Matt Cagwin: It’s going to bounce around, it’s going to be not linear. We kept the guidance of the ’19 to ’21 [ph] because we think as revenue accelerates as to provide us incremental profitable revenue growth is you have opportunity to make investments that will pull it down. Our goal is to hit the number throughout the full year but any given quarter can bounce around. I can’t really guide to that at this point.
Operator: Our next question comes to us from Tien-Tsin Huang from JPMorgan.
Tien-Tsin Huang: I just want to ask on the customer additions. I know it’s trending nicely with double digits but also the acquisition cost has been lower. How do you expect those two dynamics to trend here in ’24 ahead? Can we count on acquisition costs staying lower? Or is there a potential to maybe turn that down differently?
Matt Cagwin: I think we saw a further opportunity. As Devin talked about earlier, we have generative AI, we’re working on. We’ve done some things around robotics. Bob, who leads that organization has been with the company now for 18 months and he’s continuing to add skills into the organization. So we think there’s further opportunity as we enhance that as far as we’re rolling out incremental or new digital platform in different countries that will provide additional opportunities. So we don’t see pressure on that. I can’t say it’s going to be the same level of reduction in 2024 that we did in ’23 but we do see opportunity to keep making enhancements there.
Devin McGranahan: Tianjin [ph], one of the things we talk a lot about which is our ability to scale at cost-effective tax around the world, right? And so in some markets that are exceptionally well developed, like the U.S., the team has done a very nice job of that, what you see in the strong customer growth in the apart transaction levels that we saw last year. As we work our way around the world, increasing our capabilities to scale marketing acquisition and to do it cost effectively will be one of our priorities in 2024.
Tien-Tsin Huang: Just my last follow-up, just the Consumer Services, expectations for double-digit growth again in ’24. Should other components going to be different? I know there’s flowed [ph] and other things to consider but anything to call out there or rank the bigger contributors?
Matt Cagwin: Yes. So I think as you think about this year and last year, the vast majority of the growth has come through our legacy products that we had there, bill pay and money order. As you highlighted, there’s been a little bit of a tailwind from higher interest rates. We do have a relatively moderate term as we disclosed is probably about 4, 4.5 years is the duration for our investments there. So feel good about 24% for where we are in interest. Devin has talked about in these calls, the number of new products we put there, whether it be prepaid, ForEx, revamping our money order business and so forth. As you get in 2024 and beyond, we think that we’re going to start seeing a larger portion of our growth coming from those new product additions.
Operator: Our next question comes to us from Darrin Peller from Wolfe Research.
Darrin Peller: I guess my question is really more around just the trend line. Devin, I linked your comment about the narrowing between the transaction growth trends which we’ve seen improving consistently and the revenue growth trends which is still — I mean, if you calculate the Iraq and Argentina impact, still, I think, around negative 4% unchanged. So you’ve seen transactions improve, revenue seems like there’s going to be a lag to it but you did comment on the narrowing. So can you just get a little more detail on that because I think that’s the crux of what I know we and some investors are looking for to follow on from the obvious improvements you’re having in the transaction side of the business?
Devin McGranahan: Hi Darrin, indeed we are closely monitoring that gap. And I think we’ve talked about three things in the past which I’ll reiterate. One, our long-term aspiration is to maintain the ratio between transactions and revenue to be a 200 to 300 basis point gap as we kind of continue to evolve our business. And so our goal is to get revenue up to reach that 200 to 300 basis point gap during the duration of our Evolve 2025 strategy. The second is the way we rolled out, particularly on the digital side but also on the retail side, our revised go-to-market strategy which was kind of on a region-by-region basis create some lumpiness as to how you see that gap close because of the effects of the new region rolling into it.
As I commented on the public prepared notes, we will be lapping at least on the digital side, both the North American and European which is the preponderance of our digital business by the end of this quarter. So the acceleration in closing the GAAP will — the GAAP closure will accelerate in the second half of this year. And then third, we are continuing to iterate as we go across segments, geographies and channels. And so as we’ve always said, we compete in a lot of different places around the world. So we’ll continue to optimize. But our goal really is to close that gap and to close it over the course of the duration of our strategy.
Darrin Peller: I guess just one quick follow-up would be around the — is there any read on retention metrics on cohorts you gained via the promotional efforts now over the last year or so in the U.S.? It’s just — again, it looks like it’s great to see the transaction trends. Just curious to know a little more on the puts and takes of net new versus retention.
Matt Cagwin: We’ve highlighted, probably it’s been two quarters now but we continue to see strong results in the 90-day, 180-day retention for the newer cohorts are coming in through promotional pricing. It’s driven through the reengagement campaigns we’ve talked about in past calls, having better market-based pricing, more streamlined transaction processing as well as we’re starting to target companies that are doing ATM transactions which have a higher retention rate as well and we continue to see a high 20s, low 30% growth rate in our APN business, both in the retail and digital side.
Devin McGranahan: APN being payout to account. The other thing, I think, Darrin, you can look at Matt talked about the 110 basis point improvement in digital transactions year-over-year. That is the composition of our history, i.e., the accumulated book and as you know, as customers tenure in this category, retention goes up. So we’ve been growing new customers aggressively. But increasing the overall retention of the book which says something about the quality of the new customers and the retention in that subset of the portfolio in order to achieve that.
Operator: Our next question comes to us from Ken Suchoski from Autonomous.
Ken Suchoski: I just wanted to ask a couple on the physical retail business and maybe we can exclude Iraq just to strip out some of the noise. The revenue per transaction in that part of the business has declined over the last handful of quarters. So I was wondering if you could talk about what’s causing that revenue per transaction decline in physical retail ex-Iraq? And then, it looks like over the last few quarters, pricing adjustments were needed to accelerate transaction growth in that part of the business. So do you think your — do you think the lower pricing in that physical retail ex Iraq is sort of behind you? Or do you feel like you need to be more aggressive on that front to accelerate transaction growth even further into — as you go throughout the year?
Matt Cagwin: Ken, thank you very much for the question. As you think about the change in RPT ex Iraq over the last, call it, year, about 2/3 of that is really mix driven and you have about the remaining portion being more conscious price reductions that we’ve done. We’ve started doing some tests, we talked about in the last call in a large European country where we changed our FX yields multiple times throughout the day to be competitive which is driving pricing. We’ve done some other tests around the world that we’ve now kept permanent for many of them. So it’s a little bit of a mix of both of mix and conscious decision to drive performance. But one that we’ll highlight you’ve seen in our charts both this quarter’s past, you can see improvements in our transaction trends prior to sort of push in price changes in Q2 and Q3 as we were starting to do additional work with our agents and our customers on both the product side and customer service.
So to us, we believe that really all three elements are making a difference. It’s not a battle about price only, it’s a matter of having market competitive prices with great service, great product. As far as the future, we’re always going to be adjusting the market, looking what competitors do. So — but we are committed to our guidance.
