On April 28, Western Union Co. (WU) reported its financial results for the first quarter of 2022. While the earnings and revenue surpassed estimates, the downcut in outlook due to the Russian-Ukraine crisis caused the stock to tumble. Thus, following the results, WU declined by 5.53% in the pre-market to reach $18.11.
Bullish before the earnings release, the stock had increased by 3.06% in the regular session. At the close of regular trading, WU was valued at $19.17 per share.
WU’s Q1 2022 Results
For the first quarter of 2022, the financial services provider posted earnings of $293.3 million which resulted in an adjusted EPS of 51 cents for the quarter. Comparatively, the company had $181.4 million or 44 cents a share for the year-ago quarter. Consensus estimates had the March quarter earnings pegged at $0.43 per share.
Moreover, the decline in retail money transfers and services halt in Russia and Belarus caused the quarterly revenue to decline by 4%. The reported revenue was $1.2 billion for the quarter against the expected $1.16 billion.
Hence, WU beat both its revenue and earnings for the first quarter of 2022.
Additionally, share repurchases and dividends resulted in a return of $242 million to shareholders in the quarter.
Revised Outlook
In late March, the company halted its services in Russia and Belarus due to the Russian invasion of Ukraine. Even though the step was taken well toward the end of the quarter, it still impacted the revenue.
Based on the suspension of operations in the region, the company now expects 2022 revenue to decline by 9-11%. Despite the suspension, the revenue decrease is comparatively low to the number of operations halted as WU’s recent expansion in South Korea and further plans are probably going to cover for the damages.
Furthermore, for 2022, WU is looking ahead to adjusted earnings of $1.75 to $1.85 per share.
Market Overview
The Russia-Ukraine crisis is expected to continue for the foreseeable future, impacting much of the business world entangled in geopolitical instability. But on the other hand, increasing digital money transfers is a huge plus that will add to growth for WU.
As the world becomes more and more digitalized, money transfer is now vastly digital. Thus, WU’s recent expansion of money transfer services will definitely pay off.
Conclusion
Despite beating revenue and earnings for the quarter, WU took a hit in the pre-market due to its revised outlook for the year.
