WEX Inc. [WEX] Filings

10-Q 1 wex-20240630.htm 10-Q wex-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-32426

WEX Inc.

(Exact name of registrant as specified in its charter)

Delaware

01-0526993

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

1 Hancock St.,

Portland,

04101

(Address of principal executive offices)

(Zip Code)

(207) 773–8171

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

WEX

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S–T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b–2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act).

☐ Yes ☒ No

Number of shares of common stock outstanding as of July 19, 2024 was 41,084,042.

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TABLE OF CONTENTS
FORWARD–LOOKING STATEMENTS		3
ACRONYMS AND ABBREVIATIONS		5

PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 3 0 , 2024 and 2023 (unaudited)	7
	Condensed Consolidated Statements of Comprehensive Income for the Three and Si x Months Ended June 30 , 2024 and 2023 (unaudited)	8
	Condensed Consolidated Balance Sheets as of June 30 , 2024 (unaudited) and December 31, 2023	9
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31 and J une 30 , 2024 and 2023 (unaudited)	10
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30 , 2024 and 2023 (unaudited)	12
	Notes to Condensed Consolidated Financial Statements	14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.	Controls and Procedures	52


PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 5.	Other	53
Item 6.	Exhibits	54

	SIGNATURE

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Unless otherwise indicated or required by the context, the terms “we,” “us,” “our,” “WEX,” or the “Company,” in this Quarterly Report on Form 10–Q refers to WEX Inc. and all of its subsidiaries that are consolidated under Generally Accepted Accounting Principles in the United States.

FORWARD–LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for statements that are forward-looking and are not statements of historical facts. This Quarterly Report on Form 10-Q includes forward-looking statements including, but not limited to, statements about management’s plans and goals. Any statements in this Quarterly Report that are not statements of historical facts are forward-looking statements. When used in this Quarterly Report, the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “positions,” “confidence,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. Forward-looking statements relate to our future plans, objectives, expectations and intentions and are not historical facts and accordingly involve known and unknown risks and uncertainties and other factors that may cause the actual results or performance to be materially different from future results or performance expressed or implied by these forward-looking statements. The following factors, among others, could cause actual results to differ materially from those contained in forward-looking statements made in this Quarterly Report and in oral statements made by our authorized officers:

•the impact of fluctuations in demand for fuel and the volatility and prices of fuel, including fuel spreads in the Company’s international markets, and the resulting impact on the Company’s margins, revenues, and net income;

•the effects of general economic conditions, including a decline in demand for fuel, corporate payment services, travel related services, or healthcare related products and services;

•the failure to comply with the applicable requirements of Mastercard or Visa contracts and rules;

•the extent to which unpredictable events in the locations in which the Company or the Company’s customers operate or elsewhere may adversely affect the Company’s employees, ability to conduct business, results of operations and financial condition;

•the impact and size of credit losses, including fraud losses, and other adverse effects if the Company fails to adequately assess and monitor credit risk or fraudulent use of our payment cards or systems;

•the impact of changes to the Company’s credit standards;

•limitations on, or compression of, interchange fees;

•the effect of adverse financial conditions affecting the banking system;

•the impact of increasing scrutiny with respect to our environmental, social and governance practices;

•failure to implement new technologies and products;

•the failure to realize or sustain the expected benefits from our cost and organizational operational efficiencies initiatives;

•the failure to compete effectively in order to maintain or renew key customer and partner agreements and relationships, or to maintain volumes under such agreements;

•the ability to attract and retain employees;

•the ability to execute the Company’s business expansion and acquisition efforts and realize the benefits of acquisitions we have completed;

•the failure to achieve commercial and financial benefits as a result of our strategic minority equity investments;

•the impact of foreign currency exchange rates on the Company’s operations, revenue and income and other risks associated with our operations outside the United States;

•the failure to adequately safeguard custodial HSA assets;

•the incurrence of impairment charges if the Company’s assessment of the fair value of certain of its reporting units changes;

•the uncertainties of investigations and litigation;

•the ability of the Company to protect its intellectual property and other proprietary rights;

•the impact of regulatory capital requirements and other regulatory requirements on the operations of WEX Bank or its ability to make payments to WEX Inc.;

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•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;

•changes in interest rates, including those which we must pay for our deposits, and the rate of inflation;

•the ability to refinance certain indebtedness or obtain additional financing;

•the actions of regulatory bodies, including tax, banking and securities regulators, or possible changes in tax, 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 Treasury Regulations applicable to non-bank custodians;

•the impact from 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 the Company’s reputation, liabilities or relationships with customers or merchants;

•the impact of regulatory developments with respect to privacy and data protection;

•the impact of any disruption to the technology and electronic communications networks we rely on;

•the ability to incorporate artificial intelligence in our business successfully and ethically;

•the ability to maintain effective systems of internal controls;

•the impact of provisions in our charter documents, Delaware law and applicable banking laws that may delay or prevent our acquisition by a third party; as well as

•other risks and uncertainties identified in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, and subsequent filings with the Securities and Exchange Commission.

The forward-looking statements speak only as of the date of the initial filing of this Quarterly Report and undue reliance should not be placed on these statements. We disclaim any obligation to update any forward-looking statements as a result of new information, future events or otherwise.

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ACRONYMS AND ABBREVIATIONS

The acronyms and abbreviations identified below are used in this Quarterly Report, including the condensed consolidated financial statements and the notes thereto. The following is provided to aid the reader and provide a reference point when reviewing this Quarterly Report.


Adjusted free cash flow			A non-GAAP measure calculated as cash flows from operating activities, adjusted for net purchases of current investment securities, capital expenditures, net funding activity including the change in net deposits, net advances from the FHLB, and changes in borrowings under the BTFP and borrowed federal funds, and certain other adjustments.
Adjusted net income or ANI			A non-GAAP measure that adjusts net income (loss) to exclude all items excluded in segment adjusted operating income except unallocated corporate expenses, further excluding unrealized gains and losses on financial instruments, net foreign currency gains and losses, debt issuance cost amortization, tax related items and certain other non-operating items, as applicable depending on the period presented.
Amended and Restated Credit Agreement			Amended and Restated Credit Agreement entered into on April 1, 2021 (as amended from time to time) by and among the Company and certain of its subsidiaries, as borrowers, and Bank of America, N.A., as administrative agent on behalf of the lenders.
Ascensus Acquisition			The acquisition from Ascensus, LLC of certain entities, which comprised the health and benefits business of Ascensus.
ASU			Accounting Standards Update
Average number of SaaS accounts			Represents the average number of active consumer-directed health, COBRA, and billing accounts on our SaaS platforms. SaaS accounts include HSA accounts for which WEX Inc. serves as the non-bank custodian under designation by the U.S. Department of Treasury.
B2B			Business-to-Business

BTFP			The Federal Reserve Bank Term Funding Program, which provides liquidity to U.S. depository institutions.
CODM			Chief Operating Decision Maker
Company			WEX Inc. and all entities included in the consolidated financial statements.
Convertible Notes			Convertible senior unsecured notes due on July 15, 2027 in an aggregate principal amount of $310.0 million with a 6.5 percent interest rate, issued July 1, 2020, which were repurchased by the Company and canceled by the trustee at the instruction of the Company on August 11, 2023.
Corporate Cash			Calculated in accordance with the terms of our consolidated leverage ratio in the Company’s Amended and Restated Credit Agreement.
DSUs			Deferred stock units held by non-employee directors.
FASB			Financial Accounting Standards Board
FDIC			Federal Deposit Insurance Corporation
Federal Reserve Bank Discount Window			Monetary policy that allows WEX Bank to borrow funds on a short-term basis to meet temporary shortages of liquidity caused by internal or external disruptions.
FHLB			Federal Home Loan Bank
FSA			Flexible spending account
GAAP			Generally accepted accounting principles in the United States
HSA			Health savings account
MSUs			Market share units
NAV			Net asset value
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.
Net late fee rate			Net late fee rate represents late fee revenue as a percentage of fuel purchased by fleets that have a payment processing relationship with WEX.

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Net payment processing rate			The percentage of each payment processing $ of fuel that the Company records as revenue from merchants less certain discounts given to customers and network fees.
Operating cash flow			Net cash provided by (used for) operating activities
Operating interest			Interest expense incurred on the operating debt obtained to provide liquidity for the Company’s short-term receivables or used for investing purposes in fixed income debt securities.
Over-the-road			Typically, heavy trucks traveling long distances.
Payment processing $ of fuel			Total dollar value of the fuel purchased by fleets that have a payment processing relationship with WEX.
Payment processing transactions			Total number of purchases made by fleets that have a payment processing relationship with the Company where the Company maintains the receivable for the total purchase.

Processing costs			Expenses related to processing transactions, servicing customers and merchants and costs of goods sold related to hardware and other product sales.
Purchase volume			Purchase volume in the Corporate Payments segment represents the total dollar value of all WEX-issued transactions that use WEX corporate card products and virtual card products. Purchase volume in the Benefits segment represents the total dollar value of all transactions where interchange is earned by WEX.

Revolving Credit Facility			The Company’s secured revolving credit facility under the Amended and Restated Credit Agreement
RSUs			Restricted stock units
SaaS			Software-as-a-Service

SEC			Securities and Exchange Commission
Service fees			Costs incurred from third-party networks utilized to deliver payment solutions and other third-parties utilized in performing services directly related to generating revenue.
SOFR			Secured Overnight Financing Rate
SPE			Wholly-owned special purpose entity
Topic 606			Accounting Standards Codification Section 606, Revenue from Contracts with Customers
Total segment adjusted operating income			A non-GAAP measure that adjusts operating income to exclude specified items that the Company’s management excludes in evaluating segment performance, including unallocated corporate expenses, acquisition-related intangible amortization, other acquisition and divestiture related items, debt restructuring costs, stock-based compensation, other costs and certain non-recurring or non-cash operating charges that are not core to our operations, as applicable depending on the period presented.
Total volume			Includes purchases on WEX-issued accounts as well as purchases issued by others, but using a WEX platform.
UDFI			Utah Department of Financial Institutions

WEX			WEX Inc., and all of its subsidiaries that are consolidated under accounting principles generally accepted in the United States, unless otherwise indicated or required by the context.
WEX Australia			WEX Card Holdings Australia Pty Ltd and its subsidiaries
WEX Bank			An industrial bank organized under the laws of the State of Utah, and wholly owned subsidiary of WEX, Inc.
WEX Europe Services			WEX Europe Service Limited, a European Mobility business
WEX Health			WEX Health, Inc., the Company’s healthcare technology and administration solutions provider/business.


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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

WEX Inc. Condensed Consolidated Statements of Operations

(in millions, except per share data)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues
Payment processing revenue	$	318.4	$	300.5	$	620.4	$	588.6
Account servicing revenue	168.6		152.9		341.9		313.6
Finance fee revenue	77.8		76.4		148.1		157.1
Other revenue	108.7		91.5		215.8		174.0
Total revenues	673.5		621.3		1,326.1		1,233.3
Cost of services
Processing costs	163.8		149.7		332.9		295.3
Service fees	20.8		17.9		41.8		36.2
Provision for credit losses	20.6		22.7		43.0		68.1
Operating interest	25.7		19.5		49.2		32.3
Depreciation and amortization	32.8		25.2		64.0		50.4
Total cost of services	263.8		235.0		530.9		482.3
General and administrative	101.0		106.2		189.5		195.1
Sales and marketing	93.7		78.9		179.0		158.8
Depreciation and amortization	46.9		41.8		94.0		83.4

Operating income	168.1		159.4		332.6		313.7
Financing interest expense, net of financial instruments	(59.9)		(40.2)		(120.2)		(93.1)
Change in fair value of contingent consideration	(1.7)		(1.2)		(3.4)		(3.0)


Net foreign currency loss	(0.4)		(0.2)		(13.0)		(1.6)
Income before income taxes	106.1		117.8		196.1		216.0
Income tax expense	29.1		22.5		53.4		52.7
Net income	$	77.0	$	95.3	$	142.7	$	163.3





Net income per share:
Basic	$	1.85	$	2.22	$	3.42	$	3.80
Diluted	$	1.83	$	2.20	$	3.38	$	3.76
Weighted average common shares outstanding:
Basic	41.7		42.9		41.8		43.0
Diluted	42.0		43.4		42.2		43.5

See notes to the unaudited condensed consolidated financial statements.


Table of Contents			PART I

WEX Inc. Condensed Consolidated Statements of Comprehensive Income

(in millions)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	77.0	$	95.3	$	142.7	$	163.3

Other comprehensive (loss) income, net of tax:



Unrealized loss on available-for-sale debt securities	(9.5)		(29.9)		(35.2)		(7.7)
Foreign currency translation	4.8		5.5		(16.8)		6.3
Other comprehensive loss, net of tax	(4.7)		(24.4)		(52.0)		(1.4)



Total comprehensive income	$	72.3	$	70.9	$	90.7	$	161.9

See notes to the unaudited condensed consolidated financial statements.


Table of Contents			PART I

WEX Inc. Condensed Consolidated Balance Sheets

(in millions, except per share data)

(unaudited)


	June 30, 2024		December 31, 2023
Assets
Cash and cash equivalents	$	682.6	$	975.8
Restricted cash	1,095.7		1,254.2
Accounts receivable, net	3,966.4		3,428.5
Investment securities	3,322.5		3,022.1
Securitized accounts receivable, restricted	138.7		129.4
Prepaid expenses and other current assets	177.2		125.3
Total current assets	9,383.1		8,935.3
Property, equipment and capitalized software (net of accumulated depreciation of $597.0 in 2024 and $544.2 in 2023)	256.9		242.9
Goodwill	3,006.2		3,015.7
Other intangible assets (net of accumulated amortization of $1,457.5 in 2024 and $1,359.1 in 2023)	1,362.0		1,458.7
Investment securities	65.7		66.8
Deferred income taxes, net	14.6		13.7
Other assets	158.4		149.0

Total assets	$	14,246.9	$	13,882.1
Liabilities and Stockholders’ Equity
Accounts payable	$	1,734.1	$	1,479.1
Accrued expenses and other current liabilities	702.9		802.7
Restricted cash payable	1,095.1		1,253.5
Short-term deposits	4,288.8		3,942.8
Short-term debt, net	1,248.6		1,041.1


Total current liabilities	9,069.6		8,519.2
Long-term debt, net	2,959.6		2,827.5
Long-term deposits	—		129.8
Deferred income taxes, net	132.6		129.5
Other liabilities	301.6		455.5
Total liabilities	12,463.3		12,061.5


Stockholders’ Equity
Common stock $0.01 par value; 175.0 shares authorized; 50.3 shares issued in 2024 and 49.9 in 2023; 41.5 shares outstanding in 2024 and 41.9 in 2023	0.5		0.5
Additional paid-in capital	1,099.6		1,053.0
Retained earnings	1,899.9		1,757.1
Accumulated other comprehensive loss	(281.2)		(229.2)
Treasury stock at cost; 8.8 and 8.0 shares in 2024 and 2023, respectively	(935.3)		(760.8)


Total stockholders’ equity	1,783.5		1,820.6
Total liabilities and stockholders’ equity	$	14,246.9	$	13,882.1

See notes to the unaudited condensed consolidated financial statements.


Table of Contents			PART I

WEX Inc. Condensed Consolidated Statements of Stockholders’ Equity

(in millions)

(unaudited)



	Common Stock Issued			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Stockholders’ Equity
	Shares	Amount
Balance at January 1, 2024	49.9	$	0.5	$	1,053.0	$	1,757.1	$	(229.2)	$	(760.8)	$	1,820.6
Stock issued under share-based compensation plans	0.4	—		12.3		—		—		—		12.3
Share repurchases for tax withholdings	—	—		(28.2)		—		—		—		(28.2)
Purchase of shares of treasury stock	—	—		—		—		—		(73.6)		(73.6)
Stock-based compensation expense	—	—		28.1		—		—		—		28.1
Unrealized loss on available-for-sale debt securities	—	—		—		—		(25.7)		—		(25.7)
Foreign currency translation	—	—		—		—		(21.6)		—		(21.6)
Net income	—	—		—		65.8		—		—		65.8
Balance at March 31, 2024	50.3	$	0.5	$	1,065.2	$	1,822.9	$	(276.5)	$	(834.4)	$	1,777.7
Stock issued under share-based compensation plans	—	—		2.6		—		—		—		2.6
Share repurchases for tax withholdings	—	—		(1.6)		—		—		—		(1.6)
Purchase of shares of treasury stock	—	—		—		—		—		(100.8)		(100.8)
Stock-based compensation expense	—	—		33.4		—		—		—		33.4
Unrealized loss on available-for-sale debt securities	—	—		—		—		(9.5)		—		(9.5)
Foreign currency translation	—	—		—		—		4.8		—		4.8
Net income	—	—		—		77.0		—		—		77.0
Balance at June 30, 2024	50.3	$	0.5	$	1,099.6	$	1,899.9	$	(281.2)	$	(935.3)	$	1,783.5


Table of Contents			PART I


	Common Stock Issued			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Stockholders’ Equity
	Shares	Amount
Balance at January 1, 2023	49.6	$	0.5	$	928.0	$	1,490.5	$	(306.3)	$	(463.2)	$	1,649.5
Stock issued under share-based compensation plans	0.1	—		6.3		—		—		—		6.3
Share repurchases for tax withholdings	—	—		(8.8)		—		—		—		(8.8)
Purchase of shares of treasury stock	—	—		—		—		—		(92.8)		(92.8)
Stock-based compensation expense	—	—		25.3		—		—		—		25.3
Unrealized gain on available-for-sale debt securities	—	—		—		—		22.2		—		22.2
Foreign currency translation	—	—		—		—		0.8		—		0.8
Net income	—	—		—		68.0		—		—		68.0
Balance at March 31, 2023	49.7	$	0.5	$	950.8	$	1,558.5	$	(283.3)	$	(556.0)	$	1,670.5
Stock issued	0.1	—		1.2		—		—		—		1.2
Share repurchases for tax withholdings	—	—		(6.6)		—		—		—		(6.6)
Purchase of shares of treasury stock	—	—		—		—		—		(3.2)		(3.2)
Stock-based compensation expense	—	—		35.9		—		—		—		35.9
Unrealized loss on available-for-sale debt securities	—	—		—		—		(29.9)		—		(29.9)
Foreign currency translation	—	—		—		—		5.5		—		5.5
Net income	—	—		—		95.3		—		—		95.3
Balance at June 30, 2023	49.8	$	0.5	$	981.3	$	1,653.8	$	(307.7)	$	(559.2)	$	1,768.7

See notes to the unaudited condensed consolidated financial statements.


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WEX Inc. Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities
Net income	$	142.7	$	163.3
Adjustments to reconcile net income to net cash provided by operating activities:
Change in fair value of contingent consideration	3.4		3.0
Stock-based compensation	61.5		61.2
Depreciation and amortization	158.0		133.8




Provision for credit losses	43.0		68.1



Other non-cash adjustments	12.6		7.6

Net change in operating assets and liabilities, net of effects of business acquisitions	(581.5)		(337.5)







Net cash (used for) provided by operating activities	(160.3)		99.5

Cash flows from investing activities
Purchases of property, equipment and capitalized software	(73.6)		(65.3)
Purchase of other investments	(14.5)		(5.0)



Purchases of available-for-sale debt securities	(512.2)		(1,362.0)
Sales and maturities of available-for-sale debt securities	203.5		114.4
Acquisition of intangible assets	(5.1)		(4.5)
Other investing activities	(0.9)		—

Net cash used for investing activities	(402.7)		(1,322.4)

Cash flows from financing activities

Purchase of treasury shares	(173.6)		(104.0)

Net change in deposits	216.9		842.8

Net change in restricted cash payable	(133.2)		271.5
Borrowings on revolving credit facility	3,086.0		1,402.1
Repayments on revolving credit facility	(2,991.7)		(1,398.1)
Borrowings on term loans	68.3		—
Repayments on term loans	(30.7)		(31.7)



Advances from the FHLB	300.0		—
Borrowings on BTFP	1,570.0		500.0
Repayments on BTFP	(1,585.0)		—
Net change in borrowed federal funds	(70.0)		20.2

Net borrowings (repayments) on other debt	(2.8)		0.8
Payments of deferred and contingent consideration	(86.6)		(27.2)

Other financing activities	(20.9)		(7.9)
Net cash provided by financing activities	146.7		1,468.5
Effect of exchange rates on cash, cash equivalents and restricted cash	(35.3)		13.6
Net change in cash, cash equivalents and restricted cash	(451.7)		259.2

Cash, cash equivalents and restricted cash, beginning of period(a)	2,230.0		1,859.8
Cash, cash equivalents and restricted cash, end of period(a)	$	1,778.3	$	2,119.0

(a)The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within our condensed consolidated balance sheets to amounts within our condensed consolidated statements of cash flows.


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	Six Months Ended June 30,
	2024		2023
Cash and cash equivalents at beginning of period	$	975.8	$	922.0
Restricted cash at beginning of period	1,254.2		937.8
Cash, cash equivalents and restricted cash at beginning of period	$	2,230.0	$	1,859.8

Cash and cash equivalents at end of period	$	682.6	$	901.4
Restricted cash at end of period	1,095.7		1,217.6
Cash, cash equivalents and restricted cash at end of period	$	1,778.3	$	2,119.0

See notes to the unaudited condensed consolidated financial statements.


Table of Contents			PART I

WEX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


1.			Basis of Presentation

The accompanying condensed consolidated financial statements, which include the accounts of WEX Inc. and its subsidiaries, have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10–Q and Rule 10–01 of Regulation S–X. Accordingly, they exclude certain disclosures required by GAAP for a complete set of financial statements. Unless the context suggests otherwise, references in this Quarterly Report on Form 10-Q to “WEX,” the “Company,” “we” or “our” refer to WEX Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation in accordance with GAAP have been included. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results for any future periods or the year ending December 31, 2024. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements that are included in the Company’s Annual Report on Form 10–K for the year ended December 31, 2023, filed with the SEC on February 23, 2024 (“2023 Annual Report”).

We have applied the same accounting policies in preparing these quarterly financial statements as we did in preparing our 2023 annual financial statements. The Company rounds amounts in the condensed consolidated financial statements to millions and calculates all percentages and per-share data from underlying whole-dollar amounts. Thus, certain amounts may not foot, crossfoot or recalculate based on reported numbers due to rounding. We have included certain terms and abbreviations used throughout this Quarterly Report on Form 10-Q within “Acronyms and Abbreviations” in the front of this document.

Change in Reporting Presentation

Previously, realized gains and losses from periodic settlements on our interest rate swap contracts were included within financing interest expense, while the quarterly unrealized gains and losses from the noncash mark-to-market of our swaps were separately presented on the face of the consolidated statement of operations. During the fourth quarter of 2023, the Company made a voluntary change in accounting presentation to reflect the unrealized gains and losses from changes in the value of our swaps within financing interest expense, net of financial instruments. Prior period amounts have been reclassified to conform to the current year presentation.

Certain prior year amounts within cash flows from operating activities in the condensed consolidated statement of cash flows have been aggregated to conform to the current year presentation.


2.			Significant Accounting Policies

Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements as of and for the six months ended June 30, 2024, are consistent with those discussed in “Note 1, Basis of Presentation and Summary of Significant Accounting Policies” to the consolidated financial statements in our 2023 Annual Report.


Table of Contents			PART I
WEX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited)

Recent Accounting Pronouncements

The Company evaluates all ASUs recently issued by the FASB for consideration of their applicability. Any recently issued ASUs not listed in the following table were assessed and determined to either not be applicable, or have not had, or are not expected to have, a material impact on our condensed consolidated financial statements. The Company did not adopt any accounting standards during the six months ended June 30, 2024.

Standard

Description

Date/Method of Adoption

Effect on financial statements or other significant matters

ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

The amendments in this ASU require enhanced disclosures about significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss. In addition, this ASU expands certain annual disclosures about a reportable segment’s profit or loss and assets to interim periods.

The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 31, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures. The adoption of this ASU is not expected to have a material effect on the Company’s condensed consolidated financial position, results of operations or cash flows.

ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures

Updates income tax disclosures related to the rate reconciliation and requires disclosure of income taxes paid by jurisdiction.

The amendments are effective for annual periods beginning after December 31, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments should be applied on a prospective basis, however, retrospective application is permitted.


Table of Contents			PART I
WEX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited)


3.			Revenues

In accordance with Topic 606, revenue is recognized when, or as, performance obligations are satisfied as defined by the terms of the contract, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for goods or services provided.

The following tables disaggregate the Company’s consolidated revenues, substantially all of which relate to services transferred to the customer over time:


	Three Months Ended June 30, 2024
(in millions)	Mobility		Corporate Payments		Benefits		Total
Topic 606 revenues
Payment processing revenue	$	177.2	$	116.2	$	24.9	$	318.4
Account servicing revenue	9.5		10.3		108.4		128.3
Other revenue	26.3		—		5.6		31.9
Total Topic 606 revenues	$	213.0	$	126.6	$	138.9	$	478.6





Non-Topic 606 revenues	146.5		7.5		40.8		194.9

Total revenues	$	359.6	$	134.1	$	179.8	$	673.5


	Three Months Ended June 30, 2023
(in millions)	Mobility		Corporate Payments		Benefits		Total
Topic 606 revenues
Payment processing revenue	$	172.2	$	104.7	$	23.6	$	300.5
Account servicing revenue	4.5		10.6		101.5		116.6
Other revenue	21.2		—		6.2		27.4
Total Topic 606 revenues	$	197.9	$	115.3	$	131.3	$	444.5





Non-Topic 606 revenues	142.2		6.6		27.9		176.7

Total revenues	$	340.2	$	121.9	$	159.2	$	621.3



	Six Months Ended June 30, 2024
(In millions)	Mobility		Corporate Payments		Benefits		Total
Topic 606 revenues
Payment processing revenue	$	347.9	$	219.4	$	53.1	$	620.4
Account servicing revenue	18.7		20.3		225.4		264.4
Other revenue	49.8		—		13.3		63.2
Total Topic 606 revenues	$	416.4	$	239.7	$	291.8	$	948.0
Non-Topic 606 revenues	282.1		16.9		79.2		378.1
Total revenues	$	698.5	$	256.6	$	371.0	$	1,326.1



	Six Months Ended June 30, 2023
(In millions)	Mobility		Corporate Payments		Benefits		Total
Topic 606 revenues
Payment processing revenue	$	343.7	$	194.8	$	50.1	$	588.6
Account servicing revenue	8.9		21.2		211.3		$	241.4
Other revenue	44.5		—		14.0		58.5
Total Topic 606 revenues	$	397.1	$	216.0	$	275.4	$	888.5
Non-Topic 606 revenues	285.4		10.7		48.7		344.8
Total revenues	$	682.5	$	226.7	$	324.1	$	1,233.3


Table of Contents			PART I
WEX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited)

Contract Balances

The majority of the Company’s receivables, which are excluded from the table below, are either due from cardholders who have not been deemed our customer as it relates to interchange income, or from revenues earned outside of the scope of Topic 606. The Company’s contract assets consist of upfront payments to customers under long-term contracts and are recorded upon the later of when the Company recognizes revenue for the transfer of the related goods or services or when the Company pays or promises to pay the consideration. The resulting asset is amortized against revenue as the Company satisfies its performance obligations under these arrangements. The Company’s contract liabilities consist of customer payments received before the Company has satisfied the associated performance obligations. The following table provides information about these contract balances:


(in millions)
Contract balance	Location on the condensed consolidated balance sheets	June 30, 2024		December 31, 2023
Receivables	Accounts receivable, net	$	56.7	$	59.1
Contract assets	Prepaid expenses and other current assets	18.6		11.5
Contract assets	Other assets	29.0		33.1
Contract liabilities	Accrued expenses and other current liabilities	26.7		12.4
Contract liabilities	Other liabilities	64.3		83.0

During the three and six months ended June 30, 2024, the Company recognized revenue of $4.9 million and $12.5 million, respectively, related to contract liabilities existing as of December 31, 2023.

Remaining Performance Obligations

The Company’s unsatisfied or partially unsatisfied performance obligations as of June 30, 2024 represent the remaining minimum monthly fees on a portion of contracts across the lines of business, deferred revenue associated with stand ready payment processing obligations and contractually obligated professional services yet to be provided by the Company. The total remaining performance obligations below are not indicative of the Company’s future revenue, as they relate to an insignificant portion of the Company’s operations.

The following table includes revenue expected to be recognized related to remaining performance obligations at the end of the indicated reporting period.


(in millions)	Remaining 2024		2025		2026		2027		2028		2029		Thereafter		Total
Minimum monthly fees1	$	29.7	$	28.3	$	11.9	$	6.2	$	4.1	$	1.5	$	—	$	81.7
Other2	15.3		31.7		32.1		27.5		5.9		—		—		112.6
Total remaining performance obligations	$	45.0	$	60.0	$	44.0	$	33.7	$	10.0	$	1.5	$	—	$	194.3

(1)The transaction price allocated to the remaining performance obligations represents the minimum monthly fees on certain service contracts, which contain substantive termination penalties that require the counterparty to pay the Company for the aggregate remaining minimum monthly fees upon an early termination for convenience. These obligations will be recognized within account servicing revenue.

(2)Substantially represents deferred revenue and contractual minimums associated with payment processing service obligations. Consideration associated with certain relationships is variable and the measurement and estimation of contract consideration is contingent upon payment processing volumes and maintaining volume shares, among others.


Table of Contents			PART I
WEX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited)


4.			Acquisitions and Other Investments

Business Combinations

2023 Payzer Acquisition

On November 1, 2023, the Company closed on the acquisition of Payzer Holdings, Inc. (“Payzer”), a cloud-based, field service management software provider (the “Payzer Acquisition”). The acquisition is expected to advance WEX’s growth strategy of expanding its product suite and creating additional cross-sell opportunities by providing a new, scalable SaaS solution for its Mobility segment customers that operate field service management companies. Pursuant to the terms of the agreement, total consideration for the acquisition approximated $250.0 million ($5.5 million of which is deferred), with additional contingent consideration of up to $11.0 million based on certain performance metrics, subject to certain working capital and other adjustments.

The table below summarizes the preliminary allocation of fair value to the assets acquired and liabilities assumed on the date of acquisition under the acquisition method of accounting. These fair values may continue to be revised during the measurement period as third-party valuations on the intangible assets are finalized, further information becomes available and additional analyses are performed, and those adjustments could have a material impact on the purchase price allocation.


(in millions)	As Reported December 31, 2023		Measurement Period Adjustments		As Reported June 30, 2024
Cash consideration transferred, net of $4.5 million in cash acquired	$	244.0	$	—	$	244.0
Less:
Accounts receivable	2.4		—		2.4
Customer relationships(1)(5)	40.4		—		40.4
Developed technology(2)(5)	17.2		—		17.2
Strategic partner relationships(3)(5)	4.5		—		4.5
Trademark(4)(5)	1.4		—		1.4
Other current and long-term assets	1.4		—		1.4
Accrued expenses and other current liabilities	(1.8)		—		(1.8)

Deferred tax liability	(6.5)		3.0		(3.5)
Contingent/deferred consideration	(7.1)		—		(7.1)
Other liabilities	(0.9)		—		(0.9)
Recorded goodwill	$	193.0	$	(3.0)	$	190.0

(1)Weighted average useful life - 4.7 years

(2)Weighted average useful life - 2.4 years

(3)Weighted average useful life - 2.5 years

(4)Weighted average useful life - 2.8 years

(5)The weighted average useful life of all amortizable intangible assets acquired in this business combination is 3.9 years

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring the business. The goodwill recognized as a result of the Payzer Acquisition is not expected to be deductible for tax purposes. No pro forma information has been included in these financial statements, as the operations of Payzer for the period that it was not part of the Company is not material to the Company’s revenues, net income or earnings per share.


Table of Contents			PART I
WEX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited)

2023 Ascensus Acquisition

On September 1, 2023, WEX Health completed the acquisition from Ascensus, LLC (the “Ascensus Acquisition”) of certain entities (the “Ascensus Acquired Entities”), which comprised the health and benefits business of Ascensus and are technology-enabled providers of employee health benefit accounts including HSAs, FSAs, and other benefit accounts. The Ascensus Acquisition expands WEX’s footprint in the Benefits segment, while also enhancing and expanding Affordable Care Act compliance and verification capabilities. Pursuant to the terms of the agreement, WEX Health consummated the acquisition for total consideration of approximately $185.5 million, after a $0.9 million working capital adjustment paid by the Company during the first quarter of 2024.


(in millions)	As Reported December 31, 2023		Measurement Period Adjustments		As Reported June 30, 2024
Cash consideration transferred, net of $26.7 million in cash and restricted cash acquired	$	158.0	$	0.9	$	158.9
Less:
Accounts receivable	7.3		—		7.3
Customer relationships(1)(5)	52.1		—		52.1
Developed technology(2)(5)	6.6		—		6.6
Strategic partner relationships(3)(5)	14.0		—		14.0
Custodial rights(4)(5)	23.2		—		23.2
Other assets	3.8		—		3.8
Accrued expenses and other current liabilities	(6.5)		—		(6.5)

Restricted cash payable	(25.7)		—		(25.7)
Other liabilities	(2.7)		—		(2.7)
Recorded goodwill	$	85.9	$	0.9	$	86.8

(1)Weighted average life - 5.4 years

(2)Weighted average life - 2.2 years

(3)Weighted average life - 1.2 years

(4)Weighted average life - 4.9 years

(5)The weighted average useful life of all amortizable intangible assets acquired in this business combination is 4.4 years.

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring the business. The goodwill recognized as a result of the acquisition is expected to be deductible for tax purposes. No pro forma information has been included in these financial statements, as the operations of the Ascensus Acquired Entities for the period that they were not part of the Company are not material to the Company’s revenues, net income or earnings per share.


Table of Contents			PART I
WEX INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (unaudited)


5.			Accounts Receivable, Net

Accounts receivable consists of amounts billed to and due from customers across a wide range of industries and other third parties. The Company often extends short-term credit to cardholders by paying the merchant for the purchase price less the fees it retains and records as revenue, then subsequently collecting the total purchase price from the cardholder. The Company also extends revolving credit to certain small fleets. The Company had approximately $135.8 million and $133.3 million in gross receivables with revolving credit balances as of June 30, 2024 and December 31, 2023, respectively.

The allowance for accounts receivable consists of reserves for both credit and fraud losses, reflecting management’s current estimate of uncollectible balances on its accounts receivable. The following tables present changes in the accounts receivable allowances by portfolio segment:


	Three Months Ended June 30, 2024
(in millions)	Mobility		Corporate Payments		Benefits		Total


Balance, beginning of period	$	72.5	$	9.2	$	8.4	$	90.1
Provision for credit losses(1)	18.6		2.3		(0.3)		20.6
Charges to other accounts(2)	3.0		—		—		3.0
Charge-offs	(29.5)		(0.8)		—		(30.3)
Recoveries of amounts previously charged-off	3.9		—		—		3.9

Currency translation	—		—		—		—
Balance, end of period	$	68.5	$	10.6	$	8.1	87.2


	Three Months Ended June 30, 2023
(in millions)	Mobility		Corporate Payments		Benefits		Total


Balance, beginning of period	$	102.3	$	14.4	$	1.1	$	117.8
Provision for credit losses(1)	21.5		1.0		0.2		22.7
Charges to other accounts(2)	7.5		—		—		7.5
Charge-offs	(41.3)		(0.9)		—		(42.2)
Recoveries of amounts previously charged-off	6.2		—		—		6.2
Currency translation	—		—		—		—
Balance, end of period	$	96.2	$	14.5	$	1.3	$	112.0



	Six Months Ended June 30, 2024
(In millions)	Mobility		Corporate Payments		Benefits		Total
Balance, beginning of period	$	72.8	$	9.2	$	8.1	$	90.1
Provision for credit losses(1)	39.3		3.6		—		43.0
Charges to other accounts