The Western Union Company (NYSE:WU) Q3 2023 Earnings Call Transcript

The Western Union Company (NYSE:WU) Q3 2023 Earnings Call Transcript October 25, 2023

The Western Union Company beats earnings expectations. Reported EPS is $0.43, expectations were $0.38.

Operator: Good day, and welcome to the Western Union Third Quarter 2023 Results Conference Call. All participants will be in listen-only mode. After today’s presentation there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Tom Hadley, Head of Investor Relations. Tom, please go ahead.

Tom Hadley: Thank you. On today’s call, we will discuss the company’s third quarter 2023 results, and then we will take your questions. The slides that accompany this call and webcast can be found at westernunion.com under the Investor Relations tab and 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, Devin McGranahan and our CFO, Matt Cagwin. 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 2022 Form 10-K 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 principles. We have reconciled those items to the most comparable GAAP measures in our earnings release attached to our Form 8-K 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.

Devin McGranahan: Good afternoon, and welcome to Western Union’s third quarter 2023 financial results conference call. It was just a little over a year ago today that we presented our Evolve 2025 Strategy to the investment community in New York City. We laid out a three-year-journey that focuses the company on successfully delivering everyday branded financial services to the aspiring populations of the world. We articulated a strategy that focused on driving the business through customer level economics, including improved LTV to CAC and emphasis on improving retention and an expansion of our TAM by launching new transaction based financial services products. We painted a financial picture that would fund the required investments for this strategy within our strong operating margin range of 19% to 21% and with the goal of returning Western Union to sustainable and profitable revenue growth by 2025.

C2C: Potentially most important and initially viewed with some skepticism, we committed to returning our retail business to stability. I am thus pleased to announce that we have now excluding Iraq, returned our global retail transactions to flat on a year-over-year basis in the third quarter. Switching to digital, when we launched our new go-to-market program, I highlighted that we would first grow new customers, then we would grow transactions and finally we would start to grow revenue. In the quarter, we achieved positive revenue growth of 3% for our global branded digital business, a full quarter ahead of our previous target. We have also begun to narrow the delta between transaction growth, which has been sustained at 12% and revenue growth.

While it is still too early in our journey to declare success, as I reflect on the last year and the progress we have made against our Evolve 2025 goals, I am particularly pleased with the following. The strength of the management team that we have been able to assemble, which I believe is a great mix of the old and the new. The broad based engagement of our employees around our purpose driven strategy and the recognition of our need to drive for everyday execution in everything we do. The impact of our revised go-to-market strategy that is driving accelerated new customer acquisition at much more favorable CACs. A streamlined operating model that we believe is delivering both increased customer and agent satisfaction while achieving efficiencies that power our nearly $50 million in run rate savings.

A fundamental shift in our product and technology road map from delivering back office modernization to building customer and agent facing product and experience innovation. Finally, I’d like to recognize the strong support of our Board of Directors over the past 18 months as we’ve executed our strategy. We believe the success of these programmatic building blocks will help us to continue to power our journey to achieve our Evolve 2025 goals. Shifting now to our Q3 results, our total revenue for the third quarter reached $1.100 billion [ph] reflecting a 7% increase on a constant currency basis when excluding the contribution from Business Solutions compared to the same period last year. This growth was driven by several factors, including the increase in revenue from Iraq, the benefit of Argentinian inflation and the improving fundamentals in our core business.

Adjusted earnings per share came in the quarter strong at $0.43 and included our continued investments and our Evolve 2025 Strategy. Matt will further discuss our financial results in more detail and provide an update on our 2023 financial outlook. Shifting to the macro, despite significant and potentially rising uncertainty and disruption in the world, we remain pleased with the resilience we continue to see in the Western Union customer base. While much has been written recently on the receding power of consumer spending in the U.S. and Europe, we continue to see a strong employment environment in our major markets, which we believe is translating into a continued willingness for our customers to send money home. Our transaction growth trends are very positive as I’ve previously highlighted, and our average PPT, excluding the higher PPT from Iraq has remained relatively stable year-over-year at down only 1%.

Despite this increasingly uncertain macro backdrop, we continue to see enough opportunities within our own customer base to support our belief in the ability to drive our Evolve 2025 strategic outcomes. At our Investor Day in 2022, we highlighted the fact that we found ourselves in the unenviable position of having a digital business that was shrinking on a transaction basis. This circumstance was the result of a strategy designed to maximize in period revenue per transaction. To rectify the situation and drive long-term transaction and revenue growth, we unveiled a new go-to-market strategy which was designed to maximize customer LTV to CAC. Our new go-to-market strategy is a holistic program focused on accelerating our new customer acquisition by targeting the right audiences, launching promotional pricing offers, improving funnel conversion and ensuring a high quality conversion ratio from first transaction to repeat usage.

As you have now seen, over the last year, our new customer acquisition is up meaningfully. We have returned our branded digital business to double digit transaction growth rates and most importantly, we have achieved revenue growth for the first time in over a year with global branded digital revenue growing over 3% in the third quarter. We’ve accomplished all of this on a CAC that has declined by over 20% year-to-date, largely led by efficiencies in our marketing program. Not only is our strategy driving more customers, transactions and now revenue, but it is doing so more cost effectively with retention rates generally in line or better than our historic norms. As we have started to lap the impact of our promotional pricing launch last year, we continue to see strong growth in new customers and transactions.

This ongoing performance is being driven by a relentless focus on improving execution and experience at a country and even a corridor level. One example of this more granular focus has been our recent efforts to ensure our offers and our messaging resonate in high payout to account corridors and as a result our digitally initiated payout to account transactions grew 27% in the third quarter. Moving now to our retail business, which is powered by our extensive agent network of over 400,000 active locations providing accessible financial services to those customers who prefer in-person transactions. When we began our Evolve 2025 journey, due to the sheer size and scale of our retail business, we knew that improvements in this business would be both more gradual and potentially lumpy.

With the exit of Russia and Belarus, the looming loss of two large and important agents in Europe and the ongoing operational and executional challenges in the third quarter of 2022, we shrank transactions in the global retail business by 8%. Beginning with the launch of our Evolve 2025 Strategy, we began investing in our retail point of sale system and platform in a more meaningful way than we had in many years with a focus on improving and simplifying agent and customer experiences. We launched a program to grow our footprint of controlled distribution through concept stores and owned locations and we realigned our sales and account teams to focus much more on agent and network productivity versus total agent count. One year later, I am pleased to report that we have been able to achieve flat year-over-year retail transaction growth in Q3, excluding the benefits of Iraq, which continued the best sustained transaction growth improvement we’ve seen since 2018.

Additionally, our largest region, North America, grew retail transactions 3% excluding our U.S. domestic money transfer business and had its first quarter of positive transaction growth in over six years. As we drive more customers to our platform and continue to make enhancements to the customer and agent experience, we are also beginning to see improvements in our retail retention rates in large markets like the U.S. However, given ongoing challenges in markets like Europe, our global year-to-date retention rate has been relatively flat to 2022. Additionally, I would like to highlight the progress we continue to make on our controlled distribution strategy, supporting our focus on network optimization. We began to roll this model out in Europe last year, primarily through concept stores where we partner with our agents to provide an exclusive Western Union branded experience.

We are pleased to share that we opened our 100th concept store in Europe during the third quarter. As of September, the average concept store opened more than six months was doing 8 times the transactions of our broader retail footprint in Europe. While we do not expect these types of locations to be a large portion of our overall distribution, they highlight the power of our brand and help position us to better meet the expanding needs of our customer base. Finally, we began testing a new retail go-to-market program earlier this year with an emphasis on reinvesting in retail marketing and aligning our value proposition to market levels in important corridors. We have been pleased with the results we have seen, including an impressive turnaround in one of our more meaningful European markets.

In this market, we expanded our controlled distribution, we increased our marketing presence and we implemented a much more dynamic pricing strategy that adjusts pricing based on market insights multiple times a day. Since its implementation, our transaction growth in this country has more than doubled and after initial dip following its implementation, our revenue growth rate is now growing at an even higher level than it was before. Recent progress in our retail business validates our conviction that we can indeed stabilize this business on a global basis. Now switching to our third pillar, ecosystem, the foundation of our accessible financial services strategy is to provide products and services that can meet the unique needs of our migrant customers which will translate into a more account based relationship and thus ultimately higher retention.

Traditional financial services can often be intimidating to our customers and may require account minimums and or impose steep fees. As a result, our research indicates that there is significant unmet need amongst our customers for fair, transparent and accessible transactional financial services and a need for broader access to credit. To address these needs, we have relaunched our prepaid card in the U.S., developed and launched a digital wallet in Europe and South America and have piloted partner based lending solutions in Australia and Argentina. Our wallet provides a foundational set of financial services including a multicurrency bank account, P2P transfers as well as a Visa debit card, all integrated into our Western Union digital money transfer experience.

Since last year, this service has been available in four countries in Europe and the last quarter we launched Friends & Family in Brazil, the largest economy in Latin America and an important digital market for us.

Fácil: As our product experience has improved, we have seen monthly transactions per active customer nearly double from 4.5 in January to 8.5 in September. Our customers have a clear preference for physical debit cards over digital with a ratio of 5:1. We clearly see the need to rationalize our offering into one app instead of the two we currently have in the market in these four countries. We plan to begin this consolidation in the first half of next year. While we are in the early days of this journey, I am pleased with the progress we are making, the learnings that we are developing and our ability to serve our customers in the future with a broader set of products and services. While we do not expect our ecosystem strategy to be a material contributor to revenue nor profits in the short run, we do think it can improve customer retention rates over time and position us to provide additional products and services to meet the needs of our nearly 120 million customers worldwide.

I’m also excited to announce that our U.S. prepaid debit card has now moved from Friends & Family to a commercial pilot and is available in a number of agent locations in the U.S. with plans to roll it out more broadly throughout 2024. The card will provide customers with a convenient and secure payment solution, allowing them to manage their finances with greater flexibility. By reintroducing a prepaid card solution, we aim to expand our product offerings and provide additional value to our customers. The final pillar of our Evolve Strategy, which we laid out a year ago, was to improve the customer experience and drive ongoing operational excellence. We view this pillar as the force multiplier of the strategy. Over the last several quarters, we’ve talked about improvements in our process flow such as Remember Me, Quick Resend, One Step Refund, all of which are aimed at removing pain points from the transaction process and creating a better customer and agent experience.

Recall last quarter, we said that 30% of all transactions completed on our Vigo brand in the month of June were initiated using our Quick Resend transaction process. This process allows an agent to complete a transaction in a fraction of the time than was historically required. I am pleased to report that the usage of this tool in North America has continued to accelerate with now 45% of all transactions in the quarter on our Vigo brand being initiated using Quick Resend technology and enabled Western Union branded agents to perform at an even higher level. This technology has been rolled out to roughly 25% of our North American agent base and we look forward to continuing to expand it across our network globally. We are also excited about the rollout of our One Step refund, which is now available at 80% of our agents around the globe and we hope to have this functionality ubiquitous across our global network over the next few quarters.

This functionality allows us to solve an important customer pain point and simplify the refund process. As part of our continuous improvement mindset, we’ve also created over a dozen other self-service tools to allow agents to do things like password resets, check the status of a transaction, check their transaction history. These improvements help reduce friction, calls and make for a better experience for our agents and customers alike.

Cencosud: Next, I would like to announce the addition of Ben Hawksworth to our Management Team as our new Chief Technology Officer. Ben brings with him a wealth of experience, including more than 25 years of global technology leadership roles across multiple high transaction fin tech organizations. Ben was most recently the Chief Technology and Product Officer with Progressive Leasing and prior to that he was the Chief Information Officer at Fiserv/First Data’s merchant acquiring business. I would also like to announce that Rodrigo Garcia, President of our Latin American business, has now assumed the role of President of North America. Rodrigo has been with Western Union for nearly 20 years, having helped build our Latin American business over the past two decades.

For the last several years, he has been successfully managing and growing our Latin American operations to now be the fastest growing region of the company and we look forward to that leadership here in North America. Looking ahead, we remain optimistic about our strategic direction and the positive progress we are making. We are pleased with the change in the trajectory of our business, driven by improved transaction trends across both our retail and our digital businesses. We are excited about the launch of our new prepaid card solution in North America and the opportunity that that presents as part of our expanding ecosystem offering. We remain committed to delivering value for our customers, our shareholders and other stakeholders while we adapt to this rapidly evolving market dynamic.

I would now also like to thank our 8000 Plus employees for their dedication and commitment to our customers and our partners. Their focus, passion and efforts every day have enabled us to make the progress discussed here and will enable us to continue to meet our Evolve 2025 goals. Thank you for joining the call today and I will now turn it over to Matt to discuss our financial results in more detail.

Cencosud: Next, I would like to announce the addition of Ben Hawksworth to our Management Team as our new Chief Technology Officer. Ben brings with him a wealth of experience, including more than 25 years of global technology leadership roles across multiple high transaction fin tech organizations. Ben was most recently the Chief Technology and Product Officer with Progressive Leasing and prior to that he was the Chief Information Officer at Fiserv/First Data’s merchant acquiring business. I would also like to announce that Rodrigo Garcia, President of our Latin American business, has now assumed the role of President of North America. Rodrigo has been with Western Union for nearly 20 years, having helped build our Latin American business over the past two decades.

For the last several years, he has been successfully managing and growing our Latin American operations to now be the fastest growing region of the company and we look forward to that leadership here in North America. Looking ahead, we remain optimistic about our strategic direction and the positive progress we are making. We are pleased with the change in the trajectory of our business, driven by improved transaction trends across both our retail and our digital businesses. We are excited about the launch of our new prepaid card solution in North America and the opportunity that that presents as part of our expanding ecosystem offering. We remain committed to delivering value for our customers, our shareholders and other stakeholders while we adapt to this rapidly evolving market dynamic.

I would now also like to thank our 8000 Plus employees for their dedication and commitment to our customers and our partners. Their focus, passion and efforts every day have enabled us to make the progress discussed here and will enable us to continue to meet our Evolve 2025 goals. Thank you for joining the call today and I will now turn it over to Matt to discuss our financial results in more detail.

Matt Cagwin: Thank you, Devin, and good afternoon, everyone. I look forward to sharing our financial performance over the past quarter and highlighting some of the key achievements. I will also outline our updated outlook for the remainder of the year. Starting with a review of our financial results, in the third quarter, Western Union delivered revenue of $1.1 billion, representing a 7% increase year-over-year on a constant currency basis. This is excluding contributions from business solutions. Results exceeded our expectations due to revenue increase from Iraq, a 300 basis point benefit from Argentinian inflation and improvements in our retail and branded digital businesses. As Devin highlighted earlier, we achieved positive revenue growth in our branded digital business globally a full quarter ahead of expectations.

During the third quarter, we continue to see elevated volumes in Iraq relative to historical levels due to a change in monetary policy, which began impacting our business in the first quarter of this year. In Q3, Iraq benefited adjusted revenue by 8 percentage points. With over half of this benefit coming in July. For the remainder of the year, we expect Iraq volumes to be significantly lower going forward as we recently saw levels come down closer to 2022 levels due to changes in the regulatory environment. I will discuss our forward-looking assumptions when we get to our financial outlook in a few moments. We continue to make progress in Evolve 2025 Strategy, growing C2C transactions 5%. This is led by continued momentum in our branded digital business, which grew transactions 12% in the quarter in flat retail transactions excluding Iraq, which had been in decline since 2019.

Adjusted operating margins were 19.6% compared to 20.6% last year. The decrease is due to higher variable costs and technology spend associated with our Evolve 2025 Strategy, partially offset by lower SG&A expenses, associated with the actions related to our operating expense redeployment program. As you may remember, last October we launched a five-year $150 million operating expense redeployment program. Since launching, we have taken actions that will allow us to free up more than $50 million in 2023 with over $40 million of total savings already benefiting this year. So far in 2023 our ability to save has continued to outpace our ability to invest, benefiting adjusted operating margin. Adjusted EPS was $0.43 versus $0.42 last year with the current period benefiting from higher revenue, a lower share count, partially offset by higher adjusted effect taxes.

Now turning to our C2C business. Revenue grew 3% on a constant currency basis, led by Iraq with transaction growth of 5%. All regions drove sequential transaction improvements except for APAC. For our branded digital business revenue was up 3% on a constant currency basis on transaction growth of 12%. This was driven by our go-to-market strategy launched last year. This was the first quarter in over a year of positive revenue growth in our branded digital business. Now moving to the regional results. In the third quarter, North American adjusted revenue decreased 3%, which is a 500 basis point improvement relative to the first half of 2023. This is driven by North American branded digital business, which grew 4% on a constant currency basis reaching our goal of positive revenue growth in the third quarter.

Transactions accelerated and grew 7%, led by our branded digital business and improving transaction trends in our retail business, which had a positive transaction growth for the first time since 2017. The North American region has begun to turn a corner and is benefiting from our Evolve 2025 Strategy and the continuous operational improvements to our customer and agent experience that we’ve made over the last several quarters and have discussed in the last few earnings calls. Revenue in Europe and CIS was down 10% on a constant currency basis, while transactions were flat with a sequential improvement in key markets including Spain, the United Kingdom and Germany. As we’ve discussed previously, the region has faced tough macro backdrop. Revenue in the Middle East, Africa and South Asia grew 42% on constant currency revenue on transaction growth of 9% due to monetary policy change in Iraq previously discussed, which had a higher principal per transaction driving this revenue growth.

The Latin American and Caribbean region grew constant currency revenue 8% in the quarter on transaction growth of 9%. This solid performance in the quarter was led by Argentina, Ecuador and Venezuela. And finally, revenue and APAC was down 7% on a constant currency basis with flat transactions. Now moving to our other revenue, which consist primarily of retail bill payment in Argentina and the United States, and retail money order in the United States. Other represents 7% of the total company revenue and grew 22% year-over-year on a reported basis, benefiting from higher interest rates in our retail money order business as well as solid transaction growth in our bill payment business. As a reminder, Q3 was an easy comparison as we optimized our investment portfolio in the third quarter of last year.

Now turning to our cash flow and balance sheet. Year-to-date we have generated $519 million of operating cash flow, which included a transition tax payment of $119 million paid during the second quarter. As a reminder, these tax payments continue to step up over the next two years and will end after 2025. Capital expenditures were $27 million in the quarter, and $117 million on a year-to-date basis. As mentioned previously, we expect lower agent signing bonuses going forward, but in the first quarter of this year we had a large signing bonus that was committed to prior to this change in strategy. We continue to maintain a strong balance sheet with cash flow and cash flow equivalents of $1.1 billion and debt of $2.3 billion. Our leverage ratios were 2.2 times and 1.1 times on a gross and net basis, which we believe provides us great flexibility for potential M&A A while maintaining our investment grade credit rating.

Year-to-date, we have returned $363 million to our shareholders. This includes $100 million of shares repurchased during the third quarter. Now moving on to our outlook. Today, we improved our 2023 adjusted revenue and EPS outlook. As mentioned earlier, we expect volumes from Iraq to be significantly lower going forward, much closer to the 2022 levels. This is primarily due to a changing regulatory and policy environment in the country as regulators continue to address currency and sanction related challenges in the banking system, as well as other potential changes in our own internal policies or practices in that region. Our outlook also assumes no material macroeconomic condition changes. We now expect adjusted revenue, excluding Argentina inflation, to be in the range of flat to positive 1%.

And as a reminder, Argentine inflation has benefited year-to-date results by 300 basis points. We continue to expect full year adjusted margin to be in the range of 19% and 21%. And lastly, adjusted EPS is now expected to be in the range of a $1.68 to a $1.75. To wrap up, a year after unveiling our Evolve 2025 Strategy, I’m pleased with the progress we’ve made so far. Our Branded Digital business has returned to positive revenue growth one quarter ahead of our expectations, and our retail business has seen significant improvement in transaction trends relative to the last several years. We look forward to sharing an update over the next upcoming quarters, as well as providing our 2024 outlook during the call in February. Thank you for joining the call operator.

We’re ready to take questions.

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Q&A Session

Operator: [Operator Instructions] Our first question comes to us from Tien-Tsin Huang from JPMorgan. Please ask your question.

Tien-Tsin Huang: Thanks so much. Really encouraging results, I thought, Devin, maybe I’d ask, with success here in both the retail stabilization and the digital brand of growth coming a quarter early, does it change your thinking on investment timing or the intensity that you maybe attack both of those between retail and digital, and just curious if your strategy has changed at all.

Devin McGranahan: Tien-Tsin, great to have you on the call. Thank you for the positive comments. We have benefited over the course of call it the last seven months from the increased and unexpected growth in Iraq. So we have had the opportunity to invest in our program, and that is, as you can see driving the results. It is that relationship between being able to invest in our program and drive our results that we’re going to continue through next year in terms of getting us to that sustainable positive revenue growth that is the bedrock of our Evolve 2025 Strategy. So I’d expect us to continue to use a very balanced and return oriented view on investing with the goal of driving to positive revenue growth.

Tien-Tsin Huang: Understood. Understood. So, just maybe for Matt thinking about the fourth quarter here and the implications, any changes, I know it’s excluding Argentina, it sounds like no real impact from Iraq. Any other considerations? It sounds like you’re still calling for macro stability. I don’t know if there’s anything we should assume with Israel? Or any other call out? Thank you.

Matt Cagwin: Yes, thanks for the question. The conflict that’s going on in Israel is not overly material to our business, so you should not be thinking about that as having a major impact on our financial results. Beyond that, in Q4, we are balancing our overall financial results and the upside we’ve gotten throughout the year from Iraq and making additional investments in our Evolve Strategy. Things along the lines of technology investments, point of sale solutions. Devin talked about the one app solution or ecosystem. We’re also looking to accelerate and do some additional testing on the marketing side. So all that fits into the guidance I gave a couple minutes ago, but it helps explain why that guidance is what it is.

Tien-Tsin Huang: Understood, great. Thank you so much.

Devin McGranahan: Tien-Tsin, I’ll just add, because it’s obviously been discussed a lot and it was in the prepared comments. We’ve been pleasantly surprised by the resiliency of our customer base pretty much across the globe. We’ve seen stability across all regions in our PPT and as you can tell from the results, we see strong growing quarter-over-quarter improvements in our transaction trends. I think our customers are largely and most susceptible to employment levels. And so as employment levels, particularly for the lower paid employees, have continued strong in most regions of the world, that’s creating the stability that might lack in other payment oriented businesses.

Tien-Tsin Huang: Yes, now agree that the employment there is quite strong, so showing through our results. Thanks for the clarification.

Operator: Our next question comes to us from Jason Kupferberg from Bank of America. Please ask your question.

Jason Kupferberg: Thanks guys. So just on the raise in the revenue growth guidance, the adjusted revenue growth guidance, I guess we went up by half a point at the midpoint here. Is that purely just because of the Iraq tailwinds lasting longer than expected or anything else we should be noting there?

Matt Cagwin: Yes, Jason, this is Matt. The way we think about our results is, Iraq has obviously provided an uplift in revenue throughout the year. We flagged that impact. That has also given us a lot more flexibility. And what Devin talked about earlier about our retail go to market strategy, we feel like we’re largely on track for at the midpoint of our original guidance, when you net all those decision points and moving elements, if not a hair bit above, that’s the way I think about it.

Jason Kupferberg: Okay. Okay. That’s helpful. And then just as a follow up, if I’m thinking about both the adjusted branded digital revenue growth, the acceleration there, as well as the retail transaction growth improving just on both those fronts, what are you expecting in Q4? Should we see some further improvement relative to Q3 in terms of the year-over-year growth? And then just any comments on rough trajectory as we head into 2024 because obviously you’ve got both those going in the right direction now?

Matt Cagwin: And so I think there’s a couple of things to think about there. Jason, remember, and you have to take into account the way we launched the digital — the new digital go-to-market is we started with a few corridors in North America in the August September time frame, we expanded that to 50 corridors, which we then gained confidence. And towards the back end of 2022 we began expanding into European markets like the UK, Germany, France. We then continued that rollout over the course of the first two quarters, culminating with APAC and our big markets like Australia. So the revenue growth as we begin to work through the lapping of each incremental won’t necessarily be linear, and in some cases it’ll be a little bit of lumpiness depending on the size of the market in which we launch the program and where it will be.

I think over time you should look towards what we’re trying to get to which is sustainable double-digit transaction and revenue growth. But the path between here and there is not likely to be linear. The work that we began in retail at the beginning of this year is really now starting to take hold on a transaction basis. But as you can see, we’re not going to get the same double-digit transaction growth rates that we’ve gotten in digital in retail. We’ll be much happier with low single-digit transaction growth rates. So it just takes longer then to narrow that gap between transactions and revenues when transactions are only growing low single digits. Hopefully that helps?

Jason Kupferberg: It does. Thanks for the comments.

Operator: Our next question comes to us from Will Nance from Goldman Sachs. Please ask your question.

Will Nance: Hey guys. Good afternoon. I appreciate you taking the question. Yes, I guess I just wanted to ask a question on the moving piece and the guidance as well kind of piggyback on some of the prior questions. I mean, If I put together a handful of the comments, I mean expense performance this quarter, materially better than expected, have seen a lot of upside from sort of external factors like Iraq over the course of the year. You guys came in a little bit ahead of your objectives in the digital business. And then I think the comment was made that the ability to kind of save is outpacing, the ability to spend. And so I guess all of those comments seem very constructive, and yet it does seem like the guidance for the fourth quarter is a little bit below where street was expecting, and there wasn’t as much maybe flow through of the outperformance this quarter.