Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and the notes to those statements included in Part II, Item 8, Financial Statements and Supplementary Data in this Annual Report on Form 10‐K. This Annual Report on Form 10‐K contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements contained in the Management’s Discussion and Analysis of Financial Condition and Results of Operations are forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions, and projections about our industry, business, and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in other sections of this Annual Report on Form 10‐K. See the discussion under the heading “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K and under the heading “Forward-Looking Statements” below.
Overview
We are a leading provider of cross-border, cross-currency money movement, payments, and digital financial services and conduct business in the following operating segments:
•
Consumer Money Transfer - Our Consumer Money Transfer segment facilitates money transfers, which are primarily sent from our retail agent and owned locations worldwide or through websites and mobile devices. Our money transfer service is provided through one interconnected global network. This service is available for international cross-border transfers and, in certain countries, intra-country transfers.
•
Consumer Services - Our Consumer Services segment includes our bill payment services, money order services, retail foreign exchange services, media network, prepaid cards, lending partnerships, and digital wallets.
On August 4, 2021, we entered into an agreement to sell our Business Solutions business, and the final closing for this transaction occurred on July 1, 2023. Accordingly, we no longer report Business Solutions revenues and operating expenses after July 1, 2023. Refer to Part II, Item 8, Financial Statements and Supplementary Data,Note 4, Divestitures and Goodwill for further information related to our Business Solutions divestiture.
Additional information regarding our segments is provided in the Segment Discussion below.
Results of Operations
The following discussion of our consolidated results of operations and segment results refers to the year ended December 31, 2024 compared to the same period in 2023. For discussion of our consolidated results of operations and segment results for the year ended December 31, 2023 compared to the same period in 2022, refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 22, 2024.
The results of operations should be read in conjunction with the discussion of our segment results of operations, which provides more detailed discussions concerning certain components of the Consolidated Statements of Income. All significant intercompany accounts and transactions between our segments have been eliminated. The below information has been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”) unless otherwise noted. All amounts provided in this section are rounded to the nearest tenth of a million, except as otherwise noted. As a result, the percentage changes and margins disclosed herein may not recalculate precisely using the rounded amounts provided.
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The following table sets forth our consolidated results of operations for the years ended December 31, 2024 and 2023:
Year Ended December 31,
(in millions, except per share amounts) 2024 2023 % Change
Expenses:
Selling, general, and administrative 863.4 867.8 (1 )%
Other income/(expense):
Gain on divestiture of business — 18.0 (a)
Other income, net 0.7 — (a)
Total other expense, net (107.2 ) (71.7 ) 50 %
Provision for/(benefit from) income taxes (315.6 ) 119.8 (a)
Earnings per share:
Weighted-average shares outstanding:
(a)
Calculation not meaningful.
Revenues Overview
Revenues are primarily derived from consideration paid by customers to transfer money. These revenues vary by transaction based upon factors such as channel, send and receive locations, the send and receive funding method, the principal amount sent, and, when the money transfer involves different send and receive currencies, the difference between the exchange rate we set to the customer and a rate available in the wholesale foreign exchange market. We also offer other consumer services, for which revenue is impacted by similar factors.
Due to the significance of the effect that foreign exchange fluctuations against the United States dollar can have on our reported revenues, constant currency results have been provided in the table below for consolidated revenues. Constant currency revenues translate revenues denominated in foreign currencies to the United States dollar, net of the effect of foreign currency hedges, at rates consistent with those in the prior year. Constant currency results are also net of the impact of Argentina inflation due to its economy being hyperinflationary. We have also disclosed the impact of the Business Solutions divestiture on our revenues in the table below. Constant currency measures and measures that exclude the impact of divestitures are non-GAAP financial measures and are provided so that revenue can be viewed without the effect of fluctuations in foreign currency exchange rates, net of the hyperinflationary Argentine economy, and divestitures of our businesses, which is consistent with how management evaluates our revenue results and trends. We believe that these measures provide management and investors with information about revenue results and trends that eliminates currency volatility and divestitures, thereby providing greater clarity regarding, and increasing the comparability of, our underlying results and trends. These disclosures are provided in addition to, and not as a substitute for, the percentage change in revenue on a GAAP basis for the year ended December 31, 2024 compared to the prior year. Other companies may calculate and define similarly labeled items differently, which may limit the usefulness of this measure for comparative purposes.
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The following table sets forth our consolidated revenue results for the years ended December 31, 2024 and 2023:
Year Ended December 31,
Revenues, as reported - (GAAP) $ 4,209.7 $ 4,357.0 (3 )%
Foreign currency translation and Argentina inflation impact(a) (1 )%
Divestitures impact(b) 1 %
Adjusted revenues - (Non-GAAP) (3 )%
(a)
Fluctuations in the United States dollar compared to foreign currencies, net of the impact of foreign currency hedges and Argentina inflation, resulted in an increase to GAAP revenues of $11.1 million for the year ended December 31, 2024 when compared to the prior year. We calculate Argentina inflation as the revenue growth not attributable to either transaction growth or the change in price (revenue divided by principal).
(b)
Business Solutions revenues included in our results were $29.7 million for the year ended December 31, 2023.
For the year ended December 31, 2024 when compared to the prior year, GAAP and Adjusted revenues decreased due to a reduction in transactions originating from Iraq, which negatively impacted revenues by slightly more than 3%. We believe that we will continue to see a reduction in transactions originating in Iraq, compared to recent years, primarily driven by changes in monetary policy and related central bank actions.
Operating Expenses Overview
Redeployment program
On October 20, 2022, we announced an operating expense redeployment program, which aims to redeploy and reallocate investment and expenses in our cost base, accomplished through optimizations in vendor management, our real estate footprint, marketing, and people strategy. We believe these changes have allowed us to invest in strategic initiatives. We incurred $92.7 million of total expenses under this program, including severance, from inception through December 31, 2024.
The following table presents the location and amount of operating expenses associated with our redeployment program in the Consolidated Statements of Income for the years ended December 31, 2024 and 2023.
(dollars in millions) Year Ended December 31,
Selling, general, and administrative 21.2 18.9
Total redeployment program costs $ 41.4 $ 29.5
Cost of Services
Cost of services primarily consists of agent commissions, which represented approximately 60% of total cost of services for the years ended December 31, 2024 and 2023. For the year ended December 31, 2024, Cost of services decreased compared to the prior year primarily due to decreases in agent commissions, which generally vary with revenue, lower information technology expenses,and a decrease associated with the Business Solutions divestiture, partially offset by increases in certain variable expenses, including bank fees and credit and non-credit losses, and higher employee compensation primarily associated with our expansion of Company-owned locations.
Selling, General, and Administrative
Selling, general and administrative expenses decreased for the year ended December 31, 2024 when compared to the prior year due to a decrease in advertising costs and decreases associated with the Business Solutions divestiture. These were partially offset by fluctuations between the United States dollar and foreign currencies.
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Total Other Expense, Net
Total other expense, net increased for the year ended December 31, 2024 when compared to the prior year as a result of the prior year gain on the final closing of the Business Solutions divestiture, which occurred on July 1, 2023, as well as increased interest expense in the current year due to higher average commercial paper balances outstanding.
Income Taxes
Our effective tax rates on pre-tax income were (51.0)% and 16.1% for the years ended December 31, 2024 and 2023, respectively. The change in our effective tax rate for the year ended December 31, 2024 compared to the prior year was primarily due to the recognition of deferred tax assets, net of valuation allowance, associated with the reorganization of our international operations and a settlement of the IRS examination of our 2017 and 2018 federal income tax returns, which resulted in tax benefits of $255.2 million and $137.8 million, respectively, for the year ended December 31, 2024.
We have established contingency reserves for a variety of tax exposures. As of December 31, 2024, the total amount of tax contingency reserves was $17.9 million, including accrued interest and penalties, net of related items. Our tax reserves reflect our judgment as to the resolution of the issues involved if subject to judicial review or other settlement. While we believe that our reserves are adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that does not exceed our related reserve. With respect to these reserves, our income tax expense would include: (i) any changes in tax reserves arising from material changes in the facts and circumstances (i.e., new information) surrounding a tax issue during the period, and (ii) any difference from our tax position as recorded in the financial statements and the final resolution of a tax issue during the period. Such resolution could materially increase or decrease income tax expense in our consolidated financial statements in future periods and could impact our operating cash flows.
A significant proportion of our profits are foreign-derived. For the years ended December 31, 2024 and 2023, 112% and 105%, respectively, of our pre-tax income was derived from foreign sources. While the income tax imposed by any one foreign country is not material to us, our overall effective tax rate could be adversely affected by changes in foreign tax laws.
Earnings Per Share
During the years ended December 31, 2024 and 2023, basic earnings per share were $2.75 and $1.69, respectively, and diluted earnings per share were $2.74 and $1.68, respectively. Outstanding options to purchase Western Union stock and unvested shares of restricted stock are excluded from basic shares outstanding. Diluted earnings per share reflects the potential dilution that could occur if outstanding stock options at the presented dates are exercised and shares of restricted stock have vested. Shares excluded from the diluted earnings per share calculation were 11.6 million and 9.7 million for the years ended December 31, 2024 and 2023, respectively. The effect of these shares was anti-dilutive under the treasury stock method, as the assumed proceeds of the options and restricted stock per unit were above our average share price during the periods.
Earnings per share for the year ended December 31, 2024 compared to the prior year were impacted by the previously described factors impacting net income and a lower number of average shares outstanding.
Segment Discussion
We manage our business around the consumers and businesses we serve and the types of services we offer. Each of our segments address a different combination of customer groups, distribution networks, and services offered. Our segments are Consumer Money Transfer and Consumer Services. On August 4, 2021, we entered into an agreement to sell our Business Solutions business and the final closing for this transaction was on July 1, 2023. Accordingly, we no longer report Business Solutions revenues and operating expenses after July 1, 2023. For the year ended December 31, 2023, Business Solutions revenues and operating income included in our Consolidated Statements of Income were $29.7 million and $3.7 million, respectively.
During the years ended December 31, 2024 and 2023, we incurred $41.4 million and $29.5 million, respectively, of costs associated with our operating expense redeployment program, as described above, primarily related to severance,
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expenses associated with streamlining our organizational and legal structure, and non-cash impairments of operating lease right-of-use (“ROU”) assets and property and equipment. We also recorded non-cash amortization and impairment of acquired intangible assets in connection with recent business acquisitions. In addition, during the year ended December 31, 2024, we incurred costs associated with operating our Russian entity and impairment costs related to our assets in Russia, as we have decided to pursue either liquidating or selling these assets. In estimating this impairment, we did not include the cash that we believe will be necessary to pay for future costs as we work to liquidate and exit the business. While certain of the above expenses are identifiable to our segments, the expenses are not included in the measurement of segment operating income provided to the Chief Operating Decision Maker (“CODM”) for purposes of performance assessment and resource allocation. These expenses are therefore excluded from our segment operating income results.
Beginning in 2024, we changed our segment reporting methodology to no longer allocate acquisition, separation, and integration costs to our segments. These costs were previously allocated entirely to Consumer Services while it was called Other, and the amounts included in the segment were immaterial for the year ended December 31, 2023. The expenses are no longer included in the measurement of segment operating income provided to the CODM for purposes of performance assessment and resource allocation.
The business segment measurements provided to, and evaluated by, our CODM are computed in accordance with the following principles:
•
The accounting policies of the segments are the same as those described in the summary of significant accounting policies.
•
Corporate costs, including overhead expenses, are allocated to the segments primarily based on a percentage of the segments’ revenue compared to total revenue.
•
All items not included in operating income are excluded from the segments.
The following table sets forth the components of segment revenues as a percentage of the consolidated totals for the years ended December 31, 2024 and 2023:
Year Ended December 31,
Consumer Money Transfer 90 % 92 %
Consumer Services 10 % 7 %
Business Solutions — 1 %
Consumer Money Transfer
The following table sets forth our Consumer Money Transfer segment results of operations for the years ended December 31, 2024 and 2023:
Year Ended December 31,
(dollars and transactions in millions) 2024 2023 % Change
Operating income margin 19 % 19 %
Key indicator:
Consumer Money Transfer transactions 289.9 279.4 4 %
Our Consumer Money Transfer service facilitates money transfers sent from our retail agent locations worldwide and money transfer transactions conducted and funded through websites and mobile applications marketed under our brands (“Branded Digital”). The segment includes five geographic regions whose functions are primarily related to generating, managing, and maintaining agent relationships and localized marketing activities. We include Branded Digital transactions in our regions. By means of common processes and systems, these regions, including Branded Digital transactions, create
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one interconnected global network for consumer transactions, thereby constituting one Consumer Money Transfer business and one operating segment.
Transaction volume is the primary generator of revenue in our Consumer Money Transfer segment. A Consumer Money Transfer transaction constitutes the transfer of funds to a designated recipient utilizing one of our consumer money transfer services. The geographic split for transactions and revenue in the table that follows is determined based upon the region where the money transfer is initiated. Included in each region’s transaction and revenue percentages in the tables below are Branded Digital transactions for the years ended December 31, 2024 and 2023. Where reported separately in the discussion below, Branded Digital consists of 100% of the transactions conducted and funded through that channel.
The table below sets forth revenue and transaction changes by geographic region compared to the prior year. Additionally, due to the significance of our Consumer Money Transfer segment to our overall results, we have also provided constant currency results for our Consumer Money Transfer segment revenues. Consumer Money Transfer segment adjusted revenue growth/(decline) is a non-GAAP financial measure, as further discussed in Revenues Overview above.
Revenue Adjusted
Growth / Foreign Revenue
(Decline) Exchange Growth /
as Reported - Translation (Decline)(a) - Transaction
(GAAP) Impact (Non-GAAP) Growth
Consumer Money Transfer regional growth/(decline):
North America (United States & Canada) (“NA”) (1 )% 0 % (1 )% 3 %
Europe and CIS (“EU & CIS”) (2 )% (1 )% (1 )% 5 %
Middle East, Africa, and South Asia (“MEASA”) (19 )% (1 )% (18 )% 3 %
Latin America and the Caribbean (“LACA”) 2 % (1 )% 3 % 0 %
Asia Pacific (“APAC”) (7 )% (4 )% (3 )% 8 %
Total Consumer Money Transfer segment (5 )% (1 )% (4 )% 4 %
Branded Digital(b) 7 % (1 )% 8 % 13 %
(a)
Adjusted revenue growth/(decline) assumes that revenues denominated in foreign currencies are translated to the United States dollar, net of the effect of foreign currency hedges, at rates consistent with those in the prior year. LACA, total Consumer Money Transfer, and Branded Digital adjusted revenue growth excludes the effect of increases in local currency revenue due to inflation in Argentina, which is hyperinflationary. We calculate Argentina inflation as the revenue growth not attributable to either transaction growth or the change in price (revenue divided by principal).
(b)
As noted above, Branded Digital revenues are included in the regions.
The table below sets forth regional revenues as a percentage of our Consumer Money Transfer revenue for the years ended December 31, 2024 and 2023:
Year Ended December 31,
Consumer Money Transfer revenue as a percentage of segment revenue:
APAC 5 % 6 %
Branded Digital, which is included in the regional percentages above, represented approximately 24% and 22% of our Consumer Money Transfer revenues for the years ended December 31, 2024 and 2023, respectively.
Our consumers transferred $102.9 billion and $101.7 billion in cross-border principal for the years ended December 31, 2024 and 2023, respectively. Consumer Money Transfer cross-border principal is the amount of consumer funds transferred to a designated recipient in a country or territory that differs from the country or territory from which the transaction was initiated. Consumer Money Transfer cross-border principal is a metric used by management to monitor and better understand the growth in our underlying business relative to competitors, as well as changes in our market share of global remittances.
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Revenues
Consumer Money Transfer revenue decreased 5%, and transactions increased 4% for the year ended December 31, 2024, compared to the prior year. Fluctuations in the United States dollar compared to foreign currencies, net of the impact of foreign currency hedges and Argentina inflation, negatively impacted revenue by 1% for the year ended December 31, 2024, compared to the prior year.
For the year ended December 31, 2024, in our Consumer Money Transfer regions, NA revenue decreased and transactions increased compared to the prior year. Price reductions were partially offset by an increase in cross-border transactions sent from the United States. For the year ended December 31, 2024, our EU & CIS revenues were negatively impacted by price reductions and by one of our retail agents no longer offering cash-based services at its retail locations. Declines in revenue in the MEASA region were driven by a reduction in transactions originating from Iraq primarily driven by changes in monetary policy and related central bank actions, as discussed above.
We have historically implemented price reductions or price increases throughout many of our global corridors. We will likely continue to implement price changes from time to time in response to competition and other factors. Price reductions generally reduce margins and adversely affect financial results in the short term and may also adversely affect financial results in the long term if transaction volumes do not increase sufficiently. Price increases may adversely affect transaction volumes, as consumers may not use our services if we fail to price them appropriately.
Operating Income
Consumer Money Transfer operating income for the year ended December 31, 2024 decreased compared to the prior year due to a decrease in revenue, as discussed above, and fluctuations between the United States dollar and foreign currencies, partially offset by reduced agent commissions, a decrease in advertising costs, and lower information technology expenses.
Consumer Services
The following table sets forth Consumer Services segment results for the years ended December 31, 2024 and 2023:
Year Ended December 31,
Operating income margin 13 % 29 % (16 )%
Revenues
For the year ended December 31, 2024 compared to the prior year, Consumer Services revenues increased primarily due to an increase in retail foreign exchange services, growth in new services we are continuing to introduce to our customers, including media network, and an increase in our money order business. Argentina inflation, net of the impact of fluctuations in the United States dollar compared to foreign currencies, resulted in an increase to revenue growth of 13% for the year ended December 31, 2024 relative to the prior year.
Operating Income
Consumer Services operating income for the year ended December 31, 2024 compared to the prior year was negatively impacted by increased expenses associated with our retail foreign exchange services and new services we are continuing to introduce to our customers, including media network, increased investment in information technology, and higher credit losses.
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Capital Resources and Liquidity
Our primary source of liquidity has been cash generated from our operating activities, primarily from net income and fluctuations in working capital. Our working capital is affected by the timing of payments for employee and agent incentives, interest payments on our outstanding borrowings, and timing of income tax payments, among other items. Many of our annual employee incentive compensation and agent incentive payments are made in the first quarter following the year they were incurred. The majority of our interest payments are due in the second and fourth quarters, which results in a decrease in the amount of cash provided by operating activities in those quarters and a corresponding increase to the first and third quarters. The annual payments resulting from the United States tax reform legislation enacted in 2017 (the “Tax Act”) include amounts related to the United States taxation of certain previously undistributed earnings of foreign subsidiaries. The final payment of approximately $221 million is due in the second quarter of 2025.
Our future cash flows could be impacted by a variety of factors, some of which are out of our control. These factors include, but are not limited to, changes in economic conditions, especially those impacting migrant populations, changes in income tax laws or the status of income tax audits, including the resolution of outstanding tax matters, and the settlement or resolution of legal contingencies.
Substantially all of our cash flows from operating activities have been generated from subsidiaries. Most of these cash flows are generated from our regulated subsidiaries. Our regulated subsidiaries may transfer all excess cash to the parent company for general corporate use, except for assets subject to legal or regulatory restrictions, including: (i) requirements to maintain cash and other qualifying investment balances, free of any liens or other encumbrances, related to the payment of certain of our money transfer and other payment obligations, (ii) other legal or regulatory restrictions, including statutory or formalized minimum net worth requirements, and (iii) restrictions on transferring assets outside of the countries where these assets are located.
We currently believe we have adequate liquidity to meet our business needs, including payments under our debt and other obligations, through our existing cash balances, our ability to generate cash flows through operations, and our $1.56 billion revolving credit facility (“Revolving Credit Facility”), which supports our commercial paper program. Our commercial paper program enables us to issue unsecured commercial paper notes in an amount not to exceed $1.56 billion outstanding at any time, reduced to the extent of any borrowings outstanding on our Revolving Credit Facility. As of December 31, 2024, we had no outstanding borrowings on our Revolving Credit Facility and no outstanding borrowings on our commercial paper program.
To help ensure availability of our worldwide cash where needed, we utilize a variety of planning and financial strategies, including decisions related to the amounts, timing, and manner by which cash is repatriated or otherwise made available from our international subsidiaries. These decisions can influence our overall tax rate and impact our total liquidity. We regularly evaluate our United States cash requirements, taking tax consequences and other factors into consideration and also the potential uses of cash internationally to determine the appropriate level of dividend repatriations of our foreign source income.
Cash and Investment Securities
As of December 31, 2024 and 2023, we had Cash and cash equivalents of $1,474.0 million and $1,268.6 million, respectively.
In many cases, we receive funds from money transfers and certain other payment services before we settle the payment of those transactions. These funds, referred to as Settlement assets on our Consolidated Balance Sheets, are not used to support our operations. However, we earn income from investing these funds. We maintain a portion of these settlement assets in highly liquid investments, classified as Cash and cash equivalents within Settlement assets, to fund settlement obligations.
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Investment securities, net, classified within Settlement assets on the Consolidated Balance Sheets, were $1,332.2 million and $1,458.1 million as of December 31, 2024 and 2023, respectively, and consist primarily of highly-rated state and municipal debt securities. These investment securities are held in order to comply with state licensing requirements in the United States and are required to have credit ratings of “A-” or better from a major credit rating agency. Refer to Part II, Item 8, Financial Statements and Supplementary Data, Note 7, Settlement Assets and Obligations for more details regarding investment securities.
Investment securities are exposed to market risk due to changes in interest rates and credit risk. We regularly monitor credit risk and attempt to mitigate our exposure by investing in highly-rated securities and diversifying our investment portfolio. Our investment securities are also actively managed with respect to concentration. As of December 31, 2024, all investments with a single issuer and each individual security represented less than 10% of our investment securities portfolio.
Cash Flows from Operating Activities
Cash provided by operating activities for the year ended December 31, 2024 decreased to $406.3 million from $783.1 million for the year ended December 31, 2023. For the year ended December 31, 2024 compared to the prior year, cash provided by operating activities was negatively impacted by higher income taxes paid related to the Tax Act, as further discussed below, as well as payments related to United States federal tax liabilities arising from the examination of our tax returns for the 2017 and 2018 tax years, in addition to other changes in working capital balances.
Financing Resources
As of December 31, 2024, we had the following outstanding borrowings (in millions):
Commercial paper $ —
Notes:
Term loan facility borrowings (effective rate of 5.8%)(c) 800.0
Total borrowings at par value 2,950.0
Debt issuance costs and unamortized discount, net (9.2 )
Total borrowings at carrying value(d) $ 2,940.8
(a)
The difference between the stated interest rate and the effective interest rate is not significant.
(b)
On January 10, 2025, we repaid these notes in full. See additional information in Part II, Item 8, Financial Statements and Supplementary Data, Note 14, Borrowings.
(c)
In December 2024, we drew upon our Term Loan Facility. See additional information in Part II, Item 8, Financial Statements and Supplementary Data, Note 14, Borrowings.
(d)
As of December 31, 2024, our weighted-average effective rate on total borrowings was approximately 4.3%.
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Commercial Paper Program
Pursuant to our commercial paper program, we may issue unsecured commercial paper notes in an amount not to exceed $1.56 billion outstanding at any time, reduced to the extent of borrowings outstanding on our Revolving Credit Facility. Our commercial paper borrowings may have maturities of up to 397 days from date of issuance. Interest rates for borrowings are based on market rates at the time of issuance. As of December 31, 2024, we had no commercial paper borrowings outstanding, and as of December 31, 2023, we had $364.9 million in commercial paper borrowings outstanding. Proceeds from our commercial paper borrowings were used for general corporate purposes and working capital needs, including the settlement of our money transfer obligations prior to collecting receivables from agents or others.
Revolving Credit Facility
Our Revolving Credit Facility provides for unsecured financing facilities and allows us to draw loans payable based upon the Secured Overnight Financing Rate (“SOFR”), the Euro Interbank Offered Rate, or the Sterling Overnight Index Average. On November 30, 2024, we increased the aggregate revolving credit commitments to $1.56 billion, including a $250.0 million letter of credit subfacility and $300.0 million swing line sublimit, and extended the maturity date to November 30, 2029.
Interest due under the Revolving Credit Facility is payable according to the terms of that borrowing. Generally, interest under the Revolving Credit Facility is calculated using either (i) an adjusted term SOFR, or other applicable benchmark based on the currency of the borrowing, plus an interest rate margin determined on a sliding scale from 0.920% to 1.425% based on our credit rating (currently 1.140%) or (ii) a base rate plus a margin determined on a sliding scale from 0.000% to 0.425% based on our credit rating (currently 0.140%). A facility fee on the total amount of the facility is also payable quarterly, regardless of usage, and such facility fee is determined on a sliding scale from 0.080% to 0.200% based on our credit rating (currently 0.110%).
The purpose of our Revolving Credit Facility, which is diversified through a group of 18 participating institutions, is to provide general liquidity and to support our commercial paper program, which we believe enhances our short-term credit rating. The largest commitment from any single financial institution within the total committed balance of $1.56 billion is approximately 13%. As of December 31, 2024 and 2023, we had no outstanding borrowings under the facility. If the amount available to borrow under the Revolving Credit Facility decreased, or if the Revolving Credit Facility were eliminated, the cost and availability of borrowing under the commercial paper program may be impacted.
Term Loan Facility
On June 25, 2024, we entered into a delayed draw term loan credit agreement providing for an unsecured term loan facility in an aggregate amount of $800.0 million (the “Term Loan Facility”). On December 13, 2024, we drew upon the Term Loan Facility in the total amount of $800.0 million, and such borrowings mature on December 13, 2027. We have the option to increase the commitments under the Term Loan Facility by an amount such that the commitments do not exceed $1.0 billion in the aggregate (after giving effect to any such increases). Any such increases would be subject to obtaining additional commitments from existing or new lenders under the Term Loan Facility. We used the proceeds from the Term Loan Facility borrowings to repay our issued and outstanding 2.850% notes due January 2025, to reduce commercial paper balances, and for general corporate purposes.
Notes
For a discussion regarding the terms and maturities of our notes, please refer to Part II, Item 8, Financial Statements and Supplementary Data,Note 14, Borrowings.
Credit Ratings and Debt Covenants
The credit ratings on our debt are an important consideration in our overall business, managing our financing costs, and facilitating access to additional capital on favorable terms. Factors that we believe are important in assessing our credit ratings include earnings, cash flow generation, leverage, available liquidity, and the overall business.
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Our Revolving Credit Facility and Term Loan Facility contain interest rate margins which are determined based on certain of our credit ratings and the Revolving Credit Facility also contains a facility fee that is based on our credit ratings. In addition, the interest rates payable on our notes due in 2026 and 2031 can be impacted by our credit ratings. We are also subject to certain provisions in many of our notes and certain of our derivative contracts, which could require settlement or collateral posting in the event of a change in control combined with a downgrade below investment grade, as further described below. We do not have any other terms within our debt agreements that are tied to changes in our credit ratings.
The Revolving Credit Facility and Term Loan Facility contain covenants, subject to certain exceptions, that, among other things, limit or restrict our ability to sell or transfer assets or merge or consolidate with another company, grant certain types of security interests, incur certain types of liens, impose restrictions on subsidiary dividends, enter into sale and leaseback transactions, incur certain subsidiary level indebtedness, or use proceeds in violation of anti-corruption or anti-money laundering laws. Our notes are subject to similar covenants except that only the notes due in 2036 contain covenants limiting or restricting subsidiary indebtedness, and none of our notes are subject to a covenant that limits our ability to impose restrictions on subsidiary dividends. Both our Revolving Credit Facility and our Term Loan Facility require us to maintain a consolidated adjusted Earnings before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) interest coverage ratio of greater than 3:1 (ratio of consolidated adjusted EBITDA, defined as net income/(loss) plus the sum of (i) interest expense, (ii) income tax expense, (iii) depreciation expense, (iv) amortization expense, (v) any other non-cash deductions, losses, or charges made in determining net income/(loss) for such period, and (vi) extraordinary, non-recurring, or unusual losses or charges (including costs and expenses of litigation included in operating income), minus extraordinary, non-recurring, or unusual gains provided that the amount added back to net income (or net loss) for such extraordinary, non-recurring, or unusual losses, expenses or charges may not exceed 10% of adjusted EBITDA, in each case determined in accordance with United States generally accepted accounting principles for such period, to interest expense) for each period comprising the four most recent consecutive fiscal quarters. Our consolidated interest coverage ratio was 9:1 for the year ended December 31, 2024.
For the year ended December 31, 2024, we were in compliance with our debt covenants. A violation of our debt covenants could impair our ability to borrow, and outstanding amounts borrowed could become due, thereby restricting our ability to use our excess cash for other purposes.
Certain of our notes (including our notes due in 2026, 2031, and 2040) include a change of control triggering event provision, as defined in the terms of the notes. If a change of control triggering event occurs, holders of the notes may require us to repurchase some or all of their notes at a price equal to 101% of the principal amount of their notes, plus any accrued and unpaid interest. A change of control triggering event will occur when there is a change of control involving us, and, among other things, within a specified period in relation to the change of control, the notes are downgraded from an investment grade rating to below an investment grade rating by certain major credit rating agencies.
Cash Priorities
Liquidity
Our objective is to maintain strong liquidity and a capital structure consistent with investment-grade credit ratings. We have existing cash balances, cash flows from operating activities, access to the commercial paper markets, and our Revolving Credit Facility available to support the needs of our business.
Our ability to grow the business, make investments in our business, make acquisitions, return capital to shareholders, including through dividends and share repurchases, and service our debt and tax obligations will depend on our ability to continue to generate excess operating cash through our operating subsidiaries and to continue to receive dividends from those operating subsidiaries, our ability to obtain adequate financing, and our ability to identify acquisitions that align with our long-term strategy. For additional information, please refer to Part II, Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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Capital Expenditures
The total aggregate amount paid for purchased and developed software, contract costs, and purchases of property and equipment was $130.6 million and $147.8 million in 2024 and 2023, respectively. Capital expenditures during these periods included investments in our information technology infrastructure. Amounts paid for new and renewed agent contracts vary depending on the terms of existing contracts as well as the timing of new and renewed contract signings.
Share Repurchases and Dividends
During the years ended December 31, 2024 and 2023, 13.9 million and 24.3 million shares, respectively, were repurchased for $177.3 million and $300.0 million, respectively, excluding commissions, at an average cost of $12.75 and $12.35, respectively, under the share repurchase authorization approved by our Board of Directors which expired on December 31, 2024. On December 13, 2024, our Board of Directors authorized $1.0 billion of common stock repurchases with no expiration date.
Our Board of Directors declared quarterly cash dividends of $0.235 per common share in all four quarters of 2024 and 2023, representing $318.3 million and $346.1 million in total dividends, respectively. These amounts were paid to shareholders of record in the respective quarter the dividend was declared.
On February 4, 2025, the Board of Directors declared a quarterly cash dividend of $0.235 per common share payable on March 31, 2025.
Material Cash Requirements
Debt Service Requirements
Our 2025 and future debt service requirements will include payments on all outstanding indebtedness, including any borrowings under our commercial paper program. On January 10, 2025, we repaid our notes due in 2025 using proceeds from our Term Loan Facility borrowings.
As of December 31, 2024, the total projected interest payments on outstanding borrowings were $812.8 million, of which $114.2 million is expected to be paid in the next 12 months. We have estimated our future interest payments based on the assumption that no debt issuances or renewals will occur upon the maturity dates of our notes. However, we may refinance all or a portion of our borrowings in future periods, and we expect to continue to borrow under our commercial paper program for general corporate purposes and working capital needs. Estimated interest payments on floating-rate debt are calculated by utilizing the effective rate and forward rates as of December 31, 2024 for our current and future interest rates, respectively.
2017 United States Federal Tax Liability
The Tax Act imposed a tax on certain of our previously undistributed foreign earnings. This tax charge, combined with our other 2017 United States taxable income and tax attributes, resulted in a 2017 United States federal tax liability of approximately $800 million. We elected to pay this liability in periodic installments through 2025 and in the second quarter of 2024, we made an installment payment of $159 million towards this liability. Under the terms of the law, we are required to pay the final installment of approximately $221 million in the second quarter of 2025. These payments have affected and will continue to adversely affect our cash flows and liquidity and may adversely affect future share repurchases.
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Operating Leases
We lease real properties for use as administrative and sales offices, in addition to transportation, office, and other equipment. Refer to Part II, Item 8, Financial Statements and Supplementary Data, Note 11, Leases for details on our leasing arrangements, including future maturities of our operating lease liabilities.
Purchase Obligations
A purchase obligation is an agreement to purchase goods or services that is enforceable, legally binding, and specifies all significant terms. As of December 31, 2024, we had approximately $150 million of outstanding purchase obligations, of which approximately $100 million is expected to be paid in the next 12 months. Many of our contracts contain clauses that allow us to terminate the contract with notice and with a termination penalty. Termination penalties are generally an amount less than the original obligation. Obligations under certain contracts are usage-based and are, therefore, estimated in the above amounts. Historically, we have not had any significant defaults on our contractual obligations or incurred significant penalties for termination of our contractual obligations.
We have no material off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources.
Other Commercial Commitments
We had approximately $60 million in outstanding letters of credit and bank guarantees as of December 31, 2024 primarily held in connection with regulatory requirements, lease arrangements, and certain agent agreements. We expect to renew many of our letters of credit and bank guarantees prior to expiration.
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Critical Accounting Policies and Estimates
Management’s discussion and analysis of results of operations and financial condition is based on our consolidated financial statements that have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires that management make estimates and assumptions that affect the amounts reported for revenues, expenses, assets, liabilities, and other related disclosures. Actual results may or may not differ from these estimates. Our significant accounting policies are discussed in Part II, Item 8, Financial Statements and Supplementary Data, Note 2, Summary of Significant Accounting Policies.
Our critical accounting policies and estimates, described below, are very important to the portrayal of our financial condition and our results of operations, and applying them requires our management to make difficult, subjective, and complex judgments. We believe that the understanding of these key accounting policies and estimates is essential in achieving more insight into our operating results and financial condition.
Income Taxes
Income taxes, as reported in our consolidated financial statements, represent the net amount of income taxes we expect to pay to various taxing jurisdictions in connection with our operations. We provide for income taxes based on amounts that we believe we will ultimately owe after applying the required analyses and judgments.
The determination of our worldwide provision for income taxes requires significant judgment. We routinely receive, and may in the future receive, questions from taxing authorities on various tax-related assertions. In many of these instances, the ultimate tax determination is uncertain, given the complexities in interpreting tax laws and applying our facts and circumstances to these laws in many jurisdictions throughout the world.
We recognize the tax benefit from an uncertain tax position only when it is more likely than not, based on the technical merits of the position, that the tax position will be sustained upon examination, including the resolution of any related appeals or litigation. The tax benefits recognized in the consolidated financial statements from such a position are measured as the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution.
We have established contingency reserves for a variety of tax exposures. Our tax reserves reflect our judgment as to the resolution of the issues involved if subject to judicial review or other settlement. While we believe that our reserves are adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that does not exceed our related reserve. With respect to these reserves, our income tax expense would include: (i) any changes in tax reserves arising from material changes in facts and circumstances (i.e., new information) surrounding a tax issue during the period and (ii) any difference from our tax position as recorded in the consolidated financial statements and the final resolution of a tax issue during the period.
Our tax contingency reserves for our uncertain tax positions as of December 31, 2024 were $17.9 million, including accrued interest and penalties, net of related items. While we believe that our reserves are adequate to cover reasonably expected tax risks, in the event that the ultimate resolution of our uncertain tax positions differs from our estimates, we may be exposed to material increases in income tax expense, which could materially impact our financial condition, results of operations, and cash flows. Furthermore, the timing of any related cash payments for these tax liabilities is inherently uncertain and is affected by variable factors outside our control.
Goodwill
Goodwill represents the excess of purchase price over the fair value of tangible and other intangible assets acquired less liabilities assumed, arising from business combinations. An impairment assessment of goodwill is conducted annually during our fourth quarter at the reporting unit level. This assessment of goodwill is performed more frequently if events or changes in circumstances indicate that the carrying value of the goodwill may not be recoverable. Reporting units are determined by the level at which management reviews segment operating results. That level may be the operating segment, or it may be one level below the operating segment.
Our impairment assessment typically begins with a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. The initial qualitative assessment includes
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comparing the overall financial performance of the reporting unit against the planned results. Additionally, each reporting unit’s fair value is assessed based on current and expected events and circumstances, including macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity-specific events. Periodically, we perform a quantitative assessment, as described below, for each of our reporting units, regardless of the results of prior qualitative assessments.
If we determine in the qualitative assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then we estimate the fair value of the reporting unit using discounted cash flows and compare the estimated fair value to its carrying value. If the carrying value exceeds the fair value of the reporting unit, then an impairment is recognized for the difference. Refer to Part II, Item 8, Financial Statements and Supplementary Data, Note 2, Summary of Significant Accounting Policies, for further discussion regarding our accounting policies for goodwill and any related impairments.
The determination of the reporting units and which reporting units to include in the qualitative assessment requires significant judgment. Also, all of the assumptions used in the qualitative assessment require judgment. Additionally, for the quantitative goodwill impairment test, we calculate the fair value of reporting units through discounted cash flow analyses which require us to make estimates and assumptions including, among other items, revenue growth rates, operating margins, and capital expenditures based on our budgets and business plans. Development of such estimates and assumptions and the resultant fair value takes into consideration expected regulatory, marketplace, and other economic factors as well as relevant discount rates and terminal values.
We could be required to evaluate the recoverability of goodwill if we experience disruptions to the business, unexpected significant declines in operating results, a divestiture of a significant component of our business, or other triggering events. In addition, as our business or the way we manage our business changes, our reporting units may also change. If an event described above occurs and causes us to recognize a goodwill impairment charge, it would impact our reported earnings in the period such charge occurs.
The carrying value of goodwill as of December 31, 2024 was $2,059.6 million, which represented approximately 25% of our consolidated assets. As of December 31, 2024, goodwill of $1,983.3 million resides in our Consumer Money Transfer reporting unit, while the remaining $76.3 million resides in Consumer Services. For the years ended December 31, 2024 and 2023, we did not record any goodwill impairments. For the Consumer Money Transfer and Consumer Services reporting units, the fair values of the businesses significantly exceed their carrying amounts.
Other Intangible Assets
We capitalize software, certain initial payments for new and renewed agent contracts, and acquired intangible assets. We evaluate such intangible assets for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. In such reviews, estimated undiscounted cash flows associated with these assets or operations are compared with their carrying amounts to determine if a write-down to fair value (normally measured by the present value technique) is required.
The capitalization of software costs incurred during the application development stage, as well as costs incurred to acquire, install, and customize software for internal use, is subject to accounting policy criteria which requires management judgment to determine the stage of development, the amount of costs eligible to be capitalized, and the related period of benefit. For developed software, we capitalize the eligible costs (predominantly detailed design, development, and testing) incurred during the application development stage, and all other costs are expensed as incurred. Once the software is ready for its intended use, the capitalized costs are amortized over the software’s estimated useful life. The capitalization of initial payments for new and renewed agent contracts is subject to strict accounting policy criteria and requires management judgment as to the amount to capitalize and the related period of benefit. Our accounting policy is to limit the amount of capitalized costs for a given agent contract to the lesser of the estimated future cash flows from the contract or the termination fees we would receive in the event of early termination of the contract.
Disruptions to contractual relationships, significant actual or expected declines in cash flows or transaction volumes associated with contracts or software applications, or the discontinued use of a software application would cause us to evaluate the recoverability of the asset and could result in an impairment charge. Additionally, evaluating future cash flows
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associated with each asset requires us to make estimates and assumptions, including, among other things, revenue growth rates and operating margins based on our budgets and business plans.
The net carrying value of our other intangible assets as of December 31, 2024 was $315.4 million. During the year ended December 31, 2024, we recorded immaterial impairments related to other intangible assets. During the year ended December 31, 2023, we recorded impairments of approximately $9 million to other intangible assets primarily related to software no longer in use.
Recent Accounting Pronouncements
Refer to Part II, Item 8, Financial Statements and Supplementary Data, Note 2, Summary of Significant Accounting Policies for further discussion.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks arising from changes in market rates and prices, including changes in foreign currency exchange rates and interest rates and credit risk related to our agents and customers. A risk management program is in place to manage these risks.
Foreign Currency Exchange Rates
We provide our services primarily through a network of agent locations in more than 200 countries and territories. We manage foreign exchange risk through the structure of the business and an active risk management process. We currently settle with the significant majority of our agents and disbursement partners in United States dollars, Mexican pesos, or euros, requiring those agents and disbursement partners to obtain local currency to pay recipients, and we generally do not rely on international currency markets to obtain and pay illiquid currencies. However, in certain circumstances, we settle in other currencies. The foreign currency exposure that does exist is limited by the fact that the significant majority of transactions are paid by the next day after they are initiated, and agent settlements occur within a few days in most instances. To mitigate this risk further, we enter into short duration foreign currency forward contracts, generally with maturities ranging from a few days to one month, to offset foreign exchange rate fluctuations between transaction initiation and settlement. We also have exposure to certain foreign currency denominated cash and other asset and liability positions and may utilize foreign currency forward contracts, typically with maturities of less than one year at inception, to offset foreign exchange rate fluctuations on these positions. In certain consumer money transfer transactions involving different send and receive currencies, we generate revenue based on the difference between the exchange rate set by us to the consumer and a rate available in the wholesale foreign exchange market, helping to provide protection against currency fluctuations. We attempt to promptly buy and sell foreign currencies as necessary to cover our net payables and receivables which are denominated in foreign currencies.
We use longer-term foreign currency forward contracts to help mitigate risks associated with changes in foreign currency exchange rates on revenues denominated in the euro, and, to a lesser degree, the Canadian dollar, the British pound, and other currencies. We use contracts with maturities of up to 36 months at inception to mitigate some of the impact that changes in foreign currency exchange rates could have on forecasted revenues, with a targeted weighted-average maturity of approximately one year. We believe the use of longer-term foreign currency forward contracts provides predictability of future cash flows from our international operations.
As of December 31, 2024, a hypothetical uniform 10% strengthening or weakening in the value of the United States dollar relative to all other currencies in which our net income is generated would have resulted in a decrease/increase to pre-tax annual income of approximately $18 million, based on our forecast of unhedged exposure to foreign currency at that date. There are inherent limitations in this sensitivity analysis, primarily due to the following assumptions: (i) foreign exchange rate movements are linear and instantaneous, (ii) fixed exchange rates between certain currency pairs are retained, (iii) the unhedged exposure is static, and (iv) we would not hedge any additional exposure. As a result, the analysis is unable to reflect the potential effects of more complex market changes that could arise, which may positively or negatively affect income.
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Interest Rates
We invest in several types of interest-bearing assets, with a total value as of December 31, 2024 of approximately $2.8 billion. Approximately $1.5 billion of these assets bear interest at floating rates. These assets primarily include cash in banks, money market investments, and state and municipal variable-rate securities and are included in our Consolidated Balance Sheets within Cash and cash equivalents and Settlement assets. To the extent these assets are held in connection with money transfers and other related payment services awaiting redemption, they are classified as Settlement assets. Earnings on these investments will increase and decrease with changes in the underlying short-term interest rates.
The remaining interest-bearing assets pay fixed interest rates and primarily consist of highly-rated state and municipal debt securities and asset-backed securities. These investments may include investments made from cash received from our money order services, money transfer business, and other related payment services awaiting redemption and are classified within Settlement assets in the Consolidated Balance Sheets. As interest rates rise, the fair values of these fixed-rate interest-bearing securities will decrease; conversely, a decrease to interest rates would result in an increase to the fair values of the securities. We have classified these investments as available-for-sale within Settlement assets in the Consolidated Balance Sheets, and accordingly, recorded these instruments at their fair value with the net unrealized gains and losses, excluding credit-related losses, net of the applicable deferred income tax effect, being added to or deducted from our Total stockholders' equity in our Consolidated Balance Sheets.
As of December 31, 2024, borrowings of $800 million under our Term Loan Facility were subject to floating interest rates. The interest on these borrowings was calculated using a selected SOFR plus an interest rate margin of 1.35%. Borrowings under our commercial paper program mature in such a short period that the financing is effectively floating rate. As of December 31, 2024, there were no outstanding borrowings under our commercial paper program.
We review our overall exposure to floating and fixed rates by evaluating our net asset or liability position and the duration of each individual position. We manage this mix of fixed versus floating exposure in an attempt to minimize risk, reduce costs, and improve returns. Our exposure to interest rates can be modified by changing the mix of our interest-bearing assets as well as adjusting the mix of fixed versus floating rate debt. The latter is accomplished primarily through the use of interest rate swaps and the decision regarding terms of any new debt issuances (i.e., fixed versus floating). From time to time, we use interest rate swaps designated as hedges to vary the percentage of fixed to floating rate debt, subject to market conditions, although there were no such swaps outstanding as of December 31, 2024. As of December 31, 2024, our weighted-average effective rate on total borrowings was approximately 4.3%.
A hypothetical 100 basis point increase/decrease in interest rates would result in a decrease/increase to annual pre-tax income of approximately $8 million based on borrowings that are sensitive to interest rate fluctuations, net of the impact of hedges, on December 31, 2024. The same 100 basis point increase/decrease in interest rates, if applied to our cash and investment balances on December 31, 2024 that bear interest at floating rates, would result in an offsetting increase/decrease to annual pre-tax income of approximately $15 million. There are inherent limitations in the sensitivity analysis presented, primarily due to the assumptions that interest rate changes would be instantaneous and consistent across all geographies in which our interest-bearing assets are held and our liabilities are payable. As a result, the analysis is unable to reflect the potential effects of more complex market changes, including changes in credit risk regarding our investments, which may positively or negatively affect income. In addition, the mix of fixed versus floating rate debt and investments and the level of assets and liabilities will change over time, including the impact from commercial paper borrowings that may be outstanding in future periods.
Credit Risk
To manage our exposures to credit risk with respect to investment securities, money market fund investments, derivatives, and other credit risk exposures resulting from our relationships with banks and financial institutions, we regularly review investment concentrations, trading levels, credit spreads, and credit ratings, and we attempt to diversify our investments among global financial institutions.
We are also exposed to credit risk related to receivable balances from agents in the money transfer, bill payment, and money order settlement process. We perform a credit review before each agent signing and conduct periodic analyses of agents and certain other parties we transact with directly. In addition, we are exposed to losses directly from consumer transactions, particularly through our digital channels, where transactions are originated through means other than cash
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and are therefore subject to “chargebacks,” insufficient funds, or other collection impediments, such as fraud, which are anticipated to increase as digital channels become a greater proportion of our money transfer business.
Our credit and non-credit losses have been less than 2% of our consolidated revenues in each of the periods presented.
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10‐K of The Western Union Company and materials we have filed or will file with the Securities and Exchange Commission (as well as information included in our other written or oral statements) contain or will contain 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 predict. Actual outcomes and results may differ materially from those expressed in, or implied by, our forward-looking statements. Words such as “expects,” “intends,” “targets,” “anticipates,” “believes,” “estimates,” “guides,” “provides guidance,” “provides outlook,” “projects,” “designed to,” and other similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would,” “could,” and “might” are intended to identify such forward-looking statements. Readers of this Annual Report on Form 10‐K should not rely solely on the forward-looking statements and should consider all uncertainties and risks discussed in Part I, Item 1A, Risk Factors and throughout this Annual Report on Form 10‐K. The statements are only as of the date they are made, and the Company undertakes no obligation to update any forward-looking statement.
Possible events or factors that could cause results or performance to differ materially from those expressed in our forward-looking statements include the following:
Events or Factors Related to Our Business and Industry
•
changes in general economic conditions and economic conditions in the regions and industries in which we operate, including global economic downturns and trade disruptions, or significantly slower growth or declines in the money transfer, payment service, and other markets in which we operate, including downturns or declines related to interruptions in migration patterns or other events, such as public health emergencies, epidemics, or pandemics, any changes arising as a result of the recent United States elections, civil unrest, war, terrorism, natural disasters, or non-performance by our banks, lenders, insurers, or other financial services providers;
•
failure to compete effectively in the money transfer and payment service industry, including among other things, with respect to price or customer experience, with global and niche or corridor money transfer providers, banks and other money transfer and payment service providers, including digital, mobile and internet-based services, card associations, and card-based payment providers, and with digital currencies, and related exchanges and protocols, and other innovations in technology and business models;
•
geopolitical tensions, political conditions, and related actions, including trade restrictions, tariffs, and government sanctions, which may adversely affect our business and economic conditions as a whole, including interruptions of United States or other government relations with countries in which we have or are implementing significant business relationships with agents, clients, or other partners;
•
deterioration in customer confidence in our business, or in money transfer and payment service providers generally;
•
failure to maintain our agent network and business relationships under terms consistent with or more advantageous to us than those currently in place;
•
our ability to adopt new technology and develop and gain market acceptance of new and enhanced services in response to changing industry and consumer needs or trends;
•
mergers, acquisitions, and the integration of acquired businesses and technologies into our Company, divestitures, and the failure to realize anticipated financial benefits from these transactions, and events requiring us to write down our goodwill;
•
decisions to change our business mix;
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•
changes in, and failure to manage effectively, exposure to foreign exchange rates, including the impact of the regulation of foreign exchange spreads on money transfers;
•
changes in tax laws, or their interpretation, any subsequent regulation, and unfavorable resolution of tax contingencies;
•
any material breach of security, including cybersecurity, or safeguards of or interruptions in any of our systems or those of our vendors or other third parties;
•
cessation of or defects in various services provided to us by third-party vendors;
•
our ability to realize the anticipated benefits from restructuring-related initiatives, which may include decisions to downsize or to transition operating activities from one location to another, and to minimize any disruptions in our workforce that may result from those initiatives;
•
our ability to attract and retain qualified key employees and to manage our workforce successfully;
•
failure to manage credit and fraud risks presented by our agents, clients, and consumers;
•
adverse rating actions by credit rating agencies;
•
our ability to protect our trademarks, patents, and other intellectual property rights, and to defend ourselves against potential intellectual property infringement claims;
•
material changes in the market value or liquidity of securities that we hold;
•
restrictions imposed by our debt obligations;
Events or Factors Related to Our Regulatory and Litigation Environment
•
liabilities or loss of business resulting from a failure by us, our agents, or their subagents to comply with laws and regulations and regulatory or judicial interpretations thereof, including laws and regulations designed to protect consumers, or detect and prevent money laundering, terrorist financing, fraud, and other illicit activity;
•
increased costs or loss of business due to regulatory initiatives and changes in laws, regulations, and industry practices and standards, including changes in interpretations, in the United States and abroad, affecting us, our agents or their subagents, or the banks with which we or our agents maintain bank accounts needed to provide our services, including related to anti-money laundering regulations, anti-fraud measures, our licensing arrangements, customer due diligence, agent and subagent due diligence, registration and monitoring requirements, consumer protection requirements, remittances, immigration, and sustainability reporting, including climate-related reporting;
•
liabilities, increased costs, or loss of business and unanticipated developments resulting from governmental investigations and consent agreements with, or investigations or enforcement actions by, regulators and other government authorities;
•
liabilities resulting from litigation, including class-action lawsuits and similar matters, and regulatory enforcement actions, including costs, expenses, settlements, and judgments;
•
failure to comply with regulations and evolving industry standards regarding consumer privacy, data use, the transfer of personal data between jurisdictions, and information security;
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•
failure to comply with the Dodd-Frank Act, as well as regulations issued pursuant to it and the actions of the CFPB and similar legislation and regulations enacted by other governmental authorities in the United States and abroad related to consumer protection;
•
effects of unclaimed property laws or their interpretation or the enforcement thereof;
•
failure to maintain sufficient amounts or types of regulatory capital or other restrictions on the use of our working capital to meet the changing requirements of our regulators worldwide;
•
changes in accounting standards, rules and interpretations, or industry standards affecting our business;
Other Events or Factors
•
catastrophic events; and
•
management’s ability to identify and manage these and other risks.
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Item 8. Financial Statements and Supplementary Data
THE WESTERN UNION COMPANY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Management’s Report on Internal Control Over Financial Reporting 63
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42) 64
Consolidated Balance Sheets as of December 31, 2024 and 2023 69
Notes to Consolidated Financial Statements 73
All other financial statement schedules for The Western Union Company have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the respective consolidated financial statements or notes thereto.
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Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a‐15(f) under the Securities Exchange Act of 1934. The Western Union Company’s (“Western Union” or the “Company”) internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Western Union’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and Board of Directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of Western Union’s internal control over financial reporting as of December 31, 2024, utilizing the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 framework). Based on the results of its evaluation, the Company’s management concluded that as of December 31, 2024, the Company’s internal control over financial reporting is effective. Western Union’s internal control over financial reporting as of December 31, 2024 has been audited by Ernst & Young LLP, Western Union’s independent registered public accounting firm, as stated in their attestation report included in this Annual Report on Form 10‐K.
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of The Western Union Company
Opinion on Internal Control Over Financial Reporting
We have audited The Western Union Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, The Western Union Company (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, cash flows and stockholders’ equity for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 20, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Denver, Colorado
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of The Western Union Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of The Western Union Company (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, cash flows and stockholders’ equity for each of the three years in the period ended December 31, 2024 and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 20, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
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Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Income taxes – International tax structure
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2006.
Denver, Colorado
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THE WESTERN UNION COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
Year Ended December 31,
Expenses:
Other income/(expense):
Gain on divestiture of business (Note 4) — 18.0 248.3
Other income/(expense), net 0.7 — (37.5 )
Total other income/(expense), net (107.2 ) (71.7 ) 123.7
Provision for/(benefit from) income taxes (315.6 ) 119.8 98.0
Earnings per share:
Weighted-average shares outstanding:
(a)
As further described in Note 6, total expenses include amounts incurred with related parties of $45.5 million, $45.4 million, and $48.8 million for the years ended December 31, 2024, 2023, and 2022, respectively.
See Notes to Consolidated Financial Statements.
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THE WESTERN UNION COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
Year Ended December 31,
Other comprehensive income, net of reclassifications and tax (Note 12):
Unrealized gains/(losses) on investment securities (0.4 ) 36.4 (99.8 )
Unrealized gains/(losses) on hedging activities 28.4 (35.8 ) 1.8
Foreign currency translation adjustments (1.2 ) — (17.8 )
Total other comprehensive income/(loss) 26.8 0.6 (115.8 )
See Notes to Consolidated Financial Statements.
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THE WESTERN UNION COMPANY
CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
December 31,
Assets
Deferred tax asset, net 265.0 —
Liabilities and stockholders' equity
Liabilities:
Accounts payable and accrued liabilities $ 407.9 $ 453.0
Commitments and contingencies (Note 5)
Stockholders' equity:
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued — —
Retained earnings/(accumulated deficit) 35.2 (389.1 )
Accumulated other comprehensive loss (140.5 ) (167.3 )
Total liabilities and stockholders' equity $ 8,370.5 $ 8,198.8
See Notes to Consolidated Financial Statements.
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THE WESTERN UNION COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Year Ended December 31,
Cash flows from operating activities
Deferred income tax benefit (Note 10) (248.8 ) (11.0 ) (26.7 )
Accounts payable and accrued liabilities (46.4 ) (22.4 ) 42.6
Cash flows from investing activities
Payments for capitalized contract costs (11.8 ) (36.4 ) (71.9 )
Payments for internal use software (81.4 ) (88.5 ) (104.4 )
Purchases of property and equipment (37.4 ) (22.9 ) (31.9 )
Proceeds from the sale of settlement investments 356.0 262.0 919.3
Purchases of non-settlement investments (Note 8) — — (400.0 )
Proceeds from the sale of non-settlement investments (Note 8) — 100.0 300.0
Proceeds from divestiture, net of cash divested (Note 4) — — 887.2
Other investing activities (15.2 ) (3.7 ) 17.5
Net cash (used in)/provided by investing activities (16.3 ) (140.8 ) 525.5
Cash flows from financing activities
Net proceeds from/(repayments of) commercial paper (364.9 ) 184.9 (95.0 )
Net proceeds from issuance of borrowings 798.1 — —
Principal payments on borrowings — (300.0 ) (300.0 )
Proceeds from exercise of options — 0.2 9.5
Net change in settlement obligations 6.1 (122.8 ) (56.4 )
Other financing activities (0.9 ) (1.7 ) (1.3 )
Net cash used in financing activities (69.3 ) (896.8 ) (1,177.3 )
See Notes to Consolidated Financial Statements.
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THE WESTERN UNION COMPANY
SUPPLEMENTAL CASH FLOW INFORMATION
(in millions)
Year Ended December 31,
Reconciliation of balance sheet cash and cash equivalents to cash flows:
Restricted cash in Other assets 1.3 21.6 41.5
Cash and cash equivalents included in Assets held for sale — — 5.2
Supplemental cash flow information:
Cash paid for lease liabilities $ 54.9 $ 40.1 $ 40.5
Accrued and unpaid capitalized contract costs $ — $ — $ 32.3
See Notes to Consolidated Financial Statements.
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THE WESTERN UNION COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions)
Retained Accumulated
Earnings/ Other Total
Common Stock Capital (Accumulated Comprehensive Stockholders'
Shares Amount Surplus Deficit) Loss Equity
Stock-based compensation — — 45.5 — — 45.5
Repurchase and retirement of common shares (23.0 ) (0.3 ) — (364.3 ) — (364.6 )
Shares issued under stock-based compensation plans 2.7 0.1 9.4 — — 9.5
Other comprehensive loss (Note 12) — — — — (115.8 ) (115.8 )
Stock-based compensation — — 35.9 — — 35.9
Repurchase and retirement of common shares (24.9 ) (0.3 ) — (310.9 ) — (311.2 )
Shares issued under stock-based compensation plans 1.9 0.1 0.1 — — 0.2
Other comprehensive income (Note 12) — — — — 0.6 0.6
Stock-based compensation — — 38.9 — — 38.9
Repurchase and retirement of common shares (14.5 ) (0.1 ) — (185.9 ) — (186.0 )
Shares issued under stock-based compensation plans 1.9 — — — — —
Other comprehensive income (Note 12) — — — — 26.8 26.8
See Notes to Consolidated Financial Statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Business and Basis of Presentation
Business
The Western Union Company (“Western Union” or the “Company”) is a leader in cross-border, cross-currency money movement, payments, and digital financial services, empowering consumers, businesses, financial institutions, and governments with fast, reliable, and convenient ways to send money and make payments around the world. The Western Union brand is globally recognized. The Company’s services are available through a network of agent locations in more than 200 countries and territories and also through websites and mobile applications marketed under the Company’s brands (“Branded Digital”) and internet and mobile applications hosted by the Company’s third-party digital partners. Each location in the Company’s agent network is capable of providing one or more of the Company’s services.
The Western Union business consists of the following segments:
•
Consumer Money Transfer - The Consumer Money Transfer segment facilitates money transfers, which are primarily sent from retail agent and owned locations worldwide or through websites and mobile devices. The Company’s money transfer service is provided through one interconnected global network. This service is available for international cross-border transfers and, in certain countries, intra-country transfers.
•
Consumer Services - TheConsumer Services segment includes the Company’s bill payment services, money order services, retail foreign exchange services, media network, prepaid cards, lending partnerships, and digital wallets.
See Note 16 for further information regarding the Company’s segments.
On August 4, 2021, the Company entered into an agreement to sell its Business Solutions business, and the final closing for this transaction occurred on July 1, 2023. See Note 4 for further information regarding this transaction.
There are legal or regulatory limitations on transferring certain assets of the Company outside of the countries where these assets are located. However, there are generally no limitations on the use of these assets within those countries. Additionally, the Company must meet minimum capital requirements in some countries in order to maintain operating licenses. As of December 31, 2024, the Company’s restricted net assets associated with these asset limitations and minimum capital requirements totaled approximately $340 million.
Various aspects of the Company’s services and businesses are subject to United States federal, state, and local regulation, as well as regulation by foreign jurisdictions, including certain banking and other financial services regulations.
Basis of Presentation
The financial statements in this Annual Report on Form 10‐K are presented on a consolidated basis and include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated.
Consistent with industry practice, the accompanying Consolidated Balance Sheets are unclassified due to the short-term nature of the Company’s settlement obligations contrasted with the Company’s ability to invest cash awaiting settlement in long-term investment securities.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.
Principles of Consolidation
The Company consolidates financial results when it has a controlling financial interest in a subsidiary via voting rights or when it has both the power to direct the activities of an entity that most significantly impact the entity’s economic performance and the ability to absorb losses or the right to receive benefits of the entity that could potentially be significant to the entity. The Company utilizes the equity method of accounting when it is able to exercise significant influence over an entity’s operations, which generally occurs when the Company has an ownership interest between 20% and 50%.
Earnings Per Share
The calculation of basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Outstanding options to purchase Western Union stock and unvested shares of restricted stock are excluded from basic shares outstanding. Diluted earnings per share reflects the potential dilution that could occur if outstanding stock options at the presented dates are exercised and shares of restricted stock have vested, using the treasury stock method. The treasury stock method assumes proceeds from the exercise price of stock options and the unamortized compensation expense of options and restricted stock are available to acquire shares at an average market price throughout the period, and therefore, reduce the dilutive effect.
Shares excluded from the diluted earnings per share calculation were 11.6 million, 9.7 million, and 8.0 million for the years ended December 31, 2024, 2023, and 2022, respectively. The effect of these shares was anti-dilutive under the treasury stock method, as assumed proceeds of the options and restricted stock per unit were above the Company’s average share price during the periods.
The following table provides the calculation of diluted weighted-average shares outstanding (in millions):
Year Ended December 31,
Common stock equivalents 1.1 1.0 1.2
Diluted weighted-average shares outstanding 341.1 371.8 388.4
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THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Fair Value Measurements
The Company determines the fair values of its assets and liabilities that are recognized or disclosed at fair value in accordance with the hierarchy described below. The following three levels of inputs may be used to measure fair value:
•
Level 1 - Quoted prices in active markets for identical assets or liabilities.
•
Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. For most of these assets, the Company utilizes pricing services that use multiple prices as inputs to determine daily market values.
•
Level 3 -Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include items where the determination of fair value requires significant management judgment or estimation. The Company holds assets classified as Level 3 that are recognized and disclosed at fair value on a non-recurring basis related to the Company’s business combinations, where the values of the intangible assets and goodwill acquired in a purchase are derived utilizing one of the three recognized approaches: the market approach, the income approach, or the cost approach.
Carrying amounts for many of the Company’s financial instruments, including cash and cash equivalents, settlement cash and cash equivalents, and settlement receivables and settlement obligations approximate fair value due to their short maturities. Available-for-sale investment securities, as further discussed in Notes 7 and 8, and derivative financial instruments, as further discussed in Notes 8 and 13, are carried at fair value. Fixed-rate notes are carried at their original issuance values and adjusted over time to amortize or accrete that value to par. The fair values of fixed-rate notes are disclosed in Note 8 and are based on market quotations.
Business Combinations
The Company accounts for all business combinations where control over another entity is obtained using the acquisition method of accounting, which requires that most assets (both tangible and intangible), liabilities (including contingent consideration), and remaining noncontrolling interests be recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets less liabilities and noncontrolling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or noncontrolling interests made subsequent to the acquisition date, but within the measurement period, which is one year or less, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded within Net income. Any equity interest the Company holds in the acquired company prior to obtaining control of the entity is remeasured to fair value at acquisition with a resulting gain or loss recognized within Other income/(expense), net for the difference between fair value and existing book value. Results of operations of the acquired company are included in the Company’s results from the date of the acquisition forward and include amortization expense arising from acquired intangible assets. The Company expenses all costs as incurred related to or involved with an acquisition in Selling, general, and administrative expenses.
Cash and Cash Equivalents
Highly liquid investments (other than those included in settlement assets) with maturities of three months or less at the date of purchase (that are readily convertible to cash) are considered cash equivalents and are stated at cost, which approximates fair value.
The Company maintains cash and cash equivalent balances, which may include a portion in money market funds, with a group of globally diversified banks and financial institutions. The Company limits the concentration of its cash and cash
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THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
equivalents with any one institution and regularly reviews investment concentrations and credit worthiness of these institutions.
Allowance for Credit Losses
For the Company’s accounting policies with respect to the allowance for credit losses, refer to Note 7.
Settlement Assets and Obligations
Settlement assets represent funds received or to be received from agents and others for unsettled money transfers, money orders, and consumer payments. The Company records corresponding settlement obligations relating to amounts payable under money transfers, money orders, and consumer payment service arrangements.
Settlement assets consist of cash and cash equivalents, receivables from agents and others, and investment securities. Cash received by Western Union agents generally becomes available to the Company within one week after initial receipt by the agent. Cash equivalents consist of short-term time deposits, commercial paper, and other highly liquid investments. Receivables from agents represent funds collected by such agents, but in transit to the Company. Western Union has a large and diverse agent base, thereby reducing the Company’s credit risk from any one agent. The Company performs ongoing credit evaluations of its agents’ financial condition and credit worthiness.
Settlement obligations consist of money transfer, money order, and payment service payables, and payables to agents. Money transfer payables represent amounts to be paid to transferees when they request their funds. Most agents typically settle with transferees first and then obtain reimbursement from the Company. Money order payables represent amounts not yet presented for payment. Payment service payables represent amounts to be paid to utility companies, auto finance companies, mortgage servicers, financial service providers, government agencies, and others. Payables to agents represent amounts due to agents for money transfers that have been settled with transferees.
Refer to Note 7 for additional details on the Company’s settlement assets and obligations.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the lesser of the estimated life of the related assets (generally three to seven years for equipment and furniture and fixtures) or the lease term. Maintenance and repairs, which do not extend the useful life of the respective assets, are charged to expense as incurred.
Property and equipment consisted of the following (in millions):
December 31,
Furniture and fixtures 35.9 35.2
Total property and equipment, gross 539.1 530.2
Less accumulated depreciation (454.9 ) (438.8 )
Property and equipment, net $ 84.2 $ 91.4
Amounts charged to expense for depreciation of property and equipment were $37.4 million, $39.1 million, and $42.7 million during the years ended December 31, 2024, 2023, and 2022, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Goodwill
Goodwill represents the excess of purchase price over the fair value of tangible and other intangible assets acquired less liabilities assumed, arising from business combinations. In the event a reporting unit’s carrying amount exceeds its fair value, the Company recognizes an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value. The Company’s annual impairment assessment did not identify any goodwill impairment during the years ended December 31, 2024, 2023, and 2022.
Other Intangible Assets
Other intangible assets primarily consist of software, contract costs (amounts paid to agents in connection with establishing and renewing long-term contracts), and acquired contracts. Other intangible assets are generally amortized on a straight-line basis over the length of the contract or benefit period. Included in the Consolidated Statements of Income is amortization expense of $141.7 million, $144.5 million, and $141.1 million for the years ended December 31, 2024, 2023, and 2022, respectively.
The Company purchases and develops software that is used in providing services and in performing administrative functions. For developed software, the Company capitalizes the eligible costs (predominantly detailed design, development, and testing) incurred during the application development stage, and all other costs are expensed as incurred. Once the software is ready for its intended use, software development costs and purchased software are generally amortized over a term of three to seven years.
The Company capitalizes initial payments for new and renewed agent contracts to the extent recoverable through future operations or penalties in the case of early termination. The Company’s accounting policy is to limit the amount of capitalized costs for a given contract to the lesser of the estimated future cash flows from the contract or the termination fees the Company would receive in the event of early termination of the contract. Capitalized contract costs are generally amortized over a term of five to ten years.
Acquired contracts include customer and contractual relationships and networks of subagents that are recognized in connection with the Company’s acquisitions.
The following table provides the components of other intangible assets (in millions):
Net of Net of
Initial Accumulated Initial Accumulated
Cost Amortization Cost Amortization
The estimated future aggregate amortization expense for existing other intangible assets as of December 31, 2024 is expected to be $121.8 million in 2025, $81.1 million in 2026, $47.7 million in 2027, $12.9 million in 2028, $5.3 million in 2029, and $6.2 million thereafter.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Other intangible assets are reviewed for impairment on an annual basis or whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In such reviews, estimated undiscounted cash flows associated with these assets or operations are compared with their carrying values to determine if a write-down to fair value (normally measured by the present value technique) is required. The Company recorded immaterial impairments related to other intangible assets during the years ended December 31, 2024 and 2022 and approximately $9 million of impairments related to other intangible assets during the year ended December 31, 2023.
Other Investments
Other investments consist of equity investments in privately-held companies that do not have readily determinable fair values. For these investments, the Company has less than a 20% interest and does not have control or significant influence. The Company has elected to measure these investments at cost less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment in the same issuer. These investments are reflected in Other assets in the Consolidated Balance Sheets as of December 31, 2024 and 2023. The Company has not recorded any material annual or cumulative impairment losses or valuation adjustments based on observable price changes.
Revenue Recognition