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INNOVATION BEAT

Portland payments company is a rare winner in 2022

WEX is one of the few local tech companies with a rising stock price.

Payments company WEX is partnering with electric vehicle charging station network ChargePoint to help companies with fleets of EVs manage their expenses.ChargePoint

The stock market has made a sharp turn against most tech companies in 2022. Apple, Amazon, and Google are all in the red, as are local stalwarts including HubSpot, Wayfair, Akamai, and Analog Devices.

So it stands out that Portland, Maine-based payments company WEX is actually having a banner year so far. The stock is up 12 percent in January and 25 percent since hitting bottom in late December.

One of the leaders in offering virtual payment cards for corporate customers, WEX’s main business is managing fuel payments for fleets of vehicles. Two smaller units handle payments for corporate expenses, especially travel, and employee benefits like healthcare savings accounts. A fintech company from way before fintech was cool — WEX went public in 2005 — the company’s software helps customers monitor spending, reduce fraud, and cut costs.

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Sales took a dive in 2020 when COVID hit, as many companies shut down, parking their fleets and ceasing employee travel. WEX takes a percentage of every transaction, so the plummeting price of gasoline added to the pain. There were a few bright spots, as fleets with delivery trucks were busier and the employee benefits unit expanded. Total revenue fell 10 percent to $1.6 billion and, after years of steady profits, WEX lost $244 million.

All three segments improved in 2021 — revenue was up 17 percent in the first nine months of the year —but stock market investors had a new fear: electric vehicles. Over half of WEX’s revenue and almost all of its profits come from payments for gasoline and diesel fuel. As investors fell in love with EV companies such as Tesla, Rivian, and Fisker, they were falling out of love with WEX.

Chief executive Melissa Smith, who has headed the company since 2014, wasn’t sitting still. She partnered with ChargePoint, one of the leaders in setting up EV charging stations, so WEX will be able to manage payments for fleets of electric vehicles too. The complexity of the current charging infrastructure plays to WEX’s strengths, Smith argued at an analyst conference in November.

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“There’s just a lot more data feeds along with the need to have an integrated payment offering that reconciles and consolidates all the information together, and we feel like we are in this privileged position to actually play in that space,” Smith said.

It’s still a tiny part of WEX’s business, however. There are only about 1,000 electric vehicles out of 16 million in the fleets of WEX customers.

It remains an open question whether EV charging, which often happens overnight at homes and parking lots, will generate the same amount of revenue for WEX. “The transition to electric vehicles is both a risk and an opportunity for WEX,” Robert Napoli, an analyst at William Blair, noted last week.

Fortunately for WEX, investors have soured on EVs in recent weeks. More important right now for WEX? Rising gas prices and the recovering economy are boosting sales, according to Napoli. And improvements to WEX’s software and the continuing growth of the expense and benefits units should fuel the company’s success this year, Napoli wrote, calling WEX’s stock “very attractive.”


Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him on Twitter @ampressman.