Q2 2024 Shift4 Payments Inc Earnings Call

Greetings. Welcome to SHIFT for second quarter 2024 earnings call.

Speaker Change: 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.

Operator: 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 0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Tom McCrohan, Executive Vice President, Investor Relations. Thank you. You may begin.

Please note this conference is being recorded. I will now turn the conference over to Tom McCrohan, Executive Vice President, Investor Relations. Thank you. You may begin.

Tom McCrohan: Thank you, Operator. Good morning, everyone, and welcome to Shift4's second quarter 2024 earnings conference call. With me on the call today are Jared Isaacman, Shift4's Chief Executive Officer; Taylor Lauber, President, and Nancy Disman, our Chief Financial Officer.

Jared Isaacman: Thank you, Operator. Good morning, everyone, and welcome to Shift4's second quarter 2024 earnings conference call. With me on the call today are Jared Isaacman, Shift4's Chief Executive Officer.

Speaker Change: Taylor Lauber, President, and Nancy Disman, our Chief Financial Officer.

Tom McCrohan: This call is being webcast on the Investor Relations section of our website, which can be found at investors.shift4.com. Today's call is also being simulcast on X Spaces, formerly known as Twitter, which can be accessed through our corporate Twitter account, at www.shift4.com. Our quarterly shareholder letter, quarterly financial results, and other materials related to our quarterly results have all been posted to our IR website. Our earnings call and earnings materials today include forward-looking statements.

Speaker Change: this call is being webcast on the investor relation section of our website which can be found and investors dot shift for dot com

Today's call is also being simulcast on xSpaces, formerly known as Twitter, which can be accessed through our corporate Twitter 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.

Tom 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, which you can find on the SEC's website and the investor relations section of our corporate website. For any non-GAAP financial information discussed on this call, the related GAAP measures and reconciliations are available in today's quarterly shareholder letter.

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.

Jared Isaacman: additional information concerning those factors is available in our most recent reports on forms ten -k and ten you

Jared Isaacman: which you can find on the SEC's website and the investor relations section of our corporate website. For any non-GAAP financial information discussed on this call, the related GAAP measures and reconciliations are available in today's quarterly shareholder letter. With that, let me turn the call over to Jared. Jared?

Tom McCrohan: With that, let me turn the call over to Jared. Okay?

Jared Isaacman: Thanks, Tom. This was once again a very busy quarter, and I'm reasonably pleased with our quarterly results and the momentum we have heading into the back half of the year. So, as a quick summary, we outperformed our financial KPI goals for the quarter. We closed on two acquisitions, Rebel and Vectron.

Jared Isaacman: Thanks, Tom. This is once again a very busy quarter, and I'm reasonably pleased with our quarterly results and the momentum we have heading into the back half of the year.

Jared Isaacman: there's a quick summary we outperformed our financial kpi goals for the quarter we closed on two acquisitions rebel and vetron

Jared Isaacman: We continued our organic international expansion efforts in support of our very large strategic customer, and we won thousands of new hotels, restaurants, and stadiums here in the U.S. and internationally. So, on to the quarterly results. For the second quarter, we generated 50% year-over-year growth in end-to-end payment volume, 38% growth in gross profit, and 41% growth in gross revenue minus net worth. We also generated $162 million of adjusted EBITDA, representing 48% year-over-year growth, as our margins expanded 240 basis points to 51% versus the corresponding quarter a year ago. Our operating margins expanded despite the drag from the acquisitions of Appetize and Finaro, which together negatively impacted our margins by approximately 250 basis points for the quarter.

Jared Isaacman: We continued our organic international expansion efforts in support of our very large strategic customer, and we won thousands of new hotels, restaurants, and stadiums here in the U.S. and internationally.

Jared Isaacman: So, on to the quarterly results. For the second quarter, we generated 50% year-over-year growth in end-to-end payment volume, 38% growth in gross profit, and 41% growth in gross revenue less network fees.

Jared Isaacman: We also generated $162 million of adjusted EBITDA, representing 48% year-over-year growth as our margins expanded 240 basis points to 51% versus the corresponding quarter a year ago.

Jared Isaacman: our operating margins expanded despite the margin drag from the acquisitions of appettiz and fernaro which together negatively impacted our margins by approximately two hundred and fifty basis points for the quarter

Jared Isaacman: Now, naturally, as synergies are realized, we expect that the drag from those acquisitions to disappear and contribute to our ongoing margin expansion target. Most importantly, we generated $76 million of adjusted free cash flow, up 18% versus a year ago. Our blended spreads also remain very stable, coming in at approximately 62 basis points despite considerable volume.

Jared Isaacman: now naturally as synergies are realized we expect that the drag the dragve from those acquisition to disappear and contribute to our ongoing margin expansion targets

Jared Isaacman: Most importantly, we generated 76 million of adjusted free cash flow, up 18% versus a year ago. Our blended spreads also remain very stable, coming in at approximately 62 basis points despite considerable volume growth.

Jared Isaacman: Now, with the aim of being a bit more succinct compared to some of my prior prepared remarks, I wanted to share the following highlights. Now, starting with our core, our signature win this quarter is Whistler Blackcomb, which is part of Vail Resorts, as well as new hospitality properties, Nobu Chicago and Nobu Toronto. We also signed Pier 66 Resort, Yosemite National Park, Scott Resort and Spa, Cobblestone Inn and Suites, Emirate Ocean Resort, Deer Valley's Eckstein Lodge, Mount Airy Casino and Resort, and the new Live Casino and Hotel that is currently under construction and scheduled to open next year in Louisiana.

Speaker Change: Now, with the aim of being a bit more succinct compared to some of my prior prepared remarks, I wanted to share the following highlights.

Speaker Change: now starting with our core our signature winnessthis quarter is whistler black home which is part of bil resorts as well as new hospitality properties no bu chicago and nobo toronto

Jared Isaacman: We also signed Pier 66 Resort, Yosemite National Park, Scott Resort and Spa, Cobblestone Inn and Suites, Emirate Ocean Resort, Deer Valley, Valley Stein, Eckstein Lodge.

Jared Isaacman: mount ary casino and resort and the new live casino hotel that is currently under construction and schedule to open next year in louisiana

Jared Isaacman: I've taken a close look at our pipeline of major enterprise resorts, many of which have never before been on our gateway, and it's nothing short of impressive. So for those that like to poke fun at our organic versus inorganic debate, these wins represent billions in net new volume at some of the most desirable hospitality locations in the country. And if you're paying attention, we cover a list like this every single quarter. So now, turning to restaurants, which I feel like at times we should not even talk about because if we were simply known as the toast of hotels and stadiums, we'd probably be more appropriately valued.

Speaker Change: You know, I've taken a close look at our pipeline of major enterprise resorts, many of which have never before been on our gateway.

Jared Isaacman: And it's nothing short of impressive.

Speaker Change: So, for those that like to poke on our organic versus inorganic debate, these wins represent billions in net new volume at some of the most desirable hospitality locations in the country. And if you're paying attention, we cover a list like this every single quarter.

Speaker Change: So now, turning to restaurants, which I feel like at times we should not even talk about because if we were simply known as the toast of hotels and stadiums, we'd probably be more appropriately valued.

Jared Isaacman: But the reality is our SkyTap growth continues to accelerate with nearly 10,500 system installs in Q2, representing a 12% increase quarter over quarter. Now, we attribute our SkyTap success to A, it's a feature-rich cloud product with strong mobile and online ordering solutions. B; it's the lowest cost of ownership with the philosophy of not charging for every single module and feature, strong distribution coverage, though we could always use more between our direct and indirect teams, and a strategy that delivers a low customer acquisition cost through referral programs, lead incentives, and intelligent M&A.

Speaker Change: But the reality is our SkyTab growth continues to accelerate with nearly 10,500 system installs in Q2, representing 12% increase quarter over quarter. And we attribute our SkyTab success to, A, it's a feature-rich cloud product with strong mobile and online ordering solutions.

Speaker Change: be it's the lowest cost of ownership with the philosophy not to charge for every single module and feature

Jared Isaacman: Strong distribution coverage, though we could always use more, between our direct and indirect teams, and a strategy that delivers a low customer acquisition cost through referral programs, lead incentives, and intelligent M&A.

Jared Isaacman: Now, at current Q2 run rates, we will far exceed our 2024 system installation goals. And if you have any doubt about the momentum of the SkyTab, just check out our daily posts on X or Twitter about some of the more notable restaurant wins, and we post those results like every day on Twitter. So you can really kind of verify firsthand some really awesome restaurants and new startups. It's really going well. Now, some of the more notable restaurant wins this quarter include Experience XRG, which is an operator of 11 distinct Mexican restaurant concepts, Alpaca Chicken, which is fast-casual at 16 locations, Stanford Hotels, which will now deploy our SkyTab mobile devices across restaurants at 13 of their locations, Angie's Lobster, which is an Arizona-based fast-casual chain, the Casa Cipriani Club located in Lower Manhattan, two Gaviano restaurants In specialty retail, we added Turner's Outdoorsman, which is a 13-store hunting and fishing specialty store chain located in Southern California and Arizona, and the University Bookstores for BYU and West Los Angeles College.

Jared Isaacman: Now, at current Q2 run rates, we will far exceed our 2024 system installation goals.

Jared Isaacman: And if you have any doubt about the momentum of SkyTab, just check out our daily posts on X or Twitter.

Jared Isaacman: Some of the more notable restaurant wins, and we post those results like every day on Twitter. So you can really kind of verify first hand some really awesome restaurants and new start-ups. It's really going well.

Jared Isaacman: now some of the more notable restaurant wins this quarter include experience xrg is an operator of eleven distinct mexican restaurant concepts

Jared Isaacman: Alpaca Chicken, which is Fast & Casual's 16 locations.

Jared Isaacman: Stanford Hotels, which will now deploy our SkyTab mobile devices across restaurants at 13 of their locations.

Speaker Change: andshe's lolaststyear which is inarizona base fast casual chain

Speaker Change: The Casa Cipriani Club located in Lower Manhattan, two Gaviano restaurant, Shuck and Shack Oyster Bar Group, which is converting 18 of their locations to SkyTab, and Tulacapi Restaurant located in California.

Jared Isaacman: In specialty retail, we added Turner's Outdoorsmen, which is a 13th store hunting and fishing specialty store chain located in Southern California and Arizona, and University Bookstores for BYU and West Los Angeles College Wildcats.

Jared Isaacman: Turning to some of our newer verticals, in Sports and Entertainment, we had a really strong quarter of signings, including the Miami Heat, the Indianapolis Colts, which also includes ticketing, the Chicago Bears, the Indiana Pacers, which also includes ticketing, the Memphis Grizzlies, the AAA team for the Oakland A's, and the Las Vegas Aviators, and the Lehigh Valley Phantoms, which is the minor league team for the We also signed several college teams, including the University of Houston, Boise State and their famous Smurf Turf, Indiana University, as well as a couple MLS teams, the San Diego Football Club and the Austin Football Club. Additionally, we signed agreements with the New England Patriots to provide fans with a checkout-free concession experience at Gillette Stadium.

Jared Isaacman: now

Speaker Change: Turning to some of our newer verticals, in sports and entertainment, we had a really strong quarter of signings, including the Miami Heat, the Indianapolis Colts, which also includes ticketing.

Speaker Change: the chicago bears the indiana pacers which is also got takening the memp scrib crrizliesthe tripleli eam for the open adays which plus and the las vegas aviators

Speaker Change: and the Lehigh Valley Phantoms, which is the minor league team for the Philadelphia Flyers. We also signed several college teams.

Speaker Change: including the University of Houston, Boise State and their famous Smurf Turf, Indiana University, as well as a couple MLS teams, the San Diego Football Club, the Austin Football Club. Additionally, we signed agreements with the New England Patriots to provide fans with a checkout-free concession experience at Gillette Stadium.

Jared Isaacman: Now, five of these sports teams, as I mentioned, came in with ticketing, but just to reiterate, it's the Colts, the Pacers, Austin Football Club, San Diego Football Club, and the Las Vegas Aviators. Now, turning to non-profits. The overall volume contribution from the vertical has ramped up really nicely this year. So, in the first half of this year, we've processed more volume than all of last year combined. We expect the second half of this year to be even stronger, given the typical seasonal nature of donations, including during an election cycle that occurs typically in the fourth quarter.

Speaker Change: Now, five of these sports teams, as I mentioned, came in with ticketing, but just to reiterate, it's the Colts, the Pacers, Austin Football Club, San Diego Football Club, and the Las Vegas Aviators. Now, turning to non-profits.

Jared Isaacman: And we're really on track to deliver 400% year-over-year volume growth in the nonprofit vertical in 2024, minus St. Jude Children's Research Hospital, which is already a very large, billion-dollar-plus established customer. Now, the volume growth was really driven by just winning a lot. Our strategy and differentiated value proposition as the go-to payment processor for fundraising platforms continues to gain traction and market acceptance. This month, we fully moved all U.S. card volume from Give & Gain to Shift4 Payments, and we're going to move their non-U.S. volume later this summer. Give & Gain supports a variety of high-profile fundraising events.

Speaker Change: The overall volume contribution from the vertical is ramped up really nicely this year. So, in the first half of this year, we've processed more volume than all of last year combined.

Speaker Change: we expect the second half ofthis year to be even stronger given the typical seasonal nature of donations including during an election cycle that occur typically in the fourth quarter

Speaker Change: and we're really on track to deliver four hundred percent year-over-year volume growth in the nonprofit vertical in two thousand and twenty four minus stsincets you children's research hospital whichis which is already very large billing dollars plus established customer

Speaker Change: Now, the volume growth was driven really by just winning a lot. Our strategy and differentiated value prop as the go-to payment processor for fundraising platforms continues to gain traction and market acceptance.

Speaker Change: this month we fully moved all u s card volume from given gain to shift for payments and we're going to move their non u s volume later the summer given gain supports a variety of high profile fundraising events so for example we're pretty excitedto powering the payments for the boston marathon going forward

Jared Isaacman: So, for example, we're pretty excited to be powering the payments for the Boston Marathon. We also made great progress in our integration with fundraising platform GiveLively, and we're scheduled to go live with our initial merchants by year-end, and we expect volumes from these fundraising platforms to ramp really significantly over the coming months. So outside of the fundraising partnerships, we've also just signed a lot of impressive non-profit customers like Malala Fund, Amnesty International, the James Hutton Institute, OSF Healthcare, Migrant Health UK, CenterPoint Soho, and World Vision Canada.

Speaker Change: we also made a great progress of their integration with bundaries ing platform give lively and wewerere scheduled to go live with our initial merchants by year-end and we expect volumes from these fundraising platforms to ramp really significantly over the coming months

Speaker Change: sou outside of the fundraising partnerships we've also just signed a lot of impressiveed nonprofit customers like ma fund amesty international the james hutton institute osf health careare migrant help u k center pointints so ho and world vision canada

Jared Isaacman: Now moving on to gaming. We continue to roll out our SkyTap mobile devices at BetMGM Sportsbook locations, and we're now live at Great American Ballpark, which is home of the Cincinnati Reds. Next month, we're going live at State Farm Stadium, which is home of the Arizona Cardinals.

Speaker Change: Now moving on to gaming.

Speaker Change: we continue to roll out our sky at mobile devices at b mgm's force book locations and we're now liveed great american ballpar which is home with the cinnati reds

Speaker Change: Next month, we're going live at State Farm Stadium, which is home of the Arizona Cardinals. And by the end of this year, we're going to be live in all 24 Ben MGM Sportsbooks locations across nine states, including the locations located within the casinos in Nevada.

Jared Isaacman: And by the end of this year, we're going to be live in all 24 BetMGM Sportsbooks locations across nine states, including the locations located within the casinos in Nevada. In online gaming, we expanded our relationship with Lotto.com for the Massachusetts State Lottery and signed several new gaming clients, including Prime Sports Betting, where we're going to offer their platform in the state of New Jersey. We also signed Sports Wagering Platform Jack Entertainment and Lottery Courier Yo Lotto for the State of Texas.

Speaker Change: In online gaming, we expand our relationship with lotto.com for the Massachusetts State Lottery and sign several new gaming clients, including Prime Sports Betting, where we're going to offer their platform in the state of New Jersey.

Speaker Change: we also signed sports wagering platform jack entertainment and lottery career yo loto lotto for the state of texas

Jared Isaacman: Okay, moving on to International. We've made a lot of progress here. So, for example, we followed our most important strategic customer into several new markets, including Fiji and our first African country, Sierra Leone. By the end of this year, we expect to organically expand into eight to 12 additional countries in Africa, as well as Moldova, and countries located in the Asia Pacific, notably Sri Lanka and the Maldives. So we're very pleased with the progress of this important relationship, and we attribute a lot of it to the prior FANARO acquisition, as we're now able to expand internationally in a very organic way. Now, in Europe, we continue our momentum by serving electric vehicle charging stations.

Speaker Change: Okay, moving on to International.

Speaker Change: We've made a lot of progress here. So, for example, we followed our most important strategic customer into several new markets, including Fiji and our first African country, Sierra Leone.

Speaker Change: by the end of this year we expect to organically expand into eight to twelve additional countries in africa as well as mova and countries located in asia pacific notably sri lanka and them mallthese

Speaker Change: so we're very pleased with the progress of this important relationship we attribute a lot of it to the prior from our acquisition as we're now able to expand internationally in a very organic way

Speaker Change: now in europe we continue our momentum serving electric vehicle charging stations we're now ccessing payments in twelve countries serving this vertical

Jared Isaacman: We're now processing payments in 12 countries serving this vertical, so our right to win in this market is due to our early mover advantage and integrations with multiple players within the ecosystem. Our investment in certifying the most EV-ready devices, including strategic relationships with various hardware providers, and really unique feature functionality to support the electric vehicle use case, like incremental authorizations that we use in our resorts. So, today, we have a very turnkey EV charging station solution, and it's no wonder why we're growing so quickly within that lane.

Speaker Change: so our right to win in this market is due to ourearly mover advantage and integrations with multiple players within the ecosystem

Speaker Change: Our investments certifying the most EV-ready devices, including strategic relationships with various hardware providers, and really unique feature functionality to support the electric vehicle use case, like incremental authorizations that we use in our resorts.

Speaker Change: So today we have a very turnkey EV charging station solution, and it's no wonder why we're growing so quickly within that lane.

Jared Isaacman: Now, continuing on with our international results, we signed the prestigious Bombay Hotel in Tallinn, Estonia, the Italian jewelry and watch retailer Binda Group, and German online travel agency Travel Store, where we'll process transactions for their Holiday Heroes brand in Germany. We also entered into an agreement to process payments for Portugal's Payshop, which is a utility bill payment provider with over 7,000 locations throughout Portugal. We signed KM Air, which is formerly Air Malta.

Speaker Change: Now, continuing on with our international results, we signed the prestigious Bombay Hotel in Tallinn, Estonia, the Italian jewelry and watch retailer Binda Group.

Speaker Change: and German online travel agency Travelstore, where we'll process transactions for their Holiday Heroes brand in Germany. We also entered into an agreement to process payments for Portugal's Payshop.

Speaker Change: should the utility bill payment provider with over seven thousand location throughout portugal we signed kam air which is formerally air malta

Jared Isaacman: We signed Danish ski equipment retailer Esporteller APS and Danish LED developer BMD Trading APS. We're also boarding over 300 merchants per month in Germany, the Nordics, and soon Italy through our partnership with FlatPay. And we continue to grow our wallet share with major European delivery company Wolt, which is owned by DoorDash, recently adding Albania to the list of more than 15 countries where we power their payments in Europe.

Speaker Change: We signed Danish ski equipment retailer Esporteller APS and Danish LED developer BMD Training APS.

Speaker Change: We're also boarding over 300 merchants per month in Germany, the Nordics, and soon Italy through our partnership with FlatPay.

Speaker Change: And we continue to grow our wallet share with major European delivery company Wolt, which is owned by DoorDash, recently adding Albania to the list of more than 15 countries where we power their payments in Europe .

Jared Isaacman: Again, these are all newly contracted relationships, and the revenue associated with this laundry list of wins that I rattle off each quarter is purely organic. So moving on to capital allocation, first, we closed on two acquisitions during the quarter that are going to deliver very meaningful synergies. So, starting with Rebel, this is a proprietarily sourced transaction and very much follows the Shift4 playbook.

Speaker Change: Again, these are all newly contracted relationships, and the revenue associated with this laundry list of wins that I rattle off each quarter are purely organic.

Speaker Change: So moving on to capital allocation, so first we closed on two acquisitions during the quarter that are going to deliver very meaningful synergies.

Speaker Change: so starting with rebel this is a proprietarily source transaction and very much follows the shift or playbook so

Jared Isaacman: So, the opportunity includes a massive payment cross-sell, deleting duplicative products or parts, and reducing associated costs along with arming distribution to sell SkyTab in multiple markets beyond just the United States. Now, the talent from Rebel will accelerate SkyTab capabilities in quick service, retail, and they have some awesome enterprise offerings along with localization in several international markets that they've already been serving, so a big accelerant for SkyTab And as we previously communicated, despite Rebel having been a cash burner since the company's inception, we expect Rebel Synergies to contribute approximately $15 million of adjusted EBITDA in the back half of 2024.

Speaker Change: The opportunity includes a massive payment cross-sell.

Speaker Change: deleting duplicative products or parts and reducing associated costs along with harming distribution to sellsguy haveab in multiple markets beyond just the united states

Speaker Change: Now the talent from Rebel will accelerate SkyTap capabilities in quick service, retail, and they have some awesome enterprise offerings.

Speaker Change: along with localization in several international markets that they've already been serving, so a big accelerant to SkyTab.

Speaker Change: And as we previously communicated, despite Rebel having been a cash burner since the company's inception, we expect Rebel Synergies to contribute approximately $15 million of adjusted EBITDA in the back half of 2024.

Jared Isaacman: Now, like Rebel, Vectron is another fine example of the Shift4 playbook, you know, a proprietarily sourced transaction that we've been working on for some time now. So we recognize this monumental value unlock opportunity in the business, and as I mentioned, we spent 18 months working on this transaction. Vectron software powers over 65,000 merchants, predominantly restaurants, and it's distributed by 300-plus dealers in Central Europe.

Speaker Change: Now, like Rebel, Vectron is another fine example of the Shift4 playbook, you know, a proprietarily sourced transaction that we've been working on for some time now. So we recognize this monumental value unlock opportunity in the business, and as I mentioned, we spent 18 months working on this transaction.

Speaker Change: Vectron software powers over 65,000 merchants, predominantly restaurants, and is distributed by 300-plus dealers in Central Europe .

Jared Isaacman: The deal delivers a huge install base to cross-sell payments and eventually upgrade the SkyCab. We've got hundreds of distribution partners to pursue restaurant and hospitality opportunities across Europe, and the talent and infrastructure to approach the market at scale. So, unlike Revel, though, where we have a more immediate impact on the business, we expect the opportunity with Vectron to develop over time, and this is predominantly because of the longer closing and delisting process in Germany.

Speaker Change: The deal delivers a huge install base.

Speaker Change: to cross-sell payments and eventually upgrade to SkyCab. We've got hundreds of distribution partners to pursue restaurant and hospitality opportunities across Europe and the talent and infrastructure to approach the market at scale.

Speaker Change: So, unlike Revel, though, where we have a more immediate impact on the business, we expect the opportunity with Vectron to develop over time, and this is predominantly because of the longer closing and delisting process in Germany.

Jared Isaacman: Like similar deals in the past, we are definitely going to take several steps backwards to ultimately sprint very far forward over the years to come. But it should be clear, though, that Vectron delivers a guaranteed path to scale and distribution and has completely de-risked our SkyCab restaurant production goals in Europe. Vectron also positions us to benefit from the anticipated secular shift to card-based payments throughout many European countries, like Germany. So, as some of you may know, MasterCard just recently called out this opportunity, specifically in Europe, during their Q2 earnings call.

Speaker Change: Now, like similar deals in the past, we are definitely going to take several steps backwards to ultimately sprint very far forward over the years to come.

Speaker Change: So, it should be clear though, Vectron delivers a guaranteed path to scale and distribution and has completely de-risked our Skycap restaurant production goals in Europe .

Speaker Change: Vectron also positions us to benefit from the anticipated secular shift to card-based payments throughout many European countries, like Germany.

Speaker Change: So, as some of you may know, MasterCard just recently called out this opportunity, specifically in Europe , just last week during their Q2 earnings call.

Jared Isaacman: And we agree that the overall digitization of commerce is influencing consumer behavior throughout Europe towards a more integrated and digital payment experience. And we are now positioned very, very well to lead that evolution and benefit from it. Also, as mentioned in my letter, we are not going to sit on our hands and wait for business to come our way when the opportunity is really obvious. Some of the greatest tech companies were formed by deploying capital intelligently while a market was in transition. There are literally hundreds of examples that can be found inside Amazon, Microsoft, Apple, Meta, and Palo Alto.

Speaker Change: And we agree, the overall digitization of commerce is influencing consumer behavior throughout Europe towards a more integrated and digital payment experience, and we are now positioned very, very well to lead that evolution and benefit from it.

Jared Isaacman: Even payment companies like Fiserv and their Clover product have benefited from Intelligent M&A. We've delivered a lot of winning transactions. We're very good at it. Revl and Xtron will be winners, and there will be more like them.

Jared Isaacman: Second, we did repurchase over $35 million of our equity since implementing our $500 million buyback authorization last quarter, and we have ample free cash flow to fund additional buybacks and acquisitions. So, Nancy is going to talk a little bit more about our leverage and balance sheet in her prepared remarks. Third, while we have many organic investments underway, we've become increasingly encouraged by the recent momentum and have begun making incremental investments to accelerate our progress with SkyCat and our international expansion efforts.

Speaker Change: Third while we have many organic investments underway, we've become increasingly encouraged by recent momentum and have begun making incremental investments to accelerate our progress with sky cab and our international expansion efforts further it's no secret I would like to see shift for become essentially the Spacex a fintech, we have been funding major internal system initiatives, including our new.

Jared Isaacman: Further, it's no secret I would like to see Shift4 become essentially the SpaceX of FinTech. We have been funding major internal system initiatives, including our new Mission Control Center, Project Phoenix, and AI initiatives, where we will endeavor to take the innovation magic and the no-fail SpaceX approach and apply it to our operations all over the world. Now, in terms of investor feedback, you know, we receive a lot of questions and feedback from investors and have attempted to really answer many of them in my shareholder letter, the earnings presentation, and throughout our prepared marks.

Speaker Change: Mission Control Center project, Phoenix, and AI initiatives, where we will endeavor to take the innovation Magic and then no fail Spacex approach and apply it to our operations all over the world.

Speaker Change: No.

Speaker Change: In terms of Investor feedback.

Speaker Change: We receive a lot of questions and feedback from investors and attempted to really answer many of them in my shareholder letter the earnings presentation and throughout our prepared remarks.

Jared Isaacman: So, for example, this quarter, you should find... Further explanation of our build by partner strategy to capitalize on what we believe to be a massive opportunity as software and payments converge to deliver a superior commerce experience. You should also find a breakdown of our M&A formula, including how we delete legacy parts, blow up the revenue model, enhance the value proposition, and pivot the revenue model towards payments plus SAAS. Taylor is also going to provide further proof points at this point as he walks you through past acquisitions, including VenueNext and FocusPop.

Speaker Change: So for example, this quarter you should find further explanation of our build by partner strategy to capitalize on what we believe to be a massive opportunity of software and payments converges to deliver a superior commerce experience.

Speaker Change: You should also find a breakdown of our M&A formula, including how we delete legacy part blow up the revenue model enhance the value proposition and pivot the revenue model towards payments plus asked.

Speaker Change: Taylor is also going to provide further proof points at this point as he walks you through past acquisitions, including venue next and focus Pos and.

Jared Isaacman: And, as mentioned in prior quarters, there are many things we can control in our operations, but oftentimes, the timing of enterprise go-lives is beyond our control. As such, we have shared our contractual backlog of volume, the majority of which is expected to go live in Q3 and Q4, and we use this to sense check our own projections. Last, we have provided the inorganic contribution to Q2 gross revenue less network fees, along with reiterating that the full year of 2024 should be well north of 25%. Now, in clothing.

Taylor Lauber: And as mentioned in prior quarters. There are many things we can control in our operations, but oftentimes the timing of enterprise go lives is beyond our control as such we have shared our contractual backlog of volume. The majority of which is expected to go live in Q3, and Q4 and we use this to this to a sense check our own projections.

Taylor Lauber: Lastly, we have provided the inorganic contribution to Q2 gross revenue less network fees, along with reiterating that the full year is in the full year of 2024.

Speaker Change: It should be well north of 25%.

Speaker Change: Now in closing.

Jared Isaacman: For the 11th time in 17 quarters that we've been public, we have positively revised guidance. The guidance update this quarter accounts for the overall outperformance from the quarter, the legacy and synergy contributions from Rebel and Vectron, as well as notable incremental investments to accelerate the pace of progress with internal systems, AI, international market expansion, and SkyTap product acceleration. Now in the face of some economic uncertainty, I'd like to think our guide demonstrates the strength of our diversified business model and our strategy. So, consider this.

Speaker Change: For the 11th time in 17 quarters.

Speaker Change: We've been public we've positively revised guidance the guidance update this quarter accounts for the overall outperformance.

Speaker Change: The quarter the legacy synergy contributions from Revlon Vectren as well as notable incremental investments to accelerate the pace of progress with internal systems AI international market expansion and Sky cab product accelerant.

Speaker Change: Now in the face of some economic uncertainty I'd like to thank our guide demonstrates the strength of our diversified business model and our strategy.

Speaker Change: So considered so consider this.

Jared Isaacman: Despite the relentless comparisons, we do a lot more than just restaurants at Shift4. We do not offer capital or funding programs, and we generally target established businesses that have a lower failure risk. We have focused on an efficient and low-cost customer acquisition model by acquiring overlooked assets and cross-selling our products and services. As a result, we can grow through even the most challenging of economic times without having to win a single new customer. And this is not a believe-me story.

Speaker Change: Despite the relentless comparisons we do a lot more than just restaurants at ship for.

Speaker Change: We do not offer capital or funding programs and we generally target.

Speaker Change: Target established businesses that have less failure risks, we are focused on an efficient and low cost customer acquisition model by acquiring overlooked assets and cross selling our products and services as a result, we can grow through even the most challenging of economic times and often without having to win a single new customer and this is not a believe me story we have been.

Jared Isaacman: We have been there before and grown through the dot-com, the Great Recession, the pandemic, and pulled back, and we're gonna continue to do so for years into the future. We have the most enviable roster of clients and have consistently announced high-caliber wins each and every quarter since we went public. We intentionally serve complex merchants in challenging, card-present verticals where our platform, product, and software integrations provide an impressive remote mode. And as a result, we possess a differentiated right to win and have done a pretty good job identifying acquisitions that either extend our technology capabilities for purposes of entering new markets or just add merchants and distribution capabilities at an attractive customer's acquisition cost alongside equally attractive payback periods.

Speaker Change: There before and grown through dotcom, the great recession grown through the pandemic and pull back and we're going to continue to do so for years into the future.

Speaker Change: We have the most enviable roster of clients and have consistently announced high caliber wins, each and every quarter. Since we went public we intentionally serve complex merchants and challenging card present verticals, where our platform product and software integrations provide an impressive remote mode.

Speaker Change: And as a result, we possess a differentiated right to win and have done a pretty good job identifying acquisitions that either extend our tech technology capabilities for purposes of entering new markets or just add merchants and distribution capabilities at an attractive customer acquisition costs alongside equally attractive payback periods, we have a unique playbook and formula that delivers success.

Jared Isaacman: We have a unique playbook and formula that delivers successful results in sharp contrast to our peers. As a result, we are delivering consistently strong growth while expanding our operating margins and generating strong free cash flow. We have a proven strategy centered around software-integrated payments, and we are well on our way to replicating our success in the USA all over the world.

Speaker Change: It will result in sharp contrast to our peers as a result, we are delivering consistently strong growth, while expanding our operating margins and generating strong free cash flow. We have a proven strategy centered around software integrated payments and we are well on our way to replicating our success in the USA all over the world.

Speaker Change: With that I'm going to turn the call over to Taylor Taylor.

Taylor Lauber: Thanks, Jared as in prior quarters, I'm going to spend a bit of time talking about the current operating environment.

Taylor Lauber: Thanks, Jared. As in previous quarters, I'm going to spend a bit of time talking about the current operating environment, but I'd also like to talk about our backlog and provide detailed insight into a couple of recent acquisitions to demonstrate how we unlock value from M&A. Starting with the operating environment, we do our best during times of economic uncertainty, and now is no different. Merchant growth and same-store sales performance were generally within our expectations during Q2.

Taylor Lauber: I'd also like to talk about our backlog and provide detailed insight into a couple of recent acquisitions to demonstrate how we unlock value from M&A.

Taylor Lauber: Starting with the operating environment, we do our best during times of economic uncertainty and now is no different merchant growth in same store sales performance was generally within our expectations during Q2.

Taylor Lauber: It is important to note that, despite the constant comparison to others in the industry, we are well diversified, and we've never relied on same-store sales for our growth. This diversification was a commitment we made at our IPO and has increased our resiliency, even while growing our total volumes at a 75% CAGR in the four years since IPO. As many of you know, we have been cautious that the $100 steak will not last forever, and it appears that restaurants may be experiencing a mild slowdown.

Speaker Change: It is important to note that despite the constant comparison to others in the industry, we are well diversified and we've never relied on same store sales for our growth. This diversification was a commitment we made at our IPO and has increased our resiliency, even while growing our total volumes at a 75% CAGR in the four years since IPO.

Speaker Change: As many of you know we have been cautious that the $100 stake would not last forever and it appears that restaurants may be experiencing a mild slowdown on the contrary hotel travel stadium attendance and retail merchants are all doing reasonably well and we continue to add lots of emergence these conditions favor ship for as we grow by aggressively taking share.

Operator: for 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. Please note this conference is being recorded.

Taylor Lauber: On the contrary, hotel travel, stadium attendance, and retail merchants are all doing reasonably well, and we continue to add lots. These conditions favor Shift4 as we grow by aggressively taking share and cross-selling payments and software. This works quite well as our products are competitively priced and have a low fixed cost of ownership, which is attractive to merchants. Our strong balance sheet and free cash flow also allow us the flexibility to grow when others are shrinking.

Speaker Change: Sure across and cross selling payments and software.

Taylor Lauber: This works quite well as our products are competitively priced and up low fixed cost of ownership, which is attractive to merchants, our strong balance sheet and free cash flow also allow us the flexibility to grow when others are shrinking we use these times to invest in our business building buying and partnering at a time when many in our industry are urgently.

Thomas McCrohan: I will now turn the conference over to Tom McCrohan, executive-based president and investor relations. Thank you. You may begin. Thank you operator. Good morning, everyone. Welcome to Shift4, second quarter. We are here with me on the call today or Jared Isaacman, Shift4's chief executive officer, Taylor Lauber, president, and Nancy Disman, a chief financial officer. Just call us being webcasts on the investor relations section of our website, which can be found at investors.shift4.com.

Taylor Lauber: We use these times to invest in our business, building, buying, and partnering at a time when many in our industry are urgently trying to prove they can even achieve a modest profit. Jared provided a thorough rundown of the various drivers underpinning the step-up in growth for the back half, and I wanted to highlight our backlog, which is a metric we track internally and helps inform our guidance. Our current backlog is roughly $25 billion in debt.

Taylor Lauber: Turning to prove they can even achieve a modest profit margin.

Taylor Lauber: Jared provided a thorough rundown on the various drivers underpinning the step up in growth for the back half and I wanted to highlight our backlog, which is a metric we track internally and helped inform our guidance.

Thomas McCrohan: Today's call is also being simulcasts on x basis, formerly known as Twitter, which can be accessed through our corporate Twitter 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.

Jared Isaacman: Our current backlog is roughly 25 billion in volume. This represents volume that is already contracted but not yet implemented whereas its expected run rate. While there can be slippage from time to time. These merchants are either already installed or have an installation that is scheduled in the near term. It is important to realize that this is one of many factors that contribute to our.

Taylor Lauber: This represents volume that is already contracted but not yet implemented or at its expected run rate. While there can be slippage from time to time, these merchants are either already installed or have an installation that is scheduled in the near future. It is important to realize that this is one of many factors that contribute to our confidence and volume growth for the back half of the year. For example, we signed thousands of restaurants, hotels, and e-commerce customers, non-profits, and others that will go live immediately.

Jared Isaacman: <unk> and volume growth for the back half of the year. For example, we signed thousands of restaurants hotels and e-commerce.

Thomas McCrohan: Additional information concerning those factors is available in our most recent reports on forms 10K and 10Q, which you can find on the SEC's website and the investor relations section of our corporate website. For any non-gap financial information discussed on this call, the related gap measures and reconciliation are available in today's quarterly shareholder letter.

Jared Isaacman: Customers nonprofits and others that will go live immediately when you see this number you should think of sports stadiums and enterprise resorts that have signed contractual commitments, but for a variety of reasons such as waiting for the season to start or the resort to open they have not come online yet.

Taylor Lauber: When you see this number, you should think... Sports stadiums and enterprise resorts that have signed contractual commitments but, for a variety of reasons, such as waiting for the season to start or the resort to open, they have not gone live yet.

Taylor Lauber: As Jared mentioned, we expect the majority of this volume to be realized this year. Given our recent acquisitions, I thought it would be helpful to provide some insight into two of our more seasoned acquisitions. VenueNext and FocusPause in order to give you all a little better perspective on how the revenue model for these two companies evolved over time. In short, both companies experienced a dip in revenue shortly after acquisition. This is planned for and deliberate as we transition their models and bundle payment processing. For FocusPause, their legacy revenue model was very dependent on one-time revenue, with about two-thirds of their revenue being non-recurring in nature.

Jared Isaacman: Jared mentioned, we expect the majority of this volume will be realized this year.

Jared Isaacman: With that, let me turn the call over to Jared. Thanks, Tom. This is once again a very busy quarter, and I'm reasonably pleased with our quarterly results, and the momentum we have heading into the back half of the year.

Taylor Lauber: As a result, in the first two months post-acquisition, their gross revenue less network fees declined about 54% as we executed our typical strategy of blowing up the legacy model and pivoted to a bundled payment system. Today, FocusPAW's Gross Revenue Less Network Fees is 95% recurring in nature and is 5x higher than their post-acquisition lows and 3x higher than pre-acquisition. Because we are bundling services that merchants traditionally use multiple vendors for, they are often saving money and getting dramatically improved service quality. It's a win-win.

Speaker Change: Given our recent acquisitions I thought it would be helpful to provide some insight into two of our more seasoned acquisitions venue next and focused pause in order to give you all a little better perspective on how the revenue model for these two companies evolved over time.

Jared Isaacman: As a quick summary, we outperformed our financial KPI goals for the quarter. We closed on two acquisitions, Rebel and Vectron. We continued our organic international expansion efforts in support of our very large strategic customer, and we won thousands of new hotels, restaurants, and stadiums here in the US and internationally.

Jared Isaacman: In short both companies experienced a dip in revenue shortly after acquisition. This was planned for and deliberate as we transition their models and bundled payment processing in SaaS for focused pause their legacy revenue model was very dependent on one time revenue with about two thirds of their revenue being non recurring in nature.

Jared Isaacman: So on to the quarterly results. For the second quarter, we generated 50% year-over-year growth, and then payment volume, 38% growth in gross profit, and 41% growth in gross revenue less network fees. We also generated 162 million of adjusted EBITDA, representing 48% year-over-year growth as our margins expanded 240 basis points to 51% versus the corresponding quarter a year ago. Our operating margins expanded despite the margin drag from the acquisitions of appetite and finale, which together negatively impacted our margins by approximately 250 basis points for the quarter.

Jared Isaacman: As a result in the first two months post acquisition their gross revenue less network fees declined about 54% as we executed our typical strategy of blowing up the legacy model and pivoted to a bundled payment solution.

Jared Isaacman: Today focused pause gross revenue less network fees is 95% recurring in nature and is five X higher than their post acquisition lows and three X higher than pre acquisition levels.

Jared Isaacman: Because we are bundling services that merchants traditionally use multiple vendors for their often saving money and getting a dramatically improved service experience. It's a win win.

Jared Isaacman: Now naturally, as synergies are realized, we expect that the drag from those acquisitions to disappear and contribute to our ongoing margin expansion targets. Most importantly, we generated 76 million of adjusted free cash flow, above 18% versus a year ago. Our blended spreads also remain very stable, coming in at approximately 62 basis points despite considerable volume.

Taylor Lauber: I'm sure you can see the similarities between FocusPause and Vectron. Vectron is a business that will take some steps back in revenue and EBITDA for the remainder of the year, but in the spirit of delivering the payments plus software value proposition, that should lead to very meaningful revenue, EBITDA, and pre-cash flow growth over the medium term. With VenueNext, we also took a step back in revenue contribution before taking many steps. Legacy Venue Next already had a recurring revenue model built on SaaS, although they did also rely on one-time hardware.

Speaker Change: I'm sure you can see the similarities between focus pause on Vectra on Vectren has a business that will take some steps back in revenue and EBITDA for the remainder of the year, but in the spirit of delivering payments plus software value proposition that should lead to very meaningful revenue EBITDA and free cash flow growth over the medium term.

Jared Isaacman: With venue next we also took a step back in revenue contribution before taking many steps forward legacy venue next already had a recurring revenue model built on SaaS. Although they did also rely on one time hardware sales.

Jared Isaacman: Now, with the aim of being a bit more succinct compared to some of our, some of my prior prepared remarks, I wanted to share the following highlights. Now, starting with our core, our signature witness quarter is Whistler Black Home, which is part of Vale Resorts, as well as new hospitality properties, Nobu Chicago and Nobu Toronto. We also signed Pier 66 Resort, Yosemite National Park, Scott Resort and Spa, Cobblestone Inn and Sweets, Amrit Ocean Resort, Gear Valley, Valley Steine, Eckstein Lodge, Mount Erie, Casino and Resort, and the new live casino and hotel that is currently under construction and scheduled to open next year in Louisiana.

Taylor Lauber: We were able to complement Venunex's superior technology with our distribution and offer this end-market, bundled payment solution that was very novel at the time. Post-acquisition, Venunex similarly witnessed a temporary dip in gross revenue-less network fees as we transitioned away from one-time hardware sales and towards payment, with Venuenext today generating gross revenue less network fees that is greater than seven times pre-acquisition levels, of which 90% is recurring It took some time to educate the markets on the benefits of this bundled solution, and today, we are now reaping those benefits. Volume from stadium and entertainment clients was up over 50% year over year, with a considerable runway to capture additional share of wallet as we cross-sell ticketing to the institution.

Jared Isaacman: We were able to complement venue next superior technology with our distribution and offer. This end market are bundled payment solution that was very novel at the time post acquisition venue next similarly witnessed a temporary dip in gross revenue less network fees as we transitioned away from onetime hardware sales and towards payments with <unk>.

Jared Isaacman: <unk> today generating gross revenue less network fees that is greater than seven times pre acquisition levels of which 90% is recurring in nature.

Jared Isaacman: It took some time to educate the market on the benefits of this bundled solution and today, we are now reaping the benefit reaping those benefits.

Jared Isaacman: Volume from stadium and entertainment clients was up over 50% year over year.

Jared Isaacman: You know, I've taken a close look at our pipeline of major enterprise resorts, many of which have never before been on our gateway and it's nothing short of impressive. So, for those that like to poke on our organic versus inorganic debate, these wins represent billions in that new volume at some of the most desirable hospitality locations in the country.

Jared Isaacman: With a considerable runway to capture additional share of wallet as we cross sell ticketing to the installed base. We've put illustrations in our latest shareholder letter to help better visualize the trends mentioned here.

Taylor Lauber: We've put illustrations in our latest shareholder letter to help better visualize the trends mentioned here. In both of these examples, as with the majority of all other M&A, we don't saddle our businesses with technical debt, layers of bureaucracy, or unnecessary parts. Focus, Paws, and Venuenext integrated to our payment platform alongside 500 other ISVs go to market with a new SaaS plus embedded payments offering and win more in their respective markets. While we talked about a small handful of examples, it's worth noting that the broader opportunity set is growing as well.

Speaker Change: And both of these examples as with the majority of all other M&A, we don't settle our businesses with technical debt layers of bureaucracy unnecessary parts.

Jared Isaacman: And if you're paying attention, we cover a list like this every single quarter.

Jared Isaacman: <unk> integrated to our payment platform alongside a 500 other Isps go to market with a new SaaS plus embedded payments offering and win more in their respective markets as a result.

Jared Isaacman: So, now, turning to restaurants, which I feel like at times we should not even talk about because if we were simply known as the toast of hotels and stadiums, we'd probably be more appropriately valued. But the reality is, our SkyCap growth continues to accelerate with nearly 10,500 system installs in Q2, representing 12% increase quarter over quarter. Now, we attribute our SkyCap success to A. It's a feature rich cloud product with strong mobile and online ordering solutions.

Speaker Change: While we talked about a small handful of examples it's worth noting that the broader opportunity set is growing as well our pipeline of compelling opportunities is quite frankly larger than its been at any point in recent history and we are in the enviable position of being very picky about what we spend our time and capital on.

Taylor Lauber: Our pipeline of compelling opportunities is, quite frankly, larger than it's been at any point in recent history, and we're in the enviable position of being very picky about what we spend our time and capital on. Now, while we've spent a fair amount of time talking about M&A this quarter, it's important to realize that we don't have to do deals, and we have conviction in the balance of our build, buy, and partner approach.

Jared Isaacman: Yeah.

Jared Isaacman: Now, while we spent a fair amount of time talking about M&A in this quarter, it's important to realize that we don't have to do deals and.

Jared Isaacman: B. It's the lowest cost of ownership with the philosophy not to charge for every single module and feature. Strong distribution coverage. So, we could always use more between our direct and indirect teams and a strategy that delivers a low customer acquisition cost through referral programs, lead incentives and intelligent M&A. Now, at Current Q2 run rates, we will far exceed our 2024 system installation goals.

Jared Isaacman: We have conviction in our in the balance of our build buy and partner approach as Jared mentioned, we did not do a single acquisition in our first 15 years in business and grew quite quickly.

Taylor Lauber: As Jared mentioned, we did not do a single acquisition in our first 15 years in business and grew quite quickly. What we are not content to do is sit back and wait for business to come to us when there is still so much opportunity to accelerate the convergence of software and payment. And with that, I will turn it over to Nancy to discuss our financial results. Thank you.

Jared Isaacman: We are not concerned to do is sit back and wait for business to come to us. When there is still so much opportunity to accelerate the convergence of software and payments and with that I will turn it over to Nancy to discuss our financial results. Thank you.

Jared Isaacman: And if you have any doubt about the momentum of the SkyCap, just check out our daily posts on X or Twitter. Some of the more notable restaurant wins, and we post those results like every day on Twitter. So, you can really kind of verify firsthand some really awesome restaurants and these startups, it's really going well. Now, some of the more notable restaurant wins this quarter include Experience XRG, which is an operator of 11 distinct Mexican restaurant concepts.

Nancy Disman: Thanks, Taylor, and good morning, everyone. We delivered another quarter of consistent and solid results, outperforming our quarterly guidance and demonstrating again our ability to deliver top-line growth while continuing to drive margin expansion and strong free cash flow conversion. Thank you. Thank you.

Nancy Disman: Thanks, Taylor and good morning, everyone.

Nancy Disman: We delivered another quarter of consistent and solid results outperforming our quarterly guidance and demonstrating again, our ability to deliver top line growth, while continuing to drive margin expansion and strong free cash flow conversion.

Nancy Disman: Total Q2 volume of $40 billion grew 50% year-over-year. Gross revenue, less network fees, grew 41% to $321 million. Our adjusted EBITDA for the quarter was $162 million, up 48%. And adjusted EBITDA margins expanded 240 basis points to 51% versus the same quarter last year. Excluding the impact of the legacy Canaro and Appetize businesses, margins expanded more than 500 basis points.

Nancy Disman: Total Q2 volume of 40 billion grew 50% year over year gross revenue less network fees grew 41% to 321 million our adjusted EBITDA for the quarter was $162 million up 48% and adjusted EBITDA margins expanded 240 basis points to 51% versus the <unk>.

Jared Isaacman: Alpaca chicken, which is fast casual with 16 locations, Stanford hotels, which will now deploy our SkyCap mobile devices across restaurants at 13 of their locations. Angie's lobster, which is an Arab Zona-based fast casual chain. The cost of super Annie Club located in Lower Manhattan. Two Gaviano restaurant, Shuck and Shack Oyster bar and group, which is converting 18 of their locations to SkyCap and two lack of the restaurant located in California. In specialty retail, we added Turner's Outdoorsmen, which is a 13 store hunting and fishing specialty store chain located in Southern California, Arizona. And the university bookstores for BYU and West Los Angeles College Wildcat.

Nancy Disman: Same quarter last year, excluding the impact of the legacy tomorrow, and appetite businesses margins expanded more than 500 basis points.

Nancy Disman: Our quarterly results were driven by the continued strength of our hospitality and restaurant verticals, momentum across our enterprise merchants, further monetization and conversion of gateway customers, and an increasingly larger contribution from stadiums and ticketing. We see the impact in both our payments-based revenue growth and the increased contribution from staff-based payments. Organic revenue for the quarter was 24%, and we are reiterating organic growth to be well north of 25% on a full-year basis. The in-quarter contributions from Revel and Vectron were immaterial given both acquisitions closed in mid-January.

Nancy Disman: Our quarterly results were driven by the continued strength of our hospitality and restaurant vertical momentum across our enterprise merchants further monetization and conversion of gateway customers in an increasingly larger contribution from stadiums and ticketing.

Nancy Disman: We see the impact in both our payments base revenue growth and the increased contribution from SaaS based fees.

Nancy Disman: Organic revenue for the quarter was 24% and we are reiterating organic growth could be well north of 25% on a full year basis.

Jared Isaacman: Now, turning to some of our newer verticals in sports entertainment, we had a really strong quarter of signings, including the Miami Heat, the Indianapolis Colts, which also includes ticketing, the Chicago Bears, the Indiana Pacers, which is also got ticketing, the Memphis Grizzlies, the AAA team for the Oakland A's, which was and the Las Vegas Aviators, and we also signed several college teams, including University of Houston, Boise State, and their famous Smurfter, Indiana University, as well as a couple MLS teams, the San Diego Football Club, the Austin Football Club. Additionally, we signed agreements with the New England Patriots to provide fans with a checkout-free concession experience at Gillette Stadium. Now, five of these sports teams, as I mentioned, came in with ticketing, which is to reiterate it's the Colts, the Pacers, Austin Football Club, San Diego Football Club, and the Las Vegas Aviators.

Speaker Change: The in quarter contribution from rental and Vectren, where invacare immaterial given both acquisitions closed in mid June.

Nancy Disman: Blended spreads for the second quarter and the first half of the year were 62 basis points. Spreads across our core business of restaurant, hospitality, and specialty retail continue to remain stable. Based on our year-to-date performance and the vertical mix and customer size driving our volume, we now expect full-year spreads to average no less than 61 basis points for the full year, up from the 60 basis points floor we provided previously. Subscription and other revenue was $71 million in Q2, up 93% compared to the same period last year. The growth in SaaS and other related software revenue was driven by our success across SMB, SkyTab, and penetration into the sports and entertainment vertical.

Speaker Change: Blended spreads for the second quarter and the first half of the year was 62 basis points.

Speaker Change: Spreads across our core business of restaurant hospitality and specialty retail continue to remain stable.

Nancy Disman: Based on our year to date performance and the vertical mix and customer size driving our volume. We now expect full year spreads to average no less than 61 basis points for the full year up from the 60 basis points floor, we provided previously.

Nancy Disman: Description and other revenue was $71 million in Q2 at 93% compared to the same period last year the growth in SaaS and other related software revenue was driven by our success across SMB Sky cab and penetrating the sports and entertainment vertical.

Nancy Disman: Growth in subscription and other revenue will not always be linear. This is a good opportunity to remind investors that, as Jared and Taylor discussed, we often blow up the legacy revenue model of our acquisitions and pivot them toward our signature Shift4 Payments field value proposition. Our continued success in converting Appetize and other software-only clients to Acquiring will cause subscription and other revenue to decline and offset some of the outsized growth we are achieving. Additionally, the timing of one-time revenue may cause some bumpiness quarter-to-quarter. In Q2, total general and administrative expenses increased 34% year-over-year to $110 million.

Jared Isaacman: Now, turning to nonprofits. The overall volume contribution from the vertical is ramped up really nicely this year. So, in the first half of this year, we processed more volume than all of last year combined. We expect the second half of this year to be even stronger, given the typical seasonal nature of donations, including during an election cycle that occur typically in the fourth quarter. And we're really on track to deliver 400 percent year-over-year volume growth in the nonprofit vertical in 2024 minus St. Jude Children's Research Hospital, which is already a very large, you know, billion-dollar plus established customer.

Speaker Change: Growth in subscription and other revenue will not always be linear. This is a good opportunity to remind investors that as Jared and Taylor discussed.

Speaker Change: Discussed, we often blow up the legacy revenue model of our acquisitions and pivot them towards our signature ship our payments field value proposition. Our continued success in converting appetite and other software only clients, you're acquiring world class subscription and other revenue to decline and offset some of the outsized growth we are achieving.

Nancy Disman: Additionally, the timing of one time revenue may cause some lumpiness quarter to quarter.

Nancy Disman: In Q2, total general and administrative expenses increased 34% year over year to $110 million.

Jared Isaacman: Now, the volume growth was driven really by just winning a lot. Our strategy and differentiated value prop as the go-to payment processor for fundraising platforms continues to gain traction and market acceptance. This month, we fully moved all U.S, cart volume from given gain to shift for payments, and we're going to move their non-US volume later this summer. Given gain supports a variety of high-profile fundraising events. So, for example, we're pretty excited to be powering the payments for the Boston Marathon going forward.

Jared Isaacman: We also made great progress in their integration with fundraising platform Gib-Lively, and we're scheduled to go live with our initial merchants by year-end, and we expect volumes from these fundraising platforms to ramp really significantly over the coming months. So, outside of the fundraising partnerships, we've also just signed a lot of impressive nonprofit customers, like Malala Fund, Amnesty International, the James Hutton Institute, OSF Health Care, Migrant Health UK, Center Point Soho, and World Vision Canada.

Nancy Disman: Excluding the impact of the acquisitions, though, completed in Q4 last year, G&A expenses were flat year over year. We remain highly committed to a disciplined approach to cost management while continuing strategic investment for growth. As Jared mentioned, we are making incremental investments in areas we see further opportunity. But overall, our goal of keeping headcount flat while investing in talent upgrades remains in place.

Nancy Disman: Excluding the impact of the acquisitions now completed in Q4 of last year G&A expenses were flat year over year, we remain highly committed to a disciplined approach to cost management, while continuing strategic investments for growth as Jared mentioned, we are making incremental investments in areas, we see further opportunity, but overall Eric.

Eric: Goal of keeping headcount flat, while investing in talent upgrades remains in place we are quickly progressing on the overhaul.

Nancy Disman: We are quickly progressing on the overhaul of our operating model, which will further drive efficiency and scalability across our platform. Our second quarter adjusted EBITDA margins were 51%, representing 240 basis points of expansion compared to Q2 2023. As I mentioned, excluding the impact of acquisitions, margins expanded by over 500 basis points. We have high conviction in the many opportunities to further improve our underlying margins that are still on the horizon, including the remaining M&A synergies to be realized from our ongoing integration efforts of recent M&A, utilization of AI technology, implementation of new internal systems, and ongoing streamlining efforts to enhance scalability throughout our business operations. Our adjusted free cash flow in the quarter was $76 million, up 18% compared to a year ago.

Eric: Of our operating model, which will further drive efficiency and scalability across our platform.

Nancy Disman: Our second quarter adjusted EBITDA margins were 51%, representing 240 basis points of expansion compared to Q2 2023, as I mentioned, excluding the impact of acquisitions margins expanded over 500 basis point, we have high conviction in the many opportunities to further improve our underlying maher.

Nancy Disman: Gens that are still on the horizon, including the remaining M&A synergies to be realized from our ongoing integration efforts of recent M&A.

Jared Isaacman: Now, moving on to gaming. We continue to roll out our SkyPap mobile devices at Ben MGM's sportsbook locations, and we're now live at Great American Ballpark, which is home of the Cincinnati Reds. Next month, we're going live at State Farm Stadium, which is home of the Arizona Cardinals. And by the end of this year, we're going to be live in all 24 sportsbook, Ben MGM's sportsbooks, locations across nine states, including the locations located within the casinos in Nevada.

Nancy Disman: Realization of AI technology implementation of new internal systems, and ongoing streamlining efforts to enhance scalability and scalable.

Nancy Disman: Scalability throughout our business operation.

Nancy Disman: Our adjusted free cash flow in the quarter was $76 million up 18% compared to a year ago.

Nancy Disman: As a reminder, Q2 cash outflows include a semi-annual interest payment of roughly $10.4 million, which can distort the quarter-to-quarter sequential comparison. However, total adjusted free cash flow conversion for the first half of the year is 54%, in line with our expectations. In addition to the timing of interest payments, there will be fluctuations in our conversion rates on a quarterly basis due to the seasonality of our business, the deployment of capital to support growth, and normal working capital cycle changes from period to period.

Nancy Disman: As a reminder, our Q2 cash outflows include a semiannual interest payment of roughly $10 4 million, which can distort the quarter.

Jared Isaacman: In online gaming, we've spent our relationship with Lotto.com for the Massachusetts State Lottery, and signed several new gaming clients, including Prime Sports betting, where we're going to offer their platform in the state of New Jersey. We also signed sports wagering platform, Jack Entertainment, and Lottery Courier, Yo Lotto, Lotto for the State of Texas.

Nancy Disman: Quarter sequential comparison total adjusted free cash flow conversion for the first half of the year is 54% in line with our expectations.

Nancy Disman: In addition to the timing of interest payments, there will be fluctuations in our conversion rates on a quarterly basis due to the seasonality of our business.

Jared Isaacman: Okay, moving on to international. We've made a lot of progress here. So for example, we followed our most important strategic customer into several new markets, including Fiji and our first African country Sierra Leone. By the end of this year, we expect to organically expand into eight to 12 additional countries in Africa, as well as Moldova, and countries located in Asia Pacific, notably Sri Lanka and the Maldives. So, we're very pleased with the progress of this important relationship. We attribute a lot of it to the prior FNRO acquisition, as we're now able to expand internationally in a very organic way.

Nancy Disman: Deployment of capital to support growth and normal working capital cycle changes period to period.

Nancy Disman: Overall, the improvement in our unit economics and efficient operating model continue to give us great confidence in our ability to deliver annual year-over-year expansion and our adjusted free cash flow conversion rate in line with our previous guide of 60% plus. I will talk about the slight drag we expect from our recent acquisitions in just a moment with our updated guidance. And with respect to capital transactions, in May, our board of directors authorized a new stock repurchase program, pursuant to which we are authorized to repurchase up to $500 million of common stock through December 31, 2025.

Nancy Disman: Overall, the improvement in our unit economics, and efficient operating model continue to give us great confidence in our ability to deliver annual year over year expansion in our adjusted free cash flow conversion rate in line with our previous guide of 60% plus I will talk about the slight drag we expect from our reconnect with ACA.

Nancy Disman: Physicians in just a moment with our updated guidance.

Nancy Disman: During the second quarter, we repurchased approximately 230,000 shares for approximately $16 million, leaving approximately $484 million of capacity available as of June 30. To date in Q3, we have repurchased an additional 300,000 shares for approximately $20 million, and we will continue to be opportunistic. You can find a complete reconciliation of our shares in the back of our earnings materials. We have cumulatively deployed approximately $350 million in buybacks, repurchasing 6.5 million shares at an average price of $54 since our IPO.

Nancy Disman: And with respect to capital transactions in May our board of directors authorized a new stock repurchase program pursuant to which we are authorized to repurchase up to $500 million of common stock through December 31, 2025 during the second quarter, we repurchased approximately 230000 shares.

Jared Isaacman: Now, in Europe, we continue our momentum serving electric vehicle charging stations. We're now processing payments in 12 countries serving this vertical. So our right to win in this market is due to our early mover advantage and integrations with multiple players within the ecosystem. Our investments certifying the most EV-ready devices, including strategic relationships with various hardware providers, and really unique feature functionality to support the electric vehicle use case, like incremental authorizations that we use in our resorts. So today, we have a very turnkey EV charging station solution, and it's no wonder why we're growing so quickly within that lane.

Nancy Disman: For approximately $16 million, leaving approximately $484 million of capacity available as of June 30th.

Nancy Disman: In Q3, we have repurchased an additional 300000 shares for approximately $20 million and we will continue to be opportunistic you can find a complete reconciliation of our shares in the back of our earnings material.

Nancy Disman: We have cumulatively deployed approximately 350 million on buybacks repurchasing $6 5 million shares at an average price of $54 since our IPO.

Jared Isaacman: Now, continuing on with our international results, we signed the prestigious Bombay Hotel in Tallinn, Estonia. Now, the Italian jewelry and watch retailer have been the group, and German online travel agency travel store, where we'll process transactions for their holiday heroes brand in Germany. We also entered into an agreement to process payments for Portugal's pay shop, which is a utility bill payment provider with over 7,000 locations throughout Portugal. We signed KM Air, which is formerly Air Malta.

Nancy Disman: Of note, cumulative dilution from our stock-based compensation has been less than 2% per year on average. As employees, we are the largest shareholder of Shift4 and are very thoughtful about managing dilution. Net income for the second quarter was $54.5 million. Diluted earnings per Class A and Class C share were $0.58.

Nancy Disman: Of note cumulative dilution from our stock based compensation has been less than 2% per year on average as employees. We are the largest shareholder of shift for and are very thoughtful about managing dilution.

Nancy Disman: Net income for the second quarter was $54 5 million diluted earnings per class, a and class C share with 58 cents.

Jared Isaacman: We signed Danish ski equipment retailer Esporteller APS, and Danish LED developer, BMD trading APS. We're also boarding over 300 merchants per month in Germany, the Nordics, and soon Italy through our partnership with Flat Pay. We continue to grow our wallet share with major European delivery company Walt, which is owned by DoorDash, recently adding Albania to the list of more than 15 countries where we powered their payments in Europe.

Nancy Disman: Adjusted net income for the quarter was $89 million, or $0.96 per A and C share on a diluted basis. A $93 million average fully diluted share is outstanding. Our balance sheet remains strong, and our sequential decline in liquidity is due to the cash purchases of Vectron and Revl. Our total indebtedness has a weighted average cost of 1.35%, and we do not have any maturities until December 2025. Consequently, our net leverage at quarter end was approximately 2.7 times.

Speaker Change: <unk> net income for the quarter was $89 million or <unk> 96 cents per AMC share on a diluted basis, a 93 million average fully diluted shares outstanding.

Speaker Change: Our balance sheet remains strong our sequential our sequential decline in liquidity is due to the cash purchases at that trying to unravel. Our total indebtedness has a weighted average cost of 135% and we do not have any maturities until December 2025.

Speaker Change: Our net leverage at quarter end was approximately two seven times, excluding the impact of lower cash due to the acquisitions. We just completed net leverage dropped to two two times, our lowest level since January 2021.

Jared Isaacman: Again, these are all newly contracted relationships, and the revenue associated with this laundry list of wins that I rattle off each quarter are purely organic.

Nancy Disman: Excluding the impact of lower cash due to the acquisitions we just completed, net leverage dropped to 2.2 times, our lowest level since January 2021. The deleveraging profile has been quite extraordinary. Our strong balance sheet, growing EBITDA, and expanding free cash flow conversion afford us many options to fund strategic priorities, opportunistically buy back stock, and satisfy year-end 2025 maturities without being punitive to our equity. Now, turning to guidance.

Jared Isaacman: Moving on to capital allocation. First, we closed on two acquisitions during the quarter that are going to deliver very meaningful synergies. Starting with Rebel, this is a proprietary source transaction, and very much follows the ship or playbook. The opportunity includes a massive payment cross sell, deleting duplicative products or parts, and reducing associated costs along with arming distribution to sell SkyTap in multiple markets beyond just the United States. The talent from Rebel will accelerate SkyTap capabilities in quick service, retail, and they have some awesome enterprise offerings along with localization in several international markets that they've already been serving.

Speaker Change: The deleveraging profile has been quite extraordinary our strong balance sheet growing EBITDA and expanding free cash flow conversion afford us many options to fund strategic priorities Opportunistically buy back stock and satisfy yearend 2025 maturity without being punitive to our equity now turning to guidance.

Nancy Disman: We are updating our full-year guidance to include Q2 outperformance and the contribution from Revel and Vectron, which both closed on June 13th. As Taylor just elaborated, we expect to pivot the revenue model of both companies to payments as we cross-sell payment processing to the installed base of merchants. For the full year 2024, we are further tightening our guidance range for end-to-end volume and now expect a range of $167 billion to $172 billion, representing 53% to 58% year-over-year growth.

Speaker Change: We are updating our full year guidance to include Q2 outperformance and the contribution from Revlon Vectren, which both closed on June 13th as Taylor just elaborated we expect to pivot the revenue model of both companies to payments as we cross sell payment processing to the installed base of merchants.

Jared Isaacman: So a big accelerant to SkyTap, and as we previously communicated, despite Rebel having been a cash burner since the company's inception, we expect Rebel synergies to contribute approximately 15 million of adjusted EBITDA in the back half of 2024. Now, like Rebel, Bechron is another fine example of the Shift4 playbook, you know, proprietary source transaction that we've been working on for some time now. So we recognize this monumental value unlock opportunity in the business, and as I mentioned, we spent 18 months working on this transaction.

Speaker Change: For the full year 2024, we are further tightening our guidance range for end to end volume and now expend expect a range of 167 billion to 172 billion, representing 53% to 58% year over year growth, we are increasing our growth.

Nancy Disman: We are increasing our gross revenue less network fees range and now expect the range to be $1.35 billion to $1.38 billion, representing 44% to 47% year-over-year growth. We are also increasing our adjusted EBITDA range and now expect adjusted EBITDA to be in the range of $662 million to $689 million. The year-over-year margin expansion remains virtually unchanged from prior guidance despite the incremental investments we are making in Europe. We are also resetting our adjusted free cash flow conversion expectation to 59% from 60% previously to account for the drag from recent M&A.

Speaker Change: Revenue less network fees range and now expect the range to be 135 billion to $1, three 8 billion, representing 44% to 47% year over year growth.

Jared Isaacman: Bechron software powers over 65,000 merchants, predominantly restaurants, and is distributed by 300 plus dealers in central Europe. The deal delivers a huge install base to cross-sell payments, and eventually upgrade the Skype app. We've got hundreds of distribution partners to pursue restaurant and hospitality opportunities across Europe, and the talent and infrastructure to approach the market at scale. So, unlike Rebel though, where we have a more immediate impact on the business, we expect the opportunity with Bechron to develop over time, and this is predominantly because of the longer closing and delisting process in Germany.

Speaker Change: We are also increasing our adjusted EBITDA range and now expect adjusted EBITDA to be in the range of 662 million to 689 million a year over year margin expansion remains virtually unchanged from prior guidance. Despite the incremental investments we are making.

Speaker Change: In Europe.

Speaker Change: We are also resetting our adjusted free cash flow conversion expectation to 59% from 60% previously to account for the drag from recent M&A. We estimate this yield $399 million of adjusted free cash flow for full year 2020.

Nancy Disman: We estimate this yields $399 million of adjusted free cash flow for full year 2024 at the midpoint of our adjusted EBITDA guidance. We continue to expect organic growth of gross revenue less network fees to be well north of 25% at the midpoint of our full-year guidance and are also updating our quarterly breakdown of our annual guidance to help investors better understand the impact of seasonality on our business, which can be found on page 22 of our shareholder letter.

Jared Isaacman: Now, like similar deals in the past, we are definitely going to take several steps backwards to ultimately sprint very far forward over the years to come. So it should be clear though, Bechron delivers a guaranteed path to scale and distribution, and has completely de-risked our Skype app restaurant production goals in Europe. Bechron also positions us to benefit from the anticipated secular shift to car-based payments throughout many European countries, like Germany. So as some of you may know, MasterCard just recently called out this opportunity specifically in Europe just last week during their Q2 earnings call, and we agree. The overall digitization of commerce is influencing consumer behavior throughout Europe towards a more integrated digital payment experience, and we are now positioned very, very well to lead that evolution and benefit from it.

Speaker Change: Four at the midpoint of our adjusted EBITDA guidance.

Speaker Change: We continue to expect organic growth of gross revenue less network fees to be well north of 25% at the midpoint of our full year guide and are also updating our quarterly breakdown of our annual guidance to help investors better understand the impact of seasonality on our business.

Speaker Change: <unk>, which can be found on page 20 page 22 of our shareholder letter.

Nancy Disman: A couple of call outs as it pertains to our guidance. We continue to expect a stronger second half of 2024, a long list of low-hanging fruit cross-sell payments, and SkyTap, including from our recent acquisition of Rebel. Contracted annual volume backlog of about $25 billion that Taylor discussed that is already contracted, contracted but not yet implemented or at its expected run rate. SkyTab system installs continue to accelerate each quarter, and we are way ahead of schedule on our 30,000 goals for 2024.

Speaker Change: A couple of call outs as it pertains to our guidance. We continue to expect a stronger second half of 2020 for a long list of low hanging fruit cross sell payments and sky tap, including from our recent acquisition of rebel.

Jared Isaacman: Also, as mentioned in my letter, we are not going to sit on our hands and wait for the business to come our way when the opportunity is really obvious. You know, some of the greatest tech companies were formed by deploying capital intelligently while in market was in transition. I mean, there are literally hundreds of examples that can be found inside Amazon, Microsoft, Apple, Meta, Palo Alto, even payment companies like Pfizer and their clover product have benefited from intelligent M&A. So we've delivered a lot of winning transactions. We're very good at it, and Revlon X-Rom will be winners, and there's going to be more like them.

Taylor: Contracted annual volume volume backlog of about 25 billion that Taylor discussed that is already contracted contracted but not yet implemented are at its expected run rate.

Speaker Change: <unk> system installs continue to accelerate each quarter and we are way ahead of schedule on our 30000 golf for 2024.

Nancy Disman: Many of the wins featured each quarter, especially stadiums, ticketing opportunities, and major enterprise resorts, are seasonally strongest in the back half of the year. Strong progress in Canada, including our signature win this quarter at Whistler-Blackcomb and Nobu-Toronto. This was previously an untouched market for Shift4. There is real momentum in Europe, as demonstrated by the impressive list of hotel and restaurant wins we have shared over the last few quarters. And while it won't be a real driver of the balance of the year, we are really excited about the Vectron acquisition and what it brings.

Speaker Change: Many of the wins featured each quarter, especially stadium ticketing opportunities major enterprise resorts are seasonally strongest in the back half of the year.

Jared Isaacman: Second, we did repurchase over 35 million of our equity since implementing our $500 million buyback authorization last quarter, and we have ample free cash flow to fund additional buybacks and acquisitions. So Nancy's going to talk a little bit more about our leverage and balance sheet in her prepared remarks. Third, while we have many organic investments underway, we've become increasingly encouraged by recent momentum, and have begun making incremental investments to accelerate our progress with SkyTap and our international expansion efforts.

Speaker Change: Strong progress in Canada, including our signature win this quarter at Whistler, Blackcomb and Nobu Toronto. This was previously an untouched market for <unk> four.

Speaker Change: Real momentum in Europe as demonstrated by the impressive list of hotel and restaurant wins, we have shared over the last few quarters and while it won't be a real driver of the balance of the year. We are really excited about the vectren acquisition and what it brings.

Jared Isaacman: Further, it's no secret I would like to see Shift 4 become essentially the SpaceX of Fintech. We have been funding major internal system initiatives, including our New Mission Control Center, Project Phoenix, and AI initiatives where we will endeavor to take the innovation magic and then no fail SpaceX approach and apply it to our operations all over the world.

Nancy Disman: Our strategic e-commerce customer continues to add volume quickly, and we've been expanding organically into several new international markets with at least eight new countries set to go live in the back half of the year. The high end of our volume guide, which we have tightened in light of the delayed Vectron closing and control process, and clearly a consumer that is not at peak spending would imply seasonal trends consistent with prior years.

Speaker Change: Our strategic E Commerce customer continues to add volume quickly and we've been expanding organically into several new international markets with at least eight new country is set to go live in the back half of the year.

Speaker Change: The high end of our volume guide, which we have tightened in light of the delayed vectren clothing and control process and clearly a consumer that is not at peak spending would imply seasonal trends consistent with prior years.

Jared Isaacman: Now, in terms of investor feedback, we receive a lot of questions in feedback from investors, and if attempted to really answer many of them in my shareholder letter, the earnings presentation, and throughout our prepared remarks. So for example, this quarter you should find further explanation of our build-by partner strategy to capitalize on what we believe to be a massive opportunity as software and payments converges to deliver superior commerce. Experience. You should also find a breakdown of our M&A formula, including how we delete legacy parts, blow up the revenue model, enhance the value proposition, and pivot the revenue model towards payments plus assets.

Nancy Disman: It is also worth highlighting that we would have raised the midpoint of our EBITDA guides further if not for the anticipated drag from our European strategy. We have provided an EBITDA bridge on page 23 of our earnings. For even more clarity, even without the recent acquisitions, we would have raised the midpoint of our guidance to account for Q2 outperformance. 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.

Speaker Change: It is also worth highlighting that we would have raised the midpoint of our EBIT guidance further if not for the anticipated drag from our European strategy. We have provided an EBITDA bridge on page 23 of our earnings for even further clarity even without the recent acquisitions, we would have raised the midpoint of our guidance.

Speaker Change: To account for key to outperformance.

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.

Jared Isaacman: Taylor is also going to provide further proof points at this point as he walks you through past acquisitions, including venue necks and focus costs. And as mentioned in prior quarters, there are many things we can control in our operations, but oftentimes the timing of enterprise goal lives is beyond our control. As such, we have shared our contractual backlog of volume, the majority of which is expected to go live in Q3 and Q4, and we use this to sense check our own projections. Last, we have provided the inorganic contribution to Q2 gross revenue less network fees, along with reiterating that the full year of 2024 should be well north of 25%.

Speaker Change: With that let me now turn the call back to Jerry.

Jared Isaacman: Thanks, Nancy. So, before we go to the line for questions, we are going to take, well, it's a multi-part question that was submitted over X. So, Tanner Triggs, you've got the lucky poll here, and there are actually four really awesome questions, so I'll try and hit them really quickly.

Jerry: Thanks Nancy.

Jerry: So before we go to the line for questions. We are going to take well. It's a multipart question from that was submitted over X. So Tanner triggs, you're you've got the lucky pull here and it's actually like four really awesome question, So I'll try and hit it really quickly.

Jared Isaacman: You know, now that we've been playing the kind of carrot and stick game on our gateway business for some time now, what does the future organic trajectory of the business look like? Well, first, I'd say the power of our gateway goes well beyond just the volume that's on it. It's those 550 plus software integrations that allow us to pursue these verticals that few others can. So, great examples this quarter would be like Toronto, or, I'm sorry, Nobu Toronto, and Nobu Chicago.

Tanner Triggs: Now that we've been playing the kind of the carrot and stick game on our gateway business for some time now what is the future organic trajectory of the business look like.

Speaker Change: Well first I'd say like the power in our gateway It goes well beyond just the volume that's on it. It's those 550 plus software integrations that allow us to pursue these verticals that few others can so great. Examples this quarter would be like Toronto, or I'm, sorry, Nobu, Toronto Nobu Chicago, They were never on our gateway at all but they require those integrations.

Jared Isaacman: Now, in closing, for the 11th time in 17 quarters, we have been public, we have positively revised guidance. The guidance update this quarter accounts for the overall outperformance from the quarter, the legacy and synergy contributions from Rebel and Vectron, as well as notable incremental investments to accelerate the pace of progress with internal systems, AI, international market expansion, and SkyCab product accelerates. Now, in the face of some economic uncertainty, I'd like to think our guide demonstrates the strength of our diversified business model and our strategy.

Jared Isaacman: They were never on our gateway at all, but they required those integrations. We had the better value proposition, the other two that could compete for that business, and we won. But you think about it, our whole stadium vertical right now, I mean, you know, we acquired the software to pursue that vertical several years ago, but we've bundled it with our payment offering, and we've bundled it now with our ticketing integrations. All of that is organic growth.

Speaker Change: We had the better better value prop versus the other two that could compete for that business and we want when you think about it our whole stadium vertical right now I mean, we acquired the software to pursue that.

Speaker Change: That vertical several years ago, but we bundled it with our payment offering and we bundled it now with our ticketing integrations all of that is organic growth. So we're taking a lot of products and services like Sky tab, which was an organic initiative and we're growing really quickly in the U S with them and now we're able to do it in Canada and Europe, So for Mike.

Jared Isaacman: So consider this. Despite the relentless comparisons, we do a lot more than just restaurant to chip for. We do not offer capital or funding programs, and we generally target established businesses that have less failure risk. We have focused on an efficient and low-cost customer acquisition model by acquiring overlooked assets and cross-selling our products and services. As a result, we can grow through even the most challenging of economic times and often without having to win a single new customer.

Jared Isaacman: So, you know, we're taking a lot of products and services, like SkyTab, which was an organic initiative, and we're growing really quickly in the U.S. with them, and now we're able to do it in Canada and Europe. So, from my perspective, the organic growth trajectory of the business is going to be extraordinarily long after, you know, the gateway conversion story plays out. You had a couple other things about how easy it is to take our products and services that work in the U.S. into Europe, and that depends.

Mike: Perspective, like the organic growth trajectory of the business is going to be extraordinarily long. After you know the gateway a conversion story plays out.

Mike: Yeah, you had a couple of other things about how easy it is to take our our products and services that work in the U S into India, Europe, and and that depends so sky tab has been in the UK and Ireland for some time right now, there's very little localization or physical compliance that is required there versus you know it takes more time to look at.

Jared Isaacman: And this is not a believe me story. We've been there before and grown through.com, the great recession, grown through the pandemic and pull back, and we're going to continue to do so for years into the future. We have the most enviable roster of clients and have consistently announced high caliber wins each and every quarter since we went public. We intentionally serve complex merchants in challenging cart-present verticals where our platform, product, and software integrations provide an impressive remote.

Jared Isaacman: So, SkyTab has been in the U.K. and Ireland for some time now. There's very little localization or fiscal compliance that's required there versus, you know, it takes more time to localize SkyTab, say, in France, for example, or Germany.

Speaker Change: Skycap, saying in France for example.

Speaker Change: Or or Germany, but those are all efforts that are underway. The software integrations that we have the power of hotels for example, say oracle or agilis. It they work in a in Europe. The same as they do in the U S and they work in Canada. The same as they do and yet in the U S. Our venue next software for supporting stadiums.

Jared Isaacman: But those are all efforts that are underway. The software integrations that we have that power hotels, for example, Oracle or Agilisys, they work in Europe the same as they do in the U.S., and they work in Canada the same as they do in the U.S. Our VenueNext software for supporting stadiums is pretty plug-and-play in Europe, and I think that goes to the last part of your question, which was specific to stadiums in Europe.

Jared Isaacman: And as a result, we possess a differentiated right to win and have done a pretty good job by identifying acquisitions that either extend our technology capabilities for purposes of entering new markets or just add merchants and distribution capabilities at an attractive customer's acquisition cost, alongside equally attractive payback periods. We have a unique playbook and formula that delivers successful results in sharp contrast to our peers. As a result, we are delivering consistently strong growth while expanding our operating margins and generating strong free cash flow.

Speaker Change: It's pretty plug and play in Europe, and I think that goes to the last part of your your question, which was specific to stadiums in Europe actually have a couple more parts to it but.

Jared Isaacman: Actually, you have a couple more parts to it, but yeah, we're making great progress. I think we posted on Twitter a cool video of our first stadium that went live in the U.K., and we're working on a pretty badass video for the FC Barcelona go-live, which is underway as well. So I don't think the actual go-live process for stadiums in Europe takes any longer than it does in the U.S. You just have to wait for the season to end.

Speaker Change: Yeah, we're making great progress I think we posted on Twitter are cool video of our first stadium that went live in the U K and we're working on are pretty bad <expletive> video for the FC Barcelona have go live which is which is underway as well. So I don't think the actual go live process for stadiums in Europe take any longer than they do in the U S. You've just got to wait for the the season to end.

Jared Isaacman: We have a proven strategy centered around software integrated payments, and we are well on our way to replicating our success in the USA all over the world.

Taylor Lauber: And with that, I'm going to turn the call over to Taylor. Taylor.

Speaker Change: And here's the last part, which I think is a good one is that every now and then we talk about wins that are kind of outside the core of restaurants and hotels and stadiums you used examples like the UBS stores are fanatics or self storage and kind of like what's the trajectory like there and the interesting thing is these are just businesses that use the same integration.

Jared Isaacman: And here's the last part, which I think is a good one, is that every now and then we talk about wins that are kind of outside the core of restaurants and hotels and stadiums. You used examples like the UPS stores or Frenatics or Self Storage and kind of like, what's the trajectory like there. And the interesting thing is these are just businesses that use the same integrations that we use to pursue hospitality customers. So think about it.

Taylor Lauber: Thanks, Jared. As in prior quarters, I'm going to spend a bit of time talking about the current operating environment. But I'd also like to talk about our backlog and provide detailed insight into a couple of recent acquisitions to demonstrate how we unlock value from them.

Taylor Lauber: Starting with the operating environment, we do our best during times of economic uncertainty and now is no different. Merchant Growth and Same-Store Sales Performance was generally within our expectations during Q2. It is important to note that despite the constant comparison to others in the industry, we are well diversified and we've never relied on same-store sales for our growth. This diversification was a commitment we made at our IPO and has increased our resiliency even while growing our total volumes at a 75% and Kager in the four years since IPO.

Speaker Change: <unk> that we use to pursue.

Speaker Change: Hospitality customers, so think about a big hotels and resorts have retail shops, and it like I don't know Caesars Forum shops, and such and then other retailers use the same software. So we have a lot of ski resorts Whistler Blackcomb is a great example, this quarter, but we have to have a lot of like ski shops, but usually the same software that ski resorts.

Jared Isaacman: Big hotels and resorts have retail shops in them, like, I don't know, Caesars Forum shops and such, and then other retailers use the same software. So we have a lot of ski resorts. Whistler Blackcomb is a great example this quarter.

Jared Isaacman: But we also have a lot of, like, ski shops that use the same software that ski resorts would. And the same retail software that, say, customers in forum shops use is what UPS stores use. It might be the same software that Frenatics uses or merchandising shops. So it's actually, like, not really a new vertical for us. It leverages the same integrations that we use to serve our hospitality customers, and I appreciate those questions. We'll go to the end.

Speaker Change: And the same retail software that's a customers in the forum shops uses what UBS stores use uses it might be the same software the fanatics uses or merchandising shop. So it's actually like not really a new vertical for us. It leverages. The same integration that we use to pursue our hospitality line of business and I. Appreciate those questions. We'll go to the <unk>.

Taylor Lauber: As many of you know, we have been cautious that the $100 stake would not last forever and it appears that restaurants may be experiencing a mild slowdown. On the contrary, hotel travel, stadium attendance and retail merchants are all doing reasonably well and we continue to add lots of merchants. These conditions favor ship for as we grow by aggressively taking share across and cross-selling payments and software. This works quite well as our products are competitively priced and have low fixed cost of ownership which is attractive to merchants.

Speaker Change: Yeah.

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, we ask that you. Please limit to one question and one follow up question one moment, while we poll for questions.

Taylor Lauber: Our strong balance sheet and free cash flow also allow us the flexibility to grow when others are shrinking. We use these times to invest in our business building, buying and partnering at a time when many in our industry are urgently trying to prove they can even achieve a modest profit margin.

Operator: We ask that you please limit yourself to one question and one follow-up question. Please wait while we poll for questions. Our first question is from Darrin Peller with Wolf Research. Please proceed.

Speaker Change: Our first question is from Darrin Peller with Wolfe Research. Please proceed.

Taylor Lauber: Jared provided a thorough rundown of the various drivers underpinning the step up in growth for the back half and I wanted to highlight our backlog which is a metric we track internally and helped inform our guidance. Our current backlog is roughly 25 billion in volume. This represents volume that is already contracted but not yet implemented or at its expected run rate. While there can be slippage from time to time these merchants are already installed or have an installation that is scheduled in the near term.

Darrin Peller: Hey guys, thanks. Maybe we could just start off looking a little bit more at the acquisition contribution and then a little more on the strategy and roadmap of how you have your plan to really monetize and make the most of it. And so I know you talked about some of the guide increase being $15 million or even $35 million from revenue from acquisitions. Can you just explain the margin dynamics there first from Revel and Vectron?

Darrin Peller: Hey, guys. Thanks, maybe we could just start off looking a little bit more of the <unk> acquisition contribution and then.

Darrin Peller: Little more on the strategy and roadmap.

Darrin Peller: You know your plan to really monetize and make the most of those and so I know you've talked about some of the guide increase being $15 million and EBITDA of $35 million from revenue from acquisitions can you just explain the margin dynamics, there first rebel and backdrop.

Darrin Peller: And then more strategically, Jared, can you just hone in a little more on the roadmap on how to really, what your expectations are for the milestones are to monetize those in terms of moving some of that software over and moving it over onto payments? And some more, maybe a little more color in the timeline of how you could monetize those deals. Thanks, guys.

Jared Isaacman: And then more strategically Jared can you just hone in a little more on the roadmap on how to really what your expectation on milestones or to monetize those in terms of moving some of that software over and moving it over on to payments.

Taylor Lauber: It is important to realize that this is one of many factors that contribute to our confidence and volume growth for the back half of the year. For example, we sign thousands of restaurants, hotels and e-commerce, customers, nonprofits and others that will go live immediately. When you see this number, you should think of sports stadiums and enterprise resorts that have signed contractual commitments but for a variety of reasons such as waiting for the season to start or the resort to open they have not gone online yet. As Jared mentioned, we expect the majority of this volume to be realized this year.

Speaker Change: So maybe a little more color on the timeline of how you could monetize those deals thanks guys.

Jared Isaacman: Yeah, hey Darin. Jared here.

Jared Isaacman: Yeah, Hey, Darrin Jaret here, let me, let me kind of start out with some of the high level points, and then I'll kick it over to Nancy to get into any of the specific margin drag dynamics. So.

Jared Isaacman: Let me kind of start out with some of the high-level points, and then I'll kick it over to Nancy to get into any of the specific, you know, margin drag dynamics. So, I mean, first of all, as we've kind of demonstrated in our earnings reports with the focus pause and the venue next look back, we do take a very quick and deliberate approach to pivot the business model of these types of acquisitions.

Speaker Change: I mean first of all as we've kind of demonstrated in our earnings reports with the with the focus pause and and the venue next look back we do take a very quick and deliberate approach to pivot the business model.

Taylor Lauber: Given our recent acquisitions, I thought it would be helpful to provide some insight to two of our more seasoned acquisitions. Then you next and focus pause in order to give you all a little better perspective on how the revenue model for these two companies evolved over time. In short, both companies experienced a dip in revenue shortly after acquisition. This is planned for and deliberate as we transition their models and bundle payment processing and SaaS.

Nancy Disman: Of these type of acquisitions, so oftentimes, it's foregoing hardware software revenue, even SaaS revenue, we'll throw away if it accelerates a migration.

Jared Isaacman: So, oftentimes it's going hardware, software revenue, even SaaS revenue we'll throw away if it accelerates a migration. So, keep that in mind. I'd say especially with respect to Vectron, which probably looks a little bit more like some of the deals that we have done in the past where, you know, a heavy concentration of kind of more one-time revenue that can go away very, very quickly when you pivot strategies. Now, let's start with Revel right now.

Speaker Change: So keep that in mind, I'd say, especially with respect to the.

Jared Isaacman: The vectren, which probably looks a little bit more like some of the deals that we've done in the past, where you know a heavy concentration of kind of more onetime revenue that that can go away very very quickly.

Taylor Lauber: For focus pause, their legacy revenue model was very dependent on one-time revenue with about two-thirds of their revenue being non-recurring in nature. As a result, in the first two months of post-acquisition, their gross revenue less network fees declined about 54% as we executed our typical strategy of blowing up the legacy model and pivoted to a bundled payment solution. Today, focus pause gross revenue less network fees is 95% recurring in nature and is 5x higher than their post-acquisition lows and 3x higher than pre-acquisition.

Jared Isaacman: When you pivot strategies now.

Jared Isaacman: So, we said last quarter when we announced that deal that we expected 15 million contribution for the back half of the year. You should assume almost all that's coming from cost synergies. You know, Revel was very much a, you know, a tech startup, big cash burner. We say that we go in very deliberately.

Jared Isaacman: Let's start with rebel right now so we said last quarter, when we announced that deal that we expect a 15 million contribution for the back half of the year you should assume almost all of that is coming from cost synergies.

Jared Isaacman: <unk> was very much a.

Jared Isaacman: <unk> Tec Tech startup big Big cash burner.

Jared Isaacman: We burn the shifts so that we can focus on the future. The future is SkyTab in our world. So, you know, that isn't to say that we don't see a huge opportunity from the 18,000 customers that we're going to cross-sell payments on and eventually move to SkyTab. But these are bigger chain customers.

Jared Isaacman: We say that we go in very very deliberately we burn the shifts so that we can focus on the future of the future of Sky tab in our world. So.

Taylor Lauber: Because we are bundling services that merchants traditionally use multiple vendors for, they're often saving money and getting a dramatically improved service experience. It's a win-win. I'm sure you can see the similarities between Focus Paws and Vectron. Vectron is a business that will take some steps back in revenue in EBITDA for the remainder of the year, but in the spirit of delivering payments plus software value proposition that should lead to very meaningful revenue EBITDA and pre-cash flow growth over the medium term.

Jared Isaacman: That isn't to say that we don't see a huge opportunity from the 18000 customers that we're going to we're going to cross sell payments and eventually moved to sky that but these are bigger chain customers, that's going to play out over some period of time. The immediate move is to say look we're not we're not actively developing and rebel anymore and that's a big cost synergies. There. That's why I think some people had some question Hey, you've got 50.

Jared Isaacman: That's going to play out over some period of time. The immediate move is to say, look, we're not actively developing Revel anymore, and that brings some big cost synergies there. That's why I think some people have some questions. Hey, you've got 15 million of EBITDA coming from this thing. Where's the volume associated with it?

Jared Isaacman: EBITDA coming from this thing, whereas the volume associated with it and we're not we're not really baking that into that conversion process in REIT world that will play out over a couple of years now with respect to Vectren. This is where you're going to definitely take a couple of steps backwards as you pivot. The model. This is going to take like this isn't going to play out over two years or something like maybe rebel would this is a story that's going to play out over.

Jared Isaacman: Hey, we're not really baking that conversion process in right now. That'll play out over a couple years. Now, with respect to Vectron, this is where you're going to definitely take a couple steps backwards as you pivot the model. This isn't going to play out over two years or something like maybe a Revel would. This is a story that's going to play out over 10 years.

Taylor Lauber: With Venue Next, we also took a step back in revenue contribution before taking many steps forward. Legacy Venue Next already had a recurring revenue model built on SaaS, although they did also rely on one-time hardware sales. We were able to complement Venue Next's superior technology with our distribution and offer this end market a bundled payment solution that was very novel at the time. Post acquisition, Venue Next similarly witnessed a temporary dip in gross revenue less network fees as we transitioned away from one-time hardware sales and towards payments.

Jared Isaacman: You know, you have 65,000 customers that are – they're going to be a shoo-in for payments in Europe. You're going to have 300-plus distribution partners that are going to sell, you know, SkyTab all across Europe. But this is all going to take some time to play out. We don't even have full control over this company based on just the delisting process. So hopefully that gives you a little bit of a sense of where the puts and takes are, where you get some drag from some of these businesses, you know, where it can even impact a little bit of free cash flow when you go negative on, say, like a Vectron, but where the opportunity will play out much greater over the years to come. And Nancy, I don't know if you want to add on margins. Yeah, I think what I would add is –

Jared Isaacman: 10 years, you have 65000 customers that are there going to be a shoe in for payments in Europe.

Jared Isaacman: You're going to have 300, plus distribution partners that are going to sell sky cab all across Europe, but that this is all going to take some time to play out we don't even have full control over this company based on just the the delisting process. So hopefully that gives you a little bit of a sense of where the puts and takes are where you get some drag from some of these businesses you know where it can even impacted a little bit of free cash flow.

Taylor Lauber: With Venue Next today, generating gross revenue less network fees that is greater than seven times pre-acquisition levels, which 90% is recurring in nature. It took some time to educate the markets on the benefits of this bundled solution and today we are now reaping those benefits. Volume from stadium and entertainment clients was up over 50% year over year, with a considerable runway to capture additional share of wallet as we crossed out ticketing to the installed base.

Nancy Disman: You go negative on say like a veteran but where the opportunity will play out much much greater over the years to come and Nancy and the margins. Yeah. I think I think what I would add is understand we currently spend a lot of time looking at that and I would say the best class.

Nancy Disman: Yeah, I think what I would add is that we certainly spent a lot of time looking at this, and I would say the best process... I expect, on an all-in basis, for it to look very similar. Twitter, with puts and takes of obviously new drag from Rebel Infectron, and we continue to synergize the still-young Finaro and Appetite business from last year. So, think about the synergy process as that will sometimes take more than 12 months.

Jared Isaacman: Consolidated gross margin.

Jared Isaacman: Sure.

Jared Isaacman: On a on an all in basis for it to look very similar.

Jared Isaacman: And square with puts and takes obviously, a drag from rental and <unk> and.

Taylor Lauber: We put illustrations in our latest shareholder letter to help better visualize the trends mentioned here. In both of these examples, as with the majority of all other M&A, we don't settle our businesses with technical debt, layers of bureaucracy, unnecessary parts. Focus positive Venue Next integrated to our payment platform alongside of 500 other ISVs, go to market with a new SaaS plus embedded payments offering and win more in their respective markets as a result.

Jared Isaacman: And our guidance.

Jared Isaacman: <unk> advertising last year, so think about the synergy process and sometimes even more than 12 months ago, even though we're lapping NRL.

Nancy Disman: So even though we're lapping Finaro, we are certainly still doing lots of integration work there. So, that's how I would think about it. This thing is going to get a little more complicated, obviously, with our new support system. We're kind of blowing up one model and getting them to convert over. So I think starting to get like a good proxy for what to expect to back out in the year, Darrin, is probably looking at exactly what we're doing.

Jared Isaacman: We are certainly still doing lots of integration work. They are so that's how I would think about it as this thing is going to get a little more complicated obviously.

Jared Isaacman: Our archive.

Taylor Lauber: While we talked about a small handful of examples, it's worth noting that the broader opportunity set is growing as well. Our pipeline of compelling opportunities is quite frankly larger than it's been at any point in recent history, and we are in the enviable position of being very picky about what we spend our time and capital on. While we spend a fair amount of time talking about M&A in this quarter, it's important to realize that we don't have to do deals, and we have conviction in the balance of our build-by and partner approach.

Jared Isaacman: Model and getting them over.

Speaker Change: Trying to get like I said pricing.

Darren: Back half of the year, Darren and probably looking at exactly what we achieve.

Speaker Change: Okay, that's really helpful guys.

Nancy Disman: Sorry, Darrin, I remember it was the first part of a longer question, so I want to make sure we address it. Nancy, do you mind commenting on that?

Jared Isaacman: Sorry.

Jared Isaacman: Erin.

Nancy Disman: I remember it was the first part of a longer question.

Jared Isaacman: I remember the first part of a longer question do you want to make sure we address it Nancy do you mind, commenting on the.

Speaker Change: It was de Minimis and I think we said that but just further clarification on revenue contribution from Revlon Vectren in Q2, Yeah for sure and I think that's why we wanted to about the 24% organic because remember we only had two weeks and we're talking about something completely immaterial for Q2, so I wouldn't even thought about them as a contributor for the quarter.

Nancy Disman: I think that's why we wanted to put out the 24% organic, because remember, we only had two weeks, and we're talking about something completely immaterial for Q2. So I wouldn't even think about them as a contributor for the quarter.

Taylor Lauber: As Jared mentioned, we did not do a single acquisition in our first 15 years in business and grew quite quickly. What we are not content to do is sit back and wait for business to come to us when there is still so much opportunity to accelerate the convergence of software and payments.

Nancy Disman: And certainly, when you look at the guide, we tried to contemplate the benefits going into the back-end.

Speaker Change: And certainly when you when you look at the at the Guy grades we tried to contemplate the benefits coming into the back half of the year.

Nancy Disman: And with that, I will turn it over to Nancy to discuss our financial results. Thank you. Thanks, Taylor, and good morning, everyone.

Nancy Disman: Okay, that's really helpful. And very quickly, the backlog was really helpful to get, guys. Just considering that gives you a lot of idiosyncratic reasons to be confident in the second half, any macro-conservatism built into the outlook at this point? I mean, I know there's some in terms of same-store sales on certain verticals, but maybe just comment on that, and I'll turn it back to you.

Nancy Disman: We delivered another quarter of consistent and solid results outperforming our quarterly guidance and demonstrating, again, our ability to deliver top-line growth while continuing to drive margin expansion and strong free cash flow conversion. Total Q2 volume of 40 billion grew 50 percent year over year. Growth revenue less network fees grew 41 percent to 321 million. Our adjusted EBITDA for the quarter was 162 million, up 48 percent, and adjusted EBITDA margins expanded 240 basis points to 51 percent versus the same quarter last year.

Speaker Change: Okay, that's really helpful and very quickly the backlog was really helpful guys.

Speaker Change: Alright, just considering that gives you a lot of idiosyncratic reasons to be confident in the second half just any macro conservatism built into the outlook at this point or I mean, I know theres. Some in terms of same store sales on certain verticals, but maybe just comment on that at all sort of execute okay.

Nancy Disman: Certainly when we built the original guide, and I think some of the pull-down on volume when we tweaked it a little bit, we were thinking about that we knew the glory days were not coming. And you know we've been talking about how the prices of the states were going to bust up at some point. So the way I would think about it is that we pulled down on the high end, knowing that we wouldn't have any upside. We definitely considered that in the macro.

Speaker Change: Yeah, Yeah, and it certainly when we built the original guide and I think some of the pull down on volume when we when we tweaked it a little bit we were thinking about that we knew the glory days.

Speaker Change: We're not coming and you know we've been talking about that.

Speaker Change: The prices of the states, we're going to bust up at some point. So I think what the way I would think about it as we pulled down the high end knowing that we wouldn't have kind of any upside we definitely consider that in the macro and generally when we when we put our low out to begin with we had some conservatism there, but generally coming out of Q2, we had a really solid same.

Nancy Disman: Excluding the impact of the legacy, penoro, and appetite businesses, margins expanded more than 500 basis points. Our quarterly results were driven by the continued trend of our hospitality and restaurant verticals, momentum across our enterprise merchants, further monetization and conversion of gateway customers, and an increasingly larger contribution from stadiums and ticketing. We see the impacts in both our payments-based revenue growth and the increased contribution from staff-based fees. Organic revenue for the quarter was 24% and we are reiterating organic growth to be well-nourced of 25% on a full-year basis.

Nancy Disman: And generally, when we put our low out to begin with, we had some conservatism there. But generally, coming out of Q2, we had a really solid same-store sales. And while we're seeing some softening maybe in early July, it's definitely offset by really solid performance across the other verticals. So right now, I think we're just kind of holding steady for now from a midpoint perspective.

Speaker Change: Our sales and while we're seeing some softening maybe in early July it's definitely offset from like really solid performance across the other verticals. So right now I think we're just kind of holding them.

Speaker Change: Kind of holding steady for now.

Speaker Change: From a midpoint perspective.

Darrin Peller: All right, great results guys, thank you. Our next question is from Dan Dolev with Mizuho Securities. Please proceed.

Speaker Change: Alright, great results guys. Thank you.

Dan Dolev: Our next question is from Dan Dolev with Mizzou Health Securities. Please proceed. Hey guys, hey Jared, and uh...

Nancy Disman: The in-quarter contributions from revel and vectron were immaterial given both acquisitions closed in mid-June. Blended spreads for the second quarter and the first half of the year was 62 basis points. Spreads across our core business of restaurant, hospitality, and specialty retail continue to remain stable. Based on our year-to-day performance and the vertical mix and customer size driving our volume, we now expect full-year spreads to average no less than 61 basis points for the full year.

Speaker Change: Our next question is from did go live with Mizuho Securities. Please proceed.

Didi: Hey, guys, Hey, Jared and a tailored really good results here I have a quick question about the volume can you maybe clarify what drove volume reduction to the full year guide.

Speaker Change: Maybe give us a little bit of yourself with confidence into the background in the second half that would be great. Thank you so much.

Jared Isaacman: Yeah, I mean, I can start that one off. You know, Nancy, she kind of mentioned in her last remarks, but it really was driven by two parts. One of these is when we put out our volume bridge last year, we put a big slug of restaurants and hotels in Europe in it. And for as much progress as we are making, we're announcing awesome wins every every quarter, you know, we didn't have the 65,000 customer layup that we will eventually have control over in the balance of this year with Vectron.

Speaker Change: Yeah, I mean, I can I can start that one off Nancy.

Speaker Change: Nancy she kind of mentioned in your last remarks, but it really was driven in two parts one of which is when we put out our volume bridge last year, we put a big slug of restaurants and hotels in Europe and for as much progress as we are making we're announcing awesome wins every every quarter.

Nancy Disman: Up from the 60 basis points for we provided previously. Description and other revenue was 71 million in Q2 up 93% compared to the same period last year. The growth and fast and other related software revenue was driven by our success across SMB, SkyTab, and penetrating the sports and entertainment vertical. Growth and subscription and other revenue will not always be linear. This is a good opportunity to remind investors that as Jared and Taylor discussed, we often blow up the legacy revenue model of our acquisitions and pivot them towards our signature shift or payments field value preposition.

Speaker Change: We didn't have the 65000 customer lay up.

Speaker Change: Know that we will eventually have control over and the balance of this year with background. So I think just like you know there is some delays in getting to the.

Jared Isaacman: So I think just like, you know, there are some delays in getting to the thousands of restaurants and hotels that we were hoping for this year. The other part, as Nancy mentioned, is that the good times aren't rolling anymore.

Speaker Change: <unk> of restaurants, and hotels that we were we were hoping for this year. The other part is as Nancy mentioned is like just the good times aren't rolling anymore. So when we initially set a volume got at the beginning of the year.

Speaker Change: We said the upper end is that the you know the 100 dollar Stakes continues though we're always cautious at that will that will have like real real staying power. So I think that's just prudent to.

Nancy Disman: Our continued success in converting appetite and other software only clients to acquiring will cause subscription and other revenue to decline and offset some of the outside growth we are achieving. Additionally, the timing of one time revenue may cause some bumpiness quarter to quarter. In Q2, total general administrative expenses increased 34% year-over-year to 110 million. Excluding the impact of the acquisitions, though, completed in Q4 last year, GNA expenses were flat year-over-year. We remain highly committed to a disciplined approach to cross-management while continuing strategic investment for growth.

Speaker Change: Just to tighten that up.

Speaker Change: We'll say generally speaking on the macro look we've we have grown double digits in volume and revenue our entire history of 25 years and there's been a lot of downturn throughout that period, if you're growing volume at the pace that we are it's not to say like 3% reduction or something in same store sales in restaurants isn't a factor to consider it.

Jared Isaacman: So when we initially set a volume guide at the beginning of the year, you know, we said the upper end was that the you know, the $100 stakes continue. Though, we're always cautious that that will have like real, real staying power. So I think that it's just prudent to just tighten that up. I will say generally speaking, on the macro, look, we have grown, you know, double digits in volume and revenue over our entire history of 25 years, and there's been a lot of downturns throughout that period. If you're growing volume at the pace that we are, it's not to say, you know, a 3% reduction or something in same store sales and restaurants isn't a factor to consider. It certainly is.

Speaker Change: It certainly is and believe me if theres a restaurant I think it's all bets are I'm, sorry, if there's a recession I'm sure. It's all bets are off for everybody at that point, but from our perspective like how we're hitting our volume targets is doing smart things.

Nancy Disman: As Jared mentioned, we are making incremental investments in areas we see for the opportunity. But overall, our goal of keeping headcount flat while investing in 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. Our second quarter adjusted EBITDA margins were 51%, representing 240 basis points of expansion compared to Q2, 2023. As I mentioned, excluding the impact of acquisitions, margins expanded over 500 basis points.

Jared Isaacman: And believe me, if there's a restaurant, I think it's all bets off. I mean, I'm sorry, but if there's a recession, I'm sure all bets are off for everybody at that point. But from our perspective, like how we're hitting our volume targets is doing smart things, you know, like, you know, Vectron and rebel, where I guarantee you it will be a hell of a lot easier for us to predict where our next 65,000 customers are coming from in Europe, then it will be safe for somebody else who's just beginning to enter that market.

Speaker Change: Like you know Vectren and rebel where I guarantee you it will be a hell of a lot easier for us to predict where our next 65000 customers are coming from in Europe. Then it will be saved for somebody else, who is just beginning to enter into that market and thats. How we have like just greater control over the the volume trajectory of the business versus you know trying to underwrite.

Speaker Change: To the you know the 100 basis points on a on a same store same store sales movement.

Speaker Change: Got it really good quarter, thanks again, Sir.

Nancy Disman: We have high conviction in the many opportunities to further improve our underlying margins that are still on the horizon, including the remaining MNA synergies to be realized from our ongoing integration efforts of recent MNA. Utilization of AI technology, implementation of new internal systems, and ongoing streamlining efforts to enhance scalability throughout our business operations. Our adjusted free cash flow in the quarter with 76 million, up 18% compared to a year ago. As a reminder, Q2 cash outflows include a semi-annual interest payment of roughly 10.4 million, which can distort the quarter to quarter sequential comparison.

Jared Isaacman: And that's how we have, like, just greater control over the volume trajectory of the business versus, you know, trying to underwrite down to the, you know, the 100 basis points on a same source, same source sales.

Speaker Change: Our next question is from Timothy Chiodo with UBS. Please proceed.

Timothy Chiodo: Great. Thank you for taking my question I wanted to hit on the stadiums and ticketing wins. There was a really strong list of adds this quarter. Many of them. You noted are already starting with ticketing from day, one and you've mentioned also the ongoing cross selling opportunity I think a lot of that has to do with the integrations that you've made throughout the ticketing ecosystem with numerous platforms I think basically all.

Speaker Change: The major ones, but the question really comes down to that rough Tam I believe it's in the 100 billion or so range for the U S. Maybe you could update or correct that number if I'm off and give us giving us a sense on what portion of that youre working with in some way whether it's only on ticketing are only on concessions, but how much of that do you think you've already achieved.

Nancy Disman: Total adjusted free cash flow conversion for the first half of the year is 54% in line with our expectations. In addition to the timing of interest payments, there will be fluctuations in our conversion rates on a quarterly basis due to the seasonality of our business, the deployment of capital to support growth and normal working capital cycle changes, periods to periods. Overall, the improvement in our unit economics and efficient operating model continue to give us great confidence in our ability to deliver annual year-over-year expansion in our adjusted free cash flow conversion rate in line with our previous guide of 60% plus. I will talk about the slight drag we expect from our recent acquisitions in just a moment with our updated guidance.

Speaker Change: As a part of that but again, let's call. It roughly 100 billion Tam and then if you don't mind after I have a quick follow up on mix.

Timothy Chiodo: Our next question is from Timothy Chiodo with UBS. Please proceed.

Speaker Change: Yeah sure so.

Taylor: Good morning, Tim. This is Taylor I'll cover that I think very important to distinguish the two concepts market share versus wallet share, especially in.

Speaker Change: These like stadium environments, where the revenue centers are very fragmented in many regards so we.

Timothy Chiodo: Great, thank you for taking the question. I want to hit on the stadiums and ticketing wins. There was a really strong list of ads this quarter. Many of them, you noted, are already starting with ticketing from day one. And you've mentioned the ongoing cross-selling opportunity. I think a lot of that has to do with the integrations that you've made throughout the ticketing ecosystem with numerous platforms. I think basically all of the major ones. But the question really comes down to that rough TAM.

Speaker Change: We feel really good about our market share by and these numbers can vary, but whether it's two thirds or 75% of the stadiums.

Timothy Chiodo: I believe it's in the $100 billion or so range for the U.S. Maybe you could update or correct that number if I'm off. And give us a sense of what portion of that you're working with in some way, whether it's only on ticketing or only on concessions. But how much of that do you think?

Speaker Change: And theme parks and every league in the United States, we have a cusp.

Speaker Change: A customer relationship in some way shape or form.

Nancy Disman: And with respect to capital transactions, in May, our Board of Directors authorized a new stock repurchase program for students to which we are authorized to repurchase up to 500 million of common stock through December 31st, 2025. During the second quarter, we repurchase approximately 230,000 shares for approximately $16 million, leaving approximately 484 million of capacity available as of June 30th. To date in Q3, we have repurchased an additional 300,000 shares for approximately 20 million and we will continue to be opportunistic.

Speaker Change: The it's a minority of those where we have kind of the Holy Grail, which is the entirety of the stadium plus ticketing as you mentioned, but that is the most common of the offerings that we go to market with now it's probably the most common of the.

Speaker Change: <unk>, so thats taken from let's say a hypothetical appetite stadium move.

Speaker Change: <unk> over to venue next so.

Speaker Change: We're really enthused and quite frankly, our customers see a ton of value and giving us the bulk of the revenue Center management and ticketing inside of that I think the harder part is that the volume comes in reasonably choppy. When you do that at least that it takes kind of a year, maybe two years to fully season and the example, I would give is.

Nancy Disman: You can find a complete reconciliation of our shares in the back of our earnings materials. We have cumulatively deployed approximately 350 million on buybacks, repurchasing 6.5 million shares at an average price of $54 since our IPO. Of note, cumulative delusion from our stock-based compensation has been less than 2% per year on average. As employees, we are the largest shareholder of shift 4 and are very thoughtful about managing delusion. Net income for the second quarter was $54.5 million.

Speaker Change: We acquired appetizing the back I'm, just before the last quarter.

Speaker Change: Of 2023, and we have been installing more stadiums and a month on <unk> than we have in our busiest quarters than any other year. So pace of installation has been incredible but from a revenue and volume standpoint, you won't see that until the sports season starts up and then in the case of ticketing, usually the bulk of ticketing happens after the season when they saw <unk>.

Speaker Change: Tickets for the following year. So we feel really good about our market our market share we feel really optimistic about the ultimate wallet share.

Nancy Disman: Diluted earnings per class A and class C share was $50.8. Adjusted net income for the quarter was $89 million or 96 cents per ANC share on a diluted basis on 93 million average fully diluted shares outstanding. Our balance sheet remains strong. Our sequential decline in liquidity is due to the cash purchases of veteran and rebel. Our total indebted net has a weighted average cost of 1.35 percent and we do not have any maturities until December 2025.

Speaker Change: The chop your part and this has kind of led to.

Speaker Change: Our back half weighted.

Speaker Change: Volume expectation throughout throughout our guidance for the year is just that.

Speaker Change: Cadence of that.

Speaker Change: Excellent. Thank you for that the brief follow up is kind of a pie chart question. So in the shareholder letter you mentioned that now you're at about a third of volumes, 33% from hotels and resorts. If you wouldn't mind just updating what the rest of that Pie chart might look like meaning how much of that is restaurants stadiums et cetera based on.

Nancy Disman: Our net leverage at quarter end was approximately 2.7 times, excluding the impacts of lower cash due to the acquisitions we just completed, net leverage dropped to 2.2 times our lowest level since January 2021. The de-leveraging profile has been quite extraordinary. Our strong balance sheet, growing EBITDA and expanding free cash flow conversion afford us many options to fund strategic priorities opportunistically by backpack and satisfy year end 2025 maturity is without being punitive to our equity.

Speaker Change: The the existing base of end to end volume.

Taylor Lauber: Yeah, sure. So, good morning, Tim. This is Taylor.

Speaker Change: Yes, sure we love this it's about a third a third a third.

Taylor Lauber: I'll cover that. I think it is very important to distinguish the two concepts, market share versus wallet share, especially in these like stadium environments where the revenue centers are very fragmented in many respects. So we feel really good about our market share, and these numbers can vary, but you know, whether it's two-thirds or 75% of the stadiums and theme parks in every league in the United States, we have a customer relationship in some way, shape, or form.

Taylor Lauber: It's a minority of those where we have kind of the holy grail, which is the entirety of the Stadium Plus ticketing, as you mentioned. But that is the most common of the offerings that we go to market with now. It's probably the most common of the... offerings that are taken from, let's say, a hypothetical appetizing stadium moving over to venue next. So we're really enthused, and quite frankly, our customers see a ton of value in giving us, you know, the bulk of the revenue center management and ticketing inside of that. I think the harder part is that the volume comes in reasonably choppy when you do that.

Speaker Change: Meaning that you've got.

Speaker Change: Restaurants hotels, and then all other all other would include stadiums, but it also includes specialty retail things like Jerry had mentioned, our big strategic customer et cetera.

Taylor Lauber: At least it takes kind of a year, maybe two years, to fully season. And the example I would give is, you know, we acquired Appetize in the back, you know, just before the last quarter of 2023, and we have been installing more stadiums in a month on venue next than we have in our busiest quarters in any other year. So the pace of installation has been incredible, but from a revenue and volume standpoint, you won't see that until the sports season starts up, and then, in the case of ticketing, usually the bulk of ticketing happens after the season when they sell season tickets for the following year.

Taylor Lauber: So we feel really good about our market share. We feel really optimistic about the ultimate wallet share. I'd say the choppier part, and this has kind of led to, you know, a back half weighted volume expectation throughout our guides through the year, is just that cadence of that.

Speaker Change: As I mentioned in my scripted remarks, we made a deliberate commitment at the IPO to diversify the business and that's I think paying some dividends today we.

Nancy Disman: Now, turning to guidance, we are updating our full-year guidance to include Q2 out performance and the contribution from Rev, and Vectron, which both close on June 13th. As Taylor just elaborated, we expect to pivot the revenue model of both companies to payments as we cross-sell payment processing to the installed base of merchants. For the full-year 2024, we are further tightening our guidance range for end-to-end volume and now expect a range of 167 billion to 172 billion, representing 53% to 58% year-over-year growth.

Speaker Change: We do see a modest amount of softness as Nancy mentioned very recently in restaurants, what we are seeing none of that in hotels, and we're seeing kind of continued.

Speaker Change: Continued.

Speaker Change: Spending and across all these other verticals and we've got a handful of merchants that are growing really nicely inside of that all other bucket, which is great. It offsets kind of any expectation you'd have in the macro.

Speaker Change: Perfect. Thank you for taking both.

Timothy Chiodo: Excellent. Thank you for that.

Will Nance: Our next question is from will Nance with Goldman Sachs. Please proceed.

Nancy Disman: We are increasing our growth revenue less network fees range and now expect the range to be 1.35 billion to 1.38 billion representing 44% to 47% year-over-year growth. We are also increasing our adjusted EBITDA range and now expect adjusted EBITDA to be in the range of 662 million to 689 million. The year-over-year margin expansion remains virtually unchanged from prior guidance despite the incremental investments we are making in Europe. We are also resetting our adjusted free cash flow conversion expectation to 59% from 60% previously to account for the drag from recent M&A.

Taylor Lauber: The brief follow-up is kind of a pie chart question. So, in the shareholder letter, you mentioned that now you're at about a third of volume (33% from hotels and resorts). If you wouldn't mind just updating what the rest of that pie chart might look like, meaning how much of that is restaurants, stadiums, etc., based on the existing base of end-to-end volume.

Will Nance: Hey, guys I appreciate you taking the question.

Taylor Lauber: Yeah, sure. We love this.

Taylor Lauber: It's about a third, a third, a third, meaning that you've got restaurants, hotels, and then all other. And all other would include stadiums, but it also includes specialty retail, things like Jared mentioned, our big strategic customer, etc. You know, as I mentioned in my scripted remarks, we made a deliberate commitment at the IPO to diversify the business, and that's, I think, paying some dividends today. We do see a modest amount of softness, as Nancy mentioned, very recently in restaurants, but we're seeing none of that in hotels, and we're seeing kind of, you know, continued spending across all these other verticals. And we've got a handful of merchants that are growing really nicely inside of that other bucket, which is great. It offsets kind of any expectation you'd have in the macro.

Will Nance: Wanted to ask on I just wanted the gateway revenues I know you guys had discussed kind of like a non kind of nonstandard gateway conversion towards the end of last year and we saw the you know I guess, what we call the gateway revenues in the model or coming down over the last couple of quarters I think we got to like $1 billion or so this quarter. So just could you update us on sort of where we are.

Timothy Chiodo: Perfect. Thank you for taking both.

William Nance: Our next question is from Will Nance with Goldman Sachs. Please proceed.

William Nance: Hey guys, appreciate you taking the question. I wanted to ask about just the gateway revenues. I know you guys had discussed kind of a non-standard gateway conversion towards the end of last year. And, you know, we saw the, you know, I guess what we call the gateway revenues in the model coming down over the last couple of quarters. I think we got to like 1 million or so this quarter.

Speaker Change: In that journey, and then just clarifying because those revenues appear relatively low now relative to the large base of volume I realize it's really low take rate, but just kind of making sure that we're understanding the kind of the economics as they exist today on the existing gateway volume.

William Nance: So, could you update us on sort of where we are in that journey? And then just clarifying, because those revenues appear relatively low now relative to the large base of volume; I realize it's a really low take rate, but just kind of making sure that we're understanding kind of the economics as they exist today on the existing gateway volume.

Jared Isaacman: Yeah, hey, well, I'm happy to take that. So there is still a very large quantity of volume that is still there that we make very, very little off of. So, you know, these are some very big customers that go back to the first data, JPM, JVs, with very long contracts with lots of price protection at very low rates because during that JV, they chose to monetize the relationship upstream from the gateway. So we're still working through it.

Speaker Change: Yeah, Hey, well I'm happy to take that.

Speaker Change: So there is a there is still a very large.

Speaker Change: Entity of volume that is still there.

Nancy Disman: We estimate this yield 399 million of adjusted free cash flow for full-year 2024 at the midpoint of our adjusted EBITDA guidance. We continue to expect organic growth of growth revenue less network fees to be well-north of 25% at the midpoint of our full-year guide and are also updating our quarterly breakdown of our annual guidance to help investors better understand the impact of seasonality on our business which can be found on page 22 of our shareholder letter.

Speaker Change: That we make very very little off of.

Speaker Change: So these are these are some very big customers that.

Speaker Change: That you know go back to the first data J P. M jv's with very long contracts with lots of price protection.

Speaker Change: At very low rates because during that JV. They chose to monetize the relationship upstream from the gateway. So we're still working through it. It's a lot of volume. There is certainly a lot of like low hanging fruit and they're still to get smaller customers that we contribute to our growth every single quarter, but theres a lot of big ones in there as well and there has been for some time.

Jared Isaacman: It's a lot of volume. There's certainly a lot of low-hanging fruit in there still to get smaller customers that contribute to our growth every single quarter, but there's a lot of big ones in there as well. And there has been for some time, and we are very incentivized to cut deals to get them over so we can start sunsetting connections that we don't wanna upkeep anymore. So I think like every quarter that goes by, we are more incentivized to wanna delete those old parts.

Speaker Change: And we are very incentivized to cut deals to get them over so we can start sunsetting connections that we don't want to upkeep anymore. So I think every quarter that goes by we are more incentivized to want to delete those old parts like we maintain a lot of infrastructure to Heartland GPM Pfizer World Bank.

Nancy Disman: A couple of callouts as it pertains to our guidance, we continue to expect a stronger second half of 2024. A long list of low hanging fruit cross-sell payments and SkyTap including from our recent acquisition of Rebel. Contracted annual volume backlog of about 25 billion that Taylor discussed that is already contracted but not yet implemented or at its expected run rate. SkyTap system installs continue to accelerate each quarter and we are way ahead of schedule on our 30,000 goals for 2024.

Jared Isaacman: We maintain a lot of infrastructure for Heartland, GPN, Pfizer, and WorldPay. But yeah, there's a lot of volume at ridiculously low take rates in there. So that should represent some opportunity because literally any deal that we cut with them should have some uplift. And obviously, it would almost be like 100% flow through because we're doing a lot of support for those customers. And then

Speaker Change: But yes, it's a it's a lot of volume at like ridiculously low take rates in there.

Speaker Change: So that should represent some some opportunity because literally any deal that we cut with them should have some.

Speaker Change: Some uplift and obviously it would almost be like a 100% flow through because we're doing a lot of support for those customers and then we also try to illustrate this in our shareholder letter, you'll see kind of tags next to a bunch of the different wins that were gateway conversions as you know that pulls down gateway revenue, but much to the benefit of end to end.

Taylor Lauber: And Dan, we also try to illustrate this in our shareholder letter. You'll see tags next to a bunch of the different wins that were gateway conversions. As you know, that pulls down gateway revenue but much to the benefit of end-to-end volume and revenue. So, you know, it's been a very consistent funnel for us. I wouldn't, I wouldn't try to imply in any way that a reduction in revenue there, you know, significantly mitigates our operations.

Nancy Disman: Many of the wins featured each quarter especially stadiums, ticketing opportunities, major enterprise resorts are seasonally strongest in the back half of the year. Strong progress in Canada including our signature win this quarter at Whistler Black Home and Nobu Toronto. This was previously an untouched market for shift 4. Real momentum in Europe is demonstrated by the impressive list of hotel and restaurant wins we have shared over the last few quarters and while it won't be a real driver of the balance of the year we are really excited about the veteran acquisition and what it brings.

Speaker Change: Volume and revenue so.

Speaker Change: It's been a very consistent funnel for us.

Speaker Change: Wouldn't.

Speaker Change: I wouldn't try to.

Speaker Change: Imply in any way that a reduction in revenue there mitigates meaningfully our opportunity set.

William Nance: No, that all makes perfect sense. And then I guess the second question is just about SkyTab.

Speaker Change: No that all makes that all makes perfect sense and then I guess the second question is just on sky to have it seems like the momentum there.

William Nance: It seems like the momentum there is really strong and is obviously adding lots of more opportunities with some of the acquisitions that you just did. So just any color, I guess, broad strokes where you are seeing the traction and the deployments, whether that's through direct sales channels, through, you know, the existing indirect channels that you still have, as well as if there are any callouts around some of the acquisitions you've done over the past couple of years. Where are you guys seeing the most success in deploying the SkyTab platform?

Speaker Change: Is really strong and obviously, adding lots.

Speaker Change: Lots of more opportunity with some of the acquisitions that you just said so just.

Nancy Disman: Our strategic e-commerce customer continues to add volume quickly, and we've been expanding organically into several new international markets with at least eight new countries set to go live in the back half of the year. It was highlighting that we would have raised the midpoint of our EBITDA guides further if not for the anticipated drag from our European strategy. We have provided an EBITDA bridge on page 23 of our earnings. For even further clarity, even without the recent acquisitions, we would have raised the midpoint of our guidance to account for Q2 out performance.

Speaker Change: Any color I guess in broad strokes, where you are seeing the traction in the deployments whether thats through direct sales channels through.

Speaker Change: Under the existing indirect channels that you still have as well as if there are any call outs around some of the acquisitions you've done over the past couple of years, where are you guys seeing the most success in deploying the sky tab.

Speaker Change: <unk> platforms.

Speaker Change: Yeah, well, so happy to happy to hit that I mean, it's a.

Jared Isaacman: Yeah, well, so happy to hit that. I mean, whether it's direct or indirect, it's entirely a factor of just where you're at in the country. So we already, back in 2022, the summer of 2022, so more than two years ago, we already had insourced all of our partners in the market that we wanted to have a direct presence in. So we haven't done any insourcing in two years. So we said those were markets that we were pretty committed to.

Speaker Change: Whether it's direct or indirect it's entirely a factor of just where you're at in the country. So we already back in 2020 to summer of 2022, so more than two years ago, we already in sourced all of our partners.

Speaker Change: In the markets that we wanted to have a direct presence in sub prime.

Speaker Change: We haven't done any in sourcing in two years so.

Speaker Change: We said those were markets that were pretty committed to a lot of production comes from there and then more on the west coast and Central U S. More sparsely populated areas, that's where we have third party distribution because it's.

Jared Isaacman: 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. Thanks, Nancy.

Jared Isaacman: A lot of production comes from there. And then more on the West Coast and Central U.S., more sparsely populated areas, that's where we have third-party distribution because it's. It's just we'd rather have the variable cost in that case than the fixed cost.

Speaker Change: It's just we'd rather have the variable cost in that case and the fixed cost I would say in the U K for example in Ireland, we have a small direct team. We also have a couple of partners and we're just kind of really learning the market there with them.

Jared Isaacman: I'd say in the UK, for example, in Ireland, we have a small direct team. We also have a couple partners, and we're just kind of really learning the market there with them. But you can see the results, you know, as we post them on Twitter and X. It covers the gamut every day, from startups to really beautiful restaurants. So we love the traction.

Jared Isaacman: Before we go to the line for questions, we are going to take a multi-part question that was submitted over X. Tanner Triggs, you've got the lucky pull here, and it's actually four really awesome questions. I'll try and hit it really quickly. Now that we've been playing the kind of the carrot and stick game on our gateway business for some time now, what does the future organics trajectory of the business look like?

Speaker Change: You can see the I mean, you can see the results as we posted on Twitter and exits like covers the gamut everyday from startups to like really beautiful restaurants.

Speaker Change: So we love the traction there is no.

Jared Isaacman: There is no, you know, in terms of the legacy brands that we acquired in 2017, like we deleted those parts. There is no FuturePos production or Harbor Touch production or PosiTouch production. Like everything, everything is SkyTab and has been for two years now.

Speaker Change: Terms of the legacy brands, you know going back to 2017 that we acquired like we deleted those part there is no future pause production or harbor touch production or Pozzy touch production like everything everything is sky tab and has been essentially for two years now.

Jared Isaacman: Well, first, I'd say the power in our gateway goes well beyond just the volume that's on it. It's those 550 plus software integrations that allow us to pursue these verticals that few others can. So, great examples this quarter would be like Toronto, or I'm sorry, Nobu Toronto, Nobu Chicago. They were never on our gateway at all, but they required those integrations. We had the better value-proper as the other two that could compete for that business, and we won.

Speaker Change: Yes. It makes sense, if you don't mind, a follow up I guess when you when you think about those legacy brands and the ones that the customers that you've had on the platform for a really long time, I guess, what's sort of the mix of that backlog conversions versus kind of net new sales.

Jared Isaacman: Makes sense. If you don't mind following up, I guess when you think about those legacy brands and the ones that customers that you've had on the platform for a really long time, I guess, what's sort of the mix of like backboat conversions versus kind of net news sales?

Jared Isaacman: Yeah. I mean, it's almost all net new. So, you know, I think we've said a couple of times over the quarters, we're enhancing our Lighthouse product, which is our business intelligence platform, to have a, I don't know, kind of like the iPhone 15 upgrade path. You now qualify for SkyTab, and you kind of click here, and we transfer your database over. It just has to be done in the most automated way possible, so there's not a lot of manual programming.

Speaker Change: Yeah, I mean, it's it's almost all net new so I.

Speaker Change: I think we've said a couple of times over the quarters, where we're enhancing our lighthouse product, which is our business intelligent platform to have a I don't know kind of like iPhone 15 upgrade path now qualify for sky cab and kind of click here and we transfer your database over it just has to be done in it and the most automated way possible. So it's not a lot of manual programming.

Jared Isaacman: We think about it our whole stadium vertical right now. I mean, we acquired the software to pursue that vertical several years ago, but we bundled it with our payment offering, and we bundled it now with our ticketing integrations. All of that is organic growth. So, you know, we're taking a lot of products and services like SkyTab, which was an organic initiative, and we're growing really quickly in the US with them, and now we're able to do it in Canada and Europe.

Speaker Change: So we have only by policy you've been doing sky cab upgrades to the existing base for retention purposes.

Jared Isaacman: So we have only, by policy, been doing SkyTab upgrades to the existing base for retention purposes, which represents like a very, you know, a very, very, very small percentage of production every single month. The reality is that we do, we do have, you know, tens of thousands of existing customers on our other products that we will migrate over the next couple of years. It'll just be done thoughtfully over a couple of years through a relatively automated path.

Jared Isaacman: So, you know, from my perspective, like the organic growth trajectory of the business is going to be extraordinarily long after the gateway conversion story plays out. You had a couple other things about how easy it is to take our products and services that work in the US into Europe, and that depends. So, SkyTab has been in the UK and Ireland for some time right now. There's very little localization or fiscal compliance that's required there.

Speaker Change: Which represents like a very you know.

Speaker Change: A very small very very small percentage of production every single month. The reality is like we do we do have tens of thousands of existing customers on our other products that we will migrate over the next couple of years it'll just be done like thoughtfully over a couple of years through a relatively automated path.

Jared Isaacman: Versus, you know, it takes more time to localize SkyTab in France, for example, you know, or Germany, but those are all efforts that are underway. The software integrations that we have that power hotels, for example, say Oracle or a jealousist, they work in Europe the same as they do in the US, and they work in Canada the same as they do in the US. Our venue next software for supporting stadiums is pretty plug-and-play in Europe, and I think that goes to the last part of your question, which was specific to stadiums in Europe.

Speaker Change: Yes, it makes sense I appreciate you taking the questions guys.

William Nance: Appreciate you taking the questions, Jared. Yeah.

Andrew Schmidt: Our final question is from Andrew Schmidt with Citi. Please proceed.

Speaker Change: Our final question is from Andrew Schmidt with Citi. Please proceed.

Speaker Change: Yes.

Andrew Schmidt: Hey, Jared, and team. Thanks for taking my questions. I was wondering if we could just level set on the restaurant business for a minute, maybe talk about just, you know, where you're positioned. Obviously, there's a lot of variation in terms of assets out there. But, you know, QSR versus table service, you know, post-Revel, where are you guys positioned on a going forward basis? Thanks a lot. Yeah,

Andrew Schmidt: Hey, Jerry and team. Thanks for taking my questions. I was wondering if could just level set on the restaurant business for a minute maybe talk about just where you are.

Andrew Schmidt: Obviously theres a lot of variation in terms of assets out there, but USR versus table service post rebel.

Speaker Change: Where you guys are positioned on a go forward basis. Thanks a lot.

Jared Isaacman: Yeah, it's a good question. I mean, we've always, you know, said for some time that people actually think the restaurant, Tam, might be a little bit bigger when, in reality, there's like, three very distinct swim lanes in it, and they have their own kind of competitive set. So, or, you know, the competitive landscape associated with it. So, in terms of your cash and carry, that's your, you know, your coffee shops, your bakeries and such. That is, that is clover and square.

Speaker Change: Yes, it's a good question I mean, we've always said for some time that people I think are they actually I think the restaurant Tam might be a little bit bigger when in reality, there's like very there's three very distinct swim lanes in it and they have their own kind of competitive set.

Jared Isaacman: Actually, I have a couple more parts to do it, but yeah, we're making great progress. I think we posted on Twitter a cool video of our first stadium that went live in the UK, and we're working on a pretty badass video for the FC Barcelona GoLive, which is underway as well. So, I don't think the actual GoLive process for stadiums in Europe take any longer than they do in the US. You just got to wait for the season to end.

Speaker Change: So.

Speaker Change: You know competitive landscape associated with it so in terms of your cash and carry that's your you know your coffee shops bakeries, and such that is as Clover and square.

Speaker Change: And and essentially that is that is it then you have your fast food, which which is which is par zinio.

Jared Isaacman: And, and essentially, that is, that is it. Then you have your, your, your fast food, which is, which is par, Xenial, and Rebel did play in that lane a little bit. And then you have, then you have table service. And that is really just toast and a drink.

Jared Isaacman: And here's the last part, which I think is a good one, is that every now and then we talk about wins that are kind of outside the core of restaurants and hotels and stadiums. You use examples like the UPS stores or fanatics or self-storage and kind of like what's the trajectory like there. And the interesting thing is these are just businesses that use the same integrations that we use to pursue hospitality customers.

Speaker Change: Rebel did play in that lane, a little bit and then you have a then you have table service and that is really just toast and ship for.

Jared Isaacman: So, I would say the Revel acquisition did give us some interesting capabilities where they have some retail functionality in it that we wouldn't otherwise build. They have really solid fast food and enterprise capabilities, so we are just engineering that into SkyTap. So, I mean, we already said, like, the $15 million to Viva that came from CostSynergies, we're not building on that product anymore. There will never be another new feature that goes into Revel.

Speaker Change: So I would say the rebel acquisition did give us some interesting capabilities, where they have some retail functionality in it that we wouldn't have otherwise built.

Speaker Change: They have really solid fast food and enterprise capabilities. So we are just engineering that into into Skycap. So I mean, we already said like the $50 million of EBITDA came from cost synergies, we're not building on that product anymore.

Jared Isaacman: So, think about it big hotels and resorts have retail shops in it, like I don't know, Caesar's form shops and such, and then other retailers use the same software. So, we have a lot of ski resorts, Whistler Blackcomb is a great example this quarter, but we have to have a lot of ski shops that use the same software that ski resorts would. And the same retail software that say customers in the form shops use is what UPS stores use.

Speaker Change: There will never be another new feature that goes into rebel will certainly upkeep at as we eventually migrate customers over to payments and Sky tab, but all our Dev efforts had been steered towards skycap, including the rebel resources and talent that we've that we've held onto so we are building in those those same type of rebel enterprise quick service and.

Jared Isaacman: We'll certainly maintain it as we eventually migrate customers over to Payments and SkyTap, but all our dev efforts have been steered towards SkyTap, including the Revel resources and talent that we've held on to. So, we are building in the same type of Revel enterprise, quick service, and..., and some retail capabilities into SkyTap right now. I think for the next year and a half, you would continue to expect SkyTab to excel within the verticals that we focused on, which is table service, but I do expect a year from now we are going to be able to move into some of those other lanes.

Jared Isaacman: It might be the same software that fanatics uses or merchandising shops. So, it's actually like not really a new vertical for us, it leverages the same integrations that we use to pursue our hospitality, to win a business. And I appreciate those questions. We'll go to the analysts. Thank you.

Speaker Change: And some retail capabilities into sky to have right now I think for that for the next year and change like you continue to expect rebel II or sky cab to excel within the verticals that we focus on which is table service, but I do expect a year from now we are going to be able to move into some of those some of those other land.

Operator: If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. And for a participant using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit to one question and one follow-up question. One moment will we pull for questions.

Andrew Schmidt: Got it. Thank you for that, Jared. And then maybe expand on just the internal systems work, you know, obviously there's an efficiency component, but there's also an offensive component in terms of being able to develop faster, go to market faster. What does the internal systems work bring you in terms of tying everything together? Thanks a lot. Oh, so much.

Speaker Change: Got it. Thank you for that yard and then maybe you can expand on the just the internal systems work.

Speaker Change: Is that obviously, there's an efficiency component, but this also.

Speaker Change: And office component in terms of being able to build faster or go to market faster.

Speaker Change: What does the internal systems work bring you in terms of tying everything together.

Jared Isaacman: Oh, so much. I love this because we're a 25-year-old company that started in my parents' basement. Our first CRM, which was largely in use up until a year ago, was homegrown. It started out in Access and SQL and was bolted together over so many years. And then, of course, we have done a handful of acquisitions, and some of them have a homegrown system or CRM. And you find your employees, just from an efficiency perspective, are touching eight different systems. It's not a great foundation to work on.

Speaker Change: Oh, so much I mean this is I love this because.

Darren Peller: Our first question is from Darren Peller with Wolf Research. Please proceed. Hey guys, thanks. Maybe we could just start off looking a little bit more at the acquisition contribution. And then a little more on the strategy and roadmap of how you know, your plan to really monetize and make the most of those. And so I know you talked about, you know, some of the guide increased being 15 million or even though 35 million from revenue back was just explained the margin dynamic there first and revel in background.

Speaker Change: We're 25 year old company that started my parent's basement or our first CRM, which is which was largely in use up until a year ago was homegrown like it.

Speaker Change: <unk> and access and sequel, I mean, and bolted together through so many years and then of course, we have done a handful of acquisitions and some of them have a homegrown system or see our CRM and you find your employees just from an efficiency perspective are touching like eight different a different systems. It's not a great foundation to work on it means youre carrying a lot of extra personnel to do.

Jared Isaacman: It means you're carrying a lot of extra equipment to do all the things you need to do every day as fast as you possibly can. So we kicked off almost three years ago. We call it Project Phoenix. It's like a full rip and replace of all of our internal systems. It's built on Salesforce and Palantir, and it's going well. We constantly pump out new modules. The commercial team rolled out with it a long time ago.

Darren Peller: And then more strategically, Jared, can you just hone in a little more on the roadmap on how to really what your expectation on milestones or to monetize those in terms of moving some of that software over and moving it over onto payments. And some more maybe a little more color in the timeline of how you could monetize those deals. Thanks, Jason. Yeah, hey Darren, Jared here. Let me kind of start out with some of the high level points and then I'll kick it over to Nancy to get into any of the specific, you know, margin drag dynamics.

Speaker Change: All of the things you need to do every day as fast as you, possibly can so we kicked off a almost like three years ago, We call project Fenix, it's like a full rip and replace of all of our internal systems, it's built on Salesforce and <unk>.

Speaker Change: And it is growing well like we constantly pump out new modules commercial team rolled out with it a long time ago now our new ticket systems, all being generated from it and I think it's imperative. It's important and this is like the foundation for so much more now.

Jared Isaacman: Now our new ticket system is all being generated from it, and I think it's important, and this is like the foundation for so much more. Now we can run AI solutions for fast-building POS menus. That saves efficiency.

Darren Peller: So, I mean, first of all, as we've kind of demonstrated in our earnings reports with the focus pause and the venue next look back, we do take a very quick and deliberate approach to pivot the business model of these type of acquisition. So oftentimes it's for going hardware software revenue, even SaaS revenue will throw away if it accelerates a migration. So keep that in mind. I'd say especially with respect to, you know, DeVectron, which probably looks a little bit more like, you know, some of the deals that we have done in the past where, you know, I have a concentration of kind of more one time revenue that can go away very, very quickly when you pivot strategies.

Speaker Change: Now we can run the AI solutions for like fast building Pos menus that saves efficiency.

Jared Isaacman: That's time to install, time to revenue for getting the systems out in the field, but it also unlocks a lot of efficiencies. We're building our whole mission control system. So that's like our no-fail operations all over the world. So when you're having go-lives in Europe at the same time as the U.S., it's monitored in a very proceduralized environment, just like I've seen in other industries. So this is an important foundation we must have.

Speaker Change: That's tied to the time to install like time to revenue for getting the systems out in the field, but also unlocks a lot of efficiencies were.

Speaker Change: We're building our whole mission control system. So that's like are no fill operations all over the all over the world. So when Youre, having go lives in Europe at the same time as the U S. It's monitored in a very like procedure lives environment, just like just like I've seen in other industries. So this is an important foundation, we must have in it and I think a lot of this goes to the eventual Maher.

Jared Isaacman: And I think a lot of this goes to the eventual margin expansion that Nancy talks about all the time. People probably don't appreciate how much personnel we have. We have 3,500 employees that maintain a lot of old things, whether it's old POS products, old internal systems, gateway connections to our competitors that, as time goes by, we delete those parts and then can repurpose that talent to move even faster at new business. So it's like this way that we can keep headcount flat while accelerating growth and improving margins. It's pretty cool.

Speaker Change: And expansion that Nancy talks about all the time as like people probably don't appreciate how much personnel. We have we have 3500 employees that upkeep a lot of old things, whether it's old Pos product old internal systems gateway connections to our competitors that as time goes on.

Darren Peller: Now, let's start with Rebel right now. So we said last quarter, and we announced that deal that we expected 15 million contribution for the back half of the year. You should assume almost all that's coming from cost energies. You know, Rebel was very much a tech startup, big, big cash burner. You know, we say that we go in very, very deliberately, we burn the shifts so that we can focus on the future, the future is SkyTab in our world.

Darren Peller: So, you know, that isn't to say that we don't see a huge opportunity from the 18,000 customers that we're going to cross ill payments and eventually move to SkyTab. But these are bigger chain customers, that's going to play out over some period of time. The immediate move is to say, look, we're not actively developing in Rebel anymore, and that's some big cost energies there. That's why I think some people had some questions, hey, you've got 15 million of EBITDA coming from this thing, where's the volume associated with it?

Nancy Disman: We delete those parts and then can repurpose that talent to move even faster at new business. So it is like this way that we can keep head count flat, while accelerating growth and improving margins is pretty cool.

Speaker Change: And out of that.

Andrew Schmidt: I think you have got it well. Thank you.

Speaker Change: You got it well thank you.

Jared Isaacman: Thank you. Cool. I appreciate that question. I'm pretty excited about those two projects. Well, look, hey, thanks everyone for dialing in. I know we'll catch up with some of the other analysts shortly on another call, but yeah, thanks for dialing in and take care.

Speaker Change: I appreciate that question I'm pretty excited about those two projects are well. Okay. Thanks, everyone for dialing in I know will catch up with some of the other analysts shortly.

Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Speaker Change: On our next call, but yes, thanks for dialing in and take care.

Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Darren Peller: Hey, we're not really bacon that conversion process in right now, that'll play out over a couple years. Now, with respect to Vectron, this is where you're going to definitely take a couple steps backwards as you pivot the model. This isn't going to take like, this isn't going to play out over two years or something like maybe Rebel would. This is a story that's going to play out over 10 years. You have 65,000 customers that are going to be a shoeing for payments in Europe.

Speaker Change: Yeah.

Speaker Change: [music].

Darren Peller: You're going to have 300 plus distribution partners that are going to sell SkyTab all across Europe. But this is all going to take some time to play out. We don't even have full control over this company based on just the delisting process. Hopefully, that gives you a little bit of a sense of where the puts and takes are, where you get some drag from some of these businesses, where it can impact a little bit of free cash flow and you go negative on say like a Vectron.

Darren Peller: But where the opportunity will play out much, much greater over the years to come. Nancy, I don't know if you have any margins. Yeah, I think I think whatever that is to understand we've been struggling. I've seen a lot of time looking at this, and I would say the best property for consolidated working arts in the year is used to. I expect on an all-in basis for it to look very similar to what you're seeing in the quarter, which puts in taste of obviously new drag from Revolt Ectron, and as we could see, to synergize still, you know, the finale and advertise this last year.

Darren Peller: So think about this synergy process as that will sometimes take more than 12 months, so even though we're laughing in our own, we are certainly still doing lots of integration work there, so that's why I would think about it as this thing is going to get a little more complicated. Obviously, it's already in my position, our kind of low nut one model and getting emphasis for over. So I think trying to get like a good processing for what I expect at the end of the year, Darren, is probably looking at exactly what we achieved these two.

Darren Peller: Okay, that's really helpful, guys, very helpful. Sorry, Darren, I remember as the first part of a longer question, so I want to make sure we addressed it. Nancy, do you mind commenting on the, it was the minimus, and I think we said that, but just further clarification on revenue contribution from Revolt Ectron and Q2. Yeah, for sure. I think that's why we wanted to put out the 24% organic, because remember, we only had two weeks, and we're talking about something completely immaterial for Q2.

Darren Peller: So I wouldn't even think about that the contribute are for the quarter, and certainly when you, when you look at the, at the guide rate is, you know, we tried to contemplate the benefits going into the back half of the year. Okay, that's really helpful and very quickly, the backlog was really helpful to get guys. Just considering that gives you a lot of idiosyncratic reason to be confident on the second half.

Darren Peller: Just any macro conservatism built into the outlook at this point, or I mean, I know there's some in terms of, seems to resale on certain verticals, but maybe just comment on that and I'll turn it back to the Q. Nice guys. Yeah, you know, certainly when we built the original guide, and I think some of the pull down on volume, when we, when we tweaked it a little bit, we were thinking about that we knew the global days were not coming, and you know, we've been talking about, you know, the, the prices of the state were going to bust up at some point.

Darren Peller: So, so what the way I think about it is, we pulled down the high end, knowing that we wouldn't have kind of any upside. We definitely considered that in the macro. And generally, when we, when we put our low out to begin with, we had some conservatism there, but generally coming out of Q2, you know, we had, we had a really solid thing for sales, and while we're seeing some softening maybe in early July, it's definitely all set from like really solid performance across the other verticals. So, right now, I think we're just kind of effective.

Darren Peller: All right, great results, guys. Thank you. Thanks.

Dan Dolev: Our next question is from Dad Doliv with Mizzouho Securities. Please proceed. Hey guys, hey Jared and Taylor, really good results here. I have a quick question about the volume. Can you maybe clarify what drove the volume reduction to the full-year guide and maybe give us a little bit of your sense of confidence into the macro in the second half? That would be great. Thank you so much. Yeah, I mean, I can start that one off.

Dan Dolev: You know, Nancy, she kind of mentioned in her last remarks, but it really was driven in two parts. One of which is when we put out our volume bridge last year, we put a big slug of restaurants and hotels in Europe in it. And for as much progress as we are making, we're announcing awesome wins every quarter. You know, we didn't have the 65,000 customer layup that we will eventually have control over in the balance of this year with Vectron.

Dan Dolev: So I think just like, you know, there is some delays in getting to the thousands of restaurants and hotels that we were hoping for this year. The other part is Nancy mentioned is like, the good times aren't rolling anymore. So when we initially set a volume guide at the beginning of the year, we said the upper end is that the $100 stakes continues, though we're always cautious that that will have like real, real staying power.

Dan Dolev: So I think that's just proven to just to tighten that up. I will say generally speaking on the macro, look, we have grown, you know, double digits in volume and revenue are entire history of 25 years. And there's been a lot of downturn throughout that period. If you're growing volume at the pace that we are, it's not to say like, you know, 3% reduction or something in same store sales and restaurants isn't a factor to consider.

Dan Dolev: It certainly is. And believe me, if there's a restaurant, I think it's all bets off. I mean, I'm sorry, if there's a recession, I'm sure it's all bets are off for everybody at that point. But from our perspective, like how we're hitting our volume target is doing smart things, you know, like, you know, Vectron and Rebel, where I guarantee you, it will be a hell of a lot easier for us to predict where our next 65,000 customers are coming from in Europe than it will be saved for somebody else who's just beginning to enter into that market.

Dan Dolev: And that's how we have, like, just greater control over the volume trajectory of the business versus, you know, trying to underwrite down to the, you know, the hundred basis points on a same store sales. Thank you for taking me a question.

Timothy Chiodo: I want to hit on the stadiums and ticketing wins. There was a really strong list of ads this quarter. Many of them you noted are already starting with ticketing from day one and you've mentioned also the ongoing cross-selling opportunity. I think a lot of that has to do with the integrations. That you've made throughout the ticketing ecosystem with numerous platforms, I think basically all of the major ones. But the question really comes down to that rough tam, I believe it's in the 100 billion or so range for the US.

Timothy Chiodo: Maybe you could update or correct that number if I'm off. And give us giving us a sense on what portion of that you're working with in some way, whether it's only on ticketing or only on concessions, but how much of that do you think you've already achieved as a part of that? Again, let's call it roughly 100 billion tam. And then if you don't mind after I have a quick follow up, let's move on.

Timothy Chiodo: Yes, sure. So good morning, Tim. This is Taylor. I'll cover that. I think very important to distinguish the two concepts, market share versus wallet share, especially in these stadium environments where the revenue centers are very fragmented in many regards. So we feel really good about our market share by, and these numbers can vary, but whether it's two thirds or 75% of the stadiums and theme parks in every league in the United States.

Timothy Chiodo: We have a customer relationship in some way, shape or form. It's a minority of those where we have kind of the Holy Grail, which is the entirety of the stadium plus ticketing, as you mentioned. But that is the most common of the offerings that we go to market with now. It's probably the most common of the offerings that's taken from, let's say, a hypothetical appetite stadium moving over to venue next. So we're really enthused, and quite frankly, our customers see a ton of value in giving us the bulk of the revenue center management and ticketing inside of that.

Timothy Chiodo: I think the harder part is that the volume comes in reasonably choppy when you do that, at least it takes kind of a year or maybe two years to fully season. And the example I would give is, we acquired appetite in the back just before the last quarter of 2023, and we have been installing more stadiums in a month on that new tax than we have in our busiest quarters in any other year.

Timothy Chiodo: So pace of installation has been incredible, but from a revenue and volume standpoint, you won't see that until the sports season starts up, and then in the case of ticketing, usually the bulk of ticketing happens after the season when they sell season tickets for the following year. So we feel really good about our market share. We feel really optimistic about the ultimate wallet share. I'd say the choppy apart, and this has kind of led to a back half weighted volume expectation throughout our guides through the year is just that cadence of that.

Timothy Chiodo: Excellent. Thank you for that. The brief follow up is kind of a pie chart question. So in the shareholder letter, you mentioned that now you're at about a third of volume, 33% from hotels and resorts. If you wouldn't mind just updating what the rest of that pie chart might look like, meaning how much of that is restaurant, stadiums, etc, based on the existing base of end to end volume. Yeah, sure. We love this.

Timothy Chiodo: It's about a third to third to third, meaning that you've got restaurants, hotels, and then all other. And all other would include stadiums, but it also includes specialty retail, things like Jared mentioned, our big strategic customer, etc. You know, as I mentioned in my script of remarks, we made a deliberate commitment at the IPO to diversify the business. And that's I think paying some dividends today. We do see a modest amount of softness as Nancy mentioned very recently in restaurants, what we're seeing none of that in hotels, and we're seeing kind of, you know, continued, continued, you know, spending in across all these other verticals.

Timothy Chiodo: And we've got a handful of merchants that are growing really nicely inside of that all other bucket, which is great. It offsets kind of any expectation you'd have in the macro. Perfect. Thank you for taking both.

William Nance: Our next question is from Will Nan Swift Goldman Sachs, please proceed. Hey, guys, I appreciate you taking the question. I wanted to ask on just on the gateway revenues. I know you guys had discussed kind of like a non kind of non-standard gateway conversion towards the end of last year, and you know, we saw the, you know, I guess what we call the gateway revenues and the model coming down over the last couple of quarters.

William Nance: I think we got to like one million or so this quarter. So just could you update us and sort of where we are in that journey? And they're just like clarifying because of those revenues appear relatively low now relative to large based volume. I realize it's really low take rate, but just kind of making sure that we're understanding the kind of the economics as they exist today on the existing gateway volume.

William Nance: Yeah, hey, well, I'm happy to take that. So there is a, there is still a very large quantity of volume that is still there, that we make very, very little off of. So, you know, these are, these are some very big customers that, you know, go back to the first data, JPM JVs with very long contracts with lots of price protection at very low rates, because during that JV they chose to monetize the relationship upstream from the gateway.

William Nance: So, we're still working through it. It's a lot of volume. There's certainly a lot of like low hanging fruit in their spill to get smaller customers that we, that contributes our growth every single quarter, but there's a lot of big ones in there as well, and there has been for some time. And we are very incentivized to cut deals to get them over so we can start sunsetting connections that we don't want to upkeep anymore.

William Nance: So, I think like every quarter that goes by, we are more incentivized to want to, you know, delete those old parts. Like, we maintain a lot of infrastructure to Heartland, GPN, Pfizer, World Pay. But yeah, it's a, it's a lot of volume at like ridiculously low take rates in there. So that should represent some, some opportunity, because literally any deal that we cut with them should have some, you know, some uplift and obviously it would almost be like 100% flow through, because we're doing a lot of support for those customers.

William Nance: And Dan, we also try to illustrate this in our shareholder letter. You'll see kind of tags next to a bunch of the different wins that were gateway conversions. As you know, that pulls down gateway revenue, but much to the benefit of end-to-end, you know, volume and revenue. So, you know, it's been a very consistent funnel for us. I wouldn't, I wouldn't try to imply in any way that a reduction in revenue there, you know, it mitigates meaning clear up. Thank you for your opportunity, sir. No, that all makes perfect sense.

William Nance: And then I guess the second question is just on SkyTab, it seems like the momentum there is really strong and obviously adding lots of more opportunity with some of the acquisitions that you just did. So just any color, I guess broad strokes where you are seeing the traction and the deployments, whether that's through direct sales panels through the existing indirect channels that you still have as well as if there are any call outs around some of the acquisitions you've done over the past couple of years.

William Nance: Where are you guys seeing the most success in deploying the SkyTab platforms? Yeah, well, so happy to hit that. I mean, whether it's direct or indirect, it's entirely a factor of just where you're at in the country. So we are already back in 2022, summer of 2022, so more than two years ago. We are already insourced all of our partners in the markets that we wanted to have a direct presence in, so we haven't done any insourcing in two years.

William Nance: So we said those were markets that we were pretty committed to, a lot of production comes from there. And then more on the West Coast and Central US, more sparsely populated areas, that's where we have third-party distribution because we'd rather have the variable cost in that case than the fixed cost. I'd say in the UK, for example, in Ireland, we have a small direct team, we also have a couple partners and we're just really learning the market there with them.

William Nance: But you can see the results as we post them on Twitter and X, it's like covers the gamut every day from startups to really beautiful restaurants. So we love the traction. There is no, in terms of the legacy brands going back to 2017 that we acquired, we deleted those parts. There is no future pause production or harbor touch production or posy touch production like everything, everything is Sky Cab and has been essentially for two years now.

William Nance: Yeah, makes sense. If you don't mind to follow up, I guess when you think about those legacy brands and the ones that the customers that you've had on the platform for a really long time, I guess what sort of the mix of like backward conversions versus kind of net news sales. Yeah, it's almost all net news. So I think we've set a couple times over the quarters. We're enhancing our Lighthouse product which is our business intelligence platform to have a, I don't know, kind of like iPhone 15 upgrade path.

William Nance: You now qualify for Sky Cab and kind of click here and we transfer your database over. It just has to be done in the most automated way possible, so it's not a lot of manual programming. So we have only by policy been doing Sky Cab upgrades the existing base for retention purposes, which represents like a very, you know, a very small, very, very small percentage of production every single month. The reality is like we do.

William Nance: We do have, you know, tens of thousands of existing customers on our other products that we will migrate over the next couple of years. It'll just be done like thoughtfully over a couple of years through a relatively automated path. Makes sense. I appreciate you thanking the questions.

Andrew Schmidt: Our final question is from Andrew Schmidt with city, please proceed. Hey, Jared and team. Thanks for taking my questions. I was running with just level set on the restaurant business for a minute. Maybe talk about just, you know, where your position. Obviously, there's a lot of variation in terms of assets out there. But, you know, QSR versus table service, you know, post revel. Where you guys are positioned to go for basis.

Andrew Schmidt: Thanks a lot. Yeah, that's a good question. I mean, we've always said for some time that people I think are, they actually think the restaurant can might be a little bit bigger when in reality there's like very, there's three very distinct swim lanes in it and they have their own kind of competitive set. So, you know, competitive landscape associate with it. So in terms of your casting carry, that's your coffee shops, your bakeries and such.

Andrew Schmidt: That is clover and square and essentially that is it. Then you have your fast food. Which is, which is par, zenial, revel did play in that lane a little bit. And then you have a, then you have table service. And that is really just toast and shift4. So I would say the revel acquisition did give us some interesting capabilities where they have some retail functionality in it that we wouldn't have otherwise built.

Andrew Schmidt: They have really solid fast food and enterprise capabilities. So we're just engineering that into into SkyTap. So, I mean, we already said like the 15 million to be able to come from cost energies. We're not building on that product anymore. There will never be another new feature that goes into revel will certainly upkeep it as we eventually migrate customers over to payments in SkyTap. But all our dev efforts have been steered towards SkyTap, including the revel resources and talent that we've held onto.

Andrew Schmidt: So we are building in those, those same type of revel enterprise quick service and some retail capabilities in the SkyTap. I think for the next year and change, like you continue to expect revel to or SkyTap to excel within the verticals that we focused on, which is table service. But I do expect a year from now, we are going to be able to move into some of those, some of those other lanes.

Andrew Schmidt: Got it. Thank you for that, Jared. And then maybe you expand on the just the internal systems work. You know, does that obviously there's an efficiency component, but there's also an offense component in terms of being able to develop faster, what a market faster. What does the internal systems work bringing in terms of tying everything together? Oh, so much. I mean, this is, I love this because like, look, we're a 25 year old company that started my parents' basement.

Andrew Schmidt: Our first CRM, which was largely in use up until a year ago, was homegrown. Like, you know, it started in access and sequel. I mean, and bolted together through so many years. And then of course we have done a handful of acquisitions and some of them have a homegrown system or CRM. And you find your employees just from an efficiency perspective are touching like eight different systems. It's not a great foundation to work on it.

Andrew Schmidt: It means you're carrying a lot of extra personnel to do all the things you need to do every day as fast as you possibly can. So we kicked off almost like three years ago, we call project Phoenix. It's like a full rip and replace of all of our internal systems. It's built on Salesforce and Palantir. And it's going well. Like, we constantly pump out new modules. Commercial team rolled out with it a long time ago.

Andrew Schmidt: Now our new ticket systems all being generated from it. And I think it's important. This is like the foundation for so much more. Now we can run AI solutions for like fast building POS menus, that saves efficiency. That's time to install, like time to revenue for getting the systems out in the field, but also unlocks a lot of efficiencies. We're building our whole mission control system. So that's like our no-fail operations all over the world.

Andrew Schmidt: So when you're having go lives in Europe at the same time as the US, it's monitored in a very like proceduralized environment, just like I've seen in other industries. So this is an important foundation we must have. And I think a lot of this goes to the eventual margin expansion that Nancy talks about all the time is like people probably don't appreciate how much personnel we have with 3,500 employees that upkeep a lot of old things, whether it's old POS products, old internal systems, gateway connections to our competitors that as time goes on, you know, we delete those parts and then can repurpose that talent to move even faster at new business. So it's like this way that we can keep head count flat while accelerating growth and improving margins. It's pretty cool. I appreciate that question. I'm pretty excited about those two projects.

Jared Isaacman: We'll look, hey, thanks everyone for dialing in.

Jared Isaacman: I know we'll catch up with some of the other analysts shortly on a next call, but yeah, thanks for dialing in and take care.