The Western Union Company

Good day and welcome to the Western Union third quarter 2021 results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then 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 this event is being recorded. I would now like to turn the conference over to Brad Winbigler, Head of Treasury and Investor Relations. Please go ahead.

Thank you. On today's call, we will discuss the company's third quarter 2021 results, our financial outlook for 2021, and then we will take your questions. The slides that accompany this call and webcast can be found at WesternUnion.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. Our call today is our CEO, Hikmet Ercik, and our CFO, Raj Agrawal. 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 to 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 the 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 and disclaims responsibility for any recording, replay, or distribution of any transcription of this call. I will now turn the call over to our CEO, Hikmet Ersek.

Thank you, Brett, and good afternoon, everyone. We appreciate you joining us today to discuss our third quarter results and the progress of our business. Our business continues to rebound from the effects of the COVID-19 pandemic, delivering double-digit revenue growth in digital and business solutions, as well as strong profitability and operating cash flow during the quarter. Additionally, we are continuing to make good progress on our key initiatives, including our pricing evolution and platform enhancements. Now, let's take a closer look at the third quarter results. we achieved revenue growth in the quarter of 2% on a reported and constant currency basis, which was driven by 15% growth in digital and 31% growth in business solutions. While these two businesses grew nicely, the retail business was affected by the slower economic recovery, in particular, recovery in the labor markets where employment of migrant workers remains below 2019 levels. As a result, our CTC revenue was flat on a reported basis or down 1% in constant currency terms with transaction growth down 1%. Both principal per transaction and cross-border principal increased approximately 4% during the quarter. Year-to-date, our cross-border principal increased 19%, reflecting the elevated levels of support that our customers provide to their loved ones during the period of uneven economic recovery. With that, based on the latest World Bank forecast, we believe we are growing market share. Our digital business continues to generate strong growth. Revenue generated during the quarter was $266 million, maintaining the record high level that we achieved in the second quarter and putting us well on pace to exceed $1 billion in revenue this year. Most of our digital business is Western Union.com, which grew at a healthy pace in the third quarter with 16% principal growth and 12% revenue growth. Woo.com average monthly active users increased 8% in the quarter. Although Woo.com growth is moderating as expected, As we grow from a much larger base and compare results against the prior year's accelerated growth levels, we anticipate growth to remain healthy as we continue to invest in marketing, product, and customer experience. We were particularly encouraged by the results we are seeing in our account-to-account business, which is the fastest-growing portion of our business. The other component of our digital business is digital partnerships. Momentum is building in this business as we expand relationships with existing partners and launch new partners. We recently completed our previously announced acquisition of a minority stake in STC Bank, formerly known as STC Pay, which was a leading digital wallet service provider and is now in the process of launching as one of the first digital banks in Saudi Arabia. In addition, we are planning to launch a number of new partners in upcoming months. Our progress confirms that the capabilities we have built to serve our branded direct digital business is also well suited to serve the needs of leading banks and digital wallet providers. Our solution emphasizes flexibility and choice built on a strong foundation of compliance and technology. We are able to offer a branded solution partners who want to feature our leading brand in cross-border payments, or we can offer capabilities that partners incorporate as a white-label solution. Our real-time account payout capabilities, currently available in over 100 countries, improve on incumbent solutions while also providing choice for consumers who prefer to direct transfer to our agent network. We recently announced that Western Union International Bank has joined SEPA Instant Credit Transfer Scheme as a direct participant, further enhancing our real-time payment capabilities in Europe. Our capabilities have focused on cross-border remittances historically, but partner needs are evolving to include broader use cases. Just as we have integrated with traditional payment systems in the past, our platform can also be extended to incorporate future use cases related to digital currencies. Key to our success, whether serving our direct consumers to our branded offering or serving the customers of our partners is our omnichannel capabilities, which enable payouts to more than 200 countries and territories in over 130 currencies to our extensive global network of billions of bank accounts, millions of wallets and cards, and approximately 600,000 retail locations. We continue to invest in expanding our payment capabilities to provide our customers and partners with additional options and convenience across platforms, devices, borders, and currencies. Turning to our profit performance in the quarter, profitability was strong with operating margin increasing to approximately 25% as a result of solid business solutions revenue growth and lower planned marketing investments, which was partially offset as we continue to invest in our technology, and global omnichannel platform. Earnings per share for the quarter was $0.57 on a reported basis and $0.63 on an adjusted basis. Before turning it over to Raj to discuss our financial performance for the quarter in more detail and our updated 2021 financial outlook, I'd like to provide an update on a few key strategic initiatives. Starting with business solutions, our planned divestiture remains on track. The majority of the business and entire proceeds are expected to transfer in the first quarter of 2022. As we announced earlier today, we are expanding our ecosystem strategy. We are on track to launch our digital bank pilot in Germany and Romania in the fourth quarter, offering customers a digital banking and integrated money transfer solution to our Western Union International Bank. The digital banking offerings, where Suyun branded WooPlus, is an important part of our ecosystem strategy, which is focused on bordering and deepening our relationship with customers by offering them additional relevant products and services. Another component of our ecosystem strategy is WooShop, a shopping and cashback rewards program that enables our customers to shop internationally at over 12,000 online stores and send gifts directly to their families and friends in other countries while receiving cash back on their purchases. Wooshop is now live in Germany and Austria. Several more countries, including the US, are targeted to launch by year end. Overall, despite an uneven economic recovery and the continuing effects from the pandemic, our business proved resilient and we are on solid footing as we finish the year. With that, I'll now turn it over to Raj to discuss the third quarter results in more detail.