CORPAY INC
For the period ended Dec 31, 2024. Filed Feb 27, 2025.
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FY2024 · Filed Feb 27, 2025
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Report of Independent Registered Public Accounting Firm (PCAOB ID:
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Corpay, Inc. and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Corpay, Inc. and subsidiaries (the Company) as of December 31,
2024 and 2023, the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three
years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the
Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the
period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) and our report dated February 27, 2025 expressed an adverse opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were
communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are
not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts
or disclosures to which they relate.
| Valuation of goodwill | |
| Description of the Matter | At December 31, 2024, the Company’s goodwill was $6.0 billion. As discussed in Note 2 to the consolidated financial statements, the Company completes an impairment test of goodwill at the reporting unit level at least annually or more frequently if facts and circumstances indicate that goodwill might be impaired. The Company’s quantitative impairment test involves estimating the fair value of each reporting unit using a discounted cash flow analysis and to a lesser extent, market multiples for comparable companies. During the year ended December 31, 2024, the Company recognized a goodwill impairment loss of $90 million related to the Payroll Card reporting unit.Auditing the Company's estimate of fair value for the Payroll Card reporting unit was complex and subjective due to a high degree of subjectivity of certain assumptions underlying the determination of the reporting unit’s fair value using the discounted cash flow model. These assumptions included forecasts for Earnings before Interest Taxes Depreciation and Amortization (EBITDA) margin as well as the discount rate, which are affected by expectations about future market or economic conditions. |
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| How We Addressed the Matter in Our Audit | To test the estimated fair value of the Payroll Card reporting unit, our audit procedures included, among others, assessing the methodologies used by the Company and testing the significant assumptions discussed above, inclusive of the underlying data used by the Company in its development of these assumptions. We involved our valuation specialists to assist us in evaluating the Company’s estimated discount rate methodology and developing an independent range of reasonable discount rates. We also compared EBITDA margin forecasts to historical results and current industry and economic trends, and we performed sensitivity analyses on the significant assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the significant assumptions. |
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| Valuation of acquired customer relationship intangible assets | |
| Description of the Matter | As discussed in Notes 2 and 7 to the consolidated financial statements, the Company completed the acquisitions of Paymerang and GPS Capital Markets, LLC (GPS) for total estimated purchase consideration of $179.2 million and $576.2 million, respectively. The acquisitions were accounted for as business combinations. The Company recorded intangible assets from these acquisitions, including customer and vendor relationships of $542.3 million. The Company used the excess earnings method to estimate the preliminary fair values of the customer relationships, which were based on management’s estimates and assumptions.Auditing the preliminary fair values of the Paymerang and GPS customer relationships was complex and subjective due to the estimation uncertainty in determining customer attrition rates which had a significant impact on the estimated fair values. The customer attrition rates are forward-looking and could be affected by future economic and market conditions. |
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the valuation of customer relationships, including controls over models to estimate the fair values of the above identified intangible assets and management’s review of the significant assumptions discussed above.To test the estimated fair values of the customer relationships, our audit procedures included, among others, evaluating the Company’s selection of the valuation methodologies, testing the significant assumptions, and testing the completeness and accuracy of underlying data. With the assistance of our valuation specialists, we assessed the methodologies used by the Company and evaluated the customer attrition rates used within the valuation models. This included understanding and validating the source information underlying the determination of the attrition rates and testing the mathematical accuracy of the calculations. We also performed sensitivity analyses to evaluate the changes in the fair value of the intangible assets that would result from changes in customer attrition rates, and we compared the preliminary fair values of customer relationships relative to the purchase price to publicly available comparable transactions. |
/s/Ernst & Young LLP
We have served as the Company's auditor since 2002.
Atlanta, Georgia
February 27, 2025
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