Shift4 Shrugs off Disruption From War in the Middle East

Top executives at Shift4 Payments Inc., which in recent years has grown into an international payments processor, spent a good deal of time early Thursday reassuring Wall Street about the impact on its business from travel disruptions in the Middle East brought on by the U.S.-Iran conflict.

“Our international expansion remains on track and continues to scale,” said chief executive Taylor Lauber, summing up the impact for equity analysts on a call to discuss the company’s March-quarter results. “We were not immune to events in the Middle East, but despite that delivered above guidance despite a difficult quarter.”

Lauber underscored for listeners the importance of Shift4’s moves into international commerce. The Center Valley, Pa.-based company now operates in more than 75 countries. It has taken on a major business in international shopping with its $2.5-billion acquisition last year of Global Blue, a Switzerland-based international platform providing transaction services to high-end merchants. That has enabled Shift4 to sign up luxury retailers for tax-free shopping support, Lauber added. “The opportunity ahead remains larger than ever,” he said.

This has helped mute the impact of the Middle East conflict overall, Lauber said, joined by chief financial officer Christopher Cruz. “Our growth internationally is exceeding our expectations,” Cruz told analysts on the call. “Tax-free shopping has been able to rebound in a four-to-eight week period after past travel disruptions. That is not a consumer cohort sensitive to disruptions in the economy.” Tax-free shopping allows international customers to make purchases without paying value-added tax or similar charges for goods bought in-store and taken home.

Shift4 has over time shifted its reliance on third-party distribution to a model involving both independent sales teams and internal salespeople. Now, that move has resulted in some 300 salespeople working directly for Shift4, Lauber noted. “It’s been two-and-a-half years since the effort began to [involve] direct sales, and despite that the ISV network remains strong,” he said, referring to independent software vendors who resell services for processors.

Competition remains fierce in payments, Lauber noted. But despite that he said growth in one of the company’s foundational markets, restaurants, has been “quite strong.” Still, he added, “you should always be paranoid about who’s coming up behind you. Are we worried about somebody eating our lunch? Not particularly, today.”

For the quarter, Shift4 saw Its processing volume climb 24% year-over-year, to $56 billion. That was good for gross revenue less network fees to reach $549 million, a 49% jump, Net income came in at $12 million, down from the $20 million garnered a year ago as the company’s shift to in-house sales proceeded.