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Revenue for the quarter increased 4% year-over-year, reaching a record high for the second quarter of $621 million. This increase of $23 million year-over-year was driven by growth of 21% in our Corporate Payments segment and 34% in our Benefits segment. Our revenue growth for the quarter was notable when you consider the 26% year-over-year decline in fuel prices. We saw an anticipated decline in mobility revenue of 10% as a result of the impact of lower fuel prices, which reduced revenue by $53 million. The company's overall growth for the current fuel price headwinds reflects the strong execution and resilient business model that I have discussed on previous earnings calls. This point deserves some emphasis. The year-over-year decline in fuel prices this quarter was one of the largest that we've seen in our history, yet our diverse and resilient business model allowed us to grow top line revenue despite that.

In fact, on an organic basis, and excluding the impact of fluctuations in fuel prices and foreign exchange rates, revenue in the quarter grew 13%, a result that continues to underscore our strong momentum. Strong quarterly revenue paired with the scalability of our business model was offset by lower fuel prices versus the prior year highs and resulted in adjusted net income diluted share of $3.63. Total volume processed across the organization in the second quarter declined 2.3% year-over-year to $55.3 billion driven by strong performance in our Corporate Payments and Benefits segment and offset by lower fuel prices. I'll now turn to an update on each of our segments, starting with Benefits. We've had an active couple of months in the Benefits segment.

On June 1, we hosted an event to provide the investor community an in-depth understanding of the business, including its product set, opportunity and financial profile. We continue to believe this segment is uniquely positioned for success due to its strong strategic fit in the WEX portfolio, its leading position in a large and fast-growing benefits market, it's multiple product offerings and go-to-market channels and its compelling financial profile. I am also pleased to announce that WEX signed a definitive agreement to acquire a Ascensus Health and Benefits line of business, a leading tech-enabled provider of employee benefit accounts with a diversified portfolio, including HSAs, FSAs and other benefit accounts. We are excited about this deal as it will both increase our scale in the Benefits segment and expand our benefits product offering by including Ascensus' complementary Affordable Care Act compliance and verification capabilities.

Total consideration is expected to be approximately $180 million, subject to certain working capital and other adjustments. We expect the transaction to close before year-end. We will not update guidance for this acquisition until it closes, but we would expect it to be roughly neutral to adjusted net income for the remainder of 2023. We have known the Ascensus team for many years and look forward to welcoming them to the WEX family. We believe our combination will only strengthen and deepen our offerings for employers, consumers and partners alike. In Corporate Payments, we continue to benefit from a strong rebound in travel volume globally, with travel purchase volumes up 44% year-over-year. We are seeing strong growth in all regions with the U.S. leading the way.

We're at 149% of 2019 purchase volume for the quarter on a pro forma basis, including eNett, which is better than the 130% we saw in Q1. Across our Corporate Payments segment, we were pleased to sign a number of renewals and expanded relationships with customers, including a large regional banking partner and European online travel agency On the Beach. In mobility, we continue to sign new customers across the portfolio and see the benefit of increased marketing as we continue to add small fleets through digital channels. New signings this quarter include merchant leasing, a competitive leasing company win. Merchants is a major fleet management company and will be using both our mobility and corporate payment solutions, Over-the-road trucking customers continue to work through a slow freight environment and same-store sales were down 1%.

We've seen an increase of about 2% compared to our normal attrition rates relating to higher credit standards in our portfolio. We're seeing the benefit of this in our earnings overall. As you've heard, there's a lot to celebrate across each of our segments. Now I'd like to highlight the progress we've made against our strategic initiatives this quarter. I'll start with an update on our electric vehicles initiatives. We're striving to meet our customers where they are on their EV journeys. Our strategy is to create a seamless transition for our customers as they transition to a mixed fleet environment. We continue to build and partner to deliver tools for the mixed fleet world. Our market-leading products can be used alongside and seamlessly with EV capabilities that create flexibility for our customers to charge at work or home as well as fuel and charge while in transit.

While it's still early days, pricing is playing out consistently with what we laid out at our Investor Day last year, and we continue to see a significant opportunity to expand our offering. We're also well positioned to capture revenue when the adoption curve accelerates. Initially, this includes continued investments in our products and putting in place Acceptance Agreements with approximately 75% of the publicly available charging networks in the United States and approximately 85% in Europe. We're also in the testing phase of an at-home charging reimbursement product, and we expect to roll out a depot solution by early next year. We're feeling positive about our progress to date as we work towards replicating the ease, acceptance and control that our closed-loop network provides to customers today.

We continue to believe that we are well positioned to be our customers' adviser and partner and operating in a mixed fleet environment. Part of our ability to deliver winning solutions to the market will come from both within WEX and through unlocking the great innovation that is happening across the ecosystem. To that end, earlier this morning, we announced that our Board of Directors has authorized our recently formed WEX Venture Capital team to invest up to $100 million through the end of 2025. There's an emphasis on minority investments in early and growth-stage companies that are innovating on how the energy transition impacts corporate mobility, including areas such as fleet electrification, the EV charging ecosystem, energy management and optimization and adjacent technology.

We've already executed a set of minority investments with innovators that we believe have the potential to be great partners in providing solutions to our customers. Our experience thus far gives us confidence that our deep knowledge of the mobility industry and relationships with hundreds of thousands of customers makes us an attractive investor to the early-stage companies we are targeting. These investments enable us to bring both internally developed and partnered solutions to the market as we aggressively build our capabilities in this dynamic space. We believe the years ahead are a crucial moment for businesses with mixed fleets and we're proud to lead and help them through the energy transition. The second strategic initiative I want to share an update on is our operational improvement efforts.

As a reminder, we're on track to remove $100 million in run rate expenses exiting 2024, with approximately half of the improvements expected to be reinvested in the company. To date, much of the benefits we have seen have been offset by the cost involved in achieving them, but we expect to see margin improvements as we lap those expenses. Before I wrap up, I'd like to talk about how we are applying machine learning and artificial intelligence tools to our processes. Let me give you a few examples. First, on credit adjudication and monitoring we've significantly evolved our tools to provide us much more granularity to adjust credit decisioning based upon risk and profitability. We've invested in our credit adjudication and portfolio management capabilities leveraging machine learning models.

These enhanced capabilities have yielded strong initial results at the point of credit decision while also providing improved insights on our portfolio, leading to proactive actions where appropriate. The investments in machine learning position us to manage our existing portfolios with increased precision and support future growth. Second, on software development, we began rolling out large language modeled AI tools for our software engineers earlier this year and implemented this more broadly in the beginning of the second quarter. These tools augment their day-to-day work in useful ways and we've already seen meaningful productivity improvements which we expect to continue into next year. This has the benefit of increasing our speed to market and reducing the cost of developing new products.

With these successes and others in place and the returns they have generated, we've launched an AI center of excellence focused on hiring, educating and trading data scientists and analysts on best practices of model development and advancement in AI technologies. The Center of Excellence increases the skill set of data science and data analysis teams across WEX through projects and rapid experimentation, ultimately bringing new products using technology tools to market faster. Finally, I want to share that next week, we plan to publish our third annual ESG report. This report provides an update on WEX's ESG efforts and importantly, demonstrates how our initiatives like supporting our customers' transition to EVs and educating benefit customers at HSA Day are driving business outcomes and making a positive impact.

I remain confident in WEX's path forward and long-term growth opportunities as we continue to deliver strong financial results while managing the business through a dynamic economic environment. To that end, I'm pleased that we are raising our full year guidance for both revenue and earnings despite a lower fuel price forecast which Jagtar will discuss further in a moment. With that, I'll turn it over to Jagtar to walk you through this quarter's financial performance in more detail.

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Jagtar Narula: Thanks, Melissa, and good morning, everyone. We reported a solid second quarter, achieving attractive top line growth in spite of the headwinds of the decline in fuel prices. As our results show, we continue to deliver with dependable execution that our employees, partners, customers and shareholders have come to expect. Now we'll start with the quarter results. For the second quarter, total revenue exceeded the midpoint of our guidance by $3 million despite lower fuel prices than we anticipated due to a combination of strong corporate payments purchase volume and a continuation of great results in our Benefits segment. Total revenue came in at a Q2 record level of $621.3 million, a 4% increase over Q2 2022, with more than 80% of revenue for the quarter recurring in nature.

As a reminder, we define recurring revenue as payment processing and account servicing revenue, revenue from our factoring business, income from custodial HSA cash assets, transaction processing fees and other smaller items. In total, adjusted operating income margin for the company was 40.3%, which is down from 42.3% last year largely driven by higher margins in the corporate payments and benefits offset by lower margins in the mobility segment. From an earnings perspective, on a GAAP basis, we had net income attributable to shareholders of $95.3 million in Q2 or $2.20 per share. Non-GAAP adjusted net income was $159.3 million or $3.63 per diluted share. I would like to underscore that our strong results were in spite of 2 significant macroeconomic headwinds we experienced over the past year.

The first is the significant year-over-year decline in fuel prices that Melissa touched on earlier. The second is the large increase in interest rates year-over-year with a Fed funds rate increasing 350 basis points in that time period. While those rate increases impacted our operating and corporate debt costs, natural hedges in our business, including the HSA custodial cash balances allowed us to mitigate those increases. The diversity of our business creates the resiliency that Melissa has talked about and is a strength of the company. Now let's move to segment results, starting with mobility. Mobility revenue for the quarter was $340.2 million, a 10% decrease from the prior year. Fuel prices have retreated compared to the record highs seen last year after the Russian invasion of Ukraine with a domestic average fuel price in Q2 of $3.68 versus $4.98 in 2022.

We estimate the year-over-year 26% fuel price drop decreased segment revenue by approximately $53 million. The lower fuel prices were the primary reason for the Mobility segment revenue decline, reducing revenue growth in the segment by 14% versus last year. We also had a $7.7 million onetime revenue item related to a contract amendment in the prior year, which contributed a further 2% to the revenue decline. Together, the fuel price declines and onetime revenue item from last year combined to result in a $61 million headwind year-over-year. However, at a more fundamental level, revenue this quarter continues to reflect a strong business model with stable volumes year-over-year combined with increased interchange and late fee rates. Payment processing transactions were roughly flat year-over-year which was in line with our expectations for the quarter.

Local customers in the U.S. were flat with last year, while we had a small decline in over-the-road transactions due to difficult freight market conditions and the impact on small trucking fleets. In our over-the-road segment, we did see an increase in our direct bill transactions, a model utilized by larger trucking fleets, which is reflected in the other revenue line. We believe this reflects shipping volumes moving from smaller to larger fleets. The freight market is an area we continue to watch closely, and we believe the market has stabilized at low levels for now. Next, let's turn to late fees. As you can see in our metrics, the net late fee rate was up 10 basis points versus the prior year mostly as a result of the timing of the rapid increase in fuel prices last year, which depressed the rate.

Finance fee revenue decreased 10%, even with a higher rate earned, the previously mentioned decline in fuel prices this year and a 30% slowdown in our factoring revenue, which is related to the freight market conditions I've just mentioned caused the decline in revenue. The net interchange rate in the Mobility segment was 1.25%, which is up 4 basis points from Q1 and 16 basis points over last year. The higher interchange rate compared to last year reflects benefits from the interest rate escalator clauses contained in various merchant contracts, the rate impact from lower fuel prices and higher rates earned from merchant contract renewals at favorable terms. The one-time item I mentioned earlier was a benefit to the rate in the prior year, offsetting these increases.

The segment adjusted operating income margin for the quarter was 44.2%, down from 50.9% in Q2 2022. Decline in margin was due to higher operating interest expense based on higher interest rates and lower fuel prices, partially offset by significantly better credit losses. Let me briefly address the credit losses, which were better than our guidance range of 15 basis points of spend volume. The elevated loss rates in the over-the-road trucking business that we have seen over the past several quarters are abating. The improvement in delinquency rates noted last quarter are reflected in the improved losses we experienced this quarter. Likewise, the local fleet customers in the U.S. have a low loss rate when compared to historical norms. Fraud losses in this segment are also back close to a normal range following several quarters of elevated losses.

As you will see in our guidance, we believe we will be back to normalized loss levels for the remainder of the year. Now turning to Corporate Payments. Total segment revenue for the quarter increased 21% to $121.9 million. Purchase volume issued by WEX was $22.9 billion, which is an increase of 34% versus last year. The net interchange rate in the segment was down 2 basis points sequentially, predominantly due to travel customers contributing a larger percentage of total volume versus Q1. Breaking this segment out further. Truck-related customer volume represented approximately 76% of the total spend and grew 44% compared to last year. Revenue from travel-related customers was up 50% versus Q2 2022. This reflects continued strength in consumer travel demand, and we are very pleased with these results.

The Corporate Payments segment delivered an adjusted operating income margin of 54.4%, up from 50.8% in Q2 last year. There continues to be significant improvement in these margins as volume accelerates. Our business model here is very strong and revenue drop-through for this segment is high given our relatively fixed cost base. Finally, let's look at the Benefits segment. We continue to drive strong growth, resulting in Q2 revenue of $159.2 million. The $40.6 million increase represents 34% over the prior year. SaaS account growth was up 11% in Q2 versus the prior year. Benefits segment purchase volume increased 13%, leading to an 11% increase in payment processing revenue. We also realized approximately $42 million in revenue from the custodial HSA cash deposits that were invested by WEX Bank and funds held at third-party banks compared to $10.2 million last year.

Approximately $27 million of the revenue increase in this segment is due to the average interest rate earned on these balances increasing from 1.57% last year to 4.33% this year. As I mentioned in the beginning of my remarks, this income makes us less sensitive to interest rates as a company as the revenue offsets higher interest expense in other parts of our business and serves as a natural hedge. The revenue is highly accretive to earnings, enabling us to perform well across a range of interest rate environments and providing some stability to navigate economic cycles. The Benefits segment adjusted operating income margin was 37.2% compared to 23.9% in 2022. The custodial revenue from the invested HSA cash deposits is the primary driver of the increase in margin.

But if it's excluded from both periods, the core operating margin would still have increased 1%. Shifting gears now, I will provide an update on the balance sheet and our liquidity position. We remain in a healthy financial position and ended the quarter with $901 million in cash. We have $893 million of available borrowing capacity and corporate cash of $194 million as defined under the company's credit agreement at quarter end. At the end of the quarter, the total outstanding balance on our revolving line of credit, term loans and convertible notes was $2.6 billion. During Q2, we began accessing the Federal Reserve bank term funding program as part of our accounts receivable funding strategy due to flexibility and low cost of the funds available to us.

You will see this on the balance sheet as a $500 million increase in short-term debt, and it is included in our leverage ratio, but it is effectively being used as a replacement for broker deposits as part of our funding strategy. The leverage ratio, as defined in the credit agreement stands at 2.8x, which is within our long-term target of 2.5 to 3.5x. Our increase in leverage from Q1 is due to the use of the Fed bank term funding program, but this increased leverage is not expected to have any impact on our cost of or access to capital in the future because of our ability to quickly unwind the program and revert to brokered deposits. Next, I would like to turn to cash flow. WEX generates a significant amount of cash each year, using our adjusted free cash flow was $131 million through Q2, which is an increase of $265 million compared to 2022.

Our primary use of free cash flow so far this year has been to repurchase shares. When the Ascensus transaction closes, we would expect to use some of our available borrowing capacity to close the deal. We will continue to manage capital allocation between organic investment and M&A and returning capital to shareholders. Finally, let's move to revenue and earnings guidance for the third quarter and full year. The second quarter was a very good quarter for us, and as a result, I am pleased to share that we are raising our guidance for 2023 to reflect those results. Starting with the third quarter, we expect to report revenue in the range of $629 million to $639 million. We expect ANI EPS to be between $3.65 and $3.75 per diluted share. For the full year, we expect to report revenue in the range of $2.5 billion to $2.52 billion.

We expect ANI EPS to be between $14.15 and $14.35 per diluted share. For the full year, these updated ranges represent an increase of $35 million in revenue and $0.20 of EPS compared to the midpoint of our previous guidance. The major moving pieces compared to our prior guidance are increasing our expectations around travel volumes to match the environment we are seeing, including the assumption of reaching higher incentive tiers at the end of the year and further improvements in expected credit loss rates as a result of the actions we've taken over the last several quarters. We are providing this improved outlook despite our expectations of lower fuel prices which we expect to result in a $5 million to $10 million lower revenue and $0.15 of EPS in the back half of the year versus our prior fuel price assumption.

As I complete my prepared remarks, I would like to emphasize how pleased we were with our Q2 results. We are also very pleased to be able to increase guidance despite a significant drop in fuel prices. We continue to execute well on both growing revenue and becoming more efficient serving our customers. With that, operator, please open the line for questions.

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