Western Union CO Q4 FY2024 earnings call

Key Points

• Focus on Evolve 2025 strategy to drive sustainable, profitable revenue growth. Q4 revenue was $1.060B, with adjusted revenue growth ex-Iraq at 1.4% (third consecutive positive quarter).
• Consumer Services had 23% adjusted revenue growth in Q4, driven by Media Network, foreign exchange, and retail money order. Full year Consumer Services achieved 15% adjusted revenue growth.
• Asia showed turnaround with 8% transaction growth in 2024 (improved from 12% decline in 2022). Retail distribution in Asia is being reconfigured for better performance.
• Launched new point-of-sale system with ~70,000 active locations globally, aiming to have all relevant agents on the platform by end-2025.
• Digital business had 8% adjusted revenue growth in Q4, 13% transaction growth, with account payout transactions up 30%. Plan to launch next-gen platform in over 10 additional countries in 2025.
• Renewed partnership with Ahold Delhaize USA, co-branded with Urpay (Saudi Arabia), and collaborated with du Pay (UAE) to strengthen digital footprint.

For the fourth quarter, revenue reached $1.060 billion. Excluding Iraq, adjusted revenue growth was 1.4%, the third consecutive quarter of positive adjusted revenue growth. Consumer Services led with 23% adjusted revenue growth, driven by Media Network, foreign exchange, and retail money order. Branded digital had 13% transaction growth and 8% adjusted revenue growth. Full year GAAP revenue was $4.2 billion. CMT adjusted revenue excluding Iraq was flat in Q4 and down 1% full year. Branded digital had 8% adjusted revenue growth in Q4, with 800 basis points improvement full year. Retail business saw improvements in Europe and MEASA, partially offset by other regions. Consumer Services segment accounted for 11% of quarterly revenue, with Q4 adjusted revenue up 23% and 15% full year growth.

2025 Outlook

• Adjusted revenue forecast: $4.115B-$4.215B (midpoint ~1% adjusted revenue growth ex-Iraq, on track for Investor Day target of flat to 2% growth).
• Adjusted operating margins: 19%-21%.
• Adjusted EPS: $1.75-$1.85.
• Assumes no major macroeconomic changes, but notes uncertainty in US with new administration.

Risks

• Migration patterns in North America/LACA could impact transaction volumes and frequency.
• Regulatory approvals needed for ongoing M&A deals (e.g., DASH, Mexico digital wallet) could delay integration and impact financial results.
• Macro-economic uncertainties, including currency fluctuations and inflation, could affect revenue and margin projections.

Q: What might cause the revenue range variability between high and low ends?

A: Variability due to macroeconomic conditions, stability in retail market, acceleration of branded digital growth, and higher Consumer Services growth later in the year.

Q: What are the driving factors for digital business to achieve double-digit revenue growth?

A: Progress in customer acquisition, transactions in double-digit range, managing legacy book with different pricing profiles, and growth in account payout transactions (lower RPT but profitable).

Q: Update on M&A deals?

A: DASH and Mexico digital wallet deals not yet closed (awaiting regulatory approval), no contribution to Q4 results.

Q: Thoughts on crypto impact?

A: Will explore crypto opportunities if they align with risk compliance and financial integrity standards, potentially reducing float and speeding up transactions.