Earnings call transcript Q1 2023

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Operator

Hello and welcome to the WEX Q1 2023 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 will now turn the conference over to Steve Elder. ahead. go Please

Steve Elder

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

Corporate will mention I’d Solutions renamed Payments each changes Employee also Benefits be Fleet want be our we now to to to in Health initiatives. segment with Solutions that to There connection mobility. segments renamed and what the be the The are segment rebranding existing and segment. to now Solutions in renamed The now renaming Travel will benefits. no included are will Corporate is segment and

As adjusted cash net as income and and free a shareholders, margin metrics, our specifically during ANI, to to refer be adjusted will related which we income, adjusted reminder, operating attributable or adjusted and income non-GAAP call. flow net discussing we

a of X indeterminate in reported the basis revenue the Exhibit on measures. that The and due release earnings. guidance basis and explanation for company elements to uncertainty amount on an non-GAAP reconciliation see are please of guidance GAAP earnings provides of press the and these non-GAAP certain a included GAAP

risk XX, results of as release XX, including Annual of XXXX, those the Reform with in and subsequent Act factors, in end XX-K February Form filed statements SEC result XXXX, factors that may will discussed our those SEC December Actual forward-looking for the and year filing. press identified our on Litigation on Report the remind the various under Private you to like XXXX. from a Securities forward-looking differ materially also we would I statements of discuss

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

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

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

Melissa Smith

you We’ve of Thank morning, off XXXX. performing long you, Steve us continued track We in to good dynamic today. exceptional is our well great a financial start results macroeconomic record joining everyone. WEX the delivering across environments. and and appreciate

first of and by Revenue XX%. adjusted guidance our midpoint in net the for million per beat the the per of growth share quarter $X adjusted guidance. of revenue growth above An came of income XX% midpoint share earnings at our $X.XX,

metrics more. the grew represents these consecutive or quarter eighth XX% each quarter, This

was SPARK to the Last held event, how week, conference benefits help time annual and them we this our but which complexity unites on and showcase historically potential. Conference, held been benefits focused Payments across SPARK Corporate of reach our our specialized industries solutions has year. of across can for platform as a solutions business, a all joint full overcome their our the customer mobility, first leaders

This data, business unifying and ongoing payments of highlighted as discussed transformation digitization. we around product the our team

they challenges industry of we customers WEX which fleet the centered anticipate unique include and systems. by inefficient of today SPARK, those shows mixed at record features, across to payment when address challenges how removing businesses. and benefits, WEX’s Our resonate processes with caused simplify ability the in had we innovating employee address customers. challenges our see complexity and and many importance the experienced solutions are friction message tomorrow. personalizing to navigating on and the are their to can help attendance These they these of verticals

business. momentum seeing we’re positive the I by the am the excited response and across

benefiting solutions and meet to of a best to customers advanced help across investments business. customized employees its and example, platform markets, our from invest our the continue in demands data customer we’re them are suite allows providing their base. their critical that that platform flexibility of to our the our in sets needs choose We customers analytics, and of for unique

moving market for to our aggressively of our the which we’ve At enhanced the XX% currently scalability peak cloud completed. and increases cloud, innovation same customers. approximately have migration time, been of We

reach later We overall technologies expect to product our year, allowing to sets. shared goals across further cloud us this leverage

the the address to Before the jumping industry. quarter, quickly into performance banking disruption in for like recent I’d

very our to that were customers failures Neither noting party not our of to of were credit relationships. the hedging business. these had Signature partners minimal worth minimal Valley had deposit or of facility, it’s to and Silicon Bank They and exposure. First, a our we Bank banks counterparties impact WEX nor

for As move contractual remain limitations strong. recent continues to these bank early the when cash failures, have in and since deposit shown the to the stable. thanks industry be certificates HSA to banking custodial extremely vehicles the and This of that partthe market flows cope themselves also our funding deposit is evidenced with is deposits significant withdrawals

Now, turn let’s financial the to results.

primarily to our grew performance Turning organic XX% compared and quarter, prior year’s benefits on X% growth an organic again, basis, Once fluctuations segments. million XX%. beating $XXX which the the and excludes of Corporate prices year-over-year million. in in Payments year-over-year to our by the long-term the of $XX growth foreign to exchange to Revenue driven was increase impact XX% quarter of revenue This period. first rates. increased in XX%, of in target fuel our the both

with the to adjusted across a billion, in the our in revenue, strong the superior segments. of business by performance Total year. last driven compared $XX.X model, Corporate Benefits grew diluted our $X.XX, funding first of paired and share model resulted scalability Payments increase income quarter in by quarter of year-over-year XX% same process an net to quarterly strong in organization the XX%, volume

for XXX,XXX we quarter. resulting During roughly repurchased of stock a $XX in the quarter, benefit EPS million in WEX’s approximately small shares the

like I’d the quarter. business recap to Now, our in highlights

for administrator to one WEX funds of We than largest of made of reach. the the the order On season. multi-employer benefit XXX multi-employer signed This offer in a move arrangement their their to benefits has This long-time the very card we clients for enrollment programs clients positive the Midwest. large in benefits market front, a completed more administrators administrator health allowing open reimbursement plan. in our

in systems largest States. we in the part signed Payments, the Corporate of healthcare United one a of

As more you the may our quarter. force signed we’ve added see to in and recall, XX direct business positive to sales with starting deals first are this return in a than

globally. to regions continue benchmarked with Europe. and a from travel seeing also XXXX, gains in largest We versus against all from QX coming volume improvement are we benefit rebound the

with of the forma of acquisition half the and growth eNett a volumes with a of of pro country, to the transaction. recently mobility, popular versus we’ve the be showcasing half number leading was to value a renewal most Overall that products travel-related purchase of for the proposition. XXXX, array our the in transactions continues states signed in one value up to XX% approximately each

I’m proud strategic of strong believe quarter as we for our deliver positioned and on execution remained our well future priorities. this we the

single to a and a update managed start closely and electric single They’re all solutions mixed vehicle of app a card on me on simplified single to customers. are us listening with the our Let been We’ve asking a looking dataset, initiatives. their controlled for an needs for line, suite our on manage or through single credit evolving commercial view.

customers. plan our mixed vehicles strategy, expanding charged team the end, be stations tools Mobility environment. environment, Europe. currently when vehicle informed We’ll helps that consists has simplify fleets their on in goal and is on ensure energy for locations electric to by charge. EVs of fleet This of the controlled To the on can build in and a this where, of include determining DriverDash launch furthers the in how their managers of to hands which our charging conveniently ceiling our a offering giving our distributed to manage and feedback focusing rapidly learnings This app, transition, which their find innovating help the fleet and putting across EV process this tools mobile go drivers our U.S.-based

space, focused we charging. product on the simplification first our of phase en-route broadly in of and strategy drive in convenience EV more is rollout as our EV the

a live in United We in the solution that have is Europe States.

public stages acceptance were also which U.S., of signed the charging of in We various with XX largest implementation. networks all agreements of in the five

a is fuel EV of and large believe to have network partners our agreements Our the new fleets. acceptance we will with and these to universal network our network. be charging giving for relationships wax stations similar significant We create objective win-win government the a

piloting to have Our next electric this can at-home strategy with year. rollout is to managers no and phase product pipeline for products with be are charged of in There’s half quarter of a that will their unified matter reimbursement. to expect conveniently this reimbursement and vehicles enabling reimbursement broader ensuring vision vehicles of the have We’ll at-home significant this second Again, using their our turn be payments consistent while experience organizations. a an simplifying how and beyond fleets and overall development a grow powered. our an

also year. early conversations as we begin encouraged new We’re the cross-sell by

QX. Our to XX expanded focus relationships a were with of we to sell during whom cross-sell on Most to traction contracts mobility continues benefit more signed these gain are than customers solution. able

enhancing million in turn savings reinvested end scalability and improvement. half capture the being XXXX of Next, remain track the to of $XXX business. focused platform efficiencies of on our run with operating me are We the our approximately on let operational to by rate these in

of initiative, our this technology. of using closely in we’ve looking areas company part improved processes, number and of a As data been

costs. areas by journey, of the the saving more the of the experience excited planned added seamless is improvement I creating which One has in a customer am digital benefit about

cross-functional entire We full and me on have and of WEX, of a team. management teams has who dedicated with of leader focused my initiative dozens support inside this for are the execution

will segment, to Jagtar, before profile. an our opportunity event the in-depth the highlight call investor and host including over I understanding that financial the of Finally, benefits turning we provide to product to set, wanted

and had in will Relations hear we and will coming terrific from share of about profitable you June to Xst. more benefits event for weeks. Investor webcast the sizable, in on we’re growing website quarter available be with of Jagtar, this the Registration our the excited As you on section fast the business results the

it over turn more I’ll to quarter’s you that, financial to performance in this Jagtar walk through With detail.

Jagtar Narula

to partners, morning, first top-line while come growth a Thanks, with strong with year expect. and employees, quarter delivering our shareholders that solid Melissa and a off achieving execution dependable good have We started the customers, everyone.

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

with quarter let’s results. the start Now,

nature. a at guidance over came revenue QX $XXX in a segment. good quarter, million, our XXXX revenue For total and the in the by Corporate strong midpoint quarter exceeded due for to purchase volume revenue first open benefits with very increase $X XX% of in our more XX% million Payments of of the season total an enrollment combination than recurring

defined processing we the segment. segments, reminder, over mobility was qX. $XXX.X margins a year. recurring net other revenue XX.X%, XX.X% in perspective, from non-GAAP transaction to margin basis, Payments In adjusted a the business, lower our by or million, the $XX last which revenue a This payment fees represents as attributable of From account As in factoring offset a operating share. was diluted an largely XX% income items. total, and by down the $X.XX income million is earnings had much benefit increase margins year, we on driven shareholders process adjusted prior higher processing for servicing, and both Corporate from and in smaller company income per GAAP net

a quarter X% processing the powered interchange earned new solid growth increase to for move and over-the-road a local our transactions area continue solid to The an Payment freight results mid-single-digit year, were we from over with million, prior U.S. watch growth the customer $XXX.X payment a transactions let’s transactions. mobility. is We rate on segment to freight Now, while closely. customers and from an market up renewals, decline by market was revenue in increase had the saw volume the X% processing small wins in starting the conditions. in we Mobility year-over-year.

late added seen had prior rates was revenue as at to new is the fee XX% we just in ExxonMobil higher freight year year. was result, business X%, anticipated fee to slightly saw versus which our factoring includes finance rate up the fee mostly related metrics, continue a late I a that mentioned. revenue, end and did in you’ve late the last small net year of We up the our not trend QX that As slowdown of portfolio the market only last which conditions materialize. the overall,

interchange the benefit The XXXX $X.XX XXXX. prices of domestic renewals favorable versus net $X last up versus rate QX to merchant The higher QX. fuel in of $X.XX and points year. due merchants in year-over-year impact various $X X.XX%, fuel prices The terms. the were segment of the approximately price at European fuel segment basis losses contracts adjusted from saw for revenue was from We the for million for including is contained XXXX. a clauses estimate down impacts a was year was We quarter price rate which the spreads. Higher operating rates number in income XX.X% in margin. rate The from million, of in the by earned interest mobility impact margin credit in prior QX from lower versus approximately increased the of segment a reasons QX primary XX.X%, fuel escalator XX reduction

elevated couple down The years, forward. improve. in have also Delinquencies and to relatively losses but approximately XX% The elevated two X continued bit within loss a at our loss the starting in address are improve. to were seen points Let are The guidance that delinquency customers abate. the basis compared range we the segment, we year to the of fraud including the trucking to spend over-the-road normal last points local rates for QX about of quarters the expect me briefly have the of quarters from we’ve fraud here which losses. over are rates going to fleet which past loss range. volume basis spoken last business marginally in prior improving rates XX U.S. losses, credit continued down continue rates, a and to trend increased in were in

the fraud be a prior enhance reduction to the fraud fraud I’ve working truckstop appeared remediation operators, as quarters, include impact with continuing the fraud and tools our spoken activities in product about which enhancements delivering intended. to that detection releasing focus

We on working and are result this continue diligently pleased with to track. are this

of networks Purchase segment was total issued XX rate basis timing total The versus interchange to as customers segment of points QX year, in XX% contributing down WEX Corporate for by the in larger now volume $XX.X is increase to XX% percentage quarter last in purchase the a qX. Payments. million. billion, of last the for which the year. volume predominantly to was increased Turning sequentially, due revenue $XXX.X an as well travel incentives net

revenue compared Breaking QX XXXX. continued down travel-related pleased to consumer travel-related by travel led XX% XX% further, these with of volume was the year. total very represented up demand and versus Revenue Payments’ from segment X%. last grew customer Non-travel-related in last in was the we approximately customer customers volume results. reflects continued XX% the strength Corporate are and channel. the grew up versus spend was year and growth partner This the XX% This

improvement been and The adjusted There customers sign up our segment volume in to saw quarter. in volume XX.X%, also of direct these and are in year. in QX in the more significant channel accelerates. growth XX from income than last pleased margin direct We corporate Payments’ we has corporate XX.X% new the Payments delivered operating margins

revenue through our is given this here for base. cost relatively fixed very high business and segment model Our strong drop is

a take look segment. let’s benefits Finally, the at

growth continue and of resulting growth million. metric, processing we The as XX% view year. usage which growth. underlying the $XXX.X it We the increase platform drive prior were $XX.X other represents and million prior revenue the the that the and reminder QX this very We pleased versus important such as areas since A HSA our XX% represents drives an to up with year. deposit in payment of business strong SaaS of QX in was growth, account over

XX% revenue. segment XX% payment volume an increased purchase benefits processing in to increase leading

Bank last million by $XX the deposits cash year. in the banks, last the that to approximately third-party these from at balances increase million on HSA to invested $XX custodial increasing is this earned X.XX% $X.X funds held the Approximately, WEX rate revenue to average in segment were compared year. also interest We million year and X.XX% from realized due revenue of

segment highly to sensitive economic the XX.X% primary us would the hedge. less XXXX. as of offsets The driver parts expense range custodial the higher interest This operating across company, periods, providing business rate to serves in cycles. enabling if income nearly is a interest stability excluded revenue adjusted environments compared margin margin deposits and and earnings, in natural makes is of still this X%. the as increased from benefits was is perform to a other navigate well interest accreted operating have The to us The income in cash rates the to invested increase a XX.X%, core of both the revenue revenue some but margin, HSA from as

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

million have We defined of at in $XXX capacity under the of available $XXX company’s end. agreement borrowing corporate cash million credit as quarter

end of the of our half convertible The end target the a at times. notes half loans term three At bottom is long-term at agreement was total as of billion. and in credit balance and and ratio to leverage half revolving defined on outstanding which the quarter, credit, two a stands the of a $X.X line and times, the two our

than some QX. our deposit noted during due reversed cash as expect, would we free Also, for WEX cash was than using to to flow $XX a being lowest about timing like result, is year time to would the negative and each our cash we which amount typically free million of generates with last more I our is The flow were a $XXX beginning week to QX adjusted $XX seasonality. cash adjusted payments. a through $XXX definition, of each of significant million reported XXXX. cash better balances flow QX, Next, flow. turn were which year as typically the million quarter, normally million

free been this shares. of cash use primary year flow to Our has repurchase

continue will organic returning manage and to between capital to shareholders. capital We M&A allocation investment,

for Finally, full quarter year. let’s move the the guidance in to revenue and second earnings

was results, quarter first as fuel prices guidance a we well are result, like largely I very raising factors for else. am to maintaining those pleased completed as good for and reflect interest XXXX our to-date. guidance than of we a previous and our quarter as macro are everything share the repurchases Other The that for us. benefit share to rates,

$XXX million million. second range quarter, Starting with revenue of the expect report the to in to we $XXX

$X.XX expect revenue We expect between of the billion report year, and the to per we $X.XX in range share. to $X.XX full be for ANI EPS diluted $X.XX to billion.

EPS midpoint $XX.XX between and updated guidance. of expect ANI of increase We $XX EPS, revenue compared and $XX.XX the to of our previous be represent These to ranges diluted per $X.XX share. billion an in

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

We have our while to remainder the for the largely these through for guidance results flow the allowed previous to year. our of increase guidance year maintaining

revenue our growing both efficient on well customers. more becoming execute and to continue We servicing

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

Operator

Thank you.

begin question-and-answer (Operator comes now Sakhrani go from KBW. Please with Your will ahead. the We Instructions) question the Sanjay line session. of first

Sanjay Sakhrani

Thank morning. you. color development. of business appreciate the all Good Melissa, on

Mobility, when look maybe, and guidance. generally but Jagtar we of area. business you that are you not into of incorporating about the fair across first what the you’re Just and or a to it not any just in guys us you signs freight across talk outside appreciable the listening just like of over-the-roads the quarter seems seeing WEX? really then trends, slowing remind Is could statement only

Melissa Smith

Sure. Good morning, Sanjay.

customers when not in The agree. in within same-store as that would driver was business. They’re spot customer sales within mobility up rest I business, have be the continuing across a their negative our continued then rates American there’s the inferring were the the we X.X%. lower. they the customers fleet actually of across hearing about our migrate slowdown them, look certainly saw way and you that that North But you base shortages business portfolio, within past, the talking over-the-road from and over-the-road to X%, a If marketplace weakness fleet

and some is of continue see that we across the biggest The that’s to customers. larger multiple so And of categories. piece

office, I is of fleet going being back out sales moving. into of and the that think some rebound people continued

to continuing a within And so portfolio that. of get I even we’re couple little of trades bit But the benefit construction were up percent. a our think

So, and And the the all North that we’re employee to strength as an business. of say still benefits is area if primarily, attractive in sure talk our I’d fleet conversation business. continue you retention continues customers travel, marketplace you as our there we’re marketplace the be and expects. making we continuing into well as benefits to to rebound, that where the that continuing go see around offering in that and American to are within strength way we’re the evolve benefits, how within are see

And environment assumption have conversations second strong the within slow in base. have to the really, the that still So, then we our our really continue year. we’d guidance half customer of growth within a

in necessarily, with because seeing we same assumption. quarter, but within again, we not that trend last portfolio, what our So consistent the said that we’re had held just

Sanjay Sakhrani

of great. Okay, of in just Jagtar. how sequential you a rebound I driver to the that the know, a I Inside mobility, likely. terms help and that that late revenue there’s go-forward seasonality basis? we predominant for the and could this on through slowdown the yield follow-up Should that think one in factoring think yield. Maybe, big factoring just about finance change mentioned think think we about revenue being in us as fee And Thanks. should you the yield? being question

Jagtar Narula

Sanjay. Thanks, Yes.

I question. think a that’s good

We’ve takes got I’d revenue. benefit some that So, purchased say from we that the finance fee puts year. there portfolio and last had some ExxonMobil in were

spot expecting the spot rates million. but we’re sort brought instances factor invoice. both of to that think as number the the going number And was which these item down on as the whole slowdown quarters. mentioned $X the That’s stabilization rate you we I of item invoices, next industry, ongoing that at the that there declining. be that of to per with we on then factoring been freight down seems forward. least rates there’s expect, That’s dollars factoring in was for the kind industry negative we’re and brought But some the couple ongoing the freight the side in well average of expecting continue of about

Sanjay Sakhrani

Thank Great. you.

Jagtar Narula

Yes.

Operator

Your comes Tien-tsin line JPMorgan. Please go from next question the of Huang of ahead.

Tien-tsin Huang

morning. about volume the Payments, year, any okay, ask to learn results asking, and next growth any to just rest just growth. the spread here. because about if between with I bit trying quarters? couple the as behave down of callouts Good good I to well difference and and as incentives that’s respect the yield? the piece Hi. Corporate thinking wanted always net of I’m here volume the from was little might the revenue a interchange know clarity on how that I’m in

Jagtar Narula

Thanks, Tien-tsin sure. the question. Yes, for

for correct. rate over because So We’d last was down quarter. tends and scheme expect to the yes, between primarily is quarter going side, from take it normal what take expect non-travel a fees the travel segment, travel takes you we puts on and our a of QX the and that our called the see we’d you’re And out have overall, be kind quarter QX that and of higher to rate. we Within last The posted business. website, that seasonality the normal does lower travel travel. can a charts appendix into as

expect of go some as the from that quarters. through impacts we next So, volume we couple

Melissa Smith

in are travel growth we growth we half from environment, that a a having the what the that And slow year. of we’re volume second a you in assuming of idea in trail-off are of see perspective, terms assuming assuming

growth So, in our we assumption. underlying decent have it’s still

Jagtar Narula

Yes.

Melissa Smith

seeing pent-up quarters. but still that the coming there’s that know and the second demand, the we first in because we’re off highs

Tien-tsin Huang

Got it. That’s sense. and prudent makes

activity. with all the banking and turmoil I my you system know, about on of stresses both Just a follow-up, bit quick the the talked deposit banking and just little

Sounds like, you managed it well.

that all make understood any given Thanks. on to the change deposit that bank sure cash the or naturally operations a happens benefit payments the there. activity in side from no either I risk and WEX impact corporate flow on a standpoint standpoint, management want from Just funding also side,

Melissa Smith

this. Jagtar I’m going add let start to but I’m Yes. onto and to going

the of million on worth combination marketplace, about sheet. $X.X and real sit it’s that people CDEs of CDE largest the And to money when reason HSA have used in balance banking – the even which business, then there pieces those was market. We deposit interesting, moved of our the two deposits and fund we into a the CDEs, are in ‘XX that.

deposit our And really It’s so of it’s you we deposits if have whole across also, CIC of portfolio, funding. for our XX% a the over look Insurance. stable source

Jagtar Narula

Yes.

couple comments Let a me of add there.

one split I thing year. out, QX And you’ll evenly HSA our that So, point about this a end top deposits. of and from would increased at deposits to billion QX of end just X the see $ roughly the between level, deposits non-HSA that’s

I about greater insured XX% deposits our think, lot of remain sources are our quite a deposit in deposits our that than people insured. look our banking funding we case, FDIC evidence non-FDIC and So, that at of turmoil worried provides seen the base When strong. that we’ve basically has been

that think sources. has demand with comfort of lot to gives seen, us. I as for So, funding mentioned, pretty Melissa depositors a robust we’ve And

banks just the metrics credit money to with. insured we we of with. make what’s banks banks to from things of range looked We’ve operational changes, uninsured that In terms we closely the ratio we’re with to monitoring their around – looked deposits, and of worked at like prudently comfortable at default around a sure we are work that swaps, managing we’re moving that more it appropriate

Tien-tsin Huang

Perfect. color. Thank both That’s a you, great

Jagtar Narula

Yes.

Operator

the from Baird. ahead. comes of Dave go question next Koning Please Your with line

David Koning

the you the segment; the the late processing was guess guess thank sustainable much. on I put the you full you’re I for little of to the talking get macro fee just seems if guys. that and the When of bit X% In of offset, really about then low high. – rate end talked all impacts still maybe, And can the that payment about kind wondering in the you I’m – a like you Hey, so together, and Yes. that’s mobility then X% fleet it year? business.

Jagtar Narula

Yes.

interchange in I the about talked prepared nicely this remarks. some our reasons for our of So, was up rate it quarter.

our contracts. into have So, are some built we escalator do clauses that

We’ve rate. interchange There rates drove with so the we in pleased higher rate. cases, that of getting, rest reoccurring the The been been which through basis a impact that. we’ve was largely which the really it, would of nature. and with renewals was interchange interest really Europe, certain in And come I very renewal also about one-time which movement rates, had the was points in of be saw up rise the we’re in some expect item market also of four worth that to quarter

through we should we kind the So, see year. these levels flow of as interchange

now continue our expectation to X%. that we X% grow target And ex-PPG, right our of growth ex-FX is rate to at so will

David Koning

like that. you. And it Got maybe secondly, whatever it for know, it XX%, you I going that guess What’s I whatever your then is was kind assume was, and looked looked big, like. natural in volume, was go progression’s charts, it you of like, XX% think not strong. do to how going per quite or you it just through year? to the April that travel stay, Thank the

Jagtar Narula

forecast. see April, with our line to in continue we volumes Yes, in travel

are we we about – given us. something April, closely, this so discussion in So, But well macroeconomy. the trending watch is overall for things the far

David Koning

job. Great guys. Thanks, you. Got

Operator

Please go from with comes question of the next Wolfe Darrin ahead. Your Peller Research. line

Darrin Peller

been the touch Hey, you’re has adding well. could a as account growth. now, that obviously guys. strong minute, benefits growth the manager on Midwest there If segment mid-teens, for we the and

as that strategy of into can kind going is Midwest all, you we profile So, we the of growth if for think comes that this what how of really the assume what’s manager about, the reiterate could the as well. forward just year, especially – do first half and on driving second business

Melissa Smith

Yes.

a really open As Jagtar we strong had enrollment season. said,

before of you lot the your onboarding And business, start you think you year. a so do that when about

So, what’s the of to course in visibility it out going play really the you in terms good gives of year.

and we combination number how open across the feel that work And supporting have benefit different so channels that products gone can a we’ve you good of their and that about distribution of through. and the through have, enrollment, we and see growing and them the also we coming partners the business, marketplace, then the directly we in of

of what’s happening, to people of from likely We a were a make also an because bit period overhang where of had the less pandemic. changes, time,

gotten of I that. benefit we’ve think So, that a

close fill impact We the which about revenue benefits growth will next about and and to largely that segment. we talked year year for we’ve year, XX% to rates for continued have feel good have the pipelines this are XX% more the

Darrin Peller

impressive. obviously guys I right, it’s investor which a I detail? mean, mean, into go up – event you have think more coming I Okay. around that, we’ll

Melissa Smith

Yes, yes.

Jagtar Narula

Yes.

Melissa Smith

to people in can compete marketplace, the excited go really bit and a really sure visibility smooth. we to have able that in understand have products the be business, We’re very that the we make how deeper

that do highlight. to We’re excited

Darrin Peller

that on a the If side, of Payments more of the business OTAs. follow-up just Thanks I moving also. but on bit want outside and where beyond what travel again, of has we the doing strong, been invest the travel’s a understand in to headed. that been guys. to really terms Obviously, see you’re there you again, but mind, a differentiate mean, the I this just strategy Corporate to don’t little know bit. I side quick asked

Melissa Smith

Sure.

is itself, one has customer are uptime. important of advantage workflow, highly have sophisticated taking they the We that modalities. technology is – space; base. strong that tech-enabled, virtual payments API who is travel and within what other the Corporate we an someone, thing payment have that used card their Payments within or And product, two primary payment a within our that products That customer, typically is of stream highly in our which either is embedded embedding really product is

over settle We world currencies. XX the different ability and the of have to throughout number a

selling that a that are in had fin customer we the the base the the number customers things between also success So, really into we’ve of exchange and community about in States recently. added United that more to and we tech talked good there’s that had important

product direct salespeople. second the the partner we product have that had AP is where sales channel we’ve Historically, talked about through force. started we’ve that a just started quarter. We an in a product, that The we and sold have direct fact signings we’ve XX ramping ramping

that of amount deploying the that And So, to an it we’re that sales so seen we about will that ramp. continue it’s we’ve into we results force capital good considering area expect feel far.

those so we the Payments the have in And really space. are products predominant Corporate

Darrin Peller

Thanks, Understood. guys.

Operator

Suisse. go Nik from ahead. line with comes next question Your Cremo the Please of Credit

Nik Cremo

X% arrive travel-related taking question. for thanks strong separately guys. my growth revenue on discuss and expectations Hey, results Corporate your the the XXXX at Payments to you congrats Can for and related we materially guess expect to decelerate in where Should And the from kind guide? it’s to the range? I just Payments guide? Corporate to trend of XX% X% to travel relative at you. Thank revenue

Melissa Smith

of growth expectation environment, but QX I more a in from then that pent-up off of into where with elevated, this we’re Payments is assume some second direct up that growth again, growth continuing dropping are really sales QX we at process different strong it’s are Through half the what that in little a with of and on knowing accelerated in we travel the little single-digit going with bit really still a that’s anticipating, starting slow because rates would Corporate rates environment, be in the our QX, growth customers in year, trailing still Yes. growth of say, combination going ramping And year, of rate the this our a we there’s course space, that demand. of a customers force. ramp which new to and the adding

Jagtar Narula

be lower that guidance would with project, overall. – a Corporate we the that and of travel add I just say Payments Corporate say segment we Payments Corporate and that travel reminder of XX% on Yes, – higher be that for rate side. XX% would Payments the gave growth to the would I would the will And I

Nik Cremo

you. Thank

Operator

of William the Bob Napoli Your Blair. line next question with Please comes go from ahead.

Robert Napoli

you. Good Thank morning.

Melissa, that? Mobility deeper Just at the meaning Solutions – behind strategic any the is point just this changing there to within name

Melissa Smith

it is customers think indicative business, how you It’s offerings mix fleet where space. we’re running we of traditional Well, to as going of we’re and the into talk migrates our when the in we that continue as doing, plays. we you more moving expand internally into environment. the think it with mobility we’re about in even businesses, strategically. really And it’s what segments fleet new

Robert Napoli

your within you just And BXB I questions. called on the any Flume, that I what Okay. the mobility Is versus the So, mean SMB customers smaller with then I the the had seeing last out, think payments know called and business larger? weakness weakness progress with quarter. had related, Thanks. but and on customers. guess smaller I you same you’re and two out as

Melissa Smith

Yes. And we about to – talked be quarter just last weakness segment specific, in the customer over-the-road smaller

Robert Napoli

Right.

With right. the SMB,

Melissa Smith

within about talked we’ve Jagtar seen stabilize And the Yes. our that portfolio. fact

think within acute runoff vehicles big issue it down. So, marketplace, a people spot of kind where were had rates of We we weak. this of new went that ramp that saw kind of bunch that this a and went of customers that added down,

we And in targeted size. so the within a people and very that were that part the portfolio. newer business smaller had of in issue

stability seen within the again, have, We portfolio.

course. that like it looks run largely Now, its has

half We the are have in the aware standards, marketplace, environment planning traditional both in for the idea with slow a over-the-road tighten of and second to business retail year. in happening made we’re approval we within anticipating monitoring processes this – with keeping changes our our and with growth what’s the credit credit business for or that

we’re moves getting the some that and of And so those we’ve we’re I in that of what seeing right made portfolio now. think earlier benefit the

Robert Napoli

effort? that Flume the And or is

Melissa Smith

Yes.

had XX this So, – Flume States months United about We’ve holidays. summer we started still ago. the is

the hundreds of using that product. We have are customers

continue the that in the add to to We product we marketplace. have set

something to it product for continue say, and the revenue what to and learn good with And growth growth seeing so we’re our that X% business. framework. should so long-term slated to X% going in I’d so and into far we we’re new play and it’s have evolve,

Robert Napoli

Thank you.

Operator

question line next comes Ramsey ahead. from El-Assal of go Your with Please the Barclays.

Ramsey El-Assal

of ask guess, corporate you taking help of XX you us mentioned payments timing through a inking think about few my Hi. the thanks for I times segment, wanted impact force, can the direct sales the direct only those I implementing have and out in over question. to time building new deals. of positive yields to shift more the on could segment we should a expect more degree also term, tactically, that deals whether the whether not impact? kind longer a over mix an but and impact

Melissa Smith

Yes.

are segment. of there’s So, that within that a couple happening things

to We work meet we continuing that to that are that continuing ramp further sales we that we to the onboard have segment. customer marketplace the with to build are also needs that for to are make look sure we can the continuing direct in force; areas and they have the customers

from from that existing already then the part ramping And in of within think partners side it’s we on growth existing growth base so have about we the the marketplace. of customer when benefit we a this combination the business, that that direct and have continued

in that focused is with levers think areas. multiple the we on of those So, each team

we’ve we’re long-term is both is segment had also segment the that to that’s products. XX% So, and when for working the about of the but market, what that And rate that we architecting kind thinking about that we’re XX%. we’re towards talk really way go growth to

Ramsey El-Assal

Thank you.

Melissa Smith

You asked about rate.

You also asked about rate.

Jagtar Narula

Yes.

mean – I Ramsey, a you think longer-term question. asked a, So it’s I

So, we direct those rate, direct higher of the which accounts would come there. reasons go a is in that one

right. well. a you segments other the to But extent to expect would becomes as of that the also that Melissa So, the continue to grow a benefit positive larger be expect to that mix total, to the mentioned, as just we

Ramsey El-Assal

an in where you’re the mobility reason, you a just mean, electric see opportunities for I know then and an that Is me broader good from future opportunity, opportunity? the ex-EV provide Is vehicles. it. compelling And market? you growth there where the the Got in follow-up could on there internationally opportunity segment? in still even the update I is, are market ex-EV, prioritizing largest don’t U.S.

Melissa Smith

Yes. it’s that had of we’ve you of that vehicles our growth It share, in base. area part the our to been see market great and is a within business. continue take that an we can

existing about through, of customer on had even out a digital of as customer also which two end-to-end at perspective, we that Officers will continue take And our brought an start a last commercial little been so how we’re at and years. some first to less but customers lot the time, think within had year And for that that look market looking It’s talked products couple the our experience, experience we lose has of Chief that we’ve technology share – from have. in over cost. building focus lot we the over can, A on a we’ve doing she’s that going ago. even digitize lower has that work Digital and and teams, a We that experience, better greater customer really we and is we’ve a portfolio with build coming benefit. one capability at with position. amazing to of

that I further continue that to So, have with now, channels to the not Because path but have good – to digital ability the feel we’re enhance we only on. sales the about would we capability.

still So, both the because the States. there outside to start United United with opportunity I meaningful States in there’s and that’s, that, think

bill, an the in mobility they move ability we’d On to I EV this this the they fleet. we capability. of integrated as are their network, of system as from for want them our the products really ownership go, reimbursement want are data, capability having remarks the understand total our know talking charging – so in that, cost space, and ownership prepared are to talked Those are within this eventually Because increasingly they conversion for the the marketplace really that buy then customers, customers, that depot opportunity. record. of The point. on can letting see starting that us, now, all one one top right about to the They

that can cases lots use are in even think early We help process. different of opportunities we facilitate. see this of part that behind this There’s many that. now emerging we

the we believe for future, have, going create mixed do migration we products within a but the and to just the opportunity to through that customer opportunity do digital not capability through offering that nascent we’re to have only existing that’s So, us. fleet where base building both this we

Ramsey El-Assal

That Thank helpful. is you. very

Operator

the Bank ahead. of Your Please of America. Mihir of line question go comes from Bhatia next

Mihir Bhatia

just questions. across you your weakness Like your think anywhere but are any I with you slowdown your slowdowns seen my I you in wanted taking was interquartile mentioned particularly, in curious, OTR. else? start seeing as trends. macro half, actual just as I I maybe back for you thank far weakness some yet guidance volume Hi, have to understand but businesses? the

Melissa Smith

bulk sales negative place, customer place that slowdown of in the same-store a we’re where about base. And seeing over-the-road the that is talked seen during X%. same-store a I only being we’ve positive The pandemic. was sales That

a we grew about that few of The within lot flowing benefit in like the fact are same-store been when some the And the that sales. quarter construction rates quarters portfolio, of into of still talked same-store received the a individual look I you larger came it’s the year-over-year. growth the so codes for And now. rest but sales from X% the customers. of some SIC negative

it describe weakness. growth instead. as I say so wouldn’t And flowing I would more the of

Jagtar Narula

Yes, as trend continues I and Mihir. thing I has expectations. line as gallons fleet add, expected into our with well, travel April the same April, said into just we’ve in would with continued like seen the

just So, that. we’re seeing

Mihir Bhatia

Got it.

thinking when we businesses. I’m to process, ramp to thing? XXXX some half large just administrator wanted Okay. XXXX signings or the understand customer that’s Corporate system of more the in quarter other your do the was was in I are likely the big Like these contribute these of in the revenues? But is trying contributors? you understand signings question big I Or back benefits, like, had remark, fast you I couple think how onboarding Payments. customer this different in second to of signings do Melissa, multi-employer mentioned a health

Melissa Smith

into in we what we the Yes. customers, of the implementation When signed, we perspective rate we in we to for revenue need the come do what go have course so so not of year. and do what at through implemented. that look we for existing do kind plan we do contracts that get been need at year, yet actually the have to included have and what from the then push look but run that an of year

each that customers. customers So, are that some are maximizing sure business really existing will each some XXXX. signing then XXXX, retain of making on our of we areas that from our of implementing things, new of that of and and And impacts impact focused our those

contribution relatively meaningful are But XXXX. So, individual small they to accumulatively contracts XXXX. these the quite for of in terms become any of

Jagtar Narula

are into guidance the out. contracts that Yes, the that would I say Mihir. given Melissa we’ve talked factored about

mentioned, mean, been guidance. our say I for XX% that. example, contract benefits that in think, the contract growth expectations I about So, built talked to into have And XX% I’d she those the we’ve

Mihir Bhatia

Okay. last more expansion you how benefits? seeing focusing are question, Corporate And are are on finding the right m&A then you this you challenging my adjacency Is where of the it kind it m&A capabilities? now? a about thinking it allocation. Is about Can side you opportunities right Is fundraising environment, some bit more now? side? on talk m&A capital just Like in little on interesting just given Payments?

Melissa Smith

the is either we M&A when active. looking about always something, we’re we’re what think is And at sure. Sure, obviously product – opportunities, And extensions.

we if go doing partner buy through to we’re our and So, we do of or build, product evaluation. analysis want

or product an We the scale really that’s adjacencies look part plays. So at where across, of at any product area, we look business.

And the So, product. are size, more just in less the capabilities. assets look are financially larger which at then that accretive, we about geographic extension

across And so there’s an active mix those categories.

size. focused very the tend innovation. last added assets year. smaller separate around Those a so EV over we’ve have been stream also to whole much work in we have We and that be

in And seeing in what working those, there a terms so invest what and at the private in. multiples. we from we’re multiple disconnect in still perspective, we’re through assets between of seeing is public want multiples to looking

we’re acute in working through as the say other this. keep Specifically, we of the the there space, business than in of and more mind of areas I’d it’s that Corporate Payments some all

we with historically. same continue assets, through at have look our move we rigor so And the to assets that pipelines

Mihir Bhatia

you my Thank for Thank taking questions. you.

Operator

Your Andrew go next with question Truist. Please of the ahead. from line Jeffrey comes

Andrew Jeffrey

you remittance Payments an need feel the like I’m bit? also squeezing capabilities elaborate on do and/or the really that little a specifically. on M&A, rate do you at thinking elevated like appreciate offerings. the have AP I direct piece in. the me to business, Melissa, about Can you it’s you of the to direct, that and Hi, up color you that out point guess, grow to automation at or direct Corporate internally ramp I you need technology go this invest buy and lines

Melissa Smith

everything at to at bias that let’s had the are multiples. a where one, and build similar just Yes. With continue that, else. do looking way look want again, of to we’ve you business of buildings because we happened we to the what’s say, with

we’re doing partner, made that where continue part to see investments and should the build, should ramped that where of at an where if space, we in over we’ve we the last of So, that we have we that fine the and should buy. within opportunity years. we’ll business couple we look

we’re So, continuing sell to the marketplace. in

there intend roadmap We we the what same of I’d true into the are every part just product or say that not will business. to that We And buy. we from deliver evaluate marketplace. have did continue of opportunities or across And build we perspective should to if that’s process. to do whether

Andrew Jeffrey

sound and something to buy there. it go you Okay. have like doesn’t mind out have in to your success

Melissa Smith

No.

will market I think that continue that – a evolve. to it’s would

really this is about feel we in and So, to marketplace. think have. we the marketplace of it’s invest down want continue in that being products With build as much We is something we we interesting are to continuing more to make that sure that that that well. space. space do a something good the within Flume we upon

and as foundation probably it, upon. involve, way done, feel it’s a build like good think area we an that to I’d I but to to I don’t we invest continue going have so like will we’re the feel we say we continue And guess, it’s you’re feeling, to opposed that

Andrew Jeffrey

these continue a just in had really Okay. strong big of the benefits sort you’ve to pay that shift at enrollment one enough year-out in and the we ask seasons business, consumer to visibility momentum and provide just couple that Is in we expect open early business? to can still benefits And if year-in follow-up secular new your I are of wins. enrollment could obviously that. seasons that and open HSA –

Melissa Smith

deposits of that Yes. will growth shift coming of from have. benefit XX%, When the that consumer-directed that to A that custodial about talked from anticipation rate healthcare. comes piece this we’ve we this piece that continue continued is to XX% the to also from of long-term a being

HSAs it’s we growth about it’s that of the also business the movement is a one of resilient. so that part the with grower. but things And still strong has And interesting really flowed, find to

consumer-directed grows it most this of any to the So, really get you healthcare. movement environment, in benefit because

to upon You’ve got and we build benefit continuing our continue costs up distribution then go to channel.

great really business. have been overall And to in so the combined those things contribution

Andrew Jeffrey

Okay. it. Thanks. Appreciate

Operator

concludes the This I Elder. the turn session. call to will question-and-answer Steve

Steve Elder

about thank us to speaking and everyone minutes wanted hanging you three just again, go we’ll months. again, of couple a forward long for in with Thank with I as you. here look to we

Operator

This the call. concludes conference

now your lines. disconnect You may

Steve Elder	Senior Vice President-Global Investor Relations
Melissa Smith	Chair, Chief Executive Officer, and President
Jagtar Narula	Chief Financial Officer
Sanjay Sakhrani	Keefe Bruyette & Woods Inc.
Tien-Tsin Huang	JPMorgan Chase & Co.
David Koning	Robert W. Baird & Co. Inc
Darrin Peller	Wolfe Research, LLC
Nik Cremo	Credit Suisse
Robert Napoli	William Blair & Co. LLC
Ramsey El-Assal	Barclays Investment Bank
Mihir Bhatia	Bank of America Securities
Andrew Jeffrey	Truist Securities, Inc.

WEX (WEX) 27 Apr 232023 Q1 Earnings call transcript