Shift4: Dazed and Confused

Shares of Shift4 (FOUR) fell 23% in the two days following its Q2 report as better-than-expected results were more than offset by disappointing H2 guidance, which was reduced on both the top and bottom-lines due to the ongoing Middle East conflict and related anticipated travel impacts to Global Blue, a less favorable FX outlook, and the impact of FOUR’s recent debt raise. Additionally, after discussing potential bolt-on M&A as part of its capital allocation framework on the conference call (conducted August 6), FOUR disclosed in its 10-Q filed later in the day that on August 5 (the day before) it had indeed signed an agreement to make an acquisition for up to $316MM (an initial payment of $143MM plus multi-year earnouts of up to $173MM) for an A2A payments company. I think there’s a couple of problems with this: first, I believe the market has minimal appetite for M&A from FOUR currently given that the balance sheet is stretched to the point where it precluded FOUR from buying back a significant amount of shares at highly attractive prices during Q2 (FOUR repurchased only 652,000 shares at $38.32 during June, which was its only activity in the quarter); and second, given the first part, failing to disclose the acquisition on the conference call seems inexplicable. If it’s going in the 10-Q, certainly you can speak to it in general terms during the conference call. Further, while my understanding is that the acquisition is not included in forward GRLNF and adjusted EBITDA guidance, FOUR stated on the call they expect to reach the low-3s on a net leverage basis by the end of the year. Is the pending acquisition contemplated in that guidance?

After taking a few days to go through Q2 results and guidance, there are still things that aren’t perfectly clear to me (which I’ll touch on later), but underlying growth expectations for H2 look relatively solid at around 10%. As far as why the big decline in the share price? I’m guessing it’s a combination of many things, including optics around a guidance ‘cut’ (although other payment companies made similar changes to revenue guidance with only modest share price impact), heightened expectations for a sizable World Cup benefit that simply did not materialize, the possibility of an additional cut to Q4 numbers if the Middle East conflict persists (for now, only a Q3 impact is included), underwhelming share repurchase activity during Q2, and the ‘mishandled’ M&A disclosure. As a shareholder, I am of course disappointed with how FOUR’s stock has performed, especially since there have been some unforced errors regarding things under the company’s control, like disclosure, in my opinion. At the end of the day, this is a business with lots of moving parts. Global Blue by itself seems overly complicated. Some investors, like myself, are willing to dig in and do the work, but I do not have the utmost confidence in my conclusions based on the complexity of the business. It is no surprise others may simply throw up their hands and walk away. I don’t blame them. For me, I’m still contemplating. While I won’t make an emotional decision and ‘sell at the bottom’, I also don’t have the appetite to babysit this stock indefinitely.

The purpose of this update is to go through my math on the company’s organic GRLNF calculation and what Shift4’s guidance implies for H2. While there are other aspects to the company’s guidance, my main concern is organic GRLNF growth, because I believe it is the most important metric the company reports.

There are four transactions influencing the comparability of Shift4’s financial results. First, and most significantly, is the Global Blue acquisition, which closed July 3, 2025. The second and third are the acquisitions of Smartpay and Bambora, which closed November 4, 2025, and March 2, 2026, respectively. Finally, Shift4 divested a business during Q4 2025, resulting in proceeds of $24MM recognized on its 2025 statement of cash flows. Beginning in 2026, Shift4 has included a reconciliation of total and organic GRLNF at the end of its shareholder letter. I do not believe the impact of FX is contemplated in this calculation of organic GRLNF growth. Later, I will attempt to account for the impact of FX.

Without further ado, here is my math:

My key assumptions are as follows:

• In 2025, Global Blue’s pro-forma revenue was $626MM (10-K). Based on a disclosure in the shareholder letter, network and pass-through fees represented approximately 8% of Global Blue revenue during Q3 2025. Assuming network and pass-through fees accounted for a similar percentage of Global Blue revenue across the year implies about $574MM of Global Blue GRLNF in 2025.

• For Global Blue TFS, my Q1 2025 estimate of $98MM is based on the $102MM reported in Q1 2026 and the 4% pro-forma growth rate disclosed by FOUR. Using similar logic, my Q2 2025 estimate is $108MM based on pro-forma growth of 8% to $117MM during Q2 2026. The Other portion of Global Blue revenue represents acquiring, dynamic currency conversion (DCC), and post-purchase solutions (PPS) and is included in Payments and Subscription and Other revenue categories for FOUR. In Q3 2025, FOUR reported $26.5MM of Other revenue for Global Blue. My estimates for Global Blue’s Other revenue over the rest of 2025 builds up to $574MM of GRLNF inclusive of my TFS estimates.

• In Q3 2025, total Global Blue GRLNF was $159MM inclusive of about $3MM generated overt the 2-3 days that FOUR did not own it (from July 1-3).

• In its first quarter of full contribution, Q2 2026, I estimate Smartpay and Bambora contributed $28MM of GRLNF. For the remainder of 2026, I assume these businesses follow a similar seasonal pattern to a typical payments business.

• For the Middle East headwind, I assume a $5MM impact in Q1 (FOUR disclosed a $4-6MM range), a $15MM impact during Q2 (slightly below the $20MM guided impact), and a $25MM impact in Q3.

• Finally, my focus is on the performance of pro-forma Global Blue plus Legacy Shift4 GRLNF.

My key takeaways are as follows:

• Adjusting for the $15MM Middle East impact during Q2, organic GRLNF growth was quite strong at 12.6%. Global Blue’s Q2 2026 GRLNF of $145MM increased 7% despite the $15MM headwind. Excluding it results in mid-to-high teens underlying Global Blue GRLNF growth, a notable step-up from MSD growth in Q1. FOUR noted strong U.S. to Europe travel, strong performance in Asia, and better-than-expected same-store sales trends for both restaurants and lodging as contributors to Q2 outperformance.

• Q3 and Q4 guidance implies underlying GRLNF growth of about 10%, a modest stepdown from Q2. While some may read ‘deceleration’ into the H2 guide versus Q2, it’s possible conservatism and incremental FX headwinds are the primary contributing factors. Finally, one shouldn’t ‘miss the forest for the trees’ and recognize double-digit organic revenue growth is commendable, especially given FOUR’s discounted valuation.

• Finally, if we look at the midpoint of FOUR’s original GRLNF guide of $2.550B, the $45MM decline to the current midpoint ($2.505B) includes a $45MM Middle East headwind and a $20MM FX headwind, suggesting underlying performance has been $20MM better-than-expected through H1.

The final piece of the puzzle for FOUR is FX, which may be the most open to interpretation. According to FOUR, prior guidance for reported GRLNF growth of 26-31% (28.5% at midpoint) included 24-29% (26.5% at midpoint) FXN growth, implying a 2-point tailwind from FX, or $40MM based on $1,981MM of GRLNF in 2025. Now, reported GRLNF is expected to grow 25-28% (26.5% at midpoint) with 24-27% (25.5%) FXN growth, implying a 1-point FX tailwind, or $20MM. To the best of my knowledge, FOUR did not disclose an FXN growth range for guidance prior to Q2. It also said on multiple occasions that the financial translation benefit from a weakening U.S. dollar creates a greater headwind to TFS demand. So, presumably the recent strengthening of the U.S. dollar, which hurts translation and creates a $20MM GRLNF headwind in H2, is going to help TFS demand, which is not necessarily accounted for in guidance? Admittedly, confusing.

In thinking about how to incorporate an FX impact into my calculations above, I believe the best way is to look at the EUR-to-USD exchange rate, which I believe is the most important currency pair for FOUR. Here is how it plays out from 2025 to 2026, assuming the most recent 1.156 exchange rate holds for the remainder of 2026:

As the table shows, the Q1 translation benefit was significant, followed by a slight tailwind during Q2, and what looks to be a largely neutral impact in Q3 and Q4. The current 1.156 EUR-to-USD exchange rate compares to about 1.175 at the time of the Q1 20206 report (May 7). Doing a simple calculation and assuming 75% of the $20MM tailwind was recognized in Q1, followed by $5MM in Q2, and no impact in H2, yields the following:

Here, we find the ramp from Q1 to Q2 even more meaningful (5-points vs. 3-points) and H2 implies a slightly lower FXN slowdown (1.5-points vs. 2.5-points).

Conclusion. Despite the moving parts of FOUR’s business, underlying GRLNF growth appears to be guided toward 10% during H2, largely in-line with H1. Skeptics can point to the inconsistency over gauging the FX impact, and, to me, that’s entirely fair.

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Disclosure: As of August 9, 2026, of the stocks mentioned in this report and across payments and fintech, I am long Visa, Global Payments, Intuit, Block, Adyen, Shift4 Payments, Paychex, Mastercard, and Broadridge Financial. This report is for informational purposes only and is not a recommendation to buy or sell any stock. Finally, while I rely on the information in this report to guide my investment decisions, you should not, because I cannot guarantee its accuracy.