WEX Inc. common stock

My name is Tiffany, and I will be your conference operator today.

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 and supplemental materials we issued yesterday and the slide deck to watch your prepared remarks have been posted to the Investor Relations section of our website at wexinc.com. A copy of the release and supplemental materials have been included in an 8K filed with the SEC yesterday afternoon. As a reminder, we will be discussing non-GAAP metrics. specifically adjusted net income, which we sometimes refer to as ANI, adjusted net income per diluted share, adjusted operating income and related margin, 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 are included in reported GAAP earnings. I would also like to remind you that we'll 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 the press release, the supplementary materials, and the risk factors identified in our most recently filed annual report on Form 10-K, and in our subsequent quarterly reports on Form 10Q and other 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. Let me start today with how we think about our strategy and why we believe our business model is so durable. WEX serves customers in mission-critical areas where reliability, compliance, and control matter most. Our focus on and expertise in these areas has allowed us to earn long-lasting customer trust, win market share over time, and generate strong, reoccurring cash flow. Today, we're modernizing our platforms to reduce friction, deepen workflow integration, and expand customer lifetime values, all while executing with discipline to deliver durable growth and expanding margins. Before I go further, I want to connect back to what we said on our Q3 call. We described WEX as reaching an inflection point, where the investments we've made in product velocity, go-to-market execution, and cost discipline were beginning to translate into stronger performance. In the fourth quarter, we saw that inflection point take hold. Earnings growth accelerated, operating leverage improved, and we made tangible progress towards the margin expansion we expect as our investments continue to scale. We're confident in our ability to build upon this progress. Our strategy remains anchored in three pillars, amplifying our core, expanding our reach, and accelerating innovation. Each of these pillars is designed to turn customer trust into durable growth, margin expansion, and consistently strong free cash flow. Now turning to the quarter. Our fourth quarter results reflect the momentum we're building as execution improves across product, sales, and customer experience. In the fourth quarter, we delivered revenue of $672.9 million, an increase of 5.7% year-over-year, or 4.5%, excluding the impact of fluctuations in fuel prices and foreign exchange rates. Adjusted net income for diluted share was $4.11, an increase of 15.1% year-over-year. Excluding the impact of fluctuations in fuel prices and foreign exchange rates, Q4 adjusted EPS grew 12.1%. For the full year 2025, we delivered record revenue of $2.66 billion, up 1.2% year-over-year, with improving performance as the year progressed. Adjusted net income per share was $16.10, up 5.4% year-over-year. Excluding the impact of lower fuel prices and foreign exchange rates, revenue increased 2%, with adjusted net income per share up 7.7% year over year. A few years ago, we started a journey to reimagine and accelerate how we organically invest in technology and new products. Part of that journey included bringing on a new tech and new product leader who have enhanced our foundational capabilities in technology and augmented our team's expertise in AI and data science. We've been modernizing our architecture, strengthening execution rigor, and increasing accountability for delivery. The result is that we're building faster, scaling more efficiently, and lowering our long-term cost to serve. By combining operational discipline with an AI-first approach to product development, we increased product innovation velocity by more than 50% year over year. These investments are already improving customer outcomes and delivering efficiency. As we move through 2026, we plan to shift from an investment phase to a scaling phase, with operating leverage driving meaningful margin expansion over the medium term. Let me give you a few examples of how this is showing up across the business. In mobility, we continue to invest in our industry-leading fuel card solutions for fleets of all sizes. Targeted marketing investments in 2025 drove a 13% year-over-year increase and new small business customers. On the product side, we've introduced innovative offerings like Fleet Plus, which combines the power of our proprietary closed-loop field card with open-loop flexibility. That translates into superior controls and data, creates a product experience that is difficult to replicate at scale, and increases revenue per customer in our mobility business. In the benefits segment, investments in both sales and product help drive another strong open enrollment season. A great example is our use of AI to streamline healthcare claim reimbursements. Our AI-powered solution has reduced processing times from days to minutes with 98% accuracy, supporting our goal of improving participant satisfaction, reducing friction, and lowering our cost to serve. We also launched a modernized brokerage experience that enables real-time trading and provides seamless access to HSA cash and investments, and is designed to drive higher balances and asset retention. These are key drivers of long-term value creation in the HSA market. Our direct accounts available product continues to grow rapidly, and our investments in expanding the sales force are delivering as expected with Q4 volumes up approximately 15% year over year. The momentum in our direct AP is complemented by early success in our embedded payments offering with a growing pipeline of prospects and customers to support sustained growth in 2026 and beyond. We're deliberately extending our reach and extending addressable use cases across verticals. Our product investments continue to help us differentiate ourselves across this business. For example, we recently launched a global funding engine that enables customers to issue virtual cards in multiple currencies and execute on-demand currency conversions without incurring FX costs. This expands our product capability to better serve customer needs, strengthens our value proposition beyond travel, and supports continued operating leverage as volume scales. Looking ahead, we see the potential for additional upside from geographic expansion and travel, as well as new digital tools that accelerate onboarding and improve customer productivity. By balancing growth acceleration with operational efficiency, we've built a stronger and more agile WEX that is well-positioned to capitalize on market opportunities, scale efficiently, and strengthen our long-term competitive advantages. Now let's turn to our segment results for Q4. beginning with mobility. Mobility is our largest segment and a great example of how we are amplifying our core by protecting profitable share in a down cycle while we continue to invest to drive long-term value. Despite ongoing market softness, fourth quarter mobility revenue was flat year over year as we focused on capturing profitable market share. Transaction volumes declined modestly, consistent with our expectations, broader market trends, and the patterns we saw in the third quarter. It's also important to address what we're seeing in the over-the-road trucking market. The over-the-road market remains in a cyclical down cycle with muted freight demand and pressure on small operators. We've seen this pattern before. These cycles are historically temporary. We're executing on what is in our control by protecting profitable market share, maintaining high retention, and continue to invest in differentiated capabilities so that when volumes recover, we exit the cycle with stronger economics and greater operating leverage. As I mentioned earlier, we've been directing sales and marketing investments towards smaller fleets, which we believe represent a large and underserved market with significant potential. 10-4 by WEX expands our reach by bringing new small trucking fleets into the ecosystem while creating a pathway to amplify the core over time through deeper relationships. The discounts that we've negotiated with truck stop chains save the typical user hundreds of dollars each month, helping drive adoption. Momentum has been strong, with December accounting for more than half of the total Q4 volume on the platform. Finally, WEX Field Service Management, formerly PASER, continues to build momentum. delivering healthy double-digit revenue growth in the fourth quarter. Since acquiring this business two years ago, we have updated and aligned the brand, refined our cross-sell process, improved retention, made key product enhancements, and updated pricing. We remain energized by this opportunity as we deepen our presence in this attractive adjacent market where we believe we can generate up to 10 times more revenue per field service management customer than for a traditional small fleet. Now turning to benefits, which simplifies the of employee benefits administration and comprises approximately 30% of annual revenue. Benefits is where our accelerate innovation and expand our reach strategic priorities intersect most clearly. In 2025, we extended our track record of consistently growing HSA accounts faster than the underlying market as reported by Deveneer. Our diversified portfolio expanding benefits administration, consumer-driven benefits, and HSA custodial services positions us to sustain market leadership as we continue to further strengthen our competitive edge. Overall FAS account growth was 6% in the quarter, in line with previous quarters last year. Following a strong open enrollment season, we now have more than 9.4 million HSA accounts on our platform. We remain a top five HSA provider, powering more than 20% of all HSA accounts in the country and serving approximately 60% of the Fortune 1000 companies. We're very pleased with the results of our 2026 open enrollment season with a direct new sales exceeding expectations and continued strength across our partner channels. As a result, we expect account growth to be in the range of six to 7% year over year in Q1. Our benefits business continues to outperform the market, and we're confident in its long-term growth trajectory. Finally, let's turn to corporate payments, which is the clearest example of how we're expanding our reach, expanding our core capability across industries, geographies, and workflows, representing approximately 20% of annual revenue. This segment helps businesses pay their partners faster and more securely while simplifying their workflows. Fourth quarter performance for this segment improved meaningfully from the first half of the year, in line with our expectations. Purchase volume processed by WEX increased 16.9% year-over-year, reflecting the continued strength in travel customers. Travel-related revenue grew more than 30% in the quarter, supported by high existing customer activity and the onboarding of a meaningful new customer in Asia. Revenue from non-travel customers grew in the mid-single digits. The adjusted operating margin for corporate payments increased by 450 basis points, reflecting the strong operating leverage in the model at volume scale. Our direct accounts available product continues to scale rapidly. New customer wins fall within the construction and healthcare verticals, alongside retail and media. And this growing book of business now represents 20% of segment revenue. Before I turn it over to Jagtar, I want to highlight a governance update we announced last month. As part of our multi-year board refreshment plan and reflecting input from our ongoing engagement with shareholders, we announced the next phase of the board's planned evolution. Under this plan, newly appointed director David Foss, We'll assume the role of vice chair and lead independent director effective as of our 2026 annual meeting of stockholders. We also announced that Shakar Ghosh and Jack VanWerkum will retire from the board at that time. We're grateful to Shakar and Jack for their dedicated stewardship, and we look forward to Dave's leadership as we remain focused on long-term shareholder value creation. Stepping back, we enter 2026 with strong momentum. we expect to deliver the strongest new sales year yet based on our current pipeline, improving sales productivity, and greater customer demand across all three segments. Together, the strength of our platform, the resilience of our model, and the returns from our targeted investments give us confidence we're on the right path. As these investments continue to scale, we expect operating leverage to support margin expansion while sustaining strong free cash flow generation. With that, I'll turn the call over to Jagtar to walk you through our financial performance and our 2026 guidance in more detail.