WEX Raises 2026 Outlook as Q3 Revenue Rises 12.8%

WEX Inc. (NYSE: WEX) raised its full-year 2026 revenue and adjusted earnings outlook after higher fuel prices and organic growth helped third-quarter results exceed its previous guidance. The payments company reported a 12.8% increase in quarterly revenue, with most of the gain tied to fuel prices, while adjusted net income per diluted share rose 33.6%.

Revenue for the quarter ended September 30 increased to $780.1 million from $691.8 million a year earlier. Fuel prices contributed a favorable $57.3 million and foreign exchange added $0.8 million. Excluding those effects, revenue grew 4.4% year over year.

GAAP net income attributable to shareholders was $134.1 million, or $3.88 per diluted share, compared with $80.3 million, or $2.30 per share, in the prior-year quarter. Adjusted net income reached $211.9 million, while adjusted net income per diluted share increased to $6.13 from $4.59. Excluding fuel-price and currency effects, adjusted earnings per share grew 14.3%.

Consolidated GAAP operating income was $238.8 million, representing a 30.6% margin. Non-GAAP adjusted operating income totaled $332.5 million, with a margin of 42.6%.

Higher fuel prices drive Mobility growth

Mobility, WEX’s largest segment, generated revenue of $435.1 million, up 20.6% year over year and equal to 55.8% of consolidated revenue. Excluding fuel-price and foreign-exchange effects, segment revenue grew 4.4%.

The average U.S. fuel price was $4.85 per gallon, up 43.4% from the prior-year period and $0.95 above the assumption in WEX’s previous guidance. The difference added about $35 million of revenue relative to the midpoint of the company’s second-quarter outlook.

Higher prices lifted payment-processing dollars of fuel by 42.5% to $18.01 billion, even as payment-processing gallons declined 0.2%. Total Mobility volume rose 40.8% to $27.72 billion, while payment-processing transactions increased 1.7% to 142.3 million. The net payment-processing rate fell nine basis points sequentially to 1.14%, primarily reflecting the effect of higher fuel prices.

Finance fee revenue increased 39.5% to $115.7 million. Credit losses rose by $6 million from a year earlier but equaled 11.7 basis points of spend volume, within WEX’s guidance range of eight to 13 basis points and below the prior-year rate of 12.1 basis points.

Mobility’s GAAP operating margin expanded to 38.7% from 30.9%, while its segment adjusted operating margin increased about 620 basis points to 46.9%. WEX attributed the improvement to higher fuel prices and organic revenue growth.

Benefits revenue rises as investment yields decline

Benefits segment revenue increased 4.8% to $207.6 million. Average SaaS accounts rose 2.8% to 22.1 million, including 7.7% growth in Health Savings Account accounts, while purchase volume increased 8.4%.

Average HSA custodial cash assets grew 11.2% to $5.3 billion and generated $66.4 million of revenue, up from $61.7 million a year earlier. The yield on those assets declined 16 basis points to 4.97% as interest rates fell.

Account-servicing revenue decreased 2.7% to $110.2 million because HSA deposits were transferred from third-party depository banks to WEX Bank. The shift moved revenue from the account-servicing category into other revenue, where returns earned at WEX Bank are recorded.

The segment’s GAAP operating margin was 28.2%, compared with 28.7% a year earlier. Its adjusted operating margin declined about 160 basis points to 42.2%, reflecting higher depreciation expense against what the company described as a seasonally softer revenue base.

Corporate Payments revenue rose 3.5% to $137.4 million. WEX-issued purchase volume increased 6.3%, including 13.1% growth in travel volume and a 24% increase in Direct Accounts Payable purchase volume. Direct Accounts Payable currently produces about 20% of the segment’s annual revenue.

A greater proportion of travel activity contributed to a seven-basis-point sequential decline in the segment’s net interchange rate to 0.46%. Corporate Payments’ GAAP operating margin increased to 41.0% from 39.1%, while its adjusted operating margin rose about 190 basis points to 49.9%, primarily because of lower credit losses.

Full-year guidance increases, largely on fuel assumptions

WEX now expects full-year 2026 net revenue of $2.968 billion to $2.988 billion, an increase of $96 million at the midpoint from its previous guidance. Adjusted net income per diluted share is projected at $21.28 to $21.48, up $1.50 at the midpoint.

The revised outlook assumes an average U.S. retail fuel price of $4.50 per gallon for the full year, $0.59 above the prior assumption. WEX said the updated fuel-price assumption added approximately $91 million to projected revenue and $1.40 to adjusted earnings per share. The company based its estimates on the applicable NYMEX futures curve from the week of October 19.

For the fourth quarter, WEX expects revenue of $760 million to $780 million and adjusted net income per diluted share of $5.67 to $5.87. The outlook assumes an average U.S. retail fuel price of $4.81 per gallon and Mobility credit losses of 17 to 22 basis points. Guidance excludes any share repurchases beyond the approximately $260 million completed through the third quarter.

WEX generated $234.3 million of adjusted free cash flow during the quarter and $764.1 million over the trailing 12 months. It spent $200 million repurchasing 1.09 million shares in the third quarter. Available liquidity was approximately $1.3 billion at quarter-end, while the leverage ratio declined to 2.7 times, within management’s target range of 2.5 to 3.0 times.

The outlook remains sensitive to fuel prices, interest rates, credit and fraud losses, interchange-fee pressure, foreign exchange rates and broader economic conditions. WEX estimated that a $0.10-per-gallon change in fuel prices would affect annualized net revenue by approximately $20 million and adjusted earnings by about $0.35 per diluted share. The company also identified technology disruptions, regulatory changes, competitive pressure, debt and refinancing conditions, and the execution of investments and strategic initiatives among its material uncertainties.