The Western Union Company Price & Performance (WU)

On today's call, we will discuss the company's 4th quarter and full year 2024 results, The we will take your questions. The slides that accompany this call and webcast can be found at westernunion.com The the Investor Relations tab will remain available after the call. Additional operational statistics have been provided in supplemental tables with our press release. Joining me on the call today is our CEO, Debra McGranehan and our CFO, Matt Hagwin. Today's call is being recorded and our comments include forward looking statements. Please refer to the cautionary language in the earnings release and in Western Union's filings with the Securities and Exchange Commission, including the 2023 Form 10 ks. For additional information concerning factors that could cause actual results to differ materially from the forward looking statements. During the call, we will discuss some items that do not conform to generally accepted accounting comparable GAAP measures in our earnings release attached to our Form 8 ks as well as on our website, westernunion.com, under the Investor Relations section. I will now turn the call over to our Chief Executive Officer, Devin McGranahan.

Good afternoon, and welcome to Western Union's 4th quarter 2024 financial results conference call.

We continue to focus every day on becoming the market leader in providing accessible financial services to the aspiring populations of the Our customers are inspiration we improve our products and services and position ourselves as their trusted partner. We are privileged to have over a 100,000,000 customers around the world. A base that has stabilized over the last several years. Since October of 2022, our team has been hard at work executing our EVOLVE 25 strategy, improve our value proposition, expand our product offerings, and most importantly, ensure high quality execution. Today, we reported another quarter of improving adjusted revenue growth as we continue to implement our evolved 2025 strategy, is focused on returning Western Union to sustainable profitable revenue growth. Over the last 2 years, we have driven meaningful improvements in our business and this quarter's results continue to demonstrate that our efforts are working. These results give us confidence that we are well on our way to achieving our previously stated financial objectives, as we continue to report solid transaction trends and improving adjusted revenue growth, ex Iraq. For the 4th quarter, our revenue reached $1,060,000,000 Excluding Iraq, our adjusted revenue growth was a positive 1.4% now the 3rd consecutive quarter of positive positive adjusted revenue growth.

Consumer services led the way with another strong quarter at 23% adjusted revenue growth, driven by our media network business, the expansion of our foreign exchange services, and continued growth in retail money order. Our strategy of growing beyond CMT continues to show promise and momentum. In addition, our branded digital business continued to perform well with 13% transaction growth and 8% adjusted revenue growth Adjusted earnings per share came in strong at $0.40 or up $0.03 relative to this quarter a year ago. The improving performance of our core business is readily apparent as in q4 2023, benefited meaningfully from higher revenues and operating profits from Iraq, which were not repeated in the current quarter. Matt will discuss our financial results in more detail and provide our 2025 outlook later. I have recently returned from nearly 2 weeks in Asia visiting with our local teams aligning on plans for 2025. This region is a microcosm of our larger company wide efforts. 2022, the region shrank transactions 12% and adjusted revenue 9%. In 2024, that improved to 8% transaction growth with adjusted revenue down only 3%. The turnaround in Asia is one example of why we remain confident of the trajectory we are on. Progress on our strategic agenda and still plenty of opportunity to continue to accelerate our performance.

The region has embraced our new approach to both digital and retail. On the retail distribution side, we are moving away from a heavy dependence on postal systems and master agents to a much more dynamic system with owned locations at the top of the pyramid, branded exclusive concept agents and strategics in the middle, and a broad base of independence at the bottom. For example, Singapore now has our highest performing own location network, with 7% revenue growth, and 10% transaction growth in 2024, and includes one of the single highest volume locations in the company. While I was there, I went to the opening of our first owned location in Malaysia. This trip reinforced my belief my belief around the value of having a small network of own locations. We believe there is significant opportunity in Malaysia to go after high volume retail corridors where we can win with an owned location strategy. Australia and New Zealand have seen significant growth through our independent agent network expansion. We have seen over 20% growth in agent locations since 2022, grew revenue 17% and transactions 25% in 2024. While stabilizing the retail business, the Australia team has also embraced our next generation digital platform and is now one of the best performing digital businesses in the company within 2024 revenue growth in the mid teens and transaction growth at nearly 30%.

Our team there will continue to accelerate this region in 2025 with the launch of our new digital platform two more countries, and continued expansion of our independent agent networks and owned locations the anticipated completion of the DASH acquisition, and the launch of a new digital wallet offering Australia, We expect 2025 will see the region grow both transactions and revenue positively for the first time in seven years excluding the COVID Grover. As in '20 at our twenty twenty two Investor Day, we laid out plans to showcase our retail business as the gateway to Western Union. This plan included rationalizing our footprint, enhancing our value proposition and improving the agent and customer We do not subscribe to the melting ice cube thesis that many discuss. And that we have many opportunities to grow our share. Historically, we were a share donor. But in places where we have successfully implemented our strategy, we have seen a turnaround in performance and are achieving positive revenue and transaction growth in many of these markets. We can identify the drivers whether they be short term macro effects or the incremental work that is still required to achieve our full transformation. Excluding Russia, Belarus, and Iraq, since 2022, our global retail business has seen a 500 basis point improvement in transaction growth.

We continue to fully expect that over time, our retail business will be a net positive contributor to overall company performance. As an example, our global retail originated paid out to account business grew transactions, roughly 30% last year. Highlighting the potential of the network when we have the right product and the right value proposition. Our retail business is a strategic asset for the company. Driving brand awareness, supporting a lower cost of digital acquisition, and providing a core set of customers and stores that help enable the growth of our consumer services businesses. It is now much better positioned to compete benefiting from more competitive pricing, improved agent and customer value proposition with both better experiences and improved products, and the benefit of a great brand and significant scale that few, if any others can match. It can now grow by taking share in important corridors that we have previously shied away from, because we were uncompetitive. Key opportunities for example include retail heavy corridors, like The U. S. To Guatemala The, which we estimate is a $20,000,000,000 corridor, UK to India, a $10,000,000,000 corridor or UAA to The Philippines a $1,000,000,000 corridor. These are important corridors which we believe we currently have a sub-ten percent market share position and thus provide significant opportunities to continue to drive retail growth.

Often overlooked An often overlooked advantage of our retail business is the strong connection to our digital business. A substantial part of our digitally initiated transactions are still paid out to cash by us and our competitors and we own that experience end to end. Our several hundred thousand payout locations give us customer experience advantages relative to our digital only peers better financial economics, and allows us to engage directly with potential future customers a decade or more before they become remittance customers [indiscernible] We do not think enough credit also is given to the millions of page views on our websites and digital properties From around the world, from our retail customers. These retail customers are using our store locator or checking the status of a transfer. This traffic improves our position in most organic search algorithms and drives down our cost of digital customer acquisition. With the assistance of our retail retail network volume, Our CAC last year was down roughly 10%. Which enabled us to effectively compete in The market where many digital players routinely spend significantly more and remain mostly unprofitable. The key to winning in the retail market is being competitive. Need to have the right price.

With a seamless and easy experience in the right locations. We continue to work on all three but when we get it right, we can win. Last year, our retail business in Spain grew transactions 25% and revenue 18%. Another example is the improvement we've seen in our retail business in The UK, which grew transactions 20% and revenue 9% in 2024. These are very competitive markets where we have executed our strategy More globally, The the last year, we introduced several new point of sale improvements. Like Remember Me and Quick Resend, and have now embedded those functions our updated point of sale system. Which takes much of The required processing out of agent hardware it moves it into the cloud. We continue to seek improvements in speed, reliability, agent support and customer satisfaction. We are pleased with the progress we have made so far and look forward to additional improvements that we have planned for 2025. On the last call, mentioned we are aiming to have our new cloud based point of sale system available in 25,000 locations by the end of the year. I am pleased to report that we substantially passed that goal now have roughly 70,000 active locations.

In the last thirty days alone, we have run over 2,000,000 transactions through this platform. Have rollouts underway in North America and APAC. And we have just begun expanding this technology into Europe, and Laca. As we improve our operating model, we are increasing our pace of execution and rollout. Our goal for 2025 is to have all relevant agents globally on this platform by the end of the year. Now shifting to our digital business. As part of our Evolve 2025 strategy, returning our digital business to double digit revenue growth is a key priority for our organization and is essential to driving top line revenue growth for the overall company. Over the past year, onboarding experience The driving marketing effectiveness, and improving our value proposition as well as our overall user experiences. I am happy to report that these efforts are paying dividends with more customers more transactions and more revenue. Since 2022, we have launched our next generation digital platform in over 10 countries including a launch in India the fourth quarter We have seen significant improvements in our digital business performance this year in MEC Japan, The UK and Chile The. As a result, we saw an increase in total customers and a higher frequency in which they transacted, all of which leads us to double digit transaction growth and high single digit revenue growth which we believe positions us well for 2025.

We plan to launch our next generation platform in more than 10 additional countries in 2025, including several in Africa, where we see a real opportunity. We are significantly improving our account payout network with increased direct connections and better volume discounts. We've also launched a global initiative to improve our KYC experiences in many parts of the world by moving to a more localized approach that we believe should greatly benefit onboarding [indiscernible] We look forward to updating you as the year progresses. Finally, I'd like to spend a minute We have made it a goal to grow this segment of our business double digits annually providing new products and services to our existing customers, through our existing channels. I am pleased to report we generated 20% plus adjusted revenue growth in the fourth quarter, an acceleration of the growth we saw in the third quarter. We continue to see solid growth in our money retail money order business. Where we believe have one of the most consumer friendly products The the marketplace. In addition to RMO, we saw strong growth from several of the products and services we have launched or meaningfully expanded over the last eighteen months.

The two biggest contributors to growth in the quarter were our media network business in The United States, and our foreign exchange business in Europe which benefited from a larger footprint. [indiscernible] with Ahold Delhaize USA, one of the nation's largest grocery retail groups, for an additional five years. We are pleased to extend this agreement and continue to provide our customers the opportunity and convenience to meet their cross border remittance needs at allhold Delhaize USA brand locations. Additionally, we are pleased to announce our co branded partnership with EuroPay, owned by [indiscernible] EuroPay is the largest digital wallet in Saudi Arabia and has over 6,500,000 customers. Partnership enhances our brand, in one of the largest digital financial ecosystems in Saudi Arabia. Lastly, we are also pleased to announce our collaboration the advanced digital financial services arm of Du, and licensed by the Central Bank of the UAE. Through this white label partnership, we are enabling international money transfer services on their app further strengthening our digital footprint. In conclusion, we believe we are roughly six months ahead of where we plan to be at this point relative to our initial twenty twenty two Investor Day guidance. Having just achieved positive full year company wide adjusted revenue growth excluding Iraq.

In North America Europe, Middle East ex Iraq and APAC, which gives us optimism about the trajectory we are on and what we can accomplish in 2025 and beyond. Looking ahead, we remain very positive in our market position and the progress we are making to deliver on our strategic initiatives. Every day, we can see the improving health and performance of our core business and are now beginning to deliver the ongoing and sustainable revenue and operating profit growth required to propel the value of the company upward. I remain confident that we are tracking well to achieve our evolved 2025 goals but more importantly, our setting the company up for a much more prosperous future. Thank you for joining the call today. I will now turn it over to Matt to discuss our financial results more detail.

Thank you, Devin, and good afternoon, everyone. I'm pleased to be here today to walk you through our twenty twenty four fourth quarter and full year results, as well as our 2025 financial outlook. For the full year, we delivered GAAP revenue of $4,200,000,000 Our results landed us comfortably above the midpoint of our improved 2024 adjusted revenue outlook. Adjusted revenue growth excluding Iraq was positive 50 basis points in 2024, is about six months ahead of where we anticipated we'd be our Investor Day in October 2022. In Consumer Services and improving trends in our CMT business supported by 8% branded digital revenue growth. In the fourth quarter, GAAP revenue was $1,100,000,000 For the third consecutive quarter, adjusted revenue grew ex Iraq and was positive 1.4%. Adjusted operating margins in the quarter were 17%, compared to 16% in the prior year. With the improvement primarily due to efficiencies in our marketing and technology areas. In 2024, our full year adjusted operating margin was 19% compared to 20% in the prior year, offset by efficiencies in our core cost base. Fourth quarter adjusted EPS was $0.4 compared to $0.37 Last year, benefiting from higher adjusted operating profit, lower share count and lower adjusted tax rate For the full year, we delivered adjusted EPS of $1.74 benefited from lower share count and lower adjusted tax rate which landed us comfortably in our improved guidance range of $1.7 to $1.8 In the fourth quarter, we reported a significant non cash tax benefit exceeding $250,000,000 Stemming from the reorganization of our international operations, to realign and consolidate our international hub.

This positively impacted our GAAP EPS by $0.75 but was excluded from adjusted EPS. The adjusted tax rate for the quarter was 12% compared to 14% last year, Whereas our full year adjusted tax rate was 13% compared to 15% the prior year. Our adjusted tax rate was lower this year due to the mix of income and a few minor discrete tax [indiscernible] Now turning to our CMT business. In the fourth quarter, CMT adjusted revenue excluding Iraq, was flat year over year, While CMT transactions, excluding Iraq, grew 3%, For the full year, CMT adjusted revenue excluding Iraq, was down 1% while transactions excluding Iraq grew 4%. These results were driven by improvements in branded digital, and digital white label and a consistent retail business. We have made significant strides in our customer agent experience And our overall value proposition over the past two years which has contributed to our ability to improve overall customer retention by almost 40 basis points in 2024. Now turning to our branded digital business. In the fourth quarter, we grew adjusted revenue by 8% with a 13% increase in transactions This marks the seventh consecutive quarter of double digit transaction growth. Account payout transactions that originate digitally continued their strong momentum growing 30% in the The.

For the full year, adjusted revenue growth [indiscernible] 800 basis points compared to 2023, While average new cost border monthly active customers grew high single digit in 2024. Now turning to our Retail business. In the quarter, we saw improvements in both Europe EMEA, excluding Iraq, partially offset by North America, and Latin America. Europe's Ominum resulted in 9% transaction growth as they benefited from stronger distribution, expanded debit acceptance and lapping an agent loss.

Now transitioning to our Consumer Services segment, we accounted for 11% of our total quarterly revenue. Fourth quarter adjusted revenue rose 23% driven by growth in media network, retail foreign exchange, and retail money order. I'm pleased to report that in 2024, The achieved our goal of double digit revenue growth in Consumer Services with a 15% increase in adjusted revenue. This marks our third consecutive year of double digit growth in Consumer Services. And we continue to target 10% plus adjusted revenue growth rate in Consumer Services we continue to introduce and expand offerings to the aspiring populations globally. In the fourth quarter, Consumer Services operating margin was 11% a 200 basis point improvement over the third quarter.

As these products scale, continue to expect that our margins will improve and be at or above our total company margin. Now shifting to our top from our top line to our expense base. As part of our ongoing commitment to disciplined cost management, I'm pleased to provide an update on our five year $150,000,000 expense redeployment program. In 2024, we continue to make significant strides optimizing our cost base and reallocating resources to drive efficiency and growth. Achieving total savings of $60,000,000 This is in addition to the $50,000,000 that we freed up in 2023. To illustrate, in our global operations function, which includes areas like customer experience and support, real estate, key compliance processes and agent care we have reduced our cost base by nearly 20% between 2021 and 2024, within the overall $100,000,000 of savings that we have achieved to date, nearly $30,000,000 was related to the efficiencies that we have made in customer experience We continue to see further opportunities throughout our business continue to optimize our cost base. Looking ahead, we expect to complete our five year commitment two years ahead of schedule achieving our target of $150,000,000 The year, This accelerated timeline underscores our ability to leverage scale, drive continuous improvement and maintain financial flexibility.

Now turning to our cash flow and balance sheet. In 2024, we generated $4.00 $6,000,000 of operating cash flow. Which was negatively impacted by higher taxes paid, including $160,000,000 related to the Tax deferred tax payments under the Tax Act and $70,000,000 related to the IRS settlement earlier this year. As a reminder, we will make our final deferred tax payment related to the Tax Act of $220,000,000 in the second quarter of this year. In 2024, capital expenditures were $131,000,000 or roughly 3% of total company revenues. We remain committed to strategically investing in curious and aligning our agent compensation to performance. Over the past three years, we've averaged roughly 100% adjusted free cash flow conversion. We define adjusted free cash flow conversion as free cash flow less unusual tax items divided by adjusted net income. I'm pleased to report that in 2024, we have returned almost $500,000,000 to our shareholders. With $318,000,000 paid in dividends, and $177,000,000 used to repurchase shares. I'm also pleased to announce the Board of Directors recently approved a $1,000,000,000 share repurchase authorization which will allow us to continue our historical practice of strong cash returns to our shareholders through our dividend, which is yielding 9% and our strong share repurchase program.

We also continue to maintain a strong balance sheet. With cash and cash equivalents of $1,500,000,000 and debt of $2,900,000,000 Our leverage ratios were 2.9x and 1.5x on a gross and net basis. Which we believe provides us ample flexibility for capital return or potential M and A while maintaining our investment grade credit rating. These levels may appear to be higher than what you're used to. As you may remember, we announced in the second quarter last year that we entered into an $800,000,000 which we used to refinance our bond that matured in January of this year. As a result, our cash and our debt balance were elevated at year end which affected our gross leverage ratio. Now moving on to 2025 outlook. Which assumes no material changes in macroeconomic conditions relative to last year. However, some uncertainty exists in The United States as we are two weeks into the new administration. [indiscernible] We forecast adjusted revenue to be in the range of $4,115,000,000 to $4,250,000,000 This range reflects continued growth in our branded digital business, and 10% to 15% growth in Consumer Services as we continue to stay and as we well as we continue to stabilize our retail business, The midpoint of this range is 1% adjusted revenue growth excluding Iraq, which puts us on track to achieve our Investor Day target a flat to 2% revenue growth.

We forecast that our adjusted operating margins to be in the range of 19% to 21% And lastly, we forecast adjusted EPS to be in the range of $1.75 to $1.85 From a quarterly phasing perspective, please keep in mind that Iraq contributed $65,000,000 in the first quarter of twenty twenty four and $34,000,000 in the second quarter of last year. Before normalizing the latter half of the year. We do not anticipate that Iraq will return to the elevated levels [indiscernible] will result in a headwind in the first and second quarter of this year. Additionally, please keep in mind that the first quarter of last year was impacted by leap year, which benefited us in the first quarter of last year, The conclude, are two thirds of the way through our evolved 2025 transformation, and we are confident that we have laid the foundation needed to drive long term profitable and sustainable revenue growth. As we embark on this pivotal year, we remain committed to driving growth innovation and value to our shareholders. Thank you for joining the call. Operator, now we're ready to take questions. We will pause momentarily to compile the Q and A roster. As a reminder, each person is allowed one question with one follow-up question.

All participants will be in listen only mode. Our first question comes to us from Tianjin Wang JPMorgan. Please ask your question.

Hey, thank you so much. Thank you for going through all The the details here. Just thinking about the outlook on the revenue side, in the range and what might caused you to be at the low end versus the high end? Is it worth maybe going through some basic assumptions there that might influence the outcome?

Hey, Tianjin. Thanks for joining the call today. The variability between the high end and low end of the range, there's a lot of uncertainty in the market. Things don't move lumpy We are super proud and excited about where we've come from. If you look back two years ago, the company was declining mid single digit We were able to exit last year with 50 bps growth full year and 1.4% full year. So super excited about what we've accomplished. Assumptions that are underlying that is continued consistent macroeconomic conditions we experienced last year, So no major changes in currency or inflation We have in our core businesses, we expect to have high single digit, low double digit digital growth. Is a highlight of my prepared remarks. We expect to have 10% to 15% what could move us to the upper end of the range? Further stability in the retail market, acceleration of branded digital, this year, higher consumer service we had later in the year. So there are many things that could put us at the upper end. Or even above but it's obviously in an uncertain market where we are as we highlighted in the prepared remarks.

Yes, that's fair. Then on The just on the consumer services, you mentioned it. [indiscernible] Go ahead. Go ahead, Clyde, please. Yes. I was just going to have a quick follow-up. Just on the consumer services side, you called it out there, 10% to 15% You're running in the lower 20s exiting the The. You're mid teens for '24. So what's driving the deceleration? How much of that is conservatism or were there some The The maybe lifted The consumer services. It sounds like some of the initiatives could actually drive acceleration. So Just trying to reconcile all The. It's a great question. I mean, you've known me now for three years. So it could move around a lot of different places. I You've called me conservative before. But there are things in there that we had some strong Q4 on media network Usually Media is very strong in the latter part of the year as you know from other businesses. That may not continue for all of next year. We have launched a couple of businesses The start to cycle through as we go forward. But we do have line of sight to get us to our commitment of 10% to 15% Our next question comes to us from Darren from Wolfe Research.

Guys. Thanks.

Just want to ask about the digital aspiration to drive double digit growth on revenues. Obviously, the spread continues to be in that [indiscernible] And you're continuing to show great results on double digit growth on transactions, but help us [indiscernible] double digit revenue growth to appear in the digital transaction side. The digital business. Then maybe just remind us, like what is your timing and expectation on that?

Thanks guys. Yes, Darren, great question. Thank you. And it's something we continue to spend a lot of time talking about I think it's important just to reflect on the progress we've made Two years ago, our digital business was shrinking revenue 1% Now it's growing revenue in the high single digits. That has been the function of driving our customer acquisition and our transactions in the double digit range. We expect to be able to continue to do that as we've now done for seven quarters in a row So this becomes an exercise of managing what is in the base. And as you know, some of the factors that we've talked about is the increasing growth or the relative speed of growth to pay out to account, has a different revenue per transaction profile than our historic payout to cash. And our continued attrition of the legacy book, which has a different pricing profile, all the customers that we've acquired in the last two years as we've become market competitive on new and repeat transactions. So as that book continues to shift and manage, We continue to expect and we've talked about a 300 to 400 basis point gap between transactions and revenue we've talked about in the past, if we accelerate transactions that range might increase, but we would be okay with The.

But as we continue, we believe it will stabilize over the course of the next eighteen to twenty four months.

Our next question comes to us from Will Nantz from Goldman Sachs.

Please ask your question.

Hey, guys. Good afternoon. Thanks for taking the question. I was wondering if you can maybe touch on some of the dynamics that led to the modest e sell in the North American revenues. If you could just kind of go through what you're seeing The? And I guess specifically, called out a few macro impacts that you were seeing last quarter. I think one of them would have related to North America like The U. S. Domestic quarter, the other one The have been in Laca, so it would be helpful to get an update. On that as well. Thank you.

Hey, Will. Hope you're doing well. Let us remember that we are in fact a global business and highly diversified only 30% of our revenue comes from The U. S. We did see as we talked about in the third quarter, some sluggishness in North America but I remind we had 1.4% ex Iraq adjusted revenue growth in the quarter which is the second best quarter the company's had on adjusted revenue basis in the last twenty quarters. So even with the slowness in North America, continue to propel our business according to our strategy around the world. We are still seeing the effects of the macro events down below the border in the elections that we talked about in the third quarter. As the migratory patterns of people shift. And we're obviously seeing some effect of the election in November as we normalize to a different environment here in The U. S. For migrants.

Got it. That's very helpful. And then just maybe a separate follow-up. I know one of the bigger drivers of that, The positive revenue growth quarter was the consumer revenue. Was wondering if you could hit on the margins in that segment and just how you think about scaling margins over time maybe what level of revenue you need to see in order to kind of achieve your target margins on that segment?

Hey, Will. Thanks for the question. As we talked about in the prepared remarks today, we did progress by about 200 basis points from Q3 to Q4. We expect each product that we've launched, whether that be the The network, prepaid business, the wallets and keep going through them. We believe each one of those has company wide margins or better. Once you're fully at scale. As we've talked on prior quarters, each one of them will roll out at different pace. We launched The prepaid business a little over a year ago now. In The U. S. We're now starting to launch in other parts of the market. Each one of those will have a ramping process Media network is largely in The U. S. So we think you're going to continue to make progress towards our company average. It'll happen over the next couple of years as we roll out products.

Talk philosophically for a second.

If I could grow the whole company 23%, at 11%, I might take that trade. So we're pleased with The fact that we've launched businesses we're seeing adoption by customers and acceleration of a revenue growth profile that looks significantly different than our historic norms. We will continue to invest in these businesses and as we see market opportunities continue to grow them. I am not in the business of trying to slow the growth to improve the margin. Particular segment.

Our next question comes [indiscernible] From Barclays. Please ask your question.

Hi. Thanks so much for taking my question today.

Branded digital transactions decelerated a bit versus last quarter, although still, as you mentioned, solidly in double digit [indiscernible] to about I think about 5%. Could you give us your thought on spread dynamics in '25 and what we should expect through the year in terms of your I think longer term goal to sort of tighten that up Hey, Ramsey. Thanks for joining the call today. You heard our tone earlier. We're super excited. We've come a long way over the last two years We were plus 1% in 2022.

This year, we were able to grow Trans-thirteen and took revenue from basically being flattish to high single digit this year So huge progress. We still think there's a lot more room to go as we talk about our The we think this business is a mid teens overall business and we still got some more progress to get there. Far as the pace of closing the gap between transactions revenue, going to manage the overall business to drive top line growth adding more customers, and we're very focused on growing the overall business. The output is delivering revenue growth and EPS We do think it will narrow over time as we lap the pricing and we have more of the legacy clients that are a little bit higher rates in market. Trade away and we had new but you also have a little bit of pressure coming from as I talked about my prepared remarks, our account payout business is growing thirty percent That's both on the retail size Devon highlighted and I highlighted The my prepared remarks it's very profitable. It doesn't come with The commission. So we're we're very happy to have it.

And a quick follow-up, just on M and A, you made some smaller acquisitions DASH and I think the Mexico The wallet but recently, maybe update us on your appetite and The, hey, given all The changes in the environment, And also, I think these deals reflect small because was there any organic contribution in the quarter that's material enough to call out?

To clarify, neither deal has officially closed yet. Are waiting for regulatory approval in both Singapore and Mexico, so there would be no contribution to the quarter from either transaction. We remain a interested buyer of properties that fit particularly well with our strategy and as I have talked about, allow us to accelerate that strategy in a cost effective way with strong returns on our capital deployment. So the addition of DASH was a acquisition that as I highlighted in my comments on APAC, allows us to accelerate our digital wallet capabilities in that region and strengthens what's already a pretty good franchise for us in Singapore. Acquired cost effectively and we believe will be additive to both the strategy and the company once it closes in the latter half of twenty twenty five. As we look around the world, when we see other things like that, I would anticipate will be prepared to act.

Got it. Thank you.

Our next question comes to us from Jason Kupferberg Hi. I wanted to ask about the retail transaction growth trend, obviously, it's been on an improving trajectory here. I'm just wondering what you think could be drivers of further improvement? Is it just broader rollout of the new point of sale? Or some other [indiscernible] Most of the incremental improvement will continue from the strategies that we've already launched, which is optimizing our distribution network, continuing to grow our independent agent footprint, improving the level of service and customer experience which includes the point of sale rollouts and strategically managing our go to market against specific corridors and customer segments. The biggest opportunity as you can tell is probably now in North America. Relative to the performance that we're getting in most of the rest of the world's retail networks. We continue to wait for the market to stabilize a bit in Laca, been and was last year a mid single digit grower. So we believe that will continue as we settle through some of these transitory post election issues. I would look forward to Laca returning to mid single digits and us continuing to execute the strategy in North America will propel the overall retail business into that stable to slightly positive zone that we believe it can be.

Okay. And then just coming back to your comments earlier The you've seen a little bit of impact on migration patterns post election thinking about Mexico, Is there any headwind for that kind of factored into your guidance? And maybe can we just get an update on what percent of your total C2C revenue is coming from The U. S./Mexico corridor. Thank you.

So as far as our guidance, we've got a obviously a 0% to 2% range of revenue growth It depends on how severe something is to be impact, whether it's included or not, but we think it's a As far as how big is the U. S. The business, it represents all of North America represents around 30% of our business. U. S. Lacquer, Mid 20s.

Low to mid 20s.

Thank you. Our next question comes to us from Basu Goveil from KBW.

Please ask your question.

Hi, thanks for taking my question. I wanted to follow-up on that. Question about migration patterns. Just Matt and Devon, just can you help us think at a high level if some of The initiatives that the new administration is taking were to continue to accelerate in terms of deportation and such? How to think about The potential impact on your business And then I have a follow-up.

So I think and we've seen it over the course of the two weeks, what's Going to happen is you'll probably see some decline in transactions. And an increase in principal per transaction. So frequency will go down and principal will go up.

But also I think you have to put into context, this is largely a retail phenomena. And it's largely on what I would call recent arrivals in The United States. And so if you look at our business in 2024, new to franchise new to retail customers sending to the Laca The, so that's more than just Mexico, was only about 2.5% of our total revenue. So that's the risk right there is that number slows a bit And last year, it was growing in The negative high single digit rate So it wasn't a strong performer for us anyways all of last year, which you can see in some of the soft the numbers in North America. So Is there some risk without a doubt? Do we need to keep a close eye on this administration and the changes in perspectives but the vast majority of our business are customers that have been here for a while who have good paying jobs, send money home to loved ones, on a regular basis and we anticipate that that will continue.

Thank you. That's very helpful color. I guess my second question was on crypto, which seems to be having a resurgence. Any updated thoughts on your view on how you see that impacting your business long term?

So I've said this publicly a number of times. We pride ourselves in being one of the best in terms of managing our risk compliance and protecting our customers from fraud The integrity of the international financial payment system. If there is an opportunity in which you can do that, legally and with high protections for customers and financial integrity, with crypto will certainly explore that. In fact, we would welcome an opportunity and there are places in the world where we are exploring this where we could actually settle funds via crypto and enable us to reduce both the float that we have in the system as Matt usually talks about, any given day we have $1,000,000,000 plus dollars floating around to enable our business. To reduce the The in the system, which will certainly help our balance sheet, but also to speed up The of the inefficiencies of using the traditional Swift based banking system to move money and settle transactions. So we look forward to the innovation. But we only look forward to the innovation a manner that would be consistent with our perspective of being and continuing to be a highly regulated and high integrity financial institution.

Our next question comes to us from Rufus Hone.

Hone from BMO. Please ask your question.

Hey, guys. Good afternoon. Thanks very much. Wanted to ask about the retail business, ExoROC, And if I'm doing the math correctly, it looks like this quarter that was down about 3% year over year, a slight improvement from last quarter I'm just curious to get your view about how you think that will trend through 2025?

Thanks. Hey, Rufus. Thanks for joining the call.

As we talked about earlier and Devin shared during his prepared remarks, we're super excited about the progress we've made in our retail business. We've taken it from being down Two years ago, high single digit to that at the point now where transactions were down more low single digit We think with the items that Devin talked about a minute ago for one of the questions, two or three people back, we think we can continue to make progress there. Whether that be through improving our customer service, agent service, continuing to improve our value proposition, we think we can continue to make progress on that. Rufus, you'll recall two quarters ago, we were getting the retail business closer to negative one. And the slowdown that we've seen in The Americas has obviously caused the third quarter now.

We're clawing some of that back in the fourth quarter, which you appropriately note there's going to be some volatility in that. It's a large scale business. But the trajectory, which is upward and to the right, I mean two years ago, our retail transactions were down 7%. This year, they were only down two. So we've seen a 500 basis point improvement we see strength in many regions around the world including The Middle East ex Iraq The, including the comments I made about Laca The I mean about APAC, and obviously The strength you can see in the numbers in the quarter from Europe.

Our next question comes to us from Chris Zhang from UBS. Please ask your question.

Hi, thank you for taking our questions. Chris for Tim Chioda from UBS.

Wonder if you could rank order the areas of your investment priorities beyond this year? And related to that, you've been tracking ahead of your five year expense redeployment plan. So I guess could you talk about how you're planning on funding potential incremental future investments once the REIT deployment program is completed?

Hey, Chris. Thanks for joining the call today.

Tell Tim hello for us.

We feel very good about our ability to make It has not been any of our challenges here about the level of capacity. We feel The there's still plenty of room left in redeploying costs within our business We highlighted the current program we have, which is $150,000,000 five year which we're $110,000,000 through, We got our Investor Day coming up in November and we'll talk about something there as well. But we feel like there's tons of We think we have enough capacity on our balance sheet. If we had any strategic M and A that The, and help us accelerate our path We think we've got it we believe we have enough space within our technology budget to invest in new products and technology builds. So really our focus is going to be to continue to build out consumer services to address the needs that our hundred million plus customers we have around the world would want to expand our TAM and help them have better financial lives.

And that's really our path for the next three to five years. But Gavin, would you add? Yes, I'd add two things, right? And I think it Matt highlighted in his commentary The success and I'll just use the operations area as an example and reducing operating costs by 20% over the three year period, We continue to see plenty of opportunities within the company, within the existing cost base to have year over year performance improvements which can both drive the bottom line, but also provide money to invest in our growth initiatives So even though we're completing the $150,000,000 I don't think that's an end to the opportunities The we see. And certainly, I commented on from 2022 when I arrived. The second, Matt also highlighted that we are going to finish the last of the Tax Act deferred tax payments in April of two twenty million dollars and for most of my tenure as CEO, that has been a burden on our cash flow conversion and cash flow capital return opportunities. And so getting that behind us actually changes the dynamics of our capital creation potential and thus allows us the opportunity to both return more capital to our shareholders and or invest in organic opportunities to drive the business.

All right. I appreciate all the color. Definitely look forward to the Investor Day and I'll save the follow-up for the group call back and leave time for our colleagues. Thank you.

Our next question comes to us from Chris Kennedy Please ask your question.

Great. Thanks for taking the question.

You've talked about the strength of the digital business in Australia. Can you Unpack that a little bit, What's the dynamic in that market? And is that can you kind of replicate that success in other markets? Thank you.

Yes. So I just came from Australia, and it's a super interesting and super competitive marketplace. Our competitors are spending an enormous amount on advertising. It's on bus stops, it's on television, and it's even some of our competitors who historically not relied on advertising to drive their growth. So it's a fascinating dynamic Our growth is driven by the quality of the product and the brand that we have in the marketplace.

We have a strong business throughout APAC because of our long history of being a payout partner in many of these regions. And much of the growth from Australia is into other APAC countries. So it's Australia to India, Australia to Philippines, Australia to China, Australia to Indonesia, And so The strength of our brand across both send and receive markets the quality of the product, if you'll remember, we launched our next generation digital product in Australia first so we've been there the longest. And so we have very high conversion rates for new customers to become customers and then we have high repeat transaction and product usage given the quality of the experience that they have. We believe it's completely repeatable. And as you heard in my prepared comments, we're looking to excel rollout of that next generation digital platform in 2025 to up to 10 more countries to help accelerate our global business.

We have time for one more question and that question will come from Andrew Schmidt from Citi. Please ask your question. Hey, Devin. Hey, Matt.

For squeezing me in here. I wanted to dig into The the building blocks of for digital growth for 2025. When I think about it, there's user growth, transactional frequency, pricing and mix. So think about 2025, The there differences in terms of just the buildup or the building blocks, digital growth versus 2024? Or is it more The the same?

So I would add one dimension to your those are the right underlying dimensions. For us, there's also [indiscernible] So we have a digital business in 50 some countries around the world. As we've gone on our transformation and you can remember all the way back to 2023, I know it's hard, we had talked about as we saw the business accelerate, how we were rolling out our new go to market around the world. We started first in North America, then we went to Europe and then we went into The Middle East and then we went into APAC and finally in Laca. We're now going through and doing that same process rolling out our next generation platform And so we also see some geographic enhancements against the dimensions of new customers, increased transactions, increased principal etcetera. And so I think the building blocks remain fairly consistent. We are growing new customers at a relatively consistent rate over the last couple of years. On a very effective CAC. Those new customers are in fact higher quality customers than we were historically acquiring. So they have better retention and they have better transactions per customer. Although they are lower revenue per customer given a more competitive pricing.

And as I talked about, we're rolling out the technology platform like we have in Australia into more markets The a world in which those benefits tend to accelerate relative to our existing business on our old legacy technology platform.

Thank you for joining the Western Union fourth quarter and full year 2024 results conference call. We hope you have a great day.