Feeling impact of pandemic, WEX posts double-digit drops in Q3 revenue, earnings
Photo / Peter Van Allen
WEX Inc.'s new building, at 100 Fore St. in Portland, is shared with Northeastern University's Roux Institute.
WEX Inc. (NYSE: WEX), a Portland-based financial technology service provider, on Thursday posted a drop in third-quarter revenues and earnings, as the pandemic took its toll on the company's travel and corporate payment-processing businesses.
Third-quarter revenue fell 17% from a year ago to $382.1 million while adjusted net income attributable to shareholders was 39% lower, at $1.59 per diluted share.
The quarterly earnings per share figure missed a $1.75 per share consensus forecast of analysts polled by Zacks Investment Research, which noted that WEX has surpassed consensus estimates once over the last four quarters.
WEX's breakdown of business units showed that purchase volume in travel and corporate solutions slumped 59% to $4.7 billion, while total fuel transactions processed decreased 8% to 149.6 million.
Still, there were some positive numbers for the company. The average number of vehicles serviced was up 7% from a year ago, while health and employee benefits solutions' average number of software-as-a-service accounts in the United States grew 12% to 14.6 million.
“In the third quarter, we again demonstrated our ability to adapt to the rapidly changing operating environment," WEX President and CEO Melissa Smith said in a news release. "While demand remained muted due to global uncertainty around COVID-19, spend volumes across all segments steadily recovered as we progressed through the quarter."
Smith noted, for example, that WEX's corporate payments customers and U.S. health business experienced year-over-year top-line growth, driven by the recovery of business-to-business payments volumes and increased software-as-a-service accounts. She also said WEX was encouraged by sequential improvement in its fleet segment, driven by positive "over-the-road" volume trends.
“We remain focused on positioning WEX for sustained long-term growth once market conditions recover" by investing in areas of the business that are growing and expanding its technology offerings, she added.
"I am pleased with our efforts to successfully control what we could during these unprecedented times and deliver against key priorities this quarter. Our sales momentum continues to be strong which is important to meeting our long-term growth targets and creates confidence in the future of WEX.”
'Ample liquidity'
WEX CFO Roberto Simon noted a gradual improvement in business activity and volume across all segments as the company continued to focus on careful and strategic capital allocation as well as disciplined cost and risk management.
“Looking ahead," he said, "we expect revenue to level off in the fourth quarter, and to ramp up investments in select high-growth areas of our business to position WEX advantageously for future opportunities. Importantly, we are on track to meet the cost containment program outlined earlier this year, and we have ample liquidity with a strong balance sheet.”
Shares of WEX on Thursday morning were trading below $130, after closing Wednesday at $133.58. WEX has a market capitalization of $5.9 billion.
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