Good day and welcome to the Western Union Fourth Quarter 2023 Results Conference Call. 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 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 CEO, Devin McGranahan; and our CFO, Matt Cagwin. Today's call is being recorded and our comments include forward-looking statements. Please refer to the cautionary language in the earnings release and in Western Union's filings with the Securities and Exchange Commission including the 2022 Form 10-K for additional information concerning factors that could cause actual results to differ materially from the forward-looking statements. During the call, we will discuss some items that do not conform to generally accepted accounting principles. We have reconciled those items to the most comparable GAAP measures in our earnings release attached to our Form 8-K 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 2023 financial results conference call. Now two years into my tenure as CEO, I am pleased with the improvements we are seeing in our trajectory under our Evolve 2025 strategy. As you know, over the last 18 months, we have focused on returning our digital business to double-digit revenue growth and achieving stability in our retail business. The fourth quarter is further evidence that we are indeed on the right path. Today, we are reporting a strong finish to the year with positive adjusted revenue growth and improved transaction trends across both our retail and digital businesses with transaction growth north of 5% for the second consecutive quarter. Consistent and sustainable transaction growth is the strongest indicator of the future health of our business. It has been nearly a decade since the company has delivered 5% plus transaction growth for multiple quarters in a row excluding the COVID recovery period. We are pleased with this significant change in our trajectory. Digging in, looking at quarter level trends, you can see the change in trajectory is both widespread and meaningful, whether looking at the U.S. to Mexico, France to Africa or the world to the Philippines, these corridors show the same picture, considerable improvements in transaction growth rates over the last 18 months. As this graph illustrates, our work over the last 18 months to improve our customer experience, streamline our operational processes and accelerate our market effectiveness is driving significantly improved outcomes. Our confidence in achieving sustainable, profitable revenue growth by 2025 increases each quarter as we stabilize our retail business, accelerate our digital business expand our ecosystem offerings, enhance our customer and agent experiences and maintain industry-leading margins like we did this past quarter. For the fourth quarter, our revenue reached $1.050 billion, reflecting a 3% increase on a constant currency basis when excluding the contribution from Business Solutions compared to the same period last year. Adjusted earnings per share came in strong at $0.37, up 16% on a year-over-year basis and allowed us to achieve the upper end of our EPS guidance. Maintaining our long history of returning capital to shareholders, we produced another year of solid cash flow with operating cash flow of $800 million of which $650 million was returned to our shareholders via dividends and stock buybacks. As we discussed at our Investor Day in 2022, to date, we have funded all the required investments in our transformation while maintaining our 19% to 21% adjusted margins and continuing strong returns of capital to our investors. Matt will further discuss our financial results in more detail and provide our 2024 outlook later in this call. In addition to improving financial results, we continue to execute well on our strategic priorities. Over the last year, we have made meaningful progress on our most important initiatives, including improving our retail operations, updating our digital platforms and go-to-market strategy, refining our customer and agent experiences and enhancing our overall value proposition in the marketplace. While our journey is not over, I would like to share some of the highlights from this past year. Starting with our retail business. In 2023, we made material enhancements to our point-of-sale system with new functionalities like remember me, quick resend, debit payment enablement, digital receipts and enhanced payout to account capabilities. These improvements, while not groundbreaking, have made our retail customer and agent experience more competitive and have contributed significantly to the improvements you see in our retail transaction trends over the last 18 months. Additionally, we will continue to roll out these functionalities across the globe and anticipate further benefits in 2024. In addition to our point-of-sale improvements, we also made significant progress on expanding our controlled distribution strategy which includes both owned and concept stores in Latin America, Europe, the Middle East and Asia Pacific. Recall that by enabling an exclusive Western Union experience in high-impact locations, we believe we have more control over the customer experience can test new products and services and creates a new low-cost acquisition engine for our digital business. This strategy which prior to 2023 was largely a Latin American phenomena with owned networks in both Argentina and Brazil has now been expanded to every region in the company. In 2023, we opened 100 new owned locations in 200 new concept stores which increased our controlled distribution strategy by over 35%. In addition to new store openings, we also updated roughly 30,000 high-impact retail locations around the world with our new Western Union brand format presenting a more contemporary and omni-channel message to our retail customers. To complement our controlled distribution strategy, last year, we also enhanced our digital capabilities, including launching our next-generation digital app now in 12 countries around the globe, launching a digital wallet in four European and one Latin American country and implementing a new digital go-to-market strategy. This strategy has allowed us to drive more traffic to our digital platforms, increase our conversion rates, improve our marketing messages and enhance our value proposition while materially lowering our customer acquisition costs. As evidence of this, in 2023, we were able to grow new digital customers at double digits while at the same time, lowering our customer acquisition costs by over 15%. The scalable, cost-effective new customer acquisition is the foundation for continued double-digit growth of new digital transactions. Given the journey we are on, ongoing operational performance improvement is a powerful driver of agent and customer satisfaction and ultimately will lead to improved retention. Last year, we made significant changes across key elements of our customer and agent experiences. These changes resulted in millions of fewer phone calls to our call center and improvements in both agent and customer satisfaction. For example, we improved self-service tools like our Track a Transfer to integrate across channels so that customers can get status updates on their transfer through the Western Union mobile app, regardless of whether that transfer was initiated on the app or at more than over 400,000 retail active locations around the world. As you will recall, in late 2022, we started rolling out our new digital go-to-market strategy. This strategy included revised marketing, a focus on funnel effectiveness, improved onboarding processes, promotional pricing for new customers and market-based pricing on subsequent transactions. The program has led to double-digit new customer growth and double-digit transaction growth throughout 2023. By the end of the first quarter of 2024, we will anniversary both the U.S. and the European launches of this strategy and as such, we expect the gap between transaction growth rates and revenue growth rates to continue to narrow throughout the year. Likewise, on the retail side, last year, we also began rolling out a new go-to-market program to complement our focus on location productivity. That program included revised marketing seasonal and holiday promotions and some corridor and geographic-specific pricing initiatives. The majority of these actions occurred in the second and third quarters of last year and we are now holistically happy with the results that they are producing. We believe these changes have helped us deliver positive retail transaction growth for the first time in many years and have reinforced our belief that we can achieve a stable retail business in the near future. One of the regions that have benefited immensely from these changes implemented over the last year is our Asia Pacific region, a region that has been in cyclical decline for over five years. APAC was early in the launch of our next-generation digital app and they have been advancing our efforts through controlled distribution. This region now has some of the highest digital new customer growth rates, the highest digital conversion rates and has the most significant change in transaction growth rates we have seen anywhere in the world, led by Australia. Transaction growth rates in APAC have improved by 1,000 basis points or more year-over-year in every quarter of 2023. This type of improvement, you can see, when you have the right technology, the right distribution strategy and great customer and agent experience. We believe the right user interface and a keen focus on funnel management will help us meet our expectations of returning our digital business to double-digit revenue growth. Looking ahead, while there is more work to be done, and the team is committed to the ongoing continuous improvement of our core remittance business, we are also working diligently to expand our total addressable market beyond cross-border remittances. Given the strength of our brand, the reach of our distribution and the trust of nearly 120 million customers, we are focused on creating and delivering additional products and services that cater to the needs of the aspiring populations of the world. This strategy currently includes our digital wallet, our retail money order business, our bill payment business and we have recently added products like our prepaid debit card, lending services in Argentina and Australia and a 4x currency conversion business that we have launched in select locations across Europe and Asia Pacific. We now have over 200,000 customers onboarded to our digital wallet in Europe and over 50,000 in Argentina. Our retail money order business which we have focused on over the last 18 months has grown substantially over the last couple of years with principal up nearly 20% and investable assets up over $135 million. Growth in investable assets has been important for a business that generates substantial revenue on its asset portfolio. This business now accounts for roughly one-third of our consumer services revenue, formerly referred to as Other in our financials. With a revamped value proposition, improved distribution and a new point-of-sale system on the horizon, we are excited about continuing to see strong growth in this product ahead. As we continue this journey, our goal is not only to drive organic growth but also seek acquisition opportunities that will enable us to build stronger customer loyalty and increase our portion of our customers' financial wallets over time. As one of the key pillars of our Evolve 2025 strategy, we believe we are in the very early innings of this market expansion opportunity and will continue to invest accordingly. Finally, I would like to talk briefly about our automation journey and highlight a new partnership that we entered into in the fourth quarter. We have a long history of innovation and have continued to expand our automation capabilities, resulting in cost efficiencies, higher quality output, improved customer and agent experiences and risk reduction. Over the past two years, we have made significant investments in robotic process automation, building capabilities in agent collections and reactivation, customer refund processing, risk exception decisioning, proactive agent credit limit increases and receiver name changes. While the elimination of manual processes drives cost efficiencies, the speed and quality of the outputs have also led to better experiences. We are now taking a similar approach to artificial intelligence as we have with robotics including exploring ways to use generative AI in areas like software development, marketing content creation, price decisioning, customer care assistance and translation services. While early in the journey, we believe generative AI has the potential to increase revenue, further improve efficiency and productivity over time and thus provide additional value to our shareholders. Last, we are pleased to announce a meaningful expansion of our relationship with Visa. This long-term global strategic relationship covers issuance, Visa Direct and further enables collaboration between the two companies across 40 countries and five regions. Visa has been a long-term strategic partner of Western Union and we are thrilled to extend this relationship for years to come. Looking ahead, we remain optimistic about our strategic direction and the positive progress we have made. We are pleased with the change in the underlying trajectory of our business driven by improved transaction trends across both digital and retail businesses while continuing to deliver improved top line results and strong cash flow. We have also made substantial progress on our talent evolution, including a meaningful realignment of the top 100 executives at the company. This was done through both internal promotions and external hires and I believe we now have the right people in the right roles to allow us to execute on our Evolve 2025 strategy. We have a loyal customer base that trusts our brand and values our services. We have a global network that provides unparalleled access and convenience to nearly 120 million people around the world and have now achieved a turnaround in transaction trends, thus validating the relevance of our offering and our brand. We have a talented and dedicated team that is focused on executing our strategy and driving innovation and we have a clear vision and early progress on how we can leverage our assets to create new revenue streams and growth opportunities. I am confident that we have the right strategy, the right capabilities, the right team and the right mindset to achieve our strategic priorities. Thank you for joining the call today. I will now turn the call over to Matt to discuss our financial results and our forecast for next year in more detail.

Thank you, Devin and good afternoon, everyone. I'm pleased to be here today to walk you through our 2023 fourth quarter and full year results and our 2024 financial outlook. Before I begin, I would like to share with you the updated names of our segments more accurately reflect the underlying businesses associated with them. Our C2C segment will now be referred to as Consumer Money Transfer or CMT and our other segment will be referred to as Consumer Services or CS, as Devin mentioned earlier. The names of the segments are the only thing that changed. We have not changed the composite of the business within them. For the full year, adjusted revenue grew 4% which is meaningfully better than our original outlook of down 2% to 4% due to better core results, the benefit of Iraqi and Argentinian inflation. In the fourth quarter, we delivered adjusted revenue of $1.1 billion, representing a 3% increase year-over-year. Results benefited from a 400 basis point impact from Argentinian inflation, a revenue increase from Iraq and the ongoing progress of our Evolve 2025 strategy. Fourth quarter results were above our expectations. As discussed during our last call, Iraq volume slowed in the fourth quarter. They benefited our results by 3 percentage points versus an 8% benefit in the third quarter and a 10% benefit in the second quarter. For the full year, Iraq contributed 6% to adjusted revenue growth. Uncertainty remains high in Iraq due to the challenging regulatory environment. When we last spoke in October, our largest agent in the country had recently been suspended, leading us to believe that the volumes would return to levels closer to 2022. This agent though, has been reactivated in early December. CMT transactions grew 5% in the quarter, led by continued momentum of our branded digital business which grew double digits. Growth in our digital white label business and continued stabilization of our retail transaction trends excluding Iraq were also positive. Adjusted operating margin was 16.1% compared to 15.8% last year, with the increase due to net savings related to our operating expense redeployment program and changes in foreign currency, partially offset by higher marketing investments. In 2023, our full year adjusted operating margin was 19.6%, which was in line with our outlook. Adjusted EPS was $0.37 versus $0.32 last year with the current period benefiting from higher operating profit and lower share count. For the full year, we delivered adjusted EPS of $1.74, which was meaningfully above our original outlook of $1.55 to $1.65. This was driven by better revenue performance and the benefit of our operating expense redeployment program which we partially reinvested back in the business by accelerating our go-to-market programs in both retail and branded digital as well as incremental technology investments. Now turning to our CMT business; revenue declined 1% on a constant currency basis with transaction growth of 5%. Excluding our CMT domestic money transfer business, revenue and transaction growth would have been 1 percentage point higher for both. Branded digital revenue was up 4% on a constant currency basis with transaction growth of 13%, driven by our go-to-market strategy launched in the third quarter of 2022 which showed continued momentum after reaching positive revenue growth last quarter. We're excited about the sustainability of our transaction growth which has increased double digits for the third consecutive quarter while achieving positive revenue growth for the second consecutive quarter. Leading the way is North America, the first region where we launched our new go-to-market strategy which drove mid to high teens transaction growth in the fourth quarter and revenue in the high single-digit range. We are also seeing impressive results in APAC as Devin discussed earlier, led by Australia which was an early adopter of our new digital platform. APAC drove mid-teens transaction growth and mid-single-digit revenue growth in the fourth quarter, which we expect will continue to improve as we lap the go-to-market launch in mid-2023. Moving to our retail business; we maintained stable transaction trends for the second consecutive quarter as we continue to make progress against our strategic priorities, including operational improvements, optimization to our network and enhancing our value proposition in the marketplace. When normalizing for Russia, Belarus and Iraq, we improved full year retail transaction growth by 500 basis points. Europe and the CIS led the improvement in our retail transaction trends in the fourth quarter, with transactions growing in the low single-digit range, driven by our Evolve 2025 strategy. We also benefited as we lapsed an agent loss in the fourth quarter and executed well on our remediation plan for the second agent that we're losing. Over the last couple of years, our European retail business has not only faced macro-related challenges like war and inflation but has also lost two important agents. With this backdrop, we have taken the opportunity to test new approaches in the marketplace. For example, we opened 100 concept stores across Europe in nearly 20 markets in 2023. We also improved our value proposition in key markets, driving double-digit transaction growth in our independent channel during the second half of 2023. North America grew retail transactions low single digit in the fourth quarter, continuing its momentum from the third quarter. Prior to this year, our North America retail business hadn't seen positive transaction growth since the second quarter of 2017. The enhancements we made like One Step Refund and Quick Resend helped to drive better customer and agent experiences. Now moving to our Consumer Services segment formerly known as Other, which represents 7% of total company revenue in the quarter. Revenue for the full year was up 13% on a reported basis, while revenue in the fourth quarter was down 1%. The revenue in the fourth quarter was impacted by tougher comparisons due to a portfolio optimization that we completed last year, further optimization of our float portfolio in the current period which resulted in a loss in the current quarter but will add value over time as well as a 5 percentage point drag related to the net impact of Argentine peso devaluation. We are excited about our Consumer Services segment with 2023 marking the second consecutive year of double-digit revenue growth. With the innovations that Devin highlighted earlier today and over the past few quarters, such as our new retail money order platform launched in the fourth quarter, our prepaid card that was relaunched in the third quarter or our digital wallet that's currently live in five countries, we are bullish that we can continue to grow consumer services in the low double-digit range going forward. At our Investor Day, we launched a 5-year $150 million operating expense redeployment program and we feel very good about the progress we've made to date. Broadly speaking, we see opportunity to continue to drive efficiency, manage our cost structure and leverage our scale. In 2023, we took action that allowed us to save over $50 million. The savings last year were primarily driven by talent reallocation, technology efficiencies, marketing improvements, cost enhancements and optimizing our real estate footprint. As a result of these savings, we were able to invest in technology advancements, benefiting our ecosystem platform and our retail point-of-sale system as well as other opportunities like expanding our controlled distribution network. Heading into 2024, I remain optimistic about our continued efficiency opportunities and I'm confident that we can hit a similar savings amount again this year. Now turning to our cash flow and balance sheet; in 2023 we generated $783 million of operating cash flow which includes a transition tax payment of $119 million paid in the second quarter. These tax payments will continue to step up to $160 million in 2024 and $200 million in 2025. I was proud of how well the organization embraced a more diligent approach to free cash flow and capital expenditure management. Capital expenditures were $31 million in the fourth quarter and $148 million in 2023. Capital expenditures were over 25% lower than 2022 and 2021. We are going to remain vigilant on investing in the right areas and shifting our agents from large signing bonuses to performance-driven commission structures. Our strong free cash flow and disciplined expense management allowed us to continue to maintain a strong balance sheet with cash and cash equivalents of $1.3 billion and debt of $2.5 billion. Our leverage ratio remains strong and we're at 2.4x and 1.2x on a gross and net basis which provides us flexibility for potential M&A, while maintaining our investment-grade credit rating. This strong free cash flow also allowed us to return almost $650 million to our shareholders in 2023 which included roughly $350 million in dividends and $300 million in share repurchases, including $200 million in the fourth quarter. Now, moving on to our outlook. Today, we provided our financial outlook for 2024, reflecting current macroeconomic conditions. We expect adjusted revenue to be in the range of $4.1 billion to $4.2 billion. This range reflects continued growth in our branded digital business, the continued stabilization of our retail business and double-digit growth in our Consumer Services segment, driven by the advancements in our ecosystem strategy. We also expect Iraq to generate between $50 million and $100 million during the year. We also expect adjusted operating margins to be in the range of 19% to 21% and we expect EPS to be in the range of $1.65 to $1.75. Finally, we would like to provide an update on our four key performance indicators that we shared at our Investor Day. Starting with retention. In 2023, retail retention improved 70 basis points versus 2022. As we believe improving retention is a critical component to our strategy of achieving long-term sustainable growth across both our retail and digital channels. Starting this year, we will report our total consumer money transfer retention. Our long-term aspiration to improve retention by 200 basis points annually hasn't changed. But we've learned a lot in 2023, including the effects of a downward pressure that growing new customers can drive. We also made good strides on improving branded digital retention with a 120 basis point improvement in 2023. We continued to believe that customer acquisition is a key metric in accelerating our growth of our branded digital business to drive more customers to our digital platform and remain committed to growing this double digit annually. In 2023, we grew customer acquisition by 13% which was even higher on a cross-border basis. Next, moving to our omni-channel. At our Investor Day, we shared that this small customer base was valuable to Western Union, generating 2.5 times more transactions than a single-channel customer. While we initially thought our omni-channel is a permanent state for our customers, we have found that omni-channel largely serves as a pass-through as they migrate between channels. Only 30% of our 2022 omni-channel customers remained omni-channel at the end of 2023, while retail to digital migration accounted for 5% of our new branded digital customers in 2023. We will continue to focus on a seamless omni-channel customer experience and building an account-based relationship with our customers instead of a transactional one and believe that these benefits will be captured in other metrics. However, we will no longer report this metric going forward as we believe it is not significant to our overall business. Lastly, at Investor Day, we shared our goal to add 100,000 digital banking customers each month. However, since Investor Day, we have shifted our focus from Neobank customers to high-quality cross-border remittance customers. Additionally, as Devin highlighted today, our ecosystem strategy includes not only a digital wallet but it's broader and includes an array of products and services, including retail money orders, bill payments, prepaid cards, lending products and foreign currency exchange. These results will be directly reflected in the Consumer Services segment and not our consumer money transfer segment. We continue to believe the benefits of these new products and services will drive not only higher engagement but over time, will help us improve retention as we shift to an account-based relationship. As a result, our goal moving forward will be to grow our profitable Consumer Services segment revenue by double digits annually which better reflects the progress of our ecosystem strategy. To recap, we're pleased with the progress we've made so far in our Evolve 2025 strategy and we remain optimistic for the year ahead.

Our first question comes to us from Will Nance from Goldman Sachs.

Maybe I can start off with some of the comments that you made around omni-channel customers. I know you previously talked around the retail digital escalator over time. And I know you're not focusing on having omni-channel customers anymore. But I guess when you see these customers get off the escalator, do you still see them transacting at much higher levels? And is there any kind of overall change in your thought process about the value of these customers?

Hi Will, it's Devin. You are correct. One of the reasons we're making this change, as Matt highlighted, is the significant economic benefit we gain from the transition from retail to digital. As Matt mentioned, 5% of our new digital customers in 2023 were previously retail customers, and these customers tend to have better retention rates and higher ARPUs compared to those we acquire as new digital customers. Therefore, while we are focusing on improving our omni-channel capabilities, the emphasis is primarily on the transition rather than just having customers who engage in both retail and digital. We believe this approach provides us with a cost advantage regarding our overall customer acquisition expenses. Our strategy includes leveraging our retail customer base to continue growing our digital customer base, which will be evident in our ability to increase the number of new digital customers.

And then, just maybe a different question on some of the guidance and the kind of the guidance philosophy, particularly around reinvestment. Just a couple of data points that I'm picking up; I guess it came a little bit ahead of expectations on revenue. We saw the expenses come in much higher, bottom line kind of roughly in line with expectations, sort of a similar dynamic going on in the full year guide. I think if we look at revenue excluding Iraq, that's coming in a little bit lower than maybe what you previously talked about kind of later last year. We're still seeing earnings overall coming in roughly in line with expectations and the Iraq revenues kind of helping out. So, just when you constructed that guide, how did the incremental Iraqi revenues that maybe you weren't expecting when you spoke to us in December factor into the construction of the guide? Is there any conservatism in the overall numbers to account for the uncertainty in Iraq? And did you guys make any incremental investments on the revenue side that may have impacted the ex-Iraq numbers in light of these incremental revenues?

Main focus we've got is obviously on the top line and EPS. Sometimes you hit up the items down in Other which in line makes further investments if you got the right thing to invest in. But on your question about Iraq itself, we have made a fair bit of pricing actions during 2023 that have a carryover effect into 2024 as well as we continue to monitor that. So that's been factored into our thinking here the opportunity as we get into '24, as we gave them the $50 million to $100 million range, is slightly higher than we would have thought back in December when we met or November, I think it may have been actually but not meaningfully higher. We just knew we had a carryover effect of the actions we took this past year.

It's still a highly uncertain situation. Our main settlement partner has notified us that they will not settle for us for our cash exchange retail customers in Iraq at the end of the first quarter. That's a significant portion of our volume. And while we continue to look for alternatives to that, we really, I think, have put into the guide a reasonable outcome given the uncertainty of what may or may not happen post-March.

This is just a higher-level question to start off with. Obviously, you look at U.S. migration trends, been pretty robust, only one market but clearly the biggest outbound market in the world. I'm wondering to what extent you're seeing that show up in your results? I know that you mentioned pretty positive, I think, double-digit transaction growth in the independent channel. And I know it's a mix of self-improvement initiatives also in there. But I'm curious to what extent you're seeing that positive remittance or I should say positive migration trends show up in your results?

Andrew, it's a great question. Thank you for joining the call today. We are seeing the benefit. In fact, our business is driven by, as you know, two primary factors: overall global macroeconomic growth and migration. So the increased migration into North America over the last couple of years is benefiting particularly those outbound corridors from the U.S. to certain regions in Latin America. And so we see double-digit transaction growth in those corridors as a result of the migration. There's less of that when Matt was talking about the improved transaction trends in retail in Europe; there's been less net migration into Europe over the last year or two. And so that is more of a result of ongoing performance improvement enhancing the quality of our distribution network and our stronger go-to-market value proposition there.

You're concentrating on the specific question you raised, but overall, we believe the efforts we're making with our agents and customers are significantly contributing to our progress. We have a modest advantage as Devin mentioned. However, when you look at the bigger picture, we're transitioning from losing market share to maintaining our fair share, supported by this slight advantage.

In Mexico, there's a perfect corridor example where for many years, we were probably losing share from the U.S. to Mexico. In the last 12 months, we've returned back to growing share in that important corridor. And obviously, it's in a corridor that the Central Bank of Mexico publishes as growing in the mid- to high single digits year-over-year.

And then, if I could dig into just the branded digital transaction growth up 13% this quarter. And I know you elaborated on this a little bit but if you could break down just the drivers of that, whether it's new customer growth, whether it's retention, whether it's behavior, transactions per customer, any additional just the disaggregation of that would be helpful just so we can get a better understanding of the underlying mechanics of that transaction growth.

I mean really, it's all three. I highlighted a few of the components in back into the third but I highlighted in the metrics conversation at the end that our retention has improved and branded digital by 110 basis points in 2023. We've also highlighted that we continue to grow our new customers in the double-digit range; the full year was 13%. And then we are seeing a little bit of an uptick in transactions per customer but that’s the lower of the three.

Hopefully, you guys can hear me this time. I guess my first question for you, Devin, on the digital wallet strategy. Historically, you've been focused on sort of positioning that wallet to drive more retention and engagement. And I think today, the description you guys gave, it seemed like you were focusing a little bit on the revenue potential there as well. Is that a fair read?

Vasu, I might slightly reframe that. We are focusing on growing revenue from our overall ecosystem strategy. And we believe that, that is an important metric to gauge our ability to return Western Union to profitable revenue growth as part of our Evolve 2025 strategy. A component of that is, in fact, growing our digital wallet which we believe will primarily benefit retention as it is a more account-based relationship and thus will drive increased revenue through lower customer churn and obviously, the increased average revenue per user from extended customers. So while we still have a strong focus on growing our digital wallet, we're doing so more with a focus on our remittance business and on driving retention with our digital remittance customers by them having more of an account-based relationship which we believe will drive revenue of ancillary products and services, including interchange, including bill payments, including other services that are available digitally in the wallet that’s not available in our traditional transaction cross-border remittance platform.

It's going to bounce around, it's going to be not linear. We kept the guidance of the '19% to '21% because we think as revenue accelerates to provide us incremental profitable revenue growth, it gives us the opportunity to make investments that will pull it down. Our goal is to hit the number throughout the full year but any given quarter can bounce around. I can't really guide to that at this point.

I just want to ask on the customer additions. I know it's trending nicely with double digits but also the acquisition cost has been lower. How do you expect those two dynamics to trend here in '24 ahead? Can we count on acquisition costs staying lower? Or is there a potential to maybe turn that down differently?

I think we saw a further opportunity. As Devin talked about earlier, we have generative AI that we're working on. We've done some things around robotics. Bob, who leads that organization has been with the company now for 18 months and he's continuing to add skills into the organization. So we think there's further opportunity as we enhance that as far as we're rolling out incremental or new digital platforms in different countries that will provide additional opportunities. So we don't see pressure on that. I can't say it's going to be the same level of reduction in 2024 that we did in '23 but we do see opportunity to keep making enhancements there.

Tien-Tsin, one of the things we talk a lot about, which is our ability to scale at cost-effective tactics around the world, right? And so in some markets that are exceptionally well developed, like the U.S., the team has done a very nice job of that, leading to the strong customer growth in the key transaction levels that we saw last year. As we work our way around the world, increasing our capabilities to scale marketing acquisition and to do it cost-effectively will be one of our priorities in 2024.

Just my last follow-up, just the Consumer Services, expectations for double-digit growth again in '24. Should other components going to be different? I know there's flowed and other things to consider but anything to call out there or rank the bigger contributors?

Yes. So I think as you think about this year and last year, the vast majority of the growth has come through our legacy products that we had there: bill pay and money orders. As you highlighted, there's been a little bit of a tailwind from higher interest rates. We do have a relatively moderate term as we disclosed is probably about 4, 4.5 years as the duration for our investments there. So I feel good about 24% for where we are in interest. Devin has talked about in these calls, the number of new products we put there, whether it be prepaid, Forex, revamping our money order business and so forth. As you get into 2024 and beyond, we think that we're going to start seeing a larger portion of our growth coming from those new product additions.

I have a question about the trend line. Devin, I connected your comment regarding the narrowing between the improving transaction growth trends and the revenue growth trends, which still seems to be around negative 4% when factoring in the impacts from Iraq and Argentina. While transactions are showing improvement, it appears revenue might lag behind. You mentioned the narrowing, so could you elaborate on that? I believe it's crucial for us and some investors who are interested in following the clear progress in the transaction aspect of the business.

Hi Darrin, we are indeed closely monitoring that gap. I want to reiterate three key points we've discussed before. First, our long-term goal is to maintain a ratio between transactions and revenue that keeps the gap at 200 to 300 basis points as we evolve our business. We aim to increase revenue to reach that gap during the Evolve 2025 strategy. Second, the way we implemented our revised go-to-market strategy, especially digitally and in retail, on a regional basis has caused some fluctuations in how we see that gap close due to the new regions coming on board. As I mentioned in our public notes, we expect to be lapping both North American and European digital operations, which make up most of our digital business, by the end of this quarter. Therefore, we anticipate the gap will narrow more significantly in the second half of this year. Finally, we will continue to adapt across different segments, geographies, and channels. As we've always said, we operate in many global markets, and we will keep working to optimize our approach. Our objective is to close that gap throughout the duration of our strategy.

I have a quick follow-up question regarding the retention metrics for the cohorts acquired through promotional efforts over the last year in the U.S. The transaction trends look promising, and I would like to understand more about the factors influencing new customer acquisition versus retention.

We've highlighted, probably it's been two quarters now but we continue to see strong results in the 90-day, 180-day retention for the newer cohorts coming in through promotional pricing. It's driven through the reengagement campaigns we've talked about in past calls, having better market-based pricing, more streamlined transaction processing as well as we're starting to target companies that are doing ATM transactions which have a higher retention rate as well, and we continue to see a high 20s, low 30% growth rate in our APN business, both in the retail and digital side.

APN being payout to account. The other thing, I think, Darrin, you can look at Matt talked about the 110 basis point improvement in digital transactions year-over-year. That is the composition of our history, i.e., the accumulated book and as you know, as customers tenure in this category, retention goes up. So we've been growing new customers aggressively. But increasing the overall retention of the book which says something about the quality of the new customers and the retention in that subset of the portfolio in order to achieve that.

I wanted to ask a couple of questions about the physical retail business, excluding Iraq to eliminate some of the noise. The revenue per transaction in that area has been declining over the past few quarters. Could you explain what is leading to this decline in revenue per transaction in physical retail, excluding Iraq? Additionally, it seems that pricing adjustments were necessary in recent quarters to boost transaction growth in that sector. Do you believe that the lower pricing in physical retail, excluding Iraq, is something you have moved past, or do you think further aggressive pricing strategies are needed to continue accelerating transaction growth throughout the year?

Ken, thank you for your question. When examining the change in revenue per transaction excluding Iraq over the past year, approximately two-thirds of the variation is due to changes in the mix, while the rest is attributed to intentional price reductions we've implemented. We've initiated tests, as mentioned in our last call, in a significant European market where we adjusted our foreign exchange yields multiple times a day to remain competitive, which has impacted pricing. Additionally, we've conducted various tests globally, many of which have become permanent. This situation involves a combination of both mix changes and deliberate decisions to enhance performance. We want to emphasize that our charts show improvements in transaction trends prior to the price changes in the second and third quarters, as we began further collaboration with our agents and customers regarding product offerings and customer service. We believe that all three factors are contributing positively. It is not solely a price competition; rather, it's about offering market-competitive prices alongside excellent service and product quality. Looking ahead, we will continuously adjust to market conditions and competitor actions, but we remain committed to our guidance. Yes. So again, we're not going to give out guidance at the segment level really for most things.

I wanted to first touch on the current geopolitical events in the Middle East. Given your geographic footprint, not specific to Israel or anything, but sort of the regional change in money transfer volumes or mix between retail and digital or just any other dynamics that are worth considering that haven't been mentioned so far?

We've observed that overall volumes in the region are down, but they haven't reached zero, and there has been minimal change in the mix of retail and digital. It's mainly a retail environment in that area. We continue to keep an eye on the situation, but the region itself is relatively small compared to our total business. Our primary concern lies with the well-being of the people, ensuring the safety of our agents and employees, and hoping that the conflict resolves quickly, rather than focusing on the economic impacts on our business.

And then, just as a follow-up; I believe you mentioned in the prepared remarks that customer acquisition costs declined by around 15% in the year. Can you speak to how the company's lifetime value to customer acquisition cost has evolved throughout 2023? And how you anticipate this metric will continue to evolve through 2024, particularly as we're shifting the mindset from more of an omni-channel focus to selling consumer services to just sort of the dynamics there and any pieces to the puzzle worth noting?

If you think about it, we've highlighted a couple of key drivers of that math. We've talked about the fact that our digital retention has improved by 110 basis points. That's pushing the life out longer for historical customers before making this change. We've reduced our rates to some degree. And then we've obviously lowered our customer acquisition costs. Holistically, it's about the same as it was before for those moving parts.

And I would add two things to it. As you know, when we launched this program which is now 18 months into the program. We made the explicit shift which here to before, we had not managed to which was to a target lifetime value to customer acquisition cost goal. And so we've maintained that goal throughout the program. And as either lifetime value or customer acquisition cost adjust, we adjust accordingly in terms of our marketing spend and our ability to drive new programs into the marketplace. And so as lifetime value goes up, that enables us to spend more; as customer acquisition cost goes down, that enables us to spend more. And obviously, in reverse, hopefully that won't happen but if it did, then we would spend less.

Thank you for joining the Western Union Fourth Quarter 2023 Results Conference Call. We hope you have a great day.