The Western Union Company

Good day and welcome to the Western Union fourth quarter and full year 2024 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 this event is being recorded. I would now like to turn the conference over to Tom Hadley, Vice President of Investor Relations. Tom, please go ahead.

Thank you. On today's call, we will discuss the company's fourth quarter and full year 2024 results, and then we will take your questions. The slides that accompany this call and webcast can be found at westernunion.com under the investor relations tab and will remain available after the call. Additional operational statistics have been provided in supplemental tables with our press release. Joining me on the call today is our CEO, Devin McGranahan, and our CFO, Matt Kegwin. Today's call is being recorded, and our comments include forward-looking statements. Please refer to the cautionary language in the earnings release and in Western Union's filings with the Securities and Exchange Commission, including the 2023 Form 10-K, for additional information concerning factors that could cause actual results to differ materially from the forward-looking statements. During the call, we will discuss some items that do not conform to generally accepted accounting principles. We have reconciled those items to the most comparable gap measures in our earnings release attached to our Form 8K, as well as on our website, westernunion.com, under the Investor Relations section. I will now turn the call over to our Chief Executive Officer, Devin McGranahan.

Good afternoon, and welcome to Western Union's fourth 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. Our customers are our inspiration as we improve our products and services and position ourselves as their trusted partner. We are privileged to have over 100 million customers around the world, a base that has stabilized over the last several years. Since October of 2022, our team has been hard at work executing our Evolve 25 strategy to improve our value proposition, expand our product offerings, and most importantly, ensure high-quality execution. Today, we reported another quarter of improving adjusted revenue growth as we continue to implement our Evolve 2025 strategy, which is focused on returning Western Union to sustainable, profitable revenue growth. Over the last two years, we have driven meaningful improvements in our business, and this quarter's results continue to demonstrate that our efforts are working. These results give us confidence that we are well on our way to achieving our previously stated financial objectives as we continue to report solid transaction trends and improving adjusted revenue growth ex-Iraq. For the fourth quarter, our revenue reached $1.6 billion. Excluding Iraq, our adjusted revenue growth was a positive 1.4%. now the third consecutive quarter of positive adjusted revenue growth. Consumer services led the way with another strong quarter at 23% adjusted revenue growth, driven by our media network business, the expansion of our foreign exchange services, and continued growth in retail money order. Our strategy of growing beyond CMT continues to show promise and momentum. In addition, our branded digital business continued to perform well with 13% transaction growth and 8% adjusted revenue growth in the quarter. Adjusted earnings per share came in strong at 40 cents or up 3 cents relative to this quarter a year ago. The improving performance of our core business is readily apparent as in Q4 2023 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 our 2025 outlook later. I have recently returned from nearly two weeks in Asia, visiting with our local teams, aligning on plans for 2025. This region is a microcosm of our larger company-wide efforts. In 2022, the region shrank transactions 12% and adjusted revenue 9%. In 2024, that improved to 8% transaction growth with adjusted revenue down only 3%. The turnaround in Asia is one example of why we remain confident of the trajectory we are on. Throughout the visit, I saw progress on our strategic agenda and still plenty of opportunity to continue to accelerate our performance. The region has embraced our new approach to both digital and retail. On the retail distribution side, we are moving away from a heavy dependence on postal systems and master agents to a much more dynamic system with owned locations at the top of the pyramid, branded exclusive concept agents and strategics in the middle, and a broad base of independents at the bottom. For example, Singapore now has our highest performing owned location network, with 7% revenue growth and 10% transaction growth in 2024, and includes one of the single highest volume locations in the company. While I was there, I went to the opening of our first owned location in Malaysia. This trip reinforced my belief around the value of having a small network of owned locations. We believe there is significant opportunity in Malaysia to go after high-volume retail corridors where we can win with an owned location strategy. Australia and New Zealand have seen significant growth through our independent agent network expansion. We have seen over 20% growth in agent locations since 2022, and these networks grew revenue 17% and transactions 25% in 2024. While stabilizing the retail business, the Australia team has also embraced our next generation digital platform and is now one of the best performing digital businesses in the company within 2024 revenue growth in the mid-teens and transaction growth at nearly 30%. Our team there will continue to accelerate this region in 2025 with the launch of our new digital platform in two more countries, a continued expansion of our independent agent networks and owned locations, the anticipated completion of the DASH acquisition, and the launch of a new digital wallet offering in Australia. We expect 2025 will see the region grow both transactions and revenue positively for the first time in seven years, excluding the COVID growover. At our 2022 Investor Day, we laid out plans to showcase our retail business as the gateway to Western Union. This plan included rationalizing our footprint, enhancing our value proposition, and improving the agent and customer experience. We do not subscribe to the melting ice cube thesis that many discuss. We believe the retail market globally is stable and that we have many opportunities to grow our share. Historically, we were a share donor. But in places where we have successfully implemented our strategy, we have seen a turnaround in performance and are achieving positive revenue and transaction growth in many of these markets. Where we are lagging in these goals, we can identify the drivers, whether they be short-term macro effects or the incremental work that is still required to achieve our full transformation. Excluding Russia, Belarus, and Iraq, since 2022, our global retail business has seen a 500 basis point improvement in transaction growth. We continue to fully expect that over time, our retail business will be a net positive contributor to overall company performance. As an example, our global retail-originated, paid-out-to-account business grew transactions roughly 30% last year, highlighting the potential of the network when we have the right product and the right value proposition. Our retail business is a strategic asset for the company, driving brand awareness, supporting a lower cost of digital acquisition, and providing a core set of customers and stores that help enable the growth of our consumer services businesses. It is now a much better position to compete, benefiting from more competitive pricing, improved agent and customer value proposition with both better experiences and improved products, and the benefit of a great brand and significant scale that few, if any others, can match. It can now grow by taking share in important corridors that we have previously shied away from because we were uncompetitive. Key opportunities, for example, include retail-heavy corridors like the US to Guatemala, which we estimate is a $20 billion corridor, UK to India, a $10 billion corridor, or UAA to the Philippines, a $1 billion corridor. These are important corridors which we believe we currently have a sub-10% market share position and thus provide significant opportunities to continue to drive retail growth. An often overlooked advantage of our retail business is the strong connection to our digital business. A substantial part of our digitally initiated transactions are still paid out to cash by us and our competitors, and we own that experience end-to-end. Our several hundred thousand payout locations give us customer experience advantages relative to our digital-only peers. better financial economics, and allows us to engage directly with potential future customers a decade or more before they become remittance customers themselves. We Do Not Think Enough credit also is given to the millions of page views on our websites and digital properties from around the world from our retail customers. These retail customers are using our store locator or checking the status of a transfer. This traffic improves our position in most organic search algorithms and drives down our cost of digital customer acquisition. With the assistance of our retail network volume, our CAC last year was down roughly 10%, which enabled us to effectively compete in a market where many digital players routinely spend significantly more and remain mostly unprofitable. The key to winning in the retail market is being competitive. You need to have the right price with a seamless and easy experience in the right locations. We continue to work on all three, but when we get it right, we can win. Last year, our retail business in Spain grew transactions 25% and revenue 18%. Another example is the improvement we've seen in our retail business in the UK, which grew transactions 20% and revenue 9% in 2024. These are very competitive markets where we have executed our strategy and we are seeing the results. More globally, in the last year we introduced several new point-of-sale improvements, like Remember Me and Quick Resend. and have now embedded those functions in our updated point-of-sale system, which takes much of the required processing out of agent hardware and moves it into the cloud. We continue to seek improvements in speed, reliability, agent support, and customer satisfaction. We are pleased with the progress we have made so far and look forward to additional improvements that we have planned for 2025. On the last call, I mentioned we are aiming to have our new cloud-based point-of-sale system available in 25,000 locations by the end of the year. I am pleased to report that we substantially passed that goal and now have roughly 70,000 active locations. In the last 30 days alone, we have run over 2 million transactions through this platform. We have rollouts underway in North America and APAC, And we have just begun expanding this technology into Europe and LACA. As we improve our operating model, we are increasing our pace of execution and rollout. Our goal for 2025 is to have all relevant agents globally on this platform by the end of the year. Now, shifting to our digital business. As part of our evolved 2025 strategy, 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, and improving our value proposition as well as our overall user experiences. I am happy to report these efforts are paying dividends with more customers, more transactions, and more revenue. Since 2022, we have launched our next generation digital platform in over 10 countries, including a launch in India in the fourth quarter of this year. We have seen significant improvements in our digital business performance this year in Mexico, Japan, the UK, and Chile. As a result, We saw an increase in total customers and a higher frequency in which they transacted, all of which leads us to double-digit transaction growth and high single-digit revenue growth, which we believe positions us well for 2025. We plan to launch our next generation platform in more than 10 additional countries in 2025, including several in Africa, where we see a real opportunity. We are significantly improving our account payout network with increased direct connections and better volume discounts. We have also launched a global initiative to improve our KYC experiences in many parts of the world by moving to a more localized approach that we believe should greatly benefit onboarding rates. We look forward to updating you as the year progresses. Finally, I'd 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 by providing new products and services to our existing customers through our existing channels. I am pleased to report we generated 20% plus adjusted revenue growth in the fourth quarter, an acceleration of the growth we saw in the third quarter. We continue to see solid growth in our retail money order business, where we believe we have one of the most consumer-friendly products in the marketplace. In addition to RMO, we saw strong growth from several of 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 media network business in the United States and our foreign exchange business in Europe, which benefited from a larger footprint. We are happy to report that we have renewed our long-standing relationship with Ahold Delhaize USA, one of the nation's largest grocery retail groups, for an additional five years. We are pleased to extend this agreement and continue to provide our customers the opportunity and convenience to meet their cross-border remittance needs at Ahold Delhaize USA brand locations. Additionally, we are pleased to announce our co-branded partnership with YourPay, owned by Al-Riha Bank. YourPay is the largest digital wallet in Saudi Arabia and has over 6.5 million customers. This partnership enhances our brand in one of the largest digital financial ecosystems in Saudi Arabia. Lastly, we are also pleased to announce our collaboration with DuPay, the advanced digital financial services arm of Due, and licensed by the Central Bank of the UAE. Through this white-label partnership, we are enabling international money transfer services on their app, further strengthening our digital footprint in the country. In conclusion, We believe we are roughly six months ahead of where we plan to be at this point relative to our initial 2022 investor day guidance, having just achieved positive full-year company-wide adjusted revenue growth, excluding IRAC. From a regional perspective, we have improved adjusted revenue growth in North America, Europe, the Middle East, ex-IRAC, and APAC, which gives us optimism about the trajectory we are on and what we can accomplish in 2025 and beyond. Looking ahead, we remain very positive in our market position and the progress we are making to deliver on our strategic initiatives. Every day, we can see the improving health and performance of our core business and are now beginning to deliver the ongoing and sustainable revenue and operating profit growth required to propel the value of the company upward. I remain confident that we are tracking well to achieve our evolved 2025 goals, but more importantly, are setting the company up for a much more prosperous future. Thank you for joining the call today. I will now turn it over to Matt to discuss our financial results in more detail.