Shift4 Payments, Inc. (NYSE: FOUR)
Q1 2025 Financial Analysis | April 29, 2025
Executive Summary
Shift4 Payments reported strong Q1 2025 results, showcasing their ability to maintain high growth while also generating impressive profitability. Despite accelerating revenue model rebuilds in recent acquisitions and facing some softening in consumer spending, the company delivered record payment volumes and financial metrics across all key indicators.
Q1 2025 Highlights
Financial Performance
Shift4 demonstrated remarkable financial performance in Q1 2025, with payment volumes reaching $45.0 billion, representing a 35% year-over-year increase. This volume is approximately 6 times the level recorded in Q1 2021, underscoring the company’s consistent growth trajectory. The average size of merchants based on volume has also increased significantly, now at 137% of 2023 levels, indicating successful execution of the company’s upmarket strategy.
Gross revenue less network fees (GRLNF), a key performance metric for Shift4, grew by 40% year-over-year to $368.5 million. The company maintained a healthy 61 basis point blended spread, demonstrating its ability to preserve pricing power while expanding its merchant base. Notably, these results were achieved despite accelerating revenue model rebuilds in recent acquisitions and some softening in consumer spending.
Adjusted EBITDA increased by 38% year-over-year to $168.5 million, with an Adjusted EBITDA margin of 46%. While this represents a slight decrease from the 51% margin achieved in the previous three quarters, it remains an impressive figure and reflects the company’s focus on balancing growth with profitability. Net income for the quarter was $19.5 million, down from $28.5 million in Q1 2024, primarily due to increased interest expenses and higher operating costs associated with recent acquisitions.
Free cash flow was $46.6 million, with Adjusted Free Cash Flow of $70.5 million after accounting for acquisition, restructuring, and integration costs. While this represents a decrease from the previous quarter, it still demonstrates the company’s ability to generate significant cash while investing in growth initiatives. The company achieved greater than $20 million in EBITDA synergies across all three recent acquisitions in Q1.
Business Highlights and Vertical Performance
Restaurant Vertical
Shift4 continues to gain market share in the restaurant industry with SkyTab, its payment and point-of-sale solution. The company has set a goal of 45,000 total SkyTab systems installed in 2025. Key restaurant wins in Q1 include national chains and independent restaurants across the US, demonstrating Shift4’s strong position in this vertical.
Hospitality Vertical
The company expanded its market share in the hospitality vertical with several significant wins, including:
- The Setai Hotels – Luxury oceanfront properties in Miami Beach
- Aspen Hospitality – Six upscale lodging properties across Colorado and Idaho
- NDM Hospitality Services – Multiple properties in their portfolio
- Wilderness Resorts – Featuring three lodging properties and multiple waterparks
- Multiple gateway conversions from competing payment processors
Sports & Entertainment
Shift4 secured several major wins in the sports and entertainment sector:
- PGA Tour – Now powering payments for all retail merchandise sales at PGA Tour events
- Boston Red Sox/Fenway Park – Processing payments for food & beverage concessions
- Colorado Rockies – Food and beverage concessions at Coors Field
- Pittsburgh Pirates – Food and beverage concessions at PNC Park
- Formula One Miami Grand Prix – Payment processing services
- Red Rocks Amphitheater – Food and beverage concessions
Unified Commerce
The company continued to gain momentum in its Unified Commerce vertical, adding clients across various sectors including non-profits, retail, cryptocurrency, and transportation. The growth in this segment demonstrates Shift4’s ability to diversify beyond its core verticals.
International Expansion
International card-present momentum is accelerating, with 1,000+ international card-present wins in March alone. SkyTab is growing quickly in the UK, Ireland, and Canada, while Vectron payment cross-sells are strong in Germany:
- Formally launched in the UK in January 2025 with strong reception: 800+ SkyTab deals in March and 150+ active partners
- In Germany, launched payment-led value proposition to ~100 dealers, with 200+ cross-sells in March and continuing to ramp up
- Executing on the Vectron 65,000 merchant conversion opportunity across central Europe
- Following strategic partners into new geographies across Latin America and other regions
Acquisition Integration and Performance
Shift4 reported tangible progress across all recent acquisitions, with each effectively following the company’s integration playbook. The company achieved greater than $20 million in EBITDA synergies in Q1 across all three recent acquisitions.
Revel (June 2024):
- “Top off the Funnel” strategy showing strong results with 7,000+ active locations as of March
- Integration proceeding well with 90% of Revel product and tech team integrated with SkyTab team
- SkyTab Enterprise product is in pilot with learnings from Revel
- Notable merchant wins include 80+ locations of major chains
Eigen (November 2024):
- Payment cross-sell momentum continues with ~100 cross-sold payments in March and ramping
- Significant headway in combining gateway platforms into a single one
- Eigen product teams are fully integrated with Shift4
- Notable wins in the hospitality sector
Givex (November 2024):
- Approximately 100 cross-sold payments in Q1 (started in February)
- Implementing Givex’s loyalty platform as default off-the-shelf offering for SkyTab
- Consolidation of gift card platforms into one will be complete in the second half of 2025
- Several large chains now using the platform
Global Blue Acquisition:
- Expected to close by early Q3 2025 upon final regulatory approvals
- Will add $500B+ payment cross-sell opportunity, bringing total funnel to $1.4T+
- Dual-sided network with 15M+ affluent shoppers connected to the ecosystem
- Strategic unified commerce partnerships with Ant International and Tencent
- Expected ~$80M of run-rate revenue synergies by 2027
- ~3.6x net leverage at closing and ~3.3x net leverage by year-end 2025
Guidance and Outlook
Full-Year 2025 Guidance (Raised)
Q2 2025 Guidance
Management Commentary
“I want to be clear in saying that recent political commentary and capital markets volatility have not translated into reduced consumer spending across our merchants. In fact, payment volumes have been healthy across each of our verticals, due in part to our business being much more diversified than even just a few years ago. Our growth drivers are also not highly dependent on consumer spending and, as stated above, our products are often viewed even more favorably when value for price is at the forefront of a merchant’s mind. This is not to say we are immune to consumer spending, but we cannot control it, and our growth plans are never dependent on it.”
– Taylor Lauber, President
Shift4 has revised its full-year 2025 guidance by increasing both the low and high end of its gross revenue less network fees and adjusted EBITDA projections by $10 million each. This upward revision reflects management’s confidence in the company’s ability to execute its growth strategy despite macroeconomic uncertainties.
The company’s growth outlook is supported by several key factors:
- Strong product demand worldwide, including SkyTab, hospitality solutions, and stadium offerings
- Continued top-tier customer wins across all verticals
- Synergies and cross-selling opportunities from recent acquisitions
- Accelerating international expansion, particularly in the UK, Ireland, Germany, and Canada
- Growing contracted volume backlog of $35+ billion
Management emphasized that the guidance revision does not contemplate the inclusion of Global Blue, which is expected to close by early Q3 2025. This suggests potential further upside to the company’s financial performance in the second half of the year, once the acquisition is completed and integration begins.
Risks & Opportunities
Opportunities
Risks
Conclusion
Strengths
- Record payment volumes of $45.0 billion, up 35% year-over-year
- Strong growth in gross revenue less network fees (+40%) and adjusted EBITDA (+38%)
- Maintained stable 61 basis point spread despite competitive pressures
- Successful international expansion with 1,000+ card-present wins in March
- Increasing average merchant size, now at 137% of 2023 levels
Focus Areas
- Integration of multiple acquisitions and realization of synergies
- Completing the Global Blue acquisition and beginning integration
- Continuing international expansion beyond current markets
- Scaling SkyTab deployment with goal of 45,000 systems in 2025
- Converting Vectron’s 65,000 merchant opportunity across central Europe
Summary
Shift4 Payments delivered an impressive performance in Q1 2025, demonstrating strong execution across all key aspects of its business. The company’s ability to maintain high growth rates while also generating significant profitability positions it well for continued success. The combination of organic growth in core verticals, expansion into new markets, and strategic acquisitions provides multiple avenues for future growth.
The company’s unique balance of industry-leading growth AND strong profitability is a testament to its great products, methodical approach to selecting verticals and geographies, and highly disciplined capital allocation philosophy. Despite potential macroeconomic uncertainties, Shift4’s diversified business and strong value proposition should allow it to continue its growth trajectory.
With the pending Global Blue acquisition expected to close by early Q3, Shift4 is poised to significantly expand its international footprint and payment opportunity. The company’s raised guidance for 2025 reflects management’s confidence in its ability to execute its strategy and deliver strong financial results throughout the year.
Source: Shift4 Investor Relations
