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

Greetings, and welcome to the FLEETCOR Technologies EV Strategy Update Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jim Eglseder. Investor Relations. Thank you. You may begin.

Good afternoon, everyone, and thank you for joining us today for our EV strategy update and discussion call. With me today are Ron Clarke, our Chairman and CEO; and Alan King, our Group President of Global Fleet. Following the prepared comments, the operator will announce that the queue will open for the Q&A session. Please note, our presentation associated with this call can be found under the Investor Relations section of our website at fleetcor.com. I 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 plans are based on that information. They are not guarantees of future performance or the future, and you should not put undue reliance upon them. We undertake no obligation to update any of these statements. Our discussions today 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 our forward-looking statements in the presentation and in our annual report on Form 10-K filed with the Securities and Exchange Commission. These documents are available on our website and at sec.gov. So with that out of the way, I will turn the call over to Ron Clarke, our Chairman and CEO. Ron?

Okay, Jim. Thanks. Hi, everyone, and thanks for joining our EV update call today. I plan to start off here with a brief update of the Plugsurfing EV acquisition we announced last week. I'll run through, first, what it is; second, why we acquired Plug; and then lastly, the expected financial impact of the deal. So Plug is a 10-year-old European EV network and software provider specialist. They help EV drivers find and pay for EV recharging. They've got a mobile app that basically lays out, identifies recharging locations, so you can find them, profiles the equipment that's there, think fast charger, provides real-time availability if the charge is in use so you don't wait, and provides the cost per kilowatt. Plug's got a proprietary EV recharging network, super important. About 300,000 accepting charge point locations across Continental Europe and the Nordics. Their primary customer is the consumer, which they sign up either directly or via vehicle OEMs or even through charge point operators. So let's say you bought a new EV vehicle in Germany, the manufacturer may give you the Plug mobile app to help find recharge locations to avoid range anxiety. In addition to the consumers, Plug also serves the charge point operators. They've got roughly 40,000 of their 300,000 charge point operators that are in their acceptance network, who use their white label driver software or a basic operating system to help them run the charge point. So let me make the turn to why do we make the decision to acquire Plug. Really 2 reasons. So first, to repurpose Plug's mobile app and recharge network for our commercial fleet business. That will allow us to better serve our fleet clients when they're out and about and need public recharging. And then second was really to open up the prospect here of building a new consumer EV business so that we can go on offense during this energy transition. So the Plug deal gives us a fast start really on both fronts. They've got a modern tech platform, this 300,000-plus acceptance network, at last count, 150,000 active EV users or drivers, and an employee group that knows EV. So even though the EV transition will likely be a multi-decade process, we're investing early upfront here to make sure that we succeed in the transition. In terms of the financial profile, Plug is a single-digit million revenue company. We're estimating roughly $0.04 dilutive to our rest of year cash EPS. Fortunately, that's offset by a $1.3 million FLT buyback that we did post our Q2 earnings. So basically a wash. So with that, let me turn the call over to Alan King, our Group President, Global Fleet. He'll talk more broadly about our EV strategy and progress. Alan?

Thanks, Ron, and hello, everyone. My name is Alan King, and I'm the Group President of our new Global Fleet organization that we created 3 months ago. Global Fleet is a combination of our North American fuel business and our international fuel business, which I've been running for the last 6 years. So we've got a great opportunity now to take a much more unified global view of the many vehicle and mobility-related opportunities around the world, which can be quite similar regardless of geography. So I'm talking about opportunities like greater digitization across the customer life cycle, cross selling a broader set of FLEETCOR products and services to a customer base of over 600,000 and, of course, the emergence and adoption of EVs in many markets and the need for us to go after that space with pace and energy. And that's today's topic. So I'd like to give you all some more color around our EV strategy and direction and why we get very excited about the opportunity ahead of us to tap into new markets and customer segments that we haven't been able to do in the current ICE world. So let me start off with Slide 5 of our presentation by spending a few minutes on the EV ecosystem, which is similar but also different to what we've been used to at FLEETCOR. So on Slide 5, you can see the EV ecosystem is evolving. It's still developing with established players participating alongside new market entrants. That's creating a lot of innovation, and it's also driving new opportunities. I've been in payments for 25 years. And in some senses, I would compare it to what happened in mainstream payment from 12 or 13 years ago, with a major growth in mobile payments, e-commerce payments and fintechs. We had the payments market standing players with entrenched positions like the big networks and processors and a bunch of new disruptors and innovators trying to take a piece of an evolving value chain, from major tech players like Apple and Google to OEMs like Samsung, then there was mobile network operators, and a bunch of fintech start-ups trying to disrupt. The market evolved over the subsequent decade, but what we saw was that the established players and new entrants all thriving as new opportunities continue to emerge and consumer behavior evolved and partnerships in the marketplace increased. There are analogies with what's happening here in EV and on this slide are the key elements of this evolving ecosystem. Vehicle manufacturers spanning both traditional OEMs covering ICE and EV as well as new players focusing exclusively on EVs like Tesla. On the energy side, we're going from traditional oil companies playing the main role in ICE to utility companies being key in EV. In retail, gas stations have obviously been the only channel for fueling. In EV, they remain relevant with the ability to retrofit EV charging stations. But we also have dedicated charge point operators too, who are installing chargers on the street and destination locations like malls and in private homes and workplaces. Payment networks will be quite similar across both ICE and EV with open loop, private label and proprietary networks. These will exist in both worlds. And finally, new software opportunities will emerge over and above what we already see. So in addition to having card management systems and driver apps remaining relevant, there is more in EV. The driver apps have much greater feature functionality, so they capture all charge point locations but also key real-time insights like availability of those charge points. And then we have home charging to deal with. And for commercial fleets, this involves measuring, reporting and reimbursing employees for home charging. All of this applies both in the consumer and commercial space. Although for commercial fleets, there are even more complications given the need to manage mixed ICE and EV fleets for some time to come. So the ability to simplify vehicle payment management across conventional fuel and EV becomes really quite key. And that's something we're very well positioned to support. So moving to Slide 6. When we think about our EV strategy going forward, our focus is on using the EV assets we've already built and assembled to deepen our penetration of the commercial fleet segment, while also taking the opportunity to enter the consumer EV market, too. Ron touched on Plugsurfing at the top of the call, but let me just expand on that and lay out for you what we have today and how that stacks up against segments we're going after. First of all, we've applied our core network model to the EV space. In Europe, we now have a proprietary network of over 300,000 charge points. And in the U.K. specifically, that's around 7,500 charge points. In the U.S., we leverage Mastercard acceptance and that gives us 125,000. All this enables drivers to access seamless on-the-road charging. Secondly, we wrap this up with some market-leading EV software capability. We have driver apps to deliver mapping, charge point availability and payment. Both in Europe and the U.K., that's facilitated through Plugsurfing and Zap-Map, who are the industry leaders, innovators and the benchmarks. And for CPOs, we can now provide them with an operating system to manage their charge points and associated payments, which in turn further drives our network capabilities. And we also have dual ICE and EV card management systems and fleet management UI that enable the driver products and add significant value, especially in a mixed fleet environment. This includes all the data reporting and dashboards that the fleet manager would expect to get and fully integrated across ICE and EV. And then the third block on this slide is the new part for EV, which is the home and work recharging software capability. This SaaS capability allows us to integrate with charging hardware to measure and reimburse for charging done at home and work. The home use case is especially important, given the need to accurately reimburse. We do this in the U.K. through Mina. In Europe, we will do it with Plugsurfing. And in the U.S., we will initially leverage our investment and commercial partnership with Motorq. These 3 blocks of capabilities will allow us to serve our existing commercial fleets with new EV solutions but also mixed fleet solutions. We believe we can also attract new fleet customers with unique assets that will allow us to win mixed fleet customers, even where we don't already have conventional fuel card volume. More on that a bit later. Now we're quite excited about the offensive opportunity here that the acquisition of Plugsurfing and the other investments in Zap-Map and Mina are giving us and will continue to provide. That includes, first of all, entering new customer segments and specifically targeting consumers directly and through partners like OEMs, for example, with on-the-road charging solutions. And secondly, expanding into serving CPOs with the Plugsurfing SaaS product, including our traditional fuel merchants that are looking to get into the CPO business. The consumer opportunity here is huge, given how important it is to deliver a compelling driver charging solution that includes a broad and reliable charging network, mapping charger availability information and payment, which is interoperable across different charge point types. So moving on to Slide 7. I'd now like to explain a bit more about why we see EV as a good opportunity to defend and expand our existing relationships. As I've said before, there's a great deal of complexity for a fleet moving from ICE to EV fleets. And this complexity is amplified when managing a mixed fleet of both types of vehicles, which really will be an inevitability for years to come. We believe the transition to EV gives us an opportunity to do more for our existing fleet customers with our new EV specific products and services. Our clients are looking for us to help them manage the transition to EVs and remove complexity form them in the day-to-day management in the fleet. Today, we're already spending a lot of time advising and consulting to fleets on these topics, and we already have solutions in place that are simplifying mixed fleet management, delivering single platforms, unified data and simplified payment experiences. We call this the one-stop shop, where we bring all the fuel and EV solutions under one umbrella to make it easy for the fleet. We've already had years of experience with EV solutions and so have a good understanding of the economics we're able to get. Our EV revenue per account is broadly similar to ICE and that's helped by brand new revenue streams like SaaS subscription fees for at-home charging. It's also important to remember, of course, that the market economics are still evolving. Energy prices keep swinging, we've seen that recently with both crude and electricity and gas rates. EV is also underpinned by unsustainable tax policy over the long term and MDR rates are still dynamic for charging. So the market will continue to move, but the strength of our solutions, regardless of fueling type, does provide us with a good position. Turning to Slide 8 now. This is where we believe we can start to go after more, and it's quite exciting. We're going to be able to win many more new commercial fleet customers with the solutions and assets we have on the EV side. Now let me tell you why. Firstly, this ability to deliver a fully integrated one-stop shop is quite unique and will help us win not just new EV business, but also the old-fashioned fuel card customers, too, those who don't want multiple providers that add to the complexity. We've already won some deals in the U.K. with AllStar from the fuel card competition because of our EV assets and our ability to simplify something that is highly complex. Secondly, our EV solutions can also be stand-alone, coexisting with incumbent fleet payment methods, be they bank cards or oil company cards. So fleet might wish to continue using regular bank cards for fuel and gas but that won't help them when they need broader roaming solutions for EV charging and to manage home charging measurement and reimbursement. So it means we have more prospects to sell to that would not have typically selected an ICE fuel card. And that's potentially a very big upside. Going to Slide 9 now. The major opportunity we now have through the assets we've assembled is to go after the consumer EV opportunity, which by 2030, could be worth some $2 billion. We based this on the likely adoption rates of EVs in these key geographies you see here, using external sources of info and the data we have through Plugsurfing and other players on what to expect in terms of revenue per driver. Consumers today typically use an app to access and pay for on the road charging with the CPO market so fragmented across all these geographies, the ability to provide a broad multi-network charging product with a simple app that helps the drive locate a charge point, check if it's available in real time and then pay for the charging, means we're opening up a major new channel and customer segment to go after. The Plugsurfing acquisition and Zap-Map investment gives us these assets and means we can deliver a complete mobility experience for EV drivers regardless of whether they're consumers or commercial fleet drivers. This slide shows the expected growth of the consumer EV market in these geographies and also what we expect the conservative revenue could be per vehicle per year based on existing experience. So again, we're quite excited about this given our experience in Brazil with our tolls business, and we see many similarities here in building our more mobility-related services around the vehicles themselves. So on to Slide 10. And before I close, I've included a brief slide on a key customer of ours in the U.K., Virgin Media O2, a major mass media and telecommunications company. They are an existing FLEETCOR fleet customer and are transitioning part of their ICE fleet over to electric vehicles. They chose us to help them because of our market-leading ICE and EV solutions, and they're using our on-road AllStar card and mobile app solution for drivers to charge on the go and also using our Allstar Home Charge product for their drivers, which allows them to directly reimburse a driver's utility company for any charging undertaken at home, meaning that the driver is never out of pocket. And with energy prices so high, that's a pretty compelling proposition. So let me close now with a recap of the last 10 minutes here on Slide 11. So we believe we're very well positioned to ride the EV wave and capitalize on new revenue and growth opportunities. It's a space that gets us excited as it allows us to do new things with new customers and in new segments. We're participating in an EV ecosystem that is both established and new players taking positions. We can take advantage of the assets we've assembled and built to penetrate deeper in the commercial fleet segment, both with our existing customers and go after brand new ones at scale. We can also now open up a brand-new consumer segment, too, with some pretty unique capabilities, and that's huge in terms of potential scale. We're already making good progress in our traditional commercial fleet. We have thousands of EV clients already, including large sophisticated fleets. Our one-stop shop capability, which includes conventional fuel cards, on-road charging and home charging solutions that can be bundled together, reduces complexity significantly for fleets as they make the transition bit by bit. With that said, I'll now open it up to Q&A. Thank you.

[Operator Instructions] Our first question is from Bob Napoli with William Blair.

It's very helpful. Good information. Just a question on the growth -- or your strategy on the marketing of the consumer business, your confidence -- I mean, I know, Ron, I don't think you do anything unless you're generating good returns but just the unit economics down to the EBITDA line as you look out over the long term, is this more defensive or offensive? I guess, some of both.

Bob, it's Ron. It's a good question. So the first thought back is we've seen this movie before in Brazil. So in Brazil, we've got that tolls network and an IT system, and we repurposed it for both, right? We've got, I don't know, 5 million to 6 million consumers on it and then 1 million or so employees or businesses on it. So this model of having kind of one set of assets and then 2 different kinds of customers is something we kind of get a little bit. And so the answer is, I think, twofold. One is we think we'll get a lot to the partners. So you take like the OEMs, obviously, no one has an EV car, so someone has to sell them one. So to the extent that we could have a 1/4 or 1/3 of the people that make EVs use our app that gets to a lot of people that have EVs. And then B is the same thing with charge point operators, we've got a relationship, either acceptance or software. And the only people that go there are people that have an EV, again. And they're trying to get them. So that would be the first thing that I'd say. Initially, we're expecting some fair amount of the consumer business to come to us from those 2 partners. And then I think we'll get you some jump in the boat like the brand, like the [indiscernible] to you guys, it did to me when I met the company, but the brand is like pretty well known over there. People actually talk about this brand. So we'll get some jump in the boat where people who just -- it comes up on search and they'll come to the site. So we're not going to have some massive consumer advertising campaign initially, although if the thing lifts up, it gives us an opportunity, right, to once in a while kind of push the thing in some markets. So that's the idea as kind of partners first, get some jump in the boat and then selectively look to when we're going to push on it.

I think just to add in there -- it's Alan, that when you buy an EV and you've had no experience of having an EV, you're obviously anxious about your new life with an EV. And one of the first things you go and do is download an app that gives you a mapping capability so you could find charge points. And then once you know you can find charge points, you then get the anxiety about whether that charge point is available. And that is literally -- as a kid when you learned to walk, it's the first thing you do when you buy an EV. You want to get that capability. And so having a brand that's already established in that space and having, in some cases, OEMs pushing that for us, is a terrific outcome because it's literally the first thing you do after they hand over the keys. So people look for it, Bob. They kind of -- they're looking for the network.

Great. Then the unit economics, just any commentary on unit economics?

On the consumer side or just generally?

I guess I don't know, how do you look at it? How do you think about it? Do you think about it separately? Or do you view this as a must-have capability for your commercial clients? And so this is incremental. But just how do you think about -- I mean, do you look at the consumer side and say this -- I mean, these are the -- I mean we can generate margins of this over the long term? Or -- I mean, how do you think about the progress?

I got the question. So -- yes, obviously, we're getting out super in front of this EV thing because of the commercial business. We're in it. We've got a ton of clients, we sell a ton of clients. And so we do believe we need to be in it and be a winner in it, not get run over. And so the aha moment, I think, was the Brazil thing again, if we have all these assets, we're spending money to do stuff in networks and apps and stuff, why not just market it to this out of the group, particularly when we go to businesses like carmakers and stuff. And so I think that we think it's kind of a lot of marginal economics like what you were on right as far on the sales side that the back office side of the thing is kind of coming along almost for free. So that would only change your point if we decided to do significant kind of direct consumer marketing, which I'd say is not obviously at this point in the transition, not a big part of the plan. So I'd say we think of it as mostly kind of incremental. But remember, it's common first. I mean, our own bet is right that it's super-duper hard to make commercial specialty vehicles like big trucks, obviously, the power problem or refrigerated or some weird tree-cutting trucks, the trucks that we have -- dump trucks. The stuff that we service with old-fashioned conventional ICE stuff isn't going to be the first thing that EV guys make, right? They're going to make kind of standard sedans and stuff like that. So we want to try to be in the game where the people are making stuff that we can serve is basically we can sell.

And the other incremental piece is obviously the home charging. That's something that doesn't exist in the commercial space today. And I think with our home charging capabilities, that becomes an incremental piece and highly valuable for large fleets that have their drivers go home and charge at home but they need to be able to reimburse them and reimburse them accurately and having the capability to do that for them allows us to charge recurring fees, subscription bank fees in order to deliver that capability. So that, for us, especially in our complex fleet segment is an incremental piece.

Yes. Alan's point is a super good one. The 2 big incremental things here of why this is bad news is, hey, there's consumers who buy more of these things we think short term than anybody, maybe we can get some money. And then B, there's a whole new set of gas stations called 1 million or 2 million commercial employee guys homes that are going to have a transaction or something every other day. So those 2 things are brands back and do right to us that there's economics to the go grab in those 2 places. So that's a big part of the excitement for us. It's holy moly, there's some new places to monetize this thing.

Our next question is from James Faucette with Morgan Stanley.

It sounds like most everything that FLEETCOR will be doing will be on payments and information technology side, et cetera. But I just want to make sure that, that's correct. And would you foresee -- or under what circumstances would you foresee actually getting into the business and operation of setting up CPOs, et cetera, or being a CPO, if that's better said?

Zero. Zero.

Okay. Perfect. I just wanted to closely understand the...

Yes, James, we want to run a low capital density company. I've said it a million times. So where our game is, minimal balance sheet and minimal capital. So we are not going to be a retailer.

The interesting thing is being a software within the CPO, which is we -- we bought that capability through Plugsurfing.

Yes. Let me jump on that thing Alan just said, James, which is interesting because you brought it up. So it's zero to be a retailer that has charge points. But this company, and we're still kind of doodling on it, has made like yet the third business, right, beyond what I said, hey, consumers or at home, which is there's going to be hundreds of thousands of brand-new entrepreneur people making charge points, right, that have never made them before and some regular merchants who are already friends of ours trying to retrofit the thing. "Hey, I'm going to put in 6 chargers at my gas station" or whatever. And certainly, the first group has kind of no idea how to run a charge point, right? How to market it, how to do payments, how to check, maintenance, there's a whole bunch of operating things. And so there's a whole kind of new software opportunity, which I mentioned we've got in this company. We bought about 15% of all the European charge point sites, use the tech stack from this Plug company to kind of run. It's kind of their operating system basically. So that's yet kind of another new stream we may chase that hard because the company has done super great, right, getting 15% of it this early in the game. So I do want to call that out that, that may be another angle for us.

That's great. And I appreciate that's incremental. And then my follow-up question is that, Ron, you and your team have a well-deserved reputation for integrating acquisitions and making them quite successful. When you look at this and it being so nascent, how are you -- and how should we be assessing like the ramp? What that should look like. If it's being successful and contributing, et cetera? Just wondering what kind of metrics, even if just qualitative, that we should be watching coming out of this initiative.

Yes, I think that's a super good question. I think it's mostly a function of the adoption pace. Like, we're kind of getting out of the blocks here early, trying to assemble some assets like this one we're talking about today. But the amount of energy that we'll spend on marketing and selling, to Bob's question earlier, is kind of tie, James, to the pace of the thing. So if it picks up pace and there's more opportunity on both sides, the side, we're in the commercial side or the consumer side, we'll work as the thing harder. If the thing kind of stagnates, those utilities can't get the power in and people don't buy the thing and the economics get worse to buy. If it slows down over the midterm, we'll probably also go slower. So I think a lot of it's calibrated on really on the pace of this thing. But again, there's just not that many people. We've obviously had this thing in our gun sites for a couple of years in scour the lands here in Europe of what every asset we can own to get ready. And -- take a look at this thing, this is a 10-year-old company. I don't know if you picked that up, that we bought, and it's single-digit millions. It's been working hard at this idea in this place for 10 years. Now maybe I'd say kind of they were a company before their time or before its time or whatever. But it just gives you, again, another idea of just how long this transition could likely run. And the message we want to give today is we aren’t missing that. I just don't think that we're a bunch of ICE and our heads are buried and we love the old smelly fueling and acid and, oh, we're worrying on that. We are studying this thing, by building assets, getting going. And if that game heats up, we're going to be there, either with the new retailers that come online or even the consumers, if those 2 businesses get bigger before the commercial side, maybe we can make a bit of a business before the commercial thing comes through. So that's how we're thinking about it.

Our next question is from Tien-Tsin Huang with JPMorgan.

Thanks so much for hosting, guys. I like a lot of the info and the analogies you guys talked about. But Ron, I just want to ask you on the B2C front. I mean -- I think, loud and clear what you're talking about longer term. But is it more about the economics or just being in the game and being tested to work with the consumer to be comprehensive in owning the category, and that's why you're doing it because you've been saying for a long time that, right, FLEETCOR is a B2B company, you're not B2C. I know you and I have talked about, right, why not open up whatever Fuelman or GFN network to consumers and it just didn't make sense, but in this case, it is. So just trying to understand the prioritization on the consumer side and the bet you want to really make here.

It's a good one. It's good to hear your voice, too, by the way. So the first thing, which I don't think we said earlier, I want to be as clear as I was with James, is the -- we're taking no credit risk on the consumer side. So a, if you, Tien-Tsin, bought a -- some EV thing and you took our app and went to our network, we're going to embed Apple Pay, we're going to embed some other crazy credit issuer to you, right, into the capabilities we have. So that's kind of the first thing. I think the second thing is, right or wrong, we believe that every business is a consumer. And so getting some brand recognition and some consumers and our name at the network and stuff could be super helpful for the awareness among our fleets. So Alan, who's sitting here with me is telling me even a year or 2 ago, they've taken all these calls particularly from our Nordics and U.K. clients who are actually getting EV vehicles and I'm like, what are they mostly calling about? They're like advisory, they're calling their brother, their broker to get some info about what the heck to do and what goes on with EV and stuff. So when you hear that, you're like, we want to make sure that they really think of us that we have some modern EV thing, Tien-Tsin, that when they call us, they think of us as maybe a super good provider to them on the commercial side and that we're not some who are joining lately. So some of it to me is get now -- which we think is going to happen first, the consumer thing and using that to our advantage with the commercial guys.

No, that's clever. I didn't think about it that way. Yes, because there's a blurring of the lines between the home and the branding. So now that makes sense. And then Alan, I feel -- yes.

Unit economics again, like you've seen the Brazil thing, right? Like, we look at the cost structure of that business, the 2 giant pieces of our cost structure, which is the network, right, signing up all the tolls and the settlement infrastructure and all that stuff, and then the IT that's specialized to run it. The same thing, we use that exact same 2 pieces of platform for the guy going to his summer home in Brazil as we do the commercial guy. So when we run the numbers here, to Bob's point earlier on, that provides super good marginal economics basically on the consumer side versus doing that alone. So that's the other part that we like about it is we think we could probably generate some revenue certainly through the partners profitably. But I just want to be clear, we're not going to be some, hey, watch us announce we're going to spend $50 million on consumer EV trying to do EV. That's not our game plan.

Yes. The Super Bowl ads for FLEETCOR, I hope...

All right, But you're going to fund them. If you fund them, we'll do it.

No. Maybe we'll bet on some EV stocks and do it together. Well, I think if you don't mind me asking one more, I don't want to hung the call, just with Alan, I like the -- because I've been thinking about this a lot, the -- analogizing it to the whole e-com mobile shift in traditional payments. And Slide 5, you laid out ICE versus EV. But if we were to do the same thing against or overlay it against payments and the introduction of e-com mobile, where would FLEETCOR be listed relative to where you are today in the traditional payments world, not in this ICE world? So in other words, when I think about FLEETCOR today, right, you're an issuer, you're also a network, right? You can do some acquiring capabilities as well, depending on where you sit within the gas, the fueling site, things like that. But what -- is it different in the EV world, if I want to lay it that way? For example, would we put the CPO in the same place as a tablet, right, in the omni world? In VeriFone, that terminal would be the old world before mobile came into play. So I'm just trying to think about like how do these different players fit if we want to bring it back to e-com mobile being the equivalent of EV taking over ICE. Do you make -- do you follow my logic? I don't know if I did a good job of asking the question.

Yes. No, I saw the logic, and it's a good question. And I've been thinking about it a lot as well in that because I did that in my previous slides. And how as a Mastercard in 2009, 2010, when all this started exploding and this is part of that whole journey, and I remember you have concern around being disintermediated as a global network with unique assets by all these potential disruptors that were coming in to try and do what we were doing candidly at the time. And the way I look at the analogy with us is -- and where do we fit it. We're more than just a network, a little bit of network that's huge amount of power for us and competitive advantages is, first of all, we know how to build networks so we know how to run and manage networks. That's what we do today in the fleet business, and we're already doing it in the EV business. We were doing it before the acquisition of Plugsurfing in the U.K. We built -- we've already built an Allstar electric network in the U.K that's a proprietary network that plugs into a good proportion of the chargers in the country. And then obviously, then with Plugsurfing, we've got a foothold in Continental Europe. And that proprietary network base is important within EV. And having the knowledge, the tech and the capability to build the proprietary network is very important. Because it's not just about the act of making the payment for commercial fleets, there's also a whole lot of other things that are important to that like the capturing of the very specific data they need in order to be able to manage their fleets confidently and efficiently, the kilowatt hours, the price, the type of charger, et cetera, et cetera. So our ability to capture that data by connecting a proprietary network into CPOs is very important. So I'd say, first of all, one competitive advantage or kind of the foothold we still have in this new ecosystem is we know how to do networks. Secondly is, we understand the customer. So we have customer relationships. I mentioned it in my preamble, the 600,000 customer relationships. We have them today and we have them in geographies that are transitioning to EV. And those customers are coming to us or made deployments before coming to us asking us to help, and we're going to them offering help at the same time. And our ability to capture what we're doing today in the fuel card world, and marry that with what they need in EV makes their lives easier. So that set the analogy would be, hey, we're an issuer, a bank that still has a customer relationship, again, going back to my old world, we still has a customer relationship that we can do more with. Then if you think about our ability to enable the driver experience. So we have down with Plugsurfing again. We already had launched in a couple of other markets an app. We did it in the U.K. in partnership with Zap-Map who we just invested in as well. We have an app that enables the driver experience. That's the end user experience with mapping, finding availability of chargers, finding the price and making sure that you know where to go in order to get charged quite quickly. So that end user experience, whether it's for a driver, or to Rob's point, it's also a consumer, no doubt we can provide it to consumer directly, makes us, if you like, the Apple Pay equivalent in the analogy there of providing a customer experience in the UX or a mobile app that actually provides a significant amount of value to the end users. So I think -- if you overlay that time with this time, we have a multidimensional role to play over and above what -- when I was at Mastercard, we were just worried about, hey, how do we make sure we still process the transaction. And then you look that Mastercard expanded themselves, we're kind of thinking about it alongside of our line.

Tien-Tsin, think of the -- the analogy I use is open table. So think about it, you and your wife going to dinner tonight, you're bringing whatever car for the dinner. But the first thing you do is should fire up the app to see if it's available, if you can actually go over there. First of all, where you want to go, find it and then go. So that's really a big part of the idea here irrespective of the payment. There's other stuff you kind of need to know, plus the price volatility is massive between the different charge point guys, right? One guy is $0.20 per kilowatt, one guy is at $0.50, so -- I'd tell you that we think that this infill that wraps around the payments kind of super, duper important here.

Our next question is from Pete Christiansen with Citi.

Great call. Ron or Alan, I'm curious, like, to what degree do you have a relationship or you can build a relationship with the utilities because I'd imagine as EVs get increasing scale, there's certainly an opportunity for distributed entity storage, demand response, things like that. And to me, that sounds like it could be potentially even a larger opportunity down the road. Just wondering if you could comment any thoughts on that. And then I had a quick follow-up.

Yes. Pete, I'd say not so sure. We actually bought this company from a utility called Fortum. It's a pretty big utility. And so I think it's unclear to the utilities, how they want to play. I think they're sitting there going, "I got a ton of business coming my way" right? And it's going to be way more energy needed on and off the street and stuff there is here in 2022. So I'm loving that. I'm just getting ready to get my capacity up. The problem to your point is how they provision it, just what you said, how do they get energy to all these weird different places that maybe aren't set up for it. So as we've had conversations with them, that's one of the dilemmas of where to put the charge points, right? Do you locate where people are, are they on grid that can easily supply the energy. So I'd say it's just -- from our conversations, it's super unclear to us how they want to play. Some of them have talked about being charge point operators to us. A little bit like, to me, the perfect example is the -- is obviously the oil companies who decided to vertically integrate, right, and become retailers. Hey, I'm going to go make a gas station to retail my product. Well, theoretically, a utility could copy that, hey, I'm going to be the charge point because I'm the vertically integrated guy. So the answer is we're not super sure but I don't think they're super sure.

It's quite interesting. Just a couple of additional thoughts to the U.K. specifically. I mean, we -- the utility companies are our customers today on the fuel card side. And some of them, a couple of them in particular that are quite big in the U.K., are customers on the EV side, i.e., they're using our products today through our partner products to charge their EV vehicles on the road and actually using our products to charge their drivers' cars or vehicles at home as well to measure and reimburse, et cetera. So we've got an interesting relationship with these guys already. In the U.K. as well, it's a very deregulated market, if you're familiar with it. It's highly competitive for the price is only going up at least it was and some companies starting going out of business are utility companies. But we also think about services that we can provide to our fleet customers and their drivers in the context of tariffs i.e., if you think about, again, how the market is going to evolve with the amount of energy that a vehicle consumes there are different tariffs at different times of day associated with charging the vehicles. If you charge the vehicles during night time, for example, it could work out cheaper for you than charging through day. These plethora of tariffs and packages, so it's a way of thinking ahead. We're thinking how do we take some of these capabilities and bundle them up potentially for our customers to, again, just make the life easier for them as they think about the transition because it's quite a difficult complex animal for a fleet to transition to EV. There's so much to think about. And so anything that we can do to kind of simplify that journey and have less impact on the driver actually is taking that vehicle home, and plugging it into the same electricity suppliers they're cooking and heating. If we can make that simpler and cheaper and more efficient, it adds value to not only existing relationship but also to future potential relationships.

That's interesting. That's good color. And then as a quick follow-up, and Ron, you mentioned, obviously, what's going on in the tolls business in Brazil. I mean it certainly seems like there's expanding payment use cases for mobility and the vehicle and certainly a larger data opportunity. But to me, it sounds like the world of compliance in a way is kind of going from know your client to almost like know your machine. I mean, are there any impediments from that point of view? And has that changed the paradigm in terms of data usage and need and all that stuff. I just -- I think it all comes across like that could be a competitive moat for you guys, that aspect.

Yes, I'm not sure I totally followed it, Pete, but I would say the following, that this EV thing, I think, raises the stakes even more on the data in the network. So if you think about our fuel card business, obviously, all the universal networks here in Europe can buy fuel but the proprietary networks, we have wrapped incremental data, right, like gallons or liters or have controls and parameters and premium fuel, all that kind of stuff. And so I think it's the same idea here that this proprietary data around type of chargers and speed and is it available and obviously, pricing and advantage of the open table stuff again. So -- that's what I would say to you is that's what is like super interesting to us is that if this thing gets stood up someone's going to get that data as to -- which is why this company took so long, by the way, it's why we bought it. The reason we bought it is they telescope time with all those freaking connections. There's so much technical work, right, to go out to some faraway charge point and connect it technically into a host computer and almost real-time, grab all that data or stuff. So I tell you that, that's one of the big ideas here is we got a super head start on people of getting this data, which we think is going to be like really important to not only to the commercial guy, but to the consumer guys. So I don't know how it's going to be regulated. I mean, again, it's not data related per se to the company or the consumer, it's really mostly data related to the sites, what's going on at the site.

So just to follow up on that point real quick. Does that mean that we need some type of enhancements to just Level 3 processing? I mean, you're obviously limited the amount of data you can send with Level 3 processing kind of product, but do you need innovation to happen at that level to handle that much data?

It is that, to your point. I mean, we all call it out again in the fuel card business because the incremental data is that for fuel cars. And I think, obviously, we know our partners, Visa and Mastercard well. And they're not necessarily in that game initially because there's no business, right? There's no vehicles hardly. And so people like us that are used to build a proprietary networks or building the connections, inspecting the data fields and then turn around and offering that data back to people, right back to customers. So I mean, effectively, we're setting up the Level 3 data system for EV. In fact, it was one of my first diligence questions when we looked at this company was send me the data model. I want to know every piece of data that you collect and how many of the sites you collect this from. And when the guys showed it, I said to our guys, wow, this is like -- this is why the company has been around for 10 years. It's going to take -- if you start up tomorrow, it's going to take you back to the moating super-duper long time to go out and connect to all these people and have some contract to get this data real time.

I mean, just to build on that, the specifics I'm looking out at the sheet that I've got in front of me, 28 data points that can come out of a CPO that we're able to capture because of our connectivity to those CPOs today. And we -- before the Plugsurfing acquisition, we went and integrated with CPOs in the U.K. with our AllStar business to create the AllStar electric network. But just to give you a sense of the different type of world we're in versus fuel and why having that connectivity and to Ron's point, setting up that connectivity is valuable. I mean, we can collect everything from what you would expect, the sites, the type of charge point, the address, the times it's operating all the way through to parking restrictions around it. We could collect pictures that come out of it, about the quality of the sites. All can come through from that charge point including its availability, is it being used, is it not being used.

For Expedia, for EV guys. So this quarter, it's quite extensive versus sometimes as a consumer, all you need is the charge. You need to get there, you need to tap your card if it accepts an open-loop payment, which not many do except the very fast ones. You don't really care about some of these things, but certainly in the commercial food world, it's completely different. They care about these data points. And being able to deliver those is clearly -- we've seen this already. So it's an advantage.

Our next question is from Trevor Williams with Jefferies.

Also on the consumer business side. I just want to make sure I'm understanding just how the monetization works, if you could walk us through the revenue model there. And I think, Ron, just with the open table analogy that might have cleared it up. But if you could clarify if there's any revenue actually coming from the consumer or if we should think this is mostly coming from charge point operators, if it's all subscription based or if there's any kind of usage, payment-based component that could layer in over time. Any more detail would be great.

Yes. That's another good question, Trevor. The answer is kind of all of the above. So there's 2 sides of the wheel here, just like in our current business. So clearly, we're looking for getting wholesale rate of what we call MDR or what we call interchange rate for merchants. So we're going to bring them customers either our fleet customers or consumers to their location. So obviously, we want to get paid for it. And then on the consumer side, forget the commercial side, all those ways that you named, we could have some kind of monthly or annual subscription right to use the thing. We could have some trans fee, hey, it's $1 or EUR 1 to do it, like an ATM fee. We could have a convenience fee like we do in tolling. Hey, the thing is EUR 8 for the thing, but we're going to mark it up 5% or 10% of EUR 8.40 or EUR 8.80 or something. So the company is actually experimented with a number of those different things. So my guess is we probably would start on the side of market share of having some more time to transactions or conveniences then we would try to get a lot of subscriptions before we prove ourselves. But there's plenty -- I mean the great thing here is this plenty of value to both sides, which is what pricing is ultimately driven on. So we're being super helpful to the merchant -- because we have customers, and we're being super helpful to the consumer because we have information that most other people don't have, like is the thing available. So I think we wrote in this document today, think about maybe $25 to EUR 25 a year from a consumer based on those different things, if the business gets up to 50 million or 100 million consumer vehicles in, whatever, 5 or 8 years, it's a pretty big new business. The numbers start to get pretty big. So we're not really worried about, hey, we don't -- it used to be eyeballs or not sure how we're going to get paid. It's really just metering in the appropriate price that matches up to the value people are getting.

All right. Great. Understood. And then the other thing I wanted to ask is on telematics, which is a business I know you guys exited a while back. And I'm just wondering kind of as more of the value, and this is more on the commercial fleet side, is more of the value you're providing is coming from the data, the unified data you're able to provide mixed fleets. Maybe you can just remind us or refresh on kind of why telematics is not the best way to do that, kind of where you see your moat in providing vehicle level data if you're no longer helping facilitate the payment I'm thinking more vehicles being done at home or at a central depot.

Yes. So the telematics exit was super-duper simple. It was basically an old koosh ball retrofit-y way of getting this stuff into the vehicles. Although the software was cloud-based, it required retrofit gadgets in the cars, which required cost to get from the client, time to go implement the thing. So we hated all that and dramatically slowed the sales implementation cycle. And then second is price collapse that our view -- my view is when that stuff became part of the connected car, which obviously it has, right, the computers now in the cars, that you're not going to get priced for all that weird stuff, you're only getting good price for the software. And so buying or owning a business that would go in 1/2 or 1/3 is that part of the cost structure and price came out was just not interesting to us. So that's why we exited. But you're right, the analogy that is right here is the benefit of that was the information in the software that it helped the business, the plumbing guy do better dispatch and see if this guy left their house at 8 a.m. It helped them manage his workforce and the customers. And so you're right that this is a bit of a similar thing. We want to help our business guys not have a guy sit for an hour. Can you imagine that someone that bills at $100 to $200 an hour and he's sitting at a charge point because he didn't get charged up at home or he went to the wrong place? So we think the information is going to be super important to them. And again, we like businesses where the model doesn't have that baggage that I talked about, where that -- so much of that stuff is going to go away, the old school implementation stuff.

And just to add, I think in the new EV world, first of all, every car is connected. So you don't need telematics kind of gadgets installed in the vehicle anymore. Every car that rolls off is connected. And I think -- I mean, we've also invested in this company, Motorq here in the U.S. But our connected strategy, connected car strategy, I didn't get a chance to talk about in any detail earlier, but that's very much part of our thinking as well. And Motorq, what Motorq is they're able to aggregate that connected car data from the manufacturers and send it to us to help complement the data points that we have already. So we're pulling data -- if you think about it, we're pulling data from CPOs, mentioned it before. We can pull data from U.K. through Mina from home charging and then we've got the connected car data that we can all pull together to validate the accuracy of the data, to also cover where we have black spots or maybe the data doesn't come through properly through one device, you've got another device. And we could also help with fraud, right? We can make sure that the vehicle is at the charge point and triangulate that to make sure that there's no fraud going on if that's sort of fleet wants to have managed.

Yes. I don't know if you guys know this, the business was an aha for me, so every, certainly, EV vehicle, maybe modern vehicle, is literally talking back to the manufacturer or host like every 2 seconds. So when you buy a new car, you sign and all that paperwork and agreement to let the manufacturer have location information, charge or fuel information, maintenance information. So all that lights to come on and off in your car are also going remotely back to Ford or GM to help them build better cars and stuff. And so to Alan's point like there's a treasure chest now of information. So for like EV, if you were one of our business clients, we literally know every 2 seconds, what the charge level is of your 10 cars. Like, how cool is that? Like, the guy doesn't have to look at the thing. We tell the boss that Jim's running and he is at 10% charge or whatever or is at 90%, and he said he had to pull to over, charge. Hey, Jimmy Bond, I don't think so, I see you're 90%. So it's pretty cool. I mean, the ability to grab itself out of every car and repackage it is Star Trek and Star Wars.

Our next question is from Ramsey El-Assal with Barclays.

Maybe I'll ask both related questions at once in the interest of time. I wanted to know where the charge point operators, who are they? Is there any overlap between the fuel brands or fuel station operators who are also trying to expand the kind of distribution or have plans to in this direction? I guess the broader question is, can you leverage your existing fuel card distribution relationships in order to drive this business forward?

Ramsey, it's Ron. You got it. I think we tried to say it, but literally, like we talk greatly like to our truck stop partners here in the U.S. right, in our trucking business. They're all now contemplating putting in chargers, right, to get ready for when the big trucks roll into that chargers and stuff. And so we're estimating it may be 1/4 or 1/3 of all CPO capacity will be retrofit. We'll be -- what you and I think of as regular gas stations basically able to take EV because they're going to live in a mixed world, right, for a long time, a retailer is. So to your point, we think that, that is super advantageous to us because we're already collecting data from all our proprietary merchants here and in Europe. So this would -- we have a settlement agreement to payment and everything. So you're on, if that's another asset we think we can leverage in this thing.

Got it. Got it. So there's sort of a built-in pipeline. When the time is right, there's is a built-in pipeline for your distribution model here. That's great.

But again, we got 80% and -- just to make clear, this company we bought has 80% of all the charging points. 80%, we're obviously going to have them all. It's not universal, but it's pretty close. And that's because they've been at it, again, a super, duper long time. So I say this all the time you guys. We -- I buy assets. We make the financial profile happen, but this company has assets to us that's far outstrip the financials that it's creating. And so we think that, that's going to be super hard for other people to recreate.

The other advantage, I think, is if you think about the software that we now have -- the operating software for a CPO that we can then offer go to our existing gas station customers as an offer. It's agnostic. It's not tethered to the hardware that you're going to go and buy. That has value. Because often, the hardware and the software will come bundled and that kind of restricts the CPO's ability to maybe go in the direction they want to go in. So our ability to basically provide hardware agnostic CPO operating system software also, I think, is a really advantageous area in this particular space, which is all new to us.

There are no further questions at this time. I'd like to turn the floor back over to Jim Eglseder for any closing comments.

Guys, this is Ron. I just wanted to give a personal thanks for joining us on earnings to get on to hear thing. I just want to leave you with we're pretty excited. I don't know what's coming across the thing. But we are spending some money and spending some time to try to get out in front of this thing, but we're pretty excited about what we can do with it. So again, I appreciate your time.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.