Shift4 Payments, Inc. 2026 Q2 Earnings Call

Please go ahead. Thank you, operator, good morning everyone, and welcome to Shift4's second quarter 2026 earnings conference call.

With me on the call today are Taylor Lauber, our CEO, and Christopher Cruz, 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, which can be accessed through our corporate X account @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 on 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 today, the related GAAP measures and reconciliations are available in today's quarterly shareholder letter. With that, let me turn the call over to Taylor.

Taylor? Thanks, Tom. Good morning, everyone, thank you for joining us today.

I'd like to acknowledge the entire Shift4 team for delivering strong quarterly results, including powering payments flawlessly at many of the World Cup matches. This tournament was a great unifying event and an unparalleled showcase for Shift4's ability to help merchants deliver the moments that matter on one of the sports world's greatest stages. Shift4 technology can be found at every match in both the U.S. and Canada, and of course, across the broader experience economy of restaurants and hotels. It was especially rewarding to have the finals in our backyard and hosted by a great Shift4 customer, MetLife Stadium. Kudos to our team for demonstrating once again our ability to operate in demanding, high-stakes environments such as the World Cup final.

Believe it or not, this was not even our busiest quarter for sports and entertainment, despite the well-attended matches across so many of our customer locations. While there were clear signs of increased spending across restaurants, hotels, and other locations in host cities, our stadium customers are quite accustomed to hosting large crowds, whether it be NFL, MLB, concerts, or even events like Formula One. We are with them for all these events. I think the World Cup was another healthy demonstration of that. I'm proud of our results this quarter. They demonstrated resiliency despite ongoing travel disruptions and validated our deliberate diversification across the experience economy. With that said, three themes will guide how we talk through our second quarter results. First, the durability of our diversified business continued to show through, delivering resilient growth even as the operating environment stayed challenging.

Second, our international expansion continues to scale and compound. I'll share why we're increasingly confident in its trajectory shortly. Third, I want to spend some time on what I call the heart of our story. Our position across the experience economy isn't by accident. Many have asked about our competitive positioning in one vertical or another but miss the big picture. We are exceptionally well-positioned to handle in-person payment experiences from SMB to the largest enterprises. What we've learned from decades in restaurants is brought to hotels and then to sports and entertainment, and most recently, luxury retail. We choose these growth paths not because they're different, but to the contrary, they all demand a high-touch in-person experience that we are uniquely positioned to provide.

Of course, we challenge ourselves to build new capabilities in areas like unified commerce, but with a capital discipline that demands results before risk. Diving into Q2 results, we delivered Q2 results above our previously provided guidance, including +34% year-over-year growth in gross revenue, +51% year-over-year growth in gross revenue less network fees, +39% growth in adjusted EBITDA, and $21 million of adjusted free cash flow versus our $10 million guide. Adjusted for acquisitions, our organic gross revenue less network fees grew 11%, which is consistent with last quarter. We believe there's further room for expansion as we continue delivering our market-leading products to new geographies around the world. The performance we delivered this quarter in our payments-based revenue streams is a testimony to our durable growth.

Total payments-based revenue less network fees grew +27% in Q2, with the Americas-based revenue less network fees growing +19% and worldwide payments-based revenue less network fees growing at +53%. I'll repeat that. Our most mature Americas market grew in the high teens. Our growth markets grew over 50%. As can be the case, this quarter was not without some challenges. The Middle East conflict remained a headwind and weighed on inbound travel to Europe and across several Gulf countries. However, the overall impact on our Q2 results was slightly better than we had forecast. Said differently, we were able to absorb some of the travel disruption impact from strong U.S. to Europe travel, strong performance in Asia, and overall better-than-expected trends in same-store sales for both restaurants and lodge.

Chris will provide more details when he reviews our guidance, but we do anticipate continued travel disruption in the upcoming quarter, and our guidance now reflects that. Regardless, our Q2 results coming in above our guided KPIs speaks to the resilience of our diversified portfolio and our ability to operate through factors beyond our control. I also want to address same-store sales directly, since that's been a recurring topic on these calls. As a reminder, we experienced softer trends in recent quarters among restaurants and SMBs in the Americas. This quarter, as Chris will highlight, same-store sales trends in restaurants and lodging were slightly better than our expectations, consistent with what we saw in Q1, and a further sign that the trend is encouraging.

That said, our full-year outlook continues to assume a neutral impact on same-store sales, and we are not forecasting any material recovery in the back half of the year. We think that that's the right posture given what we deem to be arguably stable trends in consumer spending despite higher gas prices. The bottom line regarding Q2, we delivered better-than-expected results relative to our guidance in a quarter that provided some modest benefits from the halo effect of the World Cup, offset by ongoing travel disruptions in the Middle East. Chris will provide more details on our full year 2026 guidance in a bit, but the bottom line is that we are tracking to deliver 24%-27% FX neutral year-over-year growth in gross revenue less network fees this year.

Moving on to international, we delivered another quarter of over 50% growth in worldwide payments-based revenue less network fees as we continue to scale our business international. Some highlights in the quarter included, we introduced our restaurant POS product, which is Shift4 Dine, in Spain and Australia, and we are rapidly attracting restaurants to our platform. We continue to globalize all of our products for international markets and expect to introduce Shift4 Dine in many more international markets in the months and years ahead. Shift4 One continues to resonate with retailers in Europe, and we are now live in 12 countries, well on track to surpassing our annual goal of being live in 15 countries by the end of 2026. As a reminder, our Shift4 One product combines payments, dynamic currency conversion, and tax-free shopping into a single device.

This quarter, we added numerous retail, cosmetic, and jewelry merchants across Spain, Italy, and the Czech Republic. You can find them in our materials we provided this morning. Merchants understand the value immediately, and I expect that we'll be adding thousands of merchants per month in the near future. In hotels, we continue to win excellent resorts and hospitality customers. This quarter, we added Massanutten Resort, The Nora Hotel West Palm Beach, Wayford Bridge Inn Hotel, Radisson Hotel Winnipeg, just to name a few. Again, there's more in our materials. Our sports and entertainment capabilities remain unmatched. This quarter, we signed the Buffalo Bills and Texas A&M, along with new venues including Tom Benson Hall of Fame Stadium and Splashway Waterpark. You'll continue to see us processing ticket sales for LA 2028 as well.