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October 31, 2018

WEX beats Q3 expectations, announces partnership to bring its technology to Japan

Courtesy / WEX Inc.
Courtesy / WEX Inc.

WEX Inc. (NYSE: WEX) reported today that it achieved its ninth consecutive quarter of double-digit top-line growth, beating expectations with total revenue for the third quarter increasing 18% to $382.7 million, up from $324.0 million for the same period a year ago.

Of the $58.7 million increase in the quarter that ended on Sept. 30, the company reported that $17.8 million was the result of higher fuel prices.

The company is on track to achieve revenues in the range of $1.48 billion to $1.49 billion for the full year and adjusted net income in the range of $354 million to $359 million, according to its Q3 earnings report released this morning. It ended 2017 with $1.25 billion in revenues.

"Following an impressive first half of the year, our momentum continued this quarter with double-digit year-over-year revenue and profitability growth, driven by strong performance across our core businesses," WEX President and CEO Melissa Smith said. "Healthy volumes, strong international growth, and higher fuel prices all contributed to our performance being ahead of expectations."

WEX brings its technology to Japan

In a move that bodes well for the continuing growth of its corporate payments division, WEX also announced today a new partnership with JCB, Japan's premier and only international payment brand — which will expand WEX's virtual payments technology into Japan.

In a telephone interview with Mainebiz this morning, Smith said the partnership with JCB — along with last week's announcement that it plans to buy Noventis Inc., a Houston-based electronic payments network — are part of WEX's ongoing strategy to diversify its revenue streams and business sectors.

"We've wanted to enter new markets that had compelling growth rates," she said.

Under the partnership agreement with JCB, WEX will become JCB's first issuer of virtual cards, which will create "new functionality on the JCB network," according to the news release. The program is expected to launch in the second half of 2019.

"We're thrilled to be working with WEX in Japan," said Ryuji Shinzawa, President and COO at JCBUSA. "The innovative technology of the WEX platform plus JCB's merchant acceptance reach in Japan and throughout Asia make this an ideal partnership."

WEX reported that the Asian payments market shows considerable opportunity with data points from the company's latest Payments Pulse survey pointing to rapid adoption of e-payables solutions. Around half of the surveyed businesses in Asia/Oceania (43%) have already implemented an electronic payables initiative, and more than a third (42%) have one underway. The majority (85%) of those who say they have a payables initiative underway are working to launch it in the next six to 12 months. And almost all of the surveyed businesses in Asia/Oceania (94%) that have implemented a payments initiative or plan to do so, consider vendors outside of current banks or financial institutions a viable option.

Translation: Those trends represent strong growth opportunities for WEX and JCB through their partnership.

"The JCB collaboration represents WEX's commitment to expanding our presence in the Asia market, and entering Japan is an exciting step for us," Jay Dearborn, president of WEX corporate payments, said in the news release. "It is a continuation of WEX's long-term strategy and goal to be the only technology partner in virtual payments that offers multiple payment schemes to businesses."

Move to new headquarters on track

Photo / Peter Van Allen
Photo / Peter Van Allen
WEX Inc. plans to move roughly 400 employees by early 2019 into its global headquarters in Portland.

Smith said WEX is on track to move roughly 400 of its 1,000 Maine employees into its new global headquarters on Portland's eastern waterfront by February or March of next year.

The four-story 100,000-square-foot building at Thames and Hancock streets is about 75% completed.

"I'm excited about how it's progressing, they've done a great job," Smith said of the construction. "I love the location. We're on the edge of the Old Port."

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