Shift4 Payments (FOUR +6%) is gaining momentum after announcing its inclusion in the S&P MidCap 400. This achievement highlights the company's growth since its IPO in June 2020, when it debuted at $23 per share. The positive news comes after a Q3 earnings miss last week, but the company has secured several high-profile wins recently.
- Q3 Report: Despite consumer spending softness, Shift4 (FOUR, Financial) achieved a 50.2% year-over-year revenue growth to $365.1 million, slightly below analyst expectations. The EPS was also underwhelming, but the standout was a record Q3 adjusted EBITDA margin of 51.3%.
- Seasonal Trends: FOUR experienced increased spending in July and August due to vacations and travel, but restaurant spending moderated with a -3% decline in same-store comparisons. September saw a slight dip in other sectors as leisure travel decreased with the back-to-school season.
- Market Impact: With its POS terminals in about a third of US table service restaurants and 40% of hotels, macroeconomic factors like consumer spending, inflation, and interest rates significantly impact FOUR's performance.
- Strong Execution: Despite macro challenges, FOUR achieved record volumes, gross revenue less network fees, adjusted EBITDA, and free cash flow in Q3. The quarter was also notable for new logo wins, particularly in hospitality and stadium deals.
- Acquisition: FOUR acquired a majority stake in Vectron Systems, a major European POS systems supplier for restaurants and hospitality, adding 65,000 restaurants to its clientele. FOUR aims to leverage its integrated software, hardware, and payments solution in Europe, which has been slower to adopt bundled offerings.
Investors are optimistic about Shift4's inclusion in the S&P MidCap 400, which requires index funds to purchase FOUR shares. This milestone not only raises the company's profile but also reflects its substantial growth since its IPO. The stock's upward trend since mid-May suggests a promising outlook for 2025, assuming consumer spending rebounds.
