The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the information presented in
unaudited condensed consolidated financial statements and related notes included
elsewhere in this Quarterly Report on Form 10-Q, as well as our audited
consolidated financial statements and related notes as disclosed in our final
prospectus, dated June 4, 2020, filed with the Securities and Exchange
Commission, or the SEC, in accordance with Rule 424(b) of the Securities Act of
1933, as amended, on June 8, 2020, or the Prospectus, in connection with our
initial public offering, or the IPO. The following discussion and analysis
reflects the historical results of operations and financial position of Shift4
Payments, LLC and its consolidated subsidiaries prior to the Reorganization
Transactions (as defined below) on June 4, 2020 and that of Shift4 Payments,
Inc. and its consolidated subsidiaries (including Shift4 Payments, LLC)
following the completion of the Reorganization Transactions. In addition to
historical information, the following discussion contains forward-looking
statements, such as statements regarding our expectation for future performance,
liquidity and capital resources, that involve risks, uncertainties and
assumptions that could cause actual results to differ materially from our
expectations. Our actual results may differ materially from those contained in
or implied by any forward-looking statements. Factors that could cause such
differences include those identified below and those described in "Cautionary
Note Regarding Forward-Looking Statements," and "Risk Factors" in this Quarterly
Report on Form 10-Q. We assume no obligation to update any of these
forward-looking statements.

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to:

• "we," "us," "our," the "Company," "Shift4" and similar references refer:

(1) following the consummation of the Reorganization Transactions, to

Shift4 Payments, Inc., and, unless otherwise stated, all of its

subsidiaries, including Shift4 Payments, LLC and, unless otherwise stated,

all of its subsidiaries, and (2) prior to the completion of the

Reorganization Transactions, to Shift4 Payments, LLC and, unless otherwise

stated, all of its subsidiaries.

• "Blocker Companies" refers to certain direct and/or indirect owners of LLC


       Interests in Shift4 Payments, LLC, collectively, prior to the
       Reorganization Transactions that are taxable as corporations for U.S.
       federal income tax purposes and each of which is an affiliate of
       Searchlight (as defined below).

• "Blocker Mergers" refers to the acquisition by Shift4 Payments, Inc. of LLC

Interests held by the Blocker Shareholders, pursuant to one or more

contributions by Blocker Shareholders of the equity interests in the

Blocker Companies to Shift4 Payments, Inc., followed by one or more

mergers, and in exchange for which Shift4 Payments, Inc. issued to the

Blocker Shareholders shares of Class B common stock and Class C common


       stock.


    •  "Blocker Shareholders" refers to the owners of Blocker Companies,
       collectively, prior to the Reorganization Transactions.

• "Continuing Equity Owners" refers collectively to Searchlight, our Founder

and their respective permitted transferees that will own LLC Interests

after the Reorganization Transactions and who may redeem at each of their

options, in whole or in part from time to time, their LLC Interests for, at


       our election, cash or newly-issued shares of Shift4 Payments, Inc.'s Class
       A common stock.


    •  "LLC Interests" refers to the common units of Shift4 Payments, LLC,
       including those that we purchased directly from Shift4 Payments, LLC with
       the proceeds from our IPO and the concurrent private placement and the

common units of Shift4 Payments, LLC that we acquired from the Former

Equity Owners in connection with the consummation of the Reorganization

Transactions.

• "Founder" refers to Jared Isaacman, our Chief Executive Officer and the

sole stockholder of Rook Holdings Inc. Our Founder is a Continuing Equity

Owner and an owner of Class C common stock.

• "Former Equity Owner" refers to FPOS Holding Co., Inc. who exchanged its

LLC Interests for shares of our Class A common stock in connection with the

consummation of the Reorganization Transactions.

• "Rook" refers to Rook Holdings Inc., a Delaware corporation wholly-owned by

our Founder and for which our Founder is the sole stockholder.

• "RSU Holders" refers to certain current and former employees of Shift4

Payments, LLC who received restricted stock units, or RSUs, of Shift4

Payments, Inc. in connection with our IPO.

• "Searchlight" refers to Searchlight Capital Partners, L.P., a Delaware

limited partnership, and certain funds affiliated with Searchlight.

Searchlight is a Continuing Equity Owner and an owner of Class C common

stock.

• "Shift4 Payments LLC Agreement" refers to Shift4 Payments, LLC's amended

and restated limited liability company agreement.

• "Reorganization Transactions" refer to certain organizational transactions


       that we effected in connection with our IPO in June 2020. See Notes 1 and
       18 to our unaudited condensed consolidated financial statements for a

description of the Reorganization Transactions and the section entitled


       "Reorganization Transactions" below.


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Overview

We are a leading independent provider of integrated payment processing and
technology solutions in the United States based on total volume of payments
processed. We have achieved our leadership position through decades of solving
complex business and operational challenges facing our customers: software
partners and merchants. For our software partners, we offer a single integration
to an end-to-end payments offering, a proprietary gateway and a robust suite of
technology solutions to enhance the value of their software and simplify payment
acceptance. For our merchants, we provide a seamless, unified consumer
experience as an alternative to relying on multiple providers to accept payments
and utilize technology in their businesses.

At the heart of our business is our payments platform. Our payments platform is
a full suite of integrated payment products and services that can be used across
multiple channels (in-store, online, mobile and tablet- based) and industry
verticals, including:

  • end-to-end payment processing for a broad range of payment types;


  • merchant acquiring;

• proprietary omni-channel gateway capable of multiple methods of contactless


       and QR code based payments;


  • complementary software integrations;


  • integrated and mobile POS solutions;


  • security and risk management solutions; and


  • reporting and analytical tools.


In addition, we offer innovative technology solutions that go beyond payment
processing. Some of our solutions are developed in-house, such as business
intelligence and POS software, while others are powered by our network of
complementary third-party applications. Our focus on innovation combined with
our product-driven culture enables us to create scalable technology solutions
that benefit from an extensive library of intellectual property.

We have a partner-centric distribution approach. We market and sell our
solutions through a diversified network of software partners, which consists of
ISVs and VARs. ISVs are technology providers that develop commerce-enabling
software suites with which they can bundle our payments platform. VARs are
organizations that provide distribution support for ISVs and act as trusted and
localized service providers to merchants by providing them with software and
services. Together, our ISVs and VARs provide us immense distribution scale and
provide our merchants with front-line service and support.



Our end-to-end payments offering combines our payments platform, including our
proprietary gateway and breadth of software integrations, and our suite of
technology solutions to create a compelling value proposition for our merchants.
Our end-to end payment volume was $4.2 billion and $5.5 billion for the three
months ended June 30, 2020 and 2019, respectively and $10.4 billion and $10.2
billion for the six months ended June 30, 2020 and 2019, respectively. This
end-to-end payment volume contributed approximately 57% and 60% of gross revenue
less network fees for the three months ended June 30, 2020 and 2019,
respectively, and 57% and 58% of gross revenue less network fees for the six
months ended June 30, 2020 and 2019, respectively.

Our merchants range from small to medium sized businesses, or SMBs, to large
enterprises across numerous verticals in which we have deep industry expertise,
including food and beverage, lodging and leisure.

Recent acquisitions

Merchant Link



In August 2019, we completed the acquisition of Merchant-Link, LLC, or Merchant
Link, a leading provider of payment gateway and data security solutions, and
which primarily services hotels and restaurants in the United States, or the
Merchant Link Acquisition. The Merchant Link Acquisition brings to us a highly
complementary customer base, with a significant portion of the customers using
software already integrated on our gateway. This overlap presents us with a
substantial opportunity for improved share of wallet and cost efficiencies.

Initial public offering and concurrent private placement



On June 9, 2020, we completed our IPO of 17,250,000 shares of Class A common
stock, including 2,250,000 shares pursuant to the full exercise of the
underwriters' option to purchase additional shares, at a price to the public of
$23.00 per share. Upon completion of the IPO, we received net proceeds of
approximately $363.8 million, after deducting underwriting discounts and
commissions and offering expenses of approximately $33.0 million. We also
completed a $100.0 million concurrent private placement of 4,625,346 shares of
Class C common stock to Rook. The total net proceeds from the IPO and concurrent
private placement were approximately $463.8 million. Shift4 Payments, Inc. used
the total proceeds to purchase newly-issued LLC Interests, from Shift4 Payments,
LLC. Shift4 Payments, LLC used these amounts received from Shift4 Payments, Inc.
to repay certain existing indebtedness and for general corporate purposes.

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Reorganization Transactions

The historical results of operations discussed in this "Management's Discussion
and Analysis of Financial Condition and Results of Operations" are those of (1)
Shift4 Payments, LLC and its consolidated subsidiaries for periods prior to the
Reorganization Transactions on June 4, 2020 and (2) Shift4 Payments, Inc. and
its consolidated subsidiaries for periods beginning on or following the
Reorganization Transactions on June 4, 2020. The historical results of
operations and financial condition of Shift4 Payments, LLC prior to the
completion of the Reorganization Transactions, including the IPO and concurrent
private placement, do not reflect certain items that we expect will affect our
results of operations and financial condition after giving effect to the
Reorganization Transactions and the use of proceeds from the IPO and concurrent
private placement.

Following the completion of the Reorganization Transactions, we own 49.8% of the
economic interest of Shift4 Payments, LLC and the Continuing Equity Holders own
the remaining 50.2%. Shift4 Payments, Inc. is the sole managing member of Shift4
Payments, LLC and, although we do not have a majority economic interest in
Shift4 Payments, LLC, we control the management of Shift4 Payments, LLC. As a
result, we consolidate the financial results of Shift4 Payments, LLC and report
a noncontrolling interest of 50.2% related to the interests in Shift4 Payments,
LLC held by the Continuing Equity Holders on our consolidated financial
statements.

After consummation of the IPO, Shift4 Payments, Inc. became subject to U.S.
federal, state and local income taxes with respect to our allocable share of any
taxable income of Shift4 Payments, LLC and is taxed at the prevailing corporate
tax rates. In addition to tax expenses, we also have and will continue to incur
public company expenses related to our operations, plus payment obligations
under the Tax Receivable Agreement, or TRA, which we expect to be significant.
We intend to cause Shift4 Payments, LLC to make distributions to us in an amount
sufficient to allow us to pay our tax obligations and operating expenses,
including distributions to fund any payments due under the TRA.

Impact of the COVID-19 pandemic



The unprecedented and rapid spread of COVID-19 as well as the shelter-in-place
orders, promotion of social distancing measures, restrictions to businesses
deemed non-essential, and travel restrictions implemented throughout the United
States have significantly impacted the restaurant and hospitality industries -
verticals in which we have predominantly focused on over the last decade.

In response to these developments, we have implemented measures to focus on the
safety of our employees, including implementing remote working capabilities, and
to support our merchants as they shift to take-out and delivery operations,
while at the same time seeking to mitigate the impact on our financial position
and operations.

We have also implemented new programs to help ease the burden for our merchants,
encourage customers to support their local small businesses and restaurants and
incentivize new merchants to enroll in our end-to-end payment platform.
Specifically, we have:

• established www.shift4.com/situation in an effort to share data to educate


       political leaders and advocacy groups as to where aid needs to be
       prioritized;

• released a gift card funding campaign to encourage consumers to support


       their favorite bars or restaurants by purchasing a gift card through our
       Shift4Cares.com website; and


    •  implemented temporary fee waivers on certain products from March 2020
       through June 2020 that did not have a material impact on financial
       performance.


We believe we have sufficient liquidity to satisfy our cash needs, however, we
continue to evaluate and take action, as necessary, to preserve adequate
liquidity and ensure that our business can continue to operate during these
uncertain times. Our business was not significantly impacted by the COVID-19
pandemic until the latter part of March 2020, at which time our end-to-end
payment volumes declined 70%. At that time, we took the following actions to
increase liquidity and strengthen our financial position:

• furloughed approximately 25% of our employees of which approximately 75%

had returned to work as of June 30, 2020;

• accelerated approximately $30 million of annual expense reduction plans

related to prior acquisitions, including the Merchant Link Acquisition;




    •  re-prioritized our capital projects to defer certain non-essential
       improvements;


  • instituted a company-wide hiring freeze; and


  • reduced salaries for management across the organization.


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Since mid-March when shelter-in-place, social distancing, the closing of
non-essential businesses and other restrictive measures were first put in place
across the United States, we have seen a significant recovery in our end-to-end
payment volumes and, for the trailing seven days leading up to June 30, 2020,
end-to-end payment volumes were approximately 90% of pre-COVID volumes in 2020.
While end-to-end payment volumes for the six months ended June 30, 2020 have
exceeded those for the six months ended June 30, 2019, the ultimate impact that
the COVID-19 pandemic will have on our consolidated results of operations in the
second half of 2020 remains uncertain. We will continue to evaluate the nature
and extent of these potential impacts to our business, consolidated results of
operations, and liquidity. See "Risk Factors-Business risks-The recent novel
coronavirus, or COVID-19, global pandemic has had and is expected to continue to
have a material adverse effect on our business and results of operations."

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security, or CARES,
Act was signed into law. The CARES Act provides a substantial stimulus and
assistance package intended to address the impact of the COVID-19 pandemic,
including tax relief and government loans, grants and investments. The CARES Act
includes, among other things, provisions relating to payroll tax credits and
deferrals, net operating loss carryback periods, alternative minimum tax credits
and technical corrections to tax depreciation methods for qualified improvement
property. Pursuant to the CARES Act, in June 2020, we submitted a carryback
claim related to our net operating loss carryforward generated in 2018, which is
expected to provide a cash tax savings of $0.6 million and is reflected in the
condensed consolidated financial statements for the three and six months
ended June 30, 2020. We will continue to monitor any effects that may result
from the CARES Act or other government relief programs that are made available
in the future.

Factors impacting our business and results of operations

In general, our results of operations are impacted by factors such as adoption of software integrated payment solutions, continued investment in core capabilities, on-going pursuit of strategic acquisitions, and macro-level economic trends.



Increased adoption of software-integrated payments. We primarily generate
revenue through volume-based payments and transaction fees and subscription fees
for software and technology solutions. We expect to grow this volume by
attracting new software partners through our market-leading and innovative
solutions. These software partners have proven to be an effective and efficient
way of acquiring new merchants and servicing these relationships.

Continued focus on the sale of our end-to-end payments offering and resulting
revenue mix shift. Our customers utilize our comprehensive solutions to solve a
variety of business challenges. Currently, a large percentage of our merchant
base uses only our proprietary gateway. As these merchants adopt our end-to-end
payment solutions, our revenue per merchant and merchant retention are expected
to increase.

Mix of our merchant base. The revenue contribution of our merchant portfolio is
affected by several factors, including the amount of payment volume processed
per merchant, the industry vertical in which the merchant operates, and the
number of solutions implemented by the merchant. As the size and sophistication
of our merchants change, we may experience shifts in the average revenue per
merchant and the weighted average pricing of the portfolio.

Ability to attract and retain software partners. A key pillar of our Shift4 Model is our partner-centric distribution approach. We work with our software partners who are essential to helping us grow and serve our merchant base. Maintaining our product leadership and continued investment in innovative technology solutions is critical to attracting and retaining software partners.



Investment in product, distribution and operations. We make significant
investments in both new product development and existing product enhancement,
such as mobile point-of-sale and cloud enablement for our software partners'
existing systems. New product features and functionality are brought to market
through varied distribution and promotional activities including collaborative
efforts with industry leading software providers, trade shows, and customer
conferences. Further, we will continue to invest in operational support in order
to maintain service levels expected by our merchant customers. We believe these
investments in product development and software integrations will lead to
long-term growth and profitability. For example, in the second quarter of 2020,
we released numerous new products and enhancements to help our merchants adapt
to the rapidly changing commerce environment. These included numerous
delivery/takeout products, contactless payment methods and QR code based mobile
payment technologies.

Pursuit of strategic acquisitions. From time to time, we may pursue acquisitions
as part of our ongoing growth strategy. While these acquisitions are intended to
add long-term value, in the short term they may add redundant operating expenses
or additional carrying costs until the underlying value is unlocked.

Economic conditions and resulting consumer spending trends. Changes in
macro-level consumer spending trends, including as a result of the COVID-19
pandemic, could affect the amount of volumes processed on our platform, thus
resulting in fluctuations to our revenue streams. Further, consumer spending
habits are subject to seasonal fluctuations that could cause varied revenue
results across the quarters.

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Key financial definitions

The following briefly describes the components of revenue and expenses as presented in the accompanying unaudited condensed consolidated statements of operations.

Gross revenue consists primarily of payment-based revenue and subscriptions and other revenues:



Payment-based revenue includes fees for payment processing services, gateway
services, data encryption and tokenization. Payment processing fees are
primarily driven as a percentage of payment volume and a per transaction fee.
They may also be based on minimum monthly usage fees.

Subscription and other revenues include software as a service, or SaaS, fees for
point-of-sale systems provided to merchants. Point-of-sale SaaS fees are
assessed based on the type and quantity of point-of-sale systems deployed to the
merchant. This includes monthly minimums, statement fees, fees for our
proprietary business intelligence software, annual fees, regulatory compliance
fees and other miscellaneous services such as help desk support and warranties
on equipment. This also includes revenue derived from third party residuals,
automated teller machine services, and fees charged for technology support.

Cost of sales consists of interchange and processing fees, residual commissions, equipment and other costs of sales:



Interchange and processing fees represent payments to card issuing banks and
assessments paid to card associations based on transaction processing volume.
These also include fees incurred by third-parties for data transmission and
settlement of funds, such as processors and sponsor banks.

Residual commissions represent monthly payments to software partners. These costs are typically based on a percentage of payment-based revenue.

Equipment represents our costs of devices that are purchased by the merchant.



Other costs of sales includes amortization of capitalized software development
costs, capitalized software, acquired technology and capitalized customer
acquisition costs. It also includes incentives, shipping and handling costs
related to the delivery of devices and other contract fulfillment costs.
Capitalized software development costs are amortized using the straight-lined
method on a product-by-product basis over the estimated useful life of the
software. Capitalized software, acquired technology and capitalized acquisition
costs are amortized on a straight-line basis in accordance with our accounting
policies.

General and administrative expenses consist primarily of compensation, benefits
and other expenses associated with corporate management, finance, human
resources, shared services, information technology and other activities. General
and administrative expenses also include the cost of equipment deployed that
does not have a corresponding revenue stream, such as demonstration equipment
and certain customer upgrades.

Depreciation and amortization expense consists of depreciation and amortization
expenses related to merchant relationships, trademarks and trade names, residual
commission buyouts, equipment, leasehold improvements, and other intangible
assets and property, plant and equipment. We depreciate and amortize our assets
on a straight-line basis in accordance with our accounting policies. Leasehold
improvements are depreciated over the lesser of the estimated life of the
leasehold improvement or the remaining lease term. Maintenance and repairs,
which do not extend the useful life of the respective assets, are charged to
expense as incurred. Intangible assets are amortized on a straight-line basis
over their estimated useful lives which range from two years to 15 years.

Professional fees consists of costs incurred for accounting, tax, legal, and consulting services.



Advertising and marketing expenses relate to costs incurred to participate in
industry tradeshows and dealer conferences, advertising initiatives to build
brand awareness, and expenses to fulfill loyalty program rewards earned by
software partners.

Restructuring expenses relate to strategic initiatives we have taken that
include, but are not limited to, severance or separation costs and other exit
and disposal costs. These expenses are typically not reflective of our ongoing
operations.

Other operating (income) expense, net consists of other operating items.

Loss on extinguishment of debt represents a loss recorded for the unamortized capitalized financing costs associated with the debt prepayment.

Other income, net primarily consists of other non-operating items.

Interest expense consists of interest costs incurred on our borrowings and amortization of capitalized financing costs.

Income tax benefit (provision) represents federal, state and local taxes based on income in multiple domestic jurisdictions.



Net loss attributable to noncontrolling interests arises from net loss from the
non-owned portion of businesses where we have a controlling interest but less
than 100% ownership. This represents the noncontrolling interests in Shift4
Payments, LLC and its consolidated subsidiaries, which is comprised of the
income allocated to Continuing LLC Owners as a result of their proportional
ownership of LLC interests.

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Comparison of results for the three months ended June 30, 2020 and 2019

The following table sets forth the unaudited condensed consolidated statements of operations for the periods presented.





                                              Three months ended June 30,
(in millions)                                  2020                2019           $ change       % change
Payments-based revenue                     $       121.2       $       159.5     $    (38.3 )        (24.0 %)
Subscription and other revenues                     20.6                21.0           (0.4 )         (1.9 %)
Total gross revenue                                141.8               180.5          (38.7 )        (21.4 %)
Less: network fees                                  74.4               105.2          (30.8 )        (29.3 %)
Less: Other costs of sales                          35.1                31.7            3.4           10.7 %
Gross profit                                        32.3                43.6          (11.3 )        (25.9 %)
General and administrative expenses                 89.2                26.1           63.1          241.8 %
Depreciation and amortization expense               10.4                 9.8            0.6            6.1 %
Professional fees                                    1.2                 2.0           (0.8 )        (40.0 %)
Advertising and marketing expenses                   0.8                 1.4           (0.6 )        (42.9 %)
Restructuring expenses                               0.1                 0.1              -             (- %)
Other operating (income) expense, net              (12.4 )                 -          (12.4 )           NM
Total operating expenses                            89.3                39.4           49.9          126.6 %
(Loss) income from operations                      (57.0 )               4.2          (61.2 )           NM
Loss on extinguishment of debt                      (7.1 )                 -           (7.1 )           NM
Other income, net                                    0.2                 0.7           (0.5 )        (71.4 %)
Interest expense                                   (11.7 )             (12.7 )          1.0           (7.9 %)
Loss before income taxes                           (75.6 )              (7.8 )        (67.8 )           NM
Income tax benefit (provision)                       0.6                (0.4 )          1.0         (250.0 %)
Net loss                                           (75.0 )     $        (8.2 )   $    (66.8 )           NM
Net loss attributable to noncontrolling
interests                                           (1.0 )
Net loss attributable to Shift4
Payments, Inc.                             $       (74.0 )




Gross Revenue

Gross revenue was $141.8 million for the three months ended June 30, 2020,
compared to $180.5 million for the three months ended June 30, 2019, a decrease
of $38.7 million or 21.4%. Gross revenue is comprised of payments-based revenue
and subscription and other revenues.

Payments-based revenue was $121.2 million for the three months ended June 30,
2020, compared to $159.5 million for the three months ended June 30, 2019, a
decrease of $38.3 million or 24.0%. The decrease in payments-based revenue is
primarily driven by a decrease in end-to-end payment volume of $1.3 billion, or
22.9% for the three months ended June 30, 2020 as compared to the three months
ended June 30, 2019. The COVID-19 pandemic impacted our end-to-end payment
volumes beginning mid-March when shelter-in-place, social distancing, the
closing of non-essential businesses and other restrictive measures were first
put in place across the United States. Since mid-March, we have seen a
significant recovery in our end-to-end payment volumes and, for the trailing
seven days leading up to June 30, 2020, end-to-end payment volumes are
approximately 90% of pre-COVID-volumes in 2020.

Subscription and other revenues were $20.6 million for the three months ended
June 30, 2020, compared to $21.0 million for the three months ended June 30,
2019, a decrease of $0.4 million or 1.9%. The decrease was driven primarily by a
decline in hardware revenue and software license sales of $1.6 million, a
decline in customer billing revenue due to temporary fee waivers on certain
products from March 2020 through June 2020 of $1.9 million as a result of the
COVID-19 pandemic, and a decline of $0.4 million related to third-party residual
revenue, partially offset by the Merchant Link Acquisition, which contributed
$3.7 million in the three months ended June 30, 2020.

Network Fees

Network fees were $74.4 million for the three months ended June 30, 2020, compared to $105.2 million for the three months ended June 30, 2019, a decrease of $30.8 million or 29.3%. This decrease is correlated with the decrease in end-to-end payment volume as described above.



Gross revenue less network fees was $67.4 million for the three months ended
June 30, 2020, compared to $75.3 million for the three months ended June 30,
2019, a decrease of $7.9 million or 10.5%. The decrease in gross revenue less
network fees is correlated with the decrease in end-to-end payment volume. See
"-Key performance indicators and non-GAAP measures" for a reconciliation of
gross profit to gross revenue less network fees.

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Other costs of sales

Other costs of sales was $35.1 million for the three months ended June 30, 2020,
compared to $31.7 million for the three months ended June 30, 2019, an increase
of $3.4 million, or 10.7%. This increase was primarily a result of:

• an increase in equipment deployed for new contracts of $1.7 million;

• the Merchant Link Acquisition, which contributed $1.6 million to other

costs of sales for the three months ended June 30, 2020;

• higher capitalized acquisition cost amortization of $1.2 million related to

deal bonuses; partially offset by

• a decline in gross revenue less network fees driving lower residual

commissions of $1.4 million.

Operating expenses



General and administrative expenses. General and administrative expenses were
$89.2 million for the three months ended June 30, 2020, compared to
$26.1 million for the three months ended June 30, 2019, an increase of $63.1
million or 241.8%. The increase was primarily due to equity-based compensation
expense of $50.0 million and $11.0 million in change of control liabilities
recognized as a result of the IPO. See Note 21 to our accompanying unaudited
consolidated financial statements for more information on equity-based
compensation and Note 12 to our accompanying unaudited consolidated financial
statements for more information on the contingent liabilities. In addition,
general and administrative expenses increased $5.6 million in 2020 due to the
Merchant Link Acquisition.

Depreciation and amortization expense. Depreciation and amortization expense was
$10.4 million for the three months ended June 30, 2020, compared to $9.8 million
for the three months ended June 30, 2019, an increase of $0.6 million or 6.1%.
The increase was primarily due to the Merchant Link Acquisition, which
contributed $0.6 million to depreciation and amortization expense in the three
months ended June 30, 2020.

Professional fees. Professional fees were $1.2 million for the three months
ended June 30, 2020, compared to $2.0 million for the three months ended June
30, 2019, a decrease of $0.8 million or 40.0%. The decrease was primarily due
to higher professional fees incurred in 2019 resulting from nonrecurring costs
associated with activities to prepare for our IPO.

Advertising and marketing. Advertising and marketing expenses were $0.8 million
for the three months ended June 30, 2020, compared to $1.4 million for the three
months ended June 30, 2019, a decrease of $0.6 million or 42.9%. The decrease
was primarily due to postponing trade shows originally scheduled during the
second quarter of 2020 as a result of the COVID-19 pandemic.

Restructuring expenses. Restructuring expenses were $0.1 million for both the
three months ended June 30, 2020 and 2019. The restructuring expenses represent
accretion on the one-time restructuring expenses incurred in 2018 for a
historical acquisition. See Note 4 to our accompanying unaudited condensed
consolidated financial statements for more information on restructuring
expenses.

Other operating (income) expense, net



Other operating (income) expense, net includes the impact of modifying the terms
and conditions of our SaaS arrangements and updating our operational procedures.
As a result, beginning June 30, 2020, hardware provided under our SaaS
agreements is accounted for as an operating lease, whereas prior to June 30,
2020, these arrangements were accounted for as sales-type leases. An adjustment
of $12.4 million was recorded to reflect the impact of the lease modifications.
Prior to amending the terms, the sales-type lease accounting treatment impacted
net income negatively by $4.0 million and $3.3 million for the three months
ended June 30, 2020 and 2019, respectively.

Loss on extinguishment of debt



In connection with the pre-payment of $59.8 million on the First Lien Term Loan
Facility and the full repayment of $130.0 million on the Second Lien Term Loan
Facility, we incurred a non-cash loss on extinguishment of debt of $7.1 million
representing the unamortized capitalized financing costs associated with the
debt prepayment. See Note 10 to our accompanying unaudited condensed
consolidated financial statements for more information on the loss on
extinguishment of debt.

Other income, net



Other income, net was $0.2 million for the three months ended June 30, 2020,
compared to $0.7 million for the three months ended June 30, 2019, a decrease of
$0.5 million or 71.4%. The decrease is driven by unearned contingent liabilities
associated with our residual commission buyout agreements.

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Interest expense

Interest expense was $11.7 million for the three months ended June 30, 2020,
compared to $12.7 million for the three months ended June 30, 2019, a decrease
of $1.0 million or 7.9%. This decrease in interest expense was primarily due to
the pre-payments for the First Lien and Second Lien Term Loan Facilities, as
well as the repayment of the Revolving Credit Facility, in June 2020, which
impacted interest expense by approximately $1.2 million, partially offset by
additional borrowings under the First Lien Term Loan Facility from refinancing
our outstanding indebtedness in October 2019 and additional borrowings under the
Revolving Credit Facility during 2020 prior to the pre-payments.

Income tax provision



The effective tax rate for the three months ended June 30, 2020 was (0.8)%,
compared to the effective tax rate for the three months ended June 30, 2019 of
5.1%. The 2020 income tax benefit was different than the U.S. federal statutory
income tax rate of 21% primarily due to the loss allocated to the noncontrolling
interest, changes in the valuation allowances in the United States and recording
a tax benefit of $0.6 million for a net operating loss carryback at Shift4
Corporation which was allowed due to the CARES Act. The 2019 income tax expense
was different than the U.S. federal statutory income tax rate of 21% primarily
due to Shift4 Payments, LLC being treated as a partnership and not paying income
tax. The change in the effective tax rate between the periods was primarily a
result of a mix of earnings between entities, the 2020 net operating loss
carryback due to the CARES Act and the change in the noncontrolling interest and
valuation allowance adjustment.

Net loss attributable to noncontrolling interests



Net loss attributable to noncontrolling interests of Shift4 Payments, LLC was
$(1.0) million for the three months ended June 30, 2020. There was no net loss
attributable to noncontrolling interests of Shift4 Payments, LLC for the three
months ended June 30, 2019 as the Reorganization Transactions occurred on June
4,2020 and the IPO was consummated on June 9, 2020.

Net loss attributable to Shift4 Payments, Inc.

Net loss attributable to Shift4 Payments, Inc. was $(74.0) million for the three months ended June 30, 2020.

Comparison of results for the six months ended June 30, 2020 and 2019



The following table sets forth the consolidated statements of operations for the
periods presented.



                                              Six months ended June 30,
(in millions)                                  2020               2019          $ change       % change
Payments-based revenue                     $      297.6       $      293.5     $      4.1            1.4 %
Subscription and other revenues                    43.6               42.0            1.6            3.8 %
Total gross revenue                               341.2              335.5            5.7            1.7 %
Less: network fees                                194.7              193.9            0.8            0.4 %
Less: Other costs of sales                         69.7               59.4           10.3           17.3 %
Gross profit                                       76.8               82.2           (5.4 )         (6.6 %)
General and administrative expenses               111.5               52.6           58.9          112.0 %
Depreciation and amortization expense              20.9               19.6            1.3            6.6 %
Professional fees                                   2.9                3.8           (0.9 )        (23.7 %)
Advertising and marketing expenses                  2.1                2.8           (0.7 )        (25.0 %)
Restructuring expenses                              0.3                0.3              -             (- %)
Other operating (income) expense, net             (12.4 )                -          (12.4 )          (NM
Total operating expenses                          125.3               79.1           58.6           74.1 %
(Loss) income from operations                     (48.5 )              3.1          (64.0 )           NM
Loss on extinguishment of debt                     (7.1 )                -           (7.1 )           NM
Other income, net                                   0.1                0.9           (0.8 )        (88.9 %)
Interest expense                                  (25.0 )            (25.2 )          0.2           (0.8 %)
Loss before income taxes                          (80.5 )            (21.2 )        (71.7 )        338.2 %
Income tax benefit (provision)                      0.3               (0.5 )          0.8         (160.0 %)
Net loss                                          (80.2 )     $      (21.7 )   $    (70.9 )        326.7 %
Net loss attributable to noncontrolling
interests                                          (1.0 )
Net loss attributable to Shift4
Payments, Inc.                             $      (79.2 )


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Gross Revenue

Gross revenue was $341.2 million for the six months ended June 30, 2020,
compared to $335.5 million for the six months ended June 30, 2019, an increase
of $5.7 million or 1.7%. Gross revenue is comprised of payments-based revenue
and subscription and other revenues.

Payments-based revenue was $297.6 million for the six months ended June 30,
2020, compared to $293.5 million for the six months ended June 30, 2019, an
increase of $4.1 million or 1.4%. The increase in payments-based revenue was
driven by an increase in end-to-end payment volume of $0.2 billion or 2.0%, for
the six months ended June 30, 2020 as compared to the six months ended June 30,
2019. The COVID-19 pandemic impacted our end-to-end payment volumes beginning
mid-March when shelter-in-place, social distancing, the closing of non-essential
businesses and other restrictive measures were first put in place across the
United States. Since mid-March, we have seen a significant recovery in our
end-to-end payment volumes and, for the trailing seven days leading up to June
30, 2020, end-to-end payment volumes are approximately 90% of pre-COVID-volumes
in 2020.

Subscription and other revenues were $43.6 million for the six months ended June
30, 2020, compared to $42.0 million for the six months ended June 30, 2019, an
increase of $1.6 million or 3.8%. The increase was driven by the Merchant Link
Acquisition, which contributed $7.3 million in the six months ended June 30,
2020, offset by a decline in customer billing revenue due to temporary fee
waivers on certain products from March 2020 through June 2020 of $1.9 million as
a result of the COVID-19 pandemic, as well as a decline in hardware revenue and
software license sales of $2.3 million, for the six months ended June 30, 2020
as compared to the six months ended June 30, 2019.

Network Fees

Network fees were $194.7 million for the six months ended June 30, 2020, compared to $193.9 million for the six months ended June 30, 2019, an increase of $0.8 million or 0.4%. This increase is correlated with the increase in end-to-end payment volume as described above.



Gross revenue less network fees was $146.5 million for the six months ended June
30, 2020, compared to $141.6 million for the six months ended June 30, 2019, an
increase of $4.9 million or 3.5%. The increase in gross revenue less network
fees is correlated with the increase in end-to-end payment volume. See "-Key
performance indicators and non-GAAP measures" for a reconciliation of gross
profit to gross revenue less network fees.

Other costs of sales



Other costs of sales was $69.7 million for the six months ended June 30, 2020,
compared to $59.4 million for the six months ended June 30, 2019, an increase of
$10.3 million, or 17.3%. This increase was primarily a result of:

• the Merchant Link Acquisition, which contributed $3.2 million to other

costs of sales for the six months ended June 30, 2020;

• higher capitalized acquisition cost amortization of $2.4 million related to


       deal bonuses;


  • an increase in equipment deployed for new contracts of $3.1 million;

• higher capitalized software development amortization of $0.9 million; and

• higher gross revenue less network fees driving higher residual commissions


       of $0.4 million.


Operating expenses

General and administrative expenses. General and administrative expenses were
$111.5 million for the six months ended June 30, 2020, compared to $52.6 million
for the six months ended June 30, 2019, an increase of $58.9 million or 112.0%.
The increase was primarily due to equity-based compensation expense of $50.0
million and $11.0 million in change of control liabilities recognized as a
result of the IPO, offset by $13.8 million in non-cash adjustments for
contingent liability valuations and deferred compensation arrangements. See Note
21 to our accompanying unaudited consolidated financial statements for more
information on equity-based compensation and Note 12 to our accompanying
unaudited condensed consolidated financial statements for more information on
these contingent liabilities. In addition, general and administrative expenses
increased $13.3 million in 2020 due to the Merchant Link Acquisition.

Depreciation and amortization expense. Depreciation and amortization expense was
$20.9 million for the six months ended June 30, 2020, compared to $19.6 million
for the six months ended June 30, 2019, an increase of $1.3 million or 6.6%. The
increase was primarily due to the Merchant Link Acquisition, which contributed
$1.1 million to depreciation and amortization expense in the six months ended
June 30, 2020.

Professional fees. Professional fees were $2.9 million for the six months ended
June 30, 2020, compared to $3.8 million for the six months ended June 30, 2019,
a decrease of $0.9 million or 23.7%. The decrease was primarily due to higher
professional fees incurred in 2019 resulting from nonrecurring costs associated
with activities to prepare for our IPO.

Advertising and marketing. Advertising and marketing expenses were $2.1 million
for the six months ended June 30, 2020, compared to $2.8 million for the six
months ended June 30, 2019, a decrease of $0.7 million or 25.0%. The decrease
was primarily due to postponing trade shows originally scheduled during the
second quarter of 2020 as a result of the COVID-19 pandemic.

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Restructuring expenses. Restructuring expenses were $0.3 million for both the six months ended June 30, 2020 and 2019. Restructuring expenses represent accretion on the one-time restructuring expenses incurred in 2018 for a historical acquisition. See Note 4 to our accompanying unaudited condensed consolidated financial statements for more information on restructuring expenses.

Other operating (income) expense, net



Other operating (income) expense, net includes the impact of modifying the terms
and conditions of our SaaS arrangements and updating our operational procedures.
As a result, beginning June 30, 2020, hardware provided under our SaaS
agreements is accounted for as an operating lease, whereas prior to June 30,
2020, these arrangements were accounted for as sales-type leases. An adjustment
of $12.4 million was recorded to reflect the impact of the lease modifications.
Prior to amending the terms, the sales-type lease accounting treatment impacted
net income negatively by $8.6 million and $6.3 million for the six months ended
June 30, 2020 and 2019, respectively.

Loss on extinguishment of debt



In connection with the pre-payment of $59.8 million on the First Lien Term Loan
Facility and the full repayment of $130.0 million on the Second Lien Term Loan
Facility, we incurred a non-cash loss on extinguishment of debt of $7.1 million
representing the unamortized capitalized financing costs associated with the
prepaid debt. See Note 10 to our accompanying unaudited condensed consolidated
financial statements for more information.



Other income, net



Other income, net was $0.1 million for the six months ended June 30, 2020,
compared to $0.9 million for the six months ended June 30, 2019, a decrease of
$0.8 million or 88.9%. The decrease is driven by unearned contingent liabilities
associated with our residual commission buyout agreements.

Interest expense



Interest expense was $25.0 million for the six months ended June 30, 2020,
compared to $25.2 million for the six months ended June 30, 2020, a decrease of
$0.2 million or 0.8%. This decrease in interest expense was primarily due to the
pre-payments for the First Lien and Second Lien Term Loan Facilities, as well as
the repayment of the Revolving Credit Facility, in June 2020, which impacted
interest expense by approximately $1.2 million, partially offset by additional
borrowings under the First Lien Term Loan Facility from refinancing of our
outstanding indebtedness in October 2019 and additional borrowings under the
Revolving Credit Facility during 2020 prior to the pre-payments.

Income tax provision



The effective tax rate for the six months ended June 30, 2020 was (0.4)%,
compared to the effective tax rate for the six months ended June 30, 2019 of
2.4%. The 2020 income tax benefit was different than the U.S. federal statutory
income tax rate of 21% primarily due to the loss allocated to the noncontrolling
interest, changes in the valuation allowances in the United States and recording
a tax benefit of $0.6 million for a net operating loss carryback at Shift4
Corporation which was allowed due to the CARES Act. The 2019 income tax expense
was different than the U.S. federal statutory income tax rate of 21% primarily
due to Shift4 Payments, LLC being treated as a partnership and not paying income
tax. The change in the effective tax rate between the periods was primarily a
result of a mix of earnings between entities, the 2020 net operating loss
carryback due to the CARES Act and the change in the noncontrolling interest and
valuation allowance adjustment.

Net loss attributable to noncontrolling interests



Net loss attributable to noncontrolling interests of Shift4 Payments, LLC was
$(1.0) million for the six months ended June 30, 2020. There was no net loss
attributable to noncontrolling interests of Shift4 Payments, LLC for the six
months ended June 30, 2019 as the Reorganization Transactions occurred on June
4, 2020 and the IPO was consummated on June 9, 2020.

Net loss attributable to Shift4 Payments, Inc.

Net loss attributable to Shift4 Payments, Inc. was $(79.2) million for the six months ended June 30, 2020.



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Key performance indicators and non-GAAP measures

The following table sets forth our key performance indicators and non-GAAP measures for the periods presented.





                                               Three months ended June 30,           Six months ended June 30,
(in millions)                                   2020                 2019              2020               2019
End-to-end payment volume                  $      4,240.0       $      5,501.6     $    10,386.1       $ 10,163.2
Gross revenue less network fees                      67.4                 75.3             146.5            141.6
EBITDA                                              (45.8 )               20.2             (19.7 )           34.2
Adjusted EBITDA                                      14.8                 24.0              32.3             44.6




End-to-end payment volume

End-to-end payment volume is defined as the total dollar amount of card payments
that we authorize and settle on behalf of our merchants. This volume does not
include volume processed through our gateway-only merchants.

Gross revenue less network fees, EBITDA and adjusted EBITDA



We use supplemental measures of our performance which are derived from our
consolidated financial information but which are not presented in our
consolidated financial statements prepared in accordance with GAAP. These
non-GAAP financial measures include: gross revenue less network fees, which
includes interchange and assessment fees; earnings before interest expense,
income taxes, depreciation, and amortization, or EBITDA; and adjusted EBITDA.
Gross revenue less network fees represents a key performance metric that
management uses to measure changes in the mix and value derived from our
customer base as we continue to execute our strategy to expand our reach to
serve larger, complex merchants. Adjusted EBITDA is the primary financial
performance measure used by management to evaluate its business and monitor
results of operations. Adjusted EBITDA represents EBITDA further adjusted for
certain non-cash and other non-recurring items that management believes are not
indicative of ongoing operations. These adjustments include acquisition,
restructuring and integration costs, equity-based compensation expense,
management fees and other nonrecurring items.

We use non-GAAP financial measures to supplement financial information presented
on a GAAP basis. We believe that excluding certain items from our GAAP results
allows management to better understand our consolidated financial performance
from period to period and better project our future consolidated financial
performance as forecasts are developed at a level of detail different from that
used to prepare GAAP-based financial measures. Moreover, we believe these
non-GAAP financial measures provide our stakeholders with useful information to
help them evaluate our operating results by facilitating an enhanced
understanding of our operating performance and enabling them to make more
meaningful period to period comparisons. There are limitations to the use of the
non-GAAP financial measures presented in this report. Our non-GAAP financial
measures may not be comparable to similarly titled measures of other companies.
Other companies, including companies in our industry, may calculate non-GAAP
financial measures differently than we do, limiting the usefulness of those
measures for comparative purposes.

The non-GAAP financial measures are not meant to be considered as indicators of
performance in isolation from or as a substitute for net income (loss) prepared
in accordance with GAAP, and should be read only in conjunction with financial
information presented on a GAAP basis. Reconciliations of EBITDA and adjusted
EBITDA to its most directly comparable GAAP financial measure are presented
below. We encourage you to review the reconciliations in conjunction with the
presentation of the non-GAAP financial measures for each of the periods
presented. In future fiscal periods, we may exclude such items and may incur
income and expenses similar to these excluded items.

Reconciliations of gross revenue less network fees, EBITDA and adjusted EBITDA



The tables below provide reconciliations of gross profit to gross revenue less
network fees and net loss on a consolidated basis for the periods presented to
EBITDA and adjusted EBITDA.

Gross revenue less network fees:





                                               Three months ended June 30,            Six months ended June 30,
(in millions)                                  2020                  2019              2020               2019
Gross profit                               $        32.3         $        43.6     $       76.8       $       82.2
Add back: Other costs of sales                      35.1                  31.7             69.7               59.4
Gross revenue less network fees            $        67.4         $        75.3     $      146.5       $      141.6


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EBITDA and adjusted EBITDA:



                                             Three months ended June 30,            Six months ended June 30,
(in millions)                                 2020                  2019             2020               2019
Net loss                                 $         (75.0 )       $      (8.2 )          (80.2 )            (21.7 )
Interest expense                                    11.7                12.7             25.0               25.2
Income tax (benefit) provision                      (0.6 )               0.4             (0.3 )              0.5
Depreciation and amortization expense               18.1                15.3             35.8               30.2
EBITDA                                             (45.8 )              20.2            (19.7 )             34.2
Acquisition, restructuring and
integration costs (a)                               12.9                 4.2              3.1               10.9
Equity-based compensation (b)                       50.0                   -             50.0                  -
Impact of lease modifications (c)                  (12.4 )                 -            (12.4 )                -
Management fees (d)                                  0.3                 0.5              0.8                1.0
Other nonrecurring items (e)                         9.8                (0.9 )           10.5               (1.5 )
Adjusted EBITDA                          $          14.8         $      24.0             32.3       $       44.6

(a) For the three months ended June 30, 2020, consists primarily of change of

control liabilities as a result of the IPO of $11.0 million and fair value

adjustments to contingent liabilities of $1.5 million. For the six months

ended June 30, 2020, consists primarily of change of control liabilities as a

result of the IPO of $11.0 million offset by fair value adjustments to

contingent liabilities of $(7.0) million and deferred compensation

arrangements of $(2.1) million. For the three and six months ended June 30,

2019, consists primarily of fair value adjustments to contingent liabilities

of $2.7 million and $6.8 million, respectively, deferred compensation

arrangements of $0.3 million and $1.5 million, respectively, and one-time

professional fees of $0.1 million and $0.8 million, respectively. See Notes 4

and 12 to the accompanying unaudited condensed consolidated financial

statements for more information on the restructuring expenses and contingent

liability adjustments, respectively.

(b) Represents the equity-based compensation expense for restricted stock units

that vest over time and are not subject to continued service, as well as the

restricted stock units that vest ratably over time and are subject to

continued employment. See Note 21 to our accompanying unaudited consolidated

financial statements for more information on equity-based compensation.

(c) Effective June 30, 2020, we modified the terms and conditions of our SaaS

arrangements and updated operational procedures. As a result, beginning June

30, 2020, hardware provided under our SaaS agreements is accounted for as an

operating lease, whereas prior to June 30, 2020, these arrangements were

accounted for as sales-type leases. This adjustment represents the one-time

cumulative impact of modifying the contracts effective June 30, 2020. Prior

to amending the terms, the sales-type lease accounting treatment impacted

EBITDA and adjusted EBITDA negatively by $4.0 million and $8.6 million for

the three and six months ended June 30, 2020, respectively, and $3.3 million

and $6.3 million for the three and six months ended June 30, 2019,

respectively.

(d) Represents fees to the Continuing Equity Owners for consulting and managing

services through the date of the IPO. These fees are not required to be paid

subsequent to the IPO. See Note 15 to the accompanying unaudited condensed

consolidated financial statements for more information about these related

party transactions.

(e) For the three and six months ended June 30, 2020, primarily consists of a

$7.1 million loss on extinguishment of debt associated with the debt

pre-payments and $1.6 million for temporary fee waivers given on certain

products from March 2020 through June 2020 as a result of COVID-19. See Note

10 to the accompanying unaudited condensed consolidated financial statements

for more information on the loss on extinguishment of debt.

Liquidity and capital resources

Overview



We have historically sourced our liquidity requirements primarily with cash flow
from operations and, when needed, with borrowings under our Credit Facilities.
The principal uses for liquidity have been debt service, capital expenditures
(including research and development) and funds required to finance acquisitions.
Given the impact the COVID-19 pandemic has had on the restaurant and hospitality
industries, we continue to evaluate and take action, as necessary, to preserve
adequate liquidity and ensure we can continue to operate during these uncertain
times.

The following table sets forth summary cash flow information for the periods
presented.



                                                         Six months ended June 30,
(in millions)                                             2020               2019
Net cash provided by operating activities             $        6.7       $  

22.9


Net cash used in investing activities                        (16.7 )            (17.9 )
Net cash provided by (used in) financing activities          250.3               (4.6 )
Change in cash                                        $      240.3                0.4




Operating activities

Net cash provided by operating activities consists of net loss adjusted for certain non-cash items and changes in other assets and liabilities.

For the six months ended June 30, 2020, cash provided by operating activities of $6.7 million is primarily a result of:

• net loss of $(80.2) million adjusted for non-cash expenses, including

equity-based compensation of $50.0 million, depreciation and amortization


       of $35.8 million, cumulative impact of modifying our lease contracts of
       $(12.4) million, loss on extinguishment of debt


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of $7.1 million, revaluation of contingent liabilities of $(7.0) million,

provision for bad debts of $5.4 million and amortization of capitalized

financing costs of $2.1 million; plus,

• changes in operating assets and liabilities of $6.0 million, which is

primarily a result of change of control liabilities established at the time

of the IPO of $11.0 million, offset by working capital fluctuations.

For the six months ended June 30, 2019, cash provided by operating activities of $22.9 million is primarily a result of:

• net loss of $(21.7) million adjusted for non-cash expenses, including

depreciation and amortization of $30.2 million, revaluation of contingent


       liabilities of $6.8 million, provision for bad debts of $2.5 million and
       amortization of capitalized financing costs of $1.9 million; plus,

• changes in operating assets and liabilities of $3.5 million, which is a

result of working capital fluctuations, primarily due to the deferred

tenant improvement allowance received for leasehold improvements made to


       our Las Vegas office.


Investing activities

Net cash used in investing activities includes purchases of future commission
streams of our software partners, purchases of property and equipment,
capitalized software development costs and upfront processing bonuses provided
to software partners.

Net cash used in investing activities was $16.7 million for the six months ended
June 30, 2020, a decrease of $1.2 million compared to net cash used in investing
activities of $17.9 million for the six months ended June 30, 2019. This
decrease is primarily the result of:

• a decrease of $4.8 million in acquisition of property, plant and equipment

driven by leasehold improvements made in 2019 to our Las Vegas office;

partially offset by,




    •  an increase of $2.9 million in capitalized software development costs
       driven by development for additional new products and enhancements and
       timing of when technological feasibility is established; and,

• an increase in costs to obtain contracts of $1.0 million due to growth in

merchants that subscribe to our end-to-end payments platform.

Financing activities



Net cash provided by financing activities was $250.3 million for the six months
ended June 30, 2020, an increase of $254.9 million, compared to net cash used in
financing activities of $4.6 million for the six months ended June 30, 2019.
This increase was primarily due to the IPO and concurrent private placement net
proceeds of approximately $465.7 million after deducting underwriting discounts,
commissions and offering costs paid in 2020, offset by the partial repayment of
the First Lien Term Loan Facility and full repayment of our Second Lien Term
Loan Facility, totaling $189.8 million.

Credit Facilities



As of June 30, 2020, we had $450.0 million outstanding under the First Lien Term
Loan Facility. Both the Second Lien Term Loan Facility and the Revolving Credit
Facility were paid in full using the proceeds from the IPO and concurrent
private placement. The Revolving Credit Facility has a borrowing capacity of
$89.5 million, net of a $0.5 million letter of credit. As of June 30, 2020, we
had no outstanding borrowings under the Revolving Credit Facility.

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Contractual obligations

The only significant changes in contractual obligations since December 31, 2019,
as disclosed in the Prospectus, result from payments during the six months ended
June 30, 2020 on our Credit Facilities and Revolving Credit Facility. See Note
10 in the notes to the accompanying unaudited condensed consolidated financial
statements for further information about our debt financings. The table below
reflects obligations based on the amounts outstanding at June 30, 2020.



                                                    Payments due by period
                                                    2020
                                                 (remaining
                                                     six          2021 and       2023 and
    (in millions)                     Total        months)          2022           2024
    Long-term debt                   $ 450.0     $         -     $        -     $    450.0
    Interest on long-term debt (1)     111.0            12.7           50.2           48.1
    Other financing arrangements         2.6             1.4            1.2              -
    Total                            $ 563.6     $      14.1     $     51.4     $    498.1

(1) Assumes interest payment through stated maturity. Payments herein are subject

to change, as payments for variable rate debt have been estimated.

Off-balance sheet arrangements

During the periods presented, we did not engage in any off-balance sheet financing activities other than those reflected in the notes to the accompanying unaudited condensed consolidated financial statements.

Critical accounting policies



Our discussion and analysis of our historical financial condition and results of
operations for the periods described is based on our audited consolidated
financial statements, and our unaudited interim condensed consolidated financial
statements, each of which have been prepared in accordance with U.S. GAAP. The
preparation of these historical financial statements in conformity with U.S.
GAAP requires management to make estimates, assumptions and judgments in certain
circumstances that affect the reported amounts of assets, liabilities and
contingencies as of the date of the financial statements and the reported
amounts of revenue and expenses during the reporting periods. We evaluate our
assumptions and estimates on an ongoing basis. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Additionally, the full impact of the
COVID-19 pandemic is unknown and cannot be reasonably estimated. However, we
have made accounting estimates for our allowance for doubtful accounts,
valuation of our contingent liabilities, other intangible assets and goodwill
based on the facts and circumstances available as of the reporting date. Actual
results may differ from these estimates under different assumptions or
conditions.

We have provided a summary of our significant accounting policies in Note 1 to
our accompanying unaudited condensed consolidated financial statements. The
following critical accounting discussion pertains to accounting policies
management believes are most critical to the portrayal of our historical
financial condition and results of operations and that require significant,
difficult, subjective or complex judgments. Other companies in similar
businesses may use different estimation policies and methodologies, which may
impact the comparability of our financial condition, results of operations and
cash flows to those of other companies.

Revenue recognition



Application of the accounting principles in U.S. GAAP related to the measurement
and recognition of revenue requires us to make judgments and estimates. Complex
arrangements with nonstandard terms and conditions may require significant
contract interpretation to determine the appropriate accounting. Specifically,
the determination of whether we are a principal to a transaction or an agent can
require considerable judgment. We have concluded that we are the principal in
our payment processing arrangements as we control the service on our payments
platform, which is transformative in nature and allows for front-end and
back-end risk mitigation, merchant portability, third party software
integrations, and enhanced reporting functionality. We also contract directly
with our merchants and have complete pricing latitude on the processing fees
charged to our merchants. As such, we bear the credit risk for network fees and
transactions charged back to the merchant. In addition, our SaaS arrangements
include multiple performance obligations with differing patterns of revenue
recognition. For such arrangements, we allocate revenue to each performance
obligation based on its relative standalone selling price, which is based on the
fair value of each product and service. Changes in judgments with respect to
these assumptions and estimates could impact the amount of revenue recognized.

Business combinations



Upon acquisition of a company, we determine if the transaction is a business
combination, which is accounted for using the acquisition method of accounting.
Under the acquisition method, once control is obtained of a business, the assets
acquired, and liabilities assumed, including

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amounts attributed to noncontrolling interests, are recorded at fair value. We
use our best estimates and assumptions to assign fair value to the tangible and
intangible assets acquired and liabilities assumed at the acquisition date. One
of the most significant estimates relates to the determination of the fair value
of these assets and liabilities. The determination of the fair values is based
on estimates and judgments made by management. Our estimates of fair value are
based upon assumptions we believe to be reasonable, but which are inherently
uncertain and unpredictable. Measurement period adjustments are reflected at the
time identified, up through the conclusion of the measurement period, which is
the time at which all information for determination of the values of assets
acquired and liabilities assumed is received, and is not to exceed one year from
the acquisition date. We may record adjustments to the fair value of these
tangible and intangible assets acquired and liabilities assumed, with the
corresponding offset to goodwill.

Additionally, uncertain tax positions and tax-related valuation allowances are
initially recorded in connection with a business combination as of the
acquisition date. We continue to collect information and reevaluate these
estimates and assumptions periodically and record any adjustments to preliminary
estimates to goodwill, provided we are within the measurement period. If outside
of the measurement period, any subsequent adjustments are recorded to the
consolidated statement of operations.

Goodwill and intangible assets



We perform a goodwill impairment test annually at October 1 and whenever events
or circumstances make it more likely than not that impairment may have occurred.
We have determined that our business comprises one reporting unit. We have the
option to first assess qualitative factors to determine whether events or
circumstances indicate it is more likely than not that the fair value of a
reporting unit is greater than its carrying amount, in which case a quantitative
impairment test is not required.

Intangible assets with finite lives are amortized over their estimated useful
life on a straight-line basis. We monitor conditions related to these assets to
determine whether events and circumstances warrant a revision to the remaining
amortization or depreciation period. We test these assets for potential
impairment whenever our management concludes events or changes in circumstances
indicate that the carrying amount may not be recoverable. The original estimate
of an asset's useful life and the impact of an event or circumstance on either
an asset's useful life or carrying value involve significant judgment regarding
estimates of the future cash flows associated with each asset.

Income taxes

Shift4 Payments, LLC is considered a flow-through entity for U.S. federal and
most applicable state and local income tax purposes. As a flow-through entity,
taxable income or loss from Shift4 Payments, LLC is passed through to and
included in the taxable income of its members.

Following the Reorganization Transactions and the consummation of the IPO,
Shift4 Payments, LLC continues to be treated as a pass-through entity. Shift4
Payments, Inc. is subject to U.S. federal, state and local income taxes with
respect to our allocable share of any taxable income of Shift4 Payments, LLC and
will be taxed at the prevailing corporate tax rates.

We entered into a TRA with Shift4 Payments, LLC, each of the Continuing Equity
Owners and each of the Blocker Shareholders that will provide for the payment by
Shift4 Payments, Inc. to the Continuing Equity Owners of 85% of the amount of
certain tax benefits, if any, that Shift4 Payments Inc. actually realizes or in
some circumstances is deemed to realize in its tax reporting, as a result of (1)
the increases in our share of the tax basis of assets of Shift4 Payments, LLC
resulting from any redemptions of LLC interests from the Continuing Equity
Owners, (2) our utilization of certain tax attributes of the Blocker Companies
and (3) certain other tax benefits related to making our payments under the TRA.

In addition to tax expenses, we will also make payments under the TRA, which we
expect to be significant. We will account for the income tax effects and
corresponding TRA's effects resulting from future taxable purchases or
redemptions of LLC Interests of the Continuing LLC Owners by us or Shift4
Payments, LLC or the Blocker Shareholders by recognizing an increase in our
deferred tax assets, based on enacted tax rates at the date of the purchase or
redemption. Further, we will evaluate the likelihood that we will realize the
benefit represented by the deferred tax asset and, to the extent that we
estimate that it is more likely than not that we will not realize the benefit,
we will reduce the carrying amount of the deferred tax asset with a valuation
allowance. The amounts to be recorded for both the deferred tax assets and the
liability for our obligations under the TRA will be estimated at the time of any
purchase or redemption as a reduction to shareholders' equity, and the effects
of changes in any of our estimates after this date will be included in net
income (loss). Similarly, the effect of subsequent changes in the enacted tax
rates will be included in net income (loss) . We currently believe that all
deferred tax assets will be recovered based upon the projected profitability of
our operations. Judgement is required in assessing the future tax consequences
of events that have been recognized in Shift4 Payments, Inc.'s financial
statements. A change in the assessment of such consequences, such as realization
of deferred tax assets, changes in tax laws or interpretations thereof could
materially impact our results. As we currently do not generate taxable income,
the consolidated financial statements assume that no payments under the TRA will
be made.

Noncontrolling Interests

After the Reorganization Transactions, we are the sole managing member of Shift4
Payments, LLC. We own 49.8% of the economic interest of Shift4 Payments, LLC and
we have the majority of the voting interest in and control the management of
Shift4 Payments, LLC. As a result, we consolidate the financial results of
Shift4 Payments, LLC and report a noncontrolling interest of 50.2% related to
the interests in Shift4 Payments, LLC held by the Continuing Equity Holders on
our unaudited condensed consolidated balance sheet.

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New accounting pronouncements



For information regarding new accounting pronouncements, and the impact of these
pronouncements on our unaudited condensed consolidated financial statements, if
any, refer to Note 1 to our accompanying unaudited condensed consolidated
financial statements.

JOBS Act



We qualify as an "emerging growth company" pursuant to the provisions of the
JOBS Act, enacted on April 5, 2012. Section 102 of the JOBS Act provides that an
"emerging growth company" can take advantage of the extended transition period
provided in Section 7(a)(2)(B) of the Securities Act for complying with new or
revised accounting standards. We are electing to delay the adoption of new or
revised accounting standards, and as a result, we may not comply with new or
revised accounting standards on the relevant dates on which adoption of such
standards is required for non-emerging growth companies. As a result, our
consolidated financial statements may not be comparable to companies that comply
with new or revised accounting pronouncements as of public company effective
dates.

We are in the process of evaluating the benefits of relying on other exemptions
and reduced reporting requirements provided by the JOBS Act. Subject to certain
conditions set forth in the JOBS Act, if as an emerging growth company we choose
to rely on such exemptions, we may not be required to, among other things,
(1) provide an auditor's attestation report on our systems of internal controls
over financial reporting pursuant to Section 404, (2) provide all of the
compensation disclosure that may be required of non-emerging growth public
companies under the Dodd-Frank Act, (3) comply with the requirement of the PCAOB
regarding the communication of critical audit matters in the auditor's report on
the financial statements, and (4) disclose certain executive
compensation-related items such as the correlation between executive
compensation and performance and comparisons of the Chief Executive Officer's
compensation to median employee compensation. These exemptions will apply until
we no longer meet the requirements of being an emerging growth company. We will
remain an emerging growth company until the earlier of (a) the last day of the
fiscal year (i) following the fifth anniversary of the completion of our IPO,
(ii) in which we have total annual gross revenue of at least $1.07 billion or
(iii) in which we are deemed to be a large accelerated filer, which means the
market value of our common stock that is held by non-affiliates exceeds
$700.0 million as of the last business day of our prior second fiscal quarter,
and (b) the date on which we have issued more than $1.07 billion in
non-convertible debt during the prior three-year period.

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