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01/10 16:38
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance with revenue and EPS growth, robust organic growth in key segments, and a strategic partnership with Mastercard. The Q&A section reveals confidence in strategic investments and partnerships, despite some concerns about tariffs and indirect effects. The company's guidance for 2025 is optimistic, with expected growth in various areas. The share buyback program and ample cash reserves further support a positive outlook. Overall, the sentiment leans towards a positive stock price movement over the next two weeks.
Revenue $1.6 billion, up 8% year-over-year. The increase is attributed to strong performance in vehicle payments (8% organic growth) and corporate payments (19% organic growth).
Cash EPS $4.51, up 10% year-over-year. Cash EPS would be up 18% on a constant macro basis, driven by strong performance and solid expense management.
Organic Revenue Growth 9% overall for the quarter, with vehicle payments at 8% and corporate payments at 19%. This growth is attributed to strong spend volumes and increased sales.
Operating Expenses $579 million, up 8% year-over-year. The increase is primarily due to acquisitions and higher transaction volumes.
Adjusted EBITDA Margin 55.2%, consistent with Q1 of the prior year.
Interest Expense Increased 7% year-over-year due to higher balances related to capital deployment, partially offset by lower interest rates.
Effective Tax Rate 25.5%, compared to 24.7% in Q1 of last year, driven by the mix of earnings.
Leverage Ratio 2.69 times, down six basis points from year-end.
Cash and Revolver Availability Over $2.5 billion at the end of the quarter, providing ample capacity for acquisitions.
Corporate Payments Revenue Growth 19% organically during the quarter, driven by solid spend volumes.
Cross Border Sales Growth 51% for the quarter compared to the prior year, with revenue increasing 18% organically.
Vehicle Payments Revenue Growth 8% organically during the quarter, with significant growth in Brazil.
Lodging Organic Revenue Growth Down 1% compared to down 9% in Q1 of the prior year, showing improvement.
Same Store Sales Finished positive at +1%, an improvement from the previous year.
Retention Rate Steady at 92%.
Sales or New Bookings Growth Up 35% versus Q1 last year.
Tariff Impact on Cross Border Revenue Expected to be approximately $10 million to $15 million unfavorably impacting revenue based on assumptions.
New Payables Product Launch: Expected launch of a new payables product in the UK using next-gen technology this summer.
Corporate Payments Growth: Corporate Payments business expected to grow high teens to 20% for the full year.
Mastercard Partnership: Announced a strategic cross-border partnership with Mastercard, which includes a $300 million investment for a 3% share in the cross-border business, potentially adding 2-3% incremental revenue growth.
Avid Investment: Made a $500 million minority investment in Avid, a leader in B2B invoice automation and payments, with expectations of earnings accretion in 2026.
Sales Growth: Sales or new bookings increased by 35% compared to Q1 last year.
Retention Rate: Retention rate remained steady at 92%.
Divestitures: Considering divesting three non-core businesses, potentially generating $2 billion in liquidity.
Focus on Corporate Payments: Repositioning towards corporate payments, with ongoing evaluations of additional acquisition targets.
Macro Environment: The overall macro environment is uncertain, but currently not impacting the company's forecast. However, there is a potential risk of economic activity changing, which could affect business performance.
Tariff Exposure: The company has limited direct exposure to U.S. tariff policies, as most of its businesses are service-oriented. However, clients affected by tariffs may experience reduced volumes, indirectly impacting the company.
Cross Border Business: Approximately 20% of the cross border business is affected by U.S. tariff policies, which could lead to an estimated revenue impact of $10 million to $15 million for the remainder of 2025.
Supply Chain Challenges: The company acknowledges that supply chain challenges exist, particularly related to tariffs and economic factors, which could indirectly affect client volumes and, consequently, the company's revenue.
M&A Activity: Recent acquisitions and partnerships, such as with Mastercard and Avid, present both opportunities and risks. The success of these investments depends on market conditions and the ability to integrate and leverage these new assets effectively.
Economic Factors: The company is monitoring economic factors, including FX rates and fuel prices, which have shown volatility. While currently neutral to the business, any significant changes could impact future performance.
M&A Activity: Announced a strategic cross-border partnership with Mastercard, where Mastercard will invest $300 million for a 3% share in Corpay's cross-border business, potentially adding 2-3% incremental revenue growth starting next year.
Investment in Avid: Made a $500 million minority investment in Avid, a leader in B2B invoice automation and payments, expected to be accretive to earnings in 2026.
Divestitures: Considering divesting three non-core businesses, which could provide upwards of $2 billion in liquidity.
2025 Top Priorities: Focus on expanding corporate payments business mix, enhancing USA sales, launching new payables products in the UK, and targeting institutional clients in cross-border payments.
2025 Revenue Guidance: Maintaining full year 2025 revenue guidance at $4.42 billion at the midpoint, with expected organic revenue growth of 11%.
Cash EPS Guidance: Maintaining cash EPS guidance at $21 for the full year.
Q2 Revenue Growth: Expecting print revenue growth of 12-14% and cash EPS growth of 11-13% for Q2.
Organic Revenue Growth: Expecting organic revenue growth of 12% for Q2 and maintaining full year guidance of 10-12%.
Share Buyback Program: In the first quarter, Corpay spent $59,000,000 on share buybacks associated with employee stock option exercises.
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