Western Union CO Q3 FY2024 earnings call

Key Points

• Focus on Evolve 2025 strategy to improve value proposition and execution. Consumer Money Transfer shows durability of improvements. Branded digital business accelerating with 15% transaction growth and 9% revenue growth.
• Retail has platform improvements and debit acceptance rollouts, with Europe showing 5% transaction growth. Consumer Services growing double digits.
• M&A activity: Acquired Singaporean digital wallet business Dash and a Mexican digital wallet, aiming to accelerate ecosystem strategy.
• Macro challenges in Latin America due to political events affecting migration and business. Digital business efforts to return to double-digit growth through improved onboarding and user experience.
• Success in Singapore owned stores, growing from a shrinking business to double-digit revenue and transaction growth.

Consumer Money Transfer: Transactions grew 4% in the quarter excluding Iraq, with adjusted revenue up 1% excluding Iraq. Branded digital business had transaction growth of 15% and adjusted revenue growth of 9%. Consumer Services had 15% adjusted revenue growth. Retail: Europe achieved 5% transaction growth in Q3, a sequential improvement. Americas faced challenges due to geopolitical volatility. Consumer Services: Accounts for 10% of total quarterly revenue, with adjusted revenue up 15% driven by expansion in FX and Media Network businesses.

Guidance

• Reaffirmed 2024 adjusted revenue range of $4.15 billion to $4.225 billion and adjusted EPS range of $1.70 to $1.80.
• Expect continued progress on Evolve 2025 strategy, with confidence in achieving goals and setting up for future prosperity.

Risks

• Geopolitical volatility in Latin America impacting migration and Consumer Money Transfer business.
• Regulatory risks associated with M&A transactions.
• Competitive risks in the market, including potential impacts from other money transfer operators' issues.

Q: Impact of Latin America headwinds on Q4 guidance and U.S. election implications?

A: Impact is fluid, guidance stands, U.S. election unlikely to have dramatic effect on business.

Q: Spread between branded digital transactions and revenue growth?

A: Accelerating both, targeting long-term 200-300 basis points.

Q: M&A strategy and vision?

A: M&A to accelerate strategy, leveraging licenses, tech, and talent in markets like Singapore and Mexico.

Q: North America performance and competitive environment?

A: U.S. to Mexico slowdown due to macro, some competitive upticks seen but fundamentals unchanged.

Q: Retail business components and margins?

A: Retail ex-Iraq down, focusing on transaction acceleration and margin improvement through initiatives like debit acceptance.

Q: Digital business competition and pricing?

A: Focus on CAC to LTV model, leveraging market rationality in higher interest rate environment.

Q: Debit card acceptance rollout?

A: Investment in infrastructure, positive results in Europe, rolling out to U.S. with expected accretive results.

Q: Iraq revenue trends and owned stores strategy?

A: Iraq revenue volatile, owned stores strategy requires discipline in location selection for revenue coverage.

Q: Adjusted operating margins range?

A: Range remains, focus on sustainable growth without narrowing the range significantly