Q2 2019 Earnings Call
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[noise] <unk> conference I'd number.
Yes, it's 219 037 fat.
<unk> first and last name.
Evan Laflam K E the eye and.
A S L a and M E.
On your firm.
Errol A.I.E.R.A.
Okay.
Al joining now continue to fuel our robust growth engine.
Within fleet. This includes the smooth and complete integration of the shell and Chevron portfolios.
Onto our proprietary platform.
In addition, we are continuously enhancing and expanding our offerings and developing new products and capabilities.
An example of this is expanding the coverage of our mobile payment App driver dash to more than 25000 fuel locations, including Exxonmobil and shell.
Our clearview data analytics platform now has more than 8000 users, including a rollout to Exxonmobils fleet in Q2.
These are great examples of how WEX keeps the customer at the center and improves our offerings to meet the customer self service needs.
From an internal perspective.
We're making investments in digital marketing optimization, which will allow us to broaden our digital marketing channels and provide us more dynamic ways to reach customers, including text email and online.
In tandem with our investment.
We're seeing a significant increase in the percentage of new applications that we have now fully onboarded digitally.
Internationally.
We've implemented the portfolio of the energy based in New Zealand.
And we are now live in with Chevron in Hong Kong.
And the traveling corporate payments segment, we optimize the user interface for mobile and are now able to manage customer credit lines on various schemes platforms in legal entities.
We're issuing visa branded commercial virtual cards in the USA and UK in us dollars pounds in euros.
With more currencies in the pipeline.
By offering a global payment solution with visa.
We're providing our customers with even more choices and the ability to streamline and simplify transactions across the globe.
Boosting options for global merchant acceptance.
In addition, we've also made great strides in migrating transaction volume onto our internal processing platform and have now increased our run rate volume to more than $2.8 billion annually.
Our us health business continues to be the industry leader in innovation.
The June 2019 product release includes updates and enhancements that help improve the consumer experience, including CDH mobile App quick precede upload and a new Cobra member for open enrollment tool as well as business intelligence enhancements to the administrator dashboard.
In summary, I'm once again very pleased with our performance in the second quarter of 2019, as we build a stronger foundation for accelerating growth and profitability throughout this year and beyond.
We're capitalizing on the extraordinary growth and progress we made in 2018 to deliver sustained growth in each of our core verticals.
While continuing to successfully integrate our recent strategic acquisitions.
Our enhanced growth engine built for our strategic investments over the past few years, we will carry our momentum forward through the remainder of this year and beyond.
I will turn the call over to Roberta now Roberta.
Good morning, everyone.
As you'll see from Melissa.
The financial results in the quarter, what extremely positive on those expenses.
On a sequential basis.
We more than doubled the revenue growth rates.
We have excellent execution on the show on Chevron portfolio conversions.
As well as continued focus on the integration of the reason our acquisition BV on November .
The performance was driven by double digit topline growth from each of the segments.
With notable strength in several areas.
The shell and Chevron portfolios in the fleet segment.
The us corporate payments business.
On the Us health business.
Each of them have significant growth versus prior year on sort of cost projections for this quarter.
Additionally, the November these on these comedy Renovveis acquisitions continues to meet expectations.
From an earnings point of view.
We continue to benefit from revenue will.
Which was offset by the continued ramp up cost for shell and Chevron.
Lower fuel prices down Q2 2018.
On Mega TV Bucks from effects fleets.
Now, let's take a look at the results on its line number seven.
Total revenue for the second quarter was four comments on $41.8 million.
A 19% increase over the prior year.
GAAP net income attributable to shareholders was $13.8 million.
non-GAAP adjusted net income was 99.6 million.
Our $2 on 28 cents per diluted share.
Slide eight shows the overall revenue performance broken down by segments.
As I just mentioned total revenue growth was over 19%.
Breaking down health and employee benefit solutions led pivotal with 55%.
Thrombo Encore 40 solutions bolster the 21% increase.
And finally, the fluids segment had a strong 11% growth rate.
Now, let's move on to segment results, starting with fleet on a slide number nine.
The fleet solutions segment, our chief two prominent on 67.3 million in revenue.
An increase of 11% when compared to the prior year quarter.
Payment processing revenue was up 7%.
Im fine and fee revenue was up 38%.
As we expected the net late fee rate was 54 basis points over spend volume this quarter.
Compared to 38 basis points in Q2 2018.
The increase in basis points was due to the shell and chevron on portfolio conversions.
Our mix of new business wins.
On a small rate increases.
We project the rate of growth for the second half of the year.
The net payment processing rate was up five basis points from Q2 2018.
Due to higher diesel fuel spreads in the us.
Which we do not expect to continue.
Our lower fuel prices.
This was offset by the implementation of shell and Chevron.
Looking at the flu revenue in detail the highlights for the quarter includes 18% growth in the legacy WEX fleet business.
Field by shell and Chevron.
11% growth in the over the road business driven by customer wins.
Im very strong growth in the Asia Pac region.
Lower fuel prices and FX rate review for revenue growth by almost two percentage points versus prior year.
The other domestic fuel price in Q2 was $2 on 91 cents.
Mercers $3 on two cents in Q2 2018.
Similar to last quarter, we continue to see positive trends, including solid organic transaction growth of 7% our low attrition rates.
Finally in this segment as Melissa noted the shell and Chevron implementations are fully completed.
And we have already started to see the benefits of higher revenue growth.
Looking forward, we expect this trend to continue in the third and fourth quarters.
Turning to travel and corporate payments segment on slide number 10.
Total revenue for the quarter increased 21% to 91.4 million.
Due primarily to the U.S. core 40 payment business.
Lower scheme fees, which are now gone through our revenue.
Some benefits from the November these acquisition, which added approximately $9.5 million in revenue.
We continue to see solid growth internationally in Asia Pac Europe , and Latin America.
In North America, the corporate repayment business posted excellent revenue growth of 59%.
Purchase volume issues by WEX reached 7 billion.
This equates to a 13% growth versus prior year.
As expected volume growth rates have more than doubled from Q1 2019.
Thanks to the ramp up of new business signings.
Looking forward, we continue to expect full year volume to accelerate and grow double digits.
To conclude this segment the net interchange rate was 77 basis points.
Which was up 20 basis points from Q2 last year.
Similar to prior quarter the increase in the rate is due to a combination of factors.
First the acquisition of novelties.
Second our renegotiation of one of the OTI a contract.
The result has been a move on revenue from order to payment processing.
These most ground no impact on the economics.
Third the strong performance in the us corporate payments business driven by growth in the partner channel.
This also increased sales and marketing expense as part of the revenue recognition standard changes.
And lastly, domestic and international spend mix, we've seen the Toronto business.
Moving onto slide 11.
For health and employee benefit solutions.
Revenue for the quarter was up an impressive 55% compared to last year.
Within the USLV business, which includes the legacy business plus these comedy benefits.
Revenue grew 72%.
Breaking this down organic growth was our substantial 18% and the acquisition of discovery benefit added 25 million in revenue.
The average number of some accounts was up 17% relative to 2018.
Reflecting our robust enrollment season.
We've got a good start to the year and as we progress we expect the outsize performance to continue throughout 2019.
In the long term, we believe the fundamentals are in place for our continued mid to high teens growth trajectory.
From an integration point of view in 2019, we expect to deliver 5 million in run rate synergies from the discover the benefits acquisition and another 10 million by the end of 2020 .
Changing gears to expenses on slide number 12.
For the quarter total cost of services expense was our commented on $60.8 million.
Up from our committed on $35.1 million in Q2 last year.
Im Toto SGN, eight depreciation and amortization expenses.
What I commented on 86.3 million.
Which is up $51 million versus 2018.
Breaking down the line items within these categories.
Processing costs increased 22 million.
But I, mostly due to the Dbi on November these acquisitions as well as service operations cost to handle the increased volumes.
Service fees were essentially flat compared to prior year.
This was mainly due to higher causing the health and employee benefit solutions segment.
And offset by moving volume to the thermal transaction platform in the travel and corporate payments segments.
Good heavy loss on a consolidated basis were $14.8 million.
Q2 last year was 13.6 million.
In the fleet segment operating loss was 13.9 basis points over spend volume.
Which is a slightly higher than the 11.2 basis points for the same period last year.
Operating interest expense was $10.7 million. This is in line with expectations and was our 1.2 million compared to 2018, due primarily to higher interest rates on volume growth.
Gn expenses increased 28.7 million versus the prior year quarter.
The biggest increases come from stock compensation, primarily due to the performance of the company.
Then on Wednesdays and Ediscovery benefits acquisitions.
Debt related costs.
On M&A fees.
Lastly, the sales and marketing line increased $15.1 million.
Driven by pharmacy rebates, the recent acquisitions under Shawn chairman on costs.
Now for taxes on a slide number 13.
On a GAAP basis, the effective tax rate was 28% compared to 24.2% for the second quarter of 2018.
On an eni basis, the tax rate was 25.2% for the quarter and 25.1% for Q2 last year.
Looking now to the balance sheet on his line number 14.
We ended the quarter with 768 million in cash.
Up from 541 million as compared to the cash position at the end of Q4 2018.
On the corporate cost side, the balance was $357 million.
This increase in the cash balance was used to fund the gold fuel card transaction on July Onest.
There were no borrowings under the company's revolving credit agreement at the end of Q2.
Between access to corporate costs.
And they are available revolver without immediate access to more than 1 billion in capital.
During the quarter, we increased seven be borrowings by accommodate on $50 million and improve the flexibility of the credit agreement.
While also extending the maturity date from 2023 to 2026.
We have an outstanding cash flow generation for the quarter and review the financing debt balance by nearly $50 million.
At quarter end, we felt our total balance of 2.8 billion on the revolving line of credit.
Term loans and notes.
The limit us ratio of defining the credit agreement.
Stands at approximately 3.8 times.
Up from 3.1 times at year end.
As expected.
The increase in leverage ratio from Q4 of last year reflects the acquisitions, we completed during Q1 this year.
We continue to expect to deliver healthy return to three quarters of our term per year.
Finally as of today, we have approximately 65% of the financing that essentially at fixed rates.
This largely mitigated exposure to LIBOR rates.
To close out the call, let's move on to guidance on slide number 15.
The first quarter of the year set a solid foundation.
The second quarter marks the successful completion of the shell and Chevron and conversions as well as continued integration of the Dbi in November .
Moving forward, we expect but a relatively better results in the second half of the year.
Driven by organic growth.
The contributions from the shell and Chevron portfolios.
And the reason acquisitions, which now include the Goldfield CCART transaction.
We also expect the macro environment to be weaker.
With lower fuel prices and unfavorable exchange rate when compared to the last guidance.
The impact of these macro factors is approximately 15 cents of EPS.
And the updated full year guidance reflects these changes.
For the full year, we expect revenue to be in the range of 1.72 to 1.75 billion.
On adjusted net income in the range of 390 924 kilometers on $10 million.
On an EPS basis, we expect the eni to be in the range of $9 on 10 cents.
To $9 on 35 cents per diluted share.
For the third quarter, we expect to report revenue in the range of four comments on $55 million to $465 million.
On adjusted net income in the range of accommodate them then to our candidate and $15 million.
On an EPS basis, we expect adjusted net income to be between $2.52.
And $2.62 per diluted share.
Now.
Let me walk you through a few more assumptions.
Exchange rates are based as of the end of June 2019.
Domestic fuel prices will average $2.72 per gallon in the third quarter and in the full year.
The assumption for the U.S fuel prices is based on the Nymex futures price from last week.
The fleet credit loss will be between 13, and 18 basis points for the third quarter and for the full year.
The adjusted net income tax rate is expected to be between 24.5 and 25.5% both for the third quarter and the full year.
And finally, we are assuming that at approximately 43.1 million shares outstanding.
To conclude we are probably the performance year to date and the projected guidance for the remainder of the year.
And with that operator, please open the line for questions.
At this time I would like to remind everyone in order to ask a question you May Press Star then the number one on your telephone keypad.
Again, that's star then the number one on your telephone keypad, we'll pause for just a moment to compile the question and answer officers.
The first question comes from the line of Ramsey El Assal from Barclays. Your line is now open.
Hi, guys and thanks for taking my question.
I wanted to ask you to give us a little more color on the outperformance on corporate payments volume growth.
Can you parse that out for us in terms of underlying industry verticals or products or any other incremental drivers there would be would be helpful.
Sure and good morning.
Good morning, a couple of things I'd say on that front what are the things that we've talked about over the last few calls is the diversification that we've seen in that part of the business. So we've now gotten to the point, where about 40% of the revenue is coming outside of travel.
And.
As a result, you're seeing really good lift in some of these new products that were in so we saw we talked about having 59% revenue up and use corporate payments. We also.
Performed really well in travel in Europe .
We were up 35% on the same basis, meaning excluding the impact of FX and so if you kind of look across the portfolio. We're seeing benefit in each of the regions that travel is still seen in the majority of the revenue and so when we looked at the on the volumes that are coming through really saw incremental improvement.
In some of the.
Parts of the business that are outside of travel, but we came in line with what we expected in travel volume as well.
And remind us again of the delta between volume growth and revenue growth and the broader segments.
Remind us again about the drivers of why volume comes in lower than revenues in terms of the growth rate.
Hi, Good morning. This is all that at the so as I said during the call today. The fact that we have now novartis, which obviously comes with a much higher in in.
Interchange rate.
The other thing we did also used to on the interchange rate by moving from all the revenue into payment processing, we negotiated the contract with one of the Big OTI Ace.
Which obviously have no change in the overall economics box has a move between revenue lines also improve the net interchange rate and then as Melissa said, the us quarter prepayment business, which has a much higher in third interchange rate. So revenue was up 59% and volume was up 51%. So also that Beast contributed.
Finally, the mix on the travel business analysts also mentioned between domestic and international has also driven not the higher growth on the revenue side.
Hi, Ritu its mix related is not to.
Price really correct or anything correct, yes.
Exactly.
Let me sneak one last one and I'll hop in the queue just some color on your same store sales.
Verticals and fleet and then I'll hop back in the queue here. Thanks for.
Same store sales were down slightly sequentially. So if you look year of both sequentially and year over year.
Which is one of the trends that we're we're paying attention to we've seen over the last several years it being either slightly positive or slightly negative and then Q2 slightly negative.
Thanks, so much.
Okay.
Your next question comes from the line of Sanjay Sakhrani from KBW. Your line is open.
Thanks, Good morning.
Robert I wanted to just go a little bit more into the guidance you mentioned, the 15 cents macro impact, but maybe you could just go through some of the other various impacts that are affecting the range like M&A and FX and how significantly different they are versus the initial plan and then I guess also when I think about the revenues the revenue guidance for the year went up but the EPS guidance on the top end went down so I just wanted to make sure I understood why that was happening. Thanks.
Of course, good morning, So let me start with revenue and then we can jump into F.
So when we guided in Q1 at the midpoint I will talk for you. So revenue was that the 1.73 and we increase its 5 million to 1735.
The reason for this increase there are a couple of them. So number one obviously, we closed on the IGI GAAP, you'll kind of transaction on July 1st.
This will give us a boost in revenue on the second half.
We also have better performance on the us quarterly payment partner channel, which if you remember when we change the Rev. Rec last year, obviously, you get more revenue, but you record the expense on the sales and marketing line.
And finally, we had in this quarter, so, particularly higher diesel the spirits.
So this would all together boost our revenue from previous guidance on the flipside, we taf headwind both on VPG will reduce VPG on a full year basis, six cents, which more or less dry 14 50 million in revenue combined with the FX rates that the coverage deteriorated in the past in the past quarter. So all in all as I said to your revenue at the midpoint is up five to 5 million.
Moving to EPS, obviously, the difference between the revenue outperformance versus the macroeconomic headwinds.
As I said on the call the macro headwinds said, adding 15 cents of EPS negative and a midpoint, we're going from 930 to 9.225, so really we are covering half of the macroeconomic deterioration.
And you know we feel good so far in the year and you know we have out there big goals for the full year. So let's don't forget that if I look on a full year basis, and we exclude the macroeconomic factors I mean, we are expecting to grow and IP as on the 17, 18%, which I think is a very solid number for the full year.
Okay. Thank you and then Melissa I know this is over eight year, there's a lot of things building up.
Including Chevron and shell and all these deals that you've done but is it fair to assume like a lot of the investments have been made now and what's in front of us are the benefits associated with with all of these initiatives.
And I mean, I think that speaks for itself in terms of the acceleration, but maybe how do you how should we dimensionalize it.
Yes, it's something that we've been talking now for the last two quarters, maybe we want to make sure. It's clear we invested particularly the shell and Chevron we made investments in advance of the conversion.
Which is something we normally do when a private label portfolio is just the size of those two portfolios.
Stacked one on top of each other made it much more obvious.
And so the first quarter is that drag on earnings and the impact of that as we were going through the initial portfolio conversion second quarter, you're starting to see the lift as a result of shell I think been ramp through the quarter and now Chevron will start to be fully ramped through the third quarter and so each quarter, you're seeing sequential improvement and what were giving out guidance and a lot of that is driven based on those two portfolios and.
So as we continue to see the revenue benefit that plus the implementation in some of the contracts that we've added into the mix. We talked about that we are in implementation mode. That's part of what you are seeing come through and the future revenue guidance and then the earnings lift in Q3 and Q4.
And I'm sorry, just one.
A clarification, there and in terms of a full run rate for Chevron shell that we'll be within this year in the second half.
Yes revenues.
Yes, yes, now we have a history of growing portfolios and so our expectation is that baseline we're going to continue to grow from there, but yes, you will see the conversion benefit coming through in second half of the year.
And Sanjay if you remember the last quarter that also we said that so we were expecting very little revenue in Q1.
More revenue in Q2, I'm fully fully around for the second half of the year. So that's the expectation.
Okay great.
Good to hear things are running as planned thank you.
Your next question comes from the line of Darrin Peller from Wolfe Research. Your line is now open Sir.
All right. Thanks, guys, we saw the finance fee growth and fuel step up a bit after the the increase in late fee range in I think first quarter.
Are there any other just talk about pricing more broadly if you don't mind is are there any other levers you can expect from pricing standpoint over the next several months or quarters.
How's the environment feeling around your ability to take price in certain scenarios.
So another thing Thats impacting that if you look at it again sequentially is that some of the portfolios that were bringing on we.
We have a discussion with the oil partner on how they want that to be presented to the marketplace and what the fees. They want associated with that is part of the initial onboarding and so you're seeing a mix effect as some of the choices that.
That they've made rolling through our numbers Q1, Q2, Q3, and again they will start to see that normalize as we get later in the year, Okay and so that's that's one piece of what you are saying the second unit is going to relate to your second question around fees.
If you go across our portfolio, we have made choices around fees around implementing fees that people can largely avoid.
Any side the biggest benefit that happened a couple of years ago.
It's in place that we just continue to look at across the business to make sure that we're doing is in line with market and then theres the value proposition that is happening with their customers. So weve made tweaks along the way.
And to those fees and I think thats, just a steady state for us as opposed to thinking this is one big.
Macro change.
Okay.
All right. Let me just follow up I mean, I know the EG group, we saw that you that win in Europe . I think you just referenced before also robots. It's 200000 cards can you just try to help us size in terms of either transaction or revenue opportunity and then where are you guys also in Europe in the I think you had won a large multi year in Europe .
Recently, where are you in the run rate for that.
Hi, guys. So yes. So we did talk about winning E Travaline and Europe , and we are in ramp process with them.
Which started in the beginning of the year. So I think that is ramping and.
Related to your second question.
EG feels we haven't disclosed the revenue associated with that.
Rivera did talk about adding it into the guidance numbers. That's part of why we're seeing a revenue lift in this year.
And where it's collette early stages to that customer we know.
That it operates on spread model think of that like the rest of the business that we have.
And the European fleet marketplace and so.
Similar type pricing model similar type of businesses extension of acceptance.
And as a partner that we're really pleased to be working with its someone that we think we'll do more of outside of Europe and other parts of the world as well.
Okay. Thanks, guys.
Your next question comes from the line of Jim Schneider from Goldman Sachs. Your line is now open Sir.
Good morning, Thanks for taking my question I was wondering if you could maybe just kind of give us a little bit of color about the onboarding and ramping of the shell and chevron contracts in Q2 relative to what you had planned.
And then.
I guess as you as you head into the back half of the year at what point do you expect those to be accretive to your overall corporate margins.
Okay. So I'll start aneurysm reproduce eager I can tell to add on to that.
Shall shall we actually had.
Fully converted by the end of the first quarter. So you saw that at at full ramp in Q2, Chevron we were converting throughout the course of the second quarter with the last of that happening towards the end of the second quarter very much. According to what we had laid out early in the year, our plan and our expectations associated with those contracts so conversion timing.
Very much on plan.
And what we've seen come through from a revenue perspective, and Roberto talking about it being a little ahead of what we expected in the second quarter.
That's relating to us getting.
Background around what the portfolio performance going to look like as we have more time with that then we will get more predictable and with the behavior looks like that it did a little better than we expected in the second quarter.
On what I will like to you you know what you're thinking for the second half of the yet on a on a run rate basis. We have to we have talked a couple of times about the number of gallons that these two portfolios, we're going to bring into into WEX.
And you know can benefit those gallons are dependent on fuel prices. We are talking to between 60 and 70 million in revenue on a run rate basis, obviously as Melissa said before expecting note that in the future we could all those portfolios, but if you take the 60 to 70 million will give you an idea on the second half of the year.
What to expect on.
On a on a revenue side.
Thanks, Thats helpful and then maybe as a follow up.
In terms of the the margin front I apologize if I missed it but in Q2, what was the the operating margin drag from acquisitions in the quarter and how much of that do you expect to be re mediated by the the synergies you expect through the end of the year say exiting Q4.
So you know there is a lot of moving pieces on the on the operating margins on and particularly we dig in on the on the M&A transactions. What I can tell you is that the on.
On a related.
Two you know the investments we have done in in the first half of the year.
On a full year basis 2019, we expect excluding the macro economic factors through improved operating income margins at WEX level inclusive of the acquisition some of them. Obviously when you buy a company like Dbi that has lower margins equal to impact the overall, but we are expecting to improve those margins significantly now when you break that business into the first kind of on the second half as Melissa said, we have no all the investment on shell and Chevron.
The acquisition, so obviously as they ramp up in revenue will improve margins on the second half of the year and also particularly in 2019, we were aggressive on the first half of the year on the legacy USA business in terms of investment and we are going to be capitalizing on the on the operating margins on the second half. If you saw Q1 on the health side revenue was up 15%.
And on the second half eight on the second quarter, 18% and we expect that to to continue as we move into the into the second half of the year.
Great. Thank you.
Your next question comes from the line of Ryan Cary from Bank of America Mer. Your line is open.
Growth in travel and corporate solutions, it seems like growth extra ventas decelerated, a little from the first quarter and was below the full year range of kind of double digit organic growth. So thinking about the full year could we see kind of organic growth accelerate and is double digit organic growth still the right way to kind of think about it.
Hi, this is simple that though.
If you remember when we guided doubling the yet on the corporate payment side, we guided on the 10% to 15% organic.
And obviously those numbers always exclude FX fluctuation with which in this quarter, but went almost 2% of the on the total revenue we grew double digit exactly to be precise you know take out at an event is and you take out also the FX.
In but we grew 10% in the quarter. So we were on the low end of the range, but on a full year basis, we still expect to be within the 10% to 15% growth rate for the full year in this in this segment from an organic point of view, obviously, we expect not the novartis to add on that as well.
Got it okay and.
I was hoping to provide some more color on the Brazil business for employee services, just kind of how we trended throughout the quarter I believe we lap the accounting changes in Brazil in the third quarter. So I am assuming that in itself should help some of the headwinds, but could we also see some benefit from recovery in the underlying business as well.
Yes. So this is per zone perspective, it's less than 1% of our total revenue, it's less than 5% of that segment. So it's a relatively small part of the business.
And a lot of the focus we had initially and continues to be is around making sure that we are shoring up the control environment. There has been like a key nine to that.
No at the same time, we've been looking at the business itself, we've changed out the management team we are going to see an announcement later today about the new MD that we're putting in place in that business.
And we're starting to see the benefit of the changes we've been making to the business model as well as the new the idea that you're going to lap.
Some of the changes that we started making at the end of last year. So we do think you'll see sequential improvement from Q2 to Q3.
Around that part of the business, but it is a really small part of the overall company.
Got it thanks for taking my questions.
Your next question comes from the line of beat their Christian fan from Sidoti. Your line is now open Sir.
Good morning, Thanks for taking my question, Yeah, Nice execution, Melissa I was wondering if you could speak to.
There, there's there's been some notable signs of stress, particularly in the <unk> and the OTI, our trucking segment shippers.
I have been under a lot of pressure this year I'm wondering if youve, if youve seen any or you're watching closely any issues as it relates to.
Just the growth there, but also perhaps credit issues and it would be helpful. Perhaps if you can remind us what is wexs.
Overall exposure now to the OTDR segment. Thank you.
Sure. So the that part of the business and so one of the things that we were looking at again, a little bit more detail. This week was was same store sales and any trends specifically within that part of the business in it.
You know, it's pretty consistent with the rest of the market place. So it's slightly down.
Year over year for the year and it at the same time there has been.
More pressure around we have a small part of that business, where we're factoring for our customers and say that that has has seen some pressure is.
So theres been right.
Impacts within that part of the marketplace, the lows or yeah.
Less.
But we really haven't seen any any change in credit profile.
In our corporate and our population and just kind of keep in mind that part of the business is paying quickly on average it's got a shorter payment term more likely to have an a deposit associated with account.
And so we don't tend to have.
Long credit lines for those customers that tend to be really quick payment terms.
And so there's no real change or impact that I would call out second quarter versus what we've seen in the past.
Thank you helpful.
Yes.
The next question comes from the line of Mr., Bob Napoli from William Blair. Your line is now open Sir.
Thank you.
Dan Great quarter, good numbers, so much going on.
And you guys are executing.
Just on the health care business the discovery benefits.
Acquisition that HSH business is there an opportunity.
Two.
Significantly increase the interest income that off of the.
The HSH balances I mean are you holding those.
On balance sheet or.
Are you who are you partnering with.
We don't hold them on our balance sheet, we do have partners on independent thing go across the board and think about that that business in totality, we work with a number of different banks and and to the extent we are working with the banking partner, they're going to hold those deposits, they're going to get the benefit of the interest rate changes.
And what we're providing is technology for them in places, where we are we have the relationship or directly or we're working with a partner who is interested in us and helping direct that than we direct that into from partner relationship.
And so we are seeing a little bit of a lift in that revenue stream. Its really small and you think again the size of the segment and then the size of that revenue to that segment. As you know it's immaterial to the company, but we are seeing a little bit of lift associated with that and as we see growth in our business.
That is.
Outside of our relationships with our allies than we do think you'll continue to see some benefit of that.
Thank you and the travel and corporate solutions segment, what how much of that revenue is that the.
The the old Assai old travel business, if you would the legacy travel business versus the corporate payments business and that growth rate of 50.
Over 50% is.
What what is what percentage of revenue and that is that excludes the travel portion correct.
It does so say if you think about the segment and start to break it down.
About 60% of the segments travel about 40% relates outside of travel the corporate payments piece that we were talking about is the.
Is it.
Products that we have are selling into the marketplace either through our partner channel.
Or directly that's grown the.
Over 50% and.
So if you kind of did you take that that business is split into pieces, you've got travel you've got corporate payments related to HPP got bill pay which I think of that as the new Ventas acquisition.
And we have relationships with F EIS.
Which are out marketing our technology on our behalf and on their behalf on a white label basis. So all of those are different channels and in aggregate up to the total part of that business.
The P. piece, how big is the piece and it's growing because it I mean, it's such a huge market.
HP.
When you think about it again directly into our partner channels at about 15%. This segment when you start to aggregated and then add on F. buys.
And then bill pay that's when you get up to the 40%.
Okay and last question real quick on go fuel to EG joined the purchase price for that was look like.
Looked like about 10 times revenue is that right is that I mean, it looks like a pretty pretty high purchase prices that business growing really fast and.
And maybe I'm off on the purchase price.
Hello.
Well, we're at this pace, we have not disclosed the numbers Bob.
What I can tell you is that we pay you know as a.
When we go through potential acquisitions, we always look at the market on the or we can values would be most people either on revenue or on a b debt that was in line with the market.
And obviously with expectations.
That you know we are going to be growing that the business no one sees in our hands.
And that's about a $10 million revenue.
I would put it in the context, though to any aspect the growth profile of it.
Is it was a piece of EG and part of what.
Was appealing to US is that it was an asset that we felt and with we carve it out. So we had an ability to do more with and they would say the same thing that they think that.
It was something they just didnt have time or in wasn't their focus so adding onto our existing business, adding onto the network we already have.
We believe that we have more opportunity to growth and what they've seen historically.
Thanks, Congratulations on the strong results.
Thanks. Thanks.
Okay.
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Yes. Thank you that's all the time, we have for questions today about we thank everyone for joining us today and well look forward to talking with you again next quarter.
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