WEX (NYSE:WEX) reported second-quarter results above its own guidance ranges, with management citing fuel-price and foreign-exchange tailwinds, stabilizing Mobility transaction trends, and continued momentum in Corporate Payments and Benefits.
President and CEO Melissa Smith said the quarter “built on the momentum” established earlier in the year, with revenue and adjusted net income per diluted share both exceeding the high end of the company’s guidance. She said that excluding the beneficial impact of fuel prices and foreign exchange, WEX delivered results in line with expectations and saw “strong execution across the organization.”
CFO Jagtar Narula said foreign exchange rates and fuel prices contributed 10 percentage points to revenue growth and 25.4 percentage points to adjusted EPS growth. He also noted that WEX restarted share repurchases during the quarter, buying back about $60 million of shares in Q2, which added approximately $0.01 to earnings per share. Repurchases continued in July, with another roughly $33 million bought back through July 20.
Mobility Revenue Rises as Fuel Prices Provide Tailwind
WEX’s Mobility segment posted revenue growth of 22%, or 3.1% excluding foreign exchange and fuel-price impacts. Narula said the BP portfolio was fully online during the quarter following a successful migration. Payment processing transactions were flat year over year and increased 6.8% sequentially, which management described as an encouraging indicator of improving activity.
The company also reported that credit losses increased from 13.5 basis points to 16 basis points, which Narula said was better than the range WEX had guided to previously. He said credit performance benefited from improving trends in the trucking sector, including a supply-side recovery that has lifted spot rates and helped truckers manage higher fuel prices.
However, management said demand-side conditions remain constrained by broader economic factors. In response to a question from KBW analyst Sanjay Sakhrani, Smith said WEX is not assuming a rebound in miles driven in its guidance. “To the extent we do, then that’s upside to us,” she said.
Smith also said WEX is pursuing pricing opportunities in Mobility, including actions expected to generate $15 million of additional revenue in 2026. During the question-and-answer session, she said the company had already notified customers of certain pricing actions that would bring $15 million in the second half of the year.
Benefits Segment Gains From Open Enrollment and HSA Growth
Benefits revenue rose 5.6% to $206 million, reflecting what management described as a strong open enrollment season. SaaS account growth was 2.2%, which Narula said was in line with expectations and reflected a difficult comparison from the addition of the large UAW portfolio in the prior-year quarter, as well as previously disclosed account closures in the first quarter.
Narula said average HSA custodial cash assets grew 11.1%, custodial investment revenue rose 11.4%, and HSA accounts increased 7%. He said WEX Bank helps the company deliver higher yields on HSA assets through its investment portfolio.
Smith highlighted two Benefits product enhancements tied to customer feedback. WEX introduced an HRA for GLP-1 medications, designed as an employer-funded benefit outside the core health plan. The company also partnered with DoorDash to allow FSA and HSA participants to add WEX benefits cards to DoorDash wallets for eligible health essentials with same-day delivery.
Corporate Payments Sees Direct AP Growth Re-Accelerate
Corporate Payments revenue increased 5.8% to $125.1 million, at the high end of WEX’s expectations. Narula said the segment’s net interchange rate expanded by 5 basis points, while total travel volume increased 6.4%. Segment purchase volume declined 3.6%, primarily because of quarter-to-quarter timing of travel volumes from a large online travel agency customer.
Management said WEX continues to see healthy pipelines in non-travel embedded payments and direct accounts payable. Direct AP volume growth re-accelerated to 20% in the quarter and is expected to grow in the mid-teens for the rest of the year. Narula said Direct AP contributes about 20% of Corporate Payments revenue.
In response to an analyst question, Narula said roughly one-third of Direct AP growth came from over-the-road customers, while two-thirds came from new business. Smith said WEX has also been using an AI-based lead-generation tool in Corporate Payments and has begun rolling it out to other parts of the company.
AI and Margin Expansion Remain Key Themes
Smith said WEX’s strategic priorities remain focused on amplifying its core business, expanding its reach, and accelerating innovation. She said AI is “deeply integrated” into the company’s operations and highlighted a Mobility product called AI Insights, currently in beta with customers. The offering uses WEX’s proprietary transaction, fleet and payment data to help customers identify possible misuse, savings opportunities, spending trends and driver behavior issues.
Smith also said AI-powered credit tools helped WEX make faster credit decisions in Mobility as higher fuel prices increased customer credit demand. The company is also using AI in claims processing, development and coding, and operational efficiency initiatives.
WEX said it remains committed to delivering more than 100 basis points of macro-neutral margin expansion in the second half of the year, as part of a plan to deliver 75 basis points for the full year. Narula said second-quarter adjusted operating margin increased about 280 basis points, primarily due to higher fuel prices.
Guidance Raised; Buybacks Prioritized
WEX ended the quarter with a leverage ratio of 2.9 times, within its target range of 2.5 to 3 times. The company generated $696 million of adjusted free cash flow on a trailing 12-month basis, up 22%. Narula said WEX typically generates about $600 million to $650 million of annual free cash flow, generally tracking adjusted net income.
Management said the company expects to direct the vast majority of adjusted free cash flow to share repurchases in the near term, while using a modest amount to deleverage. Smith said the company views its shares as trading at attractive levels and believes buybacks are currently the best use of free cash flow after organic investments.
For the third quarter, WEX expects revenue of $733 million to $753 million and adjusted net income per diluted share of $5.45 to $5.65. For the full year, the company now expects revenue of $2.86 billion to $2.90 billion and adjusted EPS of $19.68 to $20.08. Narula said the updated outlook reflects Q2 outperformance, share repurchases during the quarter and higher fuel-price assumptions. The guidance does not factor in share repurchases beyond Q2.
Smith said WEX expects to exit the year within its long-term organic revenue growth range of 5% to 10%, excluding macro factors, supported by pricing actions, improved Mobility trends, continued Corporate Payments growth and a healthy Benefits pipeline for 2027.
About WEX (NYSE:WEX)
WEX Inc is a global financial technology company specializing in business payment solutions for fleet, travel, and corporate payments. The company delivers software-driven platforms and card-based services that help businesses automate payment processes, manage expenses and improve operational efficiency across a range of industries, including transportation, healthcare and government.
Founded in 1983 as Wright Express in Portland, Maine, the company began by offering fuel card services to trucking fleets.
