WEX (WEX) FY2025 10-K Risk Factors: 6 New, 3 Dropped

What the changes say

WEX faces new operational disruption from a proxy contest by activist hedge fund Impactive Capital nominating four board directors.

What changed since the prior 10-K

New

NewRisks Relating to Our Business and Industry
If we stop receiving incentives from Mastercard or Visa or are unable to meet our transaction volume commitments with them our profitability could be adversely impacted
Profitability could drop if Mastercard or Visa terminate incentive agreements, launch competing products, or if we miss transaction volume commitments.
NewRisks Relating to Our Business and Industry
Our business could be negatively impacted by stockholder activism
Activist hedge fund Impactive Capital nominated four directors for election at the 2026 Annual Meeting, creating potential management disruption and legal costs.
NewRisks Related to WEX Bank
money market deposits and borrow on federal funds lines of credit from other banks, which we believe provides us access to lower cost funds than many of our competitors, thus helping us to offer competitive products to our customers
Changes or elimination of WEX Bank's industrial loan company charter could restrict funding access, force credit outsourcing, or subject us to the Bank Holding Company Act.
NewRisks Related to Regulation
relationships with, foreign entities and individuals, and companies’ controls and procedures related to compliance with anti-bribery laws
International expansion increases exposure to potential violations of the Foreign Corrupt Practices Act and the UK Bribery Act by employees, agents, or intermediaries.
NewRisks Related to our Dependence on Technology
the systems of our partners, customers and vendors, we cannot control all access to those systems and they are therefore subject to the risk of cyberattacks and fraud
Stricter data privacy laws, including the California Consumer Privacy Act, impose complex compliance requirements for maintaining data security and responding to consumer deletion requests.
NewRisks Related to our Dependence on Technology
our networks and information systems, our reliance on these technologies has become increasingly important to our operating activities
Platform outages from cyberattacks, natural disasters, or third-party vendor failures can cause us to miss service level agreements and harm operating results.

Dropped

DroppedRisks Relating to Our Business and Industry
Increasing 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
DroppedRisks Relating to Our Business and Industry
activities 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
DroppedRisks Related to our Indebtedness
Fluctuations in interest rates could materially affect the interest expense incurred under our Credit Agreement and any other payments subject to variable interest rates

Reworded

88% rewrittenRisks Related to WEX Bank
The 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
Added Federal Home Loan Bank advances as a funding source alongside WEX Bank deposits for Mobility and Corporate Payments segments.
60% rewrittenRisks Related to our Dependence on Technology
We 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
Expanded AI risk language to include specific mention of data analytics tools generating outputs and the adoption of AI tools.
53% rewrittenRisks Related to Regulation
Our 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
Minor stylistic adjustments regarding foreign jurisdiction risks without altering core anti-corruption compliance warnings.
50% rewrittenRisks Relating to Our Business and Industry
We may encounter difficulties realizing the anticipated benefits of any transactions, including acquisitions, investments, or divestitures we have completed or may undertake
Clarified long-term capital allocation toward acquisitions and added a warning that acquired businesses may not perform in line with initial expectations.
Was: We 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
50% rewrittenRisks Relating to Our Business and Industry
A 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
Retained core economic downturn and fuel demand risk factors with minor phrasing refinements.
45% rewrittenRisks Related to Regulation
Legislation and regulation of, and private business actions related to sustainability issues, including as to climate-related disclosure and the reduction of GHG emissions could adversely affect our business
Added the EU Corporate Sustainability Due Diligence Directive, noting applicability delayed to 2029 and supply chain obligations.
Was: Legislation and regulation of, and private business actions related to climate change issues, including the reduction of GHG emissions could adversely affect our business
40% rewrittenRisks Relating to Ownership of Our Common Stock
We 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
Updated share repurchase details to note that the program authorization expired on January 1, 2026, following 2024 and 2025 expenditures.
39% rewrittenRisks Relating to Our Business and Industry
We 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
Expanded minority equity investment risks to explicitly include funds alongside early-stage companies and added the risk of realizing zero commercial benefits.
39% rewrittenRisks Related to Regulation
Regulations 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
36% rewrittenRisks Related to Regulation
The 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
36% rewrittenRisks Relating to Our Business and Industry
We 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
33% rewrittenRisks Related to Regulation
Evolution 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
33% rewrittenRisks Related to WEX Bank
WEX Bank is subject to funding risks associated with its reliance on brokered deposits and advances from the FHLB
Was: WEX Bank is subject to funding risks associated with its reliance on brokered deposits
29% rewrittenRisks Related to WEX Bank
In 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
26% rewrittenRisks Related to our Indebtedness
We 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
25% rewrittenRisks Relating to Our Business and Industry
Our failure to adapt to technological and industry changes and effectively implement new technology and products could materially affect our competitive position and our business
25% rewrittenRisks Relating to Our Business and Industry
Unpredictable 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
23% rewrittenRisks Relating to Ownership of Our Common Stock
Provisions 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

All 45 risk factors

Headings as the filing states them, in filing order.

Risks Relating to Our Business and Industry

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 condition50% rewritten
02If we stop receiving incentives from Mastercard or Visa or are unable to meet our transaction volume commitments with them our profitability could be adversely impactedNew
03Unpredictable 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 results25% rewritten
04We have experienced and may in the future experience 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
05Changes in or limits on interchange fees could decrease our revenue
06Bank failures or other events affecting financial institutions could adversely affect our and our customers’ liquidity and financial performance
07Our failure to adapt to technological and industry changes and effectively implement new technology and products could materially affect our competitive position and our business25% rewritten
08We 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 terms36% rewritten
09Our 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
10We may encounter difficulties realizing the anticipated benefits of any transactions, including acquisitions, investments, or divestitures we have completed or may undertake50% rewritten
11We 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 value39% rewritten
12We are exposed to risks associated with operations outside of the United States, which could harm both our U.S. and international operations
13Fluctuations in foreign currency exchange rates have affected and could continue to affect our financial results
14As 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
15We have incurred, and may incur in the future, impairment charges on goodwill or other long-lived assets
16The 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
17If 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
18Our business could be negatively impacted by stockholder activismNew

Risks Related to WEX Bank

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 competition88% rewritten
20money market deposits and borrow on federal funds lines of credit from other banks, which we believe provides us access to lower cost funds than many of our competitors, thus helping us to offer competitive products to our customersNew
21WEX 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
22Volatility 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
23In an environment of increasing interest rates and changes in the deposit market, WEX Bank’s cost of capital has increased and may continue to increase29% rewritten
24WEX Bank is subject to funding risks associated with its reliance on brokered deposits and advances from the FHLB33% rewritten
25WEX 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
26We are subject to limitations on transactions with WEX Bank, which may limit our ability to engage in transactions with and obtain credit from it
27WEX 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

28We 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 obligations26% rewritten
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

30Compliance with anti-money laundering, counter-terrorism and sanctions laws and regulations creates additional compliance costs and reputational risk
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
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 information39% rewritten
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
34As a non-bank custodian WEX Inc. is subject to regulation and noncompliance could render it unable to maintain its non-bank custodian status
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 condition36% rewritten
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 results33% rewritten
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 201053% rewritten
38relationships with, foreign entities and individuals, and companies’ controls and procedures related to compliance with anti-bribery lawsNew
39Legislation and regulation of, and private business actions related to sustainability issues, including as to climate-related disclosure and the reduction of GHG emissions could adversely affect our business45% rewritten

Risks Related to our Dependence on Technology

40the systems of our partners, customers and vendors, we cannot control all access to those systems and they are therefore subject to the risk of cyberattacks and fraudNew
41our networks and information systems, our reliance on these technologies has become increasingly important to our operating activitiesNew
42Our business is dependent on electronic communications networks managed by third parties, which could result in our inability to prevent service disruptions
43We 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 operations60% rewritten

Risks Relating to Ownership of Our Common Stock

44We 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 price40% rewritten
45Provisions 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 stock23% rewritten

Other WEX 10-Ks

FY2024 10-K risk factors
42 risks
WEX faces extensive banking regulation through WEX Bank and its industrial loan company charter, plus credit and fraud risks from small-to-mid-sized business counterparties. The company carries significant debt under its Credit Agreement and is exposed to macroeconomic shifts, fuel demand fluctuations, and foreign currency volatility. Regulatory compliance burdens span data privacy, healthcare reform, anti-money laundering, and climate change policies affecting fossil fuel use.
Filed Feb 20, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.