Wex Inc. · NYSE:WEX
Wex — Investor Day (March 2022)
72 slides from Wex's investor day presentation, Mar 23, 2022
Slide 1: Investor Day
INVESTOR DAY March 23, 2022 1
Slide 2: Forward Looking Statements
Forward Looking Statements These materials contain 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, future impac
Slide 3: Agenda
Agenda Welcome Steve Elder Business & Strategic Overview Melissa Smith Americas Strategy & Business Deep Dive Robert Deshaies & Jay Dearborn International Strategy Carlos Carriedo Technology and Digital Focus David Cooper & Karen Stroup Financial Overview Jennifer Kimball & Melissa Smith Q&A 3
Slide 4: Business & Strategic Overview
Business & Strategic Overview Melissa Smith Chief Executive Officer 4
Slide 5: A Global Commerce Platform for Simplifying Business
A Global Commerce Platform for Simplifying Business Our To simplify the business Purpose of running a business 5
Slide 6: History of Evolution
History of Evolution Revenue ($M) INVESTING IN GROWTH AND TECHNOLOGY $2,000 EARLY GROWTH AND IPO BUILDING SCALE AND DIVERSIFYING TRANSFORMATION $1,800 2016 – 2019 Strong Organic $1,600 Growth1 2012 $1,400 Name change to WEX to reflect transformation and growth $1,200 2014 Acquisition of 2020 2005 Ev
Slide 7: Strong Track Record of Revenue and Margin Expansion
Strong Track Record of Revenue and Margin Expansion Fleet Solutions Travel & Corporate Health & Employee WEX Solutions Benefits Solutions $1,850 $1,111 $1,012 $642 $414 36.2% 50.1% $325 $215 32.0% 39.6% $155 37.5% 26.7% 25.2% 24.3% 2016 2021 2016 2021 2016 2021 2016 2021 Segment Revenue ($M) Segment
Slide 8: Diverse and Experienced Executive Team
Diverse and Experienced Executive Team Melissa Smith Carlos Carriedo David Cooper Jay Dearborn Robert Deshaies Ann E. Drew Chair and CEO Chief Operating Officer, Chief Technology President, Corporate Chief Operating Officer, Chief Risk & International Officer Payments Americas Compliance Officer Ant
Slide 9: Why Our Role Matters
Why Our Role Matters Commerce is Today’s Complexity is We win when the engine of environment is the enemy of our customers progress increasingly progress are set free for the world complex for to achieve businesses their goals 9
Slide 10: Complexity We're Solving for Customers
Complexity We’re Solving for Customers Fraud & Security Risk Lack of Complex Visibility Integrations Higher Lower Costs Margins Disjointed Payments & Data Exchange Value High Error Leakage Rate Limited Highly Manual Resources to Processes & Help Solve Reconciliations Problems Repeat Delayed Costs Re
Slide 11: Our Offerings Simplify Complexity for our Customers
Our Offerings Simplify Complexity for our Customers What We Offer Why We’re Unique Engineered and operated with global scale and reliability, Global WEX is trusted to play critical roles in high growth and critical Commerce Platform infrastructure businesses Shaped by 15+ years of Customer Focused I
Slide 12: WEX is the Partner of Choice
WEX is the Partner of Choice • Customer confidence backed by strong ongoing investment in product and technology Global Scale • Platforms relied upon by businesses responsible for critical infrastructure and operations & Reliability • More than 20 currencies support the needs of global businesses •
Slide 13: Our Ecosystem of Solutions
Our Ecosystem of Solutions Incorporates the Best of our Vertical Expertise and the Power of our Commerce Platform Direct Customers Partners WEX Solutions Ecosystem Simplify Benefits Reimagine Mobility Pay & Get Paid CDH Program Billing Benefits Controls & Fraud Proprietary EV & Mixed Expense Workflo
Slide 14: Our Addressable Markets Are Large, With Big Expansion Opportunities
Our Addressable Markets Are Large, With Big Expansion Opportunities Leveraging global platform to expand our opportunity Strong Secular Tailwinds Opportunities to Expand $24B+ • Expect 5-10% long-term Addressable Market Currently addressable annual market growth • New products revenue opportunity1 •
Slide 15: Multiple Levers to Drive Growth
Multiple Levers to Drive Growth Win New Grow Share Expand & Deepen Strategic Customers of Wallet Diversify Global M&A Offering Presence 15
Slide 16: Disciplined M&A Framework
Disciplined M&A Framework Geographic Expansion Product Expansion Scale / Share Expansion • Global expansion • Comprehensive product suite • Drive operating leverage • Synergistic verticals • Expand cross-sell opportunities • Streamline technology and geographies • Deepen customer integration Strong
Slide 17: Our Commitment to ESG
Our Commitment to ESG Our focus on ESG is embedded in our culture, integral to our long-term strategy, and underpinned by our core values People & Culture Environmental Environmental Social Impact Innovation Stewardship WEX creates an inclusive WEX enables customers’ WEX is driving operational WEX e
Slide 18: Ambitious and Achievable Long-Range Financial Targets
Ambitious and Achievable 8% - 12% Long-Range Organic Revenue Growth Financial Targets 10% - 15% Total Revenue Growth 15% - 20% Adjusted Net Income Growth Financial targets represent CAGR assuming stable foreign exchange rates and fuel prices (based on average of 2021), as we are unable to predict fu
Slide 19: Why We Succeed
Why We Succeed We have leading technology, customers, and people that all continue to drive strong shareholder value Growth Engine Leadership Recurring Network People in Large Markets Position Revenue Model Effect
Slide 20: Americas Strategy & Business Deep Dive
Americas Strategy & Business Deep Dive Robert Deshaies Chief Operating Officer, Americas Jay Dearborn President, Corporate Payments 20
Slide 21: Americas Overview
Americas Overview Simplify Benefits Reimagine Mobility Pay & Get Paid Travel CDH Program Billing Benefits Controls & Fraud Proprietary EV & Mixed Expense Workflow Booking Management Solutions Administration Prevention Network Fleets Management Automation $121B $1.65B 14% Total Volume Revenue Revenue
Slide 22: A More Unified Approach
A More Unified Approach Enabled by our global commerce platform Benefits of Channel Combined Deepened Relationships the Change Optimization Capabilities Our Growth Win New Expand & Grow Share Focus Customers Diversify Offering Of Wallet 22
Slide 23: Channel Optimization
Channel Optimization Combining our networks of customers, partners, and merchants to amplify new customer acquisition Channels DIRECT PARTNER >500 Partners Sales Marketing Digital Fleet & Leasing C-Stores Benefits Brokers TPAs & Banks & Financial Fintechs & Solutions & Fuel Retailers & Consultants H
Slide 24: Combined Capabilities
Combined Capabilities Simplify Simplify Reimagine Pay & Benefits Benefits Mobility Get Paid Integrated Benefits Solutions Multi-Payment Network Routing Need: Employers want bundled benefits Need: Manage mixed fleet payments administration and consumer across multiple payment networks directed health
Slide 25: Deepened Relationships
Deepened Relationships An executable path with demonstrated successes Mobility ✓ ✓ ✓ ✓ Payments ✓ ✓ ✓ Benefits ✓ ✓ ✓ Massive Opportunity: less than 10% of top customers use products from more than one solutions set today
Slide 26: Customer-First Solutions Driving Growth
Customer-First Solutions Driving Growth Win New Customers Expand & Diversify Grow Share of Wallet Offering Competitive Wins Enhancing Existing Solutions More Awareness of - - Solutions Breadth Extend into Capabilities in New Use Cases - Underpenetrated Segments - Leverage & Enhance Touchpoints - New
Slide 27: Building on Proven Strengths
Building on Proven Strengths Track record of solving complex customer needs in creative ways • Deep expertise in key verticals with long-standing relationships Customer-Focused • Unique product combinations Innovation • Leveraging customer-driven improvements across network • Flexible technology and
Slide 28: Americas Health
Americas Health $10B $3B+ Total Volume Assets Under Simplify Benefits 2021 Management CDH Program Benefits Billing Solutions Management Administration 25% 16M+ Reimagine Revenue CAGR SaaS Accounts Mobility Controls & Fraud Proprietary EV & Mixed 2016-2021 Prevention Network Fleets Pay & Get Paid $41
Slide 29: Our Role Simplifying Benefits
Our Role Simplifying Benefits Where We Play What We Offer Who We Serve CDH Enrollment Employers Compliance Account COBRA Services Administration Employees Insights & Analytics Benefits Administration Billing & Payments Administrators Medical/ Retirement Dental Data Exchange Benefit Providers Volunta
Slide 30: Building on Proven Strengths
Building on Proven Strengths Track record of solving complex customer needs in creative ways • Lifestyle Benefits Accounts Customer-Focused • AI-powered Customer Experiences Innovation • Personalized Investment Experience • Consumer Pathways Specialized Expertise • Benefit Analytics & Real Time Benc
Slide 31: Americas Fleet
Americas Fleet $56B 11.9M Total Volume Vehicles Simplify 2021 Serviced Benefits CDH Program Benefits Billing Solutions Management Administration 13% >450K Reimagine Revenue CAGR North American Mobility Controls & Fraud Proprietary EV & Mixed 2016-2021 Customers Prevention Network Fleets Pay & Get Pa
Slide 32: Building on Proven Strengths
Building on Proven Strengths Solving complex customer needs in creative ways Customer-Focused Innovation Specialized Expertise & Rich Data Scale & Reliability
Slide 33: Introducing New Solutions to Solve the Complexities of Electrification
Introducing New Solutions to Solve the Complexities of Electrification End-to-End Charging Core Services On-Route & Destination Depot & At-Work Home Fleet Services • Card and mobile app for • Integrated reporting • Employee authentication • Integrated billing and fueling and charging and data captur
Slide 34: Shift in Product Mix Provides Opportunity for Higher Quality Revenue Capture
Shift in Product Mix Provides Opportunity for Higher Quality Revenue Capture Existing pricing structure Potential EV pricing migration Payment Processing Revenue On-Route eMSP Subscription applied to fuel and non-fuel spend applied per card Finance Fee Revenue +Home eMSP Subscription applied to tota
Slide 35: Emerging Opportunities for WEX Product Expansion within eMobility Ecosystem
Emerging Opportunities for WEX Product Expansion within eMobility Ecosystem Select Ecosystem Expansion Opportunities Connectivity Fleet Solutions Sustainability Advanced Route Energy Carbon Emissions Credits & Connected Car Telematics Offsets Planning Management Reporting Complexity linked to EV ado
Slide 36: Travel and Corporate Payments
Travel and Corporate Payments Jay Dearborn President, Corporate Payments 36
Slide 37: Americas Travel & Corporate Payments
Americas Travel & Corporate Payments $55B 200+ Total Volume Merchant Countries 2021 and Territories Simplify Benefits CDH Program Benefits 7% 20+ Billing Solutions Management Administration Revenue CAGR Currencies Reimagine Mobility 2016-2021 Controls & Fraud Proprietary EV & Mixed Prevention Networ
Slide 38: Our Capabilities
Our Capabilities Embedded Payments Solution AP Automation and Spend Management Solution Commercial payments via API Commercial payments via UI for for for for Online Travel Fintech Businesses Financial Institutions Market Leading Virtual Card Capabilities Wholly owned, cloud first, built for Issuing
Slide 39: Winning with Embedded Payments Solutions
Winning with Embedded Payments Solutions Need Why WEX Won • Enterprise grade virtual card capabilities • Ability to create payments in real time with immediate • Speed, accuracy, reliability, and security transparency on authorization flow • Co-innovation on custom configurations to prove new indust
Slide 40: Winning with AP Automation and Spend Management Solutions
Winning with AP Automation and Spend Management Solutions Need Why WEX Won • Optimized accounts payable • Enhanced AP data analysis and in-house • Reduce paper checks supplier enablement • Customizable integrations • Straight-forward UI & reconciliation One of the largest hospital operators in the U
Slide 41: Customer-First Solutions Driving Growth
Customer-First Solutions Driving Growth Win New Customers Grow Share of Wallet Expand & Diversify Offering Capture scale opportunities in Embedded Payments ✓ Launch small business product ✓ Embed payment solutions with new partners ✓ Expand developer ✓ Deliver exceptional customer experience experie
Slide 42: Built for Profitable Growth
Built for Profitable Growth Total Travel & Corporate Payment Solutions Segment Purchase Volume & Adjusted Net Interchange Rate Corporate payments $14 100 purchase volume Purchase Volume ($B) Net Interchange Rate $12 Travel purchase 80 $10 volume • Stable net 60 interchange by $8 Travel net (bps) por
Slide 43: International Strategy
International Strategy Carlos Carriedo Chief Operating Officer, International 43
Slide 44: International Overview
International $25B ~200K Overview Total Volume International 2021 Customers Simplify 8% 40 20+ Benefits CDH Program Benefits Billing Solutions Management Administration Revenue CAGR Customer Currencies Reimagine 2016-2021 Countries Mobility Controls & Fraud Proprietary EV & Mixed Prevention Network
Slide 45: International Growth Drivers
International Growth Drivers Win New Deepen Global Grow Share Customers Footprint of Wallet Lead with Our New Platform Leverage Global Partnerships Expand with Key Customers - - - Extend into Expand the Network Capitalize on Travel Recovery Underpenetrated Verticals - - - Replicate Local Success Cap
Slide 46: Winning Internationally
Winning Internationally Need Why WEX Won • Fuel card processing platform • Modern platform with opportunity to co- • Card management and control develop • Customer portal • Feature rich and highly configurable • Back-office functionality • Pan-European solution with central issuance International in
Slide 47: Technology & Digital Focus
Technology & Digital Focus David Cooper Chief Technology Officer Karen Stroup Chief Digital Officer 47
Slide 48: WEX is a Financial Technology Leader
WEX is a Financial Technology Leader WEX Platform Global Omnichannel Payments Access to Funds API Integration Flexible UIs Scalable Data, Analytics, AI Risk & Security Servicing 80%+ 7x+ 95% Multi-Cloud Faster release Fully automated based time vs. 2018 regression testing Fully automated software Cu
Slide 49: We Continue to Evolve our Platform
We Continue to Evolve our Platform Insourced global IT operations Established a micro-services framework Cloud & Multi-cloud strategy Best-in-class data platform Platform consolidation Cloud-based open loop processing platform Highly mature business agility practices Industry leading security and co
Slide 50: We Have Forged Strong Partnerships with Industry Leaders
We Have Forged Strong Partnerships with Industry Leaders Cloud Data Security & Monitoring
Slide 51: Our Platform is Flexible and Scalable
Our Platform is Flexible and Scalable Direct Customers Partners Developer Portal Simplify Benefits Reimagine Mobility Pay & Get Paid Unique, discrete Solutions & Capabilities Global Commerce Platform + More Credit Microservice Authorization Issuer Processing Payments Reporting Architecture Managemen
Slide 52: Our Technology is Driving Positive Outcomes
Our Technology is Driving Positive Outcomes Win New Customers Expand & Diversify Offering New Developer Portal Centralized Authorization Gateway Cutting-Edge Issuer Processing • Delivering an enhanced developer • Resilient, cloud-based transaction • Industry-leading, cloud-based credit and partner e
Slide 53: Digital is an Enabler of Our Broader Strategy
Digital is an Enabler of Our Broader Strategy Modernize Digitize Go-To- Launch New Simplify Ways Technology Market & Support Offerings of Working Enabling Speed and Agility Improving Productivity and Reimagining How We Reach Leveraging Experimentation Through Modern Confidence, Focused on and Serve
Slide 54: Digitize Go-to-Market & Support: Digital Marketing Cloud
Digitize Go-to-Market & Support: Digital Marketing Cloud Targeted Outreach Customer • AI-enabled search engine marketing platform and Prospect Digital Channels Insights • End-to-end digital customer acquisition & conversion Digital • Automated / integrated customer journeys Marketing • Nearly 60% of
Slide 55: Launch New Offerings: Flume
Launch New Offerings: Flume • Integrated software & payments solution to help WEX’s >450K SMB customers save time & money • Concept to MVP launch in 6 months • “I’m ready to switch to Flume… I can really see the benefit vs. our bank’s bill pay product to help us save time” - SMB customer Businesses
Slide 56: Why Technology + Digital Matters
Why Technology + Digital Matters Modernize Digitize Go-To- Launch Simplify Ways Technology Market & Support New Offerings of Working Higher More Revenue Better Agility More Sustainability, Customer & Scalability Innovation, Satisfaction Reimagination 56
Slide 57: Financial Overview
Financial Overview Jennifer Kimball Interim Chief Financial Officer & Chief Accounting Officer Melissa Smith Chief Executive Officer 57
Slide 58: Q4 and FY 2021 Results Demonstrate Momentum
Q4 and FY 2021 Results Demonstrate Momentum Q4 2021 FY 2021 $497.5M +25% $1.85B +19% Revenue vs. Q4 2020 Revenue vs. FY 2020 $2.58 +78% $9.14 +51% ANI per Share vs. Q4 2020 ANI per Share vs. FY 2020 58
Slide 59: Track Record of Strong Performance
Track Record of Strong Performance Revenue ($M) Adjusted Net Income per Diluted Share $11.20 - $11.60 $2,050 - $2,090 $1,851 $9.20 $9.14 $1,724 $8.28 $1,560 $1,493 $1,249 $6.06 $5.32 $1,012 $3.78 2016 2017 2018 2019 2020 2021 2022E 2016 2017 2018 2019 2020 2021 2022E 2022E reflects mid-point of guid
Slide 60: Robust Cash Flow Generation
Robust Cash Flow Generation $711 $657 $481 $566 $558 ~$3B Cash Generated1 Since 2017 3.7 3.5 3.7 3.4 3.1 • Attractive margin profile, low capital intensity, and recurring revenue model drive significant cash generation • Cash generation is a compelling competitive advantage compared to smaller, less
Slide 61: Capital Allocation Priorities
Capital Allocation Priorities • Enhance global commerce platform to drive customer wins and grow share of wallet Invest in Organic 1 Growth • Expand and diversify existing offering • Digital go-to-market and support capabilities • Identify targets with complementary solutions to expand WEX’s platfor
Slide 62: Ambitious and Achievable Long-Range Financial Targets
Ambitious and Achievable Long-Range Financial Targets 8% - 12% 4% - 8% Organic Revenue Growth Fleet Solutions Revenue Growth 10% - 15% 10% - 15% Total Revenue Growth Travel & Corporate Solutions Revenue Growth 15% - 20% 15% - 20% Adjusted Net Income Growth Health & Employee Benefits Solutions Revenu
Slide 63: Our Five-Year Growth Plan
Our Five-Year Growth Plan ~5% 2-3% • Largely fixed cost base and scalability of 1-2% CAGR platform driving higher margins 15-20% 3-5% 10-15% • Balance sheet actions driving incremental ANI accretion 4-5% Existing Net New New Products M&A Total Revenue Margin Expansion Adjusted Net Customer Growth Cu
Slide 64: Why We Succeed
Why We Succeed We have leading technology, customers, and people that all continue to drive strong shareholder value Growth Engine Leadership Recurring Network People in Large Markets Position Revenue Model Effect
Slide 65: Q&A
Q&A 65
Slide 66: Appendix
Appendix 66
Slide 67: Impacts of Amended Contract on Travel and Corporate Solutions Segment
Impacts of Amended Contract on Travel and Corporate Solutions Segment Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 • Accounting presentation Reported: changed in Q4 2021 from Volume $ 4,968,321 $ 6,107,675 $ 8,736,019 $ 12,799,555 $ 10,916,015 gross revenue recognition Net interchange rate** 1.26 % 0.94
Slide 68: Non-GAAP Reconciliation
Non-GAAP Reconciliation Reconciliation of Adjusted Net Income to GAAP Net Income Year Ended December 31, Year Ended December 31, Year Ended December 31, Year Ended December 31, Year Ended December 31, Year Ended December 31, 2021 2020 2019 2018 2017 2016 per diluted per diluted per diluted per dilut
Slide 69: Non-GAAP Reconciliation
Non-GAAP Reconciliation Reconciliation of GAAP Operating Income to Total Segment Adjusted Operating Income and Adjusted Operating Income Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, December 31, December 31, (in thousands) 2021
Slide 70: Non-GAAP Reconciliation
Non-GAAP Reconciliation Reconciliation of Consolidated Net Income to Bank Covenant EBITDA and Cash Generated Year Ended Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, December 31, 2021 2020 2019 2018 2017 Consolidated Net Income $ 0.1 $ (243.6) $ 99.0
Slide 71: Non-GAAP Reconciliation
Non-GAAP Reconciliation The Company's non-GAAP adjusted net income excludes unrealized gains and losses on financial instruments, net foreign currency gains and losses, change in fair value of contingent consideration, acquisition-related intangible amortization, other acquisition and divestiture re
Slide 72: Definitions
Definitions Organic revenue growth: Organic revenue includes all sources of revenue growth in a given year, except for all revenue associated with companies acquired for a period of one year following the date of the acquisition. Cash generation: Due to the complexity created by owning a bank, the c