WEX Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Strategy Pillars: Anchored in 3 pillars - amplifying core, expanding reach, and accelerating innovation. These aim to turn customer trust into durable growth, margin expansion, and strong free cash flow.
• Quarterly Performance: Fourth quarter revenue was $672.9 million, up 5.7% year-over-year. Adjusted net income per diluted share was $4.11, up 15.1% year-over-year.
• Mobility: Directed sales and marketing investments towards smaller fleets, launched 10-4 by WEX, and WEX Field Service Management continued double-digit revenue growth.
• Benefits: Extended track record of growing HSA accounts faster than the market, launched modernized brokerage experience and AI-powered claims automation.
• Corporate Payments: Direct accounts payable product continued rapid growth, and embedded payments offering had a growing pipeline.

Segment Performance

• Mobility: Largest segment. Q4 revenue was $345.1 million, flat year-over-year. Despite market softness, focused on capturing profitable market share. Transaction volumes declined modestly. Full-year 2025 revenue was $2.66 billion, up 1.2% year-over-year, with 2% growth excluding fuel prices and foreign exchange rates.
• Benefits: Comprises approximately 30% of annual revenue. Q4 revenue was $204.9 million, up 9.6%. SaaS account growth was 6%, above industry trends. Full-year 2025 adjusted net income per share was $16.10, up 5.4% year-over-year, with 7.7% growth excluding fuel prices, foreign exchange rates, and other factors.
• Corporate Payments: Represents approximately 20% of annual revenue. Q4 revenue was $122.9 million, up 17.8%. Purchase volume processed increased 16.9% year-over-year. Full-year 2025 revenue was up 1.2% year-over-year, with 2% growth excluding fuel prices and foreign exchange rates.

Guidance

• 2026 First Quarter: Expected revenue in the range of $650 million to $670 million, representing 4% growth at midpoint. Adjusted net income per diluted share expected between $3.80 and $4 per diluted share, representing 11% growth at midpoint.
• 2026 Full Year: Expected revenue in the range of $2.70 billion to $2.76 billion. Adjusted net income per diluted share expected between $17.25 and $17.85 per diluted share. Excluding fuel prices, FX rates, and interest rates, full-year revenue growth expected 5% and EPS growth 13%.
• Segment Guidance: Mobility expected full-year revenue growth 1% to 3% with headwind from lower interest rates; Benefits expected full-year revenue growth 5% to 7% with headwind from lower interest rates on nonbank custodial assets; Corporate Payments expected full-year revenue growth 5% to 7% with $50 million cost savings actions. Expected lower fuel prices to negatively impact adjusted operating margins by ~75 basis points.

Risks

• Macro Environment: Uncertainty in macro environment could impact business performance.
• Interest Rates: Lower interest rates on nonbank custodial assets could affect Benefits segment.
• Credit Losses: Mobility segment expected credit losses between 12 to 17 basis points for full year and 17 to 22 basis points in Q1.

Q: David Koning asked about the cadence of the corporate business and yields.

A: Melissa Smith mentioned favorable comp in Q4, and Jagtar Narula said yield overall expected flat to slightly down with mix to non-travel.

Q: Sanjay Sakhrani asked about Mobility organic growth assumptions and BP contribution.

A: Melissa Smith talked about leveraging closed loop network and Jagtar Narula discussed guidance bridge and cadence.

Q: Ramsey El-Assal asked about Benefits and political overlay.

A: Melissa Smith said positive political environment likely a tailwind, not factored into guidance.

Q: Mihir Bhatia asked about direct payables business growth.

A: Melissa Smith said expected double-digit growth in 2026 with consistent salespeople addition.

Q: Rayna Kumar asked about free cash flow and same-store sales.

A: Jagtar Narula said expected free cash flow north of $600 million in 2026 and same-store sales trends.

Q: Christopher Svensson asked about operating margins in 2026.

A: Melissa Smith and Jagtar Narula discussed margin improvement from cost actions and segment margin trends.

Q: Trevor Williams asked about Mobility sales focus on low end and competitive dynamics.

A: Melissa Smith talked about small fleet opportunity penetration.

Q: Darrin Peller asked about Board changes and capital allocation.

A: Melissa Smith said capital allocation focused on risk-adjusted return and paying down debt.

Q: Michael Infante asked about agentic travel booking and impact on WEX.

A: Melissa Smith said virtual card payments important and factored into guidance.

Q: Michael Infante asked about key OTA customer renewal impact.

A: Jagtar Narula said guidance included impact from key OTA customer renewal