Western Union Q2 revenue slips as Russia exit bites
Western Union had a strong second-quarter as remittances flow dropped due to the crisis in Russia. The embattled firm said that its revenue dropped by 12% on a reported basis to $1.1 billion.
Western Union earnings
Western Union is one of the oldest financial services companies. It operates globally and helps people move money across different countries. With inflation rising, the amount of money sent around the world has decline in the past few months.
Western Union said that its consumer-to-consumer revenue crashed by 9% as transactions declined by 13%. This happened as the company stopped transactions to and from Belarus and Russia. Transactions in Erope, North America, and Asia Pacific also declined.
Meanwhile, its digital money transfer revenue declimed by 6% as it contributed to about 25% of the total consumer to consumer business. Revenue from Westernunion.com declined by 1%.
At the same time, Western Union managed to increase its operating margin from 19.8% to 19.8%. This increase happened because it did not include its business solutions business that the company exited recently. Western Union’s effective tax rate was 17.9%.
WU lowers its guidance
Worse, Western Union decided to lower its revenue guidance for the year. It expects its revenue to drop by between 11% and 13%. It also expects its profit to be between $1.75 and $1.85 per share. In a statement, the firm’s CEO said:
“We have identified new business opportunities and operational performance improvements, as well as started to create an organizational structure that can drive execution. We are beginning to see the effects of certain operational improvements in second quarter margin results.”
Western Union is facing the challenge of pricing as inflation surges. Because of its business mode and the rising competition, the company has found it extremely difficult to boost prices.