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WU

Western Union CO (WU)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $984 million (GAAP), down 6% YoY as reduced Iraq contribution weighed on results; adjusted revenue ex-Iraq was down 2% YoY, and management reaffirmed full‑year 2025 guidance (GAAP revenue $4.09–$4.19B; adjusted $4.115–$4.215B; GAAP EPS $1.54–$1.64; adjusted EPS $1.75–$1.85) .
  • EPS dynamics: GAAP diluted EPS was $0.36 and adjusted diluted EPS was $0.41. Versus Wall Street, Q1 EPS was roughly in line (consensus $0.407*) and revenue was a modest miss (consensus $991.0M*), reflecting Iraq normalization and Americas retail softness .
  • Branded Digital remained a bright spot: revenue +7% YoY (+8% adjusted) with transactions +14% YoY; CMT transactions rose 3% as Europe delivered double‑digit retail transaction growth (+10%), offsetting North America weakness .
  • Consumer Services revenue grew 27% YoY (GAAP), despite adjusted revenue down 3% YoY on Argentina bill pay softness and a delayed media contract; management expects sequential acceleration as FX/travel season strengthens and Eurochange integration contributes .
  • Catalysts: guidance reaffirmation, operational efficiency savings ($30M in Q1; $140M to date, ahead of plan), accelerating payout‑to‑account growth (~35%), and the Eurochange FX acquisition in the UK (supporting Travel Money scale) .

What Went Well and What Went Wrong

What Went Well

  • Branded Digital momentum: “eighth consecutive quarter of double‑digit transaction growth,” with transactions +14% and adjusted revenue +8% YoY, underpinning digital mix and margin profile .
    Quote: “We are proud to have achieved our eighth consecutive quarter of double‑digit transaction growth for our Branded Digital business…” — CEO Devin McGranahan .
  • Europe strength: retail transactions +10% in Q1; region revenue +5% with double‑digit transaction growth across EU & CIS; debit acceptance and controlled distribution drove share gains .
  • Cost execution ahead of plan: $30M saved in Q1, $140M cumulative toward the $150M redeployment program (two years early), with more savings expected to fall to the bottom line in 2025 .

What Went Wrong

  • Iraq normalization a material headwind: revenue growth rate negatively impacted by ~6pp YoY; adjusted operating margin fell to 19% from 20% last year largely due to lower Iraq contribution .
  • Americas pressure: North America transactions down ~1.5%, U.S.–Mexico corridor softness across retail and digital; LACA intra‑region volumes slowed amid changing migration patterns .
  • Consumer Services adjusted revenue down 3% YoY on Argentina bill pay softness and delayed media contract; seasonal FX/travel effects diluted Q1 but expected to improve into Q2 .

Financial Results

Headline metrics – sequential comparison (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$1,036.0 $1,058.2 $983.6
GAAP Diluted EPS ($)$0.78 $1.13 $0.36
Adjusted Diluted EPS ($)$0.46 $0.40 $0.41
GAAP Operating Margin (%)15.9% 17% 18%
Adjusted Operating Margin (%)19.1% 17% 19%

Year-over-year comparison

MetricQ1 2024Q1 2025
Revenue ($USD Millions)$1,049.1 $983.6
GAAP Diluted EPS ($)$0.41 $0.36
Adjusted Diluted EPS ($)$0.45 $0.41
GAAP Operating Margin (%)18% 18%
Adjusted Operating Margin (%)20% 19%

Segment breakdown

MetricQ1 2024Q1 2025
CMT Revenue ($MM)$962.0 $872.9
Consumer Services Revenue ($MM)$87.1 $110.7
CMT Segment Operating Income ($MM)$187.6 $159.3
Consumer Services Segment Operating Income ($MM)$18.6 $27.1
CMT Operating Margin (%)19% 18%
Consumer Services Operating Margin (%)21% 24%

KPIs

KPIQ4 2024Q1 2025
CMT Transactions (millions)75.0 70.8
Branded Digital Revenue YoY (%)7% 7%
Branded Digital Transactions YoY (%)13% 14%
Cross-border Principal YoY (constant currency) (%)6% 6%

Guidance Changes

MetricPeriodPrevious Guidance (Feb 4, 2025)Current Guidance (Apr 23, 2025)Change
Revenue (GAAP)FY 2025$4.090–$4.190B $4.090–$4.190B Maintained
Revenue (Adjusted)FY 2025$4.115–$4.215B $4.115–$4.215B Maintained
Operating Margin (GAAP)FY 202518–20% 18–20% Maintained
Operating Margin (Adjusted)FY 202519–21% 19–21% Maintained
EPS (GAAP)FY 2025$1.54–$1.64 $1.54–$1.64 Maintained
EPS (Adjusted)FY 2025$1.75–$1.85 $1.75–$1.85 Maintained
Adjusted Effective Tax RateFY 202514–16% 13–15% Lowered
Dividend per ShareQ1 2025 / Q2 2025$0.235 (Q1) $0.235 (Q2) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 2024)Current Period (Q1 2025)Trend
Branded Digital and payout-to-accountQ3: Tx +15%, payout-to-account +36% ; Q4: Tx +13%, payout-to-account +30% Tx +14%; payout-to-account +35% growth Accelerating scale
Retail transformation & POS/debitQ3: cloud POS rollout, debit acceptance; speed gains Europe retail Tx +10%; continued POS/debit execution Improving execution
Americas macro/migrationQ3: LACA disruptions across corridors ; Q4: NA slow; U.S.–LACA mid‑20s of CMT NA Tx down ~1.5%; US–Mexico softness both channels Stabilizing with headwinds
Eurochange & Travel MoneyQ4: FX business expansion (EU) Eurochange acquired; Travel Money could become largest CS business Expanding product
Cost redeploymentQ3: $60M freed YTD, program progressing $30M saved in Q1; $140M to date; more savings to bottom line Ahead of plan
FX volatility & hedging—Detailed hedging approach, customer behavior impacts Managed risk

Management Commentary

  • Strategic focus: “We continue to focus on accelerating our Evolve 2025 strategy and providing accessible financial services to the aspiring populations of the world…” — CEO Devin McGranahan .
  • Americas update: “North America transactions were down about 1.5%... [U.S.–Mexico] volume declined in both retail and digital… very little acceleration of channel migration; channel mix relatively consistent” — CEO .
  • Europe performance and distribution: “Europe accelerated… first time we saw double‑digit transaction growth… owned and concept stores approaching 500; Eurochange adds >200 owned locations and 100+ partner sites in UK; Travel Money segment could be the largest CS business by year‑end” — CEO .
  • Cost program: “We were able to save $30 million [in Q1], bringing total savings to $140 million… on pace to exceed our $150 million target, 2 full years ahead of schedule” — CFO .
  • Tax rate: “Adjusted effective tax rate was 10% vs 16% last year, largely due to discrete benefits” — CFO .

Q&A Highlights

  • North America retail and channel mix: Slowing evident in U.S.–Mexico corridor for both retail and digital; no material channel migration; Tx down ~1.5% in Q1 .
  • Guidance and Eurochange impact: 2025 guide includes Eurochange (~1% revenue lift), accretive in 2025; macro/migration assumptions embedded; outlook difficult but line‑of‑sight to guide .
  • Holiday timing effects: Ramadan/Easter timing shifted into April; seasonal dynamics muted early Q2; underlying trends stabilizing, especially in NA; principle per transaction up mid‑single digits in NA .
  • FX approach: Hedging top line across major currencies over 2–3 years; customer behavior can shift with MXN moves; accounting gains/losses on settlement cash possible .
  • Cost savings allocation: With Iraq revenues lower, more cost efficiencies will drop to bottom line in 2025 than recent years .

Estimates Context

  • Q1 2025 vs consensus: EPS $0.41 actual vs $0.407 consensus* (slight beat); revenue $983.6M actual vs $991.0M consensus* (modest miss). EBITDA $219.3M actual vs $232.2M consensus* (below). Drivers: Iraq normalization, Americas retail softness, offset by Europe strength and digital growth .
  • Forward look: Q2 2025 consensus at the time was EPS $0.441* and revenue $1.044B*, with management cautioning Iraq’s Q2 2024 contribution ($34M) would be a headwind year‑over‑year .
PeriodEPS (Actual)EPS Consensus*Revenue (Actual)Revenue Consensus*EBITDA (Actual)EBITDA Consensus*
Q1 2025$0.41 $0.407*$983.6M $991.0M*$219.3M*$232.2M*
Q2 2025$0.42*$0.441*$1,026.1M*$1,044.2M*$232.9M*$251.4M*

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Digital momentum intact: Branded Digital transactions +14% and adjusted revenue +8% YoY; payout‑to‑account growth (~35%) supports stickier cohorts and higher long‑term margins .
  • Europe offsetting Americas pressure: Double‑digit transaction growth and controlled distribution (owned/concept stores, debit acceptance) are driving share gains and better retail economics .
  • Cost program ahead of plan: $140M cumulative savings toward $150M target (two years early), with more likely to flow to EPS in 2025; a lever supporting guidance floor amid revenue uncertainty .
  • Guidance reaffirmed: Full‑year 2025 ranges maintained; adjusted tax rate lowered (13–15%), aiding adjusted EPS conversion .
  • Near‑term watch items: Iraq headwind in Q2 comps; North America retail stabilization pace (U.S.–Mexico corridor), and Argentina bill pay softness impacting Consumer Services .
  • Product expansion catalyst: Eurochange acquisition and Travel Money build‑out in Europe/Asia should lift Consumer Services revenue and margins seasonally over Q2/Q3 .
  • Dividend continuity: $0.235 per share declared for Q2 2025, consistent with Q1, supporting cash return stability while the business reallocates costs and executes tuck‑in M&A .