Western Union's online strategy is paying off, as web transfers help overcome softness in troubled local markets.
Western Union reported revenue of $1.3 billion for the fourth quarter of 2019, a 7% decrease from a year ago, but a 3% increase in adjusted constant currency terms. Approximately 86% of that revenue comes from consumer-to-consumer payments, where Western Union saw flat revenue growth at $1.1 billion.
Continued political unrest in Lebanon and parts of South America, and the effects of
Still, Western Union CEO Hikmet Ersek was able to point to digital growth as the driver that is helping the Denver company adjust financially after selling its stand-alone
Digital money transfer revenues increased 24% in the quarter, including the WU.com and third-party white-label digital services. WU.com revenues increased 17%, including cross-border growth of 26%.
"We are doing quite well, overall, on the digital side," said Raj Agrawal, executive vice president and chief financial officer at Western Union, adding the company had more than 30% digital transaction growth.
Western Union felt Speedpay was a good asset, just not a good fit for its focus on the continued development of cross-border money movement and adding more features and services to its WU.com site.
“I’m pleased with the progress of our business in the fourth quarter, as we continued to deliver strong digital growth and solid financial results," Ersek said Tuesday during the company's earnings call. "We began implementing a number of initiatives from our new strategy and productivity program, and we start 2020 with good momentum for achieving the 2022 targets we laid out at our September investor day."
White-label partnerships for freelancers and contractors "is still early stages … and we will continue to learn what kind of economics they can provide," Agrawal said.
Typically, Western Union will be able to have a lower starting point for revenue-per-transaction with white labels, Agrawal added. "But we also don't have much cost in that transaction either, like we do in our branded offerings," he said. "In a WU.com transaction, we are investing in marketing to acquire customers and have fraud losses we are paying for, but in a white label transaction we are delivering the payment for a customer who has the funds, so we don't spend the marketing dollars there, so margins in the white labeling process can be quite high."
In spending much of the past year
The company
Last month, Western Union
Unlike other payments companies that heavily rely on face-to-face transactions or e-commerce shipping, Western Union has not felt an impact from the coronavirus outbreak in China.
"China accounts for only 2% of Western Union business and most of that is on incoming money transfers," Ersek said. "Our main emphasis there is for the safety or our workers there."
Western Union said it would increase its quarterly dividend 13% because of a strong profit outlook and reported it delivered more than $880 million to shareholders in 2019.
Western Union competitor Euronet Worldwide also announced fourth quarter results Tuesday, reporting net income of $106.5 million.
Euronet's electronic payments and transactions processor posted revenue of $694 million, nearly $20 million lower than analyst projections.
But it did post a profit of $347 million, with overall revenue at $2.75 billion. The Leawood, Kansas, company also touted its agreement with Amazon Pay to deliver new utility biller services and categories, as well as a real-time payments agreement with Federal Bank to allow Unified Payments Interface real-time remittance deposit on all bank accounts in India.
