Shares of Western Union Company (NYSE:WU) fell more than 4% in premarket trading on Friday after the company reported first-quarter earnings below expectations, even as revenue slightly exceeded forecasts.
Earnings Miss Driven by Cost Pressures
Western Union posted adjusted earnings per share of $0.25, missing the $0.39 analyst consensus.
Revenue came in at $983 million, ahead of the $965.42 million estimate and broadly flat year-on-year, though down 1% on an adjusted basis.
The weaker earnings were attributed to lower fixed cost coverage at company-owned locations, the timing of vendor incentives, higher expenses tied to new partnerships, a significant foreign exchange loss and a higher tax rate.
“First quarter results reflect the continued challenges in our Americas retail business as well as a few discrete items affecting the quarter,” said Devin McGranahan. “Looking ahead, the pending acquisition of Intermex is expected to strengthen our retail capabilities in the Americas, our stablecoin launch will modernize our payment systems, and continued investment in our digital channel is preparing us for a more digitally-focused future.”
Segment Performance Mixed
The Consumer Services division delivered strong growth, with revenue rising 24%, or 33% on an adjusted basis, driven by expansion in the Travel Money business and the contribution from the Eurochange Limited acquisition, as well as higher bill payment volumes.
Branded Digital revenue increased 9%, or 6% on an adjusted basis, supported by a 21% rise in transactions.
However, the Consumer Money Transfer segment saw revenue decline 3% on a reported basis, or 6% when adjusted.
Margins Under Pressure
Operating margin narrowed to 13%, down from 18% in the same period last year. The decline was driven by higher expenses in North America, the absence of vendor incentive payments, increased commissions linked to new agent agreements and foreign exchange impacts.
Outlook Maintained
Western Union reaffirmed its full-year 2026 guidance, forecasting adjusted earnings per share of between $1.75 and $1.85. The midpoint of $1.80 is slightly above the $1.79 consensus estimate.
The company also expects adjusted revenue growth in the range of 6% to 9% for the year.