Thank you for standing by. And welcome to the WEX Q4 2023 Earnings Call. I would now like to welcome Steve Elder, SVP of Global Investor Relations to begin the call. Steve, over to you.

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 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 has also been included in an 8-K we filed with the SEC earlier this morning. 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, adjusted operating income and related margins 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 have been reported in 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, 2022, filed with the SEC on February 28, 2023, and in our quarterly reports on Form 10-Q 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.

Thank you, Steve, and good morning, everyone. We appreciate you joining us today. Before diving into our results, I'd like to take a moment to reflect on 2023. As I've said in prior quarters, our business model is resilient and it delivers strong results in a variety of environments. This is true over the past 10 years, during which time we have delivered a revenue CAGR of 14%. I am very proud of what we've accomplished in 2023 as we continue to achieve our long-term growth targets despite macroeconomic uncertainty, higher interest rates, higher inflation rates, a freight recession, and lower fuel prices. Our incredible team of WEXers has consistently risen to the occasion, further positioning WEX for long-term success and demonstrating our ability to grow, to deliver that growth profitably, and to advance our strategic priorities. Let me start with the full year results. Revenue of $2.5 billion for the year was a new record high and grew 8% compared to the prior year despite a headwind of 5% from fuel prices and foreign exchange rates. Full year total volume processed was $225 billion, an increase of 6% year-over-year. Adjusted net income per share grew 9% year-over-year. Excluding the impact of lower fuel prices and foreign exchange rate differences, revenue grew 13% and adjusted net income per share grew 21%. Both of these growth rates were within or above our long-term target ranges as we continue to deliver strong results in the face of the headwinds I just mentioned. I'm particularly pleased about the strong performance in benefits and corporate payments, which further demonstrates the resilience of our model across many environments. Now turning to fourth quarter results. We delivered revenue of $663 million for the quarter, an increase of 7%. Excluding the impact of fluctuations in fuel prices and foreign exchange rates, Q4 revenue grew 11%. Total volume processed across the organization in the fourth quarter grew 6% year-over-year to $56 billion, driven by the strong performance in corporate payments and benefits. Strong quarterly revenue, high margin drop-through on volumes, and share repurchases resulted in adjusted net income per diluted share of $3.82, an increase of 11% compared to the same quarter last year. Excluding the impact of fluctuations in fuel prices and foreign exchange rates, Q4 adjusted EPS grew 23%. In Corporate Payments, purchase volumes grew 33% year-over-year, primarily due to continued strength from our travel customers. We had a number of significant contract renewals in the quarter, including Kiwi and several others in Europe and Flight Center in Australia. WEX continues to outpace the growth of the travel market. We're having success gaining additional pockets of spend within our existing customer base, and volume growth continues to benefit from the market transitions to settling hotel transactions with virtual cards. In the Benefits segment, the full transition to the public cloud positions us to improve our agility and platform strength going forward. Following open enrollment, we now have more than 8 million HSA accounts on our platform making us one of the largest providers in the country. Since we closed the acquisition of Ascensus Health and Benefits line of business in September, we have quickly integrated our team. Ascensus technology complements ours well, increasing our scale in the benefits space and expanding our benefit product offerings with their Affordable Care Act compliance independent verification capabilities. Finally, in our Mobility segment, we continue to see the positive impact from our enhanced credit policies. We were also pleased with strong sales performance, including a number of key contract wins and renewals in the quarter, adding approximately 121,000 new vehicles in signing wins with Smith Transport, Estes Express Lines, Quality Carriers and POTS to name a few. Overall, I'm proud of the strong progress we made executing against our strategic themes throughout 2023, which positions us for success in 2024 and beyond. A top priority for us as a company is leading in the energy transition for our mobility customers. Currently, we're focused on helping businesses navigate the energy transition and manage their vehicles in an increasingly complex mixed fleet world with over 600,000 customers worldwide, including more than 19.3 million vehicles serviced globally as of the fourth quarter, our partners and customers will first look to WEX for help in simplifying the process of building and managing mixed fleet. While the pace of transition remains fluid, we are meeting our customers where they are in their EV journeys. As part of our EV product suite, we have a new white-labeled offering to help fleet managers determine which vehicles and routes may make sense to transition to EVs. In cases where it does make sense, like a sales rep driving a sedan and returning home to charge each night, there can be substantial savings for the fleet operator. Our understanding of these dynamics uniquely positions WEX to help customers both navigate the decision to transition and effectively manage their fleets once they do. We've also launched products in the market, designed to help facilitate on-route charging at public locations as well as at-home reimbursement capabilities. Later this year, we plan to launch depot charging solutions for companies that intend to use their own infrastructure. Our EV product suite gives our customers a simple consolidated platform for mixed fleet, greatly simplifying the job as the fleet manager. Similar to the EV transition, a strategic priority has been to expand into near adjacent addressable markets, increasing our TAM. In November, we completed our acquisition of Payzer, a leading cloud-native field service management software. As we integrate Payzer into the WEX business, we expect the platform to strengthen our relationships with customers in our mobility vertical, allowing us to match our world-class payment capabilities with integrated software that creates durable value for our customer base. We're excited to deepen and expand our offerings to approximately 150,000 Mobility customers that operate field service management companies. So far, we have completed the initial stage of integration and launched our first marketing efforts targeted at current WEX customers. Over the next few quarters, we will test and learn from this initiative, and we will continue to be prudent in our decisions to allocate additional capital to this effort. That said, we're excited about the Payzer opportunity, and I look forward to providing updates on our progress going forward. Across each of our businesses, we are focused not only on driving growth but on delivering that growth profitably. To that end, we remain well positioned to generate $100 million in run rate cost savings exiting 2024. Last quarter, we said we were on track to achieve $70 million of cost savings on a run rate basis by the end of 2023. I am proud to say we have accomplished this goal, which was ahead of our original expectations. We have high confidence in achieving the full $100 million of cost savings in 2024. With these savings, we plan to let half flow through to earnings, which we will see in our expectations for 2024 and reinvest the remainder in the business to enhance our capabilities, including digital products, technology, and risk management capabilities and tools. We also continue to drive technology innovation throughout the business. The work we are doing is delivering results and we're receiving cost savings coming through our margins. In 2023, we focused heavily on determining how AI could both optimize our business and the business of our customers. We've invested in dozens of projects around developing these capabilities. For example, we are currently using internally developed AI technology to assist in making credit decisions and detecting fraud. We believe this technology helped drive the substantial credit loss improvement that we have seen over the last two quarters. We're also piloting several new initiatives to finance productivity and drive efficiencies in our sales teams by using AI to prioritize the leads most likely to convert and by prioritizing deals in the sales pipeline to maximize focus on impactful deals. We are also using AI to help process benefit claims, which drives efficiency and improves customer experience by processing claims on the same day. We processed greater than 350,000 claims last year and continue to expand use cases. We expect to process more than 800,000 claims this year using AI. Beyond this, we have a slate of digital product releases expected throughout 2024 and look forward to updating you on these developments over the coming months. We expect these margin accretive initiatives and others to further bolster our ability to generate significant cash flow conversion, and we continue to view share repurchases as an attractive proposition. We're in the privileged position to be able to make strategic growth investments in our business and buy back shares, all while maintaining a solid balance sheet with low leverage. Jagtar will provide more detail on our 2024 guidance in a moment, but I'd like to share a few high-level takeaways as we look ahead. First, WEX is incredibly resilient to economic conditions and is well positioned for continued strong revenue growth. You will note in our guidance that we have made assumptions that include continued headwinds, such as lower than normal US GDP growth and further depressed steel prices. Despite these headwinds, we expect 2024 revenue growth in the 6% to 8% range, including a 2% headwind for lower fuel prices. All segments of the business will benefit from the full year impact of our sales activity in 2023. Within our Mobility segment, we expect continued strong sales momentum, benefit from pricing actions, stabilization in the portfolio from the credit policy changes made a year ago, and the benefit of a full year of Payzer growth. Within our Benefits segment, we expect continued sales through our distribution channels, we expect continued growth in custodial assets and our organic customer growth, and the Ascensus acquisitions. Last, but certainly not least, we expect strong growth within our Corporate Payments segment built on continued strength in our embedded payment solutions, inclusive of both share of wallet capture in our travel and partner businesses as well as our investments in scaling our direct sales force becoming more meaningful to the segment. Second, we continue to be focused on delivering accretive EPS. This includes the high marginal contribution of incremental revenue to our businesses, our reengineering efforts that are delivering efficiencies across our enterprise and pricing optimization work that yields strong drop-through to our bottom line. Finally, our strong adjusted free cash flow underpins our ability to drive shareholder value. It enables us to invest in our market-leading products and solutions as well as invest in our share repurchase program in our disciplined M&A program, all while maintaining a healthy balance sheet. As I look across our business, I am confident in WEX's future, our momentum in the marketplace, and our continued ability to deliver our long-term aspirations. With that, I'll turn it over to Jagtar to walk through this quarter's financial performance in more detail.

Thank you, Melissa, and good morning, everyone. As you just heard, we again delivered strong financial results this quarter while continuing to make progress on our strategic objectives. The financial results in 2023 demonstrated the resiliency of the business in the face of a number of economic headwinds. Let's start with the quarter results. Total revenue came in at $663.3 million, a 7.2% increase over Q4 2022, with more than 80% of revenue for the quarter recurring in nature. This exceeded the midpoint of our guidance by $8 million. Half of this outperformance was due to the contribution of Payzer, which closed on November 1st and was not included in our guidance, while the other half was a variety of small beneficial items. In total, adjusted operating income margin for the company was 39.6%, which is up from 38.5% last year. High incremental margins on corporate payments volume and interest earned on custodial cash balances, as well as significantly improved credit and fraud losses were the primary drivers of the margin increase. From an earnings perspective, on a GAAP basis, we had net income attributable to shareholders of $84.9 million or $1.98 per diluted share in Q4. Non-GAAP adjusted net income was $163.9 million or $3.82 per diluted share, and this represents an 11% increase over the prior year. I would like to take a moment to reflect on these results in the context of the overall macroeconomic environment. Fuel prices were down 13% year-over-year in Q4 while the federal funds rate was up 100 basis points from the end of Q4 2022 to the end of Q4 2023. Our cost of financing and operating interest was up almost $35 million year-over-year. Yet we grew revenue and earnings significantly, which reflects the reduced impact of fuel prices and interest rate volatility on our overall results and demonstrates the resiliency we have talked about repeatedly. Now let's move to segment results, starting with Mobility. Mobility revenue for the quarter was $350.1 million, a 5% decrease compared to the prior year. The domestic fuel price in Q4 was $3.76 versus $4.34 in Q4 2022. This decline in fuel prices reduced segment revenue by approximately $24.9 million. In addition, Mobility revenue growth was impacted by lower late fees, which I will discuss in a moment. These lower late fees reflect the changes we made to credit policies that have dramatically improved credit losses and financially outweigh the impact of lower late fee revenue. The net interchange rate in Mobility was 1.26%, which is up 15 basis points from the prior year. The lower fuel prices compared to last year, contractual increases due to higher interest rates, and renegotiated contracts with some of our merchants led to the increase in the net rate. The increase in the net interchange rate combined with growing volumes over the past several years means the sensitivity to changes in fuel prices is increasing and now stands at $20 million of revenue impact and a $0.30 EPS impact for an annualized $0.10 change in fuel prices. It is important to note that despite the higher gross EPS sensitivity to fuel, which reflects the growth and success of our Mobility business, our overall earnings sensitivity to fuel price is lower than the past as non-fuel-related revenue is an increasing portion of our overall earnings mix. As you see in our metrics, while the net late fee rate increased versus Q3, it was below the prior year results. Overall, finance fee revenue was down 20% due to lower fuel prices and 28% decline in the number of late fee instances. Much of this decline is from a new portfolio that transitioned to us last year, which had higher late fee instances during the transition period, while the remainder we attribute to the stricter credit policies I mentioned earlier. Again, emphasizing that the improvement in credit losses far outweighs this lost late fee revenue. The segment adjusted operating income margin for the quarter was down 2.1% compared to last year at 43%. Lower fuel prices and higher interest rates hurt operating margins, although this was partially offset by significantly lower credit loss rates. In addition, the acquisition of Payzer, which contributed $4.3 million in revenue with essentially zero adjusted operating income, decreased its segment margin by 60 basis points. Turning now to Corporate Payments. Total segment revenue for the quarter increased 22% from the prior year to $135 million. Purchase volume issued by WEX was $22.8 billion, which is an increase of 33% versus prior year. The net interchange rate in this segment was up 10 basis points sequentially at 52 basis points, predominantly due to the recognition of network incentives based on full-year performance. Breaking this segment down further, travel-related customer volume was $16.2 billion and grew 40% compared to last year. Revenue from travel-related customers was up 39% versus last year. This reflects continued strength in consumer travel demand in the US and Europe as well as growing adoption of virtual cards and travel. We believe that there is more room for growth as our OTA customers continue to emphasize their merchant model, and we expand the types of payments that we are able to support. Non-travel-related customer purchase volume grew 21% versus last year, and revenue was up 5%. Volume growth was led by continuing strength in the partner channel, but importantly, approximately half the revenue growth came from our direct channel. Our direct business is an important channel that we have invested in over the last year, and we are starting to see the positive results of this segment. The segment adjusted operating income margin was up 10.5% over the last year to 58.4%. There has been significant improvement in these margins during the year as volume accelerated. In fact, this is the second quarter in a row where more than 100% of the year-over-year revenue increase flowed through to adjusted operating income margin. Finally, let's take a look at the Benefits segment. We continue to drive strong growth in Q4 with revenue of $178.2 million. This represents an increase of $37.5 million or 27% over the prior year. Approximately half the revenue growth is due to contributions from custodial assets, and the remainder is from the Ascensus acquisition, increases in the account base, and purchase volume growth. SaaS account growth was 7% in Q4 versus the prior year. Benefits segment volume increased 10%, leading to a 5% increase in payment processing revenue. Custodial cash assets, including those on and off balance sheet, were $3.9 billion on average in Q4 versus $3.5 billion last year, representing an increase of 13%. Of the $3.9 billion total, approximately $1 billion was held at third party banks with the remainder held at WEX Bank. We realized approximately $45.3 million in revenue in total from these deposits in Q4 versus $25.6 million last year. Although market interest rates declined during Q4, the blended yield of 4.6% was consistent with Q3. Compared to last year, the higher yield of those assets contributed $11.1 million in revenue, while the increase in balances contributed $8.6 million. In the first full quarter of ownership, Ascensus contributed $10.7 million of revenue, which was in line with our expectations for the quarter. The integration process is going well. Recall that Ascensus was a customer prior to our acquisition, so all accounts were already on our technology platform, and we are through the remainder of the integration planned during 2024. The Benefits segment adjusted operating income margin was 33.2% compared to 28.1% in 2022. The high flow-through on the revenue from the invested HSA deposits is the primary driver of the increase in margins. Shifting gears now I will provide an update on the balance sheet and our liquidity position. We remain in a healthy financial position and ended the quarter with $976 million in cash. We have $731 million of available borrowing capacity on the revolver and corporate cash of $172 million as defined under the company's agreement at quarter end. The total outstanding balance on our revolving line of credit and term loans was $2.9 billion. The leverage ratio, as defined in the credit agreement, stands at 2.5 times, which is at the bottom end of our long-term target of 2.5 times to 3.5 times. In December, we exited our interest rate hedge positions leading to an immediate cash benefit of $15 million. As discussed in prior calls, the company-wide net exposure to changes in interest rates has declined as we've grown the custodial cash assets in our Benefits segment. As a result, we determined that these hedges were unnecessary and we could exit them at favorable terms. Exiting the hedges accelerated the cash benefit we expected to see from the hedges upfront rather than over time, which we intend to return to shareholders through share repurchases, and we have already repurchased $35 million to date through last week in 2024. As a result, we will see an increase in interest costs in 2024, especially in Q1 when rates are expected to be highest and with the elimination of the hedges that were already set to expire midyear. I want to emphasize this reflects our belief in the time value of money benefit of receiving the cash earlier than we would have otherwise and returning this cash sooner to our shareholders. Going forward, we intend to continue to evaluate our overall interest rate exposures annually and make adjustments to our hedging strategy as necessary. During January, we successfully repriced $1.4 billion of term loans, reducing the spread over SOFR by 25 basis points and removed the credit spread adjustment. This will lead to interest savings of more than $5 million in 2024 on this part of debt. There were no other changes below the agreement. Next, I would like to turn to cash flow. WEX generates a significant amount of cash. Using our definition, adjusted free cash flow is $517 million for 2023. This compares to our adjusted net income of $646 million. A reminder, as I have discussed previously, that rapid fuel price declines at the end of 2022 increased adjusted free cash flow by about $150 million to $175 million that year, which reversed during 2023. Taking this into account, adjusted free cash flow for 2023 was slightly less than adjusted net income, which is what we would normally expect. We are committed to driving strong cash generation and deploying it by both repurchasing our own shares and investing in our business with an overall goal of maintaining strong long-term growth rates. For the year, we repurchased 1.7 million shares at a total cost of approximately $295 million, including approximately $150 million in the fourth quarter. As a reminder, we also extinguished a $310 million convertible debt in Q3, which further reduced fully diluted share count by 1.55 million in Q4 compared to the prior year. Going forward, we expect to continue to allocate a portion of adjusted free cash flow to repurchase shares. Finally, let's move to 2024 revenue and earnings guidance for the first quarter and the full year. Starting with the first quarter. We expect to report revenue in the range of $650 million to $660 million. We expect adjusted net income EPS to be between $3.40 and $3.50 per diluted share. For the full year, we expect to report revenue in the range of $2.7 billion to $2.74 billion. We expect adjusted net income EPS to be between $15.90 and $16.40 per diluted share. Let me spend a couple of minutes going through some of the larger assumptions in our guidance. First, a couple of high-level macro assumptions. We are basing our guidance on US GDP growth of around 1.5% for the year, which we have taken into account in our growth expectations. We are also expecting interest rates to decline in line with the market, which implies 5 quarter point rate cuts during the year. We have not included any future M&A activity or share repurchases, except as we have already announced them. Mobility revenue growth, excluding the change in fuel prices, is expected to be at the high end of our long-term target, which is 4% to 8%, including approximately 2% for the contribution of Payzer. Fuel prices are expected to be lower in 2024 than in 2023, which is a headwind to revenue and earnings that is embedded in our guidance. We are assuming an average fuel price of $3.50 in the first quarter and $3.55 for the year, which compares to $3.86 for Q1 2023 and $3.82 for the full year 2023. The fuel price decline is expected to reduce revenue and earnings per share by approximately $18 million and $0.27 per share in Q1 and $54 million and $0.81 per share for the full year compared to 2023 using the new sensitivity that I mentioned earlier. Again, this fuel price impact is already embedded in our guidance. Melissa mentioned some of our growth drivers earlier, which I will reiterate, including a strong continuing sales engine, pricing optimization, full year benefit impact of Payzer and stabilization in the portfolio from the credit policy changes made a year ago, which will also reduce the revenue drag from lower late fees that we saw in 2023. The Corporate Payments segment is expected to grow high single digits. Similar to 2023 results, we expect the net interchange rate to come down slightly, mainly due to customer mix. We see significant demand for travel and expect to improve nontravel revenue growth in 2024. Finally, the Benefits segment is expected to grow 10% to 15%. We have completed the open enrollment season, giving us confidence in the continued growth of this business. Anticipated growth in custodial assets and tailwinds from organic growth and the Ascensus acquisition are expected to more than offset the loss of an individual Medicare Advantage customer. We are on track to remove $100 million of operating costs on a run rate basis by the end of 2024, as we previously outlined. We expect adjusted operating income margins to trend up through the year as we get the benefit of these cost savings measures and the impact of pricing initiatives and scale that Melissa spoke about earlier. As I mentioned earlier, our decision to exit the swaps pulled cash forward, but also results in higher interest expense in 2024. The impact is $0.19 per share in Q1 and $0.52 per share for the full year. Again, this is reflected in our guidance. As we have discussed, we aim to balance our fixed and floating rate assets and liabilities such that we would not expect material changes to overall adjusted earnings this year if there are changes in benchmark interest rates, although, there could be impacts to individual segments. All of this leads to EPS growth in the range of 7% to 11%. Isolating out our fuel price degradation and FX, we would expect adjusted EPS growth to be in the range of 13% to 17%. As I complete my prepared remarks, I would like to emphasize again how pleased we were with our results in Q4 and our outlook for 2024. We have great confidence in our ability to win new customers, expand with existing customers, and bring new products to market, all leading to continued long-term growth of the company. With that, operator, please open the line for questions.

Our first question comes from Darrin Peller with Wolfe Research.

Maybe just touch a little more on the confidence in underlying just fundamentals given Corporate Payment yields fell a bit year-over-year? And maybe just a little more on the Benefits segment. When you think about guidance relative to recent trends, I'd love to hear a little more color on that first, if you don't mind?

I'm going to start by discussing our confidence in the upcoming year, which is based on our visibility. We concluded 2023 with a 13% revenue growth, excluding fuel prices and foreign exchange impacts. Looking at our guidance for 2024, we anticipate a 9% growth on the same basis. One of our key objectives is to maintain the sales momentum we experienced in 2023. We will benefit from the sales activity from this year and expect our sales team to continue performing well in 2024. We also have pricing strategies that we will keep implementing, similar to what we executed in Mobility in 2023 and plan to carry into 2024. We will gain from the annual effects of changes to our credit policies, which will improve our comparability regarding late fees and customer attrition. Additionally, we will enjoy a full-year impact from our acquisitions. Specifically regarding corporate payments, we anticipate growth in the nontravel segment, which has shown positive trends over the last few quarters. We expect this momentum to carry into 2024, driven by our embedded payments product pipeline and the success of our direct sales force, which is becoming increasingly significant. However, we expect our travel business to see more moderate growth in 2024 compared to the bullish performance in 2023, following a 40% increase in spend volume in the fourth quarter of 2023. Overall, we anticipate a moderation in that growth as we progress through 2024.

I think Melissa covered all the important points. Darrin, you're from benefits and corporate payments, and the question relates to benefits, right? In 2023, we saw significant growth of 32%, with more than half attributed to interest rates, but we don't expect that to be repeated in 2024. If we exclude that, there's some benefit from census and a customer leaving, but when you factor those in, the underlying business continues to perform similarly to 2023, and we are optimistic about that. Regarding corporate payments, as Melissa noted, we see more growth in our non-travel business, largely due to strong visibility with our partners and improvements in our direct business. I highlighted that our direct business contributed about half of the growth in the non-travel segment this quarter. We are very pleased with the progress made there and expect it to continue into 2024. Overall, we feel positive about these developments.

My quick follow-up is regarding the corporate payment sector. I want to clarify the medium-term targets. There are various factors affecting this year's high single-digit core payments growth. However, looking at the medium term, we still project growth between 10% and 15%. Could you confirm your confidence in that projection? Additionally, given all the changes, it seems understandable why there could be a reacceleration. What are your thoughts on the key factors that would drive growth back to the 10% to 15% range?

I would describe those as long-term targets, the 10% to 15%. But as you’re going into this year, you’re moderating off from a really strong travel growth here. And so our expectation is that that’s going to decline in the course of the year. We’ll see how that actually plays out but that’s the assumption we have in our guidance. We also are seeing some really good ramp that’s happening outside of travel. So you ask about confidence in our ability to hit our long-term growth targets, it’s because of the ramp we’re seeing outside of travel as well.

Our next question comes from the line of Sanjay Sakhrani with KBW.

I guess first question just on the guide and sort of the macro forecast. It sounds like you guys are being pretty conservative with the GDP outlook. I'm just curious if there's something you're seeing, or is that just being intentionally conservative? Just trying to get a little color there.

So what we do during our planning process is we go out to a pretty large bank group economists at Moody's, S&P, the Fed, and other institutions that are publishing GDP forecasts. And when we could average that up against the 20 institutions that we survey, we see about 1.5% is the average. And so we use that in our planning process. We're not trying to kind of make up what we think GDP is going to be; we really use it based upon what external parties are saying.

And I guess, like what you've seen year-to-date with the weather and stuff, I mean, there's nothing that has led you to be more cautious or anything like that?

No, there’s nothing significant that we've observed from a trend perspective. Same store sales in the North American fleet declined by 1.5% in the fourth quarter, and the over-the-road segment has decreased by 2% over the course of the year. We're assuming that the over-the-road market remains stable in our projections rather than anticipating a substantial rebound. There is some minor weakness that we're noticing, which we believe may be related to weather conditions. We'll gain more clarity on this as the first quarter unfolds. However, all indicators we've seen so far in January align with our expectations.

Has been in line with expectations in January.

And then Melissa, you sort of talked about the annualized benefit of the acquisitions. Maybe you could just talk a little bit about the contribution? And then Payzer, I know it wasn't really added to earnings, but maybe sort of what you guys expect in 2024?

Payzer itself, we are expecting that to continue to grow at the rate it was. So plus 20% in our guidance in 2024. When you accumulate both the acquisitions, it's in our long-term target at 2% to 3% of overall revenue growth, and it really is not material to earnings. Because Payzer came in, we talked about the fact that it was dilutive last year that they're moving it to accretion during the course of the year, so it didn't really impact from an earnings perspective but it's giving us a two different lift in revenue.

Our next question comes from the line of Ramsey El-Assal with Barclays.

I wanted to ask in the nontravel part of corporate payments. How much exposure do you have to political ad spending in 2024? I recall that that was a vertical that you were exposed to, I believe. And I'm just curious how much you think that's going to benefit you this year, given it wasn't really in numbers last year as there wasn't a lot of political spending?

Actually really good memory, it was part of our model many years ago. It is actually not part of our model now. And so we really don't expect or are not planning to have any meaningful impact based on the election.

And then I also wanted to ask about the strong sales momentum in Mobility, and just ask you to kind of break that down a little bit for us in terms of what's driving that. It seems like you're having some success in the marketplace. Is that sales investment, incentive structures, is it other factors that might be helping you to convert some customers out there in the marketplace?

It's been a longstanding tradition for us to achieve success from a sales standpoint and throughout the organization. In Mobility, we have implemented a multichannel strategy that attracts business for our partners, with over 20 recognizable brands involved. Additionally, we have developed direct channels. Over the past couple of years, there has been a notable shift in where our business originates, with a greater proportion now coming through digital avenues. Consequently, we’ve increased our marketing efforts and adapted our business processes to facilitate smoother transactions through our digital platforms. This has resulted in achieving more with lower sales costs. I believe we've effectively adjusted our marketing strategy for this segment of the business. We've also revised our credit practices over the past year, which necessitated a revamp of our application volume activities. The positive effects of these changes have been evident every quarter. The improved applications from smaller accounts have led to larger customers than last year, and we believe this will enhance profitability. I am confident not only in the sales figures we’re generating but also in the quality of clients we are attracting.

Our next question comes from the line of Andrew Jeffrey with Truist Securities.

I appreciate you taking the questions. Lisa, I'm curious about your comments about fee card attach in travel. And I wonder if you could talk about different use cases. I know the merchant model is one of the drivers, but are there other use cases to which you're referring that's driving attach? And then I wonder if you can expand a little bit in the same vein, just in corporate, you saw good volume growth and a little bit slower revenue growth this quarter, a little better than 3Q and just sort of the dynamics of fee card acceptance and attach in that segment would be really helpful.

Yes, and your last point better than Q2 and Q3 and you can look sequentially, it's improved each quarter. Going back to the travel question. There's two real primary drivers of the volume growth that we're seeing within travel that we were trying to highlight. One is the fact that we've been working with our partners to shift volume to us and most of our partners where many of them use multiple providers. And so we've been working with them to make sure that we're set up in a way that creates value to them to move volume to us. And then the second part of that is the migration, which you're talking about, which is largely this migration to the merchant model where the virtual card transaction actually is in play. Otherwise, people are paying the hotel directly. And we have benefited from both of those things, and you can see that coming through the 40% increase in travel spend we saw in the fourth quarter.

And then on the nontravel side, I would say, as I mentioned earlier, we saw really good results out of our direct investments. So we did get good volume growth overall. A lot of that volume growth was in the partner channel and that's just our partners performing well. But we had started making investments in the direct business late '22 accelerating into '23. And so we expected to start to see the impact of that as we got through '23. And so in the fourth quarter, we did what we expected would start to see impact. And the rate is a little higher or a bit higher on the direct channel. So that drove, like I said, half the revenue benefit in the fourth quarter on the non-travel side. So it's an area that we continue to invest in, we continue to watch, and we continue to be excited about.

Our next question comes from the line of Dave Koning with Baird.

On the Mobility segment guidance, the high end of the range, I guess, two questions. First of all, how do you kind of see that through the year? I assume Q1 starts a little lower. And then secondly, gallons and transactions have been pretty flat the last few quarters. Is that what's going to accelerate or is it something else around yield or account fees, or finance revenue?

Let me start by addressing the question about how we anticipate the year will progress. You're correct that we expect acceleration throughout the year. There are a few factors driving growth in the Mobility segment. First, the acquisition of Payzer contributes approximately 2 points to this growth. If we exclude Payzer, there are several elements from 2023 that we believe will improve in 2024. Notably, we experienced lower late fees in 2023, which impacted the Mobility segment's revenue by about 3% due to tighter credit policies implemented that year. We believed that the benefits of the credit strategy outweighed the negative impact of late fees. As we move into 2024, we are not tightening credit further, which means this will no longer be a drag on performance. Additionally, the tightening of credit for certain customers affected our gallon volumes in 2023, resulting in lower growth. We expect to see improvement in both gallons and revenue in 2024 as we move past these challenges.

And then secondly, it looks like there's no buybacks in the guidance just based on how you kind of guided Q1 and then full year being higher. What's the plan for use of cash this year? I mean, is it just to pay down debt given the higher rates now without the swaps?

So our intention is to use the cash both for acquisitions and for share buyback. And obviously, like we've been buying back stock. We bought back 1.7 million shares last year. And so we have like a strong emphasis, and we believe that our stock is still at a good value and we'll continue to place emphasis there. That being said, we will also, at the same time, look at pipelines for M&A transactions and evaluate that as another use of capital.

Our next question comes from the line of Trevor Williams with Jefferies.

I wanted to ask on benefits. Melissa, maybe if you could revisit the longer term growth algorithm in the 15% to 20% targets you guys had laid out earlier in 2023. And account growth has slowed the last couple of quarters. I'm curious if you think high single-digit account growth is kind of the right normalized level that we should be thinking about going forward? And just if that's the case, how we bridge from that to the 15%-plus longer term target?

If you look at Devenir's last report, they've got long-term HSA growth at 10%. So still in the double digits. I think that there are also cycles for that. And what we found going through this most recent open enrollment season is we had more non-decisions than we did the year before, which was like a really strong sales cycle. And so I think there are going to have anomalies within each of the sales cycles. But over the long term, we do feel good about our ability to grow accounts. And then on top of that, what we're seeing now, which we think will continue, is that the custodial asset base will outpace the growth of the accounts. And that is a meaningful shift. As we've added that capability, the revenue per account has gone up pretty significantly. And so the ability to create a new source of revenue that is a multiplier effect to the base of our portfolio. And then on top of that, we are continuing to cross-sell into that customer base, the products that we've added, which are our COBRA product, our benefit registration product, the most recently, the Ascensus capability. And so when you aggregate all those pieces and then the expectations that healthcare costs are going to go up and so that spend balances are going to increase, meaning the actual purchase volume will also be higher than accounts. Those factors drive our expectations of the long-term growth rates of this segment, which is something that we'll keep talking about in the course of the year. And obviously, we're guiding below that in 2024 based on what we're seeing right now. We do feel very good about our growth rates, though, competitively that we are winning our fair share in the marketplace.

And for Jagtar, the payment processing rate in fuel for the year that was up about 14 basis points, and you've referenced the last couple of quarters the benefit that you've gotten from the escalators tied to interest rates. Could you give us a sense just for how much of a tailwind the interest rate escalators were for the year? And with what you're expecting in terms of interest rates for 2024? Just how much of that tailwind you would expect to reverse this year?

So I would say the increase in the interchange rate in Mobility was a mix between the tailwind of interest rates and also price negotiations we've had with merchant vendors where we've been able to improve price, and Melissa talked about pricing optimization earlier. So it's a combination of the two. We expect next year, I mentioned the assumptions around 5 quarter point rate reduction. So we expect that to be a slight drag on Mobility revenue next year. The way I think about it is a 100 basis point movement in rates on an annualized basis is about a $50 million impact on Mobility revenue. So that's the way I would model it.

Our next question comes from the line of James Faucette with Morgan Stanley.

I have a couple of follow-up questions. First, in relation to the mobility and fleet business, could you share what you are observing on a same-store basis and what factors are influencing that? Additionally, can you provide any insight into the impact across different customer segments?

In the fourth quarter, we experienced a decline of 1.5% in same store sales for the North American fleet, and a 2% drop in same store sales for over the road. One key factor we're looking into is whether weather affected those numbers, and we will monitor this as the year progresses. It was rather widespread, showing similarities across various industries, which is not typical. We believe this is likely linked to weather conditions. On the over the road front, our customers report that their situation has stabilized and they are coming off a stronger comparison, but they do not expect a significant rebound in the near future. This sense of stability has been considered in our guidance.

And then just like I know it's small and super early, but just since you launched the venture capital fund, I always think that that's kind of an interesting opportunity and exercise for WEX. Just any early views or learnings as you start to go down that and the types of potential investments that you're looking at?

For us to reinforce the idea that it was the right path. We've got a lot of early-stage companies that are out there, many of them are pre-revenue, and it's given us an ability to learn in that marketplace without putting a lot of capital into it. And so far, I would say we have made just a few investments. The companies that we've invested in are still out there in the marketplace, proving out their value propositions, they all have interesting ones that are solving very specific niches in the marketplace. And what we're able to do is then expose that to our customers and get a sense of what's going to get traction, and what isn't. And so our objective is to have an open network where we're exposing through APIs, many different types of functionality, some of which we'll own, and some of which we're partnering with others on. And these investments allow us an avenue to do that.

One final question comes from the line of Cris Kennedy with William Blair.

Just a quick one on pricing. It’s been mentioned a few times this morning. But can you talk about kind of what the impact was last year and some of the levers that you have going into 2024?

The place we're talking about pricing just really specifically is in our Mobility segment. It's the place that we continue to experiment within that customer segment on different ways of packaging and pricing to those customers. And also, you’ve seen the benefit of renegotiation of merchant rates. And so as we've gone into contract renewals with our merchants, we've been able to, on average, negotiate up on rates. And as Jagtar said, we've also got the benefit of interest rate escalators that were in there as well. And so when we talk about pricing, it's this idea that we think that we'll continue to get benefit on the merchant rates. We also will continue to experiment with different ways of pricing into our existing customer base, and we'll get a lift to that across the year.

I'm cautious about providing a specific dollar figure regarding the impact of pricing. However, I can say that we anticipate a similar effect in 2024 as we experienced in 2023 from pricing. Most of this is already accounted for since we've completed the negotiations and price adjustments.

I would now like to turn the call over to Steve Elder for closing remarks.

Yes. I just want to say thank you to everyone for hanging with us a few extra minutes this morning, and look forward to speaking with you again next quarter.

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