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Segments
 12 Months Ended
Dec. 31, 2022
Segment Reporting [Abstract]  
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 Branded Digital transactions in its regions. By means of common processes and systems, these regions, including Branded Digital, 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. The first closing occurred on March 1, 2022, the second occurred on December 31, 2022, and the third closing is expected in the second quarter of 2023. 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.

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 overhead expenses, are allocated to the segments primarily based on a percentage of the segments’ revenue compared to total revenue. Effective January 1, 2022, the Company stopped allocating corporate costs to its Business Solutions segment, given its agreement to sell this business, as discussed further in Note 5.
•
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, 2022, 2021, and 2020 (in millions):

 

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Revenues:

 

 

 

 

 

 

 

 

 

Consumer-to-Consumer

 

$

3,993.5

 

 

$

4,394.0

 

 

$

4,220.0

 

Business Solutions(a)

 

 

196.9

 

 

 

421.8

 

 

 

356.1

 

Other

 

 

285.1

 

 

 

255.0

 

 

 

258.9

 

Total consolidated revenues

 

$

4,475.5

 

 

$

5,070.8

 

 

$

4,835.0

 

Operating income:

 

 

 

 

 

 

 

 

 

Consumer-to-Consumer

 

$

765.1

 

 

$

977.6

 

 

$

924.7

 

Business Solutions(a)

 

 

58.5

 

 

 

95.5

 

 

 

24.4

 

Other

 

 

100.8

 

 

 

50.0

 

 

 

55.0

 

Total segment operating income

 

 

924.4

 

 

 

1,123.1

 

 

 

1,004.1

 

Restructuring-related expenses (Note 4)(b)

 

 

—

 

 

 

—

 

 

 

(36.8

)

Russia/Belarus exit costs(c)

 

 

(10.0

)

 

 

—

 

 

 

—

 

Business Solutions exit costs(c)

 

 

(7.7

)

 

 

—

 

 

 

—

 

Operating expense redeployment program costs(d)

 

 

(21.8

)

 

 

—

 

 

 

—

 

Total consolidated operating income

 

$

884.9

 

 

$

1,123.1

 

 

$

967.3

 

 

(a)
On August 4, 2021, the Company entered into an agreement to sell its Business Solutions business to the Buyer, which will be completed in three closings, the first of which occurred on March 1, 2022. The second occurred on December 31, 2022, with the third expected to occur in the second quarter of 2023. The operations of the Business Solutions business to be sold in the third closing will continue to be included in Revenues and Operating income after the second closing. However, between the first and third closings, the Company is required to pay the Buyer a measure of profit from these operations, while owned by the Company, adjusted for other charges, and this expense is recognized in Other income/(expense), net in the Consolidated Statements of Income.
(b)
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 year ended December 31, 2020, the Company incurred $36.8 million of expenses 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.
(c)
Represents the exit costs incurred in connection with the Company's suspension of its operations in Russia and Belarus and the divestiture of the Business Solutions business, primarily related to severance and non-cash impairments of property and equipment, an operating lease ROU asset, and other intangible assets. While certain of the expenses are identifiable to the Company's segments, the expenses are not included in the measurement of segment operating income provided to the CODM for purposes of performance assessment and resource allocation. These expenses are therefore excluded from the Company's segment operating income results.
(d)
Represents severance, non-cash impairments of operating lease right-of-use assets and property and equipment, and other expenses associated with the Company's program to redeploy expenses in its cost base through optimizations in vendor management, real estate, marketing, and people costs. The expenses are not included in the measurement of segment operating income provided to the CODM for purposes of performance assessment and resource allocation. These expenses are therefore excluded from the Company’s segment operating income results.

 

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Depreciation and amortization:

 

 

 

 

 

 

 

 

 

Consumer-to-Consumer

 

$

176.6

 

 

$

181.6

 

 

$

178.5

 

Business Solutions

 

 

—

 

 

 

16.1

 

 

 

36.1

 

Other

 

 

7.2

 

 

 

10.5

 

 

 

11.0

 

Total consolidated depreciation and amortization

 

$

183.8

 

 

$

208.2

 

 

$

225.6

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

 

Consumer-to-Consumer

 

$

198.8

 

 

$

192.3

 

 

$

133.5

 

Business Solutions

 

 

0.2

 

 

 

5.2

 

 

 

10.3

 

Other

 

 

9.2

 

 

 

17.1

 

 

 

13.0

 

Total consolidated capital expenditures

 

$

208.2

 

 

$

214.6

 

 

$

156.8

 

 

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, 2022, 2021, and 2020, 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,

 

 

 

2022

 

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

 

United States

 

$

1,575.1

 

 

$

1,702.0

 

 

$

1,678.4

 

International

 

 

2,900.4

 

 

 

3,368.8

 

 

 

3,156.6

 

Total

 

$

4,475.5

 

 

$

5,070.8

 

 

$

4,835.0

 

Long-lived assets:

 

 

 

 

 

 

 

 

 

United States

 

$

69.7

 

 

$

82.0

 

 

$

100.4

 

International

 

 

40.6

 

 

 

53.7

 

 

 

50.0

 

Total(a)

 

$

110.3

 

 

$

135.7

 

 

$

150.4

 

 

(a)
As of December 31, 2022 and 2021, Long-lived assets in International include Assets held for sale of $0.7 million and $4.9 million, respectively, and as of December 31, 2021, Long-lived assets in the United States include Assets held for sale of $1.4 million. These assets related to the Company's Business Solutions business, as further discussed in Note 5.