Good morning. My name is David, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the WEX Q1 2022 Earnings Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. Steve Elder, Senior Vice President of Investor Relations, you may begin your conference.

Thank you, operator, and good morning everyone. With me today is Melissa Smith, our Chair and CEO; and our Interim CFO, Jenny Kimball. The press release we issued earlier this morning and a slide deck to walk through our prepared remarks have been posted to the Investor Relations section of our website at wexinc.com. A copy of the release and the slide deck have also been included in the 8-Ks we submitted to the SEC. As a reminder, we will be discussing non-GAAP metrics, specifically adjusted net income attributable to shareholders, which we refer to as adjusted net income or ANI, and adjusted operating income during our call. Adjustments for this year's first quarter to arrive at these metrics include unrealized gains on financial instruments, net foreign currency remeasurement gains, change in fair value of contingent consideration, acquisition-related intangible amortization, other acquisition and divestiture-related items, stock-based compensation, other costs, debt restructuring and debt issuance cost amortization, ANI adjustments attributable to non-controlling interests and certain tax-related items as applicable. Please see Exhibit 1 of the press release for an explanation and reconciliation of adjusted net income attributable to shareholders to GAAP net income attributable to shareholders and an explanation and reconciliation of adjusted operating income to GAAP operating income. The company provides revenue guidance on a GAAP basis and earnings guidance on a non-GAAP basis due to the uncertainty and 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 those forward-looking statements as a result of various factors, including those discussed in our press release and the risk factors identified in our annual report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 1, 2022, and 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.

Thanks, Steve, and good morning, everyone. We appreciate you joining us today. Before diving into our Q1 results, I'd like to thank our dedicated team members across the globe who continue to deliver great results, even in the quarter that included the impact of the Omicron variant. As a result of their efforts, 2022 is off to a great start for WEX. I'd also like to take a moment to touch on the war in Ukraine. Our hearts continue to be with the people of Ukraine, and we remain hopeful for a return to peace. As we communicated at the beginning of the conflict, WEX did not and does not have any employees or operations in Russia. We took additional steps since we last spoke to stop supporting business in Russia. The impact of these decisions is immaterial for our financial results at less than $5 million per year in revenue. Now turning to our results, in the first quarter, we once again delivered record revenue generating $518 million, a year-over-year increase of 26%, driven by a continued recovery in travel volumes, a strong increase in fuel volumes, a very good open enrollment season, and a favorable fuel price environment. This increase includes a 6% negative impact from a change in accounting presentation we have discussed in each of the last two quarters. To put this in perspective, of the $107 million of year-over-year revenue increase, approximately $38 million was related to higher fuel prices and unfavorable foreign exchange rates, and approximately $69 million was for all other factors. So we're very pleased with this result. Total purchase volume processed across the organization in the first quarter grew 66% year-over-year to a record high of $28 billion, reflecting the strong double-digit growth rates in each of our segments. While travel volumes globally have not yet returned to pre-pandemic levels, as an industry, WEX had record high travel-related purchase volumes for the first quarter at more than $7 billion. We also had a significant contribution from the new AVID Exchange relationship, as well as higher fuel prices. Record quarterly revenue paired with expense scalability resulted in adjusted net income per diluted share of $2.88, an increase of 61% compared to the same quarter last year. We experienced significant growth from operations, which contributed about half of the increase in EPFs, and high fuel prices drove the other half of the increase. On an adjusted basis, the first quarter of 2022 was the most profitable in WEX’s history, as we continue to execute well on all fronts. Now let me take a step back to discuss the key drivers of our first quarter results in more detail. We continue to win new customers and expand relationships with existing partners across the WEX ecosystem. First, travel enjoyed a strong rebound, with hotel industry revenue in some of our key markets trending above 2019 levels in February and March. There was a sharp increase in demand in both air and hotel travel when the threat of Omicron was deemed less severe than previous variants. This resulted in first quarter purchase volume for travel-related customers of nearly three times last year's level. Despite uncertainty caused by the Ukraine-Russia conflict and the slower recovery in Asia. On the corporate payment side, AVID Exchange volumes continued to ramp, and the implementation phase is now complete. As a reminder, we won the right to the AVID’s partner based on our wide range of different card products, extremely high reliability, and our all-in-one solution across those technology and funding capabilities. Also in the corporate payment space, we renewed a long-term agreement with Commerce Bank, one of our major bank customers, who uses our technology platform in the State of Arkansas to renew its payable business contracts. In mobility, we are seeing a strong uptick in new applications, particularly from the over-the-road small carriers. Given the rise in fuel prices, small carriers are spending more money on fuel, need more credit, and are looking for discounts in card programs to help defray costs. New applications from this market were up 26% year-over-year in the quarter, and March had the highest volume of new applications ever. Similar to last quarter, more than half of these new accounts were sold and implemented digitally. We also signed a new agreement to provide a private-label program to Travel Centers of America. Engaging with WEX's powerful global platform allows TA to provide professional drivers with a competitive quality program that offers many benefits in purchasing options. In addition to our success with smaller fleets, we signed several new large customers during the quarter, including the largest U.S. retail propane distributor in a top 10 U.S. city. In addition, we were added to the list of approved suppliers for Crown Commercial Service, which is the UK equivalent of the GSA in the U.S. Our broad-based success is also reflected in our strong renewals, including a major auto parts retailer. In the health and employee benefit segment, one of the nation's largest vocational rehabilitation and independent living programs, which is a state-run benefits program, wanted to find a company to work with to help achieve their vision of simplifying and streamlining the way that they distribute benefits to their clients. They chose WEX because our technology platform uniquely positions us to be able to support multiple benefit programs delivered in one solution. WEX was able to extend our core product offering in the consumer-directed healthcare market and create a new and unique product offering to meet their needs. The clients were able to have a simplified experience by being able to use money from the state programs they are eligible for, such as stipends for education, transportation, or healthy foods, all on one card. The seamless technology behind the scenes uses custom merchant networks to apply rules and apply the correct purse to deliver available funds right at the point of sale. This is a great example of the network effect that differentiates WEX in the marketplace that we talked about at Investor Day. Not only do we meet our customers where they want to be met, but we have the ability to deploy customer-driven improvements across our network to maximize benefits. In part due to the deep level of integration into the business processes, each new customer and partner adds additional utility to our platform, enhancing the network effect of our overall offering. Turning down to our technology platform, we continue to invest ahead of our customers to anticipate their needs. Given the recent sharp rise in fuel prices, we are receiving very positive customer feedback around a mobile driver app. As customers have been utilizing the app to find the best fuel price in their area. This week, we've launched FLUME, a new integrated software and payment solution. As we discussed at our Investor Day, we're excited about this solution as we're targeting our 450,000 small and mid-sized businesses that are searching for an automated solution while leveraging our digital marketing tools. We’re rolling FLUME out to the market and we’ll continue to enhance the product based on customer feedback while delivering a seamless digital experience to our customers. We also had a significant product release for a healthcare product that went live in March. The release delivered a highly personalized and engaging consumer experience, an investment in data and analytics, and updated mobile applications and benchmarking tools for our partner channel. Turning now to our electric vehicle vision. As outlined at Investor Day, we are well-positioned to help our customers succeed in their transition to electric vehicles. In the second quarter, we expect to roll out a charging solution for our European customers that ties directly to their existing fleet account, providing central billing and access to over 200,000 charging points. We take our role in helping customers transition to cleaner fleets seriously, as part of our broader focus on ESG, and we will be publishing a comprehensive updated ESG report this summer. As we move forward, we remain focused on our purpose, simplifying the business of running a business, and this includes our own business. We’re looking at ways to evolve how we operate our core business and to create the resources we need for future growth. One way we’re doing this is by increasing the amount of automation in the business. Like our customers, we’re currently benefiting from, and want to take even more advantage of, advanced tools like AI and robotics that we are developing to free our employees from business complexities so that they can focus on higher value work and continue to strengthen our competitive position. We also stand to benefit from a robust near-term environment; travel industry bookings for the U.S. and European summer seasons are well ahead of 2019 levels. Our digital marketing channels continue to deliver great results, and we are well-positioned to capitalize on improving macro trends across the company. Looking ahead, the future for WEX remains incredibly bright. We entered this year with significant momentum and delivered impressive financial results during the first quarter. The trends remain strong. We continue to win new customers in each of our segments, enhancing our leading technology platform and capitalizing on the opportunities in front of us. All of these trends give me confidence in our ability to deliver on our long-term financial targets. Before I turn this over to Jen, I want to welcome Jagtar Narula, who will be joining WEX as our new CFO effective May 25. As I mentioned in Tuesday’s announcement, Jagtar’s proven strategic and financial experience leading innovative technology companies is something we are looking forward to having on board. I’d also like to take a moment to thank Jen for doing an amazing job over the past few months, both leading the finance organization through change during a critical time of year and also jumping in to play a key role throughout Investor Day. Jen will continue to serve as both Interim CFO and Chief Accounting Officer until Jagtar begins his new role on May 25. I’ll now turn it over to Jen to walk you through our results in more detail. Jen?

Thank you, Melissa, and good morning, everyone. As you just heard from Melissa, we delivered a strong first quarter building on the momentum we had coming into the year. We’re firing on all cylinders and had yet another record-breaking quarter. The large attractive markets we operate in make us well-positioned to achieve our long-term growth target. In light of our strong first quarter and now with better line of sight for the remainder of 2022, we are raising our full-year revenue and our EPS guidance that we provided back in February. Let's start with the quarter results on Slide 6. For the first quarter, total revenue exceeded the high end of our guidance for three primary reasons: continued fleet volume favorability, accelerated ramp in travel spend, and higher fuel prices. Total revenue came in at $517.5 million, a 26% increase over Q1 2021, with more than 80% of revenue for the quarter recurring in nature. We define recurring revenue as payment processing and account servicing revenue, revenue from our factoring business, transaction processing fees, and other small items. From an earnings perspective on a GAAP basis, we had net income attributable to shareholders of $122.8 million. Non-GAAP adjusted net income was $131.1 million or $2.88 per diluted share. This represents a 61% increase over the prior year as we see the benefit of higher revenue drop through to our margin. Turning to Slide 7, and breaking down the revenue by segments, fleet grew 31%, travel and corporate solutions booked a 9% increase, and finally health was up 26%. The last two quarters we've discussed a change in revenue presentation for a specific customer contract in travel and corporate solutions that will impact the comps in this segment through Q3, and you will see that in the appendix. On a comparable basis, revenue growth in this segment was 47% compared to revenue growth for the total company of 32%. Now let's move to segment results; starting with fleet on Slide 8. Fleet revenue for the quarter was $319.1 million, a 31% increase over the prior year, powered by strong volumes from new customer wins and renewals, higher fuel prices, and recovery in the existing customer base. Payment processing transactions were up 12% year-over-year. Over-the-road transactions maintained their strong growth, up 23%, and North America fleet was up 13%. As you saw in our metrics, the net fee rate stayed relatively flat to the prior year. Finance fee revenue was up 51% due to significant increases in volume, fuel prices, and late fee instances. The average domestic fuel price in Q1 2022 was $3.95 versus $2.72 in Q1 of 2021. This increased fleet revenue by approximately $41 million and includes an offset of approximately $0.5 million for European fuel price spreads, which generally move in the opposite direction to the U.S. The benefit of higher fuel prices compared to our Q1 guidance was approximately $0.14 of EPS, which is lower than we would normally expect. There are two primary drivers to this; first, when fuel prices spike as quickly as they did in March, it takes time for late fees to catch up. Second, we saw bigger increases in diesel fuel prices, which is more fixed fee-based. As you know, due to the fixed transaction fees included in our payment processing revenue when fuel prices go up, interchange rates trend down. So that's what you're seeing in the 14 basis point change versus last year. To finish fleet, we are focused on the impact of high fuel prices on customer behavior. That being said, we haven't historically seen meaningful changes in volume from rising fuel prices assuming the economy remains strong. In OTR and, to a lesser extent, in the local fleet we're seeing more frequent transactions that are slightly smaller to cope with higher prices. We also expect that the high prices will increase our credit losses towards the high end of our annual guidance range, which are more in line with pre-pandemic levels as customers absorb these higher costs. Turning to travel and corporate solutions on Slide 9. Total segment revenue for the quarter increased 9% to $77.3 million. On a comparable basis, adjusted for an accounting presentation change that occurred in Q4 last year, revenue growth was 47%. There's a slide in the earnings presentation appendix that details the adjustments. Additionally, purchase volume issued by WEX was $11.8 billion, which is an increase of 93% versus last year. Travel-related customer volume represented approximately 60% of the total spend and nearly tripled over last year. Breaking revenue down, corporate payments customer revenue was up 18% adjusted for the revenue presentation change led by continued strength in the partner channel, including the Avid exchange relationship. Revenue from travel-related customers was up 151% versus Q1 2021, reflecting increasing consumer demand. We are pleased with these results and are well-positioned to capture future growth as the travel industry continues its global recovery. Finally, let's take a look at the health segment on Slide 10. We continue to drive strong growth, resulting in Q1 revenue of $121.1 million. This represents a 26% increase over the prior year. The acquisition of Benefit Express contributed approximately $11 million in revenue. SaaS account growth was 15% in Q1 versus the prior year, building up a strong open enrollment season and including the accounts related to Benefit Express. Purchase volume increased 10%, leading to a 9% increase in payment processing revenue. We also realized approximately $4 million in revenue from the HSA deposits that were moved into WEX Bank late last year. The interest income that we earned from these deposits will be a significant lever to driving long-term revenue growth as interest rates increase and the deposit-based growth. Now let us move on to adjusted operating income margins on Slide 11. In fleet, adjusted operating income margin for the quarter was 50.2%, up from 48.5% in 2021. This is the fourth consecutive quarter with fleet adjusted margins higher than 50%. The increase is from revenue drop-through as we continue to benefit from our ability to scale. Credit loss trended high this quarter is expected, increasing the 15 basis points of spend volume. Although we expect basis points to remain closer to historical norms versus the pandemic lows we saw in the last two years. We had already considered that in the guidance ranges we provided back in February. Travel and corporate solutions delivered adjusted operating income margins of 36.7%, up from 9.9% in Q1 last year. There's been significant improvement in the adjusted margins as travel volume accelerated, driving much of the margin improvement we saw on a total company basis. The sequential decline in adjusted margins of approximately 2% is due to the benefit from card network incentive we spoke about in Q4. Revenue drop-through for this segment is high given our relatively fixed cost base, and we also continue to see benefits from the eNett and Optal synergies. In health, adjusted operating income margin was 29.3% compared to 31.7% in 2021. The acquisition of Benefit Express and some expense timing is driving a lower year-over-year comparison. All of this led to an adjusted operating income margin for the company of 39.2%, which is up from 34% last year, largely driven by the travel and corporate solution segment. Shifting gears now to Slide 12, I'll provide an update on the balance sheet. We remain in a healthy financial position and ended the quarter with $578 million in cash. We had over $698 million of available borrowing capacity and corporate cash of $156 million, both as defined under the company's credit agreement. As you would expect, we saw a sizeable increase in our accounts receivable of now $972 million versus year-end from higher fuel prices and more volume. Our invested HSA deposits at WEX Bank ended the quarter at $978 million. These assets are currently yielding approximately 1.6% or about $4 million in Q1 revenue. There's an additional $250 million of HSA deposits held at WEX Bank that we are currently using as replacement funds for certificates of deposit. We continue to evaluate opportunities to optimize earnings from the remaining $1.8 billion of HSA deposit assets that we control, but are not held at WEX Bank. We intend to bring more deposits to the balance sheet this year. These deposits should continue to be a good source of revenue for us as interest rates rise and will act as a natural catch-through interest rate cycles. At the end of the quarter, the total outstanding balance on our revolving line of credit, term loans, and convertible notes was $2.8 billion. The leverage ratio, as defined in the credit agreement, stands at 3.3 times, which is well within our long-term target of 2.5 to 3.5 times, and down from the end of 2021 due to strong earnings. Our strong and consistent free cash flow generates a tremendous amount of financial flexibility to invest back into the business and pursue growth opportunities. Finishing off the balance sheet, you'll see that we came to an agreement to purchase the remaining non-controlling interest related to our health business. The contract is structured so that WEX will make payments totaling $234 million plus interest over a three-year period beginning in March 2024. This is shown at a discounted amount of $217 million in other liabilities. Finally, let's move to revenue and earnings guidance for the second quarter and the full year on Slide 13. The first quarter was a very good quarter for us, and I'm pleased to share that we are significantly increasing our guidance for 2022. Before I get into the specifics, I want to remind you again of the impact of a renewed contract for a significant corporate payments partner that occurred in Q4, which altered the accounting presentation from gross revenue recognition to net with a corresponding change in sales and marketing costs as shown in the appendix of the slide. There is no material impact on earnings from this change, but several of the segment metrics, including the revenue growth rates, are not comparable to prior periods. You can see the comparable numbers in the appendix to the slide deck. Starting with the second quarter, we expect to report revenue in the range of $555 million to $565 million and adjusted net income in the range of $154 million to $159 million. We expect ANI EPS to be between $3.35 and $3.45 per diluted share. For the full year, we expect to report revenue in the range of $2.155 billion to $2.195 billion and adjusted net income in the range of $569 million to $588 million. We expect ANI EPS to be between $12.40 and $12.80 per diluted share. For the full year, these updated ranges represent an increase of $105 million in revenue and $1.20 of EPS at the midpoint from our previous guidance. Including Q1 actual results, higher fuel prices contributed approximately $75 million of the increase to our revenue guidance and $1 of EPS compared to our previous guidance. These amounts are slightly lower than our historical sensitivity to fuel price changes would suggest. This also means that excluding the impacts of fuel prices, we are raising our 2022 guidance at the midpoint by $30 million in revenue and $0.20 in EPS, based on our strong Q1 results and a continuation of both good execution and a rebound in volume. Now let me walk you through a few more assumptions. Exchange rates are as of the end of March 2022; we estimate domestic fuel prices will average $4.46 per gallon for the second quarter and $4.13 for the full-year. Both are based on the NYMEX futures price from last week. The adjusted net income tax rate is expected to be between 25% and 26% for the second quarter and for the full year. Finally, we're assuming approximately 47.5 million shares outstanding, including the assumption that the share count will continue to include 1.6 million shares associated with the convertible notes. As a result of including the shares, approximately $3.8 million of interest expense each quarter, net of tax, will be added back to net income to calculate EPS.

Thank you. We'll take our first question from Mihir Bhatia with Bank of America. Your line's open.

Hi. Thank you for taking my questions. Wanted to just quickly go back to the discussion about what you're seeing in the freight market here with the movement in prices, but hearing more about a freight procession a little bit, right? So there's been more talk about – just talk about the trends you're seeing in the various segments and anything worth calling out regarding volume trends in recent weeks? Thank you.

Sure. It's Melissa. To respond back to that, we are, and if you look across the fleet business, the North American fleet business continues to rebound, and I think that is tied more to the reopening of businesses, and so we've seen some really great volume trends there. In the over-the-road business, we are hearing from customers that they're seeing a little bit more softness than they have over the last couple of years in terms of just volume trends, but I would say on the positive side to emphasize that the spot rates are softer than they have been. And across the portfolio, what we're hearing from our customers is a lot of focus around how to make sure that people have access to labor inflation, some of the big macro trends that everyone's talking about are certainly embedded in the conversations we're having with our customers across the portfolio.

And anything in recent weeks that I guess like – just from, and your comment even around the credit losses in season, is there anything we should be like really thinking about here just more recently?

Yes. You look at volume trends that remained really strong for us, and it's part of what we baked when we looked at our second quarter guidance. So from, to kind of run across the business from a freight perspective, like I said, they're seeing a little bit of softness in spot rates, which will translate into a little less revenue in our factoring business, but from a volume perspective, volumes remain strong. And we've assumed that within our second quarter guidance and for our full-year guidance. One of the things that we thought about when we laid our guidance for both the second quarter and the full-year is the second half of last year we started to see this kind of movement in reopening and some strong trends that we just continued to see. You can see that reflected overall; if you look at our growth rates for Q1, excluding field prices and FX and adjusting that one cost for back from a revenue recognition perspective. First quarter growth was 22% in revenue and 30% in ANI EPS. From a full-year perspective at the midpoint, we're assuming that that seems like-for-like revenue growth of 13%. Our EPS growth is 17% at the midpoint. So really strong within our long-term ranges. But we believe as you're going to see some of these strengthening trends continue to play out over the course of the year, but you'll have harder comps as you get toward the end of the year because some of that started to happen at the end of 2021.

Yes. That's helpful. And then this is my last question. Just remind us, what are you achieving in terms of just the travel recovery as we progress through the year? It looks like we've seen some good volumes even this quarter. And obviously, we're hearing positive commentary from the OTAs and airlines, etc. So what are you all assuming for the travel recovery guidance? Thank you.

Yes. No. If you look at our first quarter results, our travel volume and, reminder, our travel volume and hotels, we are facilitating largely. We facilitate some airline payments, but the large part are for hotels. And we tend to lag the broader marketplace because it is when people actually stay there as opposed to when they're booking. But in the first quarter, we were about 70% pro forma of the number for the first quarter of 2019, so tracking nicely. In April, that's been moving up, we're closer to 75%, 80% of our 2019 numbers for April. So really nice trend, and we feel really good about not only that trend, but their ability to actually show that drop through the earnings because of the scalability of that part of the business.

Thank you.

Hey, good morning, everyone. Thank you for allowing me to join this call. I was wondering if you could drill down a little bit on the guidance for Q2, whether the improved guidance for the rest of the year, perhaps qualitatively in terms of what you're seeing right now in health and what your expectations in the next months? It looks like 26% growth all in this quarter, the core growth is obviously strong, so just curious about trends going forward and where your thoughts are? Thank you.

Jenny, why don't you talk about the total amount, and I'll talk about health.

Okay, sure. So in terms of the full guidance, obviously it reflects a really strong Q1 and really an expectation for all three of our segments that they're going to do quite well for the remainder of the year. We did end last year with a lot of volume momentum, which Melissa had mentioned. Of course, there are a lot of moving parts but I'll keep it simple and really just two – kind of two key areas. It's really the travel – the travel ramp coming through as well as just again continued volume improvements. And then about $75 million, like I said in my remarks, it's really the tail end on top of the strong business performance from fuel prices. Again, the Q1 was about 50/50 for travel ramp versus the fuel prices. So that's continuing to flow through for the remainder of the year.

Yes. And then on the health side, you mentioned the 26% growth in the first quarter. It's really strong growth, 15% growth in SaaS accounts. So we feel really good about how we came out of the open enrollment season. Jenny mentioned in her prepared remarks the fact that we have additional deposits that we intend to invest through the course of the year. So that will be an additional benefit as you go through the course of the year and we will anniversary in June of this year. If you look at how the year's going to roll out first quarter – couple of quarters will have the benefit of the Benefit Express acquisition that will become annualized. The latter part, we'll start to see more of a pickup from the deposits. And this is a reminder; the long-term growth rates that we've put out there for the health and employee benefit solutions segment are 15% to 20%.

Okay, great. Appreciate all that color. And then any updates on your cross-selling efforts and also on direct sales? I would love to hear about the progress you've been making in both of those areas over the past quarter and maybe give us some color? Thanks.

Yes. So on the cross-selling avenue, I'd say it is early for us. It's a place that we are really excited about. There are a couple of things when I talked to in my prepared remarks for examples of that that have happened even organically. We talked about one of the states where we've extended, what we are doing within our health business. It's also through a customer that we have on the fleet customer side. The launch of FLUME for us is really exciting about that. Not only did we bring it to market rapidly, we got it cloud-first. It's all digital offering for pay and get paid. We're testing that within our existing fleet customer base. So we have 450,000 customers that are smaller in size that are really the target audience for this product. We went through both alpha and beta testing using existing customers. We're learning from their experiences, how they're using the product, and that allowing us to make rapid advancements. We feel like we have an ability, not only with our technical capability but with our existing customer base to combine those things together and actually bring products into the marketplace that allow us to extend the ecosystem that we have for offerings and really solve some of the problems that we're hearing that our customers have that are beyond the piece of the verticals that we're providing for them right now.

Okay, great. Appreciate all the color. Thanks very much.

Hey, great. Good morning. Appreciate the time here. I just want to ask on the travel and corporate segment and the visibility. I know there's so many moving pieces. You did a good job of explaining what's going on, but just thinking about the visibility here and the line of site, both for the second quarter or second half of the year and how that might fall in relation to your longer-term targets within that segment?

Sure. We actually added in the appendix on Page 15, a lot of color around that segment, because I know there's a lot of interest in it. So we have split out what’s happening both in terms of volume and in terms of rate across travel and corporate payments. From our perspective, like what we said last quarter is from a rate perspective that as we'd lend in more embedded payments customers into our corporate payments business, you would see that rate trail down during the course of this year, which is what we did see, as expected. On the travel related side that we expected to see that rate be close to what we had in a full year last year because we made some true-up adjustments in the fourth quarter and that also happened, came in actually a little bit better than we expected. From a rate perspective, that’s translating through from a volume perspective. The volume trends and corporate payments came in really very much on what we had forecast when we provided our guidance. The thing that has come in higher than what we expected is on the travel side. We talked about that being up significantly year-over-year. When we created the range for the year as we guided, we've thought about that as continuing down the path around where we're growing significantly over the prior year but still lagging a little of 2019 up to the possibility of actually getting back to normal.

Yes. And I appreciate this insight now. Okay. No, I think that’s good. I think we can use that to run-rate through rest of the year. Just really quickly, if you don't mind I know look tons of questions rightly on travel and across border. I know from a regional perspective there's probably differences in recovery on the MasterCard earlier, right before this call talked about Asia and how they see pent-up demand there, given differences in lockdown timing. Do you see that as well? I mean, is that what's given you maybe some bullishness around a quick recovery just depending on where that pent-up demand plays out given lockdown changes? Do you follow my question, Melissa?

Yes. Yes, no, totally. Yes. There are definitely regional differences that are playing out. Asia, and what we're seeing in Asia has lagged the rest of the world. So I'd say that's been the one standout where both in the U.S. and in Europe we've seen some nice trends returning back. As part of – as we've thought about the guide for the year, that's part of what's in that range of possibilities in our mind. Does that return back to normal, or does that take some time?

Yes, got it. Hopefully, it happens sooner rather than later. Thanks.

Yes. Yes. Thanks, Tien.

Thank you. Good morning. Question, just when you have the HSA assets fully invested, what is the level of assets? And then how do you manage the returns on those assets? Are you lowering demand? Should we think about modeling it against the fed funds rate or so what is the amount of assets when they're fully moved? How long does it take, and how should we model the returns? I would imagine that interest income is also like 90% pre-tax margin revenue.

Yes. So Jenny talked about in her prepared remarks that there was $1.8 billion that are uninvested. We're – part of what we're looking at right now is some of, well, I shouldn't say uninvested, they are invested with a third party not in our bank. So they are earning interest income. Now we are going to move them into our bank through the course of the year and what we're evaluating, how much we want to use to replace CDs and how much we want to invest since we're going through that process right now. We will roll them in through the course of the year. So think of that as, they're not going to do all at once because we want to take advantage of market changes over time. And in terms of the rate, Jenny talked about the fact that what we have right now is that 1.6%; rates are certainly trending higher than that at the moment.

So when fed raises 50 basis points next month, are you – are these invested such that they’ll move quickly or…

Yes. When they get invested – they get invested in fixed rates over longer periods of time. So think of like the average of what we have invested, I think is four years, is that right? Yes. So they tend to be over longer periods.

Okay. And then just on FLUME, where does FLUME fall into the market competitively? I mean, who would you compare it to from a competitive standpoint? I mean, just talk a little bit more about the product set in FLUME. Is it more – is the revenue stream more going to be AP automation driven? What is the – I guess the game plan to build that? So where does it fit relatively product set? Thanks.

Yes, sure. It’s a digital paying to paid model. And so we’re allowing our customers to invoice and collect as well as bill all digitally. The revenue model will be a combination of transaction fee related and subscription fees. Competitively, that you would know other that sitting in that space, part of what we think that we offer is to this customer mix. We already have a relationship with these customers. What they’re looking for is help automating the solutions that they have in place. And so we think that – we come in from having a relationship that’s trusted to that customer base and being able to solve some of their additional problems that they have. We’re finding interest with some of the smaller accounts. As I said, we’ve got 450,000 of them that fit within our existing portfolio.

Thank you. And then just lastly what could you call out on same-store sales trends? What is that telling you about the economy? What are you seeing – where do you see strength, and what has been the trend, I guess, over the last several months?

Same-store sales trends have been favorable, it was up 4%, and if you look across the mix, and again, when I talk about – there’s some talk about North American fleet, which is a lot of customers that fit in there and a lot of diversity of the type of customers they’re there. You might imagine like mining, which is relatively small part of the business is up pretty significantly, but so was construction, educational services, and some really strong increases in a number of different categories accommodations. So you look across the mix; most categories were up; a lot of them were up in double digits.

Thank you. Appreciate it.

Yes. Hey guys. Thanks. Nice job. My first question, just on travel yield, I know you’ve already answered a lot of questions on it. But because people are so sensitive to each quarter I’m just thinking sequentially, is there seasonality to that yield or it looks like mid-40s basis points or so. Is that kind of going to be consistent through the year?

Yes, we mentioned that the last call that the fourth quarter, we had some true-up adjustments. The rate in the fourth quarter was artificially high. That’s why I had said if we used the full year rate for 2021. It would be largely what we expect to play out in 2022. I’d say the same thing now. It may not play out perfectly every quarter, but we do expect to see the quarters come in line with last year’s average rate.

Okay. Thank you. And then I guess, secondly, in the Fleet segment, it’s really good, obviously mid-teen’s growth or kind of core X, X fuel prices. The rest of the year, is there going to be much difference? I mean, is it kind of going to be high single-digit maybe for all the quarters or different quarters have different core growth rates in fleet?

Yes. It was a great quarter, adjusted out for fuel prices and effects it was up 15%. So, we feel really good about that. If you can see that in all of the underlying trends where the number of vehicles were up 9%, the payment processing transactions were up 12%. We do think we’re getting some benefit in the quarter of things reopening still. That comes from the gap between those two. You’re seeing there were more transaction increases for vehicles, but we're also seeing some really great sales. Kudos to our sales teams that continue to be out there in the marketplace into our digital teams that are bringing in business digitally. We feel really good about our ability to continue to bring in new business, our ability to continue to retain the business that we have. The thing that I think that will be – that we’re at least in our guidance assuming is that you don’t see the same kind of macro pickup from same-store sales throughout the whole year. Because we started to see the benefit at the end of last year where things were reopening. In terms of the framework we gave, we said we’re going to existing customer growth, net new customers coming on, new products, and M&A, we feel really good about how we’ve landed the first quarter very much in that framework with the additive part coming from existing customer growth. As you go through the course of the year, we’re going to continue to see new customers getting added, new products rolling out, continued benefit from M&A and then existing customer growth. That’s the one thing that if you look at the course of the year, I expect to trail down a little from Q1; the rest of it looking very much in line with our long-term framework.

Sounds great. Thank you.

Thanks. Good morning. Most of my questions have been asked, but maybe just digging in on a couple. Similar to the previous question asked on the travel yield. I know in prepared remarks, you guys talked about the accounting change on the existing customer and corporate, and then Avid’s coming on as well, which is great. Melissa, where are we with the Avid onboarding? Like how much more is going to come on over the course of the remainder of this year? And what’s the impact on the yield as their volume comes on?

Yes. I’m going to be sensitive to talking about one customer. I would say that we did say that we have fully implemented Avid, which doesn’t mean that we’re done from a migration perspective. We feel good about the fact that we’ve gone through that process with them, and we’re seeing benefits coming through already. We do think that we’ll see continued growth in that relationship in the courses this year. I think that’s probably where I’m going to leave it.

And I guess, like as that happens, that should drive yield lower over the course of this year because of the...

It’s actually – and the embedded payment relationships that we have where those customers are utilizing our underlying technology stack. Those relationships tend to be less from just a revenue yield perspective. But from a cost perspective, it’s highly scalable. If you compare that to what we’re doing in the outsourced AP automation play with a small customer where we have just more cost associated with that, it’s going to have a higher yield from a rate perspective, but there’s more cost in that. So what we’re saying is, as we sell more embedded payments as it being a component of that, we think you’ll see that rate will migrate down a little bit. We’ve seen the bulk of that, we think, for the year. But we’ll continue to trail down a little bit over time as you see more of those embedded payments mix in. But from a profitability perspective, as we play out the year, we do believe that you’re going to continue to see some nice margin expansion as volume increases.

No, that’s very clear on that Slide 16 that you guys added to the deck. Absolutely. Just one last follow-up. Maybe just other questions as well, loads of chatter on supply chain, possible recession, inflation, all out of the economy. Do you think that you’ve adequately contemplated that in the outlook? Or where might there be blind spots? Thanks.

Thank you, Sanjay. We actually spent a lot of time thinking through the guide. From our perspective, we feel like we have been thoughtful about where travel scale, where we believe we’re going to see volume trends really across the business, and that’s what we factored into the guidance that we provided. From the customer perspective, it is interesting since we are seeing some really great volume trends, some really strong rebound, and some reopening happening in mobility in many ways. At the same time, there is that underlying uncertainty around inflation. From our perspective, we think that we’ve played out both of those things in the full-year guidance that we provided.

Next, we’re going to go to Darrin Peller with Wolfe Research. Your line is open.

Hey guys. Thanks. When we think about the magnitude of upside to the business, assuming, let’s just say hypothetically, there was never a pandemic and you had compounded at a rate that you thought you would. Travel, obviously, is still running at, I think you said 70%. But broadly speaking, I mean, there’s a massive amount of potential upside to normalize that even beyond just getting back to 2019 levels. And then you look into the other segments, how do you think through where we could be from an earnings power standpoint versus where we’re trending right now? And maybe breaking down the parts with travel being the first and most prominent, but obviously, others as well, if you don’t mind.

Yes. And I would start by saying we’re projecting the year to be ahead of 2019. Part of what we feel good about is we’ve grown through, what you’re talking about where there has been some softness and some volumes relating to the pandemic. If I kind of walk across the business from a fleet perspective, the places that we think we still have upside coming from the pandemic or continued office reopenings as mobility continues to play out specifically in the North American fleet business and also internationally, which has had more impact from the pandemic than we have in the U.S. On the health side, we are seeing some really strong return to spend patterns, but I think that's a place that we can continue to build upon. In travel, to the other part, is just having that return to more normal levels and then continue to see that grow. There certainly is – I think everybody knows this in their own lives. There’s kind of demand and desire from a personal travel perspective to move back to more of a normal environment. There are pockets across the company. But I think we still have an ability to continue to benefit from.

Got it. All right. One more quick one is just following up from some of the data points we learned at your Investor Day about I think you mentioned more than around 10% of your customers utilize more than one of your segments. I’m curious how that's been going. Anyway, it’s only been a little while since that day. But regardless the opportunity to continue that transition and cross-sell, has there been more progress made and what kind of upside can we see from that? Nice guys.

Yes. I’d just say that we’ve been really focused on a couple of areas. We’ve been focused on bringing FLUME market because we believe that that has a really compelling cross-sell capability. Equally importantly is the ability to bring products into the marketplace rapidly do that in a very digital manner. That’s been a pretty big focus of ours over the first quarter of this year. We’re also formalizing the process of cross-selling, which again has happened historically more organically. I think you’ll hear more about that play out from our perspective later in the year than you are going to see that right now. The organic part of that has continued to happen across the business. We’re excited about the ability to continue to offer both more product. I think of it as two ways. One is the more traditional cross-selling component. But also with the work we’ve done on technology, it’s being able to present the product that we have in different ways to our customer set and move people through this journey digitally, and that’s equally exciting to me. Thank you.

I just wanted to say thank you for everyone's time this morning. I appreciate the efforts to join the call, and we'll speak with you again in a few months. Thank you.

This concludes today's conference call. You may now disconnect.