WEX posted results Thursday that showed traction in its core fleet and travel-related business, amid gains in payment processing activity.
Revenues were just under $371 million, which were 22 percent higher than last year’s second quarter, and of that increase, $16.6 million came from higher fuel prices — but beyond that, gains in the travel and fleet divisions drove results.
Adjusted net income came in at $2.09 a share, four pennies better than the Street, while revenues edged expectations by about $5 million.
In terms of purchase volume — which went up 21.5 percent overall — and drilling down a bit by segment, travel and corporate payments grew by 15.5 percent year over year to $8.9 billion. The fleet payments business gained 28 percent to $9.5 billion.
Looking at revenue contributions, fleet solutions gained 20.6 percent to $241.5 million, and travel/corporate solutions gained almost 38 percent to $75.7 million. Fleet solutions gathered strength on the heels of payment processing revenues, which were up 29 percent to $112 million. Online travel agencies have boosted the travel and corporate solutions segment, where payment processing revenues gained 27 percent to $51 million.
WEX said in a release that the average number of vehicles serviced was approximately 11.8 million, which is an 8 percent boost from the second quarter of 2017.
Total fuel transactions processed increased 7 percent from the second quarter of 2017, standing at 139.2 million. Here, payment processing transactions increased 7 percent to 115.9 million.
Speaking directly to regional growth, management pointed to Asia and Europe, as CEO Melissa Smith noted strong international performance for the company. In terms of individual company partnerships, she said, “We’re committed to further developing the financial institution channel to use our platform for their virtual card issuance.”
She called out the recent announcement of a new issuing agreement with Visa, which, she said, allows WEX “to take full advantage of [its] global network.” She continued, “While we’ve had a small relationship with Visa for years, primarily in the Health and Employee Benefit Solutions segment, this agreement will expand our relationship to include our virtual card issuance.”
Later in the call, she told analysts that “in terms of the corporate payments business overall, beyond travel, we’ve seen really great strength in corporate payments outside of that. We talked about our core corporate payments offering, [which,] on the AP side, grew over 20 percent year-over-year in the quarter.”
CFO Roberto Simon stated on the call that the fleet was led by increases in the North American Fleet to the tune of 22 percent, and Over-the-Road by 25 percent.
“We continue to see a number of positive trends in the Fleet segment,” he told analysts. “This includes solid organic transaction growth of 7.2 percent, continued low attrition rates and marginally positive same-store sales. The net interchange rate for this quarter was 111 basis points, which is up 1 basis point from Q2 last year.”