WEX Inc. common stock

Thank you for standing by and welcome to the WEX second quarter 2026 earnings 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 that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Pedro Alvarez, head of investor relations. Please go ahead.

Thank you, operator, and good morning, everyone. With me today are Melissa Smith, our president and CEO, and Jagtar Narula, our CFO. The press release and supplemental materials issued yesterday and a slide deck to walk you 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 8K filed with the SEC yesterday afternoon. Before we begin, unless otherwise noted, all comparisons discussed during today's call are on a year-over-year basis. 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 the exhibits of the press release and the earnings supplement 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 indeterminate amount of certain elements that are included in reported GAAP earnings. I would also like to remind you that we will be discussing 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 our most recently filed annual report on Form 10-K and subsequent quarterly reports filed on Form 10-Q and other subsequent SEC filings. While we may update forward-looking statements in the future, we disclaim any obligation 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, Pedro, and good morning, everyone. We appreciate you joining us. I'm going to start on slide four of our earnings presentation today. The second quarter built on the momentum we established earlier this year. We exceeded the high end of our guidance range for both revenue and adjusted net income per diluted share. Excluding the beneficial impact of fuel prices and FX, we delivered on our expectations with strong execution across the organization. New sales momentum is building, and customers are increasingly focused on controlling expenses by leveraging our industry-leading platform. We are progressing across each of our strategic pillars, and our organic investments are delivering. Our balance sheet remains strong with leverage back below three times, and we are prioritizing our strong cash generation towards returning capital to shareholders in the near term. We are repurchasing shares on what we believe are attractive levels, reflecting our confidence in the plan and the value we see in our business and assets. There's a lot to be excited about as we look forward to the second half of the year. and corporate payments, volume growth and a direct AP channel is expected to remain in the mid-teens after re-accelerating to 20% this quarter. In benefits, our early sales pipeline for 2027 looks healthy and we have real opportunities in our operations platform to be more efficient with AI. In mobility, we're seeing a stabilization of transaction trends, near and long-term pricing opportunities, and ongoing opportunities to expand margins. Combined, these factors give us confidence in our investment strategy and execution as we expect to exit the year within our long-term organic revenue growth range of five to 10%. Let me walk you through the second quarter results and point you to slide five. Revenue for the quarter was $753.5 million, an increase of 14.2%. Excluding field prices and foreign exchange, revenue grew 4.2%, which was at the midpoint of our guidance for the quarter. Adjusted net income per diluted share was $5.35, up 35.4%. Excluding field prices and foreign exchange, adjusted EPS grew 10.1% at the high end of our guidance range, reinforcing our ability to leverage top-line growth into even stronger earnings growth. Cash flow remains a continued source of strength, and we generated $696 million of adjusted free cash flow on a trailing 12-month basis. This allowed us to reduce leverage to 2.9 times and resume share repurchases in the quarter ahead of schedule. Turning to slide six, let me remind you of our three strategic pillars, amplify our core, expanding our reach, and accelerating innovation. These pillars are the foundation that we believe will allow us to deliver sustainable and profitable growth over the long term while remaining laser focused on our customers. Each pillar is powered by organic investments, product development, and the strength of our sales and marketing efforts. Let me take a moment to highlight how we are progressing against them as we pass the midpoint of the year on slide seven. Our first pillar, amplifying our core, centers on continuing to grow in our core markets by leveraging our strengths, which include proprietary data and technology tools, compliance and regulatory capabilities, including WexBank, deep industry expertise, advantage positioning in the payments ecosystem, scale, and deep customer and partner relationships. Within this pillar, we're focused on executing across the business to delight our customers, accelerate growth, and strengthen margins. We measure success by delivering on profitable new growth. In the first half of the year, we saw strong new sales to support this. For example, in benefits, we're lining up a healthy early pipeline for 2027 after completing an excellent open enrollment season for 2026. In mobility, we've been executing on fundamental priorities amid challenges in the macro environment. And in corporate payments, our pipeline is continuing to build momentum in our direct AP business. There are two important points here. First, we're carefully looking at pricing levers across the portfolio. We plan to continue to thoughtfully execute on opportunities in the back half of the year, including new pricing actions in mobility that we expect to result in $15 million of additional revenue in 2026. We're balancing those pricing actions with a focus on improving profitable retention across the business by proactively engaging with our customers to keep our value proposition at the forefront. In benefits, the first half of the year included two enhancements to our core offering driven by customer feedback. First, we introduced the WEX HRA for GLP-1 medications. This is a defined employer-funded benefit that sits outside the core health plan. giving employers greater flexibility and control over GLP-1 benefit costs while maintaining access to weight management options for employees. Additionally, we partner with DoorDash to enable FSA and HSA participants to add their WEX benefits cards directly to their DoorDash wallets, allowing them to use pre-tax dollars for eligible health essentials with same-day delivery. This makes it easier for consumers to access Eligible healthcare products when they need them while continuing to embed WEX into everyday use. Our second strategic pillar, expanding our reach, empowers us to enter new markets where we have a clear right to win and where our differentiated assets allow us to create tangible value. This pillar is foundational to how we accelerate growth as a company. and we're investing in both product development and our go-to-market approach to move deeper into large and profitable markets with ample greenfield opportunities. Let me touch on our non-travel business and corporate payments as a clear example. Within non-travel, we are focused on diversifying the business through both our direct AP offering and continuing to expand our industry-leading embedded payments virtual card offering outside of travel. These two growth factors, are core investment priorities in this segment. As I mentioned earlier, direct AP growth accelerated in the quarter, and our embedded payments pipeline remains strong. Outside of corporate payments, let me touch briefly on mobility, where we continue to see success marketing to smaller fleets in our North American business, many of which do not currently have a fuel card solution. In our over-the-road business, 10-4 by WEX, have seen significant user growth as fuel prices increase and operators look for easy-to-access fuel discounts. As a reminder, we have positioned 10-4 to play two roles to maximize our customer reach. It acts as an on-ramp for some customers to join the WEX platform in the future, but for fleets that are not interested in or not eligible for a fuel card product, it provides another way to monetize those relationships without taking on additional credit risk. The last pillar in our strategic framework, accelerating innovation, enables us to deliver better products at a faster pace while driving efficiency and operating leverage. Here we focused on initiatives that transform what we offer our customers and how we run our business. This is a pillar I'm especially excited about because of the tremendous potential. We're leveraging customer feedback and AI to drive targeted new product and service development. AI is deeply integrated in everything we do, and has been for several years. We believe we are well positioned and ahead of the curve with a long history of proprietary data to fuel value-added client offerings. Turning to slide eight, I'll touch on how we're progressing. A recent example of how we're accelerating innovation through AI is in mobility, where a new premium offering, AI Insights, is currently in data with customers. By combining WEX's proprietary transaction fleet and payment data with AI, We're delivering actionable recommendations that help customers proactively identify potential misuse, uncover savings opportunities, understand spending trends, coach driver behavior, and improve fleet performance. Our goal here is to help customers move from reactive reporting after an issue occurs to proactive decision-making powered by AI. Another area where there are early investments in AI bore tangible fruit in the first half of the year within our credit adjudication functions within mobility. As fuel prices rose, credit demand increased across the business, and our AI-powered credit tools allowed us to make faster and smarter decisions for customers in the time of need. These tools allowed us to act quickly without increasing risk, and we saw those results in Q2. We talked before about how AI is helping to process claims faster Power Development and Coding, and empower our teams to work more efficiently. All of those trends are continuing. Looking ahead to the second half, we're going to continue to tackle parts of the business that would benefit most from automation. We're committed to delivering more than 100 basis points of macro neutral margin expansion in the back half of the year as part of our plan to deliver 75 basis points for the full year. To close on our strategic pillars, I'm proud of the work our teams are doing to position WEX for success now and in the future. Turning now to capital allocation on slide 9, our approach has not changed, and our near-term priorities reflect our clear focus on maximizing shareholder value. We're continuing to reinvest organically in our business by evaluating opportunities on a risk-adjusted returns basis to prioritize investments with the highest tangible accretion potential. This includes continuing to strengthen our core offerings to maintain and grow our competitive advantages while also investing in new products and markets that will accelerate growth. Now that we have achieved our leveraged goal of less than three times and did so quicker than anticipated, we're in a stronger position to return more capital to shareholders. Given WEX's current multiple and our confidence in the long-term growth trajectory of our business, we're currently prioritizing buybacks. In the near term, you should expect us to direct the vast majority of adjusted free cash flow to share repurchases while using the rest to de-lever, subject to notable changes in market conditions. Between May and July 20th, we repurchased approximately 93 million of shares, including approximately 60 million during the second quarter. Finally, I want to briefly touch on our annual meeting in May. I want to take this opportunity to welcome our new board members and reiterate that the full board and management team are aligned with a singular focus on maximizing value at WEX. We're moving forward with that unified purpose. This shared focus is reflected in how we manage the business every day. Our commitment to maximizing shareholder value includes routinely evaluating our portfolio and assessing the near and long-term potential of each of our businesses and their component parts. This is an important piece of our annual strategic planning process, which is already underway and helps us allocate our resources to opportunities that create the most long-term value. I'll close by saying that our results would not be possible without our employees. I want to thank our team for their hard work and commitment this quarter. Forbes recently recognized WEX is one of America's best employers for company culture, and I believe that recognition reflects the talented team and strong culture that continue to power our strategy, innovation, and customer impact. With that, I'll turn it over to Jagtar to walk through our financial performance, segment results, and updated outlook in more detail. Jagtar?