Full Transcript: Western Union Q2 2026 Earnings Call

Western Union (NYSE: WU ) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

Access the full call at Summary Western Union reported Q2 2026 adjusted revenue of $1 billion, a 1% decline year-over-year, with consumer money transfer transactions growing by 3%. 42 last year. Western Union launched the Beyond Efficiency program targeting $50 million in cost reductions by year-end, focusing on streamlining operations and adopting AI solutions. The digital business saw 25% transaction growth, but revenue growth was muted by lower RPT corridors.

Digital payout-to-account transactions grew 55%. The company plans to roll out the Beyond Digital platform in major markets and leverage their USDPT stablecoin for improved settlement and liquidity. Western Union's branded digital business continues to grow, but customer acquisition costs and lower profitability per transaction in certain regions are challenges. 35, driven by new partnerships and cost reduction initiatives.

Full Transcript OPERATOR Good day and welcome to the Western Union second quarter 2026 results conference call. All participants will be in listen-only mode. After today's presentation there will be an opportunity to ask questions. Please note this event is being recorded.

I would now like to turn the conference over to Tom Hadley, Vice President of Investor Relations. Tom, please go ahead. Tom Hadley, Vice President of Investor Relations Thank you. On today's call we will discuss the company's second quarter results and our 2026 year outlook, and then we will take your questions.

com under the Investor Relations tab and will remain available after the call. Additional operational statistics have been provided in supplemental tables with our press release. Joining me on the call today is our CEO, Devin McGranahan, and our CFO, Matt Cagwin. Today's call is being recorded and our comments include forward-looking statements.

Please refer to the cautionary language in the earnings release and in Western Union's filings with the Securities and Exchange Commission, including the 2025 Form 10-K, for additional information concerning factors that could cause actual results to differ materially from the forward-looking statements. During the call we will discuss some items that do not conform to generally accepted accounting principles. com, under the Investor Relations section. I will now turn the call over to our Chief Executive Officer, Devin McGranahan.

Devin McGranahan, Chief Executive Officer Good afternoon, and welcome to Western Union's second quarter 2026 financial results conference call. In the second quarter we continued to face significant margin pressures due to the ongoing slowdown in the retail business in the Americas, higher agent commissions, and the continued acceleration of our digital payout-to-account business. 06 better than Q1, having eliminated many of the one-time effects we saw in the first quarter.

However, the accelerated shift from cash payout transactions with higher revenue per transaction (RPT) and higher contribution profit per transaction (CPPT) to pure digital transactions continues to weigh on profitability. On a more positive note, despite the strong macro headwinds, our strategy and our significant geographic diversification enabled us to report revenue of $1 billion on an adjusted basis. This was a decline of only 1% year over year.

Consumer money transfer transactions grew 3% in the quarter, which was a 300 basis point improvement from Q1, a 600 basis point improvement year over year, and the highest transaction growth rate since the second quarter of 2024. S. to Mexico declined a little over 3% on a transaction basis in the quarter, a nearly 1,000 point improvement year over year. S.

Retail continued to be mid-teens negative on a transaction basis in the second quarter, well below our expectations. While overall global transaction growth has improved significantly, it is important to note that it comes from lower contribution profit per transaction, which is putting pressure on our margins. 42 in the quarter a year ago. This is below our expectations and is driven by lower profitability in our Americas retail business and lower profitability in our Middle East business as volumes there continue to shift rapidly from our legacy partners in the region to newer digital-only partners at lower RPTs and profitability.

Our branded digital business continued to perform well, with transactions increasing by 25% this quarter and adjusted revenue by 6%. While transaction growth continues to accelerate, the revenue growth is being muted by strong growth in lower RPT corridors and a significant increase in digital payout to account, which saw 55% growth in the quarter. As I mentioned in previous calls, our new customer acquisition economics remain challenged in the quarter, which impacted the overall revenue growth and profitability of our digital business.

We continue to roll out our Beyond Digital platform, which I believe will enable better customer experience, improve our ability to market at a corridor level, and potentially reduce the magnitude of needed new-offer incentives. In Consumer Services, adjusted revenue was up 12% in the quarter, driven by growth in our bill pay business as well as continued growth in travel money. Our financial results in this quarter came in below our expectations for the second quarter in a row. This is not acceptable, and we are not satisfied with the current operating performance and will be implementing significant changes as a result.

While the external macro factors over the past 12 months have undoubtedly accelerated the underlying trends in the business, we recognize that in the near term these trends are likely to continue at elevated levels. We have been navigating this mix shift away from payout to cash over the past several years, as well as the move from retail to digital, through cost savings initiatives and the reallocation of investments. The impact of ongoing changes in immigration in the Americas has accelerated those dynamics, and we must now more aggressively change our cost base to reflect the reality of a future with continued pressure on CPPT.

Over the past 12 months we have seen the percentage of payout-to-account and payout-to-wallet transactions grow by 25%. This is an important trend that will likely continue to cause ongoing margin headwinds unless we vigilantly reduce our fixed cost base, lower our account payout costs, and increase our ability to cost-effectively drive digital growth. We have spent much of the last eight weeks evaluating what is working across these three dimensions and what is not. That process has reinforced our belief that the long-term fundamentals of our business remain intact.

Our brand, customer relationships, market position, scale, and digital capabilities continue to provide a strong foundation upon which to build. However, a strong foundation alone is no longer enough. We must accelerate the transformation of our operating model to enable us to maintain our ability to invest in our next-generation digital initiatives while simultaneously significantly lowering our ongoing operating costs. The program we have launched is called Beyond Efficiency.

It has five key program elements, and we will be targeting a run-rate operating cost reduction of $50 million by the end of the year. The five key program pillars include: The first pillar, accelerate the dual-track strategy by reducing redundancy and streamlining processes that do not align with the Beyond strategy. As a 175-year-old company, we have a lot in the garage. Organizations build up over time, and what were once new ideas or areas of investment are now ongoing operating costs with limited or no contribution to the Beyond strategy.

For example, as we move to the Beyond Digital framework, we have made the decision to close down our existing digital wallets in Europe, saving the company a run rate of $6 to $8 million. We anticipate launching our Beyond Digital platform to replace those in Europe by the end of the year. The second pillar is to reduce discretionary operations and technology work by 20% that is not directly tied to growing digital. We are targeting a 20% reduction in discretionary operations and technology capacity by the end of the year, forcing a prioritization that will cause only the most impactful initiatives to get work done.

The third pillar is to rapidly adopt AI to drive automation and reduce manual work. Given our legacy system limitations, we have ramped up our adoption of AI and other automation platforms significantly over the past six months, and we see meaningful opportunity to eliminate manual work and reduce the friction that results from our large, geographically dispersed, and highly regulated business. The fourth pillar is to move to a more aligned operating model. As part of our Beyond Efficiency program, we are looking to align people and work closer to the region they support.

This will require us to localize what today are distributed global functions. For example, we have been moving agent onboarding for the Asia Pacific region from Lithuania and Costa Rica to our operating center in Manila. This will improve time zone and geographical alignment and reduce unit labor costs. We anticipate this will improve on all three dimensions of cost, quality, and speed.

The fifth pillar is to reduce the operating costs of moving money in a world that is rapidly going to digital payouts. We must reduce the cost of capital that we have floating around the system, lower payout costs, improve FX rate competitiveness, and accelerate real-time settlement through our own digital currency, USDPT. These initiatives are focused on creating a leaner organization while maintaining our ability to invest in the areas that matter most strategically. Importantly, this is not a short-term exercise designed solely to reduce near-term costs.

Rather, it is a structural effort to improve how we operate and to position the company for stronger, more sustainable profitability in the years ahead. We understand that our investors expect tangible evidence that these actions are producing results. While meaningful transformation takes time, our expectation is that the combination of improving growth and enhanced cost discipline will strengthen margins, improve profitability and increase returns over time. Our objective remains straightforward: generate consistent growth, improve operating profitability, strengthen free cash flow generation and create long-term shareholder value.

I look forward to updating you on the progress of this program in the coming quarters. Now, switching briefly to the macro, as you know, remittances in the Americas have faced meaningful pressure that began in late 2024 driven by the changes in immigration policy. S. to Mexico, for example, revenue growth rates improving 500 basis points sequentially compared to the first quarter.

Retail continues to underperform relative to digital, and that dynamic continues to weigh on the profitability of our Americas businesses. As we have discussed, the growth in retail business is almost always dependent on new migration. When immigrants come to a new country, most frequently they transact in retail out of necessity, given cultural and language issues, lack of access to digital funding and often heavy cash remuneration. S.

and around parts of the Latin American region, it becomes difficult to replace customers that migrate to digital channels, find alternative options or leave the country to return home. This doesn't mean the retail business can't improve like we have seen over the last several quarters. It just means it will be difficult to get the business back to true growth without a meaningful change in immigration policy or much more aggressive gains in our market share. We do believe we can take market share, and we should start to see the benefits as Canada Post and Deutsche Post ramp up, which will provide a tailwind starting in Q3 and continuing in 2027.

We also recently launched an industry-first partnership with Total Wireless, a Verizon value brand that combines wireless connectivity and cross-border money movement. The partnership expands our reach into the telecom channel, providing access to millions of subscribers through thousands of retail locations and extending our distribution footprint across both digital and retail channels.

Recognizing that consumer behavior continues to evolve and digital engagement is becoming increasingly important across every aspect of the customer journey, we believe our digital-first strategy and our digital platforms represent the most attractive growth opportunities over the long term. Over the last couple of quarters we have seen substantial gains in the Middle East while our digital business in other parts of the world has plateaued. We spoke on the last couple of calls about needing to better manage promotional offers in places like the United States and Europe, and as such we have begun to pull back.

While the benefits of this more disciplined approach are not immediately obvious in this quarter's results, in the last few months new customer growth rates have improved and have done so at higher RPTs, which should bode well for better revenue and profitability in future quarters. That said, pulling back on new customer incentives is just one element of our revised approach. Since our investor day, we have been executing our digital acceleration program along three axes. The first is the restructuring of our digital go-to-market model and team.

We have now completed the restructuring of our go-to-market team, moving digital team members into the regional operating units that they support. This now brings decision-making and local market knowledge together in one team. We have also been adding new senior digital talent with sector expertise across the regions. In particular, I would like to welcome Shishir Singh, who joined us last quarter as our new Chief Digital Officer leading the Global Digital Product Team and the North American go-to-market team.

Shishir brings deep knowledge and experience to us and has already begun to make material impacts. Second, we are accelerating our Beyond Digital Platform. S. before the end of this year.

We are expecting the Beyond Digital Platform to enable us to improve new customer onboarding success rates and thus improve the return on new customer acquisition in these important markets. We continue to target rolling out the Beyond Digital Platform to all of our major markets by the end of 2027. Third, we are focusing on investments by corridor. Our analytics and insights have improved and we've begun to differentiate our level of new customer investment in both marketing and new customer incentives at the corridor level.

This higher level of fidelity and targeting, we believe, will enable us to earn better returns on the same overall investment pool even if it means slowing down in some larger corridors where competitive dynamics inhibit strong returns. Before I turn the call over to Matt, I would like to discuss further a few minutes to provide an update on our digital asset strategy and the progress we are making. S. dollar stablecoin.

S. S. Treasury instruments. First, we successfully launched USDPT in May of this year, which established the foundation for a regulated digital dollar that can support payments, treasury operations and customer use cases across our global network.

USDPT is now live and available through an expanding ecosystem of exchanges, financial institutions and partners, with the first four exchanges now live and actively trading USDPT. Second, we have introduced our Treasury Bridge solution, which utilizes USDP to support more efficient movement of liquidity and capital across our global network. This initiative has the potential to enhance funding flexibility, improve settlement speed and reduce reliance on the traditional correspondent banking infrastructure. We are testing with multiple counterparties to use USDPT as a form of settling our cross-border money transfer transactions.

Third, we launched the Digital Asset Network, or DAN, which extends Western Union's unique global distribution capabilities to the digital asset ecosystem. Through DAN, digital asset exchanges and other partners can connect to Western Union's payout infrastructure, enabling customers to convert digital assets into local currency and access funds throughout our global network.