Yahoo Finance Western Union (WU) Q1 Earnings Beat on Branded Digital Strength
The Western Union Company WU posted robust first-quarter 2024 results, driven by the Branded Digital business' resilience, growth in transactions, solid Consumer Money Transfer business performance and stabilization of the retail business. This solid performance prompted the company to raise its full-year outlook. However, increased expenses tempered some of the gains.
It announced first-quarter 2024 adjusted earnings per share (EPS) of 45 cents, which beat the Zacks Consensus Estimate by 12.5%. The bottom line rose nearly 5% year over year.
Total revenues increased more than 1% year over year on a reported basis, or 3% on an adjusted basis, to nearly $1.05 billion. The top line beat the Zacks Consensus Estimate by 3.9%.
The Western Union Company Price, Consensus and EPS Surprise
The Western Union Company price-consensus-eps-surprise-chart | The Western Union Company Quote
Let’s delve deeper.
Q1 Performance
Adjusted operating margin of 19.7% deteriorated 80 basis points year over year due to the timing of marketing expenses and increasedredeployment costs. The first-quarter adjusted effective tax rate of 15.6% was higher than 13.5% in the year-ago period, due to the impact of Business Solutions divestment.
Western Union’s total expenses were $857 million, up 3% year over year due to higher costs of services and selling, general and administrative expenses. The company incurred $14 million in the first quarter in redeployment costs. Operating income of $192.1 million declined 6% year over year.
Segment Analysis
The CMT or Consumer Money Transfer segment reported revenues of $962 million, which increased 3% year over year in the quarter under review. The figure beat our estimate by 4.2%. Operating income improved 6% year over year to $187.6 million and comfortably beat our estimate. The operating income margin of 19.5% rose from 18.9% a year ago.
Transactions within the CMT segment increased 6% year over year on the back of strong Latin American and Caribbean regions, the Middle East, Africa, South Asia and North America. This metric surpassed our estimate by 1.5%. An improvement of 13% in Branded Digital transactions also added to the upside. Branded Digital revenues increased 9% on a reported and adjusted basis.
The CS or Consumer Services segment reported revenues of $87.1 million, which increased 5% year over year on Retail Money Order business strength. The segment’s revenues beat our estimate by 3.6%. However, operating income declined 42% year over year to $18.6 million and significantly missed our estimate. The operating income margin of 21.3% fell from 38.6% a year ago.
Financial Position (as of Mar 31, 2024)
Western Union exited the first quarter with cash and cash equivalents of $1.1 billion, decreasing from the 2023-end level of $1.3 billion. Total assets of $8.1 billion declined from $8.2 billion at 2023-end.
Borrowings remained stable at around $2.5 billion.
Total stockholders' equity of $397.9 million decreased from $479 million as of Dec 31, 2023.
In the first quarter, net cash provided by operating activities declined to $94 million from $137.3 million a year ago.
Capital Deployment
Western Union rewarded its shareholders with $230 million through $80 million in dividends and share buybacks worth $150 million during the first quarter.
2024 Guidance
The company now expects 2024 adjusted revenues between $4.150 and $4.225 billion, up from previous guidance of $4.1 and $4.2 billion but still declining from the 2023 figure of $4.4 billion. It also expects Iraq to generate revenues toward the upper limit of the guided range of $50-$100 million in 2024.
Adjusted EPS is anticipated to be in the range of $1.70-$1.80 for 2024, up from previous guidance of $1.65-$1.75 compared with the 2023 reported figure of $1.74 per share. The company expects its growth rate in the second quarter to stay low sequentially due to a benefit from Iraq received last year.
Adjusted operating margin is still expected to be between 19% and 21%. The metric stood at 19.6% in 2023.
Zacks Rank & Other Key Picks
Western Union currently has a Zacks Rank #2 (Buy). Some other top-ranked stocks in the broader Business Services space are MoneyLion Inc. ML, Flywire Corporation FLYW and CompoSecure, Inc. CMPO, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for MoneyLion’s current-year bottom line indicates a 98.7% year-over-year improvement. The consensus estimate for ML’s current-year top line is pegged at $518.9 million, suggesting 22.6% year-over-year growth.
The Zacks Consensus Estimate for Flywire’s current year earnings is pegged at 5 cents per share, which indicates a 171.4% year-over-year improvement. FLYW beat earnings estimates in two of the trailing four quarters, met once and missed on the other occasion, with an average surprise of 33.1%. The consensus estimate for current-year revenues suggests 29.9% year-over-year growth.
The Zacks Consensus Estimate for CompoSecure’s current-year earnings is pegged at $1.09 per share, which indicates 12.4% growth from the year-ago period. CMPO beat earnings estimates in three of the trailing four quarters and met once, with an average surprise of 8%. The consensus mark for current-year revenues suggests a 6.5% year-over-year increase.
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The Western Union Company (WU) : Free Stock Analysis Report
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