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Shift4 Payments Inc. reported a strong third quarter early Tuesday, but by some measures it wasn’t strong enough, and the big processor’s top management frankly admitted as much in a morning call with equity analysts to discuss the results.
“We’re clearly number-one in hospitality payments in the world,” said the company’s chief executive and founder, Jared Isaacman, while noting a string of new signings. But, he added, “we were hoping to have several more merchants processing by now.” Complicating the picture, he added, is that “there’s been some consumer-spending softening.”
Isaacman added “It’s pretty clear” the company will “fall short” of a goal it had set to bring its hotel signings to 10,000. He reminded his audience, however, that with hotels Shift4 processes all payments, not just those taking place in the restaurant, and he called the three months ending Sept. 30 “one of the strongest quarters for new hospitality wins.”
At the same time, the restaurant sector has recently softened, said Taylor Lauber, Shift4’s president. “There’s been a notable same-store sales decline in restaurants since mid-summer,” he noted, adding, “we diversified our business accordingly. It’s no reason for high optimism or pessimism.” Restaurant volume, he noted, “remains modestly below last year on a same-store basis” but has not “softened” further in recent weeks.
What it all added up to, all markets considered, was $43.5 billion in end-to-end payment volume processed for the quarter. That’s the volume Shift4 handles entirely in-house, as the label implies, rather than shuttling the volume to outside processors via its gateways. This is a closely watched metric at Shift4 and was up a robust 49% year-over-year. But it fell short of what at least some analysts expected.
Still, while acknowledging the shortfall, Isaacman quickly reminded his audience the quarter was one of the company’s strongest “for new hospitality wins,” while installations of the company’s key Skytab point-of-sale system “continue on a very strong growth trajectory.”
And while Shift4 competes online with big-name players like Adyen NV and Stripe Inc., Isaacman reminded his audience of Shift4’s key strength in card-present processing in going up against those rivals. “Complex card-present capabilities, that’s a relatively new world for them,” he said.
This is a strength especially in Europe, where Shift4 recently buttressed its capabilities with its acquisition of Vectron Systems AG, a German POS technology provider. “There isn’t that super-tech player in Europe concentrating on the card-present opportunity,” said Isaacman. “We are clearly doing well from a card-present perspective.”
Still, Shift4 is steadily marching upward when considering the average size of its clients. Its average merchant is 163% the size of the average seller in the company’s portfolio two years ago, according to figures it presented Tuesday.
For the quarter, the company recorded $909.2 million in revenue, 35% more than a year ago, while its net income nearly quadrupled to $72.2 million.
