Saturday , May 27, 2023

Shift4 Busies Itself with Domestic Expansion As It Waits for Clearance on Its Finaro Deal

Shift4 Payments Inc. is still waiting on approval from European regulators to complete its $525-million Finaro acquisition, but in the mean time the Allentown, Pa.-based processor has been busy expanding in its home market.

That expansion includes yet other acquisitions aimed at consolidating Shift4’s grip on the restaurant point-of-sale market, including its deal this spring for Focus POS, a 33-year-old technology company serving more than 15,000 restaurant locations for brands including Cold Stone Creamery, Blimpie, and Baja Fresh.

Shift4 will convert at least 10,000 of those locations to its own software, and will ultimately introduce SkyTab, the company’s contactless-payment technology aimed at the hospitality market, Shift4 chief executive Jared Isaacman told equity analysts Thursday morning. All that technical work, he added, means “we expect minimal revenue [from the deal] in 2023 and 2024.”

Isaacman: When it comes to high-tech restaurant POS, “There’s only two players in the hunt, that’s Toast and us.”

With its appetite for restaurant POS business, Shift4 is now on  par with just one other company in the highly competitive market for advanced restaurant POS technology, Isaacman contended. “There’s only two players in the hunt, that’s Toast and us,” he told the analysts.

But while the Focus POS deal brings $15 billion in annual volume to Shift4, the company is still awaiting approval for its $525-million agreement to acquire Finaro, a 15-year-old Israel-based e-commerce processor Shift4 is counting on for global expansion. “We believe the deal will close in the next 90 days,” Isaacman told the analysts, adding the delay has been the result of regulators being “distracted” by other matters. “The prolonged closing on Finaro has allowed us to work the integration plan,” he said, adding the deal will end up closing “a quarter or two later than we thought a year ago.” Shift4 announced the deal in March 2022.

The upside, Isaacman said, is that the company has had lots of time to prepare for integrating Finaro. When approval comes, “we’re ready to hit the ground running” he added. The two companies are “technically integrated with each other…we now have all the technology pieces complete,” Taylor Lauber, president and chief strategy officer at Shift4, said during the call.

For the quarter, Shift4 reported $22.3 billion in end-to-end payment volume, that is, volume it processed entirely in-house. That is up 66% from the first quarter last year. Gross revenue totaled $547 million, up 36%, while gross profit of $138.2 million grew 78%. Net income swung to a positive $20.4 million from a $13.2 million loss in 2022’s first quarter.

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