, and I don't think we've been inconsistent on this our goal is to be able to produce a few thousand merchants a month exiting the year. And admittedly with an economic contribution in '26 that is more expense than gain because of the cost of building out these teams. It's the ability to annualize that merchant base through '27 that we've had our eye on that's the price we've had our eye on the entire time. And we're quite optimistic about the pace that we've had. We've got more countries to kind of evaluate than we expected to have. And the teams are just starting to get it, which is super exciting. But I think and again, this is less of an economic basis, we're admitting to the drag that this investment causes, but Q4 production against these is really the proof point to know that we're set up in the way we want to be for '27.

All right. Can I ask 1 follow-up, Chris, for you on just the blended spread at 65 bps in the quarter. Can you just talk about the overall sustainability at this level and what extent this is impacted by the Wolfcomp related mix or Global Blue or DCC or perhaps in the quarter?

Yes, sure. So I think the 65 basis point spread relative to at the beginning of the year, sort of gave people visibility that we expect spread on a full year basis to be greater than $60 million. There isn't really much to the story of unpacking that. I think we view that spread mix is something that within this quarter is kind of well inside of what our expectations would have been. So when I say it's within, right? It was within the range of expectations that we were -- that we had for Sprint. So I don't think there are any specific callouts to make around the spread differentials. I think what we have said in the past going into this year was that it is possible that we were going to see a bit of a change in terms of the dynamic of relative to the last 3 years, where Enterprise had been an accelerating portion of the book and the enterprise spreads we're having a mix shift to a mix shift downward on blended spread.

And then this year, as that enterprise merchant base is finally kind of size and scale, and we're now growing off of that size and scale base. as we see more SMB business come through, we may actually start to see some expansion in spreads. So that trend is something that we have called out as a possibility for the year. And it is playing out. We are seeing that, but it's nothing outside of what we were already expecting. So nothing to call out or over and above the fact that this is well within the expectations that we had for the year.

We'll take our next question from Sanjay Sakhrani with KBW. .

Taylor, you mentioned the World Cup was a strong contributor to the second quarter results. And then obviously, we saw that in the payments revenues. I'm just curious, when you look underneath that, do you feel like the business was performing commensurately ahead of sort of expectations as well?

Yes. It's a good question. I actually want to be very balanced on the impact of the World Cup. We definitely saw trends of exuberance specifically in the merchant categories we focus on in host cities around gates. It was very obvious immediate commenting on this, like the Scotts drinking Boston Dry, we saw that. We saw that in our restaurant data. We saw it in Boston. However, the total payment volume across our SME franchise, meaning specifically in the stadiums, was not highest quarter by any measure. Keep in mind the football organization takes these stadiums offline for a couple of months to prepare for this event. The events themselves aren't conducive to concessions.

We saw a healthy amounts of kit being sold, a lot of souvenirs being sold, less concessions in general. So I think quite balanced on our impact. And quite frankly, is shipped for the net beneficiary of this kind of payments activity, absolutely, we are going to an event, traveling to it. even watching an event with friends nearby the venue. That's something we're absolutely a beneficiary of, but it was not a meaningful contributor to the quarter. I think it was more or less what we were expecting. And in fact, a lot of investors were sort of challenging us to talk up the impact. These are great customers that do great events all the time. And again, they would have probably been as full, if not more full with a regular event calendar in many of these stadiums as they were with the World Cup. Chris, do you want to comment?

Yes. I would just underscore the same point when you actually go and pick apart the data at a venue by venue, a city by city, you put sort of like a radiance of commerce around the venue. We've analyzed and cut and slice the data a few different ways. And it's interesting to see that -- and probably actually should be that surprising if you actually just went and mapped the calendar of events year-over-year, you would see that the calendar of events at some of the stadiums was much, much more full last summer. And intuitively, to ask the question, well, why is that? And Taylor alluded to it, the idea that -- these are venues tackling kind of almost a once in a lifetime kind of event. And in order to accommodate it, you have to go offline. I heard an anecdote that you couldn't be on -- the graph has to grow a specific regulated height, so no 1 can be on the deal, let alone taking a country music concert on that build a couple of days before the event.

So I think it was an interesting 1 to unpack, but more than anything, what I would want people to take away is it was a phenomenal showcase for us, our team, our talent, our technology to be flawless in an environment as demanding as that in a stage as large as that. And we're really proud of it, but by no means was it anywhere close to a Super Bowl.

Yes. So to get to the root of your question, yes, the underlying business performed quite well through the quarter, we're probably equally as proud of that as well. And I would say, as we become a more international business. It didn't -- it probably didn't occur to us prior to the event, but it certainly occurred to us during these events that the Shift4 brand being recognized throughout the world is becoming increasingly important, and the World Cup gave us like a phenomenal platform to it. .

Okay. That's perfect and encouraging. Just a follow-up question to all the balance sheet questions. I know you guys are trying to do a lot, delever, buy back stock obviously consider bolt-on M&A opportunities. I guess, -- as we look ahead over the next year, 1.5 years, how should we think about you balancing all of that? I mean, are there opportunities given the way the stock is trading to actually divest some noncore assets and maybe utilize that for the 3 options? I'm just trying to think about strategically and tactically how how you might figure out other ways to create capital and achieve some of the initiatives that you have in place?

Thanks, Sanjay. It's the right overall question, and it's something that is the top of our minds at all times is balancing the capital allocation framework. I think I and we look at it is actually -- it's a high-class problem to have. When you look at the number of ways with which we could generate return on invested capital through our capital allocation framework and also look back on our demonstrated track record and acknowledge that this is a business that has done this very well over periods of time managing both capital deployment and capital harvest to generate return at various periods. And then similarly, to always be able to be shareholder-minded and manage dilution. When you look at kind of the non-GAAP EPS share count -- if you look at it year-to-date or not -- actually, if you look at it relative to when we launched the share repurchase authorization in the third quarter of last year, our share count is down 11%.

So we think about all of this within the balance, and I think that it's something that I would hope people can appreciate and look at the long-term track record around and acknowledge that we that we're good at it. At the same time, what you're describing, this idea around divestitures is that within the framework? Is it within our Lexicon media, absolutely. And we have done some divestitures. They're going to be smaller in nature. They are the noncore components of, let's say, acquired companies along the way. I wouldn't expect them to be meaningful or material, but in the philosophy that we have of deleting the parts, driving efficiencies unlocking margin drags that might exist from them. Those are definitely things that we're focused on, and we actually have completed in the last -- within the last 12 months.

We'll take our final question from Dan Perlin with RBC Capital Markets.

I just wanted to touch back on kind of the incremental investments that you talked about. It sounds like they were a little heavy in the first half around technology investments and obviously product I'm wondering around the context since you've laid those out now, how do you think about investments in go-to-market to accelerate some of those implementations and maybe where we stand at that point.

Yes, it's a great question. I would say, first of all, we're doing it. So we've added a meaningful number of salespeople. We try to be, as Chris just mentioned, we try to be incredibly pragmatic about looking at head count allocation across the organization as frequently as we can and where there are areas that we're deemphasizing can those people be applied to others? Or are there areas that deliberately need investment despite what's going on in other parts of the world. And we've been building sales organizations quite meaningfully through the entire first half of this. And I expect that to continue, all within sort of the guidance ranges that we've provided.

We do like when M&A can accelerate that. I can't sort of understate the value of like -- we announced the German POS acquisition a couple of years ago at Invectron that instantly gave us 300 resellers know how to sell restaurant product to customers, already have a book of customers, et cetera. So we do like to use M&A as a framework for acceleration. I think these types of organizations really understand how we operate and vice versa, and narrowing their scope to a single product or in the case of Acton, giving them a heck of a lot more value that they can deliver in that product is something that we view really attractive.

So we're looking at that across the entirety of the 15-plus countries that we mentioned as potential accelerants. They're not particularly large. They're tuck-in in nature, but it's something that we do well. And I think -- most interestingly, reputationally, we're known is enhancing the value proposition of these teams and the distribution partners themselves. So it's usually a good conversation to have that we're uniquely positioned at .

Great. And just to put, Chris, if I could, on organic growth came in again very consistent 11% for just the sake of running kind of interference. I think you said PFS is going to roll into that organic calculus in the 3Q, is there any way to kind of get a preview of what that would have been in this quarter just so we all level set given the growth rate in CFS relative to best your business.

Yes. So I think the -- trying to think about it on the slide, I would say that if you were to look at PFS in this quarter, it delivered within that -- the upper end of sort of the mid-single digits in terms of its quarterly growth contribution. And so if you were to blend that in on a weighted basis, CFS is about 1/5 of the revenues. So you can kind of do that math. The important thing that I think you have to take away from it, though, is that, that TFS segment today is prudent by the Middle East travel conflict. So even when you think about looking forward to something like a Q3 and you think about what the implied growth rates are there in that low double digits, you still have to keep in mind that, that very same effect of being weighed down by the Middle East travel disruption, the $25 million number that we gave, that that's in that figure.

And absent that figure being embedded within it, that low double digit just mathematically would be into the mid-teens. So hopefully, that answers your question. There's a bit of a brainteaser on the fly to kind of average map. But nonetheless, hopefully, that does give you the building blocks.

This concludes the allotted time. We have our question-and-answer session and brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

My name is Dan Perlin. I head up the fintech practice here at RBC. And I am delighted to have our long-time friends from Shift4 joining us again today.

From the company, we have Chris Cruz, who's the company's Chief Financial Officer. So thank you so much for being here. Very much appreciate it.

Thanks for having us all.

Yes. I wanted to start a little bit with your journey because you've only been the CFO for a little over a year or so, but you've been affiliated with this company for over a decade in various facets. And so maybe 2 seconds on that, and then we'll dive into the philosophical view.

Sure, sure. And thanks again for having us. It's a phenomenal conference. Amazing to hear you say this is the 11th year. I've probably been coming here for, yes, almost 10 years and so it's great to see it. So thank you for having us.

For those that don't know, I took on the Chief Financial Officer role about 10 months ago coming from the Board of Directors, a seat that I had held for the company -- at the company for, as Dan had said, almost 10 years. I got involved in the business after leading a private equity control investment into the predecessor company back in 2016. And it was actually in May of 2016. So the 10-year anniversary just transpired.

And it is incredible just to sort of never would have imagined sitting here today sitting in this executive seat, but have the vantage point of, we'll say, the industry as a whole because in that role that I previously had, I've been investing in the payments space, in the fintech space for almost 2 decades. So -- and at a fund that had a global mandate. So the ability to understand fintech payments, its evolution over a multi-decade history is one that I think is a really important piece of context to have, especially when we are in the midst of changing times. That's probably piece one.

Piece two, the company has grown into something beyond my wildest dreams and is a business model that does actually, even as different as it looks today, reflects the origins right from the beginning when we made that investment back in 2016, the thesis was that payments and integrated software would come together and create really dynamic and disruptive unit economic models that would accrue to the benefit of a merchant in terms of lowest total cost of ownership and heavily disrupt the providers of monoline services, software only, payments only and so on and so forth.

And today, I think that thesis has not just proven out in our 4 walls at Shift4, but for a number of players that have been able to express that very well. But it's an interesting context to kind of go down memory lane and look at it, Dan, I think the last time probably we saw each other in person was like the Analyst Day. The Analyst Day event for Shift4's IPO at Pebble Beach back in like 2020.

And so it's -- but it's great. It's a great reflection, but it is an important context to have, especially in as dynamic of a time as we are right now, but it's a great seat.

Well, with that context, let's talk about some of the priorities that you brought, understanding that history and maybe your philosophy on how you're going to go about communicating that to investors.

Yes. So I was very fortunate to succeed a fantastic CFO, long-time friend and a member of our Board, again, Nancy Disman, who did an incredible job of building the foundation of a global finance organization. And so I definitely owe a lot of credit where credit is due in terms of all of that foundational building that she had done and that the finance team had done as a whole. So there wasn't as much to do in terms of just optimizing there. It was actually more about the fact that in July of last year, we closed on the acquisition of Global Blue, which meant an integration of a finance organization that had a global footprint and the systems and processes of that, which we are well through and we are solidly on fine footing on. And so that was a key priority.

And then the second of the key priorities was actually highly relevant to this room, which was to really try to create the bridge between the narrative of what we do at Shift4 with our strategies that are often viewed with a certain amount of complexity because they are disruptive and differentiated and take that narrative and try to bring it into a world of financial modeling, right? Just really, can you help us understand how to model this business, how to predict, how to unpack the variables. And that was like a key priority.

And I think that, that key priority has been expressed. Hopefully, folks have been able to appreciate that dynamic. when we established kind of our guide for the year and created a growth algorithm disclosure around it that allowed people to not only appreciate that tax-free shopping would be its own disaggregated revenue category, but that within payments, it's really a tale of 2 stories where we have a really great set of leadership inside of our integrated payment offerings in the Americas, growing at mid-teens.

And then we have this incredibly fast-growing international opportunity in front of us growing at high 20s, but in the first quarter grew 51% year-over-year. And being able to like unpack those parts, being able to understand how incremental free cash flow and seasonality of free cash flow might be different and then committing to EPS guidance I think those are all things that I was hoping to establish early in order to try to set the tone for investors that I think we're really seeking out the fundamentals of how do I model this business, how do I better understand it. And given my background, something that was a bit more natural to do. But beyond those 2 as like key priorities, it was kind of do no harm, support the company in a global growth, create kind of one global finance for Shift4 and let the team do their thing.

That's great. That's great. Well, I was on all those calls and the callbacks. And so I would tell you that there's a lot more clarity that was being brought and continues to be. So we'll talk about that, too.

As we take one step back before we dive into something deeper, it is important to help frame where Shift4 kind of sits inside of the payments ecosystem. I find oftentimes conversations with investors, they're all over the board as to where they want to compartmentalize you guys. How would you describe it, especially in the context of the experience economy that you talk about and then in-person payments, which is not as much a thing as e-commerce in a lot of people's minds.

Yes. It's a good question, the kind of the mapping exercise, and it's one that is constantly evolving. But one of the easiest ways that I start to think about where are we categorized relative to the space as a whole. And I'd like to start with the idea that if you made the strategic decision to be an integrated payments company to align your model of payments and connect it to software in everything you did, you are growing 2x the market, right? If the baseline of the market is a single-digit volume growth market, your strategic choice to be integrated and everything we do is integrated to software, you're a 2x grower to the market.

And if you chose to not just lean into that, but achieve leadership positions in select verticals in end markets that might be growing faster than that broad economy, a.k.a., the experience economy, we believe, grows fundamentally faster than the broader economy, you got anywhere from another turn of faster growth to plus. Hence, when we look at our business growing at kind of low double digits as a business as a whole, mid-teens in the Americas, we view that growth as 3x what the market growth is, and that's not an accident. That was very deliberate strategic decisions that we made going all the way back to the early 2010s. And so that's piece one.

Piece 2 of very deliberate strategic decisions was actually to not try to be an e-commerce leader, which was an incredibly contrarian viewpoint at the time in sort of that, again, that kind of like early 2010 time frame. And it was because when you looked at what the business was good at, what the core fundamental assets of operational provisioning of reverse logistics, service support, like those durable moats were things that we fundamentally believed in, and we were seeing how good the e-commerce tech stacks and ecosystems were. This is dating us all the way back to kind of like the early 2010s.

And so we leaned into that as a strategic imperative. -- hence, and very naturally, we ended up with our first major experience economy vertical was going to be restaurant.

But when you pull that thread further and you say, okay, so take what you're good inside of the restaurant space, where you've bundled software, hardware, services, data and payments, put that together, what are the other verticals that kind of resemble some of these same kind of attributes and might see the value proposition of this combined bundle might see value in that. And that's where very quickly, we realize, oh, it's hotels and hospitality. It's stadium entertainment, it's luxury retail. And I think for those that have followed us for a little while, they've seen other verticals that we've talked about within our shareholder letters, our materials that we believe are really great experience economy verticals, too. But this idea, this tie that binds that to be good at in-person payments, right, obviously, we are great at e-commerce payments as well. We're totally competent and capable at doing it. But when you think about what it means to be good at in-person payments and the moat that creates for you, I think you have to have a DNA that has like fundamentally grown up there.

And so relative to, I think, the broad ecosystem of what people think about when they think of like Stripe and Checkout and others, it's like for us, it's really important that people appreciate and contextualize that a big part of what we've strategically chosen to do is be absolutely excellent at in-person payments. But there's no such thing as being kind of single thread anymore. Every one of our customers is omnichannel by nature. It's just that the moat, the really -- the place where value proposition is appreciated and where I think margins are earned is because we're so good at in-person.

Yes. So let's tease this out for a second in the context of your ability to consistently grow above same-store sales growth, which is oftentimes like the pushback in some instances around the cyclicality of just payments businesses more broadly.

You have caught many waves early on, not the least of which was stadiums, which is probably the biggest upgrade cycle win that we've seen in a lot of companies over multiple years. But how do you balance those 2? And what's the message to investors around that context?

Yes. So I think one of our underappreciated assets in the business is certainly how strategically forward-looking the underlying like companies' drivers are. So -- and what do I mean by that? I mean that we have teams that either live inside of their product universe. They are kind of element members of our commercial team. And then there's our strategy team, which I have to give credit to as a whole, who all come together and within our operating model are constantly trying to push us to identify whether it's a vertical or whether it's a solution inside of our existing experience economy verticals, push us to identify those waves.

And the -- from there, we take that and we are either organically developing or we are unafraid to inorganically approach an expression that goes after that wave. And I think one of the things, though, that I think is very important about that type of approach is that you have to be proactive and willing to kind of watch a vertical, watch the technology and commerce changes in that vertical for many years.

So people think that luxury retail and tax-free shopping and Global Blue, one day we woke up and that's a great idea. Let's go talk about it. No, like we were monitoring that business and that industry solidly before COVID, right? It's a business that we had known well because when you think about being in restaurant, lodging, stadium, it's very obvious that retail is one of the largest TAMs.

But when you look at the retail tech stack, you would have been absolutely incorrect to try to roll up POS systems in retail because if you had done it in physical presence, you would have completely missed the wave of e-commerce as the tech stack that wins, and you didn't want to have to make that call. So when you unpack the retail ecosystem around the world and look for what's the killer application that will allow me to cross-sell and bundle payments, we came across TFS, tax-free shopping, VAT refunding and the idea that Global Blue was like an 80 market share global leader in it, which meant that we could be incredibly disruptive in a place that the incumbency advantage, the relative market share would probably be like durable to receive it, right?

So when you apply our strategy of disruptive cross-product bundling, payments on to pick that application, gateway, POS, tax-free shopping, gift card, it puts the customer base in what is, I'd say, a little bit of a disruptive dynamic, right? You put them through a little bit of a challenge in the moment. But if the base that you're selling into is a product where you are far and away the leader, then the resilience of the customer to accept that cross-product selling motion is incredibly high.

So I think that for us, the unsung hero is really patient strategy development to identify the other adjacencies inside of the experience economy that leverages our existing assets to go after, and we've just been doing that for many years now.

Yes. So that dovetails into the question around durability of your organic growth that you've put up thus far and the vision that you have going forward. You did 11%, I think, in the most recent quarter. How should investors think about that, both in terms of the ability to underwrite that for long-term periods, but also the sources of that?

Yes. So I would say, right now, this idea of being able to outgrow sort of the baseline of the payments growth market by like a 3x factor. So being like a low double digit versus a low single-digit type of a grower, it is -- it starts with the fact that if you unpacked and just said integrated -- and you could look at a large body of data, you could look at a lot of research from yourself and peers to see that the integrated payments market is a high single-digit grower, right? Once you start there, then the walk to durable organic being a premium to that because we are a leader in so many of our verticals, I just don't think that intuitively, that should be that hard of a walk to understand.

But what I think is harder to understand is in this year, we have sort of these 2 headwinds where Triple-S has not come back to the place that it has historically been. Triple-S has historically been for a long time series, low single-digit positive contributor to the book of business. We're not seeing that right now. We didn't see it in the fourth quarter. If anything, we saw it as negative.

So it's been, we'll say, a headwind to the relative growth historically. And then the second relative headwind to the growth historically has been that the post-COVID few years allowed companies, not just payments companies, not just ourselves, but go check your Netflix subscription, right? You've seen inflation that's allowed for pricing power across every industry, and that persisted for many years. And that created this low single-digit contributor.

So I kind of view right now where we're sitting as a premium to the integrated payments durable growth of high single digits. sitting here as like low double digits, that seems like a very fair baseline. But the reality is if Triple-S can come back and if pricing power as a result of an inflationary backdrop were to come back, I think you're going to see the ability to actually outperform that. But from a durability standpoint, importantly using that word, I think it is fine to just view us as a company that should be able to durably outperform the baseline of the market by 2 to 3 turns.

Yes. So in the spirit of that and the desire to have incremental transparency to help us map to those, you did release kind of the disaggregated revenue disclosure. You've talked about it a little bit interspersed in our discussion, but maybe you could talk about it more specifically. Why did you do it? What exactly did you do? And what are your expectations for that going forward?

Yes. So I think it was really important for people to appreciate that as payments investors, the tax-free shopping revenue bucket was going to be something that you needed to acclimate to. So the first of the starting places in the growth algorithm, as we call it, that we disclosed was to commit to the disaggregation of tax-free shopping, right?

That was, I think, a key question, which then allows for a more transparent view of a part of the business that is growing that we admittedly is growing slower than the base of payments. But there are so many strategic reasons beyond the tax-free shopping revenue base that made the Global acquisition so attractive.

But staying in line with this idea of what is in the growth algorithm, I would then move to payments-based revenue. That is the North Star of how us as a payments-born first kind of a company operates and thinks about what the important growth variable is, giving people visibility into payments-based revenue growth and then unpacking it in terms of here is the market that is largely unaffected by M&A as close to sort of an organic number before I give you an actual organic number is Americas payments-based revenue.

We've been in this market for 2 decades plus. And this is a market where all of our products are offered in live, and that's a market that's going to grow at mid-teens. And giving that, I think, disclosure was a really important one to help people like unpack how to model. And then they could then allow themselves to take a view on things like SSS and take a view on pricing above inflation, 2 very important variables that not only you could take a view on, but you can then also track in the marketplace through different data sets.

So then you get to the worldwide piece, which is give me some visibility into this fast-growing part of the business, which is where largely the Global Blue and the tax-free shopping cross-sell is going to live and help me be able to track that and model that and make sure that the revenue synergies that you talked about at the time of the transaction come through, they'll come through into that category. And that was really important to break apart.

And then separate from the growth algorithm components, we ultimately gave the organic disclosure just to help people underpin against what should be the way you think about underpinning a forward-looking multiple. Because if there's durability at a double-digit growth rate, then you would think and presume that, that should have some semblance to what underpins the underlying model -- multiple of growth on the business.

And then from there, we really tried to further unpack for folks how we view margin profile, how we view incremental free cash flow. And then like I said before, we landed on, we need to commit to giving an EPS guidance as well.

So I'd like -- I'd hope that it's, a, well received and that it creates some clarity at a time when the industry as a whole has probably not done itself many favors on creating skepticism because of the last couple of quarters of certain other peers is reporting.

Yes. I completely agree with that. So let's talk about the international opportunity. also in the context of moving into this new vertical of luxury retail. The biggest bastion of growth seems like the international market. This Global Blue acquisition opens you up to so many countries and licenses and regulatory frameworks that you would have otherwise not had. So maybe just speak to the, I would say, the strategic importance of it, but also this vertical, which is new.

It's hands down the most exciting part of the business right now. And you love all your children equally sort of thing. But it is hard to argue that when you think about the tax-free shopping cross-sell opportunity, which is where I'll start, this idea that we have an ability to cross-sell payments, dynamic currency conversion onto a tax-free shopping base, which already has a fantastic revenue model and do so without having to deprecate a legacy revenue stream this could translate and should translate into the best unit economics in the business. And even though I love my children equally, unit economics is how you like win my heart. And so I think that's going to ultimately be the thing that wins.

But I do think that the unit economic power of cross-selling, which we productize as Shift4 One is one of the most exciting initiatives. It's a big part to the revenue synergy component that we talked about in underwriting the transaction.

The lesser appreciated -- and that product is now live in 7 countries. Our target by the end of the year is to be live in 15 countries. And so we're hitting all of the operational milestones. But obviously, as we start to realize those revenue synergies, reporting out against them is going to be the key KPI.

But the unsung hero and I think the underappreciated part that you sort of astutely unpacked is that to bring a product like Shift4 One live in a European country, it's not just putting a product together, putting it into a device, shipping it out and then provisioning, servicing and supporting it. You actually have to build an entire payment infrastructure and a set of very unique capabilities onto your payment platform. And you have to do it again in every country that you open and you operate because the fiscalization is totally different. The underlying language dynamics are totally different, the way with which that you are going to integrate into local debit networks, local APMs are totally different.

If you go live with your in-person payment product in Germany and you don't have Girocard, the local debit network, you don't have a right to play. And same goes in France with Cartes Bancaires. And the same goes with almost every other country around the world outside of the United States. These local debit schemes and these local payment methods, they could be wallets, they could be any sorts of other thing. The integration to that is the hardest part. And it is what we would broadly call scheme management, but not the Visa, Mastercard schemes. It's the everyone else' schemes. But when you think about doing the work to make that happen for Shift4 One and its cross-sell, it means the work is already done for when stadium entertainment, Shift4 Venue wants to come in and go and serve FC Barcelona. It is ready for when the hotel product -- when our hotel integrated payment capabilities can come in and serve a number of hotel banners that we already serve in the Americas.

And it's how we're going to bring Shift4 Dine outside of just the U.K. and Germany and bring it across all these other countries. Basically, all of our battle-hardened products from the Americas can just fast follow. Once Shift4 One is laying the groundwork as kind of the first boat to land, everything else can come back in.

And so for us, that's like, I think, one of the most underappreciated aspects of why we did the transaction because it was going to be the forcing function to create a pan-regional in-person payment platform to be complementary to our Finaro kind of card-not-present capabilities that we already had in droves.

And I think the last thing within it was that you also didn't want to limp into the European market. I think there -- when we studied the strategy of American companies going into Europe, I think one of the telltale miscalculations was you could just bring all the Americans in and it was just going to work. And the practical reality is having all the infrastructure to do everything from hiring to having the IT and the systems, all of the localization of products to have teams that already had that because they're selling tax-free shopping and they were already selling DCC and certain payments was an absolute asset that we wanted to be well invested in, in order to bring all of our products all at once.

We don't like to do things slow. If we're going to disrupt the entire European banking market from payments, we want to go fast. We want to be disruptive, and that's our style.

So I'm going to give you 10 seconds that we're over, but since you have this unique lens and background as an investor in the company early on and kind of where you see it today operationally, what do you think are the biggest disconnects that the public market investors are missing?

I look at probably the biggest disconnect right now is the last time valuations and payments sort of sat in this kind of like call it, 6 to 8 time zone, and you probably can keep me honest on this, is like pre-GFC, right? You think about like the Heartland Payments like data breach type days, right?

And fundamentally, if you were to just kind of close your eyes and look at 2 moments in time, just look at the business model. You had a pretty commodity categorized as BPO and IT services type of an offering that realistically, when a payment is just attached to a Pin pad and is unintegrated, that's like a high teens to low 20s attrition rate, right?

You fast forward to today at payments when integrated to software has a completely different moat, completely different value proposition. You could throw value-added services, so many ways to grow the ARPU. And the core unit economic model has an attrition rate of like high single digit to low double digit.

So how the multiples can be the same makes no sense to me, right? And I feel like we're forgetting how to just intrinsically value a company. And I think that disconnect just -- it exists. But I also appreciate there are many other broad technical factors, right? The S&P 5 has never been as concentrated in 7 stocks in its history, right?

There's been a lot of kind of like SMid-cap to large cap rotation. And our sector hasn't done itself any favors in terms of like creating a little bit of skepticism because of some peers.

But put all that aside, just come back down to pure unit economics and intrinsic value math, and it doesn't make sense. But I think people will eventually come back to that.

Cool. Well, Chris, thank you so much for your time. It's been a great discussion. Looking forward to seeing you more often than 15 years from now.

Exactly. Exactly. I appreciate that.

Thank you so much for the rapid fire.

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

Thanks, Scott. Thanks for having us.

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

Yes, gosh, it's a trip down memory lane type of a question to think about the world back in 2020, and my how things have changed. But as a context point and a reminder, so at the time of the IPO, you can think about the contrast of scale and diversification as probably the easiest way to summarize it. You think back to 2020, we were a restaurant's software integrated payments company with lodging on the comp. And that was where we were at and the idea of how this proposition of converging payments in software for the restaurant vertical could translate into the world of hospitality and lodging was a bit of a question mark.

You sort of fast forward to where we are today, and not only are we still a leader in Dine, AKA restaurants and stay, which is our hotels vertical as we call it. But we are also a leader within the verticals of play, stadiums and entertainment, and then most recently, shop entering the luxury retail vertical, all of which with the core proposition of bringing payments and software solutions into a single value proposition that is really resonating with each of these verticals, each of these end markets and it allows us to really build not just a good value proposition to kind of simplify the commerce for that merchant across shop, dine, stay and play but it also allows us to have a pretty dense unit economic model when we face these merchants and bundle together the concepts of software payments, value-added services in this sort.

And so I think when you step back and look at multiple verticals and market leadership, the most scaled we've ever been sort of setting kind of quarterly records on financial metrics, and then the most diversified geographically we've ever been, sort of we were in 1 country, we weren't yet serving multiple countries across Europe and Asia Pacific. Now we're in business in more than 75 countries around the world. So it's been a pretty phenomenal kind of like 5.5, 6-year journey.

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

Yes. It's a great question because we thrive within the overall concept that payments has complexity. Commerce has complexity. And unfortunately or fortunately, depending on how you view it, we actually run towards that complexity and try to build simplified commerce technology solutions for the hardest experience economy verticals. So what is experienced economy means? It means the places where in-person commerce like thrives in lodging environments like the one we're sitting in right now or where the Super Bowl is played at major stadiums entertainment or from some of the most demanding luxury retailers around the world. We run to that kind of an environment because marrying up in-person commerce and all of the software solutions that are needed to deliver a good in-person commerce experience, that solution set is something we then try to simplify for the merchant from a financial entertainment standpoint.

So this idea that you merchant can deliver the best solution of commerce for your customer, delivering all of the different suites of software or all of the different best-in-class technologies, some of which you may choose to build yourself. But in the end, you still want one accountable party to reconcile your money to settle it, to enable the money movement to happen in a totally compliant manner and in a reliable way from a scaled enterprise, and this marriage between complex commerce on one end, especially within the experience economy and the in-person world, and the simplicity of making all of that math, all of those payments and deliver into a single place, fully reconcilable, right, like we sort of thrive in that world.

And so to make all of that happen, you can get lost within all of the interoperability you have to create because there are a lot of parties that sit within ecosystem to make money movement happen. You multiply that out by a lot more parties when you have to integrate multiple revenue centers, respective suites of software. And then you multiply it out further when you start to acknowledge that consumers' demands for how they want to pay, don't just change and grow, the old method never goes away, right? We only stopped minting the penny like a couple of months ago. And so the concept that these payment modalities from the consumer continue to grow.

And yes, like in my home of like Miami, Florida, people pay with crypto at restaurants and we enable that. But this concept, the modalities continue to grow, the complexity stays kind of pretty prevalent, but the merchant's experience when it comes to the money, they want single point of reconciliation, kind of one hand to shake, one throat to choke, they want accountability. And regardless of what the next phases of evolution in commerce tech reveal, I think we are well positioned to continue to still be that player that already has that trust with the experienced economy makers.

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

Yes. It's, again, a good kind of memory jogger to think about pretty much since IPO. Every other year, we've been public. We've kind of announced ourselves as a leader within a new experienced economy vertical. So you sort of go back to the 2020 timeframe of being restaurants only. You then have lodging on the come after that, then stadium's entertainment and now we're kind of in the luxury retail space, and we'll expand from there. This idea, though, of how do you pick those verticals is a very deliberate decision that I think stands all the way back to kind of a deep appreciation and understanding of like what is going to create a point of difference within the payment space.

Like step 1 was actually in the early 2010s, simply acknowledging that we were about to go through a mega shift of payments and software converging into integrated single offerings. And if you successfully identified that trend in the early 2010s and went all in on that trend, you're sitting here today, growing at a rate that is at least 2x what the baseline of the payments market grows. We are a 100% software integrated payment. Every payment we touch is attached to a piece of software we own or a piece of software that a partner has that we're integrating our payment capabilities on to. But that was piece one is acknowledging that. Then our big piece of what is the criteria that differentiates it.

I hate to say it, but it's like hard commerce. It's where it's not a simple commoditized proposition that enables the payment flow to happen through even an integrated partner. For us, the more that the commerce environment that, that merchant is operating in, the more that, that commerce environment is actually multi-revenue center in nature, therefore, multiple software suite in nature or where the software that we're providing in the case of restaurant or in luxury retail like where those solutions actually drive the entire kind of multi-party commerce experiments, it might be driving workflows of wait staff of host staff of kitchen workers or it's actually driving the data movement between the merchant, the consumer and something like an airport customs authority, right?

Those kinds of environments are actually pretty complicated commerce environments and almost all of those environments have been largely in-person physical presence kind of component, which just makes it even harder, because now you're not just managing lines of code because lines of code could go anywhere, and it could be dominated by anyone, but you're actually managing an experience that requires a lot of digital meets physical in order for all of this value proposition to work.

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

Yes, sure. So in the fourth quarter results and the introduction of the 2026 guidance, we introduced the concept of this growth algorithm just to help people appreciate a few different disclosures about the business. The first of which was to reinforce that there are 3 categories: disaggregated revenue categories that we want you to think about us as. One is our payments-based revenue which is our North Star. We think about payments based revenue as the way with which we -- the way with which we grow, it's the way we focus our revenue models towards. And that payments-based revenue is the largest makes up almost 3/5 of our revenue pool.

Inside of that payments-based revenue, you can split the business up into its 2 main geographies. Our Americas business which is the business -- which is the market that we've served for multiple decades. It's where our products are all the most mature and this year is pretty much entirely unaffected by prior year M&A annualization. So it's a very clean organic kind of geographic view of our most important revenue category. Then you have the worldwide region. And that worldwide region represents our fastest-growing kind of international markets where we're a challenger, we're a disruptor. We're bringing our battle hardened and tested products and solutions into a competitive backdrop where essentially we're looking to compete against unintegrated pin pads provided by banks.

It's kind of like going back in time relative to what we see in the Americas in terms of the software integrated payments team. And that market is growing incredibly fast for us. And you take a look at those 2 pieces of payments-based revenue and what we basically put to the growth algorithm is Americas will grow in the mid-teens and that the worldwide region will grow in sort of the high 20s. And in Q1, Americas grew 15% year-over-year and worldwide grew 51% year-over-year, and that's the largest part of our revenue. Then you talk about our tax-free shopping business, and we made a commitment within the disclosures to break that out as a disaggregated revenue category in order for folks to acclimate the movements in that business and acclimate to and understand that we were going to commit to that disclosure. And within tax-free shopping, what you see is a business that for this year, we sort of in the growth algorithm said, on a pro forma basis, call it, mid-single digits.

And I'll probably come back to at some point the impact on headwinds that, that category has faced. And then, of course, we have our last bucket of sub and other within our revenue growth algorithm, which we guided or provided growth outlook of like low single digits around and it grew about 10% in the first quarter.

So when you look at those categories, though, I think the important like net new disclosure that we added on top of that growth algorithm, was a view that in the first quarter, we also grew organically, putting aside kind of any effect of the last 4 quarters of M&A. And organically, we grew at a low double-digit rate as well. I think it's important to note that when you look at that growth algorithm, it's component parts, whether it's mid-teens in the Americas, a low double-digit kind of overall revenue growth or a low double-digit organic revenue growth, I should say, right. Our view is that, that is a 3x to the relative growth rate of the payments industry as a whole.

And the payments industry as a whole is still a good industry from the perspective of it has growth durability, it has elements of value, especially if people have a value proposition, strong pricing power, and I think it has demonstrated its ability to navigate a lot of these technological changes through a long duration of time. But for us to grow at sort of a multiple like a 3x of that industry growth is something that I think we're proud of.

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

Yes, sure. So we can walk through things through this kind of geographic lens, and we're always going to talk about payments based as the North Star. But when you look in the Americas, we have our power lanes. We basically look at our dynamic of dine, stay and play. So restaurants is dine, hotels is stay, stadiums and entertainment is play. Within those power lanes, you have all 3 verticals that are at or above the kind of Americas growth rate that we talk about. And it makes sense that that's where our strongest growth comes from because those are very carefully crafted value propositions.

We look at the restaurant environment. We've been in it for multiple decades. We've studied it deeply. We understand what the trials and tribulations are of restaurants of all sizes in table side dining, and we build propositions that fit those categories. We did the same in lodging, and we do the same in stadiums and entertainment. Just so happens, though, that in lodging stay and in stadium entertainment and play, we're the market leader by far.

And so I do think that the growth there being grounded in differentiated value propositions is hopefully justifiable to all and understandable by all, but those are growing kind of in line with or greater than the Americas growth rate. The standout within that is probably stadiums and entertainment, where we're in 3/4 of kind of the pro sports environment and are in a very kind of like favorable position where we can attach ticketing to all of those environments on top of the food and beverage and the retail and all of that in-person physical presence volume that we touch and flows through our software and payments, we are attaching ticketing solutions to that. And sometimes that can be the equivalent volume for a stadium and a sports team as all the F&B combined. And so there's a really nice outsized growth rate there.

Then when you step outside the Americas, the growth rate that we're incredibly excited about is this idea that worldwide kind of the growth algorithm we gave was the high 20s. And in the first quarter, it delivered a 51%. And for us, the worldwide green shoots that we're seeing is really exciting because we've been at the international markets for only 3 years. right? We were not in an international country providing payments and doing business before 2023.

And for us to be able to see these rates of growth for us to be able to see the green shoots across multiple of our products and offerings across multiple countries, this idea that international is working is very exciting for us, because we know the competitive dynamics in that landscape look like we're looking back in time in the Americas. We know that our battle-tested products and propositions in stadium entertainment in Shift4 Dine and the sort are competitively differentiated in the Americas and are going to be even more differentiated in these markets. So really excited to continue to build out those regions.

And then on top of all of that to then have this totally unique product of payments meets tax-free shopping meets currency conversion, what we call Shift4 One as a result of the tax-free shopping acquisition. When we look at that product in the market and know that we have kind of $100 billion of captive volume that we can go after within the countries that we already served in focusing on SMBs and tax-free like that's an incredibly exciting opportunity for our business. So there's a lot of places where we see sort of accretive growth areas, and they happen to be the places that we've allocated our capital resources to be differentiated and to be a leader.

Yes, it's amazing when you take a look at any individual spend and you look at the bucket of spend, whether it's eating out or travel or staying at a hotel, you guys are going after the biggest buckets of spend, and it's -- and it's the most complex bucket. So you guys are definitely getting into the big categories.

Maybe we could switch gears to capital allocation. Obviously, in this environment, a lot of companies are repurchasing shares, paying down debt. Some are looking at M&A opportunistically. How are you thinking about capital allocation, your framework in light of this market environment and how are you prioritizing different -- different...

Yes, sure. So our capital allocation framework has always been one that has been multifaceted and every dollar has to fight for the best allocation and earn its return. And our allocation strategy, historically, if you go way back in time to the beginnings of our restaurant days it was all about disrupting the concept that customer acquisition investment by essentially giving away the hardware, the software in exchange for the long-term reoccurring payments contract, that was the first allocation of capital we did. We know that playbook incredibly well.

Then you fast forward from that era and you look at how acquisitions actually accelerated our customer acquisition, we were able to acquire installed bases of legacy revenue streams, non-recurring revenue streams and successfully convert those into payments cross-sell. And so these acquisitions effectively were customer acquisition by another name, and we knew how to allocate that. So you put that arrow in the quiver. Then we find ourselves in an environment where we're a public company and given the owner's mentality that I think people can appreciate we have within the DNA across the management team, we look at trying to be as dilution-sensitive and dilution neutral as possible.

So capital allocation towards repurchases and thoughtfulness around that has always been inside kind of the framework. And then, of course, you invest in the resources, the technologies and the capabilities enhancements that are just going to make all of that kind of better and faster. That framework doesn't change, the environment changes, but the framework doesn't change. The way with which you analyze ROI and the way with which you're driven by the return on that invested capital, like it all in the end is like very easy to measure, and it all in the end, needs to, at some point, convert into the growth of free cash flow per share. And if it doesn't have that, then it's not justifying its allocation and we'll definitely look to allocate away from it.

The only other place that I would say is a bit different about the environment we're in now as it relates to capital allocation is that we're the most diversified we've ever been. So if we are looking at an environment like the fourth quarter or the second half of 2024, 2025, when same-store sales in the Americas were soft in a category like restaurant, or as folks look at varying degrees of competitive intensity or different kind of inflationary forces, the huge advantage we have is that we can be completely critical about where to allocate the dollar of capital, tech resources, people and money to the highest and most productive places, whether that's across verticals, across geographies and right now, it's really hard not to be super excited about the ability to allocate capital at the Shift4 One opportunity of cross-selling payments on top of tax-free shopping on top of currency conversion because the unit economic model of that is just going to be so sound.

But that's probably the only net new thing is that as we look at the kind of organic allocation of capital within our overall complex of Shift4 we do have these advantages to be able to react to whatever the geopolitical or the macro throws at us. And I think that, that's a really advantaged place to be.

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

Yes, I'd say this was not an overnight phenomenon. This is something that took years to really unpack the strategy around to study all of these markets, to study the verticals inside the given geographies and that we've chosen to enter. And I think the thoughtfulness around that set of strategic decisions to want to lean into experience economy verticals, in-person payments within these international regions because you're going to be differentiated in terms of the fact that integrated payments is just a much, much earlier inning theme in these markets is something that we are really careful and thoughtful about. I'd say the second thing that we were careful and thoughtful about was actually to not make the mistake that we've seen from other companies entering the European or international markets and be under invested.

This idea of experimenting inside of a region or thinking that you can just air drop your personnel and your way of doing things without really appreciating how much infrastructure is needed to be not just single country Europe but pan regionally in Europe and have density in Asia Pacific. These are not markets where you can be sheepish around how to invest to go after and compete with these legacy incumbent banks and legacy incumbent providers of payments. And I think that, that is something that was well developed in the strategy based on us looking at the failures of others. You can't limp your way into these markets. And to do so with a disruptive proposition of ours, also meant that the best assets to enter these markets through we're going to be market-leading assets, where the propositions were so durable where the market share that they're positioning from is so far and away the leader that it can endure the disruption that we bring on to it, right?

Those were some of the key critical variables. And in the case of something like Global Blue, it had the added advantage of having been, from our perspective, something that we had actually reviewed for multiple years, like we had known this company well before COVID and had seen its performance through it and had seen the grit and the durability, and I think that helped embolden us to overall view that as a really good kind of infrastructure asset from which to build this disruptive playbook on top of.

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

Yes. So from an integration milestone standpoint, we're pleased with the pace of progress. For us, the operational milestones that I think are the most important and noteworthy begin with product. Everything begins with product. And in this case, this idea of a totally unique product that can deliver tax-free shopping, payment processing and currency solutions to even an SMB merchant with a very simple provision, almost self-service model is something that we're really proud of and had to get operationally live as step 1, and it was a key component of the integration road map.

The second key component of that from there is to actually get live, get live in countries, have the product, beta testing with customers. But getting live, it's a simple statement that we talk about, but to be live with this product in 7 countries means our payment platform is in-person payments, omni person -- like omnichannel payments ready in these countries. And by the end of the year, our target is to be live in 15 countries, which means payment capable, tax-free capable, currency solution capable and live.

And then the last piece to this integration is about scaling the go-to-market, which is the phase we're in now, in order to make sure that not just scaling operations, not just scaling product capability and not just scaling the payment platform, but you need the go-to-market to be completely ready to go. And the uniqueness about the European market and the Asia Pacific market is you can't assume go-to-market as ubiquitous. You have to appreciate those nuances and identify that, yes, there's a direct sales force, you can recruit and hire, but there's a lot of interesting partners whether they're value-added software resellers, whether they're the ISVs themselves, folks that don't even realize that the entire of the American market went through a huge software payment integration that are untapped and ready to become partners of ours. And so I do think that, that last piece is the big operational milestone in front of us.

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

Yes. So I'll start with kind of the operational sides within it, where we are seeing a lot of advancements, productivity, efficiency, whether that's within your -- certainly your product and technology dev organization. We work with all of the frontier model companies from an application and a usage standpoint. So [indiscernible] tend to be the applications there. And when you go from there into the world of operations, the ability to create efficiencies on onboarding, the ability to build efficiencies on service support with agents all of that is clearly defined efficiency gain.

You then stem that all the way into, but what are the product set features, where are you actually seeing product enhancement, things like conversational ordering, things like the ability to actually help bring a time to revenue of a merchant down in 2 days from what used to be weeks because I can take a picture of a menu, and it can now be preprogrammed live into a POS system. Those kinds of gains are very like real-time dynamic and seem to be uncovered every day. And so I think it's a pretty incredible time to have the sandboxes that we have across multiple verticals, multiple geographies to be probably like aggressive in the way with which we experiment.

At the same time, as has been talked endlessly at this conference and amongst others, you have to be, and it's the CFO and me having to say it, you have to be super disciplined about the ROI that's coming through on it. And we are aware within every token dashboard that I have that I analyzed, right? You're aware of when a model drops, you see it in the spike on consumption costs. And you're going to have a very kind of unbalanced usage set of characteristics that I think you also have to manage because just because a certain set of dev and engineering capability can now move 10x. If the rest of the throughput doesn't keep pace, then all you did was create a new bottleneck somewhere within your process flow.

So actually, this process engineering and the re-architecting -- re-architecting of how you think about things is equally important from a change management standpoint as it is the adoption of technology. And so we're seeing all of those kinds of underlying dynamics. And then maybe the thing that's the least talked about is the fact that we actually are a pretty scaled provider of payments meet software, we actually have integration marketplaces, where partners are proliferating. We are seeing new and emerging partners that are providing point solutions that a merchant can go into our marketplace and select and integrate into and we have data exchange between them, and that actually is proliferating again.

So it does seem like one of the big trends that AI is probably going to unlock within this is this potential proliferation of technology, this re-fragmentation of technology does seem to be one of the early trends that we're seeing. And we haven't really seen this level of kind of proliferation or fragmentation technology since like the zero interest rate environment, right, when money was free. And so I think that, that dynamic is something to watch.

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

Yes. Well, definitely, the question of what's going on in the market is something that I ought to throw in your direction. But Look, I do think that what we have is a time within sort of the tailwinds of software payment integration as a theme and how that was impacting the kinds of investors that were moving into fintech that may have been more pure-play tech. They moved in within a certain phase, and they seem to be moving out within a certain phase.

Now where they are hiding, it seems to be sort of unclear because it would seem like there is a lot of market cap concentration that's technically rising just to the top, right, just to the top of the S&P. But if I try to isolate down where do Shift4 sort of stand out within the noise of what's happening within the public backdrop? I do think it comes down to a lot of the fundamental dynamic of what is the durability of our growth algorithm and how does that compare to an industry that today is still a good industry but maybe requires a couple of quarters to kind of rebuild confidence within, right?

And so I come back to this idea that I think the industry of payments has had to go through a bit of a reshuffle in terms of the kinds of investors that are moving in and out of it. But when I look at the fundamentals of payments industry, you're talking about a valuation paradigm that we haven't seen since like the GFC. But you're talking about a unit economic model that is totally different because it's not just providing commodity payments that was classified as BPO and IT services. This is a kind of payment that's integrated into software unit economic models that have high single-digit attrition rates.

So the LTV, the free cash flow generation that comes through on it, they're far superior than where we were when the last time multiples were ever at this kind of pocket back in kind of the late 2000s. And so I do think that there is a little bit of a coming back to the intrinsics of why is this a good industry. And can it grow durably even if that growth rate is durably at like for the industry as a whole, sort of like a low single digit for us that have made the deliberate decision to be integrated payments and then to also have leadership propositions in an integrated payment world, that's how you grow 3x the underlying market dynamics. But it would help if the industry as a whole was able to kind of get through some of the rebuilding of trust that has -- that some of the -- that has transpired over the last couple of quarters.

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

Thanks very much.

All right.

Hello, and welcome, everyone, joining today's Shift4 Q1 2026 Earnings Call. [Operator Instructions] I will now turn the call over to Tom McCrohan. Please go ahead.

Everyone, and welcome to Shift4's First Quarter 2026 Earnings Conference Call. With me on the call today are Taylor Lauber, our CEO; and Christopher Cruz, our Chief Financial Officer. This call is being webcast on the Investor Relations section of our websit,e, which can be found at investors.shift4.com. Today's call is also being simulcast on X Spaces, which can be accessed through our corporate X account at Shift4.

Our quarterly shareholder letter, quarterly financial results and other materials related to our quarterly results have all been posted to our IR website. Our call and earnings materials today include forward-looking statements. These statements are not guarantees of future performance, and our actual results could differ materially as a result of certain risks, uncertainties and many important factors. Additional information concerning those factors is available in our most recent reports on Forms 10-K and 10-Q, which can be found on the SEC's website and the Investor Relations section of our corporate website. For any non-GAAP financial information discussed on this call, the related GAAP measures and reconciliations are available in today's quarterly shareholder letter.

With that, let me turn the call over to Taylor. Taylor?

Thanks, Tom, and good morning, everyone. Thank you for joining us today. Before I get into the quarter, I want to take a moment to acknowledge what is happening in the world. Our thoughts are, first and foremost, with those in harm's way in the Middle East.

We are praying for a quick and peaceful resolution to the conflict. That context matters as we talk about our results today, not only because of the difficulties it presents, but because of how we performed despite an otherwise challenging market backdrop. With that said, there are 3 key messages that define our first quarter results.

First, our diversified business delivered durable and resilient growth in the face of a difficult environment. Second, our international expansion remains on track and continues to scale. And third, our competitive differentiation across our key experience economy verticals remains as strong as it's ever been. Let me start with Q1 results.

We performed in line with our previously provided guidance, including 32% year-over-year growth in gross revenues, 49% year-over-year growth in gross revenue less network fees, 39% year-over-year growth in adjusted EBITDA and 26% year-over-year growth in adjusted free cash flow. When adjusting for our acquisitions, our organic gross revenue less network fees grew 11%, and this was in spite of a drag of roughly 400 basis points from intentionally deprecated legacy revenue streams. We believe there is further room for expansion as we continue delivering our market-leading products to new geographies around the world.

The performance we delivered this quarter in our payments-based revenue streams is a testimony to this. Total payments-based revenue less network fees grew 25% in Q1, with the Americas-based revenue less network fees growing 15% and worldwide payments-based revenue less network fees growing 51%. Our most mature Americas market is growing in the mid-teens, and our growth market grew over 50%. We were not immune to the unforeseen events in the Middle East as the conflict impacts inbound travel to Europe as well as many GCC countries.

Despite the travel disruptions in the Middle East conflict, we've delivered results above our guiding KPIs. I also want to address the same-store sales environment directly. We've been candid since Q3 of last year about the softer trends we were seeing amongst restaurant SMBs in the Americas. And as Chris will highlight in his remarks, the quarterly same-store sales trends in restaurants and lodging were slightly better than our expectations. However, our outlook for the full year remains fairly neutral, and our guidance reflects this. We are not forecasting a dramatic recovery in the back half of the year.

We are forecasting an annualizing over softer comps and modest normalization. We think that is honest, and we think that's right. The bottom line in our results, we delivered in line results with our guidance in a quarter that was more difficult than we've seen in a while. And our full year '26 guidance remains unchanged, calling for 26% to 31% gross revenue less network fee growth. The second message is one I'm genuinely excited to talk about because of the evidence is piling up.

Our international expansion is scaling meaningfully, measurably and on the time line we had previously described. We continue to add SMB merchants to our SkyTab POS offering across Europe and are now making meaningful progress in our newest product named Shift4 One. Shift4 One is in 7 countries, and we are on track to be in 15 with this product by the end of the year.

As a reminder, our Shift4 One product combines payments, dynamic currency conversion and tax-free shopping in a single device. This is a product we internally developed and it did not exist a year ago. This is the product that will help us unlock the meaningful revenue synergies within the SMB installed base of luxury retailers that are already tax-free shopping customers of Shift4.

Some early Shift4 One customers this quarter included [ Brightlink, Pharmacia Barcilla and LaSwash, ] but we have a long runway to go with over 70,000 SMB merchants that are prospective customers on this new product. The value proposition is strong, one device, eligibility detection at the point of payment, tax refund processing, dynamic currency conversion.

The early merchant adoption we're seeing confirms that when you walk in with this product, they understand the value immensely. In addition to Shift4 One, we're continue signing net new enterprise luxury retailers to our tax-free shopping offering, which over time, also becomes prospects for our payments offering. This quarter, we signed luxury retailers such as Stella McCartney, Massimo Dutti and 55 Croisette to name a few. The overall integration of Global Blue is on track, and we announced several Global Blue employees to key management roles during the quarter.

The acquisition of Global Blue provided local infrastructure, local talent and a pre-existing network in key markets where we previously had little to no footprint. It builds upon other international expansion efforts, most recently in the U.K. and Germany, where we quickly built material merchant density. The opportunity ahead remains larger than ever. The third message may be the most important strategically because I know there's persistent confusion why we win.

Let me try to cut through that as clearly as possible. We power the experience economy. Anywhere you shop, dine, stay or play, that is our territory. And the reason we diversified into each new vertical was not simply to cast a wider net, but where we saw the competitive landscape as narrow and where our capabilities were genuinely differentiated.

In almost all the verticals, we have diversified into competitors -- in restaurants, which we deem to be the most competitive of our markets, our SkyTab POS grew active merchant counts by over 40% year-over-year with more than half of our active restaurant merchants using our software are now on Shift4 Dine. We are rebranding SkyTab to Shift4 Dine and the logic behind that is simple. We have a much larger and more powerful brand in Shift4, and this is simply our Dine product.

In hotels, we continue to win excellent resort customers. We recently signed a 5-year renewal with Choice Hotels, signed New York's Palace Hotel as well as hotels in Greece and Canada. Our sports and entertainment capabilities remain unmatched. We are powering payments at the -- we were powering payments at the big game at Levi's Stadium in February. You'll also see us powering ticket sales in L.A. in 2028.

We signed 2 major soccer league teams in the quarter, including Inter Miami and Chicago Fire and 2 major baseball teams, the Houston Astros and the Chicago Cubs. In the U.S., we still have meaningful market share to capture, and we are enabling dynamic currency conversion broadly across our U.S. merchant base in advance of the World Cup later this year. We are heads down making sure DCC is live across our key venues that are hosting World Cup matches as well as hotels we service that fans will be staying in.

Before closing, I want to reiterate our approach to expenses. Our track record here is real and a differentiator, and AI has only made us better. It has helped us scale much more efficiently in new markets with fewer resources. We run a disciplined organization but always view room for improvement and have done a reasonably good job of delivering margins above peers throughout various economic cycles.

We do see a path back to 50% margins as we sufficiently scale our international operations, but we'll balance the growth opportunity appropriately. The discipline we have towards managing expenses has not changed. We continue to maintain a relentless focus on driving incremental operational improvements, headcount control and preserving our advantage in regards to minimizing customer acquisition costs relative to others in our industry.

Let me close by returning to the phrase I've used a number of times with this group because it continues to be true. We can grow meaningfully without finding a new customer, and we can drive meaningful margin and free cash flow improvement by continuing to do what we do well, which is integrate our business and to lead the parts. We have a demonstrated track record of winning despite uncertainty. We have a financial discipline, and we have a simplified corporate structure. We have a global footprint of over 75 countries that we did not have just a few years ago.

The macro environment remains dynamic, and we are not dismissing that, but the diversification of our business, the durability of our growth and the quality of the team we have assembled give me genuine confidence on the road ahead. In times of volatility, I think it's important to remind investors that we have grown gross revenue less network fees by a compound annual growth rate of over 35% and adjusted EBITDA by 38% since 2019.

Most importantly, this growth was achieved with relatively few dollars deployed when compared with our peer set. Cumulative equity dilution over that time period was just about 18%. I will repeat that. We grew revenues by 8x in 7 years, diversified the business, improved profitability and diluted equity holders by less than 20% I've said this before, and I genuinely mean it, we do our best work during times of uncertainty.

The deliberate and measured path we've been on diversifying our revenue streams, expanding into new geographies, deepening our product suite is exactly what allows us to perform reasonably well when the environment gets tough. We are not dependent on one market, one vertical or one macro tailwind. I encourage you all to read through our prepared materials for the additional details they provide.

And with that, let me turn it over to Chris.

Thanks, Taylor. Q1 2026 delivered record Q1 financial results, underpinned by a durable model, rapid integration and disciplined capital allocation. We continue to execute against our strategy to diversify both geographically and across multiple verticals in the experience economy, enhancing our resilience. These results were all achieved despite the travel disruptions stemming from the Middle East conflict.

Gross revenue less network fees, or GRLNF, of $549 million grew 49% year-over-year, in line with guidance. Adjusted EBITDA of $234 million grew 39% year-over-year, delivering a 43% margin, also in line with guidance. Adjusted free cash flow of $88 million grew 26% year-over-year, exceeding guidance and gross revenue of $1.12 billion exceeded as well.

Now let's unpack this further. Volumes grew 24% year-over-year to $56 billion, while delivering blended spreads at 61 basis points. The Q1 volume mix was largely in line with our expectations despite some early quarter weather effects impacting the restaurant industry in the Americas.

Turning next to the disaggregated categories that make up the Q1 GRLNF. Beginning with our North Star on growth, payments-based revenues less network fees was $345 million, growing 25% year-over-year. This category consists of an Americas region that grew 15% year-over-year, which was largely unaffected by prior year M&A and a worldwide, excluding Americas region that exceeded our expectations growing 51% year-over-year.

The next category of subscription and other grew 11% year-over-year. And although this exceeded the annual growth algorithm variable provided last quarter, we expect this category to vary quarter-to-quarter. Finally, the category of tax-free shopping or TFS, it grew 4% on a pro forma year-over-year basis. As a reminder, the TFS category was not in our financial results last year as it was part of the Global Blue acquisition consummated in July 2025. Hence, growth is being provided on a pro forma basis for context.

The TFS category experienced headwinds related to the conflict in the Middle East and its disruptive impact on global travel, especially for consumers from the GCC and parts of East Asia looking to travel into Europe. We estimate this impact as having been approximately $4 million to $6 million of headwind on the quarter. Overall, we are encouraged by the resilience of the business that this growth performance expresses.

Excluding the effect of acquisitions and divestitures, the organic GRLNF growth for Q1 was 11% on modest SSS. Adjusted EBITDA grew 39% to $234 million, delivering a 43% margin. As mentioned in our prior quarter call, our investments in international market expansion are reflected in our margin trajectory. And given the encouraging performance we continue to see in the worldwide regions and receptivity to our market-leading experience economy solutions, we intend to continue to invest here.

Non-GAAP EPS came in at $0.97. Adjusted free cash flow in the quarter was $88 million. And although it exceeded our guidance, it should be viewed as in line when taking into consideration seasonality and timing benefits from Q2. On a non-GAAP per share basis, this results in $0.95 of adjusted free cash flow per share or a 98% conversion from non-GAAP EPS. For the second quarter of 2026, we are introducing guidance as follows: GRLNF of $615 million, which embeds an approximate $20 million impact from travel disruption due to the Middle East conflict, adjusted EBITDA of $278 million and $10 million of adjusted free cash flow.

As a reminder, Q2 adjusted free cash flow reflects the seasonality of the TFS category, but the business also experienced some Q1 timing benefit that contributed to exceeding guidance. It's worth reiterating my comment from last quarter that the seasonality of the TFS business is such that the first half of the year is cash flow consumptive while the second half of the year is cash flow generative. When taken together with Q1, the first half is expected to come in line with initial guidance.

Additionally, gross revenue for the quarter is expected to be $1.17 billion. For the full year, we are leaving our guidance unchanged and note that this is meant to express the wider volatility of outcomes we are seeing even with part of the year complete. Some colors on the guidance. Throughout Q1 and into April, we saw largely stable consumer trends in the Americas with weather only impacting early in the quarter. This represents an acceleration in growth trends compared to what we were experiencing in Q4, particularly in restaurants and lodging, and it reinforces our neutral SSS full year outlook.

In TFS, we are not attempting to forecast a back half impact of continued travel disruptions. However, should conflict-inluenced travel disruptions continue, it would be reasonable to assume that the seasonally stronger Q3 would have a higher monthly headwind than the $4 million to $6 million per month experienced in March, and Q4 would be more in line with the monthly impact observed in March.

Last point on guidance. We acknowledge that the seasonality of the business is still something that investors are acclimating to. As such, we wanted to provide quarterly guidance for the back half of the year in our shareholder materials to help calibrate the quarterly cadence of the year, especially on adjusted free cash flow.

We reiterate that this quarterly guidance reflects the unchanged outlook on full year results and expresses the wider range of outcomes we think reflect the environment we are in. Now finally, on capital allocation. Every allocable dollar must compete for the best use and is subjected to rigorous process, while the output that guides us is return on invested capital and adjusted free cash flow per share.

In Q1, we repurchased 5.5 million shares, resulting in a cumulative $600 million of execution against the $1 billion share repurchase authorization announced 2 quarters ago. As such, we end the quarter with non-GAAP share count flat year-over-year. On capital structure in Q1, our term loan repricing took effect at the beginning of the quarter. Pro forma net leverage was 3.7x in the quarter, and we maintain our view that we do not intend to exceed 3.75 pro forma net leverage on a sustained basis.

Based on performance trajectory and guidance, the business would delever by approximately 0.5 turn per quarter, ending the year near our long-term average net leverage level in the low 3s. Before turning the call back to Taylor, I want to thank our fellow shareholders for continuing to work with me on our evolving investor engagement. We are not a culture that is ever satisfied. So we always appreciate the thoughts sparring challenge and engagement.

With that, let me now turn the call back to Taylor.

Thanks, Chris. And with that, operator, we can open the lines up for questions.

[Operator Instructions]. Our first question will come from Timothy Chiodo with UBS.

Great. Given distribution, always a big topic in the industry, but very topical with investors today, given some of your competitors are announcing large hires of direct sales teams and increasing the size of their direct sales teams, I thought this would be a good time just to take an opportunity to do a refresh on where Shift4 sits with its distribution approach.

A few years ago, you in-sourced a large sales team. I believe that you've been hiring more since then. In summary, I'm hoping you could recap the size of the direct sales team in the U.S. today as it stands, how the European build-out has gone? And then also a refresh on how things look in terms of the number of resellers, VARs, agents and any other kind of third-party distribution? And then I have a follow-up around rev share and income statement geography.

Yes, sure. So I'll hit that. And I think it is important to give context to the journey we've been on in the United States. Keep in mind, for the vast majority of our history, we were almost exclusively third-party distribution. As you mentioned, that was a combination of value-added resellers in local markets. It was traditional ISOs back in the day and increasingly ISV software providers that serve the experience economy alongside of us.

Today, you noted it well, we in-sourced a healthy portion of that distribution network, mostly in the bar category and have those folks working on direct sales. It's been about 2.5 years since that effort began. I'd say we're pretty mature and polished in our approach there, which is that we bring in regular direct sales classes. We've got density in most of the markets we'd like to have it in, say, for kind of a couple of spots in the country.

And despite that, the ISV distribution network remains strong. Keep in mind, if you want to sell software to a hotel, in many ways, even if you want to sell software to a restaurant, you're working with Shift4 because we get you into the environments you want to be in. Stadiums is another great example of that. We've got ISVs that want to be inside of stadiums, and we can help get them there given our presence in those stadiums. So the U.S. market is quite mature with regular sales teams rolling in and out. We've got roughly 300 salespeople that are full time at Shift4 in that regard.

And then international, we're beginning that journey all over again. So we've got awesome networks of third-party distribution. They're great because they scale quite cost effectively. We've got ISV relationships that we're expanding into. We mentioned a few in last quarter's call. And we're building a direct sales force to go after this huge opportunity that sits inside of Global Blue, the 70,000 SMBs that they service.

So all told, our total sales resources, I actually like blushing at this number because we -- the company was half the size is over 700 at the moment. And that's grown at about 18% a year. So Chris will talk about kind of the margin trade-offs of this, but we see the opportunity to be quite immense and we're investing in it quite meaningfully.

We've also, as you've seen in the past, acquired local VARs in markets like we did in the U.S. We envision that being able to happen throughout Europe once our sales markets have become more mature. But right now, it's about making sure we've got people who can talk to customers in just about every capacity.

And the last thing I'll say, and then I'll turn it over for your second question is we offer pretty significant advantages to ISVs who want to access the same markets as we do. Put yourself in the mind of a retail POS software company, we can offer them integrations for tax-free shopping so that the tax-free shopping experience is great for the merchants right out of the gates. Payments, as you'd expect, gift and loyalty, digital receipts.

We can offer a comprehensive suite that just 2 years ago would have been instead of a benefit to the ISV, it would have been quite a pain point that they need to integrate all these different companies. Today, we're having ISVs approach us saying, wait, I can just talk to you and deliver to my customer a complete commerce experience given all the capabilities you have under one roof.

On that second part, yes, sorry, that follow-up was really just around, Chris, if there's anything just to flag around income statement geography in terms of the sales salaries, the commissions and the payaways that go to the third parties. If you could just give a recap of where that all sits within the P&L, I think that would be helpful.

On that second part -- yes, sorry, that follow-up was really just around, Chris, if there's anything just to flag around income statement geography in terms of the sales salaries, the commissions and the payaways that go to the third parties. If you could just give a recap of where that all sits within the P&L, I think that would be helpful.

Yes, sure. So I think what you're alluding to is that when you look at indirect distribution, that's largely compensated through the form of residual commission. and residual commissions would flow through in the cost of sales line that's large in quarters past, why we've seen growth in that line of cost of sales.

And that is deliberate because when you think about the strategy of entering a market before you have the gross profit density in a given region, in a given country, it's prudent to have variable cost structure that can flex up and down as your density grows.

At some point in time, you hit a tipping point where you want to internalize that into more of a fixed cost operating expense base, which is geographically where the direct sales and the direct go-to-market expenses would live. They would live inside of the OpEx categories or the SG&A categories.

And so that trade-off between a variable cost structure when you're early in the maturity of a region and you're expanding and you don't yet have the full gross profit density sitting on top of that region that's the strategy at the start. And then eventually, as we've seen in Shift4's history, you internalize that cost structure at some point in time. And the economics of that are really attractive trade-offs once you get to those density levels.

We'll now move to Rayna Kumar with Oppenheimer.

Good results here. Could you elaborate more on how you quantify the Middle East conflict impact on your tax-free shopping business?

Sure. And thanks for the question, Rayna. I'll tackle that one. So it's an interesting nuance, right? Obviously, a very dynamic environment when you're trying to isolate and analyze the impact of travel disruptions that are resulting from the Middle East conflict on a business like tax-free shopping.

And for us, that analysis actually can be quite targeted and quite specific because a couple of ways to look at it. First, for context, what does it even mean to look at isolating populations that are most impacted? Well, we look at things through corridors in that product line.

And one of the most important corridors when thinking about this conflict is the GCC consumer traveling into Europe and the kind of Southeast Asian and East Asian parts consumer coming into Europe. And those 2 consumer corridors coming into Europe, which is the most important region that our merchants are based, those 2 corridors together kind of make up a little more than 20% of the European kind of volumes. When you look at those 2 corridors, you can then isolate the effect that passenger seat capacity from the airlines themselves has changed, has declined.

And when you actually use passenger seat capacity and regress it against volumes and sales, it's actually a fairly tight regression, a fairly high R squared and it becomes a good predictor over a long time series of data that we use to analyze these things. And so with that as context in terms of how we looked at the backwards of what therefore happened in March and looked at kind of the effect in March as having been sort of a $4 million to $6 million headwind on revenues -- on gross revenues less network fees equivalent, you can then take that same methodology and apply it forward.

You can look at how the seat capacity from the airlines themselves has actually changed on a forward basis and apply the same modeling, the same sensitivities, the same regression against it and be -- and have a view as to how that could impact the TFS business on a go-forward basis. And probably another important point to sort of say within that is that this seat capacity that has been changed by all of the airlines across these corridors that matter to us -- this is capacity that doesn't necessarily come back that quickly.

But within a span of kind of a 4- to 8-week time frame, we sort of see this business across any kind of travel disruption has been pretty resilient and coming back quite quickly. But the analysis, the framework, the sensitivity kind of all grounded within data sets that are very rich and deep and long. At the same time, they're informed by the forward capacity planning of the airlines themselves.

We'll now move to [ Dan Demir ] with Mizuho.

It's Dan Dolev here. Guys, great results. Really nice to see, well deserved. I wanted to ask about AI. I noticed some of the comments, Taylor. Can you maybe talk to us about how you deploy AI across the organization? And congrats again.

Yes, sure. Thanks very much. We do actually read the most commonly used phrases on earnings calls and try not to get too close to the center of the pack. By our analysis, AI was, I think, # 2 or 3. So glad to be able to talk about it, but also try to talk about the fundamentals of the business as well. It is foundational in terms of how we're thinking about how our business should run. I think that's just prudent in the current environment to force embracing of these tools. We look at it largely 2 ways.

Obviously, what can it do to help us speed up delivery of product. But I think where we're putting kind of more emphasis is how is every nonproduct or technology-oriented silo of our business thinking about how to embrace AI and really challenging them through the mindset of what are our top vendors, customer relationships, financial institution relationships and just thought leaders doing in their verticals. So our HR offsite will include presentations on using AI for the purpose of speeding up HR workflows.

Our legal offsite is right now going on. They've got representatives from the big law firms talking about how to use it. It's really speeding up production, which for us is critical. Our technology scale quite nicely, just given the nature of payment platforms and software, where it's tricky is adding many thousand SMBs a month in brand-new markets. And so we're able to go to market much more quickly. We're able to stand up support infrastructure. We're able to stand up a marketing and sales framework that works for that local market a lot faster.

And then I would just say just good corporate citizenship, regular dialogue with companies that we really admire teaching our teams and us teaching them how we've gotten the most benefit out of tools. So we've had former colleagues from Blackstone, friends from Goldman Sachs, soon to be Walmart, all kind of collaborating on how to make this transition as exciting as possible for employees.

I think there's a reluctance to embrace tools if you've been in a role for a long period of time. We're challenging that immensely. And that includes, obviously, a substantial amount of deployment of tools into thought leaders inside the company. So it's a super exciting time, but we by no means think we've got kind of the road map figured out. We're borrowing as much from companies we admire as we can. And that goes all the way through the AI vendors themselves.

We'll now move to Darrin Peller with Wolfe.

Good to see the resilience in the business despite all the macro. I just want to hone in on the 15% organic -- what's effectively organic strength you're seeing in the U.S. and North America. Can you just remind us on the building blocks? I mean I know there might be still some lingering cross-sells from deals you've done over the last several years.

But maybe thinking about the verticals and what's really driving that kind of strength from an organic standpoint in this market, which is obviously including, I think you guys have flat same-store sales, right? So just a revisit of the building blocks there and the sustainability would be great.

Yes. I'll let Chris hit the macro environment. I'll talk about kind of just what we're doing. tried to address this inside of both my letter this morning and the scripted remarks to just talk about the competitive framework in the United States. There's a lot of rhetoric. There is not a lot of changing of pole position with regard to the competitors we see in a buyer in our markets and how we face off compared to them.

So put this stat in the remarks, I think it would surprise most people, but it doesn't surprise us. Our restaurant point-of-sale product is -- location counts are up over 40% year-over-year. That's just one good example of a product that's getting a heck of a lot of adoption. I think it probably surprises the Street. It does not surprise us. We are consolidating the firepower of what historically was a lot of different distribution networks into a single product. It will have results.

And the quality of those merchants is rising throughout that time as well, which is really good to see. In the hospitality vertical, our competitive differentiation has not changed. And in fact, as we folded in tools like GX and currency conversion, our value proposition go to purchase gift cards at the largest hotel chain in the world and scroll down to the bottom of the page, and you'll see Shift4 powering that whole experience for them.

So that's just one -- another example of how these acquisitions can at times feel like cookie cutter, but in reality, we spend a lot of time thinking about how it rounds out the offering, and we spend a ton of time thinking about what our customers are buying away from us and can we deliver that under one roof. And obviously, something like gift cards is so inherent to the payment experience that when we own it as part of the offering, it's a better customer experience to work with 1 vendor than 2, and we're in rarefied air being able to do that.

Loyalty was an incredibly significant set of features inside of that same acquisition, and we haven't even begun to talk about that. But as competitors and companies we admire invest significantly in loyalty, you can get a sense that we were on that curve as well. I could go on and on, but our sports and entertainment wins, I think, have sort of become happenstance, but we alluded to a really nice ticketing win with regard to L.A. in 2028. That's an example of an extension.

I don't think people would have assumed is super natural in the sports and entertainment space. So everything is going quite well in the United States. I will say the significant amount of executive attention is focused on how do we replicate all of this and not over a 25-year time line, but over like a 2- or 3-year time line throughout the rest of the world.

Chris, anything you want to comment on with regard to the same-store sales environment?

Yes, sure. So yes, Darrin, and thanks for the question. You're right to provide the context that when you think about the Americas region within our payments-based revenue less network fees, kind of disaggregated categories, that Americas region is largely -- comes into this year largely unaffected by prior year M&A annualization.

So you end up with a very clean view on our most mature region, a region where we've been doing business for multiple decades and where all of our products are also mature, live battle-tested. So you take that region and for us to be able to deliver the mid-teens growth there, you're right to point out that, that wasn't really or supported by much in the way of SSS.

We saw like a modest positive on SSS, which is a better trend than what we saw exiting Q4 and certainly is better than what was embedded within guide, but it wasn't a meaningful -- meaningfully positive contributor to that growth rate. And it's important that we also think about what is the context beyond the absolute of that growth rate.

To us, we think that we're quite proud of the fact that, that means the region is probably punching at a greater than 3x relative growth to the baseline market, which is something that I think is probably even more important because then the SSS kind of neutralizes across all of the relative players and peers. But that's a bit of the comp.

Are you guys -- just a quick follow-up, and that's great to hear, by the way, guys. Just on the coming up World Cup, you feel good about getting DCC and all your products ready here for that?

Yes, we do. I mean we've got a big estate, and there's hundreds of software suites you could be connecting to us through. But the World Cup actually helps sort of minimize distraction factor because we want it in stadiums and we want it in the hotels around those stadiums. So we feel great about it.

We'll now move to Andrew Jeffrey with William Blair.

Taylor, I wonder if we could just sort of zoom out and think about sort of how Shift4 slots into the broader global payment processing landscape. You're a $200-plus billion sort of run rate processor in a $20-plus trillion market. Where do you think Shift4's 1 or 2 kind of really meaningful competitive advantages are as you think about becoming maybe the next trillion processors.

As we look around at a lot of much, much larger companies that are even growing faster than Shift4. And I'm just trying to get a sense of like where is this company 5 to 10 years from now? How do we get there in a very sort of succinct way? And from whom do you take share to achieve your bigger ambitions?

It's a great question. I'm glad you asked it because I think a lot of our sort of strategic moves in isolation can seem strange because I don't think people have a decent enough appreciation for what our core skill sets are. We made a decision as far back as 20 years ago that we were going to double down on the in-person economy.

That was actually, at the time, a very defensive play as the likes of Amazons and were coming up and Apple and Google were suddenly getting into the payment flow. So there was a deliberate decision made that we're going to focus on in-person experiences. Restaurants was the first vertical. And we learned a ton about what it means to get hardware, software and payments working together in the most demanding environments, which is like there is a customer at your bar, waiting to pay and you need to deliver all of those things together.

At the time, these technologies didn't work nearly as seamlessly as they do today. We've expanded that into basically any place you would physically pay for something where those advantages are quite material. So I think some of the larger players that are growing really nicely that you've mentioned are almost exclusively riding a wave of e-commerce. And that's not to belittle what they do. I think they do an excellent job at powering this transition from purchasing something in a store to purchasing something online. But we continue to find a lot of opportunity where humans will physically want to pay for something as the natural entry point for us.

Now it doesn't end there. You think about some of our largest relationships, we're facilitating massive amounts of e-commerce transactions, but they ultimately want to tie that back to a physical experience. So we see an edge there. We see our most innovative customers, groups like Alterra, creating this really seamless experience behind buying a SkiPass online and then using that throughout a bunch of physical experiences. We integrate to those experiences quite nicely, and we help drive that. Now what's nice about that is these verticals are not nearly as advanced throughout the rest of the world as they are here.

So our playbook is going to sound kind of uninteresting with regard to taking everything that's made us successful in powering the experience economy in the U.S. and bringing it to the rest of the world but that's awesome. We don't have to learn a ton of new things. We have to learn about local payment methods. We have to learn about certain tax coding in local geographies, but we know how to make all these technologies work together, and they don't work together in the rest of the world.

So we think we can continue to ride this wave. We think we are helping our merchants get from physical to digital. But at the end of the day, they want and their consumers want an in-person experience, and we are naturally provided -- well positioned to provide that. Now where is share coming from? It's generally coming from a fragmented network.

So it could be coming from software providers. It could be coming from legacy banks providing bank terminals. We're actually delivering a solution that sort of takes 5 or 6 vendors off the table in exchange for Shift4. And that's what we're seeing high demand for throughout Europe today. The tax-free shopping experience prior to our acquisition of Global Blue was when it worked its best was a handshake of 5 different highly competent vendors. Now it's one.

So hopefully, you can sense the enthusiasm. But I think the root of your question is the right one, which is how do you get confidence going into luxury retail? Well, that in-person experience is as demanding as setting up a local restaurant, meaning we need people in that location, on site to help work the merchant through their challenges and deliver the whole commerce experience, and we're uniquely positioned to do it.

Yes. I'll just add that the question almost takes me down like memory lane because when you think about the market environment in some of the worldwide region, the international markets, it's reminiscent of all of the things, all of the commerce challenges that we were solving in kind of the early and mid-2010s in the U.S. or the Americas market and bringing that kind of simplification of the many parties that you have to work with to deliver an in-person software integrated payment experience, that is literally straight out of the vault, straight out of the playbook of the Americas, literally probably in all of our strategy write-ups and memos and materials from the mid-2010s.

And so the idea of where that share is coming from, Taylor is exactly right. It's going to come from the point solution providers of each of those parts. whether that is a local bank that's providing stand-alone unintegrated pin pads and devices, whether that's a partner only, whether that's a point solution software vendor. It's the combination of all that we disrupted in the Americas that we're bringing into the worldwide markets. And it's why we're so excited about the growth there. And the growth there is actually, as we said, exceeding our expectations, and that's how we know international is working.

We'll now move to Dominic Ball with Rothschild & Co.

Great numbers on the quarter, particularly the international growth. Just a question a bit beyond the quarter. And Chris, I know we've discussed this previously. A lot of the -- or the majority of Shift4's growth going forward is international, but U.S. restaurants still remain an important part of the current merchant base.

Following commentary from DoorDash yesterday, alongside seeing DoorDash POS across San Francisco, Phoenix, New York, a formal launch of DoorDash POS is becoming more imminent and more of a kind of when rather than if. So when delivery platforms evolve from more of a partner -- from a partner to a peer, how do you think about the competitive responses available to Shift4?

I'm going to let Chris hit it, but I actually want to emphasize that I don't think that's well appreciated what this online delivery trend has looked like throughout the U.S., especially over the last kind of 6 years, like COVID did accelerate a lot of it for restaurants where like a meaningful portion of sales have gone to network-affected players. We do enable that through most of our software providers.

So Chris can talk about kind of how we think about competition in the space. But I think our restaurant growth is quite strong, and I don't think people realize these numbers also have a headwind of a lot of business going out of the physical location and going on to platforms like that. So it should speak even higher for our ability to get into restaurants and deliver them solutions.

But Chris, do you want to address the DoorDash question?

Yes, sure. It's an astute observation. And it really speaks to the dynamism of restaurant technology as a sector, as an environment. It's not too far into the past that you have to look to find some pretty innovative ideas from players within the ecosystem of restaurant, such as right down to the food service providers that essentially are kind of a short handful of players that are providing and supplying the food to pretty much all of America's restaurants.

At points in time in history, even they have had POS strategies because it's highly logical to get as close to the merchant environment and seeing the data of the flow-through and trajectory as possible. We value that data, many others within restaurant value that data.

And I think that's why our strategies have various points in time involved partnering with a lot of these players within deep integrations and DoorDash is no different. These integrations are actually quite valuable to us, valuable to them. And I think our strategy has never been as myopic to sort of look at all of these players and say, okay, this is a pie, a winner take all or this is like a way that we can actually work together, grow that pie and actually have an opportunity to see whether there are greater ways to value that data, greater ways to work together.

So I do think that these kinds of, we'll say, competitive shifts and dynamics, they're not new within the restaurant space. It's partially why within the various categories of the experience economies we serve, we actually like a lot of our other categories as well because the competitive dynamics are quite different. But within our most competitive area, the vertical that is restaurants, this dynamism isn't new. But at the same time, I think our model affords a very partner-centric approach where we're able to actually take advantage of some of these innovations and through a partner lens.

Yes, I'm going to just reattack it because I think it's such a fun question because you mentioned one company, you could have just as easily said AI. What can AI do to single vertical software. this is where the scars and triumphs of a 28-year-old business in the payments industry really inform our thinking. We have run vertical software for over 20 years.

And as a single vertical software provider in restaurants, you should always be paranoid about who's going to come up around you. We can define the barriers to entry as slightly harder or slightly easier, but there have been MICROSES, there have been Toast, there have been touch Bistros, there have been Rebels. There have been many companies that we've since bought because I think our paranoia about the value you deliver as a single-service software provider and the cost you pay to acquire customers is incredibly important to pay attention to.

So we respect the heck out of most of our competitors. But again, are we worried about somebody eating our lunch in a vertical that we've specialized in, in 20 years and grown despite some of the trends that you mentioned, not particularly today.

We'll now move to Craig Maurer with FT Partners.

Just 2 modeling questions for me. For Rest of World payments-based revenue growth, what was the growth on an FX-neutral basis? And just secondly, knowing that the subscription line is volatile and moves based on what legacy revenue streams are shut off, et cetera, how should we think about the quarterly cadence underpinning the mid-single-digit growth guide for the year?

Yes, sure. So on the first one, so the FX-neutral impact, it would have been basically relative to the 51% of growth that you would have seen in that payments-based kind of worldwide region, it would have had an almost 10-point kind of impact within the quarter.

Now that is, I think, isolated as a year-over-year factor in this quarter that I think will dissipate in forward-looking quarters, future quarters because if you remember, if you kind of look back to the euro-USD kind of cross the most -- the widest it was or the widest it is in this quarter relative to the -- looking at the forward curve would have been isolated into Q1.

But that said, I think from the perspective of the commentary, the worldwide region from a payments-based revenue less network fee standpoint, it still exceeded kind of our expectations and not isolating that variable. And then can you reiterate the second and third part of the question?

It was on the volatility of subscription and the other question...

Yes. Yes. Subscription and other volatility, I think we tried to flag that upfront. So we provided, as a reminder, the growth algorithm that we provided in Q4, it flagged that subscription and other would probably be in the low single-digit category in terms of disaggregated revenue category growth. and that it would be volatile quarter-to-quarter. So from that perspective, I think you have to continue to anticipate that things remain in line and that volatility will express itself through some of the coming quarters.

The only thing I think worth calling out on international, just to layer into what Chris mentioned is that our customer base internationally is a lot more homogeneous today in these early days than what you'd see in the United States. So adding multibillion-dollar non-U.S.-based enterprise customers is not yet a thing. We believe it can be a thing. We are on the same evolution we went through in the United States, which is kind of SMB, the small- to medium-sized hotels, the larger enterprise opportunities, which are groups of these merchants. So the majority of that volume growth that you're seeing there is coming -- is expressed as like almost a location count growth rather than a volume per merchant shift, if that makes sense.

We'll now move to Sanjay Sakhrani with KBW.

Chris, I was just wondering if you could just unpack the travel stuff a little bit more for me. Just want to make sure I understand sort of the trend line that you saw in the quarter and then going into April and maybe even early May and sort of what's baked in? Because I know you have that headwind in the second quarter, but like where would be the risks from here on out in terms of travel?

Right. So to reiterate the point, what we're isolating within travel disruption as a result of Middle East conflict is trying to isolate down into the corridors within the tax-free shopping category of the business.

And when we looked at those corridors, obviously, March would have been directly impacted passenger seat capacity effectively minimized to almost nil. And what we attempted to do was look at the forward capacity and the change in that -- in those flights across those corridors. So from the perspective of how we analyzed it, I don't need to reiterate what I had mentioned to Rayna, but that's what's baked in. And I think it's important to understand that, that is not any attempt to kind of forecast conflict.

I think it really is just trying to look at, well, what is the kind of combination of all of these airlines that have really put forward not just an outlook, but also have put forward an outlook that's now underpinned by how they would have deviated passenger flights -- sorry, passenger seat capacity by having deviated flights. They've sold tickets now against where those new flights are going to be. And so for the most part, this travel disruption dynamic, as we know it right now, it's fairly baked in, and it's not that easy to change because it's driven by passenger seat capacity outlooks.

And in general, when we've looked at these travel disruptions in the past, regardless of what the origin is, the tax-free shopping business has generally been able to rebound within a 4- to 8-week period, and that's also something that's reflected into our Q2. But by no means are we trying to forecast kind of an underlying continuation of travel disruption, let alone trying to forecast a duration around conflict.

I guess I'm just trying to make sure I understand like have there been any additional sort of impacts as we think about people canceling their travel plans and obviously, FIFA coming up, there's been some mixed numbers around that, too. I'm just curious if that sort of plays into some of the forecasts that you've made and embedded in the guidance.

So again, I'll let Chris comment, but I think it's -- I want to clarify this statement. A lot of the -- all of the commentary Chris made is very specific to Global Blue tax-free shopping. And there's a reason for that. That is not a consumer cohort that is very sensitive to economic activity. They tend to travel and spend a lot almost regardless of the economic conditions where you have disruptions in that business, you have disruptions because these people cannot travel or are reluctant to travel for one reason or another.

So it's actually much easier to kind of -- well, I shouldn't say it's easy, but it's easier than trying to predict how many people are going to choose to attend the World Cup and what are they going to spend on tickets. It is these people would have otherwise traveled, but they can't. And what we're careful to do is to give line of sight into how long we know they are unlikely to be traveling for, but also not try to predict award because that's a bit of a fool's errand. So we've got good visibility through Q2. Chris, I don't know if you want to characterize it, but I think that's kind of the extent of our great visibility into the conflict.

Yes. The only other thing I may add is just a little bit of color on some of the other interesting things that we saw. And again, these aren't meant to be sort of extrapolation points. But when you do have some of this travel disruption, part of the resilience of the tax-free shopping business is sort of the second derivative effects that maybe are a little less intuitive when -- unless you're deeply studied and understood the dynamics of the business.

But you have the disruption as a result of a conflict geopolitically. And what that actually created at least within this quarter was actually relative to forward outlooks like the U.S. dollar strengthened against the euro.

And what that actually ended up -- what we saw as a result of that was our most important corridor within tax-free shopping is actually the U.S. consumer coming to Europe and spending, and that actually outperformed in the quarter. So it created a bit of a counterpoint to the travel disruption and the conflict for the corridor that was GCC to Europe or Southeast Asia to Europe. It was a bit offset by actually strength and outperformance in U.S. to Europe, largely underpinned by purchasing power.

And so there are some of these elements in the business that are maybe second derivative effects. I don't know if that's getting at the heart of the question, Sanjay, but they, I think, are worth noting because it helps at least provide a little bit of color as to why the volatility of outcomes on both sides remain higher as a result of what we're seeing in the current environment.

Thank you. At this time, we've reached our allotted time for questions. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Guys, why don't we jump in again? Thank you, everyone, for joining us on Day 2 of the Wolfe FinTech Forum. Really happy to have Shift4 with us, a company that I'll never forget this IPO, and Chris remembers it as much as I do just given where he was at Searchlight at the time as an owner of it. But right in the middle of COVID, a company focused on restaurants and hotels coming public when everyone decided not to do anything but stay home. And it was an interesting time, but ended up being a very successful IPO and really has grown quite a bit since, and it's been a very successful company since.

And with that, we're really happy to have Chris with us. Thanks for joining us. You've been with us for many years, we were just saying, but on a different panel. So happy to have you on the operating role now as the CFO of Shift4.

Right. Thank you for having us. It's always fantastic to be here. This is just a must-attend event in my mind, and I'd like to keep The Street going for many years to come.

Let's start with just it's been, what, 4 months or so now since you've been in this role, right?

Almost 6.

Six, sorry. I mean when you think about the learnings you've had shifting from investor to operator, I mean, you've been on the Board, but help us understand what you're seeing that's different and what you're learning about the business that is worth sharing.

Yes. So for context, I've actually -- even though I'm new in the seat, not new to the company. I've been involved with Shift4 almost, well, for a decade now, 10 years running. 5 years representing the controlling private equity shareholder as a partner at a private equity fund, so 5 years of that life, where I wore a lot of hats in the company but never got the title recognition, and then 5 years after the IPO in 2020 as a Director.

And so I've had the vantage point of being able to see this business just do extraordinary things. I mean you're talking about the journey that, for all of the folks in this room have probably seen the 5 years of public life, it's incredible what the company has come through and where the company is now.

The things we do in 1 year is already like quite breathtaking. But from my vantage point, I actually have seen what is a north of 20x growth in EBITDA in 10 years. It's just a phenomenal growth machine, a compounder of value, and it's just been incredible to see it resiliently navigate through so many different episodes of life.

Your mic's been cutting out.

Oh, sorry. It's been amazing to see the business just evolve through so many resilient phases of life, not least of which COVID, as you described it. But even competing in a zero interest rate environment when money is free and everyone's idea is worth funding, that's something we lived through, too. So it's a pretty incredible business with a lot of durable moats. So excited to now be back into a front row seat.

Yes. No, it definitely has grown into a ton of new verticals over the time that we've watched it, and it's incredible to see really what's ahead of us with some of the deals you've done.

But just before we go into that, I mean, you recently reported fourth quarter, gave guidance for '26. Maybe just explain some of the puts and takes during the quarter and major assumptions that underpin the revenue and volume guidance for the year ahead of us first.

Yes, sure. So to start at the '26 guidance and sort of breaking it down a little bit into its parts, one of the things that we tried to introduce was really this concept of a growth algorithm, how to deconstruct the business into a few parts that are digestible, that are areas that people are trying to get acclimated to.

So one of the first parts of that is disaggregating within the revenue streams, within the gross revenue less network fee streams, disaggregating tax-free shopping, calling that out, breaking that out and then giving a pro forma growth outlook on that component of the business, separating away from our North Star, which is payments-based revenue.

And within that payments-based revenue, really trying to disaggregate for people an understanding of two distinct narratives: the Americas region, where our most mature market makes up the majority of the payments-based revenue and where all of our market-leading products are available and served and will not for 2026 have any noise from the annualization of M&A from the prior year. So a pretty clean view on the mature part of our business.

And you contrast that inside of payments-based revenue to the worldwide segment. Super fast-growing part of the business where we are disrupting what is effectively a competitive environment of bank terminals that are unintegrated from the perspective of payments, almost looking at it through the lens of integrated payments many, many years ago in the Americas is kind of the environment we see in Europe. And we're going to disrupt it with market-leading solutions that have been battle-tested in the Americas.

And so when you deconstruct all of those components within the pro forma and then subscription and other, a low single-digit growth outlook. You combine it all together, and that's the algorithm that we're trying to convey to folks and help them understand. Within actual variables that are probably worth calling out that we have called out, one of the biggest ones that's been topical for us for quite some time, especially in the second half of last year, was the same-store sales environment in the Americas in payments space.

And what we really tried to say about that same-store sales environment is that for this year, we're trying to give a neutral outlook, a flat same-store sales perspective. That's what's embedded into the guide. And historically, we probably would have had low single digits positive contribution embedded into the guide from same-store sales. If you go back through the history of same-store sales, it would have been a positive contributor in most years.

This year in the guide, we're modeling that or we're guiding that neutral, a slightly negative first half that continues off of the Q4 trends and then a moderately positive back half, which is just anniversarying on soft comp. That's one thing to think about there.

And then the other thing I'll call out as it relates to the tax-free shopping component of the guide, we're trying to be conservative around the variables that we know are already showing themselves as having some headwinds in front of them, things like Asian travel tourism tensions between Japan and China as well as some currency dynamics where the outlook on the U.S. dollar relative to the euro was a little soft. It's obviously strengthened since we've had the Middle East conflicts, the GCC conflicts.

But now we do still think that it is important for investors to understand that a strong U.S. dollar is net positive to the demand side of tax-free shopping far more so than the financial translation benefit of a weak U.S. dollar. So for us, when we see this U.S. dollar weakening outlook from the big money center banks, et cetera, in a forecast, we have to make sure that, that gets into the guide.

But then on top of all of that, we also just view that the first year you own a business, and this is a bit of my own philosophy from the many years of the seat that I used to sit in, the first year you own a business, you have to be conservative on it. It's just important. It's prudent. A lot of things can go bump. Obviously, the events in the Middle East are a great example of that.

Yes. I want to get into conservatism in guidance in a moment. But before I do, just given the view you have -- guys, Shift4 is probably the largest processor for hotels that I can think of in the world, certainly for stadiums around the world. Most of the stadiums we all go to, they're processing at this point, and you've grown that extremely well and restaurants. So you have a really good view of a lot of key sectors.

Experience economy, as we call it, yes.

I mean can you just give us a quick snapshot of what you're seeing happening now at hotels? And maybe is it a K-shaped economy -- or restaurants? Stadiums are probably pretty resilient, I would imagine.

Yes. I would say that when you actually look at where commerce is happening, you put it well, right? The experience economy verticals, where folks are actually going shopping, dining, staying, playing, those kinds of areas, that's where you're going to find a lot of our solutions. And what we see is definitely the continued trend of this concept of a K-shaped economy. We can see it in our data, but actually you can see it in a lot of data.

One of the things often cite especially in lodging, because lodging in the U.S. is so perfectly segmented from a chain scale standpoint, that when you pull down data from a third-party provider, one of the well-known ones would be like STR, like S-T-R, right, you can see that the economy versus luxury same-store sales that they're reporting, occupancy stats and the sort, it's pretty clear. You don't have to ask for a proprietary look from anyone. It's pretty clear, the dynamics.

And then anecdotally, we obviously have the benefit of being able to talk to folks. And phrases that you'll hear is, it's not as if the economy end of that spectrum is soft or weak, and in some aspects, it doesn't exist. And so that would probably be trend one. Probably not that new news to folks, but it is consistent with some of the things we're seeing.

I'd say the other thing that we're seeing is that at least to the start of the year, things were looking pretty stable. Things are actually looking pretty positive in the Americas. And I would say the only thing to caveat around that was weather. But for weather, it would have been a really solidly positive quite start to the year.

Okay. That's helpful. Let's take it back to guidance for a minute. I mean, listen, last year, there were a couple of hiccups on the results versus the initial guide. Investors had thought there was conservatism. It turned out to being more in line at or sometimes even a little shy of it. How do we feel confident that right now you've built in the proper conservatism in the outlook that you just gave for the year ahead of us?

Yes. So I think, look, the way to probably think about some of the variables that you could look to that might be a bit different from prior year's guide, we talked about same-store sales as one. So I'm not going to belabor that point. But that is a low single-digit positive contributor to, we'll say, historical guides, historical points in time grounded on the fact that it has historically been flat.

Right. Now you're calling for flat.

Right now we're calling for flat. The other one I would probably call out is that historically, you also had the benefit of inflation-plus pricing environments that, if anyone was to look at their Netflix bill or anything that you have as an expenditure, over the last few years you probably got more, maybe in some instances, a lot more than inflation-plus from a pricing or an ARPU expansion or what have you.

I think the payments industry is no different. And so in some historical years, within the guide, you would have embedded something that looked a little more inflation-plus. And I think that's something that I've tried to call out by saying we're anticipating, and it's now going to age terribly, but we were anticipating a benign inflationary backdrop. A hard thing to say with $90 oil, but that is something that we were anticipating within the guide.

So I do think that those two variables would have been like low single-digit positive contributors unto themselves, each individually, so maybe an MSD kind of impact.

Okay. All right. So you probably did build in a mid-single-digit type level of conservatism in the outlook just based on macro factors.

Yes, I won't exactly phrase it that way, but I would say that those are the things that more tangibly you can call out as differences.

Depending on what the macro does. Okay. Let's shift to organic growth. Again, I mean, Shift4, as long as I've covered it has done an amazing job integrating assets that you acquire that really make perfect sense. But with that said, investors really are kind of hungry to know what the underlying organic profile looks like. Help us frame what you see as this year's organic profile and how that compares to last year.

Yes. I think that the growth algorithm introduction, depending on how you sort of cut and slice it, you're ultimately going to land on a place that suggests low double digits. So that LDD dynamic, it was very intentional in the way that we tried to break down the components of this growth algorithm so that you could see Americas payments-based, again, largest component of the payments-based revenues, that will largely be unaffected by the annualization of any prior year M&A. So mid-teens there. That's about as ex-M&A as it gets for an incredibly mature market and our largest part of our business.

The intention of breaking out a pro forma growth component of tax-free shopping allows you to get at the same concept, right? So this is ex the effect of some sort of an annualization noise. This is what that's doing. And then subscription and other, giving that as a low single digit. So you can basically isolate out the worldwide component of payments-based revenue because that will be very much affected by the annualization of the M&A of Global Blue, of Smartpay and look at the business as a whole and say, I have a pretty clear picture of what this business is doing excluding the effect of M&A.

And it's actually no different than, we'll say, the implied fourth quarter in terms of what was happening from a growth standpoint. And when you look at the year, when you look at the fourth quarter, even what should be implied by the first quarter's guide, LDD is the way to think about the business.

Okay. And just how does that compare to last year?

I would say in last year, and it does tie back a little bit to the components that we just described, so these two macro variables of inflation-plus and Triple S. But I think in last year, that would have been in the third quarter we had reported an 18% rebased growth. And then earlier in the year, when Triple S was actually positively contributing, we were seeing north of 20%.

Okay. Let's shift to free cash flow because as much as I think investors kind of expected more moderate growth expectations than prior Street numbers for top line, free cash was a little bit of a negative surprise to The Street when you came out with flat guidance effectively year-over-year. There were some inputs in that I think it's worth sharing and just reexplaining again.

But help us understand what informed that flat profile year-over-year. And then thinking about what you've talked about medium term for a minute, you talked about $1 billion exit run rate exiting '27 for free cash. Just where do you stand on that? And maybe put this year into context with that.

Yes, sure. So what did we talk about on free cash flow, let's start there. What we tried to give people visibility into is the free cash flow bridge and why year-over-year adjusted free cash flow is expected to be flat at $500 million as a guide point. The biggest component of this is the annualization of interest expense on one side as a year-over-year headwind to free cash flow.

And then the reduction in interest income is probably something that also people didn't necessarily pick up on. For context, we were carrying cash balances that were quite high last year. If you looked at the Q2, for example, Q2 earnings or Q2 10-Q, you would have seen a $3 billion cash balance sitting on the books at a time when interest income was actually generating quite a high rate. So you normalize for those two effects and that gets you the vast majority of the way in terms of the bridge that you need to model.

The second part of it then becomes this concept of the Global Blue, both timing of close and seasonality of the tax-free shopping business. So tax-free shopping is a seasonal business where in the first half of the year, it's free cash flow consumptive. So it does not generate much free cash flow. And then in the second half of the year, the working capital unwinds and it becomes very, very free cash flow generative. So in a year, it just looks like a free cash flow generative business in a conversion rate that isn't that far off from the broader businesses' overall conversion rate.

The issue is that we close on the business on July 3. So in 2025's numbers, you get the second half effect of the positive and you don't have the first half effect of the low consumption. So then I think when we came into this year, I would argue that, yes, as I rewind the clock, I think the communications could have been better such that a business that was public, that we had assumed -- in the business of retail which is obviously seasonal, we would have assumed that to be maybe less of a surprise. But the fact that it is now sort of, I hope, an understood fully transparent kind of part of the equation, I hope that's now fully out there.

And then the last part of the free cash flow piece is the component that is we are investing. So integrating the business this year of Global Blue is also about expanding pan-regionally across EMEA and APAC. As we do those things, we are investing. And that shows up in the free cash flow bridge. That shows up in a lot of forms of investments such as investments in go-to-market infrastructure, and we do call it out as well, investments in AI. And within that whole bridge, when you step back, the majority of it is the capital structure annualization. Then you have the effect of Global Blue and then you have the effect of international expansion.

So then the second part of your question, how does that now flow into the previous aspirational but achievable goal of a $1 billion exit run rate '27 figure that had been previously described? I would say that it is important for people to understand that the algorithm that you look at in '26 for free cash flow, that's what you should be focused on. That's what I'm focused on, right? I'm not here to provide an outlook in my first year as a CFO, in my first year in setting the guide. I think what people need to hear from me is '26.

They need to understand how do you model the growth algorithm of the business, how do you model free cash flow in the business. And I really want you to take away from it that in that bridge, the incremental free cash flow conversion is called out at 60%. That is the number to look at for modeling incremental free cash flow conversion. So you pick your sort of approach to adjusted EBITDA dollar growth, you convert that at 60%, and it would be hard to get to a significant expansion on overall adjusted free cash flow from the 42%, right?

You're going to grow probably single-digit percent points on the 42%, but the math of it is fully laid out. And so that's probably my #1 most important takeaway for people when they ask me about free cash flow because I'm not here to set some sort of a guide point beyond '26.

Okay, All right. I think we understand. All right. Just building off of what you're talking about with Global Blue, I mean, international expansion, it should provide for, I think, a nice cross-sell opportunity when you think of internationalization of business for even more than you've already done.

Yes, absolutely. I mean it is one of the most exciting parts of the business right now. And it's because you have to start with like the macro of the framework, the competitive framework, the industry structure in the markets that we're expanding into. We're going after unintegrated bank terminals and we're bringing solutions that win and have battle-tested, winning proven capabilities in the most competitive market in the world.

And that feels like the right place to therefore invest your incremental and marginal dollars. So when people ask, could you accelerate investment and really close the gap on the market leader on restaurants in the U.S.? I say I could. But I'll generate a heck of a higher return going after unintegrated bank terminals in the European market, where we're bringing battle-tested market-leading solutions. That's just a better utilization and allocation of capital.

But I think that it's an exciting place also because we just made an investment in a business that gives us day 1 pan-regional, full across-the-board European infrastructure and APAC infrastructure. But let's focus on Europe for a second. Global Blue, as much as the cross-sell is exciting, as much as the market-leading position within a very killer application within retail of tax-free shopping is all exciting, to us, one of the most underappreciated elements of the asset is day 1 pan-regional instant infrastructure in which to bring all of our products into, right?

That is something that, I think, is one of the most underappreciated aspects of the business. And you have to appreciate, too, that when we get the core product of Shift4 One, which is tax-free shopping, plus payments, plus currency solutions all into a single device out into the market targeting for 15 countries this year, right? When that gets out there, you have to appreciate the amount of payment platform development that also has to happen so that local payment methods, local wallets are all accepted.

All the operations, support, provisioning infrastructure had to be in place. All of that is totally usable for every other of our card-present solutions serving the experience economy. And oh, by the way, we have a lot of customers that are just waiting for us to turn the lights on that will follow us into the market.

Yes. It seems like a great -- I mean, look, when we think about Shift4 right now and going ahead, you have, let's call it, $250 billion of end-to-end volume. I mean you have $100 billion of volume you could attack just with Global Blue of SMBs out of the $500 billion that Global Blue has. That should make perfect sense, I think, for your solution that you can bring over on to your platform.

Yes, that's exactly right. And that's going to be the focus area. It's interesting because it's a business whose backbone was built on enterprise because serving the largest global luxury brands and having like an 80% market share doing it, they are excellent at that. The SMB DNA that Shift4 has to bring payment solutions, that actually end up becoming, as folks in this room will know, just a really good unit economic proposition in SMB.

Like when you do payments, SMB is a really powerful part of the economic segments. If you're doing tax-free shopping, enterprise is what keeps all the lights on and it's the best place to be because the volumes are so good. But for us, we actually are bringing an SMB-first DNA into a business that has been less focused on its SMBs. It has tens of thousands of SMBs because a small boutique in Milan does want to have and offer tax-free shopping, but they are not nearly as valuable to the Global Blue business, to the tax-free shopping business as pick your luxury global brand.

And so it's an interesting synergy that we bring to the table on just focus, on competency. An enterprise-first business meets an SMB-first business and we now have a product set that will make the unit economics of SMB super attractive when you put together tax-free shopping, plus payments, plus currency solutions. So we're going to go after that opportunity as the primary focus.

I mean has there been any evidence of success you could point to so far? How has it been going? And just what's the timeline on this? Because, again, this is, I think, probably one of the most important data points to get the stock working, is success with this integration.

Yes. Look, I think that being live in multiple countries with multiple merchants on a product that's never existed before is a huge proof point and it's a huge point of pride. And to be able to then set a target where you actually want to expand very quickly in opening multiple countries at once, which does mean not just this product but all of the payment infrastructure behind it, that is no small feat.

And from that perspective, essentially, when are you actually going to start seeing the realization of the $80 million of revenue synergies? And I think that, that remains on the pace that we guided to. And I think that it's on us to be able to prove that, that could be accelerated. But I'm not here to make a change right now around the previous guidance that was set around revenue synergies.

Just remind us the timing again.

Yes. So $80 million fully realized in the '27 time frame. So you'll actually see proof points in the year of '26. But ultimately, I'm not here to change the outlook on the overall.

And when we think about profitability of the company now, because, obviously, when you integrate assets, there could be some impact to margins and noise short term. I mean how do we think about overall margin profile of the core business, more of the mature assets, I guess, you could say? And just levers you can use to drive margin expansion over the medium term.

Yes. I'm glad you asked the question that way because it is a tale of two different markets, right? The idea that you have an Americas mature market where the margin profile is really attractive, that's embedded within the business. And then you have our expansion, and this is putting aside the Global Blue transaction. Just the expansion into any new region, any new market is going to come with a margin headwind because until you get the gross profit density in a country, you will have a lower margin profile.

Just the laws of physics of it. And that's what we're experiencing as we continue to expand abroad. So when you think about the EBITDA margins of the business overall, this idea that the guidance would suggest sort of a 47% EBITDA margin, that EBITDA margin profile does still have within it the expansion headwinds. And yes, it has a combination of the profile of Global Blue, which we had previously disclosed was a low 40s EBITDA margin business. But being in a new country, and in the case of Europe, multiple new countries, you have much lower margin profiles as you build up density.

So I do think that it is prudent to understand that there are puts and takes within where that EBITDA margin can go. And in some respects, the faster we're growing, the more we're growing inside of these expansion markets, the more you might see some of those margin headwinds. But we will do what we've done historically, which is try to find places to allocate capital and try to build up density more quickly, which then might allow us to potentially improve upon those margin profiles.

But I do think people need to understand that about this interplay of fast growth and expansion, what does it do to margins, versus if we can allocate capital, we might be able to improve margins.

Right. Okay. DCC, Dynamic Currency Conversion, has been an opportunity for you guys really more so now, especially in light of Global Blue having that offering you can utilize. Are you going to be ready to use that in the U.S. for the World Cup? I mean where are you on that opportunity? Because it seems like consumers coming into the U.S. should want to use it. We haven't historically seen it in the U.S. that much.

Yes. It's interesting because, I would say, in -- so DCC is our -- and I'll step back. And let's not even just call it DCC, like FX-based revenue or currency-based revenue products that we can bring to consumer to business payment environments is one of the most exciting things that is again an underappreciated component of what we acquired within Global Blue because, yes, it is an opportunity to cross-sell probably, first and foremost, our European base, right?

The idea that you can actually bring a DCC solution that's up and running and working, cross-sell it onto our European base, that is a really attractive revenue synergy opportunity. This idea of bringing it to the U.S., which for folks that have followed us for a while, we were actually developing our own developed DCC solution. When we acquired Global Blue, we were able to actually put that on pause and bring this solution in.

The adoption of DCC, the consumption of it isn't that prevalent in the U.S. because, for the most part, travelers understand that everything is indexed against to the dollar. So it's less about the opt-in and the usage of it. But where it becomes incredibly competitively important is that on the margin, there are hotels that when they run the RFP do say, do you provide DCC? And we've actually lost RFPs on the bags that we actually didn't. And that's why we were developing it to begin with.

So I would say it may not have as pronounced of an impact on, we'll say, the take rates or the adoption or the upticks. But I think competitively, if you are going to win things like the World Cup or other massive global events, you have to have it just to play. And that actually shows up in hotels and that actually shows up in other forms of international commerce that might be trying to come to the U.S.

So time-wise, by the World Cup?

You got it.

All right. I want to leave time for the audience for a couple of questions. So let me ask you a couple of quick ones. Just Bambora's, I think, around $80 billion volume opportunity to convert over, where are you on that? What's the timeline on that? Because again, I mean, that's something you've done well with gateway conversions before on.

And then when I think about all the other deals you've done, I mean, have you really integrated everything properly, whether it's Vectron or Givex or Eigen? It seems like a lot, and I just want to make sure you guys have done what you need to do on those deals before you move on to the next.

Yes. I like that question. It's like the question I would ask when I was on the Board. It's like, are we there yet? Are we realizing yet? So obviously the Bambora transaction just closed. But in the sign-to-close process, you get a lot of time to plan. We are really confident in the underlying ability to execute on gateway conversions. That is probably the most successful transaction type in terms of the payments cross-sell or the monetization of payments off of any other payment-adjacent product. So it's something we're very excited about and why you couldn't walk away, why we're excited about that deal.

The second part, though, this idea of integrating in general. I think the pace of progress that we have around integration continues to meet what our expectations are. As a culture that constantly preaches delete the parts, get flat, stay flat, we truly, truly integrate at an operational level, at a revenue model level. And from our perspective, the pace of those integrations is going as we would expect. That said, we have stated in the past that we do think, and we can analyze this, that there is a 200 to 300 basis point opportunity with some of our older acquisitions from a margin standpoint that could still probably be further optimized, further integrated. And that remains.

Okay. All right. Last question for me is just capital allocation. I mean I think you have a $500 million left in your current buyback off. And when we think about your use of capital going forward, just I'm curious to know if M&A is still going to be a big part of the story given how much you've already done and need to probably keep digesting. And so just help the audience know what your strategy is and your thought process is there.

Yes. I'll start by pointing to one of the things that's been an incredibly consistent part of what we've done is operate with a capital allocation framework that allows us to be very thoughtful about driving the best relative returns with capital across acquisitions, across organic investments into customer acquisition, across managing things like share repurchases and the sort.

And I don't think anything should be viewed as a change to the way with which we look at the capital allocation framework that we published and talked about for a long time and that it is a balancing act across all of those fronts.

Now to your question, though, when you sit in an environment that we've just been in and continue to be in where we're seeing quite a valuation change, a valuation paradigm shift for fintech as a sector as a whole, and certainly ourselves, it is hard not to ignore how compelling the opportunity of share repurchases continues to be. I don't think we shied away from it in the third quarter results when the share authorization was first announced. And I don't think that, that has changed in our tone. And so I do think that, that remains an important part of the capital allocation framework.

But meeting the high bar of relative return from an acquisition standpoint, there are things that are starting to show themselves as hitting that bar. They may not be large things but they are things that hit the bar and strategically advance and accelerate an existing priority, things like European card present distribution, tuck-ins and the sort. So I think that those are going to be things that we're always going to be balancing within the capital allocation framework.

Okay. We probably have time to take one question, if anyone has? Yes, Scott.

I guess, Chris, on the stadium opportunity, you guys have obviously shown a ton of success around adding new stadiums, really kind of capturing the market there. Just wondering if you could talk about sort of where the incremental opportunity is from here on stadiums, whether it is continuing to add new venues, expanding share of wallet, just that overall opportunity.

Yes. I'd say it's two fronts. Knowing that the time is tight, but one of the biggest and most exciting, which isn't necessarily something net new for an audience like this is there are a lot of revenue centers inside of stadiums and entertainment as an environment. And F&B and retail is where you're going to find us in the most prevalent.

But the ticketing opportunity can be a volume jump that is multiples of what is in F&B and retail. And sort of the opportunity for us to continue to get the payments volume of the ticketing side of the business, both season as well as event-by-event ticketing, that remains a huge opportunity of growth within sort of this land and expand of stadiums and entertainment.

And then the second one is we are the market leader on stadiums and entertainment with commerce technology solutions in one of the most competitive markets in the world in the Americas. We are just starting on everywhere else. And so the ability to bring that product globally into the EMEA region where we have our well-invested infrastructure, the APAC region, et cetera, that's a really exciting opportunity for the team.

Okay. All right, guys. I think we'll stop there. This is great, Chris. Thank you so much, guys.

Great. Thank you so much. Yes. Thanks, everyone.

All right. Let's hope this works. Good morning, everyone. All right. So this is just a quick overview video about us at Shift4.

[Presentation]

Okay. Awesome. Thank you for that, Chris.

So I wanted to jump in here. For those that are less familiar with the Shift4 story, I mean, can you just provide a quick overview of the company and including what differentiates you versus other payment processors?

Sure. And first off, thanks, Madison, for having us. Always a great event to be a part of. So Shift4 is a business that really, when I think about it in sort of the 10 years that I've been involved with the company, is really synonymous with this notion of integrated payments when payments comes together with software, wrapped with proprietary data solutions.

As that -- as those convergences have been transpiring within our industry over the last 10 years, Shift4 has really capitalized on being at the center of that. But separate in a way from that megatrend or that theme of payments meets software meets data, Shift4 has always been focused on the most demanding commerce environments.

So we talk about it there synonymously with the experience economy. What are we really saying? We're saying that it is not 3 lines of code that runs payments integrated to software in a place like we're sitting in right now. In a complex resort ecosystem environment, in merchant bases where there are tens of revenue centers, not just one point of checkout, in environments where you're talking about stadiums entertainment, just the complexity of cross-border dynamics, multi-currencies, multiple payment modalities, we run towards that challenge.

We look for the most demanding environments. And as a result of that, our experience economy vertical leadership has manifested in restaurants that are complex, manifest itself in being a leader in lodging, a leader in stadiums entertainment, and then most recently now, a leader within luxury retail, in particular, for those high affluent travel shoppers. And that's not where we intend to stop.

I think our model is to continue to leverage the scale that we have to identify all of the newer, harder, most demanding parts of the experience economy and announce leadership vertical after leadership vertical thereafter and do so all on the backs of this broad-based integrated payments meets data trend that's expanding globally. And so that's a little bit about us.

Okay. That's a helpful background. And then I wanted to ask about you specifically. You're relatively new to the CFO role but...

Where is this going?

Certainly not new to Shift4. I'd love to just hear about what attracted you to kind of take the CFO role? And what are some of your key priorities here as you get in the business?

Yes, sure. So it's going to sound like a bit of an academic answer because of like the framework that I've applied when I was making like my decision. But when you step back and look at where we are on the -- where we are in fintech, where we are in integrated payments, in the backdrop that we sit in right now from a market standpoint, I actually think that one of the best ways with which to express the growth of the industry and really the expression of that growth globally is through this company.

And so in my past life from allocating capital, investing capital on a direct basis, the idea that there are potentially huge advantages to do that through a business that already has a proven track record over a quarter century of having been able to identify areas to thematically invest behind within the experience economy in order to be able to bring their solutions to synergize those areas and to be able to like compound and build value there, that's definitely the most appealing part.

If you are already interested in understanding like that this is a megatrend that isn't just happening in the Americas, this notion of integrated payments meets software, meets data. This is a trend and a need that's happening all over the world. That's probably piece one.

I think piece two, the business is at a really interesting inflection in terms of like where it sits in the relative scale and size of the ecosystem that is integrated payments. Big enough and scaled enough to be able to expand borders, to expand globally with kind of like the bold ambition and pace that it always has had. At the same time, still small enough and nimble enough to be able to make bold decisions that allow it to more aggressively enter markets with speed, with disruption in mind and have those attributes.

So having that kind of dynamic of being both scaled enough but also nimble enough is a really rare attribute for a business that's trying to compete in an area that's going through, we'll say, this like this transformation and inflection at an industry level.

And then at a personal level, like I've known so much of the team, so much of the organization for almost 10 years, I've kind of worn every hat when the company was private within the context of wearing a lot of hats in that role. But then as the company has been public, playing every role on the Board, chairing committees, including audit, most recently a lead Independent Director.

And through that journey, it's hard not to kind of really make friends with the folks that you're working with. And it's a really special group where the culture of the company, even at the scale point that it's at, highly entrepreneurial, highly gritty and definitely a culture that wants to win. So all things that are a lot of fun to be around.

Awesome. And before we dive kind of in more detail of the business, I would love to get your thoughts on AI, just given what's going on in the market. Just would love to hear about where you see potential opportunity for AI, but also what risks you're assessing when it comes to AI?

Yes. I think you can start on when you're looking at such a generational change in technology, and technology is obviously something we in the company are around constantly, the idea of looking at it through the lens of, first, like what are the ways with which this technology is going to create disruption, going to create challenge, going to like approaching it through the lens of, okay, paranoia, right? Like that is one way to look at it.

And I think it's very easy for a lot of companies to almost get petrified by looking at things through that framework. In our world, I would say that the opportunity side is probably the most compelling because we are unafraid to adopt technology. That's just not ever been a problem within the DNA of the business. You can look at the track record across the last few years to know that change is the only constant in what we do.

And so for us, I think there's a lot less of that kind of petrified approach to it and a lot more of the opportunity side approach to it. Now the question is where and the question is pace. And because nothing comes for free, even though we're living in what seems like an early phase of abundance where access to AI technology is at almost like a limitless type of approach in cost, like token costs are rising in various parts of model consumption. And you have to be mindful of that, especially sitting in the seat that I sit in.

But put aside the fact that you know how to control costs around it, you'll be optimizing constantly. The area of opportunity to unlock margins, the area of opportunity to massively enhance products, the area of opportunity to produce products on much tighter cycles, faster features, faster time to market, those areas are like the scratch the surface areas.

And I think that we are going to see a lot of pace of change and a lot of opportunity as a result of it. The core question that I think you all need to ask is, is the company that I'm looking at, do they have the flexibility, the culture, the boldness to be able to embrace technology and change quick enough to be able to both capitalize on the opportunity and keep pace with competition around the adoption of these things.

And before we get into Global Blue, I did want to dive into 4Q a little bit, just a little bit of a clarification here. So there's been a lot of debate coming out of earnings around just the contribution from Global Blue and Smartpay in 4Q. You guys talked about 18% organic growth in 3Q. You talked about 23% growth for the year, excluding those businesses. So you gave enough detail to help investors kind of back into it. But can you just level set so everybody is on the same page around what kind of growth you saw specifically in 4Q, excluding the contributions around Global Blue and Smartpay?

Yes. No, it's a great question. And you're right, Madison. I think we provided the pieces. And I think it should be unambiguously clear that if you do the math on it, the quarter, excluding the contribution of acquisitions, is a low double-digit growth quarter. And I think we knew that going in, right? That fell entirely in line with the expectations of what we were looking at when we looked at the fourth quarter.

If you've been following the business or you sort of look at the historical financials on the business, that Q4 comp was a tough comp going in. It was always going to be the stack comp across 2 years. You're talking about a fourth quarter that was growing off of a mid-30s growth quarter in the prior year and -- which was already growing off of a mid-20s growth -- or high 20s growth quarter the year before.

So the 2-year stack comp we knew going in was going to be -- was always going to be challenging. The spread dynamic that we saw as a result of the enterprise positive mix shift, which obviously weighs on spreads, that definitely was a variable that impacted towards the -- definitely impacted towards the lower end of that kind of range of outcomes, but still solidly in line with the range of outcomes that we had guided to from a quarter standpoint.

And then, of course, the trends coming out of Q3 that we saw on SSS, which I think we were incredibly transparent on and incredibly clear on that if those trends persisted, we were going to land towards the lower end of that revenue range, which contributed to that kind of low double-digit outcome. And that happened, but we also had some weather events in December that kind of added to it.

When you take it all as a whole, I think everything fell still solidly in line with the range that we expected, which is why the full year spread range still ended up above 60 basis points and why the quarter's guide still ended up inside the range that we guided to.

And I think it's important, though, that once you take that as sort of, okay, this is what happened in the quarter ex the contribution of those businesses, and what I think is important is to then understand, but then how do I translate that into your go-forward guide. And I think that's where people are really getting confused around how to do that.

Yes, certainly. And we'll dive into that a little bit more here. But I did want to shift gears to Global Blue. That was the biggest acquisition in company history. You guys paid about $2.5 billion. The deal closed a few quarters ago. But can you just remind investors what exactly Global Blue does? And why was this such an attractive asset for FOUR to own?

Yes. So indulge me for a minute because I'm going to answer this in sort of a multi-parter because I think any time you think about how does Shift4 identify an acquisition, it has to be understood that it is always the product of a multiyear effort having tracked either the industry vertical that it sits in, the -- unpack the industry ecosystem, whether that's the software integrations, who are the competitors, what are the value propositions that either win, thrive and certainly lose in a given space.

Luxury retail, tax-free shopping, the things that make up the most important part of Global Blue, that, in our opinion, is a killer application within the world of retail, full stop. You can unpack all of the different commerce-enabling applications inside of retail, you can then narrow it down massively to who actually influences a payment transaction, like who was touching the payment transaction. And you will find a very short list of companies that have the definitive value proposition difference that Global Blue has.

With an 80 share, a 4x relative market share to the next competitor, a mission-critical component of a commerce enablement for anyone that's in luxury retail, working with all of the marquee brands and doing so globally, once you add that to your criteria set, it's one of one, unequivocally clear. And the reason we want that kind of a totally differentiated value proposition inside of retail is because there are a lot of undifferentiated retail applications.

Like if you had bought a retail point of sale, you're dead in the water. That's a terrible idea from an industry structure understanding perspective because you don't even know whether the in-store commerce experience is going to be the tech stack that wins for the omni commerce of that merchant, right? E-commerce being as prevalent as in-store presence, in-store commerce for a lot of retail merchants. So you could have gotten that tech stack completely wrong by making a bet one way or the other.

And importantly, POS doesn't have nearly the same level of influence over the payment transaction as it does in, let's say, restaurant, or even in stadiums and entertainment. So I think that's like the important for example, within how do you land at that place that says a tax-free shopping solution that is a one of one. Why is that -- why was that so important?

It's important to us because our model is about bundling off of that strength, right? It's about taking that tax-free shopping experience, which is one of one, which has the strength and relative market share, which has all the customer references, which already has kind of the pre-existing treasure trove of data, like a data asset on affluent travel shoppers that no one comes close to.

Once you have that, you're well moated to be able to then bring in the cross-sell of payments, of currency conversion, of gift card and be able to have a conversation with the most global marquee luxury brands to say, hey, we're probably not ready to be your processor today. But as you start to think about geographies that we're in, that maybe your preferred processor is not in, you're going to give us a shot.

And then as we start to think about unifying your experience across borders, you're going to give us a shot and maybe it'll start with us getting a 20 share of your overall payment volume, but we're always going to have a shot. And one day, when we're ready, you might give us the majority.

And I think that notion of being able to build off of that killer application is one of the most important components, the thing that I don't think people appreciate because they do understand the revenue synergies, the cross-sell capability, the way we talk about applying our model to tax-free shopping, the thing I don't think people understand about another attribute of Global Blue that we liked, it gave us day 1 instant pan-regional EMEA, APAC infrastructure from which to bring all of our battle-tested Americas market-leading solutions into the region instantly.

And it's a business that has like truly, truly global credentials with everyone from merchants and customers, but frankly, fiscal authorities is who they serve within this tri-party network. And that kind of credentialing from which you can bring your market-leading solutions in, I think that's a critical underappreciated asset.

Okay. That's very helpful overview. And then just on the 2026 tax-free shopping outlook, you guys are kind of targeting mid-single-digit growth here. Can you just help us unpack how much of that mid-single-digit growth is driven by kind of growth with existing customers versus signing new customers? And then has the growth algorithm of the business changed at all since you acquired them?

Yes. And just to be clear, it's mid-single-digit pro forma growth. Obviously, the annualization effect will have a much larger impact on growth of the business. The growth algorithm of that business has not changed at all. The growth algorithm of that business, at its core, separate and away from the synergies that we are going to employ as we continue to execute on the cross-sell of the all-in-one device and the all-in-one value proposition of TFS meets payments meets currency conversion.

Separate and away from that, the growth algorithm of the business has not changed. For the most part, the growth algorithm of that business is P times Q. It is a volume metric that they call sales in store times a spread metric, no different from the way we think about things in merchant acquiring.

Now the core components of that sales in store, I think we talk about quite a lot as having different drivers, different macro drivers that can impact things like demand for cross-border travel, demand for -- like demand that's impacted as a derivative of tourism between nations. And it is impacted by cross currency like a euro-USD cross. And so you have to like factor that in, which I think we talk quite a lot about.

But other than that, the core of that growth algorithm is you're growing with your customer base and the luxury backdrop is one that tends to have a really powerful amount of inflationary pricing built into its model. I think like a Hermes bag or a Chanel bag has probably outperformed most stocks. And I think that, that dynamic is kind of baked in within the industry.

But I do think that it's a very simple kind of a P times Q model. And when you have an 80 market share, market leader, a 4x relative market share, you're winning customers, but frankly, at this point, the logos you're winning aren't necessarily like the biggest contributors to driving the growth, you're already riding the right horses from a winners standpoint. And so you're really moving with just the components of that -- those broad trends.

Okay. And then I did want to shift back to the payments business. And kind of starting here in the Americas, you outlined a target again for 2026 for mid-teens growth. That should be a pretty clean number. I don't think there's really any M&A contribution there. But can you just talk about as we think about the mid-teens, like what are the key verticals that should contribute this year? And then given you guys do have a pretty strong presence here domestically, I mean, how much runway is left for you guys to kind of continue to take share and grow at these levels over more -- a longer period of time?

Yes, sure. So within our payments-based revenue, which is kind of the North Star within our disaggregated revenue bucket, we tried to lay out a growth algorithm in the latest shareholder materials, which is like a net new concept that allows you to see payments based deliberately separate from tax-free shopping, so as investors acclimate to that disaggregated revenue line.

But you look at payments based and what we try to do is break out the 2 distinct narratives of our Americas region, which will make up the majority of the revenue within payments based. You look at that Americas region, it's the mature market that we've been in for multiple decades. It's where all of our market-leading experience economy, commerce solutions are present and it's a market where in '26, it will be largely unaffected by the annualization of prior year M&A.

It's a clean figure. And that's why we wanted to show it to you. That's the mid-teens, and we think our outlook there is mid-teens growth in the North Star of payments-based revenue, and that's a separate contrast from the worldwide segment, which is growing off of a small base and growing at a really high rate, but is impacted by the annualization effect of M&A. And we wanted to make those points clear.

So your question on the Americas, mid-teens, which, for all intents and purposes, if you're looking at the relative growth rate of the baseline market, that's like a 2.5, 3x, north of 3x growth rate to the baseline of the market in the Americas. We think we have a ton of runway.

I mean the idea that you can look at a market that's probably our most mature, which is restaurant, and we acknowledge that we're not even the leader in it, right? So you then say, okay, let's look at the other areas you're in, whether that's lodging, whether that's stadiums entertainment, whether that's retail as a whole.

And that's without even us continuing our track record where since IPO, almost every other year, we've announced being a leader in a new vertical, and I don't think that we intend to stop that, right? That's something that is not even baked into the algorithm, that continues to provide that perspective of compounding growth that I think will continue to allow us to get into that market share in the Americas.

But one thing I do want to say before we kind of leave the Americas and this idea of the mid-teens. Like I think that it is important that people understand that even though we've broken out payments-based revenue in the mid-teens, it's not as if we don't acknowledge that when you look at the algorithm as a whole, that you can land yourself to a place that says, okay, this is on a blended basis, sort of a low double digits kind of a growth algorithm.

When I think about what's happening in sub and other or when I think about what's happening within TFS and I think that, that math is totally valid. I think that, that math is completely fine. And when you think about where we are coming off of in the fourth quarter as a low double digit, I think anybody that's thinking it's de-selling from there is also just way off on the math of Q1 because they're completely mismodeling the contribution from M&A in the first quarter, right?

There's seasonality within the business lines that would definitely make it inaccurate to model Global Blue flat Q4 to Q1. And so I just think that the path that we're trying to explain of Americas is a mid-teens business, blended with the other parts, I understand the low double-digit piece to it. But we're trying to give you those building blocks so that we can really be -- we can really understand how to model the business.

Yes, that's very helpful. And I know we're getting close to time. So I'm going to jump around a little bit, ask on free cash flow because that's very topical. So the guide that you have out there does imply that kind of free cash flow conversion will be down relative to 2025. You provided a really detailed bridge, so we don't have to kind of go through some of that. But just longer term, how can investors think about the reacceleration of free cash flow conversion? Do you think that kind of 50% plus number is still right on a normalized basis?

Yes. I would say the place to look is everything is about incrementals. So in that free cash flow bridge on -- I think it's like Page 13 in the shareholder materials, is the concept that, yes, there are components in the bridge, and I won't belabor them because we're running out of time. But the part that I would want people to focus on and take away is the call out of the incremental free cash flow that's converting at a 59% rate implied in the guide, a 60% rate in the Q1.

Like mathematically, asymptotically, that's where you should be driving forward growth to go, right? You can pick your number on the dollar growth that you think is going to be achievable within adjusted EBITDA. But when you convert it, you should be converting it at the incremental level.

And from there, when you actually think about that incremental free cash flow conversion, that's converting off of a largely fixed cost capital structure. So capital structure was probably one of the biggest variances in understanding in that free cash flow bridge.

We have an 82% fixed cost capital structure. And so growing off of that largely fixed cost capital structure means that those incremental free cash flow margins should be able to expand. And that's separate and away from the expansion in the operating leverage of the business as a whole. So I think that when you think about the modeling exercise of it, you got to be factoring in that that's asymptotically what you should be modeling towards.

Okay. And I'm sure we could fill another 30 minutes here, but unfortunately, we're out of time.

Good thing, I'm here all day.

Yes, exactly. Really appreciate you being here with us.

Yes, Madison, thanks very much.

Absolutely. Thank you.

Hello, and welcome to today's Shift4 Payments, Inc. Q4 2025 Earnings Conference Call. [Operator Instructions]

It is now my pleasure to turn the meeting over to Thomas McCrohan, EVP, Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone, and welcome to Shift4's Fourth Quarter 2025 Earnings Conference Call. With me on the call today are Taylor Lauber, our CEO; and Christopher Cruz, our Chief Financial Officer.

This call is being webcast on the Investor Relations section of our website, which can be found at investors.shift4.com. Today's call is also being simulcast on X Spaces, which can be accessed through our corporate X account at Shift4. Our quarterly shareholder letter, quarterly financial results and other materials related to our quarterly results have all been posted to our IR website.

Our call and earnings materials today include forward-looking statements. These statements are not guarantees of future performance, and our actual results could differ materially as a result of certain risks, uncertainties and many important factors. Additional information concerning those factors can be found in our most recent reports on Forms 10-K and 10-Q, which can be found on the SEC's website and the Investor Relations section of our corporate website.

For any non-GAAP financial information discussed on this call, the related GAAP measures and reconciliations are available in today's quarterly shareholder letter.

With that, let me call -- turn the call over to Taylor. Taylor?

Good morning. It's great to be speaking with you all. 2025 was yet another pivotal year for Shift4. We produced record results executed on transformative M&A, grew nicely and diversified the quality of our business. That's all while overcoming the occasional setback in more ways than one.

We also fundamentally strengthened our global footprint, our technology capabilities and organized our talent around our priorities that will continue to move the needle in 2026. As mentioned in my shareholder letter, the rapid expansion across multiple verticals has created confusion as to exactly why we win and who we compete with. This is understandable, but from our perspective, each vertical we serve is carefully selected based on the lessons we've learned over 28 years.

Contrary to popular belief, we are in these verticals because we view the competitive landscape as narrow and as such, typically have fewer -- one or fewer good competitors in each vertical.

To simplify things for everyone, I will succinctly say that we power the experience economy. We enable businesses to deliver the moments that matter and can be found anywhere, you shop, dine, stay or play. These experiences demand high availability and often in-person engagement and come with high expectations from both the guests and the merchant. What as little as 5 years ago, might have been Shift4 powering a night out at your local -- at your favorite local restaurant has evolved into us earning the responsibility to power some of the largest global resorts operating 24/7, championship matches and so much more.

In a world of constant innovation, especially digitally, the skill sets to power high-demand person experiences is increasingly valued.

Now to touch on some highlights for the quarter and the full year. We closed on the acquisition of Global Blue back in July, marking our entry into the luxury retail vertical. As a quick reminder, Global Blue is a market share leader of tax-free shopping capabilities to merchants selling luxury goods with the #1 market share globally and a 4x relative market share to their nearest competitor.

Global Blue's business remained resilient despite the weakening U.S. dollar and rising tensions between China and Japan. While a weaker U.S. dollar translates into higher prices for those traveling to Europe, having a business over-indexed to wealthy consumers remain the key benefit in this K-shaped economy.

The integration of Global Blue remains on track, including the timing of revenue synergies to begin being realized this year as expected. As you can see from our materials, we continue to add many new merchants and can increasingly be seen anywhere you shop, dine, stay or play with many of these wins a direct result of us successfully cross-selling payments.

We powered payments at the big game at Levi's Stadium in early February. So congrats to all you Seahawks Fans. And we are constantly renewing key merchants and recently signed a 5-year renewal with Choice Hotels. Some other key milestones. In Europe, we continue to add many thousands of new SkyTab POS merchants across the U.K., Ireland and Germany, ending the year with over 80,000 merchants outside of the Americas, which is before cross-selling any Global Blue merchants.

Canada is also a focus as we've only recently had full stack capabilities in the region, but inherited many world-class customer relationships from both the Eigen and Givex acquisitions. We enter the Australia and New Zealand markets and now have a substantive sales force via the acquisition of Smartpay. This progress translated into solid financial performance, including nearly $2 billion of total gross revenue less network fees, representing 46% year-over-year growth. And that's excluding -- when you exclude the contribution of Global Blue and Smartpay, we delivered roughly 23% year-over-year growth in gross revenue less network fees during 2025. $970 million of adjusted EBITDA, representing 49% adjusted EBITDA margins and $500 million of adjusted free cash flow. We are proud of both of our margins in light of ongoing investments we're making in both products and expansion.

We introduced an all-in-one payments, DCC and tax-free shopping terminal last year that we began piloting in several European countries. We also invested heavily in making our restaurants, sports and entertainment and other products suitable for the global stage.

I want to stress that our story is not a complicated one. We are experts in handling software, hardware and payments and demanding verticals and in the most competitive market in the world, the United States. We've grown from an SMB restaurant-oriented technology business to powering commerce across the experience economy, and our most meaningful growth has been as a public company for all to see.

We are now taking those lessons learned and our industry-leading products out into the world. One only needs to study our evolution in the U.S. to understand what we will be doing and less mature and often less competitive markets. Unlike our history in the U.S., we are aided by excellent beachheads provided to us by acquisition and already have a presence in over 75 countries around the world.

As we look to 2026, the macro environment remains dynamic, but we view the diversity of our end markets, our disciplined approach to customer acquisition and healthy operating margins as affording us a degree of resiliency and optionality relative to many of our peers.

In terms of priorities, I'm focused on the following: We only just begun delivering our all-in-one payment terminals throughout Europe. As mentioned previously, the Global Blue tax-free shopping product is unrivaled. And when combined with eligibility detection at the point of payment, adds meaningful utility to retailers of all sizes. We believe we can add many thousands of merchants as a result of this capability and are targeting 15 countries for launch in 2026.

Our go-to-market motion across these countries will allow us not just to win retail merchants but also deliver our restaurant, hotel and stadium products and replicate the vertical success we've had in the U.S.

While on the topic of the U.S., we still have plenty of market share to win across our key verticals and enabling DCC across our merchant base will be particularly valuable in anticipation of the World Cup this year and the Summer Olympics in 2028.

We continue to leverage our restaurant merchant estate to inform our road map for SkyTab, which has been growing nicely in both customer counts and volume per merchant. To better leverage the larger ship for brand and our presence in the broader experience economy, we will be rebranding SkyTab to Shift4 Dine later in the year.

Asia and the Middle East are also increasingly becoming important strategic markets for us, and in particular, Japan and the Kingdom of Saudi Arabia. These are large markets that align perfectly with our core competencies and it only offer one of our products today.

And lastly, our AI road map is extensive on both the operational and product fronts. We've partnered with XAI for broad-based adoption of CROC in virtually every area of our business. We've deployed AI assistance within our key products to help resolve inquiries more quickly and with less human intervention. These tools have recently been expanded to providing operational insights to our merchants as well.

We are building predictive models that analyze merchant signals to prevent churn before it happens while leveraging the vast trove of data we collect from customer interactions to identify and resolve customer pain points more rapidly than ever before.

On the productivity front, we've seen a doubling in our code production as a result of broader adoption of AI tools within our technology teams. And many of you know that Palantir has been powering our mission control platform for several years at this point. So none of this should be a big surprise.

Before I turn the call over to Chris, I want to summarize the simplification transaction announced earlier this year. We've successfully collapsed all B and C shares previously held by our founder into Class A common. As a result, Shift4 is no longer a controlled company under the NYSE rules. Going forward, Jared will own approximately 27% of our outstanding Class A shares with voting rights that are parpass to all other shareholders.

Additionally, Jared has agreed to transfer all future benefits of its tax receivable agreement to the company, permanently eliminating an estimated $440 million of future TRA payments. We believe these improvements to our governance and capital structure significantly broaden our appeal to the investment community.

In summary, 2026 marks a new chapter defined by a simplified corporate structure, improved disclosure and clear strategic focus. As we expand our footprint globally, we are laser-focused on execution, ensuring we deliver our immediate financial goals without sacrificing the balance that comes between growth and margins.

And with that, I'll turn the call over to Chris.

Thanks, Taylor. 2025 was another record year for Shift4 across all financial metrics underpinned by strong execution, integration, capital allocation and continuing to achieve scale diversification, both geographically and across multiple verticals in the experience economy.

We delivered record results with full year gross revenue of $4.18 billion, above the high end of the range we provided last quarter, volume of $209 billion, again, near the high end of last quarter's guided range, blended spreads came in at 61 basis points, exceeding our guidance of above 60 basis points. Gross revenue less network fees or GRLNF of $1.98 billion, representing 46% growth year-over-year. Adjusted EBITDA of $970 million, representing 43% growth year-over-year at a 49% margin and adjusted free cash flow of $500 million, which exceeded our guided adjusted free cash flow conversion range by 150 basis points.

Now let's move on to our quarterly performance and then shift to 2026 guidance and close with our capital allocation framework. For fourth quarter results, gross revenue increased 34% year-over-year to $1.189 billion. Volumes grew 23% year-over-year to $59 billion towards the higher end of guidance range.

Q4 volume mix was influenced by a few enterprise go-lives with strong seasonal volumes. Blended spreads came in at 57 basis points, influenced by the aforementioned few enterprise go-lives with strong seasonal volumes such as the Alterra Ikon Pass. This enterprise volume outperformance has an inverse mix shift impact on our blended spreads. That said, our full year 2025 blended spreads delivered in line with our previously communicated guidance of greater than 60 basis points, and we anticipate blended spreads to continue above 60 basis points for the full year in 2026 as well.

GRLNF grew 51% to $610 million, which was towards the lower end of our guidance range as the aforementioned outperformance in enterprise did not offset the continuation of Q3's same-store sales trends, particularly amongst SMEs in the Americas region, which were further impacted by late Q4 weather events.

Going forward, we will disaggregate our revenue into three categories: one, payments base revenue reported on a gross basis, S.So, it's noteworthy to back out [indiscernible] to arrive at the relative contribution to GRLNS; two, tax-free shopping revenue; and three, subscription and other revenue.

We have consciously chosen to report these three disaggregated revenue categories in order to let investors focus on our North Star growth in payments in -- growth in payments-based revenue and clearly break out the tax-free shopping revenue for transparency as investors acclimate to the performance of this line of business.

Adjusted EBITDA grew 48% to $304 million, delivering a 50% margin. Non-GAAP EPS came in at $1.60. Our adjusted free cash flow in the quarter was a record $171 million, representing year-over-year growth of 28% and free cash flow conversion from adjusted EBITDA was 56%. On a non-GAAP per share basis, this results in $1.76 of adjusted free cash flow per share.

As of year-end, our net leverage pro forma for the full year effect of Gold Blue was 3.4x and and includes the effects of our November activity of repaying the 2025 convertible notes issuing incremental euro-denominated senior notes under our existing 2033 indenture and repricing our term loan generating 50 basis points of run rate savings.

Our leverage guidance remains unchanged, with a view that the business should not exceed [ 3 to 3.75 ] net leverage on a sustained basis.

We are introducing the following guidance ranges. Volume of $240 billion to $260 million, representing 15% to 24% year-over-year growth, we are anticipating stable spreads in 2026, remaining above 60 basis points for the full year. GRLNF range of $2.5 billion to $2.6 billion, representing 26% to 31% year-over-year growth and to help you model our trajectory to 2026, we are introducing a growth algorithm bridge, provide further transparency on the disaggregated GRLNF growth categories.

As mentioned, we're reporting disaggregated revenue across three categories: payments-based revenue, tax-free shopping and subscription and other.

Within our payments-based revenue less network fees, we think it noteworthy to appreciate the difference between our two geographic regions. Of one the Americas and two, the worldwide region, excluding Americas.

For the Americas market, this is our most mature region where all of our market-leading experienced economy commerce solutions are present. And is a market wherein 2026, there will be minimal impact from prior year M&A annualization. In this region, we expect payments-based revenue less network fees to deliver mid-teens percentage growth. We view this growth rate as being more than 3x the baseline growth of the comparable market.

The worldwide, excluding Americas REIT market, is our faster-growing market where multiple high-growth themes exist. Such as: one, bringing our market-leading solutions, proven in the competitive Americas market into the region; two, disrupting a largely unintegrated bank-distributed card present market with our proven bundled value proposition that we pioneered decades ago; and three, the region is benefiting from our excess capital allocation through the acquisition of Global Blue and Smartpay, which provide both their attractive business attributes, but also serve as the infrastructure accelerate from which we will deploy our market-leading solutions into the region.

In this region, we are expecting high 20 percentage growth. On tax-free shopping, we expect mid-single-digit pro forma growth. We are cautious going into 2026 with a few headwinds that include a weakening outlook on the U.S. dollar relative to the euro, albeit with diverging views across major banks as well as cross-border travel tension in Asia.

Additionally, it's noteworthy that the business delivered low double-digit growth last year on the high end of its medium-term outlook range disclosed when Global Blue was an independent public company. And thus is growing over a strong comparable period.

On subscription and other, we expect low single-digit growth with quarterly fluctuation as we anticipate less impact from applying our carrots and sticks against acquisitions than in prior years, while continuing to prioritize growth in our core payments based revenue.

When you sum these parts, it builds to our guidance range of $2.5 billion to $2.6 billion in GRLNF. We are guiding an adjusted EBITDA range of $1.165 billion to $1.215 billion, representing 20% to 25% year-over-year growth and representing margins of approximately 47%. We are introducing a non-GAAP EPS guidance range of $5.50 to $5.70.

Our EPS range assumes an effective tax rate of 26%. We are guiding adjusted free cash flow of $490 million to $510 million. We anticipate free cash flow conversion to moderate in 2026 and average approximately 42% as a result of three factors: one, the annualization of interest expense; two, lower interest income due to relative cash balances; and three, Global Blue related impacts, such as integration investments and the impact of Global Blue seasonality are our year-over-year results, given the timing of the close in the second half of '25.

If you isolate the incremental flow-through of adjusted free cash flow, the implied conversion is expected to be 59%. And overall, this guidance includes the close of Bambora because we expect it to take place in the next couple of days.

And now for Q1 quarterly guidance. For the upcoming first quarter of 2026, we are introducing guidance as follows: GRLNF of $548 million, adjusted EBITDA of $233 million and adjusted free cash flow of $70 million. Additionally, gross revenue for the quarter is expected to be $1.05 billion.

Our shareholder letter materials provide a detailed bridge on these various components to our guidance to help you model these specific impacts.

Consistent with our commentary in Q3 earnings, as we looked at our capital allocation options in Q4, we found the most attractive risk-adjusted return was repurchasing our own stock. Between Q4 and year-to-date Q1, we have repurchased 7.7 million shares and now have a remaining $500 million against the $1 billion share repurchase authorization recently announced.

In light of the current market environment and the continued opportunity it presents for share repurchases, we think it more appropriate to base the previously stated goal of $1 billion of exit rate Q4 2027 adjusted free cash flow to being viewed on a per share basis through the lens of a long-term owner of the business.

Last, on capital allocation. As mentioned, we repurchased a total of 7.7 million shares, of which 4.3 million shares were repurchased during the fourth quarter and the remaining 3.4 million shares were repurchased during Q1 of this year. We have $500 million remaining under our existing authorization.

As a reminder, we allocate capital on a comparative assessment basis of our four priorities: customer acquisition, product investment, acquisitions and share repurchases. We've utilized buybacks recently due to the clear relative value. And while our valuation remains attractive, we are mindful of the associated relative value balance and net leverage ratios.

Our focus in 2026 will be to continue employing our balanced approach to capital allocation using this relative framework. That said, this quarter, we want to provide investors with insight into our capital efficiency. In our view, the textbook financial formula for value creation is driving sustainable positive spread of return on invested capital or ROIC greater than weighted average cost of capital, or WACC.

A couple of key takeaways from this. One, we have a historical track record of value creation. Throughout 2023 and 2024, our ROIC averaged approximately 13%, consistently exceeding the midpoint of our WACC range by 300 to 400 basis points. This demonstrates that our historical acquisition strategy has been accretive not just to top line but to shareholder value.

All of this while deepening our durable competitive advantages, scaling and diversifying the business as a whole.

Second takeaway. We have been able to maintain this value creation spread across the investment cycle. Even in historical periods of invested capital expansions in our history, we have maintained a positive ROIC over WACC spread, and expect this to continue. Our track record shows that we have been here before and experienced the integration phase of an investment with ROIC experiencing short-term dilution followed by very high incremental returns.

Now before turning the call back to Taylor, I want to sincerely thank our fellow shareholders, the broader management team and especially the finance organization for supporting a seamless transition. I'm energized by the momentum we've built and look forward to the year ahead.

And with that, let me now turn the call back to Taylor.

Thanks, Chris. And with that, operator, we're ready for questions.

[Operator Instructions] Our first question will come from Darrin Peller with Wolfe Research.

Let me just first start with a question on guidance, and then I'm going to shift to a question on free cash, if that's okay, as a follow-up. But just on guidance. When we look at the outlook you're giving now, and I understand, Chris, you probably tried to build an element of safety and conservatism given the macro uncertainty. So maybe just touch on how you built it up? What the organic assumptions were embedded in it for overall organic revenue growth rates? And how we should think about the potential cross-sell integration in there for the year ahead of us?

Yes. Thanks for that, Darrin. So to to kind of unpack the pieces. I think one of the things that we definitely wanted to provide some visibility into is the GRLNF growth algorithm. To give a sense for how some of the parts in our three disaggregated revenue categories are expected to behave in the year -- in the 2026 guide.

And so to look at that piece within the bridge in the materials is probably a place I'll reference and cite everyone toward. And within that, you can see that you've got the payments-based revenue piece, split out between kind of the new disaggregation of giving visibility into our two geographic regions of Americas versus the worldwide ex Americas. Then we give our tax-free shopping, which is obviously a new disaggregated revenue disclosure that we'll be providing and give that in -- on a pro forma basis, is expecting that to be on the mid-single digit and then, of course, some another.

But maybe the incremental piece that you're asking within what inside of these guidance points might be a bit more related to some of the macro that you're asking about. Did I hear that within your question?

Well, I'm trying to understand really, if you think you've built in a layer of effectively conservatism around macro or even your own bottoms-up assumptions, just given the results last year have been a little challenging versus your prior guide. And so, I'm curious to hear where you build that in. And then again, I understand your subsegments, but as a company-wide, I think we're coming to about a low to mid-teens organic revenue growth rate. I'm curious if that's about right?

Yes. So let me -- so when I think about what is inside of the guide, obviously, you're right to point out that last year had a little bit of a volatile macro backdrop and maybe more specifically within the world of same-store sales in the Americas, so inside of the payments-based revenue piece. And then within sales in store, which is kind of the equivalent of the volume metric in the tax-free shopping, both had exhibited volatility. But the one that probably you're hinting at is the volatility that was the result of the Triple S, mainly in the Americas, amongst SMBs, for example, within restaurants, lodging and retail.

Within that, I think what we're looking at in the start of the year is really a tale of kind of like two halves. In the first half of the year, we're anticipating that there's a continuation of the kind of exit rate trends that we were seeing within the Triple S. And that seems to be holding up even though we had what looks like a little bit of a continuation of softer trends in January, February was looking strong, but you have to offset some of that with weather events.

But I think in total, you end up with a place that says, that the first half of the year assume similar trends to what you were seeing coming out of the end of the year. And then in the back half, an assumption that there will be an anniversary over some softer comps, and you see some positive rebound.

Overall, though, I think the outlook for the year is a fairly neutral view, which is admittedly a couple of points lower, like low single-digit points lower than what might have existed in years past as we were laying out kind of Triple S impact within an overall outlook for the year.

Then I'll take the other opportunity to just say that one of the other variables that we're sort of trying to get our heads around is the concept, is the FX variable and how that impacts the tax-free shopping business. I think we alluded to it a couple of times that the outlook on a weakening USD relative to euro, although has maybe a benefit on financial translation it has a more negative benefit on demand.

And so within tax-free shopping. So if there is a continued sort of weakening within USD relative to expectations against the euro, which right now, there's a pretty divergent view even amongst the major banks as to what that weakening looks like. To the extent that, that is a headwind relative to expectations and you could have -- you could have some pressures there, but we're anticipating what sort of in the consensus.

Okay. Just a quick follow-up on free cash. If I understand it right, the interest expense, interest income changes given the combination of buybacks and cash available for interest income and the integration costs are causing free cash to be roughly flat. Was there -- if you could help quantify those variables? And then anything on chip costs or memory costs potentially impacting the free cash guidance this year? I just want to make sure we're still on track for the exit rate of $27 to be the $1 billion range you guys have indicated.

Yes. Thanks, Darrin. So let me unpack three parts. So first, the quantification around each of the components in the building blocks of the free cash flow variance. What we tried to do was provide people in the materials with a bridge page that gives a view on the kind of the year-over-year outlook and guidance around free cash flow. And what you see on that bridge page is -- or in material is the effect of each of kind of the components, the largest of which you pointed out well, right, the annualization of the capital structure, the annualization of the interest expense, that's the largest component there.

And then the second largest component is just a reduction in year-over-year interest income as our cash balances on a year-over-year basis are -- because of the variance in the cash balance. As a reminder, like, for example, in Q2 ended our cash balance was sort of artificially high at $3 billion as we are preparing for the close of the Global Blue transaction.

So those are your two biggest components within the bridge and then we highlight integration and investment expenses, et cetera, and other parts related to Global Blue. But the one thing I would highlight within the bridge is that the incremental flow-through of free cash flow is probably the place that absent those interest expense and integration investment type expenses, Absent those things, the incremental flow-through on adjusted free cash flow is still running at a high -- like a 59% kind of 60% free cash flow conversion rate.

And so I point people to the bridge to just understand the sizing of that. And then the second part of your question in the free cash flow related to -- sorry, can you just repeat?

It was just whether chips, higher memory costs are impacting...

Yes, thanks for that. So from our perspective, even though we are seeing sort of the back end of inflation and maybe trade-related activity start to kind of abate within some of these cost components, and there are still other factors separate and away from that, that might be impacting hardware costs. Just namely within the supply chain of how payment devices are manufactured and the landscape, the competitive landscape of that within like payment terminals and devices. But for the most part, within our free cash flow, and within our P&L, we're not anticipating like a material change such that anything was noteworthy to call out as it relates to those types of costs.

A component that might be different than what you might hear from others. It's just that within how we manage inventory policy, how we flow that all through within our P&L versus our cash flow, those variances and differences to others that exist, might be some of the explanation as to why we're not seeing it in the same way others are.

Our next question comes from Dan Dolev with Mizuho.

Great job here. Really appreciate it. Chris, I know you were asked before about the assumptions for 2026. But can you maybe just elaborate a little deeper on the exact macro assumptions and how you kind of frame the low end and the high end of the guide when it comes to your macro assumptions, I think that would be really helpful. And great job.

Yes, sure. Thanks for that, Dan. So look, I'd say if I was to break out -- if I were to categorize the macro into three parts, there's probably one thinking about the impact of Triple-S within really more specifically our Americas and largely impacting SMBs. So think of that as kind of restaurant, lodging, retail. Then there's two, I would say, it's the FX component that impacts the tax-free shopping disaggregated revenue line. And then the third is sort of also impacting tax-free, but it would be kind of just a geopolitical or we'll say, like tensions that we're seeing in some of the markets. So I'll just go back in each of the three and unpack.

So, on the Triple-S, what we were anticipating and what we already talked about was this idea that we have an assumption of a fairly neutral year on Triple-S, which relative to years past, might be kind of low single-digit points below, what might have been the trends that we were seeing within the macro. And so that's definitely a point of difference.

And that variable certainly is one of the variables that impacts kind of the low to high within the range. I would say, second, embedded within that, even though it's less about the macro effects of Triple-S, we have seen some volatility in the weather both in Q4 and most recently within Feb. But those all kind of play into the same Triple-S variable.

Within FX, I already alluded to it, but it is worth a reminder because I think it is clarifying for some that even thought about, we'll call it, 1/4 of our revenue to size it are non-U.S. dollar denominated. And therefore, there's a view that a weakening USD has a financial translation benefit. It actually has a greater headwind because of its impact on the tax-free shopping demand.

So to the extent there is a weaker USD relative to the euro as for example, on that cross we are going to have a lighter demand or a negative on the demand side of tax-free shopping between those markets. And so that's something that we're monitoring and we're watching, in particular, because, as I already said, if you go and look at bank forecast, there's a pretty divergent view as to the extent of the USD-euro cross right now.

And then the last thing I would just point out, and again, sort of touching more on the Asia segment within -- or the Asian market within tax-free shopping, we are seeing the effect of kind of tourism tension. As for example, passenger seats are down at like almost 30% between China and Japan, and that will have an effect. And so that's just another of the macro variables we're watching.

Maybe the last thing I would just say, though, is that a variable that seems to be having less of an effect on the volatility of the P&L is probably the inflationary variable. That does seem like one that is a little more benign, and that's what we're anticipating.

Our next question will come from Timothy Chiodo with UBS.

I want to see if we could dig in a little bit to the fiscal 2026 guide around the spread staying relatively stable and that 60 bps or potentially slightly higher range. I'm assuming that some of that is related to dynamic currency conversion, which I gather has been going well. And I want to see if you could talk a little bit about that assumption in terms of supporting the spread and maybe any of the contributions from either Smartpay or we already have with the Global Blue acquiring business and those spreads? Maybe there's some mix shift factors as well, but really just any of the underlying drivers of the spread staying stable, at least on an overall fiscal year basis? And then a quick follow-up.

Yes, sure, Tim. I'll hit the first part of that and then Chris can layer on. Q4 was slightly anomalous in terms of how it spreads represented itself. So if you recall even back to our last call, we were relatively cautious on the same-store sales volatility we were seeing, particularly in SMB and particularly in restaurants. Those are our highest spread categories from a merchant perspective.

Offsetting that was some really nice volume from the enterprise activation. So volume performing okay with spread a little lower than expected. That's somewhat anomalous and especially as you hear how kind Chris is forecasting the business, it's kind of a muted view on the same-store sales progress in all those categories throughout the rest of the year. That's one thing that Q4 is slightly anomalous at the year ahead, I think forecasting a more normalized trend even on kind of these lower same-store sales comps that we're seeing. So that's one thing.

Separately, you've heard us talk about this as well, but the real early success we're seeing in Global Blue and it really our international expansion more broadly is in that SMB space where you do expect to earn towards the higher end of your spread averages. So it's not to say we're forecasting a decline in enterprise or anything like that. The reality is, though, when you enter these new markets, the quickest merchants to adopt your solution are at the lower end and that the medium and large merchants come in over the course of the year to 2 years ahead.

We tried to illustrate this in our materials. We have 80,000 merchants outside the U.S. The vast majority of those are SMBs, which generate a higher spread. So I think the spread mix is going to be somewhat predictable largely because we're forecasting kind of the average quality of our merchants to be pretty predictable.

Yes, I can just add on to, probably the best way to think about starting from Q4 and looking at that 57 basis points blended spread figure, if you normalize out quite literally three enterprise merchants, you actually end up in the greater than 60 blended spread territory. And the activity there have -- are largely seasonal in nature, but one was actually the benefit of a somewhat unexpected large volume allocation away from a competitor.

And so when you have those kind of timing -- those kind of seasonal jumps coupled with the sort of an unexpected positive you end up with that Q4 spread dynamic, which was a couple of basis points below the 60.

When you forecast the business though across all of the different fronts and you factor in the mix shift dynamics slightly towards SMB from a growth standpoint that Taylor alluded to, you get to the place that allows us to guide to the blended spreads remaining stable at north of 60.

Excellent. So it sounds like DCC might not be too large of a component there, but a quick follow-up on DCC. Last quarter, you gave a really helpful disclosure in terms of the contribution to net payments revenue from DCC. Is it fair to assume that in Q4 there was directionally in that same ballpark, I believe last quarter, it was around $11.5 million.

I was just going to -- sorry, one thing I was going to say though, Tim, was that, when we talk about the blended spreads across the product, I don't want there to be a takeaway that it doesn't include a positive benefit from like FX-based -- FX-based spread revenues such as DTC or other types of products like DCC that are also FX-based. There definitely is a benefit that comes through. And so you're right to point it out as a positive. It's definitely been one of the the nice components of having acquired a business like Global Blue, where we now have that capability and competency in-house and are able to kind of bring that into the value proposition and the bundle facing merchants. So I just want to clarify that as a starting point.

Maybe just to illustrate how we're rolling out DCC and it's embedded in our offering internationally. So the blended spread of those merchants would include the benefit of a DCC product, but they're coming in as a net new merchant. So it's not really changing the spread of an existing customer meaningfully outside of the U.S. In the U.S., and this is really no change to the expectations we've set as far back as announcing the transaction. We really want DCC live as product kind of broadly based in the U.S. prior to the World Cup, that's where we see significant benefit.

So in the back half is where you could see spreads on existing customers increasing as a result of the benefit of DCC. But I want to be really specific, it's a new product forecasting the relative adoption kind of tricky. It's not widely used in the United States, although you can obviously be pretty optimistic about it when you think about a big international event like the World Cup, and we're focused on making sure, it's live in our hotels and stadiums.

Yes, that's what I was getting at, partially in terms of the U.S. cross sell. So it sounds like a good opportunity.

Our next question will come from Will Nance of Goldman Sachs.

I wanted to circle back on the free cash flow and come back to the bridge that you guys provided. So, I think we get most of the moving pieces around interest expense and cash balances. Could you speak to the $30 million of integration and investment spending? How long do you expect that to persist? And if we think about the flow-through of free cash flow kind of excluding some of these items, being at 60%, like is it possible we could be north of 60% into 2027 as the integration spend winds down?

Yes. I'll break down, not necessarily in whole dollar terms, but a significant portion of that $30 million is what I would consider in-year integration expense one time. There is a portion where we anticipate building sales teams. And as you know, like when we build sales teams in different geographies around the world, they don't pay for themselves in the first year, they take kind of 1 to 2 years to pay for themselves. So I don't think a significant portion of that line would be recurring, but all of the line would be paying for itself to the extent we hit our sales objectives.

This is something we challenge ourselves on pretty constantly. will, you know probably better than most that our preference is to deploy capital and buy small payments organizations that have a proven track record of selling in one geography or another, and we've executed against that pretty successfully in places like Germany.

At the U.K., we anticipate launching in 15 countries with our all-in-one payment product, and it's just impractical to assume that you can find that many interesting M&A opportunities across those countries. So the forecast skews a little bit more towards an organic build than we probably prefer it takes a little longer, and it costs you to your point, this capital upfront.

But in the absence of kind of finding a great sales team locally that we can partner with or we can buy. This is like -- we're not going to ignore the opportunity simply because it requires some fixed cost.

Yes. And Will, maybe just to add, in terms of where you might see some of that line show up within the financials is actually in the form of probably the the CAC and the EUL lines within cash flow statement or you'll probably end up seeing some of that. And the reason for that is that we probably expect that when we're newer in a market we'd like to be more aggressive around some of the incentification as you kind of prime the pump in entering the market with a differentiated totally new offering and you want to get the potential partners very excited to work with us and embrace the value proposition. So that's just a little bit of extra color on that.

Helpful. Okay. So it sounds like a good portion of that should kind of run off into 2027. And then just a follow-up. You're talking about the kind of organic versus inorganic trade-off. How are you guys feeling about just capacity to do further M&A, particularly given the lower level of free cash flow this year? You thinking about $0.5 billion of free cash flow against $4.5 billion of debt. Just what is sort of leverage capacity today? And is the thought to take a pause on M&A this year as you digest the several large deals from last year?

Yes. Thanks for the question. I'll address kind of the strategic bench, and then Chris can reiterate his comments on leverage ratios and everything else. We have a team dedicated to looking at opportunities. So to say pause or any. It's not really how it works. We get introduced the opportunities, and we evaluate them and we challenge ourselves as to whether those opportunities make sense. And then there is a relative balance of capital. Of course, we think about leverage ratios and how stretched we are, we think about buybacks on a relative basis with those opportunities in front of us. So we evaluate all those things constantly.

And Chris can talk about where he is the hammer to say stop. I will say though, in a year like this, we are very focused on smaller, very strategically aligned M&A. So less likely to do something kind of far afield from what we do. But if we can buy a small payment sales team in a particular country, we will do that. Why? Because you're traditionally paying a relatively low multiple, even inside of multiples we trade at today. You're acquiring a team that's got a proven track record of adding customers.

You're emboldening that team with your own product and inevitably, they're bringing some batch of customers with them that are quick and easy cross-sell. So we want to reserve the right to do that. I think if we did it, you find that the capital trade-offs are well worth it because it's an upfront and a lot of the timing associated with building is slower.

Just by way of example, we did this in the U.K. and within a couple of months, we're adding 1,000 merchants a month. Now that sounds impressive. But if you look at the quality of the organization we acquired, that was a very small organization, call it, 50 people. Their sales prowess was proven, we were able to invest in that confidently. So we'll continue to look. I don't know that these would never be things that hit the radar of kind of an earnings call, but I'd love to buy a small successful team in Spain or Italy or France as opposed to building from scratch.

Yes. The only thing I would probably add to that is that, well, I really like the line of questioning because it connects to concept that I think people have been able that -- have been constantly asking us about, which is how we allocate capital in order to drive or accelerate kind of the strategic initiatives.

Your first line of question asking about the integration expenses and us talking about in many respects, growth CapEx, that's going to be inside of our free cash flow bridge. To then follow that up with the ask about how we might be allocating capital in order to maybe acquire distribution assets that further accelerate this international expansion and the launch of brand-new products that are completely differentiated.

I mean they're exactly in the line of how we think. The capital that we have to allocate at all points, do we view it as a scarce resource regardless of whether we have ample leverage capacity, ample liquidity, ample excess cash flow generation. At all points in time, it all still has a cost.

And a relative ability to generate a return. So I don't think that there is much of a change philosophically regardless of where we are because we value the capital so highly. And -- but I do like line of thinking because it really does underscore this core point that we can allocate the capital dollars at initiatives like growth CapEx or we can allocate the dollars at initiatives that acquire us and accelerate into capabilities like distribution in an emerging market.

Our next question will come from Dominic Ball with Rothschild & Co Redburn.

super clear on the guidance. So looking slightly beyond the quarter and the guidance, many investors are trying to understand what integration success with Global Blue looks like from here. It's harder to see, obviously, from the outside. So -- and Global Blue is such a critical part of the equity story of Shift4. So can you tell us a little bit more about internally what it looks like, any key metrics and when you think you'll start to approach Global Blue retail merchants for that cross-sell opportunity as well?

Yes. Thank you for the great question. I'll start by saying it's already happening. So we have line merchants in multiple countries. We're betting in more. We've got, as I said, the ambition of having kind of being live, so to speak, in 15 countries. Those are companies that Global Blue is already in today, but we don't have a payments offering.

To give you a sense of how we view success internally, it's the ability to add several thousand merchants upon towards the back half of this year. Now these are smaller merchants admittedly. And I think the root of your question is important because traditionally, the investors look at volume as the key metric. We don't view that as the key metric internally on the cross-sell.

If you look across Global Blue's customer base, it ranges from the LVMHs of the world at the highest end representing them and others representing like 80% of the volume. And then there's a really long tail of SMBs, the hypothetical scared Scar boutique at Bellagio, Italy, representing 70,000 customers. Those customers are getting this highly differentiated product in our all-in-one terminal that delivers eligibility detection as if you were in the highest quality you may saw in in Paris. And so this is the product that's being released most quickly.

This is the product that we're investing in local sales teams. And I think it's no surprise, just go to our job postings, and you'll see job postings basically everywhere throughout Europe, looking for sales reps around this product. And quite frankly, it's where Global Blue is a stand-alone business was least equipped. They didn't have a sales force focused on this small -- this really long tail of SMB.

So we're building out that sales force. Internally, we've got this kind of mantra that one -- it's our dedicated Shift4 professionals that go into a local country sit in a local Global Blue office and help them build out this capability. And once they have 100 or so merchants under their belt, they pass it off to the regional manager. So we're already seeing the early signs of that success in a handful of countries today, but we want to be doing it in 15 countries. And so we have this internal kind of merchant count focus. And we don't have a volume priority. We just say we know what great payments businesses throughout Europe can produce on a merchant-by-merchant basis, we see a lot of that data internally, and we know that several thousand merchants a month very reasonable outcome, and that's before you have a lead list like your 70,000 Global Blue customers.

So we're very pleased with the internal progress of that. And then separate and distinct from that is visibility, and I mentioned it earlier, so I won't belabor it. to cross-sell DCC into our U.S. base of customers. But in Europe specifically, it is an SMB-oriented sale. It's an all-in-one terminal that is displacing a bank terminal, but with a lot more feature and functionality and to drive higher TFS adoption.

As you'd expect, when you walk into a merchant with this product, it adds a heck of a lot of value they adopt it quickly. And we expect, by the way, equal proportion of kind of net new wins and cross-selling existing global good customers as a result of that.

Yes, that's great to hear. And just one more, if that's okay. I mean the future growth of Shift4, as you mentioned, seems very much more international, but a good minority of your existing sort of stock, shall we say, are still in the U.S. and SMBs. A lot of your direct peers in the restaurant space are stepping up when it comes to the direct sales force. It seems like you're now, as you mentioned, rebranded SkyTab as well. Would you follow your peers in terms of a larger direct sales force or more rely on the more traditional Shift4 route when it comes to gateway M&A-driven growth, et cetera?

It's a great question. We have been scaling our sales force, our direct sales force, but in a pretty deliberate and measured way. We have kind of a higher bar for capital allocation around the SMB space, especially in our more mature markets than our peers. So like the idea of chasing them is not a good example. It's actually our head of marketing was challenging me around the SkyTab brand and what we could do to elevate it. And I was very candid with him to say, if we look at what our peers spend on sales and marketing, we're not going to come close to that.

But the Shift4 brand is a much larger, much more powerful, much more visible one. And so why should we have two different products when we could leverage the Shift4 brand and our presence in the many tens of thousands of restaurants that we're already in. So it's a relatively simplistic move to simplify the the product names to lead the part, but I think it will have some meaningful value. And it's just a sign that we have a very, very disciplined approach to customer acquisition cost.

We spend far less than our peers, and this still help us. It's a good step to gain incremental progress. We are adding direct sales people to the tune that you mentioned, but with the capital discipline that I think really differentiates us, like we will not chase the capital curve around customer acquisition costs that some of our peers doing. And yes, will still grow nice.

Our next question will come from Dan Perlin with RBC Capital Markets.

I wanted to just touch on maybe the backlog for a second. I think you're implying like $32 billion embedded in the guide. That's down a bit from the 35% last quarter. And so the question really is just have we reached a point now where like the burn rate is greater than maybe the net new signings? I know last quarter, you installed $6 billion and you signed $6 billion. So just trying to kind of work through that framework a little bit.

Yes. It's still kind of a relatively new disclosure for us as we think about the backlog. And it's a relatively new form of measurement for us. I would say it shouldn't be that much of a surprise for a slight step down when you consider the other comments made by Chris that we experienced more enterprise volume in the quarter than necessarily expected. And there are chunky enterprises, whether it be Alterra Ikon Pass is a multibillion-dollar opportunity and a handful of others. So we didn't view this as a change in kind of our relative progress. Keep in mind, most of our SMB opportunity never hits that backlog. But we did see a little bit of I would call enterprise volume that was faster than we anticipated in Q4.

Yes. That puts kind of staying on that same vein, if you think about the end-to-end volume guide, it's a pretty reasonable band that you guys put out for 15% to 24%. And -- it sounds like this year, it's totally more towards SMB versus maybe some of the enterprise that we've seen in the past. And so the question is really just how does that impact the visibility that you might have in terms of forecasting that line item? Or does that not really matter?

Just to clarify that one, Dan, when you say you're referring to the Americas versus the worldwide when you talk about when you set those two numbers?

I was really talking about -- I was really talking about total end-to-end volume kind of total volume that you guys are kind of calling out $240 million to $260 billion. And then it sounded like in the way you guys were describing maybe that book of business as you're thinking about it, it sounds like tilting a little more towards SMB this year as opposed to more enterprise maybe in the years past. Is there more visibility that you have or less visibility because it's SMB and so it's trickier. I guess the point is if you have a large implementation for enterprise clients, usually, you have those in queue exactly the time lines. SMB can be a little more spotty. So I'm just wondering if that increases or makes it harder to forecast that line.

Well, in those me why we kind of travel around the world because there are nuances to this. In the Americas, our SMB forecasts are pretty reliable. I mean, again, this is a 28-year-old business. our SMB presence has never dwindled. The change that you saw in the business over the last few years is that Enterprise was entering the mix for the first time. And the relative contribution of enterprise has matured. So again, talking about just kind of the Americas for a second, it's a relatively mature business.

Our SMB progress is quite easy to predict. And in the enterprise, to your point, longer lead time, better visibility. And the mix of SMB to enterprises more mature there.

Now when you go outside of the U.S., the SKU is heavily skewed towards SMB. And this isn't because we're strategically limited in any way. This is the reality that SMBs make decisions quickly, same day. The higher you go up in the spectrum, the longer they they take to make decisions.

So if you follow our shareholder letters over the course of the past couple of years, we only just began internationally a couple of years ago, a lot of SMB-oriented wins sort of the green shoots of larger hotel groups and things like that. Those are just starting to play through in this year, but again, still heavily SMBs speed.

There's one area of guesswork, it is how many SME merchants can we add internationally over the course of the year. We are anticipating an acceleration there. But to give you a sense for how we predict it, we have a pretty wide swath of data, we act as a payment service provider for large PSPs. So we know what SMB production can look like in good, bad and in different scenarios throughout Europe.

And we believe several thousand merchants a month is a very achievable result on top of kind of the 1,000 plus that we've been executing on relatively recently. So I would say yes, you're believing that we can execute against that cross-sell plan and that build out of that sales force. But the numbers that we have are quite grounded and I think a reasonable reality.

Thank you. This concludes our Q&A session and also brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect. Thank you.

All right, everyone. Thank you for joining us. My name is Michael Wolfe. I'm the Managing Director here at ICR. So welcome to the ICR Conference. And we're thrilled not only to have you today, but to welcome the Chief Executive Officer of Shift4, Mr. Taylor Lauber here. Taylor, welcome.

Thanks for having me.

Thank you. So for the benefit of the room, I know many of you may be familiar with Shift4, but for those who aren't, it's a fairly complex business -- is the best way to put it. So let's start with the absolute basics. So what is Shift4? And what specifically do you provide to your customers on a big picture level?

Yes, sure. So Shift4 powers the commerce behind all the great experiences in your life. And so if that's hard to find a tangible value to, it's because whether it's that great family vacation, whether it's buying a luxury good for a loved one, whether it is watching your team in the Super Bowl or just that night out with friends that lasted way longer than it should have, Shift4 powers the commerce behind all of those in-person experiences that you know and love.

Now we've been doing this for 27 years. And so as you can imagine, the technology landscape has evolved tremendously throughout that time frame. So what used to be something as simple as a payment terminal on a countertop 27 years ago has evolved into everywhere you pay for something at the New York Yankees. Imagine buying your ticket online, going to the event, parking, beer in the stands, jersey for a loved one, the Steakhouse at the end of the game, all of that is something that Shift4 connects to and delivers an experience to the New York Yankees and to the fan that is cohesive throughout that environment.

So you're talking about a lot of different verticals here. You're talking about restaurants, hotels, venues, luxury retail. Is there a thread that runs through each of these businesses in each of these verticals that makes it unique to Shift4?

Yes. It is -- you're physically there, in most cases. So as a business that 20 years ago was trying to figure out how we evolve in commerce, we focused on environments where people are going to be physically there and paying for something. So we actually don't spend as much time on vertical applications as you might think despite the fact that we have about 1/3 of the table service restaurants in the United States as customers. We have 40% of the hotels in the United States and 75% of the stadiums in every sports league in the United States use Shift4.

But by focusing on that in-person experience and embracing the complexity that a lot of our merchants have to deal with and bringing as many pieces under one roof, we found that the solution really has no upper bound. Again, I think the Yankees is a good example, but so is the Wynn Casino Resort in Las Vegas, where it's multiple resorts, thousands of places to pay, managing that used to involve a lot of different technological providers. Shift4 can do virtually all of that under one roof.

So it's in essence, "proverbial" one-stop shop for that.

Correct.

Okay. Good. Now some of you in the room may be aware that the co-founder of the company, Jared Isaacman recently stepped away to go lead the charge at NASA. As you've taken the reins here, we're introducing everybody to Shift4, but I think we want to introduce you as well. What's going to stay the same under Shift4 under your leadership? And what do you expect to change?

Sure. So I want to spend a little bit on kind of my vantage point inside the business because I think it informs the answer to the question. I worked in Jared's parents’ basement when he founded the company, and we were teenagers. I was the idiot that left and went to college. So he told me not to. He told me this opportunity was better, and I didn't trust him. And for about 18 years, I said no to rejoining the business. I had a career on Wall Street that I really liked. And quite frankly, I was skeptical of this emerging industry that seemed to have a lot more luck than skill inside of it. And so if you put yourself back at what was going on in the late '90s, early 2000s, getting a business to accept electronic payments was innovative enough. We were getting sent credit cards in the mail to our attention as 16-year-olds, and yet most businesses hadn't yet had the capability to accept them.

So there was this gold rush of payments acceptance in our industry that made a lot of companies really successful, and it became hard to differentiate skill from luck. Now I got proven wrong basically every one of those 18 years because Jared and the team kept winning. And they kept winning despite the rapid pace of innovation that was going on in the industry. So I'd say, in short, we don't want too much to change. This is a business that for 27 years, has generally predicted the big changes in technology innovation and where we needed to be to continue to serve merchants who care a heck of a lot more about the software that helps run their business than the payment processing at the other end of it.

So we don't want to change that ambition. I think the fact that our founder, his second job in his history, apart from running this company is running NASA is a pretty good example of the ambition that lives inside of our organization. We generally try not to put too many constraints on ourselves. Now what has to change? A lot has to change. We are a company that is in 75 countries that we weren't in 2 years ago. So the growth at the company is tremendous. We have 6,000 employees. That's more than double what we had probably 18 months ago. So the growth is tremendous. We're operating in dozens and dozens of new markets around the world. We have to have an organizational structure that can pursue that effectively. But the ambition can't change at all because that's really been the hallmark of what we've done.

Yes. So that's changed, but there's also consistency of change...

Of course. And he's our largest shareholder. So despite his new role, he still owns 25% of the company. I think if we took a radical departure from his ambition, it wouldn't necessarily be fun.

No. But at the same time, I'm trying to picture this. You assume the reins for the company and you -- the co-founder of 27 years leaves. And you immediately make the decision to go to your Board and request that you buy a $2.5 billion tax-free shopping business in Europe. Okay. That's kind of a bold move. So that business, Global Blue is now under Shift4. Tell me a little bit about the decision to do that, how that process went and how the combination is going?

Yes, sure. Well, so one of our mottos inside the company is boldly forward. So we do try to think in as forward-thinking a capacity as possible. But this one was a lot more logical than I think you'd expect. We constantly look at the value chain that our customers deal with and the complexities inside of it and say, what are the pieces that they really care about, what are the pieces that they don't care about? What are kind of the commodities that to them feel like paying a utility bill, but actually might have a lot of monetary value to them from the vendor's perspective. And what's our role to play? And in retail, we struggled for quite a while at what our point of difference would be in the retail vertical.

It is a fiercely competitive environment. The software providers that serve retail are incredibly fragmented and the retail service model has varied all over the world. And so as we said, what technology could we bring to the table that a retailer really cares about, this tax-free shopping piece really stood out. So for those that aren't familiar with it, in countries where there's generally a high VAT tax, most of these countries will offer a refund if the traveler is from a foreign country and bringing that good outside the country. So it's incredibly prevalent at the Hermes and the Louis Vuitton’s of the world in Paris that you're going to buy this handbag. And when you leave the country, you're going to go through a process and get several thousand dollars off the purchase price.

It's immensely valuable to these large luxury retailers to have the ability to deliver this. And there's kind of only 2 companies in the world that do that at scale with Global Blue having a roughly 85% market share. So for us, as students of commerce and really trying to understand how to make the complex easy for big merchants, this piece of providing tax-free shopping services for the largest luxury retailers in the world is immensely valuable, and it's very scarce. There's only, again, 2 of them. So we pursued the acquisition for on and off 6 years. At one point, it was too big. At another point, it was too expensive. And fortunately, we grew to the point where $2.5 billion wasn't quite as much as it used to be. And just everything aligned.

So while our founder happened to be leaving, our Board wasn't surprised that this opportunity that we talked about on and off for 6 years became available. And what's interesting about it is, it's a phenomenal business. So yes, we buy it with the ambition that we're going to add payment processing services to all of these customers. We're going to give them a better solution. The reality is the Global Blue business was growing kind of high teens, 20% even without us. So it puts us in a new vertical. It puts us in a lot of different geographies, but with a playbook that our Board understands perfectly well.

So in essence, it's a bold move, but one that actually fits neatly, at least the Board saw this as a way to expand within the commerce space without rocking the boat.

Yes. And what I'd say is it's very typical of Shift4 in that when we announced the transaction, we found ourselves explaining to all of our largest shareholders what this business does and how it's connected with commerce -- and yet at the same time, the head of most of the international payments businesses around the world were calling us, asking us, hey, what do you intend to do with this combination of these 2 things. So from an industry perspective, everyone kind of understood pretty quickly, this is a really interesting and important business. And from an investor perspective, we're going to educate on why these 2 things work so well together.

Yes, it makes sense. And obviously, we're speaking to an investor audience today. You mentioned brands like the Yankees and the Wynn hotels. Why should investors -- what should they take note of in terms of the types of clients and customers that you're serving? Is there anything, again, uniquely shifted for about working with entities like those?

Yes. Well, I'd start by saying there was a strategic bent going back as far as 20 years that if you can download a piece of software on an iPad and run your business, we want to be as far from that competitively as possible because there will be new pieces of software popping up all the time, and we don't want to compete in a hand-to-hand combat basis with whatever might pop up when the barriers to entry are download an app and run your business. What we want to do is we want to fulfill that same experience for merchants that are going to have 70, 100, 1,000 revenue centers, all managed by lots of different software because when you can connect all those things together for the benefit of some of the merchants that you mentioned, the air is very thin from a competitive standpoint.

So I think not to call out those 2 customers specifically, but you could use them or any other example. The reality for them is that when they needed a commerce solution for their environment, there was kind of only 2 phone calls that could be made ourselves and one incumbent and different, by the way, because one stadiums and the other is resort hotels, but that's where we try to position ourselves that we have technical solutions that are table stakes for the merchants that we serve like tax-free shopping and luxury retail. And at best, there's one other phone call you can make because despite the fact that they are really demanding and complex customers to serve, the competitive era is quite thin. And we know very distinctly how to differentiate ourselves from that one competitor.

Speaking of differentiation, I've noticed and maybe you can tell me whether it's true or not, I've noticed that the Shift4 name has become a bit more visible at retail actually. Is that a deliberate brand strategy? Is there some thought behind that? Or am I imagining it?

No, it is a deliberate strategy. And for those P&L focused in the room, please don't get concerned. But we are investing heavily in the brand experience. So one thing that I would have critiqued us on over the years is that generally speaking, if we were part of the commerce solution, we didn't care what name was on the screen. We didn't care what name was on the hardware. It was about delivering a solution to customers. And yet we are and have a footprint that's far bigger than what most people would expect because we generally live under the covers in a payments experience.

I think that's a shame. I think the fact that we are in 50% of the Power 4 Colleges from a payment experience and all of the stadiums that I mentioned, all the restaurants and all the hotels and luxury retail, the brand should be front and center because that brand will give the confidence to the next customer to sign up. So we are trying to tell a more cohesive everything Shift4 story and get the brand out there front and center. It doesn't mean a dramatic departure from kind of our marketing spend and everything like that, but making sure that where you pay, you understand that this is a Shift4 experience is something that's really important to me.

Okay. That makes sense. Going back to Global Blue, but just your acquisition strategy in general. You bought a lot of companies over the years. Tell me a little bit about your philosophy of when to buy versus when to build and why purchasing companies actually improves your competitive position. You've clearly made that decision over the years. Tell me a little bit about how that decision-making process works.

Sure. I'll start by saying the payment platform that we run is connected to over 1,200 pieces of software. So if we think about buying a piece of software in the stadium space, the actual technical aspects of managing an extra integration on top of 1,200 are very little. And our company is built to know how to do that. So whether we own it or whether we're partnered with it, we manage 1,200-plus software relationships at any given time. We do not get deterred when there's an interesting software asset that we could own if we could control our own destiny as a result of it. But I'd say more importantly, the ability to access customers who are using 5 or 6 different solutions to make commerce work via M&A has something we've been uniquely good at. And so you can contrast us to any of our competitors in any of the verticals we serve, and you'll see that we grow as fast as any of them. But the real differentiation is that the capital intensity of that growth is far lower.

So in certain examples, we generally spend about 1/3 of what our largest and best competitor spends to acquire a customer in the restaurant vertical. It's not to say we don't invest in organic sales capabilities. We obviously do that. And we win lots of customers like the ones that you've mentioned. But if we can buy a sales team that has proven to be successful in a particular geography and then enable that team with our products, it's just a lot easier to bet on success.

I was speaking to an investor recently who said, I liken your strategy a lot to Netflix. And what I mean by that is, why should I care whether you make a movie and produce the entire thing yourselves or if you go to Cannes and you buy one. Intuitively, I think you're going to be much lower risk buying the movie that's already been produced now that you've seen it as long as you pay the right price than making one from scratch. We tend to skew towards that. But make no mistake, we've got industry-leading products in a bunch of different categories that we've built ourselves where there wasn't a solution to buy.

The Netflix of commerce solutions is that what we're going with.

For now.

Okay. We'll see how that goes. Okay. Good. Thinking about some of the things you've said over the last year and thinking globally for a moment, especially with Global Blue still so fresh. You've said that many markets are still doing business like the U.S. did, I mean, upwards of 15 to 20 years ago. So when you think about accelerating this kind of technology adoption and the shift toward these types of solutions, what makes Shift4 uniquely positioned to take advantage of those shifts? And how do we empower them in essence, if the world is somewhat behind?

I'll start by saying we were the first to do it, and that is largely how all commerce is conducted in the United States today. So a little bit of a provocative statement, but let's sort of break this down for you all. 15, 20 years ago in the United States, there were 3 cottage industries. It was payment processing, largely driven by bank relationships and highly undifferentiated terminals that sat on a countertop. There were software companies that were emerging, trying to solve vertically specific problems for one customer or another. And then there were hardware companies that tried to kind of make it all work.

And our founder said, there's absolutely no reason these should be 3 different industries. The software works better when it's on hardware that's purpose-built for it. The payments work better when they're tightly coupled with the software, and there's no longer a misunderstanding between what was purchased and how much money hit the bank account. And so 20 years ago, we were combining these industries and delivering a cohesive product, and that's what drew the early stages of our growth. Now today, every software company goes to market in this strategy. So obviously, it was a highly valuable strategy. Interestingly, when you go to markets around the world, it still looks like the U.S. 20 years ago. As you mentioned, you can go to some of the most established economies in the world.

I'll pick a pub in London as an example, and there's still a countertop terminal, largely unconnected to the software and they punch in what you owe. If that seems inefficient, it is. And if you ask the hardware and software and payments companies why it works that way, they give you the same examples or same answers that we heard 20 years ago in the United States. So I don't want to say this is even that bold. This is just something that we know will change. We know that for the same reasons a small restaurant uses more software today than a large hotel did 10 years ago, that businesses around the world are going to embrace software. It simply makes their lives easier and helps them to conduct more commerce. And we're going to shepherd that at the expense of kind of a lot of these incumbent industries that aren't delivering more innovation or a better solution.

Yes. Any particular verticals internationally that you think are worthy of more focus than others?

Well, our products obviously lend themselves to restaurants, to hotels, to retail. And so we're going to lean on those first. And I would start -- I would say this is likely to mimic the success we had in the United States, which is it starts with small merchants because they get the highest ROI on this innovation. And then over time, we deliver into the larger and larger merchants throughout the rest of the year.

Which is exactly what's happened here.

Yes.

Okay. So that path has followed. Now we can't -- as you know, we can't specifically talk about financials here. Let's expand a little bit more on vision and your specific vision for the company. Anything you can share about how you're -- everything that you've discussed today, obviously, is thinking a little bit about the future, but expand a little bit more about what people can expect without talking too much about financials.

Yes, sure. So what I would start with is our playbook is quite mature. We understand how to combine technologies up to the most complex merchants in the world. That is not a vertically specific strategy. We weren't in a single hotel when I joined the company 8 years ago, and we're in 40% of the hotels in the United States, and yet very few outside the United States. The growth opportunities there are tremendous. We weren't in a single stadium probably 4 years ago. And now we're in 75% of the stadiums in the United States, and sports is not a U.S.-focused phenomenon. It exists all over the world. So this playbook of studying commerce, finding the most valuable pieces and doesn't really matter. You build, you buy or you partner, whatever it takes to deliver the best solution will bring us undoubtedly into more verticals and most certainly into a lot more geographies. And now how does this flywheel sustain itself?

We weren't in a single country outside the United States in any form of consequence up until 2 years ago. So if we've been able to replicate this playbook over and over again across different verticals and grow the quality of merchant tremendously and the quality of the business the way we have in the last 10 years, imagine now that we have a physical presence in 75 countries around the world that we didn't have 2 years ago. That will undoubtedly drive lots more growth. And quite frankly, I think the market conditions, I'm going to set aside economic growth for a second. I think the market conditions in a lot of these places are much better, meaning merchants are generally using antiquated solutions that are undifferentiated and are begging for the kind of playbook that we have, which is combining them with solutions that actually help them run their business.

So in the couple of minutes that we have remaining here and at the risk of sounding repetitive based on what you just said, if you could leave investors with one thought that you want to make sure they understand about what the future of Shift4 will look like? What would it be? I know that's a lot of pressure in 2 minutes, but...

No, I think it's relatively easy. This is an industry that's under an immense amount of skepticism. Payment processors have generally done a bad job of educating investors on how they win. They would tell you stories like if this giant company and that giant company mash together and save merchants a fraction of penny that merchants will see value in that. And what has happened since all those merchants have slowly and sometimes more quickly migrated to solutions that they actually -- that actually help them run their business. So why do the Shopify and the Toast and the Shift4 and the Squares exist? It's because we're delivering a heck of a lot of value.

And the legacy payment processors struggle to adapt to that and struggle to deliver value and therefore, are competing on price. We have the ability not only to deliver value substantially in all these large verticals that I mentioned, but a playbook that helps us expand in an incredibly capital-efficient way. So yes, we've acquired companies, but our margins have generally grown towards 50% on EBITDA. That shows you how innovative -- or I'm sorry, how capital effective it can be when you're really focused on finding customers at the lowest cost possible and delivering them a solution that they traditionally would have used 3 or 4 vendors for. And that's, again, largely been a U.S. story. And now we've got incredibly the rest of the world to go conquer.

Yes. Very, very exciting times ahead, no doubt. All right. Thank you very much, everybody. I appreciate your time. And hopefully, you'll have an opportunity to speak to Taylor at breakout sessions and such. But thank you for your time.

Thank you very much.

Thank you for attending.

Alright. Welcome, everyone. We're really glad to be joined here by the team from Shift4. So Chris Cruz, the recently named CFO and long-time investor in Shift4. We've known Chris for many years now through various industry events, our NAPA conference, ETA and some industry events. So we were just really happy to see Chris named to the CFO position, and we're really pleased to have him here with us on stage. Thank you, Chris.

Thank you, Tim. Thanks, everyone, at UBS, for having us. Really excited to be here.

All right. And also a special thanks to Tom McCrohan. Tom, Head of IR for Shift4, works very closely with our team and also made the trip out here to Arizona. So again, we appreciate you both making time in your busy schedules to travel out here to be a part of our conference many years in a row now. So thank you to Shift4.

All right. Well, we've got a great list of topics to get through, and we're going to start off just addressing some of the recent macro that's been called out by the Shift4 team. Chris and Taylor and team talked about a little bit of volatility, right, some weeks up, some weeks down. And Chris, we just put a little bit of context around that and maybe talk a little bit about how investors should be thinking about some of the Q4 guidance metrics?

Sure. I think what you're alluding to is on our third quarter earnings call, we made reference to a couple of data points that we were seeing within our really broad data set. So as a scaled payments company that has really great vertical leadership within areas like restaurant and hotel, we have the privileged position of seeing a lot of interesting data.

And something that was coming in as a question was what were the recent trends around that data. And one of those trends was that in the domestic restaurant, domestic lodging categories, we were seeing kind of week-over-week -- sorry, week rolling 7-day year-over-year trends that were, call it, plus 1% to minus 4%. For context, we're used to seeing those trends at the, call it, plus/minus 1% to 2%. So a narrower band is what we're used to seeing, and the range was slightly more downside biased. And we wanted to call that out because it has had an impact on the same-store variable within those verticals in the base.

At the same time, we're really proud of the fact that from a vertical diversification standpoint, we are seeing the leadership position we have in stadiums entertainment, the leadership position we have now in luxury retail and in other verticals more broadly, it gives us a vantage point that allows us to see not only those trends, but trends as a whole that I think are quite interesting in our business and certainly have been interesting to investors, topic of a lot of conversation.

All right. Great. Well, thank you. That's a great way to recap. Maybe you could talk a little bit about now we're a little deeper into the quarter and really what that means around that range that was provided for Q4 GMV.

Yes. So the -- let's start with the trends. I mean they remain consistent in terms of what we had previously discussed and disclosed. And from that standpoint, we remain with a more cautious tone within it. But as it relates to the guidance itself, what we had talked about, really no change in sort of our thinking around it, consistent with the way we had felt in the quarter.

All right. Sounds great. Thank you, Chris. Let's move on to the Shift4 Way. So this past year, we've seen Shift4 do more of the type of activity that would very much be aligned with the Shift4 Way. So you've been making some acquisitions and really executing on some of the prior ones, Vectron, VenueNext, Revel, Appetize and many more add to that list, which we like to say is they add to your cross-sell Rolodex and Global Blue, Bambora, SmartPay, the list just continues to go on. Maybe you could talk a little bit about some of these specifically and how this will feed into kind of next year's cross-sell funnel.

Absolutely. Well, actually, it's where you ended that question is exactly the most exciting part about the acquisitions that we make because from our perspective, topping the funnel or adding to this cross-sell potential that we have is one of the most attractive part in what we believe is our unique model. The ability to deploy capital in order to obtain a unique and differentiated access to customer acquisition and expanding our markets is, I think, one of the most important things that we do in order to differentiate ourselves and drive a better return of capital outcome right at the unit economic level of customer acquisition.

We could deploy capital in a lot of different distribution channels, distribution methods. You could put money into a Google AdWords campaign. For us, this idea of being disciplined on the acquisition of a business that has an installed base and a state, a cross-sell potential in its funnel that we can then, through that acquisition, have differentiated and low and disciplined cost of capital to really convert and acquire the customer.

To us, it's really quite a distinction in our unit economic model and one that historically has driven high returns on capital over time. Bucket one, that's why in our kind of strategic priorities around acquisition capital allocation, we talk about the cross-sell funnel as like one of the most important priorities.

The second priority within it, though, that comes is often capabilities enhancements. So even though most of these acquisition thesis are justifiable on their own from the perspective of the funnel, they often come with interesting capabilities enhancements. What is the capabilities enhancement? In the case of Bambora, as we announced in the third quarter, the bringing on of a payment modality like EFT ACH in North America, that's a competency, a capability that we didn't have before. In the case of Global Blue, we often talk about the tax-free shopping, the entry into the luxury retail category. What we don't talk a lot about is that they brought a proprietary dynamic currency conversion capability. That DCC capability is not only an interesting product in and of itself, but it's something we can cross-sell back into our base. So this idea that capabilities come over and above these incredibly interesting cross-sell funnel opportunities to expand that is something that is an important part of what we underwrite within our models.

And then the third from that is simply market expansion. So the opportunity to expand into a geographic region or densify a geographic region. We announced the closing of SmartPay in the Australia, New Zealand region. That created a lot of density for us in a country that we were emerging and growing our share within.

In the case of Bambora, that's giving us more North America, which really is about in Canada, building some density there as well. So three big buckets, the idea of expanding funnel, the idea of capabilities enhancements and the idea of market expansion, those are all the ways with which we think about excitement within these underwritten acquisitions.

Excellent. Thank you Chris. A minor follow-up before we get into some of the vertical mix. But related to that cross-sell funnel shifting over to end-to-end volume, would you say that there's any change maybe in the composition of that as we head into next year as we think about kind of higher-yielding merchants versus lower yielding in terms of their merchant size?

Yes. No, it's a great question. And it is -- it's an astute observation. Our business is, one, when you go to the history of the company, we were really a business that was born SMB in the history of the business, really born one vertical where we -- our first vertical of real strength and leadership is restaurant -- was restaurant. We were born SMB there. And then for those of us that have followed the story over the years, we went from one vertical market leader to becoming now a vertical market leader in 4 verticals.

Restaurant, we add hospitality, you add stadiums and entertainment and now luxury retail. The interesting thing within that mix is verticals 2 and 3 are good examples of places where our mix started to shift towards enterprise. So over the last few years, you would have heard the story in our narrative and you would have seen it in the numbers that our volumes were growing faster than our spreads. And that was because of this mix shift towards enterprise.

But now you can fast forward to Global Blue as a good example of an area where our most exciting opportunity within that business to cross-sell is within the SMB. It's not contrary to popular belief, it's not necessarily in the enterprise side. It's actually about the opportunity in SMB. To contextualize it, there's a $500 billion sort of cross-sell funnel type opportunity within -- for payments within Global Blue. $100 billion of it is the SMB component.

And so when you think about, well, what does that mean over time within the narrative? Well, if you follow the history, born SMB single vertical, adding leadership in verticals that tend to be enterprise, mix shifting towards enterprise, there is a scenario here, not trying to do any sort of guides around this or anything, but there is a scenario here where we may see mix shift that is different than this historical trajectory.

Excellent. That's really helpful context. Thank you, Chris. All right. So I think you hit a little bit on the SMB versus the enterprise evolution over the years and how that could look a little bit for next year. Maybe we just touch on that point of yields, maybe we can do that more from a vertical view and also U.S. versus international. Just any high-level comments you could make around directional take rates. I mean, obviously, we know restaurants a little higher, hotel a little bit lower? And then maybe you could expand upon that across the other verticals?

Yes. The take rate to volume question is something that if you're a student of the payment space, and I've been investing in the payment space or around the payment space for almost 2 decades now, like there's this very popular chart that's always shown to you when you first start studying payments, it's 3 pyramids that show you that volume is really a -- like you have this inverted pyramid that shows you that volume, the most amount of the payment volume sits with enterprise, the least amount sits with SMB. But then right beside it is an inverted pyramid that shows you from a revenue standpoint, AKA translating that into spread, the revenues and the spreads are the smallest in enterprise and then they're the largest within SMB.

And that dynamic is really something that I think is important to understand because when you start to think about verticals, what we see is that a vertical like stadiums entertainment, a vertical like lodging even, they tend to be more enterprise skewed. And then within our base of unified commerce, you have very, very large enterprises that run everything from technology and telecom to public sector and nonprofit in a variety of other areas.

And so depending on that mix of the business from a vertical standpoint, you actually can triangulate a little bit to an enterprise versus SMB mix in restaurant, more SMB and in what could be luxury retail probably to be more SMB.

Thank you, Chris. And on U.S. versus international, we understand there's a little obvious changes on the gross level, but when we get down to the net take rate level?

Yes. So it's interesting because I think there's a prevailing view that take rates in international markets relative to the U.S. are lower. And actually, what we've uncovered is when you're bringing a value proposition of bundled integrated payments, software mixed with the proposition that we bring of software service support, hardware mixed with the bundled payment offering, that whole collection together is delivering value that actually is translating into a monetization of spread that isn't that dissimilar to what we're seeing in the U.S.

And that, I think, is yet another surprise that no matter where you are, solving complex payment problems through an integrated solution and delivering this, call it, one hand to shake kind of an approach, it really does have monetization power.

All right, Chris, that's really helpful. All right. We're going to move on to SkyTab. So SkyTab clearly well covered at the Investor Day. But let's do just a little bit of a kind of a recap and refresh on SkyTab. Just starting with a little bit of what's the ideal or average restaurant size? Or what's the real target market for SkyTab? And then more specifically in terms of the competitors, I mean, how much is it up against a Toast, Clover, SpotOn, MICROS, NCR, who are the most predominantly viewed competitors that you go up to against head-to-head?

Yes. I think we often talk about with a healthy respect Toast as within the restaurant space. I don't think that should surprise anyone that we sort of view them as the market leader. At the same time, I'd be remiss if we didn't mention that seeing Micros, AK, Oracle in a lot of hospitality restaurants that are tied to hospitality environments or enterprise restaurants themselves, that's fairly common, too.

I don't know where your dining patterns are. But if you took a look behind the wait station or the bar, you probably see those systems as being pretty prevalent. And that's really where I would say we see our offerings play and where -- and you could define the category that way. It's really about table side dining, and it's really about the caliber of restaurant that you would see a Toast or a MICROS in.

Now I think there are some unique differences though as well, which is to say each of those parties has their own subcategories. I think it's too easy to paint with a broad brush that restaurants or restaurants. The reality is table service restaurants, table service dining and the complexity of what a POS does in table service is very distinct and different from what it does in QSR.

And when you think about a Toast, for example, you might see them straddle that world of table side and QSR. In a world of Square, you don't see Square in table side, but you might see them more in something that is a mix of restaurant to retail, right? You might see that category. So it is important to understand, I think, those distinctions when you're doing your market mapping of competition because not all of those categories are ubiquitously served by a single POS.

Excellent. Thank you, Chris. A minor follow-up to that. So clearly, when you're selling a modern point of sale with a software component to it along with end-to-end payments volume, there is a total cost, which can be split across either SaaS fees or payments revenue. It's kind of your choice on how you want to do that.

Clearly, Shift4 has gone a little bit more towards the payments means of monetization. But when you're pitching to a restaurant and you're talking about the total cost that they're going to pay, how would you compare the SkyTab offering to some of those major competitors that you just mentioned?

Yes. I think we undoubtedly believe that we have like lowest total cost of ownership to a restaurant merchant. And it's important not just from an upfront standpoint. It's also about the over time, the idea that there isn't going to be a nickel and diming around peripherals, right? Our uptime is your uptime. Our North Star on the most important part of the revenue model is the transactional component of monetizing payments.

If I take that out of the jargon for this room, it really means that if you're online, if you're uptime, if you're actually delivering revenue to yourself as a merchant, that's the only way we're also going to receive revenue. And so from that standpoint, I think we're very well aligned. So there isn't an upfront to buy multiple POS stations at $5,000 a pop. And then every time a peripheral changes or a handheld changes or this that or the other, there aren't charges for those things from that perspective. We're really about trying to align ourselves to the uptime and deliver the lowest total cost of ownership.

Excellent. All right. Chris, we're going to move on to another great topic, which is stadiums and events. So at the time of the IPO, there was the one stadium, there was the Raider stadium, and now there's a whole bunch. And every shareholder letter has a bunch more in it. It seems like there's a press release every few weeks. Part of winning those, we know, has to do with some of the ability for Shift4 to process payments across, again, in that multi-software environment.

One of those environments is the ticketing environment. The integrations that you've done with Ticketmaster, SeatGeek, Paciolan and Ticket Socket, the list goes on. Talk a little bit about how that's helping you sell to the stadiums. Clearly, it's been working quite well. And maybe you could give us a brief update directionally on where you think your market share sits?

Yes. It's a great nuance because you can look at the stadiums and entertainment environment, you can look at the logos that we talk about. And we often make mention of 3/4 of sports -- of professional sports venues are likely using our software. And this is really what we're talking about in the context of SkyTab venue and what does that really mean? That really means the in-venue experience around things like F&B and retail. What does it often not mean? It often does not mean the ticketing piece yet, which has been one of the fastest-growing areas for us because even though we had the market-leading solution in SkyTab venue, delivering the software that allowed for an integrated payment experience inside the venue, we did not, at the early phase, have the payment integrations for the aforementioned ticketing vendors.

Building that integration library, so to speak, to the ticketing players was a piece in the deal objectives and the road map that we had to do. Well we got that done. And once that did get done, you started to see a very nice attach rate coming through as it relates to ticketing. An important component is on a relative volume basis, in some venues, ticketing relative to F&B volume, it can be 1:1. But in some venues, you can see a 6:1 relative volume differential in the ticketing side relative to what is transacted inside of the 4 walls of the venue.

And so the ticketing opportunity is very exciting, and we are not at anywhere close to the same market share in ticketing as we are within the inside the venue experience of integrated payment and SkyTab venue POS. So that's still a nice growth driver within that business and something that we're obviously very excited about. It's also really important to note, just to underscore it, though, that it's easy for us to say we are a leader within a vertical, and that's the end of the story.

I think this nuance that there are more opportunities because -- to get volume across different revenue centers even once you've landed. So a lot of our verticals do still have land and expand potential even after the market share is determined.

All right. Excellent. What we're going to do with the time remaining, we're going to hit a couple of financial topics, and then Chris was kind enough to say that he'd be happy to take a few questions from the audience. So if you'd like to, I'll bring the microphone around to you. Let's hit a couple of these quickly on a couple of financial items. So the stock repurchase program. So you talked about a $1 billion repurchase program. I wonder if you could just expand upon that a little bit. What gave you the confidence and kind of put that in context of some of your leverage levels, et cetera?

Yes. I think for one, it's actually just been a recurring component of the business to evaluate from a Board standpoint to evaluate the share repurchase authorization. If you look at the history of the company since public over the 5 years, we've gone from a no authorization to a $250 million authorization, doubling it to a $500 million authorization and then the most recent announcement, which is a $1 billion authorization that will go all the way through to the end of '26.

In the ordinary course, the third quarter was the natural time for the Board to evaluate the share reauthorization since the prior one or the most recent one was supposed to expire at the end of the year. Now it happened to coincide with things that seem to happen within our industry and within our own valuation that makes executing against that share repurchase authorization actually more of a priority than it may have otherwise been, which is to say we view at present that the valuation underlying the shares seems like an attractive place to allocate capital and something we talked about on the call for context.

This valuation level for share of share repurchases would actually be below and lower than the lowest we've acquired shares in historical repurchase authorizations.

Excellent. Another $1 billion number, which is your guidance to reach that as exiting this guidance period in terms of your run rate for free cash flow. So you recently reiterated that. Maybe you could expand upon that target?

Yes. I mean it's one of those points of -- I think I did get asked the question around at one point, if there was one KPI that mattered to you in terms of getting to know you, what is it? And at the end of the day, like free cash -- like cash is king, right? Like adjusted free cash flow as a metric is an important North Star. And it's one that I think at the end of the day is what we should be measured on. The $1 billion adjusted free cash flow target as an exit rate to the 2027, the end of our medium-term guide is what we've had as a target, and it is something that we are very focused on.

Excellent. All right. Well, actually, why don't we wrap with one last and then we'll go to the audience. So the medium-term framework, right? So the 3 scenarios that you laid out. Maybe you could just talk a little bit about now we're close to 1 year past, how you're tracking against those? What kind of confidence you have in the medium-term outlook?

Yes. So no difference in the way we talked about this at the third quarter call. I mean, I think one of the things that we did talk about was within these 3 medium-term outlook cases, we have the case that we phrase is sit on our hands, which is a high-teens case. We then have a case of sit on our hands or high teens, but then you add in the acquisition of Global Blue, which we announced at the time of the Investor Day.

And then if we continue to deploy capital in a manner that's similar to what we've done in the past, we have this third case, which is a case that we feel strongly about because we actually have been able to announce things like Bambora, announce things like the closing of SmartPay, good places to have invested capital in places that we think will generate really attractive returns from.

When you look at those three cases, I think from across the board, we view ourselves as having conviction around those cases. We even gave a kind of a pull forward of the medium-term guidance, a pull forward of an update to the medium-term guidance by disclosing an organic growth figure in the third quarter of year-over-year organic growth of 18%. That actually, in our minds, is a tracker method against the sit on our hands case, and we think it compares favorably. So in summary, I think we feel good about where we're tracking on our medium-term outlook.

That's great, Chris. Thank you so much. And we did leave a few minutes. In case anyone in the audience would like to ask a question, please just raise your hand, and I'll bring you the microphone. Here we go.

Chris. A lot of your competitors are talking about making larger investments within direct sales force. Can you just remind us what your distribution philosophy is? And especially as you buy and acquire these assets, I'm sure they come with their own distribution. How do you synthesize those together and create one organization that's working towards the same direction?

Sure. I'm going to start with a quick clarifier on your question. The phrasing of a lot of our competitors really speaks to one vertical where we're a leader, which is probably, I'm assuming the restaurants vertical. Because when you actually look at our other 3 verticals of leadership, stadiums and entertainment, lodging and now luxury retail, our competitive set within those verticals is much more benign. And it's areas that we are very strong market leaders within.

So if I was to isolate on just the restaurant vertical and take your question of what is essentially the distribution or we'll say, distribution method point of difference. We talk a lot about the idea that within a vertical, we can take an inorganic approach of acquiring a business that has funnel capability or funnel expansion opportunity, capabilities enhancements and it opens up markets.

Once we have that position of an acquisition that gives us those things, within that acquisition, we now have a very unique seat with which to cross-sell our payments capability into. And we might do that with a depreciation of the existing revenue streams, whether they're software, whether they are other fees in exchange for what we believe to be a much stronger form of revenue in payments.

This idea of cross-sell being a component of how we win from a distribution standpoint because we're selling through the position of incumbency and giving more value in integrated payments and likely upgrading the solutions that they're utilizing, that to us is one point of difference. It's not to say we don't use the other methods of distribution as well. We do. We absolutely have a very strong distribution motion that allows us to go out and win in the open market within these industry-leading verticals but at the same time, everything should be adjudicated on relative return for a unit economic dollar deployed, right?

The relative CAC in the cross-sell is superior in our minds to the open market. So when you think about your question of if competitive intensity rises, how does that impact?

Well, actually, it would just tell me that on a relative basis, it's likely that the variance between my unit economic returns and my cross-sell to what's available in the open market probably got even better.

Well said, Chris. Thank you. I think we have time for one more, if anyone would like to jump in. Here we go.

Chris. You guys have done a lot of acquisitions. You talked about how the pipeline for gateway volumes is currently as big as it's ever been. Something that Shift4 has talked about historically is kind of using the carrot and the stick of kind of harvesting that over time. Can you maybe talk about whether this current gateway volume as big as it is, is time to maybe go back to that carrot and stick strategy? Or is there more kind of farming of the top of funnel that you're looking at?

Sure. So let me one clarifier. When we talk about the funnel, we're not just talking about gateway. We're talking about the variations of funnel that come from anything from gateway to point of sale to gift loyalty to tax-free shopping, right? These are all various products that have a unique ability to influence the procurement of payments. That's what makes them really attractive to us because our North Star is about the payments.

From that position, you have to do a very important analysis of what's going to work best within a gateway cross-sell versus a tax-free cross-sell versus a POS cross-sell because they are not created equal and different strategies and depends on the market you're in, like different strategies are going to work well in different permutations of market meets vertical.

So I think if your question is, will you utilize more Carat, more stick? To me, it's a nuanced question that you have to unpack by the situation. But we are utilizing kind of all of the variables that are inside of our playbook, and we have a lot of data to tell us and guide us into what playbook to use at a given time.

Excellent. I want to say again, thank you to Tom and to Chris for being here, a big part of our conference many years in a row. So thanks, guys. It was a pleasure doing this with you, Chris.

Awesome. Thank you very much.

All right. Quick picture and then we're going to go.

All right. Thanks for indulging me on that one.

No, we got to put it up. We're honored that his first fireside chat as CFO, Shift4's new CFO, Chris Cruz, is joining us. Before taking the CFO role, Chris served for nearly a decade on Shift4's Board, following his role at Searchlight Capital Partners majority investment in Shift4. He also brings a deep experience across financial services and fintech. So thank you for joining us.

Yes. Thank you. Thank you for that introduction.

So I must say you hit the ground running on your first inaugural earnings call. I think you did a good job of providing a foundation on how you see the path forward and how you plan to evolve the messaging process. Perhaps for the benefit of the audience, you can give a highlight of the quarter and then what your primary focus areas are for the upcoming year?

Sure. Well, first off, thank you for having me. Like you said, it's always nice to get this -- the first of my fireside chats under the belt. So thank you. I'd say that the highlights for the quarter from our perspective was that we were able to deliver in line kind of the idea that we'll continue to do what we say and have always said that we will do. It was a quarter where we actually pulled forward our update about our medium-term guidance and helped highlight for people that we are in line with the medium-term guidance and that our medium-term guidance outlook remains intact, of which there are many metrics within that medium-term guidance.

But one that's very near and dear to my heart is the potential ability to get to being ahead around the adjusted free cash flow exit rate of $1 billion by 2027. That at the end, I'm a cash is king kind of guy, and I'm intrinsics in that way. But I think that the idea that we were able to affirm around those things and that we continue to do what we say and have said we will do, that's highlight number one. We gave an outlook that I think also was in a narrower range, a guidance that's in line with what we said we would do from a full year guide perspective. And that number two is, I think, something that we're proud of.

I think the third thing that we're really proud of is that the integration around Global Blue, an acquisition that I'm sure we'll talk about and that is a really exciting one for us, is ahead of schedule around a number of the integration fronts and that 2026 for us with Global Blue should be a really exciting one where we finally start to realize some of the value creation on the revenue side of that business. But those are 3 things that come to mind for me as far as important takeaways.

And then I'd be remiss if I didn't say that we also, in this quarter, announced that our Board had authorized a $1 billion share repurchase program, which is about double the size of our prior share repurchase program. So $1 billion relative to what was $500 million expiring at the end of this year.

And that, as capital allocation-minded people, we are eager to kind of execute against that authorization because right now, we're seeing our shares sort of trade lower on a multiple basis than the lowest we've ever procured them in the past. So it's a good balance to the overall equation of what we see organically, of what we see inorganically and then also just how we think about capital allocation in the overall picture of our framework. So those were a few of the highlights.

Wonderful. And as we think about the primary focus areas for this upcoming year, what are they?

Yes. The primary focus area for us is continue this exercise of diversifying and scaling. So I think one of the things that we're really proud of is that without subjecting anyone to a J-curve or an investment curve that might manifest itself through EBITDA margin degradation, we have been able to expand to now covering 6 continents. We're in many geographic new markets, namely in Europe. The underlying product set that we have, we were already leaders in restaurant, lodging, stadiums, entertainment, but to add this luxury retail vertical to it and now have 4 market-leading products, that kind of diversification to us is something we're really proud of. And it's going to remain a focus is really being able to continue fortifying around that diversification. That's one.

Two, I alluded to it, but the opportunity to cross-sell and really start to harvest the value creation from the Global Blue acquisition, that's a really critical and huge value driver this coming year. I would say number three, within that is we look at our market-leading position within restaurants, and there is a lot of opportunity with our SkyTab product set, not only domestically, but we're seeing a huge growth internationally, where the demand for integrated payments, especially for that SMB, it remains unsatiated. And so the opportunity set there is really exciting.

Those are a couple of the kind of focus areas, but I don't think we're going to stay away from our core knitting as well of continuing to find really attractive opportunities to deploy capital on either capabilities enhancements or what we call funnel toppers as a nomenclature that had been used in the past, but ways with which we can be really efficient at growing the customer acquisition opportunity in our way.

Okay. Just taking your products into new markets, can you just talk about sort of what that entails and the message you want investors to walk away regarding this theme?

Yes. So I would say that what we view as an efficient and also disciplined approach to new market entry, and let's use Europe as an example, where we have new markets that are opening for us. Take a market like Germany. What we have there is a place where off of our payment processing capabilities across Europe as a licensed direct member of the card networks and the card schemes, we have the ability to process payments baseline. From there, we then added the layer of using our market-leading position in restaurants, to enter that market with product #1.

So -- but what don't we have in a market like Germany? We don't yet have the market position on lodging that we benefit from in the U.S. market. We certainly don't yet have Bayern Munich as a football club, soccer, American soccer club, and that stadium, where our stadiums and entertainment software and solutions, which you would find in almost 3/4 of the stadiums in America, that's not there. And happily, our luxury shopping -- luxury retail experience from Global Blue, it is there, but it isn't yet in the format of cross-sold with DCC solutions and integrated with our payment product.

So what I would take away is when you look at any of the markets we're expanding into, how many of our market-leading products are present. And when those market-leading products become present, can they get to the levels that we experience from a market share standpoint in one of the most competitive markets in the world in the United States.

And if you can answer that question and believe in that as an underlying pillar of growth, you'll be able to understand why we're so excited about this, right? And it's not just about one trick pony of restaurants or lodging, right? We're looking at expanding. And we've been able to expand to create market-leading positions in verticals, and we don't intend to stop.

We're really judicious about tearing down an industry structure within a vertical, trying to find the most important component that might influence the payment processing cross-sell within that industry and then going after the assets, either organically or inorganically that are going to make that vertical make sense for us.

So notably, we didn't buy a retail POS company, right? That was not what our industry research told us was the teardown way to approach retail. But to have a business that represents an 80% share of tax-free shopping to the most incredible luxury -- global luxury retail brands in the world and then from that position of strength, serves tens of thousands of other SMBs to facilitate a luxury retail tax-free shopping experience, that's unique. That's interesting. And that is embedded deeply within the POS integrated flow and within the payments integrated flow.

So for us, when we did our industry teardown work as it related to specialty retail, we tore it down from specialty to luxury to find that very specific area that was going to be unique, non-commoditized. So that's what I mean -- that's what I'd like people to take away from is think about these market entries and think about our market-leading products in these markets and put that equation together as our organic right to win from a growth standpoint.

So do you think that there's been going to be more of such deals? Do you have to spend money to sort of now grow that business organically? Like how should we think about the path forward in terms of that?

I would say right now, the funnel is obviously a north of $1 trillion funnel for us in terms of payment conversion opportunity. It's the largest it's ever been. Global Blue alone is a $500 billion opportunity, of which 20% of it is SMB. And that $100 billion relative to where we sit today from a volume opportunity is massive in and of itself. So I would say right now, execution is really at the forefront of mind. And if embedded within that question is, do you still see an interesting set of opportunities inorganically to deploy capital? I would look no further than the announcement we made in the quarter.

The ability to carve out a business of a gateway that has $90 billion of volume that we refer to as Bambora, that is right down the fairway of what we do and only deploying $80 million of capital against other capital allocation announcements we've made, such as our $1 billion share repurchase authorization. I hope that you take away from it that we're approaching this with our playbook, but we're also not losing sight of what is the most efficient way to deploy the capital.

So yes, I think there will always be these opportunistic places to make inorganic investments and continue to expand our funnel, but we have plenty to get through with our north of $1 trillion opportunity.

Perfect. I want to touch on something you talked about during earnings. Obviously, as you spoke to, you guys have a pretty diverse platform now across many different industry verticals, but a big one is restaurant and hospitality, and you did talk about choppiness in that market, right? Could you just talk a little bit more about what's driving that? And it seems like it's gone up and down even over the course of the last month or so. So maybe you could just unpack that a little bit and maybe pinpoint sort of what you think is driving that?

Sure. So what we -- we'll start with the context -- what we talked about in the quarter was as a company that has the benefit of very large data assets, we get to see how spending is moving through huge parts of the economy and with very interesting cohorts of people -- of consumers. So we get to see the best Western off the highway, and we get to see the affluent American that can travel to Europe and buy luxury goods. And that concept of seeing the bifurcation is a very unique position to be in.

And when we married what we were seeing in our data, which was a slightly downward skewed set of same-store sales numbers, I think on the call, we talked about it within restaurant and lodging as being a plus 1% same-store sales to a minus 4%, and that's relative to historically, we tend to see things a little more stable at a plus/minus 1% to 2% within the same-store sales end markets. When that started to show itself, we then married it with the appended third-party data that we were seeing from other sources and then triangulating it with the qualitative that we were hearing from everyone from Chipotle to JetBlue to the Fed.

And this narrative of there's a bifurcated consumer, it would seem like the consumer at the low and middle end is starting to pull back. We are seeing elements of that within our own data sets, and it created a cautious tone. Now at the same time, I don't think that should surprise anyone. And in terms of the variables that we can control, we will act on those. So if we know that there's a slightly defensive posture within our same-store sales in some of our end markets, it just means you're allocating capital to the end markets that are less affected, and it means that you're going to emphasize customer acquisition discipline in the places that have more certainty.

What does that translate into? It translates into us having a really high conviction around adjusted EBITDA and certainly around free cash flow conversion. So that's a little bit of what we're seeing and what we're responding to.

Okay. You affirmed your full year guidance with a narrowed range and pointed to the volatility as the basis for the wider range on volumes versus the other guidance KPIs. Does the updated guidance entirely reflect this tempered expectation?

Yes. Our view is that I would have loved to have -- I and we would have loved to have had a narrower range in terms of the low to high on the volume. But I think as we looked at the data and we were looking at some of the volatility of that data, we just thought it was the right message to send that there's a real intentionality to the shape of this and that there is more volatility.

Okay. Good to hear. I think that investors appreciate the disclosures around organic growth, especially the ones in the third quarter. And you talked about that it was tracking to sort of the 18% organic growth. Could you maybe decompose the organic growth into the core building blocks such as market growth, share gains in core verticals and then international exposure?

Sure, sure. So we -- I'll say directionally, right, we don't really deconstruct the building blocks. But I think it's fair to say that right now, in terms of the same-store number that we have disclosed, where we talk a bit about what are the trends we're seeing and how that in our -- in markets like domestic lodging and domestic restaurant, that has been more muted. Where we're seeing huge growth is this new market entry, bearing the benefits of the new market entry and expansion into international markets, that's where we're seeing a massive amount of growth.

I think there's a few data points that all the way down to how many of our SkyTab products are we installing within international markets, those numbers to us are real pride points, 1,300 in the quarter as it relates to our SkyTab counts in terms of new wins is something we talk about.

So when you deconstruct these 2 parts of domestic volumes versus international volumes, I think it's fair to say that we are seeing a really pronounced growth within the international markets. That said, we're also seeing it when you deconstruct some of the underlying verticals. Our luxury retail tax-free shopping business on its own grew 19%. And so those are examples where when you kind of look at the component parts, you'd be hard-pressed to find something in our business that is growing -- that is not growing at double-digit rates, even when you sort of break out the sum of the parts.

Got it. I want to move to like guidance philosophy because it's something you talked about. And you mentioned that there's no change to the guidance philosophy at this point, but you left the door open for there to be a change. So maybe you could talk about how this guidance philosophy could evolve as we move into 2026?

It's a great question, and it's one that as somebody that's been sitting on what I call a bit of a listening tour with investors, with analysts, I clearly appreciate at this point in time why it's such an important topic. And so I want to say 2 things within that topic. One, totally reinforce what you said. There's no intended change in the quarter that we just had, no intended change to anything philosophical. It was a very specific and intentional approach not to change that philosophy.

But in '26, especially now as I enter my 12th week in the seat, and we are deep and steep into developing what is a '26 plan that has a lot of interesting value creation levers within it. I think the idea of trying to be more, we'll say, of a guide philosophy that needs to be acknowledging that there needs -- there could be a revisit to that guidance philosophy, I think that's important.

I say that though, and I also acknowledge that having had a 10-year front row seat to this business alongside a really incredible management team that has benefited from a philosophy that manages the business by setting bold expectations. And even if it means that when you shoot for the moon, you land on a star or maybe the better terminology now, you shoot for Mars and you land on the moon, like if that philosophy has led to a massive amount of growth from a basement start-up to where we are today, you don't want to dramatically change and hurt the culture that approaches things with bold ambitious targets.

So there is this balancing act of a company and its culture and how it sets its targets and how it tries to hit those bold and ambitious targets, and then also acknowledging that there are market dynamics that might favor a different approach to guidance. So in the listening that I'm doing, acknowledging those 2 bookends, it wouldn't shock me if we find ourselves somewhere in between.

That makes sense. I won't push you on that more because I know you don't want to give guidance.

There's plenty of time to talk more about this between now and February.

No, I could, but I won't. Okay. Maybe you could talk about capital priorities going forward post the Global Blue acquisition. Obviously, you guys announced a big share buyback program. There's deleveraging, organic growth, inorganic growth. Maybe just prioritize sort of how you guys are looking at it right now?

Sure. So our capital allocation framework, we've talked about it many times, 4 big component parts: number one, invest in customer acquisition; number two, invest in product and capabilities enhancements; number three, inorganic growth; and number four, more of the share repurchase approach to capital allocation. Unambiguously, share repurchase right now, I think, is the most compelling on a relative value basis to things we see. But nothing is ever absolute. You don't ever approach this 4-part capital allocation model and say, hey, if there's a great opportunity to tuck in a gateway conversion at a really attractive value, you don't say no to that. The market gives you that opportunity when it wants to give you that opportunity.

Expanding into international markets, which really is an investment in customer acquisition by another name, right, going into these new places in order to be able to bring market-leading solutions, you don't stop doing that because you think the valuation in your shares is interesting. So I would say right now, we are firing on all 4 cylinders where we did make an announcement in the third quarter about Bambora, where we continue to invest. If you looked at our cap software to revenue, it's only risen over time. So we don't underinvest in technology. We don't underinvest in platform. We don't have catch-up CapEx dynamics.

And if you look at customer acquisition, we approach things with a mentality that our funnel is the widest it's ever been. We're in the most markets we've ever been, and we need to bring these market-leading solutions into those geographic regions. So we are going to do all 4, but it is really hard for me not -- it's really hard for me right now to ignore where we sit within our repurchase opportunity.

And can we just talk about how quickly you could expand the $1 billion? Like what's the time line?

I think of it as investing as opposed to spending, just to kind of put that finer point on it.

Deploy. All right. Okay.

Deploying, that might be another good term. But I would say Look, there's -- we don't want to guide to a pace. We don't want to guide around exactly what we're doing within it. I think the easy way to describe it right now is, since the valuation is below the lowest we've ever acquired the stock, and I hope all of the ways with which we've been conveying it would suggest that we want to be actively executing against this.

When you think about a couple of the other things that I said on the call, we today are sitting at an LTM pro forma net leverage of 3.2x. Generally, as a general matter, as a guidance matter, we do not want to have leverage be sustainably above 3.75x. So if you thought about a 0.5x, right? If you thought about what that means, that alone, that's $0.5 billion. And so you sort of have a few things out there that could give some visibility into what is in our capacity.

But at the same time, too, we are going to be looking at the continued valuation and be opportunistic there. And we're going to look at not necessarily wanting to always have a bit of a measured approach within this because historically, we've repurchased shares almost every quarter. It's really important to us as having an owner's mentality to be as absolutely dilution neutral as we can be. So dilution neutral to SBC, dilution neutral to other areas. I mean, we are looking at EPS and free cash flow per share as important metrics for any one of us that is thinking with an owner -- a long-term owner's mentality.

Great. I want to touch on free cash flow. You've guided to 50% plus adjusted free cash flow conversion. What are the primary levers that drive this metric higher towards your long-term goal of $1 billion?

Sure. So I would say absolute growth is going to be the #1 biggest driver for us. We have a business that this year will do almost $0.5 billion of adjusted free cash flow. And in the quarter we just announced, obviously, sitting north of $140 million and quite proud of our ability to continue free cash flow conversion even at a high 40s rate at a time when our interest expense is really still coming -- is at the highest level it's been, right, from the perspective that our capital structure today is the capital structure that accommodated the closure of the Global Blue transaction on July 3.

So when you think about where we sit from an interest expense standpoint, we are -- and thinking about the seasonality of interest expense, Q3 of this year might be the highest interest expense you would expect to see. So when you think about how many points of free cash flow conversion that impacts, if you go year-over-year, we had like an 8-point swing in free cash flow conversion on simply interest expense alone.

So you look at our pace of deleveraging or you look at our growth outlook, and I imagine that by the time we get to exit rate '27, one of the biggest step function changes within free cash flow conversion would simply be the mathematical reduction in interest.

Now if we find ourselves with interesting opportunities to deploy that capital, let's say, inorganically, we're certainly only going to do it with free cash flow accretion. We're going to have an eye towards free cash flow accretion in mind. So what does that mean? Well, again, hold us to the standard of what you've just seen. Q3 was the closure of a large acquisition and taking on capital structure that now had a higher cash interest expense. On a year-over-year basis, we still grew adjusted free cash flow dollars.

So I think we are disciplined in how we think about cash flow accretion. And I think whether you want to assume we are deleveraging and put that into the model or whether you want to look at our historical track record of having deployed capital and still be able to be accretive to free cash flow generation, I think both of those things kind of fit within the model.

But for simple math, if you model it out and just say, I'm going to run the business out from here, I'm not going to assume deployments. What you will see in your model is that you're going to see a large step function change in free cash flow conversion points simply from deleveraging. And then you add the growth on top of that, and you'll end up with a conversion metric that I think is very achievable.

Okay. Great. I want to kind of summarize all of these lines of questionings into the stock. Okay, right, which is I think the game plan for you to get stock -- for the firm to get the stock back on track is number one, obviously, refining the messaging and ensuring that the targets are aligned with sort of how the Street is thinking about it.

You want the Street to sort of understand what you guys are doing in terms of expanding and growing the business, especially internationally, where there's been a lot of movement, especially with Global Blue and sort of questioning of what that acquisition brings and how that -- and I have a line of questioning on Global Blue, but I want to make sure this point is hit.

And then obviously, capital management and putting your money where your mouth is and buying back stock. Like is there anything I'm missing?

Well, those are your statements, but I would say that I think those are all important value drivers for sure. I think we do believe, though, that a big thing that's missed about our business is just fundamental durability of growth. I genuinely believe that we have demonstrated our ability to consistently grow the business at high rates this idea that we put out a medium-term guidance that has -- I don't necessarily love the terminology, but sit on our hands case of high teens with Global Blue, mid-20s and then north of that, if we continue to deploy capital and do what we've historically done, find attractive ways to generate returns on capital deployed. If we do all of that, we should be a business that can grow in the mid- to high 20s according to those medium-term guides.

But even if you said, okay, all you're going to do is your organic case of being a high teens growing business, I struggle with the model folks are building that would somehow suggest there's any data points that would suggest we're doing something less. And if we are that, then I would say this question mark around durability of growth, which from my investor lens, should manifest itself in a growth-adjusted multiple greater than 1, because it has durability and it has visibility would tell you that our underlying valuation multiple is either wrong or that there's huge question marks that we really have to help close the gap on around durability of growth. But between those 2, that's probably the only other one I'd add.

Yes. Good. That's very clear. But maybe we can just dig a little bit deeper into because I do think Global Blue is a really instrumental part of the story on a go-forward basis, as you indicated. Maybe you could just talk about sort of your -- the early read on Global Blue. You've had some choppiness in Asia Pacific, for example. Was that sort of unforeseen? Or is that just normal course of business?

I would say it was foreseeable, but modeling it was difficult because of the absolute magnitude of the numbers. So for the context point around this, Global Blue has measures there, we'll call it, GMV or volume metric in what's called sales in-store. That sales in-store metric within Asia Pacific, so within the Asia Pacific region was a minus 11% for the quarter. And the European region, which is the majority of the business, was a plus 13%. That translated into a global sales in store of a plus 5%.

So let's unpack the minus 11%. Within Asia Pacific, you're talking about the Japan market. Within the Japan market, what you're really talking about is an issue where Japan was anniversary-ing a comp that was north of 100% -- and so it's less about was it foreseeable that it was going to be off that 100% comp? Yes. Modeling that was really, really difficult.

And when we were starting to see certain weeks that were performing off plan, we got a little bit nervous and started to think about, well, what about this is understood? And what about this should be understood more transparently to our constituents. And I think that's where the Asia Pacific story really narrows. Now everything is normalized, and now we are back to -- we've anniversaried that heightened level of comp set, and now we're at a place where we're seeing a very stable business, but isolated.

So then let's bring it back, though. Where does that fit within the larger scheme of things in terms of what we're trying to drive value creation around -- to us, Yes, that was an event that happened. But the biggest value creation for us is about the payment cross-sell. The business still grew 19% revenues year-over-year. The business still grew global sales at a 5% variable. So yes, it has its anomalies within its portfolio, but it's still a good business. And our biggest opportunity is to go and tackle a $500 billion cross-sell, $100 billion of which is SMB, where in the end, we are displacing an unintegrated bank processor. That is something we've had a great deal of success doing in the markets where we're already leaders.

Perfect. And that 19% that you mentioned, how do you think it sort of tracks into 2026 and long term?

Yes. So, again, I don't want to give guidance around how we view any one subcomponent of the business or especially for the Global Blue business. But I would say that the idea of Global Blue having been a public company before and having had medium-term outlook in the past is something that I think is a relevant data point, right? I think in the past, as a public company, they've provided medium-term outlooks themselves that were kind of in the low to mid-double digits of growth. And I think that's relevant. I think structurally, the business has that ability.

I think what's fundamentally missing from all of that is the Shift4 component of delivering on a conversion opportunity that's led through a real product point of difference. And when I say that, I mean, we're talking about today a tax-free shopping experience that, for the most part, is not as deeply integrated into a point-of-sale system and certainly is not integrated into the payment processing flow in a way that one would expect.

When you go into the enterprise of a Louis Vuitton, you will feel and see an experience that's totally integrated. But in the vast majority of the business, the tens of thousands of SMBs in Europe, that's not the version of the experience you see. That is a complex payment checkout with a bad sales associate experience and a bad consumer experience. And this is our jam. I mean simplify payment complexity. That is what we do. So that's the part of the business that I think is missing from that guidance -- that would have been missing from that historical stand-alone Global Blue public company guidance.

So as we think about the next 12 months, what can we expect in terms of progression against those goals?

So I think the big thing you're going to hear a lot about from us is the underlying progress of, first, getting out of beta and actually being live and starting to have real wins of customers that are using what we're going to refer to as this 3-in-1 payment experience where you can do payments, dynamic currency conversion and tax-free shopping all in a single device, even at an SMB, that's a really important milestone.

Once you get out of that milestone, it's about the go-lives, and it's about the progress that we're making with the for lack of a better term, the logo wins, the cover pages, the things that we have done to demonstrate our continued momentum in all of our other verticals, that's what you should start to see. Baltimore Ravens gets now supplemented by a luxury retail page that starts to show those wins. And it should manifest itself in our gross revenue less network fees numbers. All of the KPIs, it should manifest itself there. And as it comes through in '26, all of it then becomes really important anniversary-ing in building blocks as it becomes full year effected for '27.

Got it. How macro sensitive is Global Blue's business?

So I would say as a stand-alone business that is exposed to, we'll say, an upper income individual that has the means to travel for luxury goods, it has certainly its sensitivities. Those sensitivities seem to be quite durable right now and are a very interesting portfolio balance to other sensitivities that we at Shift4 have. That's statement one.

I'd say statement two, the elasticity of demand for that consumer is affected by things like the relative FX. And this is something that we tried to talk about within our shareholder materials because I think it was lost on some people. A soft U.S. dollar relative to the euro might have a positive effect on financial translation within our statements, but we are not rooting for that by any stretch of the imagination. Strong U.S. dollar to power the demand of that consumer to go abroad and purchase those goods and transact in those tax-free shopping ways, that far outweighs any financial translation benefit that we have.

So even though there were questions in the quarter about what was the benefit of financial translation, we look at it more as it was a detriment because it chilled and cooled demand. We're now seeing the reversion of that or we're seeing actually an improvement of that right now.

So I would say that, that's the other variable that we pay attention to. And if we thought we were a big data business, Global Blue's data assets are insane. I mean the ability to understand ticket level POS integrations to consumers across cohorts. I mean they are excellent at it. They're so good at their data set, data analysis, data assets, regressing impacts of FX, they actually are a really important consultant constituent to the luxury brands themselves. The brands pay for the data.

All right. I have one more before I see if anyone in the audience has questions. The 5% same-store sales number that you gave.

The sales in-store, yes.

In-store. Like what's a good growth rate for that business in terms of same-store sales on a go-forward basis?

So I'm not a luxury retail expert yet. But when you look at the underlying driver of luxury retail and the inflationary model that's baked into it, it's pretty enviable what they are allowed to do in terms of embedded inflation into core average selling prices. It's well north of a mid-single digit. That variable is structural within luxury.

What I don't have as an offset, which is more going to move, not as a durable movement, but rather it will move in a cycle is that, that demand that I just talked about can be affected by both FX and it can be affected by, we'll say, the perceptions of wealth effect that the high net worth is feeling.

So I think of take the luxury retail number of structural inflation in sales and then we'll say, offset it by some of these other, we'll say, macro drivers. And I think you're probably a little bit north of where they delivered this quarter.

Got it. Perfect. I'm sorry, we've run out of time audience, but thank you, Chris. Really appreciate it.

All right. Thank you. Appreciate it.

Greetings, and welcome to the Shift4 Q3 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

On today's call, we have Taylor Lauber, CEO; and Christopher N. Cruz, CFO. It is now my pleasure to introduce your host, Tom McCrohan, Head of Investor Relations. Thank you, Tom. You may begin.

Thank you, operator, and good morning, everyone, and welcome to Shift4's Third Quarter 2025 Earnings Conference Call. With me on the call today are Taylor Lauber, our CEO; and Chris Cruz, our Chief Financial Officer. This call is being webcast on the Investor Relations section of our website, which can be found at investors.shift4.com. .

Today's call is also being simulcast on X Spaces, which can be accessed through our corporate X account at Shift4. Our quarterly shareholder letter, quarterly financial results and other materials related to our quarterly results have all been posted to our IR website. Our call and earnings materials today include forward-looking statements. These statements are not guarantees of future performance, and our actual results could differ materially as a result of certain risks, uncertainties and many important factors. Additional information concerning those factors is available in our most recent reports on Forms 10-K and 10-Q, which you can find on the SEC's website and the Investor Relations section of our corporate website. For any non-GAAP financial information discussed on this call, the related GAAP measures and reconciliations are available in today's quarterly shareholder letter.

With that, let me turn the call over to Taylor. Taylor?

Good morning, everyone. Thanks for joining the call. Starting with our quarterly performance, we delivered results in line with our Q3 guidance. Gross revenue less network fees were $589 million, and adjusted EBITDA was $292 million. Each of these was up 61% and 56%, respectively. When excluding the impact of Global Blue, gross revenue less network fees grew 19% year-over-year. You will find in our shareholder letter that we also highlight the organic growth of the business, that is to say excluding the impact of recent M&A. Chris will go into more detail here, but that growth was 18% year-over-year.

Volumes were in line with our expectations at roughly $55 billion. Each of these growth scenarios can be compared with the medium-term guidance we set forth in our Investor Day in February, and we've also done so in our shareholder letter. You will note that the high teens sit on our hands case compares favorably with 19% delivered in this quarter, while the inclusion of Global Blue obviously brings things notably higher. Furthermore, we continue to find attractive capital allocation opportunities, which supports our most likely case of 30%-plus gross revenue less network fee growth over the medium term. Chris will walk you through our adjusted free cash flow, but while early, we're also feeling ahead of pace for our $1 billion target.

Some notable puts and takes in the quarter. Our blended spreads on payment volume were stable at 62 basis points, and we expect them to remain so through the end of the year. Tax-free shopping had some tough comparables, particularly in Asia as a result of a particularly weak Japanese yen last summer. Sales in store were negative 11% in Asia during Q3, but recovered throughout the quarter and were positive in October. Separately, in the U.S., the last 2 weeks of September and the subsequent weeks of October presented more same-store sales volatility than we've seen in prior periods. While not consistent across verticals, same-store sales have generally skewed negative to our expectations. To put a finer point on it, we saw same-store sales, whether that be restaurants or hospitality, range from positive 1% to negative 4% with meaningful volatility week to week.

While not immune from the broader economy, our deliberate and balanced transformation over the past several years does mean we are more diversified and scale, both geographically and by industry than at any point in our history. We also continue to add lots of high-quality customers, as I mentioned above. And we continue to complement our growth with massive payments cross-sell funnel, which becomes increasingly attractive during times of economic uncertainty. The competitive landscape has been a topic of serious debate among investors throughout the last few months.

While I can imagine it's tricky to aggregate all of the various data, we would like to reiterate that the competitive landscape from our perspective has been unchanged for quite some time. We are the #1 in hotels in the U.S. We are the #1 in stadiums, and we are the #2 in restaurants but with a large TAM and a clear differentiation in both our strategy and product focus. We are only just beginning to bring these products all over the world where there isn't a clear market leader for any of these verticals. Global Blue also puts us as an undisputed category leader in luxury retail global.

And with regard to Global Blue, this is our first quarter since closing the transaction in early July. This business brings both an industry-leading product for luxury retail and also an extensive two-sided network consisting of the best luxury brands around the globe and the high net worth shoppers that frequent them. They are also deeply embedded in the commerce experience at the store, presenting natural synergies for payments. Sales in store at Global Blue were 5% above the prior year, with Europe growing 13% and Asia being negative 11% for the reasons that I mentioned earlier. We're reasonably happy with these results considering the negative impact currency has played throughout the year. These results are also before any synergies from business combination. You will find the detailed summary of Global Blue's performance, in our shareholder letter.

And from an integration perspective, we are on track with previously discussed plants. Our 3-in-1 payment terminal for payments, currency conversion and VAT refund eligibility detection is in beta. We also highlighted several Australian hotel payment wins in our shareholder letter distributed this morning. Of note, all the hotels mentioned are owned by Accor, the largest hotel operator in Australia and New Zealand and also a very large hotel operator globally.

The Australian hotel wins represent an early proof point to our strategy to take our industry-leading products into new geographies and markets around the world is working. In restaurants, we're proud to welcome Nobu, but also signed thousands of other restaurants this quarter across Canada, the U.K., Ireland and Germany and with our international production improving to over 1,300 merchants signed each month. In hospitality, we won Hyatt Vacation Club and will power payments for their over 20 resort properties around the globe. In Sports and Entertainment, we signed the Cincinnati Bengals, Clemson University, North Carolina, State Rocket University and Syracuse University, that 1 was for you, Jordan.

Lastly, we'd like to point out the opportunities that can seem unique, but are a function of the platform effect of constantly adding integrations relevant for our other customers. To that end, we signed Hertz and will power payments across 60 of Hertz rental car locations. Our presence in nonprofits continues to grow as well, evidenced by the dozens of nonprofits attracted to our platform each quarter as well as the and off-ramp services for many crypto and Stablecoin platforms such as Stellar and Plasma.

As has been the case each quarter, these are just a few of what we've highlighted in our materials, even a smaller fraction of what we've actually onboarded. We are delivering these impressive wins while relentlessly streamlining our operations. And in that regard, as many of you know, we take the leading the parts very seriously in our M&A and integration approach. We made multiple small divestitures, most notably acardo, which is a couponing business owned by Vectron for $34 million.

These sales remove noncore business lines and help keep our laser focus on revenue synergy opportunities. We also closed SmartPay this week. As previously mentioned, this provides us with an existing and proven distribution channel to sign restaurants, hotels and stadiums in Australia and New Zealand. By equipping a proven team with industry-leading products like we have, we can be highly confident in the success of their go-to-market.

The combination of these 2 events are roughly neutral, meaning the divestitures and the acquisition of SmartPay and their contribution to the remainder of the year, but both were important operational milestones. Lastly, we agreed to acquire Bambora, otherwise known as Worldline North America. While I'm sure many of you would like to see us slow down, the opportunity presented by a $90 billion payment gateway was something we would not ignore. A core competency of our business and team is to constantly seek out interesting technologies, great customers and excellent talent.

Those of you who know our track record of executing on gateway conversions and other synergies can appreciate why this makes so much sense. We expect that transaction to close in Q1 of '26 and are encouraged by our pipeline of opportunities. I wouldn't be able to discuss capital allocation without the notable dislocation in our own valuation despite the continued performance and numerous opportunities we see ahead.

In short, our own equity is one of the more attractive opportunities we see. And with expanding cash flows and accelerated deleveraging, we simply can't ignore it. To that end, our Board has authorized the new $1 billion stock repurchase program, which is the largest in our history. We will be implementing a plan to purchase at what we view as highly attractive levels right away.

And with that, I'll turn it over to Chris for his first earnings call. Welcome aboard.

Thank you, Taylor. We delivered another quarter of consistent results that set new third quarter records across all of our key performance indicators. Volume grew 26% year-over-year to $55 billion. Gross revenue less network fees grew 61% to $589 million. Adjusted EBITDA grew 56% to $292 million, and our adjusted free cash flow conversion was 48%, resulting in $141 million of adjusted free cash flow. Our Q3 adjusted EBITDA margins continued to deliver in line with our expectations of approximately 50% in spite of the continued expansion investments we are making to become the most diversified and scaled that the business has ever been in its history.

Double-clicking on our revenue categories. Our Q3 blended net spreads remained stable at 62 basis points, and we continue to expect full year spreads to be stronger than the 60 basis points previously communicated. This stability extends across our verticals of restaurants, hospitality and unified commerce. Subscription and other revenue was $119 million in Q3, up 16% compared to the same period last year. The growth continues to come from our market-leading vertical software solutions. However, as solid as this growth continues to be, we remain focused on deleting the parts and deprecating legacy revenue streams from acquired companies in favor of what we believe to be higher quality of revenue. This dedication to strategy will continue to influence year-over-year growth rates.

As Taylor mentioned in his remarks about the medium-term guidance update, Q3 organic growth for gross revenue less network fees was 18% Organic year-over-year growth of 18% compares the performance of the base business by removing newly acquired revenue from both the Q3 2024 period and the Q3 2025 period. It's also worth noting that these disclosures related to updates about our medium-term guidance would have been done next quarter at year-end. But based on recent industry events, we wanted to be proactive about pulling forward these disclosures, including that of organic growth for you all.

Since the third quarter of 2022, we have grown gross revenue less network fees by 3x, expanded adjusted EBITDA margins by 600 basis points and achieved the balanced transformation of becoming a more diversified and globally scaled provider of software integrated payments. Through continued execution on cross-sell value creation and our delete the parts approach, we expect to maintain disciplined focus on margins and benefit from the operating leverage in our business. An example of the Shift4 playbook at work is the deleting of legacy parts through divestitures.

Additionally, and although early, we are encouraged by the potential of AI applications to enhance our operating leverage across operations and product development while enhancing our own ability to drive decisions informed by our large data assets. As it relates to Global Blue, we wanted to provide a more clear breakout this quarter given its new inclusion in results. Global Blue contributed $156 million to gross revenue less network fees and $68 million to EBITDA, which were in line with our overall expectations despite headwinds faced by the business in the Asia Pacific market.

Additionally, the subcomponents of Global Blue, consisting of: one, tax-free shopping, acquiring and dynamic currency conversion will be reported within payments-based revenue, while the post-purchase solutions subcomponent will be reported in subscription and other. As you can appreciate, we expect these breakouts to be less relevant over time as we cross-sell products to customers and bring on customers using multiple products.

Our adjusted free cash flow in the quarter was a record $141 million, which modestly exceeded our expectations given our third quarter, along with our first quarter, are the higher cash interest expense periods in the year. As you get to know me more, it should come as no surprise that I believe that the ultimate measure of business durability is compounding growth in free cash flow per share. So I'm particularly enthused by the progress of this metric, especially as a jumping off point towards our medium-term guidance goal of exiting 2027 with $1 billion of run rate adjusted free cash flow. GAAP net income for the third quarter was approximately $33 million, resulting in diluted EPS of $0.17 per share.

Non-GAAP net income for the quarter was approximately $148 million, resulting in a non-GAAP EPS of $1.47 per share. Note that the latter EPS metric uses our non-GAAP share count of 100.7 million shares, which increases share count by 10 million shares to treat the mandatory convertible preferred on an as-converted basis. On debt capital structure, we are in the enviable position of being efficiently tranched with all debt trading above par, resulting in access to attractive cost of capital in multiple deep markets.

As of Q3, our net leverage pro forma for the full year effect of Global Blue was 3.2x, with notable deleveraging achieved quarter-over-quarter that resulted in our newly issued term loan already stepping down by 25 basis points of cost. I will take this opportunity to make clear that our leverage guidance remains unchanged with a view that the business should not seek -- should not exceed 3.75x net leverage on a sustained basis.

With the company's current share repurchase authorization coming up for expiration at year-end, the Board has authorized a new share repurchase program of $1 billion through year-end 2026. This authorization level is the largest in the company's history and comes at a time when we have ample liquidity and access to capital to execute upon it.

As a reminder, our capital allocation framework judiciously assesses relative value across 4 areas: one, customer acquisition; two, product investment; three, acquisitions and investments; and four, share repurchases. As we evaluate how the current market backdrop compares to historical periods of share repurchase execution, we think it notable that valuation multiples at present would be comparable to the lowest we have executed repurchases in the past.

Further, as stated before, the company is the most diversified and scaled it has ever been in history and is generating record results across all key performance metrics. At the same time, the business is delivering growing levels of adjusted free cash flow that continue to require reinvestment. Although we believe that any 1 of our 4 categories of capital allocation opportunities would generate accretive returns, it is hard for us to ignore the relative attractiveness of the trading level of our common shares on an absolute basis, but particularly on a growth-adjusted basis.

As someone that has invested in this business multiple times over the past decade, I am eager to make immediate progress against this new $1 billion authorization to enhance long-term shareholder value. Now for guidance. For full year 2025, we are reaffirming guidance within a narrowed range. We now expect volume to range from $207 billion to $210 billion, representing 26% to 27% year-over-year growth. For gross revenue less network fees, we now expect the range to be $1.98 billion to $2.02 billion, representing 46% to 49% year-over-year growth. And for adjusted EBITDA, we now expect the range to be $970 million to $985 million, representing 43% to 45% year-over-year growth. We are affirming our adjusted free cash flow conversion expectation of plus 50%.

Within this guidance, our view on Global Blue's contribution remains unchanged as the business does have a seasonally higher calendar third quarter versus its fourth quarter. Also, we wanted to point out that even though these are now narrower ranges to our prior guidance, there is an intentional shape to the relative ranges. The implied fourth quarter range in volume is approximately 5% from low to high, while the same range in gross revenue less network fees is slightly less and in adjusted EBITDA, this range is 4%.

The intent here is that we believe a wider range of outcomes is prudent based on the uncertainty we are observing in macro and industry conditions. While at the same time, for a metric like adjusted EBITDA, there is more in our control and demonstrates our commitment to execution. In summary, after taking into consideration an essentially neutral impact from the acquisition of SmartPay and the offsetting reduction from noncore divestitures, our full year 2025 guidance is reaffirmed within a narrowed range.

One last item. In response to inquiries about gross revenue, recall that we do not formally guide this metric. However, we expect a gross revenue range of $4.09 billion to $4.15 billion for the full year.

Before passing back to Taylor, I did want to take a moment to express my sincere gratitude to my CFO, predecessor and now Board member, Nancy Disman, for the transition support, mentorship and fantastic finance foundation she has established. You will be missed by the team, but I'm certainly thankful to continue to have you on Speed Dial.

With that, let me now turn the call back to Taylor.

Thanks, Chris. Before we go to Q&A, some of you may have seen the exciting news that our Founder and Chairman, Jared, has been nominated to run NASA. Again, we're going to be updating you as things progress. But just to be clear, we don't expect really anything is going to change from our previously disclosed plans. He intends to remain the largest shareholder of the business. And so we wish him well, and we're really excited for the road ahead.

With that, we're going to turn it over to Q&A. But Tom, I think you had a question we were going to address from X.

Yes. So the question from X this quarter comes from Dor Bard. And his question is, where is the company's primary focus right now? Are you edge down on integrating and cross-selling into the $1 trillion acquisition funnel? Or are you simultaneously investing heavily in net new product development?

Yes, it's a great question. And the answer to both of those is yes. So hopefully, you can sense the theme for this quarter is a reminder of what we always do, which is that we take our category-leading products and we find as many customers as possible to get those in the hands of in as capital efficient of a way as possible. And so whether that is leveraging capabilities like the sales force that SmartPay brings us into Australia or the distribution network and existing customer base that Vectron gives us in Germany, taking our products into these new geographies with an embedded right to win like an established sales force or an existing customer base is always a significant priority for the business.

And with that, operator, if you wouldn't mind opening the line up to Q&A.

[Operator Instructions] Our first question comes from the line of Dan Dolev with Mizuho.

Great results, Taylor, and congrats on the new CFO role. My question is for you, Taylor. What are the implications of Jared getting nominated to NASA? I think a lot of people are interested in that and great results again.

Yes, sure. Thanks for the question. Good to hear from you. Well, first of all, it's great for the country. The ambition that we've seen inside our walls for 26 years really has always deserved a bigger stage. So I think it's a phenomenal thing for the country. Now with regard to the company specifically, it's likely to simplify our structure quite meaningfully. So if you recall from the ethics agreement that he executed back earlier in the year, he is not required to divest the stock, but he will be relinquishing the super votes associated with his shares.

So it likely means to collapse down to a single share class, which I know a lot of investors will appreciate and simplifying our TRA structure. So I want to reiterate, he intends to remain the largest shareholder of the business. This is something he feels passionately about, but I think it will simplify our share structure when it's completed.

Our next question comes from the line of Timothy Chiodo with UBS.

Again, Chris, good to be working with you here. I want to hit 2 things. First one on Bambora and then if you don't mind, a brief follow-up around Q4 end-to-end volumes. So on Bambora, let's hit that one first. So $90 billion of gateway opportunity. And I just think back to the time of the IPO and the gateway opportunity back then was $200 billion, and it seems so large. And here we go adding another $90 billion. So I was just hoping you could add a little bit more context around that $90 billion and what's in there in terms of verticals and how other parts of Shift4 and some of the learnings from prior gateway conversions might help to make this gateway conversion a very successful one. And then I'll follow up on the numbers after.

Sounds great. I'll hit this one. And you hit the nail on the head, Tim, which is this is textbook Shift4. It is a good technology product with a really captive base of customers and $90-odd billion of volume. Now as also is the case, the volume varies from some of the other verticals we serve. There's some business services in there. There's a few different flavors. So it's probably inappropriate to take one gateway and apply it to the next and apply it to the next. But we feel really strongly that this asset, the sticky customers, many of which have been on it for 20-plus years, will benefit from a consolidated payment solution. This has not been a huge priority for that business for a period of time.

On top of that, there's a lot of transparency in this one, which I think behooves us all given the skepticism around M&A in our industry. It is widely understood what Ingenico had paid for that business years ago and what we're paying for it now, which is fractions -- significant fractions of that. It is clearly telegraphed by Worldline what the contribution of the business is, and then we get to take that and enact a bunch of revenue synergies. Now there are also some capabilities. It's like one of the larger ACH providers in the country. So there's some capabilities we're going to get from it as well and more talent, which we always need more of. So very textbook shift forward and something we literally train ourselves to be on the lookout for opportunities like this all the time.

Yes. And one, thanks, Tim, for the congrats. But on Bambora, the other thing that I think is a really interesting way to frame the attractiveness of it is to look at how many of the capital allocation framework boxes it checks on its own. I mean in and of itself, you can think about the gateway volume potential as a large expansion in customer acquisition potential. You can look at the ACH EFT component as product and capabilities enhancement. And then, of course, in and of itself, I think it's a continued reflection of a disciplined approach to making acquisitions and investments. So that's just one other thing that I think is worth noting and is something I'm enthusiastic about with that transaction.

Excellent. And the minor -- the numbers follow-up. So implied for Q4 in terms of the end-to-end volume, you mentioned a range there. But on an absolute dollar basis, it's roughly $57 billion to $60 billion. And just clarifying, there's roughly -- I think it's slightly less than $1 billion or so a quarter in there from Global Blue acquiring business, and then there's another something in that range, maybe slightly less than $1 billion as well from the couple of months of SmartPay. But when we add up those numbers on an absolute basis, is it reasonable for investors to think about taking that $57 million to $60 million, annualizing it or multiplying by 4, adding on some conversion, some new production, thinking about same-store sales and churn, but reasonable jumping off point to model out 2026 end-to-end volume expectations.

Yes. I think from the perspective of is that -- is it reflective of a jumping off point, putting aside kind of like minor nuances and seasonality that's changing a little bit in the business, I think it actually is a reasonable jumping off point, reflective of kind of the run rate shape of the business. So I think you articulated it well.

Our next question comes from the line of Jason Kupferberg with Wells Fargo.

Thanks for all the new disclosures. And I wanted to just start on organic growth. I know you were 18% there in Q3, obviously, very consistent with the medium-term Investor Day target. But I think we were trending a bit above that in the first half of the year. Maybe you can clarify that. And then just give us a view on Q4 organic top line growth, just trying to piece together how the current year is coming together because I know we've been targeting 20% plus from a full year perspective.

Thanks. So I think the -- so one thing I just wanted to clarify off the top, and hopefully, it didn't get lost in sort of the prepared remarks was that some of the disclosures really are as a result of an update to the medium-term guidance, which we would have realistically planned for the year-end. But we, given industry events, decided it was prudent to be proactive and pull some of these things forward. And so I just wanted to make sure I reiterated that point.

Look, I think on the organic growth, the idea that we have a growth that's on a gross revenue less network fee basis in line with our -- I think the way we've articulated it in the past is the sit on our hands case would signal the consistency of the business. From that perspective, I think we're sort of in line with what we had guided to as far as that case and that medium-term guidance.

Yes. And just with regard to the full year, I think -- and Chris characterized this well in his remarks, there is caution. Our ranges give us an outcome of greater than 20% down to below that. And I think that's just prudent. The same-store sales environment has been quite volatile. And I don't mean that as persistently negative or anything else. tried to characterize that in my prepared remarks as well. So yes, it's still within our guidance range, but we want to be prudent. We want to give, obviously, the in-quarter disclosure as well.

Okay. No, that's helpful. And then just a follow-up on Global Blue. Those slides were really helpful Al. I think you had the volumes up 5% in Q3. Just curious how that's been trending quarter-to-date, what you've assumed for Q4 there? And then anything you can tell us just in terms of what the year-over-year Global Blue growth was in GRL&F as well as adjusted EBITDA. I know you gave us, obviously, the Q3 '25 actuals.

Yes, sure. So I'll start with the performance of the business has been strong despite volatility. So that's really encouraging. And Chris can keep you honest here, but the year-over-year growth of their revenue was about 19%. So a phenomenal business. I think we tried to point this out at the time of the acquisition. In terms of the sales in store, which is the tax-free shopping segment of their business, what you saw was a combination of reasonable strength in Europe.

Now keep in mind, Europe generates more revenue per sale in store than Asia, but also a pretty significant headwind in Asia. So there were a confluence of factors back in the summer of '24 that made Chinese shopping in Japan particularly strong. And so comping that was going to be quite difficult, and that's why you have that negative. So the blend of 5 is something we're reasonably content with. Also keep in mind, and we tried to just kind of illustrate this. When the dollar depreciates and the Chinese currency depreciates, that is really hard on the business because the shoppers spend less. And so while there's a little bit of translation benefit, it is not a positive for the business when the dollar depreciates.

I wanted to clarify that point as well. So awesome business dealing with volatility in their end markets and dealing with it quite nicely and growing strong on a year-over-year basis before we enact any synergies, which is phenomenal.

Our next question comes from the line of Darrin Peller with Wolfe Research.

I know there were some headwinds in the quarter, whether it be the discussion you had around the currency dynamics in Global Blue or same-store sales you called out or even some faster conversions of software, yet you came in roughly in line with your guide. And so maybe just help us understand what you saw that made up for that shortfall and if those trends are sustainable going forward or outperformance trends. And then, Chris, first of all, congrats again. But when I think about guidance, there's been a few quarters of volatility around your guide. So just help us understand your philosophy to build up from a guide standpoint going forward, what we should think about from a conservatism, how you think about it that way versus being more in line or anything else you can provide?

Yes. So I'll start with that, and then Chris can hit the guidance philosophy. With regard to things that we were pleased with during the quarter, customer adds is something we're particularly pleased with. The pace of international adds is something we're particularly pleased with. So the shopping trends that I mentioned in reaction to Jason's call was something we were particularly leery of.

Quite frankly, predicting where that would land was almost a fool's errand given how strong the success was of Chinese shopping in Japan back in the '24 period. So -- but maybe just to balance it out, and I made this comment in my prepared remarks, growth in CIS in Asia has grown to positive again on a year-over-year basis in the most recent month of October. So things are going well on that front. It remains somewhat tricky to predict where travelers are going to shop, and there are significant countries and weightings to that. So we're going to continue to get better at that. But Chris, do you want to hit the...

Yes. Well, actually, I'll just add on to one point around that is in some of the variables that we saw through the quarter that were changing, I think Taylor in his prepared remarks highlighted the note that if you were to look at some of the week-to-week trends that we were seeing within same-store sales in some of our verticals, you could end up seeing like a plus 1% to a minus 4%. And those kinds of volatile -- that kind of volatility was something that we were trying to react to throughout the quarter.

You add to that the topic that we've now talked about a couple of times already around balancing out European strength for Global Blue sales in store in the tax-free segment, offset by what looked like a pretty tough headwind in Asia Pacific. And you just had a few moving parts that I think warranted caution going into that period. At the same time, the backdrop was one where certainly from a macro data, certainly from an industry data, from data points we were seeing throughout, it was enough to want to make sure that we were expressing caution. So a lot of data points to take in.

At the same time, I think we have the most data we've ever had as far as being able to try to inform our decisions around it. So I think that's a positive. Maybe to the second part of your question, Darrin, one, thanks for the congrats. And two, so look, on guidance philosophy, it's a nuanced topic, I'm sure, and especially one that I think will need some evolution over time as I get more comfortable in the seat. The first thing I would say, though, is that from a philosophy standpoint, there really isn't an intent to change the underlying philosophies. I think the frameworks that we use, the way we inform it with data, the underlying approach to the most important drivers within the business.

I mean those are things that I think are pretty foundational, not looking to make dramatic changes. I think as we look at this set of macro backdrop, it is just something that from my perspective, we want to make sure that we're taking in all of the right data assets and that we're making the right -- the most informed decision as possible based on the recency of the information. But certainly something that I think will be an evolving topic. And so feel free to keep asking.

Our next question comes from the line of Andrew Jeffrey with Truist Securities.

Well, so we'll update that. It's been William Blair for about 1.5 years. But Chris, welcome. Look forward to working with you. I want to say that my wife and I happily contributed to Global Blue's third quarter revenue growth. A question on the pace of processing conversion in that business. It's a big opportunity. I think you said somewhere around $550 billion. Can you just update us on your right to win, how you see payment processing cutover or conversion sort of playing out?

And what you -- I guess, competitively, there's one sort of callout processor, I think, today for a lot of those Global Blue merchants. How do you sort of manage those relationships, recognizing that the VAT refund business is such a high-value product for merchants?

Yes, sure. I'm going to actually cover this one. It's a great question. But I think it's really important to distinguish between the headline customers that everyone knows and the breadth of the Global Blue business. So certainly, in downtown Paris, everyone knows the Louis Vuittons of the world. But the reality is you can just as easily go to a village on like Como in Italy and nearly every merchant is using Global Blue. And these are SMBs. So we see a breadth of conversion opportunity from SMB all the way up to the largest of the enterprises.

And if history is a guide, the earliest success comes from all those -- it is incredibly low friction to switch from an existing bank terminal into what from a product perspective is going to be pretty revolutionary, which is the terminal that they're used to, but it also does currency conversion and it automatically detects that the shopper is eligible. So to the extent you were traveling in Europe and you encountered a store where they didn't present you with the tax-free option, that's likely because the cashier just didn't know or didn't think to ask. And yet our technology is going to sort of prompt that just like it does in the largest enterprise environments that Global Blue has built so successfully.

So from a competitive landscape, we see an opportunity to win business from a ton of local banks in that SMB spread. We can win it reasonably quickly. And then, again, history being a guide, enterprises take longer and take more time -- quite frankly, I think you're probably referencing Adyen. They're a phenomenal company. We admire them a lot, and they serve these enterprises quite well. We're an important piece to the commerce puzzle in that environment. And so we want to make sure the technology works incredibly well for those customers. But the conversion opportunity goes far beyond the logos that you see.

And if you think what we're really good at is we're really good at getting that mom-and-pop store, a much better technology solution that, quite frankly, is much stickier and harder to leave. And owning all these pieces, we can do that in a way that traditionally has only existed for the largest enterprises.

Okay. That's helpful. And just as a follow-up on SkyTab and sort of the growth in your software revenue, recognizing the divestiture of some legacy software. Can that accelerate? Do you expect that to accelerate? Sort of does it grow in concert with Global Blue volume conversion? Or how do we sort of dimensionalize the software contribution going forward?

Yes. I think we've -- this is Chris here. I think we've articulated this in the past as acknowledging that the idea that we have a North Star model that really emphasizes what we view as highest quality of revenue will come from payment processing. From that perspective, I think we are not shy about the statement that we will look to deprecate kind of like deprecate the legacy revenue streams, deprecate software revenue streams in favor of the higher quality of revenue. And so I think from that perspective, -- even though our subscription and other was an attractive growth, it grew nicely over -- in the quarter for sure. It's an area that I think will be an area that will be -- will continue to be an impact on like adverse growth in the future.

Yes. Just to pull it back to philosophy here, we prioritize payment volume as the primary source of monetization. We deliver a heck of a lot of technology to these merchants. carefully weighing the fixed and variable costs that a merchant pays for our product is, I think, something we spend a lot of time on. Most of our competitors have significantly higher fixed costs, which really manifest themselves in that subscription and other revenue stream. So we tend to lean more towards payments even if the technology solution being delivered has a lot of software embedded into it.

And to Chris' point, there is -- as a byproduct of this acquisition history, there is always some legacy revenue that we're deprecating. So I completely acknowledge this is probably one of the harder lines to model inside the business. But generally, anything we're doing is in pursuit of that payments revenue growth.

Our next question comes from the line of Sanjay Sakhrani with KBW.

I guess the share buyback announcement and authorization was a pretty strong statement. Maybe Taylor and Chris, you guys can talk about sort of the cadence of how you expect to take advantage of it. I know you talked, Chris, a little bit about the leverage constraints and stuff. So maybe you could just speak to those as well. And I think it's the right thing to do given where the valuation is. So I would love some color on that.

Yes. I'll start with this one. There's been times in our history where we weigh an attractive M&A pipeline against evaluation in our equity, and it's a tough decision. In this case, and Chris will comment on our leverage profile, and that comes into this a little bit, but this one isn't a tough decision. So we are trading at levels that we were trading at in December of 2020, and yet there's 12x the EBITDA in the business and accelerating free cash flow and deleveraging at an accelerating pace as well. So the obvious thing to do here is to buy as much of our equity as we're going to be permitted to buy within reasonable price ranges.

But to Chris' point, executing at current levels is consistent with the lowest price we've paid for our equity. And we've been pretty aggressive with buybacks. I think M&A kind of gets the headlines, but -- we've repurchased, I don't know, 12% to 15% of the company in the 5 years that we've been public. This presents an opportunity to do even more than that at the lowest multiples we've seen in the company's history. So incredibly excited to be able to deploy capital into such an obvious opportunity. Chris, do you want to hit the leverage?

Yes, sure. So I think I made reference to the fact that on sort of a pro forma LTM basis, we're at 3.2x net leverage. I think the perspective that we have around having ample cash on hand, we have ample liquidity. We are approaching $0.5 billion in adjusted free cash flow generation. So there's probably not been a period in history where the company has had sort of the, we'll call it, availability to capital, but also access to capital across the multiple deep markets. So you take that into consideration, you take into consideration that the free cash flow generated needs to get reinvested -- and it's not to say -- and I hope this was clear. It's not to say that we don't think that there are attractive areas within all areas of our 4-part capital allocation framework. But right now, it is really hard to ignore the relative attractiveness of where we're trading today.

Yes, that's a good point. These dollars are not coming at the expense of a missed product development opportunity or integration priority or quite frankly, M&A opportunity, but there's more of them than I think many expected at this point, and the equity is certainly lower. So we have to act on it.

Great. And just to follow up on some of the choppiness that you've seen in the restaurant and hotel verticals in the third quarter. Could you maybe just explain what you've seen thus far into the fourth quarter and if that's persisted. And I know, Chris, you kind of talked about weighing that as you provided your refreshed outlook. But just how we should think about that? Because like when we look at like cross-border volumes and such, I know it's sort of an overarching number. So it's not specific to your verticals or such. But like how should we think about that as we move through the rest of the year?

Yes. Look, I would love to be able to know with precision exactly what the rest of the year is ultimately going to look like. But from a recency data, again, we are -- we benefit from being able to see data in a near real-time manner. But from a recency data, here's a for example. I think coming out of the -- coming towards the end of the quarter, we were actually starting to see what looked like stabilizing trends in restaurants, and it created some encouraging signs off of a quarter that had seen some downward skewed negative volatility. But of late, we're starting to see a little bit of a softening again in some of those trends. That would be a for example.

Now happily, I just want to underscore because it's an interesting contrast to what you had brought up this idea of cross-border. I think prior to us being as diversified as we are right now, that comment, the impact that cross-border is looking more positive, restaurant might have some softness, that would have been an irrelevant comment a couple of quarters ago. But now actually, from the diversification standpoint, I really think it's important not to lose sight of the fact that because of the positioning of the business, because of the balanced transformation that we've been able to achieve, we actually do have these puts and takes, these offsets. So I think in the grand scheme of things, we do have acknowledged uncertainty in certain areas, but actually some enthusiasm in some other areas.

Yes. I would call you back to the revenue diversification that we highlighted in our shareholder letter. And if it's -- I don't know if this is going to be helpful or further confusing you, but we see all the data points you do about United Airlines having their strongest weeks in their history and Chipotle, no one is buying the burritos. Like we see both of those. And we see them manifest in many ways inside of the cohorts inside of our business, which is Global Blue has got strong shopping and same-store sales in your average restaurant are bouncing week-to-week, but skewed towards that negative volatility.

It's confusing, but quite frankly, the scale and diversification of our business is awesome at this point relative to our history. So for us, there are data points that help inform future investment and all these other things and help us, quite frankly, put chips where we think verticals are going to be the most successful over a period of time. But yes, that industry to industry volatility absolutely exists. We're getting both benefit and detriment from that. And this bifurcated consumer, I think, is a real thing.

Our next question comes from the line of Adam Frisch with Evercore ISI.

It's Adam Frisch. Chris, congrats on the role and great job getting out of the gate pretty hot here this morning. The organic number is really interesting, very welcomed as well. I think you said the number excluded the deals done in both of the third quarters. But is that to say that this quarter included contributions from deals completed in the quarters in between? So maybe just a little color here on the calculation would be great. And then I have a quick follow-up as well.

Thanks for the clarifier. Absolutely not. Yes. No, it's meant to be clean of acquisitions for the periods.

So the 18% does not include any acquisition impact at all from the prior quarters or I guess, from the prior 4 quarters?

Yes. It's the best way to look at the base business, right, which is if you did not have M&A in either of the measurement periods, what would have happened in that base business is great.

Okay. Okay. Cool. Welcome that very much. And then second, as a follow-up, assuming Jared gets confirmed, I'm getting a bunch of inbounds this morning from investors about whether his shares would create a liquidity event and how that would be handled. So I wanted to give you a chance to address that on this call before it takes on a life of its own potentially.

Yes, yes. No, I completely appreciate that, and I addressed this right before the Q&A started. His ethics letter from the first go round is publicly available, not required to divest his shares. and doesn't intend to. intends to remain the largest shareholder of the business. So we don't anticipate anything there. And in fact, I just want to say he does anticipate converting his shares from the super voting shares down to common.

So I think the share class will likely collapse into a single share class and be much easier to understand from the investor standpoint and quite frankly, open us up to pools of capital that don't invest in multi-share class companies today. So from the company standpoint, it's frustrating not to see them in the halls on a daily basis, but the corporate structure gets a lot cleaner.

Yes. And then just -- since we're on the topic, to reiterate a point that also Taylor brought up earlier was the idea that beyond the share class structure potentially changing and collapsing to simplified, you also have what in the last go around, we had talked about the concept that the tax structuring would also attempt to simplify to the ups.

Great. Okay. Cool. And then just maybe one last one. The merchant conversion progress from prior acquisitions, any color there that you can provide? There were some disclosures in prior quarters, I didn't say anything this quarter. So maybe just a little bit there on what you're -- on how you're progressing there from the acquired merchants.

Yes, absolutely. Happy to provide color. And this isn't an intentful omission. It's the simple fact that our earnings shareholder letter was, I think, 190 megabytes when I tried to download the public version this morning. not anywhere. So the cross-sell is going quite well. I think that's probably best evidenced by simply the customer adds that I mentioned earlier in response to what I think was probably Darrin's question. So customer adds across the board, whether that be in Germany, whether it be in the U.K., whether it be in Canada, all of those are fueled in some way. buy an M&A asset, whether that's a small sales team or an embedded base of restaurant customers in Germany or gateway hotel customers in Canada.

So the customer adds are really, really encouraging across the business. It's quite frankly, what helps ballast that same-store sales anxiety that we see in the core base of the business. So it's going well across all of them. This is muscle memory for our business. So if you recall, what happens when we acquire a company is all of the customers inside of that become part of a sales funnel that our team is chipping away at on a daily basis. So the fact that an acquisition occurred doesn't really mean much to the average business development professional inside of Shift4. It just means they've got a lot more customers in their call queue to execute against or in their campaign. So it's going well across the board, quite frankly.

Our next question comes from the line of Will Nance with Goldman Sachs.

I wanted to follow up, I think, on Tim's earlier question on the volume approach it a slightly different way. Just look at the kind of low 20s exit rate on volume with a little bit of inorganic contribution, it's kind of roughly in line with where the Street is expecting volume growth in 2026. So I was wondering if you could just talk about the puts and takes off of that run rate and just kind of what would lead you to kind of accelerate or decelerate into next year and just things that we should be keeping in mind as it relates to modeling out to 2026.

Yes, sure. Thanks, Will. I would say probably in line with a similar kind of commentary here, and maybe Taylor will have a slightly different nuance to it. But from my perspective, again, it's hard for me to ignore sort of from a recency standpoint, data that we're seeing. And so I'd say there is some -- there's a degree of balanced caution within some of the verticals, offset by, obviously, what we're seeing is the diversification effect where we are also seeing some recent strength in other areas like in cross-border, like in luxury.

So I would say that the exit rate, which is kind of where Tim's question was at, that annualizes kind of the fourth quarter. I think that's a fine starting point, but we gave the ranges on volume really from a '25 standpoint for a region. And I think that, that range, again, the intentionality of the shape of that range where the volume range is the widest relative to something more in our control like an adjusted EBITDA, that range is widest because of wanting to acknowledge that there's a complex macro backdrop.

Yes. If I had to barbell the 2 items probably most front and center is we say this volatility of same-store sales is quite real, like it looks bad 1 week and it looks okay the next. It's very confusing, and you want to be cautious about what that could look like over a sustained period of time. Maybe on the other end of the barbell, you've got Global Blue, which is really contributing nothing of substance to that payments growth rate and a massive customer base, lots of geographies, et cetera. So those are kind of -- that's a cylinder that's not firing of any consequence yet and yet will be significantly in 2026.

Got it. Appreciate that. And that was going to be my second question. Just on some of these logo wins, you had the earlier question. I get it's early and some of the ones on the page are kind of more enterprise in nature. But wondering if you could just speak to the sales process that led to some of these wins.

And Taylor, I know you've been doing a lot of traveling over the past couple of months. As you spend time with the Global Blue team, how are you thinking about evolving the go-to-market so that when we see some of the wins on these pages, I'm thinking back to when you put the hospitality wins and we'd see something indicating it was a gateway conversion. Like how do we think -- how are you thinking about potentially starting to work payments into the selling process of some of these new wins, maybe not some of the logos that we're seeing on the page, but into some of the more SMB sales?

Yes. It's an awesome question, and I'll sort of contrast the 2 businesses for you because this is exactly what we're spending a ton of time on right now. Global Blue is a phenomenal business focused on the highest end of the enterprise, solving the most complex problems and never losing a single customer in that process. They serve the enterprise customer exceptionally well, and they're kind of built to do that, where if I were to criticize and say there's areas that we can bring strength to the table, it's the service of the really long tail of SMB customers that don't have the best coverage model.

They adopt Global Blue because it's a product that the consumer demands and has a lot of traction, and they want to be able to provide that to the shoppers. So it's that -- it's the Village of Bellagio, where it's in Lake Como, right, where there's tons of little mom-and-pop merchants that offer the service to. So the skill set we're trying to bring to the organization is how do you efficiently serve thousands of SMBs across Europe and the rest of the world. And I think we've got unique skills to bring to that. The skills they are bringing to us are how do you serve the largest and most demanding enterprises within luxury retail. So we're both learning a lot from each other in that regard.

And then the only thing I would say is -- and by the way, we're having conversations with every flavor of customer, right? So we're having conversations with SMBs. Those are quick. It's -- yes, this sounds great. I'll do it. And then we're having conversations with their largest enterprise customers, and they're saying, "Hey, can you help us with this unique problem we have today? So I'm really encouraged across the board. But the laws of physics are simply those big customers take longer to get those conversations done than the small customers. So I think that's going to be the bulk of the focus.

Yes. And I'll add that when you start to look at that customer stratification, it's at a unit economic level, very logical that if you are providing a TFS product to the longer tail of SMBs the gross profit and revenue density isn't necessarily there to provide the technology and quality of service that you would want if you add to the equation the cross-sell of services that now turn the gross profits and the unit economic model into one that looks a lot more like the SMB that we serve. It makes a ton of sense to be providing all of the service levels, all the support, really starting to elevate the significance of that SMB customer within that segment is -- or within that business is exactly like the benefits of the cross-sell.

Yes. And sorry to belabor the answer. I think it's really important, though, where we're going to have to spend a lot of time with you all and -- the Street is what's the volume pull-through of this. because to be clear, I think the enterprise customers offer the highest volume opportunity at the lowest spread, but these SMB customers are the inverse of that. And we are quite content with the volume growth that looks lower and a spread that's stable to growing because that's a fast win cycle.

To be clear, all of it is an opportunity, but I think volume growth relative to net revenue growth is something that has undulated inside the business as we skew from time to time more towards enterprise, more towards SMB, et cetera. So that's where we're going to owe you the updates, but my prediction is early success in SMB and what's going to feed the funnel 2, 3, 5 years from now, it's going to be that enterprise base.

[Operator Instructions] Our last question comes from the line of Dominic Ball with Rothschild.

Great to hear about Global Blue. On competition, we've seen some turbulence with one of your legacy acquirer peers. Does this present an opportunity to accelerate share gains in the U.S.? And on the enterprise side, we've seen Oracle Payments extend their offering powered by Adyen, but it doesn't seem like it's going to be exclusive going forward. So how do you view that development? And could this open up further partnership opportunities with Micros?

Yes. Awesome question, and congrats on the call, by the way. I think you were the long one. In terms of competition in the United States, I really do want to foot stop this point from my prepared remarks. It's relatively unchanged for our lines of business, which is in restaurants, we tend to focus on table service. This is not where you see the Clovers and the Squares of the world. We do see Toast. And I know Toast has got wider ambitions to do far more than just table service. But in our kind of slice of the world that is restaurants in the United States, competition is relatively unchanged. Toast is a great company.

We're winning and growing quite nicely in that regard. And we don't see significant pressure from others. Quite frankly, any, let's say, industry chaos tends to be helpful to the extent that big companies are struggling. It will help us, by the way, just as much on the enterprise sale as it will on the SMB sale to have a company that's sort of struggling to redefine its image. Now to go to your point with regard to Oracle, I think they've always had this ambition to try to deliver a simplistic product to their customer base that embeds software payments, et cetera. That's very, very hard to do with the products they serve.

And so much -- take yourself out of a point-of-sale system that they sell and put yourself into any other software. It's very enterprise grade and requires a lot of pieces. And this is where Shift4 has found unique success. It's taking what is an otherwise very complicated solution to implement that merchants are dependent on and stitch together all the parts to get it done and do it in a way that feels like an SMB experience where our team comes in, connect all the dots regardless of the complexity.

Again, Yankee Stadium, probably a good example of trying to make an SMB experience delivered in some of the most complex environments. So we don't see really any issue. We partner with Oracle constantly in the hotel vertical as we have to, to support them. We also activate a lot of restaurants. and we'll be there to the extent any customer needs to help.

Operator?

Thank you. At this time, I'd like to pass the call back to management for any closing remarks.

Yes. Thanks to everyone for dialing in this morning and also for the great questions. I look forward to catching up with you all individually as the weeks and quarter progresses.

Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.