Shift4 Payments, Inc. (FOUR) Q2 2022 Earnings Call Transcript

Shift4 Payments, Inc. (FOUR 1.06%)
Q2 2022 Earnings Call
Aug 04, 2022, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Hello, and welcome to the Shift4 second quarter earnings call. My name is Alex, and I'll be coordinating the call today. [Operator instructions] I will now hand over to your host, Tom McCrohan, head of investor relations. Tom, over to you.

Tom McCrohan -- Head of Investor Relations

Thank you, Alex, and good morning, everyone, and welcome to Shift4 second quarter earnings conference call. With me on the call today are Jared Isaacman, Shift4's founder and chief executive officer, Taylor Lauber, our president and chief strategy officer, and Nancy Disman. This call is being webcast on the investor relations section of our website, which can be found at investors.shift4.com. Our quarterly shareholder letter containing quarterly financial results has also 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 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 Jared. Jared?

Jared Isaacman -- Founder and Chief Executive Officer

Thanks, Tom, and good morning, everyone. So we have lots to cover today. As you may have seen from an 8-K filed last night, Brad Herring, our chief financial officer, is pursuing other opportunities. We're really grateful for the time and effort Brad has contributed to Shift4.

Since his joining the company in 2019, we've gone public on the New York Stock Exchange. We've diversified into six new verticals. We completed several acquisitions and grown our end-to-end payment volume over 200% and all with the backdrop of a global pandemic. So Brad played a key role in all this, and we're sincerely thank him for his service.

As of tomorrow, Brad will be succeeded by Nancy Disman, who is both a phenomenal industry executive and a good friend to ship for. Nancy most recently served on our board of directors from which she has resigned effective as of tomorrow. She is also recently the CFO and CAO of Intrado. Prior to Intrado, Nancy served as the CFO and CAO of TSYS merchant services following TSYS' acquisition of TransFirst, where she also served as CFO.

Nancy has also held executive roles at Cynergy Data Corporation and First Data Corporation, and we're really excited to continue working with Nancy in her new role. So now for the quarterly update, as mentioned in my letter, we are really pleased with our results this quarter, including the progress we are making in all our new verticals, although our high-growth core continues to be the primary contributor of our overall performance. For the second quarter, we generated 43% year-over-year growth in our end-to-end payment volume and 34% year-over-year growth in our gross revenue less network fees. We continue to gain market share across our high-growth core growing from net new wins and gateway conversions.

And now with our new verticals beginning to ramp meaningfully, we believe we are positioned to deliver consistent profitable growth even as we continue our expansion into new verticals and new geographic markets in the months and years ahead. As in the past, I will focus my comments initially on our high-growth core then speak to our new markets and verticals. But before getting into the components of our business, I want to highlight our current thoughts about the overall economy and its potential impact to our business. In short, we have not yet witnessed a material impact on our overall volumes from changes in consumer behavior.

Our four-year volume CAGR improved from last quarter, and our monthly volume trends continue to improve as we approach the seasonally stronger summer months. Having said that, we're also realists. We are aware that persistent inflation headwinds could ultimately influence consumer behavior, and this could result in consumers pulling back on some discretionary spending. We are fortunate to have invested in our new verticals, as well as specific levers that are less impacted by economic cycles.

In short, we believe that we are prepared to manage our business through all economic cycles, just like we have done over the last 23 years, and we intend to continue growing revenue and volume every year through the best and most challenging of economic times. To this end, we are leaving our end-to-end volume guidance unchanged for this year while increasing our gross revenue less network fees, increasing adjusted EBITDA and increasing adjusted free cash flow guidance. While we cannot predict consumer behavior in this uncertain environment, we have witnessed early success in our gateway sunset strategy, which gives us confidence in our ability to drive incremental revenue and EBITDA above our prior expectations. Our conversations with our gateway-only customers are very encouraging.

And we view our decision to leave volume unchanged but increasing revenue and adjusted EBITDA guidance as a balanced approach to take during these uncertain times. I want to emphasize our belief that unlike some of our peers, we are not completely at the mercy of the broader economy. Our gateway and software-only merchants provide a highly unique asset and that we can grow exponentially without even adding a new customer. I'm going to focus the remainder of my comments on the performance of our high-growth core and then an update on our new markets and verticals.

So with respect to high-growth core, as you can see this quarter, the primary driver of our performance does remain high growth. The high-growth core represents the payment opportunities we pursue primarily in complex restaurants, hospitality and specialty retailers. And as many of you already know, Shift4 has been growing at accelerated rates in this arena by leveraging our unique software integrations and pain point solving technology. We currently have over 450 now unique software integrations, and we continue to win shares through a combination of migrating merchants off our gateway platform to our end-to-end service, as well as just net new wins in what is a very large addressable market.

Our growing library of software integrations results in more links in the value chain to deliver a lower effective cost of service to our customers. Said differently, we are able to offer our customers more capabilities at a lower cost because they no longer need to depend on a multitude of other costly vendors to attempt to achieve a comparable solution. Throughout the quarter, we signed a number of new resort properties and high-end restaurants, including the soon to be opened Nobu Hotel in Atlanta, the New Orleans-based Hotel Monteleone, The Langham hotel in Chicago, Manhattan's Gansevoort Hotel, and Feld Entertainment, which operates Disney on Ice, Monster Jam, Ringling Brothers, and Sesame Street Live!, among others. As a result, during the second quarter, we again organically grew our end-to-end payment volumes faster than any of our peers and faster than Visa and Mastercard.

One proof point would be our nearly 42% 4-year volume CAGR, including 52% volume CAGR in restaurants and 170% volume CAGR in lodging. As a reminder, this four-year volume CAGR occurred during an unprecedented pandemic when our end markets have been quite impacted. For the quarter, our volume growth is 307% of prepandemic 2019 levels along with gross revenue less network fees at 243% and adjusted EBITDA at 272% over the same period. It's worthwhile calling out that this growth took place without the benefit of our new markets and verticals, which are now just beginning to ramp.

As discussed in the prior quarters, we have just begun removing complexity, the leading parts and increasing organizational efficiencies by executing on our gateway sunset initiative and are very confident in our ability to successfully convert gateway-only merchants to our end-to-end platform or get paid more in line with the value our payment technology provides. While it's really early, the results are very promising, and Taylor is going to go into that in just a few minutes. I did want to highlight a case study on the Gateway Sunset strategy that I believe is emblematic of why we are so confident in this approach. During the quarter, we signed a world-renowned motorcycle franchise that we had historically been unsuccessful converting to our end-to-end platform.

We had been soliciting this merchant for nearly five years. And despite our efforts, it was ultimately our gateway sunset initiative that entice this merchant to engage with us to discuss the merits of switching to our end-to-end platform. We are in the process of migrating this motorcycle franchise to our platform. And we are having hundreds of similar conversations with other gateway-only customers.

So I cannot be more excited about the pipeline. The gateway sunset initiative is the right strategy at the right time and for all the right reasons. While contribution from our gateway sunset initiative was minimal this quarter, we're highly confident the initiative will result in us getting paid fairly regardless of clients pay us more to remain gateway-only or elect to convert to our end-to-end platform. We expect that it will contribute incremental adjusted EBITDA and adjusted free cash flow and is one of the factors driving our increase to our full year guidance.

In restaurants, we reached an agreement with enterprise operator, BJ's Restaurant and Brewhouse, a Southern California headquartered national restaurant chain with over 200 restaurants in 29 states. We signed a multiyear agreement with BJ's to provide POS, software as a service for all their restaurants across the U.S. We also reached a similar agreement with one of the world's largest restaurant groups. These opportunities represent a meaningful recurring revenue and EBITDA contribution that we expect to be realized more toward the latter part of '22 and into 2023.

This represents the first of several notable restaurant opportunities we are in discussions with on our restaurant POS offering. Moving to SkyTab POS. I would like to update you on the progress of our next-generation POS product that will serve the restaurant market. Restaurants remain a key market for us, and that is why we have invested over the last few years in a new cloud-based restaurant POS offering called SkyTab.

We are getting ready to release SkyTab POS from beta at the end of this month, and it's already installed in thousands of locations. SkyTab is not just designed for restaurants as we are also having early success in selling SkyTab at theme parks and resorts. We also intend to bring this product into international markets. Recall, we are uniquely advantaged to pursue over 125,000 restaurants that are already customers using some form of Shift4 technology and many of them are not on our end-to-end platform and even less are paying any SaaS charges.

We expect that SkyTab POS will represent the migration path for this existing base of restaurants many of whom are seeking out new capabilities to better serve their patrons in addition to the large addressable market of just new restaurants. SkyTab services the mid- to high-end restaurant customer based on a cloud-based Android technology stack built from the ground up and equipped with very modern and purpose-built space age hardware. We have been going to market with SkyTab through our historic third-party distribution channels but have recently begun pivoting toward direct sales in the same way we go to market in many of our new verticals. We have found some initial successes selectively in-sourcing some of our third-party distribution partners in the most desirable markets as the opportunity to insource distribution becomes an increasingly viable with a cloud-based solution.

We believe we can improve the customer experience alongside margins without compromising the same high-touch support our customers have grown accustomed to receiving. So to summarize our high-growth core, we are excited about the combination of our accelerated gateway conversion plan, the launch of our new SkyTab POS offering and the momentum are high-growth core supported by our unique integrations with over 450 mission-critical software suites. All of this gives us confidence in our outlook and supports our decision to increase our gross revenue less network fees, our adjusted EBITDA and adjusted free cash flow guidance for the full year. So moving on to new verticals.

As I mentioned previously, our impressive volume growth has been without significant benefit from our new verticals. For clarity, we consider our new verticals to be sports and entertainment, gaming, travel, nonprofit and what we refer to as just sexy tech. This should not be surprising. It should be challenging to get the attention of software companies and enterprise merchants to complete a payment integration.

We often see that software companies and merchants tend to want to invest their time in anything, but additional payment integration, which is why they become so valuable once you've achieved it. We are really pleased with the progress we made in the second quarter, though much of the progress was literally made in the last week of June when the Starlink integration went live. So while our new verticals contributed throughout the year and into June, they've only really begun to scale meaningfully in July, and Allegiant Airlines is not expected to go live until late August. So we added a chart on page eight of our quarterly shareholder letter, depicting the year-to-date ramp in monthly volumes for our new markets and while it has taken a bit longer for our new verticals to contribute to our volumes, we feel really good about how that ramp is progressing, the contributions they can make in the second half of the year and how these strategic relationships and verticals aligned with our global expansion aspirations.

To emphasize these points, we do expect to see a much stronger contribution from these verticals as the year progresses. For example, we're in the process of implementing a number of large NCAA and NFL stadium clients in time for this football season. We're adding more states and capturing more volume from BetMGM and turning on more integrations from our nonprofit customers, and we're more than halfway through the Allegiant Airlines integration, and of course, Starlink volumes are on an impressive trajectory as they continue to populate their satellite constellation. I am biased, but I believe that we have never had a merchant in our history that is ramping as quickly or has so much upside at Starlink.

In gaming, we continue to add new commercial and tribal gaming supplier licenses and BetMGM volume has more than tripled since our last earnings call in May. We continue to build upon our early success with BetMGM and added several states this past week alone. As a result, we expect to see a further significant and sustainable spike in volume before the end of the third quarter, given the seasonally strong sports wagering tied to the football season. In nonprofits, we began processing for St.

Jude's in January of this year and overall volume continues to ramp. With our acquisition of The Giving Block, we've seen impressive results across multiple KPIs that Taylor will talk through in just a minute. Given the nature of nonprofits, we do expect the fourth quarter to represent the peak season for donation volume. We are scheduled to complete an integration of Allegiant Airlines by September 1, and we have signed a European travel agency Kiwi.com as a customer and expect to begin processing shortly as well.

Turning back to stadiums. We signed a number of new professional and college sports stadiums, including the University of Alabama, University of Wisconsin, University of Notre Dame and professional sports teams, including the New Orleans Saints and Pelicans where we also provide ticketing. Our VenueNext mobile commerce technology is the category leader in sports and entertainment venues and our software is now installed in well over 100 stadiums in the U.S. Our new business pipeline in this space remains very strong, including international stadium discussions.

Perhaps the most important competitive win this quarter came from sports-focused retailer fanatics. We will process all of Fanatics in-venue payment processing at approximately 50 sporting and entertainment venues, including PGA Tour events and NASCAR races. As a leading manufacturer and distributor of sports-related merchandise, Fanatics will be a tremendous partner as we mutually expand our footprint in the sports and entertainment space. Our performance across these new verticals, alongside our stated international expansion plans, has attracted the interest of many notable customers.

Some are in the negotiation phase. Others we have won and, in some cases, we're not permitted to announce publicly. And in others, like Fanatics and time, we have recently selected Shift4 to power their payment strategies. It's worth reinforcing that Shift4 wins because of our ability to solve our clients' problems.

Merchants are not switching to Shift4 to save a basis point or pennies per transaction even though in our experience, they usually benefit from an overall lower effective cost of service. Instead, they switch because we offer complete commerce solutions that enable them to better engage with their customers and patrons such as QR codes, online ordering, mobile and contactless payments, business intelligence and more. This is why despite our continued move upmarket, our net spreads have remained stable over a multiyear period. And our move upmarket has been at an unprecedented pace we have effectively doubled the size of our average merchant since 2019.

So before passing things off to Taylor, I wanted to provide you with an update on our recently completed acquisition of The Giving Block and the pending acquisition of Finaro. The Giving Blocks crypto donation platform continues to sign up new nonprofit customers despite the drop in value in most in crypto assets. As I write this, the single Bitcoin is still valued at over $20,000 and nonprofits are still interested in accepting cryptocurrencies such as Bitcoin. Since we closed the deal back in March, The Giving Block has signed up over 400 new nonprofit customers including the world's largest humanitarian organization, the World Food Programme, as well as many other highlighted in our quarterly shareholder letter.

The Giving Block has introduced a card widget for nonprofit so they can accept traditional card-based donations and the growth in their client base has resulted in a nearly sixfold increase in their SaaS revenues versus a year ago. The team continues to execute on a significant $45 billion cross-sell opportunity and successfully converted several giving block customers to our end-to-end platform. We believe our go-to-market offering remains unique in the nonprofit sector and remain highly attractive to what we view as a $450 billion payment opportunity where we now have a unique right to win. While on the subject of The Giving Block, I would like to personally thank those of you that participated in our carrying with crypto fundraising campaign.

We launched this fundraiser in mid-March to raise awareness within the crypto community, and I agreed to personally match dollar for dollar every crypto donation made on the giving block marketplace up to $10 million. Parts of this fundraising campaign are still underway, and I encourage all of you to check out thegivingblock.com website for more information. We are also making progress receiving all the necessary European regulatory approvals to close on our acquisition of Finaro later this year. As a reminder, we announced the acquisition of Finaro back in March in conjunction with our year-end results.

And for those unfamiliar, Finaro is a European cross-border e-commerce platform with processing capabilities and licenses in Europe and parts of APAC. The two sides -- the two of us are making great progress connecting the payment platform via arm's length partnerships during the regulatory review period, and we have successfully tested transactions between the U.S. and Europe. We intentionally structured the earnout portion of this transaction to encourage both sides to pursue commercial opportunities up until closing, and the teams are working together nicely on a number of initiatives.

For example, we are beginning to refer each other merchants. Finaro services, many e-commerce merchants in Europe that also have U.S. operations supported by U.S. payment processor.

I'm pleased to announce that Denmark-based online sporting goods retailer, Skatepro as one of the first wins alongside Kiwi.com. Skatepro is an e-commerce customer of Finaro, who relied on Finaro for their European e-commerce processing, but outsource their U.S. payment processing to a U.S. competitor.

Going forward, Skatepro will switch the U.S. payment processing to Shift4, effectively consolidating all their global e-commerce payment processing business into a Shift4 Finaro solution. There are many other merchants we are currently in discussion with regarding a joint U.S./EU offering and are pleased that our planned acquisition is yielding synergies in advance of the planned closing date. We do retain significant firepower to pursue additional acquisitions and remain focused on building out our global technology capabilities in the markets to support our signature multinational customer.

We have a low pro forma leverage ratio and a ton of conviction around our strategic plan. Internally, we remain very focused on operational improvements to make us a much more efficient company consistent with the Shift4 way. This includes investments we have made in our payment platform that have delivered 100% uptime during the quarter despite immense growth and something few of our competitors were able to achieve over a comparable time period. In addition to the executive transition mentioned at the outset of the call, this past quarter, we promoted Samantha Weeks to the chief transformation officer role to better align our human resources, learning and development, transformation, project management and mission assurance functions under a single department.

Her team will identify and execute on various productivity improvements, and we are confident our initiatives will drive productivity, excellence and further margin expansion in excess of what we have already communicated earlier this year. I would be remiss if I did not comment on the current market environment adversely impacting financial technology companies, including Shift4. We strongly believe that there remains a disconnect between our growth and our valuation in the public markets. We have generated superior growth and are on track to deliver over 30% revenue growth and over 50% adjusted EBITDA growth this year and expect to generate over $100 million of adjusted free cash flow.

Despite these results, an unparalleled performance during a completely unforeseen pandemic, we still trade well below what I believe to be our intrinsic value. Some will view these comments as self-serving, but I've challenged our company to thoroughly evaluate the cost of being a public company against this backdrop. We view our strategic initiatives, customer wins and operational tactics as highly valuable and even more so during times of economic uncertainty. Sharing them regularly is just one example of the unnecessary headwinds we face.

So with that, let me turn this call over to our president and chief strategy officer, Taylor Lauber. Taylor?

Taylor Lauber -- President and Chief Strategy Officer

Thanks, Jared. And good morning, everyone. I will focus my prepared remarks on how we see our volumes trending for the balance of the year, an update on our acquisitions and then some additional color on our major strategic initiatives, which is primarily our gateway sunset initiative. Our previously provided volume guidance for this year assumed a modest recovery in international and business travel and $3 billion of contribution from the new verticals, such as nonprofit, Starlink, gaming and sports and entertainment venues.

We are benefiting from the ongoing resumption of travel evidenced by the sequential improvement in our lodging volume CAGR although the volume contribution from our new verticals had initially been slower to ramp than we would have predicted. This is both a benefit and a detriment. A detriment because we'd always like to see the volume sooner and a benefit because the work is complex and with complexity comes barriers to entry for our competition. Said more simply, the longer it takes, the more confident we are in our competitive positioning.

This is all to say that we are optimistic for our success in new verticals but still somewhat cautious on the macro environment. We did witness the typical seasonal uptick in volume throughout the quarter and into the month of July. Our hotel volumes continued to grow meaningfully month over month, and we continue to add new hotels at a decent clip. Our volume trends throughout July were consistent with our expectations, but we remain cautious on predicting volume trends for the balance of the year given the uncertainty around consumers' reaction to persistent inflation and rising interest rates.

We do believe that consumers will ultimately pull back on discretionary spending as food and fuel prices remain high but predicting how and when behaviors change remains something we believe everyone is struggling with. We are leaving our volume forecast unchanged for 2022. And despite the delay in new verticals, we find it very encouraging that the contribution from these verticals is starting to ramp up nicely. Turning to acquisitions.

We closed on the acquisition of The Giving Block on February 28 of this year and are working through the necessary European regulatory approvals for a fourth quarter close of Finaro. In regards to The Giving Block, the ongoing volatility in the crypto space has not altered our initial view that our right to win in the nonprofit space is improved by owning The Giving Block. And going to market with a differentiated offering that includes crypto acceptance provides us with a unique advantage. As you recall, we intentionally structured the transaction with a significant portion being tied to revenue targets in order to insulate from any shocks in the crypto markets.

In short, we believe that we are very well protected on our initial investment and the business continues to operate at breakeven. Nonprofits continue to get added to The Giving Block's platform, all of whom are paying SaaS revenues. The customer count is growing, and we remain cautiously optimistic heading into the end of the year as the majority of donations occurred during the fourth quarter and in December more specifically. In the meantime, we continue to execute on the $45 billion cross-sell opportunity and are improving the product every day, including adding the online widgets that Jared mentioned earlier.

For Finaro, we are pleased with our ability to deliver a cross-border solution for global e-commerce merchants and have successfully completed testing transactions between the U.S. and Europe. As Jared highlighted, we will begin processing U.S. e-commerce transactions for Skatepro, kiwi.com, as well as European transactions for Starlink later this year and are in discussions with many more.

As a reminder, we are not including any contribution from the acquisitions in our guidance but do anticipate a positive contribution in 2023. We are leaving our expected 2023 adjusted EBITDA and volume contribution for both Finaro and The Giving Block unchanged. As a reminder, for Finaro, we anticipate $15 billion of end-to-end payment volume and roughly $30 million of adjusted EBITDA contribution. And for The Giving Block, we anticipate roughly $5 million of adjusted EBITDA contribution.

As mentioned in May, we embarked on our gateway sunset strategy during Q2. You will recall that this strategy is comprised of numerous short- and long-term benefits to the company. It is designed to grow revenues, add end-to-end merchants and reduce operational inefficiencies. The pandemic slowed our business in many ways, not the least of which was delaying the implementation of these plans until just now.

Our plan involves limiting our gateway-only offering, deprecating legacy connections and accelerating end-to-end conversions. Our process has been good, having identified roughly $4 billion on such connections and already converted approximately $700 million of that $4 billion. We have also increased pricing, which more appropriately assigns value for the critical services we're providing as a gateway. Another notable event during the quarter is the increased opportunities with regard to M&A.

We've been patient with our capital and suspect that these patients will be well rewarded as we look to execute interesting growth catalysts. As Nancy is in the process of onboarding to become our new CFO effective tomorrow, I will review the financial performance for the quarter. Q2 gross revenues were $507 million, up 44% from the same quarter last year. Gross revenues less network fees were $183 million, an increase of 34% over the last year.

Our revenue growth breaks down as follows: first, a 43% year-over-year increase in net processing revenues, driven by the year-over-year growth in end-to-end boeing. Second, a 25% increase in our SaaS and other revenue stream driven by higher merchant counts in our high-growth core and expansion into new verticals. And finally, our gateway revenue stream was roughly flat year over year as a function of decreased transaction accounts from the gateway conversion I mentioned earlier, offset by a partial quarter of our recently launched gateway sunset strategy. Spreads for the quarter came in at 78 basis points, which is consistent with what we reported for the same period last year.

Similar to our discussion last quarter, Q2 of '21 spreads were depressed approximately 2 basis points because of higher debit mix from the issuance of last year's government stimulus. This is evidenced by our interchange rate, which has increased from 182 basis points in Q2 last year to a more typical 192 basis points this quarter. When adjusting for card mix, spreads in the second quarter of this year declined by approximately 2 basis points year over year. This is expected as we continue to expand into larger merchants and new verticals.

For the quarter, we reported adjusted EBITDA of $66 million, which is up 45% over the same quarter last year. The resulting adjusted EBITDA margin for the quarter was 36%, and which represents a 270 basis points of margin expansion over the same period last year. I want to note that we are continuing to invest methodically into our growth strategy while delivering this margin expansion. Adjusted free cash flow in the quarter was $16.4 million, which compares to a nearly neutral free cash flow position for the same period last year.

It's worth noting that Q2 also includes a semiannual interest payment of roughly $10.4 million, which can distort the quarterly comparisons. And in that regard, makes Q2 look even more favorable for this quarter. The current quarter result brings year-to-date cash flow to just over $30 million, which equates to a free cash flow conversion percentage of roughly 27%. And full reconciliation of the adjusted free cash flow is available in the appendix of our earnings materials.

And then, with respect to capital transactions within the quarter, between April 1 and June 30, we repurchased approximately 3.6 million shares. Our buyback program has cumulatively purchased 4.3 million shares. And as Jared mentioned, we continue to believe the stock is meaningfully below the intrinsic value of the company. You can also see a reconciliation of our shares in the back of our earnings materials.

You will note that our guidance reflects both the cautious outlook on the consumer, but also a significant optimism in the performance of our business during the second half of the year. We believe that the gateway sunset strategy and early indicators for SkyTab and new verticals warrant a modest increase in our gross revenue less network fee outlook and are increasing our guidance range to $690 million to $710 million, up from $675 million to $705 million previously. We are also increasing our full year guidance on adjusted EBITDA and to $255 million to $265 million, up from $240 million to $250 million previously. Finally, we are reaffirming our previously discussed free cash flow conversion rate of 35% to 40%, but do expect full year free cash flow conversion to land toward the upper end of that range? Lastly, I'd like to welcome Nancy to our first earnings call.

Nancy Disman -- Chief Financial Officer

Thanks, Taylor. I've had the privilege of watching Shift4 from my seat as a board member and couldn't be more excited to join and expand on the great foundation, Brad has built in the finance organization. I also look forward to getting to spend time with our shareholders and analysts in the coming weeks.

Taylor Lauber -- President and Chief Strategy Officer

And with that, Alex, we can turn it to questions.

Questions & Answers:

Operator

[Operator instructions] Our first question for today comes from Ashwin Shirvaikar from Citi.Your line is now open. Sorry, Ashwin we're not receiving audio. Your line is now open.

Ashwin Shirvaikar -- Citi -- Analyst

Hey. Sorry about that. Can you hear me now?

Taylor Lauber -- President and Chief Strategy Officer

Yes, we got it.

Ashwin Shirvaikar -- Citi -- Analyst

Great. I wanted to ask with regards to gateway conversions. You seeing success maybe in any particular end markets? And obviously, you've had this arrow in your cooler for some time. Maybe could you review what's different now in terms of client receptivity and if there is economic weakness, would gateway conversions accelerate?

Taylor Lauber -- President and Chief Strategy Officer

Yeah, it's a great question. And I think -- thank you for asking because I think it's worth kind of reemphasizing exactly where we are in this trajectory, right? While we've had a ton of success adding end-to-end payment volume from restaurants and hotels through the pandemic, the reality is this is not at the top of restaurant, now it's all operators' minds during the pandemic. So I think our actions on the gateway have kind of increased the mind share that we have within these merchants minds through the quarter. And I think it's appropriate given where we are toward the end of this pandemic cycle that we've been realizing.

In terms of success. No, we highlighted a few examples just to show how diversified it is. We won some interesting healthcare opportunities. We had our board meeting at the Langham in Chicago, which is a beautiful hotel that we want as a result of these efforts.

It's really a function of which connections we've been prioritizing and how we're attacking those. The case study I cited in my remarks was identifying roughly $4 billion on connections, but quite frankly, have been around a very long time and need to be deprecated. And winning $700 million of annualized volume through just targeting those connections for discussions in the course of about a month and a half. So we feel good about our success rate.

We are approaching it methodically, given kind of exactly where we are in the economic cycle. And in terms of the receptivity, I don't think a downturn in kind of the broader economic cycle diminishes this. And in fact, I think it increases a merchant's desire to seek out kind of the most cost-effective solutions. I think every business operator we talk to right now is thinking longer and harder about expenses, and this is a more efficient solution economically.

So we don't think that while the consumer a slowdown in consumer spending could obviously decrease volume per merchant. We don't think it would slow down this initiative.

Jared Isaacman -- Founder and Chief Executive Officer

Yeah. And Ashwin, Jared here. Just to kind of hone in on the specifics of kind of what verticals in the gateway we're getting traction with. I mean, -- you can really see it in terms of lodging, right? And that makes sense because I think and I'm just going to give some approximate here.

At one point in time, we communicated that we believe across our gateways that we touch approximately 40% of the hotel lodging volume in this country. But from an end-to-end perspective, we've also communicated in the last quarter that we're approximately 10%. So there's a big gap between 10% and 40% that we think is it's easily accessible for us since we're already driving that commerce experience. And at Taylor's point, when they move over to our N10 platform, they're generally getting a lower cost of service.

Now, hotel customers were not easy to pursue during the pandemic. Many of them furloughed their IT departments. They had a lot of other priorities they needed to think about other than migrating their kind of commerce providers. So long way of saying right now that we're having a lot of success winning lodging customers.

We have a long way to go, customers that are, again, very easily accessible, very easy for us to address. So even in the event there was -- there were to be some sort of a slowdown in travel and hospitality, the lift from -- the gross profit lift from that gateway customer moving to end-to-end is what's going to enable us to grow even if economic circumstances were to change this year, which is completely consistent with how we were able to grow during the pandemic when every one of our end markets was incredibly depressed and we still grew end-end payment volume by double digits. So I think lodging is definitely within our high-growth core an area where we're going to continue to have a ton of traction throughout this year and in two years ahead.

Ashwin Shirvaikar -- Citi -- Analyst

Got it. And then, the other question was volume contribution from new verticals as we think of modeling the rest of the year? And maybe a point question on one specific client, Allegiant. It's one client, but it is a measurable client. Was that in your outlook previously, the specific timing, or has that timing also changed?

Jared Isaacman -- Founder and Chief Executive Officer

So we never gave any real specific customer targets in terms of volume. I mean, we might have given some approximations of what we thought they could represent at the investor day last year. We generally in our bridge said, in 2022, we're expecting a contribution of about $3 billion in end-to-end volume from our new verticals. So sure, I mean, if you were to look up what the Allegiant Airlines represent as a stand-alone customer relative to that $3 billion, you could say it's a big portion of it.

At the same time, there's a lot of other customers in there that are monsters. The idea was always that $3 billion target for 2022 in new verticals was to be viewed as conservative, no matter which direction you looked at it from the stadium side, from the Starlink side, from Allegiant side. So I guess probably the real message that we are trying to communicate this quarter is that integrations take a long time. It's largely dependent on third-party software companies that are powering commerce solution or the time that an enterprise customer is willing to commit to work through an integration.

So it did take a little bit longer, but they have essentially all come online with the exception of Allegiant in literally the last week of the second quarter, and it's now ramping pretty quickly as you can see from July. So whether Allegiant is delayed a week or not, whether Starlink is more than people would have expected or whether it's NCAA or NFL, like they're all going to be pretty meaningful contributors. You kind of just choose your own adventure, which one kind of carries the bulk of the weight in the second half of the year.

Ashwin Shirvaikar -- Citi -- Analyst

Right, right. But basically, the $3 billion is still a decent number, and we can take that in traction into next year?

Jared Isaacman -- Founder and Chief Executive Officer

For sure. Allegiant is a big number, but I'd say, geez, I mean, you look at the NCAA stadium, the NFL stadiums we now have that we didn't have before Starlink, even we said BetMGM is ramping up significantly. We added several states just this week alone. So I guess what I'm saying is in terms of that $3 billion bridge in new verticals and certainly whatever they'll represent going into 2023, Allegiant is a nice part of it.

So is everything else, like they're all really beginning to fire.

Ashwin Shirvaikar -- Citi -- Analyst

Understood. Got it. Thank you, guys.

Operator

Thank you. Our next question comes from Tim Chiodo from Credit Suisse. Your line is now open.

Tim Chiodo -- Credit Suisse -- Analyst

Great. Thanks. Good morning, everyone. So I think Jared really hit on it in terms of ship force ability to have an idiosyncratic driver essentially despite the macro.

Given all the macro uncertainty, I think that investors are even more focused on the gateway conversion opportunity for Shift4 than ever. So to that point, I think, Ashwin's question really hit on it, but maybe as a follow-up, maybe you could just recap again the various approaches that you can take. So there's the cost that you have to maintain those connections. Of course, one is the sunset approach, but there's also sort of the quicker price increase.

There's the slower price increase and maybe some other initiatives that you're doing to help better monetize overall, even if it's not a full conversion. Maybe you could just provide some additional context on, maybe the mix of those approaches?

Taylor Lauber -- President and Chief Strategy Officer

Yeah, sure. Hopefully, you also pick up on Jared's comments around us being slightly hesitant to explain our detailed strategies in environments like this. But I'll give you the broad brushes and you captured the essence of it, right, which is that there are significant operational efficiencies to our organization for simply being less of a gateway and then there are significant revenue opportunities for us converting merchants end-to-end. And we balance those two approaches all the time.

So the first and I would say, softest of the approaches that we limited a series of activities that were related to our gateway-only customers. These are services that independent gateways would traditionally provide like moving from one processor to another. We limited those functions and saved several hundred cycles for our operations team every single month. That's an immediate win and, quite frankly, pretty low friction to all of our existing customers.

We also identified roughly $4 billion of connections that, quite frankly, should have been sunsetted longer. We had identified these connections in the end of 2019 when we acquired Merchant Link and it would have been an appropriate in our view to do so during the kind of peak of the pandemic. So that compelled a really nice wave of merchants to move over, and it's simply providing them notice these connections won't stick around for a period of time. I think we spoke about them at a lunch you hosted as well.

Separate from that, we have identified certain categories of merchants that are noneconomic and we just won't maintain that relationship in that context. In almost every case, that's resulted in a nice and meaningful revenue lift from that basket of customers, and we'll continue to do that as the initiative moves on.

Jared Isaacman -- Founder and Chief Executive Officer

Yeah. Jared here. I mean, there's so much to talk about with respect to the gateway sunset initiative and just the gateway conversion strategy in general, which really affords us a pretty unique right to win relative to others that kind of have what they kill out there. I'd say first, as part of gateway sunset, it's probably worthwhile to reinforce that one of our gateways that we acquired in late 2019.

It was a joint venture between two of the largest payment companies in the world and then intentionally underprice many of the customers on that platform in order to kind of capture the economics upstream of the gateway at one of those two financial institutions. I mean, almost to a ridiculous level. So just the fact that those agreements, some of them are dated 10, 15 years old, but they are absolutely enormous customers, are coming up for renewal. It's kind of a time to have a reset of what actually is the kind of fair value for the service that's being provided.

And what it's doing is it's stimulating conversations on our end-to-end platform that had we not taken this approach, would never happen. I also want to go to the complete other end of the spectrum, which is not just kind of the stick based, but carrot based. The PCI council out there does a great service for us. Every four or five years, they pretty much declare that every EMV contactless device that's deployed in the country is no longer compliant.

In which case, every one of the customers is forced to consider a pretty large capital outlay. Now, we've always leaned in heavy in terms of the inventory we're willing to carry for EMV devices. We have our own PCI-validated key injection facility. So we maintain a chain of custody of those devices because we know at any given time, you could have a very large, several hundred location customers decide to move to our end-to-end platform, and we want to light them up rather quick.

So constantly, hotels large restaurants, even specialty retailers on our platform are coming up on decision points to replace those devices. We become the easy button. We can just encrypt them. We can deploy them.

As you know, we provide them at no cost as an inducement to move to our end-to-end platform. So it lines up saving that customer the initial capital outlay plus the ongoing cost of service is less by moving to our end-to-end platform. I just want to reinforce that the carrots that have helped us win and convert gateway customers for five years now are still driving a lot of the -- still driving a ton of the action that's going on in our gateway to end-to-end conversion process.

Tim Chiodo -- Credit Suisse -- Analyst

Thank you for that, Jared and Taylor, and congratulations to Nancy.

Operator

Thank you. Our next question comes from Andrew Bauch of SMBC Nikko Americas. Andrew, your line is now open.

Andrew Bauch -- SMBC Nikko Securities -- Analyst

Good morning, guys, and thanks for taking my question. I wanted to touch upon some of the guidance here, it's suggesting gross profit margins for the full year being at 65% of net revenues. It implies a pretty steep ramp in the back half of the year. So can you just give us additional color on how we should think about that? And what are the key drivers there in the line items?

Taylor Lauber -- President and Chief Strategy Officer

Yeah, sure. This is Taylor. I'll cover that. I think the bulk of it comes from what we've witnessed in the early days of our gateway sunset initiatives.

As Jared mentioned in his scripted remarks, we're also incrementally positive and quite frankly, notably so on what we've got going with SkyTab POS as well. So those are the two most significant drivers of those two. We've got some contribution from new verticals as well. So that's going to ramp.

And I would stick to those first to seeing a lot of starts.

Andrew Bauch -- SMBC Nikko Securities -- Analyst

Is that exit rate like a level that we should be modeling kind of in the out years?

Taylor Lauber -- President and Chief Strategy Officer

I don't -- I think it's too soon to predict that. I think that we feel highly confident in the end of the year. As you know, our success in new verticals can blend down our spread. And quite frankly, that can be augmented by SaaS success and SkyTab POS.

So I think it's just a little bit early to predict what kind of the outer year impact of this is. But coming into the back half of this year, we feel really good about margins.

Andrew Bauch -- SMBC Nikko Securities -- Analyst

Got it. And if I could just ask one more follow-up for Jared. Getting a lot of questions around some of your comments on your valuation being a public company. Can you just give us additional detail on how you're thinking about that?

Jared Isaacman -- Founder and Chief Executive Officer

Yeah. And in fact, let me just also throw a pile on Taylor's point to just what these new verticals represent. So it's hard for me not to draw like the history back to the basement days of the company. But for 18 years, we serve incredibly small customers.

Your corner restaurants on main street, every one of those customers contribute a nice amount of volume, but and also a healthy service burden too. I mean, we have 2,000-plus employees now are very close to it in the company. You look at an organization like Adyen, which is a company we in many respects, aspire to be, their margins are very, very high. Free cash flow conversion is very, very high.

The volumes are very high. They're serving customers like Facebook and Microsoft and Amazon, where you're actually getting a considerable amount of volume, but your overhead to support that customer is next to nothing. In fact, like every bit of incremental volume can potentially fall to the bottom line. We'll look at the direction in our new verticals we're going.

We said Time Magazine in their digital subscription business that we announced. I mean, obviously, Starlink is enormous, stadiums are enormous. These represent sometimes hundreds or thousands small, midsized customers. And the support burden associated with them is just so much less.

It's actually surprising how many employees we needed for our first $50 billion of end-to-end volume and how many we expect to need for the next $50 billion of end-to-end -- $1 billion of end-to-end volume. So just wanted to make that point in terms of also as we start to look at the margin profile of the business and its free cash flow conversion going forward. My point on valuation and like -- you don't want to whine in an environment where all asset classes have been absolutely pummeled. But when you look at one point and say the Street is now valuing exit potentially inside of 10 times next year's EBITDA, actually effectively even less than that when you take into account now our guidance raise.

Again, this was a week or so ago, and we're assembling our materials on this. You're saying is the cost of being a public company worth it right now. And there's obviously the hard costs that we all know and understand when you make a commitment to be a public company. But then there's kind of a harder to quantify cost that comes with just essentially radical transparency.

As a private company, we certainly wouldn't want to clue our competitors into our gateway sunset strategy, right? I mean that you're basically revealing how you're going to convert up to potentially $200 billion of end-to-end volume. Every success we have on the gateway conversion strategy is pain -- it's pain to every one of our competitors, right? So at some point, when value drops to such an extent, you do ask the question is -- is this the cost we're willing to pay, especially with respect to the transparency obligations that come with being a public company. So I think that was what we were trying to communicate.

Andrew Bauch -- SMBC Nikko Securities -- Analyst

No, I really appreciate the insight and congrats on the solid quarter.

Operator

Thank you. Our next question comes from Scott Wurtzel of Wolfe Research. Your line is now open.

Scott Wurtzel -- Wolfe Research -- Analyst

Hey, guys. It's Scott on for Darrin here. First one I want to touch on was just on the net yields. I mean, even accounting for some of the normalized sort of debit behavior.

I mean, we're still only down two basis points year over year, which I guess is a little bit sort of better than what we had expected historically. So I was just wondering if there was any sort of change to your outlook on the trajectory of yields even as you continue to penetrate larger merchants.

Jared Isaacman -- Founder and Chief Executive Officer

I'm just going to beat the same drum which is that we continue to grow into larger and larger merchants. And so, this is something that the degradation of blended spread is something that our investors should continue to expect. A little bit delayed in part because I think we were slower in the new verticals than we'd hope to be in the first half of the year. It hasn't changed our optimism.

It hasn't changed our long-term view. In fact, our optimism has kind of been bolstered seeing kind of the last week in June and some contribution from those verticals. But that, if anything, is probably the reason that you've seen kind of spreads stay a little bit elevated. Is that new vertical contribution.

Scott Wurtzel -- Wolfe Research -- Analyst

Got it. And then, just a follow-up. Just on the digital media vertical, it's interesting to see that win with Time Magazine. Just wondering if you can give a little color on sort of how you entered that vertical? And is it one that we should expect the company to continue to go after going forward?

Jared Isaacman -- Founder and Chief Executive Officer

If I was the artist behind the materials, I probably would have just lumped that into sexy tech, I think that -- let me expand on this a little bit right now. So we've announced some really, I think, exciting wins some at our industry day last year, we didn't deserve, but became a great opportunity for us to make investments in international expansion to build out our payment platform capabilities beyond what would just be expected for a restaurant or a hotel or specialty retailer beyond where we've been historically. We've started to get RFPs for surprising customers. And it's surprising in that I don't think a year or two years ago that I ever would have imagined we'd be able to compete for some of those brands.

Also not surprising in that without us in the mix, they really only had two companies or so to send it to. When you think of those large, powerful easily recognizable brands, you're sending it to Adyen and Stripe. And maybe you send it to JPM or one of the local banks here, but if you're a multinational player and you're looking for that single portal with cool capabilities, recurring billing, business intelligence, you're really in the Adyen and Stripe landscape and that landscape alone. So I think having some signature wins at Industry Day, again, about nine months or so ago, put us a little bit more on the map.

And we've had to make investments in our capabilities in order to support those type of customers. So Time is one example of it. There's another one that we weren't allowed to -- there's actually two that we weren't allowed to announce that committed to us this quarter as well. So I'd expect more to land in that general sexy tech camp of hey, there's somebody else out there that can compete with some of the big boys.

Now, we have a long way to go in terms of international expansion. If somebody needs a solution that's going to serve a couple of hemispheres here, we're not there yet. We've got Finaro. But as we mentioned in our capital allocation strategy, our No.

1 priority is to continue to expand our reach in rails all across the world. And we think in doing so and get a lot more of those RFPs for those kind of sexy tech organizations, and we're pretty excited about it.

Scott Wurtzel -- Wolfe Research -- Analyst

Got it. Thanks, guys.

Operator

Thank you. Our next question comes from Andrew Jeffrey of Truist Securities. Your line is now open.

Andrew Jeffrey -- Truist Securities -- Analyst

Hey, good morning. Appreciate you taking the question. Jared, I love to hear the ambitions and the aspirations to compete with what I think a lot of people would consider the best payments companies in the world. Along those lines, can you elaborate a little bit on how you think about Shift4 evolving into a true global omni solutions company? I think we're seeing this, I think, more pronounced trend, Shopify certainly, Amazon, moving off-line into physical point of sale, Adyen, I should say.

Can you just sort of elaborate on how Shift4 looks from an omni perspective over the next several years? And whether you need different assets need to do M&A can develop all those capabilities internally?

Jared Isaacman -- Founder and Chief Executive Officer

Really great question. So I mean, first, look, there is -- at a very high level, I talked to our team about this all the time. I mean, you can build $1 trillion organization very, very organically controlling your product road map right from the start, and I look at that as kind of an Apple model. Then you can take an Amazon model where you start with some great things, and you're not afraid of some M&A.

I say all this knowing that Apple does do a fair amount of M&A these days. But kind of like a pure focus on product evolution versus Amazon bought awful lot of domains and a lot of companies over the years to become like a mega retailer. We look at our path as we start from an incredibly powerful card-present payment platform here in the U.S. That is very hard to do.

Nobody created a global commerce platform from a strength of card present period. It's just it's so much harder. I mean, you can take all of the card brands all across the world in a card-not-present arena without having to navigate the pain points of local debit networks through various EMV and PCI and other encryption certification challenges that exist like sometimes by country. You don't have to worry about any of those things in the card-present world -- in card-not-present.

So building out like an Adyen or Stripe platform globally from a card-not-present and APM focused world is easier. Now, we are way behind when it comes to international rails relative to those two companies. But we do have the strength of our card-present platform. We do have 450-plus integrations that have given us a unique right to win and grow in the U.S., that will be applicable anywhere in the world.

We just need to get those rails. And those rails are scarce. It's hard, and we're willing to do it inorganically. In fact, we're outright stating we're going to do it that way.

Finaro is the first. It will not be the last. And I do believe with the organic investments we're making into our portal, our business intelligence product, our recurring billing capabilities, basically making sure the experience that our big, big name customer that we've mentioned before, has a comparable experience to Adyen in our portals, while behind the scenes, we build out our rails is the path to get us there. But yeah, we have a lot of work to do kind of in our -- in building -- either acquiring or building out those rails all across the world.

But we're on a -- we've got a great strategy and a great path to get there. So I know it was a long answer, but it's one that we spend an awful lot of time thinking about. We definitely think we're coming from a position of strength within the card-present world, but we've got work to do in terms of those international rails.

Andrew Jeffrey -- Truist Securities -- Analyst

Helpful. Thank you. Super.

Operator

Thank you. Our next question comes from Eugene Simuni from MoffettNathanson. Eugene, your line is now open.

Eugene Simuni -- MoffettNathanson -- Analyst

Hi. Good morning, guys. Thanks for taking my question. I wanted to come back for a second to total end-to-end payment volume growth or 43% year over year.

And I'm hearing, obviously, there is still a lot of puts and takes on macro impacts that are going on, some recovery from the pandemic, some new kind of macro uncertainty. And so, I'm wondering, can you give us, hopefully, quantitative, but if not qualitative dimension on how much is that rate that 43% that we see this quarter depressed by the macro uncertainties, headwinds versus what the normalized trend could be?

Taylor Lauber -- President and Chief Strategy Officer

Great question, Eugene. I think we haven't gotten too much better at answering it. But what I would suggest is that we feel like our average merchant is quite healthy and let's ignore Q2 and let's talk about July, where we were up nearly double digits over June, which is the most significant ramp we've seen in recent years between the two months. So I think consumer spending is quite healthy.

This will be supported by card brand data all over the place. It will be supported by travel data. So we feel like the consumer is healthy. We just -- we also feel cautious as we have for kind of two quarters now about how that translates into the back half of the year when back-to-school happens, people -- more and more people go back into the office, etc.

So we're just increasingly cautious in that regard. Now, ballast being our caution is what we know we've got going on in new verticals, which is Jared mentioned, we're installing a ton of stadium as we did in July in preparation for August. So we feel really good about the contribution from that vertical, as well as all the other verticals that really began to ramp and we haven't wrapped up our Allegiant integration yet. So we're kind of balancing all of those, but I think our view on kind of our average merchant and the consumer is that they're quite healthy, up and through this morning.

Eugene Simuni -- MoffettNathanson -- Analyst

Got it. Got it. OK. And then, a quick follow-up.

So you called out, I think, in your prepared remarks that M&A -- additional M&A is something you're looking at closely given where the valuations have come down. Can you give us a little bit more color on what would be the examples of assets or capabilities or markets that you'll be looking to enter with any potential new?

Taylor Lauber -- President and Chief Strategy Officer

Yeah. This probably touches Jared's point about like a reluctance to want to convey sensitive information. I'm very comfortable saying, though, that our priorities are quite consistent with what we laid out back in November. So valuations aside international expansion and capabilities that help deliver some of the things that Jared talked about to support these new verticals is a heavy emphasis of ours.

Jared Isaacman -- Founder and Chief Executive Officer

This is Jared again to really put stop the point. The No. 1 priority is expanding our reach and our rails to the world. people all over the world want fast internet.

And we want to make sure we're able to power their payments, their subscription payments literally anywhere else in the world. And if we can do that, and we can bring all of the products and integrations that have made us really successful in the U.S. to every other part of the world where they should also find success. That is the number one kind of capital allocation priority for us right now is to deliver on one of the best customers any payments company could ask for that has ambitions to play at the same level as Adyen or Stripe.

The No. 2 priority is if along the way, we find anything that is consistent with our past playbook that will allow us to accelerate our kind of end-to-end growth within pretty much the verticals we're already in today. I wouldn't expect us to surprise you with any new verticals where we think we applied some creativity we might be able to win. I think it's about international expansion in support of an awesome customer and I think it's about finding ways that are consistent with our playbook to accelerate growth in our current verticals.

Eugene Simuni -- MoffettNathanson -- Analyst

Got it. Thank you very much.

Operator

Thank you. Our next question comes from Chris Brendler of D.A. Davidson.  Chris, your line is now open.

Chris Brendler -- D.A. Davidson -- Analyst

Hi. Thanks. Good morning, and congrats on nice results. And just one kind of quick clarification question, if you don't mind.

When you talk about new verticals and the ramp we're seeing in July, certainly pretty exciting stuff, is the July more the sexy tech? And just from your comments, it seems like sports entertainment may be the bigger opportunity of all these, at least in 2022. I just wanted to confirm that was the case. There's no other reason to get excited about football season, it sounds like. So I just wanted to see your thoughts were on how this ramps in the second half.

Taylor Lauber -- President and Chief Strategy Officer

Yeah. So I don't want to get too specific on the contribution within each one. The one thing I would say about sports and entertainment is it's not as significant a contributor in July and that seasonality of the merchants that we cover. So there just aren't as many events at the locations that were installed that contrast that the fall is typically a much better time, and we're adding a lot of big name brands where there's a lot of volume.

So we feel good about it, but I don't want to sort of comment on the relative contribution. And if I let Jared comment on it, he won't stop talking, so he loves the sexy tech vertical.

Jared Isaacman -- Founder and Chief Executive Officer

That's right.

Chris Brendler -- D.A. Davidson -- Analyst

Just on the sports side, like, it feels like the -- like the opportunity that you're capitalizing on there is happening faster than I would expect. Like these are big, large deals and you continue to sign up stadiums one after the other. Is there something different about that business that makes it easier to convert or to sign up? Is it the strength of your product? Or it seems like it's a pretty big undertaking for a sports venue to do this and I keep seeing an announced at announcement?

Jared Isaacman -- Founder and Chief Executive Officer

So this is Jared here. I can take that one. This was a very specific product that we made, if you recall, I don't know, a little over a year ago, maybe 14, 15 months ago, based on our observations of what was going on in the sports and entertainment landscape. So if you think about restaurants, for example, if you have a nonintegrated terminal or a cash register, you're going to move to a point-of-sale system.

Once you move to a point-of-sale system, there has been no like radical changes in terms of how you ring up a cheeseburger. So you're probably going to use it for a really long time until maybe the cost of a Windows-based system, reach a point where you're ready to reinvest in a new system. Stadiums were different. Like for -- we definitely saw from our early experiences in sports and entertainment stadiums again, call it, two years ago, that there's going to be a massive shift toward mobile ordering, that everything is going to be run from the phone.

You're going to order your burger and your beer in your seat and you're not going to have to wait on a concession line stand. You wanted jersey or some other merchandise, you're going to order that from your seat or your mobile phone and you're going to walk in and you're going to pick up your jersey and you're going to walk out, you're not going to wait in the line. You want to make a bet first half bet, a second half gets a real-time betting, whatever you can do it all from your phone. That sports entertainment stadiums are going to introduce their loyalty and rewards programs through mobile applications.

So -- but recognizing that, we didn't bet on a refresh cycle in stadiums that eventually they're going to -- stadiums are going to move from a micro system or an agility system to a ship where it was. No, we've got to get in there with a mobile application that's going to do all of this and like really pivot away from kind of a prior generation of tech. And the bet is paying off. Every stadium wants this.

It's not an optional thing. I mean, once you go to a stadium once and you've got everything run off your phone, it's going to feel like you're going back in time to go to a stadium that doesn't. So every new kind of press release that comes out just becomes an additional form of motivation for the next stadium to want to get on board. Now, there is a kind of an interesting on-season, off-season thing that goes on.

You know one switching during -- when their league is in action. But as soon as league season ends, they kind of all want to sign up. And there really is no -- there's no one that's in close second at all in terms of the product capabilities we provide with menu next. So yeah.

I mean, we're excited about the traction. I'm personally very pumped about the football season coming up. We've got some of the most exciting teams to watch on TV are now Shift4 customers, so even more reason to tune in on Saturday.

Chris Brendler -- D.A. Davidson -- Analyst

Great. And just one more quick one I get a little late here. Any like guide post your milestones on the Finaro regulatory approvals, like are we close because it seems like maybe a little bit more difficult just given the international nature and some of the other factors at play at Finaro and it sounds like once you get that regulatory approval, you're going to put the switch in Europe, does it happen that quickly?

Taylor Lauber -- President and Chief Strategy Officer

Yeah, sure. So there are three jurisdictions that we require approval from and we have it in two of them. I suspect it's two to three more months, maybe four. I don't like to bet on the productivity of European regulators, but we feel really good about the pace, and it's consistent with what we laid out at the announcement of the transaction.

Chris Brendler -- D.A. Davidson -- Analyst

Great. Thanks.

Operator

Thank you. Our next question comes from John Davis of Raymond James. Your line is now open.

John Davis -- Raymond James -- Analyst

Hey, guys. I'll make this one quick. Jared, earlier this year, when you guys laid out the guide, you kind of gave us a nice bar chart that showed the walk for your volume for the full year. Obviously, things have changed.

If we were to add a bar for kind of macro headwinds so far, kind of what you guys think, is it safe to say that could be a few billion dollars of volume that has macro staying the same, you would have gotten? I'm just trying to understand the magnitude of the macro headwinds that are kind of baked into the unchanged volume guidance.

Jared Isaacman -- Founder and Chief Executive Officer

Yeah. I think we really are -- we're really saying right now that we didn't raise our end-to-end volume guide for really two factors. One, it was a slow start to the year, we knew just from Omicron from the get-go. So we had work to do there.

And two, new verticals did take longer. We did think some of those big names that really began firing in the last week of the quarter would have started a couple of months earlier, right? So that's really the heart of it. High-growth cores continue to do its thing. As Taylor mentioned, July is up nearly double digits month-over-month, so we have a lot of reasons to be optimistic.

This is really just being realistic. Like we -- when we sit around the table, we bring up the fact that the restaurant steaks are $90, $100 at some point or another, in less -- inflation starts to come down at a meaningful rate, you have to assume that some consumers are going to say, maybe tonight, not the night to go out for dinner. We have not seen that in the data, which I think is exactly what everybody has heard from all the other card brands from the payment companies, but we're just trying to be realistic about it. If the second half of the year is raging and all the new verticals are firing, well, this is why we get opportunities to check in with you every quarter to reset expectations.

John Davis -- Raymond James -- Analyst

OK. Appreciate that.

Operator

Thank you. Our final question for today comes from Anita Zirngibl from SIG. Your line is now open.

Anita Zirngibl -- Susquehanna International Group -- Analyst

Hi. Thanks for fitting me in. I just had a question on the total volumes. I'm not sure if you mentioned it already, but if you could just give some color on how sort of gateway plus end-to-end volumes are trending? Whether or not you've seen any kind of macro headwinds in that kind of overall volume?

Taylor Lauber -- President and Chief Strategy Officer

Yeah. No, we haven't seen any. And you should -- like the gateway is kind of has got a larger concentration of hotels than even our end-to-end book. So you would expect that that volume is like reasonably robust right now given what's going on in travel.

Anita Zirngibl -- Susquehanna International Group -- Analyst

Super. Thank you.

Operator

We have no further questions for today. I will hand back to Jared Isaacman for any further remarks.

Jared Isaacman -- Founder and Chief Executive Officer

Really appreciate everyone joining in. I know we talk about the Shift4 way of the leading parts to be more efficient. We'll look at doing that with some of the paragraphs of our script for the next earnings report. But I will say thanks -- we had a lot of talk about -- so thanks for kind of bearing with us.

And we're really, really excited to be sitting here around the table with Nancy Disman, known her for a long time now, known her reputation even longer. Great addition to the executive team and excited to -- excited for you to hear from her in the weeks ahead. Thanks again.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Tom McCrohan -- Head of Investor Relations

Jared Isaacman -- Founder and Chief Executive Officer

Taylor Lauber -- President and Chief Strategy Officer

Nancy Disman -- Chief Financial Officer

Ashwin Shirvaikar -- Citi -- Analyst

Tim Chiodo -- Credit Suisse -- Analyst

Andrew Bauch -- SMBC Nikko Securities -- Analyst

Scott Wurtzel -- Wolfe Research -- Analyst

Andrew Jeffrey -- Truist Securities -- Analyst

Eugene Simuni -- MoffettNathanson -- Analyst

Chris Brendler -- D.A. Davidson -- Analyst

John Davis -- Raymond James -- Analyst

Anita Zirngibl -- Susquehanna International Group -- Analyst

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