Corpay NYSE: CPAY CFO Peter Walker said the company expects its growth momentum to continue through the second half of the year, citing strong customer activity, sales and retention across its businesses.
Speaking at the Deutsche Bank Tech Conference, Walker said Corpay had posted its fourth consecutive quarter of “beat and raise” performance and its fifth straight quarter of double-digit organic growth. He said current-quarter trends were tracking in line with the assumptions underlying the company’s guidance, with no material changes to report.
Corporate Payments Remains the Primary Focus
Walker said Corpay’s corporate payments segment generated 16% organic growth in each of the first two quarters of the year, and the company expects similar, or potentially slightly higher, growth in the second half. He cited demand across spend management, commercial cards, accounts-payable automation and cross-border payments.
The company sees a $600 billion total addressable market across its corporate payments offerings, Walker said. In cross-border payments, Corpay is focused on middle-market companies, which are generally served by regional and local banks rather than the largest global banks.
Walker said the company estimates the middle-market cross-border opportunity at roughly $160 billion in revenue TAM, compared with about $700 billion in the enterprise market. He said major banks are primarily focused on enterprise customers and have less incentive to pursue middle-market clients, creating an opportunity for Corpay’s products.
“We’re very focused on serving real-world problems for CFOs and their teams,” Walker said. “At the end of the day, our goal is to help businesses save money.”
Corpay also provided an update on its integration of Alpha Group, the cross-border business it acquired last year. Walker said 80% of Corpay’s corporate payments business has been migrated to a single global platform, with the remaining 20% expected to move during the fourth quarter.
The company is also combining Corpay’s existing multi-currency account product with Alpha’s global bank account offering into “Global Bank Account 2.0,” which Walker said is expected to be completed by year-end. The combined product could support additional growth by allowing Corpay to sell Alpha’s offering into U.S. and Asian markets where Alpha had not been licensed.
Portfolio Shift and Vehicle Payments Outlook
In vehicle payments, Corpay reported 8% organic growth in the second quarter and expects high-single-digit growth for the remainder of the year. Walker said Brazil continued to grow at a mid-teens rate, while Europe and the rest of the world grew about 9% to 10%.
The company has reduced investment in U.S. vehicle payments, Walker said, because it believes incremental spending can generate higher returns in corporate payments. Corpay is seeking to operate a portfolio of “fewer, bigger, more advantaged” businesses, he said.
Walker said issues affecting one of Corpay’s 10 Brazil business lines, which had been associated with search engine optimization, had been addressed. He said the company expects Brazil to continue producing mid-teens organic growth in the second half.
Corpay has completed the sale of PayByPhone and announced the divestiture of epyx, which has not yet closed. Walker said the company could divest another three or four businesses over the next 18 months, focusing on assets that are TAM-constrained or lower growth and do not fit squarely within its corporate payments strategy.
Proceeds from divestitures are expected to be used for share repurchases to help minimize adjusted earnings-per-share dilution from selling the businesses, Walker said.
Lodging, M&A and AvidXchange
Walker said Corpay’s lodging business returned to flat to slightly positive growth in the second quarter and is expected to improve through the year, potentially exiting at a mid-single-digit growth rate. The business benefited from lapping prior-year emergency volume from FEMA and from sales signed in the second half of the prior year beginning to come online.
He noted that lodging implementations typically take longer than implementations for spend management or cross-border products because customers often require customized setup, pilot programs and testing.
On acquisitions, Walker said Corpay is “size-agnostic, return-disciplined” and has the capacity to pursue either smaller capability acquisitions or larger transactions. He said the company expects to generate $1.8 billion of free cash flow this year and would focus any M&A activity solely within corporate payments.
Walker also described Corpay’s minority investment in AvidXchange as a successful partnership so far, citing improved sales and profitability. Corpay and majority owner TPG have focused on increasing sales investment at AvidXchange while reducing emphasis on non-core projects, he said. Walker said a potential acquisition of the remaining AvidXchange stake would depend on its performance and Corpay’s capital-allocation decisions.
Long-Term Framework and Technology
Walker said investors should underwrite Corpay’s business to 10% organic growth, which he characterized as repeatable and durable. He said organic growth excludes the effects of fuel prices, foreign exchange and acquisitions.
- 10% organic growth;
- 13% growth in profit before tax; and
- More than 20% adjusted EPS growth.
Walker said Corpay expects adjusted EPS growth of 27% to 28% this year and reiterated the company’s previously discussed target of $50 in EPS. He said the company believes a greater mix of corporate payments could support a higher valuation over time, while emphasizing that he was not providing stock-price guidance.
On artificial intelligence, Walker said Corpay is developing AI agents that could assist with functions performed by fleet managers and accounts-payable managers. The company is also using AI to improve productivity in engineering, though it is currently reinvesting those gains into the business.
Walker said blockchain-based payment rails and tokenized bank deposits could be an enabler rather than a threat to Corpay’s cross-border business. Corpay has chosen JPMorgan’s Kinexys network and expects to move significant payment volume onto it by year-end, he said, citing the ability to settle transactions around the clock.
Looking ahead, Walker said Corpay aims to become a simpler company that is easier for investors to evaluate, while continuing to demonstrate its growth framework and multiple avenues for shareholder value creation.
About Corpay (NYSE:CPAY)
Corpay is a global corporate payments company that provides businesses with a range of payment and expense management solutions. Its services are designed to help organizations manage payables, card programs, travel and fleet-related expenses, and cross-border transactions more efficiently.
The company serves customers across a variety of industries and geographies, offering software and payment tools that streamline accounts payable, vendor payments, and workforce payments. Corpay also provides specialized solutions for fleet management and international payments, helping businesses control costs and simplify financial operations.
Corpay operates as part of the broader financial technology and payment processing sector.
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