Wex at William Blair Conference: Strategic Growth and Market Insights

On Wednesday, June 4, 2025, Wex Inc. (NYSE:WEX) participated in the 45th Annual William Blair Growth Stock Conference. The company, led by CEO Melissa Smith, outlined its strategic vision focusing on long-term growth through payment intelligence, data utilization, and workflow optimization. While Wex highlighted its strong market position and growth opportunities in electric vehicles (EV), benefits, and corporate payments, it also addressed challenges like customer insourcing impacting its corporate payments segment.

Key Takeaways

• Wex aims for a long-term organic revenue growth target of 5% to 10%.
• The company is increasing its sales and marketing spend in 2025, with positive early returns.
• Wex executed a significant share buyback, resulting in a current leverage ratio of 3.5x.
• The company holds a 20% market share in the mobility segment and 5% in the benefits segment.
• Wex’s EV strategy includes subscription-based revenue models and integrated solutions for fleet hybridization.

Financial Results

• Revenue: Wex reported approximately $2.6 billion in revenue, primarily from interchange and SaaS fees.
• Growth History: The company has experienced 13% top-line growth and 15% EPS growth historically.
• Net Cash and Leverage: Wex holds $750 million in net cash, with a target leverage ratio of 2.5x to 3.5x, currently at 3.5x post-buyback.
• Capital Allocation: Focus on growth investments and returning capital to shareholders through buybacks.

Operational Updates

• Mobility Segment: Wex has seen an 18% year-over-year increase in application volume, maintaining a 20% market share.
• Benefits Segment: With a 5% market share, Wex sees potential growth with an increase of up to 20 million HSA accounts.
• Corporate Payments: The non-travel segment accounts for 50% of revenue, with efforts to expand the total addressable market through product development and embedded payments.

Future Outlook

• Growth Targets: Wex is optimistic about exceeding its 10% growth target as non-travel corporate payments scale.
• EV Transition: The company supports fleet hybridization with integrated solutions and a subscription-based revenue model, aiming to reduce revenue volatility.
• Corporate Payments Expansion: Wex is enhancing its AP capabilities to capture additional market share.

Q&A Highlights

• Debt Level: Wex targets a debt level of 2.5-3.5x EBITDA and is currently at 3.5x due to share buybacks.
• Business Confidence: The share buyback reflects confidence in Wex’s business prospects and perceived stock undervaluation.

For more detailed insights, please refer to the full transcript below.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Unidentified speaker, Host, William Blair: I’m required to inform you that a complete list of research disclosures or potential conflicts of interest can be found on our website, williamblair.com. So with that, pleasure to introduce Melissa Smith, chairman and CEO of WEX as well as Steve Elder who runs the company’s IR. And Melissa will walk us through a presentation. I expect we’ll have time for a little bit of Q and A in this room and then there’ll be a breakout session after.

Melissa Smith, Chairman and CEO, WEX: That preamble made me think it was going be a longer intro. Thank you. Thank you. Thank you for inviting us to be here at your forty fifth annual conference and we appreciate being there. For those of you who don’t know me, I’m Melissa Smith.

I’m the CEO of WEX. I’m gonna talk a little bit about WEX and for those of you who don’t know what we do, we’re a global commerce platform that is, we have vertical solutions that are in corporate payments benefits in the mobility sectors. So I’m to talk a little bit about what we do, how we make money and why we think we’re well situated for long term growth. So I said our purpose is to simplify the business of running a business. The way that we think about the business is that we are really focused on how we can use our payment intelligence.

So that is the core payments technology infrastructure that we have across the product sets and our ability to optimize workflows to remove complexity from our customers. We’re very focused on how we can use the data quality and data assets we have to help businesses grow and thrive and also to make sure that we are taking the work out of the workflows and helping our customers make smarter decisions in a very compliant way. All of what we do sits on our underlying technology stack and our proprietary payments capability. It also runs through a bank that we own, WEX Bank. And so, we think about how we face our customers, which is a very diverse set of customers.

It is focused on those principles. We have 6,500 employees, about 2,600,000,000.0 in revenue. We’re operating across 16 different countries where our employees are operated and the company’s been around for forty years. We’ve been public for about twenty of those. So a little deeper if if you look at our individual segments, we’re highly focused around how we can create verticalized solutions across these segments.

So for mobility, we have a closed loop network that allows us to data capture the, the products that people are buying in a way that allows our customers to make really simplified decisions off a lot of dataset. We’re making sure that they are purchasing things that customers should be purchasing and that they’re controlling those buying behaviors in ways that are consistent with however that customer wants them to be enabled. Some customers prefer very strong controls upfront to eliminate misuse. Other customers would like to see a bunch of data that points to where there has been unusual behavior and let them do it in more of a detective way in the back end of things. We’re also really well positioned as we migrate into the EV space over time.

What we know from our customers is that they’re very focused around getting a single source of data associated with each of their transactions. If the energy source is an ICE vehicle or if it’s an EV vehicle, they want all that information packaged together in a way that they can understand the total cost of ownership of that vehicle. And so our products work both in the EV world and in the more traditional gas powered way. If you go over into the benefits space, in that case, what we’re looking at are transactions that are allowed by the IRS. So think of an HSA or an FSA transaction.

What we’re trying to do is make sure that when people are purchasing things and these are largely consumers, there’s a little over 20,000,000 consumers that use our products that they are buying things that are allowed and that we’re giving them information that helps them make better decisions in their purchasing. We do that for partners. We do that directly for employers. And we also help manage kind of the lifestyle from an employee coming on board all the way to when they’re exiting the company. So we will help with benefits administration all the way through COBRA payments along the way.

And then corporate payments, we are in this case removing the complexity of facilitating a payment. This is sitting on a technology stack that allows people to connect into our business through an API and facilitate a payment, largely virtual card payments, but they can use other modalities as well in a way that’s highly integrated into their overall workflow. So, volume of activity that goes through this part of our business, very frictionless in terms of execution and and we’ve branched into accounts payable management as well. So, if you look across to each of these businesses, what we’re focusing on is creating solutions that really help the bridge between software and payments across each of those verticals in a way that creates efficiency for the payment flow, control around the payment flow and does that in a very compliant way. And at the same time, removes some of the change that happens across the rest of the workflows that they have.

So the majority of the business is is where we first originated. So a little bit over half the business is in our mobility business. About, you know, 28%, you know, specifically is in our benefits business and 19% in corporate payments. If you look across that 2,600,000,000.0 in revenue, the two primary sources of revenue for us are interchange, so payment processing revenue that’s coming from the volume of spend that’s going across our rails. And the second thing for us are SaaS fees.

So that’s the majority of our revenue. So, you know, one based on the software and the other way based on the payment usage. If you look over time, the company has grown 13% top line, 15% on EPS. They have a long history of growth. We’re very focused around, you know, continuing that long history of growth.

In the places when we are looking at the business where we’ve been thinking about is our strengths, In each of the segments in, we have moats that sit across each of those segments. Those moats are built upon the fact that we have strong products and very strong technology and, and a high level of integration across everything that we do. So if you think about anywhere from an over the road customer that’s integrating into their HR system to, an embedded payments customer that is facilitating a payment that is embedded in their workflow. There’s a high degree of integration within our technology. We also operate across each of those segments at scale.

They’re all parts in the marketplace that have great growth potential. If you look across our mobility business, this kind of migration into EV, whether you’re in the corporate payments space where you’re seeing this transition into more digital payments. We said or within our benefits business where you’ve got this move to, more remote work, younger generational workers that is creating an opportunity as account types continue to, to evolve and that has created opportunity for us as well. We’re also in each of those parts of the business, we operate at very high margins and generate a significant amount of cash flow, which allows us to continue to reinvest in those products and create further product differentiation. So our roadmap for growth, there’s something that we’ve been very thoughtful.

Increasing the amount of spend that we have in 2025 for sales and marketing. They’re very early in this process. We’re seeing really great returns for those investments. In our corporate payments business, we’ve been really focused around extending the TAM of what we’re doing in that space from online travel companies into other parts in the marketplace. We have built products.

We’ve released those products in the marketplace. We’re seeing really good traction, in that part of the space which, is leading to pipeline development and sales. In our mobility business, we’ve been very focused around increasing market customers in that space. We’ve seen an 18% approval year over year in application volume within a mobility segment and benefits. We just went through a great open enrollment season.

We’re lining up now for the next one. So if you look across each of those businesses where we actually have been placing our bets, we’re seeing really good signs of progress. We’re also really focused around continuing to increase the speed of product innovation velocity and, you know, that’s sitting on the backbone of our technology house. As a result, you’re starting to see more products getting released in the marketplace, another place for us to monetize over time. We’ve been really thoughtful around capital allocation when I think about kind of first priority for us is growth.

And so we’ve been really focused on the things that can accelerate growth within the company. And also, we’ve been buying back stock as a way to distribute money back to shareholders. So, from a capital allocation, this is gonna continue to be a place that we are very thoughtful of where we want to spend, our monies that it gets generated from the, you know, significant scale and profitability that we have in the business.

Unidentified speaker, Host, William Blair: And that Okay.

Melissa Smith, Chairman and CEO, WEX: It’s my bit.

Unidentified speaker, Host, William Blair: That it’s a great overview. Thank you. I’m happy to open up the floor to to questions or start the conversation myself either way. Yeah. Please.

Melissa Smith, Chairman and CEO, WEX: Yeah, they always say flat, but if you looked a year ago, our price was like $2.20, 2 30. Like, so there’s been a lot of volatility in the, in the, the price. A lot of the conversation, a lot of the narrative that I have is around our corporate payments business and, and the fact that there’s more volatility in that space and has been since the pandemic. So a lot of what we’ve been very focused around how that we can create more growth outside of travel in corporate payments and leverage the assets we have to actually bring on more business. That does two things for us.

It increases the growth profile of that segment, which has been a huge focus and also dilutes some of the volatility that you see within the travel part of the marketplace. And I’m I’m really pleased with what we’re seeing for early success of the products that we’ve been rolling into the marketplace. But I’d say that’s that’s been a really big part of the conversation. I would say a lot of the conversation ever since we announced the fact that one of the customers in that portfolio is in sourcing, you know, piece of the business that that, you know, that has caused a lot of conversation across what does that mean to the rest of the portfolio. Now, we can look at that and say that that individual customer, first of all, is much bigger than, you know, what sits in the rest of the portfolio, but also has bigger than other customers in the portfolio in terms of just Major customer.

Yes. Yep. Major customer and and they have a unique set of assets that is unlike what you see in in the rest of the business and scale. So we know that that customer has got a unique set of circumstances that allows them to in source, which is unique to the rest of the business. And so, you know, as we go through that migration should start to anniversary in the third quarter and will be fully anniversaried in the fourth quarter of this year.

So we feel like you’re gonna be able to see a in q three, you start to see a more normal comp. In q four, you actually be able to see the, you know, the benefit of everything that we’re doing coming through. So, we’ve talked about our long term growth rates of five to 10% top line growth organically. And as you go through each of the segments, each of them have different drivers that sit behind that. But that’s, you know, our objective function is to be in that range.

750,000,000 of net cash. You wanna talk about that?

Unidentified speaker, IR, WEX: One of the features that Melissa mentioned is we own a bank, and so we’re taking in customer deposits and, you know, some of that’s restricted, but some of that is just, you know, cash at our banking subsidiary too for cash flow, you know, just day to day transactional kind of stuff. The way we look at it is we had, I think at the end of last quarter, we had about a hundred and $50,000,000 of what we call corporate cash, kind of readily available and for whatever use we wanna use it for. The rest, would say, is kind of, in one way or another, restricted and not kind of generally available for the company to use.

Unidentified speaker, Host, William Blair: Is there any general corporate debt?

Unidentified speaker, IR, WEX: Sure. There is. Yeah. Okay. So the so on that basis, the On a net basis, we have about three and a half times leverage.

Melissa Smith, Chairman and CEO, WEX: Okay.

Unidentified speaker, Host, William Blair: You you’re not the only one who It’s complex. Yeah. And if you look at valuation on most public whether it’s Bloomberg Bloomberg or FactSet often, the multiple is wrong because it takes into account that that that all of that cash as opposed just available corporate cash. What ratio do you want to change?

Melissa Smith, Chairman and CEO, WEX: Two and a half to three and a half is our target. Yes. Yeah. So we just did a pretty significant share buyback, which is what pushed us to the three and a half times, and we’re on delevering right now.

Unidentified speaker, Host, William Blair: Yes.

Melissa Smith, Chairman and CEO, WEX: We yeah. 12%. Yeah. It was a very active conversation from a board perspective, as you might imagine. You know, we feel really confident in the future of the business and we felt like the stock was undervalued and and we feel really confident at our cash flow.

We’ve levered up before, done it historically for M and A transactions. We levered up to a point we felt like was still reasonable. Bought back stock with the idea that we would then pay it down. It was really just a confidence. Well, at the point in time that we bought back stock, we felt like really good about the about the fact that we were buying something that was undervalued.

And I would say like even more so today. Right? Like, when we did the transaction, we did the Dutch auction, it was right before the the tariff announcement. And so, it was just, yeah, literally, I think two days before.

Unidentified speaker, Host, William Blair: Melissa, maybe a a couple of high level questions, just to to try to frame up the opportunity in each each of the three businesses. Can you kind of walk us through the the TAM and and how you do a a TAM assessment in all three? I think benefits might be the easiest to see at least from an account standpoint, but, you know, folks in the room may be less, you know, less sort of familiar with the the with the mobility segment. So if you could talk about how many vehicles you have and how how big you think the addressable market is. And then also maybe touch on some of the EV solutions that that WEX has brought to to bear in the last couple years?

Melissa Smith, Chairman and CEO, WEX: Yeah, sure. So, if you go across the markets that we’re in, it’s about a $25,000,000,000 TAM in total. And if you go across each of them, we believe we have about a 20% market share in mobility. And if you look across the mobility segments, we continue to see lots of open ground, particularly with the smaller market. And it’s, you know, if you look at overall our average sized vehicles of 15 fleets, it’s part of the market we’re actually quite accustomed to, but it’s a place that we’ve been adding in incremental investments because we see continued open market.

With the enterprise accounts of the larger accounts, it is much more penetrated, but it is a place we continue to add sales and see momentum in the marketplace both in the over the road and our North American fleet business. And so, you know, our ability to grow, we think it comes from a combination of and continue to add price across the portfolio and continuing to add new customers and penetrate the market more fully. It’s been an unusual period of time because when you look at the CAS index, it has shrunk, right, the last couple of years.

Unidentified speaker, Host, William Blair: Yeah, market’s been really tough.

Melissa Smith, Chairman and CEO, WEX: It’s been really tough, right? So, there’s been a little bit of looking like you’re running in place. We’re adding new accounts but we’re seeing like more shrinkage, you know, particularly in the over the road space than you have historically. And that seems to have stabilized, you know, the spot rates were more stable. And so we think that you’ve kind of hit this point where, you know, it’s not great.

Although same store sales for us in that part of the marketplace was actually positive in the first quarter. We think some of that came from a pull forward in spend volume and so we’re still seeing some positivity, but it’s more muted. And then in North American, you didn’t ask this, but just to kind complete the thought, the North American fleet marketplace, we said that was negative 3.9% same store sales growth in the first quarter. We’ve seen that kind of trend, you know, pretty much continue, which is what we had expected. And so, you know, it’s been a great year in terms of sales and retention, and there’s a little bit of muting that’s happening overall in the, like, just the economic environment.

Not horrible. It’s not accelerated, there’s a little bit of negative that’s coming through in that part. And then the rest of the business, have about 5% market share in the benefits space. A lot of open market there. I’m sure you’re aware of the big beautiful bill has the potential for expanding HSA, which, you know, would create even more market share for us.

You know, their estimates are that that would increase HSA twenty million accounts On a base of right now, there’s about 165,000,000 people that are eligible for HSA accounts. So, that would be, you know, a great tailwind if that comes through in the bill once this actually gets finally reconciled. But right now, we continue to see opportunity as we’ve added into sales across that portfolio. It’s got really strong LTV to CAC, you know, measures and so we continue to think that we have a lot of market. The overall growth of HSAs have slowed, but we still have a lot of market to continue to penetrate.

And then corporate payments, you know, we continue to add TAM to that. So, we are you know, we have more penetration in the travel space and a lot more open market when you get outside of travel. So it gets into a huge TAM, you know, potentially. And so so we see an ability to have outsized growth is outside of travel. So we think that our travel portfolio will grow along in line with travel over time.

And that the outside of travel, we have, you know, very small market share and have an ability to have you know, a lot of success there, which is why we’ve been investing them.

Unidentified speaker, Host, William Blair: So just to to sort of frame that up, the the the non travel part of corporate is about 40% of that segment?

Melissa Smith, Chairman and CEO, WEX: Is that About 50% of revenue, about 40% of spend.

Unidentified speaker, Host, William Blair: 40% of spend and half the revenue. And as you mentioned, that is a that is a big opportunity. What are the specific things you’re doing to drive more card based b to b payments? Yeah. And can you talk maybe a little bit about so there because there are two kind of components, right, of of the of the of the b to b piece and on travel piece.

One would be AP, AR Mhmm. Workflow automation and digitization, and then the other would actually be the the payments. Mhmm. Can you elaborate a little bit on your current capabilities where you’d like to take those capabilities? And then maybe specifically what the investments are aimed at driving that business.

Because just again, for for those in the room who may not be familiar, you know, Visa, for example, puts cross border commerce at somewhere in the in the neighborhood of $60,000,000,000,000. It’s just it’s an enormous market. It’s mostly cash and ACH. So the opportunity is huge, and I think a lot of investors are trying to understand how companies like WEX and and others for that matter are going to to monetize in this in this space.

Melissa Smith, Chairman and CEO, WEX: Yeah. Yeah. So we think there we think about it as two core products that we have in the marketplace. I’ll start with embedded payments because that’s the place we’ve been heavily investing in product. So, embedded payments would be I’m gonna take our virtual card payment stack is world class.

We have tremendous volume and scale that goes through that. We have 165 different product types in a global compliance structure, which is what the online travel agencies are very interested in because we can do so many different configurations around the world. World class. So we’ve been looking at how do we increase sales of that type of capability outside of travel. The way that we’ve thought about this is we’ve added in flexible funding capability which allows our customers to maximize their working capital.

So if you’re a business, you want the least amount that gets captured or stuck as part of that transaction, either a deposit or collateral or something like that. And from our perspective, we want the least amount of risk and exposure associated with that because there’s a tremendous amount of volume that goes through. And so we’ve added functionality that allows people to maximize that. And we’re out into the marketplace selling that capability outside of travel. And what we’re finding is that really strong success.

You know, the product is really new in the marketplace. We’ve got a pipeline that continues to develop. We’re seeing really strong sales. And so that’s been our first focus. We said that’s a core differentiated asset that we have a pure right to win in that space.

And so and anything we do in embedded payments helps our travel customers but also helps our AP products as well. So that is a growth avenue for us. On the AP side, we sit on that back end of the payment so that like facilitating the payment, you give me an AP file, I will facilitate that on your behalf. And we have continued to build a sales force and also have had success in selling that capability. Part of the sale for us, the reason why we win is because we have operated such large scale that we can maximize the financials that sit behind everything else we do and package that back to a customer in a way that we can, in a very stable, reliable way, fulfill their payments but also do it in a way that is economically advantaged to them.

We are continuing to build on that capability we have. You know, our first focus was on embedded payments, but now it is they continue to build the capability we have in AP because we see that as another area to expand TAM. But even what we’ve already done has expanded what we’re able to sell into as we add additional features that we’ll continue to build upon that. And so we think of this as, like, we’re just con we’re opening up more and more space.

Unidentified speaker, Host, William Blair: So is it right to think about in that segment as you anniversary this this one particular revenue transition and maybe start to see some transaction some traction, I should say, in some of these other businesses. Can that be does that so how do I think about that in in the five to 10% medium term revenue growth or long term revenue growth target? Does that have the capability unto itself to take you toward the the high end of that target growth range?

Melissa Smith, Chairman and CEO, WEX: Yeah. I think that for sure. And I’d like over time, our intention is to go beyond that. Like, we the thing for us right now is to be thoughtful that they’re smaller parts of the segment and travel itself will probably grow it more like a travel growth rate. And so we have to and that’s half of the revenue.

So it’s going to take some time for these other pieces of the business to come through even when they’re growing at an accelerated rate. But over time, we think that that will not just we think that we have tremendous growth Okay. You know, capability.

Unidentified speaker, Host, William Blair: It’ll be interesting to get and hear about KPIs in that business as as you make some progress. Yep. And and I did wanna come back, briefly in the last couple minutes to and it doesn’t come up in investor conversations nearly as much as it used to, but with the EV transition and Yes. And the shift to hybrid fleets, you’ve talked about the economics of your EV solutions. Mhmm.

Can you just talk a little bit about sort of how you’re helping customers hybridize and what that means for the model over time recognizing that a shift to a full EV sort of truck fleet is gonna probably not gonna happen. Well, not in my lifetime.

Melissa Smith, Chairman and CEO, WEX: Yeah, the fact that it’s a mixed fleet actually works to our advantage because what people want is an integrated solution. And, you know, as people make this migration, what they’re doing is migrating a piece of their fleet and they want to understand their gas powered vehicle and their EV vehicles like, together. So, it actually puts us in a really good, like, pole position. What we’re finding is that there’s still continued movement with government fleets. It slowed down, but has continued.

And so, that case, what we’re doing is giving them a host of solutions. We have the ability to they can access a network of our products, which is EV charging. They have an ability to do at home reimbursement if they want to. And they have the ability for depot charging so they can access all of that. That customer segment continues to actually go through the sales pipeline and we’re seeing them go through implementation cycles.

Slower than what we originally would have thought, but it’s still happening. The other place that we’re seeing a lot of interest within the enterprise accounts, and I was actually just at dinner with a bunch of our customers, they’re still trying to work through sustainability reporting requirements and the assets we have have the ability to help them with that so that as they go through the process of determining what their footprint looks like for reporting purposes, they they still need that capability and we have that capability. And so there’s a lot more consultative work that we do with with the large end of the marketplace and with the government. I would say it’s in government including states, it’s actually seeing migration onto the platform. What we know so far is that each of these products we have have an ability to charge a subscription fee.

So we like it and the fact that it creates a different source of revenue. It’s higher on aggregate than an average ice vehicle is and it has less volatility with fuel prices. And so it’s a lot of positives that should make this migration. And I think that we do have less questions because the economics seem to have proven outdone just for us but other people in the space. Yep.

And it’s just a question of now, like, what’s the migration cycle look like? Okay.

Unidentified speaker, Host, William Blair: Great. Thank you very

Melissa Smith, Chairman and CEO, WEX: much. Yeah. Appreciate

Unidentified speaker, Host, William Blair: it. We’ve got a breakout. Let’s see. Figure out which one he’s in. Yeah.

I’ll tell you a second. Richardson. Thank you. See, I don’t care on paper.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.