All right, good. I see the thumbs up. Wonderful. So up next, we're pleased to welcome WEX representing from the company. We have Melissa Smith, who's been the CEO since 2014. Wow, it's been a while now.
A decade.
Yeah, a decade.
Isn't it crazy?
Yeah, I remember it like yesterday. She's been with WEX since 1997. We also have Steve Elder, who heads up IR, and I feel like he's been there for some time too, right? Have you been there since 1997 too?
1998.
1998, look at that. So two long-tenured executives from WEX. So look, Melissa, maybe we start with the first question, which is, WEX has been able to generate an impressive 14% revenue compounded annual growth rate over the last 10 years, which is near the high end of your range. And I remember I've asked you about this range for quite some time. So congratulations, you've done it. So, as we look ahead to this 10%-15% annual growth rate, is that still appropriate, or do you feel like the mix has shifted, that it could be even higher or lower, or maybe you could opine on that?
Sure, sure. Well, we're really proud of the 14% growth. You know, part of what I'm proud about is, you know, if you think about the last 10 years, you've had a pandemic, you've had a lot of different economic cycles that have occurred in the course of that period of time. So, the resiliency of the business to grow through, you know, so many different environments is something that I would say that we're particularly proud of. When we look at the opportunities that we have at hand, we feel really confident in that 10%-15% long-term growth profile for the company. You know, when we think about how we're gearing the company and the investments we make, the choices we're making, it's with that in mind.
Okay. You have these three segments: Mobility, Corporate Payments, and Benefits. Which one are you most bullish on in 2024? I feel like I'm asking you to pick your favorite child.
Child, yeah.
I mean, I guess, like, as we think about it from a long-term perspective, which one has the most ability to sort of get bigger faster?
Okay, so I'm not going to pick my favorite.
Okay, I understand that one.
Yeah.
As I read the question, I was like, "What am I doing?
It's like, if I start at the kind of the top of the house, the 10%-15%, we get 2%-3% in our long-term framework, which comes from M&A. 1%-2% from new products. 3%-5% new net new customer growth, and 4%-5% from our existing customer base. So that's our, like, at the top of the house, that's our long-term framework of how we're going to grow. What I like about the segments, I like different things about each of them. I'm going to start with Benefits. Like, what I like about Benefits, if I think of it over that 10-year cycle, it's an incredibly resilient part of the business model. You know, it is really, what we're focused on is continuing to grow accounts.
On top of that, we've become a custodian over the last several years, and that allows us to monetize the balances that people have on the accounts. Healthcare costs keep going up. And then we have an ability to cross-sell some of our new product offerings into that customer base, like COBRA capability or Benefit Administration or Compliance. So, I like the resiliency of that part of the business. I like, when you go into our Mobility segment, what I'm excited about is it's such a wonderful launching pad for us. We have this great engine, our sales engine that we have there, that is reliably bringing on new customers. And what we're looking at is how can we actually continue to add more capability to that sales force. You know, look, I'm sure you're going to ask me about Payzer at some point in time.
I mean, that's an ability to increase the TAM that we have in that space. And so, what I like about that model is the predictability that you have with the underlying sales, and the ability to actually add more into the 600,000 customers we have into that, the part of the business. And then, with our Corporate Payments business, you know, we've had really explosive growth. We have almost 50% spend volume growth in our travel customers this last year. And what we've showed with that model is that we have this great scalable model. So as you bring business into our embedded payments products, you know, it's really high incremental drop-through rate. And so, you know, as we continue to add and build on that, you know, it's another wonderful growth engine that we've been supplementing with our direct sales force that we've built.
I like different things about each of the, you know, different segments we have, but what I like when you combine it all is the kind of the predictability of our ability to deliver.
I guess, like, the key has been, though, over time to diversify away from Mobility into these other areas too, right? The mixes should evolve towards these other ex- Mobility segments. Would you agree with that, or?
Yeah, I mean, I think that.
Naturally.
It's happened somewhat naturally, except the fact that our Mobility customer base continues to grow too. And so, you know, when we first started, it was really the thing that we were looking at is, two things. One was we had this exposure embedded in our business model to fuel prices. When we first went public, it was 80% of our revenue was exposed to fuel prices. And so, we were really trying to reduce that exposure. But actually, I would say more importantly, we were looking at what are our skills and capabilities as a company, and what can we do? And that enabled us just to think bigger. And our real, core skill has been around removing complexity from our customers. You know, our mission statement is to simplify the business of running a business.
We're trying to find places that create toil within our existing customer base and remove that so they can actually do what they do best. I think when we broaden our perspective of what we're capable of doing, it has just added to more TAM for us. The downstream effect is now only, you know, 20%, you know, a little over 20% of our revenue is exposed to fill prices. There's been a benefit.
That's great. Love that. It's been the source of quite a bit of volatility in the past, yeah?
Yes. Yes.
So yeah, I guess, look, the stock has worked, as we were discussing before. But you're still trading at 11x forward PE. Historically, it's been in the mid- to high teens. I'm just curious sort of what you think is causing this discounted valuation as you talk to investors. You know, what do you think they're missing?
Yeah. It's a good question. Yeah. So the stock has performed well, and we still feel it's undervalued. Yeah. You know, the place that I would say that we've heard the most is around this concern with our Mobility customers, is this kind of overhang of EV. Now, where we sit in a different position, probably because we have more information on this migration, we believe it's a long-term migration, A. And certainly, that's what's been playing out in the marketplace. And the products that we've evolved into in the marketplace are products that are really focusing around the added complexity of someone who now has an EV vehicle and an ICE-powered vehicle. They suddenly are looking for a solution that integrates all that data together. They want one payment mechanism.
The three places that you can charge are, you can charge at a public location, you can charge at home, or you can charge at a depot location, so your own private location. So, we've rolled out products that allow people to charge at public locations. We have networks similar to that operate, I would say, in the same way that our networks are doing on the ICE vehicles. We have the ability to people to do at-home reimbursement, and this year we'll have depot capability. You know, I think one of the underlying concerns was around what's the economics going to be, because suddenly we're earning a lot less money on interchange in this new world, which is true. But we're actually earning a lot more in subscription fees because we're providing additional services.
And so, we actually feel really good about the economic equation that this creates and the opportunity for us to grow into this marketplace over time. And we think this will take a long period of time. So I'd say EV is probably the biggest place. And in the meantime, we've accelerated our share buyback because we do see our stock as a good investment. And so, we've been investing in that as well.
That's great. I'm going to talk about EV later, so I'll save it because we'll talk about each of the segments. Maybe we start with Mobility first. Same-store sales have been a little bit weak in 2023, low single-digit decline in North America and over the road. Any early indications so far in 2024?
Yeah. So far in 2024, I'd say it looks pretty similar. So, and when we guided, we assumed that we would be in a low-growth environment. We said 1.5% GDP growth in the course of 2024. So we assumed that we would be in a kind of stable environment, which is what we've seen so far this year.
Okay. Well, I guess, is there any acceleration expected over the course of the year in Mobility? I mean, it seems like there might be, right? So do you feel like that is a possibility, given this backdrop that you're talking about?
Yeah. So in 2023 was a tough year on Mobility. I think we had a freight recession. And we intentionally changed our credit practices. So the downstream effect of that was that we saw more attrition than we normally do across our portfolio in kind of the middle part of last year. And so, I actually think we think of this last, you know, year has been more of a kind of a transition period, and will be in the first quarter too, of those credit policy changes. Because the downstream effect of that was we had a little bit more attrition, 1%-2% impact of that. We, more importantly, changed the mix of customers that were coming in. They're less likely to be late, which is great. You can see, like, the benefit of that from a credit loss perspective.
But there's an impact on our late fees that we're receiving, and that had a 3% impact on the segment. And so, it was, you know, a pretty meaningful impact. We think, again, like, the right thing to do from an overall profitability perspective. But a lot of what we think is going to play out in the course of this year is more lapsing of those issues rather than something wholesale that's going to change. Our sales have been great, and we anticipate that they'll continue to be great in 2024, you know, based on everything that we've seen. And we've got, like, a good read, obviously, on the sales tail that's coming into the year. So our migration for what happened in 2023 to what we're anticipating in 2024 has more to do with lapsing and getting back into a normal environment.
Unless we do it, we're not assuming that there's any big pickup from an economic perspective.
Okay. And before I get into, like, a Payzer question, just in terms of where we are in the ability to take share, like in the U.S. or even, I mean, you guys have pretty much gotten your fair share here, it seems.
And we will continue to.
But as we look internationally, especially in Europe, where are we with that?
Yeah, actually, that's great. Yeah, yeah.
You know, where are we with that journey?
So to your point, in the U.S., we continue to win. We feel good about our ability to continue to win. In Europe, we only have about 1% market share. And so, you know, we continue to bring on new business. And so, I'd say kind of like pro rata looking in to win in that marketplace. And you just wouldn't see it coming through the net because it's a smaller part of the numbers.
Right. Right. But it's still an evolution there, not a revolution.
Yeah. Well, the products in Europe are a little bit different. Both in Australia and the United States, we're operating off a closed-loop network that gives a lot of data advantages. In the European marketplace, the oil companies have been more proprietary about sharing data. And so, you end up with more individual card programs as opposed to, like, a universal card program.
Got it. So obviously, the Payzer acquisition was a really good one. Maybe you could just talk through the merits of the transaction and what it gives you that you didn't have before and the opportunity ahead.
Yeah. So one of the things we were looking at is where we could, again, kind of broaden the product set that we have. And we were looking, actually, starting at the top of the house, where would we want to do that? And we started really focusing on this part of the marketplace because we had such an overlap within our existing customer base. We have 150,000 field service management customers that sit within our Mobility customer base. What we liked about Payzer was we felt like it was an ability to broaden what we do with that customer segment. And they're earning, you know, more revenue per account than we are. So ability to do more, ability to add on to our existing customer base. And so, I would say this is a test for us.
What we like about Payzer specifically was that the product enables a connection into the OEM. So in the kind of the step back.
Maybe explain what Payzer does, yeah.
Okay. Payzer is a workflow tool for field service management companies. There's two types of customers that they're serving: the office manager and then the person who's in the field. For the office manager, what you're able to do is see and schedule activity. You can see payment activity, you can see all the activity that's happening in the field, and have scheduling capability. If you're in the field, if you're a driver, you're on the way there, you're actually getting information about where to go, what to expect when you get there. When you're actually on location, it enables you to order products directly through the OEM on location. You can bill and collect immediately so that it removes the issue of payment. You can schedule the next meeting. You can actually create an invoice around different options for further services.
It's everything that's digitized from their workflow experience. For our customers, because we have such a heavy concentration across this category, what we're interested in is, can we actually cross-sell that capability into our existing customer base? We're doing it two different ways. I would think of this as like an A/B test, where we took some of our customers, moved them to Payzer. We're letting them do a test and learn to see if they can how active and how accurate they are in their cross-selling. Then, flipping it within our marketing group, we're actually doing some active marketing campaigns to the customer set.
So, what I like about, you know, where we are right now, which is early, too early to tell you, but we've got many different ways that we're activating this cross-selling with the idea that we think that this could add long-term to their growth profile of our Mobility segment.
Like, can it bridge into Corporate Payments at some point?
Well, there is a connection point. So that pay and get paid component of it?
Yeah.
Yes, for sure.
Is that a Corporate Payments revenue stream, or is it a Mobility revenue stream?
Great question. Right now, the SaaS-related fees are in Mobility.
Right. Right. Right. No, well, I mean, but ultimately, there's some interrelation between the two segments and sort of what Payzer brings to the... I mean, it's a vertical software for that specific niche industry.
Yes.
Got it.
Yes.
No, that's great. Shifting gears to EV, you talked a little bit about it and sort of the risks associated with it. But you've mentioned it could be a big opportunity, $1.5-$2 billion in TAM. We have more data points now, right? Like, we've been talking about this for, I feel like, several years now. We have a lot more data points. I'm just curious, based on all those data points, you know, how much confidence do you have in this TAM, and what gives you the confidence with these data points that we have?
So when we actually put that out at Investor Day, it was like a hypothetical. Like, we had done a bunch of work. So we were estimating what it could be. And like, you know, it's been two years later, we're actually living it right now. So I...
You stand by it?
Yeah. Oh, yeah. I would say, if anything, like, we are more bullish about it than we were. And that's because each of these individual use cases, what we're solving for our customers, we're charging a subscription fee associated with that. And, you know, we've got in the marketplace just, you know, I would say kind of the bare bones of what the product will ultimately look like. And we're already in the range that we had to anticipate. So we're already charging about as much as what we get with an ICE vehicle on average. And we see so many more use cases that we can stack on top of this. So yes, we actually believe that this is a whole new way of also monetizing. It doesn't have the exposure to fuel prices, which is an added benefit.
I think, more importantly, what we're seeing with our customers is that their complexity is just increasing. What they're looking for us to do is to remove that for them, and they're willing to pay for that.
Everyone's worried, and you sort of alluded to this before, everyone's worried about the distribution changing, and then other intermediaries getting involved in the different distribution channels. You've seen, like, OEMs try to get involved, et cetera, you know, payment processors get involved. You don't see the end customer using anyone else. They kind of still are using you guys.
Well, yes. And let me explain mine. I think that, you know, part of what people undervalue is there is this migration where you're going to have an ICE vehicle and an EV vehicle. And in that period of time, people want to have information on both packaged together. That's like a very loud voice of, "I want to have all my data together so I can understand the total cost of my fleet." And so, as we go through this transition, which is going to last a long period of time, the ability to actually have that information together is a really big moat for us. And that gives us that path where we can actually draw people along. And then, you know, if you look, think of what happens in a commercial fleet, it's typically multiple vehicle types. It's not like I'm just driving Fords.
Like, I'm typically driving many different types of vehicles. And so, if you're an OEM, you have a solution that might work for a consumer, but it's a lot harder for that to work for a business. And so, I think for a lot of reasons, we're just in a really good spot. Now, if we did nothing, that would be a problem. I think it's really important that we have the products in the marketplace. You know, even if we're early in the marketplace, but having the ability to, what we're finding, that we actually have to be much more consultative than we expected.
Because people are being told, "You now are supposed to have an EV fleet," and that person is saying, "I have no idea what I'm supposed to do." And so, you know, that puts us in kind of this unique position of helping, walking them through that.
That's really interesting. I mean, I guess, like, and that's, and you still feel like the margins on that or the take rate on that would be equal or higher than interchange?
Feel more strongly about that now than I did two years ago, yes.
Okay. Great. Let's shift gears, Corporate Payments. It's obviously, you mentioned it, it's grown quite nicely over the past couple of years. The outlook's a little bit more tempered in terms of the growth rate. So maybe you can just talk about that. I think it's grown 20%+ in the past two years. You're talking about single-digit growth. Maybe you could talk about sort of what's embedded in that.
Yeah. In our guide. Yeah. So in our guidance, we assumed, and as you enter 2024, that we're going to enter back into a more normal travel marketplace. And so, again, we've had almost 50% growth in our travel customer spend volume last year. And in a normal year, that's typically more like a high single-digit grower. So our underlying assumption in the guide was that you would see that return to normal during the course of the year. And then, at the same time, in our Corporate Payments outside of travel, we have built a direct sales force. And we're seeing actually great, you know, great return for that. It's actually coming through very much like the business case. And so, we're assuming that that will continue throughout the course of this year. So we'll have success with that sales force.
We'll have a higher growth in the non-travel part than we did in 2023.
And I mean, this travel assumption that you're making, I mean, that's what you're seeing play out year to date? That's sort of slowing?
It is definitely slowed so far this year. You know, we assumed it would kind of trickle in the course of the year. It hasn't slowed all the way to a normal level, but it is slowed.
Okay. Got it. You mentioned on your earnings call, travel partners use multiple providers. And I know there's been a whole lot of stuff with the take rate and stuff over time as it relates to that. But maybe you could just talk about the interplay there. How much of their volume actually flow through you versus what they might do themselves versus what they might do with other parties? And, you know, how successful have you been to take your, you know, more share from them?
So not just travel companies, but I would say any of the large or largest customers that are using our embedded payments products are typically dual sourcing. And they do that for two reasons. They do it for redundancies. So, like, if we're down, they're down. You know, which is why reliability is so important to the customers. And then they do it to create some competitive pressure. And those are really the two primary reasons, right? And if you look across our business, you know, we feel like in 2023, we actually, you know, were on the upside of that. And of taking from those people that are dual sourcing, never going to get them, like, all the way back up. If they've dual- sourced, they're not going to go back to 100%.
We feel, you know, good about the fact that we're continuing to chip away at other people that are providing similar type of services. We're doing that, we feel really good about the products we have in the marketplace.
When you're competing against other parties, what's really the defining... like, what's the difference outside of price?
Oh, yeah.
Because I know price is an important component of it.
So in our embedded payments products, the underlying technology, so reliability, the actual system itself is really important because you're integrated into their system. And if yours goes down, like I said, they're down, right? So the reliability of that and the integration across multiple product capabilities, so the ability to issue, to use our card management systems, having that all put together in one technology stack, you know, is a second component of how we compete. So kind of the breadth of the offering and the reliability that we have in the space are things that where people will say, you know, actually, I would rather do business with you because I have more confidence in your ability to service my needs as something that's so integral to what we do. And yeah, I actually think, like, in order of priority, that's more important than price.
You know, price matters. If you look across all of pretty much everything that we do, the product itself is really important. That's how we define ourselves. We're typically charging a premium for the fact that the products are better.
When a partner uses or does it themselves, that's just a price thing? And the simplicity thing?
There aren't many that are doing it themselves.
No. Like, even on the OTA side?
Like, you're talking about like...
Oh, okay. So they've moved away entirely.
On the OTA side, it's even more complicated because you're talking about a global product set. You have to have global issuing capability. So you get into licensing. And, you know, part of why, if you look at where we have had the big moats on the OTA side, has been on the cross-border, you know, because we have a compliance structure that spans the world that enables people to move money in different currencies and, you know, at significant volume. And that's actually really hard to duplicate.
I guess, like, some of the newer payment processors have talked about getting into this business. Have you seen them sort of...
Trying?
Trying?
Yeah, trying. I mean, I think with that, it really is hard to... like, where we have seen over the years more competitive pressures is like an individual country where, you know, someone is issuing an end-of-business in one individual country. And so, that's typically where we see more pressure, but not in kind of the bigger, broader products that we have.
Have you talked about how much yours is like cross-border versus domestic?
No.
Okay. Maybe we shift gears to Benefits. The 10%-15% revenue growth for Benefits was also a little bit lower than the guide, 15%-20%. How much of this is due to lower interest rates versus other factors?
Yeah. So last year, we grew over 30%. Like, you know...
So tough for comp.
Yeah. Well, isn't it... no, I won't use tough for comp. That's an excuse. But about half of that, though, is interest rates. Okay, right? And so, we still feel good about the year last year, even ex interest rates. But we're assuming, as you go into this year, we have, what, $1 billion of floating rate?
Yeah.
Yeah, that's sitting out there. So our assumption when we provided guidance is that, you know, we were using the forward curve, which assumed some reduction in rates. Oh, the world has changed. But, you know, three weeks ago, that was the year the forward curve was...
Flattening now.
Yeah. And so, that was assumed in our guidance. And just kind of to take a step back, if, like, what I said, like, caused nervousness, that that's a positive on the benefit side. We're generally interest rate neutral, though, because we're a borrower on the fleetside of our business. And then we've got a corporate debt structure. So you'd have some moving parts with the interest rate curve changing, which shouldn't have a huge material impact. So the other thing I had talked about on the call was the fact that we had signed a customer. They were using a specialty product that we have that was a product that we hadn't really heavily invested in or really invested in. And so, we have one customer that's going to a provider that that's what they do, specialty services.
And so, that had about a 2% negative impact from a revenue perspective and our guidance for the segment and Benefits. It will be disproportionately higher, though, in terms of accounts. So just, like, that's why we talked about it as one, not to be surprised, but the account growth number that we had in the first quarter. But otherwise, if you look across, we feel good about excluding that, what our account growth looks like, you know, comparatively from a market perspective. And so, we also feel like we're winning our fair share in that space.
Like, the employment numbers as well, still very strong on the margins, have been kind of gradually going up a little bit. I mean, do you feel like that's having any impact here?
You know, we saw actually more non-decisions as we went through this sales cycle than we had. Like, I think going into 2023, I had a really strong sales cycle. Going into 2024, we had more people who just weren't, they didn't make a change. And so, I don't know if that was because more uncertainty that was happening. We've certainly seen that in previous cycles as well.
Okay. Competitive dynamics in Benefits. It seems like you guys have branched out to do more inside of Benefits. Like, who's your competitor at this point? And do you feel like the competitive intensity is getting greater or lower? I'm just curious sort of where we're at.
Yeah. It's kind of the branching. So we started with our pure account capability. Then we added COBRA. Then we added benefit administration. Now, compliance capability. So we've broadened what we do for that customer set. In doing that, like, when I think of our biggest competitors are still HealthEquity on the direct side and Alegeus on the partner side. And so, from a competitive perspective, I would say it really hasn't been much of a shift. And when we think about how we win, we win because the technology is geared towards doing multiple types of accounts. So, like, WEX is an employer. We offer to our employees a traditional Benefits program where you have an account associated with that. And if you have a high deductible plan, we have an HSA account associated with that.
And so, being able to offer the underlying technology stack where you can have multiple tax-deferred account types put together is a way that we win in the marketplace. But also win on the underlying product capabilities as we have as well.
Do you feel like your partners are as committed? Like, you know, like, you have a lot of partners that are big banks and banks.
Yeah.
They're pretty committed to this business and not, like, trying to sell it to one of these companies?
No, I think that, I mean, consolidation across everything we do, right, is something that can have an impact. But I'd say generally, there are more interests rather than less. You know, and particularly in the larger companies, because they, and they all want it in for a different reason. If you're a bank, you like the deposits. You know, if you're a health insurance company, like, kind of like the dual sale capability. If you're a third-party administrator, you know, like, everyone's coming at it for a different reason. And now you've got, you know, brokerage firms too that are, like, really interested in this as a whole different way to help people save. So I, I mean, I think if anything, over the years, you've gotten more interest in participating. And, you know, we do business with, you know, many different types of companies.
If you look across, we have more than 50% of the Fortune 1000 that are using our underlying technology in one way, shape, either directly or through a partner.
Right. Maybe we shift gears and talk about the margin. You know, the margin, you've been able to maintain your overall adjusted margin of 40% despite the fuel pressures. How should we think about the long-term operating margin profile, you know, post the savings that you're talking about, the $100 million?
Yeah. You know, margins are tricky because of fuel prices, right? But, yeah.
Assuming static fuel price.
Yeah. Assuming static fuel price. You can see in our guide, we assume margin expansion. Yeah. And that's really coming from, we've talked a lot about, we have been focused around places that we can create efficiency within the company. So the kind of, like, taking that, simplify the business, running business, and applying it internally to WEX. And, you know, we feel really good about the cost savings, scalability that we've leveraged. And, you know, I think we're only just starting, you know, frankly. So if I look at where we've had, we've had a lot of success in our risk functions. We've embedded AI tools and continue to evolve those tools, which is helping us make, you know, more informed decisions in the models that we're learning. So they're getting better and better.
We're taking that same capability, moving it into our marketing capability so that we're getting more and more sophisticated about the lead generation that's feeding that digital engine. You know, we've got a lot of work that's happening across our operations groups, sales, and marketing. Like, I think that we're in this wonderful spot right now. We've migrated to the cloud. We've spent the last several years really focused around our underlying data. So, now we're starting to leverage that. We had, what, 80 active AI projects across the company in 2023. It's, and I'm, I'm like a big believer in what that's going to do. You're starting to see the benefit of that rippling through, you know, that and other.
Can you elaborate on AI as you just said it, please?
I know. Yeah. Yeah. I mean, there's simple things. Like, if you take our call center, we're, the tools allow someone who sits in our call center to, instead of clicking through a bunch of screens, actually take in customer information and actually give them the call center rep the kind of direction on where that customer is going. So it's much more intuitive and more consistent. It can wrap up the call so that the time that someone would spend actually taking notes is actually happening, like, in the background. And then it gives you a data source to mine so that you can actually start to look at what's happening from a customer perspective, and how can I eliminate those types of calls that are happening at that call center.
We've got, in, you know, this is on the way to, you know, eventually, where you're using, you know, even more automation that's happening with our customer. We talked on the call about the fact that your Explanation of Benefits, you know, how you get, they all look different. They all have the same information on it. So we're using AI tools to actually read that so that you can, so you can reimburse people. But instead of having people sitting there sorting through it, you've got a tool that's sitting in the background. So I just feel like it is a way of creating a much better customer experience at a lower cost. And we are incredibly well-positioned to really reap the Benefits of that and to productize this too. So, like, everything I talked about was just in our internal cost structure.
I think there's a lot that we will do with our customers too.
Seems like you can get some good operating leverage off of it too.
Yes. And we've embedded, like, if you look at our guide, you know, like, just the work that we've already got behind us and what we're planning on 2024, we've embedded in our guide. But we, again, think this is a great flywheel.
Right. So my final question is on sort of the leverage ratio. I mean, you're at the low end of your long-term range now, 2.5x-3.5x. Took a little bit, but you're there now. Maybe you could just, you know, talk about sort of uses of capital, right? I mean, historically, you've done tuck-in type of deals. You've done more transformative type of deals or adding stools. So just talk about what you might use that capital to do.
Yeah. So we start with how much do we want to have internal for our internal growth, which is an important part of that. And then we've got 2%-3% embedded in our long-term guide for M&A. And when we are looking at M&A, we've historically looked at three categories: product extensions, scale plays, and geographic extension. I would say we're actively still going across those three categories. But in the last couple of years, instead of deploying for scale, we've largely used that money for share buyback. And, you know, when we're doing a comparison of where should we spend the money, that's, we're doing that evaluation. Is it something, and Payzer is a great example of that. Like, if you look at Payzer, share buyback would be a better short-term use of capital.
If you look at the ROI, Payzer is a better ROI over a longer period of time. And so, those are conversations that we're having on a very regular basis of, okay, every once in a while, we're going to do something we think is more growthy, that which we think is important to hit the 2%-3% and is a really good return to shareholders, but might take some time. And then, historically, we would have done scale acquisitions also. And I would say in the moment that we're in, where we feel undervalued, we're more likely to put that money to share buyback.
That's great. All right. So I've gotten through my questions. So I figured I'd open the last two minutes, open up to the audience if they've got questions. Any questions from the audience? That'll be one. No? All right. Then we'll end it right there. Thank you, guys. Appreciate it.
Thank you.