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Segments
 12 Months Ended
Dec. 31, 2021
Segments  
Segments

18. Segments

As further described in Note 1, the Company classifies its business into two segments: Consumer-to-Consumer and Business Solutions. Operating segments are defined as components of an enterprise that engage in business activities, about which separate financial information is available that is evaluated regularly by the Company’s CODM in allocating resources and assessing performance.

The Consumer-to-Consumer operating segment facilitates money transfers between two consumers. The segment includes five geographic regions whose functions are primarily related to generating, managing, and maintaining agent relationships and localized marketing activities. The Company includes Digital Money Transfer transactions in its regions, including transactions from the Company’s arrangements with financial institutions and other third parties to enable such entities to offer money transfer services to their own customers under their brands. By means of common processes and systems, these regions, including Digital Money Transfer transactions, create one interconnected global network for consumer transactions, thereby constituting one Consumer-to-Consumer money transfer business and one operating segment.

The Business Solutions operating segment facilitates payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises and other organizations and individuals. On August 4, 2021, the Company entered into an agreement to sell its Business Solutions business to Goldfinch Partners LLC and The Baupost Group LLC. See Note 5 for further information regarding this transaction.

All businesses and other services that have not been classified in the above segments are reported as Other, which primarily includes the Company’s bill payment services which facilitate payments from consumers to businesses and other organizations and the Company’s money order services. In May 2019, the Company sold a substantial majority of its United States based electronic bill payment services, as discussed in Note 5.

The Company’s segments are reviewed separately below because each segment represents a strategic business unit that offers different products and serves different markets. The business segment measurements provided to, and evaluated by, the Company’s 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 stock-based compensation and other overhead, are allocated to the segments primarily based on a percentage of the segments’ revenue compared to total revenue.
•
As described in Note 4, on August 1, 2019, the Company’s Board of Directors approved an overall plan to change the Company’s operating model and improve its business processes and cost structure by reducing its headcount and consolidating various facilities. For the years ended December 31, 2020 and 2019, the Company incurred $36.8 million and $115.5 million, respectively, related to this plan. While certain of these expenses may be identifiable to the Company’s segments, primarily the Company’s Consumer-to-Consumer segment, the expenses are not included in the measurement of segment operating income provided to the CODM for purposes of assessing segment performance and decision making with respect to resource allocation.
•
The CODM does not review total assets by segment for purposes of assessing segment performance and allocating resources. As such, the disclosure of total assets by segment has not been included below.
•
All items not included in operating income are excluded from the segments.

The following tables present the Company’s segment results for the years ended December 31, 2021, 2020, and 2019 (in millions):

 

 

 

Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

 

Consumer-to-Consumer

 

$

4,394.0

 

 

$

4,220.0

 

 

$

4,407.8

 

Business Solutions(a)

 

 

421.8

 

 

 

356.1

 

 

 

388.8

 

Other(b)

 

 

255.0

 

 

 

258.9

 

 

 

495.5

 

Total consolidated revenues

 

$

5,070.8

 

 

$

4,835.0

 

 

$

5,292.1

 

Operating income:

 

 

 

 

 

 

 

 

 

Consumer-to-Consumer

 

$

977.6

 

 

$

924.7

 

 

$

975.4

 

Business Solutions(a)

 

 

95.5

 

 

 

24.4

 

 

 

46.8

 

Other(b)

 

 

50.0

 

 

 

55.0

 

 

 

27.3

 

Total segment operating income(c)

 

 

1,123.1

 

 

 

1,004.1

 

 

 

1,049.5

 

Restructuring-related expenses (Note 4)

 

 

—

 

 

 

(36.8

)

 

 

(115.5

)

Total consolidated operating income

 

$

1,123.1

 

 

$

967.3

 

 

$

934.0

 

 

(a)
On August 4, 2021, the Company entered into an agreement to sell its Business Solutions business, as further discussed in Note 5.
(b)
Other primarily consists of the Company’s bill payment services which facilitate payments from consumers to businesses and other organizations. In May 2019, the Company sold a substantial majority of its United States based electronic bill payment services known as Speedpay and Paymap, as discussed in Note 5. Speedpay revenues included in the Company’s results were $125.4 million for the year ended December 31, 2019. Speedpay direct operating expenses were $98.2 million for the year ended December 31, 2019. Paymap revenues included in the Company’s results were $5.3 million for the year ended December 31, 2019. Paymap direct operating expenses were $2.2 million for the year ended December 31, 2019.
(c)
In the first quarter of 2020, the Company changed its expense allocation method so that its corporate data center and network engineering information technology expenses are allocated based on a percentage of relative revenue. In 2019, these costs had been allocated based in part on a percentage of relative transactions. The Company believes that an allocation method based fully on relative revenue presents a more representative view of segment profitability, as certain of the Company’s services, particularly some of its bill payment services and its money order services, have much lower revenues per transaction than the Company’s other services. Further, these technology expenses are becoming increasingly based on data storage utilized and less based on the number of transactions processed. For the year ended December 31, 2019, this change would have decreased Consumer-to-Consumer operating income and increased Other operating income by $49.6 million. Business Solutions was not materially impacted by the change in the allocation method.

 

 

 

Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

Depreciation and amortization:

 

 

 

 

 

 

 

 

 

Consumer-to-Consumer

 

$

181.6

 

 

$

178.5

 

 

$

194.5

 

Business Solutions

 

 

16.1

 

 

 

36.1

 

 

 

39.6

 

Other

 

 

10.5

 

 

 

11.0

 

 

 

23.6

 

Total consolidated depreciation and amortization

 

$

208.2

 

 

$

225.6

 

 

$

257.7

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

 

Consumer-to-Consumer

 

$

192.3

 

 

$

133.5

 

 

$

97.0

 

Business Solutions

 

 

5.2

 

 

 

10.3

 

 

 

7.7

 

Other

 

 

17.1

 

 

 

13.0

 

 

 

23.0

 

Total consolidated capital expenditures

 

$

214.6

 

 

$

156.8

 

 

$

127.7

 

 

The geographic split of revenue below for the Consumer-to-Consumer and Business Solutions segments and Other is based upon the country where the transaction is initiated with 100% of the revenue allocated to that country. Long-lived assets, consisting of property and equipment, net, are presented based upon the location of the assets.

Based on the method used to attribute revenue between countries described in the paragraph above, each individual country outside the United States accounted for less than 10% of consolidated revenue for the years ended December 31, 2021, 2020, and 2019, respectively. In addition, each individual agent or Business Solutions customer accounted for less than 10% of consolidated revenue during these periods.

Information concerning principal geographic areas was as follows (in millions):

 

 

 

Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

Revenue:

 

 

 

 

 

 

 

 

 

United States

 

$

1,702.0

 

 

$

1,678.4

 

 

$

1,896.1

 

International

 

 

3,368.8

 

 

 

3,156.6

 

 

 

3,396.0

 

Total

 

$

5,070.8

 

 

$

4,835.0

 

 

$

5,292.1

 

Long-lived assets:

 

 

 

 

 

 

 

 

 

United States(a)

 

$

82.0

 

 

$

100.4

 

 

$

173.7

 

International

 

 

53.7

 

 

 

50.0

 

 

 

62.5

 

Total(b)

 

$

135.7

 

 

$

150.4

 

 

$

236.2

 

 

(a)
Assets held for sale of $49.3 million, which primarily consisted of the Company’s former headquarters, were included in Other assets as of December 31, 2019 in the Company’s Consolidated Balance Sheets. In 2020, the Company sold its former corporate headquarters and other property and recorded an immaterial gain on the sales.
(b)
As of December 31, 2021, Long-lived assets in United States and International include Assets held for sale of $1.4 million and $4.9 million, respectively, related to the Company's Business Solutions business, as further discussed in Note 5.