WEX Inc. Q2 FY2025 earnings call

• Delivered stronger Q2 financial results with revenue at top end of guidance and adjusted EPS exceeding guidance.
• Had meaningful customer wins across segments, including BP and Mobility, UAW Trust, and a large corporate payments customer.
• Invested in sales and marketing, with momentum seen in new sales and renewals, especially in Mobility's small business marketing efforts.
• Launched AI-powered claims experience in Benefits to simplify FSA reimbursement.
• In Corporate Payments, direct AP volume growing strongly, and embedded payments pipeline strengthening with new customer wins.

WEX operates in 3 segments. Mobility, the largest at ~50% of total revenue, saw revenue decline 3.7% YoY in Q2, with payment processing rate at 1.31% (up 2 basis points YoY). Benefits, ~30% of revenue, had total revenue rise 8.5% YoY, with SaaS account growth 6% and HSA accounts up 7% to over 8.7 million. Corporate Payments, ~20% of revenue, saw revenues decrease 11.8% YoY, but direct AP volume grew over 25% YoY.

• Q3 revenue expected to be in range of $669 million to $689 million, adjusted net income EPS between $4.30 and $4.50 per diluted share.
• Full year 2025 revenue expected in range of $2.61 billion to $2.65 billion, adjusted net income EPS between $15.37 and $15.77 per diluted share.
• Included BP contract new sales revenue in guidance but not converted accounts; costs related to BP conversion included in guide.

Q: Starting off in Corporate Payments, talk about initiatives within Direct AP and early traction.

A: Melissa mentioned investments in product allowing efficient global money movement, focusing on increasing mobile capability and synergy across embedded payments and AP products, seeing bigger pipeline and conversions.

Q: How to think about reacceleration timeline in mobility?

A: Melissa said same-store sales weakness in local fleet and over-the-road markets expected to continue, with investments in sales and marketing showing good momentum but reacceleration taking time.

Q: On BP portfolio win, timing of conversion and costs?

A: Melissa said first phase selling BP branded cards in Q4, second phase conversion in 2026; Jagtar noted costs related to conversion embedded in guide.

Q: Outlook for Corporate Payments reacceleration, KPIs?

A: Melissa said second half of year to see improvement with lapping OTA client impact, Jagtar mentioned purchase volume expected low mid-single digits in Q3, accelerating to 20% in Q4, but noting OTA migration impact on volume metrics.

Q: HSA account growth 7%, strategies driving outperformance?

A: Melissa said deep expertise in managing complex reimbursement accounts, scale of platform, and multi-account types playing well, with United Auto Workers Trust implementation contributing, and investments in marketing ramping for future open enrollment.