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

So next up, we have Alissa Vickery, the current interim CFO, FLEETCOR; as well as Jim Eglseder who's the Head of IR. Prior to being the interim CFO, Alissa was the Chief Accounting Officer, actually is still the Chief Accounting Officer and has been at FLEETCOR for over 12 years. So maybe start off with just a big broad macro question because it's definitely top of mind for a lot of investors. Maybe you could just talk about where we are in the macro situation for you guys and how it's affecting the business today?

So I would say, first off, thanks for having us. But from a macro perspective, so far, we're really seeing really the only impacts on our business affecting our smallest of small micro SMB customers. So these are our customers who are in primarily our fuel product space in North America who have less than 5 cars. So these are like the mom-and-pop plumbers they have 1 to 4 vehicles where they have a fuel card and they're working in the local area, and they're just struggling a little bit more than the rest of the base. So what we've done is on a very targeted basis, tried to hone in on what their credit terms are today. So looking at historic vintages of customers and making sure that the credit terms make sense in accordance with the risk. And then also as we redirect our new sales channels, our new sales targeting for new sales opportunities is making sure that we're targeting at a slightly larger SMB customers. So customers that have more like 10 cards, they're a little bit more stable, a little bit more established and mature in terms of where they are in their life cycle as an org. And so we think the combination of those 2 things really does help mitigate the risk, but I'll say that we continue to be hyper focused on it.

And is there anything that -- outside of the size, is there any other commonality among those micro merchants that are seeing stress? Is it inflation that's affecting them? Is it the end demand has slowed? I mean is there anything else? Any more color there?

Yes. No, I think the biggest thing that we've identified is that there are the individuals who behave almost like consumers who received probably the best lift from the pandemic and free money wave, so PPP loans, and really, were elevated probably in a time when they wouldn't have otherwise been. And so some of that free money was super helpful to keeping them in business during a time when they were also super busy. But I think those elevated fuel prices as well over the last 6 months of 2022 really became the catalyst for, oh, gosh, it's just more expensive to stay in business, especially with a lot of them being -- their #1 expense being fuel beyond just service industry expense of headcount.

And do you have like -- I mean is there anything more that you've seen quarter-to-date? Or is it sort of a similar trend quarter-to-date?

Yes. I would say it continues to be hyper-focused on these micro SMBs. There's nothing incremental we're seeing so far across any of our other product solutions or geographies, quite frankly, of any meaningful size. So it's really micro SMB customers in our North America fuel.

Got it. So for 2023, you're ramping up investment spend quite a bit relative to the initial guide. You're now expecting 150 basis points margin improvement versus the 200 to 300 basis points. Could you just talk about where the incremental investment is happening and what you expect the ROIs to be in like over what time period?

Sure. So I would say, traditionally, we expect our EBITDA margins to be in the mid-50s. It only dips -- or it kind of bounces around depending upon the inflection points of acquisitions that we do, whether they be capability plays or even accretive deals. Typically, we're in the business of acquiring underperforming assets. Underperforming assets by definition, don't have great margins. And so what you'll see is in years where we have either large acquisitions or small, more capability plays, margin will decline. And then over time, as we scale those businesses, synergize what we can out of the base of the customers and then the tech moving it into our more traditional tech environment, we're able to really get accretion in our EBITDA margin. And so as we go into '23, one of the things that we were quite purposeful about when we're going through the budgeting process was being thoughtful about what investment we make in these capability-related plays. So specifically around our EV investments, as well as in some of our corporate payments investments. And making sure that we're actually investing in the things that we've acquired, otherwise, what was the point. And so what we see is that our EBITDA bps growth probably wasn't as much as we were hopeful for when we were originally starting out our budget process. But by the end of this year, we expect that it will be a full 200 bps of improvement year-over-year as we exit 2023.

Got it. And to the extent that we see macro weakness, do you feel like you have levers to sort of pull back even further or...

Yes. I would say, again, we're not seeing it right now. But absolutely, I mean we have a very high fixed expense model. So about 65% of our operating expenses are fixed in nature with the remaining being variable. So we will peel back accordingly on any remaining discretionary spend that exists in the budget, if necessary.

Okay. Jim, anything to add to that?

No, I just think to quantify what Alissa said, 100 basis points of the differential in margin from the 200, 300 that we said to expect to the 150 that is in the guide. 100 points of the drag is from acquisitions, whether it be from the capability investments that Alissa mentioned and/or the inclusion of global reach, the FX deal we did, the cross-border deal we did that we closed on January 3. Those were solely responsible for the difference, so.

And I mean, I guess, like the second part of my question that was just when do you expect a return? Like do you feel like making these investments and totally makes sense, will yield a noticeable return in a couple of years? Or how should we think about timing of the returns on those investments?

Right. I would say, as a reminder to all of us, we're running a business for the mid- to long term, not for the next 12 months. And so I think it depends on the deal or on the play. I think to the extent that it's complementary and accretion -- and accretive in nature, it's pretty quick. It's 6 to 12 months, you see the return. To the extent it's more visionary and when I say visionary, I think like the EV solutions, right? So EV is in its infancy in terms of adoption by fleet with the Europe and the U.K. being way ahead of the U.S. And so just when you contemplate that, we want to be ready. We're a -- we're just the middleman between the merchant and the customer or a payment mechanism. We're agnostic to the fuel type, whether it's electricity or a traditional internal combustion engine. So we're ready to service those mixed fleet customers as they have needs.

Since we're talking about EV, let's just let's dig deeper into EV. Maybe we could talk -- you've made acquisitions and investments in EV. Could you just give us an update on how it all fits together, maybe -- it would be a good venue for that. And then how you see this unfolding over the next 5 to 10 years?

Sure. So maybe I'll state what -- sort of what we've got our feet in the water on and then speak to the longer-term vision. So from an EV perspective, we have made investments and acquired companies that allow us to fundamentally service the fleet customers we have today, but also the fleet customers of the future. And so if you think about EV charging, there's the at-home component. There's the on-the-road component, and then there is the mixed fleet component. So how do I as a fleet operator manage both my traditional vehicles that use internal combustion or sorry, use traditional fossil fuels versus needing an EV solution. And so today, we're -- specifically in the U.K., we've bought a business that enables us to work directly with utility companies so that the fleet employee doesn't have to foot the bill for that incremental utility spend as he or she may charge their vehicle in their home. In addition to that, as they charge the vehicle on the road, they'll be able to tap into our network to where the fleet manager will still be able to see all of the economics of the charging or refueling, if you will, as well as continue to manage their traditional combustion engine fleet vehicles. So it's -- we kind of think it as a 3-in-1 at-home, on-the-road with mapping capabilities so that you can make sure you're mapping your route according to where the next charging site is, which anybody with an EV vehicle, especially in the U.S., has discovered, not all charging sites are created equal. Oftentimes, they'll pull up to a site and there will be 5 pumps, if you will, for EV and 2 won't even be working. So -- or there'll be a varying speeds and quality and then traditional.

And so how do you bring that technology here?

Well, I mean, I think that's obviously a longer-term play. I think what we're seeing today is the U.S. is miles behind Europe and the U.K. And then even the U.K. being significantly ahead of what we're seeing in Europe in terms of fleets themselves because as you think about it, a box truck pulling potato chips is far more efficient as an electric vehicle than, say, a box truck hauling air conditioning units. The range that those vehicles will achieve, the battery lives that just inherently exist in today's EV vehicles, combined with just the distance that those vehicles have to travel will all play into adoption as well as sort of the needs for our products in each geography.

Got it.

But I think it will be different. And what we've learned as we look across all of our businesses, you don't often consider Brazil as a test bed for what's happening in the U.K. or the U.S. But if you think about what we've done in Brazil, from all of the products and services and the mobility-based solutions around the vehicle in Brazil, can all be used to influence how we think about and build that out in the U.K. and Western Europe where we built network advantages. And so when we get to the U.S. we'll continue to look at how do we put together the network to service our clients. And then how do we package, if you will, all of the products and services that can be used in and around an EV in one place, whether it be in an app or in a tag in a vehicle, what-have-you. So it really is kind of -- we're learning different things around the different geographies that when it does become there's enough critical mass in the U.S. that we're ready to hit the ground running and to help build whatever it looks like. That's the...

Yes. I think the tricky part is just the distribution model is going to change dramatically, to your point, and having a linkage with the electric company makes sense. But then will there be other platforms that you need to also have an integration with and that is the tough part.

But we already have agreements with all of the OEMs today, right, to use our network to help you find a place to charge. If you have a Tesla, you go to the Tesla network. If you have a Mercedes EV, there is no Mercedes EV network. So how do you manage that? As a consumer, each one of these charge point operators has their own network. They have their own app, you have to put your credit card into it, you have to find it. You can't just walk up to a PON or a charging station tap your credit card and charge on the go. So think about the proliferation of the number of different charge point operators in the U.S. and the U.K. So as a consumer, it's hard to deal with. As a commercial driver, who you drive the electric vehicle because your employer told you, you're driving electric vehicle, good luck. So in the U.K., what we've done is we built the network, we have over 300,000 charge points in our network to help facilitate that. And it's all contained in one app where you can pay across all of the different charge point operators in one app, so you don't have to manage all of that complexity. So that's what we do is we simplify or minimize the administrative burden of managing your fleet, which has gotten even harder to do in a mixed leader in the EV world.

And Jim, you're on the front lines of getting all the EV related questions from investors. I'm curious like if you if you have any other thoughts to add because I'm sure there's things to clarify there.

Well, I think that one of the questions we get is, well, how much of our revenue is from EVs today and it's much less than 1% because we've only got -- we've got barely 1,000 clients in the U.K. where the things are furthest along. And we've got only a handful of EV clients here in the U.S. So the transition will take incredibly long. But as Ron mentioned on the call, hey, it's a big opportunity for us. We have an OEM opportunity that I just mentioned, the consumer opportunity. Because as a consumer, again, you want the same functionality, and there's no reason we shouldn't be able to do that. So we've gone from -- 2 years ago, hey, this is a defensive play. How do we make sure that recapture all these economics and they're equivalent to what we do an internal combustion play today toward, hey, there's a massive opportunity ahead of us and somebody is going to get it. So why not us? Let's go after it.

No, it makes sense.

And the only thing I might add there is, we said we have a little over 1,000 mixed fleet customers in the U.K. kind of all there is. It's the very beginning. And so if there's a need, we're there to serve.

I appreciate that. It makes a lot of sense. Obviously, that's top of mind for this space for investors.

And maybe I'll add one more thing. Just to comment. I mean we are going to sort of present sort of what the economic like this over the next, say, 90 days or so.

Like with earnings.

Most likely with earnings. So that there's better visibility from that from the investor community.

And I guess like it's obviously meant to be accretive to what you already have, it sounds, right? And the nature of the revenue streams probably is similar or different or...

In aggregate, on a per-client basis, we're seeing this similar to slightly better economics across that next fleet customer. Now the revenue comes in at a different place. There's a subscription component to it where we manage the at-home charging on behalf of our commercial customers, the MDR is higher. The total transaction size is lower, transaction velocity is higher. So it comes in, in a different way. But ultimately, part of it is we finally got enough data that we have confidence in what it looks like today. And do we think that's going to hold going forward. Sure. Do we think we have the ability to turn it up by providing incremental products and services around that also, absolutely.

One final question on this. I mean do you feel like on your existing business that incumbency makes a difference?

Big difference, right? Because we have all the customers today, and frankly, we're seeing it in the U.K. because in the U.K., we're not saying, hey, we're not hearing from customers. saying, hey, in 6 months, I'm going to buy 25 electric vans for my fleet. They're calling and say, "Hey, I just bought 25 electric vans. Now what do I do?" Right? And when we're looking at, we're actually seeing success in winning just gas and diesel fleets today from our competitors in the U.K. because they don't offer the all-in-one EV comprehensive solution. So I may not have any EVs in my fleet today, but I know I'm going to get them over the next 6 to 12 months. I'm moving my business today to FLEETCOR or to the FLEETCOR in the U.K. to make sure that we're ready. So ultimately, we're looking at this going, wow, we're getting wins where we never would have before, just because we have the all-on capabilities. So being the incumbent has a massive advantage. The other thing then to consider is these fleet managers, they don't want to manage 2, 3 different vendors for this. They want to go one place, pull up one dashboard, have everything right there, so they can measure and manage your fleet across all vehicle types, whether it be manufacturers say, some people bring up Ford Pro because they're trying to build their own proprietary network. Well, guess what, I don't know a whole lot of fleets that have 100 vehicles in them that are all Fords. So all of a sudden, again, the complexity of managing individual OEMs or charge point operators goes up, and we can solve all of that.

Absolutely. I guess we're not -- maybe just shifting gears to the traditional business model there on the big oil companies, right? And sort of -- that's been the long game, still trying to take share among those that are managing those programs themselves today. Like is that still a strategy? Is that something that you guys are aiming to take share of? Or how are we thinking about that opportunity?

It's certainly helpful. I don't know that that's the end game. Remember, we mostly compete with general-purpose credit cards. Hey, every fleet has a way to buy fuel today. But do you -- whether it be, hey, let your driver fill up on their own credit card and turn in a receipt, good luck with that. Or hey, I'm going to give you my -- the company general-purpose credit card, please bring a receipt and only by fuel, okay, let me know how that works out for you. So again, that's mostly who we compete against. And there is still some opportunity mostly in Western Europe, where the major oils still do it all themselves, and they're trying to keep the customer there. So I think domestically here in the U.S., not so much. It's much more selling and perps credit cards. In Western Europe, where we've been trying to pry some of those businesses away from the major oils from a card program management perspective in addition to customers, yes, we think there's a bigger opportunity going forward.

Fair. I'm going to stay with fleet and then move on to some other stuff. I mean you've seen a little bit of a deceleration in organic revenue growth over the last few quarters. Maybe you could just talk about the drivers behind this. Has same-store sales and new bookings trended along with the health of the fleet customers?

I think this really is a story of the micro SMB. I would tell you, over the last couple of years, we purposefully had directed our sales engines towards those smaller SMB customers. And it was great when there was plenty of free money to go around until the macroeconomic situation in North America specifically started to shift because I will remind us all that primarily -- the only place we take any kind of card risk or credit risk is in North America. The U.K. and Europe really behave differently. It's more of a pull model, and there's not a ton of AR risk. And so when we noticed that the macro was starting to have an impact on those micro SMB customers, we purposefully took a step back. And evaluated what the right segment of customer was to go after and redirected that sales engine kind of in the fourth quarter of last year to slightly larger SMB. And by doing that, it unfortunately did have the side effect of slowing growth in that segment. And so as we pivot into '23, it has a carryover hangover effect for the first half of the year, partially because we're actively and targetedly managing the bad debt component of those new sales, but also trying to make sure we retrain our sales engines to point at that right customer. And we're already seeing some early successes, which are quite reassuring as we ride that trajectory into the second half of the year.

And that's what gives you confidence that the second half should reaccelerate?

Absolutely. That combined with, like I said, that targeted focus on the bad debt and really having a good control and handle on it and feeling confident that the sales we're making are really strong.

Great. And I think we have easier comps in the back half of the year too, so.

Yes, that's always good.

Maybe we go back to like a strategy question, the Beyond strategy. you made a lot of progress around the Beyond strategy. Maybe you could just talk about where inside and Beyond you're most excited about? and that gives you the confidence for that 10 to mid -- 10% midterm organic growth revenue target?

Sure. And so when we talk about Beyond, really what we're trying to target is more of that attainable market or share of wallet. And so I would say Beyond has really evolved, Jim and I were talking about this before we came in here actually has evolved from this Beyond concept to more of, hey, I want to give you a menu of options or different solutions and services that I can provide to you. I don't just do a fleet card. I also do have a lodging service. I also have toll capability. And depending upon what the needs of your business are, I can provide any and all of those. And so really thinking about it in the context of mobility solutions, which we think of as, hey, I have a fleet of drivers who need to use lodging services. Oftentimes those lodging services are -- the vehicle is integral to that person performing their jobs and responsibilities. So think like a telephone truck, where they're redoing lines or a utility truck to work on power lines. The vehicle is integral to them performing their job. So it goes with them on the site. That vehicle also needs fuel. And so really pivoting how we go to market for these customers to be a one-stop shop across mobility solutions that include fuel, tolls, lodging. And then I'll say, complementary to that, we have our corporate payments products that are really driven towards AP vendor spend. So I want to offer to you any payment that you're going to make to another business, one business to another business that we're going to take that for you, and we can help you fully automate the payment cycle. We can integrate into your ERP solutions, if you want. We can have OCR capability to scan your invoices, manage the payment, secure the funds and then we'll make that payment on your behalf instead of you making 1,000 payments to pay all your AP invoices, you make one, you make it to me. And then in exchange, I will then pay your vendors and get you a rebate on that spend. And so -- oh, and then by the way, if you need to make a foreign currency payment as well, we can handle that also. And so I would say it's really that share-of-wallet solution across the different ways we go to market, whether it's the mobility solutions or corporate payments that really is the most exciting thing to us as we move forward into '23 being very purposeful with their sales efforts.

It sounds like an expansion of ARPU sort of thing with other products, right?

Yes, absolutely. And then it's not just selling more products to one customer under the vehicle mobility solutions, like Alissa said, it's also expanding what we do within the businesses, whether it be what airlines and insurance companies and lodging, right? Historically, Beyond Fuel started as hey, you're a construction business with a fuel card. I'm going to open up an MCC code for you to buy a little bit extra things that you can't use it for everything. But hey, I'm scraping some spend from your other general purpose credit card. Well, as we looked at other places and all of our businesses, there must be other ways around all of those businesses. It's really kind of morphed into much more of a comprehensive offering as opposed to just, hey, let me let you do one additional thing within one of the businesses, as opposed to we're thinking about it. It's not just how do we capture more clients, which we're super good at. It's how do we capture more revenue from our existing clients by layering in incremental products and services.

Got it. So maybe we shift gears, talk about corporate payments, which has been quite a bright spot. You've seen high teens to 20% organic revenue growth over the last several quarters, and you're obviously guiding for similar growth this year. I mean, is that growth rate sustainable over the long term? Or do you think that there's -- you might moderate some as we move forward?

I mean I think that we are highly confident in that growth rate over the short and midterm. So we're looking -- out looking 20% growth or so organically in our corporate payment solutions. What we would remind everybody is we primarily go up against financial services or banks in this product set because we're servicing customers in the $50 million to $500 million revenue target range. These are customers who are typically under serviced by their financial institutions but who have absolute needs. So it's not going to be the Coca-Colas of the world, but it's going to be that customer who still has meaningful payment capability and needs, who typically have a CFO, a mature management structure in place, but who are under-serviced and underutilizing their own in-house payment mechanisms today. And so we really are striving to make it easier and simpler for them to execute. And the reason we believe in the growth strategy is because today, it's quite metered. We only go after sales in a targeted way based on the capabilities and the, I'll call it, the ability to execute, right? And so it's purposeful that, that growth will continue to grow or continue to escalate as we move forward.

Got it. And I guess, like you guys do a lot of different things inside of corporate payments because you've built capabilities and acquired capabilities. Maybe you could just explain like how you see the model working cohesively and who your competitors are?

Okay. So I would say the model working cohesively is it's one UI for the customer. Ultimately, the customer when they come in and any capability that they need, whether it's like I said, integrating with their ERP or all the way to taking their entire AP function and outsourcing it to us and making the product a virtual product for themselves is really how we target going forward. And then I would say, yes, you're right. There are a lot of different products and solution sets within there and a lot of different margin profiles. But all-in-all, it's and the effort of providing one cohesive experience for that customer.

It sounds like you guys have a more mid-market type customer and user, is that fair?

Yes, absolutely.

And so like everyone is trying to think about build, bill versus Avid versus WEX to some extent. I'm just curious like sort of how you would compare your products to those players?

Well, I think we look at the B2B payment space, kind of like a game board, right? I don't know if there's 20, 30, 40 squares on the game board, right? We don't -- you don't have to own the Board or a row or a column to build a really big successful business in B2B payments because of the size of the opportunity. I mean our corporate payments business is likely to be a $1 billion business by the end of the year this year that would have been built up over the last 6 or 7 years. To Alissa's point, we put together a very robust bag of tools depending on what you need as a business, and we can offer you a full suite solution all the way down to, "Hey, I'm just going to help you monetize some of your payments to take advantage of that." But from a competitive situation, again, it's mostly banks. Bill is down market, we're a middle market, if you will. We do have a downmarket solution. But hey, it's going slow for us, that could present some marginal incremental upside going forward, but it's not going to be a driver of the business. The driver of the business is the core functionality and the middle market businesses that we're after because that's where the spend is. AvidXchange is a bit more of a -- also a middle market business, but they tend to focus on property payments or real estate payments. So again, there's so much space out there. I mean half of all B2B payments today are still done with a paper check, and it's even higher than that down market. So I mean, there's 5, 10 years plus before we see anybody other than banks from a competitive situation. I think that's a little bit misunderstood. It's just like in the fuel business, everybody thinks us, we're actually going out fighting tooth and nail for every SMB customer. We never see each other. And whoever gets that prospect to click on the link first to pitch the value prop, that's who wins. It's the same sort of thing in B2B payments because the CFO will have different needs and desires than the AP manager. So who you're targeting has to have a very specific message specific, call it, action, if you will, depending on who you're trying to target. So it's not a one size fits all, and it really can be very different. And there's years, if not 10 years of growth for anybody in this space before we really start seeing each other.

No, I agree. I agree. It's very fragmented. There's still a lot of runway. Do you feel like you have all the pieces you need? Because you've acquired some capabilities or do you feel like there's other acquisitions that could be made inside of B2B -- sorry, corporate payments?

Yes. I would say I think today that we sort of accumulated the assets we feel like are critical to completing the suite of offerings. That's not to say if something new when fancy came out that we wouldn't consider it. But I think as we move forward, especially in corporate payments, you'll see us do more accretive sort of straight down the fairway, traditional FLEETCOR deals where we really see the ability to lay the volume into our networks, take advantage of the scale and economic and really feel that earnings growth as a result of it over the shorter term.

And I would have to believe that those opportunities are more abundant today than they were a year ago. Is that fair?

I think that's fair. I think what we're seeing today is the valuations are coming back down to earth. That's not to say that assets in that corporate payment space still quite expensive, but they're certainly getting more in the target range is something that we would contemplate.

I don't know there's more available, but they certainly become more interesting as their valuations return to Earth.

Yes. No, I appreciate that. Maybe we shift gears, move over to tolls and lodging. Those are the next 2 biggest segments after fleet and corporate payments. Maybe you could just give us an update around the trends you're seeing in those segments? And what the current strategic initiatives there are?

Great. I would say on the lodging front, I would say the trends continue to be strong. We expect that business to still grow in the mid- to high teens as we move into 2023. We continue to work on the integration of more recent acquisitions and like I said before, really refine how we're going to market and pitching those solutions across our customer bases, so more customer-focused spend on the businesses versus just the product vertical. On the toll side, this -- as we talked before, this business is quite impressive how the team locally within Brazil has really figured out a way to go-to-market way beyond toll. And so maybe I'll come back to the beyond statement, but they are really the catalyst for this vehicle mobility solution way of thinking. They're now selling the product beyond just the initial toll and actually integrating or starting sales from a different angle, like they might -- you might not even need it as a toll product to access the toll roads throughout Brazil, but you may use it just for parking or just to pay for your fuel within the city. And so this product, in particular, I think we looked for it to grow in the low to mid-teens over the coming year. It's a super impressive go-to-market strategy. I would say that they're kind of like our best in practice for which we're evolving the rest of our business.

The OG bond in Brazil is finally a thing and roughly 20% of the revenue is from those beyond programs up from, we'll call it, not very much 5 years ago. So it really does demonstrate the ability to take something, get it of scale, but it's taken us years to build the acceptance network, which is over 5,400 locations where you can use that tag to make other purchases. So...

And building out that acceptance network, that's going direct to the merchants and working with them or it's working through third parties?

It's going direct to the merchants. So historically, we -- when we bought the business, I think we had 600 or 700 Shall stations in network on the gas stations. And we tried for years to get more Shell and Petrobras stations. And eventually, we shifted gears to go after more of the Carrefours the mega stations, if you will, where the high volume where there's more value to that merchant for increasing the throughput. So that's where we found real traction. But ultimately, it's going to the merchants itself or the brand or with parking locations or, frankly, condo access, we're now selling in the condo associations where we use our tag to go in and out of your condo because it's a secure parking. Well, guess what? The tag used for access, you can do it for other things. All you have to do is call this number or scan this QR code So it really is make it simple and easy and -- they call it manageable. I'm not sure if it's magical, but it's not too far from it. So...

Well, it's had a magical impact on numbers and growth. It's had magical growth rates, that's for sure. I mean double-digit growth for quite some time. I mean, do you feel like that's a sustainable run rate for the foreseeable future?

I mean, we think so. As we continue to partner with incremental sales channels, primarily partnering with 2 of the largest banks in Brazil, specifically our relationship with Santander. We've signed up, I think we're averaging somewhere between 30,000 and 50,000 new toll customers per month, and that relationship is in its infancy. And so we're super excited about what the future holds for that product. But then beyond that, as we expand into incremental offerings. So let's say, you only drive out of the city once a month, well, you may not need incremental insurance to really cover that kind of travel. So we have an incremental insurance offering. So now we have over 100,000 insurance policies that we've also -- are a reseller of somebody else's product, but providing that incremental service that you need because we have a trusted brand in-network that you already utilized.

Is that technology portable elsewhere to different country? Or is that really just a Brazil thing?

It can be. I mean everybody is here in the U.S. has a toll tag, whether it be the PPaaS in Georgia or the SunPass in Florida or whatever you call it, up here. But the reality is they're so fragmented and all the states keep all the economics. It's not that interesting relative to all the other opportunities we have to invest our cash in different parts of the business. So it's possible, but it's pretty far down the list of priorities. The other thing I'd mention on Brazil is, hey, it's not just the tag, it's the app. The app is the mega store of offering you. It's almost like a supermarket. Not just for our own stuff, but for third-party things as well. And we have 3 million unique users on a monthly basis that are on the app, paying their bill, managing their access or buying other things. So it really it really has become the whole thing. You said before, it sounds like higher ARPU going forward. And I don't know, it sounds like higher ARPU going forward.

To tell you, I learned something new about the toll business. Every time you guys speak, I think -- it warns like an Investor Day or something to walk through the opportunity...

Field trip to Brazil, let's go.

That sounds interesting, actually. Great. I guess I have a couple more questions, but let me see if the audience has any questions before I finish up. So if anyone's got questions, you can raise your hand, and I'm happy to take them. Yes. She has one right here.

I had a question on the M&A. ROI that you guys touched on a little bit before. I think historically, FLEETCOR used to say that for every acquisition you make, you expect to double the EBITDA or at least double the EBITDA within a period of 12 to 18 months. Is that still a good rule of thumb to think about accretion from M&A?

I think so. And I'm assuming you mean for that specific acquisition. Absolutely. Because the FLEETCOR model is we really buy underperforming assets, underperforming in our opinion, right? So the seller may have a view as to what the business is worth, but we'll have our own twist on it based on what we think and what we know we can do with it just based on our track record and our experience. So yes, I think that that's a reasonable horizon to expect doubling of the profits.

Or a decent size deal, but smaller capability deals that Alissa talked about before. That's not why we bought them, right? They're subscale, they're capabilities that we needed. So anything larger? Yes. Anything smaller from a capability standpoint? Probably not because that's not what it's for. But we've -- also are probably full on capability deals for the foreseeable future. So we're much more focused on the more classic deals that would expect to hit those return hurdles as well.

A question back there.

If it's in your Investor Relations, I apologize, but I'm curious, what's your thought on the technology of IoT sensors in cars? And does that change your economics or how you manage the fleets or how you manage payments within the fleet?

IoT, Internet of Things.

Yes. So I mean for us, we're really indifferent to the payment mechanism, whether it be a tag or the vehicle itself or an app that accesses it. I mean, we are around the payment, and we manage the networks of access because those, frankly, are the where the economics are. To the extent that the vehicle can be used or the tag could be used to purchase other things, that makes sense for us to offer as well, we're in. But whether it's a physical piece of plastic, an app, a QR code or some other way to communicate with the terminal, the acceptance terminal, we're pretty indifferent to all of that.

Any other questions in the room? All right. My last question is on Russia. Obviously, you mentioned on the earnings call that good progress is being made to sell that Russian business, but it could be dilutive, $0.30 to $0.35. Could you just give us an update on sort of where we are at? And how you feel about that dilution number?

Yes. So I would say we are well into the sales process. We feel good that there is an active market for the business, which is somewhat reassuring given the current environment, obviously. We do expect that we should be able to announce something in terms of closing, hopefully, I would call it, midyear with some meaningful progress by the time we get to Q1 earnings. In terms of the dilution, we do plan to use whatever proceeds come out of the business to repurchase our shares to offset some of that impact. But we do feel like it's the right thing to do, just as we move forward as a broader organization. And so just in terms of sizing on Russia, I know we reported it previously that on a revenue, it's about 3% of consolidated revenues and about 6% of earnings.

Okay. All right. So that stays the same.

It does.

All right. Perfect. Well, that will do it. Thank you, guys. Really Appreciate the time.