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Table of Contents
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 March 31, 2024
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.
S4 Logo SEC compliant version.jpg
(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.)
3501 Corporate Parkway
Center Valley, Pennsylvania
18034
(Address of principal executive offices)(Zip Code)
(888) 276-2108
(Registrant’s telephone number, including area code)
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 filerxAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo  
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 o No x
As of May 3, 2024, there were 62,018,362 shares of the registrant’s Class A common stock, $0.0001 par value per share, outstanding, 23,831,883 shares of the registrant’s Class B common stock, $0.0001 par value per share, outstanding and 1,694,915 shares of the registrant’s Class C common stock, $0.0001 par value per share, outstanding.


Table of Contents
SHIFT4 PAYMENTS, INC.
TABLE OF CONTENTS

2

Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Quarterly Report”) 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 fact contained in this Quarterly Report, including, without limitation, statements relating to our position as a leader within our industry, 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, international expansion, future capital expenditures, debt covenant compliance, financing activities, and debt service obligations, 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, though not all forward-looking statements can be identified by such terms or 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, those factors described in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed on February 29, 2024 (the “2023 Form 10-K”).
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 herein 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

Table of Contents
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)
March 31, 2024December 31, 2023
Assets  
Current assets  
Cash and cash equivalents$522.9 $455.0 
Restricted cash57.3 84.4 
Settlement assets316.4 321.2 
Accounts receivable, net252.2 256.8 
Inventory2.7 3.4 
Prepaid expenses and other current assets39.3 32.5 
Total current assets1,190.8 1,153.3 
Noncurrent assets
Equipment for lease, net133.0 123.1 
Property, plant and equipment, net27.3 28.6 
Right-of-use assets20.9 22.8 
Investments in securities73.1 62.2 
Collateral held by the card networks37.5 37.7 
Goodwill1,107.4 1,111.3 
Residual commission buyouts, net208.8 229.6 
Capitalized customer acquisition costs, net55.6 51.7 
Other intangible assets, net534.4 548.8 
Other noncurrent assets19.0 18.7 
Total assets$3,407.8 $3,387.8 
Liabilities and Stockholders' Equity
Current liabilities
Settlement liabilities$308.7 $315.2 
Accounts payable224.4 204.6 
Accrued expenses and other current liabilities94.6 83.9 
Deferred revenue14.7 20.6 
Bank deposits50.5 72.3 
Current lease liabilities7.4 7.8 
Total current liabilities700.3 704.4 
Noncurrent liabilities
Long-term debt1,752.3 1,750.2 
Deferred tax liability27.6 28.7 
Noncurrent lease liabilities17.0 18.8 
Other noncurrent liabilities14.8 17.3 
Total liabilities2,512.0 2,519.4 
Commitments and contingencies (Note 16)
Stockholders' equity
Preferred stock, $0.0001 par value, 20,000,000 shares authorized at March 31, 2024 and December 31, 2023, none issued and outstanding
  
Class A common stock, $0.0001 par value per share, 300,000,000 shares authorized, 60,815,224 and 60,664,171 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively
  
Class B common stock, $0.0001 par value per share, 100,000,000 shares authorized, 23,831,883 shares issued and outstanding at both March 31, 2024 and December 31, 2023
  
Class C common stock, $0.0001 par value per share, 100,000,000 shares authorized, 1,694,915 shares issued and outstanding at both March 31, 2024 and December 31, 2023
  
Additional paid-in capital997.1 985.9 
Accumulated other comprehensive income3.5 14.1 
Retained deficit(326.1)(346.7)
Total stockholders' equity attributable to Shift4 Payments, Inc.674.5 653.3 
Noncontrolling interests221.3 215.1 
Total stockholders' equity895.8 868.4 
Total liabilities and stockholders' equity$3,407.8 $3,387.8 
 See accompanying notes to unaudited condensed consolidated financial statements.

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SHIFT4 PAYMENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (in millions, except share and per share amounts)
Three Months Ended March 31,
20242023
Gross revenue$707.4 $547.0 
Cost of sales (exclusive of certain depreciation and amortization expense shown separately below)(519.6)(401.6)
General and administrative expenses(107.1)(85.7)
Revaluation of contingent liabilities(2.1)(7.0)
Depreciation and amortization expense (a)(44.8)(35.3)
Professional expenses(8.0)(6.1)
Advertising and marketing expenses(4.4)(2.5)
Income from operations21.4 8.8 
Interest income5.4 7.6 
Other income, net1.4 0.1 
Unrealized gain on investments in securities11.0 8.9 
Change in TRA liability(1.2)(0.5)
Interest expense(8.1)(8.1)
Income before income taxes29.9 16.8 
Income tax benefit (expense)(1.4)3.6 
Net income28.5 20.4 
Less: Net income attributable to noncontrolling interests7.9 5.6 
Net income attributable to Shift4 Payments, Inc.$20.6 $14.8 
Basic net income per share
Class A net income per share - basic$0.31 $0.26 
Class A weighted average common stock outstanding - basic64,444,479 55,236,204 
Class C net income per share - basic$0.31 $0.26 
Class C weighted average common stock outstanding - basic1,694,915 2,241,648 
Diluted net income per share
Class A net income per share - diluted$0.31 $0.24 
Class A weighted average common stock outstanding - diluted65,962,229 82,238,704 
Class C net income per share - diluted$0.31 $0.24 
Class C weighted average common stock outstanding - diluted1,694,915 2,241,648 
See accompanying notes to unaudited condensed consolidated financial statements.
(a)Depreciation and amortization expense includes depreciation of equipment under lease of $11.9 million and $7.2 million for the three months ended March 31, 2024 and 2023, respectively.

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SHIFT4 PAYMENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited) (in millions)
Three Months Ended March 31,
20242023
Net income$28.5 $20.4 
Other comprehensive income (loss)
Unrealized gain (loss) on foreign currency translation adjustment(14.5)3.0 
Comprehensive income14.0 23.4 
Less: Comprehensive income attributable to noncontrolling interests4.0 6.5 
Comprehensive income attributable to Shift4 Payments, Inc.$10.0 $16.9 
See accompanying notes to unaudited condensed consolidated financial statements.

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SHIFT4 PAYMENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited) (in millions, except share amounts)
 
Class A
Common Stock
Class B
Common Stock
Class C
Common Stock
Additional
Paid-In
Capital
Retained
Deficit
Accumulated Other Comprehensive Income
Noncontrolling
Interests
Total
Equity
SharesAmountSharesAmountSharesAmount
Balances at December 31, 202360,664,171 $ 23,831,883 $ 1,694,915 $ $985.9 $(346.7)$14.1 $215.1 $868.4 
Net income— — — — — — — 20.6 — 7.9 28.5 
Distributions to noncontrolling interests— — — — — — — — — (0.3)(0.3)
Equity-based compensation— — — — — — 22.8 — — — 22.8 
Vesting of restricted stock units, net of tax withholding151,053 — — — — — (11.6)— — 2.5 (9.1)
Other comprehensive loss— — — — — — — — (10.6)(3.9)(14.5)
Balances at March 31, 202460,815,224 $ 23,831,883 $ 1,694,915 $ $997.1 $(326.1)$3.5 $221.3 $895.8 

 
Class A
Common Stock
Class B
Common Stock
Class C
Common Stock
Additional
Paid-In
Capital
Retained
Deficit
Accumulated Other Comprehensive Income
Noncontrolling
Interests
Total
Equity
SharesAmountSharesAmountSharesAmount
Balances at December 31, 202254,153,218 $ 25,829,016 $ 2,889,811 $ $702.6 $(363.6)$8.3 $133.3 $480.6 
Net income— — — — — — — 14.8 — 5.6 20.4 
Issuance of Class A common stock and contingent share earnout in connection with an acquisition27,780 — — — — — 5.5 — — 2.1 7.6 
Exchange of shares held by Rook2,465,770 — (1,666,665)— (799,105)— 4.9 — — (4.9) 
Distributions to noncontrolling interests— — — — — — — — — (1.8)(1.8)
Equity-based compensation— — — — — — 21.9 — — — 21.9 
Vesting of restricted stock units, net of tax withholding123,846 — — — — — (4.7)— — (0.6)(5.3)
Other comprehensive income— — — — — — — — 2.1 0.9 3.0 
Balances at March 31, 202356,770,614 $ 24,162,351 $ 2,090,706 $ $730.2 $(348.8)$10.4 $134.6 $526.4 
See accompanying notes to unaudited condensed consolidated financial statements.










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SHIFT4 PAYMENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (in millions)
Three Months Ended March 31,
2024 2023
Operating activities
Net income$28.5 $20.4 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization66.1 47.6 
Equity-based compensation expense22.8 20.9 
Revaluation of contingent liabilities2.1 7.0 
Unrealized gain on investments in securities(11.0)(8.9)
Change in TRA liability1.2 0.5 
Amortization of capitalized financing costs2.1 2.1 
Provision for bad debts1.8 3.2 
Deferred income taxes (5.6)
Unrealized foreign exchange gains(1.4) 
Other noncash items(1.1)0.3 
Change in operating assets and liabilities
Settlement activity, net(58.3) 
Accounts receivable0.5 (17.1)
Prepaid expenses and other assets(8.5)0.1 
Inventory0.7 0.7 
Capitalized customer acquisition costs(9.5)(7.3)
Accounts payable21.4 5.3 
Accrued expenses and other liabilities6.1 5.9 
Payments on contingent liabilities in excess of initial fair value(0.3) 
Right-of-use assets and lease liabilities, net(0.2)0.1 
Deferred revenue(6.3)4.2 
Net cash provided by operating activities56.7 79.4 
Investing activities
Acquisitions, net of cash acquired (1.2)
Acquisition of equipment to be leased(24.4)(14.7)
Capitalized software development costs(14.7)(10.7)
Acquisition of property, plant and equipment(1.3)(2.7)
Residual commission buyouts(0.9)(2.1)
Proceeds from sale of investments in securities1.6  
Net cash used in investing activities(39.7)(31.4)
Financing activities
Payments for withholding tax related to vesting of restricted stock units(9.1)(5.3)
Payments on contingent liabilities(0.1)(0.3)
Distributions to noncontrolling interests(0.3)(1.4)
Net change in bank deposits(20.3) 
Net cash used in financing activities(29.8)(7.0)
Effect of exchange rate changes on cash and cash equivalents and restricted cash(6.5)0.4 
Change in cash and cash equivalents and restricted cash(19.3)41.4 
Cash and cash equivalents and restricted cash, beginning of period721.8 776.5 
Cash and cash equivalents and restricted cash, end of period$702.5 $817.9 
See accompanying notes to unaudited condensed consolidated financial statements.


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SHIFT4 PAYMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (in millions, except share and per share amounts)
1.Organization, Basis of Presentation and Significant Accounting Policies
Organization
Shift4 Payments, Inc. (“Shift4 Payments” or “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 independent provider of software and payment processing solutions in the United States (“U.S.”) based on total volume of payments processed.
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. These financial statements do not include all information and footnotes required by U.S. GAAP for complete financial statements. The December 31, 2023 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, 2023, as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Form 10-K”).
The unaudited condensed consolidated financial statements include the accounts of Shift4 Payments, Inc. and its wholly-owned subsidiaries. Shift4 Payments, Inc. consolidates the financial results of Shift4 Payments, LLC, which is considered a variable interest entity. 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”). 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, 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 (together, the “Convertible Notes”) that are held by Shift4 Payments, Inc. directly. As of March 31, 2024 and December 31, 2023, $4.1 million and $3.6 million of cash, respectively, was directly held by Shift4 Payments, Inc. As of March 31, 2024 and December 31, 2023, the TRA liability was $6.3 million and $5.1 million, respectively. In connection with the issuance of the Convertible Notes, Shift4 Payments, Inc. entered into Intercompany Convertible Notes with Shift4 Payments, LLC, whereby Shift4 Payments, Inc. provided the net proceeds from the issuance of the Convertible Notes to Shift4 Payments, LLC in the amount of $1,322.5 million. Shift4 Payments, 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.
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 Rook and certain affiliates of Searchlight Capital Partners, L.P. (together, 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.

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Significant Accounting Policies
The Company’s significant accounting policies are discussed in Note 1 to Shift4 Payments, Inc.’s consolidated financial statements as of and for the year ended December 31, 2023 in the 2023 Form 10-K. There have been no significant changes to these policies which have had a material impact on the Company’s unaudited condensed consolidated financial statements and related notes during the three months ended March 31, 2024.
Cash and Cash Equivalents and Restricted Cash
Highly liquid investments with maturities of three months or less at the date of purchase are considered to be cash equivalents and are stated at cost, which approximates fair value. The Company’s cash equivalents consist of highly liquid investments in money market funds.
The Company classifies certain cash that is not available for use in its operations as restricted. Substantially all of the Company’s Restricted cash balance is related to a deposit in its U.S. sponsor bank merchant settlement account.
In the fourth quarter of fiscal 2023, the Company acquired Credorax, Inc. d/b/a Finaro (“Finaro”). Finaro’s principal activities consist of the provision of integrated acquiring and payment processing services to merchants located in Europe and the United Kingdom (the “U.K.”). Unlike the Company’s U.S. business, Finaro operates as a full acquirer, and without a sponsor bank like the Company has historically operated with in the U.S. As a result, the Company’s European and U.K. business includes settlement processing assets and liabilities. These assets primarily include settlement-related cash and funds receivable from card networks. Cash and cash equivalents held on behalf of merchants and other payees are included within “Settlement assets” on the unaudited Condensed Consolidated Balance Sheet. The changes in settlement cash and cash equivalents are included within “Settlement activity, net” within Operating activities on the Company’s unaudited Condensed Consolidated Statements of Cash Flows. The following table provides a reconciliation between cash and cash equivalents on the unaudited Condensed Consolidated Balance Sheets and the unaudited Condensed Consolidated Statements of Cash Flows:
March 31, 2024December 31, 2023
Cash and cash equivalents$522.9 $455.0 
Restricted cash57.3 84.4 
Cash and cash equivalents included in Settlement assets122.3 182.4 
Total cash and cash equivalents and restricted cash on the unaudited Condensed Consolidated Statements of Cash Flows$702.5 $721.8 
The Company maintains its cash with what are widely considered to be high credit quality financial institutions. U.S. cash balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250 thousand per bank. The Company maintains cash and cash equivalent balances in excess of FDIC limits. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.
Settlement Assets and Liabilities
Settlement assets and liabilities are balances related to the settlement process which involves the transferring of funds between card issuers, merchants and other third parties. The Company currently operates under two different models: (1) a sponsorship model and (2) a direct member model. In the U.S., the Company operates under the sponsorship model and outside the U.S. the Company primarily operates under the direct member model. The Company’s operations outside the U.S. are primarily related to the business of Finaro, which was acquired in October of 2023.
Sponsorship Model
In the U.S., the Company operates under the sponsorship model. In order for the Company to provide payment processing services, Visa, MasterCard and other payment networks require sponsorship by a member clearing bank. The Company has an agreement with banks and financial institutions (the “Sponsoring Member”), to provide sponsorship services to the Company. The sponsorship services allow the Company to route transactions under the Sponsoring Members’ membership to clear card transactions through card networks. Under this model, the standards of the payment networks restrict the Company from performing funds settlement and require that these funds be in the possession of the Sponsoring Member until the merchant is funded. Accordingly, settlement assets and obligations resulting from the submission of settlement files to the network or cash received from the network in advance of funding the network are the responsibility of the Sponsoring Member and are not recorded on the Company’s unaudited Condensed Consolidated Balance Sheets.

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Direct Member Model
The Company’s European and U.K. business (previously known as Finaro) operates as a full acquirer and without a sponsor bank. Under the direct member model, the Company’s Consolidated Balance Sheets include settlement assets and liabilities that represent balances arising from the settlement process which involves the transferring of funds between card issuers, payment networks, processors, and merchants, as well as collateral held to manage merchant credit risk. As a processor, the Company facilitates the clearing and settlement activity for the merchant and records settlement assets and liabilities on the Consolidated Balance Sheets upon processing a payment transaction. Settlement assets represent cash received or amounts receivable primarily from payment networks or bank partners. Settlement liabilities primarily represent amounts payable to merchants. Settlement assets are in excess of Settlement liabilities due to prefunding provided to certain merchants.
Amounts included on the unaudited Condensed Consolidated Balance Sheets as Collateral held by card networks relate to collateral required by the card networks to operate as a direct member.
Recent Accounting Pronouncements
Accounting Pronouncements Adopted
In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 became effective for the Company on January 1, 2024 on a prospective basis. The adoption did not have a significant impact on the Company’s unaudited condensed consolidated financial statements.
Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes: Improvements to Income Tax Disclosures, which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The amendments in ASU 2023-09 are effective for fiscal 2025, with early adoption permitted. The amendments should be applied prospectively, however, retrospective application is also permitted. The Company does not plan to early adopt ASU 2023-09 and is evaluating the impact of the amendments on the Company’s unaudited condensed consolidated financial statements.
In March 2024, the SEC adopted new rules designed to enhance public company disclosures related to the risks and impacts of climate-related matters. The rules amend the provisions of both Regulation S-K and Regulation S-X and will be required in annual reports and registration statements. Amendments to Regulation S-K require disclosure of climate-related risks, transition plans, targets and goals, risk management and governance. Amendments to Regulation S-X require disclosure of the financial effects of severe weather events and other natural conditions as well as the use of carbon offsets or renewable energy credits. In April 2024, the SEC issued an order to stay the rules pending the completion of judicial review of multiple petitions challenging the rules. Disclosure requirements will begin phasing in for fiscal years beginning on or after January 1, 2025, subject to legal challenges and the SEC’s voluntary stay of the disclosure requirements. The Company will continue to assess the impact of these new rules on its financial statements while the stay is in place.
2.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.
Finaro
On October 26, 2023, the Company completed the acquisition of Finaro by acquiring 100% of its common stock for $330.8 million of total purchase consideration, net of cash acquired. Finaro is a cross-border eCommerce platform and bank specializing in solving complex payment problems for multi-national merchants that we believe will help drive our expansion into international markets.

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Cash (a)$211.9 
Shares of Class A common stock (b)302.0 
Contingent consideration (c)2.8 
Settlement of preexisting relationship1.3 
Total purchase consideration518.0 
Less: cash acquired(187.2)
Total purchase consideration, net of cash acquired$330.8 
(a) Subject to customary post-closing adjustments.
(b) Approximately 7.4 million shares of the Company’s Class A common stock are to be issued in connection with the acquisition, of which approximately 1.0 million shares relate to an earnout which was fully achieved prior to the acquisition date. 3.7 million shares were issued during the fourth quarter of 2023 and the remaining 3.7 million shares are expected to be issued over the course of the twelve months post-acquisition. The total equity of $302.0 million was recorded to “Additional Paid-in Capital” in the Company’s Consolidated Balance Sheets upon closing of the acquisition.
(c) The Company agreed to pay additional cash consideration to the sellers equal to the proceeds realized from the sale of an investment in certain securities held by Finaro, when and if realized, after the deduction of tax payments, if any. The fair value of the contingent consideration was included in the initial purchase consideration and will be revalued quarterly until settlement. As of March 31, 2024, the fair value of the contingent consideration was $4.0 million.
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 area of preliminary purchase price allocation subject to change relates to the valuation of accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities, and residual goodwill.
Settlement assets, excluding cash (a)$67.6 
Accounts receivable15.2 
Investments in securities2.2 
Prepaid expenses and other current assets10.9 
Goodwill (b)281.3 
Acquired technology130.0 
Merchant relationships75.0 
Banking license3.0 
Property, plant and equipment2.3 
Collateral held by the card networks36.4 
Right-of-use assets3.0 
Other noncurrent assets4.1 
Settlement liabilities(193.5)
Accounts payable(13.0)
Accrued expenses and other current liabilities(7.5)
Bank deposits(70.5)
Current lease liabilities(1.4)
Noncurrent lease liabilities(1.6)
Deferred tax liability(10.4)
Other noncurrent liabilities(2.3)
Net assets acquired$330.8 
(a) Excludes settlement-related cash of $134.9 million.
(b) Goodwill is not deductible for tax purposes.

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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 for acquired technology, the with and without method for merchant relationships, and the replacement cost method for the banking license. This transaction was not taxable for income tax purposes. Management’s estimates of fair value are based upon assumptions related to projected revenues, earnings before interest income, interest expense, income taxes, and depreciation and amortization (“EBITDA”) margins, research and development addback, obsolescence rates, and discount rates. The estimated life of acquired technology, merchant relationships and the banking license are eight, ten and two years respectively. The goodwill arising from the acquisition largely consisted of revenue synergies associated with a larger total addressable market.
In connection with the transaction, the Company also entered into compensation arrangements with employees of Finaro. In aggregate, these agreements included approximately $25.0 million of restricted stock units that were issued in the first quarter of 2024 and vest over three years. These awards are accounted for as compensation expense.
Appetize
On October 2, 2023, the Company completed the acquisition of SpotOn Technologies, Inc.’s sports and entertainment division, formerly known as Appetize, by acquiring 100% of its membership interests for $108.7 million of total purchase consideration, net of cash acquired. Appetize is a payments and software company that has served clients that management believes will strengthen the Company’s presence within the sports and entertainment market. Total purchase consideration was as follows:
Cash (a)$109.5 
Total purchase consideration109.5 
Less: cash acquired(0.8)
Total purchase consideration, net of cash acquired$108.7 
(a) Subject to customary post-closing adjustments.
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 area of preliminary purchase price allocation subject to change relates to the valuation of accounts receivable, accounts payable, accrued expenses and other current liabilities, and residual goodwill.
Accounts receivable$14.0 
Inventory1.2 
Prepaid expenses and other current assets1.0 
Goodwill (a)75.0 
Other intangible assets38.3 
Other noncurrent assets0.2 
Accounts payable(4.9)
Accrued expenses and other current liabilities(4.5)
Deferred revenue(11.0)
Other noncurrent liabilities(0.6)
Net assets acquired$108.7 
(a) Goodwill is deductible for tax purposes.
Other intangible assets consists of definite-lived intangible assets, which includes merchant relationships. 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 (merchant relationships). This transaction was taxable for income tax purposes. The estimated life of merchant relationships is ten years. The goodwill arising from the acquisition largely consisted of revenue synergies associated with the ability to cross-sell newly acquired customers and technology capabilities.
The acquisition of Appetize did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

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Focus
On April 3, 2023, the Company completed the acquisition of Focus POS Systems (“Focus”) by acquiring 100% of its common stock for $45.2 million of total purchase consideration, net of cash acquired. This acquisition adds Focus’s POS software to the Company’s suite of software and payment processing solutions and strengthens the Company’s distribution network. Total purchase consideration was as follows:
Cash$36.0 
Shares of Class A common stock (a)10.2 
Total purchase consideration46.2 
Less: cash acquired(1.0)
Total purchase consideration, net of cash acquired$45.2 
(a) Total purchase consideration includes 152,114 shares of common stock.
The following table summarizes the fair value assigned to the assets acquired and liabilities assumed at the acquisition date:
Accounts receivable$0.4 
Goodwill (a)22.0 
Residual commission buyouts1.2 
Other intangible assets29.2 
Deferred tax liability(7.6)
Net assets acquired$45.2 
(a) Goodwill is not deductible for tax purposes.
Other intangible assets consists of definite-lived intangible assets, which includes merchant relationships. 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 (merchant relationships). The estimated life of merchant relationships is 13 years. This transaction was not taxable for income tax purposes. The goodwill arising from the acquisition largely consisted of revenue synergies associated with the ability to cross-sell newly acquired customers and technology capabilities.
The acquisition of Focus did not have a material impact on the Company’s unaudited condensed consolidated financial statements.
3.Revenue
The Company’s revenue is comprised primarily of payments-based revenue which includes fees for payment processing and gateway services. Payment processing fees are primarily driven as a percentage of payment volume.
The Company also generates revenues from recurring fees which are based on the technology deployed to the merchant. Under ASC 606, the Company typically has three separate performance obligations under its recurring software as a service (“SaaS”) agreements for point-of-sale systems provided to merchants: (1) point-of-sale software, (2) lease of hardware and (3) other support services.
Disaggregated Revenue
The following table presents a disaggregation of the Company’s revenue from contracts with customers based on similar operational characteristics:
Three Months Ended March 31,
20242023
Payments-based revenue$655.1 $511.0 
Subscription and other revenues52.3 36.0 
Total$707.4 $547.0 
Substantially all of the Company’s revenue is recognized over time.

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Contract Liabilities
The Company charges merchants for various post-contract license support and service 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 March 31, 2024 and December 31, 2023, the Company had deferred revenue of $16.2 million and $22.5 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 amount of gross revenue recognized that was included in the December 31, 2023 balance of deferred revenue was $10.2 million for the three months ended March 31, 2024.
Allowance for Doubtful Accounts
The change in the Company’s allowance for doubtful accounts was as follows:
Three Months Ended March 31,
20242023
Beginning balance$22.7 $18.1 
Additions to expense1.8 3.2 
Write-offs, net of recoveries and other adjustments(2.2)(1.1)
Ending balance$22.3 $20.2 
4.Goodwill
The changes in the carrying amount of goodwill were as follows:
Balance at December 31, 2023$1,111.3 
Purchase price adjustments related to prior period acquisitions2.4 
Effect of foreign currency translation(6.3)
Balance at March 31, 2024$1,107.4 
5.Depreciation and Amortization
Amounts charged to expense in the Company’s unaudited Condensed Consolidated Statements of Operations for depreciation and amortization were as follows:
AmortizationDepreciation
Residual Commission BuyoutsOther Intangible AssetsCapitalized Customer Acquisition
Costs
Equipment Under LeaseProperty, Plant and EquipmentTotal
Three Months Ended March 31, 2024
Depreciation and amortization expense$21.8 $8.7 $ $11.9 $2.4 $44.8 
Cost of sales 15.5 5.7  0.1 21.3 
Total depreciation and amortization (a)$21.8 $24.2 $5.7 $11.9 $2.5 $66.1 
Three Months Ended March 31, 2023
Depreciation and amortization expense$21.6 $5.2 $ $7.2 $1.3 $35.3 
Cost of sales 8.3 3.8  0.2 12.3 
Total depreciation and amortization (b)$21.6 $13.5 $3.8 $7.2 $1.5 $47.6 
(a)    Total amortization of $51.7 million consisted of amortization of acquired intangibles of $38.0 million and amortization of non-acquired intangibles of $13.7 million.
(b)    Total amortization of $38.9 million consisted of amortization of acquired intangibles of $30.0 million and amortization of non-acquired intangibles of $8.9 million.

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As of March 31, 2024, the estimated amortization expense for each of the five succeeding years and thereafter is as follows:
Residual Commission BuyoutsOther Intangible AssetsCapitalized Customer Acquisition CostsTotal Amortization
2024 (remaining nine months)$65.1 $75.3 $17.0 $157.4 
202585.0 92.4 19.0 196.4 
202651.0 72.8 12.9 136.7 
20272.5 53.2 6.4 62.1 
20281.7 44.1 0.3 46.1 
Thereafter3.5 196.6  200.1 
Total$208.8 $534.4 $55.6 $798.8 
6.Residual Commission Buyouts
Residual commission buyouts represent transactions with certain third-party distribution partners, pursuant to which the Company acquires their ongoing merchant relationships that subscribe to the Company’s end-to-end payments platform.
Residual commission buyouts, net consisted of the following:

Weighted Average
Amortization Period
(in years)
March 31, 2024
Carrying ValueAccumulated AmortizationNet Carrying Value
Residual commission buyouts from asset acquisitions4$324.5 $(127.0)$197.5 
Residual commission buyouts from business combinations813.9 (2.6)11.3 
Total residual commission buyouts$338.4 $(129.6)$208.8 
Weighted Average
Amortization Period
(in years)
December 31, 2023
Carrying ValueAccumulated AmortizationNet Carrying Value
Residual commission buyouts from asset acquisitions4$323.6 $(105.7)$217.9 
Residual commission buyouts from business combinations813.9 (2.2)11.7 
Total residual commission buyouts$337.5 $(107.9)$229.6 
7.Other Intangible Assets, Net
Other intangible assets, net consisted of the following:
Weighted Average
Amortization Period
(in years)
March 31, 2024
Carrying ValueAccumulated AmortizationNet Carrying Value
Merchant relationships11$337.2 $(65.2)$272.0 
Acquired technology9254.6 (88.2)166.4 
Trademarks and trade names1328.1 (7.0)21.1 
Capitalized software development costs3114.3 (41.7)72.6 
Finaro banking license22.9 (0.6)2.3 
Total other intangible assets, net$737.1 $(202.7)$534.4 

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Weighted Average
Amortization Period
(in years)
December 31, 2023
Carrying ValueAccumulated AmortizationNet Carrying Value
Merchant relationships11$340.6 $(57.8)$282.8 
Acquired technology9257.6 (80.8)176.8 
Trademarks and trade names1328.1 (6.3)21.8 
Capitalized software development costs 398.8 (34.1)64.7 
Finaro banking license23.0 (0.3)2.7 
Total other intangible assets, net$728.1 $(179.3)$548.8 

8.Capitalized Customer Acquisition Costs, Net
Capitalized customer acquisition costs, net consisted of the following:
Weighted Average
Amortization Period
(in years)
Carrying ValueAccumulated AmortizationNet Carrying Value
Total costs as of March 31, 20244$101.5 $(45.9)$55.6 
Total costs as of December 31, 20234$96.6 $(44.9)$51.7 

9.Equipment for Lease, Net
Equipment for lease, net consisted of the following:
Weighted Average
Depreciation Period
(in years)
March 31, 2024
Carrying ValueAccumulated DepreciationNet Carrying Value
Equipment under lease4$193.7 $(69.6)$124.1 
Equipment held for lease (a)N/A8.9  8.9 
Total equipment for lease, net$202.6 $(69.6)$133.0 
Weighted Average
Depreciation Period
(in years)
December 31, 2023
Carrying ValueAccumulated DepreciationNet Carrying Value
Equipment under lease4$181.2 $(69.6)$111.6 
Equipment held for lease (a)N/A11.5  11.5 
Total equipment for lease, net$192.7 $(69.6)$123.1 
(a) Represents equipment that was not yet initially deployed to a merchant and, accordingly, is not being depreciated.


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10.Property, Plant and Equipment, Net
Property, plant and equipment, net consisted of the following:
March 31,
2024
December 31,
2023
Equipment$23.0 $21.9 
Capitalized software2.9 3.5 
Leasehold improvements18.6 18.7 
Furniture and fixtures2.2 2.2 
Vehicles0.4 0.4 
Total property, plant and equipment, gross47.1 46.7 
Less: Accumulated depreciation(19.8)(18.1)
Total property, plant and equipment, net$27.3 $28.6 
11.Debt
The Company’s outstanding debt consisted of the following:
 MaturityEffective Interest RateMarch 31,
2024
December 31,
2023
Convertible Senior Notes due 2025 ("2025 Convertible Notes")December 15, 20250.49%$690.0 $690.0 
Convertible Senior Notes due 2027 ("2027 Convertible Notes")August 1, 20270.90%632.5 632.5 
4.625% Senior Notes due 2026 ("2026 Senior Notes")
November 1, 20265.13%450.0 450.0 
Total borrowings

1,772.5 1,772.5 
Less: Unamortized capitalized financing fees(20.2)(22.3)
Total long-term debt$1,752.3 $1,750.2 
Amortization of capitalized financing fees is included within “Interest expense” in the Company’s unaudited Condensed Consolidated Statements of Operations. Amortization expense for capitalized financing fees was $2.1 million for the three months ended March 31, 2024 and 2023.
Future principal payments
As of March 31, 2024, future principal payments associated with the Company’s long-term debt were as follows:
2024$ 
2025690.0 
2026450.0 
2027632.5 
Total$1,772.5 
Revolving Credit Facility
As of March 31, 2024, there were no borrowings on the Revolving Credit Facility and borrowing capacity was $100.0 million.
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.
As of March 31, 2024 and December 31, 2023, the Company was in compliance with all financial covenants under its debt agreements. The Company expects to be in compliance with such financial covenants for at least 12 months following the issuance of these unaudited condensed consolidated financial statements.

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12.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 prices 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.

Acquisition-Related Contingent Consideration
The Company’s acquisitions often include contingent consideration, or earnout, provisions. The total fair value of contingent consideration related to the acquisitions of Finaro, Online Payments Group, and Restaurant Technology Partners as of March 31, 2024 was $34.2 million, of which $32.2 million is included in “Accrued expenses and other current liabilities” and $2.0 million is included within “Other noncurrent liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. The change in fair value of these liabilities is included in “Revaluation of contingent liabilities” on the Company’s unaudited Condensed Consolidated Statements of Operations. Each of these fair value measurements utilize Level 3 inputs, such as projected revenues, discount rates and other subjective inputs.

Online Payments Group
The Company entered into an earnout agreement with the former shareholders of Online Payments Group, not to exceed $60.0 million, with $30.0 million of the earnout payable as of September 2023 (“Tranche 1”) 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 payable as of September 2024 (“Tranche 2”) 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 is 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. Tranche 1 was fully earned and paid in 2023. The fair value of Tranche 2 as of March 31, 2024 was estimated to be $27.8 million and is included in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets as of March 31, 2024.

Restaurant Technology Partners
The Company entered into earnout agreements with certain former shareholders of the restaurant technology partners acquired in 2022, 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 is 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 March 31, 2024, the fair value of the earnouts was $2.0 million, which is recognized in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets.

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The Company also entered into an earnout agreement with certain former shareholders of the restaurant technology partner acquired in 2023, calculated as a multiple of the number of the restaurant technology partner’s merchants that are converted to the Company’s end-to-end payments platform during the 24 months following September 1, 2022, not to exceed $2.5 million in total. The earnout is expected to be paid 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 March 31, 2024, the fair value of the earnout was $0.4 million, which is recognized in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets.
Asset-Related Contingent Consideration
As of March 31, 2024, the estimated fair value of the Company’s contingent consideration agreements entered into in conjunction with residual commission buyouts and the acquisition of other intangible assets was $1.4 million, which is included in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. The fair values of the contingent consideration were estimated based on the projected attrition rates and other financial metrics within the respective merchant portfolios over the earnout periods.
The table below provides a reconciliation of the beginning and ending balances for the Level 3 contingent liabilities:
Three Months Ended March 31, 2024
Contingent Liabilities for AcquisitionsContingent Liabilities for Assets AcquiredTotal Contingent Liabilities
Balance at beginning of period$32.2 $1.4 $33.6 
Fair value adjustments2.1 0.4 2.5 
Impact of foreign exchange(0.1) (0.1)
Contingent liabilities that achieved earnout
 (0.4)(0.4)
Balance at end of period$34.2 $1.4 $35.6 
Fair value adjustments for contingent liabilities for acquisitions 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 three months ended March 31, 2024.
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:
March 31, 2024December 31, 2023
Carrying
Value (a)
Fair
Value
Carrying
Value (a)
Fair
Value
2025 Convertible Notes$684.5 $741.4 $683.6 $766.5 
2027 Convertible Notes624.1 586.4 623.5 593.2 
2026 Senior Notes444.2 434.5 443.7 438.2 
Total$1,752.8 $1,762.3 $1,750.8 $1,797.9 
(a) Carrying value excludes unamortized debt issuance costs related to the Revolving Credit Facility of $0.5 million and $0.6 million as of March 31, 2024 and December 31, 2023, respectively.
The estimated fair value of the Company’s investments in non-marketable equity securities was $73.1 million and $62.2 million as of March 31, 2024 and December 31, 2023, respectively. These non-marketable equity investments have no readily determinable fair values and are measured using the measurement alternative, which is defined as cost, less impairment, adjusted for observable price changes from orderly transactions for identical or similar investments of the same issuer. Adjustments for these investments, if any, are recorded in “Unrealized gain on investments in securities” on the Company’s unaudited Condensed Consolidated Statements of Operations. The Company recognized fair value adjustments to its non-marketable equity investments of $11.0 million for the three months ended March 31, 2024 the entire amount of which related to securities still held as of March 31, 2024, based primarily on secondary offerings of identical securities by the respective companies in 2024. The Company has recognized cumulative fair value adjustments to its non-marketable equity investments of $38.3 million.

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The estimated fair value of the Company’s crypto settlement assets and crypto settlement liabilities was $6.4 million and $3.5 million as of March 31, 2024 and December 31, 2023, respectively. The Company has valued the assets and liabilities using quoted prices from active cryptocurrency exchanges for the underlying crypto assets, considered Level 2 inputs.
Other financial instruments not measured at fair value on the Company’s unaudited Condensed Consolidated Balance Sheets at March 31, 2024 and December 31, 2023 include cash and cash equivalents, restricted cash, settlement assets, accounts receivable, prepaid expenses and other current assets, collateral held by the card networks, other noncurrent assets, settlement liabilities, accounts payable, accrued expenses and other current liabilities, bank deposits, 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.
13.Income Taxes
The Company holds an economic interest in Shift4 Payments, LLC and consolidates its financial position and results. The remaining ownership of Shift4 Payments, LLC not held by the Company is considered a noncontrolling interest. Shift4 Payments, LLC is treated as a partnership for income tax reporting and its members, including the Company, are liable for federal, state, and local income taxes based on their share of the LLC’s taxable income. In addition, Shift4 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’s effective tax rate was 5% and (21)% for the three months ended March 31, 2024 and 2023, respectively. The effective tax rate for the three months ended March 31, 2024 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 lower foreign rate differential in overseas jurisdictions compared to the U.S. federal statutory income tax rate. The effective tax rate for the three months ended March 31, 2023 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 allowance on Shift4 Payments, Inc. and certain corporate subsidiaries, and a $4.8 million tax benefit related to the valuation allowance release due to a legal entity restructuring.
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 valuation allowance against the majority of deferred tax assets as of March 31, 2024, and December 31, 2023. The Company intends to continue maintaining a valuation allowance on the deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given the current earnings and anticipated future earnings, the Company believes there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow the Company to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and an increase to income tax benefit for the period the release is recorded. The exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that is able to be achieved.
Uncertain Tax Positions
The effects of uncertain tax positions are recognized in the Company’s unaudited 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 benefit (expense)” in the Company’s unaudited Condensed Consolidated Statements of Operations. Accrued interest and penalties, if any, are included within “Deferred tax liability” in the Company’s unaudited Condensed Consolidated Balance Sheets. As of March 31, 2024 and December 31, 2023, $4.4 million and $4.7 million, respectively, of uncertain tax positions were recognized within “Other noncurrent liabilities” in the Company’s unaudited Condensed Consolidated Balance Sheets, which were primarily recognized in conjunction with acquisitions.

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Tax Receivable Agreement
The Company expects to obtain an increase in its share of the tax basis in the net assets of Shift4 Payments, LLC as LLC Interests are redeemed from or exchanged by the Continuing Equity Owners, 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 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.
As of March 31, 2024 and December 31, 2023, the Company recognized a TRA liability of $6.3 million and $5.1 million, respectively, after concluding it was probable that, based on estimates of future taxable income, the Company will realize tax benefits associated with the TRA. As of March 31, 2024, $1.8 million of the liability is recognized in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets and $4.5 million of the liability is recognized in “Other noncurrent liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. As of March 31, 2024, the Company has not recognized the remaining $272.2 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 months ended March 31, 2024 and 2023. The estimation of liability under the TRA 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.
If Rook were to exchange any of its LLC Interests subsequent to March 31, 2024, such exchanges could generate additional deferred tax assets and TRA liability. As of December 31, 2023, the estimated impact of the exchange of all of Rook’s LLC Interests was an additional deferred tax asset of approximately $545 million and a TRA liability of approximately $463 million. The actual amounts as of March 31, 2024 could differ materially from those disclosed as of December 31, 2023 as they are impacted by the timing of the exchanges, the valuation of corporate subsidiaries, the price of the Company’s shares of Class A common stock at the time of the exchange, and the tax rates then in effect.
Organisation for Economic Co-operation and Development (“OECD”) - Pillar Two
In December 2021, the Organisation for Economic Co-operation and Development issued model rules for a new global minimum tax framework (“Pillar Two”), and various governments around the world have passed, or are in the process of passing, legislation on this. Certain Pillar Two rules take effect in 2024 and 2025, depending on whether a particular jurisdiction has integrated the legislation into local law. The Company is continuing to monitor these impacts on its operating footprint and anticipates an immaterial increase in income tax expense associated with jurisdictions that have implemented an income inclusion rule or a Qualifying Minimum Top-up Tax (“QDMTT”). The Company is continuing to monitor and assess the impacts of rules set to take effect in 2025, such as the under-taxed profits rule. The impacts of Pillar Two to the Company are subject to change based on expansion and future acquisitions within jurisdictions that the Company does not currently operate.
14.Lease Agreements
The Company provides hardware, including terminals and point-of-sale equipment, to its merchants under operating leases as the lessor. 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 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 months ended March 31, 2024 and 2023 was $5.4 million and $5.3 million, respectively.
The Company expects to receive future minimum lease payments for hardware provided under the Company’s SaaS agreements of $13.4 million from April 1, 2024 through March 31, 2025.

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15.Related Party Transactions
The Company has a service agreement with Jared Isaacman, the Company’s Chief Executive Officer and founder (“Founder”), including 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 for the three months ended March 31, 2024 and 2023. There were no amounts outstanding at March 31, 2024 or December 31, 2023. In addition, during the three months ended March 31, 2024, the Company made $0.3 million of distributions related to income taxes paid on behalf of Rook, which are included in “Distributions to noncontrolling interests” in the Company’s unaudited Condensed Consolidated Statements of Cash Flows.
In November 2021, the Company implemented a one-time discretionary equity award program for non-management employees. The Founder agreed to fund 50% of this program through a contribution of shares of his Class C common stock. As of March 31, 2024, the expected contribution from the Founder totaled 629,620 shares of his Class C common stock. The one-time discretionary equity award program will vest in three equal installments annually beginning in 2024. Vesting of the awards is subject to the continued employment of non-management employees.
Rook has entered into margin loan agreements, pursuant to which, in addition to other collateral, it has pledged LLC Interests and shares of the Company’s Class A and Class B common stock (collectively, “Rook Units”) to secure a margin loan. If Rook were to default on its obligations under the margin loan and fail to cure such default, the lender would have the right to exchange and sell up to 15,000,000 Rook units to satisfy Rook’s obligation.
In September 2021, the Founder, through a wholly-owned special purpose vehicle (“SPV”), entered into two variable prepaid forward contracts (“VPF Contracts”) with an unaffiliated dealer (“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 the Company’s Class B common stock and associated LLC Interests pledged by Rook 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 common stock and LLC Interests for an equal number of the Company’s Class A common stock, and sell such Class A common stock to satisfy Rook’s obligation.
16.Commitments and 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.
On August 18, 2023, a shareholder filed a putative securities class action against the Company and certain of its current and former executive officers in the U.S. District Court for the Eastern District of Pennsylvania, captioned O’Meara v. Shift4 Payments, Inc., et al., Case No. 5:23-cv-03206-JFL (the “O’Meara Action”). Plaintiff O’Meara seeks to represent purchasers of the Company’s securities between November 10, 2021 and April 18, 2023. On October 13, 2023, another shareholder represented by the same law firm as O’Meara filed a similar complaint against the same defendants in the same court, captioned Baer v. Shift4 Payments, Inc., et al., Case No. 5:23-cv-03969-JFL (the “Baer Action”). Plaintiff Baer seeks to represent purchasers of the Company’s securities between June 5, 2020, and April 18, 2023. Both complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, based on allegedly false and misleading statements about the Company’s business, operations, and compliance policies, and both seek unspecified damages. On October 19, 2023, Plaintiff Baer filed a motion to consolidate the O’Meara Action and the Baer Action and appoint Baer as lead plaintiff. Once a lead plaintiff is appointed, a consolidated amended complaint will be filed, which the Company expects to move to dismiss on behalf of all defendants.

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On November 3, 2023, the court consolidated the O’Meara and Baer Actions and appointed Plaintiff Baer as the lead plaintiff in the consolidated action. Lead Plaintiff Baer and Plaintiff O’Meara filed an amended complaint on January 5, 2024, purportedly brought on behalf of purchasers of the Company’s securities between June 5, 2020 and April 18, 2023, and alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, based on allegedly false and misleading statements about the Company’s business, operations, and compliance policies. The Company moved to dismiss the consolidated amended complaint on February 19, 2024. A hearing is not yet scheduled on the Company’s motion to dismiss.
The Company disputes the allegations in the above-referenced matters, intends to defend the matters vigorously, and believes that the claims are without merit. Certain legal and regulatory proceedings, such as the above-referenced matters, may be based on complex claims involving substantial uncertainties and unascertainable damages. Accordingly, it is not possible to determine the probability of loss or estimate damages for any of the above matters, and therefore, the Company has not established reserves for any of these proceedings. When the Company determines that a loss is both probable and reasonably estimable, the Company records a liability, and, if the liability is material, discloses the amount of the liability reserved. Given that such proceedings are subject to uncertainty, there can be no assurance that such legal proceedings, either individually or in the aggregate, will not have a material adverse effect on our business, results of operations, financial condition or cash flows.
The Company is currently not aware of any legal proceedings or claims other than those described above that the Company believes could have a material adverse effect on its business, financial condition or operating results.
17.Stockholders’ Equity
Stock Repurchases
December 2023 Program
In December 2023, the Company’s Board of Directors (the “Board”) authorized a stock repurchase program (the “December 2023 Program”), pursuant to which the Company is authorized to repurchase up to $250.0 million shares of its Class A common stock through December 31, 2024. As of March 31, 2024, $250.0 million remains available under the December 2023 Program.
Repurchases under the December 2023 Program 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 December 2023 Program.
The December 2023 Program does not obligate the Company to acquire any particular amount of common stock. The December 2023 Program may be extended, modified, suspended or discontinued at any time at the Company’s discretion.
18.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 Rook. The following table summarizes the ownership of LLC Interests in Shift4 Payments, LLC:
March 31, 2024December 31, 2023
LLC Interests
Ownership %
LLC Interests
Ownership %
Shift4 Payments, Inc. (a)66,243,445 73.5 %66,100,484 73.5 %
Rook23,831,883 26.5 %23,831,883 26.5 %
Total90,075,328 100.0 %89,932,367 100.0 %
(a) March 31, 2024 and December 31, 2023 included 3.7 million shares related to the acquisition of Finaro that had been committed but not issued. These shares will be issued over the course of 2024, in accordance with the terms of the acquisition.
Rook has the right to require the Company to redeem their LLC Interests for, at the option of the Company, determined solely by the Company’s independent directors, newly-issued shares of Class A common stock on a one-for-one basis or a cash payment equal to a volume weighted average market price of one share of Class A common stock for each LLC Interest redeemed. In connection with the exercise of the redemption or exchange of LLC Interests, (1) Rook will be required to surrender a number of shares of Class B common stock, which the Company will cancel for no consideration on a one-for-one basis with the number of LLC Interests so redeemed or exchanged and (2) Rook will surrender LLC Interests to Shift4 Payments, LLC for cancellation.

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19.Equity-based Compensation
The Company recognized equity-based compensation expense of $22.8 million and $20.9 million for the three months ended March 31, 2024 and 2023, respectively.
2020 Incentive Award Plan
The Company’s 2020 Incentive Award Plan, as amended and restated in June 2022 (the “Restated Equity Plan”), provides for the grant of restricted stock units (“RSUs”), performance restricted stock units (“PRSUs”), stock options, restricted stock dividend equivalents, stock payments, stock appreciation rights, and other stock or cash awards. The number of shares available for issuance is subject to an annual increase on the first day of each year beginning in 2023 and ending in and including 2032, equal to the lesser of (1) 2% 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.
As of March 31, 2024, a maximum of 1,682,246 shares of the Company’s Class A common stock were available for issuance under the Restated Equity Plan.
RSUs and PRSUs
RSUs and PRSUs represent the right to receive shares of the Company’s Class A common stock at a specified date in the future.
The RSU and PRSU activity for the three months ended March 31, 2024 was as follows:
Three Months Ended March 31, 2024
Number of
RSUs and PRSUs
Weighted Average
Grant Date
Fair Value
Unvested balance at December 31, 20232,345,210 $57.35 
Granted1,019,972 66.64 
Vested(256,380)70.50 
Forfeited or cancelled(69,700)59.37 
Unvested balance at March 31, 20243,039,102 $59.20 
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.
As of March 31, 2024, the Company had $136.2 million of total unrecognized equity-based compensation expense related to outstanding RSUs and PRSUs, which is expected to be recognized over a weighted-average period of 2.60 years.

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20.Basic and Diluted Net Income per Share
Basic net income per share has been computed by dividing net income 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 per share has been computed in a manner consistent with that of basic net income 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 per share under the two-class method.
Three Months Ended March 31,
20242023
Net income$28.5 $20.4 
Less: Net income attributable to noncontrolling interests7.9 5.6 
Net income attributable to Shift4 Payments, Inc. and common stockholders $20.6 $14.8 
Numerator - allocation of net income attributable to common stockholders:
Net income allocated to Class A common stock - basic$20.1 $14.2 
Reallocation of net income attributable to common stockholders due to effect of dilutive securities0.1 5.7 
Net income allocated to Class A common stock - diluted$20.2 $19.9 
Net income allocated to Class C common stock - basic$0.5 $0.6 
Reallocation of net income attributable to common stockholders due to effect of dilutive securities (0.1)
Net income allocated to Class C common stock - diluted$0.5 $0.5 
Denominator:
Weighted average shares of Class A common stock outstanding - basic (a)64,444,479 55,236,204 
Effect of dilutive securities:
LLC Interests 25,533,462 
RSUs1,517,750 1,469,038 
Weighted average shares of Class A common stock outstanding - diluted65,962,229 82,238,704 
Weighted average shares of Class C common stock outstanding - basic and diluted1,694,915 2,241,648 
Net income per share - Basic:
Class A common stock$0.31 $0.26 
Class C common stock$0.31 $0.26 
Net income per share - Diluted:
Class A Common Stock$0.31 $0.24 
Class C Common Stock$0.31 $0.24 
(a) For the three months ended March 31, 2024 and 2023, included 3,733,306 and 162,917 shares that had been committed but not issued as of March 31, 2024 and 2023, respectively. Committed but not issued shares as of March 31, 2024 primarily relate to the acquisition of Finaro.
The following were excluded from the calculation of diluted net income per share as the effect would be anti-dilutive:
Three Months Ended March 31,
20242023
LLC Interests that convert into potential Class A common shares23,831,883  
RSUs 6,908 
Total23,831,883 6,908 
Diluted EPS was computed using the treasury stock method for RSUs and the if-converted method for convertible instruments.

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For the three months ended March 31, 2024, 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 less than the conversion price, per the terms of each respective agreement, and
shares of the Company’s Class A common stock to be issued in connection with Tranche 2 of the earnout due to the former shareholders of Online Payments Group and the earnout due to the fo