WEX's Q1 2025: Unpacking Key Contradictions in Mobility, Growth Expectations, and Payment Yields

Mobility segment performance and economic factors, growth expectations and market conditions, corporate payments yields stability, travel and OTA customer wallet share dynamics, benefits segment growth acceleration are the key contradictions discussed in WEX's latest 2025Q1 earnings call.



Revenue and Earnings Performance:
- WEX Inc. reported revenue of $636.6 million for Q1 2025, a 2.5% decrease year-over-year. Excluding fuel price and foreign exchange rate impacts, Q1 revenue was down 0.8% compared to the prior year.
- Adjusted net income per diluted share was $3.51, an increase of 1.4% year-over-year, with Q1 adjusted EPS growing 5% excluding these impacts.
- The decline in revenue was influenced by lower fuel prices and foreign exchange rates, while adjusted earnings per share benefited from slightly higher-than-anticipated fuel prices.

Segment Performance: Mobility:
- The Mobility segment, accounting for approximately 50% of total revenue, saw a decline in transaction levels and a 3.9% decrease in same-store sales for local fleets. Conversely, over-the-road customers saw an uptick of approximately 0.6%.
- The downturn in local fleet sales was attributed to economic softness and weather events, while over-the-road customers experienced a pull-forward of demand due to anticipated tariffs.

Segment Performance: Benefits:
- The Benefits segment, comprising 30% of total revenue, reported a 4.2% increase in total revenue, with SaaS account growth of 6.1%.
- Growth was driven by a strong open enrollment season, with total HSA accounts increasing by 7% to over 8.5 million.
- The segment's resilience is attributed to its less sensitivity to macroeconomic trends and the stability provided by the interest income from custodial investments.

Corporate Payments Segment Dynamics:
- The Corporate Payments segment, accounting for 20% of revenue, experienced a 15.5% decline in year-over-year revenue, impacted by a customer transition to a new operating model.
- Direct purchase volume grew nearly 25%, driven by new account additions, despite a contraction in spend per account. The segment's resilience is attributed to its strong relationships with international hotel spend and the addition of new sales, marketing, and product investments.