B2B Payments

WEX N. Amer. Corporate Purchase Volume Up 51 Percent On AP Automation

WEX results showed double digit percentage gains across fleet, travel and corporate segments. Management said on the earnings call that tailwinds come from a continued embrace of digital payments and a shift away from payments rendered by paper checks.

WEX beat second quarter estimates on the heels of strong transaction processing growth, particularly in its fuel, corporate and travel solutions segments. Particular growth in corporate payments stemmed from continued adoption in AP automation.

In terms of headline numbers, the company beat estimates by a penny with adjusted earnings per share (EPS) of $2.28.

The company’s flagship Fleet segment showed revenue growth of 10.7 percent to $267.3 million.

Other revenue line items show that Travel and Corporate Solutions revenues were up 20.6 percent to $91.35 million.

Both of those line items were outpaced in terms of percentage growth by the Health and Benefit Employee Solutions, where sales were up more than 55 percent to $83.1 million.

In fleet-specific numbers, the average number of vehicles serviced increased 18 percent to 13.9 million.

The company said in supplemental materials tied to the earnings release that payment processing transactions gained 10 percent to 128 million.

Drilling down into the numbers, the North American fuel business saw payment processing revenue of $120.7 million, up 6.9 percent. In the travel and corporate solutions segment, payment processing revenues were $77.2 million.

In the conference call discussing the results, CEO Melissa Smith told analysts that  including approximately 8 percent of  revenue growth of the total 19 percent top line growth in consolidated revenues of $441.8 million came from acquisitions.

“The remaining 11 percent of our growth in the quarter came through our existing partners and customers, the addition of new customer and partner contracts, and very high retention rates,” she said.

Smith said that travel and corporate results were driven by international and corporate payments, with the North American results of 51 percent growth was helped by the company’s AP offering and where the company is positioned to “benefit from sustained growth in corporate payments as the migration away from paper check as a form of payment continues.” Growth in health care savings accounts acted as tailwinds for the company’s business within that vertical, and there are more than 5.5 million HSA accounts on the WEX health cloud, according to the company.

Within the fleet offerings, the CEO said that the mobile payment app Driver Dash now has expanded to more than 25,000 locations and the Clear View Data analytics platform now has 8,000 users, with a second quarter rollout to Exxon Mobile’s fleet. Management said on the call that Shell and Chevron conversions are largely complete.

Within trucking, and where analysts noted there had been pressure in over the road results, Smith said “it’s slightly down year over year and at the same time there has been more pressure around — we have a small part of that business where we’re factoring for our customers. That has seen some pressure as there’s been rate impacts within that part of the marketplace. The loads are less. But we really hadn’t seen any change in credit profile in our population.”

In response to a question on corporate payments volume growth, 40 percent of the revenue is coming from outside of travel. “We also performed really well in travel in Europe. We were up 35 percent on a same basis, meaning excluding the impact of FX,” she told analysts.  CFO Roberto Simon said that revenue growth overall for the company has been mix (and not price) driven.

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