All right. So, let's get started. My name is Chris Stein. I'm an analyst as part of the UBS Payments and FinTech team. We're very excited to have Melissa Smith here with us from WEX. And I think this is your first time in quite a few years. And we're good to have you and heard your third quarter update. I guess maybe just to kick it off, it would be great to hear your key priorities. But some top of your head, heading into 2026.
Sure. Happy to be here. You're saying it's the first time. It's been. I think I was back in.
Right. In a couple years.
2005. I think it was years.
Yeah.
I was here for a long time, but it's been a few years. So the key priorities for us going into next year, we have three strategic priorities. We wanna make sure that we continue to build on our core. So, enhancing our core, we wanna extend our reach, and we want to accelerate innovation. And if I think about each of those things, enhancing our core is really about making sure that we're bringing in sales, that we're retaining customers.
Mm-hmm.
Across our portfolio. And a great example of that for us as we go into next year is BP. So as BP makes their migration over, we think of that as, you know, a wonderful way of just continuing to build on the core that we have. As we're extending our reach, the places that we've been really focused is where we can take our product and extend it into new TAM.
Mm-hmm.
10-4 is a great example of that. Or we're extending into the owner-operator marketplace and breathing new life into some of these products. Same thing with BP came on board because of an enhanced acceptance product, and we have built an ability to sell outside of travel or embedded payments capability. So when we think about those as new products, they're something that's really important for us to continue to build on in 2026.
Mm-hmm.
And then when we think about innovation and accelerating innovation, we're thinking about how you can deploy AI and other sources of technology to really reimagine customer experiences.
Yep.
And so those are, when we think about next year, the things that we're really focused on.
All right. Awesome. Thanks for the overview. I guess maybe just looking back at this year and especially in the fourth quarter, it's almost a month ago. But it's been over a month since you reported Q3. Maybe can you give us an update on how the business has been versus your expectations in the fourth quarter?
Happy to. Yeah, I'm happy to. So, if you look at our spend volume and the way that we think about, you know, business and what we had projected forward for revenue, we're seeing trends coming in pretty similar to what we had expected. So kinda largely in line. And you know, if you look across the portfolio, we've continued to see really strong sales. And so, you know, one of the things that we're excited about is how not only just we're ending 2024, but how that will project into 2025, and how that will project into 2026.
All right. Awesome, and just, yeah, as you mentioned, just, you know, exiting 2025, right? What are some of the maybe moving pieces or incremental moving pieces? I know, like, we're getting really granular here, that moving pieces that will make you feel more encouraged or more cautious about next year?
Yeah. I'll start on the things that I'm really bullish about. So, you know, when I talked about the new sales momentum.
Mm-hmm.
That's something you don't typically see a lot of benefit of in the year in. And you start to see incremental benefits of that going into the next year. And so as we've had a strong sales year this year that will benefit 2026. We also, you know, I talked about the fact that we've got new products that we're moving into the marketplace. I'm really excited about this, not just in the products that we're rolling out right now, but the idea that we have enabled our ability to create products and commercialize them in the markets that we're in. And we're doing that at a greater velocity. So that's something that I'm really excited about. The BP migration that will happen during 2026, that will be an incremental benefit for us as well.
Mm-hmm.
The sales that we're seeing, you know, specifically in AP Direct in our embedded payments products, you know, as we're going through implementation cycles. That's. I'm excited about that as well, and, you know, so far we're still about a month into open enrollment, but open enrollment has gone, you know, as we would've expected and as looking positive for us as well, and so those are things I would put in the "I'm excited about" category, and I think that, you know, the biggest thing that I'm still on my watch list is what's happening from a macro perspective.
Yep.
We've seen trends in same-store sales across our mobility business. And that's been true, you know, through the course of this year. And so that's not something that we've seen improve. And so that's, you know, the, I would say the thing that I have the most on my watch list and what we're really focused on are the things that we can control. So.
Yep.
New sales, customer retention, and making sure that we're delivering these new products in the market.
All right. Awesome. That's an amazing overview of some of the topics we're gonna dive into. So maybe let's.
That's great.
Dive into the segments. Well, let's start with mobility, right? As you see momentum in the SMB side of mobility, maybe can you remind us or maybe provide some sizing for the potential customer TAM with the SMBs and the current level of penetration relative to, you know, the other fleet segments that are potentially more penetrated?
So if you look at the mobility market itself, you'll see when you get into vehicle sizes above 250 vehicles, it's much more penetrated. And so as we're winning business, those are typically competitive takeaways.
Mm-hmm.
When you get under 25 vehicles, you get into a really open marketplace. There are, you know, millions of small businesses that have fleets, and as we are looking at areas for us to continue to grow, this has been an area that we've been really focused on because we have the ability to extend credit in a way that we have proven to be, you know, quite secure.
Mm-hmm.
And we know that there are customers that are looking for the controls, capability that we can provide as well as the credit extension and all of the ability to save, you know, which is part of the value proposition process when they use our products. They don't have to worry about misuse, but they're also there, they're saving. And so as we've extended the product in that space, we're seeing, you know, really great uplift. We know that when we spend a dollar.
Yep.
In marketing, we get $4 back within.
Mm-hmm.
a two-year period of time. And so we have been putting more money into that marketing channel. We've seen a 12% increase in new sales with small businesses year over year. And so this is part of the marketplace we're really excited about. We think it's big. There's a lot of opportunity for us. And so far we're playing well in that.
All right. That's awesome. That's awesome. And then on the, I guess on the portfolio inside, I think you mentioned BP and I guess, beyond BP, right, after this window, may not be as many, you know, private label retailers that remain that are not using the commercial platform. But maybe how do you think about the opportunities beyond this window and maybe some of the share gain opportunities in the segment?
Yeah. So, BP is the. That puts all 10 of the largest oil companies in the United States that we'll be private labeling for.
Mm-hmm.
And so you're right. We're excited about BP coming on. We think, you know, that it's a great win. They came to us, in large part because of the enhanced acceptance product that we have in the marketplace.
Mm-hmm.
And so they'll be the first to test a new product with us. And we're really excited about that. In terms of beyond that, we have added new private label relationships outside of the United States that are typically not as large in size.
Mm-hmm.
But we will continue to look at that as an area of growth. And as we talked about earlier, you know, our really our biggest focus has been around the small business segment, is in the untapped part of the marketplace, and then adding a new product capability into the existing customer base.
All right. Awesome. And excuse me. And, as you mentioned, some of the opportunities you're seeing outside of the U.S., maybe can you just give us some of the sizing of your business or what's the current mix right now?
Yeah. So 85% of the business is in the United States. So, the rest of the business where we're in, in mobility specifically, we're in Europe and Australia.
Mm-hmm.
You know, both of those places, Australia, we have, you know, a great business. We continue to grow that in that marketplace. I would say think of that as a relatively small market. Europe, we're a much smaller player in the European marketplace. And we're representing largely Esso's brand in the European marketplace. And so it's an area for us, but it's not been the highest area of focus, you know, for us when we think about incremental dollars and we're gonna invest. We've largely invested them in the United States.
See, understood. That's very helpful. And maybe just looking beyond next year and the kinda longer-term building blocks of the growth in this segment, maybe can you just, I guess, looking ahead, well, yeah, I guess, let's just talk about the longer-term building blocks first, and then I'll just have a follow-up in 2026.
Yeah. When I think about the growth algorithm for our mobility business, the way that we have historically grown the business is, we're bringing in new customers.
Mm-hmm.
We're bringing existing customers. We create a little bit on price each year.
Yep.
And then typically we get a little positive for same-store sales. So I think about the world we're in right now.
Yep.
We're doing really well in selling. We're doing well in retention.
Mm-hmm.
We are creating a little bit on price. And same-store sales has been really the thing that's deviated from what I would say is our normal growth algorithm. You know, we think of that as a transient issue. So we think of that as, historically in, you know, the 20+ years that we've, the, at least I've been in, in the business, we've seen periods of time where macro has affected.
Mm-hmm.
The Mobility business. If you focus on retention of the customers, that's something that kinda cycles its way through. And so.
Yep.
We think of that as kind of a temporary thing. And then we've really been focusing on adding in new growth levers beyond what has been our traditional growth algorithm. And that's where we've been adding in new product capability.
Mm-hmm.
Which we think will become more meaningful over time. You know, a combination of, you talked about 10-4, the enhanced acceptance product, in mobility as well as field service management, which are, you know, places that we've invested money that we're seeing, you know, a benefit of those investments. And we think will accrete to the overall growth rate over time.
All right. That's awesome. And a lot of things to look forward to. I guess maybe for 2026, just on some of the assumptions, what are you thinking from a macro or the same-store sales perspective at this point relative to 2025?
Yeah. That's a really hard question, right? You know, what I will say is typically we don't try to make a big, you know, guess around this.
Mm-hmm.
We tend to project forward what we're seeing. And so I would say, like, my operating assumption right now is that we're going to assume that you're gonna have some macro headwinds at least in the first half of next year, just kind of because that's what we're seeing happening within the portfolio.
Mm-hmm.
There are two different components of the business. There is the business of the over-the-road market. That's been in this rolling recession for, you know, quite a long period of time. And it's a matter of having excess supply, you know, work its way through the cycle, which has been happening over a long period of time. And then on the local business, that has more to do with if our customers have, you know, deliveries to make or service calls to make or it could be a sales rep, you know, that's driving around.
Yep.
If business activity returns more to normal, then that would be something we would see as a benefit. But I will say, like, it will be a.
Yep.
Conversation. I'm sure that we're gonna have every time that we're out, you know, as we do our Q4 earnings release. We'll, I'm sure we'll be talking about this as well.
Of course. Yeah. Definitely. Yeah. Just, we'll follow updates.
Yeah.
I guess maybe moving along to the benefits segment, WEX has a strong 20% share of all the HSA accounts in the country and continues to outpace the market growth in the segment. Can you talk about what's driving this from a product differentiation standpoint and maybe longer-term how we can drive incremental volume in the segment?
Yeah. So there are three things that cause us to be winning and to be outgrowing the marketplace. The biggest you talked about product. So when we first entered this market, you know, a number of years ago, we had the single-point solutions. What we've built over time has been a solution that covers HSA accounts, FSA accounts, lifestyle benefit accounts, health retirement accounts, COBRA, benefit administration. And so it is a really strong value proposition to the end customer because of the total capability that we have. That actually sells really well into the marketplace.
Mm-hmm.
That's, you know, number one and probably the most important thing. The second thing for us is around the distribution channel. So one of the things that makes this unique is that we go into the marketplace directly to an employer, but also go through partners, which is a really important part of how we go into the marketplace. We're a partner with seven of the 10 largest HSA.
Mm-hmm.
Holders and so that just gives us a lot more reach into the marketplace, so there's many different ways that people can find their way to WEX.
Yep.
And then the last thing for us is service is really important on this part of the business. And we think of service as something that we're continuing to focus on. How can we remove the pain for a customer through the use of technology?
Yep.
And so it's an increasingly important part of the, you know, the value that we're offering into that customer segment. When we look at this, we think of this as we wanna continue to outgrow the marketplace. We think that's important to us. We're gonna do it a combination of our product capability and just our ability to sell into the marketplace and do that in a very thoughtful way.
All right. That's, that's amazing, and I guess if you look at the SaaS account growth in the segment, it was 6% in the third quarter, and HSA accounts are up 7%. And then you mentioned at your last earnings call that the pipeline was looking very strong in open enrollment sales cycle, and again, it's been a little bit, and maybe can you just provide an update there and on what you're seeing in the open enrollment? We definitely heard some of the more recent commentary at other conferences, but.
Yeah.
Just, if you can give us an update in looking to 2026, what your expectations are?
Yeah. So we're a month in. We've, you know, goes into mid-January. So we've got, you know, we still got quite a bit of time. I would say it is progressing as we would've expected it to. It's looking like a strong Open Enrollment season.
Mm-hmm.
You know, the counts come through two ways. They come through both directly from us, but they're coming through our partner channels. The one thing, you know, we get a lot of questions around the big beautiful bill, expanded eligibility for, so for about 7 million consumers, which we would say is, you know, about 3 million accounts. That part is a little bit more opaque to us as how much of that will come in. We think it will come in over time.
Mm-hmm.
As opposed to having it come in like all at once. But we do believe that you're gonna get some benefit of the bill expansion that'll happen over a period of time. And so, so far I would say what we're seeing is what we would expect to see coming through an open enrollment. We think it's gonna be a good open enrollment cycle. And kinda the thing that we think is a good long-term trend is the expansion that's happened within the beautiful bill.
Yeah.
Triple B.
All right. Awesome. So basically in summary, things are progressing well and in line with what you expected when you discussed at the earnings call.
Yeah.
Yeah, it's more optimal.
Yeah. And we'll, we'll be actually through the cycle then, so we'll be able to give a more definitive update.
Yep. Awesome. Awesome. Maybe let's look at Corporate Payments. With the segment, it's now largely lapping the headwinds, including OTA customer price and model transition and return to the positive organic growth in Q3. You mentioned various investments in product capabilities in the segment as well as the AP Direct product offering where you had ramped salespeople and you're seeing strong volume growth. Maybe can you discuss some of the product investments you have made and how these are resonating in the market?
Yeah. So we're really pleased to have the headwind of the OTA.
Yep.
Lap, in the third quarter 'cause I think that puts us in a position of having much more normalized growth, you know, going forward.
Mm-hmm.
And so, that in itself is exciting. We have invested in two ways in the products. So think of the product itself. We have in the AP Direct product, we've worked on supplier enablement. We've also worked in some of the user interface work, making it just more seamless to our customers.
Mm-hmm.
And then on our Embedded Payments product, we've taken the functionality that we've created with travel customers and we've made it more user-friendly for those people who sit outside of travel. So we've made some very targeted investments, you know, across the portfolio. Then as you've pointed out, we've added in sales and marketing. In this case, actually in Corporate Payments, it's been sales. So we've added.
Mm-hmm.
New salespeople into our direct business. The embedded payments sales team is new. It's something that we've been selling just this year. And I would say in both cases, there are different models, but in the AP Direct product, we've seen, you know, like a really great, very repeatable model of we've added salespeople and you can see that actually is delivering. Embedded payments, because it's earlier, we're seeing really great customer signings and we're in implementation phases right now. And really excited about the fact we're seeing really strong product-market fit.
Yep.
in the products that we have in the market.
All right. Awesome. Awesome, Carter. And, yep, the recaps we've heard and, I think, it's definitely, I think, a lot of the progressive we've been seeing. And then, just related or, well, not quite related, but I guess you mentioned on the other hand, I think it being a very, like a slightly slower onboarding cycle in the segment. And then how do you think about the paybacks from a investment standpoint, especially as it relates to the Salesforce investment?
Yeah. So on the direct side of the business.
Yep.
So there's a ramp period between you bring a salesperson on, it takes them a few months to become.
Mm-hmm.
You know, like fully ramped. And then, customer implementations are typically a two- or three-month cycle. So, you know, those payback periods are typically less than two years. So it's not immediate, but it's actually pretty fast. When you get into the embedded payments product, the implementation cycles tend to be more like six months, you know, right now. And so because in that case, the customer is coding to our API, a beautiful sticky model, you know, once they've set up, but there's a little bit longer implementation cycle. And everything we're saying is that has also a very strong payback. But I would say we're still like early in the process with that to be able to. We have not increased the number of people that we're selling there until we actually see more and more of that come through.
and we're really focused around how can we reduce the time to first dollar.
Yeah.
because we know the products are resonating, we know they're selling, we know we're signing customers that we would like to ramp as quickly as we can, those new customer signings.
All right. Awesome. So basically as you kinda ramp up this motion, first you have the sales to kinda bring to onboard and to train, get them up to speed. And then I think there's also like a sales motion.
Yeah.
Or the implementation? And what's the sales cycle typically like if a sale is it?
The AP Direct is actually really pretty fast.
Sales cycle.
In part because the type of salespeople that we're bringing on are seasoned salespeople. They typically are coming in with their own Rolodex. They're able to actually make contact pretty quickly. And so they ramp pretty fast, and we're seeing a pretty quick payback associated with that. So again.
All right.
Less than two years.
Yep.
You know, so it's not immediate, but it's pretty quick.
Understood. That's very helpful. I guess lastly on the travel side, what are you seeing in terms of the broader demand environment there?
Travel demand has continued to stay strong. You know, I think in part, like if you look at our business model, our business is global. And I think that really benefited us this year 'cause we saw changes in patterns. We saw, you know, some of the travel moved from the United States, which has traditionally come into the U.S. and moved into other areas of the world. And so for us, we just, you know, the volume continued to just continue in different regions. We've seen rates, you know, continue to go up, you know, slightly. And transaction volume, you know, continue to grow, you know, across the model. And so it's, it's been a really strong, I would say, just a volume year in terms of what we're seeing, in the business.
You know, in the conversations we're having with our customers, you know, it looks like that, you know, is a continued trend.
All right. That's, that's very awesome. So we'll probably just wrap up the segments here and move to the corporate level. From a strategic standpoint, you announced that earnings call and also discussed since then the decision that your various business segments are stronger together. Maybe can you just recap the benefits for us of having these various segments working in tandem and where you see the greatest opportunities to cross-sell?
Yes, I think it's a great question as to why we brought in two independent investment banks because we wanted to really step back and say what is gonna create the most amount of shareholder value and is there and look across the portfolio. So we brought in Bank of America and JPMorgan.
Mm-hmm.
They each independently came back with the same, you know, perspective. And when you come right down to it, there's a lot of integration that happens across the different parts of our segments, from the technical infrastructure to the compliance structure to the bank itself, which is pretty meaningful. And so when you start to pull one part apart, it actually has an impact. In addition, you talked about the fact we've had over 200 cross-sells across, you know, the portfolio. And in one of the places we actually see cross-selling activity is between our mobility customers and our benefit customers. And so, you know, for a whole combination of reasons, each of them independently came back and said, like, if you, if you're gonna create more value.
Mm-hmm.
by continuing to focus on the whole of the business and just continue to deliver from an execution perspective.
All right. That's awesome. And I'm sure you've had a ton of conversations with investors over the last month or so. What are some of the key points you'd like to emphasize after the conversations and maybe what aspects of the business or strategy that you think are still being relatively misunderstood by the investment community?
Yeah. I think that the fact that we have turned the corner with the online travel agency and that we're going to be much more in a more normalized growth period. And I think that is, you know, one of the things that is important for us to talk about. I think that there is growing, I would say, conversation around our corporate payments business and the fact that we're actually starting to see.
Mm-hmm.
Some of these things like our, you know, while still smaller parts of the segment that we're seeing benefit of that, and you can actually start to see that coming through in the reported numbers now, so that has been part of the conversation that we're having with investors, which I would say that's like a growing interest. I think that one of the, I don't know if I'd call it misunderstood, but that one of the things that we think about pretty deeply is the fact that we have really strong moats across our business and we generate a significant amount of cash flow. Like 80%-90% of our adjusted net income drops through the cash, and so we not only does the company grow, but it creates a tremendous amount of cash, and I think sometimes that gets lost.
Just like the sheer amount of cash on cash return that the company generates. So it's another point of emphasis for us.
All right. I think that's a great segue to the next topic on capital allocation. Thank you. And it actually Q3, 3.25 leverage, within the range of your longer-term target. How, how are you thinking about the capital allocation heading into next year?
Yeah, so we've been really focused on the leverage.
Yeah.
and we'll continue to focus. We really what we're thinking about is we wanna make sure that we get below that midpoint. So our range is two and a half to three and a half times. We wanna get below three. We should get there, you know, in this next year. And then, you know, as we think about this, we look at, you know, risk-adjusted returns in the North Star and, you know, where do we think is going to have the highest impact? You can see that we have bought back a significant amount of stock over the last few years because we've felt like that's had the highest risk-adjusted return. And, you know, we're big believers in the company. And so that's where we've put the majority of our money.
And I would say that will be, you know, a continued bias of ours is making sure that we're utilizing cash and where we think has got that highest return.
All right. That's great. And then in terms of spending some of the cash flow free cash flow generating, I know you're looking to deleverage at this point, but if there are attractive M&A opportunities coming along or maybe some of the tuck-in opportunities, how would you think of that or prioritize that versus share buybacks, and maybe what's the M&A pipeline looking like right now?
Yeah. So, when we've historically looked at M&A, we've looked at scale plays, we've looked at product extensions, and then we've looked at international expansion. You know, scale, when I think of scale plays, again, that would directly compete with share buyback. You know, those are so what's got the highest return associated with that. Product extension will become a question of, can we build it? Do we partner or do we, we wanna buy it?
Yep.
And so there may be places we think that that's an important strategic move for us to make, you know, competitively. But I would again say that we have more of a bias to building, you know, where we can. And then international expansion is, you know, that's you have to have something that's really great in the sweet spot before we'd actually say, okay, that's the place that we wanna put, you know, that we'd wanna deploy capital 'cause it typically has to have a higher return to have it make sense risk-adjusted. And so I would put that further down the list. You know, it would have to fit some other criteria in there before we would do it as opposed to just because it's moving us outside the United States.
All right. Awesome. Makes total sense. And, as a reminder, investors can or anyone here can submit their questions via the app or let's see. We don't have a question so far, but if there's any, please feel free to submit. And then I'll just follow up with, like, a last parting thought. I guess I asked you about the investor questions. I guess maybe just a year from now, hopefully again, you're sitting here, speaking with us.
Yes.
Yeah. We'll be on top of your mind or what? What do you think we should be talking about?
Yeah.
A year from now.
What I'm really excited about is that we have, over the last couple of years, really focused on how to increase our ability to bring product into the marketplace. So it's really focused on the organic growth engine and how to add another lever to that. We're seeing the benefit of that coming through right now. So a year from now, I hope we're talking about the fact that BP has been implemented, that we're seeing really great benefit from the new products that we put out into the marketplace and that we are seeing the benefits of the increased acceleration and innovation on, you know, particularly on the use of AI within our benefits business.
And so, you know, and all of that, when I think about it, is what we're trying to do is hit that intersection between data, software, and payments so that we're really helping our customers manage their workflows better. So like a year from now, that's what I'm hoping we're talking about.
All right. Amazing. We definitely look forward to it. And I think with that, please join me in thanking Melissa here. It's been great, great having you. And we look definitely forward to following your progress.
Thanks, guys. That's great to hear.