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WU

Western Union CO (WU)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue was $1.03B (flat YoY) with GAAP EPS $0.43 and adjusted EPS $0.47 as operating margin expanded to 20% on both GAAP and adjusted bases; prior-year GAAP EPS was elevated by a $0.40 IRS settlement benefit .
  • Results beat Street: adjusted EPS $0.47 vs. $0.43* consensus and revenue $1.033B vs. $1.025B*; management reaffirmed FY25 guidance, guiding revenue to the low end of the range but EPS to the upper end given cost discipline and lower share count, with headwinds from higher interest and tax .
  • Mix shifts: Consumer Services +49% (travel money/Eurochange, Argentina bill pay) and Branded Digital +7% revenue/+12% transactions offset a 6% decline in Consumer Money Transfer (CMT), pressured by North America retail corridors (notably U.S.-Mexico) .
  • Strategic catalysts: HSR waiting period for Intermex expired enabling integration planning; wallets scaled to 500k users; management announced a USDPT stablecoin and Digital Asset Network (launch target 1H26) and a “Beyond” strategy with a 3‑yr medium-term outlook to ~$5B revenue and ~$2.30 adjusted EPS midpoint by 2028 .

Note: *Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Margin execution: GAAP and adjusted operating margin improved to 20% (vs. 16%/19% LY), driven by cost efficiencies; CFO: “Adjusted EPS was better than our expectations at $0.47… benefited from our cost management discipline as well as fewer shares outstanding” .
  • Consumer Services outperformance: +49% revenue YoY on travel money expansion (Eurochange) and Argentina bill pay; CEO sees travel money “likely to approach $150 million in revenue in 2026,” up from nearly nothing a few years ago .
  • Digital momentum: Branded Digital revenue +7% and transactions +12%; payout-to-account now >50% of digital principal, reflecting customer preference for speed and convenience .

What Went Wrong

  • Core CMT softness: CMT revenue –6% YoY; North America region down 12% YoY on policy-driven migration headwinds; management highlighted U.S. retail corridor pressure despite stabilization signs into late Q3 .
  • U.S.–Mexico corridor weakness: “Lows in June,” some improvement by late Q3; Bank of Mexico data showed significant declines midyear with choppy recovery (transaction declines bottomed near –18% before improving) .
  • Non-operating drags: Higher interest expense (+15% YoY) and a higher adjusted effective tax rate (12% vs. 8% LY) weighed on EPS despite opex control .

Financial Results

Headline P&L and Margins

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$1,036.0 $1,026.1 $1,032.6
Adjusted Revenue ex‑Iraq ($USD Millions)$1,026.5 $1,017.4 $1,015.3
GAAP EPS ($)$0.78 $0.37 $0.43
Adjusted EPS ($)$0.46 $0.42 $0.47
Operating Margin (GAAP)16% 19% 20%
Operating Margin (Adjusted)19% 19% 20%

Segment Breakdown

SegmentQ3 2024 Revenue ($MM)Q2 2025 Revenue ($MM)Q3 2025 Revenue ($MM)Q3 2024 MarginQ2 2025 MarginQ3 2025 Margin
Consumer Money Transfer (CMT)$932.2 $885.0 $878.0 20% 19% 20%
Consumer Services (CS)$103.8 $141.1 $154.6 9% 22% 22%

KPIs and Operating Metrics

KPIQ3 2024Q2 2025Q3 2025
CMT Transactions (Millions)72.6 71.4 pipeline pipeline 70.6
Cross‑Border Principal (as reported, $B)$25.9 $26.7 $27.2
Branded Digital Revenue YoY %8% 6% 7%
Branded Digital Transactions YoY %15% 9% 12%

Results vs. S&P Global Consensus (Q3 2025)

MetricConsensusActualSurprise
Revenue ($USD Millions)$1,025.3*$1,032.6*+$7.3*
EPS ($)$0.43*$0.47*+$0.04*

Note: *Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Q2’25)Current Guidance (Q3’25)Change
Revenue (GAAP)FY2025$4,085–$4,185MM $4,085–$4,185MM Maintained
Revenue (Adjusted)FY2025$4,035–$4,135MM $4,035–$4,135MM Maintained
Operating Margin (GAAP)FY202518%–20% 18%–20% Maintained
Operating Margin (Adjusted)FY202519%–21% 19%–21% Maintained
EPS (GAAP)FY2025$1.45–$1.55 $1.45–$1.55 Maintained
EPS (Adjusted)FY2025$1.65–$1.75 $1.65–$1.75 Maintained
Effective Tax Rate (GAAP)FY202519%–21% 19%–21% Maintained
Effective Tax Rate (Adjusted)FY202513%–15% 13%–15% Maintained

Management added qualitative color that FY25 adjusted revenue should land at the low end, while adjusted EPS should be at the upper end of the range, reflecting cost discipline and share count tailwinds . Note: The company trimmed FY25 ranges after Q1’25; Q3 guidance is unchanged vs Q2 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1’25 and Q2’25)Current Period (Q3’25)Trend
North America macro/migrationRetail headwinds; CMT adj rev ex‑Iraq –2% (Q1); NA region revenue down 11% YoY (Q2) Ongoing U.S. policy pressure; U.S.–Mexico corridor weak in summer but stabilizing late Q3; NA region revenue –12% YoY Stabilizing from summer lows
Branded Digital growthRev +7–8%; transactions +14% (Q1) and +9% (Q2); digital = 29% of CMT revenue in Q2 Rev +7%, transactions +12%; >50% of digital principal via payout‑to‑account; digital = 29% of CMT revenue/38% of transactions Durable, mix shifting to account payouts
Consumer Services / Travel MoneyCS +27% (Q1) but adjusted down on Argentina/media timing; +39% (Q2), Eurochange closed in April CS +49% on travel money and Argentina bill pay; travel money now ~$100M run rate, aiming ~$150M in 2026 Accelerating with Eurochange
Intermex acquisitionAnnounced Aug 10; HSR in process (post-Q2) HSR waiting period expired; integration planning underway; maintain Intermex brand and leverage best practices Integration catalyst in 2026
Tech/AI & POS rolloutFocus on efficiencies; platform investments (prior commentary) New global POS nearly ubiquitous; adopting AI for development and customer service to unlock next phase of efficiencies Efficiency flywheel building
Digital assetsLimited prior disclosureAnnounced USDPT stablecoin on Solana and Digital Asset Network; 1H26 target; treasury pilots underway New optionality; early-stage

Management Commentary

  • CEO (strategy/mix): “We are diversifying… broadening our Consumer Services offerings… embedding a more efficient operating model to drive sustainable growth” .
  • CEO (digital progress): “Our digital business now accounts for over 40% of the principal we move around the world… over 55% of all… transactions are digital” .
  • CEO (corridors): “U.S. to Mexico… we have begun to see some recent improvements from the lows in June… Bank of Mexico data would also indicate some improvements” .
  • CFO (execution): “Adjusted EPS was better than our expectations at $0.47… benefited from… cost management… fewer shares outstanding… offset by higher interest and higher adjusted tax rate” .
  • Strategy/catalysts: HSR period passed for Intermex; “we are now excited to begin the appropriate integration planning” . Digital assets: “testing stablecoin‑enabled treasury solutions… on‑chain settlement rails… reduce dependency on correspondent banking” .

Q&A Highlights

  • North America retail and Mexico: Management sees lumpy but improving trends since midsummer; BofM data corroborated declines bottoming midyear with partial recovery; stability signs into late September/October .
  • Digital revenue vs transaction divergence: Double‑digit transaction growth driven by Middle East account‑to‑account partnerships (lower RPT), and aggressive industry new-customer promotions; revenue expected to lag transactions near term .
  • Travel money/Eurochange: Nearly half of CS growth in Q3 from Eurochange; organic CS still double‑digit; management more confident on 2026 ~$150M travel money revenue target .
  • Intermex integration and U.S. retail model: WU to maintain Intermex brand/locations/model; port best practices to Vigo and WU independent agents; dynamic/strategic pricing from Europe being deployed in select U.S. metros, broader rollout by 2026 .
  • Payout‑to‑account and wallets: Account-directed payouts are a secular shift; >50% of digital principal; 500k wallet users with strong engagement in receive markets (Argentina ~15% inflows; Brazil ~5%) .

Estimates Context

  • Q3 2025 EPS and revenue beat consensus: $0.47 vs $0.43* and $1,032.6MM vs $1,025.3MM*, respectively. Management reaffirmed FY25 guidance and indicated revenue likely at the low end but adjusted EPS at the upper end of the range .
  • Consensus target price was ~$9.63* around the period; with the “Beyond” strategy and USDPT/Digital Asset Network announcement, estimate revisions may tilt toward CS/digital growth and margin durability, while NA retail assumptions may remain conservative pending corridor normalization .

Note: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat with mix shift: Modest revenue beat and a clearer EPS beat driven by 20% adjusted margins; CS and digital offset NA retail softness .
  • Guidance intact; bias within ranges: Revenue toward the low end, EPS toward the high end for FY25 per CFO—signals tight opex control amid macro headwinds .
  • Digital mix and payout‑to‑account expansion are structural: >50% of digital principal paid to accounts; expect sustained transaction growth with monetization lag near term .
  • Consumer Services emerging as a second engine: Travel money scaling ($100M run-rate in 2025; ~$150M targeted 2026) and broader CS portfolio support diversified growth .
  • U.S. retail stabilization would be a catalyst: Monitoring U.S.–Mexico; integration of Intermex and strategic pricing rollout could accelerate U.S. retail recovery into 2026 .
  • Optionality from digital assets: USDPT stablecoin and the Digital Asset Network add medium‑term efficiency and revenue opportunities without near-term P&L dependency .
  • Capital returns remain meaningful: Q3 capital return >$120M; YTD >$400M, supported by ~$1B cash and investment‑grade leverage (gross 2.6x; net 1.7x) .

Appendix: Additional Data and References

  • Consolidated income statement, balance sheet, cash flow and segment detail for Q3 2025 are included in the 8-K exhibit and press release .
  • FY2025 outlook unchanged vs Q2; reconciliations and non‑GAAP definitions provided in release .
  • Prior-quarter benchmarks: Q1 and Q2 2025 press releases for trend context .