The Western Union Company (WU) 30 Jul 242024 Q2 Earnings call transcript

Good day, and welcome to The Western Union Second Quarter 2024 Results Conference Call. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Tom Hadley, Vice President of Investor Relations. Tom, please go ahead.

you. Thank we we company's will call, results, Quarter discuss then and take will today's Second the XXXX On your questions. accompany under tab that found after slides this webcast and The can the at call. westernunion.com will the and Relations Investor remain available call be .

have operational press statistics tables our provided been Additional supplemental in with release.

and to Cagwin. for release in call include filings being is could the recorded, our comments concerning the earnings differ today Devin on Western in call our with me CEO, language and Today's McGranahan, statements. the that the statements. Please to Securities Union's including Commission, materially XXXX and refer forward-looking forward-looking from cause Joining factors the additional Exchange actual results is our Form the cautionary CFO, Matt XX-K and information

some we items do call, accounting not accepted the will conform principles. that generally During discuss

to the GAAP X-K our reconciled most under westernunion.com as have in We well to as the items attached earnings Form our Investor section. those Relations website, release our comparable measures on

will Executive . Officer, to turn Devin our Chief the I McGranahan. call over now

XXXX afternoon, Quarter Western focused position. continue improving Union a implement growth we welcome Results Conference reported to quarter Union's market revenue as Second Today, on of XXXX Evolve returning and strategy our to another Call. Western Good competitive we to Financial

money this the we the durability the in transaction two results highlights . Consumer that performance grew quarter's transactions X the continued the trends improvements and customer quarters. demonstrate on the mid-single-digit we have have working. quarter, excluding last have years, seen agent been we for a Iraq, and of continuation driving growth made. of This efforts at Over experiences last transfer our meaningful improvements X% in our are

is since growover have For period, time growth quarters consecutive the excluding we context, XXXX. of mid-single-digit transaction COVID first the X seen this

of future believe to consistent the of the is the our health continue best growth sustainable that and transaction indicator business. We

the spread to we revenue and between maintaining growth. reducing progress momentum transaction this make to in transaction our quarter, growth addition continued In

to have points towards a As closing XXX priority. XXX basis this goal of we gap is discussed, previously our long-term

consumer money with approximately compared the XXX between the retail spread quarter excluding improvement. Iraq, growth business revenue total points For improved to leading and transfer, the growth when adjusted our we first by basis transaction

to the The are adjusted time way Iraq. since now the of our to in Consumer quarter sustainable, profitable businesses, and that the our was highlight growth double-digit revenue well confidence This for and the on we our we positive of trends business growth when transaction revenue gives both achieving continue XXXX spread us in revenue revenue report to first milestone growth retail to transaction as segment. our digital returning solid narrowing excluding Services

reflecting the quarter, our X% decrease on $X.XX a revenue For basis. reached adjusted an billion,

the Quarter positive $X.XX to adjusted Excluding Iraq. for Iraq, is Second Earnings the at and revenue a our came time which share in ago, since XXXX. profits from revenue meaningfully or operating from in down relative benefited higher year strong per growth first $X.XX

call. our our this discuss an and later provide Matt results will detail outlook financial update more on XXXX in in

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banks days countries to complete XXX real-time across take to or Additionally, more over transaction, provides world. Western the while can near payouts Union multiple a

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growth top Investor to at our priority overall is line the business our a is XXXX returning As key of we discussed revenue to and digital growth the organization for double-digit Day, company. essential driving

have of increasing properties effectively globe. the in traffic improving around our year, top-of-funnel the Over the our cost effectiveness by digital been marketing past we

take hold and month XX% we year-over-year. U.S. final our These sites example, an the begun to have to the visits saw changes in as quarter, of up

improving addition our meaningful and the journey funnel we funnel, progress the of in also -- rates. traffic driving at journey the conversion to In customer have simplifying top made

creation. have customer As branded part process, we that of simplified profile digital the

conversion rates for a to These increase view. Quarter that have lapped to harder and transaction transaction from have customer improvements a and in phase moved have required double-digit complete the we led Second our growth even a in modular a transaction We modernized achieved a interface to XX% growth single-page user comparison in steps funnel the it as multipage a transaction double-digit contributed reduced quarter much year. our the the in of have last this we to

variants machine improvements and help learning In success steer pages. in continued page of we layouts the highest degree real time in addition traffic to run in drive to those quarters. algorithms which testing our landing have algorithms marketing and begun multivariant test traffic also the should using and messages, conversion, improvements These with to coming

price-sensitive there cohort and concern At our very look pleased to bonus report better start we at performing transactions we the to efforts, dilute not our or XXXX of some the offer thus quality we meaningfully materialized. customer, would If and cohorts has continue seekers performing existing better improvements than with steady customer I of meaningfully level only that see than per cohorts XXXX concern acquire performance the that XXXX acquisition am and was efforts. XXXX.

charts screen the to post our performance acquired customer and very similar represent cohorts, on specific We charts the per these most of chose acquisition. charts The trend. performance see X-month show but recently the XX-month allow transactions you to a X-

center turn our has As Australia discussed been of business. the digital I our efforts to around at have before,

the technological high single digits. of our declining Since of from that are new first creating shrinking was with a standpoint digitized new the X X% the goal market revenue way. feel the we have ago. user app a a at and and we best-in-class our is platform, time launch, of our At were iterate launched next-generation and This on highly launch roughly experience, transactions is to in where years digital well continued I the we we

expect XX% of highest point to go-to-market Australia it as the the countries. some and to back has than conversion we our a grew has XX% of in anniversary year in among revenue APAC mid-XXXX. close with in quarter, we the and half now pricing growth CAC spread new we country our recent our XX to with Australia most transactions at Australia the in continue digital launched we some strategy initiatives significant that of the anywhere percentage any other ratios digital higher LTV In see region,

that world All for as we of percent achieve us parts have across believe XX-plus to And row. news durable a our improvements they and branded in we changes funnel quarters X marketing to further and is retention. forward, the have I conversion The significant the believe effectiveness, in are we opportunity these still for customer good digital enabled of improvements. transaction that continue growth many move sustainable

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options network and Our customers. for goal our account lower cost with speed, reliability, provide to transparency our is payout

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regardless to of and Our options funding broadest goal channel. customers' meet of needs the payout is building by array our

would and I discuss the the like of the have drivers been within we businesses bill of previous years. take how talked Consumer minute retail last money calls, payments to Lastly, over about Consumer couple Services segment. largest our X and a In growth Services to have order biggest

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we solid quarter, continued order in retail our from season. Europe travel and the see is robust In to business ForEx in growth a money benefiting

our add expand services will we of distribution money we controlled As strategy owned traditional and additional stores, concept to transfer cross-border offering. our products and

in or retail and only expand the in services bill dozen to customers, our of around a coming world, nearly improve list our payments offer to ForEx accessibility not we We continue add for currently that footprint. expect the years. but convenience These and countries economics the also retail

services As our for to the the with continue their accessible world, access providing aspiring we to we financial to look lives. of of the our to populations they to will ways services provide fulfill and customers for financial need products look mission

on we ahead, about initiatives. optimistic opportunities are the and strategic our we market delivering making our Looking remain progress

across with pleased revenue a and businesses, our to business digital we and as trends by expect are driven underlying improved continue the improving our We retail result. of our transaction line trajectory top both

achieve team the confident XXXX remain that the our and right goals. mindset right capabilities, right to the the we I Evolve have right strategy,

to over joining for will I financial call turn you call our Thank to detail. now results discuss Matt in more today. the the

revenue and look sharing ]. X% our I was Devin, everyone. XXXX was Second Iraq you, afternoon, which to good results bit [ billion, Adjusted to Quarter and $X.XXX the down more Thank due Rover a outlook. our on forward financial

versus in several Iraq's is the indicated we year, Evolve Second percentage XXXX, positive million $XX revenue for launched strategy. Iraq adjusted uncertain. This whereas XXXX, we from revenue first been Iraq affected $XXX revenue Second earlier would which been decline slightly and adjusted have X negatively by the anticipated both . In points, the in when quarters excluding since XXXX in As the of this time our we earned periods, revenue of Quarter than Quarter lumpy from year. has we million past

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grew branded business our in business. led digital growth business, retail and continued X% X% Now CMT transactions by turning in and the our money excluding digital to of stabilization business. in quarter label white Iraq, our momentum Consumer transfer continued our

of up the Quarter was revenue with growth XX%. transaction X% in Branded digital Second adjusted

have quarter growth. to carried revenue and double-digit of quarter pleased another solid positive the the over momentum with from transaction first are growth We

have now X sustained against tougher transaction growth for double-digit even quarters, consecutive We comparisons.

between the continue suggested spread quarter, increased will in growth calendar the going As narrow shift and the was This to by Quarter. growth the we we slightly rates last revenue forward. believe spread and driven largely and holidays, Second transaction

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retail to Moving business. our

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in margins segment our Services Quarter, new the services was us and which a In Consumer customers. is our Second lower of result for investing sequentially products

company As expect gain at to or improve better be than these and the average we margins. to products margins scale,

during expense our we to $XXX program, progress to million announced make program, Day. we Investor our X-year continue which switching redeployment our Now on

we as our structure. well efficiencies as manage $X In incurred the cost our million Quarter, invested in and of redeployment Second continue costs we

we to in So far million year, we XXXX. which taken this action, expect up have free over $XX

up This in addition to the in is $XX freed we million XXXX.

am that X opportunities are have even efficiency left our effectiveness. into years, both to and of now months our for Day and Western we I being X-year improve achieved confident Investor meaningful After Union We at our X/X goal. more XX have commitment

related which operating cash IRS cash over million $XXX Tax Act, negatively refundable we our $XX tax to our flow sheet. million paid which partners, $XX and almost impacted related is $XX generated flows, a liabilities Year-to-date, to payout to to U.S. settlement account turning of in highest to to related IRS of Federal made the was proposed Now our the deposits prefunding our potential balance X of million areas. and growth million by of

and the from year the half have Capital remained half of and expenditures agents in were of we're XX% structures. million performance-driven the in on almost first signing bonuses to last upfront we areas approximately right lower $XX the investing shifting as vigilant in commission year, large first our

I owners $XXX million in pleased in million $XXX returned that with dividends repurchases. our $XXX am share also year-to-date, to paid have being and million we

cash continued and to balance a $X with maintain sheet We billion have $X.X equivalents strong and cash debt over of billion. of

has ratio or with believe basis, X.Xx strong. capital leverage to at ample net which and investment-grade a potential remained and gross rating. us our credit maintaining X.Xx flexibility on and provides we while we're Our M&A return

outlook. our our moving of based performance macroeconomic outlook for in we on the remainder our changes assumes Now no Today, the conditions. This on Second material the to confidence and outlook. in our XXXX reconfirming are year, Quarter

billion. we of adjusted in to reminder, $X.XXX billion revenue be the expect a to As range $X.XXX

$X.XX. expected And the margins be are in the of expected operating Adjusted range be finally, range of to adjusted XX% to in EPS is to to XX%. $X.XX

the the year. our phasing excluding continued for year, think we expect in revenue, you steady rest of Iraq the about to As have adjusted for of the remainder the improvement

revenue $XX between million per As and $XX Iraq and expect revenue million $XX included QX XXXX of Iraq, forward somewhere of million going a from we reminder, quarter. from

that during fourth as XX% were margins our expect past X XX% confident our seeing years be to making level evolved same XXXX in strategy. Evolve our have compressed as invested well the To with strategy. trends we are towards we are the this than year. not we Additionally, margins outlook in as lower quarter first We do our in progress the the to our XXXX the of to are we recap, half operating the

Thank today, take the for and operator, questions. ready joining we're you call to

Q&A to roster. We momentarily the will compile pause

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to know don't I Matt, if you any add want .

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question Darrin next to Research. Our Wolfe Peller us comes from from

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in margin I I there's in ask it margin plan? and come front. And et but considerations margin the on with Half was versus services, Second the callouts some Iraq wanted marketing, know range, Second cetera. how the consumer on I cadence? know Quarter to did your any

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next Our comes Vasu from us to question . Govil from KBW.

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from Andrew Schmidt comes us Our next Citi. from to question

on marketing. just First digital

starting is that marketing? it point. marketing digital Just about you're about curious feel of the a current as more in spend do level? digital put results, some good seeing good investment to history the Now time you money Or

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put highlighted behind are create I money Australia, driving forward. And will And that as so those . in we like opportunities program more it. we

tailwind? material In in your interesting. comments Got comment end been retail the it. kind to on to sort want space, on the current the activations were we've trend specifically. this particularly and retail growth to on is Or the just create the supportive environment. Just more globally? temprature back Do take the of broadly white you you it I agent . rationalization your go U.S. to then line? that something of think of up more a seeing markets Does pick curious the more the Yes, And in as that's

great Yes, question.

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So total is count agent the metric moved idea that the matters. to the that from we've locations is that metric again productive matters

we get how our distribution We've is a focused distribution, own partners, right pyramid lot and controlled our our independent stores. strategic which also concept across agent partners, our our on stores our

team forward. in driving is America think I you really is what program that the see North

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Our comes to Chiodo Tim next us Suisse. from question from Credit ] [

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to from next Our comes question Jason of us Kupferberg Bank from America.

the the like about in impacting in half. . Does spread you digital remarks, prepared and first saw holidays just more and revenue for I think between calendar transaction just spread you digital second had go the on back to we quarter? the some side that? X% the And elaborate shift talk growth. on Can that the mentioned

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between So of disconnect a a bit little those. this moved between QX the X Eid of and year. QX

holiday quarter QX. bit So of in the a Muslim that little shifted of a the the disconnect caused is end at

belief of talked the advance goal earlier, we our XXX immediate basis points. our talked at that to the is that continue prepared intermediate-term remarks, will year. the to about As towards on XXX end we Devin

it progresses. the move So as year continue will to .

need you Okay. just it turn said stable, XXXX? the kind know of next to then year-over-year. on follow-up it was flattish to that And revenue year to X% growth growth. get target positive I retail Does a transaction for

there. our accelerate business. we our branded to our There's have believe business, We as digital well multiple opportunity both white as levers retail label.

its and that board, levers the to opportunities, think be in as positive places doesn't I other we across require well. on the have there's X% So to there's own, to room because retail get

if But we this the year some actually to our leap progress advancements you upside actually leap is quarter-over-quarter to there didn't do so continue make out, quarter you retail quarter. pull believe year have made if we last current

next Autonomous. from Our us from to comes Suchoski Ken question

X% digits, by I looks wanted about excluding revenue physical retail mid-single over quarter. growth this it about business, to FX-neutral ask declined the estimates, our I And Iraq. like think year-over-year

increased quarter. X.X% was think that year-over-year. in last transactions, maybe with I retail . And then line ex-Iraq

coming just us X how over a the wanted those to could if I you those might metrics for So numbers. sense trend give confirm quarters. was I And wondering

Ken, calculating. thanks to are transactions the than for the you're question. closer X retail

what business label disclosed, to white a backing closer number but the there a little because we the the both into digital in expect our last and to business in have going next retail label and do year. and continued remainder of mentioned you're it's in year I included we progress branded the into throughout You've that's -- off, the way we flattish. do white But question,

you On answer. the the are right to much impact, revenue closer

a on digits. impacted a -- to Okay. looks And holiday, that that it I'm mid-single like it not that's is I how the physical driving think Anything guess, guess, all, maybe so going quarter-over-quarter, it bit I we that down there know curious just first ex-Iraq came quarter Or call just, about sort of ended pricing retail that? follow-up I one, out sure a pricing quite at but on should if forward? . then

retail Yes. We've in major our movement not quarter-over-quarter had pricing.

same still that. label it's think the I white diluting

digital are label as retail business well our RPTs than white lower business. as meaningfully know, you our branded As

So think assumption mix it's a white label. making and I on issue the there you're

I think as it's relatively may last are last or the quarter-on-quarter. someone same quarter, asked actually asked RPTs have you the quiet flat quarter

next comes us EI-Assal Barclays. Ramsey from question Our from to

Argentina was comment basis on this was currency for been impact I XXX digital the inflation about before. in you there line of while, add wondering to quarter. you'd revenues as you little had back. could like It X point the branded a if though, recall, item It's and looked a a there past,

what half we like And terms importantly, that do does macro expect just what I . what in we changed more was curious of the look down? second the What quarter. -- should So in line. in

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are Going forecasts of forward, currency our agnostic. foreign all

for not it's happen I to working if to real what's tell So hard here. tomorrow me knew, might be I you going

talked and just Got cadence just retail that in curious . Me, the that side, ahead. and expect Yes. for we what it. out those update on products months should rolling of some Resend you've about, then Remember And an the maybe products the timing on namely the Quick

So as a Remember transactions us we Quick from portion remember, significant Resend, which who Me, transacted have you before. are launched our customers retail derived retail know, with you of first if our

through point-of-sale . We So for We expediting then went the the of Europe our going begin year, North And west. experience and point of that been rolling beginning of quarter better customer efficiency it launched in parts and in for that customers. in then a America. gains each them expanding rest our in on our our agents starting have makes through experience America. across rest sale process, the the first the the now world of North out at legacy of

$X up to that impact the is at see, As million, almost the starting you growth can XX% up quarter-over-quarter. of show in transaction

that year, expect have the network to experience. of by of this we and So roll this globe out rest it full of the penetration year. we'll end across through the

to comes question from next BMO. us Hone Our Rufus from

your all think differences you're to . wanted cohort. Is something ask XX do seeing that your you're in transactions Slide you sustainable I presentation improvement customer showing across about that just is regions? the where how any per And you're in higher the geographies? XXXX And seeing across

new we long-term very of with and have higher They of attracting PPCs. to higher program. we're that TPCs that customers it is payout have account to goes So and higher which think, customers, retention. our sustainable, improvement, quality It percentage the has higher also a

is, those thing Me digital of platform, Remember other our as and We've a same Quick conduct adopted Resend. to we practices with easier retail on transaction. is on much customers repeat some time allowing The talked the which about same

Quick improved the significantly. functionality has Resend So

come you're customers than So in do past. seeing and transactions repeat velocity a we have back higher at the

region. it expect, could you As varies across

strongest Our in performance America. North is

coming is on Asia strongly.

Europe call some we the in license digital what the the Middle of improve. had requirement. nature master the a agent We've because there continues the model which East East, is of in given struggles Middle and dynamics model to the digital

changes tougher through to in many parts little the that in a of world. it it's of is So rest model than improvements and push the other

Bryan question X from We come question. have Bank. Keane time that And Deutsche final will for from

And Bank Bank the World about industry. guys you growth in same to might want expecting expect the drivers? be those to way World remittance Do industry the and the what ask accelerate the you that feel Just accelerate? to

So we're been industry. positive the seeing for remittance everything has

is inflation the base, others. customers of had proportions a on tends the As adverse social than effects we customer effect the if greater year and end some know, our significant might at an which of have to effects the asked our be economic of inflation on lower you pole of you concerns totem on had they us about ago,

that can decreasing. largely in most of increasing, in you TPCs not see the have been where have seen out comments as not PPCs play have in remained We consistent prepared the world

have in been East customer our associated of world and construction with in been markets in Arabia the So steady across some resilient that's and in face challenges UAE has have with inflation in on economic the the places. going trends Saudi proven like most and accelerated the of other Middle migration the and exceptionally important the places

comments or XX generally the future, we view thing call my least the in XX some at consistent generally other disrupts macro positive have industry. as positive a But to outlook environment, war it. for large foreseeable global So great in disaster on or lest it, indicated, months, a the we other the next some are

is well . other your more banks? the that at that just about are the point traditional you share is your that thinking the that follow-up, you And loser competitors? digital then versus Who Is guys a look now? as share if gaining, bank data now Or

Bank the and World only. digital banks. retail MTOs is again, So It and not digital is

a So dynamic you've on. going got that's large

What I got got switching is would within losers. general banks are You've net retail the share to from MTO to digital. customers say banks and MTOs, switching you've in customers

years who not segment this players, now are into theirs This $XXX fairly begin to more more last a at they people then realize fueled second, industry target players, customer into and $XXX of specialists, marginal a business. it's volume over had the capital-intensive couple struggling generally when remittance their been lot and is particularly digital this of is or And not corridor our undercapitalized central traditional to transaction. the

more have pay in interest happen, a expensive migrating rate high And make in when in to where to environment. even to start you prefund out you to account particular, it it becomes order

share and less smaller, banks players the So are are losing scale share, struggling the losing

Thank you for Call. Western day. today's joining great Quarter Conference have hope a you Results XXXX We Union Second