Western Union Results Buoyed By Digital

Western Union posted results that were mixed, topping the quarter’s estimates slightly on the top line while missing on the bottom line, yet the outlook for the full year remains the same.

The company said Tuesday night that earnings came in at $0.35, which slipped below what analysts had expected at $0.39. Revenues were $1.3 billion, which edged estimates by about $10 million.

Measured on a constant currency basis, consumer-to-consumer revenues were up 2 percent. CFO Raj Agrawal told analysts in his remarks that consumer-to-consumer transactions were 78 percent of total revenues, with cross-border up 2 percent via constant currency.

Transactions were also up by 2 percent with a push from westernunion.com, said management. The westernunion.com business saw double digits in transaction growth to 27 percent. Regionally speaking, the U.S. and Europe both saw revenue growth of 4 percent.

Said CEO Hikmet Ersek via remarks, online distribution expanded, and “we now have online transaction sites in 40 countries, including across the European Union, and mobile apps in 18 markets” and more than 60 percent of receiving account transactions were initiated over mobile; “once the customer uses this once, they will want to use it more often,” especially mobile to mobile activity. He did note, overall, a slowdown in oil-producing countries in remarks on the conference call, while Latin America was strong in terms of transactions overall.

The consumer-to-business segment grew by 10 percent on a constant currency basis. That business, the company said, was buoyed by walk-in business in Argentina and by U.S. electronic bill payments business.

The company reaffirmed its full year outlook for 2017, with a low single digit gain into percentage points for revenues, and adjusted earnings per share of $1.63 to $1.75, which brackets the Street at $1.69.

During a question and answer with analysts, management noted no change in the regulatory environment, despite “a lot of noise on the protective environment,” as noted by Ersek, but Latin American business and Mexico business remain strong. India, he stated, has seen improvement with “more cash in the market,” and money is also changing hands online. The CFO, Raj Agrawal, said that account coverage by Western Union across India also remains strong.

Noting the news that has dominated the money transfer space in recent weeks — a reference to the bidding war over MoneyGram — Ersek stated this “demonstrates the value” of a global money transfer business, with presence in cross-border money movement.

Regardless of the outcome of the merger, he stated, “we will continue to focus on business execution and implementation … of long-term actions.” Pricing may be seeing competition, along with pressure from smaller, innovating companies, as one analyst stated, but it remains stable overall.

Said Ersek, this should be the case short-term, though there are always “corridor adjustments; there are always some markets up and down … [yet] we feel comfortable” with Western Union’s pricing given its global scale.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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