Wex Posts Q2 EPS Beat as Revenue Slips

Wex (WEX -2.10%), a global provider of payment processing and business solutions across sectors such as fleet, benefits, and corporate payments, reported earnings on July 23, 2025. Wex beat analyst expectations, with adjusted EPS exceeding internal guidance. Adjusted earnings per share (non-GAAP) reached $3.95, compared to the $3.71 consensus, while total revenue (GAAP) was $659.6 million, topping the $649.6 million estimate. However, total revenue decreased 2% compared to the prior year, while margin contraction was evident. The quarter reflected both resilience in certain segments, especially Benefits, and ongoing volume and margin pressures in others. Overall, the results showed operational discipline but signaled caution in ongoing business trends.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Company Overview and Key Focus Areas

Wex operates as a business-to-business (B2B) financial technology company. Its core services include payment processing for fleet operations, corporate expense management, and cloud-based benefits administration. The company delivers payment solutions, data-driven insights, and technology infrastructure for customers in transportation, healthcare, and business services.

Recent business priorities have centered on enhancing technological capabilities, expanding market reach, and maintaining regulatory compliance. Technology remains a central advantage, as Wex leverages artificial intelligence (AI), automation, and proprietary data platforms to streamline operations and deliver value to customers. Strong financial management and a focus on customer-centric solutions are positioned as key factors for ongoing competitiveness and shareholder value.

Quarter in Review: Segment Performance and Trends

The results for the period showed varying performance across Wex’s key segments. The Mobility division, which processes fleet fuel and vehicle payments, remained the largest part of the business at approximately 50% of company revenue. Segment revenue (GAAP) dropped to $346.2 million, representing a 4% decline year over year. Lower fuel prices had a $15.9 million negative impact on total company revenue. Mobility payment processing transactions were down 4%, and total processed gallons fell 1.9% year over year. The segment’s adjusted operating margin also compressed by 4.2 percentage points to 38.7%. These numbers indicate that both volume and pricing pressures continue to affect activity levels within fleet services, with macroeconomic trends such as fluctuating fuel prices playing a major role.

In the Corporate Payments segment, which supports virtual cards and embedded payments for business expenses, GAAP revenue fell 12% year over year to $118.3 million. The most pronounced impact was from a 20% decline in purchase volume.—a trend management expects to move past later in the year. Despite the decrease in revenue, the net interchange rate (a measure of revenue per payment processed) improved from 0.45% in Q2 2024 to 0.48%. The segment’s adjusted operating margin dropped sharply by 13.6 percentage points to 41.9% compared to Q2 2024. This significant margin contraction highlights the impact of both mix changes within corporate payments and increased spending to support new business models.

The Benefits segment, which delivers cloud-based benefits administration and health savings account (HSA) solutions, stood out as a positive area. Revenue increased 9% year over year to $195.1 million, with the number of software-as-a-service (SaaS) accounts rising 6% to 21.2 million. Growth in average HSA assets was also notable at 11%. Segment adjusted operating income margin for Benefits expanded by 3.9 percentage points to 43.5% compared to Q2 2024. This segment demonstrated both resilience to macroeconomic headwinds and effectiveness of its growth initiatives, outperforming industry-wide benchmarks during the period.

Wex has continued investing in technology, specifically leveraging AI automation to enhance customer experience and drive operational efficiencies. For instance, the company has rolled out new embedded payments features in both Europe and the US, supporting flexible funding solutions for corporate clients. Management also noted ongoing automation projects and cloud migration—modernization efforts aimed at keeping Wex’s offerings competitive and high-value to customers. However, much of the expected return from these investments is likely to be realized over several quarters, rather than immediately.

Financial Management, Cash Flow, and Special Items

Throughout the quarter, Wex prioritized aggressive share repurchase activity, reducing its basic shares outstanding by approximately 13.1% versus the prior year as of Q1 2025. This buyback reduced the share count, supporting per-share earnings metrics despite lower GAAP net income. Cash and equivalents (GAAP) grew to $772.6 million, but long-term debt also increased to $3.91 billion as of June 30, 2025. Operating cash flow (GAAP) was $264.6 million, while adjusted free cash flow (non-GAAP) was $194.3 million, down 8.4% from Q2 2024.

Overall margin compression was clear across the company. Adjusted operating margins fell, reflecting both mix changes and higher operating expenses, including increased spending on sales and marketing. Interest expense (GAAP) rose to $65.0 million.

Looking Ahead: Guidance and Developing Themes

Management provided a positive outlook for Q3 2025 and FY2025, raising revenue (GAAP) and adjusted EPS (non-GAAP) guidance above prior ranges for FY2025. For Q3 2025, WEX expects GAAP revenue between $669 million and $689 million, and adjusted (non-GAAP) EPS between $4.30 and $4.50. For FY2025, guidance now calls for revenue between $2.61 billion and $2.65 billion and adjusted EPS (non-GAAP) between $15.37 and $15.77. Assumptions for FY2025 include an average US fuel price of $3.21 per gallon and a non-GAAP tax rate of 25%.

Wex continues to highlight the strength of its sales pipeline. While the quarter reflected outperformance against expectations, management acknowledged the persistent headwinds in core Mobility and Corporate Payments volumes. Investors should watch for signs of sustained recovery in these metrics and for the long-term benefits of ongoing technology investments to materialize.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.