WEX Q3 Earnings Call Highlights

Key Points

• WEX delivered a record third quarter, with revenue up 12.8% to $780.1 million, adjusted operating income rising 21.6%, and adjusted EPS increasing 33.6% to $6.13. Excluding fuel prices and foreign exchange, revenue still grew 4.4% and adjusted EPS rose 14.3%.
• Mobility performance improved as pricing initiatives, new business wins and fuel-price tailwinds drove 20.6% revenue growth; WEX raised its full-year Mobility organic growth outlook to 3%–5%. The company also renewed its largest direct over-the-road customer and continued share repurchases.
• WEX raised its full-year outlook to $2.97 billion–$2.99 billion in revenue and $21.28–$21.48 in adjusted EPS. The company expects fourth-quarter revenue of $760 million–$780 million and adjusted EPS of $5.67–$5.87, while leverage declined to 2.7 times and buybacks remain a near-term priority.

WEX NYSE: WEX reported record third-quarter revenue of $780.1 million, up 12.8% from a year earlier, as higher fuel prices contributed to results and the company cited progress in pricing, sales execution and margin expansion.

Adjusted operating income rose 21.6% to $332.5 million, while adjusted earnings per diluted share increased 33.6% to $6.13. Excluding the effects of fuel prices and foreign exchange, the company said revenue grew 4.4%, adjusted operating income increased 6.7%, and adjusted EPS rose 14.3%.

President and CEO Melissa Smith said the company exceeded its revenue and adjusted EPS guidance ranges, even excluding fuel-price and foreign-exchange effects. “The real story is the actions we have taken to strengthen execution, expand our competitive advantages, and deliver sustainable growth,” Smith said.

Cash flow, buybacks and leverage

WEX generated $764.1 million in adjusted free cash flow over the trailing 12 months. During the quarter, it used $200 million to repurchase shares, representing 85% of quarterly adjusted free cash flow. Chief Financial Officer Jagtar Narula said the company had repurchased an additional $75 million of shares through Oct. 26 and planned to continue repurchases through the remainder of the quarter.

The company’s leverage ratio declined to 2.7 times at the end of the third quarter from 2.9 times at the end of the second quarter, remaining within its stated target range of 2.5 to 3 times. Smith said WEX expects to direct the vast majority of adjusted free cash flow toward buybacks in the near term, while continuing to evaluate potential acquisition opportunities against the returns available from repurchasing stock.

Adjusted operating margin expanded by approximately 310 basis points in the quarter, primarily because of higher fuel prices. On a macro-neutral basis, margins expanded 90 basis points year over year. Narula said WEX remains on track to deliver more than 100 basis points of margin expansion in the second half of the year.

Mobility growth accelerated on pricing and fuel tailwinds

Mobility revenue increased 20.6%, while organic revenue growth, excluding fuel prices and foreign exchange, accelerated to 4.4% from 3.1% in the first half. The company attributed the improvement to pricing initiatives, new business wins and a partial normalization in late-fee activity.

WEX said its payment-processing gallons increased 1% sequentially, supported by improving local-fleet performance. However, Smith said over-the-road volumes were softer as elevated diesel prices contributed to some volume shifting to rail. She said the company views the behavior as a temporary change and noted that the fuel-price benefit more than offset the related volume effects.

The company renewed its largest direct over-the-road customer by gallons processed during the quarter, which Smith described as a global leader in parcel delivery and logistics. WEX also raised its expectation for Mobility organic revenue growth for the full year to 3% to 5%, compared with its initial expectation of 1% to 3%.

Narula said credit losses declined to 11.7 basis points from 12.1 basis points and were in line with guidance. He said WEX has used analytics, machine learning and real-time credit decisioning to manage customer credit limits during the period of higher fuel prices. The company expects credit costs to increase in the fourth quarter as higher fuel-price-related charge-offs move through its financial results, but said it remains within the range established at the start of the year.

Benefits and Corporate Payments developments

Benefits revenue rose 4.8% to $207.6 million. SaaS account growth was 2.8%, reflecting difficult comparisons tied to the prior-year addition of a large UAW trust portfolio and previously disclosed first-quarter account closures. WEX said both comparison headwinds will continue into the fourth quarter.

Average HSA custodial cash assets increased 11.2%, HSA accounts grew 7.7%, and custodial investment revenue rose 7.7%. Smith said WEX remained the nation’s fifth-largest HSA custodian, according to the 2026 Devenir Midyear report, and that its technology powers eight of the 10 largest custodians cited in that report.

Corporate Payments revenue increased 3.5% to $137.4 million, while adjusted operating income grew 7.4% and margin expanded 190 basis points. Direct AP volume rose 24%, exceeding the company’s previous expectation for mid-teens growth. Narula said Direct AP represents about 20% of Corporate Payments revenue.

Corporate Payments results were partly affected by delayed embedded-payments implementations and travel disruption related to the Middle East conflict. Smith said embedded products continue to sell well, but customer implementations are taking longer because clients must also build into WEX systems. The company expects the Middle East conflict to remain about a 1% drag on segment growth if conditions remain stable, though it expects to lap that impact next year.

Travel volume increased 13.1%, while the net interchange rate declined by one basis point. Narula said travel generally carries lower interchange rates than non-travel activity, and the seasonal increase in travel volume during the third quarter reduced the blended rate. He expects travel seasonality to ease in the fourth quarter, bringing interchange rates closer to earlier-year levels.

Updated outlook

For the fourth quarter, WEX expects revenue of $760 million to $780 million and adjusted EPS of $5.67 to $5.87. At the midpoint, the company said its outlook implies 5% organic revenue growth and 18% EPS growth excluding macro factors.

For the full year, WEX raised its revenue outlook to $2.97 billion to $2.99 billion and its adjusted EPS outlook to $21.28 to $21.48. Compared with the midpoint of its prior ranges, the revised forecast represents increases of $96 million in revenue and $1.50 in adjusted EPS. The company said the higher outlook reflects stronger third-quarter performance and higher fuel-price assumptions, while continuing to assume no demand recovery in Mobility.

About WEX (NYSE:WEX)

WEX Inc NYSE: WEX is a financial technology company that provides payment-processing and business-management solutions. Its products are designed to help organizations manage corporate spending, employee benefits and mobility-related expenses through specialized payment accounts, software and data tools.

WEX's mobility business serves commercial vehicle fleets with fuel cards, fleet-payment programs, expense controls, telematics integrations and related solutions. The company also supports emerging mobility needs, including electric-vehicle charging payments.

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