FLEETCOR Technologies, Inc. (FLT) Q4 2022 Earnings Call Transcript

FLEETCOR Technologies, Inc. (NYSE:FLT) Q4 2022 Earnings Conference Call February 8, 2023 5:00 PM ET

Company Participants

Jim Eglseder – Senior Vice President, Investor Relations

Ron Clarke – Chairman and CEO

Alissa Vickery – Interim CFO

Conference Call Participants

Sanjay Sakhrani – KBW

Bob Napoli – William Blair

Darrin Peller – Wolfe Research

Tien-Tsin Huang – JP Morgan

Ramsey El-Assal – Barclays

Sheriq Sumar – Evercore ISI

Jeff Cantwell – Wells Fargo

Peter Christiansen – Citi

Nik Cremo – Credit Suisse

Trevor Williams – Jefferies

Operator

Good afternoon and welcome to the FLEETCOR Technologies, Inc. Fourth Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded.

I would now like to turn the conference over to Jim Eglseder, Senior Vice President of Investor Relations. Please go ahead.

Jim Eglseder

Good afternoon, everyone. And thank you for joining us today for our fourth quarter and full year 2022 earnings call. With me today are; Ron Clarke, our Chairman and CEO; and Alissa Vickery, our Interim CFO.

Following the prepared comments, the operator will announce that the queue will open for the Q&A session. It is only then that you can get in line for questions. Please note, our earnings release and supplement can be found under the Investor Relations section of our website at fleetcor.com.

Now throughout this call, we will be covering organic revenue growth. And as a reminder, this metric neutralizes the impact of the year-over-year changes in foreign exchange rates, fuel prices and fuel spreads. It also includes pro forma results for acquisitions closed during the two 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 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.

I do need to remind everyone that part of our discussion today may include forward-looking statements. These statements reflect the best information we have as 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. These 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 on our annual report on Form 10-K, both filed with the Securities 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?

Ron Clarke

Okay, Jim, thanks. Good afternoon, everyone and appreciate you joining our Q4 2022 earnings call. At the top here, I’ll plan to cover four subjects. So first, I’ll provide my take on our Q4 results. Second, I’ll recap our full year 2022 performance. Third, I’ll share our initial 2023 guidance. And then lastly, I’ll update you on a few of the key priorities that we’re working.

Okay, let me make the turn to our Q4 results, which exceeded the top end of our guidance range. So better than we expected. We reported revenue of $884 million, that’s up 10% and cash EPS of $4.04, that’s up 9%. Our cash EPS was helped in the quarter by our Brazil Tax-Happy, which did lower our Q4 overall tax rate.

Organic revenue growth coming in at 7% overall, inside of that our Corporate Payments business super good, growing 20% in the quarter. Against the prior year, our Q4 organic revenue growth was negatively impacted by about you know $20 million to $25 million of one-time revenues sitting in Q4 of ‘21. So that reduced organic revenue growth by about 2% to 3% in Q4. We do expect Q1 2023 organic growth to return to the 9% to 10% range.

On cash EPS in the quarter pressured by both higher bad debts, and significantly higher interest expense. And as a result of the rising delinquencies we’re seeing in our US Fuel business, we did make the decision in Q4 to slow what we call our new micro digital sales. So our very smallest account. We also began tightening terms of our existing SMB account. Both of those things really a cautionary move to try to control bad debt expense here in 2023.

Fortunately, our credit risk is really narrowly concentrated and what we call these very small micro accounts and also in our newest vintages, you know think 12 months to 24 months. So really impacts a pretty small portion of our overall business.

Turning to the trends fundamentals in the quarter are quite good. Same stores finished plus 2 for the quarter, our retention remaining steady at 92%. And sales grew 19% in the quarter, despite our decision to, again to slow the micro sales in fuel. So look, all in all, you know a bit better finish than we had expected and continuing strong trends helping us here as we roll into ‘23.

Okay, let me turn to our full year 2022 performance, along with the progress that we made to better position the company for the mid-term. So for the full year 2022, we reported revenue of $3.4 billion, that’s up 21% and up almost $600 million over 2021.

Our cash EPS is $16.10, that’s up 22% versus prior year, and a full $0.85 ahead of our initial 2022 guidance. Our full year organic revenue growth of 13%. Full year sales or new bookings growth of 21%. And we closed five capability acquisitions if you include the GRG deal on January 1. So, really good, really outstanding performance against the primary objectives that we set.

So in addition to the financial goals, we really did advance pretty meaningfully are beyond our strategy in ‘22, in which we extend either or both the product set of the business or the customer segment that we serve. This is helpful, obviously, because it grows the TAM, and obviously better positions the business for long-term growth.

So just a few of our beyond highlights for 2022. So in global fleet, significant progress on our EV capabilities, you know, we acquired, you know, our European public charging network. We’ve got mapping and payment applications, we’ve got at home charging software. And we’ve integrated all that to our ICE Fueling Solutions. So great progress there.

In Corporate Payments, we added an AP Automation Software front end to our whole AP Payment Execution business, which is the company’s fastest growing business. So super delighted with that. In Lodging, we’ve gone beyond our workforce, core workforce business to two new verticals, the airline vertical and the insurance vertical, each of those reaching almost $100 million in revenue in ‘22.

And then finally, in Brazil, we keep expanding our tag Fueling Solution. We’ve gone to even more accepting sites now and more users. And I think exiting Q4 reached about $10 million annualized transactions. So of the combo in ‘22 have really good financial performance, and what I’d call significant strategic progress. So, we’re quite pleased.

All right, let me shift gears and make the turn to our 2023 outlook. We’ve worked hard to build a plan to meet our most important objectives, and what is a challenging environment. So here is our 2023 guidance at the midpoint. So revenue of $3,825,000 billion that would be up 12% or approximately $400 million, EBITDA of $2,000,025 billion that reflects up 15% or up about $260 million. And then cash EPS of $17 at the midpoint that will reflect up 6%.

We’re certainly outlooking a pretty unfavorable macro environment this year with a smidge lower fuel price and significantly higher interest rates. So those two things are expected to reduce our 2023 cash EPS by about $1.75. Implying, we’ll be giving a $18.75 cash EPS guide in kind of an apples-to-apples environments.

Our ‘23 plan does set out a number of pretty important objectives to deliver organic growth 10% plus, to grow new sales 15% plus in the diet or control our operating expenses with a plan to expand margins about 150 basis points for the full year, and 200 basis points, exiting 2023.

Our major assumptions underlying our 2023 guidance, our first that are ‘22 acquisitions will add about 2% to 3% to our 2023 print revenue growth. This ‘23 guidance does include Russia, and will and so we have certainty of the divestiture. Guidance assumes that we can manage bad debt equal to the 2022 level, although we do think it’ll be more elevated in the first half and second half. And then finally, we have not assumed a US or global recession, but rather builds our ‘23 plan and volumes, really just based on what we can see and project it from there.

Our confidence in this ‘23 plan or outlook is bolstered by a few things. You know, first, we’ve now seen our ‘22 finish. Good, you know better than we thought. We closed the Global Reach, cross-border deal. So that’s in our numbers. We’ve made expense cuts already. So those are behind us. We’re seeing some recent improvement, slight but improvement in both fuel price and FX trends. We just recently implemented two interest rate swaps that will lower our 2023 interest expense and obviously fix rates. And then lastly, we qualified for Brazil Tax-Happy that will slightly lower our 2023 consolidated tax rates, a bit better than our earlier expectations.

Okay, let me transition to my last subject, which is an update on some of our important priorities. So Russia, let me start out with Russia. So making good progress. On the sale of our Russia business, we’ve had lots of interest, a number of parties that have bid for the asset. And we’ve recently moved a select group of buyers, potential buyers into the diligence phase. Timing is probably somewhere late Q2. And at this point, our plan would be to use the Russia sale proceeds to buyback FLT stock. If we did that with kind of a mid-year close, we’re looking at about $0.30 to $0.35 of any year cash EPS dilution.

Okay, let me turn next to the FTC matter, appears to be finally in the homestretch. We’re at a point now where we do expect the court to issue an order, likely here sometime in Q1, detailing incremental processes and disclosures that we’ll need to implement. So obviously, once clear we’ll move quickly to implement those things. Although we will require some time.

I mean, just as a reminder, the disclosure, enhancements and process changes that we have voluntarily made over the last few years have not had a material impact on our financial performance. Nor do we believe that this Court order will have a material impact on our financial performance going forward.

So last up, EV, again, you know, really good progress on that initiative. So in the UK, we’re now in market with what we call our three and one EV solution for commercial fleet clients. So in this case, it includes a UK public EV charging network, at home charging software, and, of course, traditional ICE Fueling, all of those integrated into one. And I think we’ve got about 1,000 of our UK commercial fleet clients using the solution. So, doing well there.

Additionally, we’re in the market in Continental Europe with an EV solution really for new customer segments. So beyond commercial fleet, so the new segments would include EV car manufacturers, charge-point operators, you know, even EV drivers. And fortunately, we are seeing adoption by all three of those customer segments, which for us is clearly all incremental to our Fleet Payment business. So, look, the goal again is to be a big – a major player in this EV transition and I do want to report you know we are officially out of the blocks.

Okay, so in closing, again, we finished 2022 pretty well, again, positive sales and retention trends, that obviously helps the setup for this year. ‘22 full year financial performance, you know, super good, 21% and 22% top and bottom line, you know, way ahead of the initial guide. Again, we’ve advanced last year a number of important beyond ideas that supports the future growth of the company. Our outlook for ‘23 we think positive. Outlooking double-digit revenue expectations, you know, improving operating margins and EBITDA, although our absolute profits for sure will be weighed down by the interest rate spike.

We do expect to clear our Russia and FTC overhang here in the first half. The same time we’re going to continue to stake out our position in the new EV world. Again, big opportunity for us. And lastly, our mid-term objectives remain intact. We want to grow cash EPS in the 15% to 20% range once we lap the 2023 interest expense headwinds.

So with that, let me turn the call back over to Alissa to provide a bit more detail on the quarter. Alissa?

Alissa Vickery

Thanks, Ron. First, the financial details. As mentioned, we posted 10% growth in revenue in the quarter, driven by 7% organic growth or $57 million, which I’ll delve into in a moment. The remaining percentages came from $20 million of macro tailwinds and $4 million from acquisitions made over the past year.

Organic revenue growth was negatively affected by the impact of one-off items not expected to repeat from the fourth quarter of 2021, including breakage, backlog to card orders, accounting true ups in the normal course and acquisition accruals. We expect 2023 organic revenue growth to meet our double-digit targets.

Corporate Payments’ average revenue growth was 20%, driven by continued strong new sales across both direct and cross border. Specifically, our Direct Corporate Payments business grew 27% and continues to demonstrate very robust growth. Cross-Border was up 24% another very good quarter, as new sales remained strong. Activity levels were robust across nearly all geographies, and we completed the full tech integration of AFEX into our Cross-Border platforms.

Lodging continued to perform well, up 14%. While we’ve largely lapped the airline COVID recovery benefit, the airline business was still up 38% in the quarter. The suite of services we’ve bought into this business substantially enlarged as the TAM and durability of our Lodging growth profile over the medium-term.

Fuel was up organically 2% with growth in International Fuel largely offset by softness in our US Micro SMB Customer segment. And by Micro, we mean companies with less than five vehicles. So the smallest of the small. The economic cost of higher fuel prices, inflation, and in the case of micro SMB trucking, lower spot rates have negatively affected their ability to manage expenses, including their fuel bills, which has resulted in higher bad debt.

We’ve also seen some negative mix shift among that micro trucking segment. As higher margin independent trucking volume is moving to lower margin volume as those drivers move to the larger contract carriers. This micro segment generated more than 75% of our US fuel bad debt losses in both the fourth quarter and full year 2022, fully filling the brunt of these economic headwinds.

Given the higher loss rates of the micro client segment that we are experiencing, we have significantly tightened credit approval standards in a purposefully targeted and narrow way. In order to get ahead of any further stress and this micro segment, the result was a drag on organic fuel growth in the quarter. We are taking a balanced approach to new customer demand gen activities, prioritizing customer segments and industries that are healthier to drive fuel growth in 2023. All while limiting our bad debt exposure.

We will continue to feel the residual effect of tighter credit and higher losses in that micro segment in the first half of 2023. But would expect to clear this overhang and return to normalized fuel growth rates in the back half of the year. This will likely cause 2023 fuel organic growth to be at the low end of our normal range.

Tolls was up 6% compared with last year, as the impact of strong new sales was masked by almost $5 million of non-recurring revenue in the fourth quarter of last year.

Toll sales were strong in the current quarter, recovering from software sales mid-year and helping offset some of the prior year one-time benefit impact. We expect tolls to return to its low-to-mid-teens growth rate in 2023. We’ve made great progress building out the Beyond Toll network and now have over 5,400 Beyond Toll locations, including 2,200 fueling stations, 2,300 parking lots, 750 drive thrus and 150 car washes that accept our tag.

As an additional service to our customers, we are a reseller of insurance from other companies to our more than 6 million tag holders in Brazil, for whom we have negotiated preferential pricing. This insurance offering is growing quite fast. We sold more than 38,000 insurance policies in the quarter. We also signed up Santander as a total distribution partner, which is the fifth largest bank in the country. All in all, we’re very bullish on the outlook for our Brazil business.

Gift organic growth in Q4 was down 11% over prior year Q4, as the current orders that pulled forward in the last few quarters, and in Q4 prior year did not repeat. Due to the lumpy nature of card orders between quarters, it is best to look at full year gift organic growth, which was 11% as the newer online card sales programs and the B2B program have improved the growth of that business.

Looking further down the income statement, operating expenses of $514 million represented an increase over prior Q4, primarily due to recent acquisitions, higher bad debt and volume-related increases. We did recognize $5 million in expense associated with reductions to staffing levels, and the termination of office space leases.

As we adjusted our expense base for the current challenging environment. We will continue to manage our expenses with a very close eye on our outlook. Bad debt expense was $41 million or 9 basis points, consistent with the third quarter 2022 level. I’ve already talked about what we’re doing to manage this, but suffice it to say, we’re very focused on it.

Moving below the line, interest expense was $74 million for the quarter, up 168% over the prior Q4 and $165 million for the full year up 45%. These increases were driven by higher reference rates on our floating rate debt, as well as incremental borrowings for share repurchases and acquisitions. Our effective tax rate for the quarter was 24.2% versus 25.6% last year, and lower than our guidance. The primary driver was the impact of a pandemic-related tax benefit election in Brazil realized for 2022 in the quarter.

Now turning to the balance sheet. We ended the quarter with over $1.4 billion an unrestricted cash and approximately $600 million available on our revolver. There was $5.7 billion outstanding on our credit facilities, and we had $1.3 billion borrowed on our securitization facility. As a reminder, earlier in the year, we upsized and extended our credit facility by approximately $500 million and extended the maturity through June 2027 at quite attractive rates.

As of December 30th, our leverage ratio was 2.8 times trailing 12-month adjusted EBITDA as calculated in accordance with our credit agreement. Our capital allocation was once again balanced in 2022. In the quarter, we repurchased roughly 600,000 shares at an average price of $188 per share. In total, we’ve repurchased about 6.2 million shares during 2022 for $1.4 billion.

Our guidance for share count for 2023 is 5 million shares lower than what we guided to a year ago. In total, we’ve bought back 11.7 million shares over the last two years. We still have over $1.2 billion authorized for future repurchases. In 2022, we spent $217 million on acquisitions and minority investments, excluding global reach on January 1st, 2023, solidifying our positions in EV, Corporate Payments and Lodging.

Now, let me share some thoughts on our Q1 outlook and our full year assumptions. Looking ahead, we’re expecting Q1 2023 revenue to be between $875 million and $890 million. And adjusted net income per share to be between $3.55 and $3.75. This is largely due to revenue seasonality for certain businesses, such as Fuel, Lodging and Tolls tend to have lighter first quarters due to weather and holidays. As such, the first quarter tends to be the lowest in terms of both revenue and profit for our company.

We have a bit of a preview for the first few weeks of the year and we are tracking to the guidance we are providing. Of note for the full year 2023, we anticipate managing bad debt flat to the 2022 levels, expecting it will be higher in the first half of the year and then improve into the second half. We expect 2023 net interest expense to be between $312 million and $332 million based on the forward curve as of February 1st, 2023, which implies reference rates will peak sometime during the third quarter of 2023.

As we disclosed in the earnings release, and you can see on Slides 21 and 22 of our supplement, we entered into a series of interest rate swap agreements to fix rates on approximately $1.5 billion of our floating rate debt. These spots will provide some relief on our 2023 rate, and helps limit the downside risk from further rising interest rates. The inverted forward rate curve enabled us to reduce 2023 interest expense by locking in lower future rates over a three-year period. With these new swaps along with our previous outstanding swaps, we now have fixed interest rates on a total of $2 billion of our variable rate debt for most of 2023.

Last week, we also entered into a euro cross-currency swap to benefit from the lower euro interest rates, with an implied interest savings of 1.96% on $500 million of notional debt. With these various swaps, we have now managed interest rate and FX risk on $2.5 billion or 47% of our debt, excluding the securitization. We believe these actions will help mitigate the risks associated with continued increasing interest rates in 2023. We estimate these swaps to reduce interest expense by approximately $35 million in 2023.

And finally, our tax rate in 2023 is expected to be slightly higher between 26% and 27%. As the continued benefit from the Brazil tax holiday is more than offset by higher tax rates in the UK. As the UK statutory tax rate increases from 19% to 25% in April of 2023. The rest of our assumptions can be found in our press release and supplement. As I complete my prepared remarks, I would like to extend our gratitude to our more than 10,000 employees around the world who helped us deliver such a strong finish to a great year, and who will be the driving force to even greater heights throughout ‘23.

Thank you for your interest in our company. And now operator, we’d like to open the line for questions.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question today will come from Sanjay Sakhrani with KBW. Please go ahead.

Sanjay Sakhrani

Thank you. Ron, you talked a little bit about this rising delinquencies among the micro SMEs. I’m just curious was that fairly contained inside of fuel or the fleet business? Or were there any other weakness – was there any other weakness among the SMEs? And I’m just curious if you think that this might be a leading indicator of more things to come. If you go up market, I know you guys haven’t assumed any additional macro pressures and such.

Ron Clarke

Yeah, it’s a good question, Sanjay. And yes is the short answer. The fuel business and really the US fuel business, because the terms and the way we collect money and bill internationally is fundamentally different. The terms we pull all the money, et cetera. So yeah, the only place that we’ve seen the micro and again, we’re talking super-duper small, mostly one and two card accounts and super-duper new on the books, again, a year or two, that portion of the overall sells about 75% of the credit losses.

So although the credit losses from that group are sizable, the amount of business from that group is not super sizable. So yeah, that’s the only place we’re seeing it. In fact, when we study the cohorts, you know, they’re a bit larger or more mature longer on the books. It’s super ratable with the trailing you know 12 months to 24 months. So it’s super-duper pocketed for some reason.

Sanjay Sakhrani

And you don’t think it’s a leading indicator or anything looking at historically.

Ron Clarke

Yeah, I mean, look you guys get this as good as mine. We’ve been talking about you know macro recession for six months now. And we study and look everywhere and we just don’t see it. We don’t see it in volumes. We don’t see it in sales. This is the one place where it showed up and it started, I don’t know call it maybe six months ago, kind of September, October, we saw the delinquency start to step up.

So, my personal view is that, you know, these are quasi consumer businesses. You know, and as the funds ran out, and as the savings got depleted, there’s just more pressure, you know, on these kinds of businesses than others. And so, which is what [inaudible], right. When we saw that we said, okay, you know you guys always ask me, hey, Corporate Payments faster so we get it up and go and move sales dollars and implementation dollars away from our tiny fuel business over there until we see how that plays out.

Sanjay Sakhrani

Okay, great. Just one quick follow-up for Alissa on, you know some of these impacts that happened to the growth rate in the fourth quarter. As I look across the different segments, you know, there’s been a lot of variability in the growth rate. I’m just curious, did that affect multiple lines, those items as one-off items?

Alissa Vickery

It did. I mean so we thought a decent amount in our Tolls business as well as a little bit in our Fuel business.

Ron Clarke

Those two.

Alissa Vickery

Yeah.

Sanjay Sakhrani

Okay, great. Thanks.

Alissa Vickery

And I would just add, you know, this is all normal course of business stuff, it just seemed to be a collection.

Ron Clarke

Yeah you want to point out Sanjay, it’s Ron again, that you know, we view it kind of this more of a bump than a trend. I did try to call out you know in the opening basically they were outlooking, this quarter we’re sitting in the thing back at 9 or 10. So really in our minds, it’s a comps’ issue, not a run rate issue.

Sanjay Sakhrani

Got it. All right. Thank you so much.

Ron Clarke

Yeah. Good to talk to you.

Operator

And our next question will come from Bob Napoli with William Blair. Please go ahead.

Bob Napoli

Thank you. Good afternoon. Appreciate the question. So I mean, your – Ron, the Corporate Payments business, you know, very strong, within that you talked about AP being the strong, but maybe just maybe a little more color on what the stronger areas were in the quarter. And did you see any deceleration significant deceleration in any areas? You know, a lot of what type of focus on the SMB market?

Ron Clarke

Yeah, hey, Bob, it’s good – always good to hear you and hear you’re doing well. So you know, we posted 20% organic for the quarter for the category. And that’s probably our number for ‘23. You haven’t asked me yet. But I say inside of our overall 10% we’re looking really about 20% now. So more than more than AP is.

So really inside of it, everything did well, except the channel a partner thing. You know, we’ve said it before, that some of the partners that go at this four or five years move some volume to other people to get different rates.

So that business has been flat and going backwards, which means the direct businesses are growing probably 25%. And it’s, I think you know the full AP, where we have every modality is the fastest growing, I think that particular line of business is probably up 40% to 50% in the quarter, and now we’ve started some software on the front end. So even our lead volume is up.

So I’d say, the whole business is doing well. Again, the Cross-Border sales were rock and I’m looking at the page in front of me they were up 60% the sales in Q4, we’ve honestly just eaten or the process of eating, you know, another piece of business which deepens us in the geography. And so, I’d say other than the partner thing, it’s firing literally on all cylinders.

Bob Napoli

Thank you. And then your investments in EV, appreciate your continued you know forward looking moves there, if you would. Can you give any more color? And we get this question a lot. I’m sure everybody else does is, you know, the economics as you have more experience you know, especially in Europe, I guess where you have – can you give any color on the economics of EV versus gas and your competence in that?

Ron Clarke

Yeah. Another super good question. So the best place for us to look really kind of the only place to look for us is the UK, right. We’ve got a big right commercial fleet business there and they’ve been out of the blocks pretty early. So we’ve got I think about 1,200 when I looked active clients that use both our, you know, traditional fueling and some amount of EV I think the average is about 50% penetration of the EV among those accounts.

What I know for sure is that the enterprise, the bigger accounts, the economics are super favorable to us as they move to EV. The reason is probably pretty obvious that you get less fees generally from big accounts right then and negotiate. But they need these new EV things and so the ability to get fees from enterprise customers. So the report that I looked at the sample, I don’t know 10 or 20 accounts it’s up something like 50% are revenues among the enterprise. I’m guessing that probably won’t be exactly the same story with a super small account.

So, we’ll agree to do. I told our guys just come back probably in 90 days and report out provide some actual data on this question, because it’s the million-dollar question right to the commercial fleet business is the stuff comes across, you know, are we indifferent based in the economics? I’d say early on, it looks like yes, we are. But more to follow.

Bob Napoli

Are EVs growing rapidly? And your –

Ron Clarke

You know not really. I mean, again, it’s the new sales are obviously right, the mix of every 100 new vehicles, the percent EV is growing, but the base is, you know, like in the United States, I think there’s I don’t know about 300 million registered vehicles, and the new car sales are $18 million a year. So half of them were EV, it’s 9 on 300.

So it’s super hard Bob to move the base is what I say, which is again, the other things, you know, is the EV adoption is happening more in consumer and lighter vehicles, right, versus like 18 wheelers, which is the other motivation for us to chase these, you know, EV car manufacturers and EV consumers, because there’s going to be way more of those in the coming years and there going to be, you know, heavy trucks on EV.

Bob Napoli

Thank you.

Operator

And our next question will come from Darrin Peller with Wolfe Research. Please go ahead.

Darrin Peller

Hey, guys, thanks. Ron, can we go back to the Corporate Payments segment for a minute again? Just because, you know, there’s obviously been a lot of data points in the industry around SMBs having some challenges and B2B activity being a little bit more, you know, having decelerated. You don’t seem like you’re seeing that as much. So, maybe a little color on what you are seeing in the marketplace?

And then more importantly, just medium-to-long-term. You know, that’s obviously an area that we’ve talked a lot about in terms of convergence of some of the assets to really offer a more holistic solution on the account payables side and combine that with payments, you know, whether it’s invoice pay, and some of the other assets you’ve acquired. How has that been progressing? Just maybe a little update there as well?

Ron Clarke

Yeah. Hey, Darrin, it’s a good question. So the good news for us is that, our Corporate Payments business is a middle market business. So our average, you know, account there would look like $200 million to $300 million in revenue for the clients. So you know, a decent you know sized company, you know, creditworthy kind of company. So I’d say 95% of our Corporate Payments business is what we all would call a middle market client.

So the SMB move that we made, whatever a year and a half ago was really trying to be upside that’s trying to extend kind of down market. So given what’s going on with some of our friends and as it’d be maybe we’re lucky we, you know, we haven’t made as much progress there. So that’s the headline, we’re seeing nothing, you know, volumes are up, spend is up as you can see in the numbers, the revenue is, again, if you kick out the partner piece is compounding at 25%. And we’re outlooking at same kind of number on the direct business, you know, here at ‘23.

On your second question, which is also a super good one is, we got all the stuff now I feel like it’s you know, making a Thanksgiving dinner is 8 million ingredients to come and get and all of a sudden, someday there’s a plate and there is that you know the six items on the plate. We’re kind of I don’t want to say, done, but close to done, we got all the stuff, we got smartcards, we got frontend AP automation software, we pay every modality, we got a global, you know, international payment capability, we got networks.

So we kind of have the stuff, Darrin to offer the whole package now to these middle market clients. And we’re getting more and more of the clients to buy both our smartcards and our AP stuff, because we’re in the CFL office. And as you know, we moved the branding so it makes more sense now, one company is coming in with a full line so I would say that it’s the marketing challenge in front of us. We got the stuff to have an integrated pack and now between the brand and educating sales guys in the market, I think we’re going to sell way more of the package stuff as we move forward here.

Darrin Peller

Okay, okay. Timing-wise, Ron, and then just I actually do have a quick follow-up for Alissa if that’s okay, on the revenue growth rate. Maybe I’ll just throw it in now, which is when we look at the cadence on revenue growth trends, I know there’s some seasonality to it. But, you know, again, you’re coming off of this 7% rate, obviously, there were those one-time items that you called out last year’s quarter. Just to make sure there’s no – do you see any other kind of impediments to that growth rate this year beyond macro in terms of one-time items that we have to grow over or anything else? Or is that – do you see that being pretty clean for a macro adjusted basis?

Alissa Vickery

Yeah, I mean, I would expect that short of the macro adjustments, we make always organic revenue growth, which neutralizes those items, that we wouldn’t expect anything meaningful. Other than as we’d perhaps call out in the same quarter prior year. So I would encourage you to look back at those notes. But no, I mean, I think that we, other than as we’ve spoken to the micro SMB customer segment, our fuel business. Yeah I think that’s going to be the only item to speak of.

Ron Clarke

You know, the guide there today, it’s Ron again. The guide is, you know, 10% and 12%, right, we’re guiding kind of 10% organic at the midpoint and add a couple of points for the role of the acquisition. So the print at 12%. That’s what we’re chasing. That’s the number.

Darrin Peller

Understood. Thanks, guys.

Ron Clarke

Good to talk to you.

Operator

And our next question will come from Tien-Tsin Huang with JP Morgan. Please go ahead.

Tien-Tsin Huang

Thank you so much. Good to chat. I wanted to ask on the margin outlook. I think you’d mentioned that 150 bps fund. So that’s like 90 days ago, you previewed 200 bps to 300 bps. So curious what’s changed in the last 90 days? Is it more about investing or changes in thinking around costs things like that or mix?

Ron Clarke

Yeah, good question, Tien-Tsin. So yeah, the plan that we’ve landed is, I guess, 150, full year and Q4 200. And the short answer is, we I just decided to spend more money on the acquired businesses. So if you look at our core OpEx, so kick out all the 22 acquisitions we did, it’s below 5%, I think it’s only 3% or 4%. But the pile of acquisitions, we’re spending another, I don’t know, $70 million or $80 million incremental, year-over-year.

And so a bunch of those are diluted things, they’re easy things, they’re, you know, one-time things to integrate like a Global Reach, their sales investments and stuff. And so that was the call. The call was really to make sure that we gave enough oxygen to the sets of new assets that we just got so that we can get a return on it.

And since we could kind of make all the numbers work, you know, we start with a design, we start with you know, what’s the goal and then work our way around it. So I felt like we kind of, you know, made the number we want kind of 10% and 12% on the top, you know, sales in the high teens, profit kind of where we guided to, EBITDA growth of 15%. So growing obviously, you know, operating earnings faster, so it kind of fit into the envelope, so we made the call to do it.

Tien-Tsin Huang

Got you. No, that’s the right investment to make. Then just as my quick follow-up then on the – your appetite to do deals. I know I always ask you this, Ron, but just from a deals perspective, how does the pipeline look? I know you have a lot going on, you’re spending more on the acquired assets including NAVs are more to do in the short run or can we see a little bit of a pause from a deal making standpoint?

Ron Clarke

Yeah, you certainly know as well, Tien-Tsin. We are never without some kind of pipeline so yeah, we had deals. I’d say there’s kind of in my mind a little bit of good and bad on the deal for I think the good is I really am seeing some reset on the valuation side, right. Prices have been down longer I think people that were waiting you know, have waited longer than I see in the bids people aren’t hitting the you know, the bids are looking for the answer looking for the bad is obviously the cost to capital. So it raises you know, your confidence and your thesis, right to pull the trigger to make sure we’re generating the right kind of returns.

So I’d say there’s you know, a little bit of tension between those. So, better maybe valuation outlook but a bit higher cost to capital. So, but look we’ve always as you know have not been a financial buyer of things where we just buy it and absorb it. We’ve always had some view of how to double profits.

So again, we have, you know, things in the pipeline that we like that we think we can make returns on and if we can, we will. We’ll trigger off. I’d say we’re probably back to capital allocation you know, less excited about buybacks sitting here again given the, you know the cost to capital the [appreciatively] [ph] short-term maybe long-term is okay, but short-term isn’t quite as attractive.

And de-levering, frankly, is a bit crazy, more attractive, you know, given the spreads are wider right between deposit rates and borrowing rates. So I’d say that the kind of some of these changes is affecting a bit how we’re thinking about was a $1.3 billion, Alissa? $1.3 billion is the plan, Tien-Tsin. So, I’d say my first and foremost is always deals that we can make go, make returns on.

Tien-Tsin Huang

Okay. It is clear. Grateful for your thoughts.

Operator

And our next question will come from Ramsey El-Assal with Barclays. Please go ahead.

Ramsey El-Assal

Thanks so much for taking my question. I wanted to follow-up on your response to Darrin’s question earlier about having all the ingredients in place within Corporate Payments to kind of you know realize that sort of power. My question is actually broader across the entire enterprise, and maybe all the segments within the segments. Are you now kind of organizationally technologically well positioned for cross selling? Or are there still initiatives and capabilities and linkages that need to be made in order to kind of unlock the synergy potential in the broader enterprise?

Ron Clarke

Yeah. Hey, Ramsey, it’s Ron. It’s a super-duper. A good question, I’d say we’re out ahead on the synergy and relatedness in Corporate Payments, and the primary reason is, it’s a middle market business. So whenever you go to a client, that’s got $200 million to $300 million of revenue, it has more needs, right.

It does more things, obviously, it’s got a lot of AP, right if it’s got $200 million to $300 million of revenue, it’s obviously got a lot of employees probably running around, you know, in vehicles. And so, you’ll see us selling fleet cards, for example to our Corporate Payments clients. And fuel runs 10% to 12% of all the spend volume among our middle market corporate payment clients, which I guess you know, wouldn’t be shocking.

So in that area, I would say for sure, there will be a broad package of services that will all be sold into the same client. As you move into the SMB thing, I think we’re going to move organizationally towards a more integrated model like you’re saying, because the tech I think frankly is ahead of our org. And so we’re looking at starting to consolidate the vehicle-related purchases.

So if you’re sitting in a car, and you buy fuel or you recharge on EV or you pay for a toll, when you go into a parking spot, whatever, all of those, even 92% of our Lodging clients drive a company vehicle, you know, the tree cutting truck to the to the actual hotel. So we’re in the business, mostly of vehicles, company vehicles running around and us helping make the payments.

And so though, it’s a way more super-related thing than what we’ve talked about before as though they’re discrete things. And so, you’ll see us start to move organizationally, more to looking at that set of solutions as vehicle, you know, related payments, and then the Corporate Payments again, as the thing for the middle market.

Ramsey El-Assal

That was super helpful. It makes a ton of sense. A quick follow-up for me. I think on the 2023 guidance, you were able to call out in the course of the call a segment-specific expectations for Corporate Payments. And I think Alissa mentioned something for tolls and fuel. Would you mind rounding that out and just giving us your expectations for Lodging and if applicable gifts for the year so we for sort of modeling purposes?

Ron Clarke

Yeah, sure. So again, it’s that the midpoint would be 10. Overall, so fleet kind of mid-single, but weaker first half, stronger second half. Lodging in Brazil, mid-teens, maybe a smidge below 50 and a smidge above and Corporate Payments, even with the channel and I’m going to give another probably 20 you know, maybe north of 20 and obviously way north of 20 if you kick out the channel.

So that’s the mix that rounds to 10. And again, you guys have heard this before, you know, we’re super thoughtful on the design when we saw the super micro segment weaken we just literally reallocated I just said okay, I’m going to pour in terms of marketing and sales investment more into the middle market. You know, that Darrin brought up earlier that has you know, not many, certainly not as many macro kind of risks and basically just kind of, you know, tread water a little bit until we see more about how this you know micro and SMB segment plays out this year. So we’re kind of de-risking the plan a bit, I tell you.

Ramsey El-Assal

Fantastic. Thanks, Ron. Appreciate it.

Operator

And our next question will come from Sheriq Sumar with Evercore ISI. Please go ahead.

Sheriq Sumar

Hey, thanks a lot for taking my question. I have a question on the 2023 outlook, especially on the share count, it says $75 million for the full year. Does that assume any sort of buybacks throughout the year? Or it does not? And if it does not, then would there be more upside to the EPS assuming that you accelerate the buyback throughout the year?

Alissa Vickery

Hey, Sheriq it’s Alissa. That’s a good question. You know on share count, I’ll first say in our guidance, we never include the impact of potential buyback, because we see it similar to our capital allocation decision like acquisition or divestiture, we’re going to hold those decisions until they make sense. And so we do not build that into guidance.

And then I guess in terms of the share count, as we run in, the number you see that we presented in our assumptions is consistent with what we expect for the rest of the year.

Ron Clarke

Yeah what we printed for Q3 and Q4, right.

Alissa Vickery

Yeah. And fairly aligned with where you saw us coming out of Q3 and what you can now see in the Q4 number.

Ron Clarke

Yeah, Sheriq it’s Ron. Our default is always just de-levering, right. We plan to generate $1.3 billion of free cash flow in our models assume that we just you know reduce debt you know as we run through the year, and then to the extent that we take money to do a buyback in Q2, we’ll update the guidance to reflect that different use of capital.

Sheriq Sumar

Understood. Thank you so much.

Operator

And our next question will come from Jeff Cantwell with Wells Fargo. Please go ahead.

Jeff Cantwell

Hey, thanks and congrats on the results. Ron you know this is a follow-up on Darrin’s question earlier. In your prepared remarks, you said that in 2022, you added an AP automation software front end to your whole you know, AP execution business. And we all know what that is – what you’ve been doing there.

So my question is you know, what does that mean that your execution there on the front end going forward would impact others that you’ve been partnering with over the years in any way? Does that mean that you’re trying to capture those volumes on the front end? Can you just help us understand the strategy there and how to think about that going forward? Thanks.

Ron Clarke

Jeff, I’m not [inaudible] while picking up the questions. Can you just rephrase it for me?

Jeff Cantwell

Yeah, so we’ve been you know watching what you did, Ron, and, of course, A. And we know that you have Comdata as well. So we’re trying to figure out if there’s some you know competitive angle to what you’re doing on the front end, as you start to bring that into you know the picture with how you’re going to market with SMBs?

Ron Clarke

Okay. Yeah, that there’s clearly a competitive angle. I think you know, historically, AP, standalone AP automation software companies sold AP automation software, knock-knock, I’ve got software that simplifies your processes, you know, automates approvals, digitize and stuff, so you don’t lose it, hey, that’s what we do. And then knock-knock a bank said, hi, I can help you actually execute you know electronic payments for you or Cross-Border Payments.

And so you know the idea we’ve been at a long time is, let’s do both, which we’ve connected them already, obviously. So hey, knock-knock, we can help you, you know make the process work better in your company and save you time and reduce risk and B will pay you know all the different ways every modality will execute it all, you don’t need to call your bank or FX specialist or your printing company to print out paper checks we’ll do the whole thing.

So we think that it’s a huge advantage to have that package to provide you know more value to clients and it’s seemingly early on generates more leads, because historically people have been interested you know on both sides of that thing, and I think you know, we’re not the biggest we got to be one of the biggest non-bank you know a full AP payers already. So I think it is a pretty big advantage for us going forward.

Jeff Cantwell

Got it. Okay, great. And just one of the follow-up. Just found an unboxed question earlier you know on EV. And you know, I guess the question that is, just the payment for you is, you know, you’re a $16 billion market cap company and you’re generating the ratio of $3.8 billion of an annual revenue is coming here.

So can you just remind us – can you cite that revenue opportunity present in EV got, you know, two, three, five years out. We’re obviously trying to pick up this substitution effect, and you know, incremental revenue impacts, et cetera, et cetera. So how would you frame that as we think about our models? Thanks.

Ron Clarke

Yeah, that’s another super good question. So first off, it’s obviously a long time out. But the first thing I’d say is, you know on the defensive side, so on the commercial fleet side, the opportunities, the size of our whole business, right, if you went 40 years into the future, and we’ve got a what a $1.5 billion revenue, global fleet business, the hope is, we replace the business 50 years so that everything was easy, we’d have a $1.5 billion business plus however we’d grow between now and then.

But for us, I think the bigger opportunity it’s nearer in, is this consumer lighter vehicle thing that we’re going to get to through the EV carmakers, and through the new gas station operators that are called, you know, charge-point operators. So the big part of our strategy that we’re spending money on is going offensive and chasing two new segments that are any part of our business, excuse me, today that we think are going to show up sooner, because the vehicles work better, right, the light vehicles.

So that’s, I mean, again it’s just a function of adoption. That’s a massive, obviously, right. It’s every, right, every vehicle is not a commercial fleet, you’re into there in terms of the TAM. So it’s a massive, massive business. And I think I said repeatedly, our strategy and the thing is to be the network guy.

You know, our company is built on proprietary networks that have unique data that we pick up and then the volume that we have, that creates better economics. And our idea is the same. We’re going to put together EV acceptance networks where we collect data that’s interesting to clients like what kind of charges are there, is the charger open out if I drive there.

And we think that providing that in some simple way is going to be you know super interesting. And we got five or 10 already big EV carmakers using our software in our network to try to reduce you know charge anxiety, right of new buyers. So it’s massive. The question is just when, how long, right before either side, either the commercial side or the consumer side you know gets big.

Jeff Cantwell

Okay, great. That’s super helpful. Thanks so much. And congrats again.

Ron Clarke

Thank you.

[Technical difficulty]

Ron Clarke

Hey, Pete. Can you hear us? Yeah, Pete, we can hear you.

Peter Christiansen

Okay. Sorry about that. I didn’t hear the intro. Hey, thanks for the question. I appreciate that. It’s a clean up here. I just want to dig into the fuel card business a little bit, you know, given some of the pockets of weakness that you called out on the credit side, Ron, are you going to sell any differently in 23s? How are you augmenting your sales strategy there? And then as a follow-up on the partner side of the fuel card business, just wondering if you could shed any color on like RFP activity? Or if there’s any major contract renewals coming up? Any help would be great there. Thanks.

Ron Clarke

You got to tell. So on the first part of the question, hey, what do we do in for selling in 2023? The answer is, yes. There’ll be some different things. So the first thing we’ve done, which we’re about 90 days into is, we’re repointing our digital machine and algorithm to larger accounts.

So the guy that runs our digital sales business, tweaked the models effectively to point at what I would call a larger and more creditworthy accounts. So you’ll see that for sure our sales, size of new accounts will go up starting here in Q1 versus Q4. So that’s point one, will modify the targeting of our digital engine.

And then number two is. I’ve moved dollars, we’ve reallocated dollars into the Corporate Payments business. So I just said okay, I’m not going to grow sales investment or sales as much in a space that has potentially more macro risk, we’re going to earmark it at least here in 2023. And in the middle market that we have, you know, there’s more stability, if you will, in the macro.

So those are really the two things we’re doing selling-wise. And again, it’s pretty small, but the pile of bad debt, this micro super-duper, new thing, but it’s not big, per se, right against the total business, right, the total revenue. So that’s a fair point.

On the second one, there’s not much I’d say, it’s pretty quiet us and the other people to play the game have a lot of long-term contracts, both here and in Europe. So there’s really nothing on the radar, I’d say significant that we’re looking at in 2023.

Peter Christiansen

Yeah. Thank you, gentlemen.

Operator

And our next question will come from Nik Cremo with Credit Suisse. Please go ahead.

Nik Cremo

Hey, good afternoon. Thanks for taking my question. I just wanted to touch back on the Fuel segment first. How did the same-store sales come in across the various parts of that business in the quarter? And just looking to 2023, what parts of your business gives you confidence? The segment can reaccelerate in the back half, given the deceleration we’ve seen in the last few quarters? Thanks.

Alissa Vickery

Yeah, so hey, Nick, it’s Alissa. It’s a good question. I’ll make sure I got all your question. I think you’re asking what is – how the same-store sales look, and how are we outlooking?

Ron Clarke

How would you get to the reacceleration?

Alissa Vickery

Okay. So again so for same-store sales, I would say you know, we always say that same-store sales short of a massive, easy comp is usually in the minus 1 to plus 1 range. And I would say that yeah we did see it soften just a little bit more than that in the fourth quarter to minus 2. But as we look into reacceleration, it really is a re-tweaking the engine as we head into ‘23 repointing that digital engine to higher credit quality customers, and then just refocusing the entire sales engine across the board to target those healthier customer bases in segments.

Ron Clarke

Yeah, let me make sure, Nik, you’re clear that you know, we pull this trigger, like we’re super conscious that the health of the super-duper small accounts was deteriorating. So we said okay, let’s stop selling to them. So stop, and then repoint the thing and then second, because their delinquency was up, it creates more involuntary attrition, so a great volume softness too, so basically both of those things happen, right.

You – we’re not going to keep the spigot open. We’re tightening terms if you look, you know, shaky. And so we did it to make sure that a small little tiny part of our business didn’t turn into a bigger problem. So we went right with our eyes wide open doing this thing.

And so the answer is, we’ve been for 90 days, repointing the thing to bigger fuel accounts and then moving money to the mid-market. So we’re happy where there’s nothing wrong. We’re not worried about the thing. Again, our plans to have more of in the second half. I think that it’s 5%. It’ll be 2% and 7% or something, right first half, second half. But I want you to hear it, we made the decisions to do both of these things for cautionary reasons and not going to run over later.

Nik Cremo

Understood. Thanks for all the incremental stuff.

Ron Clarke

You got it.

Operator

And our next question will come from Andrew Jeffrey with Truist Securities. Please go ahead.

Unidentified Company Participant

Hey, guys. Thanks for taking the question. This is [Julian] [ph] on for Andrew. So I have a quick modeling one and then kind of more general one. So is the Lodging business, like normalized growth rates, how we think about that like 18% to 20%? Is that the right way to think about that?

Ron Clarke

15% to 20%. 15% to 20%.

Unidentified Company Participant

15% to 20%. Okay, got it. Thank you very much. And then you know I know you said that you’re off the block on EV. Obviously airline did really well, this quarter 38% up. Is there anything there kind of maybe I know that you had an in-house prior option. Any updates there? Like is that something in the pipeline in terms of deals that you’re seeing? Like, are you looking to expand there? Kind of elaborate on that a little bit.

Ron Clarke

Yeah, just really a couple of comments, I think on the airline growth. So one of it is just you know, continued recovery, right. Airline was super down. So I think there’s still some you know long tail COVID recovery and still sitting here today we still got in Asia back, there’s still more to come if the Asia you know volume picks back up.

But I think the new things that we’ve done it, we bought a company a year ago that is really working. Like I mentioned, we, you know, one a couple of accounts that we had where we put this app in the speed, you know, distress people right to their hotels, instead of queuing up at the line. Well, now we’ve added, we sold the first contract, which you’ll see in the forward numbers for basically rebooking simultaneously with the logic.

So your plain gets canceled, you know, here in Atlanta tonight. First, you got to find a place to sleep. And then you got to figure out how to go well, let’s say you’re on, you know, Air Canada, and it doesn’t have any flights or any flights available. Our tech basically looks and books you on other airlines literally as you’re walking off the plane, you’re getting to hotel and getting rebooked.

So the customer sat that the airlines are getting from having less unhappy people when they get off a plane. I think this is going to become table stakes for the couple airlines see the couple that are picking this thing from us early, that this thing we could literally run the table on this. So, this is an example of bringing kind of syntactic kind of an old-fashioned problem and it’s working.

Unidentified Company Participant

Got it, thank you. I now want to sneak one more in. Can you talk maybe a little bit about your digital marketing? How that’s coming along? Maybe any recent examples that’s there?

Ron Clarke

Yeah I mean other than the micro thing, I think the answer is, it’s representing obviously, in every business, a larger and larger piece, for example, Lodging, which we just talked about, I think it’s up now about 15% of the sales in that line of business, it was probably 5% two or three years ago, is taking a way bigger chunk of the marketing leads, we used to do old-fashioned, you know, trade shows for middle markets and things like that.

So I’d say that not only are digital sales that we close on, you know, compounding a good rate. But I think the lead sources from digital are also way up. Again, a lot of this is the world, right, we’re just chasing along with the world making sure that we’re in the right places.

Unidentified Company Participant

Got it. Thank you very much.

Operator

And our next question will come from Trevor Williams with Jefferies. Please go ahead.

Trevor Williams

Great, thanks. Good afternoon, I guess with Global Reach now closed, just wanted to see if you can give us an update on the revenue mix within Corporate Payments between FX, Cross-Border, virtual card, full AP, and then within the 20% growth outlook for the year just any sense for which of those buckets you expect to be the primary contributors I know this is a really good FX year with elevated currency vol, so just kind of how you’re thinking of the moving pieces within the segment for ‘23? Thanks.

Jim Eglseder

Yeah, Trevor. This is Jim. I mean the best way to think about it you know that Cross-Border is probably going to be closer to 65% now I call it 25% direct and then 10% – 60? Yeah, so all in Cross-Border 60 about corporate payments is 40%. So they’re going to move around a little bit.

Ron Clarke

I mean, your question is a good one, Trevor in terms of the growth thing having you know, markets that are pacing interest rate moves differently, right like Brazil cut out super early and then I guess we, the US cut out and now Europe is chasing so having you know different timing and differential the rates obviously you know, creates FX volatility. So that obviously is helpful run in here into the beginning of ‘23.

Trevor Williams

Okay, and then –

Ron Clarke

But all the reasons are working, right to get to an aggregate number we’re giving you hey look, we’re looking at just a year from today 20% revenue growth organic plus obviously the print would be way higher because we’re adding the deal. Clearly almost everything for a recipe working I’m telling you that the channel which is a pretty small piece less than 10% probably has gone backwards so everything else has got to be somewhere in the low-to-mid 20s to get the entire thing to be 20%.

So I don’t want to sound too cocky on it, but kind of it’s like all working. We’re just selling a lot. Retention is super great you know with those types of businesses. Obviously spend is growing in the middle market, right that’s small companies fault or obviously bigger companies to be like in trucking and other areas are picking it up.

So I think the message to you guys is, and our product line is better and more complete. I just think that this business is kind of coming into – it really coming into its own now for us. And it’s big finally, right. It’s going to surpass $1 billion. And it was I don’t know what it was, but $1 billion a few years ago. So it’s become a sizable thing now for the company.

Trevor Williams

Yeah, that’s great. And just one more on corporate pay. Corpay One I think last year, you know any update you can give us? There I think last year, you were talking about taking more of a measured approach with some of the migrations, but just any update on progress there or overall strategic thinking on your plan for it for the next couple of years and the cross sell opportunity? Thanks.

Ron Clarke

Yeah, so that one is really still a work-in-process, because the core business is middle market. It’ll say this is a core but there’s a pretty small part. And so when we took a swing and miss at the cross sell, I did, we did not a super smart thing. We’ve really said okay, how do we get the product to be right for the scene?

And how do we get the distribution to be right for the scene so what we’ve concluded is, we’re not going to chase super-duper small accounts that don’t have much AP you know that are at the very bottom and so we’re really kind of retooling the product and distribution to be up market a bit, so still below middle market, but kind of off of the floor and particularly given you know, what we’re seeing and hearing in the marketplace that seems like the right call who have rushed into like you know, super micro kind of AP accounts. So we’ll report wise it hasn’t been our biggest priority since we did this way of the mess you know on the cross sell but we are continuing to work it.

Trevor Williams

Okay, got it. Thank you.

Operator

And we’ve reached the allotted time for questions today. So we’d like to thank you for attending today’s presentation. This will conclude the question-and-answer session You may now disconnect your lines at this time.