Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- WEX Inc (WEX, Financial) reported a 2% increase in revenue for the third quarter, reaching $665 million.
- Adjusted net income per diluted share increased by 7% to $4.35 compared to the prior year quarter.
- The mobility segment delivered underlying revenue growth of 8% compared to last year, excluding the impact of lower fuel prices and foreign exchange rates.
- WEX Inc (WEX) achieved record high Q3 revenue and adjusted EPS, showing strong growth despite challenges.
- The company has realized approximately $110 million in annual cost savings on a run rate basis, exceeding their $100 million target.
Negative Points
- The third-quarter results fell short of prior guidance for revenue and adjusted EPS, primarily due to macro trends and an unplanned charge in the mobility segment.
- Fuel prices declined significantly, impacting revenue by approximately $8 million compared to guidance.
- The corporate payments segment saw a 6% decrease in revenue, largely due to a model change for a large online travel agency customer.
- WEX Inc (WEX) reduced its outlook for the remainder of 2024 due to ongoing impacts from lower fuel prices and softness in same-store sales.
- The company experienced a deceleration in local fleet customer base purchases, which was not anticipated, indicating potential macroeconomic concerns.
Q & A Highlights
Q: On the mobility segment, is the high interchange rate sustainable, and what was the impact of the finance fee reversal?
A: Jagtar Narula, CFO, explained that the interchange rate benefited from fuel prices and pricing increases, which are sustainable. The finance fee reversal impacted the mobility segment by about $10 million, and going forward, the rates should normalize.
Q: Regarding the corporate segment, is the large client transition complete, and what about the impact on revenue?
A: Melissa Smith, CEO, noted that the transition of a large client is progressing as expected, with some impact on revenue. The transition will continue to affect results over the next few quarters, but the company is focused on growing outside of travel to offset this.
Q: How is the pipeline for the benefits segment as we head into open enrollment season?
A: Melissa Smith stated that the company feels positive about the open enrollment season, with bookings higher year-over-year. Some contracts were delayed, impacting revenue this year, but the company expects to beat the market growth rate for HSAs.
Q: What is the outlook for the corporate payments business, considering the large customer transition?
A: Melissa Smith reiterated that the business is expected to grow 10% to 15% long-term. The transition of a large customer will impact results for the next few quarters, but the company is focused on expanding spend areas and product offerings.
Q: Can you elaborate on the impact of fuel prices and same-store sales softness on guidance?
A: Jagtar Narula clarified that the reduction in guidance is due to lower fuel prices, which impact revenue and EPS, and same-store sales softness, which is assumed to continue into Q4. The company is monitoring these trends closely.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
