Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 31, 2022 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-39313 | |
Entity Registrant Name | SHIFT4 PAYMENTS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 84-3676340 | |
Entity Address, Address Line One | 2202 N. Irving Street | |
Entity Address, City or Town | Allentown | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 18109 | |
City Area Code | 888 | |
Local Phone Number | 276-2108 | |
Title of 12(b) Security | Class A Common Stock, $0.0001 par value per share | |
Trading Symbol | FOUR | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001794669 | |
Current Fiscal Year End Date | --12-31 | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 53,006,376 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 25,829,016 | |
Class C Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 3,626,749 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 672.7 | $ 1,231.5 |
Accounts receivable, net of allowance for doubtful accounts of $14.7 in 2022 ($8.0 in 2021) | 262.2 | 205.9 |
Inventory | 5.9 | 3.5 |
Prepaid expenses and other current assets (Note 11) | 19.9 | 12.7 |
Total current assets | 960.7 | 1,453.6 |
Noncurrent assets | ||
Goodwill (Note 5) | 777.3 | 537.7 |
Other intangible assets, net (Note 6) | 561.7 | 188.5 |
Capitalized customer acquisition costs, net (Note 7) | 35.2 | 35.1 |
Equipment for lease, net (Note 8) | 70.5 | 58.4 |
Property, plant and equipment, net (Note 9) | 21.4 | 18.4 |
Right-of-use assets (Note 14) | 16.7 | 18.5 |
Investments in securities | 32 | 30.5 |
Other noncurrent assets | 10.2 | 1.9 |
Total noncurrent assets | 1,525 | 889 |
Total assets | 2,485.7 | 2,342.6 |
Current liabilities | ||
Accounts payable | 177.1 | 121.1 |
Accrued expenses and other current liabilities (Note 11) | 86.6 | 42.9 |
Deferred revenue (Note 4) | 20.3 | 15 |
Current lease liabilities (Note 14) | 4.6 | 4.8 |
Total current liabilities | 288.6 | 183.8 |
Noncurrent liabilities | ||
Long-term debt (Note 10) | 1,739.8 | 1,738.5 |
Deferred tax liability (Note 13) | 9.3 | 0.3 |
Noncurrent lease liabilities (Note 14) | 15.9 | 17.9 |
Other noncurrent liabilities | 11.3 | 2.4 |
Total noncurrent liabilities | 1,776.3 | 1,759.1 |
Total liabilities | 2,064.9 | 1,942.9 |
Commitments and contingencies (Note 16) | ||
Stockholders' equity (Note 17) | ||
Preferred stock, $0.0001 par value, 20,000,000 shares authorized at September 30, 2022 and December 31, 2021, none issued and outstanding | 0 | 0 |
Additional paid-in capital | 696 | 619.2 |
Treasury stock, at cost; no shares and 378,475 shares at September 30, 2022 and December 31, 2021, respectively | 0 | (21.1) |
Accumulated other comprehensive loss | (0.7) | 0 |
Retained deficit | (392.8) | (325.3) |
Total stockholders' equity attributable to Shift4 Payments, Inc. | 302.5 | 272.8 |
Noncontrolling interests (Note 18) | 118.3 | 126.9 |
Total stockholders' equity | 420.8 | 399.7 |
Total liabilities and stockholders' equity | 2,485.7 | 2,342.6 |
Class A Common Stock | ||
Stockholders' equity (Note 17) | ||
Common stock | 0 | 0 |
Class B Common Stock | ||
Stockholders' equity (Note 17) | ||
Common stock | 0 | 0 |
Class C Common Stock | ||
Stockholders' equity (Note 17) | ||
Common stock | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Allowance for doubtful accounts | $ 14.7 | $ 8 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Treasury stock, repurchased (in shares) | 0 | 378,475 |
Class A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, issued (in shares) | 53,006,376 | 51,793,127 |
Common stock, outstanding (in shares) | 53,006,376 | 51,793,127 |
Class B Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 25,829,016 | 26,272,654 |
Common stock, outstanding (in shares) | 25,829,016 | 26,272,654 |
Class C Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 3,626,749 | 5,035,181 |
Common stock, outstanding (in shares) | 3,626,749 | 5,035,181 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Gross revenue | [1] | $ 547.3 | $ 377.8 | $ 1,455.9 | $ 968.1 |
Cost of sales (exclusive of depreciation and amortization expense shown separately below) | [2] | (411.6) | (313.4) | (1,129.8) | (773.8) |
General and administrative expenses | (74.1) | (48.1) | (198.6) | (153.1) | |
Revaluation of contingent liabilities (Note 12) | 36.9 | 0 | 37.2 | (0.2) | |
Depreciation and amortization expense (c) | [3] | (28.9) | (15) | (62.9) | (45.9) |
Professional fees | (10.4) | (3.3) | (24.3) | (13) | |
Advertising and marketing expenses | (5.6) | (3.5) | (11.2) | (26.1) | |
Restructuring expenses (Note 11) | (0.1) | (0.1) | (0.2) | (0.2) | |
Transaction-related expenses (Note 10) | 0 | 0 | (1.4) | 0 | |
Income (loss) from operations | 53.5 | (5.6) | 64.7 | (44.2) | |
Loss on extinguishment of debt | 0 | 0 | 0 | (0.2) | |
Interest income | 3.5 | 0 | 4.9 | 0 | |
Other income, net | 0 | 0.2 | 0.3 | 0.2 | |
Change in TRA liability (Note 13) | (1.1) | 0 | (1.1) | 0 | |
Interest expense | (8.3) | (7.4) | (24.6) | (20.2) | |
Income (loss) before income taxes | 47.6 | (12.8) | 44.2 | (64.4) | |
Income tax (provision) benefit (Note 13) | (1.2) | (1) | 4 | 4.1 | |
Net income (loss) | 46.4 | (13.8) | 48.2 | (60.3) | |
Net income (loss) attributable to noncontrolling interests | 3.3 | (4.6) | 2.3 | (21.5) | |
Net income (loss) attributable to Shift4 Payments, Inc. | $ 43.1 | $ (9.2) | $ 45.9 | $ (38.8) | |
Class A Common Stock | |||||
Basic net income (loss) per share: | |||||
Net income (loss) per share - basic (in dollars per share) | $ 0.78 | $ (0.17) | $ 0.82 | $ (0.72) | |
Weighted average common stock outstanding - basic (in shares) | 51,502,825 | 49,692,599 | 51,804,935 | 46,251,576 | |
Diluted net income (loss) per share: | |||||
Net income (loss) per share - diluted (in dollars per share) | $ 0.57 | $ (0.17) | $ 0.58 | $ (0.72) | |
Weighted average common stock outstanding - diluted (in shares) | 77,801,346 | 49,692,599 | 78,479,541 | 46,251,576 | |
Class C Common Stock | |||||
Basic net income (loss) per share: | |||||
Net income (loss) per share - basic (in dollars per share) | $ 0.78 | $ (0.17) | $ 0.82 | $ (0.72) | |
Weighted average common stock outstanding - basic (in shares) | 3,648,580 | 6,117,997 | 4,069,266 | 8,078,943 | |
Diluted net income (loss) per share: | |||||
Net income (loss) per share - diluted (in dollars per share) | $ 0.57 | $ (0.17) | $ 0.58 | $ (0.72) | |
Weighted average common stock outstanding - diluted (in shares) | 3,648,580 | 6,117,997 | 4,069,266 | 8,078,943 | |
[1]For the three and nine months ended September 30, 2021, includes $22.4 million of payments to merchants associated with the TSYS outage, which are recorded as contra revenue and reflected as a reduction of “Gross revenue.” See Note 4 for more information.[2]For the three and nine months ended September 30, 2021, includes $2.3 million of payments to partners associated with the TSYS outage. See Note 4 for more information.[3]Depreciation and amortization expense includes depreciation of equipment under lease of $8.2 million and $22.6 million for the three and nine months ended September 30, 2022, respectively, and $5.8 million and $15.4 million for the three and nine months ended September 30, 2021, respectively. |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Gross revenue | [1] | $ 547.3 | $ 377.8 | $ 1,455.9 | $ 968.1 |
Depreciation and amortization expenses of equipment | $ 8.2 | 5.8 | $ 22.6 | 15.4 | |
Gross Revenue Contra Account | |||||
Gross revenue | 22.4 | 22.4 | |||
Payments To Partners | |||||
Cost of sales | $ 2.3 | $ 2.3 | |||
[1]For the three and nine months ended September 30, 2021, includes $22.4 million of payments to merchants associated with the TSYS outage, which are recorded as contra revenue and reflected as a reduction of “Gross revenue.” See Note 4 for more information. |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 46.4 | $ (13.8) | $ 48.2 | $ (60.3) |
Other comprehensive loss | ||||
Unrealized loss on foreign currency translation adjustment, net of tax | (0.5) | 0 | (1.1) | 0 |
Total other comprehensive loss | (0.5) | 0 | (1.1) | 0 |
Comprehensive income (loss) | 45.9 | (13.8) | 47.1 | (60.3) |
Comprehensive income (loss) attributable to noncontrolling interests | 3.1 | (4.6) | 1.9 | (21.5) |
Comprehensive income (loss) attributable to Shift4 Payments, Inc. | $ 42.8 | $ (9.2) | $ 45.2 | $ (38.8) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) - USD ($) $ in Millions | Total | Additional Paid-In Capital | Treasury Stock | Retained Deficit | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Class A Common Stock | Class A Common Stock Common Stock | Class B Common Stock | Class B Common Stock Common Stock | Class C Common Stock | Class C Common Stock Common Stock | Cumulative Effect of Period of Adoption Adjustment | Cumulative Effect of Period of Adoption Adjustment Additional Paid-In Capital | Cumulative Effect of Period of Adoption Adjustment Retained Deficit |
Balance at beginning of period (in shares) at Dec. 31, 2020 | 39,737,950 | 30,625,857 | 10,188,852 | ||||||||||||
Balance at beginning of period at Dec. 31, 2020 | $ 670 | $ 738.3 | $ (278.7) | $ 210.4 | $ 0 | $ 0 | $ 0 | $ (109.9) | $ (111.5) | $ 1.6 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income (loss) | (51) | (32.8) | (18.2) | ||||||||||||
Issuance of Class A common stock and fair value of equity-based compensation awards assumed in connection with acquisition (in shares) | 325,127 | ||||||||||||||
Issuance of Class A common stock and fair value of equity-based compensation awards assumed in connection with acquisition | 26.3 | 13.5 | 12.8 | ||||||||||||
Transfer from Founder of right associated with Inspiration4 seat | 2.1 | 1.3 | 0.8 | ||||||||||||
Exchange of shares held (in shares) | 2,000,000 | (926,000) | (1,074,000) | ||||||||||||
Exchange of shares held | 0 | 6.3 | (6.3) | ||||||||||||
Equity-based compensation | 14 | 14 | |||||||||||||
Vesting of restricted stock units, net of tax withholding (in shares) | 46,503 | ||||||||||||||
Vesting of restricted stock units, net of tax withholding | (2.4) | (1.4) | (1) | ||||||||||||
Balance at end of period (in shares) at Mar. 31, 2021 | 42,109,580 | 29,699,857 | 9,114,852 | ||||||||||||
Balance at end of period at Mar. 31, 2021 | 549.1 | 660.5 | (309.9) | 198.5 | $ 0 | $ 0 | $ 0 | ||||||||
Balance at beginning of period (in shares) at Dec. 31, 2020 | 39,737,950 | 30,625,857 | 10,188,852 | ||||||||||||
Balance at beginning of period at Dec. 31, 2020 | 670 | 738.3 | (278.7) | 210.4 | $ 0 | $ 0 | $ 0 | $ (109.9) | $ (111.5) | $ 1.6 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income (loss) | (60.3) | ||||||||||||||
Cumulative translation adjustment | 0 | ||||||||||||||
Balance at end of period (in shares) at Sep. 30, 2021 | 51,508,608 | 26,272,654 | 5,139,890 | ||||||||||||
Balance at end of period at Sep. 30, 2021 | 435.4 | 614.3 | (315.9) | 137 | $ 0 | $ 0 | $ 0 | ||||||||
Balance at beginning of period (in shares) at Mar. 31, 2021 | 42,109,580 | 29,699,857 | 9,114,852 | ||||||||||||
Balance at beginning of period at Mar. 31, 2021 | 549.1 | 660.5 | (309.9) | 198.5 | $ 0 | $ 0 | $ 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income (loss) | 4.5 | 3.2 | 1.3 | ||||||||||||
Exchange of shares held (in shares) | 3,152,165 | (1,459,453) | (1,692,712) | ||||||||||||
Exchange of shares held | 0 | 7.9 | (7.9) | ||||||||||||
Equity-based compensation | 6.6 | 6.6 | |||||||||||||
Vesting of restricted stock units, net of tax withholding (in shares) | 1,953,859 | ||||||||||||||
Vesting of restricted stock units, net of tax withholding | (114) | (73.7) | (40.3) | ||||||||||||
Balance at end of period (in shares) at Jun. 30, 2021 | 47,215,604 | 28,240,404 | 7,422,140 | ||||||||||||
Balance at end of period at Jun. 30, 2021 | 446.2 | 601.3 | (306.7) | 151.6 | $ 0 | $ 0 | $ 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income (loss) | (13.8) | (9.2) | (4.6) | ||||||||||||
Issuance of Class A common stock and fair value of equity-based compensation awards assumed in connection with acquisition (in shares) | 16,797 | ||||||||||||||
Exchange of shares held (in shares) | 4,250,000 | (1,967,750) | (2,282,250) | ||||||||||||
Exchange of shares held | 0 | 9 | (9) | ||||||||||||
Equity-based compensation | 6.4 | 6.4 | |||||||||||||
Vesting of restricted stock units, net of tax withholding (in shares) | 26,207 | ||||||||||||||
Vesting of restricted stock units, net of tax withholding | (3.4) | (2.4) | (1) | ||||||||||||
Cumulative translation adjustment | 0 | ||||||||||||||
Balance at end of period (in shares) at Sep. 30, 2021 | 51,508,608 | 26,272,654 | 5,139,890 | ||||||||||||
Balance at end of period at Sep. 30, 2021 | 435.4 | 614.3 | (315.9) | 137 | $ 0 | $ 0 | $ 0 | ||||||||
Balance at beginning of period (in shares) at Dec. 31, 2021 | 51,793,127 | 51,793,127 | 26,272,654 | 26,272,654 | 5,035,181 | 5,035,181 | |||||||||
Balance at beginning of period at Dec. 31, 2021 | $ 399.7 | 619.2 | $ (21.1) | (325.3) | $ 0 | 126.9 | $ 0 | $ 0 | $ 0 | ||||||
Balance at beginning of period, Treasury stock (in shares) at Dec. 31, 2021 | 378,475 | 378,475 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income (loss) | $ (13.2) | (7.5) | (5.7) | ||||||||||||
Issuance of Class A common stock and fair value of equity-based compensation awards assumed in connection with acquisition (in shares) | 785,969 | ||||||||||||||
Issuance of Class A common stock and fair value of equity-based compensation awards assumed in connection with acquisition | 36.5 | 24.7 | 11.8 | ||||||||||||
Repurchases of Class A common stock to treasury stock (in shares) | (301,510) | ||||||||||||||
Repurchases of Class A common stock to treasury stock | (17.2) | 4.5 | $ (17.2) | (4.5) | |||||||||||
Exchange of shares held (in shares) | 732,524 | (732,524) | |||||||||||||
Equity-based compensation | 15.8 | 15.8 | |||||||||||||
Vesting of restricted stock units, net of tax withholding (in shares) | 306,953 | ||||||||||||||
Vesting of restricted stock units, net of tax withholding | (3.4) | (4.6) | 1.2 | ||||||||||||
Balance at end of period (in shares) at Mar. 31, 2022 | 53,618,573 | 26,272,654 | 4,302,657 | ||||||||||||
Balance at end of period at Mar. 31, 2022 | 418.2 | 659.6 | $ (38.3) | (332.8) | 0 | 129.7 | $ 0 | $ 0 | $ 0 | ||||||
Balance at end of period, Treasury stock (in shares) at Mar. 31, 2022 | 679,985 | ||||||||||||||
Balance at beginning of period (in shares) at Dec. 31, 2021 | 51,793,127 | 51,793,127 | 26,272,654 | 26,272,654 | 5,035,181 | 5,035,181 | |||||||||
Balance at beginning of period at Dec. 31, 2021 | $ 399.7 | 619.2 | $ (21.1) | (325.3) | 0 | 126.9 | $ 0 | $ 0 | $ 0 | ||||||
Balance at beginning of period, Treasury stock (in shares) at Dec. 31, 2021 | 378,475 | 378,475 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income (loss) | $ 48.2 | ||||||||||||||
Cumulative translation adjustment | (1.1) | ||||||||||||||
Balance at end of period (in shares) at Sep. 30, 2022 | 53,006,376 | 53,006,376 | 25,829,016 | 25,829,016 | 3,626,749 | 3,626,749 | |||||||||
Balance at end of period at Sep. 30, 2022 | $ 420.8 | 696 | $ 0 | (392.8) | (0.7) | 118.3 | $ 0 | $ 0 | $ 0 | ||||||
Balance at end of period, Treasury stock (in shares) at Sep. 30, 2022 | 3,887,191 | 0 | |||||||||||||
Balance at beginning of period (in shares) at Mar. 31, 2022 | 53,618,573 | 26,272,654 | 4,302,657 | ||||||||||||
Balance at beginning of period at Mar. 31, 2022 | $ 418.2 | 659.6 | $ (38.3) | (332.8) | 0 | 129.7 | $ 0 | $ 0 | $ 0 | ||||||
Balance at beginning of period, Treasury stock (in shares) at Mar. 31, 2022 | 679,985 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income (loss) | 15 | 10.3 | 4.7 | ||||||||||||
Issuance of Class A common stock (in shares) | 17,287 | ||||||||||||||
Issuance of Class A common stock | 0.6 | 0.4 | 0.2 | ||||||||||||
Repurchases of Class A common stock to treasury stock (in shares) | (3,585,681) | ||||||||||||||
Repurchases of Class A common stock to treasury stock | (167.2) | 46.8 | $ (167.2) | (46.8) | |||||||||||
Retirement of treasury stock (in shares) | 3,539,016 | (3,539,016) | |||||||||||||
Retirement of treasury stock | 0 | (76.4) | $ 176.7 | (100.3) | |||||||||||
Exchange of shares held (in shares) | 1,095,915 | (443,638) | (652,277) | ||||||||||||
Exchange of shares held | 0 | 1.6 | (1.6) | ||||||||||||
Equity-based compensation | 9.3 | 9.3 | |||||||||||||
Vesting of restricted stock units, net of tax withholding (in shares) | 265,553 | ||||||||||||||
Vesting of restricted stock units, net of tax withholding | (7.9) | (5.8) | (2.1) | ||||||||||||
Cumulative translation adjustment | (0.6) | (0.4) | (0.2) | ||||||||||||
Balance at end of period (in shares) at Jun. 30, 2022 | 51,458,312 | 25,829,016 | 3,650,380 | ||||||||||||
Balance at end of period at Jun. 30, 2022 | 267.4 | 635.5 | $ (28.8) | (422.8) | (0.4) | 83.9 | $ 0 | $ 0 | $ 0 | ||||||
Balance at end of period, Treasury stock (in shares) at Jun. 30, 2022 | 726,650 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income (loss) | 46.4 | 43.1 | 3.3 | ||||||||||||
Issuance of Class A common stock (in shares) | 2,228,663 | ||||||||||||||
Issuance of Class A common stock | $ 95.2 | 63.8 | 31.4 | ||||||||||||
Retirement of treasury stock (in shares) | (4,265,666) | 726,650 | (726,650) | ||||||||||||
Retirement of treasury stock | $ 0 | (15.7) | $ 28.8 | (13.1) | |||||||||||
Exchange of shares held (in shares) | 23,631 | (23,631) | |||||||||||||
Equity-based compensation | 12.8 | 12.8 | |||||||||||||
Vesting of restricted stock units, net of tax withholding (in shares) | 22,420 | ||||||||||||||
Vesting of restricted stock units, net of tax withholding | (0.5) | (0.4) | (0.1) | ||||||||||||
Cumulative translation adjustment | (0.5) | ||||||||||||||
Other comprehensive loss | (0.5) | (0.3) | (0.2) | ||||||||||||
Balance at end of period (in shares) at Sep. 30, 2022 | 53,006,376 | 53,006,376 | 25,829,016 | 25,829,016 | 3,626,749 | 3,626,749 | |||||||||
Balance at end of period at Sep. 30, 2022 | $ 420.8 | $ 696 | $ 0 | $ (392.8) | $ (0.7) | $ 118.3 | $ 0 | $ 0 | $ 0 | ||||||
Balance at end of period, Treasury stock (in shares) at Sep. 30, 2022 | 3,887,191 | 0 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Operating activities | ||
Net income (loss) | $ 48.2 | $ (60.3) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||
Depreciation and amortization | 101.6 | 76.8 |
Amortization of capitalized financing costs | 6 | 4.1 |
Loss on extinguishment of debt | 0 | 0.2 |
Deferred income taxes | (4.4) | (4.3) |
Provision for bad debts | 5.8 | 10.3 |
Revaluation of contingent liabilities | (37.2) | 0.2 |
Change in TRA liability | 1.1 | 0 |
Equity-based compensation expense | 38.4 | 26.9 |
Other noncash items | 0.9 | 1 |
Change in operating assets and liabilities | ||
Accounts receivable | (58.1) | (98) |
Prepaid expenses and other assets | (4.6) | (1.4) |
Inventory | 3.1 | 2.9 |
Capitalized customer acquisition costs | (19.4) | (19.3) |
Accounts payable | 44.2 | 59.1 |
Accrued expenses and other current liabilities | 8.3 | 5.3 |
Right-of-use assets and lease liabilities, net | (0.4) | 0 |
Deferred revenue | 2.4 | 2.8 |
Net cash provided by operating activities | 135.9 | 6.3 |
Investing activities | ||
Residual commission buyouts | (268.2) | (4.4) |
Acquisitions, net of cash acquired | (135.2) | (54.2) |
Acquisition of equipment to be leased | (39.6) | (35.3) |
Capitalized software development costs | (31.7) | (13) |
Investments in securities | (1.5) | (29.5) |
Acquisition of property, plant and equipment | (6.8) | (6.3) |
Net cash used in investing activities | (483) | (142.7) |
Financing activities | ||
Proceeds from long-term debt | 0 | 632.5 |
Repurchases of Class A common stock to treasury stock | (185.9) | 0 |
Payments for withholding tax related to vesting of restricted stock units | (20.6) | (119.7) |
Deferred financing costs | (4.9) | (15.2) |
Repayment of debt | 0 | (0.9) |
Net cash (used in) provided by financing activities | (211.4) | 496.7 |
Effect of exchange rate changes on cash and cash equivalents | (0.3) | 0 |
Change in cash and cash equivalents | (558.8) | 360.3 |
Cash and cash equivalents | ||
Beginning of period | 1,231.5 | 927.8 |
End of period | $ 672.7 | $ 1,288.1 |
Organization, Basis of Presenta
Organization, Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Basis of Presentation and Significant Accounting Policies | Organization, Basis of Presentation and Significant Accounting Policies Organization Shift4 Payments, Inc., (“Shift4 Payments”) (“the Company”), was incorporated in Delaware on November 5, 2019 in order to carry on the business of Shift4 Payments, LLC and its consolidated subsidiaries. The Company is a leading provider of integrated payment processing and technology solutions in the United States (“U.S.”). The Company has also begun executing on its international expansion strategy. The Company distributes its services through its internal sales and support teams, as well as through its network of software partners. Through the Shift4 Model , the Company offers software partners a single integration to an end-to-end payments offering, a powerful gateway and a robust suite of technology solutions (including cloud enablement, business intelligence, analytics, and mobile) to enhance the value of their software suites and simplify payment acceptance. The Company provides for its merchants a seamless customer experience at scale, rather than simply acting as one of multiple providers they rely on to operate their businesses. The Shift4 Model is built to serve a range of merchants from small-to-medium-sized businesses to large and complex enterprises across numerous verticals, including food and beverage, hospitality, stadiums and arenas, gaming, specialty retail, non-profits, eCommerce, and exciting technology companies. This includes the Company’s point of sale (“POS”) software offerings, as well as over 500 additional software integrations in virtually every industry. Basis of Presentation The accompanying interim condensed consolidated financial statements of the Company are unaudited. These interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. As such, these fi nancial statements do not include all information and footnotes required by U.S. GAAP for complete financial statements. The December 31, 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, 2021, as disclosed in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2021 (the “2021 Form 10-K/A”). 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. 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, the “Continuing Equity Owners”). 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”), amounts payable under the Tax Receivable Agreement (“TRA”), and the aggregate principal amount of $690.0 million of 2025 Convertible Notes and $632.5 million of 2027 Convertible Notes that are held by Shift4 Payments, Inc. directly. As of both September 30, 2022 and December 31, 2021 , $9.8 million of cash w as directly held by Shift4 Payments, Inc. As of September 30, 2022, the earnout liability for The Giving Block was $21.0 million and the TRA liability was $1.1 million. Shift4 Pa yments, Inc., which was incorporated on 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. Change in Presentation of Condensed Consolidated Statements of Operations The Company has changed the presentation of its Condensed Consolidated Statements of Operations to remove the “Gross profit” line item and update the “Cost of sales” line item to indicate it is exclusive of depreciation and amortization expense shown separately for the three and nine months ended September 30, 2022 and 2021. The Company has also changed the presentation of the disclosure in Note 22 to remove the reconciliation between “Gross revenue” and “Gross profit.” In addition, certain prior year balances have been adjusted to present “Revaluation of contingent liabilities” in its own line item rather than within the line item “General and administrative expenses” on the Company’s unaudited Condensed Consolidated Statements of Operations. Liquidity and Management’s Plan As of September 30, 2022, the Company had $1,772.5 million total principal amount of debt outstanding and was in compliance with the financial covenants under its debt agreements. The Company expects to be in compliance with such financial covenants for at least 12 months following issuance of these unaudited condensed consolidated financial statements. See Note 10 for further information on the Company’s debt obligations. Use of Estimates 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 Company’s 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, deferred income tax valuation allowances, amounts associated with the Company’s tax receivable agreement with the Continuing Equity Owners, fair value of debt instruments, allowance for doubtful accounts, income taxes, investments in securities and noncontrolling interests. Estimates are based on past experience and other considerations reasonable under the circumstances. Actual results may differ from these estimates. Significant Accounting Policies The Company’s significant accounting policies are discussed in Note 2 to Shift4 Payments, Inc.’s consolidated financial statements as of and for the year ended December 31, 2021 in the 2021 Form 10-K/A. 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 nine months ended September 30, 2022, except for the below. Crypto Settlement Assets and Liabilities The Company recognizes a liability accompanied by an asset of the same value to reflect its obligation to safeguard the cr ypto settlement assets it holds on behalf of users of The Giving Block Inc.’s (“The Giving Block”) platform. These crypto settlement assets are comprised of numerous cryptocurrencies that are traded on numerous cryptocurrency exchanges. The liability and asset are remeasured at each reporting date at the fair value of 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 the crypto settlement assets and is primarily obligated to secure the assets and protect them from loss or theft. The Company maintains the internal recordkeeping of the assets. Recent Accounting Pronouncements Accounting Pronouncements Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 842, Leases (“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. 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. Prior period amounts were not adjusted and 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, 2021 to combine lease and non-lease components for all classes of assets. Additionally, the Company elected to not record leases with a term of twelve months or less on the 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 mat erial impact to the unaudited Condensed Consolidated Statements of Operations or unaudited Condensed Consolidated Statements of Cash Flows. See Note 14 for ASC 842-related disclosures. In June 2016, the FASB issued 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 a current expected credit loss ( “ CECL ” ) methodology, which will result in more timely recognition of credit losses. The Company adopted ASU 2016-13 on a modified retrospective basis on December 31, 2021, reflecting the adoption as of January 1, 2021 in the Company's annual results for the period ended December 31, 2021 and interim periods beginning January 1, 2022. The adoption of ASU 2016-13 did not result in a material impact on the Company’s unaudited condensed consolidated financial statements and disclosures. In October 2021, the FASB issued ASU 2021-08, 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 , as if it had originated the contracts. Prior to ASU 2021-08, an acquirer generally recognized assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts, at fair value on the acquisition date. The Company adopted ASU 2021-08 in the third quarter of 2021 and retrospectively applied the ASU to its acquisitions that occurred in 2021. The adoption of ASU 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 fiscal year ended December 31, 2021. In July 2021, the FASB issued ASU 2021-05, 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 require operating lease classification. The Company adopted ASU 2021-05 on a retrospective basis effective January 1, 2022. The adoption did not have a significant impact on the Company’s unaudited condensed consolidated financial statements. 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 pr otect 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 value of crypto settlement assets and crypto settlement liabilities associated with The Giving Block was $1.7 million as of September 30, 2022. The adoption of this guidance had no impact on the Company’s unaudited condensed consolidated financial statements. 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. In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions , to clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring the fair value of the equity security. ASU 2022-03 also clarifies that an entity cannot recognize and measure a contractual sale restriction as a separate unit of account. The amendments in ASU 2022-03 may be early adopted and are effective on a prospective basis for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company currently considers sale restrictions in measuring the fair value of shares of its Class A common stock equity securities issued in conjunction with acquisitions. The Company is currently evaluating whether it will early adopt the amendments in ASU 2022-03 and is evaluating the impact of the amendments on the Company’s unaudited condensed consolidated financial statements. |
Restatement of Previously Issue
Restatement of Previously Issued Condensed Consolidated Financial Statements | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Changes and Error Corrections [Abstract] | |
Restatement of Previously Issued Condensed Consolidated Financial Statements | Restatement of Previously Issued Condensed Consolidated Financial Statements In October 2022, it was determined that there was an error in the Company’s original Quarterly Report on Form 10-Q for the three months ended September 30, 2021 related to the classification of customer acquisition costs within the Company’s Condensed Consolidated Statements of Cash Flows. Specifically, the Company determined that “Customer acquisition costs” were incorrectly classified within “Investing activities” rather than “Operating activities” in its Condensed Consolidated Statements of Cash Flows. The Company is correcting this misclassification by restating its Condensed Consolidated Statements of Cash Flows in this Quarterly Report on Form 10-Q. The following table summarizes the impact of these adjustments for the periods presented: Nine Months Ended September 30, 2021 As Reported Adjustments As Restated Net cash provided by operating activities $ 25.6 $ (19.3) $ 6.3 Net cash used in investing activities (162.0) 19.3 (142.7) Net cash provided by financing activities 496.7 — 496.7 Change in cash and cash equivalents $ 360.3 $ — $ 360.3 |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions 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. Online Payments Group On September 29, 2022, the Company acquired Online Payments Group AG (“Online Payments Group”) by acquiring 100% of its common stock for $125.9 million of estimated total purchase consideration, net of cash acquired. Online Payments Group is a European payment service provider with a world-class developer portal and checkout experience that management believes will accelerate the Company’s global eCommerce growth. Total purchase consideration was as follows: Cash $ 74.1 Shares of Class A common stock (a) 38.6 Contingent consideration (b) 22.0 Shareholder loans transfer 2.5 Total purchase consideration 137.2 Less: cash acquired (11.3) Total purchase consideration, net of cash acquired $ 125.9 (a) Total purchase consideration includes 971,371 shares of common stock. (b) The Company agreed to an earnout due to the former shareholders of Online Payments Group, not to exceed $60.0 million. $30.0 million of the earnout is payable in September 2023 if key customers of Online Payments Group contribute a specified amount of revenue from September 29, 2022 to September 28, 2023 and the remaining $30.0 million of the earnout is payable in September 2024 if key customers contribute a specified amount of revenue from September 29, 2022 to September 28, 2024. Each portion of the earnout will be paid 50% in shares of the Company’s Class A common stock and 50% in cash. The fair value of the earnout was included in the initial purchase consideration and will be revalued and recorded quarterly until the end of the earnout period as a fair value adjustment within “Revaluation of contingent liabilities” in the Company’s unaudited Condensed Consolidated Statements of Operations. As of September 30, 2022, the fair value of the earnout was $22.0 million, which is recognized in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. 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 contingent consideration, accounts receivable, a ccrued expenses and other current liabilities assumed, and residual goodwill. Accounts receivable $ 2.2 Shareholder loans receivable (a) 2.5 Other intangible assets 44.0 Goodwill (b) 83.0 Indemnification asset (c) 6.8 Accrued expenses and other current liabilities (0.6) Uncertain tax position (d) (5.0) Deferred tax liability (5.2) Other noncurrent liabilities (1.8) Net assets acquired $ 125.9 (a) Amount is eliminated in consolidation and therefore has no impact to the Company’s Condensed Consolidated Balance Sheets. (b) Goodwill is not deductible for tax purposes. (c) Included within “Other noncurrent assets” in the Company’s Condensed Consolidated Balance Sheets. (d) Included within “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets. In the nine months ended September 30, 2022, the Company incurred expenses in connection with the acquisition of Online Payments Group of $3.8 million. These expenses are included in “Professional fees” in the Company’s unaudited Condensed Consolidated Statements of Operations. Upon acquisition, the Company assessed the probability Online Payments Group would be required to pay certain tax liabilities and recorded to “Other noncurrent liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets $5.0 million for income taxes related to unrecognized tax benefits determined in accordance with the provisions of ASC 740, “Accounting for income taxes” and $1.8 million for non-income taxes determined in accordance with the provisions of ASC 450, “Contingencies.” Online Payments Group has agreed to indemnify the Company for tax liabilities related to periods prior to the acquisition and an indemnification asset was established for $6.8 million in the purchase price allocation, which is recorded to “Other noncurrent assets” on the Company’s unaudited Condensed Consolidated Balance Sheets. 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 and customer relationships is 5 years and 10 years, respectively. The goodwill arising from the acquisition largely 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 acquisition of Online Payments Group 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. Restaurant Technology Partners During the three months ended September 30, 2022, the Company acquired Pinnacle Hospitality Systems LLC (“Pinnacle”), FPOS Group, Inc. (“FPOS”), Retail Control Solutions, Inc. (“RCS”), and three other restaurant technology partners in separate transactions for $80.3 million of total purchase consideration, net of cash acquired. The Company acquired 100% of each entity’s ownership interests. These acquisitions enable the boarding of the restaurant technology partners’ customers on the Company’s end-to-end acquiring solution and empower the Company’s distribution partners to sign the restaurant technology partners ’ customer accounts and leverage the combined expertise to handle all aspects of installation, service, and support. Total purchase consideration was as follows: Cash $ 63.1 Shares of Class A common stock (a) 20.7 Contingent consideration (b) 2.2 Settlement of preexisting relationship (2.5) Total purchase consideration 83.5 Less: cash acquired (3.2) Total purchase consideration, net of cash acquired $ 80.3 (a) Total purchase consideration includes 598,759 shares of common stock. (b) The Company agreed to earnouts due to certain former shareholders of the restaurant technology partners, calculated as a multiple of the number of each partners’ merchants that are converted to the Company’s end-to-end payments platform during the 18 months following each respective acquisition date, not to exceed $4.0 million in total. The earnouts are expected to be paid in a combination of cash and shares of the Company’s Class A common stock. The fair value of the earnouts was included in the initial purchase consideration and will be revalued and recorded quarterly until the end of the earnout period as a fair value adjustment within “Revaluation of contingent liabilities” in the Company’s unaudited Condensed Consolidated Statements of Operations. As of September 30, 2022, the fair value of the earnouts was $2.2 million, which is recognized in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. The following table summarizes the fair value assigned to the assets acquired and liabilities assumed at the acquisition dates. 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 contingent consi deration, other intangible assets, and residual goodwill. Accounts receivable $ 1.8 Inventory 1.5 Prepaid expenses and other current assets 0.1 Goodwill (a) 67.2 Other intangible assets, net 15.6 Property, plant and equipment, net 0.3 Right-of-use assets 1.3 Accounts payable (1.9) Accrued expenses and other current liabilities (0.5) Deferred revenue (1.9) Current lease liabilities (0.5) Deferred tax liability (1.9) Noncurrent lease liabilities (0.8) Net assets acquired $ 80.3 (a) $35.9 million of goodwill is deductible for tax purposes and $31.3 million of goodwill is not deductible for tax purposes. The fair values of intangible assets were estimated using inputs classified as Level 3 under the income approach using the multi-period excess earnings method (customer relationships). Three of the transactions were taxable for income tax purposes and three of the transactions were not taxable for income tax purposes. The w eighted average lives of customer rel ationships range from 14 years to 17 years. The goodwill arising from the acquisitions largely consisted of revenue synergies associated with a larger total addressable market and the ability to cross-sell existing and new customers. The acquisitions of the restaurant technology partners 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. In t he nine months ended September 30, 2022, the Company incurred expenses in connection with the Pinnacle, FPOS, RCS, and other restaurant technology partner acquisitions of $2.6 million. These e xpenses are included in “Professional fees” in the Company’s unaudited Condensed Consolidated Statements of Operations. The Giving Block On February 28, 2022, the Company acquired The Giving Block by acquiring 100% of its common stock fo r $106.9 million of estimated 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. Total purchase consideration was as 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 785,969 shares of common stock. (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 The Giving Block employees represents a component of the total consideration as presented above and was valued based on the fair value of The Giving Block awards on 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 is expected to 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 “Revaluation of contingent liabilities” in the Company’s unaudited Condensed Consolidated Statements of Operations. As of September 30, 2022, the fair value of the earnout was $20.6 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 September 30, 2022, $0.4 million is included in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. 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 contingent consideration, a ccrued expenses and other current liabilities assumed, and residual goodwill. 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. In t he three and nine months ended September 30, 2022, the Company incurred expenses in connection with the acquisition of The Giving Block of $0.1 million and $2.3 million, respectively. These expenses are included in “Professional fees” in the Company’s unaudited Condensed Consolidated Statements of Operations. 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 and trade 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, the trade name, donor relationships and customer relationships is 8 years, 15 years, 5 years and 15 years, respectively. The goodwill arising from the acquisition largely 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 acquisition of The Giving Block 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. Postec On September 1, 2021, the Company acquired Postec, Inc. (“Postec”) by acquiring 100% of its membership interests for $14.3 million in cash, net of cash acquired. 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, 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 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 for the thirty 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 regulatory approvals, which the Company expects to receive by the first quarter of 2023. 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 nine months ended September 30, 2022, the Company incurred expenses in connection with the Finaro acquisition of $2.7 million and $7.4 million, respectively. These expenses are included in “Professional fees” in the Company’s unaudited Condensed Consolidated Statements of Operations. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue ASC 606, Revenue from Contracts with Customers (“ASC 606”) Under ASC 606, the Company has three 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. TSYS outage On August 21, 2021, Total System Services, Inc. (“TSYS”), a Global Payments company and an important vendor to the Company, experienced a significant platform outage that resulted in the disruption of payment processing for the Company’s merchants (“TSYS outage”). 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. In response to the TSYS outage, the Company distributed payments to both merchants and partners in order to alleviate the impact of the outage on their businesses. The following paragraphs describe how these payments are reflected in the Company’s condensed consolidated financial statements. In the third quarter of 2021, the Company distributed $22.4 million in payments to its merchants to approximate the lost revenues they experienced as a result of the TSYS outage. Under ASC 606, these payments were recorded as contra revenue, which is reflected as a reduction of “Gross revenue” in the Company’s unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021. In the third quarter of 2021, the Company also distributed $2.3 million in payments to its partners to approximate their lost revenues and compensate them for the additional support required from them to manage the outage. Consistent with the treatment of the Company’s payments to its partners in the normal course of business, these payments are reflected in “Cost of sales” in the Company’s unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021. Disaggregated Revenue Based on similar operational characteristics, the Company’s revenue from contracts with customers is disaggregated as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Payments-based revenue (a) $ 509.0 $ 346.9 $ 1,354.4 $ 887.6 Subscription and other revenues 38.3 30.9 101.5 80.5 Total $ 547.3 $ 377.8 $ 1,455.9 $ 968.1 (a) For the three and nine months ended September 30, 2021, payments-based revenue includes nonrecurring payments of $22.4 million the Company made to merchants related to the TSYS outage, which are recorded as contra revenue and reflected as a reduction of payments-based revenue. Based on similar economic characteristics, the Company’s revenue from contracts with customers is disaggregated as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Over-time revenue (a) $ 531.9 $ 366.9 $ 1,418.9 $ 938.2 Point-in-time revenue 15.4 10.9 37.0 29.9 Total $ 547.3 $ 377.8 $ 1,455.9 $ 968.1 (a) For the three and nine months ended September 30, 2021, over-time revenue includes nonrecurring payments of $22.4 million the Company made to merchants related to the TSYS outage, which are recorded as contra revenue and reflected as a reduction of over-time revenue. Contract Assets Contract assets of $0.3 million and $0.3 million as of September 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, and contract assets of $0.5 million as of September 30, 2022 are included within “Other noncurrent assets” on the Company’s unaudited Condensed Consolidated Balance Sheets. There was no allowance for contract assets as of September 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 of September 30, 2022 and December 31, 2021, the Company had deferred revenue of $23.6 million and $17.4 million, respectively. The change in the contract liabilities was 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: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Annual service fees and regulatory compliance fees $ 11.3 $ 8.8 $ 30.9 $ 18.9 Amount of these fees included in deferred revenue at beginning of period 7.4 4.4 10.8 4.4 Accounts Receivable The change in the Company’s allowance for doubtful accounts was as follows: September 30, September 30, Beginning balance $ 8.0 $ 5.7 Additions to expense (a) 5.9 10.3 Write-offs, net of recoveries and other adjustments 0.8 (2.6) Ending balance $ 14.7 $ 13.4 (a) For the nine months ended September 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. |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The changes in the carrying amount of goodwill were as follows: Balance at December 31, 2021 $ 537.7 The Giving Block Acquisition (Note 3) 89.4 Online Payments Group Acquisition (Note 3) 83.0 Restaurant Technology Partner Acquisitions (Note 3) 67.2 Balance at September 30, 2022 $ 777.3 |
Other Intangible Assets, Net
Other Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangible Assets, Net | Other Intangible Assets, Net Other intangible assets, net consisted of the following: Weighted Average September 30, 2022 Carrying Value Accumulated Net Carrying Merchant relationships 11 $ 143.5 $ (31.3) $ 112.2 Acquired technology 9 128.8 (64.9) 63.9 Trademarks and trade names 13 27.2 (3.0) 24.2 Capitalized software development costs 3 71.6 (15.2) 56.4 Residual commission buyouts (a) 3 327.5 (22.5) 305.0 Total other intangible assets, net $ 698.6 $ (136.9) $ 561.7 (a) During the three and nine months ended September 30, 2022, the Company complet ed $298.8 million and $311.7 million, respectively, of residual commission buyouts with certain third-party distribution partners, pursuant to which the Company acquired their ongoing merchant relationships that subscribe to the Company’s end-to-end payments platform. Included in this amount are $298.5 million in residual commission buyouts executed under the Company’s mass strategic buyout program completed in the three and nine months ended September 30, 2022 in support of the Company’s strategic initiative to insource our sales distribution network. Total consideration for the residual commission buyouts was comprised of a combination of cash, shares of the Company’s Class A common stock, and contingent liability earnouts. Contingent payments included in the residual commission buyouts as of September 30, 2022 are $8.6 million, of which $5.6 million are related to residual commission buyouts executed under the mass strategic buyout program which are estimated based on analysis of historical outcomes for prior similar initiatives. The maximum contingent consideration for residual buyout commissions executed under the Company’s mass strategic buyout program is $22.5 million. Weighted Average December 31, 2021 Carrying Value Accumulated Net Carrying 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 $4.2 million as of December 31, 2021. As of September 30, 2022, the estimated amortization expense for other intangible assets for each of the five succeeding years and thereafter is as follows: 2022 (remaining three months) $ 41.3 2023 161.6 2024 156.1 2025 101.7 2026 25.2 Thereafter 75.8 Total $ 561.7 Amounts charged to expense in the Company’s unaudited Condensed Consolidated Statements of Operations for amortization of acquired other intangible assets were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Depreciation and amortization expense $ 19.4 $ 8.2 $ 37.1 $ 27.6 Cost of sales 3.3 3.2 9.9 9.5 Total $ 22.7 $ 11.4 $ 47.0 $ 37.1 Amounts charged to expense in the Company’s unaudited Condensed Consolidated Statements of Operations for amortization of non-acquired other intangible assets were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Depreciation and amortization expense $ 0.1 $ — $ 0.1 $ 0.1 Cost of sales 3.7 1.7 8.8 4.6 Total $ 3.8 $ 1.7 $ 8.9 $ 4.7 |
Capitalized Customer Acquisitio
Capitalized Customer Acquisition Costs, Net | 9 Months Ended |
Sep. 30, 2022 | |
Capitalized Customer Acquisition Costs, Net [Abstract] | |
Capitalized Customer Acquisition Costs, Net | Capitalized Customer Acquisition Costs, Net Capitalized customer acquisition costs, net were $35.2 million and $35.1 million at September 30, 2022 and December 31, 2021, respectively, consisting of upfront processing bonuses with a gross carrying value of $73.2 million and $69.1 million less accumulated amortization of $38.0 million and $34.0 million at September 30, 2022 and December 31, 2021, respectively. Capitalized customer acquisition costs had a weighted average amortization period of three years at both September 30, 2022 and December 31, 2021. Amortization expense for capitalized customer acquisition costs was $6.6 million and $19.3 million for the three and nine months ended September 30, 2022, respectively, and $5.4 million and $15.5 million for the three and nine months ended September 30, 2021, respectively, and is included in “Cost of sales” in the Company’s unaudited Condensed Consolidated Statements of Operations. As of September 30, 2022, the estimated future amortization expense for capitalized customer acquisition costs is as follows: 2022 (remaining three months) $ 5.8 2023 18.0 2024 9.7 2025 1.7 Total $ 35.2 |
Equipment for Lease, Net
Equipment for Lease, Net | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Equipment for Lease, Net | ment for Lease, Net Equipment for lease, net consisted of the following: Weighted Average Depreciation Period (in years) September 30, 2022 Carrying Value Accumulated Depreciation Net Carrying Value Equipment under lease 3 $ 95.3 $ (37.9) $ 57.4 Equipment held for lease (a) N/A 13.1 — 13.1 Total equipment for lease $ 108.4 $ (37.9) $ 70.5 Weighted Average Depreciation Period (in years) December 31, 2021 Carrying Value Accumulated Depreciation Net Carrying Value Equipment under lease 3 $ 72.9 $ (24.2) $ 48.7 Equipment held for lease (a) N/A 9.7 — 9.7 Total equipment for lease, net $ 82.6 $ (24.2) $ 58.4 (a) Represents equipment that was not yet initially deployed to a merchant and, accordingly, is not being depreciated. The amount charged to “Depreciation and amortization expense” in the Company’s unaudited Condensed Consolidated Statements of Operations for depreciation of equipment under lease was $8.2 million and $22.6 million for the three and nine months ended September 30, 2022, respectively, and $5.8 million and $15.4 million for the three and nine months ended September 30, 2021, respectively. |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net Property, plant and equipment, net consisted of the following: September 30, December 31, Equipment $ 16.2 $ 10.5 Capitalized software 4.2 5.1 Leasehold improvements 9.0 9.1 Furniture and fixtures 1.5 2.0 Vehicles 0.5 0.3 Total property, plant and equipment, gross 31.4 27.0 Less: Accumulated depreciation (10.0) (8.6) Total property, plant and equipment, net $ 21.4 $ 18.4 Amounts charged to expense in the Company’s unaudited Condensed Consolidated Statements of Operations for depreciation of property, plant and equipment were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Depreciation and amortization expense $ 1.2 $ 1.0 $ 3.1 $ 2.8 Cost of sales 0.1 0.5 0.7 1.3 Total depreciation expense $ 1.3 $ 1.5 $ 3.8 $ 4.1 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Debt The Company’s outstanding debt consisted of the following: Maturity Effective Interest Rate September 30, December 31, Convertible Notes due 2025 (2025 Convertible Notes) December 15, 2025 0.49% $ 690.0 $ 690.0 Convertible Notes due 2027 (2027 Convertible Notes) August 1, 2027 0.90% 632.5 632.5 Senior Notes due 2026 (2026 Senior Notes) November 1, 2026 5.13% 450.0 450.0 Total borrowings 1,772.5 1,772.5 Less: Unamortized capitalized financing fees (32.7) (34.0) Total long-term debt $ 1,739.8 $ 1,738.5 Amortization of capitalized financing fees is included in “Interest expense” in the Company’s unaudited Condensed Consolidated Statements of Operations. Amortization expense for capitalized financing fees was $2.1 million and $6.0 million for the three and nine months ended September 30, 2022, respectively, and $1.7 million and $4.1 million for the three and nine months ended September 30, 2021, respectively. Future principal payments As of September 30, 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: September 30, December 31, Principal outstanding $ 690.0 $ 690.0 Unamortized debt issuance costs (10.5) (13.0) Net carrying value $ 679.5 $ 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: September 30, December 31, Principal outstanding $ 632.5 $ 632.5 Unamortized debt issuance costs (12.2) (13.8) Net carrying value $ 620.3 $ 618.7 Senior Notes due 2026 In March 2022, Shift4 Payments, LLC (the “Issuer”) and Shift4 Payments Finance Sub, Inc. (the “Co-Issuer” and together with the Issuer, the “Issuers”), 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”) to allow for the repurchase of capital stock as part of the Market Capitalization exception that had been included. In connection with the solicitation, the Company paid $4.5 million of consent payments to note holders, which was capitalized and recognized in the Company’s unaudited Condensed Consolidated Balance Sheets as a reduction of long-term debt, and incurred fees of $1.4 million, which were recorded to “Transaction-related expenses” in the unaudited Condensed Consolidated Statements of Operations in the nine months ended September 30, 2022. Revolving Credit Facility Borrowing capacity on the Company’s Revolving Credit Facility under the First Lien Credit Agreement (“ Revolving Credit Facility”) wa s $99.5 million as of September 30, 2022, net of a $0.5 million lette r 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. At September 30, 2022 and Decem ber 31, 2021, the Company was in compliance with all financial covenants. Other than as provided above, there are no significant changes to the information disclosed in the 2021 Form 10-K/A. |
Other Consolidated Balance Shee
Other Consolidated Balance Sheet Components | 9 Months Ended |
Sep. 30, 2022 | |
Other Consolidated Balance Sheet Components [Abstract] | |
Other Consolidated Balance Sheet Components | Other Consolidated Balance Sheet Components Prepaid expenses and other current assets Prepaid expenses and other current assets consisted of the following: September 30, December 31, Prepaid insurance $ 4.4 $ 3.3 Taxes receivable 1.7 1.8 Crypto settlement assets (a) 1.7 — Prepaid merchant signing bonuses (b) 0.3 0.7 Other prepaid expenses (c) 10.5 6.1 Contract assets 0.3 0.3 Other current assets 1.0 0.5 Total prepaid expenses and other current assets $ 19.9 $ 12.7 (a) See the disclosure within “Accounting Pronouncements Adopted” in Note 1 for information regarding the Company’s crypto settlement assets. (b) Represents deal bonuses paid to merchants to obtain processing contracts, which are amortized over their contractual term of one year. (c) Includes prepayments related to information technology, rent, tradeshows and conferences. Accrued expenses and other current liabilities Accrued expenses and other current liabilities consisted of the following: September 30, December 31, Contingent liability earnouts for acquisitions (a) $ 45.2 $ — Contingent liability earnouts for residual commission buyouts 7.6 0.9 Residuals payable 7.2 13.1 Accrued interest 9.3 4.8 Accrued payroll 7.3 15.3 Taxes payable 2.9 1.6 Deferred employer social security tax pursuant to the CARES Act 1.6 1.6 Crypto settlement liabilities (b) 1.7 — Restructuring accrual (c) 0.3 1.5 Other current liabilities 3.5 4.1 Total accrued expenses and other current liabilities $ 86.6 $ 42.9 (a) Consists of $44.8 million of estimated contingent consideration and $0.4 million of post-acquisition compensation expense as of September 30, 2022. Primarily represents the fair value of contingent liability earnouts for The Giving Block and Online Payments Group. See Note 3 for more information. (b) See the disclosure within “Accounting Pronouncements Adopted” in Note 1 for information regarding the Company’s crypto settlement liabilities. (c) The Company made severance payments of $1.2 million for the nine months ended September 30, 2022. The restructuring accrual of $0.3 million as of September 30, 2022 is expected to be paid in 2022. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | 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 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 and residual commission buyouts using Level 3 unobservable inputs. Contingent liabilities for residual commission buyouts are expected earnout payments related to the number of existing point-of-sale merchants that convert to full acquiring merchants. Contingent liabilities included in the purchase price of an acquisition are based on achievement of specified performance metrics as defined in the purchase agreement. In conjunction with the acquisition of Online Payments Group on September 29, 2022, the Company entered into a contingent consideration agreement that requires the Company to pay up to $60.0 million if key customers of Online Payments Group contribute a certain amount of revenue for the twelve months ending September 28, 2023 and the twenty-four months ending September 28, 2024. The fair value of the contingent consideration was estimated using a Monte-Carlo simulation model, which included significant unobservable Level 3 inputs, such as projected revenues over the earnout period along with estimates for revenue volatility of 36.0% and the discount rate of 8.1% as of September 30, 2022. See Note 3 for more information on the terms of the earnout agreement. The estimated fair value of the contingent consideration of $22.0 million as of September 30, 2022 is recognized in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. In conjunction with the acquisition of The Giving Block on February 28, 2022, the Company entered into a contingent consideration agreement that requires the Company to pay up to $246.0 million if certain revenue thresholds of the acquired business are achieved for the twelve months ending February 28, 2023. The fair value of the contingent consideration was estimated using a Monte-Carlo simulation model, which included significant unobservable Level 3 inputs, such as projected revenues over the earnout period along with estimates for revenue volatility of 18.6% and 16.7% as of September 30, 2022 and February 28, 2022, respectively, and the discount rate of 9.4% and 7.1% as of September 30, 2022 and February 28, 2022, respectively. Changes in the volatility and discount rate were due to broader market conditions. See Note 3 for more information on the terms of the earnout agreement. The Company recognized fair value adjustments to the contingent liability for The Giving Block of $(36.9) million and $(37.2) million for the three and nine months ended September 30, 2022, respectively, primarily due to a decrease in projected revenues over the earnout period. The fair value adjustments are recognized in “Revaluation of contingent liabilities” on the Company’s unaudited Condensed Consolidated Statements of Operations. The estimated fair value of the contingent consideration of $20.6 million as of September 30, 2022 is recognized in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. In conjunction with the acquisitions of certain restaurant technology partners, the Company entered into contingent consideration agreements that require the Company to pay up to an aggregate of $4.0 million. The fair values of the contingent consideration were estimated using Monte-Carlo simulation models, which included significant unobservable Level 3 inputs, such as projected performance over the earnout periods and discount rates ranging from 4.4% to 5.1% as of September 30, 2022. See Note 3 for more information on the terms of the earnout agreements. The estimated fair value of the contingent consideration related to purchase consideration of $2.2 million as of September 30, 2022 is recognized in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. The table below provides a reconciliation of the beginning and ending balances for the Level 3 contingent liabilities: Nine Months Ended September 30, 2022 Contingent Liabilities for Acquisitions Contingent Liabilities for Residual Commission Buyouts Total Contingent Liabilities Balance at beginning of period $ — $ 0.9 $ 0.9 Contingent consideration for acquisitions (a) 82.0 — 82.0 Contingent consideration for residual commission buyouts — 7.3 7.3 Cash payments made for contingent liabilities related to earnout payments — (0.4) (0.4) Write-off of contingent liabilities that did not achieve earnout — (0.2) (0.2) Fair value adjustments (37.2) — (37.2) Balance at end of period $ 44.8 $ 7.6 $ 52.4 (a) Includes $22.0 million for the acquisition of Online Payments Group, $57.8 million for the acquisition of The Giving Block, and $2.2 million for the acquisitions of certain restaurant technology partners. Fair value adjustments are recorded within “Revaluation of contingent liabilities” in the Company’s unaudited Condensed Consolidated Statements of Operations. There were no transfers into or out of Level 3 during the nine months ended September 30, 2022. The estimated fair value of the Company’s outstanding debt using quoted prices from over-the-counter markets, considered Level 2 inputs, was as follows: September 30, 2022 December 31, 2021 Carrying Fair Carrying Fair 2025 Convertible Notes $ 679.5 $ 607.2 $ 677.0 $ 735.4 2027 Convertible Notes 620.3 485.7 618.7 556.5 2026 Senior Notes 440.9 408.2 443.9 465.7 Total $ 1,740.7 $ 1,501.1 $ 1,739.6 $ 1,757.6 (a) Carrying value excludes unamortized debt issuance costs related to the Revolving Credit Facility of $0.9 million and $1.1 million as of September 30, 2022 and December 31, 2021, respectively. The estimated fair value of the Company’s crypto settlement assets and crypto settlement liabilities was $1.7 million as of September 30, 2022. There are no active markets for the Company’s crypto settlement liabilities and the corresponding crypto settlement assets. Accordingly, the Company has valued the assets and liabilities using quoted prices from active cryptocurrency exchanges for the underlying crypto assets, considered Level 2 inputs. 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 September 30, 2022 and December 31, 2021 include cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, other noncurrent assets, accounts payable, accrued expenses and other current liabilities, and other noncurrent liabilities, as their estimated fair values reasonably approximate their carrying value as reported on the Company’s unaudited Condensed Consolidated Balance Sheets. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 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 Payments, LLC wholly owns various U.S. and foreign subsidiaries which are taxed as corporations for tax reporting. Taxable income or loss from these subsidiaries is not passed through to Shift4 Payments, LLC. Instead, such taxable income or loss is taxed at the corporate level subject to the prevailing corporate tax rates. 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 September 30, 2022, which will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances. The Company’s effective tax rate was 2.5% and (9.0)% for the three and nine months ended September 30, 2022, respectively. The Company’s effective tax rate was 7.8% and (6.4)% for the three and nine months ended September 30, 2021, respectively. The effective tax rate for the three and nine months ended September 30, 2022 was different than the U.S. federal statutory income tax rate of 21% primarily due to the income allocated to the noncontrolling interest, the full valuation allowances on Shift4 Payments, Inc. and certain corporate subsidiaries in the U.S., and the nontaxable adjustment related to the revaluation of the contingent liability of The Giving Block. In addition, the nine months ended September 30, 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 income tax expense for the three months ended September 30, 2021 was different than the U.S. federal statutory income tax rate of 21% primarily due to the loss allocated to the noncontrolling interest and the full valuation allowances on Shift4 Payments, Inc. and certain corporate subsidiaries in the U.S.. The income tax benefit for the nine months ended September 30, 2021 was different than the U.S. federal statutory income tax rate of 21% primarily due to the loss allocated to the noncontrolling interest, changes in the valuation allowances on Shift4 Payments, Inc. and certain corporate subsidiaries in the U.S., and the tax windfall related to vested equity-based compensation awards. Uncertain Tax Positions The effects of uncertain tax positions are recognized in the condensed consolidated financial statements if these positions meet a “more-likely-than-not” threshold. For those uncertain tax positions that are recognized in the condensed consolidated financial statements, liabilities are established to reflect the portion of those positions it cannot conclude “more-likely-than-not” to be realized upon ultimate settlement. The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits within “Income tax (provision) benefit” in the Company’s Condensed Consolidated Statements of Operations. Accrued interest and penalties, if any, are included within “Deferred tax liability” in the Company’s Condensed Consolidated Balance Sheets. As of September 30, 2022, $5.0 million of uncertain tax positions were recognized within “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets, which were recognized in conjunction with acquisitions. As of December 31, 2021, there were no uncertain tax positions recognized in the condensed consolidated financial statements. 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 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 Company’s initial public offering in June 2020 and certain organizational transactions that the Company effected in connection with it, 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. During the three months ended September 30, 2022, the Company recognized a $1.1 million TRA liability after concluding it was probable that, based on estimates of future taxable income, the Company will realize tax benefits associated with the TRA in the 2022 tax year. The liability is recognized in “Other noncurrent liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. The Company has not recognized the remaining $247.2 million liability under the TRA after concluding it was not probable that the Company will be able to realize the remaining tax benefits based on estimates of future taxable income. No payments were made to the Continuing Equity Owners pursuant to the TRA during the three and nine months ended September 30, 2022. The estimation of liability under the tax receivable agreement is by its nature imprecise and subject to significant assumptions regarding 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 remaining TRA liability may be considered probable at that time and recorded within earnings. |
Lease Agreements
Lease Agreements | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Lease Agreements | Lease Agreements As Lessee The Company has operating leases primarily for office space and equipment. Th e following amounts were recorded on the Company’s unaudited Condensed Consolidated Balance Sheets relating to operating leases: September 30, 2022 December 31, 2021 Assets Right-of-use assets $ 16.7 $ 18.5 Liabilities Current lease liabilities $ 4.6 $ 4.8 Noncurrent lease liabilities 15.9 17.9 Total lease liabilities $ 20.5 $ 22.7 The expected future payments related to leases with initial non-cancellable lease terms in excess of one year at September 30, 2022 were as follows: 2022 (remaining three months) $ 1.3 2023 5.1 2024 4.7 2025 3.7 2026 3.0 Thereafter 4.5 Total lease payments 22.3 Less: Interest (1.8) Present value of minimum payments $ 20.5 Total operating lease expense, which is included in “General and administrative expenses” in the Company’s unaudited Condensed Consolidated Statements of Operations, was $1.1 million and $3.9 million for the three and nine months ended September 30, 2022 , respectively, and $1.5 million and $4.4 million for the three and nine months ended September 30, 2021 , respectively. Supplemental balance sheet information related to leases was as follows: September 30, 2022 December 31, 2021 Weighted average remaining lease term (in years): 5.1 5.6 Weighted average discount rate 3.2 % 3.2 % Operating lease payments included in operating cash flows were $4.3 million and $4.6 million for the nine months ended September 30, 2022 and 2021, respectively. 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 nine months ended September 30, 2022 was $4.5 million and $13.2 million, respectively, and $4.3 million and $12.5 million for the three and nine months ended September 30, 2021, respectively. Variable lease income was not material for the three and nine months ended September 30, 2022 or 2021. The Company expects to receive future minimum lease payments for hardware provided under the Company’s SaaS agreements of $10.4 million from October 1 , 2022 through September 30, 2023. See Note 4 and Note 8 for more information on the accounting for these operating leases. |
Lease Agreements | Lease Agreements As Lessee The Company has operating leases primarily for office space and equipment. Th e following amounts were recorded on the Company’s unaudited Condensed Consolidated Balance Sheets relating to operating leases: September 30, 2022 December 31, 2021 Assets Right-of-use assets $ 16.7 $ 18.5 Liabilities Current lease liabilities $ 4.6 $ 4.8 Noncurrent lease liabilities 15.9 17.9 Total lease liabilities $ 20.5 $ 22.7 The expected future payments related to leases with initial non-cancellable lease terms in excess of one year at September 30, 2022 were as follows: 2022 (remaining three months) $ 1.3 2023 5.1 2024 4.7 2025 3.7 2026 3.0 Thereafter 4.5 Total lease payments 22.3 Less: Interest (1.8) Present value of minimum payments $ 20.5 Total operating lease expense, which is included in “General and administrative expenses” in the Company’s unaudited Condensed Consolidated Statements of Operations, was $1.1 million and $3.9 million for the three and nine months ended September 30, 2022 , respectively, and $1.5 million and $4.4 million for the three and nine months ended September 30, 2021 , respectively. Supplemental balance sheet information related to leases was as follows: September 30, 2022 December 31, 2021 Weighted average remaining lease term (in years): 5.1 5.6 Weighted average discount rate 3.2 % 3.2 % Operating lease payments included in operating cash flows were $4.3 million and $4.6 million for the nine months ended September 30, 2022 and 2021, respectively. 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 nine months ended September 30, 2022 was $4.5 million and $13.2 million, respectively, and $4.3 million and $12.5 million for the three and nine months ended September 30, 2021, respectively. Variable lease income was not material for the three and nine months ended September 30, 2022 or 2021. The Company expects to receive future minimum lease payments for hardware provided under the Company’s SaaS agreements of $10.4 million from October 1 , 2022 through September 30, 2023. See Note 4 and Note 8 for more information on the accounting for these operating leases. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company has a service agreement with Jared Isaacman, the Company’s Chief Executive Officer and founder (“Founder”), in cluding access to aircrafts and a property. Total expense for this service, which is included in “General and administrative expenses” in the Company’s unaudited Condensed Consolidated Statements of Operations, was $0.2 million and $0.7 million for the three and nine months ended both September 30, 2022 and 2021, respectively. There were no amounts outstanding at September 30, 2022 or December 31, 2021. In the third and fourth quarters of 2021, the Company incurred $1.1 million in costs associated with a proposed Follow-on Offering that were reimbursable by Searchlight, which were included in “Accounts receivable, net” on the Company’s unaudited Condensed Consolidated Balance Sheets as of December 31, 2021. There were no amounts outstanding at September 30, 2022. In addition, on May 24, 2022, Searchlight redeemed all of its remaining LLC Interests. As a result, Searchlight is no longer a Continuing Equity Owner or a related party of the Company as of 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 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 fiscal year ended 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. Certain expenses, totaling $0.9 million, were directly associated with the Inspiration4 mission and were reimbursable by the Founder. As of December 31, 2021, a $0.1 million receivable from the Founder was recorded as “Accounts receivable” on the Company’s unaudited Condensed Consolidated Balance Sheets. There were no amounts outstanding at September 30, 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. In September 2021, the Founder, through the SPV, entered into two 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 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. In June 2022, th e 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
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 legal proceedings or claims that the Company believes will have a material adverse effect on its business, financial condition or operating results. |
Stockholders_ Equity
Stockholders’ Equity | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Stockholders’ Equity | Stockholders’ Equity Stock Repurchases On December 16, 2021, the Company’s Board of Directors (the “Board”) authorized a stock repurchase program (the “December 2021 Program”), pursuant to which 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 stock repurchase program (the “May 2022 Program”), pursuant to which the Company was authorized to repurchase up to an additional $100.0 million of shares of its 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 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 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. As of December 31, 2021, the Company had repurchased 378,475 shares of Class A common stock under the December 2021 Program for $21.1 million, including commissions paid, at an average price paid of $55.81 per share. On May 24, 2022, Searchlight exchanged its shares of the Company’s Class B and Class C common stock for an equal number of shares of Class A common stock, which Searchlight subsequently redeemed. During the nine months ended September 30, 2022, the Company repurchased 3,887,191 shares of Class A common stock 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 nine months ended September 30, 2002 is the Company’s repurchase of all 967,600 shares of Searchlight’s Class A common stock for $43.1 million at an average price paid of $44.54 per share. As of September 30, 2022, approximately $44.5 million remained available for future purchases under the June 2022 Program. Repurchased shares of common stock that have not been retired are recorded as “Treasury stock” on the Company’s unaudited Condensed Consolidated Balance Sheets. Upon retirement, the Company allocates the value of treasury stock between Additional paid-in capital and Retained earnings. During the nine months ended September 30, 2022, the Company retired 4,265,666 shares of common stock it had repurchased under the Programs. There were no shares of treasury stock outstanding as of September 30, 2022. |
Noncontrolling Interests
Noncontrolling Interests | 9 Months Ended |
Sep. 30, 2022 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interests | Noncontrolling Interests Shift4 Payments, Inc. is the sole managing member of Shift4 Payments, LLC, and consolidates the financial results of Shift4 Payments, LLC. The noncontrolling interests balance represents the economic interest in Shift4 Payments, LLC held by the Continuing Equity Owners. On May 24, 2022, Searchlight redeemed all of its outstanding LLC Interests and is therefore no longer a Continuing Equity Owner or a component of noncontrolling interests as of that date. The following table summarizes the ownership of LLC Interests in Shift4 Payments, LLC: September 30, 2022 December 31, 2021 LLC Interests Ownership % LLC Interests Ownership % Shift4 Payments, Inc. 57,004,236 68.8 % 56,449,833 68.2 % Continuing Equity Owners 25,829,016 31.2 % 26,272,654 31.8 % Total 82,833,252 100.0 % 82,722,487 100.0 % |
Equity-based Compensation
Equity-based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Equity-based Compensation | Equity-based Compensation 2020 Incentive Award Plan 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 (“RSUs”), performance restricted stock units (“PRSUs”), stock appreciation rights, and other stock or cash awards. A maximum of 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 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 shareholders approved, the amendment and restatement of 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. RSUs and PRSUs 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 nine months ended September 30, 2022 was as follows: Nine Months Ended September 30, 2022 Number of RSUs Weighted Average Unvested balance at beginning of period 2,402,694 $ 43.28 Granted (a) 1,142,405 45.20 Vested (650,437) 30.18 Forfeited or cancelled (195,174) 55.23 Unvested balance at end of period 2,699,488 $ 48.22 (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. The grant date fair value of RSUs and PRSUs subject to continued service or those that vest immediately was determined based on the price of the Company’s Class A common stock on the grant date. The Company recognized equity-based compensation exp ense of $12.2 million and $38.4 million for the three and nine months ended September 30, 2022, respectively, and $6.3 million and $26.9 million for the three and nine months ended September 30, 2021 , respectively. At September 30, 2022, the total unrecognized equity-based compensation expense related to outstanding RSUs and PRSUs was $102.1 million , which is expected to be recognized over a weighted-average period of 3.18 years . |
Basic and Diluted Net Income (L
Basic and Diluted Net Income (Loss) per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Net Income (Loss) per Share | 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 September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net income (loss) $ 46.4 $ (13.8) $ 48.2 $ (60.3) Less: Net income (loss) attributable to noncontrolling interests 3.3 (4.6) 2.3 (21.5) Net income (loss) attributable to Shift4 Payments, Inc. 43.1 (9.2) 45.9 (38.8) Adjustment to net income (loss) attributable to common stockholders — (0.1) — (0.6) Net income (loss) attributable to common stockholders $ 43.1 $ (9.3) $ 45.9 $ (39.4) Numerator - allocation of net income (loss) attributable to common stockholders: Net income (loss) allocated to Class A common stock - basic $ 40.2 $ (8.2) $ 42.6 $ (33.5) Reallocation of net income attributable to common stockholders from assumed conversion of LLC interests and assumed vesting of RSUs 4.1 — 3.2 — Net income (loss) allocated to Class A common stock - diluted $ 44.3 $ (8.2) $ 45.8 $ (33.5) Net income (loss) allocated to Class C common stock - basic $ 2.9 $ (1.1) $ 3.3 $ (5.9) Reallocation of net income attributable to common stockholders from assumed conversion of LLC interests and assumed vesting of RSUs (0.8) — (0.9) — Net income (loss) allocated to Class C common stock - diluted $ 2.1 $ (1.1) $ 2.4 $ (5.9) Denominator: Weighted average shares of Class A common stock outstanding - basic 51,502,825 49,692,599 51,804,935 46,251,576 Effect of dilutive securities: LLC Interests 25,829,016 — 26,061,398 — RSUs 469,505 — 613,208 — Weighted average shares of Class A common stock outstanding - diluted 77,801,346 49,692,599 78,479,541 46,251,576 Weighted average shares of Class C common stock outstanding - basic and diluted 3,648,580 6,117,997 4,069,266 8,078,943 Net income (loss) per share - Basic: Class A common stock $ 0.78 $ (0.17) $ 0.82 $ (0.72) Class C common stock $ 0.78 $ (0.17) $ 0.82 $ (0.72) Net income (loss) per share - Diluted: Class A Common Stock $ 0.57 $ (0.17) $ 0.58 $ (0.72) Class C Common Stock $ 0.57 $ (0.17) $ 0.58 $ (0.72) The following were excluded from the calculation of diluted net income (loss) per share as the effect would be anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 LLC Interests that convert into potential Class A common shares — 27,115,975 — 28,806,699 RSUs and performance RSUs - employee 912,248 1,712,790 912,248 1,712,790 RSUs - non-employee directors 11,884 12,942 11,884 12,942 2025 Convertible Notes — 46,130 — 49,281 Total 924,132 28,887,837 924,132 30,581,712 For the three and nine months ended September 30, 2022, the Company has excluded from the calculation of diluted net income per share the effect of the following: • the conversion of the 2025 Convertible Notes and 2027 Convertible Notes, as the last reported sales price of the Company’s Class A common stock was not greater than or equal to 130% of the conversion price for 20 trading days during a period of 30 consecutive trading days prior to September 30, 2022, per the terms of the agreement, and • shares of the Company’s Class A common stock to be issued in connection with the earnouts due to the former shareholders of The Giving Block, Online Payments Group, and certain restaurant technology partners. See Note 3 for more information about shares to be issued in connection with earnouts. For the three and nine months ended September 30, 2021, the Company has excluded from the calculation of diluted net loss per share the effect of the conversion of the 2027 Convertible Notes, as the last reported sales price of the Company’s Class A common stock was not greater than or equal to 130% of the conversion price for 20 trading days during a period of 30 consecutive trading days prior to September 30, 2021, per the terms of the agreement. The Company will pay in cash the $690.0 million principal of the 2025 Convertible Notes and the $632.5 million principal of the 2027 Convertible Notes with any excess to be paid or delivered in cash or shares of the Company’s Class A common stock or a combination of both at the Company’s election. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 9 Months Ended |
Sep. 30, 2022 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flows Information Supplemental cash flows disclosures and noncash information consisted of the following: Nine Months Ended September 30, 2022 2021 Cash paid for interest $ 14.0 $ 10.5 Cash paid for income taxes, net of refunds 0.4 0.4 Noncash investing activities Shares and equity-based compensation awards issued in connection with acquisitions 95.8 26.3 Shares issued in connection with residual commission buyouts 36.6 — Contingent consideration for acquisitions 82.0 — Contingent consideration for residual commission buyouts 7.3 0.5 Cash consideration not yet paid in connection with residual commission buyouts 8.2 — Equipment for lease 5.2 4.6 Shareholder loans transferred in connection with the acquisition of Online Payments Group 2.5 — Capitalized software development costs 1.2 1.6 Noncash financing activities Right-of-use assets obtained in exchange for operating lease liabilities 2.3 — Right associated with Inspiration4 seat — 2.1 |
Segments
Segments | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Segments | Segments 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 one operating segment and one reportable segment. The following table summarizes gross revenue by revenue type: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Payments-based revenue (a) $ 509.0 $ 346.9 $ 1,354.4 $ 887.6 Subscription and other revenues 38.3 30.9 101.5 80.5 Gross revenue $ 547.3 $ 377.8 $ 1,455.9 $ 968.1 (a) For the three and nine months ended September 30, 2021, payments-based revenue includes nonrecurring payments of $22.4 million the Company made to merchants related to the TSYS outage, which are recorded as contra revenue and reflected as a reduction of payments-based revenue. See Note 4 for more information about the TSYS outage. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsIn preparing the unaudited condensed consolidated financial statements, the Company evaluated events and transactions occurring after September 30, 2022 for recognition and/or disclosure purposes. Based on this evaluation, there were no subsequent events from September 30, 2022 through the date the financial statements were issued. |
Organization, Basis of Presen_2
Organization, Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Change in Presentation of Condensed Consolidated Statements of Operations | Basis of Presentation The accompanying interim condensed consolidated financial statements of the Company are unaudited. These interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. As such, these fi nancial statements do not include all information and footnotes required by U.S. GAAP for complete financial statements. The December 31, 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, 2021, as disclosed in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2021 (the “2021 Form 10-K/A”). 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. 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, the “Continuing Equity Owners”). 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”), amounts payable under the Tax Receivable Agreement (“TRA”), and the aggregate principal amount of $690.0 million of 2025 Convertible Notes and $632.5 million of 2027 Convertible Notes that are held by Shift4 Payments, Inc. directly. As of both September 30, 2022 and December 31, 2021 , $9.8 million of cash w as directly held by Shift4 Payments, Inc. As of September 30, 2022, the earnout liability for The Giving Block was $21.0 million and the TRA liability was $1.1 million. Shift4 Pa yments, Inc., which was incorporated on 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. Change in Presentation of Condensed Consolidated Statements of Operations The Company has changed the presentation of its Condensed Consolidated Statements of Operations to remove the “Gross profit” line item and update the “Cost of sales” line item to indicate it is exclusive of depreciation and amortization expense shown separately for the three and nine months ended September 30, 2022 and 2021. The Company has also changed the presentation of the disclosure in Note 22 to remove the reconciliation between “Gross revenue” and “Gross profit.” In addition, certain prior year balances have been adjusted to present “Revaluation of contingent liabilities” in its own line item rather than within the line item “General and administrative expenses” on the Company’s unaudited Condensed Consolidated Statements of Operations. |
Liquidity and Managements Plan | Liquidity and Management’s Plan As of September 30, 2022, the Company had $1,772.5 million total principal amount of debt outstanding and was in compliance with the financial covenants under its debt agreements. The Company expects to be in compliance with such financial covenants for at least 12 months following issuance of these unaudited condensed consolidated financial statements. See Note 10 for further information on the Company’s debt obligations. |
Use of Estimates | Use of Estimates 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 Company’s 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, deferred income tax valuation allowances, amounts associated with the Company’s tax receivable agreement with the Continuing Equity Owners, fair value of debt instruments, allowance for doubtful accounts, income taxes, investments in securities and noncontrolling interests. Estimates are based on past experience and other considerations reasonable under the circumstances. Actual results may differ from these estimates. |
Significant Accounting Policies | Significant Accounting Policies The Company’s significant accounting policies are discussed in Note 2 to Shift4 Payments, Inc.’s consolidated financial statements as of and for the year ended December 31, 2021 in the 2021 Form 10-K/A. 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 nine months ended September 30, 2022, except for the below. |
Crypto Settlement Assets and Liabilities | Crypto Settlement Assets and Liabilities The Company recognizes a liability accompanied by an asset of the same value to reflect its obligation to safeguard the cr ypto settlement assets it holds on behalf of users of The Giving Block Inc.’s (“The Giving Block”) platform. These crypto settlement assets are comprised of numerous cryptocurrencies that are traded on numerous cryptocurrency exchanges. The liability and asset are remeasured at each reporting date at the fair value of 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 the crypto settlement assets and is primarily obligated to secure the assets and protect them from loss or theft. The Company maintains the internal recordkeeping of the assets. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Pronouncements Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 842, Leases (“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. 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. Prior period amounts were not adjusted and 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, 2021 to combine lease and non-lease components for all classes of assets. Additionally, the Company elected to not record leases with a term of twelve months or less on the 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 mat erial impact to the unaudited Condensed Consolidated Statements of Operations or unaudited Condensed Consolidated Statements of Cash Flows. See Note 14 for ASC 842-related disclosures. In June 2016, the FASB issued 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 a current expected credit loss ( “ CECL ” ) methodology, which will result in more timely recognition of credit losses. The Company adopted ASU 2016-13 on a modified retrospective basis on December 31, 2021, reflecting the adoption as of January 1, 2021 in the Company's annual results for the period ended December 31, 2021 and interim periods beginning January 1, 2022. The adoption of ASU 2016-13 did not result in a material impact on the Company’s unaudited condensed consolidated financial statements and disclosures. In October 2021, the FASB issued ASU 2021-08, 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 , as if it had originated the contracts. Prior to ASU 2021-08, an acquirer generally recognized assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts, at fair value on the acquisition date. The Company adopted ASU 2021-08 in the third quarter of 2021 and retrospectively applied the ASU to its acquisitions that occurred in 2021. The adoption of ASU 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 fiscal year ended December 31, 2021. In July 2021, the FASB issued ASU 2021-05, 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 require operating lease classification. The Company adopted ASU 2021-05 on a retrospective basis effective January 1, 2022. The adoption did not have a significant impact on the Company’s unaudited condensed consolidated financial statements. 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 pr otect 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 value of crypto settlement assets and crypto settlement liabilities associated with The Giving Block was $1.7 million as of September 30, 2022. The adoption of this guidance had no impact on the Company’s unaudited condensed consolidated financial statements. 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. In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions , to clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring the fair value of the equity security. ASU 2022-03 also clarifies that an entity cannot recognize and measure a contractual sale restriction as a separate unit of account. The amendments in ASU 2022-03 may be early adopted and are effective on a prospective basis for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company currently considers sale restrictions in measuring the fair value of shares of its Class A common stock equity securities issued in conjunction with acquisitions. The Company is currently evaluating whether it will early adopt the amendments in ASU 2022-03 and is evaluating the impact of the amendments on the Company’s unaudited condensed consolidated financial statements. |
Restatement of Previously Iss_2
Restatement of Previously Issued Condensed Consolidated Financial Statements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Changes and Error Corrections [Abstract] | |
Restatement of Previously Issued Condensed Consolidated Financial Statements | The following table summarizes the impact of these adjustments for the periods presented: Nine Months Ended September 30, 2021 As Reported Adjustments As Restated Net cash provided by operating activities $ 25.6 $ (19.3) $ 6.3 Net cash used in investing activities (162.0) 19.3 (142.7) Net cash provided by financing activities 496.7 — 496.7 Change in cash and cash equivalents $ 360.3 $ — $ 360.3 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Purchase Price Included the Forms of Consideration | Total purchase consideration was as follows: Cash $ 74.1 Shares of Class A common stock (a) 38.6 Contingent consideration (b) 22.0 Shareholder loans transfer 2.5 Total purchase consideration 137.2 Less: cash acquired (11.3) Total purchase consideration, net of cash acquired $ 125.9 (a) Total purchase consideration includes 971,371 shares of common stock. (b) The Company agreed to an earnout due to the former shareholders of Online Payments Group, not to exceed $60.0 million. $30.0 million of the earnout is payable in September 2023 if key customers of Online Payments Group contribute a specified amount of revenue from September 29, 2022 to September 28, 2023 and the remaining $30.0 million of the earnout is payable in September 2024 if key customers contribute a specified amount of revenue from September 29, 2022 to September 28, 2024. Each portion of the earnout will be paid 50% in shares of the Company’s Class A common stock and 50% in cash. The fair value of the earnout was included in the initial purchase consideration and will be revalued and recorded quarterly until the end of the earnout period as a fair value adjustment within “Revaluation of contingent liabilities” in the Company’s unaudited Condensed Consolidated Statements of Operations. As of September 30, 2022, the fair value of the earnout was $22.0 million, which is recognized in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. Cash $ 63.1 Shares of Class A common stock (a) 20.7 Contingent consideration (b) 2.2 Settlement of preexisting relationship (2.5) Total purchase consideration 83.5 Less: cash acquired (3.2) Total purchase consideration, net of cash acquired $ 80.3 (a) Total purchase consideration includes 598,759 shares of common stock. (b) The Company agreed to earnouts due to certain former shareholders of the restaurant technology partners, calculated as a multiple of the number of each partners’ merchants that are converted to the Company’s end-to-end payments platform during the 18 months following each respective acquisition date, not to exceed $4.0 million in total. The earnouts are expected to be paid in a combination of cash and shares of the Company’s Class A common stock. The fair value of the earnouts was included in the initial purchase consideration and will be revalued and recorded quarterly until the end of the earnout period as a fair value adjustment within “Revaluation of contingent liabilities” in the Company’s unaudited Condensed Consolidated Statements of Operations. As of September 30, 2022, the fair value of the earnouts was $2.2 million, which is recognized in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. 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 785,969 shares of common stock. (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 The Giving Block employees represents a component of the total consideration as presented above and was valued based on the fair value of The Giving Block awards on 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 is expected to 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 “Revaluation of contingent liabilities” in the Company’s unaudited Condensed Consolidated Statements of Operations. As of September 30, 2022, the fair value of the earnout was $20.6 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 September 30, 2022, $0.4 million is included in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. |
Schedule of Assets Acquired and Liabilities Assumed | 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 contingent consideration, accounts receivable, a ccrued expenses and other current liabilities assumed, and residual goodwill. Accounts receivable $ 2.2 Shareholder loans receivable (a) 2.5 Other intangible assets 44.0 Goodwill (b) 83.0 Indemnification asset (c) 6.8 Accrued expenses and other current liabilities (0.6) Uncertain tax position (d) (5.0) Deferred tax liability (5.2) Other noncurrent liabilities (1.8) Net assets acquired $ 125.9 (a) Amount is eliminated in consolidation and therefore has no impact to the Company’s Condensed Consolidated Balance Sheets. (b) Goodwill is not deductible for tax purposes. (c) Included within “Other noncurrent assets” in the Company’s Condensed Consolidated Balance Sheets. (d) Included within “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets. The following table summarizes the fair value assigned to the assets acquired and liabilities assumed at the acquisition dates. 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 contingent consi deration, other intangible assets, and residual goodwill. Accounts receivable $ 1.8 Inventory 1.5 Prepaid expenses and other current assets 0.1 Goodwill (a) 67.2 Other intangible assets, net 15.6 Property, plant and equipment, net 0.3 Right-of-use assets 1.3 Accounts payable (1.9) Accrued expenses and other current liabilities (0.5) Deferred revenue (1.9) Current lease liabilities (0.5) Deferred tax liability (1.9) Noncurrent lease liabilities (0.8) Net assets acquired $ 80.3 (a) $35.9 million of goodwill is deductible for tax purposes and $31.3 million of goodwill is not deductible for tax purposes. 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 contingent consideration, a ccrued expenses and other current liabilities assumed, and residual goodwill. 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. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | Based on similar operational characteristics, the Company’s revenue from contracts with customers is disaggregated as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Payments-based revenue (a) $ 509.0 $ 346.9 $ 1,354.4 $ 887.6 Subscription and other revenues 38.3 30.9 101.5 80.5 Total $ 547.3 $ 377.8 $ 1,455.9 $ 968.1 (a) For the three and nine months ended September 30, 2021, payments-based revenue includes nonrecurring payments of $22.4 million the Company made to merchants related to the TSYS outage, which are recorded as contra revenue and reflected as a reduction of payments-based revenue. Based on similar economic characteristics, the Company’s revenue from contracts with customers is disaggregated as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Over-time revenue (a) $ 531.9 $ 366.9 $ 1,418.9 $ 938.2 Point-in-time revenue 15.4 10.9 37.0 29.9 Total $ 547.3 $ 377.8 $ 1,455.9 $ 968.1 (a) For the three and nine months ended September 30, 2021, over-time revenue includes nonrecurring payments of $22.4 million the Company made to merchants related to the TSYS outage, which are recorded as contra revenue and reflected as a reduction of over-time revenue. |
Summary of Annual Service Fees and Regulatory Compliance Fees | 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: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Annual service fees and regulatory compliance fees $ 11.3 $ 8.8 $ 30.9 $ 18.9 Amount of these fees included in deferred revenue at beginning of period 7.4 4.4 10.8 4.4 |
Schedule of Changes in Allowance for Doubtful Accounts | The change in the Company’s allowance for doubtful accounts was as follows: September 30, September 30, Beginning balance $ 8.0 $ 5.7 Additions to expense (a) 5.9 10.3 Write-offs, net of recoveries and other adjustments 0.8 (2.6) Ending balance $ 14.7 $ 13.4 (a) For the nine months ended September 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. |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill were as follows: Balance at December 31, 2021 $ 537.7 The Giving Block Acquisition (Note 3) 89.4 Online Payments Group Acquisition (Note 3) 83.0 Restaurant Technology Partner Acquisitions (Note 3) 67.2 Balance at September 30, 2022 $ 777.3 |
Other Intangible Assets, Net (T
Other Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Other Intangible Assets, Net | Other intangible assets, net consisted of the following: Weighted Average September 30, 2022 Carrying Value Accumulated Net Carrying Merchant relationships 11 $ 143.5 $ (31.3) $ 112.2 Acquired technology 9 128.8 (64.9) 63.9 Trademarks and trade names 13 27.2 (3.0) 24.2 Capitalized software development costs 3 71.6 (15.2) 56.4 Residual commission buyouts (a) 3 327.5 (22.5) 305.0 Total other intangible assets, net $ 698.6 $ (136.9) $ 561.7 (a) During the three and nine months ended September 30, 2022, the Company complet ed $298.8 million and $311.7 million, respectively, of residual commission buyouts with certain third-party distribution partners, pursuant to which the Company acquired their ongoing merchant relationships that subscribe to the Company’s end-to-end payments platform. Included in this amount are $298.5 million in residual commission buyouts executed under the Company’s mass strategic buyout program completed in the three and nine months ended September 30, 2022 in support of the Company’s strategic initiative to insource our sales distribution network. Total consideration for the residual commission buyouts was comprised of a combination of cash, shares of the Company’s Class A common stock, and contingent liability earnouts. Contingent payments included in the residual commission buyouts as of September 30, 2022 are $8.6 million, of which $5.6 million are related to residual commission buyouts executed under the mass strategic buyout program which are estimated based on analysis of historical outcomes for prior similar initiatives. The maximum contingent consideration for residual buyout commissions executed under the Company’s mass strategic buyout program is $22.5 million. Weighted Average December 31, 2021 Carrying Value Accumulated Net Carrying 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 $4.2 million as of December 31, 2021. |
Schedule of Estimated Amortization Expense for Intangible Assets | As of September 30, 2022, the estimated amortization expense for other intangible assets for each of the five succeeding years and thereafter is as follows: 2022 (remaining three months) $ 41.3 2023 161.6 2024 156.1 2025 101.7 2026 25.2 Thereafter 75.8 Total $ 561.7 |
Schedule of Amounts Charged to Expense in Amortization of Intangible Assets | Amounts charged to expense in the Company’s unaudited Condensed Consolidated Statements of Operations for amortization of acquired other intangible assets were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Depreciation and amortization expense $ 19.4 $ 8.2 $ 37.1 $ 27.6 Cost of sales 3.3 3.2 9.9 9.5 Total $ 22.7 $ 11.4 $ 47.0 $ 37.1 Amounts charged to expense in the Company’s unaudited Condensed Consolidated Statements of Operations for amortization of non-acquired other intangible assets were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Depreciation and amortization expense $ 0.1 $ — $ 0.1 $ 0.1 Cost of sales 3.7 1.7 8.8 4.6 Total $ 3.8 $ 1.7 $ 8.9 $ 4.7 |
Capitalized Customer Acquisit_2
Capitalized Customer Acquisition Costs, Net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Capitalized Customer Acquisition Costs, Net [Abstract] | |
Summary of Estimated Future Amortization Expense for Capitalized Acquisition Costs | As of September 30, 2022, the estimated future amortization expense for capitalized customer acquisition costs is as follows: 2022 (remaining three months) $ 5.8 2023 18.0 2024 9.7 2025 1.7 Total $ 35.2 |
Equipment for Lease, Net (Table
Equipment for Lease, Net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Schedule of Equipment for Lease, Net | Equipment for lease, net consisted of the following: Weighted Average Depreciation Period (in years) September 30, 2022 Carrying Value Accumulated Depreciation Net Carrying Value Equipment under lease 3 $ 95.3 $ (37.9) $ 57.4 Equipment held for lease (a) N/A 13.1 — 13.1 Total equipment for lease $ 108.4 $ (37.9) $ 70.5 Weighted Average Depreciation Period (in years) December 31, 2021 Carrying Value Accumulated Depreciation Net Carrying Value Equipment under lease 3 $ 72.9 $ (24.2) $ 48.7 Equipment held for lease (a) N/A 9.7 — 9.7 Total equipment for lease, net $ 82.6 $ (24.2) $ 58.4 (a) Represents equipment that was not yet initially deployed to a merchant and, accordingly, is not being depreciated. |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property, Plant and Equipment, Net | Property, plant and equipment, net consisted of the following: September 30, December 31, Equipment $ 16.2 $ 10.5 Capitalized software 4.2 5.1 Leasehold improvements 9.0 9.1 Furniture and fixtures 1.5 2.0 Vehicles 0.5 0.3 Total property, plant and equipment, gross 31.4 27.0 Less: Accumulated depreciation (10.0) (8.6) Total property, plant and equipment, net $ 21.4 $ 18.4 |
Summary of Amounts Charged to Expense in the Unaudited Condensed Consolidated Statements of Operations for Depreciation | Amounts charged to expense in the Company’s unaudited Condensed Consolidated Statements of Operations for depreciation of property, plant and equipment were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Depreciation and amortization expense $ 1.2 $ 1.0 $ 3.1 $ 2.8 Cost of sales 0.1 0.5 0.7 1.3 Total depreciation expense $ 1.3 $ 1.5 $ 3.8 $ 4.1 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Summary of Outstanding Debt | The Company’s outstanding debt consisted of the following: Maturity Effective Interest Rate September 30, December 31, Convertible Notes due 2025 (2025 Convertible Notes) December 15, 2025 0.49% $ 690.0 $ 690.0 Convertible Notes due 2027 (2027 Convertible Notes) August 1, 2027 0.90% 632.5 632.5 Senior Notes due 2026 (2026 Senior Notes) November 1, 2026 5.13% 450.0 450.0 Total borrowings 1,772.5 1,772.5 Less: Unamortized capitalized financing fees (32.7) (34.0) Total long-term debt $ 1,739.8 $ 1,738.5 |
Schedule of Maturities of Long-term Debt | As of September 30, 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 |
Summary of Net Carrying Amount of Convertible Notes | The net carrying amount of the Convertible Senior Notes due 2025 (“2025 Convertible Notes”) was as follows: September 30, December 31, Principal outstanding $ 690.0 $ 690.0 Unamortized debt issuance costs (10.5) (13.0) Net carrying value $ 679.5 $ 677.0 The net carrying amount of the 0.50% Convertible Senior Notes due 2027 (“2027 Convertible Notes”) was as follows: September 30, December 31, Principal outstanding $ 632.5 $ 632.5 Unamortized debt issuance costs (12.2) (13.8) Net carrying value $ 620.3 $ 618.7 |
Other Consolidated Balance Sh_2
Other Consolidated Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Other Consolidated Balance Sheet Components [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following: September 30, December 31, Prepaid insurance $ 4.4 $ 3.3 Taxes receivable 1.7 1.8 Crypto settlement assets (a) 1.7 — Prepaid merchant signing bonuses (b) 0.3 0.7 Other prepaid expenses (c) 10.5 6.1 Contract assets 0.3 0.3 Other current assets 1.0 0.5 Total prepaid expenses and other current assets $ 19.9 $ 12.7 (a) See the disclosure within “Accounting Pronouncements Adopted” in Note 1 for information regarding the Company’s crypto settlement assets. (b) Represents deal bonuses paid to merchants to obtain processing contracts, which are amortized over their contractual term of one year. (c) Includes prepayments related to information technology, rent, tradeshows and conferences. |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following: September 30, December 31, Contingent liability earnouts for acquisitions (a) $ 45.2 $ — Contingent liability earnouts for residual commission buyouts 7.6 0.9 Residuals payable 7.2 13.1 Accrued interest 9.3 4.8 Accrued payroll 7.3 15.3 Taxes payable 2.9 1.6 Deferred employer social security tax pursuant to the CARES Act 1.6 1.6 Crypto settlement liabilities (b) 1.7 — Restructuring accrual (c) 0.3 1.5 Other current liabilities 3.5 4.1 Total accrued expenses and other current liabilities $ 86.6 $ 42.9 (a) Consists of $44.8 million of estimated contingent consideration and $0.4 million of post-acquisition compensation expense as of September 30, 2022. Primarily represents the fair value of contingent liability earnouts for The Giving Block and Online Payments Group. See Note 3 for more information. (b) See the disclosure within “Accounting Pronouncements Adopted” in Note 1 for information regarding the Company’s crypto settlement liabilities. (c) The Company made severance payments of $1.2 million for the nine months ended September 30, 2022. The restructuring accrual of $0.3 million as of September 30, 2022 is expected to be paid in 2022. |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Reconciliation of Beginning and Ending Balances for Level 3 Contingent Liabilities | The table below provides a reconciliation of the beginning and ending balances for the Level 3 contingent liabilities: Nine Months Ended September 30, 2022 Contingent Liabilities for Acquisitions Contingent Liabilities for Residual Commission Buyouts Total Contingent Liabilities Balance at beginning of period $ — $ 0.9 $ 0.9 Contingent consideration for acquisitions (a) 82.0 — 82.0 Contingent consideration for residual commission buyouts — 7.3 7.3 Cash payments made for contingent liabilities related to earnout payments — (0.4) (0.4) Write-off of contingent liabilities that did not achieve earnout — (0.2) (0.2) Fair value adjustments (37.2) — (37.2) Balance at end of period $ 44.8 $ 7.6 $ 52.4 (a) Includes $22.0 million for the acquisition of Online Payments Group, $57.8 million for the acquisition of The Giving Block, and $2.2 million for the acquisitions of certain restaurant technology partners. |
Summary of Estimated Fair Value | The estimated fair value of the Company’s outstanding debt using quoted prices from over-the-counter markets, considered Level 2 inputs, was as follows: September 30, 2022 December 31, 2021 Carrying Fair Carrying Fair 2025 Convertible Notes $ 679.5 $ 607.2 $ 677.0 $ 735.4 2027 Convertible Notes 620.3 485.7 618.7 556.5 2026 Senior Notes 440.9 408.2 443.9 465.7 Total $ 1,740.7 $ 1,501.1 $ 1,739.6 $ 1,757.6 (a) Carrying value excludes unamortized debt issuance costs related to the Revolving Credit Facility of $0.9 million and $1.1 million as of September 30, 2022 and December 31, 2021, respectively. |
Lease Agreements (Tables)
Lease Agreements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Assets and Liabilities, Lessee | The following amounts were recorded on the Company’s unaudited Condensed Consolidated Balance Sheets relating to operating leases: September 30, 2022 December 31, 2021 Assets Right-of-use assets $ 16.7 $ 18.5 Liabilities Current lease liabilities $ 4.6 $ 4.8 Noncurrent lease liabilities 15.9 17.9 Total lease liabilities $ 20.5 $ 22.7 |
Summary of Expected Payments Related to Non-cancellable Lease Terms | The expected future payments related to leases with initial non-cancellable lease terms in excess of one year at September 30, 2022 were as follows: 2022 (remaining three months) $ 1.3 2023 5.1 2024 4.7 2025 3.7 2026 3.0 Thereafter 4.5 Total lease payments 22.3 Less: Interest (1.8) Present value of minimum payments $ 20.5 |
Operating Lease Costs | Supplemental balance sheet information related to leases was as follows: September 30, 2022 December 31, 2021 Weighted average remaining lease term (in years): 5.1 5.6 Weighted average discount rate 3.2 % 3.2 % |
Noncontrolling Interests (Table
Noncontrolling Interests (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Noncontrolling Interest [Abstract] | |
Summary of Ownership of LLC Interests | The following table summarizes the ownership of LLC Interests in Shift4 Payments, LLC: September 30, 2022 December 31, 2021 LLC Interests Ownership % LLC Interests Ownership % Shift4 Payments, Inc. 57,004,236 68.8 % 56,449,833 68.2 % Continuing Equity Owners 25,829,016 31.2 % 26,272,654 31.8 % Total 82,833,252 100.0 % 82,722,487 100.0 % |
Equity-based Compensation (Tabl
Equity-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of RSU Activity | The RSU activity for the nine months ended September 30, 2022 was as follows: Nine Months Ended September 30, 2022 Number of RSUs Weighted Average Unvested balance at beginning of period 2,402,694 $ 43.28 Granted (a) 1,142,405 45.20 Vested (650,437) 30.18 Forfeited or cancelled (195,174) 55.23 Unvested balance at end of period 2,699,488 $ 48.22 (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. |
Basic and Diluted Net Income _2
Basic and Diluted Net Income (Loss) per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Calculation of Basic and Diluted Net 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 September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net income (loss) $ 46.4 $ (13.8) $ 48.2 $ (60.3) Less: Net income (loss) attributable to noncontrolling interests 3.3 (4.6) 2.3 (21.5) Net income (loss) attributable to Shift4 Payments, Inc. 43.1 (9.2) 45.9 (38.8) Adjustment to net income (loss) attributable to common stockholders — (0.1) — (0.6) Net income (loss) attributable to common stockholders $ 43.1 $ (9.3) $ 45.9 $ (39.4) Numerator - allocation of net income (loss) attributable to common stockholders: Net income (loss) allocated to Class A common stock - basic $ 40.2 $ (8.2) $ 42.6 $ (33.5) Reallocation of net income attributable to common stockholders from assumed conversion of LLC interests and assumed vesting of RSUs 4.1 — 3.2 — Net income (loss) allocated to Class A common stock - diluted $ 44.3 $ (8.2) $ 45.8 $ (33.5) Net income (loss) allocated to Class C common stock - basic $ 2.9 $ (1.1) $ 3.3 $ (5.9) Reallocation of net income attributable to common stockholders from assumed conversion of LLC interests and assumed vesting of RSUs (0.8) — (0.9) — Net income (loss) allocated to Class C common stock - diluted $ 2.1 $ (1.1) $ 2.4 $ (5.9) Denominator: Weighted average shares of Class A common stock outstanding - basic 51,502,825 49,692,599 51,804,935 46,251,576 Effect of dilutive securities: LLC Interests 25,829,016 — 26,061,398 — RSUs 469,505 — 613,208 — Weighted average shares of Class A common stock outstanding - diluted 77,801,346 49,692,599 78,479,541 46,251,576 Weighted average shares of Class C common stock outstanding - basic and diluted 3,648,580 6,117,997 4,069,266 8,078,943 Net income (loss) per share - Basic: Class A common stock $ 0.78 $ (0.17) $ 0.82 $ (0.72) Class C common stock $ 0.78 $ (0.17) $ 0.82 $ (0.72) Net income (loss) per share - Diluted: Class A Common Stock $ 0.57 $ (0.17) $ 0.58 $ (0.72) Class C Common Stock $ 0.57 $ (0.17) $ 0.58 $ (0.72) |
Schedule of Calculation of Diluted Net Loss Per Share as the Effect Would be Anti-dilutive | The following were excluded from the calculation of diluted net income (loss) per share as the effect would be anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 LLC Interests that convert into potential Class A common shares — 27,115,975 — 28,806,699 RSUs and performance RSUs - employee 912,248 1,712,790 912,248 1,712,790 RSUs - non-employee directors 11,884 12,942 11,884 12,942 2025 Convertible Notes — 46,130 — 49,281 Total 924,132 28,887,837 924,132 30,581,712 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Supplemental Cash Flow Information [Abstract] | |
Summary of Supplemental Cash Flows and Noncash Information | Supplemental cash flows disclosures and noncash information consisted of the following: Nine Months Ended September 30, 2022 2021 Cash paid for interest $ 14.0 $ 10.5 Cash paid for income taxes, net of refunds 0.4 0.4 Noncash investing activities Shares and equity-based compensation awards issued in connection with acquisitions 95.8 26.3 Shares issued in connection with residual commission buyouts 36.6 — Contingent consideration for acquisitions 82.0 — Contingent consideration for residual commission buyouts 7.3 0.5 Cash consideration not yet paid in connection with residual commission buyouts 8.2 — Equipment for lease 5.2 4.6 Shareholder loans transferred in connection with the acquisition of Online Payments Group 2.5 — Capitalized software development costs 1.2 1.6 Noncash financing activities Right-of-use assets obtained in exchange for operating lease liabilities 2.3 — Right associated with Inspiration4 seat — 2.1 |
Segments (Tables)
Segments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Summary of Gross Revenue by Revenue | The following table summarizes gross revenue by revenue type: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Payments-based revenue (a) $ 509.0 $ 346.9 $ 1,354.4 $ 887.6 Subscription and other revenues 38.3 30.9 101.5 80.5 Gross revenue $ 547.3 $ 377.8 $ 1,455.9 $ 968.1 (a) For the three and nine months ended September 30, 2021, payments-based revenue includes nonrecurring payments of $22.4 million the Company made to merchants related to the TSYS outage, which are recorded as contra revenue and reflected as a reduction of payments-based revenue. See Note 4 for more information about the TSYS outage. |
Organization, Basis of Presen_3
Organization, Basis of Presentation and Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jun. 30, 2022 | Feb. 28, 2022 | Dec. 31, 2020 | ||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||
Cash | $ 9,800,000 | $ 9,800,000 | $ 9,800,000 | ||||||
Tax receivable agreement recognized liability | 1,100,000 | 1,100,000 | |||||||
Total borrowings | 1,772,500,000 | 1,772,500,000 | 1,772,500,000 | ||||||
Right-of-use assets | 16,700,000 | 16,700,000 | 18,500,000 | ||||||
Present value of minimum payments | 20,500,000 | 20,500,000 | 22,700,000 | ||||||
Deferred revenue | 20,300,000 | 20,300,000 | 15,000,000 | ||||||
Gross revenue | [1] | 547,300,000 | $ 377,800,000 | 1,455,900,000 | $ 968,100,000 | ||||
Crypto settlement assets | 1,700,000 | 1,700,000 | 0 | $ 1,200,000 | $ 4,800,000 | ||||
Crypto settlement liabilities | 1,700,000 | 1,700,000 | 0 | $ 1,200,000 | $ 4,800,000 | ||||
The Giving Block | |||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||
Contingent liability earnouts | 21,000,000 | 21,000,000 | |||||||
Tax receivable agreement recognized liability | 1,100,000 | 1,100,000 | |||||||
Accounting Standards Update 2021-08 | Revision of Prior Period, Accounting Standards Update, Adjustment | |||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||
Deferred revenue | 5,700,000 | ||||||||
Gross revenue | $ 1,800,000 | ||||||||
Cumulative Effect of Period of Adoption Adjustment | Accounting Standards Update 2016-02 | |||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||
Right-of-use assets | $ 21,400,000 | ||||||||
Present value of minimum payments | $ 25,700,000 | ||||||||
Senior Notes Due 2025 | |||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||
Debt instrument, face amount | 690,000,000 | 690,000,000 | |||||||
2027 Convertible Notes | Convertible Debt | |||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||
Debt instrument, face amount | 632,500,000 | 632,500,000 | |||||||
First Lien Term Loan Facility | |||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||
Total borrowings | $ 1,772,500,000 | $ 1,772,500,000 | |||||||
[1]For the three and nine months ended September 30, 2021, includes $22.4 million of payments to merchants associated with the TSYS outage, which are recorded as contra revenue and reflected as a reduction of “Gross revenue.” See Note 4 for more information. |
Restatement of Previously Iss_3
Restatement of Previously Issued Condensed Consolidated Financial Statements (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash provided by operating activities | $ 135.9 | $ 6.3 |
Net cash used in investing activities | (483) | (142.7) |
Net cash provided by financing activities | (211.4) | 496.7 |
Change in cash and cash equivalents | $ (558.8) | 360.3 |
Previously Reported | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash provided by operating activities | 25.6 | |
Net cash used in investing activities | (162) | |
Net cash provided by financing activities | 496.7 | |
Change in cash and cash equivalents | 360.3 | |
Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash provided by operating activities | (19.3) | |
Net cash used in investing activities | 19.3 | |
Net cash provided by financing activities | 0 | |
Change in cash and cash equivalents | $ 0 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||||||
Sep. 29, 2022 USD ($) shares | Aug. 03, 2022 | Mar. 01, 2022 USD ($) day shares | Feb. 28, 2022 USD ($) shares | Sep. 01, 2021 USD ($) | Sep. 30, 2022 USD ($) vendor shares | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Jul. 20, 2022 | |
Business Acquisition [Line Items] | |||||||||
Payments to acquire businesses, net of cash acquired | $ 135.2 | $ 54.2 | |||||||
Online Payments Group | |||||||||
Business Acquisition [Line Items] | |||||||||
Business acquisition, percentage of voting interests acquired | 100% | ||||||||
Business combination, consideration transferred | $ 125.9 | ||||||||
Business acquisition, expenses | 3.8 | ||||||||
Indemnification asset, unrecognized tax benefits | 5 | ||||||||
Indemnification asset, contingencies | 1.8 | ||||||||
Indemnification asset | 6.8 | ||||||||
Cash | $ 74.1 | ||||||||
Business acquisition, number of shares issued (in shares) | shares | 971,371 | ||||||||
Shares of Class A common stock | $ 38.6 | ||||||||
Online Payments Group | Developed Technology | |||||||||
Business Acquisition [Line Items] | |||||||||
Weighted average life | 5 years | ||||||||
Online Payments Group | Customer Relationships | |||||||||
Business Acquisition [Line Items] | |||||||||
Weighted average life | 10 years | ||||||||
Restaurant Technology Partners | |||||||||
Business Acquisition [Line Items] | |||||||||
Business acquisition, percentage of voting interests acquired | 100% | ||||||||
Business combination, consideration transferred | $ 80.3 | ||||||||
Business acquisition, expenses | 2.6 | ||||||||
Number of vendors acquired | vendor | 3 | ||||||||
Cash | $ 63.1 | ||||||||
Business acquisition, number of shares issued (in shares) | shares | 598,759 | ||||||||
Shares of Class A common stock | $ 20.7 | ||||||||
Restaurant Technology Partners | Customer Relationships | Minimum | |||||||||
Business Acquisition [Line Items] | |||||||||
Weighted average life | 14 years | ||||||||
Restaurant Technology Partners | Customer Relationships | Maximum | |||||||||
Business Acquisition [Line Items] | |||||||||
Weighted average life | 17 years | ||||||||
The Giving Block | |||||||||
Business Acquisition [Line Items] | |||||||||
Business acquisition, percentage of voting interests acquired | 100% | ||||||||
Business combination, consideration transferred | $ 106.9 | ||||||||
Business acquisition, expenses | $ 0.1 | 2.3 | |||||||
Cash | $ 16.8 | ||||||||
Business acquisition, number of shares issued (in shares) | shares | 785,969 | ||||||||
The Giving Block | Developed Technology | |||||||||
Business Acquisition [Line Items] | |||||||||
Weighted average life | 8 years | ||||||||
The Giving Block | Trademarks and trade names | |||||||||
Business Acquisition [Line Items] | |||||||||
Weighted average life | 15 years | ||||||||
The Giving Block | Donor Relationships | |||||||||
Business Acquisition [Line Items] | |||||||||
Weighted average life | 5 years | ||||||||
The Giving Block | Customer Relationships | |||||||||
Business Acquisition [Line Items] | |||||||||
Weighted average life | 15 years | ||||||||
Postec | |||||||||
Business Acquisition [Line Items] | |||||||||
Business acquisition, percentage of voting interests acquired | 100% | ||||||||
Payments to acquire businesses, net of cash acquired | $ 14.3 | ||||||||
Finanro, Inc. | |||||||||
Business Acquisition [Line Items] | |||||||||
Business acquisition, expenses | $ 2.7 | $ 7.4 | |||||||
Cash | $ 200 | ||||||||
Business acquisition, number of shares issued (in shares) | shares | 6,439,316 | ||||||||
Shares of Class A common stock | $ 325 | ||||||||
Earnout, threshold trading days | day | 30 | ||||||||
Contingent consideration, earnout | $ 50 |
Acquisitions - Schedule of Purc
Acquisitions - Schedule of Purchase Price Included the Forms of Consideration (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 29, 2022 | Feb. 28, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Business Acquisition [Line Items] | |||||
Contingent consideration | $ 82 | $ 82 | $ 0 | ||
Shareholder loans transfer | 2.5 | $ 0 | |||
Online Payments Group | |||||
Business Acquisition [Line Items] | |||||
Cash | $ 74.1 | ||||
Shares of Class A common stock | 38.6 | ||||
Contingent consideration | 22 | 22 | 22 | ||
Shareholder loans transfer | 2.5 | ||||
Total purchase consideration | 137.2 | ||||
Less: cash acquired | (11.3) | ||||
Total purchase consideration, net of cash acquired | $ 125.9 | ||||
Business acquisition, number of shares issued (in shares) | 971,371 | ||||
Contingent consideration, maximum earnout | $ 60 | ||||
Contingent consideration, earnout to be paid year one | 30 | ||||
Contingent consideration, earnout to be paid year two | $ 30 | ||||
Contingent consideration, cash, earnout percentage | 50% | ||||
Online Payments Group | Tranche One | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration, equity interests issued and issuable, earnout percentage | 50% | ||||
Online Payments Group | Tranche Two | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration, equity interests issued and issuable, earnout percentage | 50% | ||||
Restaurant Technology Partners | |||||
Business Acquisition [Line Items] | |||||
Cash | 63.1 | ||||
Shares of Class A common stock | 20.7 | ||||
Settlement of preexisting relationship | (2.5) | ||||
Contingent consideration | 2.2 | 2.2 | |||
Total purchase consideration | 83.5 | ||||
Less: cash acquired | (3.2) | ||||
Total purchase consideration, net of cash acquired | $ 80.3 | ||||
Business acquisition, number of shares issued (in shares) | 598,759 | ||||
Contingent consideration, maximum earnout | 4 | ||||
The Giving Block | |||||
Business Acquisition [Line Items] | |||||
Cash | $ 16.8 | ||||
Contingent consideration | 57.8 | $ 20.6 | 20.6 | ||
Total purchase consideration | 111.1 | ||||
Less: cash acquired | (4.2) | ||||
Total purchase consideration, net of cash acquired | $ 106.9 | ||||
Business acquisition, number of shares issued (in shares) | 785,969 | ||||
Contingent consideration, maximum earnout | $ 246 | ||||
Contingent consideration, equity interests issued and issuable, earnout percentage | 75% | ||||
Contingent consideration, cash, earnout percentage | 25% | ||||
Acquisition cost expensed | $ 0.4 | ||||
The Giving Block | RSUs | |||||
Business Acquisition [Line Items] | |||||
RSUs granted for fair value of equity-based compensation awards | $ 0.1 | ||||
The Giving Block | Class A Common Stock | |||||
Business Acquisition [Line Items] | |||||
Shares of Class A common stock | $ 36.4 |
Acquisitions - Schedule of Asse
Acquisitions - Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Sep. 29, 2022 | Jun. 30, 2022 | Feb. 28, 2022 | Dec. 31, 2021 |
Business Acquisition [Line Items] | |||||
Goodwill | $ 777.3 | $ 537.7 | |||
Crypto settlement assets | 1.7 | $ 1.2 | $ 4.8 | 0 | |
Crypto settlement liabilities | 1.7 | $ 1.2 | 4.8 | $ 0 | |
Online Payments Group | |||||
Business Acquisition [Line Items] | |||||
Accounts receivable | $ 2.2 | ||||
Shareholder loan receivable | 2.5 | ||||
Goodwill | 83 | ||||
Other intangible assets | 44 | ||||
Indemnification asset | 6.8 | ||||
Accrued expenses and other current liabilities | (0.6) | ||||
Uncertain tax position | (5) | ||||
Deferred tax liability | (5.2) | ||||
Other noncurrent liabilities | (1.8) | ||||
Net assets acquired | $ 125.9 | ||||
Restaurant Technology Partners | |||||
Business Acquisition [Line Items] | |||||
Accounts receivable | 1.8 | ||||
Inventory | 1.5 | ||||
Prepaid expenses and other current assets | 0.1 | ||||
Goodwill | 67.2 | ||||
Other intangible assets | 15.6 | ||||
Property, plant and equipment, net | 0.3 | ||||
Right-of-use assets | 1.3 | ||||
Accounts payable | (1.9) | ||||
Accrued expenses and other current liabilities | (0.5) | ||||
Deferred revenue | (1.9) | ||||
Current lease liabilities | (0.5) | ||||
Deferred tax liability | (1.9) | ||||
Noncurrent lease liabilities | (0.8) | ||||
Net assets acquired | 80.3 | ||||
Goodwill, expected tax deductible amount | 35.9 | ||||
Goodwill, non expected tax deductible amount | $ 31.3 | ||||
The Giving Block | |||||
Business Acquisition [Line Items] | |||||
Prepaid expenses and other current assets | 4.8 | ||||
Goodwill | 89.4 | ||||
Other intangible assets | 26 | ||||
Accrued expenses and other current liabilities | (4.9) | ||||
Deferred revenue | (2) | ||||
Deferred tax liability | (6.4) | ||||
Net assets acquired | $ 106.9 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | ||
Disaggregation Of Revenue [Line Items] | ||||||
Gross revenue | [1] | $ 547,300,000 | $ 377,800,000 | $ 1,455,900,000 | $ 968,100,000 | |
Contract assets, current | 300,000 | 300,000 | $ 300,000 | |||
Contract assets, noncurrent | 500,000 | 500,000 | ||||
Allowance for contract assets | 0 | $ 0 | 0 | |||
Fee recognition period | 1 year | |||||
Deferred revenue | $ 23,600,000 | $ 23,600,000 | $ 17,400,000 | |||
Gross Revenue Contra Account | ||||||
Disaggregation Of Revenue [Line Items] | ||||||
Gross revenue | 22,400,000 | 22,400,000 | ||||
Payments To Partners | ||||||
Disaggregation Of Revenue [Line Items] | ||||||
Cost of sales | $ 2,300,000 | $ 2,300,000 | ||||
[1]For the three and nine months ended September 30, 2021, includes $22.4 million of payments to merchants associated with the TSYS outage, which are recorded as contra revenue and reflected as a reduction of “Gross revenue.” See Note 4 for more information. |
Revenue - Schedule of Disaggreg
Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Disaggregation Of Revenue [Line Items] | |||||
Revenue from contracts with customers | [1] | $ 547.3 | $ 377.8 | $ 1,455.9 | $ 968.1 |
Gross Revenue Contra Account | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue from contracts with customers | 22.4 | 22.4 | |||
Over-time revenue | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue from contracts with customers | 531.9 | 366.9 | 1,418.9 | 938.2 | |
Point-in-time revenue | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue from contracts with customers | 15.4 | 10.9 | 37 | 29.9 | |
Payments-based revenue | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue from contracts with customers | 509 | 346.9 | 1,354.4 | 887.6 | |
Subscription and other revenues | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue from contracts with customers | $ 38.3 | $ 30.9 | $ 101.5 | $ 80.5 | |
[1]For the three and nine months ended September 30, 2021, includes $22.4 million of payments to merchants associated with the TSYS outage, which are recorded as contra revenue and reflected as a reduction of “Gross revenue.” See Note 4 for more information. |
Revenue - Summary of Annual Ser
Revenue - Summary of Annual Service Fees and Regulatory Compliance Fees (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Disaggregation Of Revenue [Line Items] | |||||
Gross revenue | [1] | $ 547.3 | $ 377.8 | $ 1,455.9 | $ 968.1 |
Annual service fees and regulatory compliance fees | |||||
Disaggregation Of Revenue [Line Items] | |||||
Gross revenue | 11.3 | 8.8 | 30.9 | 18.9 | |
Amount of these fees included in deferred revenue at beginning of period | |||||
Disaggregation Of Revenue [Line Items] | |||||
Gross revenue | $ 7.4 | $ 4.4 | $ 10.8 | $ 4.4 | |
[1]For the three and nine months ended September 30, 2021, includes $22.4 million of payments to merchants associated with the TSYS outage, which are recorded as contra revenue and reflected as a reduction of “Gross revenue.” See Note 4 for more information. |
Revenue - Schedule of Changes i
Revenue - Schedule of Changes in Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 8 | $ 5.7 |
Additions to expense | 5.9 | 10.3 |
Write-offs, net of recoveries and other adjustments | 0.8 | (2.6) |
Ending balance | 14.7 | 13.4 |
Additions to expense | $ 5.9 | 10.3 |
Cost of sales | ||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Additions to expense | 5.5 | |
Additions to expense | $ 5.5 |
Goodwill (Details)
Goodwill (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Goodwill [Roll Forward] | |
Balance at December 31, 2021 | $ 537.7 |
Balance at September 30, 2022 | 777.3 |
The Giving Block | |
Goodwill [Roll Forward] | |
Acquisition during period | 89.4 |
Online Payments Group | |
Goodwill [Roll Forward] | |
Acquisition during period | 83 |
Restaurant Technology Partners | |
Goodwill [Roll Forward] | |
Acquisition during period | 67.2 |
Balance at September 30, 2022 | $ 67.2 |
Other Intangible Assets, Net -
Other Intangible Assets, Net - Schedule of Other Intangible Assets, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Finite Lived Intangible Assets [Line Items] | |||
Carrying Value | $ 698.6 | $ 698.6 | $ 396.5 |
Accumulated Amortization | (136.9) | (136.9) | (208) |
Net Carrying Value | 561.7 | $ 561.7 | $ 188.5 |
Merchant relationships | |||
Finite Lived Intangible Assets [Line Items] | |||
Weighted Average Amortization Period | 11 years | 8 years | |
Carrying Value | 143.5 | $ 143.5 | $ 200.1 |
Accumulated Amortization | (31.3) | (31.3) | (133.7) |
Net Carrying Value | 112.2 | $ 112.2 | $ 66.4 |
Acquired technology | |||
Finite Lived Intangible Assets [Line Items] | |||
Weighted Average Amortization Period | 9 years | 9 years | |
Carrying Value | 128.8 | $ 128.8 | $ 113.2 |
Accumulated Amortization | (64.9) | (64.9) | (54.9) |
Net Carrying Value | 63.9 | $ 63.9 | $ 58.3 |
Trademarks and trade names | |||
Finite Lived Intangible Assets [Line Items] | |||
Weighted Average Amortization Period | 13 years | 18 years | |
Carrying Value | 27.2 | $ 27.2 | $ 20.3 |
Accumulated Amortization | (3) | (3) | (3.8) |
Net Carrying Value | 24.2 | $ 24.2 | $ 16.5 |
Capitalized software development costs | |||
Finite Lived Intangible Assets [Line Items] | |||
Weighted Average Amortization Period | 3 years | 4 years | |
Carrying Value | 71.6 | $ 71.6 | $ 42.6 |
Accumulated Amortization | (15.2) | (15.2) | (9.1) |
Net Carrying Value | 56.4 | $ 56.4 | $ 33.5 |
Residual commission buyouts | |||
Finite Lived Intangible Assets [Line Items] | |||
Weighted Average Amortization Period | 3 years | 3 years | |
Carrying Value | 327.5 | $ 327.5 | $ 20.3 |
Accumulated Amortization | (22.5) | (22.5) | (6.5) |
Net Carrying Value | 305 | 305 | 13.8 |
Payments for contingent residual commission buyouts | 298.8 | 311.7 | |
Payments for contingent residual commission buyouts, strategic buyout program | $ 298.5 | 298.5 | |
Contingent payment | 8.6 | $ 4.2 | |
Residual commission buyouts under mass strategic buyout | |||
Finite Lived Intangible Assets [Line Items] | |||
Contingent payment | 5.6 | ||
Residual commission buyouts under mass strategic buyout | Maximum | |||
Finite Lived Intangible Assets [Line Items] | |||
Contingent payment | $ 22.5 |
Other Intangible Assets, Net _2
Other Intangible Assets, Net - Schedule of Estimated Amortization Expense for Intangible Assets (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 (remaining three months) | $ 41.3 | |
2023 | 161.6 | |
2024 | 156.1 | |
2025 | 101.7 | |
2026 | 25.2 | |
Thereafter | 75.8 | |
Net Carrying Value | $ 561.7 | $ 188.5 |
Other Intangible Assets, Net _3
Other Intangible Assets, Net - Schedule of Amounts Charged to Expense in Amortization of Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Finite Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets, acquired | $ 22.7 | $ 11.4 | $ 47 | $ 37.1 |
Amortization of intangible assets, not acquired | 3.8 | 1.7 | 8.9 | 4.7 |
Depreciation and amortization expense | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets, acquired | 19.4 | 8.2 | 37.1 | 27.6 |
Amortization of intangible assets, not acquired | 0.1 | 0 | 0.1 | 0.1 |
Cost of sales | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets, acquired | 3.3 | 3.2 | 9.9 | 9.5 |
Amortization of intangible assets, not acquired | $ 3.7 | $ 1.7 | $ 8.8 | $ 4.6 |
Capitalized Customer Acquisit_3
Capitalized Customer Acquisition Costs, Net - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Capitalized Contract Cost [Line Items] | |||||
Capitalized acquisition cost, net | $ 35.2 | $ 35.2 | $ 35.1 | ||
Capitalized acquisition cost, gross carrying value | 73.2 | 73.2 | 69.1 | ||
Capitalized acquisition cost, accumulated amortization | $ 38 | $ 38 | $ 34 | ||
Capitalized acquisition costs, weighted average amortization period | 3 years | 3 years | 3 years | ||
Cost of sales | |||||
Capitalized Contract Cost [Line Items] | |||||
Capitalized acquisition cost, amortization expense | $ 6.6 | $ 5.4 | $ 19.3 | $ 15.5 |
Capitalized Customer Acquisit_4
Capitalized Customer Acquisition Costs, Net - Summary of Estimate Future Amortization Expense for Capitalized Acquisition Costs (Details) $ in Millions | Sep. 30, 2022 USD ($) |
Capitalized Customer Acquisition Costs, Net [Abstract] | |
2022 (remaining three months) | $ 5.8 |
2023 | 18 |
2024 | 9.7 |
2025 | 1.7 |
Total | $ 35.2 |
Equipment for Lease, Net - Sche
Equipment for Lease, Net - Schedule of Equipment for Lease, Net (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Operating Leased Assets [Line Items] | ||
Carrying Value | $ 108.4 | $ 82.6 |
Accumulated Depreciation | (37.9) | (24.2) |
Net Carrying Value | $ 70.5 | $ 58.4 |
Equipment under lease | ||
Operating Leased Assets [Line Items] | ||
Weighted Average Depreciation Period | 3 years | 3 years |
Carrying Value | $ 95.3 | $ 72.9 |
Accumulated Depreciation | (37.9) | (24.2) |
Net Carrying Value | 57.4 | 48.7 |
Equipment held for lease | ||
Operating Leased Assets [Line Items] | ||
Carrying Value | 13.1 | 9.7 |
Accumulated Depreciation | 0 | 0 |
Net Carrying Value | $ 13.1 | $ 9.7 |
Equipment for Lease, Net - Narr
Equipment for Lease, Net - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Leases [Abstract] | ||||
Depreciation and amortization expenses of equipment | $ 8.2 | $ 5.8 | $ 22.6 | $ 15.4 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net - Summary of Property, Plant and Equipment, Net (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Property Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | $ 31.4 | $ 27 |
Less: Accumulated depreciation | (10) | (8.6) |
Total property, plant and equipment, net | 21.4 | 18.4 |
Equipment | ||
Property Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | 16.2 | 10.5 |
Capitalized software | ||
Property Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | 4.2 | 5.1 |
Leasehold improvements | ||
Property Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | 9 | 9.1 |
Furniture and fixtures | ||
Property Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | 1.5 | 2 |
Vehicles | ||
Property Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | $ 0.5 | $ 0.3 |
Property, Plant and Equipment_4
Property, Plant and Equipment, Net - Summary of Amounts Charged to Expense in the Unaudited Condensed Consolidated Statements of Operations for Depreciation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Property Plant and Equipment [Line Items] | |||||
Depreciation and amortization expense (c) | [1] | $ 28.9 | $ 15 | $ 62.9 | $ 45.9 |
Cost of sales | 0.1 | 0.5 | 0.7 | 1.3 | |
Total depreciation expense | 1.3 | 1.5 | 3.8 | 4.1 | |
Depreciation and amortization expense | |||||
Property Plant and Equipment [Line Items] | |||||
Depreciation and amortization expense (c) | $ 1.2 | $ 1 | $ 3.1 | $ 2.8 | |
[1]Depreciation and amortization expense includes depreciation of equipment under lease of $8.2 million and $22.6 million for the three and nine months ended September 30, 2022, respectively, and $5.8 million and $15.4 million for the three and nine months ended September 30, 2021, respectively. |
Debt - Summary of Outstanding D
Debt - Summary of Outstanding Debt (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | ||
Total borrowings | $ 1,772.5 | $ 1,772.5 |
Less: Unamortized capitalized financing fees | (32.7) | (34) |
Total long-term debt | $ 1,739.8 | 1,738.5 |
Convertible Notes Due 2025 | ||
Debt Instrument [Line Items] | ||
Effective Interest Rate | 0.49% | |
Total borrowings | $ 690 | 690 |
2027 Convertible Notes | ||
Debt Instrument [Line Items] | ||
Effective Interest Rate | 0.90% | |
Total borrowings | $ 632.5 | 632.5 |
2026 Senior Notes | ||
Debt Instrument [Line Items] | ||
Effective Interest Rate | 5.13% | |
Total borrowings | $ 450 | $ 450 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Oct. 31, 2020 | |
Debt Instrument [Line Items] | |||||
Amortization of capitalized financing fees | $ 2,100,000 | $ 1,700,000 | $ 6,000,000 | $ 4,100,000 | |
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | 99,500,000 | 99,500,000 | |||
Standby Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | 500,000 | 500,000 | |||
Convertible Notes Due 2025 | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | 690,000,000 | 690,000,000 | |||
4.625% Senior Notes Due 2026 | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | $ 450,000,000 | ||||
Debt instrument, interest rate, stated percentage | 4.625% | ||||
Debt instrument, capitalized amount | 4,500,000 | 4,500,000 | |||
Debt instrument, fee amount | $ 1,400,000 | $ 1,400,000 |
Debt - Schedule of Maturities o
Debt - Schedule of Maturities of Long-term Debt (Details) $ in Millions | Sep. 30, 2022 USD ($) |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
2025 | $ 690 |
2026 | 450 |
2027 | 632.5 |
Net carrying value | $ 1,772.5 |
Debt - Summary of Net Carrying
Debt - Summary of Net Carrying Amount of Convertible Notes (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Jul. 31, 2021 |
Debt Instrument [Line Items] | |||
Unamortized debt issuance costs | $ (32,700,000) | $ (34,000,000) | |
Net carrying value | 1,772,500,000 | ||
Convertible Notes Due 2025 | |||
Debt Instrument [Line Items] | |||
Principal outstanding | 690,000,000 | ||
Convertible Notes Due 2025 | Convertible Debt | |||
Debt Instrument [Line Items] | |||
Principal outstanding | 690,000,000 | 690,000,000 | |
Unamortized debt issuance costs | (10,500,000) | (13,000,000) | |
Net carrying value | 679,500,000 | 677,000,000 | |
2027 Convertible Notes | Convertible Debt | |||
Debt Instrument [Line Items] | |||
Principal outstanding | 632,500,000 | 632,500,000 | |
Unamortized debt issuance costs | (12,200,000) | (13,800,000) | |
Net carrying value | $ 620,300,000 | $ 618,700,000 | |
Debt instrument, interest rate, stated percentage | 0.50% |
Other Consolidated Balance Sh_3
Other Consolidated Balance Sheet Components - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Jun. 30, 2022 | Feb. 28, 2022 | Dec. 31, 2021 |
Other Consolidated Balance Sheet Components [Abstract] | ||||
Prepaid insurance | $ 4.4 | $ 3.3 | ||
Taxes receivable | 1.7 | 1.8 | ||
Crypto settlement assets | 1.7 | $ 1.2 | $ 4.8 | 0 |
Prepaid merchant signing bonuses | 0.3 | 0.7 | ||
Other prepaid expenses | 10.5 | 6.1 | ||
Contract assets | 0.3 | 0.3 | ||
Other current assets | 1 | 0.5 | ||
Total prepaid expenses and other current assets | $ 19.9 | $ 12.7 |
Other Consolidated Balance Sh_4
Other Consolidated Balance Sheet Components - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Millions | 9 Months Ended | |||
Sep. 30, 2022 | Jun. 30, 2022 | Feb. 28, 2022 | Dec. 31, 2021 | |
Offsetting Liabilities [Line Items] | ||||
Contingent liability earnouts for acquisitions | $ 45.2 | $ 0 | ||
Contingent liability earnouts for residual commission buyouts | 7.6 | 0.9 | ||
Residuals payable | 7.2 | 13.1 | ||
Accrued interest | 9.3 | 4.8 | ||
Accrued payroll | 7.3 | 15.3 | ||
Taxes payable | 2.9 | 1.6 | ||
Deferred employer social security tax pursuant to the CARES Act | 1.6 | 1.6 | ||
Crypto settlement liabilities | 1.7 | $ 1.2 | $ 4.8 | 0 |
Restructuring accrual | 0.3 | 1.5 | ||
Other current liabilities | 3.5 | 4.1 | ||
Total accrued expenses and other current liabilities | 86.6 | $ 42.9 | ||
Severance payments | 1.2 | |||
The Giving Block and Online Payments Group | ||||
Offsetting Liabilities [Line Items] | ||||
Contingent liability earnouts for acquisitions | 44.8 | |||
Business combination, post-aquisition compensation expense | $ 0.4 |
Fair Value Measurement - Narrat
Fair Value Measurement - Narrative (Details) $ in Millions | Sep. 30, 2022 USD ($) | Sep. 29, 2022 USD ($) | Aug. 10, 2022 | Jun. 30, 2022 USD ($) | Feb. 28, 2022 USD ($) | Dec. 31, 2021 USD ($) | Sep. 30, 2021 USD ($) |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||||||
Contingent consideration | $ 82 | $ 0 | |||||
Crypto settlement assets | 1.7 | $ 1.2 | $ 4.8 | $ 0 | |||
Online Payments Group | |||||||
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||||||
Contingent consideration arrangements, maximum | $ 60 | ||||||
Contingent consideration | $ 22 | $ 22 | |||||
Online Payments Group | Price Volatility | |||||||
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||||||
Measurement input | 0.360 | ||||||
Online Payments Group | Discount Rate | |||||||
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||||||
Measurement input | 0.081 | ||||||
The Giving Block | |||||||
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||||||
Contingent consideration arrangements, maximum | 246 | ||||||
Contingent consideration | $ 20.6 | $ 57.8 | |||||
The Giving Block | Price Volatility | |||||||
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||||||
Measurement input | 0.186 | 0.167 | |||||
The Giving Block | Discount Rate | |||||||
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||||||
Measurement input | 0.094 | 0.071 | |||||
Certain Restaurant Technology Partners | |||||||
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||||||
Contingent consideration | $ 4 | ||||||
Certain Restaurant Technology Partners | Accrued Expenses and Other Current Liabilities | |||||||
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||||||
Contingent consideration | $ 2.2 | ||||||
Certain Restaurant Technology Partners | Discount Rate | Minimum | |||||||
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||||||
Measurement input | 0.044 | ||||||
Certain Restaurant Technology Partners | Discount Rate | Maximum | |||||||
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||||||
Measurement input | 0.051 |
Fair Value Measurement - Reconc
Fair Value Measurement - Reconciliation of Beginning and Ending Balances for Level 3 Contingent Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Revaluation of contingent liabilities | $ (36.9) | $ 0 | $ (37.2) | $ 0.2 |
The Giving Block | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Revaluation of contingent liabilities | (36.9) | (37.2) | ||
Significant Observable Inputs (Level 3) | Contingent Liabilities for Acquisitions | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance at beginning of period | 0 | |||
Contingent consideration for acquisitions | 82 | |||
Contingent consideration for residual commission buyouts | 0 | |||
Cash payments made for contingent liabilities related to earnout payments | 0 | |||
Write-off of contingent liabilities that did not achieve earnout | 0 | |||
Fair value adjustments | (37.2) | |||
Balance at end of period | 44.8 | 44.8 | ||
Significant Observable Inputs (Level 3) | Contingent Liabilities for Residual Commission Buyouts | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance at beginning of period | 0.9 | |||
Contingent consideration for acquisitions | 0 | |||
Contingent consideration for residual commission buyouts | 7.3 | |||
Cash payments made for contingent liabilities related to earnout payments | (0.4) | |||
Write-off of contingent liabilities that did not achieve earnout | (0.2) | |||
Fair value adjustments | 0 | |||
Balance at end of period | 7.6 | 7.6 | ||
Significant Observable Inputs (Level 3) | Total Contingent Liabilities | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance at beginning of period | 0.9 | |||
Contingent consideration for acquisitions | 82 | |||
Contingent consideration for residual commission buyouts | 7.3 | |||
Cash payments made for contingent liabilities related to earnout payments | (0.4) | |||
Write-off of contingent liabilities that did not achieve earnout | (0.2) | |||
Fair value adjustments | (37.2) | |||
Balance at end of period | $ 52.4 | 52.4 | ||
Significant Observable Inputs (Level 3) | Online Payments Group | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Revaluation of contingent liabilities | 22 | |||
Significant Observable Inputs (Level 3) | The Giving Block | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Revaluation of contingent liabilities | 57.8 | |||
Significant Observable Inputs (Level 3) | Certain Restaurant Technology Partners | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Revaluation of contingent liabilities | $ 2.2 |
Fair Value Measurement - Summar
Fair Value Measurement - Summary of Estimated Fair Value (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Carrying Value | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | $ 1,740.7 | $ 1,739.6 |
Fair Value | Level 2 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 1,501.1 | 1,757.6 |
2025 Convertible Notes | Carrying Value | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 679.5 | 677 |
2025 Convertible Notes | Fair Value | Level 2 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 607.2 | 735.4 |
2027 Convertible Notes | Carrying Value | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 620.3 | 618.7 |
2027 Convertible Notes | Fair Value | Level 2 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 485.7 | 556.5 |
2026 Senior Notes | Carrying Value | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 440.9 | 443.9 |
2026 Senior Notes | Fair Value | Level 2 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 408.2 | 465.7 |
Line of Credit | Revolving Credit Facility | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Unamortized debt issuance costs | $ 0.9 | $ 1.1 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||||
Effective tax rate | 2.50% | 7.80% | (9.00%) | (6.40%) | |
Tax benefit of net operating loss carryback allowed due to CARES Act | $ 6.4 | ||||
Uncertain tax positions | $ 5 | $ 5 | $ 0 | ||
Tax receivable agreement realized tax benefit percentage | 85% | ||||
Tax receivable agreement expected remaining tax benefit percentage | 15% | ||||
Tax receivable agreement recognized liability | 1.1 | $ 1.1 | |||
Tax receivable agreement unrecognized liability | $ 247.2 | $ 247.2 |
Lease Agreements - Assets and L
Lease Agreements - Assets and Liabilities, Lessee (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Assets | ||
Right-of-use assets | $ 16.7 | $ 18.5 |
Liabilities | ||
Current lease liabilities | 4.6 | 4.8 |
Noncurrent lease liabilities | 15.9 | 17.9 |
Total lease liabilities | $ 20.5 | $ 22.7 |
Lease Agreements - Narrative (D
Lease Agreements - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Operating lease, expense | $ 1.1 | $ 1.5 | $ 3.9 | $ 4.4 |
Operating lease, payments | 4.3 | 4.6 | ||
Operating lease, lease income | 4.5 | $ 4.3 | 13.2 | $ 12.5 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2022-10-01 | SaaS Agreement | ||||
Disaggregation of Revenue [Line Items] | ||||
Total remaining performance obligations amount | $ 10.4 | $ 10.4 | ||
Total remaining performance obligations period | 1 year | 1 year |
Lease Agreements - Summary of E
Lease Agreements - Summary of Expected Payments Related to Non-cancellable Lease Terms (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
2022 (remaining three months) | $ 1.3 | |
2023 | 5.1 | |
2024 | 4.7 | |
2025 | 3.7 | |
2026 | 3 | |
Thereafter | 4.5 | |
Total lease payments | 22.3 | |
Less: Interest | (1.8) | |
Present value of minimum payments | $ 20.5 | $ 22.7 |
Lease Agreements - Additional I
Lease Agreements - Additional Information Related to Operating Leases (Details) | Sep. 30, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Weighted average remaining lease term (in years): | 5 years 1 month 6 days | 5 years 7 months 6 days |
Weighted average discount rate | 3.20% | 3.20% |
Related Party Transactions (Det
Related Party Transactions (Details) shares in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Jun. 30, 2022 USD ($) | Sep. 30, 2021 contract $ / Unit shares | Mar. 31, 2021 shares | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Sep. 30, 2021 USD ($) $ / Unit shares | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) $ / Unit shares | Dec. 31, 2021 USD ($) | Jun. 30, 2021 $ / Unit shares | Feb. 28, 2021 USD ($) | |
Related Party Transaction [Line Items] | |||||||||||
Additional paid-in capital | $ 696,000,000 | $ 619,200,000 | $ 696,000,000 | $ 619,200,000 | $ 2,100,000 | ||||||
Follow On Offering | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party costs | 1,100,000 | ||||||||||
Affiliated Entity | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Residual commission buyout agreement | $ 3,600,000 | ||||||||||
Payments in connection with residual commission buyouts | 2,500,000 | ||||||||||
Shares issued in connection with residual commission buyouts | 600,000 | ||||||||||
Contingent payments in connection with residual commission buyouts | $ 500,000 | ||||||||||
Aircraft Service | Founder | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Outstanding to related parties | 0 | 0 | 0 | 0 | |||||||
Inspiration4 Mission | Affiliated Entity | Founder | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Reimbursement of expenses | 0 | 900,000 | |||||||||
Accounts receivable, due from related parties | $ 100,000 | $ 100,000 | |||||||||
VPF Contract | Affiliated Entity | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Forward floor price (in dollars per share) | $ / Unit | 73.19 | ||||||||||
Forward cap price (in dollars per share) | $ / Unit | 137.24 | ||||||||||
VPF Contract | Affiliated Entity | Class A Common Stock | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Number of shares covering under contract (in shares) | shares | 2,000 | ||||||||||
VPF Contract | Affiliated Entity | Class B Common Stock | Maximum | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Number of shares pledged under contract (in shares) | shares | 4,440 | 4,440 | 4,440 | 2,000 | |||||||
VPF Contracts With Dealer | Affiliated Entity | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Number of VPF contracts | contract | 2 | ||||||||||
VPF Contract Dealer One | Affiliated Entity | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Forward cap price (in dollars per share) | $ / Unit | 112.09 | 112.09 | 112.09 | ||||||||
VPF Contract Dealer One | Affiliated Entity | Class A Common Stock | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Number of shares covering under contract (in shares) | shares | 2,180 | ||||||||||
VPF Contract Dealer Two | Affiliated Entity | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Forward floor price (in dollars per share) | $ / Unit | 66.424 | 66.424 | 66.424 | ||||||||
Forward cap price (in dollars per share) | $ / Unit | 120.39 | 120.39 | 120.39 | ||||||||
VPF Contract Dealer Two | Affiliated Entity | Class A Common Stock | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Number of shares covering under contract (in shares) | shares | 2,260 | ||||||||||
General and Administrative Expenses | Aircraft Service | Shareholder | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Total expense transaction with related party | $ 200,000 | $ 200,000 | $ 700,000 | $ 700,000 |
Stockholders_ Equity (Details)
Stockholders’ Equity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
May 24, 2022 | Sep. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2022 | Jun. 15, 2022 | May 11, 2022 | Dec. 31, 2021 | Dec. 16, 2021 | |
Class of Stock [Line Items] | ||||||||
Treasury stock, common stock (in shares) | 3,887,191 | 3,887,191 | 378,475 | |||||
Treasury stock, common stock | $ 21,100,000 | |||||||
Treasury stock acquired (in dollars per share) | $ 55.81 | $ 47.40 | ||||||
Stock repurchase program, remaining authorized repurchase amount | $ 44,500,000 | $ 44,500,000 | ||||||
Retirement of treasury stock (in shares) | 4,265,666 | |||||||
Treasury stock, repurchased (in shares) | 0 | 0 | 378,475 | |||||
Searchlight | ||||||||
Class of Stock [Line Items] | ||||||||
Treasury stock, common stock (in shares) | 967,600 | |||||||
Treasury stock, common stock | $ 43,100,000 | |||||||
Treasury stock acquired (in dollars per share) | $ 44.54 | |||||||
Class A Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Stock repurchase program, authorized amount | $ 50,000,000 | $ 100,000,000 | $ 100,000,000 | |||||
Treasury stock, common stock | $ 184,400,000 | $ 184,400,000 |
Noncontrolling Interests (Detai
Noncontrolling Interests (Details) - Shift4 Payments, LLC. - shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Noncontrolling Interest [Line Items] | ||
LLC Interests (in shares) | 82,833,252 | 82,722,487 |
Shift4 Payments, Inc. | ||
Noncontrolling Interest [Line Items] | ||
LLC Interests (in shares) | 57,004,236 | 56,449,833 |
Ownership % | 68.80% | 68.20% |
Continuing Equity Owners | ||
Noncontrolling Interest [Line Items] | ||
LLC Interests (in shares) | 25,829,016 | 26,272,654 |
Ownership % | 31.20% | 31.80% |
Equity-based Compensation - Nar
Equity-based Compensation - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Jun. 10, 2022 | Jun. 09, 2022 | Jun. 30, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Apr. 28, 2022 | Sep. 30, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||
Equity-based compensation expense | $ 12.2 | $ 6.3 | $ 38.4 | $ 26.9 | |||||
RSUs and PRSUs | |||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||
Unrecognized equity-based compensation expense | $ 102.1 | $ 102.1 | |||||||
Unrecognized equity-based compensation expense expected to be recognized over weighted-average period | 3 years 2 months 4 days | ||||||||
2020 Incentive Award Plan | |||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||
Maximum common stock available for issuance (in shares) | 7,500,000 | 418,973 | |||||||
Percentage of outstanding shares of all classes of common stock | 1% | ||||||||
Restated Equity Plan | |||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||
Percentage of outstanding shares of all classes of common stock | 2% | 1% | |||||||
Share-based payment award, expiration period | 10 years |
Equity-based Compensation - Sch
Equity-based Compensation - Schedule of RSU Activity (Details) - $ / shares | 1 Months Ended | 9 Months Ended |
Mar. 31, 2022 | Sep. 30, 2022 | |
2020 Incentive Award Plan | ||
Number of RSUs | ||
Vested (in shares) | (9,347) | |
RSUs | ||
Number of RSUs | ||
Unvested balance at beginning of period (in shares) | 2,402,694 | |
Granted (in shares) | 1,142,405 | |
Vested (in shares) | (650,437) | |
Forfeited or cancelled (in shares) | (195,174) | |
Unvested balance at end of period (in shares) | 2,699,488 | |
Weighted Average Grant Date Fair Value | ||
Unvested balance at beginning of period (in dollars per share) | $ 43.28 | |
Granted (in dollars per share) | 45.20 | |
Vested (in dollars per share) | 30.18 | |
Forfeited or cancelled (in dollars per share) | 55.23 | |
Unvested balance at end of period (in dollars per share) | $ 48.22 | |
RSUs Issued in Connection with VenueNext Acquisition, Vesting at Anniversary Dates | 2020 Incentive Award Plan | ||
Number of RSUs | ||
Granted (in shares) | 157,330 | |
RSUs Not Subject to Continued Service | 2020 Incentive Award Plan | ||
Number of RSUs | ||
Granted (in shares) | 16,422 | |
Vested (in shares) | (7,075) |
Basic and Diluted Net Income _3
Basic and Diluted Net Income (Loss) per Share - Schedule of Calculation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Earnings Per Share Basic and Diluted [Line Items] | ||||||||
Net income (loss) | $ 46.4 | $ 15 | $ (13.2) | $ (13.8) | $ 4.5 | $ (51) | $ 48.2 | $ (60.3) |
Less: Net income (loss) attributable to noncontrolling interests | 3.3 | (4.6) | 2.3 | (21.5) | ||||
Net income (loss) attributable to Shift4 Payments, Inc. | 43.1 | (9.2) | 45.9 | (38.8) | ||||
Adjustment to net income (loss) attributable to common stockholders | 0 | (0.1) | 0 | (0.6) | ||||
Net income (loss) attributable to common stockholders | 43.1 | (9.3) | 45.9 | (39.4) | ||||
Numerator - allocation of net income (loss) attributable to common stockholders: | ||||||||
Net income (loss) allocated to common stock - basic | 43.1 | (9.3) | 45.9 | (39.4) | ||||
Class A Common Stock | ||||||||
Earnings Per Share Basic and Diluted [Line Items] | ||||||||
Net income (loss) attributable to common stockholders | 40.2 | (8.2) | 42.6 | (33.5) | ||||
Numerator - allocation of net income (loss) attributable to common stockholders: | ||||||||
Net income (loss) allocated to common stock - basic | 40.2 | (8.2) | 42.6 | (33.5) | ||||
Reallocation of net income attributable to common stockholders from assumed conversion of LLC interests and assumed vesting of RSUs | 4.1 | 0 | 3.2 | 0 | ||||
Net income (loss) allocated to common stock - diluted | $ 44.3 | $ (8.2) | $ 45.8 | $ (33.5) | ||||
Denominator: | ||||||||
Weighted average shares of common stock outstanding, basic (in shares) | 51,502,825 | 49,692,599 | 51,804,935 | 46,251,576 | ||||
Weighted average shares of common stock outstanding, diluted (in shares) | 77,801,346 | 49,692,599 | 78,479,541 | 46,251,576 | ||||
Net income (loss) per share - Basic: | ||||||||
Net income (loss) per share - basic (in dollars per share) | $ 0.78 | $ (0.17) | $ 0.82 | $ (0.72) | ||||
Net income (loss) per share - Diluted: | ||||||||
Net income (loss) per share - diluted (in dollars per share) | $ 0.57 | $ (0.17) | $ 0.58 | $ (0.72) | ||||
Class A Common Stock | LLC Interests | ||||||||
Denominator: | ||||||||
Effect of dilutive securities (in shares) | 25,829,016 | 0 | 26,061,398 | 0 | ||||
Class A Common Stock | RSUs | ||||||||
Denominator: | ||||||||
Effect of dilutive securities (in shares) | 469,505 | 0 | 613,208 | 0 | ||||
Class C Common Stock | ||||||||
Earnings Per Share Basic and Diluted [Line Items] | ||||||||
Net income (loss) attributable to common stockholders | $ 2.9 | $ (1.1) | $ 3.3 | $ (5.9) | ||||
Numerator - allocation of net income (loss) attributable to common stockholders: | ||||||||
Net income (loss) allocated to common stock - basic | 2.9 | (1.1) | 3.3 | (5.9) | ||||
Reallocation of net income attributable to common stockholders from assumed conversion of LLC interests and assumed vesting of RSUs | (0.8) | 0 | (0.9) | 0 | ||||
Net income (loss) allocated to common stock - diluted | $ 2.1 | $ (1.1) | $ 2.4 | $ (5.9) | ||||
Denominator: | ||||||||
Weighted average shares of common stock outstanding, basic (in shares) | 3,648,580 | 6,117,997 | 4,069,266 | 8,078,943 | ||||
Weighted average shares of common stock outstanding, diluted (in shares) | 3,648,580 | 6,117,997 | 4,069,266 | 8,078,943 | ||||
Net income (loss) per share - Basic: | ||||||||
Net income (loss) per share - basic (in dollars per share) | $ 0.78 | $ (0.17) | $ 0.82 | $ (0.72) | ||||
Net income (loss) per share - Diluted: | ||||||||
Net income (loss) per share - diluted (in dollars per share) | $ 0.57 | $ (0.17) | $ 0.58 | $ (0.72) |
Basic and Diluted Net Income _4
Basic and Diluted Net Income (Loss) per Share - Schedule of Calculation of Diluted Net Loss Per Share as the Effect Would be Anti-dilutive (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Earnings Per Share Basic and Diluted [Line Items] | ||||
Antidilutive securities excluded from computation of net loss per share (in shares) | 924,132 | 28,887,837 | 924,132 | 30,581,712 |
LLC Interests that convert into potential Class A common shares | ||||
Earnings Per Share Basic and Diluted [Line Items] | ||||
Antidilutive securities excluded from computation of net loss per share (in shares) | 0 | 27,115,975 | 0 | 28,806,699 |
RSUs and performance RSUs - employee | ||||
Earnings Per Share Basic and Diluted [Line Items] | ||||
Antidilutive securities excluded from computation of net loss per share (in shares) | 912,248 | 1,712,790 | 912,248 | 1,712,790 |
RSUs | Non-Employee Directors | ||||
Earnings Per Share Basic and Diluted [Line Items] | ||||
Antidilutive securities excluded from computation of net loss per share (in shares) | 11,884 | 12,942 | 11,884 | 12,942 |
2025 Convertible Notes | ||||
Earnings Per Share Basic and Diluted [Line Items] | ||||
Antidilutive securities excluded from computation of net loss per share (in shares) | 0 | 46,130 | 0 | 49,281 |
Basic and Diluted Net Income _5
Basic and Diluted Net Income (Loss) per Share - Narrative (Details) | 1 Months Ended | ||
Jul. 31, 2021 day | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Convertible Notes Due 2025 | |||
Schedule Of Earnings Per Share Basic And Diluted By Common Class [Line Items] | |||
Debt instrument, face amount | $ 690,000,000 | ||
Convertible Notes Due 2025 | Convertible Debt | |||
Schedule Of Earnings Per Share Basic And Diluted By Common Class [Line Items] | |||
Debt instrument, face amount | 690,000,000 | $ 690,000,000 | |
Convertible Notes Due 2025 | Quarter Commencing After March 31, 2022 | Convertible Debt | |||
Schedule Of Earnings Per Share Basic And Diluted By Common Class [Line Items] | |||
Debt Instrument, convertible price percentage | 130% | ||
Debt Instrument, number of trading days | day | 20 | ||
Debt Instrument, number of consecutive trading days | day | 30 | ||
Senior Notes Due 2027 | |||
Schedule Of Earnings Per Share Basic And Diluted By Common Class [Line Items] | |||
Debt instrument, face amount | $ 632,500,000 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Supplemental Cash Flow Information [Abstract] | ||
Cash paid for interest | $ 14 | $ 10.5 |
Cash paid for income taxes, net of refunds | 0.4 | 0.4 |
Noncash investing activities | ||
Shares and equity-based compensation awards issued in connection with acquisitions | 95.8 | 26.3 |
Shares issued in connection with residual commission buyouts | 36.6 | 0 |
Contingent consideration for acquisitions | 82 | 0 |
Contingent consideration for residual commission buyouts | 7.3 | 0.5 |
Cash consideration not yet paid in connection with residual commission buyouts | 8.2 | 0 |
Equipment for lease | 5.2 | 4.6 |
Shareholder loans transferred in connection with the acquisition of Online Payments Group | 2.5 | 0 |
Capitalized software development costs | 1.2 | 1.6 |
Noncash financing activities | ||
Right-of-use assets obtained in exchange for operating lease liabilities | 2.3 | 0 |
Right associated with Inspiration4 seat | $ 0 | $ 2.1 |
Segments - Narrative (Details)
Segments - Narrative (Details) | 9 Months Ended |
Sep. 30, 2022 segment | |
Segment Reporting [Abstract] | |
Number of operating segment | 1 |
Number of reportable segment | 1 |
Segments - Summary of Gross Rev
Segments - Summary of Gross Revenue by Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Segment Reporting Information [Line Items] | |||||
Gross revenue | [1] | $ 547.3 | $ 377.8 | $ 1,455.9 | $ 968.1 |
Gross Revenue Contra Account | |||||
Segment Reporting Information [Line Items] | |||||
Gross revenue | 22.4 | 22.4 | |||
Payments-based revenue | |||||
Segment Reporting Information [Line Items] | |||||
Gross revenue | 509 | 346.9 | 1,354.4 | 887.6 | |
Subscription and other revenues | |||||
Segment Reporting Information [Line Items] | |||||
Gross revenue | $ 38.3 | $ 30.9 | $ 101.5 | $ 80.5 | |
[1]For the three and nine months ended September 30, 2021, includes $22.4 million of payments to merchants associated with the TSYS outage, which are recorded as contra revenue and reflected as a reduction of “Gross revenue.” See Note 4 for more information. |
Uncategorized Items - four-2022
Label | Element | Value |
Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2020-06 [Member] |