Good day. I'd like to welcome everyone to Corpay's First Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. Today's call is being recorded. I would now like to turn the call over to Jim Eglseder, Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us today for our earnings call to discuss the first quarter 2025 results. With me today are Ron Clarke, our Chairman and CEO; and Alissa Vickery, interim CFO. Following the prepared comments, the operator will announce that the queue will open for the Q&A session. Today's documents, including our earnings release and supplement can be found under the Investor Relations section of our website at corpay.com. Now, throughout this call, we will be covering several non-GAAP financial metrics, including revenues, net income and net income per diluted share, all on an adjusted basis. We will also be covering organic revenue growth. This metric neutralizes the impact of year-over-year changes in FX rates, fuel prices and fuel spreads. It also includes pro forma results for acquisitions and divestitures closed throughout the two years being compared. None of these measures are calculated in accordance with GAAP, so may be different than that at other companies. Reconciliations of the historical non-GAAP to the most directly comparable GAAP information can be found in today's press release and on our website. It's important to understand that our comments may include forward-looking statements, which reflect the information we have currently. All statements about our outlook, expected macro environment, new products and expectations regarding business development and future acquisitions or synergies are based on that information. They are not guarantees of future performance, and you should not put undue reliance upon them, and we undertake no obligation to update any of these statements. These expected results are also subject to numerous uncertainties and risks, which could cause actual results to differ materially from what we expect. Some of those risks are mentioned in today's press release and on Form 8-K and in our annual report on Form 10-K. These documents are available on our website and at sec.gov. With that out of the way, I'll turn the call over to Ron Clarke, our Chairman and CEO. Ron?

Good afternoon, everyone, and thank you for joining our Q1 2025 earnings call. I will cover three topics today: my perspective on the Q1 results and guidance, a review of our recent M&A activities, and an update on our 2025 top priorities. Let's start with our Q1 results. We reported Q1 2025 revenue of $1.6 billion, an 8% increase, and cash EPS of $451 million, a 10% rise. On a constant macro basis, cash EPS would be up 18%. Our results align well with expectations, and the overall environment was mostly as anticipated. Organic revenue growth for the quarter was 9%, with our two main businesses performing strongly. Vehicle payments saw 8% organic revenue growth, while corporate payments experienced a 19% increase. Our operational trends were positive, with same-store sales finishing at plus 1%, retention steady at 92%, and new bookings significantly up by 35% compared to Q1 last year, following a 36% sales growth in Q4. Despite various challenges, our business met expectations in Q1. Now, turning to our forecast for the remainder of the year. In terms of macro factors, we see these as neutral compared to our previous guidance. The forward curves for FX, fuel, and SOFR have shifted slightly, but their overall impact on our business is negligible. While we recognize the overall macro environment is quite uncertain, we don’t see anything that prompts us to change our forecast. Our revenue flash for April aligns perfectly with our predictions. Therefore, we are maintaining our full-year 2025 guidance at the midpoint, targeting $4 billion to $4.2 billion in revenue and sticking with $21 in cash EPS. This slightly increased guidance accounts for the Gringo acquisition in Brazil, net of the $6 million unfavorable spread shortfall from Q1. With this updated guidance, we expect full-year organic revenue growth of 11% at the midpoint, with the Corporate Payments business anticipated to grow by high-teens to 20% for the full year. Regarding tariffs, our business isn't particularly sensitive to them as our services do not directly entail tariffs. Our international operations in the U.K. and Brazil function within their respective countries and are thereby not influenced by tariffs. The only limited direct exposure to U.S. tariff policies pertains to our Cross-Border business, which depends on clients trading internationally. About 20% of our Cross-Border business may be affected by U.S. tariff policies. Now, let's discuss our recent M&A activities. Last week, we announced a strategic Cross-Border partnership with Mastercard, in which they will invest $300 million for approximately a 3% share in our Cross-Border unit, valuing it at over $10 billion. Additionally, we signed a commercial agreement to become Mastercard's exclusive provider of Cross-Border services for their Financial Institution clients, which we believe could contribute around 2% to 3% incremental revenue growth to our Cross-Border business starting next year. We also announced a $500 million minority investment in Avid, in conjunction with a take-private deal involving TPG. Avid is recognized for its leadership in B2B invoice automation and payments, and we expect this investment to enhance our earnings in 2026 and throughout the forecast period. Our agreement with TPG allows us the option to acquire the remaining equity of Avid in the future. Both of these acquisitions bolster our standing in the corporate payment sector and provide the opportunity to expand significantly over time. Moreover, we are considering divesting three of our non-core businesses, which could potentially generate over $2 billion in additional liquidity if we proceed with those transactions. We will keep you informed on this front. Next, I'll address our top priorities for 2025. In our February earnings call, we laid out four priorities, and I want to share some updates on our progress. First, regarding the portfolio, we're successfully expanding our corporate payments business mix through the Mastercard and Avid deals and are still evaluating additional corporate targets. Our aim is to focus on fewer, larger businesses. Second, our USA sales performance was strong in Q1, with a 25% year-over-year increase. We have established a new cross-sell team targeting our existing client base, alongside a new Zoom sales team now active in the market. We also plan to launch a new Corpay brand advertising campaign later this quarter to boost USA sales further. Third, on the payables side, we recently initiated operations with a significant enterprise client, which we expect will process over $30 billion in annual spending with us. We are excited about launching our new payables product in the U.K. this summer, utilizing our advanced technology. Lastly, we are making significant efforts in the cross-border segment, specifically targeting institutional clients like private equity firms and asset managers with our new multi-currency products. Since launch, we have signed over 2,000 new clients and accumulated $800 million in total deposit balances, marking a solid start. In conclusion, our Q1 financial results met expectations, and we are maintaining our guidance for the full year of 2025 based on current observations. We continue to expand our corporate payments segments, exploring additional acquisition targets while keeping a strong focus on our top priorities for 2025. I will now turn the call back over to Alissa for further details on the quarter.

Thanks, Ron, and good afternoon, everyone. Here are some additional details related to the quarter. The first quarter was a good start to the year with our business exhibiting strong organic revenue growth of 9% overall, right in line with our expectations. Our print revenue of $1.06 billion was up 8% over last year. Normalizing for macro, Q1 revenue would have been $1.013 billion, slightly ahead of the midpoint of our guidance. Our revenues were impacted by approximately $6 million of unfavorable fuel spread revenue compared to our February expectation as there was little volatility in prices in the quarter, which led to the fuel spread revenue headwind. Adjusted EPS increased 10% over last year to $4.51 per share. As Ron mentioned, performance drivers during the quarter were strong and were paired with solid expense management, fewer shares outstanding, partially offset by a higher tax rate. We completed the acquisition of Gringo in March, which had an immaterial impact on revenue and adjusted EPS. In summary, the quarter generated strong top and bottom line growth on a constant macro basis while maintaining strong margins and included significantly higher sales that should fuel growth over the balance of the year. Turning to our segment performance and the underlying drivers of revenue growth. Corporate Payments revenue was up 19% organically during the quarter, driven by solid spend volumes, which also increased 19% organically in the quarter. Our corporate payment solutions continue to sell extremely well with payables revenue up 19% organically, including direct sales up 30% year-over-year. Within sales, we signed two new channel partners in the quarter. Cross-border sales grew 51% for the quarter compared to the prior year, and revenue increased 18% organically. We did see heightened activity throughout the quarter, driven by FX rate volatility from tariff policy changes. But much of that early benefit was given back in March as uncertainty caused U.S. goods-based volumes to soften somewhat. Active volumes rebounded in April post-announcement of the 90-day tariff pause. We've already migrated most of our GPS customers from the 2024 acquisition onto our Corpay platform with the remaining migration planned to be completed by the end of the third quarter. This positions us well to cross-sell our sophisticated risk management solutions to GPS's customers. Clearly, U.S. trade policy and tariffs are challenges for our customers as they operate today. Cross-border is a global business for us, where we help customers pay for both services and goods. Services have been largely excluded from the tariff policy changes to date. So for the remainder of 2025, we expect tariff impacts to be relatively modest, unfavorably impacting our cross-border revenue by approximately $10 million to $15 million based on our assumptions. We've provided additional details on Slide 20 in our earnings supplement. Turning to vehicle payments. Our revenue grew 8% organically during the quarter, consistent with the fourth quarter of 2024. In Brazil, toll tags increased 8% year-over-year with more than a third of our customer spending coming from our extended network. Active insurance policies increased more than 50% and Kardex users were up 40%. We closed the Gringo acquisition in March and we continue to be excited about the significant opportunity in the Kardex space. Our app-based strategy, growth of offerings, as well as consistent sales execution powered Brazil's organic revenue growth of 22% for the quarter. In international vehicle payments, revenue grew 8% organically for the quarter. Consistently strong sales, a wide array of products and channels, notably EV offerings throughout the U.K. and Europe, as well as continued geographic diversification are the drivers of these results. I'm delighted to say we have resigned our existing reseller agreement with Shell for another five years to manage Shell fuel and EV cards in multiple markets across Europe. In U.S. vehicle payments, revenue growth was down 3% organically but we continue to see improvement in new customer application approvals, growth in sales to our lower to mid-market customers, and better retention. In the revamped U.S. sales organization, we are focused on standardizing performance criteria to manage sales with incremental investment and brand awareness to drive mid-market growth in leads. Lodging organic revenue growth for the quarter was down 1% compared to down 9% in the first quarter of 2024, so a big improvement over last year. Room nights increased 19%, led by the workforce business, which was particularly active as a result of last fall's hurricanes and wildfires as well as improved new sales. Airline revenues were lower due to tough prior year comps and volume softness. To accelerate U.S. sales growth, we are focused on building a single unified Corpay go-to-market strategy by combining people, processes and measurements across U.S. vehicle payments, workforce lodging and most of our payables products, led by our Chief Revenue Officer. We are building a scalable infrastructure and are seeing early returns with double-digit growth in bookings across each of these lines of business. We continue to gain traction in leveraging our product portfolio across our client base, propelled by our unified brand with meaningful growth in website traffic and a strong sales pipeline, while also having sales representatives focused on cross-selling and upselling to our existing customers. In summary, we are pleased with the performance of our business to start the year. Now looking further down the income statement. First quarter operating expenses of $579 million increased 8% versus the first quarter of last year. As a reminder, we acquired three businesses in 2024. Zapay in March, Paymerang in July, and GPS in December and disposed of our Merchant Solutions business in December. The net impact of these transactions resulted in incremental operating expenses of approximately $40 million in the first quarter of 2025 over the prior year. Excluding the M&A activity and normalizing for lower FX rates, operating expenses increased approximately 5% versus Q1 of last year. The increase in operating expense was driven by higher transaction volumes and sales activities to drive future growth. Bad debt expense as a percentage of spend was 5 basis points, consistent with Q1 of last year. To better understand our operating performance, we evaluate EBITDA with and without the impact of add-backs. Consistent with those adjustments and our cash net income definition to the extent they are operating expenses. We refer to this metric as adjusted EBITDA or cash EBITDA. Adjusted EBITDA margin was 55.2%, consistent with Q1 of prior year. Interest expense this quarter increased 7% year-over-year, due to higher balances related to capital deployment, partially offset by lower interest rates and higher interest income due to higher deposit balances. Our effective tax rate for the quarter was 25.5% compared with 24.7% in Q1 of last year, with the change driven primarily by the mix of earnings. Now turning to the balance sheet. We ended the quarter with the balance sheet in excellent shape, with a leverage ratio at 2.69 times, which is down 6 bps from year end. As we mentioned on the last call, we raised $750 million of additional Term Loan B debt and used the proceeds to pay down the revolver in the first quarter. We have over $2.5 billion of cash and revolver availability at the end of the quarter, which gives us ample capacity to pursue acquisitions. As Ron mentioned, we announced an expansion of our partnership with Mastercard to deliver an enhanced suite of corporate cross-border payment solutions, which includes Mastercard investing $300 million for an approximate 3% stake in our cross-border business unit. We expect this transaction to close in the second half of 2025. Our capital allocation in the quarter was limited, as we spent $59 million on share buybacks associated with employee option exercises and $164 million for Gringo. Given the sell-off of our stock this year, we are buyers of our stock, but our first priority remains M&A. Meaningful M&A cycles are few and far between, so we want to take advantage of them when they present and the pipeline is very active. So now let me share some additional information on our updated 2025 full year and Q2 outlook. While the forward FX and fuel price curves have changed since our February call, the net effect of the macro factors on the rest of the year financial outlook is a wash. Here are the puts and takes. Fuel prices are now expected to be $2.96, approximately 9% lower. The U.S. dollar is now weaker against most currencies, other than the Brazil Real, interest rates are slightly better, and tariffs have a slightly unfavorable impact on our cross-border unit. Consequently, we’re maintaining our 2025 guidance, and now adding Gringo, which adds to revenue but is neutral to cash EPS. Based on the current environment, we are maintaining our expectation of 10% to 12% organic revenue growth, and $21.00 of cash EPS at the midpoint. There is currently a lot of noise about if and how the demand environment will change in response to tariff uncertainty and sentiment deterioration. Through April, we’re not seeing any meaningful change in customer behavior, so it’s difficult to handicap what might happen. What we do know is that the majority of our products are B2B and intra-country focused, generally not discretionary, and provide a more efficient way to pay for what our customers are buying. There has been a lot of volatility with FX rates and the global economic outlook, but to date, we’re not seeing any meaningful impact on our business. If economic activity and the outlook change, we’ll be nimble in adjusting our spending as warranted, but today we are maintaining our full year financial estimates. For the second quarter, we expect print revenue growth of 12% to 14%, and print cash EPS to grow 11% to 13%. On a constant year-over-year macro basis, we expect organic revenue growth of 12% and Cash EPS to increase 18% at the midpoint compared to the second quarter of last year. We’ve provided additional details regarding our rest of year and second quarter outlook in our press release and earnings supplement. So now operator, we'd like to open the line for questions.

Thank you very much. We'll take our first question from Tien-tsin Huang with JPMorgan. Please go ahead.

Thanks, Ron. I know you've been really busy. I want to ask about the two deals, starting with Mastercard. Could you share more about your confidence in achieving the 2 to 3 points of incremental revenue growth from this agreement? We have seen similar partnerships in the past. Mastercard has significant connections with banks, but ultimately, it's up to the banks to promote it. How much visibility do you have regarding their efforts to drive that 2 to 3 points?

Hey, Tien-tsin, it's great to talk with you. The opportunity ahead is immense. If our dedicated Mastercard team can facilitate introductions, I believe we can make significant progress. Clients of these Tier 2 banks conduct half of their transactions in U.S. dollars, so when our team demonstrates the benefits we offer, I anticipate a substantial impact. It's important to note that we are facing a competitive landscape with a few independent firms like ours, while most cross-border payments are handled by banks. The potential flow of transactions is enormous. This is undoubtedly a long-term endeavor, but collaborating with them presents a tremendous opportunity over time.

Yes, it appears to align with what the banks aim to achieve regarding monetization at the front end. I'm curious to hear more about that. Regarding Avid, it's an interesting deal. Is this primarily a financial investment, a strategic one, or possibly both? You have a call option, but seeing a minority deal in the mid-market raises my curiosity about how passive or active your role will be as an investor in Avid?

Yes, it's a good question, strategic for sure, right? We have said repeatedly, we want to be bigger in corporate payments, particularly in the payables portion of that. And so this is a terrific asset and stuff. And so for us, it's just seeing progress really on profit acceleration, which we got a bit of a line of sight into. And so we are super hopeful that the company will progress that, and we'll be in a spot to acquire that company in a few years. So that's the primary basis that we're going into this.

Understood. Good time. Thank you, Ron.

Thank you. Next, we'll go to Andrew Jeffrey with William Blair. Please go ahead.

Hi. I appreciate you taking the question. Yes, a lot of good stuff going on here. Ron, when you think about the Avid investment and the option, seems to be a great way to go about it. Can you talk specifically about their network as well as your own AP business just around monetization rates? I assume that strategic investment as you terminated this nature indicates the confidence ability to improve card attach and monetization. I know new sales are a big part of that, too. But can you speak to the monetization piece and your confidence to be able to drive card acceptance and/or ACH pricing?

Yes, I believe it's quite high. In some respects, Avid has performed even better than we have. Their revenue mix consists largely of standalone software fees, and they have also made advancements in their payment processes related to ACH transactions. They have made significant progress in that area. As for us, it's less about our confidence in those networks since they are already very large. The real challenge lies on the buying side. The goal for both companies is to increase the amount of money flowing through our networks. In Avid's case, achieving scale will allow for higher margins and additional revenue. We are focusing on two main objectives: increasing buyer sales or spending and ensuring that this increase translates into earnings. If they can accomplish both, we would be extremely pleased.

Yeah. That makes sense. And as a quick follow-up, you mentioned enterprise last quarter as a new thrust within the corporate payments business. Can you give us an update there in terms of pipeline?

Yes, it's live. What we've mentioned is that we somewhat accidentally found ourselves in this situation six months ago after primarily focusing on the middle market. We contracted a significant account, and it is now live and starting to ramp up. In the last call, I mentioned being cautious to ensure that everything works well for the client. The large consulting firms that helped us connect have already brought in several additional prospects. I believe my previous comments still apply; if we achieve success with this initial account and it becomes a referenceable case, we will begin pursuing additional accounts. This represents a significant opportunity in the payable space for us. To put it in perspective, just four or five of these accounts are approximately the size of our entire business today.

Perfect. Thank you.

We'll go next to Ramsey El-Assal with Barclays.

Hi, this is Shrion for Ramsey. Thank you for answering my questions. My first question is about the Avid exchange investment. In your press release, you mentioned that the take-private transaction structure provides Avid the ability to transform and enhance profit growth. Ron, I know you touched on it briefly, but it's still early in the process, and I was curious about the types of strategic initiatives this might involve.

It's really a question of scale. The company has been around for over 20 years and has built a solid foundation with its software, with our support for the past two decades. Now, as they reach a revenue milestone of $400 million to $500 million, we expect the next $200 million to $300 million in revenue to increase at a much higher rate. This is due to the established network of suppliers, technology, and sales structure that are already in place. If they can increase their spending here, we believe the flow-through will improve significantly, and margins will rise. That's what we're focusing on.

Got it. Thank you. And then as a quick follow-up. Earlier in the call, you called out that outside of your cross-border business, any tariff impact would be indirect in nature. So I was wondering if you could help us think through what this indirect impact might look like in vehicle payments specifically. Would it be isolated to your OTR business or in particular geographies? And then could you potentially deploy pricing as an offset?

I think like everyone on the call, it's hard to predict. Tariffs won't affect us directly. We have a diverse client base, and clients who deal in goods, like truckers moving products, might be impacted more than local service businesses like plumbing or HVAC. Our client mix will influence the situation, but we don't have a clear understanding of how much any accounts will be impacted. As a company and as a stock, we are not exposed to tariffs since we're primarily a services business. The only area with slight exposure is cross-border transactions, and even then, only about 20% of those involve goods, with two being from the U.S. So the impact remains limited. Ultimately, it depends on the broader economic conditions affecting all businesses. While there may be slight buyers' hesitance, our operations won't be directly hindered.

Very helpful. Thanks.

Thank you. And next, we're going to go to Andrew Schmidt with Citi. Please go ahead.

Hi, Ron. Hey, Alissa. Congrats on all the progress here. Thanks for taking the questions. I wanted to ask about the U.S. business within the vehicle payments. It sounds like you're pretty optimistic around the sales trends there and maybe just comment around just the confidence in driving improvement in revenue there as the year progresses, obviously, macro aside, but would love to get some details based on the sales trends and initiatives you have there? Thanks so much.

Hey, Andrew, it's Ron. That's a really good question. I'd say it's a two-part answer. The first part is about retention. We previously discussed the significant shift in the U.S. vehicle business a few years ago when we moved away from micro accounts and made some changes. I'm happy to report that those issues are now behind us. To give you an idea, the retention rate for our entire U.S. business in Q1 of 2025 improved by more than 200 basis points compared to Q1 of 2024. Previously, the loss rate was in the low 9% range, around 9.5%, and now it's down to the 7% area. So that's the first point; we're seeing a notable improvement in retention. As for the second point, yes, sales are up compared to the previous base. Our current forecast suggests that the first half of the year will be relatively flat, while the second half should see mid-single-digit growth or better. We're optimistic about a significant uptick in organic revenue growth for that business in the coming 60 days. If this happens, our organic growth rate will increase substantially because that's a large business segment. We're confident in this outlook since we've already seen the retention numbers we anticipated after making those changes. Finally, we expect to start seeing the benefits of that decision soon.

Got it. Thank you, Ron. Yes, retention is a big lever. So that's good to hear. Every time we see macro fluctuations, we always get the question on sort of supplier acceptance trends within the AP business. It doesn't sound like there's been much variation based on the commentary. But maybe just talk about what you hear from suppliers in terms of payment choice, things like that, whether there's been any change on that front? Thanks so much.

Yes. It's a good call. So no, is the answer. That number is basically flat. It's kind of remaining flat. And I think it's just what you'd expect, which is payment certainty; suppliers want to get paid, right, and not default, and payment speed are high importance. So any supply that runs good margins, like service businesses, like an example that run 50%, 70% marginal cost basically. They love card products because they're certain and they're fast. And so I think the answer is we're not seeing really all that much different. And so that back to the comp, the same thing I said about to have is that as our payables business goes, as spend goes. If we can keep growing the buyer side and increasing spend, we think, if anything, we’ll take up the monetization as we add more ACH plus ourselves into the network. So we're not seeing really any downtick there yet.

That’s great to hear. Thank you, Ron.

Thank you. And ladies and gentlemen, I do ask you to limit yourself to one question to allow everyone to be able to ask their questions. We'll next go to Sanjay Sakhrani with KBW. Please go ahead.

Thank you. Good afternoon and congratulations on the Avid minority ownership. Ron, could you elaborate on how sales at Avid are accelerating? How will you be involved in that? Will you be selling the product yourself? I'm just trying to understand that aspect. Additionally, regarding expenses, there might be some overlap between your operations and theirs. Are there any plans to address expense rationalization? Lastly, what are the terms of the call option in 2027?

That was kind of a three-part question, Sanjay, if I was listening. So let me see if I can go back and remember part one. So on our involvement in Avid sales, you've got a good guy in my opinion running the place and you've got some good leaders there with Mike. And so I think our role is that we've been a part of the idea side of, okay, maybe being helpful in terms of priority and where to point and sharing some practices that we think in some investments that we think may help them perform better. But we wouldn't have made this investment if we didn't have some confidence that they could do it. In terms of synergies in this early hold period, Avid is going to run kind of as Avid. But clearly, we thought about and sized what I call our second bite, which would be if we get a few years out and we like the profit growth, profit acceleration there. There's a pretty labor incremental synergy right through combination to your like, whether it's the merchant network or the tech side or other things. So we would really plan to choose step that. It will run mostly kind of as it is; we'll be helpful where we can. And then if that day comes that we try to buy the rest, we'll get the second bite. On the terms front, we're basically going to kick the can and provide that detailed disclosure in our Q, which will be probably later this week on Monday. We'll lay out more of the details. But at the high level, what you said is right, we've taken a minority position along with TPG and management and basically have the option a couple of years out to buy the rest of the equity. So we'll fill in the details a different day.

Thank you.

Next, we'll go to Andrew Bauch with Wells Fargo. Please go ahead.

Hi, guys. It's similar on for Andrew. Thanks for taking the question. It's good to see the progress that you're making on the payables front in terms of moving upmarket to the enterprise segment and that one win that you called out and the intention to expand into the U.K. this summer. I guess with the noise around tariffs or the incremental macro uncertainty, maybe just give us an update if there's been any kind of revised thoughts around the scale of that expansion, whether it be moving upmarket to enterprise or the U.K. payments expansion in the U.K.

Mark, can you repeat the last stuff or that you kind of broke out?

No, I would just ask with the incremental macro is starting to kind of like the comments that you made around the tariff implications on cross-border if there are any revised stocks as it relates to the scale of that expansion, whether it be moving upmarket to enterprise or the U.K. payments expansion in the U.K.

Yes. I'm sorry, I'm sure I hear the question, but I think you're asking, hey, in the payables group. We're happy about the enterprise, the adjacent enterprise fairness there and then going to the U.K., I think the answer is yes. Like we said, we've gone live for the first account this partner introduced us to the next set of people. This is really just walk before you run. We want to make sure the thing works, and we're doing well. But the size of the step that we could get if it's successful is large. The U.K. thing, again, is an intra-market thing, right? We're taking a product that's here and it's going to help clients in the U.K. So there won't be really any specific tariff impacts of that. It's really a product that will be used by U.K. businesses for purchases there. And then to the extent that they have cross-border payments there, which, again, two-thirds or three-fourths of those will be into the continent of Europe or in Asia or other places. So yes, we don't think that that's going to have really any bearing on the launch. We're just excited to stand up a super important business in a second market that adds TAM and leverages all the assets, all the clients, and all the people and stuff that we have there. This is really what we're trying to tell people, that we think this is going to make this a way bigger business.

Okay. Thank you.

And next, we're going to go to James Faucette with Morgan Stanley. Please go ahead.

Hi. Thanks a lot for the question and all the details today. I wanted to turn to another topic really quickly, Ron, I'm curious about the performance of the hedging business in Q1? And anything you can give us on how it has performed since then during the month of April and early May. I'm just wondering if it's fair to think about that business as a beneficiary of sustained heightened market volatility. And can you give us kind of the puts and takes on that dynamic and any other impacts on tariffs that segment specifically?

Yes, that's a good question, James. In our cross-border business for Q1, we had strong results, with revenue growth in the high teens compared to the previous year, and sales grew 50% over Q1 last year. We're selling a lot of products. Looking at April, the preliminary results were outstanding, exceeding our budget and forecast, and significantly outpacing the previous year. It's clear that in April, we benefited from the uncertainty in the market. However, the sustainability of this trend is less certain. Nevertheless, for the first four months, the business has been performing exceptionally well. That said, I want to clarify that we have set aside $10 million to $15 million in our guidance for the second half of the year as a precaution in case the post-pause tariff environment turns out to be less favorable. We wanted to approach the second half with some caution, although we don’t have full visibility. I just wanted to make it clear that we opted to be somewhat conservative regarding tariffs in our second half outlook.

Great. Thanks. And next, we'll go to Trevor Williams with Jefferies. Please go ahead.

Great. Thanks very much. If we could go back to the organic guide, and Ron, you've given some kernels on this over the course of the Q&A, but we're at organic in Q1, you're keeping it at 11% for the year. It sounds like a lot of that acceleration is coming from U.S. vehicle. But if there's anything else that you could point us to? And I hear you on April running in line. But just with everything on the macro, how would you frame the level of confidence in the full year and the specific drivers you guys have baked in today versus 3 months ago?

Yes, Trevor, that's a good question. The answer would be high. It's interesting because we expect Q2 to be around 12% at the midpoint. I know that's a significant increase from the 9% we just reported. However, we've seen similar numbers in Q4 when we hit 12%. So, I'm going to stick with 12 for Q2. Surprisingly, the U.S. vehicle segment isn't the main contributor to this increase; instead, it's the gift business, which was noticeably weak in Q1 compared to the previous year, that will perform strongly in Q2. Looking ahead to the second half of the year, I agree with your assessment that we believe the U.S. vehicle business will grow into mid-single digits or higher, allowing us to maintain double-digit growth for the back half, with projections of 10% to 12% or even 13% in Q3 and Q4. We don't anticipate achieving that in Q2, but the U.S. vehicle sector should get us there in the second half, while corporate payments remain steady with growth in the high teens to 20%. Of course, the outlook is subject to change if a recession occurs, but we're basing our projections on the current data available. Overall, we feel confident given the information we have.

Okay. Thank you.

And next, we'll go to Rayna Kumar with Oppenheimer. Please go ahead.

Hi. Thanks for taking my questions. Are you seeing any different trends across SMBs versus your larger fleet clients? And can you talk about same-store sales trends for both segments?

Yeah. I'd say not much. I mean, I think historically, our middle market enterprise clients have been steadier, but I think we did such a cleaning such a remixing starting a couple of years ago that we are truly kind of micro, super small accounts are just way fewer in our portfolio. So I think that first headline is we're just way less exposed to it would be the first point. And then on the base, again, plus one, which is, I think, the same thing we quoted for Q4. Again, the good news is that's up 3% from Q1 of the prior year. If I remember right, Q1 of Q1 of 2024, we were minus two 2025 or plus one. So we moved that plus three over the period of time. The base report that I look at is pretty steady as she goes. There's not a ton of movement; each of the areas is kind of similar to what it was in Q4, where it was plus 1%. So yes, we don't see much that's patchy. It's pretty solid right now.

Appreciate the color.

And next, we'll go to Dave Koning with Baird. Please go ahead.

Yeah. Hey, guys. Thank you. I guess my question just with the Avid deal, do you guys immediately get access to their supplier network? Maybe could you talk through like if today your accounts payable as maybe you have 20% of each of their payment files on average that can go into one of your suppliers and now with Avid, does that 20% raise to 30%? I'm making up numbers, obviously, but do you have metrics like that? And am I thinking of that correctly?

Yes, that's a great question. The good news is that we started exploring this topic about six to twelve months ago when Mike and I established a commercial agreement between our companies. This agreement was designed to examine our supplier networks, focusing on which aspects were monetized and which were not. We engaged third parties to analyze this data, which will help us enhance our monetization efforts together. We've already made progress with this initiative, and as we strengthen our relationship, we anticipate improvements. We're committed to intensifying our focus on this project, with plans for a complete integration down the line. Essentially, if we envision doubling our spending within the merchant network, it would create significant synergies, giving us tremendous leverage by increasing the flow of business through those suppliers. This is certainly one of the appealing aspects for us moving forward.

Yes. Great. Thanks, guys.

Thank you. Next, we'll go to Rufus Hone with BMO Capital Markets. Please go ahead.

Hi, thank you. I have a quick question regarding the potential non-core divestitures you mentioned. The $2 billion figure suggests that it could involve something substantial. Could you provide details on which businesses this pertains to?

Yes, Rufus, it's a good question. So not shockingly, the three units that we kind of teed up are from our vehicle segment and one is from our lodging segment. So the concept here, again, is more in corporate payments, less in vehicle and lodging. The different message, I think, for everybody this time is bigger. Historically, we've said, hey, we're going to look for things that are less related non-core potentially, divest those and kind of things on the margin. We picked two or three businesses that have more size, I think, call it, $150 million, $170 million in EBITDA combined across these three businesses. These larger divestitures include a couple of them that are really good businesses and should fetch a pretty good price. The idea really is just to simplify the company more, create more liquidity in this case, $2 billion, and pour it back into the pipeline in front of us at corporate payments. So it's just a more aggressive repositioning of our portfolio, I think, towards corporate payments.

Thank you. And next, we'll go to Ken Suchoski with Autonomous Research. Please go ahead.

Hi. Good afternoon. Thanks for taking the question. Maybe I'll ask one on lodging since it wasn't covered here. But the organic growth took a step back this quarter, I know there's leap year impacts in there. But is the expectation to accelerate to mid-single-digit growth throughout the year and then ultimately get back to double-digit growth? And I'm just curious how you guys think about driving that acceleration? Thank you.

That's another good question. So the short answer for the Q1 is really all pocketed in airlines. We built a plan for Q1 and the big part of lodging where we serve the airlines was just super soft. Maybe the weather was good; I don't know, but the disruption in that sub-segment was super light, as was just maybe the Newark Airport store, I don't know. The airline volume is super light, so all of the softness, different from our plan, was airlines. Going forward, I think we said that we built the 2025 budget and guide today really on that business staying kind of flattish. It was declining. The goal was to get it stood out back towards level again. We would make sales here in 2025. So that business is a good business again in 2026. There’s nothing in our forecast that things will magically be much better. The super-important headline is its not declining. The base is strong. The retention levels are way better than they were a year to 1.5 years ago. Now it's literally just refilling the top of the bucket so that that thing can grow. But that’s the update.

Thanks, Ron.

Thank you. And we'll go for our last question with Nick Cremo with UBS.

Hey. Thanks for taking my question. I just wanted to come back to the U.S. vehicle payments business, given a deceleration versus, I think, being up slightly quarter with strong sales last quarter as well. So can you just provide more specific color as to what drove the deceleration in Q1? And just put a finer point as to the drivers for the acceleration in the back half? Thank you.

It's a good question, and this is Alissa. For the current quarter, I think we're seeing a bit of softness. However, as we look towards the latter half of the year, the trends in new sales we're observing should continue into the middle and back end of the year, along with improved retention and same-store sales, which should lead to an overall acceleration in the second half.

Thank you. And that does conclude our question-and-answer session. I'd like to turn the call back over to Jim Eglseder, with Investor Relations.

Yeah. Thanks, guys, for your flexibility today and staying on the call late. We know we were late into the wire, but I think you all understand why. If you have any other questions, feel free to reach out. We're happy to help where we can.

Thank you. And ladies and gentlemen, that does conclude today's program. Thank you for your participation. You may disconnect at any time.