10q10k10q10k.net

What changed in WEX Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of WEX Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+513 added−508 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-23)

Top changes in WEX Inc.'s 2024 10-K

513 paragraphs added · 508 removed · 386 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

98 edited+37 added−47 removed98 unchanged
Biggest changeIn addition to the applicable U.S. laws and regulations, we are also subject to various international laws and regulations aimed at combating money-laundering and terrorism, including: • in Canada, Freezing Assets of Corrupt Foreign Officials Act, Justice for Victims of Corrupt Foreign Officials Act, Listed Terrorist Entities under the Criminal Code, Special Economic Measures Act, United Nations Act and their respective regulations; • in the EU, the Fourth and Fifth Anti-Money Laundering Directives (2015/849/EU) and (2018/843/EU), and the EU’s economic sanctions regime; • in the UK, Proceeds of Crime Act 2002 (as amended), Terrorism Act 2000 (as amended by the Anti-terrorism, Crime and Security Act 2001), Money Laundering Regulations 2017 (as amended), Counter-terrorism Act 2008, Schedule 7, Financial Sanctions - HM Treasury Sanctions Notices and News Releases; • in Australia, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, the Anti-Money Laundering and Counter-Terrorism Financing Rules, Autonomous Sanctions Act 2011, the Australian Autonomous Sanctions Regulations 2011, the Charter of the United Nations Act 1945 (the United Nations Act) and its sets of regulations; and • in Singapore, the Corruption, Drug Trafficking and other Serious Crimes (Confiscation of Benefits) Act 1992, the Terrorism (Suppression of Financing) Act 2002 and various Monetary Authority of Singapore (“MAS”) regulations, notices, guidelines and guidance relating to sanctions and anti-money laundering.
Biggest changeIn addition to the applicable U.S. laws and regulations, we are also subject to various international laws and regulations aimed at combating money-laundering and terrorism, including: 18 Table of Contents PART I • in Canada, Freezing Assets of Corrupt Foreign Officials Act, Justice for Victims of Corrupt Foreign Officials Act, Listed Terrorist Entities under the Criminal Code, Special Economic Measures Act, United Nations Act and their respective regulations; • in the EU, the Fourth and Fifth Anti-Money Laundering Directives (2015/849/EU) and (2018/843/EU), and the EU’s economic sanctions regime; • in the UK, Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended by the Money Laundering and Transfer of Funds (Information) (Amendment) (EU Exit) Regulations 2019 (MLRs), section 21A Terrorism Act 2000, Proceeds of Crime Act 2002, Schedule 7 to the Counter-terrorism Act 2008, and various pieces of legislation that implement the UK’s financial sanctions regime including HM Treasury Sanctions Notices and News Releases; • in Australia, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024, the Anti-Money Laundering and Counter-Terrorism Financing Rules, Autonomous Sanctions Act 2011, the Australian Autonomous Sanctions Regulations 2011, the Charter of the United Nations Act 1945 (the United Nations Act) and its sets of regulations; and • in Singapore, the Corruption, Drug Trafficking and other Serious Crimes (Confiscation of Benefits) Act 1992, the Terrorism (Suppression of Financing) Act 2002 and various Monetary Authority of Singapore (“MAS”) regulations, notices, guidelines and guidance relating to sanctions and anti-money laundering.
Email and Text Marketing Laws We use direct email marketing and text-messaging to reach out to current or potential customers and therefore are subject to various statutes, regulations, and rulings, including the Telephone Consumer Protection Act, the Controlling the Assault of Non-Solicited Pornography and Marketing Act and related Federal Communication Commission orders as well as similar international legislation such as Canada’s Anti-Spam Legislation, which regulates the sending of commercial electronic messages.
Email and Text Marketing Laws We use direct email marketing and text-messaging to reach out to current or potential customers and therefore are subject to various statutes, regulations, and rulings, including the Telephone Consumer Protection Act and related Federal Communication Commission orders, the Controlling the Assault of Non-Solicited Pornography and Marketing Act as well as similar international legislation such as Canada’s Anti-Spam Legislation, which regulates the sending of commercial electronic messages.
ITEM 1. BUSINESS Our Company WEX’s mission is focused on simplifying the business of running a business. WEX owns and operates a B2B ecosystem that helps our customers overcome highly manual processes and reconciliations, navigate the complexity of consumer driven healthcare benefits, and solve their administrative challenges.
ITEM 1. BUSINESS Our Company Overview WEX’s mission is focused on simplifying the business of running a business. WEX owns and operates a B2B ecosystem that helps our customers overcome highly manual processes and reconciliations, navigate the complexity of consumer driven healthcare benefits, and solve their administrative challenges.
WEX’s Total Rewards program includes salary, paid time off, 401(k) employer match, eligibility for cash short term incentive payments and long term incentive equity awards, as well as health and wellness, conception, career, social, community, and overall well-being benefits.
WEX’s Total Rewards program includes salary, paid time off, 401(k) employer match, eligibility for short term incentive payments and long term incentive equity awards, as well as health and wellness, conception, career, social, community, and overall well-being benefits.
Healthcare Regulation The federal and state governments in the U.S. continue to enact and consider many broad-based legislative and regulatory proposals that could materially impact various aspects of our benefits-related business. The plans that our partners and clients administer feature consumer-directed accounts that pay for out-of-pocket expenses incurred by employees and qualified dependents.
Healthcare Regulation The federal and state governments in the U.S. continue to enact and consider many broad-based legislative and regulatory proposals that could materially affect various aspects of our benefits-related business. The plans that our partners and clients administer feature consumer-directed accounts that pay for out-of-pocket expenses incurred by employees and qualified dependents.
In addition to tax-related regulation, the Health Care Reform law imposes coverage standards affecting insured and self-insured health benefit plans that impact our current business model, including our relationships with current and future customers, producers and health care providers, products, services, processes and technology.
In addition to tax-related regulation, the Health Care Reform law imposes coverage standards affecting insured and self-insured health benefit plans that affect our current business model, including our relationships with current and future customers, producers and health care providers, products, services, processes and technology.
Optal Financial Europe Limited (“OFEL”) is an Irish authorized electronic money institution, authorized under the European Communities (Electronic Money) Regulations 2011, as amended (which implements 2EMD). A pertinent requirement of such authorization is to safeguard customer funds against the firm’s insolvency.
Optal Financial Europe Limited (“OFEL”) is an Irish authorized electronic money institution, authorized under the European Communities (Electronic Money) Regulations 2011, as amended (which implements EMD2). A pertinent requirement of such authorization is to safeguard customer funds against the firm’s insolvency.
WEX and WEX Bank are also subject to certain international privacy and data protection laws. For example, in Europe and the United Kingdom, the General Data Protection Regulation (“GDPR”) and the UK GDPR applies to all companies processing data of EU/UK residents, regardless of the company’s location.
WEX and WEX Bank are also subject to certain international privacy and data protection laws. For example, in Europe and the United Kingdom, the General Data Protection Regulation (“GDPR”) and the UK GDPR apply to all companies processing data of EU/UK residents, regardless of the company’s location.
For our AP automation and spend management solution, these capabilities include: (i) customizable integrations with different ERPs, (ii) enhanced AP data analysis and supplier enablement teams focused on increasing card acceptance, (iii) a wide variety of different virtual card products with each of the card associations to optimize card acceptance and interchange yield, (iv) bank transfer and check issuance capabilities allowing WEX to fulfill full AP file needs, and (v) different user interfaces oriented toward more simple small business needs as well as complex corporate needs.
For our Direct to Corporate solution, these capabilities include: (i) customizable integrations with different ERPs, (ii) enhanced AP data analysis and supplier enablement teams focused on increasing card acceptance, (iii) a wide variety of different virtual card products with each of the card associations to optimize card acceptance and interchange yield, (iv) bank transfer and check issuance capabilities allowing WEX to fulfill full AP file needs, and (v) different user interfaces oriented toward more simple small business needs as well as complex corporate needs.
We rely on a combination of patent, copyright, trade secret and trademark laws, confidentiality procedures, contractual provisions and other similar measures to protect the proprietary information and technology used in our business.
Intellectual Property We rely on a combination of patent, copyright, trade secret and trademark laws, confidentiality procedures, contractual provisions, and other similar measures to protect the proprietary information and technology used in our business.
Our talent strategy includes a focus on retention and we regularly monitor employee turnover and engagement to identify opportunities to strengthen our approach to human capital management. During 2023, our global voluntary turnover rate was approximately 10 percent, while our voluntary turnover among global employees who generally have managerial responsibilities (“leadership roles”) was approximately 6 percent.
Our talent strategy includes a focus on retention and we regularly monitor employee turnover and engagement to identify opportunities to strengthen our approach to human capital management. During 2024, our global voluntary turnover rate was approximately 10 percent, while our voluntary turnover among global employees who generally have managerial responsibilities (“leadership roles”) was approximately 6.5 percent.
Related to this service we have developed proprietary account approval, underwriting, credit management, and collections programs. • Merchant services : Our representatives work with fuel and vehicle maintenance providers to enroll these providers in our network, test all network technology, and provide training on our processes. • Analytics solutions : We provide customers with access to analytics platforms and custom reporting tools targeted toward identifying cost savings opportunities and managing their fleet. • Ancillary services and offerings : We provide a variety of ancillary services and tools to fleets to help them better manage expenses and capital requirements.
Related to this service we have developed proprietary account approval, underwriting, credit management, and collections programs. 11 Table of Contents PART I • Merchant services : Our representatives work with fuel and vehicle maintenance providers to enroll these providers in our network, test all network technology, and provide training on our processes. • Analytics solutions : We provide customers with access to analytics platforms and custom reporting tools targeted toward identifying cost savings opportunities and managing their fleet. • Ancillary services and offerings : We provide a variety of ancillary services and tools to fleets to help them better manage expenses and capital requirements.
Addresses the needs of businesses that utilize primarily medium and heavy duty vehicles central to the operation of the freight economy in North America. • International Fleet .
Addresses the needs of businesses that utilize primarily medium and heavy duty vehicles central to the operation of the freight economy in North America. • International Mobility .
These requirements are discussed in Part I – Item 1A – Risk Factors – “Provisions in our charter documents, Delaware law and applicable banking laws may delay or prevent our acquisition by a third party, and could adversely impact the market price of our common stock.” Anti-Bribery Regulations WEX is a global business and is required to comply with anti-bribery and corruption laws in the jurisdictions it operates within, including but not limited to, the FCPA, UK Bribery Act 2010 (“UKBA”), the Canadian Criminal Code and Corruption of Foreign Public Officials Act and the Singapore Prevention of Corruption Act 1960.
These requirements are discussed in Part I – Item 1A – Risk Factors – 22 Table of Contents PART I “Provisions in our charter documents, Delaware law and applicable banking laws may delay or prevent our acquisition by a third party, and could adversely impact the market price of our common stock.” Anti-Bribery Regulations WEX is a global business and is required to comply with anti-bribery and corruption laws in the jurisdictions it operates within, including but not limited to, the FCPA, UK Bribery Act 2010 (“UKBA”), the Irish Criminal Justice (Corruption Offences) Act 2018, the Canadian Criminal Code and Corruption of Foreign Public Officials Act and the Singapore Prevention of Corruption Act 1960.
Many states exercise authority over the operations of our services related to money transmission and payment instruments and, as part of this authority, subject us to periodic examinations, which may include a review of our compliance practices, policies and procedures, financial position and related records, privacy and data security policies and procedures, and other matters related to our business.
Many states exercise authority over the operations of our services related to money transmission and payment instruments and, as part of this authority, subject us to periodic examinations, which may include a review of our compliance practices, policies and procedures, financial position and related records, privacy and data security policies and procedures, and 20 Table of Contents PART I other matters related to our business.
Potential changes could also include clearing and execution methodology of our derivatives transactions. 17 Table of Contents PART I Brokered Deposits Section 29 of the Federal Deposit Insurance Act restricts the acceptance of brokered deposits by an insured depository institution unless the institution is “well capitalized.” For insured depository institutions that are “less than well capitalized,” certain interest rate cap restrictions are imposed.
Potential changes could also include clearing and execution methodology of our derivatives transactions. Brokered Deposits Section 29 of the Federal Deposit Insurance Act restricts the acceptance of brokered deposits by an insured depository institution unless the institution is “well capitalized.” For insured depository institutions that are “less than well capitalized,” certain interest rate cap restrictions are imposed.
For our embedded payments offering used by leading technology companies across various industries, our net interchange rate is lower than that on our direct-to-corporate AP automation and spend management solution. Due to the largely fixed or semi-fixed cost nature of our solution, this segment benefits from a high variable margin contribution.
For our embedded payments offering used by leading technology companies across various industries, our net interchange rate is lower than that on our Direct to Corporate solution. Due to the largely fixed or semi-fixed cost nature of our solution, this segment benefits from a high variable margin contribution.
Although WEX Bank is not currently subject to the examination and supervisory authority of the CFPB because it has less than $10 billion in total assets, it is required to comply with the rules and regulations issued by the CFPB, with the FDIC having the primary responsibility for supervising and examining WEX Bank’s compliance with federal rules and regulations.
Although WEX Bank is not currently subject to the examination and supervisory authority of the CFPB because it has less than $10 17 Table of Contents PART I billion in total assets, it is required to comply with the rules and regulations issued by the CFPB, with the FDIC having the primary responsibility for supervising and examining WEX Bank’s compliance with federal rules and regulations.
While our strategy articulates the choices we are making to grow our business in the market and competitive landscape we play in, we expect those choices to deliver growth across five drivers: • Win New Customers . We seek to drive organic growth across our segments by nurturing our customer relationships and ensuring we are a trusted strategic partner.
While our strategy articulates the choices we are making to grow our business in the market and competitive landscape we play in, we expect those choices to deliver growth across the following drivers: • Win New Customers . We seek to drive organic growth across our segments by ensuring we are a trusted strategic partner.
Singapore In Singapore, WEX Finance Inc. and Optal Singapore Pte Ltd are licensed to carry on the business of issuing credit cards and/or charge cards and must comply with the Banking Act 1970 and the applicable sections of the Payment Services Act 2019 (“PSA”). These entities are supervised by the MAS.
Singapore WEX Finance Inc. and Optal Singapore Pte Ltd are licensed to carry on the business of issuing credit cards and/or charge cards and must comply with the Banking Act 1970, the applicable sections of the Payment Services Act 2019 (“PSA”) and various MAS regulations, notices, guidelines and guidance. These entities are supervised by the MAS.
With our deep industry expertise we try to differentiate ourselves from the market through customer-focused innovation, working alongside customers to ensure our solutions are relevant to their specific needs.
With our deep industry expertise we strive to differentiate ourselves from the market through customer-focused innovation, working alongside them to ensure our solutions are relevant to their specific needs.
The Company’s Audit Committee Charter, Leadership Development and Compensation Committee Charter, Finance Committee Charter, Corporate Governance Committee Charter, Technology and Cybersecurity Committee Charter, Corporate Governance Guidelines and Code of Business Conduct and Ethics are available without charge through the “Governance” portion of the Investor Relations page of the Company’s 24 Table of Contents PART I website.
The Company’s Audit Committee Charter, Leadership Development and Compensation Committee Charter, Finance Committee Charter, Corporate Governance Committee Charter, Technology and Cybersecurity Committee Charter, Corporate Governance Guidelines, and Code of Business Conduct and Ethics are available without charge through the “Governance” portion of the Investor Relations page of the Company’s website.
Our virtual payments capability is used for transactions where no physical card is presented, including transactions that are increasingly completed online in a 13 Table of Contents PART I digitally connected world, but can also be used over the telephone, by mail, by email, or by fax.
Our virtual payments capability is used for transactions where no physical card is presented, including transactions that are increasingly completed online in a digitally connected world, but can also be used over the telephone, by mail, by email, or by fax.
A portion of revenue is derived from licensing fees we charge to partner financial institutions who white-label our AP automation and spend management solution. These financial institutions pay a technology fee as a percentage of the spend that the software enables them to issue.
A portion of revenue is derived from licensing fees we charge to partner financial institutions who white-label our Direct to Corporate solution. These financial institutions pay a technology fee as a percentage of the spend that the software enables them to issue.
The statute also requires maintenance of appropriate books and records and maintenance of adequate internal controls to prevent and detect possible FCPA violations. 22 Table of Contents PART I Non-Bank Custodian Regulations As a U.S.
The statute also requires maintenance of appropriate books and records and maintenance of adequate internal controls to prevent and detect possible FCPA violations. Non-Bank Custodian Regulations As a U.S.
Additionally, WEX Bank does business with customers outside of the United States and, in some countries, relies on a letter of non-objection from the local banking authority to provide services to customers in the said country from the United States.
Additionally, WEX Bank does business with customers outside of the United States and, in some countries, relies on a letter of non-objection from the local banking authority to provide services to customers in the said country from the United States. WEX Bank complies with the applicable United States regulations for services provided to those countries from the United States.
Our customers’ product set is largely focused on aggregating and managing large amounts of payments where a commercial payment solution is required. Within our AP Automation and Spend Management solutions, we focus on both direct sales to businesses as well as empowering financial institutions to serve their customers directly using our technology.
Our customers’ product set is largely focused on aggregating and managing large amounts of payments where a commercial payment solution is required. Within our Direct to Corporate solution, we focus on both direct sales to businesses as well as empowering financial institutions under white-label partnerships to serve their customers directly using our technology.
We believe that WEX offers the marketplace a unique combination of capabilities to simplify complexity, thereby setting WEX’s offerings apart from those of our competition, including: • Global commerce platform . Our technology is engineered and operated with global scale and reliability. We have invested heavily, and expect to continue to invest, in technology.
We believe that WEX offers the marketplace a unique combination of capabilities to simplify complexity, thereby setting WEX’s offerings apart from those of our competition. Our technology is engineered and operated with global scale and reliability. We have invested heavily in technology and expect to continue to do so on an ongoing basis.
In addition, our global recognition program allows employees to nominate each other for recognition. These acknowledgments are then incorporated into our annual performance management process, which factors into an employee’s annual total compensation package (or “Total Rewards”).
In addition, our global recognition program allows employees to nominate each other for recognition. These acknowledgments are then incorporated into our annual performance management process, which factors into an employee’s annual compensation package, which is a part of our Total Rewards program.
Customers access our capabilities primarily via our proprietary set of application programming interfaces (“APIs”). We combine wholly-owned and developed cloud-based technology along with our wholly-owned and operated global financial services capabilities, inclusive of WEX Bank and our various electronic money institutions around the world, to satisfy the commercial payments needs of our customer base.
We combine wholly-owned and developed cloud-based technology along with our wholly-owned and operated global financial services capabilities, inclusive of WEX Bank and our various electronic money institutions around the world, to satisfy the commercial payments needs of our customer base.
We provide a software platform for record-keeping and administration of account-based benefit plans, which reimburse eligible expenses incurred by plan participants and their eligible dependents. We also provide debit card processing services to enable immediate electronic reimbursement. • Non-bank custodial services .
The following summarizes our key products and services within the Benefits segment: • Consumer-directed benefits . We provide a software platform for record-keeping and administration of account-based benefit plans, which reimburse eligible expenses incurred by plan participants and their eligible dependents. We also provide debit card processing services to enable immediate electronic reimbursement. • Non-bank custodial services .
We address the marketplace through three different business units. • North American Fleet . Addresses the needs of businesses that utilize primarily light and medium duty vehicles central to the operation of the service economy in North America. • Over-the-Road .
We serve diverse fleet needs globally, addressing the marketplace through three different business units: • North American Mobility . Addresses the needs of businesses that utilize primarily light and medium duty vehicle fleets central to the operation of the service economy in North America. • Over-the-Road .
As of December 31, 2023, we had a substantial workforce of approximately 7,200 full time employees, of which approximately 5,500 were located in the United States. The remainder were located across fifteen countries.
As of December 31, 2024, we had a workforce of approximately 6,500 full time employees, of which approximately 5,000 were located in the United States. The remainder were located across fifteen other countries.
In our over-the-road fleet business, the amount of time between when we pay the merchants and collect from our customers is significantly reduced relative to a typical North America or International Fleet transaction.
We collect the total purchase price from our North America and international Mobility customers, typically within 30 days from the billing date. In our Over-the-Road fleet business, the amount of time between when we pay the merchants and collect from our customers is significantly reduced relative to a typical North America or International Fleet transaction.
We serve more than half of the Fortune 1000 companies in the United States. Corporate Payments WEX is both one of the largest commercial payment companies in the world as well as a trusted technology partner for some of the largest organizations in the world.
We serve more than half of the Fortune 1000 companies in the United States. Corporate Payments WEX is both one of the largest commercial payment companies in the world as well as a trusted technology partner for some of the largest organizations worldwide. WEX couples wholly owned market leading technology with a global issuing and funding capability.
Most of these accounts are tax-advantaged under the appropriate law. 18 Table of Contents PART I Employers are continuing to use CDH approaches to manage the rate of increase in healthcare expenditures and to enable employees to make decisions about the use of their healthcare savings. CDH programs provide consumers with visibility into and control over payment for healthcare expenses.
Employers are continuing to use CDH approaches to manage the rate of increase in healthcare expenditures and to enable employees to make decisions about the use of their healthcare savings. CDH programs provide consumers with visibility into and control over payment for healthcare expenses.
WEX Bank complies with the applicable United States regulations for services provided to those countries from the United States. 16 Table of Contents PART I Restrictions on Intercompany Borrowings and Transactions Sections 23A and 23B of the FRA and the implementing regulations limit the extent to which the Company can borrow or otherwise obtain credit from, or engage in, other “covered transactions” with WEX Bank.
Restrictions on Intercompany Borrowings and Transactions Sections 23A and 23B of the FRA and the implementing regulations limit the extent to which the Company can borrow or otherwise obtain credit from, or engage in, other “covered transactions” with WEX Bank.
Our revenues derive primarily from three sources: • Per participant per month fees charged for our software and administrative services. • Interest on deposits and fees related to cash balances in HSAs over which WEX Inc. is the custodian. • Interchange on debit cards used by plan participants and their dependents to pay for eligible expenses from their benefit plan. 12 Table of Contents PART I Distribution We distribute our software and payment solutions through a variety of partners, such as third-party administrators, financial institutions, payroll providers, and health plans.
Our revenues derive primarily from three sources: • Per participant per month fees charged for our software and administrative services; • Interest on deposits and fees related to cash balances in HSAs over which WEX Inc. is the custodian; and 13 Table of Contents PART I • Interchange on debit cards used by plan participants and their dependents to pay for eligible expenses from their benefit plan.
Of most significance are: (a) the European Union (Payment Services) Regulations 2018, which implement PSD2, (b) the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended (CJA 2010), which implements 5 AMLD, (c) the European Banking Authority’s Outsourcing Guidelines and the Central Bank of Ireland (CBI) Cross-Industry Guidance on Outsourcing and (d) the CBI’s Cross-Industry Guidance on Operational Resilience.
Of most significance are: (a) the European Union (Payment Services) Regulations 2018, which implement PSD2, (b) the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended (CJA 2010), which implements 4&5 AMLD, (c) the European Banking Authority’s Outsourcing Guidelines and the Central Bank of Ireland (CBI) Cross-Industry Guidance on Outsourcing, (d) the CBI’s Cross-Industry Guidance on Operational Resilience, (e) the Digital Operational Resilience Act (Regulation (EU) 2022/2554) and certain governance requirements regarding senior management and office holders under the CBI’s Fitness & Probity Standards and the Individual Accountability Standards.
We are modernizing our data platform while introducing experimentation at scale to accelerate the pace at which we can process and present data to enable data-driven decisions for both employees and customers.
Our approach to data will be a critical differentiator for WEX as we continue our digital transformation. We are modernizing our data platform while introducing experimentation at scale to accelerate the pace at which we can process and present information to enable data-driven decisions for both employees and customers.
Using our technology, our customers have trusted us to conduct hundreds of billions of dollars in money movements in more than 20 currencies. We believe that our products and services play integral roles in the infrastructure of businesses. • Personalized solutions, seamlessly embedded .
Our customers have trusted us to conduct hundreds of billions of dollars in money movements in more than 20 currencies and we believe that our products and services play integral roles in the infrastructure of businesses. Our solutions are shaped by customer-focused innovation and deep industry expertise.
We enhance the value we deliver by seamlessly embedding our solutions into our customers’ operations, which enables customers to access our capabilities through systems and interfaces they already use. • Insights that Power Success .
We enhance the value we deliver by seamlessly embedding our solutions into our customers’ operations, which enables them to access our capabilities through systems and interfaces they already use. • Customer Insights and Trust . The value of the solutions we provide is further amplified by the insights we deliver.
These accounts include CDH accounts such as HSAs, FSAs and HRAs, as well as wellness incentives, commuter benefits, and other account-based arrangements.
These accounts include CDH accounts such as HSAs, FSAs and HRAs, as well as wellness incentives, commuter benefits, and other account-based arrangements. Most of these accounts are tax-advantaged under the appropriate law.
Payment processing transactions are the primary revenue source in the Mobility segment. Revenue is earned based on a percentage of the aggregate dollar amount of the customer’s purchase, a fixed amount per transaction, or a combination of both.
Payment processing transactions are the largest revenue source in the Mobility segment. Revenue is earned based on a percentage of the aggregate dollar amount of the customer’s purchase, a fixed amount per transaction, or a combination of both. We extend short-term credit to the fleet cardholder as part of a typical domestic payment processing transaction.
With a co-branded relationship product, we market our products and services for, and in collaboration with, fuel providers and fleet management companies using their brand names and our logo on a co-branded fleet card. These companies seek to offer our payment processing and information management services as a component of their total offering to their customers.
These companies seek to offer our payment processing and information management services as a component of their total offering to their customers. Our private label programs market our products and services for, and in collaboration with, fuel retailers, using only their brand names.
We care deeply about employee engagement and satisfaction and capture employee feedback through an annual employee survey and pulse surveys throughout the year, which measure cultural and engagement indicators. We utilize the survey results to guide our decisions throughout the organization. We are dedicated to cultivating a diverse, equitable and inclusive business culture.
We care deeply about employee engagement and satisfaction and capture employee feedback through an annual employee survey and pulse surveys throughout the year, which measure cultural and engagement indicators. We utilize the survey results to guide our decisions throughout the Organization. We aim to cultivate a business culture that drives the development of the innovative solutions our customers depend on.
As a result, we have established anti-money laundering compliance programs that include: (i) internal policies and controls; (ii) designation of a compliance 20 Table of Contents PART I officer; (iii) ongoing employee training; and (iv) an independent review function.
As a result, we have established anti-money laundering compliance programs that include: (i) internal policies and controls; (ii) designation of a compliance officer; (iii) ongoing employee training; and (iv) an independent review function. We have developed and implemented compliance programs comprised of policies, procedures, systems and internal controls to monitor and address various legal requirements and developments.
Among other obligations, the PSA requires the entities to safeguard the relevant funds of their customers. Australia eNett International (Singapore) Pte Ltd holds an Australian Financial Services License (“AFSL”) granted by the Australian Securities and Investments Commission, which authorizes it to provide a non-cash payment facility to wholesale customers.
Among other obligations, the PSA requires the entities to safeguard the relevant funds of their customers. 21 Table of Contents PART I Australia eNett International (Singapore) Pte Ltd holds an Australian Financial Services License (“AFSL”) which authorizes it to deal in non-cash payment products in relation to wholesale customers.
We have developed and implemented compliance programs comprised of policies, procedures, systems and internal controls to monitor and address various legal requirements and developments. Government agencies may impose new or additional requirements on money transmission and sales of payment instruments, and we expect that compliance costs will increase in the future for our regulated subsidiaries.
Government agencies may impose new or additional requirements on money transmission and sales of payment instruments, and we expect that compliance costs will increase in the future for our regulated subsidiaries.
A key foundation to the solutions we deliver to our customers is our platform, through which we deliver the solutions that serve our customers’ businesses. We continue to focus on differentiating ourselves through the global scale and reliability of our underlying infrastructure, and by anticipating our customers’ technology needs.
We continue to focus on differentiating ourselves through the global scale and reliability of our underlying infrastructure, and by anticipating our customers’ technology needs.
WEX is unique in our space as we couple wholly owned market leading technology with a global issuing and funding capability. Our wholly owned subsidiary, WEX Bank, currently funds the majority of our Mobility and Corporate Payments operations, provides us with a number of services, including credit adjudication, and is a depository institution for certain HSA cash assets.
Our wholly owned subsidiary, WEX Bank, currently funds a significant portion of our Mobility and Corporate Payments operations, provides us with a number of services, including credit adjudication, and is a depository institution for certain HSA cash assets.
Distribution We market our Mobility products and services both directly and indirectly to businesses and government agencies with fleets of commercial vehicles, including fleets of all sizes, and over-the-road, long haul fleets. Our direct product suite includes payment processing and transaction processing services, WEX branded fleet cards in North America, and Motorpass branded fleet cards in Australia.
Distribution We market our Mobility products and services both directly and indirectly to businesses and government agencies with fleets of commercial vehicles, including fleets of all sizes, and over-the-road, long haul fleets.
Each transaction is assigned a unique VCN on either of the Mastercard or Visa networks, with a customized spend limit, expiration date, and various other purchase controls. These controls are in place to limit fraud and unauthorized spending. The unique VCN limits purchase amounts and tracks, settles, and reconciles purchases more easily, creating efficiencies and cost savings for our customers.
Each transaction is assigned a unique VCN on either of the Mastercard or Visa networks, with a customized spend limit, expiration date, and various other purchase controls. These 14 Table of Contents PART I controls are in place to limit fraud and unauthorized spending.
Our private label programs market our products and services for, and in collaboration with, fuel retailers, using only their brand names. The fuel retailers with which we have formed strategic relationships offer our payment processing and information management products and services to their customers in order to establish and enhance customer loyalty.
The fuel retailers with which we have formed strategic relationships offer our payment processing and information management products and services to their customers in order to establish and enhance customer loyalty. These fleets use these products and services to purchase fuel at locations of the fuel retailer with whom we have the private label relationship.
We foster a collaborative and supportive culture based on our core values: Community Execution Innovation Integrity Relationships Our employees, their well-being, and the culture in which they operate are core to our success as an organization and as an operating business.
We foster a collaborative and supportive culture based on our core values: Team up Stick to it Put ingenuity to work Act with integrity Stay open Be a positive force Our employees, their well-being, and the culture in which they operate are core to our success as an organization and as an operating business.
Our Technology and Resources WEX’s digital and technology strategy remains grounded in deeply understanding our customers’ needs, leveraging our technology and payments expertise and continuing strong investment to deliver great products for the near and long term.
Along with our organic growth, we may determine to grow through strategic acquisitions to bring further scale and diversification to our offerings. Our Technology and Resources WEX’s technology strategy remains grounded in deeply understanding our customers’ needs, leveraging our technology and payments expertise and continuing strong investment to deliver great products for the near and long term.
Our support and service capabilities continue to enable us to grow with existing customers and win new customers. • Grow Share of Wallet . We seek to expand our relevance and the value we deliver to our customers by growing the services we provide to them.
Our support and service capabilities continue to enable us to grow through further penetration of our markets. 9 Table of Contents PART I • Grow Share of Wallet . We seek to expand our relevance and the value we deliver to our customers by nurturing our customer relationships and growing the services we provide to them.
Our ecosystem of solutions provides the Company with multiple and diverse levers and opportunities to help WEX achieve its financial and business goals. Current goals include winning new customers, growing our share of wallet, expanding and diversifying our offering, deepening our global presence, and executing strategic mergers and acquisitions.
We believe our ecosystem of solutions provides the Company with multiple and diverse levers and opportunities to help WEX achieve its financial and business goals, including to win new customers, grow our share of wallet, expand and diversify our offering, and execute strategic mergers and acquisitions.
Available Information Location The Company’s principal executive offices are located at 1 Hancock St., Portland, ME 04101. Telephone Number (207) 773-8171 Internet www.wexinc.com The Company’s annual, quarterly and current reports, proxy statements and certain other information filed with the SEC, as well as amendments thereto, may be obtained free of charge from our website.
Telephone Number (207) 773-8171 Internet www.wexinc.com The Company’s annual, quarterly, and current reports, proxy statements, and certain other information filed with the SEC, as well as amendments thereto, may be obtained free of charge from our website. These documents are posted to our website as soon as reasonably practicable after we have filed or furnished these documents with the SEC.
The U.S. government has imposed economic sanctions that affect transactions with designated foreign countries, foreign nationals and others.
Financial regulators have issued various implementing regulations and have made enforcement a high priority. The U.S. government has imposed economic sanctions that affect transactions with designated foreign countries, foreign nationals and others.
Financial institutions, including but not limited to J.P. Morgan, Barclays, Capital One, American Express, and Citi, have access to technology solutions coupled with payment capabilities.
Competition In general, WEX Corporate Payments competes with financial institutions that provide general payment services without the enhanced capabilities of our solution set. Financial institutions, including but not limited to J.P. Morgan, Barclays, Capital One, American Express, and Citi, have access to technology solutions coupled with payment capabilities.
We believe we compete favorably against these competitors through our wide geographic reach, deep payments expertise, enduring relationships, in-house technology and issuing capabilities, and our cloud-based proprietary technology stack. 14 Table of Contents PART I Our Strategy As a continuing innovator in the payments and business technology industry, WEX has significant experience in bringing and expanding our solutions to customers and markets.
We believe we compete favorably against these competitors through our wide geographic reach, deep payments expertise, enduring relationships, in-house technology and issuing capabilities, and our cloud-based proprietary technology stack. 15 Table of Contents PART I Our People Talent Strategy Culture and engagement are of utmost importance to our business.
Several states have enacted additional, more restrictive and punitive laws regulating commercial email. Violations of these laws could result in enforcement actions, statutory fines and penalties, and class action litigation.
Violations of these laws could result in enforcement actions, statutory fines and penalties, and class action litigation.
We continuously seek to identify, experiment and launch products in new solution spaces. As business models evolve, we seek to adapt our solution suite to stay relevant, and at the forefront of serving our customers’ needs. • Deepen Global Presence . As a global business, we have an established footprint around the world.
We continuously seek to identify, experiment and launch products in new solution spaces. As business models evolve, we seek to adapt our solution suite to stay relevant, and at the forefront of serving not only our existing customers’ needs, but expanding our offerings to target new customer bases and markets. • Strategic M&A .
Additionally, beginning in November 2023, we provide a cloud-native 10 Table of Contents PART I software solution that has various capabilities, including scheduling, dispatch navigation, marketing and payment acceptance, to mobility field service customers in HVAC, roofing and other similar verticals.
Additionally, beginning with November 2023, we provide a cloud-native software solution that has various capabilities, including scheduling, dispatch navigation, marketing and payment acceptance, to Mobility field service customers in HVAC, roofing, and other similar verticals. Building upon our ICE-related fleet solutions, we are working on solutions we believe will ease the integration of EVs into mixed fleets.
These documents are posted to our website as soon as reasonably practicable after we have filed or furnished these documents with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov .
The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov .
Addresses the needs of businesses that utilize primarily light and medium duty vehicles central to the operation of the service economy outside of North America inclusive of our Fleet portfolios in Europe and Asia-Pacific. As of December 31, 2023, more than 19 million vehicles used our solutions for fleet management.
Addresses the needs of businesses that utilize primarily light and medium duty vehicles central to the operation of the service economy outside of North America inclusive of our Fleet portfolios in Europe and Asia-Pacific. Our proprietary closed-loop payments network in the U.S. covers more than 90% of fuel and 80% of EV charging locations.
These partners use our software and payment solutions in their administration of employee benefit plans for their employer clients. Our team works with these partners to help them deploy go-to-market strategies and tactics to grow their business. In addition, we provide business process outsourcing of administrative services on behalf of certain partners.
Our team works with these partners to help them deploy go-to-market strategies and tactics to grow their business. In addition, we provide business process outsourcing of administrative services on behalf of certain partners. We distribute full administrative services to the employer market directly and through brokers and consultants. Our solutions can be fully white-labeled, co-branded, or WEX-branded.
Whether our employees are working in office or at home, our primary objective remains the same - to support a healthy and safe environment for our employees.
We also continue to champion flexible working for our workforce, as our employee surveys indicate an appreciation for the flexibility of being able to work remotely. Whether our employees are working in office or at home, our primary objective remains the same — to support a healthy and safe environment for our employees.
Customers look to WEX for a powerful combination of specialized expertise and rich data to assist them in driving better decisions, moving more quickly, and in dealing with risk. We put control in the hands of our customers.
Both in our direct-to-corporate and partner channels, our solutions focus on simplifying the business of running a business by deeply embedding our solutions within our end customer workflows. Customers look to WEX for a powerful combination of specialized expertise and rich data to assist them in driving better decisions, moving more quickly, and in dealing with risk.
We support their holistic health and overall safety by providing a wide range of resources and tools, including, but not be limited to, wealth management services, virtual ergonomic assessments, on demand fitness classes, access to a mindfulness app, telehealth services, time off options, and a family concierge along with mental, behavioral and emotional support for our employees and their immediate family members.
We support their holistic health and overall safety by providing a wide range of resources and tools, including, but not be limited to, wealth management services, virtual ergonomic assessments, on-demand fitness classes, telehealth services, time off options, and a family concierge along with mental, behavioral and emotional support for our employees and their immediate family members. 16 Table of Contents PART I Regulation and Supervision The Company is subject to a substantial number of laws and regulations, both in the United States and in foreign jurisdictions, which apply to businesses offering financial technology services and payment cards to customers or processing or servicing for payment cards and related accounts.
Additionally, we are subject to other international and data protection laws in certain jurisdictions, including: • in Canada, the Personal Information Protection and Electronic Documents Act and provincial-level private sector privacy legislation enacted in Alberta, British Columbia, and Québec; • in Australia, the Privacy Act (1988) and the Australian Privacy Principles; and • in Singapore, the Personal Data Protection Act 2012. 19 Table of Contents PART I With respect to our healthcare services only, we have certain obligations under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and its implementing regulations, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”).
Additionally, we are subject to other international and data protection laws in certain jurisdictions, including: • in Canada, the Personal Information Protection and Electronic Documents Act and provincial-level private sector privacy legislation enacted in Alberta, British Columbia, and Québec; • in Australia, the Privacy Act (1988) and the Australian Privacy Principles; and • in Singapore, the Personal Data Protection Act 2012.
Further, OFL must comply with the UK sanctions regime which imposes serious and extensive restrictions on dealing with designated persons or entities. Other pertinent regulatory requirements applicable to OFL are the FCA’s expectations around outsourcing and operational resilience as set out in its Handbook and/or its Payments Services Approach Document.
Other pertinent regulatory requirements applicable to OFL are the FCA’s expectations around outsourcing and operational resilience as set out in its Handbook and/or its Payment Services and Electronic Money Approach Document.
Copies will also be provided, free of charge, to any stockholder upon written request to Investor Relations at the address above or by telephone at (866) 230-1633. The Company’s Internet site and the information contained on it or accessible through it are not incorporated into this Annual Report on Form 10–K and should not be considered part of this report.
The Company’s Internet site and the information contained on it or accessible through it are not incorporated into this Annual Report on Form 10–K and should not be considered part of this report.
These fleets use these products and services to purchase fuel at locations of the fuel retailer with whom we have the private label relationship. Competition In general, our Mobility business competes with financial institutions that provide general payment services without the enhanced capabilities of our solution set. We also compete against similar more specialized offerings from Fleetcor, U.S.
Competition In general, our Mobility business competes with financial institutions that provide general payment services without the enhanced capabilities of our solution set. We also compete against similar, more specialized offerings from Corpay, U.S. Bank Voyager, Radius Payment Solutions, DKV, and Edenred and smaller, newer players which have introduced specialized products designed for distinct customer groups.
This not only advances our ability to continuously deploy solutions, but it also improves the customer experience by enabling us to isolate issues and create opportunities for targeted integration with our partners. 15 Table of Contents PART I This work is paired with multi-layer security and privacy controls to mitigate the risk of security threats, including from cybersecurity attacks, so that our customers are provided with reliable, compliant systems that put a premium on data protection.
This work is paired with multi-layer security and privacy controls to mitigate the risk of security threats, including from cybersecurity attacks, so that our customers are provided with reliable, compliant systems that put a premium on data protection. See Part I – Item 1C – Cybersecurity for information on our processes and procedures in place for managing cybersecurity risk.
Solution Our products simplify the process of navigating and managing employee benefits for plan administrators, employers, and plan participants and their families. Our solutions power a variety of benefit plans, including HSAs, FSAs, HRAs, Lifestyle Spending Accounts, COBRA accounts, wellness incentives, Medicare Advantage supplemental benefits, commuter benefits, and other account-based benefit plans.
Our solutions power a variety of benefit plans, including HSAs, FSAs, HRAs, Lifestyle Spending Accounts, COBRA accounts, wellness incentives, Medicare Advantage supplemental benefits, commuter benefits, and other account-based benefit plans. We also provide the software that enables employees to choose and enroll in their benefits and manage those benefits throughout the plan year.
WEX Australia Pty Ltd, WEX Fuel Cards Australia Ltd and WEX Prepaid Cards Australia pty Ltd operate within a framework of regulatory relief and exemptions afforded them on the basis that they satisfy the requisite conditions. 21 Table of Contents PART I Third Party Administration Licensing Regulations We are subject to various U.S. laws and regulations governing third party administration of employee benefit plans.
WEX Finance Inc., WEX Australia Pty Ltd, WEX Fuel Cards Australia Ltd and WEX Prepaid Cards Australia Pty Ltd operate within a framework of regulatory relief and exemptions afforded them on the basis that they satisfy the requisite conditions.
Optal Australia Pty Ltd holds an intermediary authorization under eNett International (Singapore) Pte. Ltd’s AFSL. Any material failure by us to comply with the rules and regulations to which AFSL holders are subject could result with us incurring sanctions up to and including suspension or relinquishment of our license.
Any material failure by us to comply with the rules and regulations to which AFSL holders are subject could result with us incurring sanctions up to and including suspension or relinquishment of our license. WEX entities providing payment services to Australian customers must also comply with the Payment Systems (Regulation) Act 1998.
This requirement generally does not extend to information about companies or about individuals who obtain financial products or services for business, commercial, or agricultural purposes.
This requirement generally does not extend to information about companies or about individuals who obtain financial products or services for business, commercial, or agricultural purposes. For any consumer products or services provided by WEX Bank, the GLBA requires WEX Bank to provide initial and annual privacy notices to customers that describe our information sharing practices.

… 102 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

134 edited+34 added−28 removed261 unchanged
Biggest changeOur failure to adapt to technological and industry changes and effectively implement new technology and products could materially affect our competitive position and our business.
Biggest changeFor further information on how legislation and regulation related to sustainability may affect our business, please see Part I – Item 1A – Risk Factors – “ Legislation and regulation of, and private business actions related to climate change issues, including the reduction of GHG emissions could adversely affect our business .” Our failure to adapt to technological and industry changes and effectively implement new technology and products could materially affect our competitive position and our business.
In addition, we are subject to risks from operating internationally, some of which we may not typically encounter in the United States, including: • fluctuation in foreign currencies; • changes in the relations between the United States and foreign countries, including those affecting trade and foreign investment; • increased expense due to the introduction of our corporate policies and controls in our international operations; • increased expense related to localization of our products and services, including language translation and creation of localized agreements; • increased infrastructure costs, burdens and complexities with respect to legal, tax, accounting and information technology laws, matters, and treaties; • interpretation and application of local laws and regulations, including, among others, those impacting anti-money laundering, bribery, financial transaction reporting, privacy, licensing, and positive balance or prepaid cards; • enforceability of intellectual property and contract rights; • potentially adverse tax consequences due to, but not limited to, the value added tax systems, the repatriation of cash, and any adverse consequences from changes in tax rates and changes or interpretations of tax laws; • competitive pressure on products and services from companies based outside the U.S. that can leverage lower costs of operations; • increased expense to comply with U.S. laws that apply to foreign operations, including the FCPA and OFAC regulations; • political, social, and economic instability and war, including as a result of terrorist attacks and security concerns; and • local labor conditions and regulations.
In addition, we are subject to risks from operating internationally, some of which we may not typically encounter in the United States, including: • fluctuation in foreign currencies; • changes in the relations between the United States and foreign countries, including those affecting trade and foreign investment; • potentially adverse consequences due to trade restrictions or tariffs; • increased expense due to the introduction of our corporate policies and controls in our international operations; • increased expense related to localization of our products and services, including language translation and creation of localized agreements; • increased infrastructure costs, burdens and complexities with respect to legal, tax, accounting and information technology laws, matters, and treaties; • interpretation and application of local laws and regulations, including, among others, those impacting anti-money laundering, bribery, financial transaction reporting, privacy, licensing, and positive balance or prepaid cards; • enforceability of intellectual property and contract rights; • potentially adverse tax consequences due to, but not limited to, the value added tax systems, the repatriation of cash, and any adverse consequences from changes in tax rates and changes or interpretations of tax laws; • competitive pressure on products and services from companies based outside the United States that can leverage lower costs of operations; • increased expense to comply with U.S. laws that apply to foreign operations, including the FCPA and OFAC regulations; • political, social, and economic instability and war, including as a result of terrorist attacks and security concerns; and • local labor conditions and regulations.
Our ability to attract new customers, increase net revenue from existing customers and create new, or replace existing, sources of revenue as technologies such as EVs develop, will depend in significant part on our ability to adapt to industry standards, anticipate trends and the magnitude at which such trends affect the market, and continue to enhance our platform and introduce new products and capabilities on a timely and secure basis to keep pace with technological developments and customer expectations.
Our ability to attract new customers, increase net revenue from existing customers and create new, or replace existing, sources of revenue as technologies such as EVs and AI develop, will depend in significant part on our ability to adapt to industry standards, anticipate trends and the magnitude at which such trends affect the market, and continue to enhance our platform and introduce new products and capabilities on a timely and secure basis to keep pace with technological developments and customer expectations.
Our substantial indebtedness currently outstanding, or as may become outstanding if we incur additional indebtedness, and the terms and conditions of such indebtedness, could, among other things: • lead to difficulty in our ability to generate enough cash flow to satisfy our indebtedness obligations under our credit facilities, and if we fail to satisfy these indebtedness obligations, an event of default could result; • require us to dedicate a substantial portion of our cash flow to repaying our indebtedness, thus reducing the amount of funds available to execute on our corporate strategy, to fund working capital or capital expenditures or for other general corporate purposes; • limit our ability to borrow additional funds necessary for working capital, capital expenditures or other general corporate purposes; • increase our vulnerability to adverse general economic or industry conditions; • place us at a competitive disadvantage relative to our competitors that have less indebtedness or better access to capital, by, for example, limiting our ability to enter into new markets, upgrade our assets or pursue acquisitions or other business opportunities; and • limit our flexibility in planning for, or reacting to changes in, our business.
Our substantial indebtedness currently outstanding, or as may become outstanding if we incur additional indebtedness, and the terms and conditions of such indebtedness, could, among other things: • lead to difficulty in our ability to generate enough cash flow to satisfy our indebtedness obligations under our credit facilities, and if we fail to satisfy these indebtedness obligations, an event of default could result; • require us to dedicate a substantial portion of our cash flow to repaying our indebtedness, thus reducing the amount of funds available to execute on our corporate strategy, to fund working capital or capital expenditures or for other general corporate purposes; • increase our leverage ratio and limit our ability to borrow additional funds necessary for working capital, capital expenditures or other general corporate purposes; • increase our vulnerability to adverse general economic or industry conditions; • place us at a competitive disadvantage relative to our competitors that have less indebtedness or better access to capital, by, for example, limiting our ability to enter into new markets, upgrade our assets or pursue acquisitions or other business opportunities; and • limit our flexibility in planning for, or reacting to changes in, our business.
The continued adoption of alternative fuel and hybrid vehicles by our customers or others, an increase in the speed at which such adoption occurs, or any material increase in the use of alternative fuel vehicles in heavier duty vehicle fleets, such as over-the-road truck fleets, would lead to less gasoline or diesel fuels being sold and affect our financial performance.
The continued adoption of alternative fuel and hybrid vehicles by our customers or others, an increase in the speed at which such adoption occurs, or any material increase in the use of alternative fuel vehicles in heavier duty vehicle fleets, such as over-the-road truck fleets, would lead to less gasoline or diesel fuels being sold and could affect our financial performance.
Implementing the use of AI successfully, ethically and as intended, will require significant resources, including having the technical complexity and expertise required to develop, test and maintain our platform, offerings, services and products. In addition, the use of AI may increase cybersecurity risks and operational and technological risks.
Implementing the use of AI successfully, ethically and as intended, will require significant resources, including having the technical expertise required to develop, test and maintain our platform, offerings, services and products. In addition, the use of AI may increase cybersecurity risks and operational and technological risks.
The Amended and Restated Credit Agreement also contains various affirmative and negative covenants that, subject to certain customary exceptions, restrict our ability to, among other things, create liens over our property, incur additional indebtedness, enter into sale and lease-back transactions, make loans, advances or other investments, make non-ordinary course asset sales, declare or pay dividends or make other distributions with respect to equity interests, change the nature of our business, enter into certain agreements which restrict our ability to pay dividends or other distributions or create liens on our property, transact business with affiliates and/or merge or consolidate with any other person.
The Credit Agreement also contains various affirmative and negative covenants that, subject to certain customary exceptions, restrict our ability to, among other things, create liens over our property, incur additional indebtedness, enter into sale and lease-back transactions, make loans, advances or other investments, make non-ordinary course asset sales, declare or pay dividends or make other distributions with respect to equity interests, change the nature of our business, enter into certain agreements which restrict our ability to pay dividends or other distributions or create liens on our property, transact business with affiliates and/or merge or consolidate with any other person.
Furthermore, institutional, individual, and other investors, proxy advisory services, regulatory authorities, consumers and other stakeholders continue to focus on sustainability practices with regard to the oil and gas industry, including practices related to GHG emissions and climate change.
Furthermore, certain institutional, individual, and other investors, proxy advisory services, regulatory authorities, consumers and other stakeholders continue to focus on sustainability practices with regard to the oil and gas industry, including practices related to GHG emissions and climate change.
Risks Relating to Ownership of Our Common Stock The failure to maintain effective systems of internal control over financial reporting and disclosure controls and procedures could result in the inability to accurately report our financial results or prevent material misstatement due to fraud, which could cause current and potential shareholders to lose confidence in our financial reporting, adversely affect the trading price of our securities, harm our operating results, trigger a default under the Amended and Restated Credit Agreement or result in regulatory proceedings against us.
Risks Relating to Ownership of Our Common Stock The failure to maintain effective systems of internal control over financial reporting and disclosure controls and procedures could result in the inability to accurately report our financial results or prevent material misstatement due to fraud, which could cause current and potential shareholders to lose confidence in our financial reporting, adversely affect the trading price of our securities, harm our operating results, trigger a default under the Credit Agreement or result in regulatory proceedings against us.
We will not be able to protect our intellectual property and other proprietary information and technology if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property.
We will not be able to protect our intellectual property and other proprietary information and technology if we are unable to enforce our rights or if we do not timely detect unauthorized use of our intellectual property.
We use artificial intelligence in our business, and challenges with properly managing its use could result in harm to our brand, reputation, business or customers, and adversely affect our results of operations.
We use artificial intelligence in our business, and challenges with properly managing its use could result in penalties, harm to our brand, reputation, business or customers, and adversely affect our results of operations.
For further information on how the increase in usage of alternative fuels in vehicles affects our business, please see Part I – Item 1A – Risk Factors – “A significant portion of our revenue is generated by the purchase and sale of gasoline and diesel fuel by or through our customers and from our fuel retailer partners, and, as a result, a reduction in the demand for or supply of gasoline and/or diesel fuel and/or volatility in such fuel prices could have a material adverse effect on our business, financial condition, and operating results.” Risks Related to our Dependence on Technology We regularly experience cyberattacks and expect they will continue in the future.
For further information on how the increase in usage of alternative fuels in vehicles affects our business, please see Part I – Item 1A – Risk Factors – “A 43 Table of Contents PART I significant portion of our revenue is generated by the purchase and sale of gasoline and diesel fuel by or through our customers and from our fuel retailer partners, and, as a result, a reduction in the demand for or supply of gasoline and/or diesel fuel and/or volatility in such fuel prices could have a material adverse effect on our business, financial condition, and operating results.” Risks Related to our Dependence on Technology We regularly experience cyberattacks and expect they will continue in the future.
As a result, a sustained decline in general economic conditions in the U.S. or internationally could have a material adverse effect on our business, financial condition, and operating results. 28 Table of Contents PART I We process transactions through the Mastercard and Visa networks through the financial services of WEX issuers and other third party licensed institutions.
As a result, a sustained decline in general economic conditions in the U.S. or internationally could have a material adverse effect on our business, financial condition, and operating results. 27 Table of Contents PART I We process transactions through the Mastercard and Visa networks through the financial services of WEX issuers and other third party licensed institutions.
If WEX Bank fails to meet certain criteria, WEX Inc. may become subject to regulation under the Bank Holding Company Act, which could force us to divest WEX Bank or become a Bank Holding Company or cease all of our non-banking activities, which could have an adverse effect on our revenue and business or could create a default under our Amended and Restated Credit Agreement.
If WEX Bank fails to meet certain criteria, WEX Inc. may become subject to regulation under the Bank Holding Company Act, which could force us to divest WEX Bank or become a Bank Holding Company or cease all of our non-banking activities, which could have an adverse effect on our revenue and business or could create a default under our Credit Agreement.
Fewer gallons sold equates to a lower total 27 Table of Contents PART I purchase price of fuel on which our negotiated percentage revenue is determined. Our revenues, particularly in the over-the-road business, are also dependent, in part, on a flat fee derived from each fuel purchase transaction.
Fewer gallons sold equates to a lower total 26 Table of Contents PART I purchase price of fuel on which our negotiated percentage revenue is determined. Our revenues, particularly in the over-the-road business, are also dependent, in part, on a flat fee derived from each fuel purchase transaction.
Our business and operating results are materially affected by general conditions in the economy, both in the U.S. and internationally. We generate a substantial part of our revenue based on the volume of purchases and other transactions we process and our business generally depends heavily upon the overall level of spending.
Our business, operating results and financial condition are materially affected by general conditions in the economy, both in the U.S. and internationally. We generate a substantial part of our revenue based on the volume of purchases and other transactions we process and our business generally depends heavily upon the overall level of spending.
Our ability to comply with these provisions may be affected by events beyond our control, including prevailing economic, financial, and industry conditions. Failure to comply with the financial covenants or any other non-financial or restrictive covenants in our Amended and Restated Credit Agreement, for any reason, could create a default.
Our ability to comply with these provisions may be affected by events beyond our control, including prevailing economic, financial, and industry conditions. Failure to comply with the financial covenants or any other non-financial or restrictive covenants in our Credit Agreement, for any reason, could create a default.
Moreover, our due diligence review may not adequately uncover all of the contingent, undisclosed, or previously unknown liabilities or risks we may incur as a consequence of the acquisition, exposing us to potentially significant, unanticipated costs, as well as potential impairment charges.
Moreover, our due diligence review may not adequately uncover all of the contingent, undisclosed, or previously unknown liabilities or risks we may incur as a consequence of the acquisition, exposing us to potentially significant, unanticipated costs, integration challenges, as well as potential impairment charges.
WEX Bank • The loss or suspension of WEX Bank’s ILC, changes in applicable regulatory requirements, or an increase in the number or type of institutions eligible for an ILC could be disruptive to our operations, increase costs, and increase competition. • WEX Bank is subject to extensive supervision and regulation that could restrict our activities and impose financial requirements or limitations on the conduct of our business and limit our ability to generate income. • Conditions in the economy or other markets may have a negative impact on WEX Bank’s ability to attract deposits. • WEX Bank’s cost of capital has increased and may continue to increase. • WEX Bank is subject to funding risks associated with its reliance on brokered deposits. • If WEX Bank fails to meet certain criteria, WEX Inc. may become subject to the Bank Holding Company Act. • WEX Bank’s results may be affected by market fluctuations and significant changes in the value of financial instruments.
WEX Bank • The loss or suspension of WEX Bank’s ILC, changes in applicable regulatory requirements, or an increase in the number or type of institutions eligible for an ILC could be disruptive to our operations, increase costs, and increase competition. • WEX Bank is subject to extensive supervision and regulation that could restrict our activities and impose financial requirements or limitations on the conduct of our business and limit our ability to generate income. • Conditions in the economy or other markets may have a negative impact on WEX Bank’s ability to attract deposits. • WEX Bank’s cost of capital has increased and may continue to increase. • WEX Bank is subject to funding risks associated with its reliance on brokered deposits. 24 Table of Contents PART I • If WEX Bank fails to meet certain criteria, WEX Inc. may become subject to the Bank Holding Company Act. • WEX Bank’s results may be affected by market fluctuations and significant changes in the value of financial instruments.
This, in turn, could result in WEX Inc.’s need to divest WEX Bank or become a Bank Holding Company and to possibly cease certain non-banking activities that may be impermissible for a Bank Holding Company and could create a default under our Amended and Restated Credit Agreement.
This, in turn, could result in WEX Inc.’s need to divest WEX Bank or become a Bank Holding Company and to possibly cease certain non-banking activities that may be impermissible for a Bank Holding Company and could create a default under our Credit Agreement.
The failure to develop or maintain effective internal control over financial reporting and disclosure controls and procedures could harm our reputation or operating results, or cause us to fail to meet our reporting obligations, or trigger a default under the Amended and Restated Credit Agreement.
The failure to develop or maintain effective internal control over financial reporting and disclosure controls and procedures could harm our reputation or operating results, or cause us to fail to meet our reporting obligations, or trigger a default under the Credit Agreement.
We utilize a combination of proprietary and third-party technologies, including third-party owned and operated “cloud” technologies or third-party managed technology platforms, data-centers, and processing systems, to conduct our business and interact with our customers, partners and suppliers, among others.
We utilize a combination of proprietary and third-party technologies, including third-party owned and operated cloud technologies or third-party managed technology platforms, data-centers, and processing systems, to conduct our business and interact with our customers, partners and suppliers, among others.
Our Indebtedness • We currently have a substantial amount of indebtedness and may incur additional indebtedness, which could affect our flexibility in managing our business and could materially and adversely affect our ability to meet our obligations. • Fluctuations in interest rates could materially affect the interest expense incurred under our Amended and Restated Credit Agreement and any other payments subject to variable interest rates. • We may want or need to refinance a significant amount of indebtedness or otherwise require additional financings, but we cannot guarantee that we will be able to refinance or obtain additional financing on favorable terms or at all.
Our Indebtedness • We currently have a substantial amount of indebtedness and may incur additional indebtedness, which could increase our leverage, affect our flexibility in managing our business and could materially and adversely affect our ability to meet our obligations. • Fluctuations in interest rates could materially affect the interest expense incurred under our Credit Agreement and any other payments subject to variable interest rates. • We may want or need to refinance a significant amount of indebtedness or otherwise require additional financings, but we cannot guarantee that we will be able to refinance or obtain additional financing on favorable terms or at all.
Any or all of the following risks could adversely affect our growth strategy, including that: • we may not be able to identify suitable acquisition or investment candidates or acquire additional assets or businesses on favorable terms; • we may compete with others to acquire assets or businesses or make certain investments, which competition may increase, and any level of competition could result in decreased availability or increased prices for acquisition candidates; • we may compete with others for select acquisitions or investments and our competition may consist of larger, better-funded organizations with more resources and easier access to capital; • we may experience difficulty in anticipating the timing and availability of acquisition or investment candidates; • we may not be able to obtain the necessary funding, on favorable terms or at all, to finance any of our potential acquisitions; and • we may not be able to generate cash necessary to execute our acquisition or investment strategy.
Any or all of the following risks could adversely affect our growth strategy, including that: • we may not be able to identify suitable acquisition or investment candidates or acquire additional assets or businesses on favorable terms; 31 Table of Contents PART I • we may compete with others to acquire assets or businesses or make certain investments, which competition may increase, and any level of competition could result in decreased availability or increased prices for acquisition candidates; • we may compete with others for select acquisitions or investments and our competition may consist of larger, better-funded organizations with more resources and easier access to capital; • we may experience difficulty in anticipating the timing and availability of acquisition or investment candidates; • we may not be able to obtain the necessary funding, on favorable terms or at all, to finance any of our potential acquisitions; and • we may not be able to generate cash necessary to execute our acquisition or investment strategy.
Risks Related to our Indebtedness We currently have a substantial amount of indebtedness and may incur additional indebtedness, which could affect our flexibility in managing our business and could materially and adversely affect our ability to meet our debt service obligations.
Risks Related to our Indebtedness We currently have a substantial amount of indebtedness and may incur additional indebtedness, which could increase our leverage, affect our flexibility in managing our business and could materially and adversely affect our ability to meet our debt service obligations.
Additionally, we are required to pay to the lenders under the Amended and Restated Credit Agreement, any increased costs associated with the Dodd-Frank Act and other changes in laws, rules or regulations, subject to the terms of the Amended and Restated Credit Agreement.
Additionally, we are required to pay to the lenders under the Credit Agreement, any increased costs associated with the Dodd-Frank Act and other changes in laws, rules or regulations, subject to the terms of the Credit Agreement.
In addition, changes in the bank regulatory environment, including the implementation of new or varying measures or interpretations by the State of Utah or the federal government, may significantly affect or restrict the manner in which we conduct business in the future, could subject us to greater regulatory oversight requirements or could create a default under our Amended and Restated Credit Agreement.
In addition, changes in the bank regulatory environment, including the implementation of new or varying measures or interpretations by the State of Utah or the federal government, may significantly affect or restrict the manner in which we conduct business in the future, could subject us to greater regulatory oversight requirements or could create a default under our Credit Agreement.
We are subject to U.S. and international privacy and data protection regulations, including financial privacy regulations, which impose requirements concerning the protection of data, and compliance with these regulations could impose significant compliance burdens and failure to comply with such regulations could result in penalties, cause harm to our reputation and have a negative impact on our business.
We are subject to U.S. and international privacy and data protection regulations, including health and financial privacy regulations, which impose requirements concerning the handling, transfer, and protection of data, and compliance with these regulations could impose significant compliance burdens and failure to comply with such regulations could result in penalties, cause harm to our reputation and have a negative impact on our business.
If WEX Bank were to fail to meet any of the capital requirements to which it is subject, or if required under Dodd-Frank’s source of strength requirements, we may be forced to provide WEX Bank with additional capital, which could impair our ability to service our indebtedness or may not be permitted under the terms of our Amended and Restated Credit Agreement.
If WEX Bank were to fail to meet any of the capital requirements to which it is subject, or if required under Dodd-Frank’s source of strength requirements, we may be forced to provide WEX Bank with additional capital, which could impair our ability to service our indebtedness or may not be permitted under the terms of our Credit Agreement.
Our Business and Industry • A reduction in the demand for or supply of gasoline and/or diesel fuel, and/or volatility in such fuel prices, could have a material adverse effect on our business, financial condition, and operating results. • A decline in general economic conditions, and in particular, a decline in demand for fuel, travel related services or health care services could significantly affect our business, operating results, and financial condition. • We process transactions through the Mastercard and Visa networks through the financial services of WEX issuers and other third party licensed institutions.
Our Business and Industry • A reduction in the demand for or supply of gasoline and/or diesel fuel, and/or volatility in such fuel prices, could have a material adverse effect on our business, financial condition, and operating results. • A decline in general economic conditions that negatively impacts the demand for fuel, travel related services or health care services could significantly affect our business, operating results, and financial condition. • We process transactions through the Mastercard and Visa networks through the financial services of WEX issuers and other third party licensed institutions.
We may not be able to successfully execute on acquisitions as part of our growth strategy and may encounter difficulties realizing the anticipated benefits of acquisitions we have completed or may undertake.
We may not be able to successfully execute on acquisitions or divestitures as part of our strategy and may encounter difficulties realizing the anticipated benefits of acquisitions or divestitures we have completed or may undertake.
We may not be able to adequately protect our information systems, including the data we collect, which could subject us to, among other things, liability and damage to our reputation.
We may not be able to adequately protect our information systems, including the data we collect, which could subject us to, among other things, liability, damage to our reputation, and other financial impacts.
" On the supply side, disruptions to supply caused by factors such as geopolitical issues, war (such as the wars in Europe and the Middle East), weather, environmental considerations, infrastructure, labor shortages, or economic conditions could also affect the amount of fuel purchased by our customers.
" On the supply side, disruptions to supply caused by factors such as geopolitical issues, war (such as the ongoing conflicts in Europe and the Middle East), weather, environmental considerations, infrastructure, labor shortages, or economic conditions could also affect the amount of fuel purchased by our customers.
In addition, as outsourcing, specialization of functions, third-party digital services and technology innovation within the payments industry increase (including with respect to mobile technologies, tokenization, big data and cloud storage solutions), more third parties are involved in processing card transactions.
In addition, as outsourcing, specialization of functions, third-party digital services and technology innovation within the payments industry increase (including with respect to artificial intelligence, mobile technologies, tokenization, big data and cloud solutions), more third parties are involved in processing card transactions.
If WEX Inc. should fail to comply with the Treasury Regulations, including the net worth and administration of fiduciary duties requirements, such failure would materially and adversely affect its ability to maintain its current custodial accounts and to grow by adding additional custodial accounts, and it could result in the institution of procedures for the revocation of its authorization to operate as a non-bank custodian, any or all of which could materially adversely affect our business, financial condition, or results of operations.
If WEX Inc. should fail to comply with the Treasury Regulations, including the net worth and administration of fiduciary duties requirements, such failure would materially and adversely affect its ability to maintain its current custodial accounts and to grow by adding additional 41 Table of Contents PART I custodial accounts, and it could result in the institution of procedures for the revocation of its authorization to operate as a non-bank custodian, any or all of which could materially adversely affect our business, financial condition, or results of operations.
In addition, any cybersecurity incident, any incident involving our handling of protected and sensitive information, failure to comply with applicable breach notification and reporting requirements, or any violation of international, federal or state privacy laws could consume significant financial and managerial resources, expose us to liability in excess of any applicable insurance policies, litigation, regulatory scrutiny, and/or cause damage to our reputation, which may discourage customers from using, renewing, or expanding their use of our services or cause us 46 Table of Contents PART I to be in breach of our contracts with them.
In addition, any cybersecurity incident, any incident involving our handling of protected and sensitive information, failure to comply with applicable breach notification and reporting requirements, or any violation of international, federal or state privacy laws could consume significant financial and managerial resources, expose us to liability in excess of any applicable insurance policies, litigation, regulatory scrutiny, and/or cause damage to our reputation, which may discourage customers from using, renewing, or expanding their use of our services or cause us to be in breach of our contracts with them.
WEX Bank is also subject to a consent order issued by the FDIC on September 20, 2023 (the “2023 Order”), which requires WEX Bank to make certain improvements, which include corrections of certain issues identified in the 2023 Order and general enhancements to WEX Bank’s compliance management program.
For example, WEX Bank is subject to a consent order issued by the FDIC on September 20, 2023 (the “2023 Order”), which requires WEX Bank to make certain improvements, which include corrections of certain issues identified in the 2023 Order and general enhancements to WEX Bank’s compliance management program.
If any of these licensed institutions stop or are unable to provide these services to us, we would need to find other appropriate institutions to provide such services. • Unpredictable or catastrophic events may adversely affect our ability to conduct business. • We have experienced and may in the future experience substantial credit and fraud losses and other adverse effects. • Changes in or limits on interchange fees could decrease our revenue. • Bank failures or other similar events could adversely affect our and our customers’ liquidity and financial performance. • Increasing scrutiny and changing expectations from investors, customers and our employees with respect to our ESG practices may negatively affect our business, result in additional costs or expose us to new or additional risks. • Our failure to adapt to technological and industry changes and effectively implement new technology and products could materially affect our competitive position and our business. • We may not realize or sustain the expected benefits from our cost and organizational operational efficiencies initiatives. • We operate in a highly competitive business environment. • Our ability to attract, motivate, and retain qualified employees is critical to our success. • We may not be able to successfully execute on acquisitions as part of our growth strategy. • We are subject to risks associated with our strategic minority equity investments. • We are exposed to risks associated with our operations outside of the U.S. • Fluctuations in foreign currency exchange rates have affected and could continue to affect our financial results. • As a non-bank custodian of HSA assets, WEX Inc.’s failure to adequately place and safeguard our custodial assets, or the failure of any of our depository partners, could have a material adverse effect on our business. • We have incurred, and may incur in the future, impairment charges on goodwill or other intangible assets. • The Company is, and may in the future become, involved in various claims, investigations, and legal proceedings. 25 Table of Contents PART I • If we fail to adequately protect our IP, our competitive position could be impaired.
If any of these licensed institutions stop or are unable to provide these services to us, we would need to find other appropriate institutions to provide such services. • Unpredictable or catastrophic events may adversely affect our ability to conduct business. • We have experienced and may in the future experience substantial credit and fraud losses and other adverse effects. • Changes in or limits on interchange fees could decrease our revenue. • Bank failures or other similar events could adversely affect our and our customers’ liquidity and financial performance. • Increasing scrutiny and changing expectations from investors, customers and our employees with respect to our sustainability practices may negatively affect our business, result in additional costs or expose us to new or additional risks. • Our failure to adapt to technological and industry changes and effectively implement new technology and products could materially affect our competitive position and our business. • We may not realize or sustain the expected benefits from our investments in certain capabilities and initiatives. • We operate in a highly competitive business environment. • Our ability to attract, motivate, and retain qualified employees is critical to our success. • We may not be able to successfully execute on acquisitions or divestitures as part of our strategy. • We are subject to risks associated with our strategic minority equity investments. • We are exposed to risks associated with our operations outside of the U.S. • Fluctuations in foreign currency exchange rates have affected and could continue to affect our financial results. • As a non-bank custodian of HSA assets, WEX Inc.’s failure to adequately place and safeguard our custodial assets, or the failure of any of our depository partners, could have a material adverse effect on our business. • We have incurred, and may incur in the future, impairment charges on goodwill or other intangible assets. • The Company is, and may in the future become, involved in various claims, investigations, and legal proceedings. • If we fail to adequately protect our IP, our competitive position could be impaired.
As we respond to evolving standards for identifying, measuring, and reporting environmental, social and governance (“ESG”) metrics, our efforts may result in a significant increase in costs and may nevertheless not meet investor or other stakeholder expectations and evolving standards or regulatory requirements, which may negatively impact our financial results, our stock price, our reputation, our ability to attract or retain employees, our attractiveness as a service provider, investment, or business partner, or expose us to government enforcement actions, private litigation, and investor scrutiny.
As we respond to evolving standards for identifying, measuring, and reporting sustainability metrics, our efforts may result in a significant increase in costs and may nevertheless not meet investor or other stakeholder expectations and evolving standards or regulatory requirements, which may negatively impact our financial results, our stock price, our reputation, our ability to attract or retain employees, our attractiveness as a service provider, investment, or business partner, or expose us to government enforcement actions, private litigation, and investor scrutiny.
For example, although we cannot predict the duration or severity of impact, the ongoing conflicts in Europe and the Middle East, and the resulting sanctions and military actions have significantly impacted and will likely continue to impact volatility in worldwide fuel prices, and we cannot predict the ultimate impact of these conflicts on fuel prices.
For example, although we cannot predict the duration or severity of impact, the ongoing conflicts in Europe and the Middle East, and the resulting sanctions and military actions, have significantly impacted and will likely continue to impact volatility in worldwide fuel prices.
Regulation • Existing and new laws and regulations and enforcement activities, could negatively impact our business, limit our expansion opportunities and significantly impact our results of operations and financial condition. • Laws or regulations developed in one jurisdiction or for one product could result in new laws or regulations in other jurisdictions or for other products. • Changes in our tax rates, the adoption of new legislation or exposure to additional tax liabilities could affect our results. • As a non-bank custodian WEX Inc. is subject to regulation and noncompliance could render it unable to maintain its status. • Evolution and expansion of our business may subject us to additional regulatory requirements and other risks, for which failure to comply or adapt could harm our operating results. • Our increased presence in foreign jurisdictions increases the possibility of foreign law violations.
Regulation • Existing and new laws and regulations and enforcement activities, could negatively impact our business, limit our expansion opportunities and significantly impact our results of operations and financial condition. • Laws or regulations developed in one jurisdiction or for one product could result in new laws or regulations in other jurisdictions or for other products. • Changes in our tax rates, the adoption of new legislation or exposure to additional tax liabilities could affect our results. • As a non-bank custodian WEX Inc. is subject to regulation and noncompliance could render it unable to maintain its status. • Evolution and expansion of our business may subject us to additional regulatory requirements and other risks, for which failure to comply or adapt could harm our operating results. • Our increased presence in foreign jurisdictions increases the possibility of foreign law violations. • Legislation and regulation of, and private actions related to climate change issues could adversely affect our business.
If any material adverse event were to affect one or more of these depository partners, including a significant decline in financial condition, a decline in the quality of service, loss of deposits, inability to comply with applicable banking and financial services regulatory requirements, systems failure, or its inability to return principal or pay interest thereon, our business, financial condition, or results of operations could be materially and adversely affected.
If any material adverse event were to affect one or more of these depository partners, including a significant decline in financial condition, a decline in the quality of service, loss of deposits, inability to comply with 33 Table of Contents PART I applicable banking and financial services regulatory requirements, systems failure, or its inability to return principal or pay interest thereon, our business, financial condition, or results of operations could be materially and adversely affected.
Department of the Treasury, of HSA assets, a portion of which are in investment funds for individual HSA holders at a third-party brokerage firm, and the remaining portion of which are in cash and have been placed with various depository institutions.
Department of the Treasury, of HSA assets, a portion of which are in investment funds for individual HSA holders at a third-party brokerage firm, and the remaining portion of which are in cash and have been placed with various depository institutions, including WEX Bank.
The possibility of violations of the FCPA, UKBA or other similar laws or regulations may increase as we expand globally and into countries with recognized corruption problems. Legislation and regulation of, and private business actions related to the reduction of GHG emissions could adversely affect our business.
The possibility of violations of the FCPA, UKBA or other similar laws or regulations may increase as we expand globally and into countries with recognized corruption problems. Legislation and regulation of, and private business actions related to climate change issues, including the reduction of GHG emissions could adversely affect our business.
There have been efforts in recent years aimed at the investment community, including investment advisors, sovereign wealth funds, public pension funds, universities and other groups, promoting the divestment of equities issued by companies connected to fossil fuels as well as to pressure lenders and other financial services companies to limit or curtail activities with companies similarly connected.
There have been efforts in recent years aimed at the investment community, including investment advisors, sovereign wealth funds, public pension funds, universities and other groups, promoting the divestment of equities issued by companies connected to fossil fuels as well as to pressure lenders and other financial services companies to limit or curtail 29 Table of Contents PART I activities with companies similarly connected.
These factors include, but are not limited to: • domestic and foreign supply and demand for oil and gas, and market expectations regarding such supply and demand; • the demand for trucking and freight hauling services; • investor speculation in commodities; • actions by major oil exporting nations, including members of the Organization of Petroleum Exporting Countries, and the ability of the same to maintain oil price and production controls; • level of domestic and foreign oil production; • advances in oil production technologies; • excess, or alternatively, lack of adequate, infrastructure; • geo-political conditions, including revolution, insurgency, environmental activism, terrorism, or war, such as, the ongoing conflicts between Russia and Ukraine and Israel and Hamas; • oil refinery capacity and utilization rates; • weather, including climate change and natural disasters; • the value of the U.S. dollar (or other relevant currencies) versus other major currencies; • unexpected events such as global pandemics like the COVID-19 pandemic; • general local, regional, or worldwide economic conditions; • taxes and tariffs; and • governmental regulations and legislation, including those pertaining to greenhouse gases (“GHG”) and fuel efficiency standards.
These factors include, but are not limited to: • domestic and foreign supply and demand for oil and gas, and market expectations regarding such supply and demand; • the demand for trucking and freight hauling services; • investor speculation in commodities; • actions by major oil exporting nations, including members of the Organization of Petroleum Exporting Countries, and the ability of the same to maintain oil price and production controls; • level of domestic and foreign oil production; • advances in oil production technologies; • excess, or alternatively, lack of adequate, infrastructure; • geo-political conditions, including revolution, insurgency, environmental activism, terrorism, or war, such as, the ongoing conflicts in Europe and the Middle East; • oil refinery capacity and utilization rates; • weather, including climate change and natural disasters; • the value of the U.S. dollar (or other relevant currencies) versus other major currencies; • unexpected public health events like the COVID-19 pandemic; • general local, regional, or worldwide economic conditions; • taxes and tariffs; and • governmental regulations and legislation, including those pertaining to greenhouse gases (“GHG”) and fuel efficiency standards.
Increasing scrutiny and changing expectations from investors, customers and our employees with respect to our environmental, social and governance practices may negatively affect our business and result in the decline of gasoline or diesel fuel use, result in additional costs or expose us to new or additional risks.
Increasing scrutiny and changing expectations from investors, customers and our employees with respect to our sustainability practices may negatively affect our business and result in the decline of gasoline or diesel fuel use, result in additional costs or expose us to new or additional risks.
If these entities seek additional financing, such financing or other transactions may result in further dilution of our ownership stakes and such transactions may occur at lower valuations than the investment transactions through which we acquired such interests, which could significantly decrease the fair values of our investments in those entities.
If these entities seek additional financing, such financing or other transactions may result in further dilution of our ownership 32 Table of Contents PART I stakes and such transactions may occur at lower valuations than the investment transactions through which we acquired such interests, which could significantly decrease the fair values of our investments in those entities.
In addition, a significant credit rating downgrade, material capital market disruptions, significant reductions to or withdrawals of HSA cash assets, or significant withdrawals by depositors at WEX Bank, among other things, could impact our ability to maintain adequate liquidity and impact our ability to provide competitive offerings to our customers.
In addition, a significant credit rating downgrade, material capital market disruptions, significant reductions to or withdrawals of HSA cash assets, or significant withdrawals 35 Table of Contents PART I by depositors at WEX Bank, among other things, could impact our ability to maintain adequate liquidity and impact our ability to provide competitive offerings to our customers.
The risks and uncertainties discussed below also include forward-looking statements and our actual results may differ materially from those discussed in these forward-looking statements. Risk Factor Summary Investment in our securities involves risk. Below is a summary of what we believe to be the principal risks facing our business.
The risks and uncertainties discussed below also include forward-looking statements and our actual results may differ materially from those discussed in these forward-looking statements. 23 Table of Contents PART I Risk Factor Summary Investment in our securities involves risk. Below is a summary of what we believe to be the principal risks facing our business.
In addition to our outstanding debt, as of December 31, 2023, we had outstanding letters of credit issued under our Amended and Restated Credit Agreement. We have additional indebtedness in the form of deposits held by WEX Bank and other liabilities outstanding.
In addition to our outstanding debt, as of December 31, 2024, we had outstanding letters of credit issued under our Credit Agreement. We have additional indebtedness in the form of deposits held by WEX Bank and other liabilities outstanding.
We may also incur substantial additional indebtedness in the future. In addition to available borrowing capacity remaining under the Revolving Credit Facility as of December 31, 2023, we are also permitted under our credit facilities to incur additional indebtedness, subject to specified limitations, including compliance with covenants contained in our Amended and Restated Credit Agreement.
We may also incur substantial additional indebtedness in the future. In addition to available borrowing capacity remaining under the Revolving Credit Facility as of December 31, 2024, we are also permitted under our credit facilities to incur additional indebtedness, subject to specified limitations, including compliance with covenants contained in our Credit Agreement.
Moreover, how AI is used is the subject of evolving review by various U.S. regulatory agencies, including the SEC and the U.S. Federal Trade Commission.
Moreover, how AI is used is the subject of evolving review by various U.S. regulatory agencies, including the SEC and the U.S. Federal Trade Commission, and state regulatory agencies and attorneys general.
Unfavorable changes in economic conditions, which are typically beyond our control and include declining consumer confidence, increasing unemployment, a restructured or reduced workforce and business patterns, inflation, recession, changes in the political climate, war (including the wars in Europe and the Middle East) or other changes, are generally characterized by reduced commercial activity and may lead to a reduction or plateau in spending by those whose spending directly or indirectly contributes to our revenues, resulting in reduced or stagnant demand for, or use of, our products and services, including fuel, travel related services, health care services, CDH accounts, accounts payables services, and other business related products and services by our customers or partners and our customers’ or partners’ customers.
Unfavorable changes in economic conditions, which are typically beyond our control and include declining consumer confidence, increasing unemployment, a restructured or reduced workforce and business patterns, a change in government contracting practices and reduced government spending, inflation, recession, changes in the political climate, trade restrictions or tariffs, war (including the ongoing conflicts in Europe and the Middle East) or other changes, are generally characterized by reduced commercial activity and may lead to a reduction or plateau in spending by those whose spending directly or indirectly contributes to our revenues, resulting in reduced or stagnant demand for, or use of, our products and services, including fuel, travel related services, health care services, CDH accounts, accounts payables services, and other business related products and services by our customers or partners and our customers’ or partners’ customers.
For instance, we may experience some attrition in the number of clients serviced by the acquired business, causing us to not achieve the forecasted revenues and profits from an acquisition or to not achieve the level of synergies that we anticipated when entering into an acquisition.
For instance, we may experience some attrition in the number of clients serviced by the acquired business or fail to expand the number of clients serviced by the acquired business at the expected rate, causing us to not achieve the forecasted revenues and profits from an acquisition or to not achieve the level of synergies that we anticipated when entering into an acquisition.
Because our consolidated financial statements are presented in U.S. dollars, we must translate revenues, income and expenses, as well 34 Table of Contents PART I as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period.
Because our consolidated financial statements are presented in U.S. dollars, we must translate revenues, income and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period.
Any failure by our customers or partners to access the technology that we develop internally could have an adverse effect on our business, results of operations and financial condition.
Any failure by our customers or partners to access the technology that we develop internally or provide through 3rd-party technology partners could have an adverse effect on our business, results of operations and financial condition.
Our ability to maintain compliance with these standards and satisfy these audits will affect our ability to attract and maintain business in the future. If we fail to comply with these standards, we could be exposed to suits for breach of contract or to governmental enforcement proceedings.
Our ability to maintain compliance with these standards and satisfy these audits will affect our ability to attract and maintain business in the future. If we fail to comply with these standards, we could be exposed to suits for breach of contract or to governmental enforcement proceedings. In addition, our client relationships and reputation could be harmed.
Other countries in which we operate or have operated, including Brazil, and other countries where we intend to operate, also have anti-corruption laws, which we are, have been or will be subject to. Our employees and agents interact with government officials on our behalf, including as necessary to obtain licenses and other regulatory approvals necessary to operate our business.
Other countries in which we operate or have operated, including Brazil, and other countries where we intend to operate, also have anti-corruption laws, which we are, have been or will be subject to. 42 Table of Contents PART I Our employees and agents interact with government officials on our behalf, including as necessary to obtain licenses and other regulatory approvals necessary to operate our business.
Practices regarding the collection, use, storage, transmission and security of personal information by companies operating over the internet have recently come under increased public scrutiny. Governmental bodies in the United States and abroad have adopted, or are considering the adoption of, laws and regulations restricting the transfer of, and requiring safeguarding of, personal information.
Practices regarding the collection, use, storage, transmission and security of personal information by companies have recently come under increased public scrutiny. Governmental bodies in the United States and abroad have adopted, or are considering the adoption of, laws and regulations relating to the handling of, restricting the transfer of, and requiring safeguarding of, personal information.
Further, a banking regulator may determine that the payment of dividends or other payments, including payments under the Master Service Agreement, would be inappropriate and could impose other conditions on the payment of dividends or such other payments or even prohibit their payment.
Further, a banking regulator may determine that the payment of dividends or other payments, including payments under the Master Service Agreement, 36 Table of Contents PART I would be inappropriate and could impose other conditions on the payment of dividends or such other payments or even prohibit their payment.
Certain efforts may be state-sponsored and supported by significant financial and technological resources, making them 45 Table of Contents PART I even more difficult to detect, prevent and mitigate. Our security measures may also be breached due to employee error, malfeasance, system errors or vulnerabilities, or other irregularities.
Certain efforts may be state-sponsored and supported by significant financial and technological resources, making them even more difficult to detect, prevent and mitigate. Our security measures may also be breached due to employee error, malfeasance, system errors or vulnerabilities, or other irregularities.
Historically, we have been able to provide customers with a wide spectrum of services and capabilities and, therefore, we have not considered price to be the exclusive or even the primary basis on which we compete.
Historically, we have been able to provide customers with a wide spectrum of services and capabilities and, therefore, we have not considered price to be the exclusive or even the primary basis on 30 Table of Contents PART I which we compete.
The applicable rules also require that we engage in such transactions with WEX Bank only on terms and under circumstances that are substantially the same, or at least as favorable to WEX Bank, as those 38 Table of Contents PART I prevailing at the time for comparable transactions with nonaffiliated companies.
The applicable rules also require that we engage in such transactions with WEX Bank only on terms and under circumstances that are substantially the same, or at least as favorable to WEX Bank, as those prevailing at the time for comparable transactions with nonaffiliated companies.
Among the regulations that impact us or could impact us are those governing: interchange rates, interest rate and fee restrictions, credit access and disclosure requirements, collection and pricing requirements, compliance obligations, data security and data breach requirements, identity theft avoidance programs, health care mandates, the cost and scope of public and private health insurance coverage, and anti-money laundering compliance programs.
Among the regulations that impact us or could impact us are those governing: interchange rates, interest rate and fee restrictions, credit access and disclosure requirements, collection and pricing requirements, compliance obligations, data privacy and security and data breach requirements, identity theft avoidance programs, health care mandates, the cost and scope of public and private health insurance coverage, requirements relating to the development and deployment of artificial intelligence systems, and anti-money laundering compliance programs.
WEX is a global commerce platform, and as such we must constantly adapt and respond to the technological advances offered by our competitors, the requirements of our partners, customers, and potential partners, regulatory requirements and evolving industry standards and trends, such as the expected integration of EVs into mixed fleets.
WEX is a global commerce platform, and as such we must constantly adapt and respond to the technological advances offered by our competitors, the requirements of our partners, customers, and potential partners, regulatory requirements and evolving industry standards and trends, such as advances made with the further utilization of AI and the expected integration of EVs into mixed fleets, amongst others.
This includes technology that we have developed, have contracted with others to develop, have outsourced to a single provider to operate or have obtained through third-parties by way of service agreements.
This includes technology that we have 45 Table of Contents PART I developed, have contracted with others to develop, have outsourced to a single provider to operate or have obtained through third-parties by way of service agreements.
Some of these factors can vary by region and may change quickly, adding to market volatility, while others may have longer-term effects. The long-term effects of these and other factors on prices for fuel could be substantial.
Some of these factors can vary by region and may change quickly, adding to market volatility, while others may have longer-term effects. The long-term effects of these and other factors on prices for fuel could be substantial and we cannot predict the precise impact of any of these factors on fuel prices.
Although we use various models and techniques to screen potential counterparties and establish appropriate credit limits, these models and 29 Table of Contents PART I techniques cannot eliminate all potential credit risks and may not prevent us from approving applications that are fraudulently completed and submitted.
Although we use various models and techniques to screen potential counterparties and establish appropriate credit limits, these models and techniques cannot eliminate all potential credit risks and may not prevent us from approving applications that are fraudulently completed and submitted.
In addition, there are often new regulatory efforts, which could result in significant constraints and may impact our operations. These existing and emerging laws and regulations can make the expansion or operations of our business very difficult and negatively impact our revenue or increase our compliance costs.
Our operations are subject to substantial regulation both domestically and internationally. In addition, there are often new regulatory efforts, which could result in significant constraints and may impact our operations. These existing and emerging laws and regulations can make the expansion or operations of our business very difficult and negatively impact our revenue or increase our compliance costs.
" and Item 1A – Risk Factors – " Legislation and regulation of, and private business actions related to the reduction of GHG emissions could adversely affect our business.
" and Item 1A – Risk Factors – " Legislation and regulation of, and private business actions related to climate change issues, including the reduction of GHG emissions could adversely affect our business.
Our insurance coverage may be insufficient or limited and may not protect against those losses. Additionally, criminals use sophisticated illegal activities to target us, including “skimming”, counterfeit cards and accounts, and identity theft.
Our insurance coverage may be insufficient or limited and may not protect against those losses. Additionally, criminals use sophisticated illegal activities to target us, including 28 Table of Contents PART I “skimming”, counterfeit cards and accounts, and identity theft.
These requirements vary throughout the markets in which we operate, and have increased over time as the geographic scope and complexity of our payments product 43 Table of Contents PART I services have expanded.
These requirements vary throughout the markets in which we operate, and have increased over time as the geographic scope and complexity of our payments product services have expanded.
Unpredictable events, including events such as pandemics and public health crises like the COVID-19 pandemic, political unrest, war, including the ongoing wars in Europe and the Middle East, terrorist attacks, power or technological failures, natural disasters or catastrophes (such as wildfires or hurricanes) and severe weather, including conditions arising from climate change, could interrupt our operations by causing disruptions in global markets, economic conditions, fuel supply or demand, travel and tourism, and the use of health care services.
Unpredictable events, including events such as public health crises like the COVID-19 pandemic or other contagious outbreaks, political unrest, war, including the ongoing conflicts in Europe and the Middle East, terrorist attacks, power or technological failures, natural disasters or catastrophes (such as wildfires or hurricanes) and severe weather, including conditions arising from climate change, which have been increasing in frequency and severity, could interrupt our operations by causing disruptions in global markets, economic conditions, fuel supply or demand, travel and tourism, and the use of health care services.
Risks Related to Regulation Existing and new laws and regulations and enforcement activities, including those related to a wide variety of consumer protection laws, such as under the Dodd-Frank Act, Federal Trade Commission Act and state legislation, could negatively impact our business and the markets in which we presently operate, limit our expansion opportunities and significantly impact our results of operations and financial condition. 40 Table of Contents PART I Our operations are subject to substantial regulation both domestically and internationally.
Risks Related to Regulation Existing and new laws and regulations and enforcement activities, including those related to a wide variety of consumer protection laws, such as under the Dodd-Frank Act, Federal Trade Commission Act and state legislation, could negatively impact our business and the markets in which we presently operate, limit our expansion opportunities and significantly impact our results of operations and financial condition.
Unpredictable or catastrophic events in the locations in which we or our customers operate, or elsewhere, including events such as the COVID-19 pandemic, may adversely affect our ability to conduct business and could impact our financial condition and operating results.
Unpredictable or catastrophic events in the locations in which we or our customers operate, or elsewhere may adversely affect our ability to conduct business and could impact our financial condition and operating results.
Any breaches of network or data security at our partners, some of whom maintain information about our customers, or breaches of our customers’ systems could have similar effects.
Any breaches of network or data security at our partners, some of whom maintain information about our customers, or breaches of our 44 Table of Contents PART I customers’ systems could have similar effects.
To the extent that our proprietary technology or a third-party provider’s technology does not work as agreed to or as expected, or if we experience outages or unavailability resulting from ours or our third-party providers’ operations and the services provided, our ability to efficiently and effectively deliver services could be adversely impacted and our business and results of operations could be adversely affected.
To the extent that our proprietary technology or a third-party provider’s technology does not work as agreed to or as expected, or if we experience outages or unavailability resulting from ours or our third-party providers’ operations and the services provided, which has occurred from time to time, our ability to efficiently and effectively deliver services could be adversely impacted, which could and has, from time to time, caused us to miss service level agreements, and our business and results of operations could be adversely affected.
Our success depends in part upon protecting our intellectual property and other proprietary information and technology. We rely on a combination of patents, copyrights, trademarks, service marks, trade secret laws, and contractual restrictions to establish and protect our intellectual property and other proprietary rights. The steps we take to protect these rights, however, may be inadequate.
We rely on a combination of trademarks, service marks, patents, copyrights, trade secret laws, and contractual restrictions to establish and protect our intellectual property and other proprietary rights. The steps we take to protect these rights, however, may be inadequate.
In light of the increasing focus of local, state, regional, national and international regulatory bodies on GHG emissions and climate change issues, there has been a wide-ranging policy debate, both in the U.S. and internationally, regarding the regulation of GHG emissions.
In light of the increasing focus of local, state, regional, national and international regulatory bodies on the regulation of climate change issues, including GHG emissions, there has been a wide-ranging policy debate, both in the U.S. and internationally, regarding such regulation leading to an increase in climate related legislation and regulation.

… 116 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

13 edited+0 added−1 removed20 unchanged
Biggest changeAdditionally, he holds a professional degree in Computer Science. Our CLO has been with WEX since 1996, serving as the Corporate Secretary and head of the Legal department since 2005.
Biggest changeAdditionally, he holds a professional degree in Computer Science. Our CLO has been with WEX since 2021, serving as Chief of Staff to the CEO and as Vice President, Corporate Legal Services prior to that, before becoming the Corporate Secretary and head of the Legal department in 2024.
The results of these assessments are reviewed and discussed with senior members of Company management and the Technology and Cybersecurity Committee of the Board (the “Technology Committee”), which is comprised of individuals with cybersecurity experience from both a technical and governance perspective.
The results of these assessments are reviewed and discussed with senior members of Company management and the Technology and Cybersecurity Committee of the board of directors (the “Technology Committee”), which is comprised of individuals with cybersecurity experience from both a technical and governance perspective.
We believe the members of our senior management responsible for assessing and managing material risks from cybersecurity threats and interfacing with the Board and Board Committees on such matters collectively possess the appropriate expertise and experience from both a technical and governance perspective to ensure that they are able to carry out these responsibilities effectively.
We believe the members of our senior management responsible for assessing and managing material risks from cybersecurity threats and interfacing with the board of directors and board of director committees on such matters collectively possess the appropriate expertise and experience from both a technical and governance perspective to ensure that they are able to carry out these responsibilities effectively.
ITEM 1C. CYBERSECURITY Increased global cybersecurity vulnerabilities and threats and more sophisticated and targeted cyber-related attacks pose an ongoing risk to the security of our information systems and networks. We regularly experience cyberattacks aimed at our information systems and networks, including those that store sensitive data about third parties.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy Increased global cybersecurity vulnerabilities and threats and more sophisticated and targeted cyber-related attacks pose an ongoing risk to the security of our information systems and networks. We regularly experience cyberattacks aimed at our information systems and networks, including those that store sensitive data about third parties.
Prior to engaging vendors, specifically those involved in the processing, storage or transmission of certain data, the information security team completes a due diligence process, including requiring proof of the potential vendor’s PCI, HIPPA, HITRUST, and/or SOC 2 compliance, as applicable.
Prior to engaging vendors, specifically those involved in the processing, storage or transmission of certain data, the information security team completes a due diligence process, including requiring proof of the potential vendor’s PCI, HIPAA, HITRUST, and/or SOC 2 compliance, as applicable.
We may not be able to adequately protect our information systems, including the data we collect, which could subject us to, among other things, liability and damage to our reputation.
We may not be able to adequately protect our information systems, including the data we collect, which could subject us to, among other things, liability, damage to our reputation, and other financial impacts.
The Technology Committee then, in turn, regularly reports out to the full Board and the Audit Committee as necessary during succeeding meetings to keep them informed.
The Technology Committee then, in turn, regularly reports out to the full board of directors and the Audit Committee as necessary during succeeding meetings to keep them informed.
Assessments of the program are continuously conducted by management 49 Table of Contents PART I and by an independent third party at least annually or whenever there is a material change to a business practice that may implicate the security or integrity of records containing personal information, to ensure the continuing suitability, adequacy, and effectiveness of the organization's approach to managing information security.
Assessments of the program are continuously conducted by management and by an independent third party at least annually or whenever there is a material change to a business practice that may implicate the security or integrity of records containing personal information, to ensure the continuing suitability, adequacy, and effectiveness of the organization's approach to managing information security.
We determine the magnitude 50 Table of Contents PART I of such risks in the context of our overall business and how the technology risks, including cybersecurity specifically, may have an impact on other risks the Company faces and vice versa to help us inform our overall risk management strategy going forward.
We determine the magnitude of such risks in the context of our overall business and how the technology risks, including cybersecurity specifically, may have an impact on other risks the Company faces and vice versa to help us inform our overall risk management strategy going forward.
In this capacity, she has gained extensive experience coordinating with the Board on addressing numerous emerging risk areas and ensuring our governance processes are equipped to manage and mitigate such risks.
In these roles, she has gained extensive experience coordinating with the Board on addressing numerous emerging risk areas and ensuring our governance processes are equipped to manage and mitigate such risks.
Our Global Information Security Program is designed to maintain compliance with various regulatory requirements and certification standards, including those under HIPAA, HITECH, PCI, ISO, SOC and SOX, as we aim to have world-wide, generally accepted, best practices.
Our Global Information Security 48 Table of Contents PART I Program is designed to maintain compliance with various regulatory requirements and certification standards, including those under HIPAA, HITECH, PCI, ISO, SOC and SOX, as we aim to have world-wide, generally accepted, best practices.
In addition, members of senior management, including the Chief Technology Officer (“CTO”), the CISO, and the Chief Legal Officer (“CLO”) correspond directly with, or present to, the full Board, the Audit Committee, and/or the Technology Committee, regarding issues or risks relating to cybersecurity matters as the case may be.
In addition, members of senior management, including the Chief Technology Officer (“CTO”), the CISO, and the Chief Legal Officer (“CLO”) correspond directly with, or present to, the full board of directors, the Audit Committee, and/or the Technology Committee, regarding issues or risks relating to cybersecurity matters as the case may 49 Table of Contents PART I be.
The Technology Committee, pursuant to its charter, is responsible for the oversight of the Company’s management of risks regarding technology, data security, cybersecurity, disaster recovery and business continuity.
This allows us to continuously assess cybersecurity risks in alignment with our strategic objectives and operational needs. Governance The Technology Committee, pursuant to its charter, is responsible for the oversight of the Company’s management of risks regarding technology, data security, cybersecurity, disaster recovery and business continuity.
Removed
This allows us to continuously assess cybersecurity risks in alignment with our strategic objectives and operational needs.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeITEM 2. PROPERTIES Our global headquarters and principal executive offices are located in Portland, Maine, subject to a lease that expires in 2034 and our industrial banking operations at WEX Bank are located in Utah subject to a lease that expires in 2032.
Biggest changeITEM 2. PROPERTIES Our global headquarters and principal executive offices are located in Portland, Maine, subject to a lease with an initial term through 2034 and our industrial banking operations at WEX Bank are located in Utah subject to a lease with an initial term through 2027.
We also lease corporate and regional offices, as well as operations centers in numerous other locations in the United States and around the world pursuant to leases that expire at various dates through 2032. We generally consider each of our current facilities to be suitable and adequate for the business that we currently conduct.
We also lease corporate and regional offices, as well as operations centers in numerous other locations in the United States and around the world pursuant to leases that expire at various dates through 2035. We generally consider each of our current facilities to be suitable and adequate for the business that we currently conduct.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 3. LEGAL PROCEEDINGS Information regarding certain material legal proceedings in which we are involved are incorporated by reference herein from the section titled “Litigation and Regulatory Matters” in Part II – Item 8 – Note 20, Commitments and Contingencies, to the consolidated financial statements. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 51 Table of Contents PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS Information regarding certain material legal proceedings in which we are involved are incorporated by reference herein from the section titled “Litigation and Regulatory Matters” in Part II – Item 8 – Note 20, Commitments and Contingencies, to the consolidated financial statements. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 50 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+8 added−1 removed4 unchanged
Biggest changeThe following table presents the Company’s common stock repurchases during each month of the fourth quarter of 2023: Total Number of Shares Purchased Average Price Paid per Share (1),(2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3) October 1 - October 31, 2023 145,301 $ 165.19 145,301 $ 339,457,234 November 1 - November 30, 2023 681,100 $ 173.43 681,100 $ 221,335,032 December 1 - December 31, 2023 43,718 $ 180.53 43,718 $ 213,442,771 Total 870,119 $ 172.41 870,119 (1) Includes commissions paid on stock repurchases. 52 Table of Contents PART II (2) The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible one percent excise tax on the net value of certain stock repurchases made after December 31, 2022.
Biggest changeThe following table presents the Company’s common stock repurchases during each month of the fourth quarter of 2024: 51 Table of Contents PART II Total Number of Shares Purchased Average Price Paid per Share (1),(2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3) October 1 - October 31, 2024: Final settlement of ASR (4) 187,498 187,498 Other shares repurchased 101,900 $ 176.65 101,900 $ 1,051,802,300 November 1 - November 30, 2024 368,268 $ 181.32 368,268 $ 985,028,490 December 1 - December 31, 2024 115,235 $ 184.28 115,235 $ 963,792,440 Total (5) 772,901 $ 181.09 772,901 (1) Includes commissions paid on stock repurchases.
In addition, repurchases are subject to the availability of shares of stock for purchase, prevailing market conditions, the trading price of the Company’s stock and the Company’s financial performance. The repurchase program does not obligate WEX to acquire any specific number of shares and may be modified, discontinued or suspended at any time. ITEM 6. [RESERVED]
In addition, repurchases are subject to the availability of shares of stock for purchase, prevailing market conditions, the trading price of the Company’s stock and the Company’s financial performance. The repurchase program does not obligate WEX to acquire any specific number of shares and may be modified, discontinued or suspended at any time.
The Company has certain restrictions on the dividends it may pay under its Amended and Restated Credit Agreement, including pro forma compliance with a consolidated leverage ratio, testing consolidated funded indebtedness less (i) an amount up to $400.0 million of consolidated funded indebtedness due to permitted securitization transactions, (ii) the amount of consolidated funded indebtedness constituting the non-recourse portion of permitted factoring transactions, and (iii) an amount up to $400.0 million of unrestricted cash and cash equivalents denominated in U.S. dollars or other lawful currencies (provided that such other currencies are readily convertible to, and deliverable in, U.S. dollars) held by the Company and its subsidiaries (other than bank regulated subsidiaries) to Consolidated EBITDA of less than 2.75:1.00 for the most recent period of four fiscal quarters.
The Company has certain restrictions on the dividends it may pay under its Credit Agreement, including pro forma compliance with a consolidated leverage ratio, testing consolidated funded indebtedness less (i) an amount up to $400.0 million of consolidated funded indebtedness due to permitted securitization transactions, (ii) the amount of consolidated funded indebtedness constituting the non-recourse portion of permitted factoring transactions, and (iii) an amount up to $500.0 million of unrestricted cash and cash equivalents denominated in U.S. dollars or other lawful currencies (provided that such other currencies are readily convertible to, and deliverable in, U.S. dollars) held by the Company and its subsidiaries (other than bank regulated subsidiaries) and maintaining Consolidated EBITDA of less than 2.75:1.00 for the most recent test period after such payment.
As of February 15, 2024, the closing price of our common stock was $224.14 per share, there were 41.7 million shares of our common stock outstanding and there were 10 holders of record of our common stock.
As of February 13, 2025, the closing price of our common stock was $155.12 per share, there were 38.8 million shares of our common stock outstanding and there were 9 holders of record of our common stock.
Issuer Purchases of Equity Securities Under a share repurchase plan approved by our board of directors and announced on August 23, 2022, the Company was authorized to repurchase up to $150.0 million in shares of its common stock in the open market and through various other means pursuant to the share repurchase plan, through August 23, 2026.
Issuer Purchases of Equity Securities Under a share repurchase plan approved by our board of directors, through December 31, 2025, the Company is authorized to repurchase up to specified dollar values of shares of its common stock through open market purchases, privately negotiated transactions, accelerated share repurchase programs, issuer self-tender offers or other means pursuant to the share repurchase plan.
All dollar amounts presented exclude such excise taxes, as applicable. (3) Values based on the share repurchase plan authorization in place as of December 31, 2023. See Part II – Item 8 – Note 28, Subsequent Events for information regarding an increase to the share repurchase plan authorization made during 2024.
(3) Values based on the share repurchase plan authorization in place as of December 31, 2024.
Removed
On October 27, 2022, the Company announced that our board of directors approved an increase of $500.0 million to the share repurchase plan, resulting in a total repurchase authorization of $650.0 million, and shortened the duration of the plan to December 31, 2025.
Added
On February 15, 2024, the Company’s board of directors authorized an amendment to its existing share repurchase program, expanding the total authorization from $650.0 million to $1.05 billion.
Added
Subsequently, on September 5, 2024, the Company’s board of directors authorized a further amendment to the share repurchase program under which up to an additional $1.0 billion worth of WEX’s common stock may be repurchased by the Company in the open market and through various other means pursuant to the share repurchase program, through December 31, 2025, expanding the total authorization from $1.05 billion to $2.05 billion.
Added
(2) The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible one percent excise tax on the net value of certain stock repurchases made after December 31, 2022. All dollar amounts presented exclude such excise taxes, as applicable.
Added
(4) On July 29, 2024, the Company entered into an ASR agreement with JPMorgan Chase Bank, National Association (“JPMorgan”) to repurchase an aggregate of $300.0 million of WEX’s common stock (the “2024 ASR”), and received an initial delivery of approximately 1.3 million shares during July 2024, representing approximately 80 percent of the total shares expected to be repurchased under the ASR agreement based on the closing price of the Company’s common stock of $180.44 on July 26, 2024.
Added
On October 23, 2024 the 2024 ASR was early terminated and we settled the transactions contemplated by the 2024 ASR with JPMorgan, resulting in a final delivery of 187,498 shares of WEX’s common stock.
Added
The total number of shares repurchased under the 2024 ASR was 1,517,580 at an average cost per share of $197.68, based on the daily volume-weighted average share price of WEX’s common stock during the term of the 2024 ASR.
Added
(5) Total average price paid per share for the fourth quarter of 2024 excludes the shares received on final settlement of the 2024 ASR during the fourth quarter of 2024.
Added
The Company may issue secured or unsecured debt in order to finance share repurchases.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

111 edited+44 added−42 removed57 unchanged
Biggest changeIn addition, adjusted free cash flow as used by WEX may not be comparable to similarly titled measures employed by other companies. 66 Table of Contents PART II The following table reconciles GAAP operating cash flow to adjusted free cash flow for the years ended December 31, 2023, 2022 and 2021: Year ended December 31, (in millions) 2023 2022 2021 Operating cash flow, as reported $ 907.9 $ 679.4 $ (42.6) Adjustments to cash flows from operating activities: Other (124.5) — — Adjusted for certain investing and financing activities: Increases in net deposits 593.1 801.6 1,620.3 Increases in borrowings under the BTFP 775.0 — — Increases in borrowed federal funds 70.0 — — Less: Purchases of current investment securities, net of sales and maturities (1,561.0) (585.8) (956.2) Less: Capital expenditures (143.6) (112.9) (86.0) Adjusted free cash flow $ 516.9 $ 782.4 $ 535.4 Critical Accounting Estimates The preparation of financial statements in accordance with GAAP requires us to make estimates and judgments about certain items and future events that affect reported amounts of assets and liabilities, revenue and expenses and related disclosure of contingent assets and liabilities at the date of the financial statements.
Biggest changeThe following table reconciles GAAP operating cash flow to adjusted free cash flow for the years ended December 31, 2024, 2023 and 2022: 65 Table of Contents PART II Year ended December 31, (in millions) 2024 2023 2022 Operating cash flow, as reported $ 481.4 $ 907.9 $ 679.4 Adjustments to cash flows from operating activities: Change in WEX Bank cash balances 279.1 (82.4) (295.7) Other (1) 34.0 (48.5) — Adjusted for certain investing and financing activities: Net Funding Activity 652.7 1,438.2 839.1 Less: Purchases of current investment securities, net of sales and maturities (738.0) (1,561.0) (585.8) Less: Capital expenditures (147.3) (143.6) (112.9) Adjusted free cash flow $ 562.0 $ 510.6 $ 524.2 (1) For the years ended December 31, 2024 and 2023, other adjustments predominantly includes an add-back to operating cash flows for contingent consideration and deferred consideration paid to sellers in excess of acquisition-date fair value.
See “Non-GAAP Financial Measures That Supplement GAAP Measures” later in this Item 7 for a reconciliation of total segment adjusted operating income to income before income taxes. See also Part II – Item 8 – Note 24, Segment Information, of our consolidated financial statements for more information regarding our segment determination.
See “Non-GAAP Financial Measures That Supplement GAAP Measures” later in this Item 7 for a reconciliation of total segment adjusted operating income to income before income taxes. See also Part II – Item 8 – Note 24, Segment Information, of our consolidated financial statements for more information regarding our segment determination.
See “Non-GAAP Financial Measures That Supplement GAAP Measures” later in this Item 7 for a reconciliation of total segment adjusted operating income to income before income taxes. See also Part II – Item 8 – Note 24, Segment Information, of our consolidated financial statements for more information regarding our segment determination.
See “Non-GAAP Financial Measures That Supplement GAAP Measures” later in this Item 7 for a reconciliation of total segment adjusted operating income to income before income taxes. See also Part II – Item 8 – Note 24, Segment Information, of our consolidated financial statements for more information regarding our segment determination.
The Company does not allocate foreign currency gains and losses, financing interest expense, net of financial instruments, change in fair value of contingent consideration, loss on debt extinguishments, other income, income taxes, and adjustments attributable to non-controlling interests to our operating segments as management believes these items are unpredictable and can obscure a segment’s operating trends and results.
The Company does not allocate foreign currency gains and losses, financing interest expense, net of financial instruments, change in fair value of contingent consideration, loss on debt extinguishments, income taxes, and adjustments attributable to non-controlling interests to our operating segments as management believes these items are unpredictable and can obscure a segment’s operating trends and results.
Adjusted net income , which similarly excludes the impact of all items excluded in segment adjusted operating income except unallocated corporate expenses, further excludes 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.
Adjusted net income , which similarly excludes the impact of all items excluded in total segment adjusted operating income except unallocated corporate expenses, further excludes 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.
Financial Covenants The Amended and Restated Credit Agreement contains various affirmative and negative covenants that, subject to certain customary exceptions, limit the Company and its subsidiaries’ (including, in certain limited circumstances, WEX Bank and the Company’s other regulated subsidiaries) ability to, among other things (i) incur additional debt, (ii) pay dividends or make other distributions on, redeem or repurchase capital stock, or make investments or other restricted payments, (iii) enter into transactions with affiliates, (iv) dispose of assets or issue stock of restricted subsidiaries or regulated subsidiaries, (v) create liens on assets, or (vi) effect a consolidation or merger or sell all, or substantially all, of the Company’s assets.
Financial Covenants The Credit Agreement contains various affirmative and negative covenants that, subject to certain customary exceptions, limit the Company and its subsidiaries’ (including, in certain limited circumstances, WEX Bank and the Company’s other regulated subsidiaries) ability to, among other things (i) incur additional debt, (ii) pay dividends or make other distributions on, redeem or repurchase capital stock, or make investments or other restricted payments, (iii) enter into transactions with affiliates, (iv) dispose of assets or issue stock of restricted subsidiaries or regulated subsidiaries, (v) create liens on assets, or (vi) effect a consolidation or merger or sell all, or substantially all, of the Company’s assets.
Segment adjusted operating income and adjusted net income may be useful to investors as a means of evaluating our performance. However, because segment adjusted operating income and adjusted net income are non-GAAP measures, they should not be considered as a substitute for, or superior to, operating income or net income as determined in accordance with GAAP.
Total segment adjusted operating income and adjusted net income may be useful to investors as a means of evaluating our performance. However, because total segment adjusted operating income and adjusted net income are non-GAAP measures, they should not be considered as a substitute for, or superior to, operating income or net income as determined in accordance with GAAP.
Segment adjusted operating income and adjusted net income as used by WEX may not be comparable to similarly titled measures employed by other companies.
Total segment adjusted operating income and adjusted net income as used by WEX may not be comparable to similarly titled measures employed by other companies.
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is presented in the following sections: • 2023 Highlights and Year in Review • Our Segments • Results of Operations • Application of Critical Accounting Estimates • Recently Adopted and New Accounting Standards • Liquidity and Capital Resources 2023 Highlights and Year in Review Company Highlights The following graphs present a comparative, summarized view of selected results.
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is presented in the following sections: • 2024 Highlights and Year in Review • Our Segments • Results of Operations • Application of Critical Accounting Estimates • Recently Adopted and New Accounting Standards • Liquidity and Capital Resources 2024 Highlights and Year in Review Company Highlights The following graphs present a comparative, summarized view of selected results.
The letters of credit are issued on our behalf in favor of third-party beneficiaries and primarily collateralize Corporate Payments processing activity. Subject to the terms of the Amended and Restated Credit Agreement, these irrevocable letters of credit are secured and are renewed on an annual basis unless the Company chooses not to renew them.
The letters of credit are issued on our behalf in favor of third-party beneficiaries and primarily collateralize Corporate Payments processing activity. Subject to the terms of the Credit Agreement, these irrevocable letters of credit are secured and are renewed on an annual basis unless the Company chooses not to renew them.
These amounts may increase or decrease during 2024 as we increase or decrease credit to customers, subject to appropriate credit reviews, as part of our lending product agreements. Many of these commitments are not expected to be utilized. We can adjust most of our customers’ credit lines at our discretion at any time.
These amounts may increase or decrease during 2025 as we increase or decrease credit to customers, subject to appropriate credit reviews, as part of our lending product agreements. Many of these commitments are not expected to be utilized. We can adjust most of our customers’ credit lines at our discretion at any time.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The discussion below focuses on the factors affecting our consolidated results of operations for the years ended December 31, 2023 and 2022, financial condition at December 31, 2023 and 2022 and, when appropriate, factors that may affect our future financial performance, unless stated otherwise.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The discussion below focuses on the factors affecting our consolidated results of operations for the years ended December 31, 2024 and 2023, financial condition at December 31, 2024 and 2023 and, when appropriate, factors that may affect our future financial performance, unless stated otherwise.
Additionally, other third-parties are utilized in performing services directly related to generating revenue. • Provision for credit losses - Changes in the reserve for credit loss are the result of changes in management’s estimate of the losses in the Company’s outstanding portfolio of receivables, including losses from fraud. • Operating interest - The Company incurs interest expense on operating debt and deposits, which provide liquidity to fund short-term receivables or are used to purchase fixed income securities. • Depreciation and amortization - The Company has identified those tangible and intangible assets directly associated with providing a service that generates revenue and records the depreciation and amortization associated with those assets under this category.
Additionally, other third-parties are utilized in performing services directly related to generating revenue. 54 Table of Contents PART II • Provision for credit losses - Changes in the reserve for credit loss are the result of changes in management’s estimate of the losses in the Company’s outstanding portfolio of receivables, including losses from fraud. • Operating interest - The Company incurs interest expense on operating debt and deposits, which provide liquidity to fund short-term receivables or are used to purchase fixed income securities. • Depreciation and amortization - The Company has identified those tangible and intangible assets directly associated with providing a service that generates revenue and records the depreciation and amortization associated with those assets under this category.
The “Other Key Metric” included below is considered by Management to be of particular importance to our overall performance in 2023 as it provides enhanced information and data underlying our financial results.
The “Other Key Metric” included below is considered by Management to be of particular importance to our overall performance in 2024 as it provides enhanced information and data underlying our financial results.
The accounting policies that we believe are most dependent on the application of critical accounting estimates and assumptions, or those that are most important to the portrayal of our financial condition and operating results and require management’s most subjective judgments, are related to the determination of: • Credit loss reserves; • The valuation of the Company’s contingent consideration derivative liability; • The valuation of the Company’s business combinations and asset acquisitions; • Goodwill impairment; and • Income taxes, in particular the recoverability of our deferred tax assets.
The accounting policies that we believe are most dependent on the application of critical accounting estimates and assumptions, or those that are most important to the portrayal of our financial condition and operating results and require management’s most subjective judgments, are related to the determination of: • Credit loss reserves; • The valuation of the Company’s business combinations and asset acquisitions; • Goodwill impairment; and • Income taxes, in particular the recoverability of our deferred tax assets.
For more information on our future lease payments, including our minimum lease payment schedule as of December 31, 2023, refer to Part II – Item 8 – Note 15, Leases.
For more information on our future lease payments, including our minimum lease payment schedule as of December 31, 2024, refer to Part II – Item 8 – Note 15, Leases.
Concessions to certain customers experiencing financial difficulties may be granted and are generally limited to extending the time to pay, placing a customer on a payment plan or granting waivers of late fees. There were no material concessions granted to customers experiencing financial difficulties during 2023 or 2022.
Concessions to certain customers experiencing financial difficulties may be granted and are generally limited to extending the time to pay, placing a customer on a payment plan or granting waivers of late fees. There were no material concessions to customers experiencing financial difficulties during either 2024 or 2023.
HSA funds can be withdrawn by the account holders at any time. We believe that our deposits are paying competitive yields and that the brokered deposit market remains liquid. As of December 31, 2023, we had $4.1 billion in deposits. See Part II – Item 8 – Note 11, Deposits, in this report for more information regarding our deposits.
HSA funds can be withdrawn by the account holders at any time. We believe that our deposits are paying competitive yields and that the brokered deposit market remains liquid. As of December 31, 2024, we had $4.5 billion in deposits. See Part II – Item 8 – Note 11, Deposits, in this report for more information regarding our deposits.
WEX Bank is also subject to a consent order issued by the FDIC on September 20, 2023 (the “2023 Order”), which requires WEX Bank to make certain improvements, which include corrections of certain issues identified in the 2023 Order and general enhancements to WEX Bank’s compliance management program.
Regulatory Matters WEX Bank is subject to a consent order issued by the FDIC on September 20, 2023 (the “2023 Order”), which requires WEX Bank to make certain improvements, which include corrections of certain issues identified in the 2023 Order and general enhancements to WEX Bank’s compliance management program.
For the year ended December 31, 2023, net cash provided by operating activities includes a $76.0 million receipt from the return of a collateral deposit as well as the $50.0 million receipt of proceeds upon the termination of all of the Company’s outstanding swaps with a collective notional amount of $1.1 billion, which the Company had used to manage the interest rate risk associated with its outstanding variable-interest rate borrowings.
For the year ended December 31, 2023, net cash provided by operating activities includes a $76.0 million 70 Table of Contents PART II receipt from the return of a collateral deposit as well as the $50.0 million receipt of proceeds upon the termination of all of the Company’s outstanding swaps with a collective notional amount of $1.1 billion, which the Company had used to manage the interest rate risk associated with its outstanding variable-interest rate borrowings.
Year Ended December 31, 2022, Compared to the Year Ended December 31, 2021 Discussion and analysis of the year ended December 31, 2022 compared to the year ended December 31, 2021 is included under the heading “Item 7.
Year Ended December 31, 2023, Compared to the Year Ended December 31, 2022 Discussion and analysis of the year ended December 31, 2023 compared to the year ended December 31, 2022 is included under the heading “Item 7.
The determined fair value of intangible assets and the respective useful lives assigned thereto impacts the amount and timing of future amortization expense.
The determined fair value of intangible assets and the respective useful lives assigned thereto impact the amount and timing of future amortization expense.
Recently Adopted and New Accounting Standards See Part II – Item 8 – Note 2, Recent Accounting Pronouncements, for a complete discussion of recently issued accounting standards adopted and not yet adopted. 69 Table of Contents PART II Liquidity and Capital Resources We fund our business operations primarily via cash on hand, cash generated from operations, the issuance of deposits, and borrowings under our Amended and Restated Credit Agreement.
Recently Adopted and New Accounting Standards See Part II – Item 8 – Note 2, Recent Accounting Pronouncements, for a complete discussion of recently issued accounting standards adopted and not yet adopted. Liquidity and Capital Resources We fund our business operations primarily via cash on hand, cash generated from operations, the issuance of deposits, and borrowings under our Credit Agreement.
We were in compliance with these covenants and restrictions at December 31, 2023. Commitments and Contingencies Commitments to Extend Credit We have entered into commitments to extend credit in the ordinary course of business. We had approximately $9.4 billion of unused commitments to extend credit at December 31, 2023, as part of established customer agreements, which are off-balance sheet arrangements.
We were in compliance with these covenants and restrictions at December 31, 2024. Commitments and Contingencies Commitments to Extend Credit We have entered into commitments to extend credit in the ordinary course of business. We had approximately $10.5 billion of unused commitments to extend credit at December 31, 2024, as part of established customer agreements, which are off-balance sheet arrangements.
(3) From time to time, WEX Bank enters into participation agreements with third-party banks to fund customers’ balances that exceed WEX Bank’s lending limit to individual customers. There was $39.1 million borrowed against these participation agreements as of December 31, 2023.
(3) From time to time, WEX Bank enters into participation agreements with third-party banks to fund customers’ balances that exceed WEX Bank’s lending limit to individual customers. There was $49.2 million borrowed against these participation agreements as of December 31, 2024.
For a reconciliation to net cash provided by operating activities, the most closely comparable GAAP measure, and the reasons why we believe this is an important financial measure, please refer to the section titled Non-GAAP Financial Measures That Supplement GAAP Measures .
For an updated definition of adjusted free cash flow and a reconciliation to net cash provided by operating activities, the most closely comparable GAAP measure, and the reasons why we believe this is an important financial measure, please refer to the section titled Non-GAAP Financial Measures That Supplement GAAP Measures .
In association with the March 2022 acquisition of SBI’s remaining interest in PO Holding, the Company owes SBI a purchase price of $234.0 million, payable in the amount of $76.7 million in each of March 2024 and 2025 and $80.6 million in March 2026, along with interest payable in accordance with the terms of the purchase agreement.
In association with the March 2022 acquisition of SBI’s remaining interest in PO Holding, the Company owes SBI a remaining purchase price of $157.3 million, payable in the amount of $76.7 million in March 2025 and $80.6 million in March 2026, along with interest payable in accordance with the terms of the purchase agreement.
(2) Total volume processed across the Company, which includes purchases on WEX-issued accounts as well as purchases issued by others using a WEX platform. 54 Table of Contents PART II Our Segments WEX has three reportable segments: Mobility, Corporate Payments, and Benefits.
(2) Total volume processed across the Company, which includes purchases on WEX-issued accounts as well as purchases issued by others using a WEX platform. Our Segments WEX has three reportable segments: Mobility, Benefits and Corporate Payments.
Borrowing limits fluctuate based on pledged assets, and as of December 31, 2023, the Company could borrow up to a maximum amount of $151.8 million. WEX Bank had no borrowings outstanding on this line of credit as of December 31, 2023.
Borrowing limits fluctuate based on pledged assets, and as of December 31, 2024, the Company could borrow up to a maximum amount of $137.7 million. WEX Bank had no borrowings outstanding on this line of credit as of December 31, 2024.
Unforeseen events, changes in circumstances and market conditions and differences in estimates of future cash flows could adversely affect the fair value of our assets and could result in future impairment charges.
Unforeseen events, changes in circumstances and 67 Table of Contents PART II market conditions and differences in estimates of future cash flows could adversely affect the fair value of our assets and could result in future impairment charges.
The Tranche A Term Loans and Tranche B Term Loans require scheduled quarterly payments through the April 1, 2026 and April 1, 2028 respective maturity dates. See Part II – Item 8 – Note 16, Financing and Other Debt, in this report for more information regarding our applicable interest rates on our Amended and Restated Credit Agreement.
The Term A-1 Loans and Term B-2 Loans require scheduled quarterly payments through the respective maturity dates. See Part II – Item 8 – Note 16, Financing and Other Debt, in this report for more information regarding principal payments and the applicable interest rates on our Credit Agreement.
The following table reconciles net income attributable to shareholders to adjusted net income attributable to shareholders and related per share data: Year ended December 31, (in millions) 2023 2022 2021 Net income attributable to shareholders $ 266.6 $ 6.16 $ 201.4 $ 4.50 $ 0.1 $ — Unrealized loss (gain) on financial instruments 30.4 0.70 (83.2) (1.86) (39.2) (0.86) Net foreign currency (gain) loss (4.9) (0.11) 22.7 0.51 12.3 0.27 Change in fair value of contingent consideration 8.5 0.20 139.1 3.11 40.1 0.88 Acquisition-related intangible amortization 184.0 4.25 170.5 3.81 181.7 4.01 Other acquisition and divestiture related items 6.6 0.15 17.9 0.40 36.9 0.81 Stock-based compensation 131.6 3.04 100.7 2.25 76.6 1.70 Other costs 45.6 1.05 38.4 0.86 23.2 0.52 Impairment charges — — 136.5 3.05 — — Debt restructuring and debt issuance cost amortization 89.4 2.06 17.3 0.39 21.8 0.48 ANI adjustments attributable to non-controlling interests — — (34.6) (0.77) 132.0 2.91 Tax related items (112.1) (2.59) (115.8) (2.59) (71.5) (1.58) Dilutive impact of convertible debt (1) — (0.10) — (0.13) — — Adjusted net income attributable to shareholders $ 645.8 $ 14.81 $ 611.0 $ 13.53 $ 414.1 $ 9.14 (1) The dilutive impact of the Convertible Notes has been calculated under the ‘if-converted’ method for the periods through which they were outstanding.
The following table reconciles net income attributable to shareholders to adjusted net income attributable to shareholders and related per share data: Year ended December 31, (in millions) 2024 2023 2022 Net income attributable to shareholders $ 309.6 $ 7.50 $ 266.6 6.16 $ 201.4 $ 4.50 Unrealized loss (gain) on financial instruments 0.2 0.01 30.4 0.70 (83.2) (1.86) Net foreign currency loss (gain) 26.1 0.63 (4.9) (0.11) 22.7 0.51 Change in fair value of contingent consideration 6.5 0.16 8.5 0.20 139.1 3.11 Acquisition-related intangible amortization 201.8 4.89 184.0 4.25 170.5 3.81 Other acquisition and divestiture related items 12.1 0.29 6.6 0.15 17.9 0.40 Stock-based compensation 111.9 2.71 131.6 3.04 100.7 2.25 Other costs 48.9 1.19 45.6 1.05 38.4 0.86 Impairment charges — — — — 136.5 3.05 Debt restructuring and debt issuance cost amortization 15.9 0.39 89.4 2.06 17.3 0.39 ANI adjustments attributable to non-controlling interests — — — — (34.6) (0.77) Tax related items (102.2) (2.47) (112.1) (2.59) (115.8) (2.59) Dilutive impact of convertible debt (1) — — — (0.10) — (0.13) Adjusted net income attributable to shareholders $ 631.0 $ 15.28 $ 645.8 $ 14.81 $ 611.0 $ 13.53 (1) The dilutive impact of the Convertible Notes was calculated under the ‘if-converted’ method for the periods through which they were outstanding.
For more information on these unfunded commitments as of December 31, 2023 and the term over which funding can be expected, see Part II – Item 8 – Note 20, Commitments and Contingencies.
For more information on these unfunded commitments and the term over which funding can be expected, see Part II – Item 8 – Note 20, Commitments and Contingencies.
Our valuation allowance at December 31, 2023 decreased to $100.7 million from $131.4 million at December 31, 2022, resulting in deferred tax liabilities, net, of $115.8 million as of December 31, 2023. Changes in the expectations regarding the realization of deferred tax assets and liabilities could materially impact income tax expense in future periods.
Our valuation allowance at December 31, 2024 decreased to $96.3 million from $100.7 million at December 31, 2023, resulting in deferred tax liabilities, net, of $127.4 million as of December 31, 2024. Changes in the expectations regarding the realization of deferred tax assets and liabilities could materially impact income tax expense in future periods.
Financing Activities Financing cash flows generally consist of the issuance and repayment of debt, deposits and proceeds from employee exercises of stock options, changes in restricted cash payable and purchases of our common stock.
Financing Activities Financing cash flows generally consist of the issuance and repayment of debt and deposits, changes in restricted cash payable and purchases of our common stock.
In addition, since debt issuance cost amortization is dependent upon the financing method, which can vary widely company to company, we believe that excluding these costs helps to facilitate comparison to historical results as well as to other companies within our industry; • The adjustments attributable to non-controlling interests, including adjustments to the redemption value of a non-controlling interest, have no significant impact on the ongoing operations of the business; • The tax related items are the difference between the Company’s GAAP tax provision and a pro forma tax provision based upon the Company’s adjusted net income before taxes as well as the impact from certain discrete tax items.
In addition, since debt issuance cost amortization is dependent upon the financing method, which can vary widely company to company, we believe that excluding these costs helps to facilitate comparison to historical results as well as to other companies within our industry; • The adjustments attributable to non-controlling interests, including adjustments to the redemption value of a non-controlling interest, have no significant impact on the ongoing operations of the business; 63 Table of Contents PART II • The tax related items are the difference between the Company’s GAAP tax provision and a non-GAAP tax provision.
As of December 31, 2023, we had cash and cash equivalents of $975.8 million, including Corporate Cash of $171.9 million, and remaining borrowing availability of $731.2 million under the Revolving Credit Facility along with access to various sources of funds, including uncommitted federal funds lines of credit from other banks.
As of December 31, 2024, we had cash and cash equivalents of $595.8 million, including Corporate Cash of $80.3 million, and remaining borrowing availability of $655.2 million under the Revolving Credit Facility along with access to various sources of funds, including uncommitted federal funds lines of credit from other banks.
Our short-term cash requirements consist primarily of funding the working capital needs of our business, payments on maturities of deposits, current principal and interest payments on the credit facilities under our Amended and Restated Credit Agreement, and payments on other short-term debt.
Our short-term cash requirements consist primarily of funding the working capital needs of our business, payments on maturities of deposits, current principal and interest payments on the credit facilities under our Credit Agreement, and payments on other short-term debt. Our long-term cash requirements consist primarily of amounts owed under our Credit Agreement and various facilities lease agreements.
Upon distribution of the foreign subsidiaries’ earnings in which the Company continues to assert indefinite reinvestment, which approximates $203.5 million at December 31, 2023, the Company would be subject to withholding taxes payable to foreign countries, where applicable, but would generally have no further federal income tax liability.
Upon distribution of the foreign 71 Table of Contents PART II subsidiaries’ earnings in which the Company continues to assert indefinite reinvestment, which approximates $298.4 million at December 31, 2024, the Company would be subject to withholding taxes payable to foreign countries, where applicable, but would generally have no further federal income tax liability.
As of December 31, 2023, we have an estimated reserve for credit losses that is 2.6 percent of the total gross accounts receivable balance as compared to December 31, 2022, when our 67 Table of Contents PART II estimated reserve for credit losses was 3.2 percent of gross accounts receivable.
As of December 31, 2024, we have an estimated reserve for credit losses that is 2.5 percent of the total gross accounts receivable balance as compared to December 31, 2023, when our estimated reserve for credit losses was 2.6 percent of gross accounts receivable.
Operating Expenses The following table compares line items within operating income and presents segment adjusted operating income and segment adjusted operating income margin for Benefits: Twelve Months Ended December 31, Increase (Decrease) (in millions) 2023 2022 Amount Percent Cost of services Processing costs $ 261.0 $ 231.9 $ 29.1 13 % Service fees $ 53.0 $ 43.6 $ 9.4 22 % Provision for credit losses $ 7.4 $ 0.8 $ 6.7 NM Operating interest $ 5.3 $ 0.9 $ 4.4 NM Depreciation and amortization $ 39.5 $ 38.2 $ 1.3 3 % Other operating expenses General and administrative $ 55.7 $ 41.2 $ 14.6 35 % Sales and marketing $ 58.7 $ 52.2 $ 6.5 13 % Depreciation and amortization $ 72.8 $ 59.1 $ 13.7 23 % Operating income $ 114.8 $ 36.7 $ 78.1 213 % Segment adjusted operating income (1) $ 241.8 $ 133.7 $ 108.1 81 % Segment adjusted operating income margin (2) 36.2 % 26.5 % 9.7 % 37 % 61 Table of Contents PART II (1) Segment adjusted operating income excludes 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.
Operating Expenses The following table compares line items within operating income and presents segment adjusted operating income and segment adjusted operating income margin for Benefits: Twelve Months Ended December 31, Increase (Decrease) (in millions) 2024 2023 Amount Percent Cost of services Processing costs $ 270.2 $ 261.0 $ 9.2 4 % Service fees $ 64.8 $ 53.0 $ 11.8 22 % Provision for credit losses $ (0.5) $ 7.4 $ (7.9) NM Operating interest $ 4.6 $ 5.3 $ (0.7) (13) % Depreciation and amortization $ 46.2 $ 39.5 $ 6.7 17 % 58 Table of Contents PART II Twelve Months Ended December 31, Increase (Decrease) (in millions) 2024 2023 Amount Percent Other operating expenses General and administrative $ 37.1 $ 55.7 $ (18.6) (33) % Sales and marketing $ 57.9 $ 58.7 $ (0.8) (1) % Depreciation and amortization $ 85.8 $ 72.8 $ 13.0 18 % Operating income $ 173.3 $ 114.8 $ 58.4 51 % Segment adjusted operating income (1) $ 307.0 $ 241.8 $ 65.2 27 % Segment adjusted operating income margin (2) 41.5 % 36.2 % 5.3 % 15 % (1) Segment adjusted operating income excludes 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.
See Part II – Item 8 – Note 18, Fair Value of our consolidated financial statements for further information on the valuation of this derivative liability. During August 2023, we repurchased all of the outstanding aggregate principal amount of the Company’s Convertible Notes at a premium, resulting in a loss on extinguishment of $70.1 million.
During August 2023, we repurchased all of the outstanding aggregate principal amount of the Company’s Convertible Notes at a premium, resulting in a loss on extinguishment of $70.1 million. See Part II – Item 8 – Note 16, Financing and Other Debt of our consolidated financial statements for further information on the repurchase of the Convertible Notes.
For additional information with respect to interest owed on these deferred payments, see Part II – Item 8 – Note 4, Acquisitions.
For additional information with respect to interest owed on these deferred payments, see Part II – Item 8 – Note 20, Commitments and Contingencies.
There were no material concessions to customers experiencing financial difficulties during either 2023 or 2022. 59 Table of Contents PART II Operating Expenses The following table compares line items within operating income and presents segment adjusted operating income and segment adjusted operating income margin for Corporate Payments: Twelve Months Ended December 31, Increase (Decrease) (in millions, except with respect to margin) 2023 2022 Amount Percent Cost of services Processing costs $ 76.7 $ 72.9 $ 3.8 5 % Service fees $ 12.6 $ 13.2 $ (0.6) (4) % Provision for credit losses $ (4.7) $ 6.5 $ (11.2) (173) % Operating interest $ 9.4 $ 5.8 $ 3.6 62 % Depreciation and amortization $ 24.1 $ 21.6 $ 2.5 12 % Other operating expenses General and administrative $ 76.9 $ 67.8 $ 9.0 13 % Sales and marketing $ 56.6 $ 56.3 $ 0.3 1 % Depreciation and amortization $ 26.2 $ 24.4 $ 1.8 7 % Operating income $ 219.1 $ 133.9 $ 85.3 64 % Segment adjusted operating income (1) $ 277.2 $ 192.7 $ 84.5 44 % Segment adjusted operating income margin (2) 55.8 % 47.9 % 7.9 % 16 % (1) Segment adjusted operating income excludes 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.
Operating Expenses The following table compares line items within operating income and presents segment adjusted operating income and segment adjusted operating income margin for Corporate Payments: Twelve Months Ended December 31, Increase (Decrease) (in millions, except with respect to margin) 2024 2023 Amount Percent Cost of services Processing costs $ 77.4 $ 76.7 $ 0.7 1 % Service fees $ 11.7 $ 12.6 $ (1.0) (8) % Provision for credit losses $ 7.7 $ (4.7) $ 12.5 NM Operating interest $ 9.7 $ 9.4 $ 0.3 4 % Depreciation and amortization $ 32.4 $ 24.1 $ 8.3 34 % Other operating expenses General and administrative $ 58.9 $ 76.9 $ (18.0) (23) % Sales and marketing $ 59.9 $ 56.6 $ 3.3 6 % Depreciation and amortization $ 26.5 $ 26.2 $ 0.4 1 % 60 Table of Contents PART II Twelve Months Ended December 31, Increase (Decrease) (in millions, except with respect to margin) 2024 2023 Amount Percent Operating income $ 203.5 $ 219.1 $ (15.6) (7) % Segment adjusted operating income (1) $ 256.2 $ 277.2 $ (21.0) (8) % Segment adjusted operating income margin (2) 52.5 % 55.8 % (3.3) % (6) % (1) Segment adjusted operating income excludes 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.
Segment Adjusted Operating Income and Adjusted Net Income Segment adjusted operating income excludes 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.
These measures are also used to allocate capital and resources among our operating segments. 62 Table of Contents PART II Total Segment Adjusted Operating Income and Adjusted Net Income Total segment adjusted operating income excludes 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.
See Part II – Item 8 – Note 4, Acquisitions, in this report for more information regarding the Ascensus and Payzer acquisitions. • Net cash used for investing activities for 2022 decreased $884.5 million as compared to the prior year, primarily resulting from a reduction in payments made for acquisitions as well as a reduction in net purchases of available-for-sale debt securities.
See Part II – Item 8 – Note 4, Acquisitions, in this report for more information regarding the Ascensus and Payzer Acquisitions. • Net cash used for investing activities for 2023 decreased $1,421.6 million as compared to the prior year, primarily resulting from an increase in net purchases of available-for-sale debt securities and cash paid for acquisitions.
A recurring, more extensive list of key performance indicators is included by segment within the Results of Operations section later in this MD&A. 53 Table of Contents PART II GAAP Measures (in millions except per share data) : Total revenues Net income attributable to shareholders Net income attributable to shareholders per diluted share Net cash provided by (used for) operating activities Non-GAAP Measures (in millions except per share data) : (1) Adjusted net income attributable to shareholders Adjusted net income attributable to shareholders per diluted share Adjusted free cash flow Other Key Metric (in millions) : Total volume processed across the Company (2) (1) Adjusted net income attributable to shareholders, adjusted net income attributable to shareholders per diluted share, and adjusted free cash flow are supplemental non-GAAP financial measures of operating performance.
GAAP Measures (in millions except per share data) : Total revenues Net income attributable to shareholders Net income attributable to shareholders per diluted share Net cash provided by operating activities 53 Table of Contents PART II Non-GAAP Measures (in millions except per share data) : (1) Adjusted net income attributable to shareholders Adjusted net income attributable to shareholders per diluted share Adjusted free cash flow Other Key Metric (in millions) : Total volume processed across the Company (2) (1) Adjusted net income attributable to shareholders, adjusted net income attributable to shareholders per diluted share, and adjusted free cash flow are supplemental non-GAAP financial measures of operating performance.
(2) Segment adjusted operating income margin is calculated by dividing segment adjusted operating income by segment revenue. The revenues earned on HSA assets is highly accretive to earnings and as a result, segment adjusted operating income margin for 2023 increased significantly from 2022. Cost of Services Processing costs increased $29.1 million in 2023, as compared to 2022.
(2) Segment adjusted operating income margin is calculated by dividing segment adjusted operating income by segment revenue. The revenues earned on HSA assets is highly accretive to earnings and as a result, segment adjusted operating income margin for 2024 increased significantly from 2023.
For the year ended December 31, 2022, approximately 1.6 million shares of the Company’s common stock associated with the assumed conversion of the Convertible Notes as of the beginning of the period was included in the calculation of adjusted net income per diluted share, as the effect of including such adjustments was dilutive. 65 Table of Contents PART II GAAP operating income was $647.1 million, $469.8 million and $342.0 million for the years ended December 31, 2023, 2022 and 2021, respectively.
For the year ended December 31, 2022, approximately 1.6 million shares of the Company’s common stock associated with the assumed conversion of the Convertible Notes as of the beginning of the period was included in the calculation of adjusted net income per diluted share, as the effect of including such adjustments was dilutive.
This also includes non-recurring professional service costs, costs related to certain identified initiatives, including restructuring and technology initiatives, to further streamline the business, improve the Company’s efficiency, create synergies and globalize the Company’s operations, all with an objective to improve scale and efficiency and increase profitability going forward.
This also includes non-recurring professional service costs, costs related to certain identified initiatives, including restructuring and technology initiatives, to further streamline the business, improve the Company’s efficiency, create synergies and globalize the Company’s operations, all with an objective to improve scale and efficiency and increase profitability going forward. • Impairment charges represent non-cash asset write-offs, which do not reflect recurring costs that would be relevant to the Company’s continuing operations.
Although non-GAAP adjusted free cash flow is not calculated in accordance with GAAP, WEX believes that adjusted free cash flow is a useful measure for investors to further evaluate our results of operations because (i) adjusted free cash flow indicates the level of cash generated by the operations of the business, which excludes certain non-recurring transactions, after appropriate reinvestment for recurring investments in property, equipment and capitalized software that are required to operate the business; (ii) changes in net deposits occur on a daily basis as a regular part of operations; (iii) borrowings under the BTFP and borrowed federal funds are primarily used as a replacement for brokered deposits as part of our accounts receivable funding strategy; and (iv) purchases of current investment securities are made as a result of deposits gathered operationally.
Although non-GAAP adjusted free cash flow is not calculated in accordance with GAAP, WEX believes that adjusted free cash flow is a useful measure for investors to further evaluate our results of operations because (i) adjusted free cash flow indicates the level of cash generated by the operations of the business, which excludes consideration paid on acquisitions, after appropriate reinvestment for recurring investments in property, equipment and capitalized software that are required to operate the business; (ii) net Funding Activity includes fluctuations in deposits and other borrowings primarily used as part of our accounts receivable funding strategy; (iii) purchases of current investment securities are made as a result of deposits gathered operationally; and (iv) WEX Bank cash balances may be increased or decreased for reasons other than matching operating activity.
However, because adjusted free cash flow is a non-GAAP measure, it should not be considered as a substitute for, or superior to, operating cash flow as determined in accordance with GAAP.
However, because adjusted free cash flow is a non-GAAP measure, it should not be considered as a substitute for, or superior to, operating cash flow as determined in accordance with GAAP. In addition, adjusted free cash flow as used by WEX may not be comparable to similarly titled measures employed by other companies.
As a result of owning all of our technology and issuing capabilities, our Corporate Payments segment has a highly scalable and relatively fixed cost base resulting in largely comparable expenses year to year. As a result, the significant increase in 2023 revenues has also significantly increased operating income, segment adjusted operating income, and segment adjusted operating income margin in 2023.
NM - Not meaningful As a result of owning all of our technology and issuing capabilities, our Corporate Payments segment has a highly scalable and relatively fixed cost base resulting in largely comparable expenses year to year. As a result, changes in revenue similarly impact operating income, segment adjusted operating income, and segment adjusted operating income margin.
Assuming no further changes to the Federal Funds rate as of December 31, 2023, however, the Company expects that it will incur the full $225.0 million in contingent consideration, the remainder of which is payable over the next two years in average annual increments of approximately $66 million based on the Federal Funds rate in effect as of December 31, 2023.
Assuming no further changes to the Federal Funds rate as of December 31, 2024, the Company expects that it will incur the full $225.0 million in contingent consideration, the remainder of which would be payable over the next two years with the majority payable within the first quarter of 2026 based on the Federal Funds rate in effect as of December 31, 2024.
An increase or decrease to the 2023 reserve by 0.5 percent of the total gross accounts receivable balance would increase or decrease the provision for credit losses by $17.6 million.
An increase or decrease to the 2024 66 Table of Contents PART II reserve by 0.5 percent of the total gross accounts receivable balance would increase or decrease the provision for credit losses by $15.4 million.
Neither the matters identified in the 2022 Order nor the 2023 Order have had nor are expected to have a material effect on WEX Bank’s operations or the Company’s results of operations, financial condition or cash flows. 74 Table of Contents PART II
The civil money penalty and the matters identified in the 2023 Order have not had, nor are they expected to have, a material effect on WEX Bank’s operations or the Company’s results of operations, financial condition or cash flows.
The increase in income tax provision for 2023 as compared to the prior year comparable period is due primarily to an increase in income before income taxes, offset in part due to the change in the Company’s effective tax rates. The Company’s effective tax rate for 2023 was 27.7 percent compared to 35.7 percent for 2022.
The increase in income tax provision for 2024 as compared to the prior year is due primarily to an increase in the Company’s taxable income, offset in part by a decrease in the Company’s effective tax rates. The Company’s effective tax rate for 2024 was 25.9 percent compared to 27.7 percent for 2023.
Goodwill Impairment Our quantitative goodwill impairment test is performed at least annually as of October 1, or more frequently, if events or conditions indicate the carrying amount of goodwill may not be recoverable. The test consists of a comparison of the carrying value of each reporting unit with assigned goodwill to its estimated fair value.
Goodwill Impairment Our goodwill impairment test is performed at least annually as of October 1, or more frequently, if events or conditions indicate the carrying amount of goodwill may not be recoverable.
Decreased shipping demand in the over-the-road market led to a decline in size and volume of factored invoices during 2023 as compared to the elevated demands in the prior year. 57 Table of Contents PART II Operating Expenses The following table compares line items within operating income and presents segment adjusted operating income and segment adjusted operating income margin for Mobility: Twelve Months Ended December 31, Increase (Decrease) (in millions, except with respect to margin) 2023 2022 Amount Percent Cost of services Processing costs $ 283.9 $ 254.1 $ 29.8 12 % Service fees $ 7.6 $ 8.4 $ (0.8) (9) % Provision for credit losses $ 87.1 $ 172.7 $ (85.6) (50) % Operating interest $ 69.5 $ 13.9 $ 55.6 399 % Depreciation and amortization $ 40.8 $ 46.1 $ (5.3) (12) % Other operating expenses General and administrative $ 138.3 $ 110.2 $ 28.1 25 % Sales and marketing $ 212.4 $ 203.3 $ 9.1 4 % Depreciation and amortization $ 70.3 $ 72.5 $ (2.3) (3) % Impairment charges $ — $ 136.5 $ (136.5) NM Operating income $ 472.8 $ 426.0 $ 46.8 11 % Segment adjusted operating income (1) $ 599.4 $ 693.4 $ (94.0) (14) % Segment adjusted operating income margin (2) 43.3 % 48.0 % (4.7) % (10) % (1) Segment adjusted operating income excludes 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.
Operating Expenses The following table compares line items within operating income and presents segment adjusted operating income and segment adjusted operating income margin for Mobility: Twelve Months Ended December 31, Increase (Decrease) (in millions, except with respect to margin) 2024 2023 Amount Percent Cost of services Processing costs $ 300.0 $ 283.9 $ 16.1 6 % Service fees $ 7.2 $ 7.6 $ (0.4) (5) % Provision for credit losses $ 61.0 $ 87.1 $ (26.1) (30) % Operating interest $ 89.7 $ 69.5 $ 20.2 29 % Depreciation and amortization $ 55.4 $ 40.8 $ 14.6 36 % Other operating expenses General and administrative $ 122.1 $ 138.3 $ (16.2) (12) % Sales and marketing $ 222.8 $ 212.4 $ 10.4 5 % Depreciation and amortization $ 73.5 $ 70.3 $ 3.2 5 % Operating income $ 469.1 $ 472.8 $ (3.7) (1) % Segment adjusted operating income (1) $ 598.5 $ 599.4 $ (0.9) — % Segment adjusted operating income margin (2) 42.7 % 43.3 % (0.6) % (1) % (1) Segment adjusted operating income excludes 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.
The key assumptions that drive fair value of our reporting units are the WACC and projected financial information (i.e. growth rates and the amount and timing of expected future cash flows) within the DCFM and relevant comparable company earnings multiples within the GPCM, all of which require significant management judgment.
Within the DCFM, the key assumptions that drive fair value of our reporting units are the WACC and projected financial information (i.e. growth rates and the amount and timing of expected future cash flows), both of which require significant management judgment. As the WACC increases, fair value decreases because market participants would require a higher rate of return.
Cash Flows The table below summarizes our cash activities and adjusted free cash flow: Year ended December 31, (in millions) 2023 2022 2021 Net cash provided by (used for): Operating activities $ 907.9 $ 679.4 $ (42.6) Investing activities $ (2,138.3) $ (716.7) $ (1,601.1) Financing activities $ 1,573.3 $ 681.3 $ 1,596.2 Non-GAAP financial measure: Adjusted free cash flow (1) $ 516.9 $ 782.4 $ 535.4 (1) The Company’s non-GAAP adjusted free cash flow is calculated as cash generated from operations, less net purchases of current investment securities, capital expenditures, the change in net deposits, changes in borrowings under the BTFP and borrowed federal funds and certain other adjustments.
Cash Flows The table below summarizes our cash activities and adjusted free cash flow: Year ended December 31, (in millions) 2024 2023 2022 Net cash provided by (used for): Operating activities $ 481.4 $ 907.9 $ 679.4 Investing activities $ (960.6) $ (2,138.3) $ (716.7) Financing activities $ (260.3) $ 1,573.3 $ 681.3 Non-GAAP financial measure: Adjusted free cash flow (1) $ 562.0 $ 510.6 $ 524.2 (1) The Company’s non-GAAP adjusted free cash flow has historically been calculated as cash flows from operating activities adjusted for net purchases of current investment securities, capital expenditures, net Funding Activity, and certain other adjustments.
The methodology utilized for calculating the Company’s adjusted net income tax provision is the same methodology utilized in calculating the Company’s GAAP tax provision; and • The Company does not allocate certain corporate expenses to our operating segments, as these items are centrally controlled and are not directly attributable to any reportable segment.
In addition, the Company does not allocate certain corporate expenses to our operating segments, as these items are centrally controlled and are not directly attributable to any reportable segment.
We also utilize off-balance sheet factoring and receivable securitization facilities to sell certain of our accounts receivable to unrelated third-party financial institutions in order to accelerate 70 Table of Contents PART II the collection of the Company’s cash and reduce internal costs.
The Company had $86.8 million of securitized debt under these facilities as of December 31, 2024. We also utilize off-balance sheet factoring and receivable securitization facilities to sell certain of our accounts receivable to unrelated third-party financial institutions in order to accelerate the collection of the Company’s cash and reduce internal costs.
The Amended and Restated Credit Agreement also requires, solely for the benefit of the lenders of the Tranche A Term Loan and lenders under the Revolving Credit Facility, that the Company maintain at the end of each fiscal quarter the following financial ratios: • a consolidated interest coverage ratio (as defined in the Amended and Restated Credit Agreement) of no less than 3.00 to 1.00; and • a consolidated leverage ratio (as defined in the Amended and Restated Credit Agreement) of no more than 4.75 to 1.00 as of December 31, 2023 and thereafter.
The Credit Agreement also contains customary financial maintenance covenants, including that the Company maintain at the end of each fiscal quarter the following financial ratios: • a consolidated interest coverage ratio (as defined in the Credit Agreement) of no less than 3.00 to 1.00; and • a consolidated leverage ratio (as defined in the Credit Agreement) of no more than 4.75 to 1.00.
Such accounts are also subject to late fees and interest 71 Table of Contents PART II charges based on a revolving balance. The Company had approximately $133.3 million and $157.8 million of receivables with revolving credit balances as of December 31, 2023 and 2022, respectively.
Such accounts are also subject to late fees and interest charges based on a revolving balance. The Company had approximately $114.1 million and $133.3 million of receivables with revolving credit balances as of December 31, 2024 and 2023, respectively. The receivables portfolio consists of a large group of homogeneous smaller balances across a wide range of industries.
We consider factors such as the Company’s overall financial model and strategic plan, the cost to our business from customers failing to pay timely and the impact such late payments have on our financial results. We typically conduct an assessment of our late fee rates at least annually but such assessment may occur more often depending on macro-economic factors.
We consider factors such as the Company’s overall financial model and strategic plan, the cost to our business from customers failing to pay timely and the impact such late payments have on our financial results.
The following table compares line items within operating income for unallocated corporate expenses: Twelve Months Ended December 31, Increase (Decrease) (in millions) 2023 2022 Amount Percent Other operating expenses General and administrative $ 157.1 $ 124.7 $ 32.4 26 % Depreciation and amortization $ 2.6 $ 2.0 $ 0.6 29 % General and administrative expenses increased $32.4 million during 2023 as compared to the prior year, primarily due to increased headcount and related compensation expense, including stock compensation, coupled with an increase in costs incurred in connection with business acquisitions. 62 Table of Contents PART II Non-Operating Income and Expense The following table reflects comparative results for certain amounts excluded from operating income: Twelve Months Ended December 31, Absolute Dollar Change Effect of Change on Net Income (in millions) 2023 2022 Financing interest expense, net of financial instruments $ (204.6) $ (47.5) $ 157.1 Reduction Change in fair value of contingent consideration $ (8.5) $ (139.1) $ 130.6 Increase Loss on extinguishment of Convertible Notes $ (70.1) $ — $ 70.1 Reduction Net foreign currency gain (loss) $ 4.9 $ (22.7) $ 27.6 Increase Income tax provision $ 102.2 $ 93.1 $ 9.1 Reduction Net income from non-controlling interests $ — $ 0.3 $ 0.3 NM Change in value of redeemable non-controlling interest $ — $ 34.2 $ 34.2 NM NM - Not meaningful Due primarily to substantial increases in the LIBOR forward yield curve during 2022, we recognized significant unrealized gains on our interest rate swap financial instruments during 2022, which reduced financing interest expense, net of financial instruments for that year.
The following table compares line items within operating income for unallocated corporate expenses: Twelve Months Ended December 31, Increase (Decrease) (in millions) 2024 2023 Amount Percent Other operating expenses General and administrative $ 157.7 $ 157.1 $ 0.6 — % Depreciation and amortization $ 1.5 $ 2.6 $ (1.0) (40) % Expenses largely remained consistent during 2024 as compared to the prior year. 61 Table of Contents PART II Non-Operating Income and Expense The following table reflects comparative results for certain amounts excluded from operating income: Twelve Months Ended December 31, Absolute Dollar Change Effect of Change on Net Income (in millions) 2024 2023 Financing interest expense, net of financial instruments $ (235.9) $ (204.6) $ 31.3 Reduction Change in fair value of contingent consideration $ (6.5) $ (8.5) $ 2.0 Increase Loss on extinguishment of Convertible Notes $ — $ (70.1) $ 70.1 Increase Net foreign currency (loss) gain $ (26.1) $ 4.9 $ 31.0 Reduction Income tax provision $ 108.2 $ 102.2 $ 6.0 Reduction During 2023, the Company benefited from net gains and lower effective interest rates as a result of our interest rate swap financing instruments, which offset financing interest expense.
The decrease in total Mobility revenue was primarily driven by lower finance fee revenue and the impact of lower average fuel prices on stable levels of payment processing transactions year over year. 56 Table of Contents PART II Finance fee revenue is comprised of the following components: Twelve Months Ended December 31, Increase (Decrease) (in millions) 2023 2022 Amount Percent Finance income $ 271.8 $ 307.1 $ (35.3) (11) % Factoring fee revenue 41.1 52.5 (11.4) (22) % Finance fee revenue $ 312.9 $ 359.7 $ (46.7) (13) % Finance income primarily consists of late fees charged for receivables not paid within the terms of the customer agreement based upon the outstanding customer receivable balance, and to a lesser degree by finance charges earned on revolving portfolio balances.
Finance fee revenue is comprised of the following components: Twelve Months Ended December 31, Increase (Decrease) (in millions) 2024 2023 Amount Percent Finance income $ 255.1 $ 271.8 $ (16.7) (6) % Factoring fee revenue 42.1 41.1 1.0 2 % Finance fee revenue $ 297.2 $ 312.9 $ (15.8) (5) % Finance income primarily consists of late fees charged for receivables not paid within the terms of the customer agreement based upon the outstanding customer receivable balance, and to a lesser degree by finance charges earned on revolving portfolio balances.
General and administrative expenses increased $9.0 million primarily due to increased professional services expense in support of increasing operating efficiencies and business growth. 60 Table of Contents PART II Benefits Revenues The following table reflects comparative revenue and key operating statistics within Benefits: Twelve Months Ended December 31, Increase (Decrease) (in millions) 2023 2022 Amount Percent Revenues Payment processing revenue $ 90.7 $ 81.9 $ 8.8 11 % Account servicing revenue 435.7 357.3 78.5 22 % Finance fee revenue 0.3 0.1 0.1 81 % Other revenue 141.7 65.2 76.5 117 % Total revenues $ 668.4 $ 504.5 $ 163.9 32 % Key performance indicators Total volume $ 12,441.8 $ 11,205.3 $ 1,236.5 11 % Purchase volume $ 6,655.6 $ 5,869.1 $ 786.5 13 % Average number of SaaS accounts 19.9 18.0 1.9 11 % Average HSA custodial cash assets $ 3,868.9 $ 3,176.8 $ 692.1 22 % Total Benefits revenue increased $163.9 million during 2023 as compared to the prior year.
Benefits Revenues The following table reflects comparative revenue and key operating statistics within Benefits: Twelve Months Ended December 31, Increase (Decrease) (in millions) 2024 2023 Amount Percent Revenues Payment processing revenue $ 96.2 $ 90.7 $ 5.5 6 % Account servicing revenue 445.2 435.7 9.4 2 % Finance fee revenue 0.3 0.3 — NM Other revenue 197.9 141.7 56.2 40 % Total revenues $ 739.5 $ 668.4 $ 71.1 11 % Key performance indicators Total volume $ 13,600.1 $ 12,441.8 $ 1,158.3 9 % Purchase volume $ 7,242.7 $ 6,655.6 $ 587.1 9 % Average number of SaaS accounts 20.3 19.9 0.3 2 % Average HSA custodial cash assets $ 4,280.4 $ 3,868.9 $ 411.5 11 % Total Benefits revenue increased $71.1 million during 2024 as compared to the prior year.
Instances in which our expenses in 2023 did not remain comparable to those of 2022 are described hereafter. The decreased provision for credit losses for 2023, as compared to the prior year comparable period, reflects the impact of a reduction in forecasted losses internationally.
Instances in which our expenses in 2024 did not remain comparable to those of 2023 are described hereafter. The provision for credit losses for 2024 increased $12.5 million, as compared to 2023.
Customer impact and any resulting harm from the violations detailed in the 2023 Order have been identified and steps have been taken to remediate any such impact and harm. The terms of the 2023 Order will remain in effect and be enforceable until they are modified, terminated, suspended or set aside by the FDIC.
The terms of the 2023 Order will remain in effect and be enforceable until they are modified, terminated, suspended or set aside by the FDIC.
See Part II – Item 8 – Note 20, Commitments and Contingencies, for more information. In addition to these contractual commitments, the Company has unfunded commitments to provide loans of up to $11.3 million under a nonprofit community development program and to invest up to $10.0 million in certain limited partnership funds under subscription and limited partnership agreements.
In addition to these contractual commitments, as of December 31, 2024, the Company has unfunded commitments to provide loans of up to $13.5 million under a nonprofit community development program and to invest up to $8.4 million in certain limited partnership funds under subscription and limited partnership agreements.
Our long-term cash requirements consist primarily of amounts owed under our Amended and Restated Credit Agreement and various facilities lease agreements. For more information on our debt and deposit commitments refer to Part II – Item 8 – Note 16, Financing and Other Debt and Note 11, Deposits, respectively, in this report.
For more information on our debt and deposit commitments refer to Part II – Item 8 – Note 16, Financing and Other Debt and Note 11, Deposits, respectively, in this report.
Investing Activities Investing cash flows generally consist of capital expenditures, cash used for acquisitions and investment of eligible custodial cash assets. • Net cash used for investing activities for 2023 increased $1,421.6 million as compared to the prior year, primarily resulting from an increase in net purchases of available-for-sale debt securities and cash paid for acquisitions.
Investing Activities Investing cash flows generally consist of capital expenditures, cash used for acquisitions and investment of eligible custodial cash assets. • Net cash used for investing activities for 2024 decreased $1,177.7 million as compared to the prior year, primarily resulting from lower relative investment of HSA deposits.
Concessions to certain customers experiencing financial difficulties may be granted and are generally limited to extending the time to pay, placing a customer on a payment plan or granting waivers of late fees.
Offsetting in part these decreases were increases in contractual late fee rates charged during 2024, as compared to 2023, attributable to the pricing optimization efforts mentioned earlier. Concessions to certain customers experiencing financial difficulties may be granted and are generally limited to extending the time to pay, placing a customer on a payment plan or granting waivers of late fees.
For a reconciliation of GAAP operating income to total segment adjusted operating income, please see the following table: Year ended December 31, (in millions) 2023 2022 2021 Segment adjusted operating income Mobility $ 599.4 $ 693.4 $ 557.1 Corporate Payments 277.2 192.7 86.9 Benefits 241.8 133.7 104.4 Total segment adjusted operating income $ 1,118.4 $ 1,019.8 $ 748.4 Reconciliation: Total segment adjusted operating income $ 1,118.4 $ 1,019.8 $ 748.4 Less: Unallocated corporate expenses 103.0 84.5 78.2 Acquisition-related intangible amortization 184.0 170.5 181.7 Other acquisition and divestiture related items 6.6 17.9 40.5 Impairment charges — 136.5 — Debt restructuring costs — — 6.2 Stock-based compensation 131.6 100.7 76.6 Other costs 46.1 39.9 23.2 Operating income $ 647.1 $ 469.8 $ 342.0 Adjusted Free Cash Flow Adjusted free cash flow is calculated as cash flows from operating activities, adjusted for net purchases of current investment securities, capital expenditures, the change in net deposits, changes in borrowings under the BTFP and borrowed federal funds and certain other adjustments which, for the year ended December 31, 2023, reflects an adjustment for contingent consideration paid to sellers in excess of acquisition-date fair value, an adjustment for proceeds received of $76.0 million from the return of a collateral deposit, and an adjustment for proceeds received of $50.0 million on the termination of our interest rate swap agreements.
For a reconciliation of GAAP operating income to total segment adjusted operating income, please see the following table: 64 Table of Contents PART II Year ended December 31, (in millions) 2024 2023 2022 Segment adjusted operating income Mobility $ 598.5 $ 599.4 $ 693.4 Corporate Payments 256.2 277.2 192.7 Benefits 307.0 241.8 133.7 Total segment adjusted operating income $ 1,161.7 $ 1,118.4 $ 1,019.8 Reconciliation: Total segment adjusted operating income $ 1,161.7 $ 1,118.4 $ 1,019.8 Less: Unallocated corporate expenses 102.1 103.0 84.5 Acquisition-related intangible amortization 201.8 184.0 170.5 Other acquisition and divestiture related items 5.7 6.6 17.9 Impairment charges — — 136.5 Stock-based compensation 111.9 131.6 100.7 Other costs 53.9 46.1 39.9 Operating income $ 686.3 $ 647.1 $ 469.8 Adjusted Free Cash Flow Adjusted free cash flow has historically been calculated as cash flows from operating activities adjusted for net purchases of current investment securities, capital expenditures, net Funding Activity, and certain other adjustments.
The receivables portfolio consists of a large group of homogeneous smaller balances across a wide range of industries. No one customer receivable balance represented 10 percent or more of the outstanding receivables balance at December 31, 2023 or December 31, 2022.
No one customer receivable balance represented 10 percent or more of the outstanding receivables balance at December 31, 2024 or December 31, 2023.
The fair value of each reporting unit is estimated using a combination of an income-based DCFM valuation model and a market-based GPCM valuation model.
Under a quantitative impairment test, we estimate fair value using a combination of an income-based DCFM valuation model and a market-based GPCM valuation model.
Our material cash requirements under purchase obligations due beyond 2024 are approximately $26.7 million. These purchase obligations do not include amounts recorded on our consolidated balance sheet as of December 31, 2023. The expected timing of payments of our purchase obligations is estimated based on current information.
These purchase obligations do not include amounts recorded on our consolidated balance sheet as of December 31, 2024. On an ongoing basis, the Company works with suppliers on the timing of payments and delivery of purchase commitments. The expected timing of payments of our purchase obligations is estimated based on current information.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10–K for the year ended December 31, 2022, as filed with the SEC on February 28, 2023 and is incorporated by reference herein. 63 Table of Contents PART II Non-GAAP Financial Measures That Supplement GAAP Measures In addition to evaluating the Company’s performance on a GAAP basis, Company management uses particular non-GAAP financial measures, which exclude the impact of certain costs, expenses, gains and losses, to evaluate our overall operating performance, including comparison across periods and with competitors.
Non-GAAP Financial Measures That Supplement GAAP Measures In addition to evaluating the Company’s performance on a GAAP basis, Company management uses particular non-GAAP financial measures, which exclude the impact of certain costs, expenses, gains and losses, to evaluate our overall operating performance, including comparison across periods and with competitors.

… 117 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

21 edited+4 added−3 removed2 unchanged
Biggest change(in millions) Estimated Impact on Interest Expense Amended and Restated Credit Agreement $ 28.8 Contractual deposits (1) $ 4.4 Money market deposits $ 2.3 Deferred acquisition liabilities $ 1.3 Short term debt (2) $ 2.1 (1) For purposes of this table, we have assumed that contractual deposits with maturity dates during 2024, which include certificates of deposit and certain money market deposits that have a fixed maturity and/or interest rate, would be replaced at the same principal amount, but with an interest rate one percent higher than the rate in effect at maturity.
Biggest changeActual results may differ from estimates due to actual fluctuations in interest rates, debt levels, and our deposit portfolios during the year. 74 Table of Contents PART II (in millions) Estimated Impact on Interest Expense Credit Agreement $ 31.4 Contractual deposits (1) 1.0 Money market deposits 5.3 Deferred acquisition liabilities 0.6 Short term debt (2) 12.4 (1) For purposes of this table, we have assumed that contractual deposits with maturity dates during 2025, which include certain money market deposits that have a fixed maturity and/or interest rate, would be replaced at the same principal amount, but with an interest rate one percent higher than the rate in effect at maturity.
If all currencies in which we earned revenue had weakened or strengthened by 10 percent against the U.S. dollar, the Company’s 2023 revenues and operating income would each have correspondingly decreased or increased by approximately 2 percent or less. We currently do not utilize hedging instruments to mitigate these risks.
If all currencies in which we earned revenue had weakened or strengthened by 10 percent against the U.S. dollar, the Company’s 2024 revenues and operating income would each have correspondingly decreased or increased by approximately 2 percent or less. We currently do not utilize hedging instruments to mitigate these risks.
The deposits are generally short-term in nature, though certain certificates of deposit and fixed term money market deposits are issued in up to five-year maturities. Upon maturity, the deposits may be replaced by issuing new deposits to the extent they are needed. See Part II – Item 8 – Note 11, Deposits, for more information.
The deposits are generally short-term in nature, though certain certificates of deposit and fixed term money market deposits have been issued in up to five-year maturities. Upon maturity, the deposits may be replaced by issuing new deposits to the extent they are needed. See Part II – Item 8 – Note 11, Deposits, for more information.
Accordingly, a significant part of our overall revenue is derived from fuel purchases, making our revenues in this segment subject to historically volatile fuel prices. As of December 31, 2023, the Company is not hedged for changes in fuel prices, though Management continually monitors the market and our alternatives to hedge these fluctuations.
Accordingly, a significant part of our overall revenue is derived from fuel purchases, making our revenues in this segment subject to historically volatile fuel prices. As of December 31, 2024, the Company is not hedged for changes in fuel prices, though Management continually monitors the market and our alternatives to hedge these fluctuations.
We periodically review the projected borrowings under our Amended and Restated Credit Agreement and the current interest rate environment in order to ascertain whether interest rate swaps should be used to reduce our exposure to interest rate volatility. On December 12, 2023, the Company unwound and terminated all of its outstanding swap agreements.
We periodically review the projected borrowings under our Credit Agreement and the current interest rate environment in order to ascertain whether interest rate swaps should be used to reduce our exposure to interest rate volatility. On December 12, 2023, the Company unwound and terminated all of its outstanding swap agreements.
The following table presents the effect of a 1 percent hypothetical increase or decrease in interest rates on our corporate debt, deposits and deferred acquisition liabilities, assuming that borrowings and deferred acquisition liabilities outstanding and contractual deposit maturities in place as of December 31, 2023 remain the same during 2024.
The following table presents the effect of a 1 percent hypothetical increase or decrease in interest rates on our corporate debt, deposits and deferred acquisition liabilities, assuming that borrowings and deferred acquisition liabilities outstanding and contractual deposit maturities in place as of December 31, 2024 remain the same during 2025.
We estimate that each one cent decline in average domestic fuel prices below our assumed average U.S. retail fuel price per gallon during 2024 would result in a $2.0 million decline in 2024 revenue.
We estimate that each one cent decline in average domestic fuel prices below our assumed average U.S. retail fuel price per gallon during 2025 would result in a $2.0 million decline in 2025 revenue.
Foreign Currency Risk Our exposure to foreign currency fluctuation is due to our financial statements being presented in U.S. dollars and our foreign subsidiaries transacting in currencies other than the U.S. dollar, which results in gains and losses that are reflected in our consolidated statements of operations. The majority of the Company’s foreign exchange exposure is related to the U.S.
Foreign Currency Risk Our exposure to foreign currency fluctuation is due to our financial statements being presented in U.S. dollars and our foreign subsidiaries transacting in currencies other than the U.S. dollar, which results in gains and losses that are reflected in our consolidated statements of operations.
A sustained decline in prevailing interest rates may negatively affect our business by reducing the yield earned on HSA assets. Conversely, a sustained increase in prevailing interest rates can increase the yield on HSA assets.
However, a sustained decline in prevailing interest rates may negatively affect our business by reducing the yield earned on HSA assets.
Conversely, a corresponding decrease in interest rates would result in a comparable increase in fair value. 75 Table of Contents PART II Interest-Bearing Liabilities From time to time, the Company is party to interest rate swap contracts to manage interest rate risk and economically hedge the applicable reference rate component of future interest payments associated with outstanding variable-interest rate borrowings under the Company’s Amended and Restated Credit Agreement.
Conversely, a corresponding decrease in interest rates would result in a comparable increase in fair value. Interest-Bearing Liabilities From time to time, the Company has been party to interest rate swap contracts to manage interest rate risk and economically hedge the applicable reference rate component of future interest payments associated with outstanding variable-interest rate borrowings under the Company’s Credit Agreement.
As of December 31, 2023, consumer interest rates payable on HSA deposits ranged from 0.05 percent to 0.40 percent while the average rate payable during 2023 and 2022 was 0.11 percent and 0.04 percent, respectively. Accordingly, it is unlikely that the interest rate could change by 1 percent over the next twelve months. 76 Table of Contents PART II
As of December 31, 2024, consumer interest rates payable on HSA deposits ranged from 0.05 percent to 0.40 percent while the average rate payable during 2024 was 0.11 percent. Accordingly, it is unlikely that the interest rate could change by 1 percent over the next twelve months.
We have excluded HSA deposits from the table above as consumer interest rates paid thereon are based on stated rates per the account agreements and are not significantly impacted by changes in market interest rates.
(2) Includes impacts from applicable participation debt, securitized debt and advances from the FHLB. We have excluded HSA deposits from the table above as consumer interest rates paid thereon are based on stated rates per the account agreements and are not significantly impacted by changes in market interest rates.
Assuming a hypothetical increase in interest rates of 25 basis points, the resulting potential decrease in fair value of our portfolio of securities as of December 31, 2023 would be less than 2 percent.
As of December 31, 2024, we had $3.8 billion invested in current available-for-sale debt securities at fair value. Assuming a hypothetical increase in interest rates of 25 basis points, the resulting potential decrease in fair value of our portfolio of securities as of December 31, 2024 would be less than 2 percent.
See Part II – Item 8 – Note 12, Derivative Instruments, for more information. At December 31, 2023, the Company had approximately $1.1 billion of outstanding deposits that were used to fund working capital needs in our Mobility and Corporate Payment businesses where we fund a customer’s entire receivable in the majority of our processing transactions.
At December 31, 2024, the Company had approximately $0.8 billion of outstanding deposits and $1.2 billion of short-term borrowings that were used to fund working capital needs in our Mobility and Corporate Payment businesses where we fund a customer’s entire receivable in the majority of our processing transactions.
Dollar versus the Euro, Australian dollar, Canadian dollar and British pound sterling. Our results of operations can be materially affected depending on the volatility and magnitude of foreign exchange rate changes.
The majority of the Company’s foreign exchange exposure is related to the 73 Table of Contents PART II U.S. Dollar versus the Euro, Australian dollar, Canadian dollar and British pound sterling. Our results of operations can be materially affected depending on the volatility and magnitude of foreign exchange rate changes.
See Part II – Item 8 – Note 4, Acquisitions for more information.
See Part II – Item 8 – Note 12, Derivative Instruments, for more information.
Interest Rate Risk In the ordinary course of our operations, we have interest rate risk from the possibility that changes in interest rates will impact our operating and debt costs, however, the income earned on HSA custodial cash balances, allows us to help offset that risk.
Interest Rate Risk In the ordinary course of our operations, we have interest rate risk from our borrowings and WEX Bank deposits, however, the income earned on HSA custodial cash balances, allows us to help offset that risk. Interest-Earning Assets WEX Inc. and WEX Bank provide custodial and depository services, respectively, with respect to HSAs.
However, we may be required to increase the interest retained by account holders or fees paid to our partners in a rising prevailing interest rate environment, though caps exist within most of our current partner contracts. Changes in prevailing interest rates are driven by macroeconomic trends and government policies over which we have no control.
While a sustained increase in prevailing interest rates can increase the yield on HSA assets, we could also be required to increase the interest retained by account holders or fees paid to our partners in such a rate environment, though caps exist within most of our current partner contracts.
The HSA funds over which WEX Inc. serves as custodian that are deposited with, managed and invested by WEX Bank are generally invested in fixed income securities. We attempt to limit our exposure to credit risk by establishing strict investment policies as to minimum investment ratings, diversification of our portfolio and setting risk tolerance levels.
Changes in prevailing interest rates are driven by macroeconomic trends and government policies over which we have no control. We attempt to limit our exposure to credit risk by establishing strict investment policies as to minimum investment ratings, diversification of our portfolio and setting risk tolerance levels.
Interest-Earning Assets WEX Inc. and WEX Bank provide custodial and depository services, respectively, with respect to HSAs. As a non-bank custodian, WEX Inc. contracts with our depository partners, which currently include WEX Bank, to hold custodial cash assets on behalf of individual account holders. Income earned on HSA assets is impacted by fluctuations in the prevailing interest rate environment.
As a non-bank custodian, WEX Inc. contracts with our depository partners, including WEX Bank, to hold custodial cash assets on behalf of individual account holders.
The Company has deferred payments on acquisition of $234.0 million, plus any interest accruing pursuant to the terms of the Share Purchase Agreement, related to the purchase of SBI’s remaining 4.53 percent interest in PO Holding. Such interest is benchmarked to the 12-month SOFR, determined at future dates, plus a stated interest rate spread.
As of December 31, 2024, the Company has a remaining obligation for deferred acquisition payments of $157.3 million, plus interest, which accrues pursuant to the terms of the Share Purchase Agreement related to the purchase of SBI’s remaining 4.53 percent interest in PO Holding.
Removed
As of December 31, 2023, we had $3.0 billion invested in current available-for-sale debt securities at fair value. The weighted-average coupon rate on these securities was 4.1 percent as of December 31, 2023.
Added
The HSA funds over which WEX Inc. serves as custodian that are deposited with, managed and invested by WEX Bank, are predominantly invested in laddered fixed rate securities that we believe protect future revenue from the full impact of interest rate changes.
Removed
Actual results may differ from estimates due to actual fluctuations in interest rates, debt levels, and our deposit portfolios during the year.
Added
Such interest is payable annually in arrears beginning in 2025 and benchmarked to the 12-month SOFR plus a stated interest rate spread, determined at the beginning of each annual interest period. See Part II – Item 8 – Note 20, Commitments and Contingencies for more information.
Removed
(2) Includes impacts from applicable participation debt, securitized debt and borrowed federal funds (excluding borrowings from the BTFP as they are at fixed rates through December 2024).
Added
Liabilities Indexed to Interest Rates Under a prior year asset purchase agreement, WEX has a contingent consideration liability that is payable annually, calculated on a quarterly basis, and is based upon increases in the Federal Funds rate from the date of acquisition.
Added
The contingent payment period extends through the earlier of December 31, 2030, or the date when the cumulative amount paid as contingent consideration equals $225.0 million. Assuming no further changes to the Federal Funds rate as of December 31, 2024, the Company expects that it will incur the full $225.0 million in contingent consideration. 75 Table of Contents PART II

Other WEX 10-K year-over-year comparisons