WEX (WEX) risk factors, FY2024 10-K

Risks Relating to Our Business and Industry

1. 01A decline in general economic conditions that negatively impacts the demand for fuel, travel related services or health care services, and other business related products and services that we provide, adversely affects our business, operating results, and financial condition
2. 02Unpredictable or catastrophic events in the locations in which we or our customers operate, or elsewhere may adversely affect our ability to conduct business and could impact our financial condition and operating results
3. 03We have experienced and may in the future experience substantial credit and fraud losses and other adverse effects if we fail to adequately assess and monitor credit risks posed by our counterparties or if there continues to be fraudulent use of our payment cards or systems
4. 04Changes in or limits on interchange fees could decrease our revenue
5. 05Bank failures or other events affecting financial institutions could adversely affect our and our customers’ liquidity and financial performance
6. 06Increasing scrutiny and changing expectations from investors, customers and our employees with respect to our sustainability practices may negatively affect our business and result in the decline of gasoline or diesel fuel use, result in additional costs or expose us to new or additional risks
7. 07activities with companies similarly connected. If these efforts are successful, and if our business is deemed to be sufficiently tied to the use of fossil fuels by such communities, our ability to access capital markets may be limited and our stock price may be negatively impacted
8. 08Our failure to adapt to technological and industry changes and effectively implement new technology and products could materially affect our competitive position and our business
9. 09We operate in a highly competitive business environment. Such competition could adversely affect the fees we receive, our revenues and margins, and our ability to gain, maintain, or expand customer relationships, all on favorable terms
10. 10Our ability to attract, motivate, and retain qualified employees is critical to our success and the failure to do so may materially adversely affect our performance
11. 11We may not be able to successfully execute on acquisitions or divestitures as part of our strategy and may encounter difficulties realizing the anticipated benefits of acquisitions or divestitures we have completed or may undertake
12. 12We are subject to risks associated with our strategic minority equity investments, including a loss of all or part of our invested capital, which could adversely affect our results of operations or fail to enhance stockholder value
13. 13We are exposed to risks associated with operations outside of the United States, which could harm both our U.S. and international operations
14. 14Fluctuations in foreign currency exchange rates have affected and could continue to affect our financial results
15. 15As a non-bank custodian of HSA assets, WEX Inc.’s failure to adequately place and safeguard our custodial assets, or the failure of any of our depository partners, which include WEX Bank, could have a material adverse effect on our business
16. 16We have incurred, and may incur in the future, impairment charges on goodwill or other intangible assets
17. 17The Company is, and may in the future become, involved in various claims, investigations, and legal proceedings, some of which could have a material adverse effect on our business, financial condition, or results of operations
18. 18If we fail to adequately protect our intellectual property and other proprietary rights, our competitive position could be impaired and we may lose valuable assets, generate reduced net revenue, and incur costly litigation to protect our rights

Risks Related to WEX Bank

1. 19The loss or suspension of WEX Bank's industrial loan company charter or changes in applicable regulatory requirements could be disruptive to certain of our operations, increase costs and increase competition
2. 20WEX Bank is subject to extensive supervision and regulation that could restrict our activities and impose financial requirements or limitations on the conduct of our business and limit our ability to generate income
3. 21Volatility or adverse conditions in the economy or credit or other financial markets may have a negative impact on WEX Bank’s ability to attract and retain deposits
4. 22In an environment of increasing interest rates and changes in the deposit market, WEX Bank’s cost of capital has increased and may continue to increase
5. 23WEX Bank is subject to funding risks associated with its reliance on brokered deposits
6. 24WEX Bank is subject to regulatory requirements that have in the past, and may in the future, require us to make capital contributions to WEX Bank or that may restrict WEX Bank’s ability to make cash available to WEX Inc
7. 25We are subject to limitations on transactions with WEX Bank, which may limit our ability to engage in transactions with and obtain credit from it
8. 26WEX Bank’s results may be materially and adversely affected by market fluctuations and significant changes in the value of financial instruments

Risks Related to our Indebtedness

1. 27We currently have a substantial amount of indebtedness and may incur additional indebtedness, which could increase our leverage, affect our flexibility in managing our business and could materially and adversely affect our ability to meet our debt service obligations
2. 28Fluctuations in interest rates could materially affect the interest expense incurred under our Credit Agreement and any other payments subject to variable interest rates
3. 29We may want or need to refinance a significant amount of indebtedness or otherwise require additional financings, but we cannot guarantee that we will be able to refinance or obtain additional financing on favorable terms or at all

Risks Related to Regulation

1. 30Compliance with anti-money laundering, counter-terrorism and sanctions laws and regulations creates additional compliance costs and reputational risk
2. 31Laws or regulations developed in one jurisdiction or for one product could result in new laws or regulations in other jurisdictions or for other products
3. 32Regulations and industry standards intended to protect or limit access to personal information could adversely affect our ability to effectively provide our services, impose significant compliance burdens, and expose us to liability relating to our handling of and safeguarding of personal information
4. 33Changes in our tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities could affect our future results
5. 34As a non-bank custodian WEX Inc. is subject to regulation and noncompliance could render it unable to maintain its non-bank custodian status
6. 35The healthcare regulatory and political framework is uncertain and evolving, and we cannot predict the effect that further healthcare reform and other changes in government programs may have on our business, results of operations or financial condition
7. 36Evolution and expansion of our business may subject us to additional regulatory requirements and other risks, for which failure to comply or adapt could harm our operating results
8. 37Our increased presence in foreign jurisdictions increases the possibility of foreign law violations or violation of the FCPA and the United Kingdom’s Bribery Act 2010
9. 38Legislation and regulation of, and private business actions related to climate change issues, including the reduction of GHG emissions could adversely affect our business

Risks Related to our Dependence on Technology

1. 39Our business is dependent on electronic communications networks managed by third parties, which could result in our inability to prevent service disruptions
2. 40We use artificial intelligence in our business, and challenges with properly managing its use could result in penalties, harm to our brand, reputation, business or customers, and adversely affect our results of operations

Risks Relating to Ownership of Our Common Stock

1. 41We may not realize the anticipated long-term stockholder value of our share repurchase programs, and there can be no assurance that we will repurchase shares or that we will repurchase shares at favorable prices, which may negatively affect our stock price
2. 42Provisions in our charter documents, Delaware law and applicable banking laws may delay or prevent our acquisition by a third party, and could adversely impact the market price of our common stock