Western Union(WU) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In the second quarter, adjusted revenue was reported at $1,026 million, reflecting a decline of 1% year over year when excluding Iraq impacts [2][21] - Adjusted earnings per share (EPS) decreased to $0.42 from $0.44 in the same quarter last year [3][22] - Adjusted operating margin remained stable at 19% for both the current and prior year [21][22] Business Line Data and Key Metrics Changes - Consumer money transfer (CMT) transactions declined by 3% in the quarter, with a 2% decline when excluding Iraq [22][23] - The branded digital business saw a 9% increase in transactions and a 6% increase in adjusted revenue [3][23] - Consumer services adjusted revenue grew by 41%, driven by the travel money business and the acquisition of EuroChange [30] Market Data and Key Metrics Changes - Retail business in The Americas faced challenges due to geopolitical factors, while retail in Europe showed mid-single-digit transaction and revenue growth [2][27] - The travel money business is projected to approach $100 million in revenue this year, a significant increase from previous years [2][3] - The U.S. to Mexico corridor, a major revenue driver, experienced a slowdown in both retail and digital transactions [39][45] Company Strategy and Development Direction - The company is focused on its Evolve 2025 strategy, aiming for sustainable, profitable revenue growth and enhancing customer experience [1][19] - There is a commitment to increasing digital transformation and expanding the digital wallet offerings in response to market changes [11][62] - The company is exploring stablecoin opportunities to modernize money movement and improve operational efficiency [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term growth despite current geopolitical challenges affecting transaction volumes [5][19] - The company is adapting to immigration policy changes that have created short-term headwinds, particularly in the U.S. market [6][62] - Future growth is expected to come from digital services and non-remittance products as core remittance growth stabilizes [62] Other Important Information - The company generated $148 million in cash flow from operations year to date, a significant increase from $60 million in the prior year [31] - Capital expenditures were reduced by 15% year over year, indicating a focus on strategic investments [32] - The company returned over $150 million to shareholders through dividends and share repurchases in the second quarter [32] Q&A Session Summary Question: Contribution of EuroChange acquisition to revenue growth - The EuroChange acquisition contributed approximately 2% to revenue growth in the quarter, exceeding initial expectations [36][38] Question: Impact of immigration crackdown on North America - There was no significant shift from retail to digital channels; both experienced a decline in transaction volumes [39] Question: Deceleration in digital transactions - The slowdown in digital transactions is primarily seen in U.S. outbound to Latin America, particularly Mexico [41][43] Question: Demand for stablecoin utilization - There is growing interest in stablecoin infrastructure, particularly in regions with currency controls, indicating potential for future growth [54][56] Question: Visibility into political headwinds affecting business - The impact of political headwinds is volatile, with fluctuations in transaction volumes observed [51][52] Question: Fraud losses in the quarter - Fraud losses were attributed to a duplicate payment issue during the implementation of a new payment network, but it did not significantly impact margins [68][70] Question: Changes in capital allocation strategy - There are currently no changes to the capital allocation strategy regarding buybacks versus dividends [86]