WEX Inc. (NYSE:WEX) Research Report

WEX is transforming from a niche payment provider to a more integrated B2B ecosystem. For the past two decades, they have held a dominant position in the commercial vehicle space, acting as a marketplace between fleet companies and gas stations. Over the last 10 to 15 years, WEX has explored new growth opportunities by entering two new segments: employee benefits and corporate payments. These segments now each account for 25% of their total revenue. In the corporate payments sector, WEX primarily serves the OTAs (Online Travel Agents) where they hold an 80% market share through proprietary single-use card issuance. In the employee benefits space, WEX is one of the top two players in benefits SaaS, with a 22% market share. WEX generates 80% of its revenue from recurring sources and has a low churn rate for its payment processing and account servicing businesses, demonstrating strong switching costs and network effects. While the market is concerned about WEX's growth prospects, the mobility segment remains 20-30% underpenetrated, which is better than the no-growth scenario that’s been expected. Additionally, the two new segments together offer a $24B TAM for WEX to achieve long-term growth. 

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