Q3 2025 WEX Inc Earnings Call

October 30, 2025

Yeah.

Okay.

Thank you.

Okay.

Speaker #4: Thank . You for standing by . My name is Rebecca and I will be your conference operator today . At this time , I would like to welcome everyone to the Wex third quarter 2020 Earnings call .

Okay.

Go ahead.

Perfect.

Yeah.

Correct.

Okay.

Speaker #4: All lines have been placed on mute to prevent any background noise . After the speaker's remarks , there will be a question and answer session .

Good luck.

Okay.

Speaker #4: If you would like to ask a question during this time , simply press star , followed by the number one on your telephone keypad .

Okay.

Speaker #4: If you would like to withdraw your question , press one . Again , thank you . I would turn the call over to Steve Elder .

Okay.

Yeah.

Okay.

Speaker #4: Please begin .

Okay.

Speaker #5: Thank you , operator , and good morning , everyone . With me today is Melissa Smith , our chair and CEO , and Jagtar Narula , our CFO .

Okay.

Speaker #5: The press release and supplemental materials issued yesterday , and a slide deck to walk through , prepared remarks have been posted to the Investor Relations section of our website at inc.com .

Okay.

Sure.

Okay.

Speaker #5: A copy of the press release and supplemental materials have been included in an 8-K filed with the SEC yesterday afternoon . As a reminder , we will be discussing non-GAAP metrics , specifically adjusted net income , which we sometimes refer to as Annie

Speaker #5: A copy of the press release and supplemental materials have been included in an 8-K filed with the

Okay.

Got it.

Okay.

Speaker #5: income per star diluted share , adjusted operating income , and related margin , as well as adjusted free cash flow during our call , please see exhibit one of the press release for an explanation and reconciliation of these non-GAAP measures .

Okay.

Please go ahead.

Okay.

Yes.

Okay.

Speaker #5: The company provides revenue guidance on a GAAP basis and earnings guidance on a non-GAAP basis . Due to the uncertainty and the indeterminate amount of certain elements that are included in reported GAAP earnings , I would also like to remind you that we will discuss forward looking statements under the private Securities Litigation Reform Act of 1995 .

Okay.

Yeah.

Sure.

Okay.

Speaker #5: in the press release . The Supplemental materials and the risk factors identified like to in the most recently filed annual Report on Form 10-K and subsequent quarterly Reports on Form 10-q and other subsequent SEC filings .

Okay.

Yes.

Okay.

Yeah.

Yes.

Okay.

Speaker #5: While we may update forward looking statements in the future , we disclaim any obligation to do so . You should not place undue reliance on these forward looking statements , all of which speak only as of today .

Yes.

Okay.

Yeah.

Yes.

Sure.

Speaker #5: With that , I'll turn the call over to Melissa .

Perfect.

Yes.

Okay.

Speaker #6: Thank you , Steve , and good morning , everyone . We appreciate you joining us today . I'll provide an overview of our financial results .

Okay.

Speaker #6: And then share . Key takeaways from our annual strategic planning process , which included a deeper assessment of our portfolio and segments . Q3 marked a turning point with acceleration in revenue growth .

Okay.

Yeah.

Speaker #6: We're excited about the path ahead and confident in our ability to deliver sustainable growth in the markets we serve . Expand profitability and generate strong , free cash flow .

Yeah.

Okay.

Got it.

Okay.

Speaker #6: I'll start with our third quarter results . I'm pleased to report that we delivered strong performance , delivered primarily by the mobility segment , with both revenue and adjusted EPs exceeding the high end of our guidance range .

Terrific.

Okay.

Yeah.

Okay.

Speaker #6: Revenue for the third quarter was $691.8 million , an increase of 3.9% year over year . Excluding the impact of fluctuations in fuel prices and foreign exchange rates , revenue was up 4.4% .

Okay.

Speaker #6: This return to growth reflects the actions we've taken over the past few quarters . The strength of the underlying business and moving past the OTA customer headwind in corporate payments with our actions translating into improved top line performance .

Sure.

Okay.

Thank you.

Okay.

Yeah.

Okay.

Speaker #6: We have our sights set on our long term revenue growth target of 5 to 10% , and importantly , we're also focused on expanding margin through efficiencies , which will be further supported as volume returns .

Okay.

Speaker #6: Adjusted net income per diluted share was $4.59 , an increase of 5.5% year over year . Excluding the impact of fluctuations in fuel prices and foreign exchange rates , Q3 adjusted EPs grew 7.2% .

Okay.

Speaker #6: We remain committed to delivering double digit long term adjusted EPs growth . Although the macro backdrop remains dynamic . We're now moving past the headwind from the OTA transition and our strategic investments are already yielding results .

Okay.

Yeah.

Okay.

Yes.

Yeah.

Okay.

Speaker #6: We've been laying the foundation for this return to growth , and we are confident that the uptick we showed in Q3 , particularly in corporate payments , sets us up well , as we finish out 2025 and beyond .

Okay.

Yeah.

Okay.

Yeah.

Thank you David.

Okay.

Speaker #6: With that , I'd like to spend a few minutes on our strategy , as well as how our businesses work together . The opportunities ahead in the pillars guiding us forward .

Okay.

Yes.

Okay.

Speaker #6: purpose is clear to simplify the business of running a business by delivering a differentiated value proposition to Our customers . We believe we can generate our above market revenue growth , sustainable profitability , robust free cash flow , and long term value for our shareholders .

Okay.

Yes.

Okay.

Please.

Yeah.

Yes.

Okay.

Speaker #6: Our strategy comprises three strategic pillars . These guide our people , their efforts and how we allocate capital . First , we are amplifying our core by continuing to strengthen our leadership positions and deepen customer loyalty with targeted investments .

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yes.

Okay.

Thank you.

Okay.

Speaker #6: Best in class sales , execution and operational discipline . Second , we're expanding our reach by extending our platform into adjacent workflows and new use cases , unlocking additional growth factors while building customer value .

Okay.

Yes.

Okay.

Yeah.

Okay.

Yeah.

Speaker #6: Finally , we're accelerating innovation , allowing us to get more productivity out of our investments and delivering operating leverage in our model . Our approach to capital allocation is grounded in our strategy , and we will remain disciplined as we balance investments and growth with a sharp focus on efficiency .

Yeah.

Okay.

Thank you.

Okay.

Speaker #6: Free cash flow generation and returns as we execute our strategy in position . Wex for the future . We are leveraging AI to reimagine how we operate and serve our customers .

Okay.

Yeah.

Okay.

Yes.

Speaker #6: Our use of AI in customer discovery , prototyping , coding , QA , infrastructure management , and security has helped drive a 20% increase in product innovation , velocity .

Okay.

Speaker #6: We're also using AI to harness our proprietary data to make smarter , faster decisions from fraud prevention and credit management that claims processing and customer support .

Okay.

Sure.

Speaker #6: Our use of AI creates direct value for our customers and differentiates our product in our benefits segment . AI has reduced claims processing time from days to minutes , and customer service human in the loop .

Okay.

Speaker #6: Generative AI is boosting productivity and lowering our cost to serve . In Q3 , we introduced AI insights in field Service Management , pioneering a shift from a to real time intelligence and action helping customers get the answers they need .

Okay.

Yes.

Okay.

Yes.

Okay.

Yeah.

Okay.

Speaker #6: With AI increasingly embedded across our platforms and operations . We believe it will help us scale the business , accelerate innovation and strengthen long term competitive advantage .

Okay.

Yes.

Okay.

Thanks.

Okay.

Speaker #6: Let me now move to our portfolio review and outcomes . On our last call , I spoke about the unique strengths of our three segments each year we review these segments and update our enterprise strategy as part of our planning process .

Okay.

Yes.

Okay.

Speaker #6: This year , the board also conducted a comprehensive portfolio assessment drawing on both internal expertise . In two independent top tier global investment banks .

Okay.

Speaker #6: Bank of America and JP Morgan . This was a rigorous process guided by our responsibility to be thoughtful stewards of shareholder capital in our commitment to pursue the most value accretive opportunities .

Okay.

Yeah.

Okay.

Speaker #6: As part of this process , we took a hard look at our portfolio to ensure each business we own meets our criteria for returns , margins , and strategic focus .

Okay.

Yeah.

Okay.

Speaker #6: Based on this comprehensive assessment , we have determined that our businesses are stronger together . Collectively , our mobility benefits and corporate payment segments give us an exposure to large growing and operationally complex markets where we believe our scale payments , intelligence and proprietary data provide us with a strong competitive advantage .

Okay.

Yeah.

Yes.

Okay.

Got it.

Okay.

Yeah.

Speaker #6: We also benefit from cross-selling various products, and we have more than 200 discrete examples so far this year. Our businesses provide necessary balance, supporting financial resilience through different macroeconomic cycles.

Okay.

David.

Okay.

Speaker #6: Importantly , they all share a common backbone , including Wex Bank , a global compliance function , risk and regulatory management , intelligent spend controls .

Okay.

Speaker #6: Our technology point to , infrastructure and advanced fraud prevention , which creates operating leverage , lowers unit costs and accelerates innovation across segments .

Okay.

Speaker #6: We believe each of our segments will contribute meaningfully to our growth and profitability over the long term , and that our unified platform will maximize shareholder value .

Okay.

Yes.

Okay.

Speaker #6: We are also always open to considering alternative approaches to strategy and business configuration that advance this goal , and will continue to evaluate opportunities to refine the portfolio .

Okay.

Yeah.

Okay.

Yes.

Yeah.

Okay.

Speaker #6: With that , I would like to outline our four foundational that enable us to execute against our strategic pillars and are the engine behind our competitive advantage .

Okay.

Speaker #6: They extend across our portfolio are difficult to replicate and power our customer value proposition . The first core competency is payment intelligence . We integrate payments , proprietary data , and banking services to deliver actionable insights that help customers make faster , better informed decisions .

Thank you.

Okay.

Yeah.

Okay.

Speaker #6: This is not easy to do , but Wex excels at managing complexity . For example , in mobility , the insights we provide enable real time fleet management , helping customers control spend , optimize routing and improve efficiency across millions of daily transactions .

Yeah.

Okay.

Yeah.

Okay.

Speaker #6: Our second core competency is workflow optimization . Wex has a long history of combining payments and workflow to create differentiated customer value . For example , in benefits , we offer a complete platform that integrates payments into the broader workflows that competencies employers and employees rely on daily .

Okay.

Yes.

Okay.

Speaker #6: This is a key differentiator , deepening our role within customers operations . Our third core competency is scale and infrastructure . We leverage our global scale proprietary technology in risk and compliance expertise to reduce friction , offer enhanced control and deliver measurable efficiency gains .

Okay.

Sure.

Okay.

Speaker #6: For example , in corporate payments , our global infrastructure enables us to process high volumes of virtual card transactions securely and seamlessly across markets , delivering reliability , speed and compliance that sets the industry standard .

Okay.

Yes.

Okay.

Hello.

Okay.

Speaker #6: Finally , our fourth core competencies industry expertise . We have established ourselves as experts within the markets we serve , and we apply our deep industry expertise to our customers .

Okay.

Perfect.

Okay.

Yeah.

Okay.

Speaker #6: Toughest challenges developing customized solutions that address their needs . With that , I'll shift gears and review our Q3 segment results , beginning with mobility .

Okay.

But.

Okay.

Speaker #6: Mobility remains our largest segment , representing roughly half of revenue . It's competitive strengths come from our closed loop network , which directly connects fuel buyers and sellers , and from our scale , which allows us to serve the largest and most complex organizations .

Okay.

Speaker #6: This is demonstrated by our BP win last quarter , our data rich solutions are deeply embedded in our customers daily operations , delivering functional value in creating long term stickiness .

Okay.

Speaker #6: Our global fraud credit and compliance capabilities underpin our offerings , benefiting businesses ranging from local contractors to major oil companies . Excluding the benefit from higher fuel prices , Q3 results from the mobility segment were in line with their expectations .

Sure.

Okay.

Speaker #6: Transaction levels were down slightly from the prior year , consistent with the overall market trends . We continue to operate in a challenging macroeconomic environment with same store sales in the over the road market , softening during Q3 well , North American mobility , same store sales , mirrored trends seen earlier this year amid the dynamic macro .

Okay.

Sure.

Thanks.

Okay.

Great.

Okay.

Speaker #6: We're focused on maintaining our high retention rates and gaining market share while operating efficiently . One market where we see opportunity to expand share is small businesses , which we define as fleets with 25 or fewer vehicles .

Yes.

Okay.

Speaker #6: These businesses have historically relied on general purpose credit cards , but by using our fuel card , they can save on fuel costs , access , discounts , manage fraud , and better control their expenses .

Okay.

Speaker #6: Small businesses have been a core customer segment since its founding , and we believe this segment of the market has tremendous value potential .

Okay.

Yeah.

Okay.

Speaker #6: Year to date , our targeted marketing investments here have resulted in a 12% year over year increase in new small business customers . At the same time , we're building on our differentiated offerings to extend our reach and bring in new opportunities , including the BP win .

Okay.

Yeah.

Great.

Okay.

Speaker #6: We announced last quarter . The conversion of the existing BP portfolio continues to be on track for sometime next year , with sales to new customers beginning at the end of this year .

Okay.

Speaker #6: We're also broadening our opportunity set in mobility through innovation , an example of this is the ten four by Wex app , which is designed to help small trucking businesses .

Okay.

Yeah.

Okay.

Speaker #6: A large but underserved part of the market. This year, those customers have saved more than $300 per month in fuel costs.

Okay.

Speaker #6: On average . By using our app . We're excited to expand our technological reach through our new partnership with Trucker Path , a leading mobile app used by more than 1 million professional truck drivers , which we announced earlier this week .

Okay.

Yeah.

Okay.

Yes.

Okay.

Speaker #6: We're also excited about the trajectory of pacer , acquired in November 2023 . In which we recently rebranded as Wex Field Service Management , or Wex .

Okay.

Speaker #6: FSM . Although it took longer than we planned to establish , momentum revenue grew a healthy double digits in Q3 and we remain energized by this opportunity as we deepen our position in this attractive adjacent market .

Okay.

Yes.

Okay.

Speaker #6: Overall , mobility continues to generate strong free cash flow and will remain a consistent growth engine for wax as we drive expanded and new value added product and service offerings to customers .

Okay.

Speaker #6: Turning now to benefits , simplifies the complex world of employee which benefits administration . For the past decade , the business has grown consistently .

Okay.

Speaker #6: Now representing approximately 30% of company revenue . Its products and services are deeply embedded in our customers administration processes , creating strong customer retention and predictable SaaS and custodial revenue streams .

Okay.

Speaker #6: Overall , SaaS account growth was 6% in the quarter , with HSA on our platform up 7% in Q3 , bringing us to accounts more than 8.8 million .

Okay.

Yeah.

Yes.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yeah.

Okay.

Yes.

Thank you.

Okay.

Yes.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yeah.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

Yeah.

Okay.

Dave serves as president of Jack Henry, from 2014 to 2022 and chief executive officer from 2016 until his retirement from the role in 2024,

Okay.

Yes.

In addition, he's a director at CNO Financial where he shares the governance and nominating committee.

Okay.

His experience across financial services and Technology coupled with his tenure, as a public company executive and board, director will be invaluable as we enter our next phase of profitable growth.

Okay.

We're confident that the expertise in fresh perspective that Dave brings will yield immediate contributions to our board in company.

Yeah.

Okay.

On behalf of wax. I want to extend a warm welcome today.

Okay.

Yeah.

Yes.

Okay.

Investments into tangible results.

Okay.

Q3 marked a turning point with acceleration in Revenue growth and we are confident in the opportunities ahead.

Okay.

Our Focus remains on, delivering sustainable growth, strong margins attractive returns in robust, free cash flow while creating long-term value with that alternative to jagtar to walk you through our financial performance and updated Outlook in more detail. Check her

Okay.

Thank you, Melissa. And good morning, everyone.

Okay.

As a reminder in an effort to provide greater transparency, into our business and segments, We Begin publishing a supplemental materials deck this year, which can be accessed on the IR section of our website.

Okay.

also comparisons are year-over-year unless otherwise noted

Okay.

Total revenue in the quarter. Was 691.8 Million up 3.9%.

Okay.

Yeah.

Okay.

The impact of foreign exchange rates in fuel prices decreased Revenue growth by 0.5%.

Okay.

Revenue was above the top end of the guidance range we provided last quarter.

Okay.

Yes.

Okay.

Yes.

Adjusted earnings per share was $459 and increase of 5.5% partially offset by a decrease of 1.6% related to lower fuel prices, and foreign exchange rates. Adjusted EPS was also above the high end of the guidance range we provided in July.

Okay.

Yeah.

Okay.

Although fuel prices were lower than last year. They were higher than our guidance assumed contributing most of the outperformance in the addition to some underlying expense benefits.

Yes.

Okay.

Yes.

Okay.

In our Mobility segment Revenue increased 1%. Despite a drag of 1.4% related to lower fuel prices in foreign exchange rates.

Okay.

Our payment processing rate was 1.33% and increase of 2 basis points sequentially.

Okay.

The sequential increase in the net interchange rate is due primarily to Merchants pricing and mix.

Okay.

in our benefit segment, total revenue was 198.1 Million which rose 9.2%

Okay.

Sassa account growth of 6% was consistent with the performance. In the first half of this year, contributing the majority of the revenue growth.

Okay.

Custodial investment Revenue which represents the interest we earn on custodial cash balances increased 14.9% to 61.7 million.

Okay.

Yes.

Earned interest yield increased 15 basis, points year-over-year.

Right.

Yeah.

Yes.

Okay.

Yes.

Okay.

To capitalize in both the scale, we have built and the value. Derived from our Investment Portfolio at wex bank, which allows us to deliver industry-leading Returns on our HSA assets.

Okay.

Finally, in corporate payments, revenue of 13022.8 million increased 4.7%

Okay.

Purchase volume in corporate payments declined, 0.9% on a year-over-year basis, a notable sequential Improvement.

Okay.

The decline in volume was more than offset by an increase in the net interchange rate leading to the revenue growth.

Okay.

We have largely led the headwind created by the large otaa. Customer transitioning to a new operating model with us and will fully lap this impact in Q4.

Okay.

Yes.

Okay.

In addition, there was a substantial volume decrease for a legacy, non-travel embedded payments customer, where we are now earning contractual minimums.

Okay.

Despite the recent volume pressures, the scale of our corporate payment segment continues to support a strong margin profile for the business.

With that.

Okay.

Let me transition to the balance sheet.

Okay.

Yeah.

Okay.

Thank you.

Okay.

Wex is a business that generates strong recurring Revenue, which in turn produces reliable, free cash flow.

Okay.

This is a strength and all periods but especially in periods of economic uncertainty and gives us significant Capital deployment optionality.

Yes.

Okay.

In deploying Capital, our approach is guided by two core principles.

Yeah.

Okay.

Sure.

Okay.

Yeah.

Okay.

Both normal and stressed conditions which we do by maintaining appropriate leverage. We ended Q3 with a leverage ratio of 3.25 times down, from 3.5 times at the end of q1 and within our long-term range of 2 and a half to 3 and a half times.

Okay.

Yeah.

Yes.

We have historically reduced leveraged by about half, a turn per year and will continue to focus on debt reduction.

Okay.

Following that our priority is to strategically invest in our core businesses by targeting Investments where we can fortify our competitive positioning deliver attractive, returns, and capture growth.

Okay.

Yes.

Okay.

After addressing these 2 core priorities, we evaluate deploying our remaining Capital towards a creative m&a opportunities, which must meet strict financial and strategic criteria or returning Capital to shareholders through, share repurchases, every step of our disciplined. Capital allocation process is grounded by a clear objective to maximize long-term shareholder value.

Okay.

Yes.

Okay.

Now, let's move to earnings guides for the fourth quarter and the full year.

Okay.

Yeah.

Okay.

Yeah.

Okay.

In Q4, we expect to generate Revenue in the range of 646 million to 666 million.

Okay.

Yeah.

We expect adjusted net income, EPS to be between $3.76 and $3.96 cents per diluted share.

Okay.

For the full year, we expect to report Revenue in the range of 2.63 billion to 2.65 billion.

Okay.

We expect adjusting debt income EPS to be between $15.76 and $15.96 per diluted share.

David.

Okay.

Compared to the midpoint of the previous ranges. These represent increases of 19 million in revenue and 29 cents in the eps.

Okay.

The increase represents the outperformance in Q3.

Okay.

Yeah.

Okay.

A continuation of the positive Revenue Trends and expense savings. We have seen over the past 2 quarters and a higher fuel price, assumption

Okay.

Before I conclude my prepared remarks. Let me take a moment to share my perspective on the business today.

Okay.

despite a challenging macro environment, especially in our Mobility segment, combined with the short-term customer transition, headwinds, in corporate payments,

Yeah.

Okay.

Our business continues to demonstrate resiliency and we are seeing sequential improvements.

Okay.

this momentum has helped offset headwinds from ongoing softness in certain markets specifically Trucking,

Okay.

As we approach 2026.

Yes.

Okay.

Yes.

We remain cognizant of the macroeconomic uncertainty, but we’re encouraged by the building blocks we’ve established this year.

Okay.

In corporate payments, were excited to move past the customer headwind.

Okay.

In Mobility.

Okay.

Where we currently expect the sluggish Trends to persist in the near term. We believe our targeted sales and marketing efforts, including the recent BP win will contribute to improved results in 2026 and Beyond.

Okay.

Finally, we continue to win, new business and benefits and enter the open enrollment period from a position of strength.

Okay.

While it is too early to forecast a count growth for 2026.

Okay.

We expect Payment Processing revenue, and interest income, excluding changes in the rate environment to again, outpace the count growth. As they have historically,

Okay.

Through strategically investing to amplify our core and expand our reach. We are, well positioned to continue to drive growth and further benefit from the eventual turn in the macro environment.

Okay.

In closing.

Okay.

Our third quarter results, underscore the strength of our Diversified model and the discipline of our execution.

Okay.

We remain focused on executing our strategy to deliver results that drive sustainable long-term shareholder value.

Okay.

With that operator.

Okay.

Please open the line for questions.

Okay.

This time I would like to remind everyone in order to ask a question.

Okay.

Yes.

Compile the Q&A roster.

Okay.

Your first question comes from the line of Sanjay sakrani with KBW.

Okay.

Thank you. Good morning. Um, Melissa. I appreciate all the, the commentary at the beginning about the review that you guys did and I can't say I disagree that the businesses work well together. I'm just curious sort of what the conclusion was with the stock and sort of how to get investors to sort of appreciate how all of those factors come together. Um, was that part of the analysis?

Okay.

Yeah.

Okay.

Yeah.

Okay.

This year, we went even deeper and, um, and we brought in 2 independent investment Banks. We talked about that in the call, but, um, both Bank of America and JP Morgan.

Okay.

Yes.

part of that work was to really dig in uh and look at each of our segments and understand the businesses uh

Okay.

Yes.

Okay.

With their view from an independent perspective. I think that the board conducted this um really thoughtfully with with the discipline with objectivity and you say well look through that, it really the focus came out of continuing to deliver and execute against our strategic plan. Um, we we talked about the

Okay.

Yes.

The pillars that we have in our plan, and, um, we're now beyond this period of time where we're lapsing, uh, the OTA transition, which has had a, you know, pretty heavy impact on the stock. So we're excited about how we are growing the business, how we're coming out of the third quarter, and how that positions us in the future. Uh, and that was really the, you know, um, the counsel that we had from the investment banks as well.

Okay.

Yeah.

Okay.

Yes.

Got it. Okay, great. And then just a follow-up question. Um, on Mobility. I think Melissa, you mentioned over the road saw some softening during Q3, could you just talk a little bit about that and sort of how that sets up relative to your expectations? Because I do think you guys were talking a little bit about a pull forward but but is it is the deterioration a little bit more than expected and then um just another 1 on the, the financing fee rates that that kind of went up, was there a price in there or or something else? Thanks.

The first 1.

Okay.

Yeah.

Okay.

So, just from a macro perspective in our Mobility business, I'll talk about both the impact to over the road and uh, and the rest of the business and the over the road business, which is, as you know, 30% of the business. Uh, we saw a poll for related to the tariffs at the beginning of the year and then um, some softening in second and third quarter. Would I say it got worse? It got about half a point worse in the third quarter. So um, you know, not

Okay.

Significant. Uh, but what we are seeing within that part of the marketplace, it's been in a rolling recession for a number of years. Our sales teams have done, an amazing job of selling through that and um, and we continue to do that this year. We're focused on sales, we're focused on retention and um you know, think of this as a transient issue that will work its way through. Um, eventually. And then with the rest of the business, uh, what we have seen, We Believe relates to the uncertainty that's happened in related to the tariffs

Okay.

Yeah.

Okay.

Um where we've seen about negative -4% same Source sales within our local business that's been pretty consistent. And of course the area got maybe a titch worse in the course of the year, but I would say it's it's been a bit of a, a slog, I think Jack to use that word getting through the sheer. And again, what we've done a really strong job of selling through that. We've talked about the incremental Investments that we've made in marketing. We've got 10% more new accounts that have come through, um, that small business Channel this year, which is either directly related to those Investments.

Okay.

Uh and we are really focused on the customer retention and uh again expect this to be transient. We don't know exactly when it's going to turn. But uh, in our history, we know through these, we go through these periods of time.

Okay.

And uh, as long as we focus on retaining, the customer in building the portfolio, then uh that works its way through eventually. And then on top of that, we know next year, we've got conversion of VP that's happening at some point in the year. And that'll have ADD between a half to a point in Revenue in the 12 months after that. So we have a, you know, a lot of things that we're working on where we feel like we're pulling levers of things that we can affect, um, waiting for the MacBook to evolve.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yes.

Okay.

So rates uh this quarter were pretty comparable to what we've been seeing in the last couple of quarters. Uh, it's a big bump. When you look at it year over year and there's a couple reasons for that. So 1 we did make some pricing changes uh, you know, last year that went into this year so that was part of the bump in the rate and also I'd remind you that this quarter last year uh you will call that there was kind of a 1 time event that brought down the financing Fee number and the the rates as a result. So when you look at the year-over-year compared that looks you know a little odd but if you look over the last couple quarter sequentially, you'll see that we're kind of in line with where we've been

Okay.

Thank you.

Okay.

Your next question. Constantly line of Darren per with Wolfe research.

Okay.

Yes.

Okay.

Yeah.

Okay.

Hey guys, thanks, could we touch a little more on the trends in corporate payments for a minute just giving. Um, I know we're now kind of lapping as you said some of the some of the headwinds we've been dealing with which is great to see. Um, but in terms of the overall underlying drivers, anything, you're seeing that surprised you either direction around volumes or Cross travel or B2B, uh, and maybe we could just stand, uh, you know, by and reiterate. Again, what you see that business doing and Performing really over the next 18 months?

Okay.

Um, when we think about the opportunity there because it does look like it's someone that should, you know, truly rhe accelerate as the uh as we exit the year again.

Okay.

Yeah. Um thank you for the question. So if you

Okay.

Look at our corporate payments business. You know, we're excited about hitting this inflection point. It was important to us to return that segment over the business to growth.

Okay.

We've largely LED uh the otaa uh business model transition in the third quarter. So we've largely got that behind us on top of that. We're seeing really good momentum, you know, a couple of places that we have made and

Okay.

uh, extending the product capability across embedded payments. So extending the capability of what we're doing in travel and, and, uh, applying it to other Industries.

Okay.

Yeah.

Okay.

But.

Yes.

Okay.

That is gone. Uh, you'd really well in the marketplace. We're selling, uh, we're on boarding. It's a, it's a, a slower on boarding cycle. And, so, and it's good and bad because it gives us visibility into next year, but it takes a little bit of time to move this customers on to our portfolio. Um, but we feel really good about how the products are resonating in the marketplace. How they're selling the customer signings and uh and how they're on boarding.

Okay.

And also in our AP direct um, product offering, we've talked about the facts, we had ramped our sales people there, that has been just a beautiful model where as we've added people, we've actually seen really strong production and more than 20% um, volume growth in this last quarter. So those 2 things, give us a lot of confidence. As we, you know, as we think about the growth trajectory going forward

Okay.

About half the business is travel. So we know that that some of the, um, the growth over time, we should be able to grow through that because travels become a smaller part of the model. Um, but as we think about that segment, we talked about our long-term range of 5 to 10% and we're feeling really good about where we are right now.

Okay.

Okay, now that's helpful. Um, maybe just my quick follow-up to be on when I think about the benefits side and the obvious—that can accelerate benefits in 2026. Maybe just help us understand your thought process around potentially trying to gain some of those 3 to 4 million incremental agency accounts we might see.

Okay.

Yeah, it we think of it as a a really nice long-term Tailwind. Um, these are customers or potential customers.

Okay.

That are largely getting a access through the public exchanges.

But it's a little over 7 million people which we think is about 3 or 4 million accounts.

Um,

Okay.

Yeah.

Okay.

Yeah.

Okay.

we have access to those customers largely through our partner Channel, which, you know, is a, we think of as a distinct Advantage for us because we're going into the marketplace, not just directly, but through financial institutions. And, um,

Okay.

TPA then, uh, and and people who are um, health insurance companies as well that sit in that portfolio. And so,

Okay.

We believe that we will get, you know, our fair share of that. It's going to happen over time. We don't think it's all going to happen immediately. And um, you know, the, the nice thing about this is there's nothing we have to do the, the platform itself is ready. This is more education and onboarding.

Okay.

Got it, got it. All right, thanks, guys.

Okay.

Back to you, with Bank of America.

Okay.

Yeah.

Okay.

Yes.

Okay.

Hi, good morning, and thank you for taking my questions, um, wanted to start with maybe the mobility segment and the trucking backdrop mostly you mentioned, you know, it remains quite challenged, uh, at the same time you are investing in marketing and growing in that segment. So maybe just spend a few minutes just talking about.

Okay.

Uh, the underwriting how you're thinking about underwriting, how you're managing that underwriting are you tightening? Uh reducing you know,

Okay.

Yeah.

Okay.

These to pay things like that, just trying to understand how you how you keep Credit in check in that segment. And if you have any concerns about maybe bankruptcy Rising, you stand. Same store sales Trends. Don't start improving.

Okay.

Yes.

Okay.

Yeah, that's that's again um it's so if you go across that segment 30% is over the road business which which you're largely talking about there, we actually had tightened, um, you know, credit standards a while ago and we've been in this rolling recession for quite some time and over that period of time, we've spent a lot of time and investment around our risk models. We feel like we've seen the benefit of that work. So that as we're making credit decisions, we're making them, uh, in an even more informed way. It's a lot of where we head our initial applications of AI within the company. So um, so far we've seen really good performance in our Mobility business even though we've seen uh that weakness that's happened over the last few years. Um,

Okay.

Great.

The asset quality continues to look good and, you know, as well. So we feel really comfortable about the fact that we're extending the right amount of credit to the right customers, uh, and we've done more work around. Also, introducing new payment options in a particularly in our North America Mobility business which allows us to have access to customers, um, on more of a prepaid basis, uh, which is, you know, part of why we're seeing since success, uh, bringing on smaller businesses. So, if you look at this, I would say we I don't feel like we're, um, that we're changing the credit quality. We're just being thoughtful about where we're adding new customers, and that's largely because of how we've refined our models.

Yes.

Okay.

The Investments that we've made have been in the North American Mobility business, which has a very strong lgbtq hack. Um, we're seeing that come through right now we, we've talked about the fact that over the 2 years following, um, the Investments, we earned back 4 times, what we spend in terms of Revenue and, um, and so far that's holding true.

Okay.

Okay. Um, and maybe just uh, switching a little bit for a second to just Fuel and interest rates sensitivity, Joe, or maybe you can just comment a little bit on the remind us of the fuel price, sensitivity of the business, uh, both on the top and bottom line and just how quickly does that come through. Uh, the does the, you know, you meant we talked about the financing pricing changes earlier uh in response to Sanjay's question. Uh, does that impact that fuel price sensitivity and also, just the sensitivity of the business to interest rates is interest rates decline over the next year. Thank you.

Okay.

Yeah. So on the fuel prices a, you know, we've we I just remind you, we put a Supple supplemental deck, beginning of this year, and we update that sensitivity in a quarterly basis. So um, you know, that's another area. You could look for it. Uh, roughly speaking for fuel prices. That 1 has some changed since the beginning of this year, uh, a 10 cent change per gallon in fuel prices on an analyze basis uh up or down, will be at 20 million dollars of Revenue up or down and that would translate to about 35 cents of eps. In terms of speed there, that would be, you know, that would be a pretty quick flow through to both revenue and EPS, because that sort of directly affects interchange in in finance fees that we earn and that would flow through both the uh, processing line as well as the finance fee line.

Because our finance fees to some degree are, you know, dependent on the size of the bill, which does fluctuate with fuel prices.

Okay.

Yeah.

Okay.

Yes.

Okay.

Interest rates would decrease EPS by about 30 cents and uh minus 100 million base. 100 basis points on interest rate would actually increase EPS by 35 cents.

Thank you.

Okay.

Your next question comes from the line of David coning with Baird.

Yeah.

Okay.

Yeah. Hey guys, uh, nice job, a couple questions on Mobility 1 is. I know you had a tougher comp in Q3 24 or basically a tough comp this quarter. Because Q3 24, I think had a couple extra days and yet you still accelerated underlying growth. So I guess a are you seeing you know, really pretty good underlying momentum in mobility and B was your comment about better growth going forward. Do you mean better organic growth in 26 than than 25?

Okay.

I, I'll answer the second part. You can take the first part of that. So, um, on on the second part. Yeah. From an organic growth perspective next year. You know, I'm going to put aside macro because and and say, um, you know, we know that we're operating in a difficult macro environment, particularly in our Mobility business right now.

Okay.

Um and we also know that we are having a very strong uh sales year this year and overall retention rates, uh, you know, look comparable to the prior year. And so uh, all all of those things are are, you know, a positive as you think about rolling into your your next year because you get the benefit typically of those sales or on YouTube, is there long term investments that we're making. And it, it does take time for that to actually show up um, and our p&l. So we we do think that that's going to create some momentum as you go into next year.

Okay.

Hey, um, Dave, I'll address your first question on the comp, so, um, looking 24 to 25 days? Fueling was actually pretty comparable. I know when we went back to 24, uh, the 24 to 23, compared had some days Fuel and day noise in it. This year, it's actually pretty comparable year to year. Uh, I'd also kind of remind you what I'd said. I think it was in response to Sanjay, or Darren's question around. We had some 1 time, remediation, uh, last year 1 time, um, event that, that impacted the numbers a little bit. Uh, and that that, you know, made it an easier compared this year, that added roughly a point to 2 of growth.

Ex fuel, gotcha.

Okay.

Yep, that makes sense and then I guess for my follow-up. You know, you talked a lot about corporate revenue is obviously that's hitting a much easier comp but on a on a sequential basis. Historically, volume's been down sequentially as people don't travel quite as much in Q4. But yield has been up sequentially and revenues have been ended up flat sequentially. And you know in in most historic q4's, are we back to that sort of cadence, is that kind of how to think of it.

Okay.

Yes.

Okay.

Yeah, I think we're back to the Cadence where, uh, volumes will be down because of travel. Um, we uh, will see, uh, interchange, uh, processing rates up. Uh, part of that is mixed. And part of that is, you know, we typically have Revenue recognition. When we hit certain thresholds related to schemes with associations and we we'd expect that in the fourth quarter as well. Uh, I wouldn't say revenues are flat quarter over quarter sequentially. We 2 types tend to see some decrease in the corporate payment segment from Q3 to Q4.

Okay.

Okay, great. Well, nice job guys. Thanks.

Thanks.

Okay.

Yes.

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

Okay.

Hi everyone. It's Mike on font town for James. Thanks for taking our question. I just wanted to ask about your perspective, on the implications of visas, new commercial, enhanced data program and how you think about the interchange and and data implications associated with that?

Okay.

Some new answers that we use and we'll continue to think about that. Going forward with any new product rollouts that are happening.

Okay.

Yeah.

It's helpful and maybe Jack tar. Just a quick housekeeping 1 for you. On the benefits. Sasar it looks like the year-over-year trend there continues to improve. But how are you thinking about the X-ray for this year and and the potential for that line item to inflect positively in 26? Thanks.

Okay.

Yeah, I would say that, you know, arpu. So when you do the math, uh, go to the supplemental schedule for modeling and make sure you're backing out, uh, interests that showing up in the account servicing line, uh, to look at kind of rpu. Rpu has been basically flat. I think a quarter over a quarter. Uh, I would expect it to roughly remain the same. It'll be dependent on someone on mixed and what we end up selling during sell selling season. But from a modeling standpoint, I wouldn't expect significant increases within the 26th at this point.

Thank you.

Okay.

your next question, constantly line of Nate senson with Deutsche Bank

Okay.

Hey, thanks for the question. Um accelerated sharing across the business is is very encouraging to see but um I did want to ask again about the End Health in the US Trucking sector maybe in a little different light. I wanted to know where we're at. In terms of the overall capacity reduction across the sector and how you're maybe thinking about the potential impact of the removal of

Of certain CDL holders, which I know has been a big piece of discussion in the media recently.

Yeah, yeah, uh, well actually when you think...

Okay.

Yes.

Okay.

Yes.

Okay.

There was this huge buy that came from the pandemic and they've been working through that over Supply issue. Um for the last several years, you can still see if you look at some of the broader indexes like the cast rate and ATA truck page, they're still showing year-over-year volume pressure. Um so to the extent that you're going to see some of the um some of that Supply continue to come out of the marketplace.

Okay.

For that reason or honestly other reasons, I think that the market still needs that um to happen to get to more of a a normalized rate.

Okay.

We haven't seen any dramatic shifts in terms of of volume, um, or volume activity. As I said, we, we went down about half a point in terms of same store sales from Q2 uh, to Q3. And um, and I think everybody in this Marketplace has been wanting this to um, you know, to to change and it hoped it would the what happened from a tariff perspective at least within our portfolio, put a little bit more pressure and not a lot more but um only about 9% of goods that are that are moved. In the United States are coming from outside the United States but we've seen some softness and quarters uh in a particularly from Canada to the US.

Yeah.

Okay.

Um and so you've got a couple things that are combining. I think this year, you've got the oversupply issue with with some tariff noise added on top of that. So you know continued reduction in and um Supply I think is a is a benefit to the space.

Okay.

Yeah.

Okay.

Yeah.

Okay.

That's super helpful. Melissa, I appreciate it. Um did want to follow up with maybe a 2-part on corporate payments? So the first is I know last quarter we talked about a large public fintech company in embedded payments that you signed just wondering any update on the ramping there and you early learning or takeaways from that relationship and then the other question just on the direct account volume still strong at 20%. I think I saw but it did decelerate a little bit from 25% last quarter. I know it's been a big Focus area for your Investments and your your sales force. So just wondering if there's anything going on with macro or underlying trends that might explain the Slowdown um relative to the increased Investments.

Yes.

Okay.

Um, sure. So on both of those things, first, uh, the new.

Okay.

Customer is on boarded, they're in um, the process of ramping.

Okay.

Right now. And um, and so in a large amount of that was already in the third quarter, but um, there's a little bit more that continues to ramp through the end of the year which we've assumed in our guidance.

um,

Okay.

Friends that we're seeing in some of the Mobility customer base are just a little bit less spending year-over-year.

Okay.

And then I would say that we we look at cohort by cohort how customers are ramping and how that volume goes and is it is it moving like expectations. So to to Melissa's point I think things are going as expected and there might be some noise quarter to quarter but we're not we're not seeing any deceleration from expectations.

Yes.

Okay.

Super helpful. Thank you.

Okay.

Your next question content on the line of Raina Kumar with oen,

Okay.

Hi, thanks for filling me in here. Um, could you provide any color on expectations for adjusted operating margin for the rest of the year? And you know assuming um stable macro should we anticipate margins to expand next year? Thank you.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Hey Randa. Yeah, so by the rest of the year, I mean, I'm assuming you mean Q4. Um, so what I'd say is, if you look at kind of the year-over-year, uh, Q3 the Q3 this year versus last year, operating margins were down and call it on the order of 400 basis points. Uh, there was a couple of pieces for that. We had kind of the tough credit loss compared to last year because last year was a very good credit loss year. Um, and then there's the sales and marketing and, uh, products Investments that Melissa has talked about, um, the credit loss piece that compare was probably on the order of 200 basis points.

Okay.

Yeah.

Yes.

Okay.

So the of the cop so I would expect that to improve as we go into Q4. So Q4 is typically a lower uh operating income margin because of because of the drop in corporate payments and the travel business. But in terms of think about the year-over-year comparison, whereas this this quarter was kind of a 400 basis point that that 200 basis point. Um,

Uh, credit losses actually go away.

and then,

Okay.

Yep, yeah, and sorry. On on 26, if you can comment. Yeah, I mean, it's a little too early for me to give a guide in 26. You know what, I what I'd say is, you know, uh, as Melissa talked about, you know, we feel good about Revenue right now. Uh, we, you know, we'll have the lapping of some of the Investments that we've made kind of the full year impact of those. So, at this point, you know, I I would say, you know um,

Operating income next year. Operating income margins will Trend stability this year, but we're still in budgeting.

Okay.

Thank you.

Okay.

I will now turn the call back over to Melissa Smith for closing remarks.

Yeah.

Yes.

Okay.

Yes.

In closing, we're focused on delivering shareholder value. We're executing our strategy and taking actions to deliver accelerated and sustainable profitable growth in the markets we serve.

Okay.

Recognizing the dynamic and challenging macro environment. We've continued to manage expenses while investing strategically to capture future growth and efficiencies, for our Q3 results and look forward to driving momentum. As we close out 2025 and turn the page to 2026.

Thank you for your interest in wax.

Okay.

Ladies and gentlemen, that concludes today's call, thank you all for joining. You may now disconnect

Okay.

Yeah.

Okay.

Yeah.

Okay.

[noise].

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Yes.

Okay.

Thank you.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

[noise].

Okay.

[noise].

Okay.

[noise].

Okay.

Thank you.

Okay.

[noise].

Okay.

[noise].

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yes.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Thanks.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yeah.

Yes.

Okay.

Got it.

Okay.

Yes.

Okay.

Thank you.

Okay.

Yes.

Okay.

Yes.

Okay.

Thank you.

Okay.

Yes.

Okay.

Yeah.

Okay.

[noise].

Yeah.

Okay.

Yes.

Okay.

Yeah.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Thank you.

Yeah.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yes.

Okay.

Please proceed.

Yeah.

Okay.

Yeah.

Okay.

[noise].

Okay.

Yes.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

[noise].

Yes.

Okay.

Yeah.

Okay.

Yes.

Okay.

Thank you.

Okay.

Yeah.

Yes.

Okay.

Yeah.

Okay.

Yeah.

Right.

Okay.

Yeah.

Okay.

Sure.

Okay.

Yes.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yeah.

Okay.

Sure.

Okay.

Yeah.

Okay.

[noise].

Okay.

Yes.

Okay.

[noise].

Okay.

Yeah.

Okay.

Yeah.

[noise].

Yes.

Yeah.

Okay.

[noise].

Okay.

Yes.

Okay.

Yes.

[noise].

Okay.

Yeah.

Okay.

Thank you.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Sure.

[noise] six.

Okay.

Sure.

Yeah.

Okay.

[noise].

Okay.

Yeah.

Okay.

[noise].

Okay.

[noise].

Okay.

Yes.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Sure.

Okay.

Yes.

Okay.

Yes.

Okay.

Yeah.

Thank you.

Okay.

Yes.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yes.

Okay.

Yeah.

Yes.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yes.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yes.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yes.

Okay.

Thank you.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yes.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

Yeah.

Okay.

On the call.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yeah.

Okay.

Yeah.

Mark.

Okay.

Yeah.

Okay.

Yes.

Okay.

Yeah.

Okay.

Sure.

Okay.

Thanks, Jason.

Okay.

Terrific.

Okay.

Yeah.

Okay.

Thank you.

Okay.

Yeah.

Okay.

Joe.

Okay.

Q3 2025 WEX Inc Earnings Call

Request a DemoDemo

WEX

Earnings