WEX Inc. (WEX) November 11, 2026 Conference Transcript

We're going to get started here. So joining us again is Jogtar Narula, CFO of Wex. Jogtar joined Wex as CFO in 2022. Prior to that, he was CFO of 3D Systems and held senior finance strategy and business development roles at Blackbaud. His early experience also includes finance leadership positions at Xerox and General Electric, so very well-seasoned executive here. So thank you for joining us. So it's been nearly two years since you reset the long-term growth target, stepped up investment to re-accelerate growth. Where do you assess yourself in terms of your positioning in that broader effort, and what still needs to happen?

That's a good question. Thanks, Sanjay. So I think we've made a lot of progress on a number of fronts, right? We think about, you know, we've implemented pricing actions that have accelerated the growth of our mobility segment. We've talked about some of the sales and marketing investments we've made, which has helped us, you know, deliver, you know, greater new business generation. We invested in retention, and we're seeing progress there. So I think we've done a lot of things that set us up well. So, you know, the second part of your question is, you know, what really needs to happen next? And so what needs to happen next is really what I'm most excited about. So a lot of the actions that you've seen come through are the things that we could implement quickly and would result in improvements quickly. Some of the investment we've made that we started a couple of years ago was really on the product side. And we're starting to see some green shoots there, right? So if I tick down through our businesses, if you start with corporate payments, right? We invested in this new product a few years ago, both in the product, sales, and marketing around direct AP, and that's our product that basically brings AP processing to enterprises. Seeing good progress there, you saw third quarter, 24% volume growth in that business. We've talked about embedded AP or embedded payments, another solution we've built, seeing a good pipeline there. If we go through benefits, there's also been product investments there on both the customer experience side and how employers use the platform. We've gotten good customer feedback, so we're excited as those roll out. And then on the mobility side, we've talked about on earnings calls, 10-4, which is a product we introduced to expand basically the market we serve in the trucking segment. We've talked about the size, the amount of data that we collect, and our ability to create AI-driven solutions for customers. So not only are we just giving customers data, but we're decision-making for them and taking actions for them. So I think all these will be additional revenue opportunities for us in the future as we expand what we do for our customers. And so that is what I'm most excited about. I think we've made progress, and the things I've talked about, I think we've made progress in margin expansion. So I think this setup is really good, and we'd really like to, you know, accelerate on the product side. That's great.

And I guess, like, as we think about sort of monitoring if these initiatives start adding value, like, what are the KPIs that we should look at, and over what period of time do you think that they start having an impact?

Yeah, good question. Yeah, so fundamentally, the biggest KPI for us is revenue growth, right? We've said 5% to 10% revenue growth. We've said we expect to be, based on the guidance we've given, we've expected to be in that range in the fourth quarter. And so for management, that's the number one KPI. If you drill down into the segments, you know, we have a number of KPIs that we track, you know, in the mobility segment, it comes down to gallons, which is effectively how we do it in a new business, retention and growth of the base. In corporate payments, it's really about the total volume that we process. And in benefits, it's, right, what the number of SaaS accounts, the amount of assets under management. I think those are the key metrics. I would say with the new products that we just talked about, I think we'll see those metrics potentially evolve over time as additional new products become incrementally more important to the business. And we'll talk about that at some point in the future as that happens. I would say the other things critical for us is margin expansion, right? We've talked about this year, we're driving towards 75 basis margin expansion, and we've done that while rebalancing how we spend to do more investment in the business. So I think that for us is a critical KPI, and I think we've talked about 10% to 15% earnings growth, and we talk a lot about the free cash flow we generate, and those are also, I think, critical. You know, the free cash flow this year has allowed us to buy back roughly 5.5% of our outstanding stock, while at the same time pushing leverage down to 2.7 times at the end of the third quarter. So I think, you know, that's a long list of KPIs that we track, but I think it's indicative of the momentum of the business.

No, absolutely. I remember a year ago we had the margin discussion, and I'm glad you guys got some nice operating leverage after that. And so maybe we just dig down into the various segments and start with mobility. The growth accelerated this quarter off of better local fleet performance, pricing, and the BP contribution. I mean, how much more room do we have for acceleration given fuel prices are this high? And, like, where's the most incremental opportunity for mobility?

Yeah. So, you know, if you look at the third quarter, you know, we had some benefits come through. We talked about the finance fees being soft in the second quarter. We saw that start to normalize, and that added growth in the third quarter. The pricing actions we've taken have helped. There was some softness, primarily in the trucking segment. The North American fleet part of our business, what we call local fleets, did well. We saw improvements in volume growth. In the trucking part of the business, we saw some softness as what we've seen from higher fuel prices have shifted volumes from trucking to rail. So, if we talk about, you know, what sustains momentum and accelerates in the future, I think there's two key pieces. So, one is the demand environment, right? Both the trucking side, but the overall economic environment, housing starts and things like that. That's not been baked into any of our forward guide, but I think that's an incremental opportunity. And then the same for the new product investments we've talked about, right? I think there is an opportunity for that to be a more and more meaningful part of the business going forward, and that should, you know, continue to help sustain growth in the mobility sector.

Just one on demand. This over-the-road trucking industry has been weak for quite some time.

Yeah, it has been.

And, like, we've seen some green shoots. Right. Hasn't necessarily manifested itself in a big way for you guys yet. Do you think that that continues and creates momentum, and why is that happening?

Well, I would start by saying we are a leader in the trucking space. And, you know, as trucking comes back, as we're all optimistic that it eventually will, you know, we expect to capture our fair share of that market, right? You know, we're a leader. We have a great solution. You know, we've had a number of green shoots over the last couple of years here. The trucking declines we first saw with, you know, as we came out of COVID, there was very high trucking demand during COVID. We're all sitting home on Amazon ordering stuff to be delivered to our house. As people move towards experiences in traveling, less purchasing of goods, you saw that softness come through in trucking. And then I would say over the last few years, every time we expected kind of green shoots, there's been something that's hit the trucking segment externally. If we would go last year, the trucking industry was quite optimistic, and then we had tariffs hit, and that dampened demand almost instantly. This year, right, we, again, we're saying, okay, we're going to start lapping the tariffs. We're going to start to see some green shoots. And then we had diesel fuel prices hit record highs. So, you know, I think over time we will move past these items. And I think with that, you know, as I said earlier, we will get our fair share of that market opportunity.

And do you feel like the diesel prices escalating so high are having, you know, a pretty meaningful negative impact or headwind? Because they've done reasonably well despite that, but I'm just curious.

Yeah, you know, so if I look at our trucking segment, same store sales, so to give you a data point. Thank you. Q3 2025 versus Q3 2026, same store sales were about 150 basis points worse, right? And I largely attribute that to the demand destruction that's happening from fuel prices. We're still incredibly competitive in that market. We're still signing at high rates. You know, this is really less volume on the trucking side. So, you know, the following question will be, well, what happens when fuel price is lower, right? I would expect, you know, I don't know what percentage of that 150%, but I would expect demand to return, you know, as fuel prices lower in the future, hopefully.

Great. I know pricing has been a key lever in that business, in the mobility business, and as I mentioned, it's added to this year. I guess I'm curious, like, how much pricing power is left, and where is it strongest across mobility's economics?

Sure. So we have done pricing pretty consistently for the last several years. So if you go back to 2024 and 2025, we implemented about $70 million of new pricing. Then if you go to this year, we've talked about $15 million in the second half. That'll translate to about a $40 million run rate as you go into 2027. So the pricing actions have been kind of a number of different areas. We still think there to be considerable opportunity. We've done extensive studies across our different customer segments. I think you'll see it more on the local fleet side, but we think there's pricing across mobility segment. I would also add that, you know, in addition to the pricing level, if we go back to some of the product investments that we talked about at the beginning of our conversation, you know, those are investments that are enhancing, you know, whether it's a new product or even, you know, new features and new capabilities in existing platforms, those are things that provide value to customers and give us an opportunity to capture additional revenue. So I think that's part of the recipe.

Great. And I guess when we think about the margin, right, you mentioned delivered to margin expansion this year. As we think about the opportunities to improve the margin on a go-forward basis, where are those opportunities?

Sure. So just to remind the audience, this year, if I take the last quarter, we saw about 90 basis points of margin expansion year over year. So we've seen really good progress. And if you sort of look at what underlies that, clearly the pricing actions we took helped. We've also been focused very heavily on, you know, improving, you know, expenses, and especially through the use of AI. We've seen progress. I think Melissa's talked about product development. We've seen progress in customer support and services. We've seen product progress in credit decisioning, right? In all those areas, you've seen improvement in the expense rate. You know, as I think going forward, obviously, we talked about pricing continuing to be a lever for us, but I also think AI will continue to be a lever for us in managing expenses beyond the areas we talked about, right? So if I think of, you know, collections, if I think of fraud. If I think of sales, marketing, account management, right, those are all areas where I think AI will provide significant value and we'll, you know, we'll have opportunities in the future.

Is there a way to think about, like, the incremental margins of the business versus the margin you have today? I mean, like, it would give us some... What direction, outside of investments you're making, on the path to where margins can go? Is there a way to think about that?

Yeah, I would say the incremental margins of our business are generally very high. Mobility drop through, an incremental dollar of revenue. Typically, it falls through at very high margins. You can see that from the fuel price guides. You can see exactly how much revenue drops through. Same thing with corporate payments. We manage that business. It's a platform we've built. It's got a fixed cost to maintain, but the incremental is pretty high. In the benefits segment, I'd say you have two parts of the business. The part of the business is the full income, very high drop-through margins. The part of the business that's servicing accounts, you know, there's an incremental servicing cost that comes with that, so less high drop-through, but also an area that we're trying to tackle through AI, so that drop-through should improve. So, you know, one of our challenges has been, as we see the number of opportunities for us going forward, it's, you know, how do you balance the incremental drop-through of revenue against additional investment opportunities to grow the business in the future? So, you know, I think if you look at this year as an example, we've been committed to doing both. We've both invested in our business while expanding margin, and that's the mentality we take going forward.

Got it. So let's move over to travel and corporate. A lot of moving pieces here, and it's obviously been one of the areas where you felt some pressure, Middle East being one of them. Maybe you could just walk us through the trajectory from here in terms of the growth algorithm.

Yeah, sure. So, you know, where we've been investing, so we've built. A very long-standing, very successful business in the travel segment, right? We've been investing... You know, as we talked about at the beginning of the conversation, outside of travel. And, you know, two big areas that I've highlighted. So first is that direct AP business that we talked about. You know, just a reminder, I said earlier that we saw in the third quarter, 24% volume growth out of that business. That business has now grown to about 20% of the segment. This is a business that we started investing in a few years ago. We enhanced the product. It operates off the same platform, essentially the same leading payments platform that we've built on the travel side, but an enhanced front end, something that makes it usable by enterprises. We hired sales teams to go sell it, and now we're seeing the benefits of that. And so the objective now is how do we sustain and accelerate that momentum? Then you get to the embedded payment side. So again, that's taking essentially what we do in travel and now moving it to payment processes outside of travel. And we have seen there a really, really good pipeline. We've signed great customers. The start has been a little slower than I'd like. We've seen, you know, longer implementation cycles than I'd like to see, that we'd like to see. But, you know, we're addressing that, and we're very optimistic because that area has a high opportunity. So I think those two aerials will add incrementally to the growth algorithm of the business while we continue to sustain good momentum in travel. That continues to be a good business. There's still, you know, customers to go out and sign from a volume perspective. Travel, I still consider it to be a GDP plus area. So, you know, I think that continues to be part of the mix, but you will see us, you know, if we execute well on our plans, you will see us move shift a bit more to the non-travel side.

Got it. And I guess, like, specific to travel. If this war persists, like, do you think the pressure gets greater, or do you think, like, we've kind of found an equilibrium on how people are traveling cross-border today?

I think we've found an equilibrium today. You know, we've seen, you know, you didn't generally see a couple effects within our customer base. Some customers, large global footprint, what you tend to see is, you know, shifts away from the Middle East and people travel elsewhere. And we see that across their portfolio. So that won't change. And then where it impacts us is where we have customers that are more heavily weighted to the Middle East, and there's where you see volumes decline. Right now, I don't envision that changing. It seems like it is stabilized based on the data we see today.

And I guess corporate payments is one of the fastest-growing segments that you guys have. Maybe you could walk us through what's driving the growth there. I mean, it would seem like an area that's primed for better growth prospects, given, you know, there's a lot more happening in that space. There's a big secular tailwind. Maybe just talk about that and some of the investments you've made and where you feel comfortable that growth is going.

So, you know, we've talked a bit about embedded payments and travel. I think, you know, I think it's worthwhile to hit on what we really have here and why we've got a leading solution. So we have built, you know, the leading virtual card platform, payments platform. Obviously, it's, you know, the leading platform in the travel industry, and, you know, we hope to make it a leading platform outside of travel. And it really brings, you know, a robust set of features and capabilities. And I think one of the things that's underappreciated when people look at WEX is we own the technology stack. We also own WEX Bank, which is essentially the issuer. So when we're working with a customer on a solution, we are the one service provider. It is us. And that gives us a couple capabilities. So number one, we're the one answerable to the customer, which allows us to get a lot done. Two, I think because of the combination of the bank and us owning the platform, we're able to innovate very quickly. So just to give you an example, in the last 12 to 18 months, we've introduced 60 new card products onto the platform. So think of a card product as a use case for a customer or a set of customers, right? Those 60 new products are already processing about a billion dollars of volume run rate right now. So it's that fast innovation that really brings us an advantage. Then you go to, okay, like embedded payments, right? We've built the platform with a robust set of APIs, right? This allows us to integrate into our customer systems. That eliminates a whole set of manual workflows. It can be fully automated end-to-end. It also creates a stickiness for us, right, because the work that's gone on in the integration. So I think there's, you know, a number of competitive advantages of the platform that will drive essentially the growth algorithm that we talked about earlier.

Got it. Maybe we move to the benefits area. Obviously, you've got some of the SaaS account closures that have been a headwind. As we look ahead, what do you think the run rate growth rate is there, and is the high single-digit custodial asset and HSA account growth more reflective of the run rate there?

Yeah, so... Just to remind everyone, this year, you know, so. Talked earlier, SaaS metrics are an important KPI for us. This year, the KPI has been a little lower than typical. The reason for that is earlier this year, we closed a number of accounts that were essentially low-dollar accounts. So there was a number of accounts, but individually, they didn't translate to very much revenue. So for profitability reasons, we closed them. So, if you adjust for those closures, which didn't impact revenue, you know, account growth, the SaaS account growth would be in the mid-single digits like we've seen in the last couple of years. You know, if you further drill down, HSA accounts, which is an important subset of them, have been growing this past quarter. We said 7.7%. Assets under management was 11.2%. So, we continue to see good momentum in the business. I think, you know, account growth, asset management growth, you know, whereas this year there's been kind of a divergence between the growth of the business and account growth. I think, you know, in future years you'll see that kind of return to kind of more normalized. Got it.

And then when we think about... All of the different macro and secular headwinds affecting that space, you've got obviously AI and people thinking about what it does for job displacement. Do you have obviously rates moving higher in that generally? How do you think that affects the growth of that segment? Sure.

So, you know. I think the AI trend to jobs is something we watch, right, like, so as of today, right, as I said earlier, account growth has continued alongside, you know, normal trajectory, you know, I think I saw the job report number last Friday, and they were all surprised about how robust it was, so, you know, the job engine of the United States continues. I think, you know, one of the things I think we're all optimistic about, you know, I'm old enough to have gone through the wave of change that came with the Internet. A lot of jobs went away with the Internet. A lot of jobs were created by the Internet, right? And so I think it remains to be seen of, like, you know, what happens there in the future. With interest rates, so, you know, I will say if you back up at the WEX total level, you know, the disclosure we give is that 100 basis point change in interest rates up would increase WEX overall revenue on an annual basis by about $30 million, okay? Half of that would flow into the benefit segment, and that's really caused by the investment securities that we have from the custodial cash. You know, about 75% of that is in fixed rate instruments that we ladder over time to protect interest rate volatility. 25% of that remains floating, and so that's where you'd see, right, the up or down from interest rate movements. You know, if you look at WEX overall, again, 100 point rise in interest rates, about $30 million positive in revenue. Once you get to EPS, it's about 40 cents negative to revenue because of the corporate debt we have. That is, you know, that's largely floating rate, right? That's something we manage, right? We built this natural hedge in our business. We used to hedge the corporate debt through swaps. We eliminated that as we built these natural hedges into our business, and we feel comfortable right now. We try to keep it as interest rate neutral as possible, and 40 cents we feel is manageable, but it's something we constantly look at.

I've got one more on benefits, but I also want to just tie in the bank here a little bit. I mean, obviously, you've got the HSA deposits, and you've got the bank. I mean, is there more that could be done to sort of tap into that interest rate sensitivity with those two assets that you have?

With the bank and with...

With the HSA deposits.

With the HSA deposits. Well, so what we've done over... This past year is, you know, when we take custody of cash from our employees, right? We have, over time, had moved it to third-party banks as well, right? So we had some sitting at third-party banks. We had some at Wex Bank. And over the last couple of years, we've moved more and more to Wex Bank. You know, there's a complex set of dynamics that... We prevented that first couple years I was with the company that we solved over the last couple years, and so we've been able to shift assets from third-party banks to WexBank, and that has really allowed us to earn higher interest income off those assets than we did at a third-party bank, and we've been really excited about that. That's been a tailwind for the last year or two. I would not expect Sanjay that to be as much of a tailwind going forward because we've moved a lot of that. There's, you know, little pockets here and there, but not the big driver that we've seen over the last couple of years. Got it.

Just one on the health care business or the benefits business. I mean, you know, we sort of moved from like a high single digits to a mid single digits, you know, structural growth rate for that business. I mean, like, is there anything that can accelerate or decelerate that given the structure of the market? Because it seemed like we got to a saturation point where, you know, many people had the accounts and there wasn't that much more demand for HSA accounts. It's like, is there something that can accelerate it or decelerate it from here?

Yeah, I'd say, well, I think the question of acceleration and deceleration of the business is separate from the accounts, because I think, you know, the business has plans, new products, et cetera.

Right, other products, absolutely. Exactly, separate from the accounts. So you want to strengthen the engagement with the existing customer.

That's a considerable opportunity for it. That's separate from accounts. So we focus just on the account side, right? All right, what I would say is... I think there is still a lot of structural momentum. Maybe not the double-digit structural momentum that we saw five or ten years ago, but still good structural momentum. So, first, you have, from a political standpoint, both parties of the government highly supportive of HSAs and consumer-directed health, right? And you've seen that in some of the legislation in the past, including in the last year, there's been additional support of HSAs and expanding the market opportunity that we've talked about in the past. So that continues to be a structural advantage. I think employers continue to push for adoption of consumer-directed health because it's cost-effective for them and puts more power and control and alignment with the employee and how they spend their benefits dollars. So I think that continues to be a structural advantage. You know, I think one of the biggest missing pieces that are underappreciated is just how much education still needs to be done at the employee level. I'm still surprised the number of times I meet people that haven't moved to a consumer-directed health account or have moved to one and haven't adopted HSAs. There's a pretty significant educational component of the tax advantages of an HSA. There's a lot of work to be done there, and I think that will continue to sustain momentum in the HSA adoption period of time.

Capital allocation, you talked about how you've delevered and bought back stock. As we think about the path forward, should we expect some of this capital to be used to do more offensive things in terms of M&A, or do you feel like shareholder return is still a key part of the story?

Yeah, I would say in the near term, you know, said in the last earnings call, we expect to use the vast majority of our adjusted free cash flow to buy back stock. That number was about 85% of free cash flow in the third quarter. You know, I wouldn't ground anyone in the 85% number because that'll shift from quarter to quarter, but that's our near term intention to use the vast majority of shares. You know, if you look at where the share price is today, I still think it is a compelling buy at these prices. And every model we run says, you know, we should be buying stock. And so that's where we've directed our adjusted fee cash flow. Look, over time, will M&A be a component again? You know, they suspect it well that, you know, we're investing heavily in product organically now. So I think that's how we are trying to grow. That being said, there may be things that provide incremental value-add. I don't think it's going to be the core strategy for the company, but it'll be a piece of the toolkit.

My last question, if the audience has questions, please raise your hand. I guess this is on like the embedded finance opportunity, which is sort of the non-travel piece of virtual. I know you guys have gotten involved in the fintech space, for example. I mean, is that an area, like is that a segment that you intend to penetrate more? What other segments can you penetrate with the... Absolutely.

So I think fintech is a very big piece of it, right? If you think of, you know, what happens in the travel industry, right? You are, you are, you know, Have a platform, it's taking these bookings, it's got to pass payments around to hundreds, thousands, tens of thousands of suppliers, and you need a very efficient, cost-effective way to do that. And that's the value we bring. And when you go to the FinSec sector, you see a very similar set of problems, right? You have processes that won't scale manually, you need a more cost-effective way to do that. And so I think when you look at kind of other segments, whether it's insurance payments or things like that, there's a number of other segments where those similar dynamics exist. And I think that'll give us an opportunity to tackle additional areas over time.

And, like, who are you competing with in those markets?

So, you know, you compete against Marketa is an example of someone that you would compete against. There's, I mean, we don't intend to get into the healthcare payment space, but there's a company like Zellus that's doing something similar in healthcare payments, you know. So that would be the type of companies that are doing things like that.

And when you think about your right to win, what is it? Is it your scale?

Yeah, so I think there's several pieces. So, we talked about earlier. About what we've built in the platform, right? We've got... We've got a leading virtual card platform, leading set of capabilities that we continue to enhance. We've got global scale. We've built all the global infrastructure, all the payment rails, all the compliance infrastructure that really is largely fixed costs in nature. So there's incremental things we've got to add from a functionality standpoint, but we've built this tremendous infrastructure that somebody else trying to get into this business is very expensive for them to build. So we've built that. And then we talked about earlier about the pace of our innovation, the value of the bank, the value of us owning the technology stack as well, this pace that we can innovate. And so I think that brings us a structural advantage as well. So if you put all those pieces together and you say, okay, you've got really preeminent economics, right? You've got a preeminent footprint, and you have an ability to really own what you deliver for the customer and innovate very quickly. I think that's a very strong recipe. I think there's a question right there. Yeah.

Thanks for the presentation. Two questions, two concepts, really, that you brought up. One was the interest revenue that you get by being a bank, and then this fintech concept that you brought up. Does being WexBank give you an advantage with fintechs and a better relationship with the networks, meaning higher interchange or a better negotiation power because you can get more spread on corporate interchange? Yes.

So, you know, the amount of volume that we deliver gives us very, very strong relationships with the networks. And that is absolutely one of the advantages we bring. So if you look at our results this year, we've talked in some of our earnings calls, in fact, I just talked in the Q3 earnings call, the benefits that we saw this year from what we call basically the scheme arrangements with the network associations, right? And the growth received from that this year, that is, in fact, the benefits we receive from the amount of volume we bring to those providers. So that is, and when we go back to, you know, one of our structural advantages, and I hit on the economics, you know, that is a key piece of our economic.

You would ask the question with regards to margin expansion, since you're not sharing that interchange piece with another bank, you're getting more of that interchange, presumably all corporate interchange, so you're getting a higher share, and you're keeping more of it, even though you have to give some of it back at rebate. Of course, yep.

Yeah. Thank you. Did my job.

Any other questions? There's one up here.

Maybe just a high-level question on the top-line growth, which you've sort of said 5% to 10% is your long-term framework, and I think we're towards the lower end of that range right now. What kind of gets us from that 5% towards the top end?

And so, you know, I think it's two pieces, right? I think it's... The demand environment, right? We talked about earlier that it's been soft, you know, housing starts been low, the trucking market's been soft. So I think as the demand environment improves, that will help. And then I think it's, you know, as we talked about earlier, it's kind of those new product initiatives, right? Like the embedded payments one we just talked about, we think is a significant opportunity for us, 10-4 and mobility. We, you know, we haven't even touched on some of the things we're doing to move out of, you know, overtime fuel payments. We're seeing that with, you know, some of the other companies in our space, and I think that's a very large-time incremental opportunity for us in kind of like the expense management side. So I think, you know, those are things that we've invested in over the last couple of years, we continue to invest in. And as we drive those into the market, I think that will enhance the growth rate, you know, and tick us off from the bottom end of the range.

Any other questions? All right, we'll end it right there. Thank you, Jasper.

Andre, thanks a lot.

Appreciate it. Appreciate it.