Greetings. Welcome to the FLEETCOR Technologies, Inc. Third Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to your host, Jim Eglseder, Head of Investor Relations. You may begin.

Good afternoon, everyone, and thank you for joining us today for our third quarter 2021 earnings call. With me today are Ron Clarke, our Chairman and CEO; and Charles Freund, our CFO. Following the prepared comments, the operator will announce that queue will open for the Q&A session. It is only then that you can get in line for questions. Please note, our earnings release and supplement can be found under the Investor Relations section of our website at fleetcor.com. Now throughout this call, we will be presenting non-GAAP financial information, including adjusted revenues, adjusted net income and adjusted net income per diluted share. This information is not calculated in accordance with GAAP and may be calculated differently than non-GAAP information at other companies. Reconciliation of historical non-GAAP financial information to the most directly comparable GAAP information appears in today's press release and on our website as previously described. I do 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 recovery, outlook, new products and acquisitions and expectations regarding business development and future acquisitions are based on that information. They are not guarantees of future performance, and you should not put undue reliance upon them. We do not undertake any obligation to update any of these statements. These expected results 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 today's press release and on Form 8-K and in our annual report on Form 10-K filed with the Securities and Exchange Committee. 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. Good afternoon, everyone, and thanks for joining our Q3 earnings call. So up-front here, I'd like to run through 4 subjects: first, I'll give you my take on our Q3 results along with the rest of your outlook; second, take you into a bit deeper dive into our sales results; third, give you an update on the 3 acquisitions that we've completed year-to-date; and then lastly, an early preview of 2022 and beyond. All right. So let me make the turn to our Q3 results. We reported Q3 revenue of $755 million, up 29% and cash EPS of $3.52, up 25%, so both of those all-time record highs for the company. Also, the Q3 results annualized, finally above $3 billion, so past the $3 billion mark in revenue and $14 in cash EPS. Organic revenue for the quarter, up 17%. And inside of that, Corporate Payments business grew 22% organically. The trends in Q3 are quite good. Sales finishing at record levels, up over 50% versus Q3 last year and over 30% against the baseline of Q3 '19. Retention, steady as she goes at 93% for the quarter. And again, our global fuel card business inside of that also coming at 93%. Same-store sales strengthened plus 5% for the quarter, which further adds to the same-store sales rebound we saw in Q2. Credit losses low again at 3 basis points, continuing to run below historic levels. You may notice our tax rate kind of 4 points higher than last year. That did shave about $0.20 off the $3.52 that we reported for the quarter. So look, overall, kind of pretty pleased with the quarter. So in terms of rest of the year, we're raising guidance today. So revenue guidance at the midpoint now, $2.795 billion, that's up…

Thanks, Ron. I'm delighted to share with you some more color on a very solid clean quarter. For Q3 of 2021, we reported revenue of $755 million, up 29%; GAAP net income of $234 million, up 24%; and GAAP net income per diluted share of $2.80, up 28%. Adjusted net income for the quarter, or ANI, increased 22% to $294 million or roughly $1.2 billion annualized. ANI per diluted share increased 25% to $3.52. Organic revenue growth was 17%, driven by continued strong sales, solid retention levels and same-store sales recovery. Looking at organic growth across product categories. Corporate Payments was up 22% in the third quarter, highlighted by full AP, which grew over 50% again this quarter. Corpay One, our small business-focused full AP offering, grew 78%. So our full AP solutions continue to sell well in the market. Cross-border revenue was up 19%, which showed some softness from the lockdowns down under in Australia. We do believe much of this softness is recoverable, but the timing is hard to predict. The AFEX integration is progressing quite well, and we've converted more than half of its customers onto our existing cross-border payment systems. We expect to convert the remaining customers before year-end. I'd like to thank our cross-border team as they've worked tirelessly to complete these customer migrations seamlessly, while simultaneously operating a growing, thriving business. And within B2B, a lot of attention has been paid to new small entrants, several of which we enable with our partner program using our best-in-class virtual card. The partners we enable own the customer relationship, do the marketing and take the credit risk, so they keep most of the economics. We're more of a processor to them. So our take rate is meaningfully lower than when we go direct to customers, which…

[Operator Instructions] Our first question comes from the line of Darrin Peller with Wolfe Research.

Look, it's great to see the macro recovery and you guys benefiting there as well as the initiatives you've made, especially on the Corpay side. And I just want to hone in on that segment, primarily, given all the acquisitions and the rebranding and the efforts on sales focused on really software now. So can you just touch on that in terms of what the different assets are going to contribute where you saw the opportunity for growth most profound in the next few quarters? And then maybe just quickly, I saw in the quarter, we're hoping for a little more acceleration now, but I think some of this may just be coming over time as the sales free navigates its focus. But can you just touch on the current trends? I think it decelerated on a 2-year stack a little bit, but what it could be going forward?

Darrin, it's Ron here. We're pretty happy with it. I'd say, the sales continued to remain quite good in the corporate pay segment. And of the 3 areas, our direct business where we go to end clients and our FX business, cross-border business, super good growth in Q3. I think one was the direct business, was 30%. I think it's in the earnings supplement, and the cross-border, I think, high teens [ 19 ] all the while we're digesting that AFEX acquisitions are pretty busy on that. So I think those two pieces are of the business. And so they're growing good. The sales are good. To your point, if we get any COVID recovery, there's still some fair amount to get back next year. We're -- I think we're bullish. I think our early view, again, is high teens for that segment for '22.

Okay. That's really helpful. And I mean, just Ron, this is -- should we think about it being much more of a software-focused approach going forward in terms of sales versus more pure-play virtual card, I guess, more rolling together all the assets?

Yes. So that's a great question. Yes, we started that. I think a couple of years ago, we bought kind of the full AP software front-end and plug it into our back-end execution stuff. And so we've moved the mix, Darrin, dramatically here in 2021. So we're selling, I don't know, I think almost [indiscernible] what we call full AP where we take 100% of the clients' payables versus virtual card. But obviously, the great news is it's still all virtual guard, right? When we sell that, full AP, underneath that, basically is the same engine to your point, the same merchant database, the same ability to earn interchange, if you will, on that portion. So it sells better. We think it has more value to the client. We generally retain more of the economics there and yet we still have a bunch of virtual cards. So you'll see more of that. I think we'll probably move even more of the business as you roll forward that way.

Our next question comes from the line of Andrew Jeffrey with Truist.

Ron, the commentary on the digital go-to-market, I think, is particularly intriguing. Can you talk a little bit about what the LTV to CAC looks like in your fuel business? I think you said 50% of the sales are going through digital channels. And how we might expect that to inform your consolidated profitability over time?

Yes. I think the call out, Andrew, was for our whole global -- our entire sales for Q3, we run around 65%, okay? So some businesses are better than that. Obviously, some are worse, and same with channels. So it's referencing that the digital channel, which is growing as a percent, is lower than that 65% line average. So the good news is as the mix of our total sales moves more and more to digital, that should improve basically our cost of acquisition. And so, obviously, we're delighted that more and more of the business is moving there. And then second thing I'd say about that is things that are less dependent on people, right, hiring, training and retaining lots of people, slows company's ability right to staff and grow that way. So on the digital side, we're getting pretty good at increasing digital advertising spend now and seeing the payback in terms of visitors and flow through to conversions. So that's something that we can step on a bit faster and get returns faster. So I'd say this whole shift basically to digital sets up super well. As it relates to the corporate pay economics long term, I think you're right. I mean, I think the big, big idea we have is we've got this giant fuel card client base. I don't know, 500,000, I think, or more active clients. And they generally are small, right? We get a couple thousand in revenues. We don't get a lot from them. So the idea of being able to go to that group and cross-sell them something else that has the same or more value, obviously, could accelerate revenue growth, but to your point, it's a way lower cost of acquisition than prospecting for new business, like going back to all the UIs and all the ways that we talk to our existing clients. So now when I say it's super early, we just started, but that would have an opportunity one, to make our fuel card business and the synergy, the assets of 20 years of building that payout. And then second, drive again the cost of acquisition down if that cross-sell component becomes big.

Andrew, I can clarify this. This is Charles. I'd just like to clarify Ron's comment regarding 65% in terms of an acquisition cost. We define that as what we call NSC or net sales expense. It's basically cost of acquisition divided by the annual revenue from that client for prospect. So if I -- if someone is going to generate 1,000 on revenue for me annually and cost me $650 to acquire that account, that's the 65% metric that we use internally.

Okay. And how does that compare to the traditional sales channels?

I'd say that we've been fairly stable through time. Some of it does shift as you have more field-based selling. But in the main, we've been around 50%, 60% for years.

And, Andrew, I love with the spotlight on it because lots of other people spend lots of money. They generate some sales, but you can't ever make a return, right? So if you sell $100 million and spend $65 million, you're underwater on the first year. But then you've got, call it, $90 million of the $100 million you sold the second year with 80% flow through, you got $80 million flowing through for 8 more years with no sales expense. So that's the key to profitability in our kind of business is basically this acquisition cost and the retention rate. So we call it out because that's how the business actually makes money.

Our next question comes from the line of Pete Christiansen with Citi.

Nice results. Just wanted to dig a little bit into the lodging business this quarter. I know there was a bunch of natural disasters in the last couple of months, wildfires, Ida, so on and so forth. Just wondering, to what degree that was a contribution factor to some of the outsized growth in lodging? How should we think about the ALE business during periods of natural disasters? How does that business, I guess, from a revenue perspective, how should we think about it ranging in these types of periods?

Pete, thanks for the question. It's Ron. So in the first part of the question, hey, how did bad weather and stuff help the lodging business some is Q3? Some is the answer. So we picked up some decent amount of incremental volume when that happens kind of almost unexpected volume, but the rate on that is like super-duper low. We sign up with contracts with people like FEMA and stuff. And so lots of volume and a little bit of revenue contribution. On the ALE side, I'd say, it helps again a little bit. The diligence that we did in that business is surprisingly over incredibly long cycle. I don't know, 90% plus, I guess, over the 5 or 10 years we looked at is not hurricane or natural disaster-related. It's your pipe ranks and your house floods, and you left the candle on of the bathroom and the house burned down. And so it's what we think of as just way more common kind of every day, which is why we went ahead with the business. It's just way more ratably, you take all the hundreds of millions of homes or apartments. Stuff goes wrong, with them that displaces people. And so that business, obviously, it's insurance, so the statistics on it are pretty good. So I'd say for both businesses, it helps really just at the margin.

That's helpful. And then your comments on the fuel card business seeing a little bit of incremental softness, which is understandable what's going on abroad in some areas. But I was just wondering if you could characterize the competitive market perhaps for larger fleet type deals and how that's kind of evolving, I guess, as we come out of COVID. Are you seeing competition intensify? Or are there big opportunities ahead? Do you think -- just wondering if you could put a frame on that.

Yes. I'd say probably if anything, it's lessened during COVID. I mean I think we've called out for at least a few quarters now the overall fuel card retention rate, which is up. I think it's up -- I don't have it in front of me, but it's certainly up dramatically in the last couple of years versus where it was a couple of years ago. And I think I called out that it remained at 93% for the quarter. And so I would say, the COVID basically people shifted to other priorities, and doing RFPs for fuel cards probably wasn't the top one. So the other thing I'd say, because I think it's missed is, the real competition for us. We study wins and losses in fuel cards. So where do we get the 35,000 new accounts that came on board this quarter and where the 10,000 that we lost? And the answer is not our friends WEX. It's basically business cards and other forms of payment, both in business cards, for example. So that's -- so the real competition for us globally in the fuel card business is really other means of payment.

Our next question comes from the line of Ramsey El-Assal with Barclays.

I wanted to ask about the new sales bookings growth, which was an impressive number. Was this the result of any kind of changes you've made in your approach in terms of the sales organization, or -- and also, could you help us think through, or maybe even remind us of the algorithm by which those bookings will eventually convert to revenue, maybe something about timing, or how that actually operates?

Yes, Ramsey. So we agree. I tried to put a bit of a spotlight on it for the quarter because it's in record territory, right? There weren't 50,000 accounts when I started with the platform 20 years ago. So to sign up 50,000 new businesses in a quarter is good. And then second, against the '19 baseline, I think I called out our bookings dollars were up 30%. So forget the weak comp against the normal quarter. A couple of years ago, it's way up. So the headline is our company sales were way up, that's headline 1. And Part B is so why they weigh up? I think it's the location we made into digital, So start, I don't know, 4 or 5 years ago, we did a bunch of things to get way better at digital marketing and selling, obviously, not the least of which is the whole tech stack that we build to be able to follow businesses and everywhere they crawl around and then what they do to advertising, figuring out where to spend and who to target money against to get them to visit our sites to optimizing our sites to get conversion rates and sales at the bottom end to applications going end-to-end where someone could go on our site and literally order the program and get cards in a couple of days and not have to talk to people. So the reengineering, I'd say, of the whole digital machinery has been, first of all, it was massive, but we're getting the returns of it now. It's obviously ramped way the heck up. And I think it's another huge step-up in our early plans for '22. So I would say that's the main, main driver, and we're doing that everywhere. We're just way smarter…

Great. It sounds like it's not a fluke but by design, so encouraging. Ron, I wanted to ask you about your new compensation contract, which is structured in more of pay-for-performance kind of style. Can you talk about why you pivoted in that direction in terms of structuring your comp, and sort of what gives you confidence about hitting those sort of future hurdle rates?

Yes, that's interesting question. I'd say basically that the first 10 years of the company's life was in a PE form with the alignment between investors and managers were super clear. If value gets created, the proceeds get split versus this kind of, "Hey, I just give you money for showing up." And so it's in kind of the DNA. I like it. I like it, the people that put capital in alongside of me get returns, and I give returns. And if we don't, we don't. And obviously, there's more leverage than that. I've got, as you know, a lot of money. And so getting some money with our current tax structure is not super interesting. So it's a motivating way to keep me at the grindstone for a couple of years here to try to get the thing to a place. And how do I feel about the confidence other than the way people rate our stock? I feel good. We have models that come off of the sales and retention math that we run all the time for your models, and I see what the revenue and cash EPS looks like running through our machine. And if it's valued fairly reasonably, it gets to those targets that are there. So I look at it and go -- if someone priced our earnings reasonably, I think we can make the targets and then I could get paid.

Our next question comes from the line of Mihir Bhatia with Bank of America.

Maybe just to start, I just wanted to ask about the gift card business. Given all we're hearing about supply chain issues, could that be a tailwind in 4Q? Maybe a little bit of a unique opportunity there. Anything you're hearing if you could just talk about that?

Yes, Mihir, it's Ron again. So yes, there are a bit on the card side and just the retailers ordering cycle. So I would say it looks kind of like it's going to come in on our plan, just talking to our gift head not long ago. But I'd say the upside for us is probably not so much that, that the card orders would go up. It's really -- finally, the guy running it, and we finally found a way to grow the business. So -- and how long we followed our company, but I've been trying to sell a business since I bought it. And all the guys turned it into a business now that we think that can compound a double digit. So the way they've done it is instead of just being an administrator, an accountant for the Macy's gift card and count them $100 down, they help our clients now sell online. So they've moved over to helping sell online digital gift cards because they know a lot about it. They're getting paid extra for wallet provisioning. Half the gift cards, there's breakage where people can't find them anymore. They're in a drawer. And so super technically hard to move private label cards into wallets, but our guys came up with a way to do it. So we get paid money from a number of the brands to basically provision those electronically. And then the guy came up with the idea of selling the content. We have, I don't know, 300 or 400 pretty good brands. So we're taking them back to businesses because we're in the B2B business. So they've built a bit of a revenue and sales stream now taking them for rewards like companies like ours, for example, for employees. So these 2 or 3 new ideas on top of the kind of old chugging along kind of low single-digit business has propped that thing up now to being north of 10%. So -- and I went through the guys plan a couple of weeks ago. So I think finally have a set of ideas that are more sustainable to keep growing that business now.

All right. Great. And then If I could ask about the, just about Brazil. You mentioned things are getting back to normal there. You've obviously had very good momentum in selling more tags. So is there an argument there that you might see a little bit of an exponential step-function growth in the revenues per tag? Because those are still meaningfully below like where you were in 2019, and you've obviously added a lot of capabilities where you can use those tags too.

Yes, that must be -- you're looking, I think, at the FX. So we're way the heck up. The sales there in constant currency in real are way, way up. I don't have it in front of me versus '19. Chuck is going to pull it out, but these should record levels. Whatever we sold in Q3 would have been an all-time record number of sales. And what I said about the recovery is Brazil is in a complete ditch COVID-wise in the spring and into the summer, and somehow has come out the other side. They are in a better price than we are here. So what that's done is it's opened the stores there where we sell a lot. We have kiosks and hundreds and hundreds of stores. So stores are open. People are walking. Mobility's back and more people are running through the tolls where we also sell. So the place is basically where we conduct business to try to make sales are kind of reactivated again, which is helping drive it. And then second, I think we said before, we've come up with a number of super new partner or channel ideas there. The newest one is we've got a couple of the big car manufacturers to put the tags now on the vehicles. So when you go in and get your new Volkswagen and drive it out of the dealership there, you look up and there's a sticker already there with a little POS thing that says, "Hey, call this number go to this website." We're getting like 50% or something conversion on adoption of these new vehicles rolling out of the dealership. So it's really -- I can't even tell you how good of a sales story that team has put together. But the -- as you said, the big, big idea for us and we poured a lot of capital into it this year in '21 is to double or triple the fueling locations, and the fueling transactions are up huge over a year ago now as we take the 6 million vehicles. So we had tags and given more places to use the tags. So that is the one said to me, where could the free money and real acceleration come. It could come from this massive group of people basically just having more places to use the tag and the accounts already on their vehicle.

And you get paid per transaction, right?

We get paid MDR pretty attractive MDR on the fueling in that example, yes.

Our next question comes from the line of Sanjay Sakhrani with KBW.

I wanted to talk about the partner channel Corporate Payments mix that Charles touched on. When we think about that 13%, 14%, is this a higher profitability contribution because your partners are sort of bearing the expense? And then as we think about how that percentage is going to migrate over time, do you expect that to go up or down, or is there -- how long are those partners committed to?

Yes. So it's Ron. Let me start with the second part. So we probably have, I don't know, 15 significant kinds of partners in that Corporate Payments group called top 3 or 4 most important, another 8 or 10. And so the contracts generally would run anywhere from probably 3 to 5 Years. We just renewed actually a couple of them with some of our most important partners this year. In terms of what do I think I'd say down would be my answer. So if you look at -- I think we put, Jim, a slide in the earnings supplement. I think it's Page 15, Sanjay, but I think that's positive. Yes, it takes the 3 pieces of our Corporate Payments business, the partner thing that we're talking about and then the direct business where we go to the end client and then the cross-border business where we mostly go to the end client. So you can see that those two are growing revenue much faster. And so the mix itself, if you just run the clock forward would make the partner piece smaller, I think, going forward. So obviously, there's lot of spend there and spend grows fast. But to your point, they do more of the work. So obviously, our rates are much, much lower there than in the direct business. So we like the business, but obviously, 90% of our Corporate Payments business is in the directed cross-border.

Okay. I guess, obviously, the chatter out there is you have a lot of these fintechs that are competing against you and with you. And I'm just curious, as we think about FLEETCOR's competitive edge, I know, Ron, you talked about how you're putting the acquisitions together to deliver a powerful punch. But I mean do you feel like there's -- the competitive intensity has increased in that market and your -- or that you widened your moat in that market? I'm just curious to just get a little bit more color on that because that's obviously been a hot topic of discussion.

Yes, I think it's a super good question. I think obviously, there's more people trying to get into entire processing, whether it's virtual or just traditional physical cards. So I think, first off, that a lot of the players that get into are issue for issuing kinds of companies that are in that business, right, for FIs and for us, but yes, some of them are coming into our area. What I'd say back is fallacy is somehow that the game is tech and product to the X, Y, Z fintech has some great thing not old fashion FLEETCOR out of it. And what I'd say to you is what they're missing is it's the merchant network, you can't monetize virtual cards if you don't have a virtual card merchant network that can process and capture those transactions you can profit until the day goes on, but you have to have the network. So we've had a, call it, I don't know, a 10-year head start on everybody in cleansing, building, growing that network. And then the second one is the whole service dimension of a huge pay for you group, a massive group that helps the partners clean up the data and get the stuff processed. So I'd say those would be the couple of components that people missed that this isn't just making a new processing engine in the garage and giving it to AWS, and that's all going to be great. There's actual real assets that we have that cause our partners to stay with us. I mean, there was a big thing. Some came into my office a year, 2 of your clients, Build.com and AVIDA brought on other providers. We're doing great with them. We've renewed the contract for a number of years with one of them. We're getting more business than ever from another. We're obviously we have a great relationship. Some of those are targeted like the Marqeta thing, as an example, is targeted to FIs, which we're not even in. We're not in the processing business to help FIs. We thought they wouldn't use their own processes and stuff. And so I think like everything else, it's someone searching for some narrative that is in there. We've got a good business. It's growing. The spend is growing like crazy. But because we make so much more money on the direct businesses and a growing fast, that mix will cause the partner thing to be a bit smaller. But I think we're still -- I'd tell you, go call our partners. Don't ask me the supplier. Go ask our partners that they like the job we're doing. I look at the performance reports. I send performance reviews with the partners, myself personally. So from my vantage point, we're doing quite well.

Our next question comes from the line of Ken Suchoski with Autonomous.

I just wanted to dig into the fuel card business a little bit more. I mean, it looks like transactions came weaker than we were expecting, and I think you called out international and the driver shortage. But can you provide some detail there on where you're seeing that weakness on the transaction side? And what's your expectation around the recovery?

Yes, Ken, it's Ron. So yes, I'd say, there's good news and bad news. The good news is -- the bad news is, a, the transactions are a little weaker than we thought. The good news is they're not worth much. So the two areas of weakness are in trucking, again, a particularly large trucking both here and in Europe. And you guys have read the press on this that the large trucking firms just don't have drivers. And not only are they not drivers, they're quitting and forming and going into smaller firms now. So our big accounts are effectively just soft in terms of trucks and transactions, but they're happy because they're just raising their rates. And then the second one I'd say is really Europe and the big corporates, they are the white collar book of business where people haven't gone back to work in Europe. And I don't know if you guys know it's been in Europe, lots of people of company cars. So people like us have a car and we used to drive around and get reimbursed. So those are the two areas that are weak. The good news is we don't get paid anything for those things. We don't get paid very much. So that's why our revenue growth is still pretty good. The local business, for example, in our partner business are super healthy, and even a big part of our U.K. business, which I'm looking at, had strong same-store sales recovery. So the areas where we get paid and we get revenue are actually pretty healthy.

Got it. That's really helpful. And maybe just my -- for my follow-up, I think on last quarter's call, you've provided some preliminary thoughts on '22. I think you talked about $14 in annualized EPS in the second half of this year. You have some interest rate hedges rolling off and then the contribution from AFEX and ALE. So lots of moving parts, but maybe you can frame for us how you're thinking about 2022.

Yes, that's it's a good question. So the way, I mean, I say this all the time, if you like businesses, you can plan, you should like our business, it's the nature of the model. And so what we do is we -- which we're about halfway through, we build things off of run rate. So we're staring here at October volumes and revenues in all of our businesses. And I think what I said is, hey, when you post $3.52 or $3.50, we multiply it and we go, okay, that sounds like $14, and we guided to a number we don't have in front of me, Chuck, that's $3.50-something for Q4 is a track stuff. So there's another one. So hey, we start with the company is running earning $14 on an annualized basis now. Then we sit there and say, "Okay, we had sales record levels this year, of which, call it, 2/3 of that will be realized in 2022 so we can see what that number is." Then we have a bigger sales plan for 2022, probably 20% higher, and we look at what's in here there. I'm like, "hey, that looks good". And then we look at the deals that I mentioned that are kind of on top of that, which I think I called out together, call it, $0.50 would be kind of my commitment on the stuff that we use capital for. So that's how we build the math. We take the run rate, we take this year, next year sales. We take added things like the accretion of deals, and that helps us basically target a number that we can get to. And we haven't planned a heck of a lot of COVID recovery. Obviously, it's -- we're just obviously 12 months this year. And so we've been pretty conservative so far and getting some of that back. We still have probably $100 million, $150 million that could literally come back a different day potentially. And so those are the components. And what I was trying to say -- and the other one is the macro. Obviously, fuel prices are higher here in November than they were in January and seem to be holding. And so when you roll all that up, my message is it looks super early, but it looks like a really good number. And the reason I go through all that math is to get people longer than us who are in the company some insight into how they ought to think about it. Things could happen, but the company is pretty well positioned to put up an attractive growth number for next year.

Our next question comes from the line of David Togut with Evercore ISI.

In the Corporate Payments business, WEX reported a pretty substantial compression in revenue yield in the third quarter year-over-year. Can you comment on the revenue yield you're seeing in that business? And, a, is there any significant change? And are there any call-outs in verticals, i.e., kind of travel versus nontravel?

David, it's Ron. It's a good question. So I'd go back to the slide that Jim put in our earnings supplement. I think it's Page 15. So again, sitting inside, our Corporate Payments business, I think we report, what, 22% organic growth and, what, 50% or something, [ friends ], for the quarter?

68%, I think.

68%. So obviously, that's the overall number, David. But the pieces of that, again, are the direct or end-client business, the cross-border business and then this channel partner business. And so for us, the good news is the 2 big pieces, which are about 90% I'm looking at the thing are effectively flat. So because we price it, there's really no rate erosion in that out of our business. And so all of the rate erosion is really just in the mix of partners where we have tax table rates, and we have some partners that are growing like crazy. So as their volumes go up, they enjoy a bit better rates, right, in the base than the base rates. And so because we don't have the same kind of reliance, if you will, on the channel business, I think we're a bit more insulated, if you will, from rate compression there. And I mentioned it earlier, I'd say the super positive thing is our mix of that business is going to more full AP. And don't forget, we bought an SMB company that has higher rates. So as we roll in the full AP, the Nvoicepay mix and this Corpay One mix, those have a way higher rate than the existing businesses. So my guess is just kicking out the channel business, I see actually rate expansion over the next couple of years in that business mostly help from mix.

Understood. That's very clear. Just as a quick follow-up. You commented earlier about the difficulty of finding drivers in this environment. Could you quantify for us what this means for your fuel card business in terms of revenue growth in 2022?

Yes. Again, I think the driver thing is a total trucking vertical, issue, David. I don't think it's -- we don't see it obviously as significantly in the trade businesses, right? Those people have to be trained and whatever they are. So we don't see the same kind of softness, if you will, of our existing customers in those kinds of businesses. And so -- and again, we see it mostly in the large account trucking business. be the other thing, which we don't make any money in either. So I'd say that who knows? My guess is it's not a super easy fix for suddenly large trucking people to get the people, although you see the pictures of the at the ports of the need for more trucking. So my guess is there'll be more incentives and pressure to try to get more people into the space over the next 6 to 12 months. But I'd say it doesn't do much to us. One, it's limited only to that trucking vertical. Two, it's limited to the big firms, which don't pay as much. And, And three, honestly, it's kind of in our run rate. The softness has really been the year for the last couple of quarters. And so I don't see it really getting any worse, mostly because of what I said that I think there's going to be such a push to try to add people. And I think the rates are going to keep going up to attract people. So I'd say it's probably not a super duper impact on our forward thinking for the few of our business.

Our next question comes from the line of George Mihalos with Cowen.

Ron, you talked a lot about some of the, I guess, hiring and wage pressures that are impacting the fuel side of the business. I'm just curious, as it relates to the Corporate Payments business, do you feel like that's been impacted at all by any supply chain issues at your customers, or has that come up at all your conversations with them?

Yes, for sure. I mean, again, George, I'd say it's pocketed. When we go look, we have bigger customers there. And so some have come through this thing kind of unscathed and then others have had a big problem. So yes, we have a select group of clients that are kind of down and have stayed down. And I think the supply chain is a big part of it.

Okay. That's helpful. I'm just curious to the extent, are you able to quantify that in any sort of capacity or give any sort of color around that? And then maybe separately for a follow-up, the minimal credit losses that you're continuing to see, is that just a harbinger of just cleaner credit now, or do you feel that there is an opportunity to loosen credit standards even from here? Just curious how you're thinking about that.

Yes. So let me take the first part, yes. We are one of the easiest things to quantify for us is to look at clients we have, let's say, clients 1 through 100 and look at their volumes and revenue in a prior period, let's say, 2019 or Q3 of 2019. And then, let's say, we still have those 100 clients to go look at their volume and revenue with us in Q3 of this year. So that's the stat we call same-store sales or the core client base. So yes, we -- for Corporate Payments or every business, we turn that into a revenue number and say, okay, we're some, whatever, $20 million with clients that used to give us $20 million more 2 quarters ago than they do now. And hey, we watch them to see whether some of that $20 million is coming back. So we have super clear visibility on the amount of it and the rate of recovery of it. Is that one clear?

Yes. Just curious, if you could sort of ballpark what that impact would be or if you're willing to ballpark what that impact would have been how much faster the growth would have been in the segment?

You want to say, Chuck, anything about that?

Yes, I think we look at those pocketed groups. So in Corporate Payments, the top 75 we last looked at it last month, the 75 most affected clients, their volume was still down about half of where it was back in January 2020. And so we looked at it just last month. So we continue to track it. But as Ron mentioned, it's highly pocketed in certain categories that just haven't quite reopened yet.

Yes. It's about -- just to give you a percentage, it's about, I'd say 3% this quarter versus our plan. So hey, we guesstimated those 100 people would come back a certain way in Q3 from 2 years ago, and they came part of the way back. They come back to where we thought we'd at. That's 3 points more of growth in the things. So it's still a significant thing. And we'd be hopeful maybe we get it back and be kind of ready to get back a different day. On your second question, the credit question, I'd say yes, yes and yes. It's a super good question. It's record lifetime lows of credit losses, first of all, because we didn't sell much new business, obviously, in 2020. So there wasn't a lot of new business coming on. And then between the stimulus and relief and everything else, people repaid us and stuff. And so for sure, we've opened it up. I think Chuck said in the last call last time that we expect those losses to tick up. You can see it a bit in the roll rates, right, as we've onboarded a lot more business this year. Our Q4 losses will be a bit higher. And we're actually doing that juggling question now for 2022. Okay, how much do we -- how open do we want to be in credit both with existing accounts in terms of credit lines? I mean think of this, I've got fuel cards to have some credit line and the credit line is enough to pay their fuel card bills. What do they tell me they want to pay all my bill -- the bills with payment. And I said, okay, I lease with our credit. I mean our opportunity to increase credit to creditworthy people for our new products is like super high. And so I'd say we, for sure, will rebalance next year towards taking more risk certainly than this year and try to make that trade-off, right, between incremental sales and revenue growth and incremental losses. But we'll be careful. I want to make sure everyone on the call is clear, we're not crazy. We'll step our way in. We'll study our way in, but we will do more of it.

Our next question comes from the line of Bob Napoli with William Blair.

So Ron, I mean, there's been a lot of questions asked and -- but just -- what business -- or what are you most excited about over the next few years? Which part of -- parts of your business do you see the most opportunity to maybe outperform, drive upside drive growth?

Bob, it's a great question. I'd say the most -- to me, the most exciting thing, which is coming mostly from the world out there is this synergy, this platform concept of bringing walk-around plastic, which is the business we've mostly been in with payable together. And so it's a way of trading, in our case, a massive synergy in these businesses we've built over 20 years of getting just way more out of them. So I gave the example earlier, we're launching late this month or the beginning of December, the thing we call the 2-in-1, where a client that has a business card of ours or a fuel card could also pay bills with us, and literally, it would just be in one place. He could use our card and our credit to pay some of his bills. Obviously, we'd have access that it was bank account to fund the bills. His report would show all his walk-around purchases like it does now and will show all his payables, the vendors, the way it is now, and it would all be in one place. And so that has the opportunity in joining up businesses that we have. That's what creates profit acceleration, right, where you don't have to go fish one at a time, right, for each new client, you can go back to this pretty gigantic customer base that we built and basically start to join it up and cross up that's useful to them. And the tech that we have now makes it look -- when you look at it, it's just stitched together now. So I'd say, that's the -- again, I try to say the thing, I'm also excited, I know people, doubt me -- doubt us, but we got a lot of legs in the businesses we have on that page. We pitch this beyond thing, and we've added segments everywhere in all the businesses which are adding growth. So I'm obviously super happy about that. But this integration and joining up in synergy where the new guys that have some nice new shiny product, they don't have a 20-year customer base and spend, and they don't get 50,000. So I mean, most of all year, your guys had signed 50,000 clients in the quarter. So that's the super exciting thing is can we monetize this bigger business profitably, would be what I'd say is the super new opportunity for us.

Great. And Charles, just how are you feeling, looking at margins, the ability to expand margins from here over the next few years?

Yes, Bob, I'd say that our model tends to be one where we try to grow top line 10-plus percent and get a little bit of expansion. I think that is a mindset we've had for a long time, and we'll continue on that path. So I'd say we'll increment our way kind of as we go. With that said, we do make a little room for select investments, whether it's the digital sales that Ron mentioned. When we have opportunities to invest, we will make those investments. but always with a mindset that we'll continue to grow the bottom line a little bit faster than the top.

At this time, we have reached the end of our allotted time for the call. Thank you, everybody, for joining today's conference. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.