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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________
FORM 10-Q
__________________________________________________
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
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.
four-20220331_g1.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.)
2202 N. Irving Street
Allentown, Pennsylvania
18109
(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 April 29, 2022, there were 53,628,417 shares of the registrant’s Class A common stock, $0.0001 par value per share, outstanding, 26,272,654 shares of the registrant’s Class B common stock, $0.0001 par value per share, outstanding and 4,302,657 shares of the registrant’s Class C common stock, $0.0001 par value per share, outstanding.


SHIFT4 PAYMENTS, INC.
TABLE OF CONTENTS

2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including, without limitation, statements relating to our future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding expected growth, future capital expenditures and debt service obligations, and the anticipated impact of COVID-19 on our business, 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 on Form 10-Q 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 on Form 10-Q and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to the following:
the COVID-19 global pandemic has had and is expected to continue to have an adverse effect on our business and results of operations;
substantial and increasingly intense competition worldwide in the financial services, payments and payment technology industries may adversely affect our overall business and operations;
potential changes in the competitive landscape, including disintermediation from other participants in the payments chain, could harm our business;
our ability to anticipate and respond to changing industry trends and the needs and preferences of our merchants and consumers may adversely affect our competitiveness or the demand for our products and services;
because we rely on third-party vendors to provide products and services, we could be adversely impacted if they fail to fulfill their obligations;
acquisitions create certain risks and may adversely affect our business, financial condition or results of operations;
we may not be able to continue to expand our share of the existing payment processing markets or expand into new markets which would inhibit our ability to grow and increase our profitability;
our services and products must integrate with a variety of operating systems, software, device and web browsers, and our business may be materially and adversely affected if we are unable to ensure that our services interoperate with such operating systems, device, software and web browsers;
we depend, in part, on our merchant and software partner relationships and strategic partnerships with various institutions to operate and grow our business. If we are unable to maintain these relationships and partnerships, our business may be adversely affected;
our balance sheet includes significant amounts of goodwill and intangible assets. The impairment of a significant portion of these assets would negatively affect our business, financial condition or results of operations;
failure to comply with the U.S. Foreign Corrupt Practices Act (“FCPA”) anti-money laundering, economic and trade sanctions regulations, and similar laws could subject us to penalties and other adverse consequences;
our principal asset is our interest in Shift4 Payments, LLC, and, as a result, we depend on distributions from Shift4 Payments, LLC to pay our taxes and expenses, including payments under the Tax Receivable Agreement (“TRA”). Shift4 Payments, LLC’s ability to make such distributions may be subject to various limitations and restrictions;
our Founder (as defined herein) has significant influence over us, including control over decisions that require the approval of stockholders;

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the ongoing military action between Russia and Ukraine could adversely affect our business, financial condition and results of operations; and
those factors described in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Form 10-K”) and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.
Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q 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.

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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, 2022December 31, 2021
Assets  
Current assets  
Cash and cash equivalents$1,189.0 $1,231.5 
Accounts receivable, net of allowance for doubtful accounts of $9.5 in 2022 ($8.0 in 2021)
223.0 205.9 
Inventory2.9 3.5 
Contract assets (Note 3)0.3 0.3 
Prepaid expenses and other current assets (Note 11)12.9 12.4 
Total current assets1,428.1 1,453.6 
Noncurrent assets
Goodwill (Note 5)627.0 537.7 
Other intangible assets, net (Note 6)213.0 188.5 
Capitalized acquisition costs, net (Note 7)35.3 35.1 
Equipment for lease, net (Note 8)60.0 58.4 
Property, plant and equipment, net (Note 9)18.1 18.4 
Right of use assets (Note 14)17.0 18.5 
Investments in securities32.0 30.5 
Other noncurrent assets1.6 1.9 
Total noncurrent assets1,004.0 889.0 
Total assets$2,432.1 $2,342.6 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable$137.3 $121.1 
Accrued expenses and other current liabilities (Note 11)95.2 42.9 
Deferred revenue (Note 3)21.9 15.0 
Current lease liabilities (Note 14)4.4 4.8 
Total current liabilities258.8 183.8 
Noncurrent liabilities
Long-term debt (Note 10)1,735.9 1,738.5 
Deferred tax liability (Note 13)0.4 0.3 
Noncurrent lease liabilities (Note 14)16.6 17.9 
Other noncurrent liabilities2.2 2.4 
Total noncurrent liabilities1,755.1 1,759.1 
Total liabilities2,013.9 1,942.9 
Commitments and contingencies (Note 16)
Stockholders' equity (Note 17)
Preferred stock, $0.0001 par value, 20,000,000 shares authorized at March 31, 2022 and December 31, 2021, none issued and outstanding
  
Class A common stock, $0.0001 par value per share, 300,000,000 shares authorized, 53,618,573 and 51,793,127 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively
  
Class B common stock, $0.0001 par value per share, 100,000,000 shares authorized, 26,272,654 shares issued and outstanding at both March 31, 2022 and December 31, 2021
  
Class C common stock, $0.0001 par value per share, 100,000,000 shares authorized, 4,302,657 and 5,035,181 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively
  
Additional paid-in capital659.6 619.2 
Treasury stock, at cost; 679,985 shares and 378,475 shares repurchased at March 31, 2022 and December 31, 2021, respectively
(38.3)(21.1)
Retained deficit(332.8)(325.3)
Total stockholders' equity attributable to Shift4 Payments, Inc.288.5 272.8 
Noncontrolling interests (Note 18)129.7 126.9 
Total stockholders' equity418.2 399.7 
Total liabilities and stockholders' equity$2,432.1 $2,342.6 
 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,
 2022 2021
Gross revenue$401.9 $239.3 
Cost of sales317.3 187.5 
Gross profit84.6 51.8 
General and administrative expenses66.2 53.5 
Depreciation and amortization expense17.3 15.4 
Professional fees8.7 6.2 
Advertising and marketing expenses2.7 20.1 
Restructuring expenses (Note 4) 0.1 
Transaction-related expenses (Note 10)1.4  
Total operating expenses96.3 95.3 
Loss from operations(11.7)(43.5)
Loss on extinguishment of debt (0.2)
Other income, net0.2  
Interest expense(7.9)(6.5)
Loss before income taxes(19.4)(50.2)
Income tax benefit (provision) (Note 13)6.2 (0.8)
Net loss (a)(13.2)(51.0)
Net loss attributable to noncontrolling interests (b)(5.7)(18.2)
Net loss attributable to Shift4 Payments, Inc. (c)$(7.5)$(32.8)
Basic and diluted net loss per share:
Class A net loss per share - basic and diluted$(0.13)$(0.62)
Class A weighted average common stock outstanding - basic and diluted52,119,378 42,667,754 
Class C net loss per share - basic and diluted$(0.13)$(0.62)
Class C weighted average common stock outstanding - basic and diluted4,573,372 10,009,852 
(a) Net loss is equal to comprehensive loss.
(b) Net loss attributable to noncontrolling interests is equal to comprehensive loss attributable to noncontrolling interests.
(c) Net loss attributable to Shift4 Payments, Inc. is equal to comprehensive loss attributable to Shift4 Payments, Inc.
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 units and shares)
 
Class A
Common Stock
Class B
Common Stock
Class C
Common Stock
Additional
paid-in
capital
Treasury Stock
Retained
Deficit
Noncontrolling
Interests
Total
equity
SharesAmountSharesAmountSharesAmountSharesAmount
Balances at December 31, 202151,793,127 $ 26,272,654 $ 5,035,181 $ $619.2 (378,475)$(21.1)$(325.3)$126.9 $399.7 
Net loss— — — — — — — — — (7.5)(5.7)(13.2)
Issuance of Class A common stock and fair value of equity-based compensation awards assumed in connection with The Giving Block acquisition785,969 — — — — — 24.7 — — — 11.8 36.5 
Repurchases of Class A common stock to treasury stock— — — — — — 4.5 (301,510)(17.2)— (4.5)(17.2)
Exchange of shares held by Continuing Equity Owners732,524 — — — (732,524)— — — — — — — 
Equity-based compensation— — — — — — 15.8 — — — — 15.8 
Vesting of restricted stock units, net of tax withholding306,953 — — — — — (4.6)— — — 1.2 (3.4)
Balances at March 31, 202253,618,573 $ 26,272,654 $ 4,302,657 $ $659.6 (679,985)$(38.3)$(332.8)$129.7 $418.2 
Class A
Common Stock
Class B
Common Stock
Class C
Common Stock
Additional
paid-in
capital
Retained
Deficit
Noncontrolling
Interests
Total
equity
SharesAmountSharesAmountSharesAmount
Balances at December 31, 202039,737,950 $ 30,625,857 $ 10,188,852 $ $738.3 $(278.7)$210.4 $670.0 
Net loss— — — — — — — (32.8)(18.2)(51.0)
Cumulative effect of ASU 2020-06 adoption— — — — — — (111.5)1.6 — (109.9)
Issuance of Class A common stock and fair value of equity-based compensation awards assumed in connection with VenueNext acquisition325,127 — — — — — 13.5 — 12.8 26.3 
Transfer from Founder of right associated with Inspiration4 seat— — — — — — 1.3 — 0.8 2.1 
Exchange of shares held by Searchlight2,000,000 — (926,000)— (1,074,000)— 6.3 — (6.3) 
Equity-based compensation— — — — — — 14.0 — — 14.0 
Vesting of restricted stock units, net of tax withholding46,503 — — — — — (1.4)— (1.0)(2.4)
Balances at March 31, 202142,109,580 $ 29,699,857 $ 9,114,852 $ $660.5 $(309.9)$198.5 $549.1 
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,
2022 2021
Operating activities
Net loss$(13.2)$(51.0)
Adjustment to reconcile net loss to net cash provided by operating activities
Depreciation and amortization29.1 25.3 
Amortization of capitalized financing costs1.9 1.2 
Loss on extinguishment of debt 0.2 
Deferred income taxes(6.3)(0.1)
Provision for bad debts3.0 6.7 
Revaluation of contingent liabilities 0.2 
Equity-based compensation expense16.9 14.0 
Other noncash items0.3 0.3 
Change in operating assets and liabilities
Accounts receivable(20.0)(40.7)
Prepaid expenses and other assets0.6 1.1 
Inventory1.7 0.1 
Accounts payable15.4 28.0 
Accrued expenses and other current liabilities3.1 6.4 
Right of use assets and liabilities, net(0.1) 
Deferred revenue4.7 6.6 
Net cash provided by (used in) operating activities37.1 (1.7)
Investing activities
Acquisitions, net of cash acquired(12.6)(40.6)
Acquisition of equipment to be leased(9.9)(10.4)
Capitalized software development costs(8.0)(3.6)
Customer acquisition costs(6.3)(5.4)
Residual commission buyouts(4.6)(0.8)
Investments in securities(1.5)(16.0)
Acquisition of property, plant and equipment(1.0)(0.7)
Net cash used in investing activities(43.9)(77.5)
Financing activities
Repurchases of Class A common stock to treasury stock(18.7) 
Payments for withholding tax related to vesting of restricted stock units(12.2)(2.4)
Deferred financing costs(4.8)(0.4)
Repayment of debt (0.9)
Net cash used in financing activities(35.7)(3.7)
Change in cash and cash equivalents(42.5)(82.9)
Cash and cash equivalents
Beginning of period1,231.5 927.8 
End of period$1,189.0 $844.9 
Supplemental cash flows information and noncash activities are further described in Note 21.
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, unit and per unit amounts)
1.Organization, Basis of Presentation and Significant Accounting Policies
Organization
Shift4 Payments, Inc., (“Shift4 Payments”) (“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 provider of integrated payment processing and technology solutions. Through the Shift4 Model, the Company offers software providers a single integration to an end-to-end payments offering, a powerful gateway and a robust suite of technology solutions (including cloud enablement, business intelligence, analytics, and mobile) to enhance the value of their software suites and simplify payment acceptance. The Company provides for its merchants a seamless customer experience at scale, rather than simply acting as one of multiple providers they rely on to operate their businesses. The Shift4 Model is built to serve a range of merchants from small-to-medium-sized businesses to large and complex enterprises across numerous verticals, including food and beverage, hospitality, stadiums and arenas, gaming, specialty retail, non-profits and eCommerce. This includes the Company’s point of sale (“POS”) software offerings, as well as over 425 additional software integrations in virtually every industry.
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 United States (“U.S. GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. As such, these financial statements do not include all information and footnotes required by U.S. GAAP for complete financial statements. The December 31, 2021 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, 2021, as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 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 (“VIE”). 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 certain affiliates of Rook and Searchlight Capital Partners (“Searchlight”) (together, the “Continuing Equity Owners”).
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, contingent consideration for earnout liabilities for The Giving Block, and the aggregate principal amount of $690.0 million of 2025 Convertible Notes and $632.5 million of 2027 Convertible Notes that are held by Shift4 Payments, Inc. directly. As of both March 31, 2022 and December 31, 2021, $9.8 million of cash was held by Shift4 Payments, Inc. As of March 31, 2022, the earnout liabilities for The Giving Block were $59.2 million. Shift4 Payments, Inc., which was established 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.

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SHIFT4 PAYMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (in millions, except share, unit and per unit amounts)
Liquidity and Management’s Plan
As of March 31, 2022, the Company had $1,772.5 million outstanding under its credit facilities and was in compliance with the financial covenants under its debt agreements. The Company expects to be in compliance for at least 12 months following issuance of these unaudited condensed consolidated financial statements. See Note 10 for further information on the Company’s debt obligations.
The rapid spread of COVID-19 resulted in governmental authorities throughout the United States and the rest of the world implementing a variety of containment measures with the objective of slowing the spread of the virus, including travel restrictions, shelter-in-place orders and business shutdowns or other restrictions. The COVID-19 pandemic and these containment measures have had, and could continue to have, a significant impact on the Company’s business. While the Company has experienced year-over-year growth in its gross revenues and end-to-end payment volumes, end-to-end payment volumes in certain merchant categories, particularly those associated with international travel and corporate travel are running lower than pre-COVID-19 pandemic levels. The ultimate impact that the COVID-19 pandemic and any variants will have on the Company’s consolidated results of operations in future periods remains uncertain. The Company will continue to evaluate the nature and extent of these potential impacts to its business, consolidated results of operations and liquidity.
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 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, 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.
Additionally, the full impact of the COVID-19 pandemic is unknown and cannot be reasonably estimated. However, the Company has made accounting estimates based on the facts and circumstances available as of the reporting date. To the extent there are differences between these estimates and actual results, the unaudited condensed consolidated financial statements may be materially affected.
Significant Accounting Policies
The Company’s significant accounting policies are discussed in Note 2 to Shift4 Payments, Inc.’s consolidated financial statements as of and for the years ended December 31, 2021 and 2020 in the 2021 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, 2022.
Recent Accounting Pronouncements
Accounting Pronouncements Adopted
In February 2016, the FASB issued ASC 842 with amendments in 2018 and 2019. This accounting guidance requires a lessee to record assets and liabilities on the balance sheet for the rights and obligations arising from leases with terms of more than 12 months. On January 1, 2021, the Company adopted ASC 842 using the modified retrospective method, reflecting the adoption in the Company's annual results for the period ended December 31, 2021. Prior period amounts were not adjusted and continue to be reported in accordance with historic accounting under previous lease guidance, ASC Topic 840, Leases (“ASC 840”). The Company elected to use the package of practical expedients permitted under the transition guidance. The Company did not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, or (iii) initial direct costs for any existing leases. For lease agreements where the Company is a lessee that include lease and non-lease components, the Company elected to use the practical expedient on all leases entered into or modified after January 1, 2021 to combine lease and non-lease components for all classes of assets. Additionally, the Company elected to not record on the balance sheet leases with a term of twelve months or less. Upon adoption, the Company recorded right of use assets of $21.4 million and lease liabilities of $25.7 million. The adoption of ASC 842 did not result in a material impact to the consolidated statements of operations or cash flows. See Note 14 for ASC 842-related disclosures.

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SHIFT4 PAYMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (in millions, except share, unit and per unit amounts)
In June 2016, the FASB issued ASU 2016-13: Financial Instruments—Credit Losses (Topic 326), which changes the impairment model for most financial assets, including accounts receivable, and replaces the existing incurred loss impairment model with a current expected credit loss (CECL) methodology, which will result in more timely recognition of credit losses. The Company adopted ASU 2016-13 on a modified retrospective basis on December 31, 2021, reflecting the adoption as of January 1, 2021 in the Company's annual results for the period ended December 31, 2021 and interim periods beginning January 1, 2022. The adoption of ASU 2016-13 did not result in a material impact on the Company’s unaudited condensed consolidated financial statements and disclosures.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities From Contracts With Customers. This ASU requires an acquirer to account for revenue contracts acquired in a business combination in accordance with ASC 606, as if it had originated the contracts. Prior to ASU 2021-08, an acquirer generally recognized assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts, at fair value on the acquisition date. The Company adopted ASU 2021-08 in the third quarter of 2021 and retrospectively applied the ASU to its acquisitions that occurred in 2021. The adoption of ASU 2021-08 resulted in an increase to “Deferred revenue” of $5.7 million, of which $1.8 million was recognized as an increase to “Gross revenue” for the fiscal year ended December 31, 2021.
In July 2021, the FASB issued ASU 2021-05: Lessors —Certain Leases with Variable Lease Payments, to amend lessor accounting for certain leases with variable lease payments that do not depend on a reference index or a rate and would have resulted in the recognition of a loss at lease commencement if classified as a sales-type or a direct financing lease. ASU 2021-05 amends the classification requirements of such leases for lessors to require operating lease classification. The Company adopted ASU 2021-05 on a retrospective basis effective January 1, 2022. The adoption did not have a significant impact on the Company’s unaudited condensed consolidated financial statements.
Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, which provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships, subject to certain criteria, that reference the London Interbank Offered Rate (“LIBOR”), or another reference rate that is expected to be discontinued. Companies may elect to apply these amendments through December 31, 2022. The Company is currently evaluating whether we will elect the optional expedients, as well as evaluating the impact of ASU 2020-04 on the Company’s unaudited condensed consolidated financial statements.
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. Under the acquisition method of accounting for business combinations, if there are changes to acquired deferred tax balances, valuation allowances or liabilities related to uncertain tax positions during the measurement period, and they are related to new information obtained about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement-period adjustment, with the offset recorded to goodwill.
The Giving Block
On February 28, 2022, the Company acquired The Giving Block, Inc. (“The Giving Block”) for $106.9 million of estimated total purchase consideration, net of cash acquired. The Giving Block is a cryptocurrency donation marketplace that the Company expects to accelerate its growth in the non-profit sector with significant cross-sell potential. Total purchase consideration was as follows.

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SHIFT4 PAYMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (in millions, except share, unit and per unit amounts)
Cash$16.8 
Shares of Class A common stock (a)36.4 
RSUs granted for fair value of equity-based compensation awards (b)0.1 
Contingent consideration (c)57.8 
Total purchase consideration111.1 
Less: cash acquired(4.2)
Total purchase consideration, net of cash acquired$106.9 
(a) Total purchase consideration includes 785,969 shares of common stock.
(b) The Company assumed all equity awards held by continuing employees. The portion of the fair value of the equity-based compensation awards associated with prior service of The Giving Block employees represents a component of the total consideration as presented above and was valued based on the fair value of The Giving Block awards on February 28, 2022, the acquisition date.
(c) The Company agreed to an earnout due to the former shareholders of The Giving Block in April 2023, calculated as a multiple of revenue earned by The Giving Block from March 1, 2022 to February 28, 2023, not to exceed $246.0 million. The earnout will be paid 75% in a combination of RSUs and shares of the Company’s Class A common stock and 25% 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 “General and administrative expenses” in the Company’s unaudited Condensed Consolidated Statements of Operations. As of March 31, 2022, the fair value of the earnout included in the purchase consideration was $57.8 million, which is recognized in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. In addition, a portion of the earnout due in April 2023 is considered post-acquisition compensation expense and will be accrued throughout the earnout period within “General and administrative expenses” on the Company’s unaudited Condensed Consolidated Statements of Operations. As of March 31, 2022, $1.4 million was included in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets.
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 areas of preliminary purchase price allocation subject to change relate to the valuation of contingent consideration, accounts receivable, accrued expenses, other current liabilities assumed and residual goodwill.
Accounts receivable$0.1 
Other intangible assets26.0 
Goodwill (a)89.3 
Deferred revenue(2.1)
Deferred tax liability(6.4)
Net assets acquired$106.9 
(a) Goodwill is not deductible for tax purposes.
In the three months ended March 31, 2022, the Company incurred expenses in connection with The Giving Block acquisition of $2.2 million. These expenses are included in “Professional fees” in the Company's unaudited Condensed Consolidated Statements of Operations.
The fair values of intangible assets were estimated using inputs classified as Level 3 under the income approach using either the relief-from-royalty method (developed technology and trade name), the with or without method (donor relationships) or the multi-period excess earnings method (customer relationships). The contingent liability arising from the expected earnout payment included in purchase consideration was measured on the acquisition date using a Monte Carlo simulation in a risk-neutral framework, calibrated to Management's revenue forecasts. The transaction was not taxable for income tax purposes. The weighted average life of developed technology, the trade name, donor relationships and customer relationships is 8 years, 15 years, 5 years and 15 years, respectively. The goodwill arising from the acquisition largely consisted of revenue synergies associated with a larger total addressable market and the ability to cross-sell existing customers, new customers and technology capabilities.
The Giving Block acquisition did not have a material impact on the Company’s unaudited condensed consolidated financial statements. Accordingly, revenue and expenses related to the acquisition and pro forma financial information have not been presented.

12

SHIFT4 PAYMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (in millions, except share, unit and per unit amounts)
Postec
The Company completed the acquisition of Postec, Inc. (“Postec”) on September 1, 2021, by acquiring 100% of its membership interests for $14.3 million in cash, net of cash acquired. The purchase was funded with cash on hand. This acquisition enables the boarding of the vendor’s customers on the Company’s end-to-end acquiring solution and empowers the Company’s distribution partners to sign the vendor’s customer accounts and leverage the combined expertise to handle all aspects of installation, service, and support, similar to the hospitality technology vendor acquired in October 2020.
Pending Finaro Acquisition
On March 1, 2022, the Company entered into a definitive agreement to acquire Credorax, Inc. d/b/a Finaro (“Finaro”) for approximately $200.0 million in cash on hand, $325.0 million in shares of the Company’s Class A common stock and a performance-based earnout of up to $50.0 million in the Company’s Class A common stock. Consummation of the merger is subject to regulatory approvals, which the Company expects to receive in the fourth quarter of 2022. Finaro is a cross-border eCommerce platform and bank specializing in solving complex payment problems for multi-national merchants that the Company believes will accelerate its growth in international markets. In the three months ended March 31, 2022, the Company incurred expenses in connection with the Finaro acquisition of $3.6 million. These expenses are included in “Professional fees” in the Company's unaudited Condensed Consolidated Statements of Operations.
3.Revenue
ASC 606: Revenue from Contracts with Customers
Under ASC 606, the Company has three separate performance obligations under its recurring software as a service agreements (“SaaS”) arrangements for point-of-sale systems provided to merchants: (1) point-of-sale software, (2) lease of hardware and (3) other support services.
Disaggregated Revenue
Based on similar operational characteristics, the Company’s revenue from contracts with customers is disaggregated as follows:
Three Months Ended March 31,
20222021
Payments-based revenue$371.5 $215.9 
Subscription and other revenues30.4 23.4 
Total$401.9 $239.3 
Based on similar economic characteristics, the Company’s revenue from contracts with customers is disaggregated as follows:
Three Months Ended March 31,
20222021
Over-time revenue$392.0 $230.2 
Point-in-time revenue9.9 9.1 
Total$401.9 $239.3 

13

SHIFT4 PAYMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (in millions, except share, unit and per unit amounts)
Contract Assets
Contract assets were as follows:
March 31, 2022December 31, 2021
Contract assets, net - beginning of period$0.3 $ 
Less: Contract assets, net - beginning of the period, current(0.3) 
Contract assets, net - beginning of period, noncurrent  
Contract assets, net - end of period0.3 0.3 
Less: Contract assets, net - end of the period, current(0.3)(0.3)
Contract assets, net - end of period, noncurrent$0.3 $ 
There was no allowance for contract assets as of March 31, 2022 and December 31, 2021.
Contract Liabilities
The Company charges merchants for various post-contract license support/service fees and annual regulatory compliance 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, 2022 and December 31, 2021, the Company had deferred revenue of $24.1 million and $17.4 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 following reflects the amounts the Company recognized as annual service fees and regulatory compliance fees within “Gross revenue” in the Company's unaudited Condensed Consolidated Statements of Operations and the amount of such fees that was included in deferred revenue at the beginning of the respective period.
Three Months Ended March 31,
20222021
Annual service fees and regulatory compliance fees$9.6 $4.4 
Amount of these fees included in deferred revenue at beginning of period4.9 2.1 
Accounts Receivable
The change in the Company’s allowance for doubtful accounts was as follows:
March 31,
2022
March 31,
2021
Beginning balance$8.0 $5.7 
Additions to expense (a)3.0 6.7 
Write-offs, net of recoveries and other adjustments(1.5)(0.3)
Ending balance$9.5 $12.1 
(a) For the three months ended March 31, 2021, includes a $5.2 million allowance on chargebacks from a single merchant, which is included in “Cost of Sales” on the unaudited Condensed Consolidated Statements of Operations.

14

SHIFT4 PAYMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (in millions, except share, unit and per unit amounts)
4.Restructuring
The following table summarizes the changes in the Company’s restructuring accrual:
Balance at December 31, 2021$1.5 
Severance payments(0.4)
Balance at March 31, 2022$1.1 
The current portion of the restructuring accrual of $1.1 million and $1.5 million at March 31, 2022 and December 31, 2021, respectively, is included within “Accrued expenses and other current liabilities” on the Company's unaudited Condensed Consolidated Balance Sheets and is expected to be paid in 2022.
5.Goodwill
The changes in the carrying amount of goodwill were as follows:
Balance at December 31, 2021$537.7 
The Giving Block Acquisition (Note 2)89.3 
Balance at March 31, 2022$627.0 
6.Other Intangible Assets, Net
Other intangible assets, net consisted of the following:
Weighted Average
Amortization Period
(in years)
March 31, 2022
Carrying ValueAccumulated
Amortization
Net Carrying
Value
Merchant relationships8$214.1 $140.8 $73.3 
Acquired technology9116.2 58.2 58.0 
Trademarks and trade names1729.3 4.1 25.2 
Capitalized software development costs451.7 10.8 40.9 
Residual commission buyouts (a)323.6 8.0 15.6 
Total intangible assets$434.9 $221.9 $213.0 

Weighted Average
Amortization Period
(in years)
December 31, 2021
Carrying ValueAccumulated
Amortization
Net Carrying
Value
Merchant relationships8$200.1 $133.7 $66.4 
Acquired technology9113.2 54.9 58.3 
Trademarks and trade names1820.3 3.8 16.5 
Capitalized software development costs442.6 9.1 33.5 
Residual commission buyouts (a)320.3 6.5 13.8 
Total intangible assets$396.5 $208.0 $188.5 
(a) Residual commission buyouts include contingent payments of $4.4 million and $4.2 million as of March 31, 2022 and December 31, 2021, respectively.

15

SHIFT4 PAYMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (in millions, except share, unit and per unit amounts)
As of March 31, 2022, the estimated amortization expense for intangible assets for each of the five succeeding years and thereafter is as follows:
2022 (remaining nine months)$37.5 
202341.6 
202436.4 
202527.1 
202620.9 
Thereafter49.5 
Total$213.0 
Amounts charged to expense in the Company's unaudited Condensed Consolidated Statements of Operations for amortization of intangible assets were as follows:
Three Months Ended March 31,
20222021
Depreciation and amortization expense$9.3 $10.1 
Cost of sales5.4 4.5 
Total$14.7 $14.6 
7.Capitalized Acquisition Costs, Net
Capitalized acquisition costs, net were $35.3 million and $35.1 million at March 31, 2022 and December 31, 2021, respectively. This consisted of upfront processing bonuses with a gross carrying value of $70.5 million and $69.1 million less accumulated amortization of $35.2 million and $34.0 million at March 31, 2022 and December 31, 2021, respectively.
Capitalized acquisition costs had a weighted average amortization period of three years at both March 31, 2022 and December 31, 2021. Amortization expense for capitalized acquisition costs was $6.1 million and $5.0 million for the three months ended March 31, 2022 and 2021, respectively, and was included in “Cost of sales” in the Company's unaudited Condensed Consolidated Statements of Operations.
As of March 31, 2022, the estimated future amortization expense for capitalized acquisition costs is as follows:
2022 (remaining nine months)$15.4 
202314.0 
20245.7 
20250.2 
Total$35.3 
8.Equipment for Lease, Net
Equipment for lease, net consisted of the following:
Weighted Average
Depreciation Period
(in years)
March 31, 2022
Carrying ValueAccumulated DepreciationNet Carrying Value
Equipment under lease3$79.4 $29.6 $49.8 
Equipment held for lease (a)N/A10.2  10.2 
Total equipment for lease$89.6 $29.6 $60.0 

16

SHIFT4 PAYMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (in millions, except share, unit and per unit amounts)
Weighted Average
Depreciation Period
(in years)
December 31, 2021
Carrying ValueAccumulated DepreciationNet Carrying Value
Equipment under lease3$72.9 $24.2 $48.7 
Equipment held for lease (a)N/A9.7  9.7 
Total equipment for lease, net$82.6 $24.2 $58.4 
(a) Represents equipment that was not yet initially deployed to a merchant and, accordingly, is not being depreciated.
The amount charged to “Depreciation and amortization expense” in the Company's unaudited Condensed Consolidated Statements of Operations for depreciation of equipment under lease was $7.0 million and $4.5 million for the three months ended March 31, 2022 and 2021, respectively.
9.Property, Plant and Equipment, Net
Property, plant and equipment, net consisted of the following:
March 31,
2022
December 31,
2021
Equipment$11.2 $10.5 
Capitalized software5.2 5.1 
Leasehold improvements9.1 9.1 
Furniture and fixtures1.9 2.0 
Vehicles0.3 0.3 
Total property, plant and equipment, gross27.7 27.0 
Less: Accumulated depreciation(9.6)(8.6)
Total property, plant and equipment, net$18.1 $18.4 
Amounts charged to expense in the Company's unaudited Condensed Consolidated Statements of Operations for depreciation of property, plant and equipment were as follows:
Three Months Ended March 31,
20222021
Depreciation and amortization expense$1.0 $0.8 
Cost of sales0.3 0.4 
Total depreciation expense$1.3 $1.2 

17

SHIFT4 PAYMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (in millions, except share, unit and per unit amounts)
10.Debt
The Company’s outstanding debt consisted of the following:
 MaturityEffective interest rateMarch 31,
2022
December 31,
2021
Convertible Notes due 2025 (2025 Convertible Notes)December 15, 20250.48%$690.0 $690.0 
Convertible Notes due 2027 (2027 Convertible Notes)August 1, 20270.89%632.5 632.5 
Senior Notes due 2026 (2026 Senior Notes)November 1, 20265.125%450.0 450.0 
Total borrowings1,772.5 1,772.5 
Less: Unamortized capitalized financing costs(36.6)(34.0)
Total long-term debt$1,735.9 $1,738.5 
Amortization of capitalized financing fees is included in “Interest expense” in the Company's unaudited Condensed Consolidated Statements of Operations. Amortization expense for capitalized financing fees was $1.9 million and $1.2 million for the three months ended March 31, 2022 and 2021, respectively.
Future principal payments
As of March 31, 2022, future principal payments associated with the Company's long-term debt were as follows:
2025$690.0 
2026450.0 
2027632.5 
Total$1,772.5 
Convertible Notes due 2025
The net carrying amount of the Convertible Senior Notes due 2025 (“2025 Convertible Notes”) was as follows:
March 31,
2022
December 31,
2021
Principal outstanding$690.0 $690.0 
Unamortized debt issuance costs(12.2)(13.0)
Net carrying value$677.8 $677.0 
Convertible Notes due 2027
The net carrying amount of the 0.50% Convertible Senior Notes due 2027 (“2027 Convertible Notes”) was as follows:
March 31,
2022
December 31,
2021
Principal outstanding$632.5 $632.5 
Unamortized debt issuance costs(13.2)(13.8)
Net carrying value$619.3 $618.7 

18

SHIFT4 PAYMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (in millions, except share, unit and per unit amounts)
Senior Notes due 2026
In March 2022, Shift4 Payments, LLC (the “Issuer”) and Shift4 Payments Finance Sub, Inc. (the “Co-Issuer” and together with the Issuer, the “Issuers”), completed a consent solicitation to amend the indenture governing the $450.0 million principal amount of 4.625% Senior Notes due 2026 (“2026 Senior Notes”) to allow for the repurchase of capital stock as part of the Market Capitalization exception that had been included. In connection with the solicitation, the Company paid $4.5 million of consent payments to note holders, which was capitalized and recognized in the unaudited Condensed Consolidated Balance Sheets as a reduction of long-term debt as of March 31, 2022, and incurred fees of $1.4 million, which were recorded to “Transaction-related expenses” in the unaudited Condensed Consolidated Statements of Operations in the three months ended March 31, 2022.
Revolving Credit Facility
Borrowing capacity on the Company’s Revolving Credit Facility under the First Lien Credit Agreement (“Revolving Credit Facility”) was $99.5 million as of March 31, 2022, net of a $0.5 million letter of credit.
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.
At March 31, 2022 and December 31, 2021, the Company was in compliance with all financial covenants.
Other than as provided above, there are no significant changes to the information disclosed in the 2021 Form 10-K.
11.Other Consolidated Balance Sheet Components
Prepaid expenses and other current assets
Prepaid expenses and other current assets consisted of the following:
March 31,
2022
December 31,
2021
Prepaid insurance$1.6 $3.3 
Prepaid merchant signing bonuses (a)0.3 0.7 
Other prepaid expenses (b)8.4 6.1 
Taxes receivable1.7 1.8 
Agent and employee loan receivables0.5 0.2 
Other current assets0.4 0.3 
Total prepaid expenses and other current assets$12.9 $12.4 
(a) Represents deal bonuses paid to merchants to obtain processing contracts, which are amortized over their contractual term of one year.
(b) Includes prepayments related to information technology, rent, tradeshows and conferences.

19

SHIFT4 PAYMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (in millions, except share, unit and per unit amounts)
Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consisted of the following:
March 31,
2022
December 31,
2021
Contingent liability earnout - The Giving Block (a)$59.2 $ 
Residuals payable14.5 13.1 
Accrued interest9.2 4.8 
Accrued payroll2.6 15.3 
Taxes payable1.8 1.6 
Deferred employer social security tax pursuant to the CARES Act1.6 1.6 
Restructuring accrual1.1