and many more. compared to an FX neutral growth of 24% to 29% in our prior guidance range. Said differently, the midpoint of our GRLNF growth range has only been reduced by 100 basis points on an FX neutral basis. And now last on capital allocation. Every allocable dollar must compete for the best use and is subjected to rigorous process while the output that guides us is return on invested capital and adjusted free cash flow per share. In Q2, we repurchased approximately 650,000 shares at an average price of approximately $38. We were intentionally conservative this quarter given current leverage levels and the cash-consumptive quarter we were in. Cumulatively, we have deployed $625 million against the $1 billion share repurchase authorization announced three quarters ago, and this has resulted in an approximate 11% reduction in non-GAAP share count for the authorized period. On debt capital structure, our Q2 2026 pro forma net leverage was 3.7 times, and we maintain our view that we do not intend to exceed three and three quarters times pro forma net leverage on a sustained basis. Based on performance trajectory and guidance, the business is expected to be levered by year end to our long-term average net leverage level in the low threes. As mentioned on July 8, we extended the maturity of our $550 million revolving credit facility, which remains undrawn, and raised an additional $1 billion of Term Loan B at the same terms as our existing Term Loan B, with proceeds principally to address the August 2027 convertible note maturity. The net result is that we have successfully termed out our capital structure to 2031. Before turning the call back to Taylor, I want to thank our colleagues for their flawless execution at one of the world's grandest events of the World Cup. At every venue, you tirelessly executed to ensure that our customers could deliver the moments that matter in the most demanding environments. With that, let me now turn the call back to Taylor.

Thanks, Chris. And operator, we're ready for questions.

Thank you. At this time, we will open the floor for questions. If you'd like to ask a question, please press star 1 now. To remove yourself from the queue, you may press star 2. Again, that is star 1 to ask a question. And we'll take our first question from Dan Dolove with Mizuho. Please go ahead. Your line is open.

Guys, thanks so much. Lots of good things here. Hope people pay attention to that as well. Great question for you. Has anything changed regarding your capital allocation priorities? For example, how are you thinking about buybacks, acquisitions, and leverage here? Thank you so much.

Yeah, thanks for the question, Dan. I would start with the overarching phrase that our capital allocation framework remains unchanged. I think we have the benefit of having a few different value creation drivers within that framework, and we have to be prudent about how to balance it at all times, given how focused we are on driving return on invested capital. And so when you think about where we are, though, in this past quarter, I think it's fair to acknowledge that we had to approach things with a little more conservatism, and that was very deliberate. So the execution against the share repurchase in the quarter was certainly impacted by the fact that we acknowledge where we are on our pro forma net leverage level. Thank you for joining us. and then in general, from a liquidity standpoint, we're in a much more improved position in light of the recent financing. Maybe one other thing I would say about it, though, is that as we think through the cash flow generation in these coming quarters and the growth that we anticipate, I think it's fair to reiterate that within that capital allocation framework, it's not just about repurchases. It's also about making sure we continue to invest. I think something that we'd like to highlight is the fact that this was a record quarter for us in terms of investment into product, technology, platform. as well. We continue to believe that there are a number of interesting opportunities to strategically enhance or accelerate some of our strategic initiatives by looking at tuck-in M&A as well. So I would say overall, no change in the way we think about the framework, but very much intentional in how we look at it given some of the seasonality dynamics. I don't know if there's anything else you wanted to add, Taylor.

is something that we're incredibly focused on. So nothing's changed with, I think, Chris's caveat, I thought that Q2 warranted a little bit of caution, but Q3 less so.

Thank you so much for the Cutter. Appreciate it.

Thank you. We'll take our next question from Raina Kumar with Oppenheimer. Please go ahead. Your line is open.

Good morning. Chris, so you raised a new term loan B during the quarter. Can you just talk about the uses of funds and how you're thinking about your balance sheet here?

Yeah, sure. Thanks for the question, Raina. So on July 8th, we successfully executed a combination of extending our revolver maturity into a new five-year and take that out to 2031 and also raised a billion dollars of Term Loan B on essentially fungible terms or the same terms as our existing term loan. The primary use of proceeds there was to pre-fund the August 2027 convertible note maturity so that we could successfully term out the entirety of the capital structure into the 2031 territory. And actually 2032, if you think about where there actually is funded debt because the revolver is undrawn. And that's the primary purpose of that capital. I think the other dynamic within it is to acknowledge that within that, we also have some general corporate proceeds that went to the balance sheet, improves liquidity. And all the while, I think it was fair to say that it was a well-received offering in general. Ratings remained affirmed and unchanged as well. The debt markets really do view us as a seasoned issuer and we're very supportive of the transaction given the fact that you could see the terms that came through are probably really amongst the market best for our Double B rating, our Double B corporate rating. So overall, really satisfied with the transaction outcome and like where our balance sheet is right now.

Thank you. That's really helpful. And just one quick follow-up. Taylor, you went out some pretty big wins in retail and I think your initial expectations were are signing smaller retailers. So are you surprised by the bigger wins, and should we continue to expect that type of traction with large retailers?

So there's a lot of receptivity across kind of the large retailer base. This is a group that Global Blue has had a marquee product offering in for quite some time. Increasingly, as the tax-free shopping sort of product adds new geography, Thank you for having me. sophisticated customizations and take longer to board, etc. I think as has kind of always been the case with shipboard and is kind of interesting to use in the context of the World Cup, like you win the MetLife so that it helps substantiate why all the local businesses around the MetLife should be doing business with you. And that continues to be the case in Europe.

Thank you. We'll take our next question from Timothy Chiodo with UBS. Please go ahead. Your line is open.

Great. Thank you. So I think a lot of investors appreciate the shift forward approach, which, as you mentioned earlier, results often in lower cuts to our acquisition costs. One of the hallmarks of that over the years has been the gateway strategy. Of course, there's many other means of doing this and conversion, but specific to gateway, there was originally the Shift4 gateway, there was the MerchantLink gateway. More recently, that opportunity has been somewhat replenished with Eigen and even more recently, and Bambora. I was hoping you could give a little bit of an update on what remains in the specific to the Gateway conversion opportunity and maybe a little bit more specifically on the two more recent ones in terms of Eigen and Bambora.

Thank you.

Yeah, sure. Well, I'm glad you categorized it in the way that you did, which is to say that, you know, the hallmark of the M&A approach that we've taken over the years is that in every case it gives us an embedded base of customers to go cross-sell to. So institutionally, we don't think about, you know, the ability to migrate a GiveX gift card customer over to our payments. It's radically different than we think about an Eigen Gateway customer. I would say gateways have been, you know, it's a no place like home M&A move for us. That's literally what we call them in our M&A tracker because the playbook's seasoned. It's understood across the entire company, practically speaking. Eigen's been an awesome proof point for us. We've got, you know, one of the largest airport operators, concessionaires in the world has switched over. That was largely a result of a gateway concessionaire. Thank you for having me. So our restaurant team goes after all the restaurants. In our acquired book, our hotel team does the same. Just now, you know, our luxury retail team does the same with that. So we try not to sort of put a prescription on moving one versus the other. I would say highlights for us recently. have been a beginning of conversion of Rebel Merchants over to Shipboard Dine, which is quite exciting. Givex, the kind of upper bound of that product is non-existent, meaning we're attracting lots of awesome institutional customers to that product, and that product is compelling payments conversations. And again, no place like home, I would put Bambor in the same category. Thank you.

Thank you. We'll take our next question from Nate Stinson with Deutsche Bank. Please go ahead. Your line is open.

Hey, guys. Thanks for the question. I appreciate all the details on the Middle East, but do want to follow up on that just given how dynamic the situation is. For two of you, I know you said the headwind came in lower than expected, but maybe just wondering if you could give more specifics on where that number was relative to $20 million and kind of the strength you saw offsetting and many more.

Sure, I'll take that, and thanks for the question. Yeah, so, look, well said. The right word is dynamic, right? It's definitely been a dynamic conflict. The travel disruption that has resulted from it has made forecasting a challenge specific to the corridors that are impacted. And when I say the corridors... I mean the dynamic of the consumer's origin point is an origin point largely in the GCC or Southeast Asia coming into Europe. That's the corridor that we're focused on. And I'll answer the question around the commentary that relative to the 20 million Q2 sort of number that we had baked in as far as kind of like a headwind, the 20 million, it did perform modestly ahead. Not in a meaningful amount, but modestly ahead of what we had expected within our forecasting at the time. More than anything, though, the overall TFS category, I think, outperformed across other areas that demonstrates its kind of balance and resilience as a whole. So, for example, one of the themes that we had mentioned outside of that affected corridor of sort of GCC Southeast Asia consumer coming into Europe, outside of that corridor, there was like nice pockets of strength. The U.S. consumer into the European corridor continued to perform well. We continued to see nice strength there. And we saw nice strength coming from the inter-Asia area. So travel into Japan for tax-free shopping. So when you balance out TFS as a whole, it actually was pretty resilient and demonstrates its kind of The benefit that it has by being as geographically diverse as it is. But in short, to come back to your question around specific to the 20 million, it was modestly ahead.

That's very helpful, and I hear you on the challenges, especially Asia to Europe. Data's confusing to us, so appreciate the color there. Just for the follow-up on free cash flow, so get the points on the guidance this year, sounds like mostly from the term loan being made a little bit from these Just as we think about free cash flow conversion into next year and beyond, beyond the higher interest expense that will be flowing through, is there anything going on across the business that changes your confidence or kind of visibility into what free cash flow conversion should look like in future years? Just trying to get our models in the right places we think about next year and beyond.

Yeah, no, it's the right question, and it's definitely something that I think the street's done a good job of getting acclimated to through the balance of this year is sort of free cash flow modeling, so we appreciate that. I would say that as I think into next year, It's obviously two large caveats, right? The story of this year, combination of capital structure, given that we had maturities in 26 and a convertible maturity in 27, that's now out of the way. I think there was some question, even in last quarter, as to how we might address the 27 convertible and how to think about that within models. Hopefully now that's fully off the table in terms of how to model it. and then obviously the travel disruptions that we experienced this year have been the other big factor on free cash flow. And corresponding or maybe connected or maybe disconnected, like there has been FX volatility as well. So when you take in those three, if those are not part of what we have to contend with in 27, The answer is no. We don't see anything fundamental. If anything, something that we would reiterate from earlier in the year is that the incremental free cash flow conversion that should come through into the business, it should expand over time given overall operating leverage that exists. Even when we think about record levels of product investment, that is all still well within the normal and ordinary course of what the business can deliver. So I think the short answer is there shouldn't be anything incremental to the aforementioned things that we were facing this year and the capital structure point that you brought up.

One thing I want to layer into it, because fully acknowledged, Global Blue is a little bit of a different opportunity than we've had in the past. Typically, whether it's any of the cross-sells I described in Tim's question, it's almost an immediate incremental revenue opportunity on an existing customer, and that revenue is nearly 100% flow-through to the bottom line on a net to One thing that's different about Global Blue is we are deliberately investing in meaningful sales build outs across all the countries that they operate in that we see opportunity. That's because they're not just going to go after Global Blue retail customers, Global Blue SMB customers. They're going to offer all of our other products in those countries. So, while, you know, this early cross-sell motion is great, we're seeing great momentum, some of the costs associated with that mask, you know, what a typical cross-sell might look like. It's all for the right reasons, and that's kind of why when we even first signed and announced the Global Blue transaction, we talked about, you know, meeting people's synergy benefit in 27. It's because this is, you know, I think it's very balanced, but it's an investment year to make sure we have balance. and all of the infrastructure we want in these countries and as much of our full product suite available as possible. Thanks, guys.

Appreciate the call.

Thank you. We'll take our next question from Craig Marr with FT Partners. Please go ahead. Your line is open.

Thanks for taking the questions. Two clarifiers from me. First, on the 3Q Guide, or they're effectively the guide for the rest of the year. You basically said similar to last quarter, we're only forecasting potential travel disruption from Middle East conflict for the next 60 days. Now, what does that mean exactly? Does that mean beyond 60 days, it's just an immediate return to normal when we should be considering your model or how should we think about that? And second, You called out the FX drag this quarter, but could you give us the last, call it three, four quarters of FX impact so we can model properly? Thanks.

Yeah, thanks for the question. On the second one, I think it's probably most conducive to do that in a follow-up, so we'll tackle that one as a follow-up. On the first point around what does it really mean to continue to, similar to last quarter, use a 60-day outlook forecast, so as a reminder, When we look at the affected corridors in the TFS business, what we're really focused on is looking at how those corridors are tied to a forward forecast of flights. The flight, the seat capacity, and a variety of the factors through data sets that we get are input into an outlook model that allow us to get a pretty good 60-day forward forecast view. I think indicative of the, we'll say, the predictability of that view is that relative to the $20 million sort of figure that we had forecasted as an impact figure in Q2, we were pretty close. So I think that we wanted to continue that same methodology, use the forward forecast, and importantly, not try to predict the duration of a conflict, a geopolitical conflict. So you take those two things together, and we're consistently applying the exact same methodology that we applied the last quarter, and that methodology would lend itself towards the $25 million number that we've put out there. It's important to understand that the Q3 Thank you for joining us. and I know you didn't ask this as explicitly, but if you sort of think about Q4, the idea of what we're trying to say is that we don't want to break the consistent approach we've used in the last two quarters and now try to forecast a fourth quarter on something like a geopolitical conflict, but for context, It's fair to say it's probably a good data point to appreciate that Q4 and Q2 are about the same size in terms of their TFS contribution from a seasonality standpoint in terms of volumes. And so I'll put that out there as hopefully something helpful for your own modeling.

Yeah, I just want to hit this again because I sense a little bit of confusion on it. I would say the impacted travel corridor that we anticipated and we forecast in Q2 behaved largely as expected. There were other corridors that outperformed, and therefore you got a slightly better than forecast result. We are approaching Q3 with the exact same mindset, which is that we know what the impact of the travel corridor would be in the highest seasonal quarter. And so we're giving investors insights into that. The one thing I would just sort of say with regard to Chris's remarks that we haven't had. A conflict that's kind of on and off and on and off and on and on. We haven't seen that change travel behaviors radically inside of that corridor. So this is why we're so reticent to want to try to predict beyond what we can see in flight planning capacity. But this is a shopper base that is largely quite resilient. When travel is safe in the eyes of the traveler, they get out and spend quite immediately. So I don't think it's unreasonable to say that when this conflict is decisively over that, you know, this impact would be muted.

Thank you.

Thank you. We'll take our next question from Darren Peller with Research. Please go ahead. Your line is open.

Darren Peller Hey, guys. Thanks. Look, when we look beyond the Mideast impact, and to really follow up a bit on Tim's question earlier in terms of the cross-sell, it looks like you do have the underlying trends, obviously, in the payment side and the America side trending well. So just looking beyond the short-term mid-East conflict impacts and thinking about next year for a little longer, I can't help but wonder where you are on Shift 4.1 and Global Blue in terms of where you expect to be contributing to numbers. So we know by the end of the year you're hoping 15-plus countries. It seems like you're progressing well. I think you had 12 now, you said? But help us understand a little bit more in terms of the progress and the timelines you'd expect to see that really start moving the needle, where not only do you have entry into the countries, but real ability to process volumes and convert more and more merchants to sales teams that have probably a little more structural timelines.

Yeah, it's an awesome question, and it is literally the heart of our strategy here. So to give you a little bit of insight into how Global Blue historically operated, it was a very enterprise-oriented go-to-market motion with strong market share across the enterprises. And the SMBs were largely a self-service operation, meaning an SMB marketplace. Thank you for joining us. and increasing tax-free shopping at that hypothetical watch retailer or perfume boutique, et cetera. So we deliberately approach this with the idea that we're going to build a sales team that can focus on that motion explicitly. The way this works in practice, dedicated shift force strategy personnel that have done this across multiple acquisitions in their past, going into these countries, sitting in global blue offices, hiring local salespeople, training, building all the materials, et cetera. I can't kind of understate the amount of work that our awesome team has done in this. And then there's a threshold we have, which is after X hundred merchants are signed up, the motion is handed over to the local teams and they run with it from there because it is kind of a regular sales quota based system. We've been able to hand that off in a handful of countries now, so we're very excited about that. That's proving that the motion's working. But again, and I don't think we've been inconsistent on this, our goal is to be able to produce a few thousand merchants a month exiting the year. And admittedly, with an economic contribution in 26 that is more expense than gain because of the cost of building out these teams. It's the ability to annualize that merchant base through 27. That's the prize we've had our eye on the entire time, and we're quite optimistic about the pace that we've had. We've got more countries to evaluate than we expected to have, and the teams are just starting to get it, which is super exciting. Again, this is less of an economic basis. We're admitting to the drag that this investment causes, but Q4 production against these is really the proof point to know that we're set up in the way we want to be for 2017.

All right, thanks. Can I ask one follow-up, Chris, for you on just the blended spread at 65 bits on the quarter? Can you just talk about the overall sustainability at this level and what extent this is impacted by the World Cup-related mix or Global Blue or VCC perhaps on the quarter?

Yeah, sure. So I think the 65 basis points spread relative to at the beginning of the year sort of gave people visibility that we expect spreads on a full year basis to be greater than 60. There isn't really much. and much to the story of unpacking that. I think we view that spread mix as something that within this quarter is kind of well inside of what our expectations would have been. And when I say when, it's within, right? It was within the range of expectations that we had for spread. So I don't think there are any specific call-outs. to make around the spread differentials. I think what we have said in the past going into this year was that it is possible that we were going to see a bit of a change in terms of the dynamic relative to the last three years where enterprise had been an accelerating portion of the book and the enterprise spreads were having a mixed shift downward on blended spread. And that this year, as that enterprise merchant base is finally kind of sized and scaled, and we're now growing off of that size and scale base, As we see more SMB business come through, we may actually start to see some expansion and spread. So that trend is something that we have called out as a possibility for the year, and it is playing out. We are seeing that, but it's nothing outside of what we were already expecting. So nothing to call out over and above the fact that this is well within the expectations that we had for the year. Got it. Thanks, Chris.

Thank you. We'll take our next question from Sanjay Sakrani with KBW. Please go ahead. Your line is open.

Thank you. Good morning. Taylor, you mentioned the World Cup was a strong contributor to the second quarter results, and obviously we saw that in the payments revenues. I'm just curious, when you look underneath that, do you feel like the business was performing commensurately ahead of sort of expectations as well?

Yeah, it's a good question. I actually want to be very balanced on the impact of the World Cup. We definitely saw trends of exuberance, specifically in the merchant categories we focus on, in host cities around games. It was very obvious in media commenting on this, like the Scots drinking Boston Dry, we saw that. We saw that in our restaurant data, we saw it in Boston. However, the total payment volume across our SNE franchise, meaning specifically in the stadiums, was not our highest quarter by any measure. Keep in mind the football organization takes these stadiums offline for a couple months to prepare for this event. The events themselves aren't as conducive to concessions. We saw a healthy amount of... of kit being sold, a lot of souvenirs being sold, less concessions in general. So I think quite balanced on our impact. And quite frankly, is SHIP for the net beneficiary of this kind of payments activity? Absolutely, we are. Going to an event, traveling to it, even watching an event with friends nearby the venue, that's something we're absolutely a beneficiary of. But it was not a meaningful contributor to the quarter. I think it was more or less what we were expecting. And in fact, a lot of investors were sort of challenging us to talk up the impact. These are great customers that do great events all the time, and again, they would have probably been as full, if not more full, with a regular event calendar in many of these stadiums as they were with the World Cup. Chris, do you want to comment?

Yeah, I would just underscore the same point. When you actually go and pick apart the data at a venue by venue, a city by city, you put sort of like a radius of commerce around the venue. We've analyzed and cut and sliced the data a few different ways. And it's interesting to see that, and probably actually shouldn't be that surprising if you actually just went and mapped the calendar of events. and many, many more. once in a lifetime kind of event. And in order to accommodate it, you have to go offline. You know, I heard an anecdote that you couldn't be on, the grass has to grow a specific regulated height so no one can be on the field, let alone sticking a country music concert on the field a couple of days before the event. So I think it was an interesting one to unpack. But more than anything, what I would want people to take away is it was a phenomenal showcase for us. Thank you for joining us.

Through the quarter, we're probably equally as proud of that as well. And I would say as we become a more international business, it probably didn't occur to us prior to the event, but it certainly occurred to us during these events that the Chippewa brand being recognized throughout the world is becoming increasingly important, and the World Cup gave us a phenomenal platform to do that.

Okay, that's perfect and encouraging. Thank you. Just a follow-up question to all the balance sheet questions. I know you guys are trying to do a lot, de-lever, buy back stock, obviously consider bolt-on M&A opportunities, I guess. As we look ahead over the next year, year and a half, how should we think about you balancing all of that? I mean, are there opportunities given the way the stock is trading to actually divest some non-core assets and maybe utilize that for the three options? I'm just trying to think about strategically and tactically how you might figure out other ways to create capital and achieve some of the initiatives that you have in place. Thanks.

Thanks, Andre. It's the right overall question, and it's something that is the top of our minds at all times is balancing the capital allocation framework. You know, I think I and we look at it as actually it's a high-class problem to have when you look at the number of ways with which we could generate return on invested capital through our capital allocation framework. Thank you for joining us today. And then similarly, to always be able to be shareholder-minded and manage dilution. When you look at the non-GAAP EPS share count, if you look at it relative to when we launched the share repurchase authorization in the third quarter of last year, our share count is down 11%. So we think about all of this within the balance, and I think that it's something that I would hope people can appreciate and look at the long-term track record around and acknowledge that we're good at it. At the same time, what you're describing, this idea around divestitures, is that within the framework? Is it within our lexicon? It is, absolutely, and we have done some divestitures. They're going to be smaller in nature. They are the non-core components of, let's say, acquired companies along the way. I wouldn't expect them to be meaningful or material, but in the philosophy that we have of deleting the parts, driving efficiencies, unlocking margin drags that might exist from them, those are definitely things that we're focused on, and we actually have completed within the last 12 months. Thank you.

Thank you. We'll take our final question from Dan Perlin with RBC Capital Markets. Please go ahead. Your line is open.

Thanks. Good morning, everyone. I just wanted to touch back on kind of the incremental investments that you've talked about. It sounds like they were, you know, a little heavy in the first half around technology investments and obviously products. I'm wondering around the context since you've laid those out now, how do you think about investments and go to market to accelerate some of those implementations and maybe where we stand at that point?

Yeah, it's a great question. I would say, first of all, we're doing it. So, we've added a meaningful number of salespeople. We try to be, as Chris just mentioned, we try to be incredibly pragmatic about looking at headcount allocation across the organization as frequently as we can, and where there are areas that we're de-emphasizing, can those people be applied to other areas or other areas that deliberately need investment despite Thank you for joining us. sort of understate the value of like, you know, we announced a German POS acquisition a couple of years ago named Vectron that instantly gave us 300 resellers that know how to sell restaurant product to customers, already have a book of customers, et cetera. So we do like to use Thank you for joining us. Most interestingly, reputationally, we're known as enhancing the value proposition of these teams and the distribution partners themselves. So it's usually a good conversation to have that we're uniquely positioned at.

Great. Just a quick question, Chris, if I could, on organic growth. Kim, again, very consistent, 11%. For just sake of running kind of interference, I think you said TFS is going to roll into that organic calculus and the 3Q. Is there any way to kind of get a preview of what that would have been in this quarter just so we're all level set given the growth rate in TFS relative to best-year doses? Thank you.

Yeah, so I think the – trying to think about it on the fly, I would say that if you were to look at TFS – in this quarter. It delivered within the upper end of sort of the mid-single digits. in terms of its quarterly growth contribution. And so if you were to blend that in on a weighted basis, TFS is about one-fifth of the revenues. So you can kind of do that math. The important thing that I think you have to take away from it though is that that TFS segment today is burdened by the Middle East travel conflict. So even when you think about looking forward to something like a Q3, and you think about what the implied growth rates are there in that low double digit, you still have to keep in mind that that very same effect of being weighed down by the Middle East travel disruption, the 25 million number that we gave, that that's in that figure. And absent that figure being embedded within it, that low double digit just mathematically would be into the mid-teens. So hopefully that answers your question. There's a bit of a brain teaser on the fly to kind of wait and average your math. But nonetheless, hopefully that does give you the building blocks.

Yeah, no, that was perfect. That was super helpful. Thank you so much. I appreciate it.

Thank you. This concludes the A Lot of Time we have for our question and answer session and brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.