But as I’ve talked about in previous calls, we tend to manage the fixed versus floating rate exposure, so that it’s effectively P&L neutral once you take it all the way through the P&L and look at corporate debt. So we’ll have some revenue impact, it doesn’t have a bottom-line EPS impact.
James Faucette: Great. Hey, I appreciate all the color you guys.
Operator: Your next question comes from the line of John David [ph] with Raymond James. Please go ahead.
Unidentified Analyst: Hey, good morning, guys. Melissa, obviously, you called out the x, the account growth and benefits ex [ph] the loss of the Medicare Advantage customer being about, let’s call it, 1.5 million accounts or so. How should we think about the revenue impact within benefits this year of that customer loss?
Melissa Smith: It’s still a couple of percent in the course of the year for the full year.
Unidentified Analyst: Okay. So a couple of points to benefits growth, just to be clear.
Melissa Smith: Yes.
Unidentified Analyst: Okay. And then just Jagtar on Mobility margins. First time, I think margins have dipped below 40% in a while, and I know you called out lower fuel prices. But maybe just help us think about what the trajectory of margins from here in Mobility and how we should think about the full year? Any color there would be helpful.
Jagtar Narula: Yes, sure. So we should expect margins to improve overall as we go through the year. I think, right, we’ve got higher fuel prices that we’re forecasting over the balance of the year. We’re expecting improvements in late fees as we go through the year, some of the drag that we’ve seen will become less of a drag. And then we’re expecting a better interest rate environment as we go through the balance of the year. So all those things should help margins will have a little bit of an impact in Q2 because we are forecasting those higher credit losses, but that should improve as we get into the second half.
Unidentified Analyst: Okay, thanks guys.
Operator: Next question comes from the line of Nate Svensson with Deutsche Bank. Please go ahead.
Nate Svensson: Hey, I just kind of wanted to follow up on that last question there. I was hoping you could remind us some of the underlying assumptions on the revenue growth within Mobility. So I think before you had talked about 8% macro adjusted growth, including about two points or so from Payzer. So I just wanted to make sure that, that was reiterated for this quarter. And then maybe some of the underlying assumptions there. You mentioned late fee increasing that I guess, the headwind getting better in the back half of the year, but maybe some of the other assumptions like gallons of fuel growth, expansion and payment processing rate. Anyway for – that’ll help us, that would be helpful.
Melissa Smith: Jagtar is going to go into that in detail. But before he starts, one of the things that was really important to us was to see the step up in the first quarter. You talked about the fact that we had an impact of negative spreads in Europe that impacted the quarter, which offset the positivity that we had for steel prices. But in terms of revenue growth, going from our growth in the fourth quarter to the incremental growth that we saw in the first quarter was part of the plan that we had as we were progressing through the course of the year. So we are pleased with the number that we posted this quarter.
Jagtar Narula: Yes. I’ll jump in here. And I just want to emphasize what Melissa just said, right? So we’ve guided to top end of our long-term range, so call it 8% growth. In Mobility, first quarter, we saw 5%, which was a tick up from below 2% that we saw in Q4. So that was – and sorry, that’s ex fuel prices. But that’s exactly what we expected to do, and we’re quite pleased to see that. So as we think through the rest of the year, high end of our range at 8%, Payzer’s expected to contribute to. And the rest of it comes from the things that I talked about in the previous call that we saw come to start to come to fruition in Q1. So part of it is the pricing levers that we’ve pulled. We saw that coming through in the rate in the first quarter.
Part of it is the impact from the credit losses that we saw a couple of years ago and the actions that we took last year, dampened both volume growth because of higher attrition as well as late fees because of improvements in the portfolio. Both those items we expect to lap this year. We didn’t quite see it as much as Q1 because it’s more of a Q2 and beyond item. So we should start to see that as we go through the year. So those three things that I just mentioned, fuel prices – sorry, late fees, volume and pricing are all what we’re expecting in Q2 through Q4 of the year.
Nate Svensson: Super helpful. Appreciate the color. I guess my follow-up, maybe a two-parter on Corporate Payments. I think last quarter, you had talked about a better virtual card attach rate within your travel business. So I guess any update on how that trended this quarter and how you see that going forward? And then I guess the second part, a couple of comments your prepared remarks on this, but more color on your direct sales efforts in Corporate Payments. So any additional information on the benefit you’re seeing from the direct sales force or selling your AP product in the midsized businesses would be helpful. Thank you.
Melissa Smith: Yes, we’ll take them on this one, too. So we don’t continue to see the benefit of the migration to the merchant model, which I think is what you’re talking about within our European customers. And so that has been a benefit. Although I will say in the quarter, the oversize of the growth came from outside of Europe in this particular quarter. And most of the increase in spend volume was because of transaction growth. The rates seem to have normalized. It was only about a 4% increase in rate year-over-year. So again, it feels like we’re getting back into more of a normalized environment. In terms of sales, half of the growth came from our direct sales outside of travel in our Corporate Payments business.
And so we feel good about how we continue to build the pipeline there and continue to execute and deliver, and that we’ve got a sustained growth engine at this point in time that’s continuing to deliver each quarter each quarter. And I would say that’s true within travel too as well. We continue to build the pipeline we have there, working with our existing customers, look for opportunities. You talked about some of that during the call, but it’s an area that we’re going to continue to focus on as well.
Jagtar Narula: Yes, I’ll just add to that, that – we’re extremely pleased with the growth of that direct business this quarter. This is the second quarter in a row where over half of our nontravel related payment processing revenue came from the direct business. And overall, if I look at our payment processing revenue trends for nontravel, this is the third quarter of trending upwards. So we were quite pleased to see that continuing trend.
Nate Svensson: Thank you. Appreciate it.
Operator: Your next question comes from the line of Mihir Bhatia with Bank of America. Please go ahead.
Mihir Bhatia: Good morning and thank you for taking my questions. I actually wanted to start by going back to following up on Sanjay’s question. You mentioned some of the short-term headwinds from the Booking renewal. But can you just talk about the longer-term opportunity there? Is there additional volume you’ll be getting for them from them longer term? I’m just trying to understand the benefit for WEX from the renewal, beyond obviously locking up such a large customer. But what is the opportunity side of that contract renewal look like?
Melissa Smith: Yes. Let me talk about a couple of things here. First of all, I think it’s important to distinguish Booking because it is a highly sophisticated customer. They have a unique capability set in this marketplace. And so what we’re doing with them, we feel like it’s a great partnership, we’re bridging them to their capability. In terms of the opportunity for us, again, this long-term relationship, we are the primary provider over that long term. We are continuing to work with them on other areas across their portfolio, which we do believe will create opportunities.
Mihir Bhatia: Okay. And then maybe like switching to guidance a little bit, right? Just trying to understand big picture, right. What’s changed here, right? The fuel price assumption increased like $0.09, which based on the framework you gave last quarter should be about $0.27 of EPS, right? But EPS only going up $0.20. It looks like revenue guide is increasing more than just the fuel price tailwinds from that framework. So it looks like you’re maybe getting a little bit better revenue than you expected at the start of the year. But costs are may be coming in higher. Is that the right way to think about it? I’m just trying to understand what’s changed really if I remove the macro or the fuel impact?
Jagtar Narula: Yes. So what I would say here two items. So if I start with the revenue, two macro items are impacting revenue. One is fuel prices. The other one is interest rates. And our – as we said in the last call, right, I assumed originally five rate reductions this year. Now we’re assuming less than that. So that has a revenue impact because of merchant contracts and HSA assets. So the fuel-related changes you see flow through to earnings, the interest rate-related changes you see in the revenue line. But as we’ve talked about before, we manage our business to be interest rate neutral at the EPS level. So you don’t see those flow through to changes because they’re basically counteracted by interest cost increase we expect in the corporate debt.
So largely the fuels flowing through, we had in the first quarter market movement that impacted our first quarter number. That was about $2 million. And so that’s largely the delta that you see between the $0.27 you’d expect and what you’re seeing in the actual EPS increase.
Mihir Bhatia: Got it. Thank you.
Operator: That concludes our Q&A session. I will now turn the conference back over to Steve Elder for the closing remarks.
Steve Elder: Thank you, operator, and thank you, everyone, for joining us today. We’ll look forward to sharing our progress in the second quarter, coming up soon. Thank you.
Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.
