Q4 2021 WEX Inc Earnings Call

February 10, 2022

Speaker 1: Adjustments for this year's fourth quarter and four-year gap results to arrive at these metrics include unrealized gains on financial instruments, Patreon Boost, socketed

As for this year's fourth quarter and full year GAAP results to arrive at these metrics include unrealized gains on financial instruments.

Net foreign currency losses.

Speaker 1: acquisition related and tangible amortization, other acquisition and divestiture related items, stock-based compensation, and other

Acquisition related intangible amortization other acquisition and divestiture related items.

Stock based compensation and other cost change in fair value of contingent consideration that.

Speaker 1: change in fair value of contingent consideration, debt restructuring, and debt issuance cost amortization.

Debt restructuring and debt issuance cost amortization.

Speaker 1: similar adjustments attributable to non-controlling interests, and certain tax-related items as applicable.

Similar adjustments attributable to noncontrolling interests and certain tax related items as applicable.

Speaker 1: The company provides revenue guidance on a GAAP basis and earnings guidance on a non-GAAP basis as we are unable to predict certain elements that are included in reported GAAP results.

The company provides revenue guidance on a GAAP basis and earnings guidance on a non-GAAP basis as we are unable to predict certain elements that are included in reported GAAP results.

Speaker 1: Please see Exhibit 1 of the press release for an explanation and reconciliation of adjusted net income attributable to shareholders to GAAP net income attributable to shareholders.

Please see exhibit one of the press release for an explanation and reconciliation of adjusted net income attributable to shareholders to GAAP net income attributable to shareholders.

Speaker 1: and a reconciliation of operating income to adjusted operating income.

And a reconciliation of operating income to adjusted operating income.

Speaker 1: I would also like to remind you that we will discuss forward-working statements under the Private Securities Litigation Reform Act of 1995.

I would also like to remind you that we will discuss forward looking statements under the private Securities Litigation Reform Act of 1095.

Speaker 1: Actual results may differ materially from those forward-looking statements as a result of various factors, including those discussed in our press release, the risk factors identified in our 2020 annual report on Form 10K filed with the SEC on March 1, 2021, our quarterly reports on Form 10Q, and subsequent SEC filings.

Actual results may differ materially from those forward looking statements as a result of various factors, including those discussed in our press release the risk factors identified in our 2020 annual report on Form 10-K filed with the SEC on March one 2021.

Our quarterly reports on Form 10-Q , and subsequent SEC filings.

Speaker 1: While we may update forward-looking statements in the future, we disclaim any obligations to do so. You should not place undue reliance on these forward-looking statements, all of which speak only as of today. With that, I'll turn the call over.

While we may update forward looking statements in the future we disclaim any obligations to do so you should not place undue reliance on these forward looking statements all of which speak only as of today with.

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

Speaker 2: Thanks Steve and good morning everyone. We appreciate you joining us today. Before diving into our Q4 and full year results, I'd like to share my appreciation for our dedicated team members across the globe who continue to execute admirably with the backdrop of the ongoing pandemic. As a result of their remarkable efforts, 2021 was a very strong year for WAC.

Thanks, Steve and good morning, everyone. We appreciate you joining us today for our diving into our Q4 and full year results I would like to share my appreciation for our dedicated team members across the globe.

Continuing to execute accurately with the backdrop of the ongoing pandemic.

As a result of their remarkable efforts 2021 was a very strong year for lax.

Speaker 2: In the fourth quarter, we delivered record revenue of $498 million, a year-over-year increase of 25 percent, driven by the continued expansion of our platform. Approximately 12 percent of the increase in revenue was from higher fuel prices, so revenue grew approximately 13 percent for all other factors.

In the fourth quarter, we delivered record revenue of $498 million a year over year increase of 25% driven by the continued expansion of our platform approximately 12% of the increase in revenue was from higher fuel prices have revenue grew approximately 13.

For all other factors.

Speaker 2: Total purchase volume processed across the organization in the fourth quarter grew 79% year-over-year to $25 billion, reflecting the strong rebound in momentum we are seeing across each of our businesses.

Total purchase volume processed across the organization in the fourth quarter grew 79% year over year to $25 billion.

Reflecting the strong rebound in the momentum we're seeing across each of our businesses.

Speaker 2: Worth noting that while travel volumes have not yet returned to pre-pandemic levels, we have more than made up for the loss of revenue, powered by the underlying strength across all of our other solutions.

Worth, noting that while travel volumes have not yet returned to pre pandemic levels, we have more than made up for the loss of revenue.

<unk> by the underlying strength across all of our other solutions.

Record quarterly revenue paired with a unique efficiency and scalability of our platform resulted in adjusted net income per diluted share of $2 58, an increase of 78% compared to the same quarter last year.

Speaker 2: Record quarterly revenue, paired with the unique efficiency and scalability of our platform, results in adjusted net income for diluted share of $2.58, an increase of 78% compared to the same quarter last year.

Speaker 2: Before turning to the key drivers of our growth during the quarter, let me quickly touch on our full-year 2021 results. On a full-year basis, 2021 revenue increased 19% year-over-year. Approximately 8% of this increase was due to higher field prices and some benefits from foreign exchange rates, leaving approximately 11% growth for all other factors.

Before turning to the key drivers of our growth during the quarter. Let me quickly touch on our full year 2021 results on a full year basis, 2021 revenue increased 19% year over year.

Approximately 8% this increase was due to higher fuel prices and some benefit from foreign exchange rates.

Leaving approximately 11% growth for all other factors.

Speaker 2: Full year purchase volume of $88 billion was up 59% compared to 2020. And full year adjusted net income grew 51%, reflecting many of the same benefits of scale and efficiency that I just mentioned.

Full year purchase volume of $88 billion was up 59% compared to 2020.

Full year adjusted net income grew 51%, reflecting many of the same benefits of scale and efficiency that I just mentioned.

Speaker 2: Overall, 2021 was one of the best years in Lexus history, with record revenue and year-record adjusted day-to-day income per share.

Overall 2021 was one of the best years in <unk> history with record revenue and near record adjusted net income per share.

Speaker 2: we entered 2022 with strong momentum underpinned by a return to healthy organic growth.

We entered 2022 with strong momentum underpinned by a return to healthy organic growth.

Speaker 2: Now let me take a step back and discuss the key drivers of our fourth quarter results in more detail.

Now, let me take a step back and discuss the key drivers of our fourth quarter results in more detail.

Speaker 2: First, as is the case in the third quarter, most existing customers then returned to, and in many cases, exceeded pre-pandemic levels.

First as soon as the case in the third quarter, most existing customer spend return to and in many cases exceeded pre pandemic levels.

Speaker 2: Second, in core to our strategy, we're expanding our ecosystem with innovative new solutions to help our customers simplify their businesses. As an example, we recently signed a new agreement with MasterCard that allows us to add their broad merchant acceptance to our proprietary closed loop fleet cards, enabling our customers to purchase a broader set of products through WEX, but still in a highly controlled manner.

Second and core to our strategy, we are expanding our ecosystem with innovative new solutions to help our customers simplify their businesses.

As an example, we recently signed a new agreement with Mastercard that allows us to add their broad merchant acceptance to our proprietary closed loop fleet cards, enabling our customers to purchase a broader set of products through <unk>, but still in a highly controlled banner.

Speaker 2: In January , we also announced the launch of WEX Fleet Tolls in partnership with BestPath, a leader in toll management solutions for commercial fleets.

In January we also announced the launch of Flex fleet tolls in partnership with best path a leader in toll management solutions for commercial fleets. This.

Speaker 2: This solution allows our fleet customers to utilize cutting-edge payment technology to improve their mobility needs. Not only does this allow our customers to free up capital by only paying for accrued tolls, it also simplifies account management by reducing the number of accounts held with different tolling authorities across the country.

This solution allows our fleet customers to utilize cutting edge payment technology to improve their mobility needs not only does this allow our customers to free up capital by only paying for crude tolls. It also simplifies account management by reducing the number of accounts held with different tolling authorities across.

The country.

Speaker 2: Are compelling through the solutions like these underpinned by Wex's global scale and reliability. Customer focused innovation and specialized focus is leading to wins in the marketplace and helping us expand our existing relationships.

Our compelling suite of solutions like these underpinned by <unk> global scale and reliability.

Customer focused innovation and Specialised focus is leading to wins in the marketplace and helping us expand our existing relationships.

Speaker 2: To that end, I'm very pleased to announce that we have extended our agreement with one of the largest online travel companies in the world during the fourth quarter. We look forward to supporting their needs and innovating with them for many years to come.

To that end I'm very pleased to announce that we have extended our agreement with one of the largest online travel companies in the world during the fourth quarter.

We look forward to supporting their needs and innovating with them for many years to come.

Speaker 2: In addition, we continue to ramp our relationship with Avid Exchange, which we expect will continue to drive significant volume growth and profitable revenue growth over the coming quarters.

In addition, we continued to ramp our relationship with avid exchange, which we expect will continue to drive significant volume growth and profitable revenue growth over the coming quarters.

Speaker 2: Beyond driving growth with our existing clients, I'm also pleased to share that we signed several new customers during the fourth quarter, including the Commonwealth of Kentucky and Fleet, Anthem and UMB in Health, and Renewed PNC Bank, one of our largest and most important corporate payment partners, just to name a few.

Beyond driving growth whether existing clients I'm also pleased to share that we signed several new customers during the fourth quarter, including the Commonwealth of Kentucky and fleet anthem.

Anthem, and USB and health and renewed PNC bank, one of our largest and most important corporate payment partners just to name a few.

Speaker 2: We continue to hear from new customers that they are choosing WEX for many of the same reasons our existing customers are deepening their relationships. Because our unique platform allows us to offer tailored solutions that are seamlessly embedded into their workflows with a simple integration.

We continue to hear from new customers that they are choosing <unk> for many of the same reason our existing customers are deepening their relationships.

Because of our unique platform allows us to offer tailored solutions that are seamlessly embedded into their workflows with a simple integration.

Speaker 2: In mobility, this includes our industry-leading products for over-the-road and local vehicles. In travel and corporate payments, we're leading with embedded payments and AP automation solutions. In building out a regional sales force in the direct channel to bring these solutions to more customers with fast and simple integration.

And mobility. This includes our industry, leading products for over the road and local vehicles and travel and corporate payments, we're leading with embedded payments and AP automation solutions and building out our regional sales force and the direct channel to bring these solutions to more customers with fast and simple integration.

And in health, we're driving growth in our benefits platform for CCH and Cobra administration as well as our fully outsource benefit administration platform and services, which is a significant growth opportunity for wax.

Speaker 2: And in health, we're driving growth in our benefits platform for CDH and COBRA administration, as well as our fully outsourced benefit administration platform and services, which is a significant growth opportunity for WAC.

Speaker 2: From an end consumer perspective, one in five HSA account holders are on the WEX platform.

From an end consumer perspective, one in five HSA account holders are on the wax platform.

Speaker 2: This large data pool allows us to reach beyond the product offering and also help educate people on the financial benefits of HSA.

This large data pool allows us to reach beyond the product offering and also help educate people on the financial benefits of HSA flex targets educational messages based on where people are in their life plans.

Speaker 2: WECS targets educational messages based on where people are in their life plans.

Speaker 2: from newly employed to people getting ready to retire, with a goal of helping people get the most out of money that they set aside in tax-advantaged accounts.

From newly employed to people getting rates retire with the goal of helping people get the most out of money that they set aside in tax advantaged accounts and we do this in creative ways through benefit Toolkits open enrollment toolkits.

Speaker 2: And we do this in creative ways through benefit toolkits, open enrollment toolkits, blogs, and podcasts.

<unk> and podcast.

Speaker 2: This helps both our partners with their offering and end consumers.

This helps both our partners with their offering and end consumers.

Speaker 2: To that end, I'm very optimistic about the momentum we've seen in health coming out of open enrollment season, which has exceeded our expectations and sets us up for a strong 2022.

To that end I'm very optimistic about the momentum we've seen in health coming out of open enrollment season, which exceeded our expectations and sets us up for a strong 2022.

Speaker 2: During the quarter, we also successfully moved nearly $1 billion in HSA deposits to Wexbank, which were invested and we expect to be a significant driver of incremental revenue in 2022.

During the quarter. We also successfully moved nearly $1 billion in HSA deposits to West Bank.

Which we're invested and we expect to be a significant driver of incremental revenue in 2022.

Speaker 2: Again, we'll discuss the details further in a moment, but this is just one of many reasons we see significant value in health business.

Dan will discuss the details further in a moment, but this is just one of many reasons, we see significant value and health business.

Speaker 2: Wex has deep experience and is driving growth across each of our three verticals. But I'm even more excited about the opportunity we had to further integrate our products and services and wrap our customers with an ecosystem of solutions that meet their evolving needs.

<unk> has deep experience and is driving growth across each of our three verticals, but even more excited about the opportunity ahead to further integrate our products and services and wrap our customers with an ecosystem of solutions that meet their evolving needs.

Speaker 2: To that end, in January , we welcome Karen Stroup as Chief Digital Officer and Carlos Carriedo as Chief Operating Officer International.

With that end in January we welcomed parents group as Chief Digital Officer.

<unk> as Chief operating Officer International.

Speaker 2: Both Carlos and Karen will be instrumental as we continue to expand our global footprint and optimize digital solutions for customers around the world. We announced this morning that we will be hosting a virtual investor day on March 23rd, during which you'll hear more from Karen and Carlos, and we will discuss how our reorganized leadership structure will help WEX unlock the benefits of fully integrated customer relationships across our entire

Both Carlos and Karen will be instrumental as we continue to expand our global footprint and optimize digital solutions for customers around the world.

We announced this morning that we will be hosting a virtual investor day on March 23, during which you'll hear more from Karen and Carlos <unk>, who will discuss our reorganized leadership structure will help works unlock the benefits of fully integrated customer relationships.

Across our entire product portfolio.

Speaker 2: Turning now to our technology platform. Last quarter, I told you that we had nearly completed our efforts to move WEX's corporate payments card-issuing technology to the cloud. I'm very pleased to report that the integration was completed successfully.

Turning now to our technology platform last quarter I told you that nearly completed our efforts to move <unk> corporate payments card issuing technology to the cloud I'm very pleased to report that the integration was completed successfully.

Speaker 2: Today, approximately 80% of Wex's platform is multi cloud based, allowing Wex to exceed expectations for scale and reliability, while also being able to move quickly on new innovative concepts.

Today, approximately 80% of <unk> platform is multi cloud based allowing <unk> to exceed expectations for scale and reliability, while also being able to move quickly on new innovative concepts.

Speaker 2: Throughout 2021, our technology investments focused on continuing to enhance our cloud-native capabilities, digital marketing engine, and artificial intelligence. As I mentioned last quarter, our digital marketing channels are proving very effective. We're expanding it to other parts of the business to drive enhanced conversion and customer engagement. For our North American fleet business, these marketing efforts delivered 56% more new accounts in 2021.

Throughout 2021, our technology investments focused on continuing to enhance our cloud native capabilities digital marketing engine and artificial intelligence.

As I mentioned last quarter, our digital marketing channels are proving very effective there.

Expanding it to other parts of the business to drive enhanced conversion and customer engagement.

For our North American fleet business. These marketing efforts delivered 56% more new accounts in 2021.

Speaker 2: On the AI front, we continue to take strides to increase automation across the business, driving efficiency, and improving outcomes. One example of this is our call centers, where we deployed a new AI-powered virtual agent.

On the AI front, we continued to take strides to increase automation across the business driving efficiency and improving outcomes.

One example of this is our call centers, where we deployed our new AI powered virtual agents.

Speaker 2: All of our investments are geared toward creating an intelligent, secure, highly scalable, and resilient infrastructure, enabling our customers to access a full suite of capabilities in ways that can be seamlessly embedded in their business, including cutting edge digital experiences.

All of our investments are geared toward creating an intelligent secure highly scalable and resilient infrastructure, enabling our customers to access a full suite of capabilities in ways that can be seamlessly embedded in their business, including cutting edge digital experiences.

Speaker 2: We believe these technology investments will further enable us to help our customers solve increasingly complex challenges. Key among them, the expected transition to hybrid and electric vehicles. With our leadership position in providing fleet management solutions combined with new offerings like the partnership we announced with ChargePoint last quarter, we're uniquely positioned to help our customers with their mixed fleet needs.

We believe these technology investments will further enable us to help our customers solve increasingly complex challenges key among them the expected transition to hybrid and electric vehicles with our leadership position in providing fleet management solutions combined with new offerings.

Like the partnership we announced with charge point last quarter, we are uniquely positioned to help our customers with a mix fleet needs. These.

Speaker 2: These efforts also closely align with our commitment to environmental innovation, which includes identifying near and long-term opportunities to support our customers in improving their environmental sustainability.

These efforts also closely aligned with our commitment to environmental innovation, which includes identifying near and long term opportunities to support our customers and improving their environmental sustainability.

Speaker 2: As fleet's becoming increasingly electric, we will be readied with new solutions to help our customers make that transition. We look forward to sharing more on this topic at Investor Day.

Fleets, becoming briefing re electric will be ready with new solutions to help our customers make that transition we look forward to sharing more on this topic at Investor day.

Speaker 2: Looking ahead at 2022 and beyond, the future for WEX is incredibly bright. We entered this year with significant momentum, underscored by strong new sales, and a robust open enrollment season in our health business that exceeded our expectations. Our digital marketing channels continue to deliver, and we are well positioned to capitalize on that success.

Looking ahead to 2022 and beyond the future for <unk> is incredibly bright.

We entered this year with significant momentum underscored by strong new sales and a robust open enrollment season in our health business that exceeded our expectations. Our digital marketing channels continued to deliver and we are well positioned to capitalize on that success.

Speaker 2: We continue to make great strides in improving efficiency, driven by our investments to make our platform more flexible and scalable.

We continue to make great strides in improving efficiency driven by our investments to make our platform more flexible and scalable.

Speaker 2: All of these trends give me confidence in our ability to deliver on our financial targets, including revenue growth within our long-term guidance range for 2022.

All of these trends give me confidence in our ability to deliver on our financial targets, including revenue growth within our long term guidance range for 2022.

Speaker 2: Before I conclude, I'm sure you all saw the news that Roberto Simone will be leaving WEX in April . It will be helping us work through a successful transition. I'd like to extend my sincere thanks to Roberto for his many contributions to WEX since joining in 2016 and wish him well in his future endeavors.

Before I conclude I am sure you all saw the news that <unk> alone will be leading works in April and will be helping us work through a successful transition.

I'd like to extend my sincere thanks to Roberto for his many contributions to <unk> since joining in 2016 and wish him well in his future endeavors.

Speaker 2: I'm pleased to be joined on today's call by Jen Kimball, our Chief Accounting Officer and Interim Chief Financial Officer. Jen has done a great job of leading our finance and accounting teams while we conduct this search for Roberta's replacement. I'll now turn it over to Jen to walk you through our results in more detail. Jen?

I am pleased to be joined on today's call by Jen Kimball, Our Chief Accounting Officer, and interim Chief Financial Officer, Ken has done a great job of leading our finance and accounting teams, while we conduct a search for <unk> replacement.

I'll now turn it over to Jan to walk you through our results in more detail John .

Speaker 2: Thank you, Melissa, and good morning, everyone. While I haven't had the opportunity to meet many of you, I'm really excited to join Melissa and be here with you today.

Thank you Melissa and good morning, everyone.

While I haven't had the opportunity to meet many of you I'm really excited to join with us and be here with you today.

Speaker 2: First, I'll provide an overview of our strong fourth quarter results. We'll then shift to our outlook for the first quarter and full year 22.

First I'll provide an overview of our strong fourth quarter results.

We will then shift to our outlook for the first quarter and full year 2002.

Speaker 2: We raised our fourth quarter and full year guidance in early January , and our results played out even better than expected.

We raised our fourth quarter and full year guidance in early January and.

And our results played out even better than expected.

Speaker 3: feeding on both top line and adjusted earning.

Seating on both top line and.

Adjusted earnings.

Speaker 3: To put this into perspective, this is one of the best quarters in WAC's history.

To put this into perspective. This is one of the best quarters in <unk> history.

Speaker 3: As Melissa mentioned, we ended 2021 with a great deal of momentum, which demonstrates the strength of our organic business and gives us a nice tailwind coming into this year.

As Melissa mentioned, we ended 2021 with a great deal of momentum.

Demonstrates the strength of our organic business.

And gives us a nice tailwind coming into this year.

Let's start with our results for the full year on slide 11.

Speaker 3: Let's start with the results for the full year on slide 11.

We delivered total revenue of $1 $85 billion.

Speaker 3: We delivered total revenue of $1.85 billion, up 19% over prior year.

Up 19% over prior year.

Speaker 3: Gap earnings per share attributable to shareholders was breakeven.

GAAP earnings per share attributable to shareholders was breakeven.

Speaker 3: Adjusted net income for deserted share was $9.14, up 51% comparatively.

Adjusted net income per diluted share was $9 14.

Up 51% comparatively.

Fuel prices and favorable foreign exchange rates added $124 million of revenue versus prior year.

Speaker 3: Fuel prices and favorable foreign exchange rates added $124 million of revenue versus prior year.

Speaker 3: I'm pleased to report that each of our segments outperformed expectations. Full year revenue was a record high and above 2019 pre-pandemic levels by more than $125 million.

I'm pleased to report that each of our segments outperformed expectations.

Full year revenue was a record high.

And above 2019, pre pandemic levels by more than $125 million.

Our fleet segment led the way with 21% growth over last year.

Speaker 3: Our fleet segment led the way with 21% growth over last year, followed by mid- to high-team growth in traveling corporate payments and health.

Followed by mid to high teen growth in.

Travel and corporate payments and health.

Speaker 3: Now let's move on to the quarter results starting on slide 12.

Now, let's move on to the quarter results.

Starting on slide 12.

Speaker 3: Total revenue came in just above the high end of our range, up 25% compared to prior year, reflecting healthy volume increases across each of our segments, acquisitions and hiring.

Total revenue came in just above the high end of our range up 25% compared to prior year <unk>.

Reflecting healthy volume increases across each of our segments.

Acquisitions and.

Higher fuel prices.

Speaker 3: From an earnings standpoint, on a gap basis, Q4 had net loss attributable to shareholders of $11.8 million, or $0.26 per share.

From an earnings standpoint on a GAAP basis, Q4 had a net loss attributable to shareholders of $11 8 million.

For 2006 cents per diluted share.

non-GAAP adjusted net income grew 78%.

Speaker 3: non-GAAP adjusted net income grew 78 percent.

To $116 million.

Speaker 3: to $116.8 million, or $2.58 per diluted share.

Our $2 58.

<unk> diluted share.

Speaker 3: This reflects both volume-led top-line growth and significant adjusted operating income margin improvement. Turning to slide 13.

This reflects both volume led top line growth and significant adjusted operating income margin improvement.

Turning to slide 13.

Let's break down the revenue by segment.

<unk> grew 30%.

Speaker 3: Travel and corporate payments reported a 9% increase, and health delivered 23% growth.

Travel and corporate payments recorded a 9% increase and helps delivered 23% growth.

Speaker 3: Moving to segment results, let's start with fleet on slide 14.

Moving to segment results, let's start with fleet on slide 14.

We achieved $306 $8 million in revenue.

Speaker 3: We achieved $306.8 million in revenue, up 30%

Up 30% from the prior year.

Speaker 3: led by higher fuel prices, new winds and renewables, and the gradual recovery in local fleet.

Led by higher fuel prices.

And on the renewals.

And the gradual recovery in local fleet.

Speaker 3: payment processing transactions were up 12% year over year.

Payment processing transactions were up 12% year over year.

Over the road continued their strong growth up over 21%.

Speaker 3: over the road continued their strong growth up over 21 percent.

Speaker 3: North America fleet was up 12% and international fleet was up 8%.

North America fleet was up 12% and international fleet was up 8%.

Speaker 3: The net payment processing rate in Q4 was 116 basis points.

The net payment processing rate.

In Q4 was 116 basis points.

Speaker 3: up seven basis points sequentially, reflecting better spreads in Europe , and some favorable mix.

Up seven basis points sequentially.

Reflecting various price in Europe , and some favorable mix.

Speaker 3: Our net late fee rate this quarter was 48 basis points, up slightly from the 45 basis points we reported in Q3.

Our net late fee rate this quarter was 48 basis points.

Up slightly from the 45 basis points, we reported in Q3.

Speaker 3: As customer payment patterns return to normal, we expect to see modest increases in this rate.

As customer payment patterns return to normal.

We expect to see modest increases in this space.

Speaker 3: finance state revenue was up 42% on significantly higher volume and fuel prices.

Finance fee revenue was up 42% on.

On significantly higher volume.

And fuel prices.

Speaker 3: The average domestic fuel price in Q4 was $3.42, up from $2.26 in 2020.

The average domestic fuel price in Q4 was $3 42.

Up from $2 26 in 2020.

Speaker 3: leading to an increase in fleet revenue of $48 million.

Leading to an increase in fleet revenue of $48 million.

Turning to the travel and corporate solutions segment on slide 15.

Speaker 3: Turning to the travel and corporate solutions segment on slide 15, we reported total revenue up 9% to $81.5 million.

We recorded total revenue up 9% to 81 $5 million.

Speaker 3: You'll recall we had a contract change beginning in the fourth quarter for corporate payments customers that required a shift from gross revenue presentation with no impact to operating income. If the fourth quarter of last year had been reported on this basis, revenue would have been $16.1 million lower.

You'll recall, we had contract change beginning in the fourth quarter for corporate payments customer that required a shift from gross revenue presentation with no impact to operating income.

The fourth quarter of last year had been reported on this basis revenue would've been $16 $1 million slower.

Speaker 3: For additional transparency, we've added slide 22, which lays out revenue, operating margin, rate, and volume trends by quarter for travel and corporate payments to show the impact of the change on a consistent basis.

For additional transparency, we have added slide 22, which lays out revenue operating margin rate and volume trends by quarter for travel and corporate payments.

To show the impact of the change on a consistent basis.

Speaker 3: I'll walk through the segment results, assuming this contract was recorded on a net basis for each period, which is reconciled in the appendix of the slide deck.

I'll walk through the segment results assuming this contract was recorded on a net basis for each period, which is reconciled in the appendix of the slide deck.

Speaker 3: Breaking down revenue, corporate payments was up 13%, led by continued strength in the partner channel.

Breaking down revenue corporate payments was up 13%.

Led by continued strength in the partner channel.

Speaker 3: The election cycle in 2020 contributed $3 million in revenue last year, so the growth this year would have been even higher.

The election cycle in 2020 contributed $3 million in revenue last year.

So the growth this year would have been even higher.

Revenue from travel related customers was up 127%.

Speaker 3: Revenue from travel-related customers was up 127 percent, which reflects growing demand and significant contributions from E-net and Optel.

Which reflects growing demand and significant contributions from <unk> and <unk>.

Speaker 3: Purchase volume issued by WEX is also a really good story at $11 billion, up 120% over prior year.

Purchase volume issued by wax is also a really good story at $11 billion up 120% over prior year.

Travel related customer volume was up nearly 400% over last year and represented over 60% of the total.

Speaker 3: Travel-related customer volume was up nearly 400% over last year and represented over 60% of the total.

Speaker 3: We continue to be well positioned to capture future upsides as travel recovers.

We continue to be well positioned to capture future upside as travel recovers.

Speaker 3: Corporate payments related volume was up 13%, consistent with revenue growth.

Corporate payments related volume was up 13%.

Consistent with revenue growth.

The net interchange rate was 63 basis points.

Speaker 3: from the previous quarter of 52 basis points.

Up sequentially from the previous quarter of 52 basis points.

Speaker 3: The fourth quarter generally includes true-ups to reflect actual volume performance. Otherwise, the rate would have been similar.

The fourth quarter generally includes true ups to reflect actual volume performance.

Otherwise the rate would have been similar to the third quarter.

We continue to benefit from our strong card network relationships.

Speaker 3: We continue to benefit from our strong card network relationship and signed a new contract in the quarter.

And signed a new contract in the quarter.

Speaker 3: Finally, let's take a look at health on slide 16.

Finally, let's take a look at health on slide 16.

Speaker 3: We posted another quarter of meaningful growth with reported revenue of 23% over prior year, powered by Benefit Express and strong organic growth.

We posted another quarter of meaningful growth.

With reported revenue up 23% over prior year powered by benefit express and strong organic growth.

Speaker 3: The number of staff accounts was up 12% over last year, and as expected, there was a sequential decrease from temporary COBRA accounts being closed at the start of the quarter, which had no impact on fourth quarter revenue.

The number of SaaS accounts was up 12% over last year.

As expected there was a sequential decrease from temporary co brighthouse being close to the start of the quarter.

Which had no impact on fourth quarter revenue.

Now, let's move to slide 17.

Speaker 3: For the company overall, we delivered an adjusted operating income margin of 37.1%.

For the company overall, we delivered an adjusted operating income margin of 37, 1%.

Please margin has now exceeded 50% for three consecutive quarters.

Speaker 3: police margin has now exceeded 50% for three consecutive quarters.

The increase reflects revenue growth.

Speaker 3: The increase reflects revenue growth, higher fuel prices, and scale in our cost space.

Higher fuel prices and scale and our cost base.

Speaker 3: Our fleet credit loss continues to be low at 9.6 basis points.

Our fleet credit loss continues to be low at nine six basis points, but.

Speaker 3: but as expected is picking up from the 6.9 basis points we recorded last year during the pandemic.

But as expected is picking up from the $6 nine basis points, we recorded last year during the pandemic.

Travel and corporate payments delivered a margin of 38, 8%.

Speaker 3: Traveling corporate payments delivered a margin of 38.8%.

Speaker 3: Despite a seasonal decline in travel volume, we were able to hold the margin relatively flat to Q3, adjusted for the accounting change to provide a consistent comparison, and significantly better than Q2 and Q1.

Despite the seasonal decline in travel volume, we were able to hold the margin relatively flat to Q3 adjusted for the accounting change to provide a consistent comparison and significantly better than Q2 and Q1.

Speaker 3: We continue to see high drop through on incremental revenue, which reflects our ability to cost effectively scale and capitalize on $30 million of E-net and Optel run rate synergies.

We continue to see high drop through on incremental revenue, which reflects our ability to cost effectively scale.

And capitalize on $30 million of Ethernet and optimal run rate synergies.

Speaker 3: The remaining $10 million of the $40 million target relates to platform consolidation and back-end processing, which has a longer tail.

The remaining $10 million of the $40 million target.

The platform consolidation and back end processing, which has a longer tail.

Speaker 3: In the health segment, adjusted operating income margin for the quarter was 19.2 percent.

In the health segment.

Adjusted operating income margin for the quarter was 19, 2%.

Speaker 3: down 1.3% from 2020, mostly due to the acquisition of Benefit Express and some expense timing.

Down one 3% from 2020.

Mostly due to the acquisition of benefit express and some expense timing.

Speaker 3: Generally speaking, Q4 is the lowest margin quarter for the health business as expenses ramp up during open enrollment season while the related revenue comes in the following year.

Generally speaking Q4 is the lowest margin quarter for the health business as expenses ramp up during open enrollment season, while the related revenue comes in the following year.

Changing gears to taxes on slide 18.

Speaker 3: Our GAAP effective tax rate this quarter was 50% compared to 7% for the fourth quarter of 2020.

Our GAAP effective tax rate this quarter was 50%.

Compared to 7% for the fourth quarter of 2020.

Speaker 3: On an ANI basis, the tax rate was 25.3%, up 290 basis points from a year ago, reflecting a shift in the geographic mix of profits.

On an NII basis, the tax rate was 25, 3%.

Up 290 basis points from a year ago.

Reflecting a shift in the geographic mix of profits.

Turning now to slide 19.

Speaker 3: We continue to generate strong cash flow, driven by record earnings, which enabled strategic investments to support future growth and pay down debt of $109 million.

We continue to generate strong cash flow driven by record earnings, which enabled strategic investments to support future growth and pay down debt of $109 million.

Speaker 3: We ended the year with $589 million in cash.

We ended the year with $589 million in cash.

Speaker 3: of which $153 million is corporate cash, as defined in the credit agreement.

Of which a $153 million in corporate cash as defined in the credit agreement.

Speaker 3: We ended the year with $759 million of liquidity available under our credit agreement in debt of $2.8 billion.

We ended the year with $759 million of liquidity available under our credit agreement of $2 8 billion.

The leverage ratio as defined in our credit agreement came in at three four times, which.

Speaker 3: The leverage ratio, as defined in our credit agreement, came in at 3.4 times, which is within our long-term target of 2 1?2 to 3 1?2 times.

Which is within our long term target of two five to three five times.

Speaker 3: we will continue to take a flexible and opportunistic approach to deploying capital.

We will continue to take a flexible and opportunistic approach to deploying capital.

You may have noticed this quarter, we added nearly $950 million and investment securities to our balance sheet.

Speaker 3: You may have noticed this quarter, we added nearly $950 million in investment securities to our balance sheet, which will be a nice revenue stream for us going forward.

She will be a nice revenue stream for us going forward.

Speaker 3: You'll recall that in the second quarter, we acquired the rights to certain health savings account assets.

You'll recall that in the second quarter, we acquired the rights to certain health savings account assets.

We moved some of those accounts to west bank and invested them to unlock a higher yields which is around one 5% currently.

Speaker 3: We moved some of those accounts to Wexbank and invested them to unlock a higher yield, which is around one and a half percent currently.

In addition to creating a new revenue stream within other revenue.

Speaker 3: In addition to creating a new revenue stream within other revenue, as the investment portfolio matures, this will make the company less sensitive to future changes in interest rates and create a natural hedge with spending levels in the health segment.

As the investment portfolio matures.

This will make the company less sensitive to future changes in interest rates and create a natural hedge with spending levels in the health segment.

Finally, I want to close with some thoughts on our outlook for 2002.

Speaker 3: Finally, I want to close with some thoughts on our outlook for 22.

Speaker 3: We are emerging from the depth of the pandemic in a position of strength and expect the tailwind from 2021 to drive further growth.

We are emerging from the depths of the pandemic in a position of strength and expect the tailwind from 2021 to drive further growth.

Speaker 3: We continue to deliver profits consistent with our long-term guidance range when removing the benefit of higher fuel prices and expect 2022 will play out in a similar manner.

We continue to deliver profit consistent with our long term guidance range when removing the benefit of higher fuel prices and expect 2022 will play out in a similar manner.

Speaker 3: Starting with the first quarter, we expect to report revenue in the range of $495 million to $505 million. On an EPS basis, we expect adjusted net income to be between $2.55 and $2.65 per diluted share.

Starting with the first quarter, we expect to report revenue in the range of 495 million to $505 million.

On an EPS basis.

We expect adjusted net income to be between $2 55.

And $2 65.

Per diluted share.

Speaker 3: For the full year, we expect to report revenue in the range of $2.05 billion to $2.09 billion.

For the full year, we expect to report revenue in the range of $2 $45 billion to $2 9 billion.

Speaker 3: As a reminder, this includes the impact of the accounting change we discussed last quarter, which moves revenue presentation for one customer from growth to net.

As a reminder, this includes the impact of the accounting change, we discussed last quarter, which moved revenue presentation for one customer from gross to net.

Speaker 3: In the appendix, you can see the impact of the change on revenue for full year 2021 was $52 million.

In the appendix you can see the impact of the change on revenue for full year 2021 was $52 million.

Speaker 3: And on an EPS basis, we expect adjusted net income to be between $11.20 and $11.60 per diluted share.

And on an EPS basis, we expect adjusted net income to be between $11 20.

And $11 60.

Per diluted share.

For the <unk> segment, we expect revenue growth to be towards the top end of our long term guidance range of 4% to 8%.

Speaker 3: For the fleet segment, we expect revenue growth to be towards the top end of our long-term guidance range of 4 to 8 percent, with fuel prices pushing growth rates higher.

With fuel prices pushing growth rates higher.

Speaker 3: we will continue to benefit from the new ones and renewals that we signed during the year.

We will continue to benefit from the new wins and renewals that we signed during the year.

Speaker 3: We expect the late fee revenue and credit losses to trend higher than 2021 levels and generally offset each other.

We expect the late fee revenue and credit losses to trend higher than 2021 level and generally offset each other.

Speaker 3: For the travel and corporate payment segment, we also expect revenue growth, when adjusted for the accounting change, to be within the long-term guidance range of 10 to 15 percent, with a high flow-through to operating income.

For the travel and corporate payment segment. We also expect revenue growth when adjusted for the accounting change to be within the long term guidance range of 10% to 15%.

With a high flow through to operating income.

Speaker 3: Total volume is expected to grow in the mid-20s.

Total volume is expected to grow in the mid 20.

The health segment is a highly recurring revenue business for us.

Speaker 3: The health segment is a highly recurring revenue business for us, another strong year is expected after an encouraging open enrollment season.

Another strong year as expected after an encouraging open enrollment season.

Speaker 3: We expect health to deliver revenue growth in the high team, which includes a full year of Benefit Express and revenue from the HSA deposits that are now on our balance sheet. Now, let me walk you through.

We expect health to deliver revenue growth in the high teens, which includes a full year of benefit express and revenues from the HSA deposits that are now on our balance sheet.

Now, let me walk you through a few more assumptions.

Speaker 3: Exchange rates are as of the end of December 2021.

Exchange rates are as of the end of December 2021.

Speaker 3: We estimate domestic fuel prices will average $3.52 per gallon for the first quarter and $3.55 for the full year, consistent with last week's NYMEX futures price.

We estimate domestic fuel prices will average $3 52 per gallon for the first quarter and $3 55 for the full year consistent with last week with Nymex futures price.

The adjusted net income tax rate is expected to be between 25% and 26% for the first quarter and the full year.

Speaker 3: The adjusted net income tax rate is expected to be between 25% and 26% for the first quarter and the full year.

Speaker 3: And finally, based on the projected earnings, we are assuming that the shares related to our convertible debt will be included in the share count, resulting in approximately 47.5 million shares outstanding.

And finally based on the projected earnings we are assuming that the shares related to our convertible debt will be included in the share count, resulting in approximately 47 5 million shares outstanding.

Speaker 3: This means that approximately $20 million of interest expense for the year related to the debt will not be included in the earnings per share calculation.

This means that approximately $20 million of interest expense for the year related to the debt will not be included in the earnings per share calculation.

Speaker 3: As Melissa mentioned, we enter 2022 with momentum and believe the future is incredibly bright. We look forward to sharing more with you as we vesterday.

As Melissa mentioned, we entered 2022 with momentum and believe the future is incredibly bright.

We look forward to Shanghai with you at Investor Day.

Speaker 3: And with that, operator, please open the line for questions.

And with that operator please.

You open the lines for questions.

Speaker 4: Thank you. As a reminder, please press star 1 to ask a question.

Thank you as a reminder, please press star one to ask a question.

Speaker 4: Your first question is from Ramsey LFL of Berkeley. Please go ahead, your line is open.

Your first question is from Ramsey El <unk> of Barclays. Please go ahead. Your line is open hi.

Thanks, so much.

Okay.

Sure.

Alright.

Robert.

Yes.

Alright congrats.

Yes.

Okay.

Speaker 3: I'm sorry, can you hear me?

Fancy.

Sorry can you hear me I can hear you can you hear me okay.

We are cutting in and out I heard you I heard you ask this is Melissa I heard you ask about Mastercard that you were cutting in and out.

Speaker 2: You know, cutting in and out, I heard you, I heard you ask, is this Melissa? I heard you ask about the after-parts that you were cutting in and out. Let me try it.

Yes.

Trying to change.

Thank you.

Speaker 5: Is that any better? Much better, thank you. Okay, let me, that's exactly right. I was asking about MasterCard and that new arrangement and whether you could help us think through the size of it and also kind of the distribution strategy, how does it roll out.

Is that any better.

Better. Thank you Okay. Let me let me that's exactly right I was asking about Mastercard.

The new arrangement and whether you could help us think through the size of it and also kind of the distribution strategy, how does that rollout.

Speaker 2: Yeah, sure. So, we find that when our customers come on to the fleet program, you know, part of the attraction for them is the ability to lock down their controls. They really particularly like the idea that they can lock down to very specific things like fuel moves.

Yes, sure. So we find that when our customers come onto the fleet program and the part of the attraction for them is the ability to lock down their controls it really particularly like the idea that they can lock down to very specific things like fuel moves.

Speaker 2: And then we find over time with that customer base, they are interested as they build trust with us to be able to actually purchase more, more readily. And so this arrangement we have with MasterCard is really allowing the best of both worlds where we'll embed.

And then we find over time with that customer base. They are interested as they build trust with us to be able to actually purchase more.

More readily and so.

This arrangement, we have with Mastercard is really allowing the best of both worlds where will embed.

Speaker 2: The open loop capability where our proprietary network doesn't extend and so customers, if they want, would be able to actually use our proprietary network in in our locations and then purchase on top of that. And where we find that that could be particularly interesting is with our smaller fleet customers who.

The open loop capability.

Our proprietary network.

Doesn't extend and so customers if they want we'll be able to actually use our proprietary network in <unk>.

<unk> locations and then purchase on top of that and where we find that that to be particularly interesting is with our smaller fleet customers who.

Speaker 2: have a desire to continue to have more capability with us. They want to have it integrated within their systems within one point. And so we see this as just a nice extension of the product capability we have right now.

As a desire to continue.

Continue to have more capability with us they want to have an integrated within their systems within one point.

And so we see this as just a nice extension of the product capability have right now.

Speaker 2: And in terms of revenue opportunity, you know, this is what we'll see better as we go into the marketplace, what we're hearing from customers and what we're seeing for demand. We think this will actually give us a nice little list.

And in terms of.

Of revenue opportunity.

This is what we will see better as we go into the marketplace and what we're hearing from customers and what we're seeing for demand I think this will actually give us a nice little lift.

Speaker 5: Okay. And my second question is about the take rate in travel and corporate payments. There's a lot of moving parts. I guess the first question I wanted to ask on that was, will we see any incremental kind of yield compression from a large new travel renewal you called out? And I guess you also talked about some renewal with the networks, and I'm just wondering if that creates sort of an offset, sort of how to think about that take rate sort of trending over the next, you know, stretch with these inputs.

Okay.

My second question is about the take rate in travel and corporate payments. There is a lot of moving parts.

I guess the first question I wanted to ask on that was will we see any incremental kind of yield compression from a large new travel renewal you called out and I guess, you also talked about some <unk>.

The networks. So I'm just wondering if that create sort of an offset so how should we think about that take rate sort of trending over the next gen of stretch with these visa inputs.

Speaker 2: Yeah, I'd love to. On page 22 in the deck, we actually added in some detail around this, because we know that the change with that one customer going from Growth to Net adds a little bit of complexity. So we showed that on a comparable basis on both page 22 and page 23.

Yeah look.

On page 22 in the deck, we actually added in some detail around that because we know that the change with that one customer going from gross to net.

As of the complexity. So we showed that on a comparable basis on both page 22 in page 23.

Speaker 2: And what you can see is that travel and corporate payments volume was up 120% over Q4 of last year. And then we also showed the rate. So the net rate went from 50 to basis points when you adjust it for that gross net change.

And what you can see is that travel and corporate payments volume was up 120% over Q4 of last year.

And then we also showed the rates of the net rate went from 52 basis points. When you adjust it for that gross to net change too.

Speaker 2: to 63 basis points in the fourth quarter. So it went up actually 11 basis points. Now that's largely due to two-up adjustments that we make on the normal course at the end of the year. So what I would say is if you parse the rate out and you were to look at it split between travel and corporate payments, we expect the travel rate to look pretty consistent to the average of the full year for 2021.

263 basis points in the fourth quarter. So it went up actually 11 basis points.

Largely due to.

At true up adjustments that we make in the normal course at the end of the year. So what I would say is if you parse the raid out and you were to look at it split between travel and corporate payments, we expect the travel rates look pretty consistent to the average of the full year for 2021.

Speaker 2: And we expect the corporate payments rate as we bring on more embedded payments customers to trend that rate down through the course of 2022.

And we expect the corporate payments right as we bring on more embedded payments customers the trend that right down through the course of 2022.

Speaker 2: and that you can see the margin on there as well so we're showing the margin adjusted by quarter for movement of that cost for open growth.

And that you can see the margin on there as well so we're showing the margin adjusted by quarter for movement of that cash flow from gross to net and you can see we've seen some pretty significant margin improvement at 39% operating margin.

Speaker 2: And you can see we've seen some pretty significant margin improvement, a 39 percent operating margin in the fourth quarter.

In the fourth quarter. So we expect to see a continued nice drop through.

Speaker 2: So, we expect to see a continued nice drop through in terms of profitability as we bring on that additional volume. And Jen had talked about that when we gave our guidance expectations that for this segment, we expect revenue to be in our long-term range of 10 to 15 percent and spend to come in around the mid-20s.

In terms of profitability as we bring on that additional volume and Jen and talking to that when we gave our guidance expectations for this segment, we expect revenue to be in our long term range of 10% to 15% and spend to come in around the mid <unk>.

Got it that was all very helpful. Thanks, so much.

Speaker 4: Your next question is from Sanjay Sukrani of KBW. Please go ahead, your line is open.

Your next question is from Sanjay <unk> of Kw. Please go ahead. Your line is open.

Speaker 6: Thanks. Good morning. I'm curious if there's a way to think about where the key segments are across the business relative to pre pandemic levels. I know there's been a lot of mixed differences. Some parts of the business have come back and others haven't. Maybe Melissa, is there a way to sort of parse through that? And then when we think about the guidance, how much of a rebound are you assuming inside those specific verticals?

Thanks, Good morning.

I'm curious if there's a way to think about where the key segments are across the business relative to pre pandemic levels I know theres been a lot of mix differences.

The business has come back and all those haven't maybe Melissa is there a way to sort of parse through that and then when we think about the guidance how much of a rebound are you assuming.

In those specific verticals.

Speaker 2: Yeah, let me let me talk about guidance for a minute to just make sure that that's that's clear. So if you look at our

Yeah, Let me, let me talk about guidance for a minute to just to make sure that that's clear.

So if you look at R. R.

Speaker 2: our guidance for 2022, the midpoint regarding up the revenue growth of 12% and A&I EPS growth of 25%.

Our guidance for 2022, the midpoint, we're guiding up the revenue growth of 12% and Eni EPS growth of 25%.

Speaker 2: Some of the things that affect comparability from year to year, we mentioned the fact that we have the customer that's going from gross to net, which would have brought down our 2021 revenue number by $52 million to make it comparable.

Some of the things that affect comparability from year to year.

Mentioned, the fact that we have.

Customers are going from gross to net which.

Void it brought down our 2021 revenue number by $52 million to make it comparable and then we added in between 60 and $65 million.

Speaker 2: And then we added in between $60 and $65 million for additional fuel prices year over year, and a little bit of offset on FX. And you kind of take that all into account. Yeah, FX is in the same place. We have about 12% gross at the midpoint, and we adjusted out for all of those factors.

For additional fuel prices year over year.

So a little bit of offset in FX, when you kind of take that one so cal the SNF actions take place.

About 12% revenue growth at the midpoint when you adjusted out for all of those factors.

Speaker 2: If you look within our guidance itself.

If you look within our guidance itself.

Speaker 2: We have an expectation that we have a really strong sales tail going into 2022. And that's one of the things is we look at what our growth is going to be, how much have we actually signed up for our customers that are just in the implementation phase. We feel pretty strongly about that. And that's part of why we're leading to that midpoint guide.

We have an expectation that we have a really strong sales tail going into 2022.

And that's probably the things as we look at what our growth is going to be how much will we actually sign up for our customers that are just in the implementation phase.

We feel pretty strongly about that and that's part of why we are leading to that midpoint guide.

Speaker 2: There's probably about a 1% pickup to your original question around what's happening from just

There's probably about a 1% pickup tier into your original question around what's happening from just additional volume that's untapped from pre pandemic levels, you can see across the business, our North American fleet business volume is now higher than it was.

Speaker 2: additional volume that's untapped from pre-pandemic levels. You can see across the business, our North American Fleet business volume is now higher than it was in the fourth quarter of 2019. The over-the-road business has been higher for a while. You can run across the business and see that we've had a lot of volume pickup gradually over the last year and a half, and that's been reflected in the numbers today.

In the fourth quarter of 2019, the over the road business has been higher for a while the tenant run across the business and see that we've had and a lot of volume pick up gradually over the last year and a half and and that's been reflected in the numbers today.

Okay.

Speaker 6: And I guess just to follow up on Ramsey's question, I think you answered.

I guess just a follow up on Ramsey's question I think you answered.

Speaker 6: that travel renewal shouldn't have a meaningful impact on the travel part of the yield and you mentioned sort of the scale and efficiency gains you know how do we conventionalize that the efficiency gains on a go-forward basis specifically in the segment and maybe broadly speaking for the company

Be cleaner.

Travel renewals you didn't have a meaningful impact on the travel part of the yield.

You mentioned sort of the scale and efficiency gains.

How do we can dimensionalize the efficiency gains on a go forward basis, specifically in the segment and maybe broadly speaking for the company.

Speaker 2: Yes. Again, if you go back and look at the rate, what we're saying is we expect to see rate stability within the travel segment. No, I shouldn't say segment, but within the travel customer base of the travel and corporate payment segment for 2022 compared to the full year rate for 2021. And so I guess at the long window I'm saying, yes, we don't expect to have a material change net of what we're seeing across that customer base.

Yes.

Again, if you go back and look at the rate that we're saying is we expect to see rates stability within the travel segment.

I shouldn't say segments over than the travel customer base of the <unk>.

Travel and corporate payments segment for 2022 compared to the full year rate for 2021.

And so I guess, it's a linear and saying, yes, we don't expect to have a material change net net of what we're seeing across that customer base.

Speaker 2: And in terms of how we dimensionalize the volume, you can actually see on page 22, you can see margin improvement each period as volume has increased through the business.

And in terms of how we dimensionalize of omni to actually see on page 22, you can see margin improvement each period as volume has increased through the business.

Speaker 2: So I think actually we've got that graph gives you a pretty good sense of how much structure we're seeing as we have incremental volume.

So I think actually we've got that graph gives you a pretty good sense of how much drop through we're seeing as we have incremental volume.

Speaker 6: And then the broader text is, yeah, and that should continue. Yeah. Yeah. Yeah. Yeah. Just making sure, that should continue to go up. It should continue. Yeah. Yeah. And is there a way to sort of range that? Like, is it just a complete drop-through, or there's some offsets to that?

And then the broader effects business.

And that should continue.

Okay.

Thank you Sir Thank you continue to grow.

Yes.

Just put a range that like is it.

Please drop through.

Similar to that.

Speaker 2: That segment, the pre-fendemic operating margin was in the 40s. We're approaching that. You know, so we do feel like we're going to continue to see drops through incremental revenue that goes through operating margins. But we've seen huge step improvements during the course of 2021. We think you'll see incremental improvements as we go through 2022. And then the last big part that we talked about is that we still have

Is that that segment the pre pandemic operating margin was in the <unk>, we're approaching that.

Or do you feel like or.

Going to continued to see drop through of incremental revenue that goes to operating margin.

We've seen huge step improvements during the course of 2021, we think you'll see incremental improvements as we go through 2022 and then the last big part that we've talked about is that we still have.

Speaker 2: significant synergy remaining for the integration of EMET and Optel as we consolidate the platforms together. We've talked about the fact that we have $30 million worth of run rate synergies that we've recognized so far, and we have another $10 million hanging out there that will come in 2023.

Significant synergy remaining for the integration of BNET and auto as we consolidate the platforms together.

We've talked about the fact that we have $30 million worth of run rate synergies that we've recognized so far and we have another $10 million hanging out there that we will come in 2023.

Alright, thank you so much.

Your next question is from Bob Napoli of William Blair. Please go ahead. Your line is open.

Speaker 4: Your next question is from Bob Napoli of William Blair. Please go ahead, your line is open.

Speaker 5: No, thank you. Good luck to Roberto and welcome, Jen, to the calls here. Congratulations on the performance and the execution to, I guess, to the WEX team. It's really nice to see. On the margin improvements,

Thank you.

Thank you Roberto and welcome Jim.

Two calls here.

Hi, guys congratulations on that.

The performance and execution.

So to the <unk>.

Really nice to see.

The margin improvements.

Speaker 5: You know what is you know what exactly is made a very impressive margin improvements. What is driving that. I know it's been making significant investments in your tech stack. But what are incremental margins for that business. And what have you done to to improve incremental margins.

What is what exactly has to have made a very impressive margin improvement what is driving that I know.

You've been making significant investments in your tech stack that what our incremental margins for that business and what have you done to to improve.

Incremental margin if you would.

Speaker 2: Within the travel and corporate payment segment, and this is Melissa, the improvements came from three different things that came together during the course of 2021. The first was the Synergy Realization that we had with HeNet and Opel. As we went through that process, if you recall,

Within the travel and corporate payments segment. This is Melissa.

Improvements came from three different things that came together during the course of 2021, the first with the synergy realization that we had with CNET and also as we went through that process. If you recall.

Speaker 2: We closed the business at the beginning of that period, and so, you know, we rapidly went through a process of making sure that we could rationalize.

We closed the business at the beginning of that.

Period end. So we've rapidly went through a process of making sure that we rationalized.

Speaker 2: what those two businesses should look like together. And so you can see the benefit of that throughout the course of the year. The second thing is we saw volume increase.

And with those two businesses look like together and so you can see the benefit of that throughout the course of the year. The second thing is we saw volume increase.

Speaker 2: through the course of the year. And that leads to my third point, which we've done a lot of work over the last several years around the platform, making sure that it was scalable. We saw the negative of that happen in the middle of the pandemic, but we're seeing the positives of that.

During the course of the year end.

That leads to my third point, which we've done a lot of work over the last several years around the platform, making sure that it was available.

The negative to that happened and it is the middle of the pandemic, but we are seeing the positive that that you.

Speaker 2: We really had done a lot of work to set up the cost structure so that it could be highly scalable. We know the embedded payments product in the marketplace, but having a best-in-class product, having high reliability is really important for our customers.

You really have done a lot of work to set up the cost structure. So that it could be highly scalable we know the embedded payments product in the marketplace that.

Having a best in class products, having high reliability is really important to our customers.

Speaker 2: But also being able to make sure that we can participate in the market at the appropriate cost structure makes sense because it's more of an infrastructure play for a lot of what we're doing on top of that is embedding other services and other capabilities at more of a premium price.

But also being able to make sure that we can participate in the market at the appropriate cost structure makes sense, because it's more of an infrastructure play for a lot of what we're doing on top of that is embedding other services.

And other capabilities that more of a premium price.

Thank you to follow up on the healthcare business in a very.

Speaker 5: Thank you. To follow up on the health care business, you know, very nice growth in the SAS accounts.

This growth in the SaaS.

<unk>.

Speaker 5: The revenue growth is growing faster than the revenue per account.

The revenue growth growing faster than the accounts. It is the revenue per account going up as well.

Speaker 7: going up as well. And, you know, nice to see the $900 million investment, Andy.

And Dave nice to see the $900 million.

Speaker 7: is starting to benefit from the investment income, but he can comment on.

Yes, theres benefit starting to benefit investment income, but if you can comment on.

Speaker 7: the revenue per account, the improvement in revenue per account, and the $900 million, is that the full? Is there more to go? And will your interest income go up in step with Fed rate increases on that investment portfolio?

The revenue per account the improvement in revenue per account.

The $900 million exact are full.

Is there more to go and does that what are your interest income go up in step with fed rate increases on that investment portfolio.

Speaker 2: I'll answer the first part and Jen will answer the second part of that. The revenue increase is a combination of the fact that we continue to offer other services to our customers so as they come on.

And this is Melissa I will answer the first part in general answer the second part of that the revenue increase is a combination of the fact that we continue to offer other services to our customers so as they come on.

Speaker 2: We are offering the ability to provide their underlying technology. We earn a recurring revenue stream in SAS fees, and that's still 70% of the revenue, 70, 75% of the revenue in that part of the business. But on top of that, we provide services where our customers are interested in having us doing some of their outsourced services for them. And on top of that is the new revenue that we're getting from our deposit.

We are.

Offering the ability to.

Provide their underlying technology, we earn a reoccurring revenue stream and SaaS fees net still 70% of the revenue.

70, 75% of the revenue in that part of the business, but on top of that we provide services, where our customers who are interested in having us doing some of their outsource services for them.

And on top of that is the new revenue that we're getting from our deposits.

Speaker 3: And Jen, if you want to elaborate on that. Yes, so there is opportunity. There's certainly additional deposits that we could bring into West Bank. Just keeping in mind kind of the regulatory capital requirements that we have there, that's certainly going to continue to look at that opportunity as we move forward.

John if you want to elaborate on that yes. So there is opportunity there certainly.

<unk> deposits that we could bring into my bank just keeping in mind kind of the regulatory capital requirements that we have there, but certainly going to continue to look at that opportunity.

As we move forward.

Thank you.

Speaker 4: Your next question is from James Plossett of Morgan Stanley . Please go ahead, your line is open.

Your next question is from James Faucette of Morgan Stanley . Please go ahead. Your line is open.

Speaker 1: Thanks a lot. Good morning everybody. I wanted to follow up on the on the margin question there and just wondering how you know you're kind of thinking about.

Thanks, a lot good morning, everybody I wanted to follow up on the on the margin question there and just.

Wondering how youre kind of thinking about.

Speaker 1: your op-ex and investment going forward and particularly the trade-off between investing for growth versus maximizing profits particularly given that we've seen other players in the space indicate that they're planning to increase their op-ex just wondering like how you're trying to walk that very fine line.

Your opex and investment going forward, and particularly the tradeoff between investing for growth versus maximizing profits, particularly.

Given that we've seen other players in the space indicated they are planning to increase their opex. Just wondering like how you are trying to walk that fine line.

Speaker 2: No, it's a great question. If you look again at the midpoint of our guidance range, when you exclude the impact of fill prices, FX, and this move into the cash flow from gross to net, then you'll see midpoint revenue guidance is 12 percent. Midpoint ANI EPS guidance is about 15 percent. So I feel like actually we are balancing those things. We are intending to spend about 6 percent of our revenue in CapEx.

Now it's a great question.

Look again at the midpoint of our guidance range when you exclude the impact of fuel prices FX and.

And this move into the customer from gross to net and Youll see.

Midpoint revenue guidance is 12% midpoint Eni EPS guidance is about 15%.

I feel like actually we are balancing those things we are intending to spend about 6% of our revenue and capex.

Speaker 2: Keep in mind that we've been on a journey for a number of years of transforming the company. We're not in a position that we have to pivot or play catch-up, we're actually just building on the momentum that we've created. You can see that, actually. We've got products now that we're able to put in the marketplace where we're going into beta launches really quickly, and that's really the power of the movement we've made over many years into the cloud.

And keep in mind that we've been on a journey for a number of years of transforming the company.

And so we're not in a position that we have to pivot or play catch up were actually just building on the momentum that we've created.

You can see that actually we've got products now that we're able to put into the marketplace, where we're going into beta launches.

We are really quickly and and that's really the power of the movements. We've made over many years into the cloud.

Speaker 2: I feel actually very comfortable about the fact that we are balancing both the need to invest and have over a number of years with the ability to actually do that profitably.

So I feel actually very comfortable about the fact, we are balancing both the need to invest and have over a number of years.

The ability to actually do that profitably.

Speaker 1: Yeah, no, I think that's pretty clear. And then, you know, another investment related question.

Yes.

That's pretty clear and then.

Q4 2021 WEX Inc Earnings Call

Request a DemoDemo

WEX

Earnings