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WU

Western Union CO (WU)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue rose 1% YoY to $1.06B as Consumer Services (+56% GAAP, +23% adjusted) and Branded Digital (+7% GAAP, +8% adjusted; +13% transactions) offset a lower Iraq contribution; adjusted EPS was $0.40 and GAAP EPS $1.13 (benefited $0.75 from a non‑cash tax item) .
  • Operating margins improved YoY: GAAP 17% and adjusted 17% (vs 15%/16% LY), driven by marketing and tech efficiencies; CMT revenue fell 4% YoY but transactions grew 3% .
  • 2025 outlook introduced: GAAP revenue $4.09–$4.19B; adjusted $4.115–$4.215B; GAAP op margin 18–20%, adjusted 19–21%; GAAP EPS $1.54–$1.64, adjusted EPS $1.75–$1.85; adjusted tax rate 14–16% .
  • Capital returns: Board declared a $0.235 dividend for Q1’25; management also highlighted a new $1B repurchase authorization and 9% dividend yield on the call (authorization referenced by CFO) .
  • Consensus estimates from S&P Global were unavailable at time of analysis; results vs Street and any beats/misses will be updated when available.

What Went Well and What Went Wrong

  • What Went Well
    • Consumer Services acceleration with new products (media network, retail FX) and continued RMO strength; Q4 CS revenue +56% GAAP (+23% adjusted) and margins +200 bps vs Q3 to 11%. CEO: “third consecutive quarter of positive adjusted revenue growth… bolstered by 15% adjusted revenue growth in Consumer Services” .
    • Branded Digital sustained double‑digit transactions (+13%) and high single‑digit revenue growth (+7% GAAP, +8% adjusted); seventh straight quarter of double‑digit transaction growth .
    • Efficiency gains: adjusted operating margin improved YoY to 17% (from 16%); management cites marketing and technology efficiencies; $60M 2024 savings within the $150M redeployment plan, now expected to complete two years early .
  • What Went Wrong
    • CMT top line contracted: Q4 CMT revenue −4% YoY (flat ex‑Iraq on adjusted basis), despite +3% transaction growth; NA region revenue −5% YoY; management cited U.S. migration pattern impacts .
    • Iraq normalization a headwind: lower Iraq contribution reduced consolidated revenue growth by ~3 ppt YoY; CMT adjusted ex‑Iraq revenue was flat YoY .
    • CS margin lower YoY as businesses scale: Q4 CS operating margin 11% vs 27% LY; segment operating income −34% YoY; management emphasized scaling path over near‑term margin maximization .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($MM)$1,066.4 $1,036.0 $1,058.2
YoY Revenue Growth−9% −6% +1%
GAAP EPS ($)$0.41 $0.78 (incl. $0.40 IRS benefit) $1.13 (incl. $0.75 tax reorg benefit)
Adjusted EPS ($)$0.44 $0.46 $0.40
GAAP Operating Margin17.9% 15.9% 17%
Adjusted Operating Margin19.0% 19.1% 17%
Vs EstimatesN/AN/AN/A

Segment performance

Segment ($MM)Q2 2024Q3 2024Q4 2024
CMT Revenue$965.0 (−10% YoY) $932.2 (−9% YoY) $938.8 (−4% YoY)
CS Revenue$101.4 (+21% YoY) $103.8 (+32% YoY) $119.4 (+56% YoY)
CMT Transactions (YoY)+4% +3% +3%

KPIs and mix

KPIQ2 2024Q3 2024Q4 2024
Branded Digital Revenue Growth (GAAP)+5% +8% +7%
Branded Digital Transactions Growth+13% +15% +13%
Cross‑Border Principal YoY (as reported)−6% 0% +5%
CMT Operating Margin19.8% 20.2% 18%
CS Operating Margin11.0% 8.7% 11%
Branded Digital % of CMT Revenue24% 25% 25%
Adjusted Revenue ex‑Iraq YoY (Consol.)0% +1% +1%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (GAAP)FY 2025—$4.09B–$4.19B New
Revenue (Adjusted)FY 2025—$4.115B–$4.215B New
Operating Margin (GAAP)FY 2025—18%–20% New
Operating Margin (Adjusted)FY 2025—19%–21% New
GAAP EPSFY 2025—$1.54–$1.64 New
Adjusted EPSFY 2025—$1.75–$1.85 New
Effective Tax Rate (GAAP)FY 2025—20%–22% New
Effective Tax Rate (Adjusted)FY 2025—14%–16% New
DividendQ1 2025—$0.235 per share declared Declared

Earnings Call Themes & Trends

TopicQ2 2024 (Q‑2)Q3 2024 (Q‑1)Q4 2024 (Current)Trend
Branded Digital growth and spreadRev +5%, Txn +13%; first positive adj. revenue ex‑Iraq since 2021 Rev +8%, Txn +15% Rev +7%, Txn +13%; 300–400 bps txn‑rev gap discussed Improving scale; narrowing spread over 18–24 months
Retail POS & execution——~70K active cloud POS locations; goal: all relevant agents by YE25 Accelerating rollout
Consumer Services expansion+21% YoY +32% YoY +56% YoY; driven by Media Network, retail FX, RMO Accelerating growth
Regional trendsNA +1% YoY; MEASA +16% NA −3% YoY; EU improving; MEASA −32% NA −5% YoY; EU transactions +9% Europe improving; NA softer
Migration/regulatory——U.S. migration policy slowdown: lower frequency, higher principal per txn; limited revenue exposure near‑term Elevated uncertainty
Cost programRedeployment costs; margins under pressure Redeployment & Russia costs noted $60M 2024 savings; $150M target 2 years early Ahead of plan
M&A / Wallet—Announced Dash agreement (Singtel press 10/24) [27 not cited]DASH and Mexico wallet pending approvals; no Q4 contribution Strategic tuck‑ins to accelerate wallet

Management Commentary

  • “We concluded 2024 with a solid performance, marking our third consecutive quarter of positive adjusted revenue growth, excluding Iraq… and the seventh consecutive quarter of double‑digit transaction growth in our Branded Digital business.” — Devin McGranahan, CEO .
  • “Adjusted revenue grew ex‑Iraq… Adjusted operating margins in the quarter were 17%… Fourth quarter adjusted EPS was $0.40… For the full year… adjusted EPS of $1.74.” — Matt(hew) Cagwin, CFO .
  • “We substantially passed [our POS rollout] goal and now have roughly 70,000 active locations… Our goal for 2025 is to have all relevant agents globally on this platform by the end of the year.” — CEO .
  • “We expect to complete our 5‑year commitment 2 years ahead of schedule, achieving our target of $150 million this year.” — CFO .
  • On digital revenue/transaction gap: “We believe it will stabilize over the course of the next 18 to 24 months.” — CEO .

Q&A Highlights

  • Outlook drivers and range: High‑single to low‑double‑digit Branded Digital growth and 10–15% Consumer Services growth underpin FY25; upside from retail stability and faster digital .
  • Consumer Services pacing: Media Network seasonality boosted Q4; FY25 guide embeds conservatism despite new product launches .
  • Digital unit economics: Persistent transactions > revenue growth as mix shifts to account payout; profitable given no retail commission; medium‑term gap narrows as legacy book reprices .
  • North America softness and migration: Some deceleration tied to U.S. policy/election; management expects lower frequency/higher principal; exposure to “new‑to‑retail U.S.→LACA” only ~2.5% of revenue .
  • Capital allocation: New $1B buyback authorization alongside 9% dividend yield; balance sheet flexibility maintained despite year‑end debt timing .
  • M&A/Wallet: DASH (Singapore) and Mexico wallet deals pending regulatory approval; no contribution in Q4 .

Estimates Context

  • S&P Global consensus estimates were unavailable at the time of analysis due to data access limits; as a result, we cannot quantify beats/misses for Q4 or the FY25 outlook in this report. We will update with Street comparisons (revenue, EPS, EBITDA, and estimate counts) once S&P data can be retrieved.
  • Actuals used above come from the company’s 8‑K/press materials and call transcript .

Key Takeaways for Investors

  • Mix shift continues: Branded Digital and Consumer Services are the growth engines; CMT revenue is stabilizing ex‑Iraq with steady transaction growth .
  • Margin path intact: Efficiency gains offset Iraq normalization; adjusted operating margin guided to 19–21% for FY25 while CS margins should rise with scale .
  • 2025 setup: Initial guide implies flat to modest adjusted growth ex‑Iraq (midpoint ~+1% ex‑Iraq), with H1 facing Iraq comps; watch digital revenue growth vs transactions for signal of monetization progress .
  • Retail modernization is a tangible lever (70k cloud POS, corridor focus) to support retail stabilization and cross‑sell CS; execution pace is accelerating .
  • Policy/macro watch items: U.S. migration policy could weigh on NA in near term; management frames exposure as limited to a small revenue slice .
  • Capital returns remain robust (dividend declared; new buyback authorization), supported by normalized tax cash outflows post‑2025’s final deferred tax payment .

Appendix: Additional Relevant Press Releases Around Q4 Window

  • Western Union and Penny Pinch launch international money transfers (Caribbean) — distribution/product expansion .
  • urpay partnership in Saudi Arabia (largest wallet, 6.5M customers) — strengthens digital footprint .
  • Earnings release announcement logistics .

Sources:

  • Q4’24 8‑K and Exhibit 99.1 press release (financials, segments, KPIs, outlook) .
  • Q4’24 earnings call transcript (strategy, guidance color, POS rollout, Q&A) .
  • Q3’24 press release (trend context) .
  • Q2’24 press release (trend context) .
  • Additional press releases (partnerships) .