FleetCor Technologies, Inc. Aktie

All right.

Thank you, everyone, for joining us. We're at 1:45, we're going to get started. My name is Michael Infante. I cover fintech here at Morgan Stanley. I'm very pleased to be joined by Corpay's CFO, Peter Walker. Before we get started, I do just have a quick disclosure to read. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

So with that out of the way, thanks for joining us, Peter.

Yes. Great to be here.

So before we sort of get into some of the nitty gritty, the business over the last several years has evolved quite materially. You've obviously been historically concentrated in the Vehicle Payments segment, but have really aggressively mix shifted towards what is a faster growth and higher-margin segment in Corporate Payments. Just talk to us about that transition and how you think about the future trajectory of the company on a go-forward basis.

Yes, happy to. Corporate Payments was 40% of the revenue in the first quarter. So to your point, really well on our way on that transition. And to that point, we've created a new set of investor materials that are available on our IR website because what we wanted to paint for investors is what does Corpay look like 2 or 3 years from now, right? Like we've made a big rotation into corporate payments, but what does it actually look like as a pure corporate payments -- pure-play provider. So Ron and I have been on the road last month and this month meeting with investors really to kind of share that vision of the forward look of the company.

And what I would say is the reaction has been very positive. I think people are really excited about, one, the corporate payment space in terms of really large TAMs, faster-growing business, higher retention, better credit quality clients. And then I think even beyond that, the idea of really making this shift from our roots as call it, a fleet company focused on SMB clients globally to being a corporate payment company focused on the middle market has been resonating well. So it's been helpful to get that feedback. But maybe I'll just unpack it for you a little bit.

So what I would just say to everybody listening is definitely go to our website and check out the investor presentation we put out there in May, and I think it will help some of these concepts I'm talking about kind of come to life. So first, I would say we hold our strategic offsite every year in March that gives us an opportunity to walk away as a group and step out of the day, step out of the quarter, step out of the year and say, what's the midterm strategy of the company. So not only what is the strategic view of the company, but what's the financial view of the company. And that's where we all walked away as an executive team kind of going, yes, pure-play corporate payments, that's where we're headed. That's where we've been headed. So kind of more committed than ever to that's where we're going. So what this pure-play corporate payments means?

It means that we see ourselves really in 3 primary businesses as we go forward. So one of them is employee spend. Think commercial card is one of the largest products that would be employee spend for us. The next category is vendor spend. So think of AP automation, also think about us going left and moving more into procurement and offering procurement offerings. And then the third is our cross-border business, which we most recently held a teach-in on that business, which I know you attended in the recent couple of months. So that -- those materials are out there as well. So that kind of sets the stage of what do we think we look like, call it, 2 to 3 years from now. Now there's 2 things to think about when we go through that. One is, okay, Peter, how about the remaining pieces of the business that don't necessarily fit within that structure. And so I would say some of those businesses will continue to hold. They'll be a smaller part of the portfolio, but other parts -- other of those businesses will divest, right? So we've divested in the first quarter.

We used the proceeds from that divestiture to buy back shares. So we didn't have an EPS dilution from that. So what I would say is we continue to look to divest kind of noncore TAM-constrained businesses, that we will use the proceeds to buy back shares to minimize kind of any dilution. So we're in market with 2 other businesses, which we've been publicly talking about of about $1 billion in proceeds. And I'd say there's another handful of businesses that over the next year or 2, we'll look to divest of. We're never going to share the names of the businesses or the segments because that puts us in a disadvantaged position, not only from selling the business, but running the business and with employees. But we see a strong path into this pure-play corporate payments rotation and some divestitures along the way, probably the other piece I should comment on that is M&A. And our view today is we spent about $15 billion on M&A over the last, call it, 7-plus years, 7 to 8 years.

Our view is we have all the capabilities today that we need to compete in these 3 categories I mentioned of employee spend, vendor payments and cross-border. So when we think about M&A going forward, it really will be about new geographies, new customer segments we're not in today. So we're no longer on the capability hunt. So that gives us even more confidence in the ability to grow these 3 large businesses we're talking about.

Super helpful overview. If we just focus on the corporate payments piece in particular, and how you think about Corpay's value proposition and the durability of that over time. We obviously have countless crosscurrents from a thematic and sort of headline perspective as it relates to competition with new product innovation. But how do you think about Corpay's ability to continue to win over time?

Yes. I have high confidence in it. I would say in the 3 businesses that we talked about in the pure-play corporate payments, these are all 3 of these sectors that have $100 billion plus in revenue TAMs available today, so really large TAMs. The majority of those TAMs are owned by the banks today. And when you look at the Tier 1 banks servicing enterprise clients, they obviously do that extremely well. I'm not looking to compete with the Tier 1 banks enterprise clients. I'm looking to compete with the Tier 2 through 4 banks and really focus on that middle market underserved clients. And hey, the Tier 2 through 4 banks do things really well, right? I mean they handle deposits well. They lend these businesses money. It's important that they provide these middle market business services, but we think we've got a differentiated -- we know we have a differentiated product that we can sell and really take that market share from banks.

I would say specifically within employee spend, there's been some innovators out there in the space today, which we actually see great because that really points to people investing within the space because they know there's the opportunity to take share. So we think we're uniquely positioned in that space. We have a 4-in-1 card that is much different than kind of any of our competitors today. But hopefully, that's an overview when it relates to competition.

Yes. No, it helps. I think another sort of underappreciated aspect of the story is just the rate at which the business has been compounding over the last 4 to 5 years, maybe even longer, right, mid-plus teens of EPS generation sort of through the cycle on an organic basis. You laid out the target for $50 of cash EPS in the future. Just talk to us about the cadence, timing at which it would take to get there as you sort of think about the model from here.

Yes. So another thing that kind of came out of the offsite that we do. So when I first joined Corpay, several people in the office would say 10%, 13%, 19%. And I was like, what's happening? Is this like rain man? Why are they repeating 10%, 13%, 19%, right? And so obviously, a couple of weeks into it, I learned, okay, 10% organic growth. We're going to consistently deliver 10% organic growth. And by the way, we've delivered that 4 out of the last 5 years. So that's what we lead with in terms of organic growth. The 13% is EBITDA growth. So we can obviously grow EBITDA faster than we can grow top line because we have scale in the business. So we have a, call it, 80% plus incremental margins. That's how you get to 13%. And then how we got to 19% is because we've got strong yield in the business, right, we've got the ability to either buy back stock with our cash flow or we've got the ability to do M&A. So that got us to 19%.

When we went through our off-site and we reviewed that model, we said, wait a minute, it's not 19% anymore, it's 24%, right? So we've got another 5 points there in terms of EPS growth. So call it, for a midterm, call it, 10%, 13%, 20% plus. But the 24% that I'm talking to and really the expansion is driven by 2 things. One, the stock is undervalued today, right? So my ability to buy back more of that stock increases in the current environment. And then number two, what we hadn't factored in before is, well, hey, if we continue to maintain the leverage ratio of, call it, 2% to 3%, we'll continue to borrow more money over the midterm as EBITDA grows. So we'll kind of call it, have $15 billion of cash flow over the next 3.5 to 4 years. So our view to the market, to investors, and this has been received really well is, hey, we can't control how we're valued.

We think we're undervalued at, call it, 12 or 13x depending on the day. And as we continue to be undervalued, we're going to take that cash, and we're going to bet on ourselves and buy our own stock back. And that's how we're going to create value for you even though the market is not rewarding us. The thought process is that over time, right, as maybe we move out of this AI boom and there's a shift back to fundamentals and people really appreciating our business, our unique ability to be a top-tier performer that the stock does appreciate. And then maybe we probably move into more of a balance of using those proceeds, that additional cash against M&A and buybacks. But the idea of getting to $50 EPS, call it, in the next 4 years and really leaning into buybacks, we've socialized it with a lot of our investors, and they've been really enthusiastic about it again at these current valuations.

So durable 10% organic growth, 20% plus cash EPS growth from here?

That's it.

Understood.

So maybe just in terms of the growth algorithm that builds to those results, Ron, obviously, coming from more of a selling motion and obviously instilling that throughout the organization. You also have the target of delivering 20% sales growth across the organization. Just talk to us about what really drives the Corpay sales engine just because the magnitude of those dollars starts to get big when the base obviously expands.

Yes, great question. So I mean, I would say that sales is our secret sauce. To your point, I mean, Ron comes with a background around it. We have incredible discipline around it and analytics behind it. Our view is we're going to increase our sales investment every year by 20%. And we believe that's kind of at the efficient frontier. You get to a certain point where you could overinvest in sales and you're no longer productive. So if you look actually in the investor presentation materials I was referencing people before, we provide our sales growth kind of over the last 5 years and those are materials, and we've been at 20% or greater, right?

So if you look at the history, right, as a predictor of the future, we feel really confident that we can continue to grow sales by 20%. If you go over to the retention side of the business, we reported 93% -- a little better than that, 93.5% retention for the quarter. So call it, we're losing 6% to 7% of the business every year, right? So that's your algorithm that gets you, call it, at a 10% organic growth rate. Obviously, the more we move into corporate payments, the retention rate becomes stronger because we've got a middle market customer, and you've seen that improvement in our retention rate over the last couple of quarters.

Very helpful. Ron made a comment in the cross-border teach-in that the market is so large, right? You're delivering, call it, high teens organic corporate payments growth. He wants that to be north of 20% and sort of pushing the organization to deliver against that. What is the sort of practical bottleneck to growing faster within Corporate Payments as you think about the opportunity from here?

Yes. So it's a great question. So as we've shared in the teach-in, it's call it, $160 billion revenue opportunity in the Tier 2 to 4 space for us to go after. So if we're going to be about $1.5 billion this year in revenue and cross-border, we've got less than 1%. So the good news is a ton of market for us to capture. I'd say the opportunity for us is how do we do that efficiently, right? So how do we grow the sales team efficiently and responsibly to capture that market. So if you look at that business in 2017, when we went into it, right, it was a $100 million business, and now it's a $1.5 billion business. So I'd say it's continuing to do the things that we're doing. The market opportunity is there and then adding to the sales team responsibly in terms of getting a good growth rate from them, but realizing you can't overread because then it becomes unproductive.

Yes. And from a competitive perspective, obviously, the focus on the middle market customers, the sort of larger G-SIB sort of focusing on the enterprise cohort in terms of servicing those needs. How do you sort of think about what you've seen on the ground in terms of the Tier 2 to 4 banks in terms of their competitive response to the pace at which you guys are growing and where they're thinking about trying to mitigate some of that share loss in the future?

Yes, it's a great question. I mean this is kind of key to our partnership with Mastercard in the financial institution channel. So if you look at the cross-border business, call it, even a year ago, it was primarily a business that was selling into the corporate segments that's where we've built all of our business. So going after those customers directly that are being served by banks. With the purchase of Alpha, we moved in the private capital market space. We added another segment. And then we were in the financial institution segment already, but a relatively small business that we had there. What we're excited about Mastercard. Has Mastercard has relationships with these Tier 2 through 4 banks across the world, right? And they have the ability to open the door to these banks for us. And so as we announced in last year and then closed in the fourth quarter was the partnership with Mastercard. They obviously made an investment in us as part of that partnership, the value of the cross-border business at $13 billion, and we've been quite successful.

So the thought is if we're not going to take the business directly, let's go to the banks and offer them to sell our solutions. And whether they white label those or sell them as Corpay, we're really agnostic to it. We know that there's an underserved customer that has a need to be met, and we'll either do it directly or be a partner of the banks and help them be successful. I mean the concern for those Tier 2 through 4 banks is that the customer outgrows them if they can't get their cross-border needs met and they go to the Tier 1 bank. And they don't want to lose the lending relationship. So we think that we have a great value proposition to say, hey, we can complement your relationship, we can complement your lending with international payments, risk management services and global bank accounts.

Helpful. Maybe just to piggyback on Mastercard. Just a status update in terms of where you are with that relationship. I think you've historically said that you expected it to contribute, call it, 1 to 2 points of acceleration to the cross-border component of corporate payments. Does that still hold? And how do you think about the potential for incremental acceleration in '27 as some of these sort of slower converting sales cycles begin to close?

Yes, good question. So I'd say overall, the partnership is going really well. Mastercard has committed resources to the partnership that are kind of opening the doors, and then we're obviously bringing the SME to sell the product. So we've closed 3 clients to date. We've got a really strong pipeline. So I'd say that's progressing well. In terms of what's the percentage that it adds to the organic growth in cross-border, I think we shared that 1% to 2%. It was before my time, and it was when the cross-border business was quite a bit smaller before the Alpha acquisition. So it's probably a little bit lower because your base has gotten so much bigger, right? I mean last year, in '25, we were less than $1 billion. Now we're going to be $1.5 billion with Alpha. And what I would say is you are right, it is a slower sales cycle within financial institutions.

So I'd say I wouldn't get over my skis, but say we revisit '27 guidance, and we've had more time in terms of the sales cycle, we'll kind of revisit what we think the contribution is going to be. But overall, right, we do believe it's going to be meaningful.

That's great. Maybe just in terms of the cadence of wallet share expansion, in terms of the typical adoption behavior of a customer sort of initially starting with payments, expanding to things like risk management, your bank account product, et cetera. What evidence or data are you seeing in terms of just the multiproduct attach in the organization and sort of how that's either improving retention, driving yield, et cetera?

Yes. It's a really, really good question. So I would say in our Corporate segment, we see that about 2/3 of the revenue, the clients are using 2 products. And so if you think about it, a client comes to us and they typically first need help with executing the international payment, right? So the FX payment, that's what they come to us, right? And then when they come to us with that, the immediately thing that we bring to the table is, hey, there's volatility in currency and you really should be protecting yourself against this volatility. That naturally leads to the risk management services that we can provide. So those 2 products really, we say, go together like peanut butter and jelly. So I think it's important when you're thinking about kind of other players, emerging players in the space that if you're only offering the payment product, you're at a disadvantage because you can't offer a full solution. And then adding on the bank account product, the real benefit of this in the corporate space I'm speaking to, we call it the multicurrency account.

What it allows the client to do is to see all their bank accounts, right? They can connect it to their primary bank account. So they can see all their global bank accounts and then manage their money kind of across the globe. So -- but like I said, a high correlation between the first 2 products and then the global bank account adoption is also growing.

Makes sense. Maybe just spend a minute or 2 just in terms of how you think about the concept of netting in the organization. You obviously gave the statistic in terms of 60% of your cross-border trades being netted internally. Just talk to us about what that means in terms of sort of the lack of need to sort of externally source FX and how that impacts unit economics in the business.

Yes. So super powerful concept. So for those of you who are not in the weeds of cross-border, which I wasn't until about a year ago when I joined this business, right, the netting concept would be the idea of -- you're in the U.K. and you need dollars and I'm in the U.S. and I need pounds. And because we sit across 5 continents today and that we run 60% of our business on proprietary rails that I can net those 2 trades from a liquidity standpoint, so kind of self-fund that liquidity. So it's incredibly helpful not only in terms of executing the transaction for my customer, but also in terms of the efficiency that it allows me to achieve and the margins that it has allowed us to grow in the business. And like I said, run 60% of the business on our own rails.

Got it. I wanted to pivot to JPMorgan and our Kinexys product just in terms of what they're building there, what they have been building. Just talk to us about where Kinexys sort of fits into your payments orchestration stack and how you think about the sort of mix or flows on the Corpay network that are still on Swift and how the Canexus platform can help in the future to sort of drive that mix down over time?

Yes, happy to. So we think that blockchain is pretty exciting in terms of it offers the 24/7 settlement, right? So the kind of a banking hour settlement. We had in our mind that kind of, let's say, mid last year when I joined Corpay that it wasn't going to be very long until the banks entered into the blockchain space because the other providers of Stablecoin, et cetera, the banks are obviously going to be protective of keeping the deposits of all the corporates that they work with, right? So when JPMorgan came out with the Canexus product, what we were pretty interested about it is they've got 220 correspondent banks across the globe. So it's a very wide network to use. It's the same cost as SWIFT, but it gives a 24/7 settlement capability that Swift does not have.

So the reason why we made some comments about, hey, taking a significant amount of our volume off of SWIFT, right, 60% of it on our own rails, kind of that remaining 40% is up for grabs. We see a lot of that probably going to the Kinexsys partnership that we formed because we can, again, do it at the same price, and we can get it outside of bank done outside of banking hours. So we think it's a pretty great rail product that JPM has created. Citi has one that they're coming to market with as well, and I expect there'll be copycats across the top tier banks.

So it sounds like an incremental capability for you guys from a rail perspective. I'd say to sort of play the other side of the same argument, I think one of the common pushbacks we get from investors is on the corporate payments business, historically, the moat of Corpay has been sort of predicated on the breadth of your banking network, the ability to sort of FX -- source FX liquidity in various corridors. What sort of prevents either a start-up, an existing sort of remittance business that has some FX capabilities from partnering with someone like a Kinexsys leveraging their banking network and the sort of settlement layering on the FX and sort of reduces Corpay's value prop over time? How would you respond to that?

Yes. I mean maybe 2 questions. One, they could have done it with Swift for years, right? Certainly. The main difference between Swift and Kinexsys is a 24/7 settlement. So I don't know that, that's going to inspire somebody to invest a whole bunch of capital into a business to build something when they could have built a cross-border business on top of the Swift network that operates today. But one analogy that I've been using to try and help people understand kind of the rails part of our business and our middle market customers is, say you made a call this morning to Tiffany's and SoHo and you decided to buy an expensive piece of jewelry from somebody who was important to you, right?

My wife told me she wants...

All right. So here we go. All right. So this live example, right? So you called Tiffany's and you said, hey, I need it by 4:00. You spent $250,000 because you just got your bonus for the year and you wanted to reward your wife for supporting you, right? So you're sitting here kind of waiting for it to come at 4:00 because you've got dinner tonight and you want to have this in your pocket. When that delivery person shows up with that diamond that you bought, I don't think you turn to that delivery person and say, how did you get to the intercontinental? Did you take Uber? Did you take the subway? Did you take a taxi? Did you bike? You don't care, right? Is that fair to say? What do you care about?

Got the diamond.

You got the diamond. And when you look at it, it's the $250,000 diamond that you paid for, right? So if you take that analogy to my space, where we're serving the middle market customers, when the CFO or the treasury of a $300 million to $500 million company calls us and they need to have a payroll happen by Friday, so their employees in the U.K. get paid or they need to have a tax payment happen in Germany the very next morning because they're going to be late if they don't. They're not specifying for me cross-border -- hey, guys, I want you to use Kinexsys for this payment, right? It is a tiny, tiny part of the value of the transaction.

What they're looking for me to do is use the payment method, the rail that gets it to them based on their business needs, right? So in the purpose of the diamond we're speaking about, right, we would have picked the route that got it to you fastest, ensuring it got to you in full value and was fully protected. So that's the value that comes in cross-border, right? And that's tied to one technology platform that sits globally, the liquidity corridors that we talked about having 60% of our rails. The regulatory and compliance that we put in place and probably most important, the fact that we've got 800 professionals sitting across the world in our go-to-market team that knows how to sell this pretty unique product, right? You're selling it into organizations who actually really need help with treasury management as opposed to selling it into, call it, an enterprise organization that has a super sophisticated treasury management team.

Yes. Very helpful.

So hopefully, your wife is happy tonight.

Hope so. Hope so. Maybe pivoting to Alpha. You obviously spoke about the rationale for that acquisition, the incremental sort of capabilities that you gain as it relates to the private markets, the exposure to the asset management ecosystem, the deposit base, et cetera. What has sort of surprised you most since the acquisition and sort of contextualize for us where we are in terms of the synergy realization, both on the revenue and the expense side?

Yes. I'd say -- I mean, hey, we've done over 100 acquisitions in the last 25 years. So one thing you should know about Corp is when we buy something, we typically know everything we possibly can about it before we wire the funds to buy it. But I'd say maybe to the upside, what we've been surprised by is just the cultural match between Alpha and our current cross-border team, right? I mean they were a much smaller organization. We're an S&P 500 company. So we've really been able to blend those go-to-market teams even faster than we thought. And I think we even shared on the Q4 earnings call, right, we saw a little bit better performance out of Alpha than we expected in the last 2 months of last year just because we were able to kind of gel quickly there. And then I think your second part of the question was about the integration.

Yes, synergy realization.

Synergy realization, yes. So what I would say is there were some synergies that were kind of relatively day 1 synergies that we could execute on that were relatively light, but helpful, right? I mean we run a much larger business. So all of our banking contracts are at a much different scale than theirs are, right? So that's a good example of kind of some early synergies we were able to take in the business. The other 2 synergies we're focused on, which are more kind of back end, more back-end loaded, one is revenue synergies, and there's revenue synergies really in 2 places there.

One, Alpha was only licensed within the U.K. and the continent in Europe, and we are licensed in the U.S. and Australia. So we are already selling to private capital market clients in all of those geos. But today, we're not doing it on one system. So as we move to integrating the system, call it, July or August, we'll see even a bigger uptake in clients that were current clients of Alpha now in different geographies of cross-border. So that's going to be super helpful. And then the other piece is Alpha didn't typically provide the risk management services that we did in the past. So also, that's another revenue synergy, again, kind of back end -- more back-end loaded this year. And then in addition, when we move to one system, we're obviously going to get a lot of cost synergies out of that.

Yes. Makes a ton of sense. And just for those in the audience, the nature of the private markets customers, these are operation and private equity firms, the Bain Capitals of the world that have funds in various corridors and now have the licensing infrastructure to be able to move funds more efficiently.

Yes, that's exactly it. So Alpha really built a great niche business with their global bank account business. They've got about $3 billion in deposits as of the end of the year. And then once they -- and the value prop was, hey, Bain Capital used as an example, and they're an actual client. If they want to do a deal in Germany, they need an operating account in Germany. We can create that for them in, call it, 7 to 10 business days. And then once we create the global bank account, then there's the opportunity to sell them the FX payments and the RMS services. And you're absolutely right that the hypothesis here is Bain is going to use us for those services now in the U.S. and in Australia, and that is the plan that's being executed on.

On the tech platform migration, I think the rest of the migration is happening throughout the balance of the summer. What sort of changes post migration when it's complete? Does it sort of lead to some form of step function change in Alpha margins? What sort of changes either from a financial or a commercial perspective?

Yes. So it kind of goes back to the synergies I was speaking to. So one, it gets my global sales force all on one system and primarily, right, that's the corporate business of Alpha and the private capital market business of Alpha. So that's a synergy there that allows the private capital markets business at scale to sell within the 2 new regions that we spoke about. And then the other thing it does is it does improve the margins because I've got the ability to shut down a system and take out all the costs supporting that system.

Got it. In the few minutes four left, I just wanted to open up the floor to see if any clients have any questions.

Just a quick question on your move from SWIFT and pursuing 24/7. Are you moving all your volumes off of SWIFT, just to clarify or just for kind of those circumstances that are 24/7? And then how agnostic can you remain if and as Swift or other providers and rails provide 24/7 remittance capability?

Yes, great question. So we're not moving everything off Swift. I'd say it's really based on the clients' needs, and we believe the 24/7 part of Kinexsys or another type of blockchain offering like stablecoin is attractive, right? So that's where we see -- and it's the same price point. So that's why we believe a lot of volume will migrate there. We are establishing stablecoin rails. So we did introduce a relationship with BB&K as an infrastructure provider to help us do that. So we'll be able to process the blockchain either via Canexus or via stablecoin. Canexus is much better priced right now because there's just not enough volume on stablecoin today. But we'll always pick the rail that's the best for the client.

Any other questions?

SWIFT announced a blockchain product, I think it was about a year ago. I guess since you're moving away, is that making progress?

It's a great question. I don't have the answer to it. I've been in the seat for less than a year, and obviously, it's not hit our radar in terms of using it. So I would probably say that's probably the conclusion is that it's not providing us any advantage to using that.

Great. Well, 2 minutes left here. We spent a whole chunk of time on corporate payments. I did want to hit on vehicle. Talk to us about sort of the 3 components within vehicle. You have the U.S. business, you sort of have the international ex Brazil business and you have the Brazil business, each sort of with different same-store sales profiles, different growth rates, different business mixes. Just talk to us about them either in isolation or as a portfolio and sort of how that builds up to the organic 10% vehicle payments target.

Yes. So in totality, right, vehicle payments, we expect to perform, call it, 9% or 10%, right, kind of consistently at that 10% the last several quarters. If you unpack that by geography, Brazil is the fastest-growing business within the 3, call it, high teens, mid- to high teens. That's followed by our Europe and Rest of World business, which grows, call it, 9% to 10%. Both of those have grown at those rates very consistently for the last 4 to 5 years. And then U.S. vehicle payments is now the smallest business within vehicle payments, and that's growing, call it, mid-single digits. So hopefully, that's helpful.

No, that helps. 30 seconds here, lightning round in terms of buybacks. Ron was probably more -- what's the right word to describe this, more pounding the table on sort of the dislocation in the stock and the buyback opportunity from here really than I've ever heard him. How do you sort of think about what that signals and sort of what you guys are seeing in terms of either private or public valuations and how we should sort of think about the trade-off from here?

Yes. So I mean, I think it kind of goes back to where we started our conversation, right, that when we kind of step back and looked at our 4-year model and the ability for EPS to grow much faster because our yield has expanded, right? And the fact that we're so undervalued, our view was, hey, we can create value for shareholders even if the market -- while the market is not valuing us correctly, we believe, undervaluing us, we're going to create value by buybacks.

Now what I want to emphasize is, should our value go to more what we think it is, that's probably not the best use of our capital, and we'll shift it then to more M&A. But we just really -- he really wanted to make the point to investors is I can create significant value by just running a great business even if the market doesn't reward me for it.

Awesome. Well, we'll wrap there. Thank you, Peter, for joining us.

Great to be here. Appreciate it.

Thanks.

Thanks, everybody, for joining. My name is Tien-Tsin Huang, I follow the Payments and IT Services Sector at JPMorgan. Really excited to have Corpay back. Peter Walker, CFO. My first time having him at the conference. So super excited to have him here. Thank you for being here.

Great to be here with you.

So we'll do a fireside chat. I put together a bunch of questions. I think, if there are any questions in the portal or from the audience, we'll take those as well. But again, I appreciate the time.

I thought we'd just start, if that's okay, Peter, with the obligatory macro question and what you're seeing on the ground? How healthy are SMBs? What are you seeing in terms of activity? Maybe start with that, if that's okay.

Yes, happy to. So maybe talk about it in 2 ways. One, fundamentals in the business and then what we're seeing in the overall macro environment. So the fundamental business trends are strong. We reported 11% organic growth for the quarter. It's our fourth consecutive quarter of 11% organic growth. So really thrilled about that. We actually came out of the gate stronger than we expected, as we expected originally for a lower organic growth for the quarter.

Revenue retention is 93.5%, now including cross-border, so also really strong, and 24% sales growth year-over-year. So we are really set up well at the beginning of the year. And as you know from the call, we raised our revenue and adjusted EPS guidance for the full year.

From a macro environment, the world is on our side right now. So I would say that higher fuel prices in the U.S. are helpful to the business. While it's rather a small part of our business today, it's still helpful. The weaker U.S. dollar is obviously helpful for us, given we're such a global company and the FX rates related to that. And then just in general, I'd say, volatility in FX is helpful for our business in our cross-border business, which I know you joined our teach-in last week and learned a little bit more about that.

Yes. I'm sure we'll dig in on that. So just quickly, just get out of the way. I know people asked me to ask you just the sensitivity to higher fuel prices. I know diesel is all over the place relative to regular unleaded. So just quickly walk us through the sensitivity there.

Yes. So I'd say, just a reminder, right, in the U.S., our USVP business is about 10% of our total revenue of $5.3 billion. So I'd say higher fuel prices are helpful for the business, but it's not a needle-moving impact on the overall business. Higher fuel prices for a longer period of time are helpful for the profitability of the business because typically, prices remain higher longer, which means there's a spread component on the back end.

And beyond fuel, thinking about just the signals out there, watching the macro, anything else, Peter, that you pay attention to, especially with you joining the firm, what have you found to be helpful?

Yes. So I'd say we track a bunch of KPIs across the different businesses. Obviously, having 50% of our revenues overseas, we're really attuned into what's happening on a macro basis. It's super helpful that our largest and most profitable business is cross-border, which is in the business of managing risk for other CFOs. So Mark is a great partner to Ron and I in terms of input and really tracking what's happening macro. And as I said, right now, we feel like we're set up really well for the rest of the year.

No, it sounds that way. It definitely came across from the call and even on the teach-in recently. But before we get into the business, just a couple more on the headline result. There was overperformance. You said the majority of it, 2/3 of it was not macro related. So what's coming in better than expected? What's driving the step-up in financial performance, if you were to summarize it?

Yes. So I mean, the great thing, which we all hope for, is we just got off to a faster start with a lot of our initiatives this year, which was super helpful. And if you look across the segments, we had overperformance in all 4 of the businesses, especially overperformance in Corporate Payments, which is obviously the crown jewel and what we're moving towards as a total enterprise, but really pleased with the trends. So 2/3 really came from business fundamentals. And then as we talked about, the world is just being helpful to us right now, so benefit from exchange rates and benefit from fuel prices.

Right. So pretty broad-based, but definitely a big help from Corporate Payments. So let's talk about that, that you're pivoting more into Corporate Payments. You've done a great job of remixing there. I think you're ahead of schedule and getting that to 40% of revenue, which is great. Why is mid-teens plus the right target for growth? That's the most common question I get from investors. So how do you benchmark that?

Yes. So we worked really hard in terms of doing our first teach-in last week on cross-border. And I think one of the themes in that cross-border teach-in and is holistic to Corporate Payments is our competition in this space is regional banks, so call it, Tier 2 through 4 regional banks in all of Corporate Payments. Our competition is not the other fintechs out there that are relatively small compared to us in these spaces, especially within cross-border. I would say not that there's -- not competition, but there is room for all of us because there's an underserved market by these banks that we can look to serve. So I'd say this is about gaining share, and we've just had incredible success in being able to do that.

Good. Good. So a lot of ways to follow up on that. The standout for me was that you've got very high retention, upper 90s, but you've had a pretty consistent track record of reproducing the 20% of new sales growth or bookings or whatever you want to call it, replenishing the backlog and the pipeline. How sustainable is that? Where are you driving or sourcing that new revenue?

Yes. So maybe we'll start with retention quickly, right? 97% retention. Wallet share gains is a large part of that retention. So important to think about in the cross-border business, when we think about international payments and then we think about risk management contracts, they're really peanut butter and jelly. So a client who's doing international payments is also very interested in a company that has those capabilities. So it allows us to compete in a different way than others. So that's really what's helping us grow the wallet share. And then in addition to that, right, we're really focused on growing our global bank account products. So overall, we feel really good about the retention side.

If you go to the new sales side, and the same thing runs true. When we're going into a new client, and those are purely new sales, so we're including in that, call it, 20% plus. What they're interested in is that we've got this fulsome suite of 3 products to offer and they all go together really, really well. And again, here, we've sized the TAM at about $160 billion in terms of what we can serve in that, call it, Tier 4 -- Tier 2 through Tier 4 bank market, and we have less than 1% of it. So the ability for us to grow is really about capturing additional share.

As you know, we've talked about our partnership with Mastercard, which we're excited about. What that partnership allows us to do is to take these capabilities and actually sell them into the Tier 2 through 4 banks and allow them to have the same capabilities. They can white label them if they want, but really resell that product where today, they're not very successful, right? So it's not only about going after the clients directly, but we also have the ability to sell into those banks, Tier 2 through 4, and have them resell the products.

So Peter, in lay terms, just tell us like your ideal client that's consuming everything that's got high wallet share. What does that look like? Can you give us a real-world example of what a customer might look like there?

Yes. So it's interesting within the cross-border space because I think all of us here in the U.S., we don't deal with foreign currency very often. So I think it does become a kind of, oh, what is this? So I would refer the audience to the teach-in that we put out last week because the goal there was to be super transparent.

And what we used as an example in there is we used a middle market company based in the U.K. who was then looking to open up offshore operations in different countries, right? So kind of the first use case that you start with that middle market company is they're going to have employees in a different country and they're going to have vendors in a different country. So the natural place that we really start with that type of a client is how do we help them create their FX program and get those vendors paid, what then they typically stand is, oh, there's risk in international payments. How do I manage that risk? Corpay, can you be helpful to us in terms of managing that risk? That's how the relationship starts, I'd say, with a lot of our corporate clients.

If we move over to our private capital market clients, which is really the base that we bought when we bought Alpha, think of this as [ Bain ] Capital, right, or a PE firm, we typically start with them when they're looking at a transaction and they're looking at a transaction in an international country and they need to open up a bank account. And by the way, with a Tier 2 through 4 bank, it takes 4 to 6 months to open up a bank account. I don't know if you've worked for private equity, I have. That's an eternity in private equity time, right?

So our ability to open that account within, call it, a week, satisfies their need. And then once we have them on, their thought is, oh, how do you protect the volatility of this payment that I'm going to transfer, right? So then that leads to growing wallet share. So I'd say both corporates and private markets, and then I talked about financial institutions, those are 3 of the 4 segments in cross-border. And in addition to that is digital currency. So hopefully, that gives a little bit of a view of how a client works.

And I think -- I do encourage folks to listen to it. I think it was very helpful to think about the plumbing. But I thought the important takeaway -- it's hard to fathom it, but the idea that the actual money movement part is not where the value is. That's not how you get monetized. And I think there's a lot of fear, right, with stablecoins and how that's going to lower the cost of money movement in the rail. I think that gets too much play relative to the other services around that. Can you just give a 30-second summary of that, if I'm articulating that way?

Yes, happy to. I mean innovation is always exciting, right? And so I think investors' role is to always be looking at innovation and saying, how is it going to change the market? What we really wanted to do in the teach-in was kind of help further educate. So I think, Tien-Tsin, the best point I can lean on is over 85% of our revenue is in G20 currencies. Those G20 currencies are super liquid, they're nearly instant, and there's a pretty thin spread there, right? These are sophisticated markets. So there's not disruption to be had in terms of the rail, so to speak, or really in terms of the margin. So that's kind of the first thing that I would lay out.

The second thing that I would lay out is running, what we believe, is the largest cross-border business outside the banking system, takes many more capabilities than the rail. The rails is just one component, but one, you've got to have a great customer acquisition engine. Two, you've got to have liquidity across the world. We're now in a place today that we can net over 60% of our trades, which is super important, and the technology that we have and the licensing framework. So we've been investing in this for, call it, 20-plus years. The idea of somebody catching up to us at the rate we're growing, I think that's going to be difficult.

And then lastly, I would just say, hey, blockchain and stablecoin, we think the really interesting use case here is the 24/7 settlement, right, the after banking hour settlement. And we're really leaning in. Ironically, JPM has built the Kinexys product. We're really enthusiastic about it because it is using the blockchain, it is a tokenized currency, but it's not a stablecoin, and it's easier for people to use because they don't have to go on chain and off chain. It's such a -- it's a less difficult process of doing that. And the idea of foreign currency exchange still exists in that product. So we actually think that the uptake of banks who've always been the leaders of top-tier banks in money movement in the blockchain and tokenized currency, that's going to be the real winner versus stablecoin.

And how does Alpha fit the acquisition?

You mean in totality?

Yes.

Yes. So Alpha, really, 2 pieces to the business, right? They had the private capital markets business and they had the corporates business. The private capital markets business brought with it about $3 billion in deposits in global bank accounts, really focused at asset managers and as I described, kind of Bain Capital example. So what we're super excited about there is Alpha was licensed in the U.K. and in Continental Europe. We have license in Australia and we have license in the U.S. So big picture in terms of synergies, that's a huge opportunity for us.

I'd say there's also a whole other list of taking a company the size of Alpha and adding it to the company our scale that we get benefits out of. So what I'd say in terms of synergies is back half of this year, as we have shown in our guidance, there's an uptick, and that's because we'll see those synergies come on board, and we expect even a bigger impact as we go into 2027.

Right. Just by exposing it and getting that geo expansion, I think, naturally creates those synergies.

That's correct. And the great thing is the global teams are already working together. So we got that figured out really quick, ended the year strong in cross-border out of it. And then as we shared on the call, we moved about 15% of their business to our one global platform within cross-border. And through mid-summer, we'll move the rest of it. So this is -- we're a serial acquirer here. So these are new things for us in terms of how do we get the synergies out as soon as possible.

No. So the deals have been good. So let's stay on that. I think you and Ron have said that the pipeline is really, really strong and active on the Corporate Payments stuff -- front. It feels like it's imminent. Can we assume that they have similar criteria or common features of what we've seen in past deals? Or could these be different?

Yes, I think you should assume they would look similar to past deals, right? I mean, Alpha was a very large deal for us, second in the company history. So I'm not sure we've got something that big in the near time -- near term. But hey, we are an acquirer of choice, right? So people reach out to us all the time with different ideas, whether that's large businesses or whether that's innovations we can buy and enhance our products, et cetera, and our open sign is on in terms of M&A and deals.

Okay. Yes. I think sometimes we underappreciate that, right, that Corpay is a destination of choice for a lot of targets to join. So no, we're definitely excited about it.

Anything else on Corporate Payments I didn't ask before we move on?

Well, also, we didn't talk about our payables business, which I would just say, again, a lot of white space there for us to compete within the payables business. There's really 2 products in there. One is our spend management product and the others are AP automation product. So those businesses continue to perform well, and the organic growth rate for Corporate Payments in totality from payables and cross-border was quite strong in Q1, as we talked about.

Yes. We've been seeing a lot of ads from people forwarding -- or texting me [indiscernible] spend management. So it sounds like Corpay's been pretty active on that front.

Okay. Before we open it up for questions, I just want to hit a few more, just on the Vehicle Payment side, if you don't mind, Peter. Just -- you're back to double-digit growth. You've got 3 major geos there. Any surprises, anything to consider as we move into the second quarter and the back half across the 3 geos?

No surprises. I'd say everything is performing as expected. Brazil, much higher growth, call it, mid- to high teens. If we move over to Europe and Rest of World, super consistent, delivering, call it, 9% to 10%. And then USVP delivered 5% in Q1. So everything really tracking our expectations there.

And then I know you've cleaned up the down market within the U.S., so not as much exposure to very small businesses, and the credit performance has generally been good. We get this question quite a bit. Is the credit performance, some of the delinquency signals out there, how do you see that?

Yes. So we manage it very tightly. To your point, we've really moved out of the micro SMB, which cuts it off at the heels, from that perspective. Typically, when the fuel business grows, which there is some impact of growth, obviously, from what's happening in the macro, we've watched credit even more carefully, right? Because this product becomes more popular in the macro. We could do with this macro because you all of a sudden have companies who are running a fleet of 20 that didn't think they needed a program, and they need a program now. So I'd say the good thing is it enhances revenue, but it ensures that we're running our credit processes so we don't upsize our credit risk.

Okay. And then on Brazil, you mentioned mid-teens plus on that. What's the growth algo there? I know non-toll has been an important driver for the company or at least an important strategy for the company. Where is that in the growth algorithm?

Yes. So I think what's really impressive there is over 40% of the revenue is coming from non-toll. And so what we built is really the best network in the country related an individual's vehicle. And through that network and the super app, as we call it, they're able to buy toll, parking, insurance, vehicle debt to really diversify the offering. So I'd say toll continues to perform well, but we're seeing a lot of growth around the additional products that we're offering. We did 2 vehicle debt deals in like the last 2 years. We're the -- really the primary owner business in Brazil, and it continues to perform really well for us.

How do you see that mix changing then, Peter, between toll and non-toll?

Yes, it's a good question. I would say that the non-toll will continue to be a bigger part of Brazil going forward.

Okay. I know that a divestiture has been talked about there for some time. I know fitness is always a question and I know there's a mix towards Corporate Payments, but what qualifications -- what qualifies the company to be potentially -- or a piece of the business to be potentially divested within Corporate? Specifically with the Vehicle Payments?

Yes. So I'd say -- Corpay has had a great long history in M&A, right? 125 acquisitions over the last 25 years. That was really focused on high-performing payments business with great growth rates and great profitability. There's obviously the transition, call it, a couple of years ago into Corporate Payments, where we realized some of those businesses like PayByPhone, we'll use as an example, that we recently sold, it's a great business, terrific growth rate, profitable company, but we felt that it was TAM constrained in order to be able to grow it.

So that's really what we're focused on is when we look at Vehicle Payments, which of the businesses and other businesses outside of Corporate Payments, which of the businesses are TAM constrained and which of them can we not scale, right? Because as now we're a $5 billion-plus revenue company, the strategy for who we want to be is just very different. And kind of where I started out, the TAMs are so attractive in Corporate Payments that if we can reinvest the capital, let's say, in buying back shares of Corpay and then we generate so much cash per year, almost $2 billion a year, my ability to do M&A Corporate Payments is quite high.

Yes. Okay. So let's open it up here in a second, but you mentioned it there. I think Ron, CEO, said that he'd be tempted to buy back half the company given how cheap the stock is today. But in the same breath, he's also talking about wanting to do deals, which has been a super power for the company. So as the CFO, Peter, how do you balance those 2 things?

Well, just going back to being CFO of a company where this year, we have $2 billion in free cash flow, I have a lot of optionality. So if you look at kind of -- and we published this chart in the earnings deck at the end of the year, if you look over the past 8 years and kind of the split between buybacks and M&A, it was about $15.5 billion we spent, and it was almost 50-50, a little bit more weighted towards buyback. So it's always a thought of what is the most opportunistic thing for the company, given we're still undervalued, buybacks are really attractive.

Where Ron was going talking about the future is we're just about -- and we'll announce it later this week. I just refinanced all of the debt of the company. And through the process of refinancing in November related to the Alpha acquisition and this financing process, we are just an incredibly attractive company to the credit market because of our free cash flow dynamics and our growth dynamics. So when you look at the free cash flow of the company and the ability for us to continue to take leverage, by the way, not above 3x, which is our stated guidance, it puts us in a place of saying, hey, if we continue to sit at what we believe is a very depressed stock price, we'll just continue to buy back shares. And that's how we'll create valuation for our shareholders, and at the same time, we'll be able to do M&A. So if you look kind of at the past, what we did with that $15.5 billion, what can we do with it in the future, that's what Ron was focused on.

Good questions. Happy to take questions from the portal of our folks in the room. Otherwise, I can keep going. Yes, we got a couple.

Just on deals. You've talked about doing 125 in the last 20-odd years. I'm just curious to know, going forward, how do you frame internal rate of return when you acquire something?

Did you hear that?

I think how do you frame IRR on deals? Is that right?

Yes.

Yes. So we've not specifically disclosed kind of what our framework is around that. But I'd say if we look at the history of our deals, the IRR has been extremely high. And so our expectations would be to continue to produce that.

I can't hear you without a microphone.

Would 20% be a ballpark figure? Or is that too low? A 20% IRR threshold, is that too low, too high?

I'd say it's -- that would be at the minimum.

Makes sense. Thanks for the question. Anyone else? Otherwise, I can keep going. Yes, [ Brennan ]?

Yes. I'll follow up on a little different deal question. Given all the noise that you all have had to address in -- as it relates to cross-border business with stablecoin, I know some of the assets like yourself in the public markets are trading lower. What can you share about target company expectations or rationality about valuations? How rational are sellers at the moment, given obviously the benchmark of Corpay stock is pretty attractive.

It's a pretty good question. I would say in the market, I mean, I often hear this, and it always makes me want to cry, but people always say to me, hey, you're a great house in a really bad neighborhood, whenever I ask about how we're trading and the stock price. But I think what that means is that deals are available at pretty attractive prices right now. People -- I don't think investors truly appreciate cross-border. We're hoping that we helped with that last week in the stablecoin risk. But I'd say there's a lot of things out there that are pretty attractive.

On the same hand, as we just talked about, we're also in the divestiture business right now. So that's always the debate on the divestiture side is we'd probably like to move a little quicker there. But again, those multiples are kind of pulled down by what it looks like across the overall market.

Anyone else?

So I wanted to ask about incremental margins, if that's all right, especially with the mix shift going on and you're moving more into Corporate Payments. I think Corpay has the third highest margins in our whole coverage behind Visa and Mastercard, which I think is underappreciated, but also creates a high bar around margins. So as you see this evolving net of divestitures, can we still see accretive incremental margins? Or is that too much?

So adjusted EBITDA margin runs about 55%. This year, we're slightly down from last year. That's mostly driven by Alpha, right, and bringing them on as is versus getting through the synergy process. So when we talk about '27, we should be able to talk about some margin expansion into '27.

But I think the important thing to think about here, Tien-Tsin, is we run a really attractive margin, but we also are a 10%-plus organic growth rate company. So I've got to fund the growth. So finding that mix is really important. So I'd say, if we're getting out kind of long term, like 3 to 5 years from now, and we've done that full rotation to Corporate Payments, yes, I would expect some incremental increase in EBITDA margins, but I also want to be thoughtful of making sure I'm feeding the business to deliver the growth that I've committed to investors.

No, for sure. I think that's the right answer, Double-digit growth is coveted. And if you can produce that, that's very, very powerful. So the obligatory AI question then, Peter, just to ask it, we went pretty far along without me asking you the -- is that a big initiative? Again, the margins are high, but do you see a lot of opportunity to unlock some productivity and maybe break this linearity between revenue growth and people?

Yes. So I'd say our focus right now on AI is on our products and how do we improve our products. So we've introduced AI agents across many of our products, right, to bring value to market. We recently announced that we are going to have purchasing cards that AI agents can actually use. So we've got the controls in place to be able to do that. So we think that's pretty exciting that AI agents will be able to support customers, to be able to make payments on customers' behalf. So that's been where we're leaning into. I think the next question there is probably, hey, can you charge for that? And I'd say too early on to tell you, but a really good question.

Also, I'd say on the efficiency side, we've been focused on it, I'd say, throughout the organization. I think there's a lot of thought if you think of the organization, unfortunately, as a hierarchy, it's a triangle, that the opportunity for AI is at the bottom in the middle, right? And so don't get me wrong. In call centers, there's opportunity. We're focused on it. In engineering and optimizing engineering and focusing their time, we're focused on it. But we also believe, at the thought leader level, the Peter Walker level, the Ron Clarke level, that AI can be a huge innovator.

So I'll give you a great example. The cross-border presentation that you saw last week that we presented, a lot of that is through proprietary data and public data that we've added into a database on the cross-border business and asked it a series of questions, and we were able to create, call it, an investor level intellectual document. So we think that if we can help the top 150, 200 leaders across the organization, cut half of their time on things that are not creating value like the initial pulling together of a presentation or refining of it and really focusing them more on driving the business, then there's benefit. So I'd say we have religion on AI and continue your updates from us on that.

Good. No, that's a good summary. I think you -- I think in the spring, you hosted an offsite, where you brought all the leaders of the companies -- of the company together and talked about strategy and the go-forward plan. It doesn't sound like AI is top, top of the list of things. But you tell me, where did you gauge the energy to be the highest in the company that you're willing to share with us here?

Yes. So it was my first time participating in the leadership offsite. This is my fifth CFO gig, so it's not my first time doing a leadership offsite. So you always go into those, sometimes with an, ugh, what is this going to be? Is it going to be interesting? I'd tell you, it's the best one I've ever been to because it was a true working session. Like we all came with sessions with prepared materials, but the whole group got the opportunity to absorb the materials and make decisions on it.

So I'd say where we started that offsite was the voice of the investor. I think you always know kind of the culture here is we want to hear from investors, the good, the bad and the ugly, right, all of it, right? And then because that helps us become better, right? So we really started the session with the voice of the investor, then what is our strategy? How are we placed today? We looked at a bunch of other companies in the market and kind of how we line up. We did a review of all of the lines of businesses that we own. And where we left the meeting was just a stronger conviction than ever, that Corporate Payments is the journey that we're on.

And I think if you probably picked up on our last earnings call, Ron kind of leaned into, hey, PayByPhone, we did the divestiture. We've got another one on [ tap ] of size. And we've got some other things we're contemplating for the rest of the year. So things like that were outputs of meeting where, as a leadership team, we got together and said, yes, the future is Corporate Payments. How do we continue to rotate into it faster?

Good. Any final question here? Yes. Maybe use mic, if you don't mind. It'd be easier for everybody.

Peter, if you could do a pre-mortem of, let's say, 2 of your biggest businesses, the transportation business and the cross-border business, what will be your biggest concerns?

Sorry, which 2 businesses?

Let's say, the transportation, the fuel business, and then the cross-border business. You know what I mean when I say pre-mortem?

Pardon me?

Do you know -- does the question about pre-mortem make sense?

You go ahead and define it for me.

Well, basically, like if you could imagine something going wrong with those businesses, what would it be? Or what are you most concerned about longer term?

Well, so if we look at the Vehicle business, right, there's 3 businesses within that business based on geographies, right? Think about it as Brazil, Europe and Rest of World and the U.S., and we kind of walk through the positioning of those businesses. And I'd say kind of USVP business is the lowest growing business in there. But I think we've managed that to a good state, and that was really the company's heritage starting in that business. And now it's a $500 million business today. So I'd say if there's anything in there, the progress we've made is a transition out of the micro SMB and really going upmarket. So I'd say I'm not overall concerned about the risk there. Brazil performing really well and Rest of World, really well.

Moving into the cross-border business, I think my biggest concern is like investors don't understand the business and really helping investors better understand the business. So something I've been super focused on. I've been in this role for about 10 months. And by the way, we've had 3 quarters of beat and raise over those 10 months. So I'm pretty proud of that in terms of the company performance and results. But something I've been super focused on is transparency and helping investors better understand the business so that they can come to their own conclusions about risk themselves. And in the cross-border business, I think the company has an overhang from stablecoin, and this happens, right, when there are new innovations. And I think it's because people really don't understand the cross-border business.

And by the way, I didn't understand the cross-border business until I came to this company, right? So it's no fault. When we sit in America and I go from Boston to New York to Miami to Atlanta, I don't have to change currencies. So I don't even think about, right? When I set up business partnerships across the U.S., I don't think about it. So the goal of the cross-border business was, hey, let's give transparency in the business. Let's give people investors enough detail without turning it into jargon. And let's also really give context to this blockchain innovation and how it will be helpful to the business. So that's probably been a big, big focus of mine. I do truly believe that we're super undervalued given the results that we produce. So our goal is the additional transparency will help investors see the business the same way we do.

Good. We got less than a minute left. I was thinking about a good closing question for you, Peter. But with you coming in from the outside, you've got a really interesting great background coming in from a different -- lot of different places, including on the private equity side, as you mentioned. We've always thought of Corpay as -- so from a value creation standpoint, Ron is a genius thinking about driving value and returns and things like that, but I don't work there. So with you going there, what's been validated in your mind in terms of the secret sauce of Corpay and maybe what we all don't appreciate coming -- looking at it from the outside?

Yes. I'd say we've got the benefit of being a large S&P 500 public company, but operating like a private equity company, right? So I've reported to 4 other CFOs -- or CEOs in my life. With Ron, it's a constant let's reimagine the business. Let's think about some things differently. Oh, I have an M&A idea, right? As opposed to other professionals, CEOs I've worked for have been, oh, we've got the Board meeting next week or oh, kind of the judgery and the bureaucracy, like don't get me wrong, you can't help that in a large company, but we try and minimize that as much as possible and really focus on the value creation, and that comes from the very top of the house.

And I don't want the company to think that Ron is the only one, right? I mean there is a leadership team which he has built and then a team underneath us, and all of those are indoctrinated in that culture of we show up every day to create value, not to just punch the clock and be an executive. And that's why I joined the company. I love it.

Good. No, culture comes from the top, and we always learn when we track the talent. So glad to have you here and part of the company and look forward to chatting more.

Appreciate it.

Thank you, Peter.

Thanks.

Hello, and welcome, everyone, joining today's Corpay Teach-in On Cross-border Business. [Operator Instructions] Please note this call is being recorded. [Operator Instructions] It is now my pleasure to turn the meeting over to Jim Eglseder, Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us today for our Corpay Cross-border Teach-in and discussion call. With me today are Ron Clarke, our Chairman and CEO; Peter Walker, our CFO; and Mark Frey, Group President of Cross-Border Solutions. .

Please note, the presentation associated with this call can be found under the Investor Relations section on our website at corpay.com. Our remarks today will include forward-looking statements about our outlook, new products and expectations regarding business development and future plans and are based on that information. This discussion and any forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties.

Some of those risks are mentioned in the forward-looking statements in today's presentation and in our annual report on Form 10-K. These documents are all available on our website. So now with that out of the way, I will turn the call over to Ron Clarke, our Chairman and CEO. Ron?

Jim, thanks. Hi, everyone, and thanks for joining today's cross-border call. We thought this call might be helpful for a couple of reasons. First size, the cross-border business becoming quite a large part of our overall company. Clocking in at about 30% of the overall revenue this year.

And second is risk. We want to address the rise of the stable coin and blockchain narrative and the implication to our business. So look, the goals today for the call are really threefold. So one, bank structure. We do want to lay out how the very bank structure itself, namely the idea of local and licensed footprints for banks that, that creates the opening really for nonbanks to fill a pretty big underserved middle market need, a global need.

Second, as I mentioned, risk, we do want to share our view today on how the advent of stable coin and blockchain will likely impact the B2B cross-border business. And then third, growth. We do want to lay out how we grow the business, how we grow in the high teens. And that's a combination of both sales and M&A.

Okay. Let me introduce Mark Frey. He's the executive in charge of our cross-border business. Has been with us from the very beginning when we first entered the cross-border space back in 2017. Mark's really entire career has been in the B2B cross-border industry. He's got incredible knowledge of the space, terrific relationships in the industry.

So with that, let me turn the call over to Mark here to run us through the presentation. Mark?

Thanks, Ron, and good afternoon, everyone. We've got a lot to cover, so I'll jump right in. Our discussion today is a focused deep dive into our cross-border business. This is our largest and fastest-growing business, and importantly, one where we see a very long runway ahead. You've all had the pre-read, I'm not going to walk through the slide deck slide by slide.

Instead, I'll focus on the parts of the story that really matter and go deeper where it's most useful. In terms of framing the session, I'll cover five key areas. First, how the market is structured and why that creates opportunity. Second, what we actually do and how we make money, Third, why we win and why it's hard to replicate.

Fourth, the key risks and opportunities presented by blockchain and stable coins; and finally, how the business compounds over time. In terms of the market opportunity, at the very top end of the cross-border B2B market, Tier 1 banks like JPMorgan, Citibank and HSBC do a very good job of servicing large multinational clients. They have global infrastructure, deep FX liquidity and broad relationship coverage.

As might be expected, they serve a very large revenue pool, about USD 735 billion annually, and that is where they focus. But they don't meaningfully try to serve the mid-market, in large part because their fixed cost base does not make it economically attractive to do so. It's also worth noting that while Tier 1 banks are dominant in the enterprise segment, many of these institutions still rely on Corpay to be a key provider in terms of FX liquidity and payment execution in key corridors, making them some of our largest clients in our [ FI ] segment.

At the same time, Tier 2 to Tier 4 banks, the regional and national champions own the middle market relationships. They're very strong domestically in lending, cash management and local banking, but they typically lack global reach, FX depth and modern technology, especially as it relates to cross-border.

So what you end up with is a clear structural gap, mid-market companies with complex global needs, but without global banking support. In practice, these mid-market companies are often operating across multiple currencies and jurisdictions with real complexity but without access to infrastructure or a service model that large multinationals get from Tier 1 banks.

And that's exactly where we target. We focus on companies with turnover between USD 20 million to $1 billion in revenue, businesses that are becoming global, but are underserved. The mid-market segment alone represents about $161 billion revenue opportunity. It's growing faster than global GDP. It's highly fragmented, and we have less than 1% market share today. So stepping back, this is not just a large market. It's a structurally advantaged entry point into a large market with significant runway to grow.

Now focusing on what we do. At a high level, we provide three core services, global payments, FX risk management and multicurrency accounts. But the more important point and the one that's often misunderstood is how we make money. We're not just moving money and making payments.

We're solving for the entire regulated cross-border workflow around the transaction. That includes onboarding and compliance, FX conversion, integration into client systems, reconciliation reporting and automation, payment orchestration, the delivery of remittance data, payment tracking and local delivery.

The payment rail itself is just one piece and a relatively small piece of the equation. Put differently, the majority of our economics come from FX conversion and the workflow around it, not the fees related to a settlement rail. It's also important to note that we don't take market risk. We are not proprietary traders.

We facilitate client flows and we lay off that exposure in the market in real time after netting across our portfolio. To that end, approximately 60% of our overall volume is offset by customers buying and selling in opposite sides of the same currency pair, which is a key benefit of our overall scale.

As the largest nonbank B2B cross-border payments firm in the world by revenue and trading volume, our size and scale affords us a very real advantage in this area. In terms of customers and platform, we serve more than 25,000 customers globally across four primary customer segments: corporates, private capital, financial institutions and increasingly digital asset platforms.

What ties them together is the need to operate across currencies, jurisdictions and banking systems. What enables us to serve that need is a single global platform one point of integration, one API and one operating system. Underneath that, we've built a global licensing footprint integrated customer-facing technology, local bank connectivity and access to multiple payment rails that allow us to meet a wide range of use cases, whether that's for time-sensitive payroll, global vendor payments or high-value treasury flows.

So whether a client is paying them in Germany or settling in the U.K., we can deliver those payments in a locally optimized way through a single platform. Now why we win? We win because we built a combination of capabilities that are very difficult to replicate. That includes a global commercial organization of more than 800 highly specialized people, a single integrated technology platform, licensing across multiple jurisdictions that can take years for a single license and deep local market infrastructure.

Individually, competitors can replicate pieces of this, but replicating the full operating model at global scale is extremely challenging and time consuming, and that's what creates the moat. We often describe it as a flywheel, broader capability improves win rates, more customers increase scale, more scale funds for their investment, and that strengthens the platform again.

That dynamic has been compounding for years. Next, the key risks and opportunities related to blockchain and stable coin. Now let me spend a few minutes on what is probably the most common investor question given the broader market environment, which is around stable coins and blockchain and both the risks and opportunities that this technology brings to the business. There are really two concerns embedded here.

First, will stable coins reduce the need for FX conversion and thus, overall cross-border payment volumes. And second, will they compress FX spreads by inviting more competition into the space. On FX volumes, even if settlement moves on to blockchain rails and the underlying conversion requirements don't change, companies are still required to invoice in local currency, pay employees in local currency, settled with taxes authorities in local currency and settle obligations into local bank accounts.

Treasury teams still manage FX exposure across entities and currencies. Stable coins can improve how money moves between systems, but they do not eliminate the need for local currency conversion. Compliance, liquidity or delivery. There's also a structural constraint here. Central banks and governments are not about to give up control of monetary policy in local currencies.

We're already seeing regulation evolve in ways that reinforce the need for local currency settlement and regulated intermediaries. Money may increasingly move by a blockchain in USD link stable coins, but the recipients of those funds will still need them in local currency to meet their local business needs.

That conversion has to happen somewhere, either at the source or the destination, and we have a platform that allows us to do either. So when you step back, the idea that stable coins eliminate FX conversion demand really doesn't hold up. On spreads, FX is already one of the most efficient markets in the world. Spreads are typically very tight and settlement rail costs are already very low.

But more importantly, spreads are not driven by the cost of moving money or the rail that has selected. Rather, they're driven by transaction size, currency pairs, workflow, compliance, tech integration and orchestration, the full solution around the transaction.

And that's where the majority of the value sits. And that's what customers are actually paying for. Blockchain or stable coins won't eliminate the current drivers of spread and won't remove compliance oversight.

They won't replace ERP integration. They won't solve local fee delivery into bank accounts. It's also worth noting that the limitation of all native stable coin providers in crypto exchanges is that they are very much reliant on fiat currency rails to facilitate the movement of funds on and off the blockchain through the process of on and off ramping.

Further, while the larger players in the space are now maturing their compliance frameworks in the digital virtual asset space, they do not generally possess the fee at currency money transmission or the capital markets licenses to support cross-border payments and risk management services, meaning that these firms are not set up to really compete and win in the FX centric cross-border space.

As evidence of this, we are increasingly seeing these native digital firms move to onboard with us as a client of our services. In this manner, we see our digital segment as a growth avenue in servicing these firms directly earning a share of their overall economics rather than them being a competitive threat.

So when we think about new rails, whether it's real-time payments or blockchain or even stable points for that matter, we see them as additive, not disruptive to our business. Our role is to select and orchestrate the best rail for each transaction based on cost, speed, reliability and traceability.

We're already doing this today, including integrating new capabilities into our payment network like BVNK for stablecoins and the JPMorgan Kinexys private blockchain platform. And in many cases, particularly on the institutional side, we're seeing private blockchain networks scale effectively because they integrate more seamlessly into existing financial systems.

They deliver the same value as stablecoins in terms of speed and lower costs, but with less operational friction while removing the need for on and off ramping. We're leaning into this area significantly with the expansion of our private blockchain networks aimed at increasing the always on 24/7 capability of our network.

In this respect, we think that private blockchain networks will actually win the volume wars over public blockchain solutions like stablecoin. So stepping back, we believe FX conversion demand will remain as governments protect national currencies and independent monetary policy. Spreads at the core level are already very competitive and based on factors related to transaction size and currency payer. Further, digitally native firms don't pose a competitive threat to our core business, but rather represent a significant growth opportunity as we become the primary counterparty for firms in the space who need access to our feed capability.

Our conclusion, therefore, is simple that stablecoins and blockchain rails will find a place in B2B cross-border payments but will not replace existing national currencies. Though they will augment existing bank-sponsored rails, a strategy that we are materially leaning into.

Now in terms of our growth model, our growth model is quite straightforward. We retain roughly 97% to 98% of our revenue annually, and we add over 20% new sales each year. That drives consistent high-teens organic revenue growth per annum that we can sustain with significant runway. On top of that, we layer in accretive M&A. We've completed multiple acquisitions, improved sales productivity significantly with each of those deals and consolidated everything onto our single-stack technology platform to optimize both the cost structure and the customer experience.

Deals often add new capabilities, new geographies, new distribution, but will always deliver scale. So the business grows FX volumes selling more than we lose while adding acquired companies to accelerate growth and bolster the flywheel. So to bring it all together in conclusion, we operate in a large, growing and underpenetrated market focused on a segment that is structurally underserved by the banks where our primary competitors.

The mid-market is USD 161 billion revenue opportunity where we just own 1% of the market share today. We built a global platform with meaningful and difficult-to-replicate competitive moat. That moat and our scale affords a significant competitive differentiation from both banks and digitally native firms as it relates to our mid-market target customers.

We have a proven and repeatable growth model that compounds over time. As rails evolve, our platform becomes more useful because our clients need one partner to orchestrate them. Put simply, this is a durable compounding growth business with a long runway ahead, and we believe we are still early in that journey.

So with that, operator, we'll now open the line to questions.

[Operator Instructions] We will take our first question from Sanjay Sakhrani with KBW.

I guess first question, if we could talk a little bit about the growth algorithm and how you guys arrived at that 20% in new sales. Specifically, I guess I'm just trying to think about if that assumes the take rates remain stable or they move around and then sort of can that take rate go higher or lower depending on new products and services you provide? And maybe how does it translate if you move to Stablecoins?

Sanjay, thanks for the question. So I think there's a few different ways I would look at this. If we go back and we look at the recent history in terms of that onboarding of new customers, that has been slightly accelerating from 18%, 19% 4 years ago to now over 20%. So it's been getting a little bit better. We've been selling a little bit more effectively as a percentage of the base each year for the last 4 or 5 years.

There is some rate expansion in that as well. So while we expand or grow the business, let's call it 18% per year, we're growing volume. 16% and we're getting some take rate expansion, 1 to 2 percentage points each year. Some of that is from mix shift of just higher value products, higher solutions in new segments but we see good stability and strength in the core business and the core geographies that we're operating in already.

So when we look forward, we're seeing that sales is actually accelerating as a percentage of growth against the base. Rates remain firm and are growing a little bit as well and just continue to acquire volume in the geographies and the segments that we're choosing to serve.

Okay. Great. And then maybe just one on the competitive dynamics? I understand sort of the bank side of this. But maybe you could just talk about, even on the fintech side, if you feel like there's anyone that kind of does what you guys do specifically?

Because I know there is a fintech that talks about having proprietary connections to the major fiat rails and specifically licenses to real-time networks around the world. Maybe you could just help us think about how your model compares to some of the other fintechs out there that might be doing kind of similar things.

Great question. So I'd say there are some fintechs that have chosen to focus on sort of the embedded side of the business or the mass payments at scale and that's a business that focuses on the rail connectivity and the geographies and really leaning into things like ERP integrations and API connectivity to produce mass payments at scale.

And that is primarily a partner-driven rather than a direct sales driven sort of growth model in terms of customer acquisition and volume acquisition. There are another -- I'd say the other side of the spectrum is there are fintech firms that are a little bit more traditional that are largely direct sales model. They are more geographic in terms of their concentration in less global.

I'd say part of what sets us apart is we play at both ends of that spectrum. So we have much broader geographic coverage in terms of the areas which were licensed in the geographies in which we onboard customers.

We certainly have the mass payment scale where we have embedded capability that we put into ERP systems into accounting packages that we do API connectivity to banks, to marketplaces and other financial technology firms. But then we also have the direct sales business as well, where we go out and hunt and find mid-market customers and geographies, and we provide FX cross-border payments, scale, solutions and that we sell into the bank account products as well.

And every one of these firms are targets in terms of M&A as well. So we look at the traditional sort of portfolio deals that bring customers, and geographies and licenses, we look at opportunities for M&A or scale players that bring new licenses and payment integrations and then we also now, I'd say, increasingly are looking at the digital space as well that's opened up a new category for us from an M&A perspective of those digital native firms that are leading into stablecoin infrastructure technology.

We will move next with Andrew Jeffrey with William Blair.

I'll extend my thanks and appreciation for this call, too. You mentioned, and I think it's a very comprehensive Cogent call. Mark, you talked about the benefits of stablecoins and where they don't solve problems necessarily. One of the things I didn't hear you talk about is programmability and I wonder if that factors into your thinking and if that influences your views on open stablecoin networks versus private stablecoin networks or closed loops like Kinexys, I wonder if you could just comment on the role you think programmability plays in these cross-border transactions given latency, time differences, smart contract integration, those sorts of considerations.

Andrew, good to chat with you and thanks for the question. It is a smart question. I think programmability is going to be a key thing from a treasury perspective in particular. So doing things like international cash, overnight suites and cash management consolidation.

We certainly see that stablecoins and the programmability of these digital solutions is super helpful in that treasury world today. I would say, much less so in terms of the mass payment scale where we are processing third-party payments to thousands of beneficiaries at a single time. But that programmability is, I think, particularly interesting in the stablecoin world rather than the private blockchain world. Yes

Yes. Got it. Okay. Yes, I think that's an important distinction. And then the other thing I'll ask about is, again, I think you're 100% right about the desirability or the requirement the need to settle in local currency. There's been some talk, if you look at some of the L1, purpose built L1 blockchains, plasma, I think, in particular, that speaks directly to the desire to hold or have U.S. dollar exposure.

Do you think open stablecoin sandwich is something that might become more pervasive? And how does that influence again your thoughts about sort of the revenue sources and competitive positioning of your offering?

Yes. It's an interesting question. I would say at this time, no, we don't see necessarily as that becomes something that's more prevalent in the space. And why I'd say that is because you already have firms that are moving U.S. dollars internationally in a fiat currency world. I think some of those firms will move or progress more to stablecoins rather than using traditional feed rails to move the U.S. dollars internationally and transacting business in U.S. dollar terms.

That's part of the business that we do today in terms of mass payment processing where there is an FX side to it, but we actually just process payment type scale. So I think we will see some of that business transition away from feed rail to a stablecoins.

I would say, honestly, work towards private blockchain just because of the inherent operational efficiencies of moving money by that particular modality. But I would say, yes, you will see some cannibalization volume from fiat into the blockchain worlds in that particular arena. But that's a part of international commerce today.

I'd say that the overall trends towards dollarization, if you will, has actually been decreasing over time. So that's not to say that the U.S. dollar is going to be replaced and the store value and unit of account for global commerce anytime soon. But certainly, the overall intensity of U.S. dollar payments is declining slightly by 1 to 2 percentage points each year as other global currencies take up a little bit more of that share.

So we see that dollarization is actually -- or the lack of de-dollarization is a positive trend for the business and just it's more FX.

We will move next with Darrin Peller with Wolfe Research.

That's helpful. This is probably going to be a bit of a basic question, but I think it will be helpful to us and others, hopefully. When you say that 2/3 of Corpay CBS revenues for appliances using basically 1 product, and then you land and expand. I think it'd be helpful if you give us an example -- a more specific tangible example of round up, you start with the customer, what's the one product they start with, what's next and where does it go?

And why are you winning in that ability to go to the next product -- maybe just -- if you don't mind walking us through a little more tangible example in a real-life example of some of your clients that would be really helpful just to start.

Yes. No, that's a great question. So I'd say the vast majority of our customers in the corporate space start using just our basic payments products. So they have third-party payments, and they have invoices in foreign currency that they need to pay and they're perhaps upset with the service or the technology and the friction of doing that with their bank and we're able to find those customers and convince them to do business with us and their trading effects and then instructing third-party payments that we process for them around the world.

And they might start out with sort of the nuisance payments if it's a large corporates of those geographies that are just difficult to do. Sometimes it's as G7 or if they are major currencies that they're trading in their business, and they just want better service and better overall operational processing.

But then once we get that payment flow, we begin to win more in the payment flow, we usually do because it's sort of a scale-based value proposition. The more payments that we process, the more efficient it becomes. So we tend to win more wallet share over time. And then as we get insight into that wallet share, we then begin to cross-sell risk management products.

So once we have a view of how much euros they're purchasing each month, then we'll begin to sell risk management products of technology that allows them to quantify the risk that they're actually experiencing with those euros that they have to purchase each month.

And then we cross-sell risk management products to those customers. And then it would be the bank account products that we would sell when they expand into geographies. So that's all sort of on the corporate side.

On the private market side, it's a little bit different. We actually start out typically by selling a bank account to a new manager that's launching a funds so you have a big fund manager that's launching Fund V, let's say, and they need a bank account, and we can spin that up for them in 24 to 48 hours, and that's our entry point.

And then once the fund is actually up and running in their capital calls, when we begin the payments for both operationally and potentially from an FX risk perspective. So it's a little bit different between the private market space and the corporate space, but we lead with, I'd say, simple products in some cases and then upsell them to integrated actions.

All right. That's really helpful, Mark, to get an order of operations there. I guess I just had one follow-up on the earnings call last week. You said future corporate payments M&A is more likely to be about new geographies and new verticals. Just given you already have quite a bit of product now in the death, I think you want after today's discussion, cross borders, you mentioned $161 billion mid-market TAM, where do you see the largest white space opportunities or is it by geography or vertical?

And within those opportunities, which products are customers really looking for, whether it's payments or risk management or accounts or some combination?

Yes. Good question. I'd say in the cross-border space, we really see three categories of M&A that are super attractive to us. So one is just sort of the traditional portfolio expansion of new geographies or adding more scale to our existing geographies, so there are lots of fintech players, let's say, that are concentrated in the U.K. or in the U.S. and that we want to add scale in those markets, those can be attractive.

Typically, what we do when we've acquired one of those firms is accelerate sales, improve operating margins and operational performance and then become super accretive, especially over time. I think the other thing that we're always looking to do as well is breaking into new geographies. So if there can be an acquisition that comes with new licenses and geographies that we're not operating at or in today in terms of originating markets, that's always attractive to us and that have more in-country rail connectivity in the emerging market world or in the secondary world, that's attractive.

And I think the newest category that we've been looking at is the digitally native space. So those firms that are operating in the stablecoin world ultimately and trying to build businesses there where we can really leverage our inherent capabilities to accelerate the growth of those businesses because of what we can do from a feed rail perspective.

We will move next with Ramsey El-Assal with Cantor Fitzgerald.

I wanted to ask about AI and how it impacts this segment versus the rest of the business. Is there anything to call out here in terms of the way you're looking at things that could be on the front end from an agent commerce perspective on the back end? Do you think AI will have an impact here?

Yes. Great question. It's definitely something that we've spent a lot of time on, I'd say, over the last 12 months or so and have looked at with intensity. I'd say we sort of break it into 3 different categories. So building AI into our workflow processing solutions. So getting better scale, better operational efficiency and reducing operating expense by embedding AI capability directly into the products themselves.

Certainly, on sort of our back-end processing, which is an important part of the business. We are using AI today that we're building into things like transaction monitoring from a compliance perspective, customer screening from a KYC perspective and really just using it to drive efficiency of the headcount ultimately across the business.

And then I think looking at our analytics have become very AI-driven ultimately as well. So we are a business that competes on analytics and competes on our ability to do math. We're trying to drive intelligence from our own data and from data that we have access to in the marketplace to better target our market efforts for our direct sales business. It's certainly something that we're leaning into and then also looking at it in terms of how we price and how we serve our customers as well.

Okay. A quick follow-up for me. You guys mentioned, I think you net 60% of volume internally across pairs. Customer pairs. Does that netting ratio improve as the book continues to scale? And is that a significant margin driver of the business? In other words, will margins improve as that ratio improves?

Yes. That ratio has definitely gone up significantly over the last 5 or 6 years. So I think it's in a very meaningful fashion. I think in part, we've tried to create a balance within the overall portfolio because of the operational efficiency and the gains that we get through pricing.

So this was part of the reason why we've expanded significantly in European continent over the last number of years to better balance our portfolio of euro-based buyers versus euro-based sellers. And there are numerous examples of where we've done that across our business.

So we do expect that ratio to continue to improve. It definitely gives us an advantage in terms of how we price and how many times we cross the bid offer spread and how much rate we get to keep versus have to pay away to the market in terms of transaction costs.

And certainly, it gives us -- our scale and size gives us an advantage over the fintechs because of this.

We will move next with Nate Svensson with Deutsche Bank.

I had a couple of questions related to the slides. So I guess on Slide 19, where you talk about the cost of the blockchain rails, I guess it's interesting to see that the public blockchains actually look a lot more expensive today relative to where Swift or ACH or other legacy rails are. So I guess 2 questions here. First, is your expectation that these blockchain costs trend down over time and get to levels that some of the legacy rails are? Or are there regulatory or intermediary costs that may keep those elevated going forward? And then the second question, when you talk about costs, is Corpay relatively agnostic as to which rail the client wants to choose as it relates margins.

I would guess that those costs are basically passed on to the client. So maybe the more expensive ones are accretive to revenue, but just wondering if there's any different margin impacts across the rails, especially with the focus on stablecoins.

Nate, that's a great question. So I would say on the public blockchain side with respect to stablecoins that yes, we've seen that those costs have come in. I think the cost of on-ramping and off-ramping has significantly reduced over the past couple of years. And I think there's probably still more efficiency that will come from the market as adoption increases.

I think gas fees are already relatively efficient. It's more of the off-ramp from a stablecoin sandwich that is I think the particularly intensive from a cost perspective, that will come down. I would say, today, private blockchain rails are very price competitive versus Swift. I'd say, much less price competitive versus in-country ACH equivalent rails in each geography ultimately.

So I think that there will be some improvement there, but it's still, yes, to your point, public blockchain and stablecoins today versus what we're seeing in the marketplace is a relatively expensive way to move money, especially when you start with it and with it in terms of on and on-pram. And then in terms of payment modality overall, I'd say it's quite rare that a customer comes to us and says, I would like to specify how you send the payments.

They don't say that they want to go by a script or in-country or real time necessarily. They sort of describe the business challenge that they're aiming to achieve, and then we pick the right modality to solve their business problem. So if it's a payroll payment ultimately, and we're processing at a day in advance, it needs to guarantee full value transfer and be perfectly on time and a relatively small transaction. So transaction cost per manager is important.

We'll use an in-country rail with ACH equivalent rail in a particular market. If speed is super important, we'll lean towards either real time or we'll lean towards a private blockchain rail that will run that payment in 20 minutes or less ultimately from the time it's processed. We're relatively agnostic in terms of -- it doesn't make a big difference to our economics, which rail they choose. It's really about finding the best solution for their particular need and then making sure that we can deliver that at scale.

Nate, it's Ron. The point we're trying to make is we don't care, whether it's [indiscernible] that we spend $600 million or $700 million in this business per year, and we spend $20 million or something on rails. So the message we're really trying to make is super,duper, cheaper free rails is the [indiscernible].

Helpful. That's really interesting color. The follow-up question I had was on Slide 18, where you talk about your 55 basis point spread on average. So the largest bucket of that spend coming from transaction-specific and value-added regulated workflows, just hoping for a little more color on those components. I know the transaction-specific stuff probably varies pretty widely transaction by transaction, customer by customer. So I guess I'm maybe more interested on the value-add and regulated workflow side of things. Just how have those yields trended over time in terms of their contribution to total spread? And do you see additional opportunity to continue to grow that portion of the spread calculation going forward?

Yes. Great question. So yes, we do see an opportunity to expand rates in that category over time. So this comes from the value-added services of being able to direct debit funds from the customer's account as an example as opposed to them pushing a payment to us. It's about providing a reconciliation file and not just the file that we push back to them, but we can actually push the reconciliation file into their ERP or accounting package that completes their key account entries ultimately and automates the accounting for -- it is delivering the remittance information to the beneficiary.

It's doing the prescreen and the validation of the beneficiary payment instructions to ensure that the payment is going to flow through straight through, and there aren't going to be any difficulties of landing that payment. So it's all these incremental things that we do to make it a more efficient workflow for the processor or for the customer, so it ties up less time. What we simply say to our customers is when you're processing payments with us, we want you to focus on your business of selling widgets.

We'll take care of all the process behind the scenes, and we'll do it in an automated fashion to make this a seamless part of your business so that you can focus on running your core enterprise as opposed to trying to run a treasury operation that's very subscale for a mid-market corporate customer. And that's a value proposition that resonates with these clients because they want to deploy their operational resources towards selling more clients. They don't want to build out finance departments and back office reconciliation teams. They want to focus on their own front office and sell more to their clients.

We will move next with Tien-Tsin Huang with JPMorgan.

I wanted to ask on the distribution moat and your ability to replenish new sales to get to that 20%. I know that's a super power of Corpay in general. But just -- I know in the slides, this is $1.5 million in new revenue per direct seller. Is it as simple as just adding more headcount there? Tell us a little bit more about how easy or hard it is to regenerate that 20%.

Tien-Tsin, it's Ron. Let me take a step. The first thing is I told Jim to send out a bar chart to everybody that we've done the same thing in the last 5 years. So although we showed a bridge, I think it was what, '24 to '25. The first thing one reported that growth model would look literally almost the same the last 5 years where we sold 20% plus and lost 3. So the answer to the thing is it's a giant [indiscernible] planet, right? In the middle market is $160 billion. We have $1 billion business. So think of the -- we originate market really in 5 continents, right? Tien-Tsin is in the U.S. business. We get people in the U.K., the continent, Australia, everything else. Think of just the coverage like spots we can go, right, in terms of putting more origination power not only in terms of like corporates, which was the whole business when I bought it, now like 20% of the business is these other segments, right, like serving FIs or the asset managers like Bain or even the new guys.

And so the playing field to go originate business is it's pretty massive. I think I asked Chad or something, it's the largest single flow. I think the flows are like $9 trillion a day of FX money being moved. And so yes, so the short answer is there's plenty of segments and geographies for us to have more coverage. And then the second one, which is why we bought this company is the product getting into the deposit side of the business, not just the disbursement side is a huge deal for us.

So going back to all these people that we send disbursements for and helping them stand up new deposit accounts as they expand is the other way to get more juice, right? We don't need any more coverage there, right? We just added this product. So look, there's plenty of opportunity. We've done it. It's mostly just more people in these different segments. And then I'm hoping that this deposit thing will -- this bank account thing will add a ton of revenue, too. So look, it may not always be 20, but it is going to be a whopper number because, one, the thing is big; and two, the incumbents are not great. And I almost laugh to try to say this to you guys are like a disruptor, where people going into the legacy banks that are crummy at this thing with a new way of doing it versus, "Oh my God, who's going to disrupt us." So I would say of all the areas we sell in the company, this one, we've got a lot of confidence. And we got a lot of really good people. Markets recruited like the best and brightest. We pay people a lot that come out of banks like yours and stuff. And so we really do have a lot of super quality people.

Yes. No, it sounds that way. And you're right, it's good to hunt and rather be the hunted. But maybe is a good question in general there. Just thinking about the customer retention, it is high, 97% -- and Ron, you appreciate this thing about ADP, right? And retention is so important for that company. What explains the high retention in your mind? And is it sustainable? Is it as simple as that there isn't a lot of competition that's developing? Or is it really the -- I don't know, the technical integrations with ERPs like you talked about, the pricing, the service, the tech? Or is it just as simple as limited competition?

Yes, I think it's a little bit that, Tien-Tsin. I think the thing that's unique in this business is the account managers. Lots of -- whether it was in payroll or other businesses, you have account people that kind of keep track of important accounts, keep them happy and all that stuff. In this business, the account managers like no stuff. And they actually help the client like figure out stuff like, "Oh my God, currencies are moving, right, and you're not hedged properly in this area."

They say smart things all the time. So I think the nature of the ongoing advisory relationship between smart guys and the client keep us in there. And we get a lot of wallet share gains. We might only have 20% of the business with the client. And then because the guy is smart and helping the guy, that thing grows over the year, which adds to that 97%, we might lose 10% of the clients, but grow wallet share in another 20% of the client. So it's set up pretty well, I'd say, to keep the retention high for those reasons.

I'd say the thing that I would add, too, is we've always had very good retention. But as we've added products and we cross-sell more products into the same accounts, that certainly makes them stickier. And we see the math that retention rates improve when we cross-sell multiple products into the customer. But I think the big driver in addition to the relationship management that Ron mentioned is the tech integration. Once a customer is integrated with us from a technology perspective, so we're integrated into their ERP or into their accounting package or we're connected to their front-end website that they sell products on, it's very, very difficult to dislodge us from that relationship once they make that investment.

And so as we've improved the tech footprint of the business and a focus on integrating our capability across all 3 of our products, making that available on one platform and then integrating with the client, it makes them super sticky and hard for them to use.

We will move next with Michael Infante Morgan Stanley.

I was just curious on the relative pricing versus the Tier 2 to Tier 4 banks that serve the middle market. Can you just expand on that in particular. And also why you view the fixed cost base of the Tier 1 banks being relatively prohibitive for them to mix shift towards the middle market?

Yes, it's a good question. So I would say the overall pricing in the marketplace is relatively efficient. So we don't aim to win based on price. We need to be price competitive. We win on the value-added service. We win on the technology. We win on the customer centricity and our ability to act fast. So we don't necessarily need to price better. We price to a market to a certain extent versus the regional banks in the Tier 2 to Tier 4 category.

I think the biggest driver of why we don't necessarily see the Tier 1s come down into the market is it's the fixed cost base, yes, but it's just the size of the TAM that's available in the enterprise space. So if you say overall that it's a $900 billion market ultimately in the cross-border arena from a revenue perspective, $750 billion of that or $735 billion of that is in the enterprise space. They can spend all their time there, and it's a very target-rich environment, and they trade share with the other 2 banks.

It's not as fertile hunting ground for them to come down into the down market space. I would say the other part of it, though, too, is you really need specialization in order to win in the space. So a corporate banker that is selling, selling financing and selling overall corporate banking solutions, M&A liquidity to a customer is not really going to have the FX expertise to come down market and to really compete with us when it comes to a business that has the needs that are intensive in terms of cross-border payments or FX expense.

So it's the specialization, I think, rather than the generalist approach of the big banks that allows us to win. I say the other thing is it's really, really hard. Even if the Tier 1s come down to the mid-market space and they've got good technology, they're just not very customer-centric and they're pretty slow in terms of the way they do things. And I'll give you a specific example. If you're a mid-market customer and you want to open up a bank account, so you're operating in the United States and you want to open up a bank account for your new division in Europe, it might take you anywhere from 2 to 6 months to get that bank account, if you're banking with a JPMorgan or a city. That's a very real and normal experience versus with us, we'll have that account open in 24 to 48 hours, if not faster. And so that customer centricity, the ability to be agile and the technology to just simply work in the mid-market space, it's really how we compete and win even when we do come across the cities and the new base.

Michael, it's Ron, a different view to me is just that's where the game is for the big guys. There wouldn't be Tier 2 and Tier 3 and Tier 4 banks, right, if the big guys could serve the whole world, like this is just one product, right? They're really in the game of lending and their game is the giant companies that they hold all these deposits and do all the lending. So be a little weird, oh, I'm going to take one of my products and go run into a different market and hey, work on that or whatever. So I think it's more like they have 3 or 4 big products, mostly lending.

And so they focus their stuff where the rest of their business is and leave kind of the acorning stuff to regional and local banks with a lot of relationship people. So I think it's pretty normal, right, that it's that way. In fact, they even look to people like us and other people to try to resell right, to be more arms and legs for them. And so it's a pretty natural structure of the things. So the great thing for us is we compete with people who are good at local deposits and lending, but don't have a footprint anywhere else. So obviously, they don't have people that know much. So I tell Mark all the time, I expect you to do better. The guy to serve as a mid-market company is just not super good at the product that we offer.

No pressure, Mark. As you guys sort of look at the innovation in the space, mainly with respect to some of the on-chain FX providers, how do you sort of assess the solutions being built within that ecosystem and the probability or lack thereof of expansion between -- or beyond the crypto and digital asset natives to traditional corporates in the middle market, for instance?

Yes. It's a good question. So I would say we're a consumer of payment rails as well. So we're always looking for new technologies, new payment rails, new methodologies to move money, whether that's in-country connections or real-time rails, private blockchain, public blockchain. So we're used to scanning the market looking for the best ways to move liquidity, the best ways to organize ourselves in terms of our bank accounts. So that's something that we've been doing for the entire time that I've been in this business is just constantly scanning for better ways to run back-end operations.

So it's sort of a natural pivot for us to be able to look at this digitally native space now, public and private blockchains and to continually scan for new technologies that we can use. But the other part of it is because this is a focused segment for us, we have specialist people that all they do is look at blockchain universe. And they're looking at opportunities in the stablecoin space. They're looking at opportunities with digitally native firms, whether they be crypto exchanges or stablecoin providers or firms that are offering in adjacencies to tokenized deposits or tokenized lending, whatever the case might be. So this is a big area of focus for us and has been for a few years. And thankfully, now it's a segment that's beginning to take off because we've been doing that strong work now over the last 2 or 3 years.

[Operator Instructions] We will move next with Mihir Bhatia with Bank of America.

Very helpful presentation and quite informative. I guess one question I did have though was just how does spreads vary by customer segment or by product? So as your customer segments are shifting maybe towards a little bit more waiting for digital asset platforms, does that affect where the spreads, that 55 bps spread that you had, would that change? And similarly, with like just the product between spot versus hedging, does the spread vary greatly?

Let me take the first part, and then I'll turn it to Mark. On the payment side, which is this blockchain stablecoin thing right now running risk management contracts. The answer is it's incredibly efficient. Don't think about an average. We probably have a single transaction at 55 basis points, right? We have a massive distribution at 55. And think about the IRIS² that's completely related to transaction size.

So think about some small little payment, $300, right, is the payment. Hey, we're going to charge $20 or something or $10. It's 300 or 600 basis points, but it's no money. It's the spend is timing, the revenue per train is tiny. Now go to a real transaction, $5 million or $50 million. We get 8 or 10 basis points, but we get thousands of dollars for the transaction. So the main thing that I want people to get here is there is no such thing as an average. There's a curve that's incredibly efficient when we look at the IRIS².

And so I don't want people hang the phone of, oh, someone's going to go and just pick off these stupid guys at these banks. They don't know what they're doing. So a lot of people working in this space for a long, long time to Mark's point, are pretty smart at it. And so -- and as I mentioned before, the rails are beating us. They're nothing with the cost structure. They're all free forever and have no impact on anybody. The game here guys is acquiring client spend and transactions. The who does that wins. And if you acquire a lot of big transactions to move like $50 million or $100 million like from the asset guy, you make lots of revenue because you're providing like a lot of liquidity, like a giant amount of liquidity for the guy to make the trade.

And so I just hope everyone hangs this thing up with it's pretty efficient. It's on a curve that makes sense, and we're pretty good at it and innovation in rails is not the key. The innovation is going to be in selling guys. The key here is to Tien-tsin's point, do you get more customers and more big pieces of payment spend will be the one that grows revenue.

Yes. I think that's exactly right. And then I would offer just a couple of other things is that the average spread between the payments business at scale and the risk management business is very, very similar. There's not a lot of delta between those 2. But what we do see is the more that we sell technology and integration into the customer, the stickier it is over time and the more rate we get over time as well. So this is a big part of our focus and has been for a number of years is really selling the ERP integration, the technology adoption across the business. We do see slightly higher rates, the more integration that we have, the more embedded we are with the customer. So that's really a key part of the focus after we acquired the customer.

[Operator Instructions] We will move next with Ken Suchoski with Autonomous Research.

You guys provided some really helpful detail on the 18% organic, I think 16% volume, 2% yield. Just on that 16% volume growth, I mean, how much of that is, say, new logos versus just wallet share gains with retained accounts versus corridor expansion? And maybe related to that, just when you work with the client, is there a typical percentage of their cross-border flows that you ultimately capture?

Yes. Great question. So I'll sort of tackle the last part first. So I would say overwhelmingly, we become the customer's primary provider. And so our is it sort of a wallet share gain? Yes, there is always an incumbent bank that we're trying to dislodge. And once we land the customer certainly is trying to expand and grow as much wallet share as we possibly can. I'd say in that first year, we almost always establish ourselves as the primary liquidity provider with the bank sort of being the redundant provider of the fallback.

And then in terms of the overall churn rate, so when we say we retain about 97% to 98% of our revenue, there's certainly some structural loss just like any business, we have customers that go to business, customers that are acquired from an M&A perspective, whatever the case might be. And then we make up for that with some wallet share expansion in particular customers. So that's how we get to the 97% or 98% because of that little bit of portfolio churn.

In terms of the growth that we get of 16%, it's predominantly new logos. It is signing up new accounts and then volume. And I would say, over the first 12 to 18 months, really begin to scale that volume. So we start off with maybe 20% wallet share and hope to get to 80% or 90% wallet share within the first 12 to 18 months.

It's Ron. Just to be clear, it's 100% because that's how we define it. So for us, when we give you that bridge and we say whatever the page said, hey, it's 21%. We literally say if you had to be a new logo here in calendar 2026, then we count the revenue just from those new logos. The wallet share thing is in the retention number in the 97%. So I want to be clear, we define it to be 100%.

Right. Okay. That makes sense. It's a net number on the 97 net of all the moving pieces.

Yes. Now we think of that as the base clients. We have the client, but we have more or less. You just look across some we have more, some we have less. But when we get all done, we keep 97% of the revenue from all the base clients that we had is the way we think about it.

Okay. That's really helpful. And then, Ron, I know -- I mean, lodging has been one of the problem children in recent years, but I recall you saying that you like that business because there's negative working capital. Could you guys just talk about the working capital needs to run this cross-border business? I heard the 60% netting. But just outside of that, what does that look like? And how do stablecoins change that, if at all?

Yes, that's a super good question. So the great news is on the payment side. It looks a lot like our full AP business where really there isn't any working capital. We mostly work with good funds. So you're a company, you want to make a EUR 10,000 payment, I can grab USD 13,000 from your business, I convert it and I send it. So payments, I'd say that it's kind of balance sheet light. On the risk management products, think of like forwards and options, there is some kind of be ready, right, if currencies move to have some balance sheet to make our counterparties whole while we're waiting to kind of call money, if you will, from clients. But the great news and one of the dirty little secrets of why we bought Alpha in the fall was the deposits -- and so what I'd say to you is we expect in the next year or 2 for this thing to be a total positive working capital business where we're getting deposits from clients or holding deposits from clients while we're also using capital sometimes short term to pay our counterparties. And so that would be the hope that this would be kind of close to a 0 working capital business going forward.

And then the other area where we do use blockchain payments ourselves, both stables and private blockchain is to move liquidity from one jurisdiction to the other after hours ultimately. So trying to reduce the trapped cash that sits in Asia and our sort of follow the sun capital market and our follow the sun operational market where our cash starts up today in Asia, then it travels to Europe and then it comes to North America.

We don't have any liquidity materially speaking, that gets left behind in accounts at the end of the day anymore after the wire cuts because we can use private blockchain to move that money after cut. So that allows us to be quite a bit more capital efficient today than what we've historically been.

This is Jim. We don't have any more questions on the phone, but I did have a few e-mailed in that I'm going to tee up to the guys here at the table. So the first is what stops digital payment providers from adding the FX capabilities that they currently need Corpay.

Yes. I think what we're seeing is a trend in the marketplace is those digital firms are partnering with firms like us to be able to deliver that capability because it takes a lot of time to get the money transmission licenses to set up liquidity with banking partners to build the infrastructure that is FX-centric, rail connectivity in the fiat currency world. The competitive moat that we have is really just difficult to swim across ultimately. And I think what we're seeing very actively in the marketplace is these digital firms are partnering with companies like us to become their fiat rail providers, and they're leveraging our strength and capability to do the onramp.

We're providing treasury liquidity for FX at scale for them rather than them building themselves. You'd asked this, Darrin, I don't know if you're still on, but it was a pretty good question about the couple of products and stuff. Hey, you tend to start with payments and then get risk management. So when we bought the business, we're a payments company and like, oh, we have payments and I need Mark's company like this risk contracts and this stuff is stuff we need this. And so the question that someone asked earlier is the other reason the native blockchain stablecoin guys are dead on the thing, like they can't just go to a company and do payments.

We've learned that once you get in there and you figure out what the payment flows are, there's risk that service around the currencies and the client wants to basically protect against that. And so they're going to have to go get 800 of our people to know how to do this. So you're back to, again, it's another moat that clients want both payment capability and risk management contracts.

So not only do they need licenses and liquidity and stuff, they need people that know stuff to be able to write these contracts and advise clients. So like anything, it is a way hard thing to be in and have all the things you need to win in the space. So not easy.

Great. Next question is, what are potential reasons why your clients are not using blockchain versus -- versus some providers, other newer public providers putting large and increasing blockchain transaction volumes that appear to be taking share from the incumbent players.

So we are seeing, I'd say, pretty spectacular growth in our private blockchain rail placement. So if we look at our overall business today, I'd say, at the beginning of 2026, we said about 40% of our payments via Swift ultimately. By the exit of 2026, we expect that, that will probably be reduced to less than 15% of our payments, and that will be largely cannibalized by private blockchain. So we are seeing significant growth in those private blockchain rails because of the inherent advantages that they're always on 24/7, they're programmable, they're traceable, and they're near real time in terms of delivery and more cost effective than ultimately stables.

But the other part of why they're doing is it's just a little bit more operationally efficient as well. There's less friction. There's less -- there isn't a need to do on-ramp and off-ramp. And so when we think of it in terms of our own payment processing, we are definitely shifting towards the private blockchain rails, and that is winning in our own minds because of those efficiencies. And I think we're seeing that in the broader marketplace as well. And you're going to see the big network providers that provide these private blockchains are going to begin to disintermediate that rather materially. And I think you're going to see transaction counts grow way faster on private blockchain than you will on public blockchain rails.

It's Ron. I only add other thing is whatever Chad says, it's $9 trillion a day, like I don't want people to miss like the existing rail is pretty good. They get most of the money there the same day. As you saw on the page, they're cheap and that cheaper than blockchain. So I don't want people to miss it like the same works pretty good. With that said, there's clearly a role for timing that gets outside of the banking hours, right, the 24/7 nature.

So that, I think, is our view that it's not necessarily faster, it's all kinds of instant FedNow, other kinds of ways in different countries to move things instantly, and you saw the page to move it cheap. And so our sense is when the world gets clear on this, there will be some percentage of payments, particularly ones that need to move outside of the banking hours and system that would go into this "new category, but that lots of it would still stay on rails that have been working pretty well. So I don't think it's a complete flip flop would be the message to you guys. So look, I think we've taken the time today. And again, we hope the goal here was to try to provide a bit more briefing on the business. I do want to take away that we like it. I like the thing. I don't know if you like these numbers.

And again, our view is the thing is pretty durable. This is a giant playing field to go after lots of places and lots of segments. We've got tons of capabilities. We're going to embrace these new things to the extent that they're useful and stuff. And so the message we want to give people is also no cherry here to go crush the economics. It's super efficient, follows a super smart curve in terms of size and stuff. So the message to everybody is we're marching on with a plan to double this thing again over the forecast period. So I think it ran out, thank you to all you guys for making time and asking the questions today.

All right. Thank you. I think we're finishing up. So thank you, everybody.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Hello, and welcome, everyone, joining today's Corpay First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this call is being recorded. We are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to Jim Eglseder, Investor Relations. Please go ahead.

Good afternoon. and thank you for joining us today for our earnings call to discuss first quarter 2026 results. With me today are Ron Clarke, our Chairman and CEO; and Peter Walker, our CFO.

Our earnings release and supplemental materials for the quarter are available on the Investor Relations section of corpay.com. Please refer to these materials for an explanation of the non-GAAP financial measures discussed on this call along with a reconciliation of those measures to the nearest applicable GAAP measures. Our remarks today will include forward-looking statements about expected operating and financial results, strategic initiatives, acquisitions and synergies and divestitures, among other matters.

Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. Some of those risks are mentioned in today's press release on Form 8-K and can also be found on our annual report on Form 10-K. These documents are available on our website and at sec.gov.

So now I'll turn the call over to Ron Clarke, our Chairman and CEO. Ron?

Okay, Jim, thanks. Good afternoon, everyone, and thanks for joining today's call.

Upfront here, I'll plan to cover 4 subjects. First, provide my take on Q1 results. Second, I'll share our revised guidance for full year 2026. Third, I'll review progress against our top priorities. And then lastly, I'll share our thoughts on the midterm direction for the company and where we're headed.

Okay. Let me begin with our Q1 results, which were really outstanding. We reported revenue of $1.26 billion, up 25% and cash EPS of $5.80, up 29%. And Importantly, about 2/3 of our $50 million Q1 revenue beat versus guidance was really just better performance across the board, not macro related. So for us, this Q1 was really a blowout quarter.

Q1 overall organic revenue growth, 11%. That makes 4 consecutive quarters of 11%. Inside of that, Corporate Payments grew 16%, that's 18%, excluding flow compression, and did reach 40% of our overall revenues in the quarter. Vehicle Payments grew 10%. All 3 geographies contributing the U.S., Europe and Brazil. And lodging improved meaningfully sequentially, landing flat for the quarter, so a big improvement there.

The Q1 operating trends also quite good. Overall retention finished at 93.5%. I do want to note that this metric now includes our cross-border business. New sales or bookings up 24%. Happy with that. And same-store sales finishing flat for the quarter. So look, we are clearly off to a terrific start here.

All right. Let me transition to our 2026 guidance. Given our Q1 performance and the current trends, the raise to full year guidance is really pretty straightforward. So we're raising full year 2026 revenue guidance today to $5.290 billion at the midpoint. And that's driven really by a few things. First, we'll flow through the $50 million Q1 revenue beat. Second, will increase rest of your revenue guidance, another $50 million as a result of higher fuel price expectations and ongoing or continued better fundamental performance. We'll also net out $75 million from rest of year revenue to reflect the divestiture of PaybyPhone on March 31. We do continue to expect 10% organic revenue growth for the year, which again is our most important measure of durability.

On the earnings side, we are raising full year 2026 cash EPS guidance to $26.70 at the midpoint. So that's a result of flowing through our Q1 EPS beat of $0.35. It's adding a rest of year cash EPS raise of $0.35 also that's coming from the expected $50 million in rest of your higher revenue. We do expect to have a lower share count from year-to-date share buybacks, which will basically offset the expected higher interest expense in our rest of the year. You can see this bridge guidance math on Page 11 of the earnings supplement. This higher full year 2026 guidance implies for the full year, 17% revenue growth and 25% cash EPS growth for the full year.

So look, all the ingredients for a very good 2026 financial performance are holding. First off, you have the terrific [ star ] Q1 print. We've got very good sales and retention trends. We're continuing to enjoy a favorable macro environment and our 2 big acquisitions and investments, Alpha and Avid, both performing well. So we're in a good spot.

Okay. Let me make the turn out of our top 5 priorities laid out in February, which really are unchanged. So they are, one, our portfolio, again, rotating our portfolio to Corporate Payments, with the hope of having fewer bigger businesses, to USA sales, so increasing sales production in the middle market versus in the micro market. Payables widening monetization there beyond virtual cards and launching a [ spin ] management business in Europe. Fourth, cross-border priority is to further develop our multicurrency account banking business, integrate the Alpha acquisition and now add real-time blockchain rails to our global settlement network. And then lastly, AI, like others, we are incorporating AI into most of our products. And secondly, working internally to redesign processes and get expense savings.

So what I'll do here is I'll just touch on progress just in a couple of areas, our portfolio and cross-border initiatives. So on the portfolio front, we really are making good progress. Our newest acquisitions and investments there are working. So Alpha grew organic revenue 17% in Q1, that's excluding the flow compression. And Avid grew EBITDA 50% in the quarter. So really an outstanding performance and improvement there. So both off to a really good start.

We're in the late innings with the noncore Vehicle Payments divestiture and actually teeing up a couple more businesses potentially for sale. And on the other side, we're digging into a couple new Corporate Payment acquisition opportunities to do look quite interesting to us. So look, these actions are evidence that we're committed to further rotating the portfolio to Corporate Payments.

On the cross-border front, a lots happening there. We are extending the gap of our multicurrency accounts and seeing some real momentum from that. On the Alpha front, we've converted about 15% of Alpha clients to our tech platform, a lot more to follow in June. We just signed JPMorgan and BVNK agreements to speed the addition of blockchain rails to our global settlement network. And look, while working on all these initiatives, the core cross-border business rocking continuing to perform exceptionally well. So just wanted everyone to know we are laser focused on these top 5 priorities.

Okay. So last up today, I do want to share our thoughts on our midterm direction and where we're heading with the company. We did just return from our annual off-site strategy session, where each year, we get away. We debate the purpose of the company, our portfolio, the objectives to decide if it makes sense to change course. And we always come back clearer than when we go into these sessions.

So here are this year's conclusions. So purpose. So on the purpose front, we are staying put. We'll continue to have a single purpose here at Corpay, which is to help businesses better manage and control expenses. The tagline, Corpay for every way your business moves money. You will see our new Corpay brand campaign, [ Hammerhome ], this simple theme, and in fact, I think one of our newest introductory ads is now on our website.

On the portfolio front, again, we'll continue to rotate [ to ] Corporate Payments into fewer bigger businesses. You will see us divest more noncore TAM constrained businesses, and you will see us acquire more Corporate Payment assets. So we're heading towards building really 3 global businesses over time. So the first wrap really is employee payments. So we've got a set of spend management solutions that control really all distributed employee spend, whether fuel or T&E or just one-off discretionary purchases. So those programs all about preventing the misuse of company monies.

We'll have a big B2B payments business, AP and supplier solutions that automate the workflow really through the entire centralized procurement invoice and payment chain. The goal there is to derisk B2B money movement. And then third big business, cross-border payments, we'll have FX payments, risk management solutions and foreign bank accounts really for middle market companies all over the world, goal there is to make global commerce easier.

So post this midterm period portfolio remix, we really end up in these 3 main global business categories, each of which have like massive TAMs. And again, all centered around the same common purpose of helping businesses better manage and control their spending. On the objective front, really, our midterm objectives really remain intact. Most important is to grow revenue organically 10%. And remain a top quartile grower. Our business model and operating leverage do enable us to grow earnings much faster, I think, 15% plus, and our goal is to double cash EPS to $50 a share during the forecast period. We do expect to generate about $15 billion in cash during the forecast period.

That's from a combo of annual free cash flow and increased borrowing capacity as our earnings grow. So we may buy back more than half the company at this current valuation. So look, net-net, we are very clear and super excited about the way forward and where the company is headed. We'll build a simpler more attractive, more consistent, high-growth company that we believe will outperform most.

So look, in conclusion, we're delighted with the start to the year. we are raising full year '26 revenue and earnings guidance, high confidence in that. We're working the same 5 priorities very hard and we've reaffirmed the midterm purpose portfolio and objectives for the company, really leading us to a super exciting place.

So with that, let me turn the call back over to Peter to provide some additional detail on the quarter and '26 outlook. Peter?

Thanks, Ron, and good afternoon, everyone. The headline for the quarter is significant overperformance with 25% top line and 29% bottom line growth and our fourth consecutive quarter of 11% organic revenue growth.

Let's turn to our segment performance and the underlying drivers of our organic revenue growth. Corporate Payments delivered 16% organic growth for the quarter despite a 200 basis point drag from float revenue compression driven by lower interest rates. The organic revenue growth exceeded our expectations driven by strong performance in cross-border and payables. Overall, Corporate Payments performance was driven by growth in spend volumes, which increased organically 43% to $82 billion. Cross-border continued to deliver strong sales and revenue performance in Q1. Overall, currency volatility conditions were a helpful backdrop as it created the opportunity for our sales team to highlight the value of our offerings.

Additionally, Alpha integration efforts are progressing well. Approximately 15% of Alpha corporate volume has already been migrated to our global tech platform with the next wave of migration plan for Q2. The payables business continued to perform well, driven by volume growth and especially strong sales performance in Q1. This sets us up well for the rest of the year. We're also pleased with the progress of Avid, our minority investment, which is reflected as an equity investment in our financials. Sales are up over 20% versus Q1 2025. Volumes and revenue are also up and EBITDA grew 50% over Q1 2025.

Vehicle Payments organic growth was 10%, driven by solid results across all 3 geographies. Higher fuel prices benefited this segment, driving a portion of the macro beat a quarter. Additionally, we closed the sale of PaybyPhone and have taken $75 million out of our rest of year guide as a result. As a reminder, the sale has no material impact on our adjusted EPS as we bought back shares with sale proceeds.

Lodging came in better than we expected, with sequential organic revenue growth improvement of 7% versus Q4 2025. We saw better performance in all areas of the business, raising our confidence in the 2026 Lodging growth acceleration plan for the second half of the year.

In summary, we delivered 11% organic growth in Q1, a 200 basis point beat to what we expected and at the high end of our midterm range. Our Corporate Payments and Vehicle Payment segments totaled 85% of our Q1 2026 revenue and delivered a combined organic growth rate of 12%. Sales growth of 24% and retention rates over 93% in Q1 remain impressive. As such, we are encouraged by our strong Q1 and it strengthens our conviction on achieving our increased full year guidance.

Now looking further down the income statement. Operating costs, excluding the impact of FX, M&A and stock compensation, increased 10%. The increase was primarily due to higher transaction volumes and higher bad debt. Adjusted EBITDA margin of 54.6% was slightly down over the prior year primarily due to acquisitions. Our adjusted effective tax rate for the quarter was 26.8%, the year-over-year increase in the rate was due to the favorable impact of employee stock options on the tax rate last year.

On to the balance sheet. We ended the quarter in excellent shape with a leverage ratio of 2.7x and $1.4 billion of available borrowing capacity on our revolver. In the quarter, we spent $786 million repurchasing 2.4 million shares. This includes the use of $450 million of PaybyPhone sale proceeds as we essentially prepurchase Corpay shares in advance of receiving the proceeds. As of Q1, we have $1.8 billion authorized for share repurchases as the Board approved another $1 billion in the most recent Board meeting.

We have just received commitments to refinance our revolver and Term Loan A. The commitments will upsize our credit facility by over $1 billion versus existing levels. This refinancing will extend the maturity of the facility for 5 years and will reduce the interest rate by 10 basis points. We plan to use $1 billion of proceeds from the new facility to pay down a portion of our Term Loan B expiring in April 2028. This will result in overall lower interest expense going forward. We have not reflected this in our guidance as the deal is expected to close and fund later this month. As always, we will continue to pursue M&A opportunities and to buy back shares, particularly at this valuation while maintaining leverage within our target range.

Next, let's cover our segment geography changes. We've made minor reporting segment geography changes to better align our reporting with how we run the business. You can find the adjusted historical information in the earnings supplement to help you update your models.

Now let me share some additional information on our updated 2026 full year and Q2 outlook. Our updated 2026 revenue guidance is $5.29 billion at the midpoint growing 17% year-over-year. This assumes 10% organic revenue growth at the midpoint. Our updated outlook flows through our Q1 beat of $50 million increases the remaining year's revenue by $50 million, driven by a combination of macro favorability of business fundamentals and is offset by $75 million from the sale of PaybyPhone. Our updated rest of year guidance for adjusted EPS is $26.70 per share at the midpoint, growing 25% year-over-year.

Our Q2 revenue guidance is $1.25 billion at the midpoint, growing 18% year-over-year. We expect Q2 organic revenue growth in the range of 9% to 11%. We expect adjusted EPS of $6.55 at the midpoint, growing 28% year-over-year. The complete details regarding our revised full year and Q2 outlook can be found in our press release and earnings supplement.

So operator, please open up the line for questions.

[Operator Instructions] We'll take our first question from the line of Sanjay Sakhrani with KBW.

Really strong quarter here. I guess my first question is it seems like the underlying trends are really strong, and then you've got so the macro help as well. And when we sort of impute everything, it would seem like the underlying trends would suggest even more upside as we move through the year unless there's a give back. Maybe, Peter, you could just talk a little bit about sort of the puts and takes factored in for the remainder of the year?

Sanjay, thanks for the question. So when we look at Q1, we really got out of blocks stronger than we expected and obviously delivering the 11% organic growth, and we were growing over 9%, so a relatively easy comp. When we look out at the rest of the year, growing over 11% comp for all 3 quarters. So that's what lands us at the full year 10% and gets us comfortable with that. In terms of the raise for the back half of the year, that is a combination of continued business performance and macro. And when we think about how that splits out, call it, $25 million is in Q2 with the remaining $25 million in the back half.

And Sanjay, it's Ron. I just want to add to Pete's. Remember, in our business, we take the absolute revenue up about $100 million from Q1 to Q4. So the decline already built into the guide to start.

Got it. Got it. All right. Very helpful. And then, Ron, just a question for you. You talked about more divestiture opportunities and then also acquisition opportunities. So maybe you could parse apart sort of sizing, timing and sort of the core businesses going forward, it seems like lodging and gift weren't necessarily part of it. Are there opportunities there? Maybe you could just elaborate on that.

Yes. So I don't want to provide too many details and tip off too many people. I will say, one, that we're super late innings on a pretty meaningful transaction of divestiture. And so that will either happen or not applied signed or not in this quarter. We're sitting in, that's number one. Number two, we have 2 or 3 additional kind of noncore things that [ were ] teasing out trying to get a sense of whether to take them fully out to the market or not. And then on the other side, like always, we're digging into a couple of new Corporate Payment assets. So the message is more will happen, exactly when and stuff, TBD. But by the time we get to Christmas, we will have likely sold additional assets beyond the [ 1 here ] in Q2 and likely be looking at buying some additional things. So we are hard at work on this rotation.

Thank you SP1 And we'll take our next question from Tien-Tsin Huang with JPMorgan.

Great results. Maybe ask similar to what Sanjay asked without you giving away the trade secrets here, Ron, just as you're rotating to corporate payments, and it's obviously doing really, really well. Can you just instead of the details, what capabilities or TAM characteristics are you looking to acquire. I'm guessing you're probably not alone in looking at these assets. So are valuations reasonable when you compare it to buying back your own stock, which you say yourself, you buy back more than half the company of this valuation. So just trying to understand the balancing act there.

Yes, Tien-Tsin. Good to hear from you. So I don't think we need much in terms of capabilities. We have gone on a bit of a buying spree, including that foreign bank account capability, right, we got from Alpha. So I'd say it's mostly some geographic things. There's an asset in the geography that we'd like to heavy up on. There's another asset that we like some of the verticals. So it's in a completely similar business, but has positioned in some different verticals. And so we have mostly what we need. I'd say it's more now bulking up. And as you know, the closer these acquisitions are to what we do, the bigger the synergies. So we always look, as you know, a year accretion. And so if the thing is super and close to what we do, we can make the numbers work. So I would say that you should look for us to buy additional assets this year.

In that way. Okay. Yes. So topping up on geos and verticals as an example. Okay. No, that's great to hear. We trust you on that. So on the -- my follow-up, maybe staying with cross-border. You said demand there is really good. You gave us the update on the Alpha migrations. You signed JPM and BVNK on the blockchain rail side. So what's next, I suppose? What should we be asking you? Or what are you trying to track to gauge success as you're putting those agreements to work again on JPM and the BVNK side? And also on Alpha, is it more just migrations that -- are those some milestones we should be watching for?

Well, first thing I'd say, "Hey, tune into the cross-border deep dive," I think as Jim is next. Next Wednesday, Tien-Tsin. So we're going to try to spend an hour on the business and kind of peel it back and tell people why it's a pretty good thing. But I think the biggest headline for everybody is, yes, we have these new things, these new initiatives, right, get Alpha across which we're doing, get this bank account, things lifted up, get blockchains, super functional and stuff.

The key message I want people to take is the thing is f**king rocking. The base business sales, I think, were 40% or something up in Q1. And so -- it is just -- when I say way ahead of expectations, the thing like in every way for us is just working, right, the number, I don't think it's a $1.5 billion ballpark for that business in 2026 as additional assets, obviously, that we know of that we're looking at clearly in the space. And so I think it's really just getting those things done right. It's getting the bank account to accelerate, it's getting Alpha and shuttering their platform. It's teasing out whether our clients really want to use blockchain.

I mean, I think you guys, the JPM guys personally are on the right thing. The Ron Clarke bet is moving, tokenizing fiat currencies and moving it over blockchain outside the banking hours. And so there's no off-boarding of the things. I personally think that is a winner that our clients are going to really love that rail as an added rail versus the more difficult, hey, depositing money with no interest getting stable coins, running it down the block chain and reconverting it again. So the approach that your particular bank is taking, we think, for B2B is a super good fit. So we're really -- I'm personally really excited about the idea.

And we'll go next to Ramsey El-Assal with Cantor Fitzgerald.

Another terrific quarter. I wanted to ask about the U.S.A. sales and focusing on the middle market. I was just curious, is that where you see the most opportunity right now? Is that the more beneficial market segment? And I guess, why is that the best place to hunt right now?

Ramsey, it's Ron. It's a good question. So I think the first answer to that is we just like the micro market, right? I don't want to go back to that saga but that was a super unpleasant pivot, right? A couple of years ago, we saw credit losses, we saw client losses and stuff. We saw very short lives of some of the new accounts that came in. And so the conclusion was way investing in digital and bulking up in micro is not the best way to create a durable business. So we point at the middle market, which is juicy, you don't have to give as much money away, the accounts are bigger, they're more stable. They last longer.

But the other thing, which is important to us is it suddenly takes the fleet business and makes it more part of our Corporate Payments business. And what I mean by that is when we serve a little company, take like a 10-person plumbing company, all they need is a fleet car. They have no other spend. They really don't do anything else except 10 to 15 or 10 guys out and about. When you go to a middle market company, let's say, [ $30 million to $200 ] million in revenue, and it's got 50 fleet people, it's got other stuff. It's got a supply chain that might have manufacturing. It's got white collar people. So all of a sudden, the products that we have that combine our fleet controls with our kind of commercial card spend management stuff, it's the same.

And so we can take the same product that we bring to kind of nonfleet-intensive businesses to the fleet intensive businesses. And so no longer do we have kind of like specialized fleet products. They're just the spend category and our bigger platform. And so we really -- I really like that. The idea of fleet just becoming a portion really of the overall commercial card business that we're in because we moved up market basically from the super small accounts.

So the million-dollar question is the new selling approach and partner approach we're taking going to add enough business that we're working on. We've increased the investment there. We've got a lot of stuff in the pipeline. So reporting out to you guys the progress of do business in that segment is the key to growth going forward.

Super interesting. A quick follow-up. On Lodging, obviously, you saw some pretty great reacceleration in that business this quarter. Maybe just talk about the underlying drivers there, the underlying business momentum if you're feeling like that trend is now headed in the right direction.

It is, and I'm going to get off characterizing it as a problem child because not only did it race ahead of what we thought or I thought it could do in Q1. I think in the second half, the thing will be the right side of 5%, somewhere in the in the mid- to high single-digit growth. And the reason, I guess, is pretty simple, again, a couple of year ago kind of melt down from the IT thing that took a big part of our base away and blasts over 6 to 12 months was a huge, Ramsey, pothole to fill with business. Well, that thing now is way stabilized. In fact, I'm looking at our Q1 same-store sales report, and it was plus 6% for lodging, plus 6%. That number was like negative time in front of me, like negative 18%, [ 8 ] quarters ago.

So that's the first giant thing is that the base is positive so that anything we add obviously creates the growth rate of the business. So I would say that given there's a little bit of lead time to install business, implement business there, there's been enough in the pipeline, we're pretty confident you'll see that thing on the positive side in the second half. So hallelujah to Lodging. And that will help our overall growth rate, obviously, for those who could do math from consolidating minus 6% to, let's say, consolidating in the second half, plus 6% or 7%.

And we'll go next to Darrin Peller with Wolfe Research.

Okay. Sorry about that guys, I was muted. Maybe you could just touch on the a, the rate of growth of the U.S. fleet business for a moment. And then is there anything that we -- like what would we have to see for the fleet market to actually see same-store sales break out of the 0% to 1% type range we've been seeing. I'm not sure if there's any macro driven you'd expect, but I'm just kind of curious on same-store sales.

Darrin, it's Ron. So a little positive news to the U.S. fleet business was plus 1% in terms of same-store sales in the base, which is obviously -- it was minus 2% in Q1 of '25. So kind of that's a 3-point swing helping it. But I kind of answered the question earlier. The growth of that business now is just all turning on this new sales model, the middle market. If we sell a lot there, it will grow, if we don't, it won't.

I mean frankly, with you as Mr. Corporate Payments advocate, the thing is 10% now of our company, ballpark in terms of revenue. And so our focus, as you know, been super clear on this, that we have moved -- have moved a bunch of sales and marketing money into the Corporate Payments space to try to still deliver what we delivered 29% earnings growth in Q1. So we don't have unlimited money there to make profits. And so we have poured obviously way more incremental money, particularly into the cross-border business. And so if we see this middle market they take, we'll put more dough into it and grow it more. And it's not -- it's kind of a bit of beyond now to 10%. It's not going to make the thing go what you've been saying for 3 years, everybody needs to see how the Corporate Payment thing is going because that's going to be 50% of the company -- that's...

All right. I guess on that note, maybe you could just explain a little more on the rate of growth we saw this past quarter between the AP spend management side and the cross-border side of the Corporate Payments side. Obviously, the 18% ex float was solid.

That's a really good [ fall ]. It's about the same, which is really positive. So both businesses are growing in the quarter of the hygienes and again, both are working. So we like that. I would like the balance of the 2 different solutions. So -- and also the geographies, I think you know this, but maybe others don't. We finally have taking the payables business, which up until maybe 6 months ago, was 100% USA business. And now we've got a spend management business running in Europe about $15 million in revenues is the current run rate of that. So obviously up from 0.

And then in the cross-border business, about 75% of that business gets originated in other geographies, Canada, the U.K., Continental Europe, Singapore, Australia, et cetera. And so that's what's so cool is that the businesses now are truly global, that payables thing has [ TAM ] now sitting certainly cross-border, but even now in the spend management thing we've got those products there and working in other right geographies beyond the U.S. So the opportunity is way up to of that.

And we'll go next to Michael Infante with Morgan Stanley.

Rob, I'd love to hear how the Mastercard partnership is progressing, how are both organizations sort of devoting resources here? And is that 1 to 2 points of contribution across border is still the right place for '26?

A good ask. I think we're both pleased. I don't Mastercard report, I didn't hear what they commented. But I would say from RC, we're really pleased with saying we're pleased with Mastercard's engagement with us. We're pleased we've made, I think, 3 or 4 sales contracts, $5 million-ish run rate on the contracts. The last reports are 50 accounts in some form of a pipeline working. The fascinating thing is we have a better fixed now on which FIs, which kinds of banks like this thing and what they like fascinating, the most interesting product they're interested in is our foreign bank account or our multicurrency bank account product, even more so than our payment capabilities.

So look, it's a slower sales cycle, right, versus going to an end business. But I'd say the premise of Mastercard introducing us to their client base and our people explaining the expertise we have, the formula is working. And so ask we get into the summer and the fall, what that thing will be, but I'd say we're still pretty bullish on it.

That's helpful. And then maybe, Peter, just in terms of some of the tariff comp dynamics, you obviously had some pull forward some uncertainty [ and ] North America also obviously grew robustly last year. Anything we should just be mindful of in terms of the Q2 cross-border comp?

I'd say nothing specific in the Q2 cross-border comp. I mean, obviously, in my prepared remarks, I shared that the volatility across the world, right, allow us the opportunity to display our capabilities and continue to gain business. I think what will be really exciting for you guys to hear is to tune in the cross-border [indiscernible] next week, and we're going to really describe you $160 trillion market, which we have 1% of. So I'd just say our opportunity here is really big.

Next to Dave Koning with Baird.

Nice job. And I guess my question, as we look forward, the corporate volumes, which have been huge because of Alpha, et cetera. What should that what should that start to grow at? And then similarly, what should the yield be? Like does the yield around the 62 basis points. I would imagine if flow rates go up, that goes up a little bit, maybe pricing, but just the balance between how you're seeing volume and yield over the next couple of years?

Yes. Dave, it's Ron. That's also a good question. So I'd say, generally, both our payables business and our cross-border business are volume grower businesses. They're not they're not really rate rating kinds of businesses and mostly again because the clients are generally sizable. They're mid-market plus kind of clients. I'd say the only deviation from that is our cross-border business, and by the way, our payables business, have had a little bit of success with some kind of crazy enterprise opportunities.

So I think I did mention we had a payables enterprise account gigantic that we onboarded last spring that's kind of fully in now that set a quarter of kind of the line average, but it's a gigantic, I think I mentioned that we have or more of the size of the Paymerang business. And then the same in cross border, we now are targeting some giant accounts where we might be doing some risk management work, but they have big trades. And so we'll take those trades at very low sub-10 basis points because they're massive transaction sizes. So it skews a little bit these averages.

So what we do internally, which I'd be happy, Jim, for us to sit around is, we look at the thing, Dave, and pull those out. So we run the distribution, we look for like the 10 giant trades in the period and then look at the non kind of rest of business without those. And not shockingly, it's kind of right spot on the yield we've been running at. So it's a long way of saying sands, some big enterprise things, we don't see much movement in that yield.

Yes. And then just on the vehicle business. It looked like -- I just looked at the Brazil revenue number. And on a constant currency basis, if I kind of put it into the model, it looks like Brazil may be slow just to touch but you'd obviously know better, but that just looks like, but maybe comment on that in the Europe business a little bit.

Yes. I mean, to make the 3, be it 10%, obviously, some set of people need to be double digits. So I don't have it in front of me, but the Brazil business is still rocking. We've had a little weird thing with Google, some keywords in our vehicle debt business kind of nicked us for maybe a point or something, I think, in Q1. But the forecast, which I'm staring at has that business in the high teens, rest of the year, Q2 went on. So we're pretty confident. And the Europe vehicle business, I'd say steady as she goes, that thing has been right around the 10% mark. I don't know, probably 8, 10 quarters now running and same thing, that thing is out looking kind of steady as she goes. So when you put the 3 geographies together, you get back to kind of 9% or 10%, and that's what we think rest of the year will be.

[Operator Instructions] At this time, it does look like we have no further questions. So we'd like to thank everybody for participating in today's meeting. We appreciate your time and participation. You may now disconnect.

To get the ball rolling. Thank you again for being here. Again, I'm Darrin Peller, covering payments at Wolfe Research. Really happy to have Corpay with us, also known as previously FLEETCOR when I brought it public many years ago, but look, really happy to have you guys with us. We have Peter Walker, who's the CFO of the company. And I think maybe just a quick backdrop. I mean, I remember when I -- when we did the IPO several years ago, it was really a mobility and a fleet card business. It's changed a lot.

For sure.

So Peter, if you could just start off before we even get into your learnings since you've been here. Just a quick reminder of the business overview, the 3 segments and the percentage makeup of each and we'll go from there.

Yes. Yes, happy to. So yes, our foundation of the business when we went public, which is what, over 15 years ago today is in the fleet card business. That's now actually a small percentage of our business today, call it, the U.S. fleet is around 10% of what we believe will be $5.3 billion in revenue this year. We've made a big rotation into corporate payments. And so the focus of corporate payments kind of high level, the way I think about it is businesses spend money in 2 categories, payroll and non-payroll. So when you move over to that nonpayroll side of business payments, that's where we're focused. And we're focused on helping businesses control those payments, and we're also focused on helping the businesses make those payments on a global basis. And so this year, our Corporate Payments segment will be 41% of our revenue. So really a big rotation of the company into corporate payments. Vehicle Payments is our other large segment. So those 2 together make up over 80% of the business. And then kind of the tail there would be our lodging business, and then we have another business, which is mostly made up of gift.

Gift card. Yes. Thanks for that. So you've been here 8 months. Help us understand what you've really learned in the last 8 months you've been here so far. And what are your priorities for '26 now just for the remainder of the year?

Yes. So I'm an incredibly commercially focused CFO. So what I've been leaning into is our businesses, where we're performing, enhancing performance. And probably most importantly is the M&A activity we've been up to. So in 2025, we spent over $3 billion in deals. When we think about those deals, kind of the 2 big ones to think about is the Alpha acquisition in the U.K. in our cross-border business and an investment in AvidXchange. That was a take-private deal that we partnered with TPG on and brought about 1/3 of that business. So really been focused on both of those businesses as they roll into our Corporate Payments segment, as we've been talking about. And we see that Corporate Payments segment as our high grower segment growing in the mid-teens this year kind of net of float headwind.

The Alpha business has been really fun to dive into. I'd say the biggest opportunity that we see there beyond just normal cross-border business is the global bank account business that they built. We in our cross-border business have been building a multicurrency account product. We sell that into corporates. Alpha sells their product, their global bank account product into private capital markets. So I'd say one of the most exciting learnings I've had, right, is just a lot more about these 2 bank account products that we offer today. It's about $4 billion in deposits, about 10,000 accounts and what we think the growth can be off of this business when we look forward.

Right. Let's go back to the fourth quarter. Just remind us how you -- the financial exit growth rate of the business? And maybe just give us some overview on '26 and the outlook. Both on a company-wide basis, remind everyone of the growth profile and then segment-level detail would be helpful as well.

Yes, happy to. So if we look at how we ended the year, we delivered 10% organic growth for 2025. That was 4 out of the last 5 years that we've delivered 10% organic growth or better. So when we look at our midterm guidance, pretty pleased by that. We also exited at 11% organic growth rate in 2025. So that sets us up well as we go into 2026.

Think about '26 guidance, kind of 3 things that are setting up well for us. Number one, business fundamentals are strong. So sales were 30% year-over-year in 2025, setting us up well for 2026. Retention, 92%. Same-store sales kind of positive, 1%. So fundamentals are standing up really well. Next, macro setting up really well. The world is being helpful to us. About 50% of our revenue come from outside the U.S. So when we look at a weak dollar, that's actually helpful for our business. And we look at interest rates moderating, that's helpful in terms of interest expense.

And then lastly, as I mentioned, when we kind of opened up the [ ascension ], we spent about $3 billion last year in acquisitions. So as we see those acquisitions come online this year and gain synergies, we expect about $1 synergies out of those acquisitions. So sets us up overall for what we think it's going to be a really good 2026.

Just the targets are -- just remind us the top line and the earnings growth targets.

Yes. So organic growth, 10% full year. The revenue growth, 16% and adjusted EPS growth of 26%. So the thought is we're going to produce -- sorry, 22%, we're going to produce $26 of adjusted EPS.

Right. And that included the accretion you just talked about for M&A?

Correct.

Any recent trends you're seeing so far in first quarter giving you confidence around near-term outlook or just conviction in those targets you just went through that would drive either, first of all, in line or better or anything that worries you that could take you to the lower end or below?

Yes. Based on what I've seen, we're right line with our expectations. So fully closed January met our expectations. I've seen a flash of February revenue kind of right where we'd expect to be.

Okay. All right, let's go to the segments now. When you look at Corporate Payments, again, you've built out a pretty dramatic percentage of your business coming from cross-border, right? But I mean the account payables business is also nicely growing and obviously, seeing acquisition benefit as well, whether it's AvidXchange or more. And so if we take it a step back, again, the mix of your Corporate Payments business, again, remind us between cross-border and accounts payables. And then we're going to go into the subsegments of it.

Yes. So we've typically spoken about the Corporate Payments business as payables and cross-border. I'd say the mix is, call it, 1/3 payables, 2/3 cross-border. How we're evolving that because we think it's better market disclosure, we'll come out with more information on it this year is really there are 4 businesses within Corporate Payments. That would be the commercial card business, the AP Automation business, the cross-border business and the global bank account business. As we move into '26, you should expect us to give more granular level view into the business and really trying to lean in to help people forecast the business better going forward.

Okay. If we go now into the subsegments, again, the growth profile of Corporate Payments first and then the subsegments of cross-border versus accounts payable, what are you expecting for each?

Yes. So I'd say the cross-border, and this has been the case for the last couple of years, is growing slightly higher than the payables business. So kind of a continued trend of that. Both of these businesses in the back half of last year and in the first part of this year are going to be -- organic growth rate is going to be hampered by float revenue headwinds. So the guidance that we gave for the year for Corporate Payments was, call it, mid-teens net float headwind.

Okay. All right. Let's go into the differentiation. So what is it about Corporate Payments that you guys are doing so well that's allowing you to grow mid-teens, especially on the cross-border side. I mean it's a competitive market. obviously, competing with banks and others. But maybe in your own words, what do you see as the key go-to-market differentiation?

Yes. So we've been in the cross-border business. We started it in 2016 with an acquisition and then have continued to grow the business significantly. To your point, banks are our main competitors, right? So banks typically don't serve well our clients, which is, call it, corporations of, call it, $500 million, right? Those are typically focus areas for kind of Tier 2 and Tier 3 banks, which don't have the capabilities that we have in terms of international payments and risk management services. So that's where we've been able to win. I think it's really important to note that from day 1, we focused on the technology within cross-border and building a system that enables us to win. So it's really that powerful combination of having a platform combined with a very high-performing sales team.

All right. Let's talk about the acquisitions now. I mean, Alpha being one of them, obviously, more recently. It not only brings a new customer cohort, but also new product capabilities, global multicurrency accounts. Just talk about a little more about how the company can cross-sell the solution into existing client base. And I'd love to hear a little more update on timing. Is it a '26? Or is it more of a '27 opportunity?

Yes. So really excited about the Alpha acquisition. About 1/3 of the business was in the corporate space, which we're in today and about 2/3 of the business is in the private capital market space. The Alpha business was exclusively either in the U.K. or on the continent. They were not licensed to be in any other jurisdiction. So in the private capital markets business, which is new for us, we were not in that customer segment before. We can automatically -- I shouldn't say automatically. It's going to take us kind of first half of the year to get things flowing, but we can use the licenses of our current cross-border business in the U.S. and in Asia to begin to sell into the private capital markets within both of those markets.

So we think that there's quite a bit of opportunity there, significant opportunity as part of our diligence. We called those private capital markets clients who've done business with us in Europe and said, hey, if we were in the U.S., would you do business with us, et cetera. And got really strong voice of the customer feedback. So we think that, that's one of the vectors in terms of synergies and growth for Alpha that's pretty exciting.

Okay. That's helpful. Maybe we talk now about the Mastercard investment. I think you guys talked about it contributing potentially 1 to 2 points of growth for the segment, right? Help us understand what is it actually doing for you? And how is it helping to boost your growth rate?

Yes. So just to be clear, the thought was 1 to 2 points of organic growth for cross-border, not for the segment in totality. So what I would say is a pretty exciting partnership. I mean the reason why we partnered with Mastercard here is we thought that our capabilities could be really helpful to the Tier 2 and Tier 3 banks globally. Mastercard has the ability to open the door to those customers for us. So it's a combined go-to-market approach with Mastercard. Happy to share at this conference a new data point, right? We've signed 3 clients now rather than just 2, which we shared on the earnings call a couple of weeks ago. And we've got a really healthy pipeline of clients. So we're seeing kind of initial clients coming online in LatAm. There's nothing special about LatAm other than it was one of the first target markets we were focused on. So LatAm, Europe and U.S. were the 3 kind of we're going at, and we just happen to get kind of 2 clients, 2 banks based in Mexico first.

What's been pretty interesting about the process, right, is we're going in and saying, hey, this is our suite of cross-border solutions for the bank to sell on our behalf, whether they sell it as a Corpay product or they white label it. And the product that's been resonating most with them has been either a multicurrency account offering or a global bank account offering because that is really the place that they do not have an offering today other than a correspondent offering, which would take 6 months to open a bank account globally versus we can do it in 7 days. So it all of a sudden gives them a competitive advantage, something to offer their client. And what those banks are really focused on is maintaining those client deposits and those client loans and not losing the client to a Tier 1 bank.

Yes, it makes sense. One of the other questions we get about the cross-border business is obviously stablecoins and just whether or not that's a real risk for your model being the most applicable use we hear about for stablecoins is cross-border, high friction areas where there's maybe long settlement times. What do you think about that? I mean, is your business at risk of disintermediation from it? It's been a little while now since it's been a topic. You've hopefully had more time to digest it. What are you seeing?

Yes. So we see stablecoins as a real opportunity. I mean if you think about the cross-border business, there's really 3 pieces to revenue. The pieces to revenue first is the risk management piece of it, which is, call it, 45% to 50% of the revenue base. The second piece is international payments, which is call it 45% to 50%. And then there's the rail. There's actually how do we move the money across the globe. That's where stablecoin plays a role.

So today, in terms of rails, how do we move money globally today? About 60% of the money is moved on our own proprietary networks, which we can actually settle 24/7 in some countries, et cetera, and about 40% is on SWIFT. So what stablecoin introduces is a third rail into that. Again, that's about 5% of the revenue. Stablecoin does not solve the problem of how do I convert the currency into the local currency and how do I do the risk management contract.

So we think in that rail, which, again, is about 5% of the overall cross-border business. It's a nice option to bring on. And so today, where we think we've got really the first opportunity to do this is within Alpha, within the private capital market space. Those PE firms, et cetera, who are looking to buy companies in foreign currencies are sometimes looking to close those deals outside of a normal banking hours. So if we don't have 24/7 settlement on our own rails, that's where stablecoin may play a part. So I'd say we're out there with our clients talking about it. None of our clients yet are kind of signing up to adopt using it. But for a rail case, we think there's good optionality.

Right. But as far as risk goes to your model, I mean, I suppose, again, you have pretty small percentage of your business that's in these more esoteric currencies and markets.

So 90% plus of what we do is in G20 currencies. That's from a volume perspective and a revenue perspective. So yes, I would say the use case of kind of exotic currencies and that is where stablecoin is a benefit, it's not a place that impacts our business.

And just one last one on it, given it was such a hot topic at least last year, right? Has there been much progress and momentum in the last 6 to 9 months around any in terms of your customer adoption or anywhere you're seeing any disintermediation or risks popping up?

So we're building the capabilities. So we're building digital wallets not only in the private capital markets business in those global bank accounts, but for some of our largest merchants. What we're not seeing is the people opting in to actually using stablecoin. So we believe there's value in having the optionality there and first-mover advantage. But I think an important thing here, Darrin, is like just step back and think about the landscape. Like if we think about corporate payments in the U.S. and AP payments, 50% of those payments are done by check today. So like job #1 for me is to digitize the space, right? Once I digitize the space, then stablecoin might become something of interest. But today, if I can't get you to stop sending a check and move to a digital currency to do it, making the leap that stablecoin is going to be the solution tomorrow is probably not where we'd go, but we are adopting stablecoin because maybe in 5 years, that's where people...

Okay. Let's shift gears to the account payable side, the payable side of the business. I mean, again, I think it's growing pretty much in line with your overall segment, right? I mean is there anything you're seeing that's change that? And maybe for the audience, just help explain what the differentiation is there and how you're going to market.

Yes. So really, it's the AP automation space. So the thought is that we work with -- we have a client who's got a $0.5 million company, and we go to them and make the offering of outsourcing their AP. The benefit of them outsourcing their AP is, number one, we protect them against all fraud. There's been a bunch of fraud, obviously, of people going into AP departments. The other thing that we introduced to them is that we can pay their merchants through our network. We have over 1 million merchants in our network, the largest network, and we're able to monetize those payments. So basically, my value proposition to -- by the way, the CFO, so it's my value proposition to myself is, hey, you can stop doing AP, you can reduce the expense, you'll have no fraud and I'll give you a cut of the rebate. How does that sound? I actually pay you to do your AP for you. And that value proposition has resonated well in the marketplace and is why the business is performing the way it is.

All right. That's helpful. Let's shift gears to vehicles, which is obviously what you were almost built on from years ago. It showed in the -- at least the U.S. fleet business showed 5% growth, which for what it's worth, I mean, you're in a market that's basically flat, right, in terms of underlying transaction growth. So was it new sales that you've added that's really revamping that growth to 500 basis points or 400 basis points of outperformance?

It is. It's investments in the sales engine. It's the sales tactics, how we're going about our sales process, et cetera, that have proven out quite successful for us in that business and kind of landing it in that mid-single-digit space.

I mean is that sustainable from your perspective? Or is there any even potential to accelerate that?

We believe it's sustainable. I think the question that we're asking ourselves today is for that sales dollar, am I best using that sales dollar in USVP, which is, call it, 10% of our revenue? Or do I move that sales dollar into global -- into Corporate Payments, which is 40%. So I would say current guide is that, that USVP is going to deliver mid-singles, but we may revisit our allocation of sales dollars into higher performing and higher multiple businesses.

Okay. And then the other part of vehicles on Brazil. I mean, an area that I still think is pretty underappreciated. It's just not as well understood perhaps. But it's been a really strong growth business for you guys for a while, and it's expanded now with Gringo and Zapay. Just help us understand the competitive differentiation versus local peers in that market. What it even does for anyone in the room that wants to understand it a little bit more? And then how do you think about the growth algorithm for it?

Yes. So for those of you who have not been to Brazil, I think you need to go to Brazil to really get it, at least that's what I needed to do. So it was the first trip I made when I took the role, I went early September. And what resonated with me very quickly is in Brazil, owning a car is like owning a home in the United States, right? This is considered freedom. You can't lease a car in Brazil, right? So the only way you can get a car is to actually own a car. Once you own that asset, protecting it is incredibly important. So the business was born in the toll space in terms of creating an RFID reader that allowed you to go through the toll and get charged with the toll without stopping.

Then what we did is we built a super app around that, which really we're offering, call it, 30-plus products that allow the customer to protect their largest investment. So you can get in your car today the Sem Parar app as it's branded locally in Brazil, and you can pick up food at McDonald's and pay for it. You can go to a gas station, you can go to a toll, you can park. Oh, you can buy insurance because you're going to take a 2-hour trip. And in countries like Brazil, you have to buy micro insurance as opposed to have what we would consider comprehensive insurance.

So what I would say is it's really a wraparound product offering around the mobility in Brazil. And we've been so successful there because we've been continuing to find additional products that we can bring to that customer. And so as you know, the investments we made in the last couple of years is we bought both the debt protection businesses, what we call them in Brazil, but it's basically when you go to register car every year in Brazil, if you get tickets throughout the year, you have no idea it's happening. And so you show up to get your registration and you're going to spend BRL 100 and they want BRL 300 because the tickets escalate if you don't pay them. Well, what we have is the only digital solution where a customer can track did I get a ticket or not? Do I need to pay the ticket? Oh, and I can pay my registration. So I'd say the differentiator that we have from the bank competitors is the super app that we've created with Sem Parar and then also the digital experience we've created around registration and vehicle debts.

Okay. And the algorithm for it, how to think about growth? It seems like it's got years ahead of us of strong growth.

Significantly, especially with adding in vehicle debts because the TAM is so much larger. But that business has consistently delivered, call it, mid-double digits to high double digits growth. So a very successful business.

It's been great. Let's shift to the last of the main segments, which is lodging for a minute. I mean it's - I think it's been a little more disappointing as of late versus some of the other outperforming areas. And it's now guiding for -- you're guiding for an inflection to low single-digit growth in '26. So maybe just discuss some of the product enhancements that's driving your conviction on the turnaround of the business.

Yes, good question. So I think if you look at '25 and you look at the first half of 2026, it's really flat over the prior period. The reason for that is the emergency volumes in the prior period were quite high, and we just haven't had those emergencies. So for example, in Q1 of last year, with the California wildfires and event of that size is not happening. So really flat. Flat is not exciting nor where we want to be from a business perspective when we're growing at 10% in totality on an organic basis. So the view would be we kind of get past these grow-over issues in the first half. In the second half, we already have signed deals and implementations coming online that gets us into that, call it, single-digit growth category. We are focused on turning around the business. I think if eventually, we find ourselves that we can't get this to be a 10% growth business.

Is that the parameters? You want to see it all the way up to the corporate average?

That would be it. I mean, when I came in and I saw how the business was performing. My first question was like, why are we in this business, right? So I turned to Jim. And I said, pull me, the data from the past. I was like, wow, okay, 3 years ago, it's growing 22% organically. Like this business had a real competitive differentiation to it. So there is a path to get back to that. The question is how quickly can we do that? And right now, we're committed to doing that this year. And again, the results will kind of tell us.

So based on the deals you've already locked in, you feel good about the growth algorithm you gave, the mid-single digit or low to mid-single-digit type algorithm, I think, for second half getting back to mid...

We do.

Starting off a little slower, but ramping it up.

We do.

Okay. All right. Good to hear. On that note, I mean, if this -- you brought up whether the business fits, you've talked about divestitures as a company, right? And so maybe just an update on incremental divestitures as you noted on the last earnings call. Should we assume these are both noncore vehicle assets? Or are there other areas you think are in consideration for divestiture?

Yes. So we've been talking about 3 divestitures in particular. One, we've already signed and shared publicly what that is. It's a PayByPhone sale. PayByPhone is a great example of this is a great business, right, growing north of 20% organically, high EBITDA margin business. It was making no money when we bought it a couple of years ago. But when we looked at the business, the original kind of deal hypothesis is that we could take this business, Europe was a place we were going to start and turn it into a business similar to what we have in Brazil. And what we found is that wasn't where the puck was going for this business in that geo. So I think that, combined with the fact of it's not in the core of what we do was why we thought it was a perfect candidate for disposition.

So the other 2 potential divestitures that we're in market with right now are similar. They're good businesses. They just don't kind of fit the core. And as we kind of kicked off, our goal is really this significant rotation into corporate payments as we continue to do that. So the divestitures are helpful for that.

Ron has always been a good portfolio manager of different assets. And so again, are we on schedule for those divestitures from your perspective? Do you think they'll be this later this year? I mean a little more on timing?

Yes. I mean that's always tough to call it because it's always about price. And these are really good businesses. So I don't want to sell them on the cheap. I do like the idea of divesting them, buying back CPAY stock considering what we're trading at and then using my dry powder to continue to build within the corporate payment space. So I do think we've seen the shift that we'd like to in terms of corporate payments with the acquisition we did with Alpha. And the next natural acquisition for us to do would be to buy the 2/3 of Avid that we don't own today, and that would double our AP automation business.

So we're working really hard with TPG in terms of the financial performance of that business to get that in line with our financial performance. What's interesting about that business, right? They compete in different verticals than we do. So like they've got a big stronghold in the real estate vertical. So very complementary in terms of the portfolio business to our current portfolio of business.

Yes. I mean speaking of M&A, last year, you guys had a pretty big M&A. It was about 80% of your capital deployment. Usually, you're more of an equal split, right? Somewhere around -- I think looking back, it was 46% M&A, 54% buybacks more typically. What are your thoughts going forward now in terms of that mix? I mean, obviously, Avid is something you still want to eventually buyout in total. But beyond that, I mean, what are your thoughts in terms of breakdown of capital allocation?

Yes, it's a good question. I mean from the guide perspective, the view is, hey, we're going to use all the money to delever because it's really hard to predict M&A and buybacks, right? We always want to give ourselves optionality to do M&A. Also add to that, the stock is just incredibly cheap right now. So we shared with you as we do divestitures, we're going to buyback CPAY. So I'd say you're going to see a combination of that as we go throughout the year.

Okay. Great. Guys, why don't we take a couple of questions from the audience? We have about 6, 7 minutes left. So anyone have anything they'd like to ask? Yes, there's one in the back. Maybe just wait for the mic real quick. Thanks.

I know it's not part of the core business, but what's the guidance on the performance of your gift card, that business, the closed loop business and where do you see that going? Is that a part of your divestiture strategy?

Yes. To be fair, it's a really small business. You're talking about like a $250 million business on a $5.3 billion business. So a little bit of the tail wagging the dog. But what I would say in general in the gift business is it's really improved over the last several years. I mean 2 things that are happening, right, is we've improved our own capabilities. In addition to doing the gift card processing, we've actually also launched a bunch of initiatives that help retailers bring customers into stores. So that's resonated really well, and we're generating high-margin revenue off of that. we've also been able to move ourselves into much more of a stronger perspective from a competition standpoint. So we're winning a lot of new business.

So I'd say the business is performing well. Last year, it overperformed because we had this change in gift card regulation. The only thing that I don't love about the business is its very volatile quarter-to-quarter. So even at that small amount of revenue, introducing that volatility quarterly into our model isn't terrific.

Any other questions? One for me that I know the audience is always wondering and then we'll wrap it up is just on AI. You guys actually have been almost looking at it as a net safety stock, I guess, you'd call it relative to a lot of other names around AI. But I'm just curious how you see it impacting your business in terms of either opportunity to leverage it or if there are any risks around someone leveling the playing field for versus what you guys offer?

Yes, let's talk about AI, and let's also talk about software because I think they are 2 important things that are really hot in the marketplace right now. So when we think about AI today, right, we really see it as an amplifier of our current products and our current advantages. So what we are focused on today is building AI agents within our businesses that make the products better. In terms of cost savings perspective, where we've been -- or should I say, a cost optimization perspective is where we've been focused on is in our engineering team. And so deploying AI in engineering. What we're tracking there is how much of the code is being produced by AI versus engineers. With that additional capacity that we're freeing up, we've been reinvesting in the business to create the AI product enhancements that we'll plan to roll out later this year. So pretty excited about that side of the business.

On software, and I made this point at RJ last week, so to just share with this group, we are not a software company. We are not a software company. We are a payments company. Networks is what our critical advantages here, right? Our key advantages is our moat. So we've got over 30 proprietary networks across the globe. That's what makes our business so sticky and so difficult to get into. And just to put a finer tone on it because people are always cautious when I make statements like that, 1% of our revenue in 2026 will come from software. So just as a proof point, 99% of the revenue is coming from being a payments business with networks.

That's a pretty strong point. All right, guys, anything else? I think we'll stop it there then, Peter. Thank you very much for joining us.

Thanks, Darrin.

Appreciate you being with us.

All right. Good afternoon, everybody. We're going to go ahead and get started. My name is Madison Suhr. I'm the payments and fintech analyst here at Raymond James. I'm happy to be joined by Peter Walker, the CFO of Corpay. Today's format will be that Peter is going to run through a presentation.

And with that, I'll kick it over to him.

Hey, good afternoon, everyone. So excited to be here with you this afternoon. It was 2 years ago today at the Raymond James Conference that we announced that we were changing the name of the company from FLEETCOR to Corpay. So I thought it would only be fitting to kick off our presentation with a view of a brand awareness campaign on Corpay that we're kicking off this year. So give you guys a quick little video and get your reaction to it. If I can get it to work.

[Presentation]

So how do you guys like us now? Is that good? Hopefully, just gives you a view of kind of a quick snippet into the company's history and into the company's future.

So let's just take a look back in terms of the evolution of Corpay. So company started around 2000 really and the fleet card space, really a niche provider within fleet card. Company went public in 2010 with the IPO. And then the company did its largest acquisition in 2014. And in that acquisition, is when we acquired a nascent corporate payments business and really started to grow out the corporate payments business. And then from 2014 to today, we've really continued to organically grow the business and inorganically grow the business to become the corporate payments provider that we are today.

Think a really stand out statistic on this slide is that we are in a market a TAM of about $150 trillion. This is a very large market that we operate in today. Banks dominate the majority of this market space. So our overall belief is a lot of room for the company to grow given the size of the TAM and the products we offer.

We've spoken a lot in earnings calls about our rotation in the corporate payments, about rotation into deeper, not wider, meaning deeper businesses. So I thought this was a great visual. If you look at the top part of the columns here, on corporate payments. You can see corporate payments in '21 represented about 21% of our revenue, growing to 36% of our revenue in 2025. Projected to be 40% of our revenue in 2026.

So again, just continued growth in corporate payments large TAM, higher multiple business for us to be in. So pleased with what we've been able to achieve there. This represents a 30% CAGR over the 5-year period in terms of corporate payments growth from '21 to '25.

I think the other thing that's really important to note here is there's some other KPIs on the bottom of the slide that we've been able to achieve this growth while still delivering a margin -- EBITDA margin, call it, in the mid-50s, still maintaining a CapEx-light business. CapEx is about 4% of revenue and still having a really high free cash flow conversion, so call that about 90% free cash flow conversion.

This kind of a setup on how we're performing. So why don't we jump now to what do we actually provide to businesses in a little bit more detail? So when you think about a business income statement, everybody in the room can relate to that. There's really 2 types of expenses that are running through it. There's people expenses and there's non-people expenses. Our focus is on that non-people expense side of the income statement and really helping businesses put in the effective controls around purchases and the global payments related to that side of their business. I'd say the additional value that we provide is the majority of our products actually result in revenue that we can return and is a profit-sharing model with our clients.

So the solution is, let me help you spend less money, let me help you control your expenses, oh, and by the way, you're going to get hard dollars back from the programs that I put in place. What gives me the most passion about this business is the CFO or the office of the CFO. We are the purchasers of all of Corpay's products. So it's great to work in a business where I can really sit back and say, would I buy this product or not? What can we do to improve this product, et cetera.

So hopefully, that sets a good context of kind of what we're up to, where we focus. If we double-click on this a little bit further, it's really focused on 2 sides of controlling and managing expenses. First is enabling controls around what is purchased, right? So all of you are probably sitting here with a corporate card in your pocket. Most likely, you guys have pretty good authorization. You can use that corporate card at most places.

As you move down an organization, you can set up all kinds of controls to limit the amount of expenses. You can't use it in a restaurant grocery store, et cetera, or you can use it depending on your type of business. So those are the type of controls that we can put in place in the expense management space. In terms of products, we really have 4 offerings here, business cards, fleet cards, offering in tolls in Brazil and then offering and lodging.

If you go to the other side of the business, this is really about controlling what is actual paid. So what are the vendor payments that are being made. And where we do that is in the U.S., we do that in spend management and AP automation. And then within our cross-border business, we do this with international payments, and we do this with global and multicurrency bank accounts. So really a comprehensive offering for the office of the CFO in terms of controlling and managing expenses.

So this is our scorecard where we sit in terms of size, scale and capabilities, I think, pretty impressive and really critical to the growth of the business. So if we look at 2025 as a snapshot, $4.5 billion in revenue, we delivered 10% organic revenue growth for the year. That number is projected to be $5.3 billion for 2026. Also growing at 10% organic revenue. So high organic revenue growth from the business.

Next, we move to adjusted net income. We delivered about $1.5 billion of adjusted net income in 2025. Adjusted net income is a proxy for free cash flow for us. This number is expected to grow to $1.8 billion in 2026. So think of that, think of the arsenal we have. We wake up every year and say, oh, I've got a fresh $1.8 billion to spend in cash flow this year. How am I going to deploy that? Am I going to lower my debt? Am I going to do more M&A? Am I going to do buybacks? We'll get further into capital allocation in the presentation. But I think what I want you to walk away from is, this is a high free cash flow generation business that gives us a lot of optionality, and we look at our revenue midterm guidance algorithm, you'll kind of see the power of that come through.

So what delivers these results. We're in 150 countries today, 51% of our revenue is international. You'll see our concentrations of the U.S., Brazil and U.K. So highly diversified global company. We have over 800,000 business clients, and we have 4 million -- over 4 million merchants and vendors. The other thing is really critical to point out is that we have over 30 proprietary networks. This is not a software business.

Let me just say it one more time. This is not a software business. We make very little of our revenue based on software. We make our revenue based on moving payments and our key advantage there is a proprietary network and our ability to move those funds at lower cost and our clients being able to take advantage of the fact that we're doing that.

Next, I thought it would be helpful to just take a pause and say, hey, what are you guys working on in the near term? What's exciting in terms of product innovation? What are you doing to drive this company forward. Really 4 key areas that we're focused on right now. One is bank accounts. So this is a relatively new area for us within the cross-border business. We offer 2 types of bank accounts today. We just closed on an acquisition called Alpha, which is cross-border business based in London, on the London Exchange. And with Alpha, we bought what was called a global bank account alternative, this has about $3 billion in deposits, so by no means a small business. What's very interesting about this business is it is a targeted bank account product. It is a companion bank account pitched at asset managers and private equity firms who are looking to do a deal in a currency where they don't typically have a bank account today.

So they're looking to us to open up that bank account for them so that they can transact in the asset and typically hold out those funds for about 5 years. The key advantage here is that we can open up the bank account and call it 20 days versus if they were to work through a typical regional bank that could take up to 5 months. So really exciting area of growth for us. The next areas are multicurrency accounts. This is sold to our corporate clients within cross-border. The multicurrency account is also a companion account, and what this allows, for example, is a U.S. business who begins to transact in Europe and in the continent. They can open up account where they can have euros and they can have pounds in that account along with U.S. dollars. This also allows us in both of these accounts to provide international payment services and provide risk management services really important growth initiative for us going forward.

The next place I thought it goes AP monetization. We've been with investors most of the morning. I think we've got a lot of questions in terms of hey, there was a lot of enthusiasm, call it, 2020, '21 around AP monetization, virtual cards, kind of what's the next step in this journey of AP monetization. And so what we're focused on here is ending paper checks. Believe it or not, almost 50% of AP today is still done by paper checks.

This is definitely a generational thing in terms of who is running AP department. So what we're focused on is digitizing this process and introducing new monetizable products being at a debit card, instant payment or e-checks as different alternatives. But the main goal here is really to reduce fraud, get people off of checks.

Next area, which we get asked a lot about is stable coin. Kind of what do you guys think about stable coin? How are you adopting it in your business? I'd say overall, we're excited about stable coin. We're making some investments here, and I'll walk you guys through kind of what the use cases are. So first and foremost, was in the digital currency space. Today, we're supporting major crypto providers as they look to convert off of their stable coin into a fiat currency. So we're actually providing that FX conversion for those large institutions.

The other thing that we're doing is as a first mover advantage, we're adding digital wallets into our private capital markets accounts. So when I go back to the global bank account alternative that we bought with Alpha, where we're providing that to private equity and alternative asset managers, we're introducing stable coin companion digital wallet account. What's exciting here, these guys are in the business of doing deals. And one of their biggest things obstacles in doing a deal is doing things outside of banking hours. So the use case of stable coins, it's pretty interesting here, is that they close a deal 24/7 via stable coin versus waiting to be in banking hours.

We've had initial conversations with clients. They're interested in that this nobody's calling us today and saying, where is my stable coin. But our goal is to be a first mover here, set up these digital wallets and stable coin and create this capability.

We also believe this going to exist within our cross-border business payments and our merchant network in the U.S. and international. So it is another place with our large vendors that we're setting up digital wallets. Again, we're not seeing the volume yet today. Nobody is calling us up and asking us. There has been movement obviously into stable coins recently. A lot of that seems to be kind of a haven -- a safe haven for crypto versus true corporate payments moving into stable coin. So I think my message to this audience is we're excited about stable coin and when the volumes come, we're ready.

What would the presentation be if we didn't talk about AI, right? So huge disruptor. Obviously, there was an article in the last week about 2028 in the Dooms Day that we all could wake up to. Hopefully, that's not the case. What I would tell you is we see AI as an advantaged amplifier for this business. We don't see this replacing the business, but we see AI as a way that we can enhance the current products that we offer today. So we have AI instances installed in the U.K., EU and Brazil and where we think the best opportunity is with AI first is in product innovation directly with our clients.

We are also using AI to reduce our expenses. We've not taken expense reductions. We're more getting productivity gains and engineering out of AI. So we see a benefit not only a top line of our business, but also reinvesting in our business. So hopefully, that's helpful in terms of kind of hot topics that we get asked about around innovation in the business.

All right. Next, let's take a look at the actual businesses themselves. So I'm going to focus on corporate payments and vehicle payments as that makes up over 80% of our revenue today and is really our key focus. So when we go to corporate payments, a lot of people kind of say, okay, what do you mean corporate payments pretty broad category. So corporate payments today really think of this as 4 businesses that sit in corporate payments. First business is spend management or commercial cards. So we kind of talked about that business. You guys are all probably sitting with cards in your pocket that would fit into this part of our spend in our Corporate Payments business.

The next piece is AP automation. So this is where we're working with clients, and we actually take over their AP process, and we automate that process for them. The next piece of corporate payments is cross-border. This could be international payments and risk management services that we're providing to our clients. And then lastly, the bank account business that I spoke about.

So hopefully, that's a way to kind of demystify what sits in this large business that we see really is the future growth of Corpay. Corporate Payments makes up about 36% of our revenue in '25. That's going to grow to over 40% in 2026. You can see there's over $250 billion of annual spend processed in this business and we are the largest nonbank FX provider.

Our customers here in terms of the industries that we work in has stayed pretty consistent over the years, construction, transportation, logistics and business services also financial services and manufacturing. And then lastly, just some kind of key interesting things to point out. largest virtual card acceptance with over 1 million vendors, we are the largest Mastercard B2B issuer, and we settle FX in over 200 countries.

I think the other thing that's really important to point out about our cross-border business is over 90% of our volumes in cross-border are in G20 currencies. So when we go back to stable coin use cases, today, a lot of the stable coin use cases in cross-border is in exotic currencies, which is not in places we're in today. Our business within cross-border operates very efficiently under the current rails that we have. We have proprietary rails in the cross-border business, and we run them in about 60 countries. Taking a double-click on cross-border.

We've made several investments or partnerships in cross-border this year. So I thought it would be important to kind of slow down a little bit and tell you guys where we're at on our cross-border journey. So today, as we sit, we've got 4 segments that we sell into and cross border. We've got the corporates, which we've been in for several years since we began in the business. Financial institutions. This came to us mostly through the Mastercard partnership. We had a little bit of business there already, but we think the Mastercard partnership is a huge enabler of growing this business.

Next, investment funds or private equity funds. This is the Alpha business that we purchased, so the ability to sell to this segment. And then the last is digital currency. And I mentioned earlier when we were talking about stable coins, we're active in terms of having partners in the crypto space and providing the on-ramp off-ramp of foreign currency conversion for them. What we're super excited about as we went into this year really as corporates as our main business within cross-border. We've now expanded substantially into these 3 other segments, and we think this positions us really well as we go forward with the business and think about continued 10% organic growth for the overall organization.

Next, vehicle payments. Another really large part of our business. It's actually interesting if you kind of reflect back, right? We say we're a corporate payments company. We've just talked about the Corporate Payments segment. The vehicle payments is really just another flavor of corporate payments, right? It's a very specialty form in terms of very much focused on companies with large fleets, right? But it is another form of vehicle payment -- our corporate payments.

When you think about the vehicle payments business in 2025, we operated in 3 geographies, about a $2.1 billion business, the 3 geographies we operated in were the U.S. Europe and the rest of the world and Brazil. Each of those were about similar size in 2025. So this is a very global business. The growth rate on this business, what we shared is that it will grow about 9%, high single digits in 2026. So still really encouraged about the overall performance of this business. And don't want to leave off kind of like some key advantages that we have here. So proprietary fuel networks, over 80,000 sites. EV charging stations, 1 million charge points. Really important to note that while EV has fallen out of favor in the U.S. EV is still, very much in favor on the continent and in the U.K. And so when we go to market, why that Europe and Rest of the World business continues to deliver a 9% to 10% organic growth rate is that we pitch not only a fuel solution but an EV solution, which is really powerful for the markets that are interested in it.

And then lastly, in Sem Parar -- sorry, in Brazil, Sem Parar is our go-to-market brand in Brazil. This is really a super app that we built in a B2C business all around the car ownership experience of the customer. This has continued to be a really strong performing business for us delivering kind of mid-teens to high-teens organic growth consistently.

So hopefully, a nice overview of the 2 businesses that we're in without going into too much detail. kind of stepping back of, okay, well, what does this mean in terms of your growth algorithm, et cetera? And what I would say to you is really strong growth algorithm in the business, the headline would be 10% organic growth every year, and we expect cash EPS to grow faster, I call it, 15% plus. So let's maybe pull each of those apart and talk a little bit about what that means. So if we look at the performance drivers on organic growth, as we've said, a large TAM, we've got a very efficient selling system revenue retention, 92% was the latest statistics, a high revenue retention and call it, flat to slightly up same-store sales. What that results in is a 10% organic growth rate.

Next, we move to EBITDA. We expect that revenue growth to flow through and have operating leverage. So we expect EBITDA to grow, call it, low double digits year-over-year. In terms of capital deployment, as I shared with you, we have a significant amount of free cash flow, about $1.5 billion. and we can use that to deploy against accretive M&A, buybacks or to pay down debt.

So I've got a lot of things in my arsenal in order to make sure that I deliver that 15% cash EPS. And that's what kind of leaves us here with 15% cash EPS, and we've had a 10-year-plus history of delivering that. One important stat to take away is these growth rates put us in the top 10% of companies in the S&P 500. So really an elite space to be in terms of the returns we would love to be in an elite space in terms of the multiple for this business. Unfortunately, obviously, what's been happening in overall payments and disruption and worries in the marketplace. Don't have as high as we'd like to be, but just make sure investors know that we'd like to see that multiple pick up given the results of the business.

So just a quick snapshot at organic revenue growth. You can see for 4 out of the last 5 years, we've delivered 10% or greater organic revenue growth. And in 2026, we're planning on delivering 10% as well. So that would be 5 out of 6 of the last year. So a consistent track record here. We're really proud of our track record in terms of compounding revenue and compounding cash EPS. So we did these charts from the time of the IPO.

On the revenue side, you can see we're about $400 million in revenue, predicted to be $5.3 billion in revenue for this year 2026. So that's compounding at 13%. Similar on cash EPS, $1.66 is now $26 compounding at 14%. I don't know how many other companies could put up this kind of a track record. So message to audiences, we've had a great track record. We can believe we can continue to deliver on this going forward.

It wouldn't be an investor conference if we didn't hit our capital allocation really quickly. So let's take a look at our capital allocation philosophy. I'd say, in general, our leverage ratio 3x is the highest that we want to take our leverage ratio. We have communicated for a unicorn. And as you know, they don't come around very often. We would pierce 3x with a plan to march it back down pretty quickly because you see the cash flow generation of the business. The 3x is where we plan to stay are lower. So how do we think about capital allocation. First and foremost, we're a growth business. We've got to feed back growth. So feeding the organic growth at the efficient frontier, meaning we need to deliver 55% margins in that range. So that being the balance of feeding the organic revenue growth.

Next, we've done over 120 accretive deals since the company was started in 2020. So accretive M&A is very attractive to us. I'll show you a slide coming up where you can see we've really been excellent allocators of our capital and been able to drive the growth of the business through it. And then lastly, share repurchase is always an attractive tool for us when there's not interesting M&A to do and when the shares are still undervalued.

So for example, in the fourth quarter, right, there was a pullback in the stock. We issued a leverage ratio for a full year. When I went on investor meetings in the fourth quarter, I asked investors, hey, if I go up to 3x for the quarter, you guys are okay with that if I buy back shares and like I got high fives from everybody in the room. So when we're in those positions of really being depressed in the stock, we're definitely going to buy back because we believe in ourselves more than we would necessarily believe in an M&A transaction.

So this is the slide I was talking to you about in terms of capital allocations. Maybe the first thing that I'll draw your attention to is let's go all the way over to the right and look at the leverage ratio at the end of the year. You can see it's varied between 2.4% and 2.8%, but we've always stayed at that 3x or below level. And then if we go over to the left, what you'll be able to see is we said, okay, this is our adjusted income -- net income for the year, let's go to the bottom, so call it $10 million -- $10 billion, sorry. And then how did we deploy this, right?

So $15 billion, we deployed $7 million in M&A and 8.5% in share repurchase. So just a track record over the last 9 years of how we been able to deploy this capital. I think what should be really exciting to investors in the room is if you look at the amount we've deployed in M&A in 2025, 3.2 billion, obviously, a lot of money. What we're excited in that is we acquired Alpha, and we also made the investment in Avid. We own 1/3 of AvidXchange. And we bought a business in Brazil to continue to grow the Brazil business. So message here is we've been excellent at allocating capital and managing M&A in buybacks.

So lastly, I've got 2 minutes left, so pretty good timing there, I think, is business opportunity we really see our ability to create value for our clients is very high in terms of controlling their payments and controlling our expenses, making their payments. Very large TAM called $150 trillion in TAM. We do have market-leading products, and we specialize in sales, and we have the proprietary networks that I spoke to.

And what does this result in? This results in the medium-term guidance that I shared with you, organic growth of 10%, relatively fixed cost basis. So the ability to scale against that cost basis for 2025, $1.5 billion of free cash flow and strong overall operating metrics.

So hopefully, that was helpful. We're going to have a breakout session following this. We've got about a minute left. If we've got any questions in the room. Otherwise, we'll cover in the breakout session.

All right, guys. Appreciate your time.

Hello, and welcome, everyone joining today's Corpay Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this call is being recorded. [Operator Instructions]

It is now my pleasure to turn the meeting over to Jim Eglseder, Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us today for our earnings call to discuss the fourth quarter and full year 2025 results.

With me today are Ron Clarke, our Chairman and CEO; and Peter Walker, our CFO.

Our earnings release and supplemental materials for the quarter are available on the Investor Relations section of our website. Please refer to these materials for an explanation of the non-GAAP financial measures discussed on this call along with the reconciliation of those measures to the nearest applicable GAAP measures. Our remarks today will also include forward-looking statements about expected operating and financial results, strategic initiatives, acquisitions and synergies and divestitures, among other matters.

Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. Some of those risks are mentioned in today's press release and on Form 8-K and can also be found in our annual report on Form 10-K. These documents are available on our website and at sec.gov.

So now I'll turn the call over to Ron Clarke, our Chairman and CEO. Ron?

Okay, Jim, thanks. Good afternoon, everyone, and thanks for joining today's call. Up front here, I'll plan to cover 3 subjects. First, I'll provide my take on Q4, along with highlights for 2025. Second, I'll share our 2026 guidance. And then lastly, I'll outline our major priorities for 2026.

Okay. Let me begin with our Q4 results. We reported revenue of $1.248 billion, up 21%, and cash EPS of $6.04, up 13%. That would be up 20% at a constant tax rate. The results better than our expectations, mostly driven by cross-border and Alpha overperformance. We did call the macro spot on, so neutral impact versus our guide. In the quarter, overall revenue growth, 11%, that's 3 consecutive quarters. Inside of that, our vehicle segment continued growth at 10% and our Corporate Payments segment grew 16%. So our 2 biggest businesses doing quite well against pretty difficult comps.

Importantly, our trends in the quarter also quite positive. New sales or bookings up 29% versus prior year. So super robust sales. Same store sales inched into the positive territory, up 1% and overall revenue retention stable at 92%. Cash EBITDA in Q4 surpassed $700 million in the quarter. So look, all of this produced a record cash EPS print of over $6 a share. So really a terrific quarter for us.

Let me make the turn to highlights for full year 2025. So first, our financial performance for the year, quite good. Full year revenue of $4.5 billion, that's up 14%. Cash EPS of $21.38, up 12%, or again, up 17% at a constant tax rate. Organic revenue growth for the full year, 10%. So that makes 4 of the last 5 years, 10% organic revenue growth or higher. Full year sales growth also 29%, with improving productivity. So we're continuing to sell a lot.

Additionally, in the year, we made a number of moves to better position the company for the midterm. We acquired Alpha, the second largest acquisition in the company's history, giving us access to an international bank account product as well as the asset management market segment. Mastercard invested $300 million in our cross-border business at a $13 billion valuation, hopefully, to unlock and serve the FI channel. We invested in Avid that deepens our position in the middle market AP automation and payment space. And lastly, we acquired a second vehicle debts company in Brazil that will further help accelerate Brazil's non-toll revenue growth.

So look, financial performance ahead of our initial 2025 guide, along with a further rotation of our portfolio towards Corporate Payments. So I'm quite pleased.

Okay. Let me transition to our 2026 guidance. We are quite excited about it. So we're providing full year 2026 guidance at the midpoint of print revenue, $5.265 billion. That's up over $700 million versus last year or up 16%. And we're providing cash EPS at the midpoint of $26 on the button. That's up 22%. Look, the drivers behind this 2026 guide, a few things. So first, fundamentals, look, the business is working. We had a record Q4 finish and the corresponding exit rate, super good trends, positive sales, healthy client-based same-store sales, stable retention trends, big sales year again in 2025. We get a lot of that benefit as it rolls into 2026, and we are expecting continued 10% organic revenue growth this year.

A second driver are accretive acquisitions. So our Alpha acquisition expected to contribute about $300 million of incremental revenue, and Alpha paired with Avid together should contribute approximately $1 of cash EPS to our 2026 outlook. That's based on kind of our final plans now.

And then third, macro, we are expecting the macro to be our friend, to be helpful here in 2026. Favorable FX rates, particularly so in the first half. Lower SOFR rates and finally, a constant year-over-year tax rate expected. So look, lots of reasons for confidence in our 2026 guide. The guide, just for clarity, does not include the impact of expected divestitures, including the PayByPhone nor the impact of any material capital allocation actions beyond simply de-levering.

Okay. Let me turn to our top 5 priorities for 2026, which really are pretty consistent with last year's priorities. So first up is our portfolio. The goal, again, to further simplify the company, resulting in fewer bigger businesses and accelerate our rotation to Corporate Payments. We've announced one vehicle payment divestiture. We have 2 additional divestitures that we're working, and as always, we're continuing to work the acquisition pipeline for new Corporate Payments acquisition opportunities.

Second priority on U.S.A. sales. We're continuing to work to improve U.S.A. sales, particularly of our Vehicle Payments and Lodging solutions. We've done a few things. We've hired a new CMO who recently started. We've developed some new Corpay Brand creative ads to raise awareness of the company. We're growing our Zoom sales teams here in 2026. Concurrently, we're also really rethinking entirely new ways to sell our U.S. vehicle payment solutions as we deemphasize digital sales.

A third priority in payables, a number of things. One, we're trying to add new enterprise accounts there, particularly after our success with our first elephant last year. We are selling payables now in the U.K. seeing some initial traction. We are doubling down on the sales force in the U.K. And lastly, lots of energy exploring new monetization options with our merchant base or our vendor base. Those things include instant payment options, debit card payments and even e-checks to help accelerate revenue growth in the AP segment.

Our fourth priority is our cross-border. Super focused on our multicurrency account and our international bank account capabilities, particularly given the Alpha deal. We're furthering our stablecoin capabilities and obviously working hard to implement synergies related to the Alpha acquisition. We are progressing the FI channel opportunity with Mastercard. We have logged our first joint sale. So kudos there and building really a pretty meaningful pipeline. So excited about that.

So fifth and last, AI. Yes, we have gotten religion around AI. We're currently in pilot with conversational AI being added to a number of our client UIs. We're using AI agents to reduce live agent expense, particularly in our lodging business. And we're even using AI to speed our merchant matching process against our internal merchant database to help drive new payable sales with prospects.

So look, 5 key priorities here in 2026. Each is well defined, each is being worked, the portfolio, U.S.A. sales, payables expansion, cross-border capabilities and AI implementation. So a busy year for sure.

So look, in conclusion, today, a strong finish record earnings in Q4 on the high side of our guide, again, encouraging organic revenue, new sales, same-store sales and retention trends. Our full year 2025 financial performance, again, finishing ahead of our initial guide. We logged another 10% full year organic revenue growth year. That makes again 4 of the last 5. 2025, again, repositioning, active repositioning year. Further simplification of the company and the addition of more Corporate Payment assets.

In terms of '26, again, outlooking really a super strong 2026. EPS expected to be up over 20%, driven by the favorable fundamentals, the accretive acquisitions and even a favorable macro. And lastly, we have laid out a clear set of priorities to better position the company to continue to compound over the midterm.

So with that, let me turn the call back over to Peter to provide some additional detail on the quarter, the year and our '26 outlook. Peter?

Thanks, Ron, and good afternoon, everyone. Let's start with highlights of the quarter and the year. Q4 revenue was $1.248 billion, overperforming the midpoint of our guidance driven by strong Corporate Payments performance. GAAP revenue grew 21% year-over-year, driven by 11% organic revenue growth. Q4 adjusted EPS of $6.04 per share overperformed the midpoint of our guidance and grew 13% year-over-year due to strong top-line performance and solid expense management.

The headline for the quarter is overperformance, with over 20% top line and low teens bottom-line growth driven by our third consecutive quarter of delivering 11% organic revenue growth. We grew Q4 new sales 29% year-over-year and delivered a 92.3% retention rate, fueling our business for 2026.

Full year revenue was $4.528 billion, delivering organic revenue growth of 10% for the full year and for 4 out of the last 5 years. Full year adjusted EPS was $21.38, growing 12% but growing 17% at a constant tax rate. These strong year-over-year results are further reinforced by the healthy, consistent sequential quarterly growth in revenue, EBITDA and adjusted EPS throughout 2025, which positions us well for 2026. We are exiting 2025 as an even stronger company than we entered the year.

Now turning to our segment performance and the underlying drivers of our organic revenue growth. Corporate Payments delivered 16% organic growth for the quarter despite a 200 basis points drag from float revenue compression due to lower interest rates. This exceeded our expectations by 100 basis points, partially driven by Alpha revenue over performance, setting us up well for 2026. Overall, Corporate Payments performance was driven by growth in spend volumes, which increased 44% on a pro forma basis to over $81 billion in spend.

Cross-border continued to deliver strong sales and revenue performance in Q4. This business is quite resilient with significant demand even in the face of trade-related uncertainty throughout the year. Additionally, the Alpha Group integration efforts are progressing well. The payables business continues to perform with especially strong sales performance in Q4. We are optimistic about the future of the business as we are in the early innings of market penetration and closed our strategic investment in AvidXchange during the fourth quarter. We see tremendous upside over a very long period of time for this business.

Vehicle Payments organic revenue growth was 10% again this quarter. As a reminder, we operate 3 approximately equal sized Vehicle Payments businesses across the globe in the U.S., Europe and Brazil. We saw continued strong results in all 3 geographies, which drove the performance. Improving U.S. Vehicle Payments performance throughout the year is particularly encouraging.

Lodging, representing less than 10% of our total revenue, decreased 7% year-over-year or was roughly flat for the quarter when adjusting for a 600 basis point drag from lower FEMA emergency revenue year-over-year. While clearly not recovering, progress continues, and we are assuming low single-digit growth in our 2026 outlook with headwinds in the first half of the year and returning to positive organic growth in the back half of the year as new sales and implementations come online.

In summary, we delivered 11% organic growth in Q4, at the high end of our target range, driven by continued strong corporate payments organic growth and double-digit vehicle payments organic growth.

Now looking further down the income statement. Operating expenses of $684 million increased 25%, primarily driven by a lower net gain on business dispositions year-over-year, acquisitions, divestitures and related expenses and FX, partially offset by a non-cash impairment charge in Q4 of last year. Excluding these impacts, operating expenses increased 8%, driven by investments in sales and processing expenses related to higher transaction volumes. As we exited the quarter, we're starting to see benefit from expense rationalization initiatives recently executed that will deliver additional savings in 2026. Our adjusted EBITDA margin was 57.1%, and our adjusted effective tax rate for the quarter was 25.8%. The increase in the rate was due to the favorable impact of employee stock options on the tax rate last year.

On to the balance sheet. We ended the quarter in excellent shape with a leverage ratio of 2.8x, spot on our guidance. We repurchased 1.7 million shares in the quarter for $500 million, and a total of 2.6 million shares for the year. This leaves us with approximately $1.5 billion authorized for share repurchases inclusive of the $1 billion of additional authorization approved by the Board at the December meeting. We will continue to pursue M&A opportunities and we'll continue to buy back shares at this valuation while maintaining leverage within our target range.

Now let me share some additional information on our 2026 full year and Q1 outlook. As Ron mentioned, as part of our continued rotation into corporate payments, we signed a definitive agreement to sell PayByPhone, a non-core Vehicle Payments asset. The transaction is expected to close in the second quarter of 2026. The impact of this sale is not included in our guidance as we are sharing today as our policy is to update guidance for closed deals. PayByPhone is expected to produce 2026 annual revenues of approximately $100 million, and the transaction is not expected to have a material impact to adjusted EPS as we plan to use the proceeds to buy back shares. We'll provide more information when the deal is closed.

Our 2026 revenue guidance is $5.265 billion at the midpoint of our range, growing 16% year-over-year. This assumes 10% organic revenue growth, also at the midpoint of our range. 2026 organic revenue growth is lower than our 2025 exit rate of 11% due to additional float headwinds, more heavily weighted in the first half of 2026 in our Corporate Payments business.

Our 2026 guidance for adjusted EPS is $26 per share at the midpoint, growing 22% year-over-year. Our confidence in our guidance is high given most of the building blocks for this performance are already in place. This includes our strong organic growth exit rate and annualized Q4 trends, our expense rationalization initiatives which are already producing savings and our Q4 share buybacks. The $1 of accretion from the Avid and Alpha deals is achievable given our strong track record of M&A integration. The macro environment provides additional tailwinds, including a flat tax rate year-over-year.

As a reminder, our revenue and adjusted EPS build throughout the year. You can see on Page 19 of the supplement the percentage of full year revenue and adjusted EPS our lowest in Q1 and highest in Q4. This pattern is driven by our clients' highest business volumes occurring in Q2 and Q3, along with acquisition synergy realization increasing through the year, all over a relatively fixed cost basis. The consistent historical pattern gives us confidence in our ability to deliver our 2026 guidance.

Below EBITDA, we're expecting net interest expense to be between $370 million and $400 million, the adjusted tax rate to be between 25% and 27%, and weighted average shares to be flat with the period end shares 4Q '25. Related to capital allocation, our forecast assumes free cash flow is used to pay down debt, which provides some potential upside opportunity should we deploy capital for buybacks or M&A. Our guidance does not include any share buybacks.

From a segment perspective, we expect the following organic revenue growth rates. Corporate Payments, mid-teens, inclusive of the drag on float revenue from lower interest rates. Vehicle Payments, high single digits. Lodging, low single digit.

Our Q1 revenue guidance is $1.21 billion at the midpoint, growing 20% year-over-year. We expect Q1 organic revenue growth of 9% at the midpoint, lower than the full year 10% organic growth guide driven by the float headwind I mentioned earlier. We're expecting adjusted EPS of $5.45 at the midpoint, growing 21% year-over-year. We're planning organic revenue growth to increase in the remaining quarters as we digest the float headwinds.

We provided additional detail regarding our full year and Q1 outlook in our press release and earnings supplement.

Before I turn it over to the operator for Q&A, I'm delighted to share that we've remediated the outstanding material weakness related to user access, and you'll see this formally in our 10-K. I want to thank the team that made this happen.

So operator, please open the line for questions.

[Operator Instructions] Our first question comes from Andrew Jeffrey with William Blair.

Great to see the business momentum. Ron, I wanted to ask a little bit about the commentary around payables monetization. I know this is an area that, historically, has been a little bit stubborn when it's come to noncheck-based payments. I know you mentioned e-check. But could you maybe dimensionalize that for us? Is it -- is that an initiative that could add to already impressive segment organic revenue growth? Or what's the time line do you think for driving better yield from those initiatives?

Andrew, it's a great question. I think we've been a one-trick pony to the industry in terms of using virtual cards for monetization. And so this set of options now and basically kind of eliminating paper checks is the game. The idea of getting that thing sunset and using e-checks, debit at lower interchange, ACH+, instant payments, the whole plethora of things that we can do. The research suggests that merchants like that choice and some set of merchants will accept these new methods of payment where they won't accept virtual card. And so we're in the middle of it. We're laying that stuff out. We're doing the research. We're testing. And so I would say sometime Q2, Q3, we should see some impact on that. I think it just creates more legs for the business, right, long term.

Yes, I agree. And then just a quick follow-up for Peter, if I may. Could you sort of parse out domestic vehicle payment organic revenue growth versus Brazil? I assume that U.S. and Europe look pretty similar. Just trying to get a sense of what positive same-store sales might mean for that business.

Yes. So U.S. CP business, approximately 5% organic growth for the quarter. And Europe and the rest of the world and Brazil, tracked right on where they were for earlier in the year. So consistent results across all 3 for the 10% overall organic growth rate for Vehicle Payments.

We'll now move on to Darrin Peller with Wolfe Research.

Nice job. I just wanted to start off with one more of a strategic question and then a sustainability question on the growth rate on vehicles. And then, I'll have a follow-up on the modeling side. But just when I look at the double-digit growth rate, obviously, it's good to see it holding up in these ranges, even against what you're getting into harder comps towards the end of '24. So maybe just touch on sustainability, especially of the U.S. fleet acceleration and what's needed to maybe even push same-store sales meaningfully higher, in your view?

Darrin, it's Ron. It's -- sales is the answer, right? So, just to follow-up on Peter's thing. If you think of the 3 horsemen that create 10% is kind of low single digit, like right on 10%, high double-digit, average those things, you get to 10%. And so the good news, if there is any, is this work we've done on the U.S. piece of vehicle has finally landed, right? We've got stable retention that's now kind of in line with the rest of the businesses. I'm literally looking at a piece of paper, and the same-store sales of the U.S. business, vehicle business went positive, the first time in 6 quarters. I'm looking at a piece of paper now.

Approval rates are up, credit is good. So, literally, the business has gotten to a good kind of reset spot. And now, like I said, the entire assignment of the sales. So, if we could make a lot more sales there, we could inch the aggregated vehicle growth rate up. And if not, we'll stay with kind of low, mid, high for that business. The real question for me is, do we keep allocating -- what level of investment for growth do we keep making in that business vis-a-vis the other ones, is one of the internal questions.

Right. All right. That's good to hear. I guess just one follow-up would be on more of a modeling a couple of questions, which, number one, would be just if you could provide a little more color on the cadence of the accretion contribution given it's a pretty notable -- a fair amount of the beat versus some of the Street numbers was the magnitude of accretion, just so it's ramping through the year. Help us understand that. And then, I know we're getting some questions on interest expense. I think you're assuming a lower interest expense rate dollar amount. Just help us understand that notion, just given you're adding debt at a pretty healthy rate as well.

So Darrin, it's Ron. Let me take the first part, and Peter can take the second. So we're kind of done with the plans. So when we talked, I guess, 90 days ago and we're literally just onboarding Alpha. We finished the work. And so in the opening comments, I gave the dollar -- so between those 2 deals, the Avid investment, the Alpha acquisition, we're pretty comfortable we can get the dollar. And so we're literally already underway on a bunch of the things, certainly on the cost takeout side on some of the revenue synergies that are super easy like that coming across to our contracts and things.

And so the biggest thing that will unlock a bunch in the second half is the IT. We're kind of sunset their kind of their corporate IT system in favor of ours, which opens up all kinds of savings around not only IT but compliance and ops and stuff like that. So I would say this is our third, fourth, fifth rodeo, right, of doing these things. So our confidence in what to do and what number is high.

And then the last point I'll make, because you're good at math is -- it's not one and done. It's one and more. So the way we think about it is whatever EBITDA we're getting in those businesses has to grow over, right, the interest expense to finance those. So as we create the synergies and those businesses grow, they're growing obviously over fixed interest expense. And so in our multiyear plan, that creates even acceleration in EPS as you walk into next year. So the setup for those 2 things is quite good.

So Darrin, picking up on your question on interest expense. So we ended the year at about $7.7 billion in debt. As you know, we produce really high cash flows, so call it, $1.8 billion of cash flows we've produced throughout the year. So that will reduce throughout the year. Also, the forward curve is looking pretty positive for us on SOFR. So you put those 2 together, and that's what's leading to our lower interest expense.

We'll now move on to Tien-Tsin Huang with JPMorgan.

Peter and Jim, great results. I wanted to ask on Corporate Payments, if that's okay. Just mid-teens growth expected this year. Do you have the backlog to support this growth? Or is there more business to go get? I'm just curious what the visibility looks like there? And could there be some room for upside, and if so, where?

Tien-Tsin, thanks for the data, boy. So I'd say on the '26 number, it's really 2 different things. In the payables, the full payables business, I'd say, we have the sales because the implementation cycle is longer there. And so basically, we have a bunch of deals that we implement that drive that revenue. In the cross-border, it's a much shorter, right sales to implementation cycle. So we have to make sales there. Although if there was one bet to place on our company, I would not bet against the cross-border sales. We had a just rocking finish between our core cross-border business and even the new Alpha business and stuff. And so that thing is firing.

So I would say our confidence in the thing is super high. And again, the reason for the thing not being a bit more robust is just the compression obviously is the float rates, right, particularly as we absorb Alpha, which has a way bigger bank account deposit-based business than we do, it's a bit more acute, right? The compression there, particularly early on. So when we get -- it's transitory obviously. So when we get to the other side of that, I think the outlook will be even better for the business. And if we get the monetization, say, right, that Andrew asked, if we get that cranking, that would be another upside basically to the business.

Got it. No, you sound quite pleased with Alpha. That's great to hear. So mid-teens would be a win for that segment. I did want to ask just on margins, if that's okay, as my follow-up with the expense rationalization. Is there a way to think about that impact to '26 and just some broader comments on incremental margins in '26? Any surprises or puts and takes to consider?

Yes. Maybe I'll start, Tien-Tsin, and let Peter pick up. So we're targeting about $75 million of expense out. We've executed kind of $50 million of it. We're still working on the other $25 million, which we've identified but still working.

If you look at our internal plan, not shockingly, margins climb like crazy sequentially, pretty fixed cost base once we make the sales investment, which we do early and then revenue snowballs, right? So revenue increases, call it, $100 million plus as you get into the second half or quarter. And so that's -- I think it's probably 3 points. If you look at it 300 basis points from Q1 to Q4. The reason that the overall margins for the full year wouldn't look a ton different is really -- it's the acquisition expense, right? We're bringing across in these couple of deals a fair amount of cost at lower margins, basically. And then second, we made the call given the profitability to put more in the sales and marketing and even into our brand. So we're trying to hold the margins pretty constant, improve them sequentially and spend on some things that will help the growth going into the next year.

Our next question comes from Mihir Bhatia with Bank of America.

Nice results here. But Ron, maybe just wanted to ask you about PayByPhone. I think you bought that asset maybe a couple of years ago. Just any lessons from that process from owning that just what worked, what didn't, as you think about go forward.

Yes. That's a good question. So lessons, I'd say maybe 2 lessons on that. One is we had a thesis for buying that, that their 5 million, 6 million, 7 million active users and a lot of them in Europe could be kind of a launching pad for us to put those people into the network and create some incremental business. And basically, we couldn't do very well with that. So, a new idea, and it didn't work as great as it has in Brazil. But the second learning is we're good. Like we take a business, we buy it, we triple the profits, we're selling it for 50% more than we bought it for. And so it's a great reminder that even when the thesis isn't perfect that we can still make a return on the thing. And so we're pleased. I'm also pleased with the people that are running the thing, that built it, that where they'll go, they'll be happy and stuff. So I'm hoping for only good things for the buyer and the management team.

Got it. And I think kudos to you all for trying and pulling the plug when you all realized it wouldn't work. I wanted to maybe switch gears a little bit to just going back to the Corporate Payments business and just some of the questions there. Maybe like I think you kind of answered it a little bit. But just trying to understand, you laid out a lot of priorities in that business, right, whether it's building the U.K. payables, adding enterprise accounts, new monetization options, growing sales in the FI channel multi -- so, just trying to understand the time lines there, like the lift that it will take to implement some of those changes. Like what's going to be a meaningful contributor there in 2026 versus initiatives that are maybe longer term, but just you're laying the building blocks today?

Yes. That is a really good question. I think the main thing we're trying to do with that priority is just make sure people are clear on the opportunities that when you stare at payables, beyond just chopping the wood we have that there's some kind of vectors out from the middle market core there where, hey, we can get more monetization against the spend. We can add enterprise, right to the mix. We can go to geographies that widen the TAM. I'm mostly trying to make sure people are clear that there's way vectors to make the business go.

I'd say on that one is clearly the monetization is the short term, is the 2026 thing because we have the clients, we have the merchants, we have the money moving. And so we're simply trying to give more choice and stuff. So I'd say for sure, in that one. And then the same kind of on, I think, on the cross-border side. I think longer term, because the sales cycle will be like the Mastercard opportunity there or even, frankly, the international bank account opportunity. I think those are longer term, whereas the synergies of combining the Alpha corporate business would be at 2026. So I'd say those are the 2 get the money in 2026 things, monetization and payables and Alpha consolidation and synergies would be the things for this year.

Our next question comes from Sanjay Sakhrani with KBW.

Ron, you talked about a couple of more divestitures in the pipeline and obviously, this one that you did today or announced today, could you just give us a sense of what kind of liquidity you're looking at in terms of raising from that? I know you put out that $1.5 billion number last quarter. But if we just think about today's announcement, plus the other 2, does that get you to a higher number or equal number? Just trying to think through the liquidity you could raise and use of proceeds.

Yes. It's a good question, Sanjay. So yes, there's 2 other vehicle businesses that are out in process now, pretty late stage too. If we end up transacting on both of those, it will be over $1 billion. I think I call it $1 billion to $1.3 billion, somewhere in there. And the use of proceeds is to buy CPAY at this price that we're at. So we'll have an answer. My guess is the next probably 30 days of those things.

Got it. And then just maybe if you could elaborate on lodging. I know it remained weak, and you guys are assuming sort of low single digits. But anything specific happening there in terms of turning that ship around and how we should think on a go-forward basis?

Yes. The print is, obviously, Sanjay, not too good. I feel a little bit similar for the U.S. vehicle business. I think I characterize those two businesses as problem children not behaving well a couple of years ago with lots of things wrong. I feel kind of the same that both businesses, particularly Lodging, have stabilized. We fixed the IT, we fixed the product thing, we fixed the customers that kind of scooted away, the volume that scooted away. And so if you look at like the same store, as I quoted, that's actually positive now in U.S. vehicle and I think mostly flat in Lodging.

And so the good news is the management teams have made progress doing things that have stabilized the revenue. I'm still super disappointed in the new sales. And so that's the ticket. Really, the ticket for both of them is can they produce new sales now that the losses have stabilized and they're both super great margin businesses. They're both above the line average, I don't have it in front of me, but they're in the 60s in terms of EBITDA margin. So they're super great cash generators. The question is just can we productively make sales there vis-a-vis the other options we have for investing sales in the company. And so we're giving it a run here in 2026. And if we see sales improvement and accelerate throughout the year, we'll be happy. And if we don't, we'll be probably thinking about doing something else.

We'll go next to Nate Svensson with Deutsche Bank.

I want to follow up on some of the cross-border priorities that you were talking about in the prepared remarks, Ron. So you mentioned outperformance at Alpha a few times, and you obviously bumped up the Alpha plus Avid accretion to $1.00 Just maybe hoping for a little more color on what's going better than expected at Alpha? What on the revenue synergy are you realizing? Is it better organic growth? Anything beyond that? And then you also called out the first joint sale with Mastercard. I fully get from your earlier answer, that's kind of a longer-term opportunity. But we'd just love to hear more about that first win. So any specific details or learning from that partnership as you look to go out and win more sales in the pipeline that you have?

Yes, Nate, 2 good questions there. I think the overperformance in Alpha is the integration, the people thing has gone better than I thought. So when you meet a new groups like that and bring the organizations together, sometimes there's a pause, people aren't firing and stuff. And I just feel like our management team and their team did a great job, great kumbaya or whatever, where their guys just came roaring out of the blocks, pitching, hey, we're a bigger, meaner company. We have better credit. Obviously, we have better products. We have better payment products versus just risk management products. And so to me, what was so great is the people, particularly the salespeople, have embraced some of the stuff that we bring to them and just went running out and got a bunch of business closed. So that thing not only performed better in the finish, I've looked at January, and those businesses are ahead again this month.

So I think it's cultural. It's something, but just everybody's at it. People aren't moping around and stuff, they're excited to be part of the gang with us and stuff. So this is way before the other synergies of contract advantages, rate advantages, cost, IT, we got all the stuff in front of us. Bank account license, we got 9 other things that are going to create money. But to me, that's like super important.

On the Mastercard thing, I got to say like it is way exceeded mine, I don't know if it has the Mastercard folks expectations, but we now have a second sale. I think I said in one of the scripts already, we've actually closed out 2 deals. But more importantly, it's a crazy pipeline particularly in Europe, where Mastercard has done their part of getting the dedicated people to call on accounts that they know and love and our guys go in and know a lot. And literally, I don't know if it's 50 to 70 in-process opportunities. And so that thing which tends to have a very long sales cycle has stood up quite well.

And I think back to the thesis question that was before is I think the thesis is proving out the good relationships and credibility that Mastercard has, coupled with our products and expertise is a good combo.

So it will take time to build, but it is a way help to make that segment meaningful, right, for cross-border. I mean I don't know if everyone is getting it, but that business was mostly a one-trick pony. We went out to midsized businesses around the world and sold services. And now we're talking about basically getting banks, getting FIs around the world to use our services and becoming an international bank account deposit company as well. So the extension of those 2 additional kind of product and market segments is way significant. I don't know if people are picking it up, but it completely changes, I think, the long-term prospects of that business.

So we spent lots of time in this company doing an iceberg-type work kind of getting ready, getting things positioned. I think people discount it because everyone just wants to know what the numbers are, but I'm telling you that is going to make a big difference for durability.

Super exciting stuff. I guess for the follow-up, also on the cross-border business. We get some questions from time to time on a potential Supreme Court ruling on IEEPA and maybe some impact that could have to CPAY in the event that tariffs are rolled back. So I'm not asking you to speculate on any potential outcome. But I guess in the event that there is some level of rollback of tariffs. Any idea on how that could play out across either your Corporate Payments business or maybe the Vehicle Payments business as well. Is there still any pent-up demand you think might be released? Could this alleviate some of the pressure on the shipping and freight industry in the U.S. or any other factors to keep in mind there?

Yes, that's a super good follow-up. I would say, tariff certainty is our friend, like whatever it is, just be what it is. So it had a super jolt during Trump's liberation thing. I think our numbers in April were crazy as people try to anticipate things and then kind of our U.S., our North America business did really bad. The rest of the year because of the uncertainty and the other geographies picked it up. So anything that would either roll back limit or even just fix tariffs would be a plus to the cross-border business. Remember, like half the dollars that they were service-based, not goods-based and then again, we have -- we do risk management contracts and stuff. So the exposure isn't across that entire business and really most of the exposure is in North America, which is probably 1/3 of the business. So it's not like a massive amount, but it still would be, to your point, a plus for us if that thing got clarified.

We'll go next to Ramsey El-Assal with Cantor Fitzgerald.

I wanted to ask about the strong sales growth, which is obviously super impressive. Can you give us your thoughts on whether the conversion of that sales to revenue, the timing of that conversion of bookings to revenue has changed as your business has changed? In other words, as now you have more Corporate Payments, are you seeing a situation where you convert that revenue faster -- or cover those bookings rather faster or slower to revenue? Or is it sort of the same as it was when you were primarily a fleet card business years and years ago.

Well, Ramsey, welcome to your new spot. I want to say congrats to you on that and appreciate you continuing to keep an eye on us. So it's a really good question. So at the high level, the answer is -- it varies by business. As I mentioned, I think Tien-Tsin asked, our payables business has a slower contract signings or bookings to implementation of ramping. And I mentioned the cross-border business is much faster. So as you run through the businesses we have, that vary. Some are superfast, like in the fleet card business, it's almost instamatic. We don't even book until we start. We actually call it a go live. But the total is for the company is about 1/3 in year.

So for example, let me make up a number, let's say we recorded $300 million in bookings in calendar year 2025, we would print about $100 million of print revenue inside of the 2025 goal post. And then we would ramp some amount of that $200 million that we didn't capture into the forward year. So the way we think about like building our revenue plans is we already have in that example, $200 million coming our way here in 2026 that we didn't have, right, we hit our revenue numbers last year, and we'll grab 1/3 of what our bookings plan is here in 2026. So that's kind of the model, kind of 1/3 in the current year and then the 2/3 ramp depending on what the attrition is. So we've relative statistics at all this. So it's really easy for us to model it.

Got it. That's super helpful. And one follow-up for me. Stablecoin is a big thematic topic. Can you just give us an update on what you're seeing in the marketplace in terms of demand, if any? And also just give us a quick overview of the capabilities that you guys are building out to accommodate stablecoins?

Yes. That's super. I'm laughing a bit, Ramsey, because this morning when I get up knowing we had this earnings call tonight, I went out to 3 of our guys. I went to the guy that has thousands and thousands of U.S. merchants that we pay, our cross-border head, that obviously moves tons of money to beneficiaries around the world and our Alpha guy who does the bank accounts, the 7,000 bank accounts that hold deposits. And I asked all 3 of them, hey, talk to me about the demand, how many of the merchants or the deposit holders or beneficiaries are asking for a companion stablecoin wallet so that they can receive funds in stablecoins. And the basic answer was crickets. There's been really no -- basically kind of no noise kind of no demand.

Despite that, we are -- I think we said before, doing 3 things anyway. One is we're trying to serve crypto clients that actually have crypto, have Bitcoin, have stablecoins as clients. So we're doing that. We have 4 or 5 signed up. Two is we are working on the rails and piloting that like in our own treasury, for example, to make sure we can actually move funds via blockchain. And then third, which is my favorite is despite the demand comment, we are building stablecoin digital wallet so that anyone that has a bank account, if you will, they'll have a companion stablecoin account.

So if someone wants to send their money outside of the banking hours, it could be captured and then we could toggle it into the fiat account that we have for them. So we are pushing ahead to have that and just see if there's more uptake on this. But it's -- what's the line, it's all quiet on the Western front as of now.

Our next question comes from Rayna Kumar with Oppenheimer.

Could you talk about just some of the drivers that will get Lodging back up to low single-digit growth this year? And separately, could you talk about your outlook for EBITDA margin this year and any puts and takes we should be aware of?

Peter, do you want to take this?

Yes, Rayna, it's Peter. So on the Lodging side, the thought process is full year, we're expecting, call it, low single digits there, but it's really a tale of 2 stories. So the first half of the year will continue to be negative organic growth with the pickup in the back half of the year. And so I think the good news to share there is we have quite a bit of luck on the sales side and certainly those implementations are coming online in the back half of the year. So that kind of what gets you to the full year outlook on Lodging.

Then if we look at EBITDA margins, they are increasing substantially quarter-over-quarter across 2026. Even margins will be slightly down year-over-year, mostly driven by the acquisitions. But as we start to implement -- as the business volume grows and we implement the synergies, that's where you see the margins start to expand quarter-on-quarter.

Our next question comes from Trevor Williams with Jefferies.

Peter, I want to go back to the organic guide. So the 9% growth in Q1 relative to the 11% in Q4 and the 10% you're assuming for the full year. It sounds like that's mostly just due to a bigger float headwind for Corporate Payments in the first half and then the Lodging improvement that you just walked through, but any other puts and takes, cadence wise for us to be mindful of? And then specific to the first quarter, just what you're baking in for Corporate Payments growth both with and without float would be helpful.

Yes. So Trevor, I do think you have it right. When we look at Q1 '26, it is the float headwinds, mostly really as we pick up the Alpha business, right, you see a pretty sharp drop in the rate for the pound and the rate for the euro. So that's a big driver there. Whereas the drop in SOFR is more kind of even throughout the year. And then you're exactly right on lodging being a drag on organic growth for Q1 at the 9%, but then we see ourselves returning to 10% for Q2 and the rest of the year. In terms of the guidance for Corporate Payments, I'd say the guidance for the quarter is similar to what I shared for the year. We expect it to be mid-teens with float drag against that.

Trevor, it's Ron. Just to add to what Peter said. So when we look out at the curves and our weighted average of what we earn, the Q1 versus Q1 last year is just the compression is just way more acute in this quarter we're sitting in. It's about 70 or 75 basis points. When we run it out to the end of the year, that thing shrinks to like 25 to 30 basis points. And so that's enough given we have Alpha in the mix now for us to run the quarter at 9% instead of 10%. The other one, just by the way, which is the tad is really gift. We have -- that thing has been running super hot with this secure packaging thing, I don't have it in front of me, but mid- to high teens for the last 3 or 4 quarters, that's come back to earth positive, but back to earth here in Q1. So those 2 things together is what have us running the quarter at 9%.

Okay. That's helpful. And good color on gift. And then just as a follow-up on Brazil with how much you guys are outpacing the underlying TAC growth that's all coming from the contribution from extended network. Ron, how do you think about the sustainability of that and if you're able to keep that, if we think like high teens to 20% growth in Brazil, if you can keep that without layering in more acquisitions like Gringo, Zapay. I know there was the other vehicle debt company that you bought last year. Just how to think about the durability of that growth?

Great question. Yes, we're planning, Trevor, another crazy high teens, as you know, half of it you get because it had a crazy good year last year. So that just rolls in. But look, the story of Brazil is the free banks didn't beat us. We said we were going to create a bunch of non-fuel revenue. We've got millions and millions of customers and businesses as well. And so we're like, okay, if we give them some of these other vehicle things, will they come? And I want to be super clear. Yes. they will. They buy fuel. They buy parking. They buy insurance. They buy vehicle debts. They're now going crazy with 10% of our new sales. We're selling the Sem Parar credit card. The Sem Parar credit card now for 10% of our new sales. And so to say it's working, I think, is an understatement.

And the second thing I'd say is I think it's helping sell the core toll product because it's so differentiated now from a guy, a bank who's buying some crappy toll thing, wholesale one product and offering it. So not only is it creating incremental revenue with profit leverage because it's added on, I think it's allowing us to keep selling mid- to high single-digit TAC growth as well. So it is good. And I do feel like the banks there are getting weary from some market feedback. So that could be the next domino to fall there as people think they could beat us by being free and they haven't. And so that will be the next thing I keep an eye on.

Our next question comes from Michael Infante with Morgan Stanley.

I'll just ask one for the sake of time. Commentary on the stablecoin demand was helpful, but I'd be curious just to get your high-level perspective on really the mechanism by which we'll actually start to see some medium-term compression of stablecoin off-ramp costs in the future if those costs themselves are effectively just dictated by liquidity in those corridors? And if the answer is we're not likely to see that cost compression, like how should we be thinking about the incremental tailwind for if you do actually start to see that demand from your customers show up?

Yes. Michael, it's Ron. I mean I'd start with, I guess your guess is as good as ours because we see nothing, right, at this point. And I think we reiterated that the rails are an insignificant piece of the cost structure and of the value chain. And so look, who knows, I mean people can price things crazy, right, for whatever reason they have. But like we don't see it, to your point, we see nothing. And we don't think it's likely, if we're getting 50 or 60 basis points on a trade and sometimes 200, depending on the customer in the quarter.

It's mostly because of the liquidity and the compliance and everything else. And so -- we're saying to them, we're watching it carefully and stuff, but we do not see that as a high risk. And then as I said, whether there is demand or not, we're going to be there with the stablecoin offerings. And so if our clients want it, we're going to make it available. But to remind you a little bit of EV, this whole thing, there's more being written and said about this than actually being used today is my takeaway.

We'll go next to Dave Koning with Baird.

Just one question. Minority interest, that line has become a lot more important now with Avid and a little bit of the Mastercard impact. It looks like on an adjusted basis, it was like $27 million in the quarter when you do the add back that was in your line. Is that -- I guess, why was that so high? It seems very high. And is that the right number on a quarterly basis going forward? Or what should we think about that line?

So Dave, let's take that question with you off-line in a modeling conversation just so we can go through it in more detail.

And our last question comes from Madison Suhr with Raymond James.

I'll just ask one as well here. Just circling back to the Mastercard partnership, early indications sound pretty positive there. So is the 200 to 300 basis point tailwind to cross-border still kind of the right way to think about the contribution from that partnership? Or do you think there could be potential upside given some of the early indications?

Yes, that's another good question. I'd say it's a timing call, right, because the sales cycle on FIs is longer than it is for corporates. But to your point, given the size of the pipeline and the fact that some of the things are actually converting, it's a whopper segment. I do want to remind you and others that virtually all of the cross-border business that we don't have, they have. So like all of it, right, is there. And so to the extent that we're successful getting this thing going and happening with Mastercard, all I can say is like it is just so crazy large, the flows that these banks have today that if we get in with a number of them, over some cycle, it could be a big, big contribution just because they have all the business today, right? The independents like us have such a fraction of the book today. So it's super exciting. Again, to me, it's just a question of what the time frame is.

At this time, there are no further questions in queue. I will now turn the meeting back to our presenters for any additional or closing remarks.

Great. Thanks, everybody, for your interest, if you need anything else, you know where to find me. Have a good evening.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Good morning. My name is John Davis. I lead the fintech equity research effort here at Ray J. We're excited to have CPay CFO, Peter Walker, with us this morning. We're just going to do a fireside chat. We'll leave some time for questions at the end. But first off, Peter, thanks for joining us.

Yes. Great to be here on a cold morning in New York City.

Yes. It is quite cold.

Maybe we'll just start quarter-to-date macro trends. Anything you've seen or observed post the call a month ago or so, I would love to get just any update quarter-to-date.

Yes, sure. So quarter-to-date is tracking exactly where we expect to be from the guidance we set early November. We are going to focus on '26 right now. And as it stands, '26 from a macro perspective is setting up pretty favorable. So obviously, expectations of interest rates coming down here in the U.S. and FX is favorable as we speak. So that's some good tailwinds going into '26.

Okay. And I wanted to dive in a little bit in vehicle payments and specifically North America fleet. Obviously, that's been challenged. The macro backdrop there has been bouncing along the bottom for a while now. You saw some nice acceleration in the third quarter to mid-single digits. I think you expect that to continue in the fourth quarter. Maybe touch on what drove that acceleration? And then any other macro comments on North America fleet specifically?

Yes, happy to. I mean one thing I always like to do is give some context because I think for a lot of people who followed the company for a long time, they're really tied into North America fleet. And while it's an important business for us, just the context of -- it's about a $700 million business and a $4.5 billion company, right? So while important, it's not the driver. I just see us often get compared to WEX and others and write-ups and it's just a portion of our business. That being said, we've really been focused on the turnaround in that business. And so we were pleased to see that mid-single-digit organic growth in Q3 as we expected is what we printed. We expect that to continue in Q4, and that's our expectation for 2026. So pleased with where that business turnaround has resulted.

Okay. And maybe shifting to Corporate Payments, which obviously has been a big focus, mid- to high teen grower, fantastic 2025. Maybe we'll start a little bit on the fourth quarter. I think you have a much tougher comp. You talked about incremental float headwind. Maybe talk a little bit about what the expectations for the fourth quarter, how you get to that kind of mid-teen plus growth rate despite a 900 basis point tougher comp because that's the #1 question I get from investors right now is fourth quarter everything seems fine. The corporate payments, the math and the spreadsheet looks tough, but Ron was very emphatic on the call that you felt really strongly about that. So maybe just talk a little bit about the tailwinds and what's driving that growth? .

Yes. I mean our cross-border business continues to perform really well. As you guys have seen in the past, typically delivering high teens growth, sometimes north of 20% growth. So cross-border business expected to perform well in Q4. The corporate payables business can deliver call it, mid-teens to high teens, also delivering strong in Q4. So when you put that together, the number -- and we're bringing Alpha on board. So we've got 2 months of Alpha in there. So what we shared is we expect 15% organic growth in Q4, and that includes a headwind of 300 basis points from float. So again, our expectation is that we were going to deliver a pretty strong Q4. I think there were some out there from investors because of the comp issues that you spoke about. Obviously, we've got more insight into it just because we're in the business.

Okay. And maybe let's take a second and zoom out on the corporate payments business given it's been such a focus from an M&A perspective, lots of moving pieces. You've got Avid,you've got Alpha. Just remind us what's cross-border, what's the payables business, the growth rates? And what does that look like as we sit here approaching 2026. I think corporate payments means a lot to a lot of different people. We have competitors that have very different corporate payments businesses. And so just would love to maybe zoom out for a second and just kind of talk about the pieces and maybe remind the audience how large that business is as a total of all of CPay?

Yes, yes, happy to. So as we talked about next year, we expect the business to be over $2 billion. Next year, we are going to reconfigure our reporting within corporate payments so that it's easier for investors and everybody to understand. Based on the disclosure that we have today, I think you should think about the cross-border business, really 3 primary products in cross-border. One is the multicurrency bank accounts that we have, the other is payment processes on an FX basis. And then the last is risk management contracts related to those FX or international payment. So that is the cross-border business.

So it's really helping clients with their payments cross-border. And then when we move into the corporate payables business, I think of it really 2 major pieces. One is our full AP business, which is think of it as AP outsourcing. And then the other business is our spend management business, which is virtual card business. and multi card business. So that's the way you should think about it today and as we've talked about, kind of business growing in the mid-teens.

So as we break down that mid-teens growth. If I recall last time, I think Ron talked about it, you're talking high teens to low 20s in the cross-border business. And then the payables business grows a little bit slower, you have the full AP growing faster than the indirect channel, which is, I think, now the de minimis. But is that the right way to think about just the relative growth rates of how we get to that mid- to high teen consolidated corporate payments growth, corporate -- the FX cross-border business and then the payables, any color there? .

That's right. And then maybe we jump next to the acquisitions or investments that you were talking about, right? So we purchased Alpha this year, which is a cross-border business based out of the U.K.. Similar cross-border business in terms of assisting clients with FX payments. But what Alpha has, it is much a larger business than ours and unique to ours is they have a private capital markets business, where they are providing global bank accounts to private capital market clients and they've got of $3 billion of funds, of cash funds related to those private market accounts. So we think that this is a really great growth opportunity for us.

We know we have the ability now with Alpha to open up global bank account in literally days. So it's a huge competitive advantage of we call it, regional and local players. And so that's a big reason that we bought Alpha. And then our multicurrency account, we'll look to manage those 2 things together, but the MCA account was really focused more on corporates. So that deal closed pretty excited about that deal and the growth rate on that business.

Then if we move to Avid, Avid , think of Avid as a full AP, very similar to our U.S. payables business. slightly bigger than our U.S. payables business. We actually did not buy the whole company. Instead, we partnered with TPG and we took 1/3 investment. We didn't buy it right away because we really need to improve the top line growth and the bottom line performance of the business before we'd be comfortable owning the asset.

Okay. And speaking of deals closing, Mastercard partnership closed yesterday. So it's $300 million or a 3% stake. But maybe talk a little bit about why that partnership is important. You've called out, I think, 200 to 300 basis point tailwind to the cross-border business in 2026. So maybe talk a little bit about that deal and what gives you confidence in that incremental growth tailwind next year. .

Yes. So when we look at the cross-border business kind of pre-Mastercard pre-Alpha, we were primarily into the corporate segment. So very interested in expanding that. Today, we're now in 4 segments. So we're in corporates. We're in financial institutions with the Mastercard partnership. We're in private capital markets with Alpha. And with our latest stablecoin announcement, we're in the digital market as well. So now we've got 4 customers to sell to within cross-border. And there's just a huge TAM here, right? So it's great that we're in those segments.

Excited to share with you this morning, Mastercard, we actually signed our first client with Mastercard under the partnership yesterday. So you guys are the first to hear it today. So Eastern European bank that we signed up. So obviously, we've been working with Mastercard to fill the pipeline and pleased to see first client coming on board. Obviously, I hope to share more of that with you over the next year. We did share, call it, 1 to 3 basis point uplift in cross-border, potentially in '26 from the partnership, and we'll get a little bit more insight to that when we share our guidance for next year.

Okay. Great. And then maybe last corporate payments topic. Everyone's favorite stablecoins. You guys recently announced a partnership with Circle. I think a lot of people really are struggling to kind of understand both the opportunity and the risk from stablecoin. So would just love to get your perspective on the cross-border business and how you guys think about Circle partnership and the broader stablecoin opportunity? .

Yes, absolutely. So in our last earnings call, if you go back to that earnings deck, there's actually a page on stablecoins. And what we laid out is what is our strategy in more context that people could follow us. So what I'd say is, we think we're uniquely positioned to take advantage of this new rail that's being introduced, right? We've got significant payment flows when you look at our AP business that we have today. We've got a large global bank account set of clients that we can leverage. And we're also the provider of choice to many of their crypto providers where they're looking for off-boarding from stablecoin into USD with their clients when they need conversion.

So what we shared is that we're pursuing 3 opportunities related to stable coin. So the first one is serving these large crypto clients and helping them with the conversion when they take the stablecoin into USD. The second one is in our domestic and cross-border business with our merchants. We're going to open up stablecoin wallets. We think the use case here is the 24/7 settlement, right? So if I'm a large merchant in the United States, I'm limited of when I can get paid by banking hours as we all know, what stablecoin would introduce us to 24/7 settlement. So we're going to add stable going wallet accounts to those merchants. We're going to start off with a pilot obviously, and see how much interest we get there, but we think that's kind of where the puck is going.

And then lastly, in our global bank account business, we're also going to add stablecoin wallets. What we think the use case is here, and obviously, we're going to test it. We're pretty excited about it. In the private capital market space, the biggest event that they have with us with the global bank account is when they actually purchased the asset, right? So think of a private equity firm purchasing an asset in Germany and needing to open up a bank accountant to do that. The kind of nail-biting part of the process for them with that is dealing with all the funds settlement when they're purchasing the asset and the limited banking hours. So we think this might have a real upside with those PCM clients where they can settle with stablecoin outside of banking hours and get the deal done. So I'd say we're pretty excited about what stablecoin could potentially do. Adoption right now is not high for us. That being said, we want to be there and be prepared, should adoption start to increase.

Okay. No, that's great. And then I did want to spend just 30 seconds on the lodging business. I think that's something that used to be a really nice grower, has been more challenged recently. I think Ron on the last call mentioned that if it wasn't going to turn around, he'd be opening to potentially selling that business. But maybe just talk a little bit about what the challenges have been and what you guys need to do to get that back on the right growth trajectory. .

Yes. Yes, great question. I mean, as you know, I've been in my role about 5 months. So I'm stepping into lodging, performing the way it is performing today. And as you'd expect as CFO, my first thing was like, "Oh, hey, pull me the performance for lodging for the last 5 or 6 years. And we take a look like, why are we in this business, right? And I think it's important to note just a couple of years ago, this was a high double-digit growing business. So this has been a really strong performer for us. There were a couple of missteps in terms of the business. We feel like we've gotten through, let's say, those major items and what we're really focused on now is sales. We need to produce more sales in the business. And so we're investing in that.

So that is our current focus, and we are optimistic that if we focus on the sales effort that we can return lodging back to the level of growth that we've seen in the past, at least double digit. Lodging is about a $500 million business for us. So put it in perspective, a $4.5 billion organization. I want to be careful when I say about selling the lodging business because my first investor event, somebody asked me this question and then the next day, one of the trade magazines picked up. Oh, Corpay is selling the lodging business. Peter said it at an IR conference. It's absolutely not what I said.

So I just want to be clear that we are committed to the business right now. We're investing in the business for growth. Should that not realize over a certain time period, of course, we're going to step back and say, "Hey, how do we think about this from a capital allocation perspective?"

Okay. And then just maybe rounding up from the segment perspective. Gifts had a nice year. You had a tailwind from a lot of retailers having to reprint or reissue cards. And maybe just talk about that in the context of the gift business broadly and kind of how we should think about that growth on a more normalized basis? .

Yes. Great question. So there's a relatively new leader in the gift business, been there for a couple of years. I think he's done some really nice things. That business actually performed pretty well in '24, performed well in '25. And as we're setting up '26, expected to perform well. What the kind of key strategic thing that he did in that business is he focused more on how could he help the retailer generate sales using the gift programs. There are several initiatives and products that he now sells.

One of those is working with a digital wallet, where if you have, say, a gift card at Dick's and you've registered in your digital wallet, we'll pop you a popular reminder, hey, you got $50 to go spend at Dick's on a Saturday, right? So we're bringing customers into store with these products and really kind of changing what the business is. So what I would say is, it feels like a nice turnaround, feel sustainable. What's always a struggle with this business is, on an annual basis, good performer. Quarter-to-quarter, it's volatile because we're all dependent on kind of when ships happen and when orders happen. So I don't know that we'll ever be able to get out of that piece of the business, but I would say the business is much more attractive than it was several years ago.

Okay. No, that's great. Maybe we'll turn to the preliminary '26 outlook that you guys laid out on the third quarter call, calling for roughly 10% top line growth. I think that's very encouraging given some of the trends like in lodging that continue to be a drag on the business. But maybe if we just zoom out, how should we think about the different pieces of that 10% growth? Anything to call out, whether by segment or otherwise that we should make sure and keep in mind as we think about that 10% for the full year?

Yes. So I think the way that I always think about it is over 80% of the business is in corporate payments and vehicle payments with obviously, corporate payments being a larger percentage. And as we look at those 2 businesses specifically, right, our view in corporate payments will continue to deliver high to mid-teens growth. In vehicle payments we'll deliver, call it, double-digit growth. So that's how I would think about the major drivers by segment.

Okay. And then I think you guys stop short of kind of a lot of EPS commentary. I think last year, Ron gave kind of an EPS run rate. You guys stayed away from that. But the one thing you did give was the $0.75 contribution from Alpha and Avid. But as we think about EPS, is there anything we need to keep in mind, whether obviously, lower rates are going to help on the interest income -- or sorry, the interest expense, but then you do have a float headwind in the corporate payments business. But just anything else we should keep in mind when we're thinking about earnings for 2026? .

No. I mean we were very thoughtful in terms of we didn't want to get out over our skis with EPS. Obviously, FX can giveth and FX can taketh away. And that kind of hit us last year. So we wanted to be thoughtful about giving the sell-side enough that you guys could put together their models where I look at kind of where we sit today, right, consensus is about $5.2 billion for next year, give or take, probably in the ballpark. And then when I look at adjusted EPS, it's like $24.90, right? So maybe a hair above where we want to be, but I think we're in the ballpark with both of those.

Okay. No, that's great. And then...

Subject to change. That's doing all of our full planning. So that is not a guide that is just an indication of where you guys are seeing today and where we are.

Okay. And maybe just turning to the balance sheet. You guys have been obviously pretty active with Mastercard and Avid and Alpha. Up 2.8x or so end of the year. How do you guys think about buybacks versus incremental M&A? Do you need time to digest the recent acquisitions? And then Ron also talked about a couple of deals or divestitures that could be out there, it could be as much as $1.5 billion. So just how should we think about capital allocation as we go into 2026? .

Yes. Yes. Great question. So post our Q3 earnings call, obviously had a bunch of meetings with investors. And something I wanted to make sure I was aligned with them is, hey, if we go to 3x at the end of the year because I'm going to lean in hard to buybacks because the stock is just incredibly undervalued right now, are you aligned with that? And I got almost high-fives from investors in terms of, hey, are you going to make investment in the company you know that you have full confidence in or are you going to use that money for M&A? So I would say the buybacks are very attractive in the current moment because we're so undervalued.

That being said, we're never going to lock ourselves out of M&A because we're -- as you guys -- you know in this market, there's always kind of interesting things coming to market. But I would say you should probably expect a heavier foot on buybacks in the back half of the year and going into next year, but we'll give a little bit more detail on '26 on the call.

Perfect. We've got just a couple of minutes here left. Any questions in the audience? All right. Well, as we wrap up Peter here, what is the one message you want investors to walk away from this presentation with?

Yes. So I'd say it's hard to give one...

Or a couple. That's fine.

But I think at the top, I would say, we're ending the year with a stronger business than we went into year. So the acquisition of Alpha setting ourselves up for over 40% of our revenue from corporate payments is really exciting. The Alpha business itself is giving us access to new products that we can take across the world. The Avid investment that we made also sets us up for potentially a much bigger corporate payables business in the U.S., so really excited about that.

And then the other thing that I would say is we just believe the stock is extremely undervalued. So it's a great time, I think, for investors to get into a high-performing company. If you look at our organic growth rate, we've delivered -- if we include this year. If we count that in the number, right, we will deliver greater than 10% organic growth for 4 out of 5 of the last 5 years. So I think that's a pretty healthy track record.

All right. We're going to leave it there. Thanks, Peter.

Thanks.

All right. Let's get started. We're super excited to have Jim Eglseder, Senior Vice President of Investor Relations at Corpay with us here today. Welcome.

Thank you.

And good to have you. I guess to kick things off, can you maybe share a little bit about what's on top of the mind of the management team at Corpay for 2026?

Yes. Obviously, we're deep in the budgeting process right now. I kind of refer to it as the annual budget beat down season at the company. We're operators and just the organic growth of the company, setting a plan and setting the underpinnings of that to deliver the 9% to 11% organic growth that Ron outlined on the call last month.

That's what we're trying to achieve today. Obviously, the growth rates of the businesses can be a little bit different. Vehicle payments is roughly half the company, grows at double digits.

If you get core payments to grow in that mid- to high teens and get you in that target as it is. So that's where Ron and Peter in the businesses are today, crafting a plan that achieves that. So that's what we're focused on today.

All right. That's awesome. And I guess maybe looking more to the near term, looking at the fourth quarter, as of the last earnings call, trends were generally pretty consistent across the business segments with improvements.

And also, you provided a pretty encouraging preliminary 2026 guidance...

Not guidance.

On the back of favorable market setup. And then October trends you mentioned seem to be also supportive of the outlook.

Maybe can you just -- it's been a couple of weeks. So maybe can you provide an update on what you're seeing across the business now that we're kind of looking -- heading towards the end of the quarter?

Yes, there's no meaningful change sitting here on December 2 today. We don't have November in yet, but we haven't seen anything that would cause us to feel any different about our ability to deliver the outlook that we gave in 2024.

I think the feedback I've gotten across most of the companies that have been on the conference circuit, we've been out there as well as everything seems to be okay. In spite of the relative consternation, our customer underlying trends are good, aligned with what we had expected.

And the reason Ron brought up the October numbers as well, you got 1/3 of the quarter in already and everything is coming in as we would have expected to. So yes, no real change.

All right. Awesome. It's great to hear. And maybe just moving to the segments and I guess, corporate payments, the most important one to start with. So a lot of exciting developments in the segment across the board. It probably would be great to hit on a couple of key topics. First, on the underlying drivers of the strong mid-teens organic revenue growth in the segment year-to-date and line of sight to mid-teens organic growth to 2026.

Maybe can you just talk about some of the underlying drivers?

I think if you step back a little bit, a lot of it is driven by the model. Right? The revenue retention of the company is at 92%. Corporate payments, both domestically and internationally runs between 95% and 99%, generally speaking. So when you have that little attrition, it's "relatively" easier to create a mid- to high teens organic growth rate, but it's a customer acquisition game today.

Chris. I think folks, while we continue to impress upon our investors and prospective investors that we compete 90%, 99% with banks. Banks have all the share today. They have 90%, 95% plus of all domestic payment flows. They have 90%, 95% plus of all international payment flows today.

We have, call it, between 10,000 and 20,000 clients in each of the corporate payments businesses out of 200 to -- I don't know how many hundreds of thousands of prospective middle market clients that exist around the world.

So we don't have any share. So our entire objective is, go out, get the payment files domestically and internationally and just sign up more customers. Right? So if you retain, call it, between 95% and 99% of your revenue every year, you got a pretty good starting up place for next year. And as long as you invest appropriately in enough sales and marketing to drive that incremental growth to both offset the leakage and hit the growth rate that you want.

That's what the model is designed to do. And it is fairly formulaic. You know what your average salesperson produces by time and territory. You know what you want your growth rate to be. It's almost you sticking into a spreadsheet and outcome, it spits out, go hire x number of salespeople, invest x number of dollars in additional sales and marketing.

I think the other thing that we continue to get questions on, hey, you name competitor, X, Y and Z. Everybody is talking about going after the B2B opportunity. It's easy to say, it's hard to do, and everybody has a different definition of middle market companies.

Our definition of the middle market company, which is where we focus is think companies with revenues of $300 million to $500 million up to $1 billion in revenue. So call it middle market to larger middle market. Some of the peers that we get asked about are super small business or even lower middle market, right? But we're all just competing against banks and trying to chip share away from banks.

And our view over the longer term is that payments, both domestically and internationally, it's just the next thing that banks will have used to own a decade or 2 down the road, just like the networks, just like the acquirers.

I mean we work with a bank, we're at a bank conference, but it's just not what the banks are focused on today.

All right. That's very helpful color. And I think you often cite the market penetration by different segments. Can you maybe just recap for us the enterprise versus mid-market versus I guess, maybe even lower tier, what's the kind of penetration rate do you see it?

Yes. Usually, that's more of a vehicle payments question as opposed to a corporate payments question, right? If you look at the total vehicle payments category, it's about 1/3, 1/3, 1/3 today. It's 1/3 U.S., it's 1/3 Europe and 1/3 Brazil. Most of the payment statistics that we think about and talk about are kind of U.S.-centric.

And it's really pretty different by size of fleet. The largest fleets in the country, the big contract carriers that you see, the trucks on the road all the time, the delivery companies, they all have a fuel card program, a fuel card provider, and it's either us or our primary competitor, WEX, right?

It's not a surprise, but they're big enterprise customers, and they don't pay either of us very much for the service that we deliver. When you go down market, think fleets with 25, 50 trucks or less, we estimate there are only 40% -- most 50% penetrated with the fuel card as most of those businesses continue to use just a general purpose credit card, and they chase drivers around for receipts and try to make sure they're only buying what they're supposed to buy, right?

So that's where we spend most of our time selling is into that down market fleet. Why the penetration rate is lower and the economic profile of that client are just better.

And that's what we've done for 25 years, and that's what we continue to do. Obviously, we fell off the wagon a little bit over the last few years as we migrated away from the micro client segment.

And we delivered mid-single digits organic growth for the North America vehicle payments business in the third quarter, and we expect to do the same in the fourth quarter and then a pretty good jumping off point into next year since we're already there.

All right. Awesome. Before I go back to the vehicle payments, I think it's a very good segue, but there's a couple more corporate payments topics. I just want to follow up on. And also in the corporate payments that you're seeing, basically, you and a lot of competitors serving the middle market are still competing against the banks that's like the biggest competitor still.

Okay. And then I guess in terms of your customer mix, you've mentioned the decline in revenue per spend volume in this business as you mix shift towards new payables and cross-border enterprise clients. Maybe can you talk a little bit about how you think about the enterprise opportunity and maybe the trajectory of this metric in the coming years?

Yes. I think it's important to understand that the focus of the business continues to be 99% middle market companies, right, signing up more middle market companies and domestically, you're trying to ge t them to do something a little different than they're doing today. 40% of all B2B payments in the U.S. today are still done with paper check. Right?

Somebody is printing the checks, taking them down to the CFO's office, signing them, they get stuck in an envelope with a stamp and put in the post, right, to get them to outsource their AP is a little bit different.

So over the last decade or 2, we've been working, maybe not single-handedly close to it to educate companies about the benefits of outsourcing their AP to us, right on the cross-border side, most companies that have cross-border needs today are already doing that just with their bank.

And the largest global money center banks that actually have real capabilities don't really want to take the call of the average middle market company because there's not enough revenue for them, which is why we found very fertile ground to continue to sell into that middle market space.

So Ron talked, our CFO, our CEO, talked about signing up an enterprise client on the AP side earlier in the year. They were trying to solve a different problem. They had multiple AP centers around the U.S., and they were trying to drive efficiency across the organization to create a better outcome at the corporate level.

And we had a conversation with them, and they're largely ramping. I think we also talked about $1 billion a month in volume. Very little of that's carded today, but the opportunity is there. But for us, it's a client acquisition game. This is not a share of wallet game at this point.

This is not a take rate expansion game. It's a client acquisition game as we just continue to sign up more clients and put them on our platform. And it's a bit of a land grab, and I think that's where we're focused today.

So if we can pick up an enterprise customer along the way, that kind of demonstrates the value that, hey, we have a program and a product that works for the middle market, but we also have a program of product that works just as well for the largest enterprise customers in the world.

It's a pretty good per to be able to walk into somebody's CFO's office and say, hey, by the way, we can help both of you, and we've already proved it.

All right. That's awesome. And I think you've outlined this before, but I think it's pretty important from a longer-term strategic perspective, how do you see the corporate payments business growing from the expected $2 billion plus of revenue in 2026 to 5x the size longer term?

Yes. I think our CEO's comments on there was a little bit to help folks kind of look up from the trees and look at the forest and look at the opportunity. And we've grown that corporate payments business from 14%, 15% of the company in 2018 on its way to 40% plus of the company today.

And there's no shortage of TAM or opportunity out there, right? So it's easy to kind of focus in the day-to-day of the grindy details of, okay, well, hey, help us understand the confidence in your ability to create mid- to upper teens organic growth next year.

Well, the reality is that we should expect to continue to be able to do that for certainly over the medium term, maybe even longer because again, there's no shortage of opportunity.

And we kind of view this as shaping up over time a lot like the payroll space, right? 30, 40 years ago, all the companies did their own payroll. Today, nobody does their own payroll. Today, most companies pay their own bills. In 20 years, probably very few companies will pay their own bills.

And that's the opportunity we're after. So there's no shortage of TAM. There's no shortage of share to be taken from the banks. And we think there's no reason with both inorganic and organic investment that we can't have a much bigger business than we have today.

All right. Awesome. And I guess moving to the inorganic part of the growth algorithm in terms of the most recent acquisitions, maybe starting with the Alpha Group. Can you recap for us what makes this an attractive acquisition for Corpay in terms of expanding cross-border capabilities and where you'll see. And where we'll see the greatest synergies outside of the $200 million of expected revenue contribution?

Yes. I think if you look back since 2017, when we bought the original cross-border business. So since 2019, this is the fourth cross-border acquisition that we've done. And historically, it's been mostly about scale. It's more customers. It's the customer acquisition game. We can do it one by one organically or we can buy other subscale cross-border providers that have built something along the way and just add more scale in it.

We've also, along the way, picked up additional geographies, additional products and services. Alpha has a corporate business similar to what we offer today, but they also have a global bank account business that they've been able to grow from 0 to $3 billion in deposits over a few short years, right?

It sells quite well, and they were only able to sell that in Europe because that's the only place they were licensed. And they were able to build a pretty good business. It was pretty attractive for us. We already have the licenses necessary to sell that in the U.S. and Asia Pac. So now that we've closed the deal, we can go to market immediately to sell that going forward.

So the revenue synergy opportunities are probably bigger and more exciting with Alpha. They've been with just about any other acquisition.

But we also have just the core synergies as we migrate their corporate customers onto our platform and then rationalize the expenses on the back end in the second half of the year. So you look at it, you get scale, you get a little bit of incremental capabilities.

You got this brilliant new virtual bank account product that is selling quite well and quite attractive to not just corporate clients, select corporate clients, but the financial institutions as well. And with the right opportunity for us.

All right. And next one, not technically an acquisitions, it's more of an investment -- significant investment in AvidXchange, where you took 1/3 of the stake and then understand you may or may not in the future, to acquire the rest of it. What's your plan there?

And maybe can you remind us what you're looking to see from Avid that would encourage you to buy or not buy? And then how can your current AP business benefit from the added scale?

Yes. I mean again, it's not dissimilar to what we do on the cross-border side. It's scale, right? We can do it individually organically, mid-teens more slowly over time or we can use our significant free cash flow generation to buy incremental scale.

Now Avid does run a middle market and kind of a lower middle market business in slightly different verticals than we do today. We've looked at them over the years as a potential acquisition target.

But unfortunately, their profitability and their growth profile looks a little different than our profitability and growth profile of our Corporate Payments segment today and the overall company. So we partnered with TPG to take them private. That deal closed roughly 5 or 6 weeks ago now.

And ultimately, our intention in that partnership and that take private with TPG is we expect to own this business at some point down the road. We have the right to buy it at a fixed price anytime within the next 32 months, 33 months at the close.

And what we're really looking for is for the profitability of the company to meaningfully improve and the growth profile of the company to meaningfully improve. It doesn't have to get where we are today from a corporate average margins perspective, but it needs to show progress on its path to getting there.

And we expect to own this asset at some time. Otherwise, we wouldn't have done it. But it would have been diluted by both the organic growth rate of the segment and also the EPS of the company. And we didn't feel that that's what we would want, much less what investors would want at any given time.

And we also wrote roughly a $2.5 billion check for Alpha. It was the second largest deal in the company's history and write $2 billion-plus checks at the same time, it's a lot. So we can partner with TPG. They can go in and do the things necessary to improve profitability and the growth profile of the company. And over the next 32 months, if it starts to progress along the thresholds that we know and believe that should be able to, then we'll likely hit the bid button on that time.

But it's a pretty nice way to kind of sequence the transactions without impairing our ability from a leverage perspective or appetite perspective, otherwise.

All right. Awesome. And I guess lastly, can you talk about the Mastercard transaction take it the other way around? And then what's the expected financial impact in 2026?

Yes. So Mastercard, we announced over the summer that Mastercard was going to invest $300 million in our cross-border business. That deal closed this week. right? And so we now have the ability to -- we've already been going to market with Mastercard to talk to the banks and financial institutions, think regional banks and below about meaningfully improving their cross-border capability, right?

When you look at the cross-border landscape, there are a handful of global money center banks that have real broad cross-border capabilities other than just sending payments by Swift to the correspondent bank network.

Our pitch to these banks who Mastercard is facilitating the conversations to, they may not take our call because they view us as competitors. They're going to take Mastercard's call, and they're going to walk us in and facilitate a conversation on how we can meaningfully improve their cross-border capabilities.

We already have a handful of smaller banks as clients today. We work with some of the processors as a white label solution to provide that cross-border capability today. So we think it will be attractive to a number of banks that are on our target list. And now that it's closed, we would expect to close 1 or 2 of these here maybe towards the end of the fourth quarter, into the first quarter.

And we talked about, hey, maybe this could be a couple of points in incremental growth on the cross-border business over time. So you think about it, most banks spend most of their investment dollars on the consumer side of the bank.

But few dollars are left on the commercial side for investment probably isn't going into the cross-border side of things, and we can help those banks keep some of their best customers for longer or maybe even forever, who might otherwise get to the point where they outgrow what those regional and smaller banks can do for them.

And then they go across the street to one of the large money center banks so they fine, we'll help you, but you need to bring your entire relationship over here.

So our pitch is, hey, use us from a white label or referral partnership perspective, we can help you keep that customer for a lot longer, and it is oftentimes probably one of their best customers that they want to.

All right. That's awesome. Lots of things to look forward to in this segment alone.

Yes. So just before we move along, obviously, in cross-border before we just had corporates, which there's plenty of opportunities in corporates. And now we have corporates. We have financial institutions. We have asset managers and PE funds with the global bank account product and digital currencies, which I'm sure we'll get to.

There's no demand for it today from our corporates. We have the capabilities. This is not new to us, stable coins, if you will. We've been investing in this for 18 months now. So it's a bit of -- you need to build it because they will come.

Well, it's been built. We can work with our clients today. There's no real benefit in G20 currency corridors for a stablecoin versus what we can do on a proprietary transaction or a swift transaction today. It's not cheaper, it's not faster. It's not any more secure.

There are use cases for it that we've talked about, but we see it as an incremental opportunity for us as we continue to aggregate more of those flows and just use it as another rail to move liquidity around the world.

All right. Makes total sense. Moving to the next big segment, Vehicle Payments. The segment accelerated to 10% year-on-year organic growth in Q3, and it was supported by a return to mid-single-digit growth in the U.S. business.

Can you talk about the improvement in the results in the segment compared to the last couple of quarters? And maybe just recap your expectations for next year.

Well, we haven't given guidance for 2026 yet. But when you look at it, most of the conversations that we've had this year are, hey, Brazil continues to do quite well. And I said before, it's 1/3, 1/3, 1/3, 1/3 North America, 1/3 Europe and 1/3 Brazil, right?

So Brazil continues to grow at high teens rates. international or Europe continues to grow at high single-digit rates, and that's what they've grown at for the last several years. But U.S. Vehicle had gone from being a consistent quality grower to being a problem child as we've talked about it, right?

We had made the conscious decision to move away from a micro-client segment that had been quite good for us because we saw bad debt spike, and we did that several years ago, and it's taken us longer than we would have expected to rebuild the sales function into a place where it can create enough absolute new revenue dollars to create the growth profile of that part of the segment that we would expect.

Through all year, I've answered questions, we'd answered questions, hey, what gives you confidence in your ability to get there? Well, it's math. We could see it. We talked about the couple of hundred basis points of retention improvement that we saw in the second quarter. We feel that's a durable improvement, right?

We just have a slightly larger, better, higher quality, more durable customer base today. And we're finally getting to the point where we have enough sales resources producing enough new sales to create the growth rate of the company.

We've talked about a couple of enterprise customers that we won as well. That's just an indication of the overall health of the business. It wasn't a meaningful driver of the improvement.

But it's really just signing up enough new clients, bringing in enough new volume at better retention rates that caused the business to inflect to mid-single digits.

We printed to 5% for that part of the segment in the third quarter. We expect mid-single digits in the fourth quarter. And as we kind of sketched out the 9% to 11% expectations for next year, all the business that we have today pretty much just need to keep doing what they're doing today.

And how do we do that? Well, you invest enough in additional sales and marketing to deliver the growth rate that you would expect. And that's as I started -- as I mentioned at the start of this, is the advantages of the model.

So as long as some of the inputs or the underlying factors don't change, which we wouldn't expect them to, you know what the investment needs to be to create the outcome. And that's what gives us our confidence in our ability to do that. We still have to execute. Right?

But you're not trying to fix something to get it back on to the trajectory that you need to be on. It's already on the trajectory now. You just have to keep it there. It's an easier place to start from.

All right. That's helpful. And then regarding some of the divestiture candidates in the segment, maybe can you just share some additional context in terms of the business profile, growth profile and what makes them potential divestiture candidates and what are you looking to get?

Yes. Earlier in the year, we talked about potentially divesting a couple of non core vehicle payments assets in the International segment, right? They're good quality assets.

I kind of describe it as, hey, you have core and super core inflation. Well, we have super core businesses like fuel cards, and then we have core businesses, which are still vehicle related, but they may not be the -- they're certainly not the core fuel card opportunity.

We've seen some other assets in and around these businesses that traded at some pretty good prices. like, if we can get that price, maybe it makes sense to kind of take some of those proceeds and remix it into more corporate payments. That was the thought earlier in the year.

We knew we were going to write a big check for Alpha, which we did. And as Peter, our CFO, said, we expect to end the year, call it, 2.8x leverage after you account for the incremental debt and the checks that we wrote there as well, right?

So originally, it was, hey, what happens if another acquisition opportunity came down the road that we want to do shortly after we did that deal, where would the liquidity come from?

So we looked at some of these assets and our books are in the market today. first round bids were due back last week, this week or something along those lines. And if we can get some decent prices for them, they grow at or slightly better than that part of the business average. The profitability of them is quite good.

But today, given where the stock trades, well, maybe it doesn't make more sense to go back and use that liquidity to look for other acquisition opportunities.

It might make more sense to buy back shares at the current valuation, right? So we're not liquidity constrained. We was never done or considered to need to be done to be able to buy Alpha.

It's really, okay, how do you create the most flexibility after that deal closes to make sure that you're in a position to be able to do what you think is right for shareholders and what you want to do.

All right. That makes sense. And so looking forward to the update. And I think from last call, I think you shared it's -- you're probably going to see some outcome within 90 days of the earnings call.

We'll know a lot more in 90 days when we talk in February, whether it's, hey, what the likelihood is of one or both of those things closing or the initial bids weren't what we expected them to be, and we're happy to keep those assets. But we'll know a lot more when we talk in February.

Right. And it's not contingent upon being able to sell both of them at the same time, right?

Two separate processes. One is larger, one is smaller. Obviously, the smaller ones are easier to -- the checks are smaller and easier to get done, but we'll see. We're not running a fire sale. These are still very good businesses that we're happy to continue to own.

But if there's an opportunity to remix faster towards more corporate payments and/or buy back more shares of a high-quality company at low valuations, that could make more sense.

All right. And I guess maybe quickly touching on lodging. What are some of the steps you're taking to maybe revert the sales back to the level it was in 2023?

Or maybe like if it turns out to be like a secular slower growth business, what will help you make the decision of whether to keep the business or divest it at some point?

Yes. I mean this is just a lack of sales. We just haven't been able to recreate or regenerate the sales effectiveness necessary to drive the growth we would expect in that business. So we've owned that business since the company went public in 2010.

Until the last couple of years, it's been a double digit, sometimes even a 20% grower over that time. Certainly, the last couple of years, that has not been the case. We think it's mostly an us problem. right, as we continue to work and reinvigorate the go-to-market activities, getting the right salespeople in place, getting the right sales motion in place. We believe we can get that back to double digits.

But to your point, as Ron mentioned, I think, on the May call in response to a question, we're not interested in owning a business that can't grow double digits. So if we run another year forward and we don't feel like we're on the trajectory to achieve that, we could make a different outcome. It's still a great business.

It runs at better than corporate average margins. It continues to be accretive to the overall results. But it's -- we need to do with it what we did with U.S. vehicle and get it back to a place where it's just consistently producing results that are in line with expectations. So we don't have to keep talking about, okay, what's the problem? And what are you going to do to fix it.

All right. That's awesome. And then maybe just picking back up to the corporate level in terms of capital allocation, I guess, between investing sales growth, other M&A opportunities and share repurchases, you certainly touched on some of this.

And I guess from just your recent conversations with the investors, what are some of their views on where you want your leverage to be, whether there's an appetite for that to go above 3x or maybe go lower?

Yes. As we kind of think about capital allocation, right? This year, we're going to generate in the order of something about $1.5 billion in free cash flow. And from a technical free cash flow definition, there is some volatility there. So we use adjusted net income as a proxy for free cash flow. Right? So I think $1.5 billion or so.

And from a capital allocation standpoint, we already invest organically at what we think is the efficient frontier. The idea is to deliver 9%, 11% organic growth to be able to do that consistently over time. That's what we're trying to build plans to do that today. Generally speaking, the next and highest best use of every incremental capital dollars in accretive M&A, right? We're good at it. We've done roughly 150 deals in the company's history. It's a competitive advantage for us. And we've been able to create a lot of value on that.

But as I kind of describe it, the last gating factor when Ron and the Board are deciding on whether or not to do a deal is how do we feel about paying you a relatively high multiple you're subscale asset versus buying back my own high-quality company, this is trading at relatively lower valuations.

Sitting here today, that bar is much higher for incremental deals. So I think you would expect us to be much more buyback heavy in this type of environment where the valuation -- relative valuations are where they are today. But we're not constrained. We have the ability to do both. Certainly, delevering is another option, and that's probably the least likely outcome, even though that's likely how we will give our outlook next year is assuming delevering, right?

And oftentimes, we would -- most of the time, we would only delever in anticipation of doing another deal where we need the incremental capital, right? So we get very high marks for our capital allocation history and diligence and creating significant value and being opportunistic and buying back shares when it makes most sense and buying companies that create incremental growth going forward when it makes the most sense. we can do both.

Right. Awesome. Jim, I'd like to open this up for any audience Q&A. If you have a question, feel free to raise your hand. If not I have a final follow-up for Jim. All right. I guess you've had -- we had a dinner so well attended last night and a lot of investor conversations. Anything you feel like still misunderstood you want to emphasize or?

Yes. I think for us, it's probably the biggest thing is if we deliver 10% organic growth this year like we would expect to do, well, if you look back over the last 5 years, we've done that for the last 5 years. Yet we continue to get tons of -- or not tons, but some questions on the durability of the organic growth model going forward. I think it is a bit misunderstood of just the durability of the economic model, the businesses, the highly recurring nature of the businesses today that generate a lot of cash that provides a lot of optionality.

So it's something we've done since the company went public in 2010 and since before that, we would expect to continue to be able to do that going forward. Ron, our CEO, has run the company for 25 years. He's not going anywhere. He is the glue, if you will. And for us, that 9% to 11% is kind of the benchmark.

The ability to deliver that with some operating leverage and significant free cash flow gives the ability to deliver EPS growth at mid-teens plus. That's what we're trying to achieve.

All right. Perfect. Thank you so much Jim.

Thanks. Appreciate it.

Let's get started. Our next speaker is Peter Walker, CFO of Corpay. Peter has a strong background in financial leadership, having previously served as CFO at Instructure Holdings and Jackson Hewitt. Thank you for joining us, Peter.

Yes. Great.

Appreciate it. I think this is your first conference with us. So we're honored.

So it's been about 4 months since you started as CFO, maybe you could talk about your preliminary takeaways from the seat, what you think -- might be thinking of affecting a better outcome for the company?

Yes, great question because I've been thinking about it myself, reflecting on 4 months, it's gone by like this, right?

Quick.

Probably 3 big takeaways. I think one was my hypothesis coming into this role, in this company, obviously, was high growth in terms of 9% to 11% organic growth and the businesses they were in, et cetera. But I dumped my head in the water deep enough to know truly what the opportunity is. And so I think one of the biggest things on my takeaways right now is the Corporate Payment space that we really pivoted to a couple of years ago, the opportunity there is just so large for us. There's so much untapped TAM for us in both the payable space and the Cross-Border space. We've obviously been spending a lot of time in terms of M&A related to that between the Avid investment we made on October 15 and then the Alpha transaction we closed on the 31st. So I'd just say I'm probably more enthusiastic than ever about just the durability of our strategy and the biz model.

That's great. Obviously, the stock has been beaten up a decent amount recently. Although it's had a nice run in the last couple of days, and we'll take it, right? What do you think the market is missing on the business? And what do you think you need to do to bridge that -- the views going forward?

Yes. So I always focus on what can I control and what can I not control? So maybe in the space of what can I not control. Unfortunately, we're just in a bad neighborhood right now. I mean the payment space is a pretty tough space to be in. What we've been told often is, great house, bad neighborhood, not really what you want to hear. So hopefully, with time, that changes. But what we're focused on is the best we can do in terms of performing within that. And what I would say there is, I believe we're exiting the year with a stronger business than we even went into the year with, right? So we've shown to the market that our U.S. Vehicle payments which is only about a $700 million business of $4.5 billion, can deliver mid-single-digit growth. We've also shown the durability of high teens organic growth in Corporate payments. So -- and we've executed on a large acquisition and investment. So I think that's the exciting part as we look forward to '26 and really enthusiastic about what's ahead of us there.

Yes. On the conference call last week, you guys talked about each of the Core segments that make up the key businesses of Corpay, right? Maybe you could just sort of rehash that buildup of how they come together to drive double-digit topline growth.

Yes, happy to. So if you think about our 2 largest segments being Vehicle Payments and Corporate Payments, makes up over 80% of our revenue today. And those are the places that we want to operate in. If we double-click into Corporate Payments, corporate payments from an organic perspective is a consistent high-teen grower. We expect that to continue at that pace. And that business is really split between 2 businesses. Both of those really offering services to the office of the CFO. So there's a cross-sell opportunity there. That is the payables business, which is about 40% of the revenue in Corporate Payments, and then there's the Cross-Border business, which is about 60%.

So that's what makes up Corporate Payments. If we move over to Vehicle payments, something we shared on the call, just -- well, that was just a week or 2 ago, was there's really 3 businesses within Vehicle Payments, and those businesses sit in different geographies. Those businesses are all about the same size in revenue, so call them around $700 million businesses. One of those is our U.S. business, which is growing mid-single digits. The other is our international business, mostly Europe, growing at, call it, high singles, low doubles. And then the other business is in Brazil, which is growing at, call it, high teens.

And so that International Vehicle Payments business and the Brazil business, the results have been very consistent there. And then in the U.S. Vehicle Payments business, obviously, a pretty big transformation in that business, and we've returned that to mid-single digits, which we're quite pleased with.

Well, that's great. Obviously, inside of Corporate Payments, there's a lot happening over the next couple of years. And that can, at minimum, sustain the really strong growth that we've seen, if not accelerated. Maybe you could talk about how you're planning for all these different initiatives in the segment?

Yes. So on the call, we talked about how to think about the Corporate Payments in 2026 and really thinking about that business within 4 overall offerings, right? So we have a spend management business. It's about $250 million. And there really is about our ability to monetize spend for our clients. Corpay One is what you've heard us refer to as a product offering within that business. So really high valuations in that space and a nicely growing business. The other business that we talked about was our full AP business, which is AP outsourcing basically, and that's about a $400 million business today. That is a very similar business to AvidXchange, which we recently took a 1/3 investment in with the option to buy. Avid's business is actually larger than our business. So if we do decide to execute on that acquisition, we'll grow that business twofold through that M&A deal.

The next piece of the business is the Cross-Border business itself, which is really focused on foreign currency exchange, whether that's a spot exchange or longer-term contracts. So that's about $1.2 billion. And then the last piece of the business, which is really emerging for us, I would say, in terms of size, but we're super excited about it is the Global Bank Account business. So we, in legacy Corpay had the Multi-Currency account business. And then with Alpha that we just recently closed on, they have the Global Bank Account business.

So combined, that represents about $4 billion in deposits that we now have in that bank account business. with the majority of that, about $3 million coming over from Alpha. So we think that we are -- we know we are advantaged in our ability to open Global Bank Accounts given kind of some secret sauce we have around KYC and using AI capabilities, et cetera. So hopefully, that frames out what we think is going to be call it, north of a $2 billion business in 2026. And I think that we're really advantaged in these businesses to maintain that type of double-digit organic growth going forward.

So you talked about Alpha a little bit in the Global Banking Account business. But maybe you could just talk about the revenue profile of Alpha and how it impacts the Corporate Payments revenue growth profile going forward?

Yes, sure. So we shared on the call that for the fourth quarter, we expect Corporate Payments in totality to come in, in the teens, ex float, we would expect that to be in the high teens. If you look at the Corpay business on its own kind of similar results, if you look at the Alpha business, call it, 13% to 14% with out float, but 31% with float. So there's definitely a much larger float component of that business in our traditional Cross-Border business. So as we look into '26, we obviously do see some float headwinds, call it, somewhere around 100 basis points on the overall company of float headwinds from the combined Cross-Border business and from the Corporate Payables business, but we're really focused, obviously, on increasing spend in our payments business and increasing bank account balances so that obviously, larger balances and the rates are lower.

Got it. And then you've guided to at least $0.75 accretion from Alpha and the Avid deals combined. Maybe you could just talk about the sources of Alpha synergies and how much will come from cost savings versus revenue synergies, cross-selling Corpay's products into the Alpha client base, maybe just break all of that down.

Yes, sure. So I spent 5 hours yesterday on the phone with the Alpha team, the CEO, the Head of Strategy, Head of HR, there over in London. And we're going through that process right now. We firmly believe when we buy a quality asset like Alpha, one of the most important things to do is sit down with the management team, go through our deal hypothesis where we see synergies, where they see opportunities and then meld those together. So I would say we didn't want to get over our skis on the Q3 call. And so that's why we shared, hey, we expect at least $0.75 of cash EPS accretion in 2026, but generally said, give us some time to work through our budgeting process and really vet these synergies with the Alpha Group.

So I'd say more to come on that. But I would say we do expect significant revenue synergies, right? As we've mentioned in the past, Alpha only has licenses within the U.K. and Europe. We've got licenses in the U.S. and Asia Pacific, right? So being able to take their current client base and just expand them to those countries alone has a significant revenue synergy that goes along with it.

And Mike, just what's the timeline to get to a good place is, I guess, it would take a little while, I would think, just because there's a lot to do. So I'm just curious, like how should we think about that?

Well, it's interesting because we are already getting calls from our current clients and from Alpha's clients about doing business on the others platform, right? Like, we -- some of our clients are calling us going, wow, we love that Global Bank Account offering. Can we get that tomorrow. So I'd say what we're focused on is how do we create a short-term structure where we can service our clients, give them what we need, generate the revenue we want to from the business sooner than maybe we even had planned, and then in the background, having, hey, what's our ultimate plan in terms of integration of how we're going to run the businesses together.

I'd say, high level, the way to think about it is within the Corporate clients that we serve in Cross-Border. We've done several acquisitions in our past. We've always integrated those acquisitions to one platform. And so that would be the expectation here with Alpha as well. But what's unique about Alpha is they have this private capital markets business, which is basically where they're serving a lot of private equity money, et cetera, this is where their bank accounts sit. They have a unique advantage system there around KYC around the bank accounts, et cetera. So we will continue to use their system for that going forward with some benefits from our Multi-Currency account.

Got it. Okay. It seems -- it would seem to me like there's a lot of leverage between the Vehicle and Corporate Payments business. Where do you think the biggest opportunities are for synergies?

Yes. So we think the biggest opportunity is taking our fleet card customers, right? We currently have a fleet card and moving them to a multiuse card rates are really moving upmarket to -- not only are we going to help you manage your fleet expenses, but let us help you manage your corporate expenses, right? And then we are obviously always focused on within the Cross-Border business and within the payables business we are selling into the office of the CFO at some level, right? So once we get a door within -- foot within that door, how do we bring the rest of our product suite along with us.

Got it. So maybe a little double-clicking on the Vehicle business. The organic growth has been accelerating, but same-store sales has been sort of flat for quite some time. I'm just curious like when we could see some kind of inflection in same-store sales. It just seems like it's been hard to come.

Yes. So we view -- so the model that we have is we believe we're growing the business based on new client acquisitions. And so we measure same-store sales success as kind of being plus or minus 1. So in the current form, right, I mean, our view is we're being successful at same-store sales, where we see the growth is adding new clients to the portfolio. As we shared on the earnings call, sales growth for the company grew 24% year-over-year. So we are seeing some really good success in sales, and that's a lot of what is driving USPP's performance.

Got it. Okay. Maybe we shift gears to lodging. Obviously, it's been quite choppy in that business, and there's a bunch of headwinds. Maybe you could just talk about sort of the process to get an inflection in that business.

Yes. So disclosure that we added this quarter because we thought it was really beneficial is lodging is down 5% year-over-year organically. But if we remove the emergency volume related to the FEMA contract, it's down 1% year-over-year. So the business itself, right, take emergency off the table because we know there's volatility to that is basically flat. So I'd say that we feel strong about where we've repositioned the business, invested in the technology of the business, our focus here has got to be on growing sales. And so that's got to be the code that we crack in the business going forward. So that's where we're focused.

I've received a lot of questions in terms of are you going to do best of business? What are you guys going to do, et cetera. One thing that I've been focused on, I went back and looked at what's been the organic growth performance for the business, right? And as recently as '23, that business is growing at a 20% organic growth rate. So it's really been the last couple of years that we've had this slowdown. And again, there was a series of issues on our side, which we've corrected at this point. So I think our view is we would like to continue focus on the business and turn the business around. After that happens, whether we make a decision if this fits the overall portfolio or it doesn't, given our focus on Corporate Payments and Vehicle Payments kind of TBD.

Got it. I want to get to the topic of significant discussion which is Stablecoins.

Stablecoin, what I...

You got to love Stablecoins. It's one that I think a lot of people talk about just because part of your Corporate Payments business sort of is in the intersection of where people believe there's perceived disruption, which is Cross-Border payments. Maybe you could just talk a little bit about how you see the business positioned relative to the Stablecoin discussion.

Yes. So we did announce, for lack of a better way of framing it, our Stablecoin strategy on our last earnings call. And I think it was really well received by everybody. So maybe just give a little bit of a background of what we shared there, right? So we've been investing in the space for about 18 months. Mark Frey, who runs our Cross-Border business and has really been doing this his whole life is a really big advocate of Stablecoin and how we believe that it can be a competitive advantage for us. We think we're actually uniquely positioned to use it as a competitive advantage.

And given that, one, we move billions of dollars to data merchants, right? So Stablecoins is another rail that we can use to merchant to use -- move money to merchants and it can make those funds available 24/7. So we think that's the use case within the merchant space, within our Global Bank Account product, we're going to add Stablecoin accounts to all of our Global Bank Accounts. Again, it would give the opportunity for those clients to move money 24/7 and not restricted within banking hours.

And let me come back to that because there was an interesting kind of data point as we were proofing that concept yesterday with Alpha now that we're in open conversations. And then the third piece is there's an underserved crypto market where they need assistance with on-ramping and off-ramping which is really the foreign currency exchange portion of their business, which is the main product we sell within cross-sell, right? So starting there, that is the biggest revenue opportunity in front of us is bringing on clients like Bank of Frick and other clients in the crypto industry and providing our current services to those accounts.

Obviously, a lot of investment has gone into compliance related to that. The crypto world is becoming a lot more legitimized, but as we all know, there's still some kind of dark and shadowy parts of that world. So we need to make sure that we have a strong compliance against it. But to go back to the use case of Stablecoins in our Global Bank Account, what we heard yesterday from the leader of the Global Bank Account business out of Alpha is that for their clients, the most stressful time, no shocker here, in their process is when they're closing a deal and they need funds that need to flow from all over the country, right?

They're using us as the bank account for the country that they're making the investment in and that the banking hours are restricted and the funds can't flow after 5:00 p.m. or on weekends. So initial hypothesis there is that we're going to have a lot of excitement from our private capital market clients in terms of offering Stablecoin because it gives them the opportunity, obviously, to close on these assets outside of banking hours.

Got it. And then when we think about sort of the utility and the price differential, those are 2 big things that come up quite a bit. How would you compare them to what you guys provide today?

Yes. So I think there is maybe a misperception that the Stablecoin rail is going to provide the foreign currency exchange, and that is not the case. So when you convert from U.S. Stablecoin to a fiat currency, you still need to have an exchange happen. That is the service that we provide. By the way, that's a tech-enabled service, but that is still a service. So yesterday, I spent the day in our U.S. headquarters for cross-border here in New York, and I got to watch the trading desk work their day, right? And what we're providing is a service to call it, middle market businesses, either the CFO or somebody in the CFO suite treasurer, et cetera, to advise them on these transactions, right?

So the idea that, that service and all the capabilities and investments that we have in terms of conversion of FX is going to be replaced by the Stablecoin, that's not the main use case of the Stablecoin. The main use case of the Stablecoin is it is a new rail to move money electronically. By the way, we move money electronically today, right, on our own proprietary networks, or on SWIFT. So it's not like people are rolling around barrels of cash, right?

So it's just a new electronic method. Is there a price differential on the rail piece between Stablecoin, our proprietary networks in SWIFT, sure, you could plus or minus cents here and there. But overall, that makes up about 5% or less of our revenues being the rails. So we don't see that as being disruptive to the business. Again, we're excited about Stablecoin because we think we're going to be able to offer our customers some real value on it based on the chain that it provides in the 24/7 availability.

And just one last one on that. Like so how quickly do you think you guys utilize Stablecoins and have it up and running in a significant way?

Yes, interesting. So we have a road map set. Our view is, for sure, will be done by 2026 with everything we want to do. Right now, we're in a process of really looking at where do we think the most demand is going to be from clients and then Uber focused on that, right? So if the first opportunity for us is with crypto clients who need exchange capabilities, which is the case that's where we're investing first. My -- we're still rationalizing this. Well, my guess is the next place we'll go to is a Global Bank Account business because we think there's a true use case here for the private capital markets.

When I look at the merchant opportunity, nobody is calling me today and going, hey, Peter, I need some Stablecoin. Can you hook me up for my payment? So that's not there yet, but we want to be prepared when it comes. So what I would say is we're probably a year out from getting it all done, but it's not going to be a big bang theory. We're going to release capabilities related to the biggest opportunities first.

Okay. Very clear. Okay. Maybe we move to capital priorities because I think Ron spoke about the possible divestitures that are out there. And then -- there's the Mastercard investment that's coming and then obviously normal cash flow generation. Could you just talk about how you intend to sort of work through all of those different priorities that you have and inflows and outflows.

Yes, happy to. I mean a big focus of mine since joining has just been all around our debt and liquidity and cash management, et cetera. So we are pleased to share on the earnings call that we increased the revolver by about $1 billion. So the great thing about that is that's sustainable, right, as we think about running the business going forward. We did a TLB to help get the deal done. The other thing that we did is increased our securitization facility, and we actually used U.K. receivables. So if I think about liquidity kind of coming between now and year-end, I've got about $300 million coming in from Mastercard. I've got $300 million that now became available through this U.K. securitization effort. I've got Alpha cash that's coming on my books, I've got cash generation.

So we're actually generating quite a bit of cash between now and year-end. That's what gets us to kind of a 2.8 leverage ratio by the end of the year. Something I've been socializing with investors since earnings is, hey, we think that our stock is just incredibly undervalued and the buying back right now makes the most sense with our capital. And so what I've been talking to investors about is, hey, if it's not 2.8, if it's 3, are you guys comfortable, right, and really just hearing the voice of the investor about their view. And I would say that 10 out of 10 investors have come back and agreed that the stock is incredibly undervalued, and that's where we should be focused from a capital allocation perspective.

Got it. And then maybe you could talk a little bit about the divestitures and sort of where -- obviously, in Vehicle, it sounds like, but just timing and how you see that sort of working its way through into the financial statement.

Yes. So we're in market with 2 businesses that roll up into our IVP business. Both of those businesses are strong performing businesses. So I'd say they are like core businesses, but they're not core plus. So if we ended up not selling them, I'd still very happily be an owner of both of these businesses. But as we think about this rotation, right, the Alpha investment, the potential additional investment or full acquisition of Avid, et cetera, just as a reshifting of our capital. So right now, we're in the market. So books are out on both of those acquisitions.

We're receiving a lot of positive feedback. I think it really comes down to price. And is price going to be attractive enough given the value of the asset. So I don't want to rule anything out. I'd be surprised if we've got something announced before the end of the year, but potentially something maybe kind of early Q1 just given capital markets, my guess would be the smaller asset would go faster than the larger one because the more money you spend, the more diligence you want to do. So we'll see. I think that it would be a nice free up of another $1.5 billion in capital to deploy other ways. One of those could be buybacks as well as additional M&A.

But when we think about like the trade-offs of losing that revenue stream of the strong business versus the liquidity that you get, like the trade-off is still net positive in terms of like the financial impact?

Yes. So great question. So if we sell these businesses alone, right, they would be dilutive to our cash EPS, which nobody wants to have happened, right? So the use of those proceeds is incredibly important to guard against that. So I would tell you that some level of stock buyback is required in order to neutralize that impact.

And that's obviously things you're looking at when you're thinking about purchase price.

That's it.

Got it. Okay. Perfect. I want to talk a little bit about gift we saw pretty strong performance there. And it's been a while, no, I'm joking. It just goes up and down quite -- it's quite volatile, right? And so I'm just curious sort of what drove the strong performance? Is it sustainable? Can we get a little bit more visibility into the trends?

Yes. So I think a couple of things to highlight here. One is Gift had a good year in '24. Gift is going to have another good year in '25? Is it lumpy by quarter? And does that drive me crazy, Yes. Nobody likes that. But I would say the business on an annual basis is performing well and has done so for the last 2 years, and we expect it to do the same at '26. If I think about the team that's running the business, right, it was kind of a step-up management team that moved in that opportunity a couple of years ago, they're killing it. And so one of the most interesting things that they've done is they've repositioned portions of the business where they're actually helping our gift card clients with sales.

So they're using the gift card as a leader to get people back in the store. So for example, let's just use DICK'S Sporting Goods because it sits across the street from our office. If you have a DICK'S gift card, right, there's the ability to put it on your digital wallet, and then we have the ability to send a push notification and say, Sanjay, you forgot you got $150 at DICK'S you should go by this weekend, they're having a sale, 20% off. DICK'S loves these kind of things, right? So we really -- and there's a couple of other products that we've introduced. So what's driving the revenue is sustainable. We've added these additional products. And then the other thing that I would say is our sales funnel, and it's really the who's who of retailers that we don't already have, is really full. So it's a really good business.

So it's interesting. I think the question goes back to, okay, you feel good about it annually, but it's lumpy quarterly. And as you know, we get measured on quarterly performance. What do you guys do? I'd say it's not at the top of our list of something to address in the short term because we feel good about the performance and how it's positioned. I'd say our more bigger focus probably will be focused on lodging and getting that where it needs to be.

Yes. That's fair. And I guess, like just the same -- along those same lines, I know Ron has talked about, well, that business doesn't necessarily fit as a function of the whole. It's a great strong performer, but you kind of focused on those 2 core businesses. Any thoughts on like if the appetite has increased for someone who want to buy that business?

To buy the Gift business?

The Gift business.

Yes. I would say that -- I mean, definitely given the performance, it's a much more attractive asset. It is a -- of all of our businesses, I mean, it still delivers a great margin, right? I mean, when you're delivering almost 60% EBITDA margins, right? But I would say that it's below the line average from an EBITDA margin perspective. So if we did sell the business, it would be less of an uphill battle from an accretion issue. That being said, I want to be very careful what I say at these conferences because I spoke about lodging at the last conference and then an industry rag the next day, picked it up that we were selling lodging. We are not in the market of selling Lodging or Gift, but we are always looking at our portfolio of businesses and looking up.

Of course. Of course. Got it. Maybe one more for me, and then I'll see if the audience has any questions. Vehicle has now -- look, the U.S. Vehicle business has come back into mid-single-digit growth. It seems like you had done some restructuring in that business to sort of align the sales in a better way. So maybe you could just talk about the success there, and if you feel like that's a sustainable improvement and that we can even see improvement from here.

Yes. So before my time, so I have a lot of historians, like Jim in the business to remind me of what happened in the past, right? But there was a big shift in that kind of COVID and post-COVID into what we would call micro Vehicle Payments business in the U.S., right? And we obviously faced a pretty big credit issue as a result of that. As we all know, SMB clients are also long-term -- lifetime value is not very valuable of those clients.

So there was a recognition that we really needed to flip the business and really go up market. And by that, I don't mean enterprise, right? I mean we're talking about fleets of 10 to 15 cars at a minimum and then going up there. So the business has really been going through this rotation I would say, of shedding the SMB business and moving into a larger vehicle size on some enterprise clients as well along the way, which has been nice.

And you're really seeing that getting proven through the numbers, right? And what's great about moving upmarket is retention is up, retention in the business for the quarter was higher than the line average. We've put in AI-driven credit models. So we're able to provide more approvals in the space and have lower credit losses than we've had in the past. We've got the sales function working in terms of driving the business. So I'd just say we're in a really solid footing in that business. My expectation is we'll continue to deliver, we've delivered in mid-single digits, and there are aspirations to get the business beyond that. I would say at this point, we're not committing to those aspirations. But we've got a really strong leader running the business and focused on the future of it.

Great. So I figure I'll open up to the audience if there's any questions from the audience. No? Okay. I think that we're good. We've gotten through all the questions. So this is great. Thank you so much, Peter. Appreciate it.

Yes. Thanks for your time. Thank you.

Good day, everyone, and welcome to the Corpay Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. Please note, this call is being recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Jim Eglseder, Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us today for our earnings call to discuss third quarter 2025 results. With me today are Ron Clarke, our Chairman and CEO; and Peter Walker, our CFO. Our earnings release and supplemental materials for the quarter are available on the Investor Relations section of corpay.com. Please refer to these materials for an explanation of the non-GAAP financial measures discussed on this call, along with a reconciliation of those measures to the nearest applicable GAAP measures. Our remarks today will include forward-looking statements about expected operating and financial results, strategic initiatives, acquisitions and synergies and potential divestitures, among other matters.

Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. Some of those risks are mentioned in today's press release on Form 8-K and can also be found in our annual report on Form 10-K. These documents are available on our website and at sec.gov. Now I'll turn the call over to Ron Clarke, our Chairman and CEO. Ron?

Okay, Jim, thanks. Good afternoon, everyone, and thanks for joining our Q3 2025 earnings call. Upfront here, I'll plan to cover 3 subjects. So first, provide my view on Q3 results, our Q4 outlook and an early 2026 preview. Second, I want to spotlight our Corporate Payments business and emphasize really the sheer size of that opportunity. And then lastly, I'll provide a progress report on our recent M&A and stablecoin activities. Okay.

Let me begin with our Q3 results, which were really quite good across the board. We reported both revenue and cash EPS growth of 14% in the quarter. Our overall organic revenue growth finished up 11%. Particularly pleased there that higher volume and higher spend is driving the organic growth, so durable. Inside of the overall organic revenue growth, our Vehicle Payments segment grew 10%. And inside of that, our U.S. Vehicle Payment segment accelerated to 5%. So delighted, obviously, to see our Vehicle segment back to 10% organic growth. Our Corporate Payments segment grew 17% in the quarter, and that's inclusive of a point of flow compression. Q3 trends continuing quite strong. Retention improved slightly to 92.4%.

Our sales or new bookings grew 24% in the quarter, happy with that. And our same-store sales remained essentially flat. Our lodging business remained weak in Q3. It was mostly impacted by lower emergency or onetime revenues. Fortunately, the attrition in the business improved, so from minus 8% last year to minus 5% this quarter, and the client base softness improved from minus 2% to plus 2% this quarter. So for sure, the business is stabilizing. Now we just need to sell more. So look, in summary, very pleased with the quarter. It's clean. All of the businesses finished in line or better than our expectation. And our 2 biggest businesses, Vehicle and Corporate Payments, representing 80% of the company, both growing double digits organically.

Okay. Let me make the turn to our Q4 outlook, which we're revising up with today's Q4 guidance. So we're now outlooking Q4 revenue of $1.235 billion and cash EPS of $5.90 at the midpoint. Both of those numbers helped by the Alpha acquisition that closed October 31, along with our strong Q3. We are expecting Q4 organic revenue growth of approximately 10%. We are maintaining our Vehicle segment organic growth at 10% in Q4 and expecting our Corporate Payments segment to finish approximately mid-teens. That's inclusive of a 3% float revenue headwind. We have had an early peak at October's revenue, and that's incorporated here in our Q4 guide. So assuming we achieve this Q4 outlook, our full year 2025 will finish above $4.5 billion in revenue. That will be up 14% and above $21 in cash EPS, which is higher than our initial profit guide back in February.

It will also mean that 4 of the last 5 years, our organic revenue growth will be 10% or higher, so pretty durable. Okay. Now on to our 2026 fiscal year setup. Headline here is we really like what we see. Macro -- the current macro setting up quite favorably for next year, better FX rates and lower interest rates, still outlooking organic revenue growth in the 9% to 11% range expecting incremental accretion of at least $0.75 from the combined Alpha and Avid deals. We're also expecting incremental margin expansion as a result of some AI productivity and vendor rationalization initiatives. So look, all of this is to say that we're expecting strong earnings growth next year.

All right. Let me make the turn to our Corporate Payments business and speak to why we're so excited about the future. So we do have 4 solutions that make up our Corporate Payments segment. We're out looking over $2 billion in revenue next year, and that representing about 40% of the company. What we're hoping to do here is just reinforce really the sheer size of this corporate payments opportunity, along with the advantaged positions that we bring to the space. So our first solution is called Corpay One Spend Management, about a $250 million business where we provide kind of modern-day commercial cards that compete with the likes of Amex, Ramp, Brex, Divvy, et cetera. So our advantage here lies in the ability to monetize or digitize more client spend than others, really related to the pretty developed B2B virtual card and fuel networks that we attach to the offering.

Second, we've got about a $400 million mid-market AP automation and payment business where we help clients pay some or all of their invoices. We're a leader in this middle market space, have a number of exclusive ERP relationships, along with the option to acquire Avid, another $500 million mid-market business over the coming years. Third solution is our cross-border business that provides risk management and mass payment solutions. We originate clients there here in the U.S., U.K., Continental Europe and even Asia, out looking about $1.2 billion in revenue next year, largest nonbank in the world in this cross-border space, and we do boast the most experienced set of sales and service specialists.

Last up, our newest solution in Corporate Payments is our global bank account solution and our multicurrency account solution out looking about a $200 million business next year, where these global bank accounts help institutional asset managers, think PE firms and corporates set up new foreign bank accounts in record time, currently holding about $3 billion in deposits there. So look, the point here is that we've got pretty strong positions in each of these 4 corporate payment solutions areas, spend management, AP automation, cross-border risk management and global bank accounts. Each of which have just an incredible global opportunity and upside. So we've set our sights on making this a really big business, think $10 billion, think 5x from where we are. So quite excited about it. Okay. Let me make the transition to progress on the M&A front. We have closed the Avid mid-market AP automation investment.

We did that on October 15. We're busy working with TPG and Avid management to craft a more profitable plan. We've laid out a series of actions, we think, to materially improve Avid's profitability and their sales productivity. We have closed Alpha, which is the European cross-border business. on October 31. Super excited about this transaction. And as I mentioned, the global bank account product, fast growing, really a new opportunity for us. So we are in the final stages of developing the '26 plan, the synergies, but fully expect that business to be quite accretive to us in 2026. We expect to close the Mastercard investment into our cross-border business on or around December 1.

The reminder there is that we would bring our cross-border solutions to Mastercard's bank clients or FI clients. We do have a pipeline building and hope to convert some new accounts there in Q1. We are in the market with 2 divestitures, hoping to fetch up to $1.5 billion. We expect to have a pretty good idea if these divestitures will transact when we speak again in 90 days. And not surprisingly, we are continuing to look at some additional, some new corporate payment acquisitions that we're engaged with.

So lots going on, on the M&A front. Okay. Lastly, my last subject, stable coins and our progress there since last time. So we have contracted with some partners, including Circle to provision the coin, the rails and the digital wallet to enable us basically to add this new stablecoin peer-to-peer payment system to our business. So we're really chasing the stablecoin opportunity on 3 fronts. So first is to enable our largest domestic and cross-border merchants or beneficiaries to receive payouts in their stablecoin wallets so that they can receive a payment 24/7. We've got a super large set, hundreds of billions of payment flows already moving to these beneficiaries. So we like the idea of giving them another place to put funds.

Second is our idea to add digital wallets to our existing Alpha bank account clients and Corpay multicurrency account clients so that they can hold both stablecoins and fiat dollars to transfer basically back and forth between their fiat accounts and stablecoin. The third opportunity is to really directly serve large new crypto clients. We have one bank Frick that hold very large crypto balances today, but have the need to return liquidity to a U.S. bank account of an investor. So we'll leverage the fiat rails and compliance infrastructure that we have to serve these kind of clients.

So look, the existing assets that we have, we think, create a lot of leverage for us to participate in this stablecoin system. So look, in conclusion today, we printed a clean Q3 beat. We've revised up our Q4 and full year 2025 guidance. We do see an attractive 2026 setup. We're super excited about the long-term prospects for our corporate payments business and solutions, the opportunity to make that really big. We have completed a meaningful acquisition and investment this year that we think position the company well over the midterm and progressing our stablecoin entry to capitalize really on this new rail. So with that, let me turn the call back over to Peter to share some more details on the quarter. Peter?

Thanks, Ron, and good afternoon, everyone. Let's start with highlights of the quarter. Q3 revenue was $1.172 billion, overperforming the midpoint of our guidance range. Print revenue grew 14% year-over-year, driven by 11% organic revenue growth. Q3 adjusted EPS of $5.70 per share overperformed the midpoint of our range and grew 14% year-over-year due to strong top line performance and solid expense management. Adjusted EPS grew 17% year-over-year on a constant macro basis.

The headline for the quarter is mid-teens top and bottom line growth, excellent organic growth with 10% vehicle payments organic growth driven by our U.S. vehicle payments business returning to mid-single-digit organic growth, continued strong retention, all while maintaining strong margins. We've also produced significant sales growth this year that will fuel our business over the balance of 2025 and into 2026. Now turning to our segment performance and the underlying drivers of our organic revenue growth. Corporate Payments delivered 17% organic growth for the quarter despite 100 basis points drag from float revenue compression due to lower interest rates.

Overall, the performance was driven by growth in spend volumes, which increased 57% on a reported basis and up 38% organically. Spend volume was just over $68 billion in Q3, which puts us on pace to be north of $250 billion annually on a run rate basis. Corporate Payments revenue per spend volume decreased year-over-year due to new payables and cross-border enterprise clients. The payables business continues to perform, driven by strong execution on Paymerang synergies and solid progress implementing and ramping new full AP customers.

We continue to be optimistic about the future of the business and are laser-focused on customer acquisition. Cross-border continued to deliver strong sales in Q3. Both new client acquisition and recurring client transaction activity was robust as our scale, technology and talent advantages continue to power share gains from legacy financial players. Vehicle Payments organic revenue increased to 10% this quarter. You can see in the financial supplement, there is a good trend line of improving organic revenue growth in this segment, now returning to our target run rate of 10% organic revenue growth.

Also, it's important to point out that our Vehicle Payments segment is made up of 3 approximately equal sized revenue businesses in different geographies. These geographies are the U.S., Brazil and Europe. U.S. Vehicle Payments organic revenue growth improved 500 basis points sequentially to 5%, reflecting the return to sustainable mid-single-digit organic growth we've been expecting. This was driven by improved sales production, higher approval rates and strong retention. Brazil and Europe vehicle payments continue to perform well. In Brazil, the combination of 6% tag growth, growth in our extended network, including our new card debt offering is driving the strong results. International Vehicle Payments continued to deliver consistent results, driven by strong sales and performance across the U.K., Europe and ANZ.

As expected, lodging organic revenue was down 5% for the quarter, inclusive of a 400 basis point drag from lower emergency revenue year-over-year in our FEMA business. We feel good about the progress we've made to position this business for the future, but the recovery has not yet shown through in a meaningful way. The business has now stabilized, and we are hyper-focused on improving sales in the lodging business. The other segment was up 23% as the gift business generated significant year-over-year growth from pent-up demand due to new regulations to upgrade gift card packaging to reduce fraud.

In summary, we delivered 11% organic growth in Q3 at the high end of our target range, driven by continued strong corporate payments organic growth and double-digit vehicle payments organic growth. These 2 segments make up over 80% of our revenues. Now looking further down the income statement. Operating expenses of $649 million represent a 16% increase versus Q3 of last year, driven primarily by acquisitions and divestitures and related add-backs, FX and a true-up of a 2024 disposition. Excluding these impacts, operating expenses increased 8%. Bad debt expense declined 1% from last year to $28 million or 4 basis points of spend, so credit remains well controlled. Our adjusted EBITDA margin was 57.7%, essentially flat with the prior year. Our adjusted effective tax rate for the quarter was 26.6%.

The increase in the rate was driven by Pillar 2 and a change in the mix of earnings. On to the balance sheet. We ended the quarter in excellent shape with liquidity of $3.5 billion and a leverage ratio of 2.4x. Today, we closed upsized debt facilities that enhance our capital structure, increasing our revolving credit facility by $1 billion, resulting in a total facility of $2.775 billion and a new $900 million 7-year Term Loan B. Our Term Loan B and revolving credit facility continue to price at some of the tightest credit spreads amongst BB+ corporates, which reflects our strong balance sheet and significant cash flow generation.

We used proceeds from these facilities to close our Alpha acquisition and our investment in AvidXchange. We have a plan to delever and expect to end 2025 at approximately 2.8x leverage. We purchased approximately 600,000 shares in the quarter for $192 million, leaving us with approximately $1 billion authorized for share repurchases. We will continue to pursue near-term M&A opportunities and we'll also buy back shares when it makes sense while maintaining leverage within our target range. So now some updates and details on our Q4 and full year outlooks. We're increasing our full year 2025 revenue guidance to $4.515 billion at the midpoint, representing print growth of 14%, driven by our third quarter beat, the continued benefit of improved foreign currency exchange rates and the inclusion of our recently closed acquisition.

We are also increasing our adjusted EPS guidance to $21.24 per share at the midpoint, representing growth of 12% as a result of our Q3 beat, continued expense discipline and recently closed acquisition and investment. For the fourth quarter, we expect print revenue of $1.235 billion at the midpoint, representing growth of 19% and adjusted EPS of $5.90 per share at the midpoint, representing growth of 10%. We provided additional details regarding our rest of year and Q4 outlook in our press release and earnings supplement. This concludes our prepared remarks, operator. Please open the line for questions.

[Operator Instructions]. We'll take our first question from John Davis with Raymond James.

Peter, maybe just first on Corporate Payments organic growth. I think you guys said mid-teens despite an incremental float headwind. Obviously, you have a very tough comp from the year ago quarter. So maybe just talk about the drivers that give you confidence in that organic growth outlook for the fourth quarter, specifically in Corporate Payments.

John, I appreciate the question. So maybe we'll just break it down into the components because what Ron shared in his script was obviously with the Alpha acquisition. So if we look at the core Corporate Payments business, we're expecting that to be, call it, 16-ish percent with a drag of 100 basis points from float. So about a 17% growth rate there in the core business. That does compare to last year, which was 26%, which was obviously kind of had a double impact. We had a one-timer in there of about 400 basis points, and we are growing off of a really weak Q4 '23. So hopefully, that gives some context in terms of kind of the core business. When we think about Alpha, Alpha's organic growth is coming in at 13%, but ex float, that would be 31%. So obviously, the business is very dependent on float from the bank account business. And then on a consolidated basis, that gets us to the mid-teens that Ron spoke about with a 3% float headwind. So call that without the headwind, 18%-ish.

John, it's Ron. Remember, we've also seen October.

Fair enough. Fair enough. All right. So I'll continue on the guidance here. Ron, as you think about next year, you guys have consistently said 10% organic. You're guiding to that next year. There's a little bit of a choppy macro backdrop. You saw some nice acceleration in North America fleet in the quarter. Obviously, Corporate Payments is strong. Maybe just talk about what gives you confidence? And what, if any, of that organic growth outlook next year comes from synergies from Paymerang and some other of the prior corporate payments deal that now will flow through to organic growth.

Yes. I think, John, it's just run rate, right? We've got the trends. We see what we're adding new business. We see what the losses are running. And so I think our confidence of having the vehicle business high single digits to 10% in the Corporate Payments business call it, mid-teens, inclusive of the flow headwinds that we're super comfortable. And even the other category, which historically was a bit problematic, we're outlooking that thing to be kind of 10% plus.

So the wildcard, I guess, is lodging, which we think will edge over into positive territory. So I think we -- what we're seeing, I mean, look at the quarter, right, that we just printed and look what we're giving for Q4. So I think we're just -- we're seeing it and really not calling for anything super different than what we're kind of running at. So pretty confident.

We will move next with Sanjay Sakhrani with KBW.

Maybe just to follow on some of the questions asked before. Obviously, next year is setting up pretty strong. You've got this Mastercard investment and then some of the pipeline that's building associated with that partnership, the synergies from Alpha. Could you just talk, Ron, a little bit of how you're figuring for that in that preliminary outlook?

What do you mean, Sanjay? How we're figuring it.

Like how much of that is driving sort of the preliminary view on revenue growth for next year?

Yes. I'd say not a lot. I think I said before that we were hoping that Mastercard thing could add 1 point or 2 that FI channel to our cross-border business, which is already kind of a mid-high teens number. The synergies, again, the Alpha business is, call it, circa $300 million-ish in U.S. and it's got a bit of a flow headwind. So I'd say, again, 0.5 point maybe from that. So the majority really of the outlook is around just the core set of businesses. I do think we're going to get profit leverage, though, separate from revenue from Alpha from the macro, right, that we're seeing and from some of this cost efficiency, some of the AI work that we've done. So I do see us getting some incremental profit leverage next year kind of above normal levels.

Got it. Okay. And then, Peter, could you just drill down just a little bit more on that breakdown that you had. So if I think about the fourth quarter revenue outlook, how much does Alpha specifically add to that? And then on that $0.75 of upside for next year, like how much of it is Alpha versus Avid?

Yes. So on the revenue outlook for Q4 '25, Alpha is adding about $55 million of revenue in the fourth quarter. And in terms of the $0.75, we've not given that breakout, but we obviously previously shared that Alpha would be $0.50. So you can kind of take those 2 and give that some thought in terms of your split there.

Our next question comes from Tien-Tsin Huang with JPMorgan.

Just wanted to ask on '26 again. Just thinking about the segments and the growth and how growth might be different than what we saw in '25 at a high level, any interesting call-outs there? You've got the new sales performance up 20-plus percent. Retention is a little bit better. I know the deals are getting layered in. But just at a high level, how is '26 going to be different than '25?

Tien-Tsin, it's Ron. It's good to hear your voice. I'd say it's really more of the same, right, than different. I think what's different is a little bit happier on the vehicle, right, that thing accelerated second half or will we think to 10% from whatever it was 8%, 9% in the first half. So we think that's going to kind of carry through. So we think that will do a little bit better. Lodging, again, a wildcard call that thing a push. The other category, maybe a tad lighter but still positive kind of double digits. So really, the question is where in the teens will the corporate payment business inclusive of the float land. So that would be, I'd say, what could cause the thing to be a little bit better. But more of the same really, Tien-Tsin, to the '25 numbers, I'd say, next year.

And my quick follow-up, just thinking about -- I mean you have a lot on your plate thinking about, again, the acquisitions, divestitures. I'm sure there are other deals in the pipe as well. Just think about Ron, does it feel tougher to sort of regenerate some of the sales performance that you've seen? Just curious where you see opportunity versus risk going into the end of the year here and going into next year.

Yes. I mean I think the sales performance, Tien-Tsin, is quite good. The preliminary plan that we're building is way increasing. We hired someone new to start to build up some new channels like the Zoom channel has been super small. We're building that channel for kind of midsize is working. So I see us pouring a bunch more money some of it from the expense savings that we're getting and sales will be up well over 20% this year in 2025. We got a bunch of elephants, right, that help this year. So I think bullish on it.

I think the way upside for us is really in capital allocation. If people keep trading our stock at this level, and we sell these companies, we are going to be buying stock back, which obviously at this kind of a price would be pretty incremental. We have this Mastercard money coming in. So we have some sources of incremental capital, again, above kind of normal levels that could help us next year. So I'm pretty bullish on the profit side really for next year.

Our next question comes from Andrew Jeffrey with William Blair.

Appreciate taking the question. Pretty exciting times in corporate payments, obviously. Ron, I'm intrigued by the stablecoin commentary because I know there's been a lot of discussion in the market, both sort of pro and con. I wonder if you could just sort of frame up for me what you think the long-term opportunity is in that business? It sounds like initially, it's going to be infrastructure, so on-ramp, off-ramp. Over time, does the Circle agreement sort of create the opportunity for cross-border stablecoin movement? It sounds like maybe you're doing that a little bit today in the FX business, but I'm thinking like cross-border B2B payments. And what do you think the time frame on something like that is, assuming that's a business in which you have your eye at this point?

Yes. We tried to lay out, Andrew, in the supplement, I think Jim was Page 18 or something. But to me, Andrew, the stablecoin thing is kind of -- it's a 2-part thing. So one is kind of the new players, right, that have big crypto balances like Circle, Ripple, this bank, I mentioned the bank brick, where we can be helpful to them. Effectively, they're both providers of capabilities to us, but potentially clients of ours, right, again, that need to route dollars back, right, in USD to investors. So that's opportunity, one, is just to be a provider back to some of these guys that have big balances.

But to me, the fascinating one will be we've got a big business, right? We pay hundreds of billions to the U.S. merchants, both on our domestic business and our cross-border business, they're huge beneficiaries of payouts of ours. And so to me, the fascinating question is, what will the take rate be? So if we go to those biggest concentrated beneficiaries and say to them, "Hey, we'll enable you with a stablecoin wallet. Do you want us to basically have funds come in there if they're off cycle or not."

And then you can toggle it back and forth between your traditional bank accounts or we have a big bank account business. I think we said 7,000 bank accounts with $3 billion in deposits, same thing. When we tell those institutional clients, we're attaching a stablecoin wallet, will they use it? And so I think we'll learn a lot there because we have flows and we have deposits unlike people who are trying to get into this business. And so I think we're going to get a super early read of the interest on both sides, right, the deposit side and this payout side. So we're just readying those things and then seeing if the beneficiaries and the clients we have used them.

Okay. So it sounds like you'll sort of build the infrastructure and wait to see how the market evolves. Would that be the right way to think about it?

Yes, Yes. I mean if you think of what's happening, like it's kind of third-tier world driving a lot of the things, right? There's not a ton of activity kind of in the G20 space where our -- all of our bulk is. So I think we're going to be there. We're adding this set of capabilities, particularly the wallets. We have these flows, and we're going to make our clients aware of them and see what the take rate is to see whether there's utilization or not. But we're excited that there probably will be. I personally think this off-cycle piece, Andrew, is the magic being able to basically take funds when the banking system is closed, I think, might be the most interesting piece, but I guess we'll see. The thing I want to say is we're not afraid. I mean I don't -- I think some people think like we're afraid. We're not afraid. We think it's a fascinating incremental rail. We're going to offer it, and we think -- we hope that our clients are going to take some advantage of it.

Yes, I suspect they will. I suspect you're right. And if I could ask one more, maybe, Peter, the yield on these big enterprise clients, I guess, I mean, if investors ask, can you kind of frame up how you're thinking about that business? I imagine it's high incremental margin and you like the volume. Is there anything you'd add to that when we think about sort of the yield on those big customers versus the core business?

Andrew, it's Ron. I'll take that one. I think it's quite wide, right? As we said in our cross-border business, historically, we'd be in the, call it, average of 50 to 60 basis points kind of keep on conversion work. We have some of these gigantic super large transactions that could be single-digit basis points, so 16, 17 of the line average and stuff. And we often do it in concert with the normal business with those big accounts. So we might have a big account where we're doing some set of ongoing kind of mass payments at a decent kind of rate and then, hey, they call us for some kind of significant one-off kind of transaction.

So it's oftentimes done that way where the account calls us for some other kind of use. And your point, although it's a way different rate, it's a gigantic trade, and we're happy to kind of take it to your point, from a profit perspective, it's quite high, the absolute dollars of the profit because it's one big transaction, there's not a lot of work. We're really calling out mostly so people don't think that the core or normalized rate in that business is moving at all. It's really going nowhere if you look at it without this handful of accounts.

Our next question comes from Darrin Peller with Wolfe Research.

Ron, can you just give us a quick update on the progress and any details you can provide about the interest level and some of the divestitures you were looking for -- looking to make over the next several quarters or so?

Yes. Darrin, I'd say mostly it's early days. Kind of the books are out, the fireside chats have started. We've obviously had some call-ins on the businesses. So I'd say it'd be premature to say we know a lot. The one thing I would say is these are decent businesses. These are a couple of businesses that are in our International vehicle segment that are growing, both of them grow kind of 10%-ish. So they're decent businesses and they're profitable. So they will sell. The question is, are we going to like the price. So unlike the gift thing that I know you weathered through with us, however many times we try that. These will transact. The question is whether we're going to like the price enough. But we will know. We've got a process set up where first bids are due in the next few weeks here. So by the time we talk again, we'll have a clear answer for you.

All right. That's good to hear and helpful. I guess my quick follow-up would be on U.S. fleet growth. I think we saw 5% you mentioned. And just touch a little bit more on the sustainability of that just because it obviously is good to see. I'm curious what's driving it and then your conviction around it going forward.

Yes. That's a super good question. I think the main thing is the structure of that business has changed a lot kind of since the pivot. So call our Vehicle segment there a $2 billion business annually, kind of 1/3 in the U.S., 1/3 in Europe and 1/3 in Brazil, ballpark. So let's just use $700 million as a ballpark number. The retention in that business now has gotten to the company's line average. So historically, when it was a micro business, losses were super high.

So think now if you were modeling this with me, hey, I got a $700 million business printing in 2025 and our line average is, call it, 92%, 93%, so the loss rate is 7. So you lose 7 on $700 million, you lose $50 million. We actually are planning the same-store sales that are improving. They're going to go positive in that business next year. So you're into a way lower risk profile now. We don't need to sell very much or add too many initiatives to get the thing to work. Whereas before, we had the bottom of the bucket, the loss rates were almost double that at some point and the same-store sales were 2 and 3 points negative. So that's the main headline for everybody is the assignment to grow it now is just infinitely easier than it was a couple of years ago.

Way easier to get a number.

Our next question comes from Nate Svensson with Deutsche Bank.

Nice results. I did want to ask on Avid now that that's closed and nice to hear that it's contributing at least some portion of the $0.75 accretion next year. I guess, first, just any update on the work being done at Avid to help improve their margin profile and growth and kind of the role that Corpay is playing there? And then I guess more specifically, since the deal closed, any way to quantify the impact from Avid volumes maybe coming on? I think a competitor may have called out a loss, but wondering if you can size the impact there maybe in terms of volumes.

Well, the first thing I'm going to say, Nate, is thank you. That was a good opener, nice results. We kind of appreciate that. On your first question of what are we doing? I feel like the relationship is super good. We've obviously -- I've known Mike who runs the place for quite a while and a bunch of his management team, and we like, which is why we did the deal, the TPG guys.

So the first thing I'd say is the 3 groups, us, the Avid guys and TPG guys have been kind of on this together, point one. Point two is it's super clear, like the handful of things to do to dramatically improve profit performance there is clear. And Mike has already pulled the trigger really by the time we're on this call, getting rid of a bunch of costs already. So I'd say that we're aligned on it. We will get the profits way up, which is why we're comfortable with some accretion next year.

The million-dollar question is really the growth rate. Can we -- can Mike get that business close to the kind of parity with what we do, kind of a mid-teens or mid-teens plus kind of grower. So I'd say, Nate, that that's mostly what we're focused on now is what can they do on the buyer sales side and on the monetization side to get the revenue acceleration. And as I said, if we get that, if that company gets that, we will buy the balance of the business and consolidate it.

Yes, makes sense. I appreciate the detail. I do want to ask on the gift card business and other. I know there's some lumpiness and there were some regulatory changes that may have shifted demand from certain parts of the year to others. So I think it would be helpful just to kind of like walk through the changes in that business, where the pull -- how much the pull forward was. And then I think you said kind of returning to double-digit growth. So just making sure your confidence in your visibility and getting back to double-digit growth in a business that can be lumpy historically, that would be helpful.

Yes, that's a super good question. So one of the world's worst businesses, right, some number of years ago, 3, 4 years ago and now a good business, a growing business, both this year and next. So kind of what's going on. It's really 3 things, Nate. So one is this fraud packaging thing. So a couple of states have said, hey, we're sick of people going in and stealing these gift cards and coming back in and grouping up consumers to buy it and find out there's no money. They paid for the card and there's no money on the card. So look, new suppliers are going to stop that. You're going to create packaging that doesn't allow people to do that.

So that packaging has been created, and we've recycled some of that new packaging among some of our clients. So it created a bit of a lift, maybe, I don't know, 5 points -- 3 to 5 points this year above normal kind of card fulfillment as people kind of reinventory with this fraud protection stuff. But the 2 other things are we're just selling, like I don't know if other folks that do this business have gotten sleepy or whatever, but we are way winning more new accounts and onboarding those. I'm telling you like 5, 6 new accounts this year, another at least 4 or 5 that we're close to closing now that will come online next year. So way more new business the last couple of years. And then lastly, these new add-ons that I think I've spoken of like, hey, we'll help a gift card client sell cards.

So we went into the business of helping manage their website and do the fulfillment. So we get paid not only for administering their gift cards, but actually helping them sell the cards. We also figured out a way to stick the cards, these proprietary cards into the wallet. So they sort of like a marketing thing for people where you stick your Dick's Sporting Goods card in your wallet, you see it every time you go to your wallet. So we're getting paid more money from our clients for like doing additional things. So when you put those 2, 3 things together, it's like it's just turned into like it's a good business and our confidence that it will be double digit again in '26, I'd say, is pretty high.

I guess just to clarify, that 3- to 5-point uplift you mentioned above normal card fulfillment, is that a pull forward from '26? Or is there a change in inventories? Or am I thinking about that the wrong way?

No, I would say it's the incremental 2025 growth. Like if they hadn't had this thing, I'd say the full year '25 gift card might be 2, 3 points lower than what we'll print. I don't think it will have much different impact. We know everything about the legislation and stuff. So we built that into the guide already for '26. It's mostly these 2 new things that are creating the lift to get the thing in the double digits.

We will move next with Mihir Bhatia with Bank of America.

Let me also add nice results here. Maybe to just -- I want to go back to the monetization rate discussion a little bit in the Corporate Payments segment. I guess just trying to understand, was there anything unusual in 3Q in terms of the number of large transactions or onboarding some of these enterprise accounts? What I'm really trying to understand is, should we expect the monetization to increase back like the monetization rate to bounce back up in 4Q? Or have you unlocked something where you're just going to be doing more of these volumes and you've signed some of these big enterprise accounts. So it's more of a volume story than a monetization story?

Yes. I would say don't read that as abnormal. We probably will do a bit more of this. The reason we want to break it out is to make sure people are clear that when you take away these super large accounts and these super large transactions that the "normal book of business is still pricing basically in the same kind of range." And I'd say the same thing on the domestic payables business. If anything, that thing may inch up again next year as we offer some incremental ways. We've increased kind of pay for ACH via an acquisition, we're introducing a debit card as a way to get paid versus just a virtual card. So I would say that, if anything, the monetization rates and these big onetime things will probably inch up a bit in '26.

Got it. That is helpful. And then maybe just thinking about '26 broadly, you've laid out some pretty interesting upside or optionality in corporate payments, whether it's from the Mastercard of just selling more. And then similarly on U.S. vehicle payments, you were talking about the turnaround being there and being the sales increasing. Lodging, it sounds like it's stabilized and likely heading better. So I guess I'm asking, where is the risk? And could that 9% to 11% growth actually look closer to 11% to 13% or something like that?

I think that's a super great follow-up. I guess the headline, the first comment is we just have a better business today. Like I just don't want people on the call to miss that sitting here in whatever November, like the business is just better. The 2 biggest businesses are growing and working and stuff. And so that would be the #1 thing. Across the areas, I'd say, again, the thing that probably has a chance to be better that would cause our number to get better if we got there would be in the corporate payment space. A bunch of these things that you called out like the Mastercard thing are new.

We haven't actually booked a single sale yet, although we have a good pipeline. So I'd say the goal of this call, since we're still early days is to not get over our skis to kind of give you guys a number of what we're seeing, what the business is running at and provide some assurance we think we can get that number and then come back in 90 days when we finished our work and be a bit more precise. But I think the main thing is we've gotten to the second half acceleration that we said we would despite the skeptics, and we like that.

And we just don't want people to miss that the step off, when we give you 570 and 590, you're good at math, that's higher than 21. So I say it all the time in recurring businesses, if your exit rate is a lot better than your entry rate, you already have part of the next year baked. It's really in your exit rate. So yes, I'd say our confidence of the business performance is pretty good.

Our next question comes from Rayna Kumar with Oppenheimer.

This is Abigail on for Rayna. So just a quick question about corporate payments kind of going off of the team for tonight. So the accounts payables represents a major TAM for corporate payments, particularly with the investment in Avid. Could you talk a little bit more about the progress you're making in convincing companies to switch from older accounts payable methods like such as paper checks, et cetera? And then what are some of like your biggest roadblocks that the sales force is facing to unlock more of this TAM? And then how do you guys like convince the companies to make that switch?

Abigail, it's Ron. That's a pretty good question. I guess this offering of going to a midsized company that's got a lot of ADP, it's literally a proposal that's too good to be true. You show up, knock, knock, meet the CFO, the head of ADP and you tell them, hey, look, I can digitize and derisk paying your ADP and give you money back. So when you finish saying that, I think people look at you and like, what do you mean? Well, like, what do you mean? What do we mean? We can take over all the invoicing you have. We've got way more scale to do it. We've got ways to derisk the electronic transfer of things and because we can monetize some of them, we can actually give you money back.

So the pitch is super compelling. It's the inertia, I'd say, of getting in. So the close rate, the win rate is super high. If you can meet the CFO and the Head of ADP and tell them that we've got thousands of clients that we do this for, and it's pretty easy and you get money back and you transfer risk to us, it's a really super compelling pitch. The question is, can you get the meetings? Can you get people to make time to listen to it? That would be the question mark. And I think the more common, I worked at ADP before starting this company and everybody knows about payroll outsourcing, and I think less people know about ADP automation and workflow and payment ADP outsourcing. So I think as the category and the referenceability keeps getting wider that it will get easier. The world will be clear that this is a logical thing to do with non-payroll expense, right, which is almost half of a business' expense, right, payroll half and then this. So that's the bet that we have that as the clock keeps turning, more and more companies will become aware of the service.

We will move next with James Faucette with Morgan Stanley.

Ron, I want to follow up on questions around the -- around the stablecoins. I really appreciate all the work you guys are doing to build an infrastructure there. You made interesting comments about where you may see some utility. Just wondering if you can give more specific example. I think you mentioned you thought maybe there'd be some interest in things like after hours or weekend type transfers, et cetera. But have you seen any specific cases where, hey, that makes a lot of sense or at least you could imagine the kinds of transactions that you may be looking at?

Yes, James, it's a good question. I'd say it's pretty quiet. I'd say that most of the activity is with the crypto digital assets guys themselves, right, that people like us going to Circle and Ripple to get some capabilities and then them suggesting that they could be clients of ours. I'd say that's what's real today. We're actually getting paid doing work here in November.

So on the other ones, I'd say, in terms of our flows and our deposits, I think there's not a lot of people standing up and shouting. I think as we make them more aware of what this after-hours utility case is, then we'll see would be my comment back. But I wouldn't say, again, among the major countries and major markets, which is where our flows are that we are hearing tons of people jumping up and down on it yet. But we're not waiting. We're just going to put the stuff in place and tell people about it and see if they find utility there.

Got it. And maybe I just -- once again, just following up on that one point is that you mentioned the G20 and not seeing a lot of activity there. Can you just talk about like why that might be or what would change that? Because I have heard that from others saying, hey, this is going to be more of an artifact for emerging market currencies, et cetera. But I guess I'd love to hear from your perspective, like if that's a permanent thing or just requires time and development.

Yes. I mean I do think if you look at the current business, I think that, that is what's driving it, that the ability in these third world emerging countries, I think, is where the volume is. And I think the rest of the volume is really just crypto, like Bitcoin and stuff like that and us helping those guys return money in USD to investors. So I think the stablecoin among big businesses in these major markets is still just early days where they're trying to figure out what is the use case that's beneficial. It's not like the current system is broken, right, and it doesn't work like we move hundreds of billions of dollars.

So I think it's more just time for -- I think when I talk to people, they don't even understand what this is, James, literally. Like when I go through, hey, this is what. So that's what I'd say is there's more people writing and talking about it, I think, than using it. And so I'd say, just give it some time, and we're going to tell clients about it and deposit holders about it, and we'll report back of what their interest is. But the main message I'm trying to give is we're getting ready. And we're going to try to get our clients, beneficiaries and deposit holders ready, and then we'll report back of whether they're going to transact or not.

Our next question comes from Trevor Williams with Jefferies.

I wanted to ask another on '26. So within the 9% to 11% organic growth, Ron, it sounded like not much different than what we're seeing this year or at least in the second half. For Corporate Payments, can you be more specific on what you're assuming for the fully loaded growth rate there? And within that, how you're thinking about the puts and takes between float and then the revenue synergies from Alpha, if we can think about those 2 potentially netting each other out in fiscal '26?

Yes, Trevor, I think it's just too early days, which is why we're kind of giving a bit of a wide range like we're maybe halfway through the Alpha 2026 plan. I'm actually going there with our group next week to continue to work the thing and how hard we're going to press the synergies. We did mention the Mastercard thing, right? Again, we'll know more in 90 days as those appointments, the pipeline converts. We'll have a better view of whether that starts starting to convert.

So I'd say that we're kind of staying a bit broad with it. Obviously, we want to see what the interest rate curves are, what happens there, right, in the next 90 days with the employment vows -- cause that thing to keep coming down. So look, we're confident that, that segment is going to grow, and I think it's a function of what we're going to invest. If we get more money out of some of this AI stuff, we may put more sales and marketing spend into the business. So I just ask you to be patient, and we'll kind of give you the details of those 3 or 4 pieces when we talk next time.

Okay. Fair enough. And then to piggyback on Alpha and the accretion, at least within the initial $0.50 when you had announced the deal, it seemed like there was a fair amount of conservatism embedded in that number. So maybe just within the accretion that you're baking in within the $0.75 in total with Avid, can you give us some more specifics on what the obvious easy early synergies are from Alpha and then maybe beyond that, what you -- at least today, what you feel confident in being able to realize eventually, but maybe you don't have it in the numbers, at least initially, that would be helpful.

Yes. I would say we've given the number in early days, we're highly -- I would say we're highly confident that we can get at least that number. And so I'd say a couple of things. One, that in this case, in the Alpha case, we have both kinds of synergies. We have both revenue synergies and expense synergies. In some of the other businesses, we've had more on the cost side. And then second, I'd say that half or more of the synergies are just -- they're free to us. They're just super easy to get like we have contracts where we get better rates on holding deposits than they do or they have accounts that use their product in geographies that they're not licensed in, but we are. Obviously, they have a public company cost structure that will be gone and stuff. So I'd say that half or more, Trevor, of the first cut of the synergies are just sitting on the tee for us, which enable us to pay the price. And the purpose of the next 90 days is really to work the other half to really see where can we take that number. And by the time we talk again, we'll have an answer for you. But it will be quite accretive.

Our next question comes from Dave Koning with Baird.

Good job. Capital return question, really getting back kind of to the last question. Is the $0.75, is that fully self-funding, meaning the profits are fully covering the interest expense of what you're borrowing and you can use all your cash flow to do capital return over the next year. Just want to make sure I understand that how the accretion was looked at.

Yes. Dave, the answer, yes.

Good. And then just a quick follow-up -- go ahead.

I want to make sure you're clear, yes, just the way you said it, the answer is yes.

Okay. I'm glad we're on the same page. A quick follow-up. Interest expense, Q4, $115 million, $120 million, something in that range, up just a tick next year per quarter just because we'll have a full quarter of the borrowing from -- since you're into the quarter already when you bought Alpha. But just -- is that the way to think about it using a little higher than $115 million to $120 million per quarter?

Peter, you got that one?

Yes. I think it's a fair way to think about it.

And we will move next with Ken Suchoski with Autonomous Research.

Maybe just on U.S. Vehicle, the acceleration there. I think you called out higher approval rates as one of the drivers. Can you just comment on what you're seeing in terms of new acquisition and where that's coming from? It sounds like you're comfortable with the credit trends that you're seeing if you're approving more customers there.

Yes. Ken, it's Ron. That's right. The growth of that business, as I said, starts really with a complete change in the retention and same-store sales setup, which again makes it much easier to grow. But look, on the sales side, we have a bunch of elephants that we booked that created the second half acceleration. We've obviously got some more in the pipeline. I think the focus, the pivot that we made from the micro digital world is just better credit quality. And so as we've kind of retweaked our models and we look at our losses and what our receivables look like, we're approving just higher amounts.

So what we're selling, we're basically getting more into the revenue line. We also have some other kind of rate initiatives around the merchant side. We have these big proprietary networks, including cardlock. So our tech now is -- enables us to move some of the volume that was on kind of lower interchange rails to higher. So we'll basically get some merchant rate enhancement by having some of our volume flow to different areas. So we've got a lot of things working. The base is just more solid. We've made some big sales. The approval rate credit quality is better on new accounts. We're moving volume to higher interchange, things like there's 3 or 4 things that are making the thing work, and we think it's durable into next year.

And then maybe just -- sorry, go ahead.

You're breaking up a little.

Sorry about that. Just on the margins for next year, I mean, lots of moving parts with acquisitions and efficiencies. Just how are you thinking about margins? I think I saw the comment on expecting incremental margin expansion from some initiatives.

Yes. As we mentioned, we've got some AI initiatives that are paying off well, some vendor rationalization initiatives, et cetera. So we do think there'll be incremental margin improvement next year, and we'll give more details on that when we get together in 90 days.

Ken, it's Ron. I also think it's a function of what we decide to -- in that, I think I tell you guys, a big part of our growth planning is what we agreed to spend in sales and marketing. So to Peter's point, that's going to be one of the calls we make is how much do we deliver in profitability in '26? And can we productively spend a bit more in some of the businesses to get it up and go in the forward year. So that's another call that we'll make. So I don't want to get again out over the skis. We may decide to spend some of that if we think we can get a good return on it.

This does conclude our Q&A session as well as the Corpay Third Quarter 2025 Earnings Conference Call. Thank you for your participation, and you may disconnect at any time.

All right. I think we can get started. Good morning, everyone. Thanks for joining us. My name is Ken Suchoski. I'm the U.S. payments analyst at Autonomous Research. And we're excited to host our 10th Annual Future of Commerce Symposium. And we have a great group of speakers lined up, and we're excited to hear their thoughts.

We're going to do fireside chats. So all I prepared questions for each of the speakers, but you'll have an opportunity to ask questions throughout each of the sessions. And we'd like to make it interactive. So feel free to raise your hand if you have a question. There's breakfast and refreshments outside, so feel free to help yourself. we'll do an hour lunch break at 12:15, and then there'll be a reception at the end as well. And any questions, feel free to flag down Autonomous people. We're floating around and willing to help.

So with that, let's get started. We're really excited to have Corpay here this morning. We have Mark Frey and Jim Eglseder from the company with us. Mark is the Group President of Corpay's cross-border business, and he was -- he's been with the company since 2017, I think. You came over with the Cambridge acquisition. He was there for seven years. And prior to that, you were at Western Union Business Solutions for 10 years. So it feels like you spent your whole life in cross-border payments. Very much the case.

Yes.

Well, great. Thank you for joining us. And so like I said, I prepared questions for Mark. And if there's time at the end, we'll open it up to Q&A, and you guys can raise your hand and ask questions.

So, Mark, maybe to start off, the Corporate Payments segment, it's become a bigger part of Corpay's business over time. I think back in 2015, it was 10% of revenue. Now it's approaching 40%. Maybe you can give us a lay of the land in terms of the underlying businesses within that segment. And it might be helpful for investors to understand just the relative sizes of those and the different growth rates as well.

Yes, absolutely, Ken. So yes, it has been a purposeful shift towards Corporate Payments. We see higher organic growth rates in these businesses as well as it's been a primary focus from an acquisition and an M&A perspective for us as well. So we see this business growing to near 50% in the very near term of the overall corporate enterprise.

If we -- when we think of the Corporate Payments business at Corpay, it's really two separate divisions. So there's the domestic payables division focused on Canada and the United States. And that is a business that is, let's call it, a $700 million revenue business, growing high teens, sort of low 20s over the past few years fairly consistently, broken into, I'd say, three key segments. So there's a traditional sort of corporate payments, commercial card business, virtual card, T&E and expense management component to that business. That grows a little slower, sort of high double digit -- or sorry, low teens, I would say.

And then there's a larger component of the business, about 60% of the business that is a full AP outsourcing, so an AP automation business. So it's really think about a business process outsourcing of your AP department that includes all of those commercial card components as well as a business process workflow in terms of AP automation. That business grows a little faster than 25%. It is sort of the lion's share of the franchise and continues to scale. And then there is a channel partner reseller business ultimately, where we enable our capability in other fintechs to go off and sell that commercial payments value proposition.

When we think of the cross-border business, you can think of it roughly as a $1 billion revenue business, just under in '25, really broken into four key customer segments. So one and sort of the heritage of the business is the Corporate segment that was historically very sort of small business focused has become more mid-market to large market focus, large cap. That is, let's call it, an $800 million business and growing high teens year-on-year pretty consistently going back over the past decade.

We have a financial institutions and fintech practice. So this is a little bit more than $100 million business. It grows about 25% year-on-year, continues to scale nicely. And this is us servicing financial institutions and fintechs with cross-border payments. So think of the Tier 1 money center banks of the world, the BofA, Citi, sort of Wells Fargo organizations where we provide payment execution and currency liquidity in the emerging market world. So we make payments from the Northern Hemisphere to the Southern Hemisphere with a particular focus on Latin America and Africa.

For the Tier 2, Tier 3 financial institutions, we really focus on providing growth beyond the G20 currency corridors that they historically have as part of their correspondent network. We expand their capability into a larger geographic reach. And then for the Tier 4, 5 smaller financial institutions, it's really an outsourcing of their global payments capability. They might not have international SWIFT connectivity. They might not have correspondent accounts in other major currencies, and we can provide them all that infrastructure and execution ultimately for their corporate clients.

The third category of our business is sort of a rocket ship for us right now. In 2014, our institutional private markets business was a $5 million business at the end of 2014. We'll exit this year at about a $70 million business. So very impressive growth over the last 12 months. And it's really just taking our existing resources and pointing them at a particular customer segment and finding a really attractive niche to sell into. So that business does very, very well. And we provide FX services and banking services ultimately to those private markets customers, funds and SPVs and other -- and global investors ultimately.

The final category of our business is the digital currency space. And so this is relatively new. This is something that we've been building, I'd say, for the past 12 to 15 months and have really just launched commercially in '25, and it's scaling quite nicely. We've had some big client wins and is really beginning to gain some traction.

That's great. Very detailed. Thank you for that. I want to touch on that rocket ship comment because I think on the last earnings call, I think management highlighted that the Corporate Payments business, the cross-border sales were at a new record high. So maybe talk about why so much traction. And I'm curious how have trends been through the third quarter, just given all the macro noise and the tariff discussions.

Yes. We in the cross-border business, think of customer acquisition or sales as our superpower as an organization. This is something that we do exceptionally well. I'd say almost every single quarter is a record quarter. We do see particular jumps in growth at different junctures. And the private markets business, the financial institutions business has been an added element that add some fuel to that growth over the last couple of quarters.

This year, we're anticipating to print just under $200 million in realized new revenue from customers that trade with us for the first time in '25. When we annualize that or what we call starts, we will look at something a little bit north of $300 million in sales for the cross-border business against a base that was $700 million, $700 million and change at the beginning of the year. So super attractive growth set of math ultimately in terms of how this sets up for the future and continues to scale quarter-on-quarter.

We continue to find success both selling against banks, which are our primary competitors as well as fintechs. And what we think of is when we sell against banks, what we're really selling is our capability, our customer centricity, our integration technology, our ability to move fast, make decisions. In addition to the fact that we've got all the capability of the big banks because we've absorbed all of their capabilities into our network. So we've got the comparative strength of the financial institutions, but a very customer-centric fintech attitude in terms of the way that we do business and much better technology.

When we compete with fintechs, which about 2 out of 10 of our customers come from, it's really leveraging the other side of that equation. It's the financial strength, it's the balance sheet. It's the very sort of institutional nature of our business. In addition to the fact -- and the global capability, the network that we have, in addition to the fact that we can compete on technology, and we have breadth of service that beats most of the fintechs in our space.

So what we're really trying to do is create something relatively unique where we sort of charge up the middle of the marketplace, able to compete very favorably with banks, large and small, the Tier 1s because we're more customer-centric, the Tier 2s and 3s because they don't have the capability that we have when it comes to cross-border payments and FX execution. And in the fintech world, we just beat them because we've got a bigger balance sheet, we've got more capability. We've got a bigger global network and scale is super important in this business. That between those capabilities and the fact that we continue to add products, features, new customer segments that are high-growth categories that are super durable in our mind as well.

The future of our business in terms of our financial institutions practice, the future of the private markets business, we think that this is a generation of growth for us in these categories that will augment our traditional corporate business.

Yes. Maybe we could dig into the cross-border part of the business a little more, Mark. And I think one of the things that we wanted to focus on is just the evolution of the business from a go-to-market perspective as well as a geographic evolution. Because I think the cross-border business used to be very North American concentrated, but you've diversified away from that into other geographies. So how has that mix evolved? And maybe talk about why that's important to build out a presence in other geographies?

Yes, we've diversified and certainly reduced our risk to a certain extent, but moved into categories and geographies that offer us higher growth as well. So it's a shifting of the growth math ultimately to something that is a little bit more durable. So historically, the business was very North American-centric, small business focused and sort of moving into the mid-market.

Over the last five, six years, we've moved from mid-market to the large corporate market in the North American geography and then have replicated that sort of go-to-market strategy in the U.K. and across Continental Europe and now in Asia Pacific as well and continue to add geographies, particularly in Continental Europe that we think are super nutritional to the brands. The FX centricity or the cross-border centricity of business in Europe, it lends itself a little bit better to our value proposition than the U.S. does, quite frankly. So we see it as a more target-rich environment with less competition and less capable national champion banks in each of those geographies.

So we think of Italy and Spain and France and Germany as all being markets that have a $150 million to $200 million market potential that's realizable over the next four or five years. So we see a lot of growth coming from Continental Europe. We've also expanded in Asia Pacific, opening up a business in New Zealand. We've launched in Singapore, where we're contemplating next to go to Hong Kong and India ultimately. And then in North America, in addition to expanding our sort of presence across the United States, we've recently started originating customers in Mexico as well. So very diverse sort of sprawl from a geographic perspective and continuing to take the same model and technology, deploy it in new geographies and scale the business.

The other part is really moving away from that sort of direct sale primarily model to a channel partner model as well. So a good portion of our new business comes from partnerships and introductions that we get from other organizations, both where we've embedded our capability and their technology and also where they're just providing introductions to clients. So we've really augmented both the go-to-market strategy as well as the sales methodology as well.

Great. Often, we see on the merchant acquiring side of the payments industry, companies in the middle market or maybe slightly upmarket have multiple providers. Is that the same when you think about these companies on the cross-border side? And you kind of hit on it earlier, Mark, but what are sort of like the two or three key factors that companies consider when choosing a provider?

Yes. I think we do oftentimes see in the mid and large corporate space, there's certainly a focus on having a primary provider and then a redundant partner at the very least. It would be very rare that you would unilaterally own 100% of a customer's flow in all geographies, let's say. Typically, that incumbent is a financial institution until we just lodge them and then they become the redundant partner ultimately is always the goal.

I think the points in which we compete on our network connectivity capability, how can we move money everywhere in the world, the strength of our FX franchise in terms of risk management execution as well as just trading liquidity for clients. It's certainly a big part of our focus over the last number of years is building customer-facing technology, particular workflows for individual segments of customers that have sort of niche requirements that end up being very big sectors ultimately.

So we build customized technology for a group of customers that we can then go and sell to hundreds of millions of other customers or hundreds of millions of dollars of revenue of other clients in that space. So it's the technology that's important, the network connectivity, of course, the balance sheet strength as a counterparty and then the geographic reach is super important.

Is that connectivity, that's like, I guess, the integrations into the ERPs and customizing it.

Yes. It's a big part of it. So I'd say five years ago, the arms race was on to integrate with as many vertical and horizontal ERPs as possible, and we did that. And it gave us a super solid foundation in the corporate space. I think how that's evolved today is it's more front-end integration with other fintech players or e-commerce firms where our capability is just embedded in their front-end user experience.

So the customer that's utilizing our services, almost like when you're booking an Uber, you don't realize you're making a payment. The same thing occurs in our technology today when we're partnered with our go-to-market partners. So it's really a technology-first value proposition, and that's part of what allows us to win.

Yes. Lots of cross-border companies talk about the large networks that they've built out, right, these cross-border fintech players. Can you talk about some of the key differences between Corpay's network versus others? And maybe also touch on the direct connections into the local schemes. Like I'm curious how much of your connectivity is direct into the local scheme versus having to rely on a bank partner?

Yes. So our direct connectivity and in-country payments today is a little bit more than 50% of our overall flow. So that's grown from 5% five years ago to 50% today. So it's clearly the trend of shifting away from SWIFT and bank connectivity to a single counterparty to in-country connectivity via local gateways.

I think when we think of our network, it's sort of four levels ultimately. So 10 years ago, we were very focused on building bank connectivity all around the world, not just in the major currencies, but the emerging market world, building primary and redundant partners that could execute mass payments for us at scale, hundreds or thousands of payments at a time. as well as FX providers that we can do large ticket FX transactions with in places like Nigeria and Kenya and Central Africa. And so building that network of bank connectivity was sort of the first area of focus 10 years ago.

The next thing came in-country connectivity and connecting directly to local schemes without a bank between you and the scheme ultimately. The value there is speed, efficiency, cost transparency, cost effectiveness, but also that you can be the arbiter of your own risk appetite because there's no one else that dictates you're not going across someone else's rails. So that's a big driver of that as well.

So for the last eight or so years, we've been focused on building that in-country scheme connectivity that moves away from SWIFT that has guaranteed full value transfer, guaranteed on-time delivery, no fees and it costs pennies of transaction as opposed to dollars of transaction. So it's been a significant shift from SWIFT to those in-country gateways.

The next area of focus over the last two or three years was to build real-time connectivity and real-time capability. So the experience that we all have as consumers, we want to now replicate in the business world as well. So instant payments or near real-time payments has been a particular area of focus for us. So taking many of those in-country gateway connections and turning them into real-time connections to do SEPA instant payments, ACH instant payments and other real-time rails, even in emerging markets, not just in major currencies. So that's been a particular area of focus.

I'd say the fourth area that we've actually been working on for a number of years going back to 2019, but now really beginning to scale is sort of our blockchain stablecoin digital currency capability ultimately as well. And the clear value here is while real-time payments can allow you to move money instantaneously and super cost effectively, which is a core part of sort of the stablecoin value proposition or blockchain.

What stablecoin or blockchain does is sort of the always-on 24/7 element. So it's an added capability that you can build into your network by enabling blockchain payments, which is something that we've been going down this path, in particular, geographic corridor since 2019, and we've invested very heavily over the last 18 months or so to build out this capability, both in terms of being the last mile of payment delivery for third-party remittances, but also in terms of treasury flows, our own treasury flows and our large corporates so that we can move pounds thrilling on a Sunday afternoon ultimately. We've always long enabled our customers to trade on the weekends and have the FX liquidity capability to be able to do that. We're now moving money for customers over the weekends as well.

Great. It's a good segue into the next question because I wanted to hit on stablecoins, one topic that we're getting a lot of questions on. I guess thinking longer term, Mark, I mean, what role do you think stablecoins will play in B2B payments? I mean, are there certain use cases that you think will take off? And I guess, how is Corpay thinking about leveraging stablecoins in its offering?

Yes. Whether it's stablecoin or blockchain-enabled payments, we sort of think of those as one category, and that is that fourth component of our network. And we think of it as that always on 24/7 element. That's really the value that it delivers versus some of the other things that have already solved a lot of the problems that stablecoin solves versus SWIFT, but not necessarily against real-time payments that are already near instantaneous and tremendously cheap, pennies a transaction.

In many cases, the value of an in-country payment or the cost of an in-country payment is lower than the gas fees associated with the stablecoin payment. So it's not really cost where we are benefiting. It's that always on 24/7 elements of being able to move money irrespective of cutoffs or on the weekends. And I think that is the primary use case that we're thinking of stablecoins for. So when we have treasury needs to help manage customers' liquidity across geographies between the U.S. and Australia, let's say, or other Asia Pacific organizations or to be able to move money after cutoff ultimately.

When our customers come to us today, they don't say, hey, can I make a stablecoin payment? They say, I need to move money to this jurisdiction at whatever time of day. And then we leverage the capability that will deliver that in the best and most cost-effective fashion. It's not always a stablecoin or a blockchain payment. It could be a real-time payment or an instant payment. The value of having that sort of four-part network is that we can deliver value to the customer and what they're looking to achieve, solve the business problem, and it's not just with one tool, and there's not a reliance on just one tool.

I'd say the other thing that people probably get confused about stablecoins as well is that it's going to take over the cross-border business and begin to compress FX spreads. And the reality is that every stablecoin is linked to a fiat currency, and there's still a need to do FX conversion, whether it be on chain between stablecoins, euro versus U.S. dollars or if it's off chain in the fiat currency world, 95-plus percent of our economics come from that FX conversion. So whether it's converting from a U.S. dollar stable coin to a euro stablecoin and we do that on chain or we do that off chain in the fiat world, that's still where all the economics come from. And we're prepared to do that in either environment ultimately.

Yes. Great. I think you hit on my next question, so maybe I'll skip that one. But I guess when you think about a comparable transaction, Mark, right, same corridor, same currency, same pair, do you know what the cost might be to send a payment via a stablecoin versus, I guess, using your own network or another rail that you guys leverage to move money?

Yes. So I would say, typically -- so let's just take a $100,000 payment or a $10,000 payment. To send a payment via SWIFT cost dollars a transaction. To send a payment via stablecoin cost quarters per transaction. To send a payment by an in-country instant rail is pennies per transaction. So it's still more cost effective in many cases, to send an instant payment than it is a stablecoin payment. The gas fees are higher than the $0.03 it costs me to send a SEPA payment, let's say.

I'd say the other thing that is still a point of friction with respect to digital payments is the on-ramp and off-ramp scenarios. So in most cases, our customers today that are taking delivery of payments via digital means, they're not then holding those in stablecoin. They're having to off-ramp those into a fiat currency account, and that's where the friction, that's where the real cost is. So when you talk about gas fees, that's relatively inconsequential. When it comes down to the on-ramp and off-ramp friction, that's where the real cost comes in for the customer.

Yes, totally. Yes, it seems like the scenario where there would be risk is if customers operate with stablecoins and they transact with stablecoins, but it seems like the probability of that playing out is quite low, just given the need to often on-ramp.

And it's growing, and we will see -- we start to see certain customers begin to have greater appetite to hold liquidity in stablecoin as well and actually transact and do business corporately in terms of stablecoin or digital wallets ultimately. But that's not really ubiquitous in the marketplace today. There's generally an on-ramp and off-ramp. That on-ramp and off-ramp friction is also a commercial opportunity for us.

So in our digital currency practice, this is a big part of our focus is to provide on-ramp and off-ramp solutions to native crypto exchanges, native stablecoin providers that don't have the fiat currency liquidity and capability to facilitate that on-ramp and off-ramp for their customers and try to drive costs lower. So that is another opportunity that we see as a significant driver of growth in the coming years as there's greater stablecoin and crypto adoption, especially amongst the corporate space. We, with the partnerships that we put in place and the relationships that we have, will continue to benefit from that on-ramp and off-ramp flow that is super attractive for us.

Yes, totally. I guess my one question that we get is -- so I get the cost structure is for a netted transaction is quite low, right, where there's an offsetting flow. There's still a wide delta between the revenue versus that cost structure. So the margin is still quite attractive. I guess what prevents other players from coming in and trying to chip away at that margin if they could replicate that low-cost structure that you have?

Yes. It's a super deep and wide competitive moat, thankfully, that we've spent a lot of time trying to cultivate and develop over the last decade plus. So it's the regulatory framework being licensed in as many jurisdictions as possible that is then required to have the local connectivity. Without local licenses, you can't connect to the local schemes.

To build that out takes years and years going geography by geography ultimately. It's the customer-facing tech. So it's the ERP connections, the API connectivity, whether it be soap, rest or fix APIs, having a product set that can touch different customers, meeting them where they are in terms of their tech development journey. It is having the ability to embed capability directly in your customers' user interface or their front end or their web technology, their e-commerce platform. So that technology element of solving the friction in actually the execution of payments and FX is a huge component.

Then it's the network. It's the global reach and being able to move money to Central Africa or Nigeria. What we see from our customers is typically, a corporate will come to us and they'll -- 90% of their flow is in major currency corridors. But if we can solve their pain point with respect to moving money to Nigeria or moving money to Brazil, which might be a small part of their overall flow, but a big part of their treasury friction and the thing that consumes time. If we can solve that unique use case for them, then we get all the rest of the flow as well. We get all the euros and the sterling that we can make really good spreads on that are super easy to automate and everything else.

So it's that investment in the in-country networks globally in the emerging and frontier market world over the past decade that are really reaping significant benefits for us today.

Yes, totally. Are there parts of the cross-border business that might be more insulated from this perceived stablecoin threat? I think there's some services outside of the traditional FX fees that you generate just as we think about the different revenue streams within that cross-border business.

Yes. The economics that we get paid for moving money are a tiny part of the overall revenue of the business. So 95-plus percent of our revenue comes from FX conversion, whether that be digital currency or fiat currency and the movement from one to the other.

Ultimately, we feel as though as long as the global economy doesn't completely dollarize, which I think there's less risk of that occurring today than there was a generation ago, mainly for political reasons and the independence of monetary policy around the world. We just don't see that, that FX spread is going to come under pressure given that layer of value that we've created around technology and network and everything else that we built for customers. It's the compression that we may see in transaction spreads as costs come down to move money and the market moves more away from SWIFT payments to these other rails, but we believe that we've built the network to capture that flow and to win there as well.

Yes. Maybe just building on the stablecoin discussion. You guys partnered with Circle. Maybe we could touch on that partnership. I'm curious what customer feedback has been? What has demand for USDC been? And then I think separately, I think Circle is introducing a new network called Circle Payments Network. What are your initial thoughts on that network? And I'm curious to get your thoughts on how successful that might be?

Yes. So there's a lot there. So we've done a number of partnerships in the space with -- we've had a long-standing partnership with Ripple, for instance, Circle is a new partner for us. We think of these relationships is really twofold. It's taking their capability from a digital currency space and embedding it in our technology and making it part of our network. And then it's us being the on-ramp, off-ramp provider for them to be able to reduce that friction for their customers as well. So it's sort of a two-pronged attack and that contributes to the growth of both organizations.

I think the Circle Payments network is an interesting network, sort of a closed-loop network that has some treasury applications for corporates, certainly has some third-party room, so last mile payment delivery as well that we see some capability for. I think it will take a little bit of time to build. I think what they've created though is an ecosystem that will invite a number of financial institutions to participate in.

Whether they have the capability and the appetite and the technology to step into that world will dictate how quickly each of them can run. But we do see it as a valuable piece of the ecosystem in the digital currency space, much like what we partnered with and built with JPMorgan and Kinexys, for instance, is a capability that we use to move money on a 24/7 always-on basis from a treasury perspective. Each of these networks creates different opportunities and solves for different use cases for our customers.

Mark, I wanted to ask about another big announcement you guys had this year, which was the Mastercard minority investment into the cross-border business. I know it's early days, but how is that partnership progressed? And I think what everyone is trying to figure out is how big of a contributor can this partnership be as we think about revenue or volume?

Yes. We're really excited about the Mastercard deal. If I think about it at sort of a top of house level, you have this organization that has 27,500 financial institution customers around the world. Each of those financial institution customers has needs and holes in their networks in terms of the way they move money and provide FX liquidity. And we see this as a means by which we're a trusted partner of each of those banks can then introduce us to help solve those needs in those bank networks ultimately.

So we've stood up or Mastercard has stood up a dedicated sales team to partner with us to leverage the relationships that they have to introduce us to the Head of Transactional Banking in each of those financial institutions to walk us in the door, give the introduction, give this the pitch and then allow us to do the needs analysis and the implementation.

So we think there are a lot of legs to this partnership. We've actually been able to get the flow of referrals and introductions going already. It will begin to meaningfully show up in our sales results in Q3 and Q4, and we think is going to be a multiyear driver of our financial institutions practice.

It really speaks to part of the strategy as well as we've got these four key segments in our business in cross-border. We try to support each of those segments with corporate development work, whether it be partnerships, acquisitions, and certainly, this Mastercard deal is a big part of driving that financial institutions and fintech practice for us. We think it will be financial institution rich, but fintech partner-rich as well.

So what probably is lesser known about the Mastercard network is their connectivity to financial technology partners and fintechs all around the world. And we think the adoption of our capability by them because of their ability to integrate to our technology faster will be perhaps even more robust.

Yes. Great. Maybe turning to the acquisition of Alpha Group. Alpha has a bank account product and a bank account consolidation software solution. And I think that's going to be new to the Corpay portfolio. Maybe talk about the importance of those products, Mark, and the need for them across the broader portfolio.

Yes. The Alpha deal is super exciting for us. I think it's our fourth such deal that we've done since 2021, and we can sort of walk through those. But we have the belief that this could potentially be the most impactful, the biggest deal, the most successful deal that we've done yet in terms of the way that it augments our value proposition.

So what we have historically done is we focused on building a multicurrency account solution for the corporate market. And it's been -- we've launched that in the past year. It's been very, very successful. What Alpha has done is focused on building a bank account solution for the private markets business. So thinking of providing bank accounts in a super-efficient AML fashion to funds, SPVs, funds administrators to stand up a bank account for a new legal entity when it goes to launch that investment ultimately to the public market.

That capability is not just a bank account capability, but the technology layer, the connectivity to a banking platform globally and then the regional capability embedded in each geography in which funds are typically organized around the world. So it is super impactful in terms of driving value in the private market space. And we think that given our geographic footprint, the fact that Alpha today only really operates in the U.K. and Europe that we can take that capability and sell it to our institutional customers in Asia and also in North America, we see as being a tremendous runway for growth for that bank account product.

But what we also see is that Alpha delivers to us incremental geographies in Continental Europe that are high priority targets for us that we want to build boots on the ground and build big businesses in. So introductions to Germany, Luxembourg, Austria, a much bigger business in Malta, the Netherlands. That geographic expansion ties in with our overall Continental geographic expansion strategy for Europe as well. So we're super excited about the Alpha business. We think it's a tremendous fit and gives us great runway for growth.

Mark, you mentioned the four acquisitions since 2021 on the cross-border side. Can you give us a sense of how those acquisitions have played out versus expectations? I mean, I think the idea is you acquire these businesses, you put them on the Corpay platform, you get a lot of accretion, a lot of EBITDA growth by doing that. So I'm just curious how those have played out.

Yes. So the model for us is super clear. We want to be a 20% organic grower on our own, leveraging our capability and the products that we built, and we've been able to historically deliver that. We believe it's durable into the future as well. And then when we think of each acquisition brings both capability to the organization, but a portfolio of customers that we can then optimize as well.

So if I go back to the AFEX deal that we did in 2021, it was a low teens grower, 10%, 11% grower per year at a 15% EBITDA margin. By lifting all of the customers out of that technology platform, moving them on to the Corpay technology where we could optimize revenue and cost base and then decommissioning the legacy technology and infrastructure of AFEX, we took that from a 15% EBITDA margin to a 50% EBITDA margin in 12 months. we're able to move super-fast on the integration. Sort of the fintech pedigree allows us to do those sort of tech connections very, very quickly. GRG was a similar sort of story. So it's accelerate growth from high single digits to 20%, take EBITDA from 30% to 55% and move it all over in 12 months. GPS, we're only 9, 10 months in, but same exact strategy. With Alpha, the strategy will be a little bit different because there's more capability ultimately that we are uncoupling from the Alpha tech, bolting on to the Corpay technology and then selling to all of our customers around the world.

But the strategy is super clear. Take all of these tech platforms, take the capabilities that come with each one of them. separate those from the legacy technology, add them to the Corpay technology going forward, but we have one single tech stack everywhere in the world, one operational platform, which allows us to move way faster than a traditional financial institution. So when we build new capability or a new product or a new technology connection, we can push it across the entirety of our network and all of our geographies all at once. So it allows us to move super-fast when we introduce new ideas, new products. And with each organization that we acquire, it comes with incremental geographies, incremental licenses, incremental software that we can then add to the capability mix going forward.

So what we think of is with each accretive acquisition, it's a chance to acquire a portfolio of customers that we can optimize significantly given our increased products. It's little pieces of technology that become valuable in connecting to our overall technology stack and then the ability to significantly scale and optimize the P&L of those businesses and accelerate sales as well.

And it sounds like this is real consolidation, like you're actually maintaining that one platform. You're not maintaining multiple platforms as you do these acquisitions.

Yes. We've got sort of a religious belief about it. There's one way to do this, and it's proven to be very successful for us. We've looked at other deals that have happened in our space that have proven to be very unsuccessful, and we can understand the reasons why. A lot of it relates back to the technology strategy and how that's worked out. So there's usually a very clear game plan. It's really about time line, it's about execution and how do we do it without causing -- or by causing as little disruption to the network of customers as possible.

Yes, total. We've got a handful of minutes left. I have a few more questions, but if anyone in the audience has questions, feel free to raise your hand.

Mark, I guess one of the new products that has ramped pretty quickly is the multicurrency accounts. I think you have over 10,000 bank accounts, $1 billion in deposits. Can you talk about why adoption has been so strong? And is this more of -- do you guys see it as a revenue -- more of a revenue play? Or is it more of like a retention tool for the portfolio?

Yes. It's -- so we are really excited about this product. If we take a step back and we think of our business, we provide FX liquidity solutions. We've moved money in as automated a fashion as possible. And now we provide global bank account solutions to our customers in the different categories that they sit in.

We believe that it's a great retention tool, makes the customer sticky to us. The way that we think of it is that we want to be the international financial institution of choice for our customers beyond our domestic market. So if you're a U.S. corporate and you have a relationship with JPMorgan or Bank of America, but you want to expand to Europe or Australia or Canada, we don't want you partnering with RBC in Canada or Barclays or National Australia Bank. We want Corpay to be your international bank of choice. And that's essentially what we're seeing from our customers.

So at the end of Q2, I think we had around 10,400 accounts that had been opened by corporate customers in a space of about six months. We've built a base of deposits from effectively a very low base to more than $1 billion by the end of quarter. We are continuing to add geographic capability, different currencies that we're adding in, different front-end technology that will make it more useful to certain customer categories. So we think this is a big runway for growth and sort of, again, continuing to widen that competitive moat and making us insulated versus banks and nonbanks, but it's a big revenue driver as well, the fees as well as the float income that we generate on all that cash.

And the way that we think of it as well is when we are the bank for the customer, we control the cash flow, we are the incumbent provider. They come to us as a default ultimately for their payment execution and their FX liquidity. So it really makes them stickier to us ultimately and allows us to differentiate much better versus fintechs, especially and allows us to compete better than a domestic bank trying to do business internationally with that customer.

Yes. No, it seems like it's a great, I guess, share of wallet opportunity, right? If you keep taking share and you go from, I don't know, 80% to 90%, 95%, that's the real needle mover.

Yes. It's just kind of frustrated we didn't think of it years ago, but it certainly is a super power in terms of adding capability to the organization and one that's helped us from a customer acquisition standpoint as well.

Yes, totally. Mark, I know over the last few years, there was a discussion of cross-selling different products across the Corpay portfolio. One of those, I think, was specifically Corporate Payments and cross-border being a piece of that. Can you remind us where we are on that journey? Is there still an opportunity for cross-selling? And is that still an area of focus for the company?

Yes. We still think there's a lot of upside, and we're very early days in terms of our integration with certain parts of the Corpay franchise. So we've long worked with our sister company in the domestic payables business, and we've got lots of interconnectivity for us to be able to deploy card solutions to our customers internationally for the payables business to leverage our FX liquidity and money movement capability internationally for the U.S.-based corporates.

We've got sort of three major initiatives of partnering with the international business, our international fleet vehicle mobility business. That's sort of a European U.K. and ANZAC-related business, where we are embedding our cross-border capability in their front-end technology to sell to their customers. So that is really, really new.

We've actually just launched that Corporate Payments capability in Europe for the first time that we believe will actually transform that vehicle mobility business into more of a Corporate Payments business. So again, supporting that bigger top-of-the-house strategic shift with a significant pivot towards Corporate Payments that is now well underway in that international vehicle mobility business and then continuing to do the same things in the North American market as well.

So I'd say it's super early days in terms of those things. We're in the first or second inning, and we've got a lot more runway to go.

Any questions from Mark? I'll ask one more.

[indiscernible]

Very good question, both. So I'd say the way that we think of moving money internationally is if it's a cross-border transaction, a domestic international transaction, we break it into its constituent parts. So everything for us becomes a domestic transaction. It doesn't look that way for the customer, but we're leveraging a domestic rail or domestic connectivity on both sides. So we get the benefit of that pennies per transaction on everything that we settle ourselves, even though we may even charge the customer for a cross-border transaction.

In terms of the economics for us, whether it's stablecoin or blockchain-enabled payment versus an off-chain fiat transaction, the economics are largely the same. I would say that the take rates and the overall economics that we generate in the on-ramp, off-ramp world are actually higher than our corporate payments business today. The flows are bigger. The volumes are more attractive and the spreads are super attractive in that space. So there is opportunity for us as we see greater stablecoin and digital currency adoption, we actually think there's improved economics for us.

Great. Any last questions or I'll ask one last one.

Mark, I guess, maybe to wrap up, I mean, what are you most excited about over the next few years? And with the stock under a little bit of pressure and the whole space under pressure, I mean what do you think is most misunderstood across the investment?

I think for us, it's -- so if I take a look at the top of the house, it's the pivot towards corporate payments that we think is a super attractive, durable strategy that will continue to generate earnings for the Corpay at the top of the house. I think in the cross-border business, it's the durability of our sales capability ultimately and how that continues to grow quarter-on-quarter.

As I mentioned, we're on pace to deliver more than $300 million in sales this year off of a base of $700 million. That's a super attractive amount of growth as those customers scale and ramp and realize that $300 million potential. We believe that we'll continue to add to that. And so the durability of that sales model and the way that we simply think of it is we retain basically 99% of our revenue from one year to the next from existing customers. Then if we can sell and realize revenue from our base of 20% with more upside from those customers as they scale and we get more share and they reach that starts value, we believe that we can begin to accelerate growth even as the business scales beyond $1 billion. So we think that there's tremendous upside.

We think the Alpha deal gives us incremental capability, a very attractive new segment with a clear market leadership position in that segment to be the fintech of choice for the private markets vertical. And we see that market as growing 9%, 10-plus percent per annum, where we can continue to acquire share at a super attractive rate. We think the growth potential and the durability of that growth is super high.

Okay. Awesome. I think we're up against the clock, Mark. So we'll have to leave it there. But thanks for joining us. Thanks so much for making the trip, and I appreciate all your thoughts, and we'll do again next year.

Really appreciate it. Thanks so much.

Great. And thanks, everyone, for listening in.

Yes. Okay. All right. Good morning, everybody. We'll get right into it. Thanks for being here. I guess we'll call it the second Annual Jefferies Fintech Conference that we're going to kick off with Corpay and Peter Walker, CFO. Excited to have you here with us.

Peter, maybe just to jump right in. So you joined, I think, 2 months ago, we were just talking about.

That's right.

Maybe just high level, what stood out or surprised you so far in your time thus far?

Yes. Maybe 2 things I'd just share why did I join Corpay? Really 2 reasons, I would say, overall that I joined. One is our customer is the CFO or the office of the CFO. So I've been CFOing for about 20 years. It's really cool to be sitting in the seat of CFO of a company, and I'm the end customer, right? So it really allows me to look at the products and the markets and understand it in a unique way.

Second reason that really excited me is the opportunity to work for Ron Clarke, incredibly visionary CEO. And so just the opportunity to learn from him. So that's what brought me in. And then in terms of kind of what's shown up for me, I'd say, as an upside as I've come in the business, really 2 things. So one thing is in our Payables business. I didn't realize quite the opportunity that we have to cross-sell Corporate Payables into our fleet card customers. So quite a bit of an opportunity for us to do that and really expand the wallet share with our fleet card customers with our Corporate Payables products. So that's a pretty exciting upside for us, and I think we're on kind of the beginning of that journey.

The other thing is the Cross-Border business, right? I mean I understood the business from the outside, but getting in the business and really just seeing what our competitive advantages are, how we've been able to grow that business, the partnership we signed up with Mastercard, which is opening up a new customer segment for us and then the acquisition of Alpha, a new customer segment as well, which I know we'll talk about in a little bit more detail.

Okay. Perfect, yes, I mean we will get to all of those. But maybe we just get through the near-term trends. So about a month removed from the 2Q print. Any update on how things are trending so far in Q3? I mean we have the embedded assumption for U.S. vehicle growth to get up to the mid-single digits from slightly positive in 2Q, if that's still on track? And there had been a call out last quarter, at least on the North America portion of Cross-Border seeing some pressure from tariffs, just how that's looked over the last couple of months?

Yes. So in terms of Q3 results, we're trending right in line with where we expected to be based on what we shared on the Q2 call. In Vehicle Payments, and I know we're going to talk about a little bit more detail, we're really pleased with the mid-single-digit growth that we shared for the back half of the year, and we're on track with that. And then when we look at our Cross-Border business, I would say that North America continues to be a little bit of a headwind for us. That being said, the international markets have been a nice offset. So Cross-Border is kind of tracking exactly where we thought it would be.

Okay. Perfect. And so getting to vehicle fleet, it's been a journey over the past couple of years. You've had the mix shift away from micro fleets, getting the upmarket sales motion ramp back up and you're finally getting that U.S. vehicle growth back up to the mid-single digits based on how you're guiding for the back half. It sounds like you're trending in line with that. Maybe just talk through the main drivers of where you've seen that acceleration come across retention, new sales, you have a couple of big wins that are layering on?

Yes, happy to. So it has taken time to rebuild the sales engine, the sales force and the customer targeting, and we're thrilled to be in the spot that we're in. Just a reminder that we're focused on fleets with 10 or 20 vehicles or greater, where the previous strategy was really a micro strategy focused on fleets with 5 vehicles or less. So as we're going into the back half of the year and expecting mid-single-digit growth, we're really seeing that coming from 2 spots.

First is retention. As we shared on the Q2 call, it's up about 150 basis points over Q2 of last year, and it's just a little bit north of the company average. So we're really pleased with where we are on retention, and we see that holding.

The other place where we've seen positivity is on the sales force side and production. And that is now large enough to grow over the large base that we have. So really, we've got retention going for us, sales going for us. And then to a lesser degree, because we're going to see benefit in this year and next year, but we did share on the call that we had 2 enterprise clients, GasBuddy and Amazon that we won. So that's a little bit of a tailwind in there as well.

Okay. No, that all sounds good. And within Vehicle, Brazil has been a really strong organic grower over the past couple of quarters, been growing over 20%. Tag growth has been consistent, growing roughly 7%. First, if you could just remind us what the revenue split looks like today between toll and then the extended network across parking, insurance, the other verticals? And then what the major contributors have been in keeping the Brazil growth kind of well above the underlying tag growth?

Yes. So spot on that Brazil has been a high teens grower for us, if not in excess of that on some quarters. So a really strong business. When we think about the revenue there, about 40% of the revenue is now coming from the extended network, the additional products that we offer, insurance, parking, et cetera. And then about 60% is coming from the monthly Tag Subscription business. So it really is a mix shift where we're having a lot of success with those additional products. In addition, we've shared, right? That we did 2 acquisitions in the debt financing space in Brazil, and those are also adding to the growth rate here.

Okay. That's helpful. And then just to tie together for the Total Vehicle segment, you're assuming 10% growth per vehicle in the second half. We talked about the mid-single-digit growth in fleet. that implies something like high single -- high teens growth in Brazil. Is that a fair way -- if we think of the 2 components of Vehicle, is that a fair way to think about what the normalized growth of the segment should be going forward?

And if we think about '26, there's the BP deconversion. You guys have put out an 8-K, just putting some framework around the sizing of that. But any other puts and takes we should be mindful of as we think about kind of the go-forward growth rate of Vehicle?

Yes. Maybe I'll expand on that a little bit. So Vehicle Payments for 2025, revenue will be north of $2 billion. There's really 3 legs to the stool. And so when you think about those 3 legs in the stool, let's just say they're each 1/3, let's make it easy math. So if we kind of go back through the areas you were focused on, U.S. VP, we see at 5% in the back half. International VP, we see at 10% in the back half. And then Brazil, we see high teens in the back half. So if you kind of do the math on that, that's what delivers 10% organic growth in the back half, and we believe that's sustainable going into 2026.

You did mention the [ BPE ] sale. That will come off the books in 2026. So it's a really end of year event for us. Similar to when we buy things, when we sell things, that will also come out of organic growth. So it won't be a punishing factor there. And it was a relatively small book of business for us. And again, we just didn't want to compete given the economics that were offered by the company that picked it up.