As has been the trend with earnings reports this quarter, COVID-19 and its global economic effects took center stage when Western Union reported its Q1 results. President and CEO Hikmet Ersek noted that despite “unprecedented times” worldwide, Western Union remains pleased with the progress made toward both its digital growth strategy and solidifying its position as providing “essential services during this crisis” and its ability to drive profitable growth in the future despite the current difficulties.
“Stock markets have been [hit], global GDP growth projection has [plummeted] to near historic lows, and unemployment rates in many countries have surged. The effects of this pandemic are likely triggering one of the greatest economic shocks of the past century. Our industry is no exception and we are experiencing the impacts of the COVID-19 pandemic,” Ersek said during an earnings call with investors.
Ersek went on to highlight the various new programs and policies in place to protect the safety and well-being of all of Western Union’s stakeholders: employees, customers, agents and partners.
The majority of the firm’s employees are currently working from home, with most of the company’s offices operating under full or partial business continuity plans. According to the company thus far, there have been no material negative impact on operations as a result of this change.
For customers, the firm has launched a “Digital Location” concierge service in select countries where consumers may be constrained in their ability to go to a Western Union location to pick up funds due to shelter-in-place orders. For those customers, the money instead will come to them, delivered via a contactless hand-off by a Western Union agent. The firm has also expanded its Account Payout Network’s real-time capabilities such that it now reaches 50 countries, allowing users to move funds from their account cross border digitally to the recipient’s bank or mobile wallet account within moments.
As for the firm’s financial results during the quarter, Western Union reported consumer-to-consumer (C2C) revenues saw a 4 percent decline during the quarter, or 3 percent on a constant currency basis. Those declines in C2C, which represents roughly 85 percent of WU business, were largely due to the impact of the COVID-19 pandemic, according to the company.
Digital money transfers showed continued developing strength with revenues up 21 percent on a reported basis. On the whole, digital transfers represented 16 percent of total C2C revenue in the quarter. Westernunion.com revenues increased 13 percent, with cross-border revenue growth of 23 percent during the quarter when compared to the same time last year. To date, CFO Raj Agrawal noted, westernunion.com service is currently available in over 75 countries, while bank account payout is available in over 100 countries.
Ersek noted that Western Union’s digitization efforts are underway — and that the global pandemic had pushed these initiatives, but not created them.
“It has not only confirmed but accelerated the implementation of our strategic priorities for 2020 and beyond, including the expansion of our digital capabilities, the diversification of our global payments network and the off spinning of our cross-border platform to new use cases and partners,” he told investors.
Agrawal said the business produced solid cash flow and managed to continue to support their capital priorities during the crisis.
“We are confident that as the world recovers from COVID-19 our business will get back to strong and stable financial performance.”
Confident, but notably unsure enough to pass on offering a forecast for the remainder of 2020’s performance. Given the extent and uncertain duration of the impact of COVID-19, Ersek said, at this time Western Union is not able to reasonably project the impact of the virus on its 2020 financial results.
He did note the firm will provide such an update when appropriate.
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