Corpay, Inc. (CPAY) Earnings Call Transcript & Summary

Hello, this is Tien-Tsin Huang. I'm the Payments, Processing & IT Services Analyst at JPMorgan, and have already broken a [indiscernible] in the chime here as we get going. But thanks, everybody, for joining. We've got FLEETCOR back with us at the All Stars Conference, and Charles Freund, the CFO, is grateful enough to spend 40, 45 minutes with us to do a fireside chat. I've gathered some questions from the investor audience. We'll take questions from the portal as well from the ask a question portal, so feel free to ask there, and we'll wrap this up [ quarter until ] at the end of the hour. So Charles, great to see you. I appreciate you doing this.

Happy to be here, Tien-Tsin.

So it's always good to see you, and I know your time is valuable. So I thought, just sequentially, we asked first on the macro and then dig in a little bit deeper from there. So the obligatory macro question, just to start with that, how healthy are your customers? Where do you see the recovery today? Any big surprises, especially when you start to compare the business back to pre-pandemic levels in 2019?

Sure. So in terms of health of the customers, a couple of ways to look at that. So one is retention, right, customers and our bad debt. So retention is running really high, bad debt is running really low. So customers are staying with us, and they're not going out of business. But to your point, their volumes aren't quite where they were back in 2019. And I'd say, if I was to ballpark a percentage, it'd probably be around maybe 70% on the way back. We continue to see softness, though, in a couple of areas. One would be, say, travel, particularly international travel, where the pandemic has held that back. On the flip side, we've seen really good domestic travel recovery. But again, international is still pretty soft. The other area we're seeing softness is around white-collar workers. So a lot of offices -- take this conference as an example, but offices and such. The white-collar folks aren't coming back yet. A lot of people still working from home. And that affects our commuter business in Brazil. It also affects our fuel card business, also in Europe, where you have more white-collar drivers. And then on the -- more the blue-collar side, what we're seeing is, is labor shortage, particularly in the U.S., has also created a bit of an overhang in the trucking market, and that affects, obviously, our fuel card business as well as our workforce lodging business. So a couple of things there that we're watching, obviously, the labor market, looking to see how things shape up once the stimulus and the boost up from the government goes away, watching airline bookings, et cetera, to see what comes back. So overall, I'd say the customers are healthy, but they're just not as active as they were. And so we're positioned well for further recovery as we go forward.

Yes. So you mentioned a couple of the macro indicators. I get this question a lot, Charles. Just how is FLEETCOR positioned for a recovery? It seems like there's a little bit of lag with some of the items that you mentioned there. But generally speaking, how do you feel about -- when can FLEETCOR get back to pre-pandemic levels plus, for example, in 2022? And why or why not?

Yes. I'd say our midterm growth model is certainly intact with sales and retention being strong in the near term, so I would call 2022 more near term. We'll probably see a bit more higher level of growth because we're coming off of still some soft comps in the beginning of this year. So you can even see in our sequential performance, how things are starting to recover and ramp, that will carry over to next year as will record sales this year. That also throws volume into next year's revenue. So I would say that well positioned for the, call it, short term, next year or so. And then our long-term model remains intact, circa 10% plus on the top line and 15% to 20% on the bottom line, using both organic growth and some capital allocation.

Yes. Always attractive targets for FLEETCOR. That's what we've grown to love. So let's talk about new sales, right. That was running positive last quarter versus 2019. I know there's a lot of digital that you introduced into the selling motion for FLEETCOR, which is really encouraging. Is that here to stay? Does that lower the cost of doing business for FLEETCOR? And what's selling well from a new sales perspective, Charles?

Sure. So as you mentioned, digital, this is a thing we've been focused on for several years now, putting in kind of the plumbing and the infrastructure, and we've now really turned on the faucet, so to speak. And so when we say digital, a lot of this is focused on small business marketing and it's more top of funnel advertising as opposed to just trying to sell. We're actually trying to introduce you to the product category and warm you up in a different way. And what that does is it basically drives more and more traffic to our websites, it creates more engagement and then more conversions. The great news about this, Tien-Tsin, is as we put more money in, let's say, I put x percent more in, I'm seeing x percent more traffic. So that's translating quite well. And that x percent more traffic is turning into x percent more sales. And so the conversion rates all the way through the funnel from traffic, all the way to the end sale is staying consistent. And so what that means is, at least for now, based on what we've seen is it's immediately scalable. I put more money in, I get more sales out the back end at the same kind of level of return. And why that's so exciting for us is we can ramp sales more quickly than, say, going out and hiring the next 50 field sales representatives and having to train them and retain them and such. So we love that as a lever to increase sales pretty rapidly. The other thing that gets us quite excited about it is as we are moving down market with our corporate payments products through the acquisition of Roger that we've now rebranded as Corpay One. We're looking to leverage this entire digital infrastructure, right, all the technology, the process, all the learnings, ad placements, et cetera, to reach that same small business customer base or prospect base, but with now a corporate payments type offering. And so again, really excited about what this channel can do for FLEETCOR in that down market space.

Yes. No, that's a huge advantage, and it's great to hear you talk about the scalability side of it. So the new sales engine is working. It sounds like, and potentially, you found another gear with the digital, as you mentioned. And you mentioned also retention being very, very high. I'm curious if that level is sustainable, if you're doing something different there, or if businesses get back to more normal operations, maybe switching goes up, what you're thinking on sustainability on retention?

Yes. I'd say one thing about retention is on our business, we look at it by all the business. We report it as a company as a whole, but we're looking at it across all the businesses. And the great news is all the businesses are doing better. So across the board, retention is looking better. Some of that is due to depressed sales from last year. So as you stick with the business longer and build your tenure and you get more and more comfortable in using the product, you tend to stay longer. So attrition tends to be higher with shorter tenured customers. So because sales were depressed last year, I'm getting a bit of a benefit from that, no lie. However, mix does help. And so as I continue to sell more and more, particularly in our corporate payments area with full AP, the retention rates on those products tend to be better than some of the other products that we offer. And so corporate payments are a bit stickier. And as I then cross-sell a corporate payment solution to my small business customer base, I also expect that that to get stickier over time. And so I've got kind of a mix benefit that may offset some of the retention hit that I might take when sales come roaring back as they are. But we measure that retention after that you've been with us for a year. And so we'll see what that impact looks like in the months ahead. But overall, I'd say, I feel good about where we're at. And because of some of the strategic things that we're doing, where we're placing our bets, what we're selling to whom, I think we have a good chance of sustaining those levels.

Okay. No, that's great. So better retention, better sales. Those are all important KPIs for any company. And of course, for FLEETCOR as you put a little more fuel into the growth. So I guess I have to ask if you don't mind. I know you can't say much, Charles, on the FTC suit. We do get some questions here. And so I thought maybe a good chance to ask. It doesn't seem to be impacting the business with sales and retention being better. But what else can you tell us maybe about the FTC suit beyond what's in the filings on the time table, what have you? Just to get the question out of the way?

Sure. So this has been ongoing for some time. There's been some recent headlines that were put out. And so I would love to clarify what that's about. But as you mentioned, there's been no impact on the business, right. We're retaining plenty of customers. We're selling lots of customers, and I think that kind of speaks for itself. In terms of the process, there was a recent Supreme Court case called AMG, which took away the agency's ability to recoup monetary damages in cases such as this when filing under specific statutes of the FTC Act. And so what the agency has done and what you saw in the news, and even in their own press release is, they basically changed the venue and are filing the exact same suit, but just under a different statute of the FTC Act. And under that statute, which has a slightly higher bar in terms of what they have to hurdle in order to prove that the damages are warranted. But nonetheless, they could potentially recoup damage of monetary damages there. And so we have both filed motions with the federal judge where the case currently sits and provided that, and we're just awaiting her to say. And so she'll decide whether she allows that change to move or she decides that we're going to keep things [ here at Mycor ]. Things have moved at a federal court before. So this could go on. However, I'd say, based on what we understand, generally doesn't happen when you're this far along. Right? So having had discovery and everything else done, generally, it wouldn't happen at this time. So we expect the judge to return with her decision in the next several weeks. And then depending on what decision is made, we'll have a better sense as to timing. But it does look like it will probably stretch out into next year.

Got it. Thanks for that update. So let's go back to the business, if you don't mind. Just on the corporate payment side, that's a very hot topic across fintech and new payments right now. As you know, Charles, so -- and we're watching very closely what you do. And of course, I think you talked about it last time, but I wanted to ask it again, just the whole rebranding of corporate payments to Corpay and then unifying the 4 brands, if you will. What does that do? And maybe help us differentiate Corpay versus some of the other point solution players that are out there?

Yes. So in terms of rebranding for context for folks, a lot of our corporate payments assets are fairly new, came through acquisitions. So we had multiple brands, Comdata for virtual cards and multi-card products, Nvoicepay for AP automation to the mid-market, Roger, which was AP automation to small businesses, and Cambridge, which is cross-border payments, and our recent acquisition of AFEX, also in the cross-border payments space. And so you had multiple brands marketing to similar prospects, mid-market CFOs, as of AP, whatever it might be. And so what we thought at first is just to leverage our advertising, digital marketing. So instead of one, promoting multiple brands and supporting those brands and having 4 different conversations with potentially the same prospect, right, now we can have one broader conversation. And this does, Tien-Tsin, lead to kind of more of our digital marketing strategy. On the small business side, it's been pretty effective as we've talked about already. We're now bringing some of that up market. It's different. It requires more account-based marketing techniques and slightly different technology, but a lot of the process and the concepts are similar. So now I can have a digital conversation, engage you on multiple platforms, and have a broad conversation about your payment needs and then decide, do you want a bundled solution? Or do you still want point solutions? And the beautiful thing is I can provide it either which way you like. So we're looking to leverage and create more efficiency and effectiveness with that marketing and advertising. It's also been helpful from a sales force and even internal company culture. We feel like we're all part of the same team. We're all kind of sending the similar messages, which should allow for easier cross-selling and bundled selling to the base.

I mean owning the payment side with the VC piece, in addition doing the AP is unique, right, in the sense that you can do that and also you partnered with a lot of different providers there as well. So maybe we can talk about that. I don't want -- I don't know if it's called orchestration or how that works. But generally speaking, when you think about that AP automation piece, how do you benchmark growth? What's the right place for us to look at and think about how fast that can grow in short term and longer term, Charles?

Yes. I mean as you know, the TAM, the opportunity in that space is tremendous, right. You've got a bunch of people chasing it. But for now, it's all a green space. We're all going after the same thing. But it's all clinical emerging territory, so to speak, which is good. So we're all out, we're growing. Some of us are stronger in certain categories, industry verticals, as an example. But as you mentioned, there's so much space out there. We partner with other AP automation firms to provide them the back end capabilities with virtual cards and cross-border functionality, so that we can all monetize the spend that we're automating. In terms of growth rates and such, it's a function of sales investment, right. And so for us, we like to grow at a good rate, but also create sustainable profit growth on the bottom line. Others play the game a little differently, but all is worried about profits. And so we try to balance that in terms of how fast we invest and grow our sales force, et cetera. In terms of how fast could it grow, again, a function of investment, but we like to think of that business in a low-20s type of environment, try to create the right kind of incentives and investment levels in order to create that trajectory.

Yes. I think we sometimes forget, right. FLEETCOR, at least in our coverage, third highest margin in the whole group relative to VISA and Mastercard. So to grow at that level and produce that kind of cash, I think, sometimes it is underappreciated.

Thank you for saying that.

We've seen some consolidation. We saw Global Payments acquire MineralTree. That was talked about quite a bit at Investor Day. They have some attributes, and some of yours and some of that are different. But is the landscape evolving, Charles, in such a way that maybe the sense of urgency to do something different, it's different now? Or how do you feel about the assets that you have today in the corporate payment side?

Yes. I think we feel quite good. So to your point, we are differentiated from many in terms that we have the front end capabilities, super monitor stuff with Nvoicepay and Roger. We have super stable, scaled back end capabilities with virtual card and FX, both in terms of vendor databases and cross-border networks. We also have the capability of bundling our solutions with our card products. So we have a lot of capabilities, more than many. So we like that in terms of a competitive advantage. In terms of what else do we need or might want, there are elements of the payments value chain that we're looking at to maybe enter into. So what do you mean by that, Charles? There's a payment at the end, there's invoice tracking and workflow that goes before the payment. There's invoice capture and automation before you even get into the workflow. There could be things around procurement and other things on the front end of a buying solution, which we're not really involved in, in the mid-market. And I'd say that's something that we could look at to fill out our portfolio. But for now, we feel quite good about how -- where we are, how we compete. Our ERP integrations, again, focused in the mid-market on certain verticals, also help create the ecosystem to allow us to monetize spend that some others might not be able to do, which also leads to better vendor enrollment. Right. So if I have a lot of companies in one industry, I've integrated with a lot of ERPs in that industry, I have a lot of vendors within that serve -- that industry, that ecosystem really helps sales, retention, et cetera, and monetization. So we feel pretty strong about where we are in the mid-market, and we're beyond excited at what we think we can do down market with the Corpay One solution.

Good. No, thanks for going through that. So I know on the M&A side, you've acquired some assets there. I think I've heard you and Ron say, it's sort of the more of the classic kind of acquisitions that FLEETCOR does where you generate a lot of accretion. I think I've written down that AFEX and ALE will do over $0.50 in accretion. So quickly, how do you get there in terms of finding these kind of assets? And what's the model or the math to get to that level of accretion? And could we see more? We need to do it differently here to get that confidence around doing the M&A.

Sure. So AFEX, let me start with AFEX, which is the cross-border business, looks very similar to a business we bought a couple of years ago, called Cambridge, serving mostly mid-market companies and in a similar geographic footprint, but where Cambridge was strong in the U.S. and Canada, that operations in Europe and Australia, is the flip for AFEX. So they're stronger in Europe and Australia and less selling Canada and the U.S. And so because they look alike, you have a lot of redundant operations, redundant systems, et cetera. So lots of costs to be taken out. But we're going to retain most of the -- at least the productive salespeople. And so you get all that added distribution and capability, while taking out all the back office costs, and that leads to terrific types of accretion levels. The AFEX footprint also brought us into a couple of new geographies, Ireland, Singapore and the Philippines. So we are picking up a little bit more issuing capability there as well. In terms of ALE, this is a deal that just closed a couple of weeks ago. ALE brought our lodging business into the insurance space, where we help displaced policyholders find temporary lodging, while their homes are being rebuilt after a catastrophe like a house fire or a natural disaster like Hurricane Ida. And so FIS, again, good overlap, networks, adds a bit to our network in terms of more longer stay types of properties because these families can be displaced for longer, but it's a similar type of thing, right. We can leverage our relationships on the merchant side and bring more payment capabilities to the insurance adjusters. So when someone loses their home in a disaster like that, they'll often lose their car, all their food, their clothing, electronics and other valuables. So in these types of situations, we can provide a payment card, virtual card settlement with a rental agency, car agency, other things that the insurance company might want to provide to the policyholder, in a more controlled way as opposed to policyholders buying lots of things, submitting receipts and having to go through that kind of reimbursement. So we're -- obviously, it's more of a midterm strategy, but it then can leverage some of the other capabilities that we have, which is also how we generate synergistic returns with these types of deals. Always active on the M&A front, as you know, Tien-Tsin, looking across all of our product categories, tend to skew a little bit towards corporate payments in terms of capabilities building, but these types of businesses that have decent-sized portfolios that are similar to what we already do provide great immediate synergies for us. And so we have more of those in the pipe as well.

Good. And then I have one more on capital allocation. You do have $1 billion buyback that you upped, I believe, is $1 billion right draw. So you guys talked about liquidity to [ FX stat ]. So what's the appetite to buy back stock here, and also do the M&A, like what have you done?

So I think through Q2, we bought back about 1.5 million shares year-to-date. And I'd say that in Q3, we have been active. And so when we look forward into 2022 and the setup, we talked about sales and retention levels being really strong, potential for further COVID recovery from -- even from where we're at. The deals we mentioned are going to be -- they were closed mid-year. So we'll get a full year of benefit from them next year. We've got a $1 billion interest rate hedge that's going to roll off in January. It's going to pour earnings in. And we look at all that vis-a-vis where we're trading, we're buyers. So we've been pretty active in Q3.

Glad to hear. So I've got a lot of questions from the audience around EV, Charles. So maybe let's get those, if you don't mind. I know you've discussed it on the last call. And my takeaway was that, I guess, it's -- the cost is lower, but the MDRs are higher. But I'm getting a lot of questions around what is the strategy? What percent of your fleet actually park their cars overnight, [ company lots ], mobi charged when they charge at home. Another question here around the switch to EV and the resulting fragmentation of charging locations away from traditional fuel stations, how does this impact fuel card businesses? Those -- that's what we've heard. All these -- I don't know, if there's a catch on way for you to hit the basic questions you've been building? And then maybe I have a follow-up to that.

I will try. So many times, people just hear fuel cards and they just think about purchase. Our cards are really used as a fleet management tool to make the life of a fleet manager easier. And so what does that mean? Well, one, there's all the controls around the purchase. And the controls can be where you purchase. Now I'm going to help geofence a fleet. You can't purchase outside of this state or geography. It may be the time you purchase, you can't purchase on the weekends out in the network because you're not supposed to be using the vehicle on the weekends. There may be things around fuel type. You drive a diesel truck, you shouldn't be buying them late. So I want to control all these things for you. And I want to do that without having to look at receipts and cross check versus policy, I want to do it on the front end. A lot of those types of things, so let me just start with that controls. Then there's the enablement of the purchase, obviously. And there's analytics on the back end. So 3 things, controls, purchase enablement and then analytics are reporting. All those same 3 things apply for an electric vehicle. So what you mean, Charles? Well, similar types of controls. I may not want you out in the network on the weekend because you're not supposed to use my vehicle on the weekend. I may try to limit how often you use the supercharger because it degrades the battery life and the terminal value of the vehicle is highly dependent on that battery life. And so as a fleet manager, who may have to turn vehicles over time, I got to manage and make sure that the vehicle is maintained appropriately. So I may try to control what you buy, where you buy, when you buy, similarly, enabling the purchase. So when people go out to the charge point operators, we're enabling our cards, our mobile apps, et cetera, to be accepted at those locations. So similar to just like a card, yes, you can use it. And yes, the charge point operators upcharge the electricity because they're trying to make a return on their investment in those locations. And they're willing to give us higher MDR because they're making good margins. So yes, we can enable that. Great. Then there's the reporting side. Again, there's policies and controls in place to stop an authorization. Sometimes you allow things to go through, but you want to check it against policy on the back end, right, because I want to keep the operation flowing, don't stop my driver, but I want to change behavior later. So again, all that same reporting flowing through, where, when, what type of fuel or how -- what type of energy charging did you do? A lot of that is going to be around battery life management and such. But another key component of that enabling and reporting is around this expense reimbursement. And so fleet managers don't want to get receipts and check them all and do all that work manually. So in terms of, let's say, home charging, if you don't have our solution like the one that we have over in the U.K., a person at home has to get their utility bill and has to track the time that they charge and get that information and then look at the rating and then give this to the person -- the fleet manager and go through more of a paper-based expense reimbursement process. One, the fleet manager doesn't like it; two, the driver, the employee doesn't like it because they have to pay the utility bill and they're out, right. They're out that money until the company reimburses them. So they don't like it either. And for more blue-collar drivers being out a couple of hundred dollars for their utility bill to energize my company vehicle is not a favorable prospect. And so our solutions help make the fleet manager's life easier, and are better for the driver and apply regardless of fuel or energy type. Now in terms of how FLEETCOR is positioned in this respect, right, we have a lot of the fossil fuel vehicle fleets using our products. And they don't flip to EV overnight. So if I have 100 vehicles, I don't take them all and sell them all and then just go buy 100 EVs, right? I go through a replacement cycle. And as they're doing that, we feel really well positioned because we're, one, the incumbent for the 80% of vehicles you're not switching out. For the 20% that you are, I can provide the -- a very, very similar type of service and combine it with the workflow and reporting and such to make your fleet manager's life easier. So there's not a big change or duplicate type of processes. So we feel quite good about where we're positioned, and we're leaning in. And so because as we've seen, one, when fleets go on to the network, we can make similar types of economics on the transaction; two, when they fuel or recharge at home, they're willing to pay a fee for that. Because of that, we feel comfortable with the economics and we're helping fleet managers, make good decisions, get prepared for this transition, so we can help them move and migrate their fleet over time to EV.

That's a good summary. I've got a couple of questions about -- okay. So you're talking about the U.K., but what about in the U.S., your largest market? Do you need to acquire assets to do what you're talking about? Or can you do this organically? And if so, what's the cost to do it?

Yes. So we do have some partnerships in play at the moment to help in terms of this. We have markets -- in market today, pilots with fleets. And so we are following a similar path. How we get the data is a little bit different in terms of more of a connected car strategy. But nonetheless, similar path here, it's in pilot with several accounts, a couple of enterprise as well as a couple of small businesses. As we learn from them, then we'll go to market in a bigger, broader way. But yes, we're not waiting for the U.S. to make the migration. We're getting ahead of it.

Now it sounds like -- I'll ask one more from this list, just timetable. Whether it's Europe or domestic, what signs should we be looking at? How quickly do you think we actually could see some change in actually P&L impact for your business?

Yes. As it stands now, I'm not sure in terms of a P&L impact. Again, the economics we're seeing are pretty good. It may change over time, but they're pretty good. So I'm not sure about that. In terms of the conversion of EVs, I mean, there's still a relatively small proportion of sales. And so you got to wait until they're more than experts -- 50% of sales. Otherwise, we're still going to have fossil fuel stuff growing. So we think that the fossil fuel market is intact for several decades. At some point, it will start to decline, right. This growth will slow, it'll stable off and then it will start to decline, but it's not until the EV sales become a real meaningful proportion of overall sales. And you're seeing it go faster in terms of cars, slower in terms of vans and pickups because they're later in the game in terms of getting models out to market. And then on the heavy goods vehicle, it's going to be a while. And what I tell you is that what we're also hearing is people haven't quite factored in how battery life changes when you fully load a vehicle. It's one thing to check them and it's just me driving it. It's another thing when we throw a couple of thousand pounds worth of supplies and such. And it does change things. So people have to really think through the use cases before they make the change or are they going to be disciplined.

Yes. No, good point. Lot to think through. So thanks for going through that, Charles. A thing with, I guess, just this -- I know EV, we're talking a lot about the future and digital and things that are modern. I think a big theme, Charles, in fintech investing has been modern versus legacy. We've been talking about at length ad nauseam. How modern is FLEETCOR's tech stack and solutions? What's your answer to the question of where FLEETCOR lies in the spectrum of modern versus legacy technology platforms?

Yes. I think it's a -- FLEETCOR as a whole, I don't think it's fair to paint in kind of one brush. So if you look at our business, FLEETCOR has been around 20-some-odd years. I've been here for most of those. And we started in fuel cards. Even through our IPO, we're 90% fuel cards, right. And these are networks that have been built for decades, technology at the point of sale, industrial strength processing capabilities with incredibly complex pricing, right, for wholesale fuel pricing and such cost plus, taxation models, all types of things. And so in that area of, call it, fuel cards, which is a little less than half of our business today, I'd say we are a legacy player. Been around a long time. Network has been around a long time, but we feel good about our position because the networks, the economics we get, the enhanced data we capture at the point-of-sale, because our spec is there, our processing and pricing capabilities, because we've been in it for so long and understand the wholesale market. The business grew up from the fuel side, and there's a lot of nuance to that versus coming from the payment side. And so we feel good about that part of the business, but we are more of a legacy provider. In the corporate payment space, we haven't been in it very long ourselves. And some of the acquisitions that we've done have more modern technology. I mean Roger's like the perfect example. The company is only like 3 years old. Right? It's got more modern technology than most other small business bill pay solution providers have. And so we feel quite good about that. Nvoicepay, really good software, plugging into more structured processing capabilities at Comdata, but that Nvoicepay upfront software, great stuff. And so we feel quite good about where we are. And what I'd like to tell people is that when it comes to corporate payments, we are one of the disruptors. We're going after a large TAM that's controlled by banks, whether it's domestic corporate payments, cross-border payments, FX stuff, it's mostly with banks. And we partner with them in some regards. But otherwise, we're just trying to grab that volume. And so it's a tale of 2 cities. Fuel cards is more legacy, corporate payments is more modern, and we are more of a disruptor in that regard.

Yes. I think legacy, just to drill into that. I mean in this case, having -- I think you call it industrial strength, we call it [ downtown ] quality. I think having a broad network, that incumbency, that legacy is an advantage in that space because it has to have the downtown like quality. So I just wanted to point that out because I don't want people to forget that there's a reason why it's been there for so long. A couple of other things just to drill in just before we close out, the gift business, which is a part of the -- the stores are, I think, [ quite ] really small, seems to be doing a little bit better. So I've had a couple of people ask and I have on my list, too, what's changed in the gift business? And should we consider that to be a part of the FLEETCOR family longer term?

Yes. So in terms of kind of its prospects and performance, it has gotten better. And 2 quick reasons. One is around digital, which we've talked a lot about. So a couple of things we've done in digital there. One, we've enabled proprietary gift cards to be added to digital wallets. And so that creates a better customer user experience as people want to handle less plastic, I want to use my mobile phone to make payments. That's great now. You can use your gift cards in your mobile wallet to do that. Customers like it and obviously, our retailers like it. So that's a good development. But the other thing we've done in digital has enabled digital sales of gift cards on our retailers' websites. So if you go to the retailers and say, hey, I want to order a bunch of gift cards or even just one for whatever, we are that ordering engine and then, of course, do the fulfillment on the back end. And so before that, we would just ship cards to the retailers and they would distribute or their partners would distribute, whether it's in malls or shopping centers or whatever. Now on the digital side, we are the distribution engine, which is, one, again, retailers like that. But two, we can also create more volume and revenue for us through that distribution. The other thing around distribution is that we're actually doing more B2B type sales. And so what we've done is partner with several -- a number of these incentive companies. We go to a company and say, look, do you want to provide incentives to your sales force, your service agents, whatever it may be, would you like to deliver that in the form of prepaid gift cards. If so, here's my portfolio, gift cards and I'll put in all the orders that you need. And so they go to the companies and sell it, come to us and then buy more in bulk. And so that's, again, helping us distribute more cards, create more revenue and volume for the retailers and for us. And so turning that business more into a sales engine for our partners, while also creating more of a digital modern experience for the end users has helped to boost those volumes. And obviously, in the pandemic for the e-commerce, having digital gift cards enabled that you can buy on a website has been quite helpful.

Yes, for sure. Yes, that's been a fun ride watching the gift business. So good to hear that there's some change, of course, because of digital, but it's good to hear there's some change. I did want to make sure we had one tolling question, if that's okay, Charles, with Brazil. I know last quarter, you talked about, obviously, with the pandemic and mobility, having some impact there. But I don't want to also forget about the Beyond Toll opportunity as well. So maybe just catch us up on what to expect on the toll Brazil side?

The business is actually doing very, very well. So Brazil has come out of lockdown. They were in lockdown kind of Q1-ish, which had a brief impact on our sales. So a lot of our sales happen either at toll booths or happen in shopping malls. When they shut down the place, that had an impact on sales, but it was temporary. Once they reopened, again, sales pouring in. And we're seeing great sales in that business at toll booth, at the malls, online through our distribution partners at retail, a lot of different channels, all channels, rocking and rolling. So really excited about that business. In terms of the Beyond Toll strategy, we are investing heavily in building out the fuel network. And so we're pretty good in parking. We've got some fastfood, and it's going fine, but the fueling, every vehicle needs to fuel. And the fact that we can get MDR there, we think it creates a big opportunity. And so we're building out that network and then chasing it with sales. We've got, whatever, 6 million tag holders now in market. We've cut something like, I don't know, 500 or so gas stations in the country. And we're looking to take that to 5,000 over the next couple of years. And we're making good progress in that regard. But it's a little bit of the chicken and egg, right? I don't want to tell 6 million people that I've got a fuel network that's 500 sites barge, and then you got to fuel somewhere and you have a bad experience because it's not there. I want to make sure that the coverage is there. So what happens is we build the better the network and then we market around it, then we keep going. And so I got a -- it's a slow, it's a bit more of a midterm type of strategy. But we're in the process. We've got a clear road map. And I'd say so far, it's looking quite good. We're seeing the volume. The transaction volume tick up pretty rapidly as we build the network, but also to your point, as more people are mobile in this quarter.

Okay. Good. So we'll be tracking that and definitely be asking about the next time I see you. So this has been great. I always enjoy chatting with you, Charles. I think we've time for maybe one more question in 3 minutes, less than, call it, 3 minutes left. I always ask you the longer-term question. We talked about EV, we talked about corporate payments. So where is -- what does FLEETCOR going to look like here in the next 3 years to 5 years? What would you tell us based on what actions you've taken coming out of the pandemic?

Yes. I'd say that generally, you should expect our mix to shift more and more to corporate payments and less fuel. Obviously, we've been working on that since the IPO, continued diversification. It's not that we don't like fuel. We love the fuel business. But we just see other opportunities in other places, and are starting to shift more and more of our sales investment into that corporate payment space to help push that organic growth. Obviously, the big Roger or Corpay One cross-sell opportunity, taking that bill pay solution and selling it to hundreds of thousands of small businesses that I already have a relationship with, we should see that come through. And like we talked about earlier, our M&A is skewing more towards that category. So I'd say our midterm growth aspirations and model is intact. You should start to see some more mix shift towards that corporate payment space.

Thank you. Terrific. We should probably wrap it up there, Charles. Once again, thanks for being a part of the All Stars Conference. It's really important for me to have you here. So always great to have you here.

Tien-Tsin, it's been a pleasure, and always is. Look forward to see you the next time.