Shift4 shares fall 4.5% despite Q3 profit beat and revenue miss

Shift4 Payments (FOUR) beat third-quarter profit estimates but missed on revenue, and cut parts of its full-year 2026 forecast. Shares fell 4.5% at 3:59 p.m. ET, from a $44.82 close.

Here's how the company did:

• Adjusted EPS: $1.49 per share vs. $1.40 expected
• Gross revenue: $1.32 billion vs. $1.36 billion expected, up 12% from a year earlier
• Gross revenue less network fees: $648 million, up 10% from a year earlier
• Net income: $40 million, from $33 million a year earlier
• Adjusted EBITDA: $310 million, up 6% from a year earlier

Payments-based revenue less network fees, which the company calls its north star, rose 18% to $402 million. Tax-free shopping revenue rose 7% to $139 million. Subscription and other revenue fell 10% to $107 million.

Full-year guidance

Non-GAAP EPS guidance is now $5.05 to $5.15, down from $5.15 to $5.35. Volume guidance is $240 billion to $250 billion, with the upper end tightened. Gross revenue less network fees guidance is $2.45 billion to $2.46 billion, and Adjusted EBITDA guidance is $1.11 billion to $1.13 billion. Adjusted free cash flow guidance of $465 million to $475 million was affirmed. The outlook assumes a 26% effective tax rate.

CEO Taylor Lauber cited "continued macro challenges" and near-term opportunities to speed up payments-based revenue growth.

Segment results

Kahala Brands signed with the company and is now its single largest restaurant customer. Shift4 also won Kering for tax-free shopping.

The company added the MSG Sphere and several EU hotels during the quarter.

Capital returns

Shift4 repurchased 4.2 million shares for $190 million in the quarter, with $175 million left under its existing authorization. A further $1 billion authorization was recently approved.

Adjusted free cash flow was $200 million, a quarterly record.

It has a pending acquisition of Paramount Commerce, a Canadian payments platform, at an upfront multiple below 8 times EBITDA.