Western Union Company (the) · NYSE:WU
Western Union Company (the) — The Western Union Company — Investor Day (October 2022)
136 slides from Western Union Company (the)'s investor day presentation, Oct 20, 2022
Slide 1: Investor Day
OCTOBER 20TH INVESTOR DAY 2.)
Slide 2: Safe Harbor
Safe Harbor This presentation contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to pre
Slide 3: Our leadership team
Our leadership team Devin McGranahan Andrew Walker Matt Cagwin Bob Rupczynski Sheryl McKenzie President and Chief Chief Operations Chief Financial Chief Marketing Chief Product Executive Officer Officer Officer (Interim) Officer Officer Gabriella Fitzgerald Giovanni Angelini Jean Claude Farah Rodrig
Slide 4: I visited our locations around the world
I visited our locations around the world 4
Slide 5: Slide 5
Slide 6: We bring families together
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Slide 7: We support economic improvement
We support economic improvement 7
Slide 8: We are there when it matters
We are there when it matters 8
Slide 9: Slide 9
Slide 10: Our recent journey…
Our recent journey… 3 Strengthening our operating model 2 Launching and growing our digital business 1 Expanding our retail business 2006 2010 2015
Slide 11: …brought us to where we are today
Network ~600K 200+ agent locations countries and worldwide territories served Customer …brought us >120M $100B+ 750K+ to where we annual customers (>50M senders and principal or volume sent per transactions per day are today >70M receivers) year Brand Compliance >90% ~41% brand awareness in large re
Slide 12: Our strategy
Our strategy To be the world leader of branded payments and accessible consumer financial services serving the aspiring populations of the world
Slide 13: Our strategy
Language barriers Our strategy To be the world leader of Limited Loyalty Lending Invest- and Minimum Crypto Payments branded payments and credit ments rewards account accessible consumer history balance financial services serving the requirements aspiring populations of the world Cross-border identi
Slide 14: Our strategy
Money transfer Our strategy Digital Foreign wallet exchange To be the world leader of branded payments and accessible consumer financial services serving the aspiring populations of the world Retail Loyalty and payments rewards
Slide 15: Evolve 2025
Evolve 2025 Corridor and community Digital first customer customer acquisition experiences Improved customer and Scalable marketing driven agent omni-channel customer acquisition experiences Retail to digital escalator Network optimization Digital first customer Best-in-class platfor
Slide 16: Purpose-driven company delivering on ESG
Purpose-driven company delivering on ESG Moving money with integrity Enabling financial inclusion Championing diversity and inclusion Supporting aspiring populations globally
Slide 17: Evolve 2025 strategy expected outcomes
Evolve 2025 strategy expected outcomes Stabilize retail business Return to strong digital growth Expand products, services, customers Fund growth through operational excellence
Slide 18: Retail: Gateway to Western Union
Retail: Gateway to Western Union 18
Slide 19: Retail strengths
Retail strengths Visibility and power of brand Breadth of global footprint Agent commitment Customer desire to engage with Western Union 19
Slide 20: 20M+ new retail send customers each year
20M+ new retail send customers each year EU: ~30% NA: ~25% APAC: ~5% MIDDLE EAST: ~15% AFRICA: ~5% LACA: ~20% Note: Based on 2021 data. New customers have not transacted with Western Union in the past 12 months
Slide 21: The opportunity in retail
The opportunity in retail Provide cost-effective customer acquisition Cultivate an omni-channel customer Create the retail to digital escalator to fuel the ecosystem 21
Slide 22: Scope and scale of retail business
Scope and scale of retail business ~70% ~600K ~40M ~50M of total revenues1 agent locations2 send receive customers customers $70B+ ~200M 75%+ principal3 transactions3 of digital transactions to retail locations 1. Retail revenues as percentage of total company for FY2021, including other revenues 2.
Slide 23: Challenges to retail growth
Challenges to retail growth Declining send customer base (M) Declining revenue ($M) 57 3,786 3,363 3,349 49 45 2019 2020 2021 2019 2020 2021 23
Slide 24: Gateway to Western Union
Gateway to Western Union Accelerating customer acquisition Driving retention Optimizing agent network 24
Slide 25: Gateway to Western Union
Gateway to Western Union Accelerating customer acquisition Driving retention Optimizing agent network 25
Slide 26: Our organization model has evolved over time
Our organization model has evolved over time 2019-2020 2021 2022 Focus on driving digital Return to geographic Retail as the gateway for and partnerships via the focus across retail and Western Union network digital EMEA North ME & Europe Consumer Network Americas LACA APAC America APAC & Africa Nor
Slide 27: Pricing for a competitive market
Pricing for a competitive market Corridor & Customer Time-of-day Transaction Agent location geography segment based pricing value-based specific specific pricing 27
Slide 28: Communities are the nexus of our consumer demand
Communities are the nexus of our consumer demand Salinas, CA sales blocks Ethnicity composition Trade area Managing to a African sales block American level to better Asian Hispanic understand White customers Day 1 (June 1st) 6 months trend
Slide 29: Engaging with customers through community managers
Engaging with customers through community managers North African community managers in Paris Other Fine Print Info Confidential
Slide 30: In Philadelphia
In Philadelphia Engaging through hyperlocal marketing Campaigns leveraging Jamaican influencers and media agencies
Slide 31: Gateway to Western Union
Gateway to Western Union Accelerating customer acquisition Driving retention Optimizing agent network 31
Slide 32: The power of customer retention
The power of customer retention increase in retention = customer retention1 in revenues 1. For FY2021. Retained customers are defined as customers who conducted at least one retail money transfer transaction in FY2020 and at least one retail money transfer transaction in FY2021 Note: Assuming curren
Slide 33: Our customer attrition
Our customer attrition Addressable are one-time customers do not return due to pricing, transaction time, or poor customer interaction Note: Based on Western Union analysis of customer behavior in FY2021 and FY2022 33
Slide 34: We are improving the look and feel of select stores
We are improving the look and feel of select stores 34
Slide 35: Better customer experience
Better customer experience Let’s get started! Please scan the below QR code with your phone Place your ID infront of the camera Streamlined customer recognition Simplified customer registration 35
Slide 36: Agents are core to our distribution
Agents are core to our distribution 36
Slide 37: Gateway to Western Union
Gateway to Western Union Accelerating customer acquisition Driving retention Optimizing agent network 37
Slide 38: Our global footprint
Global Our global footprint footprint 38
Slide 39: Distribution through network optimization
Lower Non-exclusive (independents) Strategic partners Distribution through Distribution network control Exclusive optimization Owned Higher
Slide 40: Partnership with local Haitian grocer yielded 900% increase in transactions
Partnership with local Haitian grocer yielded 900% increase in transactions in the zip code 40
Slide 41: Hub & spoke model: Brazil
Hub & spoke model: Brazil 41
Slide 42: We are partnering with agents
We are partnering with agents who have a proven track record of offering the highest quality service to customers
Slide 43: Retail: deliver stable revenue profile
Retail: deliver stable revenue profile Ignite customer acquisition opportunity Improve customer and agent experience Increase agent network productivity Other Fine Print Info Confidential
Slide 44: Accelerating digital growth
Accelerating digital growth
Slide 45: Our starting point in digital
Our starting point in digital #1 9M 10-20% digital money digital send growth in digital transfer customers2 money transfer operator1 market3 1. Western Union Digital revenue FY GAAP 2021 of $1.05B compared to competitors in the same period Other Fine Print Info Confidential 2. Western Union WU.com s
Slide 46: Accelerating digital growth
Accelerating digital growth Increase customer acquisition by becoming omnichannel Improve retention through experience and ecosystem 46
Slide 47: Accelerating digital growth
Accelerating digital growth Increase customer acquisition by becoming omnichannel Improve retention through experience and ecosystem 47
Slide 48: ~$200 million in marketing spend
Tv ~$200 million in marketing spend Note: For FY2021
Slide 49: Tailor marketing to drive interactions across channels
Tailor marketing to drive interactions across channels Actively direct our messaging to our retail customers Other Fine Print Info Confidential
Slide 50: Extend marketing to receivers
Investor Day Extend marketing to receivers of receivers decide which money transfer provider to use1 1. Internal survey completed on a sample of Western Union customers during September 2022
Slide 51: Our program to improve acquisition
Our program to improve acquisition Acquisition Optimized Rapid issue Diaspora level offers media spend resolution marketing
Slide 52: Program results in the U.S.
Program results in the U.S. 26% Weekly new US outbound customers1 2021 vs. 2022 YoY increase in new digital customers5 40% increase in transactions in 2nd and 3rd weeks2 2021 2022 Beginning of End of September 24% January increase in transactions from lapsed3 customers4 1. Weekly new US Outbound cus
Slide 53: Retail to digital escalator
“Retail to digital escalator”: Providing retail customers with an omnichannel experience Retail only user Omnichannel user
Slide 54: Sarah
Sarah E25
Slide 55: Mutually reinforcing relationships with our agents
Mutually reinforcing relationships with our agents
Slide 56: Value of providing an omnichannel experience
Value of providing an omnichannel experience Omnichannel customers expected to drive… more transactions1 more revenue2 1. Omnichannel users (users who actively switch between channels over the course of a year) had 2.5x more transactions over a period of year than retail only customers (exclusively
Slide 57: Our opportunity
Value of providing an omnichannel experience Our opportunity Omnichannel customers today 57
Slide 58: Accelerating digital growth
Accelerating digital growth Increase customer acquisition by becoming omnichannel Improve retention through experience and ecosystem 58
Slide 59: Accelerating new product feature and functionality
Accelerating new product feature and functionality From To 59
Slide 60: Enhancing our communication capabilities
Enhancing our communication capabilities Call SMS Chat & social Email platforms Other Fine Print Info Confidential
Slide 61: Accelerating digital growth
Accelerating digital growth Effective marketing Retail to digital escalator Product experience
Slide 62: Delivering accessible financial services
Delivering Delivering accessible accessible financial services financial services 62
Slide 63: Cross-border, interconnected
Cross-border, interconnected Our customer Access to financial services needs Lower fees 63
Slide 64: We connect senders and receivers
We connect senders and receivers with a compelling set of accessible financial services Senders Receivers Save · Spend · Transfer
Slide 65: Delivering accessible financial services
Delivering accessible financial services Ecosystem vision Early evidence How we scale Other Fine Print Info Confidential 65
Slide 66: Delivering accessible financial services
Delivering accessible financial services Ecosystem vision Early evidence How we scale Other Fine Print Info Confidential 66
Slide 67: Saving methods and functionalities
Saving methods and functionalities Wallet Multicurrency Saving goals 67
Slide 68: Available in countries
Available in 180 countries Used in 75 countries 68
Slide 69: Transfer
International money transfer service with Transfer added P2P functionality 69
Slide 70: Accessible and tailored to our customers
Accessible and tailored to our customers Brand strength and trust Building on a strong Global retail presence foundation Starting from strong economics World class risk and compliance 70
Slide 71: Delivering accessible financial services
Delivering accessible financial services Ecosystem vision Early evidence How we scale Other Fine Print Info Confidential 71
Slide 72: Initial ecosystem rollout in Europe
Initial ecosystem rollout in Europe Poland Germany Romania Italy ~100K onboarded customers 50% new to Western Union 72
Slide 73: Customer onboarding accelerated trajectory
Customer onboarding accelerated trajectory 150K by year end ~100K today 20K in 2Q 0K April May June July Aug Sept Oct Nov Dec Note: Calendar year 2022 73 73
Slide 74: Developing ecosystem economic model
Developing ecosystem economic model Illustrative impact of ecosystem on lifetime value 13 2x Higher 6 retention More More products transactions and services Current Label Customer lifetime Label customer value with lifetime value ecosystem 74
Slide 75: Delivering accessible financial services
Delivering accessible financial services Ecosystem vision Early evidence How we scale Other Fine Print Info Confidential 75
Slide 76: Initial global rollout strategy
Initial global rollout 45M strategy Western Union customers where ecosystem will be available
Slide 77: Leading technology partners
Core banking system Payment network Leading Card processing technology partners Modular front-end capabilities Cloud infrastructure 77
Slide 78: Open architecture approach
Open architecture approach Products and services Bank account through partners: Multi currency account Early wage access Debit card Cash-in/cash-out Virtual card Check deposit option P2P wallet transfers Other financial services International money transfer 78
Slide 79: Delivering accessible financial services
Delivering accessible financial services Drive growth, increase retention, improve profitability Rapidly scale Grow impact
Slide 80: Driving excellence
Driving excellence Westen Union BiA5
Slide 81: I completed my first digital transaction on July 5, 2009!
I completed my first digital transaction on July 5, 2009!
Slide 82: Speed Efficiency Quality
Speed Efficiency speed efficiency Quality quality speed Quality quality Quality quality efficiency speed efficiency speed quality speed Quality quality SPEED SPEED speed Quality Efficiency SPEED quality quality efficiency speed speed speed efficiency quality Quality quality Speed Quality Efficiency
Slide 83: Rahul Zaia Paula
Rahul Zaia Paula 83
Slide 84: 84
84
Slide 85: Experiences that make our customers return and tell others about it
Experiences that make our customers return and tell others about it
Slide 86: I visited our locations around the world
I visited our locations around the world
Slide 87: Retail is the gateway to Western Union
Retail is the gateway Retail to digital Ecosystem: Save, to Western Union escalator Spend, Transfer Other Fine Print Info Confidential
Slide 88: Delivering consistently positive experiences
Delivering consistently positive experiences Personalizing customer interactions Creating seamless end-to-end journeys Maintaining world-class compliance with customer at the center Other Fine Print Info Confidential 88
Slide 89: Delivering consistently positive experiences
Delivering consistently positive experiences Personalizing customer interactions Creating seamless end-to-end journeys Maintaining world-class compliance with customer at the center Other Fine Print Info Confidential 89
Slide 90: Transaction based Relationship based
Transaction based Relationship based 90
Slide 91: Disconnected multichannel Omnichannel experience
Disconnected multichannel Omnichannel experience 91
Slide 92: Not fully integrated Personalized
Not fully integrated Personalized Call SMS Chat Chat && social social platforms platforms Email 92
Slide 93: Find and fix friction
Find and fix friction E25
Slide 94: From reactive to proactive
From reactive to proactive E25
Slide 95: Delivering consistently positive experiences
Delivering consistently positive experiences Personalizing customer interactions Creating seamless end-to-end journeys Maintaining world-class compliance with customer at the center Other Fine Print Info Confidential 95
Slide 96: How we’re building a seamless customer journey
How we’re building a seamless customer journey… Build new platforms Increase self-service Deliver efficiency 96
Slide 97: …and the impact we’re seeing
…and the impact we’re seeing $40M 31M in platform interactive voice savings1 assistant experiences2 $7M 200% in call center increase in cost savings3 automation4 1 Since 2021, includes technology, product and operations costs 2 Since 2021, includes customers resolving their issues independently thro
Slide 98: We cannot have great customer experience without great agent experience
We cannot have great customer experience without great agent experience
Slide 99: How we’re building a seamless agent experience
…and the estimated How we’re building a seamless agent experience… impact we’re seeing Build new platforms ~50% reduction in transaction time1 Increase self-service ~65% reduction in agent errors1 Deliver efficiency ~30% decrease in agent calls1 1 Based on 2022 pilots; pilot ongoing
Slide 100: Delivering consistently positive experiences
Delivering consistently positive experiences Personalizing customer interactions Creating seamless end-to-end journeys Maintaining world-class compliance with customer at the center Other Fine Print Info Confidential 100
Slide 101: Customers trust us
Customers trust us – and that trust is well-placed and well-earned Other Fine Print Info Confidential
Slide 102: Thank you for the support provided during our law enforcement training
Thank you for the support that has been provided to us during our law enforcement training” Thank you for the good work done by members of your Company’s Anti-Human Trafficking Initiative” …gratitude to Western Union for its collaborative efforts in working with our anti-crime network” …outstanding
Slide 103: Consumer fraud losses
Consumer fraud losses Index, 2017 = 100% increase in consumer fraud losses in the Deliver world class industry… compliance by 100% 2017 2021 reducing fraud losses by 41% …while Western Union had a decrease Source: 2017 – 2021 FTC Sentinel reports; Western Union database 103 Note: Fraud losses from r
Slide 104: 120M+ customers and 600K agent locations
120M+ customers and 600K agent locations 104
Slide 105: Driving excellence
Driving excellence Run operations efficiently Deliver consistently positive experiences Support YoY revenue growth and cost management Other Fine Print Info Confidential
Slide 106: YoY efficiency platform spend
YoY efficiency platform spend 106
Slide 107: Creating shareholder value
Creating shareholder value Western Gaiam ay ls
Slide 108: Creating shareholder value
Creating shareholder value Financial implications of Evolve 25 Medium-term financial outlook Capital allocation strategy Other Fine Print Info Confidential 108
Slide 109: Creating shareholder value
Creating shareholder value Financial implications of Evolve 25 Medium-term financial outlook Capital allocation strategy Other Fine Print Info Confidential 109
Slide 110: Evolve 2025
Evolve 2025 E25
Slide 111: Strategy evolves our targeted financial profile
Strategy evolves our targeted financial profile Illustrative revenue breakdown by type Ecosystem Ecosystem Ecosystem Digital Digital Retail Future Tomorrow Today Retail Retail Digital
Slide 112: Growth profile evolves over time
Growth profile evolves over time Illustrative sources of growth Network Products & marketing Network Products & marketing Today Tomorrow Ecosystem Ecosystem
Slide 113: Execution
Execution Metric-driven companies Accountability improve on the following Financial performance
Slide 114: Our healthy balance sheet
Our healthy balance sheet What we are Our strong free cash flows known for Our consistent return of capital
Slide 115: Confirming 2022 guidance
Confirming 2022 guidance Other Fine Print Info Confidential
Slide 116: Creating shareholder value
Creating shareholder value Financial implications of Evolve 25 Medium-term financial outlook Capital allocation strategy Other Fine Print Info Confidential 116
Slide 117: Disciplined cost management funds investment
Disciplined cost management funds investment Revenue breakdown by type 2022 savings to date has already led to… …incremental investments in the business Marketing Single customer view Point-of-Sale Information & digital Technology Procurement $50M $40M Ecosystem Corporate SG&A
Slide 118: We expect to further optimize our expense base
We expect to further optimize our expense base to continue to fund our strategic initiatives Our current expense base… …can be optimized… …in order to drive material capacity Variable Vendor management expenses Target: $150M Real estate footprint Marketing in operating expense $3.4B redeployme
Slide 119: Our target key levers of growth
1 Increase retention in retail 200 bps per year 2 Drive omnichannel experience Our target key Over 20% growth in omnichannel customers levers of growth 3 Grow new digital customers Double-digital growth annually 4 Expand ecosystem 100K customer per month
Slide 120: 3-year preliminary financial outlook
3-year preliminary financial outlook 2022 2023 2024-2025 Adjusted revenue (6%) – (4%) (4%) - (2%) Trending to +2% growth Adjusted operating 20% - 21% 19% - 21% 19% - 21% margin Adjusted EPS $1.75 - $1.85 $1.55 - $1.65 Mid-single digit growth No known differences in 2024-2025 GAAP and Non-GAAP outloo
Slide 121: 2023 financial outlook
2023 financial outlook Adjusted revenue outlook (4%) – (2%) (6%) – (4%) (4%) – (2%) 2% (6%) – (4%) (2%) 2% Current 2022 outlook Lost agents Russia/Belarus Net YoY improvement 2023 outlook 1 Net impact of Russia/Belarus, and the loss of two key agents Tax rate assumed to be consistent with 2022 Note:
Slide 122: 2023 financial outlook
2023 financial outlook Adjusted EPS outlook $1.75 – $1.85 $(0.05) $1.55 - $1.65 $(0.12) $(0.05) $0.02 Current 2022 Sale of WUBS Business impacts1 Current Net YoY 2023 outlook outlook impacts2 improvement 1 Net impact of Russia/Belarus, and the loss of two key agents 2 Currency impact (based on curre
Slide 123: Creating shareholder value
Creating shareholder value Financial implications of Evolve 25 Medium-term financial outlook Capital allocation strategy Other Fine Print Info Confidential 123
Slide 124: Components of our capital allocation strategy
Maintain strong Cash flow balance sheet generation Components of our capital Share Support our allocation repurchases dividend strategy Strategic & opportunistic M&A Other Fine Print Info Confidential
Slide 125: We have a strong financial position
2.5-3.0X target debt to EBITDA We have a strong financial position and a favorable debt maturity profile 67% of term debt matures after 2025 Other Fine Print Info Confidential
Slide 126: We are focused on free cash flow generation
Adjusted free cash flow generated $4.8B over past 5 years We are focused on free cash flow generation Cash flow conversion has been over 85% over the past 5 years Note: Non-GAAP metric calculated as cash flow from operations minus payments for capitalized contract costs, payments for internal use Ot
Slide 127: Maintaining our dividend
Maintaining our dividend In the last Dividends1 paid per share five years… 0.94 0.94 0.70 in paid dividends 2017 2021 2022E Other Fine Print Info Confidential 1. All dividend payments subject to Board approval
Slide 128: Targeted M&A strategy
Targeted M&A strategy M&A evaluation criteria Recent acquisition will accelerate our ecosystem strategy 1 Add new products, services, capabilities, technology, and talent 2 Increase our speed to market 3 Enable business growth Other Fine Print Info Confidential
Slide 129: Western Union
Western Union Other Fine Print Info Confidential Western Union Restricted | Attorney-Client Privilege | Proprietary and Confidential, Do Not Disclose or Reproduce | ©2020 Western Union Holdings, Inc. All rights reserved
Slide 130: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Western Union presents a number of non-GAAP financial measures because A non-GAAP financial measure should not be considered in isolation or as a management believes that these metrics provide meaningful supplemental substitute for the most comparable GAAP financi
Slide 131: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2022 Consolidated Outlook Metrics Notes Range Revenues (GAAP) - YoY % Change (13)% (11)% Foreign currency translation impact (a) 3% 3% Impact from the sale of Business Solutions (b) 4% 4% Revenues, constant currency, excluding Business Solutions (non-GAAP) - YoY %
Slide 132: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2023 Consolidated Outlook Metrics Notes Range Revenues (GAAP) - YoY % Change (10)% (8)% Foreign currency translation impact (a) 2% 2% Impact from the sale of Business Solutions (b) 4% 4% Revenues, constant currency, excluding Business Solutions (non-GAAP) - YoY %
Slide 133: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Adjusted Free Cash Flow Notes FY2021 FY2020 FY2019 FY2018 FY2017 Operating cash flow (GAAP) $ 1,045 $ 878 $ 915 $ 821 $ 742 Transition tax payments (f) 64 64 64 64 — NYDFS payment/joint settlement (g) — — — 60 594 IRS tax settlement (h) — — — 121 — Speedpay gain a
Slide 134: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Non-GAAP related notes: (a) Represents the impact from the fluctuation in exchange rates between all foreign currency denominated amounts and the United States dollar. Constant currency results exclude any benefit or loss caused by foreign exchange fluctuations be
Slide 135: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 135
Slide 136: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 136
The Western Union Company — Investor Day (October 2022) on 6ix