Shift4 Payments, Inc. (NYSE:FOUR) Q3 2024 Earnings Call Transcript

Shift4 Payments, Inc. (NYSE:FOUR) Q3 2024 Earnings Call Transcript November 12, 2024

Operator: Greetings, and welcome to the Shift4 Third Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Tom McCrohan, Executive Vice President, Investor Relations for Shift4. Thank you. You may begin.

Thomas McCrohan: Thank you, operator. And good morning, everyone and welcome to Shift4’s third 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. 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 Shift4. Our quarterly shareholder letter, quarterly financial results, and other materials related to our quarterly results have all been posted to our IR website. Our call and earnings materials today include forward-looking statements.

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

Jared Isaacman: Hey, thanks, Tom. So we have a lot to cover today. So I’m going to break up this call into the following sections. So we’re going to start with Q3 results, and then we’re going to go into the deep dive by vertical and major initiative. We’ll talk about expectations for Q4, and then end off on reflections on our performance since the IPO. So we were really pleased with what was a reasonably strong quarterly performance and our overall execution within the variables that we can control. So we’ve delivered quarterly records across all our major KPIs, so volume, gross revenue less network fees, adjusted EBITDA and adjusted free cash flow. Our adjusted EBITDA margins were also a quarterly record of 51.3% or nearly 54% when excluding a 250 basis point drag from recent acquisitions.

Specifically, we delivered $187.4 million of EBITDA, generating $111 million of adjusted free cash flow, which is up 46% versus a year ago, and represents a 59% free cash flow conversion. So let’s talk about what really went well in the quarter. So it was absolutely one of our strongest quarters for new logo wins, especially within hospitality. So I can’t actually recall a better quarter for mega hospitality wins. It starts right off with KSL Properties, as well as a very large Las Vegas international casino operator that also committed to Shift4. So we believe we are number one in end-to-end hospitality payments in the world. Similarly, we believe we’re number one in end-to-end sports and entertainment payments provider in the world. So the stadium, theme park, and ticketing wins continue to roll on.

We believe we’re number two in the world when it comes to our cloud-based restaurant POS product, SkyTab. As SkyTab installs and the associated SaaS revenue streams continue a very strong growth trajectory. I’d say we are unranked when it comes to our global e-commerce capabilities, but that’s quickly going to change as we follow our strategic merchant relationship literally all over the world and we expect to win other blue chip customers just like them. Over the last quarter, our contracted volume saw $5 billion flow into actuals and alongside an incredible list of new logos brings our contracted volume backlog to $33 billion. We set a big goal to hit 10,000 international restaurants and hotels in 2024. I think it’s pretty clear we’re going to come up short in that regard, but we do have over 1,000 international card present merchants with our first Vectron installations complete.

So I think we’re four down, 64,996 to go. We also enhanced our capital structure. We added more firepower and topped off our gateway conversion funnel, if you will, with the acquisition of Givex that’s going to add about 130,000 premium customers and what we believe to be at least $300 billion in volume that we can convert alongside the fact that its gift and loyalty capabilities are very good and we’re going to bundle that into the rest of our offerings. I’d say synergy realization and a culture of deleting parts and staying flat has resulted in expense discipline and continued profitable growth. As a result, we have once again raised the midpoint of our gross revenue less network fee and EBITDA guidance for the fourth quarter. So that brings you to what could have gone better.

Well, we grew incredibly quickly, but as you’ve heard from others, clearly there’s been some consumer spending softening, especially in some of the verticals that we serve. As mentioned, we also would have liked to have been much farther along with our Canadian and European card presence strategy. So we have about 1,000 unique merchants processing card presence payments in these new geographies, which is pretty good for a year’s work. But we certainly were hoping to have had several thousand more processing by now. But the momentum is building very quickly and there should be really no mysteries where the next 65,000 European restaurants will come from as we look to the years ahead. Now, similar to prior quarters, I’d like to do a bit of a deep dive into each vertical.

Our customers are really the envy of the industry and we appreciate the trust they’ve placed in Shift4. So for those questioning our growth rates, please keep in mind, every one of these wins I’m about to rattle off includes payments and the associated revenue stream is entirely organic. And this is just a summary of the wins that we have delivered this past quarter. So as I mentioned before, I think we are clearly number one in hospitality payments in the world. And the announcements this quarter kind of reinforced that statement. So just starting off with KSL Resorts, operator of many incredible properties, including Blue Mountain or Camelback for us, East Coast skiers who learned how to ski on ice and a variety of other mountaintop and beachside resorts including nine other premier resorts and we’re going to continue to expand on this into the future.

We are also very proud to sign a new and undisclosed mega resort in Las Vegas that also includes their other domestic and international locations. And I want to emphasize we don’t just process the payments for the restaurants in the hotel. I think at times people confuse us with others in this regard. When we announce all these resorts and refer to being number one in hospitality in the world, it means we are processing the reservations and the guest stays, the retail shops, the bar, the spa, and the restaurants. So moving on, I believe we are number two in the world in restaurant POS and payments with SkyTab leading the way as our signature cloud-based offering. We do spend considerably less on traditional sales and marketing than our closest competitor, but we believe our investments in deals like Revel and Vectron, even Givex, deliver lots of distribution, talent, and most importantly, a massive customer list to cross-sell payments to.

By virtue of these deals, we have more than a foot in the door to discuss a broader software plus payments relationship, and we can generate a lot of revenue without ever having to win a new customer. Now the proof points include growing subscription and other revenue streams alongside our profitable results that demonstrate we know how to sunset legacy products quickly and rally the organization around a single product offering, which is SkyTab. Now some notable restaurant wins this past quarter include Lombardi Family Concepts, which operates 22 restaurants primarily in Texas, [Bigby] (ph) Coffee, a fast growing coffee chain that currently operates over 400 locations in 13 states and Shakey’s Pizza which operates dozens of locations in California and Washington.

Now we encourage investors to search Shift4 on Twitter or X and you can see the wins are posted daily. Now since coming out of beta two years ago, we have installed over 55,000 SkyTab systems, and we are on pace to far exceed the 35,000 install goal that we set in 2024. It’s also worth pointing out that we are never satisfied being second best. We have a great roadmap to further enhance the product. We have the experience and we believe we’ll take SkyTab literally all over the world. Now moving on, I believe we are number one in the world when it comes to sports and entertainment, theme parks, software and payments. We continue to deliver software plus payment wins each quarter alongside many ticketing wins. So this quarter includes the Memphis Grizzlies, the San Antonio Spurs, the Brooklyn Nets, Dallas Stars, University of Arkansas, the Washington Capitals, the Washington Wizards, and more of your favorite teams.

If you took your family to Six Flags or Disney or any other theme park this summer, you’re almost assuredly interacting with our commerce technology. And we are still in the early days of gaining wallet share within this important vertical, but this past quarter marks the highest processing volume in stadiums yet with no signs of it slowing down. Now, turning to nonprofits, our donation platform, the Giving Block, continues to attract a lot of new nonprofit customers. So this quarter we signed Habitat for Humanity of Silicon Valley, the American Israeli Education Foundation, the Montana Community Foundation, Folicula Lymphoma, Mount Sinai Medical Center. These are just to name a few. I can tell you year-to-date volume is already more than double last year’s volume and we’re not even in prime giving season yet.

So moreover our integration with Give Lively is now live and we’ve begun migrating merchants over to Shift4 from Stripe. So as a reminder, Give Lively offers nonprofits a free of charge fundraising technology platform and it’s currently used by over 9,000 nonprofits. We’re also beginning to see the fruits of our prior investments in innovation. As a reminder, we acquired the Giving Block about two and a half years ago to pursue what is a $500 billion donation opportunity that’s made annually through nonprofits. Now at the time, we also established the Crypto Innovation Center to explore ways crypto could benefit really all of our customers, not just nonprofits. Now this really goes back to our IPO commitment of always trying to be where the puck is going.

And with a new administration that’s very pro crypto, we think our timing is rather opportune. So to that end, we announced in October that we intend to make available crypto and stable coins as a form of payment for many of our merchants. We see really three initial use cases. So luxury goods where people who have significant crypto wealth seek to spend their crypto on luxury items. So this could be a hotel suite, a private jet charter, or even big events at high-end restaurants. These charges now would have historically been paid outside of the Shift4 platform via wire or other electronic transfers. So the goal is, we want to bring these transactions on to Shift4 rails. A second use case, as we follow our strategic customer into developing and emerging countries all over the world, credit and debit card availability is low, but crypto and other APMs are growing in popularity.

And last, there are merchant categories looking to combat fraud, typically encountered with traditional payment methods, and we think that is a great use case for crypto as well. So overall, we are seeing significant interest from existing clients to learn more about these capabilities. We already have customers such as Tao Group and luxury charter flight company, Blade, are among our early committed customers for this Pay with Crypto initiative. Now turning to gaming, we continue to roll out our SkyTab mobile devices at more BetMGM Sportsbook locations and we are now live at the BetMGM Sportsbook at State Farm Stadium, which is home of the Arizona Cardinals and the annual Fiesta Bowl. We’re also live at the BetMGM Lounge at MGM Grand Detroit.

So in online gaming, we went live with online gaming site Play Live, which is affiliated with the live casino located in the South Philadelphia Sports Complex. And we also expanded our relationship with Lotto.com for the state of Maine’s lottery. Moving on to international, our strategy for some time now has been to follow our strategic customer all over the world and then bring the products, software integrations and other services that have helped us be successful in the USA into those markets. That process is going very well. So this past quarter we launched in four new African countries, Zimbabwe, South Sudan, Botswana and Burundi. We expect to launch in between four to six additional countries in Q4 with LATAM and Australia and New Zealand on the horizon for early 2025.

And we believe we have added sufficient global e-commerce capabilities, both local to local, cross border, and soon, MOR that our solution is now a viable option for other global enterprise e-commerce customers, just like our strategic customer. So meanwhile, we are running the playbook and bringing our card-present capabilities and products into these markets. So for example, I fully expect to see hotels, stadiums, and SkyTabs installed in Australia and New Zealand in 2025, alongside the rest of our card present international rollout. Now in Europe, we announced this last quarter the acquisition of Vectron and have already made meaningful progress transforming the revenue model and laying the foundation for our go-to-market offering to support restaurants throughout Europe.

So we have a head start now through Vectron’s existing install base of 65,000 merchants and it’s supported by 300 strong POS reseller network. So the team is energized and motivated, and as I mentioned earlier, we already began installing our first several restaurants in Germany. We made progress expanding our relationship with other international merchants and have expanded into new use cases. So for example, we increased the scope of our relationship with NIACS, providing card present capabilities to the recently expanded base of global retail customers. And separately, we have developed a transit solution that is gaining traction within the European public mass transit system. So our offering supports the Visa, [Mass Transit] (ph), and MasterCard pay-as-you-go protocol and is currently live in Portugal, Spain, Germany, Romania, and Italy, and our pipeline of other countries is growing.

We’ve also signed additional international hospitality wins, including the Magnuson Hotels, which is a collection of over 2,000 independent hotels, and the Fort Gary Hotel, Spa, and Conference Center, which is one of Winnipeg’s architectural landmarks. Some of our other international wins this quarter include Exlvis, which is a software solution for auto workshops and their customers, Klasswagen, which is a car rental service for Romania and Hungary. Move, which is an online travel agency, and two important nonprofits, the Poppy Appeal, which provides key support services to veterans of the UK Armed Services and RNLI which provides lifesaving lifeboats for the UK and Ireland. So at times our unique formula and growth rates make it hard to always nail the exact timing but we’re pretty pleased with how the stage is set for the balance of the year.

As mentioned, with less than two months to go, we have once again raised the midpoint of gross revenue, less network fees, and EBITDA expectations to account for really the limited contributions from Givex, but mostly our performance as we grow profitably in line with our plan. We continue to expect full year organic gross revenue, less network fee growth to be in excess of 25%. Now we will save 2025 expectations for our Investor Day early next year. And we have no desire to further raise expectations at this time, but if you simply take the midpoint of our updated Q4 guidance and annualize it, you will see we are already there on 2025 EBITDA consensus estimates without any growth or seasonal adjustments. Now with Q3 and the balance of the year complete, I think it’s worthwhile to take a step back and just view the progress we’ve made over the last 4.5 years since we went public.

First, we have accomplished everything we said we would since our IPO and since setting our midterm guidance. So we established very ambitious medium-term volume and net revenue targets at our inaugural Analyst Day back in the fall of 2021 and we are currently tracking to meet or exceed those targets, including a 50% CAGR and [NDEN] (ph) volume and 30% CAGR and gross revenue less network fees through the end of 2024. Now since our IPO, we also diversified into a half a dozen new verticals, including expansion internationally and today dominate in some of these verticals, notably hotels and sports entertainment. We have followed our large strategic e-commerce customer into multiple geographies around the world and have executed well on our plans to use this opportunity as our yellow brick road towards geographic expansion.

Second, we showcased our experience and accomplished this profitably while most who established midterm goals in 2021 used economic and geopolitical challenges to explain away their shortfalls. We execute on our strategic objectives, which led to financial performance exceeding consensus expectations. So if you go back to November of 2021, our inaugural Analyst Day presentation, consensus expectations for our full year 2024 volume, gross revenue less network fees, and adjusted EBITDA were $144 billion, $1.1 billion, and $433 million, respectively. It should be reasonably apparent we surpass these expectations. Today’s consensus expectations for our volumes are $25 billion higher than those numbers or 17% higher at nearly $170 billion. For gross revenue less network fees, consensus is now $250 million higher or 23% higher at $1.35 billion and for adjusted EBITDA consensus is $240 million higher or 55% higher at $673 million.

Moreover, we are on pace to deliver $390 million of adjusted free cash flow in 2024, nearly double what consensus reflected three years ago. I challenge you to find any other scaled fintech who similarly exceeded expectations over the past three years. Now third, and despite what skeptics may think, we accomplished the majority of this growth through organic initiatives. So this includes simply adding tens of thousands of new payment — net new payment customers, unlocking material revenue synergies from cross-selling payments to an installed base of customers, and capturing more share of wallet with our existing customers by adding new software integrations, such as what we’ve done with ticketing in new geographies. As a result of our unique approach to acquiring customers, the cross-sell funnel you underwrote at the time of the IPO is actually meaningfully larger today.

From an initial cross-sell funnel comprised primarily of gateway and software only customer — restaurant customers, we have materially topped off this funnel through acquisition. This past year alone we’ve added over 200,000 additional customers and a funnel of nearly $350 billion in payment volume to cross-sell payments on. And we’ve just started at that. Now on that note, we recently announced the acquisition of Givex, which recently closed and represents another classic Shift4 acquisition. We acquired over 130,000 additional customers and what we believe to be a $300 billion payment cross-sell opportunity from Givex alone. Now, similar to our gateway strategy, we will use our proven playbook and cross-sell payments to these customers. Essentially the same strategy that has worked so well with our gateway-only customers.

Now as a bonus, we also gain more distribution, a best-in-class gift and loyalty solution that we will bundle into the rest of our payment offerings, and talent to accelerate our product development and entry into new markets. Now fourth, our balance sheet and free cash flow afford us the necessary flexibility to keep doing exactly what we’ve been doing. So we have continued to delete parts and expand margins, improve efficiency and free cash flow conversion, and with an attractive deleveraging profile that allowed us to opportunistically enhance our capital structure, we are constantly tracking a long list of targets that will keep us busy for quite some time, not to mention a healthy buyback authorization to ensure we always weigh any investment, again simply the benefit of buying back our own stock.

So we have the flexibility and track record to deploy capital intelligently to take advantage of the opportunity that the convergence of software plus payments affords and you should expect us to keep doing it. Lastly, we have considerable work to do internally to improve our overall operational efficiency. So as I mentioned in my shareholder letter, we are delivering all these results as what I would consider a good company, not an excellent one. So I’ve stated many times that our earnings reports inevitably force us to focus on celebrating the wins, but I can promise you every other day of the quarter, we relentlessly focus on what we are not good at. So we have a lot of legacy parts to delete as we sunset gateway connections, upgrade legacy POS solutions, implement new internal systems like Project Phoenix, we’re going to centralize all our operations around mission control, and then we’re going to incorporate AI to improve the speed and quality of our services.

These initiatives are in their early days and as they play out you should expect us to continue to expand margin and free cash flow generation and overall just consistent profitable growth. So on that note, I’ve always run Shift4 to be a profitable business and never really understood the mindset of growth at all costs. So we welcome the industry shifting towards profitable growth. Not only does this drive more rational behavior, but it reinforces our conviction that our strategy was the correct one. So profitability is where we derive our strength, it informs all our decisions from keeping expenses flat, but upgrading talent to underwriting an acquisition. So we will never let up on identifying ways to improve how we service our customers and manage operational complexity every single day.

Which really brings us to complexity. So I think many of you appreciate that we have a lot going on in Shift4. So over the last few years, we have really transformed the business from a small domestic player focused really just on restaurants to a commerce enabling platform uniquely equipped to serve not just restaurants but hotels, stadiums, global e-commerce, non-profits, theme parks and now really all over the world. So we have great products and services, we have growing distribution, we have the firepower, the formula, the strategic partnerships and really the will to endure and succeed for years into the future. So as a public company our investors are entitled to a pretty extensive understanding on really how all this comes together but there’s honestly only so much of an education that we can reasonably capture between our earnings presentation, my letter and really this call.

So as such, we will be hosting a far more extensive investor event alongside our next earnings report. And with that, I will turn the call over to Taylor. Taylor?

Taylor Lauber: Thanks, Jared. I will begin by discussing the current operating environment, provide some insights into our current backlog and growing cross-sell opportunity, and also update you all on the progress with our key strategic objectives, and then share interesting efficiency indicators that we use internally to track our productivity. During the quarter, we experienced the customary seasonal spending lift in the months of July and August as consumers take vacations and travel more. Although, as we noted on the Q2 call, spending in restaurants had moderated, and most customers in that vertical were experiencing a roughly 3% decline in same store sales year-over-year. While restaurants did not materially worsen, we also saw some modest softness in other verticals in September as leisure travel subsided in conjunction with back to school.

These year-over-year declines in same store sales have generally been low single digit percentages and off of historic highs, but are notable in the context of consumer sentiment versus previous quarters. Looking at October, we’ve seen hotels improve to roughly flat year-over-year same-store sales, while restaurants remain modestly below last year’s levels on a same-store sales basis. Sports and entertainment has been a particular bright spot with numerous overlapping seasons, and the World Series leading to record weeks. Our current backlog is now approximately $33 billion, up from $25 billion in Q2, due to the many new wins signed during the quarter that have yet to be installed or are still ramping. Despite converting roughly $5 billion of our backlog, the pace of enterprise wins has been strong, resulting in a higher number than last quarter.

We view our growing backlog as a testimony to the productivity of our sales teams and a positive leading indicator for sustained volume growth into future quarters. Of note, the vast majority of merchants have an installation timeframe scheduled in the near term, typically within three to six months, which gives us confidence we can sustain our volume growth even during periods of consumer spending weakness. And it is important to remember that we sign thousands of restaurants, hotels, e-commerce customers, nonprofits, and others every quarter that go live nearly immediately. Our key software integrations, expanding geographic footprint, and success closing the gap with our competitors in global e-commerce is all contributing to our success, adding more enterprise merchants that builds on our backlog.

The progress we are making expanding all over the world in support of our global e-commerce customer is probably one of the most overlooked potential opportunities inside of Shift4. The more geographies we can support, the more viable an option we’ve become to other global ecommerce businesses. Not included in our backlog is the massive payments cross-sell opportunity that remains one of the primary focuses of our M&A efforts. Year-to-date alone, we added almost $350 billion of annualized cross-sell opportunity from Revel, Vectron, and now Givex. We’ll pursue the same proven strategy we successfully deployed with our gateway-only conversion strategy to unlock the revenue synergies from all of these recent deals. That is to say, these merchants are currently using a web of vendors that Shift4 can replace with an end-to-end solution.

In consolidating their processes with us, the merchants reduce vendors, save money, and get access to a wider set of capabilities. To put this into perspective, the deals closed in 2024 alone have added more cross-sell opportunity than our previous transactions combined, including the two massive gateways. It would also be fair to say that our execution playbook has become meaningfully more refined over time, and so we’re confident in the road ahead. Givex is a perfect example of our M&A strategy, so I want to elaborate on that one for a minute. Givex historically operated a best-in-class gift card and loyalty offering, which they empowered over 130,000 merchants with. They operated as a standalone product for all of these customers despite having very sticky solutions and an excellent industry reputation.

Their top 50 customer churn is under 1% and the overall churn is under 3%. Their customers, which include some of the most notable merchants in the world, were often required to hobble together a commerce experience across a dozen or so different vendors. This was not a deliberate choice, but rather a necessity because of the complex nature of their business. We intend to offer an end-to-end solution to these merchants, much like we’ve been able to offer our most complex hotels and stadiums. To give you a sense for the magnitude here, a 5 percentage point penetration of the Givex customer base alone could represent a 5% increase in gross revenue less network fees to Shift4. This is only one angle. The reality is, the Givex product will meaningfully enhance our capabilities across all our existing product lines, and we believe there will be substantial value in that as well.

Their talent is also additive as we are constantly struggling to add talent and keep pace with our growth. While we are incredibly excited by the positioning of these transactions, it is worth noting that the deal environment also remains highly attractive. We are increasingly sought out as a buyer for interesting strategic assets, given our ability to approach transactions with creativity, proven revenue synergies, and not least, a team that people want to be a part of. Additionally, some of our traditional buyers for businesses in our industry are sidelined for a variety of different reasons. The combination of these circumstances gives us a distinct advantage, and we leverage that to be highly selective in our capital allocation. Earlier this year, we would often get challenged on our M&A strategy.

Good companies don’t need M&A was a common phrase, along with anecdotes of competitors who did M&A poorly. While we disagree with the characterization, we do understand the concerns. One of our critical considerations when executing on our M&A strategy is a rigid adherence to measuring the efficiency of our company constantly, and challenging our teams to repurpose talent on the genuine needle movers. And delete unnecessary parts. At the highest level, we look at gross revenue less network fees and adjusted EBITDA per employee, and then apply much more granular metrics to specific roles, which help us constantly course correct as we learn. Since our IPO, and despite having 5 times the number of employees, adjusted EBITDA per employee has grown at roughly a 26% annual CAGR.

While it’s not the only measure of success, it should hopefully give investors confidence that overall productivity is as important of a deal objective as any other when we consider M&A. I’ll now turn the call over to Nancy to discuss our financial results.

Nancy Disman: Thanks, Taylor. And good morning, everyone. We delivered another quarter of consistent and solid results, setting quarterly records across all of our major KPIs highlighted by strong adjusted EBITDA margin, and free cash flow conversion. Total Q3 volume of $43 billion grew 56% year-over-year. Gross revenue less network fees grew 50% to $365 million, and we remain on track to deliver organic revenue growth north of 25% for the full year. Adjusted EBITDA grew 51% year-over-year to $187 million. Adjusted EBITDA margins were 51.3% or nearly 54% excluding a 250 basis point drag from recent acquisitions, which we expect to synergize over the next 12 months to 18 months. 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 and software only customers, and an increasingly larger contribution from stadiums and ticketing.

This quarter is yet another proof point that our vertical diversification since IPO allows us to deliver strong results even when facing macro headwinds in one or two verticals. We see the impact in both our payments-based revenue growth and the increased contribution from SaaS-based fees. Blended spread for the third quarter was 60 basis points. Despite a softening consumer, spreads across our core businesses remain stable and we still expect full year spreads to average 61 basis points for the full year. Subscription and other revenue was $102 million in Q3, up 111% compared to the same period last year. The growth was driven by our success across SMB, SkyTab, and further penetration of the sports and entertainment vertical, as well as a full quarter of Vectron and Revel legacy revenue streams.

As I mentioned in previous earnings calls, growth in this category will not always be linear as we often blow up the legacy revenue model from acquisitions and pivot them towards our significant Shift4 payments field value proposition. This will cause legacy revenue contribution from acquisitions to decline as we realize meaningful payments related revenue synergies. Additionally, the timing of one-time revenue may cause some bumpiness quarter-to-quarter. We remain focused on delivering profitable growth and driving significant operating leverage. Our disciplined approach to expense management has allowed us to exceed expectations on EBITDA even when we run into a bit lighter volume. This is the Shift4 way and even with achieving record-breaking adjusted EBITDA margins of 51.3% this quarter, we have high conviction in the many opportunities to further improve our underlying margins that are still on the horizon.

We still have parts to delete as we continue to integrate our recent acquisitions, and we are in the early days on many internal system and AI investments that will drive further operational efficiencies and scalability across our platform. Our adjusted free cash flow in the quarter was $111 million, up 46%, compared to a year ago, representing adjusted free cash flow conversion of 59% in line with our full year expectations. There will be fluctuations in our adjusted free cash flow conversion rates on a quarterly basis due to the seasonality of our business, the deployment of capital to support growth, and the normal working capital cycle changes period to period. Overall, the improvement in our unit economics and efficient operating model continue to produce strong free cash flows.

We are able to continue to strategically invest in our product development, global expansion, talent and operations. We pride ourselves in being one of the few growth companies that are extremely expense disciplined and maniacally focused on efficiency gains, which allows us to generate exceptional cash flow without sacrificing growth. During the third quarter, we repurchased approximately 289,000 shares for approximately $20 million, leaving approximately $460 million of capacity available as of September 30th under our current program. You can find a complete reconciliation of our shares in the back of our earnings materials. Since our IPO, we have completed approximately $350 million on repurchases, totaling 6.5 million shares at an average price of $54.

As employees, we are Shift4’s largest shareholder, and we are very thoughtful about managing dilution. GAAP net income for the third quarter was $72 million, and GAAP diluted EPS was $0.74. Non-GAAP adjusted net income for the quarter was $96 million, or $1.04 per share on a fully diluted basis. As a reminder, we have not historically added back acquired intangible amortization to non-GAAP net income and EPS. The full quarter impact of Revel and Vectron purchase accounting was a sequential headwind that was the primary driver of the increase in acquired intangible amortization of approximately $5 million or $0.05 per share from Q2 to Q3. Looking ahead to 2025, we will conform with our industry peers and include the addback of acquired intangible amortization in our adjusted EPS calculations.

During the quarter, we took steps to further strengthen our balance sheet and enhance our capital structure. We issued $1.1 billion in bonds, expanded our revolving credit facility to $450 million, and implemented a new $100 million settlement line with Citizens, which eliminated the requirement for cash collateral that we previously classified as restricted cash on the balance sheet. Our total indebtedness now has a weighted average cost of 3.8% and our net leverage at quarter ends was approximately 2.4 times. As a heads up, we do expect the $690 million of convertible debt due in December 2025 to be classified as current debt on our December 31, 2024 balance sheet. However, after the finance activity this quarter and the strong cash flow profile of our operations, we are well positioned to pay it down at maturity.

I want to take a moment to highlight two notable but non-cash accounting items from this quarter. Based on our growth and profitability since our IPO, we have now concluded that it’s more likely than not that we will realize the tax benefits contemplated in the valuation allowance on our balance sheet. As such, we are required to record a release of this valuation allowance. This appears as an income tax benefit on our Q3 income statement. And as I mentioned, this is a non-cash item, but necessary given the profitable status of the company. Related, another item we are required to update based on our tax status is the potential liability associated with the tax receivable agreement. As such, we recorded a liability on our balance sheet totaling approximately $370 million.

Please note, though, that this is a theoretical liability based on our current tax status and current tax laws, but this amount will take many years to be realized. We only expect $4 million to be paid over the next 12 months. Note that these are both positive signs of the strong fundamental growth of Shift4, but given the large balances associated with them, I wanted to call them out specifically. Our strong balance sheet, growing EBITDA, growing free cash flows, and recent capital structure actions will afford us even greater flexibility as we continue to grow around the world, opportunistically buy back stock and satisfy year end 2025 maturities without being punitive to our equity. Before turning to guidance, as we are quickly approaching the end of our initial medium term outlook, it is worth reiterating Jared’s comments.

We are on track to meet or exceed the ambitious volume and net revenue targets we set back in 2021, including 50% CAGR in end-to-end volume and 30% CAGR in gross revenue less network fees. Now to guidance. We are updating our full year guidance to include Q3 outperformance and the contribution from Givex which just closed on November 8th. In the years ahead, we expect to capture meaningful payments related revenue synergies from Givex as we cross-sell payment processing to their install base of merchants. With just under two months left in the year, we are tightening our guidance ranges across all of our KPIs to reflect Q3 results and expectations for the balance of the year. For the full year end-to-end volume, we now expect a range of $164 billion to $166 billion, representing 50% to 52% year-over-year growth.

For gross revenue less network fees, we now expect the range to be $1.35 billion to $1.36 billion, representing 44% to 45% year-over-year growth. And for adjusted EBITDA, we now expect the range to be $677 million to $688 million, representing 47% to 50% year-over-year growth. Year-over-year adjusted EBITDA on margins at the midpoint of our updated guidance has increased to 50% about 100 basis point expansion from our prior guidance. We are also resetting our adjusted free cash flow conversion expectation to 58% from 59%, which will yield over $390 million of adjusted free cash flow for the full year 2024. Full year guidance reflects increasing the fourth quarter guide midpoints for gross revenue less network fees and adjusted EBITDA. A couple of callouts as it pertains to our fourth quarter guidance.

A long list of low hanging fruit to cross-sell payments in SkyTab including from our recent acquisition of Revel, contracted annual volume backlog of approximately $33 billion that is already contracted, but not yet implemented or at its expected run rate. SkyTab system installs continue to accelerate each quarter. We now have 55,000 installs since coming out of beta and are on pace to exceed 35,000 installs in 2024, well above our original 2024 goal of 30,000. Many of the wins featured each quarter, especially stadiums, ticketing opportunities, major enterprise ski resorts are seasonally strongest in the fourth quarter. Despite falling short of our 10,000 international hotel and restaurant goal for 2024, we are still quickly ramping with proof points across Canada, UK, Ireland, and now with Vectron conversions in Central Europe.

And our strategic e-commerce customer continues to add volume very quickly, and we have been expanding organically into several new international markets with at least four new countries set to go live in the final months of the year. Importantly, we continue to expect organic growth of gross revenue less network feeds to exceed 25%. And if you annualize our recently raised midpoint of Q4 EBITDA, you can see we are already in a good place relative to 2025 consensus estimates. Before turning the call back to Jared, I want to reiterate that our balance sheet, cash generation, and profitable growth position us incredibly well for the current environment of macro uncertainty. With that, let me now turn the call back to Jared.

Jared Isaacman: Okay. Thanks, Nancy, and appreciate everyone bearing with us. I know it was a little bit longer than usual, so we’re going to have an Investor Day coming up. There’s always a lot going on at Shift4 and planning to talk about. So before turning it over to the analysts for Q&A, I did want to take a question that was submitted from Twitter or X, sorry. So this is from [John G] (ph) in Boston, Massachusetts. Two questions. From the retail side, as someone who’s followed Shift4 and its creative acquisition strategy over the past few years, I was curious about the following. One, why do you believe that another firm hasn’t replicated this strategy? And two, how long do you believe you can continue to pursue this strategy?

So John, thanks. A lot of companies are reasonably active at M&A. I mean, across all sectors. I think, within payments specifically, Adian is probably the only example of a scale payments company that has not done an acquisition. I mean, even Stripe has laid Square. They’ve all done deals. So I would say, when an industry is in transition and there’s opportunity, deploying capital intelligently to take advantage of it is a pretty obvious strategy. In fact, last quarter I gave examples of Palo Alto networks, Apple, Amazon, all of which have taken advantage of different transitions within their respective industries. So look, the issues are, are you doing a deal to take advantage of an opportunity or are you doing deals to fix problems? And I think many examples of late from people are trying to fix problems versus actually having a pretty solid strategy and then using capital intelligently to pull it forward.

So I think where people make mistakes, they don’t have good conviction around their synergies. They become afraid to burn the ships and focus on the future, and that’s scary for some. But failing to see it through is when all those worst fears are realized. Lots of tech debt, then your synergies start coming up short. You don’t actually start delivering on your margin goals or free cash flow. I think that’s where people make mistakes. We’re good at it because we’ve been doing it for 10 years. Since we started our own organic integrated payment strategy back to Harbortouch, we saw the success from it, and then moved to pull forward the opportunity by believing it was really our best use of capital. And we did this using our capital, not others.

And then we’ve since learned how to do it even better. Now the question of can this keep going on? Look, it’s very early days of software plus payments. So if you think we’re going to run out of good ideas taking advantage of this convergence, then you have to believe that Adian and Stripe will as well, since they are essentially chasing the same opportunity of software plus payments coming together. So we think that there is no shortage of opportunities ahead. This has been a particularly busy year in 2024, but it was also because there was a lot of opportunity. I mean, we didn’t do much in 2021 when valuation expectations were in a different zip code. So we like our pipeline. I wouldn’t worry about us coming up short on things that can move the needle.

With that, we’ll open up the call to the rest of the analysts.

Q&A Session

Operator: Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question comes from the line of Timothy Chiodo with UBS. Please proceed with your question.

Timothy Chiodo: Great. Thank you for taking the question. I want to talk a little bit about the $49 billion high end of guidance for end-to-end volumes in Q4. You talked a little bit about annualization of EBITDA. So two points I was hoping we could touch on. One is, Q4 seasonality around end-to-end volumes. In the past, seasonality used to be a little bit lighter in Q4, but things have changed in terms of the mix. Is it fair to assume that there’s much less seasonality and we could essentially use the $49 billion as a jumping off point for next year? And as related to that, if we take that $49 billion and just multiply it by four, we start to approach $200 billion in volumes versus the high end of this year at around $166 billion.

Now I was just hoping, appreciating that you are not giving a fiscal 2025 guide but just to help investors for some of the building blocks right, there’s Vectron and their dealers, there’s the Revel and Givex opportunity, there’s gateway conversion both active and dormant, there’s regular wave production. There’s just a lot of building blocks for next year. I was hoping you could just highlight or elaborate on those. Thanks a lot.

Taylor Lauber: Hey, Tim. This is Taylor. I’ll let Jared hit kind of the main building blocks. He’s always great at summarizing the real big needle movers for 2025. But in terms of thinking about, let’s call it the seasonal cadence of the business, you’re correct to assume that Q4 is somewhat more predictable than it had been in the past. What’s happening there is, you generally have sports and entertainment that is scheduled quite literally, and it has a heavier impact on Q4. You do see somewhat volatile behavior in restaurants through Q4. Just keep in mind, weeks like Thanksgiving are not heavy restaurant spending weeks. Travel can be mixed. But I think all of that ballast with sports and entertainment adding to what traditionally would have been a quarter that’s just a little bit below 25% of the year’s volume, even including some growth.

Now, in terms of how you use that as a jumping off point, we think it is an appropriate thing to kind of consider Q4 as, let’s call it, an average quarter on a volume basis for an average year, but Q1 is probably not the right way to contextualize that, right? Q1 is always a little bit softer spending across all of our verticals than 25% of the year, if that makes any sense.

Jared Isaacman: Yes. And Tim, I’ll just layer on. Look, there’s no way — I mean, look, the simplest answer on anything is if you just annualize Q4, you’re going to realize that we’re in pretty good shape, no matter what. We pointed to EBITDA because, the emphasis is always on profitable growth. If you look at volume, we also said, hey, we’ve got a $33 billion contracted volume backlog. We rolled five of it into actuals this past quarter. Like, these are — this is signed deals. It’s not like a weighted pipeline, so you can count on that too. So I think the idea is generally we’re looking pretty good. In terms of just like where all the needle movers come from, that’s why we have to have an investor day, or else like I’m already long-winded as is when it comes to my script and my letter.

We got a lot going on. I mean, we talked about like, I don’t know, some of the largest cities in Europe this past quarter rolling out Shift4 payments for their mass transit system. That doesn’t come up all the time, not to mention what we’re doing just in our core areas of focus like restaurants, hotels, stadiums, and global e-comm. So we owe everybody like, I don’t know, at least three quarters of a day to just kind of break everything down so you have a good way to figure out what the next three years should look like now that we’ve beaten our last three-year midterm outlook. So I think like manualizing Q4, looking at the volume backlog, the idea is it should be giving everyone a fair amount of comfort in looking to the year ahead.

Operator: Thank you. Our next question comes from the line of Dan Perlin with RBC Capital Markets. Please proceed with your question.

Dan Perlin: Thanks. I just wanted to dive in a little bit on the pull forward for Revel and Vectron’s integration plan. So I guess partly like what drove that pull forward dynamic? Secondly, kind of what are some of the early learnings that you’re seeing in POS in Germany, UK, and kind of versus the US? And then if you could also just kind of put that to the cross current as Jared is what you kind of identified as what went wrong in the quarter where you did have, like you said, a little bit of a slow down or maybe under execution in Canada and European card present transactions getting rolled out. Just trying to understand all the various dynamics and puts and takes that have to go into a lot of those complex transactions actually happening. And then just kind of how that’s going to play out through the next couple of quarters. Thank you.

Jared Isaacman: Yes, Dan, it’s a good question. I mean, I think there’s just somewhat of a timing. I mean, look, our playbook is, it’s not that hard. We literally send a letter to every customer that take a hypothetical Vectron or Revel, for example, that says we will waive gateway fees and — or waive hardware costs or waive some software costs if you sign up and then we give you free devices and some sort of a signing bonus. I mean, this is literally what we’ve been doing since 2017. I think the timing of that doesn’t always line up perfectly when you waive or make certain concessions or pivot a model versus when volume starts to ramp. So I actually would say like in terms of the pivot part, that’s actually going exactly as planned.

I’d say it’s just the timing of boarding thousands of accounts. I put in there like, hey, we went live with four of our beer gardens. My goal was 100 in October. And then obviously my goal throughout the entire 2024 was 10,000 restaurants and hotels across Europe. We always said at the beginning of last year or beginning of this year and the end of last year like, hey, look, the riskiest part of our guide is the 10,000 restaurants and hotels in Europe we don’t have yet. And that was a big focus area for the year. I think the learning points are, I mean, look, there’s always something — there was — I think we had some debit card certifications that we had to get going in — with like Bank of Nova Scotia in Canada. We had another debit card thing in Germany.

You can’t like — even if you’re like 97% ready to go, like no restaurant is going to be happy that 3% of expected transactions wouldn’t have gone through or something. So you got to learn that quick, fix it, and then you go back to rolling it all out. So I think it was just more — it was less about like the — kind of the predicted revenue destruction alongside some of these deals and just more about how quickly we ramped up the new customer ads. But it is working now. I don’t think there again will be any mysteries where our next 65,000 restaurants from Vectron come from in Europe. And then we also said this quarter, we just signed another very big international hotel operator. So I think everything’s generally working. Like when we trip and stumble and hit greater than 50% volume growth, I think we’re still doing okay.

Operator: Thank you. Our next question comes from the line of Rayna Kumar with Oppenheimer & Company. Please proceed with your question.

Rayna Kumar: Good morning. Thanks for all the details. Could you give us an update on your gateway conversion process? How much opportunity still exists and are you facing any challenges given the softening consumer spending on converting the remaining gateway?

Taylor Lauber: Hey, Rayna, it’s Taylor. I’ll hit that. The opportunity is still largely as it has been in the past couple of quarters. So we’ve made good progress with some of the large enterprises that take longer for the conversation but bring meaningful volume when they come in. And there’s still a lot of volume left. I think the last stat we quoted was probably $120 billion. There’s still over $100 billion of annualized volume on the gateway today. So it remains the gift that keeps giving. I think the one thing to kind of balance my remarks is that, the conversion pace is much more programmatic now. There’s enterprise customers that we have mapped out over a series of dialogue, and then there’s like the smaller single locations that eventually get around to it.

So it continues to give. The interesting kind of dynamic here is that the revenue contribution is like really, really paltry. And so you’re left with kind of an interesting conundrum. It’s not very consequential to the extent the revenue went away, but the opportunity is still enormous. So you want to keep it going. I would tell you the strategic focus of the business is really on continuing to make sure that funnel, that gateway conversion [indiscernible] funnel is as full as possible, which is what things like Givex bring us. But it is by no means a dormant opportunity, if that makes any sense.

Operator: Thank you. Our next question comes from the line of Darrin Peller with Wolfe Research. Please proceed with your question.

Darrin Peller: Hey guys, thanks. Nice execution on adding this magnitude of new business. But I guess what I’d like to hear from you guys is a little bit more thoughts on some of the differentiation you find yourself having in the international markets. You’ve obviously done extremely well in stadiums and hotels and kind of your legacy verticals. As we move into some of these markets, there’s some overlap, there’s some incremental. So maybe just if you could list off the top areas you’re most excited about for the international growth of the business, so many moving parts would be helpful and then what the differentiation you plan to bring there is going forward.

Taylor Lauber: Yeah, sure, I’ll start and then Jared can layer in if you’d like. Let’s talk about kind of why we’re so excited about Europe and the rest of the world. Software plus payments has yet to converge. That is just like a factual statement. So what we started to see in the late 2000s in the US where software providers were coming to market with a bundled solution that is now completely commonplace in the US has not yet happened throughout the majority of Europe and that’s really, really exciting to us. Now, in terms of differentiation, what are we bringing to the market? Not only are we bringing a bunch of kind of go-to-market expertise on how software, hardware, and payments can be bundled together to deliver a heck of a lot more value to the merchant, but increasingly we’re bringing that entire stack as a single vendor.

So if you think about Vectron, the acquisition of Finaro, our own go-to-market expertise and systems, you have a completely bundled solution that’s entirely in-house. So even the software providers that we’ve seen try to approach Europe with this value proposition have largely outsourced significant components to other vendors, which is, of course, as we’ve seen in the United States and hotels, it’s multiple mouths to feed, it’s multiple phone calls when something’s not working. So we’re highly convicted in how the macro theme of software plus payments will play out throughout Europe across basically every vertical. The ones we obviously own assets in is really, really compelling to us. So we’re highly convicted in the macro theme. We also bring kind of operational expertise, but also every piece of the value chain for these merchants.

Jared Isaacman: Yes. And Darren, just to layer on. I mean, keeping it like really simple, I think number one, which shouldn’t be too surprising, but it even is to us in some respects, which is just complex card present capabilities. So if you think about the giants of Europe that have done an absolutely outstanding job, Adian started as a card not present player. You’re talking more basic single software type integrations for card present because it’s a relatively new world for them. Stripe, incredible e-commerce capabilities, very basic card present capabilities. I mean, ShopPay, Simple Terminal, this is why, like, from my perspective when I ask, like, why are we even involved in all these transit systems or why are we getting — why are we winding up in all these EV operators across Europe?

It’s because there isn’t like that super tech player in Europe that focused on card pressing capabilities. So it’s traditional old stuff. It’s Barclay Cards is huge, say in the UK. Worldline does a lot of volume. It is not an integrated payments player. So I think that is turning out to have some surprising benefits for us in Europe. But I mean our main focus of going over there with Card Present was our restaurant product, our hotel integrations, our stadium product, but we are clearly doing well in kind of complex integrated payments from a card present perspective. Now when it comes to global e-commerce, our eventual game plan there is to differentiate through geographic coverage. I mean, we have to take advantage of following our big customer into all these new markets.

You can see our kind of Twitter releases going out. I mean, we are in a lot of places that others are not. And eventually, other blue chip players are going to want to be in those markets too and take advantage of kind of the rails we laid for that one big customer. So I think it’s like — and we’ve seen that happen already with [indiscernible] right now where they’ve kind of moved into countries that we only went into because of somebody else. So I think it’s only a matter of time before we have others just like that. And look, there’s only a few that can really serve global e-com really well and we’ll be really happy when we kind of join the stage as like a strong third choice.

Operator: Thank you. Our next question comes from the line of Andrew Schmidt with Citi. Please proceed with your question.

Andrew Schmidt: Hi Jared, Taylor, Nancy. Good morning. Thank you for taking my question. I wanted to dig in just on the organizational approach to managing complexity. You guys are obviously doing a lot, managing multiple acquisitions, going through internal simplification, you also have an M&A pipeline. Obviously, a lot of this is part of the Shift4 culture, but maybe just give us a glimpse into how you manage that complexity and you reduce risk associated with the number of initiatives you have spinning. Thank you so much.

Jared Isaacman: Yeah, I mean I love this because it just goes to the Shift4 way and kind of the drum that I literally try and beat every day and reinforce every week. I think the idea for one is to kind of try and take what is a lot of activity and concentrate it into like three — two or three like really needle moving initiatives and really that’s like when we just had our executive offsite a couple weeks ago. There’s three needle moving priorities for the year ahead. Now, there’s a lot of like kind of sub bullets underneath it and our goal is to always kind of empower small scrappy teams to work on those. But in terms of leadership, it really all boils down to like three major things that we have to get right. I would say it’s anchored on an incredible PMO office.

That’s where we have some of our best talent that’s just keeping all the other good talent across the organization. So from legal, finance, dev, moving in the right direction. So investing in a very strong project management office a few years ago, I think, was pretty important. But really, if you look at the Shift4 way philosophies that we pound the table on all the time, radical ownership, deleting parts. I can’t emphasize how much deleting parts matters when you do a reasonable amount of M&A and you want to like burn the shifts and focus on the future, procedurally driven so you don’t stumble, make the same mistake twice, executing with urgency and again — and staying flat, not absorbing lots of layers of management which delays decision making and the spread of information.

So it’s kind of — it is the — the answer is, it is the heart of the Shift4 way culture. And I’d say like, we also do a really awesome job elevating talent. There’s leaders from the Finaro acquisition of a year ago that oversee aspects of our entire payments infrastructure. There’s Q&A leads from Appetize that oversee Q&A for the whole organization. Enterprise reporting and multi-menu management for our restaurant division came out of rebel. So I think we have a lot of good proof points like that. So when you approach the next deal, like say Givex, which we had at the town hall recently, can go into it telling everyone, like absolutely the best athletes from here will wind up in key roles for the betterment of the whole organization. It makes people believe in that one plus one is a big number, but anyone else want to jump on?

Taylor Lauber: Yeah, you covered it really well. I would also say, ROI is at the root of every decision made, and that’s somewhat atypical with organizations. Like you are generally allowed a really long leash inside the company to be highly entrepreneurial and figure out the best path through, as long as your ROI math is sound. You can build, you can buy, you can partner, you can hire, et cetera. Nancy’s organization has done a phenomenal job kind of pushing that through. It’s led to tons of success, and how do we figure out a complicated enterprise win on the sales side, right? Well, ROI has to work, but you can be immensely creative in how you get there, as just one more example.

Operator: Thank you. Our final question this morning comes from the line of Sanjay Sakhrani with KBW. Please proceed with your question.

Sanjay Sakhrani: Thank you. Good morning. Obviously the trends are strong despite this, but could you just drill down a little bit on the softer consumer spending that you mentioned? Is there anything that changed significantly in the third quarter that leads you to be concerned, or is it just more on the margins? And then just maybe on SkyTab, obviously, you guys are doing really well there. Any observations above and beyond what you guys have talked about, given the success there? Thanks.

Taylor Lauber: Yes, sure. I’ll hit the consumer spending trends that we’ve witnessed. I would say there’s been a notable same-store sales decline that’s been reasonably persistent in restaurants since, like, the middle of the summer. I don’t know how much to think about this, largely because restaurants have done quite well throughout the last couple of years. So in some respects, that’s probably — we could have predicted that it wouldn’t be perfect forever. And we diversified the business accordingly. Hotels had a really strong summer. They had a slightly softer September. September was probably the only month where there was modest same-store sales declines across basically all of our verticals. But that rebounded across hotels, for example, in October, sports and entertainment, while you don’t have as solid of a same store sales base because we’re adding tons of customers, there are zero signs of weakening consumer inside of that little facet of the economy.

So I’d say it’s still mixed. There’s no significant reason for high optimism or pessimism for that regard, and our diversification has been paying dividends, so we’re quite content.

Jared Isaacman: I think we’re pretty pleased with the pace of progress with SkyTab, especially in Europe now. I think if you’re following our Twitter or X account, you’re going to see — I mean, we post a lot of SkyTab wins in general. You’re going to see a lot more out of the UK and Ireland, I think a lot more in Q4. We’re pretty pumped about that. And then just the overall pace of progress. Every one of these deals, whether it’s Revel or Vectron, even Givex, you’re taking talent again. You’re burning the ships of the past and repurposing them on the things that matter. So like Revel, your QSR, your basic retail and your enterprise multi-management capabilities, now build that into SkyTap and only worry about that because the Revel shift has been burned here on that.

Or in the case of Vectron, where their product is all across central Europe. Yes, we have 65,000 Vectron systems cross-selling payments. Eventually, they have to be replaced with SkyTap. Start localizing the product for all these markets, fiscal compliance. So, like, you’re always gaining more talent through every one of these deals that you can apply in our go-forward strategy. So, like, just velocity there is continuing to increase, which is nice. So like I said, we’re like — we’re number — I think we’re number one in the world at payments in a lot of categories, and we’re number two next to toast in restaurants. That’s totally fine. Like we have a plan there, and the more we close that gap, the more value we create and who knows, maybe we’ll edge one out at some point on them.

Operator: Thank you. Ladies and gentlemen, this concludes our question-and-answer session and thus concludes our call today. We thank you for your interest and participation. You may now disconnect your lines.