Operator: 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.

Thomas McCrohan: 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?

David Lauber: 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.

Christopher Cruz: 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.

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

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

Timothy Chiodo: 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.

David Lauber: 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.

Timothy Chiodo: 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.

Christopher Cruz: 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.

Operator: We’ll now move to Rayna Kumar with Oppenheimer.

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

Christopher Cruz: 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.

Operator: We’ll now move to [ Dan Demir ] with Mizuho.

Dan Dolev: 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.

David Lauber: 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.

Operator: We’ll now move to Darrin Peller with Wolfe.

Darrin Peller: 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.

David Lauber: 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?

Christopher Cruz: 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.

Darrin Peller: 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?

David Lauber: 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.

Operator: We’ll now move to Andrew Jeffrey with William Blair.

Andrew Jeffrey: 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?

David Lauber: 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.

Christopher Cruz: 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.

Operator: We’ll now move to Dominic Ball with Rothschild & Co.

Dominic Ball: 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?

David Lauber: 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?

Christopher Cruz: 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.

David Lauber: 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.

Operator: We’ll now move to Craig Maurer with FT Partners.

Craig Maurer: 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?

Christopher Cruz: 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?

David Lauber: It was on the volatility of subscription and the other question…

Christopher Cruz: 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.

David Lauber: 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.

Operator: We’ll now move to Sanjay Sakhrani with KBW.

Sanjay Sakhrani: 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?

Christopher Cruz: 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.

Sanjay Sakhrani: 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.

David Lauber: 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.

Christopher Cruz: 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.

Operator: 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.

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SHIFT4 PAYMENTS INC

Q1 2026

Earnings Transcript

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