Sign in

You're signed outSign in or to get full access.

WU

Western Union CO (WU)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 revenue was $1.026B, down 4% YoY; GAAP EPS $0.37 and adjusted EPS $0.42, driven by North America retail softness, lower Iraq contribution, higher interest expense, partially offset by cost efficiencies and FX tailwinds .
  • Branded Digital remained resilient: revenue +6% YoY, transactions +9%; Consumer Services surged (+39% reported, +41% adjusted) on Travel Money strength and Eurochange acquisition .
  • 2025 guidance cut: adjusted revenue to $4.035–$4.135B (from $4.115–$4.215B) and adjusted EPS to $1.65–$1.75 (from $1.75–$1.85); operating margin maintained at 19–21% .
  • Versus S&P Global consensus, Q2 missed on revenue ($1.026B vs $1.044B*) and EPS ($0.42 vs $0.441*), while prior quarter Q1 beat EPS and missed revenue; Q4 2024 beat revenue and missed EPS (estimates from S&P Global)*.
  • Near-term catalysts: implementation roadmap for U.S. 1% remittance tax (effective 2026) to accelerate card funding and digital wallet adoption, and stablecoin-enabled treasury pilots to improve liquidity efficiency .

What Went Well and What Went Wrong

What Went Well

  • Consumer Services grew 39% reported and 41% adjusted YoY, led by Travel Money strength and Eurochange acquisition; CS segment operating margin improved to 22% vs 24% in Q1, sustaining strong multi-quarter expansion .
  • Branded Digital continued healthy growth: revenue +6% YoY, transactions +9%; account payouts now almost 40% of BD transactions, supporting higher margins and stickier cohorts .
  • Strategic distribution wins: UK Post Office moved from non-exclusive to exclusive, expanding Western Union’s in-branch coverage and incentives for postmasters .

Management quotes:

  • “Our diversified business model, resilient customer base, and keen focus on operational efficiencies highlight the flexibility of our business even in this difficult operating environment.” — CEO Devin McGranahan .
  • “We expect our travel money business to have another strong quarter in Q3… our adjusted EPS came in at $0.42.” — CEO Devin McGranahan .
  • “We returned over $150 million to our shareholders via dividends and share repurchases [in Q2].” — CFO Matt Cagwin .

What Went Wrong

  • North America retail softness and immigration enforcement headwinds reduced activity in U.S. outbound corridors (notably U.S.–Mexico), impacting both retail and digital volumes .
  • Higher interest expense and increased consumer fraud losses (duplicate payments on a new RTP network) pressured EPS and margins despite cost savings .
  • Iraq revenue normalization created tough YoY comps, depressing reported growth across consolidated and CMT metrics; GAAP effective tax rate rose to 24% vs 15% YoY .

Financial Results

Consolidated Actuals

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)1,058.2 983.6 1,026.1
GAAP Diluted EPS ($)1.13 0.36 0.37
Adjusted Diluted EPS ($)0.40 0.41 0.42
GAAP Operating Margin (%)17% 18% 19%
Adjusted Operating Margin (%)17% 19% 19%
Adjusted Effective Tax Rate (%)12% 10% 16%

Q2 YoY comparables:

  • Revenue: $1,026.1M vs $1,066.4M (down 4%) .
  • GAAP EPS: $0.37 vs $0.41 .
  • Adjusted EPS: $0.42 vs $0.44 .
  • GAAP operating margin: 19% vs 18%; adjusted margin: 19% vs 19% .

Consensus vs Actuals (S&P Global)

MetricQ4 2024Q1 2025Q2 2025
EPS Consensus Mean ($)0.41848*0.40702*0.44119*
EPS Actual ($)0.40 0.41 0.42
Revenue Consensus Mean ($USD Millions)1,026.491*991.044*1,044.247*
Revenue Actual ($USD Millions)1,058.2 983.6 1,026.1

Values retrieved from S&P Global.*

  • Q2 2025: Revenue miss and EPS miss vs consensus; Q1 2025: EPS beat, revenue miss; Q4 2024: revenue beat, EPS miss (estimates from S&P Global)*.

Segment Performance

MetricQ1 2025Q2 2025
CMT Revenue ($USD Millions)872.9 885.0
CMT Revenue YoY (%)(9)% (8)%
CMT Segment Operating Income ($USD Millions)159.3 167.7
CMT Operating Margin (%)18% 19%
Consumer Services Revenue ($USD Millions)110.7 141.1
CS Revenue YoY (%)27% 39%
CS Segment Operating Income ($USD Millions)27.1 31.6
CS Operating Margin (%)24% 22%

KPIs

KPIQ1 2025Q2 2025
CMT Transactions (millions)70.8 71.4
Cross-border Principal (reported, $USD Billions)25.8 26.7
Cross-border Principal (constant currency, $USD Billions)26.1 26.4
Branded Digital Revenue YoY (%)7% 6%
Branded Digital Transactions YoY (%)14% 9%
Branded Digital Share of CMT Revenues (%)28% 29%
Branded Digital Share of CMT Transactions (%)35% 36%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (GAAP)FY 2025$4.090–$4.190B $4.085–$4.185B Lowered (narrowed down)
Revenue (Adjusted)FY 2025$4.115–$4.215B $4.035–$4.135B Lowered
Operating Margin (GAAP)FY 202518–20% 18–20% Maintained
Operating Margin (Adjusted)FY 202519–21% 19–21% Maintained
GAAP EPSFY 2025$1.54–$1.64 $1.45–$1.55 Lowered
Adjusted EPSFY 2025$1.75–$1.85 $1.65–$1.75 Lowered
GAAP Effective Tax RateFY 202519–21% 19–21% Maintained
Adjusted Effective Tax RateFY 202513–15% 13–15% Maintained
Dividend per share (quarterly)Q2 2025—$0.235 declared payable June 30, 2025 Policy sustained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
North America retail and immigrationNA retail stabilized in Q4, but continued headwinds in Q1; U.S.–Mexico corridor noted deceleration; PPT rising as customers send more per transaction less frequently Heightened immigration enforcement; softness in U.S. outbound corridors; no material channel shift to digital; volatility across months Deterioration vs Q1; stabilization uncertain
Branded Digital growth and loyaltyBD transactions +13% in Q4 and +14% in Q1; loyalty relaunch in U.S. created modest revenue accrual headwind; payout-to-account growth >35% Q1 BD revenue +6%, transactions +9%; account payouts ~40% of BD transactions; negotiated lower account payout rates; loyalty headwind expected to subside H2 Still positive growth; mix shift to account payouts; loyalty headwinds easing
Consumer Services / Travel MoneyQ4 CS +56% YoY; Q1 CS down adjusted due to Argentina and media contract timing; Eurochange acquisition completed in April CS +39% YoY reported; Eurochange added ~2% to Q2 revenue; strongest seasonal in Q3 expected Accelerating with M&A and seasonality
Stablecoins and treasury modernizationLimited prior public detail; focus on diversification Actively testing on-chain settlement rails for treasury; opportunities for on/off ramp services; pilots in LatAm and Africa Expansion; operational pilots underway
AI initiativesCost efficiency program progressing; CAC/LTV improvements in digital AI assistant lowered CSR handle times >50%; QA sampling from <1% to >90%; HCL AI Force partnership; AI in treasury pre-funding Material operational efficiency gains
Fraud and riskNo major issues highlighted priorDuplicate RTP payments created consumer fraud losses; impact small but noted One-off issue; remediation ongoing

Management Commentary

  • “Overall consumer money transfer transaction growth was down 3%… cross-border principal growth was up mid-single digits on a constant currency ex Iraq basis.” — CEO Devin McGranahan .
  • “We see the new remittance taxes as an opportunity to accelerate our digital transformation and grow both the digital and wallet businesses in the U.S.” — CFO Matt Cagwin .
  • “We now have several hundred engineers participating with code completion copilots… driving productivity and quality improvements.” — CEO Devin McGranahan .
  • “Year-to-date, we were able to save $40 million, which brings our cumulative savings to more than $150 million.” — CFO Matt Cagwin .
  • “Post Office… exclusive partner in Post Office branches going forward… expand the availability of these services.” — Post Office and Western Union joint statement .

Q&A Highlights

  • Eurochange contribution: ~2% of Q2 revenue; full-year contribution originally contemplated at ~1%; acquisition deemed accretive .
  • U.S. remittance tax (1% from 2026): exposure limited to cash-funded retail (estimated <20% of total revenue); company accelerating card acceptance and digital wallet enrollment; minimal expected impact .
  • Digital and payout-to-account dynamics: BD transactions slowed U.S.–LatAm; payout-to-account slowed in key corridors (Mexico, Venezuela, Haiti, Guatemala, DR, Colombia, Ecuador) but still nearly 40% of BD transactions; margins supported by lower payout rates .
  • Stablecoin strategy: pilots for on-chain treasury settlement to reduce pre-funding and enable real-time corridor liquidity; exploring on/off ramps with partners in LatAm and Africa .
  • Fraud losses: duplicate RTP payments in early June created consumer fraud losses; non-material but acknowledged .

Estimates Context

  • Q2 2025 missed consensus on revenue ($1,026.1M vs $1,044.247M*) and EPS ($0.42 vs $0.441*), largely due to NA retail softness, Iraq normalization, higher interest expense, and fraud losses; margins held at 19% adjusted .
  • Q1 2025 beat EPS ($0.41 vs $0.407*), missed revenue ($983.6M vs $991.044M*), consistent with strong digital and CS offset by retail softness; Q4 2024 beat revenue ($1,058.2M vs $1,026.491M*) but missed EPS ($0.40 vs $0.418*).
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Mixed quarter: resilient margins and strong Consumer Services/Branded Digital growth offset by North America retail headwinds and Iraq comp drag; consolidated revenue and EPS missed consensus, and guidance was reduced — a likely near-term sentiment headwind .
  • Strategy execution: exclusive UK Post Office deal strengthens European retail distribution; Travel Money expansion (Eurochange) adds revenue and supports omnichannel footprint .
  • Structural enablers: AI deployments are yielding measurable operational gains (>50% lower CSR handle times, QA sampling >90%), and stablecoin treasury pilots may enhance liquidity and reduce pre-funding — medium-term margin support .
  • U.S. 1% remittance tax (2026) should shift funding to cards/digital wallet, limiting exposure to cash retail (<20% revenue) and potentially accelerating digital transformation in the U.S. .
  • Watch corridors and seasonality: Q3 seasonally strong for Travel Money; monitor U.S.–Mexico and broader U.S.–LatAm recovery trajectory, loyalty accrual headwinds abating in H2 .
  • Capital returns and balance sheet: ~$1.0B cash, ~$2.75B debt; leverage provides flexibility to sustain dividends and buybacks while pursuing tuck-in M&A; final transition-tax payment completed .
  • Near-term trading: sensitivity to immigration enforcement headlines and corridor-level demand; medium term thesis hinges on omnichannel competitiveness, CS growth, digital account payout mix shift, and treasury/AI efficiency realizations .