Western Union $1.2 Billion Revenue In Q1 Was Driven By Cross-border Transfers As Remittance Inflows Recovered
Western Union's $1.2 billion revenue in Q1 was driven by cross-border transfers as remittance inflows recovered
Remittance flows have begun to recover globally following the devastating effects of the COVID-19 pandemic and the subsequent economic crisis.
According to Western Union (WU), one of the world's largest international money transfer companies, its digital money transfer arm responsible for remittances increased by 45 percent in the first quarter of 2020 to a record $242 million.
This is a significant improvement over the World Bank's 2020 forecast of a 20% decline. Additionally, the company revealed that revenue from its digital money transfer subsidiary is on track to surpass $1 billion in 2021.
In aggregate, WU generated $1.2 billion in revenue in the first quarter, a 2% increase over the $1.19 billion generated last year. According to the report, revenue growth was fueled by the report's strength in digital money transfer.
Similar to the previous quarter, the company's total operating expenses increased. The amount sent increased from $956.8 million in the first quarter of 2020 to $977.2 million in 2021.
Despite the spending increase, revenue generated was sufficient to generate a 3% increase in profit. The company's net income increased from $ 176.7 million to $181.8 million during the quarter.
Earnings per share (EPS) also benefited from revenue growth during the quarter. EPS was estimated to be $0.44, up from $0.42 in the same period last year.
The company returned $172 million to shareholders in the first quarter, which included $97 million in dividends and $75 million in share repurchases.
Cross-border money transfer grows 6%
Western Union's revenue breakdown reveals that consumer-to-consumer (C2C) transactions continue to be the company's primary source of revenue. The segment generated revenue of $ 1.05 billion in Q1, up 4% from the $1 billion generated in the same period last year. Similarly, the quarter's transaction volume increased by 9%.
Cross-border money transfer revenues increased 6% within the C2C segment, partially offset by declines in domestic money transfer revenues.
Digital money transfers accounted for 23% and 34% of total C2C revenues and transactions, respectively. The revenue increase was higher than the 16% contribution made a year ago in the first quarter.
Europe and CIS, US outbound, and the Middle East all saw transaction growth, while Latin American countries saw revenue growth of 8%, followed by Europe at 4%.
According to the company, roughly half of the approximately 150 million customers in WU's installed base are senders, while the remainder are receivers.
WU Monthly Users Surge by 46%
Westernunion.com's average monthly active users increased 46 percent year over year in the first quarter.
Additionally, according to Sensor Tower data, it was the most downloaded mobile app among peer-to-peer money transfer companies in the first quarter.
Business Solutions Continues to decline
Western Union's other significant segment, Business Solutions, is still feeling the pandemic's effects. According to the report, revenue decreased by 2%, from $98.4 million to $96.5 million.
Other revenues, which are primarily comprised of retail bill payments in the United States and Argentina, as well as money orders, decreased 18 percent as a result of the ongoing impact of COVID-19 and the Argentine peso depreciation.
In Conclusion
Western Union's first-quarter earnings report demonstrates a global recovery in cross-border activity, particularly in remittances.
While the $1.2 billion total revenue is roughly in line with expectations, the report's major highlight is the incredible growth in digital money transfer.
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