Western Union (NYSE:WU) highlighted progress in its Evolve 2025 Strategy and digital initiatives during its third-quarter 2023 earnings call. The company reported a 7% YoY increase in revenue on a constant currency basis, totaling $1.1 billion, and an adjusted EPS of $0.43. CEO Devin McGranahan noted that global retail transactions have returned to flat YoY, while the digital business saw a 3% rise in revenue, exceeding targets.
Key takeaways from the call include:
- Western Union's digital offerings have seen significant advancements, including the relaunch of its prepaid card in the U.S., the development of a digital wallet in Europe and South America, and partner-based lending solutions.
- The company plans to consolidate its services into a single app, with the process set to begin in the first half of 2024.
- Western Union has appointed Ben Hawksworth as its new Chief Technology Officer, while Rodrigo Garcia has assumed the role of President of North America.
- The company reported varying regional performance, with the Middle East, Africa, and South Asia seeing a 42% growth in revenue on a constant currency basis, driven by policy changes in Iraq. In contrast, the APAC region saw a 7% decline in revenue on a constant currency basis.
- The company generated $519 million in operating cash flow year-to-date and had $1.1 billion in cash flow equivalents and $2.3 billion in debt.
Western Union's digital initiatives, part of its Evolve 2025 Strategy, have led to increased customer acquisition, transaction growth, and revenue growth. The CEO pointed to the success of the new go-to-market strategy and improvements in the retail business, including the opening of 100 concept stores in Europe.
The company also announced advancements in its ecosystem pillar, with the relaunch of the prepaid card in the U.S., the development of a digital wallet in Europe and South America, and the piloting of partner-based lending solutions. The digital wallet provides financial services such as multicurrency bank accounts, P2P transfers, and a Visa (NYSE:V) debit card.
In terms of executive appointments, Ben Hawksworth has taken up the position of Chief Technology Officer and Rodrigo Garcia is now President of North America. The company remains optimistic about its strategic direction, with improved transaction trends in both its retail and digital businesses.
Regionally, Western Union reported a 10% decline in revenue in the CIS region on a constant currency basis, while transactions remained flat. However, there was sequential improvement in key markets such as Spain, the UK, and Germany. The Middle East, Africa, and South Asia region saw a 42% growth in revenue on a constant currency basis, with transaction growth of 9%, driven by a policy change in Iraq. Latin America and the Caribbean region experienced an 8% growth in constant currency revenue and 9% growth in transactions, led by Argentina, Ecuador, and Venezuela.
In terms of financials, the company generated $519 million in operating cash flow year-to-date and had $1.1 billion in cash flow equivalents and $2.3 billion in debt. The company expects adjusted revenue, excluding Argentina inflation, to be in the range of flat to positive 1% for 2023, with adjusted margin in the range of 19% to 21%. Adjusted EPS is projected to be in the range of $1.68 to $1.75.
The company also discussed its investment process, focusing on maintaining a good return on marketing spend and balancing technology investments with a low double-digit return on investment. They are working on improving transactional experiences, launching a new loyalty program, and enhancing communication and marketing efforts to drive retention.
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