Corpay Inc Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Tien-Tsin Huang - JPMorgan - Analyst : Thanks a lot. Ron, you've been real busy, I know. I want to ask on the two deals. Maybe first on Mastercard. Just give us a little bit more on your confidence level in getting this 2 to 3 points of incremental revenue growth out of the agreement. We've seen these kind of partnerships before. And of course, Mastercard's got a ton of reach with banks. But ultimately, the banks still have to promote it. So what kind of line of sight do you have into that. The energy that it's going to get put into that to drive that 2 or 3 points?

Question: Tien-Tsin Huang - JPMorgan - Analyst : Yeah. It seems aligned with what the banks want to do in terms of monetization of front end. But yeah, just curious on that, that's good to hear. Just on the Avid one, interesting deal. Maybe the simple high-level question, I'll let you opine on is just, is this a financial investment or a strategic one? I mean, I guess, it could be both. You have a call option, but to see you do have the minority deal in somewhat of a mid-market. I'm just curious how passive or active you'll be as an investor in Avid? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 06, 2025 / 9:00PM, CPAY.N - Q1 2025 Corpay Inc Earnings Call

Question: Tien-Tsin Huang - JPMorgan - Analyst : Understood. Good times with Prager. Thank you, Ron.

Question: Andrew Jeffrey - William Blair & Co - Analyst : Hi. I appreciate you taking the question. Yeah, a lot of good stuff going on here. Ron, when you think about the Avid investment and the option seems to be a great way to go about it. Can you talk specifically to their network as well as your own AP business just around monetization rates? And I assume that strategic investment, as you term it of this nature indicates, confidence, ability to improve card attach and monetization. I know new sales are a big part of that, too. But can you speak to the monetization piece and your confidence and be able to drive card acceptance and/or ACH pricing?

Question: Andrew Jeffrey - William Blair & Co - Analyst : Yeah. That makes sense. And as a quick follow-up, you mentioned enterprise last quarter as a new thrust within the Corporate Payments business. Can you give us an update there in terms of pipeline?

Question: Andrew Jeffrey - William Blair & Co - Analyst : Perfect. Thank you.

Question: Shrey Patel - Barclays Capital - Analyst : Hi. This is Shrey on for Ramsey. Thanks for taking my questions. So my first question is on the AvidXchange investment. So in your press release, you mentioned that their take private transaction structure gives Avid the flexibility to transform and accelerate profit growth. And Ron, I know you hit on it a little bit, but -- and I know it's still very early on in the process, but I was just wondering what kinds of strategic initiatives this could entail.

Question: Shrey Patel - Barclays Capital - Analyst : Got it. Thank you. And then as a quick follow-up. Earlier in the call, you called out that outside of your cross-border business, any tariff impact would be indirect in nature. So I was wondering if you could help us think through what this indirect impact might look like in Vehicle Payments specifically. Would it be isolated to your OTR business or in particular geographies? And then could you potentially deploy pricing as an offset?

Question: Shrey Patel - Barclays Capital - Analyst : Very helpful. Thanks.

Question: Andrew Schmidt - Citi Investment Research - Analyst : Hi, Ron. Hey, Alissa. Congrats on all the progress here. Thanks for taking the questions. I wanted to ask about the US business within the Vehicle Payments. It sounds like you're pretty optimistic around the sales trends there and maybe just comment around just the confidence in driving improvement in revenue there as the year progresses, obviously, macro aside, but would love to get some details based on the sales trends and initiatives you have there. Thanks so much.

Question: Andrew Schmidt - Citi Investment Research - Analyst : Got it. Thank you, Ron. Yeah. Retention is a big lever. So that's good to hear. Every time we see macro fluctuations, we always get the question on supplier acceptance trends within the AP business. It doesn't sound like there's been much variation based on the commentary. But maybe just talk about what you hear from suppliers in terms of payment choice, things like that, whether there's been any change on that front? Thanks so much.

Question: Andrew Schmidt - Citi Investment Research - Analyst : It's great to hear. Thank you, Ron.

Question: Sanjay Sakhrani - Keefe, Bruyette & Woods Inc - Analyst : Thank you. Good afternoon. Congrats on this Avid minority ownership. Ron, could I just follow up a little bit on the acceleration of the sales at Avid? Like how exactly will you guys be involved in that? Will you actually like sell the product, have your sales -- I'm just trying to think about that part of it. And then just on expenses, obviously, there might be some redundancies between what you guys do and they do. Is there any plans to get involved on the expense rationalization there? And just one final one, just what are the terms of the call option in 2027? Thanks.

Question: Sanjay Sakhrani - Keefe, Bruyette & Woods Inc - Analyst : Thank you.

Question: James Faucette - Morgan Stanley - Analyst : Hey. Thanks a lot for the question and all the details today. I wanted to turn to another topic really quickly, Ron. I'm curious to hear about the performance of the hedging business in Q1? And anything you can give us on how it has performed since then during the month of April and early May. I'm just wondering if it's fair to think about that business as a beneficiary of sustained heightened market volatility. And can you give us the puts and takes on that dynamic and any other impacts on tariffs on that segment specifically?

Question: James Faucette - Morgan Stanley - Analyst : Great. Thanks.

Question: Trevor Williams - Jefferies LLC - Analyst : Great. Thanks very much. If we could go back to the organic guide, and Ron, you've given some kernels on this over the course of Q&A, but we're at 9% organic in Q1, you're keeping the 11% for the year. It sounds like a lot of that acceleration is coming from US vehicle. But if there's anything else that you could point us to? And I hear you on April running in line. But just with everything on the macro, how would you frame the level of confidence in the full year and the specific drivers you guys have baked in today versus three months ago? Thanks.

Question: Trevor Williams - Jefferies LLC - Analyst : Thank you.

Question: Rayna Kumar - Oppenheimer & Co - Analyst : Hi. Thanks for taking my question. Are you seeing any different trends across SMBs versus your larger fleet clients? And can you talk about same-store sales trends for both segments?

Question: Rayna Kumar - Oppenheimer & Co - Analyst : Appreciate the color.

Question: Dave Koning - Robert W. Baird & Co Inc - Analyst : Yeah. Hey, guys. Thank you. And I guess my question just with the Avid deal, do you guys immediately get access to their supplier network? And maybe could you talk through like if today your accounts payable clients maybe you have 20% of each of their payment files on average that can go into one of your suppliers and now with Avid, does that 20% raise to 30%? I'm making up numbers, obviously, but do you have metrics like that? And am I thinking of that correctly?

Question: Dave Koning - Robert W. Baird & Co Inc - Analyst : Yeah, great. Thanks, guys.

Question: Rufus Hone - BMO Capital Markets - Analyst : Hi, guys. Thanks. Maybe just a quick one on -- you mentioned some potential noncore divestitures. Now the $2 billion number implies it could be something pretty chunky. I guess just what businesses does that cover? Any details there would be great. Thank you.

Question: Kenneth Suchoski - Autonomous Research - Analyst : Hey, good afternoon. Thanks for taking the question. Maybe I'll ask one on lodging since it wasn't covered here. But the organic growth took a step back this quarter. I know there's leap year impacts in there. But is the expectation to accelerate to mid-single-digit growth throughout the year and then ultimately get back to double-digit growth. And I'm just curious how do you guys think about driving that acceleration? Thank you.

Question: Kenneth Suchoski - Autonomous Research - Analyst : Thanks, Ron.

Question: Nik Cremo - UBS Securities - Analyst : Hey, thanks for taking my questions. I just wanted to come back to the US Vehicle Payments business just given a deceleration versus I think being up slightly last quarter with strong sales last quarter as well. So can you just provide more specific color as to what drove the deceleration in Q1? And just put a finer point as to the drivers for the acceleration in the back half? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 06, 2025 / 9:00PM, CPAY.N - Q1 2025 Corpay Inc Earnings Call

Question: Nik Cremo - UBS Securities - Analyst : Got it. Thank you.