The Western Union Company

Good day, and welcome to the Western Union First 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.

Thank you. On today's call, we will discuss the company's first quarter and full year 2026 outlook, 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. Joining me on the call today is our CEO, Devin McGranahan, and our CFO, Matt Taglin. 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. We have reconciled those items to the most comparable gap measures in our earnings release attached to our Form 8K, as well as on our website, westernunion.com, under the Investor Relations section. I will now turn the call over to our Chief Executive Officer, Devin McGranahan.

Good morning, and welcome to Western Union's first quarter 2026 Financial Results Conference Call. Today, I will spend a few minutes discussing our results in the quarter and the emerging stabilization we are seeing in the U.S. remittance market. Next, I will review our M&A strategy and our recent transactions. Then finally, I will give you a quick update on where we are with our digital asset initiatives and the near-term pending launches. In the first quarter, we reported revenue of $1 billion. On adjusted basis, this was a decline of 1% year-over-year. This is a 400 basis point improvement over the fourth quarter and relative stabilization year-over-year. Consumer money transfer transactions were slightly positive in the quarter for the first time since Q1 of 2025, which was a 300 basis point improvement from Q4. Cross-border principal growth was again up mid-single digits, speaking to the resilience of our customer base and their perseverance in the current difficult macro environment. This quarter, we again saw incremental improvement in our CMT transaction rates quarter over quarter. Q1 was better than Q4, Q4 was better than Q3, and Q3 was better than the lows that came in the second quarter of 2025. We believe this should set us up to return to a more meaningful transaction growth beginning in the second quarter of this year. Adjusted earnings per share came in at 25 cents in the quarter, compared to 41 cents this quarter a year ago. This is below our expectations and is the result of a combination of some quarter-specific issues as well as a seasonal change for how quarter one will perform going forward given the growth of our travel money business. The quarter-specific issues included incremental investments associated with our strategic agent signings, product expansion, and the timing of certain expenses that we believe will reverse in future quarters, which Matt will cover in more detail later in the call. In response to the slow start to the year, we have decided to accelerate our operational efficiency program that we first announced at Invest Today last fall. This program is designed to improve vendor efficiency, realize the synergies we expect to achieve from the pending Intermax acquisition, and leverages AI to rationalize our existing business processes and significantly reduce labor content. As a result, we believe we can accomplish our $150 million operating efficiency program by year-end 2028 with large contributions coming in both 2026 and 2027. Our retail business in the Americas continued to face headwinds in the quarter associated with the current geopolitical environment. though we believe we are now seeing improvement from the steep declines that we saw in the middle of 2025. We did see strong performance in the corridor in many corridors like Italy to Morocco, France to Cameroon, and Kuwait to Bangladesh, offset by continued weakness in the Americas across several specific and large corridors, most notably U.S. to Mexico. Though, from a transaction growth rate perspective, while still negative, the U.S. to Mexico corridor improved by 350 basis points relative to the fourth quarter. Our branded digital business increased transaction growth to 21% and adjusted revenue by 6% in the quarter, with gains driven by some of the new relationships we have signed in the Middle East last year. This is an 800 basis point acceleration in our transaction growth rate, and while the revenue growth gap has increased significantly, we are encouraged by the momentum that we are seeing on the transaction side. The revenue growth is being muted by a strong growth in lower RPT corridors, continued significant increase in payout to account, and some of our new customer promotional offers, which we discussed on the Q4 call, We also believe this will improve in coming quarters. In consumer services, adjusted revenue was up 33% in the quarter, driven by growth in travel money, led by euro change, as well as growth in our bill pay business. We expect consumer services to have another strong year in 2026, as our travel money business is expected to approach $150 million in revenue, up from nearly nothing a few years ago. Matt will discuss our first quarter results in 2026 outlook in more detail later in the call. Now, switching briefly to the macro and focusing on the Americas, as that is where much of our focus has been over the last several quarters. As you know, remittances in the Americas have faced meaningful pressure that began early last year and continued through this winter. particularly across our key U.S. to Latin American quarters. We saw meaningful declines to markets like Mexico, Ecuador, and Guatemala, driven by a combination of migration dynamics and U.S. immigration policy. What we're seeing now, however, is a business that is beginning to show stabilization and even potentially signs of improvement. Trends have improved across these corridors, with the most recent month, March, showing revenue growth rates 800 basis points or better in each of these corridors relative to the lows that we saw last summer. Starting with U.S. to Mexico, which remains the largest remittance corridor globally, central bank data shows that 2025 was a down year, with monthly remittance principal declining double digits at multiple points throughout last year. As we move through recent months, however, we've seen those declines moderate, with inbound principal activity hovering around flat to low single-digit either positive or negative. which is a vast improvement from the relative double-digit lows we experienced last summer. When we look beyond Mexico, the story also continues to be constructive. Corridors like U.S. to Ecuador and U.S. to Guatemala are meaningfully better today than they were performing last summer and into the fall. However, I do want to be clear. This is not a sharp rebound, and not all corridors have improved. with U.S. to Colombia as an example still showing weakness. But overall, we are seeing improving trends and remain optimistic about the rest of the year. We believe that what's driving stabilization is a combination of factors. First, migrant behavior has begun to normalize. After a period of disruption tied to immigration policy and labor market uncertainty, we are seeing more consistent sending patterns. Second, remittances remain a resilient category. In many of these economies, remittances represent a significant share of GDP and are non-discretionary for senders. And third, we are benefiting from the actions that we have been taking, expanding our retail footprint, strengthening our presence in key communities, and continuing to scale our digital capabilities. So, stepping back, the message is North America is not yet back to growth, but it is stabilizing, is meaningfully better than it was last summer, and the improvement we're seeing across some of our most important corridors gives us confidence that the business is now on firmer footing as we move forward. Shifting gears, I would like to spend a few minutes talking about our M&A strategy. over the past few years we have spent significant time advancing our strategic position as the global leader in providing accessible financial services for the aspiring populations of the world a central pillar of this evolution has been a disciplined but opportunistic acquisition strategy focused on strengthening our footprint in high value corridors accelerating our digital capabilities, and broadening our financial services offering. We have deliberately shifted from a strategy of complete capital return to a model that balances capital return to shareholders with value-creating and targeted capability-driven acquisitions where each transaction is designed to either expand our geographic strength, our platform functionality, or our product offering to enable us to maximize the value of our global franchise to our shareholders. last month we closed on the acquisition of lana in mexico this transaction will help strengthen our position in one of the most important remittance markets in the world the acquisition gives us the license to launch a digital wallet in the country which we plan to do later this year on our beyond digital platform strengthening our wall to wallet capabilities It will also enable us to build on the success we have seen with our receive strategy in Argentina and Brazil, where we have a meaningful portion of our inbound remittances ending up in our own digital wallets in those countries. This allows us not only to save on commission expense, but potentially opens up new revenue streams for the company. We believe bringing a wallet to Mexico has the potential to change the way we do business in the country by enabling our two-sided network. We look forward to updating you on our progress as we prepare for our wallet launch later this year. Earlier this month, we also completed the acquisition of Dash, Singtel's digital wallet business in Singapore, further extending our presence in Southeast Asia. This acquisition enhances our capabilities in key remittance and payments hubs, strengthening our access to digital-first customers in that region, and supports our broader ambition to build a more connected Asia-Pacific network. Dash brings complementary technology and distribution capabilities that will accelerate our digital onboarding and improve cross-payment efficiency across the regional corridors. We are excited to welcome Dash employees and customers to the Western Union family. In the current quarter, we expect to close the acquisition of Intermex, subject, obviously, to normal regulatory approvals. We are now down to just one jurisdiction and are optimistic that we can attain the final approval in the coming weeks. This transaction is expected to strengthen our agent network density, improve corridor economics, and further reinforce our leadership in the U.S., As previously disclosed, we expect this combination to deliver meaningful cost synergies, and I am now more optimistic today than I was just a couple of months ago when we spoke on our Q4 earnings call. The opportunity to put these businesses together and truly take a best-of-breed approach, I believe, will substantially drive value for our shareholders beginning in the back half of this year and will continue for many years to come. Over the last six months, the two teams have been hard at work designing what the post acquisition business will look like. The more time we spend together, the more obvious it is that the culture Intermex has built will be a true asset to Western Union. The Intermex team has a laser focus on delivering for their customers and agent partners alike, which very closely aligns with the culture that we have now been building at Western through synergies and outside of the obvious public company costs we think there are plenty of opportunities that could prove our 30 million dollar synergy target conservative we had originally committed to achieving these synergies over the first two years but based on the work today I am optimistic that it will be front-loaded as well And lastly, as most of you know, we completed the acquisition of Eurochange in the United Kingdom, which has added meaningfully to our scale and our travel money platform. This transaction expands our presence in the European travel money market and strengthens our ability to serve outbound travelers in the United Kingdom. Eurochange enhances our physical footprint in a strategically important market and complements our broader travel money ecosystem by improving distribution density and product diversity. diversification. These acquisitions reflect a clear and consistent strategy. We are selectively investing in assets that enhance our corridor leadership, digital capabilities, and product offerings while reinforcing the long-term resilience and growth profile of our global network. Importantly, these transactions are not standalone initiatives. They are enhancing an omnichannel platform where physical and digital channels reinforce one another and where the acquisition serves as a catalyst for accelerating the company's strategy. I recently returned from Asia where I met with our new team from Dash and spent several days with our team launching our new digital wallets in Australia and the Philippines. Our goal is to have an interconnected network of send and receive digital wallets across the important corridors in Asia. I also visited Vietnam for the first time and met with a few of our new partners that will accelerate the development of our payout-to-account network and home delivery options in that country. We see significant opportunity in increasing our market share to this important and growing market. As we outlined at our investor day, our strategy is focused on growing share in higher growth markets where, for various historical reasons, we do not have our fair share of the market. Vietnam fits this perfectly where it is a $15 billion inbound remittance market where we have only mid- to single-digit market share. Additionally, some of the largest corridors are from other Asian countries, including Japan, South Korea, Australia, and Singapore, where we have a strong presence. I've also met with our team in Manila as we move forward, growing our operations center there. As part of our Beyond Strategy, we are regionalizing our operations in each major region to drive efficiency and speed to market. Manila will be the primary operating center for the APAC region and thus will become part of our global operating model. Before I turn the call over to Matt, I'd like to make a brief update on our digital asset initiatives, and more importantly, where we are in the transition from launch readiness to real-world adoption and scale. Over the last few months, we've crossed an important threshold. It is no longer a question of if Western Union will be active in digital assets. It is now how fast can we scale. At the foundation of our strategy is USDPT, our U.S. dollar-backed stablecoin. USDPT is now in its final stages of readiness and is expected to go live next month. This milestone represents the completion of a significant build across issuance, treasury operations, settlement, and controls. and positions us to operate a native digital dollar embedded within Western Union's global network. As we approach launch, adoption is beginning to form around the coin. We are working with a growing set of exchange partners to support access, conversion, and distribution across key regions, while also engaging with banks and financial institution partners in priority corridors to enable the direct settlement in Treasury use cases. Together, these relationships position USDPT as a foundational asset for scaling digital payments and settlement across our platform. Building on that foundation is our Digital Asset Network, or DAN, which operationalizes USDPT and other digital assets. Across Western Union's physical and digital footprint, we are pleased to report that we plan to launch our first partner on the DAN network next week. with additional partners coming online shortly thereafter. Through DAN, millions of wallet users will be able to move from digital assets into local currency using Western Union's retail network with an experience that is simple for customers and familiar for our agents. Since announcing our initial partners, we've seen strong inbound interest, and our focus now shifts to launching and scaling, onboarding new partners, expanding corridor coverage, and driving value, volume, as the network grows. Importantly, Dan is not a point solution. Our partner pipeline represents tens of millions of crypto wallets globally, creating a powerful distribution channel that brings digital asset users directly into Western Union's retail and digital network, solving an industry-wide issue of ramping from crypto to cash as a safe and effective utility. Finally, extending UFDPT and DAN directly to consumers, we are preparing to launch our U.S. dollar stable card later this year. This product allows customers to hold value in stable coin form and spend globally wherever card acceptance exists, bringing digital dollars into everyday commerce. The stable card is particularly compelling in inflation-sensitive markets where customers want dollar-denominated value with immediate practical utility. We expect to begin rolling this out across dozens of markets with an initial wave targeted for later this year. Over time, this card will be consumer-facing expression, connecting USDPT, digital asset, retail customers, global spending, into a single, integrated, easy consumer experience. Taking together, USDPT, DAN, and StableCard operate as a connected ecosystem. With launches imminent, partners coming online, and early transactions beginning to flow through the network, we are firmly now in execution mode. The focus ahead is scaling, expanding adoption, increasing velocity, and embedding digital assets more deeply into Western Union's core money movement platform. this is an exciting time for the company and i look forward to updating you on our successes in the coming quarters in conclusion we enter the remainder of the year focused on disciplined execution and long-term value creation we are continuing modernize our platform accelerate our efficiency capabilities and optimize our global network to better meet the evolving needs of our customers. While we remain mindful of the macroeconomic uncertainty and competitive dynamics, our priorities are clear. Drive sustainable revenue growth, improve operating efficiency, and deliver strong cash flow. We believe the actions we are taking position us well for the future and, as always, are committed to maintaining our financial discipline while returning value to shareholders. I want to thank our nearly 10,000 strong colleagues around the world who are working diligently every day to accelerate our beyond strategy. I will now turn the call over to our CFO, Matt Taglin, to discuss our financial results in more detail. Over to you, Matt. Thank you, Devin, and good morning, everyone.