What does the Dash acquisition tell us about Western Union’s evolution?
Western Union recently announced its acquisition of digital wallet company Dash, and has also published its Q3 2024 results. We look at what the deal tells us about the company’s ongoing digitalisation and how this is bearing out in its earnings.
Although Western Union remains a dominant player in the money transfers space, competitors – including Wise, Euronet, and Remitly – have been closing the gap. Western Union had a mixed performance in Q2 2024, with 9% YoY decline in revenue growth rates, a near three percentage point YoY decrease in operating margin and a -16% drop in EBITDA.
This downturn has continued in the company’s recently reported Q3 24 earnings, with a -6% YoY decline in revenue, a 3.3 percentage point YoY decrease in operating margin and an 8% downturn in EBITDA.
There were bright spots however: Western Union saw growth in its digital money transfers space with a 13% YoY increase in its Branded Digital transactions for Q2 2024 and a 15% increase in Q3 2024. This trend corresponds to Western Union’s Evolve 2025 strategy, which aims to reinvent the company as a digitally-led financial services provider.
Last week, Western Union announced its acquisition of Singapore-based digital wallet company Dash, a significant move given Western Union’s modest history of acquisition (this is WU’s first since 2022 and only its second since 2011). In this report, we review how Western Union’s results for Q3 2024 and how its acquisition of Dash reflects the company’s digital strategy.
Topics covered:
- Western Union’s results in Q3 2024
- Western Union acquires Singapore’s Dash
- Evolve 2025: Sandbox model in Singapore
- Implications for profitability
Western Union’s results in Q3 2024
In Q3 2024, Western Union reported a sequential slowdown in revenue growth rates, with total revenue of $1.036bn. This represents a 6% YoY decrease, continuing the downward trend from Q2 2024. The company also reported a 8% YoY decline in adjusted EBITDA to $240.5m.
Western Union’s consumer money transfers segment particularly saw a decline in revenue growth, with a 9% YoY decrease. In the earnings call, Western Union’s president Devin McGranahan cited “political events” as major headwinds, with disruptions in migration flows among LatAm countries. Western Union claimed that these macro conditions could have negatively impacted its consumer money transfers revenue.
In Q3, Western Union’s Branded Digital segment also saw revenue growth of 8%, with digital transactions up 15%. In Australia, the Branded Digital business reported 25% revenue growth, having been one of the initial countries to see Western Union’s new digital solution deployed in 2022. The Branded Digital business remains the primary driver of Western Union’s growth this earnings season, marking six consecutive quarters of double-digit transaction growth.
Western Union acquires Singapore’s Dash
Western Union recently expanded its digital capabilities with the acquisition of Singapore-based mobile wallet company Dash, announcing a conditional agreement on the purchase in late October.
Dash provides a digital wallet service in Singapore, enabling mobile users to pay, remit, save, invest and insure payments. Dash also provides access to retail locations for funding digital wallets and sending remittances in Singapore and across the APAC region. The company was launched in 2014 and now has more than 1.4 million users. This makes it considerably smaller than some of its regional competitors, such as Singapore’s GrabPay, which has over 100 million users.
The acquisition could signal Western Union’s shifting interests towards the APAC region, which has typically only accounted for 5-6% of C2C revenue for the company. Given Dash’s remittance links to several South Asian nations, it may also serve to shore up the company’s MEASA region, which has dropped from 23% of C2C revenues in Q3 23 to 17% in Q3 24.
Western Union’s acquisition of Dash stands as a meaningful move, given the company has completed only three key acquisition deals since 2009. Notably, Dash is the second digital wallet company that Western Union has acquired, following Te Enviei in 2022. However, no financials were disclosed for the deal, meaning it is unlikely to be material compared to the overall value of the company.
Evolve 2025: Sandbox model in Singapore
In October 2022, Western Union launched the Evolve 2025 strategy, a business plan designed to return the company to growth through its retail and digital remittance segments. Evolve 2025 outlines increased investments in digital platforms and marketing, as well as an expansion of Western Union’s geographical footprint.
One of the main goals is to “accelerate digital,” creating digital-first customer experiences. The acquisition of Dash could strengthen Western Union’s ability to build account-based relationships, to expand its reach in remittance markets.
Western Union has also chosen Singapore as one of its subsidiary Vigo locations, which allows customers to send money directly to bank accounts or pick it up at stores. Western Union’s Lucky Plaza location in Singapore processed over 10,000 transactions in September, ranking it among the busiest company-owned stores.
However, despite the developments in Singapore, Western Union’s activities remain limited in other parts of the APAC region. This raises questions as to whether the sandbox model implemented in Singapore will be applied on a broader scale.
Implications for profitability
From a profitability perspective, Western Union still could not achieve sustained growth in Q3 2024, with a 3.3 percentage point YoY decrease in operating margin. Western Union particularly suffered from the operating margin in its consumer services segment, which dropped from 27.5% in Q3 23 to 8.7% in Q3 2024.
However, Western Union’s consumer money transfers segment reported an operating margin of 20.2%, a 1.2 percentage point increase on a YoY basis. Western Union also saw a relatively small increase in its adjusted earnings per share with $0.46 in Q3 2024, reflecting 7% YoY growth.
With the acquisition of Dash, it is clear that Western Union wants to continue to digitise its ecosystem. However, it remains to be seen how much of a top-level impact this has and on whether Western Union will truly look like a different player come 2025.
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