2202 N. Irving Street

Allentown, Pennsylvania

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

As of ~~August 2, 2021,~~July 29, 2022, there were ~~47,233,491~~51,092,250 shares of the registrant’s Class A common stock, $0.0001 par value per share, outstanding, ~~28,240,404~~25,829,016 shares of the registrant’s Class B common stock, $0.0001 par value per share, outstanding and ~~7,422,140~~3,650,380 shares of the registrant’s Class C common stock, $0.0001 par value per share, outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including, without limitation, statements relating to our future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding expected growth, future capital expenditures and debt service obligations, and the anticipated impact of ~~the~~ COVID-19 ~~pandemic (and any variants of the virus)~~ on our business, ~~and our expectations regarding our filer status as of December 31, 2021~~ are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” ~~“potential”,~~“potential,” or “continue” or the negative of these terms or other similar expressions though not all forward-looking statements can be identified by such terms or expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to the following:

•

~~the ongoing impact of the COVID-19 global pandemic on our business and results of operations;~~

•the COVID-19 global pandemic has had and may continue to have an adverse effect on our business and results of operations;•

~~substantial and increasingly intense competition worldwide in the financial services, payments and payment technology industries;~~

•substantial and increasingly intense competition worldwide in the financial services, payments and payment technology industries may adversely affect our overall business and operations;•

~~potential changes in the competitive landscape, including disintermediation from other participants in the payments chain;~~

•potential changes in the competitive landscape, including disintermediation from other participants in the payments chain, could harm our business;•

~~our ability to anticipate and respond to changing industry trends and the needs and preferences of our merchants and consumers;~~

•

our ability to anticipate and respond to changing industry trends and the needs and preferences of our merchants and consumers may adversely affect our competitiveness or the demand for our ~~reliance on third-party vendors to provide~~ products and services;

•because we rely on third-party vendors to provide products and services, we could be adversely impacted if they fail to fulfill their obligations;•

~~risks associated with acquisitions;~~

•acquisitions create certain risks and may adversely affect our business, financial condition or results of operations;•

~~our expansion of our share of the existing payment processing markets or into new markets;~~

•we may not be able to continue to expand our share of the existing payment processing markets or expand into new markets which would inhibit our ability to grow and increase our profitability;•

~~integration and interoperability of our services and products with a variety of operating systems, software, device and web browsers;~~

•our services and products must integrate with a variety of operating systems, software, device and web browsers, and our business may be materially and adversely affected if we are unable to ensure that our services interoperate with such operating systems, device, software and web browsers;•

~~dependence on our merchant and software partner relationships and strategic partnerships with various institutions to operate and grow our business;~~

•we depend, in part, on our merchant and software partner relationships and strategic partnerships with various institutions to operate and grow our business. If we are unable to maintain these relationships and partnerships, our business may be adversely affected;•

~~impairment of significant amounts of goodwill and intangible assets on our balance sheet;~~

•our balance sheet includes significant amounts of goodwill and intangible assets. The impairment of a significant portion of these assets would negatively affect our business, financial condition or results of operations;•

~~failure to comply with the U.S. Foreign Corrupt Practices Act, anti-money laundering, economic and trade sanctions regulations, and similar laws;~~

•failure to comply with the U.S. Foreign Corrupt Practices Act (“FCPA”) anti-money laundering, economic and trade sanctions regulations, and similar laws could subject us to penalties and other adverse consequences;•

~~our dependence on our interest in Shift4 Payments, LLC to pay our taxes and expenses, including payments under the Tax Receivable Agreement (“TRA”);~~

•

our principal asset is our interest in Shift4 Payments, LLC, and, as a result, we depend on distributions from 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 (as defined herein) has significant influence over us, including control over decisions that require the approval of stockholders;•

~~our Founder and Searchlight (each as defined herein) have significant influence over us, including control over decisions that require the approval of stockholders; and~~

•the ongoing military action between Russia and Ukraine could adversely affect our business, financial condition and results of operations; 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

•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 fiscal year ended December 31, 2021 (the “2021 Form 10-K”) and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.

Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

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PART I: FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

SHIFT4 PAYMENTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)(in millions, except share and per share amounts)


	June 30, 2022		December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	1,018.2	$	1,231.5
Accounts receivable, net of allowance for doubtful accounts of $10.8 in 2022 ($8.0 in 2021)	251.3		205.9
Inventory	2.3		3.5

Prepaid expenses and other current assets (Note 10)	12.1		12.7
Total current assets	1,283.9		1,453.6
Noncurrent assets
Goodwill (Note 4)	627.1		537.7
Other intangible assets, net (Note 5)	219.0		188.5
Capitalized acquisition costs, net (Note 6)	36.6		35.1
Equipment for lease, net (Note 7)	65.2		58.4
Property, plant and equipment, net (Note 8)	17.7		18.4
Right-of-use assets (Note 13)	16.2		18.5
Investments in securities	32.0		30.5

Other noncurrent assets	1.9		1.9
Total noncurrent assets	1,015.7		889.0
Total assets	$	2,299.6	$	2,342.6
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	155.2	$	121.1
Accrued expenses and other current liabilities (Note 10)	97.3		42.9
Deferred revenue (Note 3)	18.7		15.0
Current lease liabilities (Note 13)	4.1		4.8
Total current liabilities	275.3		183.8
Noncurrent liabilities
Long-term debt (Note 9)	1,737.8		1,738.5
Deferred tax liability (Note 12)	1.2		0.3
Noncurrent lease liabilities (Note 13)	16.0		17.9
Other noncurrent liabilities	1.9		2.4
Total noncurrent liabilities	1,756.9		1,759.1
Total liabilities	2,032.2		1,942.9
Commitments and contingencies (Note 15)	0		0
Stockholders' equity (Note 16)
Preferred stock, $0.0001 par value, 20,000,000 shares authorized at June 30, 2022 and December 31, 2021, NaN issued and outstanding	—		—
Class A common stock, $0.0001 par value per share, 300,000,000 shares authorized, 51,458,312 and 51,793,127 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	—		—
Class B common stock, $0.0001 par value per share, 100,000,000 shares authorized, 25,829,016 and 26,272,654 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	—		—
Class C common stock, $0.0001 par value per share, 100,000,000 shares authorized, 3,650,380 and 5,035,181 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	—		—
Additional paid-in capital	635.5		619.2
Treasury stock, at cost; 726,650 shares and 378,475 shares at June 30, 2022 and December 31, 2021, respectively	(28.8)		(21.1)
Accumulated other comprehensive loss	(0.4)		—
Retained deficit	(422.8)		(325.3)
Total stockholders' equity attributable to Shift4 Payments, Inc.	183.5		272.8
Noncontrolling interests (Note 17)	83.9		126.9
Total stockholders' equity	267.4		399.7
Total liabilities and stockholders' equity	$	2,299.6	$	2,342.6
See accompanying notes to unaudited condensed consolidated financial statements.

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SHIFT4 PAYMENTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) (in millions, except share and per share amounts)

June 30,

December 31,

2021

2020

Assets

Current assets

Cash and cash equivalents

$
699.7

$
927.8

Accounts receivable, net of allowance for doubtful accounts of $12.8 in 2021 ($5.7 in 2020) (Note 3)

177.2

92.7

Inventory

1.6

1.5

Prepaid expenses and other current assets (Note 11)

14.8

11.5

Total current assets

893.3

1,033.5

Noncurrent assets

Goodwill (Note 5)

525.2

477.0

Other intangible assets, net (Note 6)

185.1

186.3

Capitalized acquisition costs, net (Note 7)

32.8

30.2

Equipment for lease, net (Note 8)

47.2

36.6

Property, plant and equipment, net (Note 9)

17.5

15.1

Investments in securities (Note 1)

29.5

—

Other noncurrent assets

0.5

0.6

Total noncurrent assets

837.8

745.8

Total assets

$
1,731.1

$
1,779.3

Liabilities and Stockholders' Equity

Current liabilities

Current portion of debt (Note 10)

$
—

$
0.9

Accounts payable

116.4

60.6

Accrued expenses and other current liabilities (Note 11)

36.2

30.1

Deferred revenue (Note 3)

12.0

7.8

Total current liabilities

164.6

99.4

Noncurrent liabilities

Long-term debt (Note 10)

1,117.6

1,005.4

Deferred tax liability (Note 13)

0.6

2.8

Other noncurrent liabilities (Note 4)

2.1

1.7

Total noncurrent liabilities

1,120.3

1,009.9

Total liabilities

1,284.9

1,109.3

Commitments and contingencies (Note 16)

Stockholders' equity (Note 18)

Preferred stock, $0.0001 par value, 20,000,000 shares authorized at June 30, 2021 and December 31, 2020, NaN issued and outstanding

—

—

Class A common stock, $0.0001 par value per share, 300,000,000 shares authorized, 47,215,604 and 39,737,950 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

—

—

Class B common stock, $0.0001 par value per share, 100,000,000 shares authorized, 28,240,404 and 30,625,857 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

—

—

Class C common stock, $0.0001 par value per share, 100,000,000 shares authorized, 7,422,140 and 10,188,852 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

—

—

Additional paid-in capital

601.3

738.3

Retained deficit

(306.7
)

(278.7
)
Total stockholders' equity attributable to Shift4 Payments, Inc.

294.6

459.6

Noncontrolling interests (Note 19)

151.6

210.4

Total stockholders' equity

446.2

670.0

Total liabilities and stockholders' equity

$
1,731.1

$
1,779.3


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Gross revenue	$	506.7	$	351.0	$	908.6	$	590.3
Cost of sales	400.9		272.9		718.2		460.4
Gross profit	105.8		78.1		190.4		129.9
General and administrative expenses	58.0		51.7		124.2		105.2
Depreciation and amortization expense	16.7		15.5		34.0		30.9
Professional fees	5.2		3.5		13.9		9.7
Advertising and marketing expenses	2.9		2.5		5.6		22.6
Restructuring expenses (Note 10)	0.1		—		0.1		0.1
Transaction-related expenses (Note 9)	—		—		1.4		—
Total operating expenses	82.9		73.2		179.2		168.5
Income (loss) from operations	22.9		4.9		11.2		(38.6)
Loss on extinguishment of debt	—		—		—		(0.2)
Interest income	1.4		—		1.4		—
Other income, net	0.1		—		0.3		—
Interest expense	(8.4)		(6.3)		(16.3)		(12.8)
Income (loss) before income taxes	16.0		(1.4)		(3.4)		(51.6)
Income tax benefit (provision) (Note 12)	(1.0)		5.9		5.2		5.1
Net income (loss)	15.0		4.5		1.8		(46.5)
Net income (loss) attributable to noncontrolling interests	4.7		1.3		(1.0)		(16.9)
Net income (loss) attributable to Shift4 Payments, Inc.	$	10.3	$	3.2	$	2.8	$	(29.6)

Basic net income (loss) per share:
Class A net income (loss) per share - basic	$	0.19	$	0.06	$	0.05	$	(0.56)
Class A weighted average common stock outstanding - basic	51,790,403		46,297,553		51,958,494		44,492,680
Class C net income (loss) per share - basic	$	0.19	$	0.06	$	0.05	$	(0.56)
Class C weighted average common stock outstanding - basic	4,006,159		8,151,747		4,283,096		9,075,667

Diluted net income (loss) per share:
Class A net income (loss) per share - diluted	$	0.18	$	0.05	$	0.02	$	(0.56)
Class A weighted average common stock outstanding - diluted	78,514,880		76,995,332		78,823,068		44,492,680
Class C net income (loss) per share - diluted	$	0.18	$	0.05	$	0.02	$	(0.56)
Class C weighted average common stock outstanding - diluted	4,006,159		8,151,747		4,283,096		9,075,667
See accompanying notes to unaudited condensed consolidated financial statements.

~~See accompanying notes to unaudited condensed consolidated financial statements.~~

Table of Contents

SHIFT4 PAYMENTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~

COMPREHENSIVE INCOME (LOSS)

(Unaudited) (in ~~millions, except share and per share amounts)~~

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

~~(a)~~

~~Net income (loss) is equal to comprehensive income (loss).~~

millions)

~~(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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income (loss)	$	15.0	$	4.5	$	1.8	$	(46.5)
Other comprehensive income (loss)
Unrealized income (loss) on foreign currency translation adjustment, net of tax	(0.6)		—		(0.6)		—
Total other comprehensive income (loss)	(0.6)		—		(0.6)		—
Comprehensive income (loss)	14.4		4.5		1.2		(46.5)
Comprehensive income (loss) attributable to noncontrolling interests	4.5		1.3		(1.2)		(16.9)
Comprehensive income (loss) attributable to Shift4 Payments, Inc.	$	9.9	$	3.2	$	2.4	$	(29.6)
See accompanying notes to unaudited condensed consolidated financial statements.

~~(c)~~

~~Net income (loss) attributable to Shift4 Payments, Inc. is equal to comprehensive income (loss) attributable to Shift4 Payments, Inc.~~

~~(d)~~

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.

~~See accompanying notes to unaudited condensed consolidated financial statements.~~

SHIFT4 PAYMENTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN ~~REDEEMABLE PREFERRED UNITS AND~~ STOCKHOLDERS’ ~~EQUITY/ MEMBERS’ (DEFICIT)~~

EQUITY

(Unaudited) (in millions, except ~~units and~~ shares)

Class A
Common Stock

Class B
Common Stock

Class C
Common Stock

Additional

Shares

Amount

Shares

Amount

Shares

Amount

paid-in
capital

Retained
Deficit

Noncontrolling
Interests

Total
equity

Balances at December 31, 2020

39,737,950

$
—

30,625,857

$
—

10,188,852

$
—

$
738.3

$
(278.7
)

$
210.4

$
670.0

Net loss

—

—

—

—

—

—

—

(32.8
)

(18.2
)

(51.0
)
Cumulative effect of ASU 2020-06 adoption

—

—

—

—

—

—

(111.5
)

1.6

—

(109.9
)
Issuance of Class A common stock and fair value of equity-based compensation awards assumed in connection with VenueNext acquisition

325,127

—

—

—

—

—

13.5

—

12.8

26.3

Transfer from Founder of right associated with Inspiration4 seat

—

—

—

—

—

—

1.3

—

0.8

2.1

Exchange of shares held by Searchlight

2,000,000

—

(926,000
)

—

(1,074,000
)

—

6.3

—

(6.3
)

—

Equity-based compensation

—

—

—

—

—

—

14.0

—

—

14.0

Vesting of restricted stock units, net of tax withholding

46,503

—

—

—

—

—

(1.4
)

—

(1.0
)

(2.4
)
Balances at March 31, 2021

42,109,580

$
—

29,699,857

$
—

9,114,852

$
—

$
660.5

$
(309.9
)

$
198.5

$
549.1

Net income

—

—

—

—

—

—

—

3.2

1.3

4.5

Exchange of shares held by Searchlight

3,152,165

—

(1,459,453
)

—

(1,692,712
)

—

7.9

—

(7.9
)

—

Equity-based compensation

—

—

—

—

—

—

6.6

—

—

6.6

Vesting of restricted stock units, net of tax withholding

1,953,859

—

—

—

—

—

(73.7
)

—

(40.3
)

(114.0
)
Balances at June 30, 2021

47,215,604

$
—

28,240,404

$
—

7,422,140

$
—

$
601.3

$
(306.7
)

$
151.6

$
446.2


	Class A Common Stock			Class B Common Stock			Class C Common Stock			Additional Paid-In Capital		Treasury Stock			Retained Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity
	Shares	Amount		Shares	Amount		Shares	Amount				Shares	Amount
Balances at December 31, 2021	51,793,127	$	—	26,272,654	$	—	5,035,181	$	—	$	619.2	(378,475)	$	(21.1)	$	(325.3)	$	—	$	126.9	$	399.7
Net loss	—	—		—	—		—	—		—		—	—		(7.5)		—		(5.7)		(13.2)
Issuance of Class A common stock and fair value of equity-based compensation awards assumed in connection with The Giving Block acquisition	785,969	—		—	—		—	—		24.7		—	—		—		—		11.8		36.5
Repurchases of Class A common stock to treasury stock	—	—		—	—		—	—		4.5		(301,510)	(17.2)		—		—		(4.5)		(17.2)
Exchange of shares held by Continuing Equity Owners	732,524	—		—	—		(732,524)	—		—		—	—		—		—		—		—
Equity-based compensation	—	—		—	—		—	—		15.8		—	—		—		—		—		15.8
Vesting of restricted stock units, net of tax withholding	306,953	—		—	—		—	—		(4.6)		—	—		—		—		1.2		(3.4)


Balances at March 31, 2022	53,618,573	—		26,272,654	—		4,302,657	—		659.6		(679,985)	(38.3)		(332.8)		—		129.7		418.2
Net income	—	—		—	—		—	—		—		—	—		10.3		—		4.7		15.0
Issuance of Class A common stock	17,287	—		—	—		—	—		0.4		—	—		—		—		0.2		0.6
Repurchases of Class A common stock to treasury stock	—	—		—	—		—	—		46.8		(3,585,681)	(167.2)		—		—		(46.8)		(167.2)
Retirement of treasury stock	(3,539,016)	—		—	—		—	—		(76.4)		3,539,016	176.7		(100.3)		—		—		—
Exchange of shares held by Continuing Equity Owners	1,095,915	—		(443,638)	—		(652,277)	—		1.6		—	—		—		—		(1.6)		—
Equity-based compensation	—	—		—	—		—	—		9.3		—	—		—		—		—		9.3
Vesting of restricted stock units, net of tax withholding	265,553	—		—	—		—	—		(5.8)		—	—		—		—		(2.1)		(7.9)
Cumulative translation adjustment	—	—		—	—		—	—		—		—	—		—		(0.4)		(0.2)		(0.6)

Balances at June 30, 2022	51,458,312	—		25,829,016	—		3,650,380	—		$	635.5	(726,650)	$	(28.8)	$	(422.8)	$	(0.4)	$	83.9	$	267.4


	Class A Common Stock			Class B Common Stock			Class C Common Stock			Additional Paid-In Capital		Retained Deficit		Noncontrolling Interests		Total Equity
	Shares	Amount		Shares	Amount		Shares	Amount
Balances at December 31, 2020	39,737,950	$	—	30,625,857	$	—	10,188,852	$	—	$	738.3	$	(278.7)	$	210.4	$	670.0
Net loss	—	—		—	—		—	—		—		(32.8)		(18.2)		(51.0)
Cumulative effect of ASU 2020-06 adoption	—	—		—	—		—	—		(111.5)		1.6		—		(109.9)
Issuance of Class A common stock and fair value of equity-based compensation awards assumed in connection with VenueNext acquisition	325,127	—		—	—		—	—		13.5		—		12.8		26.3
Transfer from Founder of right associated with Inspiration4 seat	—	—		—	—		—	—		1.3		—		0.8		2.1
Exchange of shares held by Searchlight	2,000,000	—		(926,000)	—		(1,074,000)	—		6.3		—		(6.3)		—
Equity-based compensation	—	—		—	—		—	—		14.0		—		—		14.0
Vesting of restricted stock units, net of tax withholding	46,503	—		—	—		—	—		(1.4)		—		(1.0)		(2.4)
Balances at March 31, 2021	42,109,580	—		29,699,857	—		9,114,852	—		660.5		(309.9)		198.5		549.1
Net income	—	—		—	—		—	—		—		3.2		1.3		4.5
Exchange of shares held by Searchlight	3,152,165	—		(1,459,453)	—		(1,692,712)	—		7.9		—		(7.9)		—
Equity-based compensation	—	—		—	—		—	—		6.6		—		—		6.6
Vesting of restricted stock units, net of tax withholding	1,953,859	—		—	—		—	—		(73.7)		—		(40.3)		(114.0)
Balances at June 30, 2021	47,215,604	$	—	28,240,404	$	—	7,422,140	$	—	$	601.3	$	(306.7)	$	151.6	$	446.2
See accompanying notes to unaudited condensed consolidated financial statements.

SHIFT4 PAYMENTS, INC.

~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE PREFERRED UNITS AND STOCKHOLDERS’ EQUITY/ MEMBERS’ (DEFICIT) (continued)~~

~~(Unaudited) (in millions, except units and shares)~~

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

(Unaudited) (in millions)

SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

1.Organization, Basis of Presentation and ~~merchant count amounts)~~

Significant Accounting Policies

Organization

~~Organization, Basis of Presentation and Significant Accounting Policies~~

Basis of Presentation

The accompanying interim condensed consolidated financial statements of the Company are unaudited. These ~~unaudited~~interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and the applicable rules and regulations of the ~~SEC~~U.S. Securities and Exchange Commission (“SEC”) for interim financial information. As such, these ~~financial~~financial statements do not include all information and footnotes required by U.S. GAAP for complete financial statements. The December 31, ~~2020~~2021 Condensed Consolidated Balance Sheet was derived from audited financial statements as of that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments consisting only of normal recurring adjustments necessary to state fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods. The results of operations for the interim periods presented are not necessarily indicative of results for the full year or future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the fiscal year ended December 31, ~~2020,~~2021, as disclosed in our Annual Report on Form 10-K for the ~~2020~~fiscal year ended December 31, 2021 (the “2021 Form ~~10-K.~~

10-K”).

The unaudited condensed consolidated financial statements include the accounts of Shift4 Payments, Inc. and its wholly-owned subsidiaries. Shift4 Payments, Inc. consolidates the financial results of Shift4 Payments, LLC, which is considered a variable interest entity (“VIE”). Shift4 Payments, Inc. is the primary beneficiary and sole managing member of Shift4 Payments, LLC and has decision making authority that significantly affects the economic performance of the entity. As a result, the Company consolidates Shift4 Payments, LLC and reports a noncontrolling interest representing the economic interest in Shift4 Payments, LLC held by Rook Holdings Inc. (“Rook”). Prior to May 24, 2022, the noncontrolling interest also included the economic interest in Shift4 Payments, LLC held by certain affiliates of Searchlight Capital Partners (“Searchlight”) ~~and~~(together with Rook, ~~(together,~~ the “Continuing Equity Owners”).

As the Reorganization Transactions are considered transactions between entities under common control, the financial statement presentation for the periods prior to the IPO and Reorganization Transactions have been adjusted to combine the previously separate entities for presentation purposes. Prior to the Reorganization Transactions, Shift4 Payments, Inc. had no operations.

All intercompany balances and transactions have been eliminated in consolidation.

The assets and liabilities of Shift4 Payments, LLC represent substantially all of the consolidated assets and liabilities of Shift4 Payments, Inc. with the exception of certain cash balances, contingent consideration for earnout liabilities for The Giving Block, Inc. (“The Giving Block”), and the aggregate principal amount of $690.0 million of 2025 Convertible Notes ~~that~~

~~Table~~and $632.5 million of ~~Contents~~

2027 Convertible Notes that are held by Shift4 Payments, Inc. directly. ~~See Note 10 for information on the accounting for the 2025 Convertible Notes. In connection with the issuance~~As of the 2025 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 both June 30, 2022 and December 31, 2021, $9.8 million 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~~cash was held 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 June 30, ~~2021~~2022, the earnout liabilities for The Giving Block were ~~and~~ $58.9 million~~December 31, 2020, $9.9 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.

Certain prior year balances have been adjusted to present contract assets within the line item “Prepaid expenses and other current assets” rather than in its own line item on the Company’s unaudited Condensed Consolidated Balance Sheets.

Table of Contents

SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

Liquidity and Management’s Plan

The unprecedented and rapid spread of COVID-19 as well as the shelter-in place orders, promotion of social distancing measures, restrictions to businesses deemed non-essential, and travel restrictions implemented throughout the United States have significantly impacted the restaurant and hospitality industries. As a result, the Company’s revenues, which are largely tied to processing volumes in these verticals, were materially impacted beginning in the final two weeks of March 2020. Since late March 2020, despite volumes in merchant categories associated with international travel, corporate travel and stadium occupancy running lower than pre 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 six months ended June 30, 2021 have exceeded those for the three and six months ended June 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.

As of June 30, ~~2021,~~2022, the Company had ~~$1,140.0~~$1,772.5 million total principal amount of debt 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 109 for further information on the Company’s debt obligations.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Significant estimates inherent in the preparation of the accompanying unaudited condensed consolidated financial statements include estimates of fair value of acquired assets and liabilities through business combinations, fair value of contingent liabilities related to earnout payments, ~~and change of control,~~ fair value of debt instruments, allowance for doubtful accounts, income taxes, investments in securities and noncontrolling interests and the February 2021 transfer of the right to select a participant for one seat on board Inspiration4, the first all-civilian mission to space, from Jared Isaacman, the Company’s Chief Executive Officer and founder (“Founder”).interests. Estimates are based on past experience and other considerations reasonable under the circumstances. Actual results may differ from these estimates.

Additionally, the full impact of the COVID-19 pandemic is unknown and cannot be reasonably estimated. However, the Company has made accounting estimates based on the facts and circumstances available as of the reporting date. To the extent there are differences between these estimates and actual results, the unaudited condensed consolidated financial statements may be materially affected.

~~Revision of Previously Issued Financial Statements~~

During the course of preparing the Company’s consolidated financial statements for the year ended December 31, 2020, it was identified that $4.8 million of acquired technology recorded in “Other intangible assets, net” in the Consolidated Balance Sheet should have been impaired during fiscal year 2018. Although the Company has determined that this error did not have a material impact on its previously issued condensed consolidated financial statements, it has revised the accompanying condensed consolidated financial statements to correct for this error and to reflect the associated decrease in amortization expense of $0.2 million and $0.3 million recorded in “Cost of Sales” for the three and six months ended June 30, 2020.

In addition, a misclassification of $0.9 million and $2.1 million was identified for the three and six months ended June 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.

~~Table of Contents~~

The applicable notes to the unaudited condensed consolidated financial statements have also been revised to correct for these errors. The following table sets forth the effects of the revisions to the previously issued unaudited Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2020 to correct for the prior period errors.

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.~~

The Company’s significant accounting policies are discussed in Note 2 to Shift4 Payments, Inc.’s consolidated financial statements as of and for the ~~years~~year ended December 31, ~~2020 and 2019~~2021 in the ~~2020~~2021 Form 10-K. There have been no significant changes to these policies which have had a material impact on the Company’s unaudited condensed consolidated financial statements and related notes during the six months ended June 30, ~~2021,~~2022 except ~~as noted~~for the below.

~~Investments in securities~~

~~Investments in securities represents the Company’s investments in equity of non-public entities. These non-marketable equity investments have no readily determinable fair values~~

Crypto Settlement Assets and ~~are measured using the measurement alternative, which is defined as cost, less impairment, adjusted for observable price changes from orderly transactions for identical or similar investments~~Liabilities

The Company recognizes a liability accompanied by an asset of the same ~~issuer. Adjustments, if any,~~value to reflect its obligation to safeguard the crypto settlement assets it holds on behalf of users of The Giving Block’s platform. These crypto settlement assets are ~~recorded in “Other income, net”~~comprised of numerous cryptocurrencies that are traded on numerous cryptocurrency exchanges. The liability and asset are remeasured at each reporting date at the ~~unaudited Condensed Consolidated Statements~~fair value of ~~Operations. As~~the crypto settlement assets, which is determined using quoted prices from cryptocurrency exchanges. The Company’s agent, which acts as a cryptocurrency exchange and custodian, holds the cryptographic key information of ~~June 30, 2021,~~ the crypto settlement assets and is primarily obligated to secure the assets and protect them from loss or theft. 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 formaintains the ~~gaming, lottery, sports betting and other industries.~~

internal recordkeeping of the assets.

Recent Accounting Pronouncements

The Company, an emerging growth company (“EGC”), has elected to take advantage of the benefits of the extended transition period provided for in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards which allows the Company to defer adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company expects to become a large accelerated filer effective December 31, 2021, following which point the Company will follow the timeline for adoption of new accounting pronouncements for public companies.

~~Table of Contents~~

Accounting Pronouncements Adopted

~~In August 2020, the FASB issued ASU 2020-06,~~

Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. This ASU removes certain separation models in ASC 470-20 for convertible instruments, and, as a result, embedded conversion features that do not require bifurcation under ASC 815 are no longer subject to separation into an equity classified component. Consequently, a convertible debt instrument, such as the Company's 2025 Convertible Notes, shall be accounted for as a single liability measured at its amortized cost. The Company adopted ASU 2020-06 on January 1, 2021 using the modified retrospective transition method. As of December 31, 2020, the Company had recorded a discount on the 2025 Convertible Notes of $111.5 million related to the separation of the conversion feature. This discount resulted in the accretion of interest expense over time and 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. Interest expense recognized in future periods will be reduced as a result of accounting for the convertible debt instrument as a single liability measured at its amortized cost. The impact on net income (loss) per share and the Company’s debt covenants was not material.

~~In August 2018, the FASB issued ASU 2018-13:~~ ~~Fair Value Measurement—Disclosure Framework (Topic 820)~~. The updated guidance improves the disclosure requirements on fair value measurements. The Company adopted ASU 2018-13 effective January 1, 2020 and there was no significant impact on the Company’s disclosures upon adoption.

~~Accounting Pronouncements Not Yet Adopted~~

In February 2016, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued ~~ASU 2016-02:~~ Accounting Standards Codification (“ASC”) 842, Leases~~. The new standard~~ (“ASC 842”) with amendments in 2018 and 2019. This accounting guidance requires a lessee to record assets and liabilities on the balance sheet for the rights and obligations arising from leases with terms of more than 12 months. The 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~~On January 1, 2021, the Company adopted ASC 842 using the modified retrospective method, reflecting the adoption in the Company’s annual results for the period ended December 31, ~~2021~~2021. Prior period amounts were not adjusted and ~~interim periods beginning~~continue to be reported in accordance with historic accounting under previous lease guidance, ASC 840, Leases (“ASC 840”). The Company elected to use the package of practical expedients permitted under the transition guidance. The Company did not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, or (iii) initial direct costs for any existing leases. For lease agreements where the Company is a lessee that include lease and non-lease components, the Company elected to use the practical expedient on all leases entered into or modified after January 1, ~~2022. The~~2021 to combine lease and non-lease components for all classes of assets. Additionally, the Company ~~is evaluating the potential impact~~elected to not record leases with a term of ~~adopting ASU 2016-02~~twelve months or less on the ~~Company’s consolidated financial statements.~~

balance sheet. Upon adoption, the Company recorded right-of-use assets of $21.4 million and lease liabilities of $25.7 million. The adoption of ASC 842 did not result in a material impact to the unaudited Condensed Consolidated Statements of Operations or unaudited Condensed Consolidated Statements of Cash Flows. See Note 13 for ASC 842-related disclosures.

Table of Contents

SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

In June 2016, the FASB issued ~~ASU 2016-13:~~ Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326), which changes the impairment model for most financial assets, including accounts receivable, and replaces the existing incurred loss impairment model with ana current expected credit loss (“CECL”) methodology, which will result in more timely recognition of credit losses. The 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~~adopted ASU 2016-13 on a modified retrospective basis on December 31, 2021, ~~and to reflect~~reflecting 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 Company is evaluating the potential impact of adopting ASU 2016-13 on the Company’s consolidated financial statements.

~~In January 2017, the FASB issued ASU 2017-04:~~ ~~Simplifying the Test for Goodwill Impairment~~, which removes step 2 of the quantitative goodwill impairment test. Under the amended guidance, a goodwill impairment charge is recognized for the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill. T~~he 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.

~~In August 2018, the FASB issued ASU 2018-15,~~ ~~Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract~~. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected. The guidance is effective for the Company for annual reporting periods beginning after December 15, 2020, and interim reporting periods beginning after December 15, 2021. The Company adopted ASU 2018-15 prospectively for the Company’s annual reporting period effective January 1, 2021 and will adopt it for interim reporting periods beginning on January 1, 2022. The adoption is not expected to have a significant impact on the Company’s consolidated financial statements.

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~. ASU 2019-12 removes certain exceptions associated with (i) intraperiod tax allocations, (ii) recognition of deferred tax liability for equity method investments of foreign subsidiaries, and (iii) the calculation of income taxes in an interim period when in a loss position. Additionally, ASU 2019-12 simplifies accounting for (i) income taxes associated with franchise taxes, (ii) tax basis of goodwill in a business combination, (iii) the allocation of tax expense to a legal entity that is not subject to tax in standalone financial statements, (iv) enacted changes in tax laws, and (v) income taxes related to employee stock ownership plans and investments in qualified affordable housing projects accounted for under the equity method. The 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 our~~Company's annual results for the period ended December 31, 2021 and interim periods beginning January 1, 2022. The adoption isof ASU 2016-13 did not ~~expected to have~~result in a ~~significant~~material impact on the Company’s unaudited condensed consolidated financial ~~statements.~~

statements and disclosures.

~~Table of Contents~~

In ~~March 2020,~~October 2021, the FASB issued ASU ~~2020-04,~~ 2021-08,~~Reference Rate Reform~~ Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU requires an acquirer to account for revenue contracts acquired in a business combination in accordance with ASC 606, ~~which provides optional expedients~~as if it had originated the contracts. Prior to ASU 2021-08, an acquirer generally recognized assets acquired and ~~exceptions for applying U.S. GAAP to~~liabilities assumed in a business combination, including contract ~~modifications~~assets and ~~hedging relationships, subject to certain criteria, that reference~~contract liabilities arising from revenue contracts with customers and other similar contracts, at fair value on 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.acquisition date. The Company ~~is currently evaluating whether it will elect~~adopted ASU 2021-08 in the ~~optional expedients, as well as evaluating~~third quarter of 2021 and retrospectively applied the ~~impact~~ASU to its acquisitions that occurred in 2021. The adoption of ASU ~~2020-04 on~~2021-08 resulted in an increase to “Deferred revenue” of $5.7 million, of which $1.8 million was recognized as an increase to “Gross revenue” for the ~~Company’s consolidated financial statements.~~

fiscal year ended December 31, 2021.

In July 2021, the FASB issued ASU ~~2021-05:~~ 2021-05, ~~Lessors —Certain~~Lessors—Certain Leases with Variable Lease Payments, to amend lessor accounting for certain leases with variable lease payments that do not depend on a reference index or a rate and would have resulted in the recognition of a loss at lease commencement if classified as a sales-type or a direct financing lease. ASU 2021-05 amends the classification requirements of such leases for lessors to ~~result in an~~require operating lease classification. ~~This guidance can be applied either retrospectively or prospectively with early adoption permitted.~~ The Company ~~expects to become~~adopted ASU 2021-05 on 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 ASU 2021-05retrospective basis effective January 1, 2022. The ~~Company is evaluating the method of~~ adoption ~~and the potential~~did not have a significant impact ~~of adopting ASU 2021-05~~ on the Company’s unaudited condensed consolidated financial statements.

2.In March 2022, the SEC issued Staff Accounting Bulletin No. 121 (“SAB 121”), which provided interpretive guidance regarding the accounting for obligations to safeguard crypto-assets an entity holds for users of its crypto platform. This guidance requires entities that hold crypto-assets on behalf of platform users to recognize a liability accompanied by an asset of the same value on its balance sheet to reflect the entity’s obligation to safeguard the crypto-assets held for its platform users. The liability and asset should be measured at initial recognition and each reporting date at the fair value of the crypto-assets that the entity is responsible for holding for its platform users. The entity should also describe in the footnotes to the financial statements the nature and amount of crypto-assets the entity is responsible for safeguarding for its platform users and how the fair value is determined, and should also consider including information regarding who (e.g. the entity, its agent, or another third party) holds the cryptographic key information, maintains the internal recordkeeping of those assets, and is obligated to secure the assets and protect them from loss or theft. This guidance is effective from the first interim period after June 15, 2022 and should be applied retrospectively. The Company adopted SAB 121 on a retrospective basis effective June 30, 2022, resulting in the recognition of $1.2 million of crypto settlement assets within “Prepaid expenses and other current assets” and $1.2 million of crypto settlement liabilities within “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets as of June 30, 2022 associated with The Giving Block. The adoption of this guidance had no impact on the Company’s unaudited Condensed Consolidated Statements of Operations and unaudited Condensed Consolidated Statements of Cash Flows.

~~Acquisitions~~

Accounting Pronouncements Not Yet Adopted

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. Companies may elect to apply these amendments through December 31, 2022. The Company is currently evaluating whether we will elect the optional expedients, as well as evaluating the impact of ASU 2020-04 on the Company’s unaudited condensed consolidated financial statements.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

Each of the following acquisitions was accounted for as a business combination using the acquisition method of accounting. The respective purchase prices were allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill and represents the future economic benefits arising from other assets acquired, which cannot be individually identified or separately recognized. Under the acquisition method of accounting for business combinations, if there are changes to acquired deferred tax balances, valuation allowances or liabilities related to uncertain tax positions during the measurement period, and they are related to new information obtained about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement-period adjustment, with the offset recorded to goodwill.

~~VenueNext~~

On February 28, 2022, the Company ~~completed the acquisition~~acquired The Giving Block by acquiring 100% of ~~VenueNext Inc. (“VenueNext”),~~ its common stock fo~~a leader in integrated payments solutions in sporting arenas and event complexes,~~ ~~on March 3, 2021, for $66.9~~r $106.9 million of estimated total purchase consideration, net of cash ~~acquired, by acquiring 100% of VenueNext’s membership interests. This acquisition enhances~~acquired. The Giving Block is a cryptocurrency donation marketplace that the ~~Company’s presence and capabilities~~Company expects to accelerate its growth in ~~a number of large and growing verticals such~~the non-profit sector with significant cross-sell potential. Total purchase consideration was 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

follows:


Cash	$	16.8
Shares of Class A common stock (a)	36.4
RSUs granted for fair value of equity-based compensation awards (b)	0.1
Contingent consideration (c)	57.8
Total purchase consideration	111.1
Less: cash acquired	(4.2)
Total purchase consideration, net of cash acquired	$	106.9

(a) Total purchase consideration includes ~~345,423~~785,969 shares of common stock. ~~As of June 30, 2021, 325,127 shares of common stock have been issued.~~

						(b)	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~~The Giving Block employees represents a component of the total consideration as presented above and was valued based on the fair value of ~~the VenueNext~~The Giving Block awards on ~~March 3, 2021,~~February 28, 2022, the acquisition date.
(c) The Company agreed to an earnout due to the former shareholders of The Giving Block in April 2023, calculated as a multiple of revenue earned by The Giving Block from March 1, 2022 to February 28, 2023, not to exceed $246.0 million. The earnout will be paid 75% in a combination of RSUs and shares of the Company’s Class A common stock and 25% in cash. The fair value of the earnout was included in the initial purchase consideration and will be revalued quarterly until the end of the earnout period as a fair value adjustment within “General and administrative expenses” in the Company’s unaudited Condensed Consolidated Statements of Operations. As of June 30, 2022, the fair value of the earnout included in the purchase consideration was $57.5 million, which is recognized in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. In addition, a portion of the earnout due in April 2023 is considered post-acquisition compensation expense and will be accrued throughout the earnout period within “General and administrative expenses” on the Company’s unaudited Condensed Consolidated Statements of Operations. As of June 30, 2022, $1.4 million is included in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

The following table summarizes the fair value assigned to the assets acquired and liabilities assumed at the acquisition date. These amounts reflect various preliminary fair value estimates and assumptions, and are subject to change within the measurement period as valuations are finalized. The primary areas of preliminary purchase price allocation subject to change relate to the valuation of ~~accounts receivable, accrued~~contingent consideration, accrued expenses and other current liabilities assumed, and residual goodwill.

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



Prepaid expenses and other current assets (a)	$	4.8
Other intangible assets	26.0
Goodwill (b)	89.4
Accrued expenses and other current liabilities (a)	(4.9)
Deferred revenue	(2.0)
Deferred tax liability	(6.4)
Net assets acquired	$	106.9

(a) Includes $4.8 million of crypto settlement assets and liabilities. See the disclosure under “Accounting Pronouncements Adopted” in Note 1 for further information.
(b) Goodwill is not deductible for tax purposes.

~~During the three and~~

In the six months ended June 30, ~~2021,~~2022, the Company incurred expenses in connection with ~~the VenueNext~~The Giving Block acquisition of ~~$0.1 million and $1.1 million, respectively.~~ $2.2 million. These expenses are included in “Professional fees” in the Company’s unaudited Condensed Consolidated Statements of Operations.

~~Table of Contents~~

The fair values of intangible assets were estimated using inputs classified as Level 3 under the income approach using either the relief-from-royalty method (developed technology ~~trademarks~~ and trade ~~names)~~name), the with or without method (donor relationships) or the multi-period excess earnings method (customer relationships). The contingent liability arising from the expected earnout payment included in purchase consideration was measured on the acquisition date using a Monte Carlo simulation in a risk-neutral framework, calibrated to Management’s revenue forecasts. The transaction was not taxable for income tax purposes. The weighted average life of developed technology, ~~trademarks and~~the trade ~~names,~~name, donor relationships and customer relationships is 108 years, 1015 years, 5 years and 1115 years, respectively. The goodwill arising from the acquisition largely ~~consists~~consisted of revenue synergies associated with a larger total addressable market and the ability to cross-sell existing customers, new customers and technology capabilities.

The ~~VenueNext~~Giving Block acquisition did not have a material impact on the Company’s unaudited condensed consolidated financial statements. Accordingly, revenue and expenses related to the acquisition and pro forma financial information have not been presented.

~~3dcart~~

~~The~~

Postec

On September 1, 2021, the Company ~~completed the acquisition of Infomart2000 Corp., doing business as 3dcart, on November 5, 2020,~~acquired Postec, Inc. (“Postec”) by acquiring 100% of its membership interests for ~~$39.9~~$14.3 million in cash, net of cash acquired, and approximately $19.2 million in shares of the Company’s Class A common stock. The purchase was funded with cash on hand. Since the acquisition, 3dcart has been rebranded as Shift4Shop to align the eCommerce offering with Shift4’s existing ecosystem of services. The acquisition expanded the Company’s omni-channel transaction capabilities and enabled Shift4Shop merchants to augment their eCommerce platform experience with the Company’s secure integrated payments solutions. In addition, the Company’s indirect sales distribution network is able to offer Shift4Shop’s turnkey eCommerce capabilities to the Company’s new and existing POS and payments customers. 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.

~~Hospitality Technology Vendor~~

~~The Company completed the acquisition of a Hospitality Technology Vendor on October 16, 2020, by acquiring 100% of its membership interests for $9.9 million, net of cash~~ acquired. Subsequently, the total consideration was adjusted to $9.5 million during the measurement period due to a working capital adjustment of $0.4 million, which reduced goodwill. In the three months ended June 30, 2021, the Company made a measurement period adjustment of $(0.3) million to accounts receivable with a corresponding increase 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 solution and empowers the Company’s distribution partners to sign the vendor’s customer accounts and leverage the combined expertise to handle all aspects of installation, service, and ~~support.The primary areas~~support, similar to the hospitality technology vendor acquired in October 2020.

Pending Finaro Acquisition

On March 1, 2022, the Company entered into a definitive agreement to acquire Credorax, Inc. d/b/a Finaro (“Finaro”) for $200.0 million in cash on hand, 6,439,316 shares of ~~preliminary purchase~~the Company’s Class A common stock with a value of approximately $325.0 million as of March 1, 2022, determined by the volume weighted average price ~~allocation~~for the 30 trading days preceding the date of the agreement, and a performance-based earnout of up to $50.0 million in the Company’s Class A common stock. Consummation of the merger is subject to ~~change relate~~regulatory approvals, which the Company expects to receive in the ~~valuation~~fourth quarter of ~~accounts receivable, accrued~~2022. Finaro is a cross-border eCommerce platform and bank specializing in solving complex payment problems for multi-national merchants that the Company believes will accelerate its growth in international markets. In the three and six months ended June 30, 2022, the Company incurred expenses in connection with the Finaro acquisition of $1.1 million and ~~other current liabilities assumed~~$4.7 million, respectively. These expenses are included in “Professional fees” in the Company’s unaudited Condensed Consolidated Statements of Operations.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and ~~residual goodwill.~~

per unit amounts)

3.Revenue

~~Revenue~~

ASC ~~606:~~606, Revenue from Contracts with Customers

(“ASC 606”)

Under ASC 606, the Company has 3three 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.~~

Disaggregated Revenue

Based on similar operational characteristics, the Company’s revenue from contracts with customers is disaggregated as follows:


	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020			2022		2021		2022		2021
Payments-based revenue	$	324.8	$	121.2	$	540.7	$	297.6	Payments-based revenue	$	473.9	$	324.8	$	845.4	$	540.7
Subscription and other revenues		26.2		20.6		49.6		43.6	Subscription and other revenues	32.8		26.2		63.2		49.6
Total	$	351.0	$	141.8	$	590.3	$	341.2	Total	$	506.7	$	351.0	$	908.6	$	590.3

Based on similar economic characteristics, the Company’s revenue from contracts with customers is disaggregated as follows:


	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020			2022		2021		2022		2021
Over-time revenue	$	341.1	$	134.7	$	571.3	$	323.5	Over-time revenue	$	495.0	$	341.1	$	887.0	$	571.3
Point-in-time revenue		9.9		7.1		19.0		17.7	Point-in-time revenue	11.7		9.9		21.6		19.0
Total	$	351.0	$	141.8	$	590.3	$	341.2	Total	$	506.7	$	351.0	$	908.6	$	590.3

Contract assets of ~~Contents~~

$0.2 million and $0.3 million as of June 30, 2022 and December 31, 2021, respectively, are included within “Prepaid expenses and other current assets” on the Company’s unaudited Condensed Consolidated Balance Sheets. There was no allowance for contract assets as of June 30, 2022 and December 31, 2021.

Contract Liabilities

The Company charges merchants for various post-contract license support/service fees and annual regulatory compliance fees. These fees typically relate to a period of one year. The Company recognizes the revenue on a straight-line basis over its respective period. As ofJune 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had deferred revenue of ~~$13.4~~$20.6 million and~~$8.1~~ $17.4 million, respectively. The change in the contract liabilities iswas primarily the result of a timing difference between payment from the customer and the Company’s satisfaction of each performance obligation.

The following reflects the amounts the Company recognized as annual service fees and regulatory compliance fees within “Gross revenue” in the Company’s unaudited Condensed Consolidated Statements of Operations and the amount of such fees that was included in deferred revenue at the beginning of the respective ~~period.~~

period:

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

The change in the Company’s allowance for doubtful accounts was as follows:

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

~~(a)~~

Includes a $5.5 million allowance on chargebacks from a single merchant recorded during the six months ended June 30, 2021, which is included in “Cost of Sales” on the unaudited Condensed Consolidated Statements of Operations.


	June 30, 2022		June 30, 2021
Beginning balance	$	8.0	$	5.7
Additions to expense (a)	4.3		8.1
Write-offs, net of recoveries and other adjustments	(1.5)		(1.0)
Ending balance	$	10.8	$	12.8

(a) For the six months ended June 30, 2021, includes a $5.5 million allowance on chargebacks from a single merchant, which is included in “Cost of sales” on the unaudited Condensed Consolidated Statements of Operations.

4.	~~Restructuring~~

~~The following table summarizes the changes in the Company’s restructuring accrual:~~

Balance at December 31, 2020

$
2.9

Severance payments

(0.8
)
Accretion of interest (a)

0.1

Balance at June 30, 2021

$
2.2

4.Goodwill

~~(a)~~

~~Accretion of interest is included within “Restructuring expenses” in the unaudited Condensed Consolidated Statements of Operations.~~

The Company recognized restructuring expenses associated with a historical acquisition of $0.1 million for the six months ended June 30, 2021 and $0.1 million and $0.3 million for the three and six months ended June 30, 2020, respectively.

The current portion of the restructuring accrual of $1.5 million and $1.4 million at June 30, 2021 and December 31, 2020, respectively, is included within “Accrued expenses and other current liabilities” on the unaudited Condensed Consolidated Balance Sheets. The long-term portion of the restructuring accrual of $0.7 million and~~$1.5 million at June 30, 2021 and December 31, 2020, respectively, is included within “Other noncurrent liabilities” on the unaudited Condensed Consolidated Balance Sheets.~~

~~Of the $2.2 million restructuring accrual outstanding as of June 30, 2021, approximately $0.8 million is expected to be paid in 2021 and $1.6 million in 2022, less accreted interest of $0.2 million.~~

5.	~~Goodwill~~

The changes in the carrying amount of goodwill were as follows:

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

~~Table of Contents~~

6.
Balance at December 31, 2021~~Other Intangible Assets, Net~~	$	537.7
The Giving Block Acquisition (Note 2)	89.4
Balance at June 30, 2022	$	627.1

5.Other Intangible Assets, Net

Other intangible assets, net consisted of the following:


	Weighted Average	June 30, 2021							Weighted Average Amortization Period (in years)	June 30, 2022
	Amortization Period (in years)	Carrying Value		Accumulated Amortization		Net Carrying Value				Carrying Value		Accumulated Amortization		Net Carrying Value
Merchant relationships	8		193.3	$	119.9	$	73.4	Merchant relationships	11	$	96.5	$	28.7	$	67.8
Acquired technology	9		113.1		48.5		64.6	Acquired technology	9	116.2		61.5		54.7
Trademarks and trade names	17		21.0		3.8		17.2	Trademarks and trade names	17	29.3		4.6		24.7
Capitalized software development costs	4		33.0		8.7		24.3	Capitalized software development costs	3	61.7		12.5		49.2
Residual commission buyouts (a)	3		21.1		15.5		5.6	Residual commission buyouts (a)	3	32.3		9.7		22.6
Total intangible assets		$	381.5	$	196.4	$	185.1

Total other intangible assets, net								Total other intangible assets, net		$	336.0	$	117.0	$	219.0

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

~~(a)~~

~~Residual commission buyouts include contingent payments of $3.5 million and$3.4 million as of June 30, 2021 and December 31, 2020, respectively.~~


	Weighted Average Amortization Period (in years)	December 31, 2021
		Carrying Value		Accumulated Amortization		Net Carrying Value
Merchant relationships	8	$	200.1	$	133.7	$	66.4
Acquired technology	9	113.2		54.9		58.3
Trademarks and trade names	18	20.3		3.8		16.5
Capitalized software development costs	4	42.6		9.1		33.5
Residual commission buyouts (a)	3	20.3		6.5		13.8
Total other intangible assets, net		$	396.5	$	208.0	$	188.5

(a) Residual commission buyouts include contingent payments of $3.7 million and $4.2 million as of June 30, 2022 and December 31, 2021, respectively.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

As of June 30, ~~2021,~~2022, the estimated amortization expense for other intangible assets for each of the five succeeding years and thereafter is as follows:

Amounts charged to expense in the Company’s unaudited Condensed Consolidated Statements of Operations for amortization of other intangible assets were as follows:

7.	~~Capitalized Acquisition Costs, Net~~

6.Capitalized Acquisition Costs, Net

Capitalized acquisition costs, net were ~~$32.8~~$36.6 million and~~$30.2~~ $35.1 million at June 30, ~~2021~~2022 and December 31, ~~2020, respectively. This consists~~2021, respectively, consisting of upfront processing bonuses with a gross carrying value of ~~$60.6~~$73.0 million and~~$55.7~~ $69.1 million ~~and~~less accumulated amortization of ~~$27.8~~$36.4 million and~~$25.5~~ $34.0 million at June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

Capitalized acquisition costs had a weighted average amortization period of three years at both June 30, ~~2021~~2022 and December 31, ~~2020.~~2021. Amortization expense for capitalized acquisition costs iswas $6.6 million and $12.7 million for the three and six months ended June 30, 2022, respectively, $5.1 million and $10.1 million for the three and six months ended June 30, 2021, respectively, and ~~$3.7 million and $7.0 million for the three and six months ended June 30, 2020, respectively, and~~ is included in “Cost of sales” in the Company’s unaudited Condensed Consolidated Statements of Operations.

~~Table of Contents~~

As of June 30, ~~2021,~~2022, the estimated future amortization expense for capitalized acquisition costs is as follows:

8.	~~Equipment for Lease, Net~~

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

7.Equipment for Lease, Net

Equipment for lease, net consisted of the following:

~~(a)~~

~~Represents equipment that was not yet initially deployed to a merchant and, accordingly, is not being depreciated.~~

8.Property, Plant and six months ended June 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.

Equipment, Net

9.	~~Property, Plant and Equipment, Net~~

Amounts charged to expense in the Company’s unaudited Condensed Consolidated Statements of Operations for depreciation of property, plant and equipment were as follows:

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~~10.~~

~~Debt~~

SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

The Company’s outstanding debt consisted of the following:

Amortization of capitalized financing fees is included in “Interest expense” ~~within~~in the Company’s unaudited Condensed Consolidated Statements of Operations. Amortization expense for capitalized financing fees was $2.0 million and $3.9 million for the three and six months ended June 30, 2022, respectively, and $1.2 million and $2.4 million for the three and six months ended June 30, 2021, ~~respectively, and $1.0 million and $2.1 million for the three and six months ended~~respectively.

Future principal payments

As of June 30, ~~2020, respectively.~~

2022, future principal payments associated with the Company’s long-term debt were as follows:


2025	$	690.0
2026	450.0
2027	632.5
Total	$	1,772.5

Convertible Notes due 2025

The net carrying amount of the Convertible Senior Notes due 2025 (“2025 Convertible Notes”) was as follows:


	June 30, 2022		December 31, 2021
Principal outstanding	$	690.0	$	690.0
Unamortized debt issuance costs	(11.3)		(13.0)
Net carrying value	$	678.7	$	677.0

Convertible Notes due 2027

The net carrying amount of the 0.50% Convertible Senior Notes due 2027 (“2027 Convertible Notes”) was as follows:


	June 30, 2022		December 31, 2021
Principal outstanding	$	632.5	$	632.5
Unamortized debt issuance costs	(12.8)		(13.8)
Net carrying value	$	619.7	$	618.7

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

Senior Notes due 2026

In ~~October 2020, the Company’s subsidiaries~~March 2022, Shift4 Payments, LLC (the “Issuer”) and Shift4 Payments Finance Sub, Inc. ~~(together,~~(the “Co-Issuer” and together with the Issuer, the “Issuers”) ~~issued an aggregate of~~, completed a consent solicitation to amend the indenture governing the $450.0 million principal amount of 4.625% Senior Notes due 2026 (“2026 Senior Notes”)~~. The Company received net proceeds, after deducting initial purchasers’ discounts and estimated offering expenses,~~ to allow for the repurchase of ~~approximately $442.8 million from the 2026 Senior Notes Offering. The net proceeds~~capital stock as part of the 2026 Senior Notes Offering, together with cash on hand, were used to repay the remaining $450.0 million left on the First Lien Term Loan Facility. The 2026 Senior Notes mature on November 1, 2026, and accrue interest at a rate of 4.625% per year. Interest on the 2026 Senior Notes is payable semi-annually in arrears on each May 1 and November 1, commencing on May 1, 2021. The Issuers may redeem all or a portion of the 2026 Senior Notes at any time prior to November 1, 2022 at a redemption price equal to 100% of the principal amount of the 2026 Senior Notes, plus the applicable “make-whole” premium as provided in the indenture governing the 2026 Senior Notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. At any time on or after November 1, 2022, the Issuers may redeem all or a portion of the 2026 Senior Notes at the redemption prices set forth in the indenture governing the 2026 Senior Notes, plus accrued and unpaid interest, if any, to but excluding, the date of redemption. In addition, at any time prior to November 1, 2022, the Issuers may also redeem up to 40% of the original aggregate principal amount of the 2026 Senior Notes (including any additional 2026 Senior Notes) with the proceeds of certain equity offerings, at a redemption price equal to 104.625% of the principal amount of the 2026 Senior Notes, plus accrued and unpaid interest, if any to the redemption date. The Issuers may make such redemption so long as, after giving effect to any such redemption, at least 50% of the original aggregate principal amount of the 2026 Senior Notes (including any additional 2026 Senior Notes) remains outstanding (unless all 2026 Senior Notes are redeemed concurrently) and such redemption occurs not less than 10 days nor more than 60 days prior notice to the holders of the 2026 Senior Notes.

~~The 2026 Senior Notes have not~~Market Capitalization exception that had been registered under the Securities Act of 1933, as amended (“Securities Act”), or the securities laws of any other jurisdiction. The 2026 Senior Notes were sold to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A and outside the United States pursuant to Regulation S of the Securities Act.

~~Convertible Notes due 2025~~

~~In 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. T~~he 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 all

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of 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.

included. In connection with the ~~issuance~~solicitation, the Company paid $4.5 million 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 Notesconsent payments to ~~Shift4 Payments, LLC~~note holders, which was capitalized and recognized in the ~~amount~~unaudited Condensed Consolidated Balance Sheets as a reduction 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, and incurred fees of ~~$109.9 million.~~

~~The net carrying amount of the 2025 Convertible Notes was as follows:~~

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

~~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%.~~

~~First Lien and Second Lien Term Loan Facility~~

~~As of December 31, 2019, Shift4 Payments, LLC had borrowings of $650.0~~$1.4 million, in aggregate principal amount of secured term loans comprised of first lien term loans of $520.0 million due November 30, 2024 (“First Lien Term Loan Facility”) and second lien term loans of $130.0 million due November 30, 2025 (“Second Lien Term Loan Facility”). Interest with respect to the First Lien Term Loan Facility was payable quarterly in arrears at a rate of LIBOR plus 4.50% per annum. Interest with respect to the Second Lien Term Loan Facility was payable quarterly in arrears at a rate of LIBOR plus 8.50% per annum. The interest rate was determined based on Shift4 Payments, LLC first lien leverage ratio for the preceding fiscal quarter. Additional details on the credit agreement governing the First Lien Term Loan Facility are provided below under the heading “Revolving Credit Facility”.

~~In June 2020, the Company~~ ~~made $59.8 million~~ in principal payments on the First Lien Term Loan Facility and repaid in full the $130.0 million outstanding under the Second Lien Term Loan Facility. In connection with these payments, the Company incurred a loss on extinguishment of debt of $7.1 million representing the unamortized capitalized financing costs associated with the prepaid debt, which ~~was~~were recorded to ~~“Loss on extinguishment of debt”~~“Transaction-related expenses” in the unaudited Condensed Consolidated Statements of Operations in the ~~three and~~ six months ended June 30, ~~2020.~~

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~~In October 2020, the Company fully repaid the First Lien Term Loan Facility, as discussed above, using the proceeds from the 2026 Senior Notes.~~

2022.

Revolving Credit Facility

The credit agreement governing the First Lien Term Loan Facility (“First Lien Credit Agreement”) included a revolving credit facility that had a borrowing capacity of $90.0 million (“Revolving Credit Facility”), with a maturity date of November 30, 2022. The Company was in compliance with these covenants at December 31, 2020.

Loans incurred under the Revolving Credit Facility bore interest at the Company’s option at either the LIBO rate plus a margin ranging from 4.00% to 4.50% per year or the alternate base rate plus a margin ranging from 3.00% to 3.50% per year. The interest rate varied depending on the Company’s first lien leverage ratio. The alternate base rate and the LIBO rate were each subject to a 0 percent floor.

The Revolving Credit Facility unused commitment fee ranged from 0.25% to 0.50%. The applicable margin and unused commitment fee were determined based on the Company’s first lien net leverage ratio at the previously reported fiscal quarter.

~~In the first quarter of 2020, the Company drew~~

$68.5 million under the Revolving Credit Facility for general corporate purposes and to strengthen its financial position amid the COVID-19 pandemic. In June 2020, the Company repaid the outstanding borrowings of $89.5 million under the Revolving Credit Facility. Borrowing capacity on the Company’s Revolving Credit Facility ~~was $89.5 million as of December 31, 2020, net of a $0.5 million letter of credit.~~

~~Amended and Restated Revolving Credit Facility~~

~~On January 29, 2021,~~under the ~~Company amended and restated its~~ First Lien Credit Agreement (“~~Amended Credit Agreement”) and increased the borrowing capacity under the~~ Revolving Credit ~~Facility to $100.0 million, o~~Facility”) wa~~f which~~ $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 six months ended June 30, 2021.

The Revolving Credit Facility matures on January 29, 2026, or, if greater than $150.0 million aggregate principal amount of the Company’s 2025 Convertible Notes remains outstanding on September 15, 2025, on that date.

The Amended Credit Agreement requires periodic interest payments until maturity. The Company may prepay all revolving loans under the Amended Credit Agreement at any time without premium or penalty (other than customary LIBO rate breakage costs), subject to certain notice requirements. The Company may also be subject to mandatory prepayments if the Revolving Credit Exposure exceeds the Revolving Credit Commitments under the Revolving Credit Facility.

Loans incurred under the Revolving Credit Facility bear interest at the Company’s option at either the LIBO rate plus a margin ranging from 3.00% to 3.50% per year or the alternate base rate (the highest of the Federal Funds rate plus 0.50%, or the prime rate announced from time to time in The Wall Street Journal) plus a margin ranging from 2.00% to 2.50% per year (such margins being referred to as the “Applicable Rate”). The Applicable Rate varies depending on the Company’s total leverage ratio (as defined in the Amended Credit Agreement). The alternate base rate and the LIBO rate are each subject to a 0 percent floor.

In addition, the Company is required to pay a commitment fee under the Revolving Credit Facility in respect of the unutilized commitments thereunder at a rate ranging from 0.25% per year to 0.50% per year, in each case based on the total leverage ratio. The Company is also subject to customary letter of credit and agency fees.

Borrowings under the Amended Credit Agreement are guaranteed by each of the Company’s current and future direct and indirect wholly owned domestic subsidiaries, subject to certain customary exceptions as set forth in the Amended Credit Agreement. The obligations under the Amended Credit Agreement are secured by a first priority lien on substantially all the property and assets (real and personal, tangible and intangible) of the Company and the other guarantors, subject to certain customary exceptions.

The Amended Credit Agreement requires compliance with certain financial covenants, including a maximum secured leverage ratio, tested quarterly when the loans and certain letters of credit outstanding under the revolving credit facility exceed 35% of the total revolving commitments. In addition, the Amended Credit Agreement contains various covenants that, among other restrictions, limit the Company’s and its subsidiaries’ ability to incur indebtedness; incur certain liens; consolidate, merge or sell or otherwise dispose of assets; alter the business conducted by the Company and its subsidiaries; make investments, loans, advances, guarantees and acquisitions; enter into sale and leaseback transactions; pay dividends or make other distributions on equity interests, or redeem, repurchase or retire equity interests; enter into transactions with affiliates; enter into agreements restricting the ability to pay dividends; redeem, repurchase or refinance other indebtedness; and amend or modify governing documents. The Company was in compliance with these covenants at June 30, 2021.

The Amended Credit Agreement contains events of default that are customary for a secured credit facility. If an event of default relating to bankruptcy or other insolvency events with respect to a borrower occurs, all obligations under the Amended Credit Agreement will immediately become due and payable. If any other event of default exists under the Amended Credit Agreement, the lenders may accelerate the maturity of the obligations outstanding under the Amended Credit Agreement and exercise other rights and remedies,

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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.

~~Borrowing capacity on this Revolving Credit Facility was~~s $99.5 million as of June 30, ~~2021,~~2022, net of a $0.5 million ~~letter~~letter of credit.

Restrictions and Covenants

The 2025 Convertible Notes, 2026 Senior Notes, 2027 Convertible Notes (collectively, the “Notes”) and Revolving Credit Facility include certain restrictions on the ability of Shift4 Payments, LLC to make loans, advances, or pay dividends to Shift4 Payments, Inc.

~~11.~~At June 30, 2022 and December 31, 2021, the Company was in compliance with all financial covenants.

~~Other Consolidated Balance Sheet Components~~

Other than as provided above, there are no significant changes to the information disclosed in the 2021 Form 10-K.

10.Other Consolidated Balance Sheet Components

Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following:

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and ~~conferences.~~

per unit amounts)

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following:

~~12.~~

~~Fair Value Measurement~~

11.Fair Value Measurement

U.S. GAAP defines a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted process in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The Company determines the fair values of its assets and liabilities that are recognized or disclosed at fair value in accordance with the hierarchy described below. The following three levels of inputs may be used to measure fair value:

•

~~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.

~~Table~~•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 ~~Contents~~the assets or liabilities; and

•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.

The Company makes recurring fair value measurements of contingent liabilities arising from certain acquisitions using Level 3 unobservable inputs. These amounts relate to ~~a change of control provision and~~ expected earnout payments related to the number of existing point-of-sale merchants that convert to full acquiring merchants.

The contingent liability related to a change of control was measured on the acquisition date using a Monte Carlo simulation model based on expected possible valuations of the Company upon a change of control and is remeasured at each reporting date due to changes in management’s expectations regarding possible future valuations of the Company, including considerations of changes in results of the Company, guideline public company multiples, and expected volatility. The contingent liability related to change of control was settled for 915,503 shares of Class A common stock in

In conjunction with the ~~IPO.~~

acquisition of The Giving Block, Inc. on February 28, 2022, the Company entered into a contingent ~~liabilities arising from expected earnout payments were measured on~~consideration agreement that requires the ~~acquisition date using a probability-weighted expected payment model and were remeasured periodically due~~Company to ~~changes in management’s estimates~~pay up to $246.0 million if certain revenue thresholds of the ~~number of existing point-of-sale merchants that will convert to full acquiring merchants. In determining~~acquired business are achieved for the twelve months ending February 28, 2023. The fair value of the contingent ~~liabilities, management reviewed~~consideration was estimated using a Monte-Carlo simulation model, which included significant unobservable Level 3 inputs, such as projected financial performance over the ~~current results~~earn-out period along with estimates for revenue volatility of 20.9% and 16.7% as of June 30, 2022 and February 28, 2022, respectively, and the discount rate of 8.5% and 7.1% as of June 30, 2022 and February 28, 2022, respectively. Changes in the volatility and discount rate were due to broader market conditions. See Note 2 for more information on the terms of the ~~acquired business, along with projected results for the remaining~~ earnout ~~period, to calculate the expected earnout payment to be made using the agreed upon formula as laid out in the respective acquisition~~ agreement. The ~~earnout liabilities were fully paid at March 31, 2021.~~

estimated fair value of the contingent consideration related to purchase consideration of $57.5 million as of June 30, 2022 is recognized in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

The table below provides a reconciliation of the beginning and ending balances for the Level 3 contingent liabilities:

~~(a)~~

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.

The estimated fair value of the ~~2025 Convertible Notes and 2026 Senior Notes~~Company’s outstanding debt using quoted prices from over-the-counter markets, considered Level 2 inputs, was as ~~follows.~~

follows:

The estimated fair value of the Company’s crypto settlement assets and crypto settlement liabilities using quoted prices from active cryptocurrency exchanges, considered Level 1 inputs, was $1.2 million as of June 30, 2022. See Note 1 for more information on the Company’s crypto settlement assets and crypto settlement liabilities.

Other financial instruments not measured at fair value on the Company’s unaudited Condensed Consolidated Balance Sheets at June 30, ~~2021~~2022 and December 31, ~~2020~~2021 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 Company’s unaudited Condensed Consolidated Balance Sheets.

~~13.~~

~~Income Taxes~~

The Company holds an economic interest in Shift4 Payments, LLC and consolidates its financial position and results. The remaining ownership of Shift4 Payments, LLC not held by the Company is considered a noncontrolling interest. Shift4 Payments, LLC is treated as a partnership for income tax reporting and its members, including the Company, are liable for federal, state, and local income taxes based on their share of the LLC’s taxable income. In addition, Shift4 Corporation and VenueNext, Inc., ~~two~~2 operating subsidiaries of Shift4 Payments, LLC, are considered C-Corporations for U.S. federal, state and local income tax purposes. Taxable income or loss from Shift4 Corporation and VenueNext Inc. is not passed through to Shift4 Payments, LLC. Instead, it is taxed at the corporate level subject to the prevailing corporate tax rates.

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The Company has assessed the realizability of the net deferred tax assets and in that analysis has considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The Company has recorded a full valuation allowance against the deferred tax assets at Shift4 Payments, Inc. as of June 30, ~~2021,~~2022, which will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

The Company’s effective tax rate was 6.3% and (152.9)% for the three and six months ended June 30, 2022, respectively. The Company’s effective tax rate was (421.4)% and ~~(0.8)~~(9.9)% for the three and six months ended June 30, 2021, respectively. The effective tax rate for the three and ~~2020, respectively,~~six months ended June 30, 2022 was different than the U.S. federal statutory income tax rate of 21% primarily due to the loss allocated to the noncontrolling interest and ~~(9.9)%~~the full valuation allowances on Shift4 Payments, Inc. and ~~(0.4)% for~~VenueNext, Inc. in the United States. In addition, the six months ended June 30, ~~2021 and 2020, respectively. The~~2022 also includes the impact of a $6.4 million income tax benefit related to the valuation allowance release due to acquired deferred tax liabilities from The Giving Block. The effective tax rate for the three and six months ended June 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 full valuation allowances on Shift4 Payments, Inc. and VenueNext, Inc. in the United States, 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. The income tax benefit for the three and 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.

Tax Receivable Agreement

The Company expects to obtain an increase in its share of the tax basis in the net assets of Shift4 Payments, LLC as LLC Interests are redeemed from or exchanged by ~~the Continuing Equity Owners~~Rook, at the option of the Company, determined solely by the Company’s independent directors. The Company intends to treat any redemptions and exchanges of LLC Interests as direct purchases of LLC Interests for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that it would otherwise pay in the future to various tax authorities. In connection with the Reorganization Transactions and the IPO, the Company entered into the Tax Receivable Agreement (“TRA”) with the Continuing Equity Owners.

The TRA provides for the payment by Shift4 Payments, Inc. of 85% of the amount of any tax benefits the Company actually realizes, or in some cases is deemed to realize, as a result of (i) increases in the Company’s share of the tax basis in the net assets of Shift4 Payments, LLC resulting from any redemptions or exchanges of LLC Interests, (ii) tax basis increases attributable to payments made under the TRA, and (iii) deductions attributable to imputed interest pursuant to the TRA. The Company expects to benefit from the remaining 15% of any of cash savings that it realizes.

The Company has not ~~recognized any~~recognized a $248.3 million liability under the TRA after concluding it was not probable that such TRA Payments would be paid based on its estimates of future taxable income. No payments were made to the Continuing Equity Owners pursuant to the TRA during the three orand six months ended June 30, ~~2021.~~2022. 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.

If ~~all of the remaining Continuing Equity Owners~~Rook were to exchange all of ~~their~~its LLC Units, the Company does not expect the deferred tax asset or TRA liability to vary substantially from the amounts reported in the ~~2020~~2021 Form 10-K. The ~~actual~~actual amount of deferred tax assets and related liabilities are impacted by the timing of the exchanges, the valuation of Shift4 Corporation, the price of the Company’s shares of Class A common stock at the time of the exchange, and the tax rates then in effect.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

13.Lease Agreements

As Lessee

~~14.~~

~~Operating Lease Agreements~~

The Company has operating leases ~~under noncancellable agreements which expire~~primarily for office space and equipment. The following amounts were recorded on ~~various dates through November~~the Company’s unaudited Condensed Consolidated Balance Sheets relating to operating leases:


	June 30, 2022		December 31, 2021
Assets
Right-of-use assets	$	16.2	$	18.5
Liabilities
Current lease liabilities	$	4.1	$	4.8
Noncurrent lease liabilities	16.0		17.9
Total lease liabilities	$	20.1	$	22.7

The expected future payments related to leases with initial non-cancellable lease terms in excess of one year at June 30, ~~2030.~~

2022 were as follows:


2022 (remaining six months)	$	2.4
2023	4.5
2024	4.4
2025	3.4
2026	2.9
Thereafter	4.4
Total lease payments	22.0
Less: Interest	(1.9)
Present value of minimum payments	$	20.1

Total ~~rent~~operating lease expense, which is included in “General and administrative expenses” in the Company’s unaudited Condensed Consolidated Statements of Operations, was $1.4 million and $2.8 million for the three and six months ended June 30, 2022, respectively, and $1.4 million and $2.9 million for the three and six months ended June 30, 2021, respectively.

Supplemental balance sheet information related to leases was as follows:


	June 30, 2022		December 31, 2021
Weighted average remaining lease term (in years):	5.4		5.6

Weighted average discount rate	3.2	%	3.2	%

Operating lease payments included in operating cash flows were $3.0 million and $3.2 millionfor the six months ended June 30, 2022 and 2021, respectively.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

As Lessor

The Company provides hardware, including terminals and point-of-sale equipment, to its merchants under operating leases. The Company’s operating leases generally include options to extend the contract for successive one-year periods. Extension options are not included in the determination of lease income unless, at lease inception, it is reasonably certain that the option will be exercised. The Company’s operating leases do not generally include purchase options.

Lease payments received are recognized as income on a straight-line basis over the term of the agreement in accordance with ASC 606 and classified as gross revenue on the Company’s unaudited Condensed Consolidated Statements of Operations.

Total lease income for the three and six months ended June 30, 2022 was $4.4 million and $8.7 million, respectively, and $4.2 million and $8.2 million for the three and six months ended June 30, 2021, ~~respectively, and $1.7 million and $3.4 million~~respectively. Variable lease income was not material for the three and six months ended June 30, ~~2020, respectively.~~

~~The following are the future minimum rental payments required under the operating leases as of June 30, 2021:~~

2022 or 2021.

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 expects to receive future minimum lease payments for hardware provided under the Company’s SaaS agreements of ~~$9.7~~$10.3 million from July 1 ~~2021~~, 2022 through June 30, ~~2022.~~2023. See Note 83 and Note 7 for more information on the accounting for these operating leases.

~~Table of Contents~~14.

Related Party Transactions

~~15.~~

~~Related Party Transactions~~

In the third and fourth quarters of 2021, the Company ~~amended the monthly fee and added services in this service agreement with the Founder.~~

~~Shift4 Payments, LLC~~ incurred management fees to its respective shareholders, prior to the IPO, which is included in “Professional fees” in the unaudited Condensed Consolidated Statements of Operations, of $0.3 million and $0.8 million~~for the three and six months ended June 30, 2020, respectively~~

~~The Company incurred $1.2 million and $1.0~~$1.1 million in costs associated with ~~the September 2020 and December 2020~~a proposed Follow-on ~~Offerings, respectively,~~Offering that ~~are~~were reimbursable by Searchlight, ~~and are~~which were included in “Accounts receivable, net” inon the Company’s unaudited Condensed Consolidated Balance Sheets atas of December 31, ~~2020. The total receivable~~2021. There were no amounts outstanding at June 30, 2022. In addition, on May 24, 2022, Searchlight redeemed all of ~~$2.2 million was paid in~~its remaining LLC Interests. As a result, Searchlight is no longer a Continuing Equity Owner or a related party of the ~~first quarter~~Company as of ~~2021.~~

May 24, 2022.

In February 2021, the Company accepted the transfer of the right to select a participant for one seat on board Inspiration4, the first all-civilian mission to space, from the Founder, who is also the commander of the mission. The right was transferred to the Company as a non-cash contribution and recorded at its estimated fair value of $2.1 million in “Additional paid-in capital” on the Company’s unaudited Condensed Consolidated Balance Sheets ~~as of June 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.

In the ~~six months~~fiscal year ended ~~June 30,~~December 31, 2021, the Company incurred a significant amount of nonrecurring expenses to integrate, rebrand and promote 3dcart to Shift4Shop in conjunction with the Inspiration4 announcement. The Company leveraged this unique opportunity to deploy Shift4Shop and promote the Shift4 brand as a whole. A portion of these expenses represented a combined marketing and promotion effort designed to bring attention to both Shift4Shop and the Inspiration4 mission. Management performed a review of the expenses and determined that certainCertain expenses, totaling ~~$0.8~~$0.9 million, were directly associated with the Inspiration4 mission and were ~~reimbursed~~reimbursable by the Founder. As of December 31, 2021, a $0.1 million receivable from the Founder was recorded as of“Accounts receivable” on the Company’s unaudited Condensed Consolidated Balance Sheets. There were no amounts outstanding at June 30, ~~2021.~~

Rook entered into a margin loan agreement in September 2020, (“September 2020 Margin Loan”), pursuant to which it pledged LLC Interests and shares of the Company’s Class A and Class B common stock (collectively, “Rook Units”) to secure a margin loan. The September 2020 Margin Loan was repaid in March 2021.

Rook entered into a margin loan agreement, replacing the September 2020 Margin Loan, in March 2021 (“March 2021 Margin Loan”), pursuant to which it pledged Rook Units to secure a margin loan. If Rook were to default on its obligations under the margin loan and fail to cure such default, the lender would have the right to exchange and sell up to 10,000,000 Rook units for an equal number of the Company’s Class A common stock to satisfy Rook’s obligation.

2022.

In March 2021, the Founder, through a wholly-owned special purpose vehicle (“SPV”), entered into a variable prepaid forward contract (“VPF Contract”) with an unaffiliated dealer (“Dealer”), covering approximately 2.0 million shares of the Company’s Class A common stock. The VPF Contract is scheduled to settle on specified dates in February, March and April 2023, at which time the actual number of shares of the Company’s Class A common stock to be delivered by the SPV will be determined based on the price of the Company’s Class A common stock on such dates relative to the forward floor price of $73.19 per share and the forward cap price of $137.24 per share, with the aggregate number not to exceed approximately 2.0 million shares, which is the number of shares of Company’s Class B common stock and LLC units pledged by Rook to secure its obligations under the contract. Subject to certain conditions, the SPV can also elect to settle the VPF Contract in cash and thereby retain full ownership of the pledged shares and units.

Table of Contents

SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

In September 2021, the Founder, through the SPV, entered into 2 VPF Contracts with a Dealer, one covering approximately 2.18 million shares of the Company’s Class A common stock and the other covering approximately 2.26 million shares of the Company’s Class A common stock. The VPF Contracts are both scheduled to settle on specified dates in June, July, August and September 2024, at which time the actual number of shares of the Company’s Class A common stock to be delivered by the SPV will be determined based on the price of the Company’s Class A common stock on such dates relative to the forward floor price of approximately $66.424 per share and the forward cap price of approximately $112.09 per share for the contract covering approximately 2.18 million shares of the Company’s Class A common stock, and to the forward floor price of $66.424 per share and the forward cap price of approximately $120.39 per share for the contract covering approximately 2.26 million shares of the Company’s Class A common stock, with the aggregate number not to exceed approximately 4.44 million shares, which is the aggregate number of shares of Company’s Class B common stock and their associated common units of Shift4 Payments, LLC pledged by the SPV to secure its obligations under the contracts. Subject to certain conditions, the SPV can also elect to settle the VPF Contracts in cash and thereby retain full ownership of the pledged shares and units.

If Rook were to default on its obligations under the VPF ~~Contract~~Contracts 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.~~In June 2022, the Company entered into a $3.6 million residual commission buyout agreement with a relative of the Founder, consisting of an initial payment of $2.5 million in cash and $0.6 million in shares of the Company’s Class A common stock, and a contingent payment of $0.5 million in cash payable after 12 months, subject to certain conditions related to the performance of the acquired assets.

~~Commitments and Contingencies~~

15.Commitments and Contingencies

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm the Company’s business. In August 2021, TSYS, a Global Payments company and an important vendor to the Company, experienced a significant platform outage resulting in a payment processing service disruption that lasted for several hours. TSYS is utilized by many major credit card issuers and payment processors, which meant the impact of the outage was felt by many card accepting merchants and cardholders across the nation. The Company took steps to lessen the financial impact to its merchants and partners due to the TSYS outage and is seeking compensation through a variety of channels, including engaging with the responsible party.

The Company is currently not aware of any ~~such~~ 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 Units~~

16.Stockholders’ Equity/Members’ Deficit

On December 16, 2021, the Company’s Board of Directors (the “Board”) authorized a ~~preferred dividend,~~stock repurchase program (the “December 2021 Program”), pursuant to which ~~could be paid in cash or preferred units at~~the Company was authorized to repurchase up to $100.0 million of shares of its Class A common stock through December 31, 2022. On May 11, 2022, the Board authorized a ~~rate~~stock repurchase program (the “May 2022 Program”), pursuant to which the Company was authorized to repurchase up to an additional $100.0 million of ~~10.50% per annum, compounded quarterly.~~

~~During~~shares of its Class A common stock through December 31, 2022, and on June 15, 2022, the ~~three~~Board authorized a stock repurchase program (the “June 2022 Program” and, ~~six months ended June 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~~together with the ~~Reorganization Transactions,~~December 2021 Program and the ~~redeemable preferred units were converted~~May 2022 Program, the “Programs”), pursuant to which the Company was authorized to repurchase up to an additional $50.0 million of shares of its Class A common stock through December 31, 2022.

Repurchases under the Programs may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases depending on market conditions and corporate needs. Open market repurchases will be structured to occur within the pricing and volume requirements of Rule 10b-18. The Company may also, from time to time, enter into ~~LLC Interests.~~

Rule 10b5-1 plans to facilitate repurchases of its shares pursuant to the Programs.

The Programs do not obligate the Company to acquire any particular amount of common stock. The Programs may be extended, modified, suspended or discontinued at any time at the Company’s discretion.

Table of Contents

~~18.~~

~~Stockholders’ Equity/Members’ Deficit~~

SHIFT4 PAYMENTS, INC.

~~Structure prior to~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

As of December 31, 2021, the ~~Reorganization Transactions~~

~~Prior to the completion of the Reorganization Transactions, Shift4 Payments, LLC~~Company had ~~LLC Interests outstanding in the form of Class A Common units and Class B Common units.~~

~~Immediately prior to the completion of the Reorganization Transactions, the LLC Interests of Shift4 Payments, LLC were beneficially owned as set forth below.~~

•

~~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% 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.~~

~~Amendment and Restatement of Certificate of Incorporation~~

~~In connection with the Reorganization Transactions, the Company’s certificate of incorporation was amended and restated to, among other things, provide for the (i) authorization of 300,000,000~~repurchased 378,475 shares of Class A common stock ~~with a par value~~under the December 2021 Program for $21.1 million, including commissions paid, at an average price paid of ~~$0.0001~~$55.81 per ~~share; (ii) authorization of 100,000,000~~ share.

On May 24, 2022, Searchlight exchanged its shares of Class B common stock with a par value of $0.0001 per share; (iii) authorization of 100,000,000 shares of Class C common stock with a par value of $0.0001 per share; and (iv) authorization of 20,000,000 shares of preferred stock with a par value of $0.0001 per share.

~~Holders of Class A common stock are entitled to one vote per share, and holders of~~the Company’s Class B and Class C common stock ~~are entitled to ten votes per share. Holders~~for an equal number 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.~~

~~Shares of Class B common stock will be issued in~~which Searchlight subsequently redeemed. During the ~~future only to~~six months ended June 30, 2022, the ~~extent necessary to maintain a one-to-one ratio between the number of LLC Interests held by the Continuing Equity Owners and the number of~~Company repurchased 3,887,191 shares of Class BA common stock ~~issued to each~~under the Programs for $184.4 million, including commissions paid, at an average price paid of $47.40 per share. Included in these amounts during the ~~Continuing Equity Owners. Shares~~six months ended June 30, 2022 is the Company’s repurchase of all 967,600 shares of Searchlight’s Class BA common stock for $43.1 million at an average price paid of $44.54 per share. As of June 30, 2022, approximately $44.5 million remained available for future purchases under the Programs.

Repurchased shares of common stock that have not been retired are ~~transferable only together with an equal number~~recorded as “Treasury stock” on the Company’s unaudited Condensed Consolidated Balance Sheets. Upon retirement, the Company allocates the value of ~~LLC~~treasury stock between Additional paid-in capital and Retained earnings. During the six months ended June 30, 2022, the Company retired 3,539,016 shares of common stock it had repurchased under the Programs. There were 726,650 shares of treasury stock outstanding as of June 30, 2022, which were retired on July 1, 2022.

17.Noncontrolling Interests ~~(subject to certain exceptions). Only permitted transferees of LLC Interests held by the Continuing Equity Owners will be permitted transferees of Class B common stock.~~

~~19.~~

~~Noncontrolling Interests~~

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
%


	June 30, 2022			December 31, 2021
	LLC Interests	Ownership %		LLC Interests	Ownership %
Shift4 Payments, Inc.	54,382,042	67.8	%	56,449,833	68.2	%
Continuing Equity Owners	25,829,016	32.2	%	26,272,654	31.8	%
Total	80,211,058	100.0	%	82,722,487	100.0	%

~~Table of Contents~~18.

Equity-based Compensation

~~20.~~

~~Equity-based Compensation~~

In June 2020, the Company adopted the 2020 Incentive Award Plan (“2020 Plan”), which provides for the grant of stock options, restricted stock dividend equivalents, stock payments, ~~Restricted Stock Units~~restricted stock units (“RSUs”), ~~Performance Restricted Stock Units~~performance restricted stock units (“PRSUs”), stock appreciation rights, and other stock or cash awards. A maximum of ~~7,159,924~~418,973 shares of the Company’s Class A common stock is available for issuance under the 2020 Plan. The number of shares available for issuance is subject to an annual increase on the first day of each year beginning in 2021 and ending in and including 2030, equal to the lesser of (1) 1% of the shares outstanding (on an as-converted basis, taking into account any and all securities convertible into, or exercisable, exchangeable or redeemable for, shares of ~~Common Stock~~Class A common stock (including LLC Interests of Shift4 Payments, LLC)) on the last day of the immediately preceding fiscal year and (2) such smaller number of shares as determined by the Board.

On April 28, 2022, the Board adopted, and on June 10, 2022, the Company’s ~~board~~shareholders approved, the amendment and restatement of ~~directors.~~

the Shift4 Payments, Inc. 2020 Incentive Award Plan (the “Restated Equity Plan”). The Restated Equity Plan (a) increased the number of shares of the Company’s Class A common stock available for issuance under the Restated Equity Plan to a total of 7,500,000 shares, (b) increased the annual “evergreen” increase to the number of shares of the Company’s Class A common stock available for issuance under the Restated Equity Plan from 1% of the shares outstanding to 2% of the shares outstanding, (c) limited the number of shares of the Company’s Class A common stock that may be issued upon the exercise of incentive stock options to no more than 7,500,000 shares, and (d) extended the term of the Restated Equity Plan to ten years from the date it was adopted by the Board.

Table of Contents

SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

RSUs represent the right to receive shares of the Company’s Class A common stock at a specified date in the future.

The RSU activity for the six months ended June 30, ~~2021~~2022 was as follows:

~~(a)~~

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.

The Company recognized equity-based compensation ~~expense~~expense of ~~$6.6~~$9.3 million and ~~$20.6~~$26.2 million for the three and six months ended June 30, ~~2021~~2022, respectively, and ~~$50.0~~$6.6 million and $20.6 million for ~~both~~ the three and six months ended June 30, ~~2020.~~2021, respectively. At June 30, ~~2021,~~2022, the total unrecognized equity-based compensation expense related to outstanding RSUs and PRSUs was$92.9 million~~$45.9 million,~~, which is expected to be recognized over a weighted-average period of ~~2.03 years.~~

3.33 years.

~~21.~~

~~Basic and Diluted Net Income (Loss) per Share~~

Table of Contents

SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

19.Basic and Diluted Net Income (Loss) per Share

Basic net income (loss) per share has been computed by dividing net income (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) per share has been computed in a manner consistent with that of basic net income (loss) per share while giving effect to all shares of potentially dilutive common stock that were outstanding during the period. The following table presents the calculation of basic and diluted net income (loss) per share under the two-class method:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income (loss)	$	15.0	$	4.5	$	1.8	$	(46.5)
Less: Net income (loss) attributable to noncontrolling interests	4.7		1.3		(1.0)		(16.9)
Net income (loss) attributable to Shift4 Payments, Inc.	10.3		3.2		2.8		(29.6)
Adjustment to net income (loss) attributable to common stockholders	—		—		0.1		(0.3)
Net income (loss) attributable to common stockholders	$	10.3	$	3.2	$	2.9	$	(29.9)

Numerator - allocation of net income (loss) attributable to common stockholders:
Net income (loss) allocated to Class A common stock - basic	$	9.6	$	2.7	$	2.7	$	(24.8)
Reallocation of net income (loss) attributable to common stockholders from assumed conversion of LLC interests and assumed vesting of RSUs	4.7		1.4		(1.0)		—
Net income (loss) allocated to Class A common stock - diluted	$	14.3	$	4.1	$	1.7	$	(24.8)

Net income (loss) allocated to Class C common stock - basic	$	0.7	$	0.5	$	0.2	$	(5.1)
Reallocation of net income attributable to common stockholders from assumed conversion of LLC interests and assumed vesting of RSUs	—		(0.1)		(0.1)		—
Net income (loss) allocated to Class C common stock - diluted	$	0.7	$	0.4	$	0.1	$	(5.1)

Denominator:
Weighted average shares of Class A common stock outstanding - basic	51,790,403		46,297,553		51,958,494		44,492,680
Effect of dilutive securities:
LLC Interests	26,087,399		28,869,471		26,179,515		—
RSUs	637,078		1,726,595		685,059		—
2025 Convertible Notes	—		101,713		—		—
Weighted average shares of Class A common stock outstanding - diluted	78,514,880		76,995,332		78,823,068		44,492,680

Weighted average shares of Class C common stock outstanding - basic and diluted	4,006,159		8,151,747		4,283,096		9,075,667

Net income (loss) per share - Basic:
Class A common stock	$	0.19	$	0.06	$	0.05	$	(0.56)
Class C common stock	$	0.19	$	0.06	$	0.05	$	(0.56)
Net income (loss) per share - Diluted:
Class A Common Stock	$	0.18	$	0.05	$	0.02	$	(0.56)
Class C Common Stock	$	0.18	$	0.05	$	0.02	$	(0.56)

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
)

Table of Contents

SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

The following were excluded from the calculation of diluted net income (loss) per share as the effect would be ~~anti-dilutive.~~

anti-dilutive:

~~22.~~

~~Supplemental Cash Flows Information~~

20.Supplemental Cash Flows Information

Supplemental cash flows disclosures and noncash information consisted of the following:

~~23.~~

~~Segments~~

Table of Contents

SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) for the purposes of allocating resources and evaluating financial performance. The Company’s CODM is the chief executive officer, who reviews financial information on a consolidated level for purposes of allocating resources and evaluating financial performance, and as such, the Company’s operations constitute 1 operating segment and 1 reportable segment.

The following table summarizes gross revenue by revenue type:

~~24.~~

~~Subsequent Events~~

22.Subsequent Events

Acquisitions and Investments

Subsequent to June 30, 2022, the Company ~~issued an aggregate $632.5~~acquired 3 technology vendors for approximately $56.8 million of ~~convertible senior notes due 2027 (“2027 Convertible Notes”)~~total purchase consideration, comprised of a combination of cash and shares of the Company’s Class A common stock. Due to ~~qualified institutional buyers in an offering exempt~~the timing of these acquisitions, the initial accounting for the acquisitions, including the valuation of assets and liabilities acquired, is incomplete. As such, the Company is unable to disclose certain information, including the preliminary fair value of assets acquired and liabilities assumed, at this time.

In addition, subsequent to June 30, 2022, the Company committed approximately $120.0 million, comprised of a combination of cash and shares of the Company’s Class A common stock, to acquire ongoing merchant relationships and secure non-solicitation rights from ~~registration under~~third-party distribution partners.

Departure of Bradley Herring and Appointment of Nancy Disman as Chief Financial Officer

On August 3, 2022, Bradley Herring and the ~~Securities Act. The~~ Company ~~received net proceeds, after deducting initial purchasers’ discounts~~agreed that Mr. Herring will no longer serve as the Company’s Chief Financial Officer, effective August 5, 2022. In connection with Mr. Herring’s resignation, the Company entered into a separation and ~~estimated offering expenses,~~release of ~~approximately $617.6 million~~claims agreement with Mr. Herring on August 3, 2022.

On August 3, 2022, Nancy Disman tendered her resignation as a Class II director of the Board and stepped down from the ~~2027 Convertible Notes offering.~~Board and its Audit, Compensation and Nominating and Corporate Governance Committees, in each case effective August 5, 2022.

On August 3, 2022, the Board appointed Ms. Disman as the Company’s Chief Financial Officer and principal financial officer, in each case effective August 5, 2022, (the “Transition Date”). In connection with Ms. Disman’s appointment as the Chief Financial Officer, the Company entered into an employment agreement (the “Employment Agreement”) with Ms. Disman on August 3, 2022, effective the Transition Date. The ~~net proceeds~~Employment Agreement provides for an initial three-year term of employment with automatic one-year renewal terms unless otherwise terminated in accordance with the terms of the ~~2027 Notes Offering, together with cash on hand, will be used for general corporate purposes.~~

Employment Agreement.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

Realignment of Board Classification

On August 3, 2022, in accordance with the Company’s amended and restated bylaws, the Board decreased the size of the Board to six members and, in order to achieve an equal balance of membership among the classes of directors, determined to move Christopher N. Cruz from Class III with a term expiring at the 2023 Annual Meeting of Stockholders to Class II with a term expiring at the 2025 Annual Meeting of Stockholders, in each case effective August 5, 2022. Accordingly, on the same date, Mr. Cruz, who was a Class III director, resigned as a director and was immediately elected by the Board as a Class II director. The resignation and re-election of Mr. Cruz was effected solely to rebalance the Board's classes and, for all other purposes, including compensation, Mr. Cruz’s service on the Board is deemed to have continued uninterrupted. The Board now consists of 2 Class I directors, 2 Class II directors and 2 Class III directors. The current Class I Directors are now Karen Roter Davis and Jared Isaacman; the current Class II Directors are Christopher Cruz and Sarah Goldsmith-Grover; and the current Class III Directors are Jonathan Halkyard and Donald Isaacman.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the information presented in unaudited condensed consolidated financial statements and the related notes and other financial data and other financial data included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended December 31, ~~2020,~~2021, filed with the U.S. Securities and Exchange Commission (“SEC”) on March ~~8, 2021 (“2020~~1, 2022 (the “2021 Form 10-K”). The following discussion and analysis reflects the historical results of operations and financial position of Shift4 Payments, LLC and its consolidated subsidiaries prior to the Reorganization Transactions (as defined below) on June 4, 2020 and that of Shift4 Payments, Inc. and its consolidated subsidiaries (including Shift4 Payments, LLC) following the completion of the Reorganization Transactions. In addition to historical information, the following discussion contains forward-looking statements, such as statements regarding our expectation for future performance, liquidity and capital resources, that involve risks, uncertainties and assumptions that could cause actual results to differ materially from our expectations. Our actual results may differ materially from those contained in or implied by any forward-looking statements. Factors that could cause such differences include those identified below and those described in “Cautionary Note Regarding Forward-Looking Statements,” and “Risk Factors” in Part I, Item 1A1A. of ~~the 2020~~our 2021 Form 10-K. We assume no obligation to update any of these forward-looking statements.

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to:

•

“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.

•“we,” “us,” “our,” the “Company,” “Shift4” and similar references refer to Shift4 Payments, Inc. 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.

•“Continuing Equity Owners” refers collectively to our Founder and their respective permitted transferees 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. Searchlight was a Continuing Equity Owner prior to May 24, 2022.•

“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.

•“LLC Interests” refers to the common units of Shift4 Payments, LLC.•

~~“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.~~

•“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.

•“Rook” refers to Rook Holdings Inc., a Delaware corporation wholly-owned by our Founder and for which our Founder is the sole stockholder.•

“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.

•“Searchlight” refers to Searchlight Capital Partners, L.P., a Delaware limited partnership, and certain funds affiliated with Searchlight. Searchlight was a Continuing Equity Owner prior to May 24, 2022.•

~~“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.

Overview

We are a leading independent provider of payment acceptance and payment processing and technology solutions in the United States based on total volume of payments processed. We have achieved our leadership position through decades of solving business and operational challenges facing our ~~customers.~~customers’ overall commerce needs. We distribute our services through our internal sales and support teams, as well as through our network of independent software vendors (“ISVs”) and value-added resellers (“VARs”). For our software partners, we offer a single integration to an end-to-end payments offering, a proprietary gateway and a robust suite of technology solutions to enhance the value of their software and simplify payment acceptance. For our merchants, we provide a seamless, unified consumer experience as an alternative to relying on multiple providers to accept card-based payments, ~~and utilize technology in~~while providing the digital tools necessary to provide their ~~businesses.~~

end-customers a seamless commerce experience.

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At the heart of our business is our payments ~~platform.~~platform. Our payments platform is a full suite of integrated payment products and services that can be used across multiple channels (in-store, online, mobile and ~~tablet- based)~~tablet-based) and industry verticals, including:

•

~~end-to-end payment processing for a broad range of payment types;~~

•end-to-end payment processing for a broad range of payment types;•

~~merchant acquiring;~~

•merchant acquiring;•

~~proprietary omni-channel gateway capable of multiple methods of mobile, contactless and QR code-based payments;~~

•proprietary omni-channel gateway capable of multiple methods of mobile, contactless and QR code-based payments;•

~~complementary software integrations;~~

•complementary software integrations;•

~~full eCommerce capabilities, including web-store design, hosting, shopping cart management and fulfillment integrations;~~

•full eCommerce capabilities, including web-store design, hosting, shopping cart management and fulfillment integrations;•

~~integrated and mobile POS solutions;~~

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•

~~security and risk management solutions; and~~

•integrated and mobile POS solutions;

•security and risk management solutions; and

•reporting and analytical tools.

•

~~reporting and analytical tools.~~

In addition, we offer innovative technology solutions that go beyond payment processing. Some of our solutions are developed in-house, such as business intelligence and POS software, while others are powered by our network of complementary third-party applications. Our focus on innovation, combined with our product-driven culture, enables us to create scalable technology solutions that benefit from an extensive library of intellectual property.

We have a partner-centric distribution approach. We market and sell our solutions through a diversified network of over 7,000 software partners, which consists of ISVs and VARs. ISVs are technology providers that develop commerce-enabling software suites with which they can bundle our payments platform. VARs are organizations that provide distribution support for ISVs and act as trusted and localized service providers to merchants by providing them with software and services. Together, our ISVs and VARs provide us immense distribution scale and provide our merchants with front-line service and support.

Our end-to-end payments offering combines our payments platform, including our proprietary gateway and breadth of software integrations, and our suite of technology solutions to create a compelling value proposition for our merchants. Our ~~end-to end~~end-to-end payment volume was ~~$11.8~~$16.9 billion and ~~$4.2~~$11.8 billion for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$19.8~~$30.3 billion and ~~$10.4~~$19.8 billion for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. This end-to-end payment volume contributed ~~approximately~~72% and 68% ~~and 57%~~ of gross revenue less network fees for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~65%~~70% and ~~57%~~65% of gross revenue less network fees for the six months ended June 30, 2022 and 2021, ~~and 2020,~~ respectively.

Our merchants range from small to medium sized businesses (“SMBs”) to large ~~and complex~~ enterprises across numerous verticals including ~~lodging, leisure,~~food and beverage, hospitality, stadiums and arenas, gaming, specialty retail, non-profits, eCommerce, and ~~food~~exciting technology companies. We expect our newest verticals, including stadiums and ~~beverage.~~

~~Revision~~arenas, gaming, non-profits, and exciting technology companies, to contribute to our end-to-end payment volume significantly more in future periods than they have to date.

Recent Developments

Stock Repurchases

On December 16, 2021, our Board of ~~Previously Issued Financial Statements~~

~~The accompanying Management’s Discussion and Analysis~~Directors (the “Board”) authorized a stock repurchase program (the “December 2021 Program”), pursuant to which we were authorized to repurchase up to $100.0 million of ~~Financial Condition and Results of Operations gives effect to the revision~~shares of our ~~previously reported consolidated financial statements for~~Class A common stock through December 31, 2022. On May 11, 2022, the ~~three~~Board authorized a stock repurchase program (the “May 2022 Program”), pursuant to which we were authorized to repurchase up to an additional $100.0 million of shares of our Class A common stock through December 31, 2022, and on June 15, 2022, the Board authorized a stock repurchase program (the “June 2022 Program” and, together with the December 2021 Program and the May 2022 Program, the “Programs”), pursuant to which we were authorized to repurchase up to an additional $50.0 million of shares of our Class A common stock through December 31, 2022.

During the six months ended June 30, ~~2020.~~2022, we repurchased 3,887,191 shares of our Class A common stock for $184.4 million, including commissions paid, at an average price paid of $47.40 per share. As of June 30, 2022, approximately $44.5 million remained available for future purchases under the Programs. See Note ~~1 in the notes~~16 to the accompanying unaudited ~~condensed~~condensed consolidated financial statements for more ~~information.~~

information and Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds.”

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Recent ~~acquisition~~

~~VenueNext~~

Acquisition

The Giving Block

On February 28, 2022, we acquired The Giving Block for $106.9 million of total purchase consideration, net of cash acquired. The Giving Block is a cryptocurrency donation marketplace that the Company expects to accelerate its growth in the non-profit sector with significant cross-sell potential.

Pending Acquisition

Finaro

On March ~~3, 2021,~~1, 2022, we ~~acquired VenueNext~~entered into a definitive agreement to acquire Credorax, Inc. ~~(“VenueNext”),~~ d/b/a ~~leader in integrated payments solutions in sporting arenas and event complexes,~~Finaro (“Finaro”) for ~~$68.5~~$200.0 million in ~~aggregate purchase consideration. We believe this acquisition enhances~~cash on hand, 6,439,316 shares of our ~~presence~~Class A common stock with a value of approximately $325.0 million as of March 1, 2022, determined by the volume weighted average price for the thirty trading days preceding the date of the agreement, and ~~capabilities in~~ a ~~number~~performance-based earnout of large 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. See Note 2 in the notesup to ~~the accompanying unaudited condensed consolidated financial statements for more information.~~

~~Recent developments~~

~~Investments in securities~~

~~As of June 30, 2021, we invested $27.5~~$50.0 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 Notes~~

On 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 proceedsour Class A common stock. Consummation of the ~~2027 Notes Offering, together with cash on hand, will be used for general corporate purposes.~~

~~Reorganization Transactions~~

The historical results of operations discussed in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are those of (1) Shift4 Payments, LLC and its consolidated subsidiaries for periods prior to the Reorganization Transactions on June 4, 2020 and (2) Shift4 Payments, Inc. and its consolidated subsidiaries for periods beginning on or following the Reorganization Transactions on June 4, 2020. The historical results of operations of Shift4 Payments, LLC prior to the completion of the Reorganization Transactions, including the IPO and concurrent private placement, do not reflect certain items that we expect will affect our results of operations and financial condition after giving effect to the Reorganization Transactions and the use of proceeds from the IPO and concurrent private placement.

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The Reorganization Transactions resulted in Shift4 Payments, Inc. becoming the sole managing member of Shift4 Payments, LLC. As the sole managing member of Shift4 Payments, LLC, we operate and control all of the business and affairs of Shift4 Payments, LLC. Accordingly, we consolidate the financial results of Shift4 Payments, LLC, and report a noncontrolling interest related to the interests in Shift4 Payments, LLC held by the Continuing Equity Owners on our consolidated financial statements.

~~After consummation of the IPO, Shift4 Payments, Inc. became~~merger is subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of Shift4 Payments, LLC and is taxed at the prevailing corporate tax rates. In addition to tax expenses, we also have and will continue to incur public company expenses related to our operations, plus payment obligations under the TRA, regulatory approvals, which we expect to ~~be significant. We intend for Shift4 Payments, LLC to make to make distributions to us~~receive in ~~an amount sufficient to allow us to pay our tax obligations and operating expenses, including distributions to fund any payments due under~~ the ~~TRA.~~

~~Initial public offering and concurrent private placement~~

In June 2020, we completed our IPO of 17,250,000 shares of Class A common stock, including 2,250,000 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a price to the public of $23.00 per share. Upon completion of the IPO, we received net proceeds of approximately $362.6 million, after deducting underwriting discounts and commissions and offering expenses of approximately $34.2 million. Concurrently with the IPO, we also completed a $100.0 million private placement of 4,625,346 shares of Class C common stock to Rook. The total net proceeds from the IPO and concurrent private placement were approximately $462.6 million. Shift4 Payments, Inc. used the total proceeds to purchase newly-issued LLC Interests, from Shift4 Payments, LLC. Shift4 Payments, LLC used these amounts received from Shift4 Payments, Inc. to repay certain existing indebtedness and for general corporate purposes.

~~Impact of the COVID-19 Pandemic~~

The unprecedented and rapid spread of COVID-19 as well as the shelter-in-place orders, promotion of social distancing measures, restrictions to businesses deemed non-essential, and travel restrictions implemented throughout the United States have significantly impacted the restaurant and hospitality industries – verticals in which we have predominantly focused on over the last decade.

In response to these developments, in 2020 we implemented measures to focus on the safety of our employees, including implementing remote working capabilities, and to support our merchants as they shifted to take-out and delivery operations, while at the same time seeking to mitigate the impact on our financial position and operations.

Our business was not significantly impacted by the COVID-19 pandemic until the latter part of March 2020, at which time our end-to-end payment volumes declined 70%. Since late 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, we have seen a significant recovery in our end-to-end payment volumes despite volumes in certain merchant categories associated with international travel, corporate travel and stadium occupancy running lower than pre COVID-19 pandemic levels. End-to-end payment volumes for the secondfourth quarter of ~~2021 were approximately 180% higher than end-to-end~~2022. Finaro is a cross-border eCommerce platform and bank specializing in solving complex payment ~~volumes~~problems for multi-national merchants that we believe will accelerate our growth in ~~the second quarter~~international markets.

Factors Impacting Our Business and Results of 2020 and approximately 48% higher than the first 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 six months ended June 30, 2021 have exceeded those for the three and six months ended June 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.~~

We believe we have sufficient liquidity to satisfy our cash needs for at least the next twelve months, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during these uncertain times.

~~Factors impacting our business and results of operations~~

Operations

In general, our results of operations are impacted by factors such as the adoption of software solutions that are integrated with our payment solutions, continued investment in our core capabilities, ~~on-going~~ongoing pursuit of strategic acquisitions, and macro-level economic trends.

Increased adoption of software-integrated payments. We primarily generate revenue through fees assessed on end-to-end payment volume initiated through our integrated software partners. These fees include volume-based payments, ~~and~~ transaction fees and subscription fees for software and technology solutions. We expect to grow this volume by attracting new integrated software partners through our market-leading and innovative solutions. These integrated software partners have proven to be an effective and efficient way of acquiring new merchants and servicing these relationships.

Continued focus on ~~the sale of~~converting our gateway-only customers to our end-to-end payments ~~offering and resulting revenue mix shift.~~offering. ~~Our customers utilize our comprehensive solutions to solve a variety of business challenges.~~ Currently, a large percentage of our merchant base ~~uses~~relies only on our proprietary ~~gateway. As~~gateway technology solution to process card-based payments. However, as more of these gateway-only merchants choose to also adopt our end-to-end payment solutions, our revenue per merchant and merchant retention are expected to ~~increase.~~increase given the fees we generate on end-to-end payment processing services are significantly higher than the per transaction fees we earn on gateway-only services.

Mix of our merchant base. We continue to experience a shift to higher average revenue and higher average volume per merchant. The revenue and volume contribution of each merchant within our ~~merchant~~ portfolio is affected by several factors, including the amount of payment volume processed per merchant, the industry vertical in which the merchant operates, and the number of solutions implemented by the merchant. ~~As the~~The size and sophistication of our ~~merchants change,~~average merchant continues to increase, and we may experience shifts in the average revenue per merchant and the weighted average pricing of the portfolio.

Ability to attract and retain software partners. A key pillar of our Shift4 Model is our partner-centric distribution approach. We work with our software partners who ~~are~~rely on our suite of payment-related technology solutions to simplify the commerce needs of their end clients. Our ability to attract and retain our software partners is essential for our future growth and our ability to ~~helping us grow and serve~~service our ~~merchant base. Maintaining~~existing base of merchants. To this end, it is critical we maintain our product leadership ~~and~~through continued investment in innovative technology solutions ~~is critical~~as a means to ensure we retain our current software partners while attracting ~~and retaining~~new software partners.

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Investment in product, distribution and operations. We make significant investments in both new product development and existing product ~~enhancement,~~enhancements, such as mobile point-of-sale, ~~and~~ cloud enablement for our software partners’ existing ~~systems.~~systems, and contactless payments, including QR code based mobile payment technologies. New product features and functionality are brought to market through varied distribution and promotional activities, including collaborative efforts with industry leading software providers, ~~trade shows,~~tradeshows, and customer conferences. Further, we will continue to invest in operational support in order to maintain service levels expected by our merchant customers. We believe these investments in product development and software integrations will lead to long-term growth and profitability.

For example, numerous new products and enhancements that we introduced continue to allow our merchants the ability to enhance the customer experience in a more dynamic commerce environment through contactless payment methods and QR code based mobile payment technologies.

Pursuit of strategic ~~acquisitions~~acquisitions.. From time to time, we may pursue acquisitions as part of our ongoing growth ~~strategy.~~strategy that includes adding complementary technology capabilities to service our base of customers and adding critical sales and support capabilities within a specific industry vertical or geography. 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.

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Economic conditions and resulting consumer spending trends. Changes in macro-level consumer spending trends, including as a result of the COVID-19 pandemic, could affect the amount of ~~volumes~~volume processed on our platform, thus resulting in fluctuations toin our quarterly reported revenue. Our quarterly revenue ~~streams. Further,~~is also impacted by seasonal, consumer spending ~~habits are subject to seasonal fluctuations that could cause varied~~habit patterns, which historically have resulted in higher volumes and revenue ~~results across the~~being reported in our second and third fiscal quarters.

Key ~~financial definitions~~

Financial Definitions

The following briefly describes the components of revenue and expenses as presented in the accompanying unaudited ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations.~~

Operations.

Gross revenue consists primarily of payments-based revenue and subscription and other revenues:

Payments-based revenue includes fees for payment processing services and gateway services. Payment processing fees are primarily driven as a percentage of end-to-end payment volume. They may also have a fixed fee, a minimum monthly usage fee and a fee based on transactions. Gateway services, data encryption and tokenization fees are primarily driven by per transaction fees as well as monthly usage fees.

Subscription and other revenues include software as a service (“SaaS”) fees for point-of-sale systems and terminals provided to merchants and our Shift4Shop eCommerce platform. Point-of-sale and terminal SaaS fees are assessed based on the type and quantity of equipment deployed to the merchant. Shift4Shop SaaS fees are based on the eCommerce platform chosen by the merchant. SaaS fees also include statement fees, fees for our proprietary business intelligence software, annual fees, regulatory compliance fees and other miscellaneous services such as help desk support and warranties on equipment. Subscription and other revenues also includes revenue derived from software license sales, hardware sales, ~~third party~~third-party residuals and fees charged for technology support.

Cost of sales consists of interchange and processing fees, residual commissions, equipment and other costs of sales:

Interchange and processing fees represent payments to card issuing banks and assessments paid to card associations based on transaction processing volume. These also include fees incurred by third-parties for data transmission and settlement of funds, such as processors and sponsor banks.

Residual commissions represent monthly payments to ~~software~~third-party distribution partners. These costs are typically based on a percentage of payment-based revenue.

Equipment represents our costs of devices that are purchased by the merchant.

Other costs of sales includes amortization of capitalized software development costs, capitalized software, acquired technology and capitalized customer acquisition costs. It also includes incentives and shipping and handling costs related to the delivery of devices, and through June 30, 2020, contains other contract fulfillment costs as well as equipment provided under our warranty program that is included with the monthly SaaS fee. Subsequent to June 30, 2020, other contract fulfilment costs and equipment under our warranty program included with the monthly SaaS fee are capitalized as equipment for lease.devices. 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.

General and administrative expenses consist primarily of compensation, benefits and other expenses associated with corporate management, finance, human resources, shared services, information technology and other activities.

Depreciation and amortization expense consists of depreciation and amortization expenses related to merchant relationships, trademarks and trade names, residual commission buyouts, equipment, leasehold improvements, ~~and~~ other intangible assets, and property, plant and equipment. We depreciate and amortize our assets on a straight-line basis in accordance with our accounting policies. Leasehold improvements are depreciated over the lesser of the estimated life of the leasehold improvement or the remaining lease term. Maintenance and repairs, which do not extend the useful life of the respective assets, are charged to expense as incurred. Intangible assets are amortized on a straight-line basis over their estimated useful lives which range from two years to twenty years.

Professional fees consists of costs incurred for accounting, tax, legal, and consulting services.

Advertising and marketing expenses relate to costs incurred to participate in industry tradeshows and dealer conferences, advertising initiatives to build brand awareness, and expenses to fulfill loyalty program rewards earned by software partners.

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Restructuring expenses relate to strategic initiatives we have taken that include, but are not limited to, severance or separation costs and other exit and disposal costs. These expenses are typically not reflective of our ongoing operations.

~~Other operating (income) expense, net~~

~~consists~~Transaction-related expenses relate to debt issuance or modification costs that are not capitalizable. These expenses are typically not reflective of ~~other operating items.~~our ongoing operations.

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Loss on extinguishment of debt represents losses recorded for unamortized capitalized financing costs associated with debt prepayments.

Interest income primarily consists of interest income earned on our cash and cash equivalents.

Other income, net primarily consists of other non-operating items.

Interest expense consists of interest costs incurred on our borrowings and amortization of capitalized financing costs.

Income tax benefit (provision) represents federal, state and local taxes based on income in multiple domestic jurisdictions.

Net income (loss) attributable to noncontrolling interests arises from net income (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) allocated to Continuing Equity Owners as a result of their proportional ownership of LLC Interests.

Comparison of ~~results~~Results for the ~~three months ended~~Three Months Ended June 30, ~~2021~~2022 and ~~2020~~

2021

The following table sets forth the consolidated statements of operations for the periods ~~presented.~~

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

presented:

~~(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 June 30,
(in millions)	2022		2021		$ change		% change
Payments-based revenue	$	473.9	$	324.8	$	149.1	45.9	%
Subscription and other revenues	32.8		26.2		6.6		25.2	%
Gross revenue	506.7		351.0		155.7		44.4	%
Less: Network fees	324.1		214.7		109.4		51.0	%
Less: Other costs of sales	76.8		58.2		18.6		32.0	%
Gross profit	105.8		78.1		27.7		35.5	%
General and administrative expenses	58.0		51.7		6.3		12.2	%
Depreciation and amortization expense	16.7		15.5		1.2		7.7	%
Professional fees	5.2		3.5		1.7		48.6	%
Advertising and marketing expenses	2.9		2.5		0.4		16.0	%
Restructuring expenses	0.1		—		0.1		NM
Transaction-related expenses	—		—		—		NM
Total operating expenses	82.9		73.2		9.7		13.3	%
Income from operations	22.9		4.9		18.0		NM
Loss on extinguishment of debt	—		—		—		NM
Interest income	1.4		—		1.4		NM
Other income, net	0.1		—		0.1		NM
Interest expense	(8.4)		(6.3)		(2.1)		33.3	%
Income (loss) before income taxes	16.0		(1.4)		17.4		NM
Income tax benefit (provision)	(1.0)		5.9		(6.9)		NM
Net income	15.0		4.5		10.5		233.3	%
Net income attributable to noncontrolling interests	4.7		1.3		3.4		NM
Net income attributable to Shift4 Payments, Inc.	$	10.3	$	3.2	$	7.1	221.9	%

Gross ~~Revenue~~

revenue

Gross revenue was $506.7 million for the three months ended June 30, 2022, compared to $351.0 million for the three months ended June 30, 2021, ~~compared to $141.8 million for the three months ended June 30, 2020,~~ an increase of ~~$209.2~~$155.7 million or ~~147.5%~~44.4%. Gross revenue is comprised of payments-based revenue and subscription and other revenues.

Payments-based revenue was $473.9 million for the three months ended June 30, 2022, compared to $324.8 million for the three months ended June 30, 2021, an increase of $149.1 million or 45.9%. The increase in payments-based revenue was primarily driven by the increase in end-to-end payment volume of $5.0 billion, or 43%, for the three months ended June 30, 2022, compared to ~~$121.2~~the three months ended June 30, 2021.

Table of Contents

Subscription and other revenues were $32.8 million for the three months ended June 30, 2020, an increase of $203.6 million or 168.0%. The increase in payments-based revenue is primarily driven by an increase in end-to-end payment volume of $7.6 billion, or approximately 180%, for the three months ended June 30, 2021,2022, compared to the three 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~~ $26.2 million for the three months ended June 30, 2021, ~~compared to $20.6 million for the three months ended June 30, 2020,~~ an increase of ~~$5.6~~$6.6 million or ~~27.2%~~25.2%. The increase isin subscription and other revenues was primarily driven ~~primarily~~ by the ~~3dcart, VenueNext~~Postec and ~~hospitality technology vendor~~The Giving Block acquisitions, which collectively contributed ~~$5.9~~$4.4 million more to subscription and other revenues in the three months ended June 30, ~~2021,~~2022, compared to the three months ended June 30, ~~2020.~~2021. In addition, ~~we granted temporary fee waivers on certain products from~~

~~Table of Contents~~

~~March 2020 through~~deferred revenue increased $2.4 million for the three months ended June 2020 in an aggregate amount of $1.9 million as a result of the COVID-19 pandemic. This was offset by a decrease in hardware revenue of $1.2 million primarily due to hardware provided under our SaaS arrangements being accounted for as operating leases in the second quarter of 2021, whereby revenue is recognized monthly,30, 2022, compared to the ~~second quarter of 2020, when it was recognized at the time of shipment.~~

three months ended June 30, 2021.

Network ~~Fees~~

fees

Network fees were $324.1 million for the three months ended June 30, 2022, compared to $214.7 million for the three months ended June 30, 2021, ~~compared to $74.4 million for the three months ended June 30, 2020,~~ an increase of ~~$140.3~~$109.4 million or ~~188.6%~~51.0%. This increase is correlated with the increase in end-to-end payment volume as described above.

Gross revenue less network fees was $182.6 million for the three months ended June 30, 2022, compared to $136.3 million for the three months ended June 30, 2021, ~~compared to $67.4 million for the three months ended June 30, 2020,~~ an increase of ~~$68.9~~$46.3 million or ~~102.2%~~34.0%. The increase in gross revenue less network fees iswas largely correlated with the increase in end-to-end payment ~~volume.~~volume. See ~~“—Key performance indicators~~“Key Performance Indicators and ~~non-GAAP measures”~~Non-GAAP Measures” below for a reconciliation of gross profit to gross revenue less network fees.

Other costs of sales

Other costs of sales was $76.8 million for the three months ended June 30, 2022, compared to $58.2 million for the three months ended June 30, 2021, ~~compared~~an increase of $18.6 million, or 32.0%. This increase was primarily driven by:

•higher residual commissions, which increased other costs of sales $12.9 million, primarily driven by the growth in gross revenue less network fees;

•the Postec and The Giving Block acquisitions which collectively increased other costs of sales $1.7 million in the three months ended June 30, 2022;

•higher capitalized software development amortization, which increased other costs of sales $1.5 million; and

•higher capitalized acquisition cost amortization, which increased other costs of sales $1.3 million, related to ~~$35.8~~deal bonuses paid to third-party distribution partners to obtain processing contracts.

Operating expenses

General and administrative expenses. General and administrative expenses were $58.0 million for the three months ended June 30, ~~2020, an increase of $22.4 million, or 62.6%. 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~~2022, compared 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.

~~Operating expenses~~

~~General and administrative expenses.~~ ~~General and administrative expenses were~~ $51.7 million for the three months ended June 30, 2021, an increase of $6.3 million or 12.2%. The increase was primarily driven by the acquisitions of Postec and The Giving Block, which collectively increased general and administrative expenses $2.4 million in the three months ended June 30, 2022, and higher insurance and travel expenses of $1.3 million and $0.7 million, respectively, in the three months ended June 30, 2022, compared to ~~$88.3~~the three months ended June 30, 2021, as a result of our continued growth and expansion.

Depreciation and amortization expense. Depreciation and amortization expense was $16.7 million for the three months ended June 30, ~~2020, a decrease of $36.6 million or 41.4%. The decrease was primarily due to lower equity-based compensation expense of $49.9 million in the three months ended June 30, 2021,~~2022, compared to the three months ended June 30, 2020, as a result of compensation expense recognized in the three 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 $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.

~~Depreciation and amortization expense.~~ ~~Depreciation and amortization expense was~~ $15.5 million for the three months ended June 30, 2021, an increase of $1.2 million or 7.7%. The increase was primarily driven by higher depreciation for equipment under lease of $2.3 million in the three months ended June 30, 2022, compared to ~~$10.4~~the three months ended June 30, 2021. In addition, the acquisitions of Postec and The Giving Block collectively increased depreciation and amortization expense $0.6 million in the three months ended June 30, 2022. This was partially offset by lower amortization of intangible assets of $1.6 million in the three months ended June 30, 2022.

Professional fees. Professional fees were $5.2 million for the three months ended June 30, ~~2020, an increase of $5.1 million or 49.0%. The increase was primarily due~~2022, compared 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. 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~~ $3.5 million for the three months ended June 30, 2021, ~~compared~~an increase of $1.7 million or 48.6%. The increase was due to ~~$1.2~~higher acquisition-related costs.

Interest income

Interest income was $1.4 million for the three months ended June 30, ~~2020, an increase~~2022, consisting primarily of ~~$2.3 million or 191.7%. The increase~~interest income earned on our cash and cash equivalents.

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Interest expense

Interest expense 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 $2.5~~$8.4 million for the three months ended June 30, ~~2021,~~2022, compared to $0.8 million for the three months ended June 30, 2020, an increase of $1.7 million or 212.5%. The increase was partially due to expenses related to the integration of 3dcart and its rebranding as Shift4Shop. 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.

~~Other operating (income) expense, net~~

Other 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 three months ended June 30, 2020 to reflect the impact of the lease modifications.

~~Table of Contents~~

~~Loss on extinguishment of debt~~

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 in the three 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.

~~Interest expense~~

~~Interest expense was~~ $6.3 million for the three months ended June 30, 2021, ~~compared to $11.7~~an increase of $2.1 million or 33.3%. The increase in interest expense was primarily driven by the issuance of the Convertible Senior Notes due 2027 (“2027 Convertible Notes”) in July 2021, as well as a $0.4 million special interest payment made for the Convertible Senior Notes due 2025 (“2025 Convertible Notes”) during the three months ended June 30, 2020, a decrease of $5.4 million or 46.2%. 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 $4.2 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 the three months ended June 30, 2021.

2022.

Income tax benefit

(provision)

The effective tax rate for the three months ended June 30, ~~2021~~2022 was ~~(421.4)%~~6.3%, compared to the effective tax rate for the three months ended June 30, ~~2020~~2021 of ~~(0.8)~~(421.4)%.

The ~~2021 income~~effective tax ~~benefit~~rate for the three months ended June 30, 2022 was different than the U.S. federal statutory income tax rate of 21% primarily due to the loss allocated to the noncontrolling interest ~~changes~~and the full valuation allowances on Shift4 Payments, Inc. and VenueNext, Inc. in the United States. The effective tax rate for the three months ended June 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, the full valuation allowances on Shift4 Payments, Inc. and VenueNext, Inc. in the United States, 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. ~~The~~

Net income ~~tax benefit~~attributable to noncontrolling interests

Net income attributable to noncontrolling interests of Shift4 Payments, LLC was $4.7 million for the three months ended June 30, ~~2020~~2022, compared to $1.3 million for the three months ended June 30, 2021.

Comparison of Results for the Six Months Ended June 30, 2022 and 2021

The following table sets forth the consolidated statements of operations for the periods presented:


	Six Months Ended June 30,
(in millions)	2022		2021		$ change		% change
Payments-based revenue	$	845.4	$	540.7	$	304.7	56.4	%
Subscription and other revenues	63.2		49.6		13.6		27.4	%
Gross revenue	908.6		590.3		318.3		53.9	%
Less: Network fees	577.2		356.5		220.7		61.9	%
Less: Other costs of sales	141.0		103.9		37.1		35.7	%
Gross profit	190.4		129.9		60.5		46.6	%
General and administrative expenses	124.2		105.2		19.0		18.1	%
Depreciation and amortization expense	34.0		30.9		3.1		10.0	%
Professional fees	13.9		9.7		4.2		43.3	%
Advertising and marketing expenses	5.6		22.6		(17.0)		(75.2)	%
Restructuring expenses	0.1		0.1		—		NM
Transaction-related expenses	1.4		—		1.4		NM
Total operating expenses	179.2		168.5		10.7		6.4	%
Income (loss) from operations	11.2		(38.6)		49.8		(129.0)	%
Loss on extinguishment of debt	—		(0.2)		0.2		(100.0)	%
Interest income	1.4		—		1.4		NM
Other income, net	0.3		—		0.3		NM
Interest expense	(16.3)		(12.8)		(3.5)		27.3	%
Loss before income taxes	(3.4)		(51.6)		48.2		(93.4)	%
Income tax benefit	5.2		5.1		0.1		2.0	%
Net income (loss)	1.8		(46.5)		48.3		NM
Net loss attributable to noncontrolling interests	(1.0)		(16.9)		15.9		(94.1)	%
Net income (loss) attributable to Shift4 Payments, Inc.	$	2.8	$	(29.6)	$	32.4	NM

Table of Contents

Gross revenue

Gross revenue was $908.6 million for the six months ended June 30, 2022, compared to $590.3 million for the six months ended June 30, 2021, an increase of $318.3 million or 53.9%. Gross revenue is comprised of payments-based revenue and subscription and other revenues.

Payments-based revenue was $845.4 million for the six months ended June 30, 2022, compared to $540.7 million for the six months ended June 30, 2021, an increase of $304.7 million or 56.4%. The increase in payments-based revenue was primarily driven by the increase in end-to-end payment volume of $10.5 billion, or 52.8%, for the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

Subscription and other revenues were $63.2 million for the six months ended June 30, 2022, compared to $49.6 million for the six months ended June 30, 2021, an increase of $13.6 million or 27.4%. The increase in subscription and other revenues was driven primarily by the VenueNext, Postec and The Giving Block acquisitions, which collectively contributed $12.4 million more to subscription and other revenues in the six months ended June 30, 2022, compared to the six months ended June 30, 2021. In addition, deferred revenue increased $2.0 million for the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

Network fees

Network fees were $577.2 million for the six months ended June 30, 2022, compared to $356.5 million for the six months ended June 30, 2021, an increase of $220.7 million or 61.9%. This increase is correlated with the increase in end-to-end payment volume as described above.

Gross revenue less network fees was $331.4 million for the six months ended June 30, 2022, compared to $233.8 million for the six months ended June 30, 2021, an increase of $97.6 million or 41.7%. The increase in gross revenue less network fees was largely correlated with the increase in end-to-end payment volume. See “Key Performance Indicators and Non-GAAP Measures” below for a reconciliation of gross profit to gross revenue less network fees.

Other costs of sales

Other costs of sales was $141.0 million for the six months ended June 30, 2022, compared to $103.9 million for the six months ended June 30, 2021, an increase of $37.1 million, or 35.7%. This increase was primarily driven by:

•higher residual commissions, which increased other costs of sales $29.1 million, were driven by the growth in gross revenue less network fees;

•the VenueNext, Postec and The Giving Block acquisitions which collectively increased other costs of sales $3.8 million in the six months ended June 30, 2022;

•higher variable costs associated with processing fees of $3.2 million;

•higher capitalized acquisition cost amortization, which increased other costs of sales $2.5 million, related to deal bonuses paid to third-party distribution partners to obtain processing contracts; and

•higher capitalized software development amortization, which increased other costs of sales $2.0 million; partially offset by

•higher than normal chargeback losses during the six months ended June 30, 2021 driven by the business failure of one merchant causing $5.5 million in estimated unrecoverable chargeback transactions in 2021.

Operating expenses

General and administrative expenses. General and administrative expenses were $124.2 million for the six months ended June 30, 2022, compared to $105.2 million for the six months ended June 30, 2021, an increase of $19.0 million or 18.1%. The increase was primarily driven by higher compensation and other employee-related expenses of $7.2 million, higher insurance expenses of $1.5 million, and higher travel expenses of $1.2 million in the six months ended June 30, 2022, compared to the six months ended June 30, 2021, as a result of our continued growth and expansion. In addition, the acquisitions of VenueNext, Postec and The Giving Block collectively increased general and administrative expenses $6.7 million in the six months ended June 30, 2022.

Table of Contents

Depreciation and amortization expense. Depreciation and amortization expense was $34.0 million for the six months ended June 30, 2022, compared to $30.9 million for the six months ended June 30, 2021, an increase of $3.1 million or 10.0%. The increase was primarily driven by higher depreciation for equipment under lease of $4.8 million in the six months ended June 30, 2022, compared to the six months ended June 30, 2021. In addition, the acquisitions of VenueNext, Postec and The Giving Block collectively increased depreciation and amortization expense $1.1 million in the six months ended June 30, 2022. This was partially offset by lower amortization of intangible assets of $2.9 million in the six months ended June 30, 2022.

Professional fees. Professional fees were $13.9 million for the six months ended June 30, 2022, compared to $9.7 million for the six months ended June 30, 2021, an increase of $4.2 million or 43.3%. The increase was primarily due to higher acquisition-related costs.

Advertising and marketing expenses. Advertising and marketing expenses were $5.6 million for the six months ended June 30, 2022, compared to $22.6 million for the six months ended June 30, 2021, a decrease of $17.0 million or 75.2%. The decrease was primarily driven by expenses in the six months ended June 30, 2021 related to the integration of 3dcart and its rebranding as Shift4Shop that were nonrecurring in nature. This was partially offset by the VenueNext, Postec and The Giving Block acquisitions, which collectively increased advertising and marketing expenses $1.1 million in the six months ended June 30, 2022.

Transaction-related expenses. Transaction-related expenses were $1.4 million for the six months ended June 30, 2022. These expenses were associated with a consent solicitation for the 2026 Senior Notes in March 2022. See Note 9 in the notes to the accompanying unaudited condensed consolidated financial statements for more information.

Interest income

Interest income was $1.4 million for the six months ended June 30, 2022, consisting primarily of interest income earned on our cash and cash equivalents.

Interest expense

Interest expense was $16.3 million for the six months ended June 30, 2022, compared to $12.8 million for the six months ended June 30, 2021, an increase of $3.5 million or 27.3%. The increase in interest expense was primarily driven by the issuance of the 2027 Convertible Notes in July 2021, as well as a $0.4 million special interest payment made for the 2025 Convertible Notes during the six months ended June 30, 2022.

Income tax benefit

The effective tax rate for the six months ended June 30, 2022 was (152.9)%, compared to the effective tax rate for the six months ended June 30, 2021 of (9.9)%.

The effective tax rate for the six months ended June 30, 2022 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 full valuation allowances on Shift4 Payments, Inc. and VenueNext, Inc. in the United States, and ~~recording~~ a $6.4 million income tax benefit ~~of $0.6 million for a net operating loss carryback at Shift4 Corporation which was allowed due to the CARES Act.~~

~~Net income (loss) attributable to noncontrolling interests~~

Net income (loss) attributable to noncontrolling interests of Shift4 Payments, LLC was $1.3 million for the three months ended June 30, 2021, compared to $(73.8) million for the three months ended June 30, 2020. The net loss incurred for the three 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.

~~Table of Contents~~

~~Comparison of results for the six months ended June 30, 2021 and 2020~~

~~The following table sets forth the consolidated statements of operations for the periods presented.~~

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

~~(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 Revenue~~

Gross 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 Fees~~

Network 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.

~~Table of Contents~~

~~Other costs of sales~~

Other 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 expenses~~

~~General 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, net~~

Other 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 debt~~

A 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.

~~Table of Contents~~

~~Interest expense~~

Interest 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 primarilyvaluation allowance release 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 Facilityacquired deferred tax liabilities from ~~5.50% to 4.625% on the 2026 Senior Notes, which reduced interest expense by $3.2 million.~~

~~Income tax benefit~~

The Giving Block. The 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 full valuation allowances on Shift4 Payments, Inc. and VenueNext, Inc. 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 interests

Net loss attributable to noncontrolling interests of Shift4 Payments, LLC was $(1.0) million for the six months ended June 30, 2022, compared to $(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~~2021.

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Key Performance Indicators 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.~~

~~Key performance indicators and non-GAAP measures~~

Non-GAAP Measures

The following table sets forth our key performance indicators and non-GAAP measures for the periods presented.


	Three Months Ended June 30,					Six Months Ended June 30,						Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2021		2020			2021		2020			(in millions)	2022		2021		2022		2021
End-to-end payment volume	$	11,833.9	$	4,240.0		$	19,820.7	$	10,386.1		End-to-end payment volume	$	16,873.1	$	11,833.9	$	30,294.0	$	19,820.7
Gross revenue less network fees		136.3		67.4			233.8		146.5		Gross revenue less network fees	182.6		136.3		331.4		233.8
EBITDA		30.6		(45.8	)		12.2		(19.7	)	EBITDA	52.9		30.6		70.5		12.2
Adjusted EBITDA		45.2		14.8			67.4		32.3		Adjusted EBITDA	65.6		45.2		109.9		67.4

End-to-end payment volume

End-to-end payment volume is defined as the total dollar amount of card payments that we authorize and settle on behalf of our ~~merchants.~~merchants plus total cryptocurrency amounts transacted, translated at the spot price to U.S. dollars. This volume does not include volume processed through our gateway-only merchants.

Gross revenue less network fees, EBITDA and Adjusted EBITDA

We use supplemental measures of our performance which are derived from our consolidated financial information but which are not presented in our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures include: gross revenue less network fees, which includes interchange and assessment fees; earnings before interest, ~~expense,~~ income taxes, depreciation, and amortization (“EBITDA”); and Adjusted EBITDA. Gross revenue less network fees represents a key performance metric that management uses to measure changes in the mix and value derived from our customer base as we continue to execute our strategy to expand our reach to serve larger, complex merchants. Adjusted EBITDA is the primary financial performance measure used by management to evaluate its business and monitor results of operations. Adjusted EBITDA represents EBITDA further adjusted for certain non-cash and other nonrecurring items that management believes are not indicative of ongoing operations. These adjustments include acquisition, restructuring and integration costs, equity-based compensation expense and other nonrecurring items.

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.

We use non-GAAP financial measures to supplement financial information presented on a GAAP basis. We believe that excluding certain items from our GAAP results allows management to better understand our consolidated financial performance from period to period and better project our future consolidated financial performance as forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Moreover, we believe these non-GAAP financial measures provide our stakeholders with useful information to help them evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling them to make more meaningful period to period comparisons. There are limitations to the use of the non-GAAP financial measures presented in this ~~report.~~Quarterly Report on Form 10-Q. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

The non-GAAP financial measures are not meant to be considered as indicators of performance in isolation from, or as a substitute for, net income (loss) prepared in accordance with GAAP, and should be read only in conjunction with financial information presented on a GAAP

~~Table of Contents~~

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.

Table of Contents

Reconciliations of gross revenue less network fees, EBITDA and Adjusted EBITDA

The tables below provide reconciliations of gross profit to gross revenue less network fees and net ~~income (loss)~~loss on a consolidated basis for the periods presented to EBITDA and Adjusted EBITDA.

Gross revenue less network fees:


	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2021		2020		2021		2020		(in millions)	2022		2021		2022		2021
Gross profit	$	78.1	$	31.6	$	129.9	$	75.0	Gross profit	$	105.8	$	78.1	$	190.4	$	129.9
Add back: Other costs of sales		58.2	35.8			103.9	71.5		Add back: Other costs of sales	76.8		58.2		141.0		103.9
Gross revenue less network fees	$	136.3	$	67.4	$	233.8	$	146.5	Gross revenue less network fees	$	182.6	$	136.3	$	331.4	$	233.8

EBITDA and Adjusted EBITDA:

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

~~(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 June 30,				Six Months Ended June 30,
(in millions)	2022		2021		2022		2021
Net income (loss)	$	15.0	$	4.5	$	1.8	$	(46.5)
Interest expense	8.4		6.3		16.3		12.8
Interest income	(1.4)		—		(1.4)		—
Income tax provision (benefit)	1.0		(5.9)		(5.2)		(5.1)
Depreciation and amortization expense	29.9		25.7		59.0		51.0
EBITDA	52.9		30.6		70.5		12.2
Acquisition, restructuring and integration costs (a)	2.4		3.2		10.2		29.0
Equity-based compensation (b)	9.7		11.3		26.8		25.4
Other nonrecurring items (c)	0.6		0.1		2.4		0.8
Adjusted EBITDA	$	65.6	$	45.2	$	109.9	$	67.4

(a) For the three months ended June 30, 2022, primarily consisted of $2.5 million of acquisition-related costs, partially offset by a $0.3 million adjustment to contingent consideration for the The Giving Block acquisition. For the three months ended June 30, 2021, primarily consisted 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 six months ended June 30, 2022, primarily consisted of $8.3 million of acquisition-related costs and $1.4 million of transaction-related expenses associated with a consent solicitation for the 2026 Senior Notes in March 2022, partially offset by a $0.3 million adjustment to contingent consideration for the The Giving Block acquisition. For the six months ended June 30, 2021, primarily consisted of $20.4 million of expenses related to the integration of 3dcart and its rebranding as Shift4Shop, $4.3 million of acquisition-related costs, and $2.1 million of expense for the Inspiration4 seat.
(b) Represents equity-based compensation expense for RSUs, including employer taxes for vested RSUs. See Note 18 in the notes to the accompanying unaudited condensed consolidated financial statements for more information on equity-based compensation.
(c) For the six months ended June 30, 2022, primarily consisted of $1.2 million of costs associated with an internal processing system disruption that required technical remediation, $0.4 million of costs associated with an early retirement initiative completed in the first quarter of 2022 and $0.3 million of legal and professional fees for one-time matters.

~~(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)~~

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.

Liquidity and ~~capital resources~~

Capital Resources

We have historically sourced our liquidity requirements primarily with cash flow from operations and, when needed, with debt borrowings ~~under our Credit 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.

We do not intend to pay cash dividends on our Class A common stock in the foreseeable future. Shift4 Payments, Inc. is a holding company that does not conduct any business operations of its own. As a result, Shift4 Payments, Inc.’s ability to pay cash dividends on its common stock, if any, is dependent upon cash dividends and distributions and other transfers from Shift4 Payments, LLC. The amounts available to Shift4 Payments, Inc. to pay cash dividends are subject to the covenants and distribution restrictions in its subsidiaries’ agreements governing

~~Table of Contents~~

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.

The following table sets forth summary cash flow information for the periods presented.

Operating activities

Net cash provided by operating activities consists of net ~~loss~~income (loss) adjusted for certain non-cash items and changes in other assets and liabilities.

For the six months ended June 30, 2022, net cash provided by operating activities of $85.0 million was primarily a result of:

•net income of $1.8 million adjusted for non-cash expenses, including depreciation and amortization of $59.0 million, equity-based compensation of $26.2 million, deferred income taxes of $(5.5) million and provision for bad debts of $4.3 million; plus,

~~Delaware~~	~~84-3676340~~
Delaware		84-3676340
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
2202 N. Irving Street Allentown, Pennsylvania			18109
(Address of principal executive offices)			(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class ACommon Stock, $0.0001 par value per share	FOUR	The New York Stock Exchange


Large accelerated filer	☐ x	Accelerated filer	☐ o
Non-accelerated filer	☒ o	Smaller reporting company	☐ o
Emerging growth company	☒ o


	PART I. FINANCIAL INFORMATION
Item 1	Financial Statements ~~(unaudited~~(unaudited))		4 5
	Condensed Consolidated Balance Sheets		4 5
	Condensed Consolidated Statements of Operations		5 6
	Condensed Consolidated Statements of Comprehensive Income (Loss)	7
	Condensed Consolidated Statements of Changes in ~~Redeemable Preferred Units and~~ Stockholders’ ~~Equity/Members’ (Deficit)~~Equity		6 8
	Condensed Consolidated Statements of Cash Flows		8 9
	Notes to Condensed Consolidated Financial Statements		9 10
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		29 33
Item 3	Quantitative and Qualitative Disclosures About Market Risk		43 46
Item 4	Controls and Procedures		43 53

	PART II. OTHER INFORMATION
Item 1	Legal Proceedings		44 47
Item 1A	Risk Factors		44 47
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		44 51
Item 3	Defaults Upon Senior Securities		44 51
Item 4	Mine Safety Disclosures		44 51
Item 5	Other Information		44 51
Item 6	Exhibits		45 51
~~Signatures~~	Signatures		46 54


	Weighted Average	June 30, 2021							Weighted Average Depreciation Period (in years)	June 30, 2022
	Depreciation Period (in years)	Carrying Value		Accumulated Depreciation		Net Carrying Value			Weighted Average Depreciation Period (in years)	Carrying Value		Accumulated Depreciation		Net Carrying Value
Equipment under lease	3	$	54.1	$	14.0	$	40.1	Equipment under lease	3	$	89.8	$	(34.9)	$	54.9
Equipment held for lease (a)	N/A		7.1		—		7.1	Equipment held for lease (a)	N/A	10.3		—		10.3
Total equipment for lease		$	61.2	$	14.0	$	47.2	Total equipment for lease		$	100.1	$	(34.9)	$	65.2

☒
x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐
o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	June 30,			December 31,
	2021			2020
Assets
Current assets
Cash and cash equivalents	$	699.7		$	927.8
Accounts receivable, net of allowance for doubtful accounts of $12.8 in 2021 ($5.7 in 2020) (Note 3)		177.2			92.7
Inventory		1.6			1.5
Prepaid expenses and other current assets (Note 11)		14.8			11.5
Total current assets		893.3			1,033.5
Noncurrent assets
Goodwill (Note 5)		525.2			477.0
Other intangible assets, net (Note 6)		185.1			186.3
Capitalized acquisition costs, net (Note 7)		32.8			30.2
Equipment for lease, net (Note 8)		47.2			36.6
Property, plant and equipment, net (Note 9)		17.5			15.1
Investments in securities (Note 1)		29.5			—
Other noncurrent assets		0.5			0.6
Total noncurrent assets		837.8			745.8
Total assets	$	1,731.1		$	1,779.3
Liabilities and Stockholders' Equity
Current liabilities
Current portion of debt (Note 10)	$	—		$	0.9
Accounts payable		116.4			60.6
Accrued expenses and other current liabilities (Note 11)		36.2			30.1
Deferred revenue (Note 3)		12.0			7.8
Total current liabilities		164.6			99.4
Noncurrent liabilities
Long-term debt (Note 10)		1,117.6			1,005.4
Deferred tax liability (Note 13)		0.6			2.8
Other noncurrent liabilities (Note 4)		2.1			1.7
Total noncurrent liabilities		1,120.3			1,009.9
Total liabilities		1,284.9			1,109.3
Commitments and contingencies (Note 16)
Stockholders' equity (Note 18)
Preferred stock, $0.0001 par value, 20,000,000 shares authorized at June 30, 2021 and December 31, 2020, NaN issued and outstanding		—			—
Class A common stock, $0.0001 par value per share, 300,000,000 shares authorized, 47,215,604 and 39,737,950 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		—			—
Class B common stock, $0.0001 par value per share, 100,000,000 shares authorized, 28,240,404 and 30,625,857 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		—			—
Class C common stock, $0.0001 par value per share, 100,000,000 shares authorized, 7,422,140 and 10,188,852 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		—			—
Additional paid-in capital		601.3			738.3
Retained deficit		(306.7	)		(278.7	)
Total stockholders' equity attributable to Shift4 Payments, Inc.		294.6			459.6
Noncontrolling interests (Note 19)		151.6			210.4
Total stockholders' equity		446.2			670.0
Total liabilities and stockholders' equity	$	1,731.1		$	1,779.3

	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

	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	)

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

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


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	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

2021 (remaining six months)	$	26.6
2022		40.5

2022 (remaining six months)			2022 (remaining six months)	$	27.4
2023		27.6	2023	50.8
2024		23.0	2024	45.2
2025		21.8	2025	29.2
2026			2026	17.6
Thereafter		45.6	Thereafter	48.8
Total	$	185.1	Total	$	219.0


	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020			2022		2021		2022		2021
Depreciation and amortization expense	$	1.0	$	0.9	$	1.8	$	1.9	Depreciation and amortization expense	$	0.9	$	1.0	$	1.9	$	1.8
Cost of sales		0.4		0.4		0.8		0.8	Cost of sales	0.3		0.4		0.6		0.8
Total depreciation expense	$	1.4	$	1.3	$	2.6	$	2.7	Total depreciation expense	$	1.2	$	1.4	$	2.5	$	2.6

	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	%


	Six Months Ended June 30, 2021						Six Months Ended June 30, 2022
	Number of RSUs			Weighted Average Grant Date Fair Value			Number of RSUs	Weighted Average Grant Date Fair Value
Unvested balance at beginning of period		4,840,508		$	24.35	Unvested balance at beginning of period	2,402,694	$	43.28
Granted (a)		163,265		$	74.80	Granted (a)	604,188	45.51
Vested		(3,240,146	)	$	22.74	Vested	(619,175)	29.77
Forfeited or cancelled		(6,715	)	$	42.10	Forfeited or cancelled	(143,591)	55.94
Unvested balance at end of period		1,756,912		$	31.90	Unvested balance at end of period	2,244,116	$	48.93

(a) Includes 157,330 RSUs not subject to continued service, which vested immediately in March 2022 and 16,422 RSUs issued in connection with The Giving Block acquisition, of which 9,347 RSUs vest in equal installments in December 2022, 2023 and 2024 and 7,075 RSUs which are not subject to continued service, and vested immediately in March 2022.						(a) Includes 157,330 RSUs not subject to continued service, which vested immediately in March 2022 and 16,422 RSUs issued in connection with The Giving Block acquisition, of which 9,347 RSUs vest in equal installments in December 2022, 2023 and 2024 and 7,075 RSUs which are not subject to continued service, and vested immediately in March 2022.

	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			Three Months Ended June 30,		Six Months Ended June 30,
	June 30, 2021		June 30, 2021		June 30, 2020			2022	2021	2022	2021
LLC Interests that convert into potential Class A common shares		—		28,240,404		39,204,989	LLC Interests that convert into potential Class A common shares	—	—	—	28,240,404
RSUs and performance RSUs - employee		—		1,742,656		2,177,628	RSUs and performance RSUs - employee	999,475	—	999,475	1,742,656
RSUs - non-employee directors		—		10,244		52,660	RSUs - non-employee directors	10,742	—	10,742	10,244
2025 Convertible Notes		—		50,856		—
Total		—		30,044,160		41,435,277	Total	1,010,217	—	1,010,217	29,993,304


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a)	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (in millions)
April 1-30, 2022	1,126,277	$	54.39	1,126,277	$	—
May 1-31, 2022	1,793,954	44.58		1,793,954	20.4
June 1-30, 2022	665,450	38.92		665,450	44.5
Total	3,585,681

(a) On December 16, 2021, our Board authorized a stock repurchase program (the “December 2021 Program”), pursuant to which we were authorized to repurchase up to $100.0 million of shares of our Class A common stock through December 31, 2022. On May 11, 2022, the Board authorized a stock repurchase program (the “May 2022 Program”), pursuant to which we were authorized to repurchase up to an additional $100.0 million of shares of our Class A common stock through December 31, 2022. On June 15, 2022, the Board authorized a stock repurchase program (the “June 2022 Program” and, together with the December 2021 Program and the May 2022 Program, the “Programs”), pursuant to which we were authorized to repurchase up to an additional $50.0 million of shares of our Class A common stock through December 31, 2022. Repurchases under the Programs may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases depending on market conditions and corporate needs. Open market repurchases will be structured to occur within the pricing and volume requirements of Rule 10b-18 of the Exchange Act. We may also, from time to time, enter into Rule 10b5-1 of the Exchange Act plans to facilitate repurchases of our shares under this authorization. The exact number of shares to be repurchased by us is not guaranteed and the Programs may be suspended, modified, or discontinued at any time at our discretion and without prior notice.