Greetings and welcome to the Shift4 Second Quarter 2025 Earnings Conference Call. Please be aware that this call is being recorded. I will now hand it over to Thomas McCrohan, EVP, Investor Relations. Thank you, and you may begin.

Thank you, operator, and good morning, everyone, and welcome to Shift4's Second Quarter 2025 Earnings Conference Call. With me on the call today are Taylor Lauber, our CEO; and Nancy Disman, our Chief Financial Officer. This call is being webcast on the Investor Relations section of our website, which can be found at investors.shift4.com. Today's call is also being simulcast on X Spaces, formerly known as Twitter, which can be accessed through our corporate Twitter account at Shift4. Our quarterly shareholder letter, quarterly financial results and other materials related to our quarterly results have all been posted to our IR website. Our call and earnings materials today include forward-looking statements. These statements are not guarantees of future performance, and our actual results could differ materially as a result of certain risks, uncertainties, and many important factors. Additional information concerning those factors is available in our most recent reports on Forms 10-K and 10-Q, which you can find on the SEC's website and the Investor Relations section of our corporate website. For any non-GAAP financial information discussed on this call, the related GAAP measures and reconciliations are available in today's quarterly shareholder letter. With that, let me turn the call over to Taylor.

Good morning, everyone. Thanks for joining the call. While I will hit our strong Q2 financial performance in a minute, these past few months are illustrative of so much more than that. The Shift4 team has accomplished more since our last earnings call than we have in entire years prior. More importantly, they've done it well and without compromising the day to day. I'm truly humbled to get to call myself their colleague. Just to name a few of our accomplishments and wins this quarter, we successfully diversified our capital structure with a $3.3 billion capital raise in May, which provided both the funding for Global Blue and also retire near-term debt maturities. We are beginning to hit our stride in several European markets where we can now sell a broad suite of products, be that restaurants, hotels, sports and entertainment, unified commerce, etc. We streamlined our onboarding systems, allowing us to board over 1,000 new merchants per month in Europe alone. And again, this is just the beginning. We signed a pending acquisition of Smartpay, which essentially lets us capitalize on our leading products in restaurants, hotels, sports, and entertainment, by adding an incredible distribution network. Those who have followed previous acquisitions like Vectron know this playbook well. In Canada, we continue to expand our presence and win in the verticals we serve best. We are powering payments at the Canadian tennis open, which is currently underway in Toronto. Jared moved into the role of Executive Chairman and myself, the CEO. This allows us to continue to execute on our mission with the benefit of our founder and largest shareholder remaining focused on the needle movers. Make no mistake, this is a loss for our country and for humanity more broadly, but a win for Shift4. The Global Blue acquisition closed in early July, and we welcomed Ant International and Tencent as strategic shareholders. They each own a little less than 1% of our equity, but collaborate with our teams regularly on product capabilities in order to make payment complexity for our merchants and their consumers easier. All of this and much more was accomplished without taking our eye off the ball. Our financial results were in line with our expectations and marked by quarterly records across several of our KPIs. Some financial highlights for the quarter include 25% year-over-year growth in payment volumes to $50 billion. This is our first quarter generating over $50 billion in payment volumes. 29% year-over-year growth in gross revenue less network fees to $413 million, 26% year-over-year growth in adjusted EBITDA to $205 million and 49.6% adjusted EBITDA margins; 37% year-over-year growth in subscription and other revenues to $97.7 million, also a Q2 record and blended spreads of 62.6 basis points versus 61.5 in Q2 of 2014, ahead of our full year guidance. How is all this possible? Our algorithm is much simpler than I think many understand. We believe we are still very early in the convergence of payments and software, especially when it comes to international markets. We seek out technologies that will make us highly differentiated to merchants and give an edge in large industry verticals. When we have an idea, we build, buy or partner quickly with conviction and with an intense focus on capital efficiency. This playbook began well over 20 years ago, but has been refined constantly. And today, we are #1 in hotels, #1 in sports and entertainment, and #2 in restaurants. For emphasis, we recently won the corner collection of hotels, the Golden Gate Hotel & Casino, Blackcomb Springs, Camelback, Capital Vacations, Ponte Vedra Beach Resorts, and many more. We had a record quarter of SkyTab systems installed in restaurants, supported in small part by the European success that I mentioned earlier. We are well on track to meeting our goal of 45,000 SkyTab systems installed globally in 2025. SkyTab continues to deliver for our customers in some of the most intense environments including a futuristic diner and EV charging destination that recently opened in L.A. Our Sports and Entertainment business continues to put points on the board, adding food and beverage payments to the Cleveland Cavaliers in addition to ticket. The University of Kentucky, University of Arizona, the Glastonbury Festival, the Detroit Lions, and many more entertainment venues recently joined Shift4. Perhaps most exciting of all, SkyTab venue is coming to Madison Square Garden, home with the New York Knicks and Rangers as well as Radio City Music Hall and the Beacon Theatre, a whole suite of New York institutions. We also quietly invest in capabilities for marquee customers that we think will have relevance in the future and set us up better to win. BYD is an example of a new partner that is introducing our services to its dealerships in Latin America. Those of you at our Investor Day will recall us previewing some of these new and emerging capabilities back then. With the acquisition of Global Blue, we will accelerate our geographic expansion and dominance in these verticals. We will also gain scarce market-leading products in an entirely new vertical, which is luxury retail. I want to officially welcome the over 2,000 Global Blue colleagues located around the world to the Shift4 team. I cannot be more excited about this acquisition and the long-term implications for the combined company. Adding Global Blue's technology capabilities, the employee talent and the strong reputation with global retailers will accelerate our global expansion plans. Combined, we will offer a truly differentiated right to win within the retail vertical. It's important to note that too often you've seen other companies first enter adjacent vertical only to later determine they lack a unique go-to-market offering. As we have hopefully demonstrated time and time again, that is not our approach. We first determine our unique differentiation before entering a new vertical, which helps us underwrite our success. Global Blue is very similar to our success in stadiums. I would argue not a single person on this call would have predicted our market position today in sports and entertainment four years ago when we announced the acquisition of VenueNext back in March of ‘21. The acquisition of Global Blue is classic Shift4 just on a larger scale. We believe it is our responsibility to shareholders to continue delivering long-term value creation by executing on this algorithm even at a larger scale. Inclusive of the capital deployed to acquire Global Blue, we've invested about $5.4 billion of capital since our IPO back into the business across three major categories: customer acquisition, product investment and acquisitions. This $5.4 billion of capital has generated an associated annual EBITDA contribution of $890 million and free cash flow of $514 million. We are investing capital back into the business that returns lower current trading levels or at roughly 6.1x EBITDA multiple and a 10% free cash flow yield, which compares to our current trading levels of about 15x EBITDA and a 6% free cash flow yield. Regarding the balance of the year, integrating Global Blue remains a key priority as well as continuing our international expansion and continuing to execute. Obviously, none of this would be possible without a stable of products that merchants see value in. And so we continue to invest meaningfully in SkyTab, SkyTab Venue, and our broader payment platform. We now have over 1,200 integrations, up from about 350 just five years ago with European capabilities being a particular area of focus. Of note, I have already personally entertained productive conversations with a number of key Global Blue customers, both at the executive level and in physical stores. The early feedback from these conversations has only served to reinforce my conviction that this combination has created something unique in the fintech industry. Having witnessed our success in other verticals, it's hard to temper my enthusiasm for this new journey we're on. Since hosting our Analyst Day back in February, it's also worth reminding everyone that we are now tracking towards the most likely medium-term guidance scenario. As you recall, we provided three guidance scenarios at our Analyst Day, sit on our hands, the combination of Global Blue and most likely, with that most likely scenario calling for 30% plus gross revenue less network fee growth and 30% EBITDA growth, all with the ultimate goal of exiting at a run rate of $1 billion in free cash flow. With the acquisition of Global Blue now behind us and the recent tuck-in acquisition in Australia and New Zealand, we are clearly tracking to deliver on the most likely objectives established this past February. Before turning the call over to Nancy, I wanted to quickly provide an update on the May capital raise, given the number of 8-Ks we issued, it was likely very difficult to keep up with. In short, the roughly $3.3 billion of capital raised in May was intentionally diversified across a combination of fixed and floating rate instruments, including our first euro-denominated debt offering, to align with our growing European presence and included preferred equity in the form of a $1 billion mandatory convertible instrument. On the mandatory converts, we issued 10 million shares of mandatory convertible notes at $100 a share. In essence, holders will receive approximately 10 million shares of Class A when the notes mature in May of 2028. And because they settle in shares, these notes are treated as equity and not as debt. We also hold cash on hand for our December maturity and have already paid off our 2026 maturity, giving us lots of flexibility for the years ahead. We expect net leverage at year-end to be approximately 3.5x. Nancy will review some of the modeling related impacts to consider such as quarterly interest expense and what share count to use for the purposes of calculating non-GAAP adjusted EPS in her remarks shortly. With that, I'll turn the call over to Nancy.

Thank you, Taylor. We delivered another quarter of consistent and solid results in line with our expectations, setting new second quarter records across several of our key performance indicators. Volume grew 25% year-over-year to $50 billion. Gross revenue less network fees grew 29% to $413 million, and adjusted EBITDA grew 26% to $205 million. Our Q2 adjusted EBITDA margins were 50%. Excluding the drag from recent acquisitions, adjusted EBITDA margins would have been 53%. We expect to benefit from higher levels of operating leverage as the year progresses and we add incremental payment volumes from cross-selling and working through our existing backlog. Since Q2 2022, we have grown adjusted EBITDA over 3x and expanded margins over 1,300 basis points, all while also deploying capital on acquisitions that were highly dilutive to the margin profile of the business. Through continued execution on cross-sell synergies and deleting the parts, we've maintained best-in-class margins of 50%. We will continue to follow the Shift4 playbook, delete legacy parts and continue to expand margins and repurpose resources towards future growth. Our Q2 blended net spreads were strong at 63 basis points, and we now expect full year spreads to be stronger than the 60 basis points we previously communicated, given in part to our international success. Spreads remain stable across our core business of restaurants, hospitality, and specialty retail. Subscription and other revenue was $98 million in Q2, up 37% compared to the same period last year. The growth was once again driven by our success across SMB, SkyTab, and further penetration of the sports and entertainment vertical as well as contribution from recently completed acquisitions. Ongoing depreciation of legacy revenue from recent acquisitions will continue to influence year-over-year growth rates for the remainder of the year. Q2 organic gross revenue less network fee growth was in line with our expectations and we are on track for 20% plus organic revenue growth for the full year. Our adjusted free cash flow in the quarter was $118 million, representing 57% adjusted free cash flow conversion. Included in the $118 million is $9 million in prepaid interest we received in May from the recent issuance of 2032 notes, which will be included in the August semiannual interest payment. This affects both Q2 and Q3 adjusted free cash flow but nets to 0 on a full year basis. We remain on track to deliver 50% plus free cash flow conversion for the full year. GAAP net income for the second quarter was $41 million and GAAP diluted EPS was $0.32 per share. Non-GAAP adjusted net income for the quarter was $109 million or $1.10 per share on a fully diluted basis. Of note, our non-GAAP share count now contains an additional 10 million shares related to the mandatory convertible preferred issued in the quarter, bringing our total share count for the quarter to 99.3 million shares. We had our most active quarter of financing activity since the IPO. In May, we raised $3.3 billion of total capital to fund the acquisition of Global Blue and to repurchase the outstanding 4.625% senior notes due in November 2026. The $3.3 billion raise consisted of the following: $1.3 billion of senior notes, which was a combination of USD and euro-denominated notes, $1 billion of mandatory convertible preferred stock, and $1 billion of floating rate Term Loan B, which closed on July 3 in conjunction with the Global Blue transaction. For adjusted free cash flow modeling purposes, you should now expect approximately $75 million of cash interest payments on debt in Q1 and Q3 and $40 million in Q2 and in Q4. Additionally, we upsized the capacity of our revolving credit facility from $450 million to $550 million. During the second quarter, we opportunistically repurchased $85 million of common stock at an average of $74 per share. And as a reminder, the 2025 converts principal will be redeemed in Q4 with $690 million of cash on hand with any premium to be settled with common stock. We are well positioned to fuel our future growth. And as previously discussed at our Investor Day, we expect net leverage at year-end to be less than 3.5x. As indicated by our recent capital raise, which, as Taylor mentioned, was diversified across a combination of debt and equity instruments. We continue to prioritize maintaining low leverage to ensure financial stability and flexibility. At the same time, we remain opportunistic in pursuing strategic M&A that aligns with our growth objectives and delivers long-term value. Now turning to guidance. We are updating 2025 financial guidance to include the contributions from Global Blue and introducing Q3 guidance. I want to step through the highlights of the guidance bridge as it pertains to our outlook for the rest of the year. First, we continue to expect organic gross revenue less network fees for the full year to grow north of 20%. We are modestly raising our gross revenue less network fee guidance by $5 million to a range of $1.665 billion to $1.735 billion, representing 23% to 28% growth before considering the impact of Global Blue. On a stand-alone basis, we expect Global Blue's revenue in the back half of the year to be $334 million with adjusted EBITDA of $137 million. When translating these results to GAAP and Shift4 presentation of gross revenue less network fees, we expect Global Blue's contribution for the remainder of the year will be $300 million of gross revenue less network fees and $125 million of adjusted EBITDA. As a reminder, the revenue synergies we have previously highlighted will have no impact in 2025. You can refer to Page 18 of our shareholder letter for a complete bridge of Global Blue's expected contribution to Shift4. The resulting full-year consolidated guidance is a raise of gross revenue less network fees to a range of $1.965 billion and $2.035 billion, representing 45% to 50% growth and a raise of adjusted EBITDA to a range of $965 million and $990 million, representing 42% to 46% growth. For the third quarter, we expect gross revenue less network fees of approximately $590 million and adjusted EBITDA of approximately $290 million. We expect the contribution from Global Blue to be split about 50-50 between Q3 and Q4. And finally, for clarity, this guidance does not include the impact of our previously announced acquisition of Smartpay. Before I hand the call back to Taylor, I appreciate the opportunity to share a few brief remarks. It is a careful consideration that I made the difficult decision to retire from my role as CFO. It has been an extraordinary privilege to work alongside the Shift4 team during a remarkable period of growth and global expansion. To ensure a seamless transition to Chris, I will continue to serve as a strategic adviser through the end of the year. I'm also looking forward to rejoining the Board of Directors where I will remain fully committed to supporting Shift4's long-term strategy, execution, and value creation for our shareholders. With that, let me now turn the call back to Taylor.

Thank you, Nancy. It's been amazing to work alongside you. The team and I really appreciate your efforts over these last few years and are excited to have you back on the board. Chris Cruz has joined us here on the call to have a chance to say hello, although many of you listening have already met him. Lastly, I'm sorry to end on a somber note, but I simply couldn't neglect to acknowledge the pain from colleagues at Blackstone, everyone at 345 Park Avenue is dealing with. The completely senseless nature of what happened is something I'm still coming to grips with. All I can say is that it should serve as a reminder to cherish time with your loved ones and work harder to make this world better. Thank you.

Our first question comes from Timothy Chiodo with UBS.

I want to hit on, if you don't mind. The first one is around International and Australia. And the second one, if you don't mind, I follow up, it's around the $200 billion to $220 billion in end-to-end volume guide. On the first one, so International, you've mentioned roughly 3,000 or more than 3,000 SkyTab installs internationally per quarter, and you made the acquisition of Smartpay to further enter the Australian market. That market has been of investor interest. It looks like Toast is also entering into Australia. Maybe just talk a little bit about the Smartpay acquisition and the Australian market and what is attractive about it, that has both you and Toast entering it roughly at the same time. And then we'll come back on the end-to-end volumes, if you don't mind.

Yes, sure. Thanks, Tim. It's a great question. I would say it starts with a market that for a company like us, really any American company is relatively easy to enter compared to some of the other more complex geographies, meaning language barriers are zero, fiscalization of product is much more minimal than some of the more complicated countries in Europe, for example. So a product like SkyTab is pretty compatible out of the gates in a place like Australia. This is lesser known, but Global Blue had a really impressive and emerging payments capability in Australia. They supported a few hundred hotels, for example with their own full stack payment processing platform. And so while we've been looking at Smartpay for a number of years, Global Blue gave us the conviction that, that plus Smartpay was a very good idea. In fact, we were debating in our Board meeting how to prioritize these different things. And when you saw the two on the same page, it became obvious you had to kind of pursue both of them. What it gives us is an awesome distribution capability. So the reason that we're having the kind of scaled success in Europe as quickly as we are is because we're taking products and know-how that we've matured in the United States over the past 2 decades and we're applying them to markets that are ripe for that consolidation of software and payments with established sales forces. And so at the end of the day, we believe Smartpay will give us that established sales force, and we'll bring the products and capabilities to compare.

That's really helpful. Regarding the model or the $200 billion to $220 billion in end-to-end volume, could you provide some context on whether any assumptions about the implementation of the backlog have changed in relation to that figure? Additionally, we are aware that a small amount of acquiring volume came from Global Blue; how much of that volume is reflected in the $200 billion to $220 billion for the entire year and specifically for the second half?

I'll add a bit and Taylor can provide more details. As you mentioned, they had a small acquiring business, which we've factored in. It's significantly under $2 billion from that angle. So consider that in relation to our overall guidance. We focused on the volume bridge, and you can see that the blended take rate for this quarter was very strong. That will fluctuate based on the mix. We've indicated that any adjustments to our guidance would stem from the timing of our larger enterprise deals being accelerated or delayed. Overall, I would say this quarter aligns perfectly with our expectations. We assessed the breadth of our guidance range and felt confident remaining within it, even with a minor contribution from Global Blue’s acquiring for the Australia business. We're quite satisfied with the backlog, remaining stable since Q1, due to the ongoing flow of new business. However, it's the timing of enterprise go-lives, which we can't fully control, that is leading us to maintain our current guidance range.

The next question comes from the line of Will Nance from Goldman Sachs.

I'm wondering if you can talk about some of the European restaurant initiatives. You continue to talk about pace of SkyTab systems installs across the U.K. and Ireland as well as some of the Vectron cross-sell. So you just talked upon about some of the benefits of entering a place like Australia, where the localization is not of intent. Wondering if you could talk about kind of where you stand on the German market? And then separately, just kind of what you're seeing out of the U.K. and Ireland from net adds and just remind us where you are on distribution in those markets.

Everything is going well and as expected. One thing we didn't mention is that we completed formal control of the Vectron business in Q2, allowing us to utilize some operational levers that we previously could not. Production is increasing nicely within that business. I apologize for the slower pace compared to our initial expectations when we announced the transaction over a year ago. Vectron is progressing well, and it's important to remember that our strategy involves integrating payments with a significant base of established Vectron customers. Over time, we plan to introduce SkyTab to this group. The market necessitates more visualization and customization of software for the local German market, which we can now provide. Additionally, Vectron has a sales force that extends beyond Germany, and they are actively promoting our payments product to existing and new customers. This has been going great, and I am excited that the acquisition, which took over a year to realize, has come to fruition. In the U.K. and Ireland, the situation is similar. We have a solid group of salespeople introducing the SkyTab product to various merchants, and it is going very well. However, I want to temper expectations slightly, as European businesses tend to be smaller. Despite this, we are seeing better spreads than we initially predicted because merchants are widely adopting this integrated software product. The markets are contributing positively, and although we faced challenges early on with our onboarding capabilities due to high demand, we have since improved and are now onboarding over 1,000 merchants a month across the market.

Awesome. No, that's great. And then you hit a little bit on some of the spreads outperforming in European markets. Is that the primary reason why you're sounding a bit more constructive on spreads and just any other puts and takes across the business that are worth calling out as you think about pricing dynamics?

Yes, sure. So I think it's important to think about the evolution of our business, which is that at the time of our IPO, we have this really, really large gateway cross-sell opportunity. And every gateway customer was kind of meaningfully larger than the average customer in our book, and they're also adding capabilities like stadiums, enterprise, etc. What that meant was higher volume per merchant kind of every single month and a moderation in spreads down to kind of the 60 basis point level, which if you go back to the early calls, that's about where we predicted it would land. As you start to expand internationally, you're boarding the same number of merchants you are globally, but you're also adding on merchants internationally that are a little bit smaller than that average cohort. So this is where volume moderates on a per-merchant basis a little bit, but we underwrite every one of these transactions we do incredibly conservatively. And I think that's kind of showing itself in the spreads we're seeing from international customers, meaning they are willing to embrace a higher-cost product if you're delivering all this value of software plus payments plus hardware, all tightly integrated together. So I think over time, this kind of volume per merchant will continue to evolve as we expand into new markets. But the spreads embedded in a software plus payments product are strong. They've historically been very strong in the United States. And as we teach kind of the rest of the world the benefits you get from all this integration, I think they're willing to be a little more than a traditional bank terminal.

Our next question is from the line of Dominic Ball with Rothschild & Company.

Our question concerns Shift4's successful execution on small acquisitions, the rollout of SkyTab, the consolidation of systems, and the removal of brands. However, Global Blue appears to be a significantly different asset; it is much larger, consumer-facing, and geographically distinct. What is the integration strategy being developed, and what additional safeguards have you implemented to prevent the strategic mistakes we often see from others in the industry when scaling through transformation or mergers and acquisitions?

Yes. It's actually probably the question, right, as we embark on this journey. It's 2,000 employees. They're all located outside the United States. It's a large acquisition from a cultural perspective. I will say we learned a lot of lessons from our early international acquisitions, which is the pace of getting an acquisition closed. Always takes longer than you anticipated when you're dealing kind of cross-border in the regulatory environment there. Happy to report this deal closed kind of well within our expectations or at least the expectations we set for the Street, which is great. And then if I were to pull you into kind of the 80 pager, we set the Board kind of rationalizing this transaction, the #1 deal objective was to keep the current momentum that the Global Blue business has had for the last 5 years and don't disrupt that as a result of your kind of cross-sell ambitions. So what does that mean? It means we are as quick as we always have been to integrate functions like finance and legal and HR, but a little bit slower to kind of disrupt the day-to-day business model that exists inside the business. Jacques, who is the CEO of Global Blue, is now President of Shift4 International. Our non-U.S. functions will report into him to make sure he's building a consistent organizational structure that we can operate from and that their TFS business, which is like really, really dominant continues to win at the pace it's been winning at. Over time, we're going to take the conversations that Global Blue naturally has with their customers and introduce a much broader suite of payment products. But I think as we said kind of expectations around our Investor Day, we're going to take a little bit more time than we would in a smaller acquisition in the United States, for example.

No, that makes sense, and it's somewhat more sensible as well. When it comes to the $1 trillion in cross-sell, I believe $500 billion of that, let's say, half derived from Global Blue. Can we have a little bit breakdown or cadence of where the rest comes from? And maybe how much of that do you sort of Triumph plan to migrate to ship for annually also what the targets are?

Yes, certainly. Excluding the $500 billion from Global Blue, which includes global retailers, local boutiques, and international department stores, the remaining $500 billion comes from various acquisitions we've made, such as Givex, a significant gift card franchise that serves a vital role in the overall payments ecosystem, particularly with major merchants like Nike. Givex handles approximately $30 billion in payment volume. Additionally, we have other substantial contributors like Revel. Our focus is to keep the cross-sell funnel as full as possible, as different customers and verticals have varying purchasing cycles. Recently, several Global Blue customers have reached out to us through their account management teams, indicating that they recognize the complexity of their payments stack and are interested in simplifying it over time. Our products are exceptional, and we lead in sectors such as hotels, restaurants, stadiums, and now global retail. The strength of our product suite enhances customer introductions, and clients are more responsive when we already fulfill a core function for them. This is how our acquisitions support the business.

Our next questions are from the line of Darrin Peller with Wolfe Research.

Nancy, best wishes and congratulations on the announcement. Chris, congratulations to you as well. I want to discuss the underlying trends in the business and gain insight into what you're observing from a macroeconomic and consumer perspective in the various subsegments. Additionally, I would appreciate more details regarding July and August. Furthermore, could you share what assumptions you have regarding the consumer and the underlying factors? I understand that same-store sales contribute only slightly to your overall growth, but I'd like to know what you're factoring into the organic outlook of the business, excluding Global Blue for now.

I'll discuss the consumer for a moment, and then I'll hand it over to Nancy. The trends have largely remained consistent for quite some time, even beyond a year. There is definitely some pressure, but it's quite modest within the restaurant sector. Restaurants have experienced impressive recovery after COVID, and we are seeing a slight decline in same-store sales that we expected. This steady trend is similar to what we've observed in previous earnings calls. As we look globally, the trend varies, which is somewhat encouraging. The hotel sector is relatively stable, especially following strong travel years, and it seems like many people are traveling in Europe, which is positive for both our hotel and Global Blue businesses. Overall, consumer trends appear stable, and our retail base has expanded significantly with the addition of Global Blue, allowing us to gain more insights over time. But nothing has been particularly surprising. Nancy, do you have anything to add?

I would say that overall consumer spending trends have remained stable, similar to what we observed at the end of the second quarter and in the first quarter. Since the middle of last year, there has been a consistent pattern. Previously, we indicated a flat to a minus 2% in restaurants and a range of minus 2% to plus 2% in hotels, and I believe we are still within that range. There hasn't been much change in this regard. We have remarked on our resilience during uncertain times, but we haven't encountered the uncertainty we initially anticipated, and that pattern continues to reflect current market conditions.

It's great to hear that. I have a quick follow-up regarding Global Blue. I understand there's been some discussion about it, but I want to dive deeper. We see the potential for merchants to leverage Global Blue in helping consumers with their tax reimbursement needs, and I feel there's room for improvement in this area. From our perspective, the chance for cross-selling appears significant. I'm curious about the awareness campaigns you plan to implement. What timeline do you envision for the merchant base to grasp these opportunities and for cross-selling to become effective?

Yes, that's an important question. Over the years, particularly since the acquisition of Shift4, we’ve learned a lot. There are a few fundamental principles in this strategy. Firstly, small merchants tend to act much quicker than large merchants. This isn’t just due to the complexities of integration; it's because an owner-operator can make decisions on the same day and implement them within a week, while enterprises may take quarters for decision-making and years for implementation. We used this approach in our conversion strategy. Generally, you earn higher margins from smaller merchants compared to larger ones, even though the larger ones are still valuable. Our first product will be a comprehensive terminal that simplifies the experience for merchants. It consolidates multiple devices into one solution, helping both small businesses and those customers by ensuring that sales representatives can easily navigate what can be a complicated process depending on the location. For instance, in high-end stores like Louis Vuitton, the purchasing experience is seamless because they recognize and inform eligible consumers about these opportunities. Global Blue has effectively increased the refund rates at merchants that have been eligible for refunds for a long time, resulting in an exceptional consumer experience. Our goal is to extend this high-quality consumer and sales experience to smaller merchants within the Global Blue network while also tackling the more challenging aspects of integrating with the retail software used in larger department stores. While these sales may take longer to achieve and implement, the potential volume is significant when they do come through.

Our next question is from the line of Daniel Perlin with RBC Capital Markets.

So a quick question on Global Blue here again. So $300 million of adjusted revenue contribution in the second half. I'm just trying to kind of reconcile that to an organic number for them, like what the organic growth rate on that base would be really with the idea as that starts to anniversary in, obviously, 4 quarters from now, is it additive to that 20-plus percent number or kind of helping to support the duration of that growth?

Yes, sure. The contribution, quite frankly, is very consistent with the expectations that they had set for the Street as a stand-alone public business. So it's very consistent in that regard. I think they set mid-teens level expectations over the medium term. This is a continuation of that theme. There is a little bit of currency noise, and I think we have to do a better job of kind of educating you all on this. It is not your traditional European business whereby a depreciated dollar is net positive when you think about results, like a depreciated dollar means less shopping in Europe, and then it's translated back into U.S. dollar results. There's a little work to kind of explain the currency dynamics inside the business. But in general, the business is performing quite well. They continue to win, and it's very consistent with the trends that they've been expecting as a stand-alone business. And in a large part, we represent it that way because we don't intend to have meaningful synergies in the back half of the year across the business. This was one, and I think we set the expectations back in February that we said we want to take time to get the product solution right and get the conversations with customers in the right spot. The timing of the close was somewhat uncertain at the time. So our product teams and our go-to-market teams are heavy at work, and we hope to surprise you in that regard. But the reported contribution as described here, and we put a bridge in the materials to help people get from what they would traditionally report as numbers to how they manifest themselves in our financials is exactly what they had kind of set forth to the Street as a stand-alone business.

Okay. No, that's super helpful. And the bridge, I think, is super helpful as well. Just one other one quickly on Global Blue. Understanding the synergies are not to materialize in '25, but obviously start in '26. But just trying to understand the areas or the plan of attack first. I think you've talked in the past about maybe the DCC product being something that could be attached to a lot of the hotels here domestically, and that might be an area of kind of first attachment. But then also thinking through the SMB book that they have and the opportunities around SkyTab and payments. So just anything to help us think about maybe the order of operation in terms of what you're going to attack first.

Yes, that's a great question. It's helpful to divide our discussion into two main categories within the Global Blue product suite. Regarding the currency conversion product, we are already making significant progress with its technical integration, which will enable us to offer this product to our existing customers, even in areas where we haven't previously provided it. This is true for both Europe and the United States, although implementation in the United States takes a bit longer. However, once implemented, we anticipate a rapid increase in the product's adoption because merchants can activate it easily without any associated costs. In fact, it can actually generate revenue for them. Merchants are likely to adopt this product by simply turning it on and learning how it operates, ensuring that when consumers use it, they can guide them effectively. This process will occur systematically, as we take the necessary time to ensure the technical implementation is correct before introducing it as part of our standard offerings. On the other hand, the payments cross-sell involves more complexity. Typically, smaller merchants tend to adopt the cross-sell option more quickly because there is usually a single decision-maker involved. However, for the mid-tier businesses that possess a full range of products across several countries, the ability to sell reliably becomes crucial. It’s important to note that payment integrations can vary in relevance depending on the market. We are focused on ensuring our software operates flawlessly and that the transition to that experience is seamless for merchants. Our aim is to execute this carefully without disrupting their successful core operations. This cautious approach to integration is somewhat different from our usual strategy during acquisitions at Shift4, as we are not looking to immediately alter their go-to-market models as we have done with other companies.

Our next questions are from the line of Dan Dolev with Mizuho.

Great results here. Taylor, maybe a higher-level question about kind of the how stablecoins fit into the merchant acquiring process. Our house view is that there's no disruption whatsoever. But interested in your views on how you see kind of stablecoin fitting into consumer commerce, that would be great.

I believe it's essential to differentiate between two perspectives. First, our role as a product provider for our customers, and second, our outlook on the long-term impact on the overall economy. To start, our focus is on assisting merchants to accept whatever currencies they find most valuable for their transactions. For instance, we are helping Blue Origin accept cryptocurrency and stablecoins for space flights because they recognize that value. Our goal is to be at the forefront of enabling merchants to adopt what they find most relevant. Regarding stablecoins' broader use, I see significant potential in cross-border transactions, especially for consumers in countries with rapidly inflating currencies who prefer to hold assets that aren't tied to their local currency. Stablecoins provide a means for them to do this efficiently, and naturally, merchants worldwide are interested in accepting those forms of payment. We're here to facilitate that. In more developed markets like the United States, the benefits that traditional card networks offer are often underestimated. There's considerable value in using networks like Visa, American Express, or Mastercard, which is embedded in the fees you pay. Consumers have consistently preferred those methods over time. A U.S. consumer using stablecoins domestically may miss out on the advantages like fraud protection, chargeback insurance, and rewards programs that come with traditional card payments. I think it's clear that while stablecoins won't disrupt the payment landscape in the U.S., they may have relevance elsewhere. However, the adoption process in those markets will always face regulatory scrutiny, which could hinder growth. Nonetheless, if merchants see the value in using stablecoins, we'll enable them to do so as efficiently as possible, which we have already begun to do.

Our next questions are from the line of Sanjay Sakhrani with KBW.

Taylor, it seems like you guys are making a lot of progress on multiple fronts from what I heard from your prepared remarks. I guess when we think about some of the organic growth opportunities over the next 1.5 years, like where do you think you have the most potential for outperformance? And where are the biggest risks?

So SkyTab is undoubtedly hitting its stride. We see that nationally. The adoption is incredible. We also see it in the United States. I think even just go to Twitter and see the number of installs that we're doing or some portion of them every single day. So the SkyTab product and our ability to kind of maintain and grow our position in the restaurant vertical is kind of top of the list from a product initiative standpoint inside the company. Once you step away from that, you've got a payments platform that needs to be able to support some of the most complex circumstances in the world. And we find tons of relevance for that every single day, whether it's kind of the enterprise customers that we're signing up or the ability to instantly turn on geographies for some of the customers that are expanding rapidly around the world. That's kind of the two largest focuses of product investment. Obviously, our stadium product benefits from both of those things when we invest in that regard. Having kind of a world-class business supporting hotels, restaurants, and stadiums is going to have relevance all over the world. And again, we're like, I don't know, 9 months into supporting Europe in even a trivial way, and we're adding kind of thousands of merchants very quickly as a result of that. That's the organic business doing its thing. And then what we try to do is supplement that with what we call a foot in the door or a shot on goal through acquisitions where we can inherit customers that have traditionally owned a larger and more complicated payment stack and want to work with fewer vendors, but the solution isn't otherwise available. So you'll see that manifest itself in us introducing our traditional payments products to Global Blue customers in a way that integrates what had been a complicated handoff for them in some cases in the past. Same thing with Givex customers, same thing with Revel customers, etc. So I know I said a lot there, but this is really about taking products that we know have market appetite organically and getting them in as many geographies as we can as quickly as possible. Smartpay is a great example of that. We anticipate a transactional close kind of inside of Q4. So I don't want to get ahead of ourselves, but that Smartpay team is going to get an entirely new set of products as a result of being part of the Shift4 franchise. What they offer to customers will look nothing like what they have done in the past. And that is kind of taking both sides of that coin that I mentioned and delivering them all at once.

Got it. And sorry, I meant to say congratulations to Nancy and Chris. Maybe I have a question about the outlook. Taylor, you mentioned that the most likely case seems to be in view now. If we do the math, it appears that organic growth could help us achieve that after this year. I'm curious about the M&A pipeline and what your plans are for the next two years. Should we expect minimal activity because you're still integrating Global Blue? Also, regarding the organic growth potential of Global Blue, is it comparable or dilutive to the core organic growth rate excluding Global Blue? I'm trying to understand the algorithm as we consider the most likely scenario unfolding.

Yes, Global Blue will continue to perform well, and we tried to outline this in our Investor Day materials. The organic contribution from the business without adding customers through mergers and acquisitions is quite strong, and we estimate it to be in the mid-teens over multiple years. We believe our ability to deliver our core products into new markets is robust, and our product positioning in these markets is very favorable. Global Blue represents an entirely new market for us, and we want to present that in a way that allows investors to choose their own path: either Global Blue continues to execute as it has been or it slows down while we introduce cross-selling. Either path can lead to the same outcome. However, we don’t expect either scenario to be likely; we believe they will keep executing while we introduce new products, potentially exceeding past performance and our forecasts. By combining their capabilities and talent with our product suite, we anticipate achieving this fairly easily. Our main strategy is to reinvest our capital to enhance our market positioning and go-to-market efforts, and I feel strongly about this. I recognize it might be a controversial point. The Vectron sales team has greatly accelerated our entry into the German market compared to going it alone. We believe the Smartpay team can offer similar advantages in Australia, and that’s just two countries in a vast global landscape. Our aim is to effectively allocate capital to speed up the introduction of our products in these markets, and we plan to do so. After a short time for people to consider Global Blue and Shift4 as a combined entity, already in 50 more countries than before, we are seeing this vision come to fruition. The number of opportunities to establish sales organizations and empower them with our products is significant.

Our next question comes from the line of Rayna Kumar with Oppenheimer.

Could you give us an update on how travel trends are impacting Global Blue? So the last monthly update we got from Global Blue showed a significant slowdown in sales and store growth. Has that recovered this summer? And what are you seeing so far in the third quarter?

Certainly. The slowdown has indeed eased, and it hasn't persisted throughout the summer months. It's crucial to consider significant currency pairs in relation to this business, particularly the U.S. dollar against the euro and the Chinese currency compared to neighboring currencies like the yen and euro. Essentially, when travelers' home currencies lose value, their spending tends to decrease. We've observed this previously with the depreciation of the U.S. dollar and the Chinese currency following tariffs. However, this trend has improved, which is encouraging. Additionally, the summer travel season has been busier, and consumer concerns about tariffs appear to have lessened as the situation has unfolded. Moreover, reported results, which are primarily euro-denominated, translate favorably back into dollars, providing a slight advantage. In summary, while there is some currency fluctuation affecting the business, it is important to monitor the spending habits of both U.S. and Chinese consumers.

That's very helpful. And then one follow-up. So Agentic commerce is obviously a very hot topic right now in fintech. Given the use cases for travel bookings and hotels, are you actively investing in technology or partnerships to explore opportunities in Agentic commerce? And can you talk about what you think are the implications for the industry?

Yes, sure. I would say it's not dissimilar from the stablecoin question, which is we view it as a strategic imperative to pay attention to where things are going. And we do think Agentic commerce has the ability to cause some leapfrogs in evolution. Basically, a company that kind of creates the right solution will be far ahead of market incumbents as a result of kind of the breakthroughs in technology. With that being said, the travel industry has a lot of established rails that get relied on for this stuff, and we think we're a natural beneficiary of that. And by the way, yes, we will invest in these technologies and spend a lot of time doing them. And we will apply the same algorithm we always apply, which is do we build, do we buy, do we partner when we've seen a disruptive scenario in the marketplace. So it's too early to tell for sure. It's not something we're ignoring, and it's something, obviously, we're hearing as much of from everyone else. But in general, your average hotel does not want to change its entire tech stack to take advantage of these, and they certainly don't want a separate deposit and a separate point of reconciliation. So we'll have relevancy in that kind of regardless of the technologies that emerge.

Our last question will come from the line of John Davis with Raymond James.

I'll add my congrats to Nancy and Chris. Chris, looking forward to working with you and Nancy, we'll miss you for sure. I'll leave you with two, Nancy here. So first, gross margins, I think down about 150 basis points year-to-date. They were down last year. How much of that is driven by acquisitions? And how should we think about gross margins kind of in the balance of the year, especially once we add in Global Blue?

Yes. So from a trending perspective, you should expect them to look similar to how they look now, plus or minus. So I think using Q2 trends for remainder of the year will kind of work from a modeling perspective. And I would just say, I know consensus at a lot of times has gross margin calculated differently than we look at it internally because we take the EUL amortization against gross margin. And I would highlight that there will be some purchase accounting implications and amortization into that line from Global Blue as well. So I would just say if you consider those items and trend based on what we're seeing this quarter, that should get you close.

Okay. And then as we head into '26, and I know you reiterated the 50% free cash flow conversion this year, but now that Global Blue is closed, maybe help us think about the puts and takes to free cash flow conversion as we get to next year? I think you have higher cash taxes potentially. Just the puts and takes there would be helpful.

Yes. There are a few points to consider. When we provide guidance for 2026, I won’t be here, but I will ensure that Chris takes care of you. We will offer more details on cash flow because Global Blue's free cash flow is quite seasonal. The cash flows in the second half of the year will differ significantly from the first two quarters next year due to these seasonal trends. I don’t want to get too ahead of things right now, but I suggest you refer back to their previous public comments regarding seasonality. We will determine our guidance for 2026 when we regroup. Global Blue is a strong generator of cash flow, but its cash movements are more variable compared to ours. I'd also like to direct you to my earlier remarks about cash interest related to our recent debt raise and remind you that cash taxes are expected to increase slightly due to income generation, among other factors. I understand there are many details, and Tom and Paloma will be well-prepared to discuss this with you. We will definitely revisit this for the 2026 guidance.

At this time, we've reached the end of our question-and-answer session. I'll hand the floor back to management for closing remarks.

That's it. We got a long day of call back. So we look forward to speaking to you all then. And thanks very much for joining the call.

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.