WEX beats market estimates on Q2 results, restarts financial guidance

File photo / Courtesy of WEX WEX Inc. is a global financial technology service provider headquartered in Portland.

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WEX Inc. (NYSE: WEX), a Portland-based financial technology service provider, on Thursday reported second-quarter results that beat market expectations and, in a sign of growing confidence about the business, restarted issuing financial projections.

Second-quarter revenue was $459.5 million, up 32% over the same period last year and 5.08% above the consensus forecast from a Zacks Investment Research analysts' poll.

WEX said the revenue increase in the quarter includes a $33.3 million favorable impact from fuel prices and spreads, and a $4.6 million positive impact from foreign exchange rates.

Earnings amounted to $2.31 per diluted share, representing a 91% increase over a year ago and surpassing the Zacks consensus estimate of $1.99 per share.

Zacks noted that over the last four quarters, WEX has surpassed consensus earnings per share estimates twice.

“Momentum continued through the second quarter as we delivered robust revenue and earnings growth, signed new customer and renewed existing business, and more than doubled total purchase volume processed across the company," Melissa Smith, the company's chair and CEO, said in a statement.

"These exceptional results reflect strong execution from the WEX team, positive trends across the business and strong demand for our platform and services as volumes continue to recover."

Looking ahead to the second half of the year, she added, "We are positioning the business for future growth as demand for our platform and services accelerates with the increasing adoption of digital payment technologies."

WEX shares were trading up 2.52% by mid-morning at $207.99, giving the stock an equity value of around $9.3 billion.

In a conference call with analysts and investors, Smith said the company's strong results were in part a result of continuous innovation. She also noted that the pandemic sparked an increase in digital engagement, and that WEX's products and services are uniquely positioned to benefit from an increasingly digital economy.

"We've increased our focus and investments into accelerating digital transformation across the company," she said.

Smith also said the company is continuing strong momentum in corporate payments, including via the recent renewal of an agreement with American Express for the next five years.

"We're excited about continuing our partnership with American Express and delivering best-in-class payment solutions to their corporate customer base," she said on the call.

Business division details

In a breakdown of performance metrics during the second quarter, WEX said the average number of vehicles serviced increased by about 7% over last year to around 16.2 million, while total fuel transactions processed were 24% higher at 158.7 million. Payment processing transactions increased 26% to 130.1 million.

Among other business divisions, WEX's Travel and Corporate Solutions' purchase volume grew 176% over a year ago to $8.7 million, while Health and Employee Benefit Solutions' average number of Software-as-a-Service accounts in the United States grew 13% to 16.4 million.

“We delivered impressive top- and bottom-line results in the second quarter representing the highest revenue and adjusted earnings for Q2 in WEX history," said CFO Roberto Simon in Thursday's release. "This was driven primarily by better-than-expected volume recovery in our Fleet Solutions and Travel and Corporate Solutions segments, higher fuel prices, and robust operating income margins across each of our segments.”

He added, "We continue to position WEX for long-term sustainable growth as we execute against our customer pipeline, integrate recent acquisitions including benefitexpress, and drive innovation across our technology platform."

Financial guidance

Like many public companies, WEX has refrained from using financial guidance during the pandemic, but resumed projections on Thursday.

For the third quarter of 2021, WEX said it expects revenue in the range of $465 million to $480 million and adjusted net income in the range of $98 million to $107 million, or $2.15 to $2.35 per diluted share.

For the full year of 2021, the company expects revenue in the range of $1.805 billion to $1.835 billion and adjusted net income in the range of $377 million to $395 million, or $8.30 to $8.70 per diluted share.

Third-quarter and full-year 2021 guidance is based on an assumed average U.S. retail fuel price of $3.18 and $3.00 per gallon, respectively, and assumes around 45.4 million shares outstanding for the full year.

About WEX Inc.

WEX Inc. is a financial technology service provider across a wide spectrum of sectors, including fleet, travel and health care. The company has offices in 14 countries and employs around 5,400 people in total.