WEX - Earnings call transcript Q3 2021

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Operator

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the WEX Third Quarter 2021 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question and answer session. [Operator Instructions] I would now like to turn the call over to Steve Elder, Senior Vice President of Investor Relations for opening remarks. proceed. may you Sir,

Steve Elder

have morning and our everyone. our Chair press earlier Simon. operator, walk deck is to in deck through slide prepared CFO, the website been Relations included me Melissa The our we the have section submitted SEC. the this remarks our issued wexinc.com. we Smith, release A and and release Investor of a X-Ks to at copy good you, been slide posted of the With to morning, today Roberto and Thank CEO; also and

Litigation we of for that March reconciliation SEC Act XXXX, non-GAAP will to risk factors, GAAP of value As shareholders, SEC amortization, net specifically report in discuss our metrics include forward-looking factors of filed shareholders. a to reminder, as December press compensation, ANI, a in items, consideration, losses, we tax-related will on and cost of on issuance materially attributable the the statements the filings. X, adjusted income refer debt fair our for on Reform XX, gains and we intangible ended from explanation remeasurement unrealized see annual you for various call. the net may costs, noncontrolling to be as to press XXXX, adjusted to differ forward-looking discussed an in items. the subsequent divestiture-related other those of currency quarter instruments, discussing this and Please other attributable to attributable X our at stock-based XXXX. year with income, and result net like Exhibit third foreign or interests amortization, I and ANI attributable contingent certain income metrics, statements during Form arrive XX-K adjustments debt including income identified these to acquisition net financial net and shareholders release Securities Private remind those adjusted to which Adjustments Actual release would results under change also acquisition-related restructuring year's

update disclaim do statements may so. we forward-looking the While obligations any future, to in we

You these that, the of to of turn on call as reliance all Melissa. place should forward-looking only speak With I'll which over today. not undue statements,

Melissa Smith

good Thanks joining Thanks, Steve, and for today. everyone. morning, us

our our impressive Before their diving I for around of talented delivered hard world commitment Despite into challenges ongoing to team work to partners. unwavering performance. and results, to QX value want thank COVID, the delivering customers our of quarter incredibly and the another our team

Turning our results. to

successful double-digit trends positive continue QX revenue drove and Continued versus segment. reflects supported across X% also growth business. as the year-over-year platform XX% growth, each sequential by to capitalize The we execution line innovation increases top in performance on

growth exchange revenue was the quarter the favorable fuel XX% benefits purchase XXXX. and across record to grew prices higher foreign to rates, QX year-over-year Excluding up the company. a billion, organization for which Total in third $XX is XX% processed compared volume of the

revenue in to adjusted mobility growth, realize marketplace, platform positive. XX% and scale growth our outlook drove coupled our spend respectively. very patterns rebounds earnings strong and X%, of customer our sequential improve, and to remains win This efficiencies continue As commitment year-over-year with ongoing we operating the and

and unpack are to year-over-year take X Let strong our growth. key sequential me a moment that the drivers supporting of

from the lows spend last customer First, patterns rebound of year. continue to

offices in seeing a QX, significant reopen. as were volumes higher rebound fleet in increase increased we and in last to our year's from level. leading which We're travel-related example, volumes see customers American QX also X a mobility, for times For nearly XX% more North

the marketplace. Second, we continue in to win

ability switch the the local of to to business deliver customer delivery, corporations services. of unique This in and e-commerce and transportation, quarter, signed U.S.-based the new combined over our vehicles. both with specializing we industry-leading for multinational products one our the made road During largest WEX platform, package because

time for win have payable signing of last smaller This fleets. fully $XX of chose contract well Stampli region. period to increase the at speed showing to an integrating and support AP weeks, large Fintech rates first institution services. the with employee effective of the also other XXX this WEX the platform education Within in note X with customers, of member with institution, digital is encompassing resulted experience great higher was WEX expanding and new the and a administration chose to September We new engagement COBRA to business the year. acquiring The our multigenerational benefit health, continue workforce. cloud-based of as customers as in only more benefits in also our accounts to engine, increased platform started drive the the and small help outsourced We expertise. proving company a issued American management. which billion technology. to same I'd marketing marketing we and payments to engagement administration midsized of Valley deliver their under platform CDH than The European in signing the like Silicon a business world-class marketing and based of very conversion targeted parts growth versatility customer fleet well They had through our engine includes to improved as reliability key WEX a compared automation our and for as and and to technology a XX% North ease a stack, transaction

world-class in outstanding has strategy impressive WEX our retention market a provides the that experience and Through is customer and addressable grow share digital customer As strong we resonating innovative underpinning and rates. this service, gains our high technology resulted marketplace in market, results.

technology the cloud. of corporate This completion platform to nearing payments payments issuing complete the of are We pieces all in cloud. will card moving having corporate the the

customers wave proven digital full investing user infrastructure. With to anticipate meeting modern of and commerce step our needs, allowing rapid their which profitable Regardless e-commerce expansion and enables and to infrastructure suite workflows streamlines integrations, customers drive also An sunset the This which We're can our the of is reach. the breadth digital growth. eNett our the simplifies core scalable economy, our offering which significant past the capabilities, our strategy we legacy create including how and of highly Our combine platforms size dividends, of ability to it and technology to the customer ahead frictionless for experience. is our payment access adoption contribute seamlessly next workflows, simplify custom and experience, to paying of increasing be integration cloud-first Optal and remains of their of to the complex, BXB transitions work our to to will of and investments or we we've integrate strategic integration. growth. expand needs into ecosystems business a an coupled to example customers customers' sector for our ease and embedded is customers. the payment why are of few us they seamless deepening secure our over for customize scale, secure, platform. years completing help This, The and made in these resilient core our intelligent, our payments scale which our integrate made types solutions our quickly in their can deep with

to the customers solutions that WEX opportunities. our product. to process introducing spend by we This choice we is win-win of customers optionality breadth for to work another This customers new the and payment we customers continue and their to meet This now for WEX. us expanding needs. merchants our AvidXchange, value use The customers of service simplifies win where reach like our is allows for how Beyond make of the are we maximizing premier is number are the rates, transactions. a capture integration, example live our with This flexible of offerings willing the with and payment BXB commerce. why offer for our new

example in significant development we that market well electric From what through is our the our is great positioned vehicles. for to the are platform of believe doing support WEX Another our transition. over perspective, support the the we opportunity of customers EV long term to we're tech

to them, be transition will our parts their of WEX to for vehicles, begin their electric As needs. ready anticipating customers fleet

the payment systems. and complexity fleets, is as expand that to their solve coming reporting, with at solutions, added mixed charge way We benchmarking home, data-driven options will they simplify need for

energy Our around need goals a They tailored partner. customers carbon reduction cost will the total of and cost their from savings the efficiency will solutions trusted as need as meet well to understand of ownership EVs. and support

share largest volumes addition, new unique our opportunities in progress our earlier will and continue this month. Fleet their we and are use the serve environmental integrated to is unique pure-play scale manager this market defensible highly to Doing is the for gain our Element in more to on One automotive WEX create incremental the will position. world of example In the to and open fleet so for use and Element announcement longer to demonstration will meet great Element's as the value into clients. analytics to ChargePoint trusted This and WEX purchase WEX's goals further space is together customers. partner provide its working customers dashboard offerings of the future. and for and be and us our to combined will a to for from consolidated broader data looking solutions term, partners In technology companies fleet programs. build electrification.

serve better future managers the actively products We remain related fleet and for partner as We services their new is products and and to to further defined solutions. expand. payment developing trusted plan develop additional are integrated market

are exploring open an can revenue through carbon of in reduction benchmark a our For vehicle role market efficiency up WEX the also gasoline-powered play the presence, versus example, which can emissions benchmarking, EV new a further and opportunities. given reporting we or how of in

for come. Beyond important transition positioning bring are electric for to to we generations the to the which in has the for future the EV us space, support environment long-term benefits and to potential proud vehicles, growth

by Americans, like leading over growth this benefits and health power life various for held XX There top next HSA is stages. projected X outcomes. help unexpected Lastly, health-related We know efforts most explain an to estimated HSAs our highlight health to increase to Day are using care I our buying HSA Awareness Account of years. with penetration to care educating are mind opportunity to the to National at of care of health consumers the educate accounts increase HSA Savings is an consumers goal plan our Day earlier at month. and expenses, better their million that an costs Health all would significant for

For young how out have an to well targeted HSA about costs. example, beyond care people covering starting has go just health benefits information we for

and to savings with be health can HSA like in an accounts, way and particular, For this care demographics, retirement a investment. benefits both investment tax triple advantages supplement

the companies provide reduced education, so work their helping they on Beyond costs employees rising alleviate focused consumers, we with use end resources to help inequality. we health are can health tools and and to to products income care

WEX. ahead, investment grow positioned future very we Strategic us innovation, is combined and share. has capture As look customer-centric bright market culture, the with for continue to our to in

continue growth across leverage XX% to fit income that growth best our in digital we XX% remain ensure rebound our growth the transformation innovating we tailored our As are ability We to XX% to and of positioned organization share. ahead. our needs. revenue volume must our growth end, opportunity in adjusted evolve continues and our To net capitalize tremendous technology achieve diluted best-in-class customers' to solutions to that lies on remain engine, to our and accelerating long-term platforms, committed we per delivering to to to we targets confident XX%

have may truly better serve enable you solution January our seen effective to on leadership to across As some entire we us the our offering customers to by announced changes a X this align to morning, our teams preferences, changes executive and allow a and individuality closer These to makes special and products create what go-to-market approach. move and customers' keep needs unique while our sharing our to platform. stronger us WEX business practices our best our will integrated

changes long-term customers, business. these I forward as you the expectations and other the it on to offering for will better that entire and continuing relationships will the experience the have To they initiatives hold priorities. growth us update impact to our business our strategic and unlock of I of Day that decisions will allow goal confident the secure portfolio. to is We're deeper to customer success stakeholders. opportunities value a Investor and by we're across one-touch strategic look of in growth to they our them Our drive this across around their will March to planning am make phase us ultimately our end, XXXX. achieve an shareholders on excited about next our position product that create the

our In more performance closing, in the will quarter. proud of months. coming this team's I'm incredibly details We provide

people momentum and I'll and that, advantage communities shareholder partners, to and Roberto drive on time navigate a discussed across current be key value I've turn the and long-term As and call while build will proven again, customers globe. our competitive employees, continue We'll differentiator over to our a significant to culture With Roberto? have WEX's environment. this supporting we are Simon. the CFO, the as

Roberto Simon

Thank and you, morning, good everyone.

quarter and platform the As $XX XX. you've to on quarter the more million. needs, We we long-term The the momentum across from quarter company's results position surpassing solid, with Melissa, heard in Slide effectively than the Starting in adapting for business. were had customer acquisitions, high growth, innovation with record-breaking driving technology by remaining really upon integrating another number results the scaling the agile sustainable third half. revenues year's previous saw first building

per revenues $XX.X a XX% by Non-GAAP quarter, million better-than-expected XX% perspective, For due on we fleet as Total a travel that in the versus robust versus $XXX.X end the an GAAP QX to the higher revenue increase net driven From as $XXX.X exceeded $X.XX adjusted was year, mainly high businesses. XXXX. a at I and margin represents prior well third revenue expectations had total income million. later. shareholders of net discuss million, basis, share. income came adjusted of increase a earnings volumes income in to This will operating or attributable diluted

XX. posted down breaking Solutions Turning Benefit by Health the finally, Solutions up to Travel revenue XX%. and Solutions XX%. and a grew XX% Fleet segment. increase. Corporate And I'm was Slide Employee

by renewals, business and XX. with Solutions fleet customer Now million, starting revenue let's powered volumes customer trend fuel Slide Total on a recovery strong maintained were XX%. XX prices bills prior American move up transactions processing and higher in number year, base. and versus to results, XXXX, of points basis the increase in transactions Payment fleet time. up Over-the-road was up QX comparison from The new up X%. fee segment XX% for continuing $XXX.X was quarter decreased XX% XX existing Fleet XX%, their customers the North strong was on the wins growth their year-over-year. the in late rate international fleet net to to the paying

and $XX to On up in fuel revenue XXXX finance domestic fee increases in fleet, fuel spreads. the the $X.XX significant This fuel and by In lower other prices. fleet was QX price by price average hand, was due XX% versus was partially approximately increased in offset million volume European $X.XX QX XXXX. revenue

to and million. Turning increased segment Solutions Total quarter Travel on for Slide revenue Corporate to XX% $XX XX. the

reflecting channel. partner the XX% contribution payment of in and volume sequentially, a from from $XX.X increasing Additionally, Breaking XX%, eNett the XXXX XXXX. seasonality, continuing strength purchase up QX continued volume up up by XX% versus since down, issued billion, also sequential by Revenue and XXX% customer Travel-related Optal. was improvement significant QX represented and approximately customers total WEX expense. revenue travel-related corporate led was revenue customer was demand

pleased are and growth as recovery. are industry future the positioned travel to these its We continues with well results capture global

a let's Employee the Benefit segment on look Finally, at and take Slide Solutions XX. Health

Express divested last approximately to temporary $X COBRA year. and was account accounts of We offset Benefit represents $X revenue end related QX, and million in acquisition we XX% XX% of by The of new continue approximately last discussed in from accounts This XX% million over Express to quarter. at an increase growth including QX versus the in strong XXXX. drive $XXX.X growth, QX Brazil a SaaS prior contributed revenue, year which resulting was the Benefit million.

the transitioning fourth we COBRA off are the back employment-related will quarter, to accounts fall as growth. For

on and Now to adjusted on let's margins number move operating expenses income Slide XX.

revenue Corporate in particular the note, basis year. prior low and segment XXXX points XX%. scale in prices For quarter for in QX, the and XX% second QX fuel the the segment, QX in up and up loss This quarter XX% in XXXX. Travel QX SG&A payments service $XXX volume, income XX.X% spend steady fleet at which with adjusted X.X Total continues income of delivered cost XX.X%, million adjusted margin depreciation of has year. higher in improvement the XX%. operating year, million, now operating to was increase expenses the fleet be quarter, adjusted amortization the than XX% base. compared XX.X consecutive $XXX.X million. expense margins XX.X%. reflects $XX the total in were been adjusted credit the There growth, margin The Of to with In compared expense is this of last from was higher starting $XXX.X million, and in is in margin to

drop-through to continue revenue we see Optal and increases primarily and the base expected, eNett to As continue as cost fixed benefits from is see of high the synergies.

have implemented approximately to the the million $XX due of adjusted relates was target compared segment, certain the mostly synergies. acquisition rate processing. margin and to to In run million XX.X% The expenses. So health of was timing far, It platform back-end we remaining $XX consolidation Express of XXXX. Benefit the of $XX and million down in XX.X%

company, from Finally, was total for operating with points year. is compared up XX.X% margin last and up QX the which this income basis XX XX%, year adjusted

from balance WEX was quarter of a and on down liquidity agreement. taxes capacity million tax as the will both $XXX got XX. the We end At was company's basis, of $XXX end GAAP ended borrowing credit ANI of of of an XXXX. and available the quarter corporate under million, at million the discuss which remain a From over with the cash Changing line balance healthy perspective, Slide to billion. level and rate On the for Let's credit, defined a to the XX.X% $XXX.X the revolving rate defined basis, term negative was with The of quarter a XX.X% in for XXXX. sheet. the On year. XX.X% of the XX, notes total cash, which effective times, loans the the XX% outstanding credit at quarter, compared tax million on the third now Slide on gears is financial agreement $XXX in in is stands QX X.X the $X.X XXXX. leverage position ratio provide for I balance prior and convertible as end an update

advantage deploy capital. are take To continued X.Xtimes. target generation within We all satisfied third of on to Slide Once it guidance will year will the and to X.X quarter times of success. for the evaluate cash positions full until flow us close out opportunities level the extremely free we earnings call, reduce Revenue the is reached, to for and that continue quarter leverage long-term results, to is XX. the fourth with are the which we

renewed However, corporate gross the before in segment the to we that the impact of specifics and payments alter change, from to I get but presentation sales this guidance, change recognition contract no will of want There costs. have QX. partner of This corresponding material new contract going marketing metrics a net accounting several I earnings in into note from on forward. a will is significant revenue with change the

costs million. reduction these resulted in sales For QX $XX and in XXXX, have revenue a of approximately both

domestic prices are be fuel addition, benefits Express In significantly, tempered in expecting Europe. increased by the have although we to

million million. range be Starting of $XXX million to share. the numbers we the range to revenue we with million diluted and income $XXX adjusted quarter, EPS expect in am to expect $X.XX basis, to income the $XXX $XXX between in and an to give. about fourth reflected is net adjusted per this On of All net the I of in $X.XX report

expect to million expect we and in For $X.XX On revenue billion report diluted the per net million. to EPS $X.XX $X.XX to billion net $XXX of of range full we the to $XXX and in range adjusted share. the income an income year, adjusted be between $X.XX basis,

week. for fuel on as assumptions. rates end quarter domestic of the prices fourth the for and a the average walk NYMEX of Now will are based Exchange more Both per September We between shares $X.XX to year. we you And line income let me for gallon future adjusted full net $X.XX XXXX. through price finally, based estimate are are the few The rate expected operator, approximately XX.X% assuming that, is from XX.X the and last outstanding. full million the tax XX.X% year. please And and quarter the with for open be questions. fourth

Operator

question Mihir America. first comes of line of of Your the Bhatia Instructions] [Operator Bank from

Mihir Bhatia

I just some with wanted I by in the corporate expect when mix of provide driven you half from guess, imagine to start shift quarter, where little to it that just the is the should Because was that payment a talked bit the more towards maybe rate, on can interchange But I travel. just the we stabilizing being the in year. back be? start color about you here this, last view of section.

the just trying such your drivers decline expectations what quarter understand of and this quarter. big So for a to next

Roberto Simon

course. of Yes,

you the if for by have customer of And one But our in discussed what was we reasons. where went XX% in up recall QX XX% it's this quarter, the the QX rate So were X, look we in segment year, XX%. if different travel-related to now, impacted much of you very this is, segment. the most is quarters volume X important

much one, impact on it the the corporate you rate rate than a as travel payments because So material imagine, has lower overall. is the can take

know, The also you increases, kick as the some have that second the in. volume and as is, we tier rebates may thing customers

volumes that see you from improved to QX QX So $X we almost billion. travel have

know, you And we go the revenue. very QX X pro to going the what would are we component. the higher. travel go similar. if to with you just rate point forward, material next slightly contract pro QX, into to from I'm payment you numbers forma, what a into gross the QX, think then have net QX is because, a presentation from will say corporate say So forma and I'm the is, compare customer And But also just is, change that going QX I to to renewed going I as you say that, for would last we if year, very to you that's accounting can into into you going and revenue be as if

on it all improvement. you don't You from to QX a the I overall said. see because reasons the see But of QX, slight

Mihir Bhatia

just contract And you're mean, I understand when you what sure I a saying. to to want bit go trying I proforma? back more the exactly to understand color quarter. the what gross Just I Can can I how I the moving what's gross? affecting make guess -- net more with provide -- what and you rate happening where to contract next just little exactly trying that -- to understand there? to I'm you're from is on understand the the rate impact you

Roberto Simon

Yes.

and changes. customers, ago, with you from we revenue gross corporate to the three the of we some going we clauses recall is the to contract, customers have in some contracts contract some And presentation a we revenue. renewing presentation revenue presentation. the be Through some process through the if of So payment moved had with now changed recognition revenue and went a net significant through that process, them that years customer, net

of pro XX, our you on KPIs the with year-to-date which for without presentation on the the we have -- is appendix all adjustment. the segment forma the pro is metrics If pro there the look today, Page and forma of shown what and September forma

at look is year-to-date you basis to you if So down numbers, points pro from that the customer. XX XX rate the forma when

down expenses exactly improvement same $XX from classification the revenue. an with Operating the changing by revenue just reduction in same point the go down goes The operating million. revenue basis and net gross income XX into approximately is a margin. that's So

Mihir Bhatia

Understood.

not because revenue guidance to have numbers, QX if fair this your So into than have higher guidance, would $XX that quarter's -- question, well, higher then take -- last my last just you -- proforma year just this million is we right? know QX, say, and you your numbers, had QX materially change last if happened, been because

Roberto Simon

That Yes. is correct.

guidance, So it the increased the million, our been if wouldn't have we change, you $XX would have If QX we yes. accounting think midpoint million. $XX about had

Operator

Ramsey line the of from of comes question Barclays Capital. next El-Assal Your

Ramsey El-Assal

you large terms wondering that I color in Is multinational a that carve deal about should package timing us we maybe give would a the e-comm. of P&L like impactful on was little if magnitude be would the deal call it something you and where win not out an as delivery, out? could impact? you new to corporation more or enough mentioned, Or is thinking sizable be it want a to of

Melissa Smith

It our business. customer fleet direct on is a

customers so larger we'd deals like we sign of same about see talk partner think We not And to one our specific together. growth the win. that that as that we We're adds of of bunch magnitude actually what hitting proud do the getting bundled but that signed. you where some a It's you to it that relationship anything overall of say wouldn't customer. you're -- objectives, the I a for

Ramsey El-Assal

health QX? of some about grind Should of of accounts quarter. about we next off forward think how And that How this already, will that on as going Roberto, roll sort should could sort accounts as both the the you in of well revenue cadence Or that? but COBRA after good us help adds? the we SaaS gave through us higher segment, think through you the those cadence terms of -- color terms customer should and think it impact in just understanding

Roberto Simon

Yes.

to So if going with X% the think for to you health growth the the in middle. where you year-to-date and we guidance are be on segment, recall earlier organic we if an provided in year And have guided are we for XXXX. QX, we that XX% today the of

satisfied you XX% be industry be has organically, growth to how if to going have that. doing with which been in the it's So plus/minus think we really the year,

which acquisition from accounts, we And noise SaaS on XX% some temporary the you added the this the have so then reported quarter. On accounts. that COBRA approximately Obviously, we Benefit added XXX,XXX quarter. last of Express, accounts

we same at But off to are the to accounts adding we're same the sell as time, tail at are COBRA is the now we account season, be those going going accounts. we we enrollment time, of the enrollment the COBRA the year-end. as COBRA to going going obviously, see disappear. are those end get As SaaS quarter, accounts to or And new to last some season. we going through But

So and we see now then I market. rate to you have think next should has if that you temper, been in changing going into year, obviously, growth in into for past growth say would experienced the the similar that, to QX what the we rates

Operator

question Your Mihalos comes from next Cowen. Georgios of

Georgios Mihalos

we ask, not volume was it to and think fourth to talked that? quarter, similar, I XX-XX of the travel as should and as somewhat fourth in mistaken, to sort I'm me, quarter skewing obviously, we terms quarter the of terms the said thoughts updated I similar the split Just about towards be of wanted more think it corporate in Any thinking you business, If split. more relates travel. how excuse this being about even kind -- of

Roberto Simon

course. of Yes,

QX on You highest. the there and know travel side, on is that, is seasonality the seasonality is the side

can spend that from our you see reported almost of $X $XX.X in being numbers on with billion this So quarter travel billion side. the

but mix travel compared in view the compressed of segment. from expect very from so off the we the seasonality is the nicely to last because As move you fourth year, travel quarter, to the side, seasonality percentage, point growing of from should a tails the volumes into on a compress still

to at nice And the QX. While corporate growth if XXXX not than still from QX. we expect payments time, volumes a from from same the similar, stay higher obviously,

XX% down we say, to the and had going would to, is guess, if XX% XX-XX, on side. this travel between I So go

Georgios Mihalos

I impact more your is business, see understand you're around on could then aggressively corporate to capital on disruption, of any payments just delever still perhaps if curious the you're more and chain sneak returning long to One, some having I'm the shareholders? capital any recently. looking the in. starting here, given but And from an I related term allocation, updated kind X supply seen if sort stock that to thoughts current on more pressure to of if valuation customers. the impact we've of And Just just

Melissa Smith

tie together of those, I'm one and second first on the take one. I'll go we'll sure in the

an And with specific. of again, impact disproportionately is on and payments, also across to categories it our to customer really type labor material customers business, sit some, again, many all a that shortages, that business, corporate supply base impact affecting in base. but so a customer their categories. -- that the specifically, bit to one from then our -- and had So pretty do customer. talk customers really specific it category. of interesting across not so the because But over-the-road we're We do impacting it that's the trends chain wage pretty it's part other our little categories every concerns hear it's all. not hearing that But businesses across in disruptive becomes certainly across our different We gets less major companies around of from almost to but it's business increases and and

prepared In this above but said leverage terms Roberto remarks, in capital, return we're still targets. of his of our long-term

historically have our the our like enterprise, of Board. And but continue so the to with will focus down at use across our is pay explore moment we our capital best to we in continue debt, to conversations the

Operator

Your of next Stanley. James question Faucette from Morgan comes

James Faucette

Can I leverage quickly clarification on up just point. the for follow

actively segment at via is, those higher specific it's could think that to margins ratios where done. sense to should growth not Just through my seen settle well down likely sounds pay, than from seem pandemic get that that just settle the out about are and growth, I'm a element on debt, a for reduce been of a segment trying corporate especially given has a going looking earnings And how wondering up, to and So we that like I sure maybe forward. it kind And previously? how you're pay quite more operating growth question should perspective, do particularly expect structural travel and well. end understand to make we've you where rate to the there we correctly.

Melissa Smith

of effort to and integrate the that businesses over across Optal on added taking I'll start. and Payments fact and of segment, number and about lot term. time that a making that a when consolidate we we and the those we're growth focused is of the we're that talked costs, we've On through the same Travel our at and Corporate and things into up of gone one we've care long picked redundant eNett customers WEX sure

million synergies had $XX run $XX Roberto we've to more. about We, of have So million again, the expect far. talked so rate

process. And corporate And structure, is so travel through it trend and the cost integration within that, at a we And next grow that year continue we as margin year we was same profile to been business, can affecting see going see got our is margin highly as time, rebound not we've and having going of coming which and the our business. gone quarter-by-quarter into see forward continue the It's volume volume we business. specifically this think as you that more the business, coming fixed the to positively. we've It helpful through and payments benefit the year. last into helpful quite actually helpful

Roberto Simon

then leverage was if ratio, other do down not properly and And your recall around debt. question pay I

the leverage you be we We or now ratio. earnings are increased company. reduced know, high-growth ratio as leverage amount So The can or both with manage a with of debt.

on opportunity done we we and of QX, long we point at from like into to any term. significantly. can are get to on debt return flow when have we the short to have alleviate the exploring shareholders, then be within total always anything to to from we we have between view, sure Where And you our liquidity cash going as want possible. is are And times, are said, earnings X.X same the have and as enough improving from the X.X is the at front what obviously, is M&A and much where times that as so available, If us, Melissa seen time, obviously, we we a thinking, that down. look the of making free point in range be QX

Operator

from next Jeffrey Your comes Truist of Securities. question Andrew

Andrew Jeffrey

XX%. in being the perhaps is just that corporate want clarification by that depressed said is of volume? affecting Roberto if point number macro. a Did chain Melissa, understand you think I payments note I Travel Payments was Corporate and supply to up segment.

Melissa Smith

from say -- our customers, wouldn't gets that conversation customer having. that pretty a I prevailing our again, that's categories. conversations like that we're it we're specific not with But within having

how see you the we're new we're and transaction build, partners. expect we AvidXchange. and the customers to talked continuing if growth we so implementation, We've that and And continuing to business at gone of that volume fact through the on specifically And add we're ramp. to about starting with look that to

growth perspective say you for a overhang significant there's business. on that been supply so And wouldn't signed when I what some are from things of of the year-over-year But ramping part in a see they're within chain that that portfolio. depends when

Andrew Jeffrey

elaborate, a your So accelerate sounds wanted you new RFPs? deal. How it some would those the in are you providers? seeing issuing card cloud-native the with like who And that on Are V of I implementations. could in to the the Stampli deal? Can specifically is position that And industry? ask then frame competitors the you up

Melissa Smith

Well, we're that I providing saying into -- something have would built that a start It's business, cloud-native offering. when with we've business. the going we that we're that across

history the a great And from feel with compete that in technology there a anybody really with we the so also standpoint. can out reliability marketplace, have we else

that. payments, categories technology that as card into that we number something do of embedded with virtual So was They where our a using going our doing an we're which example customer I'd But base. start card capability. across are of in portfolios, these technology, we're

sure aware whenever of. think highly bidding a It's process a -- of I businesses. number of wide them, and all we're being winning these you're so And there's there competitors that in names I'm competitive

Operator

Your JPMorgan next of Chase. Huang comes question from Tien-Tsin

Tien-Tsin Huang

talking you modernizing as sort I lines and you the same some I were pricing initiatives modernizing in corporate about platform the moving were pricing think in of for the along talking payments, to about cloud. -- Melissa, think it

book back as as that can elaborate pricing-wise? your that what So you means book and on well maybe just for your front

Melissa Smith

remarks, referring what probably in technology a That's rates you're we the our Tien-Tsin, that, to piece to think referring give about prepared introducing we customer can where the base new I you're what to. of talked think variable merchants. to

And volume within around that is what we're acceptance the so It's payments. yes, people allowing refer that more using. we part is we're and advantage. when WEX, the extend acceptance -- as merchant to part offerings ability of have is and or to really want what of more products pushing I and partner corporate network to with again, is can purchase through that expanding different modernization. doing that interesting it this is pricing network And schemes so And and to increasing come network. the through and of people wouldn't as

than pricing more partners describe to the partners modernization. push our this so it is be describe volume to as -- and across through business as I expansion. of And I wouldn't able the more it new to important product ability sign

Tien-Tsin Huang

Yes.

for Forgive me that.

for to like supplier So sounds partner it's way this recruitment, is it a and accelerate. recruitment

Melissa Smith

Large-ticket items.

when optionality where And you acceptance, not the kind get might get so payments specifically, of other into some of customers. it you for niche our allows

Tien-Tsin Huang

Understood.

I misunderstood it upfront. Sorry if

and the shortage we're whatnot. way about that maybe have a frame consider on and Just that chain there? getting to minuses and asked -- I quantify to Is driver and others there about how know George because the supply questions and pluses

Melissa Smith

Yes.

across for them really we it's very customers, this And you business. from ways move our category, moved something if the their that would coming so our over-the-road hear of think is goods. part unpredictable affecting are ability the I'd part we business, definitely categories. again, of over-the-road in the the again, were -- that, into customer hearing the Goods by and On that say, category. across got and compounded that ways, fleet definitely expensive issue for We've to is are drivers that's from underemployment. affecting local over-the-road have we there

to number chosen a retire. drivers have had that of You've

in employment of that of ability terms issue just they more needs and the changes issue more in as well that's business, that customers, fundamental across across hear as have the and recruit as cost a the their businesses through and the about pricing meet And when demands a we as talk so pricing to to and systemic talent of to underemployment categories. factoring we how

And so broader that's the issue. of kind

it's that quantify on. we it's give to really In terms difficult. hearing that of able across that, say I'd number something you a something you're It's can not I would be would be categories, that -- but

Tien-Tsin Huang

then. it tracking be we'll -- just We'll

Operator

comes question Wolfe from of Darrin next Peller Your Research.

Darrin Peller

on segment a corporate know it's long as potentially. I term a a the area minute? investors for that revisit of we key lot Can focus a payments differentiator

looking your Slides just -- there, volume, we from And if it probably for your a strategy it in more first business. dynamics to view can us a dynamics trend what And bit. X importantly, that October. looks revisiting year-over-year, payments the bigger down software-centric, third at then of and then there's just of vision add so little line I'm your X, picture, versus all, into those are bit curious and on 'XX. And to negative there card-centric, that, just like a of And the looks quarter remind corporate it was virtual

Melissa Smith

sure. Yes,

question. So to I'm your second about talk first going

business, -- success from had of we're lot of a So embedding payments. -- where it, going with we where look this as that a you we've if at concept

as to processing issuing pieces of our then the to choose card use, card platform, which that go doing choose allows in our And out the so can choose we've a And ability efficient categories. capability, around can multiple and built across our use our that to really customer high-uptime, cloud-based doing we're processing, different well. they functionality across capability. capability They very customers virtual

They is So we to bring what go are our and volume, marketplace, people good. pieces we're new functionality volume work for continue that of are the and in us. selecting that, components them both We're it'll us bundling our for are finding both together. highly for into or well as -- is And to perspective, profitable.

software, terms In really we've we infrastructure date of can more the to that. how of around focused support and primarily

to term. capability our out over We will the continue build long

people interesting we world that talk have as we these over having in we that and to really are particularly to doing at in the interested business, and over us our you customer needs a meet the a earnings sit their I business captive customers customers the is large to to bring know tools of customers, digital We us time. largely migrated to in that those opportunity in base calls, of and those places more with One across if small us, about but think see that continue have our lot XXX,XXX us. look through a huge more along as our who've future for

pretty But larger our concept next to time we've it's this a date where we us that our of We're really sales direct payments. up channel. sales so so going the And historically we'll through fleet. We've think fleet, ramping to year. been evolve. we're adding resource will have embedded so been and focused throughout to grown continue this for also partner pool, and do we've direct And to around

so year just remember, asked you big last volume If corporate about we're off grew XX%. last QX payments, grew XX%. on comps. year, coming some QX

billion in QX $X.X XXXX payments. had for corporate and spend we illustratively, Just QX in XXXX in $X.X billion

some seen that tremendous So year-over-year. had growth

We starting customer process. gone also volumes, some transaction the variation. final that new providers, AvidXchange, that cause earlier, to split with And we're but and volume implementation have with ramp some I that this through they've partners can then just reminder, said

benefit the we'll of that quarter. coming fourth see in And through so more the

Darrin Peller

the other right discussion put mean, you're the on would put And M&A -- on would this want be you going I you areas still or forward you think to top the the to in -- primary then focus leverage earlier, about it? of area you when it other follow-up just position when

Melissa Smith

capital one want go step things at When of in to that look back and deploy is M&A, Yes. aggregate. how through we the we we do

the of over view and a like business transactions that of look we do of And we get like financial closer so it's we stack from perspective? we through to like. that time, different of disciplined like our we instead how a Does at looks historically. to do looking at And transactions strategic bunch evolve push a against gone M&A individually, we've And would to what been part goals? that how process it looks the it us

solely So basis. focused -- regular a still process through that we I'd go say payments. not we're on We're corporate on

been within business of there increasing we pretty expensive. M&A that We have that a think have category of we and some of organic has amount because the that opportunity lot the investment we in been have

And closer have pipeline. towards explore an options last going actually And category objectives, corporate our in category being had we've that what's on going the we months. strong the continue that continue will the to marketplace. of to across the within few build M&A is again, We're building one. us So and our that, over a And what's but going always bias strategic look to diversify move to active to said, already one it's wouldn't rate to, business. only payments to continue I say to we growth

Operator

question. more time have We for one

from comes Sanjay of Your KBW. question Sakhrani final

Sanjay Sakhrani

here, maybe and as coming Are these renewals, be differences? guess to yields apart corporate going is, guess good of accounting question a types to volume, into going volume. if Avid travel how is dynamic, corporate of Because follow I future of sort on they for to to and about too. my know well we bit -- where as to more just on. up feed we the but do have could the I stabilize? it's I Is think I that going parse the dilutive And travel we know So going forward? and going maybe are yield yield. I'm

the I think on sort a what baseline. as people are trying a yield out basis to of trajectory go-forward figure is

Roberto Simon

going and my said, do we growth here, thing try us, best I'm So profitability. is as has The Sanjay, Melissa said, have obviously. most to and and for important

want we So to continue growing.

all points in gave of and that obviously, volume-wise. a we now payments of doing corporate the to income. really compare been on reflected And been have adjusted Melissa 'XX revenue operating well. couple We the when has

in these probably of income you We adjusted recall, adjust presentation, accounting XX% 'XX be went QX, and you it now if X QX today, XX%. X think to quarters, we to another where X are we to it's And So operating XX%. improvement. if had margin the an we especially it's going points for

the side, growth net. have or be renewals, if don't travel growth. we and could profitability on So where the is Then enter you revenue gross into first presentation customers thing growth, the revenue

the focus changes. going that to most basis. forward net to be are the line. not So or we we you the corporate would to that how to rate. the will And again, I renewals be It's margin margin of don't what this all any new on along, us. ambitioning need on to on But it subject is on be that going more going most And I part fall of think most move the need of as payment But business are revenue renewal because the your on profitability to lower. your accounting say revenue focus side. on we a therefore, to improve to we significantly bottom the are That's the rate partners obviously is is part probably on the going growth. for onboarding growth, We the of is of business or going and growth to the

Sanjay Sakhrani

I impact think impact? Avid corporate -- significant not like and is has the and one it's And its or that one guess about we material on a yield, when a there

Roberto Simon

presentation. net a it's mean I

going are to see real So obviously, months Melissa Therefore, really the recovers X said, be until to going not corporate in on net. rate to QX, the signed it implementation I being they up, ago, it the as next but mean, phase, next going this is the to them not the benefit starting were we much a year. lower than we year. X to But travel as much depend, said, overall payments. to significant how we will we rate. in compared ramp That's It's impact year have the business, net, have

know, or or of therefore, we customers to up going corporate And the basis? the on which net all a ones growing most, the is make obviously, volume a more So volume that give which On as and, impact sure revenue are margin. why that the more on the that the And are significant present overall. you want rate that material a have, partner we payments, have down. growth, ones the that's us, revenue the that you the profitability as profitability key power is to growth, have also we for growth the metrics you company purchase

that's So for very important us. also

Sanjay Sakhrani

Yes, XXX%.

get things maybe there's that, helpful. think would how around just lot go-forward more if be a basis, can been we I a on before that and given of of have confusion

Roberto Simon

that be valuable. rate Exactly. not about And XX:X, dollars, in because. their gross very not the that, about I or going down the growth talking presentation in about probably mean, It's is customer rate a to think to take up compared travel a take. I

it's very yes. valuable, So

Melissa Smith

but part last And to I'd structure we to only a be did over make was we fixed of to a that and that perspective, of a a create cost the business. with The work very lot years from product that intentionally were just several sure a not also because we done cost wanted thing from add perspective. the technology just the able we've is competitive, that that more

we that come part the the volume feel good see so we that see business as And through really can cost going in about And incremental that of business. you through have the through. and spend dropping that we

have it's think of the the around actual scalability part why we we're I not the focused is rate because So model. of as that in

Roberto Simon

numbers. to Sanjay, If end, from I recall that in QX, you think the

revenue was AOI the million the margin and this million QX drop-through in like $XX $XX was So was sequentially. quarter, up. to QX, or from And XX% up

That's that's And we like it's are So where Melissa XXX%. just said. what focused.

is fixed allows -- business. get we on angle of that us Now revenue, is volumes, cetera. Everything very and it not to part the more et have all the that a cost play in-house, technology in to

Melissa Smith

next the which at of into go same the and time third so we what business take increase in we year, continue and to quarter. eNett of the volume get to continue things, both Optal the you of out and Roberto specifically as cost leverage if integrate to kind as was ability referring have to those through is you And the

Sanjay Sakhrani

that. forward disclosure around Okay. Look to Great. more

final a Just question.

Roberto Simon

exposure What want from you volume revenue?

Sanjay Sakhrani

Like X-year target.

early fleet reopening recovery? should are the know in Because tailwinds that's hopefully it guess, follow-up inside see the is I I one profitability Just business. big a that? where occurs? that I I mean, the on still we driver further business. with last pretty as SME mean, we

Melissa Smith

kinds such of businesses. is business The it's a interesting compositive many so because -- fleet different

larger is now businesses over-the-road that the it seen taking heat and the And what the companies, businesses And business, of of of our did the better, over-the-road of trends well fleet to the in labor So over-the-road the part see in of companies that have market we've can which the Smaller what's in the American North had skewed we've in their larger actually lag. their was happening more this transaction the volume pandemic. actually from a particularly more smaller business. the -- through down their offices the right that the and did segment, perspective. pretty largely which have are local kind and continue shut business, advantage to -- lagged has part kind the travel but of shift larger recovered, sizes they're mix they where you volume then

have there still some is within being that recovery office account So said, captive the base we coming relating reopenings. that to

have And still though volumes there, remaining our even some opportunities are back we we levels. so to think do pre-COVID

Operator

time of for over We for I really now floor Steve comments. Q&A spent will today. turn a lot closing to Elder back the .

Steve Elder

fourth speak and quarter a you Thank you, operator. when to release again time, extra appreciate Thank we earnings. you, we'll us and with everyone, our shortly few your hanging for we minutes,

Operator

today's this concludes for gentlemen, and participation. Ladies you event. your Thank

now You disconnect. may

WEX (WEX) 28 Oct 212021 Q3 Earnings call transcript