The Western Union Company (NYSE:WU) Q4 2023 Earnings Call Transcript

The Western Union Company (NYSE:WU) Q4 2023 Earnings Call Transcript February 6, 2024

The Western Union Company isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day and welcome to the Western Union Fourth Quarter 2023 Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Tom Hadley, Vice President of Investor Relations. Tom, please go ahead.

Tom Hadley: Thank you. On today’s call, we will discuss the company’s fourth quarter and full year 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 fourth quarter 2023 financial results conference call. Now two years into my tenure as CEO, I am pleased with the improvements we are seeing in our trajectory under our Evolve 2025 strategy. As you know, over the last 18 months, we have focused on returning our digital business to double-digit revenue growth and achieving stability in our retail business. The fourth quarter is further evidence that we are indeed on the right path. Today, we are reporting a strong finish to the year with positive adjusted revenue growth and improved transaction trends across both our retail and digital businesses with transaction growth north of 5% for the second consecutive quarter.

Consistent and sustainable transaction growth is the strongest indicator of the future health of our business. It has been nearly a decade since the company has delivered 5% plus transaction growth for multiple quarters in a row excluding the COVID recovery period. We are pleased with this significant change in our trajectory. Digging in, looking at a quarter level trends, you can see the change in trajectory is both widespread and meaningful, whether looking at the U.S. to Mexico, France to Africa or the world to the Philippines, these corridors show the same picture, considerable improvements in transaction growth rates over the last 18 months. As this graph illustrates, our work over the last 18 months to improve our customer experience, streamline our operational processes and accelerate our market effectiveness is driving significantly improved outcomes.

Our confidence in achieving sustainable, profitable revenue growth by 2025 increases each quarter as we stabilize our retail business, accelerate our digital business expand our ecosystem offerings, enhance our customer and agent experiences and maintain industry-leading margins like we did this past quarter. For the fourth quarter, our revenue reached $1.050 billion [ph], reflecting a 3% increase on a constant currency basis when excluding the contribution from Business Solutions compared to the same period last year. Adjusted earnings per share came in strong at $0.37, up 16% on a year-over-year basis and allowed us to achieve the upper end of our EPS guidance. Maintaining our long history of returning capital to shareholders, we produced another year of solid cash flow with operating cash flow of $800 million of which $650 million was returned to our shareholders via dividends and stock buybacks.

As we discussed at our Investor Day in 2022, to date, we have funded all the required investments in our transformation while maintaining our 19% to 21% adjusted margins and continuing strong returns of capital to our investors. Matt will further discuss our financial results in more detail and provide our 2024 outlook later in this call. In addition to improving financial results, we continue to execute well on our strategic priorities. Over the last year, we have made meaningful progress on our most important initiatives, including improving our retail operations, updating our digital platforms and go-to-market strategy, refining our customer and agent experiences and enhancing our overall value proposition in the marketplace. While our journey is not over, I would like to share some of the highlights from this past year.

Starting with our retail business. In 2023, we made material enhancements to our point-of-sale system with new functionalities like remember me, quick resend, debit payment enablement, digital receipts and enhanced payout to account capabilities. These improvements, while not ground-breaking, have made our retail customer and agent experience more competitive and have contributed significantly to the improvements you see in our retail transaction trends over the last 18 months. Additionally, we will continue to roll out these functionalities across the globe and anticipate further benefits in 2024. In addition to our point-of-sale improvements, we also made significant progress on expanding our controlled distribution strategy which includes both owned and concept stores in LACA, Europe, the Middle East and APAC.

Recall that by enabling an exclusive Western Union experience in high-impact locations, we believe we have more control over the customer experience can test new products and services and creates a new low-cost acquisition engine for our digital business. This strategy which prior to 2023, was largely a Latin American phenomena with owned networks in both Argentina and Brazil has now been expanded to every region in the company. In 2023, we opened 100 new owned locations in 200 new concept stores which increased our controlled distribution strategy by over 35%. In addition to new store openings, we also updated roughly 30,000 high-impact retail locations around the world with our new Western Union brand format presenting a more contemporary and omni-channel message to our retail customers.

To complement our controlled distribution strategy, last year, we also enhanced our digital capabilities, including launching our next-generation digital app now in 12 countries around the globe, launching a digital wallet in four European and one Latin American country and implementing a new digital go-to-market strategy. This strategy has allowed us to drive more traffic to our digital platforms, increase our conversion rates, improve our marketing messages and enhance our value proposition while materially lowering our customer acquisition costs. As evidence of this, in 2023, we were able to grow new digital customers double digits while at the same time, lowering our customer acquisition costs by over 15%. The scalable, cost-effective new customer acquisition is the foundation for continued double-digit growth of new digital transactions.

Given the journey we are on, ongoing operational performance improvement is a powerful driver of agent and customer satisfaction and ultimately will lead to improved retention. Last year, we made significant changes across key elements of our customer and agent experiences. These changes resulted in millions of fewer phone calls to our call center and improvements in both agent and customer satisfaction. For example, we improved self-service tools like our Track a Transfer to integrate across channels so that customers can get status updates on their transfer through the Western Union mobile app, regardless of whether that transfer was initiated on the app or at more than over 400,000 retail active locations around the world. As you will recall, in late 2022, we started rolling out our new digital go-to-market strategy.

This strategy included revised marketing, a focus on funnel effectiveness, improved onboarding processes, promotional pricing for new customers and market-based pricing on subsequent transactions. The program has led to double-digit new customer growth and double-digit transaction growth throughout 2023. By the end of the first quarter of 2024, we will anniversary in [ph] both, the U.S. and the European launches of this strategy and as such, we expect the gap between transaction growth rates and revenue growth rates to continue to narrow throughout the year. Likewise, on the retail side, last year, we also began rolling out a new go-to-market program to complement our focus on location productivity. That program included revised marketing seasonal and holiday promotions and some corridor and geographic-specific pricing initiatives.

The majority of these actions occurred in the second and third quarters of last year and we are now holistically happy with the results that they are producing. We believe these changes have helped us deliver positive retail transaction growth for the first time in many years and has reinforced our belief that we can achieve a stable retail business in the near future. One of the regions that have benefited immensely from these changes implemented over the last year is our APAC region, a region that has been in cyclical decline for over five years. APAC was early in the launch of our next-generation digital app and they have been advancing our efforts through controlled distribution. This region now has some of the highest digital new customer growth rates, the highest digital conversion rates and has the most significant change in transaction growth rates we have seen anywhere in the world, led by Australia.

Transaction growth rates in APAC have improved 1,000 basis points or more year-over-year in every quarter of 2023. This type of improvement, you can see, when you have the right technology, the right distribution strategy and great customer and agent experience. We believe the right user interface and a keen focus on funnel management will help us meet our expectations of returning our digital business to double-digit revenue growth. Looking ahead, while there is more work to be done and the team is committed to the ongoing continuous improvement of our core remittance business, we are also working diligently to expand our total addressable market beyond cross-border remittances. Given the strength of our brand, the reach of our distribution and the trust of nearly 120 million customers, we are focused on creating and delivering additional products and services that cater to the needs of the aspiring populations of the world.

This strategy currently includes our digital wallet, our retail money order business, our bill payment business and we have recently added products like our prepaid debit card, lending services in Argentina and Australia and a 4x currency conversion business that we have launched in select locations across Europe and APAC. We now have over 200,000 customers onboarded to our digital wallet in Europe and over 50,000 in Argentina. Our retail money order business which we have focused on over the last 18 months has grown substantially over the last couple of years with principal up nearly 20% and investable assets up over $135 million. Growth in investable assets has been important for a business that generates substantial revenue on its asset portfolio.

This business now accounts for roughly 1/3 of our consumer services revenue, formerly referred to as Other in our financials. With a revamped value proposition, improved distribution and a new point-of-sale system on the horizon, we are excited about continuing to see strong growth in this product ahead. As we continue this journey, our goal is not only to drive organic growth but also seek acquisition opportunities that will enable us to build stronger customer loyalty and an increase in our portion of our customers’ financial wallets over time. As one of the key pillars of our Evolve 2025 strategy, we believe we are in the very early innings of this market expansion opportunity and we’ll continue to invest accordingly. Finally, I would like to talk briefly about our automation journey and highlighting new partnership that we entered into in the fourth quarter.

We have a long history of innovation and have continued to expand our automation capabilities, resulting in cost efficiencies, higher quality output, improved customer and agent experiences and risk reduction. Over the past two years, we have made significant investments in robotic process automation, building capabilities in agent collections and reactivation, customer refund processing, risk exception decisioning, proactive agent credit limit increases and receiver name changes. While the elimination of manual processes drives cost efficiencies the speed and quality of the outputs have also led to better experiences. We are now taking a similar approach to artificial intelligence as we have with robotics including exploring ways to use generative AI in areas like software development, marketing content creation, price decisioning, customer care assistance and translation services.

While early in the journey, we believe generative AI has the potential to increase revenue, further improve efficiency and productivity over time and thus provide additional value to our shareholders. Last, we are pleased to announce a meaningful expansion of our relationship with Visa. This long-term global strategic relationship covers issuance, Visa Direct and further enables collaboration between the two companies across 40 countries and five regions. Visa has been a long-term strategic partner of Western Union and we are thrilled to extend this relationship for years to come. Looking ahead, we remain optimistic about our strategic direction and the positive progress we have made. We are pleased with the change in the underlying trajectory of our business driven by improved transaction trends across both digital and retail businesses while continuing to deliver improved top line results and strong cash flow.

We have also made substantial progress on our talent evolution, including a meaningful realignment of the top 100 executives at the company. This was done through both internal promotions and external hires and I believe we now have the right people in the right roles to allow us to execute on our Evolve 2025 strategy. We have a loyal customer base that trust our brand and values our services. We have a global network that provides unparalleled access and convenience to nearly 120 million people around the world and have now achieved a turnaround in transaction trends, thus validating the relevance of our offering and our brand. We have a talented and dedicated team that is focused on executing our strategy and driving innovation and we have a clear vision and early progress on how we can leverage our assets to create new revenue streams and growth opportunities.

I am confident that we have the right strategy, the right capabilities, the right team and the right mindset to achieve our strategic priorities. Thank you for joining the call today. I will now turn the call over to Matt to discuss our financial results and our forecast for next year in more detail.

Matt Cagwin: Thank you, Devin and good afternoon, everyone. I’m pleased to be here today to walk you through our 2023 fourth quarter and full year results and our 2024 financial outlook. Before I begin, I would like to share with you the updated names of our segments more accurately reflect the underlying businesses associated with them. Our C2C segment will now be referred to as Consumer Money Transfer or CMT and our other segment will be referred to as Consumer Services or CS, as Devin mentioned earlier. The names of the segments are the only thing that changed. We have not changed the composite of the business within them. For the full year, adjusted revenue grew 4% which is meaningfully better than our original outlook of down 2% to 4% due to better core results, the benefit of Iraq and Argentinian inflation.

In the fourth quarter, we delivered adjusted revenue of $1.1 billion, representing a 3% increase year-over-year. Results benefited from a 400 basis point impact from Argentinian inflation, a revenue increase from Iraq and the ongoing progress of our Evolve 2025 strategy. Fourth quarter results were above our expectations. As discussed during our last call, Iraq volume slowed in the fourth quarter. They benefited our results by 3 percentage points versus 8% benefit in the third quarter and a 10% benefit in the second quarter. For the full year, Iraq contributed 6% to adjusted revenue growth. Uncertainty remains high in Iraq due to the challenging regulatory environment. When we last spoke in October, our largest agent in the country had recently been suspended, leading us to believe that the volumes we return to levels closer to 2022.

This agent though, therefore, has been reactivated in early December. CMT transactions grew 5% in the quarter, led by continued momentum of our branded digital business which grew double digits Growth in our digital white label business and continued stabilization of our retail transaction trends ex Iraq. Adjusted operating margin was 16.1% compared to 15.8% last year, with the increase due to net savings related to our operating expense redeployment program and changes in foreign currency partially offset by higher marketing investments. In 2023, our full year adjusted operating margin was 19.6% which was in line with our outlook. Adjusted EPS was $0.37 versus $0.32 last year with the current period benefiting from higher operating profit and lower share count.

For the full year, we delivered adjusted EPS of $1.74 which was meaningfully above our original outlook of $1.55 to $1.65. This was driven by better revenue performance and the benefit of our operating expense redeployment program which we partially reinvested back in the business by accelerating our go-to-market programs in both retail and branded digital as well as incremental technology investments. Now turning to our CMT business; revenue declined 1% on a constant currency basis with transaction growth of 5%. Excluding our CMT domestic money transfer business, revenue and transaction growth would have been 1 percentage point higher for both. Branded digital revenue was up 4% on a constant currency basis with transaction growth of 13%, driven by our go-to-market strategy launched in the third quarter of 2022 which showed continued momentum after reaching positive revenue growth last quarter.

We’re excited about the sustainability of our transaction growth which has increased double digits for the third consecutive quarter while achieving positive revenue growth for the second consecutive quarter. Leading the way is North America, the first region where we launched our new go-to-market strategy which drove mid to high teens transaction growth in the fourth quarter and revenue in the high single-digit range. We are also seeing impressive results in APAC as Devin discussed earlier led by Australia which was an early adopter of our new digital platform. APAC drove mid-teens transaction growth and mid-single-digit revenue growth in the fourth quarter which we expect will continue to improve as we lap the go-to-market launch in mid-2023.

Moving to our retail business; we maintained stable transaction trends for the second consecutive quarter as we continue to make progress against our strategic priorities, including operational improvements, optimization to our network and enhancing our value proposition in the marketplace. When normalizing for Russia, Belarus and Iraq, we improved full year retail transaction growth by 500 basis points. Europe and CIS led the improvement in our retail transaction trends in the fourth quarter, with transactions growing in the low single-digit range, driven by our Evolve 2025 strategy. We also benefited as we lapsed an agent loss in the fourth quarter and have executed well on our remediation plan for the second agent that we’re losing. Over the last couple of years, our European retail business has not only faced macro-related challenges like war and inflation but has also lost two important agents.

With this backdrop, we have taken the opportunity to test new approaches in the marketplace. For example, we opened 100 concept stores across Europe in nearly 20 markets in 2023. We also improved our value proposition in key markets, driving double-digit transaction growth in our independent channel during the second half of 2023. North America grew retail transactions low single digit in the fourth quarter continuing its momentum from the third quarter. Prior to this year, our North America retail business hadn’t seen positive transaction growth since the second quarter of 2017. The enhancements we made like One Step Refund and Quick Resend helped to drive better customer and agent experience. Now moving to our Consumer Services segment formerly known as Other which represents 7% of total company revenue in the quarter.

Revenue for the full year was up 13% on a reported basis, while revenue in the fourth quarter was down 1%. The Revenue in the fourth quarter was impacted by tougher comparisons due to a portfolio optimization that we completed last year, further optimization of our float portfolio in the current period which resulted in a loss in the current quarter but will add value over time as well as a 5 percentage point drag related to the net impact of Argentine peso devaluation. We are excited about our Consumer Services segment with 2023 marking the second consecutive year of double-digit revenue growth. With the innovations that Devin highlighted earlier today and over the past few quarters, such as our new retail money order platform launched in the fourth quarter, our prepaid card that was relaunched in the third quarter or our digital wallet that’s currently live in five countries, we are bullish that we can continue to grow consumer services in the low double-digit range going forward.

At our Investor Day, we launched a 5-year $150 million operating expense redeployment program and we feel very good about the progress we’ve made to date. Broadly speaking, we see opportunity to continue to drive efficiency, manage our cost structure and leverage our scale. In 2023, we took action that allowed us to save over $50 million. The savings last year were primarily driven by talent reallocation, technology efficiencies, marketing improvements, cost and enhancements and optimizing our real estate footprint. As a result of these savings, we were able to invest in technology advancements, benefiting our ecosystem platform and our retail point-of-sale system as well as other opportunities like expanding our controlled distribution network.

Heading into 2024, I remain optimistic of our continued efficiency opportunities and I’m confident that we can hit a similar savings amount again this year. Now turning to our cash flow and balance sheet; in 2023 we generated $783 million of operating cash flow which includes a transition tax payment of $119 million paid in the second quarter. These tax payments will continue to step up to $160 million in 2024 and $200 million in 2025. I was proud of how well the organization embraced a more diligent approach to free cash flow and capital expenditure management. Capital expenditures were $31 million in the fourth quarter and $148 million in 2023. Capital expenditures were over 25% lower than 2022 and 2021. We are going to remain vigilant on investing in the right areas and shifting our agents from large signing bonuses to performance-driven commission structures.

Our strong free cash flow and disciplined expense management allowed us to continue to maintain a strong balance sheet with cash and cash equivalents of $1.3 billion and debt of $2.5 billion. Our leverage ratio remains strong and we’re at 2.4x and 1.2x on a gross and net basis which provides us flexibility for potential M&A, while maintaining our investment-grade credit rating. This strong free cash flow also allowed us to return almost $650 million to our shareholders in 2023 which included roughly $350 million in dividends and $300 million in share repurchases, including $200 million in the fourth quarter. Now, moving on to our outlook. Today, we provided our financial outlook for 2024, reflecting current macroeconomic conditions. We expect adjusted revenue to be in the range of $4.1 billion to $4.2 billion.

This range reflects continued growth in our branded digital business, the continued stabilization of our retail business and double-digit growth in our Consumer Services segment, driven by the advancements in our ecosystem strategy. We also expect Iraq to generate between $50 million and $100 million during the year. We also expect adjusted operating margins to be in the range of 19% to 21% and we expect EPS to be in the range of $1.65 to $1.75. Finally, we would like to provide an update on our four key performance indicators that we shared at our Investor Day. Starting with retention. In 2023, retail retention improved 70 basis points versus 2022. As we believe improving retention is a critical component to our strategy of achieving long-term sustainable growth across both our retail and digital channels.

Starting this year, we will report our total consumer money transfer retention. Our long-term aspiration to improve retention, 200 basis points annually hasn’t changed. But we’ve learned a lot in 2023, including the effects of a downward pressure that growing new customers can drive. We also made good strides on improving branded digital retention with a 120 basis point improvement in 2023. We continued to believe that customer acquisition is a key metric in accelerating our growth of our branded digital business to drive more customers to our digital platform and remain committed to growing this double digit annually. In 2023, we grew customer acquisition by 13% which was even higher on a cross-border basis. Next, moving to our omni-channel.

At our Investor Day, we shared that this small customer base was valuable to Western Union, generating 2.5x more transactions than a single channel customer. While we initially thought our omni-channel is a permanent state for our customers, we have found that omni-channel largely serves the pass-through as they migrate between channels. Only 30% of our 2022 omni-channel customers remained omni-channel at the end of 2023 while retail to digital migration accounted for 5% of our new branded digital customers in 2023. We will continue to focus on a seamless omni-channel customer experience and building an account-based relationship with our customers instead of a transactional one and believe that these benefits will be captured in other metrics.

However, we will no longer report this metric going forward as we believe it’s not significant to our overall business. Lastly, at Investor Day, we shared our goal to add 100,000 digital banking customers each month. However, since Investor Day, we have shifted our focus from Neobank customers to high-quality cross-border remittance customers. Additionally, as Devin highlighted today, our ecosystem strategy includes not only a digital wallet but it’s broader and includes an array of products and services, including retail money order, bill payments, prepaid cards, lending products and foreign currency exchange. These results will be directly reflected in the Consumer Services segment and not our consumer money transfer segment. We continue to believe the benefits of these new products and services will drive not only higher engagement but over time, will help us improve retention as we shift to an account-based relationship.

As a result, our goal moving forward will be to grow our profitable Consumer Services segment revenue double-digit annually which better reflects the progress of our ecosystem strategy. To recap, we’re pleased with the progress we’ve made so far in our Evolve 2025 strategy and we remain optimistic for the year ahead. Thank you for joining the call today and operator, we’re ready to take questions.

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Q&A Session

Operator: [Operator Instructions] Our first question comes to us from Will Nance from Goldman Sachs.

Will Nance: Maybe I can start off with some of the comments that you made around omni-channel customers. I know you previously talked around the retail digital escalator over time. And I know you’re not focusing on having omni-channel customers anymore. But I guess when you see these customers get off the escalator, do you still see them transacting at much higher levels? And is there any kind of overall change in your thought process about the value of these customers?

Devin McGranahan: Hi Will, it’s Devin. Indeed, you are correct. One of the reasons, as Matt highlighted, that we’re making this change is the real economic benefit to us is that retail to digital escalator. And as Matt highlighted, 5% of our new customers, digital customers in 2023 or prior retail customers, those customers turn out to have better retention and stronger ARPUs than customers that we acquire de novo as new to franchise digital customers. So growing and increasing our ability through omni-channel activities but the focus really is on the escalator and less on a pool of customers who live in both retail and digital. And, we think it gives — well, it gives us a cost benefit advantage in terms of our overall CAC. And so our ability to continue to grow the digital customer base and using the retail base as a feeder is an important part of the strategy and will be reflected in our ability to continue to grow new digital customers.

Will Nance: And then, just maybe a different question on some of the guidance and the kind of the guidance philosophy, particularly around reinvestment. Just a couple of data points that I’m picking up, I guess, it came a little bit ahead of expectations on revenue. We saw the expenses come in much higher bottom line kind of roughly in line with expectations sort of a similar dynamic going on in the full year guide. I think if we look at revenue ex Iraq, that’s coming in a little bit lower than maybe what you previously talked about kind of later last year, we’re still seeing earnings overall coming in roughly in line with expectations and the Iraq revenues kind of helping out. So, just when you constructed that guide, how did the incremental Iraqi revenues that maybe you weren’t expecting when you spoke to us in December how did that kind of factor into the construction of the guide?

Is there any conservatism in the overall numbers to account for the uncertainty in Iraq? And did you guys make any incremental investments on the revenue side that may have impacted the ex-Iraq numbers in light of these incremental revenues?

Tom Hadley: Main focus we’ve got is obviously on the top line and EPS. Sometimes you hit up the items down in Other which in line makes further investments if you got the right thing to invest in. But on your question about Iraq itself, we have made a fair bit of pricing actions during 2023 that have a carryover effect into 2024 as well as we continue to monitor that. So that’s been factored into our thinking here the opportunity as we get into ’24, as we gave them the $50 million to $100 million range, is slightly higher than we would have thought back in December when we met or November, I think it may have been actually but not meaningfully higher. We just knew we had a carryover effect of the actions we took this past year.

Devin McGranahan: It’s still a highly uncertain situation. Our main settlement partner has notified us that they will not settle for us for our cash exchange, retail customers in Iraq at the end of the first quarter. That’s a significant portion of our volume. And while we continue to look for alternatives to that, we really, I think, have put into the guide a reasonable outcome given the uncertainty of what may or may not transaction post March.

Operator: Our next question comes to us from Andrew Schmidt from Citi.

Andrew Schmidt: This is just a higher-level question to start off with. Obviously, you look at U.S. migration trends. Been pretty robust, only one market but clearly the biggest outbound market in the world. I’m wondering to what extent you’re seeing that show up in your results? I know that you mentioned pretty positive, I think, double-digit transaction growth in the independent channel. And I know it’s a mix of self-improvement initiatives also in there. But I’m curious to what extent you’re seeing that positive remittance or I should say positive migration trends show up in your results?

Devin McGranahan: Andrew, it’s a great question. Thank you for joining the call today. We are seeing the benefit. In fact, our business is driven by, as you know, two primary factors, overall global macroeconomic growth and by migration. And so the increased migration into North America over the last couple of years is benefiting, particularly those outbound corridors from the U.S. to certain regions in Latin America. And so we see double-digit transaction growth in those corridors as a result of the migration. There’s less of that when Matt was talking about the improved transaction trends in retail in Europe, there’s been less net migration into Europe over the last year or two. And so that is more of a result of kind of ongoing performance improvement enhancing the quality of our distribution network and our stronger go-to-market value proposition there.

Matt Cagwin: Devin’s comment is — you’re focusing on the specific question you asked but holistically, we believe the hard work we’re doing with our agents and our customers are really driving the progress we’re making. I think we have a modest tailwind as Devin just described. But when you look at it, we’re now starting to move from being a share donor to holding our fair share with a little bit of tailwind from this.

Devin McGranahan: In Mexico is the perfect corridor example where for many years, we were probably losing share U.S. to Mexico. In the last 12 months, we’ve returned back to growing share in that important corridor. And obviously, it’s in a corridor that the Central Bank of Mexico publishes is growing in the mid- to high single digits year-over-year.

Andrew Schmidt: And then, if I could dig into just the branded digital transaction growth up 13% this quarter. And I know you elaborated on this a little bit but if you could break down just the drivers of that, whether it’s new customer growth, whether it’s retention, whether it’s behavior, transactions per customer, any additional just the disaggregation of that would be helpful just so we can get a better understanding of the underlying mechanics of that transaction growth.

Matt Cagwin: I mean really, it’s all three. I highlighted a few of the components in back into the third but I highlighted in the metrics conversation at the end that our retention has improved and branded digital by 110 basis points in 2023. We’ve also highlighted that we continue to grow our new customers in the double-digit range, full year was 13%. And then we are seeing a little bit of an uptick in transactions per customer but that’s the lower the three [ph].

Operator: We’re going to go back to Vasu Govil [ph].

Unidentified Analyst: Hopefully, you guys can hear me this time. I guess my first question for you, Devin, on the digital wallet strategy. historically, you’ve been focused on sort of positioning that wallet to drive more retention and engagement. And I think today, the description you guys gave, it seemed like you were focusing a little bit on the revenue potential there as well. Is that a fair read?

Devin McGranahan: Vasu, I might slightly reframe that. We are focusing on growing revenue from our overall ecosystem strategy. And we believe that, that is an important metric to gauge our ability to return Western Union to profitable revenue growth as part of our Evolve 2025 strategy. A component of that is, in fact, growing our digital wallet which we believe will primarily benefit retention as it is a more account-based relationship and thus will drive increased revenue through lower customer churn and obviously, the increased ARPU from extended customers. So while we still have a strong focus on growing our digital wallet, we’re doing so more with a focus on our remittance business and on driving retention with our digital remittance customers by them having more of an account-based relationship which we believe will drive revenue of ancillary products and services, including interchange, including bill payment, including other services that are available digitally in the wallet that’s not available in our traditional transaction cross-border remittance platform.

Unidentified Analyst: And then a quick one for you, Matt. I was wondering on the margin guidance for 2024 if you could help us a little bit about what to expect for the cadence throughout the year.