Corpay (CPAY) Q1 2025 Earnings Call May 06, 2025 05:00 PM ET Speaker0 Good day. I'd like to welcome everyone to the Corpay First Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Today's call is being recorded. I would now like to turn the call over to Jim Egglestader, Investor Relations. Please go ahead. Speaker1 Good afternoon, and thank you for joining us today ...

Financial Data and Key Metrics Changes - The company reported Q1 2025 revenue of $1.6 billion, an increase of 8%, and cash EPS of $4.51, up 10% [8][24] - Organic revenue growth for the quarter was 9%, with vehicle payments growing 8% and corporate payments growing 19% [9][25] - Retention rate remained steady at 92%, with new bookings up 35% year-over-year [10][24] Business Line Data and Key Metrics Changes - Corporate Payments revenue increased 19% organically, driven by solid spend volumes [25] - Cross border sales grew 51% year-over-year, with revenue increasing 18% organically [25] - Vehicle payments revenue grew 8% organically, with significant growth in Brazil [29] Market Data and Key Metrics Changes - The company expects tariff impacts to be modest, with an estimated unfavorable impact of $10 million to $15 million on cross border revenue [28] - U.S. Vehicle payments revenue growth was down 3% organically, but improvements in customer application approvals and retention were noted [30][72] Company Strategy and Development Direction - The company is focused on expanding its corporate payments business through recent acquisitions, including a partnership with Mastercard and a minority investment in Avid [15][16] - The company aims to enhance its position in the corporate payments space and is exploring additional acquisition targets [18][19] - A major push into the institutional client segment for cross border services is underway [21] Management's Comments on Operating Environment and Future Outlook - The management maintains a full-year 2025 guidance of $4.42 billion in revenue and $21 in cash EPS, reflecting confidence in the business despite macro uncertainties [12][40] - The company is not seeing any meaningful change in customer behavior due to economic uncertainties as of April [40] - Management expressed optimism about the performance of the hedging business, benefiting from market volatility [95] Other Important Information - The company completed the acquisition of Gringo in March, which had an immaterial impact on revenue and adjusted EPS [24] - Operating expenses increased by 8% year-over-year, influenced by recent acquisitions and higher transaction volumes [33] Q&A Session Summary Question: Confidence in Mastercard partnership for incremental revenue growth - Management expressed confidence that the partnership with Mastercard will create significant opportunities, especially with Tier two and Tier three banks [44][46] Question: Nature of the Avid investment - The investment in Avid is strategic, aimed at enhancing corporate payments and payables, with a focus on profit acceleration [48][49] Question: Update on enterprise sales pipeline - Management confirmed that the enterprise sales initiative is live and progressing well, with potential for significant growth [57][58] Question: Impact of tariffs on vehicle payments - Management indicated that while tariffs do not directly impact the company, clients with goods-based businesses may experience indirect effects [63][66] Question: Performance of U.S. Vehicle payments - Management reported improved retention rates and anticipated a pivot in organic revenue growth for the U.S. Vehicle payments business [71][72] Question: Access to Avid's supplier network - Management confirmed that a prior commercial agreement with Avid has already begun to enhance supplier monetization, and further synergies are expected [113][114] Question: Potential noncore divestitures - Management mentioned plans to divest three noncore businesses, which could provide up to $2 billion in liquidity [17][116]

Financial Data and Key Metrics Changes - Revenue less ancillary services was $128.7 million in Q1 2025, representing a 16.8% year-over-year growth rate or 18.6% on an FX neutral basis [37] - Adjusted gross profit increased to $82.5 million during the quarter, up 14.6% year-over-year, with an adjusted gross margin of 64% [41] - GAAP net loss was $4.2 million, representing a year-over-year improvement of approximately $2 million [43] Business Line Data and Key Metrics Changes - Transaction revenue saw a 14% year-over-year increase, driven by a 28% increase in transaction-related payment volume [38] - Platform and other revenues increased by 35% year-over-year, primarily driven by platform fees and improvements in the healthcare business [40] - The travel vertical is experiencing strong momentum, with notable new clients and significant growth opportunities following the Certify acquisition [31][33] Market Data and Key Metrics Changes - The UK education segment is now the largest market for the company, with strong growth driven by new product offerings [68] - Australia and Canada are experiencing market uncertainty post-elections, but the company has seen resilience in Australia [29] - The international education market is expanding beyond traditional markets, with significant growth in Germany, France, Japan, and Singapore [20] Company Strategy and Development Direction - The company is focused on driving innovation, delivering exceptional value, and executing strategic initiatives despite macroeconomic challenges [4][5] - A digital transformation initiative is underway to enhance data analytics and system capabilities, aiming for operational efficiency and improved client insights [13][14] - The company is streamlining its structure and optimizing investments across products and geographies to drive greater efficiency [10][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging macro environment but remains confident in the company's performance and future growth potential [4][5] - The company expects U.S. education revenue growth to be in the low single digits, with potential impacts from geopolitical tensions affecting international student demand [46][49] - The outlook for the healthcare business is positive, with expectations of strong growth driven by unique integrated solutions [35][36] Other Important Information - The company repurchased 3.6 million shares for approximately $49 million, with $57 million remaining in the current buyback program [43] - The company is maintaining its full-year 2025 revenue guidance for FX neutral revenue growth in the range of 10% to 14% excluding Certify [49] Q&A Session Summary Question: FX guidance and growth expectations for the second half - Management explained the expected slowdown in Q2 due to seasonal effects and macroeconomic factors, with a reacceleration anticipated in the second half driven by client ramp-ups and easier comparisons [55][57][59] Question: Impact of international student demand on sales cycles - Management noted that despite macroeconomic pressures, demand for international education remains strong, and clients are looking to improve their technology solutions [60][62] Question: Growth contribution from the UK market - The UK is now the largest market for the company, with strong growth driven by new product offerings and successful client acquisitions [68][70] Question: Sources of upside in revenue growth - Travel and Australia were highlighted as key drivers of growth, with strong performance in both sectors despite macroeconomic uncertainties [73][75] Question: Competitive positioning in the education sector - Management emphasized that the company competes on product performance and results, with a strong reputation in the market and continued client acquisition [92][93]

Core Viewpoint - AvidXchange Holdings, Inc. is set to be acquired by TPG and Corpay for $10.00 per share, valuing the company at $2.2 billion, which represents a significant premium over its recent stock prices [1][2]. Acquisition Details - The acquisition price of $10.00 per share reflects a 22% premium over AvidXchange's closing price of $8.20 on May 6, 2025, a 16% premium over the 90-day volume weighted average price, and a 45% premium over the closing price of $6.89 on March 12, 2025 [2]. - Upon completion, AvidXchange will transition to a private company, allowing for greater flexibility in investing in growth and enhancing integrated payment solutions [2]. Company Background - AvidXchange is a leading provider of accounts payable automation software and payment solutions, serving over 8,500 middle market businesses and facilitating payments to more than 1,350,000 suppliers in the past five years [9]. - The company has established itself as a leader in AP automation and payment software, with a differentiated platform aimed at growth [3]. Strategic Insights - TPG and Corpay view AvidXchange as a leader in AP automation, with significant opportunities to enhance its solutions and improve efficiency in payment processes [3]. - The partnership aims to leverage TPG's technology expertise and Corpay's corporate payments capabilities to accelerate AvidXchange's growth [3]. Transaction Approval and Timeline - The transaction has been unanimously approved by AvidXchange's Board of Directors, and certain senior management members will rollover a significant portion of their equity [4]. - The deal is subject to customary closing conditions, including stockholder approval and regulatory approvals, and is expected to close in the fourth quarter of 2025 [5]. Financial Advisory - Financial Technology Partners and Barclays are acting as financial advisors to AvidXchange, while TPG is advised by J.P. Morgan Securities LLC, Moelis & Company, and RBC Capital Markets [7][8].

1Q 2025 Earnings Supplement May 6, 2025 Disclosures This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained in this presentation, including statements regarding the outcome of the operational and portfolio reviews, the costs, cash outlays, benefits, timing and financial impacts of the actions that may b ...

First Quarter Revenue Increased 17.0% Year-over-Year First Quarter Revenue Less Ancillary Services Increased 16.8% Year-over-Year Previous Fiscal Year 2025 guidance reaffirmed BOSTON, May 06, 2025 (GLOBE NEWSWIRE) -- Flywire Corporation (Nasdaq: FLYW) (“Flywire” or the “Company”), a global payments enablement and software company, today reported financial results for its first quarter ended March 31, 2025. "We are pleased with our 2025 first quarter results, as we signed more than 200 new clients, led by ou ...

Financial Data and Key Metrics Changes - The company reported a 9% increase in net revenue, reaching $224.6 million, with adjusted gross profit growing by 14% to $87.3 million and adjusted EBITDA increasing by 11% to $51.3 million [4][6] - Adjusted EPS rose by $0.19 year over year, reaching $0.22 for the quarter [21][22] - Annual transaction volume increased by $5 billion to over $135 billion, and account balances under administration improved to $1.3 billion [5][6] Business Segment Data and Key Metrics Changes - The SMB segment generated Q1 revenue of $151.7 million, a 5.3% increase year over year, with adjusted gross profit of $33.1 million, up 3.9% [12][13] - B2B revenue grew by 12.1% to $23.9 million, with adjusted gross profit increasing by 17.8% to $7.3 million [15][17] - The Enterprise segment saw revenue of $50.1 million, a 22.2% increase, with adjusted gross profit also rising by 22.2% to $46.9 million [18] Market Data and Key Metrics Changes - The company noted a 0.3% decline in U.S. GDP during Q1, with consumer spending growth slowing to 1.8% from 4% [25][26] - The company reported that its core acquiring channels produced 10% organic revenue growth, while countercyclical segments grew by 12% to 22% [27][28] Company Strategy and Development Direction - The company aims to gain market share in the acquiring segment while strengthening countercyclical assets like automated payables and CFT Pay [26][27] - The focus is on investing efficiently in new verticals with large total addressable markets (TAMs) that are still early in the adoption of integrated payment and banking solutions [26][28] - The company is positioned to benefit from the fallout of less stable banking as a service providers [64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 10% to 14% top-line revenue growth for 2025, despite potential headwinds from lower interest rates and macroeconomic uncertainty [5][22] - The company is actively working to remediate a material weakness related to automated controls, with substantial progress reported [23] Other Important Information - The company ended the quarter with $117.6 million in available liquidity, including $70 million of borrowing capacity under its revolving credit facility [19] - The company has made a $10 million prepayment on its term loan during the quarter, reducing debt levels to $935.5 million [19][20] Q&A Session Summary Question: Can you provide details on the increase in SG&A and salaries? - Management clarified that SG&A increased by 26% year over year when normalizing for non-recurring items, with significant costs related to cloud migration and headcount additions [31][32] Question: What percentage of gross profit comes from B2B and enterprise? - Management confirmed that over 62% of gross profit now comes from B2B and enterprise segments, with a significant portion also from recurring revenues [34][35] Question: Can you elaborate on the Minnesota Wild contract win? - Management highlighted that the contract was won due to the ability to optimize cash flow and provide banking transparency, which is crucial for sports franchises [39][41] Question: How did the one less day in Q1 impact revenue? - Management acknowledged that the one less day did impact daily revenue, particularly in the SMB segment, and noted other unusual influences on volume [43][44] Question: What are the considerations for segment growth in Q2? - Management indicated that shifts in interest rates could impact growth, particularly in high-margin interest income [48] Question: How has consumer behavior changed post-tariffs? - Management noted no material changes in consumer behavior yet, with a resilient portfolio that includes recession-resistant sectors [54][56] Question: What opportunities exist in the embedded finance space? - Management stated that the company is well-positioned to capture opportunities from the fallout of less stable banking service providers [64]

Core Insights - Global Payments reported revenue of $2.2 billion for the quarter ended March 2025, reflecting a 1% increase year-over-year and matching the Zacks Consensus Estimate, with an EPS of $2.82, up from $2.59 in the previous year [1] - The company achieved an EPS surprise of +4.83%, exceeding the consensus estimate of $2.69 [1] Revenue Performance - Non-GAAP Revenues from Merchant Solutions reached $1.69 billion, slightly above the $1.68 billion estimate, marking a +0.5% year-over-year change [4] - Non-GAAP Revenues from Issuer Solutions were reported at $528.82 million, surpassing the $528.21 million estimate, with a +2.6% change compared to the previous year [4] - Revenues from Issuer Solutions totaled $620.73 million, exceeding the $607.50 million estimate, representing a +3% year-over-year increase [4] - Revenues from Merchant Solutions were $1.81 billion, slightly below the $1.82 billion estimate, indicating a -1.4% year-over-year change [4] Operating Income Analysis - Non-GAAP Operating Income for Merchant Solutions was $808.95 million, above the $802.11 million estimate [4] - Non-GAAP Operating Income for Issuer Solutions was $244.94 million, slightly below the $246.04 million estimate [4] - Operating Income for Merchant Solutions was reported at $614.10 million, exceeding the $599.26 million estimate [4] - Operating Income for Corporate was -$256.53 million, worse than the -$215.98 million estimate [4]

Financial Data and Key Metrics Changes - The company reported adjusted revenue growth of 4% in Q1 2025, exceeding expectations [8][18] - Adjusted EBITDA was $958 million, leading to an EBITDA margin of 37.8% [18] - Adjusted EPS grew 11% to $1.21, at the upper end of the outlook [10][18] - Free cash flow conversion exceeded 70%, with free cash flow of $368 million compared to $95 million last year [9][19] - The company returned $670 million to shareholders through share repurchases and dividends [10][19] Business Line Data and Key Metrics Changes - Banking segment revenue grew 2%, with recurring revenue growth at 3% [21] - Capital Markets segment saw adjusted revenue growth of 9%, with recurring revenue growth of 6% [22] - Non-recurring revenue in Capital Markets advanced 47%, driven by strong license renewals [22] Market Data and Key Metrics Changes - The company signed several new marquee engagements across the money lifecycle, indicating strong demand for core solutions [10][11] - The digital solutions segment gained traction, with a Midwest community bank selecting the Digital One product [12] - The Office of the CFO capabilities expanded, with a multinational engineering firm selecting FIS's treasury management solution [13] Company Strategy and Development Direction - The company is focused on driving commercial excellence and simplifying its portfolio, which is expected to deliver consistent financial results [7] - The strategic acquisition of the Global Payments Issuer Business and the sale of the minority stake in Worldpay are aimed at strengthening the financial profile and value proposition [7][16] - The acquisition is expected to be accretive to adjusted EPS, EBITDA margins, and free cash flow in the first twelve months [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the pipeline, noting that client spending remains strong despite macroeconomic factors [32] - The company reaffirmed its full-year outlook, anticipating continued strength in recurring revenue growth [9][24] - Management highlighted the importance of high retention rates and strong sales from the previous year as drivers for future growth [90] Other Important Information - The company is targeting adjusted revenue growth of 4.2% to 5% for Q2 2025 [24] - Capital expenditures were $233 million in Q1 2025, consistent with full-year expectations [19] - The company exited the quarter at a target leverage of 2.8 times [19] Q&A Session Summary Question: Feedback on client decision-making pipeline and Issuer Solutions business - Management noted that client conversions are live and the pipeline is increasing significantly year-over-year, with no signs of slowing spend [31][32] Question: Outlook for Capital One and Discover - Management expressed positive sentiments regarding partnerships with Capital One and Discover, indicating strong support for their initiatives [36] Question: Drivers for Capital Markets Q2 guidance - Management explained that the first quarter had a high non-recurring benefit, and the second quarter guidance reflects a return to normalized levels [40][41] Question: Banking segment's combined debit issuing business - Management indicated that the banking segment will see a significant increase in scale and recurring revenue due to the acquisition [45][46] Question: Worldpay EMI outlook - Management confirmed that the Worldpay EMI outlook remains consistent with expectations, with no signs of softening [50][51] Question: Cost synergies from the acquisition - Management highlighted that the largest cost synergies would come from rationalizing duplicate vendor costs and back-office optimization [58][60] Question: Accretion from Issuer Solutions transaction - Management stated that the transaction is immediately accretive and will significantly enhance cash flow and banking revenue [69][70] Question: Free cash flow and working capital initiatives - Management reported significant improvements in cash flow due to net working capital optimization initiatives [98][99] Question: Sales progress in capital markets - Management noted strong opportunities in both traditional and non-traditional verticals, with a robust pipeline and execution [106]

Global Payments (GPN) Q1 2025 Earnings Call May 06, 2025 07:30 AM ET Speaker0 Ladies and gentlemen, thank you for standing by, and welcome to Global Payments First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will open the lines for questions and answers. And as a reminder, today's conference will be recorded. At this time, I'd like to turn the conference over to your host, Senior Vice President, Investor Relations, Winnie Smith. Pl ...