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Case Study: Wmode
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Western Union Business Solutions case study featuring Wmode, a Canadian mobile technology company.

Western Union Business Solutions case study featuring Wmode, a Canadian mobile technology company.

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  • 1. CASE STUDY: WMODEBRINGING CANADIAN INNOVATIONTO A GLOBAL MARKETThe Wmode Story to fill a need shared by mobile providers in the US and aroundWmode is a Canadian mobile technology company based out of the world: to improve mobile functionality and enhance the userCalgary, Alberta, with offices in Toronto, San Francisco, and Bern, experience in new and innovative ways.Switzerland, and clients around the world. Twelve years after its foundation, Wmode’s list of top-tier clientsA leading technology service provider, Wmode’s software gives reads like a roster of industry-leading mobile giants, from US andmobile phone users the ability to interact creatively with the Canadian providers like BlackBerry, Cricket, Alltel, Rogers, andwireless internet. When the company was founded in 2000, this Verizon to their overseas counterparts.meant developing tools to help a growing global population ofmobile users download games, graphics, and ringtones; now,most of Wmode’s work is dedicated to developing apps and apps In addition to its clients in the US, Wmode has businessservices for mobile manufacturers and services providers. experience in the following countries: UK, Australia, India, Malaysia, Belgium, France, Russia, Spain, Switzerland, andWmode is one of North America’s fastest-growing companies. Panama.And as a Canadian company in an international arena, disciplinedand strategic FX risk management has been critical to the As a result of its primarily international client base, a large percentagecompany’s success. of Wmode’s revenues are in US dollars, as well as euros, pounds, and francs, while its input costs are denominated in Canadian funds.Hedging currency risk, timing the repatriation of funds strategically, In order to remain both as profitable and competitive as possible,and entering the market efficiently have provided the financial Wmode has taken pains to carefully manage its incoming repatriationfoundation for the company’s success and sustainable flows, both short-term and long-term.international growth. “Our pricing structure is three-tier,” explains Woodward. “First,Canadian Innovation in an International Industry there is the cost of integrating our software into the mobile system.As a Canadian company, Wmode lacked the proximity to deepdomestic markets that its American competitors had immediate Then there is a monthly fee for the use of the solution. And third,access to, and as Chief Financial Officer Robert Woodward there is a fee based on the number of interactions or transactionsexplains, had to look elsewhere for clients from the very beginning. that use our software. The typical contract lasts three years, the result being that each partnership generates three years’ worth ofLuckily, Wmode’s solutions and services had international appeal. revenue via three different revenue streams. And the large majorityBranching out beyond Canadian borders early on, Wmode sought of this revenue is now in USD.”
  • 2. This makes the process of repatriating Forward contracts, on the other hand,funds – converting all of Wmode’s USD lock-in an exchange rate for future delivery, WMODE:revenue back into CAD – as profitably allowing the company to exercise more COMPANY AT A GLANCEas possible crucial to the company’s control over their long-term currency costs.profitability and growth. The stronger Founded:the rate of exchange from the USD to Calgary, Alberta, Canada in 2000the CAD, the more profits Wmode takes “Since so much of our profitability depends Number of Employees: 68in. Conversely, the weaker the rate of on the rate of exchange when translating Office Locations: Calgary,exchange from USD to CAD, the less profit funds from USD back into CAD, limit orders Toronto, Bern, San FranciscoWmode makes on its foreign contracts became crucial to ensure that we were Countries Served:compared to its CAD costs. making the most of market volatility and Canada, USA, UK, Australia, trading at sustainable, even advantageous Malaysia, Belgium, France, Russia,Woodward explains that, while no amount of rates,” explains Woodward. “At the same Spain, Switzerland, Panamastrategy can completely protect a company’s time,” he says, “forward contracts allow us to Currencies Transacted:bottom line against fundamental changes extend those gains into the future, making the CAD, USD, EUR, GBP, CHFto currency price structures and long-term most of favourable market movements in themarket trends, managing risk effectively in long term. The combination of limit orders andthe short-to-medium term can potentially forward contracts allows us to harness upsideprotect margins and control costs basedon current currency market conditions. “No opportunity in the short term while exercisingone can control where markets go. But we increased control over longer terms foreign-can work proactively to protect ourselves currency costs and profits.”against negative market movements – and toseize favourable opportunities as they occur. What does that long term hold in storeWorking with a dedicated foreign exchange for Wmode? Their new San Francisco-provider in addition to our financial institution based company, AppCarousel, is focusedhas been crucial to hedging currency risk on addressing the increasing demandand harnessing intraday volatility effectively.” for quality apps and app stores for the TV world – discovering, curating, andWmodus Operandi showcasing apps for clients across CONTACT US TODAYWmode enlisted the assistance of WesternUnion Business Solutions in Calgary to the industry. AppCarousel already has Western Union Business Solutionshelp them develop and implement a foreign partnership agreements with Myriad in Canada Head Officeexchange strategy that met their business the UK and AirCloud in the US – ensuring 517 Fort Street, Victoria BC V8W 1E7needs and growth goals. the international demand for Wmode’s Toll Free: 1.888.987.7612 products continues to grow. And with it solutions@westernunion.com“As a company that was growing very their need for a supple, strategic currency business.westernunion.caquickly,” says Woodward, “we realized how risk management framework.important it was to manage our increasingexposure to currency fluctuations, as well For Woodward, more revenue generated © 2012 Western Union Holdings Inc. All rights reserved.as to ensure that we could seize favourable abroad means that the importance of FX risk Western Union Business Solutions is a division of Theopportunities as they presented themselves.” Western Union Company. Western Union acquired management is only going to become more Custom House ULC in 2009 and the global business important as Wmode continues to grow its payments division of Travelex Canada Limited in 2011.To do this, Wmode used both limit orders Services in Canada are provided by Custom House ULC US business. “Luckily,” he says, “the strategy(also known as bids) and forward contracts. (“WUBS”), a company within the Western Union Business we currently have in place is flexible enough Solutions division. that, no matter how much our foreign This brochure has been prepared solely for informationalLimit orders allow a company to request a purposes and does not in any way create any binding revenue grows, we can easily adapt.”specific exchange rate for their transaction; obligations on either party. Relations between you and WUBS shall be governed by the applicable terms andif that rate becomes available on the spot conditions. No representations, warranties or conditionsmarket, the foreign exchange provider locks it “We couldn’t ask for more from a hedging of any kind, express or implied, are made in this brochure.in for them automatically. program – or from a hedging provider.”