Thank you. As a reminder, at this time, if you would like to ask a We do ask that you please limit yourself to 1 question and 1 follow-up. We will take our first question from Ramsey El-Assal with Cantor Fitzgerald. Please go ahead.

Hi. Thank you so much for taking my question and another great quarter. Freight prices remain healthy and fleet operators to be in a much better place than they were gotten as post COVID, Do you see an opportunity to open up the credit a little bit more, maybe lean in harder to you know, some slightly higher risk parts of the market to drive on the on the on the vehicle side of the business, obviously, to drive know, incremental growth.

Hey, Ramsey. Thanks for the question. So we do experience wind, fuel prices going up and the demand. That there is naturally a higher risk to credit losses. So taken a provision for that within the quarter, a slight provision for it. But what I would say is we are not gonna, you know, weaken our underwriting standards to gain business here. Okay.

Fair enough. And then on a follow-up for me. You announced the EPICS divestiture, and you also talked about the intention to create a simpler company. Should we think about that as more trimming more of these very small kind of embedded business lines Or is there an appetite or demand out there for a larger simplification of something like a lodging segment or larger, you know, chunks of the business.

Hey, Ramsey. it is Ronald. It might be both. I would say we are on the track. So the first thing you said, we have IDed a another, 2, 3, 4 businesses that are kind of subscale or not as related like the EPICS thing. And as I said on other things, we want better performance first. Right? I wanna have improved performance because then it gives us options. Alright. So you should look for more of the EPICS like things over the next 6 to 12 months. And if performance approves maybe something additional. Got it. Thank you. Yeah.

Thank you. And we will take our next question from Tien-Tsin Huang from JPMorgan.

Please go ahead.

Your line is open. Please make sure you check your mute switch. Even we cannot hear you, Tien-Tsin.

Now is this better?

Yes. We can hear you now. Please go ahead.

Sorry to waste your time. As always, nice to talk to you guys. Just thinking maybe for you, Ronald, just to has the bar changed at all for M&A and buybacks given pipeline valuations?

I know you are focused on these divestitures. You announced 1 that you just said just has the bar changed?

Yeah. I think so changed. And like I said last time, if anything, you know, we have seen some of the transactions, some of the deals on the side get back into a, you know, into a realistic range. So I think it is that we are actually in a pretty good spot.

Okay.

You know, glad to hear it. And then just on the on the bookings front, that was really strong. Maybe just double clicking on that. How broad based was it? Where are you operating outperforming? Can you replenish the pipeline? As we go into the second half?

Yeah. It was it was pretty good. I would say I am looking at that It was pretty broad based. We did kind of high teens year over year in the vehicle, and crazy. it is certainly close to 40%. James growth in the corporate payment segment. So we are obviously selling a lot of that. Now, again, we poured incremental investment into it. So, you know, there is more spend behind that. Reflecting the increase. But, no, it is it is good. We target, I think, you know, sales to grow 20% to kinda hit our overall rhythm. So this is a bit better than that. So I would say, you know, our rest of the year is probably targeting about that 20% again. Alright. Great. Well done. Thank you. Good to talk to you, pal.

Thank you. And we will take our next question from Sanjay Sakhrani with KBW. Please go ahead.

Thank you. Ronald, like the Corporate Payments division obviously did really well with the revenue growth up 16%. As we look ahead, it seems like the comparisons get easier. I mean, can this growth rate sort of sustain itself, if not accelerate from here?

I think it is a it is a good question, Sanjay. I think it is function again of investment. You know, we were guiding basically to 16-plus here in the second half, which is obviously attractive. And we have got you know, super line of sight in that business on both the retention and base. Like, I am staring at it. it is better than our line average. Right? Our line average is 93. That business is, you know, closer to 96% or 97%. Retention in the base is positive to the plus column. So whenever you have that set up, it is it is not complicated for math people that the whole growth rate is sales. Right? it is just it is just really the sales of I said, the Tien-Tsin's question, we sold 40% more in the quarter. So that is the toggle. And, again, unlike, you know, the start ups, we always are trying to balance, making a buck with growing. And so that is that is the balancing act. We put incremental money into it. We have taken a bit of money, out of the vehicle thing, and so I would say, that is our plan for now. We are continuing to build, spend on that, and we will update if we decide to invest more, as we look into next year. But we are obviously pleased with this growth rate.

Okay. And then second question, is this on the divestitures. As we think about the divestitures that you will make or that you have identified, do those accelerate the revenue growth rate, or are they just sort of too small to have an impact? And then maybe you could also just comment on what you are seeing in the M&A market. In terms of acquiring stuff? Yes.

I would say the answer to the first part is, it is the depends. We have you know, businesses. So I guess we have announced you guys 2 divestitures this year. And the answer is those would actually be you know, slightly quote dilutive to us. The parking business was a high flyer, right, through a 20-25%. And this EPICS thing was a kind of a perennial 10-11% grower. Some of the other things we are looking at Sanjay, might be lower growth. If I said, hey. We have 3 or 4 things in the block my comment would be it would be a mix. Some of the stuff might be a little bit slower growing. But it is really what you said. We are just trying to clean house with kind of smaller things. You know? We need to add billions of revenue to the company. And so growing, you know, a $100 million business to a 110 is not is not getting us there. So that is the emphasis. And I would say the same thing on the acquisition side. Obviously, we did a couple of pretty large transactions last year. You know, we have got our gun sites on some other pretty significant things. And so as I said to Tien-Tsin, we are super clear on what we want to acquire, what would be helpful. We target we are in discussions, obviously, with those companies, and some of those transactions are meaningful. And because of the way we could run the things, they are actionable. We can actually we can actually do them. So I would say, like, always stay tuned, you know, on the acquisition front. Thank you.

Thank you. And we will take our next question Mihir Bhatia with Bank of America. Please go ahead.

Good afternoon. Thank you for taking my question. Ronald, I was wondering if you could give us an update on the Mastercard the FI channel. I think previously you called out 3 wins. But where does the pipeline stand And are you still expecting a couple of points of cross border acceleration from that? Is that I guess, just trying to get an update on that Mastercard partnership and where things stand with the pipeline. Thank you.

it is a it is another good question. So I think we said it last time, if I had Mark, the guy that runs it, or the Mastercard folks, it is a high level better than expected again. I think the thesis that we had that Mastercard, those bank folks, and we know cross border, and that is a good combo, that is proving to be true. The numbers are good. We are now at 10. FIs that have been closed. On the last report I saw, we have got 100 active additional FIs in the pipeline. So I would say it is it is positive. The offer is resonating. Mastercard's being super helpful in introductions. You know, with FIs, the selling cycle is definitely longer. My year would know, than it is with corporates. But I would say we are we are still bullish on it and, you know, I said to the Mastercard people when we did the deal, please do not make this a press release. And I and I got to applaud, you know, their effort and the energy so far. So I would say so far, so good.

Great. And then if I could ask about the global just the global banking. I think, Ronald, you have described it. You know, prepared about the game changer. Just trying to think about the monetization timeline there. I think Peter called out some of the benefits of the hedging, but from a revenue standpoint, but, Deepak, what is, like, is the monetization timeline? Like, what kind of expectations should we have over the next year or 2?

Yeah. I think we should see a big step up next year. We still frankly, are building the product. Let me give the baby 101 here. So what we do is we open local foreign bank accounts. So if there is a company in Atlanta, they are trying to do business in Europe, boom. In less than a week or a few days, we can open a foreign bank account for which would take months, years potentially through a correspondent. The work that we are doing my other thing, is effectively linking multiple local accounts. So let's say the client Atlanta wants to open something in The UK on the continent and Australia, we go open 3 local foreign accounts in those in those jurisdictions so that they could run on the pipes there. What we are finishing up is tying those together and then balancing them back to that account primary bank account. Let's say it is back here in Atlanta. And so that kind of second part, I am gonna call that the enhanced, the better product than just the 1 off sell of a local account, which is where Alpha you know, kinda focus. So that is due to the out of the kitchen In Q4. And 2 things. 1 is I think we will sell a lot more of it because it is it is way more attractive. To go to an account and tell them, I can add these in different places, but then tie them all together for you. And then second, we are gonna sell the you know what item back to the client base. Mean, think of how many middle market clients we have in cross border and payables. Even in fleet, here and internationally. And so that is the second part of the idea is to tell me all the existing clients we have, whether they are in cross border or not, hey. We can be way helpful in this way. So I would say it is going good. You know, Alpha's selling a lot of the kind of the single local thing, but the hopes are that this kind of premium offer will be will be a big deal next year. Got it. Thank you.

Thank you. And we will take our next question from Darrin Peller with Wolfe Research. Please go ahead.

Hey, guys. Thanks. You know, I know you have talked Ronald, you talked about the opportunity to cross sell your fleet card fleet management products into the spend management customer base. Maybe just talk us through how you are thinking about that cross sell opportunity now and where it stands where could it go more broadly across other products? In AP and bill pay also and cross border? Where were the opportunities to further expand? With your existing base that you have now?

it is a it is a good question, Darrin. It has been a long know, articulation of that. We did stick in. You probably have not seen it yet, but if you guys on the call would open at some point, the do we call Jim, the earnings supplement. So the last page in there, Darrin, is an internal slide where we actually show what you are asking, which is so we have a we call it internally a spend management platform, call it cards plus, you know, software. And, basically, on that same platform, a client can buy different things. They could you know, drivers could buy fleet stuff, Travelers could buy T and E stuff. Procurement or purchasing people could buy purchasing stuff. So if you look at the thing which is interesting is we take that same platform and we sell it to fleet intensive businesses. And if you see that slide, notch shockingly, they buy a lot of fleet, a lot of fuel. And they do buy some other stuff. Like, in the mid sized ones, almost half their spend is nonfuel. And then we sell the same exact thing to kinda traditional companies, maybe the white collar that do not have the same kind of drivers, and they buy a little bit of fuel but all the other spend categories. The message to everybody is we are just embedding it. In other words, we are taking the fleet networks that we build and the point of sale data capture and the mobile apps for people, and we are just sticking it in the same platform. So that when our guys go to companies, they can actually ask them, hey. Do you have a lot of, you know, drivers of fuel, or do not you? And so to your point, it is not a dumb idea now to go back to all the big size fleet guys and say, hey. How about buying some other stuff on the same thing? And going to the regular guys and asking, hey, do we miss the fact that you actually have some drivers? And so I think it is gonna be simpler hopefully, for people outside. it is not just a bunch of kludgy you know, proprietary fleet things. it is literally now core you know, to this spend offering that we are gonna take out of the market. And I think advantage there, because other guys that make you know, business cards or corporate cards, do not have 20 year old network for fleet purchasing or even the virtual card network that we built. They have just vanilla Mastercard, and Visa network. And so I think us attaching those networks to kind of our card program is gonna be a pretty big advantage. You know, we collect more data than they do. We have better economics at those merchants than they do. So we are quite-- if you take a peek at that thing, hopefully, the slide in there will be, you know, explanatory.

Alright. that is really helpful. Thanks, Rob. Just maybe a quick follow-up if you can on margins. Just I would continue to see them ticking up sequentially. Should we expect for when we are thinking about further expansion from here, just how much more investment do you think is needed to sustain this type of 10%+ organic profile? You know, clearly, it is it is not a small you are not a you are not on a low-margin base for now, and so I am curious what your thoughts are on that. Thanks.

Hey, Darrin. it is Peter. Thanks for the question. So what I would say is for the quarter, we obviously achieved a really strong 57% EBITDA margin. A lot of that was helped by flow through of the favorable macro. Right? So for the back we kind of expect to be slightly below where we are last year, and we feel like we are really invested at the right level to deliver on the organic growth targets. So we already, you know, achieved really strong margins. The thought is that, you know, we will not look to increase those significantly. Okay. More of an investment story. That makes sense. Okay, guys. Thanks. Thanks, Aaron.

Product has the highest end Thank you. And we will take our next question from David from David Koning with Baird. Please go ahead.

Yes. Hey, guys. Great job. 1 thing I was just wondering about, it looked like Brazil remains a little slower than normal and you still had a great quarter. I guess I am wondering how much better maybe it would have even been if Brazil was running normal in maybe you know, am I right about that? How's the Google partnership or ad ads search stuff going? Maybe just reflect on all of that.

Yeah, David. Hey. it is Ronald. So I would say, you know, to your point, you know, splitting hairs, it was just a smidge slower. The ants were still sitting at the same spot with the with the Google search. But we have a couple of, like, always new ideas, so you will you will see that thing kind of in our rest of the year. We have that thing kicking back up again. A point or 2 in Q3 and Q4. So despite and we have not basically planned in that forecast for the for that Google issue to resolve. But we have some other kind of tricks up our sleeve there to keep that thing chugging. So the free flow thing is actually helping us out. I if people wanna call them what that is, but still a third or 40% of all the toll transactions in Brazil are not electronic. And I think, like 7% of the market is now moved to free flow, which means there is no other way to pay. You have to pay electronically. You cannot pay, you know, cash or credit card. So it is bringing, you know, incremental travelers in into the mix. And so things like that along with some of the sales things we are doing. So that thing will be, again, you know, high teens performance here in the second Great. Thank you.

And just 1 follow-up. The other revenue stream was up a lot sequentially in Q3. It was up about $20 million sequentially last year in Q3. Does that create a tough comp at all? Or is that kind of normal seasonality going forward?

Yeah. So appreciate the question. As you know, our gift business is in there. In the other, that is really the largest component, and there is, you know, quite a bit of follow between the quarters in the gift business. And last year, they also had the changeover in terms of the new cars, which really drove that up. So I would say it does create a tougher comp in other in the back half. Gotcha. Thanks, guys. Great job. Thanks, David.

Thank you. And our next question comes from Nate Svensson with Deutsche Bank. Please go ahead.

Hey, guys. Nice results, and thanks for the question. Ronald, I thought your commentary on GoLeft was pretty interesting. So I was maybe hoping for a little color on what your optionality there looks like in practice. I guess, what products and solutions do you plan to bring to market to help clients with vendor selection pricing, etcetera? Is this gonna require a certain level of investment, either organic or inorganic, or is it simply more kind of reorganizing your existing resources into something that will help clients? And then maybe lastly, how big do you think that opportunity could be and what could it add to growth in the coming years?

Yeah. Super good question. Big Nate, would be would be my problem. And so at the at the high level, it is the it is the AI models. Right? Those things are changing the game in lots of places, and not shockingly, they are changing the game at around, you know, corporate procurement and contract management and price comparisons and all that kind of stuff. And so this idea from talking to our clients and being have tons of clients stuff is, hey. You know, I have got, in our case, you know, 800 million of indirect expense, and you guys are super helpful at helping us manage and control and pay all that. But, like, should I have it? Should I have 750 million in expense? And should I have these people I have? So this idea is super adjacent. Nate, to what we do. it is it is left. it is earlier. it is before. You approve the payment. You decide whether you should have you should have the expense and stuff. And so we are vetting you know, a set of partners that have done some things here and looking at kind of integrating some of those capabilities. And what is interesting is we have got gazillions of clients already. That were already you know, they are telling us they approved the payment. We are making the payment with huge amounts of spend where we are not helping. On the decision support very much, let alone telling new perspectives clients, hey. We can be even more helpful to you. So I think it is a big, big deal both in terms of revenue acceleration in that spend business and potentially sales, Nate, of getting people more interested because bosses wanna spend less indirect expense. AP managers want it to work well the process to work better, right, and not to fraud, not to lose money and stuff. And so we are really trying to appeal, you know, to that c suite a bit more with these add ons, if you will.

Yeah. Interesting stuff. And I guess just for a follow-up sorry, sorry, it is a little of feedback. So I do not know if that was on my end. But, anyway, it was on the beat and raise Obviously, some help from macro, but also you called out underlying momentum, I guess, both in 2Q and for the rest of the year. So I was hoping you could maybe put a finer point on that underlying momentum. Is there 1 or 2 segments you would maybe call out as being better than expected in 2Q? And then, I guess, for the rest of the year relative to your prior expectations? I know high level, the relative growth rates sound like they are all in the same ballpark So I guess just on the margin, what came in better than expected? And what do you expect to be better than expected for the rest of the year?

Hey, Nate. Appreciate the question. So maybe starting with the rest of your guide question that you put forward. You know, our thought process here is it is a relatively immaterial raise at 15 million of revenue and $0.20 of EPS. But our message is our confidence in achieving our back half guidance. And just a reminder that we set a significant climb for ourselves in the back half of the year So absolute revenue is growing, call it, $100 million from Q1 to Q4, and absolute EPS is growing, call it, over $1.50 from Q1 to Q4. So you know, quite impressive numbers, by themselves in Q4. So, again, just you know, sharing with everybody our confidence in achieving those.

Hey, Nate. it is Ronald. Well, mostly, do not want you to miss, hey, Ronald. Hey. How's your guide versus last time? Then make sure your lens is on as 25% cash EPS growth in the second half over the prior year. So that is what we are focused on is delivering an absolute growth rate and amount, you know, exiting at $29 or something like that is our main message is do not miss that the numbers that were sticking out there were significant as prior versus prior period. Main message where I received. Thanks, guys.

Thank you. And we will take our next question from Madison Sewer with Raymond James. Please go ahead.

Hey, guys. Good afternoon. Appreciate taking the questions. You talked about some reallocation of from U. S. Vehicles to corporate payments. Obviously, The U. S. Business is much slower growth. But I guess, maybe touch on your confidence level around sustaining high single digit organic vehicle growth especially as you reallocate some of those resources, seems like it would be pretty high given your comments, you know, just now around high teens Brazil growth, but would love to just hear your thoughts about this sustainability, especially in lieu of some of those reallocations of resources.

it is it is another good question. The first thing I would say is they are really they are good businesses. You know, whether they are growing 8% or 10%, they are durable as hell or hard to knock over. They are they are super profitable. They have advantaged stuff. Networks, tech people, and stuff. So the first the first headline to people is you know, do not discount just the quality of the businesses. The second point I would make is the pivot the infamous pivot we made a couple years ago has landed us now at literally line average retention particularly in the in the US and international markets. And so historically, because they were smaller, the vehicle businesses had, you know, a worse lot rate, lower retention rate. And, generally, they had a worse same store sales. And so I am happy to report today problem solved. Because we changed the mix of business, it was always larger, international. But because we have moved the mix here in The US, larger, we have now gotten the line average loss rates and same store sales again around flat to +1. So it is really just a straight sales game now. it is my message. The growth rate now that we have stable base, which we did not have, and way improved retention because of the business mix. Now it is literally just selling. it is just investment level and productivity. And so that is what we are still toppling with. We have only got so much money. Right, to try to make returns. And so we are trying to trade that off between the vehicle business and other people value our overpayments business higher. So I would say we lead a little bit more that way, but I would say it is high. If we keep spending money on sales, and we keep making sales, I referenced high teens sales growth in Q2 over the prior year. So it is still selling the stock. So I would say that is the answer. it is it is stable. If we spend money and make sales, we can keep growing high single digits.

Okay. that is helpful. And then just a follow-up on sorry, there was some feedback. A follow-up on corporate payments here. Obviously, you guys mentioned that you expect to maintain this mid teens plus organic growth in the second half. You gave some color on retention versus new sales. So I was hoping you could maybe also double click on just what you are seeing on the cross border payable sides and just any changes in from the recent teach in, or are things kinda tracking with what you laid out there? Thanks.

Yeah. Not much difference. Between those 2 kind of sublines. I would say they are both it is not like 1 is 10 and 1 is 23 or something. They are both kind of, you know, paired up in terms of the growth rate. They are both, you know, selling a lot and stuff. And as I said, I think you know, there is a couple of exciting things there that could potentially make us do better is the bank thing that I mentioned earlier. If we if we deliver that version 2.0, and take it back to the base. And then second, it is getting the payables and spend management product over the pawn. Which we have done. And grabbing that TAM, and we got more sales and there. So those would be the 2 kind of upsides of kind of offering something or going somewhere that is not kind of in the current numbers. So both of those things are in flight. So if they take hold and do better, both of those things could be helpful the next year. Thank you.

Thank you. And as a reminder, if you would like to ask a question, it is the star and 1 on your touch tone telephone. We will go next to Michael Infante with Morgan Stanley. Please go ahead.

Yeah. Hey, guys. Thanks for taking my question. You have previously spoken about the 40% of your flows within cross border that are still on SWIFT. I think you previously had mentioned trying to take that volume mix down closer to the mid teens level by leveraging some of the private blockchain rails like Connexus. Ronald, you obviously highlighted that in your prepared remarks too. I just wanted to ask on SWIFT directly, just given know, their announcement about some more real time capabilities as well. Like, how do you think about that volume mix shift and sort of the differentiation between that swift real time rail relative to something like a Kinexas and the decision tree there? Thanks, guys.

Yeah, Michael, Ronald, it is good question. So for us, because it is a rail, it is just it is just speed and cost. So to your point, whether it is the JPM thing or, you know, city announced a similar thing. So to me, having the banks kinda rally, you know, a consortium that wants to do this speedy blockchain thing, great to do the stablecoin, just tokenize real money. We love that. And I think we said it before. I think 40 thousand I think, the number. I think we have done 40 thousand transactions already over the JPM private blockchain. So it is not just on a paper. it is real. We are actually moving money. The guy I run up there tells me, hey, I think we could get to half. By the time we leave for Chris. I think we could get literally half of our wires, you know, from Swift onto, you know, onto 1 of these things. So look. If SWIFT somehow you know, match the speed and which they have not today with their cost, Like, between how some we are kind of in different way. Right? As, you know, as long as the thing goes there fast and it is low cost, and super liable, and we can follow the bread crumbs, you know, we do not feel strongly. But the main message for me is we like the idea of tokenized fiat currency. We love the idea of helping clients move money in to merchants. 27. And then some of the banks, Michael, have said they literally credit it. You know, outside of banking hours. And so what do you need to get on and out of in and out of freaking stablecoins for? You could just tokenize the euro and send it to somebody systematically, and it gets credited right away. So for us, I have said this repeatedly, the banks announcements and move I think, way increase the chance of the outcome being what we have said, where we think it falls in the balance here.

Yeah. Makes a ton of sense.

And then just a quick follow-up on 25.50% over the prior year.

But more importantly to me, I just had a review last week. Their revenue growth is expected to tick up double digits as we get into the back half here. So the revenue growth has been the key indicator for us. Which they are bullish on. And so the composition of that revenue, to your point, is then not much change. I would say that the software revenue's been pretty stable. I think it is kinda low single digits growing. We see no attrition, no losses, you know, from clients in terms of paying the thing. They are doing a very good job in getting wider monetization. They have gone beyond, you know, virtual cards. They have added debit now as another way Electronic; they have got a lot more volume on, you know, paid ACH, if you will, that goes a lot faster. So I would say, generally, the thing is going well, and we do not see you know, a lot of risk on the software side. There are also way you know, AI ing their software. They are putting in a lot of cool things that they could not do before that clients like. Like, I do not know if you like this, but called fetch.me where, hey. Normally, I am the little person that sends out 100 invoices. I do not see Ronald Clark's invoice. The thing goes and fetches it, brings it back. Like so I would say to you, they are sexing up. They are making the software better. For clients, which adds value. And so we are liking it. I would say I am more excited about that company We did not say it, but the combo of Avid and alpha is gonna come in above. I think I gave a dollar, and I gave 39¢. So that seems gonna be, you know, pretty above the dollar, which is 1 of the reasons we are we are up above 35. And so both of those big transactions, Michael, are performing for us. that is great detail. Thanks, Ronald.

And as a reminder, if you would like to ask And it does not appear we have any further questions at this time. So we would like to thank everybody for their participation in today's conference. This does bring us to the end of the meeting, and you may now disconnect.