Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Corpay Inc (CPAY, Financial) reported a revenue of $935 million, up 8% excluding Russia, with cash EPS of $4.10, up 14% excluding Russia.
- Organic revenue growth was 6% for the quarter, with Corporate Payments business revenue growth up 17% overall.
- Retention remains stable at 91%, with sales or new bookings up 11% year-over-year.
- Corpay Inc (CPAY) has made significant progress in its North America Vehicle business, shifting focus from low-quality micro accounts to SMB accounts.
- The company has successfully closed major investments and acquisitions, such as the majority investment in Zapay and signing Paymerang, expected to be accretive to revenue and EPS growth next year.
Negative Points
- Same-store sales were soft, showing a negative 2% for the quarter, primarily driven by lodging.
- The North America Vehicle business is experiencing a slower than expected pivot, impacting performance.
- Workforce lodging business continues to experience softness due to macro weakness and issues converting to a new IT system.
- Foreign exchange movements and higher interest rates are expected to depress financial performance for the remainder of the year.
- Full year 2024 revenue guidance was reduced from $4.80 billion to $4 billion, and cash EPS guidance was reduced from $19.40 to $19 due to macroeconomic factors and lodging revenue softness.
Q & A Highlights
Q: Ron and Tom, can you provide more detail on the challenges in the lodging segment, particularly the impact of macro factors and the IT system upgrade?
A: Ronald F. Clarke - Corpay, Inc. - Chairman, President & CEO: Yes, the lodging segment faced challenges primarily due to macroeconomic factors and an IT system upgrade that initially caused disruptions. However, the situation is stabilizing, and we expect improvements as we move past these initial hurdles.
Q: What stood out about the Paymerang acquisition, and what does it bring to Corpay?
A: Ronald F. Clarke - Corpay, Inc. - Chairman, President & CEO: Paymerang is attractive because it operates in the full AP space, which we value highly due to its control over client invoices and high retention rates. The acquisition also opens up new verticals where we previously had no presence, enhancing our capabilities and market reach.
Q: Can you discuss the current performance and future expectations for the North America Vehicle business?
A: Ronald F. Clarke - Corpay, Inc. - Chairman, President & CEO: The North America Vehicle business is undergoing a strategic shift from low-quality micro accounts to more stable SMB accounts. This transition has been slower than anticipated but is showing signs of progress. We expect this segment to return to positive growth by the fourth quarter.
Q: How does the Paymerang acquisition fit into Corpay's existing operations, and what are the expected synergies?
A: Ronald F. Clarke - Corpay, Inc. - Chairman, President & CEO: Paymerang fits seamlessly into our operations, complementing our existing full AP solutions. It brings additional customers and expands our merchant network significantly, which are key competitive advantages. We anticipate substantial cost synergies and revenue opportunities from cross-selling our broader suite of payment solutions to Paymerang's customer base.
Q: What measures is Corpay taking to address the softness in the lodging segment and improve operational efficiency?
A: Thomas E. Panther - Corpay, Inc. - CFO: We are actively engaging with customers to better understand their needs and adjusting our services accordingly. Additionally, we are implementing cost control measures and optimizing our operations to align with current market conditions without compromising our growth potential.
Q: Could you provide insights into the expected recovery timeline for the lodging segment and the overall company outlook for the coming quarters?
A: Ronald F. Clarke - Corpay, Inc. - Chairman, President & CEO: We anticipate the lodging segment to stabilize and start showing recovery by the third quarter. Overall, the company is well-positioned for growth across other segments, and we remain focused on expanding our core offerings and integrating recent acquisitions to drive long-term value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
