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Western Union (WU) Q2 Earnings Beat Estimates, Fall Y/Y
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The Western Union Co. (WU - Free Report) second-quarter 2020 operating earnings of 41 cents per share surpassed the Zacks Consensus Estimate by 13.89%. However, the bottom line was down 8.9% year over year.
The year-over-year earnings decline was due to revenue declines associated with the COVID-19 pandemic and lost earnings from the 2019 divestitures, partially offset by productivity savings, additional cost-management measures and lower share count in the current year period.
The Western Union Company Price, Consensus and EPS Surprise
Total revenues of $1.11 billion beat the Zacks Consensus Estimate by 2.21% but the top line declined 17.2% year over year due to lower transaction levels resulting from the COVID-19 pandemic.
Digital money transfer revenues grew 48% year over year or 50% on constant currency basis to $219 million in the second quarter. Total expenses of $892.9 million fell 17% year over year owing to reduced cost of services and selling, general and administrative expenses.
Segmental Update
Consumer to Consumer (C2C)
Revenues of $976.6 million dropped 12% year over year on a reported basis and 11% in constant currency. Total transactions decreased 8%. Covid-19-led disruption deflated revenues across all regions, except in Europe and CIS. The pandemic took a toll on global economy and remittances.
Digital revenues and transactions represented 22% and 31% of the C2C business in the quarter, respectively. Within the digital money transfer business, westernunion.com revenues surged 33% reportedly and 34% at cc including cross-border revenue growth of 48%.
Operating income of $212.8 million decreased 15% year over year.
Operating margin contracted 70 basis points year over year to 21.8%.
Business Solutions
Revenues of $79.4 million deteriorated 17% on a reported basis or 15% on constant currency basis due to softening trends in verticals more exposed to COVID-19 including education, travel and tourism, and small and medium-sized enterprises.
The segment reported operating income of $1.3 million, down 88% year over year. Operating margin shrank 930 basis points year over year to 1.6%.
Balance Sheet (as of Jun 30, 2020)
Cash and cash equivalents were $1.18 billion, down 18.5% from the level at 2019 end.
Borrowings dipped nearly 4.9% to $3.08 billion from the level at 2019 end.
Stockholders' equity was a deficit of $73.4 million, which widened from the deficit of $39.5 million at the end of 2019.
For the first six months of 2020, the company generated net cash worth $347.8 million from operations, down 13.6% year over year.
Among other companies in the remittance industry, earnings of MoneyGram International Inc. and PayPal Holdings, Inc. (PYPL - Free Report) beat second-quarter estimates by 109.1% and 27.38%, respectively.
Another company Square Inc. (SQ - Free Report) is expected to report earnings results, today, after market close.
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A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Western Union (WU) Q2 Earnings Beat Estimates, Fall Y/Y
The Western Union Co. (WU - Free Report) second-quarter 2020 operating earnings of 41 cents per share surpassed the Zacks Consensus Estimate by 13.89%. However, the bottom line was down 8.9% year over year.
The year-over-year earnings decline was due to revenue declines associated with the COVID-19 pandemic and lost earnings from the 2019 divestitures, partially offset by productivity savings, additional cost-management measures and lower share count in the current year period.
The Western Union Company Price, Consensus and EPS Surprise
The Western Union Company price-consensus-eps-surprise-chart | The Western Union Company Quote
Behind the Headlines
Total revenues of $1.11 billion beat the Zacks Consensus Estimate by 2.21% but the top line declined 17.2% year over year due to lower transaction levels resulting from the COVID-19 pandemic.
Digital money transfer revenues grew 48% year over year or 50% on constant currency basis to $219 million in the second quarter.
Total expenses of $892.9 million fell 17% year over year owing to reduced cost of services and selling, general and administrative expenses.
Segmental Update
Consumer to Consumer (C2C)
Revenues of $976.6 million dropped 12% year over year on a reported basis and 11% in constant currency. Total transactions decreased 8%. Covid-19-led disruption deflated revenues across all regions, except in Europe and CIS. The pandemic took a toll on global economy and remittances.
Digital revenues and transactions represented 22% and 31% of the C2C business in the quarter, respectively. Within the digital money transfer business, westernunion.com revenues surged 33% reportedly and 34% at cc including cross-border revenue growth of 48%.
Operating income of $212.8 million decreased 15% year over year.
Operating margin contracted 70 basis points year over year to 21.8%.
Business Solutions
Revenues of $79.4 million deteriorated 17% on a reported basis or 15% on constant currency basis due to softening trends in verticals more exposed to COVID-19 including education, travel and tourism, and small and medium-sized enterprises.
The segment reported operating income of $1.3 million, down 88% year over year. Operating margin shrank 930 basis points year over year to 1.6%.
Balance Sheet (as of Jun 30, 2020)
Cash and cash equivalents were $1.18 billion, down 18.5% from the level at 2019 end.
Borrowings dipped nearly 4.9% to $3.08 billion from the level at 2019 end.
Stockholders' equity was a deficit of $73.4 million, which widened from the deficit of $39.5 million at the end of 2019.
For the first six months of 2020, the company generated net cash worth $347.8 million from operations, down 13.6% year over year.
Zacks Rank
Western Union carries a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other companies in the remittance industry, earnings of MoneyGram International Inc. and PayPal Holdings, Inc. (PYPL - Free Report) beat second-quarter estimates by 109.1% and 27.38%, respectively.
Another company Square Inc. (SQ - Free Report) is expected to report earnings results, today, after market close.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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See 8 breakthrough stocks now>