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WEX Inc. (WEX)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue $659.6M at the top end of guidance; adjusted EPS $3.95 beat guided range on higher fuel prices and cost discipline; GAAP EPS $1.98 .
  • Segment mix: Benefits grew 9% to $195.1M with adjusted margin 43.5%; Mobility declined 4% to $346.2M; Corporate Payments down 12% to $118.3M as OTA model shift weighed, expected to lap in H2 .
  • FY25 guidance raised: revenue $2.61–$2.65B (midpoint +$27M) and adjusted EPS $15.37–$15.77 (midpoint +$0.55); Q3 revenue $669–$689M and adjusted EPS $4.30–$4.50 .
  • Strategic catalysts: signed BP U.S. fleet agreement (new sales in Q4, conversion expected in 2026, adds 0.5–1.0% to company revenue in first full year post-conversion), strong Direct AP growth (>25% y/y) and broadened embedded payments pipeline beyond travel .

What Went Well and What Went Wrong

What Went Well

  • “Adjusted EPS exceeding guidance and revenue coming in at the top end of our guidance” due to higher fuel prices and tighter cost management . CFO: “Adjusted earnings per share exceeded expectations due to a benefit from higher fuel prices and incremental benefits from tightly managing our cost structure” .
  • Benefits segment strength: revenue +8.5% y/y to $195.1M; average SaaS accounts +6% to 21.2M; adjusted AOI margin 43.5% on custodial investment income scale .
  • Commercial wins/pipeline: BP long-term U.S. fleet agreement; UAW Retiree Medical Benefits Trust win; embedded payments implemented for a large publicly traded fintech; Direct AP volume +25% y/y with expanded sales force .

What Went Wrong

  • Corporate Payments revenue -11.8% y/y to $118.3M on OTA revenue model transition and FX (-$1.1M); net interchange rate ticked down sequentially to 0.48% .
  • Mobility softness: payment processing transactions -4% y/y to 139.2M; segment revenue -4% y/y; same-store sales weakness persisted (local fleets down; OTR modest decline) .
  • Margin compression: company adjusted operating margin 36.8% vs 40.7% LY; GAAP operating margin 23.8% vs 25.0% LY as sales/marketing and product investments weighed .

Financial Results

Headline metrics vs prior periods and consensus

MetricQ2 2024Q1 2025Q2 2025Q2 2025 Consensus
Revenue ($M)673.5 636.6 659.6 651.96*
Adjusted EPS ($)3.91 3.51 3.95 3.7064*
GAAP EPS ($)1.83 1.81 1.98 —
GAAP Operating Margin (%)25.0% 24.7% 23.8% —
Adjusted Operating Margin (%)40.7% 36.7% 36.8% —
EBITDA ($M)247.8*238.8*240.8*270.11*

Values marked with * retrieved from S&P Global.

Segment revenue and margins

SegmentQ2 2024 Revenue ($M)Q2 2025 Revenue ($M)y/y ΔQ2 2024 Adj AOI Margin (%)Q2 2025 Adj AOI Margin (%)
Mobility359.6 346.2 -3.7% 42.9% 38.7%
Benefits179.8 195.1 +8.5% 39.6% 43.5%
Corporate Payments134.1 118.3 -11.8% 55.5% 41.9%

KPIs

KPIQ2 2024Q1 2025Q2 2025
Mobility payment processing transactions (M)144.9 134.5 139.2
Net payment processing rate (%)1.29% 1.30% 1.31%
Late fee revenue ($M)67.3 63.7 65.9
Corporate Payments purchase volume ($B)25.76 17.29 20.50
Net interchange rate (%)0.45% 0.50% 0.48%
Benefits avg SaaS accounts (M)20.0 21.5 21.2
Avg HSA custodial cash assets ($M)4,231 4,609 4,705
Adjusted free cash flow ($M)212.2 16.2 194.3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q3 2025—669–689 Introduced
Adjusted EPS ($)Q3 2025—4.30–4.50 Introduced
Revenue ($M)FY 20252,568–2,628 2,605–2,645 Raised (midpoint +$27)
Adjusted EPS ($)FY 202514.72–15.32 15.37–15.77 Raised (midpoint +$0.55)

Key assumptions:

  • Avg U.S. retail fuel price: Q3 $3.23/gal; FY $3.21/gal .
  • Mobility credit losses: Q3 13–18 bps; FY 12–17 bps .
  • Diluted shares: Q3 ~34.8M; FY ~35.9M .
  • Adjusted tax rate: 25% .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
AI/product innovationPlan to use AI to drive Benefits engagement and outcomes .Launched AI-powered FSA claims tool; approvals “in minutes” and ~97% precision .Expanding AI deployment.
Tariffs/macroTrucking recession and same-store softness; macro uncertainty embedded in guidance .OTR pull-forward in Q1 normalized; local fleets same-store declines persist; assume similar macro through year .Macro drag steady.
Corporate Payments – OTAExpect decline H1’25, return to growth H2 as OTA transition laps .H2 growth reiterated; Q3 purchase volume low-mid single digits, Q4 ~20% with mix effects; total volume low double digits Q3/Q4 .Inflecting positive H2.
Direct AP>25% volume growth in Q4’24; targeted investment in 2025 .Third consecutive quarter >25% growth; sales force +50% ytd .Strong, accelerating.
Travel trends/regionsMulti-sourcing common; volumes can be lumpy; relationships intact .Travel stable; shift away from inbound U.S., more Europe/Asia corridors; avg ticket +~4% .Stable with corridor mix shift.
Mobility processing rateUp y/y in Q4’24 on pricing; seasonality/macro affects rate .Expect rate to tick up later in year; interest rate cuts could impact mobility revenue .Gradual rate improvement.
EV/energyClosed-loop network covers ~80% EV charging; EV migration multi-year .EV pipeline strong (gov’t heavy), slower migration than initially expected; integrated ICE/EV fleet data positioning .Long-term opportunity.
Sales & marketing ROI2-year payback; LTV/CAC strong; incremental investments planned .ROI reiterated; multichannel SMB marketing in Mobility yielding results .Continued investment.
Bank synergy (WEX Bank)Custodial returns resilient via fixed-rate portfolios .Benefits custodial yield steady; ability to invest HSA assets for attractive returns .Margin support sustained.

Management Commentary

  • Melissa Smith (CEO): “We delivered stronger financial results than anticipated… revenue at the top end of our guidance and adjusted EPS exceeding guidance.” She highlighted wins with BP, UAW Trust, and a large new corporate payments customer, alongside a strengthening new business pipeline .
  • Jagtar Narula (CFO): “Adjusted EPS was above the high end of the guidance range… due to higher than expected fuel prices with a contribution from lower expenses including tightly managing our headcount” and reiterated H2 Corporate Payments reacceleration as OTA effects lap .

Q&A Highlights

  • Corporate Payments H2 setup: Purchase volume low-mid single digits in Q3 accelerating to ~20% in Q4; total volume low double digits as OTA mix shifts from purchase to “unfunded” volume .
  • BP portfolio: New sales begin Q4’25; conversion of existing BP portfolio anticipated in 2026; expected +0.5–1.0% to company revenue in first full year post-conversion; conversion costs embedded in FY25 guide .
  • Mobility trajectory: Same-store sales weakness expected to persist; OTR normalized after tariff-related pull-forward; investments in SMB marketing supporting new logos .
  • Margins/OpEx: Q2 benefited from early efficiency actions and slower-than-planned hiring; margins expected “in line” with Q2 for rest of year; Q2 OpEx savings are not expected to repeat .
  • Travel environment: Stable volumes overall with corridor shifts; average ticket up ~4%; multi-sourcing common among large customers, working toward more normalized quarterly patterns .

Estimates Context

  • Beat vs consensus in Q2: Revenue $659.6M vs $651.96M*; adjusted EPS $3.95 vs $3.7064*; EBITDA $240.8M* vs $270.11M* (adj. EBITDA under consensus) . Values marked with * retrieved from S&P Global.
  • FY 2025: Company adjusted EPS guidance midpoint $15.57 vs FY EPS consensus $15.93*; revenue guidance midpoint $2.625B vs consensus $2.648B* — implies consensus may tighten modestly to guidance range as H2 reacceleration is offset by investment spend . Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat: Top-end revenue and EPS beat driven by fuel price tailwind and cost execution, despite margin compression from growth investments .
  • Benefits resilience: High-margin custodial income and account growth sustain segment strength; AI claims tooling improves efficiency and customer experience .
  • Corporate Payments inflection: H2 revenue growth expected as OTA transition laps, Direct AP scaling, and non-travel embedded payments broaden; monitor purchase vs total volume mix .
  • Strategic BP deal: Near-term new sales in Q4’25; 2026 conversion adds 0.5–1.0% to company revenue in first full year; validates network/loyalty integration strategy .
  • Guidance raised: FY revenue and adjusted EPS midpoints lifted; sensitivities underscore exposure to fuel/interest rates (±$0.35 EPS per $0.10/gal; ±$0.30 to EPS per ±100 bps rates) .
  • Watch list: Mobility same-store trends; margin trajectory as investments ramp; FX and rate cuts’ effect on mobility yield; leverage at 3.4x targeted to decline via cash flow .
  • Actionable: Position for H2 narrative shift (CP reacceleration, BP sales start) and Benefits margin durability; catalysts include additional embedded payments wins and Direct AP expansion .