🔒WEX beats expectations on Q2 results, raises full-year outlook

WEX Inc. (NYSE: WEX) posted second-quarter earnings and revenue that surpassed market expectations as operating margins improved and raised its financial outlook for the full year. Adjusted net income rose to $186.5 million, or $5.35 per diluted share, up 35.4% per diluted share over a year ago, the Portland-based financial technology services provider said Wednesday after financial markets closed. The figure exceeds the $5.08 per share consensus estimate of analysts polled by Zacks Investment Research. Operating income margin rose to 27% from 23.8% a year ago, while adjusted operating income margin climbed to 39.6% from 36.8% a year ago. Second-quarter revenue was $753.5 million, representing an increase of 14.2% over a year ago. That compares to a Zacks consensus estimate of $739.8 million. WEX said the increase includes net favorable impacts of $63.8 million and $2.1 million from fuel prices and foreign exchange rates, respectively.

“We are continuing to build momentum, exceeding our guidance ranges once again in the second quarter while advancing our strategic initiatives to accelerate our performance,” said CEO Melissa Smith. She also said the company is balancing growth reinvestment with returning capital to shareholders, including $93 million in share buybacks over the last few months. WEX provides fintech services to businesses in fleet mobility and fueling, corporate payments, travel industry payments and employee and member benefits. Under pressure from activist investor Impactive Capital this spring, WEX separated the roles of CEO and board chair and reshuffled its board by naming a new chair and adding three members put forward by the hedge fund. As of Wednesday's close on Wall Street, WEX shares have an equity value of around $5.39 billion. Shares are trading 3% lower than a year ago.

Updated guidance

In Wednesday’s earnings announcement, WEX offered a more bullish outlook for the full year. The company said it now expects 2026 revenue to be in the range of $2.86 billion to $2.90 billion and adjusted net income in the range of $689 million to $703 million, or $19.68 to $20.08 per diluted share. That compares to previous guidance for revenue of $2.82 billion to $2.88 billion and adjusted net income of $667 million to $688 million, or $18.95 to $19.55 per diluted share. “We continue to see resilience and strong underlying results across each of our segments, with strong fuel prices driving the outperformance in the second quarter and the increase in our full year guidance,” said Jagtar Narula, WEX’s chief financial officer. The company has been redeploying incremental cash flows to reduce leverage and strengthen its balance sheet in the first half of the year, he noted. “In the near term, subject to market conditions, we are prioritizing our strong cash generation towards returning capital to shareholders, and we expect to direct the vast majority of adjusted free cash flow to share repurchases,” Nagtar added.