Devin McGranahan
President & Chief Executive Officer at Western Union
Good afternoon, and welcome to Western Union's third quarter 2024 financial results conference call. We continue to focus every day on becoming the market-leader in providing accessible financial services to the aspiring populations of the world. We are a purpose-driven organization with over 100 million customers who depend on us every day to safely, securely and rapidly deliver on our promise to send their money to loved ones all across the world. Over the past 2 years, our team has been hard at work executing our Evolve 2025 strategy, which will improve our value proposition, expand our product offering and most importantly, ensure high-quality execution in everything we do. I greatly appreciate the very hard work of all of our team members and thank our customers for trusting us with their hard-earned money.
Today, we reported another quarter of improving adjusted revenue growth as we continue to implement our Evolve 2025 strategy focused on returning Western Union to a profitable and sustainable revenue growth trajectory. Over the last 2 years, we've been driving meaningful improvements and this quarter's results continue to demonstrate that our efforts are indeed working. Consumer Money Transfer transactions grew 4% in the quarter, excluding Iraq, a continuation of the mid-single-digit trends we have now seen for the last five quarters, which highlights the durability of the improvements we have made and positions the business well as we head into 2025 despite emerging softness in the Americas, which we will comment on later.
The business continue to improve on an adjusted revenue growth rate basis with adjusted revenue up 1% in the quarter, excluding Iraq. Our Branded Digital business continued to accelerate with transaction growth of 15%, a continuing improvement from the second quarter. In addition, our Branded Digital revenue growth improved 200 basis points compared to the prior quarter and at 9% growth is now approaching our double-digit growth aspirations.
And lastly, Consumer Services had another strong quarter with 15% adjusted revenue growth, driven by an expansion in our FX business as well as our media network business. These results give us confidence that we are well on our way to returning the core business to sustainable profitable revenue growth as we continue to report solid transaction trends and improving revenue growth rates.
For the third quarter, our revenue reached $1.04 billion. Excluding Iraq, our adjusted revenue growth was positive 1%, the second consecutive quarter of positive revenue growth. Adjusted earnings per share came in strong at $0.46 or up $0.03 relative to this quarter a year-ago, which benefited meaningfully from higher revenues and operating profits from Iraq, which were not repeated in the current quarter. Matt will discuss our financial results in more detail and provide an update on our 2024 outlook later in this call.
Now, switching briefly to the macro, the third quarter saw some challenges in our Latin America region for the first time in my tenure. As a reminder, we define our regions, including Latin America from a send perspective. So these are transactions initiated in Latin-America and usually paid out in either the US or in other Latin American countries. In the last several months, there have been a number of political events that have disrupted the typical migration flows in the region with recent elections in Panama, the Dominican Republic, Venezuela and Mexico. In some instances, residents may have delayed their migration to vote or stayed to see the outcome of an election in their home country. And in other instances, newly elected officials have attempted to stem migration. For example, in Panama, the new President has attempted to close the migration route from Colombia into Panama through the Darien Gap, significantly reducing the number of migrants entering Panama. We believe these macro events have created a short-term impact on our Latin American business, which is roughly 10% of Consumer Money Transfer revenue.
However, as you can see from our broader results, we benefit from our globally diversified business and the portfolio effect it affords us. While Latin America slowed in the quarter, regions like Europe, the Middle East ex-Iraq and APAC, which together account for 50% of CMT revenue, all improved with revenue growth rates in all three regions improving by 500 basis points to 1,000 basis points relative to the second quarter. Operating in 200 countries and territories means there are frequently both positives and negatives within our portfolio. We believe the benefit of being a truly global at scale player will enable us to manage these kinds of disruptions better than many of our smaller competitors.
Now shifting to our Digital business. As we discussed at our 2022 Investor Day, returning our Digital business to double-digit revenue growth is a key priority for our organization and is essential to driving top-line revenue growth for the overall company. Over the past year, we have been focused on improving the onboarding experience, driving marketing effectiveness, improving our market value proposition and our overall user experience. We have also been rolling out our new digital experience, which is now in over a dozen countries around the world. I'm happy to report that these efforts are translating into more customers, more transactions and now more revenue. This quarter, we reported the highest transaction growth rate since the second quarter of 2021. This includes solid growth in North America and meaningful acceleration in transaction growth rates across Europe, the Middle East and APAC.
Now on to retail. Over the last year, we introduced several point-of-sale improvements, including Remember Me, Quick Resend, and one-step refund to improve customer and agent experiences. We continue to seek improvements in speed, reliability, agent support and customer experience. I am pleased to announce we have now begun rolling out the next installment on our point-of-sale system improvement journey. We have learned with our last round of improvements that the key to a more rapid deployment is to reduce the dependency on local agent hardware variations. As such, this new iteration of our point-of-sale system has taken a lot of the processes, which were historically run on agent hardware and moved them into the cloud. This enables us to significantly accelerate both rollouts and core processing times.
In the third quarter of this year, on this new platform, we completed a speed test in Spain, and we were able to complete a resend transaction in just over one minute, which is a dramatic improvement from where we were just a year ago. We have started to commercialize the rollout of this new platform in the third quarter of this year and now already have nearly 12,000 agents in the US working on it. We plan to continue to roll-out two additional markets in the coming weeks and our goal is to reach 25,000 agent locations by the end of the year. This would be a meaningful step-function improvement over the pace of our first few waves of retail point-of-sale product rollouts.
In addition to these platform improvements, we have continued rolling out debit acceptance across select agents and markets in Europe. We began the rollout in mid-2023 and are pleased with the progress we are making. When we look at agent-level data across the region, those agents where debit has been enabled are performing meaningfully better than our cash-only agents. Debit-enabled agents are seeing transaction growth rates hundreds of basis points faster and in some cases multiples higher than our cash-only agents in the same countries. Retail card funded transactions is part of the market that we have historically under-indexed due to lack of a product offering, but we now have a competitive product and have begun to gain market share in this important category. Even with the significant growth over the last year, debit-funded transactions still account for less than 10% of the total transactions, and we believe we have a meaningful runway to continue to expand that over the coming years.
In addition to our ongoing rollout in Europe, we have also just launched an expanded debit card acceptance program in the United States in the third quarter of this year as well. While this launch was only in select Vigo locations, our expectation is to grow this segment meaningfully in the coming years and to build on the success we are now seeing in Europe. As an example, our focus on driving retail execution can be seen in the performance of our own store network in Singapore. Five years ago, the business was shrinking 5% and accelerating lower in subsequent years prior to the launch of our controlled distribution strategy. Through September of this year, the business has grown 12% with contribution margins improving hundreds of basis points over the last few years.
Additionally, I am pleased to report that our premier location in Singapore in the Lucky Plaza exceeded 10,000 transactions in September, making it one of the busiest company-owned stores in our network. This example highlights the commitment and dedication of our team to improve performance, but also the strength of our brand when we deliver a market-leading value proposition with high execution quality.
Finally, I would like to spend a minute discussing our Consumer Services segment. We have made it a goal to grow this segment of our business double-digits annually. I am pleased to report we generated 15% adjusted revenue growth in the third quarter, an acceleration of the growth rate we saw in the previous quarter. We continue to see solid growth in our retail money order business, where we have recently implemented in-store cash refunds for the first time and we believe we have one of the most consumer-friendly products in the marketplace.
In addition to RMO, we continue to see benefit from the products and services we have launched or meaningfully expanded over the last 18 months. The two biggest contributors to growth in the quarter were our FourX business in Europe, which benefited from a robust travel season and our media network business in the United States.
Before I turn the call over to Matt, I would like to make a few comments on some opportunities I see to continue to expand our Evolve 2025 strategy. In recent weeks, we have signed two M&A transactions, both of which remain subject to regulatory approval and other customary closing conditions. While these transactions are small in terms of capital commitments, we believe they are meaningful in accelerating our mission to become the world's leader in providing accessible financial solutions to the aspiring populations of the world.
First, we signed an agreement to acquire the Singaporean digital wallet business Dash from the Singtel Group. This acquisition is expected to bring us hundreds of thousands of incremental active customer, millions of dollars of deposits and enable us to expand into additional products and services our customers in that market desire. Over the last year, we have looked at numerous digital solutions across the world and believe this one fits our strategy exceedingly well. Dash is a truly omnichannel solution for delivering cross-border remittances. The core of their offer is a robust cash-in network with access to several hundred retail locations that are used to fund a digital wallet and to send cross-border remittances. They also enable a debit card within the digital wallet, which allows their cash-centric customers easier access to spending at the retail point-of-sale. We believe there is substantial opportunity to combine this offer with our existing business in Singapore, taking advantage of our excellent owned location network previously discussed. We look-forward to the opportunity to welcome the Dash team to Western Union and are excited about the opportunities ahead in Singapore and more generally across the APAC region.
In addition, we signed an agreement to acquire a recently launched digital wallet in Mexico. While their existing business is fairly nascent, we look forward to the opportunity to leverage their platform and assets in combination with Western Union's capabilities to create an account-based relationship with our customers in one of the most important remittance markets in the world. We believe this acquisition will help us accelerate our ecosystem strategy in Latin America and build on the momentum we are now seeing in Argentina, where we have onboarded 200,000 customers to our own digital wallet and are happy to report that in the month of September 6% of all inbound remittances into Argentina landed in our own wallet. Given the regulatory review and product development timelines associated with this acquisition, it will likely be a year or more before we have a Western Union branded wallet live in Mexico. That said, I'm excited about the prospect of a two-sided digital payment network spanning one of the largest corridors in the world.
Looking ahead, we remain optimistic about our market position, the progress we are making to deliver on our strategic initiatives. We are pleased with the performance of our business to-date, driven by improving transaction trends across both our digital and retail businesses and the top-line revenue growth that we are now beginning to see as a result. I remain confident that we are tracking well to achieve our Evolve 2025 goals and are setting the company up well for a more prosperous future.
Thank you for joining the call today. I will now turn the call over to Matt to discuss our financial results in more detail.
