WU - Earnings call transcript Q2 2021 | The Western Union Company

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Operator

Good day, and welcome to the Western Union Company Second Quarter 2021 Earnings Release Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, today’s event is being recorded. I would now like to turn the conference over to Brad Windbigler, Head of Treasury and Investor Relations. ahead. go Please

Brad Windbigler

that today's Relations quarter On XXXX will the after westernunion.com The discuss then can call. and Thank found the and be results call, will and second at slides questions. your XXXX will the for this our company's call we webcast Investor you. under take we accompany tab financial and available outlook remain

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we items discuss call, During some principles. not that conform generally accounting the will to accepted do

reconciled in website, section. the our GAAP on Investor measures the under westernunion.com, items have those most comparable We Relations

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Hikmet Ersek

the results our business. progress to Thank joining for us afternoon this quarter you, Brad, second and thank and review of you all our

which outlook growth, we achieve performance sequential to revenue a in with improvement on Our second comparison technology to XXXX impacted track strengthen as quarter to and and was trended Profit platform to strong, our the strategic continue make as reflecting digital favorable market-leading prior by quarter the COVID-XX trends was investments are financial we expected capabilities. year period, our adjusted underlying pandemic. in and

recovery. to Our the resurgences related delta business risk resilient and potential uncertainties ongoing the economic remained from global despite variant this poses COVID-XX to

customers of our unchanged. cross-border, businesses money Our us confident remain our our strategy business. serving services. deepening partnership in consumer leader strong growth in build We engagement payments, and and expansion as to with customer be them we ability array movement WU.com products by in access to to institutions financial exceed of providing well cross-currency, to business $X a our wider digital base ecosystem, our WU.com a The remains a consumers, in position XXXX, and of look billion supported and continued revenue and digital

invest as to partner, and $XXX they in on rely Baupost and we Union exchange believe are Group businesses clients. which Partners is Solutions Business business moment. to Baupost value first, development, good to Business deliver Goldfinch hedging organizations the business transaction are the for these to today. definitive a another million. positioned ecosystem and medium-sized foreign world We the strategy more Today, our agreement we The and just Goldfinch to consumer and sell global will well But important that, on announced I'd we to separately Small and around innovation the in payments, Solutions Partners our we like highlight announced a reached strategic and that, Western Solutions, to Business discuss Group

The XX and last consumer single significant provides our our platform of our the our foundation X% Union remains total company of a key benefit to global global planned be on area partnership omnichannel importantly, more will of cross-border will strategy. enable increasing Google global companies Union identify and and during sale with the addressable a engagement. cases like, XX, and incremental of in STC strong telecom Western opportunities. and investment us way of modern, focused months serving regard agents market, pricing, penetration unique experience built, companies requires digital support Continuing customer now user payments progress ended XXXX, this advanced and Business by Pay, total our including increasing branded customer most financial customer our but And June experience having on institutions Solutions, a ecosystem and like capable adaptable focus migration, market, technology platform which partners. and we in approximately These multiple that cloud Pay customers, the our for through was a payments company expanding Spare. use the Fintech other Western on be developments the marketing like, revenue us. With segments, we recent banks revenue efficient, and our fully well This machine platform are for automated improve learning of business

new coverage, our locations. and XX,XXX year-to-date network our We a focused signings enhancing also network basis, retail expand on our quality. by our market-leading remain agent will approximately cost by improving On

reflecting We commitment XX agents' have optimize our with contracts year-to-date, also over commissions. renegotiated to

global of Finally, XXX countries in payout capabilities transaction XXX we approximately volume real-time capabilities, is was in available global over account XX% real-time. continue to Over with enhance payout now delivered countries. our which account our

plan later as to multicurrency and integrated our debit excited card account, this couple of Turning through European International bank WU-branded back in money to a transfer solution our about countries strategy, Bank are consumer Western Union pilot ecosystem year. our we

will there. how Longer strategy. Our and significant initial our learning for term, focus opportunity consumer from and be will testing then we we expand we see evaluate ecosystem

well travel. well money positioned on in a market. the transfer, with such its are which beyond growing customer as segment, needs trusted brand, is customer platform a community, digital not the migrant many to provider base, and and trusted We execute Union insurance, Western to unique large and often it's lending opportunity. global served this large, global has And

fully focused on read profitable closely social encourage Western ESG values environmental, purpose. we are governance, report would learn our in business, our XXXX to advance growth strategy remain our ESG, our impact released strategy, Union. to our and to XXXX June goals, I committed ESG we to you at the are our our of or and implementation and more While which about and aligned also

are the and activity are and quarter Now the my of This recent economies more of particularly was the spike where and in government recovery are turning travel the in second levels evident labor agents, effects shortages tour from ongoing Europe pandemic, U.S., results. mixed. from economic sections pace confirmed impacted We economic policies recovery back of was where cases market being and and that pricing while to market business lifted, the leaders by delta outside is the stability varying in customers reopening local see being in variant. the

customers transfer most a funding for with convenient omnichannel choice a our for around can and comprehensive money way set remarkable receive so we the offer they in that of options, globe, and it's Fortunately, our payout them. with offering

for and strength growth markets and total on CXC the in XX% and revenue and million and and in continued Digital retail a improvement benefiting Europe. over XX% Western sequential of XX% quarter, in continued principal. of XX%, improving digital first employment per the demand XX% for Digital grew growth and trends cross-border transactions, PPT principal like transactions were trends of XX% underlying or revenue XX% constant business. with received to and currency continued principal up XX% currency our growing business XX% the from regions central highs quarterly economic for revenue, on from grew U.S. each over revenues we company revenues the aided quarter CXC During growth quarter and transaction the constant Total with transactions $XXX grew basis. a by the comprised CXC in segment. year-over-year in revenues saw or with with in support basis,

strong driven average during active WU.com beginning appears downloads growth mobile margin by height were with money XX% app wide grow expected, a we the over in digital after continue by results pandemic. the of monthly transfer COVID-XX and exceptionally healthy performance users. growth in transaction see lead are principle to XX%. XX%, WU.com growth As ease to over

trends customer favorable positive year-over-year and Our per customer. in with transaction retention, by trends engagement principal customer remained

achieved and continue of only revenue remain disruption tools, and on enhancing up We pandemic ecosystem customer and with including Customer to prior quarter new in growth base growing futures experience over rollout and launch experience westernunion.com, options in the customer year Chile the expand that market in but European second earlier. cycling also Peru the the growing for the Know focused year-over-year provides supports in I new from partnership strategy mentioned reminders. Retail We the consumer Walmart across our sequentially. continued transaction with the Improving not US. is Your the the electronic additional growth, the in customer period ramping the in a and strong

segment international money direction in most verticals. the the Business trends in with payments segment the X,XXX and US. strong Walmart stable move continued business across bill and Our now Trends stores in hedging order Solutions are services transfers, domestic and the available new right nearly and money in to improvement in across

usual Union until Business to Solutions, While transaction closes. the we have as it announced, will agreement a business Western be definitive divest

overall, strong team of the Now, I'm to we Business pleased for the new Solutions announcement today. excited the the Western support from management Solution Business with are Union ownership. receive

cross-border to conditions building strong and our we healthy digital execute with our of quarter WU ecosystem it in are with branded a retail review ability detail. growth our with results, resilient market company and second now our channel, opportunities. our financial include growth to confident Additionally, the to and strategy, in I'll more long-term channel, our our over incremental with platform results unique multiple additional serving pass agile products positions well Raj, for enterprises to

Raj Agrawal

and you, Hikmet, afternoon, good Thank everyone.

performance. Let defined XXXX the plan, then, me our And summarize quarter outlook. of second I on termination the more will and color our Solutions divestiture, year first finally, planned benefit full Business provide

of which second compared CXC XX%, revenue offset XX% quarter quarter grew increased year. billion basis currency. from for segment, a CXC transfer, the constant $X.X moderated to revenue and this XX%, money In sequentially, mix. and quarter transfer, America currency, expectations, transactions Moving led between benefited in represents supported CIS. growth money cycled In percentage Europe to growth a XX% growth three in constant hedges from CXC digital XX% quarter as was currency, impact impact lower or North translation, digital transaction by and of the constant $XX on with points transactions, per transaction transactions line partially a reported basis and by the by Currency mix reported the basis particularly flat increased or approximately of growth prior growth a spread on in retail on by or million the the the XX% we which revenue revenues results, partnership net our and high category. with second transaction revenue improved through reported

the money Principal from currency. in transfer and higher XX% onwards remain from quarter the as incremental digital in basis increased profit which constant the of of driven services WU.com grew see by basis transaction for grew last year, per XX%. transactions Total reported revenue digital in We to moderated Digital revenues experience Digital experienced growth behavior. constant WU.com and or a principal our on currency the continue growth due on in as environment we quarter. was and quarter. and or remainder was XX% tight expect partnerships cross-border growth principal across Both, include in digital on cross-border XX% or year. Transaction XX% XX% or WU.com Total the revenue, continued business. the adding XX% will partnerships the demand retail Globally, Trends transfer. WU.com mix CXC up somewhat growth average we up and and currency a revenue money continued fairly CXC stable. PPT, spread to business during consumer currency. transactions X% strong show, XX% constant reported to significantly, or changes to as PPT retail to our increased digital exceptional XX% pricing second expected, revenue, our constant

much now expect the of we base. will are this moderating larger off the we trend While a continue year, growing remainder

cross-border reported X% in led Kuwait a spread of reported the constant XX% on transactions grew transfer. of both Moving between in currency East, partnership XX% on to constant by revenue constant Russia of North led basis of the partially growth the revenue currency constant in a revenue on The Africa revenue and money in France XX% region region Russia. basis, a increased driven to transaction business and and increased results, by growth currency Qatar. revenue the money partnership increase quarter, by growth X% transfer transaction while regulations or XX%. Constant represented impact digital or the limit quarter. and domestic currency, currency Saudi Kingdom, transaction digital and CXC XX%. Cuba between followed XX% transaction U.S. constant offset currency revenue U.S. Arabia The the operate was with growth in in and and reported regional outbound, Middle by partnership by growth spread on was The on declines increased and Australia. quarter. revenue greatly quarter Constant the digital business United XX% total on in our Asia region growth by the the difference the in Revenue increased Chile, to course driven current from South in currency the the growth Revenue continuing resulted that U.S. America constant currency ability Revenue prior Mexico. the or business Business U.S. transaction and principal approximately X%. benefiting constant remained basis domestic CIS Europe in growth transaction positive the revenue basis and constant growth. revenue transaction the Revenue the Solutions driving currency and with exceeding on between favorable with constant diminished revenues or constant a Other revenues and in revenues company XX%. APAC increased growth currency reported year. currency payments and represented revenue X% XX% in of The growth a retail orders. Argentina broad-based Philippines on but revenue contributor. average by total region, in region constant transaction Philippines or on the a currency reported trends in basis primarily Latin Much recovery increased was currency, constant U.S. XX% Revenue comparisons the in America Caribbean XX% trade. money Other of across higher X% consist in in led the on of revenues the X% segment and Transactions currency represented of growth X% amount increased up XX% the primary quarter. and company the was quarter. the still in growth retail Ecuador and bill XX% led was

and XX.X% period. compared margins operating margin was profitability. in X% prior XX. Turning quarter consolidated to in GAAP to the The the year

to and Compensation-related curtailed timing continues strategic contributors the and as to reflect how primary quarter year. and period. operating margin in excludes While the operating slight year COVID-XX the of to consolidated certain adjusted margin level quarter. prior and was company last XX.X% expenses. the the impacted expenses in investments spending last both expenses XX.X% operating margin the The and in year periods margin restructuring M&A in and year's the compared decrease current decrease consolidated prior Adjusted in were expenses marketing in the investments technology the

the impact million a prior million in quarter profit on of Foreign exchange the of in benefit operating and a $X current $X had period. year hedges negative

in that XX.X% current Moving operating prior period, restructuring period. are expenses to segment margins segment year to for Note and compared both other operating and XX.X% prior the margins. BXC in M&A year exclude margins was margin last charges. the year's included

partially total earlier the the effective earnings, quarter in pre-tax year to the Other was compensation-related The quarter the quarter compared differences effective jurisdictions. in by high in compared announced Share adjusted composition decrease largely adjusted the of prior $X.XX in company's increase to in or changes partially including prior and rate year margin. between strategic most to margin period. tax effective operating due while driven impacted retirement the was to and technology. EPS low reflects adjusted the margin debt year and prior Earnings the in retirement XX.X% our XX.X% $X.XX expenses the divestiture tax was rate, tax in revenue per to the XX.X%, by period, CXC investments compared during $X.XX to XX.X%, by the to sale expenses. excluded higher year rates the GAAP margin decrease The discussion. addition in lower growth, and with comprises EPS, the expenses quarter of EPS increased a decrease two to net are debt compared to company items on GAAP was tax in EPS in operating company Given due in to prior GAAP Both The in in noted investment in an quarter. period. adjusted was that year related XX.X% margin gain EPS the in was of an the Business the the the and operating The operating $X.XX tax Solutions GAAP period, total while prior offset quarter Western in in revenue, by the period, $X.XX M&A of expenses, GAAP sale increased the XX.X% was and benefit these XX.X%, tax expenses in the expenses, in we period. offset segment gain Business to the increase the a year benefits effective Union was from compensation-related X.X% The rate compared Solutions driven in the investment that compared operating was factors marketing margin operating income, was today. same and impact on prior

million the of The quarter, share at dividends cash repurchases. and expires Turning returned operating $XX million quarter was XXX year-to-date debt the billion flow share of million. approximately had to in quarter, to share $X.X the remaining cash activities authorization, billion. shares. which $XXX We million shareholders million and we year. $XX in of second cash outstanding was expenditures Capital and of in we $XXX were $X million. December end of from the sheet, our flow our in $XXX quarter end At in million balance consisting repurchase under count $XX And this had

of Hikmet XXXX sales in Business in highlighted The is to gain in a As announce proceeds, tax previously, million Solutions. Union divestiture of expected million we $XXX in the excess result price generate of today and of net Western sale. on $XXX

early subject working the on with of stages net and to proceeds is regulatory expected adjustments. entire European transferring by Our is closing and and majority in the business policy to requisite consultations, council is The are late conditions. current two proceeds, transferring close certain based estimate in tax the transaction to capital subject the and approvals XXXX other Both business customary XXXX. and work closings regulatory

acquisitions, Following of allocation transaction, evaluate market which with strategy drive growth, the in to use we dividends, and on technological include will priorities, based established in proceeds capabilities organic our opportunities the accordance support growth our business share and including options repurchases. capital and that for conditions the reinvestment

last Solutions and As $XX generated June of reference months million, million, segment the XX a EBITDA point, XXth, and operating million revenue, respectively. Business during the ended $XX $XXX profit XXXX,

for with over We to outlook material line quarters' this billion changes the with XXXX, $X conditions revenue we business in that our for macroeconomic related the outlook no COVID-XX in expectations forecast to our Turning achieve expectation revenue pandemic. improvement growth, assumes progress provided macroeconomic including will digital year. our the prevailing today reaffirmed the as current in moderate

full-year expense our than financial $XXX expected the basis, believe expenses our on annuity pension fourth pre-tax the an more recorded termination be termination EPS to it related a the and for over GAAP approximately of good million time lowering remaining plan the quarter the business. approximately provider. P&L. Business other in as of expenses affirmed With is non-cash also M&A by updating of $XX sale XX, The while recognition to plan by GAAP outlook is costs to transition June will to in the funded a we $X.XX Solutions on an plan accelerate and basis million metrics our plan to pension We of adjusted

which or We pension difference continue on costs. a constant approximately operating Argentina inflation. digits expected approximately adjusted now be in to anticipate our grow margin to on excludes effective mid-teens to the $X.XX in $X revenues to M&A the a be range to and We to attributable the adjusted expenses to of expected $X.XX. year the mid-single EPS EPS full to be of digits expect also which mid- range to a margin GAAP expected GAAP be operating will impact XX.X% costs. the is year M&A is GAAP still for is range basis. basis with $X.XX, single XX% now in of termination be tax plan rate will of XXXX and the is Adjusted expected basis, currency and reflects high on a GAAP impact

into let assumption revenue of provide we me with quarters. the results As progress the line progression macroeconomic think forecast. remaining over global our the may for context for in environment move in some year, we how with Starting underlying second revenue, economic the half improvement the the current prevailing moderate includes

related discussed to to the potential remain, uncertainties especially and economic However, poses as earlier, emergence this Hikmet risks of recovery. delta the variant the broader global

moderate to from have quarters the last overall than progress, although we our to second the lower the year. grow-over company the current improvement in will economic seen quarter due impacts in prevailing be forecast, rates we similar business growth As expect

continue digital stable a retail business. along billion this in We revenue to generate expect $X with year, to relatively over

our financial margins, we full-year the that adjusted higher conditions on To expect XX.X%, outlook second and margin of to this approximately delivered levels. Business we will by other achieve outlook segments revenue of up, wrap year and second track With year. rebound a solid for the the continue will margin Solutions are primarily quarter we above to driven performance Lastly, our expected improve. expect macroeconomic respect global to for the the be as half year

to today. laid of Solutions also on the focus are Hikmet And sharpening out. now Business take business, the strategy our are our that call you joining Thank questions. operator, With the we ready divestiture planned we for

Operator

you. Thank

Please [Operator from session comes Wolfe the Today's Research. Instructions] question-and-answer Darrin begin ahead. go Peller first now at will question We

Darrin Peller

the on it for guys. it to on. think Hey by guys, wanted side. want your guys to the business of to you I Business I what Thanks sale enable to you core congrats, align touch Solutions will – the really way, looks on CXC like

Raj Agrawal

Thanks.

Darrin Peller

at continues reopening of sustainable then, I nice which basis did as obviously well, the see give grow simple here, accelerate, rate just you our you as you the digital was CXC out a base. narrowing look end figure I well. we though, you the the When can side to get the actually the we're by to do When do – retail are to transactions where was growth are retail it mean to the reopening? correction. from especially think get And more we from business, year? that on asset dynamics, the the if us of we see versus on as being now spread of stack where reminder trying as into saying guess element like, just And where a we

Hikmet Ersek

Yes.

Let give the the overall me sense of business.

with are is The customers we really of using. the very rates Also really well. high. the extremely First are performance all, are of retention expansion happy doing Digital business.

already enterprise we our really And which believe label on going have We that. that, that's us billion $XXX our we million Now also we XX are by achieved. And with And year-end. partnerships, in to white business. westernunion.com like exceed $X have addition brings continue. we to countries business,

especially that competition. right, you If if compare you look with from base, that what at

really base on growing a strong huge year. are We very

places that. to retail on is volatility less, back, in is retail coronavirus pleased especially doing where is coming open, due really it's And well. I'm So where

It's Our coming pump back. very is business doing well.

of the business, here And have stable. that's have the of business, ability then news us return relationship. So dotcom that also, gives here. also retail that on really customer The the on it's good adding the stability resilience digital – business we the retail the customers, with

want about with business in loyalty to us have something as increasing strategy. this allows Europe the And westernunion.com X Do to test, that? in products customers really us ecosystem really the Union here the our customer on only our now our gives for you Western and We customers add starts is a great you that future dotcom and saw, additional offer million with base Bank. year to

Raj Agrawal

your course spread, fast of some as digital of are over the on the Darrin, was really the wider last growth question the from Yes. as our of spread business, driver simple year. which is white growing label partnership around it the the we generally digital over key

that where to had over period of CXC total the ahead quarter, the we a continue at expected of that we ahead be of do look dramatically I second that about where about were. consumer slightly that going business, is narrow business of retail, I – think time. in terms XXXX, of total where would is this we're shifted compared you to second the the year, the point it overall quarter way We're obviously, is, it's impact. has business the narrow. the it So in if And that think we to of of because rest think

only second of in quarter, in we XX% Now is quarter was the XXXX, of second the it back about about have consumer revenues. mid-teens. And digital, it

business a a you going good really the So provides think us for we've story shift I good more where the consumer heavily a business, that's And forward growth profile going is and forward. oriented significant had if will. in digitally,

Darrin Peller

and they That's really is But up transactional quick think, in standpoint, for one retail versus digital the from of actually users, can that when retail minute growth for look you and point, kinds helpful. be your profile. the X that the think, for a a been Difficulty] at just is from which many monetization? helping the how holding terms side you WU.com the one progress where million It's I the engagement past, they've made can is on we guess from touch retail versus levels users years the the now the just Thanks and what are underscores big see data level XXXX from I side in number that transactions I now [Technical you've of of on those again. where side, think, that I the investment

Hikmet Ersek

Yes.

on they westernunion.com, the us longer. retention the think are open countries are increasing more we've The an and using account. I customers in been more really once levels

big customer. the and is know know, you transfer your to that As you money have difference retail westernunion.com money between transfer

on have acquire that location do new the in transactions what customers. That's don't And additional we the transaction as And like, thing our westernunion.com. locations, customers The have You is are money a KYC. is in And to recently is new huge see and many them retail PPT to to well. we XXX,XXX account. also out with get helps of wanted countries lot But did customer at higher register the the to have to go you most also the are a step biggest preregister recently have that paid locations countries. advantage customers out higher, electronic customers send changed more really segments globally in principal the with to PPT. also an locations, We a one a that, XXX paid I cash. we know, to to here they that

business is fact, In very this strong. growing

the almost share, gaining really market it's and are now. million business $XXX on We

Raj Agrawal

run Account-to-account, revenue. rate, that's million is pure annual account-to-account $XXX on a

Hikmet Ersek

$XXX million annual run rate business.

forget the countries. the to so retention really customers. here. revenues we – So we question, already who your are are And from you customers don't is have the are XX new could adding been coming But customers yes, high, the see in also,

success We are to We new opened our and they're also adding growth. sending countries. digital recently money from on countries XX

Darrin Peller

Thanks great. That's Right. guys.

Hikmet Ersek

Darrin Thank you,

Operator

Tien-Tsin with Huang go next JPMorgan. Please today comes our from ahead. question And

Hikmet Ersek

Tien-Tsin. Hi,

Tien-Tsin Huang

afternoon, Excellent to connect Hikmet. here. Good as guys. to good afternoon always. Good Hi

servicing with consumer-based just understand to idea on selling money to your that is or to clarify totally ecosystem Business with alluded focus Hikmet, stated consumer Is payments that to I point. I clarify table? still strategy still in Solutions. Is in here. the the statement more Just, strategy. movement focus businesses as on strategy wanted the wanted the as Just But the

Hikmet Ersek

So Tien-Tsin great question, that. on

we unique And of Union. serving First leader has one it's which really strategy a one cross-currency our changed, invest cross-border, our the strategy, do in Western right? multiple money platform serves a on all, cases. use of right, to multiple advantage platform, We cases, big so, not heavily use being transfer,

cases. go automation, case is to CXC, the really did white continued our to to platform, to for expand. the our that it's serves there, And this BXC, transaction BXC, cloud-based us, systems, label we continue is As in continue the which to use huge all expansion technology, investment investments advantage multiple processing happen. you look going CXB, systems, going the have a at and been

customers to As Pay. mobile customers telecom retailers Google I earlier, strategy happen to or we like to have to and like, expand continue companies, to STC that's like Then have have happen. we going And that's that. mentioned we like companies going do – Amazon, continue technology telephone Pay,

businesses. are have most their institutions. importantly, also So we do customers financial And

that biggest have white you Russia, in the know, labeling we very the are [indiscernible] business institutions serving we white financial our As about – our two big labeling that also system. And happen. continues with XX to successful more than globally a

our not institutions, So with a summarize our but has that's changed. strategy like is, and retail customer adding in strategy, I Union unique that, customers, That tech with very I serving westernunion.com brand, businesses, company customers our Western financial successful believe. if existing platform. with segments And also new

Tien-Tsin Huang

Yes.

want Okay, understood. I make to just sure…

Hikmet Ersek

XXXX remember and opportunity, Day, focus to CXB happen. our also $X showed Investor right, market way, the by I trillion Tien-Tsin, continues BXC segment that and in And is

Tien-Tsin Huang

performing it getting can my side. that got your that. don't was about Okay. – back And me expectations? retail mind, that Any often, you see to clarification, Yes, with there? on Thank is that How relative Investor thinking what Day follow-up, the if I to comment, you just so quick for I that. has have if Walmart better, thanks go you do to good to quite it. ask that's how surprises for

Hikmet Ersek

Tien-Tsin. surprises, No

out locations. rolling X,XXX are sorry, roll our in did all products – out with did roll now We we we out

not money transfer, international transfer, have money transfer. money only domestic We

payments products We aware. out are bill rolled are also the customers we aware, ramping It's at the associates are and Walmart And locations. up.

Union I the Walmart see locations transactions. think with it. ramp-up now We good the at like we Western

Tien-Tsin Huang

the for for you a Thank lot Great. update. that. Thanks

Raj Agrawal

Thanks, Tien-Tsin.

Hikmet Ersek

Tien-Tsin. Thanks

Operator

our of And from with next ahead. Kupferberg Bank question go America. comes Jason Please

Jason Kupferberg

was afternoon. you up Day, one, that, the of I the or Investor Since back going Good brought so start guys. before the which just you six Hikmet, ask Hey. Thanks know pandemic. months I'll to

due think a is to of been shift the obviously, X% to talked And the revenue back for target pandemic. had CXC then, a X% I further digital there accelerated mix CAGR business. been that's multiyear about to you

the normalize? would how would of year-over-year we So, just forward wondering and you comparisons figure move now kind as

Hikmet Ersek

Obviously, said, obviously, the forecast impact First of great had all, timing question. to as you on Jason, pandemic, wise. some but

to money and in us customers not capabilities, their business ones. bad our we that using to with to One are digital our The not support with omnichannel They want higher Day their outlined to a customers. in expanding Union has times, times. times digital, that branded good thing good of and we challenging to labeling helped changed send loved and we Also definitely kind executing Western – resilience really ones underway the good the with third-parties at Investors side, well We serve presented big been to And has pandemic want gain is Western that's on good the the Investor were this it COVID-XX, customer from has offering in has consumer in And has and which think is I institutions products, business. side new the focus financial from ready our the like Union been FI, that not send numbers but as to platform unique. growth, the as strategy, at white to And our a segments strategy. offering is also we it's And changed company. of our were that offers, ready. also already path. are Day. the us within also businesses to the only really – we receive principal in loved

significant have platform investing been technology we our – platform, in you investment. As know,

currencies our – and now investment serving them easy have really technology institutions to platform one us that, of example the kind We going connections really gives financial to is to the but that. correspondent really money emerging platform can our bank from to especially another sending it painful, know, it's account serve countries, you comes banking, the account to one on unique as the when the banks to getting exotic of capabilities, headaches is correspondent after

been loans, company in our all in talk products. that are to the Investors unique, start way, talk way loyalty, ecosystem. really like the travel, like is with not that advantage talking at UK, unique platform gives we So awareness credit Albanian can we outlined at to migrant their the –another about but didn't like that's we that. and I'm is additional we talking there the can Investors too And that recently, we talk Day, is their Day, community. this Maybe to ecosystem. we talk much pleased And all biggest platform, really us offer unique a gives to like customer in can cards, westernunion.com, or of other And our like our capability examples building really additional English who like insurance, are It's even debit products like the customers us to British these with building this brand that global understand basis huge. no cards, a

Jason Kupferberg

a that's answer. over I it. is there comprehensive authorization. mentioned Raj, I know Yes, appreciate you [indiscernible]

expires the of I spent at year? authorization by million think the expect Do quarter. the second use the you've it to $XX rest just of time the about end you the up in

Raj Agrawal

to after Solutions, And to be next first will to sale to the this of don't, authorization plan be – have is continue be just Business will close expect active. over continue active. we for to re-up that No, the going obviously, close early year. There would of we're Jason. this year. an year a which then But share we we do I be repurchase lot would

we'll how so on those view we're proceeds. have a to going And deploy

we're will buying amounts. repurchase a dividends generations back the has so we're in healthy pleased very all paying of historically. play the stock factor But with business the terms we and share And cash as had have of and that flow

Jason Kupferberg

second just the the the half given would and wondering was Yes. the second I about just be stuff? pullback quarter better than

Raj Agrawal

look, on how factors, an we Yes. other the that's conditions going to we're stock much market give the depending you don't forecast plan. nimble on that to be but exact I but buyback, current mean, have on and always

Jason Kupferberg

Okay. guys. Thank Appreciate you, it.

Hikmet Ersek

Thanks.

Raj Agrawal

you. Thank

Operator

James question [Operator Thank Stanley. Morgan Instructions] you. Please next comes from Today's go ahead. Faucette with

James Faucette

of outline Great. I'm much. – of give banking to initiative. around that? to wondering us WU be are? of color should know an Thank the services key time you that of just you get for you're that should frame, moving track expect Europe. we gradually that the in if think on you what wondering up or kind if draw watching more What and milestones what we And But some the can opportunities I kind keeping I'm trying very

Hikmet Ersek

Yes.

have and maybe are we we a is, brand opportunity, unique that having services, exciting, from having advantage what a And way, and competitive really we relationship Union bank – awareness, really base don't it. start really with extremely First starting of offering customer a the given others this our this license European which good all, it's segmentation, because services. already by actually we believe to have financial customer is a very offer having big

about to have I'm And internally, look like would has Europe I done test start no countries far they want would the I'm also give customers when the say will very what And say now. details metrics will us kind what We that that has it. will comes, at Obviously, told that that. do we in so that on it, that, But products we been product we bank about And Western of of be. excited. and very in more time you excited launching team additional two proud have Union. done will I and we to that,

get service we they brand. to trust So and want a our better

Raj Agrawal

add outcome test, I James, that ready Yes. to to be would depending expand of appropriate. go we'll on markets the as further just and this more

a market So of we'll the and that I receive out business – as dynamics between market part testing the this be is and test. send think the receiving our beauty sending a of

about excited we're it can – it's be. what So

Operator

Thank you.

El-Assal Please go question from ahead. Our comes today Ramsey Barclays. next with

Benjamin Budish

hit digital about growth. a than more like was it Hi. ask revenue quarters. bigger revenues bit to this wanted previous This Does looked of kind the taking $X continue? look has quite Or Thanks in Ben grow least question. pace sequential my is the I on to it at already a like on in billion for been your like in track it much nicely Ramsey. on XQ It because of should that versus a moderately XQ looks year. quarter, track you're like to for so little step-up of kind continuing that's bit

next wanted of we couple what a of quarters. just expect the better in I So to sense get should

Raj Agrawal

that's mean, our I outlook. Yes.

good to to as Our outlook at you're and the grow mark. that. that is the white I mean, of quarter, WU.com was got billion. $XXX we with exceed And on we're up year. this really that well the well improvement second the make least in business half And on sequential We're $X right our as pace digital for digital first over label business million. both

reach second feel we give happen about to beyond half, half, numbers should we I in but the so more. won't going second And million the if what's you $XXX specific very in it. good not

Benjamin Budish

as like it? that's go And pricing Okay. mean, the the I if pricing way perhaps side just – you are kind math, to think pricing bit? digital up up? of ask on has go in follow-up kind Or could That's that the past possibility as any of a helpful. to I little it just there of it, from some last Is on digital stabilization lapping is well, introductory about stabilized a the our you just going come of could kind a quarters. bit one couple little looks

Raj Agrawal

and down Yes. I that in And is stable in always in are quite overall the up corridors pricing of our would our we pricing channels. say all market. XX,XXX moving but

from of business But that recall. the nature. in static you year, are you're year-over-year WU.com customer standpoint beginning never we to grow we some last made is what a the it's for So acquisition changes if over seeing price in

And just be the a best couple the we drive or even the add really nimble about And price that's we're see have not gain opportunity best in I and pricing not this thing quarter or this to traction, business, we're always what's things adoption. with dynamic going to long-term and what we as quite that is is is It acquisition so of customer that that's stable, some really yet. one customers. to have, would drive of just it to started of going lifetime capabilities the what that going quarter. is this And value on health really customer done but getting the

is to team our business it's to And whether capturing the add of interesting retail then the pricing amazing is capabilities we doing So at opportunities that's capabilities. that digital, the a technical quite yield, an account-to-account there. also And job additional part in lower continue or typically. dynamic

$XXX However, run revenue annual digital. the pure about of we're getting account-to-account rate million within in business

interesting if digital and the before, that's of a of the you spoken digital quite that part hidden our It's it's fastest-growing but of business. gem, So quite about purely will, part business. that sort on we've not something attractive. is our And

Benjamin Budish

And you for Very thank my so helpful interesting. and much taking questions.

Operator

And our from with Securities. next Jeffrey Andrew question Truist today comes

Andrew Jeffrey

the you Appreciate afternoon. questions. taking good Hi,

Hikmet Ersek

Hi, Andrew.

Andrew Jeffrey

the like flow balance I little behind the you curve required bit And you're a is shareholders just about that I to one, Hi, the Hikmet. of to competitively? ecosystem And you're this strategy investments with whether an years. in that going been market, grow Union the commitment about about several you brand wonder, I'm sort to business? how have important curious in particular, competitors and for doing free the Western branded sort of Obviously, negative think advantage. how are digital maybe timing. cash or the one feel wonder and there not some

Hikmet Ersek

regulatory and a Well, investment. be different we all It's all customers a first need. investment wouldn't have a long-term have products, project the loyal basis exciting really a of environment The opportunity all, we obviously, start we is about we earlier, to It's start what for time an ecosystem it's have that. – different – for to wouldn't – exciting they kind as really And very different, such motivated with very low this if the of long project. I mentioned a opportunity. the

– We we We zero a banks like don’t investment. all don't neobank to have from the or basis. to start the the have need need

maybe than with we're incremental think us that we've a profitable that's others others here would opportunity a like lower don't course, of investment. guidance I invest, change As allows have to do that, gives that we focus. so though, growth – And that you base and the investment run us that. which big see are will a have Saying that that's a that or but company, that based Europe, is our requirements as not way always been and challenges. suddenly in – something we growth and means we're a it friendly know, to in also shareholder some We our bank, have

with We opportunity. are very pleased the

Raj Agrawal

Yes. the I the world. that say already we would everywhere have in just we is operate advantage

them why our to that are we WU.com additional That's and consumers additional be capabilities. we're and of uniquely take So it's advantage able products think on about to million give services. adding X positioned

this to that's there if drives additional beauty yes, here. what within our create but year is it's really and revenue we're it of certainly real investment, So trying outlook the growth,

Hikmet Ersek

a really I little in Investor coming we're think But it's and color the something exciting. going the in over can I quarters we question that this the you stock Day. that, to give years concerning comes bit tell new because more up, the you as and because is

And we so story the tell in detail. even really build to can't more

Andrew Jeffrey

Thanks for that.

Hikmet Ersek

Thank you.

Operator

Govil comes And KBW ahead. with our Vasu Please go from next question

Vasu Govil

the guys a lot taking about Solutions now? potentially a I divestiture also that know to it's Hi. in has if the Western done you two Business with divestiture you as in Thanks be least about for Is question. you goal the XX% and – of I a changed well, modeling Business then, Union year. my comment parts? that, I could at Solutions back because just If goal margin by to talk know since last how getting expected I the And now part Investor could segment, have then, we talked a is I go the of of the XXXX. part and on Day but that table wanted The should this know first on guess,

Raj Agrawal

Hi is this Vasu, Yes. Raj.

both answer to questions. your try me Let

million, expanding track we achieve. cost by in think driver which own were are then. to basis that XXXX, On is targets the savings had the answered which sort of changed, points. on very I initiatives much certainly XXX you've since that We question, margins a has lot key we of set original And your behind $XXX objectives of our

of $XXX which was primary expansion. savings of the get next to margin run we'll the itself driver million So rate year,

because In COVID. didn't X% addition of get we needed revenue following which, to to X% growth that, we obviously, each the years, of three

the So we have changed. are. hasn't that to model one would really where thing I we reassess say

to are cost XX% structure fixed. XX%. is So to costs XX% XX% our our still And variable

So also only, think revenue as flexibility the margins a to growth, about in it get of invest not we to gives back lot but us business.

are So if some and around the you've heard track and consumer the you've It going a we're on potentially about XX% shift seen digital. get different profile we can of back the business, of our now really us forward. growth commentary revenues gives of almost mix

the still So business. until happen early are year. really next the reflect to very about won't And Business year M&A that costs But transaction, question than no the related real of Union we're P&L other first first on that. because the divestiture. part else related second out nothing then, closing that, the your Western the will Solutions, excited this part of We've called to Woods changes impact

last some million million use just the Next months, EBITDA Solutions about about and about XX of that you year, operating to income. pro business you of basis. revenue, forma data some as get million for points. as The you $XXX first will the generated the closing, can Business $XX of $XX And we data show a start we did give points into impacts we on

months. So XX a last sense looked of I the to just like you what business has need give the

Vasu Govil

very Thank you much.

Raj Agrawal

Sure.

Operator

comes question Guggenheim Cantwell ahead. And our Securities. today Jeff next of from Please go

Jeff Cantwell

you? being can more that I talk questions We reaching you, to on revenue, the on principal We users XX%. up you're see growth see pretty you a you Slide app a digital show your over the Mine's strong guys. is are can quarters. wanted hyper How Congrats you results, Hi. up business. new follow-up X, about some asked. XX%, to past earlier new data few WU.com that's is your and download ask

height the So the us the pandemic stood results year. out and last to lapping digital of you're

So expansion to some continued there. it's see good

as that share pockets with geographically. your right out you maybe expanding So new growth now WU’s customers seeing customers, attract maybe, stood about to there's more existing is and the about far where you're whether there any your can as ability anything

very talk ahead? Just any hoping maybe then in right kind you forth? you're Thanks to opportunities further so and that more about seeing can the now as looking of digital get And much. granularity you're

Raj Agrawal

about try growing Jeff, we're if are very reflective Yes. base, of to is very digital a XX% you a about that's talking opportunity. me still we're from we hours larger later, growth and whether talk summarize, – much have I mean just The on have of but growth not rates you, of to customers revenue year larger we're what the let really off couple excited to business is a in very the you base, last much the or will. MAUs good if you're because –

opportunities improving has acquire also pleased of in think lot doing drives digital a the that better WU.com, and we're a functionality, we a continuing lot growth and on focus customers, business do We're retention. with of heavy very then of to in have So more that. features Obviously, distribution. it. We total things great ahead which

So quarter. more in more payout and expanded more payout, geographies. Chile mobile funding, account funding, in the Peru We more mobile account

WU.com. the on that's So

Hikmet Ersek

can mention downloads... you also the app maybe And

Raj Agrawal

Yes. number coming. partners have in and app as still one then Yes. pipeline far, said according download one the commentary to data. a Tower partnership And we on downloads, app are release we side, with The of Sensor digital that is number our by press

can – like that You'll Saudi long-term are growth that exceeded see we opportunity. which opportunity side in has that's some the long-term. to we partners market really Sberbank, our Not activated countries, year. expectations. get XXX the really for this on us, have partner if more all every need a Telecom But or becomes a in then big a And digital far to be

we you'd and pleased, just about the how talk So like, certainly can more if we're we offline, business. feel very generally about

Jeff Cantwell

you. great. Okay, Thank

Raj Agrawal

Sure.

Operator

ahead. final Ladies today Please Jamie Friedman question Susquehanna. and from comes gentlemen, go with our

Jamie Friedman

me the Hi, congratulations on results echo and let the transaction.

Slide like? that over – geographic would the which was to like the any map you that? characteristics What just If of XX, referencing WU.com Like look Slide does specifically callouts look Jeff or footprint. on What were footprint geographic like? X to what are there

Hikmet Ersek

are we obviously, very focused. WU.com, much On

ones We We also strong the what recently countries. and That's with WU.com North are happen countries are money of transactions million because customers Union Europe X much some Most dual very sending having send own a countries right? different receiving states with money from sending Gulf and started also our agents, segments send us in the in to countries. There to XXX on we that nature, higher recently growth countries. countries, and saw Traditional a WU.com receiving transaction certain XX also are very the loved children, customer with maybe But segments, we band. their transactions this really doing. via kind supporting is you want are focused growth it XX of in driving are dot-com the something... And or region, payments, happening really the Europe, by doing the and we really of customer doing westernunion.com. central are America in to to cross-border like business. medical add to And

Raj Agrawal

Yes.

answer speak digital The Asia of there on concentration America, heaviest America, year, this year, part be growth can decline. standpoint why because would if there's some negatively is our because to business say pop impacted geographic Jamie. quarter, upward saw you they least are really digital that Pacific, I heavily seen in of because mitigate a actually some it the significant see will East big rates of the business digital And that's me more Latin Europe and And next in Let because have The we've also to really digital two business was Middle didn't Latin probably good no part in see America. I and from concentration of the second you NCIS. question, last business the North some your there. is the of. a leverage

so keep to And as WU.com launches quarter be this important and the Latin this Chilean going building we for are that digital year America. business in Peru components

a from around So going there to expansion standpoint. world keep opportunity to the be geographic continues

Jamie Friedman

much. very you Thank it. Got

Raj Agrawal

Thank you.

Operator

question-and-answer ladies you for all and We session call. gentlemen, today's today's presentation. concludes attending this And thank and today's conference

disconnect now day. a have may your wonderful And You lines.

The Western Union Company (WU) 5 Aug 212021 Q2 Earnings call transcript