As of 30th Sept 2020

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Exec Summary (<50 words)

Traditional fuel card provider that's aggressively expanding to capture B2B payments opportunity in Travel & Health sector. Payment rails expertise, strong differentiated distribution, margin improvement over time are key levers of the investment thesis.

Baseball Stats

Founded: 1983

Employees: 5000

MarketCap (9/30/20): $6.2B

3yr Return: 7%

5 yr Return: 9%

5Yr Rev growth: 16%

5Yr Inc growth: -13%

Web: www.wexinc.com

Key Investors

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Company description

B2B payments provider platform that started as a fuel card provider to fleet operators (large and small) and has expanded into Travel/Health segment since then.

All three segments (Travel, Health, Fuel) are attractive, vertical-specific markets defined by large, fragmented, and underpenetrated TAMs; along with high complexity.

  1. Fleet Solutions → Fuel payment cards
  2. Travel → Payment infrastructure for OTAs, AP outsourcing, inter-business virtual card payments
  3. Health and Employee Benefit Solutions - TSA for employers provided plans & SaaS for other TSAs

Typically criticized for exposure to fuel price volatility given fuel cards are majority revenue (60%), the company has been constantly de-linking its revenue volatility with fuel prices, which today stands at ~25%.

Largest competitor is FleetCor (fuel cards provider)

Market / Competition

Wex being a B2B payments player mainly gains share by people switching from cash/ACH payments to industry-tailored B2B products.

Investment thesis

  1. Diversified revenues → Fuel / Healthcare & Travel are uncorrelated so provide a buffer against macro headwinds. Expansion into secular growth B2B payments in Health & Travel sectors is a big opportunity.
  2. Declining revenue sensitivity to fuel prices
  3. Inorganic strategy → Demonstrated success with the past acquisition on the payments side (Noventis, Discovery Benefits)

Detailed notes

Financials