Q1 2024 Shift4 Payments Inc Earnings Call
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Greetings and welcome to shift for Q1, 'twenty 'twenty four earnings call. At this time, all participants are in a listen only mode.
A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host Tom Mccrone Executive.
Thomas Craig McCrohan: Vice President Investor Relations. Please go ahead.
Thomas Craig McCrohan: Thank you operator, good morning, everyone and welcome to shift for US first quarter 2024 earnings conference call.
Thomas Craig McCrohan: With me on the call today are Jon Isaac men ship Forrest Chief Executive Officer, Tableau, Lorber, our President and Chief strategy Officer, and Nancy just spin Chief Financial Officer. This call is being webcast on the Investor Relations section of our website, which can be found at investors that shift for dot com.
Thomas Craig McCrohan: Today's call is also being simulcast on X spaces.
Thomas Craig McCrohan: Known as Twitter, which can be accessed through our corporate Twitter account that ship for.
Thomas Craig McCrohan: Our quarterly shareholder letter quarterly financial results and other materials related to our quarterly results have all been posted to our IR website.
Thomas Craig McCrohan: Our call and earnings materials today include forward looking statements.
Thomas Craig McCrohan: 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.
Thomas Craig McCrohan: Which you can find on the Sec's website in the investors 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 todays quarterly shareholder letter with that let me call. Let me turn the call over to Jared Jared.
Jared: Hey, Thanks, Tom.
Jared: So if you've already reviewed our earnings letter than you already know this was a very busy quarter and theres, an awful lot for us to discuss today.
Jared: So we wrapped up a strategic review we continued to win some of the most coveted enterprise merchants, we added thousands of new Sky tap customers. We cross sell has taken EUR numerous stadium wins, and we announced a synergy rich and very attractively priced acquisition alongside continuing our geographic expansion and delivering reasons.
Jared: These strong results and record free cash flow.
Jared: So I think the only thing we probably could have done better is help analysts capturing the right seasonal cadence of our business.
Jared: We're obviously diversifying and growing very quickly so to help with that we have largely reaffirmed and positively revised our EBITDA and free cash flow guidance and we broke it out on a quarterly basis for the balance of the year.
Speaker Change: So I just got a lot.
Speaker Change: To break it down and expand on a point by point so.
Speaker Change: With respect to the strategic review I would encourage you to read my shareholder letter if you'd like my complete personal take a matter, but the bottom line is there was a lot of strategic interest and multiple formal offer is materially higher than our present trading price.
Speaker Change: It should also be obvious that a go private option is usually available and others have clearly shown that to be the case. However.
Speaker Change: However, the go private option presents clear complexities alongside a competing strategic offers and I of course always want my interest to be completely aligned with the rest of my fellow shareholders.
Speaker Change: So now as the strategic review process progress, we continue to record some very big wins and as a result, our price expectations rightfully kept going up and I imagine after reviewing this quarter shareholder presentation. It will be even more obvious why we could never accept an offer that didn't properly valued the trajectory of that.
Speaker Change: Business.
Speaker Change: So on that note, we did deliver some very big wins I will go over the full list by vertical shortly but we signed one of the single largest casino properties in the world, which is boxwood.
Speaker Change: Alongside developing a major partnership with one of the largest casino operators in the world and we'll talk more about that soon and we have many more to follow.
Speaker Change: Our sky Tad growth further accelerated with nearly 9400 system installs in Q1, which represents a 38% increase quarter over quarter.
Speaker Change: We have continued momentum in our sports and entertainment vertical including notable stadium in ticketing wins for the NFL World Champion, Kansas City Chiefs.
Speaker Change: We also announced this quarter the acquisition of rebel, which I'll speak to a bit later in the prepared remarks.
Speaker Change: We followed our very important strategic customer into several new international markets, including Albania, Mongolia, and soon in several African countries, Fiji and <unk>.
Speaker Change: And the associated results from all of this met our expectations and set the stage very well for the balance of the year.
Speaker Change: So we generated 50% growth in end to end payment volume, 27% growth in gross profit and 32% growth in gross revenue less network fees. We also generated $122 million of adjusted EBITDA, representing 36% year over year growth as our margins expanded 150 basis points to 46% versus the <unk>.
Speaker Change: Corresponding year ago quarter, our operating margins expanded despite the margin drag from the acquisitions of appetites and NRO, both of which negatively impacted our margins by nearly 300 basis points for the quarter.
Speaker Change: Naturally as synergies are realized we expect that drag to disappear and contribute to our ongoing margin expansion targets.
Speaker Change: Perhaps most importantly, we generated $78 2 million of adjusted free cash flow, which is up 34% versus a year ago. Our blended spreads also remain stable coming in at approximately 62 basis points, despite considerable volume growth.
Speaker Change: As mentioned earlier an area, we can of which we can improve is helping the analyst community better model the seasonal cadence of our business.
Speaker Change: Q1, typically represents the seasonally slowest quarter of the year and 'twenty 'twenty. Four has followed that pattern now if you recall the Q1 of last year benefited from growing over and omicron depressed Q1 of 2022.
Speaker Change: That aside we also know we are diversifying into many new verticals and growing quickly, which makes modeling challenging at times.
Speaker Change: Help with that we are providing quarterly guidance for the balance of the year to include positive revisions to EBITDA and free cash flow conversion.
Speaker Change: Our guidance does not include the recently announced acquisition, but does account for the accelerating organic growth and we have great visibility into as well as expense discipline and efficiency gains.
Speaker Change: From here I intend to provide the usual doubleclick by vertical to include our progress internationally as well as more insights into our recent M&A activity.
Speaker Change: Now starting with our core which as a reminder, is composed primarily of restaurants hotels and specialty retail once again contributed meaningfully to our growth we.
Speaker Change: We are uniquely advantaged when hotels and resorts with our 550, plus strong software integration library, including industry, leading business intelligence tools and ever expanding geographic coverage.
Speaker Change: With restaurants, we have a very powerful and growing distribution network that includes both our direct sales team and authorized partners. We are advantaged as we see really toast and sky cab as the only modern cloud offerings capable of servicing table service restaurants at scale. We further believe we are a more effective and lower cost <unk>.
Speaker Change: Element and go to market strategy, which in turn delivers a lower overall cost of service for our customers.
Speaker Change: Now specifically with restaurants, we signed many notable brands to our platform and set new records with Sky cab installation.
Speaker Change: We signed change such as Pizza twist, a growing chain of Indian inspired pizza with locations throughout the U S and Canada diverse concepts, a professional restaurant management company with sovereign restaurant concepts and for top hospitality group, a multi concept independent restaurant group of 15 locations across the southwest southeast.
Speaker Change: We also signed Great Street Cafe and wine bar with two locations in Las Vegas in Summerlin vessel located in historic repurposed Lutheran Church, and mid City, New Orleans, the intimates Hog breath saloon in key West, Florida, and the award winning Union meet Cafe directly across the street from Yale University, which recently celebrated.
Speaker Change: <unk> 30 years in business.
Speaker Change: In the U S. Our sky cab production accelerated with approximately 9400 system installs during the recent quarter, our cloud based feature rich rich and low cost restaurant solution continues to resonate with restaurants in April we launched Sky cab business intelligence, which.
Speaker Change: Wishes of reporting and analytics platform that is free to Sky cab Pos customers. This follows the launch of our AI website build their last quarter. We have released many modules as indicated in our shareholder presentation, and we don't charge for any of them.
Speaker Change: We don't believe there is a restaurant out there. They are excited to pay for U S companies for more modules and instead prefer a lower overall cost of service. So on that now we believe our sky cab Tos offering.
Speaker Change: <unk> offers the most compelling value proposition in the market with a total cost of ownership that is extremely competitive versus comparable solutions.
Speaker Change: At the current Q1 run rate, we are on pace to exceed our goal of 30000 system installs a sky cap for 2024.
Speaker Change: Now outside the United States. Our team is building awareness in the Skycap U S product in the United Kingdom, and Ireland and continues to sign up new restaurants, including zawadzki located within London's West end and within walking distance to the Prince Edward Theatre. We also signed Rams restaurant just outside of London City limits. Further we are we are really excited too.
Speaker Change: <unk> been awarded the online ordering for Pizza hut in Spain, and Portugal.
Speaker Change: And these early international strides organic product investments alongside our M&A strategy inspires confidence in our goal to sign 10000, New restaurant and hotel hotel customers, specifically in Europe in Canada before the year end.
Speaker Change: Now turning to hotels, we had a record quarter of major signings and as alluded to earlier in my prepared remarks, we developed a partnership with one of the largest casino operators in the world and we plan to speak to later this year as well as signing one of the single largest casino properties in the world and the largest in North America, which is foxwoods.
Speaker Change: We also signed hotels Casino hotel, a native American hotel chain located in Wisconsin.
Speaker Change: In addition to these major casino wins, we had a record quarter of gateway conversion.
Speaker Change: We signed the ranch and Rock Creek, which is in Montana based five star rated luxury Spa and Dude Ranch Sunseeker resort on Florida, Gulf Coast, and Acme hospitality and operator, several hotels and multiple award winning restaurants throughout California.
Speaker Change: We also signed tropical beach resorts, a collection of boutique hotels in Siesta key the River Street in located in Savannah Historic River Street, Eddie Katherine in House, Taproom, and hotels, which the boutique hotel located in Golden Colorado.
Speaker Change: Hospitality, which is an upscale resort located in central Oregon, Cascade Mountains, and Mohawk Mountain House, a national Historic Landmark and resort located in the Hudson Valley of New York State.
Speaker Change: Our expansion into Canada is also going well and we signed hotels, including that healthy healthy on Hot Springs resort, which has a spa resort located in British Columbia Fairways Hotel on the mountain, which is a golf resort in the mountains of the capital City of Victoria Coastal hotels, which is an operator of multiple.
Speaker Change: Indian hotels, and the lack of wound journal.
Speaker Change: Which is a <unk>.
Speaker Change: Hotels that located on the shores of beautiful lap <unk>.
Speaker Change: In Canada.
Speaker Change: In Europe, we also signed Leonardo hotels.
Speaker Change: Which is a European European brand with hundreds of locations throughout Europe and in the UK and our business development pipeline for European Hotel prospects is building very very quickly now.
Speaker Change: Now in specialty retail, we signed Russell Stover, which just celebrated its 100th anniversary and lessen winery, which is the fifth generation family owned winery located in the heart Sonoma Valley.
Speaker Change: We also expanded our relationship with goodwill industries and will serve as a primary payment processor for their three new goodwill stores, which opened in Puerto Rico.
Speaker Change: In Europe, we entered into an agreement to process payments for online jewelry retailer Lux plus.
Speaker Change: A card present payments provider in southern Europe, EV charging network Ali unsafe and card acquiring services for the digital banking platform. One money way. We're also enabling merchants to accept digital wallets, such as Paypal Venmo and cash App in Europe through a partnership with boss.
Speaker Change: We entered into agreements to provide car part acquiring services for Bravo tours.
Speaker Change: Which is a Danish shop online travel agent.
Speaker Change: Well as Sweden's den trends, which is a network of hundreds of dental clinics and signed a partnership agreement with a couple of European Psp's painter, and fabric, which service merchants in the Netherlands, Italy, Spain and the UK.
Speaker Change: Moving on to new verticals now in sports and entertainment, we continue to add ticketing volume with our existing clients and successfully migrate advertised customers onto the shipboard venue next platform. So we were awarded ticketing from the Kansas City Chiefs, the Chicago White Sox and the Minnesota Vikings.
Speaker Change: Now the Vikings and White Sox represented a ticketing upsell to an existing ATM customer. We also converted American Airlines Center home of the Dallas Mavericks, and Dallas stars to our platform and signing University of Oklahoma University of Utah, and the University of Nebraska, the lack of which we will also be powering particularly for beer.
Speaker Change: Our partnership with <unk>.
Speaker Change: We also recently hosted an investor mandate Yankee Stadium, highlighting one of our largest venue next installations. It was also a conversion from advertisers.
Speaker Change: We signed payment processing agreements with several convention centers, including the Boston Convention Center, all of which were legacy advertise customers now and minor League baseball, we entered in ticket into ticketing and concession deals with 10 additional minor league baseball stadiums, increasing our total roster to approximately 60 minor league baseballs baseball teams that are <unk>.
Speaker Change: For customers.
Speaker Change: And we are really excited to announce two European stadium wins, including the famous FC Barcelona, alongside exit our city and.
Speaker Change: And our strategic partnership with FC Barcelona includes deploying a constant comprehensive technology and payments back to their iconic New stadium Spotify camp.
Speaker Change: I often remind investors when we were asked about the organic growth profile of the business or revenue acceleration do you think about literally dozens of major wins that I just talked about just now alongside every other quarter I mean.
Speaker Change: We are literally powering the best experiences at the coolest venues from the Super Bowl for the Rolling Stones and these caliber of merchants are not selecting shipped four because we were somehow a fraction of a penny less expensive is because the commerce, enabling solution. We are providing is the best fit for their business.
Speaker Change: So continuing on with new verticals to nonprofits the.
Speaker Change: The first quarter should actually be a seasonal low where we are in vaccine, the giving block transaction volume and donation up quarter over quarter, which.
Speaker Change: Which we estimate will lead to year over year growth in excess of 400% we.
Speaker Change: We entered into inspiring collaboration with Cabrini Mission Foundation to power.
Speaker Change: Meaningful change through crypto philanthropy Cabrini Mission Foundation embodies the spirit of Saint Francis Xavier Cabrini, the patron Saint of immigrants and her story continues to resonate notably on the big screen we've.
Speaker Change: We've taken our first steps with key integration partners, such as given gain and get lively these integrations and others to come will dwarf our efforts to process for individual nonprofits unlocking opportunities to process for tens of thousands of charity outside.
Speaker Change: Outside of direct relationships with major major organizations like St. Jude. These integration partnerships will be the drivers of our success in the nonprofit sector.
Speaker Change: So beyond traditional credit card in crypto volume. We also continue to make tremendous progress growing our market share processing alternatives donation methods for nonprofit organizations via the giving blocks such as stocks and donor Advisory fund grants. This quarter, we signed large charities like the Jewish community Foundation, the Catholic charity fun and expanded our relationship.
Speaker Change: Chip with the American Heart Association.
Speaker Change: Another new verticals like travel gaming infects the tact, we signed Grand Canyon Airlines, the oldest aerial tour operator, providing sightseeing tours for the Grand Canyon and gaming. We are now live with Sky cab mobile devices at our first bet MGM Sports book locations National Stadium in Washington D. C and next month, we will be live at the Cincinnati Reds.
Speaker Change: Stadium, we expect to be live in all 24 bet MGM sports book locations across nine states by the end of this year.
Speaker Change: <unk> devices are also being integrated with passport technology to enable various cashless gaming experiences on the casino floor at casinos, such as the <unk> casino outside of Palm Springs separately, we signed several new online gaming clients during the quarter, including launching more states with Lotto Dot com in Nebraska, Florida, and Arizona for <unk>.
Speaker Change: Lottery we.
Speaker Change: We signed Prime sports betting and online sports betting platform currently operating in Ohio, and New Jersey in Kentucky.
Speaker Change: And Kentucky has actually seen the bar and lastly, 10, 10 gaming and online gaming and Sweet Sweet stage site blending social media with slot in casino type games. We also went live with rolling riches during the quarter, which is now live processing on ship for.
Speaker Change: And sexy Tac, we teamed up with unified business to business Commerce platform Peppery software buyers on their platform, a more efficient and convenient way to pay peppery powers, the front and back office for our over 1000 <unk> E Commerce merchants in over 70 countries.
Speaker Change: We signed a payment processing agreement with Vin seeker, which provides consumers and businesses. The most comprehensive vehicle history reports in the industry.
Speaker Change: <unk> most exciting we can continue to grow volume very quickly with our large strategic e-commerce customer and have organically expanded into several new countries that I mentioned earlier. We've also built on our various domestic and international EV partnerships, including an undisclosed but personally a very special collaborations.
Speaker Change: <unk>, new restaurant concepts at EV charging locations.
Speaker Change: Now internationally.
Speaker Change: As mentioned throughout our call we are executing on our strategy to follow our important strategic customer all over the world and then bring all the products and integrations and services into those markets that made us. So successful in the USA. We have signed notable restaurants hotels e-commerce and taxi tax providers, all over Europe, and even into Canada.
Speaker Change: We feel confident we are well on our way to achieving our 2024 goal of 10000 restaurants and hotels signed in just international markets. In addition to the 30000 systems go we are on pace to exceed in the USA.
Speaker Change: Now with respect to M&A to accelerate our growth, especially in the restaurant vertical in international markets, We have announced a really exciting acquisition of rebel this quarter. This deal very much follows our playbook of achieving a lower customer acquisition costs enhancing distribution to accelerate growth in our core vertical alongside talent and other synergies.
Speaker Change: And Taylor will go over this further in just a bit.
Taylor: So in closing.
Speaker Change: For those familiar with the shift for story over the last few years, it's probably not much of a surprise that we've been frustrated from time to time with the lack of appreciation in the public markets.
Speaker Change: It seems like we're always battling one theory out there in the next to try and explain away our outperformance and at times. It feels our competitors always get the benefit of the doubt.
Speaker Change: Be that the fastest growing single vertical players that lack our diversification or profitability profile or the slower growing competitors that ran out of good ideas.
Speaker Change: Are those that will go private at 2% or three turn EBIT, a premium to our present valuation mean.
Speaker Change: Meanwhile, we have the best customers in the most desirable verticals growing faster than just about anyone else and riding several advantages that make it easier and more affordable for us to win while constantly improving the profitability profile of the business.
Speaker Change: To put a finer point on it we've grown EBIT at <unk> since our IPO and yet shift, whereas only 116 times more valuable all while being more diversified and with a much better economic backdrop, and a global pandemic and on that note I don't know why the long term weighing machine hasnt quite kicked in yet, but I do believe those the continued bet against us they're going to quit.
Speaker Change: We would be running out of stories to tell as ultimately performance and especially free cash flow per barrel.
Speaker Change: Finally, if you only follow US to earnings you May think we love celebrating our wins.
Speaker Change: I certainly read a lot of them on this call that actually couldnt be further from the truth. We are obligated maybe more so than many other companies to promote and defend our accomplishments with day to day and in the boardroom I can assure you we spend all of our time on things, we don't do well our shortcomings and inefficiencies in fact, I believe its our relentless focus on our inadequacy.
Speaker Change: It fuels so much of our momentum.
Speaker Change: All of our employees know this and we need to embrace ownership challenge the status quo delete old and costly parts procedure alive and automate the extent possible and always execute with urgency that is the ship for Wei and.
Speaker Change: So with that I will hand, it over to Kevin.
Kevin: Thank you Jared and good morning, everyone.
Kevin: The current operating environment is reasonably favorable for us while we began the year with some headwinds in same store sales merchants exited the quarter roughly flat on same store sales from a year ago.
Kevin: Merchants also continue to seek out technology that helps streamline the commerce experience the persistent uncertainty around consumer spending actually helps dealers to steer them towards solutions like ours, which eliminate multiple vendors and help save money.
Kevin: We're also advantaged from a capital perspective, and can invest in our business at a time when many competitors are pulling back I'll talk more about how we're allocating capital in a moment.
Kevin: Personnel, which is evidenced by the margin expansion, we delivered while investing in the business in that theme. We also continued to invest in our sky at that product and payment platform and added thousands of new merchants ranging from smbs to the largest hospitality enterprises in the quarter.
Kevin: This combination of winning products, a large distribution network economic advantages and volatile capital markets continues to create excellent capital allocation opportunities for us as a reminder, we generally allocate capital across four major priorities product innovation customer acquisition share repurchase.
Kevin: And M&A, which can dramatically accelerate our strategy as noted previously with the acquisition of appetite.
Kevin: In our shareholder letter. This morning, we laid out this framework along with our growth capital deployed over the last five years. This strategy has resulted in adjusted EBITDA growing seven fold over the last five years as Jared mentioned earlier.
Kevin: While we are proud of our track record. We also recognize that our work is never done we will.
Kevin: We will spend a few minutes on how we're positioning ourselves for the year and years ahead to be Frank we see more interesting capital allocation opportunities than we could reasonably pursue which is a really fun challenge.
Kevin: There is still much work to be done in delivering our products across Europe and the rest of the world. Our M&A pipeline is full of compelling opportunities in every flavor we like.
Kevin: Capability in geography enhancements low customer acquisition cost take out the parts et cetera.
Kevin: We also can't ignore our equity is one of the easiest investments we can make at current trading multiples.
Kevin: In that vein, you will see we announced our intention to acquire <unk> Pos for $250 million. This morning.
Kevin: And while I can't comment on length, given a few steps we need to complete before closing this is a playbook, we execute very well and we're excited to talk about our plans for the business should the transaction close by July one we would anticipate a roughly $15 million EBIT contribution during the remainder of the year and a more substantial EBITDA growth in 2025.
Kevin: But of course, we will update you all again when the transaction closes.
Kevin: In terms of other capital allocation priorities, our strategic review and M&A have prevented us from being an active buyer of our equity in recent quarters, which has been frustrating similar.
Kevin: Similar to 2021 and 2022, we see our equity is highly attractive at current multiples and have announced the larger $500 million repurchase authorization as a result and are implementing an ongoing repurchase plan to take advantage of the dislocation in our equity value.
Kevin: As always you should expect us to balance this with the priority as I mentioned previously and also leverage and also our leverage profile. So as to maintain short medium and long term profitable growth and free cash flow generation.
Kevin: And with that I'll turn the call over to Nancy to discuss our financial results.
Nancy J. Disman: Thanks, Taylor and good morning, everyone. We delivered another quarter of solid results in line with our expectation demonstrating again, our ability to deliver top line growth, while continuing to drive margin expansion and strong free cash flow conversion tougher Q1 volume of 33 billion grew 50% year over year gross rent.
Kevin: The new less network fees grew 32% 264.
Speaker Change: Our adjusted EBITDA for the quarter was $122 million of three 6% and adjusted EBIT margins were 46%, excluding the impact of the legacy kind of an appetite visited margins expanded nearly 450 basis points.
Speaker Change: Our quarterly results were driven by the continued strength of our hospitality and restaurant critical momentum across our enterprise margin, including new vertical further monetization and conversion of gateway customers, an increasingly large contribution from stadiums and ticketing.
Kevin: The blended spreads for the first quarter was 62 basis points in line with our expectations and consistent with our full year guidance for spreads to average 60 basis points.
Kevin: Evolution of our business has been significant since IPO and certainly over the last 12 to 18 months as we admit that market and diversified our vertical. We believe we are approaching a floor of 60 basis points that we expect to hold for the balance of the year any deviation from this will likely be a function of volume outperformance. It is worth noting that the spreads are.
Kevin: Our core business of restaurants restaurant, hospitality and special specialties and count remained stable gateway.
Kevin: Gateway revenue decreased sequentially in the quarter, reflecting the continued success of our gateway sunset initiatives.
Kevin: The remaining gateway conversion population currently represents less than three basis points of spread this highlights the magnitude of the remaining opportunity ahead of us.
Kevin: Subscription and other revenue in Q1 was up 45% compared to the same period last year driven in part by the success, we're having in sports and entertainment and with Sky cab and the restaurant vertical overall.
Kevin: Strong SaaS was up 55% in total you'll see that Q1 subscription and other revenue was $52 million was down sequentially from Q4, reflecting our continued success of converting appetite and suffer only clients to acquiring and the timing of onetime hardware revenue. This also serves as a good opportunity.
Kevin: Attunity to remind investors that we often blow up the legacy revenue model of our acquisitions and pivot them towards our signature shifts where payment field value proposition.
Kevin: In Q1, total general and administrative expenses increased 25% year over year to 107 million driven by the impact of the acquisitions completed in Q4, we remain highly committed to a disciplined approach to cost management, while continuing strategic investments for growth. Our goal is keeping overall head.
Kevin: Count flat, while investing in talent talent upgrades remains in place. We are quickly progressing on the overhaul of our operating model, which will further drive efficiency and scalability across our platform platform. As a reminder, stock based compensation expense of $23 million is higher in Q1 than other quarters as has been.
Kevin: Customary due to the timing of our.
Kevin: Our annual rewards.
Kevin: Our first quarter adjusted EBITDA margins were 46% representing over 150 basis points of expansion compared to Q1 2023.
Kevin: As I previously just mentioned, but worth saying again, excluding the impact of acquisitions margins actually expanded nearly 450 basis points, we have high conviction on the many opportunities to further improve margins that are still on the horizon, including remaining M&A synergies utilization of AI technology.
Kevin: <unk> of new internal systems, and the ongoing streamlining efforts to enhance scalability throughout our business operations.
Kevin: Our adjusted free cash flow in the quarter was $78 million, representing an adjusted free cash flow conversion of 64% well above our current full year guidance. As a reminder, there will be fluctuations in our conversion rates on a quarterly basis due to the seasonality of our business the timing of interest payments and the.
Kevin: A capital to support growth, but the improvement in our unit economics, and operating model give us confidence in our ability to deliver annual year over year expansion in our conversion rate.
Kevin: Net income was $28 5 million for the first quarter diluted earnings per class, a and class B share was 31.
Kevin: Adjusted net income for the quarter was $50 5 million or <unk> 54 per AMC share on a diluted basis on a 93 million average fully diluted shares outstanding our.
Kevin: Our balance sheet remains strong and as of the end of the quarter, we have approximately $700 million of available liquidity. Our total indebtedness has a weighted average cost of 135% and we do not have any maturities until December 2025.
Kevin: Our net leverage at quarter end was approximately two four times.
Kevin: Our strong balance sheet growing EBITDA and expanding free cash flow afford us many options to fund strategic priorities Opportunistically buy back stock and satisfy year end 2025 maturities without being punitive to our equity.
Kevin: Now turning to guidance for full year 2024, we are tightening our guidance range for end to end volume and now expect a range of $167 billion to 175 billion, representing 53% to 61% year over year growth. We are also increasing the low <unk>.
Kevin: End of our adjusted EBITDA range, and now expect adjusted EBITDA to be in the range of 640 million to $675 million, representing 72 basis points of year over year margin expansion at the midpoint, which includes the drag from acquisition. We are also increasing our adjusted.
Kevin: Free cash flow conversion expectations to 60% from 58% previously, which yields $395 million of adjusted free cash flow for full year 2024 at the midpoint of our adjusted EBITDA guidance.
Kevin: Our expectations for gross revenue less network fees remain unchanged and as mentioned on our last earnings call. We expect organic growth of gross revenue less network fees to be north of 25%.
Kevin: We are also providing a quarterly breakdown of our annual guidance to help investors better understand the impact of seasonality on our business, which can be found on page 19 of our shareholder letter.
Kevin: A couple of call outs as it pertains to our guidance. We continue to expect a stronger second half in 2024 due to factors I will elaborate on in a minute and secondly, our full year and quarterly guidance do not include any contribution from revel once we receive the customary approvals.
Kevin: We will update our guidance at that time, there are several things to note relating to our guide first I would like to highlight several initiatives that contributed to growth accelerating through the back half of the year. While most of these points should be obvious by simply reviewing the numerous wins featured each quarter. It is worth emphasizing.
Kevin: Sky Cab system installs continue to accelerate each quarter and we are ahead of schedule on our 30000 goal for 2020 for.
Kevin: Many of the wins featured each quarter, especially stadiums and their end to end related ticketing opportunities major enterprise resorts go lives several quarters. After the announcements we are particularly fortunate to have won several multibillion dollar opportunities in the hospitality industry that we expect to contribute.
Kevin: Meaningfully to the back half of this year.
Kevin: 2024 marks the first year, we are really able to offer our services in Canada and across Europe, and early traction in both hotels and restaurants, including including this quarter, we're not our hotels announcement our confidence inspiring.
Kevin: Our strategic E Commerce customer continues to add volume quickly and we have been expanding organically into several new international markets that Jared discuss with strong visibility into the back half of the year.
Kevin: The low end of our guide contemplates modest headwinds in consumer spending during which we are confident we can continue to deliver best in class growth among our peer set on that note. It's worth pointing out that we have been very pleased with same store sale recovery data we have observed in April.
Kevin: The high end of our guide implies a continuation of recent trends in both our growth and consumer spending as well as several appropriately weighted international expansion initiatives and finally, while the midpoint of our guide implies modest margin expansion, excluding the impact of legacy Funaro, an appetite margins are.
Kevin: Banding meaningfully in 2024.
Kevin: And to reiterate the impact of rebel is not included in the guide.
Speaker Change: Before turning the call back to Jared I want to reiterate that our balance sheet cash generation and profitable growth position us incredibly well for the current environment of macro uncertainty with that let me now turn the call back to Jared.
Jared: Thanks, Anthony Okay. This was.
Speaker Change: This was a long one.
Speaker Change: So a lot of ground covered a lot of good wins before we go to the analyst Q&A. We did say we were going to select one or two questions from our from X. So first one is from Jared <unk>.
Speaker Change: From one <unk> to another.
Jared: Why did a deal not closed to be acquired was evaluation do you see that the possible acquisition could happen in the near future.
Jared: Jeremy Thanks for the question I mean, this is really what I've dedicated my whole kind of opening letter to the shareholders.
Jeremy: Shareholder known I tried to give like a full play by play.
Jeremy: There was a lot of strategic interest and once you have strategic interest that means really anything from I could go private perspective has to be sidelined.
Jeremy: And I think look rightfully price expectations kept going up because we knew all about these wins and the market reacted the way they did over the last months analyst notes come out the way they view, indicating potential price ranges and Thats, what a good independent board and special Committee looks at to.
Jeremy: To make determination do we see a possible acquisition in the future and look I mean part of my letter was to say like we're very focused on our executing on our plan, we outlined our plan and the associated results that said long term I mentioned like I don't see my grandkids running a payments business someday. The idea is to make so many problems and create so much frustration for our competition.
Jeremy: But at some point they make the problem go away I have no idea what that timeframe look like.
Jeremy: Also just getting real quick quickly Krishnan Mohammad I think this is like the third quarter in a row in a row that we've taken one of your questions. But you have good months. So how has the expansion outside of North America have been progressing stadiums, skycaps et cetera, a shift <unk> been able to execute its playbook as expected are you facing any significant challenges during the expanse.
Jeremy: And.
Jeremy: Look I mean, I don't know, we probably rattled off like 100 names this quarter, which for everyone's awareness is not the complete list of our wins for the quarter, even though it may have sounded like it.
Jeremy: Including a number in Canada, and Europe, which we've never talked about before because we never could.
Jeremy: Draw attention, specifically to Leonardo hotels hotels, that's several hundred locations.
Jeremy: I mean, thats, a fantastic proof point, but we listed hotels in Canada.
Jeremy: Of which we had billions we have billions of gateway volume in Canada that we've never been able to pursue up until this past quarter or two so I'd say traction is great Sky cab is doing really well.
Jeremy: Really we put in.
Jeremy: And to our guide we've put some investments in around the middle of the year to kind of ramp up some of our some of our distribution across Europe. Because this is really going to be just a distribution game.
Jeremy: How we go out how we go to market to get Sky cab in front of a lot of restaurants, but we are able to have immediate impact just from the one hundreds of third party integrations, we have that already accounted for the European market, whether Thats, Microsoft Oracle, Microsoft Agilis is we're able to kind of hit the ground running pretty quick there. So all in all pretty happy with our.
Jeremy: <unk> expansion right now so thanks for the thanks for those two questions from X and we will go to you.
Jeremy: The animals.
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Speaker Change: Our first question today comes from Darrin Peller of Wolfe Research. Please proceed with your question.
Darrin David Peller: Hey, guys. Thanks, Jared Thanks for all the color on the strategic review update but.
Darrin David Peller: With regard to growth and the guidance, obviously, it's great to see the wins you are having yourselves.
Darrin David Peller: It sounded to me like that was the driving force of the conversion of the ramp was all the new wins you've had and.
Darrin David Peller: Those ramping as the year progresses, combined I guess with Sky type success.
Darrin David Peller: Maybe just reiterate is that is there how much conservatism do you have an understanding that the implementations are going to be timed appropriately no. There's no is there a room for timing changes or anything embedded in the outlook and then.
Darrin David Peller: Maybe just what the actual contribution is from new business versus the original guide you gave on that roadmap on volume would be helpful. And then a quick one on just organic I'm, assuming it's still in the 20% plus or mid twenties.
Darrin David Peller: It would be but if you can comment on the first quarter.
Speaker Change: Yeah, I mean, I'll start and certainly if these guys can jump in but I'll reiterate really what was in my prepared remarks, we absolutely are still reaffirming that we expect organically.
Speaker Change: 5% on a full year basis, and yes, there is definitely acceleration in that through the year, but Q1 was.
Speaker Change: Really right in line and very strong.
Speaker Change: I think when we think about.
Speaker Change: All of the things Jared just said every one of them is certainly quantified.
Speaker Change: Two an excel level that you would expect so they are not just words on the page right. So when we think about the acceleration into the back half.
Speaker Change: A lot of detail behind that and I think that.
Speaker Change: I'll start with Sky cab right and that they access.
Speaker Change: Susser happened towards the 30000 goal right.
Speaker Change: Totally on track and measurable the featured wins that we talked about I don't know.
Speaker Change: Spent as much time today, but the ticketing wins.
Speaker Change: How that works right. It's just added ebb and flow through and that's why you see our incredible positivity around upping, Nevada in EBITDA and free cash flow right.
Speaker Change: That whole unit economic and what we've been talking about for the past 12 months. It is really coming to fruition as you see these go lives quarter.
Speaker Change: Quarter after quarter, and yes of course, they're timed around certain seasons, and so forth, but with the team.
Speaker Change: As we think about hospitality.
Speaker Change: And moving forward.
Speaker Change: With hospitality and Europe, and Canada, those wins are happening right two quarters ago, we werent able to actually bring those on right. So now those reporting and live in ramping.
Speaker Change: And absolutely contributing into the back half and I.
Speaker Change: Just as you think about I know Jared talked about the strategic ecommerce customer rate like that's something that is a little bit.
Speaker Change: Timing and it can move just like some of these enterprise launches that we have can move so.
Speaker Change: We're always going to have that mix issue that we could have a delay because of installs, but our line of sight is always been pretty good and so I think that's why we've had we have high.
Speaker Change: High conviction around the ramp and.
Speaker Change: It is not different than what we planned when we gave our original guide yes.
Jaret: And Darrin if jaret here just to kind of weigh in on that.
Darrin David Peller: On those points, a little bit more I mean, first and trying to break things out on a quarterly basis, I mean simply put like we wouldn't do it unless we had pretty high confidence in it.
Jaret: We're we're pretty motivated organization, we like we like posting wins every quarter. So things are off the cadence that we believe is likely we want to correct. It and set that set the proper cadence for the year. So.
Jaret: So I would say that that should be a sign of confidence in terms of ramp for the back half to Nancy's point, yes. It's everything you list out in this quarter's.
Darrin David Peller: Earnings report.
Darrin David Peller: And probably many of the prior quarters as well like the last two or three it's just not instantaneous right like I almost liken it to like.
Darrin David Peller: Our manufacturing backlog right, maybe we should look at talking about like how much in terms of billions.
Darrin David Peller: Volume of backlog is waiting for installation because we've been posting stadium wins in ticketing wins for several quarters now and some of them. They might say the go live as of June.
Darrin David Peller: 2024 things of that nature VII hotels, we cover of our earnings report like a year and a half ago hasn't opened yet.
Speaker Change: So there.
Speaker Change: As as that backlog continues to grow.
Speaker Change: You can get you can actually like forecast it out with the degree of margin greater.
Speaker Change: And then you would have previously and the last thing I'd just say on your question on the organic side and Nancy mentioned in her remarks about blowing up the revenue model I don't think any like people like really appreciate the lengths that we will go.
Darrin David Peller: To like Rex.
Darrin David Peller: Our sales revenue model or an acquisition or to pivot in the right direction I think we said this before.
Darrin David Peller: The appetite time, but we will absolutely give freebies away on their SaaS fees for a year or their hardware fees year things that were part of their historic business or revenue at the time, we acquired just to move them over to our new products. So we can delete parts and monetize two payments so.
Darrin David Peller: I know thats very tricky for analysts like get their arms around unless we like really itemize it out but like you should assume most of the acquisitions. We've done have intentionally been set back from a from a.
Darrin David Peller: From the legacy revenue perspective to move like five steps forward in our direction.
Speaker Change: That's great. So it sounds very bottoms up so that's that's really helpful. So very quickly international it was great to see the wins the stadiums hotels both sides just the progress you're having there seems like it's truly happening any what's your opportunity there in the near term and then maybe I mean, we know long term is big.
Speaker Change: Is that does that pipeline still continuing in the near term.
Speaker Change: Yeah I mean.
Speaker Change: Jaret here on this one I think like I.
Speaker Change: I didn't expect last quarter to be able to talk about as many wins in Europe and Canada This quarter.
Jaret: We really just started so I mean, there were some pretty impressive names in there I know I rattled off.
Jaret: Pretty long laundry list, there, but we had some pretty big hotels, some pretty big operators.
Jaret: You've got Pizza hut and a couple of countries that's pretty good.
Jaret: Online ordering perspective, we've had amazing traction with <unk> operators.
Jaret: So, yes, I would say in terms of like our plans for Europe and Canada. We're ahead of where we thought we were especially.
Jaret: A quarter or two ago, that's why we kind of mentioned or I mentioned before like we started making some investments in our guide.
Jaret: Towards the middle of this year just to just to ramp up some of our distribution firepower in Europe, because we think we'll need it.
Speaker Change: That's great guys. Congrats thank you.
Speaker Change: Thank you.
Speaker Change: The next question is from will Nance of Goldman Sachs. Please proceed with your question.
William Alfred Nance: I appreciate you taking the question.
William Alfred Nance: Okay, I think the back half ramp in the guidance is kind of neat.
William Alfred Nance: The main focus this morning, and just getting comfortable with it at all Walter I just asked about this but I guess can.
William Alfred Nance: Can you put a finer point on just what's different about this year from an implementation perspective from prior years, because I think I'm getting to something like 56%, 57% of revenue in the back off and it's been pretty consistently.
William Alfred Nance: 4% to 50 falls on maybe the answer is just you've got a lot more of these chunky stadium and take any loans in the back half, but I'm. Just wondering if you can kind of double click on what's sort of different about the implementation schedule. This year versus in prior years, just to help people kind of get a better understanding for that.
Speaker Change: Yes, well I'll start and then <unk>.
Speaker Change: Taylor Nancy to come in I would really just call it that growing backlog of go lives.
Speaker Change: Sure.
Speaker Change: We have certainly been moving up market as demonstrated by the average volume per merchant data at each one of the slides we periodically put in our earnings report.
Speaker Change: <unk> been done nothing, but like move upmarket and diversify into kind of more complex verticals like stadiums and E Commerce and we just have really good visibility into into go lives and they start stocking up.
Speaker Change: As I mentioned before like there are certainly stadiums and hotels and resorts, we announced two quarters ago.
Speaker Change: That are in our backlog for go lives and frankly, the bigger the backlog grows the more margin you have when you start forecasting out which is largely customer driven date when when they'll go a lot. So I think it's a big part of it is just the mix shift and the fact over the last couple of years being in these new verticals.
Speaker Change: You just have more you just have a greater sense of our greater visibility into when they'll turn on also I mean, just from a seasonality perspective.
Speaker Change: The football season, when they do a lot of ticketing a lot of these are travel and leisure are more.
Speaker Change: Seasonally in play in the second half of the year.
Speaker Change: Sure Kevin.
Kevin: The one thing I would say just to kind of tack onto despite slightly different topic as we are continuing to synergize.
Kevin: Prior acquisitions right. So as we do that those revenue synergies.
Speaker Change: Our packing.
Speaker Change: <unk> back half of the year.
Speaker Change: So our gateway a sunset initiative.
Speaker Change: That's like a great example of where we have complete visibility of who's moving and win.
Speaker Change: The process that will definitely help buzztime conversion monetization.
Speaker Change: As you guys know, we talked about carrots, moving slightly logistics and it's working we're getting those conversions to end to end. So I would say similar to ticketing, we have visibility to when those moves are going to happen.
Speaker Change: Got it I appreciate all the helpful details. So just a follow up actually Nancy on that last point, maybe just to rewind a little bit the last quarter. It sounds like there was a bit of a more unusual gateway deal in the prior quarter. I was just wondering if you could kind of update us on how that's impacting the numbers I know you mentioned the gateway revenues coming down sequentially this quarter again.
Speaker Change: And so just remind us about the process of getting the converted into in volume up to the kind of the standard net revenue take rates that we would typically expect in those deals and maybe just some context for.
Nancy J. Disman: Roughly I guess did it come out at a significantly lower spreads initially and just I guess what is that Delta that you guys are closing over the course of I.
Nancy J. Disman: I guess, the repay bring up the franchisees.
Nancy J. Disman: Yes sure actually this is Taylor I'll hit that haven't been involved with the relationship.
Nancy J. Disman: Yes.
Nancy J. Disman: It's a dynamic that we described in detail last quarter, which is effectively what we've got.
Nancy J. Disman: A few different opportunities whereby we can contract with franchisees on a direct basis at a higher spread.
Nancy J. Disman: The way this represents itself in our financials is that we have end to end volume today that we would determined we would designate as kind of under monetize meaning its paying a lower spread however, the way the relationship. We expect to evolve is that we will be able to contract with the franchisees directly provide them more services et cetera. So again.
Nancy J. Disman: Nancy alluded to the spread stability that we're starting to see this is one area of comfort for us in that regard, which was effectively an institutional relationship where we can take on more of the burden for that large enterprise.
Nancy J. Disman: And contract with the franchisees.
Nancy J. Disman: Closer to sort of small to medium size businesses rates.
Nancy J. Disman: One level of spread but it also takes a while to roll out it's not something you can attack.
Nancy J. Disman: The locations all at once.
Nancy J. Disman: Again kind of alluding to.
Nancy J. Disman: More activity from a revenue perspective in the back half of the year.
Nancy J. Disman: Got it so it's sort of an in year benefit the repay spring, it's not like a multiyear thing.
Nancy J. Disman: Okay.
Nancy J. Disman: It's as fast as we can get the thousands of locations I don't want to be more specific than that we try hard.
Nancy J. Disman: And it also gets it also competes with net new business from time to time.
Speaker Change: Got it alright, I appreciate you taking the questions guys.
Speaker Change: The next question is from Timothy Chiodo of UBS. Please proceed with your question.
Timothy Edward Chiodo: Great. Thank you for taking the question I wanted to touch on the 500 billion figure Thats in the shareholder letter, it's the total under monetize and volume tunnel at the last update I believe the gateway opportunity had about $120 billion left software. It was another 30 I was hoping you could just bridge us to the total 500, and just expand a little bit and elaborate around that.
Speaker Change: Pretty large.
Speaker Change: And funnel opportunity.
Speaker Change: Sure. So I'll hit this one as well.
Speaker Change: Put those two slides in there because theres been a lot of talk about capital allocation, how do we think about the dollars we deploy.
Speaker Change: We believe it's a core competency of our business. It's a really strong differentiator and I think we're actually quite agnostic in terms of how our dollars get allocated to be that product development M&A stock buybacks.
Speaker Change: Customer acquisition costs et cetera, as long as the math.
Speaker Change: It makes a ton of them.
Speaker Change: A ton of fundamentals.
Speaker Change: And so we tried to illustrate kind of what our track record has been over the past few years in terms of total dollars deployed it and what the opportunity that those dollars are presented.
Speaker Change: So we have all cited the gateway regularly that was a portion of that $500 billion, but every dollar we deploy towards M&A opportunities and otherwise has as presented.
Speaker Change: Our volume base that we can go with.
Speaker Change: That hasnt monetize payments, well and I think we've called out things like advertising focus files all of those transactions had volume that isn't quite as.
Speaker Change: Daily measurable as the gateway volume, but it is an incredible opportunity. So we laid that out.
Speaker Change: Again, just to be very clear you can consider our existing.
Speaker Change: Gateway population as a portion of that 500, you can consider advertise customers inside of that 500 et cetera, what's not inside of that is the transaction that we announced.
Speaker Change: Page just after that so we tried to give investors a sense for why we allocate capital the way we do what we look for when we deploy a dollar again we're agnostic.
Speaker Change: So whether that dollars to hiring employees to build a product to buy another company or to buy back our own stock as long as the returns make a ton of sense and hopefully that gives investors some confidence that when they see us invest.
Speaker Change: And we announced two interesting ones today in the form of revenue on a large stock buyback that should be really excited that we found opportunities to meet those those return objectives.
Speaker Change: Perfect. Thank you Taylor the brief just a quick numbers. One if you are able to update I know that last year few years back when you did the in sourcing there was the 350 direct sales force like we had some other direct sales folks in house plus the resellers. So that was a U S. Number can you just one update the size of the distribution in the U S. Both direct and indirect.
Nancy J. Disman: And then touch on where that fits for Europe in terms of how much hiring there has been for sales in Europe and then how many of those distribution partners partners, you have which I recognize that you you just mentioned a few questions back, but if you could put some numbers to it that'd be appreciated.
Speaker Change: Yeah, I'll actually start in reverse let Jared cover the U S sales force.
Speaker Change: We've been spending a lot of time on the European opportunity our European sales force largely consists today.
Jared: The former for narrow sales team.
Speaker Change: Plus.
Speaker Change: And for a full of early stage software partners that we've had in the U S that also install systems throughout Europe, and then a very small handful of incredibly talented folks to put up a disproportionate number of the wins you see in this earnings deck. We are by no means at the scale, we'd like to be with regard to European distribution, we've got pretty strong.
Speaker Change: An ambitious plans for our our Salesforce in Europe, but it is by no means where we'd like it to be at Jared do you want to comment on the U S. Yes, I think from the time that we did distribution and sourcing so.
Jared: I guess I can almost almost two years ago.
Jared: We've increased we've had several as hiring classes for our direct team so.
Jared: If we increase the size of the direct team by like 10% or something it seems like generally in the ballpark and then we have added additional authorized partners, mostly in the West coast, where.
Jared: We just we just always kind of lacked a direct presence.
Jared: So, yes, and I think it's probably fair to say, we will continue to slowly add more head count to our direct sales team just to account for Skype abdomen and.
Jared: As you think about the synergies we look for in M&A transactions.
Jared: Yes.
Jared: Rebel business had an awesome sales team both direct and a series of partners are really excited to work with them as the transaction comes to a close.
Speaker Change: Alright. Thank you on both of those I appreciate it.
Jared: The next question is from Dan <unk> of Mizuho. Please proceed with your question.
Dan: Hey, guys. Thank you so much for taking my question.
Dan: Great to see the organic growth re duration for the year.
Dan: Very very strong I have a quick question about <unk>.
Dan: Very interesting to see the acquisition.
Dan: And Taylor can you maybe give us like a sense of the strategic rationale behind it and what do you expect to get out of it. Thank you.
Nancy J. Disman: Yes, sure Jared here I'm happy to ticket kick this off.
Jared: Yes, I mean this is this is totally our playbook I mean this should be looked at very similarly to advertise we're focused bonds I mean.
Nancy J. Disman: We can apply like all of our strategies to this I mean first and foremost.
Nancy J. Disman: You have a massive payment cross sell.
Dan: So if anyone's familiar with rebels history was valued once it over $500 million, we've certainly announced the purchase price meaningfully less than that but it was an organization that intentionally overlook payments for a very long time and feel really good software one great customers, but payments was somewhat of an afterthought until the last couple of years so instantly.
Dan: Instantly you have the ability to pursue existing customers switching over to payments second.
Dan: It's kind of our Spacex.
Dan: The fees that we've adopted here, leading the parts you don't need two restaurant products youre going to see the best capabilities out of out of revenue for <unk> and enterprise and bring them over into in the Sky. Tammy you can do that with a lot of talent that happens to be in the same.
Dan: Co located essentially in the same areas are.
Dan: Our monster development team and Lithuania, and then you get a lot of distribution to sell a product that you know wins that hasnt winning value proposition, meaning as Taylor mentioned <unk> has a lot of salespeople direct already they also have authorized partners in Europe for.
Dan: For their product as well so you've got a massive cross sell you've got to take out the parts. So deep delete duplicative product offerings, you pick up a bunch of talent and then you have a lot of distribution and as Taylor mentioned we.
Dan: We're just going through the standard kind of regulatory approval process, but assuming July one could very well be before that you said $15 million of EBITDA in the back half of the.
Dan: In the back half of the year, you annualize that and that's with an acceleration ramp. The following year you can already get a sense that it was just a perfectly fine financial transaction on its own right.
Speaker Change: Yes, Jared summarized that well I don't have too much to add except that we're in.
Speaker Change: Incredibly excited to get this one over to Golan and don't expect it to be much much more than than July versus June.
Speaker Change: Great. Thank you I definitely see it everywhere here in New York, So great acquisition. Thank you.
Speaker Change: Our last question today will come from Andrea <unk> of <unk>. Please proceed with your question.
Andrea: Thanks, Good morning, I guess I have a question on Sky tab I know, it's early days, but maybe you could just help us think about the revenue contribution and how you see that developing over time and maybe also just the the revenue potential of our sky type customer versus a non sky tap customer.
Speaker Change: Yeah I'll start with this.
Speaker Change: And I think it is important to dimensionalize kind of what our book looks like today.
Dan: <unk> is exclusively focused on net new wins, adding customers when we add a skype being that it is.
Dan: Overwhelmingly a customer that didn't exist in the ship where ecosystem prior to that we also have the opportunity should we choose to kind of lean on it to upgrade customers that are on other pieces of restaurant software to Skype that overtime, we will get a SaaS lift from that but these customers are typically already giving us payments.
Dan: And as you've seen we try to price the SaaS offering and Skype out to be very attractive vis vis other competitors in the market.
Dan: We've seen lots of success as evidenced in kind of earning materials and prepared remarks.
Dan: With this strategy, although we do think theres plenty of room to move price.
Dan: When our nearest competitors.
Dan: About the number of modules that can they can sell to a customer in all of ours are included in our base pricing you see the opportunity.
Dan: So chart toward over time, although we're not seeing the need to do that in the current environment.
Dan: A lot of customers what you should expect from a sky type site, just kind of at the macro level versus averages in our book is that the restaurants. They are typically a little bit smaller volume than what you'd have in an average hotels significantly smaller than the stadium, although we earn a higher spread and we earn a SaaS component on top of it so very very attractive.
Dan: Customer in terms of the revenue contribution per per dollar of volume Nancy I don't know if you want to give any more color on that.
Nancy J. Disman: Just to reiterate we've said that that's a lot of restaurant growth with 55%.
Dan: All within that is a very high percentage coming from.
Nancy J. Disman: Tableau in excess of that and I think it's just all the components that Taylor talked about just the ramping.
Nancy J. Disman: I think the one thing you didn't talk about is just we don't charge for FRE and handset right now and every module within within Sky cab.
Nancy J. Disman: I would say, it's not only is it a low cost.
Nancy J. Disman: Competitively in the market.
Nancy J. Disman: And we also are generally giving one year free to many of our customers. So there is this ramp that youre going to see as we start lapping Scott.
Nancy J. Disman: Sky cab, that's going to have an impact the back half of this year and certainly.
Nancy J. Disman: In the near term.
Nancy J. Disman: Just bigger revenue figure SaaS revenue.
Nancy J. Disman: Just just great trajectory.
Speaker Change: I appreciate it and just my follow up Jared I appreciate all of the comments on the strategic review, but maybe.
Speaker Change: And then maybe just help us think about.
Jared: So what valuation you think makes sense.
Jared: If you were to go down the path of.
Jared: A sale or we're just trying im trying to dimensionalize sort of what would get you excited and how we should think about.
Jared: The trajectory from here thanks.
Jared: Yeah.
Speaker Change: It's a.
Speaker Change: It's a really tough question right because I think there is a pretty big gap between.
Speaker Change: We value today, and frankly, how we have been valued for quite some time.
Speaker Change: Relative to some of our high growth peers that don't even kind of share our profitability profile.
Jared: So I.
Jared: The thing I would point to is I mean.
Jared: During the strategic review I think almost every analysts put out a note.
Jared: With where they thought ship four might might transact that and the rationale behind it and I was like.
Jared: I think generally, especially those on the higher end of it we're thinking things through correctly.
Jared: But I think if you watch the evolution throughout that strategic review those notes kept getting higher and higher.
Jared: I think that was rightfully so, especially when you look under the hood at some of the things that are going on.
Jared: Certainly makes it hard for I think.
Jared: The strategic parties win when Theres, a new note kind of everyday and the direction, it's going but I didn't disagree with that on the top end of those ranges that would've been a more appropriate valuation, but certainly it's.
Jared: Well, well above where we're at presently today.
Speaker Change: Okay. Thank you.
Jared: Yes.
Speaker Change: That's all the time, we have for questions. Today. This concludes today's conference you may disconnect. Your lines at this time and thank you for your participation.
Jared: Okay.
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