Earnings call transcript: Wex Inc. Q3 2025 sees earnings beat, stock dips

Wex Inc. (WEX) reported its third-quarter 2025 earnings, showcasing a robust financial performance with an earnings per share (EPS) of $4.59, surpassing the forecast of $4.41. The company also reported a revenue of $691.8 million, exceeding expectations of $677 million. Despite these positive results, Wex’s stock experienced a slight decline of 0.48% in regular trading, closing at $154.06, with a minor uptick in premarket trading.

Key Takeaways

• Wex’s Q3 revenue and EPS exceeded forecasts, reflecting strong operational performance.
• The company’s stock dipped slightly despite the earnings beat, indicating mixed investor sentiment.
• Wex’s strategic focus on AI and innovation is driving efficiency and product development.
• The trucking sector’s challenges continue to impact the Mobility segment.
• Wex maintains a strong position in the HSA market, holding 20% of the national share.

Company Performance

Wex Inc. demonstrated strong performance in Q3 2025, with total revenue increasing by 3.9% year-over-year. The company’s EPS rose by 5.5% compared to the same quarter last year. This growth is attributed to Wex’s strategic investments in AI and expense management, which have enhanced operational efficiency and product innovation.

Financial Highlights

• Revenue: $691.8 million, up 3.9% year-over-year
• EPS: $4.59, up 5.5% year-over-year
• Mobility segment: 50% of revenue
• Benefits segment: 30% of revenue
• Corporate Payments segment: 20% of revenue

Earnings vs. Forecast

Wex’s actual EPS of $4.59 exceeded the forecast of $4.41, representing a positive surprise of 4.08%. The revenue of $691.8 million also surpassed the $677 million forecast, marking a 2.18% surprise. This performance highlights Wex’s ability to consistently outperform market expectations.

Market Reaction

Despite the earnings beat, Wex’s stock fell by 0.48% during regular trading hours, closing at $154.06. In premarket trading, the stock saw a slight increase of 0.93%, reaching $155.50. This mixed reaction suggests that while the financial results were strong, investor sentiment may be cautious due to broader market conditions or sector-specific challenges.

Outlook & Guidance

Wex provided a Q4 revenue guidance range of $646 million to $666 million and a full-year revenue guidance of $2.63 billion to $2.65 billion. The company also anticipates a full-year adjusted EPS between $15.76 and $15.96. Looking ahead, Wex aims for a long-term revenue growth target of 5-10% and expects to add 3-4 million new HSA accounts in 2026.

Executive Commentary

CEO Melissa Smith highlighted the quarter as a "turning point with acceleration in revenue growth," emphasizing the company’s excitement about reaching this "inflection point." She reiterated Wex’s mission "to simplify the business of running a business," underscoring the strategic focus on innovation and customer-centric solutions.

Risks and Challenges

• The trucking sector’s ongoing challenges, including oversupply and market softening, continue to impact Wex’s Mobility segment.
• Macroeconomic pressures such as fluctuating fuel prices and interest rates could affect financial performance.
• Wex’s ability to maintain high customer retention rates amid tightening credit standards remains crucial.

Q&A

During the earnings call, analysts inquired about Wex’s strategic portfolio review with Bank of America and JPMorgan. Discussions also covered credit management strategies in the challenging trucking market and the sensitivity of operations to fuel prices and interest rates. Additionally, potential growth opportunities in the Corporate Payments segment were highlighted.

Full transcript - Wex Inc (WEX) Q3 2025:

Rebecca, Conference Operator: Thank you for standing by. My name is Rebecca and I will be your conference operator today. At this time I would like to welcome everyone to the WEX Inc. third quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question, press STAR one again. Thank you. I would like to turn the call over to Steve Elder. Please begin.

Steve Elder, Investor Relations, WEX Inc.: Thank you, Operator, and good morning, everyone. With me today is Melissa Smith, our Chair and CEO, and Jagtar Narula, our CFO. The press release and supplemental materials issued yesterday and a slide deck to walk through prepared remarks have been posted to the Investor Relations section of our website at wexinc.com. A copy of the press release and supplemental materials have been included in an 8-K filed with the SEC yesterday afternoon. As a reminder, we will be discussing non-GAAP metrics, specifically adjusted net income, which we sometimes refer to as ANI, adjusted net income per diluted share, adjusted operating income and related margin, as well as adjusted free cash flow during our call. Please see Exhibit 1 of the press release for an explanation and reconciliation of these non-GAAP measures.

The company provides revenue guidance on a GAAP basis and earnings guidance on a non-GAAP basis due to the uncertainty and the indeterminate amount of certain elements that are included in reported GAAP earnings. I would also like to remind you that we will discuss forward-looking statements under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these forward-looking statements as a result of various factors, including those discussed in the press release, the supplemental materials, and the risk factors identified in the most recently filed annual report on Form 10-K and subsequent quarterly reports on Form 10-Q and other subsequent SEC filings. While we may update forward-looking statements in the future, we disclaim any obligations to do so. You should not place undue reliance on these forward-looking statements, all of which speak only as of today.

With that, I’ll turn the call over to Melissa.

Rebecca, Conference Operator: Thank you, Steve, and good morning, everyone. We appreciate you joining us today. I’ll provide an overview of our financial results and then share key takeaways from our annual strategic planning process, which included a deeper assessment of our portfolio and segments. Q3 marked a turning point with acceleration in revenue growth. We’re excited about the path ahead and confident in our ability to deliver sustainable growth in the markets we serve, expand profitability, and generate strong free cash flow. I’ll start with our third quarter results. I’m pleased to report that we delivered strong performance, driven primarily by the Mobility segment, with both revenue and adjusted EPS exceeding the high end of our guidance range. Revenue for the third quarter was $691.8 million, an increase of 3.9% year over year. Excluding the impact of fluctuations in fuel prices and foreign exchange rates, revenue was up 4.4%.

This return to growth reflects the actions we’ve taken over the past few quarters, the strength of the underlying business, and moving past the OTA customer headwind in Corporate Payments. With our actions translating into improved top line performance, we have our sights set on our long-term revenue growth target of 5% to 10%. Importantly, we’re also focused on expanding margin through efficiencies, which will be further supported as volume returns. Adjusted net income per diluted share was $4.59, an increase of 5.5% year over year. Excluding the impact of fluctuations in fuel prices and foreign exchange rates, Q3 adjusted EPS grew 7.2%. We remain committed to delivering double-digit long-term adjusted EPS growth. Although the macro backdrop remains dynamic, we’re now moving past the headwind from the OTA transition, and our strategic investments are already yielding results.

We’ve been laying the foundation for this return to growth, and we’re confident that the uptick we showed in Q3, particularly in Corporate Payments, sets us up well as we finish out 2025 and beyond. With that, I’d like to spend a few minutes on our strategy as well as how our businesses work together, the opportunities ahead, and the pillars guiding us forward. Our purpose is clear: to simplify the business of running a business. By delivering a differentiated value proposition to our customers, we believe we can generate above-market revenue growth, sustainable profitability, robust free cash flow, and long-term value for our shareholders. Our strategy comprises three strategic pillars. These guide our people, their efforts, and how we allocate capital. First, we are amplifying our core by continuing to strengthen our leadership positions and deepen customer loyalty with targeted investments, best-in-class sales, execution, and operational discipline.

Second, we’re expanding our reach by extending our platform into adjacent workflows and new use cases, unlocking additional growth factors while building customer value. Finally, we’re accelerating innovation, allowing us to get more productivity out of our investments and delivering operating leverage in our model. Our approach to capital allocation is grounded in our strategy, and we will remain disciplined as we balance investments and growth with a sharp focus on efficiency, free cash flow generation, and returns. As we execute our strategy and position WEX Inc. for the future, we are leveraging AI to reimagine how we operate and serve our customers. Our use of AI in customer discovery, prototyping, coding, QA, infrastructure management, and security has helped drive a 20% increase in product innovation velocity. We’re also using AI to harness our proprietary data to make smarter, faster decisions.

From fraud prevention and credit management to claims processing and customer support, our use of AI creates direct value for our customers and differentiates our product. In our Benefits segment, AI has reduced claims processing time from days to minutes, and customer service Human in the Loop Generative AI is boosting productivity and lowering our cost to serve. In Q3, we introduced AI insights in field service management, pioneering a shift from reports to real-time intelligence and action, helping customers get the answers they need. With AI increasingly embedded across our platforms and operations, we believe it will help us scale the business, accelerate innovation, and strengthen WEX Inc.’s long-term competitive advantage. Let me now move to our portfolio review and outcomes. On our last call, I spoke about the unique strengths of our three segments.

Each year, we review these segments and update our enterprise strategy as part of our planning process. This year, the Board also conducted a comprehensive portfolio assessment, drawing on both internal expertise and two independent top-tier global investment banks, Bank of America and JPMorgan. This was a rigorous process guided by our responsibility to be thoughtful stewards of shareholder capital in our commitment to pursue the most value accretive opportunities. As part of this process, we took a hard look at our portfolio to ensure each business we own meets our criteria for returns, margins, and strategic focus. Based on this comprehensive assessment, we have determined that our businesses are stronger together. Collectively, our Mobility, Benefits, and Corporate Payments segments give us an exposure to large, growing, and operationally complex markets where we believe our scale, payments, intelligence, and proprietary data provide us with a strong competitive advantage.

We also benefit from cross-selling various products, and we can point to more than 200 discrete examples so far this year. Our businesses provide necessary balance, supporting financial resilience through different macroeconomic cycles. Importantly, they all share a common backbone including WEX Bank, a global compliance function, risk and regulatory management, intelligent spend controls, our technology infrastructure, and advanced fraud prevention, which creates operating leverage, lowers unit costs, and accelerates innovation across segments. We believe each of our segments will contribute meaningfully to our growth and profitability over the long term and that our unified platform will maximize shareholder value. We are also always open to considering alternative approaches to strategy and business configuration that advance this goal, and we’ll continue to evaluate opportunities to refine the portfolio.

With that, I would like to outline our four foundational competencies that enable us to execute against our strategic pillars and are the engine behind our competitive advantage. They extend across our portfolio, are difficult to replicate, and power our customer value proposition. The first core competency is payment intelligence. We integrate payments, proprietary data, and banking services to deliver actionable insights that help customers make faster, better informed decisions. This is not easy to do, but WEX excels at managing complexity. For example, in Mobility, the insights we provide enable real-time fleet management, helping customers control spend, optimize routing, and improve efficiency across millions of daily transactions. Our second core competency is workflow optimization. WEX has a long history of combining payments and workflow to create differentiated customer value.

For example, in Benefits we offer a complete platform that integrates payments into the broader workflows that employers and employees rely on daily. This is a key differentiator, deepening our role within customers’ operations. Our third core competency is scale and infrastructure. We leverage our global scale, proprietary technology, and risk and compliance expertise to reduce friction, offer enhanced control, and deliver measurable efficiency gains. For example, in Corporate Payments, our global infrastructure enables us to process high volumes of virtual card transactions securely and seamlessly across markets, delivering reliability, speed, and compliance that sets the industry standard. Finally, our fourth core competency is industry expertise. We have established ourselves as experts within the markets we serve, and we apply our deep industry expertise to our customers’ toughest challenges, developing customized solutions that address their needs. With that, I’ll shift gears and review our Q3 segment results, beginning with Mobility.

Mobility remains our largest segment, representing roughly half of revenue. Its competitive strengths come from our closed loop network, which directly connects fuel buyers and sellers, and from our scale, which allows us to serve the largest and most complex organizations. This is demonstrated by our BP win last quarter. Our data-rich solutions are deeply embedded in our customers’ daily operations, delivering functional value and creating long-term stickiness. Our global fraud, credit, and compliance capabilities underpin our offerings, benefiting businesses ranging from local contractors to major oil companies. Excluding the benefit from higher fuel prices, Q3 results from the Mobility segment were in line with our expectations. Transaction levels were down slightly from the prior year, consistent with the overall market trends.

We continue to operate in a challenging macroeconomic environment, with same store sales in the over the road market softening during Q3, while North American Mobility same store sales mirrored trends seen earlier this year. Amid the dynamic macro, we’re focused on maintaining our high retention rates and gaining market share while operating efficiently. One market where we see opportunity to expand share is small businesses, which we define as fleets with 25 or fewer vehicles. These businesses have historically relied on general purpose credit cards. By using our fuel card, they can save on fuel costs, access discounts, manage fraud, and better control their expenses. Small businesses have been a core customer segment since WEX’s founding, and we believe this segment of the market has tremendous value potential. Year to date, our targeted marketing investments here have resulted in a 12% year-over-year increase in new small business customers.

At the same time, we’re building on our differentiated offerings to extend our reach and bring in new opportunities, including the BP win we announced last quarter. The conversion of the existing BP portfolio continues to be on track for sometime next year, with sales to new customers beginning at the end of this year. We’re also broadening our opportunity set in Mobility through innovation. An example of this is the 104 by WEX app, which is designed to help small trucking businesses, a large but underserved part of the market. This year those customers have saved more than $300 per month in fuel costs on average by using our app. We’re excited to expand our technological reach through our new partnership with Trucker Path, a leading mobile app used by more than 1 million professional truck drivers, which we announced earlier this week.

We’re also excited about acquired in November 2023, which we recently rebranded as WEX Field Service Management or WEX FSM. Although it took longer than we planned to establish momentum, revenue grew a healthy double digits in Q3, and we remain energized by this opportunity as we deepen our position in this attractive adjacent market. Overall, Mobility continues to generate strong free cash flow, and we will remain a consistent growth engine for WEX as we drive expanded and new value-added product and service offerings to customers. Turning now to Benefits, which simplifies the complex world of employee benefits administration. For the past decade, the business has grown consistently, now representing approximately 30% of company revenue. Its products and services are deeply embedded in our customers’ administration processes, creating strong customer retention and predictable SaaS and custodial revenue streams.

Overall SaaS account growth was 6% in the quarter, with HSA accounts on our platform up 7% in Q3, bringing us to more than 8.8 million HSA accounts. This represents more than 20% of all HSA accounts in the country. We’re currently in our open enrollment sales cycle, and the pipeline remains strong. According to the 2025 Devonniere Mid Year report, WEX retained its position as the fifth largest HSA custodian in the market. Notably, we serve as a technology partner to seven of the top 10 custodians listed in the report. Over the long term, we will continue to drive volume by elevating awareness of HSAs across the industry, including through leadership and national HSA awareness programs. We remain well positioned for continued growth in the evolving HSA landscape, which offers an expanding TAM.

As we discussed last quarter, we see an opportunity in 2026 with new legislation which will expand HSA eligibility across public health exchanges for the first time in more than a decade. We estimate this could expand the TAM by 3 to 4 million new accounts and believe we are well positioned to benefit given our unique partner-focused distribution approach. Our strategy in Benefits is to continue to outpace market growth by delivering a compelling product portfolio. WexBank provides a distinct advantage here, allowing us to generate higher yields on custodial balances, which supports targeted investments in customer relationships and new business opportunities. Finally, let me discuss Corporate Payments, which represents approximately 20% of our revenue and includes two major offerings: embedded payments and direct accounts payable solutions. Embedded payments offer high operating leverage, with incremental volumes largely falling to the bottom line.

Due to our scalable technology platform and global compliance infrastructure, we’re seeing broad-based adoption across industries, including tech companies offering AP automation, healthcare payments, and expense management. Our direct AP solution, which leverages our Corporate Payments platform, is focused on the underserved mid-market and continues to deliver outsized growth, with Q3 volumes up more than 20% year over year. Customers in industries such as construction, retail, manufacturing, and healthcare choose WEX for our in-house supplier enablement capabilities, which allow us to deliver virtual card adoption with detailed reconciliation data. As we anticipated, Corporate Payments returned to revenue growth in Q3 as underlying market performance has improved and we have largely left the large OTA customer transition. Our enhanced platform and disciplined investments in sales are resonating in the market, driving a robust pipeline of new customer opportunities.

We’re now focused on converting that pipeline into spend volume to support sustained growth into 2026 and beyond. From a strategic perspective, we’re building on our leadership in embedded payments, which is anchored by our travel customers and driven by our industry-leading virtual card issuing engine, and expanding into new use cases and markets. At the same time, we’re scaling direct AP as a central part of our investment plan, tapping into a large, expanding addressable market where we’re still in the early innings. Before I hand the call over to Jagtar, yesterday we announced the appointment of Dave Foss to our Board of Directors, effective November 3rd. This is the result of an extensive search process with the assistance of a leading independent recruiting firm.

Dave served as President of Jack Henry from 2014 to 2022 and Chief Executive Officer from 2016 until his retirement from the role in 2024. In addition, he’s a Director at CNO Financial, where he chairs the Governance and Nominating Committee. His experience across financial services and technology, coupled with his tenure as a public company executive and Board Director, will be invaluable as we enter our next phase of profitable growth. We’re confident that the expertise and fresh perspective that Dave brings will yield immediate contributions to our Board and company. On behalf of WEX, I want to extend a warm welcome to Dave. Across the business, our teams are executing with discipline, extending our competitive advantages, and converting our targeted investments into tangible results. Q3 marked a turning point with acceleration in revenue growth, and we are confident in the opportunities ahead.

Our focus remains on delivering sustainable growth, strong margins, attractive returns, and robust free cash flow while creating long-term value. With that, I’ll turn it over to Jagtar to walk you through our financial performance and updated outlook in more detail. Jagtar.

Steve Elder, Investor Relations, WEX Inc.: Thank you Melissa and good morning everyone. As a reminder, in an effort to provide greater transparency into our business and segments, we began publishing a Supplemental Materials deck this year, which can be accessed on the IR section of our website. Also, comparisons are year over year unless otherwise noted. Total revenue in the quarter was $691.8 million, up 3.9%. The impact of foreign exchange rates and fuel prices decreased revenue growth by 0.5%. Revenue was above the top end of the guidance range we provided last quarter. Adjusted earnings per share was $4.59, an increase of 5.5%, partially offset by a decrease of 1.6% related to lower fuel prices and foreign exchange rates. Adjusted EPS was also above the high end of the guidance range we provided in July.

Although fuel prices were lower than last year, they were higher than our guidance assumed, contributing most of the outperformance in addition to some underlying expense benefits. In our Mobility segment, revenue increased 1% despite a drag of 1.4% related to lower fuel prices and foreign exchange rates. Our payment processing rate was 1.33%, an increase of 2 basis points sequentially. The sequential increase in the net interchange rate is due primarily to merchant pricing and mix. In our Benefits segment, total revenue was $198.1 million, which rose 9.2%. SaaS account growth of 6% was consistent with the performance in the first half of this year, contributing the majority of the revenue growth. Custodial investment revenue, which represents the interest we earn on custodial cash balances, increased 14.9% to $61.7 million. Earned interest yield increased 15 basis points year over year.

The Benefits segment continues to capitalize on both the scale we have built and the value derived from our investment portfolio at WEX bank, which allows us to deliver industry leading returns on our HSA assets. Finally, in Corporate Payments, revenue of $132.8 million increased 4.7%. Purchase volume in Corporate Payments declined 0.9% on a year over year basis, a notable sequential improvement. The decline in volume was more than offset by increase in the net interchange rate, leading to the revenue growth. We have largely lapped the headwind created by the large OTA customer transitioning to a new operating model with us and will fully lap this impact in Q4. In addition, there was a substantial volume decrease for a legacy non-travel embedded payments customer where we are now earning contractual minimums.

Despite the recent volume pressures, the scale of our Corporate Payments segment continues to support a strong margin profile for the business. With that, let me transition to the balance sheet. Our business operates at attractive margins as a result of the scale and competitive advantages that Melissa talked about earlier. WEX is a business that generates strong recurring revenue, which in turn produces reliable free cash flow. This is a strength in all periods, but especially in periods of economic uncertainty and gives us significant capital deployment optionality in deploying capital. Our approach is guided by two core principles. First, we are committed to maintaining a strong balance sheet and ensuring we have the right resources to operate effectively under both normal and stressed conditions, which we do by maintaining appropriate leverage.

We ended Q3 with a leverage ratio of 3.25 times, down from 3.5 times at the end of Q1 and within our long-term range of 2.5 to 3.5 times. We have historically reduced leverage by about half a turn per year and will continue to focus on debt reduction. Following that, our priority is to strategically invest in our core businesses by targeting investments where we can fortify our competitive positioning, deliver attractive returns, and capture growth. After addressing these two core priorities, we evaluate deploying our remaining capital towards accretive M&A opportunities, which must meet strict financial and strategic criteria, or returning capital to shareholders through share repurchases. Every step of our disciplined capital allocation process is grounded by a clear objective to maximize long-term shareholder value. Now let’s move to earnings guidance.

For the fourth quarter and the full year in Q4, we expect to generate revenue in the range of $646 million to $666 million. We expect adjusted net income EPS to be between $3.76 and $3.96 per diluted share. For the full year, we expect to report revenue in the range of $2.63 billion to $2.65 billion. We expect adjusted net income EPS to be between $15.76 and $15.96 per diluted share. Compared to the midpoint of the previous ranges, these represent increases of $19 million in revenue and $0.29 in EPS. The increase represents the outperformance in Q3, a continuation of the positive revenue trends and expense savings we have seen over the past two quarters, and a higher fuel price assumption. Before I conclude my prepared remarks, let me take a moment to share my perspective on the business today.

Despite a challenging macro environment, especially in our Mobility segment, combined with the short-term customer transition headwinds in Corporate Payments, our business continues to demonstrate resiliency and we are seeing sequential improvements. This momentum has helped offset headwinds from ongoing softness in certain markets, specifically trucking. As we approach 2026, we remain cognizant of the macro uncertainty but are encouraged by the building blocks we’ve established this year in Corporate Payments. We’re excited to move past the customer headwind in Mobility where we currently expect the sluggish trends to persist. In the near term, we believe our targeted sales and marketing efforts, including the recent BP win, will contribute to improved results in 2026 and beyond. Finally, we continue to win new business in Benefits and enter the open enrollment period from a position of strength.

While it is too early to forecast account growth for 2026, we expect payment processing revenue and interest income, excluding changes in the rate environment, to again outpace account growth as they have historically. Through strategically investing to amplify our core and expand our reach, we are well positioned to continue to drive growth and further benefit from the eventual turn in the macro environment. In closing, our third quarter results underscore the strength of our diversified model and the discipline of our execution. We remain focused on executing our strategy to deliver results that drive sustainable long-term shareholder value. With that, operator, please open the line for questions.

Rebecca, Conference Operator: At this time I would like to remind everyone in order to ask a question, press Star, then the number one on your telephone keypad. We’ll pause for a moment to compile the Q&A roster. Your first question comes from the line of Sanjay Sakhrani with KBW.

Steve Elder, Investor Relations, WEX Inc.: Thank you. Good morning, Melissa. I appreciate all the commentary at the beginning about the review that you guys did. I can’t say I disagree that the businesses work well together. I’m just curious what the conclusion was with the stock and how to get investors to appreciate how all of those factors come together. Was that part of the analysis?

Rebecca, Conference Operator: Yeah. Thanks for the question. We talked about before the fact that the board has gone through a strategic review annually. This year we went even deeper and we brought in two independent investment banks. We talked about that in the call. Both Bank of America and JPMorgan, part of that work was to really dig in and look at each of our segments and understand the businesses with their view from an independent perspective. I think that the board conducted this really thoughtfully, with discipline, with objectivity, and they looked through that. Really the focus came out of continuing to deliver and execute against our strategic plan. We talked about the pillars that we have in our plan and we’re now beyond this period of time where we’re lapping the OTA customer transition, which has had a pretty heavy impact on the stock.

We’re excited about how we are growing the business, how we’re coming out of the third quarter and how that positions us in the future. That was really the counsel that we had from the investment banks as well.

Steve Elder, Investor Relations, WEX Inc.: Got it. Okay, great. Just a follow up question on Mobility. I think, Melissa, you mentioned over the road saw some softening during Q3. Could you just talk a little bit about that and sort of how that sets up relative to your expectations? I do think you guys were talking a little bit about a pull forward. Is the deterioration a little bit more than expected? Just another one on the financing fee rates that kind of went up. Was there a price in there or something else?

Rebecca, Conference Operator: Thanks. Okay, I’ll take the first one. Just from a macro perspective in our Mobility business, I’ll talk about both the impact over the road and the rest of the business. In the over the road business, which is, as you know, 30% of the business, we saw a pull forward related to the tariffs at the beginning of the year and then some softening in second and third quarter. When I say it got worse, it got about half a point worse in the third quarter, not significant. What we are seeing within that part of the marketplace is that it’s been in a rolling recession for a number of years. Our sales teams have done an amazing job of selling through that and we continue to do that this year. We’re focused on sales, we’re focused on retention.

Think of this as a transient issue that will work its way through eventually. With the rest of the business, what we have seen, we believe, relates to the uncertainty that’s happened related to the tariffs where we’ve seen about negative 4% same store sales within our local business. That’s been pretty consistent in the course of the year. It got maybe a pinch worse in the course of the year, but I would say it’s been a bit of a flu. I think Jagtar used that word getting through this year and again we’ve done a really strong job of selling through that. We’ve talked about the incremental investments we’ve made in marketing. We’ve got 10% more new accounts that have come through that small business channel this year, which is directly related to those investments.

We are really focused on customer retention and again expect this to be transient. We don’t know exactly when it’s going to turn. In our history we know we go through these periods of time and as long as we focus on retaining the customer and building the portfolio, then that works its way through eventually. On top of that, we know next year we’ve got conversion of BP that’s happening at some point in the year and that’ll add between a half to a point in revenue in the 12 months after that. A lot of things that we’re working on where we feel like we’re pulling levers of things that we can affect, waiting for the macro to evolve.

Steve Elder, Investor Relations, WEX Inc.: Sanjay, on your question regarding the financing fee rates, rates this quarter were pretty comparable to what we’ve been seeing the last couple of quarters. It’s a big bump when you look at it year over year, and there’s a couple reasons for that. One, we did make some pricing changes last year that went into this year, so that was part of the bump in the rate. I’d also remind you that this quarter last year, you’ll recall that there was kind of a one-time event that brought down the financing fee number and the rate as a result. When you look at the year over year compare, that looks a little odd, but if you look over the last couple quarters sequentially, you’ll see that we’re kind of in line with where we’ve been. Thank you.

Rebecca, Conference Operator: Your next question comes from the line of Darren Peller with Wolfe Research.

Steve Elder, Investor Relations, WEX Inc.: Hey guys, thanks. Can we touch a little more on the trends in Corporate Payments for a minute, just given I know we’re now kind of lapping, as you said, some of the headwinds we’ve been dealing with, which is great to see. In terms of the overall underlying drivers, anything you’re seeing that surprised you either direction around volumes across travel or B2B? Maybe we could just stand by and reiterate again what you see that business doing and performing really over the next 18 months when we think about the opportunity there. It does look like it’s someone that should truly reaccelerate as we exit the year again.

Rebecca, Conference Operator: Yeah, thank you for the question. If you look at our core payments business, we’re excited about hitting this inflection point. It was important to us to return that segment of the business to growth. We’ve largely lapped the OTA business model transition in the third quarter, so we’ve largely got that behind us. On top of that, we’re seeing really good momentum. A couple of places that we have made investments are extending the product capability across embedded payments. Extending the capability of what we’re doing in travel and applying it to other industries has gone really well in the marketplace. We’re selling, we’re onboarding. It’s a slower onboarding cycle, which is good and bad because it gives us visibility into next year, but it takes a little bit of time to move those customers onto our portfolio.

We feel really good about how the products are resonating in the marketplace, how they’re selling, the customer signings, and how they’re onboarding. Also, in our AP Direct product offering, we’ve talked about the fact we had ramped our salespeople there. That has been just a beautiful model where as we’ve added people, we’ve actually seen strong production and more than 20% volume growth in this last quarter. Those two things give us a lot of confidence as we think about the growth trajectory going forward. About half the business is travel. We know that some of the growth over time we should be able to grow through that because travel becomes a smaller part of the model. As we think about that segment, we talked about our long-term range of 5% to 10%, and we’re feeling really good about where we are right now.

Steve Elder, Investor Relations, WEX Inc.: Okay, that’s helpful. Maybe just my quick follow-up. Beyond when I think about the Benefits side and the OBBB and whether that can accelerate Benefits in 2026, maybe just help us understand your thought process around potentially trying to gain some of those $3 to $4 billion incremental Health Savings Accounts we might see.

Rebecca, Conference Operator: Yeah, we think of it as a really nice long-term tailwind. These are customers or potential customers that are largely getting access through the public exchanges. It’s a little over 7 million people, which we think is about 3 or 4 million accounts. We have access to those customers largely through our partner channel, which we think of as a distinct advantage for us because we’re going into the marketplace not just directly, but through financial institutions and TPAs and people who are health insurance companies as well that sit in that portfolio. We believe that we will get our fair share of that. It’s going to happen over time. We don’t think it’s all going to happen immediately. The nice thing about this is there’s nothing we have to do. The platform itself is ready. This is more education and onboarding.

Steve Elder, Investor Relations, WEX Inc.: Got it, got it. All right, thanks guys.

Rebecca, Conference Operator: Your next question comes from the line of Mihir Bhatia with Bank of America.

Steve Elder, Investor Relations, WEX Inc.: Hi, good morning and thank you for taking my questions. Wanted to start with maybe the Mobility segment and the trucking backdrop. Mostly you mentioned it remains quite challenged. At the same time you are investing in marketing and growing in that segment. Maybe just spend a few minutes just talking about the underwriting, how you’re thinking about underwriting, how you’re managing that underwriting. Are you tightening, reducing, you know, pays to pay, things like that. Just trying to understand how you keep credit in check in that segment. If you have any concerns about maybe bankruptcy rising, same store sales trends don’t start improving.

Rebecca, Conference Operator: Yeah. If you go across that segment, 30% is over the road business, which you’re largely talking about there. We actually had tightened credit standards a while ago. We’ve been in this rolling recession for quite some time, and over that period of time, we spent a lot of time and investment around our risk models. We feel like we’ve seen the benefit of that work so that as we’re making credit decisions, we’re making them in an even more informed way. It’s a lot of where we had our initial applications of AI within the company. So far we’ve seen really good performance in our mobility business. Even though we’ve seen that weakness that’s happened over the last few years, the asset quality continues to look good as well. We feel really comfortable about the fact that we’re extending the right amount of credit to the right customers.

We’ve done more work around also introducing new payment options, particularly in our North America mobility business, that allows us to have access to customers on more of a prepaid basis, which is part of why we’re seeing some success bringing on smaller businesses. If you look across this, I would say I don’t feel like we’re changing the credit quality. We’re just being thoughtful about where we’re adding new customers, and that’s largely because of how we’ve refined our models. The investments that we’ve made have been in the North American mobility business, which has a very strong LP to CAC. We’re seeing that come through right now. We’ve talked about the fact that over the two years following the investments, we earn back four times what we spend in terms of revenue, and so far that’s holding true.

Steve Elder, Investor Relations, WEX Inc.: Okay. Maybe just switching a little bit for a second to just fuel and interest rate sensitivity. Jagtar, maybe you can just comment a little bit on the remind us of the fuel price sensitivity of the business both on the top and bottom line. Just how quickly does that come through? You know, we talked about the financing pricing changes earlier in response to Sanjay’s question. Does that impact that fuel price sensitivity and also just the sensitivity of the business to interest rates as interest rates decline over the next year? Thank you. Yeah. On the fuel prices, I just remind you we put a supplemental deck at the beginning of this year and we update that sensitivity on a quarterly basis. That’s another area you could look for it. Roughly speaking, for fuel prices, that one hasn’t changed since the beginning of this year.

A $0.10 change per gallon in fuel prices on an annualized basis up or down would be $20 million of revenue up or down, and that would translate to about $0.35 of EPS. In terms of speed, that would be a pretty quick flow through to both revenue and EPS because that directly affects interchange and finance fees that we earn. That would flow through both the processing line as well as the finance fee line because our finance fees to some degree are dependent on the size of the bill, which does fluctuate with fuel prices. On interest rates, that one has moved a little bit, but still within close to the range that we had talked about last quarter.

A 100 basis point change in interest rates up or down would move revenue plus or minus $40 million, with a 100 basis point increase increasing revenue $40 million again on an annualized basis, and a 100 basis point decrease decreasing revenue $40 million on an annualized basis. The difference here is when you get to EPS, it actually flips because of the liabilities in our balance sheet. A 100 basis point increase in interest rates would decrease EPS by about $0.30, and minus 100 basis points on interest rate would actually increase EPS by $0.35. Thank you.

Rebecca, Conference Operator: Your next question comes from the line of David Koning with Baird.

Steve Elder, Investor Relations, WEX Inc.: Yeah, hey guys, nice job. A couple questions on Mobility.

Rebecca, Conference Operator: I know you had a.

Steve Elder, Investor Relations, WEX Inc.: Tougher comp in Q3 2024 or basically the tough comp this quarter because Q3 2024 I think had a couple extra days, and yet you still accelerated underlying growth. I guess, A, are you seeing really pretty good underlying momentum in Mobility, and B, was your comment about better growth going forward? Do you mean better organic growth in 2026 than 2025?

Rebecca, Conference Operator: I’ll answer the second part. You can take the first part of that. On the second part, from an organic growth perspective next year, I’m going to put aside macro and say we know that we’re operating in a difficult macro environment, particularly in our Mobility business right now. We also know that we are having a very strong sales year this year, and overall retention rates look comparable to the prior year. All those things are a positive as you think about rolling into your next year because you get the benefit typically of those sales. These are long term investments that we’re making, and it does take time for that to actually show up in our P&L. We do think that that’s going to create some momentum as you go into next year.

Steve Elder, Investor Relations, WEX Inc.: Dave, I’ll address your first question on the comp. Looking 2024 to 2025, days fueling was actually pretty comparable. I know when we went back to 2024, the 2024 to 2023 compare had some days fueling day noise in it. This year it’s actually pretty comparable year to year. I’d also kind of remind you what I’d said. I think it was in response to Sanjay or Darren’s question around, we had some one-time remediation last year, a one-time event that impacted the numbers a little bit, and that made it an easier compare this year. That added roughly a point or two of growth ex fuel. Gotcha. Yeah, that makes sense.

Rebecca, Conference Operator: For my follow.

Steve Elder, Investor Relations, WEX Inc.: You talked a lot about corporate revenues. Obviously that’s hitting a much easier comp, but on a sequential basis, historically volume’s been down sequentially as people don’t travel quite as much in Q4, but yield has been up sequentially and revenues have ended up flat sequentially. In most historic Q4s, are we back to that sort of cadence? Is that kind of how to think of it? Yeah, I think we’re back to the cadence where volumes will be down because of travel. We will see interchange processing rates up. Part of that is mix and part of that is, you know, we typically have revenue recognition when we hit certain thresholds related to schemes with associations. We’d expect that in the fourth quarter as well. I wouldn’t say revenues are flat quarter over quarter sequentially.

We typically tend to see some decrease in the Corporate Payments segment from Q3 to Q4. Okay, great. Nice job, guys. Thanks. Thank you.

Rebecca, Conference Operator: Your next question comes from the line of James Fawcett with Morgan Stanley.

Steve Elder, Investor Relations, WEX Inc.: Hi everyone. It’s Michael in Fontan for James. Thanks for taking our question. I just wanted to ask about your perspective on the implications of Visa’s new commercial enhanced data program and how you think about the interchange and data implications associated with that.

Rebecca, Conference Operator: Great question. As you know, we actually use both schemes. In our Mobility business, it’s our own proprietary network. With our Mobility business where we’ve extended our scheme, it’s been through MasterCard. In Corporate Payments and Benefits, there’s a blend of both that are used from an acceptance standpoint. We think of each of those schemes as there’s something that’s beneficial about each and the different markets and nuances that we use. We’ll continue to think about that going forward with any new product rollouts that are happening.

Steve Elder, Investor Relations, WEX Inc.: That’s helpful, and maybe, Jagtar, just a quick housekeeping one for you. On the Benefits SaaS ARPU side, it looks like the year-over-year trend there continues to improve. How are you thinking about the...

Rebecca, Conference Operator: For this year and the.

Steve Elder, Investor Relations, WEX Inc.: Potential for that line item to inflect positively in 2026? Thanks. Yeah, I would say that you know, ARPU. When you do the math, go to the supplemental schedule for modeling and make sure you back it out. Interest is showing up on the account servicing line to look at kind of ARPU. ARPU has been basically flat, I think, quarter over quarter. I would expect it to roughly remain the same. It will be dependent somewhat on mix and what we end up selling during selling season. From a modeling standpoint, I wouldn’t expect significant increases going into 2026 at this point. Thank you.

Rebecca, Conference Operator: Your next question comes to the line of Nate Sanson with Deutsche Bank.

Steve Elder, Investor Relations, WEX Inc.: Hey, thanks for the question. Accelerated trading across the business is very encouraging to see. I did want to ask again about the end health in the U.S. trucking sector maybe in a little different light. I wanted to know where we’re at in terms of the overall capacity across the sector and how you’re maybe thinking about the potential impact of the removal of certain CDL holders, which I know has been a big piece of discussion in the media recently.

Rebecca, Conference Operator: Actually, when you think about what’s happened in the over the road space, there has been a huge oversupply that came from the pandemic and they’ve been working through that oversupply issue for the last several years. You can still see if you look at some of the broader indexes like the cash rate and ATA truck tonnage, they’re still showing year over year volume pressure. To the extent that you’re going to see some of that supply continue to come out of the marketplace for that reason or honestly other reasons, I think that the market still needs that to happen to get to more of a normalized rate. We haven’t seen any dramatic shift in terms of volume or volume activity. As I said, we went down about half a point in terms of same store sales from Q2 to Q3.

I think everybody in this marketplace has been wanting this to change and hoped it would. What happened from a tariff perspective, at least within our portfolio, put a little bit more pressure, not a lot more. Only about 9% of goods that are moved in the U.S. are coming from outside the U.S. We’ve seen some softness in quarters, particularly from Canada to the U.S., and you get a couple things that are combining. I think this year you’ve got the oversupply issue with some tariff noise added on top of that. Continued reduction in supply I think is a benefit to this space.

Steve Elder, Investor Relations, WEX Inc.: That’s super helpful, Melissa. I appreciate it. Did want to follow up with maybe a two parter on Corporate Payments. The first is, I know last quarter we talked about a large public fintech company in embedded payments that you signed. Just wondering, any update on the ramping there? Any early learnings or takeaways from that relationship? The other question, just on the direct account, volume still strong at 20% I think I saw. It did decelerate a little bit from 25% last quarter. I know it’s been a focus area for your investments and your sales force. Just wondering if there’s anything going on with macro or underlying trends that might explain the slowdown relative to the increased investments.

Rebecca, Conference Operator: Sure. On both of those things, first the new customer is onboarded, they’re in the process of ramping right now. A large amount of that was already in the third quarter, but there’s a little bit more that can be to ramp through the end of the year, which we’ve assumed in our guidance relating to. Your second question was directly the direct business did what we thought it was going to do in this quarter. As we have continued to add salespeople, it’s been remarkably consistent what we’ve seen for output from that sales organization. Anything that’s happening there is not related to sales activity. We are seeing a little bit of same store sales softness within that base customers. It’s just a few points, but I would say similar trends that we’re seeing in some of the Mobility customer base.

There’s just a little bit less spending year over year.

Steve Elder, Investor Relations, WEX Inc.: We look at cohort by cohort, how customers are ramping up and how that volume goes and is it moving like expectations? To Melissa’s point, I think things are going as expected and there might be some noise quarter to quarter, but we’re not seeing any deceleration from expectations. Super helpful, thank you.

Rebecca, Conference Operator: Your next question comes from the line of Raina Kumar with Oppenheimer. Hi, thanks for fitting me in here. Can you provide any color on expectations for adjusted operating margin for the rest of the year? Now, assuming stable macro, should we anticipate margins to expand next year? Thank you.

Steve Elder, Investor Relations, WEX Inc.: Hey, Raina. Yeah, so by the rest of the year, I’m assuming you mean Q4. What I’d say is if you look at kind of year over year Q3 to Q3 this year versus last year, operating margins were down, call it on the order of 400 basis points. There was a couple of pieces for that. We had kind of the tough credit loss compared to last year because last year was a very good credit loss year. Then there’s the sales and marketing and product investments that Melissa has talked about. The credit loss piece that compare was probably on the order of 200 basis points of the comp. I would expect that to improve as we go into Q4. Q4 is typically a lower operating income margin because of the drop in Corporate Payments in the travel business.

In terms of think about the year over year comparison, whereas this quarter was kind of a 400 basis point, that 200 basis point credit loss impact should go away. Yeah.

Rebecca, Conference Operator: Sorry, on 26, if you can comment.

Steve Elder, Investor Relations, WEX Inc.: Yeah, I mean, it’s a little too early for me to give a guide in 2026. What I’d say is, as Melissa talked about, we feel good about revenue right now. We’ll have the lapping of some of the investments that we’ve made, kind of the full year impact of those. At this point, I would say operating income next year, operating income margins will trend similarly to this year. We’re still on budgeting.

Rebecca, Conference Operator: Thank you. I will now turn the call back over to Melissa Smith for closing remarks. In closing, we’re focused on delivering shareholder value. We’re executing our strategy and taking actions to deliver accelerated and sustainable profitable growth in the markets we serve. Recognizing the dynamic and challenging macro environment, we’ve continued to manage expenses while investing strategically to capture future growth and efficiencies. We’re encouraged by our Q3 results and look forward to driving momentum as we close out 2025 and turn the page to 2026. Thank you for your interest in WEX. Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.

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