Western Union Reports Fourth Quarter and Full Year 2023 Results

• Q4 GAAP revenue of $1.05 billion, down 4% on a reported basis, or up 3% on an adjusted basis
• Q4 GAAP EPS of $0.35, down 46%, and Q4 adjusted EPS of $0.37, up 16%
• Consumer Money Transfer transactions grew 5% in Q4 led by 13% growth in Branded Digital transactions
• Generated nearly $800 million in operating cash flow in 2023, with adjusted free cash flow conversion over 100%
• Board of Directors approve dividend of $0.235 per share in the first quarter of 2024

The Western Union Company (the "Company" or "Western Union") (NYSE:WU) today reported fourth quarter and full year 2023 results.

The Company's fourth-quarter revenue of $1.05 billion declined 4% on a reported basis or grew 3% on a constant currency basis excluding the contribution from Business Solutions, compared to the prior year period. Argentinian inflation benefited revenue by approximately four percentage points.

"2023 was an important year for Western Union, as it was the first full year implementing our ‘Evolve 2025' strategy," said Devin McGranahan, President and Chief Executive Officer. "We made significant progress on strategic objectives including returning our Branded Digital business back to revenue growth and stabilizing retail transaction growth. We also delivered strong operating cash flow and returned significant capital to our shareholders through dividends and share repurchases."

McGranahan added, "As we enter 2024, we are confident in our ability to continue executing on our strategy, to drive long-term growth, and expand our value proposition to better serve the aspiring populations of the world."

GAAP EPS in the fourth quarter was $0.35 compared to $0.65 in the prior year period. The year-over-year decrease in GAAP EPS was due to the prior year period being positively impacted by both the sale of the Business Solutions business and a lower GAAP effective tax rate due to the reversal of uncertain tax positions. Adjusted EPS in the fourth quarter was $0.37 compared to $0.32 in the prior year period, with the current year period benefiting from higher adjusted operating profit and a lower share count.

The Board of Directors today approved the first quarter dividend of $0.235 per common share, payable March 29, 2024, to shareholders of record at the close of business on March 15, 2024.

Q4 Business Results

• The Company's Consumer Money Transfer (CMT) segment revenue, which was previously referred to as the Consumer-to-Consumer (C2C) segment, decreased 1% on a reported and constant currency basis, while transactions increased 5% compared to the prior year period. Regionally, revenue increased in MEASA, led by Iraq, and LACA. This growth was partially offset by softness in Europe & CIS, North America, and APAC, which all improved sequentially.

• Branded Digital revenue increased 4% on a reported and constant currency basis with transaction growth of 13%. The Branded Digital business represented 23% and 29% of total CMT revenues and transactions, respectively.

Q4 Financial Results

• GAAP operating margin in the quarter was 15.1%, compared to 13.9% in the prior year period. The adjusted operating margin was 16.1% compared to 15.8% in the prior year period. The increase in the GAAP and adjusted operating margin was due to the net savings related to the Company's Operating Expense Redeployment Program and changes in foreign currencies, partially offset by higher marketing investment.

• The GAAP effective tax rate in the quarter was 11.9%, compared to (15.2%) in the prior year period. The adjusted effective tax rate was 14.1% in the quarter, compared to 14.7% in the prior year period.

2023 Full Year Financial Results

• The Company's full year 2023 revenue of $4.36 billion declined 3% on a reported basis or grew 4% on a constant currency basis excluding the contribution from Business Solutions, compared to the prior year. Argentinian inflation benefited revenue by approximately three percentage points.

• GAAP operating margin was 18.8%, compared to 19.8% in the prior year. The adjusted operating margin was 19.6% compared to 20.4% in the prior year. The decrease in the GAAP and adjusted operating margin was primarily due to higher variable costs and technology spend related to the Company's ‘Evolve 2025' strategy, partially offset by net savings related to the Company's 5-year $150 million Operating Expense Redeployment Program, which generated savings of over $50 million in 2023.

• The GAAP effective tax rate for 2023 was 16.1% compared to 9.7% in the prior year. The adjusted effective tax rate was 15.2% compared to 15.0% in the prior year.

• GAAP EPS was $1.68, compared to $2.34 in 2022, while adjusted EPS was $1.74, compared to $1.76 in 2022. In 2022, Business Solutions and operations in Russia and Belarus contributed $0.09 to EPS. The year-over-year decrease in GAAP EPS was primarily due to the gain on sale from the Business Solutions business as well as a lower effective tax rate due to the reversal of uncertain tax positions in the prior year. The year-over-year decrease in adjusted EPS was due to lower operating profit, partially offset by lower share count.

• Cash flow from operating activities was $783 million for the year. In 2023, the Company returned approximately $646 million to shareholders in dividends and share repurchases, consisting of $346 million in dividends and $300 million in share repurchases.

2024 Outlook

The Company expects the following financial outlook for full year 2024, which assumes no material changes in macroeconomic conditions, including changes in foreign currencies or Argentinian inflation.

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.

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 15 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 15 minutes prior to the start of the call, followed by the meeting ID, which is 995 0186 3336, and the passcode, which is 753563. 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 995 0186 3336, and the passcode, which is 753563.

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, 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; 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, 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 ("CFPB") and similar legislation and regulations enacted by other governmental authorities in the United States and abroad related to consumer protection; 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 over 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.

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