NYSE:WU Western Union Q1 2023 Earnings Report $9.80 +0.06 (+0.56%) Closing price 04/17/2025 03:59 PM EasternExtended Trading$9.85 +0.04 (+0.41%) As of 04/17/2025 06:18 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Western Union EPS ResultsActual EPS$0.43Consensus EPS $0.34Beat/MissBeat by +$0.09One Year Ago EPS$0.51Western Union Revenue ResultsActual Revenue$1.04 billionExpected Revenue$997.07 millionBeat/MissBeat by +$39.83 millionYoY Revenue Growth-10.30%Western Union Announcement DetailsQuarterQ1 2023Date5/2/2023TimeAfter Market ClosesConference Call DateTuesday, May 2, 2023Conference Call Time4:30PM ETUpcoming EarningsWestern Union's Q1 2025 earnings is scheduled for Wednesday, April 23, 2025, with a conference call scheduled at 4:30 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Western Union Q1 2023 Earnings Call TranscriptProvided by QuartrMay 2, 2023 ShareLink copied to clipboard.There are 11 speakers on the call. Operator00:00:00Good day, and welcome to the Western Union First Quarter 2023 Results Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Tom Hadley, Head of Investor Relations. Operator00:00:19Tom, please go ahead. Speaker 100:00:22Thank you. On today's call, we will discuss the company's Q1 2023 results, and then we will take your questions. The slides that accompany this call and webcast can be found at westernunion.com under the Investor Relations tab and will remain available after the call. Additional operational statistics have been provided in supplemental tables with our press release. Joining me on the call today is our Chief Executive Officer, Devin McGranahan and our Chief Financial Officer, Matt Cagwan. Speaker 100:00:53Today's call is being recorded and our comments include 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 ks for additional information concerning factors that This could cause actual results to differ materially from the forward looking statements. During the call, we will discuss some items that do not conform to generally accepted accounting principles. We have reconciled those items to the most comparable GAAP measures in our earnings release attached to our Form 8 ks as well as on our website, westernunion.com under the Investor Relations section. I will now turn the call over to our Chief Executive Officer, Devin McGranahan. Speaker 200:01:39Good afternoon, and welcome to Western Union's Q1 2023 financial results conference call. We are pleased with the progress we are making on our Evolve 2025 strategy and are generally positive about our Q1 results. As we have discussed previously, we see our evolution as a 2 to 3 year journey to return the company to sustainable positive revenue growth. In the near term, changing the trajectory for new customer acquisition and transaction growth has been our priority. Our reported revenue in the Q1 was $1,037,000,000 Excluding contributions And excluding contributions from Business Solutions, this decreased 1% on a constant currency basis. Speaker 200:02:30This reflects several underlying dynamics, including a negative impact of 3 percentage points from the suspension of operations in Russia and Belarus and a positive impact of 2 percentage points each from the business performance in the Middle East and Argentinian inflation. Adjusted earnings per share came in strong and was $0.43 in the quarter compared to $0.51 in the prior year, which included a contribution of $0.05 from Business Solutions and $0.04 from operations in Russia and Belarus. Matt will further discuss our financial results in more detail and provide an update on our 2023 financial outlook. As you can see from these results, we are progressing against our Evolve 2025 strategy. We are making headway on stabilizing our retail business and accelerating growth in our digital business. Speaker 200:03:25Recall, some of our evolved 2025 goals including getting the retail business to stable and returning our digital business to low double digit growth rates. As we reported today, We saw sequential improvements in transactions across all regions compared to where we exited last year. More importantly, for the first time in almost 2 years, we saw positive transaction growth in North America in the Q1. We also saw a 200 basis point sequential improvement in transaction growth in our European operations when adjusted for the suspension of services in Russia and Belarus. Transactions in our Middle East region also improved by 200 basis points Sequentially and transactions in APAC improved significantly as well. Speaker 200:04:19Latin America continued to be the top over the growth rate we experienced in the Q4. Our results demonstrate that our focus on improving the core operational performance of our business, Focusing on winning new customers and improving retention can be achieved. Stepping back for a moment. On the macro front, the Q1 of 2023 continued to be challenging with persistent high inflation despite Interest rates being elevated around the world. Even with that backdrop, 2023 Central Bank remittance data Indicates the resilience of the cross border remittance market with an average principal volume up mid single digits in the countries which have reported. Speaker 200:05:15We are also seeing resilience in our own customer base with constant currency principal per transaction up 5% in the quarter. Our PPT is benefiting from our decision to suspend operations in Russia and Belarus, But even excluding Russia and Belarus, constant currency PPT remains positive. Last October, we launched our Evolve 20 25 strategy to return Western Union to positive revenue growth by becoming the market leader in providing accessible financial services to the aspiring populations of the world. In addition to accelerating our core retail and digital remittance businesses, we have been working to launch new products and services to expand our value proposition to our existing 120,000,000 customers. We have successfully launched our digital bank in Germany, Italy, Romania and Poland. Speaker 200:06:13We are now in friends and family testing in Brazil and the U. S. With our digital wallet product. We've expanded our bill pay business in Laca, relaunched our U. S. Speaker 200:06:23Corrections pay platform, have entered into partnerships in Argentina and Australia to help connect customers to lending products and are nearing the relaunch of our prepaid product in the U. S. As well. While in the short term, these products and services will not be material contributors to our overall revenue growth, They are the foundation of expanding our value proposition, increasing our relevance, improving our customer retention and providing platforms for future revenue growth. As we gain more traction, I look forward to sharing more with you. Speaker 200:07:01Returning to our returning our branded digital business to positive customer and transaction growth has been a top near term priority over the last three quarters. We launched a new go to market approach in August of 2022 and shifted from maximizing revenue per transaction to maximizing LTV to CAC. We launched new customer segment offers and more importantly, revamped our approach to marketing funnel management. We are now far enough into this journey to be able to tell you we believe It's working and durable. We reported to you last quarter that new U. Speaker 200:07:40S. Outbound branded digital customers We're up 30% year over year, which contributed to 5% transaction growth in the 4th quarter. I am happy to report that in Q1, we saw a continuation of these trends with U. S. Outbound branded digital customers growing at 21% and transactions now growing at 11%, the fastest transaction growth we have seen in the U. Speaker 200:08:08S. Since 2021. Our expectation has always been that we would see new customer growth first, followed by transaction growth and ultimately revenue growth, which we expect to begin in North America in the Q3 of 2023. In the near term, growing new customers and transactions is an important part of the equation to jump start revenue growth. But sustaining that growth at scale longer term will require us to increase the customer's lifetime value and improve our cost of customer acquisition. Speaker 200:08:46Our work in these areas is also starting to bear fruit. In the Q1, while increasing our new U. S. Branded digital customers by 21%, We were also able to lower our average customer acquisition costs by roughly 20% in North America. Additionally, retention rates of our U. Speaker 200:09:08S. Outbound September cohort, the first of our new approach, continue to perform at or above the levels of our existing customer base. In conclusion, we are acquiring more New U. S. Outbound branded digital customers than in the recent past, we are acquiring them at a lower cost of acquisition and early signs would indicate we are also retaining them at similar, if not higher levels than in the past. Speaker 200:09:38As we mentioned in the last quarter, we have expanded our digital go to market program to several of our large European markets. As a result, we have begun to see a similar trajectory across key countries in Europe. New branded digital customers in France, Spain, the U. K. And Germany were all up double digits in Q1, which is a meaningful improvement from recent trends in those countries. Speaker 200:10:06Additionally, we've also seen improvements in transaction growth across the same countries and look forward to sharing more with you on future calls. Our retail growth strategy centers around having the right value proposition for customers delivered with the right partners in the right locations and on driving location level productivity as opposed to just increasing the number of active locations. Frequently, these partners include some of our largest networks, many of which have been partners for decades. Strategic network partners, as we refer to them, are an important element of our overall Retail network strategy, as in most cases, they are exclusive to Western Union and provide the customer with a unique value proposition around convenience. Over the past 6 months, we've been working to better understand how we can improve the in store experience as well as individual location productivity of the stores in these large networks. Speaker 200:11:12Initiatives being developed include creating a more omnichannel offering, introducing new products and services, integrating loyalty programs, improving stage and pay options, simplifying refunds and focusing on reducing friction in the transaction flow. Beginning in the Q2 of 2022, I began discussing the opportunities to reduce friction for both our retail customers and our agents to better improve the overall Western Union retail experience. Over the past year, we have launched many such initiatives, including streamlining our refunds processes, reducing friction in our compliance processes, increasing transparency of the flow of funds through our track of transfer services. I am pleased to let you know that this focus on agent and customer experience has led to a 30% year over year drop in per transaction agent support calls to our call centers. While this is obviously beneficial from a cost perspective, Ultimately, we believe it will help us increase retention. Speaker 200:12:24We realize we still have a lot of work to do, but are pleased with the progress we are making and will continue to work to improve the overall experience for our agents and our customers alike. As part of our retail network strategy, we continue to pilot our new point of sale system in the U. S. We have developed this new system using a modular architecture and have built a services layer that we can access across multiple front end technologies, including our legacy point of sale systems around the world. This type of modular development allows us to bring to market product enhancements that will improve the customer experience in advance of the full scale rollout of our new point of sale system. Speaker 200:13:11Two functions we have developed in recent months are Quick Resend and an improved customer lookup tool, which we call Remember Me. The goal of Quick Resend is to allow customers to complete repeat transactions to known receivers more quickly and can reduce transaction times by up to 75%. We have tested this product enhancement on our legacy Technology in select agent locations in the United States in the Q1 and have now begun to roll it out across our entire U. S. Footprint. Speaker 200:13:48Finally, I would like to give you an update on the progress of our ecosystem strategy. In recent months, We have focused heavily on improving the onboarding and transacting experiences for new customers. In particular, We've been focusing on making it more seamless for existing and former Western Union customers to migrate to the digital bank. As we continue to evolve, we believe that these migrated customers and returning customers will continue to be the most valuable and the easiest to retain. To date, our digital bank has enabled us to reengage with more than 20,000 lapsed Western Union customers. Speaker 200:14:30Our offer has not only brought them back to Western Union, it has given them access to an improved money transfer experience, Our multi currency digital wallet and a Visa debit card. Secondly, converted Western Union customers and prior lapse customers are doing more than twice the number of transactions they were doing prior to the conversion to the digital bank. These transactions include P2P, top up, funds in and out and debit card payments in addition to traditional money transfer. Finally, and potentially most surprisingly, we have seen that the cohort that converted from our retail network to our digital bank is among our very best performing with more money transfer transactions and more revenue than they were providing prior to the conversion. This will be a clear opportunity for us going forward. Speaker 200:15:27Now We realize it is still a small sample relative to our existing customer base and we will need to continue to scale our efforts more broadly, but early results leave us optimistic about the possibility to provide broader financial services and increased retention with our 120,000,000 customers around the world. Before I turn the call over to Matt to discuss our financial results and outlook in more detail, I would like to highlight a key partnership renewal. We are pleased to announce the extension of our exclusive long standing relationship With Swiss Railways, they have been a valued partner of ours for nearly 30 years, and we look forward to continuing to serve our Swiss customer base at 135 plus Swiss Railway locations for many years to come. Thank you for your time, and I will now turn the call over to Matt. Speaker 300:16:24Thank you, Devin, and good afternoon, everyone. I'm pleased to be here today to discuss our Q1 results. 1st quarter adjusted revenue was down 1% to $1,100,000,000 Given this is better than our initial expectations, I'd like to walk you through several dynamics in the quarter that led us to this outcome. First, we continue to see a negative impact on our results from the suspension of operations in Russia and Belarus and agent loss and promotional pricing activities related to our new Branded digital go to market strategy. Russia and Belarus negatively impacted Q1 adjusted revenue by 3 percentage points. Speaker 300:17:102nd, Argentina inflation benefited 1st quarter adjusted revenue by 2 percentage points. And finally, we continue to see strength in Laca and a meaningful improvement in the Middle East. The improvement in the Middle East was driven by a change in monetary policy in Iraq during the Q1. Our leading compliance capabilities and strong agent network allowed us to react quickly and meet the needs of customers in Iraq and thus drove a 2 percentage point benefit to adjusted revenue. At this time, it's unclear at what level or for how long this trend will continue. Speaker 300:17:53In the Q1, we saw improving trends from our 4th quarter exit rates on nearly all important dimensions. Our retail money transfer business, while still down, improved sequentially and we saw and we believe it is now moving in the right direction. Our branded digital go to market program is progressing as Devin mentioned, driving 7% branded digital transaction growth across the company in the quarter. With new global Branded digital customers up 14%, excluding Russia and Belarus. We also continue to see double digit growth in other Revenue, primarily driven by retail money order business due to the benefit of higher interest rates, The Q3 2022 optimization of our float portfolio and strong transaction growth as well as strengthen our consumer bill pay business in both Argentina and United States. Speaker 300:18:57Adjusted operating margin was 20.5% compared to 21.8% last year. The year over year decrease in margin was due to increased technology investments, primarily related to our Evolve 2025 strategy and a slower reduction in cost relative to our lower revenue. When looking at operating margins on a sequential basis, It improved by nearly 500 basis points, which was above what we initially expected when we shared our outlook in early February. The sequential improvement in our operating margin was due to a few factors: 1st, lower third party spend And marketing expense, which was expected 2, quicker than expected expense reductions related to our cost redeployment program. We have been able to take actions, which will allow us to free up more than $35,000,000 in 2023 with almost half benefiting the Q1. Speaker 300:19:58And 3rd, better adjusted revenue than expected, thus increasing leverage of our cost base. The adjusted effective tax rate in the quarter was 13.5% compared to 13% in the prior year period. The increase in adjusted effective tax rate was primarily due to discrete expenses in the current period. Adjusted EPS was $0.43 when compared which compares to $0.51 in the prior year period, which included $0.05 contribution from Business Solutions and $0.04 contribution from Russia and Belarus. Now turning to the C2C segment. Speaker 300:20:44Revenue decreased 5% on a constant currency basis, while transactions declined 6%. Russia and Belarus negatively impacted revenue by 3% and transactions by 6%. Softness in our retail business and promotional and pricing activity related to our branded digital go to market strategy or partially offset by growth in Iraq. For our Branded Digital business, Revenue declined 6% on a constant currency basis. As Devin highlighted earlier, we anticipate that Our go to market strategy would first lead to an increase in new customers, followed by an increase in transactions, and then lastly, an increase in revenue. Speaker 300:21:34As a result, promotional pricing activities negatively impacted revenue in the quarter, while global transaction growth accelerated from 2% in the Q4 of last year to 7% in Q1, with new customer acquisition up 14% year over year in Q1, excluding Russia and Belarus. We remain excited about the progress of our new digital customer Customers and transactions and expect to see positive revenue growth in the back half this year. Now moving to the regional results. In the Q1, North America revenue decreased 8%, while transactions grew 1%. The U. Speaker 300:22:18S. Domestic business and U. S. Outbound business to Russia continue to be a drag on our results. While promotional pricing activities related to our new go to market strategy negatively impacted revenue growth, branded digital transactions grew 8% leading to the Q1 of positive overall transaction growth in North America since the Q2 of 2021. Speaker 300:22:44Revenue in Europe and CIS was down 13% on a constant currency basis, while transactions declined 23%. Russia and Belarus, which will anniversary next quarter, negatively impacted revenue by 6% and transactions by 19%. The region faced continued headwinds from an agent loss, A difficult macro backdrop and ongoing competitive pressures, but trends continue to improve for both revenue and transactions for the 2nd consecutive quarter. Revenue in the Middle East, Africa and South Asia accelerated meaningfully, growing 6% on a constant currency basis, while transactions decreased 3%. Iraq led the region with a higher principal per transaction driving revenue growth, partially offset by continued softness in our retail business. Speaker 300:23:47Revenue in Latin America and the Caribbean Accelerated and was up 17% on a constant currency basis, while transaction growth of 9%. The solid performance in the quarter was led by strength in Argentina, Ecuador and the Dominican Republic. And finally, revenue at APAC was down 5% on a constant currency basis, while transactions declined 2% due to softness in Japan, Australia and Korea. Now moving to other revenue, which primarily consists of retail bill payment in Argentina and United States and the money order business in the U. S. Speaker 300:24:28Other represents 8% of the total company revenue and grew 23% year over year on a reported basis. As I discussed earlier, the strength was driven by our retail money order business and our consumer bill pay businesses in both Argentina and the United States. Now turning to our cash flow and balance sheet. In the Q1, we generated $137,000,000 of operating cash flow compared to $200,000,000 in the prior year period, With the decrease due to timing of payments. Additionally, our annual transition tax payment related to 2017 U. Speaker 300:25:10S. Tax Act We'll increase to nearly $120,000,000 in the Q2. These payments will continue to step up over the next couple of years and will end after 2025. Capital expenditures were $57,000,000 in the quarter with a large portion due to a single agent signing bonus, which we entered into early last year. As a reminder, agent signings bonuses can vary from quarter to quarter and we anticipate that the mix will shift away from agent signing bonuses. Speaker 300:25:44We continue to maintain a strong balance sheet With cash and cash equivalents of $1,200,000,000 and debt of $2,500,000,000 Our leverage ratios were 2.4x and 1.2x on a gross and net basis, which continues to provide us flexibility for potential M and A, while we target to maintain our investment credit rating. Now moving to our outlook. Today, we reaffirmed our 2023 adjusted financial outlook. We have included improved trends in Iraq in our forecast for the outlook through April, but have assumed no incremental revenue for the remainder of the year due to the degree of uncertainty regarding the level and duration. Our outlook assumes no material changes in macroeconomic conditions. Speaker 300:26:37As a reminder, we expect adjusted revenue to be down 2% to 4%. We expect adjusted Operating margin to be in the range of 19% to 21%. And finally, adjusted EPS is expected to be in the range of $1.55 to 1.65 To recap, we are off to a good start. We're optimistic about the trends we're seeing and the progress that we're making in our EVOLVE 2025 Thank you for joining the call. And operator, we're ready to take questions. Operator00:27:15Please note that all participants will be in a listen only mode. Our first question comes to us from Rayna Kumar From UBS, please ask your question. Speaker 400:27:33Hi, good afternoon. Thanks for taking my question. I want to ask about promotional pricing. Can you give us an update on the spending behavior of your newly acquired customers through promotional pricing? How many of the customers are returning to make subsequent transactions at market based pricing? Speaker 200:27:53Anya, thanks for the question. Thanks for joining the call. As we have said previously and we will continue to reiterate, The customers that we acquired with new customer promotional pricing, which in many cases was first transaction free, Have exhibited the same, if not better, characteristics in terms of subsequent transactions and retention rates over 3 6 month periods. In fact, we have seen an acceleration in the progress of subsequent transactions over our traditional customers acquired not through promotional pricing. Operator00:28:47Our next question comes to us from Darrin Peller from Wolfe Research. Please ask your question. Speaker 500:28:55Hey, thanks guys. Can we just touch on where you think you are now in terms of the promotional pricing changes for digital transaction growth? And maybe just as a quick Speaker 600:29:05follow on to that, I mean, Speaker 500:29:06it looks obviously like it's been having an effect on adding digital users. If you could remind us on the stepping stones from here to a more positive inflection on revenue growth that's sustainable, Just remind us on the key variables that get us from where we are today, whether it's anniversary pricing and anniversarying some of the headwinds from Russia, etcetera, All the way to a positive inflection would be really helpful. Speaker 300:29:33Hey, Darren. Thank you very much for joining the call. As we've talked about in past calls, we're rolling this out in a cohort fashion. So we started the program last year in August here in the U. S. Speaker 300:29:45With 50 corridors and then we've been continuing to bring on customers on a monthly basis since then. So it's now been in the market for going on 8, 9 months now. We rolled it out in Q4 to our European business in the same effect. So if you go through anything about modeling Our market based pricing relative to our attrition rate, which I know we've never disclosed publicly for digital, but it's largely a little better than our retail we disclosed. That will help you get your head around this. Speaker 300:30:14But as we've talked about also, we expect to have positive revenue growth in the second half this year. Speaker 200:30:21Darren, we have historically said we anticipated somewhere between 12 18 months to anniversary or lap the effects of the new Customer and new segment based pricing. I think we are pleased as we commented in this call that we expect in North America where we first launch it To move into positive revenue territory, that is happening quicker than we originally modeled due to both as I explained on the first question, an accelerated return of customers for second, third and fourth transaction as well as Similar, if not elevated levels of retention. Speaker 500:31:04Thanks, Devin. I mean, if I have time for a quick follow-up. Just The margin strength was pretty notable in the quarter and so but we didn't see a change in EPS guidance. So was it just just remind us again, was it below the line items, anything nuance there or Maybe you can remind us on your on the cadence of margins as the year progresses. Speaker 300:31:23Hey, Darren. So really, when you think about our outlook for the year, We are very excited about the start of the year. It's giving us a whole lot more financial flexibility, Speaker 700:31:33but it is early in Speaker 300:31:34the year for us to be making any kind of guidance changes, and Speaker 200:31:46Thanks, guys. Operator00:31:50Our next question comes to us from Ken Cichowski from Autonomous, please ask your question. Speaker 800:31:59Hi, good afternoon, everyone. Thanks for taking the question here. I just want to ask about the trends in the physicals retail business. If I do some macro math, it looks like The transactions in that retail business declined maybe in that mid single digit range year over year this quarter. It was down kind of low double digits in the prior three quarters. Speaker 800:32:23Maybe there's some Russia impact in there, but I'm just curious, Should we expect that year over year growth rate to continue to improve? And I guess, is this a business that could get to positive Speaker 200:32:40Again, as we have stated, thanks for joining the call. Our goal is to get the retail business stable. We are trying hard to put in place A retail strategy as we highlighted on Investor Day and have been executing on since that would allow us to attract and retain customers and more importantly to increase the retention of the large customer base that we have. Those efforts are beginning to take effect and you can see that in the change around the world of the retail customer counts and transactions that we've been reporting. I do not anticipate that, that will accelerate enough to get us to flat or stable by the end of the year, but we anticipate that being able to achieve that during the course of our evolved 2025 time period. Speaker 800:33:30Okay. All right. That's helpful, Devin. And then just as my follow-up, I You talked about some of the momentum in the wu.com kind of branded business, transaction growth accelerating to 7% this quarter. What's the expectation there, I guess, in terms of transaction growth for the rest of the year? Speaker 800:33:48And then I guess, how should we expect that To translate into revenue growth just because the pricing just came in a little bit softer. Speaker 300:34:00Hey, Ken, this is Matt. I mean, so obviously, we're rolling out our new digital go to market strategy. You can see the Continued improvement in our transactions, you get a larger portion of our customer base that is on that and as we grow Our customer base, it's hard for us to forecast, but actually don't provide guidance on digital growth. So I can't really answer that question, but I think you can model that if you think through Just the path we've seen has been pretty sequential now for customer growth now being in the double digits and you're seeing the transactions working its way towards that level. And then same question for the first one on the Ken, I Speaker 200:34:38think you can look at I think we've been pretty clear about what we're seeing in North America Ex the Russia and Belarus progression since we launched it, we're now in double digit transaction growth in North America. That trajectory, we feel pretty good about. And so as we roll that around the world, you can assess where we're going to be by the end of the year. Speaker 500:35:03Okay. All Speaker 800:35:03right. Thank you so much. Operator00:35:07Our next question comes to us from Tien Tsin Huang from JPMorgan. Please ask your question. Speaker 600:35:15Hey, thanks so much. Good quarter here. Maybe I'll ask a similar question in a different way That's been asked already. Just thinking about the spread on the digital branded business, the spread between revenue growth and transaction growth, is that more likely to widen out Before it narrows again or could we see that start to narrow ahead? So not looking for explicit numbers, just thinking about The relationship between the 2, that's another way to look at where we are in the promotion. Speaker 300:35:50Hi, Tien Tsin, it's Matt Cagle. Pleasure to see you. Speaker 200:35:52Hey, Matt. Speaker 500:35:52Or hear Speaker 300:35:52from you. As you think about the rest of this year, I think you're going to see it could widen a little bit more potentially, but I think you're going to see the high watermark now going into Q2 and then start narrowing as you get into the back half this year when we start generating positive revenue growth. Speaker 200:36:07Particularly given the scale of our business, Tien Tsin, right, we chose North America to start because it's the 600 pound gorilla. And so as that turns to positive revenue growth in the back half of this year, Almost regardless of what we did in the rest of the world, you're going to start to see it narrow. Speaker 600:36:28Yes. Makes sense. No, it would be it's encouraging. Look forward to And my follow-up and Devin maybe for you, I know I think maybe it was Ken that asked it on the retail side. You did say that it's headed in the right direction. Speaker 600:36:41Is your statement there driven by the improvement more in the retention side or the acquisition side? I'm just thinking about And from a priority standpoint, what's more important to you from a K PAV perspective? You don't mind me sneaking in one more? Yes, I know. Because people are asking me just the Iraq Can you just is there a way to quantify that? Speaker 600:37:03I understand you're not looking for it to extend beyond April, but I'm curious if that was Sized for us. Thanks. Speaker 200:37:10Yes. On the retail side, the most powerful lever and this is why we shared it At the Evolve 2025 Investor Day, small increases in retention on a very large base can make a meaningful improvement in the trajectory of that business. The breadth and depth of our retail network is always a great catchment for new customers, Continuing to have them transact with us because we have great experiences, we're easy to do business with and we've got a good value proposition Should hopefully help us improve retention, and we're doing modifications as we've talked about on prior calls in terms of what our network looks like and its ability to attract new customers into our branded locations from both a Exclusivity standpoint, but also competing head to head in the independent channel through our improvements with our point of sale and our ongoing efforts with customer loyalty programs and things like that. I'll let Matt answer the question on Iraq. Speaker 300:38:13On the Iraq front, we talked about earlier on the call, it's about 2% of revenue in Q1. Operator00:38:26Our next question comes to us from Tim Chiodo from Credit Suisse. Please ask your question. Speaker 700:38:33Great. Thank you for taking the question. I want to dig into your recent Partnership or announcement of being a part of the initial group of apps and neobanks and fintechs that are participating in Visa Plus. And if you could just start off by maybe just giving us a little bit of the background or context on how you made the decision to join and what you thought some of the advantages might be? Speaker 200:38:54Tim, great question. Thanks for joining the call. As you know, that particular Offerproductpartnership aligns with the launch of our digital wallet in the U. S. We have always been what we would consider to be an open loop network, right? Speaker 200:39:16So we take funds in for most of the digital wallets, and we pay out funds out around the world to many, many, many digital wallets, whether that's Paytm in India or BCash in Bangladesh. So our basic philosophy of opening of operating a Funds in and funds out network is central to who we are. So the Visa Plus product offer is consistent with How we've constructed and managed our business and with the addition of a digital wallet in the U. S, it seemed to make a lot of sense. Great. Speaker 700:39:49Thank you. And if you don't mind a brief mechanical follow-up. So our understanding is that it was discussed on the Visa call that Currently, the offering is domestic only, but could or potentially could become more cross border. Should we think about this as Just another payout method, meaning there's retail in store, they're sent to an account, they're sent to card and now it would be sent to another app, Potentially in another country, meaning the PayPal or Venmo of country ABC or XYZ, meaning doesn't necessarily have to be sent to Western Union app. Speaker 200:40:26So I think, yes, let me try to clarify. So yes, it's U. S. Only. We have not agreed to anything beyond that at this point. Speaker 200:40:35We do today Send to app to others' apps all around the world. And so for us, this is simply an extension of what we already do. In fact, we have one of the largest payout networks in the world of any kind. An important component of that is payout to account and payout to digital wallet all around the world. So for us, we already have our own network. Speaker 200:41:00Can we do that? If we could expand the network for What else we pay out to? I think over time that would make sense for us. Speaker 700:41:07Excellent. Thank you for taking both Speaker 800:41:09of those. I appreciate it. Operator00:41:12Our next question comes to us from Will Nance from Goldman Sachs. Please ask your question. Speaker 200:41:20Hey, guys. I appreciate Speaker 900:41:21you taking the question. Nice results today. I wanted to follow-up, I think on Ted's question earlier on some of the moving piece And adjusted revenue and the assumptions abated to the guidance for the remainder of the year, it sounded like The 2 point contribution from Iraq, a 2 point contribution from Argentina were some of the major pieces that drove revenue above your So could you just kind of clarify, when you're saying you're not assuming a material change in the macro, are you guys assuming And news that continues or does not continue in the guidance for the remainder of the year? And I guess just a point of clarification, has it continued so far? It Sounds like maybe there might still be some activity ongoing. Speaker 300:42:07Hey, Will. So On the IRAC front, as we talked about in the call, we've assumed that it continues through the end of April. We'd assume nothing beyond April for Iraq. As far as Argentina inflation is concerned, we've always had A fair bit we call that out. Our actual outlook excludes Argentina inflation. Speaker 300:42:32So if you wanted to take our headline number of the down 1%, add back 2, that kind of gives you the comparable number to compare to are down 2% to 4%. And we'll continue to back that out because it just bounced around too much for us To try to build it into our guidance, it's one of the it's constant currency and we back out Argentine inflation. Speaker 900:42:52Yes. Okay. That makes sense. So I guess the or RAC continuing beyond April would be a source of upside? Speaker 300:42:58Correct. And as you think about that, I mean, you mentioned earlier in one of the earlier answers. I mean, for us, if it does continue on, it gives us a whole lot of financial flexibility to accelerate our investments. Our objective is to target being within our range, accelerating as fast as possible to our journey to drive us to long term sustainable growth. So it's just going to give us a lot more levers. Speaker 900:43:21Got it. So maybe just to follow-up on another lever you might have, the customer acquisition cost down about 20%. We've heard similar statistics from others in the industry on the digital customer acquisition front. So I'm just wondering if you can maybe drill down and Can you provide a little color on what's driving that? How much of that has just been kind of broad based reductions in digital advertising costs versus some of the channel Speaker 200:43:50The majority of ours comes from Our optimization of marketing funnel program that we've talked about on prior calls, so finding the productive The most productive parts of the funnel that allow us to increase conversion for dollars spent. I can't comment on others. Operator00:44:17Our next question comes to us from Ramsey El Assal from Barclays. Please ask your question. Speaker 500:44:25Thanks so much. Could you give us a bit more color on the Iraq policy change? What exactly was that that helped boost revenues there? Speaker 200:44:39So our understanding is the Iraq Central Bank changed their policy with regard to How banks can move money out of the country. We as a remittance provider were not subjected to those same policy changes and as a result Customers that were traditionally using banks to move money out of Iraq migrated to providers like us. Speaker 500:45:07Okay. And then maybe you could give us a bit more color in terms of your reengagement with lapsed customers. What are the kind of techniques that you're using there to reengage and any levers that you're kind of working to Speaker 200:45:26So one of the things we've been working on over the last 12 months has been improving what we refer to as contactability. So the ability to have marketing permission rights to our customers around the globe in accordance with individual country privacy requirements. That contact ability allows us If a customer lapses, whether they lapse for 1 transaction, 1 month, 1 quarter or 1 year, to communicate with them, to provide offers and incentives to come back and to reengage with them in a manner that allows them to, in fact, come back to Western Union. In Europe, particularly in Germany In Italy, as we launched the digital bank, we ramped up our efforts around our lapsed customer base, encouraging them to try our new product with a different experience and a different value proposition. As I was pleased to report today, we're having some success with that, and we're pleased and think it is a platform for us as we further rollout The digital wallet product with some of the added and enhanced benefits that we are now able to offer in Germany, Operator00:46:50Our next question comes to us from Vasu Govil from KBW. Please ask your question. Speaker 1000:46:58Hi, thank you for taking my questions. I guess first one for you Matt just on around the outlook. I kind of to a comment that it's too early in the year to change the guide, but you clearly saw 1Q outperformance and you're also expecting, at least U. S. Trends to be better in the So should we think about the unchanged guide is basically more conservatism baked into the back half? Speaker 1000:47:21Or Are there any dining related factors that might be sort of leaving the guide unchanged? Or are you expecting to accelerate investment to the extent there is Sorry, just if you could sort of give us a thought process there. Speaker 300:47:33Good afternoon, Basu. As I mentioned a couple of times in the call, it's giving us a lot more flexibility to make investments and look at how we can accelerate our path to long term sustainable growth. We've not identified where we're going to go do that, We're also unwilling to commit to a different guide with the macroeconomic conditions we're living through, the uncertainty around Iraq, The stage we are in our evolved 2025 strategies, as well as who are looking for ways that we can accelerate those strategies. So we look forward to updating everybody 3 months from now when we come back and we've gone through that. Speaker 200:48:09And Vasil, as we have said Since our Investor Day, we are taking what we believe to be a very pragmatic and measured approach to achieving and meeting our Public financial commitments, while continuing to rapidly involve Western Union towards our vision of becoming a broader based Financial services provider to the aspiring populations of the world. And so we will look forward to continuing to update you as the quarters go on, but we're pleased with the progress that we've made in the Q1. Speaker 1000:48:40Great. And then question for you, Devin. I sort of got all the color you gave on sort of positive metrics you're In the U. S. From the promotional activity, any meaningful differences that you were seeing in terms of retention improvement across the other regions where you're And then promotional pricing? Speaker 300:48:58Yes. I'm actually going to take this one a little bit more recently. But the results are a little bit earlier because we launched Europe and some other parts of the countries around the world we've put the promotional pricing into. What we have seen in the early days is it's comparable to the U. S, But we're just remember, it's 60 to 120 days less mature than the U. Speaker 300:49:18S, which is why we're continuing to focus on the U. S. On this call. Speaker 200:49:22Remember, it is a multi part program. I just talked about the contactability and increasing the level of ongoing communication we have with our customers. But also in addition to the New customer offer, whether that be 1st transaction free, 1st transaction 50% off. In combination with the program, we're also putting 2nd, 3rd, 4th transaction into more of a market based pricing basket, which is helping drive Speaker 1000:50:01Great. Thank you for the color. Speaker 300:50:04Thank you. Operator00:50:06Our next question comes to us from Bryan Keane from Deutsche Bank. Please ask your question. Speaker 500:50:15Yes. Hi. Can you hear me all right? Speaker 200:50:16No problem. Thanks for joining, Brian. Speaker 800:50:19Sure. Thanks. What's been the Speaker 500:50:21response from the From the competitors from promotional pricing and digital, has there been much of a response? Have they come back to cut price on their own? Speaker 200:50:30We have not seen, a particularly aggressive response. The players that were historically At the lower end of the market have stayed there and the players that were historically similar or above us have stayed there as well. In any given corridor or any given market, there's a give and take. And they're always particularly corridor specific, Particularly in Europe, players that continue to operate in what I would consider a value destroying manner, in terms of their pricing overall. But in general, the market is fairly rational and people have continued doing what they were doing before we made our change. Speaker 200:51:15Got it. And how much more promotional pricing do you Speaker 500:51:20guys expect to do throughout the business? Is there more Are you guys either in retail or just further in digital that you expect to roll this out? Or is it kind of the majority of it is complete that you plan to Speaker 200:51:33We've tackled this question before given that we operate in 20,000 corridors around the world From 150 countries give or take in territories, there are always opportunities to optimize High volume corridors, long tail corridors, we price at everything from street corner level to time of day. We have a constant and ongoing optimization algorithm and model that's always running, and we continue to tweak that to the best of our ability to get the right combination of customer value proposition, incentives in alignment with our distribution and our ability to grow transactions. Remember, the big shift is we're really focusing on acquiring customers, Managing and increasing their lifetime value, which includes retention, versus maximizing Operator00:52:38Our next question comes to us from Andrew Schmidt from Citi. Please ask your question. Speaker 200:52:47Hey, Devin. Hey, Matt. Speaker 800:52:48Thanks for taking the questions. Apologies if I missed this, but on operating margin and good performance in the Q1 here, but How should we think about the cadence as the year progresses? Is there anything lumpy we should be considering from an investment perspective? I understand there's some sounds like there's some flex In the cost base, but just curious to see your perspective there. Thanks a lot. Speaker 300:53:10Hey, Andrew. Thanks for joining the call today. As I highlighted earlier, there's really 2 major drivers why it was different than what I expected when we met maybe 6, 8 weeks ago. The drivers there were The benefit we've gotten from Iraq, just think about 2 basis 200 basis points of revenue with a normal fall through rate there. And then also we were able to execute on our cost optimization program at a faster pace and we were able to invest that both those things were Unknown and positive surprises to us as we evolve through the quarter from early February till now. Speaker 300:53:44So our plan is to go and invest that money. We had always intended to save The OpEx that we were able to identify and save, so those investments will come in the later part of this year as the year progresses. And then as I mentioned previously, we are looking for sort of monitoring how Iraq evolves. We're looking at other investment opportunities to use any upside we have relative to our guidance. And if we have some valuable way to use that to drive long term sustainable growth, we will make those investments. Speaker 800:54:15Got it. Thank you very much for that. And then if I could follow-up just on the independent channel, maybe you could comment on the Just the early results from the new POS system, how productivity of those agents that might have The new POS system compared to the independent base as a whole. Any comments there would be helpful. Thank you very much. Speaker 200:54:37Yes. So to clarify, because it is a Pilot and we are in pilot in actual Western Union exclusive locations in the U. S, partially because we wanted agents who were willing to work with us as we launch the technology refine the experience. We won't be putting it into the independent agent channel until the back half of this year. So largely the pilot results are really measured around, As you heard me talk about transaction times for customers for specific things like repeat sends around customers' ability to or the agent's ability not to have to reenter data and things like that. Speaker 200:55:20So the pilot agents are all friendly, hand selected to work with us through the launch. Speaker 800:55:28Got it. Appreciate the clarification. Thanks, Devin. Operator00:55:32Our next question comes to us from James Faucette from Morgan Stanley. Please ask your question. Speaker 500:55:45Hey, guys. This is Jeff Goldstein on for James. Can you guys hear me okay? Speaker 200:55:48Yes. No problem, Jeff. Speaker 500:55:50All right, great. So I wanted to ask about Europe. Can you talk about some of the trends there? What countries were primarily driving revenue Down 13% in the quarter. And then I think in your prepared remarks, one issue you called out for the region was competitive pressures. Speaker 500:56:06So I'm just curious what you're seeing there in particular and how you're kind of going about navigating that backdrop if anything Speaker 800:56:12is different there as opposed to other regions? Speaker 200:56:15Yes. So Jeff, a couple of things, right? Remember those results also still include through the end of the Q1, The exit of Russia and Belarus, which Matt highlighted was a moderately significant headwind on revenue growth in the Q1 in Europe, which was by far the most impacted region we had. 2nd, Europe continues to be one of the most, if not the most competitive on both The retail and the digital and in particular Central and Northern Europe to North Africa Speaker 300:57:07Hey, Jeff. Just to build on Devin's point here, just a couple of things to remind you of. We did also have the one agent loss was in Europe that started last year and has continued through Q1. And then as you think about the countries that are contributing to it, I mean, We've got some really good strength in Spain, Italy and a few other places, but Russia is the biggest place where we're obviously having a drag as we've highlighted a couple of times in the call. And then we've got some softness in Germany and France. Speaker 500:57:39Helpful. Thank you. And then, second as my follow-up, you mentioned starting to pilot your digital banking product in U. S. And Brazil in the quarter, I believe. Speaker 500:57:49Just curious if you're learning I know it's new, but just curious if you're learning anything as those rollouts begin, especially in the U. S? And then can you also remind us of the ongoing rollout plans by geography going forward? Speaker 200:58:02Yes. So a couple of important just notes. In both U. S. And Brazil, We're in what we define as friends and family, which is largely employees and employees' families And it is truly just a testing. Speaker 200:58:16We have not brought non Western Union affiliated consumers into the offer. 2nd, in both Brazil and in the U. S, we are working towards what we have affectionately called on these calls 1 app. So as you know, in Europe, we are conducting business across 2 apps, a digital banking app, which we call Western Union 1 or in some markets, Woo plus and the traditional westernunion.com app, which is a transactional money send. When we launch the new product In the U. Speaker 200:58:53S. And Brazil, we will be operating under what we call 1 app, which will include both the traditional transactional based service, which As a lower KYC burden and a full on digital wallet, we will also be able to offer transactional customers A 1 or 2 click upgrade to the digital wallet. So that is all in process, and we're obviously learning a lot about how to integrate the 2 experiences into 1. And as we learn more, I look forward to updating you. Speaker 500:59:26Appreciate it. Thank you. Operator00:59:28Our final question comes to us from Tyler DuPont from Bank of America. Please ask your question. Speaker 800:59:37Great. Thank you. Good afternoon, everyone. This is Tyler on for Jason. Thanks for the question. Speaker 800:59:41I know we're bumping up on time, so I'll try to be quick with these. So it seems like Locker continues to be Speaker 300:59:46the bright spot geographically. Can you just speak a Speaker 800:59:49little bit more to the success and sustainability of that Growth level and then maybe just to the level to which you can apply that playbook to other geographies? Speaker 200:59:59Tyler, thanks for joining. Laca is unique on many dimensions, but there's a couple of things in specific that we benefit from. One, we have a very strong retail footprint in the country and as we've highlighted, it's a great combination of Owned and controlled as well as Western Union Branded Independent And we have some particularly strong master agents in the region that we've been working with for many, many years that provide excellent Product service delivery and customer service to their customers. The second is, as we rolled out westernunion.com, We had a strategy of maximizing our footprint around the globe, so we were early on our digital business in Laca, as a result, have strong presence in many of those markets and a strong customer base. Finally, we have an excellent management team It's been in place for many years that does a great job of driving that business. Speaker 801:00:59Great. Thank you. I appreciate that. And just briefly following up with inflation. It looks like just the majority of the regions you serve continue to see inflation cooling pretty significantly. Speaker 801:01:09Can you just briefly walk me through Kind of how you're thinking about inflation, how that kind of trickles down through the P and L? Speaker 301:01:20Yes. Thankfully, most of our largest portion of our expense base is commission based, which is driven off as a percentage of revenue. We also have a large portion of our base, which is fixed through depreciation or long term contracts that don't have any kind of price increases. And then we've got a little bit of labor that we're obviously working our way through. But thankfully, we're well protected from inflation. Speaker 201:01:44Tyler, I think you can look at the success we've had in Argentina, which I think is facing 100% inflation this year on the durability of our business and our ability to manage not just through the transitory inflation that many countries around the world are seeing, but sustained and high inflation like we have in many countries in Laca. Speaker 801:02:10Great. Thank you very much. Operator01:02:12Thank you for joining the Western Union First Quarter 2023 Results Conference Call. We hope you have a greatRead morePowered by Conference Call Audio Live Call not available Earnings Conference CallWestern Union Q1 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Western Union Earnings HeadlinesMagnite (MGNI) Partners with Western Union to Enhance Ad Buying CapabilitiesApril 17, 2025 | gurufocus.comWestern Union Partners With Magnite to Grow Media Network BusinessApril 16, 2025 | pymnts.comCrypto’s crashing…but we’re still profitingMost traders are panicking right now. Bitcoin’s dropping. Altcoins are bleeding. The stock market’s a mess. The news is screaming fear. But while most traders watch their portfolios tank…April 21, 2025 | Crypto Swap Profits (Ad)Western Union (WU) Partners with Magnite to Enhance Media Buying CapabilitiesApril 16, 2025 | gurufocus.comWestern Union Media Network Taps Magnite to Expand Advertising CapabilitiesApril 16, 2025 | globenewswire.comWestern Union (WU) to Release Earnings on WednesdayApril 16, 2025 | americanbankingnews.comSee More Western Union Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Western Union? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Western Union and other key companies, straight to your email. Email Address About Western UnionWestern Union (NYSE:WU) provides money movement and payment services worldwide. The company operates through Consumer Money Transfer and Consumer Services segments. The Consumer Money Transfer segment facilitates money transfers for international cross-border and intra-country transfers, primarily through a network of retail agent locations, as well as through websites and mobile devices. The Consumer Services segments offers bill payment services, which facilitate payments for consumers, businesses, and other organizations, as well as money order services, retail foreign exchange services, prepaid cards, lending partnerships, and digital wallets. The company was founded in 1851 and is headquartered in Denver, Colorado.View Western Union ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? 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There are 11 speakers on the call. Operator00:00:00Good day, and welcome to the Western Union First Quarter 2023 Results Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Tom Hadley, Head of Investor Relations. Operator00:00:19Tom, please go ahead. Speaker 100:00:22Thank you. On today's call, we will discuss the company's Q1 2023 results, and then we will take your questions. The slides that accompany this call and webcast can be found at westernunion.com under the Investor Relations tab and will remain available after the call. Additional operational statistics have been provided in supplemental tables with our press release. Joining me on the call today is our Chief Executive Officer, Devin McGranahan and our Chief Financial Officer, Matt Cagwan. Speaker 100:00:53Today's call is being recorded and our comments include 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 ks for additional information concerning factors that This could cause actual results to differ materially from the forward looking statements. During the call, we will discuss some items that do not conform to generally accepted accounting principles. We have reconciled those items to the most comparable GAAP measures in our earnings release attached to our Form 8 ks as well as on our website, westernunion.com under the Investor Relations section. I will now turn the call over to our Chief Executive Officer, Devin McGranahan. Speaker 200:01:39Good afternoon, and welcome to Western Union's Q1 2023 financial results conference call. We are pleased with the progress we are making on our Evolve 2025 strategy and are generally positive about our Q1 results. As we have discussed previously, we see our evolution as a 2 to 3 year journey to return the company to sustainable positive revenue growth. In the near term, changing the trajectory for new customer acquisition and transaction growth has been our priority. Our reported revenue in the Q1 was $1,037,000,000 Excluding contributions And excluding contributions from Business Solutions, this decreased 1% on a constant currency basis. Speaker 200:02:30This reflects several underlying dynamics, including a negative impact of 3 percentage points from the suspension of operations in Russia and Belarus and a positive impact of 2 percentage points each from the business performance in the Middle East and Argentinian inflation. Adjusted earnings per share came in strong and was $0.43 in the quarter compared to $0.51 in the prior year, which included a contribution of $0.05 from Business Solutions and $0.04 from operations in Russia and Belarus. Matt will further discuss our financial results in more detail and provide an update on our 2023 financial outlook. As you can see from these results, we are progressing against our Evolve 2025 strategy. We are making headway on stabilizing our retail business and accelerating growth in our digital business. Speaker 200:03:25Recall, some of our evolved 2025 goals including getting the retail business to stable and returning our digital business to low double digit growth rates. As we reported today, We saw sequential improvements in transactions across all regions compared to where we exited last year. More importantly, for the first time in almost 2 years, we saw positive transaction growth in North America in the Q1. We also saw a 200 basis point sequential improvement in transaction growth in our European operations when adjusted for the suspension of services in Russia and Belarus. Transactions in our Middle East region also improved by 200 basis points Sequentially and transactions in APAC improved significantly as well. Speaker 200:04:19Latin America continued to be the top over the growth rate we experienced in the Q4. Our results demonstrate that our focus on improving the core operational performance of our business, Focusing on winning new customers and improving retention can be achieved. Stepping back for a moment. On the macro front, the Q1 of 2023 continued to be challenging with persistent high inflation despite Interest rates being elevated around the world. Even with that backdrop, 2023 Central Bank remittance data Indicates the resilience of the cross border remittance market with an average principal volume up mid single digits in the countries which have reported. Speaker 200:05:15We are also seeing resilience in our own customer base with constant currency principal per transaction up 5% in the quarter. Our PPT is benefiting from our decision to suspend operations in Russia and Belarus, But even excluding Russia and Belarus, constant currency PPT remains positive. Last October, we launched our Evolve 20 25 strategy to return Western Union to positive revenue growth by becoming the market leader in providing accessible financial services to the aspiring populations of the world. In addition to accelerating our core retail and digital remittance businesses, we have been working to launch new products and services to expand our value proposition to our existing 120,000,000 customers. We have successfully launched our digital bank in Germany, Italy, Romania and Poland. Speaker 200:06:13We are now in friends and family testing in Brazil and the U. S. With our digital wallet product. We've expanded our bill pay business in Laca, relaunched our U. S. Speaker 200:06:23Corrections pay platform, have entered into partnerships in Argentina and Australia to help connect customers to lending products and are nearing the relaunch of our prepaid product in the U. S. As well. While in the short term, these products and services will not be material contributors to our overall revenue growth, They are the foundation of expanding our value proposition, increasing our relevance, improving our customer retention and providing platforms for future revenue growth. As we gain more traction, I look forward to sharing more with you. Speaker 200:07:01Returning to our returning our branded digital business to positive customer and transaction growth has been a top near term priority over the last three quarters. We launched a new go to market approach in August of 2022 and shifted from maximizing revenue per transaction to maximizing LTV to CAC. We launched new customer segment offers and more importantly, revamped our approach to marketing funnel management. We are now far enough into this journey to be able to tell you we believe It's working and durable. We reported to you last quarter that new U. Speaker 200:07:40S. Outbound branded digital customers We're up 30% year over year, which contributed to 5% transaction growth in the 4th quarter. I am happy to report that in Q1, we saw a continuation of these trends with U. S. Outbound branded digital customers growing at 21% and transactions now growing at 11%, the fastest transaction growth we have seen in the U. Speaker 200:08:08S. Since 2021. Our expectation has always been that we would see new customer growth first, followed by transaction growth and ultimately revenue growth, which we expect to begin in North America in the Q3 of 2023. In the near term, growing new customers and transactions is an important part of the equation to jump start revenue growth. But sustaining that growth at scale longer term will require us to increase the customer's lifetime value and improve our cost of customer acquisition. Speaker 200:08:46Our work in these areas is also starting to bear fruit. In the Q1, while increasing our new U. S. Branded digital customers by 21%, We were also able to lower our average customer acquisition costs by roughly 20% in North America. Additionally, retention rates of our U. Speaker 200:09:08S. Outbound September cohort, the first of our new approach, continue to perform at or above the levels of our existing customer base. In conclusion, we are acquiring more New U. S. Outbound branded digital customers than in the recent past, we are acquiring them at a lower cost of acquisition and early signs would indicate we are also retaining them at similar, if not higher levels than in the past. Speaker 200:09:38As we mentioned in the last quarter, we have expanded our digital go to market program to several of our large European markets. As a result, we have begun to see a similar trajectory across key countries in Europe. New branded digital customers in France, Spain, the U. K. And Germany were all up double digits in Q1, which is a meaningful improvement from recent trends in those countries. Speaker 200:10:06Additionally, we've also seen improvements in transaction growth across the same countries and look forward to sharing more with you on future calls. Our retail growth strategy centers around having the right value proposition for customers delivered with the right partners in the right locations and on driving location level productivity as opposed to just increasing the number of active locations. Frequently, these partners include some of our largest networks, many of which have been partners for decades. Strategic network partners, as we refer to them, are an important element of our overall Retail network strategy, as in most cases, they are exclusive to Western Union and provide the customer with a unique value proposition around convenience. Over the past 6 months, we've been working to better understand how we can improve the in store experience as well as individual location productivity of the stores in these large networks. Speaker 200:11:12Initiatives being developed include creating a more omnichannel offering, introducing new products and services, integrating loyalty programs, improving stage and pay options, simplifying refunds and focusing on reducing friction in the transaction flow. Beginning in the Q2 of 2022, I began discussing the opportunities to reduce friction for both our retail customers and our agents to better improve the overall Western Union retail experience. Over the past year, we have launched many such initiatives, including streamlining our refunds processes, reducing friction in our compliance processes, increasing transparency of the flow of funds through our track of transfer services. I am pleased to let you know that this focus on agent and customer experience has led to a 30% year over year drop in per transaction agent support calls to our call centers. While this is obviously beneficial from a cost perspective, Ultimately, we believe it will help us increase retention. Speaker 200:12:24We realize we still have a lot of work to do, but are pleased with the progress we are making and will continue to work to improve the overall experience for our agents and our customers alike. As part of our retail network strategy, we continue to pilot our new point of sale system in the U. S. We have developed this new system using a modular architecture and have built a services layer that we can access across multiple front end technologies, including our legacy point of sale systems around the world. This type of modular development allows us to bring to market product enhancements that will improve the customer experience in advance of the full scale rollout of our new point of sale system. Speaker 200:13:11Two functions we have developed in recent months are Quick Resend and an improved customer lookup tool, which we call Remember Me. The goal of Quick Resend is to allow customers to complete repeat transactions to known receivers more quickly and can reduce transaction times by up to 75%. We have tested this product enhancement on our legacy Technology in select agent locations in the United States in the Q1 and have now begun to roll it out across our entire U. S. Footprint. Speaker 200:13:48Finally, I would like to give you an update on the progress of our ecosystem strategy. In recent months, We have focused heavily on improving the onboarding and transacting experiences for new customers. In particular, We've been focusing on making it more seamless for existing and former Western Union customers to migrate to the digital bank. As we continue to evolve, we believe that these migrated customers and returning customers will continue to be the most valuable and the easiest to retain. To date, our digital bank has enabled us to reengage with more than 20,000 lapsed Western Union customers. Speaker 200:14:30Our offer has not only brought them back to Western Union, it has given them access to an improved money transfer experience, Our multi currency digital wallet and a Visa debit card. Secondly, converted Western Union customers and prior lapse customers are doing more than twice the number of transactions they were doing prior to the conversion to the digital bank. These transactions include P2P, top up, funds in and out and debit card payments in addition to traditional money transfer. Finally, and potentially most surprisingly, we have seen that the cohort that converted from our retail network to our digital bank is among our very best performing with more money transfer transactions and more revenue than they were providing prior to the conversion. This will be a clear opportunity for us going forward. Speaker 200:15:27Now We realize it is still a small sample relative to our existing customer base and we will need to continue to scale our efforts more broadly, but early results leave us optimistic about the possibility to provide broader financial services and increased retention with our 120,000,000 customers around the world. Before I turn the call over to Matt to discuss our financial results and outlook in more detail, I would like to highlight a key partnership renewal. We are pleased to announce the extension of our exclusive long standing relationship With Swiss Railways, they have been a valued partner of ours for nearly 30 years, and we look forward to continuing to serve our Swiss customer base at 135 plus Swiss Railway locations for many years to come. Thank you for your time, and I will now turn the call over to Matt. Speaker 300:16:24Thank you, Devin, and good afternoon, everyone. I'm pleased to be here today to discuss our Q1 results. 1st quarter adjusted revenue was down 1% to $1,100,000,000 Given this is better than our initial expectations, I'd like to walk you through several dynamics in the quarter that led us to this outcome. First, we continue to see a negative impact on our results from the suspension of operations in Russia and Belarus and agent loss and promotional pricing activities related to our new Branded digital go to market strategy. Russia and Belarus negatively impacted Q1 adjusted revenue by 3 percentage points. Speaker 300:17:102nd, Argentina inflation benefited 1st quarter adjusted revenue by 2 percentage points. And finally, we continue to see strength in Laca and a meaningful improvement in the Middle East. The improvement in the Middle East was driven by a change in monetary policy in Iraq during the Q1. Our leading compliance capabilities and strong agent network allowed us to react quickly and meet the needs of customers in Iraq and thus drove a 2 percentage point benefit to adjusted revenue. At this time, it's unclear at what level or for how long this trend will continue. Speaker 300:17:53In the Q1, we saw improving trends from our 4th quarter exit rates on nearly all important dimensions. Our retail money transfer business, while still down, improved sequentially and we saw and we believe it is now moving in the right direction. Our branded digital go to market program is progressing as Devin mentioned, driving 7% branded digital transaction growth across the company in the quarter. With new global Branded digital customers up 14%, excluding Russia and Belarus. We also continue to see double digit growth in other Revenue, primarily driven by retail money order business due to the benefit of higher interest rates, The Q3 2022 optimization of our float portfolio and strong transaction growth as well as strengthen our consumer bill pay business in both Argentina and United States. Speaker 300:18:57Adjusted operating margin was 20.5% compared to 21.8% last year. The year over year decrease in margin was due to increased technology investments, primarily related to our Evolve 2025 strategy and a slower reduction in cost relative to our lower revenue. When looking at operating margins on a sequential basis, It improved by nearly 500 basis points, which was above what we initially expected when we shared our outlook in early February. The sequential improvement in our operating margin was due to a few factors: 1st, lower third party spend And marketing expense, which was expected 2, quicker than expected expense reductions related to our cost redeployment program. We have been able to take actions, which will allow us to free up more than $35,000,000 in 2023 with almost half benefiting the Q1. Speaker 300:19:58And 3rd, better adjusted revenue than expected, thus increasing leverage of our cost base. The adjusted effective tax rate in the quarter was 13.5% compared to 13% in the prior year period. The increase in adjusted effective tax rate was primarily due to discrete expenses in the current period. Adjusted EPS was $0.43 when compared which compares to $0.51 in the prior year period, which included $0.05 contribution from Business Solutions and $0.04 contribution from Russia and Belarus. Now turning to the C2C segment. Speaker 300:20:44Revenue decreased 5% on a constant currency basis, while transactions declined 6%. Russia and Belarus negatively impacted revenue by 3% and transactions by 6%. Softness in our retail business and promotional and pricing activity related to our branded digital go to market strategy or partially offset by growth in Iraq. For our Branded Digital business, Revenue declined 6% on a constant currency basis. As Devin highlighted earlier, we anticipate that Our go to market strategy would first lead to an increase in new customers, followed by an increase in transactions, and then lastly, an increase in revenue. Speaker 300:21:34As a result, promotional pricing activities negatively impacted revenue in the quarter, while global transaction growth accelerated from 2% in the Q4 of last year to 7% in Q1, with new customer acquisition up 14% year over year in Q1, excluding Russia and Belarus. We remain excited about the progress of our new digital customer Customers and transactions and expect to see positive revenue growth in the back half this year. Now moving to the regional results. In the Q1, North America revenue decreased 8%, while transactions grew 1%. The U. Speaker 300:22:18S. Domestic business and U. S. Outbound business to Russia continue to be a drag on our results. While promotional pricing activities related to our new go to market strategy negatively impacted revenue growth, branded digital transactions grew 8% leading to the Q1 of positive overall transaction growth in North America since the Q2 of 2021. Speaker 300:22:44Revenue in Europe and CIS was down 13% on a constant currency basis, while transactions declined 23%. Russia and Belarus, which will anniversary next quarter, negatively impacted revenue by 6% and transactions by 19%. The region faced continued headwinds from an agent loss, A difficult macro backdrop and ongoing competitive pressures, but trends continue to improve for both revenue and transactions for the 2nd consecutive quarter. Revenue in the Middle East, Africa and South Asia accelerated meaningfully, growing 6% on a constant currency basis, while transactions decreased 3%. Iraq led the region with a higher principal per transaction driving revenue growth, partially offset by continued softness in our retail business. Speaker 300:23:47Revenue in Latin America and the Caribbean Accelerated and was up 17% on a constant currency basis, while transaction growth of 9%. The solid performance in the quarter was led by strength in Argentina, Ecuador and the Dominican Republic. And finally, revenue at APAC was down 5% on a constant currency basis, while transactions declined 2% due to softness in Japan, Australia and Korea. Now moving to other revenue, which primarily consists of retail bill payment in Argentina and United States and the money order business in the U. S. Speaker 300:24:28Other represents 8% of the total company revenue and grew 23% year over year on a reported basis. As I discussed earlier, the strength was driven by our retail money order business and our consumer bill pay businesses in both Argentina and the United States. Now turning to our cash flow and balance sheet. In the Q1, we generated $137,000,000 of operating cash flow compared to $200,000,000 in the prior year period, With the decrease due to timing of payments. Additionally, our annual transition tax payment related to 2017 U. Speaker 300:25:10S. Tax Act We'll increase to nearly $120,000,000 in the Q2. These payments will continue to step up over the next couple of years and will end after 2025. Capital expenditures were $57,000,000 in the quarter with a large portion due to a single agent signing bonus, which we entered into early last year. As a reminder, agent signings bonuses can vary from quarter to quarter and we anticipate that the mix will shift away from agent signing bonuses. Speaker 300:25:44We continue to maintain a strong balance sheet With cash and cash equivalents of $1,200,000,000 and debt of $2,500,000,000 Our leverage ratios were 2.4x and 1.2x on a gross and net basis, which continues to provide us flexibility for potential M and A, while we target to maintain our investment credit rating. Now moving to our outlook. Today, we reaffirmed our 2023 adjusted financial outlook. We have included improved trends in Iraq in our forecast for the outlook through April, but have assumed no incremental revenue for the remainder of the year due to the degree of uncertainty regarding the level and duration. Our outlook assumes no material changes in macroeconomic conditions. Speaker 300:26:37As a reminder, we expect adjusted revenue to be down 2% to 4%. We expect adjusted Operating margin to be in the range of 19% to 21%. And finally, adjusted EPS is expected to be in the range of $1.55 to 1.65 To recap, we are off to a good start. We're optimistic about the trends we're seeing and the progress that we're making in our EVOLVE 2025 Thank you for joining the call. And operator, we're ready to take questions. Operator00:27:15Please note that all participants will be in a listen only mode. Our first question comes to us from Rayna Kumar From UBS, please ask your question. Speaker 400:27:33Hi, good afternoon. Thanks for taking my question. I want to ask about promotional pricing. Can you give us an update on the spending behavior of your newly acquired customers through promotional pricing? How many of the customers are returning to make subsequent transactions at market based pricing? Speaker 200:27:53Anya, thanks for the question. Thanks for joining the call. As we have said previously and we will continue to reiterate, The customers that we acquired with new customer promotional pricing, which in many cases was first transaction free, Have exhibited the same, if not better, characteristics in terms of subsequent transactions and retention rates over 3 6 month periods. In fact, we have seen an acceleration in the progress of subsequent transactions over our traditional customers acquired not through promotional pricing. Operator00:28:47Our next question comes to us from Darrin Peller from Wolfe Research. Please ask your question. Speaker 500:28:55Hey, thanks guys. Can we just touch on where you think you are now in terms of the promotional pricing changes for digital transaction growth? And maybe just as a quick Speaker 600:29:05follow on to that, I mean, Speaker 500:29:06it looks obviously like it's been having an effect on adding digital users. If you could remind us on the stepping stones from here to a more positive inflection on revenue growth that's sustainable, Just remind us on the key variables that get us from where we are today, whether it's anniversary pricing and anniversarying some of the headwinds from Russia, etcetera, All the way to a positive inflection would be really helpful. Speaker 300:29:33Hey, Darren. Thank you very much for joining the call. As we've talked about in past calls, we're rolling this out in a cohort fashion. So we started the program last year in August here in the U. S. Speaker 300:29:45With 50 corridors and then we've been continuing to bring on customers on a monthly basis since then. So it's now been in the market for going on 8, 9 months now. We rolled it out in Q4 to our European business in the same effect. So if you go through anything about modeling Our market based pricing relative to our attrition rate, which I know we've never disclosed publicly for digital, but it's largely a little better than our retail we disclosed. That will help you get your head around this. Speaker 300:30:14But as we've talked about also, we expect to have positive revenue growth in the second half this year. Speaker 200:30:21Darren, we have historically said we anticipated somewhere between 12 18 months to anniversary or lap the effects of the new Customer and new segment based pricing. I think we are pleased as we commented in this call that we expect in North America where we first launch it To move into positive revenue territory, that is happening quicker than we originally modeled due to both as I explained on the first question, an accelerated return of customers for second, third and fourth transaction as well as Similar, if not elevated levels of retention. Speaker 500:31:04Thanks, Devin. I mean, if I have time for a quick follow-up. Just The margin strength was pretty notable in the quarter and so but we didn't see a change in EPS guidance. So was it just just remind us again, was it below the line items, anything nuance there or Maybe you can remind us on your on the cadence of margins as the year progresses. Speaker 300:31:23Hey, Darren. So really, when you think about our outlook for the year, We are very excited about the start of the year. It's giving us a whole lot more financial flexibility, Speaker 700:31:33but it is early in Speaker 300:31:34the year for us to be making any kind of guidance changes, and Speaker 200:31:46Thanks, guys. Operator00:31:50Our next question comes to us from Ken Cichowski from Autonomous, please ask your question. Speaker 800:31:59Hi, good afternoon, everyone. Thanks for taking the question here. I just want to ask about the trends in the physicals retail business. If I do some macro math, it looks like The transactions in that retail business declined maybe in that mid single digit range year over year this quarter. It was down kind of low double digits in the prior three quarters. Speaker 800:32:23Maybe there's some Russia impact in there, but I'm just curious, Should we expect that year over year growth rate to continue to improve? And I guess, is this a business that could get to positive Speaker 200:32:40Again, as we have stated, thanks for joining the call. Our goal is to get the retail business stable. We are trying hard to put in place A retail strategy as we highlighted on Investor Day and have been executing on since that would allow us to attract and retain customers and more importantly to increase the retention of the large customer base that we have. Those efforts are beginning to take effect and you can see that in the change around the world of the retail customer counts and transactions that we've been reporting. I do not anticipate that, that will accelerate enough to get us to flat or stable by the end of the year, but we anticipate that being able to achieve that during the course of our evolved 2025 time period. Speaker 800:33:30Okay. All right. That's helpful, Devin. And then just as my follow-up, I You talked about some of the momentum in the wu.com kind of branded business, transaction growth accelerating to 7% this quarter. What's the expectation there, I guess, in terms of transaction growth for the rest of the year? Speaker 800:33:48And then I guess, how should we expect that To translate into revenue growth just because the pricing just came in a little bit softer. Speaker 300:34:00Hey, Ken, this is Matt. I mean, so obviously, we're rolling out our new digital go to market strategy. You can see the Continued improvement in our transactions, you get a larger portion of our customer base that is on that and as we grow Our customer base, it's hard for us to forecast, but actually don't provide guidance on digital growth. So I can't really answer that question, but I think you can model that if you think through Just the path we've seen has been pretty sequential now for customer growth now being in the double digits and you're seeing the transactions working its way towards that level. And then same question for the first one on the Ken, I Speaker 200:34:38think you can look at I think we've been pretty clear about what we're seeing in North America Ex the Russia and Belarus progression since we launched it, we're now in double digit transaction growth in North America. That trajectory, we feel pretty good about. And so as we roll that around the world, you can assess where we're going to be by the end of the year. Speaker 500:35:03Okay. All Speaker 800:35:03right. Thank you so much. Operator00:35:07Our next question comes to us from Tien Tsin Huang from JPMorgan. Please ask your question. Speaker 600:35:15Hey, thanks so much. Good quarter here. Maybe I'll ask a similar question in a different way That's been asked already. Just thinking about the spread on the digital branded business, the spread between revenue growth and transaction growth, is that more likely to widen out Before it narrows again or could we see that start to narrow ahead? So not looking for explicit numbers, just thinking about The relationship between the 2, that's another way to look at where we are in the promotion. Speaker 300:35:50Hi, Tien Tsin, it's Matt Cagle. Pleasure to see you. Speaker 200:35:52Hey, Matt. Speaker 500:35:52Or hear Speaker 300:35:52from you. As you think about the rest of this year, I think you're going to see it could widen a little bit more potentially, but I think you're going to see the high watermark now going into Q2 and then start narrowing as you get into the back half this year when we start generating positive revenue growth. Speaker 200:36:07Particularly given the scale of our business, Tien Tsin, right, we chose North America to start because it's the 600 pound gorilla. And so as that turns to positive revenue growth in the back half of this year, Almost regardless of what we did in the rest of the world, you're going to start to see it narrow. Speaker 600:36:28Yes. Makes sense. No, it would be it's encouraging. Look forward to And my follow-up and Devin maybe for you, I know I think maybe it was Ken that asked it on the retail side. You did say that it's headed in the right direction. Speaker 600:36:41Is your statement there driven by the improvement more in the retention side or the acquisition side? I'm just thinking about And from a priority standpoint, what's more important to you from a K PAV perspective? You don't mind me sneaking in one more? Yes, I know. Because people are asking me just the Iraq Can you just is there a way to quantify that? Speaker 600:37:03I understand you're not looking for it to extend beyond April, but I'm curious if that was Sized for us. Thanks. Speaker 200:37:10Yes. On the retail side, the most powerful lever and this is why we shared it At the Evolve 2025 Investor Day, small increases in retention on a very large base can make a meaningful improvement in the trajectory of that business. The breadth and depth of our retail network is always a great catchment for new customers, Continuing to have them transact with us because we have great experiences, we're easy to do business with and we've got a good value proposition Should hopefully help us improve retention, and we're doing modifications as we've talked about on prior calls in terms of what our network looks like and its ability to attract new customers into our branded locations from both a Exclusivity standpoint, but also competing head to head in the independent channel through our improvements with our point of sale and our ongoing efforts with customer loyalty programs and things like that. I'll let Matt answer the question on Iraq. Speaker 300:38:13On the Iraq front, we talked about earlier on the call, it's about 2% of revenue in Q1. Operator00:38:26Our next question comes to us from Tim Chiodo from Credit Suisse. Please ask your question. Speaker 700:38:33Great. Thank you for taking the question. I want to dig into your recent Partnership or announcement of being a part of the initial group of apps and neobanks and fintechs that are participating in Visa Plus. And if you could just start off by maybe just giving us a little bit of the background or context on how you made the decision to join and what you thought some of the advantages might be? Speaker 200:38:54Tim, great question. Thanks for joining the call. As you know, that particular Offerproductpartnership aligns with the launch of our digital wallet in the U. S. We have always been what we would consider to be an open loop network, right? Speaker 200:39:16So we take funds in for most of the digital wallets, and we pay out funds out around the world to many, many, many digital wallets, whether that's Paytm in India or BCash in Bangladesh. So our basic philosophy of opening of operating a Funds in and funds out network is central to who we are. So the Visa Plus product offer is consistent with How we've constructed and managed our business and with the addition of a digital wallet in the U. S, it seemed to make a lot of sense. Great. Speaker 700:39:49Thank you. And if you don't mind a brief mechanical follow-up. So our understanding is that it was discussed on the Visa call that Currently, the offering is domestic only, but could or potentially could become more cross border. Should we think about this as Just another payout method, meaning there's retail in store, they're sent to an account, they're sent to card and now it would be sent to another app, Potentially in another country, meaning the PayPal or Venmo of country ABC or XYZ, meaning doesn't necessarily have to be sent to Western Union app. Speaker 200:40:26So I think, yes, let me try to clarify. So yes, it's U. S. Only. We have not agreed to anything beyond that at this point. Speaker 200:40:35We do today Send to app to others' apps all around the world. And so for us, this is simply an extension of what we already do. In fact, we have one of the largest payout networks in the world of any kind. An important component of that is payout to account and payout to digital wallet all around the world. So for us, we already have our own network. Speaker 200:41:00Can we do that? If we could expand the network for What else we pay out to? I think over time that would make sense for us. Speaker 700:41:07Excellent. Thank you for taking both Speaker 800:41:09of those. I appreciate it. Operator00:41:12Our next question comes to us from Will Nance from Goldman Sachs. Please ask your question. Speaker 200:41:20Hey, guys. I appreciate Speaker 900:41:21you taking the question. Nice results today. I wanted to follow-up, I think on Ted's question earlier on some of the moving piece And adjusted revenue and the assumptions abated to the guidance for the remainder of the year, it sounded like The 2 point contribution from Iraq, a 2 point contribution from Argentina were some of the major pieces that drove revenue above your So could you just kind of clarify, when you're saying you're not assuming a material change in the macro, are you guys assuming And news that continues or does not continue in the guidance for the remainder of the year? And I guess just a point of clarification, has it continued so far? It Sounds like maybe there might still be some activity ongoing. Speaker 300:42:07Hey, Will. So On the IRAC front, as we talked about in the call, we've assumed that it continues through the end of April. We'd assume nothing beyond April for Iraq. As far as Argentina inflation is concerned, we've always had A fair bit we call that out. Our actual outlook excludes Argentina inflation. Speaker 300:42:32So if you wanted to take our headline number of the down 1%, add back 2, that kind of gives you the comparable number to compare to are down 2% to 4%. And we'll continue to back that out because it just bounced around too much for us To try to build it into our guidance, it's one of the it's constant currency and we back out Argentine inflation. Speaker 900:42:52Yes. Okay. That makes sense. So I guess the or RAC continuing beyond April would be a source of upside? Speaker 300:42:58Correct. And as you think about that, I mean, you mentioned earlier in one of the earlier answers. I mean, for us, if it does continue on, it gives us a whole lot of financial flexibility to accelerate our investments. Our objective is to target being within our range, accelerating as fast as possible to our journey to drive us to long term sustainable growth. So it's just going to give us a lot more levers. Speaker 900:43:21Got it. So maybe just to follow-up on another lever you might have, the customer acquisition cost down about 20%. We've heard similar statistics from others in the industry on the digital customer acquisition front. So I'm just wondering if you can maybe drill down and Can you provide a little color on what's driving that? How much of that has just been kind of broad based reductions in digital advertising costs versus some of the channel Speaker 200:43:50The majority of ours comes from Our optimization of marketing funnel program that we've talked about on prior calls, so finding the productive The most productive parts of the funnel that allow us to increase conversion for dollars spent. I can't comment on others. Operator00:44:17Our next question comes to us from Ramsey El Assal from Barclays. Please ask your question. Speaker 500:44:25Thanks so much. Could you give us a bit more color on the Iraq policy change? What exactly was that that helped boost revenues there? Speaker 200:44:39So our understanding is the Iraq Central Bank changed their policy with regard to How banks can move money out of the country. We as a remittance provider were not subjected to those same policy changes and as a result Customers that were traditionally using banks to move money out of Iraq migrated to providers like us. Speaker 500:45:07Okay. And then maybe you could give us a bit more color in terms of your reengagement with lapsed customers. What are the kind of techniques that you're using there to reengage and any levers that you're kind of working to Speaker 200:45:26So one of the things we've been working on over the last 12 months has been improving what we refer to as contactability. So the ability to have marketing permission rights to our customers around the globe in accordance with individual country privacy requirements. That contact ability allows us If a customer lapses, whether they lapse for 1 transaction, 1 month, 1 quarter or 1 year, to communicate with them, to provide offers and incentives to come back and to reengage with them in a manner that allows them to, in fact, come back to Western Union. In Europe, particularly in Germany In Italy, as we launched the digital bank, we ramped up our efforts around our lapsed customer base, encouraging them to try our new product with a different experience and a different value proposition. As I was pleased to report today, we're having some success with that, and we're pleased and think it is a platform for us as we further rollout The digital wallet product with some of the added and enhanced benefits that we are now able to offer in Germany, Operator00:46:50Our next question comes to us from Vasu Govil from KBW. Please ask your question. Speaker 1000:46:58Hi, thank you for taking my questions. I guess first one for you Matt just on around the outlook. I kind of to a comment that it's too early in the year to change the guide, but you clearly saw 1Q outperformance and you're also expecting, at least U. S. Trends to be better in the So should we think about the unchanged guide is basically more conservatism baked into the back half? Speaker 1000:47:21Or Are there any dining related factors that might be sort of leaving the guide unchanged? Or are you expecting to accelerate investment to the extent there is Sorry, just if you could sort of give us a thought process there. Speaker 300:47:33Good afternoon, Basu. As I mentioned a couple of times in the call, it's giving us a lot more flexibility to make investments and look at how we can accelerate our path to long term sustainable growth. We've not identified where we're going to go do that, We're also unwilling to commit to a different guide with the macroeconomic conditions we're living through, the uncertainty around Iraq, The stage we are in our evolved 2025 strategies, as well as who are looking for ways that we can accelerate those strategies. So we look forward to updating everybody 3 months from now when we come back and we've gone through that. Speaker 200:48:09And Vasil, as we have said Since our Investor Day, we are taking what we believe to be a very pragmatic and measured approach to achieving and meeting our Public financial commitments, while continuing to rapidly involve Western Union towards our vision of becoming a broader based Financial services provider to the aspiring populations of the world. And so we will look forward to continuing to update you as the quarters go on, but we're pleased with the progress that we've made in the Q1. Speaker 1000:48:40Great. And then question for you, Devin. I sort of got all the color you gave on sort of positive metrics you're In the U. S. From the promotional activity, any meaningful differences that you were seeing in terms of retention improvement across the other regions where you're And then promotional pricing? Speaker 300:48:58Yes. I'm actually going to take this one a little bit more recently. But the results are a little bit earlier because we launched Europe and some other parts of the countries around the world we've put the promotional pricing into. What we have seen in the early days is it's comparable to the U. S, But we're just remember, it's 60 to 120 days less mature than the U. Speaker 300:49:18S, which is why we're continuing to focus on the U. S. On this call. Speaker 200:49:22Remember, it is a multi part program. I just talked about the contactability and increasing the level of ongoing communication we have with our customers. But also in addition to the New customer offer, whether that be 1st transaction free, 1st transaction 50% off. In combination with the program, we're also putting 2nd, 3rd, 4th transaction into more of a market based pricing basket, which is helping drive Speaker 1000:50:01Great. Thank you for the color. Speaker 300:50:04Thank you. Operator00:50:06Our next question comes to us from Bryan Keane from Deutsche Bank. Please ask your question. Speaker 500:50:15Yes. Hi. Can you hear me all right? Speaker 200:50:16No problem. Thanks for joining, Brian. Speaker 800:50:19Sure. Thanks. What's been the Speaker 500:50:21response from the From the competitors from promotional pricing and digital, has there been much of a response? Have they come back to cut price on their own? Speaker 200:50:30We have not seen, a particularly aggressive response. The players that were historically At the lower end of the market have stayed there and the players that were historically similar or above us have stayed there as well. In any given corridor or any given market, there's a give and take. And they're always particularly corridor specific, Particularly in Europe, players that continue to operate in what I would consider a value destroying manner, in terms of their pricing overall. But in general, the market is fairly rational and people have continued doing what they were doing before we made our change. Speaker 200:51:15Got it. And how much more promotional pricing do you Speaker 500:51:20guys expect to do throughout the business? Is there more Are you guys either in retail or just further in digital that you expect to roll this out? Or is it kind of the majority of it is complete that you plan to Speaker 200:51:33We've tackled this question before given that we operate in 20,000 corridors around the world From 150 countries give or take in territories, there are always opportunities to optimize High volume corridors, long tail corridors, we price at everything from street corner level to time of day. We have a constant and ongoing optimization algorithm and model that's always running, and we continue to tweak that to the best of our ability to get the right combination of customer value proposition, incentives in alignment with our distribution and our ability to grow transactions. Remember, the big shift is we're really focusing on acquiring customers, Managing and increasing their lifetime value, which includes retention, versus maximizing Operator00:52:38Our next question comes to us from Andrew Schmidt from Citi. Please ask your question. Speaker 200:52:47Hey, Devin. Hey, Matt. Speaker 800:52:48Thanks for taking the questions. Apologies if I missed this, but on operating margin and good performance in the Q1 here, but How should we think about the cadence as the year progresses? Is there anything lumpy we should be considering from an investment perspective? I understand there's some sounds like there's some flex In the cost base, but just curious to see your perspective there. Thanks a lot. Speaker 300:53:10Hey, Andrew. Thanks for joining the call today. As I highlighted earlier, there's really 2 major drivers why it was different than what I expected when we met maybe 6, 8 weeks ago. The drivers there were The benefit we've gotten from Iraq, just think about 2 basis 200 basis points of revenue with a normal fall through rate there. And then also we were able to execute on our cost optimization program at a faster pace and we were able to invest that both those things were Unknown and positive surprises to us as we evolve through the quarter from early February till now. Speaker 300:53:44So our plan is to go and invest that money. We had always intended to save The OpEx that we were able to identify and save, so those investments will come in the later part of this year as the year progresses. And then as I mentioned previously, we are looking for sort of monitoring how Iraq evolves. We're looking at other investment opportunities to use any upside we have relative to our guidance. And if we have some valuable way to use that to drive long term sustainable growth, we will make those investments. Speaker 800:54:15Got it. Thank you very much for that. And then if I could follow-up just on the independent channel, maybe you could comment on the Just the early results from the new POS system, how productivity of those agents that might have The new POS system compared to the independent base as a whole. Any comments there would be helpful. Thank you very much. Speaker 200:54:37Yes. So to clarify, because it is a Pilot and we are in pilot in actual Western Union exclusive locations in the U. S, partially because we wanted agents who were willing to work with us as we launch the technology refine the experience. We won't be putting it into the independent agent channel until the back half of this year. So largely the pilot results are really measured around, As you heard me talk about transaction times for customers for specific things like repeat sends around customers' ability to or the agent's ability not to have to reenter data and things like that. Speaker 200:55:20So the pilot agents are all friendly, hand selected to work with us through the launch. Speaker 800:55:28Got it. Appreciate the clarification. Thanks, Devin. Operator00:55:32Our next question comes to us from James Faucette from Morgan Stanley. Please ask your question. Speaker 500:55:45Hey, guys. This is Jeff Goldstein on for James. Can you guys hear me okay? Speaker 200:55:48Yes. No problem, Jeff. Speaker 500:55:50All right, great. So I wanted to ask about Europe. Can you talk about some of the trends there? What countries were primarily driving revenue Down 13% in the quarter. And then I think in your prepared remarks, one issue you called out for the region was competitive pressures. Speaker 500:56:06So I'm just curious what you're seeing there in particular and how you're kind of going about navigating that backdrop if anything Speaker 800:56:12is different there as opposed to other regions? Speaker 200:56:15Yes. So Jeff, a couple of things, right? Remember those results also still include through the end of the Q1, The exit of Russia and Belarus, which Matt highlighted was a moderately significant headwind on revenue growth in the Q1 in Europe, which was by far the most impacted region we had. 2nd, Europe continues to be one of the most, if not the most competitive on both The retail and the digital and in particular Central and Northern Europe to North Africa Speaker 300:57:07Hey, Jeff. Just to build on Devin's point here, just a couple of things to remind you of. We did also have the one agent loss was in Europe that started last year and has continued through Q1. And then as you think about the countries that are contributing to it, I mean, We've got some really good strength in Spain, Italy and a few other places, but Russia is the biggest place where we're obviously having a drag as we've highlighted a couple of times in the call. And then we've got some softness in Germany and France. Speaker 500:57:39Helpful. Thank you. And then, second as my follow-up, you mentioned starting to pilot your digital banking product in U. S. And Brazil in the quarter, I believe. Speaker 500:57:49Just curious if you're learning I know it's new, but just curious if you're learning anything as those rollouts begin, especially in the U. S? And then can you also remind us of the ongoing rollout plans by geography going forward? Speaker 200:58:02Yes. So a couple of important just notes. In both U. S. And Brazil, We're in what we define as friends and family, which is largely employees and employees' families And it is truly just a testing. Speaker 200:58:16We have not brought non Western Union affiliated consumers into the offer. 2nd, in both Brazil and in the U. S, we are working towards what we have affectionately called on these calls 1 app. So as you know, in Europe, we are conducting business across 2 apps, a digital banking app, which we call Western Union 1 or in some markets, Woo plus and the traditional westernunion.com app, which is a transactional money send. When we launch the new product In the U. Speaker 200:58:53S. And Brazil, we will be operating under what we call 1 app, which will include both the traditional transactional based service, which As a lower KYC burden and a full on digital wallet, we will also be able to offer transactional customers A 1 or 2 click upgrade to the digital wallet. So that is all in process, and we're obviously learning a lot about how to integrate the 2 experiences into 1. And as we learn more, I look forward to updating you. Speaker 500:59:26Appreciate it. Thank you. Operator00:59:28Our final question comes to us from Tyler DuPont from Bank of America. Please ask your question. Speaker 800:59:37Great. Thank you. Good afternoon, everyone. This is Tyler on for Jason. Thanks for the question. Speaker 800:59:41I know we're bumping up on time, so I'll try to be quick with these. So it seems like Locker continues to be Speaker 300:59:46the bright spot geographically. Can you just speak a Speaker 800:59:49little bit more to the success and sustainability of that Growth level and then maybe just to the level to which you can apply that playbook to other geographies? Speaker 200:59:59Tyler, thanks for joining. Laca is unique on many dimensions, but there's a couple of things in specific that we benefit from. One, we have a very strong retail footprint in the country and as we've highlighted, it's a great combination of Owned and controlled as well as Western Union Branded Independent And we have some particularly strong master agents in the region that we've been working with for many, many years that provide excellent Product service delivery and customer service to their customers. The second is, as we rolled out westernunion.com, We had a strategy of maximizing our footprint around the globe, so we were early on our digital business in Laca, as a result, have strong presence in many of those markets and a strong customer base. Finally, we have an excellent management team It's been in place for many years that does a great job of driving that business. Speaker 801:00:59Great. Thank you. I appreciate that. And just briefly following up with inflation. It looks like just the majority of the regions you serve continue to see inflation cooling pretty significantly. Speaker 801:01:09Can you just briefly walk me through Kind of how you're thinking about inflation, how that kind of trickles down through the P and L? Speaker 301:01:20Yes. Thankfully, most of our largest portion of our expense base is commission based, which is driven off as a percentage of revenue. We also have a large portion of our base, which is fixed through depreciation or long term contracts that don't have any kind of price increases. And then we've got a little bit of labor that we're obviously working our way through. But thankfully, we're well protected from inflation. Speaker 201:01:44Tyler, I think you can look at the success we've had in Argentina, which I think is facing 100% inflation this year on the durability of our business and our ability to manage not just through the transitory inflation that many countries around the world are seeing, but sustained and high inflation like we have in many countries in Laca. Speaker 801:02:10Great. Thank you very much. Operator01:02:12Thank you for joining the Western Union First Quarter 2023 Results Conference Call. We hope you have a greatRead morePowered by