Dive Brief:

• Payments and point-of-sale company Shift4 cut 150 employees in the second quarter, triggering $3.5 million in one-time severance costs, Shift4 CFO Nancy Disman said Thursday.
• Largely due to a number of acquisitions the Allentown, Pennsylvania-based company has made over the past year, Shift4’s general and administrative expenses in the second quarter grew 41% year-over-year, to $82.1 million, Disman said during a quarterly conference call with analysts.
• The employee cuts amounted to about 7% of the company’s workforce. Shift4 had about 2,300 full-time employees as of the end of 2022, according to the company’s most recent annual filing. 

Dive Insight:

As Shift4 aims to keep its headcount flat through the end of the year and “upgrade” talent, other efforts to achieve that include replacing legacy internal systems with AI-based applications, Disman said. 

In the wake of rival Toast’s move to implement and then rescind a 99-cent customer-paid fee on online orders, Shift4 CEO Jared Isaacman said the situation has “created unexpected opportunities.” The company has a large presence in the hospitality and venue markets. 

Shift4’s point-of-sale system was added in 6,500 restaurants during the second quarter, and executives have noticed an uptick in demand in the current quarter. A marketing campaign Shift4 announced last week needles Toast by offering new restaurant clients a signing bonus and $1 payments for online orders for a three-month period.

Shift4 isn’t currently considering raising prices for its restaurant customers, Isaacman said. “We don’t have to price our way to profitability,” he said. “Trust has been broken” for some restaurant operators, and “this isn’t the time, really, to consider leaning in from a pricing perspective,” he added.

Isaacman also noted international expansion remains the company’s No. 1 priority when it comes to capital allocation. 

Shift4 is pursuing “several” merger and acquisition opportunities largely focused on bolstering the company’s international strategy, said company President Taylor Lauber. Those include deals that would bring added restaurant distribution in Europe, or transformational opportunities that would extend the company’s presence in other regions of the world, he added.

Company executives are having more M&A conversations and those conversations have become more productive, said Lauber, who’s also Shift4’s chief strategy officer. Plus, scouting for M&A on the international stage offers a bigger pool of targets, he added. 

Shift4 reported second-quarter net income of $36.8 million, according to the company’s shareholder letter. Revenue for the quarter rose 26%, to $637 million.