Good afternoon, and welcome to the FLEETCOR Technologies, Inc. Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Jim Eglseder, Senior Vice President of Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us today for our fourth quarter and full year 2022 earnings call. With me today are Ron Clarke, our Chairman and CEO; and Alissa Vickery, our Interim CFO. Following the prepared comments, the operator will announce that the 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 covering organic revenue growth. And as a reminder, this metric neutralizes the impact of year-over-year changes in foreign exchange rates, fuel prices and fuel spreads. It also includes pro forma results for acquisitions closed during the 2 years being compared. We will also be covering non-GAAP financial metrics, including revenues, net income and net income per diluted share, all on an adjusted basis. These measures are not calculated in accordance with GAAP and may be calculated differently than that at other companies. Reconciliations of the historical non-GAAP to the most directly comparable GAAP information can be found in today's press release and on our website. 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 outlook, new products 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 undertake no 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, on Form 8-K and on our annual report on Form 10-K, both filed with the Securities and Exchange Commission. These documents are available on our website and at sec.gov. So now 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 appreciate you joining our Q4 2022 earnings call. At the top here, I'll plan to cover 4 subjects. So first, I'll provide my take on our Q4 results. Second, I'll recap our full year 2022 performance. Third, I'll share our initial 2023 guidance. And then lastly, I'll update you on a few of the key priorities that we're working. Okay. Let me make the turn to our Q4 results, which exceeded the top end of our guidance range, so better than we expected. We reported revenue of $884 million, that's up 10%; and cash EPS of $4.04, that's up 9%. Our cash EPS was helped in the quarter by a Brazil tax-happy which did lower our Q4 overall tax rate. Organic revenue growth coming in at 7% overall. Inside of that, our corporate payments business, super good, growing 20% in the quarter. Against the prior year, our Q4 organic revenue growth was negatively impacted by about, I don't know, $20 million to $25 million of onetime revenues sitting in Q4 of '21, so that reduced organic revenue growth by about 2% to 3% in Q4. We do expect Q1 2023 organic growth to return to the 9% to 10% range. Cash EPS in the quarter pressured by both higher bad debt and significantly higher interest expense. And as a result of the rising delinquencies we're seeing in our U.S. fuel business, we did make the decision in Q4 to slow what we call our new micro-digital sales, so our very smallest account. We also began tightening terms of our existing SMB account. Both of those things really a cautionary move to try to control bad debt expense here in 2023. Fortunately, our credit risk is really narrowly concentrated in what we call these…

Thanks, Ron. First, the financial details. As mentioned, we posted 10% growth in revenue in the quarter driven by 7% organic growth or $57 million, which I'll delve into in a moment. The remaining percentages came from $20 million of macro tailwinds and $4 million from acquisitions made over the past year. Organic revenue growth was negatively affected by the impact of one-off items not expected to repeat from the fourth quarter of 2021, including breakage, backlogged card orders, accounting true-ups in the normal course and acquisition accruals. We expect 2023 organic revenue growth to meet our double-digit targets. Corporate payments average revenue growth was 20% driven by continued strong new sales across both direct and cross-border. Specifically, our direct corporate payments business grew 27% and continues to demonstrate very robust growth. Cross-border was up 24%, another very good quarter as new sales remained strong, activity levels were robust across nearly all geographies and we completed the full tech integration of AFEX into our cross-border platforms. Lodging continued to perform well, up 14%. While we've largely lapped the airline COVID recovery benefit, the airline business was still up 38% in the quarter. The suite of services we've bought into this business substantially enlarges the TAM and durability of our lodging growth profile over the medium term. Fuel was up organically 2%, with growth in international fuel largely offset by softness in our U.S. micro SMB customer segment. And by micro, we mean companies with less than 5 vehicles, so the smallest of the small. The economic cost of higher fuel prices, inflation and, in the case of micro SMB trucking, lower spot rates, have negatively affected their ability to manage expenses, including their fuel bills, which has resulted in higher bad debt. We have also seen some negative mix shift…

[Operator Instructions] And our first question today will come from Sanjay Sakhrani with KBW.

Ron, you talked a little bit about these rising delinquencies among the micro SMEs. I'm just curious, was that fairly contained inside of fuel or the fleet business? Or was there any other weakness among the SMEs? And I'm just curious if you think that this might be a leading indicator of more things to come if you go upmarket. I know you guys haven't assumed any additional macro pressures and such.

Yes, it's a good question, Sanjay. Yes is the short answer. The fuel business, and really the U.S. fuel business, because the terms and the way we collect money and bill internationally is fundamentally different, the terms, we pool all the money, et cetera. So yes, the only place that we've seen the micro, and again, we're talking super-duper small, mostly 1- and 2-card accounts and super-duper new on the books, again, a year or 2, that portion of the overall sales is about 75% of the credit losses. So although the credit losses from that group were sizable, the amount of business from that group is not super sizable. So yes, that's the only place we're seeing it. In fact, when we studied the cohorts that are a bit larger or more mature, longer on the books, it's super ratable with the trailing 12 to 24 months. So it's super-duper pocketed for some reason.

And you don't think it's a leading indicator or anything, like historically?

Yes. I mean, look, you guys' guess is as good as mine. We've been talking about a macro recession for 6 months now. And we study and look everywhere and we just don't see it. We don't see it in volumes. We don't see it in sales. This is the one place where it showed up. And it started, I don't know, call it, maybe 6 months ago. Kind of September, October, we saw the delinquencies start to step up. So my personal view is that these are quasi-consumer businesses. And as the funds ran out and as the savings got depleted, there's just more pressure on these kind of businesses than others, which is [ what's to embody right ]. When we saw that, we said, okay, you guys always ask, hey, grow corporate payments faster. So we giddyap and go and moved sales dollars and implementation dollars away from our tiny fuel business over there until we see how that plays out.

Okay. Great. Just one quick follow-up for Alissa on some of these impacts that happened to the growth rate in the fourth quarter. As I look across the different segments, there's been a lot of variability in the growth rate. I'm just curious, did that affect multiple lines, those items, those one-off items?

It did. And so we saw a decent amount in our toll business as well as a little bit in our fuel business.

Those 2.

And I would just add, this is all normal course of business stuff. It just seemed to be a collection.

Yes, I do want to point out, Sanjay, it's Ron again, that we view it kind of as more of a bump than a trend. I did try to call out in the opening basically that we're outlooking this quarter, we're sitting in, let's say, back at 9% or 10%. So really, in our minds, it's a comp issue, not a run rate issue.

Our next question will come from Bob Napoli with William Blair.

So I mean, Ron, the corporate payments business, very strong. Within that, you talked about AP being strong, maybe a little more color on what the stronger areas were in the quarter. And did you see any deceleration, significant deceleration, in any areas? A lot of watch and focus on the SMB market.

Bob, it's always good to hear you and hear you doing well. So we posted 20% organic for the quarter for the category, and that's probably our number for '23. You haven't asked me yet, but I'd say, inside of our overall 10%, we're outlooking really about 20% now, so more than high teens. So really inside of it, everything did well, except the channel partner thing. We've said it before that some of the partners that have been with us 4 or 5 years moved some volumes out of people to get different rates. So that business has been flat or going backwards, which means the direct businesses are growing probably 25%. And I think the full AP, where we have every modality, is the fastest growing. I think that particular line of business is probably up 40% to 50% in the quarter. And now we've stuck some software on the front end, so even our lead volume is up. So I'd say the whole business is doing well. Again, the cross-border sales were rock. And I'm looking at the page in front of me, they were up 60%, the sales in Q4, obviously just the process of eating another piece of business which deepens us in the geography. And so I'd say, other than the partner thing, it's firing literally on all cylinders.

And then your investments in EV, appreciate the continued forward-looking moves there, if you would. Can you give any more color, and we get this question a lot, I'm sure everybody else does, of the economics? As you have more experience, especially in Europe, I guess, can you give any color on the economics of EV versus gas and your confidence in that?

Yes, another super good question. So the best place for us to look, really kind of the only place to look, for us is the U.K., right? We've got a big, right, commercial fleet business there and they've been out of the blocks pretty early. So we've got, I think, about 1,200 when I looked of active clients that use both our traditional fueling and some amount of EV. I think the average is about 15% penetration of the EV among those accounts. What I know for sure is that the enterprise, the bigger accounts, the economics are super favorable to us as they move to EV. The reason is probably pretty obvious, that you get less fees generally from big accounts, right, that didn't negotiate, but they need these new EV things, and so the ability to get fees from enterprise customers. So the report that I looked at, a sample of, I don't know, 10 or 20 accounts, it's up something like 50% our revenues among the enterprise. I'm guessing that, that probably won't be exactly the same story with a super small account. So what we'll agree to do, I told our guys, is come back probably in 90 days and report out, provide some actual data on this question because it's the million-dollar question, right, for the commercial fleet business, as the stuff comes across, are we in a different base in the economics? I'd say early on, it looks like yes, we are, but more to follow.

Are EVs growing rapidly?

No, not really. I mean, again, the new sales are obviously, right, the mix of every 100 new vehicles, the percent EV is growing. But the base, as you know, like in the United States, I think there's, I don't know, 300 million registered vehicles and the new car sales are 18 million a year. So if half of them were EV, it's 9 million on 300 million. So it's super hard, Bob, to move the base is what I'd say, which is, again, the other thing, as you know, is the EV adoption is happening more in consumer and lighter vehicles, right, versus like 18-wheelers, which is the other motivation for us to chase these EV car manufacturers and EV consumers because there's going to be way more of those in the coming years than there are going to be heavy trucks on EV.

And our next question will come from Darrin Peller with Wolfe Research.

Ron, can we go back to the corporate payments segment for a minute again, just because there's obviously been a lot of data points in the industry around SMBs having some challenges and B2B activity having decelerated. You don't seem like you're seeing that as much, so maybe a little color on what you are seeing in the marketplace. And then more importantly, just medium to long term, that's obviously an area that we've talked a lot about in terms of convergence of some of the assets to really offer a more holistic solution on the account payables side. And combine that with payments, whether it's invoice pay and some of the other assets you've acquired, how has that been progressing, just maybe a little update there as well.

Yes. Darrin, it's a good question. So the good news for us is that our corporate payments business is a middle market business. So our average account there would look like $200 million to $300 million in revenue for the client, so a decent-sized company, a creditworthy kind of company. So I'd say 95% of our corporate payment business is what we all would call a middle market client. So the SMB move that we made, whatever, 1.5 years ago, was really trying to be upside, us trying to extend kind of down-market. So given what's going on with some of our friends in SMB, maybe we're lucky, we haven't made as much progress there. So that's the headline. We're seeing nothing. Volumes are up, spend is up. As you can see in the numbers, the revenue, again, if you kick out the partner piece, is compounding at 25%. And we're out looking at the same kind of number on the direct business here in '23. On your second question, which is also a super good one is, we've gotten all the stuff now. I feel like making a Thanksgiving dinner is 8 million ingredients to comp again, then all of a sudden, someday, there's a plate and there's 6 items on the plate. We're kind of, I don't want to say done, but close to done. We've got all the stuff. We've got smart cars. We've got front-end AP automation software. We pay every modality. We've got a global international payment capability. We've got networks. So we kind of have the stuff, Darrin, to offer the whole package now to these middle market clients. And we're getting more and more of the clients to buy both our smart card and our AP stuff because we're in the CFO office. And as you know, we moved the branding, so it makes more sense now. One company is coming in with a full line. So I would say that it's the marketing challenge in front of us. We've got the stuff to have an integrated pack. And now between the brand and educating sales guys in the market, I think we're going to sell way more of the package stuff as we move forward here.

Okay. Okay. Timing-wise, Ron. I actually do have a quick follow-up for Alissa, if that's okay, on the revenue growth rate. Maybe I'll just throw it in now, which is, when we look at the cadence on revenue growth trends, I know there's some seasonality to it. But again, you're coming off of the 7% rate. Obviously, there were those onetime items that you called out last year's quarter. Just to make sure, do you see any other kind of impediments to that growth rate this year beyond macro in terms of onetime items that we have to grow over or anything else? Or do you see that being pretty clean from a macro adjusted basis?

Yes. I mean, I would expect that short of the macro adjustments we make always for organic revenue growth, which neutralizes those items, that we wouldn't expect anything meaningful other than as we perhaps called out in the same quarter prior year, so I would encourage you to look back at those notes. But I mean, I think other than as we've spoken to the micro SMB customer segment in our fuel business, I think that's going to be the only item to speak of.

Darrin, it's Ron again, the guide is 10% and 12%, right? We're guiding kind of 10% organic at the midpoint and add a couple of points for the role of the acquisitions of the print at 12%. That's what we're sitting here telling you. That's what we're chasing. That's the number.

Yes.

And our next question will come from Tien-Tsin Huang with JPMorgan.

I wanted to ask on the margin outlook. I think you mentioned up 150 bps, Ron. So I think 90 days ago, you previewed 200 to 300 bps, so I'm curious what's changed in the last 90 days. Is it more about investing or changes in thinking around costs, things like that, or mix?

Yes. Good question, Tien-Tsin. So yes, the plan that we landed is, I guess, 150 full year and Q4, 200. And the short answer is I just decided to spend more money on the acquired businesses. So if you look at our core OpEx, so kick out all the '22 acquisitions we did, it's below 5%. I think it's only 3% or 4%. But the pile of acquisitions, we're spending another, I don't know, $70 million or $80 million incremental year-over-year. And so a bunch of those are dilutive things. They're EV things. They're onetime things to integrate like the Global Reach, their sales investments and stuff. And so that was the call. The call was really to make sure that we gave enough oxygen to these sets of new assets that we just got so that we can get a return on them. And since we could kind of make all the numbers work, we start with the design, we start with what's the goal and then work our way around it. So I felt like we kind of made the number we want, kind of 10% to 12% on the top, sales in the high teens across the kind of where we guided to, EBITDA growth of 15%, so growing obviously operating earnings faster. So it kind of fit into the envelope, so we made the call to do it.

Got you. No, I trust that's the right investment to make. Then just as my quick follow-up then on your appetite to do deals. I know I always ask you this, Ron, but just from a deals perspective, how does the pipeline look? I know you have a lot going on. You're spending more on acquired assets, including in EVs. Is there more to do in the short run? Or could we see a little bit of a pause from a deal-making standpoint?

Yes. You certainly know us well, Tien-Tsin. We never will run out a pipeline. So yes, we had deals. I'd say it's kind of, in my mind, a little bit of good and bad on the deal front. I think the good is I really am seeing some reset on the valuation side, right? Prices have been down longer. I think people that were waiting have waited longer, they're not seeing the bids. People aren't hitting the bids they're looking for, the apps they're looking for. The bad is obviously the cost of capital. So it raises your confidence in your thesis, right, to pull the trigger, to make sure we're generating the right kind of returns. So I'd say there's a little bit of tension between those. So a better maybe valuation outlook but a bit higher cost of capital. But look, we've always, as you know, not been a financial buyer of things where we just buy it and absorb it. We've always had some view of how to double-profit. So again, we have things in the pipeline that we like that we think we can make returns on. And if we can, we will. We'll full-throttle on it. I'd say we're probably, back to capital allocation, less excited about buybacks. Sitting here again, given the cost of capital, the incretion at least short term, maybe longer term, is okay. But short term isn't quite as attractive. And delevering, frankly, is a bit crazy, more attractive, given the spreads are wider, right, between deposit rates and borrowing rates. So I'd say that the kind of some of these changes is affecting a bit how we're thinking about, was it $1.3 billion, Alissa? $1.3 billion is the plan, Tien-Tsin. So I'd say my first and foremost is all these deals that we can make returns on.

And our next question will come from Ramsey El-Assal with Barclays.

I wanted to follow up on your response to Darrin's question earlier about having all the ingredients in place within corporate payments to kind of realize that sort of power. My question is actually broader across the entire enterprise and maybe all of the segments, within the segments. Are you now kind of organizationally, technologically well positioned for cross-selling? Or are there still initiatives and capabilities and linkages that need to be made in order to kind of unlock the synergy potential in the broader enterprise?

Ramsey, it's Ron. It's a super, super good question. I'd say we're out ahead on the synergy and relatedness in corporate payments, and the primary reason is it's a middle market business. So whenever you go to a client that's got $200 million to $300 million in revenue, it has more needs, right? It does more things. Obviously, it's got a lot of AP, right? If it's got $200 million to $300 million in revenue, it's obviously got a lot of employees probably running around in vehicles. And so you'll see us selling fleet cards, for example, to our corporate payment clients. And fuel runs 10% to 12% of all the spend volume among our middle market corporate payment clients, which I guess wouldn't be shocking. So in that area, I would say, for sure, there will be a broad package of services that will all be sold into the same client. As you move into the SMB thing, I think we're going to move organizationally towards a more integrated model like you're saying because the tech, I think, frankly, is ahead of our org. And so we're looking at starting to consolidate the vehicle-related purchases. So if you're sitting in a car and you buy fuel or you recharge on EV or you pay for a toll, when you go into a parking spot, whatever, all of those, even 92% of our lodging clients drive a company vehicle, the tree-cutting truck to the actual hotel. So we're in the business mostly of vehicles, company vehicles, running around and us helping make the payments. And so it's a way more super-related thing than what we've talked about before as though they're discrete things. And so you'll see us start to move organizationally more to looking at that set of solutions as vehicle-related payments and then the corporate payments, again, as a thing for the middle market.

That was super helpful. It makes a ton of sense. A quick follow-up from me, I think on the 2023 guidance, you were able to call out in the course of the call a segment specific expectation for corporate payments. And I think Alissa something for tolls and fuel. Would you mind rounding that out and just giving us your expectations for lodging and, if applicable, guests for the year, so just for sort of modeling purposes?

Yes. Sure. So again, at the midpoint, it'd be 10% overall. So fleet, kind of mid-single but weaker first half, stronger second half. Lodging in Brazil, mid-teens, maybe a smidge below 15%, a smidge above. And corporate payments, even with the channel in it, I'm going to give a number probably 20%, maybe north of 20%, and obviously, way north of 20% if you kick out the channel. So that's the mix that rounds to 10%. And again, you guys have heard this before, we're super thoughtful on the design. When we saw the super micro segment weaken, we just literally reallocated. We just said, okay, I want, in terms of marketing and sales investment, more into the middle market. Darrin brought up earlier that certainly not as many macro kind of risk and basically just kind of tread water a little bit until we see more about how this micro and SMB segment plays out this year. So we're kind of derisking the plan a bit, I tell you.

And our next question will come from Sheriq Sumar with Evercore ISI.

I have a question on the 2023 outlook and especially on the share count. It's say 75 million for the full year. Does that assume any sort of buybacks throughout the year or it does not? And if it does not, then would there be more upside to the EPS, assuming that you accelerate the buyback throughout the year?

Sheriq, it's Alissa. It's a good question. On share count, I'll first say, in our guidance, we never include the impact of potential buybacks because we see it similar to our capital allocation decisions, like acquisition or divestiture. We're going to hold those decisions until they make sense. And so we do not build that into guidance. And then I guess, in terms of the share count as we run in, the number you see that we presented in our assumptions is consistent with what we expect for the rest of the year.

And what we printed for Q3 and Q4, correct?

And fairly aligned with where you saw us come out of Q3 and what you can now see in the Q4 number.

Sheriq, it's Ron. Our default is always just delevering, right? We plan to generate $1.3 billion of free cash flow in our models, assuming that we just reduce debt as we run through the year. And then to the extent that we take money to do a buyback in Q2, we'll update the guidance to reflect that different use of capital.

Our next question will come from Jeff Cantwell with Wells Fargo.

Congrats on the results. Ron, just as a follow-up on Darrin's question earlier. In your prepared remarks, you said that in 2022, you added an AP automation software front end to your whole AP execution business. And we all know what that is, what you've been doing there. So my question is, what does that mean that your execution there on the front end going forward would impact others that you've been partnering with over the years in any way? Does that mean that you're trying to capture those volumes on the front end? Can you just help us understand the strategy there and how to think about that going forward?

Jeff, I'm not positive I'm picking up the question. Can you just rephrase it for me?

Yes. So we've been watching what you did with Roger and Corpay. And we know that you have Comdata as well. So we're trying to figure out if there's some competitive angle to what you're doing on the front end as you start to bring that into the picture with how you're going to market with SMBs.

Okay. Yes, there's clearly a competitive angle. I think historically, stand-alone AP automation software companies sold AP automation software. Knock-knock, "I've got software that simplifies your processes, automates approvals, digitizes stuff, so you don't lose it. Hey, that's what we do." And then knock-knock, a bank said, "Hi, I can help you actually execute electronic payments for you or cross-border payments." And so the idea we've been at a long time is, well, let's do both, which we've connected them already, obviously. So hey, knock-knock, "We can help you make the process work better in your company and save you time and reduce risk, and we will pay all the different ways. Every modality, we'll execute at all. You don't need to call your bank or FX specialist or your printing company to print out paper checks. We'll do the whole thing." So we think that it's a huge advantage to have that package to provide more value to clients. It seemingly, early on, generates more leads because historically, people have been interested in both sides of that thing. We're not the biggest. We've got to be one of the biggest nonbank full AP payers already. So I think it is a pretty big advantage for us going forward.

Got it. Okay. Great. And just wanted to follow up just on Bob's question earlier on EV. And I guess the question is, just to frame it for you, you're a $16 billion market cap company and you're generating over $3.8 billion in annual revenue this coming year. So can you just remind us, can you size that revenue opportunity for us maybe, call it, 2, 3, 5 years out? We'll all just trying to figure out this substitution effect and incremental revenue impacts, et cetera, et cetera. So how would you frame that as we think about our models?

Yes. That's another super good question. So first off, it's obviously a long time out. So the first thing I'd say is, on the defensive side, so on the commercial fleet side, the opportunity is the size of our whole business, right? If you went 40 years into the future and we've got, what, a $1.5 billion revenue global fleet business, the hope is, if we replace the business 50 years to today, everything was EV, we'd have a $1.5 billion business plus however we'd grow between now and then. But for us, I think the bigger opportunity that's nearer in is this consumer lighter vehicle thing that we're going to get to through the EV carmakers and through the new gas station operators that are called charge point operators. So the big part of our strategy that we're spending money on is going offensive and chasing 2 new segments that aren't any part of our business today that we think are going to show up sooner because the vehicles work better, right, the light vehicles. I mean, again, it's just a function of adoption. That's massive obviously, right? It's every vehicle that's not a commercial fleet, you're into there in terms of the TAM. So it's a massive, massive business. And I think I said repeatedly, our strategy in the thing is to be the network guy. Our company is built on proprietary networks that have unique data that we pick up and then the volume that we have that creates better economics. And our idea is the same, we're going to put together EV acceptance networks where we collect data that's interesting to clients, like what kind of chargers are there, is the charger open now if I drive there. And we think that providing that in some simple way is going to be super interesting. And we've got 5 or 10 already big EV carmakers using our software and our network to try to reduce charge anxiety, right, of new buyers. So it's massive. The question is just when, how long, right, before either side, either the commercial side or the consumer side, gets big.

Okay. Great. That's super helpful. Congrats again. [Technical Difficulty]

Hello?

Yes, Pete, we can hear you.

Sorry about that. I didn't hear the intro. Just wanted to dig into the fuel card business a little bit. Given some of the pockets of weakness that you called out on the credit side, Ron, are you going to sell any differently in '23? How are you augmenting your sales strategy there? And then as a follow-up on the partner side of the fuel card business, just wondering if you could shed any color on like RFP activity or if there's any major contract renewals coming up. Any help would be great there.

You got it, pal. So on the first part of the question, hey, what are we doing for selling in 2023, the answer is yes, there'll be some different things. So the first thing we've done, which we're about 90 days into, is we're repointing our digital machine and algorithm to larger accounts. So the guy that runs our digital sales business tweaked the models effectively to point at what I would call larger and more creditworthy accounts. So you'll see that. For sure, our sales size of new accounts will go up starting here in Q1 versus Q4. So that's point 1. We'll modify the targeting of our digital engine. And then number two is I've moved dollars. We've reallocated dollars to the corporate payments business. So I just said, okay, I'm not going to grow sales investment or sales as much in a space that has potentially more macro risk. We're going to earmark at least here in 2023 into the middle market that we have. There's more stability, if you will, in the macro. So those are really the 2 things we're doing selling-wise. And again, it's pretty small, it's a pile of bad debt, this micro super-duper new thing, but it's not big per se, right, against the total business, right, the total revenue. So that's that point. On the second one, there's not much. I'd say it's pretty quiet. Also, the other people that play the game have a lot of long-term contracts, both here and in Europe, so there's really nothing on the radar, I'd say, significant that we're looking at in 2023.

And our next question will come from Nik Cremo with Credit Suisse.

I just wanted to touch back on the fuel segment first. How did the same-store sales come in across the various parts of that business in the quarter? And just looking to 2023, what parts of the fuel business gives you confidence that the segment can reaccelerate in the back half given the deceleration we've seen in the last few quarters?

Yes. So Nik, it's Alissa. It's a good question. To make sure I got all your question, I think you're asking what is kind of same-store sales look and how are we outlooking?

Yes. How would you get to the reacceleration?

Oh, reacceleration. So yes, so for same-store sales, I would say we always say that same-store sales sort of a massive easy comp is usually in the minus 1% to plus 1% range. And I would say that we did see it soften just a little bit more than that in the fourth quarter to minus 2%. But as we look into reacceleration, it really is just retweaking the engine as we head into '23, repointing that digital engine to higher credit quality customers and then just refocusing the entire sales engine across the board to target those, I'll just call it, healthier customer bases in segments.

Yes. Let me make sure, Nik, you're clear that we pull this trigger. Like, we're super conscious that the health of these super-duper small accounts was deteriorating. So we said, okay, let's stop selling to them, so stop, and then repoint to the bank. And then second, because their delinquency was up, it creates more involuntary attrition, so a great volume softness, too. So basically, both of those things happen, right? We're not going to keep this picket open. We're tightening terms if you look shaky. And so we did it to make sure that a small, little, tiny part of our business didn't turn into a bigger problem. So we went right with our eyes wide open doing this thing. And so the answer is we've been, for 90 days, repointing the thing to bigger fuel accounts and then moving money to the mid-market. So we're happy. There's nothing wrong. We're not worried about the thing. Again, our plan is to have more in the second half. I think if it's 5%, it will be [ 2% and 7% ] or something, right, first half, second half. But I want you to hear it, we made the decisions to do both of these things for cautionary reasons and not get run over later.

And our next question will come from Andrew Jeffrey with Truist Securities.

This is Julian on for Andrew. So I have a quick modeling one and then kind of more general one. So is the lodging business, like normalized growth rate, how do we think about that, like high teens to 20%? Is that the right way to think about that?

Yes, 15% to 20%.

15% to 20%. Okay. Got it. And then I know you said that you're off the block on EV. Obviously, airline did really well this quarter, 38% up. I know that you had an in-house prior option. Any updates there? Like, is that something in the pipeline in terms of deals that you're seeing? Like, are you looking to expand there? Kind of elaborate on that a little bit.

Yes. So really, a couple of comments, I think, on the airline growth. So one of it is just continued recovery, right? Airline was super down so I think there's still some "long-tail" COVID recovery and still, sitting here today, we still don't have Asia back. There's still more to come as the Asia volume picks back up. But I think the new things that we've done there, we bought a company a year ago, that's really working. Like I mentioned, we won a couple of accounts that we had when we put this app in to speed, de-stress people, right, to their hotels instead of queuing up at the line. Well, now we've added, sold the first contract, which you'll see in the forward numbers, basically rebooking simultaneously with the lodging. So your plane gets canceled here in Atlanta tonight. First, you got to find a place to sleep and then you got to figure out how to go. Well, let's say you're on Air Canada and it doesn't have any flights or any flights available, our tech basically looks and books you on other airlines. Literally, as you're walking off the plane, you're getting a hotel and getting rebooked. So the customer sat that the airlines are getting from having less unhappy people when they get off a plane, I think this is going to become table stakes. So if a couple of airlines sees a couple that are picking this thing from us early, that this thing, we could literally run the table on this. So this is an example of bringing kind of some tech to kind of an old-fashioned problem, and it's working.

Got it. And then if I could sneak one more in, could you talk maybe a little bit about your digital marketing, how that's coming along, maybe any recent examples of success there?

Yes. I mean, other than the micro thing, I think the answer is it's representing, obviously, in every business, a larger and larger piece. For example, lodging which we just talked about, I think it's up now about 15% of the sales in that line of business. It was probably 5% 2 or 3 years ago. It's taking a way bigger chunk of the marketing leads. We used to do old-fashioned trade shows for middle markets and things like that. So I'd say that not only are digital sales that we close on compounding a good rate, but I think the lead sources from digital are also way up. Again, a lot of this is the world, right? We're just chasing along with the world, making sure that we're in the right places.

Our next question will come from Trevor Williams with Jefferies.

I guess with Global Reach now closed, just wanted to see if you could give us an update on the revenue mix within corporate payments, between FX, cross-border, virtual card, full AP. And then within the 20% growth outlook for the year, just any sense for which of those buckets you expect to be the primary contributors. I know this is a really good FX year with elevated currency vol, so just kind of how you're thinking of the moving pieces within the segment for '23.

Yes, Trevor, this is Jim. I mean, the best way to think about it is that cross-border is probably going to be closer to 65%, and call it, 25% direct and then 10% channel.

60%? 60-40?

Yes. So all-in cross-border, 60%. Domestic corporate payments, 40%. So they're going to move around a little bit.

I mean, your question is a good one, Trevor, in terms of the growth thing, having markets that are pacing, interest rate moves differently, right? Like, Brazil got out super early. And then I guess we, the U.S., got out. And now Europe is chasing. So having different timing and differential in the rates obviously creates FX volatility. So that obviously is helpful running here into the beginning of '23. But all of these is worthy, right? To get to an aggregate number, we're giving you, hey, look, we're looking, a year from today, 20% revenue growth organic plus, obviously, the print would be way higher because we're adding this deal. Clearly, most everything, Trevor, has to be working. I'm telling you that the channel, which is a pretty small piece, less than 10% probably, is going backwards. So everything else has got to be somewhere in the low to mid-20s to get the entire thing to be 20%. So I don't want to sound too cocky on it, but it's like all working. We're just selling a lot. Retention is super great in those sets of businesses. Obviously, spend is growing in the middle market, right, as smaller companies fall, so obviously bigger companies, particularly like in trucking and other areas, are picking it up. So I think the message to you guys is, our product line is better and more complete, I just think that this business has kind of really coming into its own now for us. And it's big finally, right? It's going to surpass $1 billion. And I don't know what it was, but not a $1 billion a few years ago. So it's become a sizable thing now for the company.

Yes. That's great. And just one more on corporate pay, Corpay One, any update you can give us there? I think last year, you were talking about taking more of a measured approach with some of the migrations. But just any update on progress there or just overall strategic thinking on your plan for it over the next couple of years and the cross-sell opportunity?

Yes. So that one is really still a work in process because the core business is middle market. I'd say this is an acorn, but it's a pretty small part. And so when we took a swing and miss at the cross-sell, I did, we did, not a super smart thing. We've really said, okay, how do we get the product to be right for the scene and how do we get the distribution to be right for the scene. So what we've concluded is we are not going to chase super-duper small accounts that don't have much AP that are at the very bottom. And so we're really kind of retooling the product and distribution to be upmarket a bit, so still below middle market but kind of off of the floor. And particularly, given what we're seeing and hearing in the marketplace, that seems like the right call to have not rushed into like super micro kind of AP accounts. So we'll report more. [ I'd say it doesn't matter how ] it is a priority since we did the swing and the miss on the cross-sell, but we are continuing to work it.

And we've reached the allotted time for questions today, so we'd like to thank you for attending today's presentation. This will conclude the question-and-answer session. You may now disconnect your lines at this time.