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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________
FORM 10-Q
__________________________________________________
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to .
Commission file number 001-39313
__________________________________
SHIFT4 PAYMENTS, INC.
(Exact Name of Registrant as Specified in Its Charter)
__________________________________
Delaware84-3676340
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
2202 N. Irving Street
Allentown, Pennsylvania
18109
(Address of principal executive offices)(Zip Code)
(Registrant’s telephone number, including area code): (888) 276-2108
N/A
(Former name, former address, and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per shareFOURThe New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated fileroAccelerated filero
Non-accelerated filerxSmaller reporting companyo
Emerging growth companyx  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No x
As of November 8, 2021, there were 51,522,201 shares of the registrant’s Class A common stock, $0.0001 par value per share, outstanding, 26,272,654 shares of the registrant’s Class B common stock, $0.0001 par value per share, outstanding and 5,139,890 shares of the registrant’s Class C common stock, $0.0001 par value per share, outstanding.



SHIFT4 PAYMENTS, INC.
TABLE OF CONTENTS
 

2


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report, including statements relating to our future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding expected growth, future capital expenditures and debt service obligations, the anticipated impact of the COVID-19 pandemic (and any variants of the virus) on our business, and our expectations regarding our filer status as of December 31, 2021 are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential”, or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to the following:
the ongoing impact of the COVID-19 global pandemic on our business and results of operations;
substantial and increasingly intense competition worldwide in the financial services, payments and payment technology industries;
potential changes in the competitive landscape, including disintermediation from other participants in the payments chain;
our ability to anticipate and respond to changing industry trends and the needs and preferences of our merchants and consumers;
our reliance on third-party vendors to provide products and services;
risks associated with acquisitions;
our expansion of our share of the existing payment processing markets or into new markets;
integration and interoperability of our services and products with a variety of operating systems, software, device and web browsers;
dependence on our merchant and software partner relationships and strategic partnerships with various institutions to operate and grow our business;
impairment of significant amounts of goodwill and intangible assets on our balance sheet;
failure to comply with the U.S. Foreign Corrupt Practices Act, anti-money laundering, economic and trade sanctions regulations, and similar laws;
our dependence on our interest in Shift4 Payments, LLC to pay our taxes and expenses, including payments under the Tax Receivable Agreement (“TRA”);
Shift4 Payments, LLC’s ability to make such distributions may be subject to various limitations and restrictions;
our Founder and Searchlight (each as defined herein) have significant influence over us, including control over decisions that require the approval of stockholders; and
those factors described in the sections titled “Risk Factors and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020 and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.
Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.
You should read this Quarterly Report and the documents that we reference in this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

3


PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
SHIFT4 PAYMENTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (in millions, except share and per share amounts)
September 30,
2021
December 31,
2020
Assets  
Current assets  
Cash and cash equivalents$1,288.1 $927.8 
Accounts receivable, net of allowance for doubtful accounts of $13.4 in 2021 ($5.7 in 2020) (Note 3)
184.4 92.7 
Inventory2.0 1.5 
Prepaid expenses and other current assets (Note 11)13.2 11.5 
Total current assets1,487.7 1,033.5 
Noncurrent assets
Goodwill (Note 5)537.6 477.0 
Other intangible assets, net (Note 6)188.3 186.3 
Capitalized acquisition costs, net (Note 7)34.3 30.2 
Equipment for lease, net (Note 8)56.3 36.6 
Property, plant and equipment, net (Note 9)17.8 15.1 
Investments in securities (Note 1)29.5  
Deferred tax asset (Note 13)1.5  
Other noncurrent assets2.1 0.6 
Total noncurrent assets867.4 745.8 
Total assets$2,355.1 $1,779.3 
Liabilities and Stockholders' Equity
Current liabilities
Current portion of debt (Note 10)$ $0.9 
Accounts payable125.8 60.6 
Accrued expenses and other current liabilities (Note 11)37.4 30.1 
Deferred revenue (Note 3)16.8 7.8 
Total current liabilities180.0 99.4 
Noncurrent liabilities
Long-term debt (Note 10)1,736.8 1,005.4 
Deferred tax liability (Note 13) 2.8 
Other noncurrent liabilities2.9 1.7 
Total noncurrent liabilities1,739.7 1,009.9 
Total liabilities1,919.7 1,109.3 
Commitments and contingencies (Note 16)
Stockholders' equity (Note 18)
Preferred stock, $0.0001 par value, 20,000,000 shares authorized at September 30, 2021 and December 31, 2020, none issued and outstanding
  
Class A common stock, $0.0001 par value per share, 300,000,000 shares authorized, 51,508,608 and 39,737,950 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
  
Class B common stock, $0.0001 par value per share, 100,000,000 shares authorized, 26,272,654 and 30,625,857 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
  
Class C common stock, $0.0001 par value per share, 100,000,000 shares authorized, 5,139,890 and 10,188,852 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
  
Additional paid-in capital614.3 738.3 
Retained deficit(315.9)(278.7)
Total stockholders' equity attributable to Shift4 Payments, Inc.298.4 459.6 
Noncontrolling interests (Note 19)137.0 210.4 
Total stockholders' equity435.4 670.0 
Total liabilities and stockholders' equity$2,355.1 $1,779.3 
See accompanying notes to unaudited condensed consolidated financial statements.

4


SHIFT4 PAYMENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (in millions, except share and per share amounts)
 Three Months Ended September 30,Nine Months Ended September 30,
 2021 20202021 2020
Gross revenue (a)$377.8 $214.8 $968.1 $556.0 
Cost of sales (b)313.4 163.3 773.8 429.5 
Gross profit64.4 51.5 194.3 126.5 
General and administrative expenses48.1 35.4 153.3 144.8 
Depreciation and amortization expense15.0 16.2 45.9 37.1 
Professional fees3.3 2.9 13.0 5.8 
Advertising and marketing expenses3.5 0.8 26.1 2.9 
Restructuring expenses (Note 4)0.1 0.1 0.2 0.4 
Other operating (income) expense, net (Note 3)   (12.4)
Total operating expenses70.0 55.4 238.5 178.6 
Loss from operations(5.6)(3.9)(44.2)(52.1)
Loss on extinguishment of debt (Note 10)  (0.2)(7.1)
Other income, net0.2 0.5 0.2 0.6 
Interest expense(7.4)(7.1)(20.2)(32.1)
Loss before income taxes(12.8)(10.5)(64.4)(90.7)
Income tax (expense) benefit (Note 13)(1.0)0.7 4.1 1.0 
Net loss (c)(13.8)(9.8)(60.3)(89.7)
Net loss attributable to noncontrolling interests (d)(4.6)(4.8)(21.5)(83.7)
Net loss attributable to Shift4 Payments, Inc. (e)$(9.2)$(5.0)$(38.8)$(6.0)
Basic and diluted net loss per share: (f)
Class A net loss per share - basic and diluted$(0.17)$(0.12)$(0.72)$(0.15)
Class A weighted average common stock outstanding - basic and diluted49,692,599 23,309,247 46,251,576 22,363,399 
Class C net loss per share - basic and diluted$(0.17)$(0.12)$(0.72)$(0.15)
Class C weighted average common stock outstanding - basic and diluted6,117,997 19,222,017 8,078,943 19,424,100 
(a)For the three and nine months ended September 30, 2021, includes $22.4 million of payments to merchants associated with the TSYS outage, which are recorded as contra revenue and reflected as a reduction of "Gross revenue." See Note 3 for more information.
(b)For the three and nine months ended September 30, 2021, includes $2.3 million of payments to partners associated with the TSYS outage. See Note 3 for more information.
(c)Net loss is equal to comprehensive loss.
(d)Net loss attributable to noncontrolling interests is equal to comprehensive loss attributable to noncontrolling interests, including the net loss for the period January 1, 2020 through June 4, 2020, the date the SEC declared effective the Company’s Registration Statement on Form S-1 filed in connection with its IPO. See Note 1 for more information.
(e)Net loss attributable to Shift4 Payments, Inc. is equal to comprehensive loss attributable to Shift4 Payments, Inc.
(f)For the nine months ended September 30, 2020, represents basic and diluted net loss per share of Class A and Class C common stock and weighted average shares of Class A and Class C common stock outstanding for the period from June 5, 2020 through September 30, 2020, the period following the Reorganization Transactions and Shift4 Payments, Inc.'s initial public offering described in Note 1. See Note 21 for additional information on basic and diluted net loss per share.
See accompanying notes to unaudited condensed consolidated financial statements.

5


SHIFT4 PAYMENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE PREFERRED UNITS AND STOCKHOLDERS’ EQUITY/ MEMBERS’ (DEFICIT)
(Unaudited) (in millions, except units and shares)
 
Class A
Common Stock
Class B
Common Stock
Class C
Common Stock
Additional
paid-in
capital
Retained
Deficit
Noncontrolling
Interests
Total
equity
SharesAmountSharesAmountSharesAmount
Balances at December 31, 202039,737,950 $ 30,625,857 $ 10,188,852 $ $738.3 $(278.7)$210.4 $670.0 
Net loss— — — — — — — (32.8)(18.2)(51.0)
Cumulative effect of ASU 2020-06 adoption— — — — — — (111.5)1.6 — (109.9)
Issuance of Class A common stock and fair value of equity-based compensation awards assumed in connection with VenueNext acquisition325,127 — — — — — 13.5 — 12.8 26.3 
Transfer from Founder of right associated with Inspiration4 seat— — — — — — 1.3 — 0.8 2.1 
Exchange of shares held by Searchlight2,000,000 — (926,000)— (1,074,000)— 6.3 — (6.3) 
Equity-based compensation— — — — — — 14.0 — — 14.0 
Vesting of restricted stock units, net of tax withholding46,503 — — — — — (1.4)— (1.0)(2.4)
Balances at March 31, 202142,109,580 $ 29,699,857 $ 9,114,852 $ $660.5 $(309.9)$198.5 $549.1 
Net income— — — — — — — 3.2 1.3 4.5 
Exchange of shares held by Searchlight3,152,165 — (1,459,453)— (1,692,712)— 7.9 — (7.9) 
Equity-based compensation— — — — — — 6.6 — — 6.6 
Vesting of restricted stock units, net of tax withholding1,953,859 — — — — — (73.7)— (40.3)(114.0)
Balances at June 30, 202147,215,604 $ 28,240,404 $ 7,422,140$ $601.3 $(306.7)$151.6 $446.2 
Net loss— — — — — — — (9.2)(4.6)(13.8)
Issuance of Class A common stock and fair value of equity-based compensation awards assumed in connection with VenueNext acquisition16,797 — — — — —  — —  
Exchange of shares held by Searchlight4,250,000 — (1,967,750)— (2,282,250)— 9.0 — (9.0) 
Equity-based compensation— — — — — — 6.4 — — 6.4 
Vesting of restricted stock units, net of tax withholding26,207 — — — — — (2.4)— (1.0)(3.4)
Balances at September 30, 202151,508,608 $ 26,272,654 $ 5,139,890 $ $614.3 $(315.9)$137.0 $435.4 


6


SHIFT4 PAYMENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE PREFERRED UNITS AND STOCKHOLDERS’ EQUITY/ MEMBERS’ (DEFICIT) (continued)
(Unaudited) (in millions, except units and shares)
 Redeemable
Preferred Units
Class A
Common Units
Class B
Common Units
Class A
Common Stock
Class B
Common Stock
Class C
Common Stock
Additional
paid-in
capital
Members'
Equity
Retained
Deficit
Noncontrolling
Interests
Total
equity
(deficit)
 UnitsAmountUnitsAmountUnitsAmountSharesAmountSharesAmountSharesAmount
Balances at December 31, 2019430 $43.0 100,000 $ 1,010 $0.3  $  $  $ $ $149.2 $(182.4)$ $(32.9)
Net loss prior to Reorganization Transactions, IPO and concurrent private placement— — — — — — — — — — — — — — (5.1)— (5.1)
Capital distributions— — — — — — — — — — — — — (0.1)— — (0.1)
Preferred return on redeemable preferred units— — — — — — — — — — — — — (1.2)— — (1.2)
Balances at March 31, 2020430 $43.0 100,000 $ 1,010 $0.3  $  $  $ $ $147.9 $(187.5)$ $(39.3)
Net loss prior to Reorganization Transactions, IPO and concurrent private placement— — — — — — — — — — — — — — (72.8)— (72.8)
Capital distributions— — — — — — — — — — — — — (0.4)— — (0.4)
Preferred return on redeemable preferred units— — — — — — — — — — — — — (0.9)— — (0.9)
Balances at June 4, 2020 prior to Reorganization Transactions, IPO and concurrent private placement430 $43.0 100,000 $— 1,010 $0.3 — $— — $— — $— $— $146.6 $(260.3)$— $(113.4)
Reorganization transactions(430)(43.0)(100,000)— (1,010)(0.3)528,150 — 39,204,989 — 15,513,817 — 189.9 (146.6)— — 43.0 
Preferred dividends settled with LLC interests— — — — — — — — — — — — 2.3 — — — 2.3 
Issuance of common stock in IPO and concurrent private placement— — — — — — 17,250,000 — — — 4,625,346 — 463.8 — — — 463.8 
Allocation of equity to noncontrolling interests— — — — — — — — — — — — (211.5)— — 211.5  
Issuance of common stock for change of control contingent liabilities— — — — — — 915,503 — — — — — 21.1 — — — 21.1 
Issuance of restricted stock units for change of control contingent liabilities— — — — — — — — — — — — 2.1 — — — 2.1 
Equity-based compensation— — — — — — — — — — — — 50.0 — — — 50.0 
Net loss subsequent to Reorganization Transactions, IPO and concurrent private placement— — — — — — — — — — — — — — (1.0)(1.0)(2.0)
Balances at June 30, 2020 $  $  $ 18,693,653 $ 39,204,989 $ 20,139,163 $ $517.7 $ $(261.3)$210.5 $466.9 
Issuance of Class A common stock in connection with Follow-on offering— — — — — — 2,000,000 — — — — — 91.8 — — — 91.8 
Allocation of equity to noncontrolling interest from Follow-on offering— — — — — — — — — — — — (45.7)— — 45.7  
Exchange of shares held by Searchlight— — — — — — 7,856,373 — (3,637,501)— (4,218,872)— 3.8 — — (3.8) 
Other— — — — — — — — — — — — (1.2)— — — (1.2)
Equity-based compensation— — — — — — — — — — — — 6.2 — — — 6.2 
Net loss— — — — — — — — — — — — — — (5.0)(4.8)(9.8)
Balances at September 30, 2020 $  $  $ 28,550,026 $ 35,567,488 $ 15,920,291 $ $572.6 $ $(266.3)$247.6 $553.9 
See accompanying notes to unaudited condensed consolidated financial statements.

7


SHIFT4 PAYMENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (in millions)
Nine Months Ended September 30,
2021 2020
Operating activities
Net loss$(60.3)$(89.7)
Adjustment to reconcile net loss to net cash provided by operating activities
Depreciation and amortization76.8 59.7 
Amortization of capitalized financing costs4.1 2.9 
Loss on extinguishment of debt0.2 7.1 
Deferred income taxes(4.3)1.1 
Provision for bad debts10.3 6.9 
Revaluation of contingent liabilities0.2 (5.9)
Impairment of intangible assets 0.4 
Equity-based compensation expense26.9 56.2 
Other noncash items1.0 (0.3)
Impact of lease modifications (12.4)
Change in operating assets and liabilities
Accounts receivable(98.0)(19.3)
Contract assets (0.6)
Prepaid expenses and other assets(1.4)(2.9)
Inventory2.9 0.1 
Accounts payable59.1