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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Greetings, and welcome to the FleetCor Technologies First Quarter 2019 Earnings Conference Call. As a reminder, this conference call is being recorded.
I would like to turn the conference over to our host, Mr. Jim Eglseder, Head of Investor Relations for FleetCor Technologies. Thank you. You may begin.
Good afternoon, everyone, and thank you for joining us today. By now, you should have access to our first quarter press release and supplement, which can be found under the Investor Relations section on our website at fleetcor.com.
Throughout this conference 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.
Quantitative reconciliations of historical non-GAAP financial information to the most directly comparable GAAP information appears in today's press releases and on our website, as previously described. Also, we are providing updated 2019 guidance on both a GAAP and non-GAAP basis with reconciliations.
Finally, before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements. This includes forward-looking statements about our guidance and outlook, new products and fee initiatives and expectations regarding business development and acquisitions. They are not guarantees of future performance, and therefore, you should not put undue reliance upon them.
These results are subject to numerous risks and uncertainties, 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 filed with the Securities and Exchange Commission. These documents are available on our website and at sec.gov.
With that out of the way, I would like to turn the call over to Ron Clarke, our Chairman and CEO. Ron?
Okay, Jim. Thanks. We appreciate everyone taking the time to join us this afternoon. Upfront here, I'll plan to cover three subjects. First, I'll provide my perspective on Q1 results. Second, I'll preview our outlook for rest of year, and third I'll provide a bit of an update on our major growth initiatives.
Okay. So, onto the quarter. We reported Q1 revenue of $622 million up 6% and $2.67 in cash EPS, up 7%. On a constant macro or like-for-like basis, revenue was up 11% and cash EPS up 13%. Both revenue and profitability in the quarter topped our internal expectations, revenue about $10 million better than planned and cash EPS $0.07 higher than the midpoint of our guidance range.
Organic growth, overall 11% for Q1 with all four lines of business performing well. Fuel card revenue growth finished at 10%, toll growth 15%, corporate pay revenue growth 18%, and lodging revenue growth 6%, although 18%, if you exclude the FEMA impact from Q1 last year. So, look, good performance from each of our business lines.
Our trends, also quite good in the quarter. Customer retention of 92%. Our same-store sales flat down a point from the last two quarters and new sales or new bookings up 12% versus last year, with particular strength in our corporate pay and Brazil business.
So, look, all-in-all, a good start to the year, revenue and profits are ahead of expectations, 11% overall organic growth and solid trends. So, out of the blocks quite nicely. Okay. Let me transition to our rest of year outlook. So, first off, the macro. We expect there pretty consistent with our initial '19 guidance.
There are few puts and takes from 90 days ago, clearly, better fuel prices and lower interest rates, but significantly worse FX rates. So, when you put it all together, basically comes out, where we thought at the beginning of the year. In terms of revenue, our organic revenue growth expectation remains 9% to 11% range rest of year and our fuel card organic growth in the same 9% to 11% range.
On the earnings front, we are raising full year 2019 cash EPS guidance to $11.62 at the midpoint, that reflects our $0.07 guidance beat in Q1. To know here, included in our $11.62 full year cash EPS guidance is $0.13 of new headwind really coming from two areas. First, an unexpected higher share count rest of year, about $1.2 million, $1.5 million additional shares more than planned that's because of our higher stock price along with a few cents of dilution related to our Nvoicepay acquisition. So effectively, we've baked a bit better performance into our rest of year outlook to absorb this $0.13 unplanned headwind. So, net-net, we're out looking 2019 to come in incrementally better than our expectation starting out the year.
Okay. Lastly, let me transition over to an update progress with our four major growth initiatives. So, initiative one, beyond fuel, where we opened up fuel cards in a controlled manner to allow our cardholders to make additional business purchases. Obviously, ones that are authorized by their employer.
So, now in the US, we have 5,000 of our active fuel card clients actually making beyond fuel purchases. This is resulting in about a 40% lift in per client revenue. And so as '19 rolls on, we'll plan to make this beyond fuel offer to more than a 100,000 additional US fuel card clients also to some of our new sales prospects. So, we'll keep you posted on our take rate and expected impact on revenue growth.
Second up is our beyond toll initiative in Brazil. So, here, we're trying to do two things. First, encourage our 5 million active toll users to use their account with us to also make additional fueling, parking and fast food purchases. And then second, we're trying to attract non-toll users or what we call urban users to join our fuel parking and fast food program.
So, the report here is good, we're gaining some traction at McDonald's. We now have 200 stores live, and have gone from zero transactions to 65,000 in the month of March alone. So, lots of excitement from McDonald's. We've also sold 4,000 new non-toll user accounts that's a 30 gas stations in the quarter. So, just starting the marketing and sales rollout there.
So, from our perspective, an encouraging start, and it supports the view that there is real demand for this expanded beyond toll network. Third up is lodging. The growth idea there is simple to increase the number of accepting hotels in our network from approximately 15,000 to 25,000 and thus capture some additional room nights from our existing customer base.
So, pleased to report that extended network is now live, website is now live, and we've actually begun to book new room nights in that extended network. So, again expectation is that this increase site acceptance will generate incremental lodging revenue per client. So, last up is our initiative of growth plan for our corporate payments business.
So, simply put, we want to make two offer to the marketplace. So, offer one, which is what we do today is to provide card payments for general AP that reduce paper and provide client rebates and savings. And offer number two is to automate and simplify 100% of the client AP file, so a client can literally pay 100% of all their invoices electronically. So, our first offer, which is our card payments approach, it's obviously working well, we've reported that it's growing mid teens in the quarter.
So, clear that the market likes that offer. And to accelerate the implementation of our second offer or full AP outsourcing offer, we acquired Nvoicepay in Q1. So, Nvoicepay is a leader in cloud-based AP software that lets companies pay again 100% of their invoices electronically. They pay all the clients, merchants whether that's via card ACH or even paper.
So for us the Nvoicepay deal, it's quite additive. It increases our TAM given its appeal to the SMB market, it increases our merchant network now to over a million supplier relationships, and it gives us really just an incredibly comprehensive offer to take to the market.
So, note, that we are clearly committed to building a big B2B payables payments business. So, look, in closing, back to the top. We're delighted with our Q1 results and start to the year, again revenues and profits ahead of plan, double-digit organic revenue growth, and steady trends, we're confirming our rest of year outlook confirming a 9% to 11% organic revenue growth, raising our full year cash EPS expectations.
And we've also reported we think some real progress with our four major mid-term growth initiatives, all four now live in markets, all four getting good reaction, all four increasing our revenue per client. So, look, the take rate and pace of adoption pickup throughout the year, we'll be in a better position to forecast the potential revenue acceleration.
So, with that, let me turn the call back over to Eric to provide some additional details on the quarter. Eric?
Thank you, Ron. For the first quarter of 2019, we reported revenue of $621.8 million up 6% compared to $585.5 million in the first quarter of 2018. GAAP net income decreased 2% to $172.1 million from $174.9 million and GAAP net income per diluted share increased 3% to $1.93 from $1.88 in the first quarter of 2018.
Included in the first quarter results was the impact of $15.7 million or $0.17 per diluted share impact of an impairment charge related to our investment in the Telematics business. Excluding the impact of the impairment charge, net income increased 7% to $187.8 million and net income per diluted share increased 12% to $2.10 in the first quarter of 2019.
Non-GAAP financial metrics that we'll be discussing our adjusted net income and adjusted net income per diluted share, and the reconciliation to GAAP numbers is provided in Exhibit 1 of our press release. Adjusted net income for the first quarter of 2019 increased 2% to $238.4 million compared to $233.5 million in the same period last year. And adjusted net income per diluted share increased 7% to $2.67 compared to $2.50 in adjusted net income per diluted share in the first quarter of 2018.
First quarter results reflect a negative year-over-year impact from the macroeconomic environment of approximately $23 million in revenue in line with our guidance. The negative macro was driven mostly by lower foreign exchange rates, specifically, the Brazilian real and UK pound when compared with the first quarter of 2018. We believe FX negatively impacted revenue by approximately $28 million.
Fuel prices were basically flat year-over-year in the first quarter, and although we cannot precisely calculate the impact of these changes, we believe, it was neutral to the quarter. And, finally, fuel spreads had about $5 million favorable impact in the quarter. Organic revenue growth after adjusting out the impact of the macroeconomic environment and the Chevron deconversion was approximately 11% for the first quarter of 2019.
All of our major product categories performed well during the quarter. Organic growth in our fuel card business was 10% excluding Chevron driven by solid growth in most of our fuel card businesses. The corporate payments category continues to perform well and was up 18% organically during the quarter. The growth in corporate payments was driven by both Cambridge, which grew in excess of 20% in the quarter and Comdata, which grew in the mid teens.
Our toll business was up 15% organically and our lodging business was up 6%. Our lodging business would have been up 18%, if you adjust out the $4 million in emergency related revenue from the first quarter of 2018. So, all-in-all, another very good quarter for non-fuel businesses.
Now moving down the income statement. Total operating expenses were up 4% for the first quarter of 2019. The $337.6 million compared with $325.4 million in the first quarter of 2018. The increase was primarily due to normal growth in our operations. As a percentage of total revenues, operating expenses were approximately 54.3% compared to 55.6% in the first quarter of 2018. The decrease in operating expense as a percentage of revenue was primarily due to a decrease in stock-based compensation of approximately $2 million.
The impact of foreign exchange rates on expenses and a decrease in amortization expense. Included in operating expenses, our credit losses of $22.2 million for the first quarter were eight basis points compared to $12 million or five basis points in the first quarter of 2018. As we told you in December, we expect credit losses to remain higher than normal in 2019 due primarily to higher fraud losses in fuel card business in the US.
We intend to decrease fraud losses in the short run by implementing more controls to limit fraud. Fuel card fraud should reduce significantly as US fuel stations begin transitioning to chip and PIN technology in 2020. Depreciation and amortization expense decreased 6% to $67.4 million in the first quarter of 2019 from $71.5 million in the first quarter of 2018. The decrease was primarily due to the impact of foreign exchange rates on expenses and some acquisition-related intangible assets that have become fully amortized. Investment loss was $15.7 million for the first quarter of 2019.
The company regularly evaluates the carrying value of its investments and during the first quarter of 2019 determine that the fair value of its telematics investment was impaired, and recorded an impairment of the investment. Interest expense increased 26%, a $39.1 million compared to $31.1 million in the first quarter of 2018.
The increase in interest expense was due primarily to the impact of additional borrowing or share buybacks throughout 2018 and increases in LIBOR. Our effective tax rate for the first quarter of 2019 was 23.3% excluding the impact of the impairment charge compared to 23.7% for the first quarter of 2018 in line with our expectations.
Now turning to the balance sheet. We ended the quarter with $1.373 billion in total cash, approximately $315 million is restricted and consist primarily of customer deposits. As of March 31st, 2019, we had $3.554 billion outstanding on our term loans and revolver and approximately $569 million of undrawn availability.
We also had $942 million borrowed in our securitization facility at the end of the quarter. We purchased a minimal amount of shares in the quarter and those purchase were associated with employee sales to cover taxes. We have approximately $548 million in repurchase capacity remaining under our current authorization.
As of March 31st, 2019, our leverage ratio was 2.10 times EBITDA, which is well below our covenant level of four times EBITDA as calculated under our credit agreement. We intend to use our future excess cash flow to temporarily pay down the balance on our revolving credit facility and securitization facility and maintain liquidity for acquisitions and other corporate purposes.
Finally, we spent approximately $15 million on CapEx during the first quarter of 2019. Now onto the update for our outlook for 2019. First, we are raising our full year revenue guidance $30 million at the midpoint to reflect our first quarter beat and the acquisition closed on April 1st. We are also raising our adjusted net income per diluted share guidance $0.07 to $11.62 at the midpoint to reflect our first quarter results compared to our expectations.
Also we expect a few moving parts in our balance of the year guidance. We expect the macro impact for the balance of the year to be in line with our prior guidance as the impact of favorable fuel prices will be offset by unfavorable foreign exchange rates. We also expect a higher share count due primarily to an increase in our share price, which impacts the calculation of fully diluted shares.
We also expect a slightly dilutive impact from the Nvoicepay acquisition over the balance of the year, but do expect the acquisition to become accretive in 2020. We expect our businesses to continue to over perform for the balance of the year to help offset the impact of the higher share count and slightly dilutive transaction. Please refer to our first quarter earnings call supplement for additional information regarding our guidance.
So, with that out of the way our guidance is as follows. Total revenues to be between $2.600 billion and $2.660 billion. Net income to be between $800 million and $830 million. Net income per diluted share to be between $8.85 and $9.15. Adjusted net income to be between $1.30 billion and $1.60 billion and adjusted net income per diluted share to be between $11.47 and $11.77.
Some of the assumptions we have made in preparing the guidance includes the following. Weighted fuel prices equal to $2.90 per gallon average in the US for the balance of the year for those businesses sensitive in the movement in the retail price of fuel. Market spreads slightly below the 2018 average. Foreign exchange rate equal to the seven-day average as of April 28th, 2019.
Interest expense of $160 million and fully diluted shares outstanding of approximately $90.1 million shares. A tax rate of 23% to 24%, and as always, no impact related to acquisitions or material new partnership agreements not already disclosed. For the second quarter of 2019, we are expecting adjusted net income per diluted share to be in the range of $2.74 to $2.84.
The second quarter guidance includes the dilutive impact of the Nvoicepay acquisition and higher share count. Additionally volumes should build throughout the year and our new growth initiatives should gain momentum throughout the year resulting in higher revenue and earnings per share in the third and fourth quarters.
With that said, operator, we'll open it up for questions.
[Operator Instructions] The first question comes from Ramsey El-Assal with Barclays. Please go ahead.
Ramsey you're on mute. Operator, maybe go to someone else and come back.
Absolutely. The next question comes from Jim Schneider with Goldman Sachs. Please go ahead.
Good afternoon, and thanks for taking my question. I was wondering if you can maybe kind of talk about the outlook you see in corporate payments for the rest of the year, you talked about mid teens rate, you did a little bit better than that in this quarter.
Can you talk about some of the factors that are kind of drive potential upside there, and broadly what you think you need to see in terms of. Is that going to be, sorry, the acceleration potential. Is that possible and is that can be driven more by sales trends or any other factors you can kind of talk about driving upside or downside over the course of the year?
Yes, Jim. Hey, it's Ron. So, I'd say we'd stick with the mid-teens number as you know that business, it's mostly in year a function of implementation not sales. So, virtually all the revenue that we get we've sold already. So, if we over performance sales next year, you'd see that improvement, that acceleration in 2020. The thing that could cause to kind of float up or down is really if the clients we have got healthier or we grab more of their total spend more of their files. So, I'd say that's the lever basically it's in years, is the health of the client, the growth of the client base and then the share that we might get of their overall payables.
That's helpful, thanks. And then maybe a bit of an update on your strategy in terms of B2B software. Clearly at this point, you have both partnerships, as well as now in acquisition or second acquisition in Nvoicepay. Maybe talk about your desire to kind of own more of the software for the AP side of things or AR side of things versus partnerships and then maybe any kind of where you're trying to manage a potential channel conflicts across the business there? Thank you.
Yes, that's a good question. So, clearly on the partnership side, our role is really as card processor, right, for our major partners. And so this Nvoicepay and the cloud software is really for us fronting our clients. And so it's different. We got the software, so that we have our own full AP automation software that we owned and it doesn't really affect our ability to process for the partners that we've got.
And I'd say we're probably don't need any more. Short-term we've got international cross border software capability, we've got obviously card processing capability, and now we've got full automation and disbursement capabilities. So, I think, we've got the capabilities, we now that we need to have a very comprehensive package. And so the game now is to take it to market.
The next question comes from Sanjay Sakhrani with KBW.
Thanks. A quick question on the acceleration expected in the back half of this year. Could you just talk about how much of that incorporated into the guidance and sort of what the key factors are that will either lead you to outperform or underperform?
Hey, Sanjay, this is Eric. I mean, our volumes really build throughout the year, as our sales capabilities start to kick in. So, lot of the escalation, we see typically in the back of the year, which is very consistent with how we performed over many, many years is basically just some seasonality and some of the benefit from all the sales that we made in the first half of the year and lot of our different product lines. So, we're really expecting pretty normal step up and grow kind of quarter-to-quarter.
Okay. And then I've got a question on the fuel segment. I'm just looking at sort of the transaction growth versus the revenue growth and obviously there's some noise with gas prices and the like, but how should we expect the transaction revenue, I'm sorry, the transaction volume growth to trend over time and the relationship with the revenue growth?
Yes, Sanjay, this is Eric again. Normally transactions growth in the fuel sector run around 2% to 4%. We expect that business to grow the 9% organic growth range is going to be comprised of basically three things. One is growing transactions again in that kind of 2% to 4% range, which generally translates into a little more revenue because of mix, if you think about it, we've got different product lines all over the world, each one of our product lines as a different revenue per transaction dynamic.
So, we're obviously investing in those products that deliver higher revenue per transaction. So, there is a mix favorability that comes into play as well. And then in addition to that we are going to up-sell other products and services, I think, of things like beyond fuel, I think, Ron mentioned on the call, which contributed a point or two of organic growth and then the remainder generally speaking will be a little bit of rate on the fringes on different products kind of around the world.
Our Q1 transaction growth was a little bit impacted by a couple of things. One, we had some, there's one less business day in the first quarter versus where there was a year ago, which impacted volumes a little bit. We also had a little bit of a weather impact particularly on the West Coast in our card lock business, which impacted some transaction volumes there as well. So, a little bit of that going on in Q1, but I would say generally speaking, think about it as kind of 2% to 4%.
Okay. Thank you.
The next question comes from Ramsey El Assal with Barclays.
Hi, guys. Thanks for getting me through here and taking my question. You can hear me, right?
We can.
Welcome back.
Okay, fantastic. Thanks for the color on the beyond tolls business. I wanted to get your sense maybe a little deeper sense of the penetration in the different product category there. It feels like the QSR food drive-thru toll tag usage seems to be kind of inflecting in a more substantial way than fuel or private garages. First, is that a fair characterization and then second is there a pipeline you can speak to on the food side, you have McDonald's, can you sign the proverbial Burger King?
Yes, Ramsey, hey, it's Ron. I would say that we don't know. So, if you take the three beyond toll expansions you take parking, fuel, and then fast food. So, the company has been in parking the longest, quite a long time, and so the step up there is really coming from the expansion.
We're basically doubling the number of parking locations. So that one I think will mirror the market as those doubling of locations get implemented. We'll see that parking lift probably one for one. On fuel it's earlier days, it's a couple of years, the company seesaw to round with credit and how we would do it. So I would say that one is still early and we're trying to figure out really how to push that and as importantly sell new people on to it.
And then fast food is super duper new. I think our first thing went live sometime in the fourth quarter. I don't know if you picked up the call out, but at half the locations that we're going to 200 locations, we had 65,000 transactions in one month and I heard verbally that it was quite a bit higher actually in April.
So, to your point, I don't think we know yet of the five million active users we have between fuel and fast food whether one of those is going to be more like, if you will, than the other. So, we're going to keep expanding and keep promoting and keep watching the uptick and reporting back, but I think the headline for today is, it's working. It's super early and we're just starting to promote this expanded network to the clients that we've got and the usage is already starting to build.
So, I think, the feedback that we're trying to provide everybody here is, we think we're heading in the right direction.
Okay. That makes perfect sense. I wanted to ask kind of a higher elevation question about the general kind of market penetration levels in the US fleet business. Is this something that you'll revisit periodically in terms of the overall market penetration, understanding, it's a large market, it's pretty penetrated in the small-market, it's a lot less penetrated.
Where do we stand now, and then also, can you just speak to your kind of growth algorithm and how it's evolved? How much of your growth is signing up net new customers versus flowing more volume into those same customers of wallet. If you could speak to those two things, I appreciate it.
Both good questions. So, on the first one, our estimates are circa $8 billion revenue opportunity based on the market size and the way we price that we've got circa 10% call it of $1.2 billion in revenue globally and fuel cards got $700 million to $800 million of that here in the US.
So, we got about 10% market share of the US TAM. And so we think the other quality fuel cards, if you will, that are universal like ours or circa in that similar kind of range. So, that means the other 80% are on either of a lesser fuel card called a private label fuel card again cash or general purpose credit card, what we would call not as good a methods device.
So, we think that 80% is still right to convert to our kind of card and obviously that opening, if you will, is even larger as you move down market, right. It's probably closer to 90%. So, the issue is not again runway or TAM, and then on the second question, I think, the key learning so far is of the 5,000 U.S. clients that we've got across, the revenues were up 40%. And so, when I say to you that I think it's incredibly meaningful to the growth rate that, if we can get a attach rate of 25% or 30% against our client base and yet increases of 40% to 50% that's going to create a lot of lift over the mid-term.
So, I would say, that we have been talking about this thing for two or three years. We've got traction now clients obviously like it and so I would say it's going to form a pretty core part, as Eric mentioned, it was two points of our growth of our 10% growth in the quarter, I could see that thing get into four probably over the next couple of years.
That's super helpful. Thank you.
The next question comes from Bob Napoli with William Blair.
Thank you, and good afternoon Ron, Eric and Jim. Just, I mean, the 40% beyond fuel per customer just seems like a pretty dramatic number. Does that Ron change the business model at all. Is there any more credit risk or capital requirements that go with beyond fuel. And what do you think the attach, I mean, how much have you marketed it and then what do you feel like you can get a penetration rate on that product up to?
Yes, I mean, the short answer is, obviously, we don't know, Bob, because it's super early days. Our internal target is to try to get that attach rate to call it 25% or 30%. And, yes, to your point, it does come with additional capital because you're carrying incremental spend, but again because we've already done the underwriting and seen the credit risk of the clients that we offered to. We've got a pretty good perspective right on the credit of those accounts.
I think the one place where the opportunity is way bigger again is the circle of our clients AP relative to the circle of our clients' fuel purchases. So, we're coming out with, call it, half we're getting half of the client's general AP versus fuel purchase.
Our guess is the general AP is 10 to 20 times larger than the client's fuel purchase. If you think about the expense structure of the companies, and so I tell you, I think, we're just literally scratching the surface of the amount of AP that we can get.
And, again, we're trying to offer our products in the controlled manner and only pick off certain kinds of expenses of our clients not turn ourselves into a general-purpose cards. So, what I'd say to you is that the opportunity between 40% and a much higher number is something we're going to continue to work.
So, we don't have all the answers, yet, but what I'd tell you is, it's working, where we've got lots of clients now taking the offer going out to another 100,000 this year. They like it. They are spending money on it. We're making money on it. And so it's going to be incremental and as we get clearer on just how incremental will revert.
Thanks. And a follow-up to the question just your leverage is still pretty low. You guys generate a lot of cash, obviously, you don't, I mean, the back half of the year, do you expect. I know you're always working on acquisitions, where would you expect to acquire, what areas are you most interested in adding to, and if you don't do acquisitions will you buy back stock in the back half?
Yes, so on the second half of the question, we're working on three or four active transactions now. They actually are in three of our categories. They are in fuel, lodging and corporate pay. So, Eric and I are obviously looking at the likelihood of those transacting sitting two times.
And so as those either clear or not we'll look part of the buyback, I guess, if we have more days like today, we'll be looking particularly at the buyback. But, clearly, we look at our liquidity position, Bob, relative to our deal flow and relevant to our view of our stock price, our market price, and so if those things get out of line like they did a year ago.
I think we sure we bought a lot of stock back, lot of $1 billion. So, I think, you should think that our capital allocation philosophy will stay that course really the rest of the year. If deals don't happen and our stock drops we'll be buying back stock, and if we buy deals and our stock goes up on this kind of performance, we'll probably buyback less stock.
Great. Thank you. I appreciate it.
The next question comes from Oscar Turner with SunTrust. Please go ahead.
Hey, good evening, guys. So, first question just on corporate payments and the Nvoicepay deal. Can you talk about the degree of integration we should expect to see there between Nvoicepay and the existing corporate payments businesses, for example, is there a different go-to-market to sales teams for those three products. So between Nvoicepay, Comdata and Cambridge?
Yes, Oscar, it's Ron again. So, I'd say, we're still sorting that question. It's a very good question. So, obviously today, you got the Nvoicepay sales and marketing group selling a 100% of what I call offer number two, the full 100% AP outsourcing model, and you've got the core Comdata corporates payments business selling mostly 90%, the offer number one, the virtual card that it takes out some amount of the AP.
I'd say, it's more than likely, we will integrate the sales and marketing and look at bringing both of those offers to a client, meeting a client, and then getting clear on what the clients are looking for and potentially providing either offer one or offer two.
So, if you said, what's my guess that would be the guess that Nvoicepay will be a second product and a second offer in the bag, so that we could create more pressure with the 80 field people and 50 appointments setting people. So, we can create more pressure against that full AP. So, that's likely where we'll go.
Okay, thanks. That's helpful. And second question is on beyond tolls, it sounds like you're gaining traction there. Can you talk about the competitive advantages in non-tolls. Do you see it as more of an early mover advantage and what's a huge market or do you actually have exclusive contracts with some of the gas stations and QSR partners?
Yes, another really good question. I mean, I think, the answer is super-simple here, it's our client base. So, if you're a merchant, you're parking operator or you're a guy that owns a few gas stations or you own a few McDonald's franchises, and we knock on the door and say, hey, we want to put our payment technology at your place and we'll tell our five million customers about it.
That's a generally more interesting proposition and Eric popping up and saying, he'll put his technology there and talk to his zero customers. And so that the customer base, Oscar, and the fact that the technology was proven, and we can run it in scale.
I think our -- the advantages and I think it's shown that we've signed everyday person, we signed the biggest two or three parking operators in the country. We signed the two or three biggest fuel brands and we signed obviously the biggest fast food brand. And so I think it's no surprise that we bring a pretty unique proposition tool.
Okay. Thanks a lot.
The next question comes from David Togut with Evercore ISI.
Thanks, and congrats on the strong results. I'd like to ask about the Mastercard fuel card growth in the quarter. I didn't hear you call that out?
David, that's why I love you calling, and I forgot to say that we're delighted to report, it was a mid-teens revenue grower in Q1.
Got it. Thanks for that. And then I'm curious as you look at the two big burgers that have been announced earlier this year FIS-Worldpay and Fiserv/First Data both have called out the B2B payments growth opportunity. I think both through faster payments and possibly a virtual card type solution when you look at these two mergers, do you see either one potentially being helpful for you as you expand your TAM and B2B or potentially as a competitive threat?
I would say neither, I think, that our view is that the acquiring world and focus is fundamentally at retailers and at merchants. And so our game is obviously at business employees and business AP, and so I think the core statement is that the marketplaces are just dramatically different. Now we may share some of their merchants as exceptors right of our card programs, but I would say other than seeing how investors react to the consolidation and this related FinTech space that has kind of not too much impact on us.
Got it. Just a quick final question. The 40% uplift you're seeing in revenue per client with beyond fuel. Are there particular categories that are getting the most traction?
Yes, so we've got the list. So, as you'd think there's some are employee related ads, as we've said before. So, in some verticals, we see the construction expense and the vehicle maintenance, and then we see more traditional clients of AP like business supplies, business services.
So, again, it looks like our clients are picking certain kinds of expense categories to use our card in our offer in which again is a little bit how we presented to them that it's an incremental control card and that they can add a certain category, but not others to it. So, back to Bob's question earlier, David, our issue is that AP spend is massive relative to the fuel spend and a lot of our clients.
So, really, how much do we want to stretch that thing, right, and how much do we want to deepen the relationship. So, we're going to wait into the thing slowly , and try to get a bunch of clients to buy a little bit more and look at the retention rates that yields and report back.
Understood. Congrats on the progress.
Thanks, Dave. I appreciate it.
The next question comes from Peter Christiansen with Citibank.
Good afternoon. Thanks for taking my question. I think in the past you've talked about the bookings to revenue conversion on the corporate payment side being roughly 18 months or so. In the past you've mentioned that. Now with this Nvoicepay and the full AP disbursement solution.
Do you think you have an opportunity to compress that period from bookings to revenue. And then my follow up would be, I know, this business you could distribute through resellers, can you give us a sense of, is that going to expand or are you going to bring more in-house. How do you think the sales production will improve on the corporate payments front with that feature?
Yes Peter, it's Ron again. On the question A, I'd say probably, no. I think in some ways the implementation of a full disbursement solution has actually a bit incremental complexity, right, because you take 100% of the upload, 100% of the file and doing a little bit of software training and stuff.
And so, although, a lot of it's the same running through the vendor list and the merchants take cards and go, I'd say that, but no, we're going to get better through process redesign more than we are from having Nvoicepay and this other product, which by the way, we are working super hard on to your point, if we can compress that even three or six months it will create just which you're saying mid-term revenue acceleration.
On the second one, I think, we've reported before about a third of our core corporate pay business is through channel partners, resellers and aggregators and the like. And I think we said, right now, we like that a lot because the TAM as you know in the trillions.
And we've got a much smaller business, so for certainly for the mid-term, we like these partnerships that we have. It's a big, big market, people are attacking different size segments, they're attacking different verticals, and so our direct people rarely run into our channel partners. So I'd say you should expect that will stay the course maybe add a few more and then see if the games any different three or four years from now.
Okay. Thank you. Nice trends.
The next question comes from Ashish Sabadra with Deutsche Bank.
Thanks. Let me add my congrats as well on the solid results. Maybe just quite a more higher strategic level. I just want to ask you about your digital initiatives. Can you just help explain how the digital initiative that you have implemented over the last year. How does that helped to accelerate growth or improve customer service across all the different products, and then maybe just a follow-up to that would be, you have access to so much data and with all the buzz around big data AI and ML. Can you just help us understand how you plan to leverage the information the data that you have regarding hundreds of thousands of small businesses? Thanks.
Yes, Ashish, hey, it's Ron. So, yes, I think, we spoke to this point, maybe one of the last times that we've talked and so on the digital front I'd say a few things. So, one is the client UI. So we have made lots of investments both in the design and recently in the conversion of hundreds of thousands of our clients now here and brought to this new what we call simple UI.
And so that's made a massive difference in the way the client interacts with us. Two, we've done the same thing with new applications. We signed over 30,000 new accounts globally, just in the first quarter. And so we put a lot of tech against what we call end-to-end application and implementation.
So, taking a client right through getting on a website and filling out an app to basically starting and compressing that time and making it all digital. Three, we've ramped up the digital investments in selling. We're now up to 40% or 45% of all new sales, all new accounts that we acquire in the United States are coming purely through digital.
We've completely automated the customer call centers with new screens. We'll use that people in three or four legacy systems toggling back and forth to try to answer the customers question, resolve this problem. Now we've got the stuff consolidated with one unified view or a customer service agents can see data from three or four systems at the same time. So, I think, we've done. We don't talk about a lot of kind of plumbing stuff, but we've done a lot to make the selling and customer experience and even our service people's lives easier because obviously the rest of the world is doing that.
On your second question, I'd say, we're kind of nowhere on the big data, which is, hey, how do we take this information and repackage it, and I think the early sign that we've got on this is around bench-marking where we would take certain kinds of information for similar types of clients and maybe in an anonymous way serve that data up for benchmarking to help clients understand the pace that they approve Nvoicepay all automatically, what's the cycle time so that clients could get some feedback as to how they compare to other like companies.
So, it's not probably super duper sexy, but that's our first thought of how to take all this information and create some value back to our clients.
That's helpful. Maybe just on the data question. Is there an opportunity based on like the insights that you generate from the data that you can help cross sell different products into the same customer base. For example, now that you have a full stack of full AP solution. Is there an opportunity for you to sell full AP solution into your fuel card customer deals?
That's a funny, interesting question just walking down the call this afternoon I bumped into the guy that runs the beyond fuel thing for our company, and I was asking him about that, I said, hey the 5,000 clients now that have used our card programs to buy AP. Have we thought about introducing our full AP solution people and he said, be it to it Ron.
We had the first call a month ago, served up clients that we wanted to have them call on to see if they want to continue the transition from fuel to kind of peak card only all the way to full AP. So I'd say there is -- that opportunity there are looking at what people buy. So, if we see our clients are buying a lot of lodging, for example, we could offer him our lodging products.
So, I think, we're just starting, Ashish, to look at wiring together the various products, we've built the company in a pretty short period of time here and built the kind of product by product, and now we're stepping back and looking at how we can cross-sell the products for the same clients like this.
Here in every business, we use the word beyond fuel and beyond toll and more site acceptance in lodging and so on really what we're doing is just widening the offer and the utility, if you will, to the clients that we've already got. So, it's relatively, it may seem like a simple thought, but it's a relatively still new thought for the company that we're really just getting started.
Thanks again, and congrats once again.
This concludes time allocated for the question-and-answer session. And also concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.