WEX(US:WEX)2025-07-24 15:54Financial Performance - Total revenues for Q2 2025 were $659.6 million, a decrease of 2.9% from $673.5 million in Q2 2024[149] - Net income for Q2 2025 was $68.1 million, down 11.5% from $77.0 million in Q2 2024[149] - Adjusted net income for Q2 2025 was $136.2 million, compared to $164.0 million in Q2 2024, reflecting a decrease of 17%[149] - Total volume across the company for Q2 2025 was $59,501 million, a decrease of 1.1% from $60,137 million in Q2 2024[149] - Total revenues for Benefits increased by $15.3 million (9%) for Q2 2025, totaling $195.1 million, primarily due to a rise in average HSA deposit balances[162] - Total volume for Benefits increased by $233.8 million (7%) for Q2 2025, totaling $3,729.3 million[162] - Total segment adjusted operating income for Q2 2025 was $268.5 million, compared to $299.9 million in Q2 2024, reflecting a decrease of approximately 10.4%[187] - Adjusted net income for the six months ended June 30, 2025, was $274.6 million, or $7.44 per diluted share, compared to $310.7 million, or $7.37 per diluted share for the same period in 2024, indicating a decrease of about 11.6% in net income[187] Segment Performance - In the Mobility segment, total revenues decreased by $13.4 million (4%) for Q2 2025 compared to Q2 2024, primarily due to lower average domestic fuel prices[152] - Payment processing revenue in the Mobility segment was $160.4 million for Q2 2025, down 9% from $177.2 million in Q2 2024[152] - Segment adjusted operating income for Benefits increased by $13.8 million (19%) for Q2 2025, totaling $84.9 million[164] - Payment processing revenue decreased by $18.6 million (16%) to $97.7 million for the three months ended June 30, 2025, compared to $116.2 million in 2024[169] - Account servicing revenue increased by $5.1 million (49%) to $15.4 million for the three months ended June 30, 2025, compared to $10.3 million in 2024[169] - Total Corporate Payments revenue decreased by $15.8 million and $34.9 million for the three and six months ended June 30, 2025, respectively, primarily due to a contract renegotiation with a large travel customer[170] Expenses and Costs - Processing costs for Mobility increased by $1.8 million (2%) for Q2 2025 compared to Q2 2024, totaling $76.0 million[158] - Sales and marketing expenses for Mobility increased by $2.5 million (4%) for Q2 2025, totaling $63.6 million, reflecting growth acceleration initiatives[161] - General and administrative expenses for Benefits decreased by $4.3 million (37%) for Q2 2025, totaling $7.2 million, primarily due to reduced employee compensation costs[167] - Depreciation and amortization for Mobility increased by $3.2 million (24%) for Q2 2025, totaling $16.4 million, attributed to increased capital expenditures for new product development[160] - Sales and marketing expenses increased by $3.6 million (24%) for the three months ended June 30, 2025, compared to the same period in 2024, driven by increased partner commissions and employee costs[175] Cash Flow and Liquidity - Adjusted free cash flow for the first half of 2025 was $210.5 million, compared to $203.0 million in the same period of 2024[149] - The company reported a net cash used for operating activities of $217.0 million in Q2 2025, compared to $160.3 million in Q2 2024[149] - Cash used for operating activities for the six months ended June 30, 2025, increased by $56.7 million compared to the same period in 2024, primarily due to a greater increase in accounts receivable[206] - Adjusted free cash flow for the six months ended June 30, 2025, was $210.5 million, slightly up from $203.0 million in the prior year[204] - Net cash from financing activities during 2025 increased by $513.7 million compared to the prior year, driven by an increase in HSA deposits transferred to WEX Bank[209] Credit and Financing - Provision for credit losses decreased by $3.3 million (18%) for Q2 2025, totaling $15.4 million, driven by improved management of credit and fraud losses[159] - Provision for credit losses increased by $4.1 million (161%) for the three months ended June 30, 2025, compared to the same period in the prior year, due to higher collection risk[174] - Financing interest expense increased by $5.1 million for the three months ended June 30, 2025, primarily due to increased borrowings from the issuance of Senior Notes[178] - The company was in compliance with financial covenants, maintaining a consolidated interest coverage ratio of no less than 3.00 to 1.00 and a consolidated leverage ratio of no more than 4.75 to 1.00 as of June 30, 2025[203] - The company completed a private offering of $550.0 million in senior unsecured notes and established an incremental tranche of senior secured loans totaling $450.0 million to fund various corporate activities[192] Other Financial Metrics - The average price per gallon of fuel decreased by 9% to $3.28 in Q2 2025 from $3.62 in Q2 2024[152] - The effective tax rate for the three months ended June 30, 2025, was 27.0%, compared to 27.5% for the same period in 2024[180] - Unallocated corporate expenses for Q2 2025 were $25.4 million, compared to $26.1 million in Q2 2024, reflecting a decrease of about 2.7%[187] - Acquisition-related intangible amortization for the six months ended June 30, 2025, was $97.2 million, down from $101.5 million in 2024, indicating a decrease of approximately 4.2%[187] - Stock-based compensation for the six months ended June 30, 2025, was $45.7 million, compared to $60.0 million in 2024, reflecting a decrease of about 23.9%[187] - The company reported a net foreign currency loss of $0.7 million for the six months ended June 30, 2025, compared to a loss of $13.0 million in 2024, indicating a significant improvement[190] - As of June 30, 2025, the company had cash and cash equivalents of $772.6 million, with $133.8 million classified as corporate cash[192] - As of June 30, 2025, the company had outstanding term loan principal borrowings of $2.7 billion and borrowings of $778.2 million on the Revolving Credit Facility[196] - Total deposits as of June 30, 2025, amounted to $5.1 billion, with $92.7 million of securitized debt under financing arrangements[196] - WEX Bank had the ability to borrow up to $146.6 million from the Federal Reserve Bank Discount Window, with no borrowings outstanding on this line of credit as of June 30, 2025[202] - The company completed a Tender Offer funded with $450.0 million of gross borrowings from a new Term Loan B-3 facility and $550.0 million from a new offering of Senior Notes[209] - A civil money penalty of $650 thousand was assessed to WEX Bank by the FDIC in relation to a consent order, which has been paid in full[213]