- WU
- IMXI
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Key insights: International Money Express, an international remittance company and $500 million acquisition target for Western Union, reported a 18% year-over-year decline in revenue in the second quarter, further calling into question whether the purchase holds the same value as it did a year ago when the deal was first announced.
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What’s at stake: Western Union’s retail remittance business has also been under pressure from immigration crackdowns and digital remittance companies.
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Forward look: Western Union CEO Devin McGranahan said the company is modeling for the deal to close on Sept. 1. The companies are awaiting approval from the New York Department of Financial Services.
Retail remittance companies are under fire from several directions, including digital remittance companies and lingering impacts from immigration crackdowns.
International Money Express, an Miami-based remittance company and $500 million acquisition target for Western Union, posted a 18% year-over-year decline in revenue to $131.2 million for the second quarter following a 15% decline in revenue during the first quarter, further calling into question whether the purchase, which was announced a year ago, still holds the same value.
Those declines come despite signs of broader stabilization in the core U.S.-Mexico corridor as International Money Express, also known as Intermex, loses “significant share” to digital remittance challengers
“Intermex’s second quarter results show accelerating market share erosion, raising further questions about the risk of [Western Union] ‘doubling down’ on a retail business that is in free fall,” Scharf said. “Top- and bottom-line results significantly underperforming already-reduced targets and demonstrating an alarming level of deterioration.”
Western Union has also faced headwinds due to increased popularity of digital remittance platforms and immigration crackdowns in the U.S. Revenue of $1 billion in the second quarter was down 1% from the same period last year and just shy of Wall Street’s expectations, and its share prices are down 14% since the Intermex deal was announced a year ago.
“We continued to face significant margin pressures due to the ongoing slowdown in the retail business in the Americas, higher agent commissions and the continued acceleration of our digital payout to account business,” Western Union CEO Devin McGranahan said during the company’s second-quarter earnings call on July 30.
