Q2 2026 The Western Union Co Earnings Call

July 30, 2026

Speaker #2: Good day, and welcome to The Western Union Company's second 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.

Operator 2: Good day, welcome to the Western Union Q2 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.

Operator: Good day, welcome to the Western Union Q2 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.

Speaker #2: 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.

Speaker #3: Thank you. On today's call, we will discuss the company's 2nd quarter results and our 2026 full year, although, and then we will take your questions.

Tom Hadley: Thank you. On today's call, we will discuss the company's Q2 results and our 2026 full year outlook. 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 Cagwin. Today's call is being recorded. 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.

Speaker #3: 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.

Speaker #3: Additional operational statistics have been provided in supplemental tables with our press release. Joining me on the call today are our CEO, Devin McGranahan, and our CFO, Matt Kegwin.

Speaker #3: 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.

Speaker #3: During the call, we will discuss some items that do not conform to generally accepted accounting principles. Where possible, we have reconciled those items to the most comparable gap measures in our earnings release attached to our Form A-K, as well as on our website, westernunion.com, under the Investor Relations section.

Tom Hadley: During the call, we will discuss some items that do not conform to generally accepted accounting principles. Where possible, we have reconciled those items to the most comparable GAAP measures in our earnings release attached to our Form 8-K, 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.

Speaker #3: I will now turn the call over to our Chief Executive Officer, Devin McGranahan.

Speaker #4: Good afternoon, and welcome to Western Union's second quarter 2026 financial results conference call. In the second quarter, we continued to face significant margin pressures due to the ongoing slowdown in the retail business in the Americas, higher agent commissions, and the continued acceleration of our digital payout-to-account business.

Devin McGranahan: Good afternoon and welcome to Western Union Q2 2026 financial results conference call. In the Q2, we continued to face significant margin pressures due to the ongoing slowdown in the retail business in the Americas, higher agent commissions, and the continued acceleration of our digital payout to account business. The quarter came in $0.06 better than Q1, having eliminated many of the one-time effects we saw in the Q1. However, the accelerated shift from cash payout transactions with higher revenue per transaction, RPT, and higher contribution profit per transaction, CPPT, to pure digital transactions continues to weigh on profitability. On a more positive note, despite the strong macro headwinds, our strategy and our significant geographic diversification enabled us to report revenue of $1 billion. On an adjusted basis, this was a decline of only 1% year-over-year.

Speaker #4: The quarter came in 6 cents better than Q1, having eliminated many of the one-time effects we saw in the first quarter. However, the accelerated shift from cash payout transactions with higher revenue per transaction (RPT) and higher contribution profit per transaction (CPPT) to pure digital transactions continues to weigh on profitability.

Speaker #4: On a more positive note, despite the strong macro headwinds, our strategy and our significant geographic diversification enabled us to report revenue of $1 billion.

Speaker #4: On an adjusted basis, this was a decline of only 1% year over year. Consumer money transfer transactions grew at 3% in the quarter, which was a 300 basis point improvement from Q1, a 600 basis point improvement year over year, and the highest transaction growth rate since the second quarter of 2024.

Devin McGranahan: Consumer money transfer transactions grew at 3% in the quarter, which was a 300 basis point improvement from Q1, a 600 basis point improvement year-over-year, and the highest transaction growth rate since Q2 2024. We continue to see quarter-over-quarter improvements as we lap the worst of last year. For example, US to Mexico declined a little over 3% on a transaction basis in the quarter, a nearly 1,000-point improvement year-over-year. Yet overall, US retail continued to be mid-teens negative on a transaction basis in the Q2, well below our expectations. While overall global transaction growth has improved significantly, it is important to know that it comes from lower contribution profit per transaction, which is putting pressure on our margins. Adjusted earnings per share came in at $0.31 in the quarter, compared to $0.42 this quarter a year ago.

Speaker #4: We continue to see quarter-over-quarter improvements as we lap the worst of last year. For example, U.S. to Mexico declined a little over 3% on a transaction basis in the quarter—a nearly 1,000-point improvement year over year—yet overall U.S.

Speaker #4: Retail continued to be mid-teens negative on a transaction basis in the second quarter, well below our expectations. While overall global transaction growth has improved significantly, it is important to note that it comes from a lower contribution profit per transaction, which is putting pressure on our margins.

Speaker #4: Adjusted earnings per share came in at $0.31 in the quarter, compared to $0.42 in the same quarter a year ago. This is below our expectations and is driven by lower profitability in our Americas retail business and lower profitability in our Middle East business, as volumes there continue to shift rapidly from our legacy partners in the region to newer digital-only partners at lower RPTs and profitability.

Devin McGranahan: This is below our expectations and is driven by lower profitability in our Americas retail business and lower profitability in our Middle East business as volumes there continue to shift rapidly from our legacy partners in the region to newer digital-only partners at lower RPTs and profitability. Our branded digital business continued to perform well, with transactions increasing by 25% this quarter and adjusted revenue by 6%. While transaction growth continues to accelerate, the revenue growth is being muted by strong growth in lower RPT corridors and a significant increase in digital payout to account, which saw 55% growth in the quarter. As I mentioned in previous calls, our new customer acquisition economics remained challenged in the quarter, which impacted the overall revenue growth and profitability of our digital business.

Speaker #4: Our branded digital business continued to perform well, with transactions increasing by 25% this quarter and adjusted revenue by 6%. While transaction growth continues to accelerate, the revenue growth is being muted by strong growth in lower-RPT corridors and a significant increase in digital payout-to-account, which saw 55% growth in the quarter.

Speaker #4: As I mentioned in previous calls, our new customer acquisition economics remained challenged in the quarter, which impacted the overall revenue growth and profitability of our digital business.

Speaker #4: We continue to roll out our Beyond Digital platform, which I believe will enable better customer experience, improve our ability to market at a corridor level, and potentially reduce the magnitude of needed new offer incentives.

Devin McGranahan: We continue to roll out our Beyond Digital platform, which I believe will enable better customer experience, improve our ability to market at a corridor level, and potentially reduce the magnitude of needed new offer incentives. In consumer services, adjusted revenue was up 12% in the quarter, driven by growth in our bill pay business, as well as continued growth in travel money. Our financial results in this quarter came in below our expectations for the Q2 in a row. This is not acceptable. We are not satisfied with the current operating performance and will be implementing significant changes as a result. While the external macro factors over the past 12 months have undoubtedly accelerated the underlying trends in the business, we recognize that in the near term, these trends are likely to continue at elevated levels.

Speaker #4: In consumer services, adjusted revenue was up 12% in the quarter, driven by growth in our bill-pay business, as well as continued growth in travel money.

Speaker #4: Our financial results in this quarter came in below our expectations for the 2nd quarter in a row. This is not acceptable, and we are not satisfied with the current operating performance and will be implementing significant changes as a result.

Speaker #4: While the external macro factors over the past 12 months have undoubtedly accelerated the underlying trends in the business, we recognize that in the near term, these trends are not likely to are not are likely to continue at elevated levels.

Speaker #4: We have been navigating this mix—shift away from payout to cash over the past several years, as well as the move from retail to digital—through cost savings initiatives and the reallocation of investments.

Devin McGranahan: We have been navigating this mixed shift away from payout to cash over the past several years, as well as the move from retail to digital through cost savings initiatives and the reallocation of investments. The impact of ongoing changes in immigration in the Americas has accelerated those dynamics, and we must now more aggressively change our cost base to reflect the reality of a future with continued pressure on CPPT. Over the past 12 months, we have seen the percentage of payout to account and payout to wallet transactions grow by 25%. This is an important trend that will likely continue to cause ongoing margin headwinds unless we vigilantly reduce our fixed cost base, lower our account payout costs, and increase our ability to cost-effectively drive digital growth. We have spent much of the last eight weeks evaluating what is working across these three dimensions and what is not.

Speaker #4: The impact of ongoing changes in immigration in the Americas has accelerated those dynamics, and we must now more aggressively change our cost base to reflect the reality of a future with continued pressure on CPPT.

Speaker #4: Over the past 12 months, we have seen the percentage of payout to account and payout to wallet transactions grow by 25%. This is an important trend that will likely continue to cause ongoing margin headwinds unless we vigilantly reduce our fixed cost base, lower our account payout costs, and increase our ability to cost-effectively drive digital growth.

Speaker #4: We have spent much of the last eight weeks evaluating what is working across these three dimensions and what is not. That process has reinforced our belief that the long-term fundamentals of our business remain intact.

Devin McGranahan: That process has reinforced our belief that the long-term fundamentals of our business remain intact. Our brand, customer relationships, market position, scale, and digital capabilities continue to provide a strong foundation upon which to build. However, a strong foundation alone is no longer enough. We must accelerate the transformation of our operating model to enable us to maintain our ability to invest in our next generation digital initiatives while simultaneously, significantly lowering our ongoing operating costs. The program we have launched is called Beyond Efficiency. It has five key program elements, and we will be targeting a run rate operating cost reduction of $50 million by the end of the year. The five key program pillars include the first pillar, accelerate the dual-track strategy by reducing redundancy and streamlining processes that do not align with the Beyond strategy. As a 175-year-old company, we have a lot in the garage.

Speaker #4: Our brand, customer relationships, market position, scale, and digital capabilities continue to provide a strong foundation upon which to build. However, a strong foundation alone is no longer enough.

Speaker #4: We must accelerate the transformation of our operating model to enable us to maintain our ability to invest in our next-generation digital initiatives while simultaneously significantly lowering our ongoing operating costs.

Speaker #4: The program we have launched is called Beyond Efficiency. It has five key program elements, and we will be targeting a run-rate operating cost reduction of $50 million by the end of the year.

Speaker #4: The five key program pillars include the first pillar: accelerate the dual-track strategy by reducing redundancy and streamlining processes that do not align with the Beyond strategy.

Speaker #4: As a 175-year-old company, we have a lot in the garage. Organizations build up over time, and what were once new ideas or areas of investment are now ongoing operating costs with limited or no contribution to the Beyond strategy.

Devin McGranahan: Organizations build up over time, and what were once new ideas or areas investment are now ongoing operating costs with limited or no contribution to the Beyond strategy. For example, as we move to the Beyond Digital framework, we have made the decision to close down our existing digital wallets in Europe, saving the company a run rate of $6 to $8 million. We anticipate launching our Beyond Digital platform to replace those in Europe by the end of the year. The second pillar is to reduce discretionary operations and technology work by 20% that is not directly tied to growing digital. We are targeting a 20% reduction in discretionary operations and technology capacity by the end of the year, forcing a prioritization that will cause only the most impactful initiatives to get work done.

Speaker #4: For example, as we move to the Beyond Digital framework, we have made the decision to close down our existing digital wallets in Europe, saving the company a run rate of $6 to $8 million.

Speaker #4: We anticipate launching our Beyond Digital platform to replace those in Europe by the end of the year. The second pillar is to reduce discretionary operations and technology work by 20% that is not directly tied to growing digital.

Speaker #4: We are targeting a 20% reduction in discretionary operations and technology capacity by the end of the year, forcing a prioritization that will cause only the most impactful initiatives to get worked on.

Speaker #4: The third pillar is to rapidly adopt AI to drive automation and reduce manual work, given our legacy system limitations. We have ramped up our adoption of AI and other automation platforms significantly over the past six months, and we see meaningful opportunities to eliminate manual work and reduce the friction that results from our large, geographically dispersed, and highly regulated business.

Devin McGranahan: The third pillar is to rapidly adopt AI to drive automation and reduce manual work, given our legacy system limitations. We have ramped up our adoption of AI and other automation platforms significantly over the past six months, and we see meaningful opportunity to eliminate manual work and reduce the friction that results from our large, geographically dispersed, and highly regulated business. The fourth pillar is to move to a more aligned operating model. As part of our Beyond Efficiency program, we are looking to align people in work closer to the region they support. This will require us to localize what today are distributed global functions. For example, we have been moving agent onboarding for the Asia Pacific region from Lithuania and Costa Rica to our operating center in Manila. This will improve time zone and geographical alignment and reduce unit labor costs.

Speaker #4: The fourth pillar is to move to a more aligned operating model. As part of our Beyond Efficiency program, we are looking to align people and work more closely with the regions they support.

Speaker #4: This will require us to localize what today are our distributed global functions. For example, we have been moving agent onboarding for the Asia-Pacific region from Lithuania and Costa Rica to our operating center in Manila.

Speaker #4: This will improve time zone and geographical alignment, and reduce unit labor costs. We anticipate this will improve all three dimensions: cost, quality, and speed.

Devin McGranahan: We anticipate this will improve on all three dimensions of cost, quality, and speed. The fifth pillar is to reduce the operating cost of moving money. In a world that is rapidly going to digital payouts, we must reduce the cost of capital that we have floating around the system, lower payout costs, improve FX rate competitiveness, and accelerate real-time settlement through our own digital currency, USDPT. These initiatives are focused on creating a leaner organization while maintaining our ability to invest in the areas that matter most strategically. Importantly, this is not a short-term exercise designed solely to reduce near-term costs. Rather, it is a structural effort to improve how we operate and to position the company for stronger, more sustainable profitability in the years ahead. We understand that our investors expect tangible evidence that these actions are producing results.

Speaker #4: The fifth pillar is to reduce the operating cost of moving money. In a world that is rapidly going to digital payouts, we must reduce the cost of capital that we have floating around the system, lower payout costs, improve FX rate competitiveness, and accelerate real-time settlement through our own digital currency USDPT.

Speaker #4: These initiatives are focused on creating a leaner organization, while maintaining our ability to invest in the areas that matter most strategically. Importantly, this is not a short-term exercise.

Speaker #4: Designed not solely to reduce near-term costs; rather, it is a structural effort to improve how we operate and to position the company for stronger, more sustainable profitability in the years ahead.

Speaker #4: We understand that our investors expect tangible evidence that these actions are producing results. While meaningful transformation takes time, our expectation is that the combination of improving growth and enhanced cost discipline will strengthen margins, improve profitability, and increase returns over time.

Devin McGranahan: While meaningful transformation takes time, our expectation is that the combination of improving growth and enhanced cost discipline will strengthen margins, improve profitability, and increase returns over time. Our objective remains straightforward: generate consistent growth, improve operating profitability, strengthen free cash flow generation, and create long-term shareholder value. I look forward to updating you on the progress of this program in the coming quarters. Now, switching briefly to the macro. As you know, remittances in the Americas have faced meaningful pressure that began in late 2024, driven by the changes in immigration policy. While growth rates have improved meaningfully from the summer of 2025 lows and continue to improve with US to Mexico, for example, revenue growth rates improving 500 basis points sequentially compared to the Q1, retail continues to underperform relative to digital, and that dynamic continues to weigh on the profitability of our Americas businesses.

Speaker #4: Our objective remains straightforward: generate consistent growth, improve operating profitability, strengthen free cash flow generation, and create long-term shareholder value. I look forward to updating you on the progress of this program in the coming quarters.

Speaker #4: Now, switching briefly to the macro. As you know, remittances in the Americas have faced meaningful pressure that began in late 2024, driven by the changes in immigration policy.

Speaker #4: While growth rates have improved meaningfully from the summer of 2025 lows, and continue to improve, with US to Mexico, for example, revenue growth rates improving 500 basis points sequentially compared to the first quarter, retail continues to underperform relative to digital, and that dynamic continues to weigh on the profitability of our Americas businesses.

Speaker #4: As we have discussed, the growth in retail business is almost always dependent on new migration. When immigrants come to a new country, most frequently they transact in retail out of necessity, given cultural and language issues, lack of access to digital funding, and often heavy cash remuneration.

Devin McGranahan: As we have discussed, the growth in retail business is almost always dependent on new migration. When immigrants come to a new country, most frequently, they transact in retail out of necessity, given cultural and language issues, lack of access to digital funding, and often heavy cash remuneration. When migration goes negative, like we have seen in the US and around parts of the Latin American region, it becomes difficult to replace customers that migrate to digital channels, find alternative options, or leave the country to return home. This doesn't mean the retail business can't improve like we have seen over the last several quarters. It just means it will be difficult to get the business back to true growth without a meaningful change in immigration policy or much more aggressive gains in our market share.

Speaker #4: When migration goes negative, like we have seen in the U.S. and around parts of the Latin American region, it becomes difficult to replace customers that migrate to digital channels, find alternative options, or leave the country to return home.

Speaker #4: This doesn't mean the retail business can't improve, as we have seen over the last several quarters. It just means it will be difficult to get the business back to true growth without a meaningful change in immigration policy or much more aggressive gains in our market share.

Speaker #4: We do believe we can take market share, and we should start to see the benefits as Canada Post and Deutsche Post ramp up, which will provide a tailwind starting in Q3 and continuing in 2027.

Devin McGranahan: We do believe we can take market share, and we should start to see the benefits as Canada Post and Deutsche Post ramp up, which will provide a tailwind starting in Q3 and continuing in 2027. We also recently launched an industry-first partnership with Total Wireless, a Verizon value brand that combines wireless connectivity and cross-border money movement. The partnership expands our reach into the telecom channel, providing access to millions of subscribers through thousands of retail locations and extending our distribution footprint across both digital and retail channels. Recognizing that consumer behavior continues to evolve and digital engagement is becoming increasingly important across every aspect of the customer journey, we believe our digital-first strategy and our digital platforms represent the most attractive growth opportunities over the long term.

Speaker #4: We also recently launched an industry-first partnership with Total Wireless, a Verizon value brand that combines wireless connectivity and cross-border money movement. The partnership expands our reach into the telecom channel, providing access to millions of subscribers through thousands of retail locations, and extends our distribution footprint across both digital and retail channels.

Speaker #4: Recognizing that consumer behavior continues to evolve, and digital engagement is becoming increasingly important across every aspect of the customer journey, we believe our digital-first strategy and our digital platforms represent the most attractive growth opportunities over the long term, as we've seen over the last couple of quarters.

Devin McGranahan: Over the last couple of quarters, we have seen substantial gains in the Middle East, while our digital business in other parts of the world has plateaued. We spoke on the last couple of calls about needing to better manage promotional offers in places like the United States and Europe, and as such, we have begun to pull back. While the benefits of this more disciplined approach are not immediately obvious in this quarter's results, in the last few months, new customer growth rates have improved and have done so at higher RPTs, which should bode well for better revenue and profitability in future quarters. That said, pulling back on new customer incentives is just one element of our revised approach. Since our investor day, we have been executing our digital acceleration program along three axes. The first is the restructuring of our digital go-to-market model and team.

Speaker #4: We have seen substantial gains in the Middle East, while our digital business in other parts of the world has plateaued. We spoke on the last couple of calls about needing to better manage promotional offers in places like the United States and Europe, and as such, we have begun to pull back.

Speaker #4: While the benefits of this more disciplined approach are not immediately obvious in this quarter's results, in the last few months, new customer growth rates have improved and have done so at higher RPTs, which should bode well for better revenue and profitability in future quarters.

Speaker #4: That said, pulling back on new customer incentives is just one element of our revised approach. Since our Investor Day, we have been executing our digital acceleration program along three axes.

Speaker #4: The first is the restructuring of our digital go-to-market model and team. We have now completed the restructuring of our go-to-market team, moving digital team members into the regional operating units that they support.

Devin McGranahan: We have now completed the restructuring of our go-to-market team, moving digital team members into the regional operating units that they support. This now brings decision-making and local market knowledge together in one team. We have also been adding new senior digital talent with sector expertise across the regions. In particular, I would like to welcome Shishir Singhania, who joined us last quarter as our new Chief Digital Officer, leading the global digital product team and the North American go-to-market team. Shishir brings deep knowledge and experience to us and has already begun to make material impacts. Second, we are accelerating our Beyond Digital platform. Having now seen early returns, we are accelerating the rollout across our major markets with planned launches in Australia, Europe, and the US before the end of this year.

Speaker #4: This now brings decision-making and local market knowledge together in one team. We have also been adding new senior digital talent with sector expertise across the regions.

Speaker #4: In particular, I would like to welcome Shishir Singh Hania, who joined us last quarter as our new Chief Digital Officer, leading the global digital product team and the North American go-to-market team.

Speaker #4: Shishir brings deep knowledge and experience to us and has already begun to make material impacts. Second, we are accelerating our Beyond Digital platform. Having now seen early returns, we are accelerating the rollout across our major markets, with planned launches in Australia, Europe, and the US before the end of this year.

Speaker #4: We are expecting the beyond digital platform to enable us to improve new customer onboarding success rates and thus improve the return on new customer acquisition in these important markets.

Devin McGranahan: We are expecting the Beyond Digital platform to enable us to improve new customer onboarding success rates and thus improve the return on new customer acquisition in these important markets. We continue to target rolling out the Beyond Digital platform to all of our major markets by the end of 2027. Third, we are focusing on investments by corridor. Our analytics and insights have improved, and we've begun to differentiate our level of new customer investment in both marketing and new customer incentives at the corridor level. This higher level of fidelity and targeting, we believe, will enable us to earn better returns on the same overall investment pool, even if it means slowing down in some larger corridors where competitive dynamics inhibit strong returns.

Speaker #4: We continue to target rolling out the Beyond Digital platform to all of our major markets by the end of 2027. Third, we are focusing on investments by corridor.

Speaker #4: Our analytics and insights have improved, and we've begun to differentiate our level of new customer investment in both marketing and new customer incentives at the corridor level.

Speaker #4: This higher level of fidelity and targeting, we believe, will enable us to earn better returns on the same overall investment pool, even if it means slowing down in some larger corridors where competitive dynamics inhibit strong returns.

Speaker #4: Before I turn the call over to Matt, I would like to discuss further a few minutes to provide an update on our digital asset strategy and the progress we are making.

Devin McGranahan: Before I turn the call over to Matt, I would like to discuss further a few minutes to provide an update on our digital asset strategy and the progress we are making. At the center of this strategy is USDPT, our US dollar stablecoin. USDPT is designed to maintain a one-to-one value with the US dollar and is backed by reserves, including cash and US Treasury instruments. First, we successfully launched USDPT in May of this year, which established the foundation for a regulated digital dollar that can support payments, treasury operations, and customer use cases across our global network. USDPT is now live and available through an expanding ecosystem of exchanges, financial institutions, and partners, with the first four exchanges now live and actively trading USDPT.

Speaker #4: At the center of this strategy is USDPT, our U.S. dollar stablecoin. USDPT is designed to maintain a one-to-one value with the U.S. dollar, and is backed by reserves, including cash and U.S. Treasury instruments.

Speaker #4: First, we successfully launched USDPT in May of this year, which established the foundation for a regulated digital dollar that can support payments, treasury operations, and customer use cases across our global network.

Speaker #4: USDPT is now live and available through an expanding ecosystem of exchanges, financial institutions, and partners. With the first 4 exchanges now live, and actively trading, USDPT.

Speaker #4: Second, we have introduced our Treasury Bridge solution, which utilizes USDPT to support more efficient movement of liquidity and capital across our global network. This initiative has the potential to enhance funding flexibility, improve settlement speed, and reduce reliance on the traditional correspondent banking infrastructure.

Devin McGranahan: We have introduced our Treasury Bridge solution, which utilizes USDPT to support more efficient movement of liquidity and capital across our global network. This initiative has the potential to enhance funding flexibility, improve settlement speed, and reduce reliance on the traditional correspondent banking infrastructure. We are testing with multiple counterparties to use USDPT as a form of settling our cross-border money transfer transactions. We launched the Digital Asset Network, or DAN, which extends Western Union's unique global distribution capabilities to the digital asset ecosystem. Through DAN, digital assets, exchanges, and other partners can connect to Western Union's payout infrastructure, enabling customers to convert digital assets into local currency and access funds throughout our global network. This creates a bridge between the rapidly growing digital asset economy and the real-world economy that customers can use every day.

Speaker #4: We are testing with multiple counterparties to use USDPT as a form of settling our cross-border money transfer transactions. Third, we launched the Digital Asset Network, or DAN, which extends Western Union's unique global distribution capabilities to the digital asset ecosystem.

Speaker #4: Through DAN, digital assets exchanges and other partners can connect to Western Union's payout infrastructure enabling customers to convert digital assets into local currency and access funds throughout our global network.

Speaker #4: This creates a bridge between the rapidly growing digital asset economy and the real-world economy that customers can use every day. We have successfully launched our first partner, and we expect to launch several more in the coming weeks with the goal of having tens of millions of consumer digital wallets connected to our digital asset network by the end of the year.

Devin McGranahan: We have successfully launched our first partner, and we expect the launch of several more in the coming weeks, with the goal of having tens of millions of consumer digital wallets connected to our Digital Asset Network by the end of the year. Lastly, we continue to advance our consumer proposition with the development of our USDPT-powered wallet and card capabilities. Our vision is to provide customers with the ability to redirect remittances, hold the USDPT digital dollars, and spend them through a payment card, seamlessly transitioning between digital assets and traditional financial services. We are launching the USDPT Stable Card today. We view the digital assets as an opportunity to expand our TAM and to free up capital. Our objective is not simply to participate in the digital asset system.

Speaker #4: And lastly, we continue to advance our consumer proposition with the development of our USDPT-powered wallet and card capabilities. Our vision is to provide customers with the ability to redirect remittances, hold USDPT digital dollars, and spend them through a payment card, seamlessly transitioning between digital assets and traditional financial services.

Speaker #4: We are launching the USDPT stablecard today. We view digital assets as an opportunity to expand our TAM and to free up capital. Our objective is not simply to participate in the digital asset system.

Speaker #4: Our objective is to leverage Western Union's trusted brand, regulatory expertise, global reach, and distribution network to become a critical infrastructure provider within that ecosystem.

Devin McGranahan: Our objective is to leverage Western Union's trusted brand, regulatory expertise, global reach, and distribution network to become a critical infrastructure provider within that ecosystem. What differentiates Western Union is that we are focused on real-world utility. We are not building speculative products. We are building solutions that address practical agent and customer needs, faster settlement, lower friction, improved accessibility, and broader financial inclusion. While we remain in the early stages of this journey, we are encouraged by the momentum we are seeing. We have moved beyond strategy and are now into execution. 2026 will be a foundational year for our digital asset initiatives. We have successfully launched the core building blocks of this ecosystem, and our focus now shifts towards execution, adoption, and scaling.

Speaker #4: What differentiates Western Union is that we are focused on real-world utility. We are not building speculative products; we are building solutions that address practical agent and customer needs: faster settlement, lower friction, improved accessibility, and broader financial inclusion.

Speaker #4: While we remain in the early stages of this journey, we are encouraged by the momentum we are seeing; we have moved beyond strategy and are now into execution.

Speaker #4: 2026 will be a foundational year for our digital asset initiatives. We have successfully launched the core building blocks of this ecosystem, and our focus now shifts toward execution, adoption, and scaling.

Speaker #4: We remain confident that digital assets, stablecoins, and blockchain-enabled payments can become meaningful contributors to Western Union's future growth and reinforce our mission of making financial services accessible to people everywhere.

Devin McGranahan: We remain confident that digital assets, stable coins, and blockchain-enabled payments can become meaningful contributors to Western Union's future growth and reinforce our mission of making financial services accessible to people everywhere. Before I conclude, I would like to give a quick update on Intermex. We remain actively engaged in discussions with regulators on the final approval. I remain optimistic that we will be able to obtain the outstanding approval needed. This would enable us to close the transaction upon receipt of this approval, as well as satisfaction of other outstanding and customary closing conditions. While we are disappointed with our current results, we remain confident in our ability to improve performance and unlock the value that exists within this business. The path forward is clear.

Speaker #4: Before I conclude, I would like to give a quick update on Intermex. We remain actively engaged in discussions with regulators on the final approval.

Speaker #4: I remain optimistic that we will be able to obtain the outstanding approval needed. This would enable us to close the transaction upon receipt of this approval, as well as the satisfaction of other outstanding and customary closing conditions.

Speaker #4: In closing, while we are disappointed with our current results, we remain confident and our ability to improve performance and unlock the value that exists within this business.

Speaker #4: The path forward is clear. We are focused on driving growth through our digital initiatives, improving efficiency throughout the organization, allocating capital with discipline, and executing against a well-defined strategic plan.

Devin McGranahan: We are focused on driving growth through our digital initiatives, improving efficiency throughout the organization, allocating capital with discipline, and executing against a well-defined strategic plan. We recognize that rebuilding momentum requires patience and execution. However, we believe the actions that we are taking today will position the company for a stronger future. We appreciate the continued support of our shareholders and the dedication of our employees, who remain committed to serving our agents and customers every day. While there is significant work ahead, we are focused on delivering the results that our stakeholders expect and deserve. Thank you. I now turn it over to Matt to review our financial results in more detail.

Speaker #4: We recognize that rebuilding momentum requires patience and execution. However, we believe the actions that we are taking today will position the company for a stronger future.

Speaker #4: We appreciate the continued support of our shareholders and the dedication of our employees who remain committed to serving our agents and customers every day.

Speaker #4: While there is significant work ahead, we are focused on delivering the results that our stakeholders expect and deserve. Thank you. And I now turn it over to Matt to review our financial results in more detail.

Speaker #2: Thank you, Devin. And good afternoon, everyone. I'm going to walk you through our second quarter 2026 results in more detail, and our 2026 financial outlook.

Matt Cagwin: Thank you, Devin, and good afternoon, everyone. I am going to walk you through our 2026 Q2 results in more detail and our 2026 financial outlook. In the Q2, GAAP revenue was $1 billion, which on an adjusted basis was down 1%, a meaningful improvement from down 5% last year. The decrease was driven by continued slowing of our Americas retail business, while our Consumer Services and branded digital businesses grew 12% and 6% respectively. Adjusted operating margin was 15% in the quarter, which was impacted by lower revenue from our retail business mix, higher agent signing bonuses, and higher operating expenses. As Devin said, we are clearly not satisfied with our performance of our business this quarter. We remain committed to driving higher operating profitability.

Speaker #2: In the second quarter, GAAP revenue was $1 billion, which on an adjusted basis was down 1%—a meaningful improvement from down 5% last year. The decrease was driven by continued slowing of our Americas retail business, while our Consumer Services and Branded Digital businesses grew 12% and 6%, respectively.

Speaker #2: Adjusted operating margin was 15% in the quarter, which was impacted by lower revenue from our retail business, mixed higher agent signing bonuses, and higher operating expenses.

Speaker #2: As Devin said, we are clearly not satisfied with our performance, of our business this quarter, and we remain committed to driving higher operating profitability.

Speaker #2: We are in the process of accelerating our operational efficiency program beyond efficiency, with the goal of taking out $50 million between now and the end of the year, and $200 million of run rate by the end of 2027.

Matt Cagwin: We are in the process of accelerating our operational efficiency program Beyond Efficiency, with the goal of taking out $50 million between now and the end of the year and $200 million of run rate by the end of 2027. The drivers of our Beyond Efficiency program will be the five elements that Devin discussed earlier, which includes the additional scale that we will get from our Intermex acquisition. Adjusted EPS was $0.31 in the current quarter. Adjusted EPS in the current period was driven by lower operating margin for the reasons I stated previously, offset by lower tax rate in the quarter. Our adjusted effective tax rate in the quarter was 14% compared to 16% in the prior year. The decrease in adjusted effective tax rate was primarily due to discrete expenses in the prior year period.

Speaker #2: The drivers of our Beyond Efficiency program will be the five elements that Devin discussed earlier, which include the additional scale that we will get from our Intermex acquisition.

Speaker #2: Adjusted EPS was $0.31 in the current quarter. Adjusted EPS in the current period was driven by a lower operating margin, for the reasons I stated previously, offset by a lower tax rate in the quarter.

Speaker #2: Our adjusted effective tax rate in the quarter was 14%, compared to 16% in the prior year. The decrease in the adjusted effective tax rate was primarily due to discrete expenses in the prior year period.

Speaker #2: Now, turning to the consumer services business, which contributed 15% of total revenue in the quarter, compared to 6% in 2022. Second quarter adjusted revenue increased 12%, driven by growth in our consumer bill pay business, travel money business, as well as the addition of check cashing.

Matt Cagwin: Now turning to Consumer Services business, which contributed 15% of total revenue in the quarter compared to 6% in 2022. Q2's adjusted revenue increased 12%, driven by the growth of our consumer bill pay business, travel money business, as well as the addition of check cashing. As a reminder, the current quarter marks the anniversary of our Eurochange acquisition, which was acquired on 1 April of last year. The Consumer Services segment's profitability was lower in the quarter, driven by lower operating profits in our travel money business, lower float income in our retail money order business, as well as the delayed reduction in overhead due to the acquisition we made of a check cashing partner that we had planned to integrate with Intermex. Now transitioning to our consumer money transfer or CMT business. CMT transactions grew 3% in the quarter relative to a year ago.

Speaker #2: As a reminder, the current quarter marks the anniversary of our Eurochange acquisition, which was acquired on April 1st of last year. The Consumer Services segment’s profitability was lower in the quarter, driven by lower operating profits in our travel money business, lower float income in our retail money order business, as well as the delayed reduction in overhead due to the acquisition we made of a check-cashing partner that we had planned to integrate with Intermex.

Speaker #2: Now, transitioning to our Consumer Money Transfer, or CMT, business. CMT transactions grew 3% in the quarter, relative to a year ago. This was driven by continued strength of our branded digital business, which delivered 25% transaction growth in the current quarter.

Matt Cagwin: This was driven by continued strength of our branded digital business, which delivered 25% transaction growth in the current quarter. While retail trends in the Americas remained under pressure, the ongoing shift of digital continues to support the overall transaction growth and customer engagement. CMT adjusted revenue declined 3% year over year, reflecting the continued pressures in the Americas retail business, driven by uncertainty in the US immigration policy. This was a 300 basis point improvement relative to the Q1 of this year. The CMT segment's profitability was lower in the quarter due to revenue mix, including declines in cash payout transactions, offset by lower profitability from digital payout transactions which increased, higher commission costs associated with new partners and renewals, and higher operating expenses. In the Q2, our branded digital business grew adjusted revenue by 6% and transactions by 25%.

Matt Cagwin: This was driven by continued strength of our branded digital business, which delivered 25% transaction growth in the current quarter. While retail trends in the Americas remained under pressure, the ongoing shift of digital continues to support the overall transaction growth and customer engagement. CMT adjusted revenue declined 3% year-over-year, reflecting the continued pressures in the Americas retail business, driven by uncertainty in the US immigration policy. This was a 300 basis point improvement relative to the Q1 of this year. The CMT segment's profitability was lower in the quarter due to revenue mix, including declines in cash payout transactions, offset by lower profitability from digital payout transactions which increased, higher commission costs associated with new partners and renewals, and higher operating expenses. In the Q2, our branded digital business grew adjusted revenue by 6% and transactions by 25%.

Speaker #2: While retail trends in the Americas, remained under pressure, the ongoing shift of digital continues to support the overall transaction growth and customer engagement. CMT adjusted revenue declined 3% year over year, reflecting the continued pressures in the Americas retail business, driven by uncertainty in the US immigration policy.

Speaker #2: But this was a 300 basis point improvement relative to the first quarter of this year. The CMT segment's profitability was lower in the quarter due to revenue mix, including declines in cash payout transactions, offset by lower profitability from digital payout transactions, which increased.

Speaker #2: Higher commission costs associated with new partners and renewals, and higher operating expenses. In the second quarter, our branded digital business grew adjusted revenue by 6%, and transactions by 25%.

Speaker #2: This marks the 11th straight quarter of solid revenue growth. Consistent with the recent trends, growth was increasingly driven by our Middle East partnerships, while these channels continue to expand our reach and support volume growth, their economics differ from those of our traditionally traditional licensed business.

Matt Cagwin: This marks the 11th straight quarter of solid revenue growth. Consistent with the recent trends, growth was increasingly driven by our Middle East partnerships. While these channels continue to expand our reach and support volume growth, their economics differ from those of our traditional licensed business, resulting in a more pronounced gap between transactions and revenue. We continue to view this as a strategic trade-off that supports the long-term expansion of our digital platform. As a reminder, we began to ramp the Middle East partnerships in late Q3 of last year, we expect transaction growth rates to moderate as we anniversary these partnerships. Account payout transactions also continue with a strong momentum, growing at 50% in the quarter, which is the strongest quarterly growth rate in several years. Turning to our retail business.

Speaker #2: Resulting in a more pronounced gap between transactions and revenue. We continue to view this as a strategic trade-off that supports the long-term expansion of our digital platform.

Speaker #2: As a reminder, we began to ramp the Middle East partnerships in late Q3 of last year, so we expect transaction growth rates to moderate as we anniversary these partnerships.

Speaker #2: Account payout transactions also continue with a strong momentum, growing at 50% in the quarter. Which is the strongest quarterly growth rate in several years.

Speaker #2: Turning to our retail business, overall, the performance of our retail business was in line with previous quarters on a transaction basis, and a few hundred basis points better on a revenue basis.

Matt Cagwin: Overall, the performance of our retail business was in line with previous quarters on a transaction basis and a few hundred basis points better on a revenue basis. The business remains challenged in the Americas as US immigration policy continues to weigh on our operating results. New migration is the lifeline of our retail business. With borders closed, it is difficult to offset natural attrition that comes from digital migration, industry competition, and reverse migration as consumers return home to their native countries. Looking ahead, we remain focused on strengthening our retail franchise with new agent relationships, a vastly improved platform, and better consumer experience. Turning to our cash flow and balance sheet. We generated $214 million in operating cash flow year to date, up 45% versus last year, driven by lower cash taxes.

Speaker #2: The business remains challenged in the Americas as US immigration policy continues to weigh on our operating results. New migration is lifeline of our retail business.

Speaker #2: With borders closed, it is difficult to offset the natural attrition that comes from digital migration, industry competition, and reverse migration as consumers return home to their native countries.

Speaker #2: Looking ahead, we remain focused on strengthening our retail franchise, with new agent relationships, a vastly improved platform, and better consumer experience. Now turning to our cash flow and balance sheet.

Speaker #2: We generated $214 million in operating cash flow year to date, up 45% versus last year, driven by lower cash taxes. Year to date, capital expenditures were $88 million, or 65% higher than the prior year, due to signing bonuses associated with recent agent wins and renewals.

Matt Cagwin: Year to date, capital expenditures were $88 million, or 65% higher than the prior year due to signing bonuses associated with recent agent wins and renewals. As discussed in February, we expect CapEx to be roughly $200 million this year due to new strategic partnerships, as well as a higher renewal cycle. Moving to our balance sheet. At the end of the quarter, we had cash and cash equivalents of $920 million and debt of $2.7 billion. Our leverage ratios were at three times and two times on a gross and net basis. As we announced a few weeks back, we extended our delayed draw bank facility until November. This preserves the financial flexibility while ensuring that we have the committed funds in place to support the Intermex transaction. Post-closing, we expect our debt to EBITDA ratios to be elevated above historical levels.

Speaker #2: As discussed in February, we expect capex to be roughly $200 million this year, due to new strategic partnerships as well as a higher renewal cycle.

Speaker #2: Moving to our balance sheet, at the end of the quarter we had cash and cash equivalents of $920 million, and debt of $2.7 billion.

Speaker #2: Our leverage ratios were at three times and two times on a gross and net basis. As we announced a few weeks back, we extended our delayed draw bank facility until November.

Speaker #2: This preserves our financial flexibility while ensuring that we have the committed funds in place to support the Intermex transaction. As a result, post-closing, we expect our debt-to-EBIT ratios to be elevated above historical levels.

Speaker #2: In the quarter, we returned over $80 million to our owners via dividends and stock repurchases. We have decided to pause our share buyback program in order to maintain our debt-to-EBIT ratios of two and a half times to three times.

Matt Cagwin: In the quarter, we returned over $80 million to our owners via dividends and stock repurchases. We have decided to pause our share buyback program in order to maintain our debt-to-EBITDA ratios of two and a half times to three times. Moving to 2026 outlook, which assumes no major macroeconomic changes. Based on our performance year to date and our view on the remainder of the year, we are updating our 2026 guidance. We now believe adjusted revenue will be in the range of 4% to 6% revenue growth, inclusive of the Intermex acquisition. Our outlook assumes a September 1st close. From a modeling standpoint, we expect retail CMT to continue to improve throughout the back half of this year.

Speaker #2: Now, moving to the 2026 outlook, which assumes no major macroeconomic changes. Based on our performance year to date, and our view on the remainder of the year, we are updating our 2026 guidance.

Speaker #2: We now believe adjusted revenue will be in the range of 4% to 6% revenue growth, inclusive of the Intermex acquisition. Our outlook assumes a September 1 close.

Speaker #2: From a modeling standpoint, we expect retail CMT to continue to improve throughout their back half this year. Digital CMT to be in a similar ballpark as recent quarters, and consumer services to grow low single digits as we lap the Eurochange acquisition, as well as the ramp of a large travel money partner, as well as right-sizing our underperforming products that Devin talked about earlier.

Matt Cagwin: Digital CMT to be in a similar ballpark of recent quarters, consumer services to grow low single digit as we lap the Eurochange acquisition, as well as the ramp of a large travel money partner, as well as right-sizing our underperforming products that Devin talked about earlier. Our adjusted EPS for the full year, we believe will be between $1.25 and $1.35. We expect H2 EPS to be better than H1, driven by new agent wins, back half seasonality, better revenue mix, and the accelerated pace of our Beyond Efficiency program. Thank you for joining the call today. Operator will take questions now.

Speaker #2: Our adjusted EPS for the full year, we believe, will be between $1.25 and $1.35. We expect the second half EPS to be better than the first, driven by new agent wins back half seasonality, better revenue mix, and the accelerated pace of our beyond efficiency program.

Speaker #2: Thank you for joining the call today, and operator will take questions now.

Speaker #1: We will pause momentarily to compile the Q&A roster. As a reminder, each person is allowed one question with one follow-up question. All participants will be in listen-only mode.

Operator 2: We will pause momentarily to compile the Q&A roster. As a reminder, each person is allowed one question with one follow-up question. All participants will be in listen-only mode. During today's Q&A session, please use the raise hand option in Zoom or press star nine on your keypad. Our first question comes to us from Tien-Tsin Huang at JPMorgan. Please go ahead.

Operator: We will pause momentarily to compile the Q&A roster. As a reminder, each person is allowed one question with one follow-up question. All participants will be in listen-only mode. During today's Q&A session, please use the raise hand option in Zoom or press star nine on your keypad. Our first question comes to us from Tien-Tsin Huang at JPMorgan. Please go ahead.

Speaker #1: During today's Q&A session, please use the raise hand option in Zoom, or press star 9 on your keypad. Our first question comes to us from Tinchen Huang at JP Morgan.

Speaker #1: Please go ahead.

Tien-Tsin Huang: Thanks. I think I'm on mute. Can you hear me?

Speaker #3: Thanks. I think I'm unmuted. Can you hear me?

Speaker #2: Tinchen.

Matt Cagwin: Tien-tsin.

Speaker #3: Hey, thanks. Always good to catch up with you. So yeah, you went through a lot of detail here. Thinking about the revenue, which is pretty much in line with that, but obviously the profit as you called out.

Tien-Tsin Huang: Hey, thanks. Always good to catch up with you. Yeah, you went through a lot of detail here. Thinking about the revenue, which is pretty much in line with that, but obviously the profit with you guys have calmed down. I'm just trying to surprise factor on the cost front. Is it really the fact that mix shift to digital? I think there's a lot of factors. I'm just trying to summarize it a little bit easier. Can you give us a little bit more there?

Speaker #3: I'm just trying to. Price factor on the cost front. Is it really the factor mix shift to digital? I know there's a lot of factors, but I'm just trying to summarize it a little bit easier.

Speaker #3: Can you give us a little bit more there?

Speaker #2: Yeah, absolutely, Tinchen. You broke up a little bit there, but I believe your question was can you give a little more on the cost side and what's going on there?

Matt Cagwin: Yeah, absolutely, Tien-Tsin. You broke up a little bit there. I believe your question was, can you give a little more on the cost side and what's going on there? Is that correct?

Speaker #2: Is that correct?

Speaker #3: Yes, sir.

Tien-Tsin Huang: Yes, sir.

Speaker #2: Perfect. Yeah. Happy to drain that a little more. Just a reminder, I know you know this, but our Q2 margins and adjusted EPS were 200 basis points and 6 cents better than Q1, but it's still a far cry from what we expected.

Matt Cagwin: Perfect. Yeah. Happy to drill in that a little more. Just a reminder, I know you know this. Our Q2 margins and adjusted EPS were 200 basis points and $0.06 better than Q1. It's still a far cry from what we expected. I'm sure as you know, last year, we were able to reduce our cost of sales expenses by 3% and SG&A by 14, which helped us fully offset the revenue decline last year and help us grow operating income. As you dig into this, there's really two major drivers that really stick out that we should talk about. One is the pace of our cost reduction. This has slowed from the reason why I want to give you context of last year. It slowed from where we were last year. We were able to rightsize many different departments, exit some programs.

Speaker #2: Also, I'm sure as you know, last year we were able to reduce our cost of sales expenses by 3% in SG&A, by 14, which helped us fully offset the revenue decline last year and help us grow operating income.

Speaker #2: As you dig into this, there's really two major drivers that really stick out that we should talk about. One is the pace of our cost reduction.

Speaker #2: This has slowed, which is the reason why I want to give you the context of last year. It slowed from where we were last year.

Speaker #2: We were able to right size many different departments, exit some programs. The first half of the year that's gotten a little harder. We do have a very good strong pipeline, as Devin outlined, the beyond efficiency program, which gives us confidence that over the rest of this year and going into next year, we can exit with a run rate savings of 50 and 200 million dollars.

Matt Cagwin: In H1, that's gotten a little harder. We do have a very good strong pipeline, as Devin outlined, the Beyond Efficiency program, which gives us confidence that over the rest of this year and going to next year, we can exit with a run rate savings of $50 million and $200 million. The other part of it is revenue mix. We've seen a shifting to lower contribution profit per transaction. Just giving you a couple examples. We're seeing the acceleration of our cash payout to digital in both US and the Middle East, both accelerating. We see higher profit dollars per transaction from cash payout versus account payout. We're also seeing different results between quarters. As you know, this business is made up of tens of thousands or thousands of corridors, and the economics vary massively from each one.

Speaker #2: The other part of it is revenue mix. We've seen a shift to lower contribution profit per transaction. Just to give you a couple of examples.

Speaker #2: We're seeing the acceleration of our cash payout to digital, and both US and the Middle East, both accelerating. And we see higher profit dollars per transaction from cash payout versus account payout.

Speaker #2: We're also seeing different results between quarters. As you know, this business is made up of tens of thousands or thousands of corridors, and the economics vary massively from each one.

Speaker #2: As you heard Devin talk about, we've seen quarter-over-quarter improvements for U.S. to Mexico, which has also been talked about by the central bank of Mexico.

Matt Cagwin: As you heard Devin talk about, we've seen quarter-over-quarter improvements for US to Mexico, which has also been talked about by the Bank of Mexico. We've also seen improvements in US to US and US to Canada. We've seen a deterioration quarter-over-quarter of US really to the rest of the world. There's a few spots where it's shining. As you know, the yields vary between the different corridors. The improvements we've seen in US and Mexico come in a corridor where there's lots of competition, yields are much lower. Relative to the rest of the world, we have a much higher yield, and that's putting pressure on us.

Speaker #2: We've also seen improvements in US to US and US to Canada. But we've seen a deterioration quarter over quarter of US really to the rest of the world.

Speaker #2: There are a few spots where it's shining. But, as you know, the yields vary between the different corridors. The improvements we've seen in US-to-Mexico come in a corridor where there's lots of competition. The yields are much lower, relative to the rest of the world.

Speaker #2: We have a much higher yield, and that's putting pressure on us. The other thing has helped us grow and have some improvements in US to Mexico is we've had some regional agent wins over the last couple of quarters that have ramped as the quarters have gone on.

Matt Cagwin: The other thing that's helped us grow and have some improvements in US and Mexico is we've had some regional agent wins over the last couple quarters that have ramped as the quarters have gone on. These have come at higher commissions per transaction to win them, but they are still very profitable deals and things we're excited to have. We talked about one of them earlier in the year with Velrada, which is principally focused on customers that are Latin America-based with a very heavy concentration of Mexicans.

Speaker #2: These have come at higher commissions per transaction to win them, but they are still very profitable deals and things we're excited to have. We talked about one of them earlier in the year with Velarda, which is principally focused on customers that are Latin America-based, with a very heavy concentration of Mexicans.

Speaker #3: Okay. Okay. Thanks for going through that, Matt. Maybe just a quick follow-up. The cadence of the 50 million then, so you're going to attack the cost structure here.

Tien-Tsin Huang: Okay. Thanks for going through that, Matt. Maybe just as a quick follow-up, the cadence of the $50 million then. You're going to attack the cost structure here. How quickly would that be realized, and how much do you need to send to Mexico to close on time to fully capture it?

Speaker #3: How quickly would that be realized? And how much do you need this in to Mexico to close on time, to fully capture?

Speaker #2: So it will ramp throughout the rest of the year. I'll use the example Devin gave in his discussion earlier. We made the decision to turn off the European wallets because the more modern platforms better, and will help us free up costs immediately.

Matt Cagwin: It will ramp throughout the rest of the year. I'll use the example Devin gave in his discussion earlier. We made the decision to turn off the European wallets because the more modern platform's better and will help us free up costs immediately. That benefit will start helping us in Q4. There's a migration time for the customers who are in the platform, turning off the tech costs and all that. The actions we're taking will ramp as the year progresses and that's why we try to get to a year exit rate of $50 million, and then next year being the $200 million.

Speaker #2: That benefit will start helping us in Q4. There's a migration time for the customers we're in the platform, turning off the tech costs and all that.

Speaker #2: So the actions we're taking will ramp as the year progresses, and that's why we try to get to a year exit rate of 50 million dollars.

Speaker #2: And then next year being the 200.

Speaker #1: Our next question comes to us from Will Nance at Goldman Sachs. Please go ahead.

Operator 2: Our next question comes to us from Will Nance at Goldman Sachs. Please go ahead.

Operator: Our next question comes to us from Will Nance at Goldman Sachs. Please go ahead.

Will Nance: Question. I just wanted to maybe circle back to the mix shift in the transactions that you're seeing in the quarter. If I'm hearing correctly, it sounds like from a revenue perspective, the kind of the improvement in some of the larger corridors has offset decelerations in some of the other corridors. When you look at the contribution margin per transaction, the accelerating corridors are just lower than the decelerating corridors. I guess I just want to make sure we understand that dynamic, but maybe more importantly, it seems rather sudden the acceleration and some of that mix shift that's happened.

Speaker #4: Question. I just wanted to maybe circle back to the mix shift and the transactions that you're seeing in the quarter. I mean, if I'm hearing correctly, it sounds like from a revenue perspective, the kind of the improvement in some of the larger corridors has offset decelerations in some of the other corridors.

Speaker #4: And then, when you look at the contribution margin per transaction, the accelerating corridors are just lower than the decelerating corridors. So, I guess I just want to make sure we understand that dynamic, but maybe more importantly, it seems rather sudden—the acceleration in some of that mix shift that's happened.

Speaker #4: And so I'm just wondering if you can point to anything specific that's driven that acceleration, because it does seem to be happening at a really accelerated pace.

Will Nance: I'm just wondering if you can point to anything specific that's driven that acceleration because it does seem to be happening at a really accelerated pace per your comments and I guess per some of the numbers that we're seeing in terms of gross margin this quarter.

Speaker #4: Per your comments, and I guess per some of the numbers that we're seeing in terms of gross margin this quarter.

Speaker #3: Yeah, Will. So it's really a combination of a couple of things. Just pulling the thread on what you just asked for. Retail is very profitable, particularly cash payout.

Matt Cagwin: Yeah, Will. It's really a combination of a couple of things, just pulling the thread on what you just asked for. Retail is very profitable, particularly cash payout. We've now been going on six, eight quarters of pressure on that in the US side. We've been having double-digit declines there for going on about 6 quarters. That compounding effect is having some pressure. On top of that, we have been able to make progress on it from a transaction revenue standpoint with some of the wins we've had. Those wins have been in the ballpark of our other strategic partners or the example I just gave, Dendreon, on the regionals. They're at the upper bounds of what we have for partners. It's putting pressure on commission cost per transaction, but still helping us to grow revenue and prop up the profit.

Speaker #3: We've now been going on six, eight quarters of pressure on that. On the US side, we've been having double-digit declines there for going on about six quarters.

Speaker #3: That compounding effect is having some pressure on top of a transaction revenue standpoint with some of the wins we've had. Those wins have been in the ballpark of our other strategic partners, or the example I just gave to Tenzin on the regionals.

Speaker #3: But they're at the upper bounds of what we have for partners, so it's putting pressure on commission costs per transaction. But it's still helping us to grow revenue and prop up the profit.

Speaker #5: Will, I'll give you another example which to your point has even surprised us. So most of the world, principally from the US and Spain, but most of the world to Colombia, the shift that has happened from what was traditionally a very significant payout to cash business for us, to payout to account being Colombia, but more importantly, payout to a wallet there called the Nikki wallet, and this shift to the use of their real-time payment system Bravee has truly been amazing at how quickly this has happened.

Devin McGranahan: Will, I'll give you another example, which to your point, has even surprised us. Most of the world, principally from the US and Spain, most of the world but Colombia, the shift that has happened from what was traditionally a very significant payout to cash business for us to pay out to account bank Colombia. More importantly, payout to a wallet there called the Nequi Wallet. This shift to the use of their real-time payment system, Brayy B, has truly been amazing at how quickly this has happened. We were fortunate that we were enabled into the Nequi Wallet, and then we enabled Brayy B, Matt will remember, probably in Q4 of last year, Q1 of this year.

Speaker #5: And so we were fortunate that we were enabled into the Nikki wallet, and then we enabled Bravee. Matt will remember, probably in the fourth quarter of last year, first quarter of this year.

Speaker #5: So we've been able to capture some of that, but the shifting the volume has been shifting and that shift is been significant economically because the economics of paying out to a digital wallet versus in a over a real-time payment switch is far different than the payout to cash economics in the same country in the same corridor.

Devin McGranahan: We've been able to capture some of that, the volume has been shifting, and that shift has been significant economically because the economics of paying out to a digital wallet over a real-time payment switch is far different than the payout to cash economics in the same country, in the same corridor.

Speaker #4: Got it. That's helpful. I appreciate that. And so, maybe just pulling on that last bit, is there any way to decompose the extent to which these payout-to-account transactions are less profitable than your retail business?

Will Nance: Got it. That's helpful. I appreciate that. Maybe just following on that last bit, is there any way to decompose the extent to which these payout-to-account transactions are less profitable than your retail business? How much of that do you attribute to just the structural differences in profitability in the transactions versus maybe things that are more under your control and your ability to improve the margin structure, build scale in some of these digital payout channels? I guess I'm trying to say, how much can you close that gap between your digital payout and your cash payout channels? Thank you. Appreciate you taking the question.

Speaker #4: How much of that do you attribute to just the structural differences in profitability in the transactions, versus maybe things that are more under your control—your ability to improve the margin structure, build scale, and develop some of these digital payout channels?

Speaker #4: I guess I'm trying to say how much can you close that gap between your digital payout and your cash payout channels? Thank you. Appreciate taking the question.

Speaker #3: Hey, Will. Thank you for the question. As you know, the yields, pricing, and profitability vary massively from quarter to quarter. So we can give some generalities, but the real pressure here is we're seeing the vast majority of our branded digital growth coming from our Middle Eastern partners, which come at very, very low revenue per transaction and thus very low profit.

Matt Cagwin: Hey, Will. Thank you for the question. As you know, the yields and the pricing and the profitability vary massively from quarter to quarter. We can give some generalities. The real pressure here is we're seeing vast majority of our branded digital growth coming from our Middle Eastern partners, which come at very low revenue per transaction, thus very low profit. That's causing part of this. As Devin talked about in the prepared remarks, we've strengthened the team through multiple elements of new people, some of the things we're putting in place, the go-to-market they're taking from to market to our customers. As those things take hold, which we're starting to see early glimmers of this with revamping our core branded digital customer growth. That will help us grow more profitable branded digital in lots of countries.

Speaker #3: So that's causing part of this is we Devin talked about in the prepared remarks, we've strengthened the team through multiple elements of new people, some of the things we're putting in place, the go-to-market, they're taking from market to our customers.

Speaker #3: As those things take hold, which we’re starting to see early glimmers of—this, with revamping our core branded digital customer growth—that will help us grow more profitable branded digital in lots of countries.

Speaker #3: So really, it's being driven by the fact that we have these Middle Eastern partners that are very low RPTs and profit per transaction. Beyond that, you also have just the mix, which varies because we have some corridors where digital payout might be a little higher.

Matt Cagwin: Really it's being driven by the fact that we have these Middle Eastern partners that are very low RPTs and profit per transaction. Beyond that, you also have just the mix, which varies because we have some corridors where digital payout might be a little higher. It's hard to give anything other than just generalities. The key for us is we've got to get the overall growth humming and then see and drive improvements in the Americas from a retail standpoint.

Speaker #3: So it's hard to give anything other than just generalities. The key for us is we’ve got to get the overall growth humming, and then see and drive improvements in the Americas.

Speaker #3: From a retail standpoint.

Speaker #5: And to what I would add, Will, right, if you remember and it's generally again, Matt's right, it's corridor to corridor, but in general, as a percentage digital transactions are roughly margin-wise similar to retail transactions.

Devin McGranahan: What I would add, Will, if you remember, it's generally, again, Matt's right, it's corridor to corridor. In general, as a percentage, digital transactions are roughly margin-wise similar to retail transactions. Total dollars, as I was talking about, contribution profit per transaction is reasonably different. When you start substituting the retail transactions for the digital payout transactions, like I was talking about in Colombia, that's where you start to see some of the margin pressures that we're seeing. We do have two levers that we're working on. Matt highlighted one, which was growing higher revenue and higher contribution per transaction, particularly in our digital business. The second the team is working on quite aggressively is lowering digital payout costs. Many of our digital payout partners and networks were negotiated two, three, four, five years ago in some cases.

Speaker #5: Total dollars—and as I was talking about, contribution profit per transaction is reasonably different. And so, when you start substituting the retail transactions for the digital payout transactions, like I was talking about in Colombia, that's where you start to see some of the margin pressures that we're seeing.

Speaker #5: We do have two levers that we're working on. Matt highlighted one, which is growing higher revenue and higher contribution per transaction particularly in our digital business.

Speaker #5: The second thing the team is working on quite aggressively is lowering digital payout costs. Many of our digital payout partners and networks were negotiated two, three, four, even five years ago in some cases.

Speaker #5: Some were part of our retail network, and we used them as payment switches to reach other banks or other wallets. And so we're on a pretty active campaign, and if you remember, we talked about at Investor Day our goal of lowering those payout costs.

Devin McGranahan: Some were part of our retail network, and we used them as payment switches to reach other banks or other wallets. We're on a pretty active campaign, and if you remember, we talked about at Investor Day our goal of lowering those payout costs. This has brought that more to the forefront, and we will share in upcoming calls the progress that we're making. In that Colombia example, the team recently lowered the payout cost from over $2 to less than $0.50. The contribution per profit on those Nequi Wallet is going to go up dramatically. Previously, we saw a lot of volume shift, and we were paying similar payout costs as we did to other options in Colombia, even though they had lower revenue per transaction because they were digital.

Speaker #5: This has brought that more to the forefront, and we will share on upcoming calls the progress that we're making in that Colombia example. The team recently lowered the payout cost from over $2 to less than 50 cents, right?

Speaker #5: And so the contribution per profit on those Nikki wallet is going to go up dramatically, but previously we saw a lot of volume shift and we were paying similar payout costs as we did to other options in Colombia, even though they had lower revenue per transaction because they were digital.

Speaker #1: Our next question comes to us from Raina Kumar at Oppenheimer. Please go ahead.

Operator 2: Our next question comes to us from Rayna Kumar at Oppenheimer. Please go ahead.

Operator: Our next question comes to us from Rayna Kumar at Oppenheimer. Please go ahead.

Speaker #6: Good evening. Thanks for taking my question. Just given the current profitability pressures and broader business headwinds, how are you thinking about the sustainability of the current dividend over the medium term?

Rayna Kumar: Good evening. Thanks for taking my question. Just given the current profitability pressures and broader business headwinds, how are you thinking about the sustainability of the current dividend over the medium term?

Speaker #5: So I will start, and then I will let Matt follow up with the math. We believe, and the Board of Directors believes, that the dividend is a strong return to our shareholders, and we believe we have sufficient financial capacity to continue and maintain that dividend.

Devin McGranahan: I will start, and then I will let Matt follow up with the math. We believe, and the board of directors believe that the dividend is a strong return to our shareholders and that we believe we have sufficient financial capacity to continue and maintain that dividend. At the present moment, we believe the strategy of continuing to return capital to our shareholders via the dividend is a good strategy.

Speaker #5: So, at the present moment, we believe the strategy of continuing to return capital to our shareholders via the dividend is a good strategy.

Speaker #3: Yeah, and just to build on that a little more for you, Raina. As you know, we've got over $900 million of cash in our books.

Matt Cagwin: Yeah, just to build on that a little more for you, Rayna. As you know, we've got over $900 million of cash in our books. We talked earlier about the benefit we expect to be able to get out of USDPT is we're able to go get the Treasury Bridge ramped up. We're working very fast on one of the largest three markets in the world, which we hope to have a large partner board by the end of this year, and then ramping over $1 billion of float in the Q1 next year. That will start to free up capital from both the correspondent banking process as well as what we've pre-funded to some of our partners around the world. As Devin talked about, our board's committed to the dividend.

Speaker #3: We talked earlier about the benefit we expect to be able to get out of USDPT is we're able to go get the treasury bridge ramped up.

Speaker #3: We're working very fast on one of the largest three markets in the world, which we hope to have a large partner board by the end of this year and then ramping over a billion dollars of float in the first quarter next year.

Speaker #3: So that will start to free up capital from both the correspondent banking process as well as what we pre-funded to some of our partners around the world.

Speaker #3: So we feel like we have line of sight to improve cash flow, and as Devin talked about, our Board is committed to the dividend.

Speaker #6: Thank you. That's really helpful. And as a follow-up, for one month into the third quarter, immigration policy? Have things gotten worse or they seem or are you starting to see anything ease?

Rayna Kumar: Thank you. That's really helpful. As a follow-up, after one month into Q3, what are you seeing in terms of this US immigration policy? Have things gotten worse? Are they the same? Are you starting to see anything ease? Thank you.

Speaker #6: Thank you.

Speaker #5: So what I would call it is a continuation of the policies and the effects of the policies that we've seen for a year. But as we've seen both in our financial results and in certain places, the effects of that have stabilized at a certain level and so we continue to see the negative effects of it, but it is no longer worsening.

Devin McGranahan: What I would call it is a continuation of the policies and the effects of the policies that we've seen for a year. As we've seen both in our financial results and in certain places, the effects of that have stabilized at a certain level. We continue to see the negative effects of it, but it is no longer worsening, and in some cases, and in some places, it is abating a bit. That is happening, however, slower than we anticipated at the beginning of the year. We believe that by the time we lap the effects, as you know, the real impacts on the policy started at the end of Q1 2025. We felt them ramp in Q2 2025 and really peaked in Q3 2025.

Speaker #5: And in some cases and in some places, it is abating a bit. That is happening, however, slower than we anticipated at the beginning of the year.

Speaker #5: We believe that by the time we lap the effects, as you know, the real impacts on the policies started at the end of the first quarter of 2025.

Speaker #5: We felt them ramp in the second quarter of '25 and really peak in the third quarter of '25. We felt by this time of the year we would be seeing the effects of lapping those things and more stability than we have.

Devin McGranahan: We felt by this time of the year we would be seeing the effects of lapping those things and more stability than we have. As noted earlier on the call, we also see varying effects by corridors. When you have a policy change with regard to Haitians, or you have an event in Venezuela, those are important corridors for us that will be impacted while we're seeing more stability in corridors like US to Mexico. Again, this comes back to a corridor-by-corridor basis, what policies are affecting what groups, and how does that impact our customers and the mix of our customers in those corridors. The overall effect is improving from the lows of last year, but not improving as significantly as we might have anticipated.

Speaker #5: As noted earlier on the call, we also see varying effects by corridors. And so, when you have a policy change with regard to Haitians, or you have an event in Venezuela, those are important corridors for us that will be impacted, while we're seeing more stability in corridors like US to Mexico.

Speaker #5: And so again, this comes back to a corridor by corridor basis what policies are affecting what groups and how does that impact our customers and the mix of our customers in those corridors.

Speaker #5: But the overall effect is improving from the lows of last year, though not as significantly as we might have anticipated.

Speaker #1: Our next question is from Darren Peller at Wolf Research. Please ask your question.

Operator 2: Our next question is from Darrin Peller at Wolfe Research. Please ask your question

Operator: Our next question is from Darrin Peller at Wolfe Research. Please ask your question.

Speaker #4: All right. Hey, thanks, guys. Look, you've obviously done well with growth in your branded digital users, as have many of your competitors also. But are customer acquisition costs for branded digital now higher to the degree that it's impacting incremental profitability?

Darrin Peller: Hey, thanks guys. Look, you've obviously done well with growth in your branded digital users, as have many of your competitors also. Are customer acquisition costs for branded digital now higher to the degree that it's impacting incremental profitability? I guess I'm just trying to figure out also, beyond managing expenses, can we just revisit the opportunity to expand ARPU beyond just trying to create more customer growth itself? Beyond digital, where are you in that, and what do you expect to see in terms of revenue per user expansion over the coming year or two?

Speaker #4: I guess I'm just trying to figure out also beyond managing expenses, can we just revisit the opportunities to expand our pool beyond just trying to create more customer growth itself?

Speaker #4: Beyond digital, where are you in that, and what do you expect to see in terms of revenue per user expansion over the coming year or two?

Speaker #5: So let's tackle those in two parts. First, on the customer acquisition, we started talking about this probably two, three quarters ago. As the retail business began to see significant declines, competitive intensity in the digital business increased.

Devin McGranahan: Let's tackle those in two parts. First, on the customer acquisition. We started talking about this probably two, three quarters ago. As the retail business began to see significant declines, competitive intensity in the digital business increased. The competitive intensity, which was historically driven more by marketing spend and by brand recognition, also started to envelop new customer offers, and in some cases, relatively significant new customer offers. There are offers in the market where customers can get free transactions for a month, or they can get three, four, five free transactions as a new customer. These kinds of offers have a significant negative effect on near-term revenue as you onboard those customers.

Speaker #5: And the competitive intensity, which was historically driven more by marketing spend and by kind of brand recognition, also started to envelop new customer offers.

Speaker #5: And in some cases, relatively significant new customer offers there are market off there are offers in the market where customers can get free transactions for a month or they can get three, four, five free transactions as a new customer.

Speaker #5: These kinds of offers have a significant negative effect on near-term revenue as you onboard those customers. We participated in some of that for a while and then as I noted in the public commentary, have begun to back off on some of that simply because we did not see the longer-term returns given the impact on near-term revenue that that has required in order to compete on that.

Devin McGranahan: We participated in some of that for a while, and then, as I noted in the public commentary, have begun to back off on some of that simply because we did not see the longer-term returns, given the impact on near-term revenue that that has required in order to compete on that. The second question in terms of ARPU. We continue, and one of the things I talked about in the quarter, is focusing on basically our CAC to LTV, and in particular, LTV is driven by customer behaviors in terms of longevity, transactions per customer, and principal per customer. Us and others in the industry are very focused on where are the most valuable customers, the higher senders, the more frequent senders, so that you can really optimize that revenue per transaction.

Speaker #5: The second question in terms of our pool, we continue and one of the things I talked about in the corridor is focusing on basically our CAC to LTV and in particular, LTV is driven by customer behaviors in terms of longevity, transactions for customer, and principal per customer.

Speaker #5: And so, we and others in the industry are very focused on where the most valuable customers are—the higher senders, the more frequent senders—so that you can really optimize that revenue per transaction.

Speaker #5: More importantly, you can optimize the LTV, as well as the revenue and profit over the lifecycle of the customer, to focus those acquisition dollars in places where we're getting higher returns on a lifecycle basis than in individual transaction economics that we might acquire in the first or second transaction.

Devin McGranahan: More importantly, you can optimize the LTV also, the revenue and profit over the life cycle of the customer to focus those acquisition dollars in places where we are getting higher returns on a life cycle basis than in any individual transaction economics that we might acquire the first or second transaction.

Speaker #4: All right, Evan, thank you. Quick follow-up just on Intermix. I know it's delayed, obviously, versus your prior expectation—sorry about that. But do you still expect the same financial synergy targets, just to the end of the later timeframe?

Darrin Peller: All right, Alan, thank you.

Nate Svendsen: Quick follow-up just on Intermex. I know it's delayed obviously versus your prior expectation.

Darrin Peller: Quick follow-up just on Intermex. I know it's delayed obviously versus your prior expectation.

Devin McGranahan: Sorry about that.

Darrin Peller: Sorry about that.

Nate Svendsen: Do you still expect the same financial synergy targets, just in a delayed timeframe as you previously expected?

Darrin Peller: Do you still expect the same financial synergy targets, just in a delayed timeframe as you previously expected?

Speaker #4: Have you previously expected?

Speaker #3: Hey Darren. Yeah, so ultimately, as we get close, we do expect to have actually higher synergy targets, as you probably remember from when we kicked this off a year ago.

Devin McGranahan: Hey, Darrin. Yeah. Ultimately, as we get close, we do expect to have actually higher synergy targets. As you probably remember from when we kicked this off a year ago, we had anticipated $30 million in synergies. We talked last quarter that we were seeing more opportunity and expected to be up a little bit. That continues to be the case. It will ramp post-closing. The year has gotten narrower. As I've mentioned before, we've got in our model now the September 1 close. I can't tell you we're going to close on September 1. It's up to regulatory approval. Just wanted to make sure you all knew what day we've modeled in our numbers. There'll be some synergy this year, but what we had expected originally was $0.10 in the first full year, is what we talked about in August 2023.

Matt Cagwin: Hey, Darrin. Yeah. Ultimately, as we get close, we do expect to have actually higher synergy targets. As you probably remember from when we kicked this off a year ago, we had anticipated $30 million in synergies. We talked last quarter that we were seeing more opportunity and expected to be up a little bit. That continues to be the case. It will ramp post-closing. The year has gotten narrower. As I've mentioned before, we've got in our model now the September 1 close. I can't tell you we're going to close on September 1. It's up to regulatory approval. Just wanted to make sure you all knew what day we've modeled in our numbers. There'll be some synergy this year, but what we had expected originally was $0.10 in the first full year, is what we talked about in August 2023.

Speaker #3: We had anticipated $30 million in synergies. We talked last quarter that we were seeing more opportunity and expected to be up a little bit.

Speaker #3: That continues to be the case. It will ramp post-closing. The year has gotten narrower. As I mentioned before, we've got in our model now the September 1 close. I can't tell you we're going to close on September 1.

Speaker #3: It's up to regulatory approval. Just wanted to make sure you all knew what day we've modeled in our numbers. So there will be some synergies this year, but what we expected originally was 10 cents in the first full year is what we talked about in August of last year.

Speaker #3: We would still expect that plus some.

Devin McGranahan: We would still expect that plus some.

Matt Cagwin: We would still expect that plus some.

Speaker #1: Our next question comes to us from Nate Svenson at Deutsche Bank. Please go ahead.

Operator 2: Our next question comes to us from Nate Svendsen at Deutsche Bank. Please go ahead.

Operator: Our next question comes to us from Nate Svendsen at Deutsche Bank. Please go ahead.

Speaker #5: Hey, thanks for the question. Another one on margins. I understand the points on OPEX and the mix shift in transactions, but a couple of other factors that have come up on the call I wanted to touch on.

Nate Svendsen: Hey, thanks for the question. Another one on margin. Understand the points on kind of OpEx and the mix shift in transactions, a couple other factors that have come up on the call I wanted to touch on. On the higher agent bonuses, I know you mentioned the agents in Mexico, but wondering if that same dynamic is playing out in any other regions. Is there any reason to think that the cost that you're having to pay out to these agents is structurally higher now than it has been historically? Then the other thing that came up in the prepared remarks was travel money operating profit being lower. I wanted to hear some color on what was driving profitability and travel money lower specifically.

Nate Svensson: Hey, thanks for the question. Another one on margin. Understand the points on kind of OpEx and the mix shift in transactions, a couple other factors that have come up on the call I wanted to touch on. On the higher agent bonuses, I know you mentioned the agents in Mexico, but wondering if that same dynamic is playing out in any other regions. Is there any reason to think that the cost that you're having to pay out to these agents is structurally higher now than it has been historically? Then the other thing that came up in the prepared remarks was travel money operating profit being lower. I wanted to hear some color on what was driving profitability and travel money lower specifically.

Speaker #5: So, on the higher agent bonuses, I know you mentioned the agents in Mexico, but I'm wondering if that same dynamic is playing out in any other regions.

Speaker #5: Is there any reason to think that the cost you're having to pay out to these agents is structurally higher now than it has been historically?

Speaker #5: And then the other thing that came up in the prepared remarks was travel money operating profit being lower. So I wanted to hear some color on what was driving profitability in travel money lower, specifically.

Speaker #3: Yep, I'll work my way backwards. So on the travel money side, as we talked about last quarter, the first quarter of every year, they actually lose money because fixed costs are higher than the revenue.

Devin McGranahan: Yep. I'll work my way backwards. On the travel money side, as we talked about last quarter, the Q1 of every year, they actually lose money because the fixed costs are higher than the revenue because it's a lower seasonal travel business. Typically, all the profit comes in the Q2 and Q3. They're slightly positive in Q4. What we've seen this year is that travel is down in Europe. In particular, if you go look at Heathrow travel patterns, you're seeing it be negative for the first time since COVID. We're seeing less consumers coming in, which has put some pressure on the profitability of that business. It still grew. As you can see, it was a contributor to our 12% growth rate this quarter, but it wasn't where we expected to be. It was light a bit.

Matt Cagwin: Yep. I'll work my way backwards. On the travel money side, as we talked about last quarter, the Q1 of every year, they actually lose money because the fixed costs are higher than the revenue because it's a lower seasonal travel business. Typically, all the profit comes in the Q2 and Q3. They're slightly positive in Q4. What we've seen this year is that travel is down in Europe. In particular, if you go look at Heathrow travel patterns, you're seeing it be negative for the first time since COVID. We're seeing less consumers coming in, which has put some pressure on the profitability of that business. It still grew. As you can see, it was a contributor to our 12% growth rate this quarter, but it wasn't where we expected to be. It was light a bit.

Speaker #3: Because it's a lower seasonal travel business, typically all the profit comes in the second and third quarters. They're slightly positive in Q4. What we've seen this year is that travel is down, and Europe in particular—if you go look at Heathrow travel patterns—you’re seeing it be negative for the first time since COVID.

Speaker #3: So we're seeing fewer consumers coming in, which has put some pressure on the profitability of that business. It still grew, as you can see, and it was a contributor to our 12% growth rate this quarter.

Speaker #3: But it wasn't where we expected it to be. It was light a bit. On your first part of your question about what are we seeing for signing bonuses or overall agent economics, it varies from partner to partner, but as I've mentioned a couple of times now, and we had talked about with the $200 million of capex this year, it's a heavy agent renewal cycle.

Devin McGranahan: On your first part of your question about what are we seeing for signing bonuses or overall agent economics, it varies from partner to partner. As I've mentioned a couple of times now, and we had talked about with the $200 million of CapEx this year, it's a heavy agent renewal cycle. We've talked about winning two new big partners, plus a couple more moderate ones. We've signed up the Deutsche Post in Europe, which is ramping right now. We've won, and this is a competitive takeaway, we've won the Canada Post, which will be ramping here in the latter part of Q3. Both of those have some upfront costs to ramp and help build them out.

Matt Cagwin: On your first part of your question about what are we seeing for signing bonuses or overall agent economics, it varies from partner to partner. As I've mentioned a couple of times now, and we had talked about with the $200 million of CapEx this year, it's a heavy agent renewal cycle. We've talked about winning two new big partners, plus a couple more moderate ones. We've signed up the Deutsche Post in Europe, which is ramping right now. We've won, and this is a competitive takeaway, we've won the Canada Post, which will be ramping here in the latter part of Q3. Both of those have some upfront costs to ramp and help build them out.

Speaker #3: We've talked about winning two new big partners, plus a couple more moderate ones. We've signed up the Deutsche Post in Europe, which is ramping right now.

Speaker #3: We've won, and it's a competitive takeaway. We've won the Canadian Post, which will be ramping here in the latter part of Q3. Both of those have some upfront costs to ramp and help build them out, which have—and they are—slightly higher than our typical strategic partners.

Matt Cagwin: Which they are slightly higher end of our typical strategic partners. They're not above the range, but they're the higher end because of competitive takeaways. We have the more smaller ones like a Velrada and some of the other ones like that that were also competitive takeaways that are at the higher end.

Speaker #3: They're not above the range, but they're the higher end because of competitive takeaways. And then we had the more smaller ones like a Velarda and some of the other ones like that that were also competitive takeaways that are the higher end.

Speaker #4: I would add that, in that matter.

Devin McGranahan: I would add that, Matt and I have talked about this, that we went through a renewal cycle, particularly here in North America, with the majority of our strategic partners. One of the crown jewels of the Western Union franchise is the majority of major retailers, and we are proud of these relationships, whether it be Kroger, Walmart, Albertsons, Walgreens, Publix, H-E-B, Giant Eagle. We have the majority of what we consider to be the strategic distribution in the US. As you can imagine, we faced an unusual number of renewals over the past 12 months that we successfully have gotten through and am pleased to have renewed all of those contracts. In the face of a down market and in the face of my commentary around one of the ways you deal with a down market is you work to steal share.

Speaker #5: Right. I've talked about this that we went through a renewal cycle, particularly here in North America, with the majority of our strategic partners. And one of the crown jewels of the Western Union franchise is the majority of major retailers, whether and we are proud of these relationships, whether it be Kroger or Walmart, Albertsons, Walgreens, Publix, HEB, Giant Eagle.

Speaker #5: We have the majority of what we consider to be the strategic distribution in the US. As you can imagine, and we faced an unusual number of renewals over the past 12 months that we successfully have gotten through and I'm pleased to have renewed all of those contracts.

Speaker #5: In the face of a down market, and in the face of my commentary around one of the ways you deal with a down market is you work to steal share.

Speaker #5: We had some increased competition looking to unlodge us from some of those long-term relationships. And so I think the team navigating getting the renewals, continuing to secure those relationships, and doing it at economics that weren't too different from the ones that we had previously.

Devin McGranahan: We had some increased competition looking to unlodge us from some of those long-term relationships. I think the team did an excellent job of navigating, getting the renewals, continuing to secure those relationships, and doing it at economics that weren't too different from the ones that we had previously.

Speaker #4: Thanks, that's super helpful. For a follow-up, I did want to ask about remittance taxes—more broadly, not on the federal side, but I know there are some other local or state proposals floating out there.

Nate Svendsen: Thanks. That's super helpful. For a follow-up, I did want to ask on remittance taxes more broadly. Not on the federal side, but I know there are some other local or state proposals floating out there. I know Tennessee is one that comes to mind. On Tennessee specifically, wondering if you'd give your thoughts on that specific proposal, whether you think it gets implemented. I know there are some challenges out there on that one specifically. Any other state or local taxes that we should be tracking that could potentially be on the horizon.

Nate Svensson: Thanks. That's super helpful. For a follow-up, I did want to ask on remittance taxes more broadly. Not on the federal side, but I know there are some other local or state proposals floating out there. I know Tennessee is one that comes to mind. On Tennessee specifically, wondering if you'd give your thoughts on that specific proposal, whether you think it gets implemented. I know there are some challenges out there on that one specifically. Any other state or local taxes that we should be tracking that could potentially be on the horizon.

Speaker #4: I know Tennessee is one that comes to mind. So, on Tennessee specifically, I'm wondering if you could give your thoughts on that specific proposal and whether you think it gets implemented.

Speaker #4: I know there are some challenges out there on that one specifically. And then any other state or local taxes that we should be tracking that could potentially be on the horizon?

Speaker #5: Yeah, as you know, when they passed the US remittance tax, which in our previous commentary we don't believe had a significant impact it has driven up card acceptance.

Devin McGranahan: Yeah, as you know, when they passed the US remittance tax, which, in our previous commentary, we don't believe had a significant impact. It has driven up card acceptance. I will make this up. We're now at 20-plus% card acceptance in the retail network in the US, up from a couple of percentage points before the remittance tax. We've seen a lot of move to people using bank products to not pay the tax as was written into the legislation. They left open the door for states to, in effect, pass a state-specific tax, of which several, Tennessee being probably the most notable and aggressive, have done so. There've been a couple of states that have limited those taxes to what they consider to be foreign adversaries or specific corridors that they saw, or countries they saw as problematic. We track this stuff.

Speaker #5: I'll make this up. So, we're now at 20-plus percent card acceptance in the retail network in the U.S., up from a couple of percentage points before the remittance tax.

Speaker #5: So we've seen a lot of move to people using bank products to not pay the tax as was written into the legislation. But they left open the door for states to, in effect, pass a state-specific tax, of which several—Tennessee being probably the most notable and aggressive—have done so.

Speaker #5: There have been a couple of states that have limited those taxes to what they consider to be foreign adversaries or specific corridors that they saw or countries they saw as problematic.

Speaker #5: We track this stuff. If I could predict it, I probably wouldn't be in this job. We don't think that it'll have significant impact. Tennessee is an important state, but as you can imagine, it's nothing like a Florida-Texas-California-New York in terms of the magnitude of the business that we have there.

Devin McGranahan: If I could predict it, I probably wouldn't be in this job. We don't think that it'll have significant impact. Tennessee's an important state, but as you can imagine, it's nothing like a Florida, Texas, California, New York, in terms of the magnitude of the business that we have there. In many cases, customers will simply drive across the border and send money at a Western Union at a different state if the tax equation becomes significant between one state and another.

Speaker #5: And in many cases, customers will simply drive across the border and send money at a Western Union into a different state if the tax equation becomes significant between one state and another.

Speaker #1: Our next question is from Timothy Kyoto at UBS. Please ask your question.

Operator 2: Our next question is from Timothy Chiodo at UBS. Please ask your question.

Operator: Our next question is from Timothy Chiodo at UBS. Please ask your question.

Speaker #2: Great, thank you. I want to go back to really the opening comment from the prepared remarks. And we've hit this in a few different ways, but maybe we can try another way.

Timothy Chiodo: Great. Thank you. I want to go back to really the opening comments from the prepared remarks, we've hit this in a few different ways, maybe we can try another way. Retail and digital, you were very clear that the contribution dollars or the contribution profit per transaction is lower for digital, you kind of mentioned meaningfully so. The first part is I was hoping that you could maybe just talk a little bit about that directionally in terms of how much meaningfully are we talking about in terms of how much lower it is. From there, some of the items within the P&L of each that we should be considering that might be levers. On the retail side, obviously, there's the commissions that we mentioned.

Speaker #2: So retail and digital and you were very clear that the contribution dollars or the contribution profit per transaction is lower for digital. And you kind of mentioned meaningfully so.

Speaker #2: The first part is, I was hoping that you could maybe just talk a little bit about that directionally, in terms of how much—meaningfully—are we talking about, in terms of how much lower it is?

Speaker #2: And then from there, some of the items within the P&L of each that we should be considering that might be levers. So on the retail side, obviously, there's the commissions that we mentioned.

Speaker #2: And then on the online side, I believe the two big ones are the marketing costs and then, of course, the payout costs. And maybe just dig into the basically the real levers within the kind of product-specific P&L, if you will.

Timothy Chiodo: On the online side, I believe the two big ones are the marketing costs and then, of course, the payout costs. Maybe just dig into basically the real levers within the kind of product-specific P&L, if you will.

Speaker #5: Yeah, so I'll start and then I'll let Matt. I think I understand the desire to have the specificity. That would certainly make life easier, and it would make my life easier as well.

Devin McGranahan: Yeah. I'll start, then I'll let Matt. I think I understand the desire to have the specificity. That would certainly make life easier, it would make my life easier as well. Matt highlighted particularly the growth in the nature of the business that we have in the Middle East. The Middle East is a place where it's quite difficult to get licenses, which we are working on, by the way. Much of our business there is partner-driven. In a partner-driven model, the economics, because you got to pay the partner, are just fundamentally different than in the economics of our core business or our licensed businesses around the world. The shift in the growth of that particular business is a significantly different business than the more general shift from retail to payout to account.

Speaker #5: Matt highlighted particularly the growth in the nature of the business that we have in the Middle East, because the Middle East is a place where it's quite difficult to get licenses.

Speaker #5: Which we are working on, by the way. Many of much of our business there is partner-driven and in a partner-driven model, the economics because you got to pay the partner are just fundamentally different than in the economics of our core business or our licensed businesses around the world.

Speaker #5: And so the shift in the growth of that particular business is a significantly different business than the more general shift from retail to payout to account.

Speaker #5: There is a difference in the retail to payout to account, and that was part of what I was talking about needing to lower payout costs so that difference is less.

Devin McGranahan: There is a difference in the retail to payout to account, and that was part of what I was talking about needing to lower payout costs so that difference is less and renegotiating some of those payout cost relationships. There are a bunch of other levers, though, that are important. In the digital space, payment acceptance costs. How much we pay to be able to do funds in, which is really a strategy of shifting our customers from funding with credit cards and debit cards to funding with bank accounts and digital wallets, can significantly lower one of our bigger expense items, which is funding costs. Managing card fraud and payment fraud is another significant expense for us, again, in the digital space. One, shifting to bank funding helps that, but also managing those costs in a more aggressive way also helps it.

Speaker #5: And renegotiating some of those payout costs relationships. There are a bunch of other levers, though, that are important. And so in the digital space, payment acceptance costs so how much we pay to be able to do funds in, which is really a strategy of shifting our customers from funding with credit cards and debit cards to funding with bank accounts and digital wallets.

Speaker #5: Can significantly lower one of our bigger expense items, which is funding costs. Managing card fraud and payment fraud is another significant expense for us, again in the digital space.

Speaker #5: One, shifting to bank funding helps that, but also, managing those costs in a more aggressive way also helps. We continue to look at other efficiency options.

Devin McGranahan: We continue to look at other efficiency options, particularly in that SG&A line, which you saw go up in the quarter as we continue to invest. As Matt highlighted, shutting down, and it was not an easy decision to decide to shut down the European wallets before we had the next platform in place. The opportunity to save run rate costs of $6 to $8 million, as Matt highlighted, given the situation that we're facing, we made that decision. For us, lowering some of those operating costs associated with some of our legacy platforms is an important lever as well.

Speaker #5: Particularly in that SG&A line, which you saw go up in the quarter as we continue to invest. And so, as Matt highlighted, shutting down was not an easy decision—to decide to shut down the European wallets before we had the next platform in place.

Speaker #5: But the opportunity to save run rate costs of 6 to 8 million dollars, as Matt highlighted, given the situation that we're facing, we made that decision.

Speaker #5: So, for us, lowering some of those operating costs associated with some of our legacy platforms is an important lever as well.

Matt Cagwin: I'm going to repeat a little bit, so I apologize. Just as you think about what's in cost of sales or cost of services, the biggest thing is commissions. Commissions represent almost two-thirds of the balance in there. Beyond that, there are, as Devin has highlighted, there are fraud losses, which we're working fast on and feverishly to get to leading loss rates and collection rates. There's payment fees, making sure that you get the best payment fees to your partners. We're actually running an RFP right now. There's the call center costs within there, which Devin's talked about now for the last three, four years of we've cut the calls by more than half. That has actually slowed.

Speaker #4: And I'm going to repeat myself a little bit, so I apologize. But just as you think about what's in cost of sales or cost of services, the biggest component is commissions.

Matt Cagwin: I'm going to repeat a little bit, so I apologize. Just as you think about what's in cost of sales or cost of services, the biggest thing is commissions. Commissions represent almost 2/3 of the balance in there. Beyond that, there are, as Devin has highlighted, there are fraud losses, which we're working fast on and feverishly to get to leading loss rates and collection rates. There's payment fees, making sure that you get the best payment fees to your partners. We're actually running an RFP right now. There's the call center costs within there, which Devin's talked about now for the last three, four years of we've cut the calls by more than half. That has actually slowed.

Speaker #4: Commissions represent almost two-thirds of the balance in there. But beyond that, there are as Devin has highlighted, there are fraud losses, which we're working fast on and feverishly to get to leading loss rates, and collection rates.

Speaker #4: There's payment fees, making sure that you have the best payment fees for your partners. We're actually running an RFP right now. There's the call center costs within there, which Devin's talked about now for the last three, four years of we've cut the calls by more than half.

Speaker #4: That is actually slow. That's one of the reasons why this migration from cash payout to digital over the last couple of years has been happening.

Matt Cagwin: That's one of the reasons why this migration from cash payout to digital over the last couple of years has been happening, that we've been able to manage through that on the cost of sales lines. We've been saving on the call center side. That has plateaued a little bit, but we've got some through AI, some things we're working on to improve that further. The last part is in that bucket is big platform costs. Today, we actually still operate three different digital platforms. We still have a handful of settlement platforms that we're working through. As we go and move down to one platform, which in the last year, I'll talk about the settlement side, we were able to eliminate three in the last 18 months.

Speaker #4: We've been able to manage through that on the cost of sales lines. We've been saving on the call center side. That has plateaued a little bit, but we've got some things through AI, and we're working on improving that further.

Speaker #4: And the last part is in that bucket is big platform costs. So today, we actually still operate three different digital platforms. We still have a handful of settlement platforms that we're working through.

Speaker #4: And as we go and move down to one platform—which, in the last year, I'll talk about the settlement side—we were able to eliminate three in the last 18 months. As we're able to eliminate the last couple, that will allow us to continue to reduce the cost of the sales side.

Matt Cagwin: As we're able to eliminate the last couple, that will allow us to continue to reduce the cost of sales side.

Speaker #1: Our final question is from Vasu Govul at KBW. Please ask your question.

Operator 2: Our final question is from Vasu Govil at KBW. Please ask your question.

Operator: Our final question is from Vasu Govil at KBW. Please ask your question.

Speaker #6: Hi, thanks for squeezing me in here. I guess just first question, I'm wondering if there's a way to drill down and just aggregate how much of the change in EPS guide is coming from each of the various factors you guys outlined.

Vasu Govil: Hi, thanks for squeezing me in here. I guess just first question, I'm wondering if there's a way to drill down and disaggregate how much of the change in EPS guide is coming from each of the various factors you guys outlined. I know mix shift to digital payout seems to be the biggest one, but also weaker retail, some travel money weakness. I don't know if there was some contribution as it was from Intermex for the year, so I don't know if you could help disaggregate, that would be super helpful.

Speaker #6: I know mixed shift to digital payout seems to be the biggest one, but also weaker retail. I think travel money weakness. I don't know if there was some contribution as you from Intermax for the year.

Speaker #6: So I don't know if you could help disaggregate. That would be super helpful.

Speaker #4: So Vasu, as you probably have seen, our first half of the year year over year Q1 was down 15 cents. The second quarter was down 11 cents.

Matt Cagwin: Vasu, as you probably have seen, our H1, year-over-year Q1 was down $0.15. Q2 was down $0.11. Our guide for the full year is effectively down $0.50. We've talked about the drivers of the H1 and what drove those. Q1 had a fair bit of pressure from FX loss, delayed money from a partner, things of that nature, as well as the mix items we've talked about here today for both Q1 was roughly 50% to 60% for the things we talked about today, and it's similar items for this quarter. I think if you take that, it'll give you a directional answer for that.

Speaker #4: Our guide for the full year is effectively down 50. We've talked about the drivers of the first half and what drove those. Q1 had a fair bit of pressure from FX loss, delayed money from a partner, things of that nature, as well as the mixed items we've talked about here today. For Q1, it was roughly 50–60 percent for the things we talked about today, and it's similar items for this quarter.

Speaker #4: I think if you take that, it'll give you a directional answer for that.

Operator 2: Thank you for joining the Western Union Q2 2026 results Conference Call. We hope you have a great day.

Operator: Thank you for joining the Western Union Q2 2026 results Conference Call. We hope you have a great day.

Q2 2026 The Western Union Co Earnings Call

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