The Western Union Company

Good day and welcome to the Western Union Company's second quarter 2021 earnings release conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Brad Winbigler, Head of Treasury and Investment Relations. Please go ahead.

Thank you. On today's call, we will discuss the company's second quarter 2021 results and our financial outlook for 2021, and then we will take your questions. The slides for the company of this call and webcast can be found at westernunion.com under the Investment Relations tab and will remain available after the call. Additional operational statistics have been provided in supplemental tables with our press release. On our call today is our CEO, Hikmet Ersek, and our CFO, Raj Agarwal. 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 2020 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. We have reconciled those items in the most comparable gap measures on our website, westernunion.com, under the investor relations section. We will also discuss certain adjusted metrics. The expenses that have been excluded from adjusted metrics are specific to certain initiatives, but may be similar to the types of expenses that the company has previously incurred and can reasonably expect to incur in the future. All statements made by Western Union officers on this call are the property of the Western Union company and subject to copyright protection. Other than the replay noted in our press release, Western Union has not authorized Ms. Flang's responsibility for any recording, replay, or distribution of any transcription of this call. I will now turn the call over to our CEO, Hikmet Ersec.

Thank you, Brett, and thank you all for joining us this afternoon to review our second quarter results and the progress of our business. Our second quarter performance was strong, and we are on track to achieve our adjusted 2021 financial outlook with revenue growth reflecting sequential improvements in underlining trends and a favorable comparison to the prior year period which was impacted by COVID-19 pandemic. Profit trended as expected in the quarter as we continue to make strategic technology investment to strengthen our market leading platform and digital capabilities. Our business remained resilient despite global uncertainties related to ongoing COVID-19 resurgences from the Delta variant and the potential risk it poses to economic recovery. Our strategy to be a leader in cross-border, cross-currency money movement and payment serving consumers, businesses, and financial institutions remains unchanged. We remain confident in our ability to exceed $1 billion of digital revenue in 2021, supported by continuous strong growth in our Woo.com business and our digital partnership business. The expansion of our Woo.com customer base position as well, as we look to build a consumer ecosystem, deepening engagement with our customers and providing them access to a wider array of products and services. We will discuss more on our consumer ecosystem strategy in just a moment. But first, I'd like to highlight another important strategic development, which is the business solutions transaction we announced today. Today, we separately announced that we reached a definitive agreement to sell our business solution business to Goldfinch Partners and to Baofeng Group for $910 million. Small and medium-sized businesses and organizations around the world rely on Western Business Solutions as their global payments for an exchange and hedging partner. and we believe that Goldfish Partners and the Baupost Group are well positioned to invest in the business to deliver good value and innovation to these clients. With the planned sale of West Union Business Solutions, which was approximately 7% of total company revenue during the last 12 months, ended June 30th, 2021, now we will be fully focused on increasing our penetration of the global cross-border consumer payments market expanding our digital partnership business, and increasing our total addressable market to our Western Union branded ecosystem strategy. The company will benefit by having a single global payments platform capable of serving multiple use cases and customer segments, including fintech companies like Google Pay, telecom companies like STC Pay, and banks and other financial institutions like Spare. This requires a modern, adaptable platform that provides a strong user experience for our customers, agents, and partners. And we are well on our way in this regard, with significant recent progress in our cloud migration, pricing, automated marketing, and customer support built on a foundation of advanced machine learning and omnichannel engagement. These developments enable us to be more efficient, but most importantly, improve the customer experience and identify incremental revenue opportunities. Continuing technology investment in our unique global platform remains a key area of focus for us. We also remain focused on enhancing our market-leading network by improving our coverage, cost and quality. On a year-to-day basis, our new agent signings will expand our network by approximately 18,000 retail locations. We have also renegotiated contracts with over 50 agents year-to-date reflecting our commitment to optimize commissions. Finally, we continue to enhance our global account payout capabilities, which is now available in over 125 countries with real-time capabilities in approximately 100 countries. Over 60% of our global account payout transaction volume was delivered real-time. Turning back to our consumer ecosystem strategy, We are excited about our plan to pilot to our West Union International Bank a Wu-branded multi-currency bank account, debit card, and integrated money transfer solution in a couple of European countries later this year. Our initial focus will be testing and learning, and then we will evaluate how we expand from there. Longer term, we see significant opportunity for our consumer ecosystem strategy. We are a trusted provider to a large, unique customer segment the global migrant community, which has many needs beyond money transfer, such as insurance, lending, and travel, and it's often not well served in the market. Western Union, with its trusted brand, large and growing digital customer base, and global platform, is well positioned to execute on this opportunity. While we are fully focused on the implementation of our profitable growth strategy, we also remain committed to advance environmental, social, and governance, or ESG, at Western Union. I would encourage you to read our 2020 ESG report released in June to learn more about our 2020 impact and our ESG strategy and goals, which are closely aligned to our business, our values, and our purpose. Now, turning back to the second quoted results, we see pricing stability in the market and varying levels of recovery from the effects of the ongoing pandemic, particularly outside the US, where economic activity and government policies are more mixed. This was evident in my recent market tour in Europe, where agents, customers, and business leaders confirmed that while local economies are reopening and travel restrictions are being lifted, the pace of economic recovery is being impacted by labor shortages and the spike in cases from the Delta variant. Fortunately for our customers around the globe, we offer remarkable choice with our omni-channel offering with a comprehensive set of funding and payout options so they can transfer and receive money in a way that it's most convenient for them. During the quarter, we saw continued strength in principal per transaction or PPT with growth over 11% and cross-border total principal growth of 29%. benefiting from continued demand for support in received markets and improving economic and employment trends in sent regions like the US and Western Europe. Total company revenue grew 16% or 13% on a constant currency basis with underlining trends aided by continued growth in our digital business and sequential improvement in the retail business. C2C revenues and transactions each grew 15% in the quarter with C2C revenue growing 12% on a constant currency basis. Digital revenues were up from the first quarter and grew 22% year-over-year to over $265 million with quarterly highs for revenue, transactions, and principal. Digital comprised 36% of transactions and 24% of revenues for the C2C segment. As expected, we are beginning to see digital growth ease after exceptionally strong performance during the height of the COVID-19 pandemic. Woo.com results were healthy with transaction growth over 18%, driven by 14% growth in average monthly active users. Woo.com continued to lead money transfer peers in mobile app downloads by a wide margin and grew principal over 30%. Our customer engagement trends remained favorable year over year with positive trends in retention, transaction per customer, and principle per customer. We continue to expand in the new market, launching Chile and Peru in the second quarter and enhancing the customer experience with new features and tools, including the rollout of additional electronic know your customer options across European Union and transaction reminders. Improving the customer experience not only supports the continued growth in WestUnion.com, but also provides a growing customer base for the consumer ecosystem strategy that I mentioned earlier. Retail revenue achieved strong year-over-year growth, cycling over the disruption from the pandemic in the prior year period and is growing sequentially. We remain focused on ramping up our partnership with Walmart in the U.S., our domestic and international money transfers, Bill payments and money order services are now available in nearly 4,700 Walmart stores across the U.S. Trends in the business solutions segment continue to move in the right direction with strong improvement in the new business and stable trends in hedging and across most segment verticals. While we have announced a definitive agreement to divest Western Union business solutions, it will be business as usual until the transaction closes. Overall, we are pleased with the announcement of the West Sydney Business Solutions today and excited for the Business Solutions Management Team to receive strong support from the new ownership. Additionally, with our healthy second quarter results, we are confident in our ability to execute in fluid market conditions and our strategy with our resilient retail channel, strong growth of our digital channel, building a WU branded ecosystem with additional products and serving multiple enterprises with our unique and agile cross-border platform positions the company well for long-term incremental growth opportunities. I'll now pass it over to Raj to review our financial results in more detail.