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Western Union(WU) - 2024 Q2 - Quarterly Results
Western UnionWestern Union(US:WU)2024-07-30 20:05

Q2 2024 Financial Results Performance Highlights Western Union's Q2 2024 GAAP revenue declined 9%, but adjusted revenue grew positively, driven by a 4% increase in total transactions Q2 2024 Key Financial Metrics | Metric | Q2 2024 | Q2 2023 | Change | Note | | :--- | :--- | :--- | :--- | :--- | | GAAP Revenue | $1.07 billion | $1.17 billion | -9% | - | | Adjusted Revenue | - | - | -7% | Includes 7% headwind from Iraq | | GAAP EPS | $0.41 | $0.47 | -13% | - | | Adjusted EPS | $0.44 | $0.51 | -14% | - | | Total Transactions | - | - | +4% | Led by 13% growth in Branded Digital | - Excluding the impact from Iraq, the company reported positive adjusted revenue growth for the first time since 2021, which management views as a sign that its new go-to-market strategy is succeeding3 - The revenue decline was primarily driven by lower contributions from Iraq, which negatively impacted the adjusted revenue growth rate by 7 percentage points, and the sale of the Business Solutions segment2 Business Segment Performance CMT revenue declined 10% (9% adjusted) due to Iraq; Branded Digital grew 7% adjusted revenue and 13% transactions, while Consumer Services revenue increased 21% (14% adjusted) Q2 2024 Segment Revenue Growth (YoY) | Segment | Reported Growth | Adjusted Growth | | :--- | :--- | :--- | | Consumer Money Transfer (CMT) | -10% | -9% | | Branded Digital (within CMT) | +5% | +7% | | Consumer Services | +21% | +14% | - CMT total transactions grew 4%, but excluding the impact from Iraq, transaction growth was 5%4 - Branded Digital now represents 24% of total CMT revenues and 31% of transactions11 Profitability and Margins Q2 2024 GAAP and adjusted operating margins declined due to lower Iraq revenue and foreign currency volatility; GAAP effective tax rate decreased significantly Q2 Operating Margin and Tax Rate | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | GAAP Operating Margin | 17.9% | 20.7% | | Adjusted Operating Margin | 19.0% | 21.8% | | GAAP Effective Tax Rate | 14.7% | 18.6% | | Adjusted Effective Tax Rate | 16.0% | 16.0% | 2024 Full-Year Outlook The company reiterated its full-year 2024 financial outlook, projecting GAAP revenue of $4.125-$4.200 billion and adjusted EPS of $1.70-$1.80 Full-Year 2024 Guidance (in millions) | Metric | GAAP | Adjusted | | :--- | :--- | :--- | | Revenue | $4,125M - $4,200M | $4,150M - $4,225M | | Operating Margin | 18% - 20% | 19% - 21% | | EPS | $1.62 - $1.72 | $1.70 - $1.80 | - The outlook assumes revenue from Iraq will be between $10 million and $30 million per quarter for the rest of the year8 Consolidated Financial Statements (Unaudited) Condensed Consolidated Statements of Income Q2 2024 revenues decreased 9% to $1.066 billion, operating income fell 21% to $190.7 million, and net income declined 20% to $141.0 million, with diluted EPS at $0.41 Q2 2024 Income Statement Highlights (in millions, except EPS) | Line Item | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $1,066.4 | $1,170.0 | (9)% | | Operating Income | $190.7 | $242.6 | (21)% | | Net Income | $141.0 | $176.2 | (20)% | | Diluted EPS | $0.41 | $0.47 | (13)% | Condensed Consolidated Balance Sheets As of June 30, 2024, total assets were $7.97 billion, cash and equivalents $1.03 billion, total liabilities $7.53 billion, and stockholders' equity $440.8 million, all slightly down from year-end 2023 Balance Sheet Summary (in millions) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,033.0 | $1,268.6 | | Total Assets | $7,971.3 | $8,198.8 | | Borrowings | $2,635.8 | $2,504.6 | | Total Liabilities | $7,530.5 | $7,719.8 | | Total Stockholders' Equity | $440.8 | $479.0 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2024, net cash from operating activities significantly decreased to $60.2 million, with $68.4 million used in investing and $292.6 million in financing, including $180.8 million in share repurchases Six Months Ended June 30 Cash Flow Highlights (in millions) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $60.2 | $264.0 | | Net Cash used in Investing Activities | $(68.4) | $(65.1) | | Net Cash used in Financing Activities | $(292.6) | $(609.5) | | Cash Dividends Paid | $(162.3) | $(178.7) | | Common Stock Repurchased | $(180.8) | $(6.0) | Supplemental Financial Information Summary Segment Data Q2 2024 CMT revenue was $965.0 million (down 10%) with a 19.8% operating margin; Consumer Services revenue grew 21% to $101.4 million, but its operating margin contracted to 11.0% Q2 2024 Segment Performance (in millions) | Segment | Revenue | Revenue % Change | Operating Income | Operating Margin | | :--- | :--- | :--- | :--- | :--- | | Consumer Money Transfer | $965.0 | (10)% | $191.5 | 19.8% | | Consumer Services | $101.4 | 21% | $11.1 | 11.0% | | Business Solutions | $— | N/A | $— | N/A | Key Statistics Q2 2024 consolidated adjusted revenue fell 7%, CMT transactions grew 4%, Branded Digital transactions grew 13%, and MEASA revenue declined 35% due to Iraq, while LACA grew 8% Consolidated and CMT Metrics Q2 2024 Key Performance Indicators (YoY % Change) | Metric | Q2 2024 Change | | :--- | :--- | | Consolidated Adjusted Revenues | (7)% | | CMT Transactions | 4% | | CMT Cross-border Principal (Reported) | (6)% | | Branded Digital Revenues (Adjusted) | 7% | | Branded Digital Transactions | 13% | CMT Regional Metrics Q2 2024 CMT Regional Performance (YoY % Change) | Region | GAAP Revenue | Adjusted Revenue | Transactions | | :--- | :--- | :--- | :--- | | NA | 1% | 1% | 6% | | EU & CIS | (6)% | (4)% | 3% | | MEASA | (35)% | (35)% | 0% | | LACA | 8% | 8% | 2% | | APAC | (11)% | (5)% | 6% | Reconciliation of Non-GAAP Measures This section details GAAP to non-GAAP reconciliations, with Q2 2024 adjustments for foreign currency, Business Solutions sale, redeployment, and acquisition costs, adjusting GAAP operating income from $190.7 million to $202.6 million Q2 2024 Reconciliation of Operating Income (in millions) | Description | Amount | | :--- | :--- | | Operating income (GAAP) | $190.7 | | Acquisition, separation, and integration costs | $0.5 | | Amortization of acquisition related intangible assets | $2.0 | | Redeployment program costs | $9.4 | | Adjusted operating income (non-GAAP) | $202.6 | Reconciliation of Diluted EPS | Description | Q2 2024 | | :--- | :--- | | Diluted EPS (GAAP) | $0.41 | | Pretax impact from Amortization | $0.01 | | Pretax impact from Redeployment program costs | $0.03 | | Income tax benefit impacts | $(0.01) | | Adjusted diluted EPS (non-GAAP) | $0.44 | Other Information Investor and Analyst Conference Call A conference call and webcast for investors and analysts is scheduled for 4:30 p.m. ET on July 30, 2024, to discuss quarterly results, with details available online - A conference call and webcast is scheduled for 4:30 p.m. ET on July 30, 202414 - The webcast, presentation, and replay will be available on the company's investor relations website14 Safe Harbor Compliance Statement This section provides a forward-looking statements disclaimer, highlighting risks such as economic conditions, competition, geopolitical tensions, regulatory changes, and cybersecurity threats - The press release contains forward-looking statements that are not guarantees of future performance and involve risks and uncertainties16 - Key risk factors include changes in economic conditions, competition, geopolitical tensions, regulatory compliance failures, and cybersecurity breaches17 About Western Union Western Union is a global leader in cross-border, cross-currency money movement, operating in over 200 countries and 130 currencies with a vast network of bank accounts, digital wallets, and retail locations - Western Union operates in over 200 countries and territories and more than 130 currencies19 - The company's network includes billions of bank accounts, millions of digital wallets and cards, and hundreds of thousands of retail locations19