Q3 2023 Western Union Co Earnings Call
Please note. This event is being recorded I would now like to turn the conference over to Tom Hadley head of Investor Relations. Tom. Please go ahead.
Thank you.
On today's call, we will discuss the Companys third quarter 2023 results and then we will take your questions. The slides that accompany this call and webcast can be found at Western Union Dot 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 Keigwin.
<unk> call is being recorded in 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.
<unk> to our form 8-K, as well as on our website Western Union Dot 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 the Western Union's third quarter 2023 financial results Conference call.
It was just a little over a year ago today, we presented our evolved 2025 strategy to the investment community in New York City.
We laid out a three year journey that focuses the company and successfully delivering.
Everyday branded financial services to the aspiring populations of the world, we articulated a strategy that focused on driving the business through customer level economics, including improved LTV to CAC and emphasis on improving retention and an expansion of our Tam.
By launching new transaction based financial services products, we painted a financial picture that would fund the required investments for this strategy within our strong operating margin range of 19% to 21% and with the goal of returning western Union to sustainable and profitable revenue growth.
By 2025.
Shortly thereafter, we reported Q3 2020 to see to see transaction growth of negative, 12% and adjusted revenue growth of negative 6%.
And just one year later today, we reported Q3 2023 transaction growth of 5% and adjusted revenue growth of 7%.
Even absent the benefits of the Iraq Central Bank policy changes, we have achieved global sea to see transaction growth now of 4% and 800 basis point reversal in the trajectory of the underlying business potentially.
Potentially most important and initially viewed with some skepticism we committed to returning our retail business to stability I am thus pleased to announce that we have now excluding Iraq returned our global retail transactions to flat on a year over year basis in the third quarter.
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Switching to digital when we launched our new go to market program I highlighted that we would first grow new customers. Then we would grow transactions and finally, we would start to grow revenue in the quarter, we achieved positive revenue growth of 3% for our global branded digital.
Business, a full quarter ahead of our previous target.
We have also begun to narrow the delta between transaction growth, which has been sustained at 12% and revenue growth.
While it is still too early in our journey to declare success as I reflect on the last year and the progress we have made against our evolve 2025 goals I am, particularly pleased with the following this.
The strength of the management team that we have been able to assemble which I believe is a great mix of the old and the new.
The broad based engagement of our employees around our purpose driven strategy and the recognition of our need to drive for everyday execution and everything we do.
The impact of our revised go to market strategy that is driving accelerated new customer acquisition at much more favorable tax <unk>.
A streamlined operating model that we believe is delivering both increased customer and agent satisfaction.
Unknown Attendee: Community to ask questions. Please note, this event is being recorded.
Ill, achieving efficiencies that power, our nearly $50 million and run rate savings.
Tom Hadley: I would now like to turn the conference over to Tom Hadley, Head of Investor Relations. Tom, please go ahead. Thank you. On today's call, we will discuss the company's third quarter 2023 results and then we will take your questions. The slides that accompany this call and webcast can be found at Western Union.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.
A fundamental shift in our product and technology roadmap from delivering back office modernization to building customer and agent facing product and experience innovation.
Finally, I'd like to recognize the strong support of our board of directors over the past 18 months as we've executed our strategy.
We believe the success of these programmatic building blocks will help us to continue to power our journey to achieve our evolve 2025 goals.
Tom Hadley: 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 then Western Union's filings with the Securities and Exchange Commission, including the 2022 form 10K for additional information concerning factors that could go forward.
Shifting now to our Q3 results our total revenue for the third quarter reached $1 billion $100 million, reflecting.
Reflecting a 7% increase on a constant currency basis, when excluding the contribution from business solutions compared to the same period last year.
Tom Hadley: This calls actual results 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 gap measures in our earnings release attached to our form 8K as well as on our website, Western Union.com, under the Investor Relations section.
This growth was driven by several factors, including the increase in revenue from Iraq, the benefit of Argentinean inflation.
And the improving fundamentals in our core business.
Adjusted earnings per share came in the quarter strong at 43.
And included our continued investments in our evolve 2025 strategy Matt.
Devin Mcgranahan: I will now turn the call over to our Chief Executive Officer, Devin McGranahan. Good afternoon and welcome to Western Union's third quarter, 2023 Financial Results Conference call. It was just a little over a year ago today that we presented our evolved 2025 strategy to the investment community in New York City. We laid out a three-year journey that focuses the company on successfully delivering everyday branded financial services to the aspiring populations of the world.
Matt will further discuss our financial results in more detail and provide an update on our 2023 financial outlook.
Shifting to the macro despite significant and potentially rising uncertainty and disruption in the world. We remain pleased with the resilience. We continue to see in the Western Union customer base. While much has been written recently on the receding power of consumer spending in the U S and Europe.
We continue to see a strong employment environment in our major markets, which we believe is translating engine into a continued willingness for our customers to send money home.
Devin Mcgranahan: We articulated a strategy that focused on driving the business through customer level economics, including improved LTV to CAC, an emphasis on improving retention and an expansion of our CAM by launching new transaction-based financial services products. We painted a financial picture that would fund the required investments for this strategy within our strong operating margin range of 19 to 21% and with the goal of returning Western Union to sustainable and profitable revenue growth by 2025.
Our transaction growth trends are very positive as I previously highlighted and our average ppt, excluding the higher ppt from Iraq has remained relatively stable year over year at down only 1%.
Despite this increasingly uncertain macro backdrop, we continue to see enough opportunities within our own customer base.
To support our belief in the ability to drive our evolve 2025 strategic outcomes.
Devin Mcgranahan: Shortly thereafter, we reported Q3 2020 to C to C transaction growth of negative 12% and adjusted revenue growth of negative 6%. In just one year later today, we reported Q3 2023 transaction growth of 5% and adjusted revenue growth of 7%. Even absent the benefits of the Iraq Central Bank's policy changes, we have achieved global C to C transaction growth now of 4% and 800 basis point reversal in the trajectory of the underlying business. Potentially most important and initially viewed with some skepticism, we committed to returning our retail business to stability.
Okay.
At our Investor day in 2022, we highlighted the fact that we found ourselves in the unenviable position of having a digital business that was shrinking on a transaction basis.
This circumstance was the result of our strategy designed to maximize in period revenue per transaction.
Direct defy the situation and drive long term transaction and revenue growth, we unveiled a new go to market strategy, which was designed to maximize customer LTV to CAC. Our new go to market strategy is a holistic program focused on accelerating our new customer acquisition by targeting the right.
Audiences launching promotional pricing offers improving funnel conversion and ensuring a high quality conversion ratio from first transaction to repeat usage.
Devin Mcgranahan: I am thus pleased to announce that we have now, excluding Iraq, returned our global retail transactions to flat on a year over your basis in the third quarter. Switching to digital, when we launched our new go-to-market program, I highlighted that we would first grow new customers, then we would grow transactions, and finally we would start to grow revenue. In the quarter, we achieved positive revenue growth of 3% for our global branded digital business, a full quarter ahead of our previous target.
Have you as you have now seen over the last year, our new customer acquisition is up meaningfully we have returned our branded digital business to double digit transaction growth rates and most importantly, we have achieved revenue growth for the first time in over a year with global branded digital revenue.
Growing over 3% in the third quarter we've.
We've accomplished all of this on a cat that has declined by over 20% year to date largely led by efficiencies in our marketing program not only is our strategy driving more customers transactions and now revenue, but it is doing so more cost effectively with retention rates generally in line.
Devin Mcgranahan: We have also begun to narrow the delta between transaction growth, which has been a sustained at 12% and revenue growth. While it is still too early in our journey to declare success, as I reflect on the last year and the progress we have made against our evolved 2025 goals, I am particularly pleased with the following. The strength of the management team that we have been able to assemble, which I believe is a great mix of the old and the new.
Or better than our historic norms.
As we have started to lap the impact of our promotional pricing launched last year, we continue to see strong growth in new customers and transactions. This ongoing performance is being driven by a relentless focus on improving execution and experience at a country and even a corridor level.
Devin Mcgranahan: The broad-based engagement of our employees around our purpose-driven strategy and the recognition of our need to drive for everyday execution and everything we do. The impact of our revised go-to-market strategy that is driving accelerated new customer acquisition at much more favorable cacks. A streamlined operating model that we believe is delivering both increased customer and agent satisfaction while achieving efficiencies that power our nearly $50 million in run rate savings. A fundamental shift in our product and technology roadmap from delivering back office modernization to building customer and agent-facing product and experience innovation.
One example of this more granular focus has been our recent efforts to ensure our offers and our messaging resonate in high payout to account corridors and as a result, our digitally initiated payout to account transactions grew 27% in the third quarter.
Moving now to our retail business, which is powered by our extensive agent network of over 400000 active locations, providing accessible financial services to those customers who prefer in person transactions. When we began our evolve 2025 journey.
Due to the sheer size and scale of our retail business, we knew that improvements in this business would be both more would be both more gradual and potentially lumpy.
Devin Mcgranahan: Finally, I would like to recognize the strong support of our board of directors over the past 18 months as we have executed our strategy. We believe the success of these programmatic building blocks will help us to continue to power our journey to achieve our evolved 2025 goals. Shifting now to our Q3 results are total revenue for the third quarter reached $1,100,000,000, reflecting a 7% increase on a constant currency basis when excluding the contribution from business solutions compared to the same period last year.
With the exit of Russia, and Belarus, the looming loss of two large and important agents in Europe, and the ongoing operational and execution challenges in the third quarter of 2022, we shrank transactions in the global retail business by 8%.
Beginning with the launch of our evolve 2025 strategy, we began investing in our retail point of sale system and platform in a more meaningful way than we had in many years with a focus on improving and simplifying agent and customer experiences, we launched a program to grow our footprint of control <unk>.
Devin Mcgranahan: This growth was driven by several factors, including the increase in revenue from Iraq, the benefit of Argentinian inflation, and the improving fundamentals in our core business. Adjusted earnings per share came in the quarter strong at 43 cents and included our continued investments in our evolved 2025 strategy.
<unk> through concept stores and own locations and we realigned our sales and account teams to focus much more on agent and network productivity versus total agent count.
One year later I am pleased to report that we have been able to achieve flat year over year retail transaction growth in Q3, excluding the benefits of Iraq, which continued the best sustained transaction growth improvement we've seen since 2018. Additionally.
Devin Mcgranahan: Matt will further discuss our financial results in more detail and provide an update on our 2023 financial outlook. Shifting to the macro, despite significant and potentially rising uncertainty and disruption in the world, we remain pleased with the resilience we continue to see in the Western Union customer base. While much has been written recently on the receding power of consumer spending in the US and Europe, we continue to see a strong employment environment in our major markets which we believe is translating into a continued willingness for our customers to send money home.
Additionally, our largest region North America grew retail transactions, 3%, excluding our U S domestic money transfer business and had its first quarter of positive transaction growth in over six years.
As we drive more customers to our platform and continue to make enhancements to the customer and agent experience. We are also beginning to see improvements in our retail retention rates in large markets like the U S. However, given ongoing challenges in markets like Europe, our global year to date.
Devin Mcgranahan: Our transaction growth trends are very positive, as I've previously highlighted, and our average PPT, excluding the higher PPT from Iraq, has remained relatively stable year over year, at down only 1%. Despite this increasingly uncertain macro backdrop, we continue to see enough opportunities within our own customer base to support our belief in the ability to drive our evolved 2025 strategic outcomes.
<unk> rate has been relatively flat to 2022.
Additionally, I would like to highlight the progress we continue to make on our controlled distribution strategy supporting our focus on network optimization.
We began to roll this model out in Europe last year, primarily through concept stores, where we partner with our agents to provide an exclusive western union branded experience.
Devin Mcgranahan: At our investor day in 2022, we highlighted the fact that we found ourselves in the unenviable position of having a digital business that was shrinking on a transaction basis. This circumstance was the result of a strategy designed to maximize in period revenue per transaction, to rectify the situation and drive long-term transaction and revenue growth. We unveiled a new go-to-market strategy, which was designed to maximize customer LTV to CAC. Our new go-to-market strategy is a holistic program focused on accelerating our new customer acquisition by targeting the right audiences, launching promotional pricing offers, improving funnel conversion, and ensuring a high-quality conversion ratio from first transaction to repeat usage.
We are pleased to share that we opened our 100th concept store in Europe. During the third quarter as of September. The average concept store opened more than six months was doing eight times the transactions of our broader retail footprint in Europe.
While we do not expect these types of locations to be a large portion of our overall distribution. They highlight the power of our brand and help position us to better meet the expanding needs of our customer base.
Finally, we began testing a new retail go to market program earlier this year with an emphasis on reinvesting in retail marketing and aligning our value proposition to market levels in important corridors. We have been pleased with the results we have seen including an impressive turnaround.
Devin Mcgranahan: As you have now seen over the last year, our new customer acquisition is up meaningfully. We have returned our branded digital business to double-digit transaction growth rates, and most importantly, we have achieved revenue growth for the first time in over a year, with global branded digital revenue growing over 3% in the third quarter. We've accomplished all of this on a CAC that is declined by over 20% year to date, largely led by efficiencies in our marketing program.
Round in one of our more meaningful European markets in this market, we expanded our controlled distribution, we increased our marketing presence and we implemented a much more dynamic pricing strategy that adjust pricing based on market insights multiple times a day.
Since its implementation our transaction growth in this country has more than doubled and after initial dip following its implementation our revenue growth rate is now growing at an even higher level than it was before.
Devin Mcgranahan: Not only is our strategy driving more customers, transactions, and now revenue, but it is doing so more cost-effectively with retention rates generally in line or better than our historic norms. As we have started to lap the impact of our promotional pricing launch last year, we continue to see strong growth in new customers and transactions. This ongoing performance is being driven by a relentless focus on improving execution and experience at a country and even a corridor level.
Recent progress in our retail business validates our conviction that we can indeed stabilized this business on a global basis.
Now switching to our third pillar ecosystem. The foundation of our accessible financial services strategy is to provide products and services that can meet the unique needs of our migraine customers, which will translate into a more account based relationship.
Devin Mcgranahan: One example of this more granular focus has been our recent efforts to ensure our offers and our messaging resonate in high payout to account corridors, and as a result, our digitally initiated payout to account transactions grew 27% in the third quarter.
Ultimately higher retention.
Traditional financial services can often be intimidating to our customers and may require account minimums and are imposed deep fees. As a result, our research indicates that there is significant unmet need amongst our customers for fair transparent and accessible transaction.
Devin Mcgranahan: Moving now to our retail business, which is powered by our extensive agent network of over 400,000 active locations providing accessible financial services to those customers who prefer in-person transactions.
Financial services.
And a need for broader access to credit.
To address these needs we have relaunched our prepaid card in the U S develop and launch a digital wallet in Europe, and South America and have piloted partner based lending solutions in Australia and Argentina.
Devin Mcgranahan: When we began our evolved 2025 journey, due to the sheer size and scale of our retail business, we knew that improvements in this business would be both more, would be both more gradual and potentially lumped. Technology.
Our wallet provides a foundational set of financial services, including a multi currency bank account PDP transfers as well as a visa debit card all integrated into our Western Union digital money transfer experience since last year. This service has been available in four countries.
Devin Mcgranahan: With the exit of Russia and Belarus, the looming loss of two large and important agents in Europe, and the ongoing operational and executional challenges, in the third quarter of 2022, we shrank transactions in the global retail business by 8%. Beginning with the launch of our evolved 2025 strategy, we began investing in our retail point of retail system and platform in a more meaningful way than we had in many years, with a focus on improving and simplifying agent and customer experiences.
In Europe in the last quarter, we launched friends and family in Brazil, the largest economy in Latin America, and an important digital market for us.
This quarter, we also launched a wallet in Argentina under our Pago fulfill brand in that country in the coming quarters, we continue to prepare for a launch in the United States.
We have now on boarded nearly 200000 customers to our ecosystem and in the process have gained several insights.
Devin Mcgranahan: We launched a program to grow our footprint of control distribution through concept stores and own locations, and we re-aligned our sales and account teams to focus much more on agent and network productivity versus total agent count. One year later, I am pleased to report that we have been able to achieve flat year-over-year retail transaction growth in Q3, excluding the benefits of Iraq, which continued the best sustained transaction growth improvement we've seen since 2018.
Our traditional money transfer customers are more attractive than customers seeking a pure digital banking offering.
Our best wallet customers are those that have migrated from either our traditional digital or retail offerings, including recently lapsed customers.
Onboarding and customer service matter more when enrolling someone in a more complicated product offering than our traditional transactional oriented money transfer services.
Devin Mcgranahan: Additionally, our largest region, North America, grew retail transactions 3%, excluding our US domestic money transfer business, and had its first quarter of positive transaction growth in over six years. As we drive more customers to our platform and continue to make enhancements to the customer and agent experience, we are also beginning to see improvements in our retail retention rates in large markets like the US. However, given ongoing challenges in markets like Europe, our global year-to-date retention rate has been relatively flat to 2022.
As our product experience has improved we have seen monthly transactions per active customer nearly double from four five in January to eight 5% in September.
Our customers have a clear preference for physical digital.
Physical debit cards over digital with a ratio of five to one.
We clearly see the need to rationalize our offering into one app instead of the two we currently have in the market in these four countries, where we planned to begin this consolidation in the first half of next year.
While we are in the early days of this journey I'm pleased with the progress we are making the learnings that we are developing and our ability to serve our customers in the future with a broader set of products and services.
Devin Mcgranahan: Additionally, I would like to highlight the progress we continue to make on our control distribution strategy, supporting our focus on network optimization. We began to roll this model out in Europe last year, primarily through concept stores where we partner with our agents to provide an exclusive Western Union branded experience. We are pleased to share that we opened our 100th concept store in Europe during the third quarter. As of September, the average concept store opened more than six months, was doing eight times the transactions of our broader retail footprint in Europe.
While we do not expect our ecosystem strategy to be a material contributor to revenue nor profits in the short run we do think it can improve customer retention rates over time and position us to provide additional products and services to meet the needs of our nearly 120 million customer.
Mers worldwide.
I'm also excited to announce that our U S. Prepaid debit card has now moved from friends and family to a commercial pilot and is available in the number of agent locations in the U S with plans to roll it out more broadly throughout 2020 for the card will provide customers with a convenient.
Devin Mcgranahan: While we do not expect these types of locations to be a large portion of our overall distribution, they highlight the power of our brand and help position us to better meet the expanding needs of our customer base.
And secure payment solution, allowing them to manage their finances with greater flexibility by reintroducing a prepaid card solution, we aim to expand our product offerings and provide additional value to our customers.
Devin Mcgranahan: Finally, we began testing a new retail go-to-market program earlier this year with an emphasis on reinvesting and retail marketing and aligning our value proposition to market levels in important corridors. We have been pleased with the results we have seen, including an impressive turnaround in one of our more meaningful European markets. In this market, we expanded our control distribution. We increased our marketing presence and we implemented a much more dynamic pricing strategy that adjust pricing based on market insights multiple times a day. State. Since its implementation, our transaction growth in this country has more than doubled, and after an initial dip following its implementation, our revenue growth rate is now growing at even higher level than it was before.
The final pillar of our evolved strategy, which we laid out a year ago was to improve the customer experience and drive ongoing operational excellence. We view this pillar as the force multiplier of the strategy.
Over the last several quarters, we've talked about improvements in our process flow such as remember me quick Reese and one step refund all of which are aimed at removing pain points from the transaction process and creating a better customer and agent experience.
Recall last quarter, we said that 30% of all transactions completed on our <unk> brand in the month of June were initiated using our quick <unk> transaction process. This.
Devin Mcgranahan: Recent progress in our retail business validates our conviction that we can indeed stabilize this business on a global basis.
This process allows an agent to complete a transaction in a fraction of the time than was historically required I am pleased to report that the usage of this tool in North America has continued to accelerate with now 45% of all transactions in the quarter on our Vigo brands being initiated using quick <unk>.
Devin Mcgranahan: Now switching to our third pillar, ecosystem. The foundation of our accessible financial services strategy, it's to provide products and services that can meet the unique needs of our migrant customers, which will translate into a more account-based relationship, and thus ultimately higher retention. Traditional financial services can often be intimidating to our customers and may require account minimums and or impose deep fees. As a result, our research indicates that there is significant unmet need amongst our customers for fair, transparent, and accessible transactional financial services and a need for broader access to credit.
<unk> technology and enabled western Union branded agents to perform at an even higher level. This.
This technology has been rolled out to roughly 25% of our North American agent base.
And we look forward to continuing to expand it across our network globally.
We are also excited about the rollout of our one step refund, which is now available at 80% of our agents around the globe and we hope to have this functionality ubiquitous across our global network over the next few quarters as functionality allows us to solve an important customer pain point and simplify the <unk>.
Devin Mcgranahan: To address these needs, we have relaunched our prepaid card in the US, developing launched a digital wallet in Europe and South America, and have piloted partner-based lending solutions in Australia and Argentina. Our wallet provides a foundational set of financial services, including a multi-currency bank account, P2P transfers, as well as a visa debit card, all integrated into our Western Union digital money transfer experience. Since last year, this service has been available in four countries in Europe, and the last quarter we launched friends and family in Brazil, the largest economy in Latin America, and an important digital market for us.
And process.
As part of our continuous improvement mindset. We have also created over a dozen other self service tools that allow agents to do things like password resets check the status of the transaction check their transaction history. These improvements help reduce friction calls and make for a better experience for our agents and <unk>.
Customers alike.
Finally, I'd like to highlight a new partnership.
And some additions to our executive team.
First we are pleased to announce our exclusive partnership with Sanco suit Sanka suite is the largest retailer in Chile, and the third largest retailer across Latin America. This partnership will allow consumers to send money internationally for more than 250 of their establishment in Chile.
Devin Mcgranahan: This quarter, we also launched a wallet in Argentina, under a pago-facil brand in that country. In the coming quarters, we continue to prepare for a launch in the United States. We have now onboarded nearly 200,000 customers to our ecosystem, and in the process have gained several insights. Our traditional money transfer customers are more attractive than customers seeking a pure digital banking offering. Our best wallet customers are those that have migrated from either our traditional digital or retail offerings, including recently-lapsed customers.
To more than 200 countries and territories, where we operate.
Next I would like to announce the addition of Ben Hawksworth to our management team as our new Chief Technology Officer.
And brings with him a wealth of experience, including more than 25 years of global technology leadership roles across multiple high transaction Fintech organizations.
Devin Mcgranahan: Onboarding and customer service matter more when enrolling someone in a more complicated product offering than in our traditional transactional-oriented money transfer services. As our product experience has improved, we have seen monthly transactions per active customer nearly double, from 4.5 in January to 8.5 in September. Our customers have a clear preference for physical debit cards over digital with a ratio of five to one.
He was most recently, the chief technology and product officer with Progressive leasing and prior to that he was the chief information officer at five serves slash first data's merchant acquiring business.
I would also like to announce that Rodrigo Garcia President of our Latin American business has now assumed the role of President of North America Rod.
Rodrigo has been with Western Union for nearly 20 years, having helped build our Latin American business over the past two decades.
For the last several years he has been successfully managing and growing our Latin American operations to now be the fastest growing region of the company and we look forward to that leadership here in North America.
Devin Mcgranahan: We clearly see the need to rationalize our offering into one app instead of the two we currently have in the market in these four countries. We plan to begin this consolidation in the first half of next year. While we are in the early days of this journey, I am pleased with the progress we are making, the learnings that we are developing, and our ability to serve our customers in the future with a broader set of products and services.
Looking ahead, we remain optimistic about our strategic direction and the positive progress. We are making we are pleased with the change in the trajectory of our business driven by improved transaction trends across both our retail and our digital businesses. We are excited about the <unk>.
Devin Mcgranahan: While we do not expect our ecosystem strategy to be a material contributor to revenue nor profits in the short run, we do think it can improve customer attention rates over time, and position us to provide additional products and services to meet the needs of our nearly 120 million customers worldwide. I am also excited to announce that our U.S, prepaid debit card has now moved from friends and family to a commercial pilot and is available in the number of agent locations in the U.S, with plans to roll it out more broadly throughout 2024.
Launch of our new prepaid card solution in North America, and the opportunity that that presents as part of our expanding ecosystem offering we remain committed to delivering value for our customers our shareholders and other stakeholders, while we adapt to this rapidly evolving market dynamics.
I would now also like to thank our 8000 plus employees for their dedication and commitment to our customers and our partners their focus passion and efforts every day have enabled us to make the progress discussed here and will enable us to continue to meet our evolve 2025 goals.
Devin Mcgranahan: The card will provide customers with a convenient and secure payment solution, allowing them to manage their finances with greater flexibility. By reintroducing a prepaid card solution, we aim to expand our product offerings and provide additional value to our customers.
Thank you for joining the call today, and I will now turn it over to Matt to discuss our financial results in more detail.
Thank you Devin and good afternoon, everyone I look forward to sharing our financial performance over the past quarter and highlighting some of the key achievements.
Devin Mcgranahan: The final pillar of our evolved strategy, which we laid out a year ago, was to improve the customer experience and drive ongoing operational excellence. We view this pillar as the force multiplier of the strategy. Over the last several quarters, we've talked about improvements in our process flow, such as remember me, quick resend, one step refund, all of which are aimed at removing pain points from the transaction process and creating a better customer and agent experience.
I will also outline our updated outlook for the remainder of the year.
Okay.
Starting with a review of our financial results in the third quarter Western Union delivered revenue of $1 1 billion.
Representing a 7% increase year over year on a constant currency basis.
This is excluding contributions from business solutions.
Results exceeded our expectations due to revenue increase from Iraq, a 300 basis point benefit from Argentinian inflation <unk>.
Devin Mcgranahan: Recall last quarter, we said that 30% of all transactions completed on our Vigo brand in the month of June were initiated using our quick resend transaction process. This process allows an agent to complete a transaction in a fraction of the time than was historically required. I am pleased to report that the usage of this tool in North America has continued to accelerate, with now 45% of all transactions in the quarter on our Vigo brand being initiated using quick resend technology and enabled Western Union branded agents to perform at an even higher level.
And improvements in our retail and branded digital businesses.
As Devin highlighted earlier.
We achieved positive revenue growth in our branded digital business globally, a full quarter ahead of expectations.
During the third quarter, we continue to see elevated volumes in Iraq relative to historical levels due to a change in monetary policy, which began impacting our business in the first quarter of this year.
In Q3, Iraq benefited adjusted revenue by eight percentage points.
Devin Mcgranahan: This technology has been rolled out to roughly 25% of our North American agent base, and we look forward to continuing to expand it across our network globally. We are also excited about the rollout of our one step refund, which is now available at 80% of our agents around the globe, and we hope to have this functionality ubiquitous across our global network over the next few quarters. This functionality allows us to solve an important customer pain point and simplify the refund process.
With over half of this benefit coming in July.
For the remainder of the year, we expect Iraq volumes to be significantly lower going forward as we recently.
Saw levels come down closer to 2022 levels.
Due to changes in the regulatory environment.
I will discuss our forward looking assumptions when we get to our financial outlook in a few moments.
We continue to make progress on our revolve 2025 strategy growing CDC transactions, 5%.
Devin Mcgranahan: As part of our continuous improvement mindset, we have also created over a dozen other self-service tools to allow agents to do things like password resets, check the status of a transaction, check their transaction history. These improvements help reduce friction, calls, and make for a better experience for our agents and customers alike.
This is led by continued momentum in our brand and digital business, which grew transactions, 12% in the quarter and flat retail transactions excluding Iraq.
Which had been in decline since 2019.
Adjusted operating margins.
<unk> 19, 6% compared to 26% last year.
Devin Mcgranahan: Finally, I'd like to highlight a new partnership and some additions to our executive team. First, we are pleased to announce our exclusive partnership with Senkosuit. Senkosuit is the largest retailer in Chile and the third largest retailer across Latin America. This partnership will allow consumers to send money internationally for more than 250 of their establishments in Chile to more than 200 countries and territories where we operate.
The decrease is due to higher variable costs and technology spend associated with our evolve 2025 strategy, partially offset by lower SG&A expenses associated the actions related to our operating expense redeployment program.
Okay.
As you May remember last October we launched a five year $150 million operating expense redeployment program.
Since launching we have taken actions that will allow us to free up more than $50 million in 2023 with over $40 million of total savings already benefiting this year.
Devin Mcgranahan: Next, I would like to announce the addition of Ben Hoxworth to our management team as our new chief technology officer. Ben brings with him a wealth of experience, including more than 25 years of global technology leadership roles across multiple high transaction FinTech organizations. Ben was most recently the chief technology and product officer with progressive leasing and prior to that, he was the chief information officer at five serves slash first data's merchant acquiring business.
So far in 2023, our ability to save has continued to outpace our ability to invest benefiting adjusted operating margin.
Adjusted EPS was <unk> 43.
Versus 42 last year with current with the current period benefiting from higher revenue, a lower share count partially offset by higher adjusted affect taxes.
Now turning to our <unk> business revenue grew 3% on a constant currency basis led by Iraq with transaction growth of 5%.
Devin Mcgranahan: I would also like to announce that Rodrigo Garcia, president of our Latin American business, has now assumed the role of president of North America. Rodrigo has been with Western Union for nearly 20 years having helped build our Latin American business over the past two decades. For the last several years, he has been successfully managing and growing our Latin American operations to now be the fastest growing region of the company. And we look forward to that leadership here in North America.
All regions drove sequential transaction improvement except for APAC.
For our branded digital business revenue was up 3% on a constant currency basis on transaction growth of 12%.
This was driven by our go to market strategy launched last year.
This was the first quarter in over a year of positive revenue growth in our branded visual business.
Devin Mcgranahan: Looking ahead, we remain optimistic about our strategic direction and the positive progress we are making. We are pleased with the change in the trajectory of our business driven by improved transaction trends across both our retail and our digital businesses. We are excited about the launch of our new prepaid card solution in North America and the opportunity that that presents as part of our expanding ecosystem offering. We remain committed to delivering value for our customers, our shareholders, and other stakeholders while we adapt to this rapidly evolving market dynamic.
Now moving to the regional results in.
In the third quarter, North American adjusted revenue decreased 3%, which is a 500 basis point improvement relative to the first half of 2023.
This is driven by North American branded digital business, which grew 4% on a constant currency basis.
Reaching our goal of positive revenue growth in the third quarter.
Transactions accelerated and grew 7% led by our branded digital business and improving transaction trends in our retail business.
Which had a positive transaction growth for the first time since 2017.
Devin Mcgranahan: I would now also like to thank our 8,000 plus employees for their dedication and commitment to our customers and our partners. Their focused passion and efforts every day have enabled us to make the progress discussed here and will enable us to continue to meet our evolved 2025 goals.
The North American region has begun to turn a corner and is benefiting from our evolve 2025 strategy.
And the continuous operational improvements to our customer and agent experience. So we have made over the last several quarters and have discussed in the last few earnings calls.
Matt Cagwin: Thank you for joining the call today and I will now turn over to Matt to discuss our financial results in more detail. Thank you, Devon. In good afternoon, everyone, I look forward to sharing our financial performance over the past quarter and highlighting some of the key achievements. I will also outline our updated outlook for the remainder of the year. Starting with the review of our financial results, in the third quarter, West Union delivered revenue of $1.1 billion, representing a 7 percent increase year-over-year on a constant currency Services.
Revenue in Europe, and CIS was down 10% on a constant currency basis, while transactions were flat with a sequential improvement in key markets, including Spain, the United Kingdom and Germany.
As we've discussed previously the region has faced tough macro backdrop.
Revenue in the Middle East Africa, and South Asia grew 42% on constant currency revenue on transaction growth of 9% due to monetary policy change in Iraq previously discussed.
Matt Cagwin: This is excluding contributions from business solutions. Results exceeded our expectations due to revenue increase from Iraq, a 300 basis point benefit from Argentinian inflation, and improvements in our retail and branded digital businesses. Is Devin highlighted earlier, we achieved positive revenue growth in our branded digital business globally, a full quarter ahead of expectations? During the third quarter, we continue to see elevated volumes in Iraq, relative to historical levels, due to a change in monetary policy, which began impacting our business in the first quarter of this year.
Which had a higher principal per transaction driving this revenue growth.
The Latin American and Caribbean region grew constant currency revenue, 8% in the quarter on transaction growth of 9%.
This solid performance in the quarter was led by Argentina, Ecuador and Venezuela.
And finally revenue in APAC was down 7% on.
On a constant currency basis with flat transactions.
Now moving to our other revenue, which consists primarily of retail bill payment in Argentina, and the United States and retail money order in the United States other.
Other represents 7% of the total company revenue and grew 22%.
Matt Cagwin: In Q3, Iraq benefited adjusted revenue by 8 percentage points, with over half of this benefit coming in July. For the remainder of the year, we expect Iraq volumes to be significantly lower, going forward, as we recently saw levels come down closer to 22 levels, due to changes in the regulatory environment. I will discuss our forward-looking assumptions when we get to our financial outlook in a few moments. We continue to make progress in our evolved .25 strategy, growing C to C transactions 5%.
Year over year on a reported basis benefiting from higher interest rates and our retail money order business as well as solid transaction growth and our bill payment business.
As a reminder, Q3 was an easy comparison.
As we optimize our investment portfolio in the third quarter of last year.
Now turning to our cash flow and balance sheet.
Year to date, we have generated $519 million of operating cash flow.
Which included a transition tax payment of $119 million paid during the second quarter.
Matt Cagwin: This is led by continued momentum in our brand digital business, which grew transactions 12% in the quarter, in flat retail transactions excluding Iraq, which had been in decline since 2019. Adjusted the decrease due to higher variable costs, and technology spend associated with our evolved .25 strategy, partially offset by lower SGNA expenses, associated with the actions related to our operating expense redeployment program. As you may remember, last October, we launched a 5-year $150 million operating expense redeployment program.
As a reminder, these tax payments continue to staff up.
Over the next two years and will end after 2025.
Capital expenditures were $27 million in the quarter and $117 million on a year to date basis.
As mentioned previously we expect lowers agent signing bonuses going forward.
But in the first quarter. This year, we had a large signing bonus that was committed to prior to this change in strategy.
We continue to maintain a strong balance sheet with cash flow and cash flow equivalents of $1 1 billion and debt of $2 3 billion.
Our leverage ratios were two two times and one one times on a gross and net basis, which we believe provides us great flexibility for potential M&A, while maintaining our investment grade credit rating.
Matt Cagwin: Since launching, we have taken actions that will allow us to free up more than $50 million in 2023, with over $40 million of total savings already benefiting this year. So far in 2023, our ability to save has continued to outpace our ability to invest, benefiting adjusted operating margin. Adjusted EPS was 43 cents versus 42 cents last year, with current period benefiting from higher revenue, a lower share count, partially offset by higher adjusted effect taxes.
Year to date, we have returned $363 million to our shareholders.
This includes a $100 million of shares repurchased during the third quarter.
Now moving onto our outlook today, we improved our 2023 adjusted revenue and EPS outlook.
As mentioned earlier, we expect volumes from Iraq to be significantly lower going forward much.
Much closer to the 2022 levels. This is primarily due to the changing regulatory and policy environment in the country as regulators continue to address currency.
Matt Cagwin: Now, turned to our C to C business, revenue grew 3% on a constant currency basis led by Iraq, with transaction growth of 5%. All regions drove sequential transaction improvements except for APAC. For our branded digital business, revenue was up 3% on a constant currency basis on transaction growth of 12%. This was driven by our go-to-market strategy launched last year. This was the first quarter in over a year of positive revenue growth in our branded digital business.
And sanction related challenges in the banking system as well as other potential changes in our own internal policies or practices in that region.
Our outlook also assumes no material macroeconomic condition changes.
We now expect adjusted revenue, excluding Argentina inflation to be in the range of flat to positive, 1% and as a reminder, Argentine inflation has benefited year to date results by 300 basis points.
We continue to expect full year adjusted margin to be in the range of $19, 21% and lastly, adjusted EPS is.
Matt Cagwin: Now moving to the regional results. In the third quarter, North American adjusted revenue decreased 3%, which is a 500 base point improvement relative to the first half of 2023. This is driven by North American branded digital business, which grew 4% on a constant currency basis, reaching our goal of positive revenue growth in the third quarter. Transactions accelerated and grew 7% led by our branded digital business and improving transaction trends on our retail business, which had a positive transaction growth for the first time since 2017.
<unk> is now expected to be in the range of $1 68 to $1 75.
To wrap up.
A year after unveiling our evolve 2025 strategy I am pleased with the progress. We've made so far are branded digital business has returned to positive revenue growth one quarter ahead of our expectations.
And our retail business has seen significant improvement in transaction trends.
Relative to the last several years.
We look forward to sharing an update over the next upcoming quarters as well as providing our 2024 outlook during our call in February. Thank you for joining the call 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.
Matt Cagwin: The North American region has begun to turn a corner and is benefiting from our evolved 2025 strategy and the continuous operational improvements to our customer and agent experience that we've made over the last several quarters and have discussed in the last few earnings calls. Revenue in Europe and the CIS was down 10% on a constant currency basis, while transactions were flat, with a sequential improvement in key markets including Spain, the United Kingdom and Germany.
All participants will be in listen only mode.
Our first question comes to us from Tien Tsin Huang from Jpmorgan. Please ask your question.
Okay.
Alright. Thanks, so much I think encouraging results that got Devin maybe I'd ask with success in both the retail stabilization in the digital grid.
Matt Cagwin: As we've discussed previously, the region has faced tough macro backdrop. Revenue in the Middle East, Africa and South Asia grew 42% on constant currency revenue on transaction growth of 9% due to monetary policy change in Iraq previously discussed, which had a higher principal per transaction driving this revenue growth. The Latin American and Caribbean region grew constant currency revenue 8% in the quarter on transaction growth of 9%. This solid performance in the quarter was led by Argentina, Ecuador and Venezuela.
Credit growth coming a quarter early does it change your thinking on.
Investment timing or.
Yes.
That you'd maybe attack both of those between retail and digital.
Just curious if your strategy has changed at all.
Tien tsin, great to have you on the call. Thank you for the positive comments.
We have benefited over the course of call. It the last seven months from the increased an unexpected growth in Iraq. So we've had the opportunity to invest in our program.
Matt Cagwin: And finally, revenue in APAC was down 7% on a constant currency basis with flat transactions. Now moving to our other revenue, which consists primarily of retail bill payment in Argentina, in the United States and retail money order in the United States. Other represents 7% of the total company revenue and grew 22%. Year over year on a reported basis, benefiting from higher interest rates and our retail money order business, as well as solid transaction growth in our bill payment business. As a reminder, Q3 with an easy comparison is we optimize our investment portfolio in the third quarter of last year.
And that is as you can see driving the results is that relationship between being able to invest in our program and drive our relation and drive our results that we're going to continue through next year in terms of getting us to that sustainable positive.
Revenue growth that is the bedrock of our revolve 2025 strategy. So I would expect us to continue to use a very balanced and return oriented view on investing with the goal of driving to positive revenue growth.
Understood understood. So just maybe for Matt thinking about the fourth quarter Caribbean locations.
Any changes I noticed excluding Argentina, it sounds like no real.
Impact from from.
Matt Cagwin: Now turning to our cash flow and balance sheet. Year to date, we have generated $519 million of operating cash flow, which included a transition tax payment of $199 million paid during the second quarter. As a reminder, these tax payments continue to step up over the next two years and will end after 2025. Capital expenditures were $27 million in the quarter and $117 million on a year-to-date basis. As mentioned previously, we expect lower agent signing bonuses going forward, but in the first quarter this year, we had a large signing bonus that was committed to prior to this change in strategy.
Iraq any other considerations it sounds like you're still calling for macro stability I don't know if theres anything we should assume with Israel or.
Or anything any other color.
Yes, thanks for the question.
The conflict is going on in Israel is not overly material to our business. So you should not think about that as having a major impact on our financial results.
And that in Q4, we are.
Balancing our overall financial results and the upside we've gotten throughout the year from Iraq, and making additional investments in our evolved strategy things.
Along the lines of technology investment point of sale solutions.
Devin talked about the one app solution or.
We're also looking to accelerating some additional testing on the marketing side. So all of that fits into the guidance I gave a couple of months ago, but it helps explain why the guidance what it is.
Matt Cagwin: We continue to maintain a strong balance sheet with cash flow and cash flow equivalence of $1.1 billion in debt of $2.3 billion. Our leverage ratios were 2.2 times and 1.1 times on a growth and net basis, which we believe provides us great flexibility for potential M&A while maintaining our investment grade credit rating. Year-to-date, we have returned $363 million to our shareholders. This includes $100 million of shares we purchased during the third quarter.
Understood great. Thank you so much Tien tsin I'll, just add because its obviously been discussed a lot and it was in the prepared comments, we've been pleasantly surprised by the resiliency of our customer base pretty much across the globe and we've seen stability.
Across all regions and our PBT and as you can tell from the results we see strong growing.
Quarter over quarter improvements in our transaction trends.
Matt Cagwin: Now moving on to our outlook, today we improved our 2023 adjusted revenue and EPS outlook. As mentioned earlier, we expect volumes from Iraq to be significantly lower going forward, much closer to the 2022 levels. This is primarily due to a changing regulatory and policy environment in the country, as regulators continue to address currency and sanction related challenges in the banking system, as well as other potential changes in our own internal policies or practices in that region.
Think our customers are.
Largely in most susceptible to employment levels, and so as employment levels, particularly for the lower.
Paid employees have continued strong in most regions of the world.
It's creating the stability that might lack and other payment oriented businesses.
Yes, no great.
There is quite strong so sure.
Thanks for the clarification.
Our next question comes to Us from Jason Kupferberg from Bank of America. Please ask your question.
Matt Cagwin: Our outlook also assumes no material macroeconomic condition changes. We now expect adjusted revenue, excluding Argentine inflation to be in the range of flat to positive 1%, and as a reminder, Argentine inflation has benefited year-to-date results by 300 basis points. We continue to expect full-year adjusted margin to be in the range of 19 and 21%, and lastly, adjusted EPS is now expected to be in the range of $1.68 to $1.75.
Thanks, guys. So just on the raise in the revenue growth guidance. The adjusted revenue guidance I guess I have a point at the mid point here is that is that purely just because of the Iraq tailwind is lasting longer than expected or anything else, we should be noting there.
Yes, Jason this is Matt.
The way, we think about our results as Iraq has obviously provided an uplift in revenue throughout the year, we flagged that impact that it has also given us a lot more flexibility in where Devin talked about earlier about our retail go to market strategy. We feel like we're largely on track for at the midpoint of our original guidance. When you net all of those decision points moving elements.
Matt Cagwin: To wrap up, a year after unveiling our evolved 2025 strategy, I'm pleased with the progress we've made so far. Our branded digital business has returned to positive revenue growth, one quarter ahead of our expectations, and our retail business has seen significant improvement in transaction trends relative to the last several years. We look forward to sharing an update over the upcoming quarters, as well as providing our 2024 outlook during the call in February.
If not a hair bit above.
That's the only thing about it.
Okay. Okay.
That's helpful.
And then just as a follow up if I'm thinking about both the adjusted branded digital revenue growth acceleration, there as well as the retail transaction growth.
Improving just on both those fronts.
What are you expecting in Q4 should we see some further improvement relative to Q3 in terms of the year over year growth and then just any comments on rough trajectory as we head into the 24, because obviously you've got both those going in the right direction now.
Unknown Attendee: Thank you for joining the call, operator, or ratehead 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.
And so I think Theres a couple of things to think about there Jason remember.
Unknown Attendee: All participants will be in listen only mode.
And you have to take into account the way we launched the digital the new digital go to market is we started with a few corridors in North America in the August September timeframe, we expanded that to 50 corridors, which we then gained confidence in towards the back end of 'twenty.
Tin Jin Wang: Our first question comes to us from Tin Jin Wang from J.P. Morgan. Please ask your question. Thanks so much for the encouraging results. I thought Devon maybe had asked with success here in both the retail stabilization and the digital branding, branding growth coming in quarter early.
'twenty two we began expanding into European markets like the UK, Germany, France. We then continue that rollout over the course of the first two quarters, culminating with <unk>.
Devin Mcgranahan: Does it change your thinking on investment timing, or the intensity that you may be attacked both of those between retail and digital, and just curious if your strategy has changed at all? Kim Jane, great to have you in the call. Thank you for the positive comments. We have benefited over the course of, call it the last seven months from the increased and unexpected growth in Iraq. So we have had the opportunity to invest in our program and that is, as you can see, driving the results.
APAC in our big markets like Australia, So the revenue growth as we begin to work through the lapping of each incremental.
Not necessarily be linear and in some cases, it will be a little bit of lumpiness, depending on the size of the market in which we launched the program and where it will be I think over time, you should look towards what we're trying to get to which is sustainable double digit transaction and revenue growth, but the path between here and there is not likely to be linear the work.
Devin Mcgranahan: It is that relationship between being able to invest in our program and drive our results that we are going to continue through, you know, next year in terms of getting us to that sustainable, positive, revenue growth that is the bedrock of our evolved 2025 strategy. So I would expect us to continue to use a very balanced and return oriented view on investing with the goal of driving to positive revenue growth. Understood, understood.
That we began in retail at the beginning of this year is really now starting to take hold on a transaction basis, but as you can see we're not going to get the same double digit transaction growth rates that we've gotten in digital in retail will be much happier with low single digit transaction growth rates. So it just <unk>.
Longer than two.
Narrow that gap between transactions and revenues when transactions are only growing low single digits hopefully that helps.
Devin Mcgranahan: So just maybe from that, thinking about the fourth quarter here in the implications, any changes I know is excluding Argentina, it sounds like no real impact from Iraq, any other considerations, it sounds like you are still calling for macro stability. I don't know if there is anything we should assume with Israel or anything other call like. Thank you. Thanks for the question. The conflict is going on in Israel is not over the material to our business.
It does thanks for the comments.
Our next question comes to US from will Nance from Goldman Sachs. Please ask your question.
Hey, guys. Good afternoon I appreciate you taking the question.
I guess I just wanted to ask a question on the moving pieces in the guidance as well kind of piggyback on some of the prior questions.
Together, a handful of the comments I mean <unk>.
<unk> performance this quarter are materially better than expected I've seen a lot of upside from sort of external factors like Iraq over the course of the year.
Devin Mcgranahan: So you should not think about that as having a major impact on our financial results. Beyond that in Q4, we are balancing our overall financial results and the upside we have gotten throughout the year from Iraq and making additional investments in our evolved strategy, things along the lines of technology investments, point of sale solutions. Devon talked about the one-ap solution or ecosystem. We are also looking to accelerate into some additional testing on the marketing side. So all that fits into the guidance I gave a couple minutes ago that helps explain why the guidance is what it is. Understood.
Unknown Attendee: Great. Thank you so much.
You guys came in a little bit ahead of your objectives in the digital business.
And then I think the comment was made that the <unk>.
Ability to kind of save is outpacing the ability to spend and so I guess like all of those comments and very constructive and yet it does seem like the guidance for the fourth quarter is a little bit below where the street was expecting and there wasn't as much maybe the flow through of the outperformance. This quarter. So just is that FX is that the incremental expenses maybe just.
A little color on why we're not seeing some of that strength come through in the numbers and just any color you can provide on the on the fourth quarter.
Devin Mcgranahan: The technology is bad because it has obviously been discussed a lot and it was in the prepared comments. We have been pleasantly surprised by the resiliency of our customer base pretty much across the globe. We have seen stability across all regions in our PPT and as you can tell from the results we see strong growing quarter over quarter improvements in our transaction trends. I think our customers are largely and most susceptible to employment levels and so as employment levels particularly for the lower paid employees have continued strong in most regions of the world that is creating the stability that might lack in other payment oriented businesses. Now, I agree with the employment there is quite strong so share your results. Thanks for the clarification.
Okay, well thanks for the question.
FX not a material impact to us we do think it will be a drag based on today's rates of about a penny, but not a major major driver for us really what you are probably doing the calculus on us.
We're looking to make some incremental investments I'm hopeful Devin on the saver and devins. This vendor and he has promised me that it will catch up in the investments in our ball strategy both on the point.
Point of sale solution, one app solution that you talked about in the ecosystem.
Doing additional marketing things of that nature, so a little bit similar to last year as we work our way throughout the year.
We started saving well in advance of the actual spend.
Well I think it also goes to a general philosophy that we've been working towards.
There we have a tendency to want to start the year relatively conservative make sure that we're going to be able to deliver on our commitments and as we get towards.
Jason Kupferberg: Our next question comes to us from Jason Kupferberg from Bank of America.
The back half of the year and have confidence in the macro and in the performance of the business.
Jason Kupferberg: Please ask your question. Thanks guys. So just on the raise and the revenue growth guidance, they just revenue growth guidance. I guess we went up by half a point at the midpoint here. Is that purely just because of the Iraq talent lasting longer than expected or anything else we should be noting there?
Continue to make the investments in our strategy and so again you saw that last year youre seeing some of that this year.
Our next question comes to Us from Andrew Schmidt from Citi. Please ask your question.
Matt Cagwin: Yeah, Jason, this is Matt. The way we think about our results is Iraq has obviously provided an uplift and revenue throughout the year. We fly that impact. That is also given us a lot more flexibility and what Devin talked about earlier about our retail go-to-market strategy. We feel like we're largely on track for at the midpoint of our original guidance when you net all those decision points and moving elements, if not a hair bit above. Okay, okay, that's helpful.
Yeah.
Hey, Devin Hey, Matt Thanks for the.
Thanks for the question and good job.
Progress here.
I wanted to dig in on the digital side.
<unk> for a second maybe you could talk about what youre seeing in.
Just new user acquisition trends and then.
<unk> gross new use your number you should call out.
Maybe you could just talk about.
Whether the the user base is growing on a net basis and if not.
Matt Cagwin: And then just as a follow up, if I'm thinking about both the adjusted branded digital revenue growth, the acceleration there, as well as the retail transaction growth, improving just on both those fronts, what do you expect in Q4? Should we see some further improvement relative to Q3 in terms of the year of year growth and then just any comments on rough trajectory? As we head into the 24 because obviously you've got both those going in the right direction now.
What's the right expectation around that thanks a lot.
Thanks for the question a couple of things to unpack there as you know when we launched our <unk>.
Strategy back in.
August September our goal is to drive double digit new customer growth, which would then drive double digit transaction growth eventually, bringing us back to double digit revenue growth. Since we've launched that we've continued to see double digit new customer growth in cross border and we continue to have that.
Matt Cagwin: And so I think there's a couple things to think about there, Jason, remember, and you have to take into account the way we launched the digital, the new digital go-to-market, as we started with a few corridors in North America in the August September timeframe. We expanded that to 50 corridors, which we then gained confidence in towards the back end of 2022. We began expanding into European markets like the UK, Germany, France.
Drive our sustained transaction growth I was quite pleased in the quarter as we've begun to really lap. The most important market, which is north America, you've seen that transaction growth and customer growth continue in the double digits. Our ongoing program, which is to continue to drive that through improved marketing through <unk>.
Matt Cagwin: We then continued that roll out over the course of the first two quarters culminating with APAC and our big markets like Australia. So the revenue growth, as we begin to work through the laughing of each incremental, won't necessarily be linear. And in some cases it'll be a little bit of lumpiness, depending on the size of the market in which we launched the program and where it will be. I think over time you should look towards what we're trying to get to, which is sustainable, double-digit transaction and revenue growth, but the path between here and there is not likely to be linear.
Proved effectiveness.
Is sustainable and ongoing so we expect and continue to see users growing new customers growing transactions growing and thats, what's powering our revenue.
Our next question comes to Us from Tim Chiodo from UBS. Please ask your question.
Great. Thank you for taking the question I want to go to.
And that was made during the prepared remarks. It was a standout around the North America retail business with the I believe it was revenue up three and the transaction is positive for the first time in a big number which was six years. So I was hoping you could do a little bit of a broader kind of refresh us on the north American retail market in terms of the number of agents and how that might compare to.
Matt Cagwin: The work that we began in retail at the beginning of this year is really now starting to take hold on a transaction basis. But as you can see, we're not going to get the same double-digit transaction growth rates that we've gotten in digital in retail. We'll be much happier with low single-digit transaction growth rates. So it just takes longer than to narrow that gap between transactions and revenues when transactions are only growing low single-digit. Hopefully that helps. It does.
Unknown Attendee: Thanks for the comments.
Two to three years ago, the mix of exclusive versus not how that might compare to a few years ago any other any other key broader stats about that north American retail business, which just had its best quarter in six years, yes. It's great question. Thank you.
The interesting thing is the nature of the what I'll call. The structural elements is largely consistent with what it's been in past years in terms of the number of agents the number of locations the mix of those locations between our independent brands Vigo in Ob as well.
Will Nance: Our next question comes to us from Will Nance from Goldman Sachs. Please ask your question. Hey guys, good afternoon. Appreciate you taking the question. Yeah, I guess I just wanted to ask a question on the moving piece in the guidance as well. Kind of piggyback on some of the prior questions. I mean, if I put together a handful of the comments, I mean expense performance this quarter, materially better than expected. I've seen a lot of upside from sort of external factors like a rock over the course of the year.
As our more exclusive brand Western Union very little of that has changed if any or at all the underlying driver of the productivity really has been around our go to market improving our agent experiences winning a bigger share within those non exclusive agents and making our <unk>.
Will Nance: You know, the you guys came in a little bit ahead of your objectives in the digital business. And I think the comment was made that the ability to kind of save is outpacing the ability to spend. And so I think all of those comments seem very constructive and yet it does seem like the guidance for the fourth quarter is a little bit below where street was expecting. And there wasn't as much maybe flow through the outperform this quarter.
Allusive agents more productive investing in the right retail marketing messages that bring customers back into western Union locations, where in the past they might have left the last is we're getting very tactical at a corridor.
Matt Cagwin: So just, you know, is that affects is that the incremental expenses maybe just a little color on why we're not seeing some of that strength come through and the numbers and just any color you provide on the fourth quarter. Thanks. Hey Will, thanks for the question. FX is not a material impact to us. We do think it would be a drag based on today's rates of about a penny, but not a major driver for us.
Evel in terms of improving the products experiences so doing things like home delivery and the Dominican Republic, making sure that we have the right payout partners.
The rate exchange rates to Mexico, So the tactical execution of aligning the product and service delivery in a geography with an agent for a corridor is what really has been driving that performance.
Matt Cagwin: Really what you're probably doing, the calculus on is we're looking to make some incremental investments. I'm hopeful Devin, I'm the saver and Devin's the stender, and he's promised me that he'll catch up in the investments in our ball strategy, both on the point of sale solution, the one absolution that he's talked about in the ecosystem. We've been doing additional marketing, things of that nature. So a little bit similar to last year's, we work our way throughout the year.
Thank you I appreciate that context, the minor follow up I apologize. If this was captured early and I missed it but the overall total company revenue growth of flat to up one which was ex Argentina Argentina.
Did you mentioned, what the aggregate kind of across the first three quarters impact from Iraq was in other words, what would that 010 to one be if it didn't have that benefit from Iraq in the first three quarters of the year.
Matt Cagwin: We start saving well in advance of the actual spend. Well, I think it also goes to a general philosophy that we've been working towards where we have a tendency to want to start the year relatively conservative, make sure that we're going to be able to deliver on our commitments. And as we get towards the back half of the year and have confidence in the macro and in the performance of the business, continue to make the investment in our strategy. And so again, you saw that last year, you're seeing some of that this year.
We didn't give that number but we have given each quarter the impact by quarter for the impact on revenue, but what I did say to a question a few minutes ago is we've used the upside we've got from Iraq has the opportunity to go and accelerate our go to market strategy in retail so the way we've been looking at is what is Iraq net of retail <unk>.
<unk> on the pricing side as well as a dentist that much stuff that Dennis talked about with accelerating the point of sale solutions, whether it be remember me quick reason refunds and so forth.
Andrew Schmidt: Our next question comes to us from Andrew Schmidt from City. Please ask your question. Hey, Devin. Hey, Matt. Thanks for the question and good job on the progress here. I want to dig in on the digital side for a second. Maybe you talk about what you're seeing in just new user acquisition trends. And then they think that's a gross new user number user call out. Maybe you could talk about whether the user base is growing on a net basis. And if not, what's the right expectation around that? Thanks a lot. Thanks for the question.
That number is largely on track for the mid point of our range, we gave out investor day, which was down 2% to 4% so view that as somewhere circuit around net three down.
Great. Thank you so much.
Our next question comes to Us from Ramsey El <unk> from Barclays. Please ask your question.
Hi, Thank you for taking my questions. This evening.
I wanted to ask about Iraq, as well as the contribution from Iraq as it flowed in through mostly through retail locations or is it also benefiting digital revenues I'm just trying to get a better idea about how it's benefited those two sides of your business. Yes. It is.
100% retail.
100% return, Okay. That's what I thought and then Kevin I had a question for you about.
Devin Mcgranahan: A couple of things to unpack there. As you know, when we launched our strategy back in, you know, August, September, our goal was to drive double digit, new customer growth, which would then drive double digit transaction growth. Eventually bringing us back to double digit revenue growth. Since we've launched that, we have continued to see double digit new customer growth in cross border. And we continue to have that drive our sustained transaction growth.
Some kind of key new executive hires this quarter can.
Can you give us an update on the organization sort of evolution of the team do you have what you need at this point are there still gaps youre looking to sell.
How does that all evolving.
Hey, Thanks for the question as I indicated in my prepared remarks, I'm actually quite pleased with how the team has come together and now with Rodrigo.
Taking the helm in North America.
Devin Mcgranahan: I was quite pleased in the quarter as we've begun to really lap the most important market, which is North America. You've seen that transaction growth and customer growth continue in the double digits are ongoing in program, which is to continue to drive that through improved marketing, through improved effectiveness is sustainable and ongoing. So we expect and continue to see users growing, new customers growing, transactions growing, and that's what's powering our revenue.
And then taking our chief Technology officer role I have filled out the entire executive suite. So this would be the first time.
In my 18, plus months, where we have what I would consider a complete and full executive suite.
No. It's a great mix of people who have been in the business like Giovanni who was running Europe and Africa, and JC, who is running the middle East and Asia APAC on Rodrigo now in North America, with new folks like Karen who I announced last.
Time is our new Chief people Officer, and then this time.
As our new Chief Technology Officer, So I feel quite good about the team is coming together really well and I would now say we have a full team on the field.
Tim Chiotto: Our next question comes to us from Tim Chiotto from UBS. Please ask your question. Great. Thank you for taking the question. I want to go to account. Thank you. That was made during a prepared remark that was a standout around the North America retail business with the, I believe it was revenue up to three and the transactions positive for the first time in a big number which was six years. So I was hoping you could do a little bit of a broader kind of refresh us on the North American retail market in terms of the number of agents and how that might compare to two to three years ago.
Okay.
Great Congratulations on that thank you.
Tim Chiotto: The mix of exclusive versus not how that might compare to a few years ago. And the other any other key broader stats about that. North American retail business which just had its best quarter in six years.
Our next question comes to Us from Bryan Keane from Deutsche Bank. Please ask your question.
Hey, guys.
Question is from Matt just a clarification if I if I do the math imply revenue growth in the fourth quarter at least on the high end is something like a negative 5% growth.
Is that right because I guess I would've thought the number would be a little bit better given the turn in digital in the positive trajectory, we've seen in the retail business, but theres a lot of moving parts. So maybe you could just help us through yes, Brian there are a lot of moving parts.
Matt Cagwin: Yeah, it's a great question. Thank you. The interesting thing is the nature of the, what I'll call the structural elements is largely consistent with what it's been in past years in terms of the number of agents, the number of locations, the mix of those locations between our independent brands, Vigo and OV, as well as our more exclusive brand, Western Union, very little of that has changed if any or at all. The underlying driver of the productivity really has been around our go to market, improving our agent experiences, winning a bigger share within those non exclusive agents and making our exclusive agents more productive.
Between Q3, and Q4 Q3 has been had a benefit of the portfolio rebalancing I talked about in my prepared remarks that helped us by about 100 basis points in the quarter that will not repeat itself next quarter. So the comps get harder for our other category in Q4 relative to Q3 in earlier parts of the year. We've also highlighted.
Or in the year that we had the two lost agents, we start to lap the first those two but the other one the impact will become more severe in Q4.
And then as well as the new go to market strategy for retail have a little bit of pricing pressure in Q4 that will continue in the wood Devin talked about a minute ago transactions and revenue starting to converge over time that will take longer for retail and thats, having an impact. So we buy us accelerated that strategy. It has made it a little more pressure on Q4.
Matt Cagwin: Investing in the right retail marketing messages to bring customers back into Western Union locations where in the past they might have left. The last is we're getting very tactical at a corridor level in terms of improving the products experiences, so doing things like home delivery in the Dominican Republic, making sure that we have the right payout partners in the right exchange rate to Mexico. So the tactical execution of aligning the product and service delivery in a geography with an agent for a corridor is what really has been driving that performance.
Got it and then I guess my other question is strategically Devin you've had success with the digital program.
Matt Cagwin: Thank you. I appreciate that context. The minor follow up, I apologize if this was captured early and I missed it, but the overall total company revenue growth of flat up one, which was X Argentina, Argentina. Did you mention what the aggregate across the first three quarters impact from Iraq was? In other words, what would that 0101 be if it didn't have that benefit from Iraq in the first three quarters of the year?
Have you thought about leveraging pricing more in digital to even grow transactions faster or may be even more aggressive in retail to get the transaction growth growing more positive.
It's great question.
As we stated.
When we were on the stage a year ago, we were going to execute this transformation, while maintaining our commitment to our shareholders supporting our dividend and maintaining our industry, leading 19% to 21% operating margin. So we are working within the balance of that and I am quite pleased with.
Our ability to invest in any given period with the results that we're being able to deliver now what youre seeing both in transactions and revenue. So it's that equation that we balance every day every week every month every quarter and we'll continue balancing it going forward.
Got it thank you.
Matt Cagwin: We didn't give that number, but we have given each quarter of the impact by quarter for the impact on revenue. But what I did say to a question a few minutes ago is we've used the upside we've gotten from Iraq is the opportunity to go and accelerate our go to market strategy and retail. So the way we've been looking at it is what is Iraq net of retail investments on the pricing side, as well as done a bunch of stuff that Devons talked about with accelerating the point of sell solutions, whether it be remember me quick, recent, refunds, so forth.
Our next question comes to Us from James Faucette from Morgan Stanley. Please ask your question.
Great. Thank you very much can you hear me okay, yes.
Awesome that's great.
So I'm trying to make sure I know how to use all right sorry about that I'm wondering in terms of.
Your planning assumptions for.
For 2020 for a couple of things that obviously employment is has been quite strong in most regions of the world as you highlighted.
R.
Matt Cagwin: That number is largely on track for the midpoint of our range we gave out investor day, which was down two to four percent. So view that as somewhere circuit around net three down. Great. Thank you so much.
Are you feeling like it's appropriate to build than any.
Sure.
Planning for next year right now and.
Or should we expect that for the time being at least it makes sense to us to better streamline assumes stability on a go forward basis and I'm asking that question because I wanted to follow up quick question around how you're thinking about investment then.
Ramsey El: Our next question comes to us from Ramsey L. Othal from Barclays. Please ask your question. Hi, thank you for taking my questions evening. I wanted to ask about Iraq as well. Is the contribution from Iraq? Have it flowed in through mostly to retail locations or is it also benefiting digital revenues? I'm just trying to get a better idea about how it's benefited those two sides of your business.
Expansion of the projects that are underway.
Is that James as we've thought about 'twenty 'twenty four will come out in February and give more precise guidance, but sitting here today, we feel pretty strong about our customer base. They have been resilient as Devin talked about most important factor really is.
Devin Mcgranahan: Yeah, it's 100% retail. 100% retail, okay, that's why I thought.
Unemployment rates Theres also important about migration patterns, which we're watching which have been very strong for us as well. So we feel good about where we are but things can change every day and we monitor on a daily basis.
Devin Mcgranahan: And then, Devin, I had a question for you about, you know, you know, some kind of key new executive buyers, this quarter, can you give us an update on the organization sort of evolution for the team? Do you have what you need at this point? Are there still gaps you're looking to fill, you know, how is that all evolving? Hey, thanks for the question. The, as I indicated in my prepared remarks, I'm actually quite pleased with how the team has come together.
I think matts comments on the second part, where we monitor both employment levels, but also migration and after COVID-19.
Do stay relatively.
The low level of cross border migration.
Devin Mcgranahan: And now with Rodrigo, taking the home in North America, and Ben taking our chief technology officer role, I have filled out the entire executive suite. So this would be the first time in my 18 plus months where we have what I would consider a complete and full executive suite. As you know, it's a great mix of people who have been in the business, like Giovanni, who's running Europe in Africa and JC, who's running the Middle East in Asia, APAC on Rodrigo, now in North America, with new folks like Karen, who I announced last time as their new chief people officer and Ben this time as our new chief technology officer. So I feel quite good about the team. It's coming together really well. And I would now say we have a full team on the field. Great.
Since 2021, we've seen that rebounding and we see it whether it's in markets that have historically been more closed like Japan too.
Two places in Europe, like Italy, and Spain, where you see again inbound migration driving.
Unknown Attendee: Congratulations on that. Thank you.
The lower end of the employment spectrum.
As <unk>.
Economic opportunities continue for our our customers. So we remain with the viewpoint that stability at least as far as we can see into the future.
Is the right planning assumption.
Okay.
Yes that makes a lot of sense and then to follow up on that you mentioned that you're in.
And Devin kind of balanced each other out as you're making investment decisions.
How are you thinking about.
What makes sense and what kind of hurdle rates or other metrics you can share about how you think about pushing through potential upside.
Bryan Keane: Our next question comes to us from Brian Keene from Deutsche Bank. Please ask your question. Hey guys, my question is for matches to clarification. If I do the math, the implied revenue growth in the fourth quarter, at least on the high end is something like a negative 5% growth. Is that right? Because I guess I would have thought the number would be a little bit better given the turn in digital and the positive trajectory you've seen in the retail business, but there's a lot of moving parts. So maybe you could just help us through it. Yeah, Brian, there are a lot of moving parts. Between Q3 and Q4, Q3 has been had a benefit of the portfolio rebalancing.
The incremental investments versus.
Maybe it's better if we kind of pushed us to the bottom line or at least be a little more patient.
Even more and we're seeing that just trying to get a sense of your current thought processes around investment opportunities.
Unfortunately, not a simple answer because we are always monitoring and balancing our public commitments. We've made which is the point I don't think a few months ago, but in periods like we are right now going into Q4.
We're.
Focus on maintaining our LTV to CAC and driving marketing spend where it's very.
Providing really good return as we've talked about on the call today, we brought down our cash by about 20%.
So we feel really good about the progress we've made there and feel good about spending some more money in that space.
Matt Cagwin: I talked about my prepared remarks that helped us buy about 100 basis points in the quarter that will not repeat itself next quarter to come to get harder for our other category and Q4 relative to Q3 in earlier parts of the year. We've also highlighted earlier in the year that we had the two lost agents. We start to lapse the first those two, but the other one, the impact will become more severe in Q4.
Driving customer acquisition for going into 2024 on the technology side, we're always balancing the low double digit.
Return on investment.
Hard to measure some of these things we are driving agent experience or customer experience and it's one little output, but we're talking to our customers understand whats important talking to agents and driving technology improvements that can make their lives and experience with us better.
Matt Cagwin: And then as well as the new go to market strategy for retail, have a little bit of pricing pressure in Q4 that will continue in is the what Deb talked about a minute ago transactions and revenues starting to converge over time. That will take longer for retail and that's having impact. So by us accelerating that strategy, it has made a little more pressure on Q4. Got it.
And while I'm, the Ida Guy and that's the money guide.
There is a pretty strong and robust process within the company as evidenced by the fact that we've managed the investment envelope within our public commitments in our 19% to 21% operating so given there are more opportunities and ideas running around this place given the.
Devin Mcgranahan: And then I guess my other question is strategically, Devon, you've had success with the digital program. I've been thought about leveraging pricing more in digital to even grow transactions faster or maybe even more aggressive in retail to get the transaction growth going more positive. It's a great question. You know, as we stated when we were on the stage a year ago, we were going to execute this transformation while maintaining our commitment to our shareholders, supporting our dividend, and maintaining our industry leading 19 to 21% operating margin.
<unk> of our footprint our brand what we view as the market opportunity.
Those they get funded are the ones that have the ability to rise to the top of that heat on a revenue and return commitment projection. So there is internal competition given the constraints we're living in that I've highlighted we aren't about to relax.
We're making sure the things that we are funding our hyatt have the highest potential both for future revenue and return.
Yeah.
Devin Mcgranahan: So we are working within the balance of that, and I'm quite pleased with our ability to invest in any given period with the results that we're being able to deliver now, which you're seeing both in transactions and revenue. So it's that equation that we balance every day, every week, every month, every quarter, and we'll continue balancing it going forward.
Our final question comes to Us from Chris Kennedy from William Blair. Please ask your question.
Great. Thanks for fitting me in here I just wanted to follow up on retail retention rate for your retail customers.
Unknown Attendee: Thank you.
You said it was flat with 2022 levels I think your goal was like 200 basis points of improvement per year can you just talk about the roadmap to that 200 basis point improvement goal. Thank you.
James Faucette: Our next question comes to us from James Faucette, from Morgan Stanley. Please ask you a few questions. Great. Thank you very much. Can you hear me? Okay. Yes. Awesome. That's great. I'm trying to make sure I know how to use it and correct me. Sorry about that. I'm wondering in terms of, you know, you're planning a sometimes with the head to 2024, a couple of things that obviously employment has been quite strong in most regions of the world as you've highlighted.
Thanks for the question as I indicated we are seeing a tale of two worlds.
Three of our five major regions are seeing improvements in retail retention and two of our major regions are headed in the wrong direction now some of that's a impact of Matt has talked about the loss of a couple of large important agents and then some macro factors in the other region.
James Faucette: Are you feeling like it's appropriate to build in any conservatism in your planning for next year right now? And we should we expect that for the time being, at least it makes sense to better streamline and assumes stability on a go-forward basis. And I'm asking that question because I want to follow up with question around how you're thinking about investment and the expansion of the projects that are underway.
The things that we're working on and will continue to work on our improved transactional experiences for returning customers in both our retail and our digital environment.
We will be launching a new loyalty program hopefully in the first quarter of 2024, which we also think will help the last thing that we've done is to improve our ongoing communications and marketing efforts to customers on an ongoing basis and monitoring traditional.
Matt Cagwin: Is the James as we've thought about 2024 will come out in February and give more precise guidance. But sitting here today, we feel pretty strong about our customer base. They've been resilient as Devon's talked about. Most important factor really is unemployment rates. There's also important about migration patterns which we're watching which have been very strong for us as well. So we feel good about where we are, but things can change every day and we monitor on a daily basis.
Auction patterns.
Which we call the heartbeat and when someone falls off of their traditional transaction pattern, reaching out to them.
With either a marketing message or an offer to bring them back. So we are working hard to drive retention across the entire franchise, obviously with a particular focus on retail given our goal of achieving stability and as you can see in the performance of North America. When we are able to get improvements in retention that.
Matt Cagwin: And I think Matt comments on the second part where we monitor both employment levels but also migration and after COVID, you know, induced a relatively low level of cross-border migration. Since 2021, we've seen that rebounding and we see it whether it's in markets that have historically been more closed like Japan. Two places in Europe like Italy and Spain where you see again inbound migration driving the lower end of the employment spectrum as, you know, economic opportunities continue for our customers.
<unk> helps drive the overall transaction and as we highlighted North America retail is now performing at a level that we would be happy with on an ongoing basis.
Hey, Chris add to Kevins point is the metrics, we gave at our Investor day, a year ago. Those were all targets aspirations over the three year horizon was not meant to be viewed as a commitment going into 2023 or 2024, we wanted to have a true north to galvanize our employees as well as our shareholders. Knowing we're trying to target the first one we.
Matt Cagwin: So we remain with the viewpoint that stability at least as far as we can see into the future is the right planning assumption. You have to make a lot of sense. And then to follow up, Matt, you mentioned that, you know, you and Devon kind of balance each other out as you're making investment decisions. How are you thinking about, you know, what makes sense and what kind of hurdle rates or other metrics you can share about how you think about pushing through potential upside to incremental investments versus, hey, maybe it's better if we kind of push this to the bottom line or at least be a little more patient.
Got too was the double digit.
New customers in digital we had talked about on Investor day, most of the other ones were a little harder and took effort to get there.
So we're still working hard it's evidenced talked back to get to them.
Great. Thanks for taking the question.
Thank you for joining the Western Union third quarter 2023 results Conference call. We hope you have a great day.
Yes.
Matt Cagwin: I mean, even when we're seeing that, just trying to get a sense of your current thought processes around investing opportunity. Yeah, so it's unfortunately not a simple answer because we are always monitoring and balancing our public commitments we've made, which is the point Devon take a few moments ago. But in periods like we are right now going into Q4, we're focused on maintaining our LTVDCAC and driving marketing spin where it's very going to provide a really good return.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Goodbye.
Matt Cagwin: As we've talked about in the call today, we've brought down our CAC by about 20%. So it feels really good about the progress we've made there and feel good about spending some more money in that space and driving customer acquisition for going into 2024. On the technology side, we're always balancing the low double digit return on investment. It's hard to measure some of these things when you're driving agent experience or customer experience. It's one little output, but we're talking to our customers, understanding what's important, talking to our agents, and driving technology improvements that can make their lives and experience with us better.
[music].
Devin Mcgranahan: Peter. And while I'm the idea guy and that's the money guy, there is a pretty strong and robust process within the company as evidenced by the fact that we've managed the investment envelope within our public commitments and our 19 to 21% operating. So given there are more opportunities and ideas running around this place, given the strength of our footprint, our brand, what we view as the market opportunity, those that get funded are the ones that have the ability to rise to the top of that heap on a revenue and return commitment projection.
Yes.
[music].
Devin Mcgranahan: So there is internal competition given the constraints we're living in that I've highlighted we aren't about to relax for making sure the things that we are funding are the high have the highest potential both for future revenue and return.
Cristopher Kennedy: Our final question comes to us from Chris Kennedy from William Blair, please ask your question. Great, thanks for sitting me in here. I just wanted to follow up on retail retention rate for your retail customers. I think you said it was flat with 2022 levels. I think your goal was like 200 basis points of improvement per year. Can you just talk about the roadmap to that 200 basis point improvement goal?
Devin Mcgranahan: Thank you. Thanks for the question. As I indicated we are seeing a tale of two worlds, three of our five major regions are seeing improvements in retail retention and two of our major regions are headed in the wrong direction. Now some of that say impact of Matt has talked about the loss of a couple of large important agents and then some macro factors in the other region. The things that we're working on and will continue to work on are improved transactional experiences for returning customers in both our retail and our digital environment.
Okay.
Yes.
[music].
Devin Mcgranahan: We will be launching a new loyalty program hopefully in the first quarter of 2024, which we also think will help the last thing that we've done is to improve our ongoing communications and marketing efforts to customers on an ongoing basis and monitoring traditional transaction patterns, which we call the heartbeat. And when someone falls off of their traditional transaction pattern reaching out to them with either a marketing message or an offer to bring them back.
Devin Mcgranahan: So we are working hard to drive retention across the entire franchise, obviously with a particular focus on retail given our goal of achieving stability. And as you can see in the performance of North America, when we are able to get improvements in retention that significantly helps drive the overall transaction. And as we highlighted, you know, North America retail is now performing at a level that we would be happy with on an ongoing basis.
Sure.
Devin Mcgranahan: Hey, Chris, we gave it our investor day a year ago. Those were all targets aspirations over the three or horizon. It was not meant to be viewed as a commitment going into 2023 or 2024. We wanted to have a true north to galvanize our employees as well as our shareholders knowing we're trying to target the first one we got to was the double digit. New customers in digital, we had talked about our investor day most of the other ones were a little harder and took effort to get there. So we're still working hard at the evidence talked by, to get them.
Okay.
[music].
Unknown Attendee: Great, thanks for taking the question.
Unknown Attendee: Thank you for joining the Western Union third quarter, 2023 Results Conference call. We hope you have a great day. Good bye. . [inaudible]
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