The Western Union Company

Thank you. On today's call, we will discuss the company's second quarter 2024 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 2023 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.

Good afternoon, and welcome to Western Union's second quarter 2024 financial results conference call. Today, we reported another quarter of improving revenue growth as we continue to implement our Evolve 2025 Strategy focused on returning Western Union to a market competitive position.

Over the last 2 years, we have been driving meaningful improvements in our customer and agent experiences and this quarter's results demonstrate that our efforts are working. Consumer money transfer transactions grew at 5% in the quarter, excluding Iraq, a continuation of the mid-single digit trends we have seen for the last four quarters.

This continued performance on transaction growth highlights the durability of the improvements we have made. For context, excluding the COVID grow over period, this is the first time we have seen four consecutive quarters of mid-single digit transaction growth since 2018.

We continue to believe that the consistent and sustainable transaction growth is the best indicator of the future health of our business. In addition to maintaining our transaction momentum this quarter, we continued to make progress in reducing the spread between transaction growth and revenue growth.

As we have previously discussed, closing this gap towards our long term goal of 200 to 300 basis points is a priority. For total consumer money transfer, we improved the spread between transaction growth and adjusted revenue growth by approximately 100 basis points compared to the first quarter when excluding Iraq with our retail business leading the improvement.

The highlight of the quarter was achieving positive adjusted revenue growth for the first time since 2021, when excluding Iraq. This milestone gives us confidence that we are well on our way to returning the business to sustainable, profitable revenue growth, as we continue to report solid transaction trends in both our retail and our digital businesses, narrowing of the revenue to transaction spread and now double-digit revenue growth in our consumer services segment.

For the quarter, our revenue reached $1.70 billion reflecting a 7% decrease on an adjusted basis. Excluding Iraq, our adjusted revenue growth is positive in the second quarter for the first time since 2021.

Earnings per share came in strong at $0.44 or down $0.07 relative to a year ago, which benefited meaningfully from higher revenue and operating profits from Iraq. Matt will discuss our financial results in more detail and provide an update on our 2024 outlook later in this call.

Now switching briefly to the macro. In late June, the World Bank released its semiannual migration and development brief, which provided a basis for estimating remittance volumes over the next couple of years.

And highlighted the fact that Western Union has begun gaining share again in 2023. Previously, we'd been losing market share to aggressive competitors in many parts of the world.

With the implementation of our Evolve 2025 Strategy, I'm pleased to say we are now a market share gainer again. Considering our market share is in the low-teens, we believe we still have significant room to continue to grow.

The World Bank's current economic outlook is for north of 3% principal growth for both this year and next year. And with our recent share gain performance, we believe, we can continue to see principal growth of mid-single digits or better for Western Union excluding Iraq.

Additionally, and contrary to the general market sentiment, the World Bank data would indicate pricing increased on an aggregate basis year-over-year. Even with increased growth in digital money transfer services, the global average cost to send remittances increased.

This is supportive of our belief that higher interest rates are forcing more rational competition and driving out marginal players, who may have been making uneconomic business decisions. So far this year, we have seen multiple players exit the remittance space.

We have also seen others raise prices as they strive for greater profitability and have seen several subscale players seek M&A opportunities in furtherance of increased scale and competitiveness. As a point of reference, in the second quarter, we saw net new independent agent activations in the U.S., up nearly 50% year-over-year.

And as the year progresses, we expect to see a similar dynamic in other parts of the world as smaller scale players are being forced to improve profitability or exit the market entirely. In addition, banks still hold a substantial share of the global market and continue to provide the pricing umbrella under which all MTOs compete, with the World Bank estimating that the average cost to send a remittance through bank channels globally is roughly 12%.

Additionally, banks can take multiple days or more to complete a transaction while Western Union provides near real time payouts to over a 100 countries across the world. Over the last two years, we have made significant progress on improving our retail operations, updating our digital platforms, elevating our customer and agent experiences and enhancing our overall value proposition in the marketplace.

This focus is leading to the improving revenue growth we reported today, and while we have made substantial progress, we do believe there is still meaningful opportunities to continue to improve. As we discussed at our 2022 Investor Day, returning our digital business to double-digit growth is a key priority of the organization and is essential to driving top line revenue growth for the overall company.

Over the past year, we have been improving the effectiveness of our marketing by cost effectively increasing top of funnel traffic in our digital properties around the globe. These changes have begun to take hold, and as an example, in the final month of the quarter, we saw visits to our U.S.

sites up 20% year-over-year. In addition to driving traffic at the top of the funnel, we've also made meaningful progress in simplifying the journey, customer journey and improving our funnel conversion rates.

As part of that process, we have simplified the branded digital customer profile creation. We have reduced the steps required for a customer to complete a transaction and have modernized our user interface and moved from a multi-page transaction funnel to a single page modular view.

These improvements have led to a 13% increase in conversion rates and have contributed to the double-digit transaction growth that we achieved in the second quarter even in the face of a much harder comparison as we lapped our double-digit transaction growth in this quarter last year. In addition to the improvements in traffic and conversion, we have also begun using machine learning algorithms to test our marketing messages, page layouts, and landing pages.

These algorithms run multivariate testing in real time and steer traffic to those variants with the highest degree of success, which should help drive continued improvements in coming quarters. At the start of our efforts, there was some concern that we would only acquire price sensitive bonus or offer seekers and thus dilute the quality of our existing customer acquisition efforts.

I am very pleased to report that concern has not materialized. If we look at cohort level transactions per customer, we continue to see steady improvements in performance with 2024 cohorts performing meaningfully better than 2023, and the 2023 cohorts performing meaningfully better than 2022.

The charts on the screen represent 3 and 6 month transactions per costumer post-acquisition. We chose this specific charts to allow you to see the performance of our most recently acquired cohorts, but the 12 month charts show a very similar performance trend.

As I have discussed before, Australia has been at the center of our efforts to turn around our digital business. This is a market that is highly digitized and where we first launched our new next-generation digital app roughly two years ago.

At the time of the launch, we were shrinking transactions at 5% and revenue was declining in the high single-digits. Since the launch of our new platform, we have continued to iterate from a technological standpoint with the goal of creating a best-in-class user experience and I feel we are well on our way.

Australia, now has a 20% point higher conversion than any other country in our APAC region and it has some of the highest LTV to CAC ratios we see anywhere among our significant digital countries. In the most recent quarter, Australia digital transactions grew at 30% with 14% revenue growth and we expect that spread to continue to close in the back half of the year as we anniversary some of the pricing initiatives we launched with our new go to market strategy in Australia in mid-2023.

All of these changes have enabled us to achieve the 12 plus percent branded digital transaction growth for five quarters in a row and I believe that they are durable and sustainable improvements. The good news is that as we continue to move forward, we believe we still have significant opportunity in many parts of the world for further improvements across our marketing effectiveness, funnel conversion and customer retention.

Now, on to retail. Last year we introduced several point of sale improvements including Remember Me, Quick Resend and one step refund to improve our customer and agent experiences.

We had received feedback that our transactions took too long and required too much repeat information from our customers relative to our competitors. I'm happy to report that in the second quarter we processed almost 3 million transactions using Quick Resend which is up roughly 70% sequentially compared to the first quarter.

We continue to expand the rollout of Quick Resend to allow our customers and our agents in other regions of the world to experience the speed and convenience that we have now had available in North America for a little over a year. In addition to Quick Resend, we have been expanding our pay in methods at the retail point of sale.

Specifically, we have added debit card acceptance which we have been rolling out across Europe over the last year with now a planned launch in the U.S. in the third quarter of this year.

We are also expanding and driving efficiencies in our account payout network across the globe which is being used more and more in our retail setting. Retail initiated, paid out to account transactions have accelerated significantly and in the second quarter grew at over 30% year-over-year.

Our goal with our account payout network is to provide speed, reliability, transparency and lower cost options for our customers. In a relatively significant strategic shift, we have now become more focused on end-to-end customer experience instead of absolute end point growth across our payout network.

To achieve this goal, we are increasing the number of direct connections we have with banks, wallets, and real time payout networks instead of relying on aggregators. A great example is our recent enablement of our own Western Union International Bank to SEPA in Europe, which will result in increased speed, transparency, and we believe close to a $0.5 million of cost savings annually versus our prior approach through an aggregator.

Our goal is to meet our customer’s needs by building the broadest array of funding and payout options regardless of channel. Lastly, I would like to take a minute to discuss our consumer services segment.

In previous calls, we have talked about how retail money order and bill payments have been the largest two businesses within consumer services and the biggest drivers of growth over the last couple of years. We have also now made it a goal to grow this segment of our business double-digits annually.

And after a slower start to the year, I am pleased to report we generated 14% adjusted revenue growth in the second quarter. While we do expect retail money order and bill payments to grow, we believe much of the future incremental growth within consumer services will come from products and services we have recently launched or expanded in the last 18 months.

Services like prepaid debit cards, foreign exchange, media networks and the ancillary revenue streams associated with our digital wallets. In the quarter, we continued to see solid growth in retail money order, and our Forex business in Europe is benefiting from a robust travel season.

As we expand our controlled distribution strategy of owned and concept stores, we will add additional products and services to our traditional cross border money transfer offering. These services not only add convenience and accessibility for our customers, but also improve the economics of our retail footprint.

We currently offer bill payments or retail Forex in nearly a dozen countries around the world, and we expect to continue to expand that list in the coming years. As we look to fulfill our mission of providing accessible financial services to the aspiring populations of the world.

We will continue to look for ways to provide our customers with access to the financial products and services they need for their lives. Looking ahead, we remain optimistic about our market opportunities and the progress we are making on delivering our strategic initiatives.

We are pleased with the underlying trajectory of our business driven by improved transaction trends across both our digital and our retail businesses, and we expect to continue improving top line revenue as a result. I remain confident that we have the right strategy, the right capabilities, the right team, and the right mindset to achieve our Evolve 2025 goals.

Thank you for joining the call today. I will now turn the call over to Matt to discuss our financial results in more detail.

Thank you, Devin, and good afternoon, everyone. I look forward to sharing a bit more on our 2024, second quarter results and our financial outlook.

Adjusted revenue was $1,073 billion which was down 7% due to the Iraq grow over. As we indicated in the past year, Iraq's revenue has been lumpy and uncertain.

In the second quarter of 2023, we earned $118 million in revenue from Iraq versus $34 million in the second quarter of this year. This decline negatively affected adjusted revenue by 7 percentage points.

Whereas excluding Iraq from both periods, adjusted revenue would have been slightly positive for the first time since 2021, which is several quarters earlier than we anticipated when we launched our Evolve 2025 Strategy. We are pleased with the steady progress in adjusted revenue ex.

Iraq, improving 500 basis points over the past year. Adjusted operating margins was 19% compared to 21.8% last year, with the decrease primarily related to elevated Iraq revenues last year and foreign exchange volatility in the current period.

Adjusted EPS was $0.44 versus $0.51 last year, with the prior period benefiting from higher Iraq revenues offset by lower share count in the current period. Now turning to our CMT business, consumer money transfer transactions grew 4% in the quarter and 5% excluding Iraq, led by continued momentum in our branded digital business, growth in our digital white label business and continued stabilization of our retail business.

Branded digital adjusted revenue was up 7% in the second quarter, with transaction growth of 13%. We are pleased to have carried over the positive momentum from the first quarter with another quarter of solid revenue growth and double-digit transaction growth.

We have now sustained double-digit transaction growth for five consecutive quarters, even against tougher comparisons. As we suggested last quarter, the spread between transaction growth and revenue growth rates increased slightly in the second quarter.

This was largely driven by the counter shift and holidays, and we believe the spread will continue to narrow going forward. Now turning to our regional view, we are pleased to see the revenue improvements in three of our five regions quarter-over-quarter, despite harder comparisons versus the first quarter, which benefited from a holiday shift and leap year.

North America revenue growth rate was down slightly relative to the first quarter, but grew on an absolute basis. And the Middle East was obviously facing a difficult comparison, with the year ago period benefiting from much higher Iraq contributions.

We continue to make progress across the organization and are seeing positive revenue trends globally as we continue to focus on driving growth in 2025 and beyond. In the short-term, we still have a couple of headwinds from some of the pricing initiatives we launched last year, given the outperformance of our Iraq business and the loss of counter service at one of our large agent partners in Europe.

As we anniversary these items in the back half of the year, we feel very good about closing the gap between transaction growth and our revenue growth rates and we expect by the end of the year to be much closer to our immediate term goal. Moving to our retail business.

As Devin mentioned earlier, we maintain stable transaction trends for the fourth consecutive quarter as we continue to deploy operational improvements around the world, optimize our network and improve our value proposition in the marketplace. From a revenue point of view, we are making progress as well, with the second quarter adjusted revenue excluding Iraq growth rate improving 100 basis points versus the first quarter.

Europe and CIS led the improvement in retail transaction trends in the second quarter with transactions growing 3%. We are seeing strength across a number of markets led by Spain, which was fueled by strong transactions in Western Union's owned and concept stores.

Now transitioning to our consumer services segment, which represents 10% of our company's revenue in the quarter. As a reminder, consumer services is mostly comprised of bill payment revenue in the United States and Argentina and retail money order in the U.S.

Adjusted revenue in the second quarter was up 14% benefiting from the expansion of our retail foreign exchange business, our new media network business, as well as continued growth in our retail money order business. We believe double-digit growth is sustainable going forward, which is forecasted to come in from our new and expanded project -- products such as our wallet, prepaid cards, lending partnerships, foreign exchange, and our media network business.

In the second quarter, consumer services segment margins was lower sequentially which is a result of us investing in our new products and services for our customers. As these products gain scale we expect margins to improve and to be at or better than the company average margins.

Now switching to our expense redeployment program, we continue to make progress on our five year $150 million program, which we announced during our Investor Day. In the second quarter, we incurred $9 million of redeployment costs as well as we continue to reinvest in efficiency -- as we invested in our efficiencies and manage our cost structure.

So far this year, we have taken action, which we expect to free up over $50 million in 2024. This is an addition to the $50 million we freed up in 2023.

We are now 18 months into our 5 year commitment and have achieved two-thirds of our Investor Day goal. After being at Western Union for 2 years, I am even more confident that we have meaningful opportunities left to improve both our efficiency and effectiveness.

Now turning to our cash flow and balance sheet, year-to-date we generated $60 million of operating cash flows, which was negatively impacted by $160 million paid to the IRS related to our Tax Act. Over $30 million in refundable deposits made to the IRS related to a proposed settlement of potential U.S.

Federal tax liabilities and almost $30 million related to prefunding of our account payout partners, which is one of our highest growth areas. Capital expenditures were approximately $65 million in the first half of the year, and we're almost 30% lower in the first half of last year as we have remained vigilant on investing in the right areas and shifting our agents from large upfront signing bonuses to performance driven commission structures.

I am also pleased that year-to-date we have returned $335 million to our owners with $159 million being paid in dividends and $176 million in share repurchases. We have continued to maintain a strong balance sheet with cash and cash equivalents of over $1 billion and debt of $2.6 billion.

Our leverage ratio has remained strong and we're at 2.7x and 1.6x on a gross and net basis, which we believe provides us with ample flexibility to return capital or potential M&A while maintaining our investment grade credit rating. Now moving on to our outlook.

Today, based on performance in the second quarter and our confidence for the remainder of the year, we are reconfirming our 2024 outlook. This outlook assumes no material changes in our macroeconomic conditions.

As a reminder, we expect adjusted revenue to be in the range of $4.150 billion to $4.225 billion. Adjusted operating margins are expected to be in the range of 19% to 21%.

And finally, adjusted EPS is expected to be in the range of $1.70 to $1.80. As you think about the phasing for the rest of the year, we expect to have continued steady improvement in our adjusted revenue, excluding Iraq for the remainder of the year.

As a reminder, Q3 2023 included $87 million of revenue from Iraq and we expect somewhere between $10 and $30 million of revenue from Iraq going forward per quarter. Additionally, our operating margins were lower than our 19% to 21% outlook in the fourth quarter during the past two years as we have invested in our Evolve strategy.

We do not expect our margins to be compressed to the same level this year. To recap, we are confident with the trends that we are seeing in the first half of 2024, as well as the progress we are making towards our Evolve 2025 strategy.

Thank you for joining the call today, and operator, we're ready to take questions.

We will pause momentarily to compile the Q&A roster. As a reminder, each person is allowed one question with one follow-up question.

All participants will be in listen-only mode.

Hey, guys. Appreciate it.

Let me ask a question. I wanted to follow-up maybe on some of the comments at the top of the call around industry pricing.

I guess it's interesting to hear that. I think you're right.

That's probably different than the kind of general consensus out there. So I guess, I would just kind of turn it back on you guys around the pricing dynamics, competitive dynamics in the market.

Does that kind of feel right to you? Where do you think the biggest price reductions are happening out there in the industry, and do you feel like there is a tailwind in the business right now as it relates to kind of pricing actions of some of the competitors?

Yes. Will, I think there's two things at work in your question.

One is what I was trying to emphasize, which is the macro across the globe trend lines, which for several years we have seen with price compression, the World Bank data would indicate some of that has alleviated, versus I think where you're going, in any given market, in any given period of time, there are competitors who are more aggressive or less aggressive and we continue to see specific competitors in specific markets taking action. But we feel confident that the aggregate is stabilizing and in some cases maybe moving in the right way, particularly as marginal and small or particularly corridor specific specialists seem to be becoming either more rational or exiting the market.

And then I heard the comments on expecting kind of more steady progress on the spread on digital revenues versus transactions. I wonder if you could kind of speak to the retail side of the business and then I guess across both of them, if there's any kind of notable comps we should be keeping in mind over the past, call it, 9 months or so, that can kind a help us think about, lapping some of the pricing actions you've been taking across the business?

Will, as we've said, many times, the lapping is what drives the aggregate narrowing of the gap. But we also have other dynamics that are going on in the spread, some of which you heard about on the call, which is the shift to payout to account, which on in general is a lower RPT, which will continue to keep and persist with some spread, as well as individual corridor mixes.

Some corridors, particularly some of the larger and faster growth corridors are higher RPT. So as we index in those to drive growth, you will also see some compression in those RPTs and therefore continuance of the spread.

We do remain confident as we have stated that we can narrow that gap to be 300 to 400 basis points over time, and we are on a lockstep program to get there. Matt, I don't know if you want to add.

Thing will you probably already know this, and everybody probably knows it. But the other thing that we do love about our account payout customers is they are typically a stickier customer, typically have a large higher lifetime value.

So we're actually very excited and are targeting those customers where the market is growing, but it does create a little bit of near-term RPT compression.

If you could help us understand a little bit more of your expectations on the trajectory on a retail versus digital transaction standpoint. It looked to us like your retail side was around flat from a growth rate standpoint.

I think it had grown a couple of percent last quarter. So just maybe a little more on the numbers, but then also Devin, just obviously, there's always pricing adjustments here and there.

The majority of which anniversaried. So what do you expect to do in terms of the tactics and the tools to take to really help accelerate overall or just keep your transaction growth rates positive in the mid-single digit level more broadly?

Just keep doing what you're doing? Or any more specifics would be great.

Thank you for joining the call. I' m going to tackle the first half of that and then Devin will tackle a second.

But on your question around your first part of the question there around really spreads. Thank you.

Definitely. Blink on it.

We would expect to continue to closer to the 400 basis points that Devin talked about a minute ago. But the other part of your question really was around what are we expecting for the transaction growth rates is the first part of your question there.

We've now had 5 quarters in a row of double-digit 12%, 13% branded digital transaction growth. We've had now four quarters of basically flattish, sometimes a little bit above zero, sometimes a little bit below, but it's basically been flattish now for four quarters in a row.

So it wasn't really 2% that might be a white label impact you're doing your math there. But we feel very good about the trajectory we are on.

As Devin talked about a minute ago, we've got significant work we're still doing both on rolling out Quick Resend, Remember Me, all the technology we're doing in retail, which we think will continue to provide a tailwind for us as well as all the work that Devin talked about in the opening that we're working on in our branded digital business around the solutions, the examples he gave in Australia and so forth. So we feel very good about the sustainability of both those and continued opportunity for improvement.

To your second question, Darrin, about where do we go from here? So first, we are very positive about the fact that we've sustained consistent transaction growth, as Matt said, in digital at 12-plus percent and in retail flattish, which has given us 3 or 4 quarters now of 5%.

As we narrow the goal, we can expect revenue to continue to trend towards that transaction. We have a whole set of programs that I was talking about, whether it's kind of funnel effectiveness on digital or improving, continued our retail point of sale, our customer loyalty, our ongoing transaction excellence program to continue to drive those numbers up, but in the short term, creating the platform to drive consistent growth and to continue narrowing the gap between revenue and transactions is where we're headed for the rest of this year.

I wanted to ask on the margin front. I know it was in the range, but how did second quarter margin come in versus your plan?

And any callouts on the second half margin cadence? I know there's some considerations with Iraq and consumer services, marketing, et cetera.

Tien-Tsin, thanks for joining the call. The margins ended up having a little bit of a headwind this quarter that we weren't expecting related to foreign currency.

We pre-buy currencies in some of the markets around the world. And as you -- if you monitor the Mexican peso, we've seen a strong appreciation throughout the quarter.

But we feel very good about our margins beyond that. We're right where we expected to be.

We're very happy with our $0.44. That was in the range of where we expected to be for the quarter.

But from an operating margin, that was the 1 watch out that will move over time. And a higher currency actually helped us long term on revenue just has a little bit of a bite on the currency you're holding.

That helps. Okay.

Just real quick in my follow-up then. On consumer services, good result there.

I know the comp is a little bit tougher in the third quarter, but just the confidence here in the double-digits, anything more to share in terms of what's contributing in the very near term amongst the newer initiatives?

We're starting to see a bunch of traction as we highlighted in this call with things like our ForEx business in Europe, where we've expanded now into 2 or 3 more countries. Our media network, which is now starting to get some traction here in the U.S.

And as you know, we've launched a prepaid card here in the U.S. We've also seen a bit of a headwind in the bill pay business, particularly in Argentina, given all the disruption in that country and the strength of that business historically for us that should start to reverse itself as the politics and the inflation there, maybe settled down into something more normative.

We feel pretty good about our projection for the double-digit for the rest of the year, and there's enough stuff in the pipeline to continue that trajectory for at least the foreseeable future.

Just 2 quick ones. One on Iraq revenues.

Matt, I think I got your comment that you're still expecting $10 million to $30 million, I think, per quarter. Just any change in expectation there versus what you were expecting previously?

Thanks for joining the call. Now we had talked about in our last quarterly call that we had expected the range of $10 million to $30 million per quarter for the remainder of the year.

Q2 came in at 34%, so a little above the upper end. We had a relatively stable monthly trend during the second quarter.

So we continue to believe it would be 10 to 30, but it's a very volatile market, as you saw last year with a high mark of 118 and a low mark in Q1 of 25. So we think it's going to be much more normative, but it's still a very volatile market.

So that's why we've got the wide range there of $10 million to $30 million.

Which was the same range that we gave last quarter coming out of the accelerated first quarter, which we knew would not continue given how we've solved some of our partner and settlement issues. So I think that range is a reasonable range, although a bit wide, given all the gives and takes that are there, and we were pretty close this quarter to it.

That makes sense. Just a quick 1 for you, Devin, on capital allocation.

I know you've been focused on M&A. How are you thinking about prioritizing that versus more buybacks to the extent that you're not seeing assets in the market?

I'm very excited about the stability that we've now been able to achieve in our core operating business. And with 3 or 4 quarters of that stability behind gives us confidence that we could execute an M&A transaction integrated into the company and then drive value from it.

So we continue to look. Obviously, we're disciplined buyers, and I've expressed on this call that we remain very focused on ensuring capital allocation that is favorable from our shareholders' point of view.

So if the right opportunities come along, I believe we now have an operating platform in which we can drive successful value creation and integration. We just have to make sure it's the right opportunity.

First on just digital marketing. Now that you're seeing some good history of results, is it time to put more money in digital marketing?

Or do you feel good about the current spend levels? Just curious about the digital marketing investment as a starting point.

It's a great question. It's something we look at every quarter.

And as you probably tell because we only report it once a year, we vary the amount we spend in any given quarter based on the calendar, the holiday seasons and the effectiveness of the programs that we're running. As I started to talk about 2 years ago, we made a pretty significant shift going from what I would call a marketing budgeted approach to a very disciplined LTV to CAC approach.

And so when we see opportunities, they look like we can invest more money and maintain our discipline around LTV to CAC, we put money to work. And so we are driving that program forward.

And as those opportunities create like I highlighted in Australia, we will put more money behind it.

Got it. And then I want to go back to the comments on the environment.

Yes, we've been seeing the rationalization to in the retail end markets specifically. In your comment on the retail agent activations were interesting.

Does this create sort of a material tailwind? Do you think the growth as you kind of pick up more white space, particularly in the U.S.

and more broadly globally? Or is it more something that's supportive of just the current trend line?

Just curious to take your temperature on that.

Yes, great question. As you know, we've paid a lot of attention to network productivity.

So we've moved again from the idea that total count is the metric that matters to productive agent locations is the metric that matters. We've also focused a lot on how we get our pyramid right across our strategic distribution partners, our independent agent partners, our controlled distribution, which is our concept stores and our own stores.

I think what you see in North America is that team is really driving the program forward. It's part of what has helped propel our retail results to this point in time.

And I would expect will continue to help us accelerate our retail results as we drive more productivity and new productive locations, not just new locations, new productive locations across our network, both in the U.S. and in Europe.

By the way, you can see it in Europe, which is further along in the network management program, which I think this quarter had 3% transaction growth.

I just want to circle back again on the margins. I know we dug into this a little bit, but specifically the CMT margins, they came in a little bit better despite the lesser revenue.

And I just wanted to see if you could touch on again that specific for that segment, what the main drivers were? And what is implied for the second half of the guidance for the margin for the CMT?

Tim, as you've been following us for a number of years, our margins do move around from quarter-to-quarter as we make investments in our product as we roll out new partners, have incentives and the like. We're committed to the 19% to 21% margin, but it's hard to give you a specific guidance beyond that range.

I think you had mentioned in the prepared remarks, some calendar shift and holidays impacting the spread between digital revenue and transaction growth. Can you just elaborate on that?

And just talk about for the second half. Does that spread on the digital side go back more to like the 4% we saw in the first quarter?

Jason, may or may not be now, but I know you've also followed us for a number of years. But the way we report our transactions are based on when they're actually collected, whereas the accounting rules drive our revenue based on when the things actually happened.

So a little bit of a disconnect between the 2 of those. Eid moved between Q2 and Q1 this year.

So as the Muslim holiday shifted that caused a little bit of a disconnect at the end of the quarter in Q1. As we talked on the prepared remarks, our belief is that we will continue to advance towards our immediate intermediate-term goal at the end of the year that Devin talked about earlier, 400 to 500 basis points.

So it will continue to move as the year progresses.

Okay. And then just a follow-up on the retail transaction growth.

I know you said it was stable, kind of flattish year-over-year. Does it need to turn positive next year to get to that 2% revenue growth target for 2025?

There's multiple levers there. We believe we have opportunity to accelerate both our retail business, our branded digital business, as well as our white label.

So across the board, I think there's opportunities, and there's levers to get to that 2% doesn't require retail to be positive on its own, because we have room in the other places as well. But we do believe there is upside to our current retail this quarter actually made progress if you pull leap year out of Q1, so we actually continue to make some advancements quarter-over-quarter if you didn't have the leap year last quarter.

I wanted to ask about the physical retail business, excluding Iraq. And I think by our estimates, it looks like FX-neutral revenue growth declined mid-single digits, about 5% year-over-year over this quarter.

I think that was in line with last quarter. .

And then retail transactions, ex-Iraq increased maybe 1.5% year-over-year. So I just wanted to confirm those numbers.

And I was wondering if you could give us a sense for how those 2 metrics might trend over the coming quarters.

Ken, thanks for the question. The retail transactions are closer to zero than you're calculating.

You've included in there the white label business because the way what we disclosed, you're backing into a number that's a little off, but it's closer to flattish. But we do -- I mentioned in the last question, we do expect to have continued progress both in our retail and branded digital and white label business throughout the remainder of the year and going into next year.

On the revenue impact, you are much closer to the right answer.

Okay. And then just, I guess, a follow-up on that one, I guess, it looks like physical retail pricing ex-Iraq came down quite a bit quarter-over-quarter, maybe mid-single digits.

Anything to sort of call out there that's driving that? Or is it -- I know the first quarter ended on a holiday, so I'm not sure if that impacted it at all, but just curious how we should think about that pricing going forward?

Yes. We've not had major movement quarter-over-quarter in our retail pricing.

I think it's still the same white label diluting that. As you know, white label RPTs are meaningfully lower than our branded digital business as well as our retail business.

So I think it's a mix issue there and the assumption you're making on white label. I think it's actually the same as you may have asked last quiet quarter or someone asked last quarter, the RPTs are relatively flat quarter-on-quarter.

I was wondering if you could comment on the impact of Argentina inflation and currency to branded digital revenues this quarter. It looked like there was about a 200 basis point add back.

It's been zero for a little while, though, as you recall, in the past, you'd had a line item there before. So I was just curious what changed in the quarter.

What does macro look like down? And more importantly, what do we -- what should we expect in the second half in terms of that line.

Ramsey, thanks for joining the call today. Yes, this is actually the [with] been in the last 2 years.

The drivers really, as Devin talked about in the opening, we've had some really strong growth in Australia, which is driving part of that as well as we had some FX hedges that matured this quarter that drove a little bit wider spread than we would have had otherwise. Going forward, all of our forecasts are foreign currency agnostic.

So it's hard for me to real tell you what's going to happen tomorrow if I knew, I might not be working here.

Got it. And then just on the retail side, maybe an update on some of the products that you've talked about, namely Quick Resend and Remember Me, just curious what the timing and cadence that we should expect for rolling those products out in the months ahead.

Yes.

So as you know, we launched our first Quick Resend, Remember Me, which if you remember, a significant portion of our retail transactions are derived from retail customers who have transacted with us before. So expediting them through the process, makes efficiency gains for our agents and a better customer experience for our customers.

We launched that on our legacy point of sale in North America. We then went through the rest of our point-of-sale experience in North America.

And then at the beginning of each year, begin rolling it out across the rest of the world starting in the first quarter in parts of Europe and now have been expanding that going west. As you can see, the impact of that is starting to show up in the transaction growth at $3 million, up almost 70% quarter-over-quarter.

So we expect it to roll out through the rest of this year, and we'll have full network penetration of that experience across the globe by the end of this year.

I wanted to ask about Slide 10 in your presentation where you're showing the higher transactions per customer in your 2024 cohort. Is that something you're seeing across all geographies?

And any differences you're seeing across the regions? And just how sustainable do you think that improvement is.

So that improvement, we think, is very sustainable, and it goes to quality of the customers that we're attracting with our new program. It has a higher percentage of payout to account customers, which have higher TPCs and higher PPCs.

They also have higher long-term retention. The other thing is, as we talked about on retail with Remember Me and Quick Resend.

We've adopted some of those same practices on our digital platform, which is allowing repeat customers a much easier time to conduct the same transaction. So the Quick Resend functionality has improved significantly.

So you're seeing customers come back and do repeat transactions at a higher velocity than we have in the past. As you could expect, it varies across region.

Our strongest performance is in North America. Asia is coming on strongly.

Europe continues to improve. We've had some struggles in the Middle East given the dynamics there and the nature of the digital model in the Middle East, which is what we call a digital master agent model because of the license requirement.

So it's a little tougher to push through improvements and changes in that model than it is in many other parts of the rest of the world.

Just want to ask about the World Bank and the World Bank expecting remittance growth to accelerate in the industry. Do you guys feel the same way that you expect the industry to accelerate?

And what might be those drivers?

So everything we're seeing has been positive for the remittance industry. As you know, if you had asked us a year ago, we had some significant concerns about the effects of inflation on our customer base, which is tends to be at the lower end of the social economic totem pole and the effects of inflation have an adverse effect of greater proportions on our customers than they might on others.

We have largely not seen that play out in most of the world where PPCs have remained consistent in TPCs as you can see in the prepared comments have been increasing, not decreasing. So our customer has proven exceptionally resilient in the face of the economic challenges associated with inflation and migration trends have been steady across most of the important markets in the world and have accelerated in some places like in the Middle East with the construction that's been going on in Saudi Arabia and UAE and other places.

So we generally have a positive view as my comments indicated, at least in the foreseeable future, call it, the next 12 to 24 months, lest some other great global disaster or large war or some other thing disrupts it. But in a generally consistent macro environment, we are positive on the outlook for the industry.

And then as a follow-up, just thinking about your point that if you look at your data versus the World Bank that you guys are now share gaining, who is the share loser now? Is that the other digital competitors?

Or is that more traditional banks?

So again, the World Bank is not digital only. It is digital and retail MTOs and banks.

So you've got a large dynamic that's going on. You've got customers switching from banks to MTOs and within MTOs, you've got retail customers switching to digital.

What I would say in general is the banks are net share losers. This is not particularly central to theirs and our traditional customer at $300 or $400 of remittance volume is generally not their target transaction.

And then second, the more marginal players, corridor specialists, undercapitalized digital players, people who had been fueled into this segment and into this industry over the last couple of years are struggling a lot more when they now begin to realize it's a fairly capital-intensive business. And in particular, when you start migrating to pay out to account where you have to prefund in order to make it happen, it becomes even more expensive in a high interest rate environment.

So the smaller, less scale players are struggling and losing share, the banks are losing share.