Western Union(US:WU)2024-07-31 00:11Financial Data and Key Metrics - Revenue for the quarter reached $1.70 billion, reflecting a 7% decrease on an adjusted basis Excluding Iraq, adjusted revenue growth is positive for the first time since 2021 [8] - Earnings per share came in at $0.44, down $0.07 compared to the previous year [9] - Adjusted operating margin was 19%, compared to 21.8% last year, primarily due to elevated Iraq revenues last year and foreign exchange volatility [25] - Consumer money transfer transactions grew 5% excluding Iraq, marking four consecutive quarters of mid-single-digit growth [7] Business Line Data and Key Metrics - Consumer money transfer transactions grew 4% overall and 5% excluding Iraq, driven by branded digital and digital white label businesses [26] - Branded digital adjusted revenue increased 7% with transaction growth of 13%, sustaining double-digit transaction growth for five consecutive quarters [26] - Retail transactions remained stable for the fourth consecutive quarter, with Europe and CIS leading the improvement at 3% growth [28] - Consumer services segment revenue grew 14%, driven by retail foreign exchange, media network, and retail money order businesses [29] Market Data and Key Metrics - North America revenue growth rate was slightly down but grew on an absolute basis, while the Middle East faced a difficult comparison due to higher Iraq contributions last year [27] - Australia digital transactions grew 30% with 14% revenue growth, achieving a 20% higher conversion rate than other APAC countries [17] - Net new independent agent activations in the U.S. increased nearly 50% year-over-year [11] Company Strategy and Industry Competition - The company is implementing its Evolve 2025 Strategy, focusing on improving customer and agent experiences, narrowing the revenue-to-transaction spread, and returning to sustainable, profitable revenue growth [6] - The company has gained market share in 2023 after losing share to aggressive competitors in previous years [9] - Multiple players have exited the remittance space, and others have raised prices, leading to more rational competition [10] - The company is focusing on end-to-end customer experience, increasing direct connections with banks, wallets, and real-time payout networks [20] Management Commentary on Operating Environment and Future Outlook - The World Bank estimates remittance volumes will grow north of 3% this year and next, with the company expecting mid-single-digit principal growth excluding Iraq [10] - The company remains optimistic about market opportunities and expects continued improvement in adjusted revenue excluding Iraq for the remainder of the year [34] - The company is confident in achieving its Evolve 2025 goals, driven by improved transaction trends in digital and retail businesses [23] Other Important Information - The company incurred $9 million in redeployment costs as part of its five-year $150 million expense redeployment program [31] - Year-to-date, the company returned $335 million to shareholders through dividends and share repurchases [33] - The company maintains a strong balance sheet with $1 billion in cash and cash equivalents and $2.6 billion in debt [33] Q&A Session Summary Question: Industry pricing dynamics and competitive landscape - The company noted that the World Bank data indicates some alleviation of price compression globally, with marginal and small players becoming more rational or exiting the market [39] Question: Spread between digital revenue and transaction growth - The company expects the spread to narrow towards the immediate intermediate-term goal of 400 to 500 basis points by the end of the year [66] Question: Retail transaction growth and pricing actions - Retail transactions were closer to flat, and the company expects continued progress in retail, branded digital, and white label businesses [70] Question: Impact of Argentina inflation on branded digital revenues - The company saw a 200 basis point add-back due to strong growth in Australia and FX hedges maturing in the quarter [74] Question: Rollout of Quick Resend and Remember Me products - The company expects full network penetration of these products across the globe by the end of the year [76] Question: Transactions per customer in the 2024 cohort - The company sees sustainable improvements in transactions per customer, particularly in North America and Asia [79] Question: Industry remittance growth outlook - The company is positive on the outlook for the remittance industry, with steady migration trends and resilient customers [83] Question: Market share dynamics - Banks and smaller, less scale players are losing market share, while the company is gaining share [87]