Core Insights - Wex reported revenue of $636.6 million for the quarter ended March 2025, a decrease of 2.5% year-over-year, while EPS increased to $3.51 from $3.46 in the previous year [1] - The revenue exceeded the Zacks Consensus Estimate of $630.4 million, resulting in a surprise of +0.98%, and the EPS also surpassed the consensus estimate of $3.40 by +3.24% [1] Financial Performance Metrics - Purchase volume in the Benefits segment was $2.33 billion, exceeding the average estimate of $2.19 billion [4] - Payment processing transactions in the Mobility segment totaled 134.5 million, slightly below the average estimate of 136.53 million [4] - Corporate Payments segment reported a purchase volume of $17.29 billion, lower than the estimated $18.78 billion [4] - Average US fuel price in the Mobility segment was $3.32 per gallon, above the average estimate of $3.29 per gallon [4] - Mobility revenues were $333.80 million, slightly above the estimate of $331.20 million, representing a year-over-year decline of -1.5% [4] - Benefits revenues reached $199.30 million, surpassing the estimate of $197.88 million, with a year-over-year increase of +4.2% [4] - Corporate Payments revenues were $103.50 million, below the estimate of $104.85 million, reflecting a year-over-year decline of -15.5% [4] - Payment processing revenues were $271.80 million, under the estimate of $274.30 million, showing a year-over-year decrease of -10% [4] - Account servicing revenues were $179.10 million, exceeding the estimate of $177.13 million, with a year-over-year increase of +3.4% [4] - Finance fees revenues were $75.70 million, above the estimate of $67.74 million, indicating a year-over-year increase of +7.7% [4] - Other revenues were reported at $110 million, slightly below the estimate of $112.18 million, with a year-over-year increase of +2.7% [4] - Benefits-Other revenues were $53.60 million, below the estimate of $54.77 million, reflecting a year-over-year increase of +16.5% [4] Stock Performance - Wex shares have returned -18.1% over the past month, compared to a -0.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential outperformance against the broader market in the near term [3]

Core Viewpoint - Wex reported quarterly earnings of $3.51 per share, exceeding the Zacks Consensus Estimate of $3.40 per share, and showing a slight increase from $3.46 per share a year ago, indicating a positive earnings surprise of 3.24% [1] Financial Performance - Wex's revenues for the quarter ended March 2025 were $636.6 million, surpassing the Zacks Consensus Estimate by 0.98%, although this represents a decline from $652.7 million in the same quarter last year [2] - Over the last four quarters, Wex has exceeded consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance - Wex shares have declined approximately 24.9% since the beginning of the year, contrasting with the S&P 500's decline of 5.5% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the sustainability of the recent earnings numbers [3][4] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $3.58, with expected revenues of $653.3 million, and for the current fiscal year, the estimate is $15.22 on $2.61 billion in revenues [7] - The estimate revisions trend for Wex is currently favorable, leading to a Zacks Rank 2 (Buy), suggesting that the shares are expected to outperform the market in the near future [6] Industry Context - The Financial Transaction Services industry, to which Wex belongs, is currently ranked in the top 29% of over 250 Zacks industries, indicating a favorable outlook for stocks within this sector [8]

Revenue Performance - Total revenue for Q1 2025 decreased by $16.1 million compared to Q1 2024, driven by an unfavorable impact of $8.5 million from fuel prices and spreads, and $2.5 million from foreign exchange rates[12] - For the twelve months ended December 31, 2024, total revenue was $2,628.1 million, reflecting an 8.4% year-over-year increase[11] - The company’s underlying revenue growth during Q1 2025 was down 0.8% when adjusted for fuel prices and foreign exchange impacts[12] - Mobility segment revenue for Q1 2025 decreased by 1.5% year-over-year, impacted by a 2.9% drag from lower fuel prices, with total revenue at $333.8 million[6] - Total revenues for the twelve months ended December 31, 2024, increased by 10.6% to $739.5 million compared to $668.4 million for the previous year[22] Income and Profitability - Adjusted net income per diluted share for Q1 2025 was $3.51, a 1.4% increase compared to the prior year[11] - The company’s GAAP income per diluted share for Q1 2025 was $1.81, reflecting a 16.8% year-over-year increase[11] - The adjusted operating income margin for the Mobility segment was 39.4% for Q1 2025, compared to 42.7% for the twelve months ended December 31, 2024[14] - GAAP operating income margin for the Mobility segment was 29.8%, up from 29.3% in the prior year, with non-GAAP adjusted operating income margin at 39.4%, an increase of 0.7%[6] - GAAP operating income margin for the Corporate Payments segment was 26.3%, down from 41.7% in the comparable prior year quarter[27] - Adjusted operating income margin for the Corporate Payments segment decreased to 39.1% from 52.7% in the same quarter last year[27] Segment Performance - The Mobility segment generated $333.8 million in revenue for Q1 2025, accounting for 52% of total revenue[14] - The company’s total segment adjusted operating income for the twelve months ended December 31, 2024, was $1,059.7 million[14] - Benefits revenue in Q1 2025 was $199.3 million, reflecting a 4.2% increase year-over-year, driven by strong growth in the HSA business[21] - Average SaaS accounts increased by 6.1% year-over-year to 21.5 million, with HSA account growth at 7% compared to a market growth of 5%[21] - Total purchase volume for the Corporate Payments segment decreased by 27.8% year-over-year to $17.285 million for the three months ended March 31, 2025[28] Cash Flow and Capital Expenditures - For Q1 2025, the company reported an adjusted free cash flow of $16.2 million, with trailing twelve months adjusted free cash flows totaling $587 million[33] - Capital expenditures for Q1 2025 were $32.6 million, while total capital deployed in the same quarter reached $913.8 million[35] - The adjusted free cash flow for the twelve months ended December 31, 2024, is projected to be $562.0 million[60] Financial Guidance and Market Outlook - The financial guidance for Q2 2025 projects net revenue between $640 million and $660 million, with a full-year revenue expectation of $2.568 billion to $2.628 billion[38] - The adjusted net income per diluted share guidance for Q2 2025 is between $3.60 and $3.80, with full-year guidance ranging from $14.72 to $15.32[38] - The company anticipates U.S. GDP growth of approximately 2% in 2025, without accounting for potential economic slowdowns[38] Liquidity and Debt Management - The company ended the quarter with $770 million of available liquidity, including corporate cash and borrowing capacity under its revolving credit agreement[29] - As of March 31, 2025, the leverage ratio increased to 3.5 times, remaining within the long-term target range of 2.5 to 3.5 times[29] - The company has maintained ample access to debt markets, with a three-year runway before the next debt maturity, allowing for opportunistic market positioning[31] Shareholder Returns - The company repurchased approximately 4.9 million shares at a price of $154 per share, totaling $750 million in cash for the tender offer completed on March 31, 2025[36] Non-GAAP Measures and Adjustments - The company's adjusted net income and adjusted operating income are non-GAAP measures and should not be considered superior to GAAP measures[56] - The company has begun utilizing a fixed annual projected long-term non-GAAP tax rate starting in fiscal year 2024 for better consistency across reporting periods[58] - Stock-based compensation is treated as a non-cash expense, differing from other forms of compensation[58] - Impairment charges represent non-cash asset write-offs and do not reflect recurring costs relevant to the company's continuing operations[58]

Core Viewpoint - WEX is currently identified as a strong value stock, exhibiting favorable valuation metrics compared to its industry averages, indicating potential undervaluation and a positive earnings outlook [4][8]. Valuation Metrics - WEX has a Forward P/E ratio of 8.44, significantly lower than the industry average of 22.36, with historical fluctuations between 7.27 and 12.93 over the past 12 months [4]. - The stock's P/B ratio stands at 3.40, compared to the industry's average of 8.27, with a 52-week range of 2.96 to 5.15 [5]. - WEX's P/S ratio is 1.72, which is lower than the industry average of 2.31, indicating a more favorable valuation based on sales [6]. - The P/CF ratio for WEX is 8.27, well below the industry's average of 17.50, with a historical range of 7.19 to 16.79 [7]. Investment Outlook - Given the combination of WEX's strong earnings outlook and its undervalued status based on various financial metrics, it is positioned as an attractive investment opportunity for value investors [8].

Core Insights - WEX has introduced a feature allowing fleets with electric vehicles (EVs) to utilize the WEX Fleet Card at private chargers, enhancing their EV charging and payment solutions [1] - The WEX EV Depot provides a comprehensive solution for fleet managers transitioning from internal combustion engines to EVs, facilitating data consolidation across various charging infrastructures [2] - The new feature enables EV drivers to access preferred charging locations and schedule overnight charging, streamlining the payment process [3] Company Developments - WEX EV Depot is integrated with a reporting system that allows fleets to manage EV charges from any source using their WEX fleet credit line, minimizing the number of cards required [2] - The company is exploring various payment options, including tokenized virtual cards and mobile wallets, to enhance operational efficiency [4] - WEX has partnered with Engine to offer Over The Road Fuel Cards as a payment option for eligible customers, indicating a strategic move to expand payment solutions [5]

Core Investment Thesis - WEX Inc. is identified as a compelling long-term investment opportunity due to its strong market leadership, diversified revenue streams, and global growth potential, with a long-term expected earnings growth rate of 5% [1] Group 1: Growth Drivers - WEX's top-line growth is driven organically through an expansive network of fuel and service providers, product innovation, and effective marketing strategies, leading to solid revenue and earnings growth [2] - Strategic acquisitions have reinforced WEX's growth momentum by adding to its revenue base, introducing new capabilities, and creating synergies for long-term expansion [3] Group 2: Market Position - WEX has established itself as a leader in the fleet payments industry, providing integrated payment solutions that optimize fuel efficiency and reduce operational costs for fleet operators, fostering long-term client relationships [4] - The company operates through three primary segments: Mobility, Corporate Payments, and Benefits, which broadens its customer base and protects against downturns in any single sector [5] Group 3: Innovation and Technology - WEX consistently invests in technology-driven innovation, enhancing customer experience through mobile platforms, real-time analytics, and seamless digital payment options, which strengthens client retention [6] Group 4: Challenges - WEX does not distribute cash dividends, which may deter income-focused investors, as shareholder returns rely solely on stock price appreciation [7] - The company faces intense competition from established financial service providers and emerging fintech startups, necessitating continuous innovation and investment in advanced technologies [8]

Core Insights - The integration between Reclaim Health and WEX aims to transform the health and benefits landscape for employers and employees through AI-powered claims data and analytics [1][2] - This collaboration is designed to empower employees in managing healthcare costs and optimizing health coverage, while also helping employers control rising healthcare expenses [2][3] Company Overview - Reclaim Health is an AI-powered, claims-driven healthcare financial advocacy platform that assists families in managing healthcare expenses and optimizing health coverage [4] - The platform focuses on proactive management of healthcare spending, optimization of benefit offerings, and maximizing employee benefits [4] Integration Details - The integration combines Reclaim's innovative platform with WEX's benefits administration technology, creating a fully integrated solution that provides real dollar savings for employees and helps employers manage costs [2][3] - The partnership is expected to deliver enhanced claims analysis, proactive cost-saving recommendations, streamlined benefits selection, and personalized support for employees throughout the year [5]

Core Viewpoint - WEX reported strong fourth-quarter 2024 results, with earnings and revenues exceeding estimates, but both metrics showed a year-over-year decline [2][5]. Financial Performance - Adjusted earnings for Q4 2024 were $3.57 per share, beating the Zacks Consensus Estimate by 0.9%, but down 6.5% from the previous year [2]. - Revenues reached $636.5 million, surpassing estimates by 0.7%, yet declined 4% year-over-year [2]. Segment Performance - The Mobility segment generated revenues of $345.2 million, a decrease of 1.4% from the previous year, but exceeded estimates of $334.5 million due to increased investments in digital marketing [3]. - The Corporate Payments segment saw revenues drop 22.7% to $104.3 million, missing estimates of $122.8 million [3]. - The Benefits segment's revenues increased by 4.9% year-over-year to $186.9 million, surpassing estimates of $175.8 million, driven by strong SaaS account growth [4]. Operating Results - Adjusted operating income fell 6.5% to $269.8 million, exceeding estimates of $246.1 million, with an adjusted operating income margin of 42.4%, down 110 basis points year-over-year [5]. Balance Sheet & Cash Flow - WEX ended the quarter with cash and cash equivalents of $595.8 million, down from $682.6 million in the previous quarter, while long-term debt remained at $3.1 billion [6]. - The company generated $638.4 million in cash from operating activities, with adjusted free cash flow of $169.5 million and capital expenditures totaling $38.7 million [6]. Future Outlook - For Q1 2025, WEX expects revenues between $625 million and $640 million, with adjusted net income projected between $3.35 and $3.50 per share [7]. - For the full year 2025, revenues are anticipated to be between $2.60 billion and $2.66 billion, with adjusted net income expected between $14.65 and $15.25 per share [7]. Estimate Trends - There has been a downward trend in estimates, with a consensus estimate shift of -9.1% over the past month [8]. Investment Scores - WEX holds a Growth Score of B, a Momentum Score of F, and a Value Score of A, resulting in an aggregate VGM Score of B [10].

Regulatory Compliance - WEX Bank is subject to the Durbin Amendment, which regulates interchange fees for debit transactions, with minimal applicability to prepaid or debit card products as of the filing date[99]. - Compliance with the Dodd-Frank Act has added costs to the business, particularly in the over-the-counter derivatives market, which may require changes in hedging practices[100]. - WEX Bank's acceptance of brokered deposits is restricted unless it is "well capitalized," impacting funding strategies[101]. - The company is subject to significant anti-money laundering compliance obligations, including monitoring and reporting unusual account activity[122]. - WEX's European operations must comply with the Payment Services Directive (PSD2) and the Electronic Money Directive (EMD2), with specific regulatory requirements in Ireland[124]. - In the UK, WEX's operations are governed by the Electronic Money Regulations 2011 and the Payment Services Regulations 2017, requiring safeguarding of customer funds[126]. - The company has established anti-money laundering compliance programs, including internal policies, employee training, and independent review functions[122]. - WEX Bank must provide initial and annual privacy notices to customers under the Gramm-Leach-Bliley Act, ensuring transparency in information sharing practices[111]. - The company is subject to various international privacy and data protection laws, including the GDPR, which imposes stringent privacy protections for EU residents[115]. - WEX's operations are impacted by economic sanctions imposed by the U.S. government, affecting transactions with designated foreign countries and nationals[102]. Market and Financial Risks - The company is exposed to market risks including interest rates, foreign currency exchange rates, and commodity prices, with ongoing management of these risks through derivative instruments[407]. - As of December 31, 2024, the company had $3.8 billion invested in current available-for-sale debt securities at fair value, with a potential decrease in fair value of less than 2% from a hypothetical increase in interest rates of 25 basis points[413]. - A 1% hypothetical increase in interest rates could result in an estimated impact of $31.4 million on interest expense related to the company's Credit Agreement[418]. - The company expects to incur a full contingent consideration liability of $225.0 million based on increases in the Federal Funds rate from the date of acquisition, extending through December 31, 2030[419]. - The company estimates that each one cent decline in average domestic fuel prices would result in a $2.0 million decline in revenue for 2025[408]. - If all currencies in which the company earned revenue weakened or strengthened by 10% against the U.S. dollar, revenues and operating income would each change by approximately 2% or less[410]. - The company is not currently hedged for changes in fuel prices, but management continually monitors the market for alternatives[408]. - The company does not utilize hedging instruments to mitigate foreign currency risks but may initiate strategies in the future as international operations grow[410]. Financial Performance - Total revenues for WEX Inc. in 2024 were $2,628.1 million, an increase of 3.1% from $2,548.0 million in 2023[434]. - Payment processing revenue decreased to $1,200.5 million in 2024 from $1,213.7 million in 2023, a decline of 1.3%[434]. - Account servicing revenue increased by 6.8% to $690.6 million in 2024, up from $646.4 million in 2023[434]. - Net income attributable to WEX Inc. rose to $309.6 million in 2024, compared to $266.6 million in 2023, reflecting a growth of 16.1%[434]. - The company's cash and cash equivalents decreased to $595.8 million in 2024 from $975.8 million in 2023, a decline of 38.9%[438]. - Total assets decreased to $13,321.6 million in 2024 from $13,882.1 million in 2023, a reduction of 4.0%[438]. - Total liabilities decreased to $11,832.8 million in 2024 from $12,061.5 million in 2023, a decline of 1.9%[438]. - The company reported a comprehensive income of $226.5 million in 2024, down from $343.7 million in 2023[436]. - Basic earnings per share increased to $7.59 in 2024 from $6.23 in 2023, a rise of 21.7%[434]. - The provision for credit losses decreased to $68.2 million in 2024 from $89.8 million in 2023, a reduction of 24.0%[434]. - Total cash flows from operating activities decreased to $481.4 million in 2024 from $907.9 million in 2023, reflecting a decline of 46.9%[441]. - The company reported a net cash used for investing activities of $960.6 million in 2024, compared to $2,138.3 million in 2023, indicating a reduction of 55.1%[441]. - Cash, cash equivalents, and restricted cash at the end of 2024 totaled $1,437.0 million, down from $2,230.0 million at the end of 2023, a decrease of 35.5%[442]. - Stock-based compensation expense increased to $112.2 million in 2024 from $127.0 million in 2023, a decrease of 11.3%[441]. - The company repurchased common stock totaling $655.1 million in 2024, compared to $297.6 million in 2023, an increase of 120.4%[441]. - Accounts receivable increased by $325.2 million in 2024, contrasting with a decrease of $195.1 million in 2023[441]. - The company experienced a foreign currency translation loss of $50.8 million in 2024, compared to a gain of $15.6 million in 2023[441]. - The total stockholders' equity at the end of 2024 was $1,488.8 million, a decrease from $1,820.6 million at the end of 2023, reflecting a decline of 18.2%[439]. - The company reported a provision for credit losses of $68.2 million in 2024, down from $89.8 million in 2023, a decrease of 24.1%[441]. Investments and Acquisitions - The company completed the acquisition of Payzer Holdings for approximately $250.0 million, contributing $4.3 million to Mobility segment revenues from acquisition date to December 31, 2023[534][537]. - The Ascensus acquisition was completed for approximately $185.5 million, contributing $14.0 million to Benefits segment revenues from acquisition date to December 31, 2023[538][542]. - The company entered into an ASR agreement to repurchase $300.0 million of common stock, receiving approximately 1.3 million shares initially[545]. - The weighted average useful life of amortizable intangible assets acquired in the Payzer acquisition is 3.9 years[536]. Asset Management - The total investment securities as of December 31, 2024, amounted to $3,845.2 million, an increase from $3,088.9 million in 2023, representing a growth of approximately 24.6%[551]. - The fair value of U.S. treasury notes decreased from $378.6 million in 2023 to $353.5 million in 2024, a decline of about 6.6%[551]. - The total unrealized losses on investment securities increased from $107.9 million in 2023 to $131.6 million in 2024, reflecting a rise of approximately 22.0%[553]. - The company has pledged debt securities with a fair value of $1,206.5 million as collateral for FHLB advances as of December 31, 2024[551]. - The total amortized cost of debt securities due after 10 years was $1,960.3 million, with a fair value of $1,903.3 million as of December 31, 2024[558]. - The company reported no expected credit losses recorded against its investment securities for both 2024 and 2023[551]. - The receivables portfolio showed no individual customer with a balance representing 10% or more of the outstanding receivables at the end of 2024 or 2023[550]. Goodwill and Intangible Assets - Goodwill is reviewed for impairment at least annually, with the last review conducted on October 1[477]. - Net goodwill decreased from $3,015.7 million at the beginning of 2024 to $2,983.4 million by December 31, 2024, a reduction of 1.1%[561]. - Gross goodwill for the Mobility segment decreased from $1,556.6 million to $1,545.2 million, a decline of 0.7%[561]. - Accumulated impairment losses remained stable at $200.6 million for both 2024 and 2023[561]. - The total value of computer software, including internal-use software, increased from $714.4 million in 2023 to $823.5 million in 2024, a growth of 15.3%[560]. - The gross amounts capitalized for internal-use computer software were $143.0 million in 2024, up from $136.4 million in 2023 and $107.7 million in 2022[472]. - The amounts expensed for amortization of internal-use computer software were $109.7 million in 2024, compared to $78.7 million in 2023 and $78.0 million in 2022[472]. Depreciation and Capital Expenditures - Total property, equipment, and capitalized software, net increased from $242.9 million in 2023 to $261.2 million in 2024, reflecting a growth of 7.9%[560]. - Depreciation expense rose to $119.5 million in 2024 from $92.2 million in 2023, indicating a year-over-year increase of 29.7%[560]. - Leasehold improvements decreased from $20.8 million in 2023 to $18.6 million in 2024, a decline of 10.6%[560].

Core Insights - WEX Inc. reported strong fourth-quarter 2024 results, with earnings and revenues exceeding the Zacks Consensus Estimate, leading to a 17% stock price increase since the results were released on February 5 [1] Financial Performance - Adjusted earnings per share were $3.57, surpassing the Zacks Consensus Estimate by 0.9%, but down 6.5% year-over-year [2] - Revenues reached $636.5 million, beating the consensus estimate by 0.7%, but declined 4% compared to the previous year [2] Segment Performance - The Mobility segment's revenues decreased 1.4% year-over-year to $345.2 million, exceeding the estimate of $334.5 million due to investments in digital marketing [3] - The Corporate Payments segment's revenues were $104.3 million, down 22.7% from the fourth quarter of 2023, missing the estimate of $122.8 million [3] - The Benefits segment's revenues increased 4.9% year-over-year to $186.9 million, beating the estimate of $175.8 million, driven by strong SaaS account growth [4] Operating Results - Adjusted operating income declined 6.5% to $269.8 million from the year-ago quarter, surpassing the estimate of $246.1 million [5] - The adjusted operating income margin was 42.4%, down 110 basis points year-over-year, but better than the projected 38.9% [5] Balance Sheet & Cash Flow - WEX ended the quarter with cash and cash equivalents of $595.8 million, down from $682.6 million in the previous quarter [6] - Long-term debt remained flat at $3.1 billion [6] - The company generated $638.4 million in cash from operating activities, with adjusted free cash flow of $169.5 million and capital expenditures totaling $38.7 million [6] Guidance - For Q1 2025, WEX expects revenues between $625 million and $640 million, with the midpoint above the current Zacks Consensus Estimate of $628.4 million [7] - Adjusted net income is anticipated to be between $3.35 and $3.50 per share, below the Zacks Consensus estimate of $3.72 [7] - For 2025, revenues are projected to be between $2.60 billion and $2.66 billion, with the midpoint above the current Zacks Consensus Estimate of $2.61 billion [8] - Adjusted net income for 2025 is expected to be between $14.65 and $15.25 per share, below the Zacks Consensus estimate of $16.49 [8]