Western Union posted fourth-quarter results Wednesday (Feb. 10) that showed digital transactions gathering momentum in the face of the pandemic, and double-digit growth in average monthly users of the company’s app.
The company’s adjusted earnings of 45 cents a share were three pennies better than expected, while revenues, down 3 percent, came in at about $1.27 billion, slightly lower than the $1.3 billion expected.
The company said in its earnings release that consumer-to-consumer transactions gained 6 percent in the quarter, while revenues in this segment, at 88 percent of the total, were flat on a constant currency basis. Cross border money transfer revenues gained 2 percent, the company said.
Drilling down a bit, digital money transfer revenues were up 35 percent on a constant currency basis, and represented 21 percent of total C2C transactions, up from a mid-teens percentage seen in previous periods.
Within the westernunion.com operations, CEO Hikmet Ersek said the company’s mobile app was the most downloaded among peers in the money transfer sector, and average monthly user growth was 48 percent in the period. Westernunion.com revenues grew 26 percent on a constant currency basis, with cross border revenue growth here of 38 percent.
Ersek noted on the call with analysts that digital revenues came in at $240 million in the quarter, representing a new quarterly high; the company is on track to realize $1 billion in digital revenues this year, he said. Transactions per customer, as measured through the year for WU.com, management said, were up 12 percent, and principal per transaction was up 25 percent. Chief Financial Officer Raj Agrawal said on the call that C2C cross border principal was up 24 percent.
In the C2C, notable growth was seen in Europe and the Middle East regions, where transactions were up double-digit percentages.
Business solutions represented 7 percent of the company’s revenues, where revenues were down 11 percent.
Despite the headwinds (economic and otherwise) wrought by the pandemic, Ersek said the company managed to realize $150 million in savings through restructuring, renegotiating contracts and third-party spending; and that customer growth remains “highly incremental” to results. For the current year, the company sees mid-single-digit percentage revenue growth, and further traction along real time payment and white-label initiatives as it offers its platforms to banks.
Speaking of the shifts toward digital transactions and mobile payments, Ersek said that Western Union remains in the “early stages of compelling developments.”
In an interview with Karen Webster late last month (in tandem with the release of a report on remittances by Oxford Economics commissioned by Western Union), Agrawal said that “person-to-person international transfers form by far the largest foreign economic support for developing economies. They have helped smooth COVID-19 pandemic-induced economic shocks, increased the resilience of developing nations throughout 2020, and they present a potential lifeline for recovery in 2021 and beyond. The report illustrates the crucial role global remittances play in developing economies, often achieving what governments and private direct investment cannot.”
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