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WEX Inc. (WEX)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $636.6M, down 2% YoY but slightly above guidance midpoint; adjusted EPS was $3.51, above the range, largely due to slightly higher fuel prices versus assumptions .
  • Segment mix: Benefits grew 4% YoY to $199.3M on higher custodial income; Mobility declined 2% to $333.8M amid softer same-store sales and fuel price drag; Corporate Payments fell 16% to $103.5M due to an OTA revenue model transition and FX headwinds .
  • Guidance update: FY25 revenue trimmed to $2.57–$2.63B (from $2.60–$2.66B), while FY25 adjusted EPS raised by $0.07 at midpoint; Q2 revenue guided to $640–$660M and adjusted EPS to $3.60–$3.80 .
  • Capital allocation: $790M repurchases in Q1 (including a Dutch auction at $154/share), reducing shares by ~13.1%; leverage rose to 3.5x, with intent to use cash flow to de-lever through 2025 .
  • Potential catalysts: share count reduction, Benefits strength and EV product launches (WEX EV Depot), balanced by Corporate Payments OTA transition and macro/tariff uncertainty cited by management .

What Went Well and What Went Wrong

  • What Went Well

    • Benefits segment revenue +4% YoY to $199.3M; custodial investment revenue rose 10.6% with average HSA cash assets up 9.5% to $4.6B, supporting 43.6% adjusted margin .
    • Management delivered above-range adjusted EPS, noting “revenue exceeded the midpoint of our guidance and adjusted EPS was above the range,” helped by slightly higher fuel prices .
    • Strategic wins: extended Enterprise Fleet Management partnership for 10 years and launched EV Depot, expanding mixed-energy fleet capabilities .
    • Quote: “Our strong financial position and diversified portfolio provide a meaningful buffer against short-term softness in any one sector” — Melissa Smith .

  • What Went Wrong

    • Corporate Payments revenue -16% YoY to $103.5M due to OTA revenue model transition; purchase volume -27.8% YoY; adjusted margin down to 39.1% from 52.7% .
    • Mobility same-store sales softness in local fleets (-3.9%), and overall transactions -1.8% YoY; fuel price declines reduced revenue by ~$8.5M in Mobility .
    • Operating cash flow was -$481.6M in Q1 (seasonal funding dynamics), though adjusted FCF was $16.2M; leverage increased to 3.5x following the tender offer financing .
    • Analyst concern: revenue trimmed for FY25 primarily on macro fuel/FX/interest assumptions, even as EPS midpoint increased via share count reduction .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$665.5 $636.5 $636.6
GAAP Diluted EPS ($)$2.52 $1.60 $1.81
Adjusted EPS ($)$4.35 $3.57 $3.51
GAAP Operating Margin (%)29.5% 24.7% 24.7%
Adjusted Operating Margin (%)44.0% 37.9% 36.7%
Segment Revenue ($USD Millions)Q1 2024Q1 2025YoY Change
Mobility$339.0 $333.8 (1.5%)
Benefits$191.2 $199.3 +4.2%
Corporate Payments$122.5 $103.5 (15.5%)
Segment Adjusted Operating Income Margin (%)Q1 2024Q1 2025
Mobility38.6% 39.4%
Benefits41.5% 43.6%
Corporate Payments52.7% 39.1%
Selected KPIsQ3 2024Q4 2024Q1 2025
Mobility payment processing transactions (MM)146.5 138.5 134.5
Avg US fuel price ($/gal)$3.45 $3.25 $3.32
Net payment processing rate (%)1.38% 1.36% 1.30%
Late fee revenue ($MM)$59.0 $68.4 $63.7
Corporate Payments purchase volume ($BN)$23.4 $16.54 $17.29
Benefits avg SaaS accounts (MM)20.3 20.4 21.5
Avg HSA custodial cash assets ($BN)$4.315 $4.366 $4.609
Results vs Consensus (S&P Global)Q1 2025 ConsensusQ1 2025 ActualSurprise
Revenue ($USD Millions)$632.5*$636.6 +$4.1*
Primary EPS ($)$3.40*$3.51 +$0.11*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)FY 2025$2.60–$2.66 $2.57–$2.63 Lowered; ($32M) midpoint
Adjusted EPS ($)FY 2025$14.65–$15.25 $14.72–$15.32 Raised; +$0.07 midpoint
Revenue ($USD Millions)Q2 2025—$640–$660 New
Adjusted EPS ($)Q2 2025—$3.60–$3.80 New
Fuel price assumption ($/gal)FY 2025$3.25 $3.10 Lowered
Fuel price assumption ($/gal)Q2 2025—$3.18 New
Diluted shares (MM)FY 202539.0 35.9 Lowered by ~3.1MM
Adjusted tax rate (%)FY 202525.0% 25.0% Maintained
Mobility credit losses (bps)FY 202512–17 12–17 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Macro, tariffs, OTR demandLowered outlook on fuel/same-store softness; guidance framed with macro headwinds Local fleets SSS -3.9%; OTR SSS +2.6% with apparent pull-forward ahead of tariffs; April OTR slowed 2–3 pts later in month Mixed; volatility persists
Corporate Payments OTA transitionOTA model change headwind; expected to lap by H2’25 Transition progressing; lap impact starting Q3’25; direct AP volume +~25% YoY Improvement expected
Benefits resilienceBenefits strength, custodial yield stable despite rate drift Benefits rev +4%; HSA assets +9.5%; yield ~4.85% (+5 bps YoY) Continued stability
AI/automation, efficiencyNot highlighted in Q3/Q4 8-KsDoubling down on AI-driven automation to lower cost and improve CX Increasing focus
EV/product innovationMixed-energy fleet narrative; ASR activity Launch of WEX EV Depot; depot/public/home charging integration Product expansion

Management Commentary

  • “We reported revenue of $636.6 million… adjusted EPS was $3.51… revenue exceeded the midpoint of our guidance, adjusted EPS was above the range.” — Melissa Smith .
  • “We are updating our full-year 2025 guidance to account for the macro-related impacts of fuel prices, FX, and interest rates, plus our recently completed tender offer… small but manageable incremental headwinds.” — Jagtar Narula .
  • “Direct AP volume grew nearly 25%… our intent here is to grow through a contraction in spend per account, being mindful of how we extend credit in a risk-tolerant fashion.” — Melissa Smith .
  • “New application volumes are outperforming the prior year by 18%… we have clear expectations of metrics and ROI.” — Melissa Smith; Jagtar Narula .
  • “We successfully extended partnerships with Circle K, Enterprise Fleet Management and J.B. Hunt.” — Melissa Smith .

Q&A Highlights

  • Mobility cadence and tariffs: Local fleets showed softness; OTR saw pull-forward ahead of tariffs with 2–3 pt slowdown late April; guidance reflects this .
  • Corporate Payments mix/yields: Sequential normalization; yields likely stable, with travel mix diluting rates in Q2/Q3; direct AP yields higher and growing .
  • Interest expense trajectory: Q2 all-in interest expense expected to be “mid-60s” (millions) after buyback financing .
  • Credit risk posture: Tools and portfolio adjustments fortify against cycles vs 2008; rapid payment cycles in OTR and OTA lower exposure .
  • Investment framework: Marketing/sales investments tracked tightly for ROI, with levers to moderate spend if macro deteriorates; AI automation targeted to reduce costs .

Estimates Context

  • Q1 2025: Revenue beat consensus by ~$4.1M; adjusted EPS beat by ~$0.11. Street likely raises near-term EPS but trims FY revenue given macro sensitivity and guidance revision focusing on fuel/FX/interest .
  • Q2 2025: Company guided revenue to $640–$660M and adjusted EPS to $3.60–$3.80; consensus sat near $652.0M revenue and $3.71 EPS, suggesting guidance bracketed Street .

Values retrieved from S&P Global.*

Consensus vs GuidanceQ2 2025 Consensus*Q2 2025 GuidanceContext
Revenue ($USD Millions)$652.0*$640–$660 In-line range
Primary EPS ($)$3.71*$3.60–$3.80 Centered around Street

Key Takeaways for Investors

  • Benefits remains a defensive ballast with rising custodial income and strong margins; average HSA assets +9.5% YoY and yield ~4.85% underpin segment profitability .
  • Mobility softness reflects macro and weather; watch same-store sales and fuel price trajectory—WEX quantifies PPG sensitivity (~$20M revenue and ~$0.35 EPS per $0.10/gal) .
  • Corporate Payments headwind is transitory; expect growth re-acceleration post Q3 as OTA change is lapped; direct AP is growing ~25% YoY with higher yields .
  • Share count reduction (~13.1%) acts as EPS tailwind despite trimmed revenue; management plans to delever through 2025, starting from 3.5x leverage .
  • Near-term trading setup: modest beat on Q1 and tightened FY revenue guide; catalysts include EV Depot rollout and enterprise contract extension, offset by macro uncertainty and FX .
  • Medium-term thesis: diversified segments, targeted sales/marketing investments, and AI-driven efficiency should support margin resilience and growth normalization into 2026 .
  • Risk monitors: mobility credit losses (guidance 12–17 bps), travel demand resilience (skew to international hotels), interest rate/FX path, and fuel price spreads per disclosed sensitivities .