It was an eventful report for Shift4 Payments (NYSE:FOUR) yesterday. The company announced financial results for the fourth quarter of 2024, made a $2.5 billion acquisition, finalized its CEO transition plan, and set long-term financial targets in its investor-day presentation. Management hoped to inspire investors. But I believe it's safe to say that they were uninspired, considering Shift4 stock was down by 15% as of 12:30 p.m. ET.
Good growth and a strong growth outlook
It can't all be unpacked here -- Shift4 simply announced too much yesterday. But I'll try to hit the highlights. When it comes to payment volume, the company targets high-volume customers and is firing on all cylinders. In Q4, its payment volume was up 49% to $48 billion. And in 2025, the company expects between 21% and 33% payment volume growth.
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Shift4 hopes to further boost volume with its acquisition of Global Blue. Global Blue's payment technology is used in over 400,000 locations in international markets, largely for luxury retailers. The transaction has an enterprise value of $2.5 billion, which Shift4 will pay for with cash on hand and a bridge loan.
In short, Shift4 hit records in Q4 for revenue (less network fees), adjusted free cash flow, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). And management is guiding for future growth. But keep in mind that shares were trading at all-time highs going into the report and it seems that investors wanted to see even more growth, which is why it pulled back today.
Passing the Shift4 CEO torch
Shift4 is guiding for a $1 billion run rate for adjusted free cash flow by the end of 2027. For perspective, that's almost double its free-cash-flow run rate as of Q4. That would represent strong growth and an interesting valuation, considering Shift4 stock trades at a market cap under $10 billion right now.
Whatever the future holds, it will be without Shift4's founder and CEO, Jared Isaacman. Isaacman is handing the company over to company president Taylor Lauber as he looks to lead NASA. This leadership transition does add a layer of uncertainty here and could be contributing to the stock price's drop today. But I would expect continuity considering it hired from within, which makes Shift4 a stock worth watching.
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Jon Quast has positions in Shift4 Payments. The Motley Fool has positions in and recommends Shift4 Payments. The Motley Fool has a disclosure policy.
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