We continue managing toward our goal of keeping headcount flat while investing in talent upgrades, driving further efficiency across our operating model, and demonstrating the scalability of our platform. During the quarter, in conjunction with the acquisition of Finaro, we stopped development on several in-process software development projects. We determined that the intellectual property obtained in the Finaro transaction was far better suited for the objectives of these projects. The total non-cash charge associated with these projects was $18.6 million. For the full-year 2023, our adjusted EBITDA margins were 49%, representing over 900 basis points of expansion compared to full-year 2022. We remain highly committed to a disciplined approach to Quest management while continuing strategic investment for growth.
Many opportunities to further improve margins are still on the horizon through the 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 $75.3 million, bringing year to date adjusted free cash flow to $273.5 million. Full-year 2023 adjusted free cash flow conversion was 59.5% well above our current full year guidance of 57% plus and our initial guidance of 52% plus. Net income was $19.2 million for the fourth quarter, diluted earnings per Class A and Class C share was $0.21. Adjusted net income for the quarter was $68.5 million or $0.76 per A and C share on a diluted basis based on 90.1 million average fully diluted shares outstanding.
We are exiting the quarter with $530 million of total cash, $1.78 billion of total debt and $100 million undrawn on our credit facility. Our net leverage at quarter end was approximately 2.7 times. Our strong balance sheet and free cash flow profile will continue to allow us to invest in the business, pursue our strategic priorities and opportunistically repurchase shares. As a reminder, we raised capital when the market supported us to do so attractively. Our weighted average cost of debt is currently 1.35% and we do not have any maturities until December 2025. For the full year of 2024, we are introducing guidance ranges for each of our key performance indicators. Our guidance range attempts to account for a variety of business and economic scenarios.
This is particularly important alongside our ongoing strategic review. For 2024, we expect to deliver end to end volume of $167 billion to $183 billion representing 53% to 68% year over year growth. Gross revenue less network fees of $1.3 billion to $1.35 billion representing 38% to 44% year over year growth and adjusted EBITDA of $635 million to $675 million representing 38% to [Technical Difficulty] growth and adjusted free cash flow conversion of at least 58%. There are several things to note relating to our guidance. We are no longer guiding to gross revenue as it is less relevant now, especially with our international expansion where we may not always be settling the funds for the merchant, but receiving the equivalency in spread. Although our business continues to evolve, using last year’s seasonality by quarter is the best indicator of current expectations for quarterly results for 2024 at this time.
Accordingly, we expect a heavier weighting to the back half of the year. As demonstrated over the last two years, the onboarding of multibillion-dollar enterprise merchants can have significant weighting on volume in a particular quarter and it is difficult to predict. The low end of our guide contemplates modest headwinds in consumer spending, during which we are confident we can continue to deliver best-in-class growth among our peer set. The high end of our guide implies a continuation of recent trends in both our growth and in consumer spending. And finally, while the midpoint of our guide implies modest margin expansion, excluding the impact of legacy Finaro and Appetize, margins are expanding meaningfully into 2024. 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: Thanks, Nancy. As mentioned in my letter, we are still very much in the midst of a strategic review, which may limit the extent on which we can comment on certain subjects. We will provide a more formal update as soon as it’s available. But again, thank you for that understanding. And with that, we’ll turn it over to questions with the operator.
Operator: [Operator Instructions] I’ll leave you to answer the one question from X before kicking off the Q&A.
Jared Isaacman: Yes. Perfect. Thank you very much. Just before we go to questions on the line, we did say we were going to take a question from X. So I want to thank Andre Nicolin for this multipart question related to the sports and entertainment vertical. So question is, regarding the 600-plus Appetize accounts, one, even if 50% of them switch over to end-to-end payments using VenueNext and ad ticketing, how much additional renewal that equal? Second question — second part, should we assume a higher spread on this revenue due to ticketing? Three, which are some of the objections, if any, you received over the last few months as we make this migration? And four, how long are we willing to accept letting customers remain on the Appetize platform if they’re not willing to commit?
So one, we didn’t quantify specifically the revenue opportunity associated with the Appetize migration other than to say a business that had hemorrhaged cash its entire existence. By the end of year one of our acquisition will represent $15 million of run rate EBITDA, and that’s again after year one of a multiyear plan. So I would say we — I believe we characterized last quarter that the acquisition and contributions from Appetize will be a material contributor to the business. In terms of spread direction, I think it’s good in general because people are always trying to figure out all the moving pieces in preteen. And Nancy covered it really well in her prepared remarks. But you basically have your smaller restaurants, your SMB customers card not present in international that helped on the top end of spread.
We also have the — specific to this quarter, very interesting transition of a single corporate customer in the billions range of volume that’s going to be moving to an individual franchise model that comes in at higher take rates. So that’s a little bit of a tailwind that will happen. And then it’s where — and ticketing is kind of middle of the road. And then where is it offset? It’s like very large enterprise customers will pull it down. Just the nature of the spreads coming at a lower rate. Concessions certainly a component of that, lodging. So you have a lot of moving pieces there. But generally, like spread is certainly more — the ticketing spread is certainly more favorable than the in-venue, which are some of the lowest risk spreads.
What are some of the pushback or objections associated with customers moving from Appetize to VenueNext? There’s none that I’m aware of. Keep in mind, these customers were moving to venue next prior to the acquisition. We’re just doing this as an accelerant. They’re pretty happy with that. And then how long are we willing to tolerate customers remaining on the Appetize platform? This is a two-year plan, really. So we expect to move half of the customers before the 2024 seasons for their respective leagues and then the balance of it in 2025. And again, Andre, thanks for the question. And operator, we’ll go to the line.
Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first questions come from the line of Timothy Chiodo with UBS. Please proceed with your questions.
Timothy Chiodo: Great, thank you so much. Following up on that last topic there around Appetize. So if you could just dig into a little bit of the contractual or mechanical elements there in terms of getting those Appetize customers over to end-to-end. Could you talk about what is the — so they’re using the current Appetize point-of-sale system, what does it take to switch them over to SkyTab? Are they using a current third-party gateway? And are they under a contract, in many cases, for their end-to-end processing? And then, of course, what is the contractual element to consider on the ticketing side? I would appreciate that context.
Jared Isaacman: Yes. Thanks, Tim, Jared here. So the existing contracts that these customers are under is now one of the obstacles that we’re navigating. I mean, this is really — it’s scheduling. It’s trying to get deals done before the start of a sport season, and then just the resources and logistics associated with installing them because, in a lot of cases, you’re talking about like 100s of devices. These are customers that were moving to Shift4 VenueNext anyway. I mean we were posting a lot of Ws every quarter prior to the Appetize acquisition. We obviously acquired Appetize under pretty attractive terms. So I think that says something about kind of what was going on inside of the business. So we don’t have a lot of objections here.
And yes, there are a lot of parties that these customers have. I mean they have a separate merchant acquirer, a processor, they’re using a third-party gateway, not dissimilar to like a lot of the hospitality customers that we generate wins from. Like this is the perfect setup of why Shift4 wins. And like whatever penalties they might have with their other merchant acquirer, I mean, these are pretty big sports teams. Like they are — they don’t consider that an obstacle to making sure like their fans can have like a good experience in the stadium. So really, our challenge has just been kind of mustering resources to facilitate installs before the season starts. I mean, the Yankee Stadium is a great example. We had to put a lot of resources on that to make sure we are ready in time for upcoming like spring training.
So it’s really a logistics and resource exercise, if anything.
Timothy Chiodo: Thank you. Yes, that’s exactly what I was trying to get at in terms of that penalty piece and how you put it in context there. Thank you. The brief follow-up is more of a modeling question. You mentioned to follow last year’s seasonality when we think about distributing the end-to-end volumes this year, just want to confirm, that comment holds despite the fact that Q4 would have had the inorganic contributions that would have boosted the seasonality in Q4. We should still be looking at the overall reported seasonality of 2023.
Nancy Disman: Yes, that’s exactly right.
Timothy Chiodo: Thank you.
Operator: Thank you. Our next questions come from the line of Will Nance with Goldman Sachs. Please proceed with your questions.
Will Nance: Hey, guys. Appreciate you taking the questions. I’ll start with a numerical one and then maybe ask a little bit something more thematic. But the — following up on that last bit around the seasonality, I just wanted to make sure we’re understanding that, right, as it relates to the first quarter commentary around like softer trends. I mean it seems like seasonality last year in terms of percentage of volume you saw in the first quarter would point to volume slightly up. I just wanted to make sure that was the message and not volume slightly down given the earlier commentary? And then, Nancy, if you could just clarify the comment around approaching a floor and net spreads at 60 basis points. Is that where you expect to end the year? Or you’re just saying longer term, you don’t expect to go below that?
Nancy Disman: Yes. So let me just break down both because I know it’s important for the modeling. So if you think of [Technical Difficulty] Q4 to Q1, we do expect to see some sequential uptick, but we still expect that Q1 to be our lowest point for the year. So when you look at both volume and gross revenue less network fee seasonality, looking at the ‘24 timing and applying that — the ‘23 timing and applying that to ’24 will align best with what we’re expecting. And in terms of the spread, yes, I mean, we got this question last year. Obviously, this is giving it out a little earlier than we did last year. But when we think about kind of the guide, it’s really for 2024. So just that as looking ahead to this year. And we’ll update you kind of obviously probably by Q1, Q2 in terms of more of the near-term guide.
But yes, I think as we think about approaching a floor. I think it’s good to think about that for ’24. And I would use that as at least a basis for kind of your modeling after that.
Will Nance: Got it. That’s very helpful. Okay, and then maybe just on the gateway conversion. It sounds like there were some moving pieces there. In the fourth quarter, you highlighted a number of gateway conversions in the shareholder letter. And I think, candidly, there’s also been a little bit of chatter about maybe you guys being a bit more aggressive and you’ve been seeing some churn as it relates to some of the conversion strategy. So just maybe an update in terms of how that progress is going. And if there’s been any change in sort of the tactics you guys are using in terms of carrots and sticks to get people to convert over, that would be helpful. Thank you.
Jared Isaacman: Yes. Well, I’m happy to kick it off here, Jared here, and then Taylor is — that’s one of the projects he manages very closely. I don’t — I can’t really think of any like notable, like new churn, as it relates to our gateway sunset initiative. Of course, I mean, every quarter, you got a lot of movement. You have some additional locations from existing multiyear customers that, actually add gateway customers. You have some churn of customers that hospitality operators that made decisions to move off the platform five, six years ago before we ever own the gateways. And then you have a lot of merchant conversions that are underway. We’ve said many times, I think, over the last two years, like we wanted to take like a 10-year strategy and put it into like three or four years.
So I do think we are learning and we are kind of optimizing our approach, which still includes carrots and sticks to have more migrations. I think this past quarter kind of illustrates it. One, I would say, iteration of our strategy, where you have some large multibillion-dollar customers that had other priorities. And you cut a deal where your terms are maybe slightly better than what they were paying on the gateway, but creates like a hunting license opportunity across potentially 1,000s of franchisees where you can kind of pull up the revenue at a franchise level rather than a corporate level. And those are worthwhile moves for us to make. So — and then I just say, look, the balance of the opportunity as referenced in Taylor’s remarks, is still huge.
Taylor, I don’t know if you want to add to it.
Taylor Lauber: Yes, thanks. I think exactly what Jared said, but as evidenced with data, right? We’ve had a lot of success in gateway conversions over the last quarter and we still have $120 billion of volume to go at really, really low spreads. So whether we continue to raise price on them or whether they become an acquiring customer instantly, we’re quite happy with either one of those alternatives. I think the important thing to note though is that we’re in kind of the just our third at bat, so to speak, with this effort. If you recall, we begin, it is a major strategic initiative in the summer of ’22. And hospitality has gone through two banner summers in a row with regard to the performance of their own business. So our pricing actions were probably not as noticed as we would have hoped.
We’re entering ’24 and ’25 with what we think is a more nuanced and better approach, and there’s still tons of volume left to go. And I think to the point on attrition, the $120 billion in volume indicates that we haven’t experienced a significant amount of it.
Will Nance: Yes, I appreciate all that color. It seems like there’s still a lot of momentum. I appreciate you taking all the questions.
Operator: Our next question has come from the line of Jason Kupferberg with Bank of America. Please proceed with your questions.
Melissa Chen: Hey, this is Melissa Chen filling in for Jason. I just wanted to ask how much of the 4Q net revenue underperformance was due to spread compression versus the large customers delaying their go-live dates? And as a follow-up to that, for the implementation delays, is that purely like a timing thing? Or has the scope changed in any of these deals?
Nancy Disman: Yes. I think really, when we think about what the drivers were of that, it really is more — not so much overall spread compression. I think spread came in overall net from a net spread perspective, pretty strong at the 64 basis points, but it’s really more just the delay of some large customers delaying their go live dates and just an overall reduction in some of the gateway delayed lift that we were talking about from some specific customers. So no overall concern on a mix and spread perspective.
Taylor Lauber: And in terms of those delays, these are outside of our control, which is always frustrating, but it certainly helps Nancy’s efforts building a pipeline for ’24. We’re I think more public than most, and Jared alluded to this, about the customers we win and when and why. And it’s pretty easy to see when a handful of large banner resort hotels aren’t open yet, that we’re not getting the benefit of those economics. But there’s nothing that’s changed contractually, it’s just big projects take a long time.
