Western Union (WU) Q2 Earnings Beat Estimates, Fall Y/Y

The Western Union Co. WU 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 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. MGI and PayPal Holdings, Inc. PYPL beat second-quarter estimates by 109.1% and 27.38%, respectively.

Another company Square Inc. SQ is expected to report earnings results, today, after market close.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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