Release Date: May 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Corpay Inc (CPAY, Financial) reported Q1 2025 revenue of $1.6 billion, an 8% increase, with cash EPS up 10% to $4.51.
• Organic revenue growth was strong at 9%, with Vehicle Payments and Corporate Payments segments showing 8% and 19% growth, respectively.
• The company announced a strategic partnership with Mastercard, which is expected to add 2% to 3% incremental revenue growth to the cross-border business starting next year.
• Corpay Inc (CPAY) is maintaining its full-year 2025 guidance with expected organic revenue growth of 11% and cash EPS of $21.
• The company is actively pursuing M&A opportunities, including a $500 million investment in Avid, which is expected to be accretive to earnings in 2026.

Negative Points

• The company faced a $6 million unfavorable fuel spread revenue shortfall in Q1 due to low price volatility.
• Cross-border revenue was impacted by U.S. tariff policies, with an expected unfavorable impact of $10 million to $15 million for the remainder of 2025.
• U.S. Vehicle Payments revenue declined by 3% organically, although improvements in retention and sales are anticipated.
• Lodging organic revenue growth was down 1% for the quarter, although it showed improvement from the previous year's decline.
• The macroeconomic environment remains uncertain, with potential indirect impacts from tariffs on client volumes and overall business performance.

Q & A Highlights

Q: Can you provide more details on the partnership with Mastercard and the expected revenue growth? A: Ronald Clarke, CEO, explained that the partnership with Mastercard is expected to add 2-3% incremental revenue growth to Corpay's cross-border business. He emphasized the significant opportunity due to the large volume of cross-border payments currently handled by banks, and expressed confidence that Mastercard's involvement will drive growth.

Q: Is the investment in Avid a financial or strategic move, and how active will Corpay be in this investment? A: Ronald Clarke, CEO, stated that the investment in Avid is strategic, aimed at expanding Corpay's presence in Corporate Payments, particularly in payables. Corpay plans to be actively involved, with a focus on profit acceleration and potentially acquiring the remaining equity in Avid in the future.

Q: How do you view the potential impact of tariffs on your business, particularly in Vehicle Payments? A: Ronald Clarke, CEO, noted that Corpay's direct exposure to tariffs is limited, as their business is primarily service-based. However, there could be indirect impacts on clients involved in goods transportation, such as those in the Vehicle Payments segment. The company is monitoring the situation but does not expect significant direct effects.

Q: Can you discuss the performance and outlook for the U.S. Vehicle Payments business? A: Ronald Clarke, CEO, highlighted improved retention rates and strong sales trends in the U.S. Vehicle Payments business. He expects a pivot to mid-single-digit growth in the second half of the year, driven by better retention and increased sales.

Q: What is the status of the hedging business, and how has it been affected by market volatility? A: Ronald Clarke, CEO, reported strong performance in the cross-border hedging business, with high teens revenue growth and a 50% increase in sales. The business has benefited from market volatility, particularly in April, and is performing well above expectations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.