We think that our target and our aspiration is to separate ourselves further from that growth number, but our assumptions are based on Mexico staying around 3%, or 4% growth as an industry through ’24.
Mike Grondahl: Got it. Hey, thank you.
Operator: Our next question comes from Chris Vang with UBS.
Chris Vang: Hi. Thanks for taking our question. My first question is about the Visa Direct opportunities. It’s relatively new. Understand, it’s kind of nascent and you talked about that enabling you to go into important markets such as India and Philippines and a couple others to call it out at the last call and potentially some more this year. So, the first part, maybe, can you talk about — a little bit about the potential opportunities and the expansion plans this year, and what are your kind of longer-term outlook from the Visa Direct partnership? And then the second part is, how much of that Visa Direct opportunities for new markets have you baked into the plan this year for 2024 guidance?
Marcelo Theodoro: Hi, it’s Marcelo here. I’m going to cover the first question. So we see a huge opportunity in this partnership because it makes the company move from a multi-country, multi-region approach to a global approach. So, there are important corridors that we are going to embrace, like India or Philippines as you said. Those are huge markets that we believe we can address at a lower cost and a great experience as Bob mentioned before. We did incorporate that to our projections to 2024. But of course, it’s increasing number throughout the year due to our current focus on Latin America. So, it’s a new target audience that we have to embrace. We see some traction already, but it’s a midterm exercise that we’re going step-by-step.
Andras Bende: Yeah. And I would just jump in, Chris. This is Andras. I think the overall contribution that from an overall company perspective is still quite small what was baked in 2024. I think we could see it as an option if it really pops. But right now, the contribution from the overall materiality of the plan is quite small at the moment.
Chris Vang: All right, thanks a lot to both of you. That’s very helpful. And the second part, I just wanted to ask a little bit about the fourth quarter performance. I guess, outside of the Mexico market, what were some of the trends you saw in the market and how the performance in, I guess, the rest of the Latam regions compared to what you had expected going to the quarter? Thank you.
Bob Lisy: I think we’ve seen the broader market, and certainly not only Mexico, but Guatemala and other key countries for us, slow down relative to growth, not as acutely as Mexico has. But we also see some really strong growth where we’ve executed well in certain countries and have at times been on the borderline of triple-digit growth to countries like Nicaragua and others, where we’ve been growing very quickly. So, I think the overall market has slowed a bit to virtually just about every country in Latin America. But we’ve been able to grow well outside the size of the market in certain markets like Nicaragua, I believe Ecuador, Colombia, we’re growing much faster than the market in those areas. Dominican Republic, we’re seeing that there’s some slowing in that market.
We think that’s a market that’s moving a little faster to digital. Dominican people in the US tend to be more likely banked, and if they’re more likely banked, they have more options, meaning that they have the option to go to digital easier and more fluidly than somebody who’s maybe an undocumented member of the workforce from Mexico, or Honduras or Guatemala. So those are — that’s how I would sum up the overall trends.
Chris Vang: Right. Thank you so much. That’s very helpful. Let’s come back to the queue.
Operator: Our next question comes from Sam Salvas with Needham. Please proceed.
Sam Salvas: Great. Thanks, guys, for taking the questions. I’m hopping on for Mayank today. I was wondering if you guys could provide some insight into some of the pricing dynamics you saw in the fourth quarter. I know earlier in the year, and I think it was in the third quarter, you guys mentioned some pricing pressures stemming from competitors. So, could you guys just talk about what you saw in the fourth quarter and maybe how you guys are thinking about pricing in 2024?
Bob Lisy: Yeah, what we saw is that we’ve actually been able to extend our margins in fourth quarter and increase them by being more efficient and slicing it a little bit thinner. Previously, we made bigger movements with price related to the whole market, and now our price movements are related to places where there’s an incremental upside in terms of wires. What we’re very careful about is that we don’t want to be discounting where we have wires in house where people are perfectly happy with the pricing, and those wires are already wires we’re going to get. Now, as we look at ’24, the big opportunity for us is certain areas of the country where there still remains. For instance, southwest, we have a million foreign borns living in zip codes in California that we haven’t tapped into at all.
As big as our California business is, in which it’s several million wires a year, we haven’t tapped into those zip codes at all. We also have another set of zip codes that have about 1.7 million people where we’ve tapped into very slightly. And so those are the places where you’ll see a different pricing perspective, a different pricing action. We’ll be much more aggressive there, but that doesn’t degrade at all our current margins. Our current margins are going to stay relatively stable. Those margins will be ones that will come in at a lower gross margin per transaction but will be incremental transactions. So the overall average might come down a bit, but nothing will be done to degrade the core business.
