Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

<ul>
<li>Shift4 Payments (FOUR US), a leading US-based independent provider of integrated payment processing and technology solutions, has filed for an IPO in the US. The company has not yet issued details of the IPO such as the price per share or the number of shares, however, it has a placeholder indication to raise around US$100m and could raise as much as US$300m.</li>
<li>The company managed to clock double-digit growth in revenues in 2019 and has generated operating profits during a few quarters over the past two years.</li>
<li>Our profitability analysis on the company indicates that the company gross margins are declining as it continues to incur heavily on direct costs such as network fees for its large segment, Payment-based solutions.</li>
<li>Shift4’s operating expenses below its gross margin are less volatile to change in revenues implying that these expenses are more fixed in nature. We believe, the company should continue to grow its revenues at a higher rate than historical growth rates in order to absorb all of its expenses and generate operating profits.</li>
<li>In this insight, we take a look at the company’s business model, its financials and the company’s growth prospect. In a follow-up insight, we aim to take a look at the company’s valuation in detail.</li>
</ul>


Shift4 Payments (FOUR US), a leading US-based independent provider of integrated payment processing and technology solutions, has filed for an IPO in the US. The company has not yet issued details of the IPO such as the price per share or the number of shares, however, it has a placeholder indication to raise around US$100m and could raise as much as US$300m.
The company managed to clock double-digit growth in revenues in 2019 and has generated operating profits during a few quarters over the past two years.
Our profitability analysis on the company indicates that the company gross margins are declining as it continues to incur heavily on direct costs such as network fees for its large segment, Payment-based solutions.
Shift4’s operating expenses below its gross margin are less volatile to change in revenues implying that these expenses are more fixed in nature. We believe, the company should continue to grow its revenues at a higher rate than historical growth rates in order to absorb all of its expenses and generate operating profits.
In this insight, we take a look at the company’s business model, its financials and the company’s growth prospect. In a follow-up insight, we aim to take a look at the company’s valuation in detail.


Shift4 Payments IPO: Needs More Merchants and Higher Fees to Shift2 Profitability

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shift4-payments" target="_blank" data-smartkarma-citation="entities:28965:1" rel="noopener">Shift4 Payments (FOUR US),</a> a U.S. based company providing secure payment processing solutions, plans to complete an<a href="https://www.renaissancecapital.com/IPO-Center/News/68400/Pay-to-play-Payment-processor-Shift4-Payments-files-for-an-estimated-%24300-m" target="_blank" rel="noopener"> IPO</a> in the next several weeks. Shift4 Payments is one of the leaders in the U.S. in providing integrated payment processing, delivering numerous solutions and value-added services.</li>
<li>Companies such as Shift4 Payments that are involved in the payments for online/mobile payments infrastructure are benefiting from the COVID-19 pandemic as customers make more payments with contactless payments and online banking services.</li>
<li>Some of its major competitors include third-party processors (such as <strong>Chase Paymentech, Elavon, Fiserv, Global Payments and Worldpay) </strong>and integrated payment providers (such as <strong>Adyen, Lightspeed POS, Shopify and Square).</strong>
</li>
<li>The company generated sales of $731.4 million (up 30.5% YoY), gross profit of $179 million (up 19% YoY), and an operating loss of $6.1 million (down 16.1% YoY) in 2019. The company's gross margin declined slightly from 26.8% in 2018 to 24.5% in 2019 while its operating margin improved slightly from -1.3% in 2018 to -0.8% in 2019. </li>
</ul>



Shift4 Payments (FOUR US), a U.S. based company providing secure payment processing solutions, plans to complete an IPO in the next several weeks. Shift4 Payments is one of the leaders in the U.S. in providing integrated payment processing, delivering numerous solutions and value-added services.
Companies such as Shift4 Payments that are involved in the payments for online/mobile payments infrastructure are benefiting from the COVID-19 pandemic as customers make more payments with contactless payments and online banking services.
Some of its major competitors include third-party processors (such as Chase Paymentech, Elavon, Fiserv, Global Payments and Worldpay) and integrated payment providers (such as Adyen, Lightspeed POS, Shopify and Square).

The company generated sales of $731.4 million (up 30.5% YoY), gross profit of $179 million (up 19% YoY), and an operating loss of $6.1 million (down 16.1% YoY) in 2019. The company's gross margin declined slightly from 26.8% in 2018 to 24.5% in 2019 while its operating margin improved slightly from -1.3% in 2018 to -0.8% in 2019. 


United States

Shift4 Payments, Inc. provides payment processing solutions. The Company offers software for transaction and money transfer activities. Shift4 Payments serves customers in the United States.

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Shift4 Payments (FOUR US)

Shift4 Payments IPO: Needs More Merchants and Higher Fees to Shift2 Profitability

Shift4 Payments (FOUR US), a leading US-based independent provider of integrated payment processing and technology solutions, has filed for an IPO...

Shifara Samsudeen, ACMA, CGMA

Shift4 Payments IPO Preview

Shift4 Payments (FOUR US), a U.S. based company providing secure payment processing solutions, plans to complete an IPO in the next several...

Douglas Kim

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