Devin McGranahan
President and Chief Executive Officer at Western Union
Good afternoon, and welcome to Western Union's first quarter 2024 financial results conference call. Today, we reported another quarter of steady progress, and I'm pleased with the direction of our business under our EVOLVE 2025 strategy. Over the last 18 months, we have been working hard to return our digital business to double-digit revenue growth and to achieve stability in our retail business. This quarter's results further demonstrate that our efforts are working. We delivered positive revenue growth and improved transaction trends in both our retail and our digital businesses in the quarter.
Consumer money transfer transactions grew at 6% in the quarter, the third consecutive of 5% or more transaction growth. Excluding the COVID grow over period, this is the first time we have seen three consecutive 5% plus transaction growth quarters since the second quarter of 2014, nearly a decade ago. As I have said before, we strongly believe that the consistent and sustainable transaction growth is the best indicator of the future health of our business. In addition to maintaining our transaction momentum, this quarter, we also made significant progress in reducing the spread between transaction growth and revenue growth. As we have previously discussed, closing this gap towards our long-term goal of 200 to 300 basis points is a priority, and we made a lot of progress in the first quarter.
Our total consumer money transfer we improved the spread between transaction growth and revenue growth by approximately 300 basis points compared to the fourth quarter. And more importantly, in our branded digital business, we improved 500 basis points quarter-over-quarter with our branded digital business now growing adjusted revenue at 9%, which is the highest growth rate we have seen since the third quarter of 2021. Our confidence in reaching sustainable, profitable revenue growth by 2025 grows each quarter as we see increased stability in our retail business, increased growth in our digital business and ongoing broadening of our consumer services offerings and better customer and agent experiences. We are also achieving these goals while maintaining our industry-leading margins, adjusted margins of 19% to 21%.
Now switching briefly to the macro. The macro backdrop remains consistent with what we have seen for the last couple of quarters. While beginning to temper, we continue to see elevated inflation and higher interest rates around much of the world. The good news is our customers have found a way to adapt and to continue to send money in similar sizes as they have done in the past. This confirms our belief in the resilience of our customer base, the power of our brand and our at scale global operating model. Our principal per transaction in the quarter was up 1% on a constant currency basis when excluding the positive effects from Iraq, and our customers are broadly sending with similar frequency as they did a year ago.
For the first quarter, our revenue reached $1.050 billion, reflecting a 3% increase on an adjusted basis. Adjusted earnings per share came in strong at $0.45 or up 5% on a year-over-year basis, which now puts us in a position to increase our outlook for the full year. In the quarter, we continued to return capital to our shareholders with stock repurchases and dividends totaling $230 million. This brings our cumulative capital return to shareholders since I joined the company in late 2021 to over $1.5 billion. We have facilitated this type of capital return while navigating an uncertain economic backdrop, resetting our market competitive position, exiting Russia, and investing significantly in our products, technology and our go-to-market strategies.
As revenue growth continues to accelerate, we expect to be able to continue to generate strong free cash flows while also investing in our future. Matt will further discuss our financial results in more detail and provide an update to our 2024 outlook later in this call. Over the last year, we have made significant progress on our most important strategic initiatives, including improving our retail operations, updating our digital platforms, elevating our customer and agent experiences and enhancing our overall value proposition in the marketplace. This focus on our strategic priorities is leading to the improved financial results we reported today. And while we have made substantial progress, we believe there are still opportunities to continue to improve our overall operating performance.
Now on to our retail business. Immigration around the world is showing no signs of slowing down. In the US, for example, the migrant population hit 51 million people earlier this year, which is a new record and accounts for roughly 15% of the US population and approximately 20% of the US workforce according to the Center for Immigration Studies. It was also reported that since the pandemic, migrant workers in the US have increased by 3 million, while at the same time, the US born workforce is down roughly 1 million people. Our research would indicate that many migrants start their remittance journey in a retail setting for a variety of important reasons. Given the likely future ongoing growth in migration around the world, we believe that macro trends support the fact that we can indeed stabilize our retail business, while at the same time, growing our digital and consumer services businesses.
As you remember from our Investor Day, we view our retail business as the gateway to Western Union. Over the last couple of years, we have seen more than 20 million new remittance customers annually in our agent retail locations around the world. These are 20 million new opportunities to showcase our brand, to build trust, to highlight our improved customer experience and to start a relationship with our customers that will hopefully last decades. While many new migrants start their remittance journey in a retail setting, over time, a meaningful portion migrate to digital channels as they establish in market banking relationships. When we provide them with a world-class experience in retail, an attractive value proposition and a broader set of financial service offerings, we build trust and can grow with them on their financial journey in their new home.
Last year, we introduced several point-of-sale improvements, including Remember Me, Quick Resend and one step refund to improve our customer and agent experiences. I am happy to report that in the first quarter, we processed nearly 2 million transactions using Quick Resend largely still in North America, which is up from roughly the 500,000 transactions we processed when I first shared the launch of this product in the second quarter of 2023. In recent weeks, we have begun to roll out this functionality to Europe and APAC with the goal of building on the success of the improved customer convenience that we now see in North America. In addition to Quick Resend, we've expanded our One-step Refund functionality, which allows agents to process refunds without the need to engage with our call center associates. This functionality is now available to the vast majority of our network around the world and in the first quarter of 2024, two-thirds of all refunds processed globally were processed using our one-step refund approach. This contributed to a significant reduction in call center volumes and an improved experience for both our agents and our customers alike.
Lastly, we strive to create a more customer centric approach through the expanded rollout of our Universal Customer ID. This technology enables one customer profile across our channels for both senders and receivers. It is allowing us to move from a transaction centric company to a customer centric company. With the Universal Customer ID and our improved CRM capabilities, we can now proactively alert customers when their transactions have been delivered. We can make recommendations to receivers on where they can conveniently pick up their transaction or in some markets, even enable receivers to redirect their remittance directly into their account or to a Western Union digital wallet.
A truly customer-centric and channel-agnostic approach is central to our new loyalty program, which I am very pleased to announce we successfully launched in France this week, achieving our goal of an April launch. Being able to recognize and reward customers across channels for both senders and receivers is something that we are excited about and believe it will help us improve both the engagement and the retention of our entire customer base. We are continuously looking for ways to improve our customer and agent experience. We are working hard to expand the rollout of many new additional functionalities, including debit payment at the point of sale, digital receipts and enhanced pay out to account capabilities around the globe. We look forward to updating you on these important initiatives in future quarters.
In addition to these customer and agent facing improvements, we are also nearing the end of our core transaction processing engine migration to the cloud. We expect this will be completed this summer, and we look forward to benefiting from a more consumption based model and the increased scalability that comes with a modern cloud based architecture. This migration will enable our development teams to innovate more quickly and reliably deliver solutions to our agents and customers globally. Having a fully cloud-enabled core processing platform will enable us to be more agile and competitive in a digital first world. We believe all regions will benefit from our improved technology-enabled experiences, but one I'd like to highlight today is our European region. Recall that this region has had multiple external forces working against it over the last several years, including our decision to exit our business in Russia and Belarus and the loss of meaningful revenue at two large European agents. In addition, Europe is a very competitive part of the world with strong competitors in both the retail and the digital channels.
Over the last 18 months, we have been focused on our European operations with the launch of our new digital go-to-market strategy, the expansion of our controlled distribution strategy, the improvement of our value proposition, including dynamic pricing, the launch of our new loyalty program, and the expansion of our product portfolio to include foreign exchange services. These efforts are beginning to pay off. In the first quarter, our European region grew transactions at a 5% year-over-year growth rate, a marked improvement from the double-digit declines of recent years and the first quarter of 5% plus transaction growth since the fourth quarter of 2019. This improvement was accomplished while absorbing the loss of counter service at one of our largest agents in France, which discontinued their FLA support -- supported remittance offering in the fourth quarter of last year.
While this agent loss will continue to be a headwind for the coming quarters, the European team did a great job of navigating the situation by extending the contract length by almost nine months and executing on a remediation plan, which included building up an independent agent network that now totals over 1,500 locations, launching both a digital and kiosk solution for our partner to replace their counter service and expanding the capabilities of our branded digital offering across the country. In the past, we might have chalked up this agent departure to the market decline of retail in the European region and left it at that. Instead, we viewed it as an opportunity to do the very type of problem solving required to hold our market position to improve the experience for our customers, to assist and support our agent partner and to mitigate the long-term impact of this action on the underlying health of our business. And because of those decisions, we are now seeing better outcomes than our original projections.
I would now like to spend a minute discussing our Consumer Services segment. In previous calls, we have talked about how retail money order and bill payment have been the largest two businesses within Consumer Services and the biggest drivers of growth over the last couple of years. We have also made it a goal to grow this segment of our business double digits annually for the foreseeable future. While we do expect retail money order and bill payments to continue to grow, we believe the majority of the future incremental growth within Consumer Services will come from products and services we have launched in the last 18 months or are planning to launch in the near future. Services like prepaid debit cards, foreign exchange and the ancillary revenue streams associated with our digital wallets.
Within the last two weeks, we have launched our second digital wallet-based experience in Latin America with the launch of our digital wallet in Brazil. This is in addition to the wallet we launched in Argentina under our Pago Facil brand late last year. While both are still early in their evolution, they provide us with a platform to assist our customers with their daily needs, including bill payments, savings, money transfer, both domestic and cross-border as well as access to point-of-sale payment solutions. Brazil is a unique market for us and one we believe will make for an interesting wallet launch. It is a country where we have a large, owned distribution network, where the market is roughly 50-50 split between send and receive, and it is one of the few countries in the world where our digital business is larger than our retail business on a transaction basis. We believe that these characteristics give us the ability to work on the retail to digital escalator, provide unique marketing opportunities, and accelerate our ramp based on our learnings from our recent Argentinian launch late last year.
In Argentina, we have successfully on-boarded close to 100,000 wallet-based customers now, and I am pleased to see that 38% of all funds in to the wallet this quarter came from redirects of inbound remittances. In the most recent month, 35% of our active monthly users did a bill payment transaction, 28% either put cash in or took cash out at one of our retail locations and our banking partner, Santander, funded 3,000 loans to our customers during the first quarter, a quarter in which we were recognized by Santander with their personal loan award as one of their largest loan originators. We believe this type of wallet-based relationship to our customers will make for a more engaged experience, create a two sided network, drive affinity to our brand and ultimately help us improve retention while also driving long-term sustainable and profitable revenue growth in our core business.
Finally, I'd like to highlight a new strategic partnership. Earlier this month, we began the launch of our strategic relationship with the Swiss Post, one of the most respected brands in Switzerland. This is a new long-term partnership for Western Union, and we are excited to bring Western Union services to over 700 new Swiss Post locations across the country. Looking ahead, we remain optimistic about our strategic direction and the progress we are making. We are pleased with the change in the underlying trajectory of our business driven by improved transaction trends across both our digital and retail businesses, while continuing to deliver top line -- improving top line financial results and ongoing strong cash flow.
I remain confident that we have the right strategy, the right capabilities, the right team and the right mindset to achieve our EVOLVE 2025 goals.
Thank you for joining the call today. I will now turn the call over to Matt to discuss our financial results in more detail.
