Corpay (CPAY) FY Conference Transcript

Summary of Corpay (CPAY) FY Conference Call - May 20, 2025 Company Overview - Company: Corpay (CPAY) - Event: FY Conference Call - Date: May 20, 2025 Key Points Industry and Economic Outlook - The current economic environment is stable with no significant negative trends impacting the business at this time [3][4] - Political factors are creating some market churn, but Corpay's volumes and trends are steady and in line with expectations [4] Corporate Payments Segment - Corpay's corporate payments business consists of domestic payables and international payments, with a 60% to 40% split between cross-border and domestic payments [6] - Direct business accounts for approximately 90% of domestic payables revenue, indicating strong customer engagement and retention [7] Partnership with Mastercard - Corpay has entered into a partnership with Mastercard, which includes a $300 million investment for a 3% stake in Corpay's cross-border unit [9] - This partnership aims to enhance Corpay's visibility and access to tier two and tier three banks, where many international payments are made inefficiently in USD [11][12] - The collaboration is expected to contribute 2-3 percentage points to cross-border revenue growth by 2026 [13][14] Investment in Avid Exchange - Corpay has invested approximately $550 million for a one-third stake in Avid Exchange, partnering with TPG as the majority owner [16][17] - The investment aims to leverage Corpay's existing scale and expertise to drive growth in Avid Exchange [18] M&A Strategy - Corpay maintains a high appetite for mergers and acquisitions, focusing on strategic acquisitions that enhance core capabilities and shareholder value [24][25] - The company is looking to invest in corporate payment space opportunities that are accretive to earnings [26] Vehicle Payments Business - Corpay has shifted its focus to larger, healthier customers in the vehicle payments sector, moving away from micro-SMBs [29][30] - The company reports solid same-store sales trends and improved customer retention, with a churn rate of less than 7.5% [33][34] - The goal is to achieve 20% sales growth, contributing to 10% organic growth year-over-year [35] Brazil Market Strategy - Corpay has expanded its presence in Brazil through acquisitions of Gringo and ZapPay, enhancing its vehicle debt management offerings [46][48] - The Brazilian market is characterized by a high reliance on vehicles, and the new acquisitions have added 20 million incremental users to Corpay's platform [51] Lodging Segment Performance - The lodging segment faced a tough comparison in Q1 due to prior year events and has seen some softness in customer demand [56][57] - The company believes that its products provide cost savings and better oversight for customers, with expectations of mid-single-digit growth in the back half of the year [58] Non-Core Divestitures - Corpay is considering divesting non-core assets totaling approximately $2 billion to focus on growth areas that drive shareholder value [62][64] Electric Vehicle (EV) Strategy - Corpay has prepared to service fleet customers transitioning to electric vehicles, particularly in Europe, but notes that the EV market is currently not a hot topic [69][71] - The company is agnostic to fuel types and is positioned to support both petrol and electric vehicles [72][73] Additional Insights - The company is actively monitoring the macroeconomic environment and adjusting its strategies accordingly, particularly in the vehicle payments and corporate payments sectors [2][3] - Corpay's focus on strategic partnerships and acquisitions is aimed at enhancing its market position and driving long-term growth [24][25][26]