WEX - Earnings call transcript Q1 2024

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Operator

Thank you for standing by. My name is Alex, and I will be your conference operator today. At this time, I would like to welcome everyone to the WEX Q1 2024 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Steve Elder, Senior Vice President of Investor Relations. Please go ahead.

Steven Elder

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

operating on we explanation guidance our included to cash due to a company adjusted reminder, for a reconciliation indeterminate non-GAAP these adjusted the and net as provides will refer uncertainty and of and on measures. which we flow see non-GAAP as of specifically As margin are basis revenue GAAP that X be the certain metrics, income, elements The earnings. guidance free ANI, non-GAAP press well call. income related an a amount adjusted in release the Exhibit basis discussing as of Please earnings GAAP reported and during

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

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

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

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

Melissa Smith

appreciate good us and today. joining Steve, you you, morning, everyone. We Thank

quarter, We diversified quarter environment. is strong a to quarter first for resilience in XXXX impressive results delivered the testament the any business revenue marked financial first to start record high including model of economic The which our another for of a WEX.

can to leaders together the we partners cutting-edge can conference event, annual of demonstrate help where showcased solutions we had underscores business customers unlock our highlighting We month, simplify at At industry we Spark play our our the employee hosted innovative business. and record Spark, this payments. the full potential WEX's power and invaluable how benefits, the for attendance how Earlier brought of fleet role our a corporate our which technology solutions, customers. running the management our services across of

discuss let's quarter first our Now results.

During quarter, year-over-year. revenue of million, of the $XXX achieved an we increase X%

quarter fluctuations billion, rates, corporate organization of strong in impact the the grew foreign Total revenue XX% in Excluding the and grew QX first year-over-year. across year-over-year prices performance X% to exchange volume payments. processed in $XX by fuel driven

per $X.XX, Adjusted net diluted in repurchases. X% same quarterly an compared last revenue year, strong increase and to share share as QX a was the of result income of quarter

adjusted fuel in grew fluctuations of XX% foreign exchange impact the rates, year-over-year. Excluding EPS and prices

reminder, the business interest on December, swaps performance a robust which impacted during growth our demonstrated Jagtar later segments of in As earnings rate discuss call. Each quarter. was by the exiting will our

increased at faster and at XX% very business the Our strong Corporate grow continues overall as The Payments volumes purchase Travel to a year-over-year. remains pace grow than healthy market. to continues segment a pace

loyalty. positioned have driving sustained solution long-term partners, clients. and our We preferred best-in-class strong relationships virtual to a us card provider with approach build as solutions our and This solidified our payment has growth offering customer as

we payments now Booking.com end, Booking.com, and as that process signed WEX agreement agreement XXXX, became more than and customer a long-term distinguishes Booking.com preferred partner. a with XX new for WEX in recently this To in we currencies. Booking's first

a HBX combination many customer ecosystems a Group, as Group in years. WEX it's We've the for also the renewed largest our and been Hotelbeds, TravelTech agreement with of known one division world. has HBX BXB

relationships. consolidate larger share a as they we serve forward, expect Going their volume to of total

payment are demonstrates globally. The proud and of we online when with enterprise-grade Among customer relationships our of to world-class these work strength payments deep XXX,XXX travel technology currency worldwide, X XX travel the active more broad continuation globally. expertise reliability offerings top delivering long-standing the platform, of partnerships solutions our WEX's our and than agencies

the In well previously in to last business SaaS Medicare was loss account, Still we normal the X% lower declines accounts Medicare overall and year. compared to segment, a of Benefits due this primarily the to account core quarter, than customer. the growth excluding grew continues mentioned Advantage Advantage perform

last serving report Devenir, million. accounts. HSA According X number XXXX accounts the the million by year X% to We now year-end $XX are to HSA grew overall of

perform growth. at accounts the to means the QX. end overall in of continue HSAs that U.S. run as all also market number we WEX the to well XX% Based the year-end, of of this HSA on platform on the compared So of approximately

evolving We benefits of This integrate September. landscape. positions last that also continue Ascensus the to rapidly acquisition the and Benefits in for Health acquired line we accelerated growth innovation business and us

market to Mobility a Finally, in all focused of our and clients. core value leader the our across we be continue to that space we provide segment, maximizing our in are markets, this on

North to first continuation agreements quarter, the This portfolio we that represents commercial in manage our renewed many the America. in of WEX businesses addition also established the of agreement to with its XXXX. small In signed a with fleet cars Shell up across

But the increased over over-the-road volumes business, gallon the truck payment increase in X quarters. X% year-over-year the past continues first the be by in processing QX red our challenged. In to market for

pleased sequential X% quarter. this vehicles to year. of will to details, last platform engine the the to increase continues in go-to-market Our provide see growth we with increase revenue with you an Jagtar versus the QX add but are

strategic as market further to the our leader. made executing progress we've solidifying against Now initiatives, our I'd highlight position like

our mobility as to solutions vehicles world. customers hybrid fleet on to transition manage continue mix supporting be and a We in focused EV they their and

globally. than customers have We more XXX,XXX mobility

expansive positions us expertise fleet. our offerings, our they as Our coupled evolve partner and a for with our their reach, innovative as customers trusted

out fleet solutions slowdown we the interest remains in area customer about EV steady. read our in consumer and mix invest to all continue we've integrated While because shipments, roll this

where QX, of have vehicles, we present general be at-home will and our launched believe In to acceptance. fleet charging hybrids ICE EVs we We for to up public brought come. feature traditional the set made years access, complement availability of reimbursement that our

mixed reporting Our support solutions these and data. with are designed integrated fleets to

our to startups. Spark fleet a integrating our partner. about significant to pulled together with customers confidence helping we value At a conference, with teams think we're mixed with help industry trusted most their was that customers early-stage development critically than how innovation operate unlock EVs how as and the innovative great left more in properly product energy by our dozen I WEX

for network. parking all Mobility to loop American assistance, offering and small the closed a same be the what for understand and services, experience all our the fleet owner roadside manage acceptance while that the this car North customers and their expenses can related best that manage acceptance better same business of vehicle, to tools with combines vehicle-related This each the integrated a parts purchased. helps to data, the including launched helps able WEX's the we having pilot with simplify card running business an of the is of QX, closely their controls offering, controls business. Mastercard With solution of enhanced broad washes, fuel, the customers In time, at of purchases,

as actively of enrolled insights beyond gathering expand the continue features increased have and hundreds in mobility spend it's are While pilot, future and days, fuel. customers the product to inform to we program we early

of we Furthermore, Payzer, field acquisition cloud-native strategic completed November. management leading service our a software in

to the confident Payzer continue mobility high to into that platform remain complements our WEX expand market As we value the our addressable to enhances our efforts and existing our supporting customers. ecosystem, total we and significantly integrate deliver offerings,

WEX WEX we're the at different results. Payzer's techniques testing quarter, During Payzer launched and to best first efforts we with focused customers, first We're the customer both base field service marketing drive customers. marketing our and management on sales targeting targeted the current

continue excited and with the about efforts. our are integration We be very tracking well long-term to prospects

savings Last we the million XXXX. that cost rate through $XX a basis quarter, run of end we on announced of achieved

million XXXX, cost the As we of we savings very to achieve this rate run goals ability our our start in year. full confident $XXX remain

generating front-loaded in in a half these roughly be as products, digital have drive risk to savings flows top for As a our long-term reminder, business and such been in our maintain and and management areas priority our investments reinvested and growth sustained cash leverage solid strategic remains to growth power technology the key capabilities of with low will tools, WEX. sheet year balance

our We to commitment attractive in for repurchase reflecting our additional authorizing our value. shareholders. program delivering an underscoring our Consequently, our continue Board commitment our drive to value important to as allocation expanded do share repurchases, shareholder million $XXX unwavering during element strategy, capital QX, share an and long-term repurchases by of

a Advancing through the remains technology business priority. innovation

long-term area while this drive our our in profitability. sustainable demonstrating efforts to As commitment our ongoing savings in to drive cost margins, continue

have an and efficiencies our new From operations with initial quarter customer and service. that use cases steps customer we're driving perspective, yielded focus is cases last capabilities our main of AI use in positive our technologies support on service updated the AI accelerate results, we're to A business. additional for area I where experimenting and taking you better

to payments and We're area customers enable voice-to-text forward, enable to to and as and made we our reinvent call advancements this flows experience. with we IVR more our other going learnings to text-to-speech on faster will our currently have reimagining work The technology fulfill particularly accuracy. us in systems apply working with many areas center and

holders. we're been our enhancing deliver HSA and their health particularly messaging customers account leverage analytics, Benefit area for of We've we've is AI to AI save application in excited helped able their ability personalized pay care. One to using targeted our to business. about predictive to the by And the optimize HSAs,

financial several to I In we the macroeconomic have well is reiterate to any quarters. performance that driving proven closing, in over last continue WEX solid as environment positioned want

to revenue growth deliver expect earnings adjusted year. We strong this and

by delivering contribution driven to on We focused accretive EPS, of our revenue remain incremental business. marginal high

efficiencies yield that pricing efforts bottom enterprise and line. delivering Our that strong across initiatives the through reengineering drop our to optimization are

growth to Finally, supported privileged This also sheet investments our we're a back strategic our with solid low leverage. while by shares balance most position buying is in to value the to business, in a shareholders. make deliver

in ahead term, ability across the backed our we remain of long I position confident strategic and As to market place. initiatives strong rest XXXX, WEX's in near the by the the drive to in look business and in growth

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

Jagtar Narula

first high QX Thanks, We reported and record everyone. good with a Melissa, morning, strong revenue. quarter

initiatives Our in continued show strategic our against EPS execution decline year-over-year results a adjusted prices. against even fuel

Now with quarter the let's results. start

Mobility For million, from prices segment. Corporate both increase was Payments in a over the XX% quarter, XXXX, with nature. fuel lower quarter revenue of strong Benefits, the more and revenue $XXX.X X% contributions reported than recurring the for total had first QX growth We impacted in while

we reminder, recurring a processing HSA revenue, factoring business, transaction from fees processing revenue account as payment from As servicing smaller our assets, define income and revenue custodial and items. cash other

income was and operating year, margin both margin last company up adjusted Corporate is segments. XX.X% total, which XX.X%, from increases the In Payments driven in for by Benefits

million we last $XX.X an share. $X.XX a $XXX.X From net perspective, income in on is or GAAP adjusted increase of diluted QX over had net which was or earnings share, million X% $X.XX year. income basis, Non-GAAP an per of per

Our mitigate prices costs solid first a in debt rates. as year-over-year year, to set quarters, for the our Like the fuel and higher the results allow interest continue we increase remainder up higher to us custodial cash we balances as to navigate as in have previous in were of impact well significant HSA a discussed of well quarter us rates. due decline primarily

in we quarter. also in an positions hedge an expense resulted cost rate in to a drag X% $XX December Exiting cash our to leading per interest reminder, this interest a share. impact interest exited increase on in earnings swaps rate our interest and As million December,

a In and per to to quarter negative or prices last exchange earnings versus rates year fuel million impact addition, an lower approximate revenue this share. in the resulted drag foreign X.X% $XX

revenue and durable the is the and diverse to to sustain businesses, ability through continue despite exposure, focused a swaps lower our cycle fuel growth. the drag revenue balanced exiting prices to us strong interest from earnings earnings allowing rate to Our vertical testament grow per and recurring share

a year, move Now the from Mobility price $X.XX have the with benefit of XXXX. QX strong, than in retreated million The in the entirely QX Europe offset are segment spreads but results, year. prior our higher compared fuel fuel the price by of to slightly was to let's million, received $X $X.XX negative almost was versus guidance, versus our revenue starting in we Mobility. expectation. decrease last $XXX in but Fuel was with domestic for the X% U.S. average quarter prices

and Mobility segment declined X% fuel decline an while to fuel business perform year-over-year year-over-year, decreased reduced the in continued or The revenue million approximately revenue a X%, $XX million While price impact. by estimated Europe had underlying $X spreads prices large well.

excluding As change accelerated prices, revenue the we from fuel growth QX. expected, in

remained last year-over-year, customers Local to payment approximately ago expectations. the transactions which and our year flat last U.S. Similar quarter, was processing were levels. with were roughly flat compared processing to transactions in line in above payment year, road slightly the over

rates that noted, is Melissa QX this first from have actually leap in less stabilization pleased last QX the both payment some one we a growth processing OTR As improved and time year. in had the Overall, in was total day than that transactions XXXX. fact that reflecting year, quarter transactions Note increased, that transaction business. were that this despite we business

in fee fees. points or late decline reflects fee year. decreased $XX decline the fee believe segment reduced which in XX% prices, in instances credit X% prior XX%, The late the fee by that fuel slowdown tighter decline Finance place. put revenue. mentioned the the total X%. a The factoring turn to number policies X revenue in the Next, fee versus net we have decline caused of rate finance We million a in revenue instances in basis previously and decreased revenue our late in late let's

I policies a also our late touch losses significantly resulted in the revenue, credit holistically moment. credit While reduce taken tighter these on earnings further they and losses impact our to lower company. in positive have fee will

contract our terms. reflects and interchange in favorable earned rate increase segment up benefit the merchant prices contracts, net points net rate. at rates was various which The causes interest in the higher rate from over lower is merchant contained X X.XX%, domestic Mobility XXXX rate benefits basis interchange The from continued fuel from the renewals escalated

is quarter for for The XX.X%, reason margins. this Mobility segment fuel lower the the XX.X% from income the in in margin price was XXXX. year decline adjusted QX operating down The primary

were Credit XX on. and to in Mobility Moving points our year, losses in points of segment $XX which volume, decreased XX year. line spend last the compares at basis range with million basis versus last guidance

fee with our expected. to improved had as to in year-over-year a that X made over-the-road makes credit basis trucking compared Loss than year basis XX our in of ago The of overall the and especially underscores in The credit more from year decline significantly points rate, loss intended last changes rates point losses, a decline up the for positive customers. late the net have we policies impact credit the year terms impact we changes made reducing ago.

of to in million. rate QX to now quarter incentives the WEX was versus The is revenue X to an for related by interchange last volume revenue for last net increased recognition basis down the year. segment Total segment timing Corporate which earned $XXX.X of increase year. billion, issued Payments. Purchase network in was sequentially, of XX% the points Turning XX% $XX.X

strength Travel-related travel of XX% customers revenue strong to Payments. last interchange customer demand that We QX from for continue rate to consumer down year. the grew results travel-related recognition. in in drove Corporate is The incentive to compared due timing see

Outside of positive our nontravel by reacceleration volume, channel revenue. up was our XX% direct travel, and revenue X%, partner in increase in a continued showing customer our channel some driven growth in purchase

delivered revenue payment acceleration growth came up our margin direct to QX Payments driven corporate volume. last adjusted channel. in XX.X%, continued in nontravel income over from quarter, of year, by an half XX.X% last our The Corporate Similar segment operating from

over which the with the at segment year. or Benefits prior revenue is in We results $XX.X strong $XXX.X increase million Finally, an achieved again let's XX% of million, segment. QX look of this

Advantage in As was that of to Medicare SaaS the as dynamics SaaS versus were accounts, continue loss prior the of flat market we year, growth, mentioned Core QX the excluding Medicare with the year-over-year. Advantage underlying in by accounts declines which the exemplified quarter. customer be account X% expected, we business strong last this

volume purchase increased increase payment X% revenue. processing in segment to leading Benefits a The XX%,

held realized HSA from that invested to third-party We WEX revenue last in year. were also cash banks and funds million the $XX approximately custodial at by $XX Bank from deposits million compared

$X these in year. to X.X% rate due to Benefits Approximately earned revenue last this the segment the balances, on year increase of million interest from increasing is average X% the

The custodial margin operating The cash Benefits this XXXX. primary high XX.X% in XX.X% revenue increase. incremental income to segment the was adjusted margins. invested is HSA has It very compared of from deposits driver the

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

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

balance $X.X near in to ratio, generally as our line first each of the credit billion. revolving total which end X.Xx, long-term low is credit defined The increases the target agreement, was our of The loans at on year. and X.X Leverage outstanding in of slightly quarter term stands leverage the of X.Xx.

conservative ability return Our shareholders the capital while to us also position. in debt maintaining puts enviable business and an in levels invest to

Next, I amount cash cash cash a year. each to our definition, million WEX in flow. adjusted to QX. negative was $XXX Using flow significant would generates like turn of free

and an and is normal quarter. quarter a timing resulted end the of weekend falling caused of on each for for seasonally estimated first the than an in million The flow larger $XXX impact low quarter even the year the negative of us, cash number

We reverse QX. this in will expect

of to of XXX,XXX during repurchase cost cost share. average Our restarting repurchase $XXX million, we XXXX, at has been primary approximately have share equates this million cash $XXX Since total of repurchased cost shares. shares repurchased our per to X.X use an We in shares at year QX. program of discretionary a so far a which million $XX

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

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

The for some factors first raising guidance another improvement good of our a for quarter those us trends. share to we that was macro and factors, as and quarter are in reflect pleased I'm to result XXXX

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

to $X.XX We and diluted expect be between EPS ANI $X.XX per share.

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

$XX.XX between share. EPS ANI be per and expect $XX.XX to We diluted

million full previous an EPS $X.XX of updated of midpoint $XX the of the compared and revenue increase our represent year, For these ranges in to guidance.

price prior our fuel guidance, with Consistent our through year, moving pieces expect and to of caused changes rate impact credit Mobility fee accelerate and attrition revenue. are updated prior the repurchases The finance assumptions the to completed. revenue share compared major guidance lap that and we as interest we lower growth higher

quarter, are pricing a we year. last of also the changes will we of half help As the noted number implementing second that

payments revenue slow year. through as corporate the expect also We progress growth we to

In we of our a we proportion program to to savings we through reinvestment net intended front-loaded make. as expect addition, cost have greater to the income flow

In I'm another are quarter we economic this financial environment conclusion, operating that our and especially in do we able we growth delivered uncertain the that in. results, of proud to in were

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

Operator

Ramsey comes of your question with the Barclays. [Operator And from El-Assal first Instructions] line Ramsey?

All right.

Your comes Sumar. of next line question the Sheriq from

Sheriq Sumar

Yes. This is Sheriq.

to could drivers be able levels? about tougher And year? comps even dynamics think pipeline I on for us still potential Or these remains would understand your XXXX? that for guidance do mean, help rate I maintain be I Benefit and impact, given the and we XXXX? the full the you interest potential to think So in should XXXX. XX% how we the XX% can of for side, evidence there mean mean, growth pricing believe I the HSAs in the some around you

Melissa Smith

loss, is give impact run Medicare will one Advantage about exclude start Advantage accounts the we course this of grew of X%, through think This so talked affect year the that year, for rate you the of that's we to and our Medicare this will When account. total accounts year. loss bit things growth a here. of the that the me year the the going Let and little context we've

growing how That marketplace. we're to excluding compared good overall the about being said, happening feel what's in we accounts, that

earn then we additional revenue as ancillary year, strong continuing to custodian as to transition into next some we that see of have the by that growth continue are compounded and portfolio. to expect be other we across well as the So account fees

in guidance some do this affect about think that. we're -- are we XX% that So anomalies think year, And we've our XX% of talked we to that have range going long-term going segment. to to

Jagtar Narula

just Sheriq, your XXXX. with to regard add about I'll question

came roughly little guidance of we a So for the year. range ahead our

of of just of balanced precisely from So HSA accounts benefit expect course reasons in Melissa good said. We the over year census we going Benefits we and growth the be for that that year, onboarding, quarter first sort the rest through good accounts we saw to of assets. midyear HSA should see the the uplift continued performance and from the the an HSA see normal the

Sheriq Sumar

you EV Is the the there on on potential any could could that Or you follow-up that? that economics we dilution expect? any or see One side. provide if color

on secondly, stand competitive you the you point of market? the that there do that that ahead Where thinking terms do And see WEX from to seat? dynamics, where in peers some time? see in your Or I of Like catch-up you need still do see are do of you is at out the other versus mean, it you you are investments? this curve

Melissa Smith

[indiscernible] our reasons. couple of in very bullish the for of EP to impact a continue portfolio about We be

First a we of all, revenue see opportunity. this new as

that be far, has true. proved so And to out

for fees and networks the United subscription earning in to that States we've Europe. created, we're So the both access

in is we You've product subscription as build and leading, the in future our And with subscription capability, road fact functionality, think talked which associated then ability have about we we to to map, reimbursement that think continue to gives market home additional out fees fees. us which rolled we that the add at earnings we've that. continue

over way net that different we portfolio say we've from between TAM. be that, to seen revenue going believe to okay, a a source and do the And additional billion transition talked time. $X.X I'd into is about this $X additive. far, of so billion what great we this of it's the So And

really largest part they're sit what because that about have some is competitive our in in customers of where migration, then a the you've fleets that feel that got the good a from through of going marketplace. we're we testing going this fleets are hearing requirements. this are competitively, people And sustainability government other From bunch we through migration, perspective,

when And are not mandates, what sure that to next. these from is having we they're really to they know talking what our customers do

And commercial so indicative are capability of looking had much than we're that working built. the that in really side, more fashion the we And anticipated. good think what just we probably people they're feel the a I that's we've on of consultative fact for options, and about

Operator

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

Ramsey El-Assal

Can me you guys hear now?

Melissa Smith

Hello. Yes.

Ramsey El-Assal

can. you Yes,

Sorry that. about

can If think you hear you me, I can.

fell that mentioned segment, recognition for I revenue Corporate from Can us last to bit? of through interchange timing And You just rate should the a that in also think of how help interchange rates couple the from little elaborate year. due next you on quarters. net the incentives that network think, trend

Jagtar Narula

sure. Yes,

decrease we what I to from QX was of XXXX. the XXXX of So QX referring saw to was Ramsey,

caused in have increase QX, You'll that call, coming related recall we and the to interchange QX, from last and recognition incentives rate have it that normalized. revenue down then the associations, with we QX earnings to in volume the back the to

the year. the year, some There'll to of we the to Going tick the be quarter. go through expect contract, tick we as we through with dynamics slightly slightly to expect be the but up flat rates interchange balance from flat booking up first

Ramsey El-Assal

the are credit higher in what QX? quick uptick a the credit of was bit losses you're I'm be full looks to a in an dynamics It in it than loss QX year. follow-up. terms like QX in and there maybe the guidance, curious just of bit then a in And also Okay. expecting for

Jagtar Narula

help built alarming, result losses the over we expect we'll higher at credit from can nothing some that are the trend the year. us looking the upon Based trends, We've quarter. sophisticated that a we Yes. quarter. that going. but course then down the of pretty in recent And just charge-offs where reserves to we expect guide, slightly be And too think we're forecast the models of charge-offs as see in those as forecast of you raising second

new into new in we In automated put credit QX, we've new monitoring a place model. We've line into adjudication place. got credit some had going system functionality that's a QX,

So year, we to contained we as expect through do uptick relatively go expect but QX. be we in credit losses the an

Operator

Question the of Sanjay Sakhrani. line comes from

Sanjay Sakhrani

So a be about and I and it look yes, Booking guess little HBX. we I -- congratulations probably you think some on bit, to we there's mentioned as the as impact renewals Jagtar, at this going with think year the yields can out about as think Maybe impacts and look we and help next. volumes anything P&L us rates the of you take terms just the in and such else. into

Melissa Smith

Yes.

if opportunity Let me -- are start long-term with the but be we're in bit couldn't partner. a the uniquely that's just a little partner virtual some continue contract. to associated be -- there we their going contracted more pleased agency the to to We're specifically travel sign headwinds, booking. also this contract, be short-term around Booking.com, sophisticated new the to online going And it's the card world primary largest

and rely portion they're of they're to continue upon best-in-class transitioning virtual But platform, program. to to certain in-house a be card and performing WEX's going to going forward, payments related technology the activities going

excited this But Jagtar minute. I guidance scale in that want contemplated just and term. it's allowed really talk opportunities long together will And obviously about our in we're has us for more a a to have that The about and both the partnership great we companies. reiterate, to outcome

Jagtar Narula

what rate business. Sanjay, Payments I'll a the talk bit little interchange in Corporate for means this about

our and our I've to digits previously I year, grow this the Payments for this the expectations. -- we've in And included that revenue we've right, new contract single said expect Corporate year. reminder, a our just said think in changed not last I in has that guide So the we earnings high call this

if So look in Corporate XX% grew in quarter, at did year-over-year what the first Payments. we you we

my so over remarks, the that's course down change that embedded year. Booking I This that the of And implies prepared that trend to expect in outlook. expectation doesn't as in said -- we contract that

start the with accounting impacts to me this. let So

contract. we existing continue payment is volume to booking the today, program, as it the new will as of and under But processing portion a So revenue, to expect recorded it to program. transitions revenue. this servicing longer payment as volume no new program, transition this it processing as will new that be instead, recorded revenue. account it In recorded And will to be be

still So new volume the to be program it included purchase volume interchange not although you transitions that metric will be that rate, that net our volume we our will total included published. result of in we in will report that that metric or the see

the But be factors. seen transition Corporate will rate we're total to that this interchange is slightly saw So days I the stable from for Payments on we obviously of Ramsey our and to remains to much the year how in our rates first current that earlier for expectation, through quarter. the be timing said, early full flows in as in it up

timing volumes And grow the for single currently still transition. while year, that to is of expecting in will the Corporate digits related volume shift, what inclusive Payments purchase we're the could Booking reported in that reduction high the

our So Booking. in revenue the guide the with is expectations account to remaining that servicing corresponding really you Corporate volume, we to year expected then revenue purchase Payments related for increase bridge gives full that rate and our and the expect that

we contract. we're So excited And continues relationship. to with reiterate revenue working a that really this them. This a customer, great just Melissa additional relationship. long-term what about long-term We've said, got see opportunities

So we're this. excited really about

Sanjay Sakhrani

there's growth But -- accretive go said, segment? is or to renewal just to accretive, transitory just growth you see clarify, revenue this know And to And Jagtar. quick on net this I a the something stable of stuff dilutive then on sort look this onwards, as one as guys XXXX follow-up I rate have in that you Okay. for we net year. out

Melissa Smith

short We term. the long headwind think a over term. it's in benefit the a It's

Sanjay Sakhrani

And this mainly into just not term, even year when [indiscernible] or you next short say year?

Melissa Smith

they period of migration, to the a go they're And Well, is is as that And there's timing so through again, the portfolio that bring going to be going time. this uncertain. piece of the in-house. a of

current So we're our giving you expectation.

it to how depend really on transitions. going So it's transitions, when much

giving again, And right thoughts current so we're you now. our

Sanjay Sakhrani

front-loaded of sort seems saves. the front Jagtar, get cost delinking it. sort of the ended bit. just investments, like one you investment a you back it. questions guide. I've that and revenues the then end, gotten just the and Got EPS EPS little Got of And the back-end but It mentioned you is the

visibility So the are that's correct. trajectory EPS back that in right? assuming amount a into have Is you that of revenues more end, decent the

Jagtar Narula

Sanjay. right, That's

-- got that's increase end, back revenue in look upon we've talked the in roughly the at half, cetera. about the and about, year, you guided based volume, things what million related the second to if pricing, it's et $XX we've talked we So you in in QX full

we that cost we with got the start talked we've you've before. expect flowing whereas then about repeatedly about front-loaded through reductions the And the half, some investments we talked to we've cost in reductions the that that second have of seen

Melissa Smith

were step-up loss the had in quarter. we credit also the We anticipating in second

Jagtar Narula

Correct.

Operator

Faucette of Morgan from Your comes with line the question James Stanley. next

James Faucette

model ask, Great. I mix transitions, et Payments wanted and near just to revenue cetera? travel to term, Corporate some be how thinking nontravel over the with these should about especially of medium we and between

Melissa Smith

and a pandemic. We progress Jagtar to P&L couple through the year. volume, our again, of normalize move continue rebound to to travel you in about just pieces do how through travel the the can And expectation. I will through parts is uptick relates revenue last you are spend that, that perspective. from travel, like the current case, big the think the of you deviation. as obviously, I XX% a spend over math And talk about the XX%, that expecting will time, the nontravel. Over to of the moving this spend, cleaner about go about now spend with that you think obviously, see going talked of written is course [indiscernible] way the a a seen, we total to XX% rest, wouldn't of give big years actually in So are We've in

Jagtar Narula

I'd Yes. add. just

So through -- would I year. volume be the I the the volume over total expect gave nontravel we volume year. sort what say rates we the of expect for purchase course of purchase stable fairly of to that

that and total I booking volume number to net the real transition. the gave really the So is

James Faucette

quickly it. the just side the I what's it. there. happening Benefit just better wanted understand it. to Got touch and then on Got Got And I HSA, can in so

think, this level how But rest normalize. in balances be cuts strong, 'XX? has the those rate expecting still curious in the the year? for past. quarter. Melissa, part impact I in though rest And cash as you of be the spoken are to yields that, into of And the HSA estimates the seems for on growth of the thinking making to You've XX%, and in and been on to there HSA we assets, you're that at should 'XX of growth of came seen tied I guess, that, what you've beginning about kind growth assumptions quite about it Devenir's but

Melissa Smith

the start, the I Jagtar end Yes. year. don't rates the Why of at and hit

marketplace through our of we of go the account we this in terms continue to as So anticipate the to outgrow year, growth. course

focused our making delivering through really continuing our and sales of through it pipeline move that sure the to course we that year. are So around this

to that through have well market the what products, make in to that, add added products we're have our to products. to a compliance then So happens our we is we revenue capability in Ascensus added as rights associated outgrow from additional ability as the administration perspective. And be sure custodial with benefit objective like as acquisition, accretive the able earning

from so cross-sell we've the capability, across those including do really which that cross-sell that portfolio, added to to since a about you growth talk core rate has we strong been had capability. And And want a perspective, our continuing that?

Jagtar Narula

Yes.

line forecasting is guidance, our basically expectations. what and presentation the in think market we in So are in included we've our that I earnings with

rate had expected. to year. this at said we about changed now we We've of X cuts the beginning what the that cuts rate I down market are X as, expectations So year, think is

in fixed included of regard say, the in are our what's the balances majority rate with would to instruments. guide. I HSA that's our So balances,

that's to The part the neutral don't of at since that's previous so rate rate look floating. to year less impact floating expect I've expecting and it's portfolio So effectively that the we rate in exposure, Obviously, our as the debt. as the talked for corporate revenue we're we way any cuts P&L cuts all in part manage the versus of tend fixed year. But the through calls, go about through balance we increase those. once you of P&L it guide take our

revenue have impact. So bottom EPS line a it we'll impact, doesn't have some

Operator

comes James. line question of John the next Davis Raymond from Your with

John Davis

benefits ex the the called X.X being think loss about obviously, customer out should it, loss? within benefits about, call customer Melissa, you Advantage Medicare million the let's revenue of x, this the accounts that growth we of account the year and or How impact so.

Melissa Smith

course couple the in the It's of still year. full for a the year of percent

John Davis

Okay.

clear. growth, So just points be benefits a of couple to to

Melissa Smith

Yes.

John Davis

Okay. margins. And on just Jagtar then Mobility

what of First I a have think the out be us margins helpful. about how about Any would lower here color there from know you and Mobility and maybe full margins XX% fuel But time, I think we dipped help in in think below the trajectory prices. while, called should just year?

Jagtar Narula

sure. Yes,

as should the we year. to So expect margins go through we improve overall

forecasting balance we're better think, drag. in I a we've we We're a then right, higher go the late we that interest environment that year. through year, become of got improvements go expecting expecting prices the year. fuel balance And will we're we've drag the the as of of as seen the the of fees over rate through less some

should QX losses, those a are will half. of to impact So all in the higher bit forecasting improve help we second little those an as credit that have we margins but because should things get

Operator

comes with Nate the Bank. question Deutsche of from This Svensson line

Christopher Svensson

some I could on kind wanted within the the remind last growth just Mobility. of to I that was hoping of you there. question follow underlying revenue us assumptions up on

growth, talked I adjusted points from about about had X So you or think X% so macro Payzer. including before

assumptions just wanted some was that, to then make I So quarter. And maybe sure reiterated this that of the underlying there. for

fee gallons headwind but Any growth, the expansion way fuel in payment getting and that'll rate. help for some the I back the -- us, half of like the maybe mentioned would of increasing. helpful. late better You be of guess, processing year, that other assumptions

Melissa Smith

Jagtar that that before to the was quarter. up the things in the step go But into is to he us one important to detail. really starts, first in of going was see

saw for the Europe revenue impacted of going an we that impact fact growth You quarter growth talked steel the that in about first negative as from were incremental part growth, the our had we positivity prices. But which the the had quarter to had offset through that quarter, the terms the year. the that we of in we in of that the of spreads fourth we was in course progressing plan

with number we we that the So pleased posted are this quarter.

Jagtar Narula

up In end want just it And saw growth. long-term a in range, we've below in we said, Yes. our X% Melissa right? what we that saw from Mobility, so quarter, I'll top here. jump emphasize to which So First of X%, to I just guided tick QX. X% was call

expected So to that's we we're quite and that's But sorry, pleased exactly prices. what and was to see -- that ex do, fuel that.

the from range through rest start X%, come as of that So things year, think fruition of about the we rest to comes Payzer's to end come we of expected talked in saw the to call our it previous the high QX. to in I the contribute And at to. that

saw of Part fees part it much higher portfolio. quarter. credit that that levers improvements because of as that is a ago late losses the both the rate last the well expect So it more the it coming first items as of beyond we've this we a quite we actions from because couple those We to that and through years of the attrition it's is pulled. QX of pricing in took impact in item. QX as the saw Both year. We volume year, we lap growth as dampened see because in of and didn't the

start go that we we to So should the as year. see through

the in that and pricing through QX fees, QX fuel we're X those are year. late volume things of just -- prices mentioned, sorry, I all expecting what So

Christopher Svensson

guess Appreciate helpful. Payments. follow-up, my X-parter color. on Corporate I Super maybe the a

talked last quarter, think better card virtual about I Travel rate a business. your had you attach within

forward? And I second quarter on on then how and prepared a comments direct this So guess Corporate couple part, on your see this, how in remarks color any the sales that more trended Payments. I going but efforts your update guess that you of

would information additional benefit force on you're in or direct any the So from your helpful. selling product sales be the seeing midsized AP the businesses

Melissa Smith

one, on them take we'll Yes, too. this

I which about merchant customers. the model, migration think what of our the the to benefit you're is we to European within So continue don't talking see

And that so benefit. been has a

of came from The quarter. spend particular I increase most X% in of the to this And It quarter, the outside normalized. was transaction year-over-year. in Although in seem a oversize of growth about the only growth. Europe increase will in volume rates rate of because was say the have

a feels it into again, of So we're normalized back more getting like environment.

Payments In terms business. came of outside direct growth in sales, of sales the from of Corporate our our half travel

execute feel say at and we continue I point the that's continue pipeline well. in Travel that as would quarter. And so this too and to deliver, about deliver And a that's to engine we within true good continuing to sustained and time how there each build got growth we've

with opportunities. build continue existing we pipeline customers, We to have our there, working the look for

some You of continue the to call, we're area talked going to about that on well. focus that it's during but an as

Jagtar Narula

third over processing half we're of at Yes, of quarter quarter that upwards. -- related overall, business add nontravel, trending the trends is processing I'll to pleased direct this for This row payment growth payment look I from direct of came our second in extremely this just that our the revenue that, is where with business. And the a quarter. if revenue nontravel the

quite were we trend. see to that pleased continuing So

Operator

Your with Bank comes America. of the of Bhatia line from Mihir question next

Mihir Bhatia

I actually start question. back following up to going on by wanted to Sanjay's

beyond just benefit what you just like? be a You can getting locking you'll additional there? talk the look contract longer to for from But renewal, headwinds from is from Is understand the trying opportunity large that But for mentioned some renewal. of opportunity the there volume them the short-term longer-term WEX I'm side them the about such the of term? renewal obviously up customer. Booking

Melissa Smith

Yes.

talk about here. things of me a couple Let

highly it's this customer. think unique I in have capability because set important all, of distinguish sophisticated a is a Booking marketplace. They to it First

like And to them it's feel their so them, capability. bridging with we a partnership, great what we're doing we're

primary term. In this that relationship, over terms for us, are provider the of long opportunity again, the we long-term

work create on to do them continuing with portfolio, their are believe will other areas We which opportunities. we across

Mihir Bhatia

then the understand And big Just price the based $X.XX, bit, of right? The be a revenue to Okay. about up trying like right should gave here, $X.XX. It What's increased last assumption only guidance quarter fuel to picture, little increasing which $X.XX maybe that price framework. like you going changed switching from like fuel more right? looks guide on is EPS, framework than right? just tailwinds But EPS

revenue year. that at higher. understand it the like the trying little it? start you're or the a what's about changed way may better the Is you expected the I'm looks But So fuel be in to to than remove impact? just of maybe macro bit costs right if coming getting think really I

Jagtar Narula

Yes.

here say items. X So I would what

So if I One prices. revenue. fuel start items with the revenue, impacting X macro are is

we our year. rates. assumed one other reductions And interest this said in is originally -- call, X rate the as The last right, I

we're Now that. less assuming than

So of that contracts merchant has a impact HSA revenue because and assets.

changes see interest the we to earnings, neutral business fuel-related EPS the about you as we've the rate-related flow level. So revenue through see before, at talked our to in the rate be line. But manage interest you changes

cost don't flow debt. changes those basically increase we corporate you they're So in through counteracted the see interest expect by to because

the So fuels in first that movement, quarter had first million. flowing quarter $X largely our number. the we was market impacted That about through,

EPS delta actual largely increase. that's that see in so and And seeing the you're $X.XX what expect between the you'd you the

Operator

Steve Q&A I That back concludes the now the will to for session. turn remarks. over conference our Elder closing

Steven Elder

look our and up joining operator, Thank sharing you, progress for soon. Thank you, the thank forward We'll in us to everyone, today. quarter, coming you. second

Operator

all for today's call. concludes joining. that gentlemen, and Ladies Thank you

now You disconnect. may

WEX (WEX) 25 Apr 242024 Q1 Earnings call transcript