Release Date: July 30, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Western Union Co WU reported adjusted revenue of $1 billion, a decline of only 1% year-over-year, a meaningful improvement from the 5% decline in the prior year.
- Consumer money transfer transactions grew 3% in the quarter, a 300 basis point improvement from Q1 and the highest transaction growth rate since Q2 2024.
- The branded digital business continued to perform well, with transactions increasing 25% and adjusted revenue growing 6% in the quarter.
- Consumer Services adjusted revenue was up 12% in the quarter, driven by growth in the bill pay and Travel Money businesses.
- The company launched its Beyond efficiency program, targeting a run rate operating cost reduction of $50 million by the end of the year and $200 million by the end of 2027.
- The Western Union Co (WU) successfully launched its USDPT stablecoin and Digital Asset Network, with the first four exchanges live and trading, and introduced a USDPT stable card.
- Year-to-date operating cash flow was $214 million, up 45% versus last year, driven by lower cash taxes.
Negative Points
- Adjusted EPS came in at $0.31 in the quarter, down from $0.42 a year ago, below expectations due to lower profitability in the Americas retail and Middle East businesses.
- The ongoing slowdown in the retail business in the Americas, particularly in the US, continued to be a significant headwind, with US retail transactions down mid-teens.
- The accelerated shift from cash payout transactions to lower-revenue digital payout-to-account transactions continues to weigh on profitability and margins.
- Higher agent commissions and signing bonuses associated with new partner wins and renewals are increasing costs and pressuring margins.
- The company has paused its share buyback program to maintain its debt-to-EBITDA ratio between 2.5 times and 3 times.
- New customer acquisition economics remain challenged, impacting the overall revenue growth and profitability of the digital business.
- The company lowered its 2026 adjusted EPS guidance to a range of $1.25 to $1.35, reflecting the ongoing margin pressures and weaker-than-expected performance.
Q & A Highlights
Q: Can you provide more detail on the cost side and the drivers behind the margin pressure?
A: CFO Matt Cagwin explained that the margin pressure stems from two major drivers. First, the pace of cost reduction has slowed compared to last year, when the company was able to rightsize departments and exit programs. Second, and more significantly, there has been a shift in revenue mix toward lower contribution profit per transaction (CPPT). This is driven by the acceleration of cash payout to digital in both the US and the Middle East, where digital transactions yield lower profit dollars per transaction than cash payouts. The company is addressing this through its "Beyond efficiency" program, targeting $50 million in run rate cost savings by year-end and $200 million by the end of 2027.
Q: Can you decompose the extent to which payout-to-account transactions are less profitable than retail, and how much of that gap can be closed?
A: CEO Devin McGranahan noted that while digital transactions are roughly margin-similar to retail on a percentage basis, the contribution profit per transaction is significantly different. The company has two levers to address this: growing higher revenue and higher contribution per transaction in the digital business, and aggressively lowering digital payout costs. He provided a concrete example in Colombia, where the team recently lowered the payout cost from over $2 to less than $0.50 for Nequi wallet transactions, dramatically improving contribution profit. CFO Matt Cagwin added that the pressure is also driven by Middle East partners, which have very low revenue per transaction and thus very low profit.
Q: Given the current profitability pressures and broader business headwinds, how are you thinking about the sustainability of the current dividend over the medium term?
A: CEO Devin McGranahan affirmed that the Board of Directors believes the dividend is a strong return to shareholders and that the company has sufficient financial capacity to maintain it. CFO Matt Cagwin added that the company has over $900 million in cash on its books and expects to free up additional capital through its USDPT treasury bridge solution, which could ramp over $1 billion of float in the first quarter of next year. This provides line of sight to improved cash flow, supporting the Board's commitment to the dividend.
Q: After one month into the third quarter, what do you see in terms of US immigration policy? Have things gotten worse or started to ease?
A: CEO Devin McGranahan described the situation as a continuation of the policies and effects seen over the past year, but noted that the effects have stabilized at a certain level. While the negative effects continue, they are no longer worsening and in some cases are abating, though slower than anticipated at the beginning of the year. He noted that the company expected to see more stability by this time due to lapping the effects that peaked in Q3 2025. The impact varies by corridor, with more stability in US-to-Mexico but continued pressure in other corridors like those affected by events in Venezuela.
Q: Can you revisit the opportunities to expand ARPU beyond just customer growth, and where are you with the Beyond digital platform?
A: CEO Devin McGranahan explained that the company has begun pulling back on new customer incentives, as competitive intensity has driven up customer acquisition costs with offers like free transactions for a month. The focus is now on optimizing CAC to LTV, targeting the most valuable customers with higher send frequency and principal amounts. The Beyond digital platform, which is being rolled out in Australia, Europe, and the US before year-end, is expected to improve new customer onboarding success rates and reduce the magnitude of needed new offer incentives, thereby improving returns on acquisition investments.
Q: On the higher agent bonuses, is that same dynamic playing out in other regions, and what drove lower profitability in Travel Money?
A: CFO Matt Cagwin addressed Travel Money first, noting that travel is down in Europe, with Heathrow travel patterns negative for the first time since COVID, putting pressure on profitability. On agent bonuses, he explained that it's a heavy agent renewal cycle this year, with wins like Deutsche Post and Canada Post being competitive takeaways at the higher end of typical strategic partner economics. CEO Devin McGranahan added that the company successfully renewed contracts with major US retailers like Kroger, Walmart, and Albertsons in the face of increased competition, securing these relationships at economics not too different from previous terms.
Q: On remittance taxes, what are your thoughts on the Tennessee proposal and any other state or local taxes on the horizon?
A: CEO Devin McGranahan noted that the federal remittance tax drove up card acceptance to over 20% in the retail network, as customers moved to bank products to avoid the tax. Several states, most notably Tennessee, have passed or proposed state-specific taxes. While Tennessee is an important state, it's not comparable to Florida, Texas, or California in magnitude. He noted that customers can simply cross state borders to send money if the tax equation becomes significant, and the company doesn't expect significant impact from these proposals.
Q: Can you disaggregate how much of the change in EPS guidance is coming from each of the various factors outlined?
A: CFO Matt Cagwin explained that the first half of the year saw EPS down $0.15 in Q1 and $0.11 in Q2 year-over-year, with the full-year guide effectively down $0.50. He noted that Q1 had pressure from FX losses and delayed money from a partner, while roughly 50-60% of the pressure in both quarters came from the mix shift items discussed, including lower profitability in Americas retail and Middle East business. The remainder was driven by other factors like higher operating expenses and agent signing bonuses.
Q: Can you provide more color on the mix shift dynamics, particularly the acceleration in some corridors versus deceleration in others?
A: CFO Matt Cagwin explained that retail is very profitable, particularly cash payout, but the company has faced double-digit declines in US retail for about six quarters. While there have been improvements in US-to-Mexico and US-to-Canada corridors, there's been deterioration in US to the rest of the world, which has higher yields. CEO Devin McGranahan highlighted Colombia as a surprising example, where the shift from cash payout to digital wallets like Nequi and real-time payment systems like Bre-B has been remarkably fast, significantly impacting economics as digital payout economics differ greatly from cash payout in the same corridor.
Q: On the cost side, what are the real levers within the product-specific P&L for retail
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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