Logo of jester cap with thought bubble.

Image source: The Motley Fool.

DATE

Friday, April 24, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Devin McGranahan
  • Chief Financial Officer — Matthew Cagwin

TAKEAWAYS

  • Adjusted Revenue -- $1 billion, representing a 1% year-over-year decline and a 400 basis point improvement from the prior quarter.
  • GAAP Revenue -- $983 million, reflecting continued pressure in The Americas retail segment, partially offset by growth in Consumer Services and Branded Digital.
  • Consumer Money Transfer (CMT) Transactions -- Slightly positive year over year, marking the first such increase since 2025 and a 300 basis point improvement over the previous quarter.
  • Cross-Border Principal Growth -- Up mid-single digits, demonstrating resilience in customer activity despite macroeconomic headwinds.
  • Adjusted Earnings Per Share (EPS) -- $0.25, down from $0.41 a year ago, with management citing both quarter-specific headwinds and new seasonal factors tied to Travel Money.
  • Adjusted Operating Margin -- 13%, with margin pressure from lack of vendor incentives, higher agent signing costs, a foreign currency loss, and Travel Money seasonality.
  • Branded Digital Transaction Growth -- 21% year over year, with adjusted revenue up 6% and the transaction growth accelerating by 800 basis points versus prior quarter.
  • Branded Digital Account Payout Transactions -- Increased over 45%, the highest level in four years, driven by expansion in lower revenue-per-transaction (RPT) corridors.
  • Consumer Services Adjusted Revenue -- Up 33%, accounting for 14% of total revenue, led by Travel Money expansion (notably Eurochange) and bill pay growth.
  • Travel Money Business -- Expected to reach $150 million in revenue in 2026, up from "nearly nothing a few years ago."
  • Americas Remittance Corridors -- Revenue growth rates in key markets (Mexico, Ecuador, Guatemala) improved by at least 800 basis points compared to last summer's lows, though the U.S. to Colombia remains weak.
  • U.S. to Mexico Corridor -- Still negative in growth, but improved 350 basis points sequentially; central bank remittance data now "hovering around flat to low single digit" versus prior double-digit declines.
  • Lana Digital Wallet Acquisition -- Recently closed, provides a license to launch Western Union's digital wallet in Mexico later this year on the Beyond platform.
  • Dash (Singtel) Acquisition -- Closed earlier this month, bringing digital wallet capabilities in Singapore and broader access to digital-first customers in Southeast Asia.
  • Eurochange Acquisition -- Expanded the Travel Money platform in the U.K., improved European distribution and product diversification.
  • Pending Intermex Acquisition -- Expected to close this quarter, with remaining regulatory approval in one jurisdiction and anticipated acceleration of at least $30 million in cost synergies, likely to be front-loaded.
  • Retail Agent Network Growth -- Intermex adds about 10,000 new U.S. agent locations, expanding presence in key Latin America corridors.
  • New Major Agent Partnerships -- Three of four announced partners have launched, including German Post, with Canadian Post expected later in the quarter; these relationships are forecast to contribute approximately $100 million in incremental revenue over the next few quarters.
  • Operational Efficiency Program -- Targeting $150 million in savings by 2028, with significant contributions in 2026 and 2027, emphasizing AI and vendor efficiency, in light of recent margin pressures and investment pacing.
  • USDPT Stablecoin -- U.S. dollar-backed stablecoin entering final readiness stages; expected to launch in the next month, initially targeting inter-agent settlements as an alternative to SWIFT rails.
  • Digital Asset Network (DAN) -- Launching next week, enabling crypto wallet users to convert digital assets into local currencies through the Western Union retail network.
  • StableCard -- U.S. dollar stablecoin-linked card slated for rollout in several countries later in 2026, offering consumers new payout options and dollar-denominated value.
  • Operating Cash Flow -- $109 million, down 26% versus prior year, attributed to lower operating profit.
  • Capital Expenditures -- $47 million, higher than last year due to increased agent signing bonuses.
  • Cash and Debt -- Cash and equivalents at $900 million and total debt at $2.6 billion; leverage at 2.8x gross and 1.8x net, providing flexibility for capital return and M&A.
  • Shareholder Returns -- Over $120 million returned in dividends and buybacks during the quarter.
  • 2026 Outlook -- Management reaffirmed 6%-9% adjusted revenue growth and $1.75-$1.85 adjusted EPS, inclusive of Intermex, assuming closure in Q2.
  • Margin and EPS Trajectory -- Q2 EPS expected to align with prior year, with acceleration projected in the second half due to revenue growth, efficiency gains, and reversal of Q1-specific headwinds.

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

  • Adjusted EPS of $0.25 fell below management's expectations because of "a combination of some quarter-specific issues as well as a seasonal change for how quarter one will perform going forward given the growth of our travel money business."
  • CFO Cagwin noted, "The decrease was driven by a continued slowing of our Americas retail business," and added that U.S. immigration policy uncertainty remains a "meaningful headwind."
  • A "foreign currency loss" in Q1 was described as "a bigger item, a little bit of a surprise here in March," resulting in multiple cents of EPS impact.
  • Cash flow from operations decreased 26% year over year, primarily due to lower operating profit.

SUMMARY

Western Union (WU 3.91%) reported modest transaction growth in consumer money transfers, reflecting early stabilization across major U.S.-to-Latin America corridors, though revenue and earnings remain pressured by continued headwinds in The Americas retail business and lower margin dynamics. Multiple recent acquisitions, including Lana in Mexico and Dash in Singapore, are augmenting digital and wallet capabilities, while the pending Intermex transaction—which management anticipates will close this quarter—should provide material near-term cost synergies. The company is accelerating its $150 million operational efficiency initiative, emphasizing rapid AI adoption and regionalizing operations to address recent margin shortfalls and investment timing challenges, while simultaneously launching key digital asset initiatives such as USDPT stablecoin, the Digital Asset Network, and StableCard to diversify future revenue streams and settlement models.

  • Management expects material EPS acceleration in the second half of 2026, citing emerging benefits from new agent wins, increasing Travel Money contributions, accelerating retail recovery, operational efficiencies, and early evidence of value from digital asset launches.
  • The company confirmed that Intermex integration will expand U.S. agent locations by approximately 10,000, improving customer access in key corridors and strengthening the U.S. network.
  • The efficiency program, combining AI implementation and legacy platform sunset, is projected to hit the $150 million target ahead of prior expectations, with significant impact in 2026 and 2027.
  • The digital asset strategy, anchored by USDPT, is transitioning from development to execution, opening new channels for on-chain settlement, raising customer acquisition opportunities with wallet partners, and offering stablecoin-linked remittance payout options across core markets.

INDUSTRY GLOSSARY

  • Branded Digital: Western Union’s segment delivering money movement and payout services under the company’s own brand via digital channels, including online and mobile.
  • Consumer Money Transfer (CMT): The core service enabling peer-to-peer money transfers across domestic and international corridors, via both digital and retail channels.
  • Beyond Platform: The Western Union Company’s modular technology and services platform enabling integration and operation of disparate digital wallet and payment products globally.
  • USDPT: U.S. dollar-backed stablecoin developed by The Western Union Company for digital settlement and payment use cases.
  • Digital Asset Network (DAN): Western Union’s infrastructure for settling and converting digital assets through its global retail and digital distribution network.
  • StableCard: A payment card product tied to USDPT, enabling customers to spend stablecoin value in card-accepting locations worldwide.
  • RPT (Revenue Per Transaction): Measure of revenue earned on each customer transaction, typically mentioned to clarify business mix or margin trends.
  • Travel Money: Western Union’s physical product suite for delivering travel-related foreign currency exchange and financial services, bolstered by the Eurochange acquisition.

Full Conference Call Transcript

Devin McGranahan: Good morning, and welcome to The Western Union Company's First Quarter 2026 Financial Results Conference Call. Today, I will spend a few minutes discussing our results in the quarter and the emerging stabilization we are seeing in the U.S. remittance market. Next, I will review our M&A strategy and our recent transactions. Then finally, I will give you a quick update on where we are with our digital asset initiatives and the near-term pending launches. In the first quarter, we reported revenue of $1 billion. On an adjusted basis, this was a decline of 1% year-over-year. This is a 400 basis point improvement over the fourth quarter and relative stabilization year-over-year.

Consumer money transfer transactions were slightly positive in the quarter for the first time since 2025, which was a 300 basis point improvement from Q4. Cross-border principal growth was again up mid-single digits, speaking to the resilience of our customer base and their perseverance in the current difficult macro environment. This quarter, we again saw incremental improvement in our CMT transaction rates quarter-over-quarter. Q1 was better than Q4, Q4 was better than Q3, and Q3 was better than the lows that came in 2025. We believe this should set us up to return to more meaningful transaction growth beginning in the second quarter of this year.

Adjusted earnings per share came in at $0.25 in the quarter, compared to $0.41 this quarter a year ago. This is below our expectations and is the result of a combination of some quarter-specific issues as well as a seasonal change for how quarter one will perform going forward given the growth of our travel money business. The quarter-specific issues included incremental investments associated with our strategic agent signings, product expansion, and the timing of certain expenses that we believe will reverse in future quarters, which Matthew will cover in more detail later in the call.

In response to the slow start to the year, we have decided to accelerate our operational efficiency program that we first announced at Investor Day last fall. This program is designed to improve vendor efficiency, realize the synergies we expect to achieve from the pending Intermex acquisition, and leverage AI to rationalize our existing business processes and significantly reduce labor content. As a result, we believe we can accomplish our $150 million operating efficiency program by year end 2028 with large contributions coming in both 2026 and 2027.

Our retail business in The Americas continued to face headwinds in the quarter associated with the current geopolitical environment, though we believe we are now seeing improvement from the steep declines that we saw in 2025. We did see strong performance in the quarter in many corridors like Italy to Morocco, France to Cameroon, and Kuwait to Bangladesh, offset by continued weakness in The Americas across several specific and large corridors, most notably U.S. to Mexico. Though, from a transaction growth rate perspective, while still negative, the U.S. to Mexico corridor improved by 350 basis points relative to the fourth quarter.

Our Branded Digital business increased transaction growth to 21% and adjusted revenue by 6% in the quarter, with gains driven by some of the new relationships we have signed in The Middle East last year. This is an 800 basis point acceleration in our transaction growth rate and while the revenue growth gap has increased significantly, we are encouraged by the momentum that we are seeing on the transaction side. The revenue growth is being muted by strong growth in lower RPT corridors, continued significant increase in payout to account, and some of our new customer promotional offers, which we discussed on the Q4 call. We also believe this will improve in coming quarters.

In Consumer Services, adjusted revenue was up 33% in the quarter, driven by growth in Travel Money, led by Eurochange, as well as growth in our bill pay business. We expect Consumer Services to have another strong year in 2026 as our travel money business is expected to approach $150 million in revenue, up from nearly nothing a few years ago. Matthew will discuss our first quarter results and 2026 outlook in more detail later in the call. Now switching briefly to the macro and focusing on The Americas, as that is where much of our focus has been over the last several quarters.

As you know, remittances in The Americas have faced meaningful pressure that began early last year and continued through this winter, particularly across our key U.S. to Latin American corridors. We saw meaningful declines to markets like Mexico, Ecuador, and Guatemala driven by a combination of migration dynamics and U.S. immigration policy. What we are seeing now, however, is a business that is beginning to show stabilization and even potentially signs of improvement. Trends have improved across these corridors, with the most recent month, March, showing revenue growth rates 800 basis points or better in each of these corridors relative to the lows that we saw last summer.

Starting with U.S. to Mexico, which remains the largest remittance corridor globally, central bank data shows that 2025 was a down year, with monthly remittance principal declining double digits at multiple points throughout last year. As we move through recent months, however, we have seen those declines moderate with inbound principal activity hovering around flat to low single digit, either positive or negative, which is a vast improvement from the relative double digit lows we experienced last summer. When we look beyond Mexico, the story also continues to be constructive. Corridors like U.S. to Ecuador and U.S. to Guatemala are meaningfully better today than they were performing last summer and into the fall. However, I do want to be clear.

This is not a sharp rebound and not all corridors have improved, with U.S. to Colombia as an example still showing weakness. But overall, we are seeing improving trends and remain optimistic about the rest of the year. We believe that what is driving stabilization is a combination of factors. First, migrant behavior has begun to normalize. After a period of disruption tied to immigration policy and labor market uncertainty, we are seeing more consistent sending patterns. Second, remittances remain a resilient category. In many of these economies, remittances represent a significant share of GDP and are nondiscretionary for senders.

And third, we are benefiting from the actions that we have been taking—expanding our retail footprint, strengthening our presence in key communities, and continuing to scale our digital capabilities. So stepping back, the message is North America is not yet back to growth, but it is stabilizing, is meaningfully better than it was last summer, and the improvement we are seeing across some of our most important corridors gives us confidence that the business is now on firmer footing as we move forward. Shifting gears, I would like to spend a few minutes talking about our M&A strategy.

Over the past few years, we have spent significant time advancing our strategic position as the global leader in providing accessible financial services for the aspiring populations of the world. A central pillar of this evolution has been a disciplined but opportunistic acquisition strategy focused on strengthening our footprint in high value corridors, accelerating our digital capabilities, and broadening our financial services offering.

We have deliberately shifted from a strategy of complete capital return to a model that balances capital return to shareholders with value-creating and targeted capability-driven acquisitions where each transaction is designed to either expand our geographic strength, our platform functionality, or our product offering to enable us to maximize the value of our global franchise to our shareholders. Last month, we closed on the acquisition of Lana in Mexico. This transaction will help strengthen our position in one of the most important remittance markets in the world. The acquisition gives us the license to launch a digital wallet in the country, which we plan to do later this year on our Beyond digital platform, strengthening our wallet-to-wallet capabilities.

It will also enable us to build on the success we have seen with our receive strategy in Argentina and Brazil, where we have a meaningful portion of our inbound remittances ending up in our own digital wallets in those countries. This allows us not only to save on commission expense, but potentially opens up new revenue streams for the company. We believe bringing a wallet to Mexico has the potential to change the way we do business in the country by enabling our two-sided network. We look forward to updating you on our progress as we prepare for our wallet launch later this year.

Earlier this month, we also completed the acquisition of Dash, Singtel's digital wallet business in Singapore, further extending our presence in Southeast Asia. This acquisition enhances our capabilities in key remittance and payments hubs, strengthening our access to digital-first customers in that region and supports our broader ambition to build a more connected Asia Pacific network. Dash brings complementary technology and distribution capabilities that will accelerate our digital onboarding and improve cross-payment efficiency across the regional corridors. We are excited to welcome Dash employees and customers to The Western Union Company family. In the current quarter, we expect to close the acquisition of Intermex, subject obviously to normal regulatory approvals.

We are now down to just one jurisdiction and are optimistic that we can attain the final approval in the coming weeks. This transaction is expected to strengthen our agent network density, improve corridor economics, and further reinforce our leadership in the U.S. As previously disclosed, we expect this combination to deliver meaningful cost synergies, and I am now more optimistic today than I was just a couple of months ago when we spoke on our Q4 earnings call. The opportunity to put these businesses together and truly take a best-of-breed approach, I believe, will substantially drive value for our shareholders beginning in the back half of this year and will continue for many years to come.

Over the last six months, the two teams have been hard at work designing what the post-acquisition business will look like. The more time we spend together, the more obvious it is that the culture Intermex has built will be a true asset to The Western Union Company. The Intermex team has a laser focus on delivering for their customers and agent partners alike, which very closely aligns with the culture that we have now been building at The Western Union Company. The two teams have also been thinking through synergies and, outside of the obvious public company costs, we think there are plenty of opportunities that could prove our $30 million synergy target conservative.

We had originally committed to achieving these synergies over the first two years, but based on the work to date, I am optimistic that it will be front-loaded as well. And lastly, as most of you know, we completed the acquisition of Eurochange in the United Kingdom, which has added meaningfully to our scale and our Travel Money platform. This transaction expands our presence in the European travel money market and strengthens our ability to serve outbound travelers in the United Kingdom. Eurochange enhances our physical footprint in a strategically important market and complements our broader Travel Money ecosystem by improving distribution density and product diversification. These acquisitions reflect a clear and consistent strategy.

We are selectively investing in assets that enhance our corridor leadership, digital capabilities, and product offerings while reinforcing the long-term resilience and growth profile of our global network. Importantly, these transactions are not stand-alone initiatives. They are enhancing an omnichannel platform where physical and digital channels reinforce one another and where the acquisition serves as a catalyst for accelerating the company's strategy. I recently returned from Asia where I met with our new team from Dash and spent several days with our team launching our new digital wallets in Australia and the Philippines. Our goal is to have an interconnected network of send and receive digital wallets across the important corridors in Asia.

I also visited Vietnam for the first time and met with a few of our new partners that will accelerate the development of our payout-to-account network and home delivery options in that country. We see significant opportunity in increasing our market share to this important and growing market. As we outlined at our Investor Day, our strategy is focused on growing share in higher growth markets where, for various historical reasons, we do not have our fair share of the market. Vietnam fits this perfectly, where it is a $15 billion inbound remittance market where we have only mid-single-digit market share.

Additionally, some of the largest corridors are from other Asian countries, including Japan, South Korea, Australia, and Singapore, where we have a strong presence. I have also met with our team in Manila as we move forward growing our operations center there. As part of our Beyond strategy, we are regionalizing our operations in each major region to drive efficiency and speed to market. Manila will be the primary operating center for the APAC region and thus will become part of our global operating model.

Before I turn the call over to Matthew, I would like to make a brief update on our digital asset initiatives, and more importantly, where we are in the transition from launch readiness to real-world adoption and scale. Over the last few months, we have crossed an important threshold. It is no longer a question of if The Western Union Company will be active in digital assets. It is now how fast we can scale. At the foundation of our strategy is USDPT, our U.S. dollar-backed stablecoin. USDPT is now in its final stages of readiness and is expected to go live next month.

This milestone represents the completion of a significant build across issuance, treasury operations, settlement, and controls, and positions us to operate a native digital dollar embedded within The Western Union Company's global network. As we approach launch, adoption is beginning to form around the coin. We are working with a growing set of exchange partners to support access, conversion, and distribution across key regions while also engaging with banks and financial institution partners in priority corridors to enable the direct settlement and treasury use cases. Together, these relationships position USDPT as a foundational asset for scaling digital payments and settlement across our platform.

Building on that foundation is our Digital Asset Network, or DAN, which operationalizes USDPT and other digital assets across The Western Union Company's physical and digital footprint. We are pleased to report that we plan to launch our first partner on the DAN network next week, with additional partners coming online shortly thereafter. Through DAN, millions of wallet users will be able to move from digital into local currency using The Western Union Company's retail network, with an experience that is simple for customers and familiar for our agents.

Since announcing our initial partners, we have seen strong inbound interest, and our focus now shifts to launching and scaling, onboarding new partners, expanding corridor coverage, and driving volume as the network grows. Importantly, DAN is not a point solution. Our partner pipeline represents tens of millions of crypto wallets globally, creating a powerful distribution channel that brings digital asset users directly into The Western Union Company's retail and digital network, solving an industry-wide issue of ramping from crypto to cash as a safe and effective utility. Finally, extending USDPT and DAN directly to consumers, we are preparing to launch our U.S. dollar StableCard later this year.

This product allows customers to hold value in stablecoin form and spend globally wherever card acceptance exists, bringing digital dollars into everyday commerce. The StableCard is particularly compelling in inflation-sensitive markets where customers want dollar-denominated value with immediate practical utility. We expect to begin rolling this out across dozens of markets with an initial wave targeted for later this year. Over time, this card will be a consumer-facing expression connecting USDPT, digital asset retail customers, and global spending into a single integrated, easy consumer experience. Taken together, USDPT, DAN, and StableCard operate as a connected ecosystem. With launches imminent, partners coming online, and early transactions beginning to flow through the network, we are firmly now in execution mode.

The focus ahead is scaling, expanding adoption, increasing velocity, and embedding digital assets more deeply into The Western Union Company's core money movement platform. This is an exciting time for the company, and I look forward to updating you on our successes in the coming quarters. In conclusion, we enter the remainder of the year focused on disciplined execution and long-term value creation. We are continuing to modernize our platform, accelerate our efficiency programs, expand our digital capabilities, and optimize our global network to better meet the evolving needs of our customers. While we remain mindful of the macroeconomic uncertainty and competitive dynamics, our priorities are clear: drive sustainable revenue growth, improve operating efficiency, and deliver strong cash flow.

We believe the actions we are taking position us well for the future and, as always, we are committed to maintaining our financial discipline while returning value to shareholders. I want to thank our nearly 10 thousand strong colleagues around the world who are working diligently every day to accelerate our Beyond strategy. I will now turn the call over to our CFO, Matthew Cagwin, to discuss our financial results in more detail. Over to you, Matthew.

Matthew Cagwin: Thank you, Devin, and good morning, everyone. I am going to walk you through our first quarter 2026 financial results and our 2026 full year outlook. In the first quarter, GAAP revenue was $983 million, which on an adjusted basis was down 1%. The decrease was driven by a continued slowing of our Americas retail business, offset by growth in Consumer Services and Branded Digital, which came in at 33% and 6%, respectively. Our expectation is Q1 will be the lowest growth rate of the year, due to the benefits of the Intermex acquisition, our new agent wins, accelerated Branded Digital revenue growth, and the launch of our digital asset strategy Devin just spoke about. Adjusted operating margin was 13%.

As we signaled last quarter, we believe that Q1 2026 would be a lower margin quarter due to several factors. Those factors include a lack of vendor incentive payments, which we expect to receive in future quarters this year; higher costs associated with our new agent signings; a foreign currency loss; and the seasonal dynamics associated with our Travel Money business, which has lower fixed cost coverage in the first quarter of the year. As stated, many of these margin pressures are not expected to repeat in future quarters, and a few are expected to reverse.

In addition, we expect to see a meaningful benefit from our cost efficiency program in the back half this year, driven by the Intermex synergies and lower vendor and labor costs, which will benefit from process optimization as well as the utilization of artificial intelligence. Adjusted EPS was $0.25 in the current quarter. Adjusted EPS in the current period was affected by the lower operating profits that I just discussed, as well as a higher tax rate, partially offset by fewer shares outstanding. Our adjusted effective tax rate in the quarter was 15% compared to 10% in the prior year. The increase in our adjusted tax rate was primarily due to discrete benefits in the prior year period.

Now turning to Consumer Services, which contributed 14% of total revenue in the quarter. First quarter adjusted revenue was up 33%, driven by the expansion of our Travel Money business and growth in our consumer bill pay business. As a reminder, we are lapping the acquisition of Eurochange on April 1, but remain excited about the organic growth, which was up double digits in the first quarter. Looking ahead, we are actively working to further expand our Consumer Services capabilities in line with our Beyond strategy. The Intermex acquisition strengthens our retail reach in The Americas and introduces 6 million new customers to our broader product ecosystem.

In addition to that, the launch of USDPT stablecoin, StableCard, and our Digital Asset Network also opens up multiple new revenue streams, which we believe will help accelerate future growth. As you know, Travel Money has grown from a small business just a few years ago to what we expect to be a $150 million business this year. We are applying the same approach of leveraging our brand, our global footprint, and our execution capabilities to the next generation of consumer products and look forward to seeing similar results. We believe the combination of organic expansion, inorganic activity, and digital innovation gives us a durable path to double-digit growth in this segment for years to come.

Now transitioning to our Consumer Money Transfer, or CMT, business. CMT transactions were slightly positive in the quarter relative to a year ago. This was driven by a robust Branded Digital business that grew transactions 21%, offset by the continued slowdown in our retail businesses led by The Americas. CMT adjusted revenue was down 6%, which continues to reflect the challenging industry backdrop that we have been navigating over the past several quarters. U.S. immigration policy uncertainty remains a meaningful headwind, although the comparisons get a lot easier in the second quarter, as we saw the U.S. retail business down double digits in the second quarter of last year.

We remain optimistic that the worst is behind us, with North America and LATAM CMT adjusted revenue growth improving 300 and 500 basis points versus the fourth quarter of last year. In the first quarter, our Branded Digital business grew adjusted revenue by 6% with a 21% increase in transactions. This marks the tenth consecutive quarter of solid revenue growth. The Middle East continues to be one of our largest growth regions, driven by our new partner wins that we discussed last year. As we have flagged in the past, these are primarily account-to-account transactions with lower RPT than our licensed business, so the gap between transactions and revenue growth will remain elevated as we continue to ramp these partners.

Account payout transactions continued their strong momentum, growing over 45% in the quarter, which is our strongest quarterly growth that we have seen in the past four years. As Devin highlighted, we recently closed on acquisitions in Mexico and Singapore—both are wallet businesses—and we are excited about the opportunity ahead as we will become more digital in those regions with those acquisitions. Now turning to our retail business. Overall, the performance of our retail business was up slightly on a transaction basis and more meaningfully better on a revenue basis. We continue to see softness in The Americas, but it is improving, as I mentioned earlier, and Q2 gets a lot easier from a comparison perspective.

We believe there are numerous compelling opportunities for our retail business to recapture share, and the acquisition of Intermex strengthens our ability to do so. By adding about 10 thousand new U.S. agent locations with deep roots in the key Latin America corridors, Intermex expands our retail footprint precisely where we need it most, which strengthens our ability to serve our customers in the United States. In addition to Intermex, we continue the rollout of our new agent wins that we announced last quarter. We have now launched three of the four agents, with the German Post going live last Friday, and the Canadian Post expected to go live later this quarter.

As a reminder, we expect these new agent relationships to add roughly $100 million in revenue once they are fully rolled out, which is expected to occur over the next few quarters. We are excited about the opportunities in front of us for retail and look forward to executing against the opportunities as we work to strengthen our retail business. Now turning to our cash flow and balance sheet. We generated $109 million in operating cash flow in the first quarter. This was down 26% versus last year, driven by the lower operating profit that we discussed earlier. As expected, first-quarter CapEx was $47 million, up year-over-year driven by higher agent signing bonuses.

As discussed previously, we remain committed to strategically investing in key areas of our business while also aligning our agent compensation to performance. We continue to maintain a strong balance sheet and cash flow, with cash and cash equivalents of $900 million and debt of $2.6 billion. Our leverage ratios were 2.8 times and 1.8 times on a gross and net basis, which we believe provides us ample flexibility for capital returns or potential M&A while maintaining our investment grade credit rating. As a reminder, we will fund the Intermex acquisition with a delayed draw bank facility that we entered into in January.

As a result, we expect our debt to EBITDA ratios to be elevated above historical levels for the 12 to 18 months post-closing. In the quarter, we returned over $120 million to our owners via dividends and stock repurchases. Now moving to our 2026 outlook, which assumes no macroeconomic changes and no significant impact from the conflict in The Middle East. Based on everything we know today, we are reaffirming our guidance, which includes our adjusted revenue outlook for 2026 of 6% to 9% revenue growth, inclusive of the Intermex acquisition, which we continue to expect to close in the second quarter of this year.

And our adjusted EPS for the full year, we believe, will be between $1.75 to $1.85. We expect Q2 EPS to be similar to last year, and then to accelerate as we move into the back half of the year, driven by higher revenue associated with an improving remittance backdrop, new agent wins, and a seasonally stronger period for Travel Money combined with the accelerating pace of our operating efficiency program, and the benefits from some of our Q1 headwinds that we expect to reverse or not repeat in future quarters. Beyond the near-term efficiency program, we do see meaningful long-term opportunities from two additional initiatives.

First, the implementation of AI has the potential to significantly improve efficiency for our business. And second, our stablecoin infrastructure, which we believe has the potential to reduce settlement costs by replacing the legacy correspondent banking rails with a more efficient on-chain alternative. Thank you for joining the call, and operator, we will take your questions now.

Operator: We will now open the call for questions. We will pause momentarily to compile the Q&A roster. As a reminder, each person is allowed one question with one follow-up question. All participants will be in listen-only mode. Our first question comes to us from William Alfred Nance at Goldman Sachs. Please go ahead.

William Alfred Nance: Hey, guys. Thank you for taking the question. I want to come back to some of the moving pieces in margins because it seems like that was the primary driver of the lower EPS this quarter. If I am hearing you right, it sounds like you have got incentive timing in there, you have got some vendor payments, and there is the seasonality of Q1 around the Travel Money business. So just relative to expectations, can you help delineate what actually drove things below expectations versus some of these items which are more timing in nature? And on the FX remeasurement, can you size that because I imagine that was probably one of those items?

Matthew Cagwin: Hey, Will. Thanks for joining the call this morning. Let me just dimensionalize a little bit for you. About 50% of the decline year-over-year is driven by things that we anticipated when we had our call two months ago. Those are things like the vendor incentives, which we talked about happening last year in Q1, but we anticipate happening over Q2, Q3, and Q4 this year—just phasing it when we are actually using it. Eurochange came in with fixed cost coverage dynamics in Q1—we knew that would be an impact. A lot of employees, some buildings, things of that nature, and their revenue and profit are higher in Q2, with a little bit in Q3 and Q4.

So we knew that was going to happen. And then costs associated with the strategic partners—we anticipated that would be ramping, spending a fair bit of tech time and signing bonus amortization, other costs associated with that. So that was all anticipated and talked about on the call last time. The two items that were not anticipated when we met eight weeks ago were the FX loss—it is multiple pennies of EPS, and it is just timing. Over the last ten years, we have had two or three times where it has been large, but we have a little bit of gains and losses every quarter; this was a bigger item, a little bit of a surprise here in March.

And then the other item is our dual track got dislocated. We have been managing very carefully for the last four years the ability to manage two things: one is how we continue to maintain and grow our business while reducing costs on our legacy back book, while investing in the future. As you probably remember from our first Investor Day, we talked about a cost redeployment program. We did a great job of matching up the costs in our dual track.

We got a little dislocated this quarter on the pace of investments on our digital asset strategy, investing in some of our other digital assets and replacing platforms, relative to how much cost we could pull out elsewhere in the business. As Devin talked a minute ago, we have doubled down on that in the last couple of weeks, and we see a path to accelerate that both with the Intermex business, the strength of AI, and process improvement, which is why we felt comfortable keeping our guidance where we were.

William Alfred Nance: Got it. That is helpful. And a quick one around the conflicts in The Middle East—can you provide a little color on what you are seeing with money transfers into and out of that region, and how that could evolve over the coming months, acknowledging the uncertainty?

Devin McGranahan: We have seen a mixed response in The Middle East, and this is typical of our business and the diversification of our business. We have seen a noted decline, as you would expect, of travel from Europe to The Middle East, which had some impact on our Travel Money business, particularly in the U.K. in the first quarter, which exacerbated the fixed cost coverage issues that Matthew talked about. So fewer people are vacationing in Dubai, and that has an impact on our Travel Money business. However, the opposite is also true—in the early times of a conflict like this, many people move to move money out of the region.

And so we have actually seen a moderate acceleration of outbound remittances from The Middle East. Historically, we have seen similar patterns that then revert if the conflict remains extended for some period of time, where there is less migration into the region, fewer economic opportunities, and thus the overall volume of outbound remittances begins to shrink. I think we are in the early stages of this conflict. We see mixed results in our business based on the differences of the businesses, and we are keeping a close eye on how this develops over time.

Like all, we wish for a quick resolution so that we can return back to normal course and speed, particularly in our business in The Middle East, which, as you can see, is becoming a strong driver of our financial performance, particularly in digital. I want to come back briefly on Matthew's comment about the dual track and the quarter. We are very excited about the things that we are investing in, whether that be digital assets, the rollout of digital wallets in multiple new countries around the world, or the signing of new partners.

The team has done an exceptionally good job over the last 24 to 36 months of managing the cost equation while we invest for the future. This is a strength of the team. Our ability to get back on track, I remain very confident of, and the team's ability to accelerate reducing the costs in parallel with investing for the future is where we are going to be for the rest of the year.

Operator: Our next question comes to us from Tien-Tsin Huang at J.P. Morgan. Please go ahead.

Tien-Tsin Huang: Thanks a lot. Good morning. Building on that, Devin, and your confidence around the dual track pacing issue not repeating itself—on accelerating the efficiency program, is there execution risk there? It does not sound like the AI savings is a big part of that, but you are also launching wallets and the digital asset initiatives, and absorbing acquisitions including Intermex. How are you balancing all of that with the second half EPS acceleration you reaffirmed?

Devin McGranahan: Thanks, Tien-Tsin. Of course there is always execution risk, and what I was highlighting is the team has a pretty good track record over the last couple of years as we implemented the prior $150 million program and invested in the Beyond digital platform and in building out the Travel Money business. This is a known muscle and skill for the team, so I feel confident that we can continue to flex it. We got a little out of line with the timing in the quarter, but think about the program as three things. One, there is the operating model efficiency.

In my public comments, I talked about how we are regionalizing that operating model—that reduces corporate overhead and some of the centralization. We are well down the path of that and will continue to strengthen our regional operating model in The Americas, in Europe, and in Asia Pacific across our three big regional operating centers. The second is, as we are going on this journey—and we have line of sight on these things already—we are sunsetting legacy platforms.

As we move to the Beyond platform, as we move to the next-generation point of sale, as we make the data infrastructure all cloud-based and then Snowflake, that allows us to just shut stuff down, which we have got clear line of sight and roadmap on. And then the third is AI is starting to take effect. We are starting to see broader applications of it across our operations, across our tech development, and in some cases even into our marketing functions. We think that will accelerate, and the most important thing is building momentum around those skills within people of the company.

As people adopt the skills and the tools that are being developed, we see that in the productivity gains, and then, frankly, we just need to hire fewer people as the tools replace the work. I feel good about it, and I know the team can execute.

Tien-Tsin Huang: That is clear. Thanks. As a follow-up, on the acquisitions Lana and Dash—are these beachheads to be portable into neighboring countries around Mexico and Singapore? Should we expect more wallet acquisitions?

Devin McGranahan: Think about it this way—we have solidified what we call the Beyond platform. The most important part of it is a services layer that connects into our infrastructure for core payment processing, core risk and compliance, and moving across our funds-out network. Into that services layer, we can plug different experiences in different countries around the world so that we can then create a seamless network of these wallets. That enables us to accelerate through acquisitions by buying properties that already exist and plugging them into the Beyond framework, which then takes advantage of our payout networks.

In Singapore with Dash, the team is already hard at work moving from Singtel Dash’s payment payout network, which was, as you would imagine, significantly subscale to ours and had different economics because they depended on a lot of intermediary players to move the money around the world. We are going to turn that off and plug it right into The Western Union Company's APN network, which will have both consumer advantages and, importantly for Matthew and the team, economic advantages from reducing payout costs. The Beyond framework and platform enable us to more rapidly expand our digital wallets both organically—like we are doing in Australia and the Philippines—but also inorganically—like we are now doing in Mexico and Singapore.

The key is finding those assets we can acquire at reasonable valuations and thus enable us to expand faster than we can just organically. When those opportunities present themselves, we will take advantage of them.

Matthew Cagwin: And if I just build a little bit on what Devin said—when we looked at these wallets, I wish there was a global license you could buy and do this everywhere. We do not have licenses everywhere in the world we would like to be today for our wallet strategy. By buying in Mexico and in Singapore, that brought licenses—step number one. Two is we always look at the tech stack to see if it brings something to us. As Devin mentioned, we feel pretty good about where we are now with our Beyond platform. Back when we started talking to Dash, we were not in the same place.

We have made evolutions and learnings and gotten stronger over the last four years. So we were looking at them for technology then; today that is less paramount. The other thing we always look for is people. When you can buy a company that brings in really strong tech talent with local knowledge that can help you accelerate, we get excited. Dash brought a good concentration of operations folks, tech folks, and market presence folks. We can overlay that with our great payment rails and brand recognition around the world, and then start creating wallet-to-wallet payout between Singapore, our wallet in Australia, and other wallets we are taking live.

We are building out an infrastructure within Asia where you can start doing wallet-to-wallet transactions. Very excited about both of them. It might have been one of the longest regulatory review processes of my life, but we are excited to have them as part of the family.

Operator: Our next question is from Vasundhara Govil at KBW. Please ask your question.

Vasundhara Govil: Hi. Thanks for taking my question. On the stablecoin launch, could you talk through the go-to-market strategy? Are you targeting users in specific corridors at first, and what milestones should we track over the next 12 months?

Devin McGranahan: Think about it in three tranches. The first, which is the launch of USDPT, is not initially consumer-facing. We are launching it as an alternative to the interbank SWIFT settlement network that we use today to settle with our agents. We are launching in a couple of countries with some important agent partners in the next quarter to begin moving and settling between us and our agents on-chain in real time at much faster speeds, including weekends and holidays, where we currently have capital tied up because the traditional banking system only settles Monday through Friday and takes T+2, T+3 in some parts of the world.

That is launch number one—modernizing our settlement platform and money movement between us and our major partners. Launch number two, which will happen next week, is the Digital Asset Network. We are enabling digital asset wallet companies around the world to have The Western Union Company as a funds off-ramp or payout option for their wallet customers. It opens us up to a population of tens of millions of native digital customers who own digital assets in wallets around the world, and they can pay out those digital assets in fiat currency across The Western Union Company retail network.

We have a pipeline of partners that have signed, more in the pipeline, and we are implementing them so their customers have that option—the first goes live next week. The third, which is consumer-facing, is our StableCard. We are launching in a couple of countries in the next 90 to 180 days. That will allow us to offer, as a payout option to The Western Union Company customers, a stablecoin-backed card as an alternative to payout to account or cash payout. Consumers in those countries will be able to select a The Western Union Company Visa StableCard to receive their remittance payout.

You can look forward to seeing consumers having that as an option in a number of countries before the end of the year.

Vasundhara Govil: That is super helpful. And, Matthew, on margins, how should we think about the cadence for the rest of the year?

Matthew Cagwin: We have now provided our outlook tax range and interest is pretty fixed, so you can back into margin from my comment that Q2 EPS should be in the ballpark of last year and then accelerate from there. You can derive a margin trajectory from that because we have largely framed the below-the-line items.

Operator: Our next question comes to us from Bryan Keane at Citi. Please go ahead.

Bryan Keane: Hi, guys. On digital, adjusted revenue stayed at 6% despite the surge in transaction growth due to The Middle East. If you separate out The Middle East surge, what happened to the relationship of adjusted revenue to digital transactions?

Devin McGranahan: As we talked about on the Q4 call, we had seen market trends toward more aggressive new customer offers, particularly coming out of the lows of last summer. We probably followed those to the detriment of revenue to maintain new customer acquisition. What you are seeing is the impact of that program, along with the shift to payout to account and the shift to lower RPT corridors. It is both mix—payout to account grew 45% in the quarter, which is a material acceleration for us—and mix toward lower RPT corridors like India where we are doing better than we historically have.

And the new customer acquisition strategy—which we are moving back from a bit—had very aggressive new customer offers that impacted revenue; that is in the mix as well.

Bryan Keane: Thanks. And on AI, can you quantify what AI could do to some of the back-office costs for The Western Union Company?

Devin McGranahan: We believe it can have significant impact. A lot of our processes and historical support infrastructure will benefit from modernization. The most important thing is the pace at which we have been able to do that. We have moved a lot of the data to the cloud, started sunsetting systems, and started automating. Historically, it has been throttled by how much tech development you can do and how fast you can ramp down legacy systems and ramp up new systems.

For a company like ours, the ability to accelerate the move from the old, often labor-intensive systems and platforms that support operations, customer service, risk and compliance, treasury, and accounting is the elixir that allows a large legacy company to move quicker on this modernization journey. That is what the team is focused on—accelerating the path we already knew we needed to go down—getting off legacy processing and support infrastructure at a much faster pace, which then takes away a lot of the labor required to support, maintain, and operate them.

We are making good progress, and that is part of why we believe we can accelerate our most recently announced operational efficiency improvement by at least a couple of years—we are starting to see the green shoots.

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

Darrin Peller: Thanks. I want to go back to expanding the retail footprint. In the past you discussed paring down locations and being more efficient. Help us understand the strategy now—where is the real opportunity? And how does this dovetail with more wallets, more digital, and more international on the digital side? It feels like a lot to do in one period—more digital, more white-label partners, stablecoin—so would love your thoughts on execution.

Devin McGranahan: You can think about the footprint as a twofold strategy, both of which are reasonably well controlled. One, which we have talked about at length in the last two or three calls, is we have ramped up and succeeded in signing several significant retail partners—Kroger going exclusive, the Deutsche Post, the Canada Post. These will expand our retail footprint, but most importantly, they are competitive takeaways. They allow us to expand our customer base in retail through partners that on any given one will have several thousand locations up to as many as 10 thousand locations.

That strategy of signing material partners and being the company that is the partner of choice for large retail networks is well underway, and as Matthew talked about, we see significant revenue gains in the coming months from the implementation of those partners. The second is more controlled distribution that supports the digital strategy—our owned locations and concept stores. It is a small part of the distribution today, a couple thousand, but it allows us to control the experience. We can introduce people to the digital products and wallets. We can cross-sell Travel Money, bill pay, and prepaid.

Our owned retail network in New York City, for example, has the strongest performance on our prepaid as the remittance tax came in, because our own employees are helping customers understand the value of the prepaid product with the remittance. Those two dimensions are really the strategy.

Darrin Peller: One follow-up on timing—when should we expect to see tangible benefits from the digital wallet partnerships, the wallet launches, and the stablecoin strategy, both on the card side and the network side?

Devin McGranahan: We are expecting real benefits before the end of this year. Stablecoin products and services are being launched as we speak. The wallets are ramping. We will start to see the benefit of Singtel probably in the second quarter. As we launch in Mexico, Australia, and the Philippines, we believe the value will start to accumulate, which should all happen before the end of the year.

Matthew Cagwin: If I can just build on Devin's point real quick—working through the three topics on stablecoin, some are much easier than others. The StableCard, with the partner and rails we are using, we will be able to get into dozens of locations relatively rapidly versus doing onesies and twosies. The DAN network leverages our current rails and normal network, so that can be rolled out broadly and quickly. The one that is more of a grind is getting the right partners and the pay-in, payout for using USDPT for settlement processes. We are working on a few countries right now and hoping, as that progresses, the world will evolve and help us accelerate.

That one requires more push from us, whereas the first two have the ability to get more broad-based more quickly than we normally do.

Operator: Thank you for joining The Western Union Company first quarter 2026 results conference call. We hope you have a great day.