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CI

CORPAY, INC. (CPAY)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered a clean beat: revenue $1.1725B and adjusted EPS $5.70, with organic revenue growth of 11%; Corporate Payments grew 17% organically, Vehicle Payments returned to double-digit growth, while Lodging declined 5% .
  • Guidance raised: FY 2025 revenue to $4.505–$4.525B and adjusted EPS to $21.14–$21.34; Q4 guidance implies ~$1.235B revenue and $5.90 adjusted EPS midpoint, supported by Alpha closing and Avid investment .
  • Strategic catalysts: closed Alpha (Oct 31) and Avid (Oct 15); Mastercard investment expected around Dec 1; upsized credit facilities by $1.9B, lifting Revolver B to $1.5B and adding a new $900M Term Loan B .
  • Near‑term stock reaction catalysts: execution on divestitures (up to $1.5B of proceeds), cross‑border FI pipeline via Mastercard, stabilization in Lodging, and early traction in stablecoin rails through Circle collaboration .

What Went Well and What Went Wrong

What Went Well

  • Corporate Payments momentum: spend volume reached ~$68B in Q3; organic growth +17% despite float headwind; retention improved to 92.4%; new bookings +24% QoQ, underpinning 2026 confidence .
  • Vehicle Payments inflection: segment organic growth back to ~10%, with U.S. Vehicle +5% on improved sales, approval rates, and retention; Brazil and Europe steady, aided by extended network (Card Debt/Tag growth) .
  • Balance sheet and financing: liquidity ~$3.5B; leverage ~2.4x; Revolver increased to $2.775B and new $900M Term Loan B at tight spreads for BB+ corporates; both Moody’s (Ba1) and S&P (BB+) stable outlook maintained .

Selected quotes:

  • “We reported both revenue and cash EPS growth of 14%... Our overall organic revenue growth finished up 11%.”
  • “Corporate payments delivered 17% organic growth... spend volume was just over $68 billion in Q3.”
  • “US vehicle payments organic revenue growth improved 500 basis points sequentially to 5%... driven by improved sales production, higher approval rates, and stronger retention.”

What Went Wrong

  • Lodging underperformed: organic revenue down 5%; ~400 bps drag from lower emergency/FEMA revenue; recovery not yet evident despite stabilization efforts .
  • Float revenue compression: ~100 bps drag in Q3 corporate growth; Q4 includes ~3% float headwind as lower rates soften float revenues .
  • Yield dilution in Corporate Payments: revenue per spend dollar declined YoY due to onboarding of large enterprise and bank‑account clients (mix effect), though absolute profits benefit from scale .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$1,029.2 $1,102.0 $1,172.5
Adjusted EBITDA ($USD Millions)$594.7 $620.6 $676.7
Adjusted EPS ($USD)$5.00 $5.13 $5.70
Q3 2025 vs EstimatesConsensus*ActualResult
Revenue ($USD Millions)1,163.52*1,172.48 Beat
Adjusted/Primary EPS ($USD)5.64*5.70 Beat

Values retrieved from S&P Global.*

Segment revenue breakdown ($USD Millions):

SegmentQ3 2024Q2 2025Q3 2025
Vehicle Payments$507 $526 $553
Corporate Payments$322 $392 $410
Lodging Payments$134 $120 $127
Other (Gift/Payroll Card)$67 $65 $83

Key operating KPIs:

KPIQ3 2024Q2 2025Q3 2025
Corporate Spend Volume ($USD Millions)$43,562 $58,114 $68,225
Corporate Revenue per Spend (%)0.74% 0.67% 0.60%
Lodging Room Nights (Millions)10.1 8.7 8.9
Lodging Revenue per Room Night ($USD)$13.26 $13.84 $14.20
Vehicle Transactions (Millions)206.7 222.6 223.5
Vehicle Rev per Transaction ($USD)$2.45 $2.36 $2.48

Drivers:

  • Corporate yield decline reflects mix shift to large enterprise/bank‑account clients; absolute profits still scale with volume .
  • Lodging ARPN improved despite lower emergency volumes; stabilization underway .
  • Vehicle transactions and per‑transaction revenue rose with better mix and network monetization .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenues ($USD Millions)FY 2025$4,405–$4,485 $4,505–$4,525 Raised
Adjusted EPS ($USD)FY 2025$20.86–$21.26 $21.14–$21.34 Raised
Interest Expense ($USD Millions)FY 2025$360–$390 $395–$415 Raised
Diluted Shares (Millions)FY 2025~72 ~71 Lower
Adjusted EPS ($USD)Q4 2025N/A$5.80–$6.00 New
Revenue ($USD Millions)Q4 2025N/A~$1,235 at midpoint (management) New
Tax Rate (%)FY 202525.5–26.5 25.5–26.5 Maintained

Q4 segment outlook: Corporate Payments mid‑teens organic (with ~3% float headwind); Vehicle ~10%; Lodging flattish to slightly negative .

Earnings Call Themes & Trends

TopicQ1 2025 (Prior)Q2 2025 (Prior)Q3 2025 (Current)Trend
AI/productivity & vendor rationalizationPlanning underway to support margin Noted discipline; margins steady Expect incremental margin expansion in 2026 from AI and vendor rationalization Improving margin leverage
Stablecoin/cryptoInitial plan; focus on infrastructure and use cases Partnership rationale and economics (rails vs conversion value) Circle collaboration; wallets, USDC integration; three fronts (beneficiary payouts, digital wallets, crypto clients) Building capabilities; near‑term pilots
Tariffs/macro/FXModest cross‑border impact; services less affected; tariff pause benefits Record cross‑border sales; mixed regional impact; volatility helps activity Cross‑border sales robust; North America softer, EMEA/Asia offset; float compression headwind persists Mixed but manageable; diversified
Corporate Payments19% organic; enterprise client ramp starting 18% organic; spend up 36% reported 17% organic; spend $68B; retention 92.4%; bookings +24% High-teens sustained
U.S. Vehicle PaymentsDown 3% organic; retention improved 200 bps YoY Turned positive; better approvals and sales Mid‑single‑digit growth; structural improvements and yield initiatives Durable improvement
LodgingStabilizing; airline softness Down 2% organic; emergency rooms weaker Down 5% organic; stabilization continues; sales need improvement Needs execution
Financing/leverageAdded $750M TLB; leverage ~2.69x Liquidity >$2.5B; leverage ~2.53x Liquidity ~$3.5B; leverage ~2.4x; facilities upsized $1.9B Strengthened

Management Commentary

  • Strategic setup: “We have closed the Avid mid-market AP automation investment… We have closed Alpha… expect… quite accretive to us in 2026… expect to close the Mastercard investment… on or around December 1” .
  • Corporate Payments vision: “We’re outlooking over $2 billion in revenue next year… pretty strong positions in each of these four corporate payment solution areas… Think $10 billion, think 5X from where we are.” .
  • Stablecoin approach: “We’re not afraid… It’s a fascinating incremental rail… we’re adding this set of capabilities… and see whether there’s utilization or not.” .
  • U.S. Vehicle durability: “The retention in that business now has gotten to the company’s line average… the assignment to grow it now is just infinitely easier than it was a couple of years ago.” .
  • Capital allocation: “If people keep trading our stock at this level and we sell these companies, we are going to be buying stock back…” .

Q&A Highlights

  • Corporate Payments growth drivers: Core business ~16–17% organic in Q4, despite 100 bps float drag; Alpha adds ~$55M Q4 revenue and ~$0.50 accretion in 2026 (part of $0.75 total with Avid) .
  • Divestitures: Two non‑core vehicle businesses in market; targeting up to $1.5B proceeds; focus on price discipline and simplification .
  • U.S. Vehicle sustainability: Improved approval rates, retention, and merchant rate initiatives (CardLock/rails mix) underpin durable mid‑single‑digit growth .
  • Stablecoin economics: Value creation remains in FX conversion; rails cost (SWIFT vs proprietary vs blockchain) has de minimis impact; main benefit is 24/7 settlement/programmability .
  • Interest expense cadence: Q4 expected ~$115–$120M; modestly higher per quarter in 2026 with full borrowing impact .

Estimates Context

  • Q3 2025 beat: Revenue $1,172.48M vs consensus $1,163.52M; EPS $5.70 vs consensus $5.64 – both modest beats, aided by volume strength and FX, partially offset by float compression [GetEstimates].
  • Q4 2025: Company midpoint revenue ~$1,235B vs consensus ~$1,233.9B (in‑line), adjusted EPS midpoint $5.90 vs consensus ~$5.93 (slightly below midpoint); float headwind (~3%) likely tempers yield [GetEstimates].
  • FY 2025: Company raised guidance to adjusted EPS range $21.14–$21.34 vs consensus ~$21.27; revenues $4.505–$4.525B vs consensus ~$4.5139B – broadly aligned, with minor mix differences [GetEstimates].

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Corporate Payments remains the growth engine; watch sustained high‑teens organic growth, volume scale, and enterprise/on‑ramp mix impacts on monetization rates .
  • Vehicle Payments turnaround appears durable; improved retention and pricing/mix likely support 2026 margin and growth .
  • Lodging is the swing factor; stabilization achieved but sales execution needed; emergency revenues are a structural headwind vs last year .
  • Near‑term catalysts: closing of Mastercard investment (~Dec), divestiture outcomes (up to $1.5B), integration updates and synergy sizing for Alpha, and Avid profit acceleration plans .
  • Float compression is a manageable headwind; top‑line volume growth and FX activity should offset over time; monitor rate trajectory into 2026 .
  • Capital allocation optionality: leverage within target range, revolver undrawn post‑upsizing, buybacks likely if valuation remains attractive and divestiture proceeds are realized .
  • Stablecoin rails are early but potentially additive for off‑hours settlement and FI/crypto client segments; execution updates in 2026 could become a narrative driver .

Additional Data and Details

  • Corporate Payments spend volume: $68.2B in Q3 (vs $58.1B Q2; $43.6B Q3’24), with revenue per spend dollar down due to large enterprise/bank‑account client mix .
  • Segment mix Q3: Vehicle 47%, Corporate 35%, Lodging 11%, Other 7% of revenue – diversifying toward Corporate Payments .
  • Financing: Revolver B lifted by $1B to $1.5B and new $900M Term Loan B; proceeds used to fund Alpha; Moody’s/S&P ratings unchanged with stable outlook .

All numbers and statements are sourced from Corpay’s Q3 2025 press release/8‑K exhibits and earnings call transcripts unless noted.