Ronald Clarke: It’s Ron. So happening, I’d say, a little slower than we’d like but happening. So again, it’s — I guess, we’re about a year into the pivot. I can’t remember how clear I said it, but it’s worked, right? In Q3, the credit losses in that business went in half from $24 million to $12 million, and our outlook for this quarter Q4 is $25 million going to $10 million, so down $15 million. We have traded a bit of late fee revenue, right, because we don’t have those small accounts that are going later or obviously going bad. So I’d say that it’s in process. It’s been pretty complicated to turn that digital engine to bigger accounts to make sure that they’re creditworthy and that the algorithm is working. But we’re seeing I think, as I mentioned, sequentially an increase in the what we call card market there.
And then second, we started building the field and Zoom staff that will contact — that will be outbound, if you will, on that a bit larger seam than the micros. So I’d say that we’re moving some investment dollars along with pivoting the digital engine. So the plan is for it to pick up a lot. I don’t have it in front of me, but I think our sales plan for that line of business here in the U.S. is up 25% next year on the back of that of, one, the digital pivot and, two, the incremental field sellers.
Thomas Panther: Yes. And I wouldn’t also lose sight of the international business. It continues to sell quite well. Year-to-date, 10-plus percent levels of sales growth. So that also helps generate the overall fleet performance that you’re seeing.
Unidentified Analyst: That’s very helpful color, and great to see the credit loss is down substantially. For my follow-up question, I just wanted to touch on PayByPhone. I’m sorry if this was already addressed. But what’s the margin profile and revenue growth profile of that business on a standalone basis? And how much opportunity do you see on the expense side to optimize there?
Ronald Clarke: Yes, there is no margin profile in that business, right? That’s been a go-go growth business compounding, I don’t know, 20% to 25% the last 3 years in their preliminary plan standalone into next year. Into ’24, it’s another 25%. It’s circa, call it, $50 million next year, call it, $40 million this year, pro forma, going to $50 million, kind of earning virtually nothing. So the — again, the big idea is what we can do with it, right, which are two things. One, we’ve got a ton of businesses that are already — the employees are already using their app here in the United States and in the U.K. So we’re obviously going to go to our business clients and hopefully dramatically increase the amount of B2B parking that the company has instead of “consumer parking” where FYI, the rate is substantially better if you’re working for a business.
And then the second one, I think, we said is we have networks they don’t have, right? Beyond parking, we have EV, we have service. We have registrations and fines and compliance kinds of things. And so the idea is, obviously, to try to light up their customers who are in the app making payments where, remember, we got the information. It’s Ron Clarke, he’s on his iPhone, his license plate is XYZ, he’s on his Mastercard. The data that we need to add an EV recharge is kind of in the account when we show up. So we expect the synergy, if you will, to take that thing into positive territory, right, as we head into 2024.
Operator: And your next question comes from the line of Bob Napoli from William Blair.
Robert Napoli: A lot there, a lot there tonight to go through. Just Ron, the separation alternatives, merging with someone else, is that — I mean, essentially, would that — given the size of your business, is that essentially going to be FLEETCOR Corporate Payments acquiring somebody and then merging into a public company? Or I mean, what’s — just any thoughts around how that would — could work, what you’re thinking about there?
Ronald Clarke: Bob, good to hear your voice. So obviously, there’s a few different flavors that we’re working on depending on who the counter-party is. There’s actually a pretty fascinating structure that we’re looking at where we could spin out an asset of ours effectively into a private entity and have someone else combine their assets into the same private entity. We would obviously control and own some fair amount of that company. So we’d consolidate it, work on the synergies, and then basically IPO that a different day. We’re looking at another scenario where we would literally put our asset into another company. So there’s a few different combinations. And it really is just a function of how accretive, what kind of premium we think we could get by separating something and combining it which, again, makes a lot more sense to us than the “pure spin” where we’re kind of guessing at pro forma multiple.
So we’ve been in conversations with a few people for quite a while, and we’re trying to figure out whether the thing makes sense or not.
Robert Napoli: Interesting. Just a follow-up on Corporate Payments. The 20% organic growth is really impressive given the size. Is that something that is sustainable into next year? And is it the AP side or the cross-border FX? You’ve made a number of acquisitions there. What is outperforming more? Maybe relative size of the key pieces of Corporate Payments?
Ronald Clarke: Another good question. They’re kind of 60-40 in terms of revenue, but they’re both kind of compounding around the same level. And I’d say early days, without Ron pushing too hard, I’d say next year is high teens to again. More to do to give you that final number. But I think — yes, I think we believe, given the sales again that we got in the Q and the backlog that come online next year. And then we’ve got a couple of monetization ideas to get more card, if you will, with some of the accounts. So I think it’s — even though it’s big, I think we feel good about the thing just keep getting up and going again next year.
