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x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Delaware | 84-3676340 | ||||||||
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2202 N. Irving Street Allentown, Pennsylvania | 18109 | ||||||||
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Class ACommon Stock, $0.0001 par value per share | FOUR | The New York Stock Exchange |
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•the ongoing impact of the COVID-19 global pandemic on our business and results of operations; •substantial and increasingly intense competition worldwide in the financial services, payments and payment technology industries; •potential changes in the competitive landscape, including disintermediation from other participants in the payments chain; •our ability to anticipate and respond to changing industry trends and the needs and preferences of our merchants and consumers; •our reliance on third-party vendors to provide products and services; •risks associated with acquisitions; •our expansion of our share of the existing payment processing markets or into new markets; •integration and interoperability of our services and products with a variety of operating systems, software, device and web browsers; •dependence on our merchant and software partner relationships and strategic partnerships with various institutions to operate and grow our business; •impairment of significant amounts of goodwill and intangible assets on our balance sheet; •failure to comply with the U.S. Foreign Corrupt Practices Act, anti-money laundering, economic and trade sanctions regulations, and similar laws; •our dependence on our interest in Shift4 Payments, LLC to pay our taxes and expenses, including payments under the Tax Receivable Agreement (“TRA”); •Shift4 Payments, LLC’s ability to make such distributions may be subject to various limitations and restrictions; •our Founder and Searchlight (each as defined herein) have significant influence over us, including control over decisions that require the approval of stockholders; and Three months ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Gross revenue $ 351.0 $ 141.8 $ 590.3 $ 341.2 Cost of sales 272.9 110.2 460.4 266.2 Gross profit 78.1 31.6 129.9 75.0 General and administrative expenses 51.7 88.3 105.2 109.4 Depreciation and amortization expense 15.5 10.4 30.9 20.9 Professional fees 3.5 1.2 9.7 2.9 Advertising and marketing expenses 2.5 0.8 22.6 2.1 Restructuring expenses (Note 4) — 0.1 0.1 0.3 Other operating (income) expense, net (Note 3) — (12.4 ) — (12.4 ) Total operating expenses 73.2 88.4 168.5 123.2 Income (loss) from operations 4.9 (56.8 ) (38.6 ) (48.2 ) Loss on extinguishment of debt (Note 10) — (7.1 ) (0.2 ) (7.1 ) Other income, net — 0.2 — 0.1 Interest expense (6.3 ) (11.7 ) (12.8 ) (25.0 ) Loss before income taxes (1.4 ) (75.4 ) (51.6 ) (80.2 ) Income tax benefit (Note 13) 5.9 0.6 5.1 0.3 Net income (loss) (a) 4.5 (74.8 ) (46.5 ) (79.9 ) Net income (loss) attributable to noncontrolling interests (b) 1.3 (73.8 ) (16.9 ) (78.9 ) Net income (loss) attributable to Shift4 Payments, Inc. (c) $ 3.2 $ (1.0 ) $ (29.6 ) $ (1.0 ) Basic net income (loss) per share: (d) Class A basic net income (loss) per share $ 0.06 $ (0.03 ) $ (0.56 ) $ (0.03 ) Basic weighted average common stock outstanding 46,297,553 19,002,563 44,492,680 19,002,563 Class C basic net income (loss) per share $ 0.06 $ (0.03 ) $ (0.56 ) $ (0.03 ) Basic weighted average common stock outstanding 8,151,747 20,139,163 9,075,667 20,139,163 Diluted net income (loss) per share: (d) Class A diluted net income (loss) per share $ 0.05 $ (0.03 ) $ (0.56 ) $ (0.03 ) Diluted weighted average common stock outstanding 76,995,332 19,002,563 44,492,680 19,002,563 Class C diluted net income (loss) per share $ 0.05 $ (0.03 ) $ (0.56 ) $ (0.03 ) Diluted weighted average common stock outstanding 8,151,747 20,139,163 9,075,667 20,139,163 Redeemable Preferred Units Class A Common Units Class B Common Units Class A Common Stock Class B Common Stock Class C Common Stock Additional Total Units Amount Units Amount Units Amount Shares Amount Shares Amount Shares Amount paid-in capital Members' Equity Retained Deficit Noncontrolling Interests equity (deficit) Balances at December 31, 2019 430 $ 43.0 100,000 $ — 1,010 $ 0.3 — $ — — $ — — $ — $ — $ 149.2 $ (182.4 ) $ — $ (32.9 ) Net loss prior to Reorganization Transactions, IPO and concurrent private placement — — — — — — — — — — — — — — (5.1 ) — (5.1 ) Capital distributions — — — — — — — — — — — — — (0.1 ) — — (0.1 ) Preferred return on redeemable preferred units — — — — — — — — — — — — — (1.2 ) — — (1.2 ) Balances at March 31, 2020 430 $ 43.0 100,000 $ — 1,010 $ 0.3 — $ — — $ — — $ — $ — $ 147.9 $ (187.5 ) $ — $ (39.3 ) Net loss prior to Reorganization Transactions, IPO and concurrent private placement — — — — — — — — — — — — — — (72.8 ) — (72.8 ) Capital distributions — — — — — — — — — — — — — (0.4 ) — — (0.4 ) Preferred return on redeemable preferred units — — — — — — — — — — — — — (0.9 ) — — (0.9 ) Balances at June 4, 2020 prior to Reorganization Transactions, IPO and concurrent private placement 430 $ 43.0 100,000 $ — 1,010 $ 0.3 — $ — — $ — — $ — $ — $ 146.6 $ (260.3 ) $ — $ (113.4 ) Reorganization transactions (430 ) (43.0 ) (100,000 ) — (1,010 ) (0.3 ) 528,150 — 39,204,989 — 15,513,817 — 189.9 (146.6 ) — — 43.0 Preferred dividends settled with LLC interests — — — — — — — — — — — — 2.3 — — — 2.3 Issuance of common stock in IPO and concurrent private placement — — — — — — 17,250,000 — — — 4,625,346.0 — 463.8 — — — 463.8 Allocation of equity to noncontrolling interests — — — — — — — — — — — — (211.5 ) — — 211.5 — Issuance of common stock for change of control contingent liabilities — — — — — — 915,503 — — — — — 21.1 — — — 21.1 Issuance of restricted stock units for change of control contingent liabilities — — — — — — — — — — - — 2.1 — — — 2.1 Equity-based compensation — — — — — — — — — — — — 50.0 — — — 50.0 Net loss subsequent to Reorganization Transactions, IPO and concurrent private placement — — — — — — — — — — — — — — (1.0 ) (1.0 ) (2.0 ) Balances at June 30, 2020 — $ — — $ — — $ — 18,693,653 $ — 39,204,989 $ — 20,139,163 $ — $ 517.7 $ — $ (261.3 ) $ 210.5 $ 466.9 Six Months Ended June 30, 2021 2020 Operating activities Net loss $ (46.5 ) $ (79.9 ) Adjustment to reconcile net income (loss) to net cash provided by operating activities Depreciation and amortization 51.0 35.5 Amortization of capitalized financing costs 2.4 2.1 Loss on extinguishment of debt 0.2 7.1 Deferred income taxes (2.3 ) (0.4 ) Provision for bad debts 8.1 5.4 Revaluation of contingent liabilities 0.2 (7.0 ) Impairment of intangible assets 0.1 0.4 Equity-based compensation expense 20.6 50.0 Other noncash items 0.5 (0.1 ) Impact of lease modifications — (12.4 ) Change in operating assets and liabilities Accounts receivable (92.0 ) 4.8 Contract assets — (0.6 ) Prepaid expenses and other current assets (1.6 ) (0.7 ) Inventory 3.0 0.1 Accounts payable 50.8 6.6 Accrued expenses and other current liabilities 5.2 (6.7 ) Deferred revenue 5.3 2.5 Net cash provided by operating activities 5.0 6.7 Investing activities Acquisitions, net of cash acquired (40.2 ) — Investments in securities (29.5 ) — Acquisition of equipment to be leased (18.9 ) — Customer acquisition costs (12.7 ) (9.8 ) Capitalized software development costs (8.3 ) (5.1 ) Acquisition of property, plant and equipment (5.0 ) (1.4 ) Residual commission buyouts (0.9 ) (0.4 ) Net cash used in investing activities (115.5 ) (16.7 ) Financing activities Payments for withholding tax related to vesting of restricted stock units (116.3 ) — Repayment of debt (0.9 ) (191.9 ) Deferred financing costs (0.4 ) — IPO proceeds, net of underwriting discounts and commissions — 372.9 Proceeds from private placement — 100.0 Offering costs — (7.2 ) Proceeds from revolving line of credit — 68.5 Repayment of revolving line of credit — (89.5 ) Payments on contingent liabilities — (1.1 ) Preferred return on preferred stock — (0.9 ) Capital distributions — (0.5 ) Net cash (used in) provided by financing activities (117.6 ) 250.3 Change in cash and cash equivalents (228.1 ) 240.3 Cash and cash equivalents Beginning of period 927.8 3.7 End of period 699.7 244.0 Basis of Presentation and Significant Accounting Policies are held by Shift4 Payments, Inc. directly. See Note 10 for information 2020, respectively. For the three months ended June 30, 2020 For the six months ended June 30, 2020 Consolidated Statement of Operations As previously reported Adjustment As revised As previously reported Adjustment As revised Cost of sales $ 109.5 $ 0.7 $ 110.2 $ 264.4 $ 1.8 $ 266.2 Gross profit 32.3 (0.7 ) 31.6 76.8 (1.8 ) 75.0 General and administrative expenses 89.2 (0.9 ) 88.3 111.5 (2.1 ) 109.4 Total operating expenses 89.3 (0.9 ) 88.4 125.3 (2.1 ) 123.2 Income (loss) from operations (57.0 ) 0.2 (56.8 ) (48.5 ) 0.3 (48.2 ) Loss before income taxes (75.6 ) 0.2 (75.4 ) (80.5 ) 0.3 (80.2 ) Net loss (a) (75.0 ) 0.2 (74.8 ) (80.2 ) 0.3 (79.9 ) Basic and diluted net loss per share - Class A and Class C (0.03 ) — (0.03 ) (0.03 ) — (0.03 ) (a) Net loss is equal to comprehensive loss. , In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, which provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships, subject to certain criteria, that reference the London Interbank Offered Rate (“LIBOR”), or another reference rate that is expected to be discontinued. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company is currently evaluating whether it will elect the optional expedients, as well as evaluating the impact of ASU 2020-04 on the Company’s consolidated financial statements. Cash $ 42.2 Shares of Class A common stock (a) 24.5 RSUs granted for fair value of equity-based compensation awards (b) 1.8 Total purchase consideration 68.5 Less: cash acquired (1.6 ) Total purchase consideration, net of cash acquired $ 66.9 Total purchase consideration includes 345,423 shares of common stock. As of The Company assumed all equity awards held by continuing employees. The portion of the fair value of the equity-based compensation awards associated with prior service of VenueNext employees represents a component of the total consideration as presented above and was valued based on the fair value of the VenueNext awards on March 3, 2021, the acquisition date. Accounts receivable $ 0.7 Prepaid expenses and other current assets 0.2 Inventory 0.2 Other intangible assets 18.5 Goodwill (a) 48.3 Accounts payable (0.9 ) Deferred revenue (0.1 ) Net assets acquired $ 66.9 Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Payments-based revenue $ 324.8 $ 121.2 $ 540.7 $ 297.6 Subscription and other revenues 26.2 20.6 49.6 43.6 Total $ 351.0 $ 141.8 $ 590.3 $ 341.2 Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Over-time revenue $ 341.1 $ 134.7 $ 571.3 $ 323.5 Point-in-time revenue 9.9 7.1 19.0 17.7 Total $ 351.0 $ 141.8 $ 590.3 $ 341.2 $22.4 million the Company made to merchants related to the TSYS outage that are treated as contra revenue and as such reduce payments-based revenue. Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Annual service fees and regulatory compliance fees $ 5.7 $ 3.4 $ 10.1 $ 6.8 Amount of these fees included in deferred revenue at beginning of period 4.6 1.7 4.0 2.8 June 30, June 30, 2021 2020 Beginning balance $ 5.7 $ 2.5 Additions to expense (a) 8.1 4.7 Write-offs, net of recoveries and other adjustments (1.0 ) (1.9 ) Ending balance $ 12.8 $ 5.3 Includes a $5.5 million allowance on chargebacks from a single merchant recorded during the Balance at December 31, 2020 $ 2.9 Severance payments (0.8 ) Accretion of interest (a) 0.1 Balance at June 30, 2021 $ 2.2 Balance at December 31, 2020 $ 477.0 VenueNext acquisition (Note 2) 48.3 Hospitality Technology Vendor measurement period adjustment (Note 2) (0.1 ) Balance at June 30, 2021 $ 525.2 Weighted Average June 30, 2021 Amortization Period (in years) Carrying Value Accumulated Amortization Net Carrying Value Merchant relationships 8 193.3 $ 119.9 $ 73.4 Acquired technology 9 113.1 48.5 64.6 Trademarks and trade names 17 21.0 3.8 17.2 Capitalized software development costs 4 33.0 8.7 24.3 Residual commission buyouts (a) 3 21.1 15.5 5.6 Total intangible assets $ 381.5 $ 196.4 $ 185.1 Weighted Average December 31, 2020 Amortization Period (in years) Carrying Value Accumulated Amortization Net Carrying Value Merchant relationships 8 $ 185.8 $ 106.5 $ 79.3 Acquired technology 9 105.1 42.2 62.9 Trademarks and trade names 9 57.4 39.1 18.3 Noncompete agreements 2 3.9 3.9 — Capitalized software development costs 4 25.1 5.8 19.3 Leasehold interest 2 0.1 0.1 — Residual commission buyouts (a) 3 20.0 13.5 6.5 Total intangible assets $ 397.4 $ 211.1 $ 186.3 Residual commission buyouts include contingent payments of 2021 (remaining six months) $ 26.6 2022 40.5 2023 27.6 2024 23.0 2025 21.8 Thereafter 45.6 Total $ 185.1 Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Depreciation and amortization expense $ 9.4 $ 9.4 $ 19.5 $ 18.9 Cost of sales 4.7 3.5 9.2 6.9 Total $ 14.1 $ 12.9 $ 28.7 $ 25.8 Capitalized acquisition costs, net were 2021 (remaining six months) $ 9.7 2022 14.8 2023 7.5 2024 0.8 Total $ 32.8 Weighted Average June 30, 2021 Depreciation Period (in years) Carrying Value Accumulated Depreciation Net Carrying Value Equipment under lease 3 $ 54.1 $ 14.0 $ 40.1 Equipment held for lease (a) N/A 7.1 — 7.1 Total equipment for lease $ 61.2 $ 14.0 $ 47.2 Weighted Average December 31, 2020 Depreciation Period (in years) Carrying Value Accumulated Depreciation Net Carrying Value Equipment under lease 3 $ 36.5 $ 6.9 $ 29.6 Equipment held for lease (a) N/A 7.0 — 7.0 Total equipment for lease, net $ 43.5 $ 6.9 $ 36.6 June 30, December 31, 2021 2020 Equipment $ 20.0 $ 16.0 Capitalized software 9.6 8.7 Leasehold improvements 11.6 11.6 Furniture and fixtures 3.1 3.1 Vehicles 0.3 0.2 Total property and equipment, gross 44.6 39.6 Less: Accumulated depreciation (27.1 ) (24.5 ) Total property and equipment, net $ 17.5 $ 15.1 Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Depreciation and amortization expense $ 1.0 $ 0.9 $ 1.8 $ 1.9 Cost of sales 0.4 0.4 0.8 0.8 Total depreciation expense $ 1.4 $ 1.3 $ 2.6 $ 2.7 10.Debt June 30, December 31, 2021 2020 Convertible Notes due 2025 (2025 Convertible Notes) $ 690.0 $ 577.5 Senior Notes due 2026 (2026 Senior Notes) 450.0 450.0 Other financing arrangements — 0.9 Total borrowings 1,140.0 1,028.4 Less: Current portion of debt — (0.9 ) 1,140.0 1,027.5 Less: Unamortized capitalized financing costs (22.4 ) (22.1 ) Total long-term debt $ 1,117.6 $ 1,005.4 June 30, December 31, 2021 2020 Principal outstanding $ 690.0 $ 690.0 Unamortized debt discount — (112.5 ) Unamortized debt issuance costs (14.5 ) (13.5 ) Net carrying value $ 675.5 $ 564.0 First Lien and Second Lien Term Loan Facility including charging a default rate of interest equal to 2.00% per year above the rate that would otherwise be applicable. In addition, if any event of default exists under the Amended Credit Agreement, the lenders may commence foreclosure or other actions against the collateral. June 30, December 31, 2021 2020 Taxes receivable $ 4.0 $ 1.2 Prepaid insurance 1.7 2.5 Prepaid merchant signing bonuses (a) 1.4 — Other prepaid expenses (b) 7.1 6.5 Agent and employee loan receivables 0.3 0.3 Other current assets 0.3 1.0 Total prepaid expenses and other current assets $ 14.8 $ 11.5 contracts, which are amortized over their contractual term of one year. June 30, December 31, 2021 2020 Residuals payable $ 13.3 $ 6.8 Accrued interest 3.5 3.6 Accrued payroll 3.1 2.8 Deferred employer social security tax pursuant to the CARES Act 3.0 3.0 Deferred tenant reimbursement allowance 2.9 3.1 Escrow payable 2.3 2.3 Accrued rent 1.5 1.5 Taxes payable 1.5 1.4 Restructuring accrual 1.5 1.4 Other current liabilities 3.6 4.2 Total accrued expenses and other current liabilities $ 36.2 $ 30.1 Six Months Ended June 30, 2021 2020 Balance at beginning of period $ — $ 32.3 Additions (a) — 1.7 Cash payments made for contingent liabilities related to earnout payments (0.2 ) (1.5 ) Contingent liabilities related to change of control settled with Class A common stock and restricted stock units — (23.2 ) Fair value adjustments 0.2 (8.7 ) Balance at end of period $ — $ 0.6 During the three months ended March 31, 2020, certain employment compensation agreements were amended. Consequently, previously recorded deferred compensation liabilities of $1.9 million associated with these agreements, included within “Other noncurrent liabilities” on the Consolidated Balance Sheet at December 31, 2019, were derecognized and new liabilities of $1.7 million were recognized at fair value within “Other noncurrent liabilities” on the unaudited Condensed Consolidated Balance Sheets. These contingent liabilities were settled at the IPO for 89,842 restricted stock units. June 30, 2021 December 31, 2020 Carrying Value Fair Value Carrying Value Fair Value 2025 Convertible Notes $ 690.0 $ 937.3 $ 690.0 $ 843.9 2026 Senior Notes 450.0 470.7 450.0 468.0 Total $ 1,140.0 $ 1,408.0 $ 1,140.0 $ 1,311.9 The Company has leases under noncancellable agreements which expire on various dates through November 30, 2030. 2021 (remaining six months) $ 2.9 2022 4.5 2023 3.6 2024 3.6 2025 3.1 Thereafter 6.8 Total $ 24.5 The Company has a service agreement with the Founder, including access to aircrafts and a property. Total expense for this service, which is included in “General and administrative expenses” in the unaudited Condensed Consolidated Statements of Operations, was 2020. In the third quarter of 2021, the Company incurred $0.6 million in costs associated with a proposed Follow-on Offering that are reimbursable by Searchlight and included in "Accounts receivable, net" on the Company's unaudited Condensed Consolidated Balance Sheets at September 30, 2021. 2021, are recorded as "Accounts receivable" on the Company's unaudited Condensed Consolidated Balance Sheets. Structure prior to the Reorganization Transactions Shift4 Payments, Inc. is the sole managing member of Shift4 Payments, LLC, and consolidates the financial results of Shift4 Payments, LLC. The noncontrolling interests balance represents the economic interest in Shift4 Payments, LLC held by the Continuing Equity Owners. The following table summarizes the ownership of LLC Interests in Shift4 Payments, LLC: LLC Interests Ownership percentage Shift4 Payments, Inc. Continuing Equity Owners Total Shift4 Payments, Inc. Continuing Equity Owners Total Balances at December 31, 2020 49,926,802 30,625,857 80,552,659 62.0 % 38.0 % 100.0 % Issuance of LLC units 2,325,489 — 2,325,489 1.0 % (1.0 %) — Redemption of LLC units 2,385,453 (2,385,453 ) — 2.9 % (2.9 %) — Balances at June 30, 2021 54,637,744 28,240,404 82,878,148 65.9 % 34.1 % 100.0 % 20.Equity-based Compensation Six Months Ended June 30, 2021 Number of RSUs Weighted Average Grant Date Fair Value Unvested balance at beginning of period 4,840,508 $ 24.35 Granted (a) 163,265 $ 74.80 Vested (3,240,146 ) $ 22.74 Forfeited or cancelled (6,715 ) $ 42.10 Unvested balance at end of period 1,756,912 $ 31.90 Includes 77,326 RSUs not subject to continued service, which vested immediately in March 2021 and 35,973 RSUs issued in connection with the VenueNext acquisition, which vest at anniversary dates ranging from six months to two years. Three Months Ended June 30, Six Months Ended June 30, June 5, 2020 through 2021 2021 June 30, 2020 Net income (loss) $ 4.5 $ (46.5 ) $ (2.1 ) Less: Net income (loss) attributable to noncontrolling interests 1.3 (16.9 ) (1.1 ) Net income (loss) attributable to Shift4 Payments, Inc. $ 3.2 $ (29.6 ) $ (1.0 ) Adjustment to net income (loss) attributable to common stockholders — (0.3 ) (0.1 ) Net income (loss) attributable to common stockholders - basic $ 3.2 $ (29.9 ) $ (1.1 ) Numerator - allocation of net income (loss) attributable to common stockholders: Net income (loss) allocated to Class A common stock - basic $ 2.7 $ (24.8 ) $ (0.5 ) Reallocation of net income attributable to common stockholders from assumed conversion of LLC interests and assumed vesting of RSUs 1.4 — — Net income (loss) allocated to Class A common stock - diluted $ 4.1 $ (24.8 ) $ (0.5 ) Net income (loss) allocated to Class C common stock - basic $ 0.5 $ (5.1 ) $ (0.6 ) Reallocation of net income attributable to common stockholders from assumed conversion of LLC interests and assumed vesting of RSUs (0.1 ) — — Net income (loss) allocated to Class C common stock - diluted $ 0.4 $ (5.1 ) $ (0.6 ) Denominator: Weighted average shares of Class A common stock outstanding - basic 46,297,553 44,492,680 19,002,563 Effect of dilutive securities: LLC Interests 28,869,471 — — RSUs 1,726,595 — — Convertible notes 101,713 — — Weighted average shares of Class A common stock outstanding - diluted 76,995,332 44,492,680 19,002,563 Weighted average shares of Class C common stock outstanding - basic and diluted 8,151,747 9,075,667 20,139,163 Net income (loss) per share - Basic: Class A common stock $ 0.06 $ (0.56 ) $ (0.03 ) Class C common stock $ 0.06 $ (0.56 ) $ (0.03 ) Net income (loss) per share - Diluted: Class A Common Stock $ 0.05 $ (0.56 ) $ (0.03 ) Class C Common Stock $ 0.05 $ (0.56 ) $ (0.03 ) Three months ended Six months ended June 5, 2020 through June 30, 2021 June 30, 2021 June 30, 2020 LLC Interests that convert into potential Class A common shares — 28,240,404 39,204,989 RSUs and performance RSUs - employee — 1,742,656 2,177,628 RSUs - non-employee directors — 10,244 52,660 2025 Convertible Notes — 50,856 — Total — 30,044,160 41,435,277 Six Months Ended June 30, 2021 2020 Cash paid for interest $ 10.5 $ 26.6 Cash paid for income taxes, net of refunds 0.3 0.1 Noncash operating activities Deferred compensation settled with restricted stock units — 2.1 Noncash investing activities Shares and equity-based compensation awards issued in connection with VenueNext acquisition 26.3 — Equipment for lease 5.8 — Capitalized software development costs 0.5 — Noncash financing activities Contingent consideration settled with Class A common stock — 21.1 Right associated with Inspiration4 seat 2.1 — Short-term financing for directors and officers insurance — 3.4 Preferred return on preferred stock settled with LLC Interests — 2.3 Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Payments-based revenue $ 324.8 $ 121.2 $ 540.7 $ 297.6 Subscription and other revenues 26.2 20.6 49.6 43.6 Total gross revenue 351.0 141.8 590.3 341.2 Less: network fees 214.7 74.4 356.5 194.7 Less: Other costs of sales 58.2 35.8 103.9 71.5 Gross profit $ 78.1 $ 31.6 $ 129.9 $ 75.0 •“we,” “us,” “our,” the “Company,” “Shift4” and similar references refer: (1) following the consummation of the Reorganization Transactions, to Shift4 Payments, Inc., and, unless otherwise stated, all of its subsidiaries, including Shift4 Payments, LLC and, unless otherwise stated, all of its subsidiaries, and (2) prior to the completion of the Reorganization Transactions, to Shift4 Payments, LLC and, unless otherwise stated, all of its subsidiaries. •“Continuing Equity Owners” refers collectively to Searchlight, our Founder and their respective permitted transferees that own LLC Interests after the Reorganization Transactions and who may redeem at each of their options, in whole or in part from time to time, their LLC Interests for, at our election, cash or newly-issued shares of Shift4 Payments, Inc.’s Class A common stock. •“LLC Interests” refers to the common units of Shift4 Payments, LLC, including those that we purchased directly from Shift4 Payments, LLC with the proceeds from our initial public offering (“IPO”) and the concurrent private placement and the common units of Shift4 Payments, LLC that we acquired from the Former Equity Owners in connection with the consummation of the Reorganization Transactions. See the section entitled “Initial public offering and concurrent private placement” below. •“Founder” refers to Jared Isaacman, our Chief Executive Officer and the sole stockholder of Rook Holdings Inc. Our Founder is a Continuing Equity Owner and an owner of Class C common stock. •“Former Equity Owner” refers to FPOS Holding Co., Inc. who exchanged its LLC Interests for shares of our Class A common stock in connection with the consummation of the Reorganization Transactions. •“Reorganization Transactions” refer to certain organizational transactions that we effected in connection with our IPO in June 2020. See the section entitled “Reorganization Transactions” below. •“Rook” refers to Rook Holdings Inc., a Delaware corporation wholly-owned by our Founder and for which our Founder is the sole stockholder. •end-to-end payment processing for a broad range of payment types; •merchant acquiring; •proprietary omni-channel gateway capable of multiple methods of mobile, contactless and QR code-based payments; •complementary software integrations; •full eCommerce capabilities, including web-store design, hosting, shopping cart management and fulfillment integrations; •integrated and mobile POS solutions; Pursuit of strategic acquisitions. From time to time, we may pursue acquisitions as part of our ongoing growth strategy. While these acquisitions are intended to add long-term value, in the short term they may add redundant operating expenses or additional carrying costs until the underlying value is unlocked. Operations. Recent Developments above, that are treated as contra revenue and as such reduce payments-based revenue. Recent Developments above. Three Months Ended June 30, (in millions) 2021 2020 $ change % change Payments-based revenue $ 324.8 $ 121.2 $ 203.6 168.0 % Subscription and other revenues 26.2 20.6 5.6 27.2 % Total gross revenue 351.0 141.8 209.2 147.5 % Less: network fees 214.7 74.4 140.3 188.6 % Less: Other costs of sales 58.2 35.8 22.4 62.6 % Gross profit 78.1 31.6 46.5 147.2 % General and administrative expenses 51.7 88.3 (36.6 ) (41.4 %) Depreciation and amortization expense 15.5 10.4 5.1 49.0 % Professional fees 3.5 1.2 2.3 191.7 % Advertising and marketing expenses 2.5 0.8 1.7 212.5 % Restructuring expenses — 0.1 (0.1 ) NM Other operating (income) expense, net — (12.4 ) 12.4 NM Total operating expenses 73.2 88.4 (15.2 ) (17.2 %) Income (loss) from operations 4.9 (56.8 ) 61.7 (108.6 %) Loss on extinguishment of debt — (7.1 ) 7.1 NM Other income, net — 0.2 (0.2 ) NM Interest expense (6.3 ) (11.7 ) 5.4 (46.2 %) Loss before income taxes (1.4 ) (75.4 ) 74.0 (98.1 %) Income tax benefit 5.9 0.6 5.3 NM Net income (loss) 4.5 (74.8 ) $ 79.3 (106.0 %) Net income (loss) attributable to noncontrolling interests (a) 1.3 (73.8 ) 75.1 (101.8 %) Net income (loss) attributable to Shift4 Payments, Inc. $ 3.2 $ (1.0 ) $ 4.2 NM revenues and in the three months ended September 30, 2021 includes $22.4 million in payments we made to merchants as a result of the August 2021 TSYS outage discussed in This was partially offset by $22.4 million in payments we made to merchants as a result of the August 2021 TSYS outage discussed in •higher residual commissions, which increased other costs of sales $40.8 million, driven by the growth in gross revenue less network fees; •the 3dcart, VenueNext, hospitality technology vendor and Postec acquisitions, which collectively increased other costs of sales $9.8 million in the three months ended September 30, 2021; •higher than normal chargeback losses during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, driven by the business failure of one merchant causing $5.5 million in estimated unrecoverable chargeback transactions in the nine months ended September 30, 2021; •higher capitalized acquisition cost amortization, which increased other costs of sales $4.4 million, related to deal bonuses paid to VARs to obtain processing contracts; compensation. Six Months Ended June 30, (in millions) 2021 2020 $ change % change Payments-based revenue $ 540.7 $ 297.6 $ 243.1 81.7 % Subscription and other revenues 49.6 43.6 6.0 13.8 % Total gross revenue 590.3 341.2 249.1 73.0 % Less: network fees 356.5 194.7 161.8 83.1 % Less: Other costs of sales 103.9 71.5 32.4 45.3 % Gross profit 129.9 75.0 54.9 73.2 % General and administrative expenses 105.2 109.4 (4.2 ) (3.8 %) Depreciation and amortization expense 30.9 20.9 10.0 47.8 % Professional fees 9.7 2.9 6.8 234.5 % Advertising and marketing expenses 22.6 2.1 20.5 NM Restructuring expenses 0.1 0.3 (0.2 ) (66.7 %) Other operating (income) expense, net — (12.4 ) 12.4 NM Total operating expenses 168.5 123.2 45.3 36.8 % Loss from operations (38.6 ) (48.2 ) 9.6 (19.9 %) Loss on extinguishment of debt (0.2 ) (7.1 ) 6.9 (97.2 %) Other income, net — 0.1 (0.1 ) NM Interest expense (12.8 ) (25.0 ) 12.2 (48.8 %) Loss before income taxes (51.6 ) (80.2 ) 28.6 (35.7 %) Income tax benefit 5.1 0.3 4.8 NM Net loss (46.5 ) (79.9 ) $ 33.4 (41.8 %) Net loss attributable to noncontrolling interests (a) (16.9 ) (78.9 ) 62.0 (78.6 %) Net loss attributable to Shift4 Payments, Inc. $ (29.6 ) $ (1.0 ) $ (28.6 ) NM Key performance indicators and non-GAAP measures Three Months Ended June 30, Six Months Ended June 30, (in millions) 2021 2020 2021 2020 End-to-end payment volume $ 11,833.9 $ 4,240.0 $ 19,820.7 $ 10,386.1 Gross revenue less network fees 136.3 67.4 233.8 146.5 EBITDA 30.6 (45.8 ) 12.2 (19.7 ) Adjusted EBITDA 45.2 14.8 67.4 32.3 The financial impact of certain elements of these activities is often large relative to the Company's overall financial performance and can adversely affect the comparability of our operating results and investors' ability to analyze the business from period to period. basis. Reconciliations of gross revenue less network fees, EBITDA and Adjusted EBITDA to its most directly comparable GAAP financial measure are presented below. We encourage you to review the reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. In future fiscal periods, we may exclude such items and may incur income and expenses similar to these excluded items. Three Months Ended June 30, Six Months Ended June 30, (in millions) 2021 2020 2021 2020 Gross profit $ 78.1 $ 31.6 $ 129.9 $ 75.0 Add back: Other costs of sales 58.2 35.8 103.9 71.5 Gross revenue less network fees $ 136.3 $ 67.4 $ 233.8 $ 146.5 Three Months Ended June 30, Six Months Ended June 30, (in millions) 2021 2020 2021 2020 Net income (loss) $ 4.5 $ (74.8 ) $ (46.5 ) $ (79.9 ) Interest expense 6.3 11.7 12.8 25.0 Income tax benefit (5.9 ) (0.6 ) (5.1 ) (0.3 ) Depreciation and amortization expense 25.7 17.9 51.0 35.5 EBITDA 30.6 (45.8 ) 12.2 (19.7 ) Acquisition, restructuring and integration costs (a) 3.2 12.9 29.0 3.1 Equity-based compensation (b) 11.3 50.0 25.4 50.0 Impact of lease modifications (c) — (12.4 ) — (12.4 ) Other nonrecurring items (d) 0.1 10.1 0.8 11.3 Adjusted EBITDA $ 45.2 $ 14.8 $ 67.4 $ 32.3 its indebtedness, including covenants in such agreements providing that the payments of dividends or other distributions are subject to annual limitations based on our market capitalization. Six Months Ended June 30, (in millions) 2021 2020 Net cash provided by operating activities $ 5.0 $ 6.7 Net cash used in investing activities (115.5 ) (16.7 ) Net cash (used in) provided by financing activities (117.6 ) 250.3 Change in cash and cash equivalents $ (228.1 ) $ 240.3 •net loss of $60.3 million, which is net of $25.1 million of nonrecurring payments to our merchants and partners due to the TSYS outage and associated costs incurred in the third quarter of 2021, adjusted for non-cash expenses, including depreciation and amortization of $76.8 million, equity-based compensation of $26.9 million and provision for bad debts of $10.3 million; plus, •net loss of $89.7 million, adjusted for non-cash expenses including equity-based compensation of $56.2 million, depreciation and amortization of $59.7 million, cumulative impact of modifying our lease contracts of $(12.4) million, loss on extinguishment of debt of $7.1 million, revaluation of contingent liabilities of $(5.9) million, provision for bad debts of $6.9 million, and amortization of capitalized financing costs of $2.9 million; plus, •the acquisition of VenueNext in March 2021 for $68.5 million in aggregate purchase consideration, including $40.6 million in cash, net of cash acquired of $1.6 million; •the investment in SpaceX of $27.5 million; •the acquisition of Postec in September 2021 for $14.0 million, net of cash acquired of $1.7 million; •the net proceeds from the 2027 Convertible Notes during the nine months ended September 30, 2021 of $617.7 million; • the partial repayment 10-K have been modified. The following table provides an update as of September 30, 2021. Incorporated by Reference Filed/Furnished Herewith Exhibit Number Exhibit Description Form File No. Exhibit Filing Date 3.1 Amended and Restated Certificate of Incorporation of Shift4 Payments, Inc. S-8 333-239042 4.1 06/09/2020 3.2 S-8 333-239042 4.2 06/09/2020 4.1 Specimen Stock Certificate evidencing the shares of Class A common stock. S-1/A 333-238307 4.1 06/01/2020 4.3 8-K 001-39313 4.1 07/27/2021 10.1 Employment Letter between Shift4 Payments, Inc. and Sarah Goldsmith-Grover. 10-Q 001-39313 10.2 05/07/2021 31.1 * 31.2 * 32.1 ** 32.2 ** 101.INS Inline XBRL Instance Document. * 101.SCH Inline XBRL Taxonomy Extension Schema Document. * 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. * 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. * 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. * 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. * 104* Cover Page Interactive Data File (formatting as Inline XBRL and contained in Exhibit 101) Table of Contents•the ongoing impact of the COVID-19 global pandemic on our business and results of operations;•substantial and increasingly intense competition worldwide in the financial services, payments and payment technology industries;•potential changes in the competitive landscape, including disintermediation from other participants in the payments chain;•our ability to anticipate and respond to changing industry trends and the needs and preferences of our merchants and consumers;•our reliance on third-party vendors to provide products and services;•risks associated with acquisitions;•our expansion of our share of the existing payment processing markets or into new markets;•integration and interoperability of our services and products with a variety of operating systems, software, device and web browsers;•dependence on our merchant and software partner relationships and strategic partnerships with various institutions to operate and grow our business;•impairment of significant amounts of goodwill and intangible assets on our balance sheet;•failure to comply with the U.S. Foreign Corrupt Practices Act, anti-money laundering, economic and trade sanctions regulations, and similar laws;•our dependence on our interest in Shift4 Payments, LLC to pay our taxes and expenses, including payments under the Tax Receivable Agreement (“TRA”);•Shift4 Payments, LLC’s ability to make such distributions may be subject to various limitations and restrictions;•our Founder and Searchlight (each as defined herein) have significant influence over us, including control over decisions that require the approval of stockholders; and•those factors described in the sections titled “Risk Factors and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020 and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.Table of Contents(a)Net income (loss) is equal to comprehensive income (loss).(b)Net income (loss) attributable to noncontrolling interests is equal to comprehensive income (loss) attributable to noncontrolling interests, including the net loss for the period January 1, 2020 through June 4, 2020, the date the SEC declared effective the Company’s Registration Statement on Form S-1 filed in connection with its IPO.See Note 1 for more information. Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Gross revenue (a) $ 377.8 $ 214.8 $ 968.1 $ 556.0 Cost of sales (b) 313.4 163.3 773.8 429.5 Gross profit 64.4 51.5 194.3 126.5 General and administrative expenses 48.1 35.4 153.3 144.8 Depreciation and amortization expense 15.0 16.2 45.9 37.1 Professional fees 3.3 2.9 13.0 5.8 Advertising and marketing expenses 3.5 0.8 26.1 2.9 Restructuring expenses (Note 4) 0.1 0.1 0.2 0.4 Other operating (income) expense, net (Note 3) — — — (12.4) Total operating expenses 70.0 55.4 238.5 178.6 Loss from operations (5.6) (3.9) (44.2) (52.1) Loss on extinguishment of debt (Note 10) — — (0.2) (7.1) Other income, net 0.2 0.5 0.2 0.6 Interest expense (7.4) (7.1) (20.2) (32.1) Loss before income taxes (12.8) (10.5) (64.4) (90.7) Income tax (expense) benefit (Note 13) (1.0) 0.7 4.1 1.0 Net loss (c) (13.8) (9.8) (60.3) (89.7) Net loss attributable to noncontrolling interests (d) (4.6) (4.8) (21.5) (83.7) Net loss attributable to Shift4 Payments, Inc. (e) $ (9.2) $ (5.0) $ (38.8) $ (6.0) Basic and diluted net loss per share: (f) Class A net loss per share - basic and diluted $ (0.17) $ (0.12) $ (0.72) $ (0.15) Class A weighted average common stock outstanding - basic and diluted 49,692,599 23,309,247 46,251,576 22,363,399 Class C net loss per share - basic and diluted $ (0.17) $ (0.12) $ (0.72) $ (0.15) Class C weighted average common stock outstanding - basic and diluted 6,117,997 19,222,017 8,078,943 19,424,100 (c)(a)For the three and nine months ended September 30, 2021, includes $22.4 million of payments to merchants associated with the TSYS outage, which are recorded as contra revenue and reflected as a reduction of "Gross revenue." See Note 3 for more information.Net income (loss) attributable to Shift4 Payments, Inc. is equal to comprehensive income (loss) attributable to Shift4 Payments, Inc.(d)(b)For the three and nine months ended September 30, 2021, includes $2.3 million of payments to partners associated with the TSYS outage. See Note 3 for more information.For the three and six months ended June 30, 2020, represents basic and diluted net loss per share of Class A and Class C common stock and weighted average shares of Class A and Class C common stock outstanding for the period from June 5, 2020 through June 30, 2020, the period following the Reorganization Transactions and Shift4 Payments, Inc.'s initial public offering described in Note 1. See Note 21 for additional information on basic and diluted net income (loss) per share.Table of Contents Redeemable
Preferred UnitsMembers'
Equity Units Amount Units Amount Units Amount Shares Amount Shares Amount Shares Amount Balances at December 31, 2019 430 $ 43.0 100,000 $ — 1,010 $ 0.3 — $ — — $ — — $ — $ — $ 149.2 $ (182.4) $ — $ (32.9) Net loss prior to Reorganization Transactions, IPO and concurrent private placement — — — — — — — — — — — — — — (5.1) — (5.1) Capital distributions — — — — — — — — — — — — — (0.1) — — (0.1) Preferred return on redeemable preferred units — — — — — — — — — — — — — (1.2) — — (1.2) Balances at March 31, 2020 430 $ 43.0 100,000 $ — 1,010 $ 0.3 — $ — — $ — — $ — $ — $ 147.9 $ (187.5) $ — $ (39.3) Net loss prior to Reorganization Transactions, IPO and concurrent private placement — — — — — — — — — — — — — — (72.8) — (72.8) Capital distributions — — — — — — — — — — — — — (0.4) — — (0.4) Preferred return on redeemable preferred units — — — — — — — — — — — — — (0.9) — — (0.9) Balances at June 4, 2020 prior to Reorganization Transactions, IPO and concurrent private placement 430 $ 43.0 100,000 $ — 1,010 $ 0.3 — $ — — $ — — $ — $ — $ 146.6 $ (260.3) $ — $ (113.4) Reorganization transactions (430) (43.0) (100,000) — (1,010) (0.3) 528,150 — 39,204,989 — 15,513,817 — 189.9 (146.6) — — 43.0 Preferred dividends settled with LLC interests — — — — — — — — — — — — 2.3 — — — 2.3 Issuance of common stock in IPO and concurrent private placement — — — — — — 17,250,000 — — — 4,625,346 — 463.8 — — — 463.8 Allocation of equity to noncontrolling interests — — — — — — — — — — — — (211.5) — — 211.5 — Issuance of common stock for change of control contingent liabilities — — — — — — 915,503 — — — — — 21.1 — — — 21.1 Issuance of restricted stock units for change of control contingent liabilities — — — — — — — — — — — — 2.1 — — — 2.1 Equity-based compensation — — — — — — — — — — — — 50.0 — — — 50.0 Net loss subsequent to Reorganization Transactions, IPO and concurrent private placement — — — — — — — — — — — — — — (1.0) (1.0) (2.0) Balances at June 30, 2020 — $ — — $ — — $ — 18,693,653 $ — 39,204,989 $ — 20,139,163 $ — $ 517.7 $ — $ (261.3) $ 210.5 $ 466.9 Issuance of Class A common stock in connection with Follow-on offering Issuance of Class A common stock in connection with Follow-on offering — — — — — — 2,000,000 — — — — — 91.8 — — — 91.8 Allocation of equity to noncontrolling interest from Follow-on offering Allocation of equity to noncontrolling interest from Follow-on offering — — — — — — — — — — — — (45.7) — — 45.7 — Exchange of shares held by Searchlight Exchange of shares held by Searchlight — — — — — — 7,856,373 — (3,637,501) — (4,218,872) — 3.8 — — (3.8) — Other Other — — — — — — — — — — — — (1.2) — — — (1.2) Equity-based compensation Equity-based compensation — — — — — — — — — — — — 6.2 — — — 6.2 Net loss Net loss — — — — — — — — — — — — — — (5.0) (4.8) (9.8) Balances at September 30, 2020 Balances at September 30, 2020 — $ — — $ — — $ — 28,550,026 $ — 35,567,488 $ — 15,920,291 $ — $ 572.6 $ — $ (266.3) $ 247.6 $ 553.9 Table of ContentsNine Months Ended September 30, 2021 2020 Operating activities Net loss $ (60.3) $ (89.7) Adjustment to reconcile net loss to net cash provided by operating activities Adjustment to reconcile net loss to net cash provided by operating activities Depreciation and amortization 76.8 59.7 Amortization of capitalized financing costs 4.1 2.9 Loss on extinguishment of debt 0.2 7.1 Deferred income taxes (4.3) 1.1 Provision for bad debts 10.3 6.9 Revaluation of contingent liabilities 0.2 (5.9) Impairment of intangible assets — 0.4 Equity-based compensation expense 26.9 56.2 Other noncash items 1.0 (0.3) Impact of lease modifications — (12.4) Change in operating assets and liabilities Accounts receivable (98.0) (19.3) Contract assets — (0.6) Prepaid expenses and other assets Prepaid expenses and other assets (1.4) (2.9) Inventory 2.9 0.1 Accounts payable 59.1 16.9 Accrued expenses and other current liabilities 5.3 (5.5) Deferred revenue 2.8 2.3 Net cash provided by operating activities 25.6 17.0 Investing activities Acquisitions, net of cash acquired (54.2) — Acquisition of equipment to be leased Acquisition of equipment to be leased (35.3) (5.8) Investments in securities (29.5) — Customer acquisition costs (19.3) (14.4) Capitalized software development costs (13.0) (7.0) Acquisition of property, plant and equipment (6.3) (2.6) Residual commission buyouts (4.4) (2.1) Net cash used in investing activities (162.0) (31.9) Financing activities Proceeds from long-term debt Proceeds from long-term debt 632.5 — Payments for withholding tax related to vesting of restricted stock units (119.7) — Deferred financing costs Deferred financing costs (15.2) (0.5) Repayment of debt (0.9) (192.8) IPO proceeds, net of underwriting discounts and commissions — 372.9 Proceeds from private placement — 100.0 September follow-on offering proceeds, net of underwriting discounts and commissions September follow-on offering proceeds, net of underwriting discounts and commissions — 93.4 Offering costs — (9.1) Proceeds from revolving line of credit — 68.5 Repayment of revolving line of credit — (89.5) Payments on contingent liabilities — (1.4) Preferred return on preferred stock — (0.9) Capital distributions — (0.5) Net cash provided by financing activities Net cash provided by financing activities 496.7 340.1 Change in cash and cash equivalents 360.3 325.2 Cash and cash equivalents Beginning of period 927.8 3.7 End of period $ 1,288.1 $ 328.9 Table of Contents1.Organization, Basis of Presentation and Significant Accounting Policies9onabout the accounting for2025 Convertible Notes and the 20252027 Convertible Notes. In connection with the issuance of each the 2025 Convertible Notes and the 2027 Convertible Notes, Shift4 Payments, Inc. entered into an intercompany convertible promissory note (“Intercompany Convertible Note”) with Shift4 Payments, LLC, whereby Shift4 Payments, Inc. provided the net proceeds from the issuance of the 2025 Convertible Notes and the 2027 Convertible Notes to Shift4 Payments, LLC in the amount of $673.6 million.million and $617.7 million, respectively. The terms of theeach Intercompany Convertible Note mirror the terms of each the 2025 Convertible Notes and the 2027 Convertible Notes issued by Shift4 Payments, Inc. The intent of theeach Intercompany Convertible Note is to maintain the parity of shares of Class A common stock with LLC Units as required by the Shift4 Payments LLC Agreement. As of JuneSeptember 30, 2021 and December 31, 2020,, $9.9 $9.6 million and $684.5 million of cash was held by Shift4 Payments, Inc., respectively. Shift4 Payments Inc., which was established November 5, 2019, has not had any material operations on a standalone basis since its inception, and all of the operations of the Company are carried out by Shift4 Payments, LLC and its subsidiaries. and stadium occupancy running lower than pre COVID-19pre-COVID-19 pandemic levels, the Company has seen a significant recovery in its end-to-end payment volumes as a result of merchants reopening their operations, new merchant onboarding and gateway conversions. While gross revenue and end-to-end volumes for the three and sixnine months ended JuneSeptember 30, 2021 have exceeded those for the three and sixnine months ended JuneSeptember 30, 2020, the Company will continue to evaluate the nature and extent of potential COVID-19-related impacts to its business, consolidated results of operations, and liquidity.JuneSeptember 30, 2021, the Company had $1,140.0$1,772.5 million outstanding under its credit facilities and was in compliance with the financial covenants under its debt agreements. The Company expects to be in compliance for at least 12 months following issuance of these unaudited condensed consolidated financial statements. See Note 10 for further information on the Company’s debt obligations.$0.2$0.1 million and $0.3$0.4 million recorded in “Cost of Sales” for the three and sixnine months ended JuneSeptember 30, 2020.$0.9$0.1 million and $2.1$2.2 million was identified for the three and sixnine months ended JuneSeptember 30, 2020, respectively, resulting from expensing equipment provided to customers under the Company’s warranty program as “General and administrative expenses” which should have been classified as “Cost of sales” in the unaudited Condensed Consolidated Statements of Operations. This misclassification has also been corrected in connection with the revision of the unaudited Condensed Consolidated Statements of Operations. The revisions had no net impact on cash flows from operating, investing or financing activities in the unaudited Condensed Consolidated Statements of Cash Flows.10StatementStatements of Operations for the three and sixnine months ended JuneSeptember 30, 2020 to correct for the prior period errors.For the three months ended September 30, 2020 For the nine months ended September 30, 2020 Consolidated Statements of Operations Consolidated Statements of Operations Adjustment As revised As previously reported Adjustment As revised Cost of sales $ 163.3 $ — $ 163.3 $ 427.7 $ 1.8 $ 429.5 Gross profit 51.5 — 51.5 128.3 (1.8) 126.5 General and administrative expenses 35.5 (0.1) 35.4 147.0 (2.2) 144.8 Total operating expenses 55.5 (0.1) 55.4 180.8 (2.2) 178.6 Income (loss) from operations (4.0) 0.1 (3.9) (52.5) 0.4 (52.1) Loss before income taxes (10.6) 0.1 (10.5) (91.1) 0.4 (90.7) Net loss (a) (9.9) 0.1 (9.8) (90.1) 0.4 (89.7) Basic and diluted net loss per share - Class A and Class C (0.12) — (0.12) (0.15) — (0.15) JuneSeptember 30, 2020 were revised from $(257.6)$(262.6) million to $(261.3)$(266.3) million and $470.6$557.5 million to $466.9,$553.9 million, respectively.sixnine months ended JuneSeptember 30, 2021, except as noted below.JuneSeptember 30, 2021, the Company has invested $27.5 million in Space Exploration Technologies Corp. (“SpaceX”), which designs, manufactures, and launches advanced rockets, spacecraft and satellites and $2.0 million in Sightline Payments, Inc. (“Sightline Payments”), a financial technology company that provides cashless, mobile, and omni-channel commerce solutions for the gaming, lottery, sports betting and other industries.11income (loss)loss per share and the Company’s debt covenants was not material.TheThe Company expects to become a large accelerated filer effective December 31, 2021, at which point the Company will follow the timeline for adoption of new accounting pronouncements for public companies. As a result, the Company expects to adopt this guidance on a modified retrospective basis on December 31, 2021 and to reflect the adoption as of January 1, 2021 in the annual results for the period ended December 31, 2021 and interim periods beginning January 1, 2022. The Companyadoption is evaluating the potentialnot expected to have a significant impact of adopting ASU 2016-02 on the Company’s consolidated financial statements.TheThe Company expects to apply this guidance to the annual goodwill impairment test performed on October 1, 2021 for the year ended December 31, 2021. The Company is evaluating the potential impact of adopting ASU 2017-04 on the Company’s consolidated financial statements.CompanyCompany expects to become a large accelerated filer effective December 31, 2021, at which point the Company will follow the timeline for adoption of new accounting pronouncements for public companies. As a result, the Company expects to adopt this guidance on a modified retrospective basis on December 31, 2021 and to reflect the adoption as of January 1, 2021 in our annual results for the period ended December 31, 2021 and interim periods beginning January 1, 2022. The adoption is not expected to have a significant impact on the Company’s consolidated financial statements.12Table of Contents2.AcquisitionsCash $ 1.7 Accounts receivable 1.2 Prepaid expenses and other current assets 0.3 Inventory 0.6 Other intangible assets 5.6 Property, plant and equipment 0.3 Goodwill (a) 10.3 Accounts payable (1.0) Deferred revenue (2.8) Other accrued expenses (0.5) Net assets acquired 15.7 Less: cash acquired (1.7) Net assets acquired $ 14.0 of total purchase consideration, net of cash acquired, by acquiring 100% of VenueNext’s membership interests. This acquisition enhances the Company’s presence and capabilities in a number of large and growing verticals such as stadiums and arenas, while significantly expanding its total addressable market with entry into entertainment, universities, theme parks, airports, and other verticals. The purchase price included the following forms of consideration:Cash $ 42.2 Shares of Class A common stock (a) 24.5 RSUs granted for fair value of equity-based compensation awards (b) 1.8 Total purchase consideration 68.5 Less: cash acquired (1.6) Total purchase consideration, net of cash acquired $ 66.9 JuneSeptember 30, 2021, 325,127341,924 shares of common stock have been issued.(a)Accounts receivable $ 0.7 Prepaid expenses and other current assets 0.2 Inventory 0.2 Other intangible assets 19.8 Goodwill is not deductible for tax purposes.(a)52.7 Accounts payable (0.9) Deferred revenue (5.8) Net assets acquired $ 66.9 Duringsixnine months ended JuneSeptember 30, 2021. This resulted in corresponding adjustments of $1.3 million in the preliminary fair value assigned to "Other intangible assets" and "Goodwill."$0.1 million and $1.1 million, respectively.million. These expenses are included in “Professional fees” in the unaudited Condensed Consolidated Statements of Operations.13 The primary areas of preliminary purchase price allocation subject to change relate to the valuation of accounts receivable, accrued expenses and other current liabilities assumed and residual goodwill.three months ended June 30,second and third quarters of 2021, the Company made a measurement period adjustmentadjustments of $(0.3) million and $2.3 million, respectively, to accounts receivable with a corresponding increasechanges to goodwill to reflect the facts and circumstances in existence as of the effective date of the acquisition. The purchase was funded with cash on hand. This acquisition enables the boarding of the vendor’s customers on the Company’s end-to-end acquiring solutionThe primary areas of preliminary purchase price allocation subject to change relate to the valuation of accounts receivable, accrued expenses and other current liabilities assumed and residual goodwill.3.Revenue3three separate performance obligations under its recurring software as a service agreements (“SaaS”) arrangements for point-of-sale systems provided to merchants: (1) point-of-sale software, (2) lease of hardware and (3) other support services. For the period January 1, 2019 through June 29, 2020, the hardware provided under the Company’s SaaS agreements was accounted for as a sales-type lease. Effective June 30, 2020, the Company modified the terms and conditions of its SaaS arrangements and updated its operational procedures. As a result, beginning June 30, 2020, hardware provided under the Company’s SaaS agreements is accounted for as an operating lease. See Note 8 for more information on equipment for lease.Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Payments-based revenue (a) Payments-based revenue (a) $ 346.9 $ 196.8 $ 887.6 $ 494.4 Subscription and other revenues 30.9 18.0 80.5 61.6 Total $ 377.8 $ 214.8 $ 968.1 $ 556.0 Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Over-time revenue (a) Over-time revenue (a) $ 366.9 $ 210.3 $ 938.2 $ 533.8 Point-in-time revenue 10.9 4.5 29.9 22.2 Total $ 377.8 $ 214.8 $ 968.1 $ 556.0 14TableContentsJuneSeptember 30, 2021 and December 31, 2020, the Company had deferred revenue of $13.4$19.4 million and $8.1 million, respectively. The change in the contract liabilities is primarily the result of a timing difference between payment from the customer and the Company’s satisfaction of each performance obligation.Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Annual service fees and regulatory compliance fees $ 8.8 $ 3.5 $ 18.9 $ 10.3 Amount of these fees included in deferred revenue at beginning of period 4.4 2.6 4.4 3.3 September 30,
2021September 30,
2020Beginning balance $ 5.7 $ 2.5 Additions to expense (a) 10.3 6.2 Write-offs, net of recoveries and other adjustments (2.6) (2.8) Ending balance $ 13.4 $ 5.9 sixnine months ended JuneSeptember 30, 2021, which is included in “Cost of Sales” on the unaudited Condensed Consolidated Statements of Operations.4.Restructuring(a)Balance at December 31, 2020 $ 2.9 Severance payments (1.2) Accretion of interest is included within “Restructuring expenses” in the unaudited Condensed Consolidated Statements of Operations.(a)0.2 Balance at September 30, 2021 $ 1.9 for the six months ended June 30, 2021 and $0.1 million and $0.3$0.2 million for the three and sixnine months ended JuneSeptember 30, 2021, respectively, and $0.1 million and $0.4 million for the three and nine months ended September 30, 2020, respectively.JuneSeptember 30, 2021 and December 31, 2020, respectively, is included within “Accrued expenses and other current liabilities” on the Company's unaudited Condensed Consolidated Balance Sheets. The long-term portion of the restructuring accrual of $0.7$0.4 million and $1.5 million at JuneSeptember 30, 2021 and December 31, 2020, respectively, is included within “Other noncurrent liabilities” on the Company's unaudited Condensed Consolidated Balance Sheets.$2.2$1.9 million restructuring accrual outstanding as of JuneSeptember 30, 2021, approximately $0.8$0.4 million is expected to be paid in 2021 and $1.6 million in 2022, less accreted interest of $0.2$0.1 million.5.Goodwill156.Balance at December 31, 2020 Other Intangible Assets, Net$ 477.0 VenueNext acquisition (Note 2) 52.7 Postec acquisition (Note 2) 10.3 Hospitality Technology Vendor measurement period adjustments (Note 2) (2.4) Balance at September 30, 2021 $ 537.6 Weighted Average
Amortization Period
(in years)September 30, 2021 Carrying Value Accumulated
AmortizationNet Carrying
ValueMerchant relationships 8 $ 200.1 $ 126.7 $ 73.4 Acquired technology 9 113.2 51.7 61.5 Trademarks and trade names 18 20.3 3.4 16.9 Capitalized software development costs 4 36.2 7.9 28.3 Residual commission buyouts (a) 3 13.2 5.0 8.2 Total intangible assets $ 383.0 $ 194.7 $ 188.3 Weighted Average
Amortization Period
(in years)December 31, 2020 Carrying Value Accumulated
AmortizationNet Carrying
ValueMerchant relationships 8 $ 185.8 $ 106.5 $ 79.3 Acquired technology 9 105.1 42.2 62.9 Trademarks and trade names 9 57.4 39.1 18.3 Noncompete agreements 2 3.9 3.9 — Capitalized software development costs 4 25.1 5.8 19.3 Leasehold interest 2 0.1 0.1 — Residual commission buyouts (a) 3 20.0 13.5 6.5 Total intangible assets $ 397.4 $ 211.1 $ 186.3 $3.5$3.9 million and$3.4 $3.4 million as of JuneSeptember 30, 2021 and December 31, 2020, respectively.JuneSeptember 30, 2021, the estimated amortization expense for intangible assets for each of the five succeeding years and thereafter is as follows:2021 (remaining three months) 2021 (remaining three months) $ 14.1 2022 43.6 2023 30.9 2024 25.8 2025 23.2 Thereafter 50.7 Total $ 188.3 Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Depreciation and amortization expense $ 8.2 $ 9.8 $ 27.7 $ 28.7 Cost of sales 4.9 3.3 14.1 10.2 Total $ 13.1 $ 13.1 $ 41.8 $ 38.9 7.Capitalized Acquisition Costs, Net$32.8$34.3 million and $30.2 million at JuneSeptember 30, 2021 and December 31, 2020, respectively. This consists of upfront processing bonuses with a gross carrying value of $60.6$65.2 million and $55.7 million and less accumulated amortization of $27.8$30.9 million and $25.5 million at JuneSeptember 30, 2021 and December 31, 2020, respectively.JuneSeptember 30, 2021 and December 31, 2020. Amortization expense for capitalized acquisition costs is $5.1$5.4 million and $10.1$15.5 million for the three and sixnine months ended JuneSeptember 30, 2021, respectively, and $3.7$4.2 million and $7.0$11.2 million for the three and sixnine months ended JuneSeptember 30, 2020, respectively, and is included in “Cost of sales” in the unaudited Condensed Consolidated Statements of Operations.16JuneSeptember 30, 2021, the estimated future amortization expense for capitalized acquisition costs is as follows:2021 (remaining three months) 2021 (remaining three months) $ 5.4 2022 17.1 2023 9.8 2024 2.0 Total $ 34.3 8.Equipment for Lease, NetSeptember 30, 2021 Carrying Value Accumulated Depreciation Net Carrying Value Equipment under lease 3 $ 65.5 $ 18.5 $ 47.0 Equipment held for lease (a) N/A 9.3 — 9.3 Total equipment for lease $ 74.8 $ 18.5 $ 56.3
20(a)Represents equipment that was not yet initially deployed to a merchant and, accordingly, is not being depreciated.December 31, 2020 Carrying Value Accumulated Depreciation Net Carrying Value Equipment under lease 3 $ 36.5 $ 6.9 $ 29.6 Equipment held for lease (a) N/A 7.0 — 7.0 Total equipment for lease, net $ 43.5 $ 6.9 $ 36.6 $5.1$5.8 million and $9.6$15.4 million for the three and sixnine months ended JuneSeptember 30, 2021, respectively, with 0 corresponding amountsand $5.7 million for both the three and sixnine months ended JuneSeptember 30, 2020. Effective June 30, 2020, the Company modified the terms and conditions of its SaaS arrangements and updated its operational procedures. As a result, beginning June 30, 2020, hardware provided under the Company’s SaaS agreements is accounted for as an operating lease.9.Property, Plant and Equipment, NetSeptember 30,
2021December 31,
2020Equipment $ 11.4 $ 16.0 Capitalized software 8.5 8.7 Leasehold improvements 8.5 11.6 Furniture and fixtures 2.0 3.1 Vehicles 0.3 0.2 Total property and equipment, gross 30.7 39.6 Less: Accumulated depreciation (12.9) (24.5) Total property, plant and equipment, net Total property, plant and equipment, net $ 17.8 $ 15.1 Three Months Ended
September 30,Nine Months Ended
September 30,2021 2020 2021 2020 Depreciation and amortization expense $ 1.0 $ 0.8 $ 2.8 $ 2.7 Cost of sales 0.5 0.4 1.3 1.2 Total depreciation expense $ 1.5 $ 1.2 $ 4.1 $ 3.9 17Table of ContentsDebt September 30,
2021December 31,
2020Convertible Notes due 2025 (2025 Convertible Notes) $ 690.0 $ 577.5 Convertible Notes due 2027 (2027 Convertible Notes) Convertible Notes due 2027 (2027 Convertible Notes) 632.5 — Senior Notes due 2026 (2026 Senior Notes) 450.0 450.0 Other financing arrangements — 0.9 Total borrowings 1,772.5 1,028.4 Less: Current portion of debt — (0.9) 1,772.5 1,027.5 Less: Unamortized capitalized financing costs (35.7) (22.1) Total long-term debt $ 1,736.8 $ 1,005.4 $1.2$1.7 million and $2.4$4.1 million for the three and sixnine months ended JuneSeptember 30, 2021, respectively, and $1.0$0.8 million and $2.1$2.9 million for the three and sixnine months ended JuneSeptember 30, 2020, respectively.September 30,
2021December 31,
2020Principal outstanding $ 690.0 $ 690.0 Unamortized debt discount — (112.5) Unamortized debt issuance costs (13.7) (13.5) Net carrying value $ 676.3 $ 564.0 September 30,
2021Principal outstanding $ 632.5 Unamortized debt issuance costs (14.5) Net carrying value $ 618.0 Convertible Notes due 2025In December 2020, Shift4 Payments, Inc. issued an aggregate principal amount of $690.0 million of convertible senior notes due 2025 (“2025 Convertible Notes”) in an offering to qualified institutional buyers exempt from registration under the Securities Act. The Company received net proceeds, after deducting initial purchasers’ discounts and estimated offering expenses, of approximately $673.6 million from the 2025 Convertible Notes Offering. The 2025 Convertible Notes do not bear regular interest and will mature on December 15, 2025 unless earlier repurchased, redeemed or converted. The Company will settle conversions by paying in cash up to the principal amount of the 2025 Convertible Notes with any excess to be paid or delivered, as the case may be, in cash or shares of Class A common stock or a combination of both at its election, based on the conversion rate. The conversion rate for the 2025 Convertible Notes will initially be 12.4262 shares of Class A common stock per $1,000 principal amount of 2025 Convertible Notes (equivalent to an initial conversion price of approximately $80.48 per share of Class A common stock), subject to adjustment upon the occurrence of specified events. Before September 15, 2025, holders will have the right to convert their 2025 Convertible Notes under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ended March 31, 2021 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the 5 business day period after any 5 consecutive trading day period in which the trading price per $1,000 principal amount of the 2025 Convertible Notes for each trading day of the 2025 Measurement Period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate in effect on each such trading day; (3) if the Company calls any or all18of the 2025 Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. From and after September 15, 2025, holders may convert their 2025 Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. Upon conversion of the 2025 Convertible Notes, the Company will pay in cash the principal amount of the 2025 Notes with any excess to be paid or delivered, as the case may be, in cash or shares of the Company’s Class A common stock or a combination of both at the Company’s election. The 2025 Convertible Notes will be redeemable, in whole or in part, for cash at the Company’s option at any time, and from time to time, on or after December 20, 2023 and on or before the 40th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of the Company’s Class A common stock exceeds 130% of the conversion price for a specified period of time. The redemption price will be equal to the principal amount of the 2025 Convertible Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date. Upon the occurrence of a “fundamental change,” which term includes certain change of control transactions, the Company must offer to repurchase the 2025 Convertible Notes at a price equal to 100% of their principal amount, plus accrued and unpaid special interest, if any, to, but not including, the date of repurchase. In addition, if a “make-whole fundamental change” occurs prior to the maturity date or if the Company delivers a notice of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2025 Convertible Notes in connection with such make-whole fundamental change or notice of redemption, as the case may be.In connection with the issuance of the 2025 Convertible Notes, Shift4 Payments, Inc. entered into an Intercompany Convertible Note with Shift4 Payments, LLC, whereby Shift4 Payments, Inc. provided the net proceeds from the issuance of the 2025 Convertible Notes to Shift4 Payments, LLC in the amount of $673.6 million. The terms of the Intercompany Convertible Note mirror the terms of the 2025 Convertible Notes issued by Shift4 Payments, Inc. The intent of the Intercompany Convertible Note is to maintain the parity of shares of Class A common stock with LLC Units as required by the Shift4 Payments LLC Agreement.As of December 31, 2020, in accounting for the issuance of the 2025 Convertible Notes, the Company separated the 2025 Convertible Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was $114.2 million and was determined by deducting the fair value of the liability component from the par value of the 2025 Convertible Notes.Debt issuance costs related to the 2025 Convertible Notes are comprised of discounts and commissions payable to the initial purchasers and third-party offering costs and total $16.4 million. As of December 31, 2020, the Company allocated the total amount incurred to the liability and equity components of the 2025 Note based on their relative values. Issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity.The Company adopted ASU 2020-06 on January 1, 2021 using the modified retrospective transition method. As of December 31, 2020, the Company recorded a discount on the 2025 Convertible Notes of $111.5 million related to the separation of the conversion feature. This discount was removed upon adoption of this ASU. The adoption of ASU 2020-06 resulted in a decrease to additional paid-in capital of $111.5 million, a decrease to retained deficit of $1.6 million, and a net increase to long-term debt of $109.9 million.The net carrying amount of the 2025 Convertible Notes was as follows:The debt issuance costs are amortized to interest expense over the term of the 2025 Convertible Notes at an effective interest rate of 0.48%.sixnine months ended JuneSeptember 30, 2020.19Table of Contents0zero percent floor.ofof which $25.0$25.0 million is available for letters of credit. Subject to certain exceptions, all obligations under the First Lien Term Credit Agreement were repaid in full and all commitments thereunder terminated in connection with the Amended Credit Agreement. In connection with the amendment, the Company incurred a loss on extinguishment of debt of $0.2 million, representing unamortized capitalized financing costs, which was recorded to “Loss on extinguishment of debt” in the unaudited Condensed Consolidated Statements of Operations in the three and sixnine months ended JuneSeptember 30, 2021.0zero percent floor.JuneSeptember 30, 2021.20JuneSeptember 30, 2021, net of a $0.5 million letter of credit.11.Other Consolidated Balance Sheet ComponentsSeptember 30,
2021December 31,
2020Prepaid insurance $ 4.5 $ 2.5 Prepaid merchant signing bonuses (a) 1.4 — Other prepaid expenses (b) 5.8 6.5 Taxes receivable Taxes receivable 1.1 1.2 Agent and employee loan receivables 0.2 0.3 Other current assets 0.2 1.0 Total prepaid expenses and other current assets $ 13.2 $ 11.5 contracts.September 30,
2021December 31,
2020Residuals payable $ 12.1 $ 6.8 Accrued interest 9.2 3.6 Deferred employer social security tax pursuant to the CARES Act 3.0 3.0 Deferred tenant reimbursement allowance 2.8 3.1 Accrued payroll Accrued payroll 2.3 2.8 Escrow payable — 2.3 Accrued rent 1.5 1.5 Taxes payable 1.3 1.4 Restructuring accrual 1.5 1.4 Other current liabilities 3.7 4.2 Total accrued expenses and other current liabilities $ 37.4 $ 30.1 12.Fair Value Measurement•Level 1—Quoted prices in active markets for identical assets or liabilities;•Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the•Level 1—Quoted prices in active markets for identical assets or liabilities;•Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include items where the determination of fair value requires significant management judgment or estimation.21Nine Months Ended September 30, 2021 2020 Balance at beginning of period $ — $ 32.3 Additions (a) — 1.7 (0.2) (2.3) — (23.2) Fair value adjustments 0.2 (7.6) Balance at end of period $ — $ 0.9 0no transfers into or out of Level 3 during the sixnine months ended JuneSeptember 30, 2021 and 2020.2025 Convertible Notes and 2026 Senior NotesCompany's outstanding debt using quoted prices from over-the-counter markets, considered Level 2 inputs, was as follows.September 30, 2021 December 31, 2020 Carrying
ValueFair
ValueCarrying
ValueFair
Value2025 Convertible Notes $ 690.0 $ 835.4 $ 690.0 $ 843.9 2026 Senior Notes 450.0 470.8 450.0 468.0 2027 Convertible Notes 2027 Convertible Notes 632.5 647.5 — — Total $ 1,772.5 $ 1,953.7 $ 1,140.0 $ 1,311.9 JuneSeptember 30, 2021 and December 31, 2020 include cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, other noncurrent assets, accounts payable, and accrued expenses and other current liabilities as their estimated fair values reasonably approximate their carrying value as reported on the unaudited Condensed Consolidated Balance Sheets.13.Income Taxes 22JuneSeptember 30, 2021, which will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances.(421.4)%7.8% and (0.8)(6.7)% for the three months ended JuneSeptember 30, 2021 and 2020, respectively, and (9.9)(6.4)% and (0.4)(1.1)% for the sixnine months ended JuneSeptember 30, 2021 and 2020, respectively. The income tax expense for the three months ended September 30, 2021 was different than the U.S. federal statutory income tax rate of 21% primarily due to the loss allocated to the noncontrolling interest and changes in the valuation allowances in the United States. The income tax benefit for the three and sixnine months ended JuneSeptember 30, 2021 was different than the U.S. federal statutory income tax rate of 21% primarily due to the loss allocated to the noncontrolling interest, changes in the valuation allowances in the United States and the tax windfall related to vested equity-based compensation awards, and the near break-even loss before income taxes for the three months ended June 30, 2021.awards. The income tax benefit for the three and sixnine months ended JuneSeptember 30, 2020 was different than the U.S. federal statutory income tax rate of 21% primarily due to the loss allocated to the noncontrolling interest and changes in the valuation allowances in the United States and recordingStates. In addition, the nine months ended September 30, 2020 includes a tax benefit of $0.6 million for a net operating loss carryback at Shift4 Corporation which was allowed due to the CARES Act.sixnine months ended JuneSeptember 30, 2021. The amounts payable under the TRA will vary depending upon a number of factors, including the amount, character, and timing of the taxable income of Shift4 Payments, Inc. in the future. If the valuation allowance recorded against the deferred tax assets applicable to the tax attributes referenced above is released in a future period, the TRA liability may be considered probable at that time and recorded within earnings.14.Operating Lease Agreements$1.4$1.5 million and $2.9$4.4 million for the three and sixnine months ended JuneSeptember 30, 2021, respectively, and $1.7$1.3 million and $3.4$4.7 million for the three and sixnine months ended JuneSeptember 30, 2020, respectively.JuneSeptember 30, 2021:2021 (remaining three months) 2021 (remaining three months) $ 1.6 2022 4.9 2023 4.0 2024 3.9 2025 3.4 Thereafter 6.9 Total $ 24.7 $9.7$10.3 million from JulyOctober 1, 2021 through JuneSeptember 30, 2022. See Note 8 for more information on the accounting for these operating leases.23Table of Contents15.Related Party Transactions15.Related Party Transactions$0.3$0.2 million and $0.5$0.7 million for the three and sixnine months ended JuneSeptember 30, 2021, respectively, and $0.1 million and $0.2 million for the three and sixnine months ended JuneSeptember 30, 2020, respectively.2020. There were 0no amounts outstanding at JuneSeptember 30, 2021 or December 31, 2020. On May 31, 2020, the Company amended the monthly fee and added services in this service agreement with the Founder.$0.3 million and $0.8 million for the three and sixnine months ended JuneSeptember 30, 2020, respectivelyarewere reimbursable by Searchlight, and arewere included in “Accounts receivable, net” in the Consolidated Balance Sheets at December 31, 2020. The total receivable of $2.2 million was paid in the first quarter of 2021.JuneSeptember 30, 2021, and expensed within “Advertising and marketing” on the Company's unaudited Condensed Consolidated Statements of Operations in March 2021 when the participant was selected for the mission through a contest held by the Company.JuneSeptember 30, 2021.ContractContracts and fail to cure such default, the Dealer would have the right to exchange the pledged Class B stock and LLC interests for an equal number of the Company’s Class A common stock, and sell such Class A common stock to satisfy Rook’s obligation.16.Commitments and Contingenciessuchother legal proceedings or claims that the Company believes will have a material adverse effect on its business, financial condition or operating results.17.Redeemable Preferred Unitsthree and sixnine months ended JuneSeptember 30, 2020, $0.9 million and $2.1 million respectively, of preferred dividends were accrued and recognized as a reduction of “Members’ Deficit.” In connection with the Reorganization Transactions, the redeemable preferred units were converted into LLC Interests.24Table of Contents18.Stockholders’ Equity/Members’ Deficit18.Stockholders’ Equity/Members’ Deficit•Searchlight owned 28,889,790 Class A units, representing 52.3% economic interest in Shift4 Payments, LLC.•Rook owned 25,829,016 Class A units, representing 46.7%•Searchlight owned 28,889,790 Class A units, representing 52.3% economic interest in Shift4 Payments, LLC.•A former equity owner owned 528,150 Class B units, representing 1.0% economic interest in Shift4 Payments, LLC.$0.0001$ 0.0001 per share; (ii) authorization of 100,000,000 shares of Class B common stock with a par value of $0.0001$ 0.0001 per share; (iii) authorization of 100,000,000 shares of Class C common stock with a par value of $0.0001$ 0.0001 per share; and (iv) authorization of 20,000,000 shares of preferred stock with a par value of $0.0001$ 0.0001 per share.one1 vote per share and holders of Class B and Class C common stock are entitled to ten10 votes per share. Holders of Class A, Class B, and Class C common stock will vote together as a single class on all matters presented to the Company’s stockholders for their vote of approval, except for certain amendments to the Company’s Certificate of Incorporation or as otherwise required by law. Holders of the Class A and Class C common stock are entitled to receive dividends, and upon the Company’s dissolution or liquidation, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of Class A and Class C common stock will be entitled to receive pro rata the Company’s remaining assets available for distribution. Holders of the Company’s Class B common stock are not entitled to receive dividends and will not be entitled to receive any distributions upon dissolution or liquidation of the Company. Holders of Class A, Class B, and Class C common stock do not have pre-emptive or subscription rights, and there will be no redemption or sinking fund provisions applicable to any class of common stock. Holders of Class A and Class B common stock do not have conversion rights. Shares of Class C common stock can only be held by the Continuing Equity Owners or their permitted transferees, and if any such shares are transferred to any other person, they will automatically convert into shares of Class A common stock on a one-to-one basis.19.Noncontrolling InterestsLLC Interests Ownership percentage Shift4
Payments,
Inc.Total Total Balances at December 31, 2020 49,926,802 30,625,857 80,552,659 62.0 % 38.0 % 100.0 % Issuance of LLC units 2,368,493 — 2,368,493 1.0 % (1.0 %) — Redemption of LLC units 4,353,203 (4,353,203) — 5.3 % (5.3 %) — Balances at September 30, 2021 Balances at September 30, 2021 56,648,498 26,272,654 82,921,152 68.3 % 31.7 % 100.0 % 25Table of ContentsEquity-based Compensationsixnine months ended JuneSeptember 30, 2021 was as follows:Nine Months Ended September 30, 2021 Weighted
Average
Grant Date
Fair ValueUnvested balance at beginning of period 4,840,508 $ 24.35 Granted (a) 165,751 $ 74.97 Vested (3,262,321) $ 23.09 Forfeited or cancelled (18,206) $ 45.07 Unvested balance at end of period 1,725,732 $ 31.33 $6.6$6.3 million and $20.6$26.9 million for the three and sixnine months ended JuneSeptember 30, 2021 and $50.0$6.2 million and $56.2 million for both the three and sixnine months ended JuneSeptember 30, 2020.2020, respectively. At JuneSeptember 30, 2021, the total unrecognized equity-based compensation expense related to outstanding RSUs and PRSUs was $45.939.2 million, which is expected to be recognized over a weighted-average period of 2.031.82 years.21.Basic and Diluted Net Income (Loss) per Shareincome (loss)loss per share for the periods following the Reorganization Transactions under the two-class method.income (loss)net loss per share of the Company is calculated for the Company's current outstanding classes of common stock. Prior to the Reorganization Transactions, the Shift4 Payments, LLC membership structure included Class A Common units and Class B Common units. Certain of these units were exchanged for Class A and Class C common stock of the Company in the Reorganization Transactions, but not in a proportionate manner, with the remaining units reflecting a noncontrolling interest in the Company. The basic and diluted net loss per share for the three and sixJuneSeptember 30, 2020 represents only the period from June 5, 2020 to JuneSeptember 30, 2020, the period where the Company had outstanding Class A and Class C common stock.26income (loss)loss per share has been computed by dividing net income (loss)loss attributable to common shareholders by the weighted average number of shares of common stock outstanding for the same period. Shares issued during the period and shares reacquired during the period are weighted for the portion of the period in which the shares were outstanding. Diluted net income (loss)loss per share has been computed in a manner consistent with that of basic net income (loss)loss per share while giving effect to all shares of potentially dilutive common stock that were outstanding during the period.Three Months Ended September 30,
2021Three Months Ended
September 30, 2020Nine Months Ended September 30,
2021Net loss $ (13.8) $ (9.8) $ (60.3) $ (11.8) Less: Net loss attributable to noncontrolling interests (4.6) (4.8) (21.5) (5.8) Net loss attributable to Shift4 Payments, Inc. $ (9.2) $ (5.0) $ (38.8) $ (6.0) Adjustment to net loss attributable to common stockholders (0.1) (0.1) (0.6) (0.2) Net loss attributable to common stockholders $ (9.3) $ (5.1) $ (39.4) $ (6.2) Numerator - Basic and Diluted: Net loss attributable to common stockholders $ (9.3) $ (5.1) $ (39.4) $ (6.2) Allocation of net loss among common stockholders: Net loss allocated to Class A common stock $ (8.2) $ (2.8) $ (33.5) $ (3.3) Net loss allocated to Class C common stock $ (1.1) $ (2.3) $ (5.9) $ (2.9) Denominator - Basic and Diluted: Weighted average shares of Class A common stock outstanding 49,692,599 23,309,247 46,251,576 22,363,399 Weighted average shares of Class C common stock outstanding 6,117,997 19,222,017 8,078,943 19,424,100 Net loss per share - Basic and Diluted: Class A common stock $ (0.17) $ (0.12) $ (0.72) $ (0.15) Class C common stock $ (0.17) $ (0.12) $ (0.72) $ (0.15) income (loss)loss per share as the effect would be anti-dilutive.Three months ended
September 30, 2021Three months ended September 30, 2020 Nine months ended
September 30, 2021LLC Interests that convert into potential Class A common shares 27,115,975 35,567,488 28,806,699 35,567,488 RSUs and performance RSUs - employee 1,712,790 2,171,660 1,712,790 2,171,660 RSUs - non-employee directors 12,942 46,170 12,942 46,170 2025 Convertible Notes 46,130 — 49,281 — Total 28,887,837 37,785,318 30,581,712 37,785,318 27TableContentsdiluted net loss per share the effect of the conversion of the 2027 Notes, as the last reported sales price of the Company's common stock was not greater than or equal to 130% of the conversion price for 20 trading days during a period of 30 consecutive trading days during the quarter ended September 30, 2021, per the terms of the agreement. As discussed in Note 10, the Company will pay in cash the $632.5 million principal of the 2027 Notes with any excess to be paid or delivered in cash or shares of the Company's Class A common stock or a combination of both at the Company's election.
3522.Supplemental Cash Flows InformationNine Months Ended September 30, 2021 2020 Cash paid for interest $ 10.5 $ 33.0 Cash paid for income taxes, net of refunds 0.4 0.8 Noncash operating activities Deferred compensation settled with restricted stock units — 2.1 Noncash investing activities Shares and equity-based compensation awards issued in connection with VenueNext acquisition 26.3 — Equipment for lease 4.6 — Capitalized software development costs 1.6 — Capitalized acquisition costs Capitalized acquisition costs 0.4 — Noncash financing activities Contingent consideration settled with Class A common stock — 21.1 Right associated with Inspiration4 seat 2.1 — Short-term financing for directors and officers insurance — 3.4 Preferred return on preferred stock settled with LLC Interests — 2.3 Offering costs not yet paid Offering costs not yet paid — 0.8 23.SegmentsThree Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 $ 346.9 $ 196.8 $ 887.6 $ 494.4 Subscription and other revenues 30.9 18.0 80.5 61.6 Total gross revenue 377.8 214.8 968.1 556.0 Less: network fees 251.9 127.1 608.4 321.8 Less: Other costs of sales (b) Less: Other costs of sales (b) 61.5 36.2 165.4 107.7 Gross profit $ 64.4 $ 51.5 $ 194.3 $ 126.5 24.Subsequent EventsConvertible Notes Offering – 2027 NotesOn July 26, 2021, the Company issued an aggregate $632.5 million of convertible senior notes due 2027 (“2027 Convertible Notes”) to qualified institutional buyers in an offering exempt from registration under the Securities Act. The Company received net proceeds, after deducting initial purchasers’ discounts and estimated offering expenses, of approximately $617.6 million from the 2027 Convertible Notes offering. The net proceeds of the 2027 Notes Offering, together with cash on hand, will be used for general corporate purposes.28Table of Contents•“we,” “us,” “our,” the “Company,” “Shift4” and similar references refer: (1) following the consummation of the Reorganization Transactions, to Shift4 Payments, Inc., and, unless otherwise stated, all of its subsidiaries, including Shift4 Payments, LLC and, unless otherwise stated, all of its subsidiaries, and (2) prior to the completion of the Reorganization Transactions, to Shift4 Payments, LLC and, unless otherwise stated, all of its subsidiaries.•“Continuing Equity Owners” refers collectively to Searchlight, our Founder and their respective permitted transferees that own LLC Interests after the Reorganization Transactions and who may redeem at each of their options, in whole or in part from time to time, their LLC Interests for, at our election, cash or newly-issued shares of Shift4 Payments, Inc.’s Class A common stock.•“LLC Interests” refers to the common units of Shift4 Payments, LLC, including those that we purchased directly from Shift4 Payments, LLC with the proceeds from our initial public offering (“IPO”) and the concurrent private placement and the common units of Shift4 Payments, LLC that we acquired from the Former Equity Owners in connection with the consummation of the Reorganization Transactions. See the section entitled “Initial public offering and concurrent private placement” below.•“Founder” refers to Jared Isaacman, our Chief Executive Officer and the sole stockholder of Rook Holdings Inc. Our Founder is a Continuing Equity Owner and an owner of Class C common stock.•“Former Equity Owner” refers to FPOS Holding Co., Inc. who exchanged its LLC Interests for shares of our Class A common stock in connection with the consummation of the Reorganization Transactions.•“Reorganization Transactions” refer to certain organizational transactions that we effected in connection with our IPO in June 2020. See the section entitled “Reorganization Transactions” below.•“Rook” refers to Rook Holdings Inc., a Delaware corporation wholly-owned by our Founder and for which our Founder is the sole stockholder.•“Searchlight” refers to Searchlight Capital Partners, L.P., a Delaware limited partnership, and certain funds affiliated with Searchlight. Searchlight is a Continuing Equity Owner and an owner of Class C common stock.•end-to-end payment processing for a broad range of payment types;•merchant acquiring;•proprietary omni-channel gateway capable of multiple methods of mobile, contactless and QR code-based payments;•complementary software integrations;•full eCommerce capabilities, including web-store design, hosting, shopping cart management and fulfillment integrations; •integrated and mobile POS solutions;29•security and risk management solutions; and•reporting and analytical tools.$11.8$13.5 billion and $4.2$7.1 billion for the three months ended JuneSeptember 30, 2021 and 2020, respectively, and $19.8$33.3 billion and $10.4$17.5 billion for the sixnine months ended JuneSeptember 30, 2021 and 2020, respectively. This end-to-end payment volume contributed approximately 68%67% and 57%65% of gross revenue less network fees for the three months ended JuneSeptember 30, 2021 and 2020, respectively, and 65%approximately 66% and 57%60% of gross revenue less network fees for the sixnine months ended JuneSeptember 30, 2021 and 2020, respectively.sixnine months ended JuneSeptember 30, 2020. See Note 1 in the notes to the accompanying unaudited condensed consolidated financial statements for more information.VenueNextMarch 3,September 1, 2021, we acquired VenueNext Inc. (“VenueNext”Postec, Inc ( “Postec”), a leader in integrated payments solutions in sporting arenas and event complexes, for $68.5approximately $14.0 million in aggregate purchase consideration. We believe thiscash, net of cash acquired. This acquisition enhancesenables the boarding of the vendor’s customers on our presenceend-to-end acquiring solution and capabilities in a numberempowers our distribution partners to sign the vendor’s customer accounts and leverage the combined expertise to handle all aspects of largeinstallation, service, and growing verticals such as stadiums and arenas, while significantly expanding our total addressable market with entry into entertainment, universities, theme parks, airports, and other verticals.support. See Note 2 in the notes to the accompanying unaudited condensed consolidated financial statements for more information.Recent developmentsInvestments in securitiesAs of June 30, 2021, we invested $27.5 million in shares of Space Exploration Technologies Corp.(“SpaceX”), which designs, manufactures, and launches advanced rockets, spacecraft and satellites and $2.0 million in Sightline Payments, Inc. (“Sightline Payments”), a financial technology company that provides cashless, mobile, and omni-channel commerce solutions for the gaming, lottery, sports betting and other industries.Convertible Notes Offering – 2027 NotesOn July 26, 2021, we issued an aggregate $632.5 million of convertible senior notes due 2027 (“2027 Convertible Notes”) to qualified institutional buyers in an offering exempt from registration under the Securities Act. We received net proceeds, after deducting initial purchasers’ discounts and estimated offering expenses, of approximately $617.6 million from the 2027 Convertible Notes offering. The net proceeds of the 2027 Notes Offering, together with cash on hand, will be used for general corporate purposes.30 and stadium occupancy running lower than pre COVID-19pre-COVID-19 pandemic levels. End-to-end payment volumes for the secondthird quarter of 2021 were approximately 180%90% higher than end-to-end payment volumes in the secondthird quarter of 2020 and approximately 48%14% higher than the firstsecond quarter of 2021 as a result of merchants reopening their operations, new merchant onboarding and a growing number of gateway merchants converting to our end-to-end solution in 2021. While gross revenue and end-to-end payment volumes for the three and sixnine months ended JuneSeptember 30, 2021 have exceeded those for the three and sixnine months ended JuneSeptember 30, 2020, we will continue to evaluate the nature and extent of potential COVID-19-related impacts to our business, consolidated results of operations, and liquidity. See “Risk Factors” in Part I, Item 1A of our 2020 Form 10-K.31condensed consolidated statementsCondensed Consolidated Statements of operations.fulfilmentfulfillment costs and equipment under our warranty program included with the monthly SaaS fee are capitalized as equipment for lease. Capitalized software development costs are amortized using the straight-line method on a product-by-product basis over the estimated useful life of the software. Capitalized software, acquired technology and capitalized acquisition costs are amortized on a straight-line basis in accordance with our accounting policies. In addition, the three and nine months ended September 30, 2021 include nonrecurring payments of $2.3 million we made to our partners related to the TSYS outage described in 32income (loss)loss attributable to noncontrolling interests arises from net income (loss)loss from the non-owned portion of businesses where we have a controlling interest but less than 100% ownership. This represents the noncontrolling interests in Shift4 Payments, LLC and its consolidated subsidiaries, which is comprised of the income (loss)loss allocated to Continuing Equity Owners as a result of their proportional ownership of LLC Interests.JuneSeptember 30, 2021 and 2020(a)For the three months ended June 30, 2020, includes the period April 1, 2020 through June 4, 2020, the date the SEC declared effective our Registration Statement on Form S-1 filed in connection with our IPO.Three Months Ended September 30, (in millions) 2021 2020 $ change % change Payments-based revenue $ 346.9 $ 196.8 $ 150.1 76.3 % Subscription and other revenues 30.9 18.0 12.9 71.7 % Total gross revenue 377.8 214.8 163.0 75.9 % Less: network fees 251.9 127.1 124.8 98.2 % Less: Other costs of sales 61.5 36.2 25.3 69.9 % Gross profit 64.4 51.5 12.9 25.0 % General and administrative expenses 48.1 35.4 12.7 35.9 % Depreciation and amortization expense 15.0 16.2 (1.2) (7.4) % Professional fees 3.3 2.9 0.4 13.8 % Advertising and marketing expenses 3.5 0.8 2.7 NM Restructuring expenses 0.1 0.1 — NM Total operating expenses 70.0 55.4 14.6 26.4 % Loss from operations (5.6) (3.9) (1.7) 43.6 % Other income, net 0.2 0.5 (0.3) (60.0) % Interest expense (7.4) (7.1) (0.3) 4.2 % Loss before income taxes (12.8) (10.5) (2.3) 21.9 % Income tax (expense) benefit (1.0) 0.7 (1.7) NM Net loss (13.8) (9.8) (4.0) 40.8 % Net loss attributable to noncontrolling interests (4.6) (4.8) 0.2 (4.2) % Net loss attributable to Shift4 Payments, Inc. $ (9.2) $ (5.0) $ (4.2) 84.0 % $351.0$377.8 million for the three months ended JuneSeptember 30, 2021, compared to $141.8$214.8 million for the three months ended JuneSeptember 30, 2020, an increase of $209.2$163.0 million or 147.5%75.9%. Gross revenue is comprised of payments-based revenue, and subscription and other revenues.$324.8$346.9 million for the three months ended JuneSeptember 30, 2021, compared to $121.2$196.8 million for the three months ended JuneSeptember 30, 2020, an increase of $203.6$150.1 million or 168.0%76.3%. The increase in payments-based revenue is primarily driven by an increase in end-to-end payment volume of $7.6$6.4 billion, or approximately 180%90%, for the three months ended JuneSeptember 30, 2021, compared to the three months ended JuneSeptember 30, 2020. The COVID-19 pandemic impacted our end-to-end payment volumes beginning mid-March 2020 when shelter-in-place, social distancing, the closing of non-essential businesses and other restrictive measures were first put in place across the United States.$26.2$30.9 million for the three months ended JuneSeptember 30, 2021, compared to $20.6$18.0 million for the three months ended JuneSeptember 30, 2020, an increase of $5.6$12.9 million or 27.2%71.7%. The increase in subscription and other revenues is driven primarily by the 3dcart, VenueNext, and hospitality technology vendor and Postec acquisitions which collectively contributed $5.9$10.2 million more to subscription and other revenues in the three months ended JuneSeptember 30, 2021, compared to the three months ended JuneSeptember 30, 2020. In addition, software license sales increased $1.3 million for three months ended September 30, 2021, compared to the three months ended September 30, 2020.YTD (in millions) 2021 2020 $ change % change Payments-based revenue $ 887.6 $ 494.4 $ 393.2 79.5 % Subscription and other revenues 80.5 61.6 18.9 30.7 % Total gross revenue 968.1 556.0 412.1 74.1 % Less: network fees 608.4 321.8 286.6 89.1 % Less: Other costs of sales 165.4 107.7 57.7 53.6 % Gross profit 194.3 126.5 67.8 53.6 % General and administrative expenses 153.3 144.8 8.5 5.9 % Depreciation and amortization expense 45.9 37.1 8.8 23.7 % Professional fees 13.0 5.8 7.2 124.1 % Advertising and marketing expenses 26.1 2.9 23.2 NM Restructuring expenses 0.2 0.4 (0.2) (50.0 %) Other operating (income) expense, net — (12.4) 12.4 NM Total operating expenses 238.5 178.6 59.9 33.5 % Loss from operations (44.2) (52.1) 7.9 (15.2 %) Loss on extinguishment of debt (0.2) (7.1) 6.9 (97.2 %) Other income, net 0.2 0.6 (0.4) (66.7 %) Interest expense (20.2) (32.1) 11.9 (37.1 %) Loss before income taxes (64.4) (90.7) 26.3 (29.0 %) Income tax benefit 4.1 1.0 3.1 NM Net loss (60.3) (89.7) 29.4 (32.8 %) Net loss attributable to noncontrolling interests (a) (21.5) (83.7) 62.2 (74.3 %) Net loss attributable to Shift4 Payments, Inc. $ (38.8) $ (6.0) $ (32.8) NM granted temporary fee waiversmade in the third quarter of 2021 to our merchants of $22.4 million and partners of $2.3 million due to the TSYS outage and associated costs of $0.4 million. The TSYS outage payments and associated costs had the following impact on certain productsour results in our unaudited Condensed Consolidated Statements of Operations for the nine months ended September 30, 2021:33TableSee Recent developments above and Note 3 to the accompanying unaudited condensed consolidated financial statements for more information about the TSYS outage.ContentsMarch 2020 through June 2020$412.1 million or 74.1%. Gross revenue is comprised of payments-based revenue and subscription and other revenues and in an aggregate amount of $1.9the nine months ended September 30, 2021 includes $22.4 million in payments we made to merchants as a result of the August 2021 TSYS outage discussed in Recent developments above, which were recorded as contra revenue.pandemic.pandemic impacted our end-to-end payment volumes beginning mid-March 2020 when shelter-in-place, social distancing, the closing of non-essential businesses and other restrictive measures were first put in place across the United States. This was partially offset by $22.4 million in payments we made to merchants as a result of the August 2021 TSYS outage discussed in Recent developments above.$1.2$2.6 million primarily due to hardware provided under our SaaS arrangements being accounted for as operating leases in the second quarter ofnine months ended September 30, 2021, whereby revenue is recognized monthly, as compared to the second quarter ofnine months ended September 30, 2020, when it was recognized at the time of shipment.$214.7$608.4 million for the threenine months ended JuneSeptember 30, 2021, compared to $74.4$321.8 million for the threenine months ended JuneSeptember 30, 2020, an increase of $140.3$286.6 million or 188.6%89.1%. This increase is correlated with the increase in end-to-end payment volume as described above.$136.3$382.1 million for the threenine months ended JuneSeptember 30, 2021, compared to $67.4$234.2 million for the threenine months ended JuneSeptember 30, 2020, an increase of $68.9$147.9 million or 102.2%63.2%.For the nine months ended September 30, 2021, gross revenue less network fees excludes the $22.4 million impact of the TSYS outage. The increase in gross revenue less network fees is largely correlated with the increase in end-to-end payment volume. See “—Key performance indicators and non-GAAP measures” for a reconciliation of gross profit to gross revenue less network fees.$58.2$165.4 million for the threenine months ended JuneSeptember 30, 2021, compared to $35.8$107.7 million for the threenine months ended JuneSeptember 30, 2020, an increase of $22.4$57.7 million, or 62.6%53.6%. This increase was primarily a result of:•higher residual commissions of $20.1 million driven by the growth in gross revenue less network fees;•the 3dcart, VenueNext and hospitality technology vendor acquisitions which collectively contributed $4.6 million to other costs of sales in the three months ended June 30, 2021;•higher capitalized acquisition cost amortization of $1.6 million related to deal bonuses paid to VARs to obtain processing contracts; and,•higher capitalized software development amortization of $0.6 million; partially offset by,•the impact of modifying the terms and conditions of our SaaS arrangements and updating our operational procedures to account for our hardware as operating leases, which resulted in a decline of $6.5 million in costs of sales. Effective June 30, 2020, equipment leased to merchants is capitalized as a fixed asset, whereas, prior to June 30, 2020, these arrangements were accounted for as sales-type leases and expensed when deployed.$51.7$153.3 million for the threenine months ended JuneSeptember 30, 2021, compared to $88.3$144.8 million for the threenine months ended JuneSeptember 30, 2020, a decreasean increase of $36.6$8.5 million or 41.4%5.9%. The decreaseincrease was primarily due to higher employee-related expenses of $23.9 million in the nine months ended September 30,$49.9$32.2 million in the threenine months ended JuneSeptember 30, 2021, compared to the threenine months ended JuneSeptember 30, 2020, as a result of compensation expense recognized in the threenine months ended JuneSeptember 30, 2020 related to contractual change of control bonuses in connection with the IPO. See Note 20 in the notes to the accompanying unaudited condensed consolidated financial statements for more information on equity-based compensation and Note 12 in the notes to the accompanying unaudited condensed consolidated financial statements for more information on contingent liabilities. This was offset by higher employee-related expenses of $10.0 million in the three months ended June 30, 2021, compared to the three months ended June 30, 2020, as a result of our continued growth and expansion. In addition, the recent acquisitions of VenueNext, 3dcart and a hospitality technology vendor collectively contributed $3.5 million in general and administrative expenses in the three months ended June 30, 2021.$15.5$45.9 million for the threenine months ended JuneSeptember 30, 2021, compared to $10.4$37.1 million for the threenine months ended JuneSeptember 30, 2020, an increase of $5.1$8.8 million or 49.0%23.7%. The increase was primarily due to hardware provided under our SaaS arrangements being accounted for as operating leases, effective June 30, 2020, while previously they were accounted for as sales-type leases.leases driving higher depreciation expense for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, of $9.7 million. See Note 3 in the notes to the accompanying unaudited condensed consolidated financial statements for more information on the change to the terms and conditions of our SaaS arrangements. In addition, the recent acquisitions of VenueNext, 3dcart, a hospitality technology vendor and Postec collectively increased depreciation and amortization expense $1.9 million in the nine months ended September 30, 2021. This was partially offset by a decline in intangible amortization expense as certain intangible assets reached the end of their amortization period.$3.5$13.0 million for the threenine months ended JuneSeptember 30, 2021, compared to $1.2$5.8 million for the threenine months ended JuneSeptember 30, 2020, an increase of $2.3$7.2 million or 191.7%124.1%. The increase was due to acquisition-related costs and increased fees related to requirements of operating as a public company.marketing. marketing expenses. Advertising and marketing expenses were $2.5$26.1 million for the threenine months ended JuneSeptember 30, 2021, compared to $0.8$2.9 million for the threenine months ended JuneSeptember 30, 2020, an increase of $1.7 million or 212.5%.$23.2 million. The increase was partiallyprimarily due to expenses related to the integration of 3dcart and its rebranding as Shift4Shop.Shift4Shop and $3.7 million of costs associated with the Inspiration4 seat. These expenses are anticipated to be nonrecurring in nature. In addition, the VenueNext, 3dcart and hospitality technology vendor acquisitions collectively contributed $0.7 million in advertising and marketing expenses in the three months ended June 30, 2021, as compared to the three months ended June 30, 2020.three months ended June 30,second quarter of 2020 to reflect the impact of the lease modifications.34induring the threenine months ended JuneSeptember 30, 2020 representing the unamortized capitalized financing costs associated with the debt prepayment. See Note 10 to the accompanying unaudited condensed consolidated financial statements for more information.Interest expenseInterest expense$6.3$0.2 million for the threenine months ended JuneSeptember 30, 2021, compared to $11.7$0.6 million for the threenine months ended JuneSeptember 30, 2020, a decrease of $5.4$0.4 million or 46.2%66.7%. The decrease is driven by unearned contingent liabilities associated with our residual commission buyout agreements in 2020.whichand impacted interest expense by approximately $4.2$9.2 million. In addition, the debt refinancing in October 2020 reduced the interest rate on our First Lien Term Loan Facility from 5.50% to 4.625% on the 2026 Senior Notes, which reduced interest expense by $1.2 million for$4.4 million. This was partially offset by an increase in interest expense as a result of the three months ended June 30,issuance of the 2027 Convertible Notes in July 2021.threenine months ended JuneSeptember 30, 2021 was (421.4)(6.4)%, compared to the effective tax rate for the threenine months ended JuneSeptember 30, 2020 of (0.8)(1.1)%.awards, and the near break-even loss before income taxes for the three months ended June 30, 2021.awards. The income tax benefit for the threenine months ended JuneSeptember 30, 2020 was different than the U.S. federal statutory income tax rate of 21% primarily due to the loss allocated to the noncontrolling interest, changes in the valuation allowances in the United States and recording a tax benefit of $0.6 million for a net operating loss carryback at Shift4 Corporation which was allowed due to the CARES Act.income (loss)loss attributable to noncontrolling interestsincome (loss)loss attributable to noncontrolling interests of Shift4 Payments, LLC was $1.3$(21.5) million for the threenine months ended JuneSeptember 30, 2021 compared to $(73.8)$(83.7) million for the threenine months ended JuneSeptember 30, 2020. The net loss incurred for the threenine months ended JuneSeptember 30, 2020 includes the net loss incurred prior to the Reorganization and prior to June 4, 2020, the date the SEC declared effective our Registration Statement on Form S-1 filed in connection with our IPO.35Comparison of results for the six months ended June 30, 2021 and 2020The following table sets forth the consolidated statements of operations for the periods presented.(a)For the six months ended June 30, 2020, includes the net loss incurred prior to the Reorganization Transactions and prior to June 4, 2020, the date the SEC declared effective our Registration Statement on Form S-1 filed in connection with our IPO.Gross RevenueGross revenue was $590.3 million for the six months ended June 30, 2021, compared to $341.2 million for the six months ended June 30, 2020, an increase of $249.1 million or 73.0%. Gross revenue is comprised of payments-based revenue and subscription and other revenues.Payments-based revenue was $540.7 million for the six months ended June 30, 2021, compared to $297.6 million for the six months ended June 30, 2020, an increase of $243.1 million or 81.7%. The increase in payments-based revenue is primarily driven by an increase in end-to-end payment volume of $9.4 billion, or approximately 91%, for the six months ended June 30, 2021, compared to the six months ended June 30, 2020. The COVID-19 pandemic impacted our end-to-end payment volumes beginning mid-March 2020 when shelter-in-place, social distancing, the closing of non-essential businesses and other restrictive measures were first put in place across the United States.Subscription and other revenues were $49.6 million for the six months ended June 30, 2021, compared to $43.6 million for the six months ended June 30, 2020, an increase of $6.0 million or 13.8%. The increase is driven by the 3dcart, VenueNext and hospitality technology vendor acquisitions which collectively contributed $10.7 million more to subscription and other revenues in the six months ended June 30, 2021 compared to the six months ended June 30, 2020. This was offset by a decrease in hardware revenue of $2.8 million primarily due to hardware provided under our SaaS arrangements being accounted for as operating leases in the six months ended June 30, 2021, whereby revenue is recognized monthly, as compared to the six months ended June 30, 2020, when it was recognized at the time of shipment. In addition, software license revenue declined $0.7 million from the six months ended June 30, 2021 as compared to the six months ended June 30, 2020.Network FeesNetwork fees were $356.5 million for the six months ended June 30, 2021, compared to $194.7 million for the six months ended June 30, 2020, an increase of $161.8 million or 83.1%. This increase is correlated with the increase in end-to-end payment volume as described above.Gross revenue less network fees was $233.8 million for the six months ended June 30, 2021, compared to $146.5 million for the six months ended June 30, 2020, an increase of $87.3 million or 59.6%. The increase in gross revenue less network fees is largely correlated with the increase in end-to-end payment volume. See “—Key performance indicators and non-GAAP measures” for a reconciliation of gross profit to gross revenue less network fees.36Other costs of salesOther costs of sales was $103.9 million for the six months ended June 30, 2021, compared to $71.5 million for the six months ended June 30, 2020, an increase of $32.4 million, or 45.3%. This increase was primarily a result of:•higher residual commissions of $26.7 million driven by the growth in gross revenue less network fees;•higher than normal chargeback losses during the six months ended June 30, 2021 compared to the six months ended June 30, 2020 driven by the business failure of one merchant causing $5.5 million in estimated unrecoverable chargeback transactions in 2021;•the 3dcart, VenueNext and hospitality technology vendor acquisitions which collectively contributed $6.2 million to other costs of sales in the three months ended June 30, 2021;•higher capitalized software development amortization of $1.2 million; and,•higher capitalized acquisition cost amortization of $3.2 million related to deal bonuses paid to VARs to obtain processing contracts; partially offset by,•the impact of modifying the terms and conditions of our SaaS arrangements and updating our operational procedures to account for our hardware as operating leases, which resulted in a decline of $12.6 million in costs of sales. Effective June 30, 2020, equipment leased to merchants is capitalized as a fixed asset, whereas, prior to June 30, 2020, these arrangements were accounted for as sales-type leases and expensed when deployed.Operating expensesGeneral and administrative expenses. General and administrative expenses were $105.2 million for the six months ended June 30, 2021, compared to $109.4 million for the six months ended June 30, 2020, a decrease of $4.2 million or 3.8%. The decrease was due to lower equity-based compensation expense of $27.5 million in the six months ended June 30, 2021, compared to the six months ended June 30, 2020, as a result of compensation expense recognized in the six months ended June 30, 2020 related to contractual change of control bonuses in connection with the IPO. See Note 20 in the notes to the accompanying unaudited condensed consolidated financial statements for more information on equity-based compensation and Note 12 in the notes to the accompanying unaudited condensed consolidated financial statements for more information on contingent liabilities. This was offset by higher employee-related expenses of $12.2 million in the six months ended June 30, 2021, compared to the six months ended June 30, 2020, as a result of our continued growth and expansion. In addition, the recent acquisitions of VenueNext, 3dcart and a hospitality technology vendor collectively contributed $11.3 million in general and administrative expenses in the six months ended June 30, 2021.Depreciation and amortization expense. Depreciation and amortization expense was $30.9 million for the six months ended June 30, 2021, compared to $20.9 million for the six months ended June 30, 2020, an increase of $10.0 million or 47.8%. The increase was primarily due to hardware provided under our SaaS arrangements being accounted for as operating leases, effective June 30, 2020, while previously they were accounted for as sales-type leases. Depreciation expense incurred for the six months ended June 30, 2021 related to these operating leases was $9.6 million. See Note 3 in the notes to the accompanying unaudited condensed consolidated financial statements for more information on the change to the terms and conditions of our SaaS arrangements.Professional fees. Professional fees were $9.7 million for the six months ended June 30, 2021, compared to $2.9 million for the six months ended June 30, 2020, an increase of $6.8 million or 234.5%. The increase was due to acquisition-related costs and increased fees related to requirements of operating as a public company.Advertising and marketing. Advertising and marketing expenses were $22.6 million for the six months ended June 30, 2021, compared to $2.1 million for the six months ended June 30, 2020, an increase of $20.5 million. The increase was primarily due to expenses related to the integration of 3dcart and its rebranding as Shift4Shop. These expenses are anticipated to be nonrecurring in nature.Other operating (income) expense, netOther operating (income) expense, net includes the impact of modifying the terms and conditions of our SaaS arrangements and updating our operational procedures. As a result, beginning June 30, 2020, hardware provided under our SaaS agreements is accounted for as an operating lease, whereas prior to June 30, 2020, these arrangements were accounted for as sales-type leases. An adjustment of $12.4 million was recorded in the six months ended June 30, 2020 to reflect the impact of the lease modifications.Loss on extinguishment of debtA loss on extinguishment of debt, representing unamortized capitalized financing costs, of $0.2 million was incurred with the refinancing of the Revolving Credit Facility during the six months ended June 30, 2021. In connection with the pre-payment of $59.8 million on the First Lien Term Loan Facility and the full repayment of $130.0 million on the Second Lien Term Loan Facility, we incurred a non-cash loss on extinguishment of debt of $7.1 million during the six months ended June 30, 2020 representing the unamortized capitalized financing costs associated with the debt prepayment. See Note 10 to the accompanying unaudited condensed consolidated financial statements for more information.37Interest expenseInterest expense was $12.8 million for the six months ended June 30, 2021, compared to $25.0 million for the six months ended June 30, 2020, a decrease of $12.2 million or 48.8%. This decrease in interest expense was primarily due to the pre-payments for the First Lien and Second Lien Term Loan Facilities and the repayment of the Revolving Credit Facility, all of which were completed in June 2020, which impacted interest expense by approximately $9.2 million. In addition, the debt refinancing in October 2020 reduced the interest rate on our First Lien Term Loan Facility from 5.50% to 4.625% on the 2026 Senior Notes, which reduced interest expense by $3.2 million.Income tax benefitThe effective tax rate for the six months ended June 30, 2021 was (9.9)%, compared to the effective tax rate for the six months ended June 30, 2020 of (0.4)%. The 2021 income tax benefit was different than the U.S. federal statutory income tax rate of 21% primarily due to the loss allocated to the noncontrolling interest, changes in the valuation allowances in the United States, and the tax windfall related to vested equity-based compensation awards. The income tax benefit for the six months ended June 30, 2020 was different than the U.S. federal statutory income tax rate of 21% primarily due to the loss allocated to the noncontrolling interest, changes in the valuation allowances in the United States and recording a tax benefit of $0.6 million for a net operating loss carryback at Shift4 Corporation which was allowed due to the CARES Act.Net loss attributable to noncontrolling interestsNet loss attributable to noncontrolling interests of Shift4 Payments, LLC was $(16.9) million for the six months ended June 30, 2021 compared to $(78.9) million for the six months ended June 30, 2020. The net loss incurred for the six months ended June 30, 2020 includes the net loss incurred prior to the Reorganization and prior to June 4, 2020, the date the SEC declared effective our Registration Statement on Form S-1 filed in connection with our IPO. Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2021 2020 2021 2020 End-to-end payment volume $ 13,457.2 $ 7,090.7 $ 33,277.9 $ 17,476.8 Gross revenue less network fees 148.3 87.7 382.1 234.2 EBITDA 20.4 20.8 32.6 1.1 Adjusted EBITDA 55.8 28.7 123.2 61.0 38income (loss)loss on a consolidated basis for the periods presented to EBITDA and Adjusted EBITDA.Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Gross profit (a) (b) $ 64.4 $ 51.5 $ 194.3 $ 126.5 Add back: Other costs of sales (a) 61.5 36.2 165.4 107.7 Add back: TSYS outage payments (b) 22.4 — 22.4 — Gross revenue less network fees $ 148.3 $ 87.7 $ 382.1 $ 234.2 (a)For the three months ended June 30, 2021, consists primarily of $1.4 million of acquisition-related costs and $1.3 million of expenses related to the integration of 3dcart and its rebranding as Shift4Shop. For the three months ended June 30, 2020, consists primarily of change of control liabilities as a result of the IPO of $11.0 million and fair value adjustments to contingent liabilities of $1.5 million. For the six months ended June 30, 2021, consists primarily of expenses related to the integration of 3dcart and its rebranding as Shift4Shop of $20.4 million, $2.1 million of expense for the Inspiration4 seat and acquisition-related costs incurred of $4.3 million. For the six months ended June 30, 2020, consists primarily of change of control liabilities as a result of the IPO of $11.0 million offset by fair value adjustments to contingent liabilities of $(7.0) million and deferred compensation arrangements of $(2.1) million. See Note 12 in the notes to the accompanying unaudited condensed consolidated financial statements for more information on the contingent liability adjustments.(b)Represents equity-based compensation expense for RSUs, including employer taxes for vested RSUs. See Note 20 in the notes to the accompanying unaudited condensed consolidated financial statements for more information on equity-based compensation. Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2021 2020 2021 2020 Net loss $ (13.8) $ (9.8) $ (60.3) $ (89.7) Interest expense 7.4 7.1 20.2 32.1 Income tax (benefit) provision 1.0 (0.7) (4.1) (1.0) Depreciation and amortization expense 25.8 24.2 76.8 59.7 EBITDA 20.4 20.8 32.6 1.1 TSYS outage payments and associated costs (a) 25.1 — 25.1 — Acquisition, restructuring and integration costs (b) 4.0 1.7 33.0 4.8 Equity-based compensation (c) 6.6 6.2 32.0 56.2 Impact of lease modifications (d) — — — (12.4) Other nonrecurring items (e) (0.3) — 0.5 11.3 Adjusted EBITDA $ 55.8 $ 28.7 $ 123.2 $ 61.0 (c)Effective June 30, 2020, we modified the terms and conditions of our SaaS arrangements and updated our operational procedures. As a result, beginning June 30, 2020, hardware provided under our SaaS agreements is accounted for as an operating lease, whereas prior to June 30, 2020, these arrangements were accounted for as sales-type leases. This adjustment represents the one-time cumulative impact of modifying the contracts effective June 30, 2020. Prior to amending the terms, the sales-type lease accounting treatment impacted EBITDA and adjusted EBITDA negatively by $4.0 million and $8.6 million for the three and six months ended June 30, 2020, respectively.(d)(a)Includes nonrecurring payments we made in the third quarter of 2021 to our merchants of $22.4 million and partners of $2.3 million due to the TSYS outage and other expenses incurred associated with the TSYS outage of $0.4 million. See Recent developments above and Note 3 to the accompanying unaudited condensed consolidated financial statements for more information about the TSYS outage.For the three and six months ended June 30, 2020, primarily consists of a $7.1 million loss on extinguishment of debt associated with the debt pre-payments and $1.6 million for temporary fee waivers granted on certain products from March 2020 through June 2020 as a result of the COVID-19 pandemic. See Note 10 in the notes to the accompanying unaudited condensed consolidated financial statements for more information on the loss on extinguishment of debt. For the three and six months ended June 30, 2020 includes $0.3 million and $0.8 million, respectively, of fees to the Continuing Equity Owners for consulting and managing services through the date of the IPO. These fees are not required to be paid subsequent to the IPO. See Note 15 to the accompanying unaudited condensed consolidated financial statements for more information about these related party transactions.Facilities.Facilities or equity transactions. The principal uses for liquidity have been debt service, capital expenditures (including research and development) and funds required to finance acquisitions. Given the impact the COVID-19 pandemic has had on the restaurant and hospitality industries, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure we can continue to successfully operate until these industries fully recover.39 Nine Months Ended September 30, (in millions) 2021 2020 Net cash provided by operating activities $ 25.6 $ 17.0 Net cash used in investing activities (162.0) (31.9) Net cash provided by financing activities Net cash provided by financing activities 496.7 340.1 Total Total $ 360.3 $ 325.2 sixnine months ended JuneSeptember 30, 2021, net cash provided by operating activities of $5.0$25.6 million is primarily a result of:•net loss of $46.5 million adjusted for non-cash expenses, including depreciation and amortization of $51.0 million, equity-based compensation of $20.6 million, provision for bad debts of $8.1 million and amortization of capitalized financing costs of $2.4 million; plus,•changes in operating assets and liabilities of $(29.3) million, which is primarily a result of $24.1 million of additional funds deposited in our sponsor bank merchant settlement account to facilitate gross card transaction deposits for those customers we bill on a monthly, versus a daily basis.sixnine months ended JuneSeptember 30, 2020, net cash provided by operating activities of $6.7$17.0 million is primarily a result of:•net loss of $79.9 million, adjusted for non-cash expenses including equity-based compensation of $50.0 million, depreciation and amortization of $35.5 million, cumulative impact of modifying our lease contracts of $(12.4) million, loss on extinguishment of debt of $7.1 million, revaluation of contingent liabilities of $(7.0) million, provision for bad debts of $5.4 million and amortization of capitalized financing costs of $2.1 million; plus,•changes in operating assets and liabilities of $6.0 million, which is primarily a result of change of control liabilities established at the time of the IPO of $11.0 million, offset by working capital fluctuations.$115.5$162.0 million for the sixnine months ended JuneSeptember 30, 2021, an increase of $98.8$130.1 million compared to net cash used in investing activities of $16.7$31.9 million for the sixnine months ended JuneSeptember 30, 2020. This increase is primarily the result of:•the acquisition of VenueNext in March 2021 for $68.5 million in aggregate purchase consideration, including $40.6 million in cash, net of cash acquired of $1.6 million,•the investment in SpaceX of $27.5 million,•$18.9 million in purchases for equipment to be leased; and,•the investment in Sightline Payments of $2.0 million.used inprovided by financing activities was $117.6$496.7 million for the sixnine months ended JuneSeptember 30, 2021, a decreasean increase of $367.9$156.6 million, compared to net cash provided by financing activities of $250.3$340.1 million for the sixnine months ended JuneSeptember 30, 2020. This decreaseincrease was primarily the result of:•the IPO and concurrent private placement net proceeds of approximately $465.7 million after deducting underwriting discounts, commissions and offering costs paid in the six months ended June 30, 2020; and,•$116.3 million in employee taxes paid on vested RSUs during the six months ended June 30, 2021; partially offset by, of the First Lien Term Loan Facility and full repayment of our Second Lien Term Loan Facility in the six months ended June 30, 2020, totaling $189.8 million.40JuneSeptember 30, 2021 and December 31, 2020, we had $1,140.0$1,772.5 million total principal amount of debt outstanding, including $450.0 million of 2026 Senior Notes and $690.0 million of 2025 Convertible Notes, $632.5 million of 2027 Convertible Notes and $450.0 million 2026 Senior Notes. in an offering to qualified institutional buyers in an offering exempt from registration under the Securities Act. We received net proceeds, after deducting initial purchasers’ discounts and estimated offering expenses, of approximately $673.6 million from the 2025 Convertible Notes Offering. The net proceeds of the 2025 Convertible Notes Offering, together with cash on hand, will be used for general corporate purposes. The 2025 Convertible Notes do not bear regular interest and will mature on December 15, 2025 unless earlier repurchased, redeemed or converted. The Company will settle conversions by paying in cash up to the principal amount of Notes with any excess to be paid or delivered, as the case may be, in cash or shares of Class A common stock or a combination of both at its election, based on the conversion rate. The conversion rate for the 2025 Convertible Notes will initially be 12.4262 shares of Class A common stock per $1,000 principal amount of 2025 Convertible Notes (equivalent to an initial conversion price of approximately $80.48 per share of Class A common stock), subject to adjustment upon the occurrence of specified events. None of the specified events for the conversion of the 2025 Convertible Notes occurred as of JuneSeptember 30, 2021. See Note 10 to the accompanying unaudited condensed consolidated financial statements for more information.JuneSeptember 30, 2021, we had no outstanding borrowings under the Revolving Credit Facility.There have been no material changes toduring the six months ended June 30, 2021 from those previously disclosedfor long-term debt and interest on long-term debt as presented in our 2020 Form 10-K.Payments due by period (in millions) Total 2021 (remaining three months) 2022 and 2023 2024 and 2025 2026 and beyond Long-term debt $ 1,772.5 $ — $ — $ 690.0 $ 1,082.5 Interest on long-term debt 133.5 10.4 48.0 48.0 27.1 Total $ 1,906.0 $ 10.4 $ 48.0 $ 738.0 $ 1,109.6 41exceedsexceeded $700.0 million; therefore, as of December 31, 2021, we expect that we will cease to be an EGC.42JuneSeptember 30, 2021, we had approximately $1,140.0$1,772.5 million of fixed rate debt outstanding pursuant to the Notes, with a fair value of $1,408.0$1,953.7 million, none of which was subject to an interest rate hedge. Since the Notes bear interest at fixed rates, they do not result in any financial statement risk associated with changes in interest rates. However, the fair value of the Notes fluctuates when interest rates change.JuneSeptember 30, 2021 and December 31, 2020, we had no amounts outstanding under the Revolving Credit Facility. See “Liquidity and capital resources” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 of this Quarterly Report on Form 10-Q and Note 10 in the notes to the accompanying unaudited condensed consolidated financial statements for more information.JuneSeptember 30, 2021, our disclosure controls and procedures were effective at the reasonable assurance level.JuneSeptember 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.43Table of ContentsNone.44Table of Contents*Filed herewith.**Furnished herewith. Incorporated by Reference Exhibit Description Form File No. Exhibit 3.1 S-8 333-239042 4.1 06/09/2020 3.1 S-8 333-239042 4.2 06/09/2020 4.1 S-1/A 333-238307 4.1 06/01/2020 4.2 8-K 001-39313 4.1 07/26/2021 31.1 * 31.2 * 32.1 ** 32.2 ** 101.INS Inline XBRL Instance Document. * 101.SCH Inline XBRL Taxonomy Extension Schema Document. * 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. * 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. * 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. * 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. * 104* Cover Page Interactive Data File (formatting as Inline XBRL and contained in Exhibit 101) 45