Western Union Co.‘s (WU – Free Report) third-quarter 2021 earnings per share of 63 cents was 8.62% higher than Zacks’ consensus estimate. Net income increased 10.5% year over year.
Total revenue of $ 1.29 billion improved 2% year over year, but missed the Zacks consensus estimate of 1.81%. Revenue growth was driven by digital money transfer, which continued to show double-digit growth, and the Business Solutions segment, partially offset by retail money transfer due to the slow economic recovery.
In its largest Consumer to Consumer (C2C) segment (87% of total revenue), revenue was flat on a reported basis or declined 1% at constant currency, while transactions declined 1% % during the quarter. Income from cross-border money transfers grew 1% year-on-year.
Western Union has invested in its digital platform to stay ahead in the rapidly evolving remittance market. Its vast electronic platform built over the years helped it during the pandemic crisis when people turned away from its physical stores to send money to their families online. During the quarter, digital money transfer revenue grew 14% at cc and accounted for 24% and 37% of total C2C revenue and transactions, respectively.
The 8% increase in the average number of monthly active users shows that the company’s mobile app is widely used. Data provided by mobile app marketing company Sensor Tower showed that Westernunion.com was the most downloaded mobile app among its money transfer companies in the third quarter.
Western Union Business Solutions revenue jumped 31% on a reported basis or 28% cc. This growth is driven by the increase in payment services business and the education vertical as the business grew under the impact of COVID-19. Other income, which consists primarily of retail bill payments in the United States and Argentina as well as money orders, increased 3%.
The company updated its financial outlook for 2021, which was previously released on August 4. GAAP and constant currency revenue forecasts have been revised to reflect recent business trends and macroeconomic conditions. In addition, the projected EPS ranges have been reduced with the revised adjusted EPS at the upper end of the previously guided range, while the GAAP EPS has been revised slightly down to reflect the deferred taxes related to the pending sale. of Business Solutions.
The outlook provided assumes that the macroeconomic environment in Q4 will be similar to the Q3 scenario.
Zacks rank and actions to consider
Western Union currently carries a Zacks Rank # 3 (Hold). You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.
Other businesses in the same space include Adyen (ADYEY – Free report), Pag Seguro Digital (PAGE – Free report) and Refund (RPAY – Free Report), each currently wearing a Zacks Rank # 2 (Buy).