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Western Union (WU) Q4 Earnings Beat on High CMT Transactions
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The Western Union Company (WU - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of 37 cents, which beat the Zacks Consensus Estimate by 2.8%. The bottom line rose 15.6% year over year.
Total revenues declined 3.7% year over year on a reported basis or grew 3% on a constant-currency basis to $1.05 billion. The top line beat the Zacks Consensus Estimate by 4.8%.
The better-than-expected quarterly earnings were due to strength in the branded digital business, growth in transactions, disciplined expense management and the progress of Evolve 2025. However, the poor performance of the consumer services segment due to the devaluation of the Argentine peso partially offset the results.
The Western Union Company Price, Consensus and EPS Surprise
Adjusted operating margin of 16.1% improved 30 basis points year over year due to savings from the Operating Expense Redeployment Program and favorable changes in foreign currency. This was partially offset by a higher amount of marketing investment. The fourth-quarter adjusted effective tax rate of 14.1% was lower than 14.7% in the year-ago period.
Western Union’s total expenses were $893 million, down 5% year over year. Lower costs of services and selling, general and administrative expenses contributed to this improvement in overall expenses in the fourth quarter. The company saved $50 million in 2023 on the back of successful results of its five-year $150 million operating expense redeployment program.
Consumer Money Transfer Segment
The CMT or Consumer Money Transfer segment reported revenues of $975.5 million, which declined 1% year over year on a reported and constant-currency basis in the quarter under review. However, the segment’s revenues beat our estimate by 4.3%. Operating income improved 7% year over year to $148.9 million but missed our estimate by 4.2%. The operating income margin of 15.3% rose from 14.1% a year ago.
Transactions within the CMT segment increased 5.2% year over year on the back of strong Latin American and Caribbean regions, the Middle East, Africa and South Asia and North America. This metric surpassed our estimate by 5%. An improvement of 13% in Branded Digital transactions also added to the upside.
Branded Digital revenues increased 4% on a reported and constant-currency basis.
Consumer Services
The CS or Consumer Services segment reported revenues of $76.8 million, which declined 1% year over year on a reported basis. The segment’s revenues missed our estimate by 3.2%. Operating income declined 25% year over year to $20.4 million. The metric missed our estimate by 37.9%. The operating income margin of 26.6% fell from 35.5% a year ago.
Balance Sheet (as of Dec 31, 2023)
Western Union exited the fourth quarter with cash and cash equivalents of $1.27 billion, decreasing from the 2022-end level of $1.29 billion. Total assets of $8.2 billion declined from $8.5 billion at 2022-end.
Borrowings dropped from $2.6 billion at 2022-end to $2.5 billion.
Total stockholders' equity of $479 million increased from $477.8 million as of Dec 31, 2022.
In 2023, net cash provided by operating activities improved to $783.1 million from $518.6 million.
Full-Year Update
Adjusted revenues improved 0.6% year over year to $4.5 billion in 2023. Total expenses declined 1% year over year to $3.5 billion. Adjusted EPS declined 1.1% to $1.74 per share for 2023.
Capital Deployment
Western Union rewarded its shareholders with $646 million through $346 million in dividends and share buybacks worth $300 million during 2023.
The board approved a dividend of 23.5 cents per share for the first quarter of 2024, payable on Mar 29, 2024, to shareholders of record as of Mar 15, 2024.
2024 Guidance
The company expects 2024 adjusted revenues between $4.1 and $4.2 billion. The midpoint of the guidance indicates a decline of 7.2% from the 2022 figure of $4.5 billion.
Adjusted EPS is anticipated to be in the range of $1.65-$1.75 for 2024. The midpoint of the guidance indicates a decline from the 2023 reported figure of $1.74 per share.
Adjusted operating margin is expected to be between 19% and 21%. The metric stood at 19.6% in 2023.
The company expects Consumer Services to grow in double-digits in 2024. It also expects Iraq to generate revenues in the range of $50-$100 million in 2024.
Zacks Rank
Western Union currently has a Zacks Rank #4 (Sell).
Performance of Other Financial Transaction Services Players
Fiserv, Inc. (FI - Free Report) reported mixed fourth-quarter 2023 results, wherein earnings beat the Zacks Consensus Estimate while revenues missed the mark.
Adjusted earnings per share (excluding 40 cents from non-recurring items) of $2.19 exceeded the consensus mark by 1.9% and increased 14.7% year over year. Adjusted revenues of $4.64 billion missed the consensus estimate by 1.1% but increased slightly on a year-over-year basis.
Visa Inc. (V - Free Report) reported first-quarter fiscal 2024 earnings per share of $2.41, which outpaced the Zacks Consensus Estimate of $2.33 by 3.4%. The bottom line rose 11% year over year.
The quarterly results benefited on the back of expanding payments volume, cross-border volume and processed transactions. Strong consumer spending and a decline in overall expenses drove Visa’s performance. However, the upside was partly offset by an increase in client incentives.
Mastercard Incorporated (MA - Free Report) reported fourth-quarter 2023 adjusted earnings of $3.18 per share, which outpaced the Zacks Consensus Estimate by 3.3%. The bottom line climbed 20% year over year.
Net revenues of the leading technology company in the global payments industry amounted to $6.5 billion, which improved 13% year over year in the quarter under review. The top line beat the consensus mark by 1.4%.
Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) advanced 18% on a local currency basis. Switched transactions, which indicate the number of times a company’s products have been used to facilitate transactions, were 38.1 billion in the quarter under review. The figure grew 12% year over year and beat the consensus mark of 37.6 billion.
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Western Union (WU) Q4 Earnings Beat on High CMT Transactions
The Western Union Company (WU - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of 37 cents, which beat the Zacks Consensus Estimate by 2.8%. The bottom line rose 15.6% year over year.
Total revenues declined 3.7% year over year on a reported basis or grew 3% on a constant-currency basis to $1.05 billion. The top line beat the Zacks Consensus Estimate by 4.8%.
The better-than-expected quarterly earnings were due to strength in the branded digital business, growth in transactions, disciplined expense management and the progress of Evolve 2025. However, the poor performance of the consumer services segment due to the devaluation of the Argentine peso partially offset the results.
The Western Union Company Price, Consensus and EPS Surprise
The Western Union Company price-consensus-eps-surprise-chart | The Western Union Company Quote
Q4 Performance
Adjusted operating margin of 16.1% improved 30 basis points year over year due to savings from the Operating Expense Redeployment Program and favorable changes in foreign currency. This was partially offset by a higher amount of marketing investment. The fourth-quarter adjusted effective tax rate of 14.1% was lower than 14.7% in the year-ago period.
Western Union’s total expenses were $893 million, down 5% year over year. Lower costs of services and selling, general and administrative expenses contributed to this improvement in overall expenses in the fourth quarter. The company saved $50 million in 2023 on the back of successful results of its five-year $150 million operating expense redeployment program.
Consumer Money Transfer Segment
The CMT or Consumer Money Transfer segment reported revenues of $975.5 million, which declined 1% year over year on a reported and constant-currency basis in the quarter under review. However, the segment’s revenues beat our estimate by 4.3%. Operating income improved 7% year over year to $148.9 million but missed our estimate by 4.2%. The operating income margin of 15.3% rose from 14.1% a year ago.
Transactions within the CMT segment increased 5.2% year over year on the back of strong Latin American and Caribbean regions, the Middle East, Africa and South Asia and North America. This metric surpassed our estimate by 5%. An improvement of 13% in Branded Digital transactions also added to the upside.
Branded Digital revenues increased 4% on a reported and constant-currency basis.
Consumer Services
The CS or Consumer Services segment reported revenues of $76.8 million, which declined 1% year over year on a reported basis. The segment’s revenues missed our estimate by 3.2%. Operating income declined 25% year over year to $20.4 million. The metric missed our estimate by 37.9%. The operating income margin of 26.6% fell from 35.5% a year ago.
Balance Sheet (as of Dec 31, 2023)
Western Union exited the fourth quarter with cash and cash equivalents of $1.27 billion, decreasing from the 2022-end level of $1.29 billion. Total assets of $8.2 billion declined from $8.5 billion at 2022-end.
Borrowings dropped from $2.6 billion at 2022-end to $2.5 billion.
Total stockholders' equity of $479 million increased from $477.8 million as of Dec 31, 2022.
In 2023, net cash provided by operating activities improved to $783.1 million from $518.6 million.
Full-Year Update
Adjusted revenues improved 0.6% year over year to $4.5 billion in 2023. Total expenses declined 1% year over year to $3.5 billion. Adjusted EPS declined 1.1% to $1.74 per share for 2023.
Capital Deployment
Western Union rewarded its shareholders with $646 million through $346 million in dividends and share buybacks worth $300 million during 2023.
The board approved a dividend of 23.5 cents per share for the first quarter of 2024, payable on Mar 29, 2024, to shareholders of record as of Mar 15, 2024.
2024 Guidance
The company expects 2024 adjusted revenues between $4.1 and $4.2 billion. The midpoint of the guidance indicates a decline of 7.2% from the 2022 figure of $4.5 billion.
Adjusted EPS is anticipated to be in the range of $1.65-$1.75 for 2024. The midpoint of the guidance indicates a decline from the 2023 reported figure of $1.74 per share.
Adjusted operating margin is expected to be between 19% and 21%. The metric stood at 19.6% in 2023.
The company expects Consumer Services to grow in double-digits in 2024. It also expects Iraq to generate revenues in the range of $50-$100 million in 2024.
Zacks Rank
Western Union currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Financial Transaction Services Players
Fiserv, Inc. (FI - Free Report) reported mixed fourth-quarter 2023 results, wherein earnings beat the Zacks Consensus Estimate while revenues missed the mark.
Adjusted earnings per share (excluding 40 cents from non-recurring items) of $2.19 exceeded the consensus mark by 1.9% and increased 14.7% year over year. Adjusted revenues of $4.64 billion missed the consensus estimate by 1.1% but increased slightly on a year-over-year basis.
Visa Inc. (V - Free Report) reported first-quarter fiscal 2024 earnings per share of $2.41, which outpaced the Zacks Consensus Estimate of $2.33 by 3.4%. The bottom line rose 11% year over year.
The quarterly results benefited on the back of expanding payments volume, cross-border volume and processed transactions. Strong consumer spending and a decline in overall expenses drove Visa’s performance. However, the upside was partly offset by an increase in client incentives.
Mastercard Incorporated (MA - Free Report) reported fourth-quarter 2023 adjusted earnings of $3.18 per share, which outpaced the Zacks Consensus Estimate by 3.3%. The bottom line climbed 20% year over year.
Net revenues of the leading technology company in the global payments industry amounted to $6.5 billion, which improved 13% year over year in the quarter under review. The top line beat the consensus mark by 1.4%.
Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) advanced 18% on a local currency basis. Switched transactions, which indicate the number of times a company’s products have been used to facilitate transactions, were 38.1 billion in the quarter under review. The figure grew 12% year over year and beat the consensus mark of 37.6 billion.