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Western Union Q4 Earnings Miss Estimates on CMT Revenue Decline
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The Western Union Company (WU - Free Report) reported fourth-quarter 2024 adjusted earnings per share (EPS) of 40 cents, which missed the Zacks Consensus Estimate by 4.8%. Nevertheless, the bottom line improved 8.1% year over year.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Total revenues were $1.1 billion, which inched up 1% on a reported basis on the back of strong contributions from the Consumer Services (CS) segment and a well-performing Branded Digital business. Additionally, the top line surpassed the Zacks Consensus Estimate by 3.1%.
The quarterly results suffered due to lower contributions from the Consumer Money Transfer (CMT) segment and decreased contributions from Iraq. Nevertheless, the downside was partly offset by strong performance in the retail foreign exchange business and the launch of the media network business. Additionally, a reduction in overall expenses helped support margins.
The Western Union Company Price, Consensus and EPS Surprise
The adjusted operating margin improved 100 basis points (bps) year over year to 17%, attributable to advanced marketing and technology efficiencies.
Total expenses dipped 1% year over year to $880.1 million, higher than our estimate of $822.5 million. The year-over-year decline resulted from lower selling, general and administrative expenses.
Operating income of $178.1 million advanced 12% year over year but lagged our estimate of $197.2 million.
Segment Analysis of WU
The CMT segment’s revenues fell 4% on a reported basis and remained flat on an adjusted basis at $938.8 million. The metric beat the Zacks Consensus Estimate of $935.4 million and our estimate of $927.4 million.
Operating income was $170 million, which rose 14% year over year but fell short of the consensus mark and our estimate of $180.5 million. The operating income margin improved 300 bps year over year to 18%.
Transactions within the CMT segment grew 3% year over year, attributable to 13% transaction growth in the Branded Digital business. Branded Digital revenues, which accounted for 25% of CMT’s fourth-quarter revenues, improved 7% on a reported basis and 8% on an adjusted basis.
The CS unit recorded revenues of $119.4 million , which soared 56% on a reported basis and 23% on an adjusted basis. The metric outpaced the Zacks Consensus Estimate of $88.3 million and our estimate of $92.3 million. The year-over-year growth was driven by the launch of the company's media network business, the expansion of its retail foreign exchange operations and the continued growth of the retail money order business.
However, operating income tumbled 34% year over year to $13.4 million, lower than the consensus mark and our estimate of $16.8 million. Operating income margin of 11% deteriorated 1,600 bps year over year.
WU’s Financial Position (As of Dec. 31, 2024)
Western Union exited the fourth quarter with cash and cash equivalents of $1.5 billion, which advanced 16.2% from the 2023-end level.
Total assets of $8.4 billion increased 2.1% from the figure at 2023-end.
Borrowings were $2.9 billion, up 17.4% from the figure as of Dec. 31, 2023.
Total stockholders' equity of $968.9 million more than doubled from the 2023-end figure.
WU generated net cash from operations of $406.3 million in 2024, which plunged 48.1% from the 2023 figure.
Western Union’s Capital Deployment
Western Union rewarded its shareholders with $318 million in dividends and share buybacks worth $177 million in 2024.
WU’s 2025 View
Management anticipates adjusted revenues to be between $4.115 billion and $4.215 billion, the mid-point of which indicates a 0.8% decline from the 2024 figure of $4.198 billion.
Adjusted EPS is forecasted to be in the range of $1.75-$1.85, the mid-point of which indicates a 3.4% improvement from the 2024 reported figure of $1.74.
GAAP EPS is currently forecasted within the band of $1.54-$1.64, the mid-point of which implies a 42% decline from the 2024 figure of $2.74.
Adjusted operating margin is expected to be between 19% and 21%. The metric was 19% in 2024.
Of the other Business Services sector industry players that have reported December-quarter results so far, the bottom-line results of Mastercard Incorporated (MA - Free Report) , Visa Inc. (V - Free Report) and Trane Technologies plc (TT - Free Report) beat the Zacks Consensus Estimate.
Mastercard reported fourth-quarter 2024 adjusted earnings of $3.82 per share, which surpassed the Zacks Consensus Estimate by 3.8%. The bottom line improved 20% year over year. Net revenues of the leading technology company in the global payments industry advanced 14% year over year to $7.5 billion. The top line beat the consensus mark by 1.4%. Gross dollar volume increased 12% on a local-currency basis to $2.6 trillion. Cross-border volumes rose 20% on a local currency basis.
Switched transactions improved 11% year over year to 42.2 billion. Value-added services and solutions’ net revenues of $3.1 billion advanced 16% year over year. Mastercard’s clients issued 3.5 billion Mastercard and Maestro-branded cards as of Dec. 31, 2024. Adjusted operating income was $4.22 billion, which grew 15% year over year. Adjusted operating margin improved 10 bps year over year to 56.3%.
Visa’s first-quarter fiscal 2025 EPS of $2.75 outpaced the Zacks Consensus Estimate of $2.66 by 3.4%. The bottom line increased 14% year over year. Net revenues of $9.5 billion improved 10% year over year. The top line beat the consensus mark by 1.8%. Visa's payments volume increased 9% year over year on a constant-dollar basis in the fiscal first quarter. Processed transactions (implying transactions processed by Visa) grew 11% year over year to 63.8 billion.
On a constant-dollar basis, the cross-border volume of Visa rose 16% year over year. Excluding transactions within Europe, its cross-border volume (that boosts a company’s international transaction revenues) also rose 16% year over year on a constant-dollar basis. Service revenues increased 8% year over year to $4.2 billion in the December quarter. Data processing revenues of $4.75 billion grew 9% year over year. International transaction revenues rose 14% year over year to $3.44 billion.
Trane Technologies reported fourth-quarter 2024 adjusted EPS of $2.61, which surpassed the Zacks Consensus Estimate by 2.8% and increased 20.3% year over year. Revenues of $4.9 billion beat the consensus mark by 2.2% and rose 10.2% year over year on a reported basis and organically. Bookings were up 11% year over year on a reported basis and organically. The Americas segment’s revenues of $3.8 billion increased 12.2% year over year on a reported basis and organically. Bookings were up 1% on a reported basis and organically to $3.7 billion.
The Europe, Middle East and Africa segment’s revenues were $690.3 million, up 5% year over year on a reported basis and 7% organically. Bookings were up 8% year over year on a reported basis and 9% organically to $614.8 million. Revenues from the Asia Pacific segment were up 1% year over year on a reported basis and organically to $381.2 million.
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Western Union Q4 Earnings Miss Estimates on CMT Revenue Decline
The Western Union Company (WU - Free Report) reported fourth-quarter 2024 adjusted earnings per share (EPS) of 40 cents, which missed the Zacks Consensus Estimate by 4.8%. Nevertheless, the bottom line improved 8.1% year over year.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Total revenues were $1.1 billion, which inched up 1% on a reported basis on the back of strong contributions from the Consumer Services (CS) segment and a well-performing Branded Digital business. Additionally, the top line surpassed the Zacks Consensus Estimate by 3.1%.
The quarterly results suffered due to lower contributions from the Consumer Money Transfer (CMT) segment and decreased contributions from Iraq. Nevertheless, the downside was partly offset by strong performance in the retail foreign exchange business and the launch of the media network business. Additionally, a reduction in overall expenses helped support margins.
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 of WU
The adjusted operating margin improved 100 basis points (bps) year over year to 17%, attributable to advanced marketing and technology efficiencies.
Total expenses dipped 1% year over year to $880.1 million, higher than our estimate of $822.5 million. The year-over-year decline resulted from lower selling, general and administrative expenses.
Operating income of $178.1 million advanced 12% year over year but lagged our estimate of $197.2 million.
Segment Analysis of WU
The CMT segment’s revenues fell 4% on a reported basis and remained flat on an adjusted basis at $938.8 million. The metric beat the Zacks Consensus Estimate of $935.4 million and our estimate of $927.4 million.
Operating income was $170 million, which rose 14% year over year but fell short of the consensus mark and our estimate of $180.5 million. The operating income margin improved 300 bps year over year to 18%.
Transactions within the CMT segment grew 3% year over year, attributable to 13% transaction growth in the Branded Digital business. Branded Digital revenues, which accounted for 25% of CMT’s fourth-quarter revenues, improved 7% on a reported basis and 8% on an adjusted basis.
The CS unit recorded revenues of $119.4 million , which soared 56% on a reported basis and 23% on an adjusted basis. The metric outpaced the Zacks Consensus Estimate of $88.3 million and our estimate of $92.3 million. The year-over-year growth was driven by the launch of the company's media network business, the expansion of its retail foreign exchange operations and the continued growth of the retail money order business.
However, operating income tumbled 34% year over year to $13.4 million, lower than the consensus mark and our estimate of $16.8 million. Operating income margin of 11% deteriorated 1,600 bps year over year.
WU’s Financial Position (As of Dec. 31, 2024)
Western Union exited the fourth quarter with cash and cash equivalents of $1.5 billion, which advanced 16.2% from the 2023-end level.
Total assets of $8.4 billion increased 2.1% from the figure at 2023-end.
Borrowings were $2.9 billion, up 17.4% from the figure as of Dec. 31, 2023.
Total stockholders' equity of $968.9 million more than doubled from the 2023-end figure.
WU generated net cash from operations of $406.3 million in 2024, which plunged 48.1% from the 2023 figure.
Western Union’s Capital Deployment
Western Union rewarded its shareholders with $318 million in dividends and share buybacks worth $177 million in 2024.
WU’s 2025 View
Management anticipates adjusted revenues to be between $4.115 billion and $4.215 billion, the mid-point of which indicates a 0.8% decline from the 2024 figure of $4.198 billion.
Adjusted EPS is forecasted to be in the range of $1.75-$1.85, the mid-point of which indicates a 3.4% improvement from the 2024 reported figure of $1.74.
GAAP EPS is currently forecasted within the band of $1.54-$1.64, the mid-point of which implies a 42% decline from the 2024 figure of $2.74.
Adjusted operating margin is expected to be between 19% and 21%. The metric was 19% in 2024.
WU’s Zacks Rank
Western Union currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Business Services Sector Releases
Of the other Business Services sector industry players that have reported December-quarter results so far, the bottom-line results of Mastercard Incorporated (MA - Free Report) , Visa Inc. (V - Free Report) and Trane Technologies plc (TT - Free Report) beat the Zacks Consensus Estimate.
Mastercard reported fourth-quarter 2024 adjusted earnings of $3.82 per share, which surpassed the Zacks Consensus Estimate by 3.8%. The bottom line improved 20% year over year. Net revenues of the leading technology company in the global payments industry advanced 14% year over year to $7.5 billion. The top line beat the consensus mark by 1.4%. Gross dollar volume increased 12% on a local-currency basis to $2.6 trillion. Cross-border volumes rose 20% on a local currency basis.
Switched transactions improved 11% year over year to 42.2 billion. Value-added services and solutions’ net revenues of $3.1 billion advanced 16% year over year. Mastercard’s clients issued 3.5 billion Mastercard and Maestro-branded cards as of Dec. 31, 2024. Adjusted operating income was $4.22 billion, which grew 15% year over year. Adjusted operating margin improved 10 bps year over year to 56.3%.
Visa’s first-quarter fiscal 2025 EPS of $2.75 outpaced the Zacks Consensus Estimate of $2.66 by 3.4%. The bottom line increased 14% year over year. Net revenues of $9.5 billion improved 10% year over year. The top line beat the consensus mark by 1.8%. Visa's payments volume increased 9% year over year on a constant-dollar basis in the fiscal first quarter. Processed transactions (implying transactions processed by Visa) grew 11% year over year to 63.8 billion.
On a constant-dollar basis, the cross-border volume of Visa rose 16% year over year. Excluding transactions within Europe, its cross-border volume (that boosts a company’s international transaction revenues) also rose 16% year over year on a constant-dollar basis. Service revenues increased 8% year over year to $4.2 billion in the December quarter. Data processing revenues of $4.75 billion grew 9% year over year. International transaction revenues rose 14% year over year to $3.44 billion.
Trane Technologies reported fourth-quarter 2024 adjusted EPS of $2.61, which surpassed the Zacks Consensus Estimate by 2.8% and increased 20.3% year over year. Revenues of $4.9 billion beat the consensus mark by 2.2% and rose 10.2% year over year on a reported basis and organically. Bookings were up 11% year over year on a reported basis and organically. The Americas segment’s revenues of $3.8 billion increased 12.2% year over year on a reported basis and organically. Bookings were up 1% on a reported basis and organically to $3.7 billion.
The Europe, Middle East and Africa segment’s revenues were $690.3 million, up 5% year over year on a reported basis and 7% organically. Bookings were up 8% year over year on a reported basis and 9% organically to $614.8 million. Revenues from the Asia Pacific segment were up 1% year over year on a reported basis and organically to $381.2 million.