Earnings

Western Union’s Q1 Digital Transactions Up 19 Pct

Western Union missed Wall Street estimates on the top and bottom lines amid currency headwinds and some weakness in a few international payment corridors — but logged double-digit growth in its digital business as the money transfer company saw traction with westernunion.com.

In terms of headline numbers, GAAP earnings per share of 39 cents missed the Street by four pennies.

Revenues of $1.4 billion were down 3.6 percent year over year and missed consensus by about $20 million. As measured in constant currency, the consolidated revenues were in fact up two percent.

The company said in its results that consumer-to-consumer revenues, which comprise 79 percent of the top line, were down three percent but were flat as measured in constant currency.  Transactions were up two percent.  And in reference to cross-border revenues, Western Union said that contribution was up five percent in constant currency.  As included in the C2C segment, said management, westernunion.com, which was 13 percent of C2C revenues, saw transactions up 19 percent, while constant currency revenues gained 19 percent here, too.  With a bit more granular detail, North America and Europe, with a cumulative C2C contribution of 70 percent, saw revenues up one percent while transactions were flat to up 50 basis points.

“Geographically, growth in the U.S. outbound business and sends originated in Latin America was offset by declines in U.S. domestic money transfer and sends originated in the Middle East and Asia Pacific,” said the company in its earnings release.  CEO Hikmet Ersek said that even as digital growth marked the latest quarter, “declines in the U.S. domestic money transfer business continue to affect …overall C2C growth rates.”  The Middle East, he continued, was still being impacted by price reductions that were implemented in the first half of last year.  Weakness in Africa had been seen among hard currency shortages, management noted on the call.

Business Solutions, the B2B segment, was seven percent of total company revenues, with revenues gaining four percent in constant currency.

Management noted on the call that “other” contributions – namely, the bill payments business in the U.S. and Argentina —  showed constant currency declines in the high single digits among currency headwinds. Speedpay contributed half of the revenues here.

In an interview with PYMNTS’ Karen Webster, CFO Raj Agrawal noted that the Speedpay transaction is on track to close in May, and the sale, for $750 million, will generate roughly $530 million in pre-tax income. While much of that is earmarked, as management said on the analyst call, for stock buybacks and debt reduction, the company will continue to examine acquisitions on a strategic basis.

In the commentary with PYMNTS, the executive said that in reference to digital efforts “we continue our expansion all around the world,” and that while the firm’s digital efforts are in 70 countries, the goal is to be in 200 countries and territories around the globe through the next few years with its westerunion.com business. Other efforts will center around the joint payment option with Amazon, where Amazon customers are able to pay in local currency for the items that they buy online.

Western Union sees particular promise in channels such as account funding and payout, the CFO told PYMNTS.  Amid the broader efforts tied to expansion and cross border payments, said the CFO to Webster, Western Union will look to “offer our platform on more of a white label basis…that will benefit other players in the market.”

 

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