Earnings call transcript Q4 2022

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Operator

Good morning. My name is David, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the WEX Q4 2022 Earnings Call. Todays conference is being recrded. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After [Operator you. Instructions] Thank

Investor Vice may Senior Elder, Relations, President, Steve Global you conference. begin your

Steve Elder

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

to it’s reconciliation adjusted of free adjusted cash cash our non-GAAP related press a specifically, see release, shareholders, and income adjusted adjusted as we operating margins of income, and on our adjusted to net earnings during income refer reconciliation Exhibit to GAAP most attributable reconciliation shareholders to adjusted shareholders, explanation explanation income to net cash ANI, a free and GAAP or Investor for income to an X operating income be an As our net reminder, and and deck discussing and flow. Please call. metrics, attributable of flow Relations we will attributable net which of and to website adjusted operating available income flow operating on GAAP recent

included earnings. certain earnings guidance and GAAP a uncertainty efforts are and cannot amount to unreasonable on guidance without The indeterminate a reconciled due guidance revenue the that basis in provides company of be non-GAAP on GAAP The basis. non-GAAP reported elements the

non-GAAP and for detail We more have about the deck measure. Company’s slide recent release most earnings

subsequent risk XXXX. filings. statements our result those annual to statements results most our we the I a Actual factors as forward-looking release recent Reform remind under and may of of Form Act you press forward-looking including report discussed various that would Private in materially identified differ those Securities in SEC on also from Litigation the and discuss XX-K will like factors,

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

place forward-looking statements, only on not all as should of speak today. of undue You which these reliance

to With that, Melissa. turn call the over I'll

Melissa Smith

of morning, joining WEX Thank in another appreciate impressive And income per us WEX for strong numbers. quarter. let revenue XXXX We me with beating the for adjusted increasing everyone. billion. XXth Revenue XX% overview to start of straight today. position you a finished the $X.X year for revenue revenue net a record good you, quarter, very But XXXX over our increased full and guidance quick share a Steve. and with

by up driven XX% $XXX total income is XXXX. per Full share of adjusted was volume which This billion, year process net XX%. to compared year grew full

diverse revenue our earnings success our Our and is flow through reliable enabled market reoccurring model, cash cycles engine model. our through

more in Over previously of for WEX’s comes year As XX% exceeding this shared segments, first health time. XX% the than our in revenue nature. of $X.X revenue in from is now reoccurring our revenue

fast earnings and a and provides revenue profitable growing predictable stream. This

but WEX, warrant. while valuations its from to capital returning interest as remains opportunistically natural to for business a revenue as hedge positioned strengthens market of growth, WEX for further assets, health well stability and invest shareholders, custodian conditions Our the acting expense.

as investing Our term combination capital returning of generation shareholders, future of growth, enviable to long scale a both for in position the and business. puts also us cash the while

diving on give later, our provide quick before more results Now recap into Jagtar detail I'd for quarterly this a to XXXX. financial priorities our which morning, like released will of

growth of primarily XX%. across fees, from and assets by I'm benefit year-over-year prices. of increased volume driven This growth Normalization pleased revenue the business. share revenue a to $XXX that the was the in late custodial of million is quarter higher increase fuel

the the in excludes XX% of year foreign which fuel This compared basis, XX% the to rates, quarters term prices continues grew in fluctuations prior of exchange period. the spring to our XX%. On and an of targets quarter where revenue impact organic exceeded growth long we've

the in of Strong revenue, an year. superior compared a increase with model our quarter income same business $X.XX, paired net diluted model funding adjusted of of the and to scalability quarterly share XX% per resulted last

quarter our of Total to in volume billion, our organization the the by grew segments driven of the in across and strong each model. process year-over-year $XX performance fourth reflecting XX% power

drive turn We've helped Now several business recap of highlights the in outstanding wins year a exciting had throughout to to product results. and our customer I'd XXXX. new our that like launches

new large the added small speaks strength year wins, our to majority of engine the XXXX, addition marketing enterprise customers we've of level and and sales businesses. year our This XXX,XXX In in were more out. than in which

net positive growth day we We revenue at five XX% payment last our vehicles M&A. a from to We existing new from XX% our million XX% about for volume March. progress close the increase posting an XX% Investor year X% inside customers, customers, travel health and products, in very plan, new posted X.X adding corporate from we SaaS the new X% accounts the XXXX, XX%. purchase grow X% In feel year from outlined impressive and total

members and year, in well-structured on significant for achieve performance When year I us characterized free a grateful setting earnings the a I was us and spectacular by it adjusted $XXX geopolitical generated proud XXXX to results. helped such team flow, million XXXX. economic am who WEX incredibly and company. strong remain engine, Overall, to of financial Thanks back up look cash n our diverse events. our and our resilient

I'll we our morning head strategy outlining conclude this as XXXX. by into my remarks

our innovation about maintaining focus engine platform of to our driving out spring, deepening vertical talked scalability leading of As further customer strategy our our last on specialized continues that day share and wallet, by in through investor sales our strong we positions our market the hosts building services. focused

through and return. the growth The manage the We're a cash and to us to WEX scale thoughtfully allocating situated uniquely dynamic environment between on generation in balance by business a economic doing shareholder business this capitalize of with our across reinvestment momentum. capital

significant with addressable tailwinds characterized opportunities markets is provide growth. that business by structural continued total large for Our

this to the and few translate highlight for a in enterprise. the me segments operate we Let priorities

look let's our Travel solution Corporate at Payments segments. and First,

unique We’re a market customer be leading space technology owned as funding quickly, wholly to couple and to issuing in margins the two leads in The the us with we segments. responding these gives and global to needs, the of scale capability. more strong agile combination ability

and In globe. We're volumes travel pleased our around the about excited clear we the in to Travel normalize are the as leader. of the rebound portfolio, portion travel growth are market with continue

increase and XXXX. yielding us marketing, in results sales XXXX travel, of and will we investment positive part give in As momentum through

costs, are provide health and benefits which in solutions. Next attract benefits create a resilient secular Employers to rising retain healthcare and for simultaneously manage employees, to tailwind. tools and looking

payments their or security FSA, Our or a utilizing advantage like also market deductible benefit with a plan, leading PPO taking our plan, an to platform, products paired which choosing COBRA. offers simplified experience traditional experience, account, an products Medicare high Advantage utilizing have integrated whether benefits, they're employees allow of employers an HSA lifestyle

of growth. health experience another account to our large an we'll and look from to and As distribution industry in segment, year we diverse network, strong employee benefit benefits to XXXX the expect continue deliver

penetrate Our ability direct wholesale the distribute market. broadly, both to to and employer partners ability to enhances our

driver growth. of from an increasingly becoming revenue important assets custodial our Additionally, is

became ago, to is largest custodian the HSA Devenir, fewer update. two WEX and years mid-year than now an sixth custodian according

Growing as global share progress good proven penetration need with a fleet of also our control our solution and simplifying our there mix capturing opportunities transition And solutions, with with represents a customers to Greenfield making to the with environment market the opportunity. organizations Finally, addition increased significant fleet are fleet engine. vehicles. sales business, fleet costs. leading We're electric a to ongoing our result, further

of will fleet becoming apparent timing the transition decade. While uncertain, world more believe next is the mixed it we compete than we in the that increasingly is the

strides allowing in EV, through The revenue EV transition products new TAM, to recurring great made to in revenue, Launching introduces and that billion streams. $X.X company to continues valued we the grow will for We've believe XXXX. be revenue billion based in subscription at $X a for designed mix management at offering be for to all industry public reimbursement, fleet mobility building and charging to our both charging Europe, home in locations U.S. our into at with the deeper products. locations, in leading energy and payment integrated of functionality the allow

growth. Looking multiple drive levers across And this the in macroeconomic to environment scale. importantly, we enterprise, have

even an add data growth cross-selling, efficiencies prominent allows centers we'll electric of of wallet value of through a our From our We're use and which share deepening focused the our contact solutions adding also commerce company. integrate across fleet business mixed compelling platform believe increased by in standpoint, continue the for role the global take for our to speed new and streamline through platforms, vehicles, will in enable on on our analytics enhanced and further XXXX. and more enhance and offerings

customers some learnings early team nearly XXXX to success customers additional the by adding apply the throughout have working sales XXX these in other each to year. of second the We We're half customers in up segment. signing services with for

scale to by in progress XXXX. continue we $XXX capturing a standpoint, efficiencies of end From good the million make operating in

up EPS to Day. revenue outlined to long-term to as my XX% Investor our we of growth comments, wrap our adjusted XX% last CAGR net deliver financial confident of in ability our income we're our targets, As and including I XX% XX%, on at

the from as and Regardless WEX of environment, well flexibility as reoccurring our positioned benefit diversity model. to our of the revenue business economic is

to environment downturn businesses. We to staying close and customers a continue impact understand the to our monitor on are potential their of macroeconomic the

they to challenges as nimbly will respond capture We opportunities our materialize. for fan or

superior cash business with I funding interest dynamic of leverage, model environment, confident may take path macro in as in our to future capital rising remain current environment. WEX the struggle focused impact While invest and on strong a for or managing of to through companies availability low in will flow the advantage the its future. forward economic be we some the limited the of WEX rates continue

you financial pleased that, CFO, walk With I'm performance WEX' to through Jagtar? Narula, turn our Jagtar quarter. this to things to over

Jagtar Narula

everyone. Thank good and Melissa, morning, you,

As strategic to we results on you strong while just progress our financial heard, objectives. continuing again delivered make

As the strength our this quarters, competitiveness global of the the prior and of commerce offerings showed our of quarter business with power model. our platform,

results. start let's quarter with Now the

impacts exceeded assets, the guidance rate our fees. fourth $XX of price midpoint of combination and of normalization quarter, to earnings a of custodial primarily fuel total the revenue due the by For million,

Total revenue for of increase at the in XX.X% than more came recurring over nature. $XXX.X quarter a with QX in XXXX XX% revenue million,

payment reminder, is a up as XX.X%, revenue In and from the for factoring and items. business, smaller was transaction which margin company total, fees define other we revenue income year. account As adjusted last servicing operating revenue, recurring processing our XX.X% processing from

was income GAAP per $XXX.X million on shareholders a million income we basis, XX% perspective, a over QX. a adjusted earnings $XX.X had net to represents of This an increase net $X.XX in share. or the year. From diluted Non-GAAP attributable prior

quarter powered on-boarded let's results, increase of increase for the XX% a to million, new revenue, prior contribution in move volume and QX. growth, starting segment portfolio fleet. the ExxonMobil higher the by with revenue fuel an fee including was Now $XXX.X prices finance over the of end year, Fleet at

Payment fleets were The while transactions over-the-road to led an we saw environment growth trucking recessionary U.S. year-over-year. X% local up the processing a in by freight was business. fleets slowdown in due expected

due Overall, late in number in As up prices rate fee pandemic the steel of volume, mobilize rates. XX% was increases net you fee fee our late revenue finance instances. to continued metrics, see the and pre to to

primarily new the revolving these of of All impact ExxonMobil balance is portfolio. portfolio, the which include

European The primary was approximately impact approximately a prices price of $X.XX benefit estimate XXXX of XXXX. $X higher QX the rate interchange to prior in rate. points fleet X is year-over-year net domestic X.XX%, decline million, increase We fuel the the the is the fuel fuel by year year. QX the $XX The fuel $X.XX for including for segment revenue which last prices versus net in The spreads. price from million down in in higher fleet was basis compared reason

about XXXX, XX points quarter next. adjusted Fleet which basis at segment was basis and were in credit down I losses, of elevated approximately operating losses will X spend the XX.X%, our expectations primarily from speak including to losses. fraud above credit of XX.X% points for due fraud income volume, The margin

Let me losses. first discuss credit

month each were they improved levels. expected While quarter, rates above the loss through

but experience delinquencies, in over-the-road continued customers. we trucking portfolio have in As smaller overall predominantly I've healthy have stated previous to calls, increased our a we

more As pronounced business has downturn, this our freight smaller a a has recessionary experienced I the with mentioned had earlier, and impact customers.

actively focus underwriting managing We continue payment adjusting credit to the where our to appropriate portfolio, credit standards, including on terms. tight and reducing reducing lines models

to losses. fraud Next on

we actions and rates fraud application sequentially. taken slowed have the activity improved our by rates than of both transactional more seen have fraud XX%. rate to We The have date fraudulent

improving activity. monitoring and We product scheming help us combat enhancements launching tools to are further

conversations with responsibility. of fraud also partners are address some shift to cases, in the financial merchant and, We sources ongoing the our in

Turning year. segment an now to the increase issued quarter to revenue which sequentially, is prior WEX Travel by based a and segment favorable The in $XXX.X well X as year Corporate million. this XX% increased Purchase year-end the net true-up on full rate of billion, mix customer Solutions. was up for versus and points was as interchange XX% to for due volume incentives predominantly Total $XX.X basis performance. product

Asia recovery down volume Europe. its versus to approximately demand and that for as compared We Revenues up XXXX. continued last to year. demand open reflects is grew strength room in XX% represented consumer the pent-up travel-related XX% and XX% QX the segment U.S. travel-related strong, more total believe customer the begins spend was Breaking appears further, This up borders. customers from of and there travel in

last grew QX revenue Corporate continued volume margin up segment an in There led of payments XX.X% been significant year. improvement customer channel. volume partner last during margins strength delivered has XX% in year up This and growth was XX.X%, the operating The by accelerated. income as the XX%. year versus these adjusted from in was

a designed to cost allowing high be fixed, for base of We revenue the new have margins. relatively to drop-through

health Finally, let's segment. look take at a the

earnings growth the strong Approximately custodial continue due $XXX.X the assets the to growth from the represents base year. with account remainder We increase XX% a million. and volume. is QX to This from the drive is of and increases in of revenue purchase in half over prior

accounts XX% segment a was amount prior in the revenue. to success growth to contributed volume account Advantage year. with plans, purchase XXXX the XX% in payment SaaS health large in had versus leading QX through a Health processing Medicare increased volume increase of growth. We XX%, sold which significant

last from QX assets, last Custodial realized yield held $XX.X We $X.X at billion blended banks remainder during $X.X in $X.X the on in income interest approximately billion funds Bank. represents the revenue million year. in billion total, which QX X.X% deposits capital versus of that of held were use million these in approximately increase $X.X the an average representing WEX QX This were total third-party invested on year. a with Of year, over was generated for XX%. at this working $X.X versus billion

The income operating compared revenue adjusted of to margins. XX.X% flow-through from segment was is high HSA health XXXX. on the the the The increase XX.X% driver in deposits margin invested in the primary

will position. I and balance a healthy now, position financial gears Shifting with the and liquidity $XXX update in an on quarter our sheet in ended cash. million remain the provide We

at the borrowing of corporate agreement million and $XXX revolver cash of company's credit $XXX have as available We on capacity defined under million quarter the end.

we expect, fuel in quarter receivable you $XXX declined sizable seasonally. decrease as As saw last versus million cost a and our volumes travel moderated accounts

X.X our credit term as loans convertible line on total balance in bottom the end ratio stood outstanding of revolving is long-term of times The was end agreement at and defined strong $X.X and end billion. primarily to the XXXX notes X.X down which the leverage due our of times the of quarter, to At earnings. the target of times, the from credit, X.X

during to flow cash adjusted result, would than compared flow to XXXX. adjusted I XXXX. was likely $XXX a as end rapid fuel million our Using prices about This excess Next, cash. the that normally a the of $XXX balances WEX turn of to will cash to year generates Note cash the QX, in is significant our free deposit of reverse amount our for reported expect. million we would at the more definition, flow. free million end to and like decline $XXX due

build both into mentioned committed continuing Melissa goal driving shares X.X remaining generation an authorization. million at $XXX in to additional business as by so an As resiliency cost $XXX opportunistically to and of million earlier, and last have cash our own in well investing total further repurchasing year we growing nearly million in of strong are business We our the still as purchased deploying We our shares XXXX. and it XXX,XXX with shares overall a model. far

guidance to XXXX the Starting earnings $XXX of expect quarter, revenue to the and first move million in let's year. with first range million. the quarter full report for the to $XXX Finally, we and revenue

We expect $X.XX adjusted net and per income EPS to be between diluted $X.XX share.

to the year, revenue $X.XX $X.XX of report billion. billion full range the For we expect to in

$XX.XX and per EPS We to diluted share. income between be expect net $XX.XX adjusted

our spend me couple larger Let in a going the minutes of through assumptions guidance.

assumptions. high-level a macro of First, couple

suggest consensus the our are in around in our We account U.S. a growth into environment slow guidance the expectations. Market have and year, X.X% of surveys we slowing for a which growth basing GDP taken economy U.S. growth on

XX target. increases Fed adding XX another are to current continued basis the We points interest early this year expecting rate rate to funds

a increase point modest for to headwind year. $XX presents basis adjusted XXX income million As this rule of thumb, rates in a net a interest

is fleet our Excluding revenue the slow because towards is expected X% expected the to of growth the be X% to prices, lower which of impact growth U.S. end fuel growth of economic segment the target, in long-term

are change $X.XX of We reduce year, price year. revenue for which fuel compares approximately $X.XX $XX is by to expected average million. an This last to the assuming

we and the despite economy. and continue The to customers grow a mix. and expected for and steady customer turn see segment fairly XX%. slowing Similar to payment strength of due is to demand to continued between continue remain potentially expect travel pent-up customers Corporate to rate demand to travel net in interchange indications Payments to Travel corporate We X% the slightly XXXX, for significant down for

growth to expected is have XX% segment solutions benefit employee year and another with XX%. health to the of Finally, strong

balances significant well and as from a rates. successful season completed invested custodial higher in a the expect as enrollment interest benefits increase have We open

track operating $XXX on the remove on are outlined million run quarter. we rate a basis XXXX of by We as to costs end of last

to year up the savings as we these get the measures reduced and of operating adjusted We cost expect losses. through credit income trend margins benefit

leads the in significant drop X% this growth fuel in X% the range to of to expected. of All to due EPS prices

Excluding expect in XX%. EPS be to out the and fuel adjusted range growth would XX% degradation price of FX, we to

remarks, we I emphasize QX how our to with are like again my I results. complete pleased prepared As would

long-term market, Finally, in and company. win products ability to our customers with bring customers, confidence the to we expand have targets new great to of new leading existing the growth

for please With questions. the operator, that, open line

Operator

from Bhatia Bank with first America. take [Operator Instructions] We'll Mihir our of question

is line Your open.

Mihir Bhatia

Good you do healthcare it the my morning. And question. thank want to just for segment. taking I with stocked he

is You you had like fourth nice Can of and step you that? And into And current of growth drivers up not that that and the expect showing the comes continue quarter. see right? talk a saxophones So enrollment revenue about us to QX, should that are season the in sounds enrollment the in QX, some those it in XXXX. up benefit numbers, just right? just we remind

wanted And then just acquisition. also the Express just relatedly, ask to about Benefits I

this of you where first enrollment going benefits. is the see the season were to think I some

line that in on how expect expectations, Was better And can Just update went? with what that, here? an it we from worse? or

Melissa Smith

there in lot care. unpack health on to A

added so, And going that accounts account The -- out parse pieces. growth saw in if that XXXX. we I'm to in take I million SaaS X.X we

had really growth So strong a year.

we're you're the in to season, part guidance quarter had we addition of we for went our when next what that, more up than picking in is seeing the we which fourth saw In anticipated, reflected strength what year. into enrollment and

of of enrollment. who the through started numbers, already some customers season some are that So enrollment our

quarter into drive really So in that through that is seeing fourth what's the to XXXX. going you're growth

It feel visibility we for good. So numbers lot of into the really us a gives XXXX.

asset which the top supplement growth, custodian about of with have. that, to stream been able on that X/X is the of revenue account we then we've investments revenue And the with

revenue And we so, the things. we've with been of able two to opportunities those the have really maximize that combination

You administration components. also benefit asked about the

ability cross-selling sell both fleet some have. We've customer a it sell bit we've and the and to We we also on about stand-alone -- a continuing the with our within are offerings basis that We little we sell success I that had had it of into into to marketplace. integrated the existing sell into success our bases that talked business.

kind say really board, So momentum. of across strong I'd the

marketplace. of in is it's business. happen things benefit the is what also that more us the selling that within you're But bunch seeing a segment, One selling distinguishes the we marketplace We're of which little unique and partner the competitively a different through health directly. do channels, the bit to we're what across in

we segment, their really that think some meet into can they well works broker And that because needs through the and marketplace. go but of to offering those combined And also where model to things great the really our offer of directly our the technology channel numbers. use really the supplement into customer revenue bringing marketplace we that all can partners

Operator

Credit Next, we'll with to go Cremo Nik Suisse.

line open. is Your

Nik Cremo

Good question. you taking for morning. my Thank

First, update. touch it I was million I previously, the million, year I embedded run for just thought to could the rate. at, outlook? Thanks in the cost on exit know $XX that wanted $XX was program. said savings you like you XXXX curious that the revenue what's just

Jagtar Narula

Jagtar. question. we is are track cost this Yes, the with reduction Nik, program. on for Thanks our

year operating talked to at X/X reminder, basis. As the of expect we're as million about And exit about of I've a exiting to rate a run about, that previously half run rate reduction we expense XXXX. expecting $XXX on

that that forward So continuing guidance. into we're our embedded we've -- project our that's in to guidance

Melissa Smith

around little this expose we're to what working And our opportunity customers have focused think to the create twofer. streamlining great a are within to operationally just that that to add the we on that, items also a company, we're the really we projects bit doing but we type of

at that structure. lower actually We experience to the have cost better to even an but customer a do ability create

Nik Cremo

color strong my throughout upon cadence be in quarter-to-date just helpful? and what fuel looks that Could it would expectations Any Because growth organic then based have the for of for you the in revenue guys on you're the QX year? just provide trends like Thank the guidance. for seeing you. also continued you the follow-up. should growth And segment,

Jagtar Narula

Sure. Nik. Yes,

seeing good segment. the in are segment, fleet strong we the growth fuel So

we slowing economy through prepared go my in projecting our the in noted we I guidance As remarks, of as are some the year.

early forecasting we're in a higher the half go through we of the really, as year. of So some part and year back the the moderation growth

talked prepared segment, the our long-term the remarks, really for of we're be of fuel in year the in back I the year. as mean, we about the my to range and first of And get but kind end expecting will slow I of higher then as part the lower part

Melissa Smith

in In a year, back the talked growth guidance which the of slow environment, we we part together the we use slowing about assumptions. environment when the expecting put fact we're macro a our is

the In we're business. of portfolio, -- marketplace what terms the across we're the our the of strength seeing continued fleet in with exception today, seeing over-the-road

So we sales strong to that have segment. down same-store really sales are but in X% momentum continue

fleet. talked with is a the a as smaller segment, all marketplace. business we've that we piece through with times, the particularly the do over-the-road about, fleets going So within across what tougher of It is

that same-store have rest you our at we growth the North fourth of in had what quarter If America X%. of portfolio, look sales in in specifically the

across you've rest to And pipelines that growth strong of got that, time on sales having fleet continues within have and then deliver to really the a of dichotomy is sliver the harder So particular portfolio. grow continue nicely. we to segment one but portfolio top anticipate of this strong the

Operator

El-Assal Barclays. Next, we'll to go Ramsey with

open. Your line is now

Ramsey El-Assal

little fruit what a Good is of end by 'XX can where so order to you types What are where the you reduction, economize said? do going think, now flesh question. you you operating thank there? you bit and $XXX in on taking of million lower-hanging much the get get morning see kind of in Just I for cost curious, out those my Could the to organization is of of sort -- that you savings?

Jagtar Narula

Yes.

start let it me will needed. if Melissa and with So in chime

in the primarily areas. So coming cost is several reduction

So we've number looked the structure. optimize first, of and and layers how our at at looked management we better organizational structure we've the

reflects that. we So release, some coming related restructuring our That seen doing that there. you have charges And some of out to that. what may we're see in of

The operating second is of it efficiencies. piece

have technology centers able more operating infrastructure, savings. those development, expect be in areas enhancements, And to optimizing expect we making our processing process cost to centers, the to to reduce of We We're lead cetera. a doing call that technology efficiency do development et we large that centers. we better to some where centers, those in cost where will economize we're

better is last We've procurement And purchasing, then right? the in invested function. our area,

to existing get out spend expect better of We our vendors.

are where those expecting happen four into of items so, really the And 'XX. we're this bulk what will year

Melissa Smith

Yes. add is we thing the while ago. I those And he's the talked announced changes about, would a headcount

So proactively. we really did this get ahead and to this of wanted

a I'd say the then And the using second part we're is lot more of changes that technology. modern are making

what up call would it anything from machine So to we learning robotics, automation, AI. super to

intuitive those deploy And infrastructure, we into synergies. as allowing so, tools creating our create more a customer it's experience. that's And again, us to

on, which about. technology of to amount combination is we're is the that savings data, massive with data the that just that a combined sitting of the talking leading So we're

Ramsey El-Assal

the you're That's decrease a macro at strategies sort of for in you're comment deteriorating in follow-up of your 'XX in if on more losses. you not situation, I'm additional exit credit aggressively some for that terms implies your could wondering the lying XXXX. control though One even very that seeing to Does sense? quick you're time, trying that's or make underwriting whether for me. seems what just maybe square XQ that today. to to But guidance like rate. guiding relative was It looks same it expectations you're helpful. a I loss credit like

Jagtar Narula

Yes, me address those. Ramsey, let

an adjudication customers, got action. One, and from of we're of there current doing from just book projecting we've in takes We've taking guidance. So new the our second puts in what So and from some with and with -- standpoint, with starting our right? we're what been what current our book we're our customers. doing economic

in the talk me QX. heard about saw losses elevated You we credit

it's a which said, loan I've our customers. As It's of is balances. small segment our subset our total of smaller predominantly over-the-road segment, a

customers it's like fleets that for are that largely think two to the truck book couple really smaller the one trucking fleets, that of years. that, I last is on the within And new were

small of So segment portfolio. it's the a

reducing focused So often tightening, more credit terms, on losses. we've those getting adjudication customers of payment control been paid in new to coming better credit and

see is economic that of of on the side of to over the half over the of year. expect We year. the a environment in the we see benefits back slowing But the that that -- other do course

impact so, losses. And to in some we've factored credit

that's puts you in So and our guide. see where the takes

Operator

Next, to Jefferies. with we'll Williams go Trevor

open. Your line is now

Trevor Williams

in segment. to just with there if on the Great. Thanks. prices out in thinking provision some Obviously, of margins Thanks. segment the we fleet impact that fuel, from and provision, fuel ask you're some pieces would the with and in Just but the margins help lower just takes thinking great. then Good there about wanted puts morning. Yes, the of any savings? back cost I there's how decremental the be XXXX, moving but offset

Jagtar Narula

primary we've Yes. -- two looking I with fleet the at that things related there's margins. been to would say

is that lower next of on interest we also prices fuel one the that higher expect. expect So that will top we be year. Then operating

that rise, interest As impacts margins. fuel rates

well. mentioned, credit in those and fraud of expect the segment fuel and bring down the losses both higher we as to So margins as you

Trevor Williams

custodial parse think growth the you Thanks. can XXXX. for XX% in to interest you embedded on Got segment Any number the the the for then health, Okay. within -- what assets? income for you it. said And way I XX% for out have that

Jagtar Narula

you in we're of some growth year. investing. factor kind this see from in in that at $X.X with the we're look be nonbank of to growth, XX% about we rates combined assets custodial custodial business. higher When that next year growth billion the of to coming that And the it, expecting we're half SaaS assets investing you year, about XX% we growth with roughly interest Yes, account normal if ended into those the that,

Operator

Next, we'll Blair. go William with to Bob Napoli

Your now line is open.

Bob Napoli

Thank Nice Good XXXX, morning. -- SMBs. you. mainly XXX,XXX results. on said added you you Question customers about in

And outside the related Just truckers. broadly? slowing are like any Doesn't you thoughts in in around others this environment, seeing and seeing are SMB trucking. like But the sound what is the seen deceleration to Flume, of SMB. some smaller you've some in, that SMB there's and of

Melissa Smith

Bob, good morning.

the in our had growth segment we XXX,XXX deceleration there we've talked and across the our each business that we've really portfolio. of total, a net We the and strong And to new continue portfolio. customer added. customers X% certainly small added be and about within have marketplace not to we additions strength growth In seen within

towards So business businesses, really across Freda, new segments. our like each geared added we of smaller

but And equally, a both our with That segment, to the actually, of large larger and tends look segment. smaller businesses. if large payments customers concentration pretty you accounts. equally travel corporate segments small exception across mid-market of and fleet and towards adding at our geared the be also we're But health both our

Bob Napoli

business has lot I your nothing a you grown years mean Great. got care first into it. health over the from when

public for pretty health that pretty valuation. finding attention and to there care has in to and to spinning around spin or don't it markets the a for getting comp part, know, monetization? maybe a any investors. health piece around segment care off any have that rather a is in other do the with certainly Does just ways you care business way highlighted? healthy just more off I health or good that value You But thoughts a shareholders thoughts any One Are that get that business? thoughts

Melissa Smith

Yes.

way the -- business, we're platform across entertainment the we've that and to we you what platform Health we are different specialized that that across creating segments developed care If in think one the do that different services industries. is of business is -- very many integrated about sits look them. the

business of underlying of part about. the the to that talking the increasingly rest we're levers connection point the that So service technology the as have synergies is the we and

and the the and the important So actually part company. it's growth of the think the it business we rest portfolio of like how an balances of we

Operator

Koning Baird. we'll Next Dave with

line Your now open. is

David Koning

just maybe there would in X% a to XX%, I to year often ask thought what's guiding business, we And of as disconnect? yield as job. fast corporate And have growing travel being just recovery We growth. quite XX% only XX%, you're some XX%. being Great the expect? part maybe sometimes it being the we maybe would something to of about kind But recovery. think then of Asia would with Is think corporate not in still growth. of or -- the a Maybe and some of 'XX in travel And better bit. little

Jagtar Narula

Dave, this Jagtar. is

of couple there's travel a on corporate say I So impacts and would the business. payments

good pent-up we in continue travel. demand to So do expect

prepared there. slowness But in that portfolio well business. go economic to we said continue things like factoring my the I are So remarks, in throughout

related some We XXXX in true-ups also had that repeat not currently forecast XXXX. to MasterCard we're incentives to in fully

those X% we XX% to XXXX. led that's for combine to when So our two growth items,

David Koning

travel would right? the open -- probably was up or in the yield that in -- corporate, that And would in yield show that you. Got

Jagtar Narula

corporate, both. bit bit more It's up in it but a a little shows to skewed little

David Koning

just QX kind as by Okay. you growth, full maybe but follow-up. Segment growth, gave of expecting? year what then you're And a growth segment,

Jagtar Narula

roughly would XX% segment, I'm give health healthy and fleet XX%. Corporate benefits and well. expect ex-PPG, healthy growth I'd And as to Solutions, expecting QX -- second Travel I growth. I'd me growth the expect think by a double-digit also Travel, expect, employee here, I double-digit

Operator

Securities. go we'll Next, Andrew to Truist Jeffrey with

line is Your open.

Andrew Jeffrey

be that I'm a function elaborate thanks is combination? just in my and employers? Melissa, more secular business above revenue just Are in of custodial Or looked a a SaaS a to surprise account is how in -- particular, but seeing it surprise, it to want sort market. maybe taking a you that say maybe a Or wondering is don't nice might of for health little growth sort a feels morning care, of we care? bit bit a you quarter. trend. the -- Good nice I Can little seeing question. tailwind of of of Congratulations. health like self-directed Very a is function signing adopting employees bit? much it more today? a

Melissa Smith

secular tailwind. do largely from the a We has the accounts. But growth that in new Yes. actually XXXX, think came market

so And XXXX, really the as the little what reflecting we of brought is marketplace. guide. forward than a better just So which year, end anticipated we're sales, did the at going bit had of into strong we in into actually part we I said, the

the got brokers when our through that have channels of channel, direct we've and we partner which we each So then we channel. go into our go the marketplace,

take across account really strong really led the you XXXX, that each business we had in a to If those, growth. in the and of look strengths

Andrew Jeffrey

in about get in significant a unemployment a were we change of And think growth way, inform business? If up indeed sort that to environment. is the expectations in if there to meaningful that employment does your anything go

Melissa Smith

If you we have if gives not the what we buffer something actually have account a pretty so, again, good type even counterbalance see what did in buffer in data. historically us the a that from a you to we're fact you products It's a our is which and of seen have good have seeing that might in we marketplace. provide if think happen. we one happen another, bit migration COBRA But does a also

Operator

Suchoski And Research. Autonomous next, we'll Ken to go with

open. is Your line

Ken Suchoski

talk you low-hanging about on provide sales detail more for force the the positioning that? little that how where Good And morning fruit? two taking everyone. you in and Thanks see cross-selling Melissa, of you. you're And a you just prominent you more XXXX. cross-sell my can percentage new the question. a for products how Thank points growth role mentioned taking from Can works?

Melissa Smith

Yes, sure.

our of So we've We had comes X% base. existing XX% got 'XX. long-term that in growth to our from customer model in X%

really we just a growing. portfolio. actions said more make And right it both And come relationships piece has our across inherent number and business are A been then the based market really will and in on on had Right different really in that, that, we the that luckily and of early. think, I'd cross-sell call, as much 'XX. So have doing I a can growth, now, we're infrastructure From relationships the seamless. that up it's strong last pricing perspective, cross-selling. that from top markets of strong say across so the focus, we setting

to products. to different segment one from relationships those bringing offer another we're So

now. mid under We're so some product in that infrastructure customers the customers on our so formalizing effort. success within come can place time. creating we happen right had And by XXX over We in fluidly set had new right larger primarily And we've that that from far. are focused just and the more

about the of And can that also, the products businesses, have so aspects smaller when think we we're we the more we focused offers around that much digitally. digital organically offer

larger inherent customers then marketplace thinking segmenting more happen those handoff the the of And will market from an digitally. to be far and another. we're will And the sales one so, person end

see out cross-selling pace continue And this again, into now which time. handoff we much of expect build more build manually. this this happen happening more do us going we'd that infrastructure are have increase and we're to that that to as to And over fluidly

Operator

Stanley. with Morgan Next, we'll Faucette James to go

now Your line open. is

James Faucette

some in et most much. And saw on especially weakness your weakness payments. so of a I with recent you, dig called to Thank of I comp, cetera. some customers, bit little out earnings. out, you them with kind you work want smallest the in Divi's on know more Build

any remind you your other of? we they us So aware issues percentage of mix up? that can what partners make similar if seeing be are And should

Melissa Smith

a the And that the you customer. look -- is our Yes, you pretty we're only they'd over-the-road like a has The segments, businesses. that at if small area of than fleet seeing go be if small of percentage each less weakness we mix through heavy X%, have. in concentration

The the micro strong. one rest board segment business actually of been the across So within actually quite segment. that has

in little deviation seeing that are that there that then In in business businesses portfolio. segment -- in small overall anywhere, into mixed into health, corporate sits any on fleet trend but are segment. small payments, that the there's not And customer. very Again, based small size over-the-road we're

Jagtar Narula

that just end of smaller customers the and over-the-road, would to I those over-the-road are remind of kind over-the-road James, And add it's that -- the newer customer, at so want smaller that you of that at customers. I of in kind end

business. subsegment a our a So of of it's micro segment

been over-the-road, within with actually performing and Our It's us especially overall of subsegment have while subsegment. ones stable. are customers kind to a for of kind that a well

Operator

with we'll Research. to Wolfe Darrin Peller go Next,

open. now is line Your

Darrin Peller

assets, look it's of some what we acquisitions. Thanks. great obviously done together at deals, whether an other some When built and -- you've the put you've

looking at, have when I'm really the about corporate inorganically what board, a both. you corporate what and the more -- being you but little bit across travel, big but what Probably Melissa, about So strategically you in now, love in you guys? see is for hear as step next think to specifically

follow-up important now Asia. the know lot of and I side. travel the more the a us reopening just if -- you China brought the just a geographic mix Maybe travel remind on -- And Obviously, more then quick eNett a it's segment. term? mix lot

Melissa Smith

Yes.

Let M&A the question. I'll back that one me answer go to first, and

portfolio XX% about XX% of only the is was right pre-pandemic. now. Asia It

there's ability rebound see continue quarter-to-quarter. up some from did sequentially to a So bit to go still little there. It

of in QX did we So of benefit that bit a reopening. see little

the company. build scale And related framework look around increase important to focuses areas And expansion. at clearly We plays the long-term And growth for the versus something capability around to product geographic of then have it's M&A, that buy capability. had us. that's we've been that

the it have you really of those like in continued bit eNett, multiples so, be across a have we little the we'd elevated. but hit that active those but assets, three to be in through is marketplace And the all identifying continue categories, working to

both right in opportunistically us, And financially. and marketplace but assets for so we the and then share through our active continue buyback, deploy the capital be to we strategically for looking

Operator

And question our Fargo. Cantwell final comes Jeffrey with from Wells

line is open. Your

Jeff Cantwell

And of over you think there? China have forward? little that trying to there what what can out Flume? we company if going of Okay. giving the just there? next give will that launch. Curious you is Great. billion since you're curious a us of bit Thank a on you, time to type us so if an can is little latest revenue mind, over I'm forth, framework realizing much. I year you you any to about it wanted happening what be $X us speak, And through walk through don't is annual and a just update so kind we think Thank bit was a you. run ask how might on the contribution I chance revenue understanding

Melissa Smith

All of category our in X% right. put I the X% in we have framework. our growth Flume long-term to

make they idea products that -- to perspective. the be sure we're continuing a that we have marketplace that want So introduce to from new and revenue will into the we accretive

we I technology. It's I'm used the is said the that also it, and to product we that to marketplace. alpha, internally, this Part this we're with do And into and and alpha across that, launch wallet full then when Flume life a going I'm the going beta created marketplace. you're said, board a about about we before, ideas what company launch itself. moving of create debentures of the where through process the talking excited Flume, the the into and digital started cycle going you're beta but

to us services. chassis a that deliver products It's and allows

But So about just do about in but it's relative whole excited that, segment. still we're not what that we're to can size. excited it still of small potential business early the the and small

investments, it's, of one in when our the into that that. growth I making in -- aggregate, this, to be about think framework. going the X% product yielding marketplace piece we're where that X% think I that offerings we're we And is have to moving this just

Jagtar Narula

just time make up. we it's I think quick we note before one it wrap the I David, to So now. have right all wanted

mentioned small remarks. number deck We to a year in asset we'll $X.X on correct we and our KPI have is that the in prepared slide website. The correction HSA cash billion, our update prior that custodial

again our it progress and sharing our today, everyone up next and look that, joining quarter. us with on wrap we So for end, forward to we'll thank

Operator

conference today's concludes call. This

now may You disconnect.

WEX (WEX) 9 Feb 232022 Q4 Earnings call transcript