Ladies and gentlemen, thank you for standing by, and welcome to the Shift4 Payments Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone keypad. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Sloan Bohlen, Investor Relations. Thank you. Please go ahead.
Thank you. I'd like to welcome everyone to Shift4 Payments' fourth Quarter 2020 Earnings Conference Call. Before we begin, I'd like to remind everyone on this call that it will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding management's plans, strategies, goals, and objectives, the potential annualized gross profit related to the conversion of gateway-only merchants, our acquisitions, and their ability to bring us into a high-growth vertical, the expected impact of COVID-19 on our business and industry, and anticipated financial performance, including our financial outlook for the 1st quarter of 2021 and the full year of 2021.
These statements are neither promises nor guarantees but involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results. Performance or achievements expressed or implied by the forward-looking statements, factors discussed in the Risk Factors section of our financial perspectives filed with the Securities and Exchange Commission, pursuant to Rule 424(b)(4) on December 4th, 2020, and our other filings with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made on this call. Any such forward-looking statements represent management's estimates as of the date of this call. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change.
In addition, we may also reference certain non-GAAP measures on this call, which are reconciled to the nearest GAAP measure in the company's earnings release, which can be found on our investor relations website at investors.shift4.com. With that, let me turn the call to our Chief Executive Officer, Jared Isaacman.
Thank you, Sloan. Good morning, and thank you all for joining us today. For our agenda this morning, we will take you through the business performance, payment and merchant trends, and strategic initiatives, we're going to save a bit of time for the fun stuff at the end, which is the road ahead. To begin, as I mentioned some of these points in my shareholder letter, we just concluded a very challenging year. The economic, social, and political issues did not spare anyone. Despite these extraordinary circumstances and having exposure to highly impacted verticals like restaurants and hotels, the team at Shift4 Payments performed incredibly well, I'd like to highlight some of our 2020 accomplishments. For the year, we grew every material KPI, including number of merchants using our platform, the volume they processed, and the revenue generated.
This marks our 21st consecutive year of year-over-year revenue growth. Mostly it reinforces that Shift4's value proposition is compelling, and it's winning share during the best, and during the most challenging of economic circumstances. We also completed multiple capital market transactions to strengthen our balance sheet, diversify our base of shareholders, and provide capital to fund organic and inorganic growth initiatives. We also completed two great acquisitions, including the 3dcart e-commerce platform, which we now call Shift4Shop, which has greatly expanded our e-commerce capabilities and significantly expanded our TAM. We also released several products like our new generation online ordering products, mobile payments for takeout, delivery, and curbside ordering, and QR code-based ordering and payments, all of which were quite timely given the pandemic, and we think will continue to fuel growth in a post-pandemic environment.
We owe our 2020 performance not just to these reasons, but also the dedication of our employees, the support of our software partners, and the perseverance of our customers. It's during these challenging times that they make me most proud. As to the fourth quarter specifically, we delivered another reasonably strong quarter given the circumstances. As previously shared, we celebrated the highest volume month at the time in October, which slowed in November and then significantly so in December. We attribute this entirely to COVID requirements on social distancing and cold weather that was not conducive to travel and outdoor dining. Despite these realities, Q4 end-to-end payment volume grew 12% from the previous year to $6.8 billion. Our ability to grow merchant count and volume while serving some of the hardest-hit industries is a testament to our technology, our business model, and most importantly, our people.
Make no mistake, this is a quarter that included some really rough business conditions. While volume growth is nice to see during a tough quarter, we also look at active end-to-end merchant count, which grew 4% quarter-over-quarter. This continued growth in our merchant base makes us incredibly optimistic as we look forward into 2021. This end-to-end volume growth drove 5% growth in gross revenue, less network fees, which resulted in adjusted EBITDA of $26.7 million for the quarter, which is up 10% from the prior year when normalized for our change in accounting for leased equipment. It's also worth reinforcing that virtually all of Shift4 Payments' merchants and all those that we have been adding throughout 2020 are operating at substantially below normal levels, which we anticipate is becoming quite the coiled spring. As previously announced, we also acquired two businesses in the latter part of 2020.
Each very unique in serving different verticals and increasing both our capabilities and our TAM. The Shift4Shop acquisition has significantly expanded our capabilities to serve online merchants and dramatically expanded the market we are capable of addressing with our services. Taylor will provide some additional color on our month-to-month trends, as I noted at the onset of the call, December volumes declined meaningfully as weather became colder and COVID cases accelerated, resulting in stricter social distancing requirements across the country. We'll speak to the uncertainty that still exists from COVID, what is clear to us is that our nonstop innovation and unique value proposition continues to win across a growing range of merchants and market segments. For those of you who are new to the story, we hope you see Q4 as a perfect example of our business model.
We offer innovative solutions to merchants across a broad range of industry categories. Our technologies go far beyond traditional payment acceptance and often give us an incumbency advantage versus other payment providers. We use these advantages to offer a vertically integrated solution at a lower total cost of ownership than the competition. Lastly, we don't sit still and are constantly looking for new industries and geographies, as evidenced by our acquisition of VenueNext, which Taylor's going to talk about shortly. As we spoke about on our last quarter's call, and I described in my initial letter to shareholders at the IPO, our philosophy is to drive change where we see inefficiency and incremental value for our merchants, and to ensure Shift4 is always positioned in the direction the puck is going.
As you may recall, during 2020, Shift4 Payments became the official payments partner for the Las Vegas Raiders, the first sports and entertainment venue in our history. Within a few months, we have found significant successes across what was a pretty neglected vertical, supported by multiple expensive vendors and lots of legacy technology. We have found that our strength in serving some of the most complex and demanding environments in commerce has made us well suited to solve problems and deliver a better fan experience in sports stadiums, theme parks, and other similar venues. This is why we're so excited to talk about our most recent acquisition of VenueNext, which again, Taylor will discuss shortly. On the same note, we just announced today that Staples Center will be using Shift4 Payments payment technology. We believe stadiums and theme parks will contribute meaningful incremental intent volume in the months and years ahead.
It was just a few months ago that we announced the acquisition of 3dcart e-commerce platform, which again, we now call Shift4Shop. Our entry into e-commerce came as a surprise to some. I think it's worth reiterating this is textbook Shift4. We observed an industry category, like e-commerce, that is massive and growing quickly, yet unnecessarily complex and with multiple layers of fees. Taylor will speak about our go-to-market strategy with regard to Shift4Shop in a few minutes, which I also believe will drive a new layer of growth for our business. These are two new markets that are quite meaningful from a TAM perspective and were largely foreign to Shift4 at the time of our IPO just nine months ago. Despite having operated this business for over 20 years, I can't recall a time when I was more optimistic about the road ahead.
Our merchants are back to experiencing healthy volume growth with a very strong start to 2021. We continue to win share in our core markets and also find new exciting verticals to enter. We also have an impressive capital position right now that affords us the ability to invest in growth accelerants, for which I thank all of you again. While I have the mic, I feel compelled to share a personal project and a call to action. As some of you may know, I am fortunate to command the first all-civilian mission to space later this year, which will be a personal achievement beyond my wildest childhood dreams. In reflecting on the significance of it, I couldn't help but think about all the children who don't get a chance to live out their dreams.
It's for that reason that I've made St. Jude Children's Research Hospital my co-pilot on this mission. We've begun a very ambitious, even for us, fundraising campaign, and I would urge you all to consider a donation. You can still visit inspiration4.com to learn more. With that, let me turn the call over to Taylor to discuss our fourth quarter operating results in more detail. Taylor?
Thank you, Jared, and g ood morning. I'm going to take a minute to give some additional detail on volumes through the fourth quarter and then also provide an update on what we've seen to date in 2021. First, we've included a monthly snapshot of the quarter to give you all a sense for the reasonably pronounced impact the pandemic had on end-to-end volume throughout the holiday season. We are pleased to report that this deceleration was isolated to December. January, for example, represented a nearly 10% increase in end-to-end volume from the prior year. Seven of our eight highest volume days in our history occurred during just the last two weeks of February.
These volume trends are quite positive when considering many of our merchants in large states like New York and California are operating at less than 50% capacity, and several states, including Texas, were without power during this time period. This ability to grow at a pace exceeding many payment leaders, despite a merchant base that continues to be heavily impacted by COVID and occupancy and travel restrictions, reinforces the power of our value proposition and the clear competitive advantages we have in our core markets. Jared mentioned the 4% sequential growth in active merchant count during the quarter. Hotels represented a larger than typical percentage as we won several large hotel groups, including Sonesta and their acquired brands, to our platform.
I do want to note that this Q4 activity does not reflect the impact of our 3dcart acquisition, now branded as Shift4Shop, as we've used the majority of the time since acquisition to reposition the business for what we believe is a highly disruptive go-to-market strategy. If you recall, the 3dcart platform was a mature, feature-rich web store builder, largely reliant on SaaS revenue. The platform was the driving force behind billions of dollars in payment volume and yet sending this volume to third parties for which merchants were paying yet another vendor for. We've recently launched Shift4Shop, a platform that is entirely free for any merchant using Shift4 Payments. Competitive platforms charge as much as $300 per month and actually more for enterprise and B2B features and still rely on third-party payment processing. This investment isn't simply a branding and marketing exercise.
We also repackaged the platform to make it highly intuitive and created a payments enablement process that is second to none. We also introduced Facebook and Instagram integrations and count fraud detection at no extra cost for our merchants. On that note, in the brief time we've owned and operated Shift4Shop, we've accomplished many of the integration and branding goals for our first year of ownership. We've also increased the number of web stores by roughly 8,000 or 54% since acquisition, which we think is the appropriate way to measure success this early in the integration process. We also have an exciting roadmap for Shift4Shop that we believe will continue to impress merchants and help them grow.
Make no mistake, we believe this platform will compete successfully among the best e-commerce businesses in the world and believe we can double the pre-acquisition site count by the end of this year. While the depressed volumes are real in the fourth quarter, what is masked is the upside potential that Shift4 has across a broader set of merchants than when the quarter began. While there is uncertainty on the pace of economic recovery and consumer spend in 2021, our growth should compound as that activity recovers given our expanded share. Before I turn it over to Brad, I wanted to close with providing you an overview of our acquisition of VenueNext. VenueNext is a best-in-class provider of mobile ordering and point-of-sale solutions for sports and entertainment venues.
Their technology began as an in-seat ordering app envisioned and seeded by the San Francisco 49ers, and h as evolved into a full stack solution, including point of sale for concessions. Their applications have been proven in every major sporting category, including the NBA, MLB, NFL, NHL, and MLS, and a lso power mobile ordering at some of the nation's largest theme parks. In a story that should be familiar to you by now, VenueNext was competing very successfully to win these marquee clients. The integration of payment providers included a web of gateways, merchant acquirers, and hardware providers. We took an approach of partnering with VenueNext to offer a more streamlined solution and quickly won several world-class merchants, including the Staples Center in Los Angeles.
We've discussed our enthusiasm towards this channel in previous calls, but now own the entirety of the stack and believe our solution will be incredibly competitive. The mobile technology also has application in adjacent verticals and will have applications far beyond stadiums. We believe that VenueNext's best-in-class technology will attract $2.5 billion-$3 billion in incremental volume by the end of 2023. I've included a chart to illustrate how through these two transactions, our TAM growth has doubled since our IPO, which was just nine months ago. I'll hand the call over to Brad to walk you through our financials.
Thanks, Taylor. As mentioned in our release, we generated $88.8 million of gross revenue less network fees in the quarter. This represents a 5% increase over the prior year but was up just 1% compared to last quarter for the reasons Jared and Taylor spoke to. The year-over-year variance was driven by a 23% increase in net processing revenues, driven by continued share wins and gateway conversions. Net processing revenue now makes up 63% of our gross revenue less network fees, up from 54% for the same period last year. Growth in net processing revenue was offset by modest declines in gateway and SAF other revenue streams due to the impact of COVID-19 on our hospitality merchants and our continued efforts to convert gateway and non-recurring revenue sources to our ongoing spread-based monetization model.
Our net spread for the quarter was approximately 81 basis points, while the spread on interchange remains at lower than normal levels due to shifts in card mix. Specifically, the spread on interchange for the quarter was approximately 179 basis points, 8% lower than prior year. We reported $26.7 million in adjusted EBITDA for the fourth quarter. If we apply consistent accounting treatment to our equipment leases in 2019, this represents a comparable increase of 10% over prior year. Our fourth quarter results represent an adjusted EBITDA margin of 30% against gross revenue less network fees. Again, applying consistent treatment of equipment leases, this represents a 110 basis points increase from prior years as we continue to benefit from additional scale.
Compared to the third quarter, adjusted EBITDA margins declined by 270 basis points due to COVID-related volume slowdowns in the back portion of the quarter, as well as the impact of our recently announced acquisitions. Next, let me give you an update on our capitalization and liquidity, as we had a very busy quarter. First, at the end of October, we completed a successful offering of $450 million of senior notes that are due in 2026 and carry a coupon rate of 4.625%. The proceeds of the offering were used to pay off the entirety of our previous term loan facility, which saves us approximately $4 million in annual interest expense. That offering establishes Shift4 Payments' participation in the public debt markets, which will offer us an additional source of capital going forward.
Second, in December, we completed a highly successful offering of $690 million of convertible notes that are due in 2025. The deal was upsized from an original offer amount of $400 million and priced with zero coupon and a conversion rate of effectively $80.48 per share. Finally, in December, we completed a 9.2 million-share secondary equity offering priced at $55.50 per share. These shares were sold exclusively by Searchlight Capital Partners. As a result of these Q4 activities and our previous capital raises, we ended 2020 with $927.8 million in cash and $89.5 million of available capacity on our revolving credit facility. Subsequent to the end of the quarter, we've restructured our revolver and increased its capacity to an even $100 million. I want to take a minute to mention some financial revisions that will be disclosed in our 10-K filing.
These revisions primarily impact 2018 and 2019 and reflect non-cash balance sheet adjustments and geography changes within the P&L. While there is an immaterial net income impact, it should be noted that these revisions have zero effect on our reported revenues, EBITDAs, or net cash flows. I'd like to discuss our outlook. During 2020, we provided quarterly guidance because of the significant variability in volume patterns driven by COVID. With volume trends returning to more normal levels of variability in the back half of 2020, for 2021, we'll be shifting to annual guidance. Let me first make a few comments about the first quarter. As you've certainly seen through our activities across various media channels, we have recently initiated a major rebranding effort related to the integration of 3dcart.
These investments will place our new e-commerce solution, Shift4Shop, as a leader in the e-commerce market to drive additional merchant boarding to significantly increase our TAM. The impact of this effort will largely be isolated in Q1 and will be treated as a non-recurring integration expense in our financials. That said, here is our guidance for 2021. We expect full year 2021 end-to-end volumes to be between $36 billion-$38 billion. Gross revenues are expected to be between $1.1 billion-$1.2 billion, while gross revenue less network fees are expected to be between $450 million-$460 million. Adjusted EBITDA is expected to be between $155 million-$160 million. Note that this EBITDA guidance excludes the impact of the Q1 integration investments I mentioned previously, as well as any inorganic sources outside what has already been disclosed.
Similar to my outlook comments for the last few quarters, there still remains a lot of uncertainty related to the recovery curve. While the numbers for the first two months of 2021 suggest the slowdown in Q4 was largely temporary, there are still a number of moving parts related to COVID that could impact our volume and results in the near term. With that, let me turn the call back to the operator for questions.
As a reminder, to ask a question, you will need to press star one on your telephone. Again, that is star one. Please limit your questions to one question and one follow-up. To withdraw your question, press the pound key. We will pause for just a moment to compile the Q&A roster. Your first question is from the line of Darrin Peller with Wolfe Research.
Hey, guys. Thanks for the question and congrats on a good year in a tough environment. When we look at the strategic investments you're making, clearly it's much further into Shift4Shop, e-com, and obviously now stadiums as well as we see these moves, probably more so than I think a lot of us even expected at this point after the IPO. When you talk about, first of all, if you have the right pieces now first on the e-com side, where are you in terms of your strategic build-out there? Is there enough done that you can actually run with it? How material can this be for you guys through this year and next? And maybe just touch a little more on the differentiation you guys offer besides pricing that can really help that succeed.
Yeah, good morning. Thank you. Appreciate the question. I guess first just to say, I don't think it should be that surprising that we continue to seek out industries that are challenged by multiple different software vendors adding complexity and cost that we think we can do a better job providing more vertically integrated solution. As we were saying towards the end of last year, we get an awful lot of questions about our gateway conversion strategy, but we've been in business 21 years growing in payments, and gateways were only part of our story for the last three and a half, almost four years. You should expect us to continue to find these interesting opportunities with a lot of growth behind them, a substantial payments opportunity to unlock, and a big TAM to win share from going forward.
E-commerce, if you look at the spectrum that we're able to address, if you go back six months ago, we were able to do the ultra-enterprise version of e-commerce that complemented some of our hospitality type of customers. Shift4Shop has added a very SMB at the entry point into e-commerce type capabilities. There's an awful lot that lives in between that I would expect us to continue to invest in both organically and inorganically in order to cover the full spectrum of card-not-present commerce. That's going to be a pretty big focus for us just when you consider how much opportunity lives in that market. Talking a little bit about VenueNext, we love the stadium space. Our exposure to it is actually rather recently with Raiders Stadium, as we mentioned in our remarks.
What we learned there is, wow, this is not that dissimilar to the hospitality environments that we do exceptionally well. You've got restaurants inside, you have ticketing, you've got merchandise sales, you have bars. Some of these newer stadiums have nightclubs, and it's like, wow, this looks very similar to the hospitality environment we're good at, and it's got multiple different software applications that are all coming together. This is an area that we should put more attention to. Our journey began mostly with collaboration with VenueNext, and then it was just clear based on early successes, as we mentioned, Staples Center was a big win we announced today, that we could take this a lot farther and not just end in sports and entertainment, but bring it into theme parks and other large entertainment venues.
I'd say towards just the general question is it done? No, it's not done because commerce is huge, and there's a lot of opportunity as commerce enabling software and payments come together, both in new verticals in the U.S. market as accelerants to the current verticals we're already in, and then in new geographies that we think could benefit from an integrated payment solution like we're capable of offering.
All right. That's really helpful, Jared. Brad, just a quick one on margins, then I'll turn it back to the queue. You guys guided towards numbers on revenues that were above us. On the margin side, it seemed more in line. I'm just curious, I think you mentioned something about an expense in the beginning of the year in this, but just investments versus any one-time items. Thanks again, guys.
Yeah. Hey, Darrin, this is Brad. There are a couple things. One is, we do have some investments teed up next year to shore up some of the things we talked about in some previous calls. There's also a near-term impact of some of the acquisitions that'll flow through over time as well. You'll see that in the near term, but over time, the margins driven by those acquisitions are going to get us back to those numbers that we had previously guided to. You'll see a little bit of compression here in the next couple of quarters as we absorb and kind of digest those acquisitions.
Got it, a ll right. Thanks for the advice.
Your next question is on the line of Tim Chiodo with Credit Suisse.
Great, thanks a lot. That context on the margins was really helpful. The data you gave around the number of merchants being up year-over-year is super helpful, as well as the up 4% quarter-over-quarter. It really gets to your point earlier around the coiled spring in terms of a lot of these volumes in this year's cohort coming on at a very COVID-depressed level. If there's any context you could give us around maybe the average size of the merchant base now, maybe relative to 2019 levels, and I guess further context there, you mentioned that some of those more recent additions were in the hotel vertical, which would also be supportive of a larger size merchant.
Good morning, Tim. T his is Taylor, t hanks for the question. As we look at our average merchant size, we try not to spend too much time on 2020 over 2019 only because of the COVID impact. To answer your question in sort of a pointed way, we see across the gamut, usually merchants coming out of the tail end of 2020 were down between 30% and 60%, and then there's lots beyond that, quite frankly. Hotels that were flat out closed. A lot of the hotels we boarded during the quarter used that time, that downtime to implement systems like our own. We would say that the average size of the merchant we boarded in a normalized state is substantially higher, but you can't really discern that from their 2020 levels.
Yeah, completely with you. That's exactly what I was getting at, more of the normalized level, not on the COVID-depressed type level. Fully follow you there. Same page. Okay, great. A minor follow-up on 3dcart. That 8,000 incremental web stores pretty quickly, pretty impressive. Could you just give a little more context on those 8,000 web stores? Were some of them from existing Shift4 merchants adding this capability? Were they fully net new? That type of context.
Yeah, sure. Jared here, I'm happy to answer that. This is almost all just share wins and largely related to the rebranding and promotion effort that we undertook over the last, really call it five weeks or so. We spent the first two months after the acquisition really just getting 3dcart ready for its big debut as Shift4Shop. There were a lot of things we had to do internally in terms of having a more frictionless onboarding that's hyper-appropriate for a Shift4Shop type customer, but not really typical for, say, a Hyatt or a Hilton, the type of customers we typically interacted with. There was a lot to get ready for internally. Obviously around February 1st, we really highlighted the platform in a big way, and that's where all of that growth really came from.
It's continued to maintain a very healthy state of production even since. We actually only just began enabling our 7,000-plus software partners with a means to sign up Shift4Shop customers in the last probably one and a half to two weeks. One of the areas that we're most excited about with the acquisition is enabling third-party distribution because that is not very typical at all, call it the other shop that's out there or the other web store e-commerce players. Again, we actually haven't even really begun the cross-sell to the existing base of customers either. This was really just highlighting the platform with a pretty disruptive pricing model and making available an awful lot of features and capabilities that the other players charge quite a lot of premium fees for, and seeing how the market reacts.
As you can tell, we've really increased the size of sites by about nearly 50% in a pretty short period of time.
Yeah, definitely, t hank you, Jared. Sounds like all new and now third-party distribution is enabled. Very good. Thanks a lot for taking both of those questions.
Thank you.
Your next question is on the line of Ashwin Shirvaikar with Citi.
Thank you. Hey, Jared, Taylor, Brad, g ood to speak with you guys again, and g ood job in a very tough environment. I guess let me start with asking about the cadence of quarterly expectations for 2021, particularly net revenues and EBITDA. What are you assuming with regards to an economic recovery?
Hey, Ashwin, this is Brad. I'll take that. When we put together our guidance, that's probably where we spent the majority of our time as a leadership team looking at patterns. In fact, we were looking at patterns up until the last couple of days. As some of the numbers Taylor mentioned, it's starting to come in pretty well since January, February kicked off out of 2020.
The recovery curve is going to be a big question. We think there's certainly signs that we are seeing recovery, w e talked about the coiled spring as merchants start to get back to more normal processing levels. We still think that's probably one year to one year plus before that full recovery really starts to get us back to what we would consider "normal." The pace of which you're going to see some seasonality, right? We always see seasonality in this business. Q2 and Q3 are going to boost because of weather, a lot of outdoor dining, et cetera. I still think 2021 is still going to be a recovery year that's going to behave a little different than a normal pattern.
I would expect a year to a year plus for getting us back to normal and expect some seasonality boosts between Q2 and Q3, just like we would normally see in a more normal environment.
Got it, o kay. The other question, I just wanted to just dig in a little bit into net revenue outlook versus end-to-end volumes. The net revenue outlook was a bit higher than our estimate. How much, from a contribution perspective, yield in organic contribution, subscription, other, and gateway, maybe some kind of a breakout like that, if you could provide, that'd be great. Before I get off, I also wanted to just say to Jared, just on a personal note, really appreciate what you're doing for St. Jude.
Yeah, sure, Ashwin. Kind of talking about the revenue, we've always had this ongoing premise, and it goes back to us in the IPO roadshow talking about how we're shifting our revenue streams into the net processing revenue. One of the stats I mentioned in my previous readings was around shifting that from 54% last year in the quarter. Now we're at over 60%. There is an ongoing movement on our behalf, very intentional, to make sure that that net processing becomes bigger and bigger as a proportion of our revenue streams. We will be looking at the gateways for conversions. We're always targeting different ways of driving those merchants to convert from the gateway to the end-to-end solution. We still have some SaaS and other revenue streams.
Those have been boosted a little bit lately with some of the acquisitions that have more SaaS models. What we are exploring is how do we morph those back into our existing revenue model, where we convert those SaaS and other fees back into the payments model. I think you're going to see a continued trend, right? You're going to see a continued trend that the net processing revenue becomes more and more of our revenue streams, which is also going to be very helpful for us as soon as these recoveries do kick in. That's where those recoveries are going to monetize. I think we positioned ourselves really well, and that's part of our ongoing model, whether it's the back book, if you think of the gateway, or the forward book, if you think about our recent acquisitions of 3dcart and now VenueNext.
Got it, t hank you.
Thanks, Ashwin.
Your next-
Thanks, Ashwin.
Your next question is from the line of Matthew O'Neill with the Goldman Sachs & Co.
Yeah. Hi, good morning, gentlemen, and t hanks for taking my questions. Was hoping we could dig in a tiny bit more on the acquisitions. On VenueNext, for example, I appreciate the guidance in the out years, but I was curious if there was any way to frame either what you're expecting for this year for it to contribute or maybe what 2019 was like in kind of a pre-COVID, more normal environment. Similarly, I was just curious on 3dcart now, Shift4Shop, is that back end completely converted? Is it all accruing as end-to-end volume, kind of following the rebranding? I guess the same question for VenueNext, if it is now or will it be at some point soon?
Yeah. Hey, Matthew, it's Taylor. Thanks for the questions. I'll answer your second question first, which is from a payments compatibility standpoint, yes, both platforms are able to take payments via Shift4 Payments. It was actually relatively easy. As we mentioned, I think, on an earlier call, the Shift4Shop platform had integrated to numerous payment gateways. This was like a week-long effort, and from about the midpoint of November forward, that was the preferred payment method for any of the new shops that were boarding. VenueNext, as we mentioned, this is a phenomenal transaction that we're thrilled about. This is a partner that we would have considered one of our top partners coming into the end of 2020. It's a software application that was winning in its own right, with its full pricing in some of the most demanding venues in the U.S.
That gave us all the confidence in the world to partner up with them and, through an acquisition, make the value prop that much clearer to customers. In terms of expectations, we sort of laid out a $3 billion by year-end 2023 target. I think the reality is that's not a terribly significant portion of the sports and entertainment market, and yet this tool has been able to win share at an incredibly rapid rate with a sales model that's somewhat disjointed, meaning, you got to bring in a payments partner, you got to bring in a gateway. Sometimes you're integrating with other software suites. We think we'll be able to far surpass that. We like to set conservative goals for our shareholders when we put out guidance, but we're incredibly optimistic about the path and also the adjacent verticals, right?
This is a mobile-first technology that has performed incredibly well in stadiums, but it is a demand that merchants in a lot of different categories have. It already exists in the largest theme parks in the country, and y ou can see its application across lots of resorts and other things. We are incredibly excited, not just for the ability to cross-sell into a vertical that was an emerging vertical for us, but also the ability to deliver best-in-class technology across multiple verticals. Do the payments work with Shift4? Yeah. That's how we went out and won the Staples Center last year.
Yeah. Jared, here just to layer on to some of Taylor's comments and go into some of the specifics. We wanted to set expectations, which is why we gave a sense of where we thought we would be in terms of end-to-end volume contribution from VenueNext in the next couple of years. Really didn't want to drill down into any more specifics because there's a lot going on here. First, this business, again, is growing very fast. If you look at the presentation we put out, there's a lot of, obviously, recognizable sports team and entertainment venue logos. Those were accumulated essentially over the last 18 months. To Taylor's point, this is technology that's doing incredibly well in its own right, kind of charging full freight for everything.
We just have a lot of past experience that when you combine those type of models with our integrated payments approach and eliminate some of those pain points, you're only going to accelerate growth, so w e have to see what that looks like. Then second, to Taylor's point on some of the adjacencies, and I think this is probably just a bullet point that may get overlooked in the presentation itself. We see VenueNext as providing our right to win within kind of regulated gaming environments. If you look at whether it's fantasy or some of the other sports betting-type opportunities that are happening in-app, it's our relationship with VenueNext that's already made some of these conversations come together. That itself is very hard to predict because it is also growing at a really wicked fast rate.
We wanted to at least just kind of set some initial expectations with the idea that we're going to refine it in the quarters ahead as we bring together that vertically integrated value prop that's done well for us in the past. I would expect more updates in the future.
All right, u nderstood. Thanks. Bye, everyone.
Your next question is from the line of John Davis with Raymond James.
Hey, good morning, guys. I just wanted to hit on Q4 revenue for a minute. Obviously, with the COVID spike in cases in Q4 and the corresponding lockdowns, volume fell quite a bit short of your initial expectations, yet you were still able to hit the revenue outlook. Just curious, what came in better in Q4 from a revenue perspective than your initial expectations?
Yeah. Hey, John, it's Brad, I'll take that. We've talked previously about spread expectations, right? We've talked about as the average merchant size grows, we expect to see that spread start to decline just based on purely mix from those larger merchants. When the volumes pulled back, it certainly had an impact on those larger merchants as well. What we did see is spread come in over expectation for the quarter. That's why I mentioned 81 basis points for the quarter, which is slightly ahead of what we were expecting to see, given the pattern we would've expected to see with a larger merchant base coming on board.
Okay, great. As we think about year-to-date trends, I think January up 10% encouraging. Can you give us a sense on what February was on year-over-year basis or even the exit rate, just to help us with 1Q modeling?
Yeah, sure. February was a really interesting month. The exit rate we really wanted to highlight because the back half of February in particular was incredibly strong. We sort of phrased it with the idea that seven of our eight best days in our history were during that second two weeks, and t hat's really what drove it. February on a year-over-year basis was up just shy of 6%. That's topping off a really strong February pre-pandemic 2020, but i f you look at that exit rate, you get pretty exponential growth and e ven into the early days of March. This is an area where we're starting to be incredibly optimistic. I think, as you heard from Brad, our long-term guidance suggests about the same recovery out of the pandemic that we would've told you pre-IPO, right? Takes about 18 months.
Yet we're seeing incredibly positive trends in just the last few weeks. I think what's important to understand is there's really no seasonality that should drive that. It's really just merchants across the country. It's also, as was mentioned, occurring at a time when significant portions of the country, like Texas, had no power. There was no contribution of volume. We're incredibly optimistic. I can't say it enough about where we're exiting February and what early March looks like.
Okay, great. One final one. Brad, just CapEx outlook for 2021.
I think what you're going to see, we typically run, excuse me, about $5 million a quarter in CapEx for acquisition costs, which is obviously one of the biggest things that we focus our capital deployment on. I think you're going to see some gradual creep in that. We talked about increasing our customer acquisition costs as we shorten the payback periods because we think we have such a significant opportunity to board new merchants. I'm thinking of probably a 5%-10% increase over the exit rate of 2020.
Okay, great. Thanks, guys.
Your next question is from the line of Andrew Jeffrey with the Truist Securities.
Hi, good morning. Appreciate you taking the questions. Jared, I wonder if you could comment a little bit on the growth you're seeing by channel. My inference from the update you gave in January on fourth quarter volumes with 20% growth and.
The end-to-end channel suggests that that's really outperforming, which I assume is a function of conversions. Maybe you could elaborate a little bit there and just a sense of how you're doing in the ISV channel versus your direct channel, because I assume some of that contributes to the comments about the leverage to recovery on the other side of COVID.
Well, first, I'd say almost all of our customer production, whether it's gateway conversions or just pure net new wins, originate through an aligned software partner, so t hat is our model. We do have a direct team, but they work in collaboration with our software partners. Virtually everything is an ISV channel for us because 99% of all of our transactions are connected into software. I would say in terms of the performance that we've been sharing over the last few quarters and even the update as of today, it's almost all coming from the core elements of the business, which is our focus on hospitality, restaurants, and more complex retail. The production mix between gateway conversions and net new wins is still rather consistent at about 50% in each direction. I think what you have here is just a lot of continued caretaking.
Merchants are continuing to migrate to a single-vendor solution and cutting out the cost and complexity of a multi-vendor environment. The acquisition of Shift4Shop, which has taken us more into e-commerce, it was a recent event, and we spent literally the last three months in an accelerated integration plan focus to be able to board customers of that size. The impact of which we've only started to really see in terms of the conversion cycle in February. Even our interest in stadiums, of which certainly there was Raiders Stadium and what we've recently announced with Staples, that contributed virtually zero volume at this point, just given the realities of the pandemic.
All of the growth that we're seeing, like the numbers that Taylor shared that have already been rather eye-watering in the last couple of weeks of February and early March, is all a result of our focus on hospitality and restaurants.
That's helpful color, it sounds like vertical driven growth. Shift4 , Jared, you've done a lot of things that are pretty innovative and groundbreaking in the industry, and now w hen I think about Shift4Shop and the pricing model, can you talk a little bit about the economics around that and how over time you drive good returns as you're subsidizing, I guess, maybe the front end of the e-commerce selling effort?
Yeah. It's certainly a good question, right? How is Shift4Shop going to go to market and completely forego a lot of SaaS and premium fees that it seems some of the largest giants in the industry are heavily dependent on? How are we going to be able to monetize entirely through payments? Well, I think there's a couple of factors there. First, we were very fortunate to buy an asset that had already invested quite heavily over the years in a lot of capabilities and features that we don't need to invest quite as much in in the road ahead. That's one factor. Two, the fact that we own all of our own payments infrastructure is pretty important because it means we're going to be able to capture greater spreads off payments, which will contribute more meaningfully to the bottom line.
It allows us to monetize the relationship with that customer in a way that's a little bit different, even from the super behemoths that are out there that do depend on other third parties, which does eat into some of their payment-related margins. We are pretty focused on this. I think what else is important is that the story doesn't end with just buying 3dcart and rebranding it and then having a disruptive pricing model. There is an ongoing investment to fund various internal and through inorganic initiatives. We look at Shift4Shop as a means to serve customers that are very different from our core. I fully expect it to turn into something that has a lot more direct-to-merchant, self-help type capability for even card-present retail shops, smaller restaurants.
We will absolutely incorporate as part of our roadmap capital offerings and certain things we're looking at with crypto acceptance because you're dealing with a different audience than our traditional upmarket, enterprising restaurants and hotels, where some of those features wouldn't necessarily be of greatest utility. These are all things we're taking into account for the long term and how we're going to move the needle with Shift4Shop.
Super helpful. Thanks.
Your next question is on the line of Jason Kupferberg with Bank of America.
Hi. Good morning, guys. This is Mike filling in for Jason. Just a quick follow-up on margins. If we look at the implied adjusted EBITDA margins at the midpoint of the guide of around 34.5%, I believe you've been expecting margins to approach the upper 30s by the end of 2021. Is this still the case or should margins be slightly lower than this exiting the year, perhaps due to step up investments you talked about? It sounds like there could be some pressure in the first quarter or two as you integrate recent acquisitions. How should we think about margins in the back half of the year? Thanks.
Yeah, sure, Mike. Hey, this is Brad. No, very good observation. You're exactly right. We are expecting the full-year guide at the midpoint within the mid-30s. Think about how that's going to evolve over the course of the year, right? The first quarter or two, as we digest some of these acquisitions we mentioned, those will be a little bit lower, and then they will certainly accelerate as we get into the back half of the year. The guide for the back half of the year in the high 30s is not changing.
Great, t hank you.
Your next question is from the line of Chris Donat with Piper Sandler.
Good morning, gentlemen, t hanks for taking my questions. Wanted to ask one on the end-to-end volume guidance for 2021. Just to confirm, is there any material volume coming from Shift4Shop and VenueNext in your 2021 guidance, or is that immaterial at this point from the acquisitions?
It's largely immaterial. What we're signaling, and that Brad commented on a little bit with the first quarter, second quarter margins, is we're signaling really strong assets and desire to invest in these businesses and incredibly strong potential over the back half of next year and into the following.
Okay. Jared, in your shareholder letter, you comment that you're pursuing several strategic opportunities. Just curious where you're allocating your time with the Shift4Shop acquisition, and you got a lot planned there, and then VenueNext, and then you had an incredibly busy 2020. I imagine you're going to have an incredibly busy 2021 with some other activities also. Just trying to understand where you're putting your focus this year.
Well, the answer is we're doing all of the above, and you just don't need an awful lot of sleep. We've spent an awful lot of time. Well, first, I have to say, we have an incredible team, just to be clear. I think if you replay some of our discussions, probably our Q2 and Q3 earnings calls, we've said we're going to be investing in talent. Some of our competitors are going through their own big merger integration plans and talent's becoming available in the market, we're going to get it because we do intend to take advantage of a lot of these opportunities we see in the market at the same time.
There's a great team here, and we have some really talented people focused very much on the Shift4Shop roadmap and what that's going to look like, and I gave some hints as to some of the things that are in the works right now. We obviously have a lot of good things going on from a day-to-day perspective because that is what's moving the needle. As mentioned, all the performance we're seeing in a very, very depressed market is coming largely from the hospitality, restaurant, and specialty retail customers we have today and that we'll continue to win share from in the journey ahead. There are also other strategic opportunities we're pursuing in a couple of very interesting directions, actually.
I think the answer is it's certainly worth our time to pursue all these opportunities while they're available and do the other day-to-day things at a pretty exceptional rate. I think that's the philosophy right now is we're not going to pass up anything.
Okay, g ot it. Thanks very much.
Your next question is from the line of Michael Del Grosso with Compass Point.
Good morning, guys, t hanks for taking my question. I wanted to ask about some of the legacy gateway platforms, Merchant Link, et cetera. I know you're a little bit over a year into those integrations, but how much of that gateway volume has been converted? And then some of, I guess, the longer-term question is just around your expectations for conversion in 2021. 2020 was really a transformative year in terms of tech investments for merchants, and I think a pretty significant opportunity for those merchants to shift if they wanted to. So what are your expectations around 2021, and what are you thinking it's going to take to get those merchants across the line if they haven't converted already? Thank you.
Yeah. Really good question. As I mentioned, our production still is rather consistent on average, that 50% of the customers that are joining our platform are pure net new wins, just share taking in the market. Then 50% continues to come from the existing gateway customers who are shedding all that complexity and cost from the multi-vendor environment and adopting our end-to-end solution. That's consistent even through today. Largely as we think through our planning for the years ahead, we continue to make very consistent type of assumptions. There's a lot that goes on in that gateway world. You have 350-plus ISVs, you have a lot of enterprise customers, as we've always said, the carrots, the incentives that we make available to our partners and customers, they click at different times.
The problems that we solved for our customers two years ago that influenced a lot of gateway migrations are different than the problems we solve today. In the last, call it two weeks, I'd say, Radisson, which is one of our gateway customers, big hospitality brand, actively started endorsing all of their locations on our gateway to move to our end-to-end platform, and that created a nice surge. Similarly, Jonas Club, which is another ISV that's more in golf and membership clubs, if you will, they're an existing gateway ISV that we've had for a long time. They just started actively endorsing. This type of thing just continues to happen and will continue to happen as it goes forward.
I think one of the questions that we're going to start asking ourselves, and this is not in the next year or 2 years or 3-year type thing, but is being a gateway, if you will, and making available connectivity to what are essentially our competitors, is that even a good strategy anymore? Is it just a legacy model that should go away and we just no longer even offer that service? I mention that because if you look at some of the really fastest-growing type integrated payment solutions that are on the market, they don't offer a gateway at all. First Data or Fiserv's Clover product does not have a gateway option to Shift4 or Global Payments or anyone else out there. Toast, a fast-growing, obviously restaurant player, does not have a gateway option. Square does not have a gateway option.
Shopify has some very punitive costs if a merchant uses another provider. Right now, we love the kind of carrot incentive-first approach that's been serving us really well with the gateway migration. Certainly at some point in time, we might want to ask ourselves that is the product and feature set we're making available to our customers of such value that it no longer is really even required. In doing so, we would certainly expect that would also pull forward a lot of volume from that gateway to our end-to-end platform.
Jared did a good job about commenting on the future there, but I do think it's worth revisiting the past a little bit. I think it's important to note not a single merchant who's joined our end-to-end platform from the Merchant Link acquisition has given us a normalized month worth of volume. There is still tons of growth potential inside of the merchants that have already migrated, and I think that's worth emphasizing because we acquired that business towards the end of 2019. We boarded merchants pretty steadily throughout, but the pandemic hit very shortly thereafter. We tried to sort of allude to this during our comments, but the volume potential inside of all those merchants that have already joined is pretty phenomenal as well.
Okay, thanks. That's helpful color. My follow-up is on capital allocation. I think the elephant in the room, so to speak, is the nearly billion in dry powder that you guys have, and y ou just completed a $70 million or so acquisition. Is that the size of deals that we should expect going forward? Jared, how are you thinking about some of the options for strategic M&A going forward?
Yeah. Certainly Taylor should weigh in on this too. One, obviously we feel very fortunate to have such a significant cash position that really affords us a lot of options that we can look at in the market. One thing, we've said this before, even in the fourth quarter when people were expecting us to do something rather large, is we're not going to feel pressured to do anything that we don't want to do right now. If playing small ball works for us really well and we can continue to find just total gems like VenueNext and 3dcart where we know we can unlock a lot of value, that's what we're going to do.
I'd say that Taylor has a very full pipeline right now. In terms of deals of size that could be rather transformative, you're talking about at least three that we've been investing a fair amount of time in. Then if you're looking at smaller deals that kind of similarly have a profile like a VenueNext or like a 3dcart, there's an awful lot of them there, too. I think throughout our whole history, we've really been rather disciplined allocators of capital. We tend to think about all the things that can go wrong and not get excited about necessarily the shiny thing in the moment. That's going to continue to influence our decision-making on the road ahead. Taylor, if you want.
Yeah, w ell said. I think Jared summarized it pretty well. The bookends are that there's always a handful of really transformative transactions that we'd love to get done, but they're complicated. They require a party on the other side, and we'd like to keep optionality with those. I can tell you there's more than one that help us grow exponentially in completely opposite directions, and we keep those both on the table as long as we can. We'd love to do both, to the extent the environment affords that. There is also an incredibly long line of the VenueNext, the 3dcarts of the world that have just watched our ability to help a business like theirs grow through a vertically integrated customer model. There are, quite frankly, more of those than we can handle. A plug for the strategy department. We're taking resumes.
We'll do as many of those as we possibly can, and to the extent they give us access to new verticals like both those transactions did, we love it. Yeah, we keep a really open pipeline on the small end. They're coming to us, quite frankly.
Yeah. One thing I'd add in terms of an area that we've kind of taken new interest in as of the last really quarter is in charitable giving. I think the exposure that we've had collaborating with St. Jude Children's Research Hospital on Inspiration4 has really enlightened us as to the payment industries that kind of support philanthropic and charitable giving. There's actually an awful lot there. There's technology now that enables donations in live stream video games, and it actually has quite the following. There's actually quite a few things as we turn our attention a little bit more towards that have been rather enlightening to us that I think just will be something that we'll probably get some focus on in the months ahead.
Understood, t hank you. I appreciate you taking my questions.
Your next question is from the line of James Faucette with Morgan Stanley.
Hi, this is Priscilla Rizon for James. Two quick questions. You've talked about a number of hotel deals coming on the platform. Can you talk about the RFP/competitive dynamics so far in 2021? Are there particular verticals or merchants that have decided to look for alternative payment providers such as yourself early on this year?
Well, as kind of we mentioned before, we actually boarded quite a few hotels over the last two quarters. Some pretty sizable actual properties that would be in areas that were more impacted by the pandemic, which really afforded them the opportunity to have the conversation, look at their infrastructure from a technology perspective, and use that downtime to make good decisions, which Shift4 certainly has benefited from. That just kind of reinforces the point that Taylor's made a few times. Every single one of the customers that we have at Shift4 today, and every single one of the customers we've boarded essentially over the last years, is operating in a pretty depressed state. That's that hyper coiled spring effect that we're going to be paying attention to. To answer your question on RFP specifically, we boarded 25,000+ customers.
Please, that doesn't take into account any of the Shift4Shop numbers that we shared before, just in the last year. I'd say maybe less than five of those relationships came from an RFP. That's really consistent throughout our entire history. We try and position ourselves so that there's no one else who can really compete from an RFP perspective. Certainly, it was the thing of the past. Prior to Shift4's strategy really being developed over the last four years, where hospitality merchants would have an RFP for payment hardware, and they would have an RFP for secure payment gateway. They might even do an RFP for tokenization or PCI-validated encryption, they do an RFP for merchant acquiring. That's because that industry was essentially served by four or five different vendors to complete a payment experience.
Now, with our M&A strategy and how we've kind of bundled together our services and really created that vertically integrated solution for the market, we're able to eliminate all those vendors and all the costs associated with it to really have a differentiated solution. As a result, a lot of the merchants that we boarded have migrated to our platform without ever really needing to do an RFP because the solution we're able to provide was so unique. I actually can't recall a single RFP we've seen in 2021 so far.
Perfect. Just one quick follow-up. Jared, congratulations on the Inspiration4 mission announcement. How should we be thinking about the day-to-day operations and the management of that as you proceed with that endeavor? Is there going to be any change to Shift4 Payments? If not, any clarification on that would be helpful.
No. As I mentioned before, we really benefit by having a rockstar team that we've actually been investing in quite a bit over the last few quarters and adding talent to the organization. We actually have, as Taylor was kind of joking before, we actually have quite a few open positions too that we're continuing to look to fill. I did shed quite a bit of responsibility prior to the IPO. I was one of the co-founders and CEO of a reasonably sized defense aerospace company for a decade. I did give up my CEO position, and I resigned my board position just to free up bandwidth so that I could focus on all the things that are very important to Shift4, as well as some of the other things of interest, like Inspiration4.
I am lucky that I'm able to structure an awful lot of things on nights and weekends, so it doesn't impact any of my day-to-day responsibilities. Of course, these are conversations that have been well discussed with our board of directors. All of the various appropriate governance and contingency things have been discussed, but I don't expect it to be impacting any of my day-to-day responsibilities.
Perfect. Well, congratulations again. Thank you.
Thank you.
Your final question is from the line of Dan Perlin with RBC Capital Markets.
Thanks, guys, and thanks for sneaking me in today. I had a question about embedded in guidance is this gross profit margin at 60%. I fully appreciate the mix shift that goes along with end-to-end. That's been a big part of the story. 60% margins, that's even better than I think we would have all expected even in the out years at the time of the IPO. I'm just wondering, what are some of the other incremental drivers to that? Obviously that cost to sales number at 40% is also a lot lower. Is there a bigger mix shift that's occurring because of all these other solutions that you've rolled in? How do we think about the cadence of that gross profit margin throughout the year? Thank you.
Hey, s orry. Hey, Dan. Brad, I'll take that. We're really proud of that gross margin rate. I think a big part of that is going to be what we think our spread performance looks like. This all comes back to this underlying strategy of how we're monetizing the different products and services we offer. This is why when you monetize those items through spreads, you're actually able to get some spread expansion. That's why we report a spread of Q4 just around 80, 81 basis points, and we've seen that historically. If you look around our competitive landscape, you're not going to see those kinds of numbers. As we shift these monetization models out of lower gross margin-type items, think of equipment sales that a bunch of our competitors are going to see. That is a very thin margin business.
The way we monetize our equipment deployments, the way we monetize encryption and all the different components of our end-to-end solution through the spreads allows us to maintain gross margins that we're really proud of and are going to be in that 60% range.
Great. Then how do we think about that as an exit rate when we go into the back half of the year since you're going to be jumping off on a materially lower rate it seems like in the first half? Thank you.
Exit rate out of 2020?
2021.
Out of 2021.
I'm just thinking about second versus first half because the margin profiles look quite a bit different.
I think you're going to see that. You're going to see first and fourth quarter are typically our lowest margin quarters just because there's some seasonality factors in there. You're going to see margins expansions in Q2 and Q3. As we get into the back half, I think you're going to have to factor in kind of that normal seasonality focus of Q1 and Q4 are going to be a little thinner. Q2 and Q3 are going to be a little bit heavier. We still should see some expansion from Q1 into Q4. We've talked about this recovery curve, and as we get back to normal, the increased scale of us with the really high pass-through rates is certainly going to flow through those margins.
I think you've got a little bit of abnormality related to the recovery curve. Exit numbers out of 2021 are going to be slightly higher than they're going to be in Q1. The objective is by the time we get into 2022, we're going to be a much more normal seasonality pattern.
Got it, o kay. Thank you guys very much.
Yep.
Well, thanks everyone, really appreciate the great questions. Just to close things out here. Obviously really appreciate everyone giving us some time this morning to hear some of the updates that we have going on at Shift4. I'll end by emphasizing again that 2020, for all of its challenges, is a year that everyone at Shift4 can take a lot of pride in. We not only operated the business through turmoil and volatility, but we grew rapidly because of our unique approach and value proposition for merchants. In addition, we applied the ambition in Shift4's DNA to lay the groundwork for growth in new and large markets like e-commerce. Most important, our commitment to our customers has never been more evident through community engagement like Shift4Cares. Appreciate again everyone's time for joining in. Thank you, and have a great day.
This concludes the Shift4 Payments fourth quarter 2020 earnings call. Thank you for participating. You may now disconnect.