WEX Inc. Reports Second Quarter 2022 Financial Results

Rhea-AI Summary

WEX reported a record second-quarter revenue of $598 million, up 30% year-over-year, driven by a 77% increase in total purchase volume to $37 billion. The company achieved a GAAP net income of $0.76 per diluted share, compared to a loss last year, while adjusted net income surged 61% to $3.71 per share. Operating margins improved, with GAAP at 28.6% and adjusted at 42.3%. WEX raised its full-year revenue guidance to $2.250 billion to $2.280 billion, reflecting strong operational momentum and planned investments in technology and product innovation.

Positive

• Record Q2 revenue of $598 million, a 30% increase year-over-year.
• 77% year-over-year growth in total purchase volume, reaching $37 billion.
• GAAP net income increased to $0.76 per diluted share from a loss last year.
• Adjusted net income per diluted share rose 61% to $3.71.
• Operating income margins improved: GAAP at 28.6%, adjusted at 42.3%.
• Raised full-year revenue guidance to $2.250-$2.280 billion.

Negative

• Negative impact from foreign exchange rates totaling $8.4 million.

2Q revenue increased 30% year-over-year to a record $598 million

2Q GAAP net income per share increased to $0.76 per diluted share; 2Q adjusted net income per share increased 61% year-over-year to $3.71 per diluted share

2Q GAAP operating income margin of 28.6% and adjusted operating income margin of 42.3%

Total purchase volume increased 77% year-over-year to $37 billion

Raises full-year 2022 financial guidance

PORTLAND, Maine--(BUSINESS WIRE)-- WEX (NYSE: WEX), the global commerce platform that simplifies the business of running a business, today reported financial results for the three and six months ended June 30, 2022.

“I am pleased to report that in the second quarter, we once again delivered record revenue and adjusted net income per share, driven by strong volume trends across the Company and favorable fuel prices,” said Melissa Smith, WEX’s Chair and Chief Executive Officer.

Ms. Smith added, “I'm proud of this performance, and it is a testament to our team's continued hard work that our results exceeded our high expectations. I believe we are well positioned as we continue to expand and diversify our offerings that businesses rely upon. We are also making targeted investments, which we believe will further solidify our market leadership position, accelerate our strategy, and enhance our speed to market.”

Second Quarter 2022 Financial Results

Total revenue for the second quarter of 2022 increased 30% to $598.2 million from $459.5 million for the second quarter of 2021. The revenue increase in the quarter includes a $64.2 million favorable impact from fuel prices and spreads and an $8.4 million negative impact from foreign exchange rates.

Net income attributable to shareholders on a GAAP basis increased by $68.0 million to net income of $34.1 million, or $0.76 per diluted share for the second quarter of 2022, compared with a net loss of $33.9 million, or $(0.76) per diluted share, for the second quarter of 2021. The Company's adjusted net income attributable to shareholders, which is a non-GAAP measure, was $169.4 million for the second quarter of 2022, or $3.71 per diluted share, up 61% per diluted share from $104.9 million or $2.31 per diluted share for the same period last year. GAAP operating income margin was 28.6%. Adjusted operating income margin was 42.3% in the second quarter of 2022 compared to 36.3% in the prior year. See Exhibit 5 for information on the calculation of adjusted operating income margin. See Exhibit 1 for a full explanation and reconciliation of adjusted net income attributable to shareholders, adjusted net income attributable to shareholders per diluted share and adjusted operating income to the most directly comparable GAAP financial measures.

Second Quarter 2022 Performance Metrics

• Total volume across the Company totaled $56.6 billion, an increase of 60% from the second quarter of 2021.
• Fleet Solutions segment payment processing transactions increased 10% from the second quarter of 2021 to 143.2 million.
• Average number of vehicles serviced was approximately 17.5 million, an increase of 8% from the second quarter of 2021.
• Health and Employee Benefit Solutions' average number of Software-as-a-Service (SaaS) accounts in the U.S. grew 7% to 17.6 million from 16.4 million in the second quarter of 2021.
• Travel and Corporate Solutions' segment purchase volume grew 96% to $17.1 billion from $8.7 billion in the second quarter of 2021.
• During Q2 the company purchased approximately 520,000 shares of its stock for a total cost of approximately $81 million.

“Building on the momentum we had after the first quarter, we delivered a record-breaking second quarter in terms of both revenue and adjusted earnings by a wide margin,” said Jagtar Narula, WEX’s Chief Financial Officer. “I’m pleased to share that we are raising our full year guidance, while simultaneously making targeted investments in specific areas of strategic focus, including cross-sell, additional enhancements to our technology, product innovation including EV’s and process simplification.”

Financial Guidance and Assumptions

The Company provides revenue guidance on a GAAP basis and earnings guidance on a non-GAAP basis, due to the uncertainty and the indeterminate amount of certain elements that are included in reported GAAP earnings.

• For the third quarter of 2022, the Company expects revenue in the range of $580 million to $590 million and adjusted net income in the range of $152 million to $156 million, or $3.35 to $3.45 per diluted share.

• For the full year 2022, the Company now expects revenue in the range of $2.250 billion to $2.280 billion, up from the prior guidance range of $2.155 billion to $2.195 billion. Adjusted net income is now expected to be in the range of $592 million to $603 million, or $13.05 to $13.30 per diluted share, an increase from the prior guidance range of $569 million to $588 million, or $12.40 to $12.80 per diluted share.

Third quarter and full year 2022 guidance is based on an assumed average U.S. retail fuel prices of $4.50 and $4.36 per gallon, respectively. The fuel prices referenced above are based on the applicable NYMEX futures price from the week of July 18, 2022. Our guidance assumes approximately 46.5 million fully diluted shares outstanding for the full year.

The Company's adjusted net income guidance, which is a non-GAAP measure, excludes unrealized gains and losses on financial instruments, net foreign currency gains and losses, changes in fair value of contingent consideration, acquisition-related intangible amortization, other acquisition and divestiture related items, stock-based compensation, other costs, debt restructuring and debt issuance cost amortization, adjustments attributable to our non-controlling interests and certain tax related items. We are unable to reconcile our adjusted net income guidance to the comparable GAAP measure without unreasonable effort because of the difficulty in predicting the amounts to be adjusted, including, but not limited to, foreign currency exchange rates, unrealized gains and losses on financial instruments, and acquisition and divestiture related items, which may have a significant impact on our financial results.

Additional Information

Management uses the non-GAAP measures presented within this earnings release to evaluate the Company's performance on a comparable basis. Management believes that investors may find these measures useful for the same purposes, but cautions that they should not be considered a substitute for, or superior to, disclosure in accordance with GAAP.

To provide investors with additional insight into its operational performance, WEX has included in this earnings release in: Exhibit 1, reconciliations of non-GAAP measures referenced in this earnings release; in Exhibit 2, tables illustrating the impact of foreign currency rates and fuel prices for each of our reportable segments for the three and six months ended June 30, 2022; and in Exhibit 3, a table of selected non-financial metrics for the quarter ended June 30, 2022 and the four preceding quarters. The Company is also providing segment revenue for the three and six months ended June 30, 2022 and 2021 in Exhibit 4 and information regarding segment adjusted operating income margin and adjusted operating income margin in Exhibit 5.

Conference Call Details

In conjunction with this announcement, WEX will host a conference call today, July 28, 2022, at 10:00 a.m. (ET). As previously announced, the conference call will be webcast live on the Internet, and can be accessed along with the accompanying slides at the Investor Relations section of the WEX website, www.wexinc.com. The live conference call also can be accessed by dialing (888) 510-2008 or (646) 960-0306. The Conference ID number is 2237921. A replay of the webcast and the accompanying slides will be available on the Company's website.

About WEX

WEX (NYSE: WEX) is the global commerce platform that simplifies the business of running a business. WEX has created a powerful ecosystem that offers seamlessly embedded, personalized solutions for its customers around the world. Through its rich data and specialized expertise in simplifying benefits, reimagining mobility and paying and getting paid, WEX aims to make it easy for companies to overcome complexity and reach their full potential. For more information, please visit www.wexinc.com.

Forward-Looking Statements

This earnings release contains forward-looking statements, including statements regarding: assumptions underlying the Company's future financial performance; future operations; future growth opportunities and expectations; expectations for future revenue performance; expectations for the macro environment; assumptions regarding future fuel prices; assumptions regarding Fleet credit loss; assumptions regarding our income tax rate; assumptions regarding the number of fully diluted shares outstanding; and expectations for volumes. Any statements that are not statements of historical facts may be deemed to be forward-looking statements. When used in this earnings release, the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, including: the effects of general economic conditions, including a decline in demand for fuel, travel related services, or healthcare related services, and payment and transaction processing activity; the impact of fluctuations in fuel prices and fuel spreads, including the resulting impact on the Company’s revenues and net income; the failure to maintain or renew key customer and partner agreements and relationships, or to maintain volumes under such agreements; breaches of, or other issues with, the Company’s technology systems or those of its third-party service providers and any resulting negative impact on its reputation, liabilities or relationships with customers or merchants; the actions of regulatory bodies, including banking and securities regulators, and the Company’s and its industrial bank’s responses thereto, or possible changes in banking or financial regulations impacting the Company’s industrial bank, the Company as the corporate parent or other subsidiaries or affiliates; the failure to comply with the applicable requirements of MasterCard or Visa contracts and rules; the extent to which the COVID-19 pandemic, including the emergence of new variants, and measures taken in response thereto impact the Company’s employees, business, results of operations and financial condition in excess of current expectations, particularly with respect to demand for worldwide travel; the impact and size of credit losses, including losses attributable to fraud; failure to expand the Company’s technological capabilities and service offerings as rapidly as the Company’s competitors; changes in interest rates and the rate of inflation; the ability to attract and retain employees; limitations on or compression of interchange fees; the effects of the Company’s business expansion and acquisition efforts; the failure of corporate investments to result in anticipated strategic value; the failure to comply with the Treasury Regulations applicable to non-bank custodians; potential adverse changes to business or employee relationships, including those resulting from the completion of an acquisition; uncertainty of the expected financial performance of the combined operations following completion of an acquisition; the failure to complete or successfully integrate the Company’s acquisitions or to realize anticipated synergies and cost savings from such acquisitions; unexpected costs, charges, or expenses resulting from an acquired company or business; the impact of changes to the Company’s credit standards; the impact of foreign currency exchange rates on the Company’s operations, revenue and income; the impact of the Company’s debt instruments on the Company’s operations; the impact of leverage on the Company’s operations, results or borrowing capacity generally, and as a result of acquisitions specifically; the impact of sales or dispositions of significant amounts of the Company’s outstanding common stock into the public market, or the perception that such sales or dispositions could occur; the possible dilution to the Company’s stockholders caused by the issuance of additional shares of common stock or equity-linked securities, whether as result of the Company’s convertible notes or otherwise; the impact of the transition from LIBOR as a global benchmark to a replacement rate; the incurrence of impairment charges if the Company’s assessment of the fair value of certain of its reporting units changes; the uncertainties of litigation; as well as other risks and uncertainties identified in Item 1A of the Company’s Annual Report of Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 1, 2022. The Company's forward-looking statements do not reflect the potential future impact of any alliance, merger, acquisition, disposition or stock repurchases. The forward-looking statements speak only as of the date of this earnings release and undue reliance should not be placed on these statements. The Company disclaims any obligation to update any forward-looking statements as a result of new information, future events or otherwise.

WEX INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)
	Three months ended June 30,								Six months ended June 30,
	2022				2021				2022				2021
Revenues
Payment processing revenue	$	312,305			$	213,426			$	551,783			$	401,815
Account servicing revenue		137,638				132,997				277,579				251,620
Finance fee revenue		85,310				59,499				163,892				111,652
Other revenue		62,984				53,561				122,518				105,153
Total revenues		598,237				459,483				1,115,772				870,240
Cost of services
Processing costs		137,435				116,208				269,942				225,970
Service fees		14,856				13,759				30,606				24,905
Provision for credit losses		42,186				12,962				67,826				18,021
Operating interest		3,197				2,271				5,497				4,895
Depreciation and amortization		26,633				26,451				52,635				55,645
Total cost of services		224,307				171,651				426,506				329,436
General and administrative		83,482				79,543				162,145				165,974
Sales and marketing		80,440				85,605				154,385				163,952
Depreciation and amortization		38,877				40,406				79,331				78,059
Operating income		171,131				82,278				293,405				132,819
Financing interest expense		(31,820	)			(32,473	)			(61,509	)			(65,757	)
Change in fair value of contingent consideration		(88,200	)			(47,700	)			(104,800	)			(47,700	)
Net foreign currency (loss) gain		(19,408	)			1,342				(14,402	)			(1,413	)
Net unrealized gain on financial instruments		16,894				6,013				66,721				13,046
Income before income taxes		48,597				9,460				179,415				30,995
Income tax expense (benefit)		14,468				(746	)			56,500				(2,416	)
Net income		34,129				10,206				122,915				33,411
Less: Net income from non-controlling interests		—				239				268				965
Net income attributable to WEX Inc.	$	34,129			$	9,967			$	122,647			$	32,446
Change in value of redeemable non-controlling interest		—				(43,823	)			34,245				(68,867	)
Net income (loss) attributable to shareholders	$	34,129			$	(33,856	)		$	156,892			$	(36,421	)
Net income (loss) attributable to shareholders per share:
Basic	$	0.76			$	(0.76	)		$	3.50			$	(0.82	)
Diluted	$	0.76			$	(0.76	)		$	3.47			$	(0.82	)
Weighted average common shares outstanding:
Basic		44,790				44,788				44,851				44,566
Diluted		45,077				44,788				45,211				44,566

WEX INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited)
	June 30, 2022			December 31, 2021
Assets
Cash and cash equivalents	$	438,754		$	588,923
Restricted cash		815,496			667,915
Accounts receivable		4,444,958			2,891,242
Investment securities		1,442,416			948,677
Securitized accounts receivable, restricted		171,415			125,186
Prepaid expenses and other current assets		112,995			77,569
Total current assets		7,426,034			5,299,512
Property, equipment and capitalized software		180,954			179,531
Goodwill and other intangible assets		4,428,374			4,551,353
Investment securities		37,253			39,650
Deferred income taxes, net		7,010			5,635
Other assets		243,296			231,147
Total assets	$	12,322,921		$	10,306,828
Liabilities and Stockholders’ Equity
Accounts payable	$	1,958,545		$	1,021,911
Accrued expenses		529,865			476,971
Restricted cash payable		815,520			668,014
Short-term deposits		2,885,727			2,026,420
Short-term debt, net		175,834			155,769
Other current liabilities		33,387			50,614
Total current liabilities		6,398,878			4,399,699
Long-term debt, net		2,761,531			2,695,365
Long-term deposits		588,932			652,214
Deferred income taxes, net		181,448			192,965
Other liabilities		575,765			273,706
Total liabilities		10,506,554			8,213,949
Redeemable non-controlling interest		—			254,106
Stockholders’ Equity
Total stockholders’ equity		1,816,367			1,838,773
Total liabilities and stockholders’ equity	$	12,322,921		$	10,306,828

Exhibit 1
Reconciliation of Non-GAAP Measures (in thousands, except per share data) (unaudited)
Reconciliation of GAAP Net Income (Loss) Attributable to Shareholders to Adjusted Net Income Attributable to Shareholders
	Three Months Ended June 30,
	2022								2021
					per diluted share								per diluted share
Net income (loss) attributable to shareholders	$	34,129			$	0.76			$	(33,856	)		$	(0.76	)
Unrealized gain on financial instruments		(16,894	)			(0.37	)			(6,013	)			(0.13	)
Net foreign currency loss (gain)		19,408				0.43				(1,342	)			(0.03	)
Change in fair value of contingent consideration		88,200				1.96				47,700				1.07
Acquisition–related intangible amortization		42,538				0.94				45,294				1.01
Other acquisition and divestiture related items		6,461				0.14				10,690				0.24
Stock–based compensation		25,267				0.56				21,662				0.48
Other costs		7,926				0.18				1,705				0.04
Debt restructuring and debt issuance cost amortization		4,694				0.10				11,461				0.26
ANI adjustments attributable to non–controlling interests		—				—				43,206				0.96
Tax related items		(42,348	)			(0.94	)			(35,613	)			(0.80	)
Dilutive impact of stock awards1		—				—				—				(0.03	)
Dilutive impact of convertible debt 2		—				(0.05	)			—				—
Adjusted net income attributable to shareholders	$	169,381			$	3.71			$	104,894			$	2.31
	Six Months Ended June 30,
	2022								2021
					per diluted share								per diluted share
Net income (loss) attributable to shareholders	$	156,892			$	3.47			$	(36,421	)		$	(0.82	)
Unrealized gain on financial instruments		(66,721	)			(1.48	)			(13,046	)			(0.29	)
Net foreign currency loss		14,402				0.32				1,413				0.03
Change in fair value of contingent consideration		104,800				2.32				47,700				1.07
Acquisition–related intangible amortization		85,257				1.89				87,748				1.97
Other acquisition and divestiture related items		11,001				0.24				25,486				0.57
Stock–based compensation		50,487				1.12				40,605				0.91
Other costs		16,105				0.36				13,942				0.31
Debt restructuring and debt issuance cost amortization		7,973				0.18				16,553				0.37
ANI adjustments attributable to non–controlling interests		(34,587	)			(0.77	)			67,006				1.50
Tax related items		(45,173	)			(1.00	)			(64,818	)			(1.45	)
Dilutive impact of stock awards1		—				—				—				(0.07	)
Dilutive impact of convertible debt 2		—				(0.06	)			—				—
Adjusted net income attributable to shareholders	$	300,436			$	6.59			$	186,168			$	4.10

¹ As the Company reported a net loss for the three and six months ended June 30, 2021 under U.S. Generally Accepted Accounting Principles (“GAAP”), the diluted weighted average shares outstanding equals the basic weighted average shares outstanding for those periods. The non-GAAP adjustments described above resulted in adjusted net income attributable to shareholders (versus a loss on a GAAP basis) for the three and six months ended June 30, 2021. Therefore, dilutive common stock equivalents have been included in the calculation of adjusted diluted weighted average shares outstanding to arrive at adjusted per share data.

² During the three and six months ended June 30, 2022, the dilutive impact of convertible notes has been calculated under the 'if-converted' method in accordance with GAAP. Under such method, $3.8 million and $7.6 million of interest expense associated with our convertible notes, net of tax, was added back to adjusted net income for the three and six months ended June 30, 2022, respectively, and approximately 1.6 million shares of the Company’s common stock associated with the assumed conversion of the convertible notes as of the beginning of the periods were included in the calculation of adjusted net income per diluted share, as the effect of including such adjustments was dilutive.

Reconciliation of GAAP Operating Income to Total Segment Adjusted Operating Income and Adjusted Operating Income
	Three Months Ended June 30,								Six Months Ended June 30,
	2022				2021				2022				2021
Operating income	$	171,131			$	82,278			$	293,405			$	132,819
Unallocated corporate expenses		18,986				17,174				39,997				33,383
Acquisition-related intangible amortization		42,538				45,294				85,257				87,748
Other acquisition and divestiture related items		6,461				10,690				11,001				25,486
Stock-based compensation		25,267				21,662				50,487				40,605
Other costs		7,926				1,705				16,105				13,942
Debt restructuring costs		(17	)			5,299				(29	)			5,936
Total segment adjusted operating income	$	272,292			$	184,102			$	496,223			$	339,919
Unallocated corporate expenses		(18,986	)			(17,174	)			(39,997	)			(33,383	)
Adjusted operating income	$	253,306			$	166,928			$	456,226			$	306,536

The Company's non-GAAP adjusted net income excludes unrealized gains and losses on financial instruments, net foreign currency gains and losses, changes in fair value of contingent consideration, acquisition-related intangible amortization, other acquisition and divestiture related items, stock-based compensation, other costs, debt restructuring and debt issuance cost amortization, adjustments attributable to our non-controlling interests and certain tax related items.

The Company's non-GAAP adjusted operating income excludes acquisition-related intangible amortization, other acquisition and divestiture related items, stock-based compensation, other costs and debt restructuring costs. Total segment adjusted operating income incorporates these same adjustments and further excludes unallocated corporate expenses.

Although adjusted net income, adjusted operating income and total segment adjusted operating income are not calculated in accordance with GAAP, these non-GAAP measures are integral to the Company's reporting and planning processes and the chief operating decision maker of the Company uses segment adjusted operating income to allocate resources among our operating segments. The Company considers these measures integral because they exclude the above specified items that the Company's management excludes in evaluating the Company's performance. Specifically, in addition to evaluating the Company's performance on a GAAP basis, management evaluates the Company's performance on a basis that excludes the above items because:

• Exclusion of the non-cash, mark-to-market adjustments on financial instruments, including interest rate swap agreements and investment securities, helps management identify and assess trends in the Company's underlying business that might otherwise be obscured due to quarterly non-cash earnings fluctuations associated with these financial instruments. Additionally, the non-cash mark-to-market adjustments on financial instruments are difficult to forecast accurately, making comparisons across historical and future quarters difficult to evaluate.

• Net foreign currency gains and losses primarily result from the remeasurement to functional currency of cash, accounts receivable and accounts payable balances, certain intercompany notes denominated in foreign currencies and any gain or loss on foreign currency hedges relating to these items. The exclusion of these items helps management compare changes in operating results between periods that might otherwise be obscured due to currency fluctuations.

• The change in fair value of contingent consideration, which is related to the acquisition of certain contractual rights to serve as custodian or sub-custodian to health savings accounts, is dependent upon changes in future interest rate assumptions and has no significant impact on the ongoing operations of the Company. Additionally, the non-cash, mark-to-market adjustments on financial instruments are difficult to forecast accurately, making comparisons across historical and future quarters difficult to evaluate.

• The Company considers certain acquisition-related costs, including certain financing costs, investment banking fees, warranty and indemnity insurance, certain integration-related expenses and amortization of acquired intangibles, as well as gains and losses from divestitures to be unpredictable, dependent on factors that may be outside of our control and unrelated to the continuing operations of the acquired or divested business or the Company. In addition, the size and complexity of an acquisition, which often drives the magnitude of acquisition-related costs, may not be indicative of such future costs. The Company believes that excluding acquisition-related costs and gains or losses on divestitures facilitates the comparison of our financial results to the Company's historical operating results and to other companies in our industry.

• Stock-based compensation is different from other forms of compensation as it is a non-cash expense. For example, a cash salary generally has a fixed and unvarying cash cost. In contrast, the expense associated with an equity-based award is generally unrelated to the amount of cash ultimately received by the employee, and the cost to the Company is based on a stock-based compensation valuation methodology and underlying assumptions that may vary over time.

• We exclude certain other costs when evaluating our continuing business performance when such items are not consistently occurring and do not reflect expected future operating expense, nor provide insight into the fundamentals of current or past operations of our business. These include costs related to certain identified initiatives (including technology initiatives) to further streamline the business, improve the Company's efficiency, create synergies and globalize the Company's operations, all with an objective to improve scale and efficiency and increase profitability going forward. For the six months ended June 30, 2021, other costs additionally include a penalty incurred on a vendor contract termination.

• Debt restructuring and debt issuance cost amortization are unrelated to the continuing operations of the Company. Debt restructuring costs are not consistently occurring and do not reflect expected future operating expense, nor do they provide insight into the fundamentals of current or past operations of our business. In addition, since debt issuance cost amortization is dependent upon the financing method, which can vary widely company to company, we believe that excluding these costs helps to facilitate comparison to historical results as well as to other companies within our industry.

• The adjustments attributable to non-controlling interests, including adjustments to the redemption value of a non-controlling interest, have no significant impact on the ongoing operations of the business.

• The tax related items are the difference between the Company’s U.S. GAAP tax provision and a pro forma tax provision based upon the Company’s adjusted net income before taxes as well as the impact from certain discrete tax items. The methodology utilized for calculating the Company’s adjusted net income tax provision is the same methodology utilized in calculating the Company’s U.S. GAAP tax provision.

• The Company does not allocate certain corporate expenses to our operating segments, as these items are centrally controlled and are not directly attributable to any reportable segment.

For the same reasons, WEX believes that adjusted net income, adjusted operating income and total segment adjusted operating income may also be useful to investors when evaluating the Company's performance. However, because adjusted net income, adjusted operating income and total segment adjusted operating income are non-GAAP measures, they should not be considered as a substitute for, or superior to, net income, operating income or cash flows from operating activities as determined in accordance with GAAP. In addition, adjusted net income, adjusted operating income and total segment adjusted operating income as used by WEX may not be comparable to similarly titled measures employed by other companies.

Exhibit 2 Impact of Certain Macro Factors on Reported Revenue and Adjusted Net Income (in thousands, except per share data) (unaudited)
The tables below show the impact of certain macro factors on reported revenue:
	Segment Revenue Results
	Fleet Solutions							Travel and Corporate Solutions						Health and Employee Benefit Solutions						Total WEX Inc.
	Three months ended June 30,
	2022				2021			2022			2021			2022			2021			2022				2021
Reported revenue	$	379,223			$	274,388		$	100,410		$	81,762		$	118,604		$	103,333		$	598,237			$	459,483
FX impact (favorable) / unfavorable	$	4,849			$	—		$	3,565		$	—		$	—		$	—		$	8,414			$	—
PPG impact (favorable) / unfavorable	$	(64,203	)		$	—		$	—		$	—		$	—		$	—		$	(64,203	)		$	—
	Segment Revenue Results
	Fleet Solutions							Travel and Corporate Solutions						Health and Employee Benefit Solutions						Total WEX Inc.
	Six Months Ended June 30,
	2022				2021			2022			2021			2022			2021			2022				2021
Reported revenue		698,362				518,225			177,661			152,404			239,749			199,611		$	1,115,772			$	870,240
FX impact (favorable) / unfavorable	$	6,933			$	—		$	4,259		$	—		$	—		$	—		$	11,192			$	—
PPG impact (favorable) / unfavorable	$	(105,342	)		$	—		$	—		$	—		$	—		$	—		$	(105,342	)		$	—

To determine the impact of foreign exchange translation (“FX”) on revenue, revenue from entities whose functional currency is not denominated in U.S. dollars, as well as revenue from purchase volume transacted in non-U.S. denominated currencies, were translated using the weighted average exchange rates for the same period in the prior year, exclusive of revenue derived from acquisitions for one year following the acquisition date.

To determine the impact of price per gallon of fuel (“PPG”) on revenue, revenue subject to changes in fuel prices was calculated based on the average retail price of fuel for the same period in the prior year for the portion of our business that earns revenue based on a percentage of fuel spend, exclusive of revenue derived from acquisitions for one year following the acquisition dates. For the portions of our business that earn revenue based on margin spreads, revenue was calculated utilizing the comparable margin from the prior year.

The table below shows the impact of certain macro factors on Adjusted Net Income:

	Segment Estimated Adjusted Net Income Impact
	Fleet Solutions							Travel and Corporate Solutions						Health and Employee Benefit Solutions
	Three months ended June 30,
	2022				2021			2022			2021			2022			2021
FX impact (favorable) / unfavorable	$	2,081			$	—		$	2,529		$	—		$	16		$	—
PPG impact (favorable) / unfavorable	$	(40,347	)		$	—		$	—		$	—		$	—		$	—
	Segment Estimated Adjusted Net Income Impact
	Fleet Solutions							Travel and Corporate Solutions						Health and Employee Benefit Solutions
	Six months ended June 30,
	2022				2021			2022			2021			2022			2021
FX impact (favorable) / unfavorable	$	2,895			$	—		$	2,550		$	—		$	24		$	—
PPG impact (favorable) / unfavorable	$	(66,065	)		$	—		$	—		$	—		$	—		$	—

To determine the estimated adjusted net income impact of FX on revenue and expenses from entities whose functional currency is not denominated in U.S. dollars, as well as revenue and variable expenses from purchase volume transacted in non-U.S. denominated currencies, amounts were translated using the weighted average exchange rates for the same period in the prior year, net of tax, exclusive of revenue and expenses derived from acquisitions for one year following the acquisition date.

To determine the estimated adjusted net income impact of PPG, revenue and certain variable expenses impacted by changes in fuel prices were adjusted based on the average retail price of fuel for the same period in the prior year for the portion of our business that earns revenue based on a percentage of fuel spend, net of applicable taxes, exclusive of revenue and expenses derived from acquisitions for one year following the acquisition dates. For the portions of our business that earn revenue based on margin spreads, revenue was adjusted to the comparable margin from the prior year, net of non-controlling interests and applicable taxes.

Exhibit 3 Selected Non-Financial Metrics (unaudited)
	Q2 2022				Q1 2022				Q4 2021				Q3 2021				Q2 2021
Fleet Solutions:
Payment processing transactions (000s) (1)		143,163				132,663				132,894				134,029				130,104
Payment processing gallons of fuel (000s) (2)		3,690,875				3,549,562				3,569,979				3,576,781				3,483,695
Average US fuel price (US$ / gallon)	$	4.98			$	3.95			$	3.42			$	3.23			$	3.04
Payment processing $ of fuel (000s) (3)	$	18,639,733			$	14,390,257			$	12,600,745			$	11,907,220			$	10,995,418
Net payment processing rate (4)		1.09	%			1.06	%			1.16	%			1.09	%			1.15	%
Payment processing revenue (000s)	$	202,359			$	151,906			$	146,333			$	130,006			$	126,450
Net late fee rate (5)		0.38	%			0.44	%			0.48	%			0.45	%			0.41	%
Late fee revenue (000s) (6)	$	70,830			$	63,110			$	60,101			$	53,104			$	45,235
Travel and Corporate Solutions:
Purchase volume (000s) (7)	$	17,119,962			$	11,809,450			$	10,916,015			$	12,799,555			$	8,736,019
Net interchange rate (8)		0.52	%			0.55	%			0.63	%			0.62	%			0.78	%
Payment solutions processing revenue (000s)	$	88,608			$	65,075			$	68,747			$	79,815			$	68,282
Health and Employee Benefit Solutions:
Purchase volume (000s) (9)	$	1,514,004			$	1,630,218			$	1,146,436			$	1,173,913			$	1,311,131
Average number of SaaS accounts (000s) (10)		17,572				17,847				16,222				16,912				16,380

Definitions and explanations:

⁽¹⁾ Payment processing transactions represents the total number of purchases made by fleets that have a payment processing relationship with WEX.

⁽²⁾ Payment processing gallons of fuel represents the total number of gallons of fuel purchased by fleets that have a payment processing relationship with WEX.

⁽³⁾ Payment processing $ of fuel represents the total dollar value of the fuel purchased by fleets that have a payment processing relationship with WEX.

⁽⁴⁾ Net payment processing rate represents the percentage of the dollar value of each payment processing transaction that WEX records as revenue from merchants, less certain discounts given to customers and network fees.

⁽⁵⁾ Net late fee rate represents late fee revenue as a percentage of fuel purchased by fleets that have a payment processing relationship with WEX.

⁽⁶⁾ Late fee revenue represents fees charged for payments not made within the terms of the customer agreement based upon the outstanding customer receivable balance.

⁽⁷⁾ Purchase volume represents the total dollar value of all WEX issued transactions that use WEX corporate card products and virtual card products.

⁽⁸⁾ Net interchange rate represents the percentage of the dollar value of each payment processing transaction that WEX records as revenue from merchants, less certain discounts given to customers and network fees.

⁽⁹⁾ Purchase volume in the Health and Employee Benefit Solutions segment represents the total US dollar value of all transactions where interchange is earned by WEX.

⁽¹⁰⁾ Average number of Health and Employee Benefit Solutions accounts represents the number of active Consumer Directed Health, COBRA, and billing accounts on our SaaS platforms in the United States.

Exhibit 4 Segment Revenue Information (in thousands) (unaudited)
	Three months ended June 30,						Increase (decrease)						Six months ended June 30,						Increase (decrease)
Fleet Solutions	2022			2021			Amount			Percent			2022			2021			Amount			Percent
Revenues
Payment processing revenue	$	202,359		$	126,450		$	75,909		60	%		$	354,265		$	237,026		$	117,239		49	%
Account servicing revenue		43,860			42,293			1,567		4	%			86,303			82,284			4,019		5	%
Finance fee revenue		85,067			59,258			25,809		44	%			163,472			111,098			52,374		47	%
Other revenue		47,937			46,387			1,550		3	%			94,322			87,817			6,505		7	%
Total revenues	$	379,223		$	274,388		$	104,835		38	%		$	698,362		$	518,225		$	180,137		35	%

	Three months ended June 30,						Increase (decrease)							Six months ended June 30,						Increase (decrease)
Travel and Corporate Solutions	2022			2021			Amount				Percent			2022			2021			Amount				Percent
Revenues
Payment processing revenue	$	88,608		$	68,282		$	20,326			30	%		$	153,683		$	125,530		$	28,153			22	%
Account servicing revenue		10,400			11,222			(822	)		(7	) %			21,158			21,909			(751	)		(3	) %
Finance fee revenue		216			199			17			9	%			357			493			(136	)		(28	) %
Other revenue		1,186			2,059			(873	)		(42	) %			2,463			4,472			(2,009	)		(45	) %
Total revenues	$	100,410		$	81,762		$	18,648			23	%		$	177,661		$	152,404		$	25,257			17	%

	Three months ended June 30,						Increase (decrease)							Six months ended June 30,						Increase (decrease)
Health and Employee Benefit Solutions	2022			2021			Amount				Percent			2022			2021			Amount			Percent
Revenues
Payment processing revenue	$	21,338		$	18,694		$	2,644			14	%		$	43,835		$	39,259		$	4,576		12	%
Account servicing revenue		83,378			79,482			3,896			5	%			170,118			147,427			22,691		15	%
Finance fee revenue		27			42			(15	)		(36	) %			63			61			2		3	%
Other revenue		13,861			5,115			8,746			171	%			25,733			12,864			12,869		100	%
Total revenues	$	118,604		$	103,333		$	15,271			15	%		$	239,749		$	199,611		$	40,138		20	%

Exhibit 5 Segment Adjusted Operating Income and Adjusted Operating Income Margin Information (in thousands) (unaudited)
	Segment Adjusted Operating Income						Segment Adjusted Operating Income Margin(1)
	Three Months Ended June 30,						Three Months Ended June 30,
	2022			2021			2022			2021
Fleet Solutions	$	192,969		$	137,865		50.9	%		50.2	%
Travel and Corporate Solutions	$	51,016		$	17,157		50.8	%		21.0	%
Health and Employee Benefit Solutions	$	28,307		$	29,080		23.9	%		28.1	%
Total segment adjusted operating income	$	272,292		$	184,102		45.5	%		40.1	%
	Segment Adjusted Operating Income						Segment Adjusted Operating Income Margin(1)
	Six Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Fleet Solutions	$	353,070		$	256,123		50.6	%		49.4	%
Travel and Corporate Solutions	$	79,346		$	24,172		44.7	%		15.9	%
Health and Employee Benefit Solutions	$	63,807		$	59,624		26.6	%		29.9	%
Total segment adjusted operating income	$	496,223		$	339,919		44.5	%		39.1	%

⁽¹⁾ Segment adjusted operating income margin is derived by dividing segment adjusted operating income by the revenue of the corresponding segment (or the entire Company in the case of total segment adjusted operating income). See Exhibit 1 for a reconciliation of total segment adjusted operating income to GAAP operating income.

	Three Months Ended June 30,								Six Months Ended June 30,
	2022				2021				2022				2021
Adjusted operating income	$	253,306			$	166,928			$	456,226			$	306,536
Adjusted operating income margin (1)		42.3	%			36.3	%			40.9	%			35.2	%

⁽¹⁾ Adjusted operating income margin is derived by dividing adjusted operating income by total revenues of the entire Company as shown on the Condensed Consolidated Statement of Operations. See Exhibit 1 for a reconciliation of GAAP operating income to adjusted operating income.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220728005124/en/

News media contact:

WEX

Rob Gould, 207-523-7429

robert.gould@wexinc.com

or

Investor contact:

WEX

Steve Elder, 207-523-7769

Steve.Elder@wexinc.com

Source: WEX

FAQ

What were WEX's Q2 2022 earnings results?

WEX reported a Q2 2022 revenue of $598 million, a 30% increase year-over-year, with GAAP net income of $0.76 per diluted share.

How did WEX's total purchase volume change in Q2 2022?

Total purchase volume increased by 77% year-over-year to $37 billion.

What is WEX's guidance for full-year 2022 revenue?

WEX raised its full-year revenue guidance to a range of $2.250 billion to $2.280 billion.

What were WEX's adjusted net income figures for Q2 2022?

Adjusted net income for Q2 2022 was $169.4 million, or $3.71 per diluted share, a 61% increase year-over-year.

What financial metrics did WEX highlight for its second quarter?

WEX reported a GAAP operating income margin of 28.6% and an adjusted operating income margin of 42.3%.