Western Union(WU) - 2025 Q3 - Quarterly Results

Financial Performance - Third quarter 2025 revenue was $1.03 billion, flat compared to the prior year, with adjusted revenue down 1% excluding Iraq[2] - GAAP EPS for Q3 was $0.43, down 45% from $0.78 in the prior year, while adjusted EPS increased to $0.47 from $0.46[3][4] - The Company expects full year 2025 GAAP revenue between $4,085 million and $4,185 million, and adjusted revenue between $4,035 million and $4,135 million[8] - Net income for Q3 was $139.6 million, a decrease of 47% from $264.8 million in the prior year[20] - Total consolidated revenues for the nine months ended September 30, 2025, decreased by 3% to $3,042.3 million compared to $3,151.5 million in the same period of 2024[26] - Consumer Money Transfer revenues declined by 8% year-over-year to $2,635.9 million for the nine months ended September 30, 2025, down from $2,859.2 million in 2024[26] - Net income for the nine months ended September 30, 2025, was $385.2 million, a decrease of 30% from $548.5 million in 2024[24] - Total revenues (GAAP) for FY2024 were $4,209.7 million, with a YoY decrease of 3%[40] - Revenues for Q3 2024 (GAAP) were $932.2 million, reflecting a year-over-year decline of 9%[48] Revenue Growth and Segments - Consumer Services revenue grew 49% on both a reported and adjusted basis, driven by the expansion of the Travel Money business and higher revenues from Argentina bill pay[9] - Branded Digital revenue increased by 7% on a reported basis and 6% on an adjusted basis, with transaction growth of 12% compared to the prior year[9] - The company reported a decrease in CMT segment revenue by 6% on a reported basis, with adjusted revenues and transactions declining 7% and 2%, respectively[9] - The company reported a 49% increase in Consumer Services revenues for the three months ended September 30, 2025, reaching $154.6 million compared to $103.8 million in 2024[26] - Consumer Services segment revenues increased by 32% YoY in Q3 2024 and 56% in Q4 2024, with adjusted revenues showing a 15% increase in Q3 2024[35] - The Consumer Money Transfer segment accounted for 90% of total company revenue in Q3 2024[35] Operating Metrics - Operating margin for Q3 was 20%, up from 16% in the previous year, benefiting from improved cost efficiencies[9] - Operating income for the total segments increased by 4% to $572.0 million for the nine months ended September 30, 2025, compared to $547.7 million in 2024[26] - The operating margin for the Consumer Services segment was reported at 9% in Q3 2024 and 11% in Q4 2024[35] - GAAP operating income for 3Q24 was $164.9 million, with an adjusted operating income of $197.5 million, reflecting an operating margin of 16% and an adjusted operating margin of 19%[42] Tax and Expenses - The GAAP effective tax rate was 17%, compared to a benefit of 95% in the prior year, primarily due to an IRS settlement[9] - Total expenses for Q3 decreased by 5% to $830.7 million, driven by a 14% reduction in selling, general, and administrative expenses[20] - The effective tax rate (GAAP) for 3Q24 was -95%, while the adjusted effective tax rate (non-GAAP) was 8%[46] Cash and Liabilities - Cash and cash equivalents at the end of the period were $1,375.4 million, a decrease from $1,427.6 million at the end of September 30, 2024[24] - Total liabilities decreased to $6,858.6 million as of September 30, 2025, from $7,401.6 million as of December 31, 2024[22] - The company’s total stockholders' equity decreased to $925.4 million as of September 30, 2025, from $968.9 million as of December 31, 2024[22] Regional Performance - North America region revenues decreased by 3% YoY in Q3 2024 and 5% in Q4 2024, with adjusted revenues showing a similar trend[33] - EU & CIS region revenues increased by 0% YoY in Q3 2024 and 3% in Q4 2024, with adjusted revenues showing a 1% increase in Q3 2024[33] - MEASA region revenues saw a significant decline of 32% YoY in Q3 2024 and 10% in Q4 2024, with adjusted revenues down 31% in Q3 2024[33] - APAC region revenues decreased by 2% YoY in Q3 2024 and 6% in Q4 2024, with adjusted revenues showing a 1% increase in Q3 2024[33] Future Projections - The company anticipates continued growth in adjusted operating income, with projections of $206.2 million for 3Q25[42] - The company projects FY 2025 revenues (GAAP) in the range of $4,085 million to $4,185 million[50] - Adjusted revenues (non-GAAP) for FY 2025 are expected to be between $4,035 million and $4,135 million[50] - Operating margin (GAAP) for FY 2025 is forecasted to be between 18% and 20%[50] - Earnings per share (GAAP) for FY 2025 is projected to be between $1.45 and $1.55[50] - The effective tax rate (GAAP) for FY 2025 is estimated to be between 19% and 21%[50] Operational Changes and Challenges - The company will no longer adjust for the estimated impact of Argentinian hyperinflation starting Q2 2025, as inflation has moderated[36] - The Company experienced a significant increase in business originating from Iraq starting March 2023, attributed to policy changes by U.S. and Iraqi regulators[54] - In July 2023, the U.S. Treasury and the Federal Reserve Bank of New York banned 14 Iraqi banks from conducting U.S. dollar transactions, impacting the Company's operations[54] - The Central Bank of Iraq suspended the Company's largest agent in October 2023, although the agent was later reinstated[54] - Management believes that revenue measures excluding Iraq revenues provide better consistency and comparability to prior periods[54] - The Company reorganized its international operations in Q4 2024, recognizing deferred tax assets associated with this reorganization[54] - The non-cash recognition of deferred tax assets has been excluded from reported results due to its significance[54] - The Company excludes transactions and revenues generated from Iraq websites and mobile applications from the definition of Branded Digital due to significant volatility[54] - The North America region represents the Company's Consumer Money Transfer segment, which includes the United States and Canada[54] - The Middle East, Africa, and South Asia region includes India and certain South Asian countries, contributing to the Company's Consumer Money Transfer segment[54] - The Company focuses on factors it believes are most relevant to operations by excluding severance costs from its measurement of non-GAAP profitability[54]