Shift4 Payments (NYSE:FOUR) reported third-quarter results in line with its guidance, but adopted a more cautious outlook for the fourth quarter as travel disruptions, a stronger U.S. dollar and softer restaurant sales weighed on its business.
The payments company reaffirmed its full-year adjusted free cash flow forecast while updating its outlook for other financial measures. Management also offered an initial 2027 growth framework and announced a new $1 billion share repurchase authorization.
“We are approaching this quarter with more deliberate cautiousness than earlier in the year,” Chief Financial Officer Christopher Cruz said, citing geopolitical, macroeconomic and market risks.
Payments Growth Offsets Softer Subscription Revenue
Third-quarter gross revenue rose 12% from a year earlier to $1.3 billion. Gross revenue less network fees, or GRLNF, increased 10% to $648 million, including 9% organic growth on a constant-currency basis.
Adjusted EBITDA rose 6% to $310 million, representing a 48% margin. Adjusted free cash flow reached a quarterly record of $200 million, up 42%, although Cruz said the figure included an approximately $20 million working-capital timing benefit from the fourth quarter.
Payments volume increased 11% to $61 billion. Payments-based revenue less network fees rose 18% to $402 million, or 14% organically. That included 13% growth in the Americas and 31% growth in the worldwide region.
Subscription and other revenue fell 10% to $107 million. Cruz said Shift4 was deliberately offering incentives and retiring some legacy acquired revenue to support payments cross-selling and increase customer lifetime value. Tax-Free Shopping revenue rose 7% to $139 million despite travel disruption, which he said created a $25 million headwind in the quarter.
CEO Taylor Lauber said restaurant same-store sales softened modestly relative to other verticals, particularly toward the end of the quarter. Cruz added that some weeks in the first month of the fourth quarter had shown negative restaurant same-store sales comparisons.
Outlook Reflects Travel and Currency Pressures
For the fourth quarter, Shift4 forecast GRLNF of $625 million to $640 million, adjusted EBITDA of $285 million to $300 million and adjusted free cash flow of $155 million to $165 million.
Cruz attributed $20 million to $25 million of the variance at the midpoint of the GRLNF guidance to projected travel disruption, which had not been included in the prior outlook. A stronger U.S. dollar accounted for approximately $6 million, he said.
Another $25 million to $30 million reflected the company’s strategy of exchanging non-core revenue for payments-based revenue and its decision to defer planned commercial initiatives for European merchants facing travel disruption. Cruz said the effect would be most pronounced in subscription and other revenue.
For the full year, Shift4 projected GRLNF of $2.45 billion to $2.46 billion and adjusted EBITDA of $1.11 billion to $1.13 billion. It maintained its adjusted free cash flow forecast of $465 million to $475 million. The company expects an adjusted EBITDA margin of 45% to 46%, compared with its original range of 46% to 47%.
Looking ahead to 2027, Cruz described mid- to high-single-digit organic GRLNF growth as a reasonable framework, while emphasizing that formal guidance would come with fourth-quarter results. He said the company viewed several fourth-quarter pressures as isolated and cautioned against annualizing the quarter’s implied growth rate.
International Expansion and Global Blue
Lauber said Shift4One, which combines payments, dynamic currency conversion and Tax-Free Shopping on one device, was live in 15 countries ahead of the company’s operational schedule. Worldwide payments-based revenue was up 44% year to date.
The company expects to exit 2026 with nearly $50 million in annualized Global Blue synergies. Cruz said the figure includes both revenue and cost synergies, with approximately two-thirds from the top line. Lauber said the business added luxury group Kering to Global Blue Tax-Free Shopping and completed an accelerated rollout during the third quarter.
Lauber also discussed Japan’s shift to a refund-based Tax-Free Shopping process, which he said took effect Nov. 1. He said the change introduces friction for consumers and that it was too early to predict the near-term impact, though Shift4 had expanded staffing and expected an opportunity to increase market share over time.
Buybacks and Capital Allocation
Shift4 repurchased approximately 4.2 million Class A shares for $190 million during the third quarter and spent another $10 million repurchasing mandatory convertible preferred shares. It had $175 million remaining under its existing $1 billion authorization, and its board approved a new $1 billion program beginning Jan. 1, 2027.
Lauber said the company had repurchased roughly 16% of shares outstanding over the past year. He said the share price did not reflect Shift4’s underlying performance and noted that the founder and employees together owned more than 40% of its equity.
Pro forma net leverage stood at 3.7 times at quarter-end. Cruz said the company expects to end the year at approximately 3.6 times, including the estimated capital needed to close its pending Paramount Commerce acquisition but excluding any additional fourth-quarter repurchases. Lauber said Shift4 expects to close the deal in the coming weeks, subject to regulatory review.
About Shift4 Payments (NYSE:FOUR)
Shift4 Payments, Inc (NYSE: FOUR) is a payment technology company that provides integrated commerce solutions for businesses and organizations. Its platform supports payment acceptance across in-person, online and mobile channels, combining payment processing with point-of-sale, commerce management and reporting tools.
The company serves merchants and enterprises in industries including restaurants, hospitality, hotels, sports and entertainment venues, gaming, retail and e-commerce. Its offerings include payment gateways, point-of-sale systems, mobile and contactless payment capabilities, fraud prevention, chargeback management and business analytics.
