Greetings. Welcome to Shift4 Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I'll now turn the conference over to Thomas McCrohan, EVP, Investor Relations. Thank you. You may now 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, et cetera. 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…

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 deprecation 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…

Thank you, Nancy. It's been amazing to work alongside of you. The team and I really appreciate your efforts on 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 are 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.

[Operator Instructions] Our first question comes from the line of 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 3,000-plus 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 that, 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 0, 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 hell of a good idea. In fact, we were debating in our Board meeting how to prioritize these different things. And when you saw the 2 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 those -- 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 compare.

Excellent. That's really helpful. The item around the modeling or the $200 billion to $220 billion in end-to-end volume. I was hoping you could put some context around -- if any of the assumptions around implementation of the backlog might have changed at all implied in that $200 billion to $220 billion? And the other item being, we know that there was a small amount of acquiring volume that came over from Global Blue and to what extent that volume is included in the $200 billion to $220 billion for the full year and then obviously, specifically in the second half.

I'll jump in a little and Taylor could always supplement. As you said, they had a small acquiring business, which we have included. It's well sub-$2 billion from that perspective. So think about that in relation to our overall guide. And really, we spent some time on the volume bridge. And you could see [indiscernible] from a blended take rate perspective this quarter, which came in very strong. That's always going to move based on mix. We've talked about that if we moved our guide, it would be based on timing of some of our large enterprise deals getting accelerated or delayed, right? So some of that, I think, is we would say this quarter is completely in line with our expectations. And we looked at the kind of breadth of the guide range and felt like even with the high end of that opposed, we still felt comfortable that it was the right range to stick with even a small amount of Global Blue acquiring coming in for the Australia business. So really feel great about the backlog sitting pretty much where it was in Q1 just based on things coming in and out. But it's really that timing of enterprise go-lives that we can't completely control that is causing us to kind of stick with the guide range that we had.

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 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.

Yes, sure. So all going kind of well and as expected. Maybe 1 thing that we neglected to mention is at formal control of the Vectron business was completed in Q2. So we're able to kind of pull some of the operational levers that we would not be -- we were not able to control. So production is ramping really nicely inside of that business. And what I think we're kind of a handful of quarters, apologizing for the slower, the slower pace than we had initially expected when we announced the transaction kind of well over a year ago. So Vectron is going really nicely. Just to remind the audience, this is the idea of attaching payments to a really large basket of awesome established Vectron customers. And then over time, we can go back and sell SkyTab into this population. It's a market that requires more visualization requirements, more customization of the software for the local German market, we're able to do that. Vectron, also as a sales force that kind of extends beyond just Germany. So that sales force is ramping up as well, introducing our payments product to their established customers and any new customers that come across. That's all going great. I'm really thrilled that the acquisition well over a year in the making, has kind of largely come to fruition at this point in time. Learned to talk through that process. In the U.K. and Ireland, it is a similar story, which is we have a large established group of salespeople now introducing the SkyTab product across a variety of merchants. And it's going incredibly well. The one thing I would say to kind of moderate expectations is that, generally speaking, these European businesses are a little smaller, although we are seeing spreads that are better than we originally modeled because investors are -- I'm sorry, merchants are embracing this kind of software integrated product in mass. So the markets are contributing really nicely. We actually struggled early on to get our boarding capabilities ready to deal with the onslaught, but we are there now, and we're boarding kind of, as I mentioned, well 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, et cetera. 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.

So our question is, Shift4's been very good on execution on small acquisitions, rolling out SkyTab, consolidated systems, removing brands. Global Blue does seem like quite a different asset. It's a lot larger, consumer facing geographically distant. So what is the sort of integration strategy evolving from -- what are still more safeguards have you implemented to avoid the sort of strategic missteps that we see from others in the industry when scaling into transformation or M&A?

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 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, sure. So setting aside the $500 billion of Global Blue, which is comprised of global retailers, local boutiques, international department stores, et cetera, the remaining $500 billion is from a combination of different acquisitions that we've done, whether that be Givex, which was a really large gift card franchise, again, fulfilling a pretty small function of the overall payments value chain, but a critical and sticky one across really big merchants, the likes of Nike, for example, who work with Givex. [indiscernible] was not a trivial gateway with about $30 billion of payment volume flowing through that. So -- and then you've got still large contributors in the likes of Revel and other things. So again, we sort of view the strategic imperative to be to keep that cross-sell funnel as full as possible. They all are fire on different cylinders. Small customers move faster than big customers, certain verticals move faster than others. Everyone has their own kind of purchasing cycle. But as long as we can keep that funnel really, really big, you've got an embedded base of customers to go talk to. I referenced in my scripted remarks, we had several Global Blue customers reach out to us proactively through their account management teams at Global Blue saying, everything Shift4 is saying about our payments stack and its complexity is correct. We would love to find ways to simplify this over time. So again, our products are awesome. We are a category leader in hotels and restaurants and stadiums and now in global retail. So the product suite is incredibly strong. It's about introductions to customers. And those customers are so much more quick to answer the phone when you're already fulfilling a core function for them. So that's what the acquisition side of the coin kind of helps supplement inside of the business.

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

Nancy, all the best with -- and congrats on the announcement. And Chris, congrats as well. Guys, I just want to touch base on the underlying trends in the business and maybe help us understand what you're seeing from macro and consumer standpoint in the underlying subsegments. And then even looking now into July and August, a little more color on that. And then maybe as a sort of attached to that is what assumptions on the consumer and the underlying -- I know same-store sales is only a minor contribution to your underlying growth. But just help us understand what you're embedding in the organic outlook of the business, put Global Blue aside for a moment.

Yes, sure. I'll talk about the consumer for a little bit, and then I'll pass it over to Nancy. I think the trends are largely as we've seen for a long time now. And I mean, like longer than a year, which is -- there's pressure undoubtedly, but it's very modest inside the restaurant vertical itself. I say this because restaurants have come off of really awesome years in the recovery of COVID and a modest single-digit same-store sales compression. I think we anticipated and when we anticipated a year before, it actually occurred. So that's been a steady trend, no real meaningful difference from what we would have talked about in other earnings calls. It becomes more moderated as we look around the world because that trend does not exist everywhere, which is encouraging. Hotels are kind of flat, which, again, these are off of pretty awesome travel years. And I think if your Instagram feed looks saying like mine, everyone seems to be traveling Europe these days, which is encouraging for both our hotel business and for the Global Blue business. So I would say consumer trends seem pretty stable. Our base of retail has grown quite a bit with the inclusion of Global Blue. So we'll start to get more insights into that over time. But nothing really surprising. Nancy, anything you want to add in?

Pretty much I will add, will sound more like a repeat, but just signs of overall stable consumer spending trends largely in line with what we saw exiting Q2 -- 2024, I'm sorry, and in Q1. I would say really since mid last year, we've seen it fairly stable. I know we've given out before kind of a flat to minus 2% on restaurants and a range on hotels of maybe a minus 2% to a plus 2%. And I feel like we're still within that corridor. So really not much changing. And I think we always comment that we're pretty resilient during uncertain times, but these really haven't -- we haven't seen that uncertainty, like we've kind of planned for that range of expectations, and that's what we're still seeing in the current market conditions.

Okay. That's good to hear. Just 1 quick follow-up would be on -- I know Global Blue. The question was someone asked, but I'm really trying to understand a little bit more of. We understand the opportunity for merchants to utilize Global Blue under your ability to help them realize consumers are, for example, in need of a [ bad ] tax reimbursement so thing that I don't think they've effectively -- they could do better. So the opportunity to cross-sell seems pretty material from our perspective. I'm just curious what kind of awareness campaigns do you anticipate getting out to market? How -- what kind of time frame do you anticipate, the merchant base understanding these opportunities and cross-sell taking hold?

Yes, it's a great question. And it's really important, I think, whether it's kind of the acquisition of Shift4 from many years ago, all the way through to now, we've learned a ton of lessons in this regard. There's a few, what I would call, laws of physics in this strategy. The first is small merchants move a heck of a lot faster than large merchants. That's not just the complexity of the integration. It's that when you have like an owner-operator, single decision-maker, that's the same day decision and like a same week implementation versus an enterprise, which is deciding over quarters and implementing over years. So we kind of applied that methodology to our conversion strategy. Now that's a fine thing because you generally earn higher spreads on smaller merchants than you do on larger merchants. Like again, the merchant is still very valuable. So the first product we intend to introduce is kind of a single all-in-one terminal that makes the life of that merchant a lot easier. It's consolidating 5 or 6 things on their countertop, in that watch boutique or that perfume store in Paris into a single solution that does a lot of what the enterprises have already figured out with that, which is it's identifying at the point of payment that the consumer is eligible for this, and it's walking the sales representative through -- what can be a convoluted process in certain geographies? That's why when you go into the likes of a Louis Vuitton in Paris, it is an incredibly seamless experience and where you go into another store, and they might not even be aware that you're eligible for this and prompt you for it. Well, Global Blue has had a ton of success at doing is increasing the rate within which refunds occur in merchants that were already eligible for a very long period of time and the consumer experience is unparalleled. So we intend to kind of bring that enterprise grade consumer experience and sales experience down to as small a merchant as we can inside the Global Blue ecosystem and then are already underway on all the really tough stuff. Tough stuff is integrating to all the retail software that sits behind the counter in a large department store or in the likes of Louis Vuitton for example. Those sales will undoubtedly take more time both to occur and to implement, but you get a ton of volume when they come in.

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 kind of support the duration of that growth?

Yes, sure. So 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. 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. Great question. So it is worth segmenting into kind of the 2 populations, 2 large kind of cohorts of products within the Global Blue suite. So the currency conversion product, that's already intensely underway from a technical integration standpoint, and that's the ability for us to introduce that product to our own customers where we traditionally have not offered that. That applies both in Europe and to the United States. It takes a little bit longer to implement in the United States. But once that's done, we expect the uptick of that product adoption to be near instantaneous. This is something that merchants generally just turn on. It's not a cost for them. In fact, it can be a revenue driver for them. So merchants accept this product. It's not even really a sale as much as it is just turn it on and educate them on how it works so that when the consumer is prompted, they understand how to walk them through it. That will happen in a more binary sense, again, giving ourselves the time to get the technical implementation right, but it will be more binary that we will introduce that product as part of our standard offering over time. The payments cross-sell has more complexity to it. Again, the concept that smaller merchants generally adopt to the cross-sell faster because it's a single decision-maker, we believe to play true. But it's generally kind of a mid-26 level where you're like got a full suite of products in enough countries that you can sell on a reliable basis -- keep in mind, there's payment -- I don't want to overcomplicate the situation, but there's payment integrations that become more relevant for one market or another. They're really making sure that the software works incredibly well and that transition from payment to that experience is seamless. We want to get that right, and we don't want to disrupt their core business, which has been winning a lot. So you'll notice a prudence in kind of the integration plan here that is somewhat atypical of acquisitions that we do at Shift4 because we're not trying to break their go-to-market model immediately the way we have with other businesses.

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.

Yes, sure. I think it's important to kind of separate 2 views. Our view as a product supplier to our customers and then kind of the longer-term view of what do we think this thing is going to do to the overall economy. To the first point there, we are in the business of helping merchants accept whatever currencies they view as most valuable to them conducting commerce. It's in our earnings materials, we're helping Blue Origin accept cryptocurrency and stablecoins for space flights. They view that as valuable. We enable that. And we always want to be on the cutting edge of enabling merchants to accept what they think is most relevant. With regard to the broader applicability of stablecoins, I think it has the most applicability in cross-border where consumers in certain countries that have a rapidly inflating currency might want to hold on to something that's not that currency and stablecoins do provide a mechanism for them to do that in a somewhat efficient way. And to the extent they're holding on to that stuff, merchants, obviously, around the world would like to take that. So we're in the business of enabling it. I think in larger, more established markets like the United States, I think the value that the traditional card brands offer is almost always misunderstood. There's a heck of a lot of value you get as a user of the Visa network or the American Express network or the Mastercard network that is embedded in some of those costs that you pay. And consumers undoubtedly over time have reverted to those methodologies. A U.S. consumer using stablecoins in the United States doesn't get near the value from that transaction that they get in the form of fraud protection and chargeback insurance and rewards and all the other stuff that you get as a traditional card scheme member. So hopefully, you get kind of the 2 sides of the brain there, which is I don't think it's going to disrupt the world in the United States. I think it's got some applicability in other markets. And I think adoption of those -- from those other markets will always be under kind of some level of regulatory scrutiny, which will slow progress. With that being said, if merchants see value in it and want to take it, we're going to enable them as quickly as possible, and I think we've done that.

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 2 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, et cetera. 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. But maybe just a question on sort of the outlook. And Taylor, you mentioned like the most likely case seems in view now. And if you kind of do the math, it just seems like organic growth can get you there after this year. I'm just curious like if we think about the M&A pipeline and sort of what you would want to do over the next 2 years, should we expect that, that's minimal because you're still integrating Global Blue? And then as we think about like the organic growth potential of Global Blue, I think that was asked in many different ways. Like is that like -- is it equal, dilutive to sort of like the core organic growth rate ex Global Blue? I'm just trying to think through the algorithm as we think about the most likely case occurring.

Yes, sure. So Global Blue will continue to -- and we tried to lay this out in our Investor Day materials. the organic contribution of the business without ever adding customers via M&A is quite strong, and that's like what we think is something like mid-teens as we go out like multiple years. So yes, we believe our ability to deliver our core products into new markets is quite strong, and our product positioning inside of these markets is very good. Global Blue adds on an entirely new market for us. So we try to represent that in a somewhat, I think, conservative way, which is that we kind of let investors choose their own adventure, which is Global Blue continues to execute as is or they slow down and we introduce cross-sell. Either way, you can get to the same spot. I think neither of those is the likely scenario. I think they continue to execute and we introduce products. And I think they accelerate beyond what they've traditionally done and what we've laid out in the forecast. That's something that I think when you add their capabilities and talent to our product suite, I think you can get there reasonably easily. The whole point of the most likely scenario is we intend to reinvest our capital into ways to improve whether it's our market positioning or our go-to-market pipeline. And I feel really strongly about this, and I know it's somewhat controversial. What the Vectron sales team gave us in Germany is a massive accelerant into that market versus going it alone. We believe the Smartpay team can do that for us as just another example in Australia, and that's like 2 countries in a really, really big world. So we hope that through thoughtful capital allocation, we can accelerate the introduction of our products in these markets, and we intend to do that. And I would say after just a very, very short period of people thinking about Global Blue and Shift4 as a combined entity and now in 50 more countries than we were before, that's manifesting itself. I mean the number of opportunities we have to get established sales organizations and bring them in and empower them with product is enormous.

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

Congratulations to Nancy and Chris. 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?

Yes, sure. So it has certainly moderated. And by that, I mean that, that slowdown is not pulling itself through all the summer months. But what I think is important is there are currency pairs that matter a lot when you're thinking about that business. The 2 largest are the U.S. dollar versus the euro. And then secondarily, Chinese currency versus neighboring countries, whether that's the yen or the euro as well. All this to say, and I'm sorry to pull people back into like -- into the [indiscernible] 301 level courses in college, but lower value of a shopper's home currency when they're traveling means that they spend less. When they travel, -- and we saw that, by the way, in the form of U.S. dollar and the Chinese currency being depreciated in the wake of tariffs. Now that has moderated, which is good. You also picked up a busier travel season in general. And I think the fear of tariffs in the consumer has moderated as well as we started to see the whole saga play out. All that's encouraging. And then there's the very simple manifestation of their reported results, which are pretty euro-denominated being translated back into dollars, which we get a little bit of a tailwind with. All this to say, a lot of currency noise is somewhat ballasted inside the business, but we do pay attention to the U.S. shopper and the Chinese shopper and how much they're spending on a regular basis.

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 2, 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 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. So a couple of things, but I would say -- I would caveat that to say that when we come up for '26 guide, well, I won't be here. I will make sure Chris takes care of you guys this way, that we'll have to give you some more guidance on cash flow because the free cash flow at Global Blue is very seasonal. So what we'll see in the back half versus what we'll see the first 2 quarters next year, there definitely is some real seasonality trends in the way their cash moves. So I don't want to get ahead of it right now, but I would just placehold that and probably go back to their prior public remarks to just take a look at their seasonality. And we'll think through how we'll guide that when we come back out for 2026. So they're a great cash flow generator, but they have more lumpiness to theirs than we do. And -- of course, I will point you guys back to my prepared remarks on cash interest, just to make sure we pick that up from the recent debt raise and for sure, on cash taxes, just consistent with what we've guided, those moving up slightly just from income generation, if nothing else. So I know there's a lot of pieces there, and we'll make sure Tom and Paloma are armed to take you guys through it. But absolutely, we'll be back on that for '26 guide.

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.