Western Union plummets as downgraded to Neutral, downward FY22 guidance

• Western Union (WU -12.5%) stock slides as Q1 revenue of $1.2B declined 4% Y/Y on a reported basis, or 1% Y/Y on a constant currency basis excluding the contribution from Business Solutions.
• Revenue was also impacted by a decline in retail money transfer, as well as the suspension of services in Russia and Belarus, which has revised 2022 financial outlook downwards.
• Consumer-to-Consumer revenues declined 5% Y/Y on a reported basis or 3% Y/Y on a constant currency basis, while transactions declined 4% Y/Y.
• Regionally, transaction declines in North America, Europe and CIS, and APAC were partially offset by transaction growth in MEASA and LACA.
• The Co. returned $242M to shareholders in Q1, consisting of $92M in dividends and $150M of share repurchases.
• Downgrades Outlook: The Co. updated its FY22 financial outlook due to suspension of operations in Russia and Belarus and other related impacts. It expects GAAP revenue decline of ~-9% to -11% and adj. EPS of $1.75-1.85 vs. $1.94 consensus.
• Citi also downgrades Western Union to Neutral, sees shares being range-bound.
• J.P. Morgan is cutting estimates to assume Q1 macro trends persist, and a lower Digital growth profile, as the underestimated margin impact of Russia when they cut estimates earlier this month.
• However, the headwind came at higher than expected decremental margins, which along with certain Business solutions-related standalone expenses staying in the guidance, is expected to hurt FY22 margins.
• Wall Street analysts and Seeking Alpha Quant System both stand with a Hold rating on the stock.
• Previously: Western Union Non-GAAP EPS of $0.51 beats by $0.08, revenue of $1.15B misses by $10M (April 28)