• Full Year Revenue: $2.6 billion, a 3% increase year over year.
• Full Year Adjusted Net Income Per Share Growth: 3% year over year.
• Fourth Quarter Revenue: $637 million, a 4% decrease year over year.
• Fourth Quarter Adjusted Net Income Per Diluted Share: $3.57, a 6.5% decrease year over year.
• Mobility Segment Revenue Decline: 1.4% in Q4, impacted by fuel prices and foreign exchange rates.
• Benefits Segment Revenue Growth: 4.9% year over year in Q4.
• Corporate Payments Segment Revenue Decline: 22.7% year over year in Q4.
• Leverage Ratio: 2.6 times, at the low end of the long-term range.
• First Quarter 2025 Revenue Guidance: $625 million to $640 million.
• First Quarter 2025 Adjusted EPS Guidance: $3.35 to $3.50 per diluted share.
• Full Year 2025 Revenue Guidance: $2.6 billion to $2.66 billion.
• Full Year 2025 Adjusted EPS Guidance: $14.65 to $15.25 per diluted share.

• Warning! GuruFocus has detected 4 Warning Signs with WEX.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• WEX Inc (NYSE:WEX) reported a record high revenue of $2.6 billion for the full year, growing 3% compared to the prior year despite headwinds from fuel prices and foreign exchange rates.
• The company has introduced supplemental materials for investors to better understand and analyze their performance, indicating a commitment to transparency.
• WEX Inc (NYSE:WEX) is making targeted investments in sales and marketing across all segments, which are expected to yield returns within two years.
• The company is optimistic about the growth potential in its Corporate Payments segment, particularly with new product offerings and increased sales efforts.
• WEX Inc (NYSE:WEX) maintains a strong balance sheet with a leverage ratio of 2.6 times, providing flexibility for capital optimization and strategic investments.

Negative Points

• Fourth-quarter revenue decreased by 4% year over year, with adjusted net income per diluted share also declining by 6.5%.
• The company has adjusted its long-term organic revenue growth targets from 8%-12% to 5%-10%, reflecting updated market insights and slower growth expectations.
• WEX Inc (NYSE:WEX) experienced pressure from macroeconomic factors such as fuel prices, foreign exchange rates, and a trucking recession, impacting growth.
• The Corporate Payments segment saw a 22.7% decline in revenue year over year, attributed to contract renegotiations and temporary volume reductions from large customers.
• The Benefits segment experienced a moderation in growth due to industry trends and the loss of a Medicare Advantage customer, impacting overall performance.

Q & A Highlights

Q: Can you provide more details on the change in long-term growth targets and expectations by segment? A: Melissa Smith, CEO, explained that the previous 8% to 12% organic growth target was set when market conditions were different. The travel segment has normalized, and the benefits segment has seen a slowdown in HSA adoption. The new long-term growth target is 5% to 10%, reflecting these changes. No specific long-term growth targets are provided for individual segments.

Q: What is the potential for growth in the Corporate Payments segment, particularly in direct corporate payments? A: Melissa Smith, CEO, highlighted opportunities across all segments, including Corporate Payments. The focus is on expanding embedded payments and AP automation solutions. New products like flexible funding have been introduced, and sales efforts are being increased to capture more market share. The segment has experienced volatility, but investments are expected to drive growth.

Q: How are macroeconomic factors affecting WEX, particularly in the mobility segment? A: Melissa Smith, CEO, noted that same-store sales in the mobility segment are returning to historical norms, with a slight decline in Q4 2024. The trucking recession and fuel efficiency improvements have impacted growth, but the company remains disciplined on pricing and is optimistic about long-term opportunities, including the transition to electric vehicles (EVs).

Q: What are the expected returns on the increased sales and marketing investments? A: Jagtar Narula, CFO, stated that the returns on sales and marketing investments are expected to be realized within two years or less. The company has high customer retention rates, leading to strong lifetime value relative to the investment. These investments are seen as a key driver for future growth.

Q: How does WEX plan to use M&A to support its growth strategy, and is there consideration for divesting any assets? A: Melissa Smith, CEO, mentioned that WEX is always evaluating its business portfolio. The integrated nature of their technology stack across segments supports their strategy. While M&A could accelerate growth, the focus remains on leveraging existing capabilities and scale to enhance competitiveness and drive growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.