Payment processing was good to financial transaction provider WEX in 2019, as the company reported double-digit growth for the year in its earnings report today. While the company is known for its payment solutions aimed at fuel for fleet services, it also has grown its corporate card and U.S. healthcare payments business over the past year. Both helped create Q4 and full-year increases.
“2019 was another record year for WEX, capped off by an impressive fourth quarter driven by double-digit, top-line growth and strong operating leverage,” said Melissa Smith, WEX’s chair and CEO. “The fourth quarter built upon the momentum from earlier in the year, marked by robust transaction volume growth, strong performance from acquisitions, and significant contribution from our previous contract signings and meaningful new contract wins.”
Smith noted that both fuel and healthcare contributed to the strong performance, pointing to integrations with Noventis, Discovery Benefits and Go Fuel Card as examples of its core success. The company also saw continued growth in its Shell and Chevron business, and a higher-than-expected contribution from the U.S. healthcare business. The Wex Health Cloud is the company’s cloud-based platform that helps companies manage healthcare benefits, HSAs and spending cards for consumer usage.
Among the specific metrics in the fuel business was an increase in the number of vehicles it serviced, which reached 14.9 million – up 19 percent from the fourth quarter of 2018. Total fuel transactions increased 12 percent from the fourth quarter of 2018 to 156 million, while payment processing transactions increased 9 percent to 126.7 million. On the travel side, purchase volume grew 17 percent to $9.6 billion from $8.2 billion for the fourth quarter of 2018. Health and employee benefit solutions accounts in the U.S. grew 17 percent to 13.4 million from 11.5 million for the fourth quarter of 2018.
The company has been trying to grow its non-fuel business, focusing on healthcare and corporate expenses. For corporate travel, it has been encouraging partners to focus their offerings on millennials. A recent report from the company showed that millennials are the current lucrative travel targets, but that Generation Z will dictate the future of the industry. For example, less than half of surveyed Gen Z customers book directly with airlines and hotels, preferring instead to deal with brokers, agents or travel sites. Millennials will book directly at a rate of 63 percent.
“This presents a huge opportunity for online travel companies that can gain the next generation’s attention while they’re experiencing the world of travel for the first time,” the report states. “If businesses act accordingly, they can start fostering a sense of brand loyalty in this group at the very start of their customer journey. And because they are young, this group is impressionable. When picking a destination or activity, both Gen Z and millennials report being more easily swayed by online advertisements, Facebook, Instagram and word of mouth than their elders.”
The emphasis on the travel business was evident just two weeks ago when WEX closed a deal to acquire B2B travel payments startup eNett and B2B optimization company Optal, as the company announced in January. The $1.7 billion agreement includes about $1.275 billion in cash and roughly two million shares of WEX common stock paid to the sellers.