Western Union Slashes Full-Year Profit Outlook as Costs Climb
Western Union posted a 31% drop in operating income to $132.1 million as guidance for full-year adjusted earnings per share was cut to $1.25 to $1.35 from $1.75 to $1.85.
Western Union (WU) cut its full-year profit guidance on Thursday after second-quarter operating income fell 31% to $132.1 million from $192.7 million a year earlier, as expenses climbed faster than revenue could offset the decline.
The money-transfer company's revenue slide is easing even as profitability erodes. Second-quarter GAAP revenue of $1,013.2 million fell 1% from a year earlier, an improvement from flat growth in the first quarter and a 5% decline in the fourth quarter of 2024. But total expenses rose 6% in the quarter, with cost of services up 5% and selling, general and administrative costs up 7%, outpacing the top-line decline and compressing margins even as revenue trends improved.
GAAP operating margin held at 13% in the second quarter, matching the first quarter but down from 18% to 19% in the fourth quarter of 2024 and 19% a year earlier. Adjusted operating margin improved to 15% from 13% in the first quarter but remained well below the 19% to 20% range posted a year ago. GAAP earnings per share fell to $0.24 from $0.37 a year earlier, though that was up from $0.20 in the first quarter; adjusted earnings per share were $0.31, down from $0.42 a year earlier but up from $0.25 in the prior quarter.
Consumer Services, the company's growth engine in recent quarters, decelerated sharply. Segment revenue rose 4% on a GAAP basis and 12% on an adjusted basis, down from 24% and 33% growth respectively in the first quarter. Segment operating margin recovered to 16% from 12% in the first quarter but remained below the 22% posted a year earlier. The core Consumer-to-Consumer, Money Transfer and Bill Payments segment continued to stabilize, with revenue declining 2% on a GAAP basis, an improvement from a 3% decline in the first quarter, as transactions rose 3%. Branded Digital transaction growth accelerated to 25% from 21% in the first quarter, even as revenue growth held roughly steady at 7% GAAP and 6% adjusted.
Regional results diverged sharply. The Middle East, Africa and South Asia region swung to 13% revenue growth from double-digit declines as recently as the fourth quarter of 2024, with transactions accelerating to 44% growth. Latin America and the Caribbean continued to shrink, with revenue down 4% for a second straight quarter, though transaction declines worsened to 10%. Asia-Pacific revenue turned negative, falling 7% after roughly flat results in the fourth quarter, as transaction growth stalled to 1%.
Western Union cut its full-year 2025 revenue growth outlook to 3% to 5% on a GAAP basis and 4% to 6% adjusted, down roughly two to three points from the 5% to 8% and 6% to 9% ranges given at the first quarter. The company dropped GAAP earnings guidance entirely and cut its adjusted earnings per share outlook to $1.25 to $1.35 from $1.75 to $1.85.
The company also pushed back the expected close of its Intermex acquisition to September 1, 2025, after guiding in April to a second-quarter close, and said the delay had pushed out expected cost synergies and pressured margins.
Western Union's effective tax rate provided a partial offset, falling to 20% on a GAAP basis from 28% in the first quarter and 24% a year earlier, while the adjusted tax rate dropped to 14% from 15% in the prior quarter.