Western Union Reports First Quarter 2023 Results

• Q1 GAAP revenue of $1.04 billion, down 10% on a reported basis, or 1% on an adjusted basis
• GAAP EPS of $0.40, a decrease of 46% year-over-year; Adjusted EPS of $0.43, a decrease of 16% year-over-year
• GAAP operating margin of 19.7%, a decrease of 80 bps year-over-year; Adjusted operating margin of 20.5%, a decrease of 130 bps year-over-year
• New branded digital go-to-market strategy continued momentum in Q1 with new customers up 14% and transactions up 7% globally, while U.S. outbound new customers were up 21% and transactions were up 11% ¹

The Western Union Company (the “Company”) (NYSE: WU) today reported first quarter 2023 results.

The Company’s first quarter revenue of $1.04 billion declined 10% on a reported basis, or 1% on a constant currency basis excluding the contribution from Business Solutions, compared to the prior year period. The suspension of operations in Russia and Belarus negatively impacted revenue by approximately three percentage points, while Argentina inflation benefited revenue by approximately two percentage points. Softness in the retail money transfer business as well as the impact of promotional pricing activities related to the Company’s new branded digital go-to-market strategy was partially offset by Other, which includes the Company’s bill payments businesses and retail money order.

GAAP EPS in the first quarter was $0.40 compared to $0.74 in the prior year period. The year-over-year decrease in GAAP EPS was primarily due to the partial recognition of the Business Solutions gain in the prior year period.

Adjusted EPS in the first quarter was $0.43 compared to $0.51 in the prior year period. The year-over-year decline in adjusted EPS was driven by lower operating profit due to a $0.09 contribution from Business Solutions, Russia, and Belarus in the prior year period, partially offset by lower share count.

“I am pleased to say we exceeded our expectations in the first quarter,” said Devin McGranahan, President and Chief Executive Officer of Western Union. “This was achieved through momentum created by our 'Evolve 2025' strategic initiatives, strength in our Middle East business, and the Company’s remaining business performing in-line with our expectations.”

McGranahan added, “While revenue remained below our long-term aspirations for the Company, we were pleased to see a significant improvement in trajectory relative to the fourth quarter in many key markets around the world. We are particularly pleased with the ongoing momentum in our digital business with 14% growth in our new branded digital customer base, which accelerated global branded digital transaction growth to 7%. We remain focused on driving our 'Evolve 2025' strategy to become the leading provider of branded accessible financial services serving aspiring populations around the world.”

Q1 Business Results

• C2C revenues declined 6% on a reported basis, or 5% constant currency, while transactions declined 6% compared to the prior year period. The suspension of operations in Russia and Belarus negatively impacted C2C revenue and transactions by three percentage points and six percentage points, respectively. Regionally, softness in Europe & CIS, North America, and APAC was partially offset by continued strength in LACA and strength in MEASA led by Iraq.

• Branded digital revenue declined 7% on a reported basis, or 6% constant currency, and represented 22% and 29% of total C2C revenues and transactions, respectively. Transactions grew 7% in the quarter driven by the Company’s new go-to-market strategy. The Company expects that revenue will be adversely impacted in the near term related to its new go-to-market strategy, which includes promotional pricing activities. The suspension of operations in Russia and Belarus negatively impacted both branded digital revenue and transactions by 2 percentage points in the quarter.

Q1 Financial Results

• GAAP operating margin in the quarter was 19.7%, compared to 20.5% in the prior year period. The adjusted operating margin was 20.5% compared to 21.8% in the prior year period. The decrease in the adjusted operating margin was primarily due to increased technology investment driven by the Company’s 'Evolve 2025' strategy and lower revenue.

• The GAAP effective tax rate in the quarter was 16.1%, compared to 19.0% in the prior year period, with the decrease primarily due to the effects of the sale of Business Solutions offset by discrete expenses in the current period. The adjusted effective tax rate was 13.5% in the quarter, compared to 13.0% in the prior year period, with the increase primarily due to discrete expenses in the current period.

• Cash flow from operating activities was $137 million compared to $200 million in the prior year period due to timing of payments related to expenses incurred in previous periods. The Company returned $88 million to shareholders in the first quarter through dividends.

2023 Outlook

Today, the Company reaffirmed its 2023 adjusted full year financial outlook provided on February 7, 2023. The outlook assumes no material changes in macroeconomic conditions, including changes in foreign currencies or Argentina inflation.

The 2023 outlook is as follows:

Non-GAAP Measures

Western Union presents a number of non-GAAP financial measures because management believes that these metrics provide meaningful supplemental information in addition to the GAAP metrics and provide comparability and consistency to prior periods. Constant currency results assume foreign revenues are translated from foreign currencies to the U.S. dollar, net of the effect of foreign currency hedges, at rates consistent with those in the prior year.

Reconciliations of non-GAAP to comparable GAAP measures are available in the accompanying schedules and in the “Investor Relations” section of the Company’s website at https://ir.westernunion.com.

GAAP figures reflect an expected partial year of Business Solutions ownership, including contractual payments to the buyers, representing profits between the first and third closings. Adjusted constant currency revenue growth metrics exclude contributions from Business Solutions. Adjusted operating profit metrics exclude the following items, as applicable: contributions from Business Solutions, operating expense redeployment program costs, acquisition and divestiture costs, Russia and Belarus exit costs, and Business Solutions exit costs. Adjusted effective tax rate and adjusted earnings per share metrics exclude the following items and the related taxes, as applicable: Business Solutions gain, operating expense redeployment program costs, acquisition and divestiture costs, Russia and Belarus exit costs, Business Solutions exit costs, and the reversal of significant uncertain tax positions.

Additional Statistics

Additional key statistics for the quarter and historical trends can be found in the supplemental tables included with this press release. All amounts included in the supplemental tables to this press release are rounded to the nearest tenth of a million, except as otherwise noted. As a result, the percentage changes and margins disclosed herein may not recalculate precisely using the rounded amounts provided.

Environmental, Social, and Governance (ESG)

Western Union is committed to making a positive impact. For more details on how Western Union is addressing some of the most pressing issues facing society, our shared environment, and our Company, please view our latest ESG report: https://corporate.westernunion.com/esg.

Investor and Analyst Conference Call and Presentation

The Company will host a conference call and webcast at 4:30 p.m. ET today.

The webcast and presentation will be available at https://ir.westernunion.com. Registration for the event is required, so please register at least fifteen minutes prior to the scheduled start time. A webcast replay will be available shortly after the event.

To listen to the conference call via telephone in the U.S., dial +1 (719) 359-4580 fifteen minutes prior to the start of the call, followed by the meeting ID, which is 920 8368 6498 and the passcode, which is 123540. To listen to the conference call via telephone outside the U.S., dial the country number from the international directory, followed by the meeting ID, which is 920 8368 6498 and the passcode, which is 123540.

Safe Harbor Compliance Statement for Forward-Looking Statements

This press release contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict. Actual outcomes and results may differ materially from those expressed in, or implied by, our forward-looking statements. Words such as "expects," "intends," "targets," "anticipates," "believes," "estimates," "guides," "provides guidance," "provides outlook," "projects," "designed to," and other similar expressions or future or conditional verbs such as "may," "will," "should," "would," "could," and “might” are intended to identify such forward-looking statements. Readers of this press release of The Western Union Company (the “Company,” “Western Union,” “we,” “our,” or “us”) should not rely solely on the forward-looking statements and should consider all uncertainties and risks discussed in the Risk Factors section and throughout the Annual Report on Form 10-K for the year ended December 31, 2022. The statements are only as of the date they are made, and the Company undertakes no obligation to update any forward-looking statement.

Possible events or factors that could cause results or performance to differ materially from those expressed in our forward-looking statements include the following: (i) events related to our business and industry, such as: changes in general economic conditions and economic conditions in the regions and industries in which we operate, including global economic downturns and trade disruptions, or significantly slower growth or declines in the money transfer, payment service, and other markets in which we operate, including downturns or declines related to interruptions in migration patterns or other events, such as public health emergencies, epidemics, or pandemics, such as COVID-19, civil unrest, war, terrorism, natural disasters, or non-performance by our banks, lenders, insurers, or other financial services providers; failure to compete effectively in the money transfer and payment service industry, including among other things, with respect to price or customer experience, with global and niche or corridor money transfer providers, banks and other money transfer and payment service providers, including digital, mobile and internet-based services, card associations, and card-based payment providers, and with digital currencies and related exchanges and protocols, and other innovations in technology and business models; geopolitical tensions, political conditions and related actions, including trade restrictions and government sanctions, which may adversely affect our business and economic conditions as a whole, including interruptions of United States or other government relations with countries in which we have or are implementing significant business relationships with agents, clients, or other partners; deterioration in customer confidence in our business, or in money transfer and payment service providers generally; failure to maintain our agent network and business relationships under terms consistent with or more advantageous to us than those currently in place; our ability to adopt new technology and develop and gain market acceptance of new and enhanced services in response to changing industry and consumer needs or trends; mergers, acquisitions, and the integration of acquired businesses and technologies into our Company, divestitures, and the failure to realize anticipated financial benefits from these transactions, and events requiring us to write down our goodwill; decisions to change our business mix; changes in, and failure to manage effectively, exposure to foreign exchange rates, including the impact of the regulation of foreign exchange spreads on money transfers and payment transactions; changes in tax laws, or their interpretation, any subsequent regulation, and unfavorable resolution of tax contingencies; any material breach of security, including cybersecurity, or safeguards of or interruptions in any of our systems or those of our vendors or other third parties; cessation of or defects in various services provided to us by third-party vendors; our ability to realize the anticipated benefits from restructuring-related initiatives, which may include decisions to downsize or to transition operating activities from one location to another, and to minimize any disruptions in our workforce that may result from those initiatives; our ability to attract and retain qualified key employees and to manage our workforce successfully; failure to manage credit and fraud risks presented by our agents, clients, and consumers; adverse rating actions by credit rating agencies; our ability to protect our trademarks, patents, copyrights, and other intellectual property rights, and to defend ourselves against potential intellectual property infringement claims; material changes in the market value or liquidity of securities that we hold; restrictions imposed by our debt obligations; (ii) events related to our regulatory and litigation environment, such as: liabilities or loss of business resulting from a failure by us, our agents, or their subagents to comply with laws and regulations and regulatory or judicial interpretations thereof, including laws and regulations designed to protect consumers, or detect and prevent money laundering, terrorist financing, fraud, and other illicit activity; increased costs or loss of business due to regulatory initiatives and changes in laws, regulations and industry practices and standards, including changes in interpretations, in the United States and abroad, affecting us, our agents or their subagents, or the banks with which we or our agents maintain bank accounts needed to provide our services, including related to anti-money laundering regulations, anti-fraud measures, our licensing arrangements, customer due diligence, agent and subagent due diligence, registration and monitoring requirements, consumer protection requirements, remittances, immigration, and sustainability reporting including climate-related reporting; liabilities, increased costs or loss of business and unanticipated developments resulting from governmental investigations and consent agreements with or enforcement actions by regulators; liabilities resulting from litigation, including class-action lawsuits and similar matters, and regulatory enforcement actions, including costs, expenses, settlements, and judgments; failure to comply with regulations and evolving industry standards regarding consumer privacy, data use, the transfer of personal data between jurisdictions, and information security, including with respect to the General Data Protection Regulation in the European Union and the California Consumer Privacy Act; failure to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as regulations issued pursuant to it and the actions of the Consumer Financial Protection Bureau and similar legislation and regulations enacted by other governmental authorities in the United States and abroad related to consumer protection and derivative transactions; effects of unclaimed property laws or their interpretation or the enforcement thereof; failure to maintain sufficient amounts or types of regulatory capital or other restrictions on the use of our working capital to meet the changing requirements of our regulators worldwide; changes in accounting standards, rules and interpretations, or industry standards affecting our business; and (iii) other events, such as catastrophic events and management’s ability to identify and manage these and other risks.

About Western Union

The Western Union Company (NYSE: WU) is committed to helping people around the world who aspire to build financial futures for themselves, their loved ones and their communities. Our leading cross-border, cross-currency money movement, payments and digital financial services empower consumers, businesses, financial institutions and governments—across more than 200 countries and territories and nearly 130 currencies—to connect with billions of bank accounts, millions of digital wallets and cards, and a global footprint of hundreds of thousands of retail locations. Our goal is to offer accessible financial services that help people and communities prosper. For more information, visit www.westernunion.com.

WU-G

THE WESTERN UNION COMPANY

NOTES TO KEY STATISTICS

(Unaudited)

(in millions, unless indicated otherwise)

Western Union’s management believes the non-GAAP financial measures presented within this press release and related tables provide meaningful supplemental information regarding the Company’s results to assist management, investors, analysts, and others in understanding the Company’s financial results and to better analyze operating, profitability, and other financial performance trends in the Company’s underlying business because they provide consistency and comparability to prior periods or eliminate currency volatility, increasing the comparability of the Company's underlying results and trends.

A non-GAAP financial measure should not be considered in isolation or as a substitute for the most comparable GAAP financial measure. A non-GAAP financial measure reflects an additional way of viewing aspects of the Company’s operations that, when viewed with the Company’s GAAP results and the reconciliation to the corresponding GAAP financial measure, provides a more complete understanding of the Company’s business. Users of the financial statements are encouraged to review the Company’s financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is included below, where not previously reconciled above.