Fleetcor Technologies Inc

NYSE:CPAY

Earnings Call Analysis

FLEETCOR Q3 Earnings: Growth Amid Economic Headwinds

In the latest quarter, FLEETCOR's business grew 16% with a standout increase in revenue per night of 20%, offset by softness in construction and transportation due to macroeconomic factors. Operating expenses rose 4% year-over-year to $526 million, mainly due to acquisitions and higher transaction volumes. The company's strategy to drive growth includes transitioning to three primary business segments, which will be reflected in the Q4 report. EBITDA margins improved notably by 225 basis points from last year to 54.5%. Despite a $43 million increase in interest expense and a $0.44 impact on adjusted EPS from higher rates, the company holds a strong balance sheet with $1.1 billion in unrestricted cash. Q4 revenue is projected between $953 million and $983 million, a 10% growth, with adjusted net income per share expected to rise by 11% at the midpoint. Full-year guidance anticipates GAAP revenues between $3.774 billion and $3.804 billion, with an EBITDA margin of 53%.

Strategic Expansion in Consumer Vehicle Payments and Fleet Products

The company is advancing its core business by introducing new fleet products and targeting corporate payment solutions to major verticals. Success has been seen in Brazil, where more than 60% of toll users are now engaging with multiple payment solutions, demonstrating the viability of this strategy. The PayByPhone acquisition, a significant player in global parking payments, is set to accelerate this expansion, potentially leading to double-digit growth within the vehicle business. This move aims to establish a billion-dollar consumer vehicle payments arm, already showing promising signs of progress.

Steady 2023 Forecast with Encouraging 2024 Outlook

Despite the divestiture of its Russian business and facing some macroeconomic headwinds, the company's cash EPS forecast for 2023 remains consistent with the initial estimates from February, hovering around $17. While early, the 2024 outlook is positive, and the company is currently engaged in discussions which are expected to conclude in the next 90 days, potentially influencing future prospects.

Quarterly Performance Amid Economic Challenges

The company navigated a quarter filled with crucial events like the sale of the Russia business and the acquisition of PayByPhone. External factors like fluctuating fuel prices and foreign exchange rates created headwinds, resulting in a revenue downswing. However, the firm's adept management led to a revenue of $971 million and a cash EPS of $4.49 per share, surpassing the pro forma August guidance even after considering these headwinds.

Growth in Diverse Business Segments

The company witnessed a 10% organic revenue growth, driven by a diversified business model and consistent strong sales. The Corporate Payments segment soared with a 20% revenue increase, linked to a direct business growth of over 30%. The Fleet business grew organically by 4% due to international market strength, especially with the 3-in-1 product offering that caters to the evolving Electric Vehicle (EV) segment. PayByPhone is projected to contribute around $50 million in revenue next year, strengthening the company's position in the fleet and vehicle payments sector.

Robust Sales and Market Expansion in Brazil

In Brazil, the company's revenue went up by 16% on a year-over-year basis, attributed to a 7% increase in tag growth. The expansion of product offerings has led to 35% of customer spend coming from the broadened network. Sales grew by 20% compared to the previous year, with non-tag products contributing nearly 30% to this growth. The success in Brazil serves as concrete evidence of how anchoring a primary product can facilitate the cross-selling of additional services, effectively driving revenue.

Earnings Call Transcript 2023-Q3

[Operator]

Good afternoon, ladies and gentlemen, and welcome to the FLEETCOR Technologies, Inc. Third Quarter 2023 Earnings Conference Call. [Operator Instructions] This call is being recorded on Wednesday, November 8, 2023. And I would now like to turn the conference over to James Eglseder, Investor Relations. Please go ahead.

[James Eglseder, executive]

Good afternoon, everyone, and thank you for joining us today for our Third quarter 2023 earnings call. With me today are Ronald Clarke, our Chairman and CEO; and Tom Panther, our CFO. Following the prepared comments, the operator will announce that the queue will open for the Q&A session.

Please note, our earnings release and supplement can be found under the Investor Relations section on our website at fleetcor.com. Throughout this call, we will be covering organic revenue growth. Now as a reminder, this metric neutralizes the impact of year-over-year changes in foreign exchange rates, fuel prices and fuel spreads, and it also includes pro forma results for acquisitions and divestitures or scope changes closed during the 2 years being compared.

We will also be covering non-GAAP financial metrics, including revenues, net income and net income per diluted share, all on an adjusted basis. These measures are not calculated in accordance with GAAP and may be calculated differently than 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. I need to remind everyone that part of today's discussion may include forward-looking statements. These statements reflect the best information we have of today.

All statements about our outlook, new products and expectations regarding business development and future acquisitions are based on that information. They are not guarantees of future performance, and you should not put undue reliance upon them. We undertake no obligation to update any of these statements. The expected results are 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 on Form 8-K and in our annual report on Form 10-K filed with the Securities and Exchange Commission.

These documents are available on our website and at sec.gov. So now with that out of the way, I will turn the call over to Ron Clarke, our Chairman and CEO. Ron?

[Ronald F. Clarke, executive]

Okay, Jim, thanks. Good afternoon, everyone. I appreciate you joining us today. Upfront here, I'll plan to cover 3 subjects: First, our financials, our Q3 results, our Q4 guidance and a brief 2024 preview. Second, I'll provide an update on our strategic review and where we're coming out. And then lastly, I'll introduce our fleet transformation plan, which is aimed at accelerating the revenue growth of that business. Okay.

Let me begin with our Q3 results, which were generally in line with our expectations. We reported revenue of $971 million, up 9% and cash EPS of $449 million, up 6% versus last year. [ Now ], if it would have been up 16% at constant interest rates. Q3 macro weaker than our August outlook. Our fuel spreads contracted about 25% in the quarter, and that was the result of a $0.50 fuel price point-to-point increase from the Q2 exit to the Q3 exit which compresses fuels spreads.

Look, despite this weaker macro, our Q3 earnings are powered through. We actually finished a few cents ahead of our August guide if you exclude just the Russia and PayByPhone transactions. Overall, organic revenue growth for Q3, up 10%, inside of that, our corporate payments business maintained its 20% growth rate. So super pleased there. Our pivot, which we started last year in North America fuel away from new super small micro accounts clearly paid dividends this quarter.

Our North America fuel credit losses went in half from about $24 million last year to $12 million this year. Trends in the quarter generally quite good. Continued strong demand for our products. Our new sales up 17% versus prior year. So very good. Retention remaining stable across the enterprise at 91%. Our same-store sales did soften a bit, from flat last quarter to kind of minus 1 this quarter. We did notice pretty noticeable softening in our managed services subsegment and lodging, which we're digging into. Our Q3 EBITDA reached $529 million, $529 million, an all-time record high for the company, held by EBITDA margins, which expanded to 54.5%. That's up about 200 basis points versus last year. So all in all, I'd say a pretty good Q3 performance. Okay.

Let me make the turn to our updated Q4 guidance, which reflects a couple of changes in scope. So the Rusher divestiture, which we mentioned last time and the recent PayByPhone acquisition, we've also refreshed the Q4 macro, which is out looking a bit weaker FX than we saw in August. So look, despite these adjustments and these pressures, the fundamentals quite good such that our underlying Q4 profit guide is actually a bit stronger than our view 90 days ago. You can see on Page 14 in our earnings supplement that refreshed bridge.

So we're updating Q4 guidance today to $968 million in revenue at the midpoint and $449 in cash EPS at the midpoint. So really right on top of our Q3 print. Here again, historically, Q3 and Q4 results have been very similar. This updated Q4 guide implies a 10% organic revenue growth in the quarter and a 14% EBITDA growth. So again, the forecast really spot on to our [ 10-13-19 ] compounding model. Okay. Let me transition to our preliminary view of 2024 which I characterize the setup is quite encouraging.

So we're outlooking the 2024 macro environment to be neutral to maybe slightly positive. And that's simply looking at the various macro factors as they exit this year into next year. Revenue, we're out looking, again, although early organic revenue growth in the same 9% to 11% range. That's consistent with prior years. And then lastly, kind of the key profit drivers of the business generally setting up favorably. So we're expecting lower [ bad debts ], flat to lower interest expense and a stable tax rate and share count. So generally, a good setup. So look, although it's early days in our '24 planning, I'd say we generally like what we see. All right.

Let me shift gears and provide an update on our strategic review. As a reminder, the goal of our strategic review or portfolio review is really twofold. So first, to make a simpler company and then second, to evaluate separation options to increase shareholder value. On the simplification front, we've done a few things. We've sold [ Rusher ]. We decided to keep our prepaid business although we are working a couple of other noncore asset sales. And we're moving to primary reporting segments, all of these things to make a simpler company. On the separation front, we've concluded not to pursue a pure spend and that's mainly looking at [ RemainCo ] derating risk.

We've also decided not to pursue a strategic sale, primarily they are due to tax leakage and our estimate of [ disynergies ]. But we are continuing to evaluate a couple separation alternatives with Dan's Partners that we think are potentially pretty attractive. So we do expect to conclude those discussions with the counter parties over the next 90 days, and we'll certainly report back then. Okay.

My last subject is to introduce our Fleet Transformation Plan, which we believe is the single most important thing, effort to unlock shareholder value and re-rate our stock. So the objective of the fleet, the transformation plan is to accelerate our global fleet business growth in the double digits. So that we have 3 big primary businesses that can all target double-digit revenue growth. We have prepared a few slides in our lengthy, in our earnings supplement beginning on Page 22 to help walk you through how we intend to accelerate fleet growth. The plan really centers around 3 big ideas.

So first, BAU. On the BAU front, we plan to get at performance improvement through new fleet products, which we're leasing into the market now. And these products join up with our corporate payment products to really create a differentiated offering in the marketplace. As you may recall, we're also pivoting that business from kind of small micro prospects to a bit larger seam prospects, both from repointing our digital marketing machine and adding additional field and Zoom reps targeted this slightly larger market segment.

The emphasis will be on two primary verticals. Those are Field Services and Construction, both of which are big significant opportunities. Second, underpinning for the plan is EV. We believe we can capitalize on the EV transition, we're getting much more confident that our [ 3-in-1 ] commercial fleet EV-ICE solution is really is a winner and that we can maintain or maybe even increase our fleet revenues throughout the transition. So early experience in the U.K. over the last 11 quarters bears this out. Revenue per EV vehicle running higher than revenue per ICE vehicle. So again, pretty positive.

Then lastly, is this idea of a consumer vehicle payments business versus just the B2B vehicle payments business. And so the idea is to further expand on that front, and really just leverage the networks, the payment networks, the merchant relationships we have, that we built on the B2B side over the last 20 years. So the idea would be we start with Anchor Apps. So think toll tags in Brazil or digital parking in the U.K. that have millions of active mobile users and then offer additional vehicle payment-related solutions that utilize our payment networks. So for example, utilize our EV network or utilize our service repair network.

We've demonstrated success in this approach in Brazil. Over 60% of our active consumer toll users now use a second or even third payment solution like parking or insurance. So we think, pretty exciting. Additionally, this consumer vehicle payments push does open up additional interesting acquisition targets. For example, PayByPhone and literally other ones as well. So look, we believe that we have the potential to incrementally drive the overall fleet/vehicle business into double-digit territory via these 3 ideas. So again, kind of new fleet products, combined with corporate payment products targeted to a couple of big verticals, success in the EV transition and the build-out of a big billion dollar consumer vehicle payments business, clearly well underway in Brazil, and we hope to accelerate with this PayByPhone acquisition.

You can actually see our forecast math the [ bill to $1 billion ] on Page 29 of the supplement. This anticipates that this expanded consumer vehicle leg growing fast, can pull a low single-digit core fleet card business into double-digit growth territory. Literally maybe 12%.

So look, in conclusion, today, we're forecasting 2023 pretty much where we started out in February of this year. In and around $17 of cash EPS. That's despite selling [ Rusher ] and having a bit unfavorable macro. '24 outlook early, but I'd say encouraging still busy on some active separation, discussions with some counterparties, we expect to conclude that in 90 days. And then lastly, this fleet transformation plan, we think, quite exciting. We believe it has the potential to reaccelerate the fleet business and really potentially lift the entire enterprise to faster growth. So with that, let me turn the call back over to Tom to provide some additional detail on the quarter. Tom?

[Thomas Panther, executive]

Thanks, Ron, and good afternoon, everyone. Here are some additional details related to the quarter. Let me start by acknowledging that it was an active quarter with the sales of the Rusher business, the acquisition of PayByPhone and significant movements in fuel prices and FX rates. I'll address the impact from each of these factors to better compare our actual results to our previous guidance.

First, our prior guidance included a full year of revenue and earnings from the Russia Fuel business. Based on the August 15 closing date and final cash proceeds, the disposition of Rusher, resulted in $12 million of lower revenue and $0.06 of lower cash EPS. Secondly, the acquisition of PayByPhone on September 15, added $2 million of revenue and was $0.01 dilutive to adjusted earnings. Turning to the macro headwinds in the quarter compared to the assumptions used for our guidance in August, the total negative impact was $17 million. Average fuel prices of $3.88 were 7% higher during the quarter, resulting in a $4 million benefit. However, it's important to note the point-to-point increase in fuel price from July 1 to September 30 was around $0.50. The majority of this 15% increase occurred in August and plateaued for the remainder of the quarter.

Underlying that rapid increase in the retail fuel price was an even greater increase in wholesale fuel costs, which compressed fuel spreads approximately 25%, compared to our forecast, adversely affecting revenue by $13 million. So the net impact from changes in fuel prices on revenue was a $9 million headwind. It's typical when fuel prices rapidly increase for spreads to compress due to wholesale fuel prices increasing faster than retail prices, which can overwhelm the fuel price increase benefit. We get asked regularly, if there's a way to track the price and spread impact. We found that OPIS or the oil price information service, which is a subscription-based provider does a good job depicting retail and wholesale fuel prices and the resulting spread.

Now turning to FX rates. The significant strengthening of the dollar beginning in August when the Fed's tone became more hawkish, caused the dollar to strengthen relative to our foreign currencies, resulting in an $8 million drag on revenue. In summary, if we knew in early August, what we know now about these factors I just discussed, our guide would have been revenue of $963 million and cash EPS of $4.33 per share compared to our reported results of $971 million and $4.49 per share. The majority of the $8 million revenue beat came from our international businesses. Our earnings outperformance is particularly impressive because the flow-through of our revenue results, combined with our strong expense management and lower bad debt expense enabled us to power through the macro headwind and still exceed our pro forma August cash EPS guidance, when adjusting only for the impact from Rusher and PayByPhone.

We've included Slide 7 in our earnings supplement that walks you through these moving parts. Now on to more details regarding our results for the quarter, focusing on year-over-year revenue growth. Organic revenue growth was 10%, reflecting the diversification of our business and the realization of the strong sales that we've produced throughout the year. Year-over-year, lower fuel prices resulted in a $12 million reduction in revenue and lower fuel price spreads reduced revenue by $23 million. FX rates were favorable relative to last year, translating into a $15 million benefit. So net-net, a $20 million macro headwind versus last year. Putting aside the macro noise in comparison to our prior guidance. GAAP revenue increased 9%, which reflects the business' ability to consistently deliver solid revenue growth.

Corporate Payments revenue was up 20%, driven by 20% growth in spend. Strength in our Direct business, which grew over 30%, was again led by outstanding growth in full AP. Our comprehensive menu of high-quality payment solutions continues to sell extremely well, up 28% as we sign up new customers who are looking to modernize their AP operations. We also continue to expand our proprietary merchant network and increase the amount of cardable spend. Cross-Border revenue was up 19% as sales also grew 28% and recurring client transaction activity was robust. We are the largest nonbank FX provider in the world, and the name recognition we now have is a real advantage when we compete for our clients' business.

More importantly, our best-in-class capabilities, service and products allow to have market-leading retention and client acquisition, which you can see in our results. Turning to our Fleet business. Organic revenue increased 4%. We experienced strength in our international markets. And in the U.K., we are pleased with the continued strong sales performance of our [ 3-in-1 ] product offering, which customers find very attractive as they add EVs to their fleet. In the U.S., some softness in small fleet, in addition to the impact from our shift away from micro clients are affecting our sales and overall results. Our shift to higher credit quality clients also impacted late fees, which were down 21% from Q3 2022. While the decline in late fees results in a drag on our revenue growth, it has been more than offset by a decline in bad debt expense, which I'll comment on later. But it's important to point out that our decision to pivot up market has been EBITDA positive.

Lastly, as Ron mentioned, we continue to refine our go-to-market strategy to acquire larger customers and we are excited about the rollout of additional products that we expect will drive a significant uplift in sales heading into next year and going forward. Before I move on, Ron addressed the PayByPhone acquisition and how it fits into our fleet transformation strategy. To give you some deal specifics, PayByPhone is the world's second largest global parking payments platform, with over 6 million monthly active users on its mobile app. Their network covers approximately 4 million parking spaces primarily in North America, the U.K. and Europe, and they process over 200 million transactions annually, totaling $900 million in spend. We paid approximately $300 million for the company and expect to realize about $50 million in revenue next year.

Now to Brazil, where revenue grew 16% compared to last year, driven by 7% tag growth. Our tag growth enables us to further increase the proportion of revenue from our expanded network of products where we earn incremental revenue. In the quarter, approximately 35% of customer spend was from our expanded network. Fuel is a great example of how we're expanding our product network with the number of tag enabled gas stations growing 25% and transactions up over 40%. Our extensive network enabled us to generate 20% sales growth in the quarter over the prior year with almost 30% of the sales coming from non-tag products. Our success in Brazil is a tangible proof point of our broader vehicle payment strategy, where we leverage an anchor product used by a large customer base to deliver additional products and services driving incremental revenue growth.

Lastly, we've received some questions over the last several quarters about the potential impact of the Brazilian government deploying free flow tolling, where the toll station reads the license plate and the individual pays the toll after the fact by going to a website. Now that these free flow stations have been in place for a few years, our experience is that we actually sell more tags when these toll stations are installed, because the tag user receives a small discount and is able to pay the toll automatically via their tag. This frictionless customer experience drives incremental demand for our product.

Lodging revenue increased 10% against a tough prior year Q3 comp where the business had grown 28%. It's not unusual for the business to have quarterly revenue growth fluctuations driven by weather and natural disaster variability. Year-to-date, the business is up 16%. This quarter's performance was highlighted by sales success across our industry verticals. In addition to revenue per night, which increased 20%, driven primarily from channel and product mix, namely from our distressed passenger product and higher hotel commission revenue. Offsetting that to some degree was softness in our construction and transportation verticals as the weaker macroeconomic environment is impacting these sectors.

We expect this softness to rebound as the economic outlook becomes clear. Before leaving the segments, I want to briefly comment on our expectation to move to 3 primary business segments. We're making this change in how we operate the company in the fourth quarter and reflect the new segment in our 10-K. Now looking further down the income statement. Operating expenses of $526 million represent a 4% increase versus Q3 of last year, driven by acquisitions, increases tied to higher transaction and sales activities and investments to drive future growth, partially offset by lower FX rates and the sale of our Rusher business.

Bad debt expense declined 22% from last year to $29 million or 6 basis points of spend. Within that, Fleet bad debt expense was down $15 million year-over-year as we realized the benefit from lower exposure to micro clients as previously discussed. EBIDTA margin in the quarter was 54.5%, a 225 basis point improvement from the 3rd quarter of last year. After normalizing for the [ Rusher ] sale, we still expect our full year EBITDA margin to exit this year, 200 to 250 basis points better than the prior year. This positive operating leverage is driven by solid revenue growth, lower bad debt expense disciplined expense management and synergies realized from recent acquisitions.

Interest expense increased $43 million year-over-year, driven by the increase in SOFR on our debt stack and higher debt balances driven by acquisitions. The impact of higher interest rates resulted in an approximate $0.44 drag on Q3 adjusted EPS. Our effective tax rate for the quarter was 26.6% versus 26.8% last year. Now turning to the balance sheet.

We ended the quarter with $1.1 billion in unrestricted cash and we had $660 million available on our revolver. We have $5.6 billion outstanding on our credit facilities, and we had $1.4 billion borrowed under our securitization facility. As of September 30, our leverage ratio was 2.66x trailing 12-month EBITDA as calculated in accordance with our credit agreement. We repurchased 2 million shares in the quarter for $530 million including the ASR we announced in conjunction with the [ Rusher ] sale, and we have over $700 million authorized for share repurchases. We have ample liquidity to pursue near-term M&A opportunities and we'll continue to buyback shares when it makes sense. Now turning to our guidance.

Let me start by bridging the implied Q4 guidance we provided in August to reflect the acquisition and divestiture activity during the quarter and current macro environment. The sale of the [ Rusher ] business would reduce revenue by $30 million and the acquisition of PayByPhone would increase revenue by $10 million. We're now expecting a $20 million macro headwind versus what we thought back in August, driven primarily by worse FX rates, partially offset by higher fuel prices of $3.96. Making these pro forma adjustments to our prior Q4 guide, lowers revenue to $968 million and adjusted earnings per share to $4.34 per share at the midpoint. We've included Slide 14 in the earnings presentation that lays out these factors.

With that pro forma reference point established, let me comment on our Q4 outlook that includes the factors I just mentioned. We're expecting revenue to be between $953 million and $983 million, representing 10% growth versus last year at the midpoint. And we expect adjusted net income per share to be between $4.34 and $4.64 per share, which, at the midpoint, is up 11% over what we reported in Q4 2022. So similar to the 3rd quarter, we expect to generate solid year-over-year revenue and earnings growth despite some softening economic conditions in our markets. Based on this Q4 guidance, for the full year, we now expect GAAP revenues between $3.774 billion and $3.804 billion. Adjusted net income between $1.252 billion and $1.276 billion. Adjusted net income per diluted share between $16.82 and $17.12 per share and EBITDA growth of 14% and EBITDA margin of 53%.

Thank you for your interest in FLEETCOR. And now operator, we'd like to open the line for questions.

[Operator]

Ladies and gentlemen, we will now begin the question and answer session. [Operator Instructions] Your first question comes from the line of Sanjay Sakhrani from KBW.

[Sanjay Sakhrani, analyst]

Good results in a tough backdrop here. Ron, could you give us a little bit more color on the strategic assets? You're considering in the [indiscernible] scenario with these Dan's Partners. Maybe you can just speak to what certain permutations might be?

[Ronald F. Clarke, executive]

Sure, Sanjay. So it's really mostly in and around our Corporate Payments business. And so we have a couple of interesting counter parties where we might separate something and actually have a pure play that has more scale and synergies and stuff. And so we're kind of in the final mile of working through those conversations and seeing whether there's something there.

[Sanjay Sakhrani, analyst]

Understood. And then sort of appreciate the preliminary organic revenue outlook for next year. I guess when we think about the different variables from a macro standpoint, whether it be the economy and then obviously FX and such. Can you just give us a sense of sort of where we're at with that? Like what are you guys baking into that organic growth in terms of backdrop, the macro backdrop.

[Ronald F. Clarke, executive]

Yes, I think generally, the comment I gave is comp. So if you look at the various macro factors and the way we're exiting both fuel price spreads, FX, et cetera. I'd say that sitting here today, it feels like kind of a [ nuetralish ] to maybe a smidge positive. And so obviously, our organic stuff puts that to the side, right, the between [indiscernible] organic. But I did want to just provide a bit of a preview that unlike this year, Sanjay, with interest rates up, whatever, 400 basis points that the grow over basically across some of our key profit levers looks quite good. So the setup looks way more normalized than it has in the last couple of years.

[Operator]

And your next question comes from the line of Tien-Tsin Huang from JPMorgan.

[Tien-Tsin Huang, analyst]

I know you guys covered a lot here. I wanted to ask on the maybe for you, Ron, just on the consumer vehicle payments, the $1 billion that you're talking about '27 , do you have the assets you need today to get to that $1 billion? And do you expect the margin profile at that time to be different since this is a consumer or CDP business as you called out?

[Ronald F. Clarke, executive]

It's a great question. Good to talk. You can only get into the debate Tien-Tsin, tonight. So yes, we've got a couple, I'd say, of additional transactions that we're looking at to fill out a couple of the product lines. But this is, I don't know how clear I was in, but mostly an organic play where we get, we use basically these big consumer active blocks, right, of accounts. and just match it up with what we already have, right, which is the payment network and the merchants. And so the million dollar question there, Tien-Tsin, is just that velocity. So when we show 2 million people, some additional related things, what's the take rate going to be. So I'd say that most of the thinking, both studying what we've done in Brazil and obviously studying this deal, the view is that it's organic.

And the key is you were, we talk a million times is caused the sales. That's the key to growth and profitability. And so the good news is our view is we're not going to do tons of marketing, a, let's go spend gazillions of dollars but rather try to light up a big basis. So I'd say we like the EBITDA profile basically got the thing to go. So a couple more deals and mostly organic, that's the game plan.

[Thomas Panther, executive]

Yes. And Tien-Tsin, we wouldn't expect it to be margin dilutive. Again, look at Brazil as our bellwether and has attractive margins across the rest of our portfolio. So we think that's a good indicator of what the overall business can be as it expands.

[Ronald F. Clarke, executive]

The add-on tensions, as you know, are always lower cost, right, than new new accounts.

[Tien-Tsin Huang, analyst]

Sure. No, I like it. I mean it's exciting. I think getting into the consumer side and getting the synergies there make a lot of sense. Just curious on the cost side, as you called out, but I'm sure you're thoughtful about that, and I'm glad to hear that it's in your margin zone. Just on the, my follow-up then, just the 3 business lines and the cleaning up the reporting segments. I know we're going to get more, but is the general idea that it's going to be Corpay, Vehicle Payments, and I suppose, Lodging. And can you give us an idea on the margin differences between the three? Because I think as we're thinking about our own, some of the parts, I know there are a lot of different views on the profitability across those three, but is there any high-level thoughts that you can share on that?

[Ronald F. Clarke, executive]

Yes. Let me start, Tien-Tsin ,just on the segments, yes. So segment 1 will be vehicle, which will be our Global Fleet business, our Brazil business. And then honestly, really, this Consumer, which is a big part of the Brazil thing today, so the PayByPhone and the other things would be in that. Second business, obviously, Corporate Payments and then third business Lodging. So those would be the three lines.

[Thomas Panther, executive]

Yes. And for your modeling, we're really just combining fleet in Brazil today. And so based on how we report operating income and how you may model the business in a more detailed level, it would just be a simple summation of those two. We wouldn't anticipate any type of shift in the margin profile is just bringing those two together into the Vehicle Payment segment.

[Operator]

And your next question comes from the line of Darrin Peller from Wolfe Research.

[Darrin Peller, analyst]

I mean sticking to just the current, the segment themselves from this past quarter, they were strong in the Corpay side. And then suddenly, you hear that's an important part of the strategic thinking going forward. But Ron, I'd love to just hear what you see going well there? There's obviously a lot of competitive chatter going on around macro headwinds, some debating structural changes. So just talk to us a little more about your strategic plans on that segment? Before any real mergers or anything else, just stand-alone, what's going well? What do you anticipate it to look like over the next year?

[Ronald F. Clarke, executive]

Good question, Darren. Mostly everything, right, is going well to post, I don't know how many quarters not 20%, but quite a few, from where i am looking at going forward. And I think the sales inside of the 17% were in the mid- to high 20s for that line of business. So that tells us that we're selling a lot. There's a lot of demand. In terms of what's working well and not well today, everything is working well with the exception of that channel business, which we've spoken of.

So again, that thing continues to decline, but become, as you know, a much smaller part of the total which implies again that the direct business is growing close to 25% to 30%. So look, as I said before, we spent whatever the last couple of years assembling stuff, right, software, getting scale, getting more scale across border. And now the game is really marketing sales. We put the brand out a while ago. We've added head count as you see in the sales growth rate. So that's the game now. It's really just to drive new sales faster and get those implemented. And unlike some other people have reported to your point, because we're a middle market, the book is pretty stable, right? Our same-store sales look stable, look stable exiting the quarter. So we're not seeing any of that.

[Thomas Panther, executive]

We haven't seen erosion on the supplier level either. We continue to see good network expansion, cardable spend continues to gradually move up. So the interest level from the merchant side and the supplier side continue to be favorable.

[Darrin Peller, analyst]

That's really helpful color. Ron, just a quick follow-up to the prepaid business decision. Just maybe just take a step back on why you decided to keep that now? And are there any other noncore assets that do make sense to sell potentially?

[Ronald F. Clarke, executive]

Yeah good follow up. I think ultimately, Darren, we just like the business more than some of the people that looked at it. So when you look at the tax leakage, and dilution from that, I'd say that we spent a lot of time making that a better business than when we shopped it 3 years ago. And so the premium that we were looking for about what is worth today, right, to pay the tax I think people didn't get close enough to where we or I wanted to see the thing. So we feel good enough to hold it.

With that said, as part of this review, we went through all the other kind of small noncore things. So we do have to kind of noncore things that we're kind of actively talking to buyers about. So there's a couple of hanging chads left there. But both that and the broader counterparty thing, we will have mopped up when we come back to you in 90 days.

[Operator]

And your next question comes from the line of Ramsey El-Assal from Barclays.

[Ramsey El-Assal, analyst]

I have a quick follow-up on the consumer, the new consumer business. How should we think about that from kind of a geographic perspective? Is it a plan that you're kind of going to execute sort of all over the place depending on whether helpful assets become available in key geographies? Or are you focused just on the U.S. or Europe? Or how are you looking at that?

[Ronald F. Clarke, executive]

Yes. Look great question, Ramsey. So if you step back, our current business is really in 3 markets, 3 countries, call it, 90% of the company. right here, Brazil and the U.K. So that would be the answer. So we're, of the $1 billion target were, I don't know, $350 million or $400 million consumer payment business in Brazil today. Close to 0, right, in the U.K. and the U.S. And so part of this PayByPhone idea was to get a big customer base in the U.K. and in the U.S. where we already have these networks again was the idea. So there's no plan for tensions or the question for us to go fire a young man in faraway places and to try to build a business where we don't have networks and management and stuff. So Brazil, U.K., U.S. and that or, is how we're thinking about it.

[Ramsey El-Assal, analyst]

All right, makes a ton of sense. And one follow-up. On the Lodging segment, you called out the tough year-over-year comparison this quarter. Also mentioned some softening in a sub vertical. I think it was managed services. Just trying to think through how to model that out next quarter, the comp gets easier, but did the headwinds you're seeing in that managed service is sort of subvertical stick around, or should we expect more of a bounce back on the easier comp next quarter?

[Ronald F. Clarke, executive]

Yes. Good question and unclear, I'd say we start I think I called this out because we started to see it in Q2. So again, let me go to the top and maybe this will be helpful. So inside of our Lodging business, we serve, call it, 4 or 5 different customer subsegments. So we do things like airlines, insurance, railroads, construction, things like that. So one of those segments is kind of this project-based segment. So think like consulting first retail merchandising people environmental companies. It's only, I don't know, Ramsey, 300 or 400 clients in it, but they feel pretty big teams of people they go to places and stay for a while. So maybe 10 people go to a city and stay there for 2 or 3 weeks. So that's the nature of the business.

So literally starting in Q2 and more in Q3 say, say 50 out of those 300 clients just start to go like super some when we call them, they would say things like, "Oh, hey, Walmart, who's a big client for merchandising move that in-house and i use our third-party company to go there and do merchandising in their stores" or hey, a couple of our construction clients flipped over to using some local contractors instead of their own people. So I'd say we're just not really. Sure. The good news is the other segments. We don't see it. It's mostly resident kind of in this one place. So I think we've read what's up 10% organic. So that thing actually went backwards that managing a bit, while obviously, the rest of the businesses went forward. So we're kind of out looking, Ramsey the thing to kind of stay softish here in Q4 and then obviously go to a better idea when we make a turn in the next year.

[Operator]

And your next question comes from the line of Peter Christiansen from Citi.

[Peter Christiansen, analyst]

Ron, I'm just curious now that you're through a good portion of the strategic review and it seems like you certainly have a team set up for the next couple of quarters. Just curious on your thoughts on the use of of share repurchase, leverage levels? And then secondary to that, are you generally thinking about the trade-off between margin and growth here. Do you see an opportunity to invest maybe perhaps accelerate growth a bit more, get more behind sales? Just curious on your thoughts on those relationships.

[Ronald F. Clarke, executive]

Good question, Pete. So I'd say it's been a pretty busy and active whatever it's been, 6 or 9 months strategic review. So look, the good news in it is when you put out an ad like that, it does generate incremental activity. So we do have, as I said, not only some separation discussions still going, but we've surfaced some additional M&A targets or the kind of interesting in and around the same space as people look to the phone. So look, I think our priorities around capital and leverage are kind of the same. Our target is 3%. I think we're running, I don't know, 2.5% or 2.6%, where buyers of our stock obviously at this price, if we grow 9% to 11% next year, grow the bottom faster. That's 10x EBITDA multiple for company compounding in the team.

So we're buyers of our stock, let's say, 3x leverage will go higher. For a deal. We do have, again, a few interesting things in this consumer space, that have surfaced and a couple in our core Corporate Payments base that we're chasing. So like always, I'd say, those the two main uses. I think will generate, I don't know, low billions to $1.3 billion-ish, I think is in our early look at next year, plus we've got leverage still right, where we're sitting today and the EBITDA will grow next year. So a handful of deals and buy our stock back would be the order.

[Peter Christiansen, analyst]

And then longer-term growth versus margin? Are you coming out any differently postal review? Or as you get through the products.

[Ronald F. Clarke, executive]

Yes, good question. So if you look at our [indiscernible] or 3 quarters and even into our guide, I think we've stepped up sequentially, as we said, right, EBITDA margin. I think I quoted between 54% and 55% this quarter. And I think Tom and I look at kind of the same number for Q4. We kind of looked at our plan for next year, similarly, which gives us a little more money because we've kind of gone past on these capability acquisitions. So I'd say we'll ramp up the sales and marketing investments a bit, but look initially at least try to keep the exit of our margin kind of between 54% and 55% is kind of the target for next year.

[Operator]

And your next question comes from the line of Mihir Bhatia from Bank of America.

[Mihir Bhatia, analyst]

The first question I had, I just wanted to go back to the fleet product transformation, so Fleet segment transformation strategy. And on point one, where you talk about the fuel plus Business Card, I wanted to ask a little bit more, if you could talk a little bit more about that. How is that different than the Beyond Fuel strategy that I think you all had a couple of years ago. I'm just trying to understand what kind of growth et cetera, you expect that strategy to drive?

[Ronald F. Clarke, executive]

Yes. It's a good question. So let me start by saying that most of the competition for the prospects that we're trying to get are is business cards. So in the older days, there was cash and house accounts and other things. And now we look at the customers that we want to have, that we don't have many are on business cards. And some of those are on our competitors' fuel cards, as well. And so the idea is really to go to new accounts with a combined effectively business card and a fuel card in one. So, and target that against verticals that use fuel cards that have people in the field, think of like field services like HVAC or construction, things like that.

And so that's the basic idea that we've now wrapped, I don't if you guys remember, we bought a company about 2 years ago, call it, Roger, that we rebranded as Corpay One. So we've wrapped all that technology now around a business card, so that it's mobile-centric kind of automated expense capture and stuff around the business card and then connected that to our proprietary fuel card capabilities. And so what you've got is a business card that's a little more high tech than some of the bank cards combined to a fuel card that has controls and advantaged economics and it's bundled into kind of one package and one account.

And so the testing on it has been super duper good, and we're literally in the market selling the products now. So the biggest difference, I'd say, is the focus. It's new accounts versus back to the base. It's in a couple of verticals. And the product has been rewrapped with kind of a modern technology.

[Mihir Bhatia, analyst]

Got it. And then just one maybe just switching back to the corporate payment segment for a second. And it's a little bit of a repeat of earlier question about just what is driving that strength that you were seeing? Like I appreciate that you are a little bit more mid-market. But some of the factors like just your macro slowdown or large suppliers choosing to push back? Or not accept virtual card payments seem like that shouldn't be as big of an issue whether you're small or medium, whether your customers are small or medium.

And I was just wondering, are there particular areas of strength in that corporate payment segment that you would call out? I'm just trying to understand a little bit about what's really driving so much strength for you guys? Has it just been a lot of [indiscernible] sales? What's driving that?

[Ronald F. Clarke, executive]

Yes. I mean, I think you can see it a bit in the KPIs that it's volume. I mean it's really not rate. So in the 2 big businesses there, the Payables business and the FX business, it's volume and it's what you said. I think I just quoted that in Q3, again, I think the sales of those businesses were up 28%. And year-over-year over the prior, and we had a blockbuster first half. So you've got this huge implementation backlog effectively new volume, new business that's coming on the books, which helps give us the predictability. A lot of the sales we're making in this quarter or next quarter will obviously be implemented in the spring and the summer next year.

So it's not really complicated. We finally are off "humpty dumpy" work of putting a competitive set of offerings together and have made the turn really to marketing and selling them, and they're doing a great job at it. So I think it's pretty straightforward. And then B, we're getting leverage in that business on the profit side. I think, Tom, it's looking about $1 billion ballpark, call it $1 billion a year in revenue.

And so the scale of the business now and compounding at 20%, the incremental revenue the flow-through margins are 75% to 80% on that stuff. So it's obviously increasing the EBITDA margin. So it's just, it's in a good spot. It's a giant TAM and so the game is to just keep chasing, chasing hard after it and we finally have what we need there.

[Operator]

And your next question comes from the line of Nick Bremo from UBS.

[Unknown Analyst]

Congrats on the strong quarter. I just wanted to ask about how the sales pipeline has been trending in the fleet business with the pivot to larger customers and how that informs the 2024 outlook for the fleet business? When paired with the new products that you plan to roll out.

[Ronald F. Clarke, executive]

It's Ron. So happening. I'd say a little slower than we'd like, but happening. So again, it's, I guess, we're about a year into the pivot. I can't remember how clear I said it, but it's worked right in Q3, the credit losses in that business went half or [ 24% to 12% ], and our outlook for this quarter, Q4 is 25% going to 10%, so down 15%. We have traded a bit of late fee revenue, right, because we don't have those small accounts that are going later obviously going bad. So I'd say that it's in process. It's been pretty complicated to turn that digital engine to bigger accounts to make sure that they're creditworthy and that the algorithm is working. But we're seeing I think, as I mentioned, sequentially an increase in what we call above 5 card market there.

And then second, we started building the field and Zoom staff little contact, it will be outbound, if you will, on that a bit larger seen than the micros. So I'd say that we're moving some investment dollars along with pivoting the digital engine. So the plan is for it to pick up a lot. I don't have it in front of me, but I think our sales plan for that line of business here in the U.S. is up 25% next year on the back of that of, one, the digital pivot and two the incremental field sellers.

[Thomas Panther, executive]

Yes. And I would also lose sight of the international business. It continues to do quite well. year-to-date, 10-plus percent levels of sales growth. So that also helps generate the overall Fleet Performance that you're seeing.

[Unknown Analyst]

That's very helpful color and great to see the credit loss is down substantially. For my follow-up question, I just wanted to touch on PayByPhone. I'm sorry if this was already addressed, but what's the margin profile and revenue growth profile of that business on a stand-alone basis? And how much opportunity do you see on the expense side to optimize there?

[Ronald F. Clarke, executive]

Yes, there is no margin profile. In that business, right? That's been a go-go growth business compounding 20% to 25% the last 3 years in their preliminary plan stand-alone into, in the next year to '24 is another 25%. It's circa, call it $50 million next year, call it, $40 million this year, pro forma going to going to [ $50 million ] kind of earning virtually nothing. So the, again, the big idea is what we can do with it, right, which are two things. One, we've got a ton of businesses that are already, the employees are already using their app here in the United States and in the U.K. So we're obviously going to go to our business clients and hopefully dramatically increase the amount of B2B parking that the company has instead "consumer parking" where FYI, the rate is substantially better if you're working for a business.

And then the second one, I think we said is we have networks they don't have, right? Beyond parking, we have EV, we have service. We have registrations and fine and compliance kinds of things. And so the idea is, obviously, to try to light up their customers who are in the app making payments where, remember, we got the information. It's Ron Clark. He's on his iPhone, his license plate is XYZ, he's on his Mastercard, the data that we need to add an EV recharge is kind of in the accont when we show up. So we expect the synergy, if you will, to take that thing into positive territory, right, as we head into 2024.

[Operator]

And your next question comes from the line of Bob Napoli from William Blair.

[Robert Napoli, analyst]

A lot there, a lot there tonight to go through. Just Ron, the separation alternatives merging with someone else. Is that, I mean, essentially, would that, given the size of your business, is that essentially going to be FLEETCOR's Corporate Payments acquiring somebody and then merging into a public company? Or I mean, what's, just any thoughts around how that would, could work what you're thinking about there?

[Ronald F. Clarke, executive]

Bob, this is good to hear you, voice. So obviously, there's a few different flavors that we're working on depending on who the counterparty is. There's actually a pretty fascinating structure that we're looking at where we could spin out an asset of ours effectively into a private entity and have someone else combine their assets into the same private entity. We would obviously control and fair amount of that company. So we've consolidated work on the synergies. And then basically, I feel that a different day. We're looking at another scenario where we would literally put our asset into another company. So there's a few different combinations.

And it really is just a function of how accretive, what kind of premium we think we could get by separating something and combining which, again, makes a lot more sense to us than the "pure spin "where we're kind of guessing at pro forma multiple. So we've been in conversations with a few people for quite a while, and we're trying to figure out whether the thing makes sense or not.

[Robert Napoli, analyst]

Interesting. Just a follow-up on Corporate Payments. The 20% organic growth is really impressive given the size. Is that something that is sustainable into next year? And is it the AP side or the Cross-Border FX, you've made a number of acquisitions there. What is outperforming more maybe relative size of the key pieces of Corporate Payments?

[Ronald F. Clarke, executive]

Another good question. They're kind of 60-40 in terms of revenue, but they're both kind of compounding around the same level. And I'd say early days without, Ron pushing too hard. I'd say next year as high teens to 20% again, Board are due to give you that final number. But I think, yes, I think we believe given the sales again we got in the Q and the backlog of that come online next year. And then we've got a couple of monetization ideas to get more card, if you will, with some of the accounts. So I think it's even though it's big, I think we feel good about the thing just keep getting up and going again next year.

[Operator]

And your next question comes from the line of Nate Svensson from Deutsche Bank.

[Christopher Svensson, analyst]

I just wanted to double-click on organic growth within the fleet period a little bit. So if you take [ Rusher ] out from all periods, it looks like organic growth was relatively flat at 3% this quarter. So can you give a little geographic detail on what drove that 3% growth? I know last quarter, you called out Mexico and Australia. So just wondering what happened this quarter, what grew well, which may have grown a little softer. Within that, how did the monthly trends progress as we move through the third quarter and moving into the fourth quarter, should we expect that organic growth ex [ Rusher ] to stay roughly flat at around 3%?

[Ronald F. Clarke, executive]

Nate, I'll take that. Again, I'd say the international markets continue to perform quite well, both Mexico, in Australia, Europe, U.K., all of them performed very well. But even within our U.S. business, we saw our enterprise segment do quite well. Even some of the over-the-road trucking was able to do some level of positive growth relative to the overall blended growth rate. So while the international markets carried most of the weight of the positive growth, we did see some pockets within the U.S. business that was also accretive to the overall.

As we said, some of the small fleet business is just struggling a little bit in terms of filling the bucket back up with the sales activity as we've pivoted that market.

[Christopher Svensson, analyst]

Got it. I appreciate that. And so I know there's been a few questions on the shift into consumer vehicle payments, but I find that pretty intriguing. So I'll ask another one here. Obviously, you've seen great success kind of building out the strategy in Brazil, but it seems to me like there's a lot of idiosyncrasies about that market that may get fairly unique compared to the U.K. or the U.S. that you called out earlier. So maybe can you talk about some of the hurdles that you might see on your path to implementing the consumer vehicle ecosystem in the U.S. and the U.K.? And how you're planning to get over those hurdles as you roll it out and what learnings you can take from the Brazil experience?

[Ronald F. Clarke, executive]

Yes. It's another good question. I think the whole thing turns on the existing active customer file. So the big learning, I think, in Brazil, just to walk back in time is if you recall there, the original consumer business was mostly tags initially. So "hey, you go to the toll booth, you go to a store, you go online and hey, I want a automatic toll tag, and I get one and I stick it on my windshield and there it is". And so the big idea a couple of years ago there was to get people onto the phone to get those same people that have a tag to be on the phone.

And so what we learn there is once they are on the phone and checking things like their account or hey, we put the content on like what the value of their car is because we know the car and stuff that we found that there were 3 million of the 5 million people every month on the app on the phone. Doing stuff. And so that's what enabled the sales of additional things, for example, insurance, providing insurance. And so that's the hurdle. That's the million dollar question is, can you take the couple of million active users that are on a phone every month in the U.K. and point them at 3 or 4 other things related to their vehicle light EV, for example, like servicing their car, will that take like it has in Brazil because we have the rest of it. We have the networks.

We obviously have tech that connects to these networks and host computers and the like and all kinds of G&A is still on the top of all the stuff. So that's the focus. The game is that conversation, that marketing, that app with the consumer and their willingness to basically take things. And the secret idea, I keep telling you is there's no more dated input. So rather than having 3 or 4 separate apps where i type in Ron Clarke, I have a Range Rover, here's the license play, here's my credit card, here's my phone number and so on. It's kind of one and done. The vehicle and you and your card stuff is already in place. To make the parking app go.

And so it's kind of in place for the add-on apps. So I would point you to there in lies the big question to how fast we can grow this thing.

[Christopher Svensson, analyst]

And in Brazil, that's over 60% of the customer base is using multiple products. So it's a number where we feel like we can get some really good penetration over time as a significant number of people would do just as Ron described, that use case, I wanted to use one app to service the multiple types of activities and ultimately payment transactions surrounding their vehicle?

[Thomas Panther, executive]

Yes. Let me just do one thing, which I found fast, and you like this is not, but to me, it's a bit of peanut butter and jelly, hey, you've got a phone in your hand and you're doing parking end of the park here, I'm going to be here for an hour or whatever. And then you carry it away and you go on the app and you extend your time another hour. So I know exactly when you parked when you're leaving stuff.

Hey, what about contents insurance for that 2 hours. How about while you're parked at the stadium watching a game or something with no deductible, we covered during that 2-hour period theft from your vehicle. So I give that one as an example of we can nest, we think some things like Super Duper close, we have your registration and stuff. We could provide notifications and reminders of when that thing is up. were scanned for fines that you have. So the power of it is really in it being super close to what the existing application is.

[Operator]

And your next question comes from the line of Trevor Williams from Jefferies.

[Trevor Williams, analyst]

I wanted to go back to the thinking on organic growth in 2024, and I know it's early days, so it's a rough sketch, but the 9% to 11%, that's in line with kind of what historically you've shared for organic targets. But Ron, how are you thinking about what the right growth rate is for fleet specifically now, especially with [ Rusher ] out? So at least in the near term, how you're thinking about fleet within 9% to 11%, I think historically, it had been assumed to grow 7% to 9%, if you think you can get there in 2024 ex [ Rusher ]?

[Ronald F. Clarke, executive]

Yes. Trevor, good question. I'd say probably too early a set of days to give you a super good answer. I'd say that we've done more work as we started around the Corporate Payments. And because that stuff cells and then installed later. There's way visibility into the forward year, right? I kind of know what the backlog is as we head home for Christmas. So I think the big question of where we come out is how much juice from the new new stuff, so obviously, the baseline global fleet business has been kind of low single digits the last few quarters. We obviously have 2 kind of big upsides around this new product line and new channel.

And then obviously, this consumer piece, for example, like selling businesses parking. So I'd say it turns on that. To me, the question is how far out and how much are we going to invest basically and try to boost some of these incremental things to try to move that number up faster. And remember, with the vehicle combo with Brazil, you're probably already at between the International, Brazil and the U.S., you're probably at 7% to 8%, so call it, high single digits before we take a breath, so the real push is going to be how much new new do we layer on top of that.

But as you can tell from my conversation that that's what we're on and that's what we're going to really try to push. It's the #1, 2 and 3 assignments of this company is to take that big business and reuse it and get it back to being find and exciting and going somewhere. So we have 3 businesses that people like instead of 2. So I want to hear loud and clear that, that's what we're on.

[Trevor Williams, analyst]

Understood. And then, Tom, just a quick one for you. The corporate payment margins, it looks like we're up a little more than 400 basis points year-over-year. I think you alluded to potentially some synergies coming through in your prepared remarks. Anything specific to call out there? I don't know if there was some global reach, expense synergies that came through? But that would be helpful.

[Thomas Panther, executive]

Trevor, that's certainly a contributing factor in terms of the synergies that we're able to realize with global reach. We did a lot of heavy lifting over the spring and early summer to move on to one platform. We're able to eliminate some of the back office costs, technology costs, that was a significant contributor. And then just a positive operating leverage within the business and just look at the structural dynamics of that business and how 20% revenue growth against a relatively stable fixed cost base. We're just going to generate positive operating leverage and drive margins higher.

So combination synergies and structural components would be the things that contributed to that.

[Operator]

And your last question comes from the line of Kenneth Suchoski from Autonomous Research.

[Kenneth Suchoski, analyst]

Ron, maybe one for you. I wanted to ask about the Spin merge opportunity with a strategic partner. You've been CEO at FLEETCOR for 2-plus decades and built the business out over time. So how do you think about your day-to-day responsibilities in the scenario where there is a spin/merger, and I guess, where would your responsibilities fall under that new structure, which would be two separate entities? And then separately, are there specific assets within B2B that you would look to combine with? Either by product segment of the market or geography, or is the play really to find overlap with another business and take out the cost?

[Ronald F. Clarke, executive]

Yes. So multiple Ken. So I'd say, first off, we're not sure, right? We've been working at this, and we have a couple of attractive combination, but I don't want to leave this call where people think, "hey, it's a pay to complete and Ron is resting or something" So that would be point one. I'd say they're possible, but I don't want to [indiscernible] That's number one. Number two, it depends on the structures again. So one of the structures that's kind of interesting is this idea of us spinning assets into a private entity and someone else. And in that case, it would almost look to me like a FLEETCOR company where we have a minority investor, which we had that world before. So I'm a busy thinking about that thing as I am today.

If it went the other way and we were to basically RMT it into something else that was public, I probably sit on the board, and have a plan in advance of doing that, that we were clear kind of where the thing was going. So to your point, to take something that's super valuable, we and I have to be super convinced that it's going to go on a path that makes sense and it's going to get resolved. That will warrant a premium. So we are spending a lot of time on those social issues and talk about how that would go.

But my comment to you is, I think I and others would be super involved certainly early on in whatever combination we went forward with. We're not going to just spin it and close our eyes.

[Kenneth Suchoski, analyst]

Yes. That makes a lot of sense, Ron. And then I guess just as my follow-up, some of the, some of your payment peers have called out headwinds in their cross-border businesses. Specifically, they're seeing more cross-border transactions being done in U.S. dollars rather than those payments being converted to local currencies. I guess, are you guys seeing any of those trends? And I guess, how much of a risk is that for the Cross-Border payments business within Corporate Payments?

[Ronald F. Clarke, executive]

Yes. That's a good follow-up. I'd say not much. I mean there's a little bit of it when FX volatility kind of right softens and kind of where the dollar was, whatever a few weeks ago. But I'd say it's really on the margin. If you look at again what we're printing there, it's just, it's the share of volume growth. We're just adding just more clients and more spend, and I'd say we're generally pretty stable. Maybe a smidge softness to your point here and there. And then remember, for us, the diversity in that business, right?

So we originate I guess, about 80% of all the business, all the revenue outside of the United States, right, in Canada, the U.K., Europe, Australia. And so the geographic diversity and kind of the originating currencies also have a big impact. So the, it's a little bit of a hedge, right? One base is a little bit weaker, but the counterpart is a little bit stronger. So I don't say we're immune, but I'd say we're not seeing much in the way to slowdown.

[Operator]

Thank you. There are no further questions at this time. Ladies and gentlemen, that does conclude our conference for today. Thank you all for participating. You may all disconnect.