Shift4 Looks to a Revamped Restaurant Platform As It Racks up a Strong Second Quarter

Top executives at Shift4 Payments Inc. said early Thursday the company will launch general availability of a new restaurant platform in the first quarter of next year. The Android-based technology will include a Quick Response-code payments option as well as capabilities for analytics, marketing, payroll, and other features, according to chief executive Jared Isaacman, who spoke during a morning call with equity analysts to review the company’s second-quarter results.

While not pinpointing any prospective deals, Isaacman hinted further acquisitions could also be announced relatively soon. “Our roadmap of [merger-and-acquisition] opportunities is immense,” he said. In recent months, the Allentown, Pa.-based company has acquired 3dcart, an e-commerce platform, and VenueNext, a provider of technology for payments at stadiums and similar venues. Shift4 rebranded 3dcart in January as Shift4Shop.

The new restaurant platform comes as volume in the sector is starting to improve for Shift4 following the effects of lockdowns and other restrictions associated with the pandemic, executives said. “Restaurants in general are looking reasonably good. Average ticket volumes have gone up,” said Taylor Lauber, Shift4’s chief strategy officer, who spoke during the analyst call. This stands in contrast, he said, to the hotel market, which “on a macro level, is still depressed, though there are pockets above prepandemic levels.”

The new platform, codenamed “Edgewater,” has progressed beyond its beta stage and is now deployed with eateries “measured in the hundreds,” said Isaacman, who touted the product’s “more modern architecture” compared to technology already in the restaurant market. He foresees the system appealing in particular to value-added resellers, the agents that sell payments integrated with business-management software.

The new restaurant technology comes as Shift4 has completed a quarter that saw record volume for its end-to-end processing platform. Transactions on the platform totaled $11.8 billion in the June quarter, nearly tripling the $4.2 billion recorded in the same period last year and more than double the $5.5 billion seen in the same quarter in 2019. 

Shift4 watches end-to-end volume closely because it earns higher processing revenue on it, in contrast to gateway volume, which it hands off to other processors. As a result, the company works to convert gateway activity to its end-to-end platform. Generally, half of the new end-to-end volume comes from gateway conversions, Isaacman said. “It should be an awesome feeder system for us for many years,” said Lauber, who added end-to-end volume in July alone came to $4.7 billion.

As for the recently acquired properties, VenueNext is benefiting from “a return to live entertainment events,” Lauber said, while Shift4Shop has added 36,000 online stores since the acquisition, according to Isaacman. Chicago’s United Center is VenueNext’s latest client, a deal announced a week ago.

Isaacman said Shift4 has not exhausted the possibilities for further acquisitions, but added, “We don’t want to be pressured into a bad deal.” Referring to acquired properties as long-term bets, he jokingly referred to completed acquisitions as a “life sentence,” adding, “we’re not going to do a transaction we’ll regret.”

For the quarter, revenue less network fees doubled compared to a year ago, to $136.3 million. For the year, Shift4 expects that number to total between $500 million and $510 million.