Shift4 Addresses Sale Rumors, Lays Out Strategic Plan During Q1 Earnings Call

After months of speculation that Shift Payments Inc. was an acquisition target, company founder and chief executive and founder Jared Isaacman confirmed Thursday the company had indeed received multiple offers. The acknowledgment came at the outset of Shift4’s first quarter earnings call early Thursday.

Despite the offers being “materially higher” than Shift4’s share price at the time, Shift4 opted not to accept them because they did not reflect the company’s value relative to its high growth rate, especially as Shift4 kept announcing new deals, Isaacman said.

Isaacman added that Shift4’s stock tends to be undervalued, which has been a “source of frustration” for the company. “We would never accept an offer that does not reflect the value of our trajectory,” Isaacman told analysts.

Rumors that Shift4 was for sale began swirling last December when reports processing behemoth Global Payments Inc. was a potential suitor. Sale rumors surfaced again in February when it was reported that Fiserv Inc. and a Spain-based reservations-processing company called Amadeus were potential buyers. Throughout all the speculation of a sale, Shift4 remained mum about its intentions.

Upon deciding not to accept acquisition offers, Shift4 debated if it made sense to take the company private again. Shift4 went public in 2020 after more than two decades in business. Going private did not make sense as doing so would create “complexities” that did not necessarily align with shareholders’ interests. As a result, the company passed on that option.

“I always want my interests completely aligned with my fellow shareholders,” Isaacman told analysts.

With both options off the table, Shift4 developed a strategic plan that involves a continued focus on growing faster than its competitors, especially in the restaurant, hotel, hospitality, and stadium concessions and ticketing sectors.

“We are very profitable, expanding margins and generating lots of free cash flow,” Isaacman said in his letter to shareholders, which he referenced throughout the earnings call. “Just as we have always done, we will deploy capital in a disciplined way with very high returns and when there is not a better strategic use of capital, we will opportunistically buy back our stock with a fresh $500 million authorization. We can do this and manage our capital structure and leverage ratios in a responsible way.”

When asked at what valuation would the company consider a sale, Isaacman declined to provide a figure, but added “we didn’t disagree with the top end of analysts valuations”

For the quarter, Shift4 notched several keys wins when it came to signing new clients and relatively strong financial results. One signature win is the deal with Foxwoods Resort and Casino in Connecticut. Other deals struck during the quarter include ticketing deals with the Kansas City Chiefs and Minnesota Vikings of the National Football League and the Major League Baseball’s Chicago White Sox. The ticketing deals with Viking and the White Sox are “upsells” of existing contracts with those teams, Isaacman said.

Shift4 also struck concessions and ticketing deals with 10 minor league baseball teams, bringing the total number of minor league teams it services to 60.

“We’ve had dozens of major wins [in the stadium market] and are powering the best [customer] experiences at the coolest venues,” Isaacman said.

Internationally, Shift4 landed a deal with restaurant chain Pizza Hut LLC to provide online ordering for all its locations in Spain. The company has also set a goal for signing 10,000 restaurants and hotels in Canada by year’s end.

Another big win was the addition of candy manufacturer Russell Stover Chocolates Inc. as a client.

On the financial side of the ledger, Shift4 posted end-to-end payment volume of $33.4 billion for the first quarter, a 50% year-over-year increase. Gross revenues for the quarter totaled $707.4 million, up 29% from a year ago. Net income for the quarter was $28.5 million, a 39.7% increase from $20.4 million in the year-ago quarter.