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WEX Expands Offerings and Sets New Growth Targets Amid EV Transition

The market reaction to WEX’s latest initiatives reveals a promising future. With their significant scale, WEX has successfully negotiated substantial fuel discounts for customers, particularly independent truckers who typically struggle to gain such advantages due to credit limitations.

Expanding Fuel Discounts Through 10-4 by WEX

WEX is thrilled to introduce 10-4 by WEX, aimed at independent owner-operators and small companies. This app allows users to access discounts with their existing debit or credit cards, effectively increasing WEX’s offerings to this underserved market. The company is also making strides in electric vehicle (EV) and hybrid solutions, catering to mobility customers who are transitioning to more sustainable options. WEX acknowledges that the shift to EVs is a gradual process that they are well-equipped to navigate.

Market Insights Point to Growing Demand for EVs

A report by Frost & Sullivan indicates that 80% of global fleet managers plan for EVs to comprise at least 25% of their fleets by 2030. WEX recognizes this inherent complexity within EV operations as an opportunity for growth during the transition. Many public-sector clients show a keen interest in adopting EV solutions, and WEX currently serves over two-thirds of U.S. states with their traditional fleet offerings.

Acquisition of Payzer Bolsters Service Offerings

WEX continues to see strong market resonance following their recent initiatives. The acquisition of Payzer, finalized late last year, is central to their strategy for expanding into closely related markets and enhancing field service management. The company anticipates that Payzer will contribute approximately 2% to the mobility segment’s revenue growth this year.

Corporate Payments Segment Thrives Through Strategic Partnerships

In the corporate payments segment, WEX is focused on scaling effective solutions for global enterprises. The quarter saw new collaborations, including a partnership with Artsyl, known for accounts payable automation technology. Renewals with WebJet and WebBeds in Australia further illustrate WEX’s proactive market engagement.

Enhanced Card Options Drive Growth

WEX empowers customers with a diverse array of card products designed to unlock growth potential. This quarter, they expanded offerings in the APAC region and introduced various new product types worldwide. The company is building what they believe is the broadest array of virtual cards, laying a foundation for sustained growth through strong client relationships.

Customer Retention Remains a Key Focus

Customer retention is a vital aspect of WEX’s strategy. The company shows consistent growth in new accounts and is preparing for a healthy open enrollment season. Their sophisticated approach to tracking customer sentiment includes quarterly Net Promoter Score (NPS) surveys. This continuous feedback loop is essential in refining products and enhancing customer experiences. Notably, improvements in claims processing stemmed directly from client suggestions.

Striving for Continued Customer Growth

The management of WEX’s customer base is scrutinized through pricing and volume growth strategies. Despite mixed results this year, the mobility segment specifically benefited from pricing initiatives. Constraints were noted due to macroeconomic factors, yet retention remains strong. For instance, although the over-the-road industry reports a decline in the volume of goods moved compared to the previous year, WEX observed modest growth in payment processing gallon volumes in this sector.

Transaction Volumes Indicate Future Growth Potential

The corporate payments segment is experiencing adjustments due to a large online travel agency customer transition. Although this has created short-term fluctuations, total transaction volumes processed grew by 6% year-over-year, underscoring the robustness of WEX’s offerings as expectations trend upwards post-transition.

Leading HSA Custodian and Consumer Education Initiatives

According to a recent report, WEX ranks as the fifth-largest HSA custodian in the market, partnering with seven of the top ten entities. The company is optimistic about contributions from referral partners as they gear up for the forthcoming open enrollment season. Additionally, WEX is actively participating in efforts to educate consumers about HSAs, including their involvement in National HSA Awareness Day on October 15.

Strategic Cost Management and AI Innovations

WEX has successfully exceeded its annual run-rate cost savings target of $100 million, achieving about $110 million by the end of the third quarter. Half of these savings are being reinvested in long-term growth initiatives while enhancing profitability. Capital allocation remains disciplined, aiming at investments within the business alongside strategic mergers and acquisitions.

Furthermore, WEX is making headway with its artificial intelligence initiatives, which promise to enhance operations’ efficiency and security. AI is seen as a crucial differentiator in the market, particularly in improving user experience within their benefits segment. The recent pilot of the AI-driven Benefit Assistance resource illustrates WEX’s commitment to simplifying how employees understand and utilize their benefits.

In summary, WEX’s growing initiatives and strategic direction position the company favorably for future expansion and customer engagement as the market evolves.

WEX Reports Strong Third Quarter Despite Market Challenges

Financial Results Highlight Revenue Growth and Shareholder Commitment

The latest earnings call by WEX highlighted the company’s efforts to enhance efficiencies and innovate, particularly in the AI sector, to better serve customers and employees. Notably, the board has raised its share repurchase authorization by $1 billion, achieving the lowest share count in almost ten years. Since the share count dipped below 40 million in 2016, WEX has experienced an impressive revenue growth of over 200%, with adjusted net income soaring nearly 450%. This remarkable growth underscores the effectiveness of WEX’s proactive capital management strategy.

In the context of its share buyback strategy, WEX has successfully reduced outstanding shares by 12% since early 2022. The leadership expressed strong confidence in WEX’s future, despite having revised guidance for 2024. They remain focused on acquiring new business, nurturing existing customer relationships, and optimizing the cost structure, all while sustaining a solid balance sheet.

Third Quarter Financial Highlights

WEX’s results for the third quarter showed total revenue of $665.5 million, representing a 2% increase compared to Q3 2023, with the majority being recurring revenue. The adjusted operating income margin also improved to 44%, up from 41.8% the previous year. Net income was reported at $102.9 million, translating to $2.52 per diluted share. Non-GAAP adjusted net income reached $177.5 million ($4.35 per diluted share), marking a 7% rise over the previous year.

In terms of the mobility segment, revenue equated to $357.2 million, also reflecting a 2% year-on-year increase. Fuel prices have seen a decrease of 13% compared to last year, averaging $3.45 in Q3. Despite a 1.3% year-on-year increase in payment processing transactions, the overall growth rates were softer than anticipated. WEX noticed a downturn in fuel consumption among local fleet customers since August, although there were no signs of a broader economic slowdown at this time.

Evaluating Segment Performance

Within the mobility segment, WEX saw improvements in sales and retention rates among customers, despite an unexpected reduction in the gallons consumed by existing fleet customers. They believe this trend reflects broader macroeconomic factors rather than problems specific to their service. Late fees and finance fee revenues were impacted partly due to reduced fuel prices and other isolated factors, but pricing changes have led to an increase in net interchange rates in the mobility segment.

The adjusted operating income margin for mobility increased to 46.8%, benefiting from effective cost-saving measures and decreased credit losses. Credit losses were notably lower, coming in at just 6 basis points of spend volume, compared to 7 basis points last year, which allowed WEX to mitigate the effects of revenue shortfalls on earnings per share.

In contrast, corporate payments segment revenue fell 6% to $126.9 million, with total purchase volume dropping 16% mainly due to a model change for a significant OTA customer. WEX’s performance underscores its resilience in a volatile market, while its leaders remain committed to strategic growth and shareholder value.

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WEX Reports Strong Q3 Results Amidst Changing Market Conditions

The interchange rate in the payments segment remained flat from the previous quarter. A model change has introduced some variability, but it’s essential to highlight that total transaction volume on our platform saw a 6% year-over-year increase. This steady growth in volume demonstrates strength in our offerings and supports our optimistic outlook for future growth as we navigate through short-term adjustments.

Corporate Payments and Benefits Show Resilience

The corporate payments segment achieved an adjusted operating income margin of 56.4%, down from 61.3% the same quarter last year. In the benefits segment, we recorded robust results with Q3 revenue reaching $181.5 million, up $15.4 million or 9% from last year. Average accounts increased by 2% this quarter, bringing the total to $20.3 million, consistent with our Q2 results.

Core market dynamics in the benefits business remain strong, particularly highlighted by the underlying growth in SaaS accounts. However, there was a noted decline of 7% year-over-year in Medicare Advantage accounts. Segment purchase volume grew by 9.6% compared to the same quarter last year. Additionally, we earned approximately $54 million in revenue from custodial HSA cash deposits invested by WEX Bank, a rise from $42 million last year. Interest rates on these balances also improved from 4.4% last year to 5% this year.

Our strategy involves protecting revenues from interest rate fluctuations. Currently, 80% of our HSA-related investments are in fixed-rate investments which we believe will shield future revenues from variations in interest rates. We expect that the effects of interest rates on the remaining portfolio will be partly countered by reinvesting lower-yielding fixed-rate investments when they mature. Thus, our benefits segment revenue is secure from major interest rate changes, bolstered by our overall financial hedge against macroeconomic interest rate shifts.

Financial Position and Cash Flow Remain Strong

The adjusted operating income margin for the benefits segment improved to 43.2%, compared to 35.4% in 2023, largely due to improved custodial income flow-through. Our balance sheet and liquidity position remain solid. We concluded the quarter with $535 million in cash, in addition to $606 million in available borrowing capacity and $123 million in corporate cash as defined by our existing agreements. The total outstanding balance on our credit facilities stands at $3.2 billion. Our leverage ratio is currently at 2.6 times, comfortably within our target range of 2.5 to 3.5 times.

Year-to-date adjusted free cash flow reached $393 million as of September. We have slightly adjusted our cash flow calculation to reflect more significant changes in working capital compared to historical norms, enhancing our accuracy in reporting adjusted free cash flow. This year, our primary cash deployment has focused on share repurchases, totaling $544 million in buybacks during the first nine months, including $370 million in Q3 alone. We expect the final settlement of our previously announced ASR within the next week, resulting in a further share count reduction. Since restarting share buybacks in 2022, we have acquired about 6.1 million shares at an average cost of approximately $175 per share, decreasing our share count by 12%.

Outlook for Q4 and Full Year Earnings

Looking ahead, we remain dedicated to balancing capital allocation across organic growth, mergers and acquisitions, and returning capital to shareholders. For Q4, we anticipate revenues between $630 million and $640 million. Our adjusted net income (ANI) per diluted share is expected to fall between $3.51 and $3.61. For the full year, revenues are projected between $2.62 billion and $2.63 billion, with ANI EPS expected to be between $15.21 and $15.31 per diluted share. This revised guidance reflects a $73 million decrease in revenue and a $0.92 reduction in EPS, largely due to actual Q3 results and lower expectations for Q4 driven by macroeconomic factors, particularly within the mobility sector.

Noteworthy is the fact that fuel prices have dropped significantly since late July, prompting a revision from an average anticipated price of $3.61 to $3.48, affecting expected revenue by $22 million and EPS by $0.34, partially recognized in Q3. Additionally, lower interest rates have also led us to revise guidance, reducing anticipated Q4 revenue by about $5 billion. It is important to emphasize that these revenue declines from interest rates will not impact our overall earnings guidance due to our robust balance sheet hedge.

Lastly, we are adjusting our growth expectations for the mobility and benefits segments. In mobility, we noted a downturn in transactions from existing clients, which we expect to persist into Q4, leading to a revised growth outlook of 6% to 7% for the year. In the benefits segment, while new signings are on track, delays in revenue recognition are leading us to anticipate growth at the lower end of our original 10% to 15% range. As we navigate these short-term challenges, we remain focused on executing our long-term strategy and look forward to providing further updates as we approach 2025.

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Company Executives Discuss Financial Outlook in Recent Q&A Session

Key Takeaways from Analyst Queries

Operator

Thank you. [Operator instructions] Your first question comes from the line of David Koning with Baird. Please go ahead.

David Koning — Analyst

Thanks for taking my question. First, regarding the mobility segment, you mentioned the interchange rate was high. Do you believe this rate is sustainable? Additionally, could you quantify how much the finance fee reversal impacted this segment? Will we see it reflected in Q4?

Jagtar Narula — Chief Financial Officer

Hi, David. This is Jagtar. We did see a significant pickup in the interchange rate this quarter. The increase can be attributed to a couple of factors. First, higher fuel prices have positively impacted the rate, alongside pricing adjustments we’ve made over the past year. The pricing increases should remain sustainable, while fuel prices may fluctuate. If they stabilize as they have recently, we expect the rates to remain steady. Regarding the revenue aspect, the mobility segment experienced a reversal that had a $10 million impact.

David Koning — Analyst

Thank you for the clarification.

Melissa D. Smith — Chair, President, and Chief Executive Officer

You inquired about future benefits. This reversal stems from auditing previous late fee calculations. Our pricing optimization process has introduced complexities, leading us to identify and correct specific issues affecting a small group of customers. We anticipate returning to a standard operating rate and will continue to prioritize pricing optimization in our strategy.

David Koning — Analyst

Understood, thank you. Regarding the corporate segment, you mentioned a 1% revenue headwind from a significant client departure that could affect next year. In light of this, I noticed there was a decline this quarter instead of the expected growth. Can you confirm if the large client has completely exited, and what else accounts for the decline? Are smaller OTAs contributing?

Melissa D. Smith — Chair, President, and Chief Executive Officer

This year has indeed seen various challenges impacting our growth. Rising fuel prices remain a macro headwind, and we expect this trend to continue in Q4. Additionally, the departure of one major client was slightly quicker than anticipated, reflecting in our latest quarter. The travel sector typically shows stronger performance in Q3 due to increased spending, which may create some variability in our quarterly results. Furthermore, softness in same-store sales has also affected our performance this quarter and is likely to have similar repercussions next quarter.

David Koning — Analyst

Got it, thank you.

Operator

Your next question comes from the line of Nik Cremo with UBS. Please go ahead.

Nik Cremo — UBS — Analyst

Good morning, and thank you for taking my question. Could you provide insights on the benefits segment, especially regarding the pipeline as we approach open enrollment? What are the prospects for 2025? I understand there may have been some delays in expected revenue—what level of SaaS accounts would facilitate growth in this business?

Melissa D. Smith — Chair, President, and Chief Executive Officer

We feel optimistic about the current open enrollment season. Bookings have increased compared to last year. In 2023, we noted some indecisions, but this trend appears to be reversing for 2024. However, some contracts that were close to finalization have been delayed, affecting this year’s anticipated revenue. Despite this, we are encouraged by our bookings progression for the coming year. Devenir expects HSA growth to be around 5%, and we believe we will outpace that growth rate.

Nik Cremo — UBS — Analyst

Thanks for the detailed insights.

Jagtar Narula — Chief Financial Officer

Additionally, regarding our SaaS account growth, while we reported a 2% increase, this figure excludes one Medicare Advantage customer. When accounting for this, our growth is actually around 7%, which exceeds Devenir’s projected growth.

Operator

Your next question comes from the line of Andrew Bauch with Wells Fargo. Please go ahead.

Andrew Bauch — Wells Fargo Securities — Analyst

Thanks for taking my question. Turning to the corporate payments business, I noted the 6% growth rate, excluding the large customer transition. Historically, we viewed this business as a mid-teens grower. With the current situation, should we reevaluate the long-term growth expectations for this segment?

Melissa D. Smith — Chair, President, and Chief Executive Officer

When considering the long-term perspective, we still think of the corporate payments business achieving growth rates of 10% to 15%. Within this quarter, our travel customer base grew by 7%, although we observed more softness outside of this sector. As mentioned, the departure of the major online travel agency will impact our numbers over the next few quarters. However, we are confident in returning to a normal growth rate in the travel marketplace. We continue to engage with numerous clients in this area and are optimistic about adding new spending categories. In the broader corporate payments space, we’re aware of some mix changes and slight pullbacks in spending, which we are monitoring closely while focusing on growing outside of the travel segment.

Andrew Bauch — Wells Fargo Securities — Analyst

Thank you for the clarification.

Mobility Sector Update: Examining Capacity and Pricing Trends

During a recent discussion, WEX leaders provided insights into the current state of the mobility sector while addressing questions about pricing strategies and share buybacks.

Melissa D. Smith — Chair, President, and Chief Executive Officer

We’re currently experiencing a phase of digestion after a prolonged freight recession, particularly in the over-the-road market. Historically, we expect conditions to normalize over time. However, we don’t anticipate any significant change this quarter, as we’ve observed slight softness in same-store sales compared to last year.

Andrew Bauch — Wells Fargo Securities — Analyst

Thank you, Melissa.

Operator

Your next question comes from Dan Dolev with Mizuho. Please go ahead.

Dan Dolev — Analyst

Thanks for taking my question. I’d like to talk about pricing in mobility. We’re expecting the gallons to stay relatively flat year over year in 2024, resulting in about 5% organic growth. Can you elaborate on the influence of pricing in this context?

Jagtar Narula — Chief Financial Officer

Pricing has significantly impacted our revenues this year, estimating an increase of $40 million to $50 million. We’ve been optimizing pricing for about a year now, and we expect a continued positive impact in the range of $10 million to $20 million next year based on this year’s adjustments. We’re continually assessing additional pricing opportunities but have no new decisions to announce at this time.

Dan Dolev — Analyst

Understood. As a follow-up, have there been any changes to your stock buyback program considering current stock prices?

Melissa D. Smith

We are pleased to report that our share count has reached its lowest level in the past decade, down 12% since Q1 2022. This makes share repurchases an attractive use of capital. Our recent activities reflect our confidence in WEX’s long-term value. Additionally, our board has recently increased the share repurchase authorization.

Dan Dolev — Analyst

Thank you, Melissa.

Operator

Your next question comes from Mihir Bhatia with Bank of America. Please proceed.

Mihir Bhatia — Analyst

Good morning, thanks for taking my questions. I’d like to discuss the corporate payments segment. Can you clarify how the large OTA customer transition affects our revenue, and will we see this reflected in quarterly numbers moving forward?

Jagtar Narula — Chief Financial Officer

The large OTA customer is gradually shifting their volume to the new model, which we expect to contribute more in the fourth quarter and stabilize into next year. We anticipate this transition to result in about a 1% impact for 2025.

Melissa D. Smith — Chair, President, and Chief Executive Officer

It’s important to note that seasonality will also play a role; Q3 typically has higher spending volume than Q4, which may influence these projections.

Mihir Bhatia — Analyst

Got it. Your guidance for the segment remains unchanged, correct? Around 2% as previously mentioned?

Jagtar Narula — Chief Financial Officer

Yes, we maintain that guidance with minor softness noted in corporate payments.

Mihir Bhatia — Analyst

Thanks. Shifting back to mobility, could you clarify the impact of fuel prices on earnings, specifically regarding the reported decline in EPS linked to these prices?

Melissa D. Smith — Chair, President, and Chief Executive Officer

Yes. The projected decline of $0.34 in EPS primarily stems from lower average fuel prices in Q4 compared to earlier expectations.

Jagtar Narula — Chief Financial Officer

To clarify, while the average fuel price decline equates to $0.34 in EPS adjustments, the actual EPS impact is approximately $0.23, aligning with our historical ratios.

Mihir Bhatia — Analyst

And for same-store sales trends, are you predicting stability in pricing moving forward without further changes?

Jagtar Narula — Chief Financial Officer

Correct, we’re basing our estimates on September figures and maintaining that outlook for Q4.

Mihir Bhatia — Analyst

Thank you.

Operator

Your next question comes from Sanjay Sakhrani with KBW. Please go ahead.

Sanjay Sakhrani — Analyst

Thanks, good morning. I’d like to revisit the weakness in mobility spending. Historically, spending trends have been indicators of broader economic conditions. Melissa, can you share your insights on how you see this developing?

Melissa D. Smith — Chair, President, and Chief Executive Officer

The local business primarily relies on our products for delivery and sales calls, linking their spending habits closely to business activity. This indicates that changes here could indeed signal broader economic trends.

Industry-Wide Declines Highlight Uncertainty as Corporate Payments and Travel Spend Shift

Recent trends indicate that seven out of eight leading industry groups have experienced declines of 3% to 5% year over year, marking a significant and broad-based downturn.

This decline began in August, as noted by Jagtar Narula, and accelerated slightly into September before stabilizing in October. Data analysis reveals consistent patterns across geographical regions, industry types, and fleet sizes. Communication with customers has provided additional insights.

After reaching out to hundreds of clients, a common sentiment emerged: many are facing decreased needs. The prevailing uncertainty related to upcoming elections and fluctuating interest rates may be contributing to this situation. As a result, projections for the fourth quarter remain assumptions based on current observations.

Sanjay Sakhrani — Analyst

Thank you for the update. In regard to corporate payments and recent developments in the OTA sector, it appears that progress is being made with the major OTA. However, it looks like the effects will extend well into next year. Is there anything else we should keep in mind, particularly regarding potential concerns with other large OTA renewals?

Melissa D. Smith — Chair, President, and Chief Executive Officer

We are concentrating on maintaining strong relationships with our current clients while seeking new spending opportunities among them. Although we have noted weaknesses in airline expenditures, we believe there are promising areas for growth in global acceptance and alternative spending methods that we can explore, especially with our beta payments product.

Sanjay Sakhrani — Analyst

Can you clarify if there is a significant OTA renewal we should consider for 2025?

Melissa D. Smith — Chair, President, and Chief Executive Officer

We have ongoing renewals with various customers, but nothing specific needs to be highlighted at this time.

Jagtar Narula — Chief Financial Officer

As previously discussed, we’ve observed a fluctuation in spending between the first and second halves, but we’re not currently worried about any upcoming renewals for the next year.

Sanjay Sakhrani — Analyst

Thank you for clarifying.

Operator

Your next question comes from Nate Svensson with Deutsche Bank. Please proceed.

Nate Svensson — Analyst

Thanks. I wanted to revisit the topic of corporate payments, particularly concerning the large travel client. It seems that about 30% of volumes were shifted in-house in the third quarter, and Melissa mentioned this has progressed favorably. Is there any change to your outlook, particularly regarding expectations for 40% volumes in the fourth quarter and maintaining that level next year?

Melissa D. Smith — Chair, President, and Chief Executive Officer

The large OTA segment is progressing faster than we anticipated, which could boost penetration. However, seasonal factors may mitigate some of the impact. Our expectation is that what occurs in the fourth quarter will carry into the next year.

Nate Svensson — Analyst

Understood. Regarding spending volumes across the rest of the portfolio, could you provide updates on the trends you’ve observed?

Melissa D. Smith — Chair, President, and Chief Executive Officer

Two-thirds of our revenue stems from smaller online travel agencies, and we are seeing trends consistent with our earlier expectations. While there are acceptance challenges with low-cost carriers in Europe, discussions with those carriers could pave future opportunities. Currently, our overall volume with these smaller clients is slightly below that of larger clients, mostly due to travel-related expenditures.

Nate Svensson — Analyst

Thanks, Melissa. For my follow-up, I noticed that credit losses appeared better than expected over the last two quarters, despite some underlying business softness. Your guidance for the fourth quarter indicates a substantial increase in expected losses. Can you explain the factors driving this adjustment?

Jagtar Narula — Chief Financial Officer

This past quarter saw some of the lowest charge-off rates we’ve recorded. While we expect a change in the next quarter due to receivable balances and previously reduced reserve levels, there are no specific items driving this shift—it’s more of a prudent forecast.

Nate Svensson — Analyst

Thank you, Jagtar, for the clarification.

Operator

The next question comes from Ramsey El-Assal with Barclays. Please go ahead.

Ramsey El-Assal — Barclays — Analyst

Hi, I appreciate you taking my question. Regarding the benefits segment, Jagtar mentioned delays in new revenue due to later client onboarding. Could you address that?

WEX Faces Challenges with Bookings and Earnings Guidance Adjustment

Unpacking Deferred Bookings and their Impact on Revenue

Melissa D. Smith — Chair, President, and Chief Executive Officer

Correct. While we expect to meet our bookings target for the year, the timing has shifted. A few contracts were nearly finalized but have now been postponed. This will not affect our overall bookings total.

Ramsey El-Assal — Barclays — Analyst

I understand. Could you clarify if the additional billing days in this quarter will affect next quarter’s results, or perhaps they played a role this quarter?

Jagtar Narula — Chief Financial Officer

You’re right. We did experience about 3% more fueling days compared to last year. However, in the next quarter, the numbers will remain flat year-over-year.

Ramsey El-Assal — Barclays — Analyst

Thanks for that clarification.

Operator

Next, we have Andrew Jeffrey from William Blair. Please proceed.

Andrew Jeffrey — Analyst

Good morning. Thanks for taking my question. Jagtar, could you explain why the earnings guidance has been reduced? If about one-third of that is fuel-related, what about the rest?

Jagtar Narula — Chief Financial Officer

Certainly. In the fourth quarter, we projected a $45 million reduction compared to our previous guidance. About $15 million to $20 million of that impact is from fuel and interest rates. Just to note, interest rates affect revenue but don’t significantly impact EPS. So, roughly $15 million to $20 million is from fuel prices. Additionally, around $10 million to $11 million is due to a decline in mobility sales and late fees. Lastly, we estimate $5 million to $10 million related to benefits adjustments.

Andrew Jeffrey — Analyst

How does all of this affect the bottom line? It seems like various factors are at play.

Jagtar Narula — Chief Financial Officer

Starting with fuel and rate adjustments, the $15 million to $20 million primarily influences EPS negatively by about $0.23. The remaining $25 million impacts EPS by about $0.50, largely related to credit loss provisions, which we expect to rise compared to the previous quarter.

Andrew Jeffrey — Analyst

Can you elaborate on the credit losses? Are they due solely to macroeconomic factors, or are there other reasons?

Jagtar Narula — Chief Financial Officer

It’s not an increase in losses but rather a shift. We previously experienced favorable trends in credit losses, benefitting from reduced reserves. However, we don’t expect to see the same improvements in the fourth quarter, hence the anticipated rise in credit loss provisions.

Andrew Jeffrey — Analyst

I’m surprised these issues appear at this stage of the year. What does this say about your overall visibility in the business?

Melissa D. Smith — Chair, President, and Chief Executive Officer

Fuel price changes are often immediate; we recently noted variability in this figure post-earnings announcement. The decline in mobility surfaced in August, peaked in September, and has stabilized in October. While we typically have a good grasp on volume trends, this unusual fluctuation surprised us. Additionally, the delay in contract signings happened right at the end stages, diverging from our expectations. Historically, our predictive capabilities have been strong, but this quarter was an exception.

Andrew Jeffrey — Analyst

Thank you for your insights.

Operator

This concludes our Q&A session. I will turn the call back to Steve Elder for closing remarks.

Steven Alan Elder — Senior Vice President, Global Investor Relations

Thank you all for your time today. We look forward to discussing our year-end earnings with you soon.

Operator

[Operator signoff]

Duration: 0 minutes

Call Participants:

Steven Alan Elder — Senior Vice President, Global Investor Relations

Melissa D. Smith — Chair, President, and Chief Executive Officer

Jagtar Narula — Chief Financial Officer

David Koning — Analyst

Dave Koning — Analyst

Nik Cremo — UBS — Analyst

Andrew Bauch — Wells Fargo Securities — Analyst

Dan Dolev — Analyst

Mihir Bhatia — Analyst

Sanjay Sakhrani — Analyst

Nate Svensson — Analyst

Ramsey El-Assal — Barclays — Analyst

Andrew Jeffrey — Analyst

Steve Elder — Senior Vice President, Global Investor Relations

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