A nearly 68% boost in corporate card purchase volume helped Fleet card provider and processor Wright Express Corp. to report more than a 40% increase in first quarter revenue, Michael Dubyak, chairman, president and CEO, tells PaymentsSource.
Revenue for the quarter ended March 31 was $120.1 million, up 43.3% from $83.8 million during the same period last year. Net income was $12.1 million, down 35% from $18.6 million.
Other factors also helped drive revenue growth, Dubyak says. “We saw transactions on our core North American fleet business grow 6%, which is the strongest growth we’ve seen since the end of 2008,” he says, suggesting it signals a rebound in the economy. Dubyak told analysts during a May 4 conference call the Southwest region had the most growth during the quarter, followed by the Northeast.
The company’s performance was better than anticipated, analysts say. “Revenue growth was solid and better than expected, aided by improving transaction growth and lower credit losses as the economy recovers, as well as higher gas prices and favorable foreign currency,” Tien-tsin Huang, analyst at J.P. Morgan Securities Inc., said in an e-mail.
Corporate card purchase volume grew 67.6%, to $1.43 billion from $853 million. “We’ve seen tremendous growth so far this year, and we are expanding our sales force and looking to expand [the program] internationally,” says Dubyak. He put the statistic in perspective during the conference call with analysts, saying, “in 2006–the year after we went public–total purchase volume was $1.3 billion for the full year.”
The absorption of an unnamed bank partner’s single-use hotel card program, which experienced growth in the online travel segment during the quarter, also helped drive corporate card transaction growth, Dubyak says.
Wright Express’ MasterCard program “has been a terrific asset that continues to surprise on the upside” and has growth potential for new markets, J.P. Morgan’s Huang said in his e-mail. “Its single-use product continues to gain share, especially in high-growth verticals like online travel (including clients such as Priceline and Expedia) where secular growth remains strong.”
Huang foresees more growth coming from further penetration into the online travel vertical market and from new markets like insurance.
The company processed 70.3 million fuel card transactions during the quarter, up 13.8% from 61.8 million. Payment-processing volume–where Wright Express funds the receivables–increased 14.3%, to 56 million transactions from 49 million.
Unfunded transaction-processing volume increased 12.6%, to 14.3 million transactions from 12.7 million.
Wright Express’ September acquisition of Australia-based Retail Decisions Ltd., now called Wright Express Australia, also drove revenue during the quarter, Dubyak says. “We’re getting some lift from the exchange rate [in that program,]” he says. (
Dubyak also told analysts of further expansion plans in Australia. “BP in Australia, which is roughly double the size of BP New Zealand, successfully came online a few days ago,” he said during the call.
Higher fuel prices also provided revenue growth, the company noted in its earnings release. Domestic fuel prices increased 22.5%, to $3.38 per gallon from $2.76 per gallon a year earlier.
Wright Express serviced approximately 5.4 million vehicles during the first quarter, a 20% increase from 4.5 million a year earlier.
The company expects second quarter revenue to be approximately $132 million to $137 million and adjusted net income to fall between $33 million to $35 million.
Wright Express stock was trading at $54.79 at mid-day Wednesday after the earnings call. At mid-day Thursday, the stock was trading at $54.96.
What do you think about this? Send us your feedback.
