WEX Inc. common stock

Thank you for standing by and welcome to the WEX first quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. I'd now like to turn the call over to Steve Elder, Senior Vice President of Investor Relations. You may begin.

Thank you, operator, and good morning, everyone. With me today are Melissa Smith, our chair and CEO, and Jagtar Narula, our CFO. The press release and supplemental materials issued yesterday and a slide deck to walk through prepared remarks have been posted to the Investor Relations section of the website at wexinc.com. A copy of the press release and supplemental materials have been included in an 8-K 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 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 the press release, the supplemental materials, and the risk factors identified in the most recently filed annual report on Form 10-K and subsequent quarterly reports on Form 10-Q 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. The first quarter marked a strong start to the year for WEX. We exceeded the high end of our guidance range for both revenue and adjusted net income for diluted share, and we did that with strong execution across the organization. After record revenue and adjusted net income for diluted share in 2025, we continued to build on our momentum in the first quarter of 2026. Revenue for the quarter was $673.8 million, an increase of 5.8% year over year. Excluding fuel prices and foreign exchange, revenue grew 5.4%, which was above the midpoint of our prior guidance. Adjusted net income for diluted share was $4.15, up 18.2% year over year. Excluding fuel prices and foreign exchange, Adjusted EPS grew 19.4%. Importantly, these results were not driven by just one segment. Benefits and corporate payments continued to perform well, and we delivered better than expected results in mobility amid a still challenging market. We're seeing the benefits of our scale, our increasing productivity, and the strength of WEX's operating model. At WEX, we simplify the business of running a business. Every day, our customers manage payments and workflows that are complex, regulated, and mission critical. Too often, they still have to stitch together disconnected systems across spending, payments, reimbursement, reporting, and controls. That makes decisions slower, oversight harder, and risk more difficult to manage. That complexity is only increasing, and that's exactly why we believe WEX is well-positioned to thrive. What makes our model powerful is that across mobility, benefits, and corporate payments, our businesses share common technology, data, compliance, and financial infrastructure, including WexBank. That allows us to uniquely solve customer problems in vertically specialized ways while also scaling capabilities across the enterprise. It is why our strategy is focused on the customer and driven by three priorities. amplify our core, expanding our reach, and accelerating innovation. The work we've done over several years to strengthen that shared operating foundation is translating into tangible business results. In 2025, we increased product innovation velocity by more than 50%. And in 2026, we are focused on converting that velocity into better experiences and outcomes for our customers and stronger productivity, growth, and operating leverage for WEX. A large part of our accelerated product innovation is being driven by AI, which is helping us in two ways. First, it enables us to deliver better products and make smarter and faster decisions. We're able to use our data, workflows, and domain expertise to improve things like claims, spend visibility, service, credit, and payment outcomes. Second is helping us redesign how things get done inside WAX by both automating routine work and improving speed and accuracy, allowing our teams to focus on higher value decisions for customers. AI is not a separate initiative, but something that is being integrated into our operations to improve customer outcomes and increase efficiency. In 2026, We plan to deliver $50 million in cost-saving actions, including savings from automation and modernization, with a portion of the proceeds to be reinvested in the business and the remainder to flow through to margins. Let me spend a few minutes on the momentum we're seeing across the business and how that momentum reflects the strategy we're executing, starting with mobility. Within mobility, which represents roughly half of our revenue, We are executing well and delivering improved results, even as the market and macroeconomic environment remains challenging. While our outlook does not anticipate a macro recovery, we are making progress in the areas we can control, pricing, sales productivity, product expansion, and customer execution. That strong execution is reflected in our financial results in the first quarter. Mobility revenue increased 3.2% year over year. Higher U.S. fuel prices were a tailwind, but that benefit was offset by international fuel spreads. Payment processing transactions were down 3%, so this is not a story of the market suddenly snapping back. Rather, it's a story of improving execution. We are closely monitoring energy price volatility related to the Middle East conflict, At this point, we have not seen a meaningful impact on customer demand or volumes in mobility. We are seeing a small impact to travel volume trends leading into the second quarter that we are reflecting in our guidance. We are confident in the progress of our growth levers. We are encouraged by the early traction in 10-4 by WACS, where we are growing active users and have earned very high ratings in both the Apple and Google app stores. This product expands our reach into a large and under-penetrated part of the market while creating a path to deepen relationships over time. Lastly, on mobility, I'm proud of our team for completing the complex BP conversion, which will create a small benefit in the second quarter. Most importantly, it solidifies the BP contribution we expect in the second half of 2026 and into 2027. As a reminder, we won this important contract from the strength of our enhanced acceptance product. Let me now shift to benefits, which represents approximately 30% of our revenue. In benefits, our momentum continued during the first quarter. We came through a strong open enrollment season, and that positioned us well for the remainder of the year. Benefits revenue increased 8.5% in the quarter. HSA accounts on our platform were up 8% year over year to 9.4 million HSA accounts in Q1. Here, WexBank continues to be an important differentiator, allowing us to earn attractive yields on HSA assets. Benefits is one of the clearest examples of how our technology investments are creating value for customers. We've talked before about our early results in reducing claims reimbursement times by more than 98%, and we continue to increase integration and automation across the platform. We are leveraging technology to create better customer and partner experiences and drive durable growth. Finally, let me turn to corporate payments, which represents approximately 20% of our revenue. Corporate payments revenue increased 9.3% in the quarter. In corporate payments, we're strengthening the core while continuing to expand the reach of the business across industries, geographies, and workflows. We continue to bring in new customers onto our platform, and our pipeline is building momentum. We're excited to announce today that we entered into a long-term renewal with a large and strategically important travel customer. This renewal reinforces the value proposition of our platform, reliability, compliance, workflow integration, and the ability to handle complex payments flows at scale. Consistent with what we said on our fourth quarter call, the economics of the renewal are already contemplated in our guidance and are fully reflected in our Q1 results. At the same time, we continue to see progress outside of travel. Our direct accounts payable solution leverages our corporate payments platform and has focused on the underserved mid-market, enabling it to deliver outsized growth. Direct accounts payable purchase volume increased in line with last quarter. And this book of business represents approximately 20% of annual segment sales. Broadening our opportunity set outside of travel represents attractive long-term growth opportunities for the segment. We entered 2026 with momentum, and our first quarter results reinforce that our strategy is working. In the third quarter of last year, I mentioned we had reached an inflection point. Since then, we have seen both revenue and adjusted EPS grow, as we illustrate on slide five of our earnings presentation. This momentum is driven by the strength of our pipeline, improving productivity, and from the pace of product innovation. Our investments over the last several years are producing results, and we are now moving to a phase of scaling those investments to deliver increasing operating leverage and drive meaningful margin expansion over time. We are combining our increased efficiency and scale with a disciplined capital allocation framework. As we illustrate on slide 14 of our earnings presentation today, our returns on invested capital have been increasing on a notepad basis as a result of our strong execution and thoughtful capital deployment. As the environment has changed, we have shifted our capital allocation priorities accordingly, pivoting from accretive M&A to share repurchases. Today, we are prioritizing debt reduction until our leverage ratio is below three times while continuing to invest in the business. I know some of you may have questions regarding the proxy contest. I will be discussing this in more detail with our lead independent director designee, Dave Voss, during a webcast fireside chat on Monday, April 27th. I hope you will be able to join us for that discussion. In the meantime, you can read more about our strategy and progress and our thoughts on the proxy contest in the comprehensive investor presentation that we have published on our investor relations website last week. With that, I'll turn it over to Jagtar to walk through our financial performance and updated outlook in more detail. Jagtar?